Gannett Announces Fourth Quarter and Full Year 2020 Results

MCLEAN, Va.–(BUSINESS WIRE)–Feb 25, 2021–
Gannett Co., Inc. ("Gannett", "we", "us", "our", or the "Company") (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."
Financial Highlights

in thousands Fourth Quarter 2020   Full Year 2020
Revenues $ 875,447     $ 3,405,670  
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.

Earnings Conference Call
Management will host a conference call on Thursday, February 25, 2021 at 8:30 A.M. Eastern Time. A copy of the earnings release will be posted to the Investor Relations section of Gannett’s website, investors.gannett.com. The conference call may be accessed by dialing 1-855-319-1124 (from within the U.S.) or 1-703-563-6359 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference “Gannett Fourth Quarter and Full Year 2020 Earnings Call” or access code “6922159”. A simultaneous webcast of the conference call will be available to the public on a listen-only basis at investors.gannett.com. Please allow extra time prior to the call to visit the website and download any necessary software required to listen to the internet broadcast. A telephonic replay of the conference call will also be available approximately two hours following the call’s completion through 11:59 P.M. Eastern Time on Thursday, April 8, 2021 by dialing 1-855-859-2056 (from within the U.S.) or 1-404-537-3406 (from outside of the U.S.); please reference access code “6922159”.
About Gannett
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.
Same Store Pro Forma Revenues
Same store pro forma revenues are based on (i) the sum of GAAP revenues for New Media and Legacy Gannett prior to New Media’s acquisition of Legacy Gannett and (ii) GAAP revenues for Gannett for the current period, excluding (1) revenues related to the acquisitions that occurred in 2019, including Legacy Gannett, from the beginning of 2020 through the first year anniversary of the applicable acquisition date, (2) exited operations, (3) currency impacts, and (4) deferred revenue impacts related to the acquisition of Legacy Gannett.
Cautionary Statement Regarding Forward-Looking Statements
Certain items in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding measures expected to result in over $90 million in annualized cash interest savings, our ability to achieve our operating priorities and increase stockholder value, our digital revenue performance, shifts in our revenue mix and the timing of realizing such shifts, the potential sales of non-core assets, including the anticipated use of any proceeds from such sales, integration of our acquisitions, our ability to achieve $300 million of synergies through measures expected to be implemented by the end of 2021, our expectations, in terms of both amount and timing, with respect to debt repayment, real estate sales and debt refinancing, growth of our digital-only subscriptions, digital marketing services, and events and promotions businesses, the impact from and our response to the COVID-19 pandemic, our strategy, and future revenue trends and our ability to influence trends. These statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties. These and other risks and uncertainties could cause actual results to differ materially from those described in the forward-looking statements, many of which are beyond our control. The Company can give no assurance its expectations will be attained. Accordingly, you should not place undue reliance on any forward-looking statements contained in this press release. For a discussion of some of the risks and important factors that could cause actual results to differ from such forward-looking statements, see the risks and other factors detailed from time to time in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other filings with the Securities and Exchange Commission. Furthermore, new risks and uncertainties emerge from time to time, and it is not possible for the Company to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this press release. The Company expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.

CONSOLIDATED BALANCE SHEETS
Gannett Co., Inc.
In thousands (except per share amounts)
 
Table No. 1      
Assets December 31,
2020
  December 31,
2019
Current assets:      
Cash and cash equivalents $ 170,725     $ 156,042  
Accounts receivable, net of allowance for doubtful accounts of $20,843 and $19,923, respectively 314,305     438,523  
Inventories 35,075     55,090  
Prepaid expenses and other current assets 116,581     129,460  
Total current assets 636,686     779,115  
Property, plant, and equipment, net 590,272     815,807  
Operating lease assets 289,504     309,112  
Goodwill 534,088     914,331  
Intangible assets, net 824,650     1,012,564  
Deferred tax assets 90,240     76,297  
Other assets 143,474     112,876  
Total assets $ 3,108,914     $ 4,020,102  
       
Liabilities and equity      
Current liabilities:      
Accounts payable and accrued expenses $ 378,246     $ 453,628  
Deferred revenue 186,007     218,823  
Current portion of long-term debt 128,445     3,300  
Other current liabilities 48,602     42,702  
Total current liabilities 741,300     718,453  
Long-term debt 890,323     1,636,335  
Convertible debt 581,405     3,300  
Deferred tax liabilities 6,855     9,052  
Pension and other postretirement benefit obligations 99,765     235,906  
Long-term operating lease liabilities 274,460     297,662  
Other long-term liabilities 151,847     136,188  
Total noncurrent liabilities 2,004,655     2,318,443  
Total liabilities 2,745,955     3,036,896  
Redeemable noncontrolling interests (1,150)     1,850  
Commitments and contingent liabilities      
       
Equity      
Preferred stock, $0.01 par value, 300,000 shares authorized, of which 150,000 shares are designated as
Series A Junior Participating Preferred Stock, none of which were outstanding at December 31, 2020 and
December 31, 2019
     
Common stock, $0.01 par value, 2,000,000,000 shares authorized; 139,494,741 shares issued and
138,102,993 shares outstanding at December 31, 2020; 129,386,258 shares issued and 128,991,544
shares outstanding at December 31, 2019
1,395     1,294  
Treasury stock, at cost, 1,391,748 and 394,714 shares at December 31, 2020 and December 31, 2019, respectively (4,903)     (2,876)  
Additional paid-in capital 1,103,881     1,090,694  
Accumulated deficit (786,437)     (115,958)  
Accumulated other comprehensive loss (income) 50,173     8,202  
Total equity 364,109     981,356  
Total liabilities and equity $ 3,108,914     $ 4,020,102  
CONSOLIDATED STATEMENTS OF OPERATIONS
Gannett Co., Inc.
In thousands (except per share amounts)
 
Table No. 2 Three months ended   Year ended
  December 31,
2020
  December 31,
2019
  December 31,
2020
  December 31,
2019
  (Unaudited)        
Operating revenues:              
Advertising and marketing services $ 461,088     $ 370,324     $ 1,710,244     $ 952,644  
Circulation 338,468     255,574     1,391,996     704,842  
Other 75,891     73,376     303,430     210,423  
Total operating revenues 875,447     699,274     3,405,670     1,867,909  
Operating costs 498,733     398,322     2,034,272     1,079,593  
Selling, general and administrative expenses 232,514     226,611     999,789     602,106  
Depreciation and amortization 58,113     43,148     263,819     111,882  
Integration and reorganization costs 71,753     38,999     145,731     52,212  
Acquisition costs 891     45,300     11,152     60,618  
Asset impairments 2,585     540     11,029     3,009  
Goodwill and intangible impairments     100,743     393,446     100,743  
Net (gain) loss on sale or disposal of assets (7,220)     1,384     (5,680)     4,723  
Total operating expenses 857,369     855,047     3,853,558     2,014,886  
Operating income (loss) 18,078     (155,773)     (447,888)     (146,977)  
Interest expense 54,623     33,283     228,513     63,660  
Loss on early extinguishment of debt 42,110     6,058     43,760     6,058  
Non-operating pension income (17,716)     (8,460)     (72,149)     (9,085)  
Unrealized loss on Convertible notes derivative 74,329         74,329      
Gain on sale of investments         (7,995)      
Other income, net (1,506)     (249)     (8,499)     (426)  
Non-operating expense 151,840     30,632     257,959     60,207  
Loss before income taxes (133,762)     (186,405)     (705,847)     (207,184)  
Benefit for income taxes (11,250)     (90,924)     (33,450)     (85,994)  
Net loss $ (122,512)     $ (95,481)     $ (672,397)     $ (121,190)  
Net loss attributable to redeemable noncontrolling interests (338)     (393)     (1,918)     (1,348)  
Net loss attributable to Gannett $ (122,174)     $ (95,088)     $ (670,479)     $ (119,842)  
Loss per share attributable to Gannett – basic $ (0.92)     $ (1.05)     $ (5.09)     $ (1.77)  
Loss per share attributable to Gannett – diluted $ (0.92)     $ (1.05)     $ (5.09)     $ (1.77)  
Dividends declared per share $     $     $     $ 1.52  
CONSOLIDATED STATEMENTS OF CASH FLOWS
Gannett Co., Inc.
In thousands
 
Table No. 3 Year ended
  December 31,
2020
  December 31,
2019
Operating activities:      
Net loss $ (672,397)     $ (121,190)  
Adjustments to reconcile net loss to operating cash flows:      
Depreciation and amortization 263,819     111,882  
Facility consolidation costs 3,629     148  
Share-based compensation 26,350     11,324  
Non-cash interest expense 24,086     3,851  
Non-cash acquisition related costs     26,411  
Benefit for deferred income taxes (30,175)     (87,765)  
Net (gain) loss on sale or disposal of assets (5,680)     4,723  
Unrealized loss on Convertible notes derivative 74,329      
Non-cash loss on early extinguishment of debt 43,760     6,058  
Asset impairments 11,029     3,009  
Goodwill and intangible impairments 393,446     100,743  
Pension and other postretirement benefit obligations (117,522)     (100,452)  
Change in assets and liabilities:      
Accounts receivables, net 111,506     12,608  
Inventory 19,965     5,150  
Prepaid expenses 4,078     7,016  
Accounts payable and accrued liabilities (66,377)     44,311  
Deferred revenue (19,348)     (8,326)  
Other assets and liabilities (6,728)     6,034  
Net cash provided by operating activities 57,770     25,535  
Investing activities:      
Acquisitions, net of cash acquired     (796,502)  
Purchases of property, plant, and equipment (36,975)     (13,978)  
Proceeds from sale of publications, real estate and other assets 196,344     27,486  
Insurance proceeds received for damaged of property 1,643      
Change in other investing activities (876)     (2,066)  
Net cash used for investing activities 160,136     (785,060)  
Financing activities:      
Payments of debt issuance costs (2,307)     (121,223)  
Borrowings under term loans     1,792,000  
Borrowings under revolving credit facility     153,900  
Repayments under term loans (681,050)     (481,058)  
Repayments under revolving credit facility     (153,900)  
Repayments of convertible debt     (197,950)  
Proceeds from convertible debt 497,094      
Issuance of common stock, net of underwriters’ discount 4      
Payments of dividends     (91,936)  
Changes in other financing activities (15,083)     (920)  
Net cash (used for) provided by financing activities (201,342)     898,913  
Effect of currency exchange rate change 1,498     (3,494)  
Increase in cash, cash equivalents and restricted cash 18,062     135,894  
Balance of cash, cash equivalents and restricted cash at beginning of year 188,664     52,770  
Cash, cash equivalents and restricted cash at end of year $ 206,726     $ 188,664  
SEGMENT INFORMATION
Gannett Co., Inc.
Unaudited, In thousands
 
Table No. 4 Three months ended   Year ended
  December 31,
2020
  December 31,
2019
  December 31,
2020
  December 31,
2019
Operating revenues:              
Publishing $ 794,179     $ 653,877     $ 3,080,447     $ 1,792,652  
Digital Marketing Solutions 107,318     69,336     428,605     149,242  
Corporate and Other 2,820     2,018     10,960     4,554  
Intersegment eliminations (28,870)     (25,957)     (114,342)     (78,539)  
Total $ 875,447     $ 699,274     $ 3,405,670     $ 1,867,909  
               
Adjusted EBITDA:              
Publishing $ 147,428     $ 113,334     $ 459,195     $ 268,916  
Digital Marketing Solutions 9,514     4,024     24,361     (3,279)  
Corporate and Other (8,113)     (18,537)     (69,661)     (41,766)  
Total $ 148,829     $ 98,821     $ 413,895     $ 223,871  
               
Depreciation and amortization:              
Publishing $ 45,756     $ 37,442     $ 221,746     $ 101,881  
Digital Marketing Solutions 7,775     3,714     25,878     6,534  
Corporate and Other 4,582     1,992     16,195     3,467  
Total $ 58,113     $ 43,148     $ 263,819     $ 111,882  
SAME STORE REVENUES
Gannett Co., Inc.
Unaudited, in thousands
 
   
Table No. 5 Three months ended   Year ended  
  December 31,
2020
  December 31,
2019
  % Change   December 31,
2020
  December 31,
2019
  % Change  
                         
Total revenue (a) $ 875,447     $ 1,054,252     (17.0) %   $ 3,405,670     $ 4,182,220     (18.6) %  
Acquired revenues         ***   (16,350)         ***  
Currency impact (1,698)         ***   (832)         ***  
Exited operations (1)     (21,400)     (100.0) %   (12)     (29,894)     (100.0) %  
Deferred revenue adjustment 221     10,791     (98.0)     3,597     10,791     (66.7)    
Same store pro forma revenue $ 873,969     $ 1,043,643     (16.3) %   $ 3,392,073     $ 4,163,117     (18.5) %  
                         
Advertising and marketing
services revenue (a)
$ 461,088     $ 566,211     (18.6) %   $ 1,710,244     $ 2,227,318     (23.2) %  
Acquired revenues         ***   (3,283)         ***  
Currency impact (1,187)         ***   (481)         ***  
Exited operations (1)     (12,872)     (100.0) %   (12)     (20,326)     (99.9) %  
Deferred revenue adjustment 28     1,262     (97.8)     1,202     1,262     (4.8)    
Same store pro forma
advertising and marketing
services revenue
$ 459,928     $ 554,601     (17.1) %   $ 1,707,670     $ 2,208,254     (22.7) %  
                         
Circulation revenue (a) $ 338,468     $ 384,376     (11.9) %   $ 1,391,996     $ 1,574,054     (11.6) %  
Acquired revenues         ***   (1,803)         ***  
Currency impact (423)         ***   (347)         ***  
Exited operations     (2,343)     (100.0)         (2,824)     (100.0)    
Deferred revenue adjustment 193     9,529     (98.0)     2,395     9,529     (74.9)    
Same pro forma store
circulation revenue
$ 338,238     $ 391,562     (13.6) %   $ 1,392,241     $ 1,580,759     (11.9) %  
                         
Other revenue (a) $ 75,891     $ 103,665     (26.8) %   $ 303,430     $ 380,848     (20.3) %  
Acquired revenues         ***   (11,264)         ***  
Currency impact (88)         ***   (4)         ***  
Exited operations     (6,185)     (100.0) %       (6,744)     (100.0) %  
Same store pro forma other revenue $ 75,803     $ 97,480     (22.2) %   $ 292,162     $ 374,104     (21.9) %  
(a)   Revenue for 2019 represents unaudited pro forma Revenues, which assumes that the acquisition of Legacy Gannett, along with transactions necessary to finance the acquisition, occurred at the beginning of 2019.
***   Indicates a percentage change greater than 100.

USE OF NON-GAAP INFORMATION
The Company uses non-GAAP financial performance and liquidity measures to supplement the financial information presented on a GAAP basis. These non-GAAP financial measures, which may not be comparable to similarly titled measures reported by other companies, should not be considered in isolation from or as a substitute for the related GAAP measures and should be read together with financial information presented on a GAAP basis.
The Company defines its non-GAAP measures as follows:

  • Adjusted EBITDA is a non-GAAP performance measure the Company believes offers a useful view of the overall operations of our business. The Company defines Adjusted EBITDA as Net income (loss) attributable to Gannett before: (1) Income tax expense (benefit), (2) Interest expense, (3) Gains or losses on early extinguishment of debt, (4) Non-operating pension income (expense), (5) Unrealized (gain) loss on Convertible notes derivative, (6) Other Non-operating items, primarily equity income, (7) Depreciation and amortization, (8) Integration and reorganization costs, (9) Asset impairments, (10) Goodwill and intangible impairments, (11) Gains or losses on the sale or disposal of assets, (12) Share-based compensation expense, (13) Acquisition costs, (14) Gains or losses on the sale of investments, and (15) certain other non-recurring charges. The most directly comparable GAAP measure is Net income (loss) attributable to Gannett.
  • Free cash flow is a non-GAAP liquidity measure that adjusts our reported GAAP results for items we believe are critical to the ongoing success of our business. The Company defines Free cash flow as Net cash provided by operating activities as reported on the Statement of Cash Flows less capital expenditures, which results in a figure representing Free cash flow available for use in operations, additional investments, debt obligations, and returns to stockholders. The most directly comparable GAAP financial measure is Net cash from operating activities.

Management’s Use of Non-GAAP Measures
Adjusted EBITDA and Free cash flow are not measurements of financial performance under GAAP and should not be considered in isolation or as an alternative to income from operations, net income (loss), cash flow from operating activities, or any other measure of performance or liquidity derived in accordance with GAAP. We believe these non-GAAP financial measures as we have defined them are helpful in identifying trends in our day-to-day performance because these items excluded have little or no significance on our day-to-day operations. These measures provide an assessment of controllable expenses and affords management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieve optimal financial performance.
Adjusted EBITDA provides us with a measure of financial performance, independent of items that are beyond the control of management in the short-term such as depreciation and amortization, taxation, non-cash impairments, and interest expense associated with our capital structure. This metric measures our financial performance based on operational factors that management can impact in the short-term, namely the cost structure or expenses of the organization. Adjusted EBITDA is one of the metrics we use to review the financial performance of our business on a monthly basis.
We use Adjusted EBITDA as a measure of our day-to-day operating performance, which is evidenced by the publishing and delivery of news and other media and excludes certain expenses that may not be indicative of our day-to-day business operating results.
Limitations of Adjusted EBITDA and Free Cash Flow
Each of our non GAAP measures have limitations as an analytical tool. They should not be viewed in isolation or as a substitute for GAAP measures of earnings or cash flows. Material limitations in making the adjustments to our earnings to calculate Adjusted EBITDA and using this non-GAAP financial measure as compared to GAAP net income (loss) include: the cash portion of interest / financing expense, income tax (benefit) provision, and charges related to asset impairments, which may significantly affect our financial results.
A reader of our financial statements may find this item important in evaluating our performance, results of operations, and financial position. We use non-GAAP financial measures to supplement our GAAP results in order to provide a more complete understanding of the factors and trends affecting our business.
Adjusted EBITDA and Free Cash Flow are not alternatives to net income, income from operations, or cash flows provided by or used in operations as calculated and presented in accordance with GAAP. Readers of our financial statements should not rely on Adjusted EBITDA or Free Cash Flow as a substitute for any such GAAP financial measure. We strongly urge readers of our financial statements to review the reconciliations of Net income (loss) attributable to Gannett to Adjusted EBITDA and Cash provided by operations to Free Cash Flow along with our consolidated financial statements included elsewhere in this report. We also strongly urge readers of our financial statements to not rely on any single financial measure to evaluate our business. In addition, because Adjusted EBITDA and Free Cash Flow are not a measures of financial performance under GAAP and are susceptible to varying calculations, the Adjusted EBITDA and Free Cash Flow measures as presented in this report may differ from and may not be comparable to similarly titled measures used by other companies.

NON-GAAP FINANCIAL INFORMATION
ADJUSTED EBITDA
Gannett Co., Inc.
Unaudited, in thousands
 
Table No. 6 Three months ended December 31, 2020
  Publishing   Digital
Marketing
Solutions
  Corporate and
Other
  Consolidated
Total
               
Net income (loss) attributable to Gannett $ 104,884     $ 582     $ (227,640)     $ (122,174)  
Benefit for income taxes         (11,250)     (11,250)  
Interest expense 15         54,608     54,623  
Loss on early extinguishment of debt         42,110     42,110  
Non-operating pension income (17,643)         (73)     (17,716)  
Unrealized loss on Convertible notes derivative         74,329     74,329  
Other non-operating (income) expense, net (839)     (2,100)     1,433     (1,506)  
Depreciation and amortization 45,756     7,775     4,582     58,113  
Integration and reorganization costs 21,803     1,076     48,874     71,753  
Acquisition costs         891     891  
Asset impairments 2,585             2,585  
Net (gain) loss on sale or disposal of assets (9,417)     2,153     44     (7,220)  
Share-based compensation expense         3,538     3,538  
Other items 284     28     441     753  
Adjusted EBITDA (non-GAAP basis) $ 147,428     $ 9,514     $ (8,113)     $ 148,829  
               
  Three months ended December 31, 2019
  Publishing   Digital
Marketing
Solutions
  Corporate and
Other
  Consolidated
Total
               
Net loss attributable to Gannett $ (52,036)     $ (1,392)     $ (41,660)     $ (95,088)  
Benefit for income taxes         (90,924)     (90,924)  
Interest expense 24         33,259     33,283  
Loss on early extinguishment of debt         6,058     6,058  
Non-operating pension income (1,861)         (6,599)     (8,460)  
Other non-operating (income) expense, net 1,855     (775)     (1,329)     (249)  
Depreciation and amortization 37,442     3,714     1,992     43,148  
Integration and reorganization costs 14,420     965     23,614     38,999  
Acquisition costs         45,300     45,300  
Asset impairments 540             540  
Goodwill and intangible impairments 100,743             100,743  
Net (gain) loss on sale or disposal of assets 1,289     (8)     103     1,384  
Share-based compensation expense         8,790     8,790  
Other items 10,918     1,520     2,859     15,297  
Adjusted EBITDA (non-GAAP basis) $ 113,334     $ 4,024     $ (18,537)     $ 98,821  
NON-GAAP FINANCIAL INFORMATION
ADJUSTED EBITDA
Gannett Co., Inc.
Unaudited, in thousands
 
Table No. 6 (continued) Year ended December 31, 2020
  Publishing   Digital
Marketing
Solutions
  Corporate and
Other
  Consolidated
Total
               
Net loss attributable to Gannett $ (108,606)     $ (42,494)     $ (519,379)     $ (670,479)  
Benefit for income taxes         (33,450)     (33,450)  
Interest expense 142         228,371     228,513  
Loss on early extinguishment of debt         43,760     43,760  
Non-operating pension income (71,858)         (291)     (72,149)  
Unrealized loss on Convertible notes derivative         74,329     74,329  
Gain on sale of investments (195)     (7,800)         (7,995)  
Other non-operating income, net (6,029)     (2,278)     (192)     (8,499)  
Depreciation and amortization 221,746     25,878     16,195     263,819  
Integration and reorganization costs 60,852     6,663     78,216     145,731  
Acquisition costs         11,152     11,152  
Asset impairments 10,312     717         11,029  
Goodwill and intangible impairments 352,947     40,499         393,446  
Net (gain) loss on sale or disposal of assets (7,541)     1,727     134     (5,680)  
Share-based compensation expense         26,350     26,350  
Other items 7,425     1,449     5,144     14,018  
Adjusted EBITDA (non-GAAP basis) $ 459,195     $ 24,361     $ (69,661)     $ 413,895  
 
  Year ended December 31, 2019
  Publishing   Digital
Marketing
Solutions
  Corporate and
Other
  Consolidated
Total
               
Net income (loss) attributable to Gannett $ 22,523     $ (14,006)     $ (128,359)     $ (119,842)  
Benefit for income taxes         (85,994)     (85,994)  
Interest expense 123         63,537     63,660  
Loss on early extinguishment of debt         6,058     6,058  
Non-operating pension income (2,486)         (6,599)     (9,085)  
Other non-operating (income) expense, net 1,517     (775)     (1,168)     (426)  
Depreciation and amortization 101,881     6,534     3,467     111,882  
Integration and reorganization costs 23,487     2,202     26,523     52,212  
Acquisition costs     (38)     60,656     60,618  
Asset impairments 3,009             3,009  
Goodwill and intangible impairments 100,743             100,743  
Net (gain) loss on sale or disposal of assets 4,036     (5)     692     4,723  
Share-based compensation expense         11,324     11,324  
Other items 14,083     2,809     8,097     24,989  
Adjusted EBITDA (non-GAAP basis) $ 268,916     $ (3,279)     $ (41,766)     $ 223,871  
NON-GAAP FINANCIAL INFORMATION
FREE CASH FLOW
Gannett Co., Inc.
Unaudited, in thousands
 
Table No. 7    
  Three months ended
December 31, 2020
Year ended December
31, 2020
     
Net cash flow (used for) provided by operating activities (GAAP basis) $ (16,510)   $ 57,770  
Capital expenditures (8,031)   (36,975)  
Free cash flow (non-GAAP basis) (a) $ (24,541)   $ 20,795  
(a)   Free cash flow for the fourth quarter of 2020 was negatively impacted by $53.5 million of integration and reorganization costs. Free cash flow for the full year of 2020 was negatively impacted by $132.2 million of integration and reorganization costs, $6.1 million of acquisition costs, and $2.6 million of other one-time adjustments.

 
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CONTACT: For investor inquiries:
Ashley Higgins
Investor Relations
212-479-3160
investors@gannett.com
For media inquiries:
Stephanie Tackach
Director, Public Relations
212-715-5490
stackach@gannett.com
KEYWORD: UNITED STATES NORTH AMERICA VIRGINIA
INDUSTRY KEYWORD: PROFESSIONAL SERVICES MARKETING ADVERTISING COMMUNICATIONS SMALL BUSINESS PUBLISHING
SOURCE: Gannett Co., Inc.
Copyright Business Wire 2021.
PUB: 02/25/2021 06:30 AM/DISC: 02/25/2021 06:31 AM
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