Gannett(US:GCI)2025-07-31 14:13Part I. Financial Information Item 1. Financial Statements Unaudited Q2 2025 financial statements report total assets decreased to $2.01 billion, liabilities to $1.77 billion, and net income significantly improved to $78.4 million, despite a 9% revenue decline Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $88,542 | $106,299 | | Total current assets | $392,840 | $425,895 | | Total assets | $2,010,187 | $2,040,147 | | Total current liabilities | $540,953 | $545,602 | | Total debt (Long-term + Convertible) | $919,571 | $1,005,511 | | Total liabilities | $1,773,598 | $1,887,513 | | Total equity | $236,589 | $152,634 | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $584,861 | $639,840 | $1,156,434 | $1,275,601 | | Net income (loss) attributable to Gannett | $78,391 | $13,748 | $71,058 | $(71,020) | | Diluted income (loss) per share | $0.42 | $0.09 | $0.40 | $(0.50) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | | Cash provided by operating activities | $55,863 | $57,576 | | Cash provided by (used for) investing activities | $27,804 | $(16,266) | | Cash used for financing activities | $(102,163) | $(43,524) | | Decrease in cash, cash equivalents and restricted cash | $(20,016) | $(1,818) | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail Q2 2025 revenue disaggregation, showing a decline to $584.9 million, with $12.3 million in restructuring costs and total debt reduced to $988.9 million, while Domestic Gannett Media remains the largest segment Q2 2025 Revenue by Segment and Type (in thousands) | Revenue Type | Domestic Gannett Media | Newsquest | Digital Marketing Solutions | Consolidated Total | | :--- | :--- | :--- | :--- | :--- | | Digital | $161,026 | $20,165 | $117,478 | $265,435 | | Print and commercial | $278,273 | $41,153 | $— | $319,426 | | Total Segment Revenues | $439,299 | $61,318 | $117,478 | $584,861 | Integration and Reorganization Costs (in thousands) | Period | Severance-related | Other Reorganization | Total | | :--- | :--- | :--- | :--- | | Q2 2025 | $8,204 | $4,114 | $12,318 | | Q2 2024 | $4,429 | $15,346 | $19,775 | Debt Summary (in millions) | Debt Instrument | Carrying Value (June 30, 2025) | Carrying Value (Dec 31, 2024) | | :--- | :--- | :--- | | 2029 Term Loan Facility | $750.7 | $830.1 | | 2031 Notes | $216.3 | $215.9 | | 2027 Notes | $21.9 | $33.8 | | Total Debt | $988.9 | $1,079.8 | - In April 2025, the company repurchased $14.0 million principal amount of its 2027 Notes for $15.0 million in cash, financed by drawing from its 2029 Delayed Draw Facility5076 - On February 28, 2025, the company sold the Austin American-Statesman, recognizing a pre-tax gain of approximately $20.8 million122123 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) MD&A highlights a 9% Q2 2025 revenue decrease driven by print decline, a 5% digital revenue drop, and an 8% reduction in operating costs, with net income improving due to tax benefits and asset sales, and $97.9 million debt prepaid Business Trends and Recent Developments - Key business trends include the ongoing decline of print advertising and circulation, macroeconomic pressures on ad spending, reliance on third-party technology platforms, and the increasing pace of change due to artificial intelligence (AI)132133 - The Detroit Joint Operating Agreement (JOA) will not be renewed and is set to end in December 2025134 - New U.S. tax legislation, the "One Big Beautiful Bill Act," signed in July 2025, is being evaluated for its impact on interest deductibility and R&D expensing137 Results of Operations Consolidated Results Summary (in thousands) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total revenues | $584,861 | $639,840 | (9)% | | Digital revenues | $265,435 | $278,378 | (5)% | | Print and commercial revenues | $319,426 | $361,462 | (12)% | | Operating costs | $359,448 | $391,474 | (8)% | | Net income attributable to Gannett | $78,391 | $13,748 | 470% | Segment Adjusted EBITDA (in thousands) | Segment | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Domestic Gannett Media | $43,224 | $52,898 | (18)% | | Newsquest | $14,894 | $14,138 | 5% | | Digital Marketing Solutions | $11,498 | $11,773 | (2)% | | Total Segment Adjusted EBITDA | $69,616 | $78,809 | (12)% | - The significant increase in net income for Q2 2025 was primarily driven by an $87.5 million benefit for income taxes, compared to a $26.8 million benefit in Q2 2024143161 Key Performance Indicators Key Performance Indicators (as of June 30) | KPI | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Digital-only paid subscriptions (thousands) | 1,723 | 2,034 | (15)% | | Domestic Gannett Media Digital-only ARPU | $7.92 | $7.70 | 3% | | DMS Core platform average customer count (thousands) | 13.8 | 14.7 | (6)% | | DMS Core platform ARPU | $2,830 | $2,777 | 2% | Liquidity and Capital Resources - Cash provided by operating activities was $55.9 million for the first six months of 2025, a slight decrease from $57.6 million in the prior-year period217 - The company's total outstanding debt had a carrying value of $988.9 million as of June 30, 2025, with $97.9 million prepaid under its 2029 Term Loan Facility in the first half of 2025220224 - No shares were repurchased under the $100 million Stock Repurchase Program during Q2 2025, leaving approximately $96.9 million authorized230 Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes to market risk disclosures were reported for Q2 2025 compared to the 2024 Annual Report on Form 10-K - No material changes have occurred in the quantitative and qualitative disclosures about market risks since the company's 2024 Form 10-K234 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during Q2 2025 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025235 - No material changes were made to the company's internal control over financial reporting during Q2 2025236 Part II. Other Information Item 1. Legal Proceedings The company is involved in various legal proceedings, including a civil action filed against Google and Alphabet Inc. on June 20, 2023, alleging anticompetitive ad-tech practices - The company has filed a lawsuit against Google and Alphabet Inc. for alleged anticompetitive practices in the ad-tech market, with an unpredictable outcome106 Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K have occurred - No material changes to the risk factors described in the 2024 Form 10-K have occurred240 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2025, the company did not repurchase equity securities in the open market, but withheld 95,000 shares from employees at $3.39 per share for tax obligations - The company did not repurchase any shares of its common stock under its publicly announced repurchase program during the three months ended June 30, 2025241242 Issuer Purchases of Equity Securities (Q2 2025) | Period | Total shares purchased (a) | Average price paid per share (a) | | :--- | :--- | :--- | | April 2025 | 3,000 | $3.02 | | May 2025 | 0 | $— | | June 2025 | 92,000 | $3.40 | | Total | 95,000 | $3.39 | (a) Represents shares withheld to cover employee tax-withholding obligations upon vesting of restricted stock awards