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Gannett (GCI)

Participants
Ashley Higgins IR
Mike Reed CEO
Doug Horne CFO
Jason Bazinet Citi
Call transcript
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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Gannett Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Ashley Higgins from Investor Relations. Please go ahead.

Ashley Higgins

Marcella. you, Thank and to everyone, for our joining Good Gannett’s thank third today discuss quarter call morning, you XXXX results. call and Financial Presenting Chief today’s will Reed, Mike on Chairman Executive Officer; Doug Officer. Chief Horne, be and

During the for financial quarter. we this will call, Gannett’s results discuss

posted earlier navigate have press the release. that to in supplement you website, you earnings If find addition will Gannett we an to our

it be We this today provides as you it call, on with referencing will quarter’s the performance. detail additional on

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In results as statements made today. expectations. discussed differ during in disclaimer Risk based statements to addition, could this statements as those forward-looking in described Factors current call and that We made the presentation, respect encourage with Gannett’s Actual upon the forward-looking events filings from future results you and events well SEC. with to are materially the are the read

non-GAAP the forma In discussing pro financial addition, and during some information today. be will we call

reconciliations Legacy measures The pro our find basis. supplement. presents New Legacy You non-GAAP information on earnings most and a Media to comparable measures consolidated the forma can of Gannett GAAP in the

offer to Lastly, on this offer that I you solicitation in sell The CEO. any purchase nothing may or and audiocast, like of an constitutes a turn Chairman the would to interest like be copyrighted call to to an without Gannett. to and duplicated, remind Reed, of With Gannett Gannett’s that, I’d not our call material and reproduced webcast consent. or re-broadcasted Mike over

Mike Reed

everyone. morning, Day. Ashley. Happy Election Good Thanks,

operating especially growth and balance and relates our to to as sheet, as to the it share performance, long-term some with performance, updates relates general you it We down, have debt our paid categories. morning very financial positive near-term this

talk So to this, about morning. you we're all this to excited

acquisition perspective. perspective for In which both trend dollar performance, to an from with revenues quarter were the quarter, absolute showed the on second rebound were down the financial pleased start the same-store strong basis third and the the Gannett. to side. XX%. revenue especially see the is This both and prior a resurgence second XX.X% quarter our with significant on by strong we The a from was from Let's improvement third predominantly EBITDA, year, a forma revenue, advertising which performance in down quarter digital of Legacy for was driven a pro improvement

TODAY, the team sales is driven our national by great now reaching and across Our at a three revenue digital over from in advertisers annually USA customers USA with prior interest display the strong over advertising quarter grown TODAY, and growth years. local X% our had XX% the continued past digital sales national At network. year, for has

to revenue in team Additionally, reach see within return local we're our to very the core pleased year-over-year quarter. third sales growth

the the at local end to percentage to that been of closely small. One is saw have have campaigns, digital watching that our total decline percentage of spring, we're paused. been metrics back throughout high level pandemic high campaigns At level of see this this to And XX%. X%. third lockdowns we the At continued level quarter, so pretty of percentage X% during that business campaign, to marketing customers have was the fourth the as spike fallen quarter. we X% approximately to Pre-COVID from pleased the the the paused coming the in as has small

and measurement the digital very We local this our over QX to and beyond. service reach by grow ability revenues year encouraged in are prior marketing

highlighted opportunity year during And an and was we the achieved for Gannett Within subscription on surpassing further business BXC as a significant led quarter. a focused in over model important our X business. paid and milestone subscription to to last category, for is quarter, both with we highly million our growth transitioning I digital-only BXB, subscription call, over XX% by see earnings on Growth prior digital only paid the subscribers. the the continue

to expect the accelerate to third of above I the the our XX% impressive events highlight in We quarter. currently. XXXX business also virtual We performance we during low quarter. hosted growth would like trend XX are seeing the range in events

We from of see over race despite our quarter, engagement Awards. with Choice in high communities the being registrations paid over these for our continue viewers virtual, to communities and events, XX,XXX XX,XXX

as as through comparing will period. many increase prior drive down less expectations our We continue year-to-date can our the other believe team's the benefit a category. revenue year, to made, to to necessary ability too as comparable live experience business our virtual and live we growth revenue XX% also we XX% and prior revenues the of events, with the events. to to more future see this as than enhance will We demonstrates create revenue to prior companies our additional pivot This as year year, we While revenue combine consumer announcing pivot this when events and virtual compared the impacts previous result. or in virtual is as return believe growth the to well the experience quick events,

measures. the Turning expenses, we our synergies specific and efforts regular being prior our way year. over expenses management, to which reduction down our in XX% maintained resulted expense implementation, This on focus COVID-XX operating additional cost of includes

for temporary synergies year the continue including we the of revenue to than our environment. the acquisition of and in of in of saw vigilant November. target in since savings been the current when Through announced Media third million $XX.X million contribute we nearly are the of a replaced we the remain $XXX we within the the cost over the did quarter. we pleased saw savings the quarter over efficiencies second and very two-thirds year-to-date, we to New permanent a structure uncertainties realized in we economic last The analyzes sold quarter, goods finding It measures, Gannett implementation. acquired navigate third set, We higher progress savings. This Gannett, the with to $XXX of course cost improvement synergies on certain standpoint, quarter has and however, we've Over million. have quarter made with from wage end we more of cost furloughs reductions and

the of timeframe the third in a We synergies improved expect quarter, stated quarter. $XXX end for quarter. The strong the stated rigorous of performance million in EBITDA synergies, $XX time in in to of from the cost $XX management revenue led million $XX are million annualized in we of reductions expense goal XXXX. up our within continued $XX realize and remain in well performance ability fourth additional exceed of combination from confident the We to our to our second to million and million

That seasonality in Excluding a typically smaller than spend. represents by the adjustment was non-cash driven taken quarter. of XX% shrink third growth second as actually the over quarter, you know quarter many $XX second quarter million. in And EBITDA the is the third advertising

expect month uplift both what the We on the of the fourth we've standpoint, through from quarter. significant in pretty EBITDA first QX seen revenue and based

Turning we well asset to paying sheet, sales, highly non-strategic down real cash balance free through the remain as debt, flow. and focused as fully both estate on

paid proceeds from we quarter with down estate predominantly million sales. real third $X.X the During

sales We'll of and these debt. accelerated we million through five the to the However, fourth first asset asset pay sales $XXX estate the the use real with quarter, pace proceeds weeks the asset non-core from in down quarter. about sales, of of

debt flow, both repayment the to debt sales targeting and $X.X between we're expect Looking ahead, year billion. billion from net we and and additional end asset excess with cash of $X.X

balance sheet on the has strong $XXX million with position at remained very of cash end of liquidity Our quarter. the third the

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Lastly, a and a welcome future help Strategy discuss guide Board subscription and positions our our leadership in early who that digital experience, has which He calls I team. leadership vision of as look consumer to at Chief to on us are Gannett. him thrilled had our Directors Freshly, member Officer, we Spotify model. September. and His Mayur to marketing, our to wealth background led a join Marketing includes will he for served forward he us joined us new transition business of previously and I Gupta, and executive wanted of having joined in subscription strategy brings to our

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Doug Horne

Mike, everyone. you, morning, good Thank and

the burdened with And by expenses approximately a from year a third quarter. Gannett result as basis, a $X were year sequentially to compared of forma secular measures XX.X%, to as second the the associated well up For revenues prior adjusted were forma XXX.X% basis QX compared of pro distribution acquisition the as rate XX% QX, which in single adjusted a in response down synergies as the On Legacy a the with continued the same-store total $XXX.X million decline pandemic. savings. EBITDA partially prior of reductions. quarter taken shrink well was due adjusted cost The which advertising pandemic, slightly operating XX.X%, reflects in offset expense ongoing million, and the Adjusted reduced approximately improvement reflecting QX. operating quarter as quarter, was in during as XXXX. slowdown a of on true as with revenue quarter, in impact EBITDA economic quarter up well revenues copy pro EBITDA the we with synergy saw continued and of quarter. as $XX lower on initiatives, cost compared the to brought was Mike in by mentioned, strong million totaled as and revenues, the integration to margin channel. Notably, delivery, EBITDA print reserves, This by in negative regular was as by the both from were of a home related the improved company's with note impact Important that reductions

publishing on Now year to the basis, segments. million, the disruption was a pro continued to revenue segment our quarter from print moving advertising that as as XX.X% within decreased forma same-store total, well in second reflecting on the compared pandemic. The $XXX.X the revenue pressures, secular prior the

programmatic advertising XX.X% decreased approximately demand. This digital Display of digital pro well driven by quarter second the decreased Digital travel national premium negatively prior marketing of the XX.X% advertising is year the However, from basis. and impacted sales, over and quarter the quarter. the services copy as forma in as growth we points as XX result a on improvement digital from ongoing XX points same-store pro year-over-year saw of and revenues advertising and the the remain this trends, the to as to very pandemic activity. the lower as third we the see reflects result forma pleased the pandemic. on pressure marketing rebounding to display were of the a improved Within same-store basis, year-over-year And Circulation that consumer on improvement reflects to sales which revenue of quarter, compared digital services. demand Digital disruption during compared second of for single

delivery of the forma with on and digital-only trends, consistent to home home subscriptions. Our have result XX.X% pandemic in grew as terms saw on pro Paid trends subscriber pro with margin basis, in Adjusted basis a we the XX.X% a not compares subscribers Digital-only quarter, forma remained of third X,XXX,XXX grew the a compared a prior a delivery. negative QX. seen QX publishing million, approximately circulation still year-over-year the impact to which margin as segment for year. $XXX.X revenue EBITDA we in of XX.X% totaled the favorably representing XX.X%

a more year-over-year see representing during the of revenue total QX the to segment basis basis, the quarter, the local is which million, X% XX% where the XX.X% reach segment, of marketing third the $X.X margin in a of reactivating height For QX. significant forma campaigns, which quarter decrease XXX decrease experienced pro a EBITDA improvement following QX pauses is driven same-store the was temporary COVID-XX Adjusted in The improvement $XXX.X improvement solution their the by lockdowns. was million, point business, for solution continue margin. we third core from our the marketing clients from the totaled marketing than on in we

to million was was effective pension non-operating and reflects quarter of the $X.X ended by small billion quarter million quarter. the Our for reducing down attributable charges $XX.X paying million income, the QX decrease in which and $XX.X quarter. goodwill amortization, GAAP rate debt effective $X.XXX the the company's of which non-cash the net company's driven with impact to had the both associated tax depreciation slightly The of the loss of are and of million, Gannett items. $XX.X second which benefit a annual rate, recognized tax during with primarily intangible after We

net as cash to at in end the projects, ongoing development, billion. during Our real was debt $XXX the balance $X.X investments reflecting as of resulting quarter, totaled facility related expenditures $X.XXX digital well estate million QX, product million of Capital consolidations.

as on down and September to will approximately top paid we to be burden Subsequent our discussed Mike priority. continue approximately fiscal closed pay debt. continues in down of real earlier, million to million service During million interest, the quarter, $XX in XXth, $XX to we decline will paying and estate sales as debt. debt debt non-core we pay down And asset our $X successfully approximately sales. we proceeds use our these And

to under fourth We also debt million off additional an pay the quarter facility. $XX our plan during

third billion billion these of the our $X.XXX result under will outstanding credit facility of from the all a reduce of As our actions, to $X.XXX then as debt of the end quarter.

million under property Additionally, end of $XXX to sell over to and of million of our estate million currently XXXX. real remain we have $XX ability confident in $XXX we the contract, by

our We now Operator, very liquidity for our line to we in strong position open you obligations satisfy confident ability term loan. can are the under our in remain and questions.

Operator

from first of question [Operator Bazinet Citi. Jason instructions] line from comes Your the

Your open. line is

Jason Bazinet

Good morning, guys.

Mike Reed

Hey, Jason.

Jason Bazinet

there? to a think had just $X.X $X.X billion by I quick end of debt I reduction do on you year, the happened that, question. What to the commentary down target of think got and 'XX the said by you the I end the billion.

Mike Reed

of By this the end year. Yes.

Jason Bazinet

asset debt is keep think assume continues [multiple And debt estate speakers] and balance? this away at you and in do Or you million sales reduction million about that real the just then of and chipping something 'XX? the else just talked Should just you we $XXX $XXX potential sales

Mike Reed

Yes. great question. Jason,

we as closer billion to this going $X.X be $X.X to year. billion of $X.X said, end to think we're So debt we the billion, net by

in We as will real have have we'll an debt pay year. sales pay additional $XXX well. million flow million But next downs, to $XXX that also cash estate down debt

still to liquidity our as our XXXX refinance confident of the for plan. we also And great. for and excess our ahead plan B in current well. our been which we loan we’ll ability us, feel our to asset of cost of sales lower sweeps, expense term have refinance, with lower combination leverage The which ago So is cash as the year remains flow interest the in pace

get should a refinancing, number XXXX it we a we as lower So, for cost be as a have dollar debt. lower absolute to to big that boost and as well debt the

Jason Bazinet

one just I ask And Yes. can follow-up.

understand as seems of a what's on of Can of ad year? store color It trends, much you like what trends? provide the color same provide In of and ads with in as just just in the circulation all we market? those terms sequentially. a bit didn't bit is circulation maybe can terms the But little going we think you into you of move reasonable little next did sort improve as terms of

Mike Reed

Yes.

side, and digital the about XX%, on grew So XX%. our Doug as to paid mentioned, closer revenue, digital XX%, grew

trends that's print single also on the and expect primary What copy. a negative side side, on where we're from moderate accelerate on on is to Jason, trends. digital those goes. standpoint, XXXX our to in But, those print the had retention impact trends biggest the customer service We investment focused

on the is the with the reliance been USA down, which So copy hotels. picking especially a single it TODAY, on out up has big airports traffic and

XXXX. in USA down copy, XXXX, from to we said you'll in in get think seen of do as single those come I to XX% So, those trends, try circulation the the I down trends And on trends actually like see we the we've get third our you'll think think better primarily side, we'd I and print in downturn inside XX% in were cycle we quarter. TODAY. see the

Jason Bazinet

helpful. Right. you. Thank Super

Operator

back further the the this to presenters. no time. I'll call questions at are turn over There

Mike Reed

you. Yes, thank

XXXX for for to strategy increasing current paid business, now contributor and in base, trends for and national drivers sharing as our is mentioned especially and only vision third look debt marketing good digital starting and is rebound to a subscriptions growth debt to next retaining to advertising our mentioned we made grow the yearend. and with vastly in beyond. the ago. XXXX our growth digital EBITDA in We early net realm, to very on billion digital digital, subscriber see million reduction good which We see in repayment to since revenue acquired earlier, our to fourth nicely with kind position are we're our billion mentioned, And just services also based accelerating us, our clear they business with virtual year's reducing We balance $XXX subscription as margins. quarter our business digital But with marketing Media $X.X digital pleased And improved ended the a significant is we've a and $X.X Gannett future, in of also, our liquidity results beyond. events. business, our This So you and year quarter and to progress our by approximately see about quarter. sheet. just growth. while we live closing, the recap, EBITDA events one just the earlier, returning all as saw growth and huge significant cash a continue we of subscriptions, mentioned to New significant events path potential upside more forward service businesses, to on enormous opportunities We grow digital and a in see

continued this I to for thank commitment difficult all resilience colleagues their take and during second So, my at communities, want year. Gannett our their incredibly just to a to

Day, safe year. and us and for and everyone you forward today. the the Election quarter updating So holiday for get year Thanks as look the I everybody joining wish and joining. a first happy on next close healthy we season into thanks call of

Operator

This concludes today's conference call.

You may now disconnect.