Greetings and welcome to Gannett Fourth Quarter Earnings Conference Call. [Operator Instructions]. I would now like to turn the call over to your host Trisha Gosser, Investor Relations. Please go ahead. Hello, Ms. Gosser, your line is unmuted, can you hear us? Hello, Ms. Gosser, can you hear us?

Hamed, this is Mike. Can you hear me?

Yes, I can hear Ms. Gosser -- I don't hear Ms. Gosser.

I'll take it from here. Are we open?

Yes, we are, thank you.

Thank you. So good morning, everyone. Thanks for joining our call this morning. Let me start off by apologizing for some technical difficulties we had with the arranger here of the call. We've been ready to go for 10 minutes. So apologies for that. I'll read Trisha's part here and then really get to mine, but we have to do the preamble so I will do that first. So again, good morning, and apologies for the technical difficulties. Thanks for joining our call today to discuss Gannett's Fourth Quarter 2021 results. Presenting on the call today will be myself and our Chief Financial Officer, Doug Horne. During this call, we'll discuss Gannett's financial results for the quarter. And if you navigate to the Gannett website you will find that we have posted an earnings supplement in addition to our earlier press release this morning and the supplement has good information in it. We will be referencing it today on the call and it provides you with additional detail on the quarter's performance and some expectations we have for '22 in the years ahead. Before we begin, please let me remind you that this call is being recorded. In addition, certain statements, including those with respect to future results and events and are based on current expectations. These 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 in the earnings supplement as well as the risk factors described in Gannett's filings made with the SEC. Except as required by law, we undertake no obligation to publicly update or correct any of the forward-looking statements made during this call. In addition, we will be discussing some non-GAAP financial information during the…

Thank you, Mike, and good morning everyone. For Q4 total operating revenues were $826.5 million a decrease of 5.6% as compared to the prior year quarter. On a same-store basis, operating revenues decreased 4.3% year-over-year. Total digital revenues were $272.6 million and represented 1/3 of our total revenues, increasing 5% on a same-store basis year-over-year. Adjusted EBITDA totaled $115.4 million in the quarter and that was down $33.4 million or 22.5% year-over-year. The adjusted EBITDA margin was 14%, and that was also down 300 points from the 17% recorded in the prior year quarter. Expenses included in adjusted EBITDA of $711.1 million declined 2.1% year-over-year and benefited from $1.3 million in PPP loans forgiveness in the quarter. The decline in adjusted EBITDA year-over-year represents the secular pressures of print revenue declines, coupled with the investment in our strategic pillars as well as ongoing inflationary pressures related to raw materials and labor. On the bottom line, we ended the fourth quarter with a net loss of $22.4 million and $42.8 million of adjusted net income attributable to Gannett. Our net loss of $22.4 million compares favorably to the prior year where we incurred a loss of $122.2 million. We benefited in part year-over-year as a result of 52% lower interest expense as well as lower debt-related expenses and losses related to the extinguishment of debt. Moving now to our segments. The Publishing segment revenue in the fourth quarter was $746.8 million, down 6% as compared to the prior year and down 4.7% on a same-store basis. Print advertising revenue decreased 10.1% compared to the prior year on a same-store basis, reflecting secular industry trends impacting all categories. Digital advertising and marketing services revenues decreased 0.4% on a same-store basis, mainly due to our digital media revenue which decreased 8.1% year-over-year on…

[Operator Instructions] The first question comes from the line of Greg Lewin with Lewin Capital Partners [ph].

Mike, 2 questions, please. The first question, in your 1 to 2-year strategic long-term investment category in the chart, you mentioned $80 plus million in annual investment anticipated this year. Do you have a perspective on what that number was in 2021?

Yes, below $30 million.

Below $30 million, okay. So...

Yes, really came in the second half of the year. So we're -- there's additional investments in '22, but some of it's run rate carrying into.

So when we think about free cash flow and the estimates that you've given, one of the things you've chosen to do that reduces your free cash flow from higher numbers was invest incrementally $50 million plus more in growth for your business.

Right. Correct.

Okay. So that was your corporate decision. Second, I don't think -- when we first met and we were talking about DMS, and the statistics there remain exceedingly strong. The first thing that you when I asked about the gating factors, it was all about sales cycle because your ARPU is tremendous, your retention is tremendous. And I know the value that you offer your customers are absolutely essential for them to basically prosper in business in the current way currently business is structured. And you actually have a very interesting competitive advantage in this enormous market with your presence throughout the United States. Can you -- but the premium -- the freemium and buy online models are directly addressing the sales cycle issue and could have a very dramatic impact. Can you discuss those -- like where you are in that implementation? I think you mentioned something with -- we're doing Phase 3 or Phase 4 in the first quarter or the fourth quarter, I don't recall what you said. I don't know how many phases there are. Can you address when -- how these people migrate into what you now count as core customers as you now maybe are able to have a much faster growing customer base through these lower hurdle rate entries into your business. Could you kind of give more substance to that piece of the DMS story?

Yes. So sure. First of all, there's about 30 million SMBs in the United States. About $29 million of those SMBs are very small businesses, 50 employees are less and have much lower overall digital marketing spend budgets, if any, and they don't have digital marketing departments. And so the DMS business that we have today really the addressable market is the $1 million bigger businesses. And so what we're really aiming to do with the freemium product is open up local IQ to the 29 million small businesses that may not have the budget to spend on the high premium offerings that Local IQ currently leads with the direct sales force itself. So this takes the sales channel out of the middle of a direct sales force that brings businesses to us or to a call center and allows them to experiment with low-hanging fruit local IQ products that we believe will eventually turn those businesses into paying customers on the local IQ platform. When they become paying customers on the local IQ platform, they will then become core customers and our customer count. So we will develop a freemium customer count, and then we'll continue to have a core customer account and the core customer account is where our primarily will be our paying customers, but we are engaged in building the top of the funnel for local IQ at a much more rapid pace than we've been able to do in the past. And we also want to open local IQ up to a much larger addressable market opportunity for the small business owner. That's where our plan is there.

Got it. And where are you in -- not the rollout, but in having the product where you want it to be, where you really think you're going to grab these smaller customers' attention?

I think we worked on it pretty much throughout 2021. And so 2022 is the year where we really believe we will start to build a freemium client base. So 2022 is a year for us to see pretty good growth in that part of our business.

Okay. And conceptually --

It's early stages, but we should take some other customers. We can go offline if you want to have a long narrative, but we should take some other questions, I think, Craig.

Go ahead.

Ladies and gentlemen, we have reached the end of question-and-answer session. And I would like to turn the call back to Mike Reed, CEO for closing remarks. Thank you.

Okay. Thank you. I want to apologize again for technical difficulties. I got a word from our operator that those on the webcast there was some cut out towards the end of my remarks speaking about guidance. Please remember Page 10 and 11 of the supplement available on our website contains the specifics of that guidance. Please go to our website, visit the supplement and visit Pages 10 and 11. I also would encourage you to visit Page 4, which is the progression of our journey. And I'd like to close today by thanking the entire team at Gannett for consistent execution against our strategic plan and for making 2021 a transformational year for our company. There are 4 big takeaways from this morning's announcement that I'd like shareholders to take away. One, our strategy is working, and we have line of sight on our inflection point occurring during 2024. We also have line of sight on improving same-store revenue trends which you see in our 2022 guidance. Number two, we expect free cash flow to grow through 2025 at a 40% CAGR and we expect to have net leverage considerably below 1x next year. We expect to grow our digital subscriber base at a 40% CAGR through 2025. We have good liquidity and with the recently announced $100 million share repurchase program, we have all levers available to us from a capital allocation standpoint in order to drive maximum returns for our shareholders. Over this past year, we have substantially completed the efforts of integrating the old 2 legacy New Media and Gannett organizations. And we've completed our work around synergies overachieving the initial target of $270 million to $300 million. We also paid down over $235 million of debt in 2021 and have paid over $400 million of…

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.