- Operating Income of $34.9 million; Net Loss Attributable to
Gannett of $2.6 million
- Adjusted EBITDA(1) of $59.5 million, up 15% Year-over-Year
- Cash Provided by Operating Activities of $20.6 million; Free
Cash Flow(1) of $7.4 million
- Repaid $65.3 million in Debt; First Lien Net Leverage Below
2.0x
Gannett Co., Inc. ("Gannett", "we", "us", "our", or the
"Company") (NYSE: GCI) today reported its financial results for the
third quarter ended September 30, 2023.
"In the third quarter, we drove significant improvement to our
bottom line, along with sustained growth in both Adjusted EBITDA(1)
and total digital revenues. Furthermore, for the third consecutive
quarter, we achieved a sequential improvement in same-store
revenues(1). Our financial results for the third quarter reflect
the continued progress on our strategy and our resilience in
successfully navigating a challenging operating environment for our
advertising clients. The positive momentum observed in our key
financial metrics underscores our relentless effort to execute on
our strategy, which we believe will result in long term sustainable
revenue and profit growth, along with much lower debt levels," said
Michael Reed, Gannett Chairman and Chief Executive Officer.
"We remain focused on improving profitability, improving revenue
trends through digital revenue growth, and debt repayment. In the
third quarter we repaid $65 million of debt, which combined with
our Adjusted EBITDA(1) growth, reduced our first lien net leverage
to below 2.0x. We also maintained a strong liquidity position with
$109 million of cash at the end of the third quarter. Equally
important, total digital revenues surpassed 40% of total revenues,
growing 3% year-over-year on a same store basis(1). We expect this
trend of digital revenue growth to continue into the fourth quarter
of 2023."
"We continue to focus on and expand our partnerships to generate
new digital and affiliate revenues. Our recent agreements with
Jackpocket and Red Ventures bring the total number of executed
partnerships to four, which we believe will allow us to expand our
audience and create additional monetization opportunities."
"Our progress and results in 2023 serve as a testament to the
strength of our strategy, prudent cost management, and our seasoned
management team. We've shown resilience across various operating
environments, and as a result, we are confident in our ability to
navigate any near-term volatility and drive sustained, long-term
value for our shareholders. As you may expect, no evolution from an
analog business to a digital business is a straight line. We are
making substantive progress on our evolution in key areas."
"We expect 2023 will be a good year by most measures that are
critical to our strategy. Importantly, we expect to end the year
with overall revenue trend improvement, growth in both total
digital revenues and Adjusted EBITDA, significant free cash flow
generation, meaningful debt reduction, and first lien net leverage
below 2.0x. With our continued execution we expect to improve on
all these areas in 2024 and beyond, and remain optimistic about
creating sustainable growth and significant value for our
shareholders."
Third Quarter 2023
Highlights:
- Total revenues of $652.9 million decreased 9.1% compared to the
third quarter of 2022
- Same store revenues(1) decreased 8.4% compared to the third
quarter of 2022, as compared to a decrease of 8.6% in the second
quarter of 2023
- Total digital revenues were $263.6 million, or 40.4% of total
revenues, up 2.7% over the same period in the prior year on a same
store basis(1)
- Net loss attributable to Gannett of $2.6 million improved by
$51.5 million versus the net loss attributable to Gannett of $54.1
million in the third quarter of 2022
- Adjusted EBITDA(1) totaled $59.5 million, an increase of 14.7%
compared to the third quarter of 2022
- Adjusted EBITDA margin(1) of 9.1% improved 190 basis points
compared to the 7.2% Adjusted EBITDA margin(1) in the third quarter
of 2022
- Cash provided by operating activities of $20.6 million
- Free cash flow(1) of $7.4 million
________________________
(1) See "Use of Non-GAAP Information"
below for information about this non-GAAP measure.
Third Quarter 2023 Gannett Media
Highlights:
- Digital-only subscription revenues of $40.0 million grew 15.9%
year-over-year and increased 16.1% year-over-year on a same store
basis(1)
- Record high digital-only average revenue per user(2) of $6.82
increased 14.0% year-over-year, reflecting the execution of our
refined customer acquisition strategy with a heightened focus on
profitability and lowering churn
- After minor sequential declines in the first and second quarter
of 2023, digital-only paid subscriptions(2) returned to growth in
the third quarter of 2023, up 0.7% compared to the second quarter
of 2023, and totaled 1.96 million digital-only paid
subscriptions(2)
- 189 million average monthly unique visitors in the third
quarter of 2023 with 138 million average monthly unique visitors
coming from our USA TODAY NETWORK (based on September 2023 Comscore
Media Metrix®) and 51 million average monthly unique visitors
resulting from our U.K. digital properties(3)
Third Quarter 2023 Digital Marketing
Solutions Highlights:
- Digital Marketing Solutions segment revenues of $121.9 million
grew 1.6% year-over year and increased 1.9% year-over-year on a
same store basis(1)
- Total core platform revenues(4) were $120.8 million in the
third quarter of 2023, up 1.8% compared to the same quarter in the
prior year
- Total core platform average customer count(2) of 15.3 thousand
in the third quarter of 2023 was unchanged sequentially, and down
3.2% compared to same period in the prior year
- Core platform average revenue per user(2) was $2,636, a 5.0%
increase year-over-year
- Customer budget retention(5) was 95.4%, an increase of 20 basis
points compared to the third quarter of 2022
- Net income attributable to Gannett within the segment was $5.9
million in the third quarter of 2023 and Net income attributable to
Gannett margin within the segment was 4.8% in the third quarter of
2023 versus 4.5% in the same quarter of the prior year
- Adjusted EBITDA(1) within the segment was $13.6 million in the
third quarter of 2023, decreasing 13.5% compared to the same period
in the prior year. Adjusted EBITDA margin(1) within the segment
decreased to 11.1% in the third quarter of 2023 versus 13.1% in the
same quarter of the prior year
________________________
(2)
See "Key Performance Indicators" ("KPI")
below for information about our use of KPIs.
(3)
Newsquest used Adobe Analytics to identify
unique visitors in the third quarter of 2023.
(4)
Core platform revenues is defined as
revenue derived from customers utilizing our proprietary digital
marketing services platform that are sold by either our direct or
local market teams.
(5)
Customer budget retention is calculated as
1 minus the average of churned budgets in a given month divided by
starting budgets in the same period, averaged across the
quarter.
Third Quarter 2023 Capital Structure
Highlights:
- As of September 30, 2023, the Company had cash and cash
equivalents of $109.2 million
- Total principal amount of debt outstanding as of September 30,
2023 was $1,154.5 million including $665.9 million in first lien
debt, which resulted in a First Lien Net Leverage(6) of 1.96x, a
decline of 26.9% compared to 2.68x as of the end of fiscal
2022
- During the third quarter of 2023, the Company repaid $65.3
million of debt
- The Company repurchased approximately $33.5 million of the
first lien notes due November 1, 2026 (the "2026 Senior Notes") for
approximately $29.5 million representing a discount to par
- In connection with the repurchase of the 2026 Senior Notes, the
Company received a waiver from certain lenders under its five-year
senior secured term loan facility (the "New Senior Secured Term
Loan") that reduced the scheduled amortization payment for the
quarter ended September 30, 2023 payable to those lenders by $13.1
million
- The Company repaid $31.8 million of its New Senior Secured Term
Loan using the proceeds from real estate and other asset sales
totaling $29.9 million and its quarterly amortization of $1.9
million
- Subsequent to September 30, 2023:
- The Company repaid $6.2 million of its New Senior Secured Term
Loan using the proceeds from real estate asset sales
________________________
(6)
As of September 30, 2023, the First Lien
Net Leverage ratio was calculated by subtracting cash on the
balance sheet from the sum of both our Senior Secured Term Loan and
6% first lien notes due November 1, 2026 (the "2026 Senior Notes")
and dividing that by Q3 2023 LTM Adjusted EBITDA. Our 6% Senior
Secured Convertible Notes due 2027 are second lien as of the
completion of the Senior Secured Term Loan refinancing in October
2021.
Financial Highlights
In thousands
Third Quarter 2023
Revenues
$ 652,871
Net loss attributable to Gannett
(2,566
)
Adjusted EBITDA(7) (non-GAAP basis)
59,524
Adjusted Net loss attributable to
Gannett(7) (non-GAAP basis)
(22,619
)
Cash provided by operating activities
20,631
Free cash flow (7) (non-GAAP basis)
7,372
(7)
Refer to "Use of Non-GAAP Information"
below for the Company’s definition of Adjusted EBITDA, Adjusted Net
loss attributable to Gannett, and Free cash flow, as well as the
reconciliation of such measures to the most comparable GAAP
measure.
Business Outlook
The Company is adjusting its full year 2023 outlook with respect
to revenues, net income (loss) attributable to Gannett, cash
provided by operating activities, same store total revenues
year-over-year, free cash flow, and Adjusted EBITDA. The Company is
reiterating its full year 2023 outlook with respect to first lien
net leverage.
Full Year 2023
Outlook(11)
Full Year 2022 Results
Revenues
$2.65B to $2.67B
$2.95B
Same store total revenues(8)(9)
Year-Over-Year (non-GAAP basis)
(9%) to (8%)
(7)%
Net income (loss) attributable to
Gannett
($20M) to $0M
($78M)
Cash provided by operating activities
$105M to $125M
$41M
Free cash flow(8)(9)(10) (non-GAAP
basis)
$65M to $85M
($5M)
Adjusted EBITDA(8)(9) (non-GAAP basis)
$270M to $290M
$257M
First lien net leverage
<2.0x
2.7x
(8)
Refer to "Use of Non-GAAP Information"
below for the Company’s definition of Adjusted EBITDA, Same store
total revenues, and Free cash flow, as well as the reconciliation
of such measures to the most comparable GAAP measure.
(9)
Refer to "Business Outlook" on Tables 11,
12 and 13 below for a reconciliation of non-GAAP outlook measures
to corresponding GAAP measures.
(10)
Capital expenditures are assumed at
approximately $40 million for full year 2023. Figure does not
include asset disposition proceeds which we estimate will be
approximately $85 million in 2023.
(11)
Projections are based on Company estimates
as of November 2, 2023 and are provided solely for illustrative
purposes. Actual results may vary. The Company undertakes no
obligation to update this information. Additionally, the Company's
estimates do not factor in the impact of any future acquisitions or
dispositions. The Company’s future financial results could differ
materially from the Company’s current estimates.
Earnings Conference Call
Management will host a conference call on Thursday, November 2,
2023 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. The conference call may be accessed by
dialing 1-877-451-6152 (from within the U.S.) or 1-201-389-0879
(from outside of the U.S.) ten minutes prior to the scheduled start
of the call; please reference "Gannett Third Quarter Earnings Call"
or access code "13733336". 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, November 16, 2023 by dialing 1-844-512-2921 (from within
the U.S.) or 1-412-317-6671 (from outside of the U.S.); please
reference access code "13733336".
About Gannett
Gannett Co., Inc. (NYSE: GCI) is a subscription-led and
digitally-focused media and marketing solutions company committed
to empowering communities to thrive. 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 current
portfolio of media assets includes the USA TODAY NETWORK, which
includes USA TODAY, and local media organizations in 43 states in
the United States, and Newsquest, a wholly-owned subsidiary
operating in the United Kingdom. We also own digital marketing
services companies under the brand LocaliQ, which provide a
cloud-based platform of products to enable small and medium-sized
businesses to accomplish their marketing goals. In addition, our
portfolio includes what we believe is the largest media-owned
events business in the U.S., USA TODAY NETWORK Ventures. To connect
with us, visit www.gannett.com.
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, our Business Outlook, statements regarding our business
outlook, digital revenue performance and growth, growth in our
Digital Marketing Solutions segment, growth of and demand for our
digital-only subscriptions and digital marketing and advertising
services, expectations regarding our free cash flows, revenues, net
income (loss) attributable to Gannett, same-store revenues and cash
flows, expectations regarding our long-term growth, expectations
regarding growth in revenues and Adjusted EBITDA, our ability to
navigate near-term volatility and create long-term stockholder
value, our expectations, in terms of both amount and timing, with
respect to debt repayment, our expected capital expenditures,
expectations regarding real estate and other asset sales, our
strategy, our ability to achieve our operating priorities, our
long-term opportunities, economic impacts, our ability to navigate
volatility, achieve our financial goals, optimize our capital
structure and achieve optimal financial performance, our cost
management programs, our cost structure and future revenue trends
and our ability to influence trends. Words such as "expect(s)",
believe(s)", "will", "outlook", "guidance", "estimate(s)",
"project(s)" and similar expressions are intended to identify such
forward-looking statements. 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 most recent Annual
Report on Form 10-K, our quarterly reports on Form 10-Q, and our
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. Except to the extent required by law, 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.
GANNETT CO., INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
Table No. 1
In thousands, except share data
September 30, 2023
December 31, 2022
Assets
(Unaudited)
Current assets:
Cash and cash equivalents
$
109,240
$
94,255
Accounts receivable, net of allowance of
$13,143 and $16,697 as of September 30, 2023 and December 31, 2022,
respectively
257,032
289,415
Inventories
29,914
45,223
Prepaid expenses
50,327
46,205
Other current assets
17,107
32,679
Total current assets
463,620
507,777
Property, plant and equipment, net of
accumulated depreciation of $373,232 and $360,522 as of September
30, 2023 and December 31, 2022, respectively
246,271
305,994
Operating lease assets
230,961
233,322
Goodwill
533,264
533,166
Intangible assets, net
545,740
613,358
Deferred tax assets
57,284
56,618
Pension and other assets
172,237
143,320
Total assets
$
2,249,377
$
2,393,555
Liabilities and equity
Current liabilities:
Accounts payable and accrued
liabilities
$
310,527
$
351,848
Deferred revenue
128,599
153,648
Current portion of long-term debt
69,339
60,452
Operating lease liabilities
46,918
44,872
Other current liabilities
5,797
6,218
Total current liabilities
561,180
617,038
Long-term debt
580,789
695,642
Convertible debt
412,483
405,681
Deferred tax liabilities
—
1,439
Pension and other postretirement benefit
obligations
43,966
50,710
Long-term operating lease liabilities
212,681
219,109
Other long-term liabilities
112,227
108,563
Total noncurrent liabilities
1,362,146
1,481,144
Total liabilities
1,923,326
2,098,182
Commitments and contingent
liabilities
Equity
Preferred stock, $0.01 par value per
share, 300,000 shares authorized, of which 0 shares and 150,000
shares were designated as Series A Junior Participating Preferred
Stock at September 30, 2023 and December 31, 2022, respectively,
none of which were issued and outstanding at September 30, 2023 and
December 31, 2022
—
—
Common stock, $0.01 par value per share,
2,000,000,000 shares authorized, 158,446,632 shares issued and
149,002,959 shares outstanding at September 30, 2023; 153,286,104
shares issued and 146,223,179 shares outstanding at December 31,
2022
1,584
1,533
Treasury stock, at cost, 9,443,673 shares
and 7,062,925 shares at September 30, 2023 and December 31, 2022,
respectively
(17,392
)
(14,737
)
Additional paid-in capital
1,422,400
1,409,578
Accumulated deficit
(1,004,300
)
(999,401
)
Accumulated other comprehensive loss
(75,773
)
(101,231
)
Total Gannett stockholders'
equity
326,519
295,742
Noncontrolling interests
(468
)
(369
)
Total equity
326,051
295,373
Total liabilities and equity
$
2,249,377
$
2,393,555
GANNETT CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Table No. 2
Three months ended September
30,
In thousands, except per share amounts
2023
2022
Advertising and marketing services
$
339,803
$
361,847
Circulation
227,104
264,732
Other
85,964
91,323
Total operating revenues
652,871
717,902
Operating costs
416,103
459,343
Selling, general and administrative
expenses
184,914
212,473
Depreciation and amortization
40,644
44,778
Integration and reorganization costs
(reversal)
(955
)
33,311
Asset impairments
188
71
Gain on sale or disposal of assets,
net
(23,334
)
(7,180
)
Other operating expenses
370
249
Total operating expenses
617,930
743,045
Operating income (loss)
34,941
(25,143
)
Interest expense
27,918
27,750
Gain on early extinguishment of debt
(2,717
)
(1,228
)
Non-operating pension income
(2,929
)
(14,990
)
Other income, non-operating, net
(907
)
(651
)
Non-operating expenses
21,365
10,881
Income (loss) before income
taxes
13,576
(36,024
)
Provision for income taxes
16,144
18,098
Net loss
(2,568
)
(54,122
)
Net loss attributable to noncontrolling
interests
(2
)
(8
)
Net loss attributable to
Gannett
$
(2,566
)
$
(54,114
)
Loss per share attributable to Gannett -
basic
$
(0.02
)
$
(0.39
)
Loss per share attributable to Gannett -
diluted
$
(0.02
)
$
(0.39
)
GANNETT CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
Table No. 3
Nine months ended September
30,
In thousands
2023
2022
Operating activities
Net loss
$
(4,998
)
$
(110,924
)
Adjustments to reconcile net loss to
operating cash flows:
Depreciation and amortization
124,126
142,091
Share-based compensation expense
12,727
13,277
Non-cash interest expense
15,942
15,954
Gain on sale or disposal of assets,
net
(40,869
)
(9,612
)
(Gain) loss on early extinguishment of
debt
(3,213
)
2,264
Asset impairments
1,370
1,010
Pension and other postretirement benefit
obligations
(10,765
)
(71,640
)
Change in other assets and liabilities,
net
(20,903
)
50,562
Cash provided by operating
activities
73,417
32,982
Investing activities
Acquisitions, net of cash acquired
—
(15,432
)
Purchase of property, plant and
equipment
(29,707
)
(35,943
)
Proceeds from sale of real estate and
other assets
83,799
71,004
Change in other investing activities
(24
)
(548
)
Cash provided by investing
activities
54,068
19,081
Financing activities
Payments of deferred financing costs
—
(957
)
Borrowings of long-term debt
—
80,000
Repayments of long-term debt
(111,894
)
(127,567
)
Acquisition of noncontrolling
interests
—
(2,050
)
Treasury stock
(2,642
)
(6,529
)
Changes in other financing activities
1,593
(941
)
Cash used for financing
activities
(112,943
)
(58,044
)
Effect of currency exchange rate change on
cash
688
(1,447
)
Increase (decrease) in cash, cash
equivalents and restricted cash
15,230
(7,428
)
Cash, cash equivalents and restricted cash
at beginning of period
104,804
143,619
Cash, cash equivalents and restricted
cash at end of period
$
120,034
$
136,191
GANNETT CO., INC.
SEGMENT INFORMATION
(Unaudited)
Table No. 4
Three months ended September
30,
In thousands
2023
2022
Operating revenues:
Gannett Media
$
567,540
$
633,006
Digital Marketing Solutions
121,919
120,049
Corporate and other
1,532
1,328
Intersegment eliminations
(38,120
)
(36,481
)
Total
$
652,871
$
717,902
USE OF NON-GAAP
INFORMATION
The Company uses non-GAAP financial performance and liquidity
measures to supplement the financial information presented on a
U.S. 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 U.S. GAAP measures and should be read
together with financial information presented on a U.S. GAAP
basis.
The Company defines its non-GAAP measures as follows:
- Adjusted EBITDA is a non-GAAP performance measure the Company
believes offers a useful view of the overall and segment operations
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 the early
extinguishment of debt, (4) Non-operating pension income, (5) Loss
on convertible notes derivative, (6) Depreciation and amortization,
(7) Integration and reorganization costs, (8) Other operating
expenses, including third-party debt expenses and acquisition
costs, (9) Asset impairments, (10) Goodwill and intangible
impairments, (11) Gains or losses on the sale or disposal of
assets, (12) Share-based compensation, and (13) certain other
non-recurring charges. The most directly comparable U.S. GAAP
measure is Net income (loss) attributable to Gannett.
- Adjusted EBITDA margin is a non-GAAP performance measure the
Company believes offers a useful view of the overall and segment
operations of our business. Adjusted EBITDA margin is defined as
Adjusted EBITDA divided by total Operating revenues.
- Adjusted Net income (loss) attributable to Gannett is a
non-GAAP performance measure the Company believes offers a useful
view of the overall operations of our business and is useful to
analysts and investors in evaluating the results of operations and
operational trends. The Company defines Adjusted Net income (loss)
attributable to Gannett before (1) Gains or losses on the early
extinguishment of debt, (2) Loss on convertible notes derivative,
(3) Integration and reorganization costs, (4) Other operating
expenses, including third-party debt expenses and acquisition
costs, (5) Asset impairments, (6) Goodwill and intangibles
impairments, (7) Gains or losses on the sale or disposal of assets,
(8) certain other non-recurring charges, and (9) the tax impact of
the above items.
- Free cash flow is a non-GAAP liquidity measure that adjusts our
reported U.S. GAAP results for items we believe are critical to the
ongoing success of our business. The Company defines Free cash flow
as Cash provided by (used for) operating activities as reported on
the Consolidated 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 stockholders. The most directly comparable U.S. GAAP
financial measure is Cash provided by (used for) operating
activities.
- Same store revenues is a non-GAAP performance measure based on
GAAP revenues for Gannett for the current period, excluding (1)
acquired revenues (2) currency impact, and (3) exited
operations.
Management’s Use of Non-GAAP Measures
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net income
(loss) attributable to Gannett, Free cash flow and Same store
revenues are not measurements of financial performance under U.S.
GAAP and should not be considered in isolation or as an alternative
to income (loss) from operations, net income (loss), margin,
revenues, cash flow provided by (used for) operating activities, or
any other measure of performance or liquidity derived in accordance
with U.S. GAAP. We believe these non-GAAP financial 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.
We use Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net
income (loss) attributable to Gannett, Free cash flow and Same
store revenues as measures 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.
Limitations of Adjusted EBITDA, Adjusted EBITDA margin,
Adjusted Net income (loss) attributable to Gannett, Free cash flow
and Same store revenues
Each of our non-GAAP measures have limitations as analytical
tools. They should not be viewed in isolation or as a substitute
for U.S. GAAP measures of earnings or cash flows. Material
limitations in making the adjustments to our earnings to calculate
Adjusted EBITDA and Adjusted Net income (loss) attributable to
Gannett using these non-GAAP financial measures as compared to U.S.
GAAP net income (loss) include: the cash portion of interest /
financing expense, income tax (benefit) provision, and charges
related to asset impairments, which may significantly affect our
financial results.
Management believes these items are important in evaluating our
performance, results of operations, and financial position. We use
non-GAAP financial measures to supplement our U.S. GAAP results in
order to provide a more complete understanding of the factors and
trends affecting our business.
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net income
(loss) attributable to Gannett, Free cash flow and Same store
revenues are not alternatives to net income, margin, income from
operations, cash flows provided by (used for) operations or
revenues as calculated and presented in accordance with U.S. GAAP.
As such, they should not be considered or relied upon as
substitutes or alternatives for any such U.S. GAAP financial
measure. We strongly urge you to review the reconciliations of Net
income (loss) attributable to Gannett to Adjusted EBITDA, Adjusted
EBITDA margin, Net income (loss) attributable to Gannett to
Adjusted Net income (loss) attributable to Gannett, Cash provided
by (used for) operations to Free cash flow and Revenues to Same
Store revenues along with our Consolidated financial statements
included elsewhere in this report. We also strongly urge you not to
rely on any single financial measure to evaluate our business. In
addition, because Adjusted EBITDA, Adjusted EBITDA margin, Adjusted
Net income (loss) attributable to Gannett, Free cash flow and Same
store revenues are not measures of financial performance under U.S.
GAAP and are susceptible to varying calculations, the Adjusted
EBITDA, Adjusted EBITDA margin, Adjusted Net income (loss)
attributable to Gannett, Free cash flow and Same store revenues
measures as presented in this report may differ from and may not be
comparable to similarly titled measures used by other
companies.
Non-GAAP Outlook
Our 2023 outlook included in this release includes certain
non-GAAP measures, including Same store revenues, Adjusted EBITDA
and Free cash flow. The outlook for these items does not factor in
the impact of any further acquisitions or dispositions within 2023.
We have provided these non-GAAP measures for future guidance for
the same reasons that were outlined above for historical non-GAAP
measures.
We have not fully reconciled non-GAAP forward-looking Same store
revenues, Adjusted EBITDA and Free cash flow to its most directly
comparable GAAP measure because the Company is unable to predict
with reasonable certainty those items that may affect such measures
calculated and presented in accordance with GAAP without
unreasonable effort. These reconciling items are uncertain, depend
on various factors and could significantly impact, either
individually or in the aggregate, our comparable GAAP measures. For
forward-looking Adjusted EBITDA and Same store revenues, the
reconciliation is unavailable because it would include
forward-looking financial statements in accordance with GAAP that
are unavailable without unreasonable effort. For these reasons, we
use a projected range of the aggregate amount of certain items in
order to calculate our projected non-GAAP Adjusted EBITDA outlook
(see Table 11 below), our projected non-GAAP Same Store revenues
outlook (see Table 12 below) as well as our projected non-GAAP Free
cash flow outlook (see Table 13 below). Accordingly, we are unable
to provide a full reconciliation of these non-GAAP measures used in
our outlook without unreasonable effort as certain information
necessary to calculate such measures on a GAAP basis is
unavailable, dependent on future events outside of our control and
cannot be predicted without unreasonable efforts by the
Company.
GANNETT CO., INC.
NON-GAAP FINANCIAL INFORMATION
ADJUSTED EBITDA
(Unaudited)
Table No. 5
Three months ended September
30, 2023
In thousands
Gannett Media
Digital Marketing
Solutions
Corporate and other
Consolidated Total
Net income (loss) attributable to
Gannett
$
54,537
$
5,902
$
(63,005
)
$
(2,566
)
Provision for income taxes
—
—
16,144
16,144
Interest expense
—
—
27,918
27,918
Gain on early extinguishment of debt
—
—
(2,717
)
(2,717
)
Non-operating pension income
(2,929
)
—
—
(2,929
)
Depreciation and amortization
29,944
6,015
4,685
40,644
Integration and reorganization costs
(reversal)
(3,539
)
630
1,954
(955
)
Other operating expenses
139
—
231
370
Asset impairments
188
—
—
188
(Gain) loss on sale or disposal of assets,
net
(23,465
)
131
—
(23,334
)
Share-based compensation expense
—
—
3,944
3,944
Other items
(615
)
897
2,535
2,817
Adjusted EBITDA (non-GAAP basis)
$
54,260
$
13,575
$
(8,311
)
$
59,524
Net income (loss) attributable to Gannett
margin
9.6
%
4.8
%
NM
(0.4
)%
Adjusted EBITDA margin (non-GAAP
basis)
9.6
%
11.1
%
NM
9.1
%
NM indicates not meaningful.
Three months ended September
30, 2022
In thousands
Gannett Media
Digital Marketing
Solutions
Corporate and other
Consolidated Total
Net income (loss) attributable to
Gannett
$
9,774
$
5,385
$
(69,273
)
$
(54,114
)
Provision for income taxes
—
—
18,098
18,098
Interest expense
—
—
27,750
27,750
Gain on early extinguishment of debt
—
—
(1,228
)
(1,228
)
Non-operating pension income
(14,990
)
—
—
(14,990
)
Depreciation and amortization
32,821
7,252
4,705
44,778
Integration and reorganization costs
25,378
431
7,502
33,311
Other operating (income) expenses
(48
)
—
297
249
Asset impairments
71
—
—
71
(Gain) loss on sale or disposal of assets,
net
(7,171
)
2
(11
)
(7,180
)
Share-based compensation expense
—
—
4,499
4,499
Other items
188
2,620
(2,143
)
665
Adjusted EBITDA (non-GAAP basis)
$
46,023
$
15,690
$
(9,804
)
$
51,909
Net income (loss) attributable to Gannett
margin
1.5
%
4.5
%
NM
(7.5
)%
Adjusted EBITDA margin (non-GAAP
basis)
7.3
%
13.1
%
NM
7.2
%
NM indicates not meaningful.
GANNETT CO., INC.
NON-GAAP FINANCIAL INFORMATION
ADJUSTED NET LOSS ATTRIBUTABLE TO
GANNETT
(Unaudited)
Table No. 6
Three months ended September
30,
In thousands
2023
2022
Net loss attributable to Gannett
$
(2,566
)
$
(54,114
)
Gain on early extinguishment of debt
(2,717
)
(1,228
)
Integration and reorganization costs
(reversal)
(955
)
33,311
Other operating expenses
370
249
Asset impairments
188
71
Gain on sale or disposal of assets,
net
(23,334
)
(7,180
)
Other items
42
(6
)
Subtotal
(28,972
)
(28,897
)
Tax impact of above items (1)
6,353
(6,069
)
Adjusted Net loss attributable to Gannett
(non-GAAP basis)
$
(22,619
)
$
(34,966
)
(1)
Beginning with the fourth quarter of 2022,
the Company calculated the tax impact of the items impacting
Adjusted Net loss attributable to Gannett using a combined U.S.
federal statutory income tax rate and a State and Local tax rate of
24.1% (the "Combined Tax Rate"). As most of our operations are in
the U.S. and the Company expects to pay the Combined Tax Rate, the
Company believes this methodology provides for a more accurate
representation of our business and the tax impacts affecting
Adjusted net income (loss) attributable to Gannett. For the three
months ended September 30, 2022, the Company calculated the tax
impact of items impacting Adjusted Net loss attributable to Gannett
based on a full recalculation of the estimated annual effective tax
rate and the annual tax expense, which resulted in volatility of
the tax impact of items affecting Adjusted Net loss attributable to
Gannett due to estimates used in the quarterly tax calculation. As
a result, and as reflected on the table, the Company has recast the
tax impact of items impacting Adjusted Net loss attributable to
Gannett for the three months ended September 30, 2022.
GANNETT CO., INC.
NON-GAAP FINANCIAL INFORMATION
FREE CASH FLOW
(Unaudited)
Table No. 7
Three months ended September
30,
In thousands
2023
2022
Cash provided by operating activities
(GAAP basis)
$
20,631
$
31,294
Capital expenditures
(13,259
)
(12,651
)
Free cash flow (non-GAAP basis)(1)
$
7,372
$
18,643
(1)
For the three months ended September 30,
2023 and 2022, Free cash flow was negatively impacted by interest
paid of $10.4 million and $9.1 million, respectively, integration
and reorganization costs of $9.6 million and $22.4 million,
respectively, and other costs of $4.1 million and $1.7 million,
respectively.
GANNETT CO., INC.
NON-GAAP FINANCIAL INFORMATION
SAME STORE REVENUES -
CONSOLIDATED
(Unaudited)
Table No. 8
Three months ended September
30,
In thousands
2023
2022
% Change
Total revenues
$
652,871
$
717,902
(9.1
)%
Currency impact
(3,749
)
—
***
Exited operations(1)
—
(8,989
)
***
Same store total revenues
$
649,122
$
708,913
(8.4
)%
Advertising and marketing services
revenues
$
339,803
$
361,847
(6.1
)%
Currency impact
(1,999
)
—
***
Exited operations(1)
—
(7,125
)
***
Same store advertising and marketing
services revenues
$
337,804
$
354,722
(4.8
)%
Circulation revenues
$
227,104
$
264,732
(14.2
)%
Currency impact
(1,295
)
—
***
Exited operations(1)
—
(1,736
)
***
Same store circulation revenues
$
225,809
$
262,996
(14.1
)%
Other revenues
$
85,964
$
91,323
(5.9
)%
Currency impact
(455
)
—
***
Exited operations(1)
—
(128
)
***
Same store other revenues
$
85,509
$
91,195
(6.2
)%
*** Indicates a percentage change greater than or equal to 100.
(1)
In 2023, exited operations include (i)
businesses divested and (ii) the elimination of stand-alone print
products discontinued within the media markets.
GANNETT CO., INC.
NON-GAAP FINANCIAL INFORMATION
SAME STORE REVENUES - TOTAL DIGITAL and
DIGITAL-ONLY SUBSCRIPTION REVENUES
(Unaudited)
Table No. 9
Three months ended September
30,
In thousands
2023
2022
% Change
Total Digital revenues
$
263,644
$
256,434
2.8
%
Currency impact
(952
)
—
***
Exited operations(1)
—
(698
)
***
Same store total digital
revenues
$
262,692
$
255,736
2.7
%
Three months ended September
30,
In thousands
2023
2022
% Change
Digital-only subscription
revenues
$
40,039
$
34,532
15.9
%
Currency impact
(95
)
—
***
Exited operations(1)
—
(127
)
***
Same store digital-only subscription
revenues
$
39,944
$
34,405
16.1
%
*** Indicates a percentage change greater than or equal to 100.
(1)
In 2023, exited operations include (i)
businesses divested and (ii) the elimination of stand-alone print
products discontinued within the media markets.
GANNETT CO., INC.
NON-GAAP FINANCIAL INFORMATION
SAME STORE REVENUES - DIGITAL MARKETING
SOLUTIONS SEGMENT
(Unaudited)
Table No. 10
Three months ended September
30,
In thousands
2023
2022
% Change
Total revenues - Digital Marketing
Solutions
$
121,919
$
120,049
1.6
%
Currency impact
385
—
***
Exited operations(1)
—
—
***
Same store total revenues - Digital
Marketing Solutions
$
122,304
$
120,049
1.9
%
*** Indicates a percentage change greater than or equal to 100.
(1)
In 2023, exited operations include (i)
businesses divested and (ii) the elimination of stand-alone print
products discontinued within the media markets.
GANNETT CO., INC.
NON-GAAP FINANCIAL INFORMATION
BUSINESS OUTLOOK - 2023
GUIDANCE(1)(2)
ADJUSTED EBITDA
(Unaudited)
Table No. 11
Full Year 2023 (Est.)
Net income (loss) attributable to
Gannett
($20M) to $0M
Provision for income taxes
$10M to $30M
Interest expense
$105M to $115M
Non-operating pension income
~($10M)
Depreciation and amortization
~$165M
Integration and reorganization costs
$20M to $25M
Share-based compensation expense
$15M to $20M
Other items
~($35M)
Adjusted EBITDA (non-GAAP basis)
$270M to $290M
(1)
Projections are based on Company estimates
as of November 2, 2023 and are provided solely for illustrative
purposes. Actual results may vary. The Company undertakes no
obligation to update this information. Additionally, the Company's
estimates do not factor in the impact of any future acquisitions or
dispositions. The Company’s future financial results could differ
materially from the Company’s current estimates.
(2)
For forward-looking Adjusted EBITDA, the
reconciliation is unavailable without unreasonable effort. For this
reason, we use a projected range of the aggregate amount of certain
items in order to calculate our projected non-GAAP Adjusted EBITDA
outlook.
GANNETT CO., INC.
NON-GAAP FINANCIAL INFORMATION
BUSINESS OUTLOOK - 2023
GUIDANCE(1)(2)
SAME STORE REVENUES
(Unaudited)
Twelve months ended December
31, 2022 (Est.)
Twelve months ended December
31, 2023 (Est.)
Table No. 12
Total revenues
$2.95B(4)
$2.65B to $2.67B
Acquired revenues
—
~($9M)
Currency impact
—
~($1M)
Exited operations(3)
($42M)
—
Same store total revenues
$2.90B
$2.64B to $2.66B
(1)
Projections are based on Company estimates
as of November 2, 2023 and are provided solely for illustrative
purposes. Actual results may vary. The Company undertakes no
obligation to update this information. Additionally, the Company's
estimates do not factor in the impact of any future acquisitions or
dispositions. The Company’s future financial results could differ
materially from the Company’s current estimates.
(2)
For forward-looking Same store revenues,
the reconciliation is unavailable without unreasonable effort. For
this reason, we use a projected range of the aggregate amount of
certain items in order to calculate our projected non-GAAP Same
store revenues outlook.
(3)
In 2023, exited operations include (i)
businesses divested and (ii) the elimination of stand-alone print
products discontinued within the media markets.
(4)
Total revenues as reported.
GANNETT CO., INC.
NON-GAAP FINANCIAL INFORMATION
BUSINESS OUTLOOK - 2023
GUIDANCE(1)(2)
FREE CASH FLOW
(Unaudited)
Table No. 13
Full Year 2023 (Est.)
Cash provided by operating activities
(GAAP basis)
$105M to $125M
Capital expenditures
~$40M
Free cash flow (non-GAAP basis)
$65M to $85M
(1)
Projections are based on Company estimates
as of November 2, 2023 and are provided solely for illustrative
purposes. Actual results may vary. The Company undertakes no
obligation to update this information. Additionally, the Company's
estimates do not factor in the impact of any future acquisitions or
dispositions. The Company’s future financial results could differ
materially from the Company’s current estimates.
(2)
For forward-looking Free cash flow, the
reconciliation is unavailable without unreasonable effort. For this
reason, we use a projected range of the aggregate amount of certain
items in order to calculate our projected non-GAAP Free cash flow
outlook.
KEY PERFORMANCE INDICATORS
A key performance indicator ("KPI") is generally defined as a
quantifiable measurement or metric used to gauge performance,
specifically to help determine strategic, financial, and
operational achievements, especially compared to those of similar
businesses.
We define Digital-only average revenue per user ("ARPU") as
digital-only subscription average monthly revenues divided by the
average digital-only paid subscriptions within the respective
period. We define Core platform ARPU as core platform average
monthly revenues divided by average monthly customer count within
the period. We define Core platform revenues as revenue derived
from customers utilizing our proprietary digital marketing services
platform that are sold by either our direct or local market
teams.
Management believes Digital-only ARPU, Core platform ARPU,
digital-only paid subscriptions, and core platform average customer
count are KPIs that offer useful information in understanding
consumer behavior, trends in our business, and our overall
operating results. Management utilizes these KPIs to track and
analyze trends across our segments.
GANNETT CO., INC.
KEY PERFORMANCE INDICATORS
(Unaudited)
Table No. 14
Three months ended September
30,
Nine months ended September
30,
In thousands, except ARPU
2023
2022
Change
% Change
2023
2022
Change
% Change
Gannett Media:
Digital-only ARPU
$
6.82
$
5.98
$
0.84
14.0
%
$
6.33
$
5.97
$
0.36
6.0
%
DMS:
Core platform ARPU
$
2,636
$
2,511
$
125
5.0
%
$
2,605
$
2,412
$
193
8.0
%
Core platform average customer count
15.3
15.8
(0.5
)
(3.2
)%
15.1
15.8
(0.7
)
(4.4
)%
Table No. 15
As of September 30,
In thousands
2023
2022
% Change
Gannett Media:
Digital-only paid subscriptions
1,964
1,982
(0.9)%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231102658064/en/
For investor inquiries, contact: Matt Esposito Investor
Relations 703-854-3000 investors@gannett.com
For media inquiries, contact: Lark-Marie Anton Corporate
Communications 646-906-4087 lark@gannett.com
New Gannett (NYSE:GCI)
Historical Stock Chart
From Apr 2024 to May 2024
New Gannett (NYSE:GCI)
Historical Stock Chart
From May 2023 to May 2024