UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________ FORM 10-Q _______________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___ Commission file number 001-36097 ___________________________ GANNETT CO., INC. (Exact name of registrant a ...

Gannett Co., Inc. (NYSE:GCI) Q2 2023 Results Conference Call August 3, 2023 8:30 AM ET Company Participants Matthew Esposito - Investor Relations Mike Reed - Chairman and Chief Executive Officer Doug Horne - Chief Financial Officer Kristin Roberts - Chief Content Officer Chris Cho - President of Digital Marketing Solutions Operator Greetings, and welcome to the Gannett Second Quarter Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________ FORM 10-Q _______________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___ Commission file number 001-36097 ___________________________ GANNETT CO., INC. (Exact name of registrant as spe ...

Gannett Co, Inc. (NYSE:GCI) Q1 2023 Earnings Conference Call May 4, 2023 8:30 AM ET Company Participants Matthew Esposito - IR Michael Reed - Chairman, CEO & President Douglas Horne - CFO & CAO Conference Call Participants Courtney Bahlman - Barclays Douglas Arthur - Huber Research Operator Greetings, and welcome to the Gannett First Quarter Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Matthew Esposito, Investor Relat ...

[Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for the company [ITEM 1. Financial Statements (unaudited)](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements for Gannett Co., Inc., including the balance sheets, statements of operations, cash flows, and equity, along with detailed notes explaining the company's business, revenue recognition, asset valuations, debt, pension plans, income taxes, equity information, commitments, and segment reporting [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a summary of the company's financial position, detailing assets, liabilities, and equity at specific reporting dates Balance Sheet Summary | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :--------- | | Total Assets | $2,328,434 | $2,393,555 | $(65,121) | -2.72% | | Total Liabilities | $2,007,791 | $2,098,182 | $(90,391) | -4.31% | | Total Equity | $320,643 | $295,373 | $25,270 | 8.56% | | Cash and cash equivalents | $83,074 | $94,255 | $(11,181) | -11.86% | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) This statement outlines the company's revenues, expenses, and net income or loss over specific periods, including comprehensive income adjustments Statements of Operations Summary | Metric | Three months ended March 31, 2023 (in thousands) | Three months ended March 31, 2022 (in thousands) | Change (in thousands) | Change (%) | | :------------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Total operating revenues | $668,917 | $748,077 | $(79,160) | -10.58% | | Operating income (loss) | $19,961 | $(1,978) | $21,939 | >100% | | Net income (loss) attributable to Gannett | $10,344 | $(2,967) | $13,311 | >100% | | Income (loss) per share attributable to Gannett - diluted | $0.07 | $(0.02) | $0.09 | >100% | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement details the cash inflows and outflows from operating, investing, and financing activities for the reported periods Cash Flow Summary | Metric | Three months ended March 31, 2023 (in thousands) | Three months ended March 31, 2022 (in thousands) | Change (in thousands) | Change (%) | | :------------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Cash provided by operating activities | $6,718 | $32,429 | $(25,711) | -79.29% | | Cash provided by (used for) investing activities | $20,704 | $(6,220) | $26,924 | >100% | | Cash used for financing activities | $(38,640) | $(3,818) | $(34,822) | >100% | | Increase (decrease) in cash, cash equivalents and restricted cash | $(11,180) | $21,399 | $(32,579) | >100% | [Condensed Consolidated Statements of Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) This statement presents changes in the company's equity, including net income, other comprehensive income, and share transactions Equity Summary | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :--------- | | Total Equity | $320,643 | $295,373 | $25,270 | 8.56% | | Net income attributable to Gannett (Q1 2023) | $10,344 | N/A | N/A | N/A | | Other comprehensive income, net (Q1 2023) | $13,290 | N/A | N/A | N/A | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=NOTES%20TO%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) These notes provide detailed explanations and additional information supporting the condensed consolidated financial statements [NOTE 1 — Description of business and basis of presentation](index=10&type=section&id=NOTE%201%20%E2%80%94%20Description%20of%20business%20and%20basis%20of%20presentation) Gannett is a subscription-led and digitally-focused media and marketing solutions company, operating the USA TODAY NETWORK, Newsquest (U.K.), and LocaliQ digital marketing services. Its strategy prioritizes digital growth while maximizing the value of its legacy print business. The financial statements are prepared in accordance with U.S. GAAP for interim information - Gannett's business model is **subscription-led and digitally-focused**, aiming to empower communities through content and marketing solutions[16](index=16&type=chunk) - Key media assets include the USA TODAY NETWORK (U.S.), Newsquest (U.K.), LocaliQ (digital marketing services), and USA TODAY NETWORK Ventures (events business)[17](index=17&type=chunk) - The company reports in two segments: Gannett Media and Digital Marketing Solutions (DMS), with a Corporate and other category for broad corporate functions[18](index=18&type=chunk) [NOTE 2 — Revenues](index=11&type=section&id=NOTE%202%20%E2%80%94%20Revenues) Total operating revenues decreased by 10.6% year-over-year, primarily due to declines in print advertising and circulation. Digital advertising and marketing services also saw a slight decrease, while international revenues increased as a percentage of total revenues Revenue Breakdown by Type | Revenue Type | Three months ended March 31, 2023 (in thousands) | Three months ended March 31, 2022 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Print advertising | $147,954 | $173,518 | $(25,564) | -14.73% | | Digital advertising and marketing services | $192,893 | $201,596 | $(8,703) | -4.32% | | Total advertising and marketing services | $340,847 | $375,114 | $(34,267) | -9.13% | | Circulation | $241,285 | $288,602 | $(47,317) | -16.40% | | Other | $86,785 | $84,361 | $2,424 | 2.87% | | Total revenues | $668,917 | $748,077 | $(79,160) | -10.58% | - Revenues generated from international locations increased to approximately **10.2% of total revenues** for Q1 2023, up from 8.9% in Q1 2022[23](index=23&type=chunk) [NOTE 3 — Accounts receivable, net](index=12&type=section&id=NOTE%203%20%E2%80%94%20Accounts%20receivable,%20net) The allowance for doubtful accounts decreased from $16.7 million at December 31, 2022, to $14.5 million at March 31, 2023. The company recorded a bad debt expense of $1.4 million in Q1 2023, a shift from a $2.4 million benefit in Q1 2022 Accounts Receivable and Bad Debt Expense | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :--------- | | Allowance for doubtful accounts (Ending balance) | $14,499 | $16,697 | $(2,198) | -13.16% | | Current period provision (Q1 2023 vs Q1 2022) | $1,383 | $(2,403) | $3,786 | >100% | [NOTE 4 — Goodwill and intangible assets](index=12&type=section&id=NOTE%204%20%E2%80%94%20Goodwill%20and%20intangible%20assets) Total intangible assets decreased to $591.7 million at March 31, 2023, from $613.4 million at December 31, 2022, primarily due to amortization. Goodwill remained stable at approximately $533.5 million, and no impairment indicators were identified during the quarter Goodwill and Intangible Assets Summary | Asset Type | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :--------- | | Total intangible assets | $591,688 | $613,358 | $(21,670) | -3.53% | | Goodwill | $533,469 | $533,166 | $303 | 0.06% | - The company performed a review of potential impairment indicators for goodwill and indefinite-lived intangible assets as of March 31, 2023, and determined that **no indicators of impairment were present**[29](index=29&type=chunk) [NOTE 5 — Integration and reorganization costs](index=12&type=section&id=NOTE%205%20%E2%80%94%20Integration%20and%20reorganization%20costs) Total integration and reorganization costs increased to $12.1 million in Q1 2023 from $11.4 million in Q1 2022. This was driven by a significant increase in severance-related expenses, partially offset by a decrease in other restructuring-related expenses due to the reversal of a multiemployer pension plan withdrawal liability Integration and Reorganization Costs | Cost Type | Three months ended March 31, 2023 (in thousands) | Three months ended March 31, 2022 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Total Integration and reorganization costs | $12,127 | $11,398 | $729 | 6.40% | | Severance-related expenses | $10,253 | $5,360 | $4,893 | 91.29% | | Other restructuring-related expenses | $1,874 | $6,038 | $(4,164) | -68.96% | - The decrease in other restructuring-related costs was primarily due to the **reversal of a withdrawal liability** related to a multiemployer pension plan[32](index=32&type=chunk) [NOTE 6 — Debt](index=13&type=section&id=NOTE%206%20%E2%80%94%20Debt) Total debt decreased to $1.13 billion at March 31, 2023, from $1.16 billion at December 31, 2022, primarily due to prepayments on the Senior Secured Term Loan and repurchases of 2026 Senior Notes. The company was in compliance with all debt covenants as of March 31, 2023 Debt Summary | Debt Type | Carrying Value (March 31, 2023, in millions) | Carrying Value (December 31, 2022, in millions) | Change (in millions) | Change (%) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | :------------------- | :--------- | | Total debt | $1,130.3 | $1,161.8 | $(31.5) | -2.71% | | Senior Secured Term Loan | $397.6 | $427.6 | $(30.0) | -7.02% | | 2026 Senior Notes | $323.8 | $328.5 | $(4.7) | -1.43% | | 2027 Notes (Convertible debt) | $405.6 | $402.4 | $3.2 | 0.79% | | 2024 Notes | $3.3 | $3.3 | $0.0 | 0.00% | - The Senior Secured Term Loan had an effective interest rate of **10.6%** as of March 31, 2023, and the company made **$31.3 million in prepayments** during Q1 2023[39](index=39&type=chunk) - The company repurchased **$6.1 million of 2026 Senior Notes** in Q1 2023, resulting in a net gain of approximately **$0.9 million** on early extinguishment of debt[42](index=42&type=chunk) - As of March 31, 2023, the company was in compliance with all covenants and obligations under its debt instruments[36](index=36&type=chunk) [NOTE 7 — Pensions and other postretirement benefit plans](index=17&type=section&id=NOTE%207%20%E2%80%94%20Pensions%20and%20other%20postretirement%20benefit%20plans) Total retirement plan expense shifted from a significant benefit of $18.1 million in Q1 2022 to a smaller benefit of $1.6 million in Q1 2023, primarily due to a decrease in non-operating pension income. The Gannett Retirement Plan (GR Plan) was more than 100% funded as of March 31, 2023 Retirement Plan Benefit/Expense | Metric | Three months ended March 31, 2023 (in thousands) | Three months ended March 31, 2022 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Total (benefit) expense for retirement plans | $(1,587) | $(18,137) | $16,550 | -91.25% | | Non-operating pension income | $(1,911) | $(18,612) | $16,701 | -89.73% | - The decrease in non-operating pension income was mainly driven by a decrease in the expected return on plan assets following an annuity contract in Q3 2022[131](index=131&type=chunk) - As of March 31, 2023, the GR Plan was **more than 100% funded**[66](index=66&type=chunk) [NOTE 8 — Fair value measurement](index=18&type=section&id=NOTE%208%20%E2%80%94%20Fair%20value%20measurement) The company applies a three-tiered fair value hierarchy for its measurements. Pension plan assets are the primary assets measured at fair value on a recurring basis. Debt instruments are recorded at carrying value, with fair values disclosed, and assets held for sale are measured on a nonrecurring basis - Fair value measurements are categorized into **Level 1** (quoted prices in active markets), **Level 2** (significant other observable inputs), and **Level 3** (significant unobservable inputs)[67](index=67&type=chunk) - Assets and liabilities recorded at fair value on a recurring basis primarily consist of **pension plan assets**[68](index=68&type=chunk) - Assets held for sale, totaling **$2.3 million** as of March 31, 2023, are measured at fair value on a nonrecurring basis (Level 3)[70](index=70&type=chunk) [NOTE 9 — Income taxes](index=19&type=section&id=NOTE%209%20%E2%80%94%20Income%20taxes) The company reported a benefit for income taxes of $17.3 million in Q1 2023, significantly higher than $7.6 million in Q1 2022, resulting in an effective tax rate of 245.1%. This was mainly driven by the tax benefit of the pre-tax book loss and changes in valuation allowances. The Inflation Reduction Act is not expected to have a material financial impact in 2023 Income Tax Summary | Metric | Three months ended March 31, 2023 (in thousands) | Three months ended March 31, 2022 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Loss before income taxes | $(7,069) | $(10,709) | $3,640 | -34.00% | | Benefit for income taxes | $(17,329) | $(7,607) | $(9,722) | >100% | | Effective tax rate | 245.1% | 71.0% | 174.1% | >100% | - The Q1 2023 benefit for income taxes was mainly driven by the tax benefit of the pre-tax book loss, changes in valuation allowances on non-deductible U.S. interest expense carryforwards, global intangible low-taxed income inclusion, and stock compensation[71](index=71&type=chunk) - The Inflation Reduction Act of 2022 is not anticipated to have a **material financial impact** on the company during 2023[75](index=75&type=chunk) [NOTE 10 — Supplemental equity information](index=19&type=section&id=NOTE%2010%20%E2%80%94%20Supplemental%20equity%20information) Net income attributable to Gannett was $10.3 million, or $0.07 diluted EPS, for Q1 2023, a significant improvement from a net loss of $3.0 million, or $0.02 diluted loss per share, in Q1 2022. Share-based compensation expense increased slightly, and no shares were repurchased under the Stock Repurchase Program during the quarter Supplemental Equity and EPS Information | Metric | Three months ended March 31, 2023 (in thousands, except per share) | Three months ended March 31, 2022 (in thousands, except per share) | Change (in thousands) | Change (%) | | :------------------------------------------------ | :------------------------------------------------------------- | :------------------------------------------------------------- | :-------------------- | :--------- | | Net income (loss) attributable to Gannett | $10,344 | $(2,967) | $13,311 | >100% | | Diluted weighted average shares outstanding | 138,175 | 136,425 | 1,750 | 1.28% | | Income (loss) per share attributable to Gannett - diluted | $0.07 | $(0.02) | $0.09 | >100% | | Share-based compensation expense | $3,736 | $3,393 | $343 | 10.11% | - Approximately **97.1 million shares** convertible from the 2027 Notes were excluded from diluted EPS calculation as their effect would have been antidilutive[77](index=77&type=chunk) - No shares were repurchased under the Stock Repurchase Program during Q1 2023, with approximately **$96.9 million remaining authorized**. No repurchases are anticipated for the remainder of 2023[82](index=82&type=chunk) [NOTE 11 — Commitments, contingencies and other matters](index=21&type=section&id=NOTE%2011%20%E2%80%94%20Commitments,%20contingencies%20and%20other%20matters) The company is involved in various legal proceedings in the ordinary course of business, including libel, privacy, intellectual property, and employment matters. Management believes these current and threatened proceedings will not have a material adverse effect on the company's financial position or results of operations - The company is involved in legal proceedings such as libel, invasion of privacy, intellectual property infringement, wrongful termination, and regulatory investigations[84](index=84&type=chunk) - Management does not believe it is reasonably possible that current and threatened legal proceedings will have a **material adverse effect** on the company's business, financial position, or consolidated results of operations[85](index=85&type=chunk) [NOTE 12 — Segment reporting](index=21&type=section&id=NOTE%2012%20%E2%80%94%20Segment%20reporting) Gannett operates through two reportable segments: Gannett Media (local, regional, national, and international newspaper publishers) and Digital Marketing Solutions (LocaliQ digital marketing services). The Chief Operating Decision Maker uses Adjusted EBITDA and Adjusted EBITDA margin to evaluate segment performance and allocate resources - Reportable segments are Gannett Media (USA TODAY NETWORK, Newsquest) and Digital Marketing Solutions (LocaliQ)[86](index=86&type=chunk)[87](index=87&type=chunk) - **Adjusted EBITDA** and **Adjusted EBITDA margin** are key non-GAAP financial performance measures used to evaluate segment performance and allocate resources[89](index=89&type=chunk) Adjusted EBITDA by Segment | Segment | Adjusted EBITDA (Q1 2023, in thousands) | Adjusted EBITDA (Q1 2022, in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------- | :--------- | | Gannett Media | $57,263 | $68,648 | $(11,385) | -16.58% | | Digital Marketing Solutions | $11,683 | $11,180 | $503 | 4.50% | | Corporate and other | $(6,044) | $(15,657) | $9,613 | -61.40% | | Consolidated Adjusted EBITDA | $62,902 | $64,171 | $(1,269) | -1.98% | [NOTE 13 — Other supplemental information](index=23&type=section&id=NOTE%2013%20%E2%80%94%20Other%20supplemental%20information) Total cash, cash equivalents, and restricted cash decreased to $93.6 million at March 31, 2023, from $165.0 million at March 31, 2022. Cash paid for interest increased, while cash paid for taxes remained relatively stable. Accounts payable and accrued liabilities also decreased Cash and Cash Equivalents, and Cash Paid for Taxes and Interest | Metric | March 31, 2023 (in thousands) | March 31, 2022 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :--------- | | Total cash, cash equivalents and restricted cash | $93,624 | $165,018 | $(71,394) | -43.26% | | Cash paid for taxes, net of refunds (Q1) | $953 | $846 | $107 | 12.65% | | Cash paid for interest (Q1) | $10,499 | $7,531 | $2,968 | 39.41% | Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | Change (in thousands) | Change (%) | | :--------------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :--------- | | Accounts payable | $154,859 | $189,094 | $(34,235) | -18.11% | | Compensation | $60,241 | $87,937 | $(27,696) | -31.49% | | Total Accounts payable and accrued liabilities | $304,912 | $351,848 | $(46,936) | -13.34% | [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides a detailed discussion of Gannett's financial condition and results of operations for the three months ended March 31, 2023. It covers the company's business overview, recent developments, strategic pillars, macroeconomic environment, and a comprehensive analysis of consolidated and segment-level financial performance, liquidity, capital resources, and non-GAAP financial measures [OVERVIEW](index=25&type=section&id=OVERVIEW) Gannett is executing a subscription-led, digitally-focused strategy to drive audience growth and engagement, while optimizing its legacy print business. Key business trends include declining print revenues, increasing demand for digital marketing solutions for SMBs, and inflationary cost pressures. The company also highlights its ESG initiatives and the impact of the macroeconomic environment - Gannett's strategy prioritizes the growth of highly recurring digital businesses while maximizing the lifetime value of its legacy print business[100](index=100&type=chunk) - Print advertising and circulation revenues continue to decline as audiences shift to digital platforms - SMBs are increasingly seeking digital marketing solutions that offer greater attribution - Inflationary prices across categories like labor, fuel, and newsprint have negatively impacted costs, with the impact believed to have peaked in 2022[103](index=103&type=chunk) - The company repurchased **$6.1 million of 2026 Senior Notes** in February 2023, recognizing a net gain of approximately **$0.9 million** on early extinguishment of debt[104](index=104&type=chunk) - Driving digital subscriptions growth, aiming for additional digital subscription offerings - Driving Digital Marketing Solutions growth by engaging more customers in recurring monthly revenue offerings - Optimizing traditional businesses across print and advertising for profitability and lifetime value - Prioritizing investments in growth businesses like USA TODAY NETWORK Ventures, Reviewed, and sports betting partnerships - Building on environmental, social, and governance (ESG) focus, including workplace diversity and emissions reduction[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) - Uncertain economic conditions, including higher inflation and interest rates, adversely impacted advertising revenues and consumer price sensitivity, leading to reduced print circulation volumes[115](index=115&type=chunk)[116](index=116&type=chunk) [RESULTS OF OPERATIONS](index=29&type=section&id=RESULTS%20OF%20OPERATIONS) Gannett reported a significant turnaround in Q1 2023, achieving net income and operating income despite an 11% decline in total operating revenues. This improvement was driven by substantial reductions in operating expenses and a gain on asset sales, partially offset by increased non-operating expenses due to higher interest and lower pension income. Segment results show varying performance, with Gannett Media's operating income increasing due to cost controls, and DMS showing revenue and operating income growth [Consolidated Summary](index=29&type=section&id=Consolidated%20Summary) This section provides a high-level overview of the company's consolidated financial performance, including revenues, expenses, and net income Consolidated Financial Performance Summary | Metric | Three months ended March 31, 2023 (in thousands, except per share) | Three months ended March 31, 2022 (in thousands, except per share) | Change (in thousands) | Change (%) | | :------------------------------------------------ | :------------------------------------------------------------- | :------------------------------------------------------------- | :-------------------- | :--------- | | Total operating revenues | $668,917 | $748,077 | $(79,160) | -10.58% | | Total operating expenses | $648,956 | $750,055 | $(101,099) | -13.48% | | Operating income (loss) | $19,961 | $(1,978) | $21,939 | >100% | | Net income (loss) attributable to Gannett | $10,344 | $(2,967) | $13,311 | >100% | | Income (loss) per share attributable to Gannett - diluted | $0.07 | $(0.02) | $0.09 | >100% | [Operating revenues](index=29&type=section&id=Operating%20revenues) Total operating revenues decreased by 11% year-over-year. Print advertising and circulation revenues experienced significant declines, while digital marketing services revenues showed growth. Other revenues also increased slightly Operating Revenues Breakdown | Revenue Category | Three months ended March 31, 2023 (in thousands) | Three months ended March 31, 2022 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Print advertising | $147,954 | $173,518 | $(25,564) | -14.73% | | Digital advertising and marketing services | $192,893 | $201,596 | $(8,703) | -4.32% | | Total advertising and marketing services | $340,847 | $375,114 | $(34,267) | -9.13% | | Print circulation | $205,454 | $258,476 | $(53,022) | -20.51% | | Digital-only circulation | $35,831 | $30,126 | $5,705 | 18.94% | | Total circulation | $241,285 | $288,602 | $(47,317) | -16.40% | | Other | $86,785 | $84,361 | $2,424 | 2.87% | | Total operating revenues | $668,917 | $748,077 | $(79,160) | -10.58% | - Digital marketing services revenues increased by **3%** due to an increase in average revenue per user (ARPU), partially offset by a decrease in client counts[123](index=123&type=chunk)[139](index=139&type=chunk) - Digital-only circulation revenues increased by **19%**, driven by a **15.4% increase** in paid digital-only subscriptions to approximately **2.02 million** as of March 31, 2023[123](index=123&type=chunk)[140](index=140&type=chunk) [Operating expenses](index=31&type=section&id=Operating%20expenses) Total operating expenses decreased by 13% year-over-year, contributing to the improved operating income. This reduction was primarily driven by lower operating costs and selling, general and administrative expenses, reflecting ongoing cost control initiatives and fewer print facilities Operating Expenses Breakdown | Expense Category | Three months ended March 31, 2023 (in thousands) | Three months ended March 31, 2022 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Total operating expenses | $648,956 | $750,055 | $(101,099) | -13.48% | | Operating costs | $430,188 | $469,885 | $(39,697) | -8.45% | | Selling, general and administrative expenses | $180,390 | $221,837 | $(41,447) | -18.68% | | Depreciation and amortization | $43,698 | $47,783 | $(4,085) | -8.55% | | Integration and reorganization costs | $12,127 | $11,398 | $729 | 6.40% | | Gain on sale or disposal of assets, net | $(17,681) | $(2,804) | $(14,877) | >100% | - Operating costs decreased due to lower labor, newsprint, and delivery costs[128](index=128&type=chunk) - Selling, general and administrative expenses decreased due to lower labor, payroll, outside services, and benefits costs[128](index=128&type=chunk) [Non-operating (income) expense](index=31&type=section&id=Non-operating%20(income)%20expense) Non-operating expenses increased significantly to $27.0 million in Q1 2023 from $8.7 million in Q1 2022. This was primarily driven by higher interest expense due to increased interest rates and a substantial decrease in non-operating pension income, partially offset by a gain on early extinguishment of debt Non-Operating Income and Expense | Expense Category | Three months ended March 31, 2023 (in thousands) | Three months ended March 31, 2022 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Non-operating expenses | $27,030 | $8,731 | $18,299 | >100% | | Interest expense | $28,330 | $26,006 | $2,324 | 8.94% | | (Gain) loss on early extinguishment of debt | $(496) | $2,743 | $(3,239) | >100% | | Non-operating pension income | $(1,815) | $(18,213) | $16,398 | -90.00% | | Other non-operating expense (income), net | $1,011 | $(1,805) | $2,816 | >100% | - The increase in interest expense was mainly due to the impact of **higher interest rates** on the Senior Secured Term Loan, partially offset by a lower debt balance[129](index=129&type=chunk) - The decrease in non-operating pension income was primarily due to a decrease in the expected return on plan assets following an annuity contract in Q3 2022[131](index=131&type=chunk) [Benefit for income taxes](index=32&type=section&id=Benefit%20for%20income%20taxes) The benefit for income taxes increased to $17.3 million in Q1 2023 from $7.6 million in Q1 2022, resulting in an effective tax rate of 245.1%. This was primarily driven by the tax benefit of the pre-tax book loss and changes in valuation allowances on non-deductible U.S. interest expense carryforwards Income Tax Benefit and Effective Rate | Metric | Three months ended March 31, 2023 (in thousands) | Three months ended March 31, 2022 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Loss before income taxes | $(7,069) | $(10,709) | $3,640 | -34.00% | | Benefit for income taxes | $(17,329) | $(7,607) | $(9,722) | >100% | | Effective tax rate | 245.1% | 71.0% | 174.1% | >100% | - The benefit for income taxes in Q1 2023 was mainly driven by the tax benefit of the pre-tax book loss, the change in valuation allowances on non-deductible U.S. interest expense carryforwards, global intangible low-taxed income inclusion, and stock compensation[134](index=134&type=chunk) [Net income (loss) attributable to Gannett and diluted income (loss) per share attributable to Gannett](index=32&type=section&id=Net%20income%20(loss)%20attributable%20to%20Gannett%20and%20diluted%20income%20(loss)%20per%20share%20attributable%20to%20Gannett) Net income attributable to Gannett was $10.3 million, or $0.07 diluted EPS, for Q1 2023, a significant improvement from a net loss of $3.0 million, or $0.02 diluted loss per share, in Q1 2022, reflecting the overall positive changes in operating and non-operating items Net Income and Diluted EPS | Metric | Three months ended March 31, 2023 (in thousands, except per share) | Three months ended March 31, 2022 (in thousands, except per share) | Change (in thousands) | Change (%) | | :------------------------------------------------ | :------------------------------------------------------------- | :------------------------------------------------------------- | :-------------------- | :--------- | | Net income (loss) attributable to Gannett | $10,344 | $(2,967) | $13,311 | >100% | | Income (loss) per share attributable to Gannett - diluted | $0.07 | $(0.02) | $0.09 | >100% | [Segment Results](index=32&type=section&id=Segment%20Results) Segment results highlight varying performance across Gannett Media and Digital Marketing Solutions. Gannett Media saw a decrease in revenues but an increase in operating income due to significant cost reductions and asset sales. Digital Marketing Solutions achieved revenue and operating income growth, driven by its core direct business and local markets [Gannett Media segment](index=32&type=section&id=Gannett%20Media%20segment) Gannett Media's total operating revenues decreased by 12% year-over-year to $589.1 million, primarily due to declines in print advertising and circulation. Despite this, operating income increased by 37% to $35.0 million, driven by a 14% reduction in operating expenses, reflecting successful cost control initiatives and a significant gain on asset sales Gannett Media Segment Performance | Metric | Three months ended March 31, 2023 (in thousands) | Three months ended March 31, 2022 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Total operating revenues | $589,095 | $670,419 | $(81,324) | -12.13% | | Total operating expenses | $554,108 | $644,827 | $(90,719) | -14.07% | | Operating income | $34,987 | $25,592 | $9,395 | 36.71% | | Advertising and marketing services | $262,423 | $298,762 | $(36,339) | -12.16% | | Circulation | $241,285 | $288,602 | $(47,317) | -16.40% | | Other | $85,387 | $83,055 | $2,332 | 2.81% | - Print advertising revenues decreased by **15%** due to volume declines, macroeconomic factors, and the absence of revenues from divested businesses and sunset non-core products[138](index=138&type=chunk) - Digital-only circulation revenues increased by **19%**, driven by a **15.4% increase** in paid digital-only subscriptions[140](index=140&type=chunk) - Operating costs decreased by **11%**, primarily due to lower compensation and benefits (down **19%**), distribution (down **15%**), and newsprint and ink costs (down **3%**)[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) - A net gain of **$16.3 million** was recognized on the sale of assets, primarily from a domestic production facility[150](index=150&type=chunk) [Digital Marketing Solutions segment](index=36&type=section&id=Digital%20Marketing%20Solutions%20segment) The Digital Marketing Solutions (DMS) segment reported a 3% increase in total operating revenues to $112.8 million in Q1 2023, driven by growth in the core direct business and local markets. Operating income increased by 31% to $5.8 million, as operating expenses grew at a slower rate than revenues, and amortization expense decreased Digital Marketing Solutions Segment Performance | Metric | Three months ended March 31, 2023 (in thousands) | Three months ended March 31, 2022 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Total operating revenues | $112,817 | $109,709 | $3,108 | 2.83% | | Total operating expenses | $107,049 | $105,295 | $1,754 | 1.67% | | Operating income | $5,768 | $4,414 | $1,354 | 30.68% | | Advertising and marketing services | $112,817 | $109,709 | $3,108 | 2.83% | - Operating costs increased by **3%**, primarily due to higher outside services costs (up **4%**) driven by third-party media fees, and increased compensation and benefits (up **7%**) due to higher headcount[155](index=155&type=chunk)[156](index=156&type=chunk) - Depreciation and amortization expense decreased by **9%**, mainly due to intangibles becoming fully amortized in Q4 2022[160](index=160&type=chunk) [Corporate and other category](index=37&type=section&id=Corporate%20and%20other%20category) Corporate and other operating revenues remained stable at $1.4 million in Q1 2023. Operating expenses decreased significantly by 33% to $22.2 million, primarily due to a substantial reduction in selling, general, and administrative expenses and a gain on the sale of intellectual property, partially offset by increased operating and integration costs Corporate and Other Category Performance | Metric | Three months ended March 31, 2023 (in thousands) | Three months ended March 31, 2022 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Operating revenues | $1,398 | $1,306 | $92 | 7.05% | | Total operating expenses | $22,192 | $33,290 | $(11,098) | -33.34% | | Selling, general and administrative expenses | $5,598 | $22,707 | $(17,109) | -75.35% | | Operating costs | $6,026 | $795 | $5,231 | >100% | | Integration and reorganization costs | $7,458 | $5,526 | $1,932 | 34.96% | | (Gain) loss on sale or disposal of assets, net | $(1,448) | $7 | $(1,455) | >100% | - The decrease in Selling, general and administrative expenses was primarily driven by lower compensation costs[165](index=165&type=chunk) - A **$1.4 million gain** was recognized on the sale of intellectual property[165](index=165&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=38&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Cash provided by operating activities decreased significantly in Q1 2023 compared to Q1 2022, primarily due to lower deferred revenue receipts and higher severance payments. Investing activities shifted to a cash-providing position, while financing activities saw increased cash usage. The company expects to have adequate liquidity for the next twelve months, supported by ongoing cost reduction initiatives and planned capital expenditures Cash Flow Activities Summary | Cash Flow Activity | Three months ended March 31, 2023 (in thousands) | Three months ended March 31, 2022 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Cash provided by operating activities | $6,718 | $32,429 | $(25,711) | -79.29% | | Cash provided by (used for) investing activities | $20,704 | $(6,220) | $26,924 | >100% | | Cash used for financing activities | $(38,640) | $(3,818) | $(34,822) | >100% | - The decrease in operating cash flow was primarily due to lower cash receipts related to deferred revenues (**$40.9 million decrease**) and an increase in severance payments (**$12.7 million increase**), partially offset by a decrease in pension contributions (**$7.3 million decrease**)[169](index=169&type=chunk) - Total outstanding debt was **$1.13 billion** as of March 31, 2023, with the Senior Secured Term Loan accounting for approximately **33%** of outstanding debt[172](index=172&type=chunk)[118](index=118&type=chunk) - The company expects capital expenditures for the remainder of 2023 to total approximately **$31.2 million**, primarily for digital product development and technology systems[183](index=183&type=chunk) - Management expects adequate capital resources and liquidity for the next twelve months, supported by cost reduction initiatives to offset secular decline in legacy print business[167](index=167&type=chunk) [CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES](index=41&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20USE%20OF%20ESTIMATES) There have been no material changes to the company's critical accounting policies and use of estimates since the Annual Report on Form 10-K for the fiscal year ended December 31, 2022 - No material changes to critical accounting policies and use of estimates have occurred since the Annual Report on Form 10-K for the fiscal year ended December 31, 2022[186](index=186&type=chunk) [NON-GAAP FINANCIAL MEASURES](index=41&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) Gannett utilizes Adjusted EBITDA and Adjusted EBITDA margin as non-GAAP financial measures to assess its day-to-day operating performance, excluding certain non-recurring or non-operational items. These measures are considered useful for identifying trends and making operational decisions but are not substitutes for U.S. GAAP measures - **Adjusted EBITDA** is defined as Net income (loss) attributable to Gannett before income tax expense (benefit), interest expense, gains/losses on early extinguishment of debt, non-operating pension income, loss on convertible notes derivative, depreciation and amortization, integration and reorganization costs, other operating expenses, asset impairments, goodwill and intangible impairments, gains/losses on sale or disposal of assets, share-based compensation, and certain other non-recurring charges[188](index=188&type=chunk) - **Adjusted EBITDA** and **Adjusted EBITDA margin** are used by management to evaluate ongoing operating performance, identify trends, and make decisions, as they eliminate the effect of items not indicative of core operations[89](index=89&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk) - These non-GAAP measures have limitations and should not be considered in isolation or as an alternative to U.S. GAAP measures like net income (loss) or cash flows[191](index=191&type=chunk)[193](index=193&type=chunk) Adjusted EBITDA and Margin | Metric | Three months ended March 31, 2023 (in thousands) | Three months ended March 31, 2022 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Adjusted EBITDA (non-GAAP basis) | $62,902 | $64,171 | $(1,269) | -1.98% | | Adjusted EBITDA margin (non-GAAP basis) | 9.4% | 8.6% | 0.8% | 9.30% | [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Gannett is exposed to market risks from changes in interest rates and foreign currency exchange rates. The company manages interest rate risk through a mix of variable and fixed-rate debt, with variable-rate debt comprising approximately one-third of its total debt. Foreign currency risk primarily stems from its U.K. operations and other international DMS activities - The company is exposed to market risks from changes in **interest rates** and **foreign currency exchange rates**[195](index=195&type=chunk) - As of March 31, 2023, variable-rate debt totaled **$407.1 million**, and a hypothetical **150 basis point interest rate increase** would have increased interest expense by approximately **$1.5 million** for Q1 2023[196](index=196&type=chunk) - Foreign exchange rate risk primarily arises from operations in the U.K. (British pound sterling) and the DMS segment's activities in Australia, Canada, India, and New Zealand[197](index=197&type=chunk) - A hypothetical **10% fluctuation** in the British pound sterling and other DMS currencies against the U.S. dollar would not have materially impacted Q1 2023 operating income[198](index=198&type=chunk) [ITEM 4. Controls and Procedures](index=43&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) As of March 31, 2023, the company's disclosure controls and procedures were evaluated and deemed effective by management, including the Chief Executive Officer and Chief Financial Officer. There were no material changes in internal control over financial reporting during the quarter - The company's disclosure controls and procedures were **effective** as of March 31, 2023[199](index=199&type=chunk) - There were **no material changes** in the company's internal control over financial reporting during the quarter ended March 31, 2023[200](index=200&type=chunk) [Part II. Other Information](index=44&type=section&id=Part%20II.%20Other%20Information) This section provides additional disclosures on legal proceedings, risk factors, equity sales, defaults, and other miscellaneous information [ITEM 1. Legal Proceedings](index=44&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) There have been no material developments with respect to the legal proceedings previously reported in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022 - No material developments regarding legal proceedings have occurred since the Annual Report on Form 10-K for the fiscal year ended December 31, 2022[203](index=203&type=chunk) [ITEM 1A. Risk Factors](index=44&type=section&id=ITEM%201A.%20Risk%20Factors) While there have been no material changes to previously disclosed risk factors, the company highlights new risks related to actual or perceived banking volatility or limited liquidity, which could materially and adversely impact its available cash and results of operations - No material changes from the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022, except as noted[204](index=204&type=chunk) - A new risk factor highlights that actual or perceived events involving **banking volatility or limited liquidity** could have a **material and adverse impact** on the company's available cash and results of operations[206](index=206&type=chunk)[207](index=207&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company did not repurchase any shares of Common Stock under its Stock Repurchase Program during the three months ended March 31, 2023. However, 66 thousand shares were withheld to cover employee tax-withholding obligations upon the vesting of restricted stock awards - No shares of Common Stock were repurchased under the Stock Repurchase Program during the three months ended March 31, 2023[208](index=208&type=chunk)[213](index=213&type=chunk) Shares Purchased for Tax Withholding | Period | Total number of shares purchased | Average price paid per share | | :-------------------------------- | :----------------------------- | :--------------------------- | | March 1, 2023 - March 31, 2023 | 66,000 | $1.83 | - The **66 thousand shares** purchased were withheld to cover employee tax-withholding obligations upon the vesting of restricted stock awards[213](index=213&type=chunk) - As of March 31, 2023, approximately **$96.9 million** remained authorized under the Stock Repurchase Program, with no repurchases anticipated for the remainder of 2023[213](index=213&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=45&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The company reported no defaults upon senior securities during the period - No defaults upon senior securities were reported[210](index=210&type=chunk) [ITEM 4. Mine Safety Disclosures](index=45&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company's operations - This item is not applicable[211](index=211&type=chunk) [ITEM 5. Other Information](index=45&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No other information was reported under this item - No other information was reported[212](index=212&type=chunk) [ITEM 6. Exhibits](index=46&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including various employee compensation agreements, certifications from principal executive and financial officers, and the Inline XBRL financial information - Form of Gannett Co., Inc. Employee Cash Performance Unit Award Agreement (2020 Omnibus Incentive Compensation Plan, as amended) - Form of Gannett Co., Inc. Employee Restricted Stock Grant Agreement (2020 Omnibus Incentive Compensation Plan, as amended) - Form of Gannett Co., Inc. Employee Long-Term Cash Award Agreement (2020 Omnibus Incentive Compensation Plan, as amended) - Gannett Co., Inc. 2023 Annual Bonus Plan - Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(d) of the Securities Exchange Act of 1934 and Section 1350 - Inline XBRL financial information, including Condensed Consolidated Balance Sheets, Statements of Operations, Cash Flow, Equity, and Notes to Condensed Consolidated Financial Statements[214](index=214&type=chunk) [Signatures](index=47&type=section&id=SIGNATURES) The report was officially signed on May 4, 2023, by Douglas E. Horne, Chief Financial Officer and Chief Accounting Officer of GANNETT CO., INC. - The report was signed on **May 4, 2023**, by **Douglas E. Horne**, Chief Financial Officer and Chief Accounting Officer[217](index=217&type=chunk)

Gannett Co, Inc. (NYSE:GCI) Q4 2022 Earnings Conference Call February 23, 2023 8:30 AM ET Company Participants Matthew Esposito - IR Michael Reed - Chairman, CEO & President Douglas Horne - CFO & CAO Conference Call Participants Jason Bazinet - Citigroup Leon Cooperman - Omega Advisors Operator Greetings, and welcome to the Gannett Fourth Quarter Earnings Call. [Operator Instructions]. It is now my pleasure to introduce your host, Matthew Esposito. Thank you, Mr. Esposito, you may begin. Matthew Esposito Th ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to | Commission file number 001-36097 | | | | | | --- | --- | --- | --- | --- | | GANNETT CO., INC. | | | | | | (Exact name of registrant as specified in its charter) ...

Financial Data and Key Metrics Changes - Total operating revenues for Q3 2022 were $717.9 million, a decrease of 10.3% year-over-year, with same-store revenues down 9% [42] - Adjusted EBITDA totaled $51.9 million, down 49.1% year-over-year, with an adjusted EBITDA margin of 7.2% compared to 12.8% in the prior quarter [44] - The net loss attributable to Gannett was $54.1 million, which included significant depreciation and amortization costs [48] Business Line Data and Key Metrics Changes - Digital revenues accounted for approximately 36% of total revenue, totaling $256.4 million, a decrease of 2.3% year-over-year on a same-store basis [49] - Digital-only circulation revenue grew 35.4% year-over-year to $34.5 million, with ARPU increasing approximately 2% [50] - Digital marketing solutions revenue reached a record high of $120 million, up 3.4% year-over-year, with adjusted EBITDA for the segment at $15.7 million, reflecting a strong margin of 13.1% [51][52] Market Data and Key Metrics Changes - The company ended Q3 with 1.98 million paid digital-only subscribers, representing nearly 30% year-over-year growth, surpassing 2 million in October [16] - The average monthly unique visitors reached 178 million, with 126 million from the USA TODAY network [20] Company Strategy and Development Direction - The company is focused on digital transformation, shifting from legacy print to more stable recurring digital revenue streams [14] - Cost control initiatives are being implemented to improve adjusted EBITDA and margins, with a target of $200 million to $240 million in annualized cost savings [58][36] - Partnerships with brands like the Weather Channel and T-Mobile are being pursued to expand audience and monetization opportunities [24] Management's Comments on Operating Environment and Future Outlook - Management noted that while the macro environment remains challenging, there are signs of stabilization and improvement in trends compared to Q2 [8] - The company expects significant improvements in adjusted EBITDA and total revenue in Q4, driven by recent cost actions [62] - The target for revenue stabilization and growth is set for 2024, with confidence in achieving this goal [72] Other Important Information - The company has repaid $130 million of debt year-to-date and is on track to repay $150 million to $200 million by the end of 2022 [18] - A significant pension liability transfer was executed, which is expected to yield approximately $20 million in future savings [57] Q&A Session Summary Question: Have inflationary cost pressures seen any mitigation? - Management noted slight improvements in fuel costs but continued increases in distribution costs due to investments in route coverage [66] Question: Are the cost reduction efforts primarily about outsourcing? - Management confirmed that outsourcing is a significant part of the strategy, along with internal process improvements [67] Question: When does the company expect to achieve flattish organic growth? - The target for achieving revenue stabilization and growth is set for 2024 [72] Question: Is the $29 million inflationary impact year-over-year or sequential? - Management clarified that the $29 million is a year-over-year impact [73] Question: How does the company view broader inflation pressures? - Management expressed that stabilization has been seen across most categories, with no significant further increases expected at present [75]

Part I. Financial Information [ITEM 1. Financial Statements](index=4&type=section&id=ITEM%201.%20Financial%20Statements) This section presents Gannett's unaudited condensed consolidated financial statements and detailed notes for the periods ended September 30, 2022, and December 31, 2021 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$2.48 billion**, liabilities to **$2.17 billion**, and equity to **$313.1 million** by September 30, 2022, from December 31, 2021 | Metric (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :-------------------- | :----------- | :----------- | | Total Assets | $2,481,652 | $2,828,069 | | Total Liabilities | $2,168,517 | $2,298,454 | | Total Equity | $313,135 | $529,615 | - Cash and cash equivalents decreased from **$130,756 thousand** at December 31, 2021, to **$124,867 thousand** at September 30, 2022[12](index=12&type=chunk) - Accounts receivable, net, decreased from **$328,733 thousand** to **$270,440 thousand**[12](index=12&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) The company reported a net loss of **$54.1 million** for Q3 2022 and **$110.9 million** for the nine months, with total operating revenues declining due to advertising and circulation decreases | Metric (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Operating Revenues | $717,902 | $800,185 | $2,214,639 | $2,381,544 | | Operating Income (Loss) | $(25,143) | $31,102 | $(48,345) | $84,488 | | Net Income (Loss) | $(54,122) | $14,545 | $(110,924) | $(113,447) | | Diluted EPS | $(0.39) | $0.09 | $(0.81) | $(0.84) | - Advertising and marketing services revenue decreased by **12%** for the three months ended September 30, 2022, and by **8%** for the nine months ended September 30, 2022, compared to the prior year periods[14](index=14&type=chunk) - Circulation revenue decreased by **14%** for the three months and **12%** for the nine months ended September 30, 2022, year-over-year[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased to **$33.0 million** for the nine months ended September 30, 2022, while financing cash outflow significantly reduced due to lower debt repayments | Metric (in thousands) | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | | Operating Activities | $32,982 | $133,347 | | Investing Activities | $19,081 | $39,236 | | Financing Activities | $(58,044) | $(212,284) | | Decrease in Cash | $(7,428) | $(39,312) | - The decrease in operating cash flow was primarily due to lower cash receipts related to deferred revenues (**$35.3 million** decrease), an increase in taxes paid (**$11.8 million** increase), and the absence of **$16.4 million** in PPP funding received in 2021[215](index=215&type=chunk) - Cash used for financing activities decreased due to lower net repayments under term loans (**$163.5 million** decrease) and a **$33.0 million** decrease in deferred financing costs payments[217](index=217&type=chunk) [Condensed Consolidated Statements of Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) Total equity declined to **$313.1 million** by September 30, 2022, primarily due to a net loss of **$110.8 million** and other comprehensive loss of **$107.8 million** | Metric (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :-------------------- | :----------- | :----------- | | Total Equity | $313,135 | $529,615 | | Accumulated Deficit | $(1,032,168) | $(921,399) | | Accumulated Other Comprehensive (Loss) Income | $(47,803) | $59,998 | - Net loss attributable to Gannett for the nine months ended September 30, 2022, was **$110,769 thousand**[19](index=19&type=chunk) - Other comprehensive loss, net of tax, for the nine months ended September 30, 2022, was **$107,801 thousand**, primarily due to foreign currency translation adjustments and pension/postretirement benefit items[19](index=19&type=chunk)[107](index=107&type=chunk) [NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=10&type=section&id=NOTES%20TO%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed explanations of financial statements, covering business, accounting policies, revenue, assets, debt, pensions, taxes, equity, and segment reporting [NOTE 1 — Description of business and basis of presentation](index=10&type=section&id=NOTE%201%20%E2%80%94%20Description%20of%20business%20and%20basis%20of%20presentation) Gannett, a subscription-led media and marketing solutions company, restructured its U.S. operations, facing ongoing negative impacts from the COVID-19 pandemic - Gannett is a subscription-led and digitally-focused media and marketing solutions company[21](index=21&type=chunk) - Strategic organizational restructuring in June 2022 centralized U.S. operations within Gannett Media and Digital Marketing Solutions (DMS)[22](index=22&type=chunk) - The COVID-19 pandemic continues to negatively impact Advertising and marketing services revenues and Circulation revenues, particularly single-copy newspapers and event attendance[25](index=25&type=chunk) [NOTE 2 — Revenues](index=11&type=section&id=NOTE%202%20%E2%80%94%20Revenues) Total operating revenues decreased by **10%** for Q3 and **7%** for the nine months, driven by declines in print advertising and circulation, despite growth in other revenues | Revenue Type (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Print advertising | $159,324 | $190,044 | $506,295 | $584,165 | | Digital advertising and marketing services | $202,523 | $221,976 | $614,275 | $636,322 | | Circulation | $264,732 | $306,702 | $827,958 | $942,398 | | Other | $91,323 | $81,463 | $266,111 | $218,659 | | Total revenues | $717,902 | $800,185 | $2,214,639 | $2,381,544 | - International revenues were approximately **9.6%** and **9.4%** of total revenues for the three and nine months ended September 30, 2022, respectively, an increase from **7.9%** and **7.7%** in the prior year periods[34](index=34&type=chunk) - Deferred revenues primarily consist of circulation subscriptions paid in advance, expected to be recognized over the next one to twelve months[35](index=35&type=chunk) [NOTE 3 — Accounts receivable, net](index=12&type=section&id=NOTE%203%20%E2%80%94%20Accounts%20receivable%2C%20net) Allowance for doubtful accounts decreased to **$12.1 million**, while bad debt expense increased to **$5.1 million** for the nine months due to higher write-offs | Metric (in thousands) | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | | Beginning balance | $16,470 | $20,843 | | Current period provision | $5,074 | $3,478 | | Write-offs | $(13,149) | $(10,998) | | Ending balance | $12,056 | $16,411 | - Bad debt expense for the nine months ended September 30, 2022, was **$5.1 million**, an increase from **$3.5 million** in the prior year, driven by increased write-offs and reserves for circulation revenue[40](index=40&type=chunk) [NOTE 4 — Goodwill and intangible assets](index=13&type=section&id=NOTE%204%20%E2%80%94%20Goodwill%20and%20intangible%20assets) Total intangible assets decreased to **$638.3 million**, while goodwill slightly increased; impairment assessment showed no impairment but reduced headroom for Domestic Gannett Media | Asset Type (in thousands) | Sep 30, 2022 (Net) | Dec 31, 2021 (Net) | | :------------------------ | :----------------- | :----------------- | | Finite-lived intangible assets | $471,232 | $544,955 | | Indefinite-lived intangible assets (Mastheads) | $167,105 | $168,198 | | Total Intangible Assets | $638,337 | $713,153 | | Goodwill | $537,898 | $533,709 | - The excess of fair value over carrying value for the Domestic Gannett Media reporting unit decreased from **126%** in 2021 to **22%** in 2022, indicating reduced headroom[43](index=43&type=chunk) - No impairment indicators were present as of September 30, 2022, but adverse changes in macroeconomic factors or market conditions could lead to future declines in fair value[45](index=45&type=chunk)[46](index=46&type=chunk) [NOTE 5 — Integration and reorganization costs and asset impairments](index=14&type=section&id=NOTE%205%20%E2%80%94%20Integration%20and%20reorganization%20costs%20and%20asset%20impairments) Integration and reorganization costs significantly increased to **$33.3 million** for Q3 and **$60.5 million** for the nine months, driven by severance and facility consolidation | Cost Type (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :----------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Severance-related expenses | $15,737 | $2,660 | $32,734 | $10,886 | | Facility consolidation and other restructuring-related expenses | $17,574 | $10,959 | $27,720 | $24,581 | | Total Integration and reorganization costs | $33,311 | $13,619 | $60,454 | $35,467 | - The increase in facility consolidation costs for Gannett Media was due to a withdrawal liability from a multiemployer pension plan and expenses from exiting a lease[50](index=50&type=chunk) - Accelerated depreciation related to print facility closures was **$0.3 million** for the three months and **$10.5 million** for the nine months ended September 30, 2022[51](index=51&type=chunk) [NOTE 6 — Debt](index=16&type=section&id=NOTE%206%20%E2%80%94%20Debt) Total debt decreased to **$1.20 billion**; the New Senior Secured Term Loan had a **6.4%** effective rate, and **$37.0 million** of 2026 Senior Notes were repurchased | Debt Type (in millions) | Sep 30, 2022 (Carrying Value) | Dec 31, 2021 (Carrying Value) | | :---------------------- | :---------------------------- | :---------------------------- | | New Senior Secured Term Loan | $455.7 | $463.3 | | 2026 Senior Notes | $344.3 | $375.6 | | 2027 Notes | $399.2 | $390.1 | | 2024 Notes | $3.3 | $3.3 | | Total Debt | $1,202.5 | $1,232.3 | - The New Senior Secured Term Loan had an effective interest rate of **6.4%** as of September 30, 2022, and **$92.2 million** in prepayments were made during the nine months ended September 30, 2022[59](index=59&type=chunk)[222](index=222&type=chunk) - For the nine months ended September 30, 2022, **$37.0 million** of 2026 Senior Notes principal was repurchased, resulting in a **$0.4 million** loss on early extinguishment of debt[67](index=67&type=chunk)[228](index=228&type=chunk) - The 2027 Notes had an effective interest rate of **10.5%** as of September 30, 2022[79](index=79&type=chunk)[241](index=241&type=chunk) [NOTE 7 — Pensions and other postretirement benefit plans](index=19&type=section&id=NOTE%207%20%E2%80%94%20Pensions%20and%20other%20postretirement%20benefit%20plans) Non-operating pension income decreased due to lower asset returns; a **$450 million** pension liability transfer reduced net funded obligation by **$99.9 million** | Metric (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Non-operating pension income | $(14,990) | $(23,860) | $(51,363) | $(71,644) | | Total expense (benefit) for retirement plans | $(14,837) | $(23,785) | $(50,892) | $(71,429) | - On August 31, 2022, Gannett Media Corp. transferred approximately **$450 million** of GR Plan pension liabilities and related assets to insurers, resulting in a **$99.9 million** decrease in net funded pension obligation[85](index=85&type=chunk) - A noncash pension settlement gain of **$0.7 million** (**$0.5 million** after tax) was recognized for the GR Plan for the quarter ended September 30, 2022[85](index=85&type=chunk) [NOTE 8 — Fair value measurement](index=21&type=section&id=NOTE%208%20%E2%80%94%20Fair%20value%20measurement) Fair value measurements primarily cover pension assets and debt, with most debt classified as Level 2, 2027 Notes equity as Level 3, and **$0.6 million** in assets held for sale - Assets and liabilities recorded at fair value on a recurring basis primarily consist of pension plan assets, for which NAV is used as a practical expedient[89](index=89&type=chunk) - The New Senior Secured Term Loan and 2026 Senior Notes are classified as Level 2 for fair value measurement[57](index=57&type=chunk)[65](index=65&type=chunk) - The equity component of the 2027 Notes is classified as Level 3 due to significant unobservable inputs[78](index=78&type=chunk) - Assets held for sale (Level 3) totaled **$0.6 million** as of September 30, 2022[91](index=91&type=chunk) [NOTE 9 — Income taxes](index=21&type=section&id=NOTE%209%20%E2%80%94%20Income%20taxes) Pre-tax losses of **$36.0 million** for Q3 and **$78.3 million** for nine months resulted in negative effective tax rates due to valuation allowances and GILTI inclusion | Metric (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Income (loss) before income taxes | $(36,024) | $17,529 | $(78,275) | $(101,880) | | Provision for income taxes | $18,098 | $2,984 | $32,649 | $11,567 | | Effective tax rate | (50.2)% | 17.0% | (41.7)% | (11.4)% | - The provision for income taxes in 2022 was mainly driven by valuation allowances on non-deductible interest expense carryforwards and global intangible low-taxed income inclusion[92](index=92&type=chunk)[93](index=93&type=chunk) - Unrecognized tax benefits that could impact the effective tax rate were approximately **$43.2 million** as of September 30, 2022[94](index=94&type=chunk) [NOTE 10 — Supplemental equity information](index=22&type=section&id=NOTE%2010%20%E2%80%94%20Supplemental%20equity%20information) Diluted loss per share was **$0.39** for Q3 and **$0.81** for nine months; **$3.1 million** was used to repurchase **800 thousand** shares under the **$100 million** program | Metric (in thousands, except per share) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (loss) attributable to Gannett | $(54,114) | $14,687 | $(110,769) | $(112,514) | | Diluted weighted average shares outstanding | 137,008 | 239,453 | 136,857 | 134,610 | | Diluted income (loss) per share | $(0.39) | $0.09 | $(0.81) | $(0.84) | - Share-based compensation expense was **$4.5 million** for the three months and **$13.3 million** for the nine months ended September 30, 2022[100](index=100&type=chunk) - During the nine months ended September 30, 2022, **800 thousand** shares of Common Stock were repurchased for approximately **$3.1 million** under the Stock Repurchase Program, with **$96.9 million** remaining authorized[106](index=106&type=chunk) [NOTE 11 — Commitments, contingencies and other matters](index=24&type=section&id=NOTE%2011%20%E2%80%94%20Commitments%2C%20contingencies%20and%20other%20matters) Gannett is involved in various legal proceedings, but management does not expect a material adverse effect on financial position or results of operations - The Company is involved in legal proceedings such as libel, invasion of privacy, intellectual property infringement, wrongful termination, and regulatory investigations[108](index=108&type=chunk) - Management does not expect current and threatened legal proceedings to have a material adverse effect on the Company's business, financial position, or consolidated results of operations[109](index=109&type=chunk) [NOTE 12 — Segment reporting](index=24&type=section&id=NOTE%2012%20%E2%80%94%20Segment%20reporting) Gannett operates in Gannett Media and DMS segments, using Adjusted EBITDA; consolidated Adjusted EBITDA for Q3 2022 was **$51.9 million** (**7.2%** margin) - Reportable segments are Gannett Media and Digital Marketing Solutions (DMS)[110](index=110&type=chunk)[111](index=111&type=chunk) - Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures used by the CODM to evaluate segment performance and allocate resources[113](index=113&type=chunk) | Metric (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Consolidated Adjusted EBITDA | $51,909 | $102,067 | $166,931 | $318,301 | | Consolidated Adjusted EBITDA margin | 7.2% | 12.8% | 7.5% | 13.4% | [NOTE 13 — Other supplemental information](index=27&type=section&id=NOTE%2013%20%E2%80%94%20Other%20supplemental%20information) Total cash and equivalents decreased to **$136.2 million**; cash paid for interest was **$51.0 million**, and accounts payable totaled **$342.8 million** | Metric (in thousands) | Sep 30, 2022 | Sep 30, 2021 | | :-------------------- | :----------- | :----------- | | Cash and cash equivalents | $124,867 | $141,302 | | Restricted cash | $11,324 | $26,112 | | Total cash, cash equivalents and restricted cash | $136,191 | $167,414 | | Metric (in thousands) | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | | Cash paid for taxes, net of refunds | $2,726 | $(9,031) | | Cash paid for interest | $51,021 | $80,280 | | Accounts Payable and Accrued Liabilities (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :-------------------------------------- | :----------- | :----------- | | Accounts payable | $162,646 | $157,257 | | Compensation | $86,596 | $107,585 | | Total Accounts payable and accrued liabilities | $342,815 | $357,014 | [NOTE 14 — Subsequent events](index=28&type=section&id=NOTE%2014%20%E2%80%94%20Subsequent%20events) In October 2022, Gannett agreed to repurchase **$17.8 million** of 2026 Senior Notes, expecting a **$3.0 million** gain on early extinguishment of debt - In October 2022, the Company agreed to repurchase **$17.8 million** of 2026 Senior Notes at **78.0%** of par value[126](index=126&type=chunk) - This transaction is expected to result in a gain on early extinguishment of debt of approximately **$3.0 million** in the fourth quarter of 2022[126](index=126&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Gannett's financial condition and operations, covering business overview, trends, strategic outlook, and segment performance amidst print-to-digital shifts and macroeconomic challenges - Gannett is a subscription-led and digitally-focused media and marketing solutions company[129](index=129&type=chunk) - Strategic organizational restructuring in June 2022 centralized U.S. operations within Gannett Media and Digital Marketing Solutions (DMS)[130](index=130&type=chunk) - Key business trends include declining print advertising and circulation, a complex digital marketing environment for SMBs, and increased costs due to inflation[133](index=133&type=chunk)[138](index=138&type=chunk) [OVERVIEW](index=29&type=section&id=OVERVIEW) Gannett, a subscription-led media company, restructured its operations, facing declining print revenues and inflation, while focusing on digital growth and strategic investments [Business Trends](index=29&type=section&id=Business%20Trends) Print advertising and circulation revenues continue to decline, digital marketing faces reduced demand, and the company experiences constrained newsprint and inflationary cost pressures - Print advertising and circulation revenues continue to decline, with an accelerated rate in Q2 and Q3 2022 due to macroeconomic factors and consumer price sensitivity[133](index=133&type=chunk) - Digital Marketing Solutions segment experienced longer sales cycles and reduced demand for digital advertising in Q3 2022 due to a challenging macroeconomic environment[133](index=133&type=chunk) - Newsprint availability is constrained, and inflationary prices across labor, fuel, delivery, newsprint, ink, and printing plates are negatively impacting the cost structure[138](index=138&type=chunk) [Recent Developments](index=30&type=section&id=Recent%20Developments) Recent developments include a **$17.8 million** debt repurchase, a **$450 million** pension liability transfer, and **$3.1 million** in stock repurchases under the **$100 million** program - Debt Repurchase: In October 2022, the Company repurchased **$17.8 million** of 2026 Senior Notes at **78.0%** of par, expecting a **$3.0 million** gain on early extinguishment of debt[135](index=135&type=chunk) - Pension Annuity Contract: On August 31, 2022, **$450 million** of pension liabilities and assets were transferred to insurers, decreasing net funded pension obligation by **$99.9 million** and recognizing a **$0.7 million** noncash pension settlement gain[136](index=136&type=chunk) - Stock Repurchase Program: **800 thousand** shares of Common Stock were repurchased for approximately **$3.1 million** during the nine months ended September 30, 2022, with **$96.9 million** remaining authorized[138](index=138&type=chunk) [Environmental, Social and Governance Initiatives](index=31&type=section&id=Environmental%2C%20Social%20and%20Governance%20Initiatives) Gannett formalized its ESG strategy in 2021, aligning with U.N. SDGs, focusing on Reduced Inequalities, Climate Action, and Peace, Justice & Strong Institutions - Gannett formed an executive-led, cross-functional committee in 2021 to formalize an ESG strategy[139](index=139&type=chunk) - Key ESG priorities are Reduced Inequalities, Climate Action, and Peace, Justice & Strong Institutions, aligning with U.N. Sustainable Development Goals[140](index=140&type=chunk) [Certain matters affecting comparability](index=31&type=section&id=Certain%20matters%20affecting%20comparability) Increased integration and reorganization costs, accelerated depreciation, and foreign currency headwinds negatively impacted comparability and profitability in 2022 - Integration and reorganization costs were **$33.3 million** for Q3 2022 and **$60.5 million** for the nine months, including severance and facility consolidation expenses[141](index=141&type=chunk) - Accelerated depreciation from printing facility closures was **$0.3 million** for Q3 2022 and **$10.5 million** for the nine months[142](index=142&type=chunk) - Foreign currency headwinds, particularly the strengthening U.S. dollar, negatively impacted revenues and profitability from U.K. operations[143](index=143&type=chunk) [Outlook for 2022](index=31&type=section&id=Outlook%20for%202022) Gannett's 2022 outlook focuses on accelerating digital subscriber and marketing services growth, optimizing traditional businesses, and investing in new ventures to become a subscription-led platform - Strategic focus areas include accelerating digital subscriber growth, driving digital marketing services growth, optimizing traditional print and advertising, and prioritizing investments in growth businesses[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk) - USA TODAY NETWORK Ventures hosted **65 events** in Q3 2022 and **152 events** for the nine months, with event revenues decreasing **9.9%** in Q3 but expected to increase for the full year[148](index=148&type=chunk) [Macroeconomic Environment](index=32&type=section&id=Macroeconomic%20Environment) Increased macroeconomic volatility, including inflation and interest rates, negatively impacted advertising revenues, consumer spending, and increased operating costs for Gannett - Increased volatility in U.S. and global economies due to inflation, interest rates, supply chain disruptions, and foreign currency fluctuations[150](index=150&type=chunk) - Adversely impacted advertising revenues and reduced demand for print and digital advertising in Q2 and Q3 2022[150](index=150&type=chunk)[151](index=151&type=chunk) - Increased consumer price sensitivity, labor shortages, and delivery challenges negatively impacted print circulation volumes[152](index=152&type=chunk) - Higher costs associated with labor, newsprint, delivery, ink, printing plates, fuel, and utilities, along with exposure to rising interest rates[153](index=153&type=chunk) [Impacts of the COVID-19 pandemic](index=33&type=section&id=Impacts%20of%20the%20COVID-19%20pandemic) The COVID-19 pandemic accelerated declines in advertising revenues and continues to negatively impact event attendance and single-copy newspaper sales - COVID-19 pandemic initially caused a significant decline in Advertising and marketing services revenues, accelerating secular declines[155](index=155&type=chunk) - Ongoing negative impact on revenues and attendance associated with events and lower sales of single-copy newspapers due to changes in consumer behavior[155](index=155&type=chunk) [Seasonality](index=33&type=section&id=Seasonality) Gannett's revenues are moderately seasonal, typically peaking in Q4, but Q2 and Q3 2022 advertising revenues were adversely impacted by economic uncertainty - Revenues are subject to moderate seasonality, with advertising and marketing services revenues typically highest in the fourth quarter due to holiday fluctuations[156](index=156&type=chunk) - Uncertain economic conditions in Q2 and Q3 2022 adversely impacted advertising revenues, leading to reduced demand and rates[156](index=156&type=chunk) [RESULTS OF OPERATIONS](index=34&type=section&id=RESULTS%20OF%20OPERATIONS) Consolidated operating revenues decreased by **10%** for Q3 and **7%** for nine months, resulting in net losses, with Gannett Media declining and Digital Marketing Solutions growing | Metric (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Operating Revenues | $717,902 | $800,185 | $2,214,639 | $2,381,544 | | Operating Income (Loss) | $(25,143) | $31,102 | $(48,345) | $84,488 | | Net Income (Loss) attributable to Gannett | $(54,114) | $14,687 | $(110,769) | $(112,514) | - Print advertising revenues decreased by **16%** for the three months and **13%** for the nine months, while digital advertising and marketing services decreased by **9%** and **3%** respectively[158](index=158&type=chunk) - Circulation revenues declined by **14%** for the three months and **12%** for the nine months[158](index=158&type=chunk) [Consolidated Summary](index=34&type=section&id=Consolidated%20Summary) Total operating revenues decreased by **10%** for Q3 and **7%** for nine months, leading to operating and net losses, with non-operating expenses significantly lower due to prior year derivative loss absence | Metric (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Operating Revenues | $717,902 | $800,185 | $2,214,639 | $2,381,544 | | Operating Income (Loss) | $(25,143) | $31,102 | $(48,345) | $84,488 | | Net Income (Loss) attributable to Gannett | $(54,114) | $14,687 | $(110,769) | $(112,514) | - Non-operating expenses decreased by **84%** for the nine months ended September 30, 2022, primarily due to the absence of a **$126.6 million** loss on convertible notes derivative in the prior year[158](index=158&type=chunk)[166](index=166&type=chunk) - Interest expense decreased due to a lower debt balance and lower interest rates on fixed-rate debt[163](index=163&type=chunk) [Segment Results](index=38&type=section&id=Segment%20Results) Gannett Media revenues and Adjusted EBITDA declined significantly, while Digital Marketing Solutions saw revenue and Adjusted EBITDA growth driven by core direct business and local markets [Gannett Media segment](index=38&type=section&id=Gannett%20Media%20segment) Gannett Media's revenues decreased by **12%** for Q3 and **8%** for nine months, with print and digital media declines, but digital-only circulation grew by **34%** and Adjusted EBITDA fell significantly | Metric (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Operating Revenues | $633,006 | $715,807 | $1,968,269 | $2,139,937 | | Operating Income (Loss) | $(6,087) | $58,246 | $19,471 | $170,891 | | Adjusted EBITDA | $46,023 | $101,001 | $165,527 | $317,398 | - Print advertising revenues decreased by **16%** for the three months and **13%** for the nine months, driven by secular trends and macroeconomic factors[174](index=174&type=chunk) - Digital-only circulation revenues increased by **34%** for the three months and **33%** for the nine months, driven by a **28.5%** increase in paid digital-only subscribers to approximately **1.98 million**[178](index=178&type=chunk) [Digital Marketing Solutions segment](index=43&type=section&id=Digital%20Marketing%20Solutions%20segment) DMS segment revenues increased by **3%** for Q3 and **6%** for nine months, driven by client growth and ARPU, with operating income and Adjusted EBITDA also showing increases | Metric (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Operating Revenues | $120,049 | $116,771 | $347,771 | $329,089 | | Operating Income | $8,005 | $6,198 | $19,584 | $12,377 | | Adjusted EBITDA | $15,690 | $15,024 | $41,176 | $36,725 | - Advertising and marketing services revenues increased due to growth in the core direct business and local markets, partially offset by the sunset of non-core products[197](index=197&type=chunk) - Operating costs increased due to higher expenses associated with third-party media fees, driven by corresponding revenue growth[199](index=199&type=chunk) [Corporate and other category](index=46&type=section&id=Corporate%20and%20other%20category) Corporate and other operating revenues decreased, while operating expenses also declined due to lower professional fees, compensation, and integration costs | Metric (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Operating revenues | $1,328 | $1,649 | $4,042 | $6,428 | | Operating costs | $2,372 | $6,039 | $2,589 | $14,534 | | Selling, general and administrative expenses | $13,524 | $15,222 | $57,738 | $43,386 | - Operating expenses decreased primarily due to lower professional fees, reduced compensation and benefits, and a decrease in integration and reorganization costs[209](index=209&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=48&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Operating cash flow significantly decreased to **$33.0 million**, while financing cash outflow reduced; the company plans to meet liquidity needs through operations and cost reductions, facing leverage risks | Cash Flow (in thousands) | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :----------------------- | :-------------------------- | :-------------------------- | | Operating activities | $32,982 | $133,347 | | Investing activities | $19,081 | $39,236 | | Financing activities | $(58,044) | $(212,284) | - Decrease in operating cash flow primarily due to lower cash receipts related to deferred revenues (**$35.3 million**), increased taxes paid (**$11.8 million**), and absence of **$16.4 million** PPP funding from 2021[215](index=215&type=chunk) - Capital expenditures for the remainder of 2022 are expected to be approximately **$9.5 million**, focused on digital product development, print/technology systems, and system upgrades[247](index=247&type=chunk) - The company's leverage may adversely affect its business and financial performance, restricting operating flexibility and cash flow for corporate purposes[249](index=249&type=chunk) [CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES](index=53&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20USE%20OF%20ESTIMATES) No material changes to critical accounting policies and estimates have occurred since the December 31, 2021 Annual Report on Form 10-K - No material changes to critical accounting policies and use of estimates since the December 31, 2021 Annual Report on Form 10-K[251](index=251&type=chunk) [NON-GAAP FINANCIAL MEASURES](index=53&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) Gannett uses Adjusted EBITDA and Adjusted EBITDA margin as non-GAAP measures to evaluate operating performance, excluding non-operating and non-cash items, with limitations acknowledged - Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures used to evaluate overall business operations[253](index=253&type=chunk) - Adjusted EBITDA excludes items such as income tax, interest expense, gains/losses on debt extinguishment, non-operating pension income, depreciation and amortization, integration and reorganization costs, asset impairments, and share-based compensation[253](index=253&type=chunk) | Metric (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (loss) attributable to Gannett | $(54,114) | $14,687 | $(110,769) | $(112,514) | | Adjusted EBITDA | $51,909 | $102,067 | $166,931 | $318,301 | | Adjusted EBITDA margin | 7.2% | 12.8% | 7.5% | 13.4% | [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=55&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Gannett faces market risks from interest rate and foreign currency fluctuations, with **$467.9 million** in variable-rate debt and a **$35.8 million** cumulative foreign currency translation loss - Exposed to market risk from changes in interest rates and foreign currency exchange rates[260](index=260&type=chunk) - As of September 30, 2022, variable-rate debt totaled **$467.9 million** (New Senior Secured Term Loan) and fixed-rate debt totaled **$851.6 million**[261](index=261&type=chunk) - A hypothetical **150 basis point** interest rate increase would decrease income and cash flows by approximately **$5.3 million** for the nine months ended September 30, 2022[261](index=261&type=chunk) - Cumulative foreign currency translation loss reported as part of equity was **$35.8 million** at September 30, 2022, primarily due to the strengthening U.S. dollar against the British pound sterling[263](index=263&type=chunk) [Interest Rates](index=55&type=section&id=Interest%20Rates) Gannett manages interest rate risk with **$467.9 million** in variable-rate debt; a **150 basis point** increase would decrease income and cash flows by **$5.3 million** for nine months - Variable-rate debt was **$467.9 million** and fixed-rate debt was **$851.6 million** as of September 30, 2022[261](index=261&type=chunk) - The New Senior Secured Term Loan bears interest at Adjusted Term SOFR plus a margin, with Adjusted Term SOFR at **2.46%** as of September 30, 2022[261](index=261&type=chunk) - A hypothetical **150 basis point** interest rate increase would decrease income and cash flows by approximately **$1.8 million** for three months and **$5.3 million** for nine months[261](index=261&type=chunk) [Foreign Currency](index=55&type=section&id=Foreign%20Currency) Gannett's foreign currency risk stems from U.K. and DMS operations, resulting in a **$35.8 million** cumulative translation loss due to a strengthening U.S. dollar - Exposure to foreign exchange rate risk primarily from U.K. operations (British pound sterling) and DMS segment operations in various currencies (e.g., Australian dollar, Canadian dollar, Indian rupee, New Zealand dollar)[262](index=262&type=chunk) - Cumulative foreign currency translation losses reported as part of equity were **$35.8 million** at September 30, 2022, mainly due to the strengthening U.S. dollar[263](index=263&type=chunk) - A hypothetical **10%** fluctuation in foreign currency rates would not have materially impacted operating income for the three and nine months ended September 30, 2022[264](index=264&type=chunk) [ITEM 4. Controls and Procedures](index=55&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Gannett's disclosure controls and procedures were effective as of September 30, 2022, with no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures were effective as of September 30, 2022[265](index=265&type=chunk) - No material changes in internal control over financial reporting during the quarter ended September 30, 2022[266](index=266&type=chunk) [Disclosure Controls and Procedures](index=55&type=section&id=Disclosure%20Controls%20and%20Procedures) Gannett's CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2022, ensuring timely and accurate information reporting - The Company's Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of September 30, 2022[265](index=265&type=chunk) [Changes in Internal Control over Financial Reporting](index=55&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2022 - No material changes in internal control over financial reporting during the quarter ended September 30, 2022[266](index=266&type=chunk) Part II. Other Information [ITEM 1. Legal Proceedings](index=56&type=section&id=ITEM%201.%20Legal%20Proceedings) No material developments in legal proceedings have occurred since the December 31, 2021 Annual Report on Form 10-K - No material developments in legal proceedings since the Annual Report on Form 10-K for the fiscal year ended December 31, 2021[268](index=268&type=chunk) [ITEM 1A. Risk Factors](index=56&type=section&id=ITEM%201A.%20Risk%20Factors) Gannett faces significant macroeconomic risks, including inflation, interest rates, and supply chain disruptions, impacting advertising demand and the success of cost control initiatives - Volatility in U.S. and global economies, higher inflation, increased interest rates, supply chain disruptions, and geopolitical events have adversely impacted business[271](index=271&type=chunk) - Challenging economic conditions have reduced demand for print and digital advertising, lowered rates, and increased consumer price sensitivity[271](index=271&type=chunk)[272](index=272&type=chunk) - Inability to successfully implement cost control programs and initiatives to improve profitability could materially and adversely affect future financial results[277](index=277&type=chunk) [Risks Related to Macroeconomic Factors](index=56&type=section&id=Risks%20Related%20to%20Macroeconomic%20Factors) Economic uncertainty, including inflation, rising interest rates, and supply chain disruptions, negatively impacts advertising demand, consumer spending, and increases borrowing costs - Economic uncertainty, including higher inflation, increased interest rates, and supply chain disruptions, has negatively impacted advertising demand and revenues[271](index=271&type=chunk) - Increased consumer price sensitivity, labor shortages, and delivery challenges have negatively impacted print circulation volumes[272](index=272&type=chunk) - Higher interest rates could increase borrowing costs, and foreign currency fluctuations impact international operations[273](index=273&type=chunk)[274](index=274&type=chunk) [Additional Risks Related to Our Business](index=57&type=section&id=Additional%20Risks%20Related%20to%20Our%20Business) Failure to successfully implement cost control and profitability initiatives poses a material risk to Gannett's future financial results and liquidity - Failure to successfully implement cost control programs and initiatives to improve profitability could materially and adversely affect future financial results and liquidity[277](index=277&type=chunk) - The actual amount and timing of cost savings from these initiatives may differ from current expectations[277](index=277&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=57&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Gannett repurchased **800 thousand** shares for **$3.1 million** under its **$100 million** Stock Repurchase Program, with **$96.9 million** remaining authorized - Board authorized a **$100 million** Stock Repurchase Program in February 2022[278](index=278&type=chunk) - During the nine months ended September 30, 2022, **800 thousand** shares of Common Stock were repurchased for approximately **$3.1 million**[278](index=278&type=chunk) - As of September 30, 2022, **$96.9 million** remained authorized under the Stock Repurchase Program[278](index=278&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=57&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities occurred during the reporting period - No defaults upon senior securities[279](index=279&type=chunk) [ITEM 4. Mine Safety Disclosures](index=57&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Gannett's operations - This item is not applicable[280](index=280&type=chunk) [ITEM 5. Other Information](index=57&type=section&id=ITEM%205.%20Other%20Information) No other information is reported under this item - No other information reported[281](index=281&type=chunk) [ITEM 6. Exhibits](index=58&type=section&id=ITEM%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including a binding term sheet, officer certifications, and Inline XBRL financial information - Includes a Binding Term Sheet with Tipico USA Technology, Inc. and Tipico US Group Corp[283](index=283&type=chunk) - Certifications of Principal Executive Officer and Principal Financial Officer are filed[283](index=283&type=chunk) - Financial information is formatted in Inline XBRL[283](index=283&type=chunk) [Signatures](index=59&type=section&id=Signatures) The report is signed by Douglas E. Horne, CFO and Chief Accounting Officer, on November 3, 2022 - Report signed by Douglas E. Horne, Chief Financial Officer and Chief Accounting Officer, on November 3, 2022[287](index=287&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________ FORM 10-Q _______________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-36097 ___________________________ GANNETT CO., INC. (Exact name of registrant as specified in its charter) Delaware 38-3910250 (S ...