MCLEAN, Va.–(BUSINESS WIRE)–Gannett Co., Inc. (NYSE: GCI) today reported its financial results for the fourth quarter ended December 31, 2023.
“In 2023, we made excellent progress executing on our strategy to drive our digital transformation, resulting in total digital revenues exceeding 41% of total revenues in the fourth quarter, and amounting to nearly $1.1 billion for the year. Over the past year, we’ve expanded our digital audience, improved engagement, grown the monetization of our audience, and driven significantly improved financial results over the prior year. Our digital-only subscription revenues surpassed $150 million in 2023, with total digital-only average revenue per user reaching a new high. Also, our partnership strategy increased our overall digital monetization, and importantly, we expect to generate $20 million in high margin revenue from our partnerships in 2024,” said Michael Reed, Gannett Chairman, and Chief Executive Officer.
“In 2023, we achieved full year growth in both Adjusted EBITDA and free cash flow, representing an important change in trajectory compared to last year’s declines. We also remained focused on improving our capital structure and, with over $140 million in debt repayments in 2023, we were able to significantly reduce our leverage during the year. As these results show, we are building momentum toward a sustainable digital growth business, with a strong balance sheet.”
“As we look forward to 2024 and the next several years, we expect to capitalize on this progress and build to inflection in our revenue as we end 2024. Our business outlook reflects our investments in strategy and our prioritization of revenue and free cash flow growth while also maintaining ongoing profit improvements and further deleveraging. We believe 2024 is an important milestone in the foundation for creating sustainable growth for Gannett.”
Fourth Quarter 2023 Digital Highlights:
- Total digital revenues of $277.1 million, or 41.4% of total revenues, up 2.9% versus the prior year
- Digital-only subscription revenues of $41.9 million grew 18.1% year-over-year
- Digital-only average revenue per user(1) of $7.05 increased 19.5% year-over-year
- Total digital-only paid subscriptions(1) were approximately 2.0 million, sequential growth of 1.6%
- 187 million(2) global average monthly unique visitors in the fourth quarter of 2023, up 4.3% year-over-year
- Digital Media revenues of $78.8 million grew 3.9% year-over-year
- Digital Marketing Solutions core platform revenues(1) of $119.4 million decreased 0.3% year-over year
- Record high core platform average revenue per user(1) of $2,663, up 2.1% year-over-year
- Customer budget retention(3) was 95.4%, an increase of 50 basis points compared to the fourth quarter of 2022
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(1) |
See “Key Performance Indicators” (“KPIs”) below for information about our use of KPIs. |
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(2) |
187 million average monthly unique visitors in the fourth quarter of 2023 with approximately 136 million average monthly unique visitors coming from our USA TODAY NETWORK (based on December 2023 Comscore Media Metrix®) and approximately 51 million average monthly unique visitors resulting from our U.K. digital properties (based on Adobe Analytics). |
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(3) |
Customer budget retention is calculated as 1 minus the average of churned budgets in a given month divided by starting budgets in the same period, averaged across the quarter. |
Fourth Quarter 2023 Capital Structure Highlights:
- As of December 31, 2023, the Company had cash and cash equivalents of $100.2 million
- Total principal amount of debt outstanding as of December 31, 2023 was $1,130.6 million, including $642.0 million in first lien debt, which resulted in a First Lien Net Leverage(4) of 2.0x, a decrease of 24.6% compared to 2.7x as of the end of fiscal 2022
- During the fourth quarter of 2023, the Company repaid $23.9 million of debt. For the full year 2023, the Company repaid $141.6 million of debt
Full Year 2024 and Mid-Term 2025-2026 Business Outlook(5)
The Company presents its full year 2024 outlook and its mid-term outlook over the course of 2025 and 2026 below.
- Full Year 2024 Business Outlook(5)
- Total digital revenues are expected to grow approximately 10%
- Total revenues are expected to be down in the low to mid-single digits on a reported and same store basis(6)
- Net income attributable to Gannett is expected to improve, after excluding an impairment charge of approximately $45 million related to the exit of our McLean, Virginia office during the first quarter of 2024
- Adjusted EBITDA(6) is expected to grow versus the prior year
- Cash provided by operating activities is expected to grow versus the prior year
- Free cash flow(6) is expected to grow in excess(7) of the expected growth in Adjusted EBITDA(6)
- Real estate and non-strategic asset sales are expected to be in the range of $45 million and $50 million
- Full Year 2025 and Full Year 2026 Business Outlook(5)
- Total digital revenues are expected to accelerate with growth exceeding 10% year-over-year
- Total digital revenues are expected to make up 50% of total revenues in 2025 and exceed 55% of total revenues in 2026
- Total revenues are expected to grow in the low single digits on a reported basis and same store basis(6)
- Net income attributable to Gannett is expected to improve to positive
- Adjusted EBITDA(6) is expected to exhibit ongoing growth
- Cash provided by operating activities is expected to grow with an estimated CAGR(8) of 30%
- Free cash flow(6) is expected to grow at an accelerated rate with an estimated CAGR(6)(8) of 40%
- Total digital revenues are expected to accelerate with growth exceeding 10% year-over-year
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(4) |
As of December 31, 2023, the First Lien Net Leverage ratio was calculated by subtracting cash on the balance sheet from the sum of both our five-year senior secured term loan facility (the “Senior Secured Term Loan”) and 6% first lien notes due November 1, 2026 (the “2026 Senior Notes”) and dividing that by Q4 2023 LTM Adjusted EBITDA. Our 6% Senior Secured Convertible Notes due 2027 are second lien as of the completion of the Senior Secured Term Loan refinancing in October 2021. |
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(5) |
Projections are based on Company estimates as of February 22, 2024 and are provided solely for illustrative purposes. Actual results may vary. The Company undertakes no obligation to update this information. Additionally, the Company’s estimates do not factor in the impact of any future acquisitions or dispositions. The Company’s future financial results could differ materially from the Company’s current estimates. |
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(6) |
Adjusted EBITDA, Adjusted EBITDA margin, Free cash flow, Same store revenues, and Free cash flow CAGR are non-GAAP measures. See “Use of Non-GAAP Information” below for information about these non-GAAP measures. |
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(7) |
Capital expenditures are expected to increase as a result of investments in technology and products. |
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(8) |
Cash provided by operating activities CAGR and Free cash flow CAGR are based on 2023 to 2026 estimated growth rates. |
Additional Fourth Quarter 2023 Highlights:
- Total revenues of $669.4 million decreased 8.4% compared to the fourth quarter of 2022
- Same store revenues(6) decreased 8.0% compared to the fourth quarter of 2022, reflecting a sequential improvement of 40 basis points compared to the third quarter of 2023
- Net loss attributable to Gannett of $22.9 million as compared with net income attributable to Gannett of $32.8 million in the fourth quarter of 2022 and a Net loss attributable to Gannett margin of 3.4% versus a net loss attributable to Gannett margin of 0.4% in the third quarter of 2023
- Adjusted EBITDA(6) totaled $74.1 million, a decrease of 18.0% compared to the fourth quarter of 2022
- Sequential improvement of 24.5% compared to the third quarter of 2023
- Adjusted EBITDA margin(6) of 11.1%, representing sequential improvement of 200 basis points compared to the third quarter of 2023
- The prior year results included approximately $9.0 million related to employee furloughs which did not recur
- Cash provided by operating activities of $21.2 million, an increase of $13.4 million year-over-year
- Free cash flow(6) of $12.7 million, an improvement of $14.4 million year-over-year
Financial Highlights
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In thousands |
Fourth Quarter 2023 |
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Full Year 2023 |
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Revenues |
$ |
669,405 |
|
|
$ |
2,663,550 |
|
|
Net loss attributable to Gannett |
|
(22,892 |
) |
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(27,791 |
) |
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Adjusted EBITDA(9) (non-GAAP basis) |
|
74,106 |
|
|
|
267,683 |
|
|
Adjusted Net loss attributable to Gannett(9) (non-GAAP basis) |
|
(18,220 |
) |
|
|
(40,982 |
) |
|
Cash provided by operating activities |
|
21,157 |
|
|
|
94,574 |
|
|
Free cash flow(9) (non-GAAP basis) |
|
12,748 |
|
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56,458 |
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(9) |
Refer to “Use of Non-GAAP Information” below for the Company’s definition of Adjusted EBITDA, Adjusted Net loss 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 diversified media company with expansive reach at the national and local level dedicated to empowering and enriching communities. We seek to inspire, inform, and connect audiences as a sustainable, growth focused media and digital marketing solutions company. We endeavor to deliver essential content, marketing solutions, and experiences for curated audiences, advertisers, consumers, and stakeholders by leveraging our diverse teams and suite of products to enrich the local communities and businesses we serve. Our current portfolio of trusted media brands includes the USA TODAY NETWORK, comprised of the national publication, USA TODAY, and local media organizations in the United States, and Newsquest, a wholly-owned subsidiary operating in the United Kingdom. Our digital marketing solutions brand, LocaliQ, uses innovation and software to enable small and medium-sized businesses to grow, and USA TODAY NETWORK Ventures, our events division, creates impactful consumer engagements, promotions, and races.
