Usa Today Co., Inc. · NYSE:TDAY
Usa Today — Gannett — Debt Investor Presentation (September 2021)
45 slides from Usa Today's debt investor presentation, September 2021
Slide 1: Investor Presentation
Investor Presentation September 2021
Slide 2: Disclaimers and Notes
Disclaimers and Notes In General. This disclaimer applies to this document and the verbal or written comments of any person presenting it. This document, taken together with any such verbal or written comments, is referred to herein as the “Presentation.” Prior to November 19, 2019, our corporate na
Slide 3: Presenters
Presenters Mike Reed Doug Horne Chairman and Chief Financial Officer Chief Executive Officer 3
Slide 4: Agenda
Agenda • Company Overview and Business Update • Financial and Key Credit Highlights • Refinancing Transactions • Appendix 4
Slide 5: Company Overview & Business Update
Company Overview & Business Update
Slide 6: Scalable, data-driven digital media platform aligned with consumer trends
Gannett operates a scalable, data-driven digital media platform that is fully aligned with consumer and digital marketing trends. We are a subscription-led and digitally focused media and marketing solutions company that is committed to empowering communities to thrive. Our strategy is focused on dr
Slide 7: Company History
Company History New Media’s acquisition of Legacy Gannett in November 2019 created the largest local-to-national media network in the U.S. Gannett separates from its broadcasting Refinanced remaining and digital businesses $1.0 billion of debt into (now TEGNA) Term Loan B due 2026 New Media acquir
Slide 8: Gannett At-a-Glance
Gannett At-a-Glance Gannett is a digitally focused content company that empowers communities to thrive by providing clarity, connections, and solutions for consumers and businesses The largest owner of daily Revenue by segment LTM Q2 21 Distribution footprint newspapers in the United States and co
Slide 9: Leading multiplatform media and marketing company
Leading multiplatform media and marketing company Strong digital engagement 174M 4.8B 312M 11M+ 74% Unique monthly Video views Exclusive mobile Pageviews Twitter followers visitors (on platform) unique visitors Trusted, known brands Significant reach 3.7M 1.4M 9.8M 2.7M 600+ Paid subscribers Digital
Slide 10: Shift in mix to recurring revenue from DMS and Circulation
Shift in mix to recurring revenue from DMS and Circulation Total Digital % (1) 22.0% 24.0% 26.0% 29.0% 31.3% 7.3% 8.2% 8.0% 8.1% 37.7% 37.6% 37.6% 47.2% 41.5% 13.8% 1.7% 1.5% 0.8% 1.5% 0.6% 11.9% 12.8% 10.8% 11.1% 9.4% 36.9% 37.6% 40.9% 40.1% 35.5% 2017A 2018A 2019A 2020A 2021 Q2 LTM Circulation Dig
Slide 11: Significant Achievement Against Priorities
Significant Achievement Against Priorities Continued momentum in 2021 in executing our key initiatives • Total digital revenues account for 32.2% of total revenues in the second quarter of 2021, up 33% year over year on same store basis Accelerate Digital • Launched digital subscription model at USA
Slide 12: Significant Achievement Against Priorities (Cont'd)
Significant Achievement Against Priorities (Cont’d) Committed to rapidly de-leveraging our balance sheet with a target of <1.0x first lien net leverage by end of 2022 • Since closing the acquisition of Legacy Gannett in November 2019, 154 real estate and non-strategic asset sales have been completed
Slide 13: Key Operating Pillars
Key Operating Pillars Drive digital Optimize Prioritize Accelerate digital Build on inclusive marketing traditional print investments in subscriber growth & diverse culture services growth business growth businesses • Goal to reach 10 • Significant digital • Optimizing our • Identify, test, and • Pr
Slide 14: Financial and Key Credit Highlights
Financial and Key Credit Highlights
Slide 15: Key Credit Highlights
Key Credit Highlights 1 Highly resilient, “must–have” nature of local community journalism and high-quality content 2 Growth segments are well–positioned to capitalize on positive digital media tailwinds 3 Portfolio scale provides revenue diversification 4 Subscription–based, recurring revenue model
Slide 16: Highly resilient, must-have nature of local community journalism
1 Highly resilient, “must-have” nature of local community journalism and high-quality content • Gannett brands are highly trusted, long-standing community cornerstones – Over 80% have been published for more than 100 years • Reach 1 in 2 U.S. adults, and over 10 million people read our print papers
Slide 17: Growth segments positioned for positive digital media tailwinds
2 Growth segments are well–positioned to capitalize on positive digital media tailwinds Our leading content presence and unrivaled reach at the national and local community levels has allowed our business model to evolve away from its print beginnings and into a digital future Digital Subscriptions
Slide 18: Digital Only Subscriber Growth
2 Digital Only Subscriber Growth Digital-only subscription growth is accelerated by Digital-only Subscription Growth four key priorities • Subscriber growth is accelerating, with paid digital-only subscribers in Q2 2021 growing 41% over the prior year quarter to 1.38M 1.22M approximately 1.4M 1.10M
Slide 19: Drive Digital Marketing Services Growth
2 Drive Digital Marketing Services Growth Significant local community footprint coupled Core Platform Metrics with trusted brands and in-market sales teams • Digital marketing solutions segment revenue of $110M in Q2 Revenue (M) grew 21.5% year-over-year on same store basis $105 $93 $90 $96 $94 • Co
Slide 20: Portfolio scale provides revenue diversification
3 Portfolio scale provides revenue diversification Revenue diversification due to geographic, product, and customer mix Geographic footprint does not align us to any single market or region Offer a broad range of products to both consumers and businesses Products are attractive to wide range of busi
Slide 21: Subscription-based, recurring revenue model supports sustainable margins
4 Subscription–based, recurring revenue model supports sustainable margins Recurring Digital Advertising (1) Subscription-Based Revenue Stable Adj. EBITDA Margins Revenue Note: LTM 2021 Q2 Circulation revenue Note: LTM 2021 Q2 Digital Media/Classified and DMS Revenue 14% 12% 12% 12% 12% 51% 73% 71%
Slide 22: Proven history of strong expense mitigation
4 Proven history of strong expense mitigation • Track record of strong expense management Operating Expenses ($M) – Match expense reductions to secular declines to preserve $3,940 $3,915 $3,697 margins $1,009 $984 $2,991 $2,818 $877 – Despite COVID-19 pandemic, maintained margin profile $823 $848 $7
Slide 23: Free cash flow profile and commitment to deleveraging
5 Free cash flow profile and commitment to deleveraging (1) (2) Significant Debt Repayment Cumulative Cash Flow – Adjusted EBITDA less CapEx $700M $2,000 $1,792M $1,759M $1,746M $1,739M $1,732M $1,800 $1,575M $593M $1,537M $1,491M $1,600 $500M $1,400 $1,200 $359M $1,000 $278M $800 $208M $600 $1,036M
Slide 24: Experienced management team with commitment to operational excellence
6 Experienced management team with commitment to operational excellence Mayur Gupta, Chief Marketing & Strategy Officer Mike Reed, Chairman & Chief Executive Officer • Served on Gannett’s Board of Directors from October 2019 to • Joined Gannett, formerly GateHouse Media, in January of 2006 September
Slide 25: Gannett Leadership Bios
6 Gannett Leadership Bios Polly Grunfeld Sack, Chief Legal Officer Maribel Wadsworth, President of News and Publisher of USA • Joined Gannett, formerly GateHouse Media, as its chief legal TODAY officer in 2006 after 14 years with sports, media and • Leader in Gannett for over 25 years ago, formerly
Slide 26: Financial Overview
Financial Overview
Slide 27: Solid Execution Against Key Operating Pillars
Solid Execution Against Key Operating Pillars Operational Results in Q2 2021: Q2 2021 Key Metrics: Revenue of $804.3 million for the quarter, up 6.8% year over year on a same store basis • Same store revenue trend growth impacted by cycling of second quarter 2020, the quarter most negatively impacte
Slide 28: Q3 2021 Outlook
Q3 2021 Outlook Same store revenue growth projected • Continue to expect same store revenue growth year-over-year in Q3 2021 Adjusted EBITDA(1) growth expected • Substantial growth year-over-year expected in Q3 2021 • Q3 margin expansion of more than 100 basis points projected over prior year quarte
Slide 29: Real Estate and Asset Sales
Real Estate and Asset Sales • Since closing the acquisition of Legacy Gannett in November 2019, 154 sales have been completed totaling $259 million – Real estate sales totaled $161.0 million across 83 deals – Non-strategic asset sales totaled $98.0 million across 10 deals • $60M of real estate and a
Slide 30: Historical Annual Revenue Performance
Historical Annual Revenue Performance 2017A 2018A 2019A 2020A 2021 Q2 LTM Commentary Print Advertising $1,669 $1,492 $1,298 $888 $827 Digital Classified 113 101 84 58 50 • Advertising Digital Media 335 355 353 334 354 Advertising $2,117 $1,947 $1,735 $1,279 $1,231 – Secular decline in print advertis
Slide 31: Historical Financial Performance
Historical Financial Performance • Steady AEBITDA margin as the Company transitions revenue (1) Operating Expenses ($M) mix to DMS and Circulation $3,940 $3,915 $3,697 • $300M of annualized synergies implemented through Q1 2021 $1,009 $984 $2,991 $2,818 $877 • Reduced operating expenses during COVID
Slide 32: Refinancing Transactions
Refinancing Transactions
Slide 33: Refinancing Opportunity Summary
Refinancing Opportunity Summary • Gannett Co., Inc. (“Gannett” or the “Company”) is a publicly traded (NYSE: GCI), digitally focused media and marketing solutions company with an unmatched reach at the national and local level. Gannett touches millions of lives with Pulitzer Prize-winning content, c
Slide 34: Sources, Uses and Pro Forma Capitalization
Sources, Uses and Pro Forma Capitalization Sources & Uses Pro Forma Capitalization As of PF as of Sources ($ in millions) 06/30/21 Trans Adj. 06/30/21 ($ in millions) Amount % Total New Senior Secured Debt $916 91% Cash & Equivalents $159 ($53) $106 Real Estate and Asset Sales 39 4 Cash from Balance
Slide 35: Appendix
Appendix
Slide 36: Continued outperformance of the synergy implementation plan
Continued outperformance of the synergy implementation plan is expected, creating stable ongoing expense savings 2020 Realized 2021E Realized Total Annualized Synergies(1) Synergies(1) Synergies Current Key Milestones ($M) ($M) ($M) Consolidated 49 sites print manufacturing & distribution sites Ne
Slide 37: COVID-19 Pandemic Impact
COVID-19 Pandemic Impact Gannett quickly responded to the economic impacts from the pandemic, preserving liquidity and pivoting its operations Key Steps Taken Same Store Revenue trend by month • Preserved liquidity through: – Suspension of dividend; $75M savings in 2020 – Employer FICA and VAT tax d
Slide 38: Circulation
Circulation Key highlights(1) Over 70% of circulation revenue is subscription based, with approximately 1.4 million digital only subscribers 73% 2.3M ~$32 60+% with expectation to reach 10 million over next 5 years. Subscription Home Home of subscribers based Delivery delivery ARPU with college Loya
Slide 39: Digital Marketing Services (DMS)
Digital Marketing Services (DMS) One place to manage marketing goals in order to drive better value and outcomes for SMBs National Brand Integration Market Opportunity Key Highlights $18.8B 2% 20k $1.5k+ Online SMB Estimated Total SMB Avg. monthly ad spend current customers campaign market share val
Slide 40: Advertising
Advertising Key highlights(2) Unrivaled scale matched with unique local-to- $828M 250+ 120+ 46 national reach Print ad Local U.S Local U.K. States across revenue daily community the U.S. • Authentic, trusted brand partner – balanced, brand-safe content newspapers newspapers • Offer products across o
Slide 41: Events & Promotions
Events & Promotions Building community experiences across the U.S. and U.K., both in-person and virtually Revenue Mix Representative events Annual Events Held COVID-19 disrupted plans, 210+ 500k+ 432 Events Event Print Races & but virtual events reached 384 hosted in attendees Sponsorships Ticket si
Slide 42: Company Legal Structure
Company Legal Structure Gannett Co., Inc. (NYSE: GCI) Gannett Holdings LLC (Issuer of Secured Notes/Borrower of Direct Term Loan) Gannett Media Corp. Operating subsidiaries 42
Slide 43: Reconciliations
Reconciliations
Slide 44: AEBITDA Reconciliation
AEBITDA Reconciliation Three Months Ended LTM Full Year (in thousands) 31-Dec-19 31-Mar-20 30-Jun-20 30-Sep-20 31-Dec-20 31-Mar-21 30-Jun-21 30-Jun-21 2017 2018 2019 2020 Net income (loss) attributable to Gannett ($115,696) ($80,152) ($436,893) ($31,260) ($122,174) ($142,316) $15,115 ($280,635) $5,9
Slide 45: Gannett Non-GAAP Reconciliation
Gannett Non-GAAP Reconciliation Three Months Ended (in thousands) 30-Jun-21 Net income (loss) attributable to Gannett $15,115 Loss on early extinguishment of debt 2,834 Integration and reorganization costs 8,444 Acquisition costs - Other Operating Expenses 774 Net (gain) loss on sale or disposal of
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