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2018 Q1 FS Press Release

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2018 Q1 FS Press Release PRESS RELEASE TORSTAR CORPORATION REPORTS FIRST QUARTER RESULTS TORONTO, ONTARIO – (Marketwired – May 9, 2018) – Torstar Corporation (TSX:TS.B) today reported financial results for the first quarter ended March 31, 2018. Highlights for the first quarter: • On April 12, 2018, Workopolis.com and Workopolis' related assets were sold to Recruit Holdings Co., Ltd. Following the sale and subsequent wind up of the remaining Workopolis business, we estimate the net proceeds will be in the range of $2 million to $4 million. • As part of our transformation plan, on April 10, 2018, we launched a major national expansion with a reinvention of our Metro urban commuter newspapers and more robust digital offerings on thestar.com in Vancouver, Calgary, Edmonton, Toronto, Halifax and nationally. This expansion leverages the Star brand and its history and unique position of local and investigative reporting. • Ended the first quarter of 2018 with $51.5 million of cash and cash equivalents and $7.7 million of restricted cash; Torstar has no bank indebtedness. • Our net loss attributable to equity shareholders was $14.5 million ($0.18 per share) in the first quarter of 2018 an improvement relative to a net loss of $24.3 million ($0.30 per share) in the first quarter of 2017. • Our net loss from continuing operations in the first quarter of 2018 was $20.9 million ($0.26 per share) compared to a net loss of $24.4 million ($0.30 per share) in the first quarter of 2017. • Adjusted loss per share was $0.20 in the first quarter of 2018, an improvement of $0.02 per share relative to the first quarter of 2017. • Our segmented operating loss was $18.9 million in the first quarter of 2018 which included $15.6 million of non-cash amortization and depreciation expense as well as $4.4 million of restructuring and other charges. • Our segmented adjusted EBITDA was $1.8 million in the first quarter of 2018, down $0.2 million from the first quarter of the prior year. Segmented adjusted EBITDA in the Daily Brands segment was a loss of $1.5 million in the first quarter of 2018, an improvement of $0.5 million relative to the first quarter of 2017. Segmented adjusted EBITDA in the Community Brands segment was $0.6 million, down $0.3 million relative to the comparable period in 2017 while segmented adjusted EBITDA in the Digital Ventures segment was $5.4 million, an increase of $0.3 million relative to the first quarter of 2017. • Segmented revenue was $147.4 million in the first quarter of 2018, down $9.3 million (6%) from $156.7 million in the first quarter of 2017 and included revenue growth of $1.4 million or 14% (19% growth in USD) from VerticalScope. "Earnings in the quarter were solid and in line with our expectations. We were particularly pleased with subscriber revenue which is a large and more resilient part of our business. Segmented adjusted EBITDA of $1.8 million was down just $0.2 million as we benefitted from synergies associated with the purchase and sale of a number of daily and community papers in late 2017, as well as continued efforts on costs which almost entirely offset continued pressure on print advertising revenues. Earnings in the quarter included $5.4 million from VerticalScope.” said John Boynton, President and CEO of Torstar. "Looking forward, we expect continued growth at VerticalScope and continued efforts on costs which we anticipate will help to offset pressures on print advertising revenues in the newspaper operations and new costs associated with our transformation. Transformation of our core brands remains our top priority and I am encouraged by the progress we are making." -1- The following chart provides a continuity of earnings per share from the first quarter of 2017 to the first quarter of 2018: Three months ended March 31 Adjusted Earnings (Loss) Earnings (Loss) Per Share Per Share** Earnings (loss) per share from continuing operations attributable to equity shareholders ($0.30) ($0.22) in 2017 Changes • Adjusted EBITDA* — — • Amortization and depreciation* 0.02 0.02 • Operating earnings (loss)* (0.28) (0.20) • Impairment of assets* 0.04 • Operating profit (loss)* (0.24) (0.20) • Change in current and future taxes (including associated businesses) (0.02) ($0.26) ($0.20) Loss per share from continuing operations attributable to equity shareholders in 2017 Earnings per share from discontinued operations attributable to equity shareholders in $0.08 2018 Loss per share attributable to equity shareholders in 2018 ($0.18) ($0.20) *Includes proportionately consolidated share of joint venture and VerticalScope's operations. These include Non-IFRS or additional IFRS measures. ** Refer to discussion of "Non-IFRS measures" including definition of adjusted earnings (loss) per share. OPERATING RESULTS –FIRST QUARTER 2018 The following tables sets out, in $000’s, the segmented results for the three months ended March 31, 2018 and 2017 Three months ended March 31, 2018 Total Per Adjustments Consolidated Digital Total & Statement of (in $000’s) Communities Dailies Ventures Corporate Segmented* Eliminations1 Income (Loss) Operating revenue $59,765 $71,215 $16,428 $147,408 ($18,436) $128,972 Salaries and benefits (31,422) (29,944) (6,078) ($1,812) (69,256) 5,990 (63,266) Other operating costs (27,768) (42,737) (4,995) (855) (76,355) 5,423 (70,932) Adjusted EBITDA** 575 (1,466) 5,355 (2,667) 1,797 (7,023) (5,226) Amortization & depreciation (3,002) (3,107) (9,529) (15,638) 8,958 (6,680) Share based compensation (92) (57) (181) (349) (679) 679 Operating earnings (loss)** (2,519) (4,630) (4,355) (3,016) (14,520) 2,614 (11,906) Restructuring and other charges (1,553) (2,595) (261) (4,409) 405 (4,004) Operating profit (loss)** ($4,072) ($7,225) ($4,616) ($3,016) ($18,929) $3,019 ($15,910) Net loss ($14,560) Three months ended March 31, 2017 Total Per Adjustments Consolidated Digital Total & Statement of (in $000’s) Communities Dailies Ventures Corporate Segmented* Eliminations1 Income (Loss) Operating revenue $65,758 $75,142 $15,815 $156,715 ($18,039) $138,676 Salaries and benefits (33,771) (29,817) (5,577) ($1,485) (70,650) 5,907 (64,743) Other operating costs (31,108) (47,277) (5,141) (540) (84,066) 5,576 (78,490) Adjusted EBITDA** 879 (1,952) 5,097 (2,025) 1,999 (6,556) (4,557) Amortization & depreciation (3,383) (6,174) (7,613) (17,170) 7,105 (10,065) Share based compensation (130) (103) (120) 25 (328) 328 Operating earnings (loss)** (2,634) (8,229) (2,636) (2,000) (15,499) 877 (14,622) Restructuring and other charges (2,674) (2,064) (141) (4,879) 396 (4,483) Impairment of assets (3,000) (3,000) 3,000 Operating profit (loss)** ($5,308) ($10,293) ($5,777) ($2,000) ($23,378) $4,273 ($19,105) Net income ($24,397) 1Reflects adjustments and eliminations of proportionately consolidated results of, and transactions with joint ventures and VerticalScope Holdings Inc. ("VerticalScope"). * Includes proportionately consolidated share of joint venture operations and VerticalScope . ** These are non-IFRS or additional IFRS measures, see “Non-IFRS measures”. -2- Revenue Segmented revenue was down $9.3 million or 6% in the first quarter of 2018 and included revenue growth of $1.4 million (14%) from VerticalScope (19% in USD). Segmented revenue in the first quarter of 2018 reflected an increase of 6% in subscriber revenues offset by declines of 14% in print advertising revenues, with particular softness in national advertising revenues within the Daily Brands segment, and a 9% decrease in distribution revenues. Operating revenue (excluding our proportionate share of revenues from our joint ventures and our 56% interest in VerticalScope) was down $9.7 million or 7% in the first quarter of 2018. In November 2017, we completed a transaction with Postmedia Network Inc. (“Postmedia”), in which we purchased and sold a number of daily and community newspapers. As part of the transaction, we acquired eight weekly community publications, seven daily community newspapers and two free daily newspapers from Postmedia. In addition, we sold 22 weekly community newspapers in eastern and southern Ontario and the Metro Winnipeg and Metro Ottawa free daily publications to Postmedia. Readers and advertisers of certain publications we acquired and subsequently closed are now being serviced by one or more of our other Community properties while we continue to operate four daily newspapers acquired from Postmedia now included in our Daily Brands segment. Refer to Section 13 of our MD&A for the three months ended March 31, 2018 as well as Section 16 of our annual MD&A for further discussion. As a result of publications sold and acquired, revenues in the Community Brands segment were estimated to be $5.0 million lower in the first quarter of 2018, while revenues in the Daily Brands segment increased by $2.4 million in the first quarter. In addition, as a result of a variation in the publishing calendar in the first quarter of 2018 relative to the first quarter last year, the first quarter of 2018 benefited from additional publishing days in both the Daily Brands and Community Brands segments. This was partially offset by the impact of Easter, which is typically a slower advertising week for the Community Brands segment, occurring in the first quarter in 2018 compared to the second quarter in 2017. This variance in the publishing calendar will reverse in the fourth quarter of 2018. The impact of these shifts in the calendar resulted in incremental net revenue of $3.4 million in the first quarter of 2018 (Community Brands - $2.6 million, Daily Brands - $0.8 million).
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