Postmedia Reports Fourth Quarter Results

TORONTO--(BUSINESS WIRE)--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,
2024

August 31,
2023

August 31,
2024

August 31,
2023

 

 

 

 

 

Revenues

 

 

 

 

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

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

 

Loss per share attributable to equity holders of the Company

 

 

 

 

Basic and diluted

$(0.03)

$(0.11)

$(0.50)

$(0.73)

 

 

 

 

 

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

 

 

 

Assets

 

 

Current Assets

 

 

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

 

 

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

 

 

 

Liabilities and Deficiency

 

 

Current Liabilities

 

 

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

 

 

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

 

 

 

Deficiency

 

 

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
ended

For the year
ended

 

August 31,
2024

August 31,
2023

August 31,
2024

August 31,
2023

 

 

 

 

 

Cash Generated (Utilized) by:

 

 

 

 

Operating Activities

 

 

 

 

Net loss attributable to equity holders of the Company

(3,077)

(11,044)

(49,662)

(72,568)

Items not affecting cash:

 

 

 

 

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

 

 

 

 

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

 

 

 

 

Repayment of senior secured notes

-

(1,569)

(24,475)

(22,629)

Repayment of first lien senior secured notes

-

-

(699)

-

Restricted cash

-

(5,379)

6,968

(6,238)

Advances from senior secured asset-based revolving credit facility

-

6,800

8,500

25,300

Repayment of senior secured asset-based revolving credit facility

-

(27,300)

(14,500)

(27,300)

Advances from asset-based lending credit facility

4,997

-

13,788

-

Repayment of asset-based lending facility

-

-

(6,347)

-

Proceeds on issuance of unsecured promissory notes

-

27,300

-

27,300

Repayment of unsecured promissory notes

-

-

(4,696)

-

Issuance of first lien senior secured notes

-

-

20,158

-

Issuance of asset-based lending facility

-

-

15,393

-

Issuance of short-term promissory note

5,000

-

5,000

-

Debt issuance costs

111

-

(2,307)

-

Lease payments

(1,642)

(1,818)

(6,771)

(7,062)

Cash flows from (used in) financing activities

8,466

(1,966)

10,012

(10,629)

Net change in cash for the period

940

(3,636)

(3,737)

(5,870)

Cash at beginning of period

1,514

9,827

6,191

12,061

Cash at end of period

2,454

6,191

2,454

6,191

Supplemental disclosure of operating cash flows

 

 

 

 

Interest paid

834

1,357

3,541

9,860

 


Contacts

Media Contact
Communications
inquiries@postmedia.com

Investor Contact
John Bode
Executive Vice President, Chief Financial Officer and Chief Transformation Officer
investors@postmedia.com

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