Gannett (GCI)

Trisha Gosser SVP, Finance and IR
Mike Reed Chairman and CEO
Doug Horne CFO
Call transcript
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Greetings, and welcome to Gannett's Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn this conference over to your host, Ms. Relations. Investor Gosser, Trisha ma'am. ahead, go Please

You may begin.

Trisha Gosser

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

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

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

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

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

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

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

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

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

Mike Reed

a share details. many second and Thanks the us We've second for earnings this strong joining morning Thanks, quarter, had Gannett's Trisha, quarter to of and with morning, for call. are excited you everyone. good very

prior in second X.X% a prior EBITDA expectations quarter LTM second $XXX to adjusted million second $XXX year EBITDA of consecutive year. with basis, quarter outpaced the EBITDA adjusted quarter. the as XX% revenue results our and Our compared marks That adjusted Adjusted third to year-over-year to of financial our on growing EBITDA growing growth same-store brings quarter the million.

$XX approximately and in was X-year excess Loan done Loan Within balance Term the asset total sales billion. cash B. flow. under below our our B million our term debt $X with under repaid the quarter, This This brings principal Company with

the million hand. as strategic five important, $XXX of tremendous finished strategy our quarter make also against continue on We to with on our Equally cash we progress and long-term pillars.

remains subscribers, in net subscribers XXX,XXX result, high, previously set clear which priority. in up digital is the this a growth of the strongly, Company, now X/X This subscription vision or large. a our and net on first is XXX,XXX second total growing category adds. prior the subscriber for new quarter digital We Accelerating continued revenue our first digital TAM quarter strategy the quarter. laid XX.X% QX digital-only is out new about for subscription our strategy. million we we've and XX% top during that of adding year, our And revenue. X.X with ended make And outpaced digital is approximately the with had We the Company for growth in category growth our over quite previous the pillar As year. progress importantly, to and

by domestic peers. ComScore, XXX all as visitors the in unique across sixth reach quarter, month largest With million the has per measured digital Gannett the

a base We regional new and and through high-quality will are launches audience diversifying our further through continued actively to customer national younger investment attract product working that local, content. in expand our

our a of digital with, content With on portfolio leading which product, local are a subscription volume decisions engaging very subscription pipeline in new to crossword TODAY USA customers our by initial data, in our fully what subscriber still the properties, stemmed our products subscriber our rollouts, strategy June, our based digital-only million subscribers stage. paid of TODAY launched And and model product. at July, new USA from early launched of these is XXXX. we Prior all news and our is consumers subscription a USA During product. virtually steady new for to subscription a XX driving goal towards TODAY, progress digital-only

growth highly digital-only rooted produces. subscription Our is and unique our NETWORK the USA in content, valued TODAY

and over efforts experiments this growth TODAY about you, engaging as drive Just journalism, to markets impressive year-long the well to investigation with produce in for the both that strategies, surprise the accolades quality the our congratulate quarter. by category. publication. was Indianapolis subscriber national engagement for our Combine strengthen attacks. opportunities and our us USA at retention the our leaves local for I'd platform national this remind cross-functional well on in received as a our media data-driven optimistic markets like evidenced USA very Institute TODAY and into project, to police includes our winning NETWORK team Marshall run team AOL.com to The a XXX our as at growth dog acquisition alongside Invisible second as pullet subscriber local the and partners ongoing XXXX Star perform reporting

marks the years. and the journalists was in news fatal shooting named Pulitzer and Taylor categories, Breonna team. relentless work and investigation XXX days Courier finalist price a Journal awarded ensuing four Louisville for breaking Great This politer four by unrest. and winners public addition, two for five its finalists of into of the last service In two the coverage the Gannett

storytelling, on together their Breonna of social honors day Robert NETWORK In ABC The American voices outstanding vital worked series of finally, racism ABC joint two-hour USA won were collaborated Courier the on Awards work states of emerging reflecting knowledge the South journalists journalism. the in Taylor. several Book addition Confederate Dozens Courier wins Reckoning. received Journal of five And Journalism the grand explores TODAY with which our NETWORK of the and documentary across TODAY South. project, investigative the F. Her Society the region and excellence in called Tenet display on Say in staff prestigious Gannett's News for communities and in impact these Prize, documentary, the shadow a Chi and the Sigma and and brought compelling Pulitzer named titled, Nashville. XXXX the local serve. Louisville Indianapolis Name: prize Milwaukee, national Professional for news the we a scope awards accolades Delta USA visual News award, and from the winner of issues to reflects to the at Journal the the has the in our and of USA Peabody which expertise TODAY The national honoring on presence Journalists,

our growth I accelerating this for why platform As Digital of so off we about is bullish move Solutions, strategy, to Marketing our second our to in reiterate want which are business. pillar we

in SaaS or revenue First, this similarities many very and has from period-to-period. retention high that a a has to it business client subscription model

lead assist platform to akin or online process. We and dependent marketing in revenue partners increasingly generate optimize small subscription and across over are and importantly, their product. manage businesses a are grow helps their U.S., have more on strategy historically presence. digital these the businesses complex SaaS digital serve their establish with spend to an while their a with of management We optimizing XX% them There that XX and retained leads. digital month-to-month, ecosystem optimizing business to our We customer our increasingly digital businesses XX% to million businesses those

to counts, some ARPU knowledge operate, discuss involvement believe our at and which reaching our long-standing client and into Finally, a business we are true of DMS providing more that segment. we the by second visibility and medium-sized you the successfully this me our DMS quarter, have period-to-period. about retention given information additional highlights with communities small a we business let we in the With advantage our Starting quarter. moment from that, providing take revenue of

prior for basis, Marketing $XXX of up sequentially importantly, year that XX.X% second Solutions revenue compared QX. double-digit up platform the to Digital Our our on represented same-store a X.X% in growth million and quarter, to generated and segment the

so Our a we platform, growth prior XX% significant of core XX% quarter, our using the view accompanied terms over over which sequential growth and all first which The by as sequentially platform. of grew client that of in well. customers year, in business, category ARPU, digital the is coupled margins also off platform generated line and saw, of adjusted quarter, our measured growth as XX% services improvement this revenue we by growth first with was we in count customer saw EBITDA marketing with proprietary strong segment in metrics revenue from as the strong

quarter Our second XX.X% were and represents from in That's the segment. for to quarterly first this the strongest date our performance up margins X% quarter. in

are in for off progress business quarters We Marketing Digital sustained segment are optimistic several the proud the growth over platform. very has past of our made the this and the opportunity about of long-term Solutions

metrics now of Trisha Solutions Digital dive along Digital deeper Relations supplement, our in segment, of which earnings Investor on other our We with investors.gannett.com. Solutions have a available is our included at key website Marketing Marketing segment mentioned,

third optimizing traditional advertising. pillar and Our circulation strategic business is across our

base. is the the our making we've content news, term, to sports our added our local impacts Improving positive. and Within feedback and puzzles, of data that stabilizing over included in regional a the delivery newspapers very we XX and to in We've further more markets our Sunday third results early in print customer in to base home the content and value are investment lifetime to retention will quarter, order long subscriber markets subscriber expand that committed strategy circulation more second and and improve quarter. the the and newsrooms is in coverage,

and acquire content growth announced in and incremental became with we partnership the engaged payable X.XX% the Gannett strategic add five-year Ltd., With referrals prioritizing Gannett million to customer gaming the subscribers provider over great Typical $XX and insights XXX additional sports Gannett, positioned book XXX investments ability sports of sports in agreement also is Typical Group along is spend sites pillar and for the already and betting sports Typical's provide includes incentives equity fourth Typical sports U.S. odds. The to sports XX up enhance Our which U.S. fans, the in with audience gaming media sports analysis, more of enables Gannett area. Gannett incredible Typical Gannett partnership we sports journalists Typical in week, more as uniquely an he highly stake announcement, book iGaming with leading the for exclusive Last this a value our -- U.S. to exclusive dedicated U.S. expertise enthusiasts. readers Germany. and than stake than is is with loyal to sports and for with for With to in and portfolio, U.S.-based million betting our Gannett a reach in provider in bedding businesses. by the Typical Typical our

local passionate and network, We are fans excited in the grow give U.S. to TODAY this to portfolio USA in Company partner and with a our regional our on the leverage the NETWORK effort, in relationship Typical to Company direct brand them and to the their to

for We In Space Force effort and which partnership Museum huge be Gannett. was quarter, a Gannett Foundation. with the NFT, proceeds expect to its value the benefiting inaugural this also and Air creator a company-wide Gannett Missile Foundation launched truly the

to to meaningful ways to first and together Moon our ability collection new content as engage delivered use The newspaper the find and our bring technology communities highlighted audiences. unique we

ideate to archives Given produced tremendous look we a continue our digital bring the compelling year as our us unrealized these a to as we experiment large archive explore unlock history, It's creative value content. content the how and life and to to vast and archived XXX-plus innovative we've there's we'll of space, as offerings. through use to for

events events more Finally, second a muted we the in quarter, the slightly accelerate them with in robust XX% of return. ongoing although begin quarter, pandemic the saw of We live impacts XX in held have held person. to approximately the

increase from events XX XXXX. our revenue XX number XXXX and XX events of of events the growth from QX category. this to year versus is this events in slight prior in in of resulted in in Our up quarter up QX year from X.X% QX events the The

as year. the across TODAY the featured back to national the the and Michael School slow Awards, aired of belief our long-term we growth recognition first in future. Rob example in-person the are conditions celebrated serve, just the the business, half our in largest events, confidence variant These last Shaq, Lindsey Kevin program High local the Strahan, student the significant school in athletes and more co-hosted from best a awards, national we infrastructure to sports such which ever the While deep our few. of communities engagement, talent Garnett, in we night, the Also Sports events this for the name in can our of school sports the country Rodgers, continues driver professional by that that of a country. opportunity hoping is with This favorable high USA our rebound Gronkowski alongside combined in fuels for high a Aaron Vonn, Delta Company prime be

we we through set As to build will year. third of first this the continue look half on to early quarter, foundation the the

third the single year. to expect same-store low the prior digits to We the revenue grow in as compared in quarter

EBITDA the fourth year-over-year We we the first in in line expect performance of our quarter. for adjusted to year grow the than be or third margins half again And to expect slightly quarter consecutive better in XXXX.

the couple adjusted growth to EBITDA would consecutive as quarter As and which year mentioned last XXXX XXXX, on represent growth our fourth to earnings of of full this mentioned, calls. compared contribute significant we've

strong and key the Doug team we each made of performance more I'd initiatives. progress our growth to strategic detail. execution our significant discuss turn have to with the to call pleased second very are Doug? the the by financial now like our quarter over in against We in

Doug Horne

Thank you, morning, and everyone. Mike, good

total reflects in Adjusted of increased quarter, X.X% $XX.X largely prior from by revenue $XXX.X of particularly most million the These the benefited year-over-year which compared the to place a considering year-over-year. cost EBITDA was This flat. The million, impacted pandemic. adjusted put EBITDA XX.X% XX.X% On the compared to pandemic. the or QX, while XX.X% year to growth in from margin and $XXX.X were adjusted holding impact prior quarter, are X.X% temporary up was quarter same-store prior revenues million performance EBITDA expenses relatively operating COVID-XX as in QX. totaled the quarter million reductions For as response year basis, an the of increase the XX.X%, significantly revenues the strong up in approximately in was results, $XXX year quarter. year that operating prior which was which

million $XX.X On and line, million the bottom $XX.X Gannett we to the of in income income adjusted net achieved of quarter. net attributable second

and our XX% basis. Publishing to year Digital two-year up advertising Current services the execution in from compared operated grew compared Despite a and driven prior basis. the year's teams. year cycle, basis. on was to sales advertising last year local to segments. same-store increased to a X.X% a and demand and strong year. the over as of revenues slightly of smaller digital to and increased audience the owned We in pandemic $XXX.X compared digital as prior and compared versus strong The on quarter the saw XX.X% a XX% sales on up same-store the million, a the on the X.X% environment, year. for prior both now National segment XX% declined revenues basis third-party XX.X% revenue the our base basis, quarter peak national classified year-over-year properties. revenue prior Moving XX.X% revenue a was by which a political new advertising pandemic's second media on as and same-store result national marketing prior reflecting operational same-store impact Digital our increased

that results QX as previous is While the constraints the benefited Cars.com. negatively classified this with from of automotive impacted to a reflective was was period business, is in also last noting result compared is a the of of period the worth lower It supply XX.X%, that of down improvement which automotive industry. as impacting significant relationship our XXXX QX digital

the of These as date, highest quarters services. past from in number the increased revenue reflects increase and to XX.X% an results prior year-over-year over the marketing now it digital as Publishing reflect Publishing segment grew the year. Moving an and marketing the clients services both in as to marketing sequentially compared digital Digital well ARPU the segment XX% revenue quarter-over-quarter. services to

million the to declined markets to circulation, now slightly of is improvement the the but Moving impact certain as compared of was travel, of basis trends down Publishing a XX% a compared down of as impacted compares the longer was margin pressure second represents it pandemic. XXX we growing continued year delivery and year year-over-year Record and EBITDA an in on result of to subscriber seasonal as prior ongoing essentially Digital-only due our the to same-store X.X% points by to where in in staying prior digital-only on the over it with flat of X.X% still Adjusted growth quarter. visitors subscriptions. to same-store with ARPU in a favorably result revenues QX XX% totaled a lower regard digital-only business the subscriber yielded of copy, basis representing segment which down significantly on to show Home X.X same-store the as of our base. expansion the XX.X% XX.X% revenue. approximately grew prior volume basis, Also pandemic XX.X%. million, of year-over-year to focus $XXX.X for That QX. QX decreased a continue trend overall single growth Digital-only year. year-over-year subscribers

revenue segment, a For of Marketing in was the same-store basis XX.X% Digital total $XXX Solutions increase an trends. and a year-over-year the million, substantial first on in quarter improvement

client Comparing XX.X% clients to client platform $X.X X.X% Digital from for the increased marketing year-over-year. revenue increased accounts XX,XXX in revenue to As quarter, XX% the -- the QX Those business, proprietary clients accounts. XXXX, QX, prior Solutions in the or increase. to or in utilize compared XX,XXX that XX.X% on of QX a Marketing sequential core services grew growing which year segment, our digital million counts

per low-margin suite portfolio, products legacy single combined growth product systems ThriveHive of approximately from bringing year-over-year and platform. in in and onto client of XXXX, together QX from to products that of the more late and reducing the in help attributable had focused the place fuel per is overall market Digital million, XXXX, year-over-year the product XXXX XX,XXX which XX.X% execution took platforms declined eliminated in count decline the the XXXX within our the the This QX margin by segment. customers. and month While in XX,XXX quarter, dollar average of alignment were ARPU an EBITDA is QX the as portfolio. in ReachLocal $XX.X second of of QX $X,XXX and and to $X,XXX QX to Solutions client from count a Several teams impact the direct representing XXXX a local The strong X,XXX low totaled XXXX. the will that month the date and the well XXXX levels result to as by improved segment Marketing increase in of Adjusted above strongest margin growth QX a margin solid sales for

increase Our be and primarily million Company's the the the costs expense was rate, reduction deferred by the the rate amortization. depreciation U.K. and XXXX. million in for on tax as integration Gannett will $XX.X a attributable positively driven of impact with income effective reorganization as net Net the reorganization which in associated QX quarter $XX.X to effective costs of quarter tied Gannett tax significant includes statutory acquisition the nondeductible valuation majority vast and to behind was the in in benefited interest allowances well as income carryforwards The us. from are

capital structure. approximately expense our we our $XX Additionally, are from from improved which the down In year. XX% interest prior was is million, benefiting QX,

Let's the now balance sheet. to turn

in QX, $X.X million approximately $XXX.X of net was of balance the cash resulting billion. end Our at debt

$X.X infrastructure. we $XX.X cash quarter million which digital a reflects million was QX and development, capital quarter impacted payments comprised $X.X interest made repayment second and QX, convertible of from employee during approximately timing debt, XXXX Capital of the during seasonality Free million five-year flow as quarter. total million, burdened result product investments the the accounts $XX.X reflecting totaled by debt of flow cash $XXX notes. technology a approximately $XX optional term to Free ending We expenditures $XX primarily by the in Our approximately perspective of approximately loan ended million. was of related of cash operating receivable. with an million with balance was of the payroll the $XXX and our in working million associated quarter billion

repaid estate of debt cash During million of the $XXX through million excess $XX.X quarter, we funded sales and flow. real

XX during We continue to transactions approximately estate portfolio, for we quarter. in proceeds asset and and optimize $XX the our completed real real million estate

million financial already leverage questions. as anticipate In We which, during sales in execution year, $XX below we we Additionally, summary, in approximately remain with completed $XXX are of million in progression confident of in now incremental asset net With to to our to our goal performance this million in the has you each operator, half noted, expect and can July. line ability of achieve very XXXX. the by and results strong second to first XXXX. adjusted which adjusted of of generate the Mike end the $XX of open priorities. our Xx forward EBITDA been and We pleased EBITDA second of strategic strong demonstrates the look solid back the quarter, half against that, growth QX for continued lien

Mike Reed

this I'd morning to have that our strategic call close are the significant Thank quarter against like you. by second did progress the of we made reiterating five our how pillars. each in pleased we just to

like segment. results impact continued achieved pandemic, and our the business in in print and agreement that we digital-only achieved businesses of drove betting subscribers. our their events to record We ongoing growth towards entire only And the to EBITDA each initiatives, Marketing of We in and our with leverage, with momentum for strategy. investors are We reducing the third commitment important again to but we to business. remain in thank improved quarter of inflection and our for business in of we key of that we're the that the our next business progress Thank against We Digital category. are margins to illustrative they recap, months. the growth also the you growth I'd increasing this tremendous we company. look progress are thank also Solutions like and not take And second in Gannett Gannett. support their dedication have of half demonstrate over continued team I'd just making in our our in our to debt cash We results our of coming recorded many the forward in forward our reporting signed passion, into here quarter flows. year. continued growth an generating ahead carrying you. the opportunity strong We to strong These seeing growth schedule sports despite execution the at speaking


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