Greetings. Welcome to the Gannett 1Q Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I will now to turn the conference over to your host Trisha Gosser. Ms. Gosser, you may begin.

Thank you, Alex. Good morning, everyone and thank you for joining our call today to discuss Gannett's first quarter 2021 results. Presenting on today's call will be Mike Reed, Chairman and Chief Executive Officer and Doug Horne, Chief Financial Officer. During this call, we will discuss Gannett's financial results for the quarter. If you navigate to the Gannett website, 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 results and events 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. 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 are 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, Trisha. Good morning, everyone. Thanks for joining us this morning on our earnings call. I'm very pleased to report that our first quarter highlights results in operations witnesses show significant progress against our stated strategy in almost all respects. First quarter financial results were ahead of internal expectations showing continued year-over-year growth and adjusted EBITDA and after normalizing for some structural changes in our year-over-year comparisons. We also produced a sequential improvement from Q4 to Q1 in same-store revenue and adjusted EBITDA trends. We're pleased to see that. March was our best month of the quarter, and we anticipate continued sequential trend improvement in Q2, as we start to cycle the largest impacts of the COVID-19 pandemic in 2020. We expect to post a year-over-year total revenue growth of low to mid single digits in the second quarter, along with more than 30% adjusted EBITDA growth in the second quarter. And that is expected to lead to significant adjusted EBITDA growth for full year 2021 as compared to 2020 and that's we've mentioned that in our last couple calls, and we're a little bit ahead of pace so far under internal targets. Within the quarter, we also continue to improve the capital structure of the Company and we significantly lowered the cost of debt in the first quarter. For those that have been following the Company for a while now, we refinanced 11.5% term loan B with a LIBOR plus 700 term loan B during the quarter, and we also got shareholder approval for our converts issuance which we did in the Q4 time periods. And that was approved at the end of February in the first quarter and the converts have a rate of 6%. So, we have lowered our overall cost of capital from 11.5% about 7.17%.…

Thank you, Mike, and good morning, everybody. For Q1 total operating revenues were $777.1 billion, a decrease of 18.1% as compared to the prior quarter. On the same-store basis operating revenues decreased 16.5% as compared with the prior year quarter, due to the continued secular decline in print advertising and home delivery revenue, as well as the continued economic slowdown brought on by the pandemic. First quarter revenue trends were also impacted by the cessation of certain industry wide digital marketing incentives in 2020. The incentives generated through the Digital Marketing Solutions segment totaled $13 million for all of 2020 with $9.2 million of that in the first quarter last year. That negatively impacts the Q1 same-store trend by approximately 90 basis points. So, on a comparable basis to Q1 2021, same-store trends improved slightly from the levels we saw in Q4 of last year. Adjusted EBITDA totaled $100.5 million in the quarter, which is up $1.4 million or 1.4% year-over-year. This performance reflects the impact of lower revenues offset by cost reductions and synergy savings. The adjusted EBITDA margin was 12.9% and growing 250 basis points over the prior year. In the first quarter, expenses were lower by 20.4%, reflecting permanent expense savings put in place in response to the pandemic, regular way cost reductions as well as the continued synergies from the merger integration. Now moving on to our segments, the publishing segment revenue in the first quarter was $699.6 million. Print advertising revenue decreased 24.9% compared to the prior year on a same-store basis reflecting the continued sector of pressures as well as the disruption from the pandemic. However, print advertising revenue continues to show improvement each quarter, with 200 basis points of improvement in Q1 as compared with the Q4 trend. Digital advertising and marketing services…

Thank you. At this time, we'll be conducting the question-and-answer session. [Operator Instructions] Our first question is from Doug Arthur with Huber Research. Please proceed with your question.

So 23.2 million in digital circulation revenues in Q1, so roughly 100 million annualized; A, if I do the quick math, it looks like your average, your ARPUs is around $6.50 monthly give or take. And Mike, I'm wondering if you've been just sort of expand on kind of what's this -- how do you execute the strategy on digital circulation? I mean, you have so many different markets, some are large, some are small, some are rural, some are urban. I mean, what's the game plan to really jack this number up?

Well, Dough, there's actually several initiatives that we are undertaking that over the next five years we believe will allow us to hit 10 million or more in paid digital subscribers. First of all, the 1.2 million we have today are all local. So this is, in those markets you're referencing, whether they're their cities or rural, and we are developing best practices right now. We've gone to more consistent metering which as mentioned, and we're going to develop best practices based on size and market geography, that will allow us to optimize the continued growth in those markets based. First of all, on best practices for the wind the meter clicks, but also the type of content that goes behind the meter and the type of content consumers are actually demanding. So it's really a data driven approach, combined with the data will really drive our best practices to grow our local subscriptions. We also will, we are in the process of rolling out a paid strategy for the USA Today. And that is just in its infancy stages, and that we think will present significant upside to our current 1.2 million paid digital subscriber number. We also are implementing a paid digital strategy for our subscribers in the UK as part of our Newsquest business and that's the first thing as well. And then finally, we are going to roll out paid subscription offerings for more category content and those things are in development, sports being one of the first ones we're focused on. So we see growth really coming from 1.2 million to 10 million over the next five years through higher penetration locally, everything driven by data, Doug, the higher penetration locally turning USA Today into a paid product digitally, growth in the UK and then growth in other specific category specific areas.

I mean, obviously, it's early days, but if you look at the 1.2 million today, is it more concentrated in your larger markets than your smaller markets? Is that a fair description?

Yes, that's fair. That's across our top 50 markets is where the majority of that is. It's not our biggest. Biggest is not like the top five, it's not concentrated like that. It's more the top 50 or so markets.

And then Doug, on just on the balance sheet, I think you mentioned 90 million do 115 million of potential asset sales still to come this year. In addition to that, in terms of the free cash flow for 2021, I mean, kind of what's your additional capacity you think looking ahead to pay off more debt from operations in 2021?

Yes, I think, given kind of our current outlook and kind of the both between the mandatory amortization that we'll start making in Q3, as well as kind of there's an excess cash sweep at the end of the year, in terms of all cash in excess of $100 million goes to amortization on the term loan. I think between those two things as well as the asset sales, we expect significant really significant debt pay down by the end of the year.

Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session. I will now turn the call over to Mike Reed for closing remarks.

Okay, thank you. And in closing, I'd like to reiterate the solid performance of the first quarter. As I mentioned at the onset, we did exceed our internal expectations and so we're ahead of our plan for the year. And we do expect our results for the year to be substantially better than 2020. We're also pleased with our first quarter results and then our ability to expand our EBITDA margins while also investing in our long-term subscription led digital strategy. This clearly defined that strategy with five pillars. And we believe that we'll transform or evolve our company over the next few years and create sustainable long-term revenue and cash flow growth. We are leveraging our unparalleled reach, trusted media positioning and long standing SMB relationships to drive our digital offerings and create growing recurring revenue streams with both consumers and businesses. And we are already making executing on our strategy as demonstrated by our largest ever quarter for adding new digital subscriptions. With our restructured balance sheet and performance momentum, we're well positioned to create meaningful shareholder value 2021 and beyond. And we are highly optimistic that our new business opportunities in the sports gaming in the NFT space will create additional significant value for shareholders over the quarters and years to come. So, we're quite excited and quite optimistic. And we appreciate you joining us today and we look forward to updating you in three months on our Q2 earnings call. Thanks everybody. Have a great weekend. End of Q&A:

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation. Have a great day.