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

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Transcription:

December 2018

Disclaimers This presentation may include 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 second quarter of fiscal 2018. 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

Gannett Overview 2017A Financial Summary $3BN Revenue $1BN Digital Revenue $360MM Adjusted EBITDA $1BN Market Capitalization BUSINESSES CONSUMERS Growing Digital Revenues $2BN+ of 2017A Advertising and Marketing Services Revenue $700MM+ in 2017A (1) Digital Advertising & Marketing Services Revenues PREMIUM LOCAL NEWS BRANDS NATIONAL PRESENCE ROBUST DIGITAL MARKETING SOLUTIONS OFFERINGS High-Quality Trusted Content at Scale $1BN+ of 2017A Subscription Revenue 120MM+ Monthly Unique Visitors (2) (1) Includes ReachLocal and corporate eliminations (2) Per Comscore GANNETT 3

Nationwide Digital Marketing Solutions Provider Managed Service Do-it-for-Me BUSINESSES Self Service Do-it-Yourself $359MM 2017 Revenue 19,000 Active Clients ~2 Average Products / Client $55MM NTM* Revenue 29% EBITDA Margin 3,400 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 GANNETT Note: NTM = next twelve months 4

A Large, Growing Local Digital Advertising Market ~9MM SMBs in the U.S. $46.9B $53.4B $59.6B $66.0B $72.6B $77.7B 2017 2018 2019 2020 2021 2022 GANNETT Source: BIA Kelsey; IAB/Borrell. 5

That is Increasingly Complex for SMBs to Manage I don t have enough time 75% of SMBs Advertise Digitally I don t know how to do it But Run into Numerous Issues I don t have necessary personnel GANNETT Source: IAB/Borrell; ReachLocal Survey Data 2017; LSA Pulse Survey 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 8MM Local Sunday Readership Local USA TODAY 2MM USA TODAY Average Daily Print Readership 43MM Average Monthly Unique Visitors Passion 78MM Average Monthly Unique Visitors 109 Local Markets 25MM Mobile App Downloads Source: comscore (October 2018), MRI, AAM, Scarborough. USA TODAY unique visitors include audience from distributed platforms (YouTube, AppleNews, MSN Video, Google AMP, FBIA) and exclude Sport Media Group owned and operated properties and affiliates. GANNETT 7

USA TODAY NETWORK Overview Tangible Value for Advertisers and Consumers Significant USA TODAY NETWORK Scale Avg. Monthly Unique Visitors (millions) Top News Destination for Millennials Monthly Unique Visitors (millions) Leading User Engagement Page Views per Visit 110 117 125 36 29 27 3.2 2.3 2.1 2016 2017 YTD 2018 GANNETT Source: comscore (July 2018). 8

Largest Local Media Organization in the United States WA Des Moines (90) Wisconsin Rochester (52) Key Highlights #1 or #2 local news website in most markets 32% millennial audience across top markets 1,500+ FTE Sales Organization CA OR NV ID UT AZ MT WY CO NM ND SD NE KS OK MN IA MO AR WI IL MI Milwaukee (40) Detroit (14) MI PA IN OH WV KY TN AL SC GA VA NC ME NY VT NH Westchester MA RI CT NJ DE MD Cincinnati (28) Indianapolis (35) Louisville (45) Knoxville (65) ~2,500 Journalists Guam Phoenix (12) TX LA FL Nashville (37) Fort Myers (79) Naples (146) 38 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. 9

The Future of Gannett: Our Strategy 1 2 3 4 Leverage nationwide scale and local presence to expand and deepen our relationships with consumers and businesses Accelerate growth of our digital revenue 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 10

Financial Highlights

Recent Financial Highlights 1 2 3 4 Strong Digital Advertising & Marketing Services Improvement and Focus on Digital Transformation Digital Advertising & Marketing Services Revenues Reached 49% of Total Advertising & Marketing Services Revenues in Q3 18 Closed Acquisition of WordStream, a Digital Marketing Software Company, to Further Enhance ReachLocal s Digital Marketing Solutions Significant Margin Improvement at ReachLocal Segment 5 Continued Focus on Efficiencies to Drive Steady Cash Flow 6 $100MM Stock Repurchase Authorization and 2017 Annual Dividend of $0.64 per share GANNETT 12

Strong Improvement in ReachLocal Segment Trends Q3 18 Highlights $120.0 $100.0 ($ in millions) $85.9 $93.8 ReachLocal Operating Revenue & Adjusted EBITDA Margin $101.4 $96.5 $100.4 $109.6 16% 18% 16% 14% 1 Solid Growth in Digital Advertising & Marketing Services Revenues $80.0 $60.0 6% 10% 12% 10% 8% 2 ReachLocal Segment Revenues were $110 Million, up 16.8% Year-Over-Year $40.0 $20.0 $- 1% 7% Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 6% 6% 4% 2% 0% Operating Revenue Margin 3 ReachLocal Segment Adjusted EBITDA Margin Reaches 16% Digital Ad & Marketing Services Revenues as a % of Total Ad & Marketing Services Revenues 4 Total Digital Revenues Increased 8% to $266 Million, or ~37% of Total Revenue 38.6% 41.8% 40.1% 43.6% 46.0% 49.4% 5 Completed Acquisition of WordStream in July; Outperformed Expectations in First Quarter of Ownership Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 GANNETT ReachLocal Q2 17 Adjusted EBITDA Margin impacted by one-time transition costs associated with migration of Gannett accounts to the ReachLocal platform 13

Financial Summary ($ in millions) $2,885 Revenue $3,047 $3,146 ($ in millions) Total Digital Advertising & Marketing Services Revenues $504.5 $406.1 $743.9 2015A 2016A 2017A 2015A 2016A 2017A ($ in millions) Adjusted EBITDA and Margin Free Cash Flow (1) ($ in millions) $387 $360 $360 13% 12% 11% $177 $106 $164 2015A 2016A 2017A Adjusted EBITDA Margin 2015A 2016A 2017A GANNETT (1) Defined as cash flow from operating activities less capital expenditures. 14

Appendix

Non-GAAP Financial Metrics - Consolidated ($ in millions) Fiscal Year 2017 2016 2015 Net income (GAAP basis) $7 $53 $146 Provision for income taxes 34 14 48 Interest expense 17 13 5 Other non-operating items 10 10 (34) Operating income (GAAP basis) $68 $89 $165 Depreciation & Amortization 192 133 108 Asset impairment charges 47 56 29 Restructuring costs 44 46 77 Acquisition-related items 5 33 0 Other items 4 3 8 Adjusted EBITDA (non-gaap basis) $360 $360 $387 GANNETT 16

Non-GAAP Financial Metrics ReachLocal Segment ($ in millions) Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Operating income (GAAP basis) ($4,772) ($7,889) ($4,207) ($2,071) ($2,926) ($1,696) $2,483 Depreciation & Amortization 7,875 8,783 8,846 8,398 8,513 8,896 12,096 Restructuring costs 323 191 466 539 2,966 1,159 Asset Impairment Charges 271 Other items 43 399 168 83 105 1,331 Adjusted EBITDA (non-gaap basis) $3,146 $1,217 $5,229 $6,961 $6,209 $10,271 $17,340 GANNETT 17