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Press release content from Business Wire. The AP news staff was not involved in its creation.
PRESS RELEASE: Paid content from Business Wire
Press release content from Business Wire. The AP news staff was not involved in its creation.

Postmedia Reports First Quarter Results

January 13, 2022 GMT

TORONTO--(BUSINESS WIRE)--Jan 13, 2022--

Postmedia Network Canada Corp. (“Postmedia” or the “Company”) today released financial information for the three months ended November 30, 2021.

“We are pleased to report strong growth in digital advertising revenue this quarter,” said Andrew MacLeod, President and Chief Executive Officer, Postmedia. “Much uncertainty remains as we continue to manage through this unpredictable environment. Nonetheless, we are keeping a strong focus on executing our strategy.”

Updates from the Quarter

  • Constraining Costs – In the quarter we implemented cost savings initiatives that are expected to result in approximately $9 million of net annualized cost savings.
  • Maximizing Revenue – First quarter revenue was up 1.0% from the same period in the prior year with total advertising revenue up 8.4% showing continued improvement each quarter since the peak of the pandemic in Q4 of fiscal 2020.
  • Preserving Liquidity – Cash management, including the impact of cost savings initiatives and government assistance has resulted in an unrestricted cash balance of $52 million as at November 30, 2021.

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First Quarter Operating Results

Revenue for the quarter was $118.1 million as compared to $116.9 million in the same period in the prior year, representing an increase of $1.1 million or 1.0%. The revenue increase was due to increases in digital revenue of $9.0 million or 36.4%, with digital advertising revenue up 43.9%. Partially offsetting the increase in digital revenue were decreases in print advertising revenue of $3.7 million or 8.4% and print circulation revenue of $4.3 million or 9.7%.

Total operating expenses excluding depreciation, amortization, settlement gain, impairment and restructuring increased $6.4 million or 6.4% for the quarter, relative to the same period in the prior year. The increase was the result of increases in compensation expenses due to a reduction in government assistance and production costs related to the increase in digital advertising revenue. The compensation expense increase includes a decrease in the compensation expense recovery related to CEWS of $5.0 million, partially offset by an increase in compensation recovery related to journalism tax credits of $0.7 million.

Operating income before depreciation, amortization, settlement gain, impairment and restructuring of $11.9 million in the quarter represents a decrease of $5.3 million relative to the same period in the prior year. The decrease is due to the increase in operating expenses excluding depreciation, amortization, and restructuring partially offset by an increase in total revenues. Included in the operating expense increase is the impact of the net compensation expense recovery related to CEWS and journalism tax credits.

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Net loss in the quarter ended November 30, 2021 was $4.4 million, as compared to net earnings of $52.8 million in the same period in the prior year. The change was primarily the result of a non-cash settlement gain related to employee benefit plans of $63.1 million and impairment expense of $13.5 million both during the three months ended November 30, 2020 and the decrease in operating income before depreciation, amortization, settlement gain, impairment and restructuring.

COVID-19 Update

The COVID-19 pandemic has resulted in governments worldwide enacting emergency measures to combat the spread of the virus including travel bans, self-imposed quarantine periods and social distancing that have caused disruption to businesses resulting in an economic slowdown. The Company is generally exempt from mandates requiring closures of non-essential businesses and therefore has been able to continue operations, however, advertising revenue declines accelerated during the first twelve months of the COVID-19 pandemic with a return to previous trends in recent quarters. The duration of the COVID-19 pandemic and related government measures and their impact on the Company’s revenue continues to be uncertain. On April 11, 2020, the Government of Canada passed CEWS to support employers facing financial hardship as measured by certain revenue declines as a result of the COVID-19 pandemic. CEWS provided a reimbursement of compensation expense to October 23, 2021, provided the applicant has met the applicable criteria. During the three months ended November 30, 2021, the Company filed and received all the remaining claims available under the program and recognized a recovery of compensation expense of $1.6 million related to CEWS (2021 - $6.6 million) and in total has recognized $64.9 million related to CEWS since the program was announced.

Debt Repayment

During the three months ended November 30, 2021, the Company redeemed $2.5 million of first-lien debt on November 24, 2021, as required pursuant to the semi-annual excess cash flow requirement. After this redemption the Company has $64.5 million of first-lien debt outstanding of the original $225.0 million that was issued in October 2016.

Business Transformation Initiatives

During the three months ended November 30, 2021, the Company implemented initiatives related to compensation expense reductions, real estate rationalization, production efficiencies and other transformation programs, which are expected to result in approximately $9 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.

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 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 120 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 impact of the COVID-19 pandemic on the Company’s business, the implementation and results of the Company’s transformation initiatives, continued benefits of historical results into future periods, 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.

In addition, we are subject to the risk and uncertainties related to the COVID-19 pandemic. The pandemic has resulted in governments worldwide enacting emergency measures to combat the spread of the virus including travel bans, self-imposed quarantine periods and social distancing that have caused disruption to businesses resulting in an economic slowdown. We are generally exempt from mandates requiring closures of non-essential businesses and therefore have been able to continue operations however, advertising revenues have declined as a result of COVID-19 pandemic and related government measures. The outbreak of contagious illness such as this can impact our operations in a number of ways including quarantined employees, travel restrictions, temporary closure of our facilities, a decrease in demand for advertising, as well as interruptions to our supply chain, including temporary closure of supplier facilities. Given the high level of uncertainty surrounding the duration of the COVID-19 pandemic it is difficult to reliably estimate its potential impact on the financial condition and results of our business. We are continuing to address the current challenges related to the COVID-19 pandemic and monitoring these challenges as they evolve so as to minimize this risk however it could have a material adverse effect on our business, financial condition, results of operations, liquidity and cash flow. 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, 2021 and 2020. 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.

Postmedia Network Canada Corp.

Consolidated Statements of Operations

(UNAUDITED)

 

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

For the three months

ended November 30,

 

2021

 

2020

 

 

 

Revenues

 

 

Print advertising

39,881

 

43,532

 

Print circulation

39,808

 

44,100

 

Digital

33,910

 

24,869

 

Other

4,471

 

4,429

 

Total revenues

118,070

 

116,930

 

Expenses

 

 

Compensation

40,267

 

36,812

 

Newsprint

4,266

 

4,990

 

Distribution

23,450

 

24,686

 

Production

19,923

 

14,944

 

Other operating

18,274

 

18,320

 

Operating income before depreciation, amortization, impairment, settlement gain and restructuring

11,890

 

17,178

 

Depreciation

2,657

 

2,783

 

Amortization

2,190

 

2,555

 

Impairment

-

 

13,464

 

Settlement gain

-

 

(63,079

)

Restructuring

700

 

2,935

 

Operating income

6,343

 

58,520

 

Interest expense

7,530

 

7,826

 

Net financing expense related to employee benefit plans

234

 

636

 

Gain on disposal of assets held-for-sale

-

 

(6

)

Loss (gain) on derivative financial instruments

264

 

(1,604

)

Foreign currency exchange losses (gains)

2,737

 

(1,157

)

Earnings (loss) before income taxes

(4,422

)

52,825

 

Provision for income taxes

-

 

-

 

Net earnings (loss) attributable to equity holders of the Company

(4,422

)

52,825

 

 

 

 

 

 

 

Earnings (loss) per share attributable to equity holders of the Company

 

 

Basic

$(0.05

)

$0.56

 

Diluted

$(0.05

)

$0.54

 

Postmedia Network Canada Corp.

Consolidated Statements of Financial Position

(UNAUDITED)

 

(In thousands of Canadian dollars)

As at

November 30,

2021

As at

August 31,

2021

 

 

 

Assets

 

 

Current Assets

 

 

Cash

52,005

 

61,996

 

Restricted cash

437

 

437

 

Trade and other receivables

50,274

 

41,255

 

Assets held-for-sale

17,727

 

17,727

 

Inventory

3,327

 

3,348

 

Prepaid expenses and other assets

8,421

 

8,697

 

Total current assets

132,191

 

133,460

 

Non-Current Assets

 

 

Property and equipment

74,346

 

76,390

 

Right of use assets

34,010

 

35,646

 

Derivative financial instruments and other assets

7,150

 

6,914

 

Intangible assets

23,337

 

23,791

 

Total assets

271,034

 

276,201

 

 

 

 

Liabilities and Deficiency

 

 

Current Liabilities

 

 

Accounts payable and accrued liabilities

52,091

 

49,599

 

Provisions

1,722

 

2,257

 

Deferred revenue

21,931

 

22,351

 

Current portion of lease obligations

8,073

 

8,120

 

Current portion of long-term debt

5,000

 

7,409

 

Total current liabilities

88,817

 

89,736

 

Non-Current Liabilities

 

 

Long-term debt

250,999

 

248,262

 

Employee benefit obligations and other liabilities

42,925

 

44,753

 

Lease obligations

31,719

 

33,161

 

Total liabilities

414,460

 

415,912

 

 

 

 

Deficiency

 

 

Capital stock

810,861

 

810,861

 

Contributed surplus

16,543

 

16,570

 

Deficit

(970,330

)

(967,142

)

Total deficiency

(143,426

)

(139,711

)

Total liabilities and deficiency

271,034

 

276,201

Postmedia Network Canada Corp.

Consolidated Statements of Cash Flows

(UNAUDITED)

(In thousands of Canadian dollars)

For the three months

ended November 30,

 

2021

 

2020

 

 

 

Cash Generated (Utilized) by:

 

 

Operating Activities

 

 

Net earnings (loss) attributable to equity holders of the Company

(4,422

)

52,825

 

Items not affecting cash:

 

 

Depreciation

2,657

 

2,783

 

Amortization

2,190

 

2,555

 

Impairment

-

 

13,464

 

Loss (gain) on derivative financial instruments

264

 

(1,604

)

Non-cash interest

6,028

 

5,855

 

Gain on disposal of assets held-for-sale

-

 

(6

)

Non-cash foreign currency exchange losses (gains)

2,751

 

(1,124

)

Share-based compensation plans

(27

)

273

 

Net financing expense relating to employee benefit plans

234

 

636

 

Non-cash settlement gain relating to employee benefit plans

-

 

(63,079

)

Employee benefit plan funding in excess of compensation expense

(1,121

)

(538

)

Net change in non-cash operating accounts

(13,320

)

(3,767

)

Cash flows (used in) from operating activities

(4,766

)

8,273

 

 

 

 

Investing Activities

 

 

Net proceeds from the sale of assets held-for-sale

-

 

4,708

 

Purchases of property and equipment

(613

)

(392

)

Purchases of intangible assets

(159

)

(15

)

Cash flows (used in) from investing activities

(772

)

4,301

 

 

 

 

Financing activities

 

 

Repayment of long-term debt

(2,396

)

(15,372

)

Restricted cash

-

 

3,402

 

Lease payments

(2,057

)

(2,647

)

Cash flow used in financing activities

(4,453

)

(14,617

)

 

 

 

Net change in cash for the period

(9,991

)

(2,043

)

Cash at beginning of period

61,996

 

49,795

 

Cash at end of period

52,005

 

47,752

 

 

 

 

Supplemental disclosure of operating cash flows

 

 

Interest paid

 

2,924

 

4,162

Income taxes paid

-

 

-

 

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20220113005633/en/

CONTACT: Media Contact

Phyllise Gelfand

Vice President, Communications

(647) 273-9287

pgelfand@postmedia.comInvestor Contact

Mary Anne Lavallee

Executive Vice President, Chief Operating Officer and Interim Chief Financial Officer

(416) 442-3448

mLavallee@postmedia.com

KEYWORD: NORTH AMERICA CANADA

INDUSTRY KEYWORD: PROFESSIONAL SERVICES MARKETING ADVERTISING COMMUNICATIONS FINANCE PUBLIC RELATIONS/INVESTOR RELATIONS

SOURCE: Postmedia Network Canada Corp.

Copyright Business Wire 2022.

PUB: 01/13/2022 11:04 AM/DISC: 01/13/2022 11:04 AM

http://www.businesswire.com/news/home/20220113005633/en