Gannett(US:GCI)2021-02-25 16:00Acquisition and Integration - The company completed the acquisition of Legacy Gannett for an aggregate purchase price of $1.315 billion, funded by a senior-secured term loan facility of approximately $1.792 billion[200][210]. - For the year ended December 31, 2020, the company incurred integration and reorganization costs of $145.7 million, with $86.3 million related to severance activities[211]. - Integration and reorganization costs rose by $37.4 million due to severance costs and ongoing consolidation efforts[266]. - Operating expenses for the year ended December 31, 2020, increased by $317.2 million to $481.2 million, with significant increases in operating costs ($177.6 million) and selling, general and administrative expenses ($72.8 million) attributed to the acquisition of Legacy Gannett[273][276]. Financial Performance - Total operating revenues for the year ended December 31, 2020, were $3.406 billion, an increase of $1.538 billion (82%) from 2019[233]. - The net loss attributable to Gannett for the year ended December 31, 2020, was $670.5 million, compared to a net loss of $119.8 million in 2019[249]. - Earnings per share attributable to Gannett for the year ended December 31, 2020, was a loss of $5.09, compared to a loss of $1.77 in 2019[249]. - The company reported an operating loss of $447.9 million for the year ended December 31, 2020, compared to a loss of $147.0 million in 2019[396]. - The company reported a net income loss attributable to Gannett of $42.5 million for the year ended December 31, 2020, compared to a loss of $14.0 million in 2019[282]. Revenue Streams - Print advertising revenues declined by 26%-47% during the second and third quarters of 2020, while digital advertising revenues fluctuated between down 5% to up 5% annually prior to the pandemic[209]. - The Publishing segment's operating revenues increased by $1.288 billion, driven by higher advertising and marketing services revenues of $511.9 million and higher circulation revenues of $687.2 million[234]. - Advertising and marketing services revenues increased by 57% to $1,409,500, up from $897,585 in 2019[252]. - Digital media revenues surged significantly, with a 100%+ increase to $341,259, compared to $125,756 in 2019[252]. - Print circulation revenues rose by 93% to $1,316,695, compared to $683,529 in 2019, largely due to acquired revenues from Legacy Gannett[256]. Cost Management - The company has implemented cost-reduction measures, including the suspension of the quarterly dividend and refinancing of debt, to preserve cash flow during the pandemic[222]. - The Company has suspended its quarterly dividend to preserve liquidity, with no current intention to reinstate it[320]. - The company incurred approximately $4.9 million in fees and expenses related to the Acquisition Term Loan, which will be amortized over its term[307]. Debt and Liquidity - The Company has a total debt outstanding of $1.545 billion, which includes a $1.045 billion 5-Year Term Loan, $497.1 million in 2027 Notes, and $3.3 million in 2024 Notes[317]. - The Company recorded $194.0 million in interest expense and $217.5 million in cash interest paid for the year ended December 31, 2020[309]. - The company is closely monitoring liquidity due to uncertainties related to the COVID-19 pandemic, which could impact its ability to meet obligations under the 5-Year Term Loan[325]. - The company expects to have adequate capital resources and liquidity to meet its working capital needs and obligations for at least the next twelve months[285]. Impairments and Adjustments - The company recognized $393.4 million in goodwill and intangible impairments for the year ended December 31, 2020, primarily due to the impact of the COVID-19 pandemic[216]. - Goodwill and intangible impairments increased by $252,204, reflecting the impact of the COVID-19 pandemic on operations[267]. - The company recognized goodwill impairment charges across all three reporting units during the second quarter of 2020, impacting the carrying value of each unit[344]. Cash Flow and Investments - Net cash provided by operating activities was $57.8 million for the year ended December 31, 2020, an increase from $25.5 million in 2019, primarily due to a decrease in pension payments and an increase in tax refunds[287]. - Net cash provided by investing activities was $160.1 million for the year ended December 31, 2020, a significant improvement from $785.1 million used in 2019, mainly due to a decrease in cash used for acquisitions[288]. - The company reported a net cash outflow from financing activities of $201.3 million in 2020, compared to an inflow of $898.9 million in 2019[397]. Subscriber Growth and Digital Strategy - The company aims to accelerate digital subscriber growth and expects to launch new digital subscription offerings tailored to specific users[214]. - Digital-only subscribers increased by 29% to approximately 1.1 million as of December 31, 2020[256]. - The company plans to drive digital marketing services growth by engaging more clients in a subscriber relationship, leveraging its extensive client base and digital campaigns[215]. Tax and Regulatory Matters - The effective tax rate for the year ended December 31, 2020, was 4.7%, significantly lower than the 41.5% rate in 2019[248]. - The Company deferred $41.6 million of the employer portion of FICA taxes under the CARES Act, with payment due by December 31, 2022[321].