Gannett(GCI) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total operating revenues for Q4 were $621.3 million, a decrease of 7.2% year-over-year [49] - Adjusted EBITDA for Q4 totaled$ 78.2 million, an increase of 5.5% or $4.1 million compared to the prior year [51] - Adjusted net income rose to$ 38.3 million, reflecting a significant year-over-year improvement of $56.5 million [53] - Free cash flow for the full year was$ 58.4 million, an increase of 3.5% over the prior year [62] Business Line Data and Key Metrics Changes - Total digital revenues in Q4 reached $280.4 million, up 1.2% or 3.4% on a same-store basis, accounting for 45.1% of total revenues [54] - Digital-only subscription revenue rose 17% in Q4, with digital-only average revenue per user increasing approximately 13% [55] - Adjusted EBITDA for the Domestic Gannett Media segment was$ 58.7 million, up 4.7% year-over-year [58] - Adjusted EBITDA for the Newsquest segment was $11.2 million, with margins at 19.2% [59] Market Data and Key Metrics Changes - The company has the largest digital audience in the nation, with 200 million average monthly unique visitors, growing 7% year-over-year [18] - Total digital revenues are expected to grow between 7% and 10% on a same-store basis in 2025 [66] Company Strategy and Development Direction - The company aims to reach an inflection point for positive revenue growth in 2025, focusing on digital revenue strategies [15][66] - Plans to enhance engagement through personalized consumer experiences and expanding content offerings, particularly in sports and video [28][32] - The company is strategically moving upstream to target larger businesses in its Digital Marketing Solutions (DMS) segment [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving sustainable revenue growth and improving financial metrics in 2025 [47][66] - The company anticipates a year-over-year decline in Q1 adjusted EBITDA, followed by steady improvement in the latter half of the year [67] - Management remains optimistic about the ongoing digital transformation and the potential for significant value creation for shareholders [70] Other Important Information - The company completed a comprehensive debt refinancing in Q4, extending maturities and reducing potential future dilution [63] - The company expects total asset sales in 2025 to be in the range of$ 60 million to $70 million, supporting continued debt reduction [65] Q&A Session Summary Question: Digital growth outlook for 2025 - Management indicated that the 7% to 10% same-store digital growth outlook for 2025 will be driven by both accelerated digital advertising growth and DMS growth, with the latter expected to enhance results in the latter half of the year [72][74] Question: Asset sales and debt paydown - Management confirmed that proceeds from asset sales will be used to pay down debt, estimating$ 50 million to $60 million in Q1 and$ 60 million to $70 million in the first half of the year [76][77] Question: Revenue impact from asset sales - The sale of the Austin American-Statesman reflects a mix of digital and print revenue, and future asset sales will primarily involve nonstrategic real estate [80][81] Question: Capital structure considerations - Management expects significant debt paydown in 2025, aiming for a first lien net leverage closer to 2x, which may allow for refinancing into a lower cost capital structure [85][86] Question: Update on legal cases against Google - Management stated that the timing of the DOJ case does not impact their case against Google, which is proceeding as planned [89][90] Question: Remaining nonstrategic assets for sale - Management indicated that the majority of asset sales in 2025 will relate to the Austin sale and some real estate, with a focus on optimizing the footprint [96][97] Question: Opportunity with Reuters - The opportunity from the bundled content offering with Reuters is characterized as a low to mid-single-digit million opportunity in the near term [99] Question: Key levers for growing digital subscriber growth - Management emphasized the importance of personalizing consumer experiences and focusing on local content to drive digital subscriber growth [102]