UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 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, 2021 ☐ 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) Delaware 38-3910250 (State or Other Jurisdictio ...

The Path Forward January 13, 2022 1 Disclaimer and Notes In General. This disclaimer applies to this document and the verbal or written comments of any person presenting it. This document, taken together with any such verbal or written comments, is referred to herein as the "Presentation." Gannett Co., Inc. is referred to in this Presentation as "Gannett," "we," "us," "our" or the "Company". Prior to November 19, 2019, our corporate name was New Media Investment Group Inc. ("New Media") and Gannett Co., Inc ...

Gannett Company Inc. (NYSE:GCI) Q3 2021 Earnings Conference Call November 5, 2021 8:30 AM ET Company Participants Mike Reed - Chief Executive Officer Doug Horne - Chief Financial Officer Trisha Gosser - Investor Relations Conference Call Participants Doug Arthur - Huber Research Lawrence Fuller - Fuller Asset Management Operator Greetings. Welcome to the Gannett third quarter earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presen ...

| --- | --- | --- | |------------------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Q3 2021 Earnings | | | | | | | | | | | | | | | | | | | | | | | | November 5, 2021 | | | Disclaimer and Notes 2 In General. This disclaimer applies to this document and the verbal or written comments of any person presenting it. This document, taken together with any such verbal or written comments, is referred to herein as the "Presentation." Gannett Co., Inc. is ...

[Cautionary Note Regarding Forward-Looking Statements](index=2&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This note cautions that forward-looking statements are subject to risks and uncertainties, where actual results may differ materially - Forward-looking statements reflect current views on future growth, operations, performance, and business prospects, but are not historical facts[5](index=5&type=chunk) - Actual results, liquidity, and financial condition may differ materially due to known and unknown risks, uncertainties, and other factors[6](index=6&type=chunk) - Key risk factors include general economic and market conditions, competitive environment, COVID-19 pandemic impacts, shift from print to digital media, risks in the Digital Marketing Solutions segment, declining print advertising and circulation, debt restrictions, and ability to retain key personnel[8](index=8&type=chunk) [Part I. Financial Information](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Part I details Gannett's unaudited Q3 2021 financial statements, management's discussion, market risk, and internal controls [Item 1. Financial Statements](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section provides unaudited condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and equity, with detailed notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) The condensed consolidated balance sheets show the company's financial position as of September 30, 2021, compared to December 31, 2020, highlighting changes in assets, liabilities, and equity Key Balance Sheet Metrics (in thousands) | Metric (in thousands) | Sep 30, 2021 | Dec 31, 2020 | Change ($) | Change (%) | | :-------------------- | :----------- | :----------- | :--------- | :--------- | | Total Assets | $2,910,003 | $3,108,914 | $(198,911) | -6.40% | | Total Liabilities | $2,367,369 | $2,745,955 | $(378,586) | -13.79% | | Total Equity | $544,843 | $364,109 | $180,734 | 49.64% | | Cash and cash equivalents | $141,302 | $170,725 | $(29,423) | -17.23% | | Current portion of long-term debt | $104,948 | $128,445 | $(23,497) | -18.29% | | Long-term debt | $741,636 | $890,323 | $(148,687) | -16.70% | | Convertible debt | $399,875 | $581,405 | $(181,530) | -31.22% | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20INCOME%20%28LOSS%29) This statement summarizes the company's revenues, expenses, and net income (loss) for the three and nine months ended September 30, 2021, compared to the same periods in 2020 Operating Results for Three Months Ended Sep 30 (in thousands, except per share) | Metric (in thousands, except per share) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :-------------------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Total operating revenues | $800,185 | $814,539 | $(14,354) | -1.76% | | Total operating expenses | $769,083 | $813,059 | $(43,976) | -5.41% | | Operating income (loss) | $31,102 | $1,480 | $29,622 | 1999.99% | | Net income (loss) attributable to Gannett | $14,687 | $(31,260) | $45,947 | -147.00% | | Basic EPS | $0.11 | $(0.24) | $0.35 | -145.83% | | Diluted EPS | $0.09 | $(0.24) | $0.33 | -137.50% | Operating Results for Nine Months Ended Sep 30 (in thousands, except per share) | Metric (in thousands, except per share) | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :-------------------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Total operating revenues | $2,381,544 | $2,530,223 | $(148,679) | -5.88% | | Total operating expenses | $2,297,056 | $2,996,189 | $(699,133) | -23.33% | | Operating income (loss) | $84,488 | $(465,966) | $550,454 | -118.14% | | Net income (loss) attributable to Gannett | $(112,514) | $(548,305) | $435,791 | -79.48% | | Basic EPS | $(0.84) | $(4.17) | $3.33 | -79.86% | | Diluted EPS | $(0.84) | $(4.17) | $3.33 | -79.86% | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This statement details cash flows from operating, investing, and financing activities for the nine months ended September 30, 2021, compared to the same period in 2020 Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Metric (in thousands) | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Net cash provided by operating activities | $133,347 | $74,280 | $59,067 | 79.52% | | Net cash provided by (used for) investing activities | $39,236 | $(1,979) | $41,215 | -2082.62% | | Net cash used for financing activities | $(212,284) | $(37,471) | $(174,813) | 466.52% | | (Decrease) increase in cash, cash equivalents and restricted cash | $(39,312) | $35,269 | $(74,581) | -211.46% | [Condensed Consolidated Statements of Equity](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20EQUITY) This section presents changes in the company's equity for the three and nine months ended September 30, 2021 and 2020, detailing movements across components Equity Components (in thousands) | Equity Component (in thousands) | Balance at Dec 31, 2020 | Net Loss Attributable to Gannett | Equity Component of 2027 Notes | Other Comprehensive Loss, net of tax | Share-based Compensation Expense | Treasury Stock | Other Activity | Balance at Sep 30, 2021 | | :------------------------------ | :---------------------- | :------------------------------- | :----------------------------- | :----------------------------------- | :------------------------------- | :------------- | :------------- | :---------------------- | | Common stock | $1,395 | — | — | — | — | — | $51 | $1,446 | | Additional paid-in capital | $1,103,881 | — | $283,718 | — | $13,804 | $(2,034) | $(1,708) | $1,399,693 | | Accumulated other comprehensive income (loss) | $50,173 | — | — | $(578) | — | — | — | $49,595 | | Accumulated deficit | $(786,437) | $(112,514) | — | — | — | — | — | $(898,951) | | Treasury stock | $(4,903) | — | — | — | — | $(2,034) | — | $(6,940) | | **Total Equity** | **$364,109** | **$(112,514)** | **$283,718** | **$(578)** | **$13,804** | **$(2,034)** | **$(1,657)** | **$544,843** | [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, digitally-focused media and marketing solutions company, with its strategy aiming to grow audience and engagement - Gannett is a subscription-led and digitally-focused media and marketing solutions company, aiming to be a premier source for clarity, connections, and solutions within communities[21](index=21&type=chunk) - The company's portfolio includes USA TODAY, local media organizations in 46 U.S. states, Newsquest (U.K. subsidiary with over 120 local media brands), and digital marketing services (ReachLocal, UpCurve, WordStream) marketed under the LOCALiQ brand[22](index=22&type=chunk)[23](index=23&type=chunk) - The COVID-19 pandemic caused a significant decline in Advertising and marketing services revenues and constraints on single-copy newspaper sales, leading to cost reduction measures, including PPP funding and debt refinancing[24](index=24&type=chunk)[25](index=25&type=chunk) PPP Loan Forgiveness (Q3 2021) | Item | Amount (in millions) | | :--- | :------------------- | | Total PPP funding received (9 months ended Sep 30, 2021) | $16.4 | | PPP loans forgiven (Q3 2021) | $15.1 | | Recognized as offset to Operating costs | $11.1 | | Recognized as offset to Selling, general, and administrative expenses | $4.0 | | Remaining PPP loans as of Sep 30, 2021 | $1.3 | [Note 2 — Revenues](index=11&type=section&id=NOTE%202%20%E2%80%94%20Revenues) This note disaggregates total operating revenues by source, including print advertising, digital advertising, circulation, and other revenues, and details deferred revenues Operating Revenues by Source for Three Months Ended Sep 30 (in thousands) | Revenue Type | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :----------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Print advertising | $190,044 | $208,047 | $(17,993) | -8.65% | | Digital advertising and marketing services | $221,976 | $197,180 | $24,796 | 12.57% | | Total advertising and marketing services | $412,020 | $405,227 | $6,793 | 1.68% | | Circulation | $306,702 | $336,158 | $(29,456) | -8.76% | | Other | $81,463 | $73,154 | $8,309 | 11.36% | | **Total revenues** | **$800,185** | **$814,539** | **$(14,354)** | **-1.76%** | Operating Revenues by Source for Nine Months Ended Sep 30 (in thousands) | Revenue Type | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :----------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Print advertising | $584,165 | $664,047 | $(79,882) | -12.03% | | Digital advertising and marketing services | $636,322 | $585,109 | $51,213 | 8.75% | | Total advertising and marketing services | $1,220,487 | $1,249,156 | $(28,669) | -2.29% | | Circulation | $942,398 | $1,053,528 | $(111,130) | -10.55% | | Other | $218,659 | $227,539 | $(8,880) | -3.90% | | **Total revenues** | **$2,381,544** | **$2,530,223** | **$(148,679)** | **-5.88%** | - Deferred revenues primarily stem from circulation subscriptions paid in advance, with recognition expected over the next 1-12 months[36](index=36&type=chunk) [Note 3 — Leases](index=12&type=section&id=NOTE%203%20%E2%80%94%20Leases) This note outlines the company's lease obligations for real estate, vehicles, and equipment, including operating lease assets, liabilities, and lease expense components Lease Liabilities (in thousands) | Item | Sep 30, 2021 | | :-------------------------------- | :----------- | | Operating lease right-to-use assets | $279,400 | | Short-term operating lease liabilities | $48,300 | | Long-term operating lease liabilities | $261,400 | Net Lease Cost (in thousands) | Period | 2021 | 2020 | | :-------------------------- | :----- | :----- | | Three months ended Sep 30 | $23,073 | $24,649 | | Nine months ended Sep 30 | $70,009 | $77,457 | Future Minimum Lease Payments (in thousands) | Year Ended Dec 31, | Amount | | :----------------- | :----- | | 2021 (remaining) | $18,625 | | 2022 | $81,364 | | 2023 | $68,607 | | 2024 | $60,380 | | 2025 | $51,315 | | Thereafter | $213,647 | | **Total** | **$493,938** | | Less: Imputed interest | $(184,245) | | **Total (net)** | **$309,693** | [Note 4 — Accounts Receivable, Net](index=13&type=section&id=NOTE%204%20%E2%80%94%20Accounts%20receivable%2C%20net) This note details the allowance for doubtful accounts, calculated using specific formulas, which decreased significantly due to lower write-offs compared to the prior year - Allowance for doubtful accounts is calculated using a 'black motor formula' for advertising receivables and a 90-day aging reserve for circulation receivables[43](index=43&type=chunk) Allowance for Doubtful Accounts (in thousands) | Metric | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Beginning balance | $20,843 | $19,923 | $920 | 4.62% | | Current period provision | $3,478 | $23,075 | $(19,597) | -84.93% | | Write-offs charged against the allowance | $(10,998) | $(21,139) | $10,141 | -47.98% | | Ending balance | $16,411 | $23,749 | $(7,338) | -30.90% | - Bad debt expense decreased significantly for both the three and nine months ended September 30, 2021, compared to the prior year, which reflected higher impacts from the COVID-19 pandemic[45](index=45&type=chunk) [Note 5 — Goodwill and Intangible Assets](index=14&type=section&id=NOTE%205%20%E2%80%94%20Goodwill%20and%20intangible%20assets) This note breaks down goodwill and intangible assets, net of amortization, and discusses the annual impairment assessment, with no impairment indicators as of September 30, 2021 Goodwill and Intangible Assets (in thousands) | Asset Type | Sep 30, 2021 (Net Carrying Amount) | Dec 31, 2020 (Net Carrying Amount) | Change ($) | Change (%) | | :-------------------------- | :--------------------------------- | :--------------------------------- | :--------- | :--------- | | Finite-lived intangible assets | $571,649 | $653,242 | $(81,593) | -12.49% | | Indefinite-lived intangible assets (Mastheads) | $169,942 | $171,408 | $(1,466) | -0.86% | | **Total intangible assets** | **$741,591** | **$824,650** | **$(83,059)** | **-10.07%** | | Goodwill | $533,797 | $534,088 | $(291) | -0.05% | - The company performed its annual goodwill and indefinite-lived intangible impairment assessment in Q2 2021, concluding that the fair value of all reporting units and indefinite-lived assets exceeded their carrying values[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk) - No indicators of impairment were present as of September 30, 2021[50](index=50&type=chunk) - In Q2 2020, the company recorded significant goodwill and intangible asset impairment charges totaling **$393.4 million** due to the COVID-19 pandemic's impact[51](index=51&type=chunk) [Note 6 — Integration and Reorganization Costs and Asset Impairments](index=15&type=section&id=NOTE%206%20%E2%80%94%20Integration%20and%20reorganization%20costs%20and%20asset%20impairments) This note details costs associated with restructuring programs, including severance, facility consolidation, asset impairment charges, and accelerated depreciation Severance-Related Expenses for Three Months Ended Sep 30 (in thousands) | Segment | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :---------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Publishing | $1,941 | $3,983 | $(2,042) | -51.27% | | Digital Marketing Solutions | $402 | $1,196 | $(794) | -66.39% | | Corporate and other | $317 | $2,103 | $(1,786) | -84.93% | | **Total** | **$2,660** | **$7,282** | **$(4,622)** | **-63.47%** | Severance-Related Expenses for Nine Months Ended Sep 30 (in thousands) | Segment | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :---------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Publishing | $10,125 | $35,401 | $(25,276) | -71.40% | | Digital Marketing Solutions | $321 | $5,333 | $(5,012) | -94.00% | | Corporate and other | $440 | $14,069 | $(13,629) | -96.87% | | **Total** | **$10,886** | **$54,803** | **$(43,917)** | **-80.14%** | - Asset impairment charges for the three and nine months ended September 30, 2021, were **$2.3 million** and **$3.1 million**, respectively, primarily due to the impairment of real estate held for sale in the Publishing segment[56](index=56&type=chunk) - Accelerated depreciation decreased significantly for both the three and nine months ended September 30, 2021, compared to 2020, due to fewer print facility shutdowns[57](index=57&type=chunk) [Note 7 — Debt](index=16&type=section&id=NOTE%207%20%E2%80%94%20Debt) This note details the company's debt structure, including the 5-Year Term Loan, 2027 Notes, and 2024 Notes, covering refinancing, reclassification, and interest expenses - On February 9, 2021, the company entered into a new **$1.045 billion** 5-Year Term Loan to repay the previous Acquisition Term Loan, resulting in a **$17.2 million** loss on early extinguishment of debt in Q1 2021[58](index=58&type=chunk)[59](index=59&type=chunk)[61](index=61&type=chunk) - As of September 30, 2021, **$899.4 million** was outstanding under the 5-Year Term Loan with an effective interest rate of **9.5%**. The loan was fully repaid on October 15, 2021, through a subsequent debt refinancing[63](index=63&type=chunk)[64](index=64&type=chunk) - The **$497.1 million** 6.0% Senior Secured Convertible Notes due 2027 (2027 Notes) initially had a derivative liability component for the conversion option. Following stockholder approval on February 26, 2021, the conversion option was reclassified to equity, resulting in a **$126.6 million** non-cash loss due to fair value increase[65](index=65&type=chunk)[76](index=76&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk) Debt Interest Expense (in thousands) | Debt Type | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2021 | | :---------------- | :-------------------------- | :-------------------------- | | 5-Year Term Loan | $19,200 | $50,500 | | 2027 Notes | $7,500 | $22,400 | - The 2027 Notes have an initial conversion rate of **200 shares per $1,000 principal amount** (conversion price of **$5.00 per share**) and are subject to various covenants, including minimum liquidity and dividend restrictions[68](index=68&type=chunk)[72](index=72&type=chunk)[75](index=75&type=chunk) [Note 8 — Pensions and Other Postretirement Benefit Plans](index=20&type=section&id=NOTE%208%20%E2%80%94%20Pensions%20and%20other%20postretirement%20benefit%20plans) This note details defined benefit retirement plans and postretirement benefits, highlighting an increase in non-operating pension income due to higher expected returns and lower interest costs Total Expense (Benefit) for Retirement Plans for Three Months Ended Sep 30 (in thousands) | Plan Type | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Pension Benefits | $(23,785) | $(18,236) | $(5,549) | 30.43% | | Postretirement Benefits | $438 | $622 | $(184) | -29.58% | Total Expense (Benefit) for Retirement Plans for Nine Months Ended Sep 30 (in thousands) | Plan Type | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Pension Benefits | $(71,429) | $(54,139) | $(17,290) | 31.94% | | Postretirement Benefits | $1,322 | $1,863 | $(541) | -29.04% | - The increase in non-operating pension income for both periods was primarily due to higher expected returns on plan assets and lower interest costs on benefit obligations[162](index=162&type=chunk) - The company contributed **$40.2 million** to pension plans and **$4.4 million** to other postretirement plans during the nine months ended September 30, 2021, including deferred contributions for the GR Plan[83](index=83&type=chunk) [Note 9 — Income Taxes](index=21&type=section&id=NOTE%209%20%E2%80%94%20Income%20taxes) This note summarizes pre-tax income (loss) and income tax provision (benefit), with the Q3 provision driven by pre-tax income and PPP loan forgiveness, and the nine-month provision by net loss and derivative revaluation Income Taxes (in thousands) | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Income (loss) before income taxes | $17,529 | $(28,350) | $(101,880) | $(572,085) | | Provision (benefit) for income taxes | $2,984 | $3,098 | $11,567 | $(22,200) | | Effective tax rate | 17.0% | *** | (11.4)% | 3.9% | - The Q3 2021 tax provision was mainly driven by pre-tax income and impacted by PPP loan forgiveness, partially offset by valuation allowances on non-deductible interest expense carryforwards[85](index=85&type=chunk) - The nine-month 2021 tax provision was primarily due to a pre-tax net loss in Q1 2021, the non-deductible derivative revaluation, valuation allowances, and state/foreign tax expenses[86](index=86&type=chunk) - A **$32.5 million** deferred tax asset related to the 2027 Notes' embedded conversion feature was reclassified to Equity in Q1 2021[87](index=87&type=chunk) [Note 10 — Supplemental Equity Information](index=22&type=section&id=NOTE%2010%20%E2%80%94%20Supplemental%20equity%20information) This note details income (loss) per share calculations, including dilutive securities, share-based compensation, and the company's Rights Agreement to protect NOLs Income (Loss) Per Share Attributable to Gannett (in thousands, except per share) | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (loss) attributable to Gannett | $14,687 | $(31,260) | $(112,514) | $(548,305) | | Basic weighted average shares outstanding (in thousands) | 135,002 | 132,223 | 134,610 | 131,425 | | Diluted weighted average shares outstanding (in thousands) | 239,453 | 132,223 | 134,610 | 131,425 | | Basic EPS | $0.11 | $(0.24) | $(0.84) | $(4.17) | | Diluted EPS | $0.09 | $(0.24) | $(0.84) | $(4.17) | - Dilutive securities for Q3 2021 included **5.032 million** restricted stock grants and **99.419 million** shares from the 2027 Notes[92](index=92&type=chunk) Share-Based Compensation Expense (in thousands) | Period | 2021 | 2020 | | :-------------------------- | :----- | :----- | | 3 Months Ended Sep 30 | $4,600 | $3,800 | | 9 Months Ended Sep 30 | $13,800 | $22,800 | - The company adopted a Section 382 Rights Agreement to protect its **$543.5 million** net operating loss carryforwards (NOLs), which will continue until April 5, 2023[96](index=96&type=chunk)[98](index=98&type=chunk) [Note 11 — Fair Value Measurement](index=24&type=section&id=NOTE%2011%20%E2%80%94%20Fair%20value%20measurement) This note describes fair value measurements, categorizing assets and liabilities into a three-tiered hierarchy, with pension plan assets measured recurringly and assets held for sale nonrecurringly - Fair value measurements are disclosed using a three-tiered hierarchy: Level 1 (quoted prices in active markets), Level 2 (significant other observable inputs), and Level 3 (significant unobservable inputs)[101](index=101&type=chunk) - Pension plan assets are measured at fair value on a recurring basis, and the 5-Year Term Loan was classified as Level 2[102](index=102&type=chunk)[103](index=103&type=chunk) - Assets held for sale, totaling **$21.7 million** as of September 30, 2021, are measured on a nonrecurring basis and classified as Level 3[104](index=104&type=chunk) [Note 12 — Commitments, Contingencies and Other Matters](index=24&type=section&id=NOTE%2012%20%E2%80%94%20Commitments%2C%20contingencies%20and%20other%20matters) This note addresses the company's legal proceedings and contingent matters, with management believing current proceedings will not materially adversely affect financial position or results - The company is involved in various legal proceedings in the ordinary course of business, including libel, intellectual property, employment, and regulatory matters[105](index=105&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[106](index=106&type=chunk) - Equity purchase arrangements exercisable by counterparties are classified as Redeemable noncontrolling interests[107](index=107&type=chunk) [Note 13 — Segment Reporting](index=25&type=section&id=NOTE%2013%20%E2%80%94%20Segment%20reporting) This note defines the company's Publishing and Digital Marketing Solutions segments, outlining revenue types and the use of non-GAAP measures like Adjusted EBITDA for performance evaluation - Gannett reports in two segments: Publishing (local, regional, national, and international newspaper publishers) and Digital Marketing Solutions (DMS) (digital marketing services through ReachLocal)[23](index=23&type=chunk)[112](index=112&type=chunk) - The Chief Operating Decision Maker (CEO) uses Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss) attributable to Gannett (non-GAAP measures) to evaluate segment performance and allocate resources[110](index=110&type=chunk)[111](index=111&type=chunk) Adjusted EBITDA for Three Months Ended Sep 30 (non-GAAP basis, in thousands) | Segment | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :---------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Publishing | $101,001 | $108,752 | $(7,751) | -7.13% | | Digital Marketing Solutions | $15,024 | $4,177 | $10,847 | 259.70% | | Corporate and other | $(13,958) | $(24,949) | $10,991 | -44.05% | | **Consolidated** | **$102,067** | **$87,980** | **$14,087** | **16.01%** | Adjusted EBITDA for Nine Months Ended Sep 30 (non-GAAP basis, in thousands) | Segment | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :---------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Publishing | $317,398 | $311,767 | $5,631 | 1.81% | | Digital Marketing Solutions | $36,725 | $14,847 | $21,878 | 147.35% | | Corporate and other | $(35,822) | $(61,548) | $25,726 | -41.80% | | **Consolidated** | **$318,301** | **$265,066** | **$53,235** | **20.08%** | [Note 14 — Other Supplemental Information](index=28&type=section&id=NOTE%2014%20%E2%80%94%20Other%20supplemental%20information) This note provides additional financial details, including a reconciliation of cash, cash equivalents, and restricted cash, supplemental cash flow information, and a breakout of accounts payable and accrued liabilities Cash, Cash Equivalents and Restricted Cash (in thousands) | Item | Sep 30, 2021 | Sep 30, 2020 | | :-------------------------------------- | :----------- | :----------- | | Cash and cash equivalents | $141,302 | $188,960 | | Restricted cash included in other current assets | $4,845 | $10,796 | | Restricted cash included in investments and other assets | $21,267 | $24,177 | | **Total cash, cash equivalents and restricted cash** | **$167,414** | **$223,933** | Supplemental Cash Flow Information for Nine Months Ended Sep 30 (in thousands) | Item | 2021 | 2020 | | :-------------------------- | :----- | :----- | | Net cash refund for taxes | $(9,031) | $(4,510) | | Cash paid for interest | $80,280 | $176,402 | | Accrued capital expenditures | $2,836 | $758 | Accounts Payable and Accrued Liabilities (in thousands) | Item | Sep 30, 2021 | Dec 31, 2020 | | :-------------------------------- | :----------- | :----------- | | Accounts payable | $134,805 | $131,797 | | Compensation | $108,444 | $115,061 | | Taxes (primarily property and sales taxes) | $29,104 | $30,834 | | Benefits | $23,031 | $22,821 | | Interest | $10,012 | $3,676 | | Other | $51,928 | $74,057 | | **Total** | **$357,324** | **$378,246** | [Note 15 — Subsequent Events](index=28&type=section&id=NOTE%2015%20%E2%80%94%20Subsequent%20events) This note discloses a major debt refinancing completed on October 15, 2021, where the company secured new loans to repay existing debt, resulting in an estimated loss on early extinguishment - On October 15, 2021, Gannett Holdings completed a debt refinancing, including a **$516 million** New Senior Secured Term Loan and **$400 million** of 6.00% first lien notes due 2026 (2026 Senior Notes)[119](index=119&type=chunk)[120](index=120&type=chunk) - Proceeds from the new debt were used to fully repay the **$899.4 million** 5-Year Term Loan[120](index=120&type=chunk)[124](index=124&type=chunk) - Total debt outstanding after the refinancing was **$1.416 billion**, comprising the New Senior Secured Term Loan, 2026 Senior Notes, 2027 Notes, and 2024 Notes[123](index=123&type=chunk) - The company estimates a loss on early extinguishment of the 5-Year Term Loan and other fees of approximately **$31.2 million** in Q4 2021 due to the refinancing[124](index=124&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 provides management's perspective on Gannett's financial performance, condition, and operational results, covering strategy, trends, COVID-19 impact, and non-GAAP measures [Overview](index=29&type=section&id=OVERVIEW) Gannett is a subscription-led and digitally-focused media and marketing solutions company, aiming to drive audience growth and engagement through content and marketing expertise - Gannett's strategy focuses on driving audience growth and engagement by delivering deeper content experiences and offering marketing expertise to advertisers, transitioning from traditional print to a digitally-focused content platform[126](index=126&type=chunk) - The company's assets include USA TODAY, local media in 46 U.S. states, Newsquest in the U.K., and digital marketing services (ReachLocal, UpCurve, WordStream) marketed under the LOCALiQ brand[127](index=127&type=chunk) [Business Trends](index=30&type=section&id=Business%20Trends) Gannett navigates industry trends including declining print advertising, SMBs' need for digital presence, consumer demand for experience-based connections, and newsprint availability challenges - Print advertising continues to decline, prompting a focus on optimizing print operations and converting digital audiences into digital-only subscribers[131](index=131&type=chunk) - Small and medium-sized businesses (SMBs) require digital presence, which Gannett addresses with its broad suite of Digital Marketing Solutions (DMS) products[131](index=131&type=chunk) - Digital consumer engagement has declined from its peak during the COVID-19 pandemic, as consumers resume pre-pandemic activities and the news cycle slows[131](index=131&type=chunk) - Newsprint availability is constrained, and inflationary pressures are impacting newsprint and delivery costs[131](index=131&type=chunk) [Recent Developments](index=30&type=section&id=Recent%20Developments) Recent developments include a significant debt refinancing on October 15, 2021, and reclassifications in prior period financial statements for consistency - On October 15, 2021, Gannett Holdings completed a debt refinancing, securing a **$516 million** New Senior Secured Term Loan and issuing **$400 million** of 6.00% first lien notes due 2026, used to repay the 5-Year Term Loan[129](index=129&type=chunk) - Certain prior period condensed consolidated financial statements were reclassified to conform to the current year presentation, including a re-alignment of Publishing segment's Circulation revenues related to Digital-only circulation[130](index=130&type=chunk) [Certain Matters Affecting Comparability](index=30&type=section&id=Certain%20matters%20affecting%20comparability) This section highlights factors impacting financial comparisons, including reclassifications, the 2027 Notes' conversion option reclassification, integration costs, accelerated depreciation, and foreign currency fluctuations - Stockholder approval on February 26, 2021, allowed the 2027 Notes' conversion option to be share-settled, leading to its reclassification to equity and a **$126.6 million** non-cash loss due to fair value increase[131](index=131&type=chunk)[132](index=132&type=chunk) Integration and Reorganization Costs (in thousands) | Period | 2021 | 2020 | | :-------------------------- | :----- | :----- | | 3 Months Ended Sep 30 | $13,600 | $13,400 | | 9 Months Ended Sep 30 | $35,500 | $74,000 | - The company ceased operations of **4** and **14** printing facilities for the three and nine months ended September 30, 2021, respectively, resulting in accelerated depreciation of **$1.1 million** and **$11.4 million**[134](index=134&type=chunk) - No goodwill and intangible impairments were incurred for the three and nine months ended September 30, 2021, compared to **$393.4 million** in the nine months ended September 30, 2020, primarily due to COVID-19 impacts[137](index=137&type=chunk) [Outlook for 2021](index=33&type=section&id=Outlook%20for%202021) Gannett's 2021 strategic focus includes accelerating digital subscriber growth, driving digital marketing services growth, optimizing print businesses, and investing in growth areas like USA TODAY NETWORK Ventures - Strategic focus areas for 2021 include accelerating digital subscriber growth to **10 million** over the next five years, driving digital marketing services growth, optimizing traditional print and advertising businesses, and investing in growth businesses like USA TODAY NETWORK Ventures[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk) - The company entered an exclusive agreement with Tipico USA Technology, Inc. in July 2021 to explore online gaming[143](index=143&type=chunk) [Impacts of the COVID-19 Pandemic](index=33&type=section&id=Impacts%20of%20the%20COVID-19%20pandemic) The COVID-19 pandemic continued to negatively impact Gannett's Advertising and marketing services and single-copy newspaper sales, accelerating secular declines, leading to cost reduction measures - The COVID-19 pandemic continued to negatively impact Advertising and marketing services revenues and single-copy newspaper sales, accelerating secular declines[144](index=144&type=chunk) - Measures to reduce costs and preserve cash flow included applying for governmental relief programs (like PPP), suspending quarterly dividends, and debt refinancing[145](index=145&type=chunk) - The company received **$16.4 million** in PPP funding and had **$15.1 million** of these loans forgiven in Q3 2021, recognized as an offset to operating costs and SG&A expenses[147](index=147&type=chunk) [Seasonality](index=34&type=section&id=Seasonality) Gannett's revenues experience moderate seasonality, with Advertising and marketing services revenues typically highest in the fourth quarter and lowest in the first quarter, influenced by external factors - Revenues are subject to moderate seasonality, with Advertising and marketing services revenues typically highest in Q4 (holiday season) and lowest in Q1[148](index=148&type=chunk) - Advertising sales volumes are influenced by competitors' pricing, advertiser spending decisions, and general economic conditions[148](index=148&type=chunk) [Results of Operations](index=34&type=section&id=RESULTS%20OF%20OPERATIONS) This section provides a high-level overview of the company's consolidated financial results, including total operating revenues, expenses, and income (loss) for the three and nine months ended September 30, 2021 Consolidated Operating Results for Three Months Ended Sep 30 (in thousands) | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Total operating revenues | $800,185 | $814,539 | $(14,354) | -1.76% | | Total operating expenses | $769,083 | $813,059 | $(43,976) | -5.41% | | Operating income (loss) | $31,102 | $1,480 | $29,622 | 1999.99% | Consolidated Operating Results for Nine Months Ended Sep 30 (in thousands) | Metric | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Total operating revenues | $2,381,544 | $2,530,223 | $(148,679) | -5.88% | | Total operating expenses | $2,297,056 | $2,996,189 | $(699,133) | -23.33% | | Operating income (loss) | $84,488 | $(465,966) | $550,454 | -118.14% | [Consolidated Summary](index=35&type=section&id=Consolidated%20Summary) This section provides a consolidated summary of the company's segment results, including operating revenues, expenses, and income (loss) for the three and nine months ended September 30, 2021 and 2020 Consolidated Summary for Three Months Ended Sep 30 (in thousands) | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :-------------------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Publishing Operating revenues | $715,807 | $732,226 | $(16,419) | -2% | | Digital Marketing Solutions Operating revenues | $116,771 | $105,443 | $11,328 | 11% | | Total operating revenues | $800,185 | $814,539 | $(14,354) | -2% | | Total operating expenses | $769,083 | $813,059 | $(43,976) | -5% | | Operating income (loss) | $31,102 | $1,480 | $29,622 | *** | | Net income (loss) attributable to Gannett | $14,687 | $(31,260) | $45,947 | *** | | Diluted EPS | $0.09 | $(0.24) | $0.33 | *** | Consolidated Summary for Nine Months Ended Sep 30 (in thousands) | Metric | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :-------------------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Publishing Operating revenues | $2,139,937 | $2,286,268 | $(146,331) | -6% | | Digital Marketing Solutions Operating revenues | $329,089 | $321,287 | $7,802 | 2% | | Total operating revenues | $2,381,544 | $2,530,223 | $(148,679) | -6% | | Total operating expenses | $2,297,056 | $2,996,189 | $(699,133) | -23% | | Operating income (loss) | $84,488 | $(465,966) | $550,454 | *** | | Net income (loss) attributable to Gannett | $(112,514) | $(548,305) | $435,791 | -79% | | Diluted EPS | $(0.84) | $(4.17) | $3.33 | -80% | [Operating Revenues](index=35&type=section&id=Operating%20revenues) Total operating revenues decreased for both the three and nine months ended September 30, 2021, with Publishing declines offset by DMS growth in digital advertising and marketing services - Total Operating revenues decreased by **$14.4 million (2%)** for the three months and **$148.7 million (6%)** for the nine months ended September 30, 2021[152](index=152&type=chunk) - Publishing segment revenues decreased due to lower Circulation revenues (**$29.5 million** for 3 months, **$111.1 million** for 9 months) and Advertising and marketing services revenues (**$40.8 million** for 9 months), partially offset by higher Other revenues[153](index=153&type=chunk) - DMS segment revenues increased by **$11.3 million (11%)** for the three months and **$7.8 million (2%)** for the nine months, driven by higher Advertising and marketing services revenues[155](index=155&type=chunk) [Operating Expenses](index=36&type=section&id=Operating%20expenses) Total operating expenses decreased for both the three and nine months ended September 30, 2021, with significant reductions in Publishing and Corporate, partially offset by DMS operating cost increases - Total Operating expenses decreased by **$44.0 million (5%)** for the three months and **$699.1 million (23%)** for the nine months ended September 30, 2021[156](index=156&type=chunk) - Publishing segment operating expenses decreased by **$27.2 million (4%)** for the three months and **$591.8 million (23%)** for the nine months, driven by lower operating costs, depreciation, integration costs, and the absence of goodwill impairments seen in 2020[156](index=156&type=chunk) - DMS segment operating expenses increased by **$1.4 million (1%)** for the three months but decreased by **$55.6 million (15%)** for the nine months, reflecting increased operating costs offset by lower SG&A and the absence of 2020 goodwill impairments[157](index=157&type=chunk) - Corporate and other operating expenses decreased by **$9.9 million (22%)** for the three months and **$43.3 million (29%)** for the nine months, primarily due to reduced SG&A and integration costs[158](index=158&type=chunk) [Non-Operating (Income) Expense](index=37&type=section&id=Non-operating%20%28income%29%20expense) This section details changes in non-operating items, including decreased interest expense, increased loss on early debt extinguishment, higher non-operating pension income, and a significant loss on convertible notes derivative - Interest expense decreased for both periods due to a lower effective interest rate from debt refinancing and a reduced debt balance[160](index=160&type=chunk) - Loss on early extinguishment of debt increased significantly, primarily due to early prepayments on the 5-Year Term Loan and the payoff of the Acquisition Term Loan[161](index=161&type=chunk) - Non-operating pension income increased due to higher expected returns on plan assets and lower interest costs on benefit obligations[162](index=162&type=chunk) - A **$126.6 million** loss on convertible notes derivative was recorded for the nine months ended September 30, 2021, driven by an increase in the fair value of the derivative liability due to the company's stock price increase[163](index=163&type=chunk) [Provision (Benefit) for Income Taxes](index=37&type=section&id=Provision%20%28benefit%29%20for%20income%20taxes) The income tax provision for Q3 2021 was influenced by pre-tax income and PPP loan forgiveness, while the nine-month provision was impacted by a pre-tax net loss and the non-deductible derivative revaluation Income Taxes (in thousands) | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Income (loss) before income taxes | $17,529 | $(28,350) | $(101,880) | $(572,085) | | Provision (benefit) for income taxes | $2,984 | $3,098 | $11,567 | $(22,200) | | Effective tax rate | 17.0% | *** | (11.4)% | 3.9% | - The Q3 2021 tax provision was mainly driven by pre-tax income and PPP loan forgiveness, partially offset by valuation allowances on non-deductible interest expense carryforwards[166](index=166&type=chunk) - The nine-month 2021 tax provision was primarily due to a pre-tax net loss in Q1 2021, the non-deductible derivative revaluation, valuation allowances, and state/foreign tax expenses[167](index=167&type=chunk)[168](index=168&type=chunk) - A **$32.5 million** deferred tax asset related to the 2027 Notes' embedded conversion feature was reclassified to Equity in Q1 2021[169](index=169&type=chunk) [Net Income (Loss) Attributable to Gannett and Diluted Income (Loss) Per Share Attributable to Gannett](index=38&type=section&id=Net%20income%20%28loss%29%20attributable%20to%20Gannett%20and%20diluted%20income%20%28loss%29%20per%20share%20attributable%20to%20Gannett) Gannett reported net income of **$14.7 million** and diluted EPS of **$0.09** for Q3 2021, a significant improvement, while the nine-month net loss decreased substantially to **$112.5 million** Net Income (Loss) Attributable to Gannett and Diluted EPS (in thousands, except per share) | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (loss) attributable to Gannett | $14,687 | $(31,260) | $(112,514) | $(548,305) | | Diluted EPS | $0.09 | $(0.24) | $(0.84) | $(4.17) | - The change in net income (loss) and diluted EPS for both periods reflects the combined impact of improved operating income, reduced interest expense, increased non-operating pension income, and the loss on convertible notes derivative[171](index=171&type=chunk) [Publishing Segment](index=38&type=section&id=Publishing%20segment) The Publishing segment experienced declining total operating revenues due to decreases in print circulation and advertising, but showed growth in digital advertising and marketing services, with significantly reduced operating expenses Publishing Segment Operating Revenues for Three Months Ended Sep 30 (in thousands) | Revenue Type | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :----------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Advertising and marketing services | $328,784 | $329,508 | $(724) | 0% | | Circulation | $306,698 | $336,152 | $(29,454) | -9% | | Other | $80,325 | $66,566 | $13,759 | 21% | | **Total operating revenues** | **$715,807** | **$732,226** | **$(16,419)** | **-2%** | Publishing Segment Operating Revenues for Nine Months Ended Sep 30 (in thousands) | Revenue Type | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :----------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Advertising and marketing services | $984,575 | $1,025,396 | $(40,821) | -4% | | Circulation | $942,392 | $1,053,517 | $(111,125) | -11% | | Other | $212,970 | $207,355 | $5,615 | 3% | | **Total operating revenues** | **$2,139,937** | **$2,286,268** | **$(146,331)** | **-6%** | - Print advertising revenues declined due to secular trends and divestitures, while Digital advertising and marketing services revenues increased due to higher digital media spend and marketing services, and improved operating trends post-COVID-19[173](index=173&type=chunk)[174](index=174&type=chunk) - Print circulation revenues decreased due to reduced home delivery and single-copy sales, but Digital-only circulation revenues increased by **27% (Q3)** and **37% (9 months)** driven by a **46%** increase in paid digital-only subscribers to approximately **1.543 million**[175](index=175&type=chunk) - Operating costs decreased due to lower newsprint and ink costs, and reduced compensation and benefits from headcount reductions and PPP loan forgiveness, partially offset by increased distribution costs[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) - Depreciation and amortization expenses decreased due to fewer print facility shutdowns and strategic real estate dispositions[185](index=185&type=chunk) - Adjusted EBITDA for the Publishing segment decreased by **$7.8 million (7%)** for the three months but increased by **$5.6 million (2%)** for the nine months ended September 30, 2021[192](index=192&type=chunk) [Digital Marketing Solutions Segment](index=43&type=section&id=Digital%20Marketing%20Solutions%20segment) The Digital Marketing Solutions (DMS) segment reported increased operating revenues driven by advertising and marketing services growth, with operating expenses reflecting higher outside services costs offset by reduced compensation Digital Marketing Solutions Segment Operating Revenues for Three Months Ended Sep 30 (in thousands) | Revenue Type | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :----------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Advertising and marketing services | $116,771 | $100,807 | $15,964 | 16% | | Other | — | $4,636 | $(4,636) | -100% | | **Total operating revenues** | **$116,771** | **$105,443** | **$11,328** | **11%** | Digital Marketing Solutions Segment Operating Revenues for Nine Months Ended Sep 30 (in thousands) | Revenue Type | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :----------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Advertising and marketing services | $328,184 | $306,899 | $21,285 | 7% | | Other | $905 | $14,388 | $(13,483) | -94% | | **Total operating revenues** | **$329,089** | **$321,287** | **$7,802** | **2%** | - Advertising and marketing services revenues increased due to growth in the core ReachLocal business and improved operating trends post-COVID-19[194](index=194&type=chunk) - Operating costs increased due to higher outside services costs (third-party media fees) driven by increased revenues, while compensation and benefits decreased due to integration efforts and cost containment[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk) - Selling, general and administrative expenses decreased due to reduced compensation and benefits from integration efforts and cost containment initiatives[199](index=199&type=chunk)[200](index=200&type=chunk) - Adjusted EBITDA for the DMS segment increased significantly by **$10.8 million (Q3)** and **$21.9 million (9 months)** compared to the prior year[207](index=207&type=chunk) [Corporate and Other Category](index=45&type=section&id=Corporate%20and%20other%20category) The Corporate and other category experienced decreases in both operating revenues and expenses, with expense reductions driven by cost containment and lower severance, partially offset by systems implementation and debt fees Corporate and Other Operating Expenses for Three Months Ended Sep 30 (in thousands) | Expense Type | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :-------------------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Operating costs | $6,039 | $7,424 | $(1,385) | -19% | | Selling, general and administrative expenses | $15,222 | $26,393 | $(11,171) | -42% | | Depreciation and amortization | $4,260 | $2,106 | $2,154 | *** | | Integration and reorganization costs | $9,176 | $7,060 | $2,116 | 30% | | Other operating expenses | $4 | $1,913 | $(1,909) | -100% | | **Total operating expenses** | **$34,991** | **$44,924** | **$(9,933)** | **-22%** | Corporate and Other Operating Expenses for Nine Months Ended Sep 30 (in thousands) | Expense Type | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :-------------------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Operating costs | $14,534 | $17,864 | $(3,330) | -19% | | Selling, general and administrative expenses | $43,386 | $79,339 | $(35,953) | -45% | | Depreciation and amortization | $12,123 | $11,613 | $510 | 4% | | Integration and reorganization costs | $23,525 | $29,342 | $(5,817) | -20% | | Other operating expenses | $11,354 | $10,261 | $1,093 | 11% | | **Total operating expenses** | **$105,208** | **$148,509** | **$(43,301)** | **-29%** | - The decrease in operating expenses was mainly due to cost containment initiatives in SG&A and lower severance costs, partially offset by increased costs for systems implementation and outsourcing of corporate functions[210](index=210&type=chunk)[212](index=212&type=chunk) - Other operating expenses increased for the nine months due to **$10.9 million** in third-party fees related to the 5-Year Term Loan[213](index=213&type=chunk) [Liquidity and Capital Resources](index=47&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Gannett's primary cash requirements are for working capital, debt, and capital expenditures, funded by operating activities, with net cash provided by operating activities increasing significantly and a major debt refinancing completed in October 2021 - Primary cash requirements are for working capital, debt obligations, and capital expenditures, expected to be funded by operating activities[214](index=214&type=chunk) Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Activity | 2021 | 2020 | Change ($) | Change (%) | | :-------------------------------------- | :--------- | :--------- | :--------- | :--------- | | Net cash provided by operating activities | $133,347 | $74,280 | $59,067 | 79.52% | | Net cash provided by (used for) investing activities | $39,236 | $(1,979) | $41,215 | -2082.62% | | Net cash used for financing activities | $(212,284) | $(37,471) | $(174,813) | 466.52% | - Increase in operating cash flow was due to decreased interest paid, lower severance payments, PPP funding, and increased tax refunds, partially offset by decreased working capital and increased pension contributions[216](index=216&type=chunk) - Investing activities shifted from cash used to cash provided, primarily due to increased proceeds from asset sales and decreased capital expenditures[217](index=217&type=chunk) - Financing activities used more cash due to increased net repayments under term loans and payments of debt issuance costs[218](index=218&type=chunk) - On October 15, 2021, the company completed a debt refinancing, repaying the 5-Year Term Loan with proceeds from a New Senior Secured Term Loan (**$516 million**) and 2026 Senior Notes (**$400 million**), bringing total debt outstanding to **$1.416 billion**[239](index=239&type=chunk)[242](index=242&type=chunk) - The company does not currently pay a quarterly dividend and has no intention to reinstate it, with debt agreements restricting dividend payments[244](index=244&type=chunk) - Deferred **$41.6 million** in FICA taxes under the CARES Act, with **50%** due by Dec 31, 2021, and the remainder by Dec 31, 2022[245](index=245&type=chunk) - Forecasted capital expenditures for the remainder of 2021 are approximately **$13.9 million**, primarily for digital product development, print/technology systems, and system upgrades[247](index=247&type=chunk) [Critical Accounting Policies and Use of Estimates](index=51&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20USE%20OF%20ESTIMATES) This section refers readers to the company's most recent Annual Report on Form 10-K for a discussion of its critical accounting policies and use of estimates, noting no material changes during the quarter - No material changes to critical accounting policies and use of estimates were reported for the quarter ended September 30, 2021[250](index=250&type=chunk) [Non-GAAP Financial Measures](index=51&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) This section defines and reconciles non-GAAP financial measures, including Adjusted EBITDA and Adjusted Net income (loss) attributable to Gannett, used by management to evaluate operational performance and trends - Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss) attributable to Gannett are non-GAAP measures used to assess overall business operations, identify trends, and evaluate controllable expenses[252](index=252&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk)[256](index=256&type=chunk) - These non-GAAP measures exclude items like income tax expense (benefit), interest expense, gains/losses on early debt extinguishment, non-operating pension income, loss on convertible notes derivative, depreciation and amortization, integration and reorganization costs, asset impairments, goodwill and intangible impairments, gains/losses on asset sales, share-based compensation, and other non-recurring charges[252](index=252&type=chunk) - These measures have limitations and should not be considered in isolation or as alternatives to U.S. GAAP measures[257](index=257&type=chunk)[259](index=259&type=chunk) Adjusted EBITDA Reconciliation (in thousands) | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (loss) attributable to Gannett | $14,687 | $(31,260) | $(112,514) | $(548,305) | | Total Adjustments | $87,380 | $119,240 | $430,815 | $813,371 | | **Adjusted EBITDA** | **$102,067** | **$87,980**

| --- | --- | --- | |------------------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Q2 2021 Earnings | | | | | | | | | | | | | | | | | | | | | | | | | | | | August 6, 2021 | | | Disclaimer and Notes 2 In General. This disclaimer applies to this document and the verbal or written comments of any person presenting it. This document, taken together with any such verbal or written comments, is referred to herein as the "Presentation." Cautionary Sta ...

Financial Data and Key Metrics Changes - Total operating revenues for Q2 were $804.3 million, an increase of 4.9% year-over-year, with same-store revenue growth of 6.8% [41] - Adjusted EBITDA totaled $115.8 million, up 48.4% year-over-year, with an adjusted EBITDA margin of 14.4%, an increase from 10.2% in the prior year [42] - Net income for the quarter was $15.1 million, with adjusted net income of $30.1 million [43] Business Line Data and Key Metrics Changes - Publishing segment revenue was $724.5 million, up 4.2% year-over-year, with advertising revenue increasing by 10.7% [44] - Digital advertising and marketing services revenues increased by 35.9% on a same-store basis, with national sales of digital advertising growing by 77% [45] - Digital marketing services revenue grew 41% year-over-year, with a significant increase in average revenue per user (ARPU) from $1,600 to $2,300 [52][54] Market Data and Key Metrics Changes - Digital-only subscribers grew by 41% year-over-year to approximately 1.4 million, contributing to a 40% increase in digital-only revenue [50] - The company achieved 174 million unique visitors per month, ranking sixth in digital reach among domestic peers [12] Company Strategy and Development Direction - The company is focused on accelerating digital subscription growth, with a goal of reaching 10 million digital-only subscribers by 2025 [14] - A strategic partnership was announced with Typical U.S. in the sports gaming sector, expected to enhance value for subscribers and drive growth [29][31] - Continued investment in local and regional content is prioritized to improve subscriber retention and engagement [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth in digital subscriptions and digital marketing solutions, with expectations for same-store revenue growth in the low single digits for Q3 [38] - The company anticipates adjusted EBITDA growth for the fourth consecutive quarter, reflecting strong execution against strategic priorities [62] Other Important Information - The company repaid approximately $46 million in debt during the quarter, reducing the principal balance under its term loan to below $1 billion [10] - Free cash flow for the quarter was $23.1 million, impacted by working capital timing [59] - The company expects to generate $80 million to $100 million in incremental asset sales during the second half of the year [61] Q&A Session Summary Question: What are the expectations for digital subscription growth? - Management highlighted record growth in digital-only subscribers, with a target of 10 million by 2025, driven by new product launches and data-driven strategies [14][66] Question: How is the company addressing the challenges in the advertising market? - The company reported strong national demand for digital advertising, with significant growth in both owned and operated and third-party properties [45][66] Question: What is the outlook for the events business? - Management noted a slight increase in live events, with expectations for more favorable conditions in the latter half of the year despite ongoing pandemic impacts [34][66]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Delaware 38-3910250 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) 7950 Jones Branch Drive, McLean, Virginia 22107-0910 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (703) 854-6000 Securities registered pursuant to Section 12(b) of the Act: Washington, D.C. 20549 _______________________ FORM 10-Q _______________________ ☒ QUARTERLY REPORT PURSUANT TO ...

| --- | --- | --- | |------------------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Q1 2021 Earnings | | | | | | | | | | | | | | | | | | | | | | | | May 7, 2021 | | | Disclaimer and Notes 2 In General. This disclaimer applies to this document and the verbal or written comments of any person presenting it. This document, taken together with any such verbal or written comments, is referred to herein as the "Presentation." Prior to November 19, 201 ...

Financial Data and Key Metrics Changes - First quarter total operating revenues were $777.1 million, a decrease of 18.1% compared to the prior quarter [37] - Adjusted EBITDA totaled $100.5 million, up $1.4 million or 1.4% year-over-year, with an adjusted EBITDA margin of 12.9%, growing 250 basis points over the prior year [39][40] - The company reported a net loss of $142.3 million, which included a non-cash charge of $126.6 million related to convertible notes [50][51] Business Line Data and Key Metrics Changes - Publishing segment revenue was $699.6 million, with print advertising revenue decreasing 24.9% year-over-year [41] - Digital advertising and marketing services revenues decreased 10.4% on a same-store basis [42] - Digital-only subscribers grew 37.2% year-over-year, reaching approximately 1.2 million, with digital-only subscriber revenue growing 46.3% [45] Market Data and Key Metrics Changes - Digital revenues accounted for approximately 30% of total revenue, while print advertising was less than 25% [18] - Circulation revenues decreased 12.9% compared to the prior year on a same-store basis [44] - The company experienced record audience metrics in Q1 of 2020, which impacted year-over-year comparisons [42] Company Strategy and Development Direction - The company is committed to a subscription-led digital business strategy, aiming for 10 million paid digital-only subscriptions in the next five years [20][65] - Five key pillars of the strategy include accelerating digital subscriber growth, driving digital marketing services growth, optimizing traditional businesses, prioritizing investments in growth businesses, and building an inclusive culture [20][35] - The company is exploring opportunities in the sports gaming sector and non-fungible tokens (NFTs) as new business avenues [30][34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for continued sequential improvement in Q2, anticipating low to mid-single-digit total revenue growth and over 30% adjusted EBITDA growth [11][12] - The company is well-positioned for significant adjusted EBITDA growth for the full year 2021 compared to 2020 [12] - Management highlighted the importance of leveraging their media reach and trusted brands to drive digital offerings and create recurring revenue streams [70][71] Other Important Information - The company has refinanced its debt, lowering the overall cost of capital from 11.5% to about 7.17% [13] - The company ended the quarter with approximately $1.54 billion of total debt and a cash balance of $163.5 million [53][54] - The company received approval for approximately $16.2 million in PPP funding under the CARES Act [56] Q&A Session Summary Question: Digital circulation revenue and strategy execution - Management discussed initiatives to increase digital subscriptions, including consistent metering and best practices based on market geography [61][63] Question: Concentration of digital subscribers - The majority of digital subscribers are concentrated in the top 50 markets, not just the largest cities [66] Question: Balance sheet and debt repayment capacity - Management indicated significant debt paydown is expected by the end of the year, driven by asset sales and cash flow [67]