GCI New Gannett Co Inc

Gannett Co., Inc. ("Gannett", "we", "us", "our", or the "Company") (NYSE: GCI) today reported its financial results for the second quarter ended June 30, 2024.

"We are pleased to report another strong quarter of financial results. In fact, our operational execution led to year-over-year growth in Adjusted EBITDA and further improvement to our same store revenue trends. Same store revenue trends improved sequentially for the sixth consecutive quarter, and we remain on track and expect to hit the revenue growth inflection point as we exit 2024. Each of our digital revenue streams continued to grow over the prior year, and as a result, total digital revenues now account for 44% of total revenues."

"As part of our strategy, we continued to further optimize our capital structure. During the second quarter, we repaid $24.3 million of debt, which combined with our Adjusted EBITDA growth, reduced our first lien net leverage below 2.0x. Equally important, our total net debt fell under $1.0 billion for the first time since the 2019 acquisition of legacy Gannett, and we continued to maintain a strong liquidity position with approximately $99 million in cash on the balance sheet."

"Midway through 2024 we are on track with our operating plans and believe we are well-positioned to continue this positive momentum for the balance of the year. Our operational performance in the second quarter reinforces the confidence we have in our strategic direction, and as such, we are reiterating our business outlook," said Michael Reed, Gannett Chairman and Chief Executive Officer.

Second Quarter 2024 Digital Highlights:

• Total digital revenues of $278.4 million, or 43.5% of total revenues, up 6.2% versus the same period of the prior year
• Digital-only subscription revenues of $46.3 million grew 22.3% year-over-year
• Digital-only average revenue per user(1) of $7.62 increased 20.0% year-over-year
• Total digital-only paid subscriptions(1) of 2.03 million increased 4.2% year-over-year
• 185 million(2) average monthly unique visitors in the second quarter of 2024
• Digital advertising revenues of $84.5 million grew 3.6% year-over-year
• Digital Marketing Solutions segment core platform revenues(1) of $122.8 million increased 1.0% year-over year
• Record high core platform average revenue per user(1) of $2,777, up 5.1% year-over-year
• Core platform average customer count(1) of 14.7 thousand, a 2.8% increase from the first quarter of 2024

Additional Second Quarter 2024 Highlights:

• Total revenues of $639.8 million decreased 4.8% compared to the second quarter of 2023
  • Same store revenues(3) decreased 4.6%, reflecting a sequential improvement of 50 basis points
• Net income attributable to Gannett of $13.7 million improved by $26.4 million year-over-year
  • Adjusted Net income attributable to Gannett(3) of $29.1 million
• Adjusted EBITDA(3) totaled $74.6 million, a $17.0 million increase from the first quarter of 2024
• Cash provided by operating activities of $35.1 million, a $12.7 million increase from the first quarter of 2024
• Free cash flow(3) of $25.4 million, a sequential improvement of $15.9 million compared to the first quarter of 2024

(1)

See "Key Performance Indicators" ("KPIs") below for information about our use of KPIs.

(2)

185 million average monthly unique visitors in the second quarter of 2024 with approximately 132 million average monthly unique visitors coming from our USA TODAY NETWORK (based on June 2024 Comscore Media Metrix®) and approximately 53 million average monthly unique visitors resulting from our U.K. digital properties (based on Adobe Analytics).

(3)

Adjusted EBITDA, Adjusted Net income (loss) attributable to Gannett, 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.

Second Quarter 2024 Capital Structure Highlights:

• As of June 30, 2024, the Company had cash and cash equivalents of $98.9 million
• Total principal debt outstanding at June 30, 2024 was $1,089.9 million, including $604.6 million in first lien debt
  • Total net debt outstanding(4) at June 30, 2024 of $991.0 million
• First lien net leverage(5) was 1.9x, a decrease of 15.9% compared to the same period of the prior year
• The Company repaid $24.3 million of debt in the second quarter of 2024

Full Year 2024 and 2025-2026 Business Outlook(6)

The Company reiterates its full year 2024 outlook and its outlook over the course of 2025 and 2026.

• Full Year 2024 Business Outlook(6)
  • 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(3)
  • Net income attributable to Gannett is expected to improve, after excluding an impairment charge of approximately $46.0 million related to the exit of our McLean, Virginia office during the first quarter of 2024
  • Adjusted EBITDA(3) is expected to grow versus the prior year
  • Cash provided by operating activities is expected to grow versus the prior year
  • Free cash flow(3) is expected to grow in excess(7) of the expected growth in Adjusted EBITDA(3)
  • Real estate and non-strategic asset sales are expected to be in the range of $45 million and $50 million
• 2025-2026 Business Outlook(6)
  • Total digital revenues are expected to accelerate with growth exceeding 10% year-over-year and 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(3)
  • Net income attributable to Gannett is expected to improve to positive
  • Adjusted EBITDA(3) 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(3) is expected to grow at an accelerated rate with an estimated CAGR(3)(8) of 40%

Financial Highlights

In thousands

Second Quarter 2024

Revenues

$

639,840

Net income attributable to Gannett

 

13,748

Adjusted EBITDA(9) (non-GAAP basis)

 

74,562

Adjusted net income attributable to Gannett(9) (non-GAAP basis)

 

29,129

Cash provided by operating activities

 

35,125

Free cash flow(9) (non-GAAP basis)

 

25,399

(4)

Total net debt outstanding is calculated by subtracting cash on the balance sheet from the total principal value of debt.

(5)

As of June 30, 2024, 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 Q2 2024 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.

(6)

Projections are based on Company estimates as of August 1, 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.

(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.

(9)

Refer to "Use of Non-GAAP Information" below for the Company’s definition of Adjusted EBITDA, Adjusted net income 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, August 1, 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 1-888-506-0062 (from within the U.S.) or 1-973-528-0011 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference "Gannett Second Quarter Earnings Call" or access code "598135". 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, August 15, 2024 by dialing 1-877-481-4010 (from within the U.S.) or 1-919-882-2331 (from outside of the U.S.); please reference access code "50820". 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 2025-2026 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 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, 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", 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

June 30, 2024

 

December 31, 2023

Assets

(Unaudited)

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

98,886

 

 

$

100,180

 

Accounts receivable, net of allowance of $14,514 and $16,338 as of June 30, 2024 and December 31, 2023, respectively

 

241,649

 

 

 

266,096

 

Inventories

 

22,427

 

 

 

26,794

 

Prepaid expenses

 

39,426

 

 

 

36,210

 

Other current assets

 

15,647

 

 

 

14,957

 

Total current assets

 

418,035

 

 

 

444,237

 

Property, plant and equipment, net of accumulated depreciation of $342,821 and $336,408 as of June 30, 2024 and December 31, 2023, respectively

 

233,892

 

 

 

239,087

 

Operating lease assets

 

157,980

 

 

 

221,733

 

Goodwill

 

533,687

 

 

 

533,876

 

Intangible assets, net

 

478,697

 

 

 

524,350

 

Deferred tax assets

 

40,166

 

 

 

37,125

 

Pension and other assets

 

191,029

 

 

 

180,839

 

Total assets

$

2,053,486

 

 

$

2,181,247

 

 

 

 

 

Liabilities and equity

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued liabilities

$

304,882

 

 

$

293,444

 

Deferred revenue

 

112,259

 

 

 

120,502

 

Current portion of long-term debt

 

60,452

 

 

 

63,752

 

Operating lease liabilities

 

41,694

 

 

 

45,763

 

Other current liabilities

 

8,361

 

 

 

10,052

 

Total current liabilities

 

527,648

 

 

 

533,513

 

Long-term debt

 

531,211

 

 

 

564,836

 

Convertible debt

 

423,370

 

 

 

416,036

 

Deferred tax liabilities

 

—

 

 

 

2,028

 

Pension and other postretirement benefit obligations

 

40,391

 

 

 

42,661

 

Long-term operating lease liabilities

 

183,137

 

 

 

203,871

 

Other long-term liabilities

 

98,459

 

 

 

100,989

 

Total noncurrent liabilities

 

1,276,568

 

 

 

1,330,421

 

Total liabilities

 

1,804,216

 

 

 

1,863,934

 

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 June 30, 2024 and December 31, 2023

 

—

 

 

 

—

 

Common stock, $0.01 par value per share, 2,000,000,000 shares authorized, 158,817,284 shares issued and 147,653,745 shares outstanding at June 30, 2024; 158,554,705 shares issued and 148,939,463 shares outstanding at December 31, 2023

 

1,588

 

 

 

1,586

 

Treasury stock, at cost, 11,163,539 shares and 9,615,242 shares at June 30, 2024 and December 31, 2023, respectively

 

(20,499

)

 

 

(17,393

)

Additional paid-in capital

 

1,432,682

 

 

 

1,426,325

 

Accumulated deficit

 

(1,098,212

)

 

 

(1,027,192

)

Accumulated other comprehensive loss

 

(65,786

)

 

 

(65,541

)

Total Gannett stockholders' equity

 

249,773

 

 

 

317,785

 

Noncontrolling interests

 

(503

)

 

 

(472

)

Total equity

 

249,270

 

 

 

317,313

 

Total liabilities and equity

$

2,053,486

 

 

$

2,181,247

 

GANNETT CO., INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

Table No. 2

Three months ended June 30,

In thousands, except per share amounts

2024

 

2023

Digital

$

278,378

 

 

$

262,103

 

Print and commercial

 

361,462

 

 

 

410,254

 

Total revenues

 

639,840

 

 

 

672,357

 

Operating costs

 

391,474

 

 

 

426,096

 

Selling, general and administrative expenses

 

183,019

 

 

 

184,127

 

Depreciation and amortization

 

38,258

 

 

 

39,784

 

Integration and reorganization costs

 

19,775

 

 

 

7,287

 

Asset impairments

 

—

 

 

 

1,177

 

Loss on sale or disposal of assets, net

 

236

 

 

 

146

 

Other operating expenses

 

112

 

 

 

229

 

Total operating expenses

 

632,874

 

 

 

658,846

 

Operating income

 

6,966

 

 

 

13,511

 

Interest expense

 

26,270

 

 

 

28,559

 

Loss on early extinguishment of debt

 

87

 

 

 

—

 

Non-operating pension income

 

(3,137

)

 

 

(2,263

)

Equity income in unconsolidated investees, net

 

(559

)

 

 

(621

)

Other non-operating income, net

 

(2,609

)

 

 

(807

)

Non-operating expenses

 

20,052

 

 

 

24,868

 

Loss before income taxes

 

(13,086

)

 

 

(11,357

)

(Benefit) provision for income taxes

 

(26,803

)

 

 

1,333

 

Net income (loss)

 

13,717

 

 

 

(12,690

)

Net loss attributable to noncontrolling interests

 

(31

)

 

 

(13

)

Net income (loss) attributable to Gannett

$

13,748

 

 

$

(12,677

)

 

 

 

 

Income (loss) per share attributable to Gannett - basic

$

0.10

 

 

$

(0.09

)

Income (loss) per share attributable to Gannett - diluted

$

0.09

 

 

$

(0.09

)

GANNETT CO., INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Table No. 3

Six months ended June 30,

In thousands

2024

 

2023

Operating activities

 

 

 

Net loss

$

(71,051

)

 

$

(2,430

)

Adjustments to reconcile net loss to operating cash flows:

 

 

 

Depreciation and amortization

 

76,556

 

 

 

83,482

 

Share-based compensation expense

 

6,338

 

 

 

8,783

 

Non-cash interest expense

 

10,513

 

 

 

10,567

 

Loss (gain) on sale or disposal of assets, net

 

788

 

 

 

(17,535

)

Gain on early extinguishment of debt

 

(530

)

 

 

(496

)

Asset impairments

 

45,989

 

 

 

1,182

 

Pension and other postretirement benefit obligations

 

(15,399

)

 

 

(6,792

)

Equity income in unconsolidated investees, net

 

(374

)

 

 

(831

)

Change in other assets and liabilities, net

 

4,746

 

 

 

(23,144

)

Cash provided by operating activities

 

57,576

 

 

 

52,786

 

Investing activities

 

 

 

Purchase of property, plant and equipment

 

(22,725

)

 

 

(16,448

)

Proceeds from sale of real estate and other assets

 

6,073

 

 

 

31,465

 

Change in other investing activities

 

386

 

 

 

(12

)

Cash (used for) provided by investing activities

 

(16,266

)

 

 

15,005

 

Financing activities

 

 

 

Repayments of long-term debt

 

(39,575

)

 

 

(51,291

)

Treasury stock

 

(3,103

)

 

 

(2,622

)

Changes in other financing activities

 

(846

)

 

 

(647

)

Cash used for financing activities

 

(43,524

)

 

 

(54,560

)

Effect of currency exchange rate change on cash

 

386

 

 

 

98

 

(Decrease) increase in cash, cash equivalents and restricted cash

 

(1,828

)

 

 

13,329

 

Cash, cash equivalents and restricted cash at beginning of period

 

110,612

 

 

 

104,804

 

Cash, cash equivalents and restricted cash at end of period

$

108,784

 

 

$

118,133

 

GANNETT CO., INC. SEGMENT INFORMATION (Unaudited)

Table No. 4

Three months ended June 30,

In thousands

2024

 

2023

Revenues:

 

 

 

Domestic Gannett Media

$

491,909

 

 

$

528,194

 

Newsquest

 

61,252

 

 

 

57,609

 

Digital Marketing Solutions

 

123,798

 

 

 

122,789

 

Corporate and other

 

1,258

 

 

 

1,673

 

Intersegment eliminations

 

(38,377

)

 

 

(37,908

)

Total

$

639,840

 

 

$

672,357

 

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. generally accepted accounting principles ("U.S. GAAP") basis. These non-GAAP financial performance and liquidity measures, which may not be comparable to, and may be defined differently than, similarly titled measures used or 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.

We define our non-GAAP financial performance and liquidity measures as follows:

• Adjusted EBITDA is a non-GAAP financial performance measure we believe offers a useful view of the overall and segment operations of our business. We define 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) 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, (13) Other non-operating (income) expense, net, and (14) Non-recurring items. The most directly comparable U.S. GAAP financial performance measure is Net income (loss) attributable to Gannett.

• Adjusted EBITDA margin is a non-GAAP financial performance measure we believe offers a useful view of the overall and segment operations of our business. We define Adjusted EBITDA margin as Adjusted EBITDA divided by total Revenues.

• Adjusted Net income (loss) attributable to Gannett is a non-GAAP financial performance measure we believe 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. We define Adjusted Net income (loss) attributable to Gannett as 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) 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) Other items, including (Gain) loss on sale of investments, 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. We define Free cash flow as Cash provided by (used for) operating activities as reported on the condensed consolidated statements 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 liquidity measure is Cash provided by (used for) operating activities.

• Same store revenues is a non-GAAP financial performance measure based on our U.S. GAAP revenues 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 or liquidity under U.S. GAAP and should not be considered in isolation or as an alternative to net income (loss), margin, income (loss) from operations, cash flow provided by (used for) operating activities, revenues, or any other measure of performance or liquidity derived in accordance with U.S. GAAP. We believe these non-GAAP financial performance and liquidity 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 core 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 Non-GAAP Measures

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 performance and liquidity 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 (loss), margin, income (loss) from operations, cash flow provided by (used for) operating activities, revenues, or any other measure of performance or liquidity derived 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 measures. 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 condensed consolidated financial statements included elsewhere in this report. We also strongly urge you not to rely on any single financial performance or liquidity 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 release 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 2025-2026 business outlook included in this release include certain non-GAAP financial performance and liquidity 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 future 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 U.S. 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 U.S. 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 U.S. 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 June 30, 2024

In thousands

Domestic Gannett Media

 

Newsquest

 

Digital Marketing Solutions

 

Corporate and other

 

Consolidated Total

Net income (loss) attributable to Gannett

$

16,043

 

 

$

14,058

 

 

$

5,514

 

 

$

(21,867

)

 

$

13,748

 

Benefit for income taxes

 

—

 

 

 

—

 

 

 

—

 

 

 

(26,803

)

 

 

(26,803

)

Interest expense

 

—

 

 

 

—

 

 

 

—

 

 

 

26,270

 

 

 

26,270

 

Loss on early extinguishment of debt

 

—

 

 

 

—

 

 

 

—

 

 

 

87

 

 

 

87

 

Non-operating pension income

 

(1,306

)

 

 

(1,831

)

 

 

—

 

 

 

—

 

 

 

(3,137

)

Depreciation and amortization

 

24,309

 

 

 

2,043

 

 

 

6,065

 

 

 

5,841

 

 

 

38,258

 

Integration and reorganization costs

 

14,693

 

 

 

243

 

 

 

887

 

 

 

3,952

 

 

 

19,775

 

Third-party debt expenses and acquisition (income) costs

 

—

 

 

 

(22

)

 

 

—

 

 

 

270

 

 

 

248

 

Loss on sale or disposal of assets, net

 

233

 

 

 

1

 

 

 

—

 

 

 

2

 

 

 

236

 

Share-based compensation expense

 

—

 

 

 

—

 

 

 

—

 

 

 

3,512

 

 

 

3,512

 

Other non-operating income, net

 

(1,118

)

 

 

(354

)

 

 

(697

)

 

 

(440

)

 

 

(2,609

)

Non-recurring items

 

75

 

 

 

—

 

 

 

4

 

 

 

4,898

 

 

 

4,977

 

Adjusted EBITDA (non-GAAP basis)

$

52,929

 

 

$

14,138

 

 

$

11,773

 

 

$

(4,278

)

 

$

74,562

 

Net income attributable to Gannett margin

 

3.3

%

 

 

23.0

%

 

 

4.5

%

 

 

NM

 

 

 

2.1

%

Adjusted EBITDA margin (non-GAAP basis)

 

10.8

%

 

 

23.1

%

 

 

9.5

%

 

 

NM

 

 

 

11.7

%

NM indicates not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended June 30, 2023

In thousands

Domestic Gannett Media

 

Newsquest

 

Digital Marketing Solutions

 

Corporate and other

 

Consolidated Total

Net income (loss) attributable to Gannett

$

22,786

 

 

$

13,139

 

 

$

9,273

 

 

$

(57,875

)

 

$

(12,677

)

Provision for income taxes

 

—

 

 

 

—

 

 

 

—

 

 

 

1,333

 

 

 

1,333

 

Interest expense

 

—

 

 

 

—

 

 

 

—

 

 

 

28,559

 

 

 

28,559

 

Non-operating pension income

 

(80

)

 

 

(2,183

)

 

 

—

 

 

 

—

 

 

 

(2,263

)

Depreciation and amortization

 

27,630

 

 

 

2,126

 

 

 

5,927

 

 

 

4,101

 

 

 

39,784

 

Integration and reorganization costs (reversal)

 

1,934

 

 

 

376

 

 

 

(48

)

 

 

5,025

 

 

 

7,287

 

Third-party debt expenses and acquisition costs

 

—

 

 

 

—

 

 

 

—

 

 

 

229

 

 

 

229

 

Asset impairments

 

1,177

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,177

 

Loss on sale or disposal of assets, net

 

77

 

 

 

3

 

 

 

66

 

 

 

—

 

 

 

146

 

Share-based compensation expense

 

—

 

 

 

—

 

 

 

—

 

 

 

5,047

 

 

 

5,047

 

Other non-operating (income) expense, net

 

(157

)

 

 

(1,110

)

 

 

252

 

 

 

208

 

 

 

(807

)

Non-recurring items

 

10

 

 

 

91

 

 

 

—

 

 

 

3,235

 

 

 

3,336

 

Adjusted EBITDA (non-GAAP basis)

$

53,377

 

 

$

12,442

 

 

$

15,470

 

 

$

(10,138

)

 

$

71,151

 

Net income (loss) attributable to Gannett margin

 

4.3

%

 

 

22.8

%

 

 

7.6

%

 

 

NM

 

 

 

(1.9

)%

Adjusted EBITDA margin (non-GAAP basis)

 

10.1

%

 

 

21.6

%

 

 

12.6

%

 

 

NM

 

 

 

10.6

%

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 June 30,

In thousands

2024

 

2023

Net income (loss) attributable to Gannett

$

13,748

 

 

$

(12,677

)

Loss on early extinguishment of debt

 

87

 

 

 

—

 

Integration and reorganization costs

 

19,775

 

 

 

7,287

 

Third-party debt expenses and acquisition costs

 

248

 

 

 

229

 

Asset impairments

 

—

 

 

 

1,177

 

Loss on sale or disposal of assets, net

 

236

 

 

 

146

 

Other items

 

7

 

 

 

(18

)

Subtotal

 

34,101

 

 

 

(3,856

)

Tax impact of above items

 

(4,972

)

 

 

(2,122

)

Adjusted net income (loss) attributable to Gannett (non-GAAP basis)

$

29,129

 

 

$

(5,978

)

GANNETT CO., INC. NON-GAAP FINANCIAL INFORMATION FREE CASH FLOW (Unaudited)

Table No. 7

Three months ended June 30,

In thousands

2024

 

2023

Cash provided by operating activities (GAAP basis)

$

35,125

 

 

$

46,068

 

Capital expenditures

 

(9,726

)

 

 

(7,650

)

Free cash flow (non-GAAP basis)(1)

$

25,399

 

 

$

38,418

 

(1) For the three months ended June 30, 2024 and 2023, free cash flow was negatively impacted by interest paid of $32.1 million and $35.2 million, respectively, integration and reorganization costs of $10.3 million and $16.2 million, respectively, and other costs of $3.8 million and $2.5 million, respectively.

GANNETT CO., INC. NON-GAAP FINANCIAL INFORMATION SAME STORE REVENUES - CONSOLIDATED (Unaudited)

Table No. 8

Three months ended June 30,

In thousands

2024

 

2023

 

% Change

Revenues

$

639,840

 

 

$

672,357

 

 

(4.8

)%

Currency impact

 

(344

)

 

 

—

 

 

 

Exited operations(1)

 

—

 

 

 

(2,348

)

 

 

Same store revenues

$

639,496

 

 

$

670,009

 

 

(4.6

)%

(1) 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. 9

Three months ended June 30,

In thousands, except ARPU

2024

 

2023

 

Change

 

% Change

Domestic Gannett Media:

 

 

 

 

 

 

 

Digital-only ARPU

$

7.70

 

$

6.34

 

$

1.36

 

 

21

%

 

 

 

 

 

 

 

 

Newsquest:

 

 

 

 

 

 

 

Digital-only ARPU

$

5.94

 

$

6.61

 

$

(0.67

)

 

(10

)%

 

 

 

 

 

 

 

 

Total Gannett:

 

 

 

 

 

 

 

Digital-only ARPU

$

7.62

 

$

6.35

 

$

1.27

 

 

20

%

 

 

 

 

 

 

 

 

DMS:

 

 

 

 

 

 

 

Core platform revenues

$

122,843

 

$

121,574

 

$

1,269

 

 

1

%

Core platform ARPU

$

2,777

 

$

2,642

 

$

135

 

 

5

%

Core platform average customer count

 

14.7

 

 

15.3

 

 

(0.6

)

 

(4

)%

Table No. 10

As of June 30,

In thousands

2024

 

2023

 

% Change

Digital-only paid subscriptions:

 

 

 

 

 

Domestic Gannett Media

1,938

 

1,886

 

3

%

Newsquest

96

 

66

 

45

%

Total Gannett

2,034

 

1,952

 

4

%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240801224878/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