Q4 2022 Gannett Co Inc Earnings Call
And welcome to thank goodness first water earnings call at this time, all participants are in a listen only mode.
A British question and answer session will follow the final presentation.
Anyone should require operator assistance during the conference police spreads are zero on your telephone keypad.
A reminder, this conference.
Record. It eight is now my pleasure to introduce your host Matthew <unk>. Thank him Mister <unk> you have may begin.
Thank you good.
Good morning, everyone and thank you for joining our call today to discuss can that fourth quarter 20 twenty-two results.
Does that thing on today's call will be Mike Reed.
Chairman and Chief Executive Officer, and dug court Chief Financial Officer.
During this call, we all discussed and that's financial results for the quarter.
If you navigate to the Guy that website, you will find that we have posted and earning supplement in addition, or earlier press release.
We will be referencing it today on the call as it provides you with additional detail on this quarter's performance.
Before we begin please let me remind you that this call is being recorded.
In addition, certain statements made during this call are or may be deemed to be forward looking statements <unk>.
Including those with respect to future results and events and are based upon current expectations.
Statements involve risks and uncertainties that may cause actual results and events to differ materially from those discussed today.
We encourage you to read the cautionary statement regarding forward looking statements and the earning supplement as well as the risk factors described and can that filings made with the S. E C.
Except as required by law, we undertake no obligation of publicly updates or correct any of the forward looking statements made during this call.
In addition, we will be discussing non-GAAP financial information during the call.
Including Same-store revenues free.
Free cash flow adjust.
Justin EBITDA adjusted EBITDA margin and adjusted net income attributable to the net.
You can find reconciliation of our non-GAAP measures to the most comparable us GAAP measures in the earning supplement.
Lastly, I would like to remind you that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase any interest in getting at.
The webcast and Audiocast are copyrighted material <unk> and may not be duplicated.
Reproduced or rebroadcasted without prior written consent.
With that I would like to turn the call over to Mike Reed isn't as chairman and C E O.
Thanks, Matt Good morning, everyone. Thanks for taking the time this morning to join us on our on our call.
We are entering 2023 with a lot of optimism.
You'll hear that throughout the call today.
The trusted EBITDA of the fourth quarter increased substantially over the third quarter and we believe sets us up for adjusted EBITDA growth.
2023 of approximately 10% to 15% year over year.
We'll walk through the details later, but we expect significant free cash flow growth in 2023 as well.
We're seeing improving revenue trends early in two one.
Then we've announced a few exciting new partnerships that drive the immediate revenue opportunities that are also very high margin deals.
<unk> pay down significant debt in 2022.
We expect to repay at least another hundred and $20 million of debt in 2023.
Expect at the end of 2023 are firstly that that will be less than two times EBITDA.
And our digital businesses are showing consistent growth.
Of course, we're happy to turn the page on 2022, it was a tough year, but we are excited about the momentum that we are carrying into 2023.
2022 was a year of unanticipated <unk>, the volatility and of course high inflation.
Despite these challenges we made great strides with the business.
We focused on what we could control, providing unique and relevant content to our readers.
Helping local businesses find convert and keep customers as well as taking the message necessary actions to significantly lower our cost structure.
As a result fourth quarter adjusted EBITDA grew nearly 40 million over the third quarter.
Digital only subscription revenue grew nearly 30% year over year.
And we saw new highs across several key metrics than our digital marketing solutions business.
We are focused on the investments needed to support the growth areas of our business and still believe we will reach the revenue inflection point in 2024 and create longterm sustainable growth from there.
We also continued to repay debt as I mentioned, we repaid $147 million of debt in 2022, and we've already paid another 22 million of that so far in 2023.
Since the acquisition of Janette back in November of 2019, we have repaid over one third of that depth, while also significantly lowering our cost of capital.
For the full year, we generated 2.9 billion in total operating revenues.
And approximately 35% of that revenue came from digital sources and that grew 1.8% year over year same store basis, we're very proud to have grown digital revenues. Despite the continued slowdown in the digital advertising market place and while many of <unk> and many of our pure play digital peers.
They've actually witnessed revenue declines.
This really speaks to the importance of revenue diversification and the digital ecosystem, particularly in recurring revenue streams, such as are digital only subscription revenue in our digital marketing solutions business.
Turning to 2023, we believe we are well positioned to grow adjusted EBITDA and free cash flow as well as improve our revenue trends.
We created a lower and more variable cost base in the second half of 2022, which we expect will translate into annual savings of at least $220 million in 2023.
Our cash obligations tied to items, such as pension and reorganization costs are expected to decrease by over 60 billion euro over a year and should provide a substantial uplift to our free cash flow.
Our digital businesses are expected to continue to perform well and represent valuable recurring revenue streams.
In addition, we are creating incremental revenue streams through partnerships with top tier organizations, we are optimizing our local content and we believe we are bet our position to better monetize our sports verticals.
All of these things are building blocks for growth for the growth we expect in 2000 2003.
As you May remember the macro pressures that we experience for much of 2022 did not begin until the second quarter, which will meet in the first quarter of twenty-three will have tougher revenue comparisons to the prior year. However, starting in the second quarter of this year, we expect to benefit for more favorable year over year comparisons with.
Which combined with the anticipated growth of our digital businesses and the flow through of our cost management program is expected to result in full year 2023, adjusted EBITDA growth, but I've mentioned of about 10% to 15% and free cash flow growth approaching nearly $100 million.
Double go into more detail later on the call on a full year 2000 twenty-three guidance and how we believe the foundation. We built in 22 is expected to set us up for success this year.
We are excited to build on the momentum of our execution fourth quarter performance and improved capital structure, we have a clear vision and strategy and I'd like to spend a few minutes outlining it for Ya.
We made.
We've made tremendous progress on our strategic priorities last year.
Digital only subscriptions grew to $2.03 million during the fourth quarter and since the second quarter of 2022 paid.
Paid digital only subscriptions have outnumbered are full access print subscriptions and then the back half of 2022, we have grown out overall total number of subscriptions on a combined basis.
The growth of our overall paid consumer base across print and digital marks a meaningful inflection point in our consumer business and.
We believe this will be a key component and driving total revenue growth by the end of 2024.
In queue for traditionally our lowest quarter for net new digital only paid subscribers. We added 47000, new subscribers Andrew.
And we added approximately 400000 net new digital subscribers for the full year of 2022.
During the fourth quarter, we continued to grow our total registered users and new newsletter subscribers as well.
We ended the quarter with 5.9 million registered users and $8 5 million newsletter subscribers, which represents meaningful growth of 60% and 25% respectively year over year <unk>.
Both continue to be an important customer acquisition and subscriber engagement channels for us with low cost of acquisition.
While growing digital only subscriptions remains one of our top priorities, we have adopted a more balanced approach between increasing profitability and growing subscribers.
We will continue to pursue subscriptions growth, but we will be more targeted and our acquisition strategy. During 2022, we experimented with several offer strategies and rate structures.
As a result, we are learning, which offers performed well with both the near term and which are expected to perform well in the long term based.
Based on all of the learnings of the various tests, we intend to focus our subscription acquisition efforts on acquiring highly engaged longterm and more profitable subscribers.
During the first half of 2023, we will be focusing our efforts on consumer acquisition and retention improvement.
Will be modulating back are paid acquisition strategy. During this time as well and expect to lower our marketing spend while also while our product enhancements begin to take effect.
Having said that we still expect to see significant growth in digital only subscriptions and revenue during the 2023.
We have learned an incredible amount from our first year of USA today as a subscription product.
At the start of it's launched we prioritize subscriber volume growth over advertising monetization.
Given our learnings we have refined our strategy to be more balanced balanced, which we believe will lead to improved overall USA today monetization and profitability versus purely subscriber growth.
The new balanced approach will bring a larger audience into our ecosystem and we will be able to monetize these visitors.
Not only through digital advertising, but also through strategic partnerships.
As a result, we expect lower subscription acquisition at USA today, but an overall increase in revenue and profitability.
Local markets are expected to continue to drive most of our subscription growth and already account for over 90% of our current subscribers.
And we believe we still have significant opportunity in these local communities since the local subscribers. We have today only represent approximately 3% of our digital local audience as of the end of 2022.
Turning back to the USA today for a minute we plan to balance monetization across the platform.
With USA today's clear concise incredible approach to journalism, we believe USA today has the potential to be the top digital news and content destination in the United States.
It's large organic audience delivering over half of the 133 million unique visitors to our digital platform average each month in the U S.
We will use USA today more extensively to guide people into our ecosystem help create bundles Sir.
Service private extensions for games, and sports and create a subscription based value proposition for our local offerings.
In addition to the success of our digital subscription efforts are digital marketing solutions business again drove impressive results in Q4.
We achieved core platform revenues of $119.7 million in the fourth quarter of 2022.
Increasing eight 7% year over year.
And we continued to maintain double digit adjusted EBITDA margins.
Customer count are Pooh and budget retention all grew year over year.
The majority of our revenue in the gym S segment continues to be recurring and structured on evergreen contracts.
With monthly customer budget retention rates of 95%.
We continue to expand our <unk> product offerings through our premium channel to help smbs have greater control over how they interact with their customers and.
Including a recently launched scheduling tools, which makes booking appointments simple and enables businesses to accept online appointments 24 seven.
Since we launched our premium channel in 2021, we have seen significant growth in the number of registered users. Thanks to these and other initiatives.
As many of you are aware, we launched the channel and 21 and as we ended 2021, we had less than 1000 registered users.
We're ending 2022 with 55000 registered users and that number more than tripled from two three Q for so you can see the growth trajectory and that in our premium channel.
Our premium customer business is important lever for future growth. There's these are businesses that have registered with us and are engaged with our platform in our products.
And our growth channel outside our traditional lead Jen channels.
Moving forward, we expect a premium capabilities throughout 2023 in connection with do it yourself and buy online products that will deliver a quality marketing solution for lower tier marketing budgets.
And a lower cost of sale and service, we do expect to continue to expand these capabilities in 2003.
R 2022 financial results reflect an important year for our Dmf's business as it represented the most profitable year to date in the segments history.
So despite advertising budgets being tightened across the country. We believe these results demonstrate that are efficient data driven solutions with in depth analytics and attributions yielded tangible results for our customers. We are proud of the progress we've made in 2022 and believe our dedication to helping local businesses and.
Lock their potential makes our local like two digital marketing platform and indispensable partner to thousands of Smbs.
I'm incredibly grateful to Chris Barton, the president of local I Q for his leadership driving this platform and developing an extremely talented team of leaders.
While Chris will be leaving next month to pursue his passion of becoming a CEO .
We expect his positive impact will continue to fuel the team and business under Christians guidance, we have achieved significant milestones.
And he has helped further position localized to as a competitive leader in the industry.
We have begun an executive search for Christmas replacement.
But his leadership team, including our Chief revenue Officer, and Chief customer officer have well over 30 years of combined experience in the marketing solutions business.
We remained well positioned with a talented and experienced leadership team in place and we remain confident in our ability to execute on a strategic plans in 2023 and beyond.
We've been on an incredible journey to evolve local I choose brand identity and positioning to showcase the commitment to helping customers transform their businesses through the power of digital marketing.
Last year, we shared the beginning of the brand evolution with our first brand advertising campaign, highlighting businesses, who benefited from the look like <unk> platform.
And earlier this month, we launched a new website, which unifies the local I Q brand promise and highlights the digital solutions to help businesses sees their full potential using local like use advanced digital platform.
On our new local <unk> web site, you can find rebuilt product pages that more clearly explain the features and benefits of each of our solutions and how they work to help businesses reach their specific marketing goals along with more information about how the local IQ platform uses proprietary marketing.
Technology data and expertise to help its customers.
We have also been laser focused on increasing the overall monetization of our content platform and a key piece of this strategy is growth through new partnerships that bring in both new audience and revenue streams.
The strength of the USA today brand and audience crenate creates a unique opportunity to work with top tier organizations across subscriptions the affiliate and content partnerships.
We're very excited about the two new partnerships. We have recently launched in 2023 with gambling dotcom and Forbes marketplace platforms.
Both of these will allow us to provide additional sports and consumer financial services content to our readers, while also allowing us to immediately monetize are large organic audience of 133 million uniques.
These affiliate partners affiliate partnerships such as these provide great content to our audience and are expected to be immediately accretive to our total revenue in free cash flow.
We intend to roll out additional partnerships in the future, where we can leverage our platform to create additional growth and audience and revenue and you'll hear more on these in the quarters to come.
Finally, as we enter 2023, we are renewing our commitment to our local operations in our local communities.
Serves over 200 local communities and our commitment is to build community connections by helping advertisers and readers stay informed connected and engaged we believe by leaning further into our local connections we will not only better serve audiences, but we will also drive better operating performance.
We are confident in our belief that we have entered 2023 with great plans in place.
We believe are digital only subscription revenue in digital marketing solution revenue are poised for significant growth.
Our focus on creating a lower and more variable cost base going forward combined with sustainable growth in our core digital revenue streams.
Positions us well for our anticipated adjusted EBITDA growth and free cash flow growth.
With anticipated improving improving free cash flow and a strong balance sheet. We believe we are well positioned to navigate in the near term headwinds that may persist and continue our evolution to a customer first subscription led business powered by data and content.
I'm now going to turn the call over to Doug provides additional detail and color around 2022 fourth quarter and our full year 2023 guidance stub.
Thank you, Mike and good morning, everybody as.
As Mike mentioned, a moment ago in queue for we drove significant sequential improvement to our adjusted EBITDA from Q3.
As a result of our robust cost management program, we improved our adjusted EBITDA margin in the fourth quarter by over 500 basis points sequentially and importantly, we expect to see continued improvement during 2023.
For Q4 total operating revenues were $737 million, a decrease of 11.6% as compared to the prior year quarter and a decline of 10.3% on the same store basis.
This is down slightly from the 9% year over year same store revenue decline in the third quarter as a result of the pressures on our print and digital advertising revenues.
Also given the strength of the U S dollar relative to the UK pound currency translation negatively impacted are reported revenue by $9.4 million or about 114 basis points as compared to the prior year period.
Adjusted EBITDA totaled $94 million in the fourth quarter, a decrease of 21.7% year over year ajar.
Adjusted EBITDA margin was 12.4% compared to 14% in the prior year quarter.
In the fourth quarter, we continued to be impacted by inflationary pressures, which we estimate negatively impacted Q4 by approximately $25 million as compared to the prior year period.
However, however, we have seen the largest cost pressures, namely newsprint and distribution costs peak and stabilize and we believe that the worst is behind us in terms of inflation.
We expect labour in newsprint costs in 2023 to remain relatively stable to the pricing at year end 2022.
Factoring in the queue for impact, we estimate that inflationary pressures on distribution newsprint fuel and utilities negatively impacted our full year 2022 results by approximately $100 million.
As we have seen caught stabilized we expect that we will largely cycle the year over year year over year impacts of these increases early in 2023.
On a sequential basis, adjusted EBITDA increased $38.4 million, representing substantial growth over Q3, well beyond the traditional seasonality.
The strong improvement and adjusted EBITDA and adjusted EBITDA margin from Q3 to queue for reflects both the seasonally stronger revenue and the momentum of our cost management initiatives.
We took significant actions in Q3 and Q4 to operate more efficiently.
Through these steps, which had an impact on both our head count and our Nonpayroll expenses, we were able to create a more flexible cost structure and effectively adjust our expenses in response to the revenue trends.
As a result of our cost management initiatives, we recognize $16 million in benefits in the third quarter $49 million in the fourth quarter and anticipate at least $220 million in savings during 2023.
The focus of our cost management program was to drive a more variable efficient cost structure to support our revenue base.
We are relying more substantially on third party variable services for our technology teams third parties for accounting and other finance functions self service across the <unk> organization and AI to create efficiencies.
Or quality journalism and unique content is the foundation of what we do however, we have made recent investments in AI and machine learning tools that allow us to simplify routine tasks such as selecting a cropping images quickly wreck.
Recommendation engines to personalized content or gathering simple datasets to inform readers on things such as where to watch various sporting events.
These AI enabled efficiencies allows our journalists to focus on what differentiates us quality content that drives deeper engagement.
On the bottom line, we ended the fourth quarter with a net income attributable to get net a $32.8 million and $53 $2 million and adjusted net income attributable to get at.
Our net income represents a $55 2 million dollar year over year increase driven by lower depreciation and amortization costs and the absence of the impact in the prior year from the early extinguishment of debt.
Total digital revenues in queue for where $269.2 million down 4% year over year on a same store basis, but up sequentially by 190 basis points from Q3.
In the fourth quarter or total digital revenues accounted for approximately 37% of total revenues.
Or decline in total digital revenues was influenced by digital advertising, which fell 25% on our same store basis year over year.
The decrease in digital advertising revenue it reflects a softer market, where we continue to see lower monetization rates as compared to the prior year.
The performance and are digital only circulation and digital marketing solutions businesses is expected to continue to provide the foundation for future growth.
Are digital only circulation revenue of $35.5 million grew 29.5% compared to the prior year on our same store basis, while arpey grew approximately 2% you're a year.
As we head into 2023, we expect our growth to continue as we optimize the subscriber funnel improve our customer interactions and leverage our data and insights to improve retention and minimized churn.
We expect to drive further revenue growth as a result of these improvements and lessen our reliance on introductory offers as well as acquire and retain more engaged consumers.
While revenue performance on a year over year basis was fairly stable from Q3 into Q4, we did see some deterioration in print advertising revenue late in the fourth quarter. This includes softness and classifieds, including obituaries and employment.
We have begun to implement self service order functionality across these verticals and are pleased that in the early stages self services increase both the number of orders and the average order size.
We are also highly focused on improving print circulation revenue and volume.
While our volume trends improved approximately 106 basis points quarter over quarter from a revenue trim perspective, we are beginning to cycle. Some of the more aggressive price price actions that we rolled out late 2021.
We continue to believe that we have some additional pricing power for new subscribers on our focus has destabilized, our print subscriber base and maximize the lifetime value of our customers.
For new subscribers, we've rolled out in all in one pricing model, which has been shown to improve subscriber retention.
We have continued to reduce the number of Unstaffed delivery routes, which peaked in the second quarter of 2022, and we will continue to take advantage of mail delivery in certain locations.
And our digital marketing solutions business total revenue in the fourth quarter reached a record high of $121.1 million, an increase of seven 8% year over year on our same store basis.
Adjusted EBITDA for the segment was $16.4 million, representing a strong double digit margin of 13.5% in the fourth quarter.
Average monthly customer count increased by approximately 1%, while <unk> reached a new high of over $2600 per month and that grew 7.7% versus the prior year period.
These positive trends reflect the impact national clients, and a focused product portfolio, which we believe drives more effective results for clients and higher <unk> and margins within the segment.
In terms of quarter over quarter results. There was a slight decline from 15800 customers in Q3 to 15300 customers in queue for due to the seasonality of small multilocation customers that are still inherent in our business. However, <unk> and revenue both grew in the fourth quarter over what is traditionally.
Stronger third quarter.
We believe our continued execution along with the development of additional products and features will increase our addressable market and reduce the effective seasonality on the Dmf's segment.
It's not shipped to the balance sheet.
At the end of the fourth quarter, we had a cash balance of $94 $3 million translating into net debt of approximately $1.18 billion.
In the fourth quarter free casual usage was one $6 million, which included our final FICA deferral payment of $20.8 million.
We had a slight use of cash flow for the full year of $4.5 million, which included $23 million of cash pension contributions that.
$28 million in deferred FICA payment.
And $64 $8 million in cash.
Related to integration reorganization of severance we.
<unk> all of these items to decrease materially in 2023 with no funding of our main pension plan anticipated and our final differed bike a payment behind us.
We ended the fourth quarter with approximately $1.3 billion a total debt.
Firstly net leverage was 2.6 to eight times and for the full year of 2022, we repaid $146 $6 million, a total debt and in 2023, we've already reduced our first lien debt by $22 $2 million.
We expect to repay a minimum of $120 million in 2023 through our scheduled quarterly amortization payments as well as further real estate and other asset sales.
In queue for we completed 13 real estate and other asset sales totaling $12 $2 million, bringing our total of 2022 real estate and other asset sales to $67.9 million.
For the full year of 2023, we project, 65% to $75 million in real estate and other asset sales, including those completed in January we.
We continue to maintain a sizeable real estate sales pipeline of approximately $50 million to $60 million, which combined with are expected free cash flow improvement should contribute to our aggressive debt paydowns strategy.
So looking ahead to 2000 2023, we begin to cycle the decline of digital media mid Q2 and benefit immediately from the ramp of the cost management program, we've put in place.
As a result, we expect adjusted EBITDA in the range of $280 million to $300 million for 2023, which translates to expected year over year growth of 10% to 15%.
Q1, adjusted EBITDA trends will be more in line with what we experienced in Q4 of 2022 as a result of a difficult year over year comparison as well as certain non-recurring items, we benefited from in the prior year, which contributed about $6 million in the previous year.
While Q1 adjusted EBITDA is expected to decline on a year over year basis, we anticipate year over year growth in each of the remaining quarters of 2023.
This growth will be most significant in Q2 and Q3 due to the cycling of the more significant revenue declines and ramping of cost initiatives in 2022.
2023, net income attributed open ticket net is expected to range from a net loss of $20 million to a net income of $10 million.
For the full year 2023, we expect total revenues between $2 $75 billion to $2.8 billion, representing a same store decline of 3% to 5% year over year for.
For the first half of the year revenue is expected to perform similar to the end of 2022, improving slightly as we cycled the digital advertising declines mid Q too.
And the second half of 2023.
Revenue is expected to return to low single digit declines on a same store basis.
With an increased focus on growing quality subscriptions, which is expected to result in higher profitability and retention in 2023 digital only circulation revenue is expected to grow rates slightly below 2022.
Digital only subscription volume growth will reflect the balance of volume versus profitability and as such is expected to be more moderated as compared to digital only revenue growth.
Net ads are expected to be lower than the first two quarters as we ramp product deficiencies and scaled back marketing spent but we expect acquisition volume to accelerate in the back half of the year.
With expected that paydown of $120 million in 2023 unexpected adjusted EBITDA of $280 million to $300 million, we anticipate firstly net leverage to fall below two times at the end of 2023.
Finally, as a result of the improving net income performance and.
Significantly lower cash obligations, we expect cash provided by operating activities to be in the range of $120 million to $140 million and substantial improvement in free cash flow free cash flow is expected to be in the range of $80 million to $100 million for the year, representing a conversion rate of approach.
25% to 35%.
We are pleased to have made considerable progress on our strategic pillars and to be entering 2023 with a strong balance sheet and liquidity position, we have shown that even in a challenging environment compounding growth in our digital revenue businesses in our abilities to strategically moderate our cost structure allows us the positive.
Impact adjusted EBITDA and free cash flow.
We are excited about our operational and financial plans for 2023, as well as the opportunity to create meaningful value for both our shareholders as well as the communities that we serve.
I will now hand, it back to the operator for questions and then we will go back to Mike for some closing thoughts operator.
Q.
Be connected.
[noise].
If you would like to ask a question. Please.
One on your telephone keypad.
Nation.
[noise]. Thank you.
Yeah.
Your question.
Pardon.
<unk>.
Uh-huh.
Sandwiches.
<unk>.
Please.
For questions.
Oh Wow.
Thomas.
Thanks.
Please go ahead.
Thanks.
I just had to get a new questions. One about sort of this year 23, and then one sort of about getting back to growth by 24. So.
For 23.
It feels like the by sites I've been thinking about a recession for a year now and.
There've been some some areas that we're weak sort of in 22, maybe some of your businesses may be mobile advertising also.
But but now the market's like less convinced we're going into recession, and so I would just love to know sort of what sort of macro you guys talked about things getting better.
But.
Is that assuming that the macro doesn't deteriorate materially is it just sort of steady Eddie and the improvement is just on the columns of just any sort of macro color for this year and then.
The longer term getting back to growth.
<unk>.
Should we think about the improvement being sort of balanced across print advertising circ and digitalize a D. M. S. In commercial print and other or is there one area in particular that you think will be most important.
Get you back to go smoke.
Yeah. Thanks, Jason So on your first question.
We are not seeing.
Trends in our business this year in the first quarter that would indicate that the country's moving into a recession are moving in that direction. In fact, our trends are improving here in the first two months relative to two four so.
We've looked out for the full year, our teams have done bottoms up across all of our revenue categories and based on what we see today based on how our our customers are interacting with us across all of our revenue channels. We just don't see it.
Worst case kind a hard landing.
And especially on the local side are local businesses continued to engage with us and we see some some slightly improving trends there in the first quarter. So our forecast is built on.
A soft economy, certainly not a hard landing we don't we don't see that in our numbers today, we don't anticipate that.
We'd have to pivot if that occurred with our with our cost structure, but but we feel really good about what we're seeing in the markets today, what our customers are telling us and so we.
C. A soft landing is the worst case scenario, but potentially no recession at all.
With regard to the to your to your second question.
The most important is our digital growth obviously.
<unk> said, 37% of total revenue in the fourth quarter is digital only.
That will continue to move towards 50% the growth in that across all of the spectrum, whether it's our new partnership opportunities are digital advertising business, obviously, the subscription business in our digital marketing solutions business.
All important that those continue to churn and grow as we expect them to but we are also.
Working on stabilizing to some degree.
Or not stabilizing, but but slowing the rate of decline of our print business and that's also unimportant component of reaching the inflection point in 2000 2004, we've undertaken a lot of actions over the last 12 months too on both of those fronts, but but certainly.
Lowering the declines on print is something we've been focused on and we're actually seeing those results in our in our first quarter numbers. So we're encouraged by that so.
Right now based on what we see Jason.
Soft landing to no recession this year and.
And a.
A combination of our strong digital growth combined with <unk>.
Proving trend performance in print is what leads us to to have confidence in the reflection point being reached back half of 2024.
Okay, and if you hit that infection.
So like mix like if you get to 50 per cent of your revenues are digital that's sort of a late.
Yeah, that's about the right of the crossover.
Okay. Thank you.
Okay.
Please.
That comes.
Okay.
Oh My gosh.
Yes. Please.
Thank you very much.
Just a few observations and I have two questions ever since I invested in the company, which is at least five years ago.
Felt the stock wished significantly undervalued.
When did nothing but go down but I have to say you backed up your view by consistently buying substantial miniature stock for your own account.
I think it's fair to say you couldn't understand the impact of Covid in the recession of the company.
Having said that I think it's a fair Christian to say, we had been too slowly reducing cost now.
Now from the ideas and questions K, one I think we should consider selling off a few of the trophy properties evaluation levels substantially above the public market valuation of equity to accelerate that debt repayment surface.
Surface, some hidden value like to get your thoughts on that.
[noise] excuse me, a particularly when do you think you'll be in a position to buy back cheap equity.
Cause I think we know that the original authorization before the economy deteriorated when you're stuck.
Seven and a half and it went down to below two now about two and a half to 60 would ever.
So is your thoughts in those two questions.
Yeah. So.
First first question leads selling off Trophy trophy properties.
Obviously the answer is yes, we would entertain.
Bids on.
Any of our markets any of our products that are at or above fair market value. So.
That's something we have done in the past will do in the future those things can be can be lumpy depends on.
Vanity type buyers and those particular markets, but I would say Lee the answer is yes, we will do that we're hopeful that we will have an opportunity or two this year to do that but but it's not anything that's in our plans is it's hard to count on it for with certainty, but so.
Yes. The answer is yes, we will do that if and when we get the opportunity to do so as far as buying back cheap equity.
We would love to be in a position to continue our stock buyback program. We feel right now leave that the best continued use of capital beyond investing in the growth business growth parts of our business is to reduce debt.
As Doug mentioned are firstly that that is still to succeed so closer to three I'd love to see that.
Under two closer to one and a half as we go into next year, and then I think when when the.
Nobody nobody is worried about that which we're not worried about that at all some other people are but but as we get into a much better position from a leveraged standpoint, then I think the capital allocation opportunities widen for us.
As we as we materially lower that firstly that leverage.
Thank you very much and congratulations on that.
Hopefully turning the corner.
Thankfully.
[noise] I would like to trying to Florida.
Migraines.
Please go ahead.
Okay. Thank you as you as you could hear from the call. We're entering 2023 with a great deal of optimism. Let me just highlight a couple of things you heard today that give us that optimism.
I'll start with by saying, we have a very strong team here and that and I think we have the right organizational structure in place with the right players here.
Further we reduced our cost structure is you heard today by over $220 million as we enter into 2023 inflation seems to have peaked and we could see some moderation. There in 2023 revenue trends are improving during the first two months of 2023 were encouraged by what we're seeing and hearing from our customers.
We see 10% to 15% EBITDA growth in 2023, we see nearly $100 million of free cash flow growth in 2023 with.
We see firstly net leveraged below two times by the end of 2023.
Our digital growth businesses remain robust from a growth standpoint, we see that continuing in 2000 2003.
And we continue to see our inflection point for long term sustainable growth hitting.
Towards the end of 2024 so.
Not to be optimistic about we feel good about our opportunities in the plans we have in place for 2023, we look forward to updating you on our progress on each of our quarterly earnings caused this year. Thanks. Thanks to all of you for your support.
As we as we continue to navigate this journey. Thank you.
Let me just connect your lines.
Thank you for your participation.
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Uh-huh.
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Mmm.
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