Torstar Corporation reports first quarter results

TORONTO, May 9, 2018 /CNW/ - 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."

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
		Earnings (Loss) Per Share	Adjusted Earnings (Loss) Per Share**
Earnings (loss) per share from continuing operations attributable to equity shareholders in 2017		($0.30)	($0.22)
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)
Loss per share from continuing operations attributable to equity shareholders in 2017		($0.26)	($0.20)
Earnings per share from discontinued operations attributable to equity shareholders in 2018		$0.08
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
(in $000's)	Communities	Dailies	Digital Ventures	Corporate	Total Segmented*	Adjustments & Eliminations^1	Total Per Consolidated Statement of 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
(in $000's)	Communities	Dailies	Digital Ventures	Corporate	Total Segmented*	Adjustments & Eliminations^1	Total Per Consolidated Statement of 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".

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).  The impact on Adjusted EBITDA as a result of this shift was minimal.

Excluding the impact of the Postmedia transaction, and the shift in the publishing calendar, segmented revenue in the first quarter of 2018 reflected stable subscriber revenues, a decline of 15% in print advertising revenues and a 5% decrease in distribution revenues.

Excluding the impact of the Postmedia transaction, the sale of wagjag.com in October 2017 and the impact of Workopolis Inc. ("Workopolis"), whose assets were sold subsequent to the end of the first quarter of 2018, digital revenue in the first quarter of 2018 was up 10% relative to the first quarter of 2017 reflecting continued solid growth at VerticalScope, growth in local digital advertising within the community websites and growth at thestar.com. Digital revenues were 19% of total revenue in the first quarter of 2018 compared to 18% in the first quarter of 2017.

The following charts provide a breakdown of total segmented operating revenue:

Three months ended  March 31, 2018		Communities		Dailies		Digital Ventures		Total
		$	%	$	%	$	%	$	%
Print advertising		$22,811	38%	$30,299	43%			$53,110	36%
Digital advertising		6,146	10%	5,784	8%	$16,428	100%	28,358	19%
Distribution		21,535	36%	3,724	5%			25,259	17%
Subscriber		119	—%	29,154	41%			29,273	20%
Other		9,154	15%	2,254	3%			11,408	8%
Total		$59,765	100%	$71,215	100%	$16,428	100%	$147,408	100%
Three months ended  March 31, 2017		Communities		Dailies		Digital Ventures		Total
		$	%	$	%	$	%	$	%
Print advertising		$26,757	41%	$34,946	47%			$61,703	39%
Digital advertising		6,788	10%	5,873	8%	$15,815	100%	28,476	18%
Distribution		23,375	36%	4,404	6%			27,779	18%
Subscriber		188	—%	27,430	37%			27,618	18%
Other		8,650	13%	2,489	3%			11,139	7%
Total		$65,758	100%	$75,142	100%	$15,815	100%	$156,715	100%

Salaries and benefits
Segmented salaries and benefits costs were down $1.4 million (2%) in the first quarter of 2018 reflecting $1.8 million of lower costs associated with the Postmedia transaction as well as the benefit of savings from restructuring initiatives, including lower staffing costs associated with Toronto Star Touch, partially offset by $2.4 million of increased salary and benefit expenses as a result of the shift in the publishing calendar, the impact of higher minimum wage in Ontario, as well as increased salary and benefit costs in support of organic and acquisition related growth at VerticalScope.

Other operating costs
Segmented other operating costs primarily include newspaper circulation and flyer distribution costs, production costs and newsprint costs, which represented 41%, 14% and 11%, respectively, of segmented other operating costs for the first quarter of 2018. Segmented other operating costs were down $7.7 million or 9% in the first quarter, largely as a result of $4.6 million of lower costs associated with the sale of publications to Postmedia as well as lower print volumes and the impact of other cost reductions partially offset by increased costs associated with the shift in the publishing calendar.

Adjusted EBITDA
Our segmented adjusted EBITDA was $1.8 million in the first quarter of 2018, down $0.2 million from 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. The first quarter of 2018 included an incremental $2.1 million in segmented adjusted EBITDA resulting from synergies associated with the Postmedia transaction, as well as $5.4 million of savings related to restructuring initiatives offset by $1.4 million of costs related to our transformation activities.

Amortization and depreciation
Total segmented amortization and depreciation of $15.6 million in the first quarter of 2018 decreased $1.6 million relative to the comparable period in 2017.  The decrease in the first quarter of 2018 was primarily the result of lower amortization associated with our Daily Brands segment, partially offset by higher amortization associated with our investment in VerticalScope.

Operating earnings (loss)
Segmented operating loss was $14.5 million in the first quarter of 2018 compared to a segmented operating loss of $15.5 million in the first quarter of 2017. This improvement was primarily the result of lower amortization and depreciation expense.

Restructuring and other charges
Total segmented restructuring and other charges were $4.4 million in the first quarter of 2018 compared to $4.9 million in the first quarter of 2017.

Restructuring initiatives undertaken in the first quarter of 2018 are expected to result in annualized net savings of $5.3 million and have resulted in the reduction of approximately 100 positions with $4.9 million of the savings expected to be realized in 2018 (including $1.0 million in the first quarter).

Impairment of assets
During the first quarter of 2018, charges related to the impairment of assets were $nil.  During the first quarter of 2017, we incurred non-cash charges related to asset impairment of our joint venture investment in Workopolis totalling $3.0 million. This charge had no impact on cash flows and was the result of a further downward revision in longer term forecasted revenues reflecting further increased competition in the online recruitment and job search markets as well as general market conditions. As discussed above, Workopolis.com and related assets of workopolis were sold subsequent to the end of the first quarter of 2018.

Operating profit (loss)
Segmented operating loss was $18.9 million in the first quarter of 2018, reflecting an improvement of $4.5 million relative to the first quarter of 2017. Segmented operating loss for the first quarter of 2018 included $15.6 million of non-cash amortization and depreciation expense ($17.2 million - in the first quarter of 2017) and $4.4 million of restructuring and other charges ($4.9 million - in the first quarter of 2017).

Our operating loss excluding our proportionate share of operating profit (loss) from VerticalScope and our joint ventures improved $3.2 million in the first quarter of 2018 relative to the comparable periods in 2017.

Income (loss) from joint ventures
Our income from joint ventures was $0.4 million in the first quarter of 2018 compared to a loss of $2.8 million in the first quarter of 2017.  The results of our joint ventures are included in our discussions of segmented revenue and segmented adjusted EBITDA above. The loss from joint ventures in the first three months of 2017 included an impairment charge of $3.0 million related to our investment in Workopolis. On April 12, 2018, Workopolis.com and related assets of workopolis were sold.  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.

Loss from associated businesses
Our loss from associated businesses was $4.1 million in the first quarter of 2018 compared to a loss of $2.2 million in the first quarter of 2017.

The loss in the first quarter of 2018 included income of $0.4 million from Black Press offset by losses of $0.3 million from Blue Ant and $4.1 million from VerticalScope.  The loss from VerticalScope included $8.6 million of amortization and depreciation expense.  The loss in the first quarter of 2017 included income of $0.3 million from Blue Ant offset by losses of $0.5 million from Black Press and $2.0 million from VerticalScope which included $6.6 million of amortization and depreciation expense.

During the first quarter of 2018, VerticalScope generated U.S. $8.4 million in cash from operations and made acquisitions totalling U.S. $39.9 million.  VerticalScope's debt, net of cash, was up U.S. $32.1 million from U.S. $87.1 million at December 31, 2017 to U.S. $119.2 million at March 31, 2018.

Income and other taxes
We recorded tax recoveries of $nil in the first quarter of 2018 and $1.1 million in the first quarter of 2017.  Excluding the impact of deferred income tax assets not recognized, our effective tax rate was 19.7% in the first quarter of 2018 (March 31, 2017 - 18.8%).

Net loss from continuing operations
Our net loss was $20.9 million ($0.26 per share) in the first quarter of 2018.  This compares to a net loss of $24.4 million ($0.30 per share) in the first quarter of 2017. 

Income from discontinued operations
Income from discontinued operations of $6.3 million in the first quarter of 2018 resulted from an adjustment to the estimated income tax expense related to the sale of Harlequin in 2014 (2017 - $nil).

Net loss attributable to equity shareholders
Our net loss was $14.5 million ($0.18 per share) in the first quarter of 2018.  This compares to a net loss of $24.3 million ($0.30 per share) in the first quarter of 2017.

OUTLOOK
In the first quarter of 2018, the Community Brands and the Daily Brands segments continued to face a challenging print advertising market resulting from ongoing shifts in spending by advertisers. While these trends have continued early into the second quarter, it is difficult to predict if these trends will improve or worsen in the balance of the year.  Adjusting for the impact of the Postmedia transaction and the impact of timing, flyer distribution revenues declined 5% in the first quarter and we expect this trend to continue in the balance of the year.  Subscriber revenues were stable in the first quarter, however, we expect that these revenues will decrease marginally in the balance of 2018 as we increase focus on subscriber profitability. Overall digital revenue at the Community Brands and Daily Brands is expected to continue to grow in the balance of 2018 as it continues to benefit from growth at thestar.com and in local digital advertising at both the daily newspaper sites and the community sites partially offset by expected continued declines in other digital verticals.

We expect the transaction with Postmedia in November 2017 to continue to have a positive effect on earnings due to anticipated synergies, but a negative effect on revenue, as we experienced in the first quarter of 2018.  We continue to expect that synergies from this transaction will contribute to an improvement in operating earnings in the range of $5 million to $7 million for the full year ($2.1 million in the first quarter of 2018).

Within the Digital Ventures segment, revenue growth at VerticalScope experienced through the first quarter of 2018 is expected to improve slightly in the balance of the year. This will be partially offset by declines resulting from the sale of Workopolis.com and related assets on April 12, 2018.  Segmented revenue and adjusted EBITDA in respect of Workopolis was $7.4 million and $1.0 million, respectively in the second through fourth quarter of 2017. The revenue trends experienced at eyeReturn Marketing Inc. in the first quarter of 2018 are expected to continue through the balance of the year.

We anticipate that we will incur an estimated $11 - $13 million of incremental operating expenses related to our transformation efforts for the full year in 2018 ($1.4 million in the first quarter).  We expect these incremental costs will be offset by $14.7 million of full year savings related to restructuring initiatives undertaken through the first quarter of 2018 ($6.9 million in the Community Brands segment and $7.8 million in the Daily Brands segment). $5.4 million of this benefit was realized in the first quarter. We also expect to identify additional cost savings in the balance of the year.  We continue to anticipate that capital expenditures for the full year 2018 will be in the range of $15 million, including approximately $5 million of capital spending related to technology platforms in connection with our transformation activities.

We continue to make progress in exploring a potential merger of our defined benefit pension plans with the CAAT jointly-sponsored defined benefit pension plan.  There are various approvals required to complete such a merger. Subsequent to the end of the first quarter, we obtained the required Ontario government approval to allow a potential merger.  Additional approvals required include member consent, final Torstar and CAAT approval, and regulatory approval.  While it is possible that a merger could be in place effective in late 2018, there can be no certainty as to the outcome or timing of this process.

DIVIDEND
On May 8, 2018, Torstar declared a quarterly dividend of 2.5 cents per share on its Class A shares and Class B non-voting shares, payable on June 29, 2018, to shareholders of record at the close of business on June 8, 2018.  Torstar advises that, for the purposes of the Income Tax Act, Canada and for any relevant provincial tax legislation, this dividend is designated as an eligible dividend.

ADDITIONAL INFORMATION
For additional information, please refer to Torstar's condensed consolidated financial statements for the period ended March 31, 2018 (the "Condensed Consolidated Financial Statements") and the Interim Management's Discussion and Analysis ("MD&A").  Both documents will be filed today on SEDAR and are available on Torstar's corporate website www.torstar.com.

CONFERENCE CALL
Torstar has scheduled a conference call for May 9, 2018 at 8:15 a.m. to discuss its first quarter results.  The dial-in number is 888-231-8191.  A live broadcast of the conference call will be available over the internet on the Presentations, Events and Conference Calls page (Investor Relations) on Torstar's website www.torstar.com.  A recording of the conference call will be available for 9 days at 855-859-2056 reservation number 5095685.  An online archive of the broadcast will be available shortly after the completion of the call and will be accessible by visiting the Presentations, Events and Conference Calls (Investor Relations) page on Torstar's website www.torstar.com.

ANNUAL GENERAL MEETING
Torstar will be holding its Annual General Meeting at 10:00 a.m. on May 9, 2018 at 1 Yonge Street, 3^rd Floor Auditorium, Toronto, Ontario.  The Annual General Meeting will also be webcast live on the Presentations, Events and Conference Calls page (Investor Relations) at www.torstar.com with interactive capabilities. An online archive of the broadcast will be available shortly after the completion of the call and will be accessible by visiting the Presentations, Events and Conference Calls page (Investor Relations) on the www.torstar.com website.

About Torstar Corporation
Torstar Corporation is a broadly based media company listed on the Toronto Stock Exchange (TS.B). Its businesses include the Toronto Star, Canada's largest daily newspaper, six regional daily newspapers in Ontario including The Hamilton Spectator; the StarMetro newspapers in several Canadian cities; more than 80 community newspapers in Ontario; flyer distribution services; and digital properties including thestar.com, wheels.ca, save.ca, toronto.com, a number of regional online sites and eyeReturn Marketing. Torstar also holds a majority interest in VerticalScope, a North American vertically-focused digital media company.

Non-IFRS measures
In addition to operating profit (loss), an additional IFRS measure, as presented in the consolidated statement of income (loss), management uses segmented revenue, adjusted EBITDA (and where applicable segmented adjusted EBITDA), operating earnings (loss) (and where applicable segmented operating earnings (loss)), and adjusted earnings (loss) per share as measures to assess the consolidated performance and the performance of the reporting units and business segments.  Please refer to Section 12 of Torstar's MD&A for the three months ended March 31, 2018 for a reconciliation of adjusted EBITDA and operating earnings (loss) (and segmented adjusted EBITDA/segmented operating earnings (loss) – as applicable) with operating profit (loss) (segmented operating profit (loss) – as applicable) and adjusted earnings (loss) per share to earnings (loss) per share.

Segmented revenue
Segmented revenue is calculated in the same manner as operating revenue in the Condensed Consolidated Financial Statements, except that it is calculated using total segment results which includes our proportionately consolidated share of revenues from joint ventures and our 56% interest in VerticalScope.  Management of each segment is accountable for the revenues, including the proportionately consolidated share of revenues from joint venture operations. We believe that segmented revenue is a useful measure for investors as it is a measure of the revenues for which management of each segment is accountable.  The intent of segmented revenue is to provide additional useful information to investors, analysts and readers of our financial statements. The measure does not have any standardized meaning under IFRS and accordingly may not be comparable to measures used by other companies.

Adjusted EBITDA (Segmented Adjusted EBITDA)
Management believes that adjusted EBITDA is an important proxy for the amount of cash generated by our ongoing operations (or by a reporting unit or business segment) to generate liquidity to fund future capital needs and we use this metric for this purpose. Adjusted EBITDA is not the actual cash provided by operating activities and is not a recognized measure of financial performance under IFRS.  We calculate adjusted EBITDA as operating revenue, less salaries and benefits and other operating costs, as presented on the consolidated statement of income, and exclude restructuring and other charges, share based compensation and impairment of assets.  Share based compensation is eliminated as it is a non-cash expense that fluctuates significantly from period to period, in particular for VerticalScope as a result of industry compensation practices. Restructuring and other charges and impairment of assets are eliminated as these activities are not related to ongoing operations as of the end of the period.  The exclusion of impairment of assets also eliminates the non-cash impact. Adjusted EBITDA is also used by investors and analysts for valuation purposes. The intent of adjusted EBITDA is to provide additional useful information to investors, analysts and readers of our financial statements. The measure does not have any standardized meaning under IFRS and accordingly may not be comparable to measures used by other companies (including calculating EBITDA on an adjusted basis to exclude restructuring and other charges, share based compensation and impairment of assets). Segmented adjusted EBITDA is calculated in the same manner described above, except that it is calculated using total segment results including our proportionately consolidated results for joint ventures and our 56% interest in VerticalScope for which management is accountable.

Operating earnings (loss)/Segmented operating earnings (loss)
Operating earnings (loss) is used by management to represent the results of ongoing operations inclusive of amortization and depreciation. We use operating earnings (loss) as a measure of the amount of income generated by our ongoing operations (or by a reporting unit or business segment) after giving effect to amortization and depreciation.  We believe this metric is also useful for investors for this purpose.  We calculate operating earnings (loss) as operating revenue less salaries and benefits, other operating costs, share based compensation and amortization and depreciation.  Operating earnings (loss) excludes restructuring and other charges and impairment of assets. Restructuring and other charges and impairment of assets are eliminated as these activities are not related to ongoing operations as of the end of the period.  Our method of calculating operating earnings (including calculating operating earnings (loss) on an adjusted basis to exclude restructuring and other charges and impairment of assets) may differ from other companies and accordingly may not be comparable to measures used by other companies. The intent of operating earnings (loss) is to provide additional useful information to investors, analysts and readers of our financial statements. The measure does not have any standardized meaning under IFRS, is not a recognized measure of financial performance under IFRS, and accordingly may not be comparable to measures used by other companies.  Segmented operating earnings (loss) is calculated in the same manner described above, except that it is calculated using total segment results including proportionately consolidated operating earnings (loss) for our joint ventures and our 56% interest in VerticalScope for which management is accountable.

Adjusted earnings (loss) per share
Adjusted earnings (loss) per share is used by management to represent the per share earnings (loss) of results of our ongoing operations (or by a reporting unit or business segment) and is not a recognized measure of financial performance under IFRS. We believe this metric is also useful for investors for this purpose.  We calculate adjusted earnings (loss) per share as earnings (loss) per share from continuing operations less the per share effect of restructuring and other charges, impairment of assets, non-cash foreign exchange, other income (expense) and change in deferred taxes. Restructuring and other charges and impairment of assets are eliminated as these activities are not related to ongoing operations as of the end of the period.  Non-cash foreign exchange, other income (expense) and changes in deferred taxes are eliminated as these are not related to routine operating activities. The intent of presenting adjusted earnings (loss) per share is to provide additional useful information to investors, analysts and readers of our financial statements. Our method of calculating adjusted earnings (loss) per share may differ from other companies and accordingly may not be comparable to measures used by other companies. The measure does not have any standardized meaning under IFRS, is not a recognized measure of financial performance under IFRS, and accordingly may not be comparable to measures used by other companies.

Operating profit (loss)/Segmented operating profit (loss)
Operating profit (loss) is an additional IFRS measure. Management uses operating profit (loss) to measure the results of operations inclusive of impairments and restructuring and other charges. Operating profit (loss) appears in our consolidated statement of income (loss). We believe that operating profit (loss) provides additional useful information to investors, analysts and readers of our financial statements. The measure does not have any standardized meaning under IFRS and accordingly may not be comparable to measures used by other companies. Our method of calculating operating profit (loss) may differ from other companies and accordingly may not be comparable to measures used by other companies. Segmented operating profit  (loss) is calculated in the same manner described above, except that it is calculated using total segment results including proportionately consolidated results for our joint ventures and our 56% interest in VerticalScope for which management is accountable.

Forward-looking statements
Certain statements in this press release and in Torstar's oral and written public communications may constitute forward-looking statements that reflect management's expectations regarding Torstar's future growth, financial performance and business prospects and opportunities as of the date of this press release. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "anticipate", "believe", "plan", "forecast", "expect", "estimate", "assume", "predict", "intend", "would", "could", "if", "may" and similar expressions.

This press release includes, among others, forward-looking statements regarding Torstar's estimates and expectations  regarding the expected net proceeds from the recent Workopolis transaction, growth at VerticalScope, anticipated revenue trends, transformation of our core brands and related costs, expected savings including savings from restructuring initiatives and other cost reductions, estimates and expectations related to contingent liabilities and impairment of assets, and Torstar's outlook for the balance of 2018, including anticipated revenue trends within the Daily and Community Brands segments, the expected effects of the Postmedia transaction on Torstar's earnings and revenue, anticipated revenue trends within the Digital Ventures segment, operating expenses, capital expenditures and transformation efforts, and the potential merger of our defined benefit pension plans with the CAAT jointly sponsored defined benefit pension plan.  All such statements are made pursuant to the "safe harbour" provisions of applicable Canadian securities legislation. These statements reflect current expectations of management regarding future events and operating performance, and speak only as of the date of this press release. In addition, forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes.

By their very nature, forward-looking statements require management to make assumptions and are subject to inherent risks and uncertainties.  There is a significant risk that predictions, forecasts, conclusions or projections will not prove to be accurate, that management's assumptions may not be accurate and that actual results, performance or achievements may differ significantly from such predictions, forecasts, conclusions or projections expressed or implied by such forward-looking statements.  We caution readers not to place undue reliance on the forward-looking statements in this press release as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, outlooks, expectations, goals, estimates or intentions expressed in the forward-looking statements.

These factors include, but are not limited to: Torstar's ability to operate in highly competitive changing industries; Torstar's ability to compete with digital media,  other newspapers and other forms of media; Torstar's ability to respond to the shift to digital media and the shift by advertisers to other digital platforms; Torstar's ability to attract, grow and retain its digital audience and profitably develop its digital platforms; Torstar's ability to attract and retain advertisers and customers; Torstar's ability to build and maintain adequate circulation/subscription levels; Torstar's ability to attract and retain readers and traffic; Torstar's ability to integrate the technology associated with new digital platforms; general economic conditions and customer prospects in the principal markets in which Torstar operates; Torstar's ability to reduce costs; loss of reputation; dependence on third party suppliers and service providers; reliance on technology and information systems; cybersecurity and risks of security breaches; Torstar's ability to execute appropriate strategic growth initiatives including acquisitions; changes in employee future benefit obligations; unexpected costs or liabilities related to acquisitions and dispositions; investments in other businesses; reliance on printing operations; labour disruptions; newsprint costs; privacy, anti-spam, communications, competition, e-commerce, data use and environmental laws, health and safety regulations and other laws and regulations applicable generally to Torstar's businesses;  litigation; foreign exchange fluctuations and foreign operations; dependence on key personnel;  availability of insurance; intellectual property rights and other content risks; credit risk; availability of capital and restrictions imposed by credit facilities; income tax and other taxes; dividend policy; controls over financial reporting, results of impairment tests and uncertainties associated with critical accounting estimates; holding company structure; and control of Torstar by the Voting Trust.

Torstar cautions that the foregoing list is not exhaustive of all possible factors, as other factors could adversely affect our results.

In addition, a number of assumptions, including those assumptions specifically identified throughout this press release, were applied in making the forward-looking statements set forth in this press release.  Some of the key assumptions include, without limitation, assumptions regarding the performance of the North American economies; tax laws; continued availability of printing operations; availability of financing on appropriate terms; exchange rates; market conditions and competition; rates of return and discount rates relating to pension expense and pension plan obligations; discount rates and tends in health care costs relating to post employment benefits; expected future revenues; expected future liabilities; expected future cash flows and discount rates relating to valuation of intangible assets; and successful development and launch of strategic initiatives and new products. There is a risk that some or all of these assumptions may prove to be incorrect. There is no assurance regarding the amount and timing of future dividends. When relying on our forward-looking statements to make decisions with respect to Torstar and its securities, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Torstar does not intend, and disclaims any obligation, to update any forward-looking statements, whether written or oral, or whether as a result of new information or otherwise, except as may be required by law.

For more information, please see the discussion of risks affecting Torstar and its businesses in Torstar's 2017 Management's Discussion & Analysis, and the Management's Discussion & Analysis for the three months ended March 31, 2018, which have been filed on www.sedar.com and are available on Torstar's corporate website www.torstar.com.

Torstar's news releases are available on the Internet at www.torstar.com.

Torstar Corporation Consolidated Statement of Financial Position (Thousands of Canadian Dollars) (Unaudited)
		As at March 31, 2018	As at December 31, 2017
Assets
	Current:
	Cash and cash equivalents	$51,527	$71,377
	Restricted cash	7,692	9,056
	Receivables	91,220	112,946
	Inventories	4,096	4,326
	Derivative financial instrumens		57
	Prepaid expenses	5,801	4,373
	Prepaid and recoverable income taxes	1,000	1,000
	Total current assets	161,336	203,135
Investments in joint ventures		23,865	23,420
Investments in associated businesses		142,420	142,769
Property, plant and equipment		53,882	55,259
Intangible assets		37,900	40,217
Other assets		12,884	12,967
Deferred income tax assets		3,460	3,460
Total assets		$435,747	$481,227
Liabilities and Equity
	Current:
	Accounts payable and accrued liabilities	$53,073	$72,962
	Deferred revenue	14,619	16,170
	Derivative financial instruments	1,796
	Provisions	13,220	18,113
	Income tax payable	482	6,781
	Total current liabilities	83,190	114,026
Provisions		6,182	6,714
Other liabilities		6,654	6,599
Employee benefits		103,938	104,716
Deferred income tax liabilities		3,342	3,342
Equity:
	Share capital	403,080	403,040
	Contributed surplus	21,473	21,322
	Accumulated deficit	(189,744)	(176,180)
	Other components of equity	(2,165)	(2,207)
	Total equity attributable to equity shareholders	232,644	245,975
	Minority interests	(203)	(145)
Total equity		232,441	245,830
Total liabilities and equity		$435,747	$481,227

Torstar Corporation Consolidated Statement of Loss (Thousands of Canadian Dollars except per share amounts) (Unaudited)
				Three months ended  March 31
				2018	2017
Operating revenue				$128,972	$138,676
Salaries and benefits				(63,266)	(64,743)
Other operating costs				(70,932)	(78,490)
Amortization and depreciation				(6,680)	(10,065)
Restructuring and other charges				(4,004)	(4,483)
Operating loss				(15,910)	(19,105)
Interest and financing costs				(730)	(562)
Foreign exchange				(613)	(845)
Income (loss) from joint ventures				445	(2,816)
Loss from associated businesses				(4,052)	(2,195)
Other income					26
				(20,860)	(25,497)
Income and other taxes recovery (expense)					1,100
Net loss from continuing operations				(20,860)	(24,397)
Income from discontinued operations				6,300
Net loss				($14,560)	($24,397)
Attributable to:
	Equity shareholders			($14,502)	($24,278)
	Minority interests			($58)	($119)
Net income (loss) attributable to equity shareholders
per Class A (voting) and Class B (non-voting) share:
Basic and Diluted:
	From continuing operations			($0.26)	($0.30)
	From discontinued operations			$0.08
				($0.18)	($0.30)

Torstar Corporation Consolidated Statement of Cash Flows (Thousands of Canadian Dollars) (Unaudited)
		Three months ended  March 31
		2018	2017
Cash was provided by (used in)
	Operating activities	($14,520)	($11,674)
	Investing activities	(3,338)	(2,357)
	Financing activities	(1,992)	(1,962)
Decrease in cash		(19,850)	(15,993)
Cash, beginning of period		71,377	75,374
Cash, end of period		$51,527	$59,381
Operating activities:
	Net loss from continuing operations	($20,860)	($24,397)
	Amortization and depreciation	6,680	10,065
	Loss (income) from joint ventures	(445)	2,816
	Loss from associated businesses	4,052	2,195
	Dividend from associated businesses		194
	Non-cash employee benefit expense	3,668	3,966
	Employee benefits funding	(4,146)	(4,141)
	Other	426	(1,748)
		(10,625)	(11,050)
	Decrease in restricted cash	1,364	2,791
	Increase in non-cash working capital	(5,259)	(3,415)
Cash provided by (used in) operating activities		($14,520)	($11,674)
Investing activities:
	Additions to property, plant and equipment and intangible assets	($3,511)	($2,232)
	Acquisitions and portfolio investments		(125)
	Other	173
Cash provided by (used in) investing activities		($3,338)	($2,357)
Financing activities:
	Dividends paid	($1,981)	($1,986)
	Other	(11)	24
Cash used in financing activities		($1,992)	($1,962)
Cash represented by:
Attributed to continuing operations:
	Cash	$16,218	$14,344
	Cash equivalents – short-term deposits	35,309	45,037
	Net cash, end of period	$51,527	$59,381

SOURCE Torstar Corporation

L. DeMarchi, Executive Vice-President and Chief Financial Officer, Torstar Corporation, [phone]

Related Links

http://www.torstar.com