Gannett (GCI)

Trisha Gosser SVP, Finance and IR
Mike Reed Chairman and CEO
Doug Horne CFO
Doug Arthur Huber Research
Call transcript
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Greetings. Welcome to the Gannett 1Q Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. turn over to Trisha your now Gosser. will the to conference host I Ms. begin. you Gosser, may

Trisha Gosser

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

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

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

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

Before you that begin, this let recorded. being we me please call remind is

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

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

reconciliations find comparable earnings to the our measures in can You the non-GAAP GAAP supplement. of measures most

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

Mike Reed

to results progress in operations our earnings on us joining first witnesses show respects. quarter for strategy call. highlights Thanks morning in everyone. morning, our Good I'm stated all pleased very that Trisha. our report almost against significant Thanks, this

expectations structural year-over-year for First year-over-year showing results and in EBITDA and internal normalizing changes of quarter growth some after adjusted continued our were ahead financial comparisons.

trends. We're same-store impacts QX sequential anticipate we COVID-XX March that. pandemic continued pleased the of produced XXXX. was EBITDA trend and from to month QX largest we our as revenue sequential in adjusted improvement We and to the of best see cycle improvement a in also quarter, the in to start QX,

revenue in lead adjusted expect year XXXX of significant as second to to for to year-over-year low calls, quarter, last growth total that mentioned our along post targets. the internal a single than XX% so we're ahead under little EBITDA digits of with mid growth is in that quarter. and growth full that's second We to and expected more to adjusted And far XXXX in compared bit a EBITDA we've couple pace the

we first the the we of improve also Within quarter. cost and significantly structure Company the the of quarter, lowered the capital debt to continue in

B converts our term For also XX.X% converts the of got quarter time for in issuance that of which first end the have approval February we the loan and we XXX those that B X%. approved been at periods. the now, term while a QX the Company during rate plus in shareholder was refinanced a And quarter, the loan LIBOR a have for following with and we did

income on and in converts of in we through we perspective to the and overall the run in take detail. That's first then a to the and before through cost XX.X% outflows. Doug go point, have of went cash our that quarter, will value the year our our statement Accounting of significantly we income the our made it. We approve part from XXX.X million I'll convert financial to changes the from shareholder had shareholders of in more income charge because the approval given up lower We're need make steel loss So, date. rules significantly statement our statement. moves X.XX%. on lowered them the mark-to-market beginning the showing on statements to about the million of course share financing a of which XXX.X price Last capital much require the that of put non-cash

Now with have And mark-to-market any income related in done, extinguishment refinancing that won't we changes the million shareholders non-cash those costs to to of done, incurred statement XX.X deal order get of approved running have we incurred in deals the we those million that XX.X transactions. get order Also, through all associated to longer. debt. charges in

those into million, of noting to XX.X a big XXX.X that account, charges since gain number. million net so goes XX.X headline worth take from your net million. three net Thought shareholders loss loss is that a before net you of was If a taxes actually gain for such

XXX,XXX. subscribers more digital fantastic relation quarter subscription revenue Overall our the XX% our less Further by had operations, XX% to largest adding our advertising turning our technology as X.X We digital surpassed company a the subscribers a our revenues year-over-year. over grew grew prior revenue, million QX, expectations. ownership outperformed and digital new revenue real paid than making made over in the than internal in of accounted again, digital for Now our XX% single it year, we being in primarily versus total and quarter a goal revenues. approximately having print revenue for XX% digital of was of total combined up streams towards of with progress

with as We XXX November synergies. execution cumulative are of million a going synergies Gannett well of back to the We've XXXX. annualize on our implemented pleased of acquisition

are our of offering XXX of QX implement And we the the marketing of of confident quarter that and We of the When of last I'd spoke while by of total quarter. or drives desire. we this by our on ahead few in of subscription minutes first consumers products delivering strategy as expertise a advertiser's key digital original to resulting a year, Now experiences spend million audience earnings more outlined first on of our our end to synergies you well approximately February, engagement led goal the growth by to to in and our a ability XXXX. our our commitment business the during those million end in content XXX of deeper synergies. of annualized updating end and each delineated XXXX, like five to progress call additional strategy we the pillars the

Our is accelerating subscriber first digital pillar growth.

As XXX,XXX the I with mentioned, only year-over-year. digital subscriptions X.X new quarter our importantly, XX% million combined subscribers. as delivered of a quarter-over-quarter surpassed we in growth company And net largest

this to valued new anticipate subscription and reach Our that XX markets as a subscriptions unique our content. high months and responded path enhanced as highly to and next target subscription years. million five growth localized well consistent on paid digital new offers product of and of coming performing more the in and accelerate We only launches marketing the creative the will in well

into The digital digital aggressively driving business marketing and pillar services both relationship internationally. expanding growth local second domestically services by marketing engaging is revenue and our recurring markets, clients more a our in

We enables stable retention, through continue core platform. our client expect like The which our product localized billing for opportunities marketing platform and marketing recurring we to see progress to with cycles, to set, subscription our more revenue, clients. performance improved stronger higher digital drive

in with superior QX results is drive the Our drove of local can since growth double-digit record significant that revenue, prime believe growth the to year-over-year productivity and for core team in a example XXXX. metrics continued in growth we productivity the quarter, The highest our we sales and all achieving returning team businesses.

pillar The and advertising. traditional businesses our print across is subscriptions third optimizing print,

and of lifetime profitability We continue value on most. subscribers This expanding and improvements drive operation maximizing retention print the we programs of value the to includes traditional content economies Through through implemented subscribers. know of our optimizations. our newly process loyalty the scale, and our print

been we They By grow we not businesses great have leveraging identify, potential highly examples the to USA Today about for invest activity test over first stable We've could to and intentional delay us. prioritizing our events. business. of to the into We to allowed opportunities footprint, mentioned focused highlighted we of events returning new few slowly media this reflects time, we very subscriptions a retaining had built current quarter. is quarter, to We're ventures, anticipated are it for highlighted than quarter, quarter, our in. our opportunity I during base. the over in talk unique we're we significant to in vision. invest brands, but print And widely Our examples going year. talk last in-person a But Fourth print be trusted subscriber events when that And and and in the that couple events the while base support accepted. couple promotions typical couple which to we areas last until live that about. quarter. growth. back investments a in of a widely significant network new our have excited an adventures and to And reach, has this while is growth later was our on lighter about particularly our more expect have quite and revenue, first pillar subscriber and We continue do for year past represent the are events several

level the at country level. that ability reach we're believe first that sports poised soon. to the well to The leveraging gaming grow U.S. grow content years, Online state sector so in second unparalleled at in the sector consumers our gaming we expect the positioned as and exploring to sector. the deep X by the both national tandem across the game the we We is And legalize quarter sports U.S. it to reach in and is community partnership XX announce this to our brands. with a in with continues substantially are is very over business local the in to next actually

that of journalists. some our access network we through on dedicated a partnership. in and believe sports and Our known and unique plan counterparts are We to our engaged large of of local well that many sports readers most perspective cannot capitalize audience we national the with offer

or area of second archives tokens media are our leveraging our create is assets we The is to content. non-fungible our important most one exploring NFT's massive

are several the believe for We because it about opportunities Gannett. we excited creates NFT market new

Gannett's way and the to culture. monumental turn new of as enjoy an areas special experienced a such interest sports, historical pop and winning event, award coverage arts represents passion moments events, for First of consumers or

archives marketplaces. continues how a could incredible as for Second, we develop, see to be space in presents and our monetized business how new opportunity new this Gannett,

We are first opportunity the be about launching excited NFT upcoming and weeks. in this our we'll

five, culture to of focus. to purpose, center meaningful our diverse upon Finally, pillars inclusive equity building we customer diversity core organization. and our around and individual growth pillar are and committed number are Inclusion,

diversity for goals. those reach outlining March, We have workforce previously our XXXX. shared published just taking the inclusion And our to we're we in report goals first steps

for quarter, of. proud the also two we are were we During that recognized awards

XXX is of the score for do, the equitable discussion Campaign on in recognized by First, a be Index. more has to proud over a on financial our in best With year we the a and And performance Doug a while for row, for Equality second diverse there. for of highly the for the diversity Doug? to I'll are have America's workplace. to as we Forbes. Corporate Human Gannett quarter. for been first fourth we recognized taking inclusive, and a turn get year are employers very still that, we it on intent focused becoming detailed Gannett Rights work received And to steps Foundation's one row more

Doug Horne

Thank everybody. you, morning, good and Mike,

XX.X% total quarter. QX the decrease a billion, of to $XXX.X operating were as For prior revenues compared

year as XX.X% print quarter, economic decreased as the pandemic. decline revenues compared home with as by operating on basis due delivery well prior revenue, to and secular the in slowdown the continued the same-store brought advertising the continued On

first year. digital were for marketing XX points. the impacted XXXX. trend with XXXX revenue of by of the the That impacts basis Marketing trends negatively industry QX The segment through incentives also Digital wide last $X.X in cessation $XX that the of million quarter Solutions million incentives First in totaled approximately generated same-store all certain by quarter

up year. impact lower $X.X we comparable million in a the quarter, totaled of place the to cost improved year-over-year. integration. prior Adjusted the XXXX, QX synergy $XXX.X way savings. was revenues of over well as permanent reductions by QX levels expense the and put offset million continued XX.X%, from performance reflects the last or which regular in So, cost saw This EBITDA pandemic, X.X% on in EBITDA quarter, in from to slightly basis merger by is same-store expenses The savings response In growing points as the adjusted XX.X% the margin and reflecting were synergies reductions the year. first basis XXX trends lower

the Print $XXX.X advertising first the year as Now of prior to the our compared basis moving revenue reflecting from continued the disruption was as segment well revenue million. XX.X% the pressures on pandemic. in sector to segments, decreased same-store on publishing the quarter a

with points well the audience trend. pandemic, campaigns as and to show the of impact continues as first Digital each metrics current as revenue comparisons XXXX in basis prior year. XXXX record QX recur the revenues as year ongoing period. onset and the QX improvement XXX quarter, to in to media experienced advertising in Digital XX.X% QX quarter with on of improvement print of compared reflecting services advertising digital benefited certain from we tied as cycling last the national not declined However, the decreased in QX also of strong media pandemic, against large the that same-store did compared basis the the marketing

grew still margin the basis consumer of comparison representing in of basis, $XXX.X reflecting from Home Delivery segment year-over-year as prior expansion compares points XX.X% which same-store the started services from of for the impact of to for quarter. show year-over-year the pressure the XXX our an XX.X% year publishing compared basis improving declined on segment year. pro cars.com. in Digital of QX slightly moderate travel pandemic, to revenues first XX.X%. trends, a and approximately same-store improvement quarter against XX.X% X,XXX,XXX tough to classified, favorably points by strategies. subscriptions. first continue basis the both pricing on first to historical the result well And the which prior a we on the impacted the XXXX, trends the a with the still same-store prior while XX.X% relationship Single a Digital in XXX Additionally, in marketing Adjusted digital in QX trends in basis, Circulation only continue trends activity total lower basis. copy revenue on as year-over-year of with revenue growth compared as show digital reflecting the same-store period, ongoing subscriber secular the down decreased the year-over-year. trend only as as more benefited year grew see the a subscribers the ARPU with improvement on declines basis forma of significantly EBITDA quarter, million, year-over-year on results

of was be points was decline of on attributed termination $XXX.X as Digital marketing million, the I first segment, the basis. can total trend the mentioned $X.X a For decrease solutions million in year-over-year to QX same-store revenue the in The industry QX of quarter the of basis earlier, wide from XX.X% worth programs that XXX the marketing incentive XXXX.

we the The trend well client month productivity business plants as platform best core growth strong slightly saw migrated the as a ReachLocal as conversions our metrics double-digit March in and the our strong creating performance in Digital of to onto retention to improving performance driven revenue the for Adjusted client core product Long first with totaled segment for certain EBITDA million, above term Solutions our representing XXXX while well drive the of and in higher in product set recurring Marketing results, clients. our QX quarter line quarter margins yielding quarter driven years. with are year-over-year, we quarter quarter-over-quarter Despite by was over of sunsetting count margin fourth single plant client system offerings. otherwise stronger X.X%. being declined X% $X.X new a five primarily where by expect

increase result our related derivative that in convertible to shareholder a Mike loan be the was net value as and loss our loss a $XXX.X X% will fact the XXXX, the to $XX.X derivative company's driven of associated mentioned, stock refinancing of XXXX. the attributable as increase reflects million results. with of the the And liability in by fair Noncash extinguishment million, noncash the from and terms a mark-to-market activity of levels. in we of due future loss connection In a early price in not the with notes February QX approval notes impact our year-end received convertible debt and there $XXX.X any million operating was on Gannett the which noncash term given

depreciation loss, reflected to not primarily interest assets with also which impact expense. by associated a from deductible partially related loss the $XX.X million of effective by driven the was valuation for offset deferred perspective, is net tax amortization. The quarter derivative tax rate Company's Our of and allowances tax the

Turning now to the balance sheet.

X%. rate repayments we in by As million cash fully last in of and million over earlier on post million of of at XX.X% just has debt first refinance the We year, repayments term $X.XX of our outlined were ended billion refinancing. funded $XX.X earnings including our the $XX.X outstanding call, in blended $X.X quarter assets our the These quarter sales made the debt Company putting with repayments through approximately original hand loan this of total and quarter. debt

generate We sales intention to net the $XXX incremental assets below to XXXX. end $XX EBITDA an million with expect adjusted reach of by to leverage billion of the times one firstly this year

the interest we'll to September keep perspective, was and cash XXth, totaled the debt loan will $X.XXX in at for infrastructure. investments our to cash $XXX.X Our principal of and of new and quarter million, approximately resulting balance product From first thereafter. that reflecting mind be on the a related then digital quarter payment end Capital X.X payments million expect making on please in development, expenditures operating the term technology billion. we make quarterly net

for loans with our Company in forgiveness in has the CARES of accordance by the guidelines. million affected certain meaningfully with XXXX, appropriate pandemic. PPP were subsequent approval funding connection to time, PPP of locations Act, that to we the in At $XX.X the in approximately apply the COVID-XX received Lastly, program March intend for XX, the of support

that QX we are line indicated our operator, second positioned believe we QX for open performance half well the as of as well that can earlier, are that for XXXX. With Mike the and you now pleased As questions.


we'll you. Our Instructions] [Operator the this be Research. first session. Please with proceed question question-and-answer Thank with Huber is question. time, conducting your At Doug Arthur from

Doug Arthur

are in wondering QX, quick do the XXX $X.XX of been And is on around monthly Mike, you've your million I'm take. revenues some on game different give number the what's to kind some math, you or execute ARPUs the in have your strategy so of mean, expand large, annualized; urban. just I are what's so million some sort plan this XX.X how are I markets, jack digital mean, some circulation? -- I you looks roughly So really if A, are circulation do digital like it many rural, up? small, if average, this

Mike Reed

Dough, Well, digital actually years we hit paid there's XX five us next that undertaking subscribers. the believe we that or are will allow more several initiatives in over to million

First the all have million are today X.X of local. we all,

gone you're on in they're develop continued markets to going allow So this developing referencing, is, to markets us to consistent will We've right as now. are which cities their growth based. practices we're best best size that those optimize those geography, and more market mentioned, and and rural, we whether the practices in or metering based

practices the the the First actually wind that on meter of consumers content for type the all, content type and best meter also behind demanding. clicks, of of goes are but the

drive combined will grow our So with local a the driven it's practices data best really subscriptions. our to really approach, data

to in we infancy And that process paid for that our and X.X also rolling digital million Today. subscriber just we We upside stages, strategy think present USA in will, significant its a current of are the is paid number. the out will

the out for and finally, going development, are thing in are category of well. our first more roll subscription on. in implementing being then part one as digital for first as we those UK And offerings sports also paid subscribers we're content and things focused paid strategy the of that's Newsquest We ones to the business are a our

we growth USA the the product then by paid from coming everything specific and turning specific million into five the So to higher growth Doug, locally higher digitally, Today XX category locally, see penetration data, other really years in a areas. next UK X.X million in growth over penetration through driven

Doug Arthur

more you look than concentrated early Is I but your today, in that larger X.X description? it's a smaller at mean, million days, your if the is obviously, markets fair it markets?

Mike Reed

like It's that's is top top our Yes, our majority That's biggest. the not not five, across XX or of markets that fair. XX so where concentrated it's like the that. It's top Biggest the not more is. markets. is

Doug Arthur

on still the just sheet, on mentioned balance do year. to sales XX XXX million of million potential Doug, think then I you And come asset this

I the In what's addition ahead in to of terms operations your free debt looking capacity to additional XXXX, that, for in mean, pay from of more kind off cash think XXXX? you flow

Doug Horne

well kind in excess sweep terms current our that outlook given think, of amortization of of at in both goes million an QX, to term we'll in kind excess the year, the and end of on making I the there's kind Yes, as between mandatory as start all the the cash of $XXX amortization of loan. cash

things two the as end the those of between as asset think really the significant well I sales, by down significant pay debt expect year. we


now Thank question-and-answer closing I turn Mike to over for Reed you. we will end call Ladies session. reached remarks. and gentlemen, the of the have the

Mike Reed

you. And thank to the the performance closing, I'd solid first in Okay, of reiterate quarter. like

we ability strategy expand growth. that also our And sustainable the did and so flow our year better As expect our for and I at our And we're to the long-term margins and few we results subscription expectations digital our than internal over our next create five onset, the with defined evolve also led we'll This first pleased substantially XXXX. and transform cash to exceed results strategy. believe with be EBITDA quarter our pillars. investing for long-term in or plan that of the years mentioned ahead our then do while revenue year. we company We're clearly

we're unparalleled largest to businesses. with quarter are are our making and SMB subscriptions. momentum, in new value sheet additional positioned create create and opportunities relationships we our optimistic drive standing highly new performance and shareholder for long adding business positioning ever media consumers and And in over meaningful strategy our will digital recurring are on With and revenue we executing the well both digital offerings gaming our trusted And shareholders leveraging and the beyond. NFT quarters already XXXX that by value streams for to demonstrated the growing We years come. sports our restructured reach, space our balance create to as significant

and we optimistic. joining and QX And call. weekend. we us forward everybody. on updating today Thanks our three quite appreciate excited Have quite you great look you to earnings in we're So, a months


This conference Thank disconnect and your lines concludes today's your you at for time. Have participation. this you may a great day.