Postmedia Network Canada Corp. continued to feel the effects of the coronavirus pandemic in its fiscal first quarter, but nonetheless posted net earnings of $52.8 million for the three months ended Nov. 30, 2020, up from a loss of $3 million in the same period a year earlier.
The swing was largely due to a number of items unique to the quarter, including a non-cash settlement gain related to employee benefit plans of $63.1 million, and gains on derivative financial instruments and foreign exchange.
Revenue in the quarter declined by 25.4 per cent to $116.9 million, as advertisers responded to government-mandated shutdowns to try to control the spread of COVID-19.
“With the effects of the global pandemic continuing to weigh on our communities and our people, our focus remains on the safety of our teams, preserving liquidity, constraining costs, maximizing revenue and pursuing government support,” said Andrew MacLeod, president and chief executive of Postmedia.
Postmedia, which publishes a chain of newspapers across Canada including the National Post, posted a 26.3 per cent decline in total operating expenses (excluding depreciation, amortization, impairment and restructuring) for the first quarter compared to a year earlier. This was the result of lower compensation expense and newspaper circulation volumes as well as the implementation of various cost-reduction initiatives, the company said.
The decrease in operating expenses included a compensation expense recovery of $6.6 million related to Canada Emergency Wage Subsidy. This was partially offset by a decrease in compensation recovery related to journalism tax credits of $0.9 million.
Postmedia continued to repay its debt during the first quarter. During the three months ended Nov. 30, the company redeemed $8.5 million of its first-lien debt from the proceeds of assets sales. In addition, the firm redeemed $6.9 million of first-lien debt on Nov. 13 as required by terms of the notes governing excess cash flow.
After these redemptions, the company had $83.8 million of first-lien debt outstanding, down from $225 million in October 2016.