Torstar reports Q4 net income of $7.8M
Toronto Star CEO expects growth at VerticalScope to offset pressure on print ads
Torstar Corp., publisher of The Toronto Star, reported net income of $7.8 million in the fourth quarter of 2017, buoyed by cost management, along with the benefit of a digital media tax credit.
Adjusted earnings per share were 32 cents in the quarter, up 16 cents from a year ago, and included the effect of amortization of intangible assets. Segmented adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $43 million in the quarter, an improvement of $11.1 million, including the benefit of the $13.4 million digital media tax credit.
Segmented adjusted EBITDA in the Daily Brands segment was $24.2 million for a year-over-year gain of $12.7 million, including the digital media tax credit, which means underlying earnings were essentially flat year over year.
The Community Brands operation, which includes more than 80 weekly newspapers, posted segmented adjusted EBITDA of $14.5 million, up $0.7 million compared to the fourth quarter of 2016.
Overall segmented revenue in the fourth quarter at Torstar was $189.5 million, down $19.2 million or 9.2 per cent from the comparable period in 2016. Results also included $6.6 million of earnings from VerticalScope, where revenues grew by 12 per cent in U.S. dollars in the quarter.
Torstar ended 2017 with $71.4 million of unrestricted cash, up from $51.4 million at the end of the third quarter. Cash flow provided by operations in the traditionally strong fourth quarter reached $23.6 million.
“We were pleased with the results,” said John Boynton, who in March 2017 was named Torstar chief executive officer and president. The com- pany benefited from efforts on costs, he said in a statement, “which largely offset continued pressure on print advertising.
“Looking forward, we expect to continue to benefit from a solid financial position, having finished 2017 with $71.4 million in unrestricted cash and no bank debt,” Boynton said. Torstar is “well positioned to invest in our transformation,” he added in a conference call with investors Wednesday.
Transformational changes at Torstar so far include a new management structure and reconfigured operating segments to better align operations by type of publication.
In the latter half of 2017, the company also added costs to support additional organic and acquisitionrelated growth at VerticalScope, which develops websites and online communities across various consumer categories.
Boynton told analysts that the accelerated investment is bearing fruit in a number of key verticals including automotive, although he called positive momentum at VerticalScope “broad based.”
“In 2018 we expect earnings to benefit from growth at VerticalScope and continued efforts on costs,” which, he said, “will help to offset pressure on print advertising revenues . . . while we transform our core brands.”