Gannett : 2020 - Annual Report PDF

Annual Report

2020

About Gannett

Gannett is a subscription-led and digitally focused media and marketing solutions company committed to empowering communities to thrive. We aim to be the premiere source for clarity, connections, and solutions within our communities.

The broad reach of our newsroom network links leading national journalism at USA TODAY, our local property network in 46 states in the U.S., and Newsquest in the U.K. with more than 120 local media brands. This gives us the ability to deepen our relationships with consumers at both the national and local levels. We bring consumers local news and information that impacts their day-to-day lives while keeping them informed of the national events that impact their country. Our USA TODAY NETWORK newsrooms have won 96 Pulitzer Prizes.

Gannett also owns the digital marketing services companies ReachLocal, UpCurve and WordStream, which are marketed under the LOCALiQ brand. We have strong relationships with thousands of local and national businesses in both our U.S. and U.K. markets due to our large local and national sales forces and a robust advertising and digital marketing solutions product suite.

USA TODAY NETWORK Ventures, our events and promotions business, is the largest media-owned events business in the U.S.

The foundation of our business is the employees who make our day-to-day operations possible. We invest in our employees by providing resources and programs to empower personal and professional advancement. Inclusion, Diversity and Equity are core pillars of our organization and influence all that we do.

Letter to Shareholders

Dear Shareholders:

As I wrote my letter to you last year, the COVID-19 pandemic had just turned our lives upside down and brought on a deep economic slowdown felt globally. We were faced with an enormous amount of uncertainty, which prompted us to move quickly to ensure the safety of our employees, to continue to deliver our trusted, comprehensive content to our communities, and to strengthen our balance sheet and liquidity position. I am incredibly proud of what our Company was able to accomplish, despite this disruption, and am excited about where we are headed.

2020 Operational Highlights

Our top operational priority in 2020 was to reduce our debt with an eye toward refinancing the entirety of the 11.5% term loan by the end of 2021. In addition to generating free cash flow for debt paydown, we had committed to completing $100 million - $125 million in asset sales over that same time frame. During 2020, we outperformed that goal, completing over $195 million in asset sales, the proceeds of which were used to repay over $180 million of debt during the year. We also refinanced approximately $500 million of term loans using proceeds from our issuance of 6% Senior Secured Convertible Notes due in 2027. This reduced the outstanding 11.5% term loan to $1.075 billion at the close of 2020, which quickly put us on a path to refinancing that remaining amount in early 2021.

Another key priority was to integrate our legacy companies to achieve an expected $300 million in annualized synergies by the end of 2021. Despite the pandemic, our integration plans moved ahead of schedule with $177 million in savings benefitting 2020 and ending the year on an annualized run rate of $245 million. We expect to outperform our anticipated $300 million annualized synergies target both in size and timeline.

In response to the pandemic, the Company further reduced its expense base to create incremental savings of $125 million in the second quarter, initially through temporary actions such as furloughs and wage reductions. As the pandemic continued into the second half of 2020, we shifted those actions to permanent savings, which will benefit 2021 and beyond.

While many of the pandemic's impacts were outside of our control, we executed strongly against our stated top priorities and ended 2020 with a stronger balance sheet than when we began. We also did

so while keeping our mission to empower our communities to thrive at the center of all that we do.

2020 Content & Community Highlights

2020 was a very challenging year for our communities; they navigated a global pandemic, a divisive U.S. Presidential election, over 30 natural disasters, and widespread civil unrest in protest of racial injustice in the U.S. The demand for trusted news and how these issues impacted their local communities was apparent in the sustained, strong engagement we saw with our content. We also reached a significant milestone in the third quarter of 2020, surpassing 1 million digital-only subscribers to our local media sites.

In response to the pandemic, we launched over

35 Coronavirus newsletters as well as the Nation's Health daily section in USA TODAY. All pandemic- focused content was made available digitally, free of charge, and garnered over 650 million views during the first half of the year. Our production and distribution teams managed through the year's challenges without any significant disruptions to service, ensuring that our communities received their content when they needed it most. And our marketing solutions and product teams quickly mobilized to launch the Support Local initiative, which created free business listings that shared how the community could continue to support local businesses and take advantage of their ongoing services.

Our award-winning content continued to be recognized, with the Louisville Courier Journal awarded the Pulitzer Prize for breaking news reporting on its coverage of Kentucky Governor Matt Bevin's pardons and commutations during his last days in office. It also led coverage of the Breonna Taylor tragedy, leading to a partnership with ABC's "20/20" that aired in November 2020. In the U.K., The Impartial Reporter received recognition at

the Amnesty International UK Media Awards for its outstanding investigation into historical sexual

Letter to Shareholders

abuse. We are incredibly proud of our journalism and appreciative for the many recognitions beyond these that were received during 2020.

2021 and Beyond

In the fourth quarter of 2020, we were able to grow Adjusted EBITDA as compared to the prior year and have seen marked improvement to our revenue trends from the initial impact of the pandemic in the second quarter. This strong financial outcome as well as our aggressive debt paydown and partial term loan refinancing during 2020 enabled us to take advantage of strong credit markets in early 2021. In February 2021, we closed on a broadly syndicated $1.045 billion term loan facility at a rate of LIBOR+700 with a 0.75% LIBOR floor. The combination of debt repayment, refinancing using the convertible notes, and refinancing of the remaining term loan is expected to save the Company $90 million in annual cash interest during 2021 as compared to 2020. The Company remains committed to debt reduction, targeting first lien net leverage of 1.0x by the end of 2022.

We have also outlined five key operating priorities for 2021 and beyond: accelerating digital subscriber growth, driving digital marketing services growth, optimizing our traditional print operations and advertising businesses, prioritizing investments into growth businesses that support our vision, and building our inclusive and diverse culture. In 2021, you will hear us speak to these priorities regularly and share data points with you to track our progress. We expect this strategy to create significant stockholder value in the coming years by driving increased revenue from digital products, bringing our Company's total revenue trend

back toward growth, and allowing us to continue significant debt reduction.

Sincerely,

Michael E. Reed

Chairman and Chief Executive Officer

Cautionary Note Regarding Forward-Looking Statements

Certain items herein may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding measures expected to result in over $90 million in annualized cash interest savings, our ability to achieve our operating priorities and increase stockholder value, our digital revenue performance, shifts in our revenue mix and the timing of realizing such shifts, the potential sales of non-core assets, including the anticipated use of any proceeds from such sales, integration of our acquisitions, our ability to achieve or exceed $300 million of synergies through measures expected to be implemented by the end of 2021 or sooner, our expectations, in terms of both amount and timing, with respect to debt repayment, real estate sales and debt refinancing, growth of our digital- only subscriptions, digital marketing services, and events and promotions businesses, the impact from and our response to the COVID-19 pandemic, our strategy, and future revenue trends and our ability to influence trends. These statements are based on management's current expectations and beliefs and are subject to a number of evolving risks and uncertainties. These and other risks and uncertainties could cause actual results to differ materially from those described in the forward-looking statements, many of which are beyond our control. The Company can give no assurance that its expectations will be attained. Accordingly, you should not place undue reliance on any forward-looking statements contained herein. For a discussion of some of the risks and important factors that could cause actual results to differ from such forward- looking statements, see also the risk factors described in the Company's most recent Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, and other filings filed with the Securities and Exchange Commission. Furthermore, new risks and uncertainties emerge from time to time, and it is not possible for the Company to predict or assess the impact of every factor that may cause its actual results

to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this press release. Except to the extent required by law, the Company expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.

April 1, 2021

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

(Mark One)

• ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020

• TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the transition period fromto

Commission file number 001-36097

GANNETT CO., INC.

(Exact name of registrant as specified in its charter)

Delaware		38-3910250
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
7950 Jones Branch Drive,	McLean, Virginia	22107-0910
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: [phone]

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share	GCI	The New York Stock Exchange
Preferred Stock Purchase Rights	N/A	The New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None	☒		☐
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes	No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes	☐	No	☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)

has been subject to such filing requirements for the past 90 days.Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to

Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was

required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☐	Accelerated filer	☒	Non-accelerated filer	☐	Smaller reporting company	☐
					Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for	☐
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ☐ No ☒

The aggregate market value of the voting common equity held by non-affiliates of the registrant based on the closing sales price of the registrant's Common Stock as reported on The New York Stock Exchange on June 30, 2020 was approximately $187,837,799. The registrant has no non-voting common equity.

As of February 19, 2021, 139,033,905 shares of the registrant's Common Stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The definitive proxy statement relating to the registrant's Annual Meeting of Stockholders for 2021 is incorporated by reference in Part III to the extent described therein.