Financial Summary. $360MM 2017A Adjusted EBITDA $1BN Market Capitalization PREMIUM LOCAL NEWS BRANDS NATIONAL PRESENCE

Transcription

1 May 2018

2 Disclaimers This presentation may certain forward-looking statements regarding business strategies, market potential, future financial performance and other matters. Forward-looking statements include all statements that are not historical facts. The words believe, expect, estimate, could, should, intend, may, plan, seek, anticipate, project and similar expressions, among others, generally identify forward-looking statements, which speak only as of the date the statements were made and are not guarantees of future performance. Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of our management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. Whether or not any such forward-looking statements are in fact achieved will depend on future events, some of which are beyond our control. The matters discussed in these forward-looking statements are subject to a number of risks, trends, uncertainties and other factors that could cause actual results to differ materially from those projected, anticipated or implied in the forward-looking statements. These factors include, among other things: our ability to achieve our strategic transformation; an accelerated decline in general print readership and/or advertiser patterns as a result of competitive alternative media or other factors; an inability to adapt to technological changes or grow our digital businesses; risks associated with the operation of an increasingly digital business, such as rapid technological changes, frequent new product introductions, declines in web traffic levels, technical failures and proliferation of ad blocking technologies; macroeconomic trends and conditions; competitive pressures in the markets in which we operate; increases in newsprint costs over the levels anticipated or declines in newsprint supply; potential disruption or interruption of our IT systems due to accidents, extraordinary weather events, civil unrest, political events, terrorism or cyber security attacks; variability in the exchange rate relative to the U.S. dollar of currencies in foreign jurisdictions in which we operate; risks and uncertainties related to strategic acquisitions or investments, including distraction of management attention, incurrence of additional debt, integration challenges, and failure to realize expected benefits or synergies or to operate businesses effectively following acquisitions; our ability to consummate the acquisition of WordStream on a timely basis or at all; risks and uncertainties associated with our ReachLocal segment, including its significant reliance on Google for media purchases, its international operations and its ability to develop and gain market acceptance for new products or services; our ability to protect our intellectual property or defend successfully against infringement claims; our ability to attract and retain employees; labor relations, including, but not limited to, labor disputes which may cause business interruptions, revenue declines or increased labor costs; risks associated with our underfunded pension plans; adverse outcomes in litigation or proceedings with governmental authorities or administrative agencies, or changes in the regulatory environment, any of which could encumber or impede our efforts to improve operating results or the value of assets; volatility in financial and credit markets which could affect the value of retirement plan assets and our ability to raise funds through debt or equity issuances and otherwise affect our ability to access the credit and capital markets at the times and in the amounts needed and on acceptable terms; and other uncertainties relating to general economic, political, business, industry, regulatory and market conditions. A further description of these and other important risks, trends, uncertainties and other factors is provided in the company s filings with the U.S. Securities and Exchange Commission, including the company s annual report on Form 10-K for fiscal year 2017 and quarterly report on Form 10-Q for the first quarter of fiscal Any forward-looking statements should be evaluated in light of these important risk factors. The company is not responsible for updating or revising any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. GANNETT 2

3 Gannett Overview Gannett is a leading media and marketing services company with unparalleled local-to-national reach, successfully connecting consumers, communities and businesses Financial Summary $3BN 2017A Revenue $1BN 2017A Digital Revenue $360MM 2017A Adjusted EBITDA $1BN Market Capitalization BUSINESSES CONSUMERS Growing Digital Revenues $2BN+ of 2017A Advertising and Services Revenue PREMIUM LOCAL NEWS BRANDS High-Quality Trusted Content at Scale $1BN+ of 2017A Subscription Revenue $700MM+ in 2017A (1) Digital Advertising Revenues 109 Local U.S. Markets (including growth areas such as Phoenix, Nashville, Indianapolis) $359MM in 2017A Digital Marketing Services Revenues (incl. above) 66% of USA TODAY (2) Advertising Revenues Are Now Digital Tremendous Opportunity Remains in Local Markets for Digital Transition 2,000+ FTE Sales Organization NATIONAL PRESENCE ROBUST DIGITAL MARKETING SOLUTIONS OFFERINGS National USA TODAY NETWORK 128MM+ Monthly Unique Visitors (3) #3 Destination for News and Information (3) 3,000+ Journalists Award-Winning Content (1) Includes ReachLocal and corporate eliminations (2) National USA TODAY only; excludes network (3) Per Comscore, as of February 2018 GANNETT 3

4 Nationwide Digital Marketing Solutions Provider BUSINESSES Managed Service Do-it-for-Me Pending Acquisition (1) of BUSINESSES Self Service Do-it-Yourself Provides small- to mid-sized and regional businesses with a comprehensive suite of managed digital marketing solutions that help them generate leads and superior ROI on their marketing investments Provides cloud-based software-as-a-service (SaaS) solutions on a subscription basis for local and regional businesses and agencies looking to optimize their own digital marketing spend $359MM 2017 Revenue 19,000 Active Clients ~2 Average Products / Client $55MM NTM* Revenue 29% EBITDA Margin 3,399 Active Clients End-to-End Suite of Digital Marketing Solutions for SMBs at Any Stage DIGITAL ADVERTISING WEB PRESENCE DIGITAL MARKETING SOFTWARE Search Social Ads Display Ads Geotargeting Retargeting SEO Websites Live Chat Listings Reviews Lead Management Marketing Automation Analytics Note: NTM = next twelve months GANNETT 4 (1) Subject to regulatory clearance and other customary closing conditions

5 Focusing on the Local Advertising Market Gannett has the Reach, Personnel, and Technology to Service SMBs Local Digital Advertising Needs Nationwide Huge Local Digital Advertising Market Digital Advertising is Critical to SMBs But is Increasingly Complex Wisconsin Des Moines (90) WA ND MT MN OR ID SD WI WY CA NE NV IA UT IL MO CO ~$50B (1) KS AZ Local Digital Advertising NM Market OK AR MI Guam Phoenix (12) TX LA Nashville (37) Rochester (52) ME Milwaukee (40) NY VT NH Westchester Detroit (14) MA RI CT MI NJ PA DE IN OH WV MD VA Cincinnati (28) ~9MM (1) KY NC Indianapolis (35) SMBs TN in the U.S. AL SC GA FL Fort Myers (79) Naples (146) Louisville (45) Knoxville (65) 75% (1) of SMBs Advertise But Run into Numerous Issues I don t have enough time I don t know how to do it I don t have necessary personnel Gannett is Uniquely-Positioned to Capitalize on Local Digital Advertising Growth Best-in-class, end-to-end technology platform (ReachLocal, SweetIQ and, pending acquisition of WordStream) Sales organization of 2,000+ across the U.S. Demand from larger platform such as Google to drive local growth GANNETT (1) Source: IAB Report; ReachLocal Survey Data 2017; LSA Pulse Survey 5

6 USA TODAY NETWORK Overview The USA TODAY NETWORK delivers tremendous nationwide reach through strong, trusted national, local and passion brands that form the foundation of our local-to-national network strategy Local USA TODAY 11MM Local Sunday Readership 3MM USA TODAY Daily Print Readership 45MM Average Monthly Unique Visitors 109 Local Markets Local USA TODAY 103MM Average Monthly Unique Visitors (USA TODAY Sites Only) 24MM Mobile App Downloads Deep community roots inform network knowledge of people and issues of greatest interest and importance Passion Comprehensive, inclusive reflection of the USA; large platform amplifies important local issues Significant USA TODAY NETWORK Scale Avg. Monthly Unique Visitors (1) (millions) Tangible Value for Consumers and Advertisers Top News Destination for Millennials Monthly Unique Visitors (millions) Leading User Engagement Page Views per Visit YTD 2018 Source: comscore (February 2018). GANNETT 6 (1) Excludes local / national duplicates

7 Largest Local Media Organization in the United States Key Highlights #1 or #2 local news website in most markets 2.2MM average daily circulation 4.5MM Sunday circulation No single market makes up more than 6% of revenue 9 sites located in state capitals 32% millennial audience across top markets CA WA OR NV ID UT AZ Des Moines (90) MT WY CO NM ND SD NE KS Wisconsin MN IA MO OK AR WI IL MI Milwaukee (40) Detroit (14) MI PA IN OH WV KY TN AL SC GA Rochester (52) ME NY VT NH Westchester MA RI CT NJ DE MD VA Cincinnati (28) NC Indianapolis (35) Louisville (45) Knoxville (65) 33% of top markets have 4 major league sports teams Majority of top markets are in fast-growing areas Guam Phoenix (12) TX LA Nashville (37) Fort Myers (79) Naples (146) FL 40 Print Sites 3 Content Design Studios 2 Advertising Creative Services 4 Circulation Call Centers Large Markets / Clusters Large Community Small Markets GANNETT Note: Numbers in parentheses represent MSA rankings based on 2016 US Census estimates. 7

8 Gannett Strategy: The Future of Gannett Leverage nationwide scale and local presence to expand and deepen our relationships with consumers and businesses Accelerate expansion of our digital business through innovative consumer experiences and new marketing experiences for businesses Maximize the value of our legacy print business and rationalize our cost base Continue to pursue opportunistic acquisitions GANNETT 8

9 Strategy: Leverage Nationwide Scale and Local Presence to Expand and Deepen Relationships B2B Strategy Deliver ROI for advertisers B2C Strategy Connect with / monetize targeted audiences 1 Focus on customer segments with the right product suite and level of service 1 Super-serve and retain our most valuable subscribers 2 Drive deeper penetration of digital marketing services and advertising products within our broad client base 2 Deepen our relationship with younger audiences through niche passion brands and events 3 Leverage data and technology to drive effectiveness and efficiency 3 Align storytelling efforts with consumers consumption habits across mobile, video and audio 4 Pursue acquisitions that fill an advertising or marketing service product gap 4 Pursue acquisitions that expand our passion brands or fill a gap in our storytelling product portfolio GANNETT 9

10 Strategy: Accelerate Expansion of Digital Business B2B Expanding the Number of Products to Businesses B2C Expanding Audience and Driving Consumer Engagement Provide listing services (e.g. location, phone number, hours of operation) on Google, Facebook, Yelp, etc. Extend distribution of compelling content across all digital media (e.g. new video franchises, podcasts, flash briefings on Alexa) Manage advertising budget across all media (e.g. Search, Display, Social) to facilitate lead generation Provide data on the effectiveness of advertising campaigns Partner with key mobile and social media players for content distribution and monetization Create custom marketing solutions (e.g. branded content articles) Paramount Develop passion brands to attract new audiences and deepen engagement with existing audiences (e.g. FTW, Humankind, Grateful) Connect advertisers to our large, attractive audiences via print or digital advertising across Gannett s digital products and its publications Marketing Solutions Extend digital audience engagement offline through events ~$1BN Digital Revenue (32% of Total) GANNETT (1) LTM revenue for the period ended 12/31/17; includes digital circulation allocation. 10

11 Strategy: Maximize the Value of Legacy Print Business and Rationalize Cost Base Track Record in Reducing Operating Expenses Continued Opportunity to Maximize Profits ($ in millions) Subscriber Pricing Aggressive Full Access pricing in late 2017 / 2018 Loyal print audience willing to pay more Pricing to continue, although likely at more modest levels $3,709 $630MM+ In Opex Reductions $3,079 Distribution & Production Regionalization / Centralization Consolidate facilities Outsource printing Optimize routes Salesforce reorganization, including migrating accounts to more efficient call centers and optimizing post-sales Develop more regional structures (e.g. TN, WI, NJ, FL) Centralize financial and accounting functions (e.g. payroll, accounts receivable, accounts payables) Leverage scale to drive savings in technology services (cloud services, hosting, software services) Standardization / Optimization Templatize print products to drive efficiencies across Design Studios Realign content resources to focus on digital future (1) PF Outsourcing Leverage ReachLocal s India operations for technology and development functions Outsource subscriber call centers GANNETT (1) Pro forma for acquisition of JMG, NJMG and ReachLocal. Source: Pro forma financials filed with 8-K on 10/21/16. 11

12 Strategy: Pursue Opportunistic Acquisitions Category Objective Historical Future Digital Marketing Software & Services To provide national and local marketers with best-in-class solutions that generate a superior ROI for their digital marketing investments (April 2017, $32MM) Tuck-in acquisitions to expand and / or optimize ReachLocal s service offerings and technologies (August 2016, $163MM) Consumer Engagement To provide consumers with engaging digital content, live experiences and exclusive benefits as members of the USA TODAY NETWORK (October 2017, undisclosed) Opportunistic small acquisitions in key content areas Disciplined acquirer (October 2016, undisclosed) Local Market Expansion To grow the size of the USA TODAY NETWORK audience and expand our editorial coverage where news is happening in America (July 2016, $39MM) Selective acquisitions to enhance the USA TODAY NETWORK footprint in key markets (April 2016, $261MM) GANNETT 12

13 Proven and Experienced Management Team Robert J. Dickey President & CEO Sharon Rowlands President, USA TODAY NETWORK Marketing Solutions & CEO, ReachLocal Joined Gannett in 1990 Previous experience as President of Former Parent s US Community Publishing Division Senior Group President, Pacific Group and Chairman of Phoenix Newspapers, Inc. President and Publisher of the Desert Sun, Palm Spring, CA and Group Vice President of the Pacific Group Named to her current role in November 2017 Previously CEO of ReachLocal in 2014 Previous experience as CEO of Altegrity, CEO of Penton Media, and President and Managing Director at Thomson Financial Alison K. Engel Chief Financial Officer & Treasurer Maribel P. Wadsworth President, USA TODAY NETWORK & Publisher of USA TODAY Joined Gannett in 2015 Previous experience as Senior Vice President, Chief Financial Officer and Treasurer A. H. Belo Corporation B.S. and MPA from University of Texas at Austin Certified Public Accountant Joined Gannett in 1996 Previous experience as Chief Strategy Officer, VP of Audience Development and engagement 15 years of experience in a variety of roles (reporter to managing editor) at US Community Publishing Division Kris Barton Chief Product Officer, USA TODAY NETWORK Kevin Gentzel Chief Revenue Officer Named to his current role in November 2017 Previously served as ReachLocal s Chief Product Officer since February 2012 Previous experience in senior leadership roles of Nero, Microsoft, Omniture and Novell Joined Gannett in 2015 Previous experience as head of Advertising Sales, North America at Yahoo! Chief Revenue Officer of The Washington Post Chief Revenue Officer of Forbes Media GANNETT 13

14 Financial Highlights

15 Recent Financial Highlights Strong Digital Advertising Improvement and Focus on Digital Transformation Digital Advertising Revenues Reaching 44% of Total Advertising Revenues in Q1 18 Pending Acquisition of WordStream, a Digital Marketing Software Company, to Further Enhance ReachLocal s Digital Marketing Solutions Continued Focus on Efficiencies to Drive Steady Cash Flow 5 $100M Stock Repurchase Plan and 2017 Annual Dividend of $ Completed $200M Convertible Debt Financing GANNETT 15

16 Strong Improvement in Digital Advertising Trends 1 Q1 18 Highlights Results Ahead of Expectations Driven by Solid Growth in Digital Advertising Revenues $120.0 $100.0 $80.0 $60.0 $40.0 ReachLocal Operating Revenue & Adjusted EBITDA Margin ($ in millions) $101.4 $93.8 $85.9 $75.2 $77.6 7% 5% 6% 4% $96.5 6% 9% 8% 7% 6% 5% 4% 3% 2 Digital Advertising Revenues Reached 44% of Total Advertising Revenues Growing 7% YoY $20.0 $- 1% Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 2% 1% 0% Operating Revenue Adjusted EBITDA Margin 3 4 ReachLocal Operating Revenues were $96.5 Million, up 24%Year-Over-Year Total Digital Revenues Increased 9% to $255.5 Million, or Approximately 35% of Total Revenue 34.9% Digital Advertising Revenues as a % of Total Advertising Revenues 37.9% 38.6% 41.8% 40.1% 43.6% 5 Strong Cash Flow and Real Estate Sales Led to Significant Debt Paydown in Q1/early Q2 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 GANNETT ReachLocal Q2 17 Adjusted EBITDA Margin impacted by one-time transition costs associated with migration of Gannett accounts to the ReachLocal platform 16

17 Financial Summary ($ in millions) Revenue Total Digital Advertising Revenues ($ in millions) $2,885 $3,047 $3,146 ($ in millions) $709.3 $405.2 $ A 2016A 2017A 2015A 2016A 2017A Adjusted EBITDA and Margin Free Cash Flow (1) ($ in millions) ($ in millions) $387 $360 $360 13% 12% 11% $177 $106 $ A 2016A 2017A Adjusted EBITDA Margin 2015A 2016A 2017A GANNETT (1) Defined as cash flow from operating activities less capital expenditures. 17

18 We Are Gannett. From local to national, we engage the country to tell its stories.

19 Appendix

20 Non-GAAP Financial Metrics - Consolidated ($ in millions) For the twelve months ended December 31, Net income (GAAP basis) $7 $53 $146 Provision for income taxes Interest expense Other non-operating items (34) Operating income (GAAP basis) $68 $89 $165 Depreciation & Amortization Asset impairment charges Restructuring costs Acquisition-related items Other items Adjusted EBITDA (non-gaap basis) $360 $360 $387 GANNETT 20

21 Non-GAAP Financial Metrics ReachLocal Segment ($ in millions) Q Q Q Q Q Q Operating income (GAAP basis) ($7,498) ($4,772) ($7,889) ($4,207) ($2,071) ($2,926) Depreciation & Amortization 8,312 7,875 8,783 8,846 8,398 8,513 Restructuring costs Acquisition-related items 43 Other items Adjusted EBITDA (non-gaap basis) $892 $3,146 $1,217 $5,229 $6,961 $6,209 GANNETT 21