MCLEAN, Va.--(BUSINESS WIRE)--Gannett Co., Inc. (NYSE: GCI) today reported first quarter 2019 financial results for the period ended March 31, 2019.

"We had a solid start to 2019, with better than expected results across print advertising and circulation revenues as well as improved Adjusted EBITDA in the first quarter," said Robert J. Dickey, president and chief executive officer. "We also experienced robust new client acquisition in March and April that we believe will contribute to improved digital advertising and marketing services revenues in future quarters. Importantly, we are continuing to make progress on transitioning to a digitally-led product and revenue model, which we are confident will enhance growth and drive shareholder value."

"We were pleased with our cost performance this quarter as our ongoing initiatives to enhance productivity and efficiency enabled us to reduce same store operating expenses 10% year-over-year," said Ali Engel, senior vice president and chief financial officer. "We are focused on continuing to make strategic investments to support our digital transformation, while closely managing our expense base to maintain profitability amid current print revenue trends."

First Quarter 2019 Consolidated Results(1)

• Operating revenues were $663.4 million, compared to $723.0 million in the first quarter of 2018.
• Unfavorable changes in foreign currency exchange rates reduced revenues by $6.0 million.
• Same store operating revenues declined 9.0% year-over-year; adjusted for the day trades(2), the decline would have been 9.9%
• Total digital revenues reached $245.8 million, or approximately 37% of total revenue.
• Total digital advertising and marketing services revenues totaled $179.0 million, or 49% of total advertising revenues.
• GAAP net loss was $11.9 million, including $17.4 million of after-tax restructuring, asset impairment charges, and other costs.
• Adjusted EBITDA(3) increased 15% year-over-year to $63.3 million, representing a 9.5% margin compared to 7.6% in the first quarter of 2018.

First Quarter 2019 Publishing Segment

• Publishing segment operating revenues were $579.2 million compared to $638.7 million in the first quarter of 2018. On a same store basis, segment revenues declined 9.1%; adjusted for the day trades, the decline would have been 10.1%.
• Same store print advertising revenues declined 17.4% year-over-year, or adjusted for day trades, 19.3%, consistent with the fourth quarter trend.
• Digital advertising and marketing services revenues of $96.4 million fell 5.2%, on a same store basis, compared to the prior year quarter.
  • Digital marketing services revenues of $18.4 million rose 6.2%, on a same store basis, driven by higher average revenue per client.
  • Digital media advertising revenues of $61.1 million fell 5.4%, on a same store basis, due to weakness in local display more than offsetting continued strong national growth.
  • Digital classified advertising revenues of $16.9 million fell 14.6%, on a same store basis, reflecting expected weakness across all categories.
• Same store circulation revenues fell 5.2% from the prior year quarter; adjusted for the day trades, the decline would have been 5.9%.
• Digital-only subscriber volumes grew 39% year-over-year and now total approximately 538,000.
• Publishing segment Adjusted EBITDA was $81.4 million compared to $77.8 million in the prior year quarter.

First Quarter 2019 ReachLocal Segment

• ReachLocal segment revenues were $97.2 million, up 1% year-over-year, reflecting the addition of WordStream as well as the divestiture of certain international operations. On a same store basis, ReachLocal segment revenues fell 6.0% due to lower client counts.
• Adjusted EBITDA was $7.6 million, up 23% year-over-year and represented a 7.9% margin compared to 6.4% in the first quarter of 2018. The increase in profitability reflects the addition of WordStream.

First Quarter 2019 Cash Flow

• Net cash flow from operating activities was approximately $37.5 million compared to $65.2 million in the prior year quarter.
• We implemented the new lease accounting standard, ASC 842, on January 1, 2019. As a result of adopting this guidance, we recorded a net right of use asset for operating leases of approximately $268.9 million and a lease liability of approximately $317.4 million. As part of this implementation, we also recorded a tax effected retained earnings adjustment of $13.4 million.
• Capital expenditures were $12.6 million, primarily for product development, technology investments, and maintenance projects.
• The company paid dividends of $18.3 million; there were no share repurchases.
• As of the end of the first quarter, the company had a cash balance of $89.4 million, $130.0 million drawn on its revolver, and $170.5 million in convertible notes(4), or net debt of $211.1 million.

Outlook

For 2019, the company reiterates the following:

• Consolidated revenues of $2.74-2.81 billion.
• Consolidated Adjusted EBITDA outlook of $285-295 million, including roughly $8 million of one-time costs associated with the CEO transition.
• Capital expenditures of $50-60 million, excluding real estate projects.
• Depreciation and amortization of $150-160 million, excluding accelerated depreciation related to facility consolidations.
• The non-operating cost associated with our pension plans, recorded in other non-operating items, is currently estimated to be between $20-25 million as compared to a credit of $5 million in 2018.
• A non-GAAP effective tax rate of 28-30%.(3)

About Gannett

Gannett Co., Inc. (NYSE: GCI) is an innovative, digitally focused media and marketing solutions company committed to strengthening communities across our network. With an unmatched local-to-national reach, Gannett touches the lives of more than 125 million people monthly with our Pulitzer-Prize winning content, consumer experiences and benefits, and advertiser products and services. Gannett brands include USA TODAY NETWORK with the iconic USA TODAY and more than 100 local media brands, digital marketing services companies ReachLocal, WordStream and SweetIQ, and U.K. media company Newsquest. To connect with us, visit www.gannett.com.