Implemented $160 million in annualized
synergies year to date
Ended the quarter with $159 million of cash and
cash equivalents
Digital-only subscribers grew 31% from the
prior year to 927,000
Gannett Co., Inc. ("Gannett", "we", "us",
"our", or "the Company") (NYSE: GCI) today reported its financial
results for the second quarter ended June 30, 2020. Prior to
November 19, 2019, our corporate name was New Media Investment
Group Inc. ("New Media" or "Legacy New Media"), and Gannett Co.,
Inc. ("Legacy Gannett") was a separate publicly traded company. On
November 19, 2019, New Media acquired Legacy Gannett (the
"Acquisition"). In connection with the Acquisition, Legacy Gannett
became a wholly owned subsidiary of New Media, and New Media
changed its name to Gannett Co., Inc.
“While the second quarter was significantly impacted by the
COVID-19 pandemic, our revenue was in line with the guidance we
shared on our last earnings call and our EBITDA performance
benefited from our expense reduction efforts," said Michael Reed,
Gannett Chairman and Chief Executive Officer. "We saw sequential
improvement to revenue each month during the quarter and
successfully realized over $125 million of incremental expense
savings during the quarter. In addition, we continued to execute on
our operating and integration plans from the Acquisition, with over
$160 million of cumulative annualized synergies implemented by the
end of the quarter. Combining our incremental expense savings, our
synergy implementation, and the normal course expense savings that
rolled forward from the first quarter, our operating expenses
included in Adjusted EBITDA were down 26%."
"At no time in our history has the value of high-quality
journalism been as clear as it is right now at this intersection of
a global pandemic and a nation in turmoil over systemic racism and
inequality. Our journalists have worked tirelessly and doggedly to
help keep our communities safe and informed, while exercising the
crucial role of holding officials accountable. As digital, social
platforms are overtaken by the spread of misinformation, our
readers trust us to clear through the noise with credible,
fact-based, fair reporting. And that is evidenced by audiences
turning to us in record numbers since the beginning of the pandemic
and very strong digital subscription growth. Our employees have
been phenomenal, performing during these challenging times at the
highest level, which is a testament to their commitment to our
mission and our communities. We do not have certainty around how
the pandemic will continue to affect our country and the economy,
but we remain highly confident in our ability to continue to
execute upon our operational and integration plans."
Financial Highlights
in thousands
Second quarter 2020
GAAP operating revenue
$
767,000
GAAP net loss attributable to Gannett
(436,893
)
Adjusted EBITDA(1) (non-GAAP)
78,018
Net cash flow used for operating
activities (GAAP basis)
(35,849
)
Free cash flow(1) (non-GAAP)
(44,223
)
(1) Refer to “Use of Non-GAAP Information” below for the
Company’s definition of Adjusted EBITDA and Free Cash Flow, and
reconciliations to the most comparable GAAP measures.
Second Quarter 2020 Consolidated
Results
- Second quarter revenues of $767.0 million rose 89.7% as
compared to the prior year, reflecting the Acquisition.
- Same store pro forma revenues (as defined and reconciled below)
decreased 28.0%, due to unfavorable impacts resulting from the
COVID-19 pandemic and general trends adversely impacting the
publishing industry.
- Digital advertising and marketing services revenues were $168.8
million in the second quarter, or 22.0% of total revenues.
- Over $160 million in annualized synergy measures were
implemented by the end of the second quarter, with approximately
$41.2 million in savings recognized in the quarter.
- On a pro forma basis, operating expenses included in Adjusted
EBITDA were down 26.3% to the prior year quarter due to the
implementations of synergies, incremental cost measures in response
to the COVID-19 pandemic, and normal course expense savings that
rolled forward from the first quarter.
- Non-cash goodwill and intangible impairment of $393.4 million
was recognized in the second quarter of 2020 in connection with the
Company’s annual impairment testing. The non-cash charge was driven
by the COVID-19 pandemic and the uncertainty the crisis has
created.
- GAAP net loss attributable to Gannett of $436.9 million in the
second quarter reflects $393.4 million of non-cash goodwill and
intangible impairment and $66.3 million of depreciation and
amortization.
- Adjusted EBITDA totaled $78.0 million. Margins in the quarter
were 10.2%, despite the pressures from the COVID-19 pandemic.
Balance Sheet & Cash
Flow
- As of the end of the second quarter, the Company had cash and
cash equivalents of $158.6 million.
- During the quarter, the Company repaid $6.3 million in
principal under its credit facility.
- Sold $7.5 million of real estate in the second quarter and used
the net proceeds to pay down debt.
- Over $15.0 million in real estate sales under contract expected
to close during the third quarter; and on track to sell an
additional $100 - $125 million of real estate by the end of 2021,
which we expect will enable us to accelerate debt repayment.
- Capital expenditures were $8.4 million, primarily for product
development, technology investments, and maintenance projects. We
expect capital expenditures to be between $9 - $10 million in both
the third and fourth quarters.
- Cash flow used by operations in the second quarter of 2020 was
$35.8 million compared to cash flow provided of $25.9 million for
the prior year quarter primarily driven by interest paid and
integration costs related to the Gannett acquisition.
COVID-19 Response
- Strengthened balance sheet and continue to preserve liquidity:
- Reduced expenses for the second quarter by over $125 million
through implementation of furloughs, significant pay reductions,
reductions in force, and cancellation of non-essential travel and
spending.
- Expect to maintain expenses, other than variable costs of goods
sold, in line with the second quarter for the remainder of
2020.
- Reduced planned capital expenditures for 2020 by approximately
20%.
- Suspended quarterly dividend until conditions improve.
- Implemented NOL Rights Plan to protect approximately $435
million in tax assets.
- Deferred over $50 million of payments, under the CARES Act,
using provisions relating to ERISA pension contribution deferral
and employer FICA tax deferral.
- Restructured required additional pension contributions, that
were originally due in 2020 and 2021, into quarterly installments
beginning in the fourth quarter of this year through the third
quarter of 2022.
- Adapted our workplaces and continue to promote the health and
safety of our employees:
- Transitioned 95% of our non-production and delivery employees
to work from home by late March.
- Thoughtfully exploring how to prepare our offices as safe work
environments for those employees who wish to return.
- Implemented social distancing measures and hygiene best
practices in line with CDC and WHO guidelines for all facilities
and employees in product and delivery roles.
- Maintained consistent operations across all properties, with no
significant disruptions.
- Supported our communities by providing high quality journalism
and by creating innovative solutions to support small businesses:
- Created new tailored content for readers and their communities,
which has received more than 885 million views since mid-February,
nearly all of which is available for free:
- Nation’s Health daily COVID-19 specific section runs in USA
TODAY in print and digital and is available in all local
e-editions; real-time updates online.
- The USA TODAY and 35 local markets publish coronavirus
newsletters for our readers.
- Support Local platform has had over 1.6 million page views
which provided communities with an easy way to discover
opportunities to help their favorite local businesses.
- Free business listings providing special services, such as
enabling gift cards and delivery services.
Publishing Segment
- Publishing segment revenues totaled $695.9 million in the
second quarter.
- Circulation revenues totaled $342.6 million in the second
quarter.
- Same store pro forma circulation revenues decreased 13.6% in
the second quarter, partially stemming from a reduction in volume
of our single copy and home delivery sales, reflecting the impact
of COVID-19 pandemic on businesses that sell single copies of our
publications as well as general industry trends.
- Print advertising revenues totaled $187.9 million in the second
quarter.
- Same store pro forma print advertising revenues decreased 45.0%
compared to the prior year reflecting the negative impact from the
COVID-19 pandemic.
- Digital advertising and marketing services revenues were $104.4
million in the second quarter.
- Same store pro forma digital advertising and marketing services
revenues decreased 26.7% versus the prior year period, reflecting
the impacts from the COVID-19 pandemic beginning in the latter part
of the first quarter which negatively affected digital revenues
across each category.
- Commercial printing and other revenues contributed $61.0
million in the second quarter.
- Paid digital-only subscribers now total approximately 927,000,
up 31.3% year-over-year on a pro forma basis.
- Publishing segment Adjusted EBITDA was $92.0 million,
representing a margin of 13.2% for the quarter.
Marketing Solutions
Segment
- Marketing Solutions segment revenues were $94.6 million in the
second quarter.
- Same store pro forma Marketing Solutions segment revenues
decreased by 24.0% to the prior year driven by the impacts of the
COVID-19 pandemic which began in the latter part of the first
quarter of 2020.
- Marketing Solutions segment Adjusted EBITDA was $2.8 million,
representing a margin of 2.9% for the quarter.
Integration Update
- Implemented cumulative measures by the end of the second
quarter that will result in over $160 million in annualized
savings.
- Realized $41.2 million in savings in the second quarter.
- Expect to have implemented measures that will result in over
$200 million in annualized savings by the end of the third quarter.
- Expect to realize $50 - $55 million in savings during the third
quarter.
- Management remains highly confident in its ability to implement
measures by the end of 2021 that are expected to result in $300
million in synergies.
Earnings Conference Call
Management will host a conference call on Thursday, August 6,
2020 at 8:30 A.M. Eastern Time. A copy of the earnings release will
be posted to the Investor Relations section of Gannett’s website,
investors.gannett.com. All interested parties are welcome to
participate on the live call. The conference call may be accessed
by dialing 1-855-319-1124 (from within the U.S.) or 1-703-563-6359
(from outside of the U.S.) ten minutes prior to the scheduled start
of the call; please reference “Gannett Second Quarter Earnings
Call” or access code “4339957”. A simultaneous webcast of the
conference call will be available to the public on a listen-only
basis at investors.gannett.com. Please allow extra time prior to
the call to visit the website and download any necessary software
required to listen to the internet broadcast. A telephonic replay
of the conference call will also be available approximately two
hours following the call’s completion through 11:59 P.M. Eastern
Time on Thursday, August 13, 2020 by dialing 1-855-859-2056 (from
within the U.S.) or 1-404-537-3406 (from outside of the U.S.);
please reference access code “4339957”.
About Gannett
Gannett Co., Inc. (NYSE: GCI) is an innovative, digitally
focused media and marketing solutions company committed to the
communities in our network and helping them build relationships
with their local businesses. With an unmatched reach at the
national and local level, Gannett touches the lives of millions
with our Pulitzer-Prize winning content, consumer experiences and
benefits, and advertiser products and services. Our portfolio
includes the USA TODAY, local media organizations in 46 states in
the U.S. and Guam, and Newsquest, a wholly owned subsidiary with
over 140 local media brands operating in the United Kingdom.
Gannett also owns the digital marketing services companies
ReachLocal, Inc., UpCurve, Inc., and WordStream, Inc. and runs the
largest media-owned events business in the U.S., Gannett Ventures,
formerly GateHouse Live. Effective November 20, 2019, following the
completion of its merger with Gannett, New Media Investment Group
Inc. trades on the New York Stock Exchange under Gannett Co., Inc.
and its ticker symbol has changed to “GCI”. To connect with us,
visit www.gannett.com.
Same Store Pro Forma
Revenues
Same store pro forma revenues are based on GAAP revenues for New
Media Investment Group Inc. and Legacy Gannett prior to the
Acquisition and GAAP revenues for Gannett for the current period,
excluding (1) revenues related to 2019 acquisitions from the
beginning of 2020 through the first year anniversary of the
applicable acquisition date, (2) exited operations, (3) currency
impacts, and (4) deferred revenue impacts related to the
Acquisition.
Cautionary Statement Regarding
Forward-Looking Statements
Certain items in this press release may constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, including, but not
limited to, statements regarding our ability to execute our
operational and integration plans, such as measures expected to
result in over $200 million in annualized savings, the timing of
realizing those savings, including our expectation that $50 - $55
million will be realized in the third quarter, the potential to
realize additional savings in future quarters, our ability to
achieve $300 million of synergies through measures expected to be
implemented by the end of 2021, our expected capital expenditures,
our expectations, in terms of both amount and timing, with respect
to debt repayment, real estate sales and debt refinancing, future
revenue trends and our ability to influence trends, and the amount
and timing of any future dividend. These statements are based on
management’s current expectations and beliefs and are subject to a
number of risks and uncertainties. These and other risks and
uncertainties could cause actual results to differ materially from
those described in the forward-looking statements, many of which
are beyond our control. The Company can give no assurance its
expectations will be attained. Accordingly, you should not place
undue reliance on any forward-looking statements contained in this
press release. For a discussion of some of the risks and important
factors that could cause actual results to differ from such
forward-looking statements, see the risks and other factors
detailed from time to time in the Company’s Annual Report on Form
10-K, Quarterly Reports on Form 10-Q, and other filings with the
Securities and Exchange Commission. Furthermore, new risks and
uncertainties emerge from time to time, and it is not possible for
the Company to predict or assess the impact of every factor that
may cause its actual results to differ from those contained in any
forward-looking statements. Such forward-looking statements speak
only as of the date of this press release. The Company expressly
disclaims any obligation to release publicly any updates or
revisions to any forward-looking statements contained herein to
reflect any change in the Company’s expectations with regard
thereto or change in events, conditions or circumstances on which
any statement is based.
CONSOLIDATED BALANCE SHEETS Gannett
Co., Inc. and Subsidiaries Unaudited, in thousands (except per
share amounts)
Table No. 1
Assets
June 30, 2020
December 31, 2019
(Unaudited)
Current assets
Cash and cash equivalents
$
158,603
$
156,042
Accounts receivable, net of allowance for
doubtful accounts of $26,560 and $19,923
288,509
438,523
Inventories
40,468
55,090
Prepaid expenses and other current
assets
125,208
129,460
Total current assets
612,788
779,115
Property, plant and equipment, at cost net
of accumulated depreciation of $358,746 and $277,291
718,590
815,807
Operating lease assets
296,128
309,112
Goodwill
559,623
914,331
Intangible assets, net
920,525
1,012,564
Deferred income tax assets
105,051
76,297
Other assets
125,212
112,876
Total assets
$
3,337,917
$
4,020,102
Liabilities and equity
Current liabilities
Accounts payable and accrued
liabilities
$
327,071
$
453,628
Deferred revenue
213,988
218,823
Current portion of long-term debt
—
3,300
Other current liabilities
47,017
42,702
Total current liabilities
588,076
718,453
Long-term debt
1,633,449
1,636,335
Convertible debt
3,300
3,300
Deferred tax liabilities
6,256
9,052
Pension and other postretirement benefit
obligations
214,084
235,906
Long-term operating lease liabilities
282,896
297,662
Other long-term liabilities
157,313
136,188
Total noncurrent liabilities
2,297,298
2,318,443
Total liabilities
2,885,374
3,036,896
Redeemable noncontrolling interests
458
1,850
Commitments and contingent
liabilities
Equity
Common stock of $0.01 par value per share,
2,000,000,000 shares authorized, 136,885,320 issued and 136,114,347
shares outstanding at June 30, 2020; 129,386,258 issued and
128,991,544 shares outstanding at December 31, 2019
1,369
1,294
Treasury stock at cost, 770,973 and
394,714 shares at June 30, 2020 and December 31, 2019,
respectively
(4,818
)
(2,876
)
Additional paid-in capital
1,101,899
1,090,694
Accumulated deficit
(633,003
)
(115,958
)
Accumulated other comprehensive income
(loss)
(13,362
)
8,202
Total equity
452,085
981,356
Total liabilities and equity
$
3,337,917
$
4,020,102
CONSOLIDATED STATEMENTS OF
OPERATIONS Gannett Co., Inc. and Subsidiaries Unaudited, in
thousands (except per share amounts)
Table No. 2
Three months ended
Fiscal year ended
June 30, 2020
June 30, 2019
Operating revenues:
Advertising and marketing services
$
356,918
$
204,697
Circulation
342,646
150,850
Other
67,436
48,840
Total operating revenues
767,000
404,387
Operating expenses:
Operating costs
476,735
233,407
Selling, general and administrative
expenses
226,484
126,628
Depreciation and amortization
66,327
23,328
Integration and reorganization costs
32,306
4,278
Acquisition costs
2,379
2,364
Impairment of property, plant and
equipment
6,859
1,262
Goodwill and intangible impairment
393,446
—
Loss on sale or disposal of assets
88
947
Total operating expenses
1,204,624
392,214
Operating income (loss)
(437,624
)
12,173
Non-operating (income) expense:
Interest expense
57,928
10,212
Loss on early extinguishment of debt
369
—
Non-operating pension income
(17,553
)
(208
)
Other income
(6,261
)
(103
)
Non-operating expense
34,483
9,901
Net income (loss) before income
taxes
(472,107
)
2,272
Benefit for income taxes
(34,276
)
(343
)
Net income (loss)
$
(437,831
)
$
2,615
Net loss attributable to redeemable
noncontrolling interests
(938
)
(200
)
Net income (loss) attributable to
Gannett
$
(436,893
)
$
2,815
Income (loss) per share attributable to
Gannett - basic
$
(3.32
)
$
0.05
Income (loss) per share attributable to
Gannett - diluted
$
(3.32
)
$
0.05
Dividends declared per share
$
—
$
0.38
CONSOLIDATED STATEMENTS OF CASH
FLOWS Gannett Co., Inc. and Subsidiaries Unaudited, in
thousands
Table No. 3
Six months ended
June 30, 2020
June 30, 2019
Cash flows from operating activities:
Net loss
$
(518,437
)
$
(6,740
)
Adjustments to reconcile net loss to
operating cash flows:
Depreciation and amortization
144,352
44,251
Equity-based compensation expense
18,968
1,843
Non-cash interest expense
11,902
689
Loss on sale or disposal of assets
745
2,737
Loss on early extinguishment of debt
1,174
—
Goodwill and intangible impairment
393,446
—
Impairment of property, plant and
equipment
6,859
2,469
Pension and other postretirement benefit
obligations, net of contributions
(49,064
)
(649
)
Change in other assets and liabilities,
net
14,695
13,053
Net cash provided by operating
activities
24,640
57,653
Cash flows from investing activities:
Acquisitions, net of cash acquired
—
(39,353
)
Purchase of property, plant, and
equipment
(22,157
)
(4,934
)
Proceeds from sale of real estate and
other assets
17,792
7,107
Insurance proceeds received for damage to
property
1,643
—
Change in other investing activities
(304
)
—
Net cash used for investing
activities
(3,026
)
(37,180
)
Cash flows from financing activities:
Repayment under term loans
(18,985
)
(11,296
)
Borrowing under revolving credit
facility
—
102,900
Repayments under revolving credit
facility
—
(94,900
)
Payments for employee taxes withheld from
stock awards
(1,942
)
(700
)
Issuance of common stock
1,007
—
Payment of dividends
—
(46,066
)
Changes in other financing activities
(411
)
—
Net cash used for financing
activities
(20,331
)
(50,062
)
Effect of currency exchange rate change on
cash
(780
)
3
Increase (decrease) in cash, cash
equivalents, and restricted cash
503
(29,586
)
Balance of cash, cash equivalents, and
restricted cash at beginning of period
188,664
52,770
Balance of cash, cash equivalents, and
restricted cash at end of period
$
189,167
$
23,184
SEGMENT INFORMATION Gannett Co.,
Inc. and Subsidiaries Unaudited, in thousands
Table No. 4
Three months ended
June 30, 2020
June 30, 2019
Operating revenues:
Publishing
$
695,893
$
394,435
Marketing Solutions
94,563
27,345
Corporate and Other
2,398
895
Intersegment eliminations
(25,854
)
(18,288
)
Total
$
767,000
$
404,387
Adjusted EBITDA:
Publishing
$
91,991
$
55,493
Marketing Solutions
2,784
(2,459
)
Corporate and Other
(16,757
)
(5,739
)
Total
$
78,018
$
47,295
Depreciation and amortization:
Publishing
$
56,553
$
21,769
Marketing Solutions
4,004
778
Corporate and Other
5,770
781
Total
$
66,327
$
23,328
PRO FORMA SAME STORE REVENUES
Gannett Co., Inc. and Subsidiaries Unaudited, in thousands
Table No. 5
Three months ended
June 30, 2020
June 30, 2019
% Change
Pro forma total revenue
$
767,000
$
1,064,725
(28.0
)%
Acquired revenues
(3,797
)
—
***
Currency impact
1,867
—
***
Exited operations
(2
)
(957
)
(99.8
)%
Deferred revenue adjustment
980
—
***
Same store total revenue
$
766,048
$
1,063,768
(28.0
)%
Pro forma advertising and marketing
services revenue
$
356,919
$
573,026
(37.7
)%
Acquired revenues
(286
)
—
***
Currency impact
1,167
—
***
Exited operations
(2
)
(653
)
(99.7
)%
Deferred revenue adjustment
396
—
***
Same store advertising and marketing
services revenue
$
358,194
$
572,373
(37.4
)%
Pro forma circulation revenue
$
342,645
$
397,942
(13.9
)%
Acquired revenues
—
—
***
Currency impact
543
—
***
Exited operations
—
(146
)
(100.0
)%
Deferred revenue adjustment
584
—
***
Same store circulation revenue
$
343,772
$
397,796
(13.6
)%
Pro forma other revenue
$
67,436
$
93,757
(28.1
)%
Acquired revenues
(3,511
)
—
***
Currency impact
157
—
***
Exited operations
—
(158
)
(100.0
)%
Same store other revenue
$
64,082
$
93,599
(31.5
)%
*** Indicates an absolute value percentage change greater than
100
USE OF NON-GAAP
INFORMATION
The Company uses non-GAAP financial performance and liquidity
measures to supplement the financial information presented on a
GAAP basis. These non-GAAP financial measures, which may not be
comparable to similarly titled measures reported by other
companies, should not be considered in isolation from or as a
substitute for the related GAAP measures and should be read
together with financial information presented on a GAAP basis.
The Company defines its non-GAAP measures as follows:
- Adjusted EBITDA is a non-GAAP financial performance
measure the Company believes offers a useful view of the overall
operation of our business. The Company defines Adjusted EBITDA as
net income (loss) attributable to Gannett before (1) income tax
expense (benefit), (2) interest expense, (3) gains or losses on
early extinguishment of debt, (4) non-operating items, primarily
pension costs, (5) depreciation and amortization, (6) integration
and reorganization costs, (7) impairment of long-lived assets, (8)
goodwill and intangible impairments, (9) net loss (gain) on sale or
disposal of assets, (10) equity-based compensation, (11)
acquisition costs, and (12) certain other non-recurring charges.
The most directly comparable GAAP financial measure is net income
(loss) attributable to Gannett.
- Free cash flow is a non-GAAP liquidity measure that
adjusts our reported GAAP results for items we believe are critical
to the ongoing success of our business. The Company defines Free
cash flow as net cash provided by operating activities as reported
on the statement of cash flows less capital expenditures, which
results in a figure representing Free cash flow available for use
in operations, additional investments, debt obligations, and
returns to shareholders. The most directly comparable GAAP
financial measure is net cash from operating activities.
Management’s Use of Non-GAAP Measures
Adjusted EBITDA and Free cash flow are not measurements of
financial performance under GAAP and should not be considered in
isolation or as an alternative to income from operations, net
income (loss), cash flow from continuing operating activities, or
any other measure of performance or liquidity derived in accordance
with GAAP. We believe our non-GAAP measures as we have defined them
are helpful in identifying trends in our day-to-day performance
because the items excluded have little or no significance on our
day-to-day operations. These measures provide an assessment of
controllable expenses and afford management the ability to make
decisions which are expected to facilitate meeting current
financial goals as well as achieve optimal financial
performance.
Adjusted EBITDA provides us with a measure of financial
performance, independent of items that are beyond the control of
management in the short-term such as depreciation and amortization,
taxation, non-cash impairments, and interest expense associated
with our capital structure. This metric measures our financial
performance based on operational factors that management can impact
in the short-term, namely the cost structure or expenses of the
organization. Adjusted EBITDA is one of the metrics we use to
review the financial performance of our business on a monthly
basis.
We use Adjusted EBITDA as a measure of our day-to-day operating
performance, which is evidenced by the publishing and delivery of
news and other media and excludes certain expenses that may not be
indicative of our day-to-day business operating results. We
consider the unrealized (gain) loss on derivative instruments and
the (gain) loss on early extinguishment of debt to be financing
related costs associated with interest expense or amortization of
financing fees. Accordingly, we exclude financing related costs
such as the early extinguishment of debt because they represent the
write-off of deferred financing costs, and we believe these
non-cash write-offs are similar to interest expense and
amortization of financing fees, which by definition are excluded
from Adjusted EBITDA. Additionally, the non-cash gains (losses) on
derivative contracts, which are related to interest rate swap
agreements to manage interest rate risk, are financing costs
associated with interest expense. Such charges are incidental to,
but not reflective of, our day-to-day operating performance, and it
is appropriate to exclude charges related to financing activities
such as the early extinguishment of debt and the unrealized (gain)
loss on derivative instruments which, depending on the nature of
the financing arrangement, would have otherwise been amortized over
the period of the related agreement and does not require a current
cash settlement. Such charges are incidental to, but not reflective
of our day-to-day operating performance of the business that
management can impact in the short term.
Limitations of Non-GAAP Measures
Each of our non-GAAP measures has limitations as an analytical
tool. They should not be viewed in isolation or as a substitute for
GAAP measures of earnings or cash flows. Material limitations in
making the adjustments to our earnings to calculate Adjusted EBITDA
and using this non-GAAP financial measure as compared to GAAP net
income (loss) include: the cash portion of interest / financing
expense, income tax (benefit) provision, and charges related to
impairment of long-lived assets, which may significantly affect our
financial results.
A reader of our financial statements may find this item
important in evaluating our performance, results of operations, and
financial position. We use non-GAAP financial measures to
supplement our GAAP results in order to provide a more complete
understanding of the factors and trends affecting our business.
Adjusted EBITDA and Free cash flow are not alternatives to net
income, income from operations, or cash flows provided by or used
in operations as calculated and presented in accordance with GAAP.
Readers of our financial statements should not rely on Adjusted
EBITDA or Free cash flow as a substitute for any such GAAP
financial measure. We strongly urge readers of our financial
statements to review the reconciliation of income (loss) from
continuing operations to Adjusted EBITDA and the reconciliation of
net cash from operating activities to Free cash flow, along with
our consolidated financial statements included elsewhere in this
report. We also strongly urge readers of our financial statements
to not rely on any single financial measure to evaluate our
business. In addition, because Adjusted EBITDA and Free cash flow
are not measures of financial performance under GAAP and are
susceptible to varying calculations, the Adjusted EBITDA and Free
cash flow measures as presented in this report may differ from and
may not be comparable to similarly titled measures used by other
companies.
NON-GAAP FINANCIAL INFORMATION
ADJUSTED EBITDA Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands
Table No. 6
Three months ended June 30,
2020
Publishing
Marketing Solutions
Corporate and Other
Consolidated Total
Net income (loss) attributable to
Gannett
$
(328,207
)
$
(43,226
)
$
(65,460
)
$
(436,893
)
Benefit for income taxes
—
—
(34,276
)
(34,276
)
Interest expense
92
—
57,836
57,928
Loss on early extinguishment of debt
—
—
369
369
Non-operating pension income
(17,480
)
—
(73
)
(17,553
)
Other non-operating items, net
(3,066
)
(2,614
)
(581
)
(6,261
)
Depreciation and amortization
56,553
4,004
5,770
66,327
Integration and reorganization costs
20,619
2,962
8,725
32,306
Acquisition costs
—
—
2,379
2,379
Impairment of long-lived assets
6,859
—
—
6,859
Goodwill and mastheads impairment
352,947
40,499
—
393,446
Net (gain) loss on sale or disposal of
assets
(449
)
516
21
88
Equity-based compensation
—
—
7,391
7,391
Other items
4,123
643
1,142
5,908
Adjusted EBITDA (non-GAAP basis)
$
91,991
$
2,784
$
(16,757
)
$
78,018
Three months ended June 30,
2019
Publishing
Marketing Solutions
Corporate and Other
Consolidated Total
Net income (loss) attributable to
Gannett
$
24,830
$
(3,807
)
$
(18,208
)
$
2,815
Income tax expense (benefit)
—
—
(343
)
(343
)
Interest expense
23
—
10,189
10,212
Non-operating pension income
(208
)
—
—
(208
)
Other non-operating items, net
(162
)
—
59
(103
)
Depreciation and amortization
21,769
778
781
23,328
Integration and reorganization costs
4,074
180
24
4,278
Acquisition costs
—
—
2,364
2,364
Impairment of long-lived assets
2,469
—
(1,207
)
1,262
Net (gain) loss on sale or disposal of
assets
2,159
1
(1,213
)
947
Equity-based compensation
—
—
707
707
Other items
539
389
1,108
2,036
Adjusted EBITDA (non-GAAP basis)
$
55,493
$
(2,459
)
$
(5,739
)
$
47,295
NON-GAAP FINANCIAL INFORMATION
FREE CASH FLOW Gannett Co., Inc. and Subsidiaries Unaudited,
in thousands
Table No. 7
Three months ended June 30,
2020
Net cash flow used for operating
activities (GAAP basis)
$
(35,849
)
Capital expenditures
(8,374
)
Free cash flow (non-GAAP basis)(1)
$
(44,223
)
(1) Free cash flow for the second quarter was negatively
impacted by $23.7 million of integration and reorganization costs
and $0.1 million of acquisition costs.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200806005301/en/
For investor inquiries, contact: Ashley Higgins Investor
Relations 212-479-3160 investors@gannett.com
For media inquiries, contact: Stephanie Tackach Director,
Public Relations 212-715-5490 stackach@gannett.com
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