Gannett Co., Inc. Reports 37% Increase in Non-GAAP Earnings per Diluted Share to $0.59; Earnings per Diluted Share of $0.51 on a GAAP Basis; Record Broadcasting Revenue and Adjusted EBITDA
- Overall company revenue growth of 15 percent, pro forma revenue growth of 4 percent, driven by strong Broadcast and Digital Segment results
- Record Broadcasting Segment revenue increased 105 percent, a 19 percent increase on a pro forma basis
- Adjusted EBITDA rose 47 percent to
$342 million also driven by strong Broadcasting and Digital Segment results - Free Cash Flow of
$186 million , a 76 percent year-over-year increase
Martore continued, "
On
CONTINUING OPERATIONS
Operating revenues in the third quarter totaled
Net income attributable to
Special items in the third quarter of 2014 totaled
The table below details third quarter results on a GAAP and non-GAAP basis.
Dollars in thousands, except per share amounts |
|||||||||||||||||||||||
GAAP Measure |
Special Items |
Non-GAAP Measure |
|||||||||||||||||||||
Thirteen weeks ended Sept. 28, 2014 |
Workforce restructuring |
Other transformation costs |
Non-operating items |
Special tax benefits |
Thirteen weeks ended Sept. 28, 2014 |
||||||||||||||||||
Operating income |
$ |
270,517 |
$ |
3,004 |
$ |
6,621 |
$ |
— |
$ |
— |
$ |
280,142 |
|||||||||||
Equity income in unconsolidated investees, net |
1,756 |
— |
— |
5,987 |
— |
7,743 |
|||||||||||||||||
Other non-operating items |
(17,450) |
— |
— |
14,491 |
— |
(2,959) |
|||||||||||||||||
Income before income taxes |
188,892 |
3,004 |
6,621 |
20,478 |
— |
218,995 |
|||||||||||||||||
Provision for income taxes |
48,900 |
1,000 |
1,400 |
4,300 |
5,600 |
61,200 |
|||||||||||||||||
Net income |
139,992 |
2,004 |
5,221 |
16,178 |
(5,600) |
157,795 |
|||||||||||||||||
Net income attributable to Gannett Co., Inc. |
118,516 |
2,004 |
5,221 |
16,178 |
(5,600) |
136,319 |
|||||||||||||||||
Net income per share - diluted |
$ |
0.51 |
$ |
0.01 |
$ |
0.02 |
$ |
0.07 |
$ |
(0.02) |
$ |
0.59 |
Operating expenses including special charges noted above were
BROADCASTING
Broadcasting Segment revenues totaled a record
The following table summarizes the year-over-year changes in select Broadcasting Segment revenue categories. Digital revenues are included in the "Other" category.
Broadcasting Revenue Detail |
|||||||||
Thirteen weeks ended Sept. 28, 2014 |
Percentage change from thirteen weeks ended Sept. 29, 2013 |
||||||||
Reported |
Pro Forma (a) |
||||||||
Core (Local & National) |
$ |
250,647 |
75 |
% |
(3%) |
||||
Political |
39,995 |
*** |
*** |
||||||
Retransmission (b) |
91,903 |
154 |
% |
61 |
% |
||||
Other |
33,964 |
68 |
% |
15 |
% |
||||
Total |
$ |
416,509 |
105 |
% |
19 |
% |
|||
(a) The pro forma amounts are presented as if the acquisitions of Belo Corp. and the London Broadcasting TV stations as well as the Captivate disposition occurred at the beginning of 2013. |
|||||||||
(b) Reverse compensation to networks is included as part of programming costs and therefore not included in this line. |
Broadcasting Segment revenues on a pro forma basis were 18.6 percent higher compared to the third quarter last year. The increase reflects a 60.9 percent increase in retransmission revenue to approximately
Non-GAAP operating expenses in the Broadcasting Segment on a pro forma basis were
Based on current trends and including a full quarter of results for the former Belo and London stations in 2014, we expect the increase in total television revenues for the fourth quarter of 2014 compared to the same quarter of 2013 to exceed 115 percent. On a pro forma basis, the percentage increase in total television revenues in the fourth quarter of 2014 is projected to be in the low-twenties compared to the fourth quarter of 2013.
PUBLISHING
Publishing Segment revenues in the quarter were
Advertising revenues totaled
A summary of the year-over-year percentage change for each of the company's advertising categories can be found on Table 3.
Circulation revenues totaled
Pro forma Publishing Segment digital revenues were 7.2 percent higher in the quarter reflecting continued growth in digital marketing solutions and digital advertising. Digital revenues at Newsquest were up 20.4 percent in local currency while digital revenues at USA TODAY and its associated businesses increased 16.6 percent. Pro forma digital revenues at local domestic publishing operations were 3.9 percent higher.
Pro forma non-GAAP Publishing Segment operating expenses declined 2.1 percent compared to the third quarter of 2013 and totaled
Non-GAAP operating income totaled
DIGITAL
Operating revenues in the Digital Segment were 4.4 percent higher compared to the third quarter of 2013 and totaled
Pro forma digital revenues company-wide, including the Digital Segment and all digital revenues generated by the other business segments, totaled
At the end of the quarter,
NON-OPERATING ITEMS
The company's equity earnings include its share of operating results from unconsolidated investees including the
Equity income in unconsolidated investees totaled
Interest expense was
Excluding special items, other non-operating expense in the quarter would have been
Net cash flow from operating activities was
USE OF NON-GAAP INFORMATION
The company uses non-GAAP financial performance and liquidity measures to supplement the financial information presented on a GAAP basis. These non-GAAP financial measures should not be considered in isolation from or as a substitute for the related GAAP measures, and should be read together with financial information presented on a GAAP basis.
The company discusses in this report non-GAAP financial performance measures that exclude from its reported GAAP results the impact of special items consisting of workforce restructuring charges, transformation costs, non-cash asset impairment charges, certain expenses recognized in non-operating categories and certain credits and charges to its income tax provision. The company believes that such expenses, charges and credits are not indicative of normal, ongoing operations and their inclusion in results makes for more difficult comparisons between years and with peer group companies.
The company also discusses Adjusted EBITDA, a non-GAAP financial performance measure that it believes offers a useful view of the overall operation of its businesses. Adjusted EBITDA is defined as net income attributable to
Management uses non-GAAP financial performance measures for purposes of evaluating business unit and consolidated company performance. The company therefore believes that each of the non-GAAP measures presented provides useful information to investors by allowing them to view the company's businesses through the eyes of management and the Board of Directors, facilitating comparison of results across historical periods and providing a focus on the underlying ongoing operating performance of its businesses. In addition, many of the company's peer group companies present similar non-GAAP measures so the presentation of such measures facilitates industry comparisons. Tabular reconciliations for the non-GAAP financial measures are contained in Tables 4 through 8 attached to this news release.
As previously announced, the company will hold an earnings conference call at
About
Certain statements in this press release may be forward looking in nature or "forward looking statements" as defined in the Private Securities Litigation Reform Act of 1995. The forward looking statements contained in this press release are subject to a number of risks, trends and uncertainties that could cause actual performance to differ materially from these forward looking statements. A number of those risks, trends and uncertainties are discussed in the company's
CONDENSED CONSOLIDATED STATEMENTS OF INCOME Gannett Co., Inc. and Subsidiaries Unaudited, in thousands (except per share amounts) |
|||||||||||
Table No. 1 |
|||||||||||
Thirteen weeks ended Sept. 28, 2014 |
Thirteen weeks ended Sept. 29, 2013 |
% Increase (Decrease) |
|||||||||
Net operating revenues: |
|||||||||||
Broadcasting |
$ |
416,509 |
$ |
203,364 |
104.8 |
||||||
Publishing advertising |
494,899 |
520,189 |
(4.9) |
||||||||
Publishing circulation |
276,829 |
274,999 |
0.7 |
||||||||
All other Publishing |
55,098 |
62,891 |
(12.4) |
||||||||
Digital |
199,802 |
191,447 |
4.4 |
||||||||
Total |
1,443,137 |
1,252,890 |
15.2 |
||||||||
Operating expenses: |
|||||||||||
Cost of sales and operating expenses, exclusive of depreciation |
757,301 |
713,369 |
6.2 |
||||||||
Selling, general and administrative expenses, exclusive of depreciation |
347,123 |
315,677 |
10.0 |
||||||||
Depreciation |
46,681 |
38,195 |
22.2 |
||||||||
Amortization of intangible assets |
14,894 |
8,071 |
84.5 |
||||||||
Facility consolidation charges |
6,621 |
5,880 |
12.6 |
||||||||
Total |
1,172,620 |
1,081,192 |
8.5 |
||||||||
Operating income |
270,517 |
171,698 |
57.6 |
||||||||
Non-operating (expense) income: |
|||||||||||
Equity income in unconsolidated investees, net |
1,756 |
11,711 |
(85.0) |
||||||||
Interest expense |
(65,931) |
(41,628) |
58.4 |
||||||||
Other non-operating items |
(17,450) |
(17,580) |
(0.7) |
||||||||
Total |
(81,625) |
(47,497) |
71.9 |
||||||||
Income before income taxes |
188,892 |
124,201 |
52.1 |
||||||||
Provision for income taxes |
48,900 |
26,700 |
83.1 |
||||||||
Net income |
139,992 |
97,501 |
43.6 |
||||||||
Net income attributable to noncontrolling interests |
(21,476) |
(17,753) |
21.0 |
||||||||
Net income attributable to Gannett Co., Inc. |
$ |
118,516 |
$ |
79,748 |
48.6 |
||||||
Net income per share - basic |
$ |
0.52 |
$ |
0.35 |
48.6 |
||||||
Net income per share - diluted |
$ |
0.51 |
$ |
0.34 |
50.0 |
||||||
Weighted average number of common shares outstanding: |
|||||||||||
Basic |
225,761 |
228,587 |
(1.2) |
||||||||
Diluted |
232,097 |
234,438 |
(1.0) |
||||||||
Dividends declared per share |
$ |
0.20 |
$ |
0.20 |
— |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME Gannett Co., Inc. and Subsidiaries Unaudited, in thousands (except per share amounts) |
|||||||||||
Table No. 1 (continued) |
|||||||||||
Thirty-nine |
Thirty-nine |
% Increase (Decrease) |
|||||||||
Net operating revenues: |
|||||||||||
Broadcasting |
$ |
1,197,035 |
$ |
606,906 |
97.2 |
||||||
Publishing advertising |
1,526,382 |
1,609,164 |
(5.1) |
||||||||
Publishing circulation |
836,756 |
840,626 |
(0.5) |
||||||||
All other Publishing |
173,116 |
183,753 |
(5.8) |
||||||||
Digital |
573,918 |
552,875 |
3.8 |
||||||||
Total |
4,307,207 |
3,793,324 |
13.5 |
||||||||
Operating expenses: |
|||||||||||
Cost of sales and operating expenses, exclusive of depreciation |
2,300,460 |
2,159,962 |
6.5 |
||||||||
Selling, general and administrative expenses, exclusive of depreciation |
1,056,115 |
950,407 |
11.1 |
||||||||
Depreciation |
136,295 |
115,588 |
17.9 |
||||||||
Amortization of intangible assets |
47,108 |
26,567 |
77.3 |
||||||||
Facility consolidation and asset impairment charges |
50,216 |
15,163 |
*** |
||||||||
Total |
3,590,194 |
3,267,687 |
9.9 |
||||||||
Operating income |
717,013 |
525,637 |
36.4 |
||||||||
Non-operating (expense) income: |
|||||||||||
Equity income in unconsolidated investees, net |
166,787 |
28,929 |
*** |
||||||||
Interest expense |
(199,727) |
(113,207) |
76.4 |
||||||||
Other non-operating items |
(41,180) |
(28,954) |
42.2 |
||||||||
Total |
(74,120) |
(113,232) |
(34.5) |
||||||||
Income before income taxes |
642,893 |
412,405 |
55.9 |
||||||||
Provision for income taxes |
207,400 |
71,700 |
*** |
||||||||
Net income |
435,493 |
340,705 |
27.8 |
||||||||
Net income attributable to noncontrolling interests |
(49,351) |
(42,772) |
15.4 |
||||||||
Net income attributable to Gannett Co., Inc. |
$ |
386,142 |
$ |
297,933 |
29.6 |
||||||
Net income per share - basic |
$ |
1.71 |
$ |
1.30 |
31.5 |
||||||
Net income per share - diluted |
$ |
1.66 |
$ |
1.27 |
30.7 |
||||||
Weighted average number of common shares outstanding: |
|||||||||||
Basic |
226,374 |
228,940 |
(1.1) |
||||||||
Diluted |
232,157 |
234,724 |
(1.1) |
||||||||
Dividends declared per share |
$ |
0.60 |
$ |
0.60 |
— |
BUSINESS SEGMENT INFORMATION Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars |
|||||||||||
Table No. 2 |
|||||||||||
Thirteen |
Thirteen |
% Increase (Decrease) |
|||||||||
Net operating revenues: |
|||||||||||
Broadcasting |
$ |
416,509 |
$ |
203,364 |
104.8 |
||||||
Publishing |
826,826 |
858,079 |
(3.6) |
||||||||
Digital |
199,802 |
191,447 |
4.4 |
||||||||
Total |
$ |
1,443,137 |
$ |
1,252,890 |
15.2 |
||||||
Operating income (net of depreciation, amortization and facility |
|||||||||||
Broadcasting |
$ |
177,970 |
$ |
83,810 |
112.3 |
||||||
Publishing |
62,424 |
62,744 |
(0.5) |
||||||||
Digital |
48,342 |
42,050 |
15.0 |
||||||||
Corporate |
(18,219) |
(16,906) |
7.8 |
||||||||
Total |
$ |
270,517 |
$ |
171,698 |
57.6 |
||||||
Depreciation, amortization and facility consolidation charges: |
|||||||||||
Broadcasting |
$ |
20,307 |
$ |
7,059 |
*** |
||||||
Publishing |
33,040 |
32,183 |
2.7 |
||||||||
Digital |
9,886 |
8,309 |
19.0 |
||||||||
Corporate |
4,963 |
4,595 |
8.0 |
||||||||
Total |
$ |
68,196 |
$ |
52,146 |
30.8 |
||||||
Adjusted EBITDA (a): |
|||||||||||
Broadcasting |
$ |
198,397 |
$ |
91,508 |
116.8 |
||||||
Publishing |
98,348 |
103,534 |
(5.0) |
||||||||
Digital |
58,228 |
50,359 |
15.6 |
||||||||
Corporate |
(13,256) |
(12,311) |
7.7 |
||||||||
Total |
$ |
341,717 |
$ |
233,090 |
46.6 |
||||||
(a) "Adjusted EBITDA" is a non-GAAP measure used by management to measure, analyze and compare the performance of its business segment operations at a more detailed level and in a meaningful and consistent manner. The definition of "Adjusted EBITDA" is provided in Table No. 5, along with reconciliations to the most directly comparable financial measure calculated and presented in accordance with GAAP on the company's condensed consolidated statements of income. |
BUSINESS SEGMENT INFORMATION Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars |
|||||||||||
Table No. 2 (continued) |
|||||||||||
Thirty-nine |
Thirty-nine |
% Increase (Decrease) |
|||||||||
Net operating revenues: |
|||||||||||
Broadcasting |
$ |
1,197,035 |
$ |
606,906 |
97.2 |
||||||
Publishing |
2,536,254 |
2,633,543 |
(3.7) |
||||||||
Digital |
573,918 |
552,875 |
3.8 |
||||||||
Total |
$ |
4,307,207 |
$ |
3,793,324 |
13.5 |
||||||
Operating income (net of depreciation, amortization and facility |
|||||||||||
Broadcasting |
$ |
503,841 |
$ |
265,578 |
89.7 |
||||||
Publishing |
158,651 |
208,073 |
(23.8) |
||||||||
Digital |
107,861 |
100,931 |
6.9 |
||||||||
Corporate |
(53,340) |
(48,945) |
9.0 |
||||||||
Total |
$ |
717,013 |
$ |
525,637 |
36.4 |
||||||
Depreciation, amortization and facility consolidation and asset |
|||||||||||
Broadcasting |
$ |
68,122 |
$ |
20,968 |
*** |
||||||
Publishing |
122,754 |
95,834 |
28.1 |
||||||||
Digital |
27,777 |
26,799 |
3.6 |
||||||||
Corporate |
14,966 |
13,717 |
9.1 |
||||||||
Total |
$ |
233,619 |
$ |
157,318 |
48.5 |
||||||
Adjusted EBITDA (a): |
|||||||||||
Broadcasting |
$ |
574,303 |
$ |
287,185 |
100.0 |
||||||
Publishing |
308,451 |
339,607 |
(9.2) |
||||||||
Digital |
135,638 |
127,730 |
6.2 |
||||||||
Corporate |
(38,374) |
(35,228) |
8.9 |
||||||||
Total |
$ |
980,018 |
$ |
719,294 |
36.2 |
||||||
(a) "Adjusted EBITDA" is a non-GAAP measure used by management to measure, analyze and compare the performance of its business segment operations at a more detailed level and in a meaningful and consistent manner. The definition of "Adjusted EBITDA" is provided in Table No. 5, along with reconciliations to the most directly comparable financial measure calculated and presented in accordance with GAAP on the company's condensed consolidated statements of income. |
PUBLISHING SEGMENT REVENUE COMPARISONS Gannett Co., Inc. and Subsidiaries Unaudited |
|||||
Table No. 3 |
|||||
The following percentage changes for the Publishing Segment advertising and classified revenue categories are presented as if the sale of Apartments.com occurred at the beginning of 2013. |
|||||
Third quarter 2014 year-over-year comparisons: |
|||||
U.S. Publishing (including USA |
Newsquest (in pounds) |
Total Publishing Segment |
|||
Retail |
(5.4%) |
(2.1%) |
(4.2%) |
||
National |
(10.7%) |
(3.3%) |
(9.6%) |
||
Classified: |
|||||
Automotive |
(1.4%) |
(6.3%) |
(1.1%) |
||
Employment |
(1.6%) |
9.3% |
4.2% |
||
Real Estate |
(4.5%) |
(7.6%) |
(2.8%) |
||
Legal |
(4.9%) |
—% |
(4.9%) |
||
Other |
(7.0%) |
(6.1%) |
(4.3%) |
||
Total classified |
(3.6%) |
(2.3%) |
(1.4%) |
||
Total advertising |
(5.8%) |
(2.3%) |
(4.2%) |
||
Year-to-date 2014 year-over-year comparisons: |
|||||
U.S. Publishing (including USA |
Newsquest (in pounds) |
Total Publishing Segment |
|||
Retail |
(5.7%) |
(2.2%) |
(4.6%) |
||
National |
(10.6%) |
(3.8%) |
(9.6%) |
||
Classified: |
|||||
Automotive |
(2.2%) |
(5.8%) |
(1.7%) |
||
Employment |
(5.5%) |
8.0% |
1.1% |
||
Real Estate |
(4.7%) |
(9.0%) |
(3.5%) |
||
Legal |
(5.2%) |
—% |
(5.2%) |
||
Other |
(8.5%) |
(6.1%) |
(5.3%) |
||
Total classified |
(4.9%) |
(2.9%) |
(2.5%) |
||
Total advertising |
(6.3%) |
(2.7%) |
(4.7%) |
NON-GAAP FINANCIAL INFORMATION Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars (except per share amounts) |
|||||||||||||||||||||||
The company uses non-GAAP financial performance and liquidity measures to supplement the financial information presented on a GAAP basis. These non-GAAP financial measures are not to be considered in isolation from or as a substitute for the related GAAP measures and should be read only in conjunction with financial information presented on a GAAP basis. |
|||||||||||||||||||||||
Tables No. 4 through No. 8 reconcile these non-GAAP measures to the most directly comparable GAAP measure. |
|||||||||||||||||||||||
Table No. 4 |
|||||||||||||||||||||||
GAAP Measure |
Special Items |
Non-GAAP Measure |
|||||||||||||||||||||
Thirteen weeks ended Sept. 28, 2014 |
Workforce restructuring |
Other transformation costs |
Non-operating items |
Special tax benefits |
Thirteen weeks ended Sept. 28, 2014 |
||||||||||||||||||
Cost of sales and operating expenses, exclusive of |
$ |
757,301 |
$ |
(2,268) |
$ |
— |
$ |
— |
$ |
— |
$ |
755,033 |
|||||||||||
Selling, general and administrative expenses, exclusive of depreciation |
347,123 |
(736) |
— |
— |
— |
346,387 |
|||||||||||||||||
Facility consolidation charges |
6,621 |
— |
(6,621) |
— |
— |
— |
|||||||||||||||||
Operating expenses |
1,172,620 |
(3,004) |
(6,621) |
— |
— |
1,162,995 |
|||||||||||||||||
Operating income |
270,517 |
3,004 |
6,621 |
— |
— |
280,142 |
|||||||||||||||||
Equity income in unconsolidated investees, net |
1,756 |
— |
— |
5,987 |
— |
7,743 |
|||||||||||||||||
Other non-operating items |
(17,450) |
— |
— |
14,491 |
— |
(2,959) |
|||||||||||||||||
Total non-operating (expense) income |
(81,625) |
— |
— |
20,478 |
— |
(61,147) |
|||||||||||||||||
Income before income taxes |
188,892 |
3,004 |
6,621 |
20,478 |
— |
218,995 |
|||||||||||||||||
Provision for income taxes |
48,900 |
1,000 |
1,400 |
4,300 |
5,600 |
61,200 |
|||||||||||||||||
Net income |
139,992 |
2,004 |
5,221 |
16,178 |
(5,600) |
157,795 |
|||||||||||||||||
Net income attributable to Gannett Co., Inc. |
118,516 |
2,004 |
5,221 |
16,178 |
(5,600) |
136,319 |
|||||||||||||||||
Net income per share - diluted |
$ |
0.51 |
$ |
0.01 |
$ |
0.02 |
$ |
0.07 |
$ |
(0.02) |
$ |
0.59 |
|||||||||||
GAAP Measure |
Special Items |
Non-GAAP Measure |
|||||||||||||||||||||
Thirteen weeks ended Sept. 29, 2013 |
Workforce restructuring |
Other transformation costs |
Non-operating items |
Thirteen weeks ended Sept. 29, 2013 |
|||||||||||||||||||
Cost of sales and operating expenses, exclusive of |
$ |
713,369 |
$ |
(7,162) |
$ |
— |
$ |
— |
$ |
706,207 |
|||||||||||||
Selling, general and administrative expenses, exclusive of depreciation |
315,677 |
(2,084) |
— |
— |
313,593 |
||||||||||||||||||
Facility consolidation charges |
5,880 |
— |
(5,880) |
— |
— |
||||||||||||||||||
Operating expenses |
1,081,192 |
(9,246) |
(5,880) |
— |
1,066,066 |
||||||||||||||||||
Operating income |
171,698 |
9,246 |
5,880 |
— |
186,824 |
||||||||||||||||||
Other non-operating items |
(17,580) |
— |
— |
21,025 |
3,445 |
||||||||||||||||||
Total non-operating (expense) income |
(47,497) |
— |
— |
21,025 |
(26,472) |
||||||||||||||||||
Income before income taxes |
124,201 |
9,246 |
5,880 |
21,025 |
160,352 |
||||||||||||||||||
Provision for income taxes |
26,700 |
3,600 |
2,300 |
10,200 |
42,800 |
||||||||||||||||||
Net income |
97,501 |
5,646 |
3,580 |
10,825 |
117,552 |
||||||||||||||||||
Net income attributable to Gannett Co., Inc. |
79,748 |
5,646 |
3,580 |
10,825 |
99,799 |
||||||||||||||||||
Net income per share - diluted |
$ |
0.34 |
$ |
0.02 |
$ |
0.02 |
$ |
0.05 |
$ |
0.43 |
NON-GAAP FINANCIAL INFORMATION Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars (except per share amounts) |
|||||||||||||||||||||||||||
Table No. 4 (continued) |
|||||||||||||||||||||||||||
GAAP Measure |
Special Items |
Non-GAAP Measure |
|||||||||||||||||||||||||
Thirty-nine weeks ended Sept. 28, 2014 |
Workforce restructuring |
Other transformation costs |
Asset impairment |
Non-operating items |
Special tax charge |
Thirty-nine weeks ended Sept. 28, 2014 |
|||||||||||||||||||||
Cost of sales and operating expenses, exclusive of depreciation |
$ |
2,300,460 |
$ |
(26,155) |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
$ |
2,274,305 |
|||||||||||||
Selling, general and administrative |
1,056,115 |
(3,231) |
— |
— |
— |
— |
1,052,884 |
||||||||||||||||||||
Amortization of intangible assets |
47,108 |
— |
(4,480) |
— |
— |
— |
42,628 |
||||||||||||||||||||
Facility consolidation and asset |
50,216 |
— |
(34,029) |
(16,187) |
— |
— |
— |
||||||||||||||||||||
Operating expenses |
3,590,194 |
(29,386) |
(38,509) |
(16,187) |
— |
— |
3,506,112 |
||||||||||||||||||||
Operating income |
717,013 |
29,386 |
38,509 |
16,187 |
— |
— |
801,095 |
||||||||||||||||||||
Equity income in unconsolidated investees, net |
166,787 |
— |
— |
— |
(142,003) |
— |
24,784 |
||||||||||||||||||||
Other non-operating items |
(41,180) |
— |
— |
— |
39,371 |
— |
(1,809) |
||||||||||||||||||||
Total non-operating (expense) income |
(74,120) |
— |
— |
— |
(102,632) |
— |
(176,752) |
||||||||||||||||||||
Income before income taxes |
642,893 |
29,386 |
38,509 |
16,187 |
(102,632) |
— |
624,343 |
||||||||||||||||||||
Provision for income taxes |
207,400 |
10,800 |
14,500 |
800 |
(39,700) |
(18,200) |
175,600 |
||||||||||||||||||||
Net income |
435,493 |
18,586 |
24,009 |
15,387 |
(62,932) |
18,200 |
448,743 |
||||||||||||||||||||
Net income attributable to Gannett Co., Inc. |
386,142 |
18,586 |
24,009 |
15,387 |
(62,932) |
18,200 |
399,392 |
||||||||||||||||||||
Net income per share - diluted |
$ |
1.66 |
$ |
0.08 |
$ |
0.10 |
$ |
0.07 |
$ |
(0.27) |
$ |
0.08 |
$ |
1.72 |
|||||||||||||
GAAP Measure |
Special Items |
Non-GAAP Measure |
|||||||||||||||||||||||||
Thirty-nine weeks ended Sept. 29, 2013 |
Workforce restructuring |
Other transformation costs |
Non-operating items |
Special tax benefits |
Thirty-nine weeks ended Sept. 29, 2013 |
||||||||||||||||||||||
Cost of sales and operating expenses, exclusive of depreciation |
$ |
2,159,962 |
$ |
(29,692) |
$ |
— |
$ |
— |
$ |
— |
$ |
2,130,270 |
|||||||||||||||
Selling, general and administrative expenses, exclusive of depreciation |
950,407 |
(6,647) |
— |
— |
— |
943,760 |
|||||||||||||||||||||
Facility consolidation charges |
15,163 |
— |
(15,163) |
— |
— |
— |
|||||||||||||||||||||
Operating expenses |
3,267,687 |
(36,339) |
(15,163) |
— |
— |
3,216,185 |
|||||||||||||||||||||
Operating income |
525,637 |
36,339 |
15,163 |
— |
— |
577,139 |
|||||||||||||||||||||
Equity income in unconsolidated investees, net |
28,929 |
— |
— |
731 |
— |
29,660 |
|||||||||||||||||||||
Other non-operating items |
(28,954) |
— |
— |
33,501 |
— |
4,547 |
|||||||||||||||||||||
Total non-operating (expense) income |
(113,232) |
— |
— |
34,232 |
— |
(79,000) |
|||||||||||||||||||||
Income before income taxes |
412,405 |
36,339 |
15,163 |
34,232 |
— |
498,139 |
|||||||||||||||||||||
Provision for income taxes |
71,700 |
14,300 |
6,000 |
14,600 |
27,800 |
134,400 |
|||||||||||||||||||||
Net income |
340,705 |
22,039 |
9,163 |
19,632 |
(27,800) |
363,739 |
|||||||||||||||||||||
Net income attributable to Gannett Co., Inc. |
297,933 |
22,039 |
9,163 |
19,632 |
(27,800) |
320,967 |
|||||||||||||||||||||
Net income per share - diluted (a) |
$ |
1.27 |
$ |
0.09 |
$ |
0.04 |
$ |
0.08 |
$ |
(0.12) |
$ |
1.37 |
|||||||||||||||
(a) Total per share amount does not sum due to rounding. |
NON-GAAP FINANCIAL INFORMATION Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars |
|||||||||||||||||||
Table No. 5 |
|||||||||||||||||||
"Adjusted EBITDA", a non-GAAP measure, is defined as net income attributable to Gannett before (1) net income attributable to noncontrolling interests, (2) income taxes, (3) interest expense, (4) equity income, (5) other non-operating items, (6) workforce restructuring, (7) other transformation costs, (8) asset impairment charges (9) depreciation and (10) amortization. When Adjusted EBITDA is discussed in reference to performance on a consolidated basis, the most directly comparable GAAP financial measure to Adjusted EBITDA is Net income. Management does not analyze non-operating items such as interest expense and income taxes on a segment level; therefore, the most directly comparable GAAP financial measure to Adjusted EBITDA when performance is discussed on a segment level is Operating income. Management believes that use of this measure allows investors and management to measure, analyze and compare the performance of its business segment operations at a more detailed level and in a meaningful and consistent manner. |
|||||||||||||||||||
Reconciliations of Adjusted EBITDA to the most directly comparable financial measure calculated and presented in accordance with GAAP on the company's condensed consolidated statements of income, follow: |
|||||||||||||||||||
Thirteen weeks ended Sept. 28, 2014: |
|||||||||||||||||||
Broadcasting |
Publishing |
Digital |
Corporate |
Consolidated Total |
|||||||||||||||
Net income attributable to Gannett Co., Inc. (GAAP basis) |
$ |
118,516 |
|||||||||||||||||
Net income attributable to noncontrolling interests |
21,476 |
||||||||||||||||||
Provision for income taxes |
48,900 |
||||||||||||||||||
Interest expense |
65,931 |
||||||||||||||||||
Equity income in unconsolidated investees, net |
(1,756) |
||||||||||||||||||
Other non-operating items |
17,450 |
||||||||||||||||||
Operating income (GAAP basis) |
$ |
177,970 |
$ |
62,424 |
$ |
48,342 |
$ |
(18,219) |
$ |
270,517 |
|||||||||
Workforce restructuring |
120 |
2,884 |
— |
— |
3,004 |
||||||||||||||
Other transformation costs |
1,230 |
5,391 |
— |
— |
6,621 |
||||||||||||||
Adjusted operating income (non-GAAP basis) |
179,320 |
70,699 |
48,342 |
(18,219) |
280,142 |
||||||||||||||
Depreciation |
12,629 |
23,898 |
5,191 |
4,963 |
46,681 |
||||||||||||||
Amortization |
6,448 |
3,751 |
4,695 |
— |
14,894 |
||||||||||||||
Adjusted EBITDA (non-GAAP basis) |
$ |
198,397 |
$ |
98,348 |
$ |
58,228 |
$ |
(13,256) |
$ |
341,717 |
|||||||||
Thirteen weeks ended Sept. 29, 2013: |
|||||||||||||||||||
Broadcasting |
Publishing |
Digital |
Corporate |
Consolidated Total |
|||||||||||||||
Net income attributable to Gannett Co., Inc. (GAAP basis) |
$ |
79,748 |
|||||||||||||||||
Net income attributable to noncontrolling interests |
17,753 |
||||||||||||||||||
Provision for income taxes |
26,700 |
||||||||||||||||||
Interest expense |
41,628 |
||||||||||||||||||
Equity income in unconsolidated investees, net |
(11,711) |
||||||||||||||||||
Other non-operating items |
17,580 |
||||||||||||||||||
Operating income (GAAP basis) |
$ |
83,810 |
$ |
62,744 |
$ |
42,050 |
$ |
(16,906) |
$ |
171,698 |
|||||||||
Workforce restructuring |
639 |
8,607 |
— |
— |
9,246 |
||||||||||||||
Other transformation costs |
139 |
5,741 |
— |
— |
5,880 |
||||||||||||||
Adjusted operating income (non-GAAP basis) |
84,588 |
77,092 |
42,050 |
(16,906) |
186,824 |
||||||||||||||
Depreciation |
6,747 |
22,300 |
4,553 |
4,595 |
38,195 |
||||||||||||||
Amortization |
173 |
4,142 |
3,756 |
— |
8,071 |
||||||||||||||
Adjusted EBITDA (non-GAAP basis) |
$ |
91,508 |
$ |
103,534 |
$ |
50,359 |
$ |
(12,311) |
$ |
233,090 |
NON-GAAP FINANCIAL INFORMATION Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars |
|||||||||||||||||||
Table No. 5 (continued) |
|||||||||||||||||||
Thirty-nine weeks ended Sept. 28, 2014: |
|||||||||||||||||||
Broadcasting |
Publishing |
Digital |
Corporate |
Consolidated Total |
|||||||||||||||
Net income attributable to Gannett Co., Inc. (GAAP basis) |
$ |
386,142 |
|||||||||||||||||
Net income attributable to noncontrolling interests |
49,351 |
||||||||||||||||||
Provision for income taxes |
207,400 |
||||||||||||||||||
Interest expense |
199,727 |
||||||||||||||||||
Equity income in unconsolidated investees, net |
(166,787) |
||||||||||||||||||
Other non-operating items |
41,180 |
||||||||||||||||||
Operating income (GAAP basis) |
$ |
503,841 |
$ |
158,651 |
$ |
107,861 |
$ |
(53,340) |
$ |
717,013 |
|||||||||
Workforce restructuring |
2,340 |
27,046 |
— |
— |
29,386 |
||||||||||||||
Other transformation costs |
14,095 |
24,414 |
— |
— |
38,509 |
||||||||||||||
Asset impairment charges |
— |
16,187 |
— |
— |
16,187 |
||||||||||||||
Adjusted operating income (non-GAAP basis) |
520,276 |
226,298 |
107,861 |
(53,340) |
801,095 |
||||||||||||||
Depreciation |
35,953 |
70,634 |
14,742 |
14,966 |
136,295 |
||||||||||||||
Adjusted amortization (non-GAAP basis) |
18,074 |
11,519 |
13,035 |
— |
42,628 |
||||||||||||||
Adjusted EBITDA (non-GAAP basis) |
$ |
574,303 |
$ |
308,451 |
$ |
135,638 |
$ |
(38,374) |
$ |
980,018 |
|||||||||
Thirty-nine weeks ended Sept. 29, 2013: |
|||||||||||||||||||
Broadcasting |
Publishing |
Digital |
Corporate |
Consolidated Total |
|||||||||||||||
Net income attributable to Gannett Co., Inc. (GAAP basis) |
$ |
297,933 |
|||||||||||||||||
Net income attributable to noncontrolling interests |
42,772 |
||||||||||||||||||
Provision for income taxes |
71,700 |
||||||||||||||||||
Interest expense |
113,207 |
||||||||||||||||||
Equity income in unconsolidated investees, net |
(28,929) |
||||||||||||||||||
Other non-operating items |
28,954 |
||||||||||||||||||
Operating income (GAAP basis) |
$ |
265,578 |
$ |
208,073 |
$ |
100,931 |
$ |
(48,945) |
$ |
525,637 |
|||||||||
Workforce restructuring |
639 |
35,700 |
— |
— |
36,339 |
||||||||||||||
Other transformation costs |
139 |
15,024 |
— |
— |
15,163 |
||||||||||||||
Adjusted operating income (non-GAAP basis) |
266,356 |
258,797 |
100,931 |
(48,945) |
577,139 |
||||||||||||||
Depreciation |
20,294 |
68,301 |
13,276 |
13,717 |
115,588 |
||||||||||||||
Amortization |
535 |
12,509 |
13,523 |
— |
26,567 |
||||||||||||||
Adjusted EBITDA (non-GAAP basis) |
$ |
287,185 |
$ |
339,607 |
$ |
127,730 |
$ |
(35,228) |
$ |
719,294 |
NON-GAAP FINANCIAL INFORMATION Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars |
||||||||
Table No. 6 |
||||||||
"Free cash flow" is a non-GAAP liquidity measure used in addition to and in conjunction with results presented in accordance with GAAP. Free cash flow should not be relied upon to the exclusion of GAAP financial measures. |
||||||||
Free cash flow is defined as "Net cash flow from operating activities" as reported on the statement of cash flows reduced by "Purchase of property, plant and equipment" as well as "Payments for investments" and increased by "Proceeds from investments." The company believes that free cash flow is a useful measure for management and investors to evaluate the level of cash generated by operations and the ability of its operations to fund investments in new and existing businesses, return cash to shareholders under the company's capital program, repay indebtedness, add to the company's cash balance, or to use in other discretionary activities. Management uses free cash flow to monitor cash available for repayment of indebtedness and in its discussions with the investment community. |
||||||||
Thirteen |
Thirty-nine |
|||||||
Net cash flow from operating activities |
$ |
217,662 |
$ |
572,601 |
||||
Purchase of property, plant and equipment |
(34,654) |
(91,559) |
||||||
Payments for investments |
— |
(5,318) |
||||||
Proceeds from investments |
2,936 |
166,251 |
||||||
Free cash flow |
$ |
185,944 |
$ |
641,975 |
TAX RATE CALCULATION Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars |
|||||||||||||||
Table No. 7 |
|||||||||||||||
The calculations of the company's effective tax rate on a GAAP and non-GAAP basis are below: |
|||||||||||||||
GAAP |
Non-GAAP |
||||||||||||||
Thirteen |
Thirteen |
Thirteen |
Thirteen |
||||||||||||
Income before taxes (per Table 4) |
$ |
188,892 |
$ |
124,201 |
$ |
218,995 |
$ |
160,352 |
|||||||
Noncontrolling interests (per Table 1) |
(21,476) |
(17,753) |
(21,476) |
(17,753) |
|||||||||||
Income before taxes attributable to Gannett Co., Inc. |
$ |
167,416 |
$ |
106,448 |
$ |
197,519 |
$ |
142,599 |
|||||||
Provision for income taxes (per Table 4) |
$ |
48,900 |
$ |
26,700 |
$ |
61,200 |
$ |
42,800 |
|||||||
Effective tax rate |
29.2% |
25.1% |
31.0% |
30.0% |
|||||||||||
GAAP |
Non-GAAP |
||||||||||||||
Thirty-nine |
Thirty-nine |
Thirty-nine |
Thirty-nine |
||||||||||||
Income before taxes (per Table 4) |
$ |
642,893 |
$ |
412,405 |
$ |
624,343 |
$ |
498,139 |
|||||||
Noncontrolling interests (per Table 1) |
(49,351) |
(42,772) |
(49,351) |
(42,772) |
|||||||||||
Income before taxes attributable to Gannett Co., Inc. |
$ |
593,542 |
$ |
369,633 |
$ |
574,992 |
$ |
455,367 |
|||||||
Provision for income taxes (per Table 4) |
$ |
207,400 |
$ |
71,700 |
$ |
175,600 |
$ |
134,400 |
|||||||
Effective tax rate |
34.9% |
19.4% |
30.5% |
29.5% |
NON-GAAP FINANCIAL INFORMATION Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars |
|||||||||||||||||||
Table No. 8 |
|||||||||||||||||||
A reconciliation of the company's Broadcasting Segment revenues and expenses on an as reported basis to a pro forma basis is below: |
|||||||||||||||||||
Thirteen weeks ended Sept. 28, 2014: |
|||||||||||||||||||
Gannett (as reported) |
Special items (a) |
Pro forma adjustments (b) |
Gannett pro forma |
||||||||||||||||
Broadcasting revenue: |
|||||||||||||||||||
Local/national |
$ |
250,647 |
$ |
— |
$ |
713 |
$ |
251,360 |
|||||||||||
Political |
39,995 |
— |
1 |
39,996 |
|||||||||||||||
Retransmission |
91,903 |
— |
193 |
92,096 |
|||||||||||||||
Other |
33,964 |
— |
81 |
34,045 |
|||||||||||||||
Total broadcasting revenue |
416,509 |
— |
988 |
417,497 |
|||||||||||||||
Broadcasting expenses |
238,539 |
(1,350) |
803 |
237,992 |
|||||||||||||||
Broadcasting operating income |
$ |
177,970 |
$ |
1,350 |
$ |
185 |
$ |
179,505 |
|||||||||||
(a) See reconciliation of special items in Table 5. |
|||||||||||||||||||
(b) Gannett acquired six television stations from London Broadcasting on July 8, 2014. Results from these television stations from that date and forward are included in the as reported numbers above. The Gannett pro forma numbers above present results as if the acquisition had taken place on the first day of Gannett's third quarter. |
|||||||||||||||||||
NON-GAAP FINANCIAL INFORMATION Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars |
|||||||||||||||||||
Table No. 8 (continued) |
|||||||||||||||||||
A reconciliation of the company's revenues and expenses on an as reported basis to a pro forma basis is below: |
|||||||||||||||||||
Thirteen weeks ended Sept. 29, 2013: |
|||||||||||||||||||
Gannett (as reported) |
Belo (as reported) |
Special items (a) |
Pro forma adjustments (b) |
Gannett pro forma |
|||||||||||||||
Broadcasting revenue: |
|||||||||||||||||||
Local/national |
$ |
143,317 |
$ |
125,518 |
$ |
— |
$ |
(9,563) |
$ |
259,272 |
|||||||||
Political |
3,606 |
2,636 |
— |
(394) |
5,848 |
||||||||||||||
Retransmission |
36,240 |
21,996 |
— |
(1,004) |
57,232 |
||||||||||||||
Other |
20,201 |
16,042 |
— |
(6,637) |
29,606 |
||||||||||||||
Total broadcasting revenue |
203,364 |
166,192 |
— |
(17,598) |
351,958 |
||||||||||||||
Broadcasting expenses |
119,554 |
123,828 |
(778) |
(12,793) |
229,811 |
||||||||||||||
Broadcasting operating income |
$ |
83,810 |
$ |
42,364 |
$ |
778 |
$ |
(4,805) |
$ |
122,147 |
|||||||||
(a) See reconciliation of special items in Table 5. |
|||||||||||||||||||
(b) The pro forma adjustments include reductions to revenues and expenses for the former Belo stations in Phoenix, AZ and St. Louis, MO totaling $25 million and $20 million, respectively. Subsidiaries of Gannett and Sander Media, a holding company that has a station-operation agreement with Gannett, agreed to sell these stations upon receiving government approval. KMOV-TV, the television station in St. Louis, was sold in February 2014 and the two television stations in Phoenix were sold in June 2014. Revenue and expense adjustments totaling $12 million and $10 million, respectively, were added as if the third quarter 2014 acquisition of six London Broadcasting Television stations had occurred on the first day of 2013. Pro forma adjustments also include reductions to revenues and expenses for Captivate that totaled $5 million and $6 million, respectively, as Gannett sold its controlling interest in Captivate in the third quarter of 2013. The pro forma adjustment for broadcasting expense reflects the addition of $6 million of amortization for definite-lived intangible assets as if the acquisition of Belo had occurred on the first day of 2013. In addition, the pro forma adjustment for broadcasting expense removes $3 million of merger costs incurred by Belo. |
|||||||||||||||||||
Thirteen weeks ended Sept. 29, 2013: |
|||||||||||||||||||
Gannett (as reported) |
Special items (a) |
Pro forma adjustments (b) |
Gannett pro forma |
||||||||||||||||
Publishing revenue: |
|||||||||||||||||||
Advertising |
$ |
520,189 |
$ |
— |
$ |
(3,721) |
$ |
516,468 |
|||||||||||
Circulation |
274,999 |
— |
— |
274,999 |
|||||||||||||||
Other |
62,891 |
— |
(6,412) |
56,479 |
|||||||||||||||
Total publishing revenue |
858,079 |
— |
(10,133) |
847,946 |
|||||||||||||||
Publishing expenses |
795,335 |
(14,348) |
(8,499) |
772,488 |
|||||||||||||||
Publishing operating income |
$ |
62,744 |
$ |
14,348 |
$ |
(1,634) |
$ |
75,458 |
|||||||||||
(a) See reconciliation of special items in Table 5. |
|||||||||||||||||||
(b) The pro forma adjustments include a reduction of $4 million in revenue and $1 million in expense for Apartments.com, which was sold by Classified Ventures in the second quarter of 2014. Pro forma adjustments also include a reduction of $6 million of revenue and $7 million of expense related to the sale of a printing press in the second quarter of 2014. |
|||||||||||||||||||
Thirteen weeks ended Sept. 29, 2013: |
|||||||||||||||||||
Gannett (as reported) |
Belo (as reported) |
Special items (a) |
Pro forma adjustments (b) |
Gannett pro forma |
|||||||||||||||
Company-wide operating revenue |
$ |
1,252,890 |
$ |
166,192 |
$ |
— |
$ |
(27,731) |
$ |
1,391,351 |
|||||||||
Company-wide operating expenses |
1,081,192 |
123,828 |
(15,126) |
(21,292) |
1,168,602 |
||||||||||||||
Company-wide operating income |
$ |
171,698 |
$ |
42,364 |
$ |
15,126 |
$ |
(6,439) |
$ |
222,749 |
|||||||||
(a) See reconciliation of special items in Table 5. |
|||||||||||||||||||
(b) The pro forma adjustments include the Broadcasting and Publishing pro forma adjustments discussed above. |
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SOURCE
For investor inquiries, contact: Jeffrey Heinz, Vice President, Investor Relations, 703-854-6917, jheinz@gannett.com; For media inquiries, contact: Jeremy Gaines, Vice President, Corporate Communications, 703-854-6049, jmgaines@gannett.com