Postmedia Reports Fourth Quarter Results
Postmedia Network Canada Corp. (“Postmedia” or the “Company”) today released financial information for the three months and year ended August 31, 2024. “While we continue to operate in a cha...
TORONTO: Postmedia Network Canada Corp. (“Postmedia” or the “Company”) today released financial information for the three months and year ended August 31, 2024.
“While we continue to operate in a challenging advertising marketplace dominated by large, foreign media platforms, Postmedia achieved some important milestones during the quarter that give us optimism around the future of Canadian news media. It is clear from our digital audience that Canadians look to us to provide accurate and timely local, provincial, and national news,” said Andrew MacLeod, President and CEO.
“We are appreciative of the Ontario government’s recent policy change to support local media in Ontario. We hope to see similar initiatives from governments and corporate Canada.
We are encouraged by the successful completion of the C-18 negotiations and look forward to the release of funding.
The improving environment gave us confidence to both step into a challenging situation in Atlantic Canada and save local news brands that have operated in those provinces for over 150 years and to invest millions of dollars in a new digital platform with improved capabilities.
While we are seeing successes, this work must be augmented and supported by a renewed commitment from Canadian governments to ensure trusted journalism is delivered for Canadians across the country.”
Fourth Quarter Operating Results
Revenue for the quarter was $93.2 million as compared to $101.3 million in the same period in the prior year, representing a decrease of $8.1 million (8.0%). The revenue decrease was primarily due to decreases in advertising revenue of $3.6 million (7.7%) circulation revenue of $2.3 million (6.7%) and other revenue of $2.8 million (32.8%), partially offset by increases in parcel revenue of $0.6 million (5.1%).
Total operating expenses excluding depreciation, amortization and restructuring decreased $18.5 million, or 18.6%, for the quarter ended August 31, 2024, relative to the same period in the prior year. The decrease relates to decreases in compensation, newsprint, production and other operating expenses, partially offset by an increase in distribution expense.
Operating income before depreciation, amortization and restructuring in the quarter was $12.2 million, an increase of $10.3 million relative to the same period in the prior year. The increase in operating income before depreciation, amortization and restructuring is due to a decrease in operating expenses excluding depreciation, amortization and restructuring, partially offset by a decrease in total revenue.
Net loss in the quarter ended August 31, 2024 was $3.1 million, as compared to a net loss of $11.0 million in the same period in the prior year. The decrease in net loss was primarily the result of an increase in operating income before depreciation, amortization and restructuring, an increase in foreign currency gains, and a decrease in restructuring expenses, partially offset by an increase in interest expense, loss on disposal of property, plant and equipment, right-of-use assets, and assets held-for-sale.
Fiscal 2024 Operating Results
Revenue for the year ended August 31, 2024 was $395.9 million as compared to $448.5 million in the same period in the prior year, a decrease of $52.6 million or 11.7%. The revenue decrease was primarily due to decreases in advertising revenue of $35.9 million (16.2%), circulation revenue of $16.9 million (11.5%) and other revenue of $7.6 million (20.4%), partially offset by increases in parcel revenue of $7.8 million (17.9%).
Total operating expenses excluding depreciation, amortization and restructuring decreased $56.7 million or 13.0% for the year ended August 31, 2024, relative to the same period in the prior year. The decrease relates to decreases in compensation, newsprint, production and other operating expenses, partially offset by an increase in distribution expense.
Operating income before depreciation, amortization and restructuring of $14.8 million in the year ended August 31, 2024 represents an increase of $4.2 million relative to the same period in the prior year. The increase is due to a decrease in operating expenses excluding depreciation, amortization and restructuring, partially offset by a decrease in total revenue.
Net loss in the year August 31, 2024 was $49.7 million, as compared to a net loss of $72.6 million in the same period in the prior year. The decrease in net loss is primarily the result of an increase in operating income before depreciation, amortization and restructuring, an increase in gain on derivatives and financial assets and foreign currency gains, and a decrease in interest expense, partially offset by an increase in interest expense, an increase in loss on disposal of property and equipment, right-of-use assets, and assets held-for-sale.
Acquisition of The Halifax Herald Limited and Saltwire Network Inc.
On August 25, 2024, PNI Maritimes LP completed the purchase (the “Saltwire Asset Purchase Transaction”) of certain businesses and assets of Saltwire Network Inc. and The Halifax Herald Limited (collectively, “Saltwire”), pursuant to an Asset Purchase Agreement dated July 25, 2024 (the “Saltwire Purchase Agreement”). Postmedia intends to continue operations of certain Saltwire publications, leveraging existing Postmedia newsmedia back-office resources and operational infrastructure to ensure there continues to be reliable and high-quality local news provided to the affected communities. The acquisition included Saltwire’s daily and weekly papers, and parcel delivery business. The purchase price consisted of $1 million of cash consideration and $3.1 million of estimated contingent consideration.
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.sedarplus.ca.
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 130 brands across multiple print and digital 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. Our expertise in home delivery and expanding distribution network powers Postmedia Parcel Services. For more information, visit www.postmedia.com, www.postmediasolutions.com and www.postmediaparcelservices.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 the implementation and results of the Company’s transformation initiatives, continued benefits of historical results into future periods, the realization of anticipated cost savings, 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, 2024 and 2023. 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 | For the year ended | ||
| August 31, | August 31, | August 31, | August 31, |
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Revenues |
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Advertising | 43,115 | 46,709 | 185,134 | 221,019 |
Circulation | 32,079 | 34,377 | 130,183 | 147,043 |
Parcel Services | 12,146 | 11,553 | 51,016 | 43,257 |
Other | 5,817 | 8,651 | 29,588 | 37,180 |
Total revenues | 93,157 | 101,290 | 395,921 | 448,499 |
Expenses |
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Compensation | 19,734 | 32,542 | 124,780 | 155,455 |
Newsprint | 2,825 | 3,716 | 11,597 | 17,636 |
Distribution | 34,214 | 32,222 | 137,922 | 129,999 |
Production | 8,881 | 12,088 | 40,405 | 56,135 |
Other operating | 15,288 | 18,831 | 66,398 | 78,620 |
Operating income before depreciation, amortization, impairment, and restructuring | 12,215 | 1,891 | 14,819 | 10,654 |
Depreciation | 2,395 | 3,253 | 10,431 | 12,894 |
Amortization | 1,894 | 2,396 | 8,081 | 9,411 |
Restructuring | 3,843 | 4,249 | 9,144 | 25,784 |
Operating loss | 4,083 | (8,007) | (12,837) | (37,435) |
Interest expense | 9,965 | 8,486 | 37,179 | 33,988 |
Net financing expense related to employee benefit plans | 343 | 350 | 1,376 | 1,398 |
Loss (gain) on disposal of property and equipment, assets held-for-sale, right of use assets and other assets | 295 | (5,065) | 156 | (8,242) |
Loss (gain) on derivative financial instruments and financial assets at fair value through profit and loss | 146 | 330 | (1,076) | 470 |
Loss on debt refinancing | - | - | 367 | - |
Foreign currency exchange (gains) losses | (3,589) | (1,064) | (1,177) | 7,519 |
Net loss attributable to equity holders of the Company | (3,077) | (11,044) | (49,662) | (72,568) |
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Loss per share attributable to equity holders of the Company |
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Basic and diluted | $(0.03) | $(0.11) | $(0.50) | $(0.73) |
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Postmedia Network Canada Corp. Consolidated Statements of Financial Position (UNAUDITED) | ||
(In thousands of Canadian dollars) | As at August 31, 2024 | As at August 31, 2023 |
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Assets |
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Current Assets |
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Cash | 2,454 | 6,191 |
Restricted cash | - | 6,968 |
Trade and other receivables | 53,931 | 46,764 |
Assets held-for-sale | 2,560 | 2,560 |
Inventory | 2,318 | 3,408 |
Prepaid expenses and other assets | 8,522 | 8,837 |
Total current assets | 69,785 | 74,728 |
Non-Current Assets |
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Property and equipment | 35,089 | 48,299 |
Intangible assets | 19,868 | 16,236 |
Right of use assets | 19,783 | 26,780 |
Derivative financial instruments and other assets | 4,399 | 3,335 |
Total assets | 148,924 | 169,378 |
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Liabilities and Deficiency |
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Current Liabilities |
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Accounts payable and accrued liabilities | 38,509 | 35,609 |
Provisions | 1,514 | 10,201 |
Contract Liabilities | 16,716 | 17,841 |
Current portion of lease obligations | 7,773 | 8,320 |
Current portion of long-term debt | 29,509 | 17,772 |
Total current liabilities | 94,021 | 89,743 |
Non-Current Liabilities |
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Long-term debt | 323,129 | 292,524 |
Employee benefit obligations and other liabilities | 34,250 | 35,131 |
Lease obligations | 19,345 | 24,286 |
Total liabilities | 470,745 | 441,684 |
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Deficiency |
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Capital stock | 820,357 | 820,131 |
Contributed surplus | 19,511 | 18,923 |
Deficit | (1,161,689) | (1,111,360) |
Total deficiency | (321,821) | (272,306) |
Total liabilities and deficiency | 148,924 | 169,378 |
Postmedia Network Canada Corp. Consolidated Statements of Cash Flows (UNAUDITED) | ||||
(In thousands of Canadian dollars) | For the three months | For the year | ||
| August 31, | August 31, | August 31, | August 31, |
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Cash Generated (Utilized) by: |
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Operating Activities |
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Net loss attributable to equity holders of the Company | (3,077) | (11,044) | (49,662) | (72,568) |
Items not affecting cash: |
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Depreciation | 2,395 | 3,253 | 10,431 | 12,894 |
Amortization | 1,894 | 2,396 | 8,081 | 9,411 |
Loss on debt refinancing | - | - | 367 | - |
Loss (gain) on derivative financial instruments and financial assets at fair value through profit and loss | 146 | 330 | (1,076) | 470 |
Non-cash interest | 9,554 | 7,078 | 34,312 | 26,709 |
Loss (gain) on disposal of property and equipment, assets held-for-sale, right of use assets and other assets | 295 | (5,065) | 156 | (8,242) |
Non-cash foreign currency exchange (gains) losses | (5,996) | (1,221) | (3,028) | 7,342 |
Share-based compensation plans | 214 | 164 | 814 | 950 |
Net financing expense relating to employee benefit plans | 343 | 350 | 1,376 | 1,398 |
Employee benefit plan funding in excess of compensation expense | (777) | (101) | (3,169) | (2,983) |
Net change in non-cash operating accounts | (13,900) | (4,345) | (15,610) | 1,120 |
Cash flows used in operating activities | (8,909) | (8,205) | (17,008) | (23,409) |
Investing Activities |
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Net proceeds from the sale of property and equipment, assets held-for-sale and other assets | 3,053 | 7,002 | 6,125 | 29,464 |
Purchases of property and equipment | (126) | (96) | (575) | (502) |
Purchases of intangible assets | (544) | (371) | (1,291) | (794) |
Acquisition | (1,000) | - | (1,000) | - |
Cash flows from (used in) investing activities | 1,383 | 6,535 | 3,259 | 28,168 |
Financing activities |
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