EX-99.1 2 gciq42017earningsrelease.htm EXHIBIT 99.1 Exhibit


image0a05.jpg
FOR IMMEDIATE RELEASE
Tuesday, February 20, 2018

Gannett Reports Fourth Quarter and Full-Year 2017 Results
Company Delivers Full-Year 2017 Revenue Growth
Digital Revenues Grow to 32% of Total Revenue

McLean, VA - Gannett Co., Inc. (NYSE: GCI) ("Gannett" or "company" or "we" or "our") today reported fourth quarter and full-year 2017 financial results for the period ended December 31, 2017. Our full-year 2017 results include 53 weeks as compared to 52 weeks in 2016, with the extra week impacting the fourth quarter. For comparability purposes, our same store revenue comparisons exclude the 53rd week.

"We are pleased with our financial results for the full-year 2017. Digital revenues grew to $1.0 billion and now comprise 31.6% of total revenues, evidence that our transformation to a next-generation media company is well underway," said Robert J. Dickey, president and chief executive officer. "Additionally, we delivered year-over-year revenue growth and flat Adjusted EBITDA, despite continued secular pressures in print advertising and circulation."

Dickey continued, "In the fourth quarter, we improved Adjusted EBITDA, despite a more challenging print advertising environment than expected. Strong profitability gains in our ReachLocal segment and solid overall cost management offset print revenue pressures. Looking ahead to 2018, we remain focused on growing our marketing solutions and consumer businesses, while driving additional operating efficiencies."

"We are excited by the momentum in the ReachLocal North America business, especially with the newly migrated Gannett clients,” said Sharon Rowlands, president of USA TODAY NETWORK Marketing Solutions and chief executive officer of ReachLocal. "There is a tremendous opportunity to increase penetration across our local markets by growing both new digital marketing services customers and wallet share. In 2018, we plan to capitalize on this significant opportunity with our newly aligned sales organization, which we expect will drive revenue growth and margin improvement."

Fourth Quarter 2017 Consolidated Results

•
Operating revenues were $854.2 million, including approximately $49.1 million from the 53rd week, compared to $867.0 million in the prior year quarter.
•
Favorable changes in foreign currency exchange rates benefited revenues by $4.2 million.
•
Same store operating revenues declined 8.8%, an improvement compared to a decline of 9.4% in the third quarter of 2017, due to our strategic subscriber pricing initiatives and the inclusion of a full quarter of ReachLocal revenue in our same store calculation.
•
Total digital revenues increased to $272.3 million, or approximately 31.9% of total revenue.
•
GAAP net losses were $13.6 million, including a $42.8 million tax expense from the Tax Cuts and Jobs Act of 2017 and $27.6 million of after-tax restructuring, asset impairment charges and other costs.
◦
The effective tax rate was impacted by one-time items related to the reduction in deferred tax assets that resulted from the decrease in the federal statutory tax rate from 35% to 21% and valuation allowances recorded on certain deferred tax assets. The effective tax rate for the fourth quarter without charges related to our deferred tax assets and other adjustments was 25.7%. 



•
Adjusted EBITDA (1) totaled $132.7 million compared to $129.8 million in the prior year quarter with a 50 basis point margin improvement year-over-year; the 53rd week contributed approximately $3.6 million in Adjusted EBITDA.

Fourth Quarter 2017 Publishing Segment

•
Publishing segment operating revenues were $764.8 million compared to $790.5 million in the prior year quarter.
•
Same store publishing segment operating revenues declined 10.0% year-over-year.
•
Same store print advertising revenues declined 18.5% year-over-year, consistent with the 18.7% decline in the third quarter of 2017.
•
Same store circulation revenues fell 6.7% from the prior year quarter compared to a 7.6% decline in the third quarter of 2017, primarily reflecting the positive impact from our subscriber pricing strategies.
•
Digital-only subscriber volumes grew 49.5% year-over-year and now total approximately 341,000.
•
Digital advertising revenues increased 7.3% to $118.9 million compared to the prior year quarter.
◦
Same store digital revenues increased 0.7% with growth in areas such as digital marketing services, audience extension, mobile and branded content, offset in part by weaknesses in digital classified and local desktop display.
•
Publishing segment Adjusted EBITDA was $149.2 million compared to $145.9 million in the prior year quarter reflecting continued operational efficiencies.
 
Fourth Quarter 2017 ReachLocal Segment

•
Operating revenues were $101.4 million, a 34.9% increase compared to the prior year quarter; excluding the 53rd week, the increase was approximately 25.6%.
◦
The increase was attributable to continued solid growth in North America and the migration of Gannett clients onto the ReachLocal platform.
•
Adjusted EBITDA was $7.0 million, representing a 6.9% margin, up from the 5.6% margin in the third quarter.
◦
Improved profitability in the quarter was driven by solid growth in average revenue per client due to more successful cross-selling and the continued ramp up of Gannett clients on the ReachLocal platform.

Fourth Quarter 2017 Cash Flow

•
Net cash flow from operating activities was approximately $72.8 million compared to $47.6 million in the prior year quarter.
•
Capital expenditures were approximately $25.4 million, primarily for product development, technology investments, and maintenance projects.
•
The company paid dividends of $17.9 million; there were no share repurchases.
•
The company had a cash balance of $120.6 million and a balance on its revolving line of credit of $355.0 million, or net debt of $234.4 million.
•
Long-term pension liabilities totaled $421.9 million at year end, down $256.1 million from the end of the third quarter 2017 primarily due to strong asset returns during 2017.

Subsequent Event

On February 5th, we closed on the sale of one of two parcels of property in downtown Nashville, generating net proceeds of approximately $38 million. The second parcel is planned to close in the second quarter of 2018 for an additional $6 million. We have entered into a leaseback for the next 15



months. As a result of the sale, plus additional cash generated during the first quarter, we have paid down an additional $50 million on our revolver in the first quarter, resulting in a revolver balance of $305 million.

Outlook

For 2018, the company expects the following:
•
Consolidated revenues of $2.930-3.030 billion.
•
Consolidated Adjusted EBITDA of $330-340 million.
◦
The slight margin compression reflects rising newsprint prices, our continued transformation to digital and a contribution to our charitable foundation.
•
Capital expenditures of $65-75 million, excluding real estate projects.
•
Depreciation and amortization of $140-150 million, excluding accelerated depreciation related to facility consolidations.
•
The non-operating cost associated with our pension plans, recorded in other non-operating items, is currently estimated to be a credit of $5-10 million as compared to an expense of $21 million in 2017.
•
An effective tax rate between 25% and 27%.

We will be moving our reporting calendar to the Gregorian calendar in 2018 as compared to our 5-4-4 reporting calendar in 2017. From a quarterly perspective, this change will impact our traditional print operations as we will lose one Sunday in the first quarter of 2018 and gain one Sunday in the third quarter. As Sundays are our most profitable days, this change will reduce our first quarter margin and benefit our third quarter margin. Additionally, we expect softer revenue and Adjusted EBITDA in the first quarter as our sales transition is implemented but do anticipate trend improvement in total advertising revenues and Adjusted EBITDA margins as we progress throughout the year.

1 
The company defines adjusted EBITDA as earnings before income taxes, interest expense, equity income, other non-operating items, restructuring costs, acquisition-related expenses, asset impairment charges, depreciation, amortization and other items. Because of the variability of these and other items as well as the impact of future events on these items, management is unable to reconcile without unreasonable effort the company's forecasted range of adjusted EBITDA for the full year to a comparable GAAP range.



* * * *

Conference Call Information

The company will hold a conference call at 10:00 a.m. ET today to discuss its fourth quarter results. The call can be accessed via a live webcast through the company's investor site, http://investors.gannett.com/, or listen-only conference lines. U.S. callers should dial 855-462-1958 and international callers should dial 503-343-6635 at least 10 minutes prior to the scheduled start of the call. The confirmation code for the conference call is 1798915. A conference call replay will be available through March 31, 2018. U.S. callers should dial (855) 859-2056 and international callers should dial (404) 537-3406.


Forward Looking Statements

This press release contains certain forward-looking statements regarding business strategies, market potential, future financial performance and other matters. Forward-looking statements include all statements that are not historical facts. 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 and



are not guarantees of future performance. Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of our management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. Whether or not any such forward-looking statements are in fact achieved will depend on future events, some of which are beyond our control. The matters discussed in these forward-looking statements are subject to a number of risks, trends, uncertainties and other factors that could cause actual results to differ materially from those projected, anticipated or implied in the forward-looking statements. These factors include, among other things:

•
our ability to achieve our strategic transformation;
•
an accelerated decline in general print readership and/or advertiser patterns as a result of competitive alternative media or other factors;
•
an inability to adapt to technological changes or grow our digital businesses;
•
risks associated with the operation of an increasingly digital business, such as rapid technological changes, frequent new product introductions, declines in web traffic levels, technical failures and proliferation of ad blocking technologies;
•
macroeconomic trends and conditions;
•
competitive pressures in the markets in which we operate;
•
increases in newsprint costs over the levels anticipated or declines in newsprint supply;
•
potential disruption or interruption of our IT systems due to accidents, extraordinary weather events, civil unrest, political events, terrorism or cyber security attacks;
•
variability in the exchange rate relative to the U.S. dollar of currencies in foreign jurisdictions in which we operate;
•
risks and uncertainties related to strategic acquisitions or investments, including distraction of management attention, incurrence of additional debt, integration challenges, and failure to realize expected benefits or synergies or to operate businesses effectively following acquisitions;
•
risks and uncertainties associated with our ReachLocal segment, including its significant reliance on Google for media purchases, its international operations and its ability to develop and gain market acceptance for new products or services;
•
our ability to protect our intellectual property or defend successfully against infringement claims;
•
our ability to attract and retain employees;
•
labor relations, including, but not limited to, labor disputes which may cause business interruptions, revenue declines or increased labor costs;
•
risks associated with our underfunded pension plans;
•
adverse outcomes in litigation or proceedings with governmental authorities or administrative agencies, or changes in the regulatory environment, any of which could encumber or impede our efforts to improve operating results or the value of assets;
•
volatility in financial and credit markets which could affect the value of retirement plan assets and our ability to raise funds through debt or equity issuances and otherwise affect our ability to access the credit and capital markets at the times and in the amounts needed and on acceptable terms; and
•
other uncertainties relating to general economic, political, business, industry, regulatory and market conditions.

A further description of these and other important risks, trends, uncertainties and other factors is provided in the company’s filings with the U.S. Securities and Exchange Commission, including the company’s annual report on Form 10-K for fiscal year 2016. Any forward-looking statements should be evaluated in light of these important risk factors. The company is not responsible for updating or revising any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.




Non-GAAP Financial Measures

This press release also contains a discussion of certain non-GAAP financial measures that the company presents 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 tables accompanying this press release.

About Gannett

Gannett Co., Inc. (NYSE: GCI) is an innovative, digitally focused media and marketing solutions company committed to strengthening communities across our network. With an unmatched local-to-national reach, Gannett touches the lives of more than 110 million people monthly with our Pulitzer-Prize winning content, consumer experiences and benefits, and advertiser products and services. Gannett brands include USA TODAY NETWORK with the iconic USA TODAY and more than 100 local media brands, digital marketing services companies ReachLocal and SweetIQ, and U.K. media company Newsquest. To connect with us, visit www.gannett.com.

For investor inquiries, contact:
 
For media inquiries, contact:
Stacy Cunningham
 
Amber Allman
VP, Financial Planning & Investor Relations
 
Vice President, Corporate Events & Communications
703-854-3168
 
703-854-5358
investors@gannett.com
 
aallman@gannett.com
or
 
 
Brinlea Johnson
 
 
The Blueshirt Group
 
 
investors@gannett.com
 
 

# # #



CONSOLIDATED STATEMENTS OF INCOME (LOSS)
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands (except per share amounts)
 
 
 
 
 
 
 
 
Table No. 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
 
Year ended
 
December 31, 2017
 
December 25, 2016
 
December 31, 2017
 
December 25, 2016
 
 
 
 
 
 
 
 
Operating revenues:
 
 
 
 
 
 
 
Advertising
$
490,096

 
$
513,687

 
$
1,791,618

 
$
1,703,795

Circulation
299,364

 
297,804

 
1,120,739

 
1,133,676

Other
64,782

 
55,503

 
234,123

 
210,003

Total operating revenues
854,242

 
866,994

 
3,146,480

 
3,047,474

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Cost of sales and operating expenses *
507,008

 
531,024

 
1,959,638

 
1,927,895

Selling, general and administrative expenses *
216,648

 
214,134

 
836,306

 
795,548

Depreciation and amortization
43,432

 
41,114

 
191,885

 
132,964

Asset impairment charges
26,780

 
25,003

 
46,796

 
55,940

Restructuring costs
16,118

 
16,703

 
44,284

 
45,757

Total operating expenses
809,986

 
827,978

 
3,078,909

 
2,958,104

Operating income
44,256

 
39,016

 
67,571

 
89,370

 
 
 
 
 
 
 
 
Non-operating expenses:
 
 
 
 
 
 
 
Interest expense
(4,821
)
 
(4,282
)
 
(17,142
)
 
(12,791
)
Other non-operating items, net
423

 
(579
)
 
(9,688
)
 
(10,151
)
Total non-operating expenses
(4,398
)
 
(4,861
)
 
(26,830
)
 
(22,942
)
 
 
 
 
 
 
 
 
Income before income taxes
39,858

 
34,155

 
40,741

 
66,428

Provision for income taxes **
53,449

 
9,561

 
33,854

 
13,718

Net income (loss)
$
(13,591
)
 
$
24,594

 
$
6,887

 
$
52,710

 
 
 
 
 
 
 
 
Earnings (loss) per share - basic
$
(0.12
)
 
$
0.21

 
$
0.06

 
$
0.45

Earnings (loss) per share - diluted
$
(0.12
)
 
$
0.21

 
$
0.06

 
$
0.44

 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding:
 
 
 
 
 
 
Basic
111,787

 
114,688

 
113,047

 
116,018

Diluted
111,787

 
117,053

 
115,610

 
118,625


*
The company early adopted Financial Accounting Standards Board ("FASB") guidance requiring changes to the presentation of net periodic pension and other postretirement benefit costs. Specifically, this guidance requires entities to classify the service cost component of the net benefit cost in the same income statement line item as other employee compensation costs while all other components of net benefit cost must be presented as non-operating items. The guidance further requires such classification changes to be retrospectively applied beginning in the interim period in which the guidance is adopted. As a result of adopting this guidance, in the fourth quarter and year ended December 25, 2016, operating income and other non-operating expenses increased $2.8 million and $10.3 million, respectively. Net income, retained earnings, and earnings per share remained unchanged.

**
The provision for income taxes for the fourth quarter and year ended December 31, 2017 includes incremental tax expense of $42.8 million as a result of the U.S. Tax Cuts and Jobs Act passed in December 2017 and tax expense of $7.7 million related to the revaluation of a deferred tax asset associated with a deferred intercompany transaction. Further, the tax provision for the fourth quarter and year ended December 31, 2017 is partially offset by a benefit of $0.9 million and $21.0 million, respectively, related to a worthless stock and debt deduction for one of our ReachLocal international subsidiaries.




SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands
 
 
 
 
 
 
 
 
Table No. 2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
 
Year ended
 
December 31, 2017
 
December 25, 2016
 
December 31, 2017
 
December 25, 2016
 
 
 
 
 
 
 
 
Operating revenues:
 
 
 
 
 
 
 
Publishing
$
764,801

 
$
790,474

 
$
2,812,243

 
$
2,933,095

ReachLocal
101,420

 
75,167

 
358,728

 
110,144

Corporate and Other
1,488

 
1,353

 
4,835

 
4,235

Intersegment eliminations
(13,467
)
 
—

 
(29,326
)
 
—

Total
$
854,242

 
$
866,994

 
$
3,146,480

 
$
3,047,474

 
 
 
 
 
 
 
 
Adjusted EBITDA:
 
 
 
 
 
 
 
Publishing
$
149,184

 
$
145,947

 
$
432,420

 
$
444,108

ReachLocal
6,961

 
892

 
16,553

 
(5,852
)
Corporate and Other
(23,401
)
 
(16,994
)
 
(89,040
)
 
(78,361
)
Total
$
132,744

 
$
129,845

 
$
359,933

 
$
359,895

 
 
 
 
 
 
 
 
Depreciation and amortization:
 
 
 
 
 
 
 
Publishing
$
29,098

 
$
28,583

 
$
135,214

 
$
105,102

ReachLocal
8,398

 
8,312

 
33,902

 
12,236

Corporate and Other
5,936

 
4,219

 
22,769

 
15,626

Total
$
43,432

 
$
41,114

 
$
191,885

 
$
132,964

 
 
 
 
 
 
 
 
Capital expenditures:
 
 
 
 
 
 
 
Publishing
$
12,116

 
$
9,234

 
$
35,702

 
$
34,324

ReachLocal
3,967

 
2,927

 
16,871

 
4,123

Corporate and Other
9,358

 
2,886

 
19,752

 
21,601

Total
$
25,441

 
$
15,047

 
$
72,325

 
$
60,048


    




REVENUE DETAIL
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands
 
 
 
 
 
 
 
Table No. 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
 
 
December 31, 2017
 
December 25, 2016
 
% Change
 
 
 
 
 
 
 
Reported revenue
 
$
854,242

 
$
866,994

 
(1.5
%)
Acquired revenue
 
(9,937
)
 
—

 
***

Currency impact
 
(4,232
)
 
—

 
***

Exited operations
 
—

 
587

 
***

53rd week
 
(49,074
)
 
—

 
***

Same store revenue
 
$
790,999

 
$
867,581

 
(8.8
%)
 
 
 
 
 
 
 
Reported advertising revenue
 
$
490,096

 
$
513,687

 
(4.6
%)
Acquired revenue
 
(5,012
)
 
—

 
***

Currency impact
 
(2,648
)
 
—

 
***

53rd week
 
(26,826
)
 
—

 
***

Same store advertising revenue
 
$
455,610

 
$
513,687

 
(11.3
%)
 
 
 
 
 
 
 
Reported circulation revenue
 
$
299,364

 
$
297,804

 
0.5
%
Acquired revenue
 
(982
)
 
—

 
***

Currency impact
 
(1,209
)
 
—

 
***

53rd week
 
(19,329
)
 
—

 
***

Same store circulation revenue
 
$
277,844

 
$
297,804

 
(6.7
%)
 
 
 
 
 
 
 
Table No. 4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
 
 
December 31, 2017
 
December 25, 2016
 
% Change
 
 
 
 
 
 
 
Publishing revenue detail
 
 
 
 
 
 
Print advertising
 
$
293,606

 
$
334,414

 
(12.2
%)
Digital advertising:
 
 
 
 
 
 
External sales
 
106,831

 
110,832

 
(3.6
%)
Intersegment sales
 
12,085

 
—

 
***

Total digital advertising
 
118,916

 
110,832

 
7.3
%
Total advertising
 
412,522

 
445,246

 
(7.3
%)
 
 
 
 
 
 
 
Circulation
 
299,364

 
297,804

 
0.5
%
 
 
 
 
 
 
 
Other:
 
 
 
 
 
 
External sales
 
51,533

 
47,424

 
8.7
%
Intersegment sales
 
1,382

 
—

 
***

Total other
 
52,915

 
47,424

 
11.6
%
 
 
 
 
 
 
 
Total Publishing revenue
 
$
764,801

 
$
790,474

 
(3.2
%)



USE OF NON-GAAP INFORMATION

The company uses non-GAAP financial performance and liquidity measures to supplement the financial information presented on a GAAP basis. These non-GAAP financial measures, which may not be comparable to similarly titled measures reported by other companies, should not be considered in isolation from or as a substitute for the related GAAP measures and should be read together with financial information presented on a GAAP basis.

The company defines its non-GAAP measures as follows:

•
Adjusted EBITDA is a non-GAAP financial performance measure that the company believes offers a useful view of the overall operation of our business. The company defines adjusted EBITDA as net income before (1) income taxes, (2) interest expense, (3) equity income, (4) other non-operating items, (5) restructuring costs, (6) acquisition-related expenses (including certain integration expenses), (7) asset impairment charges, (8) other items (including certain business transformation costs, litigation expenses, multi-employer pension withdrawals, and gains or losses on certain investments), (9) depreciation, and (10) amortization. The most directly comparable GAAP financial measure is net income.

•
Adjusted net income is a non-GAAP financial performance measure that the company uses for calculating adjusted earnings per share ("EPS"). Adjusted net income is defined as net income before the adjustments we apply in calculating adjusted EPS, as described below. We believe presenting adjusted net income is useful to enable investors to understand how we calculate adjusted EPS, which provides a useful view of the overall operation of the company's business. The most directly comparable GAAP financial measure is net income.

•
Adjusted diluted EPS is a non-GAAP financial performance measure that the company believes offers a useful view of the overall operation of our business. The company defines adjusted EPS as EPS before tax-effected (1) restructuring costs, (2) asset impairment charges, (3) acquisition-related expenses (including certain integration expenses), (4) non-operating (gains) losses, and (5) other items (including certain business transformation expenses, litigation expenses, multi-employer pension withdrawals and gains or losses on certain investments). The tax impact on these non-GAAP tax deductible adjustments is based on the estimated statutory tax rates for the United Kingdom of 19.25% and the United States of 38.7%. In addition, tax is adjusted for the impact of non-deductible acquisition costs, a tax benefit related to a worthless stock and debt deduction, tax expense associated with new tax rates in the U.S. Tax Cuts and Jobs Act, and revaluation of a deferred tax asset associated with a deferred intercompany transaction. The most directly comparable GAAP financial measure is diluted EPS.

•
Free cash flow is a non-GAAP liquidity measure that adjusts our reported GAAP results for items that we believe are critical to the ongoing success of our business. The company defines free cash flow as cash flow from operating activities as reported on the statement of cash flows less capital expenditures, which results in a figure representing free cash flow available for use in operations, additional investments, debt obligations, and returns to shareholders. The most directly comparable GAAP financial measure is net cash from operating activities.

The company uses non-GAAP financial measures for purposes of evaluating its performance and liquidity. Therefore, the company believes that each of the non-GAAP measures presented provides useful information to investors by allowing them to view our businesses through the eyes of our management and Board of Directors, facilitating comparison of results across historical periods, and providing a focus on the underlying ongoing operating performance of our business. Many of our peer group companies present similar non-GAAP measures to better facilitate industry comparisons.




NON-GAAP FINANCIAL INFORMATION
ADJUSTED EBITDA
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands
 
 
 
 
 
 
 
 
Table No. 5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended December 31, 2017
 
Publishing
 
ReachLocal
 
Corporate and Other
 
Consolidated Total
 
 
 
 
 
 
 
 
Net loss (GAAP basis)
 
 
 
 
 
 
$
(13,591
)
Provision for income taxes
 
 
 
 
 
 
53,449

Interest expense
 
 
 
 
 
 
4,821

Other non-operating items, net
 
 
 
 
 
 
(423
)
Operating income (loss) (GAAP basis)
$
80,313

 
$
(2,071
)
 
$
(33,986
)
 
$
44,256

Depreciation and amortization
29,098

 
8,398

 
5,936

 
43,432

Asset impairment charges
26,780

 
—

 
—

 
26,780

Restructuring costs
13,411

 
466

 
2,241

 
16,118

Acquisition-related items
45

 
—

 
505

 
550

Other items
(463
)
 
168

 
1,903

 
1,608

Adjusted EBITDA (non-GAAP basis)
$
149,184

 
$
6,961

 
$
(23,401
)
 
$
132,744

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended December 25, 2016
 
Publishing
 
ReachLocal
 
Corporate and Other
 
Consolidated Total
 
 
 
 
 
 
 
 
Net income (GAAP basis)
 
 
 
 
 
 
$
24,594

Provision for income taxes
 
 
 
 
 
 
9,561

Interest expense
 
 
 
 
 
 
4,282

Other non-operating items, net
 
 
 
 
 
 
579

Operating income (loss) (GAAP basis)
$
72,121

 
$
(7,498
)
 
$
(25,607
)
 
$
39,016

Depreciation and amortization
28,583

 
8,312

 
4,219

 
41,114

Asset impairment charges
25,003

 
—

 
—

 
25,003

Restructuring costs
16,539

 
78

 
86

 
16,703

Acquisition-related items
641

 
—

 
2,987

 
3,628

Other items
3,060

 
—

 
1,321

 
4,381

Adjusted EBITDA (non-GAAP basis)
$
145,947

 
$
892

 
$
(16,994
)
 
$
129,845













NON-GAAP FINANCIAL INFORMATION
ADJUSTED EBITDA
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands

 
 
 
 
 
 
 
 
Table No. 5 (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year ended December 31, 2017
 
Publishing
 
ReachLocal
 
Corporate and Other
 
Consolidated Total
 
 
 
 
 
 
 
 
Net income (loss) (GAAP basis)
 
 
 
 
 
 
$
6,887

Provision for income taxes
 
 
 
 
 
 
33,854

Interest expense
 
 
 
 
 
 
17,142

Other non-operating items, net
 
 
 
 
 
 
9,688

Operating income (loss) (GAAP basis)
$
219,677

 
$
(18,939
)
 
$
(133,167
)
 
$
67,571

Depreciation and amortization
135,214

 
33,902

 
22,769

 
191,885

Asset impairment charges
46,796

 
—

 
—

 
46,796

Restructuring costs
37,376

 
980

 
5,928

 
44,284

Acquisition-related items
375

 
43

 
4,784

 
5,202

Other items
(7,018
)
 
567

 
10,646

 
4,195

Adjusted EBITDA (non-GAAP basis)
$
432,420

 
$
16,553

 
$
(89,040
)
 
$
359,933

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year ended December 25, 2016
 
Publishing
 
ReachLocal
 
Corporate and Other
 
Consolidated Total
 
 
 
 
 
 
 
 
Net income (loss) (GAAP basis)
 
 
 
 
 
 
$
52,710

Provision for income taxes
 
 
 
 
 
 
13,718

Interest expense
 
 
 
 
 
 
12,791

Other non-operating items, net
 
 
 
 
 
 
10,151

Operating income (loss) (GAAP basis)
$
235,398

 
$
(18,728
)
 
$
(127,300
)
 
$
89,370

Depreciation and amortization
105,102

 
12,236

 
15,626

 
132,964

Asset impairment charges
55,940

 
—

 
—

 
55,940

Restructuring costs
45,031

 
640

 
86

 
45,757

Acquisition-related items
777

 
—

 
31,906

 
32,683

Other items
1,860

 
—

 
1,321

 
3,181

Adjusted EBITDA (non-GAAP basis)
$
444,108

 
$
(5,852
)
 
$
(78,361
)
 
$
359,895





NON-GAAP FINANCIAL INFORMATION
ADJUSTED DILUTED EPS
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands (except per share amounts)
 
 
 
 
 
 
 
 
Table No. 6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
 
Year ended
 
December 31, 2017
 
December 25, 2016
 
December 31, 2017
 
December 25, 2016
 
 
 
 
 
 
 
 
Asset impairment charges
$
26,780

 
$
25,003

 
$
46,796

 
$
55,940

Restructuring costs (including accelerated depreciation)
22,534

 
19,921

 
88,331

 
48,975

Acquisition-related items
550

 
3,628

 
5,202

 
32,683

Non-operating (gains) losses
(5,725
)
 
1,964

 
(4,710
)
 
3,115

Other items
(97
)
 
3,060

 
(3,276
)
 
1,860

Pretax impact
44,042

 
53,576

 
132,343

 
142,573

Income tax impact of above items
(16,450
)
 
(20,196
)
 
(50,826
)
 
(50,609
)
Estimated effect of U.S. statutory tax rate change
42,776

 
—

 
42,776

 
—

Other tax-related items
6,834

 
—

 
(12,169
)
 
—

Impact of items affecting comparability on net income
$
77,202

 
$
33,380

 
$
112,124

 
$
91,964

 
 
 
 
 
 
 
 
Net income (loss) (GAAP basis)
$
(13,591
)
 
$
24,594

 
$
6,887

 
$
52,710

Impact of items affecting comparability on net income (loss)
77,202

 
33,380

 
112,124

 
91,964

Adjusted net income (non-GAAP basis)
$
63,611

 
$
57,974

 
$
119,011

 
$
144,674

 
 
 
 
 
 
 
 
Earnings (loss) per share - diluted (GAAP basis)
$
(0.12
)
 
$
0.21

 
$
0.06

 
$
0.44

Impact of items affecting comparability on net income (loss)
0.67

 
0.29

 
0.97

 
0.78

Adjusted earnings per share - diluted (non-GAAP basis)
$
0.55

 
$
0.50

 
$
1.03

 
$
1.22

 
 
 
 
 
 
 
 
Diluted weighted average number of common shares outstanding (GAAP basis)
111,787

 
117,053

 
115,610

 
118,625

Diluted weighted average number of common shares outstanding (non-GAAP basis)
115,477

 
117,053

 
115,610

 
118,625





NON-GAAP FINANCIAL INFORMATION
FREE CASH FLOW
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands
 
 
 
 
Table No. 7
 
 
 
 
 
 
 
 
Three months ended December 31, 2017
 
Year ended December 31, 2017
 
 
 
 
Net cash flow from operating activities (GAAP basis)
$
72,777

 
$
236,468

Capital expenditures
(25,441
)
 
(72,325
)
Free cash flow (non-GAAP basis)
$
47,336

 
$
164,143