Usa Today Co., Inc. · NYSE:TDAY
Usa Today — Gannett — Debt Investor Presentation (September 2021)
45 slides from Usa Today's debt investor presentation, Sep 27, 2021
Slide 1: Investor Presentation September 2021
Investor PresentationSeptember 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 ReedChairman and Chief Executive Officer Doug HorneChief Financial Officer
Slide 4: Agenda
Agenda Company Overview and Business UpdateFinancial and Key Credit HighlightsRefinancing TransactionsAppendix
Slide 5: Company Overview & Business Update
Company Overview & Business Update
Slide 6: Gannett operates a scalable, data-driven digital media platform
6 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
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. 2015 Gannett separates from its broadcasting and digital businesses (now TEGNA) 2019 New Media acquires Gannett for $2.1 billion in a cash and stock transaction
Slide 8: Gannett At-a-Glance
Gannett At-a-Glance The largest owner of daily newspapers in the United States and community newspapers in the United KingdomStrong local and national brands create significant scale for marketing B2C and B2B products:Advertising, print & digital, across multiplatform media network and partnersDigit
Slide 9: Significant reach and strong digital engagement
Significant reach Trusted, known brands Select local titles Strong digital engagement Leading multiplatform media and marketing company Gannett is positioned as the local and national leader in news and digital marketing solutions, serving 175K+ businesses globally 3.7M Paid subscribers 1.4M Digital
Slide 10: Shift in mix to recurring revenue from DMS and Circulation
Shift in mix to recurring revenue from DMS and Circulation Shift from traditional print and digital advertising, which faces secular declines, to stable recurring circulation and digital marketing services and higher digital base. Total Digital(1) % Digital revenue includes Digital advertising and m
Slide 11: Significant Achievement Against Priorities
Significant Achievement Against Priorities Total digital revenues account for 32.2% of total revenues in the second quarter of 2021, up 33% year over year on same store basisLaunched digital subscription model at USA TODAY and other subscription products including USA TODAY crosswords app and Sports
Slide 12: Significant Achievement Against Priorities (Cont'd)
Significant Achievement Against Priorities (Cont’d) Since closing the acquisition of Legacy Gannett in November 2019, 154 real estate and non-strategic asset sales have been completed totaling $259M$60M of asset sales in 2021 year to date(1)Significant opportunity to further rationalize the real est
Slide 13: Key Operating Pillars
Key Operating Pillars Accelerate digital subscriber growth Significant digital scaleLeverage integrated sales structure and lead generation strategy to grow client baseData and insights inform new and dynamic marketing products and services Optimizing our pricing and improving customer service for o
Slide 14: Financial and Key Credit Highlights
Financial and Key Credit Highlights
Slide 15: Key Credit Highlights
Key Credit Highlights Highly resilient, “must–have” nature of local community journalism and high-quality content Subscription–based, recurring revenue model with flexible cost structure supports sustainable margins Experienced management team with commitment to operational excellence and conservati
Slide 16: Highly resilient, must-have nature of local community journalism
Highly resilient, “must-have” nature of local community journalism and high-quality content Gannett brands are highly trusted, long-standing community cornerstonesOver 80% have been published for more than 100 yearsReach 1 in 2 U.S. adults, and over 10 million people read our print papers every dayY
Slide 17: Growth segments well-positioned for positive digital media tailwinds
Growth segments are well–positioned to capitalize on positive digital media tailwinds New subscriber products to expand TAMUSA TODAY, Crossword, and Sports+Test & learn new content categories beyond newsOptimize Content, Product, and MarketingData Foundation and Agile Growth Rhythm Our leading conte
Slide 18: Digital Only Subscriber Growth
Digital Only Subscriber Growth 18 Digital-only Subscription Growth Digital-only subscription growth is accelerated by four key priorities Subscriber growth is accelerating, with paid digital-only subscribers in Q2 2021 growing 41% over the prior year quarter to approximately 1.4M 120K net new subscr
Slide 19: Drive Digital Marketing Services Growth
Drive Digital Marketing Services Growth 19 Core platform revenue is defined as revenue derived from customers utilizing our proprietary digital marketing services platform that are sold by either our direct or local market teams.Client count is derived from the active number of clients each month av
Slide 20: Portfolio scale provides revenue diversification
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 busine
Slide 21: Predictable and recurring revenue drives stable Adj. EBITDA margins
Gannett’s predictable and recurring revenue drives stable Adj. EBITDA margins (1) even during periods of economic disruption Subscription–based, recurring revenue model supports sustainable margins Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP figures. Refer to Appendix for reconciliation
Slide 22: Proven history of strong expense mitigation
Proven history of strong expense mitigation Track record of strong expense managementMatch expense reductions to secular declines to preserve marginsDespite COVID-19 pandemic, maintained margin profile~70% of expense base is variable: headcount, M&D, COGSLevers to consider if growth does not occur o
Slide 23: Free cash flow profile and commitment to deleveraging
Free cash flow profile and commitment to deleveraging 2019 data is pro forma for New Media and Legacy GannettCumulative cash flow (defined as Adjusted EBITDA less CapEx) since the time of the acquisition of Legacy Gannett.Adjusted EBITDA is a non-GAAP figure. Refer to Appendix for reconciliation of
Slide 24: Experienced management team with commitment to operational excellence
Experienced management team with commitment to operational excellence Mike Reed, Chairman & Chief Executive OfficerJoined Gannett, formerly GateHouse Media, in January of 2006 as Chief Executive OfficerOfficer of Community Newspaper Holdings, Inc., or “CNHI”, a leading publisher of local news and in
Slide 25: Gannett Leadership Bios
Gannett Leadership Bios Jason Taylor, President of Events & PromotionsJoined Gannett in 2015, as President of Western U.S. Publishing Operations and Publisher of the Las Vegas Review-JournalLeads Gannett’s Events and Promotions businessRecognized with numerous industry accolades including the Mega-C
Slide 26: Financial Overview
Financial Overview
Slide 27: Solid Execution Against Key Operating Pillars
Solid Execution Against Key Operating Pillars 27 Unique visitors from ComScore across US and UK. Ranking amongst media peers in US only.Core platform customers are defined as customers utilizing our proprietary digital marketing services platform that are sold by either our direct or local market te
Slide 28: Q3 2021 Outlook
Q3 2021 Outlook Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP figures. Refer to Appendix for reconciliation of non-GAAP measures Same store revenue growth projectedContinue to expect same store revenue growth year-over-year in Q3 2021Adjusted EBITDA(1) growth expectedSubstantial growth yea
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 millionReal estate sales totaled $161.0 million across 83 dealsNon-strategic asset sales totaled $98.0 million across 10 deals$60M of real estate and asset sales
Slide 30: Historical Annual Revenue Performance
Historical Annual Revenue Performance AdvertisingSecular decline in print advertising ongoing and is segment most impacted due to COVID-19 in 2020. YTD 2021, print advertising accounts for less than 25% of total revenue.Circulation2017-2019A stable revenue in print circulationDecline in print circul
Slide 31: Historical Financial Performance
Historical Financial Performance Steady AEBITDA margin(1) as the Company transitions revenue mix to DMS and Circulation$300M of annualized synergies implemented through Q1 2021Reduced operating expenses during COVID-19 to create $250+M in 2020 savings; distinct from synergies savingsCapEx represents
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, con
Slide 34: Sources, Uses and Pro Forma Capitalization
Sources, Uses and Pro Forma Capitalization Source: Company Filings, Bloomberg. As of 6/30/2021 financial statements.Minimum liquidity covenant of $30 million, tested quarterly.First Lien Senior Secured Direct Term Loan and First Lien Senior Secured NotesAdjusted EBITDA is a non-GAAP figure. Refer to
Slide 35: Appendix
Appendix
Slide 36: Continued outperformance of the synergy implementation plan expected
Continued outperformance of the synergy implementation plan is expected, creating stable ongoing expense savings In-year savings realized.Calculated as Q4’20 realized synergies of $61.5mm multiplied by 4.Calculated as Q4’21E realized synergies of $84.5mm multiplied by 4. Current Key Milestones 2020
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 Same Store Revenue trend by month Key Steps Taken Preserved liquidity through:Suspension of dividend; $75M savings in 2020Employer FICA and VAT tax deferral
Slide 38: Over 70% of circulation revenue is subscription based
Over 70% of circulation revenue is subscription based, with approximately 1.4 million digital only subscribers with expectation to reach 10 million over next 5 years. Loyal print subscriber base further stabilized by investment in content, product, and customer service to maximize customer lifetime
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 $1.5k+Avg. monthly campaign value 20kTotal SMB customers Market Opportunity Digital advertising Web presence Marketing software SearchSocial adsDisplay
Slide 40: Advertising
Advertising Unique visitors from July 2021 ComScore (inclusive of US only).Q2 2021 LTM Revenue, KPIs as of Q1 2021. Key highlights(2) 90%USA TODAY advertising is digital 46States across the U.S. 120+Local U.K. community newspapers 250+Local U.S daily newspapers $828MPrint ad revenue $235+MNational a
Slide 41: Events & Promotions
Events & Promotions Building community experiences across the U.S. and U.K., both in-person and virtually Representative events 500k+Event attendees 210+Events hosted in 2020 Annual Events Held Promotional Tentpole Expos / Festivals Endurance events Revenue generation through community engagement an
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
Slide 43: Reconciliations
Reconciliations
Slide 44: AEBITDA Reconciliation
AEBITDA Reconciliation ThreeMonths Ended Lm™ Full Year Gn thousands) 3EDecI19_ 3tMar20 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 ($15,696) 80,52) 6436893) (31260) GD2.14) (S236) 515,115 ($280,635) $5972 $33236 (SIM,9
Slide 45: Gannett Non-GAAP Reconciliation
Gannett Non-GAAP Reconciliation
Gannett — Debt Investor Presentation (September 2021) on 6ix