TORONTO--(BUSINESS WIRE)--

Postmedia Network Canada Corp. (“Postmedia” or the “Company”) today released financial information for the three and six months ended February 28, 2018.

Second Quarter Operating Results

Revenue for the quarter was $157.6 million as compared to $176.7 million in the same period in the prior year, a decrease of $19.1 million or 10.8%. The revenue decline was primarily due to decreases in print advertising revenue of $16.3 million or 18.8% and decreases in print circulation revenue of $4.6 million or 7.9%. Digital revenue increased by $2.4 million or 10.1% in the quarter with digital advertising revenue up 12.0%.

Total operating expenses excluding depreciation, amortization, impairment and restructuring decreased $36.2 million or 21.0% for the quarter, relative to the same period in the prior year. The decrease was as a result of cost reduction initiatives as well as a compensation expense recovery totaling $17.0 million related to the Company’s Ontario Interactive Digital Media Tax Credit (“OIDMTC”) claim. Excluding the recovery related to the OIDMTC claim, total operating expenses excluding depreciation, amortization, impairment and restructuring decreased $19.2 million or 11.1% for the quarter, relative to the same period in the prior year.

Operating income before depreciation, amortization, impairment and restructuring of $21.1 million in the quarter represents an increase of $17.1 million relative to the same period in the prior year. The increase is due to operating expense decreases partially offset by a decrease in total revenues.

Net loss in the quarter ended February 28, 2018 was $1.3 million, as compared to $28.5 million in the same period in the prior year. The change was primarily the result of the increase in operating income before depreciation, amortization, impairment and restructuring as well as a decrease in restructuring expense.

Year-to-Date Operating Results

Revenue for the six months ended February 28, 2018 was $346.6 million as compared to $387.4 million in the same period in the prior year, a decrease of $40.9 million or 10.5%. The revenue decline was primarily due to decreases in print advertising revenue of $36.1 million or 18.3% and decreases in print circulation revenue of $8.4 million or 7.0%. Digital revenue increased by $6.4 million or 12.5% year to date with digital advertising revenue up 14.9%.

Total operating expenses excluding depreciation, amortization, impairment and restructuring decreased $62.2 million or 17.1% for the six months ended February 28, 2018, relative to the same period in the prior year. The decrease was as a result of cost reduction initiatives as well the compensation expense recovery related to the Company’s OIDMTC claim. Excluding the recovery related to the OIDMTC claim, total operating expenses excluding depreciation, amortization, impairment and restructuring decreased $45.2 million or 12.4% for six months ended February 28, 2018, relative to the same period in the prior year.

Operating income before depreciation, amortization, impairment and restructuring of $45.0 million in the six months ended February 28, 2018 represents an increase of $21.3 million relative to the same period in the prior year. The increase is due to operating expense decreases partially offset by a decrease in total revenues.

Net earnings in the six months ended February 28, 2018 was $4.5 million, as compared to a net loss of $8.7 million in the same period in the prior year. The change was primarily the result of a gain on debt settlement and impairment expense in the six months ended February 28, 2017 as well as a decrease in restructuring expense.

Business Transformation Initiatives

During the three months ended February 28, 2018, the Company implemented initiatives which are expected to result in approximately $5 million of net annualized cost savings.

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

Management Commentary

“We are executing on a strategy that continues to deliver results including continued positive signs from our digital advertising initiatives,” said Paul Godfrey, Executive Chairman and Chief Executive Officer. “In addition there has been a slowing of our legacy revenue declines along with continued rigor around cost reduction initiatives.”

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 160 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, 2017 and 2016. 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.

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