Good day, ladies and gentlemen, and welcome to the Third Quarter 2018 Gannett Company Earnings Release Conference Call. At this time, all participants are in a listen-only mode. And later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] And as a reminder, this conference is being recorded. I would now like to hand the call over to Ms. Stacy Cunningham. You may proceed.

Thank you. Good morning, everyone, and welcome to Gannett's Third Quarter 2018 Earnings Conference Call. As a reminder, this call is being recorded and webcast. Joining us today from Gannett are Bob Dickey, President and Chief Executive Officer; Ali Engel, Chief Financial Officer; and Sharon Rowlands, President of USA TODAY NETWORK, Marketing Solutions and Chief Executive Officer of ReachLocal. Before we begin, I would like to call your attention to our Safe Harbor provision for forward-looking statements in our financial results press release. The Safe Harbor provision identifies risk factors that may cause actual results to differ materially from the contents of our forward-looking statements. For a more detailed description of the risk factors that may affect our results, please refer to our financial results press release and our SEC filings, including our 2017 Form 10-K. Also, during this call, management's commentary will include non-GAAP financial measures. Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in the tables of our financial results press release, which we have been posted into our Investor Relations website at investors.gannett.com. With these formalities out of the way, I'd like to turn the call over to Bob Dickey.

Thanks, Stacy. I'm going to start by giving you highlights from the quarter from our marketing solutions and consumer organizations. Then I will turn it over to Sharon for an update on ReachLocal, and Ali will conclude with our detailed financial results. Overall, our third quarter results reflect steady progress on our digital transformation with strong results from our ReachLocal segment, including the WordStream acquisition. During the quarter, we also encountered weakness within our Publishing segment. I will provide more color on that in a moment. However, we expect these trends to continue in the fourth quarter, and are therefore lowering our full-year revenue and adjusted EBITDA guidance. Despite these challenges, we remain focused on delivering growth in our digital business, driving further cost efficiencies and capitalizing on the digital opportunity. Turning to our ReachLocal segment, we reported solid revenue growth and achieved margins that exceeded our expectations, driven by strong growth in average revenue per client. Additionally, this quarter was the first quarter that included WordStream, provider of Software-as-a-Service local digital marketing solutions that we acquired in July. We are pleased WordStream delivered quarterly revenues and adjusted EBITDA that exceeded our expectations due to higher client spending. We truly believe that we have the strongest digital marketing solution set in the marketplace and remain optimistic about our market position and future growth opportunities. Within our Publishing segment, we experienced challenges in the digital media category, reflecting three main factors: our local sales reorganization; weakness within local digital display; and the cycling of some unprofitable affiliate partnerships we ceased in Q4 of last year. First, in reference to our sales structure, at the end of the second quarter we shifted accounts based on the new organizational structure and made reductions in our post-sales organization. While these changes affected sales productivity…

Thank you, Bob. The ReachLocal segment delivered another strong quartet with solid revenue growth, record adjusted EBITDA margin and the launch of LOCALiQ, our data-driven marketing solutions brand that represents our integrated B2B marketing solutions product suite. Given our expanding solution capabilities with the addition of WordStream, we will begin discussing ReachLocal segment revenues within two broad categories: digital advertising and subscription solution. Additionally, with the divestiture of Europe and Japan, international now represents a smaller piece of our business. And we will therefore focus our comment on our North American operation. Digital advertising, which represents about 75% of North American revenue, includes products such as search engine advertising, social advertising and display advertising. Subscription solutions, which makes up the remaining 25% of revenue, represents two revenue streams. Firstly, software, which includes our new WordStream business as well as existing lead management and field service software products; and secondly, presence solution, which includes listing and reputation management from SweetIQ, SEO services, website development and other services that have subscription pricing. In quarter three, we experienced strong growth across both revenue categories. Digital advertising revenues grew 5% year-over-year and subscription solutions revenues grew over 100% year-over-year, driven by the WordStream acquisition and a 15% increase in presence solution. Our North American client base grew to 16,100 in the quarter, up 18% year-on-year driven by the addition of WordStream. Excluding WordStream our client counts were down slightly, as we continue to churn smaller client and focus on acquiring larger higher ARPU client. These larger clients are more profitable and tend to have a higher retention rate. Excluding WordStream, our average revenue per client grew 11% year-over-year and total just over $2,000 in the quarter. This quarter also marked a significant milestone in our transformation of the business with the launch of our…

Thank you, Sharon, and good morning, everyone. One quick housekeeping item to start. Our third quarter of 2018 had 92 days, while the third quarter of 2017 had 91 days. The extra day this quarter was a Sunday, which is our highest revenue day. We estimate the extra day accounted for approximately $11 million in revenue and $7 million in adjusted EBITDA. Looking to the fourth quarter, as a reminder, we will have six fewer days as compared to last year's fourth quarter. Consolidated revenues were $712 million compared to $744 million in the third quarter of 2017. The revenue decline reflects the challenge of print advertising and single copy circulation environment, partially offset by the WordStream acquisition, full access subscriber pricing initiatives, and digital advertising and marketing services revenue growth. On a same store, day adjusted basis, total revenues declined 8.1% in the third quarter. Total digital revenues of $266 million, grew 8% in the quarter and represented 37% of total revenue, up from 33% a year ago. Our total digital advertising and marketing services revenues of $199 million in the quarter rose 8% and reached 49.4% of total advertising and marketing services revenues, nearly hitting the 50% milestone. Adjusted EBITDA totaled $70 million for the quarter, down 5% from last year. The addition of WordStream and solid growth that our ReachLocal segment did not entirely offset the revenue pressures within the Publishing segment. Total same store, day adjusted operating expenses fell approximately 7% year-over-year, reflecting production and distribution savings due to facility consolidations and lower payroll and benefits expenses. These productions were offset in part by higher expenses and our ReachLocal segment associated with higher revenues, and for the first time in years, an increase in same store newsprint expense of 11%, reflecting newsprint pricing pressures largely related…

Thank you. [Operator Instructions] Our first question comes from the line of Doug Arthur of Huber Research. Your line is open.

Yeah, thanks. Still trying to break everything down here. Just two detail questions. Ali, do you have an update on the pension liability?

We have I think a significant change in the third quarter. We'll have, obviously, at the end of the year, where we update the discount rate and all the assumptions, that will be more meaningful, Doug. But have a material or significant change in the third quarter. And we'll file our Q later - we'll file our 10-Q later this afternoon that will have all the detail associated with it.

Okay. And then, on the digital subscriptions, I mean, it looks like - well, the number is still somewhat small, 472,000.00. The growth accelerated certainly sequentially. Is there anything to read into that? You mentioned some different initiatives in terms of the meter, et cetera. Is that on track of what you expected?

Hey, Doug. It's Bob. The side-door - closing the side-doors and tightening some of the meters, plus we are just - every day, every week, every month, we're getting much more sophisticated in our marketing as we test various things. We're getting better with pricing, with better sales channel, et cetera. Also the team, our newsrooms continue to contribute in a big way, both with just doing an excellent job of communicating with our readers about the content that we are providing, the great journalism we are providing. And we're just consistently doing a better job of targeting that content. So we're seeing engagement improvements. As you saw, our overall uniques were better than the peer group. So it's a combination of really Nicole Carroll and Maribel really getting in the news organization coming along. And Andy and his team are just getting smarter on how to market on the digital side. So we think that what you saw in the third quarter is a great indication of a very positive trajectory for 2019 as well.

Yeah, does the growth in the mix of that number skewed toward the larger markets, I assume?

It does. Yeah, we're seeing some really nice pops in markets like Milwaukee, Phoenix, Indianapolis, Nashville, so we're happy about that. We also have some of our small and midsized communities that are very tech-savvy like a Fort Collins, college university town, actually outperforms for a market its size in the number of digitals. But you're right, it is coming. The bigger numbers are coming from our larger markets, which is where we really put our focus.

Okay. Great, thank you. I'll jump back in queue.

Thanks, Doug.

Thank you. [Operator Instructions] And at this time, I'm showing no further questions. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.