- Operating Income of $13.5 million; Net Loss Attributable to
Gannett of $12.7 million
- Adjusted EBITDA(1) of $71.2 million, up 40% Year-over-Year
- Cash Provided by Operating Activities of $46.1 million, up 250%
Year-over-Year, Free Cash Flow(1) of $38.4 million, up 189%
Year-over-Year
Total Digital Revenues returned to growth in
Q2; expect further improvement to digital growth trend in Q3
Improving Digital-only subscription monetization; Digital-only
ARPU(2) up 6% Year-over-Year to $6.35 DMS achieved record high core
platform revenues(3) and ARPU(2); sequential improvement to
customer count(2)
Gannett Co., Inc. ("Gannett", "we", "us", "our", or the
"Company") (NYSE: GCI) today reported its financial results for the
second quarter ended June 30, 2023.
"We are pleased to report strong operational and financial
results for the quarter. In the second quarter, Adjusted EBITDA
grew by 40% year-over-year, reflecting a margin of approximately
11%, a sizable increase compared to the prior year's margin of
about 7%. Additionally, free cash flow increased by 189%
year-over-year, while our strategic initiatives drove ongoing
sequential improvements in same-store revenue trends. As a result,
our total digital revenues returned to growth in the second quarter
and account for nearly 40% of total revenues, representing an
all-time high. We believe we are making great progress on our
strategy, and our results signify a notable turning point in our
business trajectory," said Michael Reed, Gannett Chairman and Chief
Executive Officer.
"In the second quarter, our digital businesses continued to
deliver solid results. Digital-only subscription revenues
experienced growth of 17% year-over-year on a same store basis,
while our digital marketing solutions business achieved record high
core platform revenues and ARPU, and sustained strong Adjusted
EBITDA margins. We also repaid $15 million of debt, and combined
with our improving Adjusted EBITDA performance, we materially
reduced our first lien net leverage to 2.26x, while maintaining a
healthy liquidity position."
"We continue to build on the strong foundation we laid over the
past year and our focus persists on profitability, digital revenue
growth and continuing to enhance our balance sheet. We believe that
focus is evident in our results, enabling us to raise our full year
guidance again this quarter. We expect sustained improvement in
same store revenue trends throughout the second half of the year,
alongside more substantial growth in our digital revenue trends.
Our strong performance expected in the latter half of this year
also extends to Adjusted EBITDA and free cash flow, reinforcing our
confidence in achieving a first lien net leverage well below 2.0x
by the end of 2023."
Second Quarter 2023
Highlights:
- Total revenues of $672.4 million decreased 10.2% compared to
the second quarter of 2022
- Same store revenues(1) decreased 8.6% compared to the second
quarter of 2022, reflecting a sequential improvement of 70 basis
points compared to the first quarter of 2023
- Total digital revenues were $262.1 million, or 39.0% of total
revenues, up 0.8% over the same period in the prior year on a same
store(1) basis
- Net loss attributable to Gannett of $12.7 million improved by
$41.0 million versus the net loss attributable to Gannett of $53.7
million in the second quarter of 2022
- Adjusted net loss attributable to Gannett(1) of $6.0
million
- Adjusted EBITDA(1) totaled $71.2 million, an increase of 39.9%
compared to the second quarter of 2022
- Adjusted EBITDA margin(1) of 10.6% improved 380 basis points
compared to the 6.8% Adjusted EBITDA margin(1) in the second
quarter of 2022
- Cash provided by operating activities of $46.1 million
- Free cash flow(1) of $38.4 million, an increase of 188.8%
compared to second quarter of 2022
- Strengthened our executive leadership team through the
strategic appointments of:
- Chris Cho as President of Digital Marketing Solutions
- Imtiaz Patel as Gannett Media Chief Consumer Officer
- Kristin Roberts as Gannett Media Chief Content Officer
- Jason Taylor as Gannett Media Chief Sales Officer
_________________________________ (1)
See "Use of Non-GAAP Information" below
for information about these non-GAAP measures.
(2)
See "Key Performance Indicators" ("KPI")
below for information about our use of KPIs.
(3)
Core platform revenues is defined as
revenue derived from customers utilizing our proprietary digital
marketing services platform that are sold by either our direct or
local market teams.
Second Quarter 2023 Gannett Media
Highlights:
- Digital-only subscription revenues of $37.9 million grew 16.6%
year-over-year and increased 17.3% year-over-year on a same store
basis(1)
- Digital-only paid subscriptions(2) of 1.95 million at the end
of the second quarter of 2023, up 4.6% compared to same period in
the prior year
- Digital-only average revenue per user(2) of $6.35 increased
6.2% year-over-year, reflecting the execution of our refined
acquisition strategy with a heightened focus on profitability and
digital-only average revenue per user(2)
- 185 million average monthly unique visitors in the second
quarter of 2023 with 134 million average monthly unique visitors
coming from our USA TODAY NETWORK (based on June 2023 Comscore
Media Metrix®) and 51 million average monthly unique visitors
resulting from our U.K. digital properties(4)
Second Quarter 2023 Digital Marketing
Solutions Highlights:
- Digital Marketing Solutions segment revenues of $122.8 million
grew 4.0% year-over year and increased 4.6% year-over-year on a
same store basis(1)
- Total core platform revenues(3) of $121.6 million in the second
quarter of 2023, up 4.4% compared to the same quarter in the prior
year
- Total core platform average customer count(2) of 15.3 thousand
increased sequentially by 4.1% compared to the first quarter of
2023
- Core platform average revenue per user(2) was $2,642, a 10.4%
increase year-over-year
- Customer budget retention(5) was 95.6%, an increase of 70 basis
points compared to the second quarter of 2022
- Net income attributable to Gannett within the segment was $9.3
million in the second quarter of 2023 and Net income attributable
to Gannett margin within the segment was 7.6% in the second quarter
of 2023 versus 3.6% in the same quarter of the prior year
- Adjusted EBITDA(1) within the segment of $15.5 million in the
second quarter of 2023, increasing 8.1% compared to the same period
in the prior year. Adjusted EBITDA margin(1) within the segment
increased to 12.6% in the second quarter of 2023 versus 12.1% in
the same quarter of the prior year
Second Quarter 2023 Capital Structure
Highlights:
- As of June 30, 2023, the Company had cash and cash equivalents
of $106.6 million
- Total principal amount of debt outstanding as of June 30, 2023
was $1,219.7 million including $731.1 million in first lien debt,
which resulted in a First Lien Net Leverage(6) of 2.26x - a decline
of 15.7% compared to 2.68x in the fourth quarter of 2022
- During the second quarter of 2023, the Company repaid $15.1
million of debt through its scheduled quarterly amortization
payment on its five-year senior secured term loan facility (the
“New Senior Secured Term Loan”)
- Subsequent to June 30, 2023, the Company repaid $8.2 million of
its New Senior Secured Term Loan using the proceeds from real
estate asset sales
___________________________________ (4)
Newsquest used Adobe Analytics to
identify unique visitors in the second quarter of 2023.
(5)
Customer budget retention is
calculated as 1 minus the average of churned budgets in a given
month divided by starting budgets in the same period, averaged
across the quarter.
(6)
As of June 30, 2023, the First
Lien Net Leverage ratio was calculated by subtracting cash on the
balance sheet from the sum of both our Senior Secured Term Loan and
6% first lien notes due November 1, 2026 (the “2026 Senior Notes”)
and dividing that by Q2 2023 LTM Adjusted EBITDA. Our 6% Senior
Secured Convertible Notes due 2027 are second lien as of the
completion of the Senior Secured Term Loan refinancing in October
2021.
Financial Highlights
in thousands
Second Quarter 2023
Revenues
$
672,357
Net loss attributable to Gannett
(12,677
)
Adjusted EBITDA(7) (non-GAAP basis)
71,151
Adjusted Net loss attributable to
Gannett(7) (non-GAAP basis)
(5,978
)
Cash provided by operating activities
46,068
Free cash flow (7) (non-GAAP basis)
38,418
(7)
Refer to "Use of Non-GAAP Information"
below for the Company’s definition of Adjusted EBITDA, Adjusted Net
loss attributable to Gannett, and Free cash flow, as well as the
reconciliation of such measures to the most comparable GAAP
measure.
Business Outlook
The Company is raising its 2023 full year outlook with respect
to net income (loss) attributable to Gannett, cash provided by
operating activities, free cash flow, and Adjusted EBITDA. The
Company is reiterating its 2023 full year outlook with respect to
revenues, same store total revenues year-over-year, and first lien
net leverage. The Company's estimates do not factor in the impact
of any future acquisitions or dispositions.
Full Year 2023 Outlook
Prior Full Year 2023
Outlook(11)
Revenues
$2.75B to $2.80B
$2.75B to $2.80B
Same store total revenues(8)(9)
Year-Over-Year (non-GAAP basis)
(5%) to (3%)
(5%) to (3%)
Net income (loss) attributable to
Gannett
($10M) to $20M
($15M) to $15M
Cash provided by operating activities
$130M to $150M
$125M to $145M
Free cash flow(8)(9)(10) (non-GAAP
basis)
$90M to $110M
$85M to $105M
Adjusted EBITDA(8)(9) (non-GAAP basis)
$290M to $310M
$285M to $305M
First lien net leverage
<2.0x
<2.0x
(8)
Refer to "Use of Non-GAAP Information"
below for the Company’s definition of Adjusted EBITDA, Same store
total revenues, and Free cash flow, as well as the reconciliation
of such measures to the most comparable GAAP measure.
(9)
Refer to "Business Outlook" on Tables 11,
12 and 13 below for a reconciliation of non-GAAP outlook measures
to corresponding GAAP measures.
(10)
Capital expenditures are assumed at $40
million for full year 2023. Figure does not include asset
disposition proceeds which we estimate will be approximately $65
million to $75 million in 2023.
(11)
Projections were based on Company
estimates as of May 4, 2023.
Earnings Conference Call
Management will host a conference call on Thursday, August 3,
2023 at 8:30 A.M. Eastern Time. A copy of the earnings release will
be posted to the Investor Relations section of Gannett’s website,
investors.gannett.com. The conference call may be accessed by
dialing 1-877-451-6152 (from within the U.S.) or 1-201-389-0879
(from outside of the U.S.) ten minutes prior to the scheduled start
of the call; please reference "Gannett Second Quarter Earnings
Call" or access code "13733335". 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 17, 2023 by dialing 1-844-512-2921 (from
within the U.S.) or 1-412-317-6671 (from outside of the U.S.);
please reference access code "13733335".
About Gannett
Gannett Co., Inc. (NYSE: GCI) is a subscription-led and
digitally-focused media and marketing solutions company committed
to empowering communities to thrive. With an unmatched reach at the
national and local level, Gannett touches the lives of millions
with our Pulitzer Prize-winning content, consumer experiences and
benefits, and advertiser products and services. Our current
portfolio of media assets includes the USA TODAY NETWORK, which
includes USA TODAY, and local media organizations in 43 states in
the United States, and Newsquest, a wholly-owned subsidiary
operating in the United Kingdom. We also own digital marketing
services companies under the brand LocaliQ, which provide a
cloud-based platform of products to enable small and medium-sized
businesses to accomplish their marketing goals. In addition, our
portfolio includes what we believe is the largest media-owned
events business in the U.S., USA TODAY NETWORK Ventures. To connect
with us, visit www.gannett.com.
Cautionary Statement Regarding
Forward-Looking Statements
Certain items in this press release may constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, including, but not
limited to, our Business Outlook, statements regarding our business
outlook, digital revenue performance and growth, growth in our
Digital Marketing Solutions segment, growth of and demand for our
digital-only subscriptions and digital marketing and advertising
services, expectations regarding our free cash flows, revenues, net
income (loss) attributable to Gannett, same-store revenues and cash
flows, expectations regarding our long-term growth, expectations
regarding growth in revenues and Adjusted EBITDA, our ability to
create long-term stockholder value, our expectations, in terms of
both amount and timing, with respect to debt repayment, our
expected capital expenditures, expectations regarding real estate
and other asset sales, our strategy, our ability to achieve our
operating priorities, our long-term opportunities, economic
impacts, our ability to navigate volatility, achieve our financial
goals, optimize our capital structure and achieve optimal financial
performance, our cost management programs, our cost structure and
future revenue trends and our ability to influence trends. Words
such as "expect(s)", believe(s)", "continue(s)", "persist(s)",
"will", "anticipate", "outlook", "making", "target", "estimate(s)",
"project(s)" and similar expressions are intended to identify such
forward-looking statements. These statements are based on
management’s current expectations and beliefs and are subject to a
number of risks and uncertainties. These and other risks and
uncertainties could cause actual results to differ materially from
those described in the forward-looking statements, many of which
are beyond our control. The Company can give no assurance its
expectations will be attained. Accordingly, you should not place
undue reliance on any forward-looking statements contained in this
press release. For a discussion of some of the risks and important
factors that could cause actual results to differ from such
forward-looking statements, see the risks and other factors
detailed from time to time in the Company’s most recent Annual
Report on Form 10-K, our quarterly reports on Form 10-Q, and our
other filings with the Securities and Exchange Commission.
Furthermore, new risks and uncertainties emerge from time to time,
and it is not possible for the Company to predict or assess the
impact of every factor that may cause its actual results to differ
from those contained in any forward-looking statements. Such
forward-looking statements speak only as of the date of this press
release. Except to the extent required by law, the Company
expressly disclaims any obligation to release publicly any updates
or revisions to any forward-looking statements contained herein to
reflect any change in the Company’s expectations with regard
thereto or change in events, conditions or circumstances on which
any statement is based.
GANNETT CO., INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
Table No. 1
In thousands, except share data
June 30, 2023
December 31, 2022
Assets
(Unaudited)
Current assets:
Cash and cash equivalents
$
106,633
$
94,255
Accounts receivable, net of allowance of
$13,170 and $16,697 as of June 30, 2023 and December 31, 2022,
respectively
250,164
289,415
Inventories
29,449
45,223
Prepaid expenses
51,846
46,205
Other current assets
43,693
32,679
Total current assets
481,785
507,777
Property, plant and equipment, net of
accumulated depreciation of $387,919 and $360,522 as of June 30,
2023 and December 31, 2022, respectively
254,402
305,994
Operating lease assets
223,174
233,322
Goodwill
533,796
533,166
Intangible assets, net
569,757
613,358
Deferred tax assets
71,731
56,618
Pension and other assets
172,193
143,320
Total assets
$
2,306,838
$
2,393,555
Liabilities and equity
Current liabilities:
Accounts payable and accrued
liabilities
$
302,308
$
351,848
Deferred revenue
137,478
153,648
Current portion of long-term debt
63,752
60,452
Operating lease liabilities
46,556
44,872
Other current liabilities
5,606
6,218
Total current liabilities
555,700
617,038
Long-term debt
647,811
695,642
Convertible debt
408,992
405,681
Deferred tax liabilities
—
1,439
Pension and other postretirement benefit
obligations
47,989
50,710
Long-term operating lease liabilities
205,753
219,109
Other long-term liabilities
113,696
108,563
Total noncurrent liabilities
1,424,241
1,481,144
Total liabilities
1,979,941
2,098,182
Commitments and contingent
liabilities
Equity
Preferred stock, $0.01 par value per
share, 300,000 shares authorized, of which 0 shares and 150,000
shares were designated as Series A Junior Participating Preferred
Stock at June 30, 2023 and December 31, 2022, respectively, none of
which were issued and outstanding at June 30, 2023 and December 31,
2022
—
—
Common stock, $0.01 par value per share,
2,000,000,000 shares authorized, 158,436,428 shares issued and
149,125,668 shares outstanding at June 30, 2023; 153,286,104 shares
issued and 146,223,179 shares outstanding at December 31, 2022
1,584
1,533
Treasury stock, at cost, 9,310,760 shares
and 7,062,925 shares at June 30, 2023 and December 31, 2022,
respectively
(17,370
)
(14,737
)
Additional paid-in capital
1,418,577
1,409,578
Accumulated deficit
(1,001,734
)
(999,401
)
Accumulated other comprehensive loss
(73,694
)
(101,231
)
Total Gannett stockholders'
equity
327,363
295,742
Noncontrolling interests
(466
)
(369
)
Total equity
326,897
295,373
Total liabilities and equity
$
2,306,838
$
2,393,555
GANNETT CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Table No. 2
Three months ended June
30,
In thousands, except per share amounts
2023
2022
Advertising and marketing services
$
353,310
$
383,609
Circulation
233,612
274,624
Other
85,435
90,427
Total operating revenues
672,357
748,660
Operating costs
426,096
476,002
Selling, general and administrative
expenses
184,127
227,836
Depreciation and amortization
39,784
49,530
Integration and reorganization costs
7,287
15,745
Asset impairments
1,177
85
Loss on sale or disposal of assets,
net
146
372
Other operating expenses
229
314
Total operating expenses
658,846
769,884
Operating income (loss)
13,511
(21,224
)
Interest expense
28,559
26,084
Loss on early extinguishment of debt
—
749
Non-operating pension income
(2,263
)
(18,160
)
Other non-operating (income) expense,
net
(1,428
)
1,645
Non-operating expenses
24,868
10,318
Loss before income taxes
(11,357
)
(31,542
)
Provision for income taxes
1,333
22,158
Net loss
(12,690
)
(53,700
)
Net loss attributable to noncontrolling
interests
(13
)
(12
)
Net loss attributable to
Gannett
$
(12,677
)
$
(53,688
)
Loss per share attributable to Gannett -
basic
$
(0.09
)
$
(0.39
)
Loss per share attributable to Gannett -
diluted
$
(0.09
)
$
(0.39
)
GANNETT CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
Table No. 3
Six months ended June
30,
In thousands
2023
2022
Operating activities
Net loss
$
(2,430
)
$
(56,802
)
Adjustments to reconcile net loss to
operating cash flows:
Depreciation and amortization
83,482
97,313
Share-based compensation expense
8,783
8,778
Non-cash interest expense
10,567
10,641
Gain on sale or disposal of assets,
net
(17,535
)
(2,432
)
(Gain) loss on early extinguishment of
debt
(496
)
3,492
Asset impairments
1,182
939
Pension and other postretirement benefit
obligations
(6,792
)
(51,353
)
Change in other assets and liabilities,
net
(23,975
)
(8,888
)
Cash provided by operating
activities
52,786
1,688
Investing activities
Acquisitions, net of cash acquired
—
(15,432
)
Purchase of property, plant and
equipment
(16,448
)
(23,292
)
Proceeds from sale of real estate and
other assets
31,465
29,623
Change in other investing activities
(12
)
(548
)
Cash provided by (used for) investing
activities
15,005
(9,649
)
Financing activities
Payments of deferred financing costs
—
(957
)
Borrowings of long-term debt
—
80,000
Repayments of long-term debt
(51,291
)
(104,879
)
Acquisition of noncontrolling
interests
—
(2,050
)
Treasury stock
(2,622
)
(6,529
)
Changes in other financing activities
(647
)
(632
)
Cash used for financing
activities
(54,560
)
(35,047
)
Effect of currency exchange rate change on
cash
98
(1,140
)
Increase (decrease) in cash, cash
equivalents and restricted cash
13,329
(44,148
)
Cash, cash equivalents and restricted cash
at beginning of period
104,804
143,619
Cash, cash equivalents and restricted
cash at end of period
$
118,133
$
99,471
GANNETT CO., INC.
SEGMENT INFORMATION
(Unaudited)
Table No. 4
Three months ended June
30,
In thousands
2023
2022
Operating revenues:
Gannett Media
$
585,803
$
664,844
Digital Marketing Solutions
122,789
118,013
Corporate and other
1,673
1,408
Intersegment eliminations
(37,908
)
(35,605
)
Total
$
672,357
$
748,660
Adjusted EBITDA(1) (non-GAAP
basis):
Gannett Media
$
65,819
$
50,856
Digital Marketing Solutions
15,470
14,306
Corporate and other
(10,138
)
(14,311
)
Total
$
71,151
$
50,851
(1)
See "Use of Non-GAAP Information" below
for the Company’s definition of Adjusted EBITDA, and the
reconciliation of such measure to the most comparable GAAP
measure.
USE OF NON-GAAP
INFORMATION
The Company uses non-GAAP financial performance and liquidity
measures to supplement the financial information presented on a
U.S. GAAP basis. These non-GAAP financial measures, which may not
be comparable to similarly titled measures reported by other
companies, should not be considered in isolation from or as a
substitute for the related U.S. GAAP measures and should be read
together with financial information presented on a U.S. GAAP
basis.
The Company defines its non-GAAP measures as follows:
- Adjusted EBITDA is a non-GAAP performance measure the Company
believes offers a useful view of the overall and segment operations
of our business. The Company defines Adjusted EBITDA as Net income
(loss) attributable to Gannett before: (1) Income tax expense
(benefit), (2) Interest expense, (3) Gains or losses on the early
extinguishment of debt, (4) Non-operating pension income, (5) Loss
on convertible notes derivative, (6) Depreciation and amortization,
(7) Integration and reorganization costs, (8) Other operating
expenses, including third-party debt expenses and acquisition
costs, (9) Asset impairments, (10) Goodwill and intangible
impairments, (11) Gains or losses on the sale or disposal of
assets, (12) Share-based compensation, and (13) certain other
non-recurring charges. The most directly comparable U.S. GAAP
measure is Net income (loss) attributable to Gannett.
- Adjusted EBITDA margin is a non-GAAP performance measure the
Company believes offers a useful view of the overall and segment
operations of our business. Adjusted EBITDA margin is defined as
Adjusted EBITDA divided by total Operating revenues.
- Adjusted Net income (loss) attributable to Gannett is a
non-GAAP performance measure the Company believes offers a useful
view of the overall operations of our business and is useful to
analysts and investors in evaluating the results of operations and
operational trends. The Company defines Adjusted Net income (loss)
attributable to Gannett before (1) Gains or losses on the early
extinguishment of debt, (2) Loss on convertible notes derivative,
(3) Integration and reorganization costs, (4) Other operating
expenses, including third-party debt expenses and acquisition
costs, (5) Asset impairments, (6) Goodwill and intangibles
impairments, (7) Gains or losses on the sale or disposal of assets,
(8) certain other non-recurring charges, and (9) the tax impact of
the above items.
- Free cash flow is a non-GAAP liquidity measure that adjusts our
reported U.S. GAAP results for items we believe are critical to the
ongoing success of our business. The Company defines Free cash flow
as Cash provided by (used for) operating activities as reported on
the Consolidated statement of cash flows less capital expenditures,
which results in a figure representing Free cash flow available for
use in operations, additional investments, debt obligations, and
returns to stockholders. The most directly comparable U.S. GAAP
financial measure is Cash provided by (used for) operating
activities.
- Same store revenues is a non-GAAP performance measure based on
GAAP revenues for Gannett for the current period, excluding (1)
acquired revenues (2) currency impact, and (3) exited
operations.
Management’s Use of Non-GAAP Measures
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net income
(loss) attributable to Gannett, Free cash flow and Same store
revenues are not measurements of financial performance under U.S.
GAAP and should not be considered in isolation or as an alternative
to income (loss) from operations, net income (loss), margin,
revenues, cash flow provided by (used for) operating activities, or
any other measure of performance or liquidity derived in accordance
with U.S. GAAP. We believe these non-GAAP financial measures, as we
have defined them, are helpful in identifying trends in our
day-to-day performance because the items excluded have little or no
significance on our day-to-day operations. These measures provide
an assessment of controllable expenses and afford management the
ability to make decisions which are expected to facilitate meeting
current financial goals as well as achieve optimal financial
performance.
We use Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net
income (loss) attributable to Gannett, Free cash flow and Same
store revenues as measures of our day-to-day operating performance,
which is evidenced by the publishing and delivery of news and other
media and excludes certain expenses that may not be indicative of
our day-to-day business operating results.
Limitations of Adjusted EBITDA, Adjusted EBITDA margin,
Adjusted Net income (loss) attributable to Gannett, Free cash flow
and Same store revenues
Each of our non-GAAP measures have limitations as analytical
tools. They should not be viewed in isolation or as a substitute
for U.S. GAAP measures of earnings or cash flows. Material
limitations in making the adjustments to our earnings to calculate
Adjusted EBITDA and Adjusted Net income (loss) attributable to
Gannett using these non-GAAP financial measures as compared to U.S.
GAAP net income (loss) include: the cash portion of interest /
financing expense, income tax (benefit) provision, and charges
related to asset impairments, which may significantly affect our
financial results.
Management believes these items are important in evaluating our
performance, results of operations, and financial position. We use
non-GAAP financial measures to supplement our U.S. GAAP results in
order to provide a more complete understanding of the factors and
trends affecting our business.
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net income
(loss) attributable to Gannett, Free cash flow and Same store
revenues are not alternatives to net income, margin, income from
operations, cash flows provided by (used for) operations or
revenues as calculated and presented in accordance with U.S. GAAP.
As such, they should not be considered or relied upon as
substitutes or alternatives for any such U.S. GAAP financial
measure. We strongly urge you to review the reconciliations of Net
income (loss) attributable to Gannett to Adjusted EBITDA, Adjusted
EBITDA margin, Net income (loss) attributable to Gannett to
Adjusted Net income (loss) attributable to Gannett, Cash provided
by (used for) operations to Free cash flow and Revenues to Same
Store revenues along with our Consolidated financial statements
included elsewhere in this report. We also strongly urge you not to
rely on any single financial measure to evaluate our business. In
addition, because Adjusted EBITDA, Adjusted EBITDA margin, Adjusted
Net income (loss) attributable to Gannett, Free cash flow and Same
store revenues are not measures of financial performance under U.S.
GAAP and are susceptible to varying calculations, the Adjusted
EBITDA, Adjusted EBITDA margin, Adjusted Net income (loss)
attributable to Gannett, Free cash flow and Same store revenues
measures as presented in this report may differ from and may not be
comparable to similarly titled measures used by other
companies.
Non-GAAP Outlook
Our 2023 outlook included in this release includes certain
non-GAAP measures, including Same store revenues, Adjusted EBITDA
and Free cash flow. The outlook for these items does not factor in
the impact of any further acquisitions or dispositions within 2023.
We have provided these non-GAAP measures for future guidance for
the same reasons that were outlined above for historical non-GAAP
measures.
We have not fully reconciled non-GAAP forward-looking Same store
revenues, Adjusted EBITDA and Free cash flow to its most directly
comparable GAAP measure because the Company is unable to predict
with reasonable certainty those items that may affect such measures
calculated and presented in accordance with GAAP without
unreasonable effort. These reconciling items are uncertain, depend
on various factors and could significantly impact, either
individually or in the aggregate, our comparable GAAP measures. For
forward-looking Adjusted EBITDA and Same store revenues, the
reconciliation is unavailable because it would include
forward-looking financial statements in accordance with GAAP that
are unavailable without unreasonable effort. For these reasons, we
use a projected range of the aggregate amount of certain items in
order to calculate our projected non-GAAP Adjusted EBITDA outlook
(see Table 11 below), our projected non-GAAP Same Store revenues
outlook (see Table 12 below) as well as our projected non-GAAP Free
cash flow outlook (see Table 13 below). Accordingly, we are unable
to provide a full reconciliation of these non-GAAP measures used in
our outlook without unreasonable effort as certain information
necessary to calculate such measures on a GAAP basis is
unavailable, dependent on future events outside of our control and
cannot be predicted without unreasonable efforts by the
Company.
GANNETT CO., INC.
NON-GAAP FINANCIAL INFORMATION
ADJUSTED EBITDA
(Unaudited)
Table No. 5
Three months ended June 30,
2023
In thousands
Gannett Media
Digital Marketing
Solutions
Corporate and other
Consolidated Total
Net income (loss) attributable to
Gannett
$
35,925
$
9,273
$
(57,875
)
$
(12,677
)
Provision for income taxes
—
—
1,333
1,333
Interest expense
—
—
28,559
28,559
Non-operating pension income
(2,263
)
—
—
(2,263
)
Depreciation and amortization
29,756
5,927
4,101
39,784
Integration and reorganization costs
2,310
(48
)
5,025
7,287
Other operating expenses
—
—
229
229
Asset impairments
1,177
—
—
1,177
Loss on sale or disposal of assets,
net
80
66
—
146
Share-based compensation expense
—
—
5,047
5,047
Other items
(1,166
)
252
3,443
2,529
Adjusted EBITDA (non-GAAP basis)
$
65,819
$
15,470
$
(10,138
)
$
71,151
Net income (loss) attributable to Gannett
margin
6.1
%
7.6
%
NM
(1.9
)%
Adjusted EBITDA margin (non-GAAP
basis)
11.2
%
12.6
%
NM
10.6
%
NM indicates not meaningful.
Three months ended June 30,
2022
In thousands
Gannett Media
Digital Marketing
Solutions
Corporate and other
Consolidated Total
Net income (loss) attributable to
Gannett
$
19,145
$
4,306
$
(77,139
)
$
(53,688
)
Provision for income taxes
—
—
22,158
22,158
Interest expense
—
—
26,084
26,084
Loss on early extinguishment of debt
—
—
749
749
Non-operating pension income
(18,160
)
—
—
(18,160
)
Depreciation and amortization
38,558
6,829
4,143
49,530
Integration and reorganization costs
11,041
293
4,411
15,745
Other operating expenses
34
—
280
314
Asset impairments
85
—
—
85
Loss on sale or disposal of assets,
net
353
19
—
372
Share-based compensation expense
—
—
5,385
5,385
Other items
(200
)
2,859
(382
)
2,277
Adjusted EBITDA (non-GAAP basis)
$
50,856
$
14,306
$
(14,311
)
$
50,851
Net income (loss) attributable to Gannett
margin
2.9
%
3.6
%
NM
(7.2
)%
Adjusted EBITDA margin (non-GAAP
basis)
7.6
%
12.1
%
NM
6.8
%
NM indicates not meaningful.
GANNETT CO., INC.
NON-GAAP FINANCIAL INFORMATION
ADJUSTED NET LOSS ATTRIBUTABLE TO
GANNETT
(Unaudited)
Table No. 6
Three months ended June
30,
In thousands
2023
2022
Net loss attributable to Gannett
$
(12,677
)
$
(53,688
)
Loss on early extinguishment of debt
—
749
Integration and reorganization costs
7,287
15,745
Other operating expenses
229
314
Asset impairments
1,177
85
Loss on sale or disposal of assets,
net
146
372
Other items
(18
)
—
Subtotal
(3,856
)
(36,423
)
Tax impact of above items (1)
(2,122
)
(4,155
)
Adjusted Net loss attributable to Gannett
(non-GAAP basis)
$
(5,978
)
$
(40,578
)
(1)
Beginning with the fourth quarter of 2022,
the Company calculated the tax impact of the items impacting
Adjusted Net income (loss) attributable to Gannett using a combined
U.S. federal statutory income tax rate and a State and Local tax
rate of 24.1% (the "Combined Tax Rate"). As most of our operations
are in the U.S. and the Company expects to pay the Combined Tax
Rate, the Company believes this methodology provides for a more
accurate representation of our business and the tax impacts
affecting Adjusted net income (loss) attributable to Gannett. For
the three months ended June 30, 2022, the Company calculated the
tax impact of items impacting Adjusted Net loss attributable to
Gannett based on a full recalculation of the estimated annual
effective tax rate and the annual tax expense, which resulted in
volatility of the tax impact of items affecting Adjusted Net loss
attributable to Gannett due to estimates used in the quarterly tax
calculation. As a result, and as reflected on the table, the
Company has recast the tax impact of items impacting Adjusted Net
loss attributable to Gannett for the three months ended June 30,
2022.
GANNETT CO., INC.
NON-GAAP FINANCIAL INFORMATION
FREE CASH FLOW
(Unaudited)
Table No. 7
Three months ended June
30,
In thousands
2023
2022
Cash provided by (used for) operating
activities (GAAP basis)
$
46,068
$
(30,741
)
Capital expenditures
(7,650
)
(12,528
)
Free cash flow (non-GAAP basis)(1)
$
38,418
$
(43,269
)
(1)
For the three months ended June 30, 2023
and 2022, Free cash flow was negatively impacted by interest paid
of $35.2 million and $34.4 million, respectively, integration and
reorganization costs of $16.2 million and $15.8 million,
respectively, and other costs of $2.5 million and $1.2 million,
respectively.
GANNETT CO., INC.
NON-GAAP FINANCIAL INFORMATION
SAME STORE REVENUES -
CONSOLIDATED
(Unaudited)
Table No. 8
Three months ended June
30,
In thousands
2023
2022
% Change
Total revenues
$
672,357
$
748,660
(10.2
)%
Currency impact
901
—
***
Exited operations(1)
—
(12,429
)
***
Same store total revenues
$
673,258
$
736,231
(8.6
)%
Advertising and marketing services
revenues
$
353,310
$
383,609
(7.9
)%
Currency impact
773
—
***
Exited operations(1)
—
(10,235
)
***
Same store advertising and marketing
services revenues
$
354,083
$
373,374
(5.2
)%
Circulation revenues
$
233,612
$
274,624
(14.9
)%
Currency impact
97
—
***
Exited operations(1)
—
(2,044
)
***
Same store circulation revenues
$
233,709
$
272,580
(14.3
)%
Other revenues
$
85,435
$
90,427
(5.5
)%
Currency impact
31
—
***
Exited operations(1)
—
(150
)
***
Same store other revenues
$
85,466
$
90,277
(5.3
)%
*** Indicates a percentage change greater than or equal to 100. (1)
In 2023, exited operations include (i)
businesses divested and (ii) the elimination of stand-alone print
products discontinued within the media markets.
GANNETT CO., INC.
NON-GAAP FINANCIAL INFORMATION
SAME STORE REVENUES - TOTAL DIGITAL and
DIGITAL-ONLY SUBSCRIPTION REVENUES
(Unaudited)
Table No. 9
Three months ended June
30,
In thousands
2023
2022
% Change
Total Digital revenues
$
262,103
$
261,768
0.1
%
Currency impact
714
—
***
Exited operations(1)
—
(928
)
***
Same store total digital
revenues
$
262,817
$
260,840
0.8
%
Three months ended June
30,
In thousands
2023
2022
% Change
Digital-only subscription
revenues
$
37,856
$
32,473
16.6
%
Currency impact
7
—
***
Exited operations(1)
—
(205
)
***
Same store digital-only subscription
revenues
$
37,863
$
32,268
17.3
%
*** Indicates a percentage change greater than or equal to 100. (1)
In 2023, exited operations include (i)
businesses divested and (ii) the elimination of stand-alone print
products discontinued within the media markets.
GANNETT CO., INC.
NON-GAAP FINANCIAL INFORMATION
SAME STORE REVENUES - DIGITAL MARKETING
SOLUTIONS SEGMENT
(Unaudited)
Table No. 10
Three months ended June
30,
In thousands
2023
2022
% Change
Total revenues - Digital Marketing
Solutions
$
122,789
$
118,013
4.0
%
Currency impact
614
—
***
Exited operations(1)
—
—
***
Same store total revenues - Digital
Marketing Solutions
$
123,403
$
118,013
4.6
%
*** Indicates a percentage change greater than or equal to 100. (1)
In 2023, exited operations include (i)
businesses divested and (ii) the elimination of stand-alone print
products discontinued within the media markets.
GANNETT CO., INC.
NON-GAAP FINANCIAL INFORMATION
BUSINESS OUTLOOK - 2023
GUIDANCE(1)(2)
ADJUSTED EBITDA
(Unaudited)
Table No. 11
Full Year 2023
Net income (loss) attributable to
Gannett
($10M) to $20M
Provision for income taxes
$10M to $30M
Interest expense
$105M to $115M
Non-operating pension income
~($10M)
Depreciation and amortization
~$165M
Integration and reorganization costs
$20M to $30M
Share-based compensation expense
~$20M
Other items
~($30M)
Adjusted EBITDA (non-GAAP basis)
$290M to $310M
(1)
Projections are based on Company estimates
as of August 3, 2023 and are provided solely for illustrative
purposes. Actual results may vary. The Company undertakes no
obligation to update this information. Additionally, the Company's
estimates do not factor in the impact of any future acquisitions or
dispositions. The Company’s future financial results could differ
materially from the Company’s current estimates.
(2)
For forward-looking Adjusted EBITDA, the
reconciliation is unavailable without unreasonable effort. For this
reason, we use a projected range of the aggregate amount of certain
items in order to calculate our projected non-GAAP Adjusted EBITDA
outlook.
GANNETT CO., INC.
NON-GAAP FINANCIAL INFORMATION
BUSINESS OUTLOOK - 2023
GUIDANCE(1)(2)
SAME STORE REVENUES
(Unaudited)
Twelve months ended December
31, 2022 (Est.)
Twelve months ended December
31, 2023 (Est.)
Table No. 12
Total revenues
$2.95B(4)
$2.75B to $2.80B
Acquired revenues
—
~($9M)
Currency impact
—
~($0.2M)
Exited operations(3)
($42M)
—
Same store total revenues
$2.90B
$2.75B to $2.80B
(1)
Projections are based on Company estimates
as of August 3, 2023 and are provided solely for illustrative
purposes. Actual results may vary. The Company undertakes no
obligation to update this information. Additionally, the Company's
estimates do not factor in the impact of any future acquisitions or
dispositions. The Company’s future financial results could differ
materially from the Company’s current estimates.
(2)
For forward-looking Same store revenues,
the reconciliation is unavailable without unreasonable effort. For
this reason, we use a projected range of the aggregate amount of
certain items in order to calculate our projected non-GAAP Same
store revenues outlook.
(3)
In 2023, exited operations include (i)
businesses divested and (ii) the elimination of stand-alone print
products discontinued within the media markets.
(4)
Total revenues as reported.
GANNETT CO., INC.
NON-GAAP FINANCIAL INFORMATION
BUSINESS OUTLOOK - 2023
GUIDANCE(1)(2)
FREE CASH FLOW
(Unaudited)
Table No. 13
Full Year 2023
Cash provided by operating activities
(GAAP basis)
$130M to $150M
Capital expenditures
~$40M
Free cash flow (non-GAAP basis)
$90M to $110M
(1)
Projections are based on Company estimates
as of August 3, 2023 and are provided solely for illustrative
purposes. Actual results may vary. The Company undertakes no
obligation to update this information. Additionally, the Company's
estimates do not factor in the impact of any future acquisitions or
dispositions. The Company’s future financial results could differ
materially from the Company’s current estimates.
(2)
For forward-looking Free cash flow, the
reconciliation is unavailable without unreasonable effort. For this
reason, we use a projected range of the aggregate amount of certain
items in order to calculate our projected non-GAAP Free cash flow
outlook.
KEY PERFORMANCE INDICATORS
A key performance indicator ("KPI") is generally defined as a
quantifiable measurement or metric used to gauge performance,
specifically to help determine strategic, financial, and
operational achievements, especially compared to those of similar
businesses.
We define Digital-only average revenue per user ("ARPU") as
digital-only subscription average monthly revenues divided by the
average digital-only 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 subscriptions, and core platform average customer
count are KPIs that offer useful information in understanding
consumer behavior, trends in our business, and our overall
operating results. Management utilizes these KPIs to track and
analyze trends across our segments.
GANNETT CO., INC.
KEY PERFORMANCE INDICATORS
(Unaudited)
Table No. 14
Three months ended June
30,
Six months ended June
30,
In thousands, except ARPU
2023
2022
Change
% Change
2023
2022
Change
% Change
Gannett Media:
Digital-only ARPU
$
6.35
$
5.98
$
0.37
6.2
%
$
6.17
$
5.96
$
0.21
3.5
%
DMS:
Core platform ARPU
$
2,642
$
2,393
$
249
10.4
%
$
2,590
$
2,362
$
228
9.7
%
Core platform average customer count
15.3
16.2
(0.9
)
(5.6
)%
15.0
15.8
(0.8
)
(5.1
)%
Table No. 15
As of June 30,
In thousands
2023
2022
% Change
Gannett Media:
Digital-only subscriptions
1,952
1,866
4.6
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230803330381/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
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