Gannett Co., Inc. ("Gannett", "we", "us", "our", or the
"Company") (NYSE: GCI) today reported its financial results for the
fourth quarter ended December 31, 2023.
"In 2023, we made excellent progress executing on our strategy
to drive our digital transformation, resulting in total digital
revenues exceeding 41% of total revenues in the fourth quarter, and
amounting to nearly $1.1 billion for the year. Over the past year,
we’ve expanded our digital audience, improved engagement, grown the
monetization of our audience, and driven significantly improved
financial results over the prior year. Our digital-only
subscription revenues surpassed $150 million in 2023, with total
digital-only average revenue per user reaching a new high. Also,
our partnership strategy increased our overall digital
monetization, and importantly, we expect to generate $20 million in
high margin revenue from our partnerships in 2024," said Michael
Reed, Gannett Chairman, and Chief Executive Officer.
"In 2023, we achieved full year growth in both Adjusted EBITDA
and free cash flow, representing an important change in trajectory
compared to last year's declines. We also remained focused on
improving our capital structure and, with over $140 million in debt
repayments in 2023, we were able to significantly reduce our
leverage during the year. As these results show, we are building
momentum toward a sustainable digital growth business, with a
strong balance sheet."
"As we look forward to 2024 and the next several years, we
expect to capitalize on this progress and build to inflection in
our revenue as we end 2024. Our business outlook reflects our
investments in strategy and our prioritization of revenue and free
cash flow growth while also maintaining ongoing profit improvements
and further deleveraging. We believe 2024 is an important milestone
in the foundation for creating sustainable growth for Gannett."
Fourth Quarter 2023 Digital
Highlights:
- Total digital revenues of $277.1 million, or 41.4% of total
revenues, up 2.9% versus the prior year
- Digital-only subscription revenues of $41.9 million grew 18.1%
year-over-year
- Digital-only average revenue per user(1) of $7.05 increased
19.5% year-over-year
- Total digital-only paid subscriptions(1) were approximately 2.0
million, sequential growth of 1.6%
- 187 million(2) global average monthly unique visitors in the
fourth quarter of 2023, up 4.3% year-over-year
- Digital Media revenues of $78.8 million grew 3.9%
year-over-year
- Digital Marketing Solutions core platform revenues(1) of $119.4
million decreased 0.3% year-over year
- Record high core platform average revenue per user(1) of
$2,663, up 2.1% year-over-year
- Customer budget retention(3) was 95.4%, an increase of 50 basis
points compared to the fourth quarter of 2022
_____________________
(1)
See "Key Performance Indicators" ("KPIs")
below for information about our use of KPIs.
(2)
187 million average monthly unique
visitors in the fourth quarter of 2023 with approximately 136
million average monthly unique visitors coming from our USA TODAY
NETWORK (based on December 2023 Comscore Media Metrix®) and
approximately 51 million average monthly unique visitors resulting
from our U.K. digital properties (based on Adobe Analytics).
(3)
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.
Fourth Quarter 2023 Capital Structure
Highlights:
- As of December 31, 2023, the Company had cash and cash
equivalents of $100.2 million
- Total principal amount of debt outstanding as of December 31,
2023 was $1,130.6 million, including $642.0 million in first lien
debt, which resulted in a First Lien Net Leverage(4) of 2.0x, a
decrease of 24.6% compared to 2.7x as of the end of fiscal
2022
- During the fourth quarter of 2023, the Company repaid $23.9
million of debt. For the full year 2023, the Company repaid $141.6
million of debt
Full Year 2024 and Mid-Term 2025-2026
Business Outlook(5)
The Company presents its full year 2024 outlook and its mid-term
outlook over the course of 2025 and 2026 below.
- Full Year 2024 Business Outlook(5)
- Total digital revenues are expected to grow approximately
10%
- Total revenues are expected to be down in the low to mid-single
digits on a reported and same store basis(6)
- Net income attributable to Gannett is expected to improve,
after excluding an impairment charge of approximately $45 million
related to the exit of our McLean, Virginia office during the first
quarter of 2024
- Adjusted EBITDA(6) is expected to grow versus the prior
year
- Cash provided by operating activities is expected to grow
versus the prior year
- Free cash flow(6) is expected to grow in excess(7) of the
expected growth in Adjusted EBITDA(6)
- Real estate and non-strategic asset sales are expected to be in
the range of $45 million and $50 million
- Full Year 2025 and Full Year 2026 Business Outlook(5)
- Total digital revenues are expected to accelerate with growth
exceeding 10% year-over-year
- Total digital revenues are expected to make up 50% of total
revenues in 2025 and exceed 55% of total revenues in 2026
- Total revenues are expected to grow in the low single digits on
a reported basis and same store basis(6)
- Net income attributable to Gannett is expected to improve to
positive
- Adjusted EBITDA(6) is expected to exhibit ongoing growth
- Cash provided by operating activities is expected to grow with
an estimated CAGR(8) of 30%
- Free cash flow(6) is expected to grow at an accelerated rate
with an estimated CAGR(6)(8) of 40%
_____________________
(4)
As of December 31, 2023, the First Lien
Net Leverage ratio was calculated by subtracting cash on the
balance sheet from the sum of both our five-year senior secured
term loan facility (the "Senior Secured Term Loan") and 6% first
lien notes due November 1, 2026 (the "2026 Senior Notes") and
dividing that by Q4 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.
(5)
Projections are based on Company estimates
as of February 22, 2024 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.
(6)
Adjusted EBITDA, Adjusted EBITDA margin,
Free cash flow, Same store revenues, and Free cash flow CAGR are
non-GAAP measures. See "Use of Non-GAAP Information" below for
information about these non-GAAP measures.
(7)
Capital expenditures are expected to
increase as a result of investments in technology and products.
(8)
Cash provided by operating activities CAGR
and Free cash flow CAGR are based on 2023 to 2026 estimated growth
rates.
Additional Fourth Quarter 2023
Highlights:
- Total revenues of $669.4 million decreased 8.4% compared to the
fourth quarter of 2022
- Same store revenues(6) decreased 8.0% compared to the fourth
quarter of 2022, reflecting a sequential improvement of 40 basis
points compared to the third quarter of 2023
- Net loss attributable to Gannett of $22.9 million as compared
with net income attributable to Gannett of $32.8 million in the
fourth quarter of 2022 and a Net loss attributable to Gannett
margin of 3.4% versus a net loss attributable to Gannett margin of
0.4% in the third quarter of 2023
- Adjusted EBITDA(6) totaled $74.1 million, a decrease of 18.0%
compared to the fourth quarter of 2022
- Sequential improvement of 24.5% compared to the third quarter
of 2023
- Adjusted EBITDA margin(6) of 11.1%, representing sequential
improvement of 200 basis points compared to the third quarter of
2023
- The prior year results included approximately $9.0 million
related to employee furloughs which did not recur
- Cash provided by operating activities of $21.2 million, an
increase of $13.4 million year-over-year
- Free cash flow(6) of $12.7 million, an improvement of $14.4
million year-over-year
Financial Highlights
In thousands
Fourth Quarter 2023
Full Year 2023
Revenues
$
669,405
$
2,663,550
Net loss attributable to Gannett
(22,892
)
(27,791
)
Adjusted EBITDA(9) (non-GAAP basis)
74,106
267,683
Adjusted Net loss attributable to
Gannett(9) (non-GAAP basis)
(18,220
)
(40,982
)
Cash provided by operating activities
21,157
94,574
Free cash flow(9) (non-GAAP basis)
12,748
56,458
(9)
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.
Earnings Conference Call
Management will host a conference call on Thursday, February 22,
2024 at 8:30 A.M. Eastern Time to review the financial and
operating results for the period. 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 Fourth Quarter Earnings
Call" or access code "13742832". We use our website as a channel of
distribution for important Company information and we use the
investors.gannett.com website as a means of disclosing material
non-public information and for complying with our disclosure
obligations under Regulation FD. 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, March 7, 2024 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 "13742832". A transcript of our
earnings call held today also will be posted to the
investors.gannett.com website.
About Gannett
Gannett Co., Inc. (NYSE: GCI) is a diversified media company
with expansive reach at the national and local level dedicated to
empowering and enriching communities. We seek to inspire, inform,
and connect audiences as a sustainable, growth focused media and
digital marketing solutions company. We endeavor to deliver
essential content, marketing solutions, and experiences for curated
audiences, advertisers, consumers, and stakeholders by leveraging
our diverse teams and suite of products to enrich the local
communities and businesses we serve. Our current portfolio of
trusted media brands includes the USA TODAY NETWORK, comprised of
the national publication, USA TODAY, and local media organizations
in the United States, and Newsquest, a wholly-owned subsidiary
operating in the United Kingdom. Our digital marketing solutions
brand, LocaliQ, uses innovation and software to enable small and
medium-sized businesses to grow, and USA TODAY NETWORK Ventures,
our events division, creates impactful consumer engagements,
promotions, and races.
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 full year 2024 business outlook, our mid-term
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 audience, digital marketing and
advertising services, digital revenues, monetization of our
audience, print advertising trends and revenues, expected results
of our targeting and pricing models, expectations regarding our
cash from operating activities, free cash flows, compound annual
growth rates ("CAGR"), revenues, net income (loss) attributable to
Gannett, Adjusted EBITDA, same-store revenues and cash flows,
expectations regarding our long-term growth, sustainable growth,
and inflection in our revenue, our ability to 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 non-strategic
asset sales, the impact from changes at our McLean, Virginia
property, our strategy, our partnerships, our ability to generate
affiliate revenues, 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 structure and future revenue and expense
trends and our ability to influence trends. Words such as
"expect(s)", believe(s)", "will", "outlook", "guidance",
"estimate(s)", "project(s)", "focus", "building", 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. CONSOLIDATED BALANCE SHEETS
Table No. 1
In thousands, except share data
December 31, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
100,180
$
94,255
Accounts receivable, net of allowance for
doubtful accounts of $16,338 and $16,697, respectively
266,096
289,415
Inventories
26,794
45,223
Prepaid expenses
36,210
46,205
Other current assets
14,957
32,679
Total current assets
444,237
507,777
Property, plant, and equipment, net
239,087
305,994
Operating lease assets
221,733
233,322
Goodwill
533,876
533,166
Intangible assets, net
524,350
613,358
Deferred tax assets
37,125
56,618
Pension and other assets
180,839
143,320
Total assets
$
2,181,247
$
2,393,555
Liabilities and equity
Current liabilities:
Accounts payable and accrued
liabilities
$
293,444
$
351,848
Deferred revenue
120,502
153,648
Current portion of long-term debt
63,752
60,452
Operating lease liabilities
45,763
44,872
Other current liabilities
10,052
6,218
Total current liabilities
533,513
617,038
Long-term debt
564,836
695,642
Convertible debt
416,036
405,681
Deferred tax liabilities
2,028
1,439
Pension and other postretirement benefit
obligations
42,661
50,710
Long-term operating lease liabilities
203,871
219,109
Other long-term liabilities
100,989
108,563
Total noncurrent liabilities
1,330,421
1,481,144
Total liabilities
1,863,934
2,098,182
Commitments and contingent
liabilities
Equity
Preferred stock, $0.01 par value per
share, 300,000 shares authorized, none of which were issued and
outstanding at December 31, 2023 and December 31, 2022
—
—
Common stock, $0.01 par value per share,
2,000,000,000 shares authorized, 158,554,705 shares issued and
148,939,463 shares outstanding at December 31, 2023; 153,286,104
shares issued and 146,223,179 shares outstanding at December 31,
2022
1,586
1,533
Treasury stock, at cost, 9,615,242 shares
and 7,062,925 shares at December 31, 2023 and December 31, 2022,
respectively
(17,393
)
(14,737
)
Additional paid-in capital
1,426,325
1,409,578
Accumulated deficit
(1,027,192
)
(999,401
)
Accumulated other comprehensive loss
(65,541
)
(101,231
)
Total Gannett stockholders'
equity
317,785
295,742
Noncontrolling interests
(472
)
(369
)
Total equity
317,313
295,373
Total liabilities and equity
$
2,181,247
$
2,393,555
GANNETT CO., INC. CONSOLIDATED STATEMENTS OF
OPERATIONS
Table No. 2
Three months ended December
31,
Year ended December
31,
In thousands, except per share amounts
2023
2022
2023
2022
(Unaudited)
Advertising and marketing services
$
353,154
$
375,567
$
1,387,114
$
1,496,137
Circulation
225,820
256,679
927,821
1,084,637
Other
90,431
98,418
348,615
364,529
Total revenues
669,405
730,664
2,663,550
2,945,303
Operating costs
419,644
455,123
1,692,031
1,860,353
Selling, general and administrative
expenses
185,908
190,342
735,339
852,488
Depreciation and amortization
38,496
39,931
162,622
182,022
Integration and reorganization costs
6,009
27,520
24,468
87,974
Asset impairments
—
46
1,370
1,056
Loss (gain) on sale or disposal of assets,
net
768
2,729
(40,101
)
(6,883
)
Other operating expenses
722
227
1,550
1,892
Total operating expenses
651,547
715,918
2,577,279
2,978,902
Operating income (loss)
17,858
14,746
86,271
(33,599
)
Interest expense
26,969
28,526
111,776
108,366
Gain on early extinguishment of debt
(1,316
)
(2,663
)
(4,529
)
(399
)
Non-operating pension income
(2,375
)
(7,590
)
(9,382
)
(58,953
)
Other non-operating income, net
(4,105
)
(4,896
)
(5,429
)
(5,707
)
Non-operating expenses
19,173
13,377
92,436
43,307
(Loss) income before income
taxes
(1,315
)
1,369
(6,165
)
(76,906
)
Provision (benefit) for income taxes
21,581
(31,300
)
21,729
1,349
Net (loss) income
(22,896
)
32,669
$
(27,894
)
$
(78,255
)
Net loss attributable to noncontrolling
interests
(4
)
(98
)
(103
)
(253
)
Net (loss) income attributable to
Gannett
$
(22,892
)
$
32,767
$
(27,791
)
$
(78,002
)
Interest adjustment to Net (loss) income
attributable to Gannett for assumed conversions of the 2027 Notes,
net of taxes
$
—
$
7,909
$
—
$
—
Net (loss) income attributable to
Gannett for diluted earnings per share
$
(22,892
)
$
40,676
$
(27,791
)
$
(78,002
)
(Loss) income per share attributable to
Gannett - basic
$
(0.16
)
$
0.24
$
(0.20
)
$
(0.57
)
(Loss) income per share attributable to
Gannett - diluted
$
(0.16
)
$
0.17
$
(0.20
)
$
(0.57
)
GANNETT CO., INC. CONSOLIDATED STATEMENTS OF CASH
FLOWS
Table No. 3
Year ended December
31,
In thousands
2023
2022
Operating activities
Net loss
$
(27,894
)
$
(78,255
)
Adjustments to reconcile net loss to
operating cash flows:
Depreciation and amortization
162,622
182,022
Share-based compensation expense
16,567
16,751
Non-cash interest expense
21,199
21,303
Provision for deferred income taxes
11,514
2,549
Gain on sale or disposal of assets,
net
(40,101
)
(6,883
)
Gain on early extinguishment of debt
(4,529
)
(399
)
Asset impairments
1,370
1,056
Pension and other postretirement benefit
obligations
(13,917
)
(80,012
)
Change in other assets and
liabilities:
Accounts receivable, net
34,135
44,943
Inventory
18,510
(7,434
)
Prepaid expenses
16,680
3,244
Accounts payable and accrued
liabilities
(65,094
)
(23,653
)
Deferred revenue
(29,971
)
(30,076
)
Other assets and liabilities
(6,517
)
(4,380
)
Cash provided by operating
activities
94,574
40,776
Investing activities
Acquisitions, net of cash acquired
—
(15,432
)
Purchase of property, plant, and
equipment
(38,116
)
(45,376
)
Proceeds from sale of real estate and
other assets
85,298
83,504
Change in other investing activities
(203
)
(572
)
Cash provided by investing
activities
46,979
22,124
Financing activities
Payments of deferred financing costs
—
(1,652
)
Borrowings of long-term debt
—
80,000
Repayments of long-term debt
(133,821
)
(170,994
)
Acquisition of noncontrolling
interests
—
(2,050
)
Treasury stock
(2,642
)
(6,555
)
Changes in other financing activities
952
(1,616
)
Cash used for financing
activities
(135,511
)
(102,867
)
Effect of currency exchange rate change on
cash
(234
)
1,152
Increase (decrease) in cash, cash
equivalents and restricted cash
5,808
(38,815
)
Cash, cash equivalents and restricted cash
at beginning of year
104,804
143,619
Cash, cash equivalents and restricted
cash at end of year
$
110,612
$
104,804
GANNETT CO., INC. SEGMENT INFORMATION
(Unaudited)
Table No. 4
Three months ended December
31,
Year ended December
31,
In thousands
2023
2022
2023
2022
Revenues:
Domestic Gannett Media
$
529,217
$
590,078
$
2,095,853
$
2,379,806
Newsquest
58,178
56,089
233,980
234,630
Digital Marketing Solutions
120,384
121,112
477,909
468,883
Corporate and other
1,665
1,398
6,268
5,440
Intersegment eliminations
(40,039
)
(38,013
)
(150,460
)
(143,456
)
Total
$
669,405
$
730,664
$
2,663,550
$
2,945,303
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 2024 business outlook and our mid-term outlook included in
this release include certain non-GAAP measures, including Same
store revenues, Adjusted EBITDA, Free cash flow, and Free cash flow
CAGR. CAGR is a compound annual growth rate over the time period
noted for Free cash flow. We believe providing expected Free cash
flow CAGR as part of our outlook is meaningful to share with
investors and an indication of what management believes is an
important measure of growth. The outlook for each of these non-GAAP
items does not factor in the impact of any further acquisitions or
dispositions. 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 reconciled non-GAAP
forward-looking Same store revenues, Adjusted EBITDA, Free cash
flow, and Free cash flow CAGR to their most directly comparable
GAAP measure, as permitted by Item 10(e)(1)(i)(B) of Regulation
S-K. Such reconciliations would require unreasonable efforts to
estimate and quantify various necessary GAAP components largely
because forecasting or predicting our future operating results is
subject to many factors or future events out of our control, is
unavailable, or is not readily predictable, and could significantly
impact, either individually or in the aggregate, our comparable
GAAP measures. Accordingly, we are unable to provide a full
reconciliation of the non-GAAP measures used in our outlook without
unreasonable efforts.
GANNETT CO., INC. NON-GAAP FINANCIAL INFORMATION
ADJUSTED EBITDA (Unaudited)
Table No. 5
Three months ended December
31, 2023
In thousands
Domestic Gannett Media
Newsquest
Digital Marketing
Solutions
Corporate and other
Consolidated Total
Net income (loss) attributable to
Gannett
$
26,915
$
11,107
$
8,043
$
(68,957
)
$
(22,892
)
Provision for income taxes
—
—
—
21,581
21,581
Interest expense
—
—
—
26,969
26,969
Gain on early extinguishment of debt
—
—
—
(1,316
)
(1,316
)
Non-operating pension income
(209
)
(2,166
)
—
—
(2,375
)
Depreciation and amortization
25,721
2,063
5,993
4,719
38,496
Integration and reorganization costs
3,248
677
182
1,902
6,009
Other operating expenses
—
215
—
507
722
Loss (gain) on sale or disposal of assets,
net
703
(29
)
92
2
768
Share-based compensation expense
—
—
—
3,840
3,840
Other items
(280
)
(538
)
(1,815
)
4,937
2,304
Adjusted EBITDA (non-GAAP basis)
$
56,098
$
11,329
$
12,495
$
(5,816
)
$
74,106
Net income (loss) attributable to Gannett
margin
5.1
%
19.1
%
6.7
%
NM
(3.4
)%
Adjusted EBITDA margin (non-GAAP
basis)
10.6
%
19.5
%
10.4
%
NM
11.1
%
NM indicates not meaningful.
Three months ended December
31, 2022
In thousands
Domestic Gannett Media
Newsquest
Digital Marketing
Solutions
Corporate and other
Consolidated Total
Net income (loss) attributable to
Gannett
$
28,545
$
12,248
$
11,971
$
(19,997
)
$
32,767
Benefit for income taxes
—
—
—
(31,300
)
(31,300
)
Interest expense
—
—
—
28,526
28,526
Gain on early extinguishment of debt
—
—
—
(2,663
)
(2,663
)
Non-operating pension income
(2,135
)
(5,455
)
—
—
(7,590
)
Depreciation and amortization
27,302
1,819
5,892
4,918
39,931
Integration and reorganization costs
16,839
1,021
233
9,427
27,520
Other operating expenses
—
—
—
227
227
Asset impairments
46
—
—
—
46
Loss (gain) on sale or disposal of assets,
net
2,729
—
1
(1
)
2,729
Share-based compensation expense
—
—
—
3,474
3,474
Other items
(366
)
(445
)
(1,693
)
(811
)
(3,315
)
Adjusted EBITDA (non-GAAP basis)
$
72,960
$
9,188
$
16,404
$
(8,200
)
$
90,352
Net income attributable to Gannett
margin
4.8
%
21.8
%
9.9
%
NM
4.5
%
Adjusted EBITDA margin (non-GAAP
basis)
12.4
%
16.4
%
13.5
%
NM
12.4
%
NM indicates not meaningful.
GANNETT CO., INC. NON-GAAP FINANCIAL INFORMATION
ADJUSTED EBITDA (Unaudited)
Table No. 5 (continued)
Year ended December 31,
2023
In thousands
Domestic Gannett Media
Newsquest
Digital Marketing
Solutions
Corporate and other
Consolidated Total
Net income (loss) attributable to
Gannett
$
114,254
$
49,257
$
28,841
$
(220,143
)
$
(27,791
)
Provision for income taxes
—
—
—
21,729
21,729
Interest expense
—
—
—
111,776
111,776
Gain on early extinguishment of debt
—
—
—
(4,529
)
(4,529
)
Non-operating pension income
(705
)
(8,677
)
—
—
(9,382
)
Depreciation and amortization
112,201
8,792
23,795
17,834
162,622
Integration and reorganization costs
5,582
1,763
784
16,339
24,468
Other operating expenses
139
215
—
1,196
1,550
Asset impairments
1,370
—
—
—
1,370
(Gain) loss on sale or disposal of assets,
net
(38,937
)
(42
)
324
(1,446
)
(40,101
)
Share-based compensation expense
—
—
—
16,567
16,567
Other items
737
(1,180
)
(521
)
10,368
9,404
Adjusted EBITDA (non-GAAP basis)
$
194,641
$
50,128
$
53,223
$
(30,309
)
$
267,683
Net income (loss) attributable to Gannett
margin
5.5
%
21.1
%
6.0
%
NM
(1.0
)%
Adjusted EBITDA margin (non-GAAP
basis)
9.3
%
21.4
%
11.1
%
NM
10.0
%
NM indicates not meaningful.
Year ended December 31,
2022
In thousands
Domestic Gannett Media
Newsquest
Digital Marketing
Solutions
Corporate and other
Consolidated Total
Net income (loss) attributable to
Gannett
$
63,225
$
49,301
$
26,919
$
(217,447
)
$
(78,002
)
Provision for income taxes
—
—
—
1,349
1,349
Interest expense
—
—
—
108,366
108,366
Gain on early extinguishment of debt
—
—
—
(399
)
(399
)
Non-operating pension income
(35,921
)
(23,032
)
—
—
(58,953
)
Depreciation and amortization
130,557
7,374
26,431
17,660
182,022
Integration and reorganization costs
55,575
4,425
1,108
26,866
87,974
Other operating expenses
2
725
—
1,165
1,892
Asset impairments
1,056
—
—
—
1,056
(Gain) loss on sale or disposal of assets,
net
(6,738
)
(319
)
179
(5
)
(6,883
)
Share-based compensation expense
—
—
—
16,751
16,751
Other items
(108
)
1,553
2,943
(2,278
)
2,110
Adjusted EBITDA (non-GAAP basis)
$
207,648
$
40,027
$
57,580
$
(47,972
)
$
257,283
Net income (loss) attributable to Gannett
margin
2.7
%
21.0
%
5.7
%
NM
(2.6
)%
Adjusted EBITDA margin (non-GAAP
basis)
8.7
%
17.1
%
12.3
%
NM
8.7
%
NM indicates not meaningful.
GANNETT CO., INC. NON-GAAP FINANCIAL INFORMATION
ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO GANNETT
(Unaudited)
Table No. 6
Three months ended December
31,
Year ended December
31,
In thousands
2023
2022
2023
2022
Net (loss) income attributable to
Gannett
$
(22,892
)
$
32,767
$
(27,791
)
$
(78,002
)
Gain on early extinguishment of debt
(1,316
)
(2,663
)
(4,529
)
(399
)
Integration and reorganization costs
6,009
27,520
24,468
87,974
Other operating expenses
722
227
1,550
1,892
Asset impairments
—
46
1,370
1,056
Loss (gain) on sale or disposal of assets,
net
768
2,729
(40,101
)
(6,883
)
Other items
(99
)
(932
)
(196
)
(1,596
)
Subtotal
(16,808
)
59,694
(45,229
)
4,042
Tax impact of above items
(1,412
)
(6,489
)
4,247
(19,754
)
Adjusted Net (loss) income attributable to
Gannett (non-GAAP basis)
$
(18,220
)
$
53,205
$
(40,982
)
$
(15,712
)
GANNETT CO., INC. NON-GAAP FINANCIAL INFORMATION
FREE CASH FLOW (Unaudited)
Table No. 7
Three months ended December
31,
Year ended December
31,
In thousands
2023
2022
2023
2022
Cash provided by operating activities
(GAAP basis)
$
21,157
$
7,794
$
94,574
$
40,776
Capital expenditures
(8,409
)
(9,433
)
(38,116
)
(45,376
)
Free cash flow (non-GAAP basis)(1)
$
12,748
$
(1,639
)
$
56,458
$
(4,600
)
(1)
For the three months ended December 31,
2023 and 2022, free cash flow was negatively impacted by interest
paid of $33.2 million and $35.5 million, respectively, integration
and reorganization costs of $6.7 million and $13.8 million,
respectively. In addition, for the three months ended December 31,
2023, free cash flow was negatively impacted by other costs of $5.6
million and for the three months ended December 31, 2022, there
were no other costs impacting free cash flows. For the year ended
December 31, 2023 and 2022, free cash flow was negatively impacted
by interest paid of $89.3 million and $86.5 million, respectively,
integration and reorganization costs of $53.7 million and $64.8
million, respectively, and other costs of $13.2 million and $3.3
million, respectively.
GANNETT CO., INC. NON-GAAP FINANCIAL INFORMATION
SAME STORE REVENUES - CONSOLIDATED (Unaudited)
Table No. 8
Three months ended December
31,
Year ended December
31,
In thousands
2023
2022
% Change
2023
2022
% Change
Print advertising revenues
$
142,162
$
164,587
(13.6
)%
$
576,545
$
670,882
(14.1
)%
Acquired revenues
—
—
(3,825
)
—
Currency impact
(1,017
)
—
(635
)
—
Exited operations(1)
—
(4,931
)
—
(31,373
)
Same store print advertising
revenues
$
141,145
$
159,656
(11.6
)%
$
572,085
$
639,509
(10.5
)%
Digital advertising and marketing
services revenues
$
210,992
$
210,980
—
%
$
810,569
$
825,255
(1.8
)%
Acquired revenues
—
—
(1,631
)
—
Currency impact
(762
)
—
1,206
—
Exited operations(1)
—
(322
)
—
(2,461
)
Same store digital advertising and
marketing services revenues
$
210,230
$
210,658
(0.2
)%
$
810,144
$
822,794
(1.5
)%
Advertising and marketing services
revenues
$
353,154
$
375,567
(6.0
)%
$
1,387,114
$
1,496,137
(7.3
)%
Acquired revenues
—
—
(5,456
)
—
Currency impact
(1,779
)
—
571
—
Exited operations(1)
—
(5,253
)
—
(33,834
)
Same store advertising and marketing
services revenues
$
351,375
$
370,314
(5.1
)%
$
1,382,229
$
1,462,303
(5.5
)%
Circulation revenues
$
225,820
$
256,679
(12.0
)%
$
927,821
$
1,084,637
(14.5
)%
Acquired revenues
—
—
(2,989
)
—
Currency impact
(978
)
—
(610
)
—
Exited operations(1)
—
(1,214
)
—
(7,504
)
Same store circulation revenues
$
224,842
$
255,465
(12.0
)%
$
924,222
$
1,077,133
(14.2
)%
Other revenues
$
90,431
$
98,418
(8.1
)%
$
348,615
$
364,529
(4.4
)%
Acquired revenues
—
—
(629
)
—
Currency impact
(395
)
—
(208
)
—
Exited operations(1)
—
(43
)
—
(471
)
Same store other revenues
$
90,036
$
98,375
(8.5
)%
$
347,778
$
364,058
(4.5
)%
Revenues
$
669,405
$
730,664
(8.4
)%
$
2,663,550
$
2,945,303
(9.6
)%
Acquired revenues
—
—
(9,074
)
—
Currency impact
(3,152
)
—
(247
)
—
Exited operations(1)
—
(6,510
)
—
(41,809
)
Same store revenues
$
666,253
$
724,154
(8.0
)%
$
2,654,229
$
2,903,494
(8.6
)%
(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 REVENUES, TOTAL DIGITAL
MEDIA REVENUES and DIGITAL-ONLY SUBSCRIPTION REVENUES
(Unaudited)
Table No. 9
Three months ended December
31,
Year ended December
31,
In thousands
2023
2022
% Change
2023
2022
% Change
Digital revenues(1)
$
277,145
$
269,234
2.9
%
$
1,050,370
$
1,038,580
1.1
%
Acquired revenues
—
—
(1,927
)
—
Currency impact
(989
)
—
1,067
—
Exited operations(2)
—
(454
)
—
(3,180
)
Same store digital revenues
$
276,156
$
268,780
2.7
%
$
1,049,510
$
1,035,400
1.4
%
Three months ended December
31,
Year ended December
31,
In thousands
2023
2022
% Change
2023
2022
% Change
Digital media revenues
$
78,825
$
75,859
3.9
%
$
280,596
$
299,775
(6.4
)%
Acquired revenues
—
—
(1,145
)
—
Currency impact
(606
)
—
(379
)
—
Exited operations(2)
—
(201
)
—
(1,408
)
Same store digital media
revenues
$
78,219
$
75,658
3.4
%
$
279,072
$
298,367
(6.5
)%
Three months ended December
31,
Year ended December
31,
In thousands
2023
2022
% Change
2023
2022
% Change
Digital-only subscription
revenues
$
41,895
$
35,487
18.1
%
$
155,621
$
132,618
17.3
%
Acquired revenues
—
—
(49
)
—
Currency impact
(80
)
—
(53
)
—
Exited operations(2)
—
(131
)
—
(661
)
Same store digital-only subscription
revenues
$
41,815
$
35,356
18.3
%
$
155,519
$
131,957
17.9
%
(1)
Total Digital revenues include Digital
advertising and marketing services revenues, Digital-only
subscription revenues, and Other Digital revenues, including
digital syndication, affiliate, production and licensing
revenues.
(2)
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 December
31,
Year ended December
31,
In thousands
2023
2022
% Change
2023
2022
% Change
Revenues - Digital Marketing
Solutions
$
120,384
$
121,112
(0.6
)%
$
477,909
$
468,883
1.9
%
Currency impact
61
—
1,643
—
Exited operations(1)
—
—
—
—
Same store revenues - Digital Marketing
Solutions
$
120,445
$
121,112
(0.6
)%
$
479,552
$
468,883
2.3
%
(1)
In 2023, exited operations include (i)
businesses divested and (ii) the elimination of stand-alone print
products discontinued within the media markets.
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, core platform revenues 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. 11
Three months ended December
31,
Year ended December
31,
In thousands, except ARPU
2023
2022
Change
% Change
2023
2022
Change
% Change
Domestic Gannett Media
Digital-only ARPU
$
7.09
$
5.88
$
1.21
20.6
%
$
6.46
$
5.99
$
0.47
7.8
%
Newsquest
Digital-only ARPU
$
6.18
$
6.57
$
(0.39
)
(5.9
)%
$
6.14
$
7.44
$
(1.30
)
(17.5
)%
Total Gannett:
Digital-only ARPU
$
7.05
$
5.90
$
1.15
19.5
%
$
6.45
$
6.04
$
0.41
6.8
%
DMS:
Core platform revenues
$
119,355
$
119,713
$
(358
)
(0.3
)%
$
473,172
$
462,067
$
11,105
2.4
%
Core platform ARPU
$
2,663
$
2,607
$
56
2.1
%
$
2,620
$
2,459
$
161
6.5
%
Core platform average customer count
14.9
15.3
(0.4
)
(2.6
)%
15.1
15.7
(0.6
)
(3.8
)%
Table No. 12
As of December 31,
In thousands
2023
2022
% Change
Digital-only paid
subscriptions:
Domestic Gannett Media
1,912
1,970
(2.9
)%
Newsquest
83
59
40.7
%
Total Gannett
1,995
2,029
(1.7
)%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240222872111/en/
For investor inquiries, contact: Matt Esposito Investor
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