Q4 2024 Gannett Co Inc Earnings Call
Thank you for watching.
Cause actual results and events to differ materially from those discussed today, we encourage you to read the cautionary statement regarding forward looking statements in the earnings supplement as well as the risk factors described in Gannett's filings made with the Securities and Exchange Commission, except as required by law, we undertake no obligation to publicly update or correct any of the forward looking statements.
During this call.
Please keep in mind all comparisons are on a year over year basis, unless otherwise noted. In addition, we will be discussing non-GAAP financial information during the call, including same store revenues free cash flow adjusted EBITDA adjusted EBITDA margin and adjusted net income attributable to <unk> you can find reconciliations of our non-GAAP.
So the most comparable U S. GAAP measures in the earnings supplement lastly, I would like to remind you that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase any interest in Gannett. The webcast and audiocast are copyrighted material of Gannett and may not be duplicated reproduced or rebroadcast without our prior written consent.
Mike Reed: With that I would like to turn the call over to Mike Reed Chairman and CEO.
Mike Reed: Thank you, Matt good morning, and thanks for joining our fourth quarter earnings call I am pleased to share with you details on our fourth quarter and 2020 for full year performance and how we expect to build on our momentum in 2025.
Mike Reed: 2024 represented an important year of progress for good that we.
Mike Reed: We executed strongly against our strategy and achieved a meaningful improvement in our key metrics, but more importantly, we set the foundation for anticipated long term sustainable growth.
Mike Reed: We believe a real transition is underway and our confidence is supported by several milestones that were achieved for the full year of 2024, including significant improvement in same store revenue trends.
Mike Reed: Full year growth and adjusted EBITDA, adjusted net income attributable to <unk> and free cash flow.
Mike Reed: And a successful debt refinancing that simplifies our capital structure extended our debt runway and reduced potential future share dilution.
Mike Reed: It's important to take a moment and recognize how much we have accomplished in total across the past two years.
Mike Reed: Reflecting on our progress.
Mike Reed: Especially for those following along with the supplement please refer to slide six.
Mike Reed: We've made significant strides.
Mike Reed: Well I'll start key metrics.
Mike Reed: As highlighted on slide six over the past two years, we have expanded our total digital mix from 35% to 44%.
Mike Reed: Improved our bottomline by 52 million and increased our cash provided by operating activities and free cash flow by approximately $60 million.
Mike Reed: Overall, the progress highlighted in our results underscores the traction we have gained and further validates our strategic plan.
Mike Reed: In 2024, adjusted EBITDA increased for the second consecutive year, while we simultaneously invested in our digital initiatives aimed at funding future growth.
Mike Reed: Our adjusted EBITDA growth combined with a continued focus on optimizing our working capital also resulted in our second consecutive year of free cash flow growth.
Mike Reed: Adjusted net income attributable to getting that rose to $25 million.
Mike Reed: An improvement of 66 million versus a net loss of $41 million in the prior year.
Mike Reed: We also improved our capital structure and maintained a healthy balance sheet.
Mike Reed: Evidence by our solid cash position at year end.
Mike Reed: We are excited to carry this momentum into the year ahead.
Mike Reed: We expect 2025 to be our third consecutive year of adjusted EBITDA and free cash flow growth.
Mike Reed: Along with ongoing improvement in our top line trends.
Mike Reed: As a result on a same store basis, we are aiming to hit the inflection point to positive revenue growth during the year.
Mike Reed: At the core of our momentum is the execution of our digital revenue strategy.
In 2024 total digital revenues increased 5% to approximately $1 1 billion.
Mike Reed: Three out of our four digital revenue categories experienced year over year growth.
Mike Reed: And as a result total digital revenues increased to 44% of total revenue.
Mike Reed: Up from 39% last year.
Mike Reed: In 2025, our expectation is that total digital revenues will make up 50% of our total revenue during the year.
Mike Reed: Growing between 7% and 10% on a same store basis compared to 2024.
Mike Reed: And importantly, we'll begin to outpace the secular declines we see in our legacy print revenue.
Mike Reed: We have seen solid progress across several of our digital revenue streams and then the fourth quarter total digital revenues continued to grow over the prior year period.
Mike Reed: One factor that has become evident in our transformation is the importance of scale.
Mike Reed: Recall that we have the largest digital audience in the nation.
Mike Reed: Larger than any other content creator in the media space. According to Comscore with 200 million average monthly unique visitors coming to our platform in both Q3 and Q4.
Mike Reed: And growing 7% versus prior year in Q4.
Mike Reed: This significant digital audience outpaced national TV brands National publishing brands and certainly the local publishing brands.
Mike Reed: And as we have built scale. We've also improved our engagement with that audience. As we have achieved another quarter of double digit page view growth compared to the prior year period.
Mike Reed: Over the last 12 months, we have successfully grown this audience at scale and moving forward.
Mike Reed: Our focus will be on driving higher engagement and increasing the monetization of that audience.
Mike Reed: We believe there is significant potential to grow our total digital revenues by further personalizing the consumer journey.
Mike Reed: Through strategic tools and tactics, along with increasing the engagement loyalty and monetization of those consumers that come to our platform.
Mike Reed: This is expected to unlock greater revenue opportunities through digital advertising.
Mike Reed: Digital only paid subscriptions ecommerce and video, which presents a major opportunity for us.
Mike Reed: Looking specifically at Q4 digital only paid subscriptions continued to grow year over year.
Mike Reed: Subscription volumes also rose sequentially every quarter in 2024.
Mike Reed: In Q4 digital only subscription revenue and digital only average revenue per user experienced another quarter of double digit year over year growth.
Mike Reed: We expect digital only subscription revenue to be a meaningful contributor to the expected overall digital revenue growth in the near and long term.
Mike Reed: Opportunity remains as our penetration rates are below benchmark and there are two is still below market rates. So we see potential to unlock additional value through pricing optimization.
Mike Reed: Leveraging our full product portfolio and leaning in on local growth.
Mike Reed: Couple that with the outstanding work the content team has done to provide high quality journalism and broader content experiences and we believe we have a strong value proposition for both our consumers and advertisers.
Mike Reed: We are also strengthening the alignment between our content and consumer teams to capture the significant potential to enhance retention and engagement as well as drive growth in our local core businesses.
Mike Reed: To do this we have repositioned our consumer division under Christian Roberts' leadership.
Mike Reed: Since joining us as our chief content Officer Christian content organization has made a remarkable impact on the domestic did that media segment.
Mike Reed: Evidenced by significant increases in audience growth page views and readership per story.
Mike Reed: As we head into 2025, we are confident we can replicate this success within our consumer division.
Christian Roberts: I will now hand, it over to Christian to recap the team's accomplishments in 2024 and what you can expect in 2020 fives Kristen.
Speaker Change: Thank you, Mike 2024, with a transformational year for our content.
Speaker Change: Executing on our strategy to rapidly expand our audience and content amplify our journalism and drive diversified revenue streams and importantly, we've proven that content can be an engine for growth.
Speaker Change: Audience growth with Apple heart of our transformation and transferring the floor by listening to our audience and studying their behavior on our platform as we gain clarity on the content our readers desire we met them in the middle with trusted news and information we're listening to what people want and we believe our strategy is working we Jen.
Speaker Change: The rate of 12 consecutive months of at least 1 billion page views, which we view as the baseline for 2025 and expect to grow upon.
Speaker Change: Really impressive the USA today network over the year as the leading news and information provider in America as measured by Comscore. None of that was by chance. It was a direct result of our collaborative work to anticipate and deliver the journalism and information on our readers viewers and listeners.
Speaker Change: One thing.
The next step of our transformation is indulge me a crucial element of engaging our audience involves understanding our preferences.
Speaker Change: Still handout experiences around the topics they love their preferred platforms. This deepens their connection with our products and in prices take another step in their journey initiatives, such as expanding our sports content.
Speaker Change: Failing our video strategy will be at the top of our list, let's briefly walk through each of them. We have built what we believe is one of the strongest sports coverage teams in America through one team sports.
Speaker Change: Power of our coverage was evident during the college football and NFL season, where the USA today network generated over 390 million page views and increase up 33% compared to last quarter. In 2025, we will continue to meet readers.
Speaker Change: Where they are to deliver highly engaged in sports news and information. We also have ambitious plans to become the leading force in women's sports contracts through the USA today network, we reach more women's sports fans than any of our competitors and we expect to capitalize on that opportunity.
Speaker Change: We're building an expert content team can drive our place in women's basketball soccer softball, and beyond overall, we believe sports continues to present promising opportunity to expand our audience.
Speaker Change: Personalized and relevant experiences and developed journeys that are expected to maximize digital revenue per user and per visit.
Speaker Change: Other key focus will be expanding our success in video content, our audience with pilot in so many ways, but they want more video journalism and visual content, both on our sites and on other platforms. We're here to deliver with editorially relevance and high quality.
Speaker Change: Digital journalism that meets the mission and extends our reach we have already seen success from this initiative in 2024 with significant gains in video programming.
Speaker Change: Use from major sporting events, such as the Kentucky Derby Indy 500, and College World series. These results underscore the power of sports video on our network.
Speaker Change: When March madness quickly approaching we plan to expand this strategy back in our local markets and nationwide importantly video content needs the habits of our audience, while creating inventory with higher advertising CPM.
Speaker Change: To recap our progress in 2024 was a total team effort and I want to express my sincere gratitude to the entire team. The most exciting part is that we're just getting started we have brought together two of the largest teams within that not with the intention of increasing efficiency while also.
Mike Reed: Summarizing the monetization opportunities of our content back to you Mike.
Mike Reed: Thank you Kristen.
Speaker Change: It's exciting to see the significant audience growth in 2024 and to discuss several of the key initiatives underway to increase engagement and enhance the overall monetization of our content platforms.
Speaker Change: Now turning to our Dms business in Q4, our performance continued to be influenced by the macro environment, along with higher churn among our customer base.
Speaker Change: We are acutely focused on better serving our customer base across our product suite and are encouraged by the strategic plans and initiatives already underway, which we believe will return our dms business to growth during the year.
Speaker Change: We understand where our growth opportunities lie and we have the ability to win some.
Speaker Change: Some of the initiatives that reinforce our optimism for 2025 include.
Speaker Change: Improving underlying account performance by driving high quality leads while minimizing cost per lead for our clients.
Speaker Change: Improving the client experience through a more nimble realigned client success organization and through utilizing tools such as D. M. S zero to more quickly ramp new clients' budgets.
Speaker Change: And enhancing client retention through a more robust and stickier Dms product suite.
Speaker Change: This includes launching new features and capabilities to enhance product fulfillment.
Speaker Change: While further leveraging our AI powered solution dash to optimize campaigns and drive stronger commercial outcomes.
Speaker Change: As we scale dash and integrate more deeply into our customers' operations, we expect to solidify our position as an indispensable digital partner.
Speaker Change: Furthermore, we plan to expand our total addressable market by strategically moving upstream to target large sized businesses.
Speaker Change: These businesses are seeking integrated solutions.
Speaker Change: And given our proven success in managing multi location accounts. We believe we are well positioned to meet that demand.
Speaker Change: As we enter 2025, we remain extremely confident in the large opportunities related to our Dms business and we look forward to restoring our dms business to growth during the year.
Speaker Change: Turning to partnerships in Q4, our partnership revenue continued to grow.
Speaker Change: However, it was tempered by Google's updated and fluids search policies and algorithm changes, which negatively impacted many media companies getting that included.
Speaker Change: Working within the revised policies, we leveraged the vast collection of content produced within our network to continue to drive leads and audience to our partners.
Speaker Change: Search will always be an evolving space and Google sudden change reinforces the importance of maintaining flexibility in an evolving market.
Speaker Change: We've heard from our partners the positive impact our speed to market with evolving solutions has had on their business.
Speaker Change: Ultimately it has highlighted the opportunity of an e-commerce business for us built on the content we already produce.
Speaker Change: E Commerce and affiliate marketing are currently smaller categories for us but.
Speaker Change: But we believe we are well positioned to expand this revenue stream over time.
Speaker Change: We have a vast portfolio of content that resonates deeply with our audience.
Speaker Change: Our town centers, not just informative, it's relevant essential and highly valuable.
Speaker Change: Our focus is on creating new ways to monetize the content, we already have on our platform.
Speaker Change: The recently announced bundled content offering with Reuters is a perfect example.
Speaker Change: The unique offering provides other media brands and publishers was ready to publish news from USA today, and the USA today network.
Speaker Change: At a local regional state and national level, as well as content, including breaking news entertainment sports and lifestyle coverage delivered in a single news feed.
Speaker Change: This aligns well with our existing digital syndication relationships and we will continue to seek out additional opportunities too.
Speaker Change: To smartly monetize the vast array of content, we already produce.
Speaker Change: As you can see from our results we made excellent progress executing on our strategy to drive our digital transformation in 2024.
Speaker Change: While transformations such as ours are rarely in a straight line, we continue to make substantial progress on our evolution in key areas.
Speaker Change: We expanded our digital audience improved engagement.
Speaker Change: Through the monetization of our audience and drove significantly improved financial results over the prior year.
Speaker Change: We expect top line growth on a same store basis as we progress through 2025.
Speaker Change: And our solid balance sheet and extended debt maturities are expected to give us the flexibility needed for the coming years.
Speaker Change: In addition, we have invested in key growth areas that are expected to drive the speed and execution of our transformation.
Speaker Change: We believe we have a great opportunity as an organization in 2025, and we look forward to capitalizing on.
Speaker Change: With that I will now turn the call to Doug to provide additional detail and color around our 2020 for fourth quarter financials as well as the details on our full year 2025 business outlook Doug.
Doug: Thank you, Mike and good morning, everyone.
Doug: As Mike mentioned, we are pleased with the progress on our overall revenue trends during 2024, our success at navigating the market dynamics, along the way and the significant progress achieved against our strategic priorities for Q4 total operating revenues were $621 $3 million a decrease of seven two.
Doug: <unk>.
Doug: As a reminder, our proactive decisions to sell or shut down non strategic assets in 2024 impacted reported revenue in Q4.
Doug: Importantly, these actions aligned with our long term strategy and did not negatively affect our adjusted EBITDA performance.
On a same store basis revenues decreased five 5%, which was relatively in line with Q3 trends.
Doug: As we look ahead, our execution remains focused on cultivating sustainable revenue growth growing our digital audience and customer base, increasing our monetization and continuing to stabilize our print business.
Doug: As we continue to execute on these fronts, we are targeting for the pace and magnitude of our revenue trend improvement to accelerate.
Doug: Adjusted EBITDA totaled $78 $2 million in the fourth quarter, an increase of five 5% or $4 $1 million.
Doug: Adjusted EBITDA margin was 12, 6% in Q4 of 150 basis point improvement compared to the 11, 1% in the prior year period.
Doug: The growth in adjusted EBITDA was driven by the improved year over year revenue trends and strategic cost controls.
On the cost side, we continue to align our expense structure with recent revenue trends in Q4 operating expenses decreased approximately 6%, reflecting our commitment to prudent cost management.
Doug: We believe we have additional opportunities to modulate expenses and improve efficiency by further simplifying our operating model continuing to improve our technology infrastructure.
Doug: Utilizing lower cost sources of labor and utilizing our third party relationships to create a more variable cost structure.
Doug: On the bottom line, we ended the fourth quarter with a net income of $64 $3 million and adjusted net income of $38 $3 million, reflecting.
Doug: Significant year over year improvements of $87 $2 million and $56 $5 million respectively.
Total digital revenues in Q4 reached $284 million up one 2% or three 4% on a same store basis and accounted for 45, 1% of total revenues.
Doug: Digital advertising increased approximately 2% in Q4, driven by audience Patriot growth.
Doug: Moving forward, we are confident that a renewed focus on premium digital inventory and enhanced monetization of our page views will drive stronger growth in 2025.
Doug: In Q4, our digital only subscription business continued to perform well with growth observed across all key metrics.
Doug: Digital only subscription revenue rose, 17% and digital only ARPA increased approximately 13% in Q4.
Doug: Importantly, we achieved these results while also growing digital only paid subscriptions, both sequentially and year over year.
Doug: The results in print and commercial revenue also saw promising improvements in Q4, driven by the actions we have implemented to enhance the subscriber experience.
Doug: The conversion to mail delivery has proven to be a consistent and effective delivery model to our customers in certain markets. In 2024, we successfully converted 55 markets to mail delivery and we expect more market conversions in 2025 mailed.
Doug: Mail delivery provides a consistent and reliable customer experience and on average it is approximately 50% of the cost compared to regular carrier delivery.
Doug: Looking at the domestic media segment in Q4 adjusted EBITDA in this segment was $58 $7 million up four 7% over the prior year period.
Doug: Our adjusted EBITDA margin expanded by 160 basis points year over year to 12, 2%.
Doug: Revenue trends in Q4 on a reported basis continued to reflect the sale and unwinding of certain non strategic assets.
Doug: Turning to news quest for Q4, adjusted EBITDA in the segment was $11 $2 million, while adjusted EBITDA margins totaled 19, 2%.
Doug: Despite a more challenging operating environment in the second half of the year. We are encouraged by the strong operating performance in Q4.
Doug: And our digital marketing solutions business total core platform revenue in the quarter was $116 $2 million adjusted EBITDA for the segment totaled $11.4 million, representing a margin of nine 7%.
Doug: We had approximately 13900 core platform customers with our core platform <unk>, reaching approximately $2800 an increase of four 7% over the prior year.
Doug: As Mike highlighted our 2025 strategic plan prioritizes optimizing account performance enhancing the client experience and improving retention.
Doug: Let's now shift to the balance sheet.
Doug: At the end of the fourth quarter, our cash balance stood at $106 $3 million and our outstanding net debt was approximately $1 billion, we generated $3 $8 million of free cash flow during Q4, which reflects approximately $6 million of accelerated cash interest payments driven by the Q4 refinancing.
Doug: Despite this timing of interest payments, we delivered $58 $4 million in free cash flow for the full year, an increase of three 5% over the prior year.
Doug: We ended Q4 with approximately $1 one $1 billion of total debt and for the full year, we repaid $73 $5 million.
Doug: As previously announced in Q4, we successfully completed a comprehensive debt refinancing debt extended our maturities and significantly reduce potential future dilution from the impact of our convertible notes.
Doug: Our first lien net leverage of two seven times in Q4 was in line with our expectations given the repurchase of convertible notes with funds from the first lien term loan.
Doug: We believe the benefit of extending maturities and reducing potential future dilution significantly outweighs the change in our first lien net leverage.
Doug: In Q4, we completed three real estate and non strategic asset sales, which generated $1 $7 million in proceeds, bringing our total asset sales for the year to $21 million.
Doug: Yesterday, we announced that we've entered into an asset purchase agreement with first corporations divest the Austin American statesman from our portfolio.
Doug: This transaction is anticipated to close in the first quarter.
Doug: First is a stellar reputation in the polishing industry and we believe they outstanding team in Austin will be a great fit as part of the <unk> portfolio.
Doug: This strategic sale along with proceeds of our other non strategic asset sales supports our continued debt reduction as a result, we expect to pay down an incremental $50 million to $60 million of debt in the first half of the year.
Doug: In 2025, we expect total asset sales to be in the range of 60 million to $70 million, which combined with our scheduled quarterly amortization payments supports our priority of continued debt reduction.
Doug: Turning now to guidance.
Doug: In 2025, we expect another year of adjusted EBITDA growth over the prior year, driven by improving revenue trends and ongoing cost management.
Doug: Total digital revenues are expected to grow between 7% to 10% on a same store basis total revenue declines will be in the low single digits on a same store basis.
Doug: Q1 same store revenue trends are expected to be in line with the fourth quarter of 2024 with sequential improvements starting in the second quarter.
Doug: Importantly, we expect same store revenue trends to begin growing on an overall basis as we near the end of 2025.
Doug: While we anticipate adjusted EBITDA growth for the year, we expect a year over year decline in Q1.
Doug: Followed by steady improvement in meaningful growth in the back half of the year.
Doug: In 2025, we will continue to make further investments in our technology infrastructure and in our product portfolio driving an increase in capital expenditures year over year.
Doug: This is expected to have a $10 million impact on free cash flow for 2025, and Q1 free cash flow is expected to decline on a year over year basis. However for the full year, we are expecting growth in excess of 40%.
Doug: It is also important to note that for 2026, we remain confident in the targets. We previously outlined after factoring in the interest impact of the 2020 for refinancing on cash flow.
Doug: The underlying drivers of our long term growth strategy remains strong and we continue to execute against those priorities to drive our digital transformation.
Doug: Our progress and results in 2024 serve as a testament to the strength of our strategy continued prudent cost management and our seasoned management team.
Doug: We have shown a consistent ability to grow audience increased digital revenues and strategically modulate our cost structure to positively impact adjusted EBITDA and free cash flow.
Doug: We are excited about our operational and financial plans for 2025 as well as what we believe to be the opportunity to create meaningful value for both our shareholders as well as the communities that we serve.
Speaker Change: I will now hand, it back to the operator for questions and then we will go back to Mike for some closing thoughts.
Doug: Okay.
Speaker Change: Certainly at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Doug: Information tone will indicate your line is in the question queue.
Speaker Change: You May press Star two if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Your first question for today is from Giuliano Bologna with campus.
Giuliano Bologna: Well good morning, Congrats on the continued execution on our long term clients here.
Speaker Change: One thing I was curious about.
Speaker Change: You as well.
Speaker Change: When you look at the 7% to 10% same store digital growth outlook for 'twenty Fives. I think you guys are at five 8% in 'twenty four and DNS was essentially flat.
Speaker Change: I am curious when you look at the 7% to 10% range how much of that is flat to up outside of Dms versus Dms.
Speaker Change: Coming back out.
Speaker Change: And deposit territory, and then kind of as such.
Speaker Change: As I think about the contribution from those two different parts and driving.
Speaker Change: Kind of a re acceleration.
Speaker Change: Residential revenue run rate.
Speaker Change: Yeah, Julie I don't think stays for the well.
Speaker Change: Question, we Oh, there's a combination of both the accelerated digital advertising growth as well as Gms growth. The gms growth would be more of an enhancer towards the last two quarters of the year and the digital advertising growth would be more consistent throughout the year, but I think overall moving from you know five.
Speaker Change: 5.8 to seven to 10 is going to be a combination of both digital advertising and D. M S.
Speaker Change: It's hard to say exactly you know, which one will be the dominant one but we expect as I said digital advertising to be.
Speaker Change: More of an enhancer, all year versus Dms, which will be an enhancer in the back half of the year.
Speaker Change: That's very helpful. And then just going back to the asset sale on the debt Paydown topic.
Speaker Change: There are a couple of asset sales or could be pushed from <unk> into <unk> and then there's also the announcement of the sale.
Speaker Change: I'm curious when you think about kind of the.
Speaker Change: The aggregate of those.
Speaker Change: Assuming those things close and once you is there a rough sense of like how much of that could be in total.
Speaker Change: To send your use of the proceeds to pay down debt.
Speaker Change: Yeah, Yeah, we will use all the proceeds to pay down debt I think you know one too.
Speaker Change: It's probably in the $50 million to $60 million range and then when you look at the first half of the year, it's more like $60 million to $70 million.
Speaker Change: The failures.
Speaker Change: Got it that's very helpful.
Speaker Change: Yeah.
Yes.
Speaker Change: Absolutely.
Speaker Change: Commentary around asset sales I'm curious when we think about it.
Speaker Change: The asset sales. So far is there any is there a rough sense of what the.
Revenue impact is for.
Speaker Change: Digital versus non digital for the.
Joe Albi: For the existing sale and then Joe Albi.
Joe Albi: Therefore that that trend can be for other asset sales throughout the year.
Joe Albi: Yeah.
Joe Albi: The for the sale of Boston the their business was very reflective of our overall business. So kind of that 45, $45 55 mix of digital and print.
Joe Albi: The the other the other asset sales really all that will work for that are primarily around kind of real estate and non strategic stuff.
Joe Albi: As you can.
Joe Albi: You can hear from our remarks, not only today, but on all of our quarters.
Joe Albi: You know that the one of the key components to our long term strategy as the scale. We're building in the digital world. So while we will always take you know inbounds on properties that that potentially high multiples.
Joe Albi: Not actively out there trying to sell anything because our long term strategy is dependent upon the scale that we're building in the digital side. So.
I wouldn't I wouldn't we're not actively out there trying to market things, but certainly we looked at inbounds.
Joe Albi: And as we've as we said you know, we're we're only going to sell assets.
Joe Albi: That come with a very compelling multiple that is accretive to our shareholders.
Joe Albi: Okay.
Joe Albi: So I hope Dodge your question, but that's very helpful. And then thinking about the debt pay downs.
Joe Albi: China has been an acceleration of debt pay downs.
Joe Albi: Without assessments at me in the first half of the year I'm.
Joe Albi: I'm curious.
Joe Albi: Is there a point at which it would make sense to consider.
Joe Albi: We're working on a different capital structure setup, whether it's you know hopefully be getting better.
Joe Albi: And better costs on the term loan or moving in a hybrid or a different term loan in some notes and or trying to work on.
Speaker Change: Reducing the dilution going forward I'm curious, how you're thinking about that and is there any events that you would helping our dealer.
Joe Albi: Leveraging perspective on front end.
Joe Albi: Yeah. It looks like I think you know what.
Joe Albi: First of all with the asset sales that Doug mentioned in his comments today or you know potentially $60 million to $70 million and then combine that with our regular way amortization and our and our excess cash flow that we'll.
Joe Albi: Generate this year, we expect pretty significant debt pay down.
Joe Albi: Well north of $100 million and as we get towards the end of the year. Our first lien net leverage should be down closer to two times and that's probably a good tipping point to go to maybe the more regular way bank markets for refinancing.
Joe Albi: And then our goal with the.
Joe Albi: Converts that remain is to try to do something similar to what we did this past year, where we're able to convert those at some premium into debt.
Joe Albi: And reduce further dilution, we're not quite there yet that's probably not a 2025 of that.
Joe Albi: But that would be the goal. So so refinance the current first lien debt into a.
Joe Albi: A lower cost capital structure, and then and then tackle the second lien two birds.
Joe Albi: Very helpful.
Joe Albi: Last one.
Joe Albi: And then on the topic asked about.
Joe Albi: I'm curious when you think about the I guess, you obviously have your case against Google.
Joe Albi: This Doj case and there's also other attorneys generals. He was just I'm curious if there's any update or any perspective from your side around the potential timing of the ruling in that case or how are you.
Joe Albi: You think that impacts your case.
Joe Albi: Yeah.
Well the timing of the ruling on the Doj case really doesn't impact our case large cases proceeding along as we expected.
Joe Albi: If you know information that's been shared back in force expert witnesses have been.
Joe Albi: <unk> hired in and that's all proceeding just as we planned we feel as good about our case today as we as we have all along so nothing changes there the timing of the Doj case.
Joe Albi: Yeah as I said it doesn't impact us. So we also don't believe that the timing of the ruling.
Joe Albi: It shows any kind of weakness or anything like that we think the Doj put out of a strong case.
Joe Albi: You know we expect.
Joe Albi: We expect the Doj to have a favorable ruling but.
Joe Albi: Obviously that has we haven't seen anything there yet the other thing that's coming around the corner is the Texas.
Joe Albi: Case against Google and the same for the same AD Tech.
Joe Albi: Antitrust.
Joe Albi: The issue is going to trial late in the first half of this year and that's Texas in 17 states. So we're kind of excited to see that get going too, but but but nothing's changed on our end and things are on track and we feel good.
Joe Albi: Our position here.
Speaker Change: That's very helpful. I really appreciate it.
Joe Albi: The time and the questions and I will jump back in the queue.
Julie: Thanks Julie.
Speaker Change: Your next question is from Matt Condon with citizens.
Matt Condon: Thank you for taking my questions. My first one is just back on the asset sales Mike. It sounds like you aren't looking proactively to solve any more trophy assets unless.
Matt Condon: Something comes in with the right multiple but maybe can you just remind us where are we as far as what assets are left from the non strategic portfolio that you think that you can sell last year, not only 25% in 2006 and beyond.
Matt Condon: Yes.
Matt Condon: So this is Doug first we definitely agree with your kind of first point there in terms of marketing other properties I mean, it definitely is really dependent on it.
Matt Condon: Facts and circumstances basis and has to be kind of at a premium relative to our implied trading multiple.
Matt Condon: With regard to other asset sales.
Matt Condon: We we gave the information this morning about 60 to 70 for the year.
Matt Condon: The vast majority of that relates to Austin and then there is some component of real estate that we expect to sell during the year. So you know those are the biggest components as we look at this year.
Matt Condon: Going further out you know I would say that we're at the tail end of that real estate pipeline, we still have some properties and as we continue to opt or optimize our footprint.
Matt Condon: <unk> generate some new properties for that pipeline.
Matt Condon: But it'll primarily be real estate as we move forward.
Speaker Change: Great. That's Super helpful. And then my second one is just can you contextualize the opportunity with Reuters and then bundled content offering is there anything you can provide in the size of budgets from local publishers and broadcasters that are available to license your content.
Speaker Change: Yeah, Matt it's it's it's a I would characterize the opportunity over the next couple of years is kind of a you know a low to mid single digit millions type opportunity over the long run you know depending on our offerings and in our in where we can expand through with.
Speaker Change: Reuters distribution in combination with the USA today, it could get bigger, but right now I'd think about it more in that mid low to mid single digit millions type opportunity.
Speaker Change: Great and then just a final one for me can you just talk about the key levers that you guys have at your disposal for 2025 for growing digital subscriber growth I'm just yeah. What are the key beverage there and how do you think about pushing back going forward.
Matt Condon: Yeah, Matt.
Bill: Matt It's bill.
Bill: Primarily through the personalizing the experience by understanding you know when consumers come to our platform each individual consumer what are they engaged with what do they spend the most time with and how can we use our vast array of content to continue to serve more personalized experiences to that consumer.
Bill: Which will which will which will lead to we believe better.
Bill: Tenant or better conversion from users to paid subscribers and then really one of the things we mentioned.
Bill: Hum in the earnings call was really going back and doubling down on the work we're doing in local markets and so with more focus on local content creation. That's listening to the data on what consumers are using what are they engaging with personalizing that experience and having a.
Bill: Broader set of content that we understand from the data is what consumers want and then making that more personalized experience. We believe we will accelerate the local subscriber.
Bill: Paid the local paid subscriber numbers.
Bill: So it's really the data the data play in the personalization.
Bill: Personalization played.
Bill: Great. Thank you so much.
Bill: We have reached the end of our question and answer session and I will now turn the call over to Mike for closing remarks.
Mike Reed: Yeah. Thank you so are.
Mike Reed: We are entering 2025 with a great deal of optimism.
Mike Reed: And as we do I just want to recap a few key points from 2024 that lead to that confidence we're carrying into 'twenty five.
We delivered on the overall revenue and profitability targets, we set at the start of 2024.
Mike Reed: We grew adjusted EBITDA and free cash flow for the second consecutive year.
Mike Reed: We drove a marked improvement to adjusted net income, which increased 66 million over the prior year.
Mike Reed: Our same store revenue trends improved significantly to down five 1% from down eight 6% in the prior year too.
Mike Reed: 2025 is a pivotal year in that we have plans to reach the inflection point and beyond that we see sustainable revenue growth as a foundational shift in the trajectory for Gannett.
Mike Reed: Our same store total digital revenues grew five 8%.
Mike Reed: That was a significant improvement versus the one 4% growth in 2023 and.
Mike Reed: In total digital revenues as a percentage of total revenue increased to 44% in 2024 versus 39% in 'twenty to 'twenty three.
Mike Reed: And we have industry, leading scale with proven customer engagement metrics, which gives us a tremendous revenue opportunity. When you think about our audience and so we're really excited about that.
Mike Reed: And I'll leave you with this thought transformations are not easy, but the payoffs can be tremendous.
Mike Reed: And when you reflect on slide six which was in the supplement which we called out earlier in our remarks today you can see the progress we've made over the last couple of years on this transformation across all important metrics and and what we're really excited about and we're delivering to you. Today is we expect to improve again across all of those metrics.
Mike Reed: In 2025, so we feel good about where we are in the journey.
Mike Reed: And and are excited about what our what we can deliver again in 2025. So thank you for joining us today and we look forward to updating you again in the at the end of the first quarter.
Mike Reed: This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.