Significant progress on integration; continued
confidence in high-end of synergy targets
On track to implement over $60 million in
annualized synergies by the end of the first quarter
Combined paid digital-only subscriptions reach
over 800,000
Gannett Co., Inc. ("Gannett", "we", "us", "our", or "the
Company") (NYSE: GCI) today reported its financial results for the
fourth quarter and full year ended December 31, 2019. Prior to
November 19, 2019, our corporate name was New Media Investment
Group Inc. ("New Media" or "Legacy New Media"), and Gannett Co.,
Inc. ("Legacy Gannett") was a separate publicly traded company. On
November 19, 2019, New Media acquired Legacy Gannett (the
"Acquisition"). In connection with the Acquisition, Legacy Gannett
became a wholly owned subsidiary of New Media, and New Media
changed its name to Gannett Co., Inc.
The discussion below presents “consolidated results” for the
Company as a whole and “segment results” for our primary reporting
segments: Publishing and Marketing Solutions. Within each of these
categories, we provide (i) our actual GAAP results, which reflect a
full quarter or year (as applicable) of Legacy New Media operations
and six weeks of Legacy Gannett operations, (ii) same store revenue
trends for Legacy Gannett and Legacy New Media, each on a
stand-alone basis for the entire period, (iii) pro forma results,
which reflect the consolidated operations, adjusted as if New Media
had owned Legacy Gannett for the entire period presented, and (iv)
Adjusted EBITDA, which is our non-GAAP measure of operating
results, calculated based on actual results (with six weeks of
Legacy Gannett results) and on a pro forma basis (assuming Legacy
Gannett was owned for the entire period).
Financial Highlights
Fourth Quarter 2019
Full Year 2019
in thousands
Actual
Pro Forma
Actual
Pro Forma
GAAP operating revenue
$
699,274
$
1,054,253
$
1,867,909
$
4,182,220
GAAP net loss attributable to Gannett
(95,088
)
(115,694
)
(119,842
)
(114,983
)
Adjusted EBITDA(1) (non-GAAP)
98,821
141,208
223,871
485,452
Free cash flow(2) (non-GAAP)
(79,692
)
N/A
11,557
N/A
(1) Refer to “Use of Non-GAAP Information” below for the
Company’s definition of Adjusted EBITDA and the reconciliation to
the most comparable GAAP measure included herein.
(2) Refer to “Use of Non-GAAP Information” below for the
Company’s definition of Free cash flow and the reconciliation to
the most comparable GAAP measure included herein. Free cash flow
for the fourth quarter was negatively impacted by $87.8 million of
pension benefits paid as a result of the Acquisition, $35.9 million
of integration and reorganization costs, $19.3 million of
acquisition costs, and $2.5 million of other one-time adjustments.
Free cash flow for the full year was negatively impacted by $87.8
million of pension benefits paid as a result of the Acquisition,
$45.4 million of integration and reorganization costs, $38.4
million of acquisition costs, and $11.3 million of other one-time
adjustments.
Fourth Quarter 2019 Consolidated
Results
- Fourth quarter GAAP revenues of $699.3 million rose 68.1% as
compared to the prior year quarter reflecting the Acquisition.
- Legacy Gannett fourth quarter same store revenues decreased
10.1% year-over-year.
- Legacy New Media fourth quarter same store revenues decreased
9.6% year-over-year.
- Pro forma digital advertising and marketing services revenues
reached $231.8 million in the fourth quarter, or 22.0% of total pro
forma revenues.
- GAAP net loss attributable to Gannett of $95.1 million in the
fourth quarter reflects a one-time non-cash write-down of $100.7
million related to the revaluation of intangibles and $145.6
million one-time cash charges related to restructuring and
transaction related costs.
- Adjusted EBITDA totaled $98.8 million and represented a 14.1%
margin. On a pro forma basis, Adjusted EBITDA totaled $141.2
million and represented a 13.4% margin.
Full Year 2019 Consolidated
Results
- 2019 GAAP revenues of $1.9 billion rose 22.4% as compared to
the prior year reflecting the Acquisition.
- Legacy Gannett 2019 same store revenues decreased 9.4%
year-over-year.
- Legacy New Media 2019 same store revenues decreased 8.0%
year-over-year.
- Pro forma digital advertising and marketing services revenues
reached $912.5 million in 2019, or 21.8% of total pro forma
revenues.
- GAAP net loss attributable to Gannett of $119.8 million in 2019
reflects a one-time $100.7 million non-cash write-down related to
the revaluation of intangibles and $182.9 million one-time cash
charges related to restructuring and transaction related
costs.
- Adjusted EBITDA totaled $223.9 million and represented a 12.0%
margin. On a pro forma basis, Adjusted EBITDA reached $485.5
million and represented a 11.6% margin.
"We are pleased to announce our first earnings report since
completing our acquisition of Legacy Gannett in November," said
Michael Reed, Gannett Chairman and Chief Executive Officer.
"Although we acquired Legacy Gannett only six weeks before the end
of the quarter, we immediately began implementing our integration
plan. By the end of the first quarter of 2020, we expect to have
implemented measures that will result in over $60 million in
annualized savings. As a result of these measures, we expect to
realize $10 - $15 million of savings in the first quarter, and we
expect the savings in subsequent quarters to increase as we
continue to implement synergies throughout the year. We remain
highly confident that we will complete the implementation of
measures in 2020 corresponding to more than half of our $300
million synergy target related to the acquisition of Legacy
Gannett."
"We are also happy to report that we are ahead of schedule in
paying down debt. As announced earlier in January, we paid down
$35.8 million in principal on our credit facility during the fourth
quarter. Subsequent to the quarter, we have paid down an additional
$9.4 million. Real estate sales have driven $8.9 million of the
repayments, and we anticipate an additional $100 - $125 million in
real estate sales by the end of 2021."
"As expected, same store trends weakened in the fourth quarter,
in large part reflecting the runoff of more aggressive subscriber
pricing initiatives that Legacy Gannett implemented in the fourth
quarter of 2018. Beyond circulation revenue, same store advertising
trends were a bit weaker than expected primarily due to disruption
from the Acquisition. We have already seen trends improve in the
first quarter and are confident in our ability to sustain these
positive trends. In the fourth quarter, we saw strong gains in
digital marketing services revenues at Legacy Gannett in our local
markets, and the Legacy New Media events business nearly doubled
its revenues compared to the prior year period. We were pleased
with the strong momentum we saw in our key growth areas, which
positioned us for a solid start to 2020."
"Our Adjusted EBITDA in the quarter was negatively impacted by
both the revenue softness and higher than anticipated healthcare
claims, while our Free cash flow reflects a significant amount of
one-time costs related to the Acquisition. Adjusting for these
one-time items, Free cash flow would have been $65.9 million. With
integration efforts ongoing, we remain very optimistic about our
ability to deliver on our synergy targets, pay down debt, and
return capital to shareholders, while continuing to serve as a
trusted source of high quality news to the communities we
serve."
Fourth Quarter 2019 Publishing
Segment
- Publishing segment revenues totaled $653.9 million in the
fourth quarter; on a pro forma basis, Publishing segment revenues
were $964.7 million.
- Print advertising revenues totaled $240.9 million in the fourth
quarter; on a pro forma basis, print advertising revenues were
$334.1 million, reflecting continued secular pressures.
- Same store Legacy Gannett print advertising revenues decreased
20.1% as compared to the prior year quarter.
- Same store Legacy New Media print advertising revenue decreased
16.3%, as compared to the prior year quarter.
- Digital advertising and marketing services revenues were $90.1
million in the fourth quarter; on a pro forma basis, digital
advertising and marketing services revenues were $150.3 million.
- Legacy Gannett same store digital advertising and marketing
services revenues decreased 1.6% as compared to the prior year
quarter, an improvement from the third quarter trend, reflecting
improved digital marketing services results.
- Legacy New Media same store digital advertising and marketing
services revenues decreased 0.4% year-over-year.
- Circulation revenues totaled $255.6 million in the fourth
quarter; on a pro forma basis, circulation revenues were $384.4
million.
- Legacy Gannett same store circulation revenues decreased 10.3%
year-over-year, as expected, reflecting the cycling of last year's
more aggressive pricing initiatives.
- Legacy New Media same store circulation revenues decreased 7.2%
from the prior year.
- Commercial printing and other revenues contributed $67.3
million to Publishing segment revenues in the fourth quarter.
- Paid digital-only subscriber volumes now total approximately
812,000, up 25.3% year-over-year on a pro forma basis.
- Publishing segment Adjusted EBITDA was $113.3 million,
representing a margin of 17.3% for the quarter.
Fourth Quarter 2019 Marketing Solutions
Segment
- Marketing Solutions segment revenues were $69.3 million in the
fourth quarter; on a pro forma basis, Marketing Solutions segment
revenues were $122.7 million.
- Legacy Gannett same store digital marketing services revenues
increased 1.8% as compared to the prior year, similar to the 2.5%
gain in the third quarter. Revenues across the Legacy Gannett local
markets achieved another quarter of robust growth, driven by an
increase in the number of clients.
- Marketing Solutions segment Adjusted EBITDA was $4.0 million,
representing a margin of 5.8% for the quarter.
Fourth Quarter 2019 Cash
Flow
- Cash flow from operations was negative $73.0 million compared
to positive $37.6 million for the prior year quarter, as net cash
used in operating activities from Legacy Gannett of $72.4 million
included additional pension and postretirement contributions of
$92.4 million, most of which were related to an $87.8 million
pay-out of pension benefits upon change-in-control. Additionally,
cash flow from operations was reduced by $35.9 million of
integration and reorganization costs, $19.3 million of acquisition
costs, and $2.5 million of other one-time adjustments.
- Capital expenditures were $6.7 million, primarily for product
development, technology investments, and maintenance projects.
- The Company repaid $35.8 million in principal under its credit
facility.
- As of the end of the fourth quarter, the Company had a cash
balance of $156.0 million.
2020 Dividend
We expect to resume paying a quarterly dividend with respect to
the first quarter of 2020. Consistent with our past practice, any
dividend declared with respect to the first quarter is expected to
be announced and paid in May. We expect the amount of this dividend
to be $0.19 per share.
Under the terms of the credit facility that we entered into on
November 19, 2019 in connection with the Acquisition, we are
prohibited from paying cash dividends until after April 2020 and
thereafter will be permitted to pay cash dividends only in
accordance with the limitations set forth in our credit facility.
Accordingly, our Board of Directors did not declare a dividend with
respect to the fourth quarter of 2019. In addition, our Board has
not yet declared any dividend with respect to the first quarter of
2020 or any future quarter, and there can be no guarantee as to the
amount and timing of any future dividend.
Integration Update
By the end of the first quarter of 2020, the Company expects to
have implemented measures that will result in over $60 million in
annualized savings. As a result of these measures, the Company
expects to realize $10 - $15 million in savings in the first
quarter and further savings in each subsequent quarter, as it
continues to implement synergies throughout the year. Management
remains highly confident in its ability to implement measures by
the end of 2021 that are expected to result in $300 million in
synergies, with more than half of such measures expected to be
completed in 2020.
Earnings Conference Call
Management will host a conference call on Thursday, February 27,
2020 at 8:30 A.M. Eastern Time. A copy of the earnings release will
be posted to the Investor Relations section of the Company's
website, www.gannett.com. The conference call may be accessed by
dialing 1-855-319-1124 (from within the U.S.) or 1-703-563-6359
(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 “6790119”. A simultaneous webcast of the
conference call will be available to the public on a listen-only
basis at www.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 5, 2020 by dialing 1-855-859-2056 (from within the
U.S.) or 1-404-537-3406 (from outside of the U.S.); please
reference access code “6790119”.
About Gannett
Gannett Co., Inc. (NYSE: GCI) is an innovative, digitally
focused media and marketing solutions company committed to
fostering the communities in our network and helping them build
relationships with their local businesses. With an unmatched reach
at the national and local level, Gannett touches the lives of
nearly 150 million people monthly with our Pulitzer-Prize winning
content, consumer experiences and benefits, and advertiser products
and services. Our portfolio includes the USA TODAY, local media
organizations in 47 states in the U.S. and Guam, and Newsquest, a
wholly owned subsidiary with over 140 local media brands operating
in the United Kingdom. Gannett also owns the digital marketing
services companies ReachLocal, Inc., UpCurve, Inc., and WordStream,
Inc. and runs the largest media-owned events business in the U.S.,
GateHouse Live. Effective November 20, 2019, following the
completion of its merger with Gannett, New Media Investment Group
Inc. trades on the New York Stock Exchange under Gannett Co., Inc.
and its ticker symbol has changed to “GCI”. To connect with us,
visit www.gannett.com.
Same Store Revenues
Same store revenues are defined as GAAP revenues excluding (1)
revenues related to 2019 acquisitions from the date of the
acquisition through the end of the year, (2) revenues related to
2018 acquisitions from the beginning of 2019 through the first year
anniversary of their applicable acquisition date, (3) exited
operations, (4) currency impacts, and (5) deferred revenue impacts
related to the Acquisition. As noted above, we have provided same
store revenue trends for Legacy Gannett and Legacy New Media, each
on a stand-alone basis for the entire period. This information is
provided on a transitional basis, and management expects to provide
same store results for the consolidated company in future
periods.
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 statements
regarding measures expected to result in over $60 million in
annualized savings, the timing of realizing those savings,
including our expectation that $10 - $15 million will be realized
in the first quarter, the potential to realize additional savings
in future quarters, our ability to achieve $300 million of
synergies through measures expected to be implemented by the end of
2021, our expectations, in terms of both amount and timing, with
respect to debt repayment, real estate sales and debt refinancing,
future revenue trends and our ability to influence trends, and the
amount and timing of any future dividend, including our expectation
that the Board will declare a $0.19 per share dividend with respect
to the first quarter of 2020. 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 Annual Report on Form
10-K, Quarterly Reports on Form 10-Q, and 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. 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.
CONSOLIDATED BALANCE SHEETS Gannett
Co., Inc. and Subsidiaries Unaudited, in thousands (except per
share amounts)
Table No. 1 (1)
Assets
December 31, 2019
December 30, 2018
Current assets
Cash and cash equivalents
$
156,042
$
48,651
Accounts receivable, net of allowance for
doubtful accounts of $19,923 and $8,042 at December 31, 2019 and
December 30, 2018, respectively
438,523
174,274
Inventories
55,090
25,022
Prepaid expenses and other current
assets
129,460
49,662
Total current assets
779,115
297,609
Property, plant, and equipment, net of
accumulated depreciation of $277,291 and $219,256 at December 31,
2019 and December 30, 2018, respectively
815,807
339,608
Operating lease assets
309,112
—
Goodwill
914,331
310,737
Intangible assets, net of accumulated
amortization of $145,773 and $101,543 at December 31, 2019 and
December 30, 2018, respectively
1,012,564
486,054
Deferred income taxes
76,297
—
Other assets
112,876
9,856
Total assets
$
4,020,102
$
1,443,864
Liabilities and equity
Current liabilities
Current portion of long-term debt
$
3,300
$
12,395
Accounts payable
146,995
16,612
Accrued expenses
306,633
109,597
Deferred revenue
218,823
105,187
Other current liabilities
42,702
4,053
Total current liabilities
718,453
247,844
Long-term debt
1,636,335
428,180
Convertible debt
3,300
—
Deferred income taxes
9,052
8,282
Pension and other postretirement benefit
obligations
235,906
24,326
Long-term operating lease liabilities
297,662
—
Other long-term liabilities
136,188
16,462
Total noncurrent liabilities
2,318,443
477,250
Total liabilities
3,036,896
725,094
Redeemable noncontrolling interests
1,850
1,547
Commitments and contingent
liabilities
Equity
Common stock, $0.01 par value,
2,000,000,000 shares authorized; 129,386,258 shares issued and
128,991,544 shares outstanding at December 31, 2019; 60,508,249
shares issued and 60,306,286 shares outstanding at December 30,
2018
1,294
605
Treasury stock, at cost, 394,714 and
201,963 shares at December 31, 2019 and December 30, 2018,
respectively
(2,876
)
(1,873
)
Additional paid-in capital
1,090,694
721,605
Retained earnings
(115,958
)
3,767
Accumulated other comprehensive loss
(income)
8,202
(6,881
)
Total equity
981,356
717,223
Total liabilities and equity
$
4,020,102
$
1,443,864
(1) Starting in 2019 and subsequent to our acquisition of Legacy
Gannett, our fiscal year coincides with the Gregorian calendar. In
2018, our fiscal year ended on the last Sunday of the calendar
year. Our fiscal year for 2018 was a 52-week year ending on
December 30, 2018.
CONSOLIDATED STATEMENTS OF
OPERATIONS Gannett Co., Inc. and Subsidiaries Unaudited, in
thousands (except per share amounts)
Table No. 2 (1)
Three months ended
Year ended
Fiscal year ended
December 31, 2019
December 30, 2018
December 31, 2019
December 30, 2018
Operating revenues:
Advertising and marketing services
$
370,324
$
217,687
$
952,644
$
786,577
Circulation
255,574
154,503
704,842
574,963
Commercial printing and other
73,376
43,849
210,423
164,484
Total operating revenues
699,274
416,039
1,867,909
1,526,024
Operating expenses:
Operating costs
398,322
230,299
1,079,593
865,234
Selling, general and administrative
expenses
227,711
136,994
606,917
502,631
Depreciation and amortization
43,148
20,515
111,882
84,791
Integration and reorganization costs
37,899
1,768
47,401
15,011
Acquisition costs
45,300
762
60,618
2,651
Impairment of long-lived assets
540
417
3,009
1,538
Goodwill and mastheads impairment
100,743
—
100,743
—
Net (gain) loss on sale or disposal of
assets
1,384
80
4,723
(3,971
)
Total operating expenses
855,047
390,835
2,014,886
1,467,885
Operating income (loss)
(155,773
)
25,204
(146,977
)
58,139
Non-operating (income) expense:
Interest expense
33,283
9,606
63,660
36,072
Loss on early extinguishment of debt
6,058
2,886
6,058
2,886
Other (income) expense
(8,709
)
452
(9,511
)
(838
)
Non-operating expense
30,632
12,944
60,207
38,120
Income (loss) before income
taxes
(186,405
)
12,260
(207,184
)
20,019
Provision (benefit) for income taxes
(90,924
)
(679
)
(85,994
)
1,912
Net income (loss)
$
(95,481
)
$
12,939
$
(121,190
)
$
18,107
Net loss attributable to redeemable
noncontrolling interests
(393
)
(321
)
(1,348
)
(89
)
Net income (loss) attributable to
Gannett
$
(95,088
)
$
13,260
$
(119,842
)
$
18,196
Earnings (loss) per share attributable to
Gannett - basic
$
(1.05
)
$
0.22
$
(1.77
)
$
0.31
Earnings (loss) per share attributable to
Gannett - diluted
$
(1.05
)
$
0.22
$
(1.77
)
$
0.31
Dividends declared per share
$
—
$
0.38
$
1.52
$
1.49
(1) Starting in 2019 and subsequent to our acquisition of Legacy
Gannett, our fiscal year coincides with the Gregorian calendar. In
2018, our fiscal year ended on the last Sunday of the calendar
year. Our fiscal year for 2018 was a 52-week year ending on
December 30, 2018.
CONSOLIDATED STATEMENTS OF CASH
FLOWS Gannett Co., Inc. and Subsidiaries Unaudited, in
thousands
Table No. 3 (1)
Year ended
December 31, 2019
December 30, 2018
Operating activities:
Net income (loss)
$
(121,190
)
$
18,107
Adjustments to reconcile net income (loss)
to operating cash flows:
Depreciation and amortization
111,882
84,791
Facility consolidation costs
148
—
Stock-based compensation - equity
awards
11,324
3,156
Non-cash interest expense
3,851
1,996
Non-cash acquisition related costs
26,411
—
(Benefit) provision for deferred income
taxes
(87,765
)
202
Net (gain) loss on sale or disposal of
assets
4,723
(3,971
)
Non-cash charge to investments
—
505
Non-cash loss on early extinguishment of
debt
6,058
2,886
Impairment of long-lived assets
3,009
1,538
Goodwill and mastheads impairment
100,743
—
Pension and other postretirement benefit
obligations
(100,452
)
(2,575
)
Change in assets and liabilities:
Accounts receivables, net
12,608
15
Inventory
5,150
(4,336
)
Prepaid expenses
7,016
3,338
Accounts payable
3,958
(2,530
)
Accrued expenses
40,353
8,019
Deferred revenue
(8,326
)
(7,642
)
Other assets and liabilities
6,034
6,060
Net cash provided by operating
activities
25,535
109,559
Investing activities:
Acquisitions, net of cash acquired
(796,502
)
(204,877
)
Purchases of property, plant, and
equipment
(13,978
)
(11,639
)
Proceeds from sale of publications, real
estate and other assets, and insurance proceeds
27,486
15,040
Change in other investing activities
(2,066
)
—
Net cash used for investing
activities
(785,060
)
(201,476
)
Financing activities:
Payments of debt issuance costs
(121,223
)
(800
)
Borrowings under term loans
1,792,000
79,675
Borrowings under revolving credit
facility
153,900
20,000
Repayments under term loans
(481,058
)
(3,093
)
Repayments under revolving credit
facility
(153,900
)
(20,000
)
Repayments of convertible debt
(197,950
)
—
Payment of offering costs
—
(369
)
Issuance of common stock, net of
underwriters' discount
—
111,099
Purchase of treasury stock
(1,002
)
(792
)
Repurchase of common stock
—
—
Payments of dividends
(91,936
)
(87,195
)
Change in other financing activities
82
—
Net cash provided by financing
activities
898,913
98,525
Effect of currency exchange rate
change
(3,494
)
—
Increase in cash, cash equivalents, and
restricted cash
135,894
6,608
Balance of cash, cash equivalents, and
restricted cash at beginning of year
52,770
46,162
Cash, cash equivalents, and restricted
cash at end of year
$
188,664
$
52,770
(1) Starting in 2019 and subsequent to our acquisition of Legacy
Gannett, our fiscal year coincides with the Gregorian calendar. In
2018, our fiscal year ended on the last Sunday of the calendar
year. Our fiscal year for 2018 was a 52-week year ending on
December 30, 2018.
SEGMENT INFORMATION Gannett Co.,
Inc. and Subsidiaries Unaudited, in thousands
Table No. 4 (1)
Three months ended
Year ended
December 31, 2019
December 30, 2018
December 31, 2019
December 30, 2018
Operating revenues:
Publishing
$
653,877
$
406,966
$
1,792,652
$
1,495,124
Marketing Solutions
69,336
26,878
149,242
95,871
Corporate and Other
2,018
675
4,554
3,118
Intersegment eliminations
(25,957
)
(18,480
)
(78,539
)
(68,089
)
Total
$
699,274
$
416,039
$
1,867,909
$
1,526,024
Adjusted EBITDA:
Publishing
$
113,334
$
68,132
$
268,916
$
220,415
Marketing Solutions
4,024
(1,896
)
(3,279
)
(6,404
)
Corporate and Other
(18,537
)
(10,267
)
(41,766
)
(33,718
)
Total
$
98,821
$
55,969
$
223,871
$
180,293
Depreciation and amortization:
Publishing
$
37,442
$
18,787
$
101,881
$
78,075
Marketing Solutions
3,714
1,263
6,534
5,003
Corporate and Other
1,992
465
3,467
1,713
Total
$
43,148
$
20,515
$
111,882
$
84,791
(1) Starting in 2019 and subsequent to our acquisition of Legacy
Gannett, our fiscal year coincides with the Gregorian calendar. In
2018, our fiscal year ended on the last Sunday of the calendar
year. Our fiscal year for 2018 was a 52-week year ending on
December 30, 2018.
SAME STORE REVENUES Gannett Co.,
Inc. and Subsidiaries Unaudited, in thousands
Table No. 5
Three months ended
Legacy Gannett
December 31,
2019
December 31,
2018 (1)
% Change
Pro forma total revenue
$
654,132
$
751,405
(12.9
)%
Currency impact
401
—
***
Exited operations
(15
)
(11,157
)
(99.9
)%
Deferred revenue adjustment
10,791
—
***
Same store total revenue
$
665,309
$
740,248
(10.1
)%
Pro forma advertising and marketing
services revenue
$
365,776
$
427,226
(14.4
)%
Currency impact
374
—
***
Exited operations
(15
)
(11,102
)
(99.9
)%
Deferred revenue adjustment
1,262
—
***
Same store advertising and marketing
services revenue
$
367,397
$
416,124
(11.7
)%
Pro forma circulation revenue
$
236,128
$
273,757
(13.7
)%
Currency impact
26
—
***
Deferred revenue adjustment
9,529
—
***
Same store circulation revenue
$
245,683
$
273,757
(10.3
)%
Pro forma other revenue
$
52,228
$
50,422
3.6
%
Currency impact
1
—
***
Exited operations
—
(55
)
(100.0
)%
Same store other revenue
$
52,229
$
50,367
3.7
%
(1) Legacy Gannett's fourth quarter 2018 coincided with the
Gregorian calendar and ended on December 31, 2018.
SAME STORE REVENUES Gannett Co.,
Inc. and Subsidiaries Unaudited, in thousands
Table No. 5 (continued)
Year ended
Legacy Gannett
December 31, 2019
December 31, 2018 (1)
% Change
Pro forma total revenue
$
2,613,463
$
2,916,838
(10.4
)%
Acquired revenues
(35,779
)
—
***
Currency impact
14,766
—
***
Exited operations
(322
)
(43,712
)
(99.3
)%
Deferred revenue adjustment
10,791
—
***
Same store total revenue
$
2,602,919
$
2,873,126
(9.4
)%
Pro forma advertising and marketing
services revenue
$
1,444,562
$
1,661,075
(13.0
)%
Acquired revenues
(34,578
)
—
***
Currency impact
10,249
—
***
Exited operations
(319
)
(43,640
)
(99.3
)%
Deferred revenue adjustment
1,262
—
***
Same store advertising and marketing
services revenue
$
1,421,176
$
1,617,435
(12.1
)%
Pro forma circulation revenue
$
976,538
$
1,063,022
(8.1
)%
Acquired revenues
(1,130
)
—
***
Currency impact
3,443
—
***
Exited operations
—
—
***
Deferred revenue adjustment
9,529
—
***
Same store circulation revenue
$
988,380
$
1,063,022
(7.0
)%
Pro forma other revenue
$
192,363
$
192,741
(0.2
)%
Acquired revenues
(71
)
—
***
Currency impact
1,074
—
***
Exited operations
(3
)
(72
)
(95.8
)%
Same store other revenue
$
193,363
$
192,669
0.4
%
(1) Legacy Gannett's 2018 fiscal year coincided with the
Gregorian calendar and ended on December 31, 2018.
SAME STORE REVENUES Gannett Co.,
Inc. and Subsidiaries Unaudited, in thousands
Table No. 5 (continued)
Three months ended
Legacy New Media
December 31, 2019
December 30,
2018(1)
% Change
As reported total revenue
$
400,121
$
416,039
(3.8
)%
Acquired revenues
(26,385
)
—
***
Exited operations
—
(2,666
)
(100.0
)%
Same store total revenue
$
373,736
$
413,373
(9.6
)%
As reported advertising and marketing
services revenue
$
200,435
$
217,687
(7.9
)%
Acquired revenues
(11,622
)
—
***
Exited operations
—
(1,632
)
(100.0
)%
Same store advertising and marketing
services revenue
$
188,813
$
216,055
(12.6
)%
As reported circulation revenue
$
148,248
$
154,503
(4.0
)%
Acquired revenues
(5,151
)
—
***
Exited operations
—
(291
)
(100.0
)%
Same store circulation revenue
$
143,097
$
154,212
(7.2
)%
As reported other revenue
$
51,438
$
43,849
17.3
%
Acquired revenues
(9,612
)
—
***
Exited operations
—
(743
)
(100.0
)%
Same store other revenue
$
41,826
$
43,106
(3.0
)%
(1) Starting in 2019 and subsequent to our acquisition of Legacy
Gannett, our fiscal year coincides with the Gregorian calendar. In
2018, our fiscal year ended on the last Sunday of the calendar
year. Our fiscal year for 2018 was a 52-week year ending on
December 30, 2018.
SAME STORE REVENUESGannett Co., Inc. and
SubsidiariesUnaudited, in thousands
Table No. 5 (continued)
Year ended
Legacy New Media
December 31, 2019
December 30,
2018(1)
% Change
As reported total revenue
$
1,568,757
$
1,526,024
2.8
%
Acquired revenues
(176,870
)
—
***
Exited operations
—
(13,188
)
(100.0
)%
Same store total revenue
$
1,391,887
$
1,512,836
(8.0
)%
As reported advertising and marketing
services revenue
$
782,755
$
786,577
(0.5
)%
Acquired revenues
(97,742
)
—
***
Exited operations
—
(8,282
)
(100.0
)%
Same store advertising and marketing
services revenue
$
685,013
$
778,295
(12.0
)%
As reported circulation revenue
$
597,517
$
574,963
3.9
%
Acquired revenues
(59,225
)
—
***
Exited operations
—
(1,904
)
(100.0
)%
Same store circulation revenue
$
538,292
$
573,059
(6.1
)%
As reported other revenue
$
188,485
$
164,484
14.6
%
Acquired revenues
(19,903
)
—
***
Exited operations
—
(3,002
)
(100.0
)%
Same store other revenue
$
168,582
$
161,482
4.4
%
(1) Starting in 2019 and subsequent to our
acquisition of Legacy Gannett, our fiscal year coincides with the
Gregorian calendar. In 2018, our fiscal year ended on the last
Sunday of the calendar year. Our fiscal year for 2018 was a 52-week
year ending on December 30, 2018.
USE OF NON-GAAP
INFORMATION
The Company uses non-GAAP financial performance and liquidity
measures to supplement the financial information presented on a
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 GAAP measures and should be read
together with financial information presented on a GAAP basis.
The Company defines its non-GAAP measures as follows:
- Adjusted EBITDA is a non-GAAP financial performance
measure the Company believes offers a useful view of the overall
operation 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
early extinguishment of debt, (4) non-operating items, primarily
pension costs, (5) depreciation and amortization, (6) integration
and reorganization costs, (7) impairment of long-lived assets, (8)
goodwill and intangible impairments, (9) net loss (gain) on sale or
disposal of assets, (10) non-cash compensation, (11) acquisition
costs, and (12) certain other non-recurring charges. The most
directly comparable GAAP financial measure is net income (loss)
attributable to Gannett.
- Free cash flow is a non-GAAP liquidity measure that
adjusts our reported GAAP results for items we believe are critical
to the ongoing success of our business. The Company defines Free
cash flow as net cash provided by operating activities as reported
on the 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 shareholders. The most directly comparable GAAP
financial measure is net cash from operating activities.
Management’s Use of Non-GAAP Measures
Adjusted EBITDA and Free cash flow are not measurements of
financial performance under GAAP and should not be considered in
isolation or as an alternative to income from operations, net
income (loss), cash flow from continuing operating activities, or
any other measure of performance or liquidity derived in accordance
with GAAP. We believe our non-GAAP 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.
Adjusted EBITDA provides us with a measure of financial
performance, independent of items that are beyond the control of
management in the short-term such as depreciation and amortization,
taxation, non-cash impairments, and interest expense associated
with our capital structure. This metric measures our financial
performance based on operational factors that management can impact
in the short-term, namely the cost structure or expenses of the
organization. Adjusted EBITDA is one of the metrics we use to
review the financial performance of our business on a monthly
basis.
We use Adjusted EBITDA as a measure 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. We
consider the unrealized (gain) loss on derivative instruments and
the (gain) loss on early extinguishment of debt to be financing
related costs associated with interest expense or amortization of
financing fees. Accordingly, we exclude financing related costs
such as the early extinguishment of debt because they represent the
write-off of deferred financing costs, and we believe these
non-cash write-offs are similar to interest expense and
amortization of financing fees, which by definition are excluded
from Adjusted EBITDA. Additionally, the non-cash gains (losses) on
derivative contracts, which are related to interest rate swap
agreements to manage interest rate risk, are financing costs
associated with interest expense. Such charges are incidental to,
but not reflective of, our day-to-day operating performance, and it
is appropriate to exclude charges related to financing activities
such as the early extinguishment of debt and the unrealized (gain)
loss on derivative instruments which, depending on the nature of
the financing arrangement, would have otherwise been amortized over
the period of the related agreement and does not require a current
cash settlement. Such charges are incidental to, but not reflective
of our day-to-day operating performance of the business that
management can impact in the short term.
Limitations of Non-GAAP Measures
Each of our non-GAAP measures has limitations as an analytical
tool. They should not be viewed in isolation or as a substitute for
GAAP measures of earnings or cash flows. Material limitations in
making the adjustments to our earnings to calculate Adjusted EBITDA
and using this non-GAAP financial measure as compared to GAAP net
income (loss) include: the cash portion of interest / financing
expense, income tax (benefit) provision, and charges related to
impairment of long-lived assets, which may significantly affect our
financial results.
A reader of our financial statements may find this item
important in evaluating our performance, results of operations, and
financial position. We use non-GAAP financial measures to
supplement our GAAP results in order to provide a more complete
understanding of the factors and trends affecting our business.
Adjusted EBITDA and Free cash flow are not alternatives to net
income, income from operations, or cash flows provided by or used
in operations as calculated and presented in accordance with GAAP.
Readers of our financial statements should not rely on Adjusted
EBITDA or Free cash flow as a substitute for any such GAAP
financial measure. We strongly urge readers of our financial
statements to review the reconciliation of income (loss) from
continuing operations to Adjusted EBITDA and the reconciliation of
net cash from operating activities to Free cash flow, along with
our consolidated financial statements included elsewhere in this
report. We also strongly urge readers of our financial statements
to not rely on any single financial measure to evaluate our
business. In addition, because Adjusted EBITDA and Free cash flow
are not measures of financial performance under GAAP and are
susceptible to varying calculations, the Adjusted EBITDA and Free
cash flow measures as presented in this report may differ from and
may not be comparable to similarly titled measures used by other
companies.
NON-GAAP FINANCIAL INFORMATION ADJUSTED
EBITDA Gannett Co., Inc. and Subsidiaries Unaudited, in
thousands
Table No. 6 (1)
Three months ended December 31,
2019
Publishing
Marketing Solutions
Corporate and Other
Consolidated Total
Net income (loss) attributable to
Gannett
$
(52,036
)
$
(1,392
)
$
(41,660
)
$
(95,088
)
Income tax expense (benefit)
—
—
(90,924
)
(90,924
)
Interest expense
24
—
33,259
33,283
Loss on early extinguishment of debt
—
—
6,058
6,058
Other non-operating items, net
(6
)
(775
)
(7,928
)
(8,709
)
Depreciation and amortization
37,442
3,714
1,992
43,148
Integration and reorganization costs
13,777
950
23,172
37,899
Acquisition costs
—
—
45,300
45,300
Impairment of long-lived assets
540
—
—
540
Goodwill and mastheads impairment
100,743
—
—
100,743
Net (gain) loss on sale or disposal of
assets
1,289
(8
)
103
1,384
Non-cash compensation
—
—
8,790
8,790
Other items
11,561
1,535
3,301
16,397
Adjusted EBITDA (non-GAAP basis)
$
113,334
$
4,024
$
(18,537
)
$
98,821
Three months ended December 30,
2018
Publishing
Marketing Solutions
Corporate and Other
Consolidated Total
Net income (loss) attributable to
Gannett
$
45,631
$
(3,866
)
$
(28,505
)
$
13,260
Income tax expense (benefit)
—
—
(679
)
(679
)
Interest expense
56
—
9,549
9,605
Loss on early extinguishment of debt
—
—
2,886
2,886
Other non-operating items, net
(467
)
—
580
113
Depreciation and amortization
18,787
1,263
465
20,515
Integration and reorganization costs
1,541
—
227
1,768
Acquisition costs
—
15
747
762
Impairment of long-lived assets
417
—
—
417
Goodwill and mastheads impairment
—
—
—
—
Net (gain) loss on sale or disposal of
assets
51
—
29
80
Non-cash compensation
—
—
657
657
Other items
2,116
692
3,777
6,585
Adjusted EBITDA (non-GAAP basis)
$
68,132
$
(1,896
)
$
(10,267
)
$
55,969
(1) Starting in 2019 and subsequent to our acquisition of Legacy
Gannett, our fiscal year coincides with the Gregorian calendar. In
2018, our fiscal year ended on the last Sunday of the calendar
year. Our fiscal year for 2018 was a 52-week year ending on
December 30, 2018.
NON-GAAP FINANCIAL INFORMATION ADJUSTED
EBITDA Gannett Co., Inc. and Subsidiaries Unaudited, in
thousands
Table No. 6 (continued) (1)
Year ended December 31, 2019
Publishing
Marketing Solutions
Corporate and Other
Consolidated Total
Net income (loss) attributable to
Gannett
$
22,523
$
(14,006
)
$
(128,359
)
$
(119,842
)
Income tax expense (benefit)
—
—
(85,994
)
(85,994
)
Interest expense
123
—
63,537
63,660
Loss on early extinguishment of debt
—
—
6,058
6,058
Other non-operating items, net
(969
)
(775
)
(7,767
)
(9,511
)
Depreciation and amortization
101,881
6,534
3,467
111,882
Integration and reorganization costs
21,336
1,937
24,128
47,401
Acquisition costs
—
(38
)
60,656
60,618
Impairment of long-lived assets
3,009
—
—
3,009
Goodwill and mastheads impairment
100,743
—
—
100,743
Net (gain) loss on sale or disposal of
assets
4,036
(5
)
692
4,723
Non-cash compensation
—
—
11,324
11,324
Other items
16,234
3,074
10,492
29,800
Adjusted EBITDA (non-GAAP basis)
$
268,916
$
(3,279
)
$
(41,766
)
$
223,871
Year ended December 30, 2018
Publishing
Marketing Solutions
Corporate and Other
Consolidated Total
Net income (loss) attributable to
Gannett
$
122,392
$
(14,047
)
$
(90,149
)
$
18,196
Income tax expense (benefit)
—
—
1,912
1,912
Interest expense
400
—
35,672
36,072
Loss on early extinguishment of debt
—
—
2,886
2,886
Other non-operating items, net
(1,554
)
—
—
(1,554
)
Depreciation and amortization
78,075
5,003
1,713
84,791
Integration and reorganization costs
14,487
—
524
15,011
Acquisition costs
—
85
2,566
2,651
Impairment of long-lived assets
1,538
—
—
1,538
Goodwill and mastheads impairment
—
—
—
—
Net (gain) loss on sale or disposal of
assets
(3,109
)
34
(896
)
(3,971
)
Non-cash compensation
—
—
3,156
3,156
Other items
8,186
2,521
8,898
19,605
Adjusted EBITDA (non-GAAP basis)
$
220,415
$
(6,404
)
$
(33,718
)
$
180,293
(1) Starting in 2019 and subsequent to our acquisition of Legacy
Gannett, our fiscal year coincides with the Gregorian calendar. In
2018, our fiscal year ended on the last Sunday of the calendar
year. Our fiscal year for 2018 was a 52-week year ending on
December 30, 2018.
NON-GAAP FINANCIAL INFORMATION FREE
CASH FLOW Gannett Co., Inc. and Subsidiaries Unaudited, in
thousands
Table No. 7
Three months ended December 31,
2019
Year ended December 31, 2019
Net cash flow provided by operating
activities (GAAP basis)
$
(72,995
)
$
25,535
Capital expenditures
(6,697
)
(13,978
)
Free cash flow (non-GAAP basis)(1)
$
(79,692
)
$
11,557
(1) Free cash flow for the fourth quarter was negatively
impacted by $87.8 million of pension benefits paid as a result of
the Acquisition, $35.9 million of integration and reorganization
costs, $19.3 million of acquisition costs, and $2.5 million of
other one-time adjustments. Free cash flow for the full year was
negatively impacted by $87.8 million of pension benefits paid as a
result of the Acquisition, $45.4 million of integration and
reorganization costs, $38.4 million of acquisition costs, and $11.3
million of other one-time adjustments.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200227005303/en/
For investor inquiries, contact: Ashley Higgins and Stacy
Cunningham Investor Relations 212-479-3160
investors@gannett.com
For media inquiries, contact: Stephanie Tackach Director,
Public Relations 212-715-5490 stackach@gannett.com
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