MCLEAN, Va.--(BUSINESS WIRE)--Gannett Co., Inc. (NYSE: GCI) today reported its financial results for the fourth quarter and full year ended December 31, 2020.
"During a challenging 2020, we achieved strong operational execution, significant cost and debt reductions, improved operating trends and financial position, and we enter 2021 with good momentum, prepared to implement our subscription-led growth plan," said Michael Reed, Gannett Chairman and Chief Executive Officer. "We are making significant progress on our transition from a traditional media business to a digitally focused content platform, having already surpassed one million digital subscribers. We are committed to becoming a subscription-led business that drives audience growth and engagement by delivering deeper content experiences to our consumers and offering the products and marketing expertise our business partners desire."
He continued, "We have outlined five key operating priorities: accelerating digital subscriber growth, driving digital marketing services growth, optimizing our traditional print operations and advertising businesses, prioritizing investments into growth businesses that support our vision, and building our inclusive and diverse culture. In 2021, you will hear us speak to these priorities regularly and share data points with you to track our progress. We expect this strategy to create significant stockholder value in the coming years by driving increased revenues from digital products, bringing our Company’s total revenue trend back toward growth, and allowing us to continue significant debt reduction."
|in thousands||Fourth Quarter 2020||Full Year 2020|
|Net loss attributable to Gannett||(122,174)||(670,479)|
|Adjusted EBITDA(1) (non-GAAP)||148,829||413,895|
|Net cash flow provided by operating activities||(16,510)||57,770|
|Free cash flow(1) (non-GAAP)||(24,541)||20,795|
|(1)||Refer to "Use of Non-GAAP Information" below for the Company’s definition of Adjusted EBITDA and Free cash flow, as well as the reconciliation of such measures to the most comparable GAAP measure included herein.|
Fourth 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.
- Fourth quarter revenues of $875.4 million rose 25.2% as compared to the prior year quarter reflecting the acquisition of Legacy Gannett.
- Same store pro forma revenues (as defined and reconciled on Table No. 5 below) decreased 16.3%, due to unfavorable impacts resulting from the COVID-19 pandemic and general trends adversely impacting the publishing industry. This is an improvement of 330 basis points over the third quarter 2020 trend.
- Digital advertising and marketing services revenues reached $223.3 million in the fourth quarter, or 25.5% of total revenues.
- Net loss attributable to Gannett of $122.2 million in the fourth quarter reflects a $74.3 million non-cash loss on the derivative associated with our convertible notes and a $42.1 million loss associated with the early extinguishment of debt.
- Adjusted EBITDA totaled $148.8 million, an increase of 50.6% compared to the prior year and represented a 17.0% margin.
- Adjusted EBITDA grew $7.4 million, or 5.4%, year-over-year on a pro forma basis.
Full Year 2020 Consolidated Results
- Full year 2020 revenues of $3.406 billion rose 82.3% as compared to the prior year reflecting the acquisition of Legacy Gannett.
- Same store pro forma revenues decreased 18.5%, due to unfavorable impacts resulting from the COVID-19 pandemic and general trends adversely impacting the publishing industry.
- Digital advertising and marketing services revenues reached $808.4 million in 2020, or 23.7% of total revenues.
- Net loss attributable to Gannett of $670.5 million in 2020 reflects a second quarter non-cash write-down related to the second quarter 2020 impairment of goodwill and intangible assets of $393.4 million, as well as a $74.3 million non-cash loss on the derivative associated with our convertible debt and a $43.8 million loss associated with the early extinguishment of debt, offset by non-operating pension income of $72.1 million.
- Adjusted EBITDA totaled $413.9 million and represented a 12.2% margin.
Balance Sheet & Cash Flow
- As of December 31, 2020, the Company had cash and cash equivalents of $170.7 million.
- During the fourth quarter of 2020, the Company repaid $653.4 million in principle under its $1.075 billion 11.5% term loan (the "Acquisition Term Loan") using the proceeds from the issuance of the $497.1 million 6% senior secured convertible notes due 2027 (the "2027 Convertible Notes"), along with real estate and other asset sales and cash on hand.
- Total debt outstanding as of December 31, 2020 was $1.575 billion, comprised of:
- $1.075 billion Acquisition Term Loan;
- $497.1 million of 2027 Convertible Notes; and
- $3.3 million of 4.75% senior secured convertible notes (the "2024 Convertible Notes").
- Cash flow provided by operations was $57.8 million for the year ended December 31, 2020 compared to $25.5 million for the prior year primarily due to a decrease in pension and postretirement payments of $44.2 million and an increase in tax refunds of $5.2 million, offset by an increase in interest paid of $177.9 million and an increase in severance payments of $73.1 million. The remainder of the change was due to the acquisition of Legacy Gannett, as well as overall timing of receipts and payments.
- Capital expenditures were $8.0 million in the fourth quarter of 2020 and $37.0 million for the year ended December 31, 2020, primarily for product development, technology investments, and operating infrastructure.
- Subsequent to December 31, 2020, the Company further amended its debt structure by:
- Reducing its Acquisition Term Loan debt by an additional $32.6 million utilizing net proceeds from real estate sales; and
- Refinancing the remaining Acquisition Term Loan with a five-year, senior secured term loan facility in an aggregate principal amount of $1.045 billion (the "5-Year Term Loan"), at LIBOR+700 with a 0.75% LIBOR floor.
- Total debt outstanding at February 25, 2021, after giving effect to those changes is $1.545 billion, which includes the $1.045 billion 5-Year Term Loan, $497.1 million of 2027 Convertible Notes, and $3.3 million of 2024 Convertible Notes.
- Cash interest during 2021 is expected to be $90.0 million less than 2020 due to the interest rate savings from the 5-Year Term Loan and 2027 Convertible Notes, and the approximately $250.0 million in debt reduction made since the acquisition of Legacy Gannett.
- The Company also expects to sell an additional $100 million to $125 million in non-core assets during 2021 that are anticipated to accelerate debt pay down and further reduce cash interest costs.
- Targeting first lien net leverage of 1.0x by the end of 2022.
Fourth Quarter 2020 Publishing Segment
- Publishing segment revenues totaled $794.2 million in the fourth quarter.
- Circulation revenues totaled $338.5 million in the fourth quarter.
- Same store pro forma circulation revenues decreased 13.6% in the fourth quarter, primarily driven by single copy sales, reflecting the impact of the COVID-19 pandemic on businesses that buy and sell copies of our publications, and the overall secular declines in the volume of home delivery due to subscriber declines.
- Print advertising revenues totaled $237.6 million in the fourth quarter, reflecting continued secular pressures.
- Same store pro forma print advertising revenues decreased 26.9% compared to the prior year fourth quarter, a 400 basis point improvement over the third quarter of 2020, reflecting secular industry trends and the negative impact of the COVID-19 pandemic on all categories.
- Digital advertising and marketing services revenues were $146.5 million in the fourth quarter.
- Same store pro forma digital advertising and marketing services revenues decreased 2.0% versus the same period in the prior year, an improvement from the 13.5% year-over-year decline we experienced in the third quarter of 2020.
- Other revenues contributed $71.6 million in the fourth quarter.
- Digital-only subscriptions totaled approximately 1.1 million at the end of the fourth quarter, up 29% year-over-year.
- Publishing segment Net income attributable to Gannett was $104.9 million and Adjusted EBITDA was $147.4 million, representing an Adjusted EBITDA margin of 18.6% for the fourth quarter.
Fourth Quarter 2020 Digital Marketing Solutions Segment
- Digital Marketing Solutions segment revenues were $107.3 million in the fourth quarter.
- Same store pro forma Digital Marketing Solutions segment revenues decreased by 10.3% compared to the prior year fourth quarter, versus the 17.4% decline that we experienced in the third quarter of 2020. Fourth quarter 2020 trend improvement was driven by overall growth in our core ReachLocal business, offset by continued impacts from the COVID-19 pandemic.
- Digital Marketing Solutions segment Net income attributable to Gannett was $0.6 million and Adjusted EBITDA was $9.5 million, representing an Adjusted EBITDA margin of 8.9% for the quarter.
Integration of Legacy Gannett Update
- Realized $61 million in savings in the fourth quarter, bringing our total 2020 integration savings to approximately $177 million.
- On an annualized basis, that will result in over $245 million of ongoing savings.
- Management remains confident in its ability to implement additional measures by the end of 2021 that are expected to result in over $300 million in aggregate annualized synergies.
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.