GCI New Gannett Co Inc

Gannett Co., Inc. ("Gannett", "we", "us", "our", or the "Company") (NYSE: GCI) today reported its financial results for the third quarter ended September 30, 2024.

"We continued to make solid progress on our key priorities in the third quarter while delivering another quarter of year-over-year Adjusted EBITDA growth. Three out of four digital revenue categories experienced further trend improvement year-over-year, and as a result, total digital revenues surpassed 45% of total revenues, representing an all-time high. These results reinforce our belief that we have created a sustainable pathway for ongoing growth moving forward. We also significantly increased our free cash flow by 168% year-over-year. Additionally, within the quarter, we repaid approximately $29 million of debt, which combined with our Adjusted EBITDA growth, reduced our first lien net leverage to 1.76x. It is also important to note that some of our strategic decisions impacted total reported revenue in the third quarter, such as the intentional closure or divestiture of certain businesses in our portfolio. These actions were in-line with our long-term strategy and did not materially impact Adjusted EBITDA," said Michael Reed, Gannett Chairman and Chief Executive Officer.

"In the third quarter, our audience surpassed 200 million average monthly unique visitors for the first time in our history, reflecting growth of over 7% compared to the prior year period. Furthermore, in the third quarter, we announced an additional partnership with BetMGM, which is expected to enhance the monetization of our content platform."

"On October 15, 2024, we completed our debt refinancing transactions which extended our maturities, reduced potential share dilution by approximately 46%, and simplified our capital structure. This refinancing is an important milestone in our long-term strategic plan. With our continued strong performance, we are pleased to reiterate nearly all of our 2024 full year outlook, with the exception of slight adjustments to total digital revenues and free cash flow, which was impacted by our refinancing efforts. Beyond 2024, we continue to believe we are well-positioned to drive sustainable growth across all of our key financial metrics, and as a result, we reiterated our 2025-2026 business outlook."

"We continue to execute on our strategy and have made great progress on our key priorities in the third quarter. We expect to see further improvement to trends in the fourth quarter as well. Importantly, we believe we are well-positioned to realize 2025 full year total revenue growth, as well as continued growth in Adjusted EBITDA and free cash flow. With the completion of our debt refinancing transactions, combined with anticipated revenue and cash flow growth in 2025 and 2026, we believe we are well-positioned to create significant value for our shareholders."

Third Quarter 2024 Digital Highlights (Year-Over-Year):

• Total digital revenues of $277.4 million increased 5.2%, or 5.8% on a same store basis(1)
• Digital-only subscription revenues of $50.1 million grew 25.0%
• Digital-only average revenue per user(2) of $8.16 increased 19.6%
• Total digital-only paid subscriptions(2) of 2.06 million increased 4.7%
• Record 203 million(3) average monthly unique visitors, an increase of 7.4%
• Digital advertising revenues of $84.7 million grew 4.9%
• Digital Marketing Solutions ("DMS") segment core platform revenues(2) of $119.2 million decreased 1.4% driven primarily by the third quarter home improvement sector performance
• DMS core platform average revenue per user(2) of $2,777 increased 5.3%

______________

(1)

Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net income (loss) attributable to Gannett, Free cash flow, Same store revenues, and Free cash flow CAGR are non-GAAP measures. See "Use of Non-GAAP Information" below for information about these non-GAAP measures.

(2)

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

(3)

203 million average monthly unique visitors in the third quarter of 2024 with approximately 147 million average monthly unique visitors coming from our USA TODAY NETWORK (based on September 2024 Comscore Media Metrix®) and approximately 56 million average monthly unique visitors resulting from our U.K. digital properties (based on Adobe Analytics).

Additional Third Quarter 2024 Highlights (Year-Over-Year):

• Total revenues of $612.4 million decreased 6.2%
  • Total revenues were impacted by the decision to sell or shut down certain properties
• Same store revenues(1) decreased 5.3%, reflecting an improvement of 310 basis points
• Net loss attributable to Gannett of $19.7 million, a loss margin of 3.2%
• Adjusted Net loss attributable to Gannett(1) of $6.1 million improved by $16.6 million
• Adjusted EBITDA(1) totaled $62.9 million, an increase of 5.6%
• Adjusted EBITDA(1) margin of 10.3% improved by 120 basis points
• Cash provided by operating activities of $33.7 million, an increase of $13.1 million
• Free cash flow(1) of $19.8 million, an increase of 168%

Third Quarter 2024 Capital Structure Highlights:

• As of September 30, 2024, the Company had cash and cash equivalents of $101.8 million
• Total principal debt outstanding at September 30, 2024 was $1,061.4 million, including $576.1 million in first lien debt
• First lien net leverage(4) was 1.76x, a decrease of 10.2% compared to the prior year period
• The Company repaid approximately $28.5 million of debt

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

• Full Year 2024 Business Outlook(5)
  • Total digital revenues are expected to grow approximately 6%-7% on a same store basis(1)
  • Total revenues are expected to be down in the low to mid-single digits on a reported and same store basis(1)
  • Net income attributable to Gannett is expected to improve, after excluding an impairment charge of approximately $46.0 million related to the exit of our McLean, Virginia office during the first quarter of 2024
  • Adjusted EBITDA(1) is expected to grow versus the prior year
  • Cash provided by operating activities is expected to grow versus the prior year
  • Free cash flow(1) is expected to grow in excess(6) of the expected growth in Adjusted EBITDA(1) after excluding the estimated $7 million impact of the debt refinancing

• 2025-2026 Business Outlook(5)
  • Total digital revenues are expected to accelerate with growth exceeding 10% year-over-year and 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(1)
  • Net income attributable to Gannett is expected to improve to positive
  • Adjusted EBITDA(1) is expected to exhibit ongoing growth
  • Cash provided by operating activities is expected to grow with an estimated CAGR(7) of 30%
  • Free cash flow(1) is expected to grow at an accelerated rate with an estimated CAGR(1)(7) of 40%

Financial Highlights

In thousands

 

Third Quarter 2024

Revenues

 

$

612,439

 

Net loss attributable to Gannett

 

 

(19,653

)

Adjusted EBITDA(8) (non-GAAP basis)

 

 

62,880

 

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

 

 

(6,054

)

Cash provided by operating activities

 

 

33,745

 

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

 

 

19,762

 

_____________

(4)

As of September 30, 2024, the First Lien Net Leverage ratio was calculated by subtracting cash on the balance sheet from the sum of both our five-year senior secured term loan facility (the "Senior Secured Term Loan") and 6% first lien notes due November 1, 2026 (the "2026 Senior Notes") and dividing that by Q3 2024 LTM Adjusted EBITDA. Our 6% Senior Secured Convertible Notes due 2027 are second lien as of the completion of the Senior Secured Term Loan refinancing in October 2021.

(5)

Projections are based on Company estimates as of October 31, 2024 and are provided solely for illustrative purposes. Actual results may vary. The Company undertakes no obligation to update this information. Additionally, the Company's estimates do not factor in the impact of any future acquisitions or dispositions. The Company’s future financial results could differ materially from the Company’s current estimates.

(6)

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

(7)

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

(8)

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

Earnings Conference Call

Management will host a conference call on Thursday, October 31, 2024 at 8:30 A.M. Eastern Time to review the financial and operating results for the period. A copy of the earnings release will be posted to the Investor Relations section of Gannett’s website, investors.gannett.com. The conference call may be accessed by dialing 1-888-506-0062 (from within the U.S.) or 1-973-528-0011 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference "Gannett Third Quarter Earnings Call" or access code "926379". 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, November 14, 2024 by dialing 1-877-481-4010 (from within the U.S.) or 1-919-882-2331 (from outside of the U.S.); please reference access code "50822". 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 2025-2026 business outlook, statements regarding our business outlook, digital revenue performance and growth, growth in our Digital Marketing Solutions segment, growth of and demand for our digital-only subscriptions and audience, digital marketing and advertising services, digital revenues, monetization of our audience, print advertising trends and revenues, expected results of our targeting and pricing models, expectations regarding our cash from operating activities, free cash flows, compound annual growth rates ("CAGR"), revenues, net income (loss) attributable to Gannett, Adjusted EBITDA, same store revenues and cash flows, expectations regarding our long-term growth, sustainable growth, and inflection in our revenue, our ability to create long-term stockholder value, our expectations, in terms of both amount and timing, with respect to debt repayment, our expectations with respect to the effects of our refinancing transaction, 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 achieve our operating priorities, our long-term opportunities, economic impacts, our ability to navigate volatility, achieve our financial goals, optimize our capital structure and achieve optimal financial performance, our cost structure, future revenue and expense trends, and our ability to influence trends. Words such as "expect(s)", "believe(s)", "will", "outlook", "guidance", "estimate(s)", "project(s)", "suggest", "trend", "focus", and similar expressions are intended to identify such forward-looking statements. These statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties. These and other risks and uncertainties could cause actual results to differ materially from those described in the forward-looking statements, many of which are beyond our control. The Company can give no assurance its expectations will be attained. Accordingly, you should not place undue reliance on any forward-looking statements contained in this press release. For a discussion of some of the risks and important factors that could cause actual results to differ from such forward-looking statements, see the risks and other factors detailed from time to time in the Company's most recent Annual Report on Form 10-K, our quarterly reports on Form 10-Q, and our other filings with the Securities and Exchange Commission. Furthermore, new risks and uncertainties emerge from time to time, and it is not possible for the Company to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this press release. Except to the extent required by law, the Company expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.

GANNETT CO., INC.

   

CONDENSED CONSOLIDATED BALANCE SHEETS

     

Table No. 1

 

 

 

 

In thousands, except share data

 

September 30, 2024

 

December 31, 2023

Assets

 

(Unaudited)

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

101,801

 

 

$

100,180

 

Accounts receivable, net of allowance of $15,170 and $16,338 as of September 30, 2024 and December 31, 2023, respectively

 

 

244,011

 

 

 

266,096

 

Inventories

 

 

22,423

 

 

 

26,794

 

Prepaid expenses

 

 

43,166

 

 

 

36,210

 

Other current assets

 

 

21,319

 

 

 

14,957

 

Total current assets

 

 

432,720

 

 

 

444,237

 

Property, plant and equipment, net of accumulated depreciation of $344,789 and $336,408 as of September 30, 2024 and December 31, 2023, respectively

 

 

247,733

 

 

 

239,087

 

Operating lease assets

 

 

151,604

 

 

 

221,733

 

Goodwill

 

 

531,112

 

 

 

533,876

 

Intangible assets, net

 

 

453,052

 

 

 

524,350

 

Deferred tax assets

 

 

49,722

 

 

 

37,125

 

Pension and other assets

 

 

197,437

 

 

 

180,839

 

Total assets

 

$

2,063,380

 

 

$

2,181,247

 

 

 

 

 

 

Liabilities and equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable and accrued liabilities

 

$

334,356

 

 

$

293,444

 

Deferred revenue

 

 

108,306

 

 

 

120,502

 

Current portion of long-term debt

 

 

60,452

 

 

 

63,752

 

Operating lease liabilities

 

 

40,447

 

 

 

45,763

 

Other current liabilities

 

 

7,604

 

 

 

10,052

 

Total current liabilities

 

 

551,165

 

 

 

533,513

 

Long-term debt

 

 

504,369

 

 

 

564,836

 

Convertible debt

 

 

427,238

 

 

 

416,036

 

Deferred tax liabilities

 

 

—

 

 

 

2,028

 

Pension and other postretirement benefit obligations

 

 

39,123

 

 

 

42,661

 

Long-term operating lease liabilities

 

 

176,152

 

 

 

203,871

 

Other long-term liabilities

 

 

125,386

 

 

 

100,989

 

Total noncurrent liabilities

 

 

1,272,268

 

 

 

1,330,421

 

Total liabilities

 

 

1,823,433

 

 

 

1,863,934

 

Commitments and contingent liabilities

 

 

 

 

Equity

 

 

 

 

Preferred stock, $0.01 par value per share, 300,000 shares authorized, none of which were issued and outstanding at September 30, 2024 and December 31, 2023

 

 

—

 

 

 

—

 

Common stock, $0.01 par value per share, 2,000,000,000 shares authorized, 158,821,732 shares issued and 147,430,592 shares outstanding at September 30, 2024; 158,554,705 shares issued and 148,939,463 shares outstanding at December 31, 2023

 

 

1,588

 

 

 

1,586

 

Treasury stock, at cost, 11,391,140 shares and 9,615,242 shares at September 30, 2024 and December 31, 2023, respectively

 

 

(20,539

)

 

 

(17,393

)

Additional paid-in capital

 

 

1,435,879

 

 

 

1,426,325

 

Accumulated deficit

 

 

(1,117,865

)

 

 

(1,027,192

)

Accumulated other comprehensive loss

 

 

(58,612

)

 

 

(65,541

)

Total Gannett stockholders' equity

 

 

240,451

 

 

 

317,785

 

Noncontrolling interests

 

 

(504

)

 

 

(472

)

Total equity

 

 

239,947

 

 

 

317,313

 

Total liabilities and equity

 

$

2,063,380

 

 

$

2,181,247

 

GANNETT CO., INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

Table No. 2

 

Three months ended September 30,

In thousands, except per share amounts

 

2024

 

2023

Digital

 

$

277,386

 

 

$

263,644

 

Print and commercial

 

 

335,053

 

 

 

389,227

 

Total revenues

 

 

612,439

 

 

 

652,871

 

Operating costs

 

 

375,912

 

 

 

416,103

 

Selling, general and administrative expenses

 

 

183,857

 

 

 

184,914

 

Depreciation and amortization

 

 

40,398

 

 

 

40,644

 

Integration and reorganization costs (reversal)

 

 

17,307

 

 

 

(955

)

Asset impairments

 

 

87

 

 

 

188

 

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

 

 

784

 

 

 

(23,334

)

Other operating expenses

 

 

117

 

 

 

370

 

Total operating expenses

 

 

618,462

 

 

 

617,930

 

Operating (loss) income

 

 

(6,023

)

 

 

34,941

 

Interest expense

 

 

25,959

 

 

 

27,918

 

Loss (gain) on early extinguishment of debt

 

 

176

 

 

 

(2,717

)

Non-operating pension income

 

 

(3,193

)

 

 

(2,929

)

Equity loss (income) in unconsolidated investees, net

 

 

97

 

 

 

(510

)

Other non-operating income, net

 

 

(2,979

)

 

 

(397

)

Non-operating expenses

 

 

20,060

 

 

 

21,365

 

(Loss) income before income taxes

 

 

(26,083

)

 

 

13,576

 

(Benefit) provision for income taxes

 

 

(6,429

)

 

 

16,144

 

Net loss

 

 

(19,654

)

 

 

(2,568

)

Net loss attributable to noncontrolling interests

 

 

(1

)

 

 

(2

)

Net loss attributable to Gannett

 

$

(19,653

)

 

$

(2,566

)

 

 

 

 

 

Loss per share attributable to Gannett - basic

 

$

(0.14

)

 

$

(0.02

)

Loss per share attributable to Gannett - diluted

 

$

(0.14

)

 

$

(0.02

)

GANNETT CO., INC.

   

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

   

Table No. 3

 

Nine months ended September 30,

In thousands

 

2024

 

2023

Operating activities

 

 

 

 

Net loss

 

$

(90,705

)

 

$

(4,998

)

Adjustments to reconcile net loss to operating cash flows:

 

 

 

 

Depreciation and amortization

 

 

116,954

 

 

 

124,126

 

Share-based compensation expense

 

 

9,243

 

 

 

12,727

 

Non-cash interest expense

 

 

15,905

 

 

 

15,942

 

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

 

 

1,572

 

 

 

(40,869

)

Gain on early extinguishment of debt

 

 

(354

)

 

 

(3,213

)

Asset impairments

 

 

46,076

 

 

 

1,370

 

Pension and other postretirement benefit obligations

 

 

(20,047

)

 

 

(10,765

)

Equity income in unconsolidated investees, net

 

 

(277

)

 

 

(1,341

)

Change in other assets and liabilities, net

 

 

12,954

 

 

 

(19,562

)

Cash provided by operating activities

 

 

91,321

 

 

 

73,417

 

Investing activities

 

 

 

 

Purchase of property, plant and equipment

 

 

(36,708

)

 

 

(29,707

)

Proceeds from sale of real estate and other assets

 

 

19,257

 

 

 

83,799

 

Change in other investing activities

 

 

386

 

 

 

(24

)

Cash (used for) provided by investing activities

 

 

(17,065

)

 

 

54,068

 

Financing activities

 

 

 

 

Repayments of long-term debt

 

 

(68,116

)

 

 

(111,894

)

Treasury stock

 

 

(3,141

)

 

 

(2,642

)

Changes in other financing activities

 

 

(1,251

)

 

 

1,593

 

Cash used for financing activities

 

 

(72,508

)

 

 

(112,943

)

Effect of currency exchange rate change on cash

 

 

(681

)

 

 

688

 

Increase in cash, cash equivalents and restricted cash

 

 

1,067

 

 

 

15,230

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

110,612

 

 

 

104,804

 

Cash, cash equivalents and restricted cash at end of period

 

$

111,679

 

 

$

120,034

 

GANNETT CO., INC.

 

SEGMENT INFORMATION

(Unaudited)

 

Table No. 4

 

Three months ended September 30,

In thousands

 

2024

 

2023

Revenues:

 

 

 

 

Domestic Gannett Media

 

$

468,511

 

 

$

508,505

 

Newsquest

 

 

59,548

 

 

 

59,035

 

Digital Marketing Solutions

 

 

119,929

 

 

 

121,919

 

Corporate and other

 

 

1,431

 

 

 

1,532

 

Intersegment eliminations

 

 

(36,980

)

 

 

(38,120

)

Total

 

$

612,439

 

 

$

652,871

 

USE OF NON-GAAP INFORMATION

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

We define our non-GAAP financial performance and liquidity measures as follows:

• Adjusted EBITDA is a non-GAAP financial performance measure we believe offers a useful view of the overall and segment operations of our business. We define Adjusted EBITDA as Net income (loss) attributable to Gannett before (1) Income tax expense (benefit), (2) Interest expense, (3) Gains or losses on the early extinguishment of debt, (4) Non-operating pension income, (5) Loss on convertible notes derivative, (6) Depreciation and amortization, (7) Integration and reorganization costs, (8) Third-party debt expenses and acquisition costs, (9) Asset impairments, (10) Goodwill and intangible impairments, (11) Gains or losses on the sale or disposal of assets, (12) Share-based compensation, (13) Other non-operating (income) expense, net, and (14) Non-recurring items. The most directly comparable U.S. GAAP financial performance measure is Net income (loss) attributable to Gannett.
• Adjusted EBITDA margin is a non-GAAP financial performance measure we believe offers a useful view of the overall and segment operations of our business. We define Adjusted EBITDA margin as Adjusted EBITDA divided by total Revenues.
• Adjusted Net income (loss) attributable to Gannett is a non-GAAP financial performance measure we believe offers a useful view of the overall operations of our business and is useful to analysts and investors in evaluating the results of operations and operational trends. We define Adjusted Net income (loss) attributable to Gannett as Net income (loss) attributable to Gannett before (1) Gains or losses on the early extinguishment of debt, (2) Loss on convertible notes derivative, (3) Integration and reorganization costs, (4) Third-party debt expenses and acquisition costs, (5) Asset impairments, (6) Goodwill and intangibles impairments, (7) Gains or losses on the sale or disposal of assets, (8) Other items, including (Gain) loss on sale of investments, and (9) the tax impact of the above items.
• Free cash flow is a non-GAAP liquidity measure that adjusts our reported U.S. GAAP results for items we believe are critical to the ongoing success of our business. We define Free cash flow as Cash provided by (used for) operating activities as reported on the condensed consolidated statements of cash flows less capital expenditures, which results in a figure representing Free cash flow available for use in operations, additional investments, debt obligations, and returns to stockholders. The most directly comparable U.S. GAAP financial liquidity measure is Cash provided by (used for) operating activities.
• Same store revenues is a non-GAAP financial performance measure based on our U.S. GAAP revenues for the current period, excluding (1) acquired revenues, (2) currency impact, and (3) exited operations.

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 or liquidity under U.S. GAAP and should not be considered in isolation or as an alternative to net income (loss), margin, income (loss) from operations, cash flow provided by (used for) operating activities, revenues, or any other measure of performance or liquidity derived in accordance with U.S. GAAP. We believe these non-GAAP financial performance and liquidity 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 core 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 Non-GAAP Measures

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 exclusion of the cash portion of interest / financing expense, income tax (benefit) provision, and charges related to asset impairments, which are items that 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 performance and liquidity 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 (loss), margin, income (loss) from operations, cash flow provided by (used for) operating activities, revenues, or any other measure of performance or liquidity derived 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 measures. 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 condensed consolidated financial statements included elsewhere in this report. We also strongly urge you not to rely on any single financial performance or liquidity 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 release 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 2025-2026 business outlook included in this release include certain non-GAAP financial performance and liquidity 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 future 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 U.S. 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 U.S. 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 U.S. 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 September 30, 2024

In thousands

 

Domestic Gannett Media

 

Newsquest

 

Digital Marketing Solutions

 

Corporate and other

 

Consolidated Total

Net income (loss) attributable to Gannett

 

$

9,639

 

 

$

14,279

 

 

$

5,685

 

 

$

(49,256

)

 

$

(19,653

)

Benefit for income taxes

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(6,429

)

 

 

(6,429

)

Interest expense

 

 

—

 

 

 

—

 

 

 

—

 

 

 

25,959

 

 

 

25,959

 

Loss on early extinguishment of debt

 

 

—

 

 

 

—

 

 

 

—

 

 

 

176

 

 

 

176

 

Non-operating pension income

 

 

(1,307

)

 

 

(1,886

)

 

 

—

 

 

 

—

 

 

 

(3,193

)

Depreciation and amortization

 

 

23,872

 

 

 

2,114

 

 

 

6,434

 

 

 

7,978

 

 

 

40,398

 

Integration and reorganization costs

 

 

13,362

 

 

 

84

 

 

 

1,030

 

 

 

2,831

 

 

 

17,307

 

Third-party debt expenses and acquisition costs

 

 

—

 

 

 

—

 

 

 

—

 

 

 

247

 

 

 

247

 

Asset impairments

 

 

87

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

87

 

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

 

 

1,032

 

 

 

(443

)

 

 

4

 

 

 

191

 

 

 

784

 

Share-based compensation expense

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,905

 

 

 

2,905

 

Other non-operating income, net

 

 

(266

)

 

 

(231

)

 

 

(1,410

)

 

 

(1,072

)

 

 

(2,979

)

Non-recurring items

 

 

(117

)

 

 

—

 

 

 

—

 

 

 

7,388

 

 

 

7,271

 

Adjusted EBITDA (non-GAAP basis)

 

$

46,302

 

 

$

13,917

 

 

$

11,743

 

 

$

(9,082

)

 

$

62,880

 

Net income (loss) attributable to Gannett margin

 

 

2.1

%

 

 

24.0

%

 

 

4.7

%

 

 

NM

 

 

 

(3.2

)%

Adjusted EBITDA margin (non-GAAP basis)

 

 

9.9

%

 

 

23.4

%

 

 

9.8

%

 

 

NM

 

 

 

10.3

%

NM indicates not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended September 30, 2023

In thousands

 

Domestic Gannett Media

 

Newsquest

 

Digital Marketing Solutions

 

Corporate and other

 

Consolidated Total

Net income (loss) attributable to Gannett

 

$

41,544

 

 

$

12,993

 

 

$

5,902

 

 

$

(63,005

)

 

$

(2,566

)

Provision for income taxes

 

 

—

 

 

 

—

 

 

 

—

 

 

 

16,144

 

 

 

16,144

 

Interest expense

 

 

—

 

 

 

—

 

 

 

—

 

 

 

27,918

 

 

 

27,918

 

Gain on early extinguishment of debt

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(2,717

)

 

 

(2,717

)

Non-operating pension income

 

 

(719

)

 

 

(2,210

)

 

 

—

 

 

 

—

 

 

 

(2,929

)

Depreciation and amortization

 

 

27,099

 

 

 

2,845

 

 

 

6,015

 

 

 

4,685

 

 

 

40,644

 

Integration and reorganization (reversal) costs

 

 

(3,649

)

 

 

110

 

 

 

630

 

 

 

1,954

 

 

 

(955

)

Third-party debt expenses and acquisition costs

 

 

139

 

 

 

—

 

 

 

—

 

 

 

231

 

 

 

370

 

Asset impairments

 

 

188

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

188

 

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

 

 

(23,446

)

 

 

(19

)

 

 

131

 

 

 

—

 

 

 

(23,334

)

Share-based compensation expense

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3,944

 

 

 

3,944

 

Other non-operating (income) expense, net

 

 

(422

)

 

 

(297

)

 

 

897

 

 

 

(575

)

 

 

(397

)

Non-recurring items

 

 

15

 

 

 

89

 

 

 

—

 

 

 

3,110

 

 

 

3,214

 

Adjusted EBITDA (non-GAAP basis)

 

$

40,749

 

 

$

13,511

 

 

$

13,575

 

 

$

(8,311

)

 

$

59,524

 

Net income (loss) attributable to Gannett margin

 

 

8.2

%

 

 

22.0

%

 

 

4.8

%

 

 

NM

 

 

 

(0.4

)%

Adjusted EBITDA margin (non-GAAP basis)

 

 

8.0

%

 

 

22.9

%

 

 

11.1

%

 

 

NM

 

 

 

9.1

%

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 September 30,

In thousands

 

2024

 

2023

Net loss attributable to Gannett

 

$

(19,653

)

 

$

(2,566

)

Loss (gain) on early extinguishment of debt

 

 

176

 

 

 

(2,717

)

Integration and reorganization costs (reversal)

 

 

17,307

 

 

 

(955

)

Third-party debt expenses and acquisition costs

 

 

247

 

 

 

370

 

Asset impairments

 

 

87

 

 

 

188

 

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

 

 

784

 

 

 

(23,334

)

Other items

 

 

(610

)

 

 

42

 

Subtotal

 

 

(1,662

)

 

 

(28,972

)

Tax impact of above items

 

 

(4,392

)

 

 

6,353

 

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

 

$

(6,054

)

 

$

(22,619

)

GANNETT CO., INC.

 

NON-GAAP FINANCIAL INFORMATION

FREE CASH FLOW

(Unaudited)

 

Table No. 7

 

Three months ended September 30,

In thousands

 

2024

 

2023

Cash provided by operating activities (GAAP basis)

 

$

33,745

 

 

$

20,631

 

Capital expenditures

 

 

(13,983

)

 

 

(13,259

)

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

 

$

19,762

 

 

$

7,372

 

(1) For the three months ended September 30, 2024 and 2023, free cash flow was negatively impacted by interest paid of $8.7 million and $10.4 million, respectively, integration and reorganization costs of $7.3 million and $9.6 million, respectively, and other costs of $12.4 million and $4.1 million, respectively.

GANNETT CO., INC.

NON-GAAP FINANCIAL INFORMATION

SAME STORE REVENUES - CONSOLIDATED & DIGITAL

(Unaudited)

   

Table No. 8

 

Three months ended September 30,

In thousands

 

2024

 

2023

 

% Change

Total revenues

 

$

                  612,439

 

 

$

                  652,871

 

 

(6.2

)%

Currency impact

 

 

(1,585

)

 

 

—

 

 

 

Exited operations(1)

 

 

(2,152

)

 

 

(10,345

)

 

 

Same store total revenues

 

$

                  608,702

 

 

$

                  642,526

 

 

(5.3

)%

(1) Exited operations include (i) businesses divested and (ii) the elimination of stand-alone print products discontinued within the media markets.

       

 

 

Three months ended September 30,

In thousands

 

2024

 

2023

 

% Change

Digital revenues

 

$

                  277,386

 

 

$

                  263,644

 

 

5.2

%

Currency impact

 

 

(587

)

 

 

—

 

 

 

Exited operations(1)

 

 

(2,123

)

 

 

(4,065

)

 

 

Same store digital revenues

 

$

                  274,676

 

 

$

                  259,579

 

 

5.8

%

(1) Exited operations include (i) businesses divested and (ii) the elimination of stand-alone print products discontinued within the media markets.

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 paid 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 paid subscriptions, core platform revenues 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. 9

 

Three months ended September 30,

In thousands, except ARPU

 

2024

 

2023

 

Change

 

% Change

Domestic Gannett Media:

 

 

 

 

 

 

 

 

Digital-only ARPU

 

$

8.24

 

$

6.83

 

$

1.41

 

 

21

%

 

 

 

 

 

 

 

 

 

Newsquest:

 

 

 

 

 

 

 

 

Digital-only ARPU

 

$

6.49

 

$

6.46

 

$

0.03

 

 

—

%

 

 

 

 

 

 

 

 

 

Total Gannett:

 

 

 

 

 

 

 

 

Digital-only ARPU

 

$

8.16

 

$

6.82

 

$

1.34

 

 

20

%

 

 

 

 

 

 

 

 

 

DMS:

 

 

 

 

 

 

 

 

Core platform revenues

 

$

119,158

 

$

120,836

 

$

(1,678

)

 

(1

)%

Core platform ARPU

 

$

2,777

 

$

2,636

 

$

141

 

 

5

%

Core platform average customer count

 

 

14.3

 

 

15.3

 

 

(1.0

)

 

(7

)%

Table No. 10

 

As of September 30,

In thousands

 

2024

 

2023

 

% Change

Digital-only paid subscriptions:

 

 

 

 

 

 

Domestic Gannett Media

 

1,953

 

1,889

 

3

%

Newsquest

 

103

 

75

 

37

%

Total Gannett

 

2,056

 

1,964

 

5

%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241031042049/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