Gannett(US:GCI)2022-11-04 01:57Financial 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]