MCLEAN, Va.--(BUSINESS WIRE)--Gannett Co., Inc.(NYSE:GCI) today reported its financial results for the third quarter ended September 30, 2020.

“Our third quarter results showed a significant and rapid rebound from the second quarter impact of the COVID pandemic and economic shut down,” said Michael Reed, Gannett Chairman and Chief Executive Officer. “Our same store revenue trend, though down 19.6% year over year, improved meaningfully over our second quarter trend of down 28.0% year over year. Third quarter Adjusted EBITDA was $88 million, up from $78 million in the second quarter. These results are particularly encouraging given the seasonal drag that we usually experience in the third quarter. We also reached a major milestone in our digital subscription growth, surpassing 1 million digital subscriptions during the quarter, thanks to continued strong growth of more than 31% year over year. As we continue to focus on transitioning to a subscription-led business model, we expect to leverage this important milestone to accelerate growth in 2021 and beyond.”

"We are also pleased to announce substantial progress on debt repayment and a strong liquidity position. Since the beginning of the fourth quarter, we have sold approximately $100 million of non-core assets and real estate. We'll apply the net proceeds of these sales to reduce our total debt outstanding to $1.633 billion. We are targeting another $100 million of debt repayment by early next year and remain focused on refinancing our credit agreement during the first half of 2021. In the meantime, our effective cost management and synergy implementation continue to bolster our liquidity; we ended the quarter with $189 million in cash on the balance sheet."

Financial Highlights

Third Quarter 2020 Consolidated Results

Note: During the comparable period in 2019 until November 19, 2019, our corporate name was New Media Investment Group Inc. ("New Media"), and Gannett Co., Inc. (“Legacy Gannett”) was a separate publicly traded company. On November 19, 2019, we completed the acquisition of Legacy Gannett and changed our name to Gannett Co., Inc.

• Third quarter revenues of $814.5 million rose 116.3% as compared to the prior year, reflecting the acquisition of Legacy Gannett.
  • Same store pro forma revenues (as defined and reconciled below) decreased 19.6%, due to unfavorable impacts resulting from the COVID-19 pandemic and general trends adversely impacting the publishing industry.
• Digital advertising and marketing services revenues were $197.2 million in the third quarter, or 24.2% of total revenues.
• Over $218 million in annualized synergy measures were implemented by the end of the third quarter, with approximately $54.5 million in savings recognized in the quarter.
• On a pro forma basis, operating expenses included in Adjusted EBITDA decreased 19.3% to the prior year quarter due to the implementations of synergies, normal course cost reductions, and temporary expense actions in response to the COVID-19 pandemic.
• GAAP net loss attributable to Gannett of $31.3 million in the third quarter reflects $61.4 million of depreciation and amortization.
• Adjusted EBITDA totaled $88.0 million. Margins in the quarter were 10.8%, despite the pressures from the COVID-19 pandemic.

Balance Sheet & Cash Flow

• As of the end of the third quarter, the Company had cash and cash equivalents of $189.0 million.
• During the quarter, the Company repaid $8.6 million in principal under its credit facility.
  • Total debt outstanding at the end of the third quarter was $1.732 billion.
  • Net debt outstanding at the end of the third quarter was $1.543 billion.
• Capital expenditures were $6.8 million, reflecting investments related to digital product development, real estate projects and ongoing facility consolidations. We expect capital expenditures to be between $9 - $10 million in the fourth quarter.
• Cash flow provided by operations in the third quarter of 2020 was $49.6 million compared to cash flow provided of $40.9 million for the prior year quarter primarily driven by increases in working capital partially offset by interest paid and integration costs related to the acquisition of Legacy Gannett.
• Subsequent to the end of the quarter, the Company closed on the sales of:
  • Approximately $95 million of non-core assets including BridgeTower Media, our business publications unit, the Nantucket Inquirer & Mirror, and other non-core assets, and
  • Approximately $5 million of real estate sales.
  • Net proceeds will be used to pay down outstanding debt to $1.633 billion.

COVID-19 Response

• Maintained our previously stated efforts to strengthen our balance sheet and preserve liquidity, adapt our workplaces, promote the health and safety of our employees, and support our communities through high-quality journalism and the creation of innovative solutions to support small businesses.

Publishing Segment

• Publishing segment revenues totaled $732.2 million in the third quarter.
• Circulation revenues totaled $336.2 million in the third quarter.
  • Same store pro forma circulation revenues decreased 13.2% in the third quarter, partially stemming from a reduction in volume of our single copy and home delivery sales, reflecting the impact of the COVID-19 pandemic on businesses that sell single copies of our publications as well as general industry trends.
• Print advertising revenues totaled $208.2 million in the third quarter.
  • Same store pro forma print advertising revenues decreased 30.9% compared to the prior year reflecting the negative impact from the COVID-19 pandemic.
• Digital advertising and marketing services revenues were $121.3 million in the third quarter.
  • Same store pro forma digital advertising and marketing services revenues decreased 13.5% versus the prior year period, reflecting the impacts from the COVID-19 pandemic.
• Commercial printing and other revenues contributed $66.6 million in the third quarter.
• Paid digital-only subscribers now total approximately 1.029 million, up 31.1% year-over-year on a pro forma basis.
• Publishing segment Adjusted EBITDA was $108.8 million, representing a margin of 14.9% for the quarter.

Marketing Solutions Segment

• Marketing Solutions segment revenues were $105.4 million in the third quarter.
  • Same store pro forma Marketing Solutions segment revenues decreased by 17.4% to the prior year, an improvement to the second quarter, which was driven by stronger national and large account sales offset by continued impacts from the COVID-19 pandemic that began in the latter part of the first quarter.
• Marketing Solutions segment Adjusted EBITDA was $4.2 million, representing a margin of 4.0% for the quarter.

Integration Update

• Implemented cumulative measures by the end of the third quarter that will result in over $218 million in annualized savings.
  • Realized $54.5 million in savings in the third quarter.
• Expect to have implemented measures that will result in over $240 million in annualized savings by the end of the fourth quarter.
  • Expect to realize $60 - $65 million in savings during the fourth quarter.
• Management remains highly confident in its ability to implement measures by the end of 2021 that are expected to result in $300 million in annualized synergies.

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., Gannett Ventures, formerly GateHouse Live. To connect with us, visit www.gannett.com.