By: Press Release | Postmedia
Postmedia Network Canada Corp. ("Postmedia" or the "Company") today released financial information for the three and six months ended February 28, 2014.
Second Quarter Operating Results
Net loss in the quarter ended February 28, 2014 was $25.3 million compared to $15.8 million in the same period in the prior year. The increase in net loss was primarily a result of increased restructuring expenses of $3.6 million and depreciation expenses of $4.4 million as well as a decline in operating income before depreciation, amortization and restructuring, all as compared to the same period in the prior year.
Operating income before depreciation, amortization and restructuring of $22.1 million in the quarter represents a decrease of $2.9 million (11.7%), relative to the same period in the prior year. This decrease is the result of revenue declines of $16.3 million, partially offset by decreases in compensation, newsprint, distribution and other expenses totaling $13.4 million. Excluding non-cash compensation expense, related to option and other long-term incentive plans, operating income before depreciation, amortization and restructuring decreased $2.4 million (9.5%).
Operating loss in the quarter was $4.1 million as compared to operating income of $5.7 million in the same period in the prior year. The decrease was primarily as a result of increased depreciation and restructuring expenses and a decline in operating income before depreciation, amortization and restructuring, all as described above.
Revenue for the quarter was $162.5 million, a decrease of $16.3 million (9.1%) relative to the same period in the prior year. This decrease was primarily due to a decline in print advertising revenue of $15.5 million (14.7%) with the declines occurring across most categories. Print circulation revenue decreased $0.3 million (0.7%) and digital revenue decreased $0.2 million (0.7%) relative to the same period in the prior year.
Total operating expenses excluding depreciation, amortization and restructuring decreased $13.4 million (8.7%) in the quarter, relative to the same period in the prior year. Expense reductions occurred in all operating expense categories, including compensation, newsprint, distribution and other operating expenses. Excluding non-cash compensation expense, operating expenses excluding depreciation, amortization and restructuring decreased $13.9 million (9.1%).
Year-to-Date Operating Results Net loss in the six months ended February 28, 2014 was $37.1 million compared to $9.1 million in the same period in the prior year. The increase in net loss was largely due to an increase in restructuring expenses of $18.9 million, primarily associated with print production outsourcing, an increase in depreciation expense of $10.8 million and a decline in operating income before depreciation, amortization and restructuring, partially offset by a gain on derivative financial instruments, all as compared to the same period in the prior year.
Operating income before depreciation, amortization and restructuring for the six months ended February 28, 2014 was $68.1 million, a decrease of $5.9 million (8.0%) relative to the prior year. This decrease is the result of revenue declines of $34.0 million, partially offset by decreases in compensation, newsprint, distribution and other expenses totaling $28.1 million. Excluding non-cash compensation expense, related to option and other long-term incentive plans, operating income before depreciation, amortization and restructuring decreased $6.1 million (8.1%).
Operating loss for the six months ended February 28, 2014 was $1.8 million as compared to operating income of $32.2 million in the same period in the prior year. This decrease was primarily as a result of increased depreciation and restructuring expenses as well as a decline in operating income before depreciation, amortization and restructuring, all as described above.
Revenue for the six months ended February 28, 2014 was $356.5 million, a decrease of $34.0 million (8.7%) relative to the same period in the prior year. This decrease was primarily due to a decline in print advertising revenue of $31.6 million (13.3%) with the declines occurring across most categories. Print circulation revenue was flat and digital revenue decreased $1.4 million (3.1%) relative to the same period in the prior year.
Total operating expenses excluding depreciation, amortization and restructuring decreased $28.1 million (8.9%) in the six months ended February 28, 2014, relative to the same period in the prior year. Expense reductions occurred in all operating expense categories including compensation, newsprint, distribution and other operating expenses. Excluding non-cash compensation expense, operating expenses excluding depreciation, amortization and restructuring decreased $27.9 million (8.9%).
Business Transformation Initiatives
As announced in July 2012, the Company is implementing a three-year transformation program that is targeted to result in operating cost savings of 15%-20%. During the three months ended February 28, 2014 the Company implemented transformation initiatives which will result in net annualized savings of approximately $11 million. This brings total net annualized cost savings, since the beginning of the program, to approximately $98 million.
Management Commentary
"We continue to face significant print advertising revenue pressure, however we are pleased with the rapid progress we are making in the transformation of our cost structure," said CEO Paul Godfrey. "We are also encouraged with the progress we are making on subscriber revenue and continue to pursue real estate sales as a means of accelerating debt repayment. These priorities are key elements of repositioning the Company for the digital media environment of the future."
Note: All dollar amounts are expressed in Canadian dollars unless otherwise specified.
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, on SEDAR at www.sedar.com or on the website maintained by the U.S. Securities and Exchange Commission (the "SEC") at
www.sec.gov. About Postmedia Network Canada Corp.
Postmedia Network Canada Corp. (TSX:PNC.A, PNC.B) is the holding company that owns Postmedia Network Inc., the largest publisher by circulation of paid English-language daily newspapers in Canada, representing some of the country’s oldest and best known media brands. Reaching millions of Canadians every week, Postmedia engages readers and offers advertisers and marketers integrated solutions to effectively reach target audiences through a variety of print, online, digital, and mobile platforms.
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