Postmedia Reports First Quarter Results

Marketing News – MarketingTools365 – Mktg News – Marketing Tools 365 – //// Business Marketing news and Mktg News : Postmedia Reports First Quarter Results :

TORONTO–(BUSINESS WIRE)–Postmedia Network Canada Corp. (“Postmedia” or the “Company”) today
released financial information for the three months ended November 30,
2018.

Highlights from the Quarter

  • Continued digital growth – Digital advertising revenue up 10.1%– the
    eighth consecutive quarter of double-digit growth in this area1
  • Slowing legacy decline – Print advertising revenue down 13.9% and
    print circulation revenue down 4.8% versus 17.6% and 5.5%
    respectively in Q1 F20181
  • Operating income before depreciation amortization and restructuring
    was $21.7 million in the quarter down $2.2 million from prior year
    reflecting the above noted revenue changes as well as transformation
    initiatives which resulted in a 9.4% reduction in operating costs
  • Debt repayment in the quarter was $8.7 million and subsequent to
    quarter end, a real estate sale will result in further debt repayment
    of $20.4 million.
  • After this repayment, first-lien debt will be reduced by 53% by
    retiring $119.7 million of the original $225.0 million since October
    2016.

First Quarter Operating Results

Revenue for the quarter was $171.3 million as compared to $189.0 million
in the same period in the prior year, a decrease of $17.7 million or
9.4%. The revenue decline was primarily due to decreases in print
advertising revenue of $14.0 million or 15.4% and print circulation
revenue of $4.6 million or 7.9%. Digital revenue increased by $1.5
million or 4.7% in the quarter with digital advertising revenue up 6.3%.

Notably, adjusted for the impact of the publications acquired and sold
in the Company’s first quarter of Fiscal 2018, revenue for the quarter
decreased 6.9% relative to the same period in the prior year including
decreases in print advertising revenue of 13.9%, print circulation
revenue of 4.8% and an increase in digital revenue of 7.9% which
includes an increase in digital advertising revenue of 10.1%.

”We are pleased to report ongoing traction on the key elements of our
strategy including digital revenue growth,” said Paul Godfrey, Executive
Chairman and Chief Executive Officer, Postmedia. “Our teams are focused
on continuing to promote the great value of Postmedia’s brands among
audiences and marketers and working together to transform our Company
amid a shifting landscape.”

Total operating expenses excluding depreciation, amortization and
restructuring decreased $15.5 million or 9.4% for the quarter, relative
to the same period in the prior year. The decrease was as a result of
various cost reduction initiatives.

Operating income before depreciation, amortization and restructuring of
$21.7 million in the quarter represents a decrease of $2.2 million or
9.2% relative to the same period in the prior year. The decrease is due
to decreases in print advertising and circulation revenues only
partially offset by increased digital revenue and operating expense
decreases.

Net loss in the quarter ended November 30, 2018 was $1.4 million, as
compared to net earnings of $5.8 million in the same period in the prior
year. The change was primarily the result of a gain on disposal of
operations in Q1 of Fiscal 2018, losses on derivative financial
instruments and the disposal of property and equipment in Q1 of Fiscal
2019, partially offset by a decrease in restructuring expense.

Business Transformation Initiatives

During the three months ended November 30, 2018, the Company implemented
initiatives – including compensation expense reductions, real estate
rationalization, production efficiencies and other transformation
programs – which are expected to result in approximately $4 million of
net annualized cost savings.

The Company intends to continue to identify and undertake ongoing cost
reduction initiatives in an effort to address revenue declination in the
legacy print business.

Debt Repayment

During the three months ended November 30, 2018 the Company made a
mandatory debt repayment of $8.7 million bringing the total principal
amount of first-lien notes outstanding to $125.6 million.

Subsequent to the end of the quarter, the company sold the Ottawa
Citizen facility. Net proceeds from the sale will be used as part of a
redemption of $20.4 million first-lien notes at par in accordance with
the terms and conditions of the amended and restated first-lien notes
indenture. After this redemption the Company will have $105.3 million of
first-lien debt outstanding – bringing the total repayments made, since
October 2016, to $119.7 million.

Additional Information

Additional information, including financial statements and management’s
discussion and analysis can be found on the Company’s website at www.postmedia.com/investors/financial-reports
or on SEDAR at www.sedar.com.

Note: All dollar amounts are expressed in Canadian dollars unless
otherwise specified.

About Postmedia Network Canada Corp.

Postmedia Network Canada Corp. (TSX:PNC.A, PNC.B) is the holding company
that owns Postmedia Network Inc., a Canadian newsmedia company
representing more than 140 brands across multiple print, online, and
mobile platforms. Award-winning journalists and innovative product
development teams bring engaging content to millions of people every
week whenever and wherever they want it. This exceptional content, reach
and scope offers advertisers and marketers compelling solutions to
effectively reach target audiences. For more information, visit www.postmedia.com.

Forward-Looking Information

This news release may include information that is “forward-looking
information” under applicable Canadian securities laws. The Company has
tried, where possible, to identify such information and statements by
using words such as “believe,” “expect,” “intend,” “estimate,”
“anticipate,” “may,” “will,” “could,” “would,” “should” and similar
expressions and derivations thereof in connection with any discussion of
future events, trends or prospects or future operating or financial
performance. Forward-looking statements in this news release include
statements with respect to the implementation and results of the
Company’s transformation initiatives, the realization of anticipated
cost savings and the identification and undertaking of ongoing cost
savings initiatives. By their nature, forward-looking information and
statements involve risks and uncertainties because they relate to events
and depend on circumstances that may or may not occur in the future.
These risks and uncertainties include, among others: competition from
digital and other forms of media; the effect of economic conditions on
advertising revenue; the ability of the Company to build out its digital
media and online businesses; the failure to maintain current print and
online newspaper readership and circulation levels; the realization of
anticipated cost savings; possible damage to the reputation of the
Company’s brands or trademarks; possible labour disruptions; possible
environmental liabilities, litigation and pension plan obligations;
fluctuations in foreign exchange rates and the prices of newsprint and
other commodities. For a complete list of our risk factors please refer
to the section entitled “Risk Factors” contained in our annual
management’s discussion and analysis for the years ended August 31, 2018
and 2017. Although the Company bases such information and statements on
assumptions believed to be reasonable when made, they are not guarantees
of future performance and actual results of operations, financial
condition and liquidity, and developments in the industry in which the
Company operates, may differ materially from any such information and
statements in this press release. Given these risks and uncertainties,
undue reliance should not be placed on any forward-looking information
or forward-looking statements, which speak only as of the date of such
information or statements. Other than as required by law, the Company
does not undertake, and specifically declines, any obligation to update
such information or statements or to publicly announce the results of
any revisions to any such information or statements.

1 Adjusted for the impact of the publications acquired and sold in
the Company’s first quarter of Fiscal 2018.

Postmedia Network Canada Corp.
Consolidated Statements of
Operations

(UNAUDITED)

(In thousands of Canadian dollars, except per share amounts)  

For the three months
ended November,

  2018   2017
 
Revenues
Print advertising 77,091 91,125
Print circulation 53,451 58,013
Digital 32,747 31,289
Other 7,984 8,563
Total revenues 171,273 188,990
Expenses
Compensation 58,324 66,364
Newsprint 9,760 10,801
Distribution 31,443 35,461
Production 20,921 22,048
Other operating 29,119 30,405
Operating income before depreciation, amortization and
restructuring
21,706 23,911
Depreciation 4,999 5,335
Amortization 4,192 3,389
Restructuring and other items 2,678 6,924
Operating income 9,837 8,263
Interest expense 7,185 7,552
Gain on disposal of operations (4,676)
Net financing expense related to employee benefit plans 541 735
(Gain) loss on disposal of property and equipment and assets
held-for-sale
226 (1,542)
(Gain) loss on derivative financial instruments 557 (3,100)
Foreign currency exchange losses 2,747 3,521
Earnings (loss) before income taxes (1,419) 5,773
Provision for income taxes
Net earnings (loss) attributable to equity holders of the Company (1,419) 5,773
 
     
Earnings (loss) per share attributable to equity holders of the
Company
Basic $(0.02) $0.06
Diluted $(0.02) $0.06

Postmedia Network Canada Corp.
Consolidated Statements of
Financial Position

(UNAUDITED)

(In thousands of Canadian dollars)   As at

November 30,

2018

  As at

August 31,

2018

(revised)
Assets
Current Assets
Cash 11,782 26,037
Restricted cash 6,104 5,711
Accounts receivable 85,576 68,069
Assets held-for-sale 15,502 6,827
Inventory 5,699 6,219
Prepaid expenses and other assets 9,303 9,561
Total current assets 133,966 122,424
Non-Current Assets
Property and equipment 140,340 154,465
Derivative financial instruments 1,922 2,479
Intangible assets 69,872 73,895
Total assets 346,100 353,263
 
Liabilities and Equity
Current Liabilities
Accounts payable and accrued liabilities 64,837 62,833
Provisions 16,460 18,666
Deferred revenue 28,469 28,994
Current portion of long-term debt 10,000 8,718
Total current liabilities 119,766 119,211
Non-Current Liabilities
Long-term debt 257,171 264,022
Employee benefit obligations and other liabilities 68,733 62,703
Provisions 416 526
Total liabilities 446,086 446,462
 
Deficiency
Capital stock 810,836 810,836
Contributed surplus 14,016 13,589
Deficit (924,838) (917,624)
Total deficiency (99,986) (93,199)
Total liabilities and deficiency 346,100 353,263

Postmedia Network Canada Corp.
Consolidated Statements of
Cash Flows

(UNAUDITED)

(In thousands of Canadian dollars)  

For the three months
ended November 30,

  2018   2017
 
Cash Generated (Utilized) by:
Operating Activities
Net earnings (loss) attributable to equity holders of the Company (1,419) 5,773
Items not affecting cash:
Depreciation 4,999 5,335
Amortization 4,192 3,389
Gain on disposal of operations (4,676)
(Gain) loss on derivative financial instruments 557 (3,100)
Non-cash interest 4,540 3,822
(Gain) loss on disposal of property and equipment and assets
held-for-sale
226 (1,542)
Non-cash foreign currency exchange losses 2,761 3,536
Share-based compensation plans expense 427
Net financing expense relating to employee benefit plans 541 735
Employee benefit plan funding in excess of compensation expense (783) (59)
Net change in non-cash operating accounts (21,241) (15,671)
Cash flows used in operating activities (5,200) (2,458)
 
Investing Activities
Net proceeds from the sale of property and equipment and assets
held-for-sale
391 9,829
Purchases of property and equipment (166) (149)
Purchases of intangible assets (169) (239)
Cash flows from investing activities 56 9,441
 
Financing activities
Repayment of long-term debt (8,718) (79,442)
Restricted cash (393) 62,044
Advances from senior secured asset-based revolving credit facility 14,000
Cash flow used in financing activities (9,111) (3,398)
 
Net change in cash for the period (14,255) 3,585
Cash at beginning of period 26,037 10,848
Cash at end of period 11,782 14,433
Supplemental disclosure of operating cash flows    
Interest paid 5,510 8,816
Income taxes paid    

Contacts

Media Contact
Phyllise Gelfand
Vice President,
Communications
(416) 442-2936
pgelfand@postmedia.com

Investor Contact
Brian Bidulka
Executive Vice President
and Chief Financial Officer
(416) 383-2325
bbidulka@postmedia.com

. From Business Wire – Marketingtools365(COMM) – ATOM http://bit.ly/2Fjkgtz Source : Postmedia Reports First Quarter Results – http://bit.ly/2Fjkgtz