Gannett Announces Second Quarter 2023 Results and Raises Full Year Outlook
- Adjusted EBITDA up 40% YoY
- Cash Provided by Operating Activities up 250% YoY
- Total Digital Revenues returned to growth
- Digital-only ARPU up 6% YoY
- DMS achieved record high core platform revenues and ARPU
- Total revenues decreased 10.2% YoY
- Same store revenues decreased 8.6% YoY
-
Operating Income of
$13.5 million $12.7 million -
Adjusted EBITDA(1) of
$71.2 million 40% Year-over-Year -
Cash Provided by Operating Activities of
$46.1 million 250% Year-over-Year, Free Cash Flow(1) of$38.4 million 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
DMS achieved record high core platform revenues(3) and ARPU(2); sequential improvement to customer count(2)
"We are pleased to report strong operational and financial results for the quarter. In the second quarter, Adjusted EBITDA grew by
"In the second quarter, our digital businesses continued to deliver solid results. Digital-only subscription revenues experienced growth of
"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 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
-
Same store revenues(1) decreased
-
Total digital revenues were
$262.1 million 39.0% of total revenues, up0.8% over the same period in the prior year on a same store(1) basis -
Net loss attributable to Gannett of
$12.7 million $41.0 million $53.7 million -
Adjusted net loss attributable to Gannett(1) of
$6.0 million
-
Adjusted net loss attributable to Gannett(1) of
-
Adjusted EBITDA(1) totaled
$71.2 million 39.9% compared to the second quarter of 2022-
Adjusted EBITDA margin(1) of
10.6% improved 380 basis points compared to the6.8% Adjusted EBITDA margin(1) in the second quarter of 2022
-
Adjusted EBITDA margin(1) of
-
Cash provided by operating activities of
$46.1 million -
Free cash flow(1) of
$38.4 million 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 16.6% year-over-year and increased17.3% 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 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 ourU.K. digital properties(4)
Second Quarter 2023 Digital Marketing Solutions Highlights:
-
Digital Marketing Solutions segment revenues of
$122.8 million 4.0% year-over year and increased4.6% year-over-year on a same store basis(1)-
Total core platform revenues(3) of
$121.6 million 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 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
-
Total core platform revenues(3) of
-
Net income attributable to Gannett within the segment was
$9.3 million 7.6% in the second quarter of 2023 versus3.6% in the same quarter of the prior year -
Adjusted EBITDA(1) within the segment of
$15.5 million 8.1% compared to the same period in the prior year. Adjusted EBITDA margin(1) within the segment increased to12.6% in the second quarter of 2023 versus12.1% 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 $731.1 million 15.7% compared to 2.68x in the fourth quarter of 2022 -
During the second quarter of 2023, the Company repaid
$15.1 million -
Subsequent to June 30, 2023, the Company repaid
$8.2 million
| ___________________________________ | |
| (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 |
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 |
|
|
Same store total revenues(8)(9) Year-Over-Year (non-GAAP basis) |
( |
( |
Net income (loss) attributable to Gannett |
( |
( |
Cash provided by operating activities |
|
|
Free cash flow(8)(9)(10) (non-GAAP basis) |
|
|
Adjusted EBITDA(8)(9) (non-GAAP basis) |
|
|
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 |
| (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
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
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 |
|
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 |
|
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, |
|
— |
|
|
|
— |
|
Common stock, |
|
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
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 comparableU.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
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
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
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
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
|
|
Corporate and
|
|
Consolidated
|
||||||||
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
|
|
Corporate and
|
|
Consolidated
|
||||||||
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 |
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 |
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 |
( |
Provision for income taxes |
|
Interest expense |
|
Non-operating pension income |
~( |
Depreciation and amortization |
|
Integration and reorganization costs |
|
Share-based compensation expense |
|
Other items |
~( |
Adjusted EBITDA (non-GAAP basis) |
|
| (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
|
|
Twelve months
|
Table No. 12 |
|
|
||
Total revenues |
|
|
|
|
Acquired revenues |
|
— |
|
~( |
Currency impact |
|
— |
|
~( |
Exited operations(3) |
|
( |
|
— |
Same store total revenues |
|
|
|
|
| (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) |
|
Capital expenditures |
|
Free cash flow (non-GAAP basis) |
|
| (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
Source: Gannett Co., Inc.
