Ladies and gentlemen, thank you for standing by, and welcome to the Gannett First Quarter Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers’ presentation there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Ashley Higgins. Please go ahead.

Thank you, Marcella. Good morning, everyone, and thank you for joining our call today to discuss to Gannett's first quarter 2020 results. Presenting on today's call will be Mike Reed, Chairman and CEO of the Public Company; Doug Horne, Chief Financial Officer; and Paul Bascobert, CEO of the Operating Company. During this call, we will discuss Gannett's financial results for the quarter. If you navigate to the Gannett Web site, you will find that we have posted an earnings supplement in addition to our 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, statements made during this call with respect to future results and events are forward-looking statements that are based upon current expectations. Actual events and results could differ materially from those discussed today. We encourage you to read the forward-looking statements disclaimer in the presentation, as well as the risk factors described in Gannett's filings made with the SEC. In addition, we will be discussing some non-GAAP and pro forma financial information during the call today. You can find reconciliations of our non-GAAP measures to the most comparable GAAP measures in the earnings supplement. The pro forma information presents Legacy New Media and Legacy Gannett on a consolidated basis. 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 Gannett. The webcast and audio cast is copyrighted material of Gannett and may not be duplicated, reproduced or rebroadcasted without our consent. With that, I would like to turn the call over to Mike Reed, Gannett's Chairman and CEO.

Thanks, Ashley. Good morning, everyone. Thanks for joining our call this morning from wherever you happen to be situated this morning. Prior to getting into my remarks about the company, I wanted to take a moment to recognize the unique and incredibly challenging time we are in today. It is truly unprecedented. The personal tragedies and economic devastation experienced across the country and in the communities our company serves were unimaginable just a few months ago. The toll on people, families and on businesses is overwhelming at times, and my heart and prayers are with those most directly impacted by this pandemic and the sudden change in economic conditions. With the COVID-19 pandemic, we've also been witnessed to the absolutely heroic work by so many across our country, fighting back for our collective health and safety, from healthcare workers and first responders to those on the front lines providing us with essential products and services. Our news organization here at Gannett highlights this work through impactful journalism every day. We chronicle the stories of these heroes who put themselves at risk every day to serve and to save. Finally, I want to acknowledge the work of my nearly 20,000 colleagues here at Gannett. As an essential business ourselves, our team has risen to the challenge of this pandemic, honoring their professional commitments while balancing the immense personal responsibilities of keeping families and loved ones safe in a time of great stress. This has enabled our company to provide uninterrupted, accurate and up to date news and resources to our customers and our communities, helping everyone manage through this pandemic. I want to express my gratitude to all of my Gannett colleagues for their hard work and continued commitment to our mission, as we navigate through this crisis. And before diving…

Great. Thanks Mike. I wanted to open with congratulations to the staff at the Louisville Courier Journal, who were awarded on Monday with the Pulitzer Prize in breaking news for their coverage of the hundreds of last minute pardons by Kentucky's governor, Matt Bevin, during his final days in office. It's an incredible story, and we couldn't be more proud of this work and that of all of our journalists. It's really a reminder for all of us why we are here, to create an enduring platform for this important work to continue in our communities. As Mike mentioned, I'd like to speak in a little bit more detail about how we are responding to the COVID-19 pandemic, some Q1 operational details and an update on integration. Regarding our COVID-19 response, by March 20 we had migrated 95% of our non-production and delivery workers to a work from home position, which is over 12,000 employees. We also implemented social distancing measures and hygiene best practices for all of our production and delivery facilities, in line with CDC and WHO guidelines. This has included spreading out our teams and our shifts, distributing personal protective equipment, implementing multiple daily cleanings. In addition, we've also procured and distributed masks and other protective supplies to any employee, who needs to travel outside of the home for work. Across the company, we've set up communication channels for people to report infections and any workplace concerns, which we monitor and respond to in real time. On April 1, as Mike mentioned, we also implemented cost measures to save an additional $100 million to $125 million. Most of these measures are temporary in nature, such as furloughs and salary reductions, and were designed to give us some flexibility as to how to adapt based on how the…

Thank you, Paul, and good morning, everyone. I'm very excited to be with you this morning and even more excited to be part of the Gannett team moving forward. For Q1, total operating revenues were $948.7 million, which was up 144.8% as compared with the prior year quarter, as a result of the acquisition of Legacy Gannett in Q4 of 2019. On a pro forma basis, operating revenues were down 9.7% as compared with the prior year quarter, which is in line with what we experienced during Q4 of 2019. On same store basis, revenues were down 10%, largely in line with the fourth quarter trend as well. Total operating revenues, as Mike mentioned, reflect approximately $17 million of negative impact from the COVID-19 situation, primarily as a result of the cancellation or pausing of advertising campaigns during March. Adjusted EBITDA totaled $99.1 million in the quarter. This reflects the impact of lower revenues, partially offset by cost reductions and synergy savings. The adjusted EBITDA margin in the quarter was 10.4%. In the first quarter, expenses fell approximately 10.5% on a pro forma basis, reflecting compensation savings from various cost reduction and synergy initiatives, significant newsprint savings from both lower volumes and prices, as well as continued production and distribution efficiencies. Moving on to the segments, within the Publishing segment, revenue in the first quarter was $858.2 million and print advertising revenue was down 21.2% to the prior year, on a same store pro forma basis. That is reflecting both continued secular pressures, as well as the disruption from the COVID-19 situation in the last weeks of the quarter. Digital advertising and marketing services revenues increased 1.7% on a same store pro forma basis, driven by national campaigns during the quarter, as well as gains in digital marketing services within…

Thanks, Doug. Marcella, we can open it now to questions.

[Operator Instructions] Your first question comes from the line of Kyle Evans. Your line is open.

Thank you. Thanks for taking my questions. So, a lot of discussion about real estate sales as a source of liquidity. Could you provide a little bit more detail there on what you're going to bring to the market? And maybe some supporting thoughts on why you're confident you can get those done in this current environment?

Well, yes. So the real estate sales I mentioned for Q2, Kyle, are actually under contract with scheduled closing dates, down payments made, et cetera. So we feel highly confident that those transactions are nearly completed and will be completed. These are pieces of property generally that are in good strategic locations in these towns across the country. And so the buyers for these types of facilities generally have very long-term plans for what they want to use the building or the land for. And so the kind of the disruption of the COVID pandemic doesn't alter or change the long-term view of local developers, local contractors, et cetera. Maybe the business next door that's wanted that land for a long time. So these transactions we're under to sell real estate are with strategic local buyers, who have a very long-term view on the market and what they want to do with the property. So we feel highly confident that the disruption that the pandemic has caused will have little impact on our real estate sales. Obviously, there's a lot of real estate that we're trying to sell over the next two years, so there could be some hiccups and some delays. But primarily the bulk of what we're trying to do is tied to, say, eight or 10 properties that we feel really good about.

Got it. And you know you weren't going to get by me without talking about circulation. Obviously, the declines you had in 1Q were a pretty considerable improvement over the 4Q, but still running down more than the first three quarters of ‘19. What do you think the pandemic does to the circulation line going forward? Is it considered a discretionary spend that people will eliminate? And then what were the underlying volume numbers there and the down 7% and change?

So, we had about $375 million of revenue in the first quarter in circulation, about $60 million of that is digital subscriptions, about $315 million is print. And we mentioned digital subscriptions were up 29% in the first quarter, and we've seen that growth accelerate more than 30% in April. So I expect as a result of the pandemic and just our more importantly our ongoing efforts to grow our digital subscriber base that, we'll see that growth accelerate and be in that revenue part of our total revenue coming from digital subscriptions will continue to represent a bigger piece of the pie, and that will help drive a positive change in trend. So when you think about the first quarter, our print trends were down kind of 8% to 8.5%, offset by the digital growth of, say, 8.5%. And then the volume we're not doing much on pricing right now. So we're doing a small amount of pricing, so volumes are a little bit north of 10% declines. But I think what I've been impressed with is the resiliency of our products, both print and digital, during the crisis. And what it's really showed our communities and our own customers is how important and how vital your local media organization is, how important and how vital your local news organization is. So I think Paul mentioned, we haven't really seen any change to the negative in our print circulation trends other than in single copy. And so that's been favorable. So right now, it's really hard to obviously see long-term what the pandemic and crisis looks like for our country. But right now we've seen some improvement overall in our circulation trends, and that's primarily driven by digital, but print has been resilient as well.

And what are your thoughts on pricing going forward in this current environment?

Yes, we're not raising prices in the current environment.

And I asked you this question just recently, but it was in a completely different universe, it feels like. Would you consider eliminating some of the unprofitable print days across the system going forward?

You know, Kyle, that's not part of our plan today. We've been pretty consistent with that view. Everything's on the table if depending on what happens with revenues and how things evolve in our world, nothing is off the table. But as we sit here today, and it's been pretty consistent in our view that we want our consumers to habitually come to us every day for their local news and information. And we don't want to drive our consumers to other places by eliminating products in the market that we produce today. So, that's our current view. Everything's subject to change, obviously, but as we sit here today, our view is to keep our schedules as they are now.

Got it. That's all I got. Just also a quick thanks on giving the liquidity balance sheet metrics. Very helpful.

Thanks, Kyle.

Your next question comes from the line of Ryan Vaughan. Your line is open.

Hi, thank you for making my questions.

Hi, Ryan.

Just a couple of questions, you referenced that the current trends that you saw through April. Just to be a little bit more granular, I guess, first off, have you noticed anything on your trends just from over the last five weeks, call it, whether it's just been pretty steady at that rate? And then the second question, just so I'm clear. Just does that include – obviously, print's in there, but as far as digital advertising. Does it also include the marketing services? Just trying to get an idea when you reference the current trends, what's included in that? And if one is if digital's holding up better than print. Thanks.

Yes. So thanks, Ryan. Yes, the down 30% that we are anticipating that April's going to close out at we're still in the process of closing the books for April, but our best view today is down 30%. But that's for the whole company, so it includes it encompasses everything. Obviously, we've seen the biggest hit during the crisis come to print advertising, which is down more than 30%. Our digital business has definitely held up better. It's been more resilient than print advertising. Our circulation, as we just talked about with Kyle, has been probably the most resilient part of our business. The events part of our business, Paul talked about that that we've been resilient there with virtual events, but it's still probably going to be a down 40% to 50% revenue quarter for events. To your specific question on how it's played out over the last five weeks, we definitely saw - it's really more than that now. The last couple weeks of March things worsened. The first couple weeks of April were probably the worst. And I wouldn't say the back-half of April improved a lot in terms of helping April, but what we really have seen over the last two weeks, late April and early May, is more meetings, more conversations, more businesses now entertaining coming off positive with their spend. So it's encouraging. It's not really - we can't really reflect it in our numbers yet, because we don't know for sure. But the tone of our conversations with our customers, the number of meetings and the discussions around getting back to business and restarting campaigns, marketing campaigns with us, are positive right now. So that's not a prognosis on the second quarter or May or June. I think that our best view right now is April is down 30%. But the tone has improved. So we're cautiously optimistic that the worst is behind us.

That would be great. And then just the other point about the real estate sales, you had mentioned, look, we could take the $50 million bucks and pay down that term loan and knock down interest by a couple million bucks over the next couple of quarters. To be clear, you don't have to pay down that term loan. Obviously, that's part of your plan. If you wanted to, you could just put that into cash, put that in the books on the balance sheet here just in case this is prolonged and second wave, all those things. No obligation to pay that down, correct?

No, actually we are required in the credit agreement if we sell assets to pay down debt.

Got it. Okay. So real estate falls under that. Okay. Thank you.

All right, man. Thanks, Ryan.

There are no further questions at this time. I'll turn the call over to Mike for final remarks.

Okay. Thanks, everyone. I'd just like to reiterate pretty solid performance in the first quarter and we are pleased with it, despite how it ended. I want to reiterate the very strong liquidity position we have today with $200 million of cash on the balance sheet, and our expectation to continue to generate positive cash flows. I also mentioned the CARES Act and the liquidity enhancement there, that's going to be more than $50 million that you have to add to the cash position we have today. Our integration plan, as you heard from me and from Paul, is progressing really well. We have $140 million of annualized savings that we expect to have in place by the end of the second quarter. And we've taken the steps necessary to create additional flexibility and to be able to create additional cost savings during the crisis. And we're in a position to continue to adapt as conditions evolve, so we generally feel really good. We continued to reduce our debt during the quarter. We remain optimistic about our ability to continue to do that with real estate asset sales. And as I mentioned in my remarks on the call, we are highly confident in our ability to be in compliance and stay in compliance with our credit agreement. Just a reminder, it's a five-year term loan. We're only six months into it. So we have four and half years left. So we have nothing hanging or dangling out there that we have to deal with. Very unfortunate situation that we're in today, and it impacts everybody across our country and really most people around the world, it's unfortunate. But I feel good about the efforts we've made to position our company to come out of the other side of this crisis. Hopefully that's sooner, not later. But come out of the other side of this crisis with a better, stronger and leaner company. So, thanks for your time this morning. And we look forward to updating you again at the end of the second quarter. And in the meantime, everybody be safe and be healthy. Thanks. Bye.

This concludes today’s conference call. You may now disconnect.