GCI - Earnings call transcript Q3 2019

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Operator

Ladies and gentlemen, thank you for standing-by, and welcome to the Gannett Company Inc.

Third Quarter, 2019 Earnings Conference Call. [Operator Instructions].

I’d now like to turn the conference over to our speaker today, Stacy Cunningham, Vice President of Financial Planning and Investor Relations. Thank you Please go ahead madam.

Stacy Cunningham

you. Thank and third everyone, conference XXXX to call. welcome morning quarter Gannett's earnings Good

this recorded is a call As reminder, being and webcast.

Joining Bascobert, Chief Chief Gannett is and from Engel, Financial us Ali Officer. Executive today Officer Paul

Safe statements. release. differ I may begin, forward-looking cause factors of in call to forward-looking like Before materially Harbor contents Harbor results provision our we for press would provision financial that to from Safe your the actual to attention results our The our risk statements identifies

For of refer may our our and description more our financial affect filings, XX-K. SEC release that detailed factors risk the press results, including to please Form our XXXX results

can this GAAP our the tables be measures, management's call, press include will of reconciliations our during financial and non-GAAP which to for between metrics posted results we have financial results found Also non-GAAP release, Investor in commentary reported website. Relations our

now over With way, out turn I'd the to call these of Paul. like the formalities to

Paul Bascobert

morning, everyone thank Good Thanks, you us for today. Stacy. and joining

Before Gannett a lead moment I I how drawn want to new to about to say am Company's quarter and take third thrive. was act communities our always honored been quality, local share I've in investing I passionate mission connect, commitment this Gannett's this From to I talk help and the supporting to exciting chapter. beginning, I during industry, results, and this to about journalism.

double our compelling shareholders assuming give technology opportunity number and necessary our and morning investments. of or markets, than also on meeting merger New product like both both Once shareholder closes, close exciting enhancing ability local brief I'd November more we our value Media, journalistic to our Next, the to expected excellence, shareholder creates companies. to on deliver scale shared of transaction for the our a to is following our scheduled receive The take this moment merger our for an XX, which a update will of mission approvals. pending driving with monetize to we special

a talented, to have for will We'll unique in service to marketing their businesses, who operations and incredibly operations. our award-winning broad, as Media's stronger combined can network SMBs of communities New even and national portfolio an local digital journalists audiences. local UpCurve national both The better help them ReachLocal solutions have continue to bring content deliver we experienced together grow

over backs as brands our is we believe the advantage, Importantly, of Gannett to competitive our engaged around will look and journalism. to what local continue outstanding the future, decades core on communities built our innovate local we

work confident the While lot following companies there's integration and a of close, we're our ahead we Gannett, of stronger together. are about be of will us future excited

the touch to turn going I'm detailed to with on over highlights our then from conclude now going it important to and to I'm quarter, results. financial third the briefly Ali

marketing In trends growth the marketing ongoing good And our adjusted to and and advertising held of progress print the digital paid see EBITDA consumer signs results revenue. services advertising now total revenues. continue QX, our and margins our we improved our in we saw in up and Within our to are continue transformation. in These of XX% nice In make we subscribers our and operations, digital-only our best delivered digital year-over-year. business, year we same-store BXB services revenues. revenue makes advertising flat revenue of digital

the revenues UK. also to decline, although they briefly Circulation Segment, as remained continued spending got consistent all in from some advertising steady while all year, domestic to year. print have upside Brexit-related Publishing trends Turning remained the have we've

expansion that across a paywall. additional premium Our driven hybrid quarter, paid digital-only part the model, of pricing the content subscribers reached in XXX,XXX some the put in behind markets by

media services digital businesses digital the Newsquest in the and domestic including marketing showed revenue in media, local services overall quarter, in TODAY, digital advertising Publishing segment declines local quarter. weigh slower in continued USA and classified marketing although and showed National category. all to the in the growth Digital declines solid

growth some in client trends markets, we new have ReachLocal and were continue and core in At don't operations the both adjusted reflect reported local where said, our the media certain churn EBITDA slower year-over-year The and margins That in sequential counts to activity. lower acquisition client counts we quarter. down, presence. of revenues sale lower ReachLocal a client segment, accounts from larger international reflecting

digital growth by up line growth of at quarter, XX% year-over-year X% We as in comScore mobile continued in unique X% web measured trends with and strong the visitors our web and peer page views. quarter, groups. our our uniques, mobile in which year-over-year, million averaged audience the saw Looking comScore in monthly XXX from increased

-- revenues Additional with maintained a growth quarter the and and steady views views in additionally, XX% up revenues up XX%. video

manage Company maintain our pleased operations to in continue to continue as efficiently that areas growth returns the the more and quarter continued performance our overall the driving while excellence, teams shareholders. business in to for we find journalistic efficiently. ways operate so as Finally, also to to invest cost we as I'm across with possible, can the us

better also thoughtful may this like as we have would to year for management finally, as outcomes this the deliver you challenges to like this the tirelessly, who over reminder, this your of our I'd call best for country. As is Tuesday a here thank support be also last worked the Election for the a to together, position I communities at to team Gannett over future. all shareholders. in very fought and years, across particularly And Company Day last thank

like rights vote. encourage to your civic would free organization and do I a provided to duty an all by to society, and you of open committed As

that, And turn with Ali. to let it me over

Ali Engel

$XXX at decline a and subscription revenues. weakness WordStream, Paul the revenue $XXX million growth by revenues The you, revenue, Thank both were and and Consolidated marketing continued compared good advertising digital morning revenues, to circulation partially digital-only services in offset million print third year-ago. reflects quarter in everyone. local

one a revenues improvement total compared offset additional impacted Monday the and declined Sunday, $X.X the local digital to quarter over negatively X.X%, one second by a advertising the a basis, had WordStream fewer Additionally, in results, improvement basis quarter marketing ago, calculation same-store same-store point XXX year to of million. services and reflecting addition which revenue moderate by third On trends.

revenues, EBITDA were Total the the digital by totaled versus from the flat of X.X%. the XX% in of total strong quarter, quarter, Adjusted a million ago. prior down expense reflecting to revenues XX% $XXX management. EBITDA million, in margins continued pressures, adjusted at part revenue, represented year XX% up year revenue lower Despite offset prior-year $XX.X

payroll reduction initiatives, operating same-store various declined from and cost newsprint both and savings continued X%, volumes reflecting savings Total and from distribution approximately expenses prices, quarter efficiencies. production significant third lower

revenues services, other segment, third basis, XX and over to digital as revenues were which a basis down as X.X% X.X% Publishing X.X%. digital within down an strong Turning services advertising on were declined improvement well revenue over point and improvement year-over-year, same-store improvement an marketing reflecting to the revenue trends, results, marketing advertising second quarter second syndication quarter Same-store due growth. quarter

average client. new higher year-over-year due markets as grew impact sales per in local Digital reflecting of on reflects to The the in of client same-store both initiatives and at training counts marketing and local Client growth and grew basis, sequentially year-over-year, a counts both efforts. revenue growth single-digit positive services Newsquest. our as strong X.X%, growth revenues XX% well

trends expect fourth throughout We the favorable the to continue quarter.

strong advertising within revenues TODAY. Within rate second video display. from basis, on reduction digital Local at a more offset from the trends declined digital improved media, local reflecting of revenue X.X% local, benefited quarter same-store USA prior-year by unchanged at growth results, and cycling growth modest a

USA from well in gains, view continued third national digital advertisers, and as but showed as media desktop slowed quarter, rate page spending TODAY the some growth reflecting continued delayed pullback revenue weakness. solid the modestly

Newsquest at reflecting digital revenue media growth. advertising continued display robust, remained national sell

third continued quarter. digital classifieds we weakness As revenue expected, the in

renegotiated with early the channel, markets channel. direct Cars.com, in our an we Within early our Cars.com reflecting into affiliate sales agreement July, of the conversion auto

not to a While EBITDA. overall negative impact impact third quarter our revenue, had it did materially transition the adjusted

quarter revenues relatively to circulation, year-over-year, with second results. X.X% same-store Turning consistent declined

in see revenues premium to subscriber revenues. our by full-access continue offset and additions revenues, in declines digital-only We strong growth from incremental

revenue the initiatives as last we weaker Gannett, plan ahead implemented would for we As we circulation stand-alone our cycle pricing as for subscriber fourth company, year. anticipate a quarter, trends

Paid robust digital-only quarter, reflecting up revenue XX% grew transition rate volume year-over-year subscribers rates subscriber rates. digital-only in Paid remained the of growth year-over-year, XXX,XXX. subscriber XX%, from introductory XX% to growth continue to monthly strong to approximately higher low we as

and hybrid model page in pricing material third all very markets, far are introduced across strong growth During positive the quarter, views. impact on with a volumes results so without our the we

revenues basis, counts the from our revenue client prior ReachLocal and segment, grew an third by X% both million, driven benefited On quarter our year-over-year, divested gains markets, revenues from a to totaled client. WordStream international of reflecting total same-store per in operations. year, versus Turning which X.X% and local average growth $XXX decline

for $XX efforts, and second larger margin EBITDA basis aggressive margin XXX retention accounting weakness segment from representing reflecting the last year-over-year core from XX.X% pressure, On Adjusted margin, due to North America ReachLocal the both by with quarter. about benefit a or improvements margins million and revenue basis, points, more sequential declined erosion clients was a gross the and one-time year.

for year-over-year. million, million was pension ago, expense reflecting net $XX GAAP higher $XX income year a Our from down the non-operating quarter

portion million including Turning convertible our of the debt, on $XXX quarter to of million million $XXX -- the million balance the sheet, $XXX $XXX we revolver. our liability ended drawn with debt, and

at the quarter, $XXX million. net cash debt $XXX end the million balance was of of in Our resulting

reflecting for shares third facility well expenditures estate we projects this supporting no developments, There $XX Capital million quarter, consolidations totaled in as related digital $XX million transactions. the quarter and dividends. paid to real and investments were our as repurchased product ongoing

XX%. $X.XX to the of tax million, for $X.XX non-operating billion for EBITDA to $X of million, costs to in in of prior related end consistent between our as remain to billion a expect adjusted We consolidated XX% and and plans of with of previously; associated consolidations; pension be following recorded $XX effective $X.XX million million, $XXX depreciation stand-alone with $XX real credit $XXX Gannett company amortization of to the compared finally, million XXXX; $XXX $XX facility billion of million currently million compared accelerated revenues non-operating XXXX; excluding to projects; expenditures estimated non-GAAP to depreciation other capital the assuming to items consolidated million $XXX excluding would rate estate to the our our billion as million guidance; full-year, a is to $X.XX $XX

this morning. That concludes for remarks our

So with questions. that, for please the operator, line open Thank you.

Operator

Our first comes Stephens. Kyle from Evans question Instructions] with [Operator

now open. Your line is

Kyle Evans

morning. thanks, good Hi

Ali Engel

Good Kyle. morning,

Kyle Evans

years cost guess, I'll for I with cutting. start a been kind This cost-cutting has now. of story

of cost help long-term close the business, deal it. about of more top got do on laid you materially of potential a You're muscle out about products? the taking to to impact kind Could continue hitting to that's think synergy how and pretty are and a you bone cost you substantial us where

follow-ups I've got some well. as

Ali Engel

Kyle. you. morning, Good from good Hey, hear Yes. to

the as we of planning were and I we're thinking that that company, with do over integrate as and a lot we've ways more about as cost think this different a to to stand-alone we summer, Media. of long-tail as to New we've them a do little looking starting I look, projects and times. advanced about those as bit -- would company, more And think always said, have all cut we're were our budgets stand-alone what we talked of to I a require for looking think difficult, kind think about of become a

lot [distribution] company costs, of things facility the with duplicative our are a that public consolidations, have driving similar respect We work. potential and and opportunities manufacturing process, synergy-related to

operations both their running companies core in doing think competencies and through efficiently have acquisitions. integrations I

we very and think skill I those actually this So and be have we at very sets process. can both judicious combined, be good

that hiring the and of and kick on leading the include for call. be WordStream off how everyone and helping think also that they're enlightening would focus Our this they're us AlixPartners I

Paul. So I'll turn over that to

Paul Bascobert

Yes, thanks.

how in through So we're up looking actually the the getting engaged we synergy going have sight, we've weeks. of those. to work teams, several over achieve a detailed line have been last setting -- engaged and estimates, AlixPartners actively Both companies

about this we our at ability hit to feel that And good have articulated numbers we point, publicly. the

the is think well I and So going actively everybody's process pretty engaged.

Kyle Evans

I radical didn't of pretty to distribution. and it I'm you Also Great. here DMA#XX volume It thoughts changes I'm about maybe Rock, delivery, print some in on how just some means a sitting could on as distribution. are Arkansas that what that Paul numbers and forward? talking wondering -- circulation, higher-level there hand we're while circulation. from about a quarter, use you for going if going your print relates and wouldn't as think you ask delivery just be

Paul Bascobert

a on in what say things little about going are Arkansas? you Can bit more radical

Kyle Evans

print unless away doing Sundays. with on it's We're

Paul Bascobert

Okay.

--. terms In just of

Ali Engel

The frequency.

Paul Bascobert

general, generates of of as power forward. I just our reduction. in print journalism, going tell and as you power is our Look, to that frequency to business a long to It healthy help Yes, lot to flow that help would EBITDA business. so we're products, push continues, our continue a business our and cash

delivery We're at going revenue. advertising that, the We're the at moving people and always keep frequency and deliver. number looking cost looking between circulation to looking of at of of it's target in terms just the to and the a trade-offs

can to no but keep so, us And this to expect specific change frequency. that, you point at revisiting plans

it leave just I'll So at that.

Ali Engel

want you if Maribel, to...?

Paul Bascobert

your appreciate Sure. Hi, good] The thank you volumes. asked -- you questions, [for we about it. Kyle. And always

high-teens low in expected as decline XX% volume our see to continue the range. We to

in to year, declines we subscription the we started of actions to forward. continue we'll moderate began plan of and our full-access we've continue that to pricing to past, cycling -- with mentioned in pricing. course, some is And We're the going overall revenue, last some that see going tied the which that of our

of revenues. overall So our to continued see we expect moderation

Kyle Evans

and much and there advertising, have that effective in overall one, the kind last given in Thanks. views fine. is video the one of in on were content more button digital video desktop want percent video CPMs to the to hit and if settings? as call, you what display one of sits and interested delay for a that's was you Great, over where mobile maybe it, create higher after the I But this

Ali Engel

there. for Yes, percentage we'll area but an I views you, have focused video is we have get the mean and on specific to seeing certainly that are strong

on give report you those some -- numbers guys. giving continue those [indiscernible]. side of the we're maybe to specifically that to content We things to the can Maribel to speak

Paul Bascobert

course, on more CPMs mean, you're associate from demand video of considerably that's right, content, higher, we there being that absolutely definitely both video specifically the I a to focus Yes. we have and to with strong been advertisers of for and creating distribution put wanting on-platform something content. and effect see

focused also on distribution. off-platform we've And

syndication seen strong continue year-over-year. revenue to in double-digits You've our grow

to that tied video. a As of result, a lot specifically

a So percentage we'll advertising follow up the with this as total exact of percentages call. after

Kyle Evans

Great, thank you.

Operator

Our next Instructions] Arthur Research. question with from [Operator comes Doug Huber

Your line is now open.

Doug Arthur

Yes, thanks. Three questions.

been times, digital. Stacy, the think of I and through few interest this net $XXX.X on a total you right? I've First million that's segment,

Ali Engel

Yes.

Doug Arthur

with implies an if about and that's publishing the of run if $XX million. revenues net, So, that from revenue QX digital outside year like seems associated it's break the that digital the QX you out and uptick was we That rate. struggle

Ali Engel

we call. had we as digital marketing on stronger quarter highlighted services, a Yes, the for

trend So growth second DMS, from the in quarter. we what seen reversal which XX% was a saw in we've

Doug Arthur

digital Yes, guess, at specifically the no, to I'm outside $XXX -- looking digital revenue netting million, I number with of to Publishing I'm circulation -- it's the advertising. get really associated

the I better afterward? if numbers strong than that's in if it we take So talked about first that words quarters. million, you that don't sub-number, to -- or or true digital know two the $XXX so, the in I'm can doing the to other number correctly, get up looks

Ali Engel

circulation allocated access on just we've and does portion in does get are down. Doug, of there given can trend We offline. been calculation, growth take our and to I discussed, growth. I mean, very well. that been there, think us other alluded see is we digital story that I the is has say up this strong I numbers the digital-only syndication, this Maribel thing is included Yes, that as that number, do strong as in mean would which to, weigh full as a the has continue for it But full-access consistent

Doug Arthur

Okay, terrific.

adjusted question, $XX.X number The SG&A bottom $X.X other in that expenses? your have to million you operating the item a that EBITDA Is at getting the of million, included second call cost of and items. in is total,

Ali Engel

That's probably Most to relates mostly SG&A. in activities. that of M&A-related

Doug Arthur

Okay.

Okay, it put you a So finally, lot. Can thank about a that? of down that mostly out be of newsprint back SG&A? And then on a percentage you. talked would you Ali,

Ali Engel

Yes, XX% XX% to XX% quarter, related Doug. in pricing, and volume, the

Doug Arthur

very you thank much. okay, Well

Ali Engel

are Operator, there any other welcome. You're question?

Operator

showing you may conference I'm time, and this further At participating now for today's concludes you questions. and this Thank call. Ladies gentlemen, disconnect. no

Gannett (GCI) 4 Nov 192019 Q3 Earnings call transcript