NEW YORK, NY–(BUSINESS WIRE)–Gannett Co., Inc. (NYSE: GCI) today reported its financial results for the third quarter ended September 30, 2024.
“We continued to make solid progress on our key priorities in the third quarter while delivering another quarter of year-over-year Adjusted EBITDA growth. Three out of four digital revenue categories experienced further trend improvement year-over-year, and as a result, total digital revenues surpassed 45% of total revenues, representing an all-time high. These results reinforce our belief that we have created a sustainable pathway for ongoing growth moving forward. We also significantly increased our free cash flow by 168% year-over-year. Additionally, within the quarter, we repaid approximately $29 million of debt, which combined with our Adjusted EBITDA growth, reduced our first lien net leverage to 1.76x. It is also important to note that some of our strategic decisions impacted total reported revenue in the third quarter, such as the intentional closure or divestiture of certain businesses in our portfolio. These actions were in-line with our long-term strategy and did not materially impact Adjusted EBITDA,” said Michael Reed, Gannett Chairman and Chief Executive Officer.
“In the third quarter, our audience surpassed 200 million average monthly unique visitors for the first time in our history, reflecting growth of over 7% compared to the prior year period. Furthermore, in the third quarter, we announced an additional partnership with BetMGM, which is expected to enhance the monetization of our content platform.”
“On October 15, 2024, we completed our debt refinancing transactions which extended our maturities, reduced potential share dilution by approximately 46%, and simplified our capital structure. This refinancing is an important milestone in our long-term strategic plan. With our continued strong performance, we are pleased to reiterate nearly all of our 2024 full year outlook, with the exception of slight adjustments to total digital revenues and free cash flow, which was impacted by our refinancing efforts. Beyond 2024, we continue to believe we are well-positioned to drive sustainable growth across all of our key financial metrics, and as a result, we reiterated our 2025-2026 business outlook.”
“We continue to execute on our strategy and have made great progress on our key priorities in the third quarter. We expect to see further improvement to trends in the fourth quarter as well. Importantly, we believe we are well-positioned to realize 2025 full year total revenue growth, as well as continued growth in Adjusted EBITDA and free cash flow. With the completion of our debt refinancing transactions, combined with anticipated revenue and cash flow growth in 2025 and 2026, we believe we are well-positioned to create significant value for our shareholders.”
Third Quarter 2024 Digital Highlights (Year-Over-Year):
- Total digital revenues of $277.4 million increased 5.2%, or 5.8% on a same store basis(1)
- Digital-only subscription revenues of $50.1 million grew 25.0%
- Digital-only average revenue per user(2) of $8.16 increased 19.6%
- Total digital-only paid subscriptions(2) of 2.06 million increased 4.7%
- Record 203 million(3) average monthly unique visitors, an increase of 7.4%
- Digital advertising revenues of $84.7 million grew 4.9%
- Digital Marketing Solutions (“DMS”) segment core platform revenues(2) of $119.2 million decreased 1.4% driven primarily by the third quarter home improvement sector performance
- DMS core platform average revenue per user(2) of $2,777 increased 5.3%
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(1) |
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net income (loss) attributable to Gannett, 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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(2) |
See “Key Performance Indicators” (“KPIs”) below for information about our use of KPIs. |
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(3) |
203 million average monthly unique visitors in the third quarter of 2024 with approximately 147 million average monthly unique visitors coming from our USA TODAY NETWORK (based on September 2024 Comscore Media Metrix®) and approximately 56 million average monthly unique visitors resulting from our U.K. digital properties (based on Adobe Analytics). |
Additional Third Quarter 2024 Highlights (Year-Over-Year):
- Total revenues of $612.4 million decreased 6.2%
- Total revenues were impacted by the decision to sell or shut down certain properties
- Same store revenues(1) decreased 5.3%, reflecting an improvement of 310 basis points
- Net loss attributable to Gannett of $19.7 million, a loss margin of 3.2%
- Adjusted Net loss attributable to Gannett(1) of $6.1 million improved by $16.6 million
- Adjusted EBITDA(1) totaled $62.9 million, an increase of 5.6%
- Adjusted EBITDA(1) margin of 10.3% improved by 120 basis points
- Cash provided by operating activities of $33.7 million, an increase of $13.1 million
- Free cash flow(1) of $19.8 million, an increase of 168%
Third Quarter 2024 Capital Structure Highlights:
- As of September 30, 2024, the Company had cash and cash equivalents of $101.8 million
- Total principal debt outstanding at September 30, 2024 was $1,061.4 million, including $576.1 million in first lien debt
- First lien net leverage(4) was 1.76x, a decrease of 10.2% compared to the prior year period
- The Company repaid approximately $28.5 million of debt
Full Year 2024 and 2025-2026 Business Outlook(5)
- Full Year 2024 Business Outlook(5)
- Total digital revenues are expected to grow approximately 6%-7% on a same store basis(1)
- Total revenues are expected to be down in the low to mid-single digits on a reported and same store basis(1)
- Net income attributable to Gannett is expected to improve, after excluding an impairment charge of approximately $46.0 million related to the exit of our McLean, Virginia office during the first quarter of 2024
- Adjusted EBITDA(1) is expected to grow versus the prior year
- Cash provided by operating activities is expected to grow versus the prior year
- Free cash flow(1) is expected to grow in excess(6) of the expected growth in Adjusted EBITDA(1) after excluding the estimated $7 million impact of the debt refinancing
- 2025-2026 Business Outlook(5)
- Total digital revenues are expected to accelerate with growth exceeding 10% year-over-year and 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(1)
- Net income attributable to Gannett is expected to improve to positive
- Adjusted EBITDA(1) is expected to exhibit ongoing growth
- Cash provided by operating activities is expected to grow with an estimated CAGR(7) of 30%
- Free cash flow(1) is expected to grow at an accelerated rate with an estimated CAGR(1)(7) of 40%
Financial Highlights
|
In thousands |
Third Quarter 2024 |
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Revenues |
$ |
612,439 |
|
|
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Net loss attributable to Gannett |
|
(19,653 |
) |
|
|
Adjusted EBITDA(8) (non-GAAP basis) |
|
62,880 |
|
|
|
Adjusted net loss attributable to Gannett(8) (non-GAAP basis) |
|
(6,054 |
) |
|
|
Cash provided by operating activities |
|
33,745 |
|
|
|
Free cash flow(8) (non-GAAP basis) |
|
19,762 |
|
|
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(4) |
As of September 30, 2024, 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 Q3 2024 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 October 31, 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) |
Capital expenditures are expected to increase as a result of investments in technology and products. |
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(7) |
Cash provided by operating activities CAGR and Free cash flow CAGR are based on 2023 to 2026 estimated growth rates. |
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(8) |
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.
