Torstar Corporation Reports Second Quarter Results

TORONTO, July 31, 2019 /CNW/ - Torstar Corporation (TSX:TS.B) today reported financial results for the second quarter ended June 30, 2019.

Highlights for the second quarter:

• We continued to make progress on the transformation of our business including paid digital subscription offerings, ending the second quarter with over 20,000 digital only subscribers to our Daily Brands news sites including more than 19,500 digital only subscribers to thestar.com.
  
  
• We continued to grow our base of registered users in the community sites and continued to evaluate potential subscription models in three test markets in the Community Brands segment including one of these markets where we have fully rolled out paid subscriptions.
  
  
• During the second quarter, we announced the closure of our Hamilton printing and mailroom operations which is expected to occur in the third quarter of 2019 and result in annualized net savings in the range of approximately $5 to $6 million once fully implemented. Printing work performed at the Hamilton facility will be transitioned to TC Transcontinental Printing and other Torstar-owned facilities as well as other external printers. In connection with this decision we have also extended our printing arrangements with Transcontinental to 2024 and we have commenced exploration of the sale of the Hamilton property.
  
  
• We ended the second quarter of 2019 with $36.3 million of cash and cash equivalents and $8.9 million of restricted cash; Torstar has no bank indebtedness.
  
  
• In the second quarter of 2019, we recorded an estimated benefit of $3.0 million for the first half of the year in respect of a new refundable labour tax credit for qualifying journalism organizations which was approved as part of the federal budget on June 21, 2019.
  
  
• Our net loss attributable to equity shareholders was $17.4 million ($0.22 per share) in the second quarter of 2019. This compares to net income of $4.8 million ($0.06 per share) in the second quarter of 2018.
  
  
• Adjusted loss per share was $0.02 in the second quarter of 2019, down $0.18 relative to the second quarter of 2018.
  
  
• Our segmented adjusted EBITDA was $13.3 million in the second quarter of 2019, a decrease of $6.5 million relative to the second quarter of 2018 after adjusting for the impact of digital media and journalism tax credits as well as the change in accounting for leases effective January 1, 2019. Including these adjustments, segmented adjusted EBITDA in the Daily Brands segment was down $4.4 million, segmented adjusted EBITDA in the Community Brands segment was down $3.3 million and segmented adjusted EBITDA in the Digital Ventures segment was down $1.0 million. These declines reflect lower revenues partially offset by cost savings from restructuring initiatives and lower other operating costs.
  
  
• Segmented revenue was $142.4 million, down $18.3 million or 11% in the second quarter of 2019.

"Our efforts in the quarter continued to balance a focus on advancing those areas important to our future with managing the cost base of our more traditional business lines.  We are making good progress in combining the power of data with our journalism to develop a new and growing digital revenue stream.  We were pleased to end the quarter with over 20,000 digital only subscribers to thestar.com, thespec.com and therecord.com, which was in line with our expectations" said John Boynton, President and CEO of Torstar. "At the same time our decision announced in the quarter to both outsource and streamline our printing operations in our Hamilton facility will result in a meaningful reduction in our costs going forward and will allow us to potentially realize value in a sale of the property.   Results in the quarter however continued to reflect ongoing challenges in the print advertising market. Segmented adjusted EBITDA, excluding the benefit of tax credits, was down $6.5 million with the impact of lower print advertising revenues only partially offset by cost reductions and the benefit of restructuring efforts. We remain encouraged by the results of our focus on total subscriber revenue which continues to represent a significant and growing portion of our revenue base, where print subscription revenues declined modestly offset by growth in new digital subscription revenue. We will continue to manage costs carefully and remain focused on identifying ways to operate more efficiently across our operations while we invest in new capabilities critical to our future."

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

	Three months ended June 30				Six months ended June 30
	Earnings (Loss) Per Share		Adjusted Earnings (Loss) Per Share**		Earnings (Loss) Per Share		Adjusted Earnings (Loss) Per Share**
Income (loss) per share from continuing operations attributable to equity shareholders in 2018		$0.06		$0.16		($0.20)		($0.04)
Changes
•    Adjusted EBITDA*		(0.18)		(0.18)		(0.05)		(0.05)
•    Amortization and depreciation*		0.03		0.03		0.02		0.02
Operating earnings (loss)*		(0.09)		0.01		(0.23)		(0.07)
•    Restructuring and other charges*		(0.08)				(0.07)
•    Impairment of assets*		(0.02)				(0.02)
Operating profit (loss)*		(0.19)		0.01		(0.32)		(0.07)
•    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		(0.04)		(0.04)		(0.02)		(0.02)
Loss per share attributable to equity shareholders in 2019		($0.22)		($0.02)		($0.31)		($0.08)
*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 –SECOND QUARTER 2019

The following tables set out, in $000's, the segmented results for the three months ended June 30, 2019 and 2018:

Three months ended June 30, 2019
(in $000's)	Communities		Dailies		Digital Ventures		Corporate		Total Segmented*		Adjustments & Eliminations^1		Total Per Consolidated Statement Loss
Operating revenue		$61,233		$67,774		$13,411				$142,418		($15,226)		$127,192
Salaries and benefits^2		(28,027)		(21,023)		(4,751)		($1,532)		(55,333)		5,147		(50,186)
Other operating costs		(26,952)		(42,274)		(3,823)		(727)		(73,776)		4,520		(69,256)
Adjusted EBITDA**		6,254		4,477		4,837		(2,259)		13,309		(5,559)		7,750
Amortization & depreciation		(3,914)		(2,384)		(8,744)		(2)		(15,044)		8,279		(6,765)
Share based compensation		(76)		(23)		(232)		(315)		(646)		646
Operating earnings (loss)**		2,264		2,070		(4,139)		(2,576)		(2,381)		3,366		985
Restructuring and other charges		(4,282)		(9,802)		(39)		41		(14,082)		230		(13,852)
Impairment of assets		(1,671)								(1,671)				(1,671)
Operating profit (loss)**		($3,689)		($7,732)		($4,178)		($2,535)		($18,134)		$3,596		($14,538)
Net loss														($17,508)
Three months ended June 30, 2018
(in $000's)	Communities		Dailies		Digital Ventures		Corporate		Total Segmented*		Adjustments & Eliminations^1		Total Per Consolidated Statement of Income
Operating revenue		$68,661		$75,406		$16,598				$160,665		($17,494)		$143,171
Salaries and benefits^3		(31,965)		(12,669)		(5,155)		($1,681)		(51,470)		6,165		(45,305)
Other operating costs		(28,807)		(44,034)		(5,738)		(2,814)		(81,393)		5,616		(75,777)
Adjusted EBITDA**		7,889		18,703		5,705		(4,495)		27,802		(5,713)		22,089
Amortization & depreciation		(2,758)		(3,192)		(11,911)				(17,861)		11,327		(6,534)
Share based compensation		(61)		72		(411)		197		(203)		203
Operating earnings (loss)**		5,070		15,583		(6,617)		(4,298)		9,738		5,817		15,555
Restructuring and other charges		(4,071)		(1,663)		(1,818)				(7,552)		1,768		(5,784)
Operating profit (loss)**		$999		$13,920		($8,435)		($4,298)		$2,186		$7,585		$9,771
Net Income														$4,849
^1Reflects adjustments and eliminations of proportionately consolidated results of, and transactions with joint ventures and VerticalScope Holdings Inc. ("VerticalScope").
^2Salaries and benefits in the three months ended June 30, 2019 included the recovery of $6.5 million of digital media and journalism tax credits ($0.9 million in the Communities segment and $5.6 million in the Dailies segment).
^3Salaries and benefits in the three months ended June 30, 2018 included the recovery of $15.8 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 $142.4 million, down $18.3 million or 11% in the second quarter of 2019.  Relative to the second quarter of 2018, subscriber revenues in the second quarter of 2019 remained relatively stable while flyer distribution revenues decreased 12% and print advertising revenues decreased 17%.

Digital advertising revenues were down 10% in the second quarter of 2019 reflecting lower revenues at VerticalScope and eyeReturn partially offset by growth in digital advertising revenues in the Dailies and Communities segments. Revenues at VerticalScope continued to be impacted by year over year declines in search algorithm related traffic volumes. Digital advertising revenues were 19% of total segmented revenue in the second 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 $16.0 million or 11% in the second quarter of 2019.

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

Three months ended June 30, 2019	Communities				Dailies				Digital Ventures				Total
	$		%		$		%		$		%		$		%
Print advertising		$24,037		39%		$23,310		34%						$47,347		33%
Digital advertising		6,743		11%		6,952		10%		$13,411		100%		27,106		19%
Flyer distribution		21,458		35%		4,849		7%						26,307		18%
Print and digital subscriber		94				30,502		45%						30,596		21%
Other		8,901		15%		2,161		4%						11,062		9%
Total		$61,233		100%		$67,774		100%		$13,411		100%		$142,418		100%

Three months ended June 30, 2018	Communities				Dailies				Digital Ventures				Total
	$		%		$		%		$		%		$		%
Print advertising		$27,963		41%		$29,418		39%						$57,381		36%
Digital advertising		6,517		9%		6,921		9%		$16,598		100%		30,036		19%
Flyer distribution		24,465		36%		5,591		7%						30,056		19%
Print and digital subscriber		115				30,557		41%						30,672		19%
Other		9,601		14%		2,919		4%						12,520		7%
Total		$68,661		100%		$75,406		100%		$16,598		100%		$160,665		100%

Salaries and benefits
Segmented salaries and benefits costs were $55.3 million in the second quarter of 2019 and included the benefit of $3.5 million of digital media tax credits ($15.8 million in the second quarter of 2018).  The digital media tax credits represent recoveries of previously incurred salary and benefit costs and relate to claims made in respect of prior years and not current year operations.  Segmented salaries and benefits costs in the second quarter of 2019 also included an estimated benefit of $3.0 million in respect of a new refundable labour tax credit for qualifying journalism organizations that was approved as part of the federal budget on June 21, 2019 and reflects our estimated benefit for the first six months of 2019.

Excluding the digital media and journalism tax credits (together referred to as "tax credits"), segmented salaries and benefit costs were down $5.4 million (8%) in the second quarter of 2019 and reflected $4.2 million of savings from restructuring initiatives and $0.9 million of lower pension expense.

Adjusted EBITDA
Our segmented adjusted EBITDA was $13.3 million in the second quarter of 2019, a decrease of $6.5 million relative to the second quarter of 2018 after adjusting for the impact of the tax credits as well as the change in accounting for leases effective January 1, 2019.  Including these adjustments, segmented adjusted EBITDA in the Daily Brands segment was down $4.4 million, segmented adjusted EBITDA in the Community Brands segment was down $3.3 million and segmented adjusted EBITDA in the Digital Ventures segment was down $1.0 million.  These declines reflect lower revenues partially offset by cost savings from restructuring initiatives and lower other operating costs.  These declines were partially offset by $2.2 million of lower Corporate costs.

Restructuring and other charges
Total segmented restructuring and other charges were $14.1 million in the second quarter of 2019 resulting primarily from ongoing efforts to reduce costs including $7.6 million for severance and facility related expenses in respect of the upcoming closure of the Hamilton printing and mailroom operations.

Restructuring initiatives undertaken through the end of the second quarter of 2019, are expected to result in annualized net savings of $16.5 million and have resulted in the reduction of approximately 350 positions with $8.3 million of the savings expected to be realized in 2019 (including $1.3 million in the first six months of 2019).

Loss from associated businesses
Our loss from associated businesses was $2.5 million in the second quarter of 2019, compared to a loss of $5.7 million in the second quarter of 2018.

The loss in the second quarter of 2019 included a loss of $4.0 million from VerticalScope (including $8.1 million of non-cash amortization and depreciation expense), partially offset by income of $0.9 million from Black Press and $0.6 million from Blue Ant. The loss in the second quarter of 2018 included income of $0.6 million from Black Press offset by a loss of $6.1 million from VerticalScope (including $11.1 million of amortization and depreciation expense).

During the second quarter of 2019, VerticalScope generated U.S. $4.6 million in cash from operations.  VerticalScope's debt, net of cash, decreased U.S. $3.4 million to U.S. $110.6 million at June 30, 2019 from U.S. $114 million at March 31, 2019.

OUTLOOK

The Community Brands and the Daily Brands continued to face a challenging print advertising market in the first six months of 2019 resulting from ongoing shifts in spending by advertisers. Similar trends have continued early into the third quarter and it is difficult to predict if these trends will improve or worsen in the balance of the year.  Flyer distribution revenues declined 10% through the end of the second quarter and we expect this trend to improve modestly in the balance of the year.

Subscriber revenues remained stable through the end of the second quarter, benefiting from new digital subscription revenues.  While we expect digital subscription revenue to continue to grow in the balance of 2019, we expect continued modest declines in print subscription revenue will offset this growth in the balance of the year with total subscription revenue expected to be relatively flat on a year over year basis and with print and new digital subscription revenue continuing to be a larger percentage of our overall revenue.

Digital advertising revenues at the Community Brands and Daily Brands returned to growth in the second quarter of 2019 and we expect this trend to continue in the balance of 2019 resulting in expected modest growth on a full year basis.  Digital revenue is expected to benefit from continued 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 $19.4 million of full year savings related to restructuring initiatives undertaken through the end of the second quarter of 2019 ($11.1 million in the Community Brands segment and $8.3 million in the Daily Brands segment), with $8.6 million of this benefit realized in the first six months of 2019.  In the second quarter of 2019 we recorded $3.0 million of an estimated annualized $6.0 million in benefit related to the new refundable tax credit for qualifying journalism organizations for which we expect to be eligible ($1.8 million in Community Brands segment and $4.2 million in Daily Brands segment).  We also expect to identify additional cost savings in the balance of the year.

The new IFRS 16 standard adopted on lease accounting has and will continue to 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, while the migration of forum sites on to a new technology platform, which began in May, is expected to improve user experience, revenues may be negatively impacted during a transition period.  The migration of sites will continue through the balance of 2019 and into the first half of 2020.  EBITDA margins and cash generated by operations are expected to remain strong with savings related to integration of prior year acquisitions likely offset by incremental costs associated with the new technology platform.

From a cash flow perspective, capital expenditures for 2019 are expected to be in the range of $16 million, including approximately $8 million of capital spending related to technology platforms in connection with our transformation activities.  In addition, at June 30, 2019 we had net receivables related to digital media tax credits totaling $43.5 million, of which $21.9 million was received subsequent to the end of the quarter.  The amount and timing of any cash realized from the majority of the remaining receivable is dependent upon the final review and approval by the Canada Revenue Agency.

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 Financial Services Regulatory Authority of Ontario, which is expected to occur later in 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 ($2 million in the first six months of 2019). In 2019, we expect contributions to the CAAT plan to be equivalent to the related expense.

DIVIDEND
On July 30, 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 September 30, 2019, to shareholders of record at the close of business on September 9, 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 June 30, 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 July 31, 2019 at 8:15 a.m. to discuss its second quarter results.  The dial-in number is 647-427-7450 or 1-888-231-8191.  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 2299308.  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.

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 three and six months ended June 30, 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 relating to the closure of the Hamilton printing and mailroom operations (including the timing of the closure of the affected operations, the transfer of the Hamilton printing work to third parties and other Torstar-owned facilities, associated restructuring charges and cost savings, and the potential sale of the Hamilton property), estimates and expectations relating to anticipated eligibility and benefits related to a new refundable labour tax credit for qualifying journalism organizations, 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 and subscriber 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, and 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).  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 and six months ended June 30, 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 June 30, 2019		As at December 31, 2018
Assets
Current:
Cash and cash equivalents		$36,344		$68,227
Restricted cash		8,863		7,175
Receivables		118,361		105,143
Inventories		3,769		3,918
Prepaid expenses		6,883		5,152
Prepaid and recoverable income taxes				332
Total current assets		174,220		189,947
Investments in joint ventures		13,116		12,692
Investments in associated businesses		116,941		131,216
Property, plant and equipment		44,507		49,205
Right of use assets		14,401
Intangible assets		30,960		32,592
Other assets		12,080		11,140
Total assets		$406,225		$426,792
Liabilities and Equity
Current:
Accounts payable and accrued liabilities		$55,869		$61,814
Deferred revenue		12,950		13,844
Lease liability		3,371
Derivative financial instruments		469		2,843
Provisions		18,032		13,247
Income tax payable		517		515
Total current liabilities		91,208		92,263
Lease liability		12,264
Provisions		7,042		5,343
Other liabilities		5,200		5,170
Employee benefits		133,723		94,569
Equity:
Share capital		403,611		403,437
Contributed surplus		22,151		21,928
Accumulated deficit		(268,037)		(198,384)
Other components of equity		(360)		2,657
Total equity attributable to equity shareholders		157,365		229,638
Minority interests		(577)		(191)
Total equity		156,788		229,447
Total liabilities and equity		$406,225		$426,792

Torstar Corporation
Consolidated Statement of Income (Loss)
(Thousands of Canadian Dollars except per share amounts) (Unaudited)
	Three months ended June 30				Six months ended June 30
	2019		2018		2019		2018
Operating revenue		$127,192		$143,171		$243,174		$272,143
Salaries and benefits		(50,186)		(45,305)		(90,726)		(108,571)
Other operating costs		(69,256)		(75,777)		(138,030)		(146,709)
Amortization and depreciation		(6,765)		(6,534)		(13,738)		(13,214)
Restructuring and other charges		(13,852)		(5,784)		(17,186)		(9,788)
Impairment of assets		(1,671)				(1,671)
Operating income (loss)		(14,538)		9,771		(18,177)		(6,139)
Interest and financing costs		(642)		(744)		(413)		(1,474)
Foreign exchange		(26)		(66)		1,067		(679)
Income from joint ventures		173		1,788		424		2,233
Loss from associated businesses		(2,475)		(5,711)		(8,155)		(9,763)
Other income				11				11
Net income (loss) before tax from continuing operations		(17,508)		5,049		(25,254)		(15,811)
Income and other taxes				(200)				(200)
Net income (loss) from continuing operations		(17,508)		4,849		(25,254)		(16,011)
Income from discontinued operations								6,300
Net income (loss)		($17,508)		$4,849		($25,254)		($9,711)
Attributable to:
Equity shareholders		($17,441)		$4,848		($24,868)		($9,654)
Minority interests		($67)		$1		($386)		($57)
Net income (loss) attributable to equity shareholders
per Class A (voting) and Class B (non-voting) share:
Basic and Diluted:
From continuing operations		($0.22)		$0.06		($0.31)		($0.20)
From discontinued operations								$0.08
		($0.22)		$0.06		($0.31)		($0.12)

Torstar Corporation
Consolidated Statement of Cash Flows
(Thousands of Canadian Dollars)
(Unaudited)
		Three months ended June 30				Six months ended June 30
		2019		2018		2019		2018
Cash was provided by (used in)
Operating activities		($7,596)		$3,013		($17,531)		($11,507)
Investing activities		(4,244)		(3,274)		(7,934)		(6,612)
Financing activities		(3,358)		(1,877)		(6,418)		(3,869)
Decrease in cash		(15,198)		(2,138)		(31,883)		(21,988)
Cash, beginning of period		51,542		51,527		68,227		71,377
Cash, end of period		$36,344		$49,389		$36,344		$49,389
Operating activities:
Net income (loss) from continuing operations		($17,508)		$4,849		($25,254)		($16,011)
Amortization and depreciation		6,765		6,534		13,738		13,214
Income from joint ventures		(173)		(1,788)		(424)		(2,233)
Distributions from joint ventures				1,314				1,314
Loss from associated businesses		2,475		5,711		8,155		9,763
Impairment of assets		1,671				1,671
Non-cash employee benefit expense		1,350		3,666		2,791		7,334
Employee benefits funding		(1,249)		(3,436)		(2,287)		(7,582)
Other		2,086		(406)		1,765		20
		(4,583)		16,444		155		5,819
Decrease (increase) in restricted cash						(1,688)		1,364
Increase in non-cash working capital		(3,013)		(13,431)		(15,998)		(18,690)
Cash provided by (used in) operating activities		($7,596)		$3,013		($17,531)		($11,507)
Investing activities:
Additions to property, plant and equipment and
intangible assets		($3,119)		($2,149)		($6,809)		($5,660)
Acquisitions and portfolio investments		(1,125)		(1,125)		(1,125)		(1,125)
Other								173
Cash used in investing activities		($4,244)		($3,274)		($7,934)		($6,612)
Financing activities:
Lease payments		($1,280)				($2,433)
Dividends paid		(2,013)		($1,984)		(4,003)		($3,965)
Other		(65)		107		18		96
Cash used in financing activities		($3,358)		($1,877)		($6,418)		($3,869)
Cash represented by:
Attributed to continuing operations:
Cash		$5,355		$13,914		$5,355		$13,914
Cash equivalents – short-term deposits		30,989		35,475		30,989		35,475
Net cash, end of period		$36,344		$49,389		$36,344		$49,389

SOURCE Torstar Corporation

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

Related Links

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