Gannett. Company Overview July 2016

Transcription

1 Gannett Company Overview July 2016

2 FORWARD-LOOKING STATEMENTS Certain statements in this presentation may be forward looking in nature or constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 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. The matters discussed in these forward-looking statements are subject to a number of risks, trends and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied in the forward-looking statements. A number of those risks, trends and uncertainties are discussed in the Company s filings with the U.S. Securities and Exchange Commission, including the Company s annual report on Form 10-K for the 2015 fiscal year and its subsequent Quarterly reports on form 10-Q. Any forward-looking statements should be evaluated in light of these important risk factors. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. This presentation also contains a discussion of certain non-gaap financial measures that the Company presents in order 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 Company s annual report on Form 10-K for the 2015 fiscal year and its subsequent Quarterly reports on Form 10-Q. The Company s filings with the U.S Securities and Exchange Commission are available through the investor relations portion of our website. 2

3 PROFILE Company Name Gannett Co., Inc. Incorporation: Delaware President and CEO: Robert J. Dickey Headquarters: McLean, VA Employees: 17,300 (including JMG) 2015 Revenues: $2.9 billion Ticker GCI 3

4 LEADING MEDIA AND MARKETING COMPANY Gannett is a leading media and marketing company with unparalleled local-to-national reach, successfully connecting consumers, communities, and businesses. Gannett owns USA TODAY, 109 strong local media organizations in 34 states and Guam, and more than 150 local news brands in the U.K. Each month more than 100 million unique visitors access content from USA TODAY and Gannett s local media organizations, making the company a powerhouse in the U.S. news and information category. Gannett typically reaches approximately 40% of the total domestic digital population. Gannett reaches more people digitally than Netflix, CBSnews.com, New York Times Digital, BuzzFeed.com, Huffington Post, and WashingtonPost.com. Gannett reaches more millennials than Vice or Vox. 4

5 INVESTMENT HIGHLIGHTS Strong Financial Profile $749 million Q2 revenues, up 3% year-over year. Achieved $152 million total quarterly digital revenues, and 107 million unique domestic digital visitors in June. National digital advertising up 22.4%, up 18.5% excluding acquisitions. Well-Positioned to Make Accretive Acquisitions Completed the acquisition of Journal Media Group and the North Jersey Media Group. Announced planned acquisition of ReachLocal (expected to increase digital revenues by roughly 50%). Proforma consolidated digital revenues expected to approach $1 billion by end of Q3. Over $500 million revenues acquired in last twelve months (JMG and North Jersey Media Group). High Liquidity Available for Return of Capital to Shareholders High level of stable cash flow. Cash flow from operations of $67 million for second quarter of Dividend of $0.16 per share, $0.64 per share annualized. Share buyback program of $150 million. Generated $7 million in second quarter from real property liquidations. 5

6 SECOND QUARTER 2016 FINANCIAL HIGHLIGHTS Q Q B/(W) Revenues, as reported $ $ % Operations exited in prior year (8.3) Effects of FX 5.7 Reclassification of certain customer credits 1.3 Prospective accounting for third party digital revenue 15.6 Revenue before impact of acquired businesses % Adjusted EBITDA $ 89.7 $ $7.3 Adjusted EBITDA % 12.0% 13.4% -1.4% 6

7 SECOND HALF OUTLOOK Year-over-year revenue growth for the second half of 2016 between 7% and 9%. Third quarter tends to be a seasonally slower revenue quarter, while the fourth quarter is generally the best revenue quarter of the year. Margins will remain under pressure, particularly in the third quarter, driven by: The impact of recently acquired businesses. Incremental investments being made to accelerate the integration of these businesses and achieve the expected synergies. Other technology related investments. Recent appreciation of the U.S. dollar relative to the Sterling will result in a reduction in reported Adjusted EBITDA of approximately $6 million for the second half of Capital expenditures of $30-$40 million, not including real estate projects. Depreciation and amortization of approximately $65 million. Effective tax rate of 34-35%. 7

8 8 LOCAL DAILY PUBLICATIONS IN MARKETS THROUGHOUT THE U.S.

9 ATTRACTIVE LOCAL CIRCULATION AND ADVERTISING REVENUE PROFILE Local Market Circulation Nearly 2.4M Full Access including Digital Only Subscriptions. 61% of Subscribers are either on EZ Pay or Annual Payments. Digital Only Subscription Revenue up 20% YoY, Digital subscribers up 40% YoY. Local Market Advertising Circulation Revenue Single Copy, 17% Other, 2% Full Access Including Digital Only, 81% Advertising & Marketing Service Revenue Full access including digital only subscription revenue provides Gannett a more stable revenue base Local Digital Advertising makes up 26% of Local Account revenue, up slightly year over year before CareerBuilder contract changes. National Major Retail Accounts, 20% Local, 80% Local accounts offer some protection from secular pressures 9

10 LARGE AND GROWING DIGITAL REVENUE BASE Implemented All Access Content Subscription Model in ~30 million unique domestic visitors. Large user base accessing content via desktops, smartphones, and tablets. ~2 million downloads of local newspaper apps. Digital Revenues (Millions) LTM* Digital Revenue by Category Other, 4% Diversified digital revenues. Circulation, 38% Advertising, 58% *Third party affiliate revenue reported on a net basis 10

11 USA TODAY: A POWERFUL AND UNIQUE NATIONAL BRAND #1 publication with total daily circulation of 3.9 million. Average cross-platform page views of more than 1.0 billion per month. 22+ million downloads of USA TODAY's awardwinning app. Quality content delivered on multiple platforms drive visitors and engagement. Sports continues to be a driver of growth for USA TODAY. Video views across platform and social media in June topped 100M views for the month. Mobile traffic and engagement is the driver of growth for USA Today, with more than 60% of our users in the Millennial or GenX age groups. 1.7 Daily Average Circulation (MM) Dec 13-Dec 14-Dec 15-Dec 16-Mar USA Today Sites Digital Unique Visitors (MM) Q Q Q Q % since % since

12 A LEADING COMMUNITY PUBLISHER IN THE U.K. Robust and Growing Digital Revenues and Audience Newsquest Overview Leading regional media player in the UK. 19 daily paid-for titles weekly print products, magazines, and trade publications. Leading network of local news websites, and digital classifieds (s1 and Exchange & Mart). Industry leading margins. 15% Growth in digital / print ad revenue ratio 18% 21% 24% Q update Strong digital performance. Digital display revenues up 16.5% YoY. Digital audience up 22.9% YoY. Innovations in print. New weekly newspaper launches. New community magazine launches. Innovations in digital. Targeted SME ad products. New digital recruitment platform. Industry Awards (Q2). Most Innovative Publisher. Best Use of Data. Local Newspapers of the Year: York Press, Impartial Reporter (N. Ireland). H H H H Growth in monthly unique users Average monthly browsers - millions, Apr - Jun 18 Q Q Q Q

13 COMMITTED TO RETURNING CAPITAL TO SHAREHOLDERS Disciplined Capital Policy Allocating capital to create value. Direct returns to shareholders. Investment in the business. Strategic and accretive acquisitions. Repayment of debt, if any. Gannett is paying an annual cash dividend of $0.64 / share and approved a $150MM share repurchase program, to be used over a 3-year period. Declared $0.16 quarterly dividend per share. Total annual expected dividends and share repurchases represents 32% of 2015A EBITDA. Illustrative Free Cash Flow Allocation Free Cash Flow (2015)* $280 Less: Dividends 73 1 Less: Repurchases 50 1 Excess Annual Cash Flow Available for Accretive Investments / Further $157 Return of Capital Significant available liquidity for accretive acquisitions and further returns of capital to shareholders *Before impact of $100M one time pre spin pension contribution 1 Assumption for a full calendar year 13

14 NEWS AND INFORMATION MEDIA INDUSTRY TRANSFORMATION Current Industry State 6-7 days of print distribution. Print revenues > digital revenues. Declining top line. Key Gannett Strategies and Initiatives Consolidation Strategy Revenue and earnings growth Synergies Free cash flow Largest local-to-national news network Return capital to shareholders Digital Investments Mobile Video Data analytics and data mining Advertising technology Virtual Reality Future Industry State Fewer days of print distribution. Robust, enhanced digital products and user experience. Digital revenues > print revenues. Growing top line. Financial strength and industry leading position to make consolidating local market acquisitions. Growing news network, enhanced revenues, earnings, and free cash flow through operational efficiencies and synergies. Necessary scale and resources for investment in digital platforms and technologies to transform existing digital revenues. Solidifies market leading position in the next generation of the news and information media industry. 14

15 SUBSTANTIAL CONSOLIDATION OPPORTUNITY Fragmented market provides consolidation opportunities at attractive multiples. Gannett plans to acquire more local markets to add scale and increase its national footprint. Acquisitions bring significant top line and bottom line synergy opportunities. Targeting markets between 0.5M and 3M population. Additional targeted characteristics include university presence, state capital, diversified economy, and ability to consolidate around market. Gannett 12% Other 45% Digital First Media 8% News Corp. 6% Tribune Publishing 5% McClatchy 5% New York Times 4% Advance 3% BH Media 3% Lee 3% Hearst 2% New Media 2% 15

16 MULTIPLE MARKET CONSOLIDATION SYNERGIES Consolidate back-office and infrastructure GPS Manage production and distribution more efficiently than most independents and smaller chains. Design Studios Bring efficiencies to acquired sites by taking in design and copy editing. NSSC/CCC/Finance Hubs Take financial operations into our consolidated shared service centers. USA TODAY Local Edition - Leverage improved subscriber value proposition through pricing. Leverage Company-Wide Content and Resources Local Sales Expertise Elevate the skill of local sales staffs by providing world-class training and research out of our regional sales organization. National Sales Team Increase advertising through existing national relationships, and streamline advertising at acquired sites. Digital Platform Apply our digital platform to new properties. Content Tap into content from across our entire footprint. Consumer Marketing Leverage the investments made in consumer sales capabilities to improve sales at acquired sites. G/O Provide digital marketing services to acquired sites. 16

17 Appendix

18 ADJUSTED EBITDA 18

19 ADJUSTED EPS 19