Gannett Announces Third Quarter 2021 Results

MCLEAN, Va.–(BUSINESS WIRE)–Gannett Co., Inc. (NYSE: GCI) today reported its financial results for the third quarter ended September 30, 2021. 

“Nine months ago we outlined a long-term vision for growth at Gannett. While we are still in early stages, the strong growth in digital-only circulation and digital marketing solutions confirms we are on the right path as evidenced by Adjusted EBITDA and same store revenue growth in the third quarter of 2021,” said Michael Reed, Gannett Chairman and Chief Executive Officer. “With digital revenue accounting for over one-third of total revenue and growing, we are excited about the Company’s evolution to a digitally focused content platform and the early momentum of our subscription-led strategy.”

“We remain committed to maximizing shareholder value and we believe this is achievable through the execution of our long-term strategy coupled with our improved capital structure, lower cost of debt, and new credit facility, each of which provides us greater financial flexibility to conduct share repurchases and redeem our previously issued convertible notes.”

Third Quarter 2021 Financial Highlights:

  • Total revenues of $800.2 million decreased 1.8% compared to the prior year quarter
    • Same store revenues increased 0.9% compared to the third quarter of 2020
  • Total digital revenues were $265.0 million or 33.1% of total revenues, up 17.8% over the prior year period on a same store basis
  • Net income attributable to Gannett of $14.7 million
  • Adjusted net income attributable to Gannett of $26.5 million
  • Adjusted EBITDA totaled $102.1 million, an increase of 16.0% compared to the third quarter of 2020, the fourth consecutive quarter of year-over-year growth
    • Adjusted EBITDA margin of 12.8% versus 10.8% in the prior year period
    • Prior year third quarter Adjusted EBITDA includes $4.8 million related to businesses that the Company divested in the fourth quarter of 2020
  • Net cash flow provided by operating activities of $40.8 million
  • Free cash flow of $29.3 million

Additional Business Highlights:

  • Digital-only paid subscribers exceeded 1.5 million at the end of the third quarter of 2021, up 46% compared to the same period in the prior year
    • Digital-only circulation revenues of $25.7 million grew 26.6% year-over-year
  • 179 million average monthly unique visitors in the third quarter of 2021 across USA TODAY NETWORK per ComScore plus the U.K. digital properties
  • Digital Marketing Solutions segment revenues were $116.8 million, and on a same store basis increased 16.5% in the third quarter of September 30, 2021 compared to the same period in the prior year
    • Total core platform customers increased sequentially to 15.4 thousand in the third quarter of September 30, 2021, up 0.5% quarter-over-quarter
    • Margins within the segment increased over historical levels to 12.9% versus 4.0% in the same quarter prior year
  • Launched USA TODAY Sports+ Premium Subscription Product
  • In conjunction with the Tipico USA Technology, Inc. sports betting partnership, added new brands to extensive sports portfolio for avid sports betting fans including Sportsbook Wire, BetFTW, and several new video series dedicated to sports betting analysis
  • During the third quarter of 2021, the Company repaid approximately $91.1 million in principal under its previous 5-Year Term Loan (the “5-Year Term Loan”) using the proceeds from real estate and other asset sales totaling $39.0 million and excess cash, bringing the 5-Year Term Loan principal under $1.0 billion at September 30, 2021
    • Total debt principal outstanding as of September 30, 2021 was $1.400 billion, comprised of the (i) $899.4 million of 5-Year Term Loan, (ii) $497.1 million of the Company’s 2027 convertible notes, and (iii) $3.3 million of remaining convertible notes from our acquisition of Gannett Co., Inc. (which was renamed Gannett Media Corp. and is referred to as “Legacy Gannett”) in the fourth quarter of 2019
  • During October 2021, the Company secured a five-year senior secured term loan facility in an aggregate principal amount of $516 million (the “New Senior Secured Term Loan”). The proceeds from the New Senior Secured Term Loan, together with net proceeds from the Company’s private offering of $400 million first lien notes due 2026, allowed the Company to repay in full its existing 5-Year Term Loan
    • The refinancing reduced the Company’s cost of debt by nearly 200 basis points and will result in meaningful cash interest savings in the future
  • As of September 30, 2021, the Company had cash and cash equivalents of $141.3 million
    • First Lien Net Leverage(1) of 1.6x as of September 30, 2021
    • Targeting First Lien Net Leverage of 1.0x by the end of 2022
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(1)

First Lien Net Leverage ratio as of September 30, 2021 was calculated by subtracting cash on the balance sheet from the 5-Year Term Loan and dividing it by Q3 2021 LTM Adjusted EBITDA. Our 2027 convertible notes are second lien as of the completion of the 5-Year Term Loan refinancing in February 2021.

Financial Highlights

in thousands

Third Quarter 2021

Revenues

$

800,185

Net income attributable to Gannett

14,687

Adjusted EBITDA(2) (non-GAAP)

102,067

Adjusted Net income attributable to Gannett(2) (non-GAAP)

26,506

Net cash flow provided by operating activities

40,760

Free cash flow(2) (non-GAAP)

29,316

(2)

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

About Gannett

Gannett Co., Inc. (NYSE: GCI) is a subscription-led and digitally focused media and marketing solutions company committed to empowering communities to thrive. 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. Our current portfolio of media assets includes USA TODAY, local media organizations in 46 states in the U.S., and Newsquest, a wholly owned subsidiary operating in the United Kingdom with more than 120 local news media brands. Gannett also owns the digital marketing services companies ReachLocal, Inc., UpCurve, Inc., and WordStream, Inc., which are marketed under the LOCALiQ brand, and runs the largest media-owned events business in the U.S., USA TODAY NETWORK Ventures. To connect with us, visit www.gannett.com.