Torstar Corporation Reports First Quarter Results

News provided by

Torstar Corporation

May 08, 2019, 06:30 ET

TORONTO, May 8, 2019 /CNW/ - Torstar Corporation (TSX:TS.B) today reported financial results for the first quarter ended March 31, 2019.

Highlights for the first quarter:

  • We continue to make progress on the transformation of our business. During the first quarter of 2019, we entered into an agreement with Apple to provide Toronto Star content on Apple News+, Apple's new paid subscription service that launched in Canada and the United States on March 25, 2019. Under this agreement, we receive a share of Apple News+ subscriber revenue and can also sell advertising against our content on the Apple News+ platform.

  • We continued to make good progress in paid digital subscription offerings on thestar.com and finished the quarter with more than 15,000 digital only subscribers.

  • We continued to grow our base of registered users in the community sites and continue to evaluate potential subscription models in three test markets in the Community Brands segment, and have fully rolled out paid subscriptions in one of these test markets.

  • We ended the first quarter of 2019 with $51.5 million of cash and cash equivalents and $8.9 million of restricted cash; Torstar has no bank indebtedness.

  • Our net loss attributable to equity shareholders was $7.4 million ($0.09 per share) in the first quarter of 2019. This compares to a net loss of $14.5 million ($0.18 per share) in the first quarter of 2018.

  • Adjusted loss per share was $0.06 in the first quarter of 2019. This compares to an adjusted loss per share of $0.20 in the first quarter of 2018.

  • Our segmented adjusted EBITDA was $12.1 million in the first quarter of 2019, up $10.3 million from the first quarter of 2018 and included the benefit of $18.0 million of digital media tax credits and the absence of $1.3 million of lease expense related to the accounting change for leases effective January 1, 2019. Excluding these two factors, segmented adjusted EBITDA loss in the Daily Brands segment was $6.2 million in the first quarter, compared to an adjusted EBITDA loss of $1.5 million in the first quarter of 2018 and segmented adjusted EBITDA loss in the Community Brands segment was $2.4 million, compared to adjusted EBITDA of $0.6 million in the first quarter of 2018. Segmented adjusted EBITDA in the Digital Ventures segment was $4.1 million in the first quarter, down $1.3 million relative to the first quarter of 2018, $0.4 million of which was related to the Workopolis sale in April 2018.

  • Segmented revenue was $131.2 million, down $16.2 million or 11% in the first quarter of 2019.

"We continued to make good progress on our journey towards a digital future that combines the power of data with our deep roots in journalism to develop new and growing digital subscription and advertising revenue streams. We ended the quarter with over 15,000 digital only subscribers to thestar.com, which was in line with our expectations. We also announced an agreement with Apple which has the potential to allow us to generate revenue from a broader national audience.  Results in the quarter however continued to reflect ongoing challenges in the print advertising market." said John Boynton, President and CEO of Torstar. "Segmented adjusted EBITDA, excluding the benefit of digital media tax credits, was down $7.7 million as print advertising revenue trends worsened slightly in the quarter compared to our experience in recent quarters. At the same time, we remain pleased with the performance of our subscriber revenue and flyer distribution revenue which represent a significant portion of our revenue base, and remain relatively resilient. These categories are a source of strength for us as we focus our efforts on growing new digital revenue streams while managing declines in print advertising. We continue to manage costs carefully and remain focused on identifying ways to operate more efficiently across our operations to help pay for investments in new capabilities critical to our future.  We ended the quarter with $52 million in cash, unchanged from a year ago."

The following chart provides a continuity of earnings per share from the first quarter of 2018 to the first quarter of 2019:

Three months ended March 31

Earnings (Loss) Per Share

Adjusted Earnings (Loss)
Per Share**

Loss per share from continuing operations attributable to
equity shareholders in 2018

($0.26)

($0.20)

Changes

•    Adjusted EBITDA*

0.13

0.13

•    Amortization and depreciation*

(0.01)

(0.01)

Operating earnings (loss)*

(0.14)

(0.08)

•    Restructuring and other charges*

0.01

Operating loss*

(0.13)

(0.08)

•    Interest and financing costs

0.01

0.01

•    Non-cash foreign exchange

0.02

•    Loss from associated businesses (excluding VerticalScope)

(0.01)

(0.01)

•    Other

0.02

0.02

Loss per share attributable to equity shareholders in 2019

($0.09)

($0.06)

*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 2019

The following tables set out, in $000's, the segmented results for the three months ended March 31, 2019 and 2018:

Three months ended March 31, 2019

(in $000's)

Communities

Dailies

Digital
Ventures

Corporate

Total
Segmented*

Adjustments

&

Eliminations1

Total Per
Consolidated
Statement
Loss

Operating revenue

$54,144

$64,262

$12,771

$131,177

($15,195)

$115,982

Salaries and benefits2

(18,569)

(20,484)

(4,854)

($1,671)

(45,578)

5,038

(40,540)

Other operating costs

(25,965)

(42,818)

(3,773)

(926)

(73,482)

4,708

(68,774)

Adjusted EBITDA**

9,610

960

4,144

(2,597)

12,117

(5,449)

6,668

Amortization & depreciation

(3,935)

(2,448)

(10,218)

(2)

(16,603)

9,630

(6,973)

Share based compensation

(79)

(23)

(319)

(313)

(734)

734

Operating earnings (loss)**

5,596

(1,511)

(6,393)

(2,912)

(5,220)

4,915

(305)

Restructuring and other charges

(1,839)

(1,436)

(63)

(3,338)

4

(3,334)

Operating profit (loss)**

$3,757

($2,947)

($6,456)

($2,912)

($8,558)

$4,919

($3,639)

Net loss





($7,746)

Three months ended March 31, 2018

(in $000's)

Communities

Dailies

Digital
Ventures

Corporate

Total
Segmented*

Adjustments
&
Eliminations1

Total Per
Consolidated
Statement of
Loss

Operating revenue

$59,765

$71,215

$16,428

$147,408

($18,436)

$128,972

Salaries and benefits3

(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 loss**

($4,072)

($7,225)

($4,616)

($3,016)

($18,929)

$3,019

($15,910)

Loss from continuing operations





($20,860)

Income from discontinued operations





$6,300

Net loss





($14,560)

1Reflects adjustments and eliminations of proportionately consolidated results of, and transactions with joint ventures and VerticalScope Holdings Inc. ("VerticalScope").

2 Salaries and benefits for the first quarter of 2019 included the recovery of $18.0 million of Digital Media Tax Credits ($11.2 million in the Communities  segment and $6.8 million in the Dailies segment)

3Salaries and benefits for the first quarter of 2018 included the recovery of $0.3 million of Digital Media Tax Credits in the Dailies segment.

* 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 $131.2 million, down $16.2 million or 11% in the first quarter of 2019.  During the first quarter of 2019, subscriber revenues increased 1%, flyer distribution revenues decreased 6% and print advertising revenues decreased 21% respectively from the prior year.

Digital advertising revenues in the first quarter were down 14% compared to the prior year reflecting the absence of $2.2 million of revenue from Workopolis following the sale in April 2018 as well as lower revenues at VerticalScope and eyeReturn.  Revenues at VerticalScope continued to be impacted by reductions in search related traffic volumes. Digital revenues were 19% of total revenue in the first quarter of both 2019 and 2018.

Operating revenue (excluding our proportionate share of revenues from our joint ventures and our 56% interest in VerticalScope) was down $13.0 million or 10% in the first quarter of 2019 as compared to 2018.

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




Three months ended
March 31, 2019

Communities

Dailies

Digital Ventures

Total

$

%

$

%

$

%

$

%

Print advertising

$18,984

35%

$22,176

35%


$41,160

31%

Digital advertising

5,907

11%

5,716

9%

$12,771

100%

24,394

19%

Flyer distribution

19,713

36%

4,721

7%


24,434

19%

Print and digital subscriber

103

29,510

46%


29,613

23%

Other

9,437

18%

2,139

3%


11,576

8%

Total

$54,144

100%

$64,262

100%

$12,771

100%

$131,177

100%






Three months ended
March 31, 2018

Communities

Dailies

Digital Ventures

Total

$

%

$

%

$

%

$

%

Print advertising

$22,811

38%

$29,155

41%


$51,966

35%

Digital advertising

6,145

10%

5,784

8%

$16,428

100%

28,357

19%

Flyer distribution

21,535

36%

4,568

6%


26,103

18%

Print and digital subscriber

119

29,356

41%


29,475

20%

Other

9,155

16%

2,352

4%


11,507

8%

Total

$59,765

100%

$71,215

100%

$16,428

100%

$147,408

100%

Adjusted EBITDA
Our segmented adjusted EBITDA was $12.1 million in the first quarter of 2019, up $10.3 million from the first quarter of 2018 and included the benefit of $18.0 million of digital media tax credits and the absence of $1.3 million of lease expense related to the accounting change for leases effective January 1, 2019. Excluding these two factors, segmented adjusted EBITDA loss in the Daily Brands segment was $6.2 million in the first quarter  of 2019, compared to an adjusted EBITDA loss of $1.5 million in the first quarter of 2018 and segmented adjusted EBITDA loss in the Community Brands segment was $2.4 million in the first quarter of 2019, compared to adjusted EBITDA of $0.6 million in the first quarter of 2018.  Segmented adjusted EBITDA in the Digital Ventures segment was $4.1 million in the first quarter of 2019, down $1.3 million relative to the first quarter of 2018, $0.4 million of which was related to the Workopolis sale in April 2018.

Loss from associated businesses
Our loss from associated businesses was $5.7 million in the first quarter of 2019, compared to a loss of $4.1 million in the first quarter of 2018.

The loss in the first quarter of 2019 included a loss of $5.1 million from VerticalScope (including $9.5 million of non-cash amortization and depreciation expense), $0.2 million from Black Press, $0.2 million from Nest Wealth and $0.1 million from Blue Ant. The loss in the first quarter of 2018 included income of $0.4 million from Black Press offset by a loss of $4.1 million from VerticalScope (including $8.6 million of amortization and depreciation expense), and $0.3 million from Blue Ant.

During the first quarter of 2019, VerticalScope generated U.S. $5.6 million in cash from operations. VerticalScope's debt, net of cash, decreased U.S. $4.4 million to U.S. $114.0 million at March 31, 2019 from U.S. $118.4 million at December 31, 2018.

OUTLOOK
The Community Brands and the Daily Brands continued to face a challenging print advertising market in the first quarter of 2019 resulting from ongoing shifts in spending by advertisers. Similar trends have continued early into the second quarter and it is difficult to predict if these trends will improve or worsen in the balance of the year. Flyer distribution revenues declined 6% through the end of the first quarter and we expect this trend to continue in the balance of the year.

We experienced growth in subscriber revenues of 1% through the end of the first quarter, benefiting from new digital subscribers, and relative stability in underlying print subscription revenues.  While we expect digital subscription revenue to continue to grow in the balance of 2019, we expect the trend in print subscription revenue will deteriorate modestly in the balance of the year with total subscription revenue expected to be relatively flat on a year over year basis.

Digital advertising revenues at the Community Brands and Daily Brands declined 3% in the first quarter but we expect this trend will improve in the balance of 2019 returning to modest growth on a full year basis. Digital revenue is expected to benefit  from growth in local digital advertising at the community news sites and in digital revenue growth at the Star partially offset by expected continued declines in other digital verticals.

We expect the cost base in 2019 to benefit from $13.5 million of full year savings related to restructuring initiatives undertaken through the end of the first quarter of 2019 ($8.3 million in the Community Brands segment and $5.2 million in the Daily Brands segment), with $4.4 million of this benefit realized in the first quarter of 2019. We also expect to identify and benefit from additional cost savings in the balance of the year.

The new IFRS 16 standard adopted on lease accounting will have a positive impact on adjusted EBITDA in respect of rent expense offset by increased depreciation expense and interest expense. The estimated full year impact on segmented adjusted EBITDA for the removal of the rent expense is approximately $5.3 million (Dailies Segment approximately $1.5 million, Communities segment approximately $3.2 million and Digital Ventures segment approximately $0.6 million). This change will have no impact on cash flow year over year.

At VerticalScope we expect organic revenue declines will begin to moderate towards the end of the year as we lap various search algorithm changes introduced during 2018. In addition, the migration of forum sites on to a new technology platform beginning in the second half of 2019 is expected to improve user experience, however, revenues may be negatively impacted during a transition period. EBITDA margins and free cash flow generation are expected to remain strong with savings related to integration of prior year acquisitions likely offset by incremental costs associated with the new platform.

From a cash flow perspective, capital expenditures for 2019 are expected to be in the range of $15 - $16 million, including approximately $8 million of capital spending related to technology platforms in connection with our transformation activities. In addition, at March 31, 2019 we had net receivables related to digital media tax credits totaling $39.6 million. The amount and timing of any cash realized from the majority of these receivables is dependent upon the final review and approval by the Canada Revenue Agency, approximately half of which is expected to be completed towards the end of 2019.

On September 27, 2018, we received approval from the members of our eight registered defined benefit pension plans (the "Torstar Plans") to proceed with the merger of the Torstar Plans with the CAAT Pension Plan (the "CAAT Plan") effective October 1, 2018, with Torstar and certain of its subsidiaries becoming participating employers under the CAAT Plan. The merger remains subject to the consent of the Superintendent of Financial Services (Ontario), which is not expected to occur prior to the second half of 2019.

As at January 1, 2019, the majority of Torstar employees were enrolled as members of the CAAT Plan, including those previously enrolled in defined contribution type benefit plans. Pension expense and contributions related to the CAAT plan are based on a fixed percentage of earnings with the expense expected to be approximately $4 million lower in 2019 than our combined 2018 expense for our registered defined benefit plans and defined contribution type plans ($1.1 million in the first quarter of 2019). In 2019, we expect contributions to the CAAT plan to be equivalent to the related expense.

In the 2019 federal budget, the Federal Government included a new 25% refundable tax credit on salary or wages paid to eligible newsroom employees of qualifying news organizations starting in 2019. We continue to assess the benefit we may receive from this program, however at this stage there can be no certainty that we will qualify for the tax credit under this program.

DIVIDEND
On May 7, 2019, 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 28, 2019, to shareholders of record at the close of business on June 7, 2019. 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, 2019 (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 8, 2019 at 8:15 a.m. to discuss its first quarter results. The dial-in number is 647-427-7450 or 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 9030519. 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 8, 2019 at 1 Yonge Street, 3rd 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; English-language StarMetro newspapers in several Canadian cities; more than 80 weekly 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 11 of Torstar's MD&A for the three months ended March 31, 2019 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 (loss), 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", "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 our transformation efforts including our efforts to obtain and grow digital subscription and advertising revenue, add value to our audiences and collect and use data, expectations related to trends in print advertising, subscriber and flyer distribution revenue, expectations regarding our ability to manage costs and identify efficiencies to offset key future investments, expected savings including savings from restructuring initiatives and other cost reductions, and Torstar's outlook for the balance of 2019, including anticipated revenue trends within the Daily and Community Brands segments, anticipated effects of adopting the new IFRS 16 standard on lease accounting and its impact on adjusted EBITDA and cash flow, anticipated revenue trends, technological advancements and EBITDA margins at VerticalScope, expected capital expenditures and expectations related to our transformation efforts and costs, the anticipated timing and amount of digital media tax credits, expectations related to the merger of our defined benefit pension plans with the CAAT Plan (including the expected benefits of the transaction, the anticipated obtaining and timing of regulatory consent, expected funding and expenses for registered defined benefit obligations and contributions to the CAAT Plan), and the new refundable tax credit on salary or wages paid to eligible newsroom employees of qualifying news organizations.  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 charge for news content used by search, social media and other technology companies; Torstar's ability to attract and retain advertisers and customers; Torstar's ability to build and maintain adequate 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, data protection 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; distribution 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, and any related regulatory proceedings;  litigation; foreign exchange fluctuations and foreign operations; dependence on and competition for key personnel;  availability of insurance; intellectual property rights and other content risks; income tax and other taxes; credit risk; availability of capital and restrictions imposed by credit facilities; 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; successful development and launch of strategic initiatives and new products; and expected benefits from the transaction with CAAT. 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 2018 Management's Discussion & Analysis, and the Management's Discussion & Analysis for the three months ended March 31, 2019, 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, 2019

As at
December 31, 2018

Assets


Current:


Cash and cash equivalents

$51,542

$68,227

Restricted cash

8,863

7,175

Receivables

109,748

105,143

Inventories

4,039

3,918

Prepaid expenses

7,668

5,152

Prepaid and recoverable income taxes

332

Total current assets

181,860

189,947

Investments in joint ventures

12,943

12,692

Investments in associated businesses

123,198

131,216

Property, plant and equipment

47,949

49,205

Right of use assets

13,405

Intangible assets

31,533

32,592

Other assets

10,973

11,140

Total assets

$421,861

$426,792

Liabilities and Equity


Current:


Accounts payable and accrued liabilities

$58,273

$61,814

Deferred revenue

13,579

13,844

Lease liability

3,032

Derivative financial instruments

574

2,843

Provisions

10,957

13,247

Income tax payable

517

515

Total current liabilities

86,932

92,263

Lease liability

11,225

Provisions

5,241

5,343

Other liabilities

4,920

5,170

Employee benefits

103,852

94,569

Equity:


Share capital

403,475

403,437

Contributed surplus

22,058

21,928

Accumulated deficit

(217,025)

(198,384)

Other components of equity

1,693

2,657

Total equity attributable to equity shareholders

210,201

229,638

Minority interests

(510)

(191)

Total equity

209,691

229,447

Total liabilities and equity

$421,861

$426,792

Torstar  Corporation

Consolidated Statement of Loss

(Thousands of Canadian Dollars except per share amounts)

(Unaudited)

Three months ended
March 31

2019

2018



Operating revenue

$115,982

$128,972



Salaries and benefits

(40,540)

(63,266)

Other operating costs

(68,774)

(70,932)

Amortization and depreciation

(6,973)

(6,680)

Restructuring and other charges

(3,334)

(4,004)

Operating loss

(3,639)

(15,910)

Interest and financing income (costs)

229

(730)

Foreign exchange

1,093

(613)

Income from joint ventures

251

445

Loss from associated businesses

(5,680)

(4,052)

Net loss from continuing operations

(7,746)

(20,860)

Income from discontinued operations

6,300

Net loss

($7,746)

($14,560)

Attributable to:


Equity shareholders

($7,427)

($14,502)

Minority interests

($319)

($58)



Net income (loss) attributable to equity shareholders
per Class A (voting) and Class B (non-voting) share:

Basic and Diluted:


From continuing operations

($0.09)

($0.26)

From discontinued operations

$0.08

($0.09)

($0.18)

Torstar  Corporation

Consolidated  Statement  of Cash  Flows

(Thousands of Canadian Dollars)

(Unaudited)

Three months ended
March 31

2019

2018

Cash was used in


Operating activities

($9,935)

($14,520)

Investing activities

(3,690)

(3,338)

Financing activities

(3,060)

(1,992)

Decrease in cash

(16,685)

(19,850)

Cash, beginning of period

68,227

71,377

Cash, end of period

$51,542

$51,527

Operating activities:


Net loss from continuing operations

($7,746)

($20,860)

Amortization and depreciation

6,973

6,680

Income from joint ventures

(251)

(445)

Loss from associated businesses

5,680

4,052

Non-cash employee benefit expense

1,441

3,668

Employee benefits funding

(1,038)

(4,146)

Other

(321)

426


4,738

(10,625)

Decrease (increase) in restricted cash

(1,688)

1,364

Increase in non-cash working capital

(12,985)

(5,259)

Cash used in operating activities

($9,935)

($14,520)

Investing activities:


Additions to property, plant and equipment and intangible assets

($3,690)

($3,511)

Other

173

Cash used in investing activities

($3,690)

($3,338)

Financing activities:


Lease payments

($1,153)


Dividends paid

(1,990)

($1,981)

Other

83

(11)

Cash used in financing activities

($3,060)

($1,992)

Cash represented by:

Attributed to continuing operations:


Cash

$15,553

$16,218

Cash equivalents – short-term deposits

35,989

35,309

Net cash, end of period

$51,542

$51,527

SOURCE Torstar Corporation

L. DeMarchi, Executive Vice-President and Chief Financial Officer, Torstar Corporation, (416) 869-4776

Related Links

http://www.torstar.com

Organization Profile

Torstar Corporation