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Share Name | Share Symbol | Market | Type |
---|---|---|---|
New Gannett Co Inc | NYSE:GCI | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 3.36 | 2 | 13:29:52 |
Digital Revenues Reach 37% of Total Revenues
Digital Advertising and Marketing Services Revenues Reach 50% of Total Advertising and Marketing Services Revenues
Company Separately Announces Appointment of Paul Bascobert as President and Chief Executive Officer
Company Separately Announces a Definitive Agreement with New Media
Gannett Co., Inc. (NYSE:GCI) ("Gannett" or "company" or "we" or "our") today reported second quarter 2019 financial results for the period ended June 30, 2019.
"We are pleased with our results for the second quarter, delivering Adjusted EBITDA in-line with our expectations and achieving a key milestone with 50% of our advertising and marketing services revenue from digital sources," said Barbara Wall, senior vice president, interim chief operating officer and chief legal officer. "Print advertising and circulation trends were stable in the quarter and we delivered sequential improvements in our client counts and retention within our digital marketing services business. We believe we are well positioned to drive future growth within digital advertising and marketing services."
"We reported another quarter of strong cost management as our same store operating expenses declined 9% year-over-year," said Ali Engel, senior vice president and chief financial officer. "We continue to focus on initiatives that will drive efficiencies and improve productivity to enable strategic investment in our digital transformation, while also maintaining margins."
Second Quarter 2019 Consolidated Results
Second Quarter 2019 Publishing Segment
Second Quarter 2019 ReachLocal Segment
Second Quarter 2019 Cash Flow
Outlook
For 2019, the company's outlook remains unchanged:
1 The company defines adjusted EBITDA as earnings before income taxes, interest expense, equity income, other non-operating items, restructuring costs, acquisition-related expenses, asset impairment charges, depreciation, amortization and other items. We define the non-GAAP effective tax rate as the tax rate excluding any non-recurring one-item tax adjustments. Because of the variability of these and other items as well as the impact of future events on these items, management is unable to reconcile without unreasonable effort the company's forecasted range of adjusted EBITDA and non-GAAP tax rate for the full year to a comparable GAAP range.
2 The total aggregate principal related to our offering of convertible notes was $201.3 million. At issuance, this principal value was bifurcated into liability and equity components totaling $171.8 million and $30.2 million, respectively. The carrying value of the liability component as of June 30, 2019 is $171.8 million.
* * * *
CEO Appointment
In a separate release issued today, Gannett also announced that Paul Bascobert has been appointed President and Chief Executive Officer and a member of the Gannett Board of Directors, effective immediately. Mr. Bascobert will become Chief Executive Officer of the combined operating company to be formed in connection with the transaction with New Media Investment Group Inc. (“New Media”) (NYSE: NEWM) announced separately today.
New Media Transaction and Conference Call Information
In a separate release issued today, Gannett and New Media announced a definitive agreement pursuant to which New Media will acquire Gannett for a combination of cash and stock. As a result of this announcement, Gannett has cancelled the second quarter 2019 earnings conference call scheduled for 10:00 a.m. EST tomorrow, August 6, 2019. Gannett and New Media will conduct a joint conference call and webcast today, August 5, 2019, at 4:15 p.m. EST. The webcast of the conference call will be accessible through each company’s website, or listen-only conference lines. U.S. callers should dial 1-855-319-1124 and international callers should dial 1-703-563-6359 at least 10 minutes prior to the scheduled start of the call. The confirmation code for the conference call is 3747329.
The webcast replay of the conference call will also be available approximately two hours following the completion of the call on the Investor Relation section of each company’s website.
* * * *
Forward Looking Statements
This press release contains certain forward-looking statements regarding business strategies, market potential, future financial performance and other matters. Forward-looking statements include all statements that are not historical facts. The words “believe,” “expect,” “estimate,” “could,” “should,” “intend,” “may,” “plan,” “seek,” “anticipate,” “project” and similar expressions, among others, generally identify forward-looking statements, which speak only as of the date the statements were made and are not guarantees of future performance. Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of our management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. Whether or not any such forward-looking statements are in fact achieved will depend on future events, some of which are beyond our control. The matters discussed in these forward-looking statements are subject to a number of risks, trends, uncertainties and other factors that could cause actual results to differ materially from those projected, anticipated or implied in the forward-looking statements. These factors include, among other things:
A further description of these and other important risks, trends, uncertainties and other factors is provided in the company’s filings with the U.S. Securities and Exchange Commission, including the company’s annual report on Form 10-K for fiscal year 2018. Any forward-looking statements should be evaluated in light of these important risk factors. The company is not responsible for updating or revising any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Non-GAAP Financial Measures
This press release also contains a discussion of certain non-GAAP financial measures that the company presents to allow investors and analysts to measure, analyze and compare its financial condition and results of operations in a meaningful and consistent manner. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the tables accompanying this press release.
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.
CONSOLIDATED STATEMENTS OF INCOME (LOSS) Gannett Co., Inc. and Subsidiaries Unaudited, in thousands (except per share amounts)
Table No. 1
Three months ended
Six months ended
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
Operating revenues:
Advertising and marketing services
$
368,328
$
420,163
$
733,563
$
830,475
Circulation
247,092
263,806
499,819
530,392
Other
44,917
46,799
90,380
92,852
Total operating revenues
660,337
730,768
1,323,762
1,453,719
Operating expenses:
Cost of sales
403,089
452,053
814,253
909,037
Selling, general and administrative expenses
195,068
199,143
395,170
412,142
Depreciation and amortization
35,466
38,378
72,511
78,630
Gain on sale of property
(32,768
)
—
(33,650
)
—
Restructuring costs
6,771
12,611
27,730
21,910
Asset impairment charges
274
10,483
803
14,239
Total operating expenses
607,900
712,668
1,276,817
1,435,958
Operating income
52,437
18,100
46,945
17,761
Non-operating income (expense):
Interest expense
(6,879
)
(5,935
)
(13,844
)
(10,413
)
Other non-operating items, net
(6,104
)
4,042
(9,134
)
8,353
Non-operating expense
(12,983
)
(1,893
)
(22,978
)
(2,060
)
Income before income taxes
39,454
16,207
23,967
15,701
Provision (benefit) for income taxes
12,729
(99
)
9,147
(228
)
Net income
$
26,725
$
16,306
$
14,820
$
15,929
Earnings per share - basic
$
0.23
$
0.14
$
0.13
$
0.14
Earnings per share - diluted
$
0.23
$
0.14
$
0.13
$
0.14
Weighted average number of common shares outstanding:
Basic
114,521
112,946
114,485
112,852
Diluted
116,692
116,219
117,375
116,035
SEGMENT INFORMATION Gannett Co., Inc. and Subsidiaries Unaudited, in thousands
Table No. 2
Three months ended
Six months ended
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
Operating revenues:
Publishing
$
576,173
$
644,551
$
1,155,340
$
1,283,211
ReachLocal
98,566
100,435
195,747
196,923
Corporate and Other
1,690
1,809
3,293
3,785
Intersegment eliminations
(16,092
)
(16,027
)
(30,618
)
(30,200
)
Total
$
660,337
$
730,768
$
1,323,762
$
1,453,719
Adjusted EBITDA:
Publishing
$
90,664
$
94,358
$
172,047
$
172,116
ReachLocal
12,200
10,271
19,831
16,480
Corporate and Other
(26,642
)
(19,030
)
(52,330
)
(47,929
)
Total
$
76,222
$
85,599
$
139,548
$
140,667
Depreciation and amortization:
Publishing
$
17,758
$
24,157
$
37,497
$
50,446
ReachLocal
13,152
8,896
26,084
17,409
Corporate and Other
4,556
5,325
8,930
10,775
Total
$
35,466
$
38,378
$
72,511
$
78,630
Capital expenditures:
Publishing
$
5,066
$
6,321
$
8,540
$
10,430
ReachLocal
4,804
4,234
9,849
7,742
Corporate and Other
3,465
3,419
7,529
9,350
Total
$
13,335
$
13,974
$
25,918
$
27,522
SAME STORE REVENUE DETAIL Gannett Co., Inc. and Subsidiaries Unaudited, in thousands
Table No. 3
Three months ended
June 30, 2019
June 30, 2018
% Change
Reported total revenue
$
660,337
$
730,768
(9.6
%)
Acquired revenues
(17,281
)
—
***
Currency impact
4,461
—
***
Exited operations
(307
)
(13,401
)
(97.7
%)
Same store revenue
$
647,210
$
717,367
(9.8
%)
Reported advertising and marketing services revenue
$
368,328
$
420,163
(12.3
%)
Acquired revenues
(17,281
)
—
***
Currency impact
2,960
—
***
Exited operations
(304
)
(13,395
)
(97.7
%)
Same store advertising and marketing services revenue
$
353,703
$
406,768
(13.0
%)
Reported circulation revenue
$
247,092
$
263,806
(6.3
%)
Currency impact
1,144
—
***
Same store circulation revenue
$
248,236
$
263,806
(5.9
%)
*** Indicates an absolute value percentage change greater than 100.
PUBLISHING REVENUE DETAIL Gannett Co., Inc. and Subsidiaries Unaudited, in thousands
Table No. 4
Three months ended
June 30, 2019
June 30, 2018
% Change
Publishing revenue detail
Print advertising:
Local
$
84,185
$
103,354
(18.5
%)
Classified
60,750
74,905
(18.9
%)
National
39,317
49,636
(20.8
%)
Total print advertising
184,252
227,895
(19.2
%)
Digital advertising and marketing services:
Digital media
65,729
68,513
(4.1
%)
Digital classified
15,709
19,300
(18.6
%)
Digital marketing services
20,164
20,047
0.6
%
Total digital advertising and marketing services
101,602
107,860
(5.8
%)
Total advertising and marketing services
285,854
335,755
(14.9
%)
Circulation
247,092
263,806
(6.3
%)
Other
43,227
44,990
(3.9
%)
Total Publishing revenue
$
576,173
$
644,551
(10.6
%)
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:
The company uses non-GAAP financial measures for purposes of evaluating its performance and liquidity. Therefore, the company believes that each of the non-GAAP measures presented provides useful information to investors by allowing them to view our businesses through the eyes of our management and Board of Directors, facilitating comparison of results across historical periods, and providing a focus on the underlying ongoing operating performance of our business. Many of our peer group companies present similar non-GAAP measures to better facilitate industry comparisons.
NON-GAAP FINANCIAL INFORMATION ADJUSTED EBITDA Gannett Co., Inc. and Subsidiaries Unaudited, in thousands
Table No. 5
Three months ended June 30, 2019
Publishing
ReachLocal
Corporate and Other
Consolidated Total
Net income (GAAP basis)
$
26,725
Provision for income taxes
12,729
Interest expense
6,879
Other non-operating items, net
6,104
Operating income (loss) (GAAP basis)
$
99,253
$
(1,950
)
$
(44,866
)
$
52,437
Depreciation and amortization
17,758
13,152
4,556
35,466
Gain on sale of property
(32,768
)
—
—
(32,768
)
Restructuring costs
5,990
100
681
6,771
Asset impairment charges
274
—
—
274
Other items (a)
157
898
12,987
14,042
Adjusted EBITDA (non-GAAP basis)
$
90,664
$
12,200
$
(26,642
)
$
76,222
(a) Includes costs incurred as a direct result of the proxy contest of $12.1 million for the three months ended June 30, 2019.
Three months ended June 30, 2018
Publishing
ReachLocal
Corporate and Other
Consolidated Total
Net income (GAAP basis)
$
16,306
Benefit for income taxes
(99
)
Interest expense
5,935
Other non-operating items, net
(4,042
)
Operating income (loss) (GAAP basis)
$
48,998
$
(1,696
)
$
(29,202
)
$
18,100
Depreciation and amortization
24,157
8,896
5,325
38,378
Restructuring costs
9,447
2,966
198
12,611
Asset impairment charges
10,483
—
—
10,483
Other items
1,273
105
4,649
6,027
Adjusted EBITDA (non-GAAP basis)
$
94,358
$
10,271
$
(19,030
)
$
85,599
NON-GAAP FINANCIAL INFORMATION ADJUSTED EBITDA Gannett Co., Inc. and Subsidiaries Unaudited, in thousands
Table No. 5 (continued)
Six months ended June 30, 2019
Publishing
ReachLocal
Corporate and Other
Consolidated Total
Net income (GAAP basis)
$
14,820
Provision for income taxes
9,147
Interest expense
13,844
Other non-operating items, net
9,134
Operating income (loss) (GAAP basis)
$
141,413
$
(10,173
)
$
(84,295
)
$
46,945
Depreciation and amortization
37,497
26,084
8,930
72,511
Gain on sale of property
(33,650
)
—
—
(33,650
)
Restructuring costs
24,079
240
3,411
27,730
Asset impairment charges
804
(1
)
—
803
Other items (a)
1,904
3,681
19,624
25,209
Adjusted EBITDA (non-GAAP basis)
$
172,047
$
19,831
$
(52,330
)
$
139,548
(a) Includes costs incurred as a direct result of the proxy contest of $17.8 million for the six months ended June 30, 2019.
Six months ended June 30, 2018
Publishing
ReachLocal
Corporate and Other
Consolidated Total
Net income (GAAP basis)
$
15,929
Benefit for income taxes
(228
)
Interest expense
10,413
Other non-operating items, net
(8,353
)
Operating income (loss) (GAAP basis)
$
88,163
$
(4,622
)
$
(65,780
)
$
17,761
Depreciation and amortization
50,446
17,409
10,775
78,630
Restructuring costs
17,724
3,505
681
21,910
Asset impairment charges
14,239
—
—
14,239
Other items
1,544
188
6,395
8,127
Adjusted EBITDA (non-GAAP basis)
$
172,116
$
16,480
$
(47,929
)
$
140,667
NON-GAAP FINANCIAL INFORMATION ADJUSTED DILUTED EPS Gannett Co., Inc. and Subsidiaries Unaudited, in thousands (except per share amounts)
Table No. 6
Three months ended
Six months ended
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
Gain on sale of property
$
(32,768
)
$
—
$
(33,650
)
$
—
Restructuring costs (including accelerated depreciation)
7,324
16,833
29,984
31,293
Asset impairment charges
274
10,483
803
14,239
Loss (gain) from other non-operating activities
4,810
(2,862
)
4,308
(2,728
)
Other items (a)
14,077
4,294
24,596
5,932
Pretax impact
(6,283
)
28,748
26,041
48,736
Income tax impact of above items
1,714
(7,173
)
(6,484
)
(12,100
)
Tax benefit
—
(2,094
)
—
(2,094
)
Other tax-related items
$
1,879
$
—
$
1,879
$
—
Impact of items affecting comparability on net income (loss)
$
(2,690
)
$
19,481
$
21,436
$
34,542
Net income (GAAP basis)
$
26,725
$
16,306
$
14,820
$
15,929
Impact of items affecting comparability on net income (loss)
(2,690
)
19,481
21,436
34,542
Adjusted net income (non-GAAP basis)
$
24,035
$
35,787
$
36,256
$
50,471
Earnings per share - diluted (GAAP basis)
$
0.23
$
0.14
$
0.13
$
0.14
Impact of items affecting comparability on net income (loss)
$
(0.02
)
$
0.17
$
0.18
$
0.29
Adjusted earnings per share - diluted (non-GAAP basis)
$
0.21
$
0.31
$
0.31
$
0.43
Diluted weighted average number of common shares outstanding (GAAP basis)
116,692
116,219
117,375
116,035
Diluted weighted average number of common shares outstanding (non-GAAP basis)
116,692
116,219
117,375
116,035
(a) Includes costs incurred as a direct result of the proxy contest of $12.1 million and $17.8 million for the three and six months ended June 30, 2019, respectively.
NON-GAAP FINANCIAL INFORMATION FREE CASH FLOW Gannett Co., Inc. and Subsidiaries Unaudited, in thousands
Table No. 7
Three months ended June 30, 2019
Six months ended June 30, 2019
Net cash flow from operating activities (GAAP basis)
$
(1,893
)
$
35,646
Capital expenditures
(13,335
)
(25,918
)
Free cash flow (non-GAAP basis)
$
(15,228
)
$
9,728
View source version on businesswire.com: https://www.businesswire.com/news/home/20190805005548/en/
For investor inquiries, contact: Stacy Cunningham VP, Financial Planning & Investor Relations 703-854-3168 investors@gannett.com or Brinlea Johnson The Blueshirt Group investors@gannett.com
For media inquiries, contact: Amber Allman VP, Corporate Events & Communications 703-854-5358 aallman@gannett.com
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