Strong fourth quarter Revenue and Adjusted
EBITDA performance Approximately 46% year-over-year digital-only
circulation pro forma revenue growth Fourth quarter term loan
reduction of approximately $654 million results in $48 million of
annual interest savings Ended the year with approximately $171
million of cash and cash equivalents
Gannett Co., Inc. ("Gannett", "we", "us", "our", or the
"Company") (NYSE: GCI) today reported its preliminary financial
results for the fourth quarter ended December 31, 2020.
Selected, Preliminary Financial
Results
Unaudited; in millions
Preliminary Estimated Results
Range(1) Fourth Quarter 2020
Revenues
$
865
to
$
875
Net loss before taxes
(135
)
to
(130
)
Adjusted EBITDA(2) (non-GAAP)
142
to
147
(1)
Figures presented are projected
estimates for the fourth quarter of 2020.
(2)
Refer to “Use of non-GAAP
Information” below for the Company’s definition of Adjusted EBITDA
and the reconciliation to the most comparable GAAP measure included
herein.
“We are pleased to share that the fourth quarter ended with
strong Revenue and Adjusted EBITDA performance,” said Michael Reed,
Chairman & Chief Executive Officer. “Revenue improvement was
primarily driven by a continued rebound in our advertising trends,
both print and digital. We also continued to see strong
digital-only circulation pro forma revenue performance with an
increase of approximately 46% year-over-year. The revenue
improvement as well as continued expense management, led to
stronger Adjusted EBITDA, and positions us for continued
performance improvement in 2021.”
“We reduced $654 million of our 11.5% term loan during the
fourth quarter and an additional $30 million subsequent to year
end, which brings our total term loan reduction to $684 million.
These actions have allowed us to reduce debt outstanding to $1.545
billion, as of today, which is ahead of the originally outlined
levels that we shared in connection with the acquisition of Gannett
Media Corp. in 2019. The reduction of the term loan through debt
paydown and refinancing of approximately $500 million into
convertible notes has reduced our annual interest expense by $48
million. As we head into 2021, we firmly believe that we will be in
a position to refinance the remaining term loan, which will further
improve our balance sheet.”
The unaudited preliminary financial results and the non-GAAP
reconciliation tables represent the most current information
available to the Company and are based on calculations or figures
prepared internally, which have not been reviewed or audited by the
Company's independent registered public accounting firm. The
Company’s actual results may differ materially from these unaudited
preliminary financial results and non-GAAP reconciliations due to
the completion of its financial closing procedures and reviews.
Balance Sheet &
Liquidity
- As of December 31, 2020, the Company had cash and cash
equivalents of approximately $171 million.
- During the fourth quarter of 2020, the Company reduced
approximately $654 million in principal under its term loan.
- Total debt outstanding at the end of the fourth quarter of 2020
was approximately $1.575 billion. This is comprised of:
- $1.075 billion 11.5% term loan;
- $497.1 million 6% senior secured convertible notes; and
- $3.3 million of legacy Gannett 4.75% senior secured convertible
notes.
- Net debt outstanding as of December 31, 2020 was approximately
$1.404 billion.
- Subsequent to December 31, 2020, an additional approximately
$30 million of the term loan was repaid from cash on hand, reducing
the outstanding term loan balance to $1.045 billion.
About Gannett
Gannett Co., Inc. (NYSE: GCI) is an innovative, digitally
focused media and marketing solutions company committed to the
communities in our network and helping them build relationships
with their local businesses. With an unmatched reach at the
national and local level, Gannett touches the lives of millions
with our Pulitzer-Prize winning content, consumer experiences and
benefits, and advertiser products and services. Its portfolio
includes the USA TODAY, local media organizations in 46 states in
the U.S. and Guam, and Newsquest, a wholly owned subsidiary with
over 140 local media brands operating in the United Kingdom.
Gannett also owns the digital marketing services companies
ReachLocal, Inc., UpCurve, Inc., and WordStream, Inc. and runs the
largest media-owned events business in the U.S., USA TODAY NETWORK
Ventures, formerly GateHouse Live. To connect with us, visit
www.gannett.com.
Pro Forma Revenues
Pro forma revenues are based on (i) the sum of GAAP revenues for
New Media Investment Group Inc. (“New Media”), and legacy Gannett
prior to New Media's acquisition of legacy Gannett and (ii) GAAP
revenues for Gannett for the current period.
Cautionary Statement Regarding
Preliminary Estimated Results
The preliminary estimated results for the fourth quarter ended
December 31, 2020 are preliminary, unaudited and subject to
completion. They reflect management’s current views and may change
as a result of our review of results and other factors, including a
wide variety of significant business, economic and competitive
risks and uncertainties. Such preliminary results are subject to
the finalization and closing of our accounting books and records
(which have yet to be performed), and should not be viewed as a
substitute for full quarterly financial statements prepared in
accordance with GAAP. We caution you that these preliminary results
are not guarantees of future performance or outcomes and that
actual results may differ materially from those described above.
For more information regarding factors that could cause actual
results to differ from those described above, please see
“Cautionary Statement Regarding Forward-Looking Statements”
below.
The preliminary estimated results have been prepared by, and are
the responsibility of, our management. Ernst & Young LLP, our
independent registered public accounting firm, has not audited,
reviewed, compiled, or applied agreed-upon procedures with respect
to the preliminary estimated financial information. Accordingly,
Ernst & Young LLP does not express an opinion or any other form
of assurance with respect thereto.
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, statements regarding our ability to execute our
operational and integration plans, including our ability to
refinance amounts outstanding under our term loan, the impact of
the COVID-19 pandemic on our business and operations, our expected
capital expenditures, our expectations, in terms of both amount and
timing, with respect to debt repayment, real estate sales and debt
refinancing, future cash flow and revenue trends and our ability to
influence trends. These statements are based on management’s
current expectations and beliefs and are subject to a number of
risks and uncertainties. These and other risks and uncertainties
could cause actual results to differ materially from those
described in the forward-looking statements, many of which are
beyond our control. The Company can give no assurance its
expectations will be attained. Accordingly, you should not place
undue reliance on any forward-looking statements contained in this
press release. For a discussion of some of the risks and important
factors that could cause actual results to differ from such
forward-looking statements, see the risks and other factors
detailed from time to time in the Company’s Annual Report on Form
10-K, Quarterly Reports on Form 10-Q, and other filings with the
Securities and Exchange Commission. Furthermore, new risks and
uncertainties emerge from time to time, and it is not possible for
the Company to predict or assess the impact of every factor that
may cause its actual results to differ from those contained in any
forward-looking statements. Such forward-looking statements speak
only as of the date of this press release. The Company expressly
disclaims any obligation to release publicly any updates or
revisions to any forward-looking statements contained herein to
reflect any change in the Company’s expectations with regard
thereto or change in events, conditions or circumstances on which
any statement is based.
USE OF NON-GAAP
INFORMATION
The Company uses Adjusted EBITDA, a non-GAAP financial
performance measure to supplement the financial information
presented on a GAAP basis. The Company believes Adjusted EBITDA
offers a useful view of the overall operations of our business.
This non-GAAP financial measure, which may not be comparable to
similarly titled measures reported by other companies, should not
be considered in isolation from or as a substitute for the related
GAAP measure and should be read together with financial information
presented on a GAAP basis.
The Company defines Adjusted EBITDA as Net income (loss)
attributable to Gannett before: (1) Income tax expense (benefit),
(2) Interest expense, (3) Gains or losses on early extinguishment
of debt, (4) Non-operating pension income (expense), (5) Unrealized
(gain) loss on derivative, (6) Other Non-operating items, primarily
equity income, (7) Depreciation and amortization, (8) Integration
and reorganization costs, (9) Asset impairments, (10) Goodwill and
intangible impairments, (11) Gains or losses on the sale or
disposal of assets, (12) Share-based compensation expense, (13)
Acquisition costs, (14) Gains or losses on the sale of investments,
and (15) certain other non-recurring charges. The most directly
comparable GAAP measure is Net income (loss) attributable to
Gannett.
Management’s Use of Adjusted EBITDA
Adjusted EBITDA is not a measurement of financial performance
under GAAP and should not be considered in isolation or as an
alternative to income from operations, net income (loss), or any
other measure of performance or liquidity derived in accordance
with GAAP. We believe this non-GAAP financial measure as we have
defined it is 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. This measure provides an
assessment of controllable expenses and affords management the
ability to make decisions which are expected to facilitate meeting
current financial goals as well as achieve optimal financial
performance.
Adjusted EBITDA provides us with a measure of financial
performance, independent of items that are beyond the control of
management in the short-term such as depreciation and amortization,
taxation, non-cash impairments, and interest expense associated
with our capital structure. This metric measures our financial
performance based on operational factors that management can impact
in the short-term, namely the cost structure or expenses of the
organization. Adjusted EBITDA is one of the metrics we use to
review the financial performance of our business on a monthly
basis.
We use Adjusted EBITDA as a measure of our day-to-day operating
performance, which is evidenced by the publishing and delivery of
news and other media and excludes certain expenses that may not be
indicative of our day-to-day business operating results. We
consider the unrealized gain or loss on derivative instruments and
the gain or loss on the early extinguishment of debt to be
financing related costs associated with interest expense or
amortization of financing fees. Accordingly, we exclude financing
related costs such as the early extinguishment of debt because they
represent the write-off of deferred financing costs, and we believe
these non-cash write-offs are similar to interest expense and
amortization of financing fees, which by definition are excluded
from Adjusted EBITDA. Additionally, the non-cash gains or losses on
derivative contracts, which are related to the conversion feature
associated with our approximate $500 million of convertible debt,
are financing costs. Such charges are incidental to, but not
reflective of, our day-to-day operating performance and it is
appropriate to exclude charges related to these financing
activities which, depending on the nature of the financing
arrangement, would have otherwise been amortized over the period of
the related agreement and does not require a current cash
settlement. Such charges are incidental to, but not reflective of
our day-to-day operating performance of the business that
management can impact in the short term.
Limitations of Adjusted EBITDA
Adjusted EBITDA has limitations as an analytical tool. It should
not be viewed in isolation or as a substitute for GAAP measures of
earnings or cash flows. Material limitations in making the
adjustments to our earnings to calculate Adjusted EBITDA and using
this non-GAAP financial measure as compared to GAAP net income
(loss) include: the cash portion of interest / financing expense,
income tax (benefit) provision, and charges related to asset
impairments, which may significantly affect our financial
results.
A reader of our financial statements may find this item
important in evaluating our performance, results of operations, and
financial position. We use non-GAAP financial measures to
supplement our GAAP results in order to provide a more complete
understanding of the factors and trends affecting our business.
Adjusted EBITDA is not an alternative to net income as
calculated and presented in accordance with GAAP. Readers of our
financial statements should not rely on Adjusted EBITDA as a
substitute for any such GAAP financial measure. We strongly urge
readers of our financial statements to review the reconciliation of
Net income (loss) attributable to Gannett to Adjusted EBITDA. We
also strongly urge readers of our financial statements to not rely
on any single financial measure to evaluate our business. In
addition, because Adjusted EBITDA is not a measure of financial
performance under GAAP and is susceptible to varying calculations,
the Adjusted EBITDA measure as presented in this report may differ
from and may not be comparable to similarly titled measures used by
other companies.
NON-GAAP FINANCIAL INFORMATION
ADJUSTED EBITDA
Gannett Co., Inc.
Unaudited, in millions
Table No. 1
Preliminary Estimated Results
Range(1) Fourth Quarter 2020
Low End
High End
Net loss before taxes
$
(135
)
$
(130
)
Interest expense
55
55
Loss on early extinguishment of debt
42
42
Non-operating pension income
(18
)
(18
)
Unrealized loss on Convertible notes
derivative
74
74
Other non-operating income, net
(2
)
(2
)
Depreciation and amortization
58
58
Integration and reorganization costs
72
72
Acquisition costs
1
1
Asset impairments
3
3
Net gain on sale or disposal of assets
(11
)
(11
)
Share-based compensation expense
4
4
Other items
(1
)
(1
)
Adjusted EBITDA (non-GAAP basis)
$
142
$
147
(1)
Figures presented are projected
estimates for the fourth quarter of 2020.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210119005338/en/
For investor inquiries: Ashley Higgins Investor Relations
212-479-3160 investors@gannett.com
For media inquiries: Stephanie Tackach Director, Public
Relations 212-715-5490 stackach@gannett.com
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