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Gannett Announces First Quarter 2024 Results and Reiterates Business Outlook

Businesswire ·  May 2 19:00

NEW YORK, NY--(BUSINESS WIRE)--Gannett Co., Inc. ("Gannett", "we", "us", "our", or the "Company") (NYSE: GCI) today reported its financial results for the first quarter ended March 31, 2024.


"Our first quarter results reflect an excellent start to the year. Year-over-year revenue trends were a bright spot in the quarter, reflecting the most pronounced sequential improvement in nearly three years. This top line momentum gives us confidence in our belief that we'll exit 2024 with total revenues growing over the prior year. Equally important, we continued to expand our audience, improve engagement, and grow digital revenues through diversified channels. As a result, total digital revenues increased 8% year-over-year and accounted for over 42% of total revenues, representing an all-time high," said Michael Reed, Gannett Chairman and Chief Executive Officer.

"We continued to execute on our expanded monetization strategy, and in the first quarter, each of our digital revenue streams grew over the prior year period. Digital-only subscription revenues and average revenue per user reached new highs, with growth rates exceeding 20% compared to the prior year period. Digital advertising continued to grow year-over-year, and as expected, our digital marketing solutions business returned to growth versus the prior year period. Finally, our partnership revenue continues to scale, nearly doubling over the prior year period."

"We drove free cash flow growth over the prior year period, along with improved sequential year-over-year trends in Adjusted EBITDA, which we believe positions us well for full year Adjusted EBITDA and free cash flow growth as outlined in our business outlook."

First Quarter 2024 Digital Highlights:

  • Total digital revenues of $267.5 million, or 42.1% of total revenues, up 8.1% versus the same period of the prior year
  • Digital-only subscription revenues of $43.5 million grew 21.3% year-over-year
  • Digital-only average revenue per user(1) of $7.22 increased 22.4% year-over-year
  • Total digital-only paid subscriptions(1) surpassed 2.0 million, representing sequential growth of 1.1%
  • 187 million(2) global average monthly unique visitors in the first quarter of 2024, up 0.6% year-over-year
  • Digital advertising revenues of $84.5 million grew 5.3% year-over-year
  • Digital Marketing Solutions segment core platform revenues(1) of $116.1 million increased 4.2% year-over year
    • Record high core platform average revenue per user(1) of $2,697, up 6.4% year-over-year

Additional First Quarter 2024 Highlights:

  • Total revenues of $635.8 million decreased 5.0% compared to the first quarter of 2023, reflecting improvement on revenue declines of 8.4% in the fourth quarter of 2023 compared to the prior year fourth quarter
    • Same store revenues(3) decreased 5.1% compared to the first quarter of 2023, reflecting improvement on revenue declines of 8.0% in the fourth quarter of 2023 compared to the prior year fourth quarter
  • Net loss attributable to Gannett of $84.8 million includes an impairment charge of approximately $46.0 million related to the exit of our leased facility in McLean, Virginia during the first quarter of 2024
    • Adjusted Net loss attributable to Gannett(3) of $36.4 million
  • Adjusted EBITDA(3) totaled $57.6 million, a decrease of 8.4% compared to the first quarter of 2023
  • Cash provided by operating activities of $22.5 million, an increase of $15.7 million year-over-year
  • Free cash flow(3) of $9.5 million, an improvement of $11.5 million year-over-year
____________________

(1)

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

(2)

187 million average monthly unique visitors in the first quarter of 2024 with approximately 134 million average monthly unique visitors coming from our USA TODAY NETWORK (based on March 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.

First Quarter 2024 Capital Structure Highlights:

  • As of March 31, 2024, the Company had cash and cash equivalents of $93.3 million
  • Total principal amount of debt outstanding at Q1 end was $1,114.2 million, including $625.6 million in first lien debt
  • First lien net leverage(4) was 2.0x, a decrease of 21.6% compared to the same period of the prior year
  • The Company repaid $16.3 million of debt in the first quarter of 2024

Full Year 2024 and Mid-Term 2025-2026 Business Outlook(5)

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

  • 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(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(6) 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
  • 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(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(7) of 30%
    • Free cash flow(3) is expected to grow at an accelerated rate with an estimated CAGR(3)(7) of 40%
____________________

(4)

As of March 31, 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 Q1 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.

(5)

Projections are based on Company estimates as of May 2, 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)

Capital expenditures are expected to increase as a result of investments in technology and products.

(7)

Cash provided by operating activities CAGR and Free cash flow CAGR are based on 2023 to 2026 estimated growth rates.

Financial Highlights

In thousands

First Quarter 2024

Revenues

$

635,761

Net loss attributable to Gannett

(84,768)

Adjusted EBITDA(8) (non-GAAP basis)

57,589

Adjusted net loss attributable to Gannett(8) (non-GAAP basis)

(36,425)

Cash provided by operating activities

22,451

Free cash flow(8) (non-GAAP basis)

9,452

___________________
(8)

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, May 2, 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 First Quarter Earnings Call" or access code "207142". 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, May 16, 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 "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 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 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, 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

March 31, 2024

December 31, 2023

Assets

(Unaudited)

Current assets:

Cash and cash equivalents

$

93,334

$

100,180

Accounts receivable, net of allowance of $15,543 and $16,338 as of March 31, 2024 and December 31, 2023, respectively

244,082

266,096

Inventories

23,622

26,794

Prepaid expenses

44,386

36,210

Other current assets

20,344

14,957

Total current assets

425,768

444,237

Property, plant and equipment, net of accumulated depreciation of $330,747 and $336,408 as of March 31, 2024 and December 31, 2023, respectively

238,902

239,087

Operating lease assets

166,911

221,733

Goodwill

533,743

533,876

Intangible assets, net

501,640

524,350

Deferred tax assets

34,243

37,125

Pension and other assets

187,959

180,839

Total assets

$

2,089,166

$

2,181,247

Liabilities and equity

Current liabilities:

Accounts payable and accrued liabilities

$

300,340

$

293,444

Deferred revenue

119,509

120,502

Current portion of long-term debt

64,263

63,752

Operating lease liabilities

43,586

45,763

Other current liabilities

9,303

10,052

Total current liabilities

537,001

533,513

Long-term debt

550,044

564,836

Convertible debt

419,671

416,036

Deferred tax liabilities

6,604

2,028

Pension and other postretirement benefit obligations

41,121

42,661

Long-term operating lease liabilities

192,293

203,871

Other long-term liabilities

109,451

100,989

Total noncurrent liabilities

1,319,184

1,330,421

Total liabilities

1,856,185

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 March 31, 2024 and December 31, 2023

Common stock, $0.01 par value per share, 2,000,000,000 shares authorized, 158,564,950 shares issued and 147,585,710 shares outstanding at March 31, 2024; 158,554,705 shares issued and 148,939,463 shares outstanding at December 31, 2023

1,586

1,586

Treasury stock, at cost, 10,979,240 shares and 9,615,242 shares at March 31, 2024 and December 31, 2023, respectively

(19,927

)

(17,393)

Additional paid-in capital

1,429,137

1,426,325

Accumulated deficit

(1,111,960

)

(1,027,192)

Accumulated other comprehensive loss

(65,383

)

(65,541)

Total Gannett stockholders' equity

233,453

317,785

Noncontrolling interests

(472

)

(472)

Total equity

232,981

317,313

Total liabilities and equity

$

2,089,166

$

2,181,247

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

Table No. 2

Three months ended March 31,

In thousands, except per share amounts

2024

2023

Digital

$

267,499

$

247,478

Print and commercial

368,262

421,439

Total revenues

635,761

668,917

Operating costs

402,399

430,188

Selling, general and administrative expenses

180,489

180,390

Depreciation and amortization

38,298

43,698

Integration and reorganization costs

17,881

12,127

Asset impairments

45,989

5

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

552

(17,681)

Other operating expenses

39

229

Total operating expenses

685,647

648,956

Operating (loss) income

(49,886

19,961

Interest expense

26,565

28,330

Gain on early extinguishment of debt

(617

)

(496)

Non-operating pension income

(3,146

)

(1,815)

Equity loss (income) in unconsolidated investees, net

185

(210)

Other non-operating expense, net

1,817

1,221

Non-operating expenses

24,804

27,030

Loss before income taxes

(74,690

(7,069

Provision (benefit) for income taxes

10,078

(17,329)

Net (loss) income

(84,768

10,260

Net loss attributable to noncontrolling interests

(84)

Net (loss) income attributable to Gannett

$

(84,768

$

10,344

(Loss) income per share attributable to Gannett - basic

$

(0.60

)

$

0.07

(Loss) income per share attributable to Gannett - diluted

$

(0.60

)

$

0.07

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

Table No. 3

Three months ended March 31,

In thousands

2024

2023

Operating activities

Net (loss) income

$

(84,768

)

$

10,260

Adjustments to reconcile net (loss) income to operating cash flows:

Depreciation and amortization

38,298

43,698

Share-based compensation expense

2,826

3,736

Non-cash interest expense

5,260

5,267

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

552

(17,681)

Gain on early extinguishment of debt

(617

)

(496)

Asset impairments

45,989

5

Pension and other postretirement benefit obligations

(11,211

)

(3,725)

Equity loss (income) in unconsolidated investees, net

185

(210)

Change in other assets and liabilities, net

25,937

(34,136)

Cash provided by operating activities

22,451

6,718

Investing activities

Purchase of property, plant and equipment

(12,999

)

(8,798)

Proceeds from sale of real estate and other assets

575

29,502

Change in other investing activities

(2

)

Cash (used for) provided by investing activities

(12,426

20,704

Financing activities

Repayments of long-term debt

(15,290

)

(36,178)

Treasury stock

(2,532

)

(2,139)

Changes in other financing activities

(423

)

(323)

Cash used for financing activities

(18,245

(38,640

Effect of currency exchange rate change on cash

984

38

Decrease in cash, cash equivalents and restricted cash

(7,236

)

(11,180)

Cash, cash equivalents and restricted cash at beginning of period

110,612

104,804

Cash, cash equivalents and restricted cash at end of period

$

103,376

$

93,624

GANNETT CO., INC.
SEGMENT INFORMATION
(Unaudited)

Table No. 4

Three months ended March 31,

In thousands

2024

2023

Revenues:

Domestic Gannett Media

$

495,719

$

529,937

Newsquest

60,198

59,158

Digital Marketing Solutions

117,045

112,817

Corporate and other

1,604

1,398

Intersegment eliminations

(38,805

)

(34,393)

Total

$

635,761

$

668,917

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.

Contacts

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


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