Gannett Announces 2023 Results and Business Outlook

Published

MCLEAN, Va.--(BUSINESS WIRE)-- Gannett Co., Inc. ("Gannett", "we", "us", "our", or the "Company") (NYSE: GCI) today reported its financial results for the fourth quarter ended December 31, 2023.

"In 2023, we made excellent progress executing on our strategy to drive our digital transformation, resulting in total digital revenues exceeding 41% of total revenues in the fourth quarter, and amounting to nearly $1.1 billion for the year. Over the past year, we’ve expanded our digital audience, improved engagement, grown the monetization of our audience, and driven significantly improved financial results over the prior year. Our digital-only subscription revenues surpassed $150 million in 2023, with total digital-only average revenue per user reaching a new high. Also, our partnership strategy increased our overall digital monetization, and importantly, we expect to generate $20 million in high margin revenue from our partnerships in 2024," said Michael Reed, Gannett Chairman, and Chief Executive Officer.

"In 2023, we achieved full year growth in both Adjusted EBITDA and free cash flow, representing an important change in trajectory compared to last year's declines. We also remained focused on improving our capital structure and, with over $140 million in debt repayments in 2023, we were able to significantly reduce our leverage during the year. As these results show, we are building momentum toward a sustainable digital growth business, with a strong balance sheet."

"As we look forward to 2024 and the next several years, we expect to capitalize on this progress and build to inflection in our revenue as we end 2024. Our business outlook reflects our investments in strategy and our prioritization of revenue and free cash flow growth while also maintaining ongoing profit improvements and further deleveraging. We believe 2024 is an important milestone in the foundation for creating sustainable growth for Gannett."

Fourth Quarter 2023 Digital Highlights:

  • Total digital revenues of $277.1 million, or 41.4% of total revenues, up 2.9% versus the prior year
  • Digital-only subscription revenues of $41.9 million grew 18.1% year-over-year
  • Digital-only average revenue per user(1) of $7.05 increased 19.5% year-over-year
  • Total digital-only paid subscriptions(1) were approximately 2.0 million, sequential growth of 1.6%
  • 187 million(2) global average monthly unique visitors in the fourth quarter of 2023, up 4.3% year-over-year
  • Digital Media revenues of $78.8 million grew 3.9% year-over-year
  • Digital Marketing Solutions core platform revenues(1) of $119.4 million decreased 0.3% year-over year
    • Record high core platform average revenue per user(1) of $2,663, up 2.1% year-over-year
    • Customer budget retention(3) was 95.4%, an increase of 50 basis points compared to the fourth quarter of 2022

_____________________

(1)

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

(2)

187 million average monthly unique visitors in the fourth quarter of 2023 with approximately 136 million average monthly unique visitors coming from our USA TODAY NETWORK (based on December 2023 Comscore Media Metrix®) and approximately 51 million average monthly unique visitors resulting from our U.K. digital properties (based on Adobe Analytics).

(3)

Customer budget retention is calculated as 1 minus the average of churned budgets in a given month divided by starting budgets in the same period, averaged across the quarter.

Fourth Quarter 2023 Capital Structure Highlights:

  • As of December 31, 2023, the Company had cash and cash equivalents of $100.2 million
  • Total principal amount of debt outstanding as of December 31, 2023 was $1,130.6 million, including $642.0 million in first lien debt, which resulted in a First Lien Net Leverage(4) of 2.0x, a decrease of 24.6% compared to 2.7x as of the end of fiscal 2022
  • During the fourth quarter of 2023, the Company repaid $23.9 million of debt. For the full year 2023, the Company repaid $141.6 million of debt

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

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

  • Full Year 2024 Business Outlook(5)
    • Total digital revenues are expected to grow approximately 10%
    • Total revenues are expected to be down in the low to mid-single digits on a reported and same store basis(6)
    • Net income attributable to Gannett is expected to improve, after excluding an impairment charge of approximately $45 million related to the exit of our McLean, Virginia office during the first quarter of 2024
    • Adjusted EBITDA(6) is expected to grow versus the prior year
    • Cash provided by operating activities is expected to grow versus the prior year
    • Free cash flow(6) is expected to grow in excess(7) of the expected growth in Adjusted EBITDA(6)
    • Real estate and non-strategic asset sales are expected to be in the range of $45 million and $50 million
  • Full Year 2025 and Full Year 2026 Business Outlook(5)
    • Total digital revenues are expected to accelerate with growth exceeding 10% year-over-year
      • Total digital revenues are expected to make up 50% of total revenues in 2025 and exceed 55% of total revenues in 2026
    • Total revenues are expected to grow in the low single digits on a reported basis and same store basis(6)
    • Net income attributable to Gannett is expected to improve to positive
    • Adjusted EBITDA(6) is expected to exhibit ongoing growth
    • Cash provided by operating activities is expected to grow with an estimated CAGR(8) of 30%
    • Free cash flow(6) is expected to grow at an accelerated rate with an estimated CAGR(6)(8) of 40%

_____________________

(4)

As of December 31, 2023, the First Lien Net Leverage ratio was calculated by subtracting cash on the balance sheet from the sum of both our five-year senior secured term loan facility (the "Senior Secured Term Loan") and 6% first lien notes due November 1, 2026 (the "2026 Senior Notes") and dividing that by Q4 2023 LTM Adjusted EBITDA. Our 6% Senior Secured Convertible Notes due 2027 are second lien as of the completion of the Senior Secured Term Loan refinancing in October 2021.

(5)

Projections are based on Company estimates as of February 22, 2024 and are provided solely for illustrative purposes. Actual results may vary. The Company undertakes no obligation to update this information. Additionally, the Company's estimates do not factor in the impact of any future acquisitions or dispositions. The Company’s future financial results could differ materially from the Company’s current estimates.

(6)

Adjusted EBITDA, Adjusted EBITDA margin, Free cash flow, Same store revenues, and Free cash flow CAGR are non-GAAP measures. See "Use of Non-GAAP Information" below for information about these non-GAAP measures.

(7)

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

(8)

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

Additional Fourth Quarter 2023 Highlights:

  • Total revenues of $669.4 million decreased 8.4% compared to the fourth quarter of 2022
    • Same store revenues(6) decreased 8.0% compared to the fourth quarter of 2022, reflecting a sequential improvement of 40 basis points compared to the third quarter of 2023
  • Net loss attributable to Gannett of $22.9 million as compared with net income attributable to Gannett of $32.8 million in the fourth quarter of 2022 and a Net loss attributable to Gannett margin of 3.4% versus a net loss attributable to Gannett margin of 0.4% in the third quarter of 2023
  • Adjusted EBITDA(6) totaled $74.1 million, a decrease of 18.0% compared to the fourth quarter of 2022
    • Sequential improvement of 24.5% compared to the third quarter of 2023
    • Adjusted EBITDA margin(6) of 11.1%, representing sequential improvement of 200 basis points compared to the third quarter of 2023
    • The prior year results included approximately $9.0 million related to employee furloughs which did not recur
  • Cash provided by operating activities of $21.2 million, an increase of $13.4 million year-over-year
  • Free cash flow(6) of $12.7 million, an improvement of $14.4 million year-over-year

Financial Highlights

In thousands

Fourth Quarter 2023

 

Full Year 2023

Revenues

$

669,405

 

 

$

2,663,550

 

Net loss attributable to Gannett

 

(22,892

)

 

 

(27,791

)

Adjusted EBITDA(9) (non-GAAP basis)

 

74,106

 

 

 

267,683

 

Adjusted Net loss attributable to Gannett(9) (non-GAAP basis)

 

(18,220

)

 

 

(40,982

)

Cash provided by operating activities

 

21,157

 

 

 

94,574

 

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

 

12,748

 

 

 

56,458

 

(9)

Refer to "Use of Non-GAAP Information" below for the Company’s definition of Adjusted EBITDA, Adjusted Net loss attributable to Gannett, and Free cash flow, as well as the reconciliation of such measures to the most comparable GAAP measure.

Earnings Conference Call

Management will host a conference call on Thursday, February 22, 2024 at 8:30 A.M. Eastern Time to review the financial and operating results for the period. A copy of the earnings release will be posted to the Investor Relations section of Gannett’s website, investors.gannett.com. The conference call may be accessed by dialing 1-877-451-6152 (from within the U.S.) or 1-201-389-0879 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference "Gannett Fourth Quarter Earnings Call" or access code "13742832". We use our website as a channel of distribution for important Company information and we use the investors.gannett.com website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. A simultaneous webcast of the conference call will be available to the public on a listen-only basis at investors.gannett.com. Please allow extra time prior to the call to visit the website and download any necessary software required to listen to the internet broadcast. A telephonic replay of the conference call will also be available approximately two hours following the call’s completion through 11:59 P.M. Eastern Time on Thursday, March 7, 2024 by dialing 1-844-512-2921 (from within the U.S.) or 1-412-317-6671 (from outside of the U.S.); please reference access code "13742832". A transcript of our earnings call held today also will be posted to the investors.gannett.com website.

About Gannett

Gannett Co., Inc. (NYSE: GCI) is a diversified media company with expansive reach at the national and local level dedicated to empowering and enriching communities. We seek to inspire, inform, and connect audiences as a sustainable, growth focused media and digital marketing solutions company. We endeavor to deliver essential content, marketing solutions, and experiences for curated audiences, advertisers, consumers, and stakeholders by leveraging our diverse teams and suite of products to enrich the local communities and businesses we serve. Our current portfolio of trusted media brands includes the USA TODAY NETWORK, comprised of the national publication, USA TODAY, and local media organizations in the United States, and Newsquest, a wholly-owned subsidiary operating in the United Kingdom. Our digital marketing solutions brand, LocaliQ, uses innovation and software to enable small and medium-sized businesses to grow, and USA TODAY NETWORK Ventures, our events division, creates impactful consumer engagements, promotions, and races.

Cautionary Statement Regarding Forward-Looking Statements

Certain items in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, our full year 2024 business outlook, our mid-term business outlook, statements regarding our business outlook, digital revenue performance and growth, growth in our Digital Marketing Solutions segment, growth of and demand for our digital-only subscriptions and audience, digital marketing and advertising services, digital revenues, monetization of our audience, print advertising trends and revenues, expected results of our targeting and pricing models, expectations regarding our cash from operating activities, free cash flows, compound annual growth rates ("CAGR"), revenues, net income (loss) attributable to Gannett, Adjusted EBITDA, same-store revenues and cash flows, expectations regarding our long-term growth, sustainable growth, and inflection in our revenue, our ability to create long-term stockholder value, our expectations, in terms of both amount and timing, with respect to debt repayment, our expected capital expenditures, expectations regarding real estate and non-strategic asset sales, the impact from changes at our McLean, Virginia property, our strategy, our partnerships, our ability to generate affiliate revenues, our ability to achieve our operating priorities, our long-term opportunities, economic impacts, our ability to navigate volatility, achieve our financial goals, optimize our capital structure and achieve optimal financial performance, our cost structure and future revenue and expense trends and our ability to influence trends. Words such as "expect(s)", believe(s)", "will", "outlook", "guidance", "estimate(s)", "project(s)", "focus", "building", and similar expressions are intended to identify such forward-looking statements. These statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties. These and other risks and uncertainties could cause actual results to differ materially from those described in the forward-looking statements, many of which are beyond our control. The Company can give no assurance its expectations will be attained. Accordingly, you should not place undue reliance on any forward-looking statements contained in this press release. For a discussion of some of the risks and important factors that could cause actual results to differ from such forward-looking statements, see the risks and other factors detailed from time to time in the Company’s most recent Annual Report on Form 10-K, our quarterly reports on Form 10-Q, and our other filings with the Securities and Exchange Commission. Furthermore, new risks and uncertainties emerge from time to time, and it is not possible for the Company to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this press release. Except to the extent required by law, the Company expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.

GANNETT CO., INC. CONSOLIDATED BALANCE SHEETS

Table No. 1

 

 

 

In thousands, except share data

December 31, 2023

 

December 31, 2022

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

100,180

 

 

$

94,255

 

Accounts receivable, net of allowance for doubtful accounts of $16,338 and $16,697, respectively

 

266,096

 

 

 

289,415

 

Inventories

 

26,794

 

 

 

45,223

 

Prepaid expenses

 

36,210

 

 

 

46,205

 

Other current assets

 

14,957

 

 

 

32,679

 

Total current assets

 

444,237

 

 

 

507,777

 

Property, plant, and equipment, net

 

239,087

 

 

 

305,994

 

Operating lease assets

 

221,733

 

 

 

233,322

 

Goodwill

 

533,876

 

 

 

533,166

 

Intangible assets, net

 

524,350

 

 

 

613,358

 

Deferred tax assets

 

37,125

 

 

 

56,618

 

Pension and other assets

 

180,839

 

 

 

143,320

 

Total assets

$

2,181,247

 

 

$

2,393,555

 

 

 

 

 

Liabilities and equity

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued liabilities

$

293,444

 

 

$

351,848

 

Deferred revenue

 

120,502

 

 

 

153,648

 

Current portion of long-term debt

 

63,752

 

 

 

60,452

 

Operating lease liabilities

 

45,763

 

 

 

44,872

 

Other current liabilities

 

10,052

 

 

 

6,218

 

Total current liabilities

 

533,513

 

 

 

617,038

 

Long-term debt

 

564,836

 

 

 

695,642

 

Convertible debt

 

416,036

 

 

 

405,681

 

Deferred tax liabilities

 

2,028

 

 

 

1,439

 

Pension and other postretirement benefit obligations

 

42,661

 

 

 

50,710

 

Long-term operating lease liabilities

 

203,871

 

 

 

219,109

 

Other long-term liabilities

 

100,989

 

 

 

108,563

 

Total noncurrent liabilities

 

1,330,421

 

 

 

1,481,144

 

Total liabilities

 

1,863,934

 

 

 

2,098,182

 

Commitments and contingent liabilities

 

 

 

Equity

 

 

 

Preferred stock, $0.01 par value per share, 300,000 shares authorized, none of which were issued and outstanding at December 31, 2023 and December 31, 2022

 

 

 

 

 

Common stock, $0.01 par value per share, 2,000,000,000 shares authorized, 158,554,705 shares issued and 148,939,463 shares outstanding at December 31, 2023; 153,286,104 shares issued and 146,223,179 shares outstanding at December 31, 2022

 

1,586

 

 

 

1,533

 

Treasury stock, at cost, 9,615,242 shares and 7,062,925 shares at December 31, 2023 and December 31, 2022, respectively

 

(17,393

)

 

 

(14,737

)

Additional paid-in capital

 

1,426,325

 

 

 

1,409,578

 

Accumulated deficit

 

(1,027,192

)

 

 

(999,401

)

Accumulated other comprehensive loss

 

(65,541

)

 

 

(101,231

)

Total Gannett stockholders' equity

 

317,785

 

 

 

295,742

 

Noncontrolling interests

 

(472

)

 

 

(369

)

Total equity

 

317,313

 

 

 

295,373

 

Total liabilities and equity

$

2,181,247

 

 

$

2,393,555

 

GANNETT CO., INC. CONSOLIDATED STATEMENTS OF OPERATIONS

Table No. 2

Three months ended December 31,

 

Year ended December 31,

In thousands, except per share amounts

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(Unaudited)

 

 

 

 

Advertising and marketing services

$

353,154

 

 

$

375,567

 

 

$

1,387,114

 

 

$

1,496,137

 

Circulation

 

225,820

 

 

 

256,679

 

 

 

927,821

 

 

 

1,084,637

 

Other

 

90,431

 

 

 

98,418

 

 

 

348,615

 

 

 

364,529

 

Total revenues

 

669,405

 

 

 

730,664

 

 

 

2,663,550

 

 

 

2,945,303

 

Operating costs

 

419,644

 

 

 

455,123

 

 

 

1,692,031

 

 

 

1,860,353

 

Selling, general and administrative expenses

 

185,908

 

 

 

190,342

 

 

 

735,339

 

 

 

852,488

 

Depreciation and amortization

 

38,496

 

 

 

39,931

 

 

 

162,622

 

 

 

182,022

 

Integration and reorganization costs

 

6,009

 

 

 

27,520

 

 

 

24,468

 

 

 

87,974

 

Asset impairments

 

 

 

 

46

 

 

 

1,370

 

 

 

1,056

 

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

 

768

 

 

 

2,729

 

 

 

(40,101

)

 

 

(6,883

)

Other operating expenses

 

722

 

 

 

227

 

 

 

1,550

 

 

 

1,892

 

Total operating expenses

 

651,547

 

 

 

715,918

 

 

 

2,577,279

 

 

 

2,978,902

 

Operating income (loss)

 

17,858

 

 

 

14,746

 

 

 

86,271

 

 

 

(33,599

)

Interest expense

 

26,969

 

 

 

28,526

 

 

 

111,776

 

 

 

108,366

 

Gain on early extinguishment of debt

 

(1,316

)

 

 

(2,663

)

 

 

(4,529

)

 

 

(399

)

Non-operating pension income

 

(2,375

)

 

 

(7,590

)

 

 

(9,382

)

 

 

(58,953

)

Other non-operating income, net

 

(4,105

)

 

 

(4,896

)

 

 

(5,429

)

 

 

(5,707

)

Non-operating expenses

 

19,173

 

 

 

13,377

 

 

 

92,436

 

 

 

43,307

 

(Loss) income before income taxes

 

(1,315

)

 

 

1,369

 

 

 

(6,165

)

 

 

(76,906

)

Provision (benefit) for income taxes

 

21,581

 

 

 

(31,300

)

 

 

21,729

 

 

 

1,349

 

Net (loss) income

 

(22,896

)

 

 

32,669

 

 

$

(27,894

)

 

$

(78,255

)

Net loss attributable to noncontrolling interests

 

(4

)

 

 

(98

)

 

 

(103

)

 

 

(253

)

Net (loss) income attributable to Gannett

$

(22,892

)

 

$

32,767

 

 

$

(27,791

)

 

$

(78,002

)

 

 

 

 

 

 

 

 

Interest adjustment to Net (loss) income attributable to Gannett for assumed conversions of the 2027 Notes, net of taxes

$

 

 

$

7,909

 

 

$

 

 

$

 

Net (loss) income attributable to Gannett for diluted earnings per share

$

(22,892

)

 

$

40,676

 

 

$

(27,791

)

 

$

(78,002

)

 

 

 

 

 

 

 

 

(Loss) income per share attributable to Gannett - basic

$

(0.16

)

 

$

0.24

 

 

$

(0.20

)

 

$

(0.57

)

(Loss) income per share attributable to Gannett - diluted

$

(0.16

)

 

$

0.17

 

 

$

(0.20

)

 

$

(0.57

)

GANNETT CO., INC. CONSOLIDATED STATEMENTS OF CASH FLOWS

Table No. 3

Year ended December 31,

In thousands

 

2023

 

 

 

2022

 

Operating activities

 

 

 

Net loss

$

(27,894

)

 

$

(78,255

)

Adjustments to reconcile net loss to operating cash flows:

 

 

 

Depreciation and amortization

 

162,622

 

 

 

182,022

 

Share-based compensation expense

 

16,567

 

 

 

16,751

 

Non-cash interest expense

 

21,199

 

 

 

21,303

 

Provision for deferred income taxes

 

11,514

 

 

 

2,549

 

Gain on sale or disposal of assets, net

 

(40,101

)

 

 

(6,883

)

Gain on early extinguishment of debt

 

(4,529

)

 

 

(399

)

Asset impairments

 

1,370

 

 

 

1,056

 

Pension and other postretirement benefit obligations

 

(13,917

)

 

 

(80,012

)

Change in other assets and liabilities:

 

 

 

Accounts receivable, net

 

34,135

 

 

 

44,943

 

Inventory

 

18,510

 

 

 

(7,434

)

Prepaid expenses

 

16,680

 

 

 

3,244

 

Accounts payable and accrued liabilities

 

(65,094

)

 

 

(23,653

)

Deferred revenue

 

(29,971

)

 

 

(30,076

)

Other assets and liabilities

 

(6,517

)

 

 

(4,380

)

Cash provided by operating activities

 

94,574

 

 

 

40,776

 

Investing activities

 

 

 

Acquisitions, net of cash acquired

 

 

 

 

(15,432

)

Purchase of property, plant, and equipment

 

(38,116

)

 

 

(45,376

)

Proceeds from sale of real estate and other assets

 

85,298

 

 

 

83,504

 

Change in other investing activities

 

(203

)

 

 

(572

)

Cash provided by investing activities

 

46,979

 

 

 

22,124

 

Financing activities

 

 

 

Payments of deferred financing costs

 

 

 

 

(1,652

)

Borrowings of long-term debt

 

 

 

 

80,000

 

Repayments of long-term debt

 

(133,821

)

 

 

(170,994

)

Acquisition of noncontrolling interests

 

 

 

 

(2,050

)

Treasury stock

 

(2,642

)

 

 

(6,555

)

Changes in other financing activities

 

952

 

 

 

(1,616

)

Cash used for financing activities

 

(135,511

)

 

 

(102,867

)

Effect of currency exchange rate change on cash

 

(234

)

 

 

1,152

 

Increase (decrease) in cash, cash equivalents and restricted cash

 

5,808

 

 

 

(38,815

)

Cash, cash equivalents and restricted cash at beginning of year

 

104,804

 

 

 

143,619

 

Cash, cash equivalents and restricted cash at end of year

$

110,612

 

 

$

104,804

 

GANNETT CO., INC. SEGMENT INFORMATION (Unaudited)

Table No. 4

Three months ended December 31,

 

Year ended December 31,

In thousands

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenues:

 

 

 

 

 

 

 

Domestic Gannett Media

$

529,217

 

 

$

590,078

 

 

$

2,095,853

 

 

$

2,379,806

 

Newsquest

 

58,178

 

 

 

56,089

 

 

 

233,980

 

 

 

234,630

 

Digital Marketing Solutions

 

120,384

 

 

 

121,112

 

 

 

477,909

 

 

 

468,883

 

Corporate and other

 

1,665

 

 

 

1,398

 

 

 

6,268

 

 

 

5,440

 

Intersegment eliminations

 

(40,039

)

 

 

(38,013

)

 

 

(150,460

)

 

 

(143,456

)

Total

$

669,405

 

 

$

730,664

 

 

$

2,663,550

 

 

$

2,945,303

 

USE OF NON-GAAP INFORMATION

The Company uses non-GAAP financial performance and liquidity measures to supplement the financial information presented on a U.S. GAAP basis. These non-GAAP financial measures, which may not be comparable to similarly titled measures reported by other companies, should not be considered in isolation from or as a substitute for the related U.S. GAAP measures and should be read together with financial information presented on a U.S. GAAP basis.

The Company defines its non-GAAP measures as follows:

  • Adjusted EBITDA is a non-GAAP performance measure the Company believes offers a useful view of the overall and segment operations of our business. The Company defines Adjusted EBITDA as Net income (loss) attributable to Gannett before: (1) Income tax expense (benefit), (2) Interest expense, (3) Gains or losses on the early extinguishment of debt, (4) Non-operating pension income, (5) Loss on convertible notes derivative, (6) Depreciation and amortization, (7) Integration and reorganization costs, (8) Other operating expenses, including third-party debt expenses and acquisition costs, (9) Asset impairments, (10) Goodwill and intangible impairments, (11) Gains or losses on the sale or disposal of assets, (12) Share-based compensation, and (13) certain other non-recurring charges. The most directly comparable U.S. GAAP measure is Net income (loss) attributable to Gannett.
  • Adjusted EBITDA margin is a non-GAAP performance measure the Company believes offers a useful view of the overall and segment operations of our business. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by total Operating revenues.
  • Adjusted Net income (loss) attributable to Gannett is a non-GAAP performance measure the Company believes offers a useful view of the overall operations of our business and is useful to analysts and investors in evaluating the results of operations and operational trends. The Company defines Adjusted Net income (loss) attributable to Gannett before (1) Gains or losses on the early extinguishment of debt, (2) Loss on convertible notes derivative, (3) Integration and reorganization costs, (4) Other operating expenses, including third-party debt expenses and acquisition costs, (5) Asset impairments, (6) Goodwill and intangibles impairments, (7) Gains or losses on the sale or disposal of assets, (8) certain other non-recurring charges, and (9) the tax impact of the above items.
  • Free cash flow is a non-GAAP liquidity measure that adjusts our reported U.S. GAAP results for items we believe are critical to the ongoing success of our business. The Company defines Free cash flow as Cash provided by (used for) operating activities as reported on the Consolidated statement of cash flows less capital expenditures, which results in a figure representing Free cash flow available for use in operations, additional investments, debt obligations, and returns to stockholders. The most directly comparable U.S. GAAP financial measure is Cash provided by (used for) operating activities.
  • Same store revenues is a non-GAAP performance measure based on GAAP revenues for Gannett for the current period, excluding (1) acquired revenues (2) currency impact, and (3) exited operations.

Management’s Use of Non-GAAP Measures

Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net income (loss) attributable to Gannett, Free cash flow and Same store revenues are not measurements of financial performance under U.S. GAAP and should not be considered in isolation or as an alternative to income (loss) from operations, net income (loss), margin, revenues, cash flow provided by (used for) operating activities, or any other measure of performance or liquidity derived in accordance with U.S. GAAP. We believe these non-GAAP financial measures, as we have defined them, are helpful in identifying trends in our day-to-day performance because the items excluded have little or no significance on our day-to-day operations. These measures provide an assessment of controllable expenses and afford management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieve optimal financial performance.

We use Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net income (loss) attributable to Gannett, Free cash flow and Same store revenues as measures of our day-to-day operating performance, which is evidenced by the publishing and delivery of news and other media and excludes certain expenses that may not be indicative of our day-to-day business operating results.

Limitations of Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net income (loss) attributable to Gannett, Free cash flow and Same store revenues

Each of our non-GAAP measures have limitations as analytical tools. They should not be viewed in isolation or as a substitute for U.S. GAAP measures of earnings or cash flows. Material limitations in making the adjustments to our earnings to calculate Adjusted EBITDA and Adjusted Net income (loss) attributable to Gannett using these non-GAAP financial measures as compared to U.S. GAAP net income (loss) include: the cash portion of interest / financing expense, income tax (benefit) provision, and charges related to asset impairments, which may significantly affect our financial results.

Management believes these items are important in evaluating our performance, results of operations, and financial position. We use non-GAAP financial measures to supplement our U.S. GAAP results in order to provide a more complete understanding of the factors and trends affecting our business.

Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net income (loss) attributable to Gannett, Free cash flow and Same store revenues are not alternatives to net income, margin, income from operations, cash flows provided by (used for) operations or revenues as calculated and presented in accordance with U.S. GAAP. As such, they should not be considered or relied upon as substitutes or alternatives for any such U.S. GAAP financial measure. We strongly urge you to review the reconciliations of Net income (loss) attributable to Gannett to Adjusted EBITDA, Adjusted EBITDA margin, Net income (loss) attributable to Gannett to Adjusted Net income (loss) attributable to Gannett, Cash provided by (used for) operations to Free cash flow and Revenues to Same Store revenues along with our Consolidated financial statements included elsewhere in this report. We also strongly urge you not to rely on any single financial measure to evaluate our business. In addition, because Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net income (loss) attributable to Gannett, Free cash flow and Same store revenues are not measures of financial performance under U.S. GAAP and are susceptible to varying calculations, the Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net income (loss) attributable to Gannett, Free cash flow and Same store revenues measures as presented in this report may differ from and may not be comparable to similarly titled measures used by other companies.

Non-GAAP Outlook

Our 2024 business outlook and our mid-term outlook included in this release include certain non-GAAP measures, including Same store revenues, Adjusted EBITDA, Free cash flow, and Free cash flow CAGR. CAGR is a compound annual growth rate over the time period noted for Free cash flow. We believe providing expected Free cash flow CAGR as part of our outlook is meaningful to share with investors and an indication of what management believes is an important measure of growth. The outlook for each of these non-GAAP items does not factor in the impact of any further acquisitions or dispositions. We have provided these non-GAAP measures for future guidance for the same reasons that were outlined above for historical non-GAAP measures. We have not reconciled non-GAAP forward-looking Same store revenues, Adjusted EBITDA, Free cash flow, and Free cash flow CAGR to their most directly comparable GAAP measure, as permitted by Item 10(e)(1)(i)(B) of Regulation S-K. Such reconciliations would require unreasonable efforts to estimate and quantify various necessary GAAP components largely because forecasting or predicting our future operating results is subject to many factors or future events out of our control, is unavailable, or is not readily predictable, and could significantly impact, either individually or in the aggregate, our comparable GAAP measures. Accordingly, we are unable to provide a full reconciliation of the non-GAAP measures used in our outlook without unreasonable efforts.

GANNETT CO., INC. NON-GAAP FINANCIAL INFORMATION ADJUSTED EBITDA (Unaudited)

Table No. 5

Three months ended December 31, 2023

In thousands

Domestic Gannett Media

 

Newsquest

 

Digital Marketing Solutions

 

Corporate and other

 

Consolidated Total

Net income (loss) attributable to Gannett

$

26,915

 

 

$

11,107

 

 

$

8,043

 

 

$

(68,957

)

 

$

(22,892

)

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

21,581

 

 

 

21,581

 

Interest expense

 

 

 

 

 

 

 

 

 

 

26,969

 

 

 

26,969

 

Gain on early extinguishment of debt

 

 

 

 

 

 

 

 

 

 

(1,316

)

 

 

(1,316

)

Non-operating pension income

 

(209

)

 

 

(2,166

)

 

 

 

 

 

 

 

 

(2,375

)

Depreciation and amortization

 

25,721

 

 

 

2,063

 

 

 

5,993

 

 

 

4,719

 

 

 

38,496

 

Integration and reorganization costs

 

3,248

 

 

 

677

 

 

 

182

 

 

 

1,902

 

 

 

6,009

 

Other operating expenses

 

 

 

 

215

 

 

 

 

 

 

507

 

 

 

722

 

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

 

703

 

 

 

(29

)

 

 

92

 

 

 

2

 

 

 

768

 

Share-based compensation expense

 

 

 

 

 

 

 

 

 

 

3,840

 

 

 

3,840

 

Other items

 

(280

)

 

 

(538

)

 

 

(1,815

)

 

 

4,937

 

 

 

2,304

 

Adjusted EBITDA (non-GAAP basis)

$

56,098

 

 

$

11,329

 

 

$

12,495

 

 

$

(5,816

)

 

$

74,106

 

Net income (loss) attributable to Gannett margin

 

5.1

%

 

 

19.1

%

 

 

6.7

%

 

 

NM

 

 

 

(3.4

)%

Adjusted EBITDA margin (non-GAAP basis)

 

10.6

%

 

 

19.5

%

 

 

10.4

%

 

 

NM

 

 

 

11.1

%

NM indicates not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended December 31, 2022

In thousands

Domestic Gannett Media

 

Newsquest

 

Digital Marketing Solutions

 

Corporate and other

 

Consolidated Total

Net income (loss) attributable to Gannett

$

28,545

 

 

$

12,248

 

 

$

11,971

 

 

$

(19,997

)

 

$

32,767

 

Benefit for income taxes

 

 

 

 

 

 

 

 

 

 

(31,300

)

 

 

(31,300

)

Interest expense

 

 

 

 

 

 

 

 

 

 

28,526

 

 

 

28,526

 

Gain on early extinguishment of debt

 

 

 

 

 

 

 

 

 

 

(2,663

)

 

 

(2,663

)

Non-operating pension income

 

(2,135

)

 

 

(5,455

)

 

 

 

 

 

 

 

 

(7,590

)

Depreciation and amortization

 

27,302

 

 

 

1,819

 

 

 

5,892

 

 

 

4,918

 

 

 

39,931

 

Integration and reorganization costs

 

16,839

 

 

 

1,021

 

 

 

233

 

 

 

9,427

 

 

 

27,520

 

Other operating expenses

 

 

 

 

 

 

 

 

 

 

227

 

 

 

227

 

Asset impairments

 

46

 

 

 

 

 

 

 

 

 

 

 

 

46

 

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

 

2,729

 

 

 

 

 

 

1

 

 

 

(1

)

 

 

2,729

 

Share-based compensation expense

 

 

 

 

 

 

 

 

 

 

3,474

 

 

 

3,474

 

Other items

 

(366

)

 

 

(445

)

 

 

(1,693

)

 

 

(811

)

 

 

(3,315

)

Adjusted EBITDA (non-GAAP basis)

$

72,960

 

 

$

9,188

 

 

$

16,404

 

 

$

(8,200

)

 

$

90,352

 

Net income attributable to Gannett margin

 

4.8

%

 

 

21.8

%

 

 

9.9

%

 

 

NM

 

 

 

4.5

%

Adjusted EBITDA margin (non-GAAP basis)

 

12.4

%

 

 

16.4

%

 

 

13.5

%

 

 

NM

 

 

 

12.4

%

NM indicates not meaningful.

 

 

 

 

 

 

 

 

 

GANNETT CO., INC. NON-GAAP FINANCIAL INFORMATION ADJUSTED EBITDA (Unaudited)

Table No. 5 (continued)

Year ended December 31, 2023

In thousands

Domestic Gannett Media

 

Newsquest

 

Digital Marketing Solutions

 

Corporate and other

 

Consolidated Total

Net income (loss) attributable to Gannett

$

114,254

 

 

$

49,257

 

 

$

28,841

 

 

$

(220,143

)

 

$

(27,791

)

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

21,729

 

 

 

21,729

 

Interest expense

 

 

 

 

 

 

 

 

 

 

111,776

 

 

 

111,776

 

Gain on early extinguishment of debt

 

 

 

 

 

 

 

 

 

 

(4,529

)

 

 

(4,529

)

Non-operating pension income

 

(705

)

 

 

(8,677

)

 

 

 

 

 

 

 

 

(9,382

)

Depreciation and amortization

 

112,201

 

 

 

8,792

 

 

 

23,795

 

 

 

17,834

 

 

 

162,622

 

Integration and reorganization costs

 

5,582

 

 

 

1,763

 

 

 

784

 

 

 

16,339

 

 

 

24,468

 

Other operating expenses

 

139

 

 

 

215

 

 

 

 

 

 

1,196

 

 

 

1,550

 

Asset impairments

 

1,370

 

 

 

 

 

 

 

 

 

 

 

 

1,370

 

(Gain) loss on sale or disposal of assets, net

 

(38,937

)

 

 

(42

)

 

 

324

 

 

 

(1,446

)

 

 

(40,101

)

Share-based compensation expense

 

 

 

 

 

 

 

 

 

 

16,567

 

 

 

16,567

 

Other items

 

737

 

 

 

(1,180

)

 

 

(521

)

 

 

10,368

 

 

 

9,404

 

Adjusted EBITDA (non-GAAP basis)

$

194,641

 

 

$

50,128

 

 

$

53,223

 

 

$

(30,309

)

 

$

267,683

 

Net income (loss) attributable to Gannett margin

 

5.5

%

 

 

21.1

%

 

 

6.0

%

 

 

NM

 

 

 

(1.0

)%

Adjusted EBITDA margin (non-GAAP basis)

 

9.3

%

 

 

21.4

%

 

 

11.1

%

 

 

NM

 

 

 

10.0

%

NM indicates not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31, 2022

In thousands

Domestic Gannett Media

 

Newsquest

 

Digital Marketing Solutions

 

Corporate and other

 

Consolidated Total

Net income (loss) attributable to Gannett

$

63,225

 

 

$

49,301

 

 

$

26,919

 

 

$

(217,447

)

 

$

(78,002

)

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

1,349

 

 

 

1,349

 

Interest expense

 

 

 

 

 

 

 

 

 

 

108,366

 

 

 

108,366

 

Gain on early extinguishment of debt

 

 

 

 

 

 

 

 

 

 

(399

)

 

 

(399

)

Non-operating pension income

 

(35,921

)

 

 

(23,032

)

 

 

 

 

 

 

 

 

(58,953

)

Depreciation and amortization

 

130,557

 

 

 

7,374

 

 

 

26,431

 

 

 

17,660

 

 

 

182,022

 

Integration and reorganization costs

 

55,575

 

 

 

4,425

 

 

 

1,108

 

 

 

26,866

 

 

 

87,974

 

Other operating expenses

 

2

 

 

 

725

 

 

 

 

 

 

1,165

 

 

 

1,892

 

Asset impairments

 

1,056

 

 

 

 

 

 

 

 

 

 

 

 

1,056

 

(Gain) loss on sale or disposal of assets, net

 

(6,738

)

 

 

(319

)

 

 

179

 

 

 

(5

)

 

 

(6,883

)

Share-based compensation expense

 

 

 

 

 

 

 

 

 

 

16,751

 

 

 

16,751

 

Other items

 

(108

)

 

 

1,553

 

 

 

2,943

 

 

 

(2,278

)

 

 

2,110

 

Adjusted EBITDA (non-GAAP basis)

$

207,648

 

 

$

40,027

 

 

$

57,580

 

 

$

(47,972

)

 

$

257,283

 

Net income (loss) attributable to Gannett margin

 

2.7

%

 

 

21.0

%

 

 

5.7

%

 

 

NM

 

 

 

(2.6

)%

Adjusted EBITDA margin (non-GAAP basis)

 

8.7

%

 

 

17.1

%

 

 

12.3

%

 

 

NM

 

 

 

8.7

%

NM indicates not meaningful.

 

GANNETT CO., INC. NON-GAAP FINANCIAL INFORMATION ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO GANNETT (Unaudited)

Table No. 6

Three months ended December 31,

 

Year ended December 31,

In thousands

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net (loss) income attributable to Gannett

$

(22,892

)

 

$

32,767

 

 

$

(27,791

)

 

$

(78,002

)

Gain on early extinguishment of debt

 

(1,316

)

 

 

(2,663

)

 

 

(4,529

)

 

 

(399

)

Integration and reorganization costs

 

6,009

 

 

 

27,520

 

 

 

24,468

 

 

 

87,974

 

Other operating expenses

 

722

 

 

 

227

 

 

 

1,550

 

 

 

1,892

 

Asset impairments

 

 

 

 

46

 

 

 

1,370

 

 

 

1,056

 

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

 

768

 

 

 

2,729

 

 

 

(40,101

)

 

 

(6,883

)

Other items

 

(99

)

 

 

(932

)

 

 

(196

)

 

 

(1,596

)

Subtotal

 

(16,808

)

 

 

59,694

 

 

 

(45,229

)

 

 

4,042

 

Tax impact of above items

 

(1,412

)

 

 

(6,489

)

 

 

4,247

 

 

 

(19,754

)

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

$

(18,220

)

 

$

53,205

 

 

$

(40,982

)

 

$

(15,712

)

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

Table No. 7

Three months ended December 31,

 

Year ended December 31,

In thousands

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Cash provided by operating activities (GAAP basis)

$

21,157

 

 

$

7,794

 

 

$

94,574

 

 

$

40,776

 

Capital expenditures

 

(8,409

)

 

 

(9,433

)

 

 

(38,116

)

 

 

(45,376

)

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

$

12,748

 

 

$

(1,639

)

 

$

56,458

 

 

$

(4,600

)

(1) 

 

For the three months ended December 31, 2023 and 2022, free cash flow was negatively impacted by interest paid of $33.2 million and $35.5 million, respectively, integration and reorganization costs of $6.7 million and $13.8 million, respectively. In addition, for the three months ended December 31, 2023, free cash flow was negatively impacted by other costs of $5.6 million and for the three months ended December 31, 2022, there were no other costs impacting free cash flows. For the year ended December 31, 2023 and 2022, free cash flow was negatively impacted by interest paid of $89.3 million and $86.5 million, respectively, integration and reorganization costs of $53.7 million and $64.8 million, respectively, and other costs of $13.2 million and $3.3 million, respectively.

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

Table No. 8

Three months ended December 31,

 

Year ended December 31,

In thousands

 

2023

 

 

 

2022

 

 

% Change

 

 

2023

 

 

 

2022

 

 

% Change

Print advertising revenues

$

142,162

 

 

$

164,587

 

 

(13.6

)%

 

$

576,545

 

 

$

670,882

 

 

(14.1

)%

Acquired revenues

 

 

 

 

 

 

 

 

 

(3,825

)

 

 

 

 

 

Currency impact

 

(1,017

)

 

 

 

 

 

 

 

(635

)

 

 

 

 

 

Exited operations(1)

 

 

 

 

(4,931

)

 

 

 

 

 

 

 

(31,373

)

 

 

Same store print advertising revenues

$

141,145

 

 

$

159,656

 

 

(11.6

)%

 

$

572,085

 

 

$

639,509

 

 

(10.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

Digital advertising and marketing services revenues

$

210,992

 

 

$

210,980

 

 

%

 

$

810,569

 

 

$

825,255

 

 

(1.8

)%

Acquired revenues

 

 

 

 

 

 

 

 

 

(1,631

)

 

 

 

 

 

Currency impact

 

(762

)

 

 

 

 

 

 

 

1,206

 

 

 

 

 

 

Exited operations(1)

 

 

 

 

(322

)

 

 

 

 

 

 

 

(2,461

)

 

 

Same store digital advertising and marketing services revenues

$

210,230

 

 

$

210,658

 

 

(0.2

)%

 

$

810,144

 

 

$

822,794

 

 

(1.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

Advertising and marketing services revenues

$

353,154

 

 

$

375,567

 

 

(6.0

)%

 

$

1,387,114

 

 

$

1,496,137

 

 

(7.3

)%

Acquired revenues

 

 

 

 

 

 

 

 

 

(5,456

)

 

 

 

 

 

Currency impact

 

(1,779

)

 

 

 

 

 

 

 

571

 

 

 

 

 

 

Exited operations(1)

 

 

 

 

(5,253

)

 

 

 

 

 

 

 

(33,834

)

 

 

Same store advertising and marketing services revenues

$

351,375

 

 

$

370,314

 

 

(5.1

)%

 

$

1,382,229

 

 

$

1,462,303

 

 

(5.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

Circulation revenues

$

225,820

 

 

$

256,679

 

 

(12.0

)%

 

$

927,821

 

 

$

1,084,637

 

 

(14.5

)%

Acquired revenues

 

 

 

 

 

 

 

 

 

(2,989

)

 

 

 

 

 

Currency impact

 

(978

)

 

 

 

 

 

 

 

(610

)

 

 

 

 

 

Exited operations(1)

 

 

 

 

(1,214

)

 

 

 

 

 

 

 

(7,504

)

 

 

Same store circulation revenues

$

224,842

 

 

$

255,465

 

 

(12.0

)%

 

$

924,222

 

 

$

1,077,133

 

 

(14.2

)%

 

 

 

 

 

 

 

 

 

 

 

 

Other revenues

$

90,431

 

 

$

98,418

 

 

(8.1

)%

 

$

348,615

 

 

$

364,529

 

 

(4.4

)%

Acquired revenues

 

 

 

 

 

 

 

 

 

(629

)

 

 

 

 

 

Currency impact

 

(395

)

 

 

 

 

 

 

 

(208

)

 

 

 

 

 

Exited operations(1)

 

 

 

 

(43

)

 

 

 

 

 

 

 

(471

)

 

 

Same store other revenues

$

90,036

 

 

$

98,375

 

 

(8.5

)%

 

$

347,778

 

 

$

364,058

 

 

(4.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

669,405

 

 

$

730,664

 

 

(8.4

)%

 

$

2,663,550

 

 

$

2,945,303

 

 

(9.6

)%