• Total Operating Revenues: $621.3 million, a decrease of 7.2% year-over-year.
• Same Store Revenue Decline: 5.5% decrease.
• Adjusted EBITDA: $78.2 million, an increase of 5.5%.
• Adjusted EBITDA Margin: 12.6%, a 150 basis points improvement.
• Net Income: $64.3 million.
• Adjusted Net Income: $38.3 million, an improvement of $56.5 million year-over-year.
• Total Digital Revenues: $280.4 million, up 1.2% (3.4% on a same store basis).
• Digital Advertising Growth: Approximately 2% increase.
• Digital Only Subscription Revenue: 17% increase.
• Digital Only ARPU: Approximately 13% increase.
• Free Cash Flow: $3.8 million in Q4; $58.4 million for the full year, a 3.5% increase.
• Total Debt: Approximately $1.11 billion, with $73.5 million repaid in the full year.
• Cash Balance: $106.3 million at the end of Q4.
• First Lien Net Leverage: 2.7 times.
• Asset Sales: $21 million for the year, with $1.7 million in Q4.

• Warning! GuruFocus has detected 4 Warning Signs with GCI.

Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Gannett Co Inc (NYSE:GCI) achieved significant improvement in key metrics, including same store revenue trends, adjusted EBITDA, adjusted net income, and free cash flow for 2024.
• The company successfully executed a debt refinancing that simplified its capital structure, extended its debt runway, and reduced potential future share dilution.
• Digital revenues increased by 5% to approximately $1.1 billion, with digital revenues making up 44% of total revenue, up from 39% last year.
• Gannett Co Inc (NYSE:GCI) has the largest digital audience in the nation, with 200 million average monthly unique visitors, and achieved double-digit page view growth.
• The company expects 2025 to be its third consecutive year of adjusted EBITDA and free cash flow growth, with digital revenues projected to grow between 7% and 10%.

Negative Points

• Total operating revenues for Q4 2024 decreased by 7.2%, with same store revenues decreasing by 5.5%.
• The macro environment and higher churn among customer bases negatively influenced the performance of the Digital Marketing Solutions (DMS) business.
• Google's updated search policies and algorithm changes negatively impacted partnership revenue growth.
• The company anticipates a year-to-year decline in adjusted EBITDA for Q1 2025, with improvements expected later in the year.
• Free cash flow is expected to decline on a year-over-year basis in Q1 2025, despite an overall growth expectation for the full year.

Q & A Highlights

Q: Can you elaborate on the 7% to 10% digital growth outlook for 2025 and the contribution from digital advertising versus DMS? A: Michael Reed, CEO: The growth will be a combination of accelerated digital advertising and DMS growth. Digital advertising will contribute consistently throughout the year, while DMS growth will enhance the last two quarters. It's challenging to pinpoint which will dominate, but both will play significant roles.

Q: Regarding asset sales, what is the expected total from the sales pushed from Q4 to Q1, and will proceeds be used to pay down debt? A: Michael Reed, CEO: We expect proceeds in the range of $50 million to $60 million, and all will be used to pay down debt. For the first half of the year, the total is expected to be $60 million to $70 million.

Q: How do asset sales impact digital versus non-digital revenue, and what is the strategy for future sales? A: Michael Reed, CEO: The Austin sale reflects our overall business mix of 45% digital and 55% print. Future sales will focus on non-strategic real estate. We are not actively marketing assets but will consider offers with compelling multiples that benefit shareholders.

Q: Is there a plan to restructure the capital setup to reduce debt and potential dilution? A: Michael Reed, CEO: We aim for significant debt paydown, potentially over $100 million, by year-end. As leverage decreases, we may refinance into a lower-cost structure and address convertible notes to reduce dilution, though this is likely beyond 2025.

Q: Can you provide an update on the legal case against Google and its potential impact? A: Michael Reed, CEO: Our case is proceeding as planned, with no impact from the DOJ case timing. We remain confident in our position. The Texas case against Google is set for trial soon, which we are watching closely.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.