Strong fourth quarter Revenue and Adjusted
EBITDA performance Debt reduction and refinancing expected to
result in $90 million of annual cash interest savings in 2021 Paid
digital-only subscriptions reach 1.1 million, an increase of 29% to
prior year
Gannett Co., Inc. ("Gannett", "we", "us", "our", or the
"Company") (NYSE: GCI) today reported its financial results for the
fourth quarter and full year ended December 31, 2020.
"During a challenging 2020, we achieved strong operational
execution, significant cost and debt reductions, improved operating
trends and financial position, and we enter 2021 with good
momentum, prepared to implement our subscription-led growth plan,"
said Michael Reed, Gannett Chairman and Chief Executive Officer.
"We are making significant progress on our transition from a
traditional media business to a digitally focused content platform,
having already surpassed one million digital subscribers. We are
committed to becoming a subscription-led business that drives
audience growth and engagement by delivering deeper content
experiences to our consumers and offering the products and
marketing expertise our business partners desire."
He continued, "We have outlined five key operating priorities:
accelerating digital subscriber growth, driving digital marketing
services growth, optimizing our traditional print operations and
advertising businesses, prioritizing investments into growth
businesses that support our vision, and building our inclusive and
diverse culture. In 2021, you will hear us speak to these
priorities regularly and share data points with you to track our
progress. We expect this strategy to create significant stockholder
value in the coming years by driving increased revenues from
digital products, bringing our Company’s total revenue trend back
toward growth, and allowing us to continue significant debt
reduction."
Financial Highlights
in thousands
Fourth Quarter 2020
Full Year 2020
Revenues
$
875,447
$
3,405,670
Net loss attributable to Gannett
(122,174)
(670,479)
Adjusted EBITDA(1) (non-GAAP)
148,829
413,895
Net cash flow provided by operating
activities
(16,510)
57,770
Free cash flow(1) (non-GAAP)
(24,541)
20,795
(1)
Refer to "Use of Non-GAAP Information" below for the
Company’s definition of Adjusted EBITDA and Free cash flow, as well
as the reconciliation of such measures to the most comparable GAAP
measure included herein.
Fourth Quarter 2020 Consolidated
Results
Note: During the comparable period
in 2019 until November 19, 2019, our corporate name was New Media
Investment Group Inc. ("New Media"), and Gannett Co., Inc. ("Legacy
Gannett") was a separate publicly traded company. On November 19,
2019, we completed the acquisition of Legacy Gannett and changed
our name to Gannett Co., Inc.
- Fourth quarter revenues of $875.4 million rose 25.2% as
compared to the prior year quarter reflecting the acquisition of
Legacy Gannett.
- Same store pro forma revenues (as defined and reconciled on
Table No. 5 below) decreased 16.3%, due to unfavorable impacts
resulting from the COVID-19 pandemic and general trends adversely
impacting the publishing industry. This is an improvement of 330
basis points over the third quarter 2020 trend.
- Digital advertising and marketing services revenues reached
$223.3 million in the fourth quarter, or 25.5% of total
revenues.
- Net loss attributable to Gannett of $122.2 million in the
fourth quarter reflects a $74.3 million non-cash loss on the
derivative associated with our convertible notes and a $42.1
million loss associated with the early extinguishment of debt.
- Adjusted EBITDA totaled $148.8 million, an increase of 50.6%
compared to the prior year and represented a 17.0% margin.
- Adjusted EBITDA grew $7.4 million, or 5.4%, year-over-year on a
pro forma basis.
Full Year 2020 Consolidated
Results
- Full year 2020 revenues of $3.406 billion rose 82.3% as
compared to the prior year reflecting the acquisition of Legacy
Gannett.
- Same store pro forma revenues decreased 18.5%, due to
unfavorable impacts resulting from the COVID-19 pandemic and
general trends adversely impacting the publishing industry.
- Digital advertising and marketing services revenues reached
$808.4 million in 2020, or 23.7% of total revenues.
- Net loss attributable to Gannett of $670.5 million in 2020
reflects a second quarter non-cash write-down related to the second
quarter 2020 impairment of goodwill and intangible assets of $393.4
million, as well as a $74.3 million non-cash loss on the derivative
associated with our convertible debt and a $43.8 million loss
associated with the early extinguishment of debt, offset by
non-operating pension income of $72.1 million.
- Adjusted EBITDA totaled $413.9 million and represented a 12.2%
margin.
Balance Sheet & Cash
Flow
- As of December 31, 2020, the Company had cash and cash
equivalents of $170.7 million.
- During the fourth quarter of 2020, the Company repaid $653.4
million in principle under its $1.075 billion 11.5% term loan (the
"Acquisition Term Loan") using the proceeds from the issuance of
the $497.1 million 6% senior secured convertible notes due 2027
(the "2027 Convertible Notes"), along with real estate and other
asset sales and cash on hand.
- Total debt outstanding as of December 31, 2020 was $1.575
billion, comprised of:
- $1.075 billion Acquisition Term Loan;
- $497.1 million of 2027 Convertible Notes; and
- $3.3 million of 4.75% senior secured convertible notes (the
"2024 Convertible Notes").
- Cash flow provided by operations was $57.8 million for the year
ended December 31, 2020 compared to $25.5 million for the prior
year primarily due to a decrease in pension and postretirement
payments of $44.2 million and an increase in tax refunds of $5.2
million, offset by an increase in interest paid of $177.9 million
and an increase in severance payments of $73.1 million. The
remainder of the change was due to the acquisition of Legacy
Gannett, as well as overall timing of receipts and payments.
- Capital expenditures were $8.0 million in the fourth quarter of
2020 and $37.0 million for the year ended December 31, 2020,
primarily for product development, technology investments, and
operating infrastructure.
- Subsequent to December 31, 2020, the Company further amended
its debt structure by:
- Reducing its Acquisition Term Loan debt by an additional $32.6
million utilizing net proceeds from real estate sales; and
- Refinancing the remaining Acquisition Term Loan with a
five-year, senior secured term loan facility in an aggregate
principal amount of $1.045 billion (the "5-Year Term Loan"), at
LIBOR+700 with a 0.75% LIBOR floor.
- Total debt outstanding at February 25, 2021, after giving
effect to those changes is $1.545 billion, which includes the
$1.045 billion 5-Year Term Loan, $497.1 million of 2027 Convertible
Notes, and $3.3 million of 2024 Convertible Notes.
- Cash interest during 2021 is expected to be $90.0 million less
than 2020 due to the interest rate savings from the 5-Year Term
Loan and 2027 Convertible Notes, and the approximately $250.0
million in debt reduction made since the acquisition of Legacy
Gannett.
- The Company also expects to sell an additional $100 million to
$125 million in non-core assets during 2021 that are anticipated to
accelerate debt pay down and further reduce cash interest
costs.
- Targeting first lien net leverage of 1.0x by the end of
2022.
Fourth Quarter 2020 Publishing
Segment
- Publishing segment revenues totaled $794.2 million in the
fourth quarter.
- Circulation revenues totaled $338.5 million in the fourth
quarter.
- Same store pro forma circulation revenues decreased 13.6% in
the fourth quarter, primarily driven by single copy sales,
reflecting the impact of the COVID-19 pandemic on businesses that
buy and sell copies of our publications, and the overall secular
declines in the volume of home delivery due to subscriber
declines.
- Print advertising revenues totaled $237.6 million in the fourth
quarter, reflecting continued secular pressures.
- Same store pro forma print advertising revenues decreased 26.9%
compared to the prior year fourth quarter, a 400 basis point
improvement over the third quarter of 2020, reflecting secular
industry trends and the negative impact of the COVID-19 pandemic on
all categories.
- Digital advertising and marketing services revenues were $146.5
million in the fourth quarter.
- Same store pro forma digital advertising and marketing services
revenues decreased 2.0% versus the same period in the prior year,
an improvement from the 13.5% year-over-year decline we experienced
in the third quarter of 2020.
- Other revenues contributed $71.6 million in the fourth
quarter.
- Digital-only subscriptions totaled approximately 1.1 million at
the end of the fourth quarter, up 29% year-over-year.
- Publishing segment Net income attributable to Gannett was
$104.9 million and Adjusted EBITDA was $147.4 million, representing
an Adjusted EBITDA margin of 18.6% for the fourth quarter.
Fourth Quarter 2020 Digital Marketing
Solutions Segment
- Digital Marketing Solutions segment revenues were $107.3
million in the fourth quarter.
- Same store pro forma Digital Marketing Solutions segment
revenues decreased by 10.3% compared to the prior year fourth
quarter, versus the 17.4% decline that we experienced in the third
quarter of 2020. Fourth quarter 2020 trend improvement was driven
by overall growth in our core ReachLocal business, offset by
continued impacts from the COVID-19 pandemic.
- Digital Marketing Solutions segment Net income attributable to
Gannett was $0.6 million and Adjusted EBITDA was $9.5 million,
representing an Adjusted EBITDA margin of 8.9% for the
quarter.
Integration of Legacy Gannett
Update
- Realized $61 million in savings in the fourth quarter, bringing
our total 2020 integration savings to approximately $177 million.
- On an annualized basis, that will result in over $245 million
of ongoing savings.
- Management remains confident in its ability to implement
additional measures by the end of 2021 that are expected to result
in over $300 million in aggregate annualized synergies.
Earnings Conference Call
Management will host a conference call on Thursday, February 25,
2021 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 1-855-319-1124 (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 Fourth Quarter and Full Year
2020 Earnings Call” or access code “6922159”. 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, April 8, 2021 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 “6922159”.
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 USA TODAY, local media
organizations in 46 states in the U.S., and Newsquest, a wholly
owned subsidiary operating in the United Kingdom with more than 120
local news media brands. Gannett also owns the digital marketing
services companies ReachLocal, Inc., UpCurve, Inc., and WordStream,
Inc., which are marketed under the LOCALiQ brand, and runs the
largest media-owned events business in the U.S., USA TODAY NETWORK
Ventures. To connect with us, visit www.gannett.com.
Same Store Pro Forma
Revenues
Same store pro forma revenues are based on (i) the sum of GAAP
revenues for New Media and Legacy Gannett prior to New Media's
acquisition of Legacy Gannett and (ii) GAAP revenues for Gannett
for the current period, excluding (1) revenues related to the
acquisitions that occurred in 2019, including Legacy Gannett, 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 of Legacy Gannett.
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 statements
regarding measures expected to result in over $90 million in
annualized cash interest savings, our ability to achieve our
operating priorities and increase stockholder value, our digital
revenue performance, shifts in our revenue mix and the timing of
realizing such shifts, the potential sales of non-core assets,
including the anticipated use of any proceeds from such sales,
integration of our acquisitions, our ability to achieve $300
million of synergies through measures expected to be implemented by
the end of 2021, our expectations, in terms of both amount and
timing, with respect to debt repayment, real estate sales and debt
refinancing, growth of our digital-only subscriptions, digital
marketing services, and events and promotions businesses, the
impact from and our response to the COVID-19 pandemic, our
strategy, and future revenue trends and our ability to influence
trends. 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.
In thousands (except per share
amounts)
Table No. 1
Assets
December 31, 2020
December 31, 2019
Current assets:
Cash and cash equivalents
$
170,725
$
156,042
Accounts receivable, net of allowance for
doubtful accounts of $20,843 and $19,923, respectively
314,305
438,523
Inventories
35,075
55,090
Prepaid expenses and other current
assets
116,581
129,460
Total current assets
636,686
779,115
Property, plant, and equipment, net
590,272
815,807
Operating lease assets
289,504
309,112
Goodwill
534,088
914,331
Intangible assets, net
824,650
1,012,564
Deferred tax assets
90,240
76,297
Other assets
143,474
112,876
Total assets
$
3,108,914
$
4,020,102
Liabilities and equity
Current liabilities:
Accounts payable and accrued expenses
$
378,246
$
453,628
Deferred revenue
186,007
218,823
Current portion of long-term debt
128,445
3,300
Other current liabilities
48,602
42,702
Total current liabilities
741,300
718,453
Long-term debt
890,323
1,636,335
Convertible debt
581,405
3,300
Deferred tax liabilities
6,855
9,052
Pension and other postretirement benefit
obligations
99,765
235,906
Long-term operating lease liabilities
274,460
297,662
Other long-term liabilities
151,847
136,188
Total noncurrent liabilities
2,004,655
2,318,443
Total liabilities
2,745,955
3,036,896
Redeemable noncontrolling interests
(1,150)
1,850
Commitments and contingent
liabilities
Equity
Preferred stock, $0.01 par value, 300,000
shares authorized, of which 150,000 shares are designated as Series
A Junior Participating Preferred Stock, none of which were
outstanding at December 31, 2020 and December 31, 2019
—
—
Common stock, $0.01 par value,
2,000,000,000 shares authorized; 139,494,741 shares issued and
138,102,993 shares outstanding at December 31, 2020; 129,386,258
shares issued and 128,991,544 shares outstanding at December 31,
2019
1,395
1,294
Treasury stock, at cost, 1,391,748 and
394,714 shares at December 31, 2020 and December 31, 2019,
respectively
(4,903)
(2,876)
Additional paid-in capital
1,103,881
1,090,694
Accumulated deficit
(786,437)
(115,958)
Accumulated other comprehensive loss
(income)
50,173
8,202
Total equity
364,109
981,356
Total liabilities and equity
$
3,108,914
$
4,020,102
CONSOLIDATED STATEMENTS OF
OPERATIONS
Gannett Co., Inc.
In thousands (except per share
amounts)
Table No. 2
Three months ended
Year ended
December 31, 2020
December 31, 2019
December 31, 2020
December 31, 2019
(Unaudited)
Operating revenues:
Advertising and marketing services
$
461,088
$
370,324
$
1,710,244
$
952,644
Circulation
338,468
255,574
1,391,996
704,842
Other
75,891
73,376
303,430
210,423
Total operating revenues
875,447
699,274
3,405,670
1,867,909
Operating costs
498,733
398,322
2,034,272
1,079,593
Selling, general and administrative
expenses
232,514
226,611
999,789
602,106
Depreciation and amortization
58,113
43,148
263,819
111,882
Integration and reorganization costs
71,753
38,999
145,731
52,212
Acquisition costs
891
45,300
11,152
60,618
Asset impairments
2,585
540
11,029
3,009
Goodwill and intangible impairments
—
100,743
393,446
100,743
Net (gain) loss on sale or disposal of
assets
(7,220)
1,384
(5,680)
4,723
Total operating expenses
857,369
855,047
3,853,558
2,014,886
Operating income (loss)
18,078
(155,773)
(447,888)
(146,977)
Interest expense
54,623
33,283
228,513
63,660
Loss on early extinguishment of debt
42,110
6,058
43,760
6,058
Non-operating pension income
(17,716)
(8,460)
(72,149)
(9,085)
Unrealized loss on Convertible notes
derivative
74,329
—
74,329
—
Gain on sale of investments
—
—
(7,995)
—
Other income, net
(1,506)
(249)
(8,499)
(426)
Non-operating expense
151,840
30,632
257,959
60,207
Loss before income taxes
(133,762)
(186,405)
(705,847)
(207,184)
Benefit for income taxes
(11,250)
(90,924)
(33,450)
(85,994)
Net loss
$
(122,512)
$
(95,481)
$
(672,397)
$
(121,190)
Net loss attributable to redeemable
noncontrolling interests
(338)
(393)
(1,918)
(1,348)
Net loss attributable to
Gannett
$
(122,174)
$
(95,088)
$
(670,479)
$
(119,842)
Loss per share attributable to Gannett -
basic
$
(0.92)
$
(1.05)
$
(5.09)
$
(1.77)
Loss per share attributable to Gannett -
diluted
$
(0.92)
$
(1.05)
$
(5.09)
$
(1.77)
Dividends declared per share
$
—
$
—
$
—
$
1.52
CONSOLIDATED STATEMENTS OF CASH
FLOWS
Gannett Co., Inc.
In thousands
Table No. 3
Year ended
December 31, 2020
December 31, 2019
Operating activities:
Net loss
$
(672,397)
$
(121,190)
Adjustments to reconcile net loss to
operating cash flows:
Depreciation and amortization
263,819
111,882
Facility consolidation costs
3,629
148
Share-based compensation
26,350
11,324
Non-cash interest expense
24,086
3,851
Non-cash acquisition related costs
—
26,411
Benefit for deferred income taxes
(30,175)
(87,765)
Net (gain) loss on sale or disposal of
assets
(5,680)
4,723
Unrealized loss on Convertible notes
derivative
74,329
—
Non-cash loss on early extinguishment of
debt
43,760
6,058
Asset impairments
11,029
3,009
Goodwill and intangible impairments
393,446
100,743
Pension and other postretirement benefit
obligations
(117,522)
(100,452)
Change in assets and liabilities:
Accounts receivables, net
111,506
12,608
Inventory
19,965
5,150
Prepaid expenses
4,078
7,016
Accounts payable and accrued
liabilities
(66,377)
44,311
Deferred revenue
(19,348)
(8,326)
Other assets and liabilities
(6,728)
6,034
Net cash provided by operating
activities
57,770
25,535
Investing activities:
Acquisitions, net of cash acquired
—
(796,502)
Purchases of property, plant, and
equipment
(36,975)
(13,978)
Proceeds from sale of publications, real
estate and other assets
196,344
27,486
Insurance proceeds received for damaged of
property
1,643
—
Change in other investing activities
(876)
(2,066)
Net cash used for investing
activities
160,136
(785,060)
Financing activities:
Payments of debt issuance costs
(2,307)
(121,223)
Borrowings under term loans
—
1,792,000
Borrowings under revolving credit
facility
—
153,900
Repayments under term loans
(681,050)
(481,058)
Repayments under revolving credit
facility
—
(153,900)
Repayments of convertible debt
—
(197,950)
Proceeds from convertible debt
497,094
—
Issuance of common stock, net of
underwriters' discount
4
—
Payments of dividends
—
(91,936)
Changes in other financing activities
(15,083)
(920)
Net cash (used for) provided by
financing activities
(201,342)
898,913
Effect of currency exchange rate
change
1,498
(3,494)
Increase in cash, cash equivalents and
restricted cash
18,062
135,894
Balance of cash, cash equivalents and
restricted cash at beginning of year
188,664
52,770
Cash, cash equivalents and restricted
cash at end of year
$
206,726
$
188,664
SEGMENT INFORMATION
Gannett Co., Inc.
Unaudited, In thousands
Table No. 4
Three months ended
Year ended
December 31, 2020
December 31, 2019
December 31, 2020
December 31, 2019
Operating revenues:
Publishing
$
794,179
$
653,877
$
3,080,447
$
1,792,652
Digital Marketing Solutions
107,318
69,336
428,605
149,242
Corporate and Other
2,820
2,018
10,960
4,554
Intersegment eliminations
(28,870)
(25,957)
(114,342)
(78,539)
Total
$
875,447
$
699,274
$
3,405,670
$
1,867,909
Adjusted EBITDA:
Publishing
$
147,428
$
113,334
$
459,195
$
268,916
Digital Marketing Solutions
9,514
4,024
24,361
(3,279)
Corporate and Other
(8,113)
(18,537)
(69,661)
(41,766)
Total
$
148,829
$
98,821
$
413,895
$
223,871
Depreciation and amortization:
Publishing
$
45,756
$
37,442
$
221,746
$
101,881
Digital Marketing Solutions
7,775
3,714
25,878
6,534
Corporate and Other
4,582
1,992
16,195
3,467
Total
$
58,113
$
43,148
$
263,819
$
111,882
SAME STORE REVENUES
Gannett Co., Inc.
Unaudited, in thousands
Table No. 5
Three months ended
Year ended
December 31, 2020
December 31, 2019
% Change
December 31, 2020
December 31, 2019
% Change
Total revenue(a)
$
875,447
$
1,054,252
(17.0)
%
$
3,405,670
$
4,182,220
(18.6)
%
Acquired revenues
—
—
***
(16,350)
—
***
Currency impact
(1,698)
—
***
(832)
—
***
Exited operations
(1)
(21,400)
(100.0)
%
(12)
(29,894)
(100.0)
%
Deferred revenue adjustment
221
10,791
(98.0)
3,597
10,791
(66.7)
Same store pro forma revenue
$
873,969
$
1,043,643
(16.3)
%
$
3,392,073
$
4,163,117
(18.5)
%
Advertising and marketing services
revenue(a)
$
461,088
$
566,211
(18.6)
%
$
1,710,244
$
2,227,318
(23.2)
%
Acquired revenues
—
—
***
(3,283)
—
***
Currency impact
(1,187)
—
***
(481)
—
***
Exited operations
(1)
(12,872)
(100.0)
%
(12)
(20,326)
(99.9)
%
Deferred revenue adjustment
28
1,262
(97.8)
1,202
1,262
(4.8)
Same store pro forma advertising and
marketing services revenue
$
459,928
$
554,601
(17.1)
%
$
1,707,670
$
2,208,254
(22.7)
%
Circulation revenue(a)
$
338,468
$
384,376
(11.9)
%
$
1,391,996
$
1,574,054
(11.6)
%
Acquired revenues
—
—
***
(1,803)
—
***
Currency impact
(423)
—
***
(347)
—
***
Exited operations
—
(2,343)
(100.0)
—
(2,824)
(100.0)
Deferred revenue adjustment
193
9,529
(98.0)
2,395
9,529
(74.9)
Same pro forma store circulation
revenue
$
338,238
$
391,562
(13.6)
%
$
1,392,241
$
1,580,759
(11.9)
%
Other revenue(a)
$
75,891
$
103,665
(26.8)
%
$
303,430
$
380,848
(20.3)
%
Acquired revenues
—
—
***
(11,264)
—
***
Currency impact
(88)
—
***
(4)
—
***
Exited operations
—
(6,185)
(100.0)
%
—
(6,744)
(100.0)
%
Same store pro forma other
revenue
$
75,803
$
97,480
(22.2)
%
$
292,162
$
374,104
(21.9)
%
(a) Revenue for 2019 represents unaudited pro forma
Revenues, which assumes that the acquisition of Legacy Gannett,
along with transactions necessary to finance the acquisition,
occurred at the beginning of 2019.
***
Indicates a 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 performance measure the
Company believes offers a useful view of the overall 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 early
extinguishment of debt, (4) Non-operating pension income (expense),
(5) Unrealized (gain) loss on Convertible notes derivative, (6)
Other Non-operating items, primarily equity income, (7)
Depreciation and amortization, (8) Integration and reorganization
costs, (9) Asset impairments, (10) Goodwill and intangible
impairments, (11) Gains or losses on the sale or disposal of
assets, (12) Share-based compensation expense, (13) Acquisition
costs, (14) Gains or losses on the sale of investments, and (15)
certain other non-recurring charges. The most directly comparable
GAAP 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 stockholders. 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 operating activities, or any other
measure of performance or liquidity derived in accordance with
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 these items excluded have little or no
significance on our day-to-day operations. These measures provide
an assessment of controllable expenses and affords 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.
Limitations of Adjusted EBITDA and Free Cash Flow
Each of our non GAAP measures have 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
asset impairments, 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 reconciliations of Net income (loss)
attributable to Gannett to Adjusted EBITDA and Cash provided by
operations 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 a 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.
Unaudited, in thousands
Table No. 6
Three months ended December
31, 2020
Publishing
Digital Marketing
Solutions
Corporate and Other
Consolidated Total
Net income (loss) attributable to
Gannett
$
104,884
$
582
$
(227,640)
$
(122,174)
Benefit for income taxes
—
—
(11,250)
(11,250)
Interest expense
15
—
54,608
54,623
Loss on early extinguishment of debt
—
—
42,110
42,110
Non-operating pension income
(17,643)
—
(73)
(17,716)
Unrealized loss on Convertible notes
derivative
—
—
74,329
74,329
Other non-operating (income) expense,
net
(839)
(2,100)
1,433
(1,506)
Depreciation and amortization
45,756
7,775
4,582
58,113
Integration and reorganization costs
21,803
1,076
48,874
71,753
Acquisition costs
—
—
891
891
Asset impairments
2,585
—
—
2,585
Net (gain) loss on sale or disposal of
assets
(9,417)
2,153
44
(7,220)
Share-based compensation expense
—
—
3,538
3,538
Other items
284
28
441
753
Adjusted EBITDA (non-GAAP basis)
$
147,428
$
9,514
$
(8,113)
$
148,829
Three months ended December
31, 2019
Publishing
Digital Marketing
Solutions
Corporate and Other
Consolidated Total
Net loss attributable to Gannett
$
(52,036)
$
(1,392)
$
(41,660)
$
(95,088)
Benefit for income taxes
—
—
(90,924)
(90,924)
Interest expense
24
—
33,259
33,283
Loss on early extinguishment of debt
—
—
6,058
6,058
Non-operating pension income
(1,861)
—
(6,599)
(8,460)
Other non-operating (income) expense,
net
1,855
(775)
(1,329)
(249)
Depreciation and amortization
37,442
3,714
1,992
43,148
Integration and reorganization costs
14,420
965
23,614
38,999
Acquisition costs
—
—
45,300
45,300
Asset impairments
540
—
—
540
Goodwill and intangible impairments
100,743
—
—
100,743
Net (gain) loss on sale or disposal of
assets
1,289
(8)
103
1,384
Share-based compensation expense
—
—
8,790
8,790
Other items
10,918
1,520
2,859
15,297
Adjusted EBITDA (non-GAAP basis)
$
113,334
$
4,024
$
(18,537)
$
98,821
NON-GAAP FINANCIAL INFORMATION
ADJUSTED EBITDA
Gannett Co., Inc.
Unaudited, in thousands
Table No. 6 (continued)
Year ended December 31,
2020
Publishing
Digital Marketing
Solutions
Corporate and Other
Consolidated Total
Net loss attributable to Gannett
$
(108,606)
$
(42,494)
$
(519,379)
$
(670,479)
Benefit for income taxes
—
—
(33,450)
(33,450)
Interest expense
142
—
228,371
228,513
Loss on early extinguishment of debt
—
—
43,760
43,760
Non-operating pension income
(71,858)
—
(291)
(72,149)
Unrealized loss on Convertible notes
derivative
—
—
74,329
74,329
Gain on sale of investments
(195)
(7,800)
—
(7,995)
Other non-operating income, net
(6,029)
(2,278)
(192)
(8,499)
Depreciation and amortization
221,746
25,878
16,195
263,819
Integration and reorganization costs
60,852
6,663
78,216
145,731
Acquisition costs
—
—
11,152
11,152
Asset impairments
10,312
717
—
11,029
Goodwill and intangible impairments
352,947
40,499
—
393,446
Net (gain) loss on sale or disposal of
assets
(7,541)
1,727
134
(5,680)
Share-based compensation expense
—
—
26,350
26,350
Other items
7,425
1,449
5,144
14,018
Adjusted EBITDA (non-GAAP basis)
$
459,195
$
24,361
$
(69,661)
$
413,895
Year ended December 31,
2019
Publishing
Digital Marketing
Solutions
Corporate and Other
Consolidated Total
Net income (loss) attributable to
Gannett
$
22,523
$
(14,006)
$
(128,359)
$
(119,842)
Benefit for income taxes
—
—
(85,994)
(85,994)
Interest expense
123
—
63,537
63,660
Loss on early extinguishment of debt
—
—
6,058
6,058
Non-operating pension income
(2,486)
—
(6,599)
(9,085)
Other non-operating (income) expense,
net
1,517
(775)
(1,168)
(426)
Depreciation and amortization
101,881
6,534
3,467
111,882
Integration and reorganization costs
23,487
2,202
26,523
52,212
Acquisition costs
—
(38)
60,656
60,618
Asset impairments
3,009
—
—
3,009
Goodwill and intangible impairments
100,743
—
—
100,743
Net (gain) loss on sale or disposal of
assets
4,036
(5)
692
4,723
Share-based compensation expense
—
—
11,324
11,324
Other items
14,083
2,809
8,097
24,989
Adjusted EBITDA (non-GAAP basis)
$
268,916
$
(3,279)
$
(41,766)
$
223,871
NON-GAAP FINANCIAL INFORMATION
FREE CASH FLOW
Gannett Co., Inc.
Unaudited, in thousands
Table No. 7
Three months ended December
31, 2020
Year ended December 31,
2020
Net cash flow (used for) provided by
operating activities (GAAP basis)
$
(16,510)
$
57,770
Capital expenditures
(8,031)
(36,975)
Free cash flow (non-GAAP basis)(a)
$
(24,541)
$
20,795
(a) Free cash flow for the fourth quarter of 2020 was
negatively impacted by $53.5 million of integration and
reorganization costs. Free cash flow for the full year of 2020 was
negatively impacted by $132.2 million of integration and
reorganization costs, $6.1 million of acquisition costs, and $2.6
million of other one-time adjustments.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210225005327/en/
For investor inquiries: Ashley Higgins Investor Relations
212-479-3160 investors@gannett.com For media inquiries:
Stephanie Tackach Director, Public Relations 212-715-5490
stackach@gannett.com
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