gci-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________

FORM 10-Q

_______________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission file number 001-36097

___________________________

GANNETT CO., INC.
(Exact name of registrant as specified in its charter)

___________________________

Delaware

38-3910250

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

7950 Jones Branch Drive,

McLean,

Virginia

22107-0910

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code: (703) 854-6000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, par value $0.01 per share

GCI

New York Stock Exchange

Preferred Stock Purchase Rights

N/A

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☐	Accelerated Filer	☒
Non-Accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of July 31, 2023, 149,072,872 shares of the registrant's Common Stock were outstanding.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including "Part I, Item 2 — Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Part II, Item 1A — Risk Factors" contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect our current views regarding, among other things, our future growth, results of operations, performance, business prospects and opportunities, and our environmental, social and governance goals, and are not statements of historical fact. Words such as "anticipate(s)," "expect(s)," "intend(s)," "plan(s)," "goal," "project(s)," "believe(s)," "will," "aim," "would," "could," "can," "may," "seek(s)," "estimate(s)" and similar expressions are intended to identify such forward-looking statements.

Forward-looking statements are based on management's current expectations and beliefs and are subject to a number of known and unknown risks, uncertainties, and other factors that could lead to actual results materially different from those described in the forward-looking statements. We can give no assurance our expectations will be attained. Our actual results, liquidity, and financial condition may differ from the anticipated results, liquidity, and financial condition indicated in the forward-looking statements. Forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause our actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, among others, the risks identified by us under the heading "Risk Factors" in this Quarterly Report on Form 10-Q, and under the heading "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission on February 23, 2023, as well as other risks and factors identified from time to time in our subsequent filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, we expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or change in events, conditions, or circumstances on which any statement is based.

INDEX TO GANNETT CO., INC.

Q2 2023 FORM 10-Q


Item No.		Page
	Part I. Financial Information
1	Financial Statements (unaudited)	2
2	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
3	Quantitative and Qualitative Disclosures About Market Risk	44
4	Controls and Procedures	44

	Part II. Other Information
1	Legal Proceedings	45
1A	Risk Factors	45
2	Unregistered Sales of Equity Securities and Use of Proceeds	46
3	Defaults Upon Senior Securities	46
4	Mine Safety Disclosures	46
5	Other Information	46
6	Exhibits	47
	Signatures	48

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Table of Contents

GANNETT CO., INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


In thousands, except share data	June 30, 2023		December 31, 2022
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	106,633	$	94,255
Accounts receivable, net of allowance of $13,170 and $16,697 as of June 30, 2023 and December 31, 2022, respectively	250,164		289,415
Inventories	29,449		45,223
Prepaid expenses	51,846		46,205
Other current assets	43,693		32,679
Total current assets	481,785		507,777
Property, plant and equipment, net of accumulated depreciation of $387,919 and $360,522 as of June 30, 2023 and December 31, 2022, respectively	254,402		305,994
Operating lease assets	223,174		233,322
Goodwill	533,796		533,166
Intangible assets, net	569,757		613,358
Deferred tax assets	71,731		56,618
Pension and other assets	172,193		143,320
Total assets	$	2,306,838	$	2,393,555
Liabilities and equity
Current liabilities:
Accounts payable and accrued liabilities	$	302,308	$	351,848
Deferred revenue	137,478		153,648
Current portion of long-term debt	63,752		60,452
Operating lease liabilities	46,556		44,872
Other current liabilities	5,606		6,218
Total current liabilities	555,700		617,038
Long-term debt	647,811		695,642
Convertible debt	408,992		405,681
Deferred tax liabilities	—		1,439
Pension and other postretirement benefit obligations	47,989		50,710
Long-term operating lease liabilities	205,753		219,109
Other long-term liabilities	113,696		108,563
Total noncurrent liabilities	1,424,241		1,481,144
Total liabilities	1,979,941		2,098,182
Commitments and contingent liabilities (See Note 11)
Equity
Preferred stock, $0.01 par value per share, 300,000 shares authorized, of which 0 shares and 150,000 shares were designated as Series A Junior Participating Preferred Stock at June 30, 2023 and December 31, 2022, respectively, none of which were issued and outstanding at June 30, 2023 and December 31, 2022	—		—
Common stock, $0.01 par value per share, 2,000,000,000 shares authorized, 158,436,428 shares issued and 149,125,668 shares outstanding at June 30, 2023; 153,286,104 shares issued and 146,223,179 shares outstanding at December 31, 2022	1,584		1,533
Treasury stock, at cost, 9,310,760 shares and 7,062,925 shares at June 30, 2023 and December 31, 2022, respectively	(17,370)		(14,737)
Additional paid-in capital	1,418,577		1,409,578
Accumulated deficit	(1,001,734)		(999,401)
Accumulated other comprehensive loss	(73,694)		(101,231)
Total Gannett stockholders' equity	327,363		295,742
Noncontrolling interests	(466)		(369)
Total equity	326,897		295,373
Total liabilities and equity	$	2,306,838	$	2,393,555

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

GANNETT CO., INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	Three months ended June 30,				Six months ended June 30,
In thousands, except per share amounts	2023		2022		2023		2022
Advertising and marketing services	$	353,310	$	383,609	$	694,157	$	758,723
Circulation	233,612		274,624		474,897		563,226
Other	85,435		90,427		172,220		174,788
Total operating revenues	672,357		748,660		1,341,274		1,496,737
Operating costs	426,096		476,002		856,284		945,887
Selling, general and administrative expenses	184,127		227,836		364,517		449,673
Depreciation and amortization	39,784		49,530		83,482		97,313
Integration and reorganization costs	7,287		15,745		19,414		27,143
Asset impairments	1,177		85		1,182		939

(Gain) loss on sale or disposal of assets, net	146		372		(17,535)		(2,432)
Other operating expenses	229		314		458		1,416
Total operating expenses	658,846		769,884		1,307,802		1,519,939
Operating income (loss)	13,511		(21,224)		33,472		(23,202)
Interest expense	28,559		26,084		56,889		52,090
(Gain) loss on early extinguishment of debt	—		749		(496)		3,492
Non-operating pension income	(2,263)		(18,160)		(4,078)		(36,373)

Other non-operating (income) expense, net	(1,428)		1,645		(417)		(160)
Non-operating expenses	24,868		10,318		51,898		19,049
Loss before income taxes	(11,357)		(31,542)		(18,426)		(42,251)
Provision (benefit) for income taxes	1,333		22,158		(15,996)		14,551
Net loss	(12,690)		(53,700)		(2,430)		(56,802)
Net loss attributable to noncontrolling interests	(13)		(12)		(97)		(147)
Net loss attributable to Gannett	$	(12,677)	$	(53,688)	$	(2,333)	$	(56,655)

Loss per share attributable to Gannett - basic	$	(0.09)	$	(0.39)	$	(0.02)	$	(0.41)
Loss per share attributable to Gannett - diluted	$	(0.09)	$	(0.39)	$	(0.02)	$	(0.41)

Other comprehensive income (loss):
Foreign currency translation adjustments	$	5,827	$	(15,648)	$	12,164	$	(23,204)
Pension and other postretirement benefit items:
Net actuarial gain	13,968		12,786		25,564		10,990
Amortization of net actuarial gain (loss)	8		(217)		12		(249)

Amortization of prior service cost	17		—		33		—
Equity method investments	—		—		610		—
Other	(2,631)		1,469		(5,542)		2,005
Total pension and other postretirement benefit items	11,362		14,038		20,677		12,746
Other comprehensive income (loss) before tax	17,189		(1,610)		32,841		(10,458)
Income tax provision related to components of other comprehensive income (loss)	2,942		3,250		5,304		2,793
Other comprehensive income (loss), net of tax	14,247		(4,860)		27,537		(13,251)
Comprehensive income (loss)	1,557		(58,560)		25,107		(70,053)
Comprehensive loss attributable to noncontrolling interests	(13)		(12)		(97)		(147)
Comprehensive income (loss) attributable to Gannett	$	1,570	$	(58,548)	$	25,204	$	(69,906)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

GANNETT CO., INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six months ended June 30,
In thousands	2023		2022
Operating activities
Net loss	$	(2,430)	$	(56,802)
Adjustments to reconcile net loss to operating cash flows:
Depreciation and amortization	83,482		97,313
Share-based compensation expense	8,783		8,778
Non-cash interest expense	10,567		10,641
Gain on sale or disposal of assets, net	(17,535)		(2,432)

(Gain) loss on early extinguishment of debt	(496)		3,492

Asset impairments	1,182		939

Pension and other postretirement benefit obligations	(6,792)		(51,353)
Change in other assets and liabilities, net	(23,975)		(8,888)







Cash provided by operating activities	52,786		1,688
Investing activities
Acquisitions, net of cash acquired	—		(15,432)
Purchase of property, plant and equipment	(16,448)		(23,292)
Proceeds from sale of real estate and other assets	31,465		29,623
Change in other investing activities	(12)		(548)
Cash provided by (used for) investing activities	15,005		(9,649)
Financing activities
Payments of deferred financing costs	—		(957)


Borrowings of long-term debt	—		80,000
Repayments of long-term debt	(51,291)		(104,879)
Acquisition of noncontrolling interests	—		(2,050)


Treasury stock	(2,622)		(6,529)


Changes in other financing activities	(647)		(632)
Cash used for financing activities	(54,560)		(35,047)
Effect of currency exchange rate change on cash	98		(1,140)
Increase (decrease) in cash, cash equivalents and restricted cash	13,329		(44,148)
Cash, cash equivalents and restricted cash at beginning of period	104,804		143,619
Cash, cash equivalents and restricted cash at end of period	$	118,133	$	99,471

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

GANNETT CO., INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)


	Three months ended June 30, 2023
	Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Treasury stock			Non-controlling interest
In thousands	Shares	Amount								Shares	Amount				Total
Balance at March 31, 2023	157,981	$	1,580	$	1,413,397	$	(87,941)	$	(989,057)	8,760	$	(16,883)	$	(453)	$	320,643
Net loss attributable to Gannett	—	—		—		—		(12,677)		—	—		(13)		(12,690)




Other comprehensive income, net(a)	—	—		—		14,247		—		—	—		—		14,247
Share-based compensation expense	—	—		5,047		—		—		—	—		—		5,047
Issuance of common stock	455	4		21		—		—		—	—		—		25
Treasury stock	—	—		—		—		—		167	(483)		—		(483)
Restricted share forfeiture	—	—		—		—		—		384	(4)		—		(4)
Other activity	—	—		112		—		—		—	—		—		112
Balance at June 30, 2023	158,436	$	1,584	$	1,418,577	$	(73,694)	$	(1,001,734)	9,311	$	(17,370)	$	(466)	$	326,897


	Three months ended June 30, 2022
	Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Treasury stock			Non-controlling interest
In thousands	Shares	Amount								Shares	Amount				Total
Balance at March 31, 2022	151,017	$	1,510	$	1,397,516	$	51,607	$	(924,366)	3,188	$	(11,290)	$	(251)	$	514,726
Net loss attributable to Gannett	—	—		—		—		(53,688)		—	—		(12)		(53,700)
Restricted stock awards settled, net of withholdings	—	—		(18)		—		—		—	—		—		(18)
Restricted share grants	1,303	13		(13)		—		—		—	—		—		—

Other comprehensive loss, net(a)	—	—		—		(4,860)		—		—	—		—		(4,860)
Share-based compensation expense	—	—		5,385		—		—		—	—		—		5,385
Issuance of common stock	278	3		23		—		—		—	—		—		26

Treasury stock	—	—		—		—		—		863	(3,391)		—		(3,391)
Restricted share forfeiture	—	—		—		—		—		1,759	(19)		—		(19)
Other activity	—	—		(241)		—		—		—	—		—		(241)
Balance at June 30, 2022	152,598	$	1,526	$	1,402,652	$	46,747	$	(978,054)	5,810	$	(14,700)	$	(263)	$	457,908

(a) For the three months ended June 30, 2023 and 2022, Other comprehensive income (loss) is net of income tax provision of $2.9 million and $3.3 million, respectively.

Table of Contents

GANNETT CO., INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)


	Six months ended June 30, 2023
	Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Treasury stock			Non-controlling interest
In thousands	Shares	Amount								Shares	Amount				Total
Balance at December 31, 2022	153,286	$	1,533	$	1,409,578	$	(101,231)	$	(999,401)	7,063	$	(14,737)	$	(369)	$	295,373
Net loss attributable to Gannett	—	—		—		—		(2,333)		—	—		(97)		(2,430)


Restricted share grants	4,682	47		(47)		—		—		—	—		—		—

Other comprehensive income, net(a)	—	—		—		27,537		—		—	—		—		27,537
Share-based compensation expense	—	—		8,783		—		—		—	—		—		8,783
Issuance of common stock	468	4		46		—		—		—	—		—		50

Treasury stock	—	—		—		—		—		1,124	(2,622)		—		(2,622)
Restricted share forfeiture	—	—		—		—		—		1,124	(11)		—		(11)
Other activity	—	—		217		—		—		—	—		—		217
Balance at June 30, 2023	158,436	$	1,584	$	1,418,577	$	(73,694)	$	(1,001,734)	9,311	$	(17,370)	$	(466)	$	326,897


	Six months ended June 30, 2022
	Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Treasury stock			Non-controlling interest
In thousands	Shares	Amount								Shares	Amount				Total
Balance at December 31, 2021	144,667	$	1,446	$	1,400,206	$	59,998	$	(921,399)	2,368	$	(8,151)	$	(2,485)	$	529,615
Net loss attributable to Gannett	—	—		—		—		(56,655)		—	—		(147)		(56,802)
Acquisition of noncontrolling interests	—	—		(4,419)		—		—		—	—		2,369		(2,050)
Restricted stock awards settled, net of withholdings	615	7		(1,559)		—		—		—	—		—		(1,552)
Restricted share grants	7,031	70		(70)		—		—		—	—		—		—

Other comprehensive loss, net(a)	—	—		—		(13,251)		—		—	—		—		(13,251)
Share-based compensation expense	—	—		8,778		—		—		—	—		—		8,778
Issuance of common stock	285	3		85		—		—		—	—		—		88

Treasury stock	—	—		—		—		—		1,555	(6,529)		—		(6,529)
Restricted share forfeiture	—	—		—		—		—		1,887	(20)		—		(20)
Other activity	—	—		(369)		—		—		—	—		—		(369)
Balance at June 30, 2022	152,598	$	1,526	$	1,402,652	$	46,747	$	(978,054)	5,810	$	(14,700)	$	(263)	$	457,908

(a) For the six months ended June 30, 2023 and 2022, Other comprehensive income (loss) is net of income tax provision of $5.3 million and $2.8 million, respectively.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — Description of business and basis of presentation

Description of business

Gannett Co., Inc. ("Gannett", "we", "us", "our", or the "Company") is a subscription-led and digitally-focused media and marketing solutions company committed to empowering communities to thrive. Gannett operates a scalable, data-driven media platform that aligns with consumer and digital marketing trends. We aim to be the premier source for clarity, connections and solutions within our communities. Our mission is to provide unbiased, unique local and national content and unrivaled marketing solutions to the communities we serve. We seek to drive audience growth and engagement by delivering valuable content experiences to our consumers, while offering the unique products and marketing expertise our advertisers desire. Our strategy prioritizes the growth of highly recurring digital businesses, while maximizing the lifetime value of our legacy print business, and we expect the execution of this strategy to enable us to continue our evolution to a digitally-focused content platform.

Our current portfolio of media assets includes the USA TODAY NETWORK, which includes USA TODAY and local media organizations in 43 states in the United States (the "U.S."), and Newsquest, a wholly-owned subsidiary operating in the United Kingdom (the "U.K."). We also own digital marketing services companies under the brand LocaliQ, which provide a cloud-based platform of products to enable small and medium-sized businesses to accomplish their marketing goals. In addition, our portfolio includes what we believe is the largest media-owned events business in the U.S., USA TODAY NETWORK Ventures.

Through USA TODAY, our network of local properties, and Newsquest, we deliver high-quality, trusted content with a commitment to balanced, unbiased journalism, where and when consumers want to engage with it on virtually any device or platform. Additionally, the Company has strong relationships with hundreds of thousands of local and national businesses in both our U.S. and U.K. markets due to our large local and national sales forces and a robust advertising and marketing solutions product suite. The Company reports in two segments, Gannett Media and Digital Marketing Solutions ("DMS"). We also have a Corporate and other category that includes activities not directly attributable to a specific reportable segment and includes broad corporate functions such as legal, human resources, accounting, analytics, finance and marketing, as well as other general business costs. A full description of our reportable segments is included in Note 12 — Segment reporting in the notes to the condensed consolidated financial statements.

Basis of presentation

The unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. As permitted under those rules, certain notes or other financial information that are normally required by U.S. GAAP have been condensed or omitted from these interim financial statements. The unaudited condensed consolidated financial statements should therefore be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022.

In the opinion of management, the unaudited condensed consolidated financial statements as of June 30, 2023 include all the assets, liabilities, revenues, expenses and cash flows of entities which Gannett controls due to ownership of a majority voting interest ("subsidiaries"). All significant intercompany accounts and transactions have been eliminated in consolidation, and the Company consolidates its subsidiaries.

Use of estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and footnotes thereto. Actual results could differ materially from those estimates. Significant estimates inherent in the preparation of the unaudited condensed consolidated financial statements include pension and postretirement benefit obligation assumptions, income taxes, and goodwill and intangible asset impairment analysis.

Table of Contents

NOTE 2 — Revenues

Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

The Company's condensed consolidated statements of operations and comprehensive income (loss) present revenues disaggregated by revenue type. Sales taxes and other usage-based taxes are excluded from revenues. The following table presents our revenues disaggregated by source:


	Three months ended June 30,				Six months ended June 30,
In thousands	2023		2022		2023		2022
Print advertising	$	149,275	$	173,453	$	297,229	$	346,971
Digital advertising and marketing services	204,035		210,156		396,928		411,752
Total advertising and marketing services	353,310		383,609		694,157		758,723
Circulation	233,612		274,624		474,897		563,226
Other	85,435		90,427		172,220		174,788
Total revenues	$	672,357	$	748,660	$	1,341,274	$	1,496,737

For the three and six months ended June 30, 2023, revenues generated from international locations were approximately 10.0% and 10.1% of total revenues, respectively. For the three and six months ended June 30, 2022, revenues generated from international locations were approximately 9.8% and 9.3% of total revenues, respectively.

Deferred revenues

The Company records deferred revenues when cash payments are received in advance of the Company's performance obligation. The Company's primary source of deferred revenues is from circulation subscriptions paid in advance of the service provided, which represents future delivery of publications (the performance obligation) to subscription customers. The Company expects to recognize the revenue related to unsatisfied performance obligations over the next one to twelve months in accordance with the terms of the subscriptions.

The Company's payment terms vary by the type and location of the customer and the products or services offered. The period between invoicing and when payment is due is not significant. For certain products or services and customer types, the Company requires payment before the products or services are delivered to the customer. The majority of our subscription customers are billed and pay on monthly terms.

The following table presents the change in the deferred revenues balance by type of revenues:


	Six months ended June 30, 2023						Six months ended June 30, 2022
In thousands	Advertising, marketing services, and other		Circulation		Total		Advertising, marketing services, and other		Circulation		Total
Beginning balance	$	46,327	$	107,321	$	153,648	$	60,665	$	124,173	$	184,838
Acquisition	—		—		—		—		2,388		2,388
Cash receipts, net of refunds	138,697		407,797		546,494		140,331		489,333		629,664
Revenue recognized	(146,364)		(416,300)		(562,664)		(149,353)		(493,425)		(642,778)
Ending balance	$	38,660	$	98,818	$	137,478	$	51,643	$	122,469	$	174,112

Table of Contents

NOTE 3 — Accounts receivable, net

Receivables are presented net of allowances, which reflect the Company's expected credit losses based on historical experience as well as current and expected economic conditions. The following table presents changes in the allowance for doubtful accounts:


	Six months ended June 30,
In thousands	2023		2022
Beginning balance	$	16,697	$	16,470
Current period provision	3,305		1,629
Write-offs charged against the allowance	(8,993)		(8,503)
Recoveries of amounts previously written-off	2,045		1,994
Other	116		377

Ending balance	$	13,170	$	11,967

For the three and six months ended June 30, 2023, the Company recorded $1.9 million and $3.3 million in bad debt expense, respectively. For the three and six months ended June 30, 2022, the Company recorded $4.0 million and $1.6 million in bad debt expense, respectively. Bad debt expense is included in Selling, general and administrative expenses on the condensed consolidated statements of operations and comprehensive income (loss).

NOTE 4 — Goodwill and intangible assets

Goodwill and intangible assets consisted of the following:


	June 30, 2023						December 31, 2022
In thousands	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
Finite-lived intangible assets:
Advertiser relationships	$	446,470	$	214,016	$	232,454	$	445,775	$	192,032	$	253,743
Other customer relationships	102,292		51,290		51,002		102,224		45,811		56,413
Subscriber relationships	251,097		141,097		110,000		251,083		126,899		124,184
Other intangible assets	68,780		59,245		9,535		68,780		55,932		12,848
Sub-total	$	868,639	$	465,648	$	402,991	$	867,862	$	420,674	$	447,188
Indefinite-lived intangible assets:
Mastheads					166,766						166,170
Total intangible assets					$	569,757					$	613,358

Goodwill					$	533,796					$	533,166

The Company performs its annual goodwill and indefinite-lived intangible impairment assessments as of November 30. In addition to the annual impairment test, the Company is required to regularly assess whether a triggering event has occurred under both ASC 350 "Intangibles - Goodwill and Other" ("ASC 350"), and ASC 360 "Property, Plant and Equipment" ("ASC 360"), which would require interim impairment testing.

As of June 30, 2023, the Company performed a review of potential impairment indicators under both ASC 350 and ASC 360 and it was determined that no indicators of impairment were present.

NOTE 5 — Integration and reorganization costs

Over the past several years, the Company has engaged in a series of individual restructuring programs, designed primarily to right-size the Company's employee base, consolidate facilities and improve operations, including those of acquired entities. These initiatives impact all the Company's operations and can be influenced by the terms of union contracts. Costs related to these programs, which primarily include severance, facility consolidation and other restructuring-related expenses, are accrued when probable and reasonably estimable or at the time of program announcement.

Table of Contents

Severance-related expenses

The Company recorded severance-related expenses by segment as follows:


	Three months ended June 30,				Six months ended June 30,
In thousands	2023		2022		2023		2022
Gannett Media	$	1,708	$	10,595	$	7,820	$	15,772
Digital Marketing Solutions	(48)		140		(28)		149
Corporate and other	891		902		5,012		1,076
Total	$	2,551	$	11,637	$	12,804	$	16,997

A roll-forward of the accrued severance and related expenses included in Accounts payable and accrued liabilities on the condensed consolidated balance sheets for the six months ended June 30, 2023 is as follows:


In thousands	Severance and related costs
Beginning balance	$	29,773
Restructuring provision included in integration and reorganization costs	12,804
Cash payments	(28,781)
Ending balance	$	13,796

Other restructuring-related expenses

Other restructuring-related expenses represent costs for consolidating operations, systems implementation, outsourcing of corporate functions and facility consolidations. The Company recorded Other restructuring-related costs by segment as follows:


	Three months ended June 30,				Six months ended June 30,
In thousands	2023		2022		2023		2022
Gannett Media (a)	$	602	$	446	$	(861)	$	990
Digital Marketing Solutions	—		153		—		295
Corporate and other	4,134		3,509		7,471		8,861
Total	$	4,736	$	4,108	$	6,610	$	10,146

(a) For the six months ended June 30, 2023, Other restructuring-related costs at the Gannett Media segment reflected the reversal of a withdrawal liability related to a multiemployer pension plan.

NOTE 6 — Debt

The Company's debt consisted of the following:


	June 30, 2023								December 31, 2022
In millions	Principal balance		Unamortized original issue discount		Unamortized deferred financing costs		Carrying value		Principal balance		Unamortized original issue discount		Unamortized deferred financing costs		Carrying value
Senior Secured Term Loan	$	392.0	$	(7.1)	$	(1.5)	$	383.4	$	438.4	$	(8.9)	$	(1.9)	$	427.6
2026 Senior Notes	339.1		(8.0)		(6.2)		324.9		345.2		(9.4)		(7.3)		328.5
2027 Notes	485.3		(74.7)		(1.6)		409.0		485.3		(81.2)		(1.7)		402.4
2024 Notes	3.3		—		—		3.3		3.3		—		—		3.3
Total debt	$	1,219.7	$	(89.8)	$	(9.3)	$	1,120.6	$	1,272.2	$	(99.5)	$	(10.9)	$	1,161.8
Less: Current portion of long-term debt	$	(63.8)	$	—	$	—	$	(63.8)	$	(60.5)	$	—	$	—	$	(60.5)
Non-current portion of long-term debt	$	1,155.9	$	(89.8)	$	(9.3)	$	1,056.8	$	1,211.7	$	(99.5)	$	(10.9)	$	1,101.3

Table of Contents

Senior Secured Term Loan

On October 15, 2021, Gannett Holdings LLC ("Gannett Holdings"), a wholly-owned subsidiary of the Company, entered into the five-year senior secured term loan facility in an original aggregate principal amount of $516.0 million (the "Senior Secured Term Loan," formerly referred to as the New Senior Secured Term Loan) with Citibank N.A., as collateral agent and administrative agent for the lenders. On January 31, 2022, Gannett Holdings entered into an amendment (the "Term Loan Amendment") to the Senior Secured Term Loan to provide for new incremental senior secured term loans (the "Incremental Term Loans") in an aggregate principal amount of $50 million. The Incremental Term Loans have substantially identical terms as the Senior Secured Term Loan and are treated as a single tranche with the Senior Secured Term Loan. The Term Loan Amendment also amended the Senior Secured Term Loan to transition the interest rate base from the London Inter-bank Offered Rate ("LIBOR") to the Adjusted Term Secured Overnight Financing Rate ("Adjusted Term SOFR"). Effective as of March 21, 2022 and April 8, 2022, Gannett Holdings entered into two separate amendments to the Senior Secured Term Loan to provide for incremental senior secured term loans totaling an aggregate principal amount of $30.0 million (collectively, the "Exchanged Term Loans"). The Exchanged Term Loans have substantially identical terms as the Senior Secured Term Loan and Incremental Term Loans and are treated as a single tranche with the Senior Secured Term Loan and the Incremental Term Loans.

The Senior Secured Term Loan bears interest at a per annum rate equal to the Adjusted Term SOFR (which shall not be less than 0.50% per annum) plus a margin equal to 5.00% or an alternate base rate (which shall not be less than 1.50% per annum) plus a margin equal to 4.00%. Loans under the Senior Secured Term Loan may be prepaid, at the option of Gannett Holdings, at any time without premium. In addition, we are required to repay the Senior Secured Term Loan from time to time with (i) the proceeds of non-ordinary course asset sales and casualty and condemnation events, (ii) the proceeds of indebtedness not permitted under the Senior Secured Term Loan, and (iii) the aggregate amount of cash and cash equivalents on hand at the Company and its restricted subsidiaries in excess of $100 million at the end of each fiscal year of the Company. Subsequent to the amendment effective as of April 8, 2022, the Senior Secured Term Loan is amortized at $15.1 million per quarter (or, if the ratio of debt secured on an equal basis with the Senior Secured Term Loan less unrestricted cash of the Company and its restricted subsidiaries to Consolidated EBITDA (as such terms are defined in the Senior Secured Term Loan) (such ratio, the "First Lien Net Leverage Ratio"), for the most recently ended period of four consecutive fiscal quarters is equal to or less than 1.20 to 1.00, $7.6 million per quarter). All obligations under the Senior Secured Term Loan are secured by all or substantially all of the assets of the Company and the wholly-owned domestic subsidiaries of the Company (the "Senior Secured Term Loan Guarantors"). The obligations of Gannett Holdings under the Senior Secured Term Loan are guaranteed on a senior secured basis by the Company and the Senior Secured Term Loan Guarantors.

The Senior Secured Term Loan contains usual and customary covenants for credit facilities of this type, including a requirement to have minimum unrestricted cash of $30 million as of the last day of each fiscal quarter, and restricts, among other things, our ability to incur debt, grant liens, sell assets, make investments and pay dividends, in each case with customary exceptions, including an exception that permits dividends and repurchases of outstanding junior debt or equity in (i) an amount of up to $25 million per fiscal quarter if the First Lien Net Leverage Ratio for such fiscal quarter is equal to or less than 2.00 to 1.00, (ii) an amount of up to $50 million per fiscal quarter if the First Lien Net Leverage Ratio for such fiscal quarter is equal to or less than 1.50 to 1.00, and (iii) an unlimited amount if First Lien Net Leverage Ratio for such fiscal quarter is equal to or less than 1.00 to 1.00. As of June 30, 2023, the Company was in compliance with all of the covenants and obligations under the Senior Secured Term Loan.

As of June 30, 2023 and December 31, 2022, the Senior Secured Term Loan was recorded at carrying value, which approximated fair value, in the condensed consolidated balance sheets and was classified as Level 2.

For the three and six months ended June 30, 2023, the Company recognized interest expense of $10.4 million and $20.7 million, respectively, and paid cash interest of $10.4 million and $20.8 million, respectively. For the three and six months ended June 30, 2022, the Company recognized interest expense of $7.5 million and $14.4 million, respectively, and paid cash interest of $7.5 million and $14.4 million, respectively. For the three and six months ended June 30, 2023, the Company recognized amortization of original issue discount of $0.7 million and $1.5 million, respectively, and amortization of deferred financing costs of $0.2 million and $0.3 million, respectively. For the three and six months ended June 30, 2022, the Company recognized amortization of original issue discount of $0.9 million and $1.8 million, respectively, and amortization of deferred financing costs of $0.2 million and $0.4 million, respectively. Additionally, during the three months ended June 30, 2023, there was no gain or loss on early extinguishment of debt, and during the six months ended June 30, 2023, the Company recognized losses on early extinguishment of debt of $0.4 million. For the three and six months ended June 30, 2022, the Company recognized losses on early extinguishment of debt of $0.4 million and $1.8 million, respectively, related to the write-off of original issue discount and deferred financing costs as a result of early prepayments on the Senior Secured Term Loan.

Table of Contents

For the three and six months ended June 30, 2023, the Company made $15.1 million and $46.4 million, respectively, of prepayments, including quarterly amortization payments, which were classified as financing activities in the condensed consolidated statements of cash flows. As of June 30, 2023, the effective interest rate for the Senior Secured Term Loan was 11.1%.

Senior Secured Notes due 2026

On October 15, 2021, Gannett Holdings completed a private offering of $400 million aggregate principal amount of 6.00% first lien notes due November 1, 2026 (the "2026 Senior Notes"). The 2026 Senior Notes were issued pursuant to an indenture, dated October 15, 2021 (the "2026 Senior Notes Indenture") among Gannett Holdings, the Company, the guarantors from time to time party thereto (the "2026 Senior Notes Guarantors"), U.S. Bank National Association, as trustee, and U.S. Bank National Association, as collateral agent, registrar, paying agent and authenticating agent.

For the year ended December 31, 2022, the Company repurchased $54.8 million in aggregate principal amount of outstanding 2026 Senior Notes pursuant to privately negotiated agreements with certain holders of the 2026 Senior Notes. As part of these repurchases, we exchanged an aggregate principal amount equal to $30.0 million of the 2026 Senior Notes for $30.0 million of new term loans under the Senior Secured Term Loan. The repurchases were treated as an extinguishment of a portion of the 2026 Senior Notes, and as a result, for the year ended December 31, 2022, the Company recognized a net gain on the early extinguishment of debt of approximately $2.6 million, which included write-offs of unamortized original issue discount and deferred financing costs.

For the six months ended June 30, 2023, the Company repurchased $6.1 million in aggregate principal amount of outstanding 2026 Senior Notes at a discount to par value pursuant to a privately negotiated agreement with a holder of the 2026 Senior Notes. As a result of this transaction, for the six months ended June 30, 2023, the Company recognized a net gain on the early extinguishment of debt of approximately $0.9 million, which included the write-off of unamortized original issue discount and deferred financing costs.

Interest on the 2026 Senior Notes is payable semi-annually in arrears, beginning on May 1, 2022. The 2026 Senior Notes mature on November 1, 2026, unless redeemed or repurchased earlier pursuant to the 2026 Senior Notes Indenture. The 2026 Senior Notes may be redeemed at the option of Gannett Holdings, in whole or in part, at any time and from time to time after November 1, 2023, at the redemption prices set forth in the 2026 Senior Notes Indenture. At any time prior to such date, Gannett Holdings will be entitled at its option to redeem all, but not less than all, of the 2026 Senior Notes at the "make-whole" redemption price set forth in the 2026 Senior Notes Indenture. Additionally, at any time prior to November 1, 2023, Gannett Holdings may, on one or more occasions, redeem up to 40% of the aggregate principal amount of the 2026 Senior Notes at the redemption price set forth in the 2026 Senior Notes Indenture with the net cash proceeds of certain equity offerings. If certain changes of control with respect to Gannett Holdings or the Company occur, Gannett Holdings must offer to purchase the 2026 Senior Notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest to, but excluding, the date of purchase. In addition, during any twelve-month period commencing on or after October 15, 2021 and ending prior to November 1, 2023, up to 10% of the aggregate principal amount of the 2026 Senior Notes issued under the 2026 Senior Notes Indenture may be redeemed at a purchase price equal to 103% of the aggregate principal amount of the 2026 Senior Notes to be redeemed, plus accrued and unpaid interest, if any, to but excluding, the redemption date.

The 2026 Senior Notes are unconditionally guaranteed, jointly and severally, on a senior secured basis by the 2026 Senior Notes Guarantors. The 2026 Senior Notes and such guarantees are secured on a first-priority basis by the collateral, consisting of substantially all of the assets of Gannett Holdings and the 2026 Senior Notes Guarantors, subject to certain intercreditor arrangements.

The 2026 Senior Notes Indenture limits the Company and its restricted subsidiaries' ability to, among other things, make investments, loans, advances, guarantees and acquisitions; incur or guarantee additional debt and issue certain disqualified equity interests and preferred stock; make certain restricted payments, including a limit on dividends on equity securities or payments to redeem, repurchase or retire equity securities or other indebtedness; dispose of assets; create liens on assets to secure debt; engage in transactions with affiliates; enter into certain restrictive agreements; and consolidate, merge, sell or otherwise dispose of all or substantially all of their or the 2026 Senior Notes Guarantor's assets. These covenants are subject to a number of limitations and exceptions. The 2026 Senior Notes Indenture also contains customary events of default.

Table of Contents

As of June 30, 2023 and December 31, 2022, the 2026 Senior Notes were recorded at carrying value in the condensed consolidated balance sheets, which did not approximate fair value. The 2026 Senior Notes were classified as Level 2, and based on unadjusted quoted prices in the active market obtained from third-party pricing services, the Company determined that the estimated fair value of the 2026 Senior Notes was $287.6 million and $281.7 million as of June 30, 2023 and December 31, 2022, respectively, and was primarily affected by fluctuations in market interest rates.

The unamortized original issue discount and deferred financing costs will be amortized over the remaining contractual life of the 2026 Senior Notes using the effective interest method. For the three and six months ended June 30, 2023, the Company recognized interest expense of $5.1 million and $10.1 million, respectively, and paid cash interest of $10.2 million and $10.3 million, respectively. For the three and six months ended June 30, 2022, the Company recognized interest expense of $5.5 million and $11.5 million, respectively, and paid cash interest of $12.3 million and $12.9 million, respectively. For the three and six months ended June 30, 2023, the Company recognized amortization of original issue discount of $0.6 million and $1.2 million, respectively, and amortization of deferred financing costs of $0.5 million and $1.0 million, respectively. For the three and six months ended June 30, 2022, the Company recognized amortization of original discount of $0.7 million and $1.4 million, respectively, and amortization of deferred financing costs of $0.5 million and $1.1 million, respectively. As of June 30, 2023, the effective interest rate on the 2026 Senior Notes was 7.3%.

Senior Secured Convertible Notes due 2027

The $497.1 million in aggregate principal amount of 6.0% Senior Secured Convertible Notes due 2027 (the "2027 Notes") were issued pursuant to an Indenture dated as of November 17, 2020, as amended by the First Supplemental Indenture dated as of December 21, 2020 and the Second Supplemental Indenture dated as of February 9, 2021 (collectively, the "2027 Notes Indenture"), between the Company and U.S. Bank National Association, as trustee.

In connection with the issuance of the 2027 Notes, the Company entered into an Investor Agreement (the "Investor Agreement") with the holders of the 2027 Notes (the "Holders") establishing certain terms and conditions concerning the rights and restrictions on the Holders with respect to the Holders' ownership of the 2027 Notes. The Company also entered into an amendment to the Registration Rights Agreement dated November 19, 2019, between the Company and FIG LLC.

Interest on the 2027 Notes is payable semi-annually in arrears. The 2027 Notes mature on December 1, 2027, unless earlier repurchased or converted. The 2027 Notes may be converted at any time by the holders into cash, shares of the Company's common stock, par value $0.01 per share (the "Common Stock") or any combination of cash and Common Stock, at the Company's election. The initial conversion rate is 200 shares of Common Stock per $1,000 principal amount of the 2027 Notes, which is equal to a conversion price of $5.00 per share of Common Stock (the "Conversion Price").

The conversion rate is subject to customary adjustment provisions as provided in the 2027 Notes Indenture. In addition, the conversion rate will be subject to adjustment in the event of any issuance or sale of Common Stock (or securities convertible into Common Stock) at a price equal to or less than the Conversion Price in order to ensure that following such issuance or sale, the 2027 Notes would be convertible into approximately 42% (adjusted for repurchases and certain other events that reduce the outstanding amount of the 2027 Notes) of the Common Stock after giving effect to such issuance or sale (assuming the initial principal amount of the 2027 Notes remains outstanding). After giving effect to the repurchase of $11.8 million in aggregate principal amount of outstanding 2027 Notes during the year ended December 31, 2021, such percentage is approximately 41%.

Upon the occurrence of a "Make-Whole Fundamental Change" (as defined in the 2027 Notes Indenture), the Company will in certain circumstances increase the conversion rate for a specified period of time. If a "Fundamental Change" (as defined in the 2027 Notes Indenture) occurs, the Company will be required to offer to repurchase the 2027 Notes at a repurchase price of 110% of the principal amount thereof.

Holders of the 2027 Notes will have the right to put up to approximately $100 million of the 2027 Notes at par on or after the date that is 91 days after the maturity date of the Senior Secured Term Loan.

Under the 2027 Notes Indenture, the Company can only pay cash dividends up to an agreed-upon amount, provided the ratio of consolidated debt to EBITDA (as such terms are defined in the 2027 Notes Indenture) does not exceed a specified ratio. In addition, the 2027 Notes Indenture provides that, at any time that the Company's Total Gross Leverage Ratio (as defined in the 2027 Notes Indenture) exceeds 1.5 and the Company approves the declaration of a dividend, the Company must offer to purchase a principal amount of 2027 Notes equal to the proposed amount of the dividend.

Table of Contents

Until the four-year anniversary of the issuance date, the Company will have the right to redeem for cash up to approximately $99.4 million of the 2027 Notes at a redemption price of 130% of the principal amount thereof, with such amount reduced ratably by any principal amount of 2027 Notes that has been converted by the holders or redeemed or purchased by the Company.

The 2027 Notes are guaranteed by Gannett Holdings and any subsidiaries of the Company that guarantee the Senior Secured Term Loan. The 2027 Notes are secured by the same collateral that secures the Senior Secured Term Loan. The 2027 Notes rank as senior secured debt of the Company and are secured by a second priority lien on the same collateral package that secured the indebtedness incurred in connection with the Senior Secured Term Loan.

The 2027 Notes Indenture includes affirmative and negative covenants, including limitations on liens, indebtedness, dispositions, loans, advances and investors, sale and leaseback transactions, restricted payments, transactions with affiliates, restrictions on dividends and other payment restrictions affecting restricted subsidiaries, negative pledges and modifications to certain agreements. The 2027 Notes Indenture also requires that the Company maintain, as of the last day of each fiscal quarter, at least $30.0 million of Qualified Cash (as defined in the 2027 Notes Indenture). The 2027 Notes Indenture includes customary events of default.

The 2027 Notes have two components: (i) a debt component, and (ii) an equity component. As of June 30, 2023 and December 31, 2022, the debt component of the 2027 Notes was recorded at carrying value in the condensed consolidated balance sheets. The carrying value of the 2027 Notes reflected the balance of the unamortized discount related to the value of the conversion feature assessed at inception and did not approximate fair value as of June 30, 2023 and December 31, 2022. The 2027 Notes were classified as Level 2, and based on unadjusted quoted prices in the active market obtained from third-party pricing services, the Company determined that the estimated fair value of the 2027 Notes was $374.2 million and $353.7 million as of June 30, 2023 and December 31, 2022, respectively, and was primarily affected by fluctuations in market interest rates and the price of the Company's Common Stock. The fair value of the equity component was classified as Level 3 because it was measured at fair value using a binomial lattice model using assumptions based on market information and historical data, and significant unobservable inputs. As of June 30, 2023 and December 31, 2022, the amount of the conversion feature recorded in Additional paid-in capital was $279.6 million.

For the three and six months ended June 30, 2023, the Company recognized interest expense of $7.3 million and $14.5 million, respectively, and paid interest expense of $14.6 million for both the three and six months ended June 30, 2023. For the three and six months ended June 30, 2022, the Company recognized interest expense of $7.3 million and $14.5 million, respectively, and paid interest expense of $14.6 million for both the three and six months ended June 30, 2022. In addition, during the three and six months ended June 30, 2023, the Company recognized amortization of the original issue discount of $3.3 million and $6.5 million, respectively, and an immaterial amount of amortization of deferred financing costs. For the three and six months ended June 30, 2022, the Company recognized amortization of original issue discount of $2.9 million and $5.8 million, respectively, and an immaterial amount of amortization of deferred financing costs. As of June 30, 2023, the effective interest rate on the liability component of the 2027 Notes was 10.5%.

For the six months ended June 30, 2023, no shares were issued upon conversion, exercise, or satisfaction of the required conditions. Refer to Note 10 — Supplemental equity information for details on the impact of the 2027 Notes to diluted earnings per share under the if-converted method.

Senior Convertible Notes due 2024

The $3.3 million principal value of the remaining 4.75% convertible senior notes due April 15, 2024 (the "2024 Notes") outstanding is reported within the Current portion of long-term debt in the condensed consolidated balance sheets. As of June 30, 2023, the effective interest rate on the 2024 Notes was 6.05%. As of June 30, 2023 and December 31, 2022, the 2024 Notes were recorded at carrying value, which approximated fair value, in the condensed consolidated balance sheets and were classified as Level 2.

NOTE 7 — Pensions and other postretirement benefit plans

We, along with our subsidiaries, sponsor various defined benefit retirement plans, including plans established under collective bargaining agreements. Our retirement plans include the Gannett Retirement Plan (the "GR Plan"), the Newsquest and Romanes Pension Schemes in the U.K., and other defined benefit and defined contribution plans. We also provide health care and life insurance benefits to certain retired employees who meet age and service requirements.

Table of Contents

Retirement plan costs include the following components:


	Pension benefits				Postretirement benefits
	Three months ended June 30,				Three months ended June 30,
In thousands	2023		2022		2023		2022
Operating expenses:
Service cost - benefits earned during the period	$	346	$	434	$	10	$	23
Non-operating expenses:
Interest cost on benefit obligation	20,894		18,132		632		434
Expected return on plan assets	(23,814)		(36,509)		—		—
Amortization of prior service benefit	17		—		—		—
Amortization of actuarial loss (gain)	544		25		(536)		(242)

Total non-operating (benefit) expenses	$	(2,359)	$	(18,352)	$	96	$	192
Total expense (benefit) for retirement plans	$	(2,013)	$	(17,918)	$	106	$	215


	Pension benefits				Postretirement benefits
	Six months ended June 30,				Six months ended June 30,
In thousands	2023		2022		2023		2022
Operating expenses:
Service cost - benefits earned during the period	$	670	$	909	$	20	$	38
Non-operating expenses:
Interest cost on benefit obligations	42,095		36,781		1,264		885
Expected return on plan assets	(47,482)		(73,790)		—		—
Amortization of prior service benefit	33		—		—		—
Amortization of actuarial loss (gain)	1,084		45		(1,072)		(294)

Total non-operating (benefit) expense	$	(4,270)	$	(36,964)	$	192	$	591
Total (benefit) expense for retirement plans	$	(3,600)	$	(36,055)	$	212	$	629

Contributions

We are contractually obligated to contribute to our pension and postretirement benefit plans. During the six months ended June 30, 2023, we contributed $0.6 million and $2.8 million to our pension and other postretirement plans, respectively. Beginning with the quarter ended December 31, 2022, and ending with the quarter ending September 30, 2024, the GR Plan's appointed actuary will certify the GR Plan's funded status for each quarter (the "Quarterly Certification") in accordance with U.S. GAAP. If the GR Plan is less than 100% funded, the Company will make a $1.0 million contribution to the GR Plan no later than 60 days following the receipt of the Quarterly Certification, provided, however, that the Company's obligation to make additional contractual contributions will terminate the earlier of (a) the day following the date that a contractual contribution would be due for the quarter ending September 30, 2024, and (b) the date the Company has made a total of $5.0 million of contractual contributions subsequent to June 30, 2022. As of June 30, 2023, the GR Plan was more than 100% funded.

NOTE 8 — Fair value measurement

In accordance with ASC 820 "Fair Value Measurement," fair value measurements are required to be disclosed using a three-tiered fair value hierarchy which distinguishes between assumptions based on market data (observable inputs) and the Company's own assumptions (unobservable inputs). Level 1 refers to fair values determined based on quoted prices in active markets for identical assets or liabilities, Level 2 refers to fair values estimated using significant other observable inputs and Level 3 includes fair values estimated using significant unobservable inputs.

As of June 30, 2023 and December 31, 2022, assets and liabilities recorded at fair value and measured on a recurring basis primarily consist of pension plan assets. As permitted by U.S. GAAP, we use net asset values ("NAV") as a practical expedient to determine the fair value of certain investments. These investments measured at NAV have not been classified in the fair value hierarchy.

Table of Contents

The Company's debt is recorded on the condensed consolidated balance sheets at carrying value. Refer to Note 6 — Debt for additional discussion regarding fair value of the Company's debt instruments.

Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). Assets held for sale (Level 3), which are recorded in Other current assets on the condensed consolidated balance sheets, are measured on a nonrecurring basis and are evaluated using executed purchase agreements, letters of intent or third-party valuation analyses when certain circumstances arise. The Company has classified certain real estate assets as held for sale, primarily at the Gannett Media segment, totaling $27.5 million and $8.4 million as of June 30, 2023 and December 31, 2022, respectively, as part of our plan to monetize non-core assets. We expect to record a gain on the sale of assets held for sale as of June 30, 2023 in the third quarter of 2023 upon closing of the transactions. During the three and six months ended June 30, 2023, we recognized a net loss on the sale of assets of $0.1 million and a net gain of $17.5 million, respectively, primarily in connection with assets held for sale at December 31, 2022. The Company performs its annual goodwill and indefinite-lived intangible impairment assessment during the fourth quarter of the year. Any resulting asset impairment would require that the asset be recorded at its fair value. The resulting fair value measurements of the assets are considered to be Level 3 measurements. Refer to Note 4 — Goodwill and intangible assets for additional discussion regarding the annual impairment assessment.

NOTE 9 — Income taxes

The following table outlines our pre-tax net loss and income tax amounts:


	Three months ended June 30,						Six months ended June 30,
In thousands	2023			2022			2023			2022
Loss before income taxes	$	(11,357)		$	(31,542)		$	(18,426)		$	(42,251)
Provision (benefit) for income taxes	1,333			22,158			(15,996)			14,551
Effective tax rate	(11.7)		%	(70.3)		%	86.8		%	(34.4)		%

The provision (benefit) for income taxes is calculated by applying the projected annual effective tax rate for the year to the current period income or loss before tax plus the tax effect of any significant or unusual items (discrete events), and changes in tax laws. The provision for income taxes for the three months ended June 30, 2023, was mainly driven by a decrease in the estimated annual effective tax rate applied to the full year resulting from an increase in the net income before tax projections used in the second quarter of 2023, the change in valuation allowances on non-deductible U.S. interest expense carryforwards, and the global intangible low-taxed income inclusion. The provision was calculated using an estimated annual effective tax rate of 110.0%. The estimated annual effective tax rate is principally impacted by valuation allowances on non-deductible interest expense carryforwards, the global intangible low-taxed income inclusion, and foreign tax expense, which is partially offset by the benefit of U.S. pre-tax book loss. The estimated annual effective tax rate is based on the projected tax expense for the full year.

The benefit for income taxes for the six months ended June 30, 2023, was mainly driven by the tax benefit of the pre-tax book loss, the change in valuation allowances on non-deductible U.S. interest expense carryforwards, and the global intangible low-taxed income inclusion.

The total amount of unrecognized tax benefits that, if recognized, may impact the effective tax rate was approximately $52.1 million and $43.3 million as of June 30, 2023 and December 31, 2022, respectively. The amount of accrued interest and penalties payable related to unrecognized tax benefits was $4.4 million and $3.9 million as of June 30, 2023 and December 31, 2022, respectively.

It is reasonably possible that further adjustments to our unrecognized tax benefits may be made within the next twelve months due to audit settlements and regulatory interpretations of existing tax laws. At this time, an estimate of the potential change to the amount of unrecognized tax benefits cannot be made.

The provision for income taxes for the three months ended June 30, 2022, was mainly driven by the valuation allowances on non-deductible interest expense carryforwards, the change in the estimated annual effective tax rate as a result of the change in the net income before tax forecast in the second quarter of 2022, and the global intangible low taxed income inclusion from

Table of Contents

our wholly owned U.K. subsidiary. The provision was calculated using the estimated annual effective tax rate of negative 43.3%.

The provision for income taxes for the six months ended June 30, 2022, was mainly driven by the valuation allowances on non-deductible interest expense carryforwards, pre-tax loss benefit during the period, and the global intangible low taxed income inclusion.

On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (the "Inflation Reduction Act"), which includes, among other provisions, changes to the U.S. corporate income tax system, including a 15% minimum tax based on "average adjusted financial statement income" exceeding $1 billion for any three consecutive years preceding the tax year and a 1% excise tax on net repurchases of stock in excess of $1 million after December 31, 2022. During the three and six months ended June 30, 2023, we did not experience a material financial impact from the Inflation Reduction Act. We do not anticipate a material financial impact from the Inflation Reduction Act during the second half of 2023.

NOTE 10 — Supplemental equity information

Loss per share

The following table sets forth the information to compute basic and diluted loss per share:


	Three months ended June 30,				Six months ended June 30,
In thousands, except per share data	2023		2022		2023		2022
Net loss attributable to Gannett	$	(12,677)	$	(53,688)	$	(2,333)	$	(56,655)



Basic weighted average shares outstanding	139,805		137,132		138,873		136,781



Diluted weighted average shares outstanding	139,805		137,132		138,873		136,781

Loss per share attributable to Gannett - basic	$	(0.09)	$	(0.39)	$	(0.02)	$	(0.41)
Loss per share attributable to Gannett - diluted	$	(0.09)	$	(0.39)	$	(0.02)	$	(0.41)

The Company excluded the following securities from the computation of diluted loss per share because their effect would have been antidilutive:


	Three months ended June 30,		Six months ended June 30,
In thousands	2023	2022	2023	2022
Warrants	845	845	845	845
Stock options	6,068	6,068	6,068	6,068
Restricted stock grants (a)	8,937	11,789	8,937	11,789
2027 Notes (b)	97,057	97,057	97,057	97,057

(a)Includes Restricted stock awards ("RSAs"), Restricted stock units ("RSUs") and Performance stock units ("PSUs").

(b)Represents the total number of shares that would be convertible at June 30, 2023 and 2022 as stipulated in the 2027 Notes Indenture.

The 2027 Notes may be converted at any time by the holders into cash, shares of the Company's Common Stock or any combination of cash and Common Stock, at the Company's election. Conversion of all of the 2027 Notes into Common Stock (assuming the maximum increase in the conversion rate as a result of a Make-Whole Fundamental Change but no other adjustments to the conversion rate), would result in the issuance of an aggregate of 287.2 million shares of Common Stock. The Company has excluded approximately 287.2 million shares from the income (loss) per share calculation, representing the total number of shares issuable assuming the maximum increase in the conversion rate. As of June 30, 2023, 97.1 million shares representing the total number of shares that would be convertible were excluded from the income (loss) per share calculation because their effect would be antidilutive.

Table of Contents

Share-based compensation

Share-based compensation expense was $5.0 million and $8.8 million for the three and six months ended June 30, 2023, respectively, and $5.4 million and $8.8 million for the three and six months ended June 30, 2022, respectively.

The total compensation cost not yet recognized related to non-vested awards as of June 30, 2023 was $24.7 million, which is expected to be recognized over a weighted-average period of 1.9 years through May 2025.

Equity awards

During the six months ended June 30, 2023, a total of 5.2 million RSAs were granted. RSAs generally vest one-third on each of the first three anniversaries of the date of grant, subject to the participants' continued employment with the Company and the terms of the applicable award agreement. The weighted average grant date fair value of RSAs granted during the six months ended June 30, 2023 was $1.87.

Preferred stock

The Company has authorized 300,000 shares of preferred stock, par value $0.01 per share, issuable in one or more series designated by the Company's Board of Directors. The Company previously designated 150,000 preferred shares as Series A Junior Participating Preferred Stock, which were eliminated on May 5, 2023 upon the filing of a Certificate of Elimination with the Secretary of State of the State of Delaware and which shares were returned to the status of authorized but unissued shares of preferred stock, without designation. There were no issuances of preferred stock during the six months ended June 30, 2023.

Stock Repurchase Program

On February 1, 2022, the Company's Board of Directors authorized the repurchase of up to $100 million (the "Stock Repurchase Program") of the Company's Common Stock. Repurchases may be made from time to time through open market purchases or privately negotiated transactions, pursuant to one or more plans established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, or by means of one or more tender offers, in each case, as permitted by securities laws and other legal requirements. The amount and timing of the purchases, if any, will depend on a number of factors, including, but not limited to, the price and availability of the Company's shares, trading volume, capital availability, Company performance and general economic and market conditions. The Stock Repurchase Program may be suspended or discontinued at any time. Further, future repurchases under our Stock Repurchase Program may be subject to various conditions under the terms of our various debt instruments and agreements, unless an exception is available or we obtain a waiver or similar relief.

During the three and six months ended June 30, 2023, the Company did not repurchase any shares of Common Stock under the Stock Repurchase Program. As of June 30, 2023, the remaining authorized amount under the Stock Repurchase Program was approximately $96.9 million. The Company does not anticipate repurchasing any shares of Common Stock pursuant to the Stock Repurchase Program during the second half of 2023.

Table of Contents

Accumulated other comprehensive loss

The following tables summarize the components of, and the changes in, Accumulated other comprehensive loss, net of tax:


	Six months ended June 30, 2023						Six months ended June 30, 2022
In thousands	Pension and postretirement benefit plans		Foreign currency translation		Total		Pension and postretirement benefit plans		Foreign currency translation		Total
Beginning balance	$	(86,351)	$	(14,880)	$	(101,231)	$	50,870	$	9,128	$	59,998
Other comprehensive income (loss) before reclassifications, net of taxes	15,342		12,164		27,506		10,138		(23,204)		(13,066)
Amounts reclassified from accumulated other comprehensive income (loss) (a)(b)	31		—		31		(185)		—		(185)
Net current period other comprehensive income (loss), net of taxes	15,373		12,164		27,537		9,953		(23,204)		(13,251)
Ending balance	$	(70,978)	$	(2,716)	$	(73,694)	$	60,823	$	(14,076)	$	46,747

(a)Amounts reclassified from accumulated other comprehensive (loss) income are included in the computation of net periodic benefit cost. See Note 7 — Pensions and other postretirement benefit plans.

(b)Amounts reclassified from accumulated other comprehensive (loss) income are recorded net of tax impacts of $14 thousand and $64 thousand for the six months ended June 30, 2023 and 2022, respectively.

NOTE 11 — Commitments, contingencies and other matters

Legal Proceedings

The Company is and may become involved from time to time in legal proceedings in the ordinary course of its business, including, but not limited to, matters such as libel, invasion of privacy, intellectual property infringement, wrongful termination actions, complaints alleging employment discrimination, and regulatory investigations and inquiries. In addition, the Company is involved from time to time in governmental and administrative proceedings concerning employment, labor, environmental, and other claims. Insurance coverage mitigates potential loss for certain of these matters. Historically, such claims and proceedings have not had a material adverse effect on the Company's consolidated results of operations or financial position.

We are also defendants in judicial and administrative proceedings involving matters incidental to our business. Although the Company is unable to predict with certainty the eventual outcome of any litigation, regulatory investigation or inquiry, in the opinion of management, the Company does not believe it is reasonably possible that its current and threatened legal proceedings will have a material adverse effect on the Company's business, financial position or consolidated results of operations. Given the inherent unpredictability of these types of proceedings, however, it is possible that future adverse outcomes could have a material effect on the Company's financial results.

On June 20, 2023, the Company filed a civil action against Google LLC and Alphabet Inc. (together, "Google") in the U.S. District Court in the Southern District of New York seeking injunctive relief and damages for the anticompetitive monopolization of advertising technology markets and for deceptive commercial practices. The Company's complaint details more than a dozen anticompetitive and deceptive acts that the Company believes demonstrate Google's unfair control and manipulation of all sides of each online advertising transaction. The Company intends to vigorously pursue this action. However, at this stage, the Company is unable to predict the outcome or impact on its business and financial results. The Company is accounting for this matter as a gain contingency, and will record any such gain in future periods, if and when the contingency is resolved, in accordance with ASC 450 "Contingencies." We do not expect the lawsuit to be a significant cost to us.

NOTE 12 — Segment reporting

We define our reportable segments based on the way the Chief Operating Decision Maker ("CODM"), which is our Chief Executive Officer, manages the operations for purposes of allocating resources and assessing performance. Our reportable segments include the following:

Table of Contents

•Gannett Media is comprised of our portfolio of local, regional, national, and international newspaper publishers. The results of this segment include Advertising and marketing services revenues from local, classified, and national advertising across multiple platforms, including print, online, mobile, and tablet as well as niche publications, Circulation revenues from home delivery, digital distribution and single copy sales of our publications, and Other revenues, mainly from commercial printing, distribution arrangements, revenues from our events business, digital content syndication and affiliate revenues, and third-party newsprint sales. The Gannett Media reportable segment is an aggregation of two operating segments: Domestic Gannett Media and Newsquest.

•Digital Marketing Solutions is comprised of our digital marketing services companies under the brand LocaliQ. The results of this segment include Advertising and marketing services revenues through multiple services, including search advertising, display advertising, search optimization, social media, website development, web presence products, customer relationship management, and software-as-a-service solutions.

In addition to the reportable segments above, we have a Corporate and other category that includes activities not directly attributable to a specific segment. This category primarily consists of broad corporate functions, including legal, human resources, accounting, analytics, finance and marketing, as well as other general business costs.

In the ordinary course of business, our reportable segments enter into transactions with one another. While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues and expenses recognized by the segment that is the counterparty to the transaction are eliminated in consolidation and do not affect consolidated results.

The CODM uses Adjusted EBITDA and Adjusted EBITDA margin to evaluate the performance of the segments and allocate resources. Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial performance measures we believe offer a useful view of the overall operation of our businesses and may be different than similarly-titled measures used by other companies. We define Adjusted EBITDA as Net income (loss) attributable to Gannett before (1) Income tax expense (benefit), (2) Interest expense, (3) Gains or losses on the early extinguishment of debt, (4) Non-operating pension income, (5) Loss on convertible notes derivative, (6) Depreciation and amortization, (7) Integration and reorganization costs, (8) Other operating expenses, including third-party debt expenses and acquisition costs, (9) Asset impairments, (10) Goodwill and intangible impairments, (11) Gains or losses on the sale or disposal of assets, (12) Share-based compensation, and (13) certain other non-recurring charges. We define Adjusted EBITDA margin as Adjusted EBITDA divided by total Operating revenues.

Management considers Adjusted EBITDA and Adjusted EBITDA margin to be important metrics to evaluate and compare the ongoing operating performance of our segments on a consistent basis across reporting periods as they eliminate the effect of items that we do not believe are indicative of each segment's core operating performance.

The following tables present our segment information:


	Three months ended June 30, 2023
In thousands	Gannett Media			Digital Marketing Solutions			Corporate and other		Intersegment Eliminations		Consolidated
Advertising and marketing services - external sales	$	230,521		$	122,789		$	—	$	—	$	353,310
Advertising and marketing services - intersegment sales	37,908			—			—		(37,908)		—
Circulation	233,612			—			—		—		233,612
Other	83,762			—			1,673		—		85,435
Total operating revenues	$	585,803		$	122,789		$	1,673	$	(37,908)	$	672,357

Adjusted EBITDA (non-GAAP basis)	$	65,819		$	15,470		$	(10,138)	$	—	$	71,151
Adjusted EBITDA margin (non-GAAP basis)	11.2		%	12.6		%	NM		NM		10.6		%

NM indicates not meaningful.

Table of Contents


	Three months ended June 30, 2022
In thousands	Gannett Media			Digital Marketing Solutions			Corporate and other		Intersegment Eliminations		Consolidated
Advertising and marketing services - external sales	$	265,596		$	118,013		$	—	$	—	$	383,609
Advertising and marketing services - intersegment sales	35,605			—			—		(35,605)		—
Circulation	274,624			—			—		—		274,624
Other	89,019			—			1,408		—		90,427
Total operating revenues	$	664,844		$	118,013		$	1,408	$	(35,605)	$	748,660

Adjusted EBITDA (non-GAAP basis)	$	50,856		$	14,306		$	(14,311)	$	—	$	50,851
Adjusted EBITDA margin (non-GAAP basis)	7.6		%	12.1		%	NM		NM		6.8		%

NM indicates not meaningful.


	Six months ended June 30, 2023
In thousands	Gannett Media			Digital Marketing Solutions			Corporate and other		Intersegment Eliminations		Consolidated
Advertising and marketing services - external sales	$	458,551		$	235,606		$	—	$	—	$	694,157
Advertising and marketing services - intersegment sales	72,301			—			—		(72,301)		—
Circulation	474,897			—			—		—		474,897
Other	169,149			—			3,071		—		172,220
Total operating revenues	$	1,174,898		$	235,606		$	3,071	$	(72,301)	$	1,341,274

Adjusted EBITDA (non-GAAP basis)	$	123,082		$	27,153		$	(16,182)	$	—	$	134,053
Adjusted EBITDA margin (non-GAAP basis)	10.5		%	11.5		%	NM		NM		10.0		%

NM indicates not meaningful.


	Six months ended June 30, 2022
In thousands	Gannett Media			Digital Marketing Solutions			Corporate and other		Intersegment Eliminations		Consolidated
Advertising and marketing services - external sales	$	531,001		$	227,722		$	—	$	—	$	758,723
Advertising and marketing services - intersegment sales	68,962			—			—		(68,962)		—
Circulation	563,226			—			—		—		563,226
Other	172,074			—			2,714		—		174,788
Total operating revenues	$	1,335,263		$	227,722		$	2,714	$	(68,962)	$	1,496,737

Adjusted EBITDA (non-GAAP basis)	$	119,504		$	25,486		$	(29,968)	$	—	$	115,022
Adjusted EBITDA margin (non-GAAP basis)	8.9		%	11.2		%	NM		NM		7.7		%

NM indicates not meaningful.

Table of Contents

The following table presents our reconciliation of Net loss attributable to Gannett to Adjusted EBITDA and Net loss attributable to Gannett margin to Adjusted EBITDA margin:


	Three months ended June 30,						Six months ended June 30,
In thousands	2023			2022			2023			2022
Net loss attributable to Gannett	$	(12,677)		$	(53,688)		$	(2,333)		$	(56,655)
Provision (benefit) for income taxes	1,333			22,158			(15,996)			14,551
Interest expense	28,559			26,084			56,889			52,090
(Gain) loss on early extinguishment of debt	—			749			(496)			3,492
Non-operating pension income	(2,263)			(18,160)			(4,078)			(36,373)

Depreciation and amortization	39,784			49,530			83,482			97,313
Integration and reorganization costs	7,287			15,745			19,414			27,143
Other operating expenses	229			314			458			1,416
Asset impairments	1,177			85			1,182			939

(Gain) loss on sale or disposal of assets, net	146			372			(17,535)			(2,432)
Share-based compensation expense	5,047			5,385			8,783			8,778
Other items	2,529			2,277			4,283			4,760
Adjusted EBITDA (non-GAAP basis)	$	71,151		$	50,851		$	134,053		$	115,022
Net loss attributable to Gannett margin	(1.9)		%	(7.2)		%	(0.2)		%	(3.8)		%
Adjusted EBITDA margin (non-GAAP basis)	10.6		%	6.8		%	10.0		%	7.7		%

Asset information by segment is not a key measure of performance used by the CODM function. Accordingly, we have not disclosed asset information by segment. Additionally, equity income in unconsolidated investees, net, interest expense, other non-operating items, net, and provision (benefit) for income taxes, as reported in the condensed consolidated financial statements, are not part of operating income and are primarily recorded at the corporate level.

NOTE 13 — Other supplemental information

Cash and cash equivalents, including restricted cash

Cash equivalents represent highly liquid certificates of deposit which have original maturities of three months or less. Restricted cash is held as cash collateral for certain business operations. Restricted cash primarily consists of funding for letters of credit, cash held in an irrevocable grantor trust for our deferred compensation plans and cash held with banking institutions for insurance.

The following table presents a reconciliation of cash, cash equivalents and restricted cash:


	June 30,
In thousands	2023		2022
Cash and cash equivalents	$	106,633	$	87,331
Restricted cash included in other current assets	998		1,117
Restricted cash included in pension and other assets	10,502		11,023
Total cash, cash equivalents and restricted cash	$	118,133	$	99,471

Table of Contents

Supplemental cash flow information

The following table presents supplemental cash flow information, including non-cash investing and financing activities:


	Six months ended June 30,
In thousands	2023		2022
Cash paid for taxes, net of refunds	$	3,502	$	2,396
Cash paid for interest	45,702		41,898
Non-cash investing and financing activities:
Accrued capital expenditures	$	1,802	$	1,406

Accounts payable and accrued liabilities

A breakout of Accounts payable and accrued liabilities is presented below:


In thousands	June 30, 2023		December 31, 2022
Accounts payable	$	159,188	$	189,094
Compensation	70,045		87,937
Taxes (primarily property, sales, and payroll taxes)	10,579		11,940
Benefits	19,164		21,942
Interest	5,809		6,162
Other	37,523		34,773
Accounts payable and accrued liabilities	$	302,308	$	351,848

Table of Contents

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations and quantitative and qualitative disclosures should be read in conjunction with our unaudited condensed consolidated financial statements and related notes and with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission. Management's Discussion and Analysis of Financial Condition and Results of Operations contains a number of forward-looking statements that reflect our plans, estimates, and beliefs, all of which are based on our current expectations and could be affected by certain uncertainties, risks, and other factors described under Cautionary Note Regarding Forward-Looking Statements, Risk Factors, and elsewhere throughout this Quarterly Report, as well as the factors described in our Annual Report on Form 10-K for the year ended December 31, 2022, and subsequent periodic reports filed with the Securities and Exchange Commission, particularly under "Risk Factors." Our actual results could differ materially from those discussed in the forward-looking statements.

OVERVIEW

We are a subscription-led and digitally-focused media and marketing solutions company committed to empowering communities to thrive. We operate a scalable, data-driven media platform that aligns with consumer and digital marketing trends. We aim to be the premier source for clarity, connections, and solutions within our communities. Our mission is to provide unbiased, unique local and national content and unrivaled marketing solutions to the communities we serve. We seek to drive audience growth and engagement by delivering valuable content experiences to our consumers, while offering the unique products and marketing expertise our advertisers desire. Our strategy prioritizes the growth of highly recurring digital businesses, while maximizing the lifetime value of our legacy print business, and we expect the execution of this strategy to enable us to continue our evolution to a digitally-focused content platform.

Our current portfolio of media assets includes the USA TODAY NETWORK, which includes USA TODAY and local media organizations in 43 states in the United States (the "U.S."), and Newsquest, a wholly-owned subsidiary operating in the United Kingdom (the "U.K."). We also own digital marketing services companies under the brand LocaliQ, which provide a cloud-based platform of products to enable small and medium-sized businesses ("SMBs") to accomplish their marketing goals. In addition, our portfolio includes what we believe is the largest media-owned events business in the U.S., USA TODAY NETWORK Ventures.

Through USA TODAY, our network of local properties, and Newsquest, we deliver high-quality, trusted content with a commitment to balanced, unbiased journalism, where and when consumers want to engage with it on virtually any device or platform. Additionally, we have strong relationships with hundreds of thousands of local and national businesses in both our U.S. and U.K. markets due to our large local and national sales forces and a robust advertising and digital marketing solutions product suite. We report in two segments, Gannett Media and Digital Marketing Solutions ("DMS"). We also have a Corporate and other category that includes activities not directly attributable to a specific reportable segment and includes broad corporate functions, such as legal, human resources, accounting, analytics, finance and marketing, as well as other general business costs. A full description of our reportable segments is included in Note 12 — Segment reporting in the notes to the condensed consolidated financial statements.

Business Trends

We have considered several industry trends when assessing our business strategy:

•Print advertising and circulation revenues continue to decline as our audience increasingly moves to digital platforms. We seek to optimize our print operations to efficiently manage for the declining print audience. We are focused on converting a growing digitally-focused audience into paid digital-only subscribers to our publications.

•SMBs are facing a more complex marketing environment and need to create digital presence to capture audience online. Advertisers are increasingly looking for more effective ways to analyze their return on marketing investments and they are seeking solutions that offer greater attribution. We offer a broad suite of digital marketing services products that offer a single, unified solution to meet their digital marketing needs.

•Inflationary prices across a number of categories such as labor, fuel, delivery costs, newsprint, ink, and printing plates have had and are expected to continue to have a negative impact on our overall cost structure year over year. In the short term, we believe the impact of inflationary pressure peaked in 2022.

Table of Contents

Certain Matters Affecting Comparability

The following items affect period-over-period comparisons and will continue to affect period-over-period comparisons for future results:

(Gain) loss on sale or disposal of assets

For the three and six months ended June 30, 2023, we recognized a net loss on the sale of assets of $0.1 million and a net gain of $17.5 million, respectively. For the six months ended June 30, 2023, the net gain was primarily related to the sale of a domestic production facility at Gannett Media as part of our plan to monetize non-core assets as well as the gain on the sale of intellectual property of $1.4 million at our Corporate and other category. For the three and six months ended June 30, 2022, we recognized a net loss on the sale of assets of $0.4 million and a net gain of $2.4 million, respectively. For the six months ended June 30, 2022, the net gain was primarily related to sales of real estate, partially offset by losses on the sales of non-core products which were divested at Gannett Media.

Integration and reorganization costs

For the three and six months ended June 30, 2023, we incurred Integration and reorganization costs of $7.3 million and $19.4 million, respectively. Of the total costs incurred, $2.6 million and $12.8 million, respectively, were related to severance activities and $4.7 million and $6.6 million, respectively, were related to other costs, including costs for consolidating operations, primarily related to systems implementation and the outsourcing of corporate functions. In addition, for the six months ended June 30, 2023, other costs were partially offset by the reversal of a withdrawal liability related to a multiemployer pension plan. For the three and six months ended June 30, 2022, we incurred Integration and reorganization costs of $15.7 million and $27.1 million, respectively. Of the total costs incurred, $11.6 million and $17.0 million, respectively, were related to severance activities and $4.1 million and $10.1 million, respectively, were related to other costs, including costs for consolidating operations, primarily related to systems implementation and the outsourcing of corporate functions.

Foreign currency

Our U.K. media operations are conducted through our Newsquest subsidiary. In addition, we have foreign operations in regions such as Canada, Australia, New Zealand and India. Earnings from operations in foreign regions are translated into U.S. dollars at average exchange rates prevailing during the period, and assets and liabilities are translated at exchange rates in effect at the balance sheet date. Currency translation fluctuations may impact revenue, expense, and operating income results for our international operations. Foreign currency headwinds have increased significantly as the U.S. dollar strengthened in relation to many foreign currencies, including the U.K. pound sterling. Foreign currency exchange rate fluctuations negatively impacted our revenues and profitability during the three and six months ended June 30, 2023, and may continue to negatively impact our financial results in the future.

Strategy

Gannett is committed to a subscription-led business strategy that drives audience growth and engagement by delivering valuable content experiences to our consumers, while offering the unique products and marketing expertise our advertisers desire. The execution of this strategy is expected to allow us to continue our evolution from a more traditional print media business to a digitally focused content creator and marketing solutions platform.

We intend to create stockholder value through a variety of methods, including organic growth driven by our consumer and business-to-business strategies, as well as through paying down debt. The five key operating pillars of our strategy include:

Driving digital subscriptions growth

As consumers have become increasingly interested in digital consumption of news, a key element to our consumer strategy is growing our paid digital-only subscriber base. We are able to deliver our unique local and national content to our customers across multiple print and digital platforms, and expect the addressable market for our digital platforms to continue to grow. In service of that, we expect to develop and launch additional digital subscription offerings tailored to specific topics and audiences in the future. We are focused on growing our digital-only subscriber base in order to maximize overall return and, as a result, the volume of new digital-only subscriptions is expected to fluctuate versus historical trends.

Table of Contents

Driving Digital Marketing Solutions growth by engaging more customers in recurring monthly revenue offerings

We are now of significant digital scale, with unique reach at both the national and local community levels. We expect to leverage our integrated sales structure and lead generation strategy to continue to aggressively expand our digital marketing services business into our local markets, both domestically and internationally. Given our extensive customer base and volume of digital campaigns, we plan to use data and insights to inform new and dynamic advertising products, such as our "freemium" offering to complement our sales structures, which we believe will deliver superior results.

Optimizing our traditional businesses across print and advertising

We plan to continue to drive the profitability and lifetime value of our traditional operations by focusing on product and property-level performance across our portfolio. We expect the continued evolution of the core print product, but remain committed to providing strong customer service and delivering high quality products for our print subscribers. Advertising, both print and digital, continues to offer a compelling branding opportunity across our network due to our scale and unique reach at both the national and local community levels.

Prioritize investments in growth businesses

By leveraging our unique footprint, trusted brands, and media reach, we identify, experiment with, and invest in potential growth businesses. Some examples of our growth businesses include our community events and promotions subsidiary, USA TODAY NETWORK Ventures, our consumer product review site, Reviewed, and our sports betting presence, which we have expanded through strategic partnerships. We expect to engage in future partnerships and expanded product offerings that can further monetize our significant audience and unique footprint.

Building on our environmental, social and governance focus to foster culture and community both internally and externally

We will continue our environmental, social and governance ("ESG") journey that is rooted in our strategic mission to empower our communities to thrive and putting our customers at the center of everything we do. We support that mission with clearly defined values that aim to influence not only what we do, but how we do it, with one of the core pillars focusing on our ongoing commitments to inclusion, diversity and equity ("ID&E"). From our internal efforts around recruiting, development and retention, to our external efforts to provide high quality products and excellent customer service, we believe our strategic focus will benefit from our continued commitment to building upon our culture and community values.

Macroeconomic Environment

The U.S. and global economies and markets experienced increased volatility in 2022, and are expected to continue to experience volatility, due to factors, including higher inflation, increased interest rates, banking volatility, and other geopolitical events that are anticipated to continue during the remainder of 2023. Uncertain economic conditions adversely impacted our advertising revenues, and the occurrence of these factors has resulted in a reduction in demand for our print and digital advertising, reduced the rates for our advertising, and caused marketers to shift, reduce or stop spend. The impact of the uncertain macroeconomic conditions has not changed substantially since the initial volatility that began in the second quarter of 2022.

These challenging conditions, especially higher inflation and interest rates, have negatively impacted the consumer and resulted in increased price sensitivity from our print and paid digital-only subscribers. Consumer purchases of discretionary items, including our products and services, generally decline during periods of economic uncertainty, when disposable income is reduced or when there is a reduction in consumer confidence. Increased consumer price sensitivity, along with delivery challenges associated with labor shortages, and ongoing consumer sentiment negatively impacted print circulation volumes as compared to the same periods in the prior year.

As a result of the macroeconomic volatility, we experienced rising costs, including costs associated with labor, newsprint, delivery, ink, printing plates, fuel, and utilities. However, we believe that the inflationary pressures peaked in 2022 and we are beginning to realize and expect we may continue to realize lower prices related to newsprint costs. We are also exposed to potential increases in interest rates associated with our five-year senior secured term loan facility in an original aggregate principal amount of $516.0 million (the "Senior Secured Term Loan," formerly referred to as the New Senior Secured Term Loan), which as of June 30, 2023 and December 31, 2022, accounted for approximately 32% and 34% of our outstanding debt, respectively, as well as fluctuations in foreign currency exchange rates, primarily related to our operations in the U.K. We expect continued uncertainty and volatility in the U.S. and global economies which will continue to impact our business.

Table of Contents

Recent U.S. Tax Legislation

Seasonality

Our revenues are subject to moderate seasonality, primarily due to fluctuations in advertising volumes. Advertising and marketing services revenues for our Gannett Media segment are typically highest in the fourth quarter, primarily due to fluctuations in advertising volumes tied to the holidays, regional weather and levels of activity in our various markets, some of which have a high degree of seasonal residents and tourists. The volume of advertising sales in any period is also impacted by other external factors such as competitors' pricing, advertisers' decisions to increase or decrease their advertising expenditures in response to anticipated consumer demand, and general economic conditions. Uncertain economic conditions continued to adversely impact our advertising revenues in the first half of 2023, and the occurrence of these factors has resulted in a reduction in demand for our print and digital advertising, reduced the rates for our advertising, and caused marketers to shift, reduce or stop spend. Refer to "Macroeconomic Environment" above for further discussion.

Environmental, Social and Governance Initiatives

As a leading media organization, our longstanding corporate social responsibility position is driven by our deep commitment to our communities. We are dedicated to ensuring that we have mindful and ethical business practices that positively impact our world. In early 2023, we published our 2023 ESG Report detailing the progress we made on our U.N. Sustainable Development Goals ("U.N. SDGs") that include Reduced Inequalities, Climate Action, and Peace, Justice & Strong Institutions. The 2023 ESG Report included noteworthy highlights such as our efforts to improve our workplace diversity, expand our systems infrastructure to provide Scope 1 and 2 emissions for our entire global carbon footprint and reduce our number of manufacturing facilities. Also in early 2023, we published the inaugural edition of our network-wide 2022 Impact Report, which highlighted what we believe are the most influential articles we produced in 2022 and includes topics such as coverage on inclusion, diversity, and equity, as well as climate change.

Table of Contents

RESULTS OF OPERATIONS

Consolidated Summary

A summary of our consolidated results is presented below:


	Three months ended June 30,								Six months ended June 30,
In thousands, except per share amounts					Change								Change
	2023		2022		$		%		2023		2022		$		%
Operating revenues:
Local and national print	$	86,114	$	105,721	$	(19,607)	(19)	%	$	168,263	$	208,465	$	(40,202)	(19)	%
Classified print	63,161		67,732		(4,571)		(7)	%	128,966		138,506		(9,540)		(7)	%
Print advertising	149,275		173,453		(24,178)		(14)	%	297,229		346,971		(49,742)		(14)	%

Digital media	67,995		77,259		(9,264)		(12)	%	134,128		156,030		(21,902)		(14)	%
Digital marketing services (a)	122,539		117,465		5,074		4	%	235,222		226,456		8,766		4	%
Digital classified	13,501		15,432		(1,931)		(13)	%	27,578		29,266		(1,688)		(6)	%
Digital advertising and marketing services	204,035		210,156		(6,121)		(3)	%	396,928		411,752		(14,824)		(4)	%

Advertising and marketing services	353,310		383,609		(30,299)		(8)	%	694,157		758,723		(64,566)		(9)	%

Print circulation	195,756		242,151		(46,395)		(19)	%	401,210		500,627		(99,417)		(20)	%
Digital-only subscription	37,856		32,473		5,383		17	%	73,687		62,599		11,088		18	%
Circulation	233,612		274,624		(41,012)		(15)	%	474,897		563,226		(88,329)		(16)	%

Other	85,435		90,427		(4,992)		(6)	%	172,220		174,788		(2,568)		(1)	%

Total operating revenues	672,357		748,660		(76,303)		(10)	%	1,341,274		1,496,737		(155,463)		(10)	%

Total operating expenses (a)	658,846		769,884		(111,038)		(14)	%	1,307,802		1,519,939		(212,137)		(14)	%
Operating income (loss)	13,511		(21,224)		34,735		***		33,472		(23,202)		56,674		***
Non-operating expenses	24,868		10,318		14,550		***		51,898		19,049		32,849		***
Loss before income taxes	(11,357)		(31,542)		20,185		(64)	%	(18,426)		(42,251)		23,825		(56)	%
Provision (benefit) for income taxes	1,333		22,158		(20,825)		(94)	%	(15,996)		14,551		(30,547)		***
Net loss	(12,690)		(53,700)		41,010		(76)	%	(2,430)		(56,802)		54,372		(96)	%
Net loss attributable to noncontrolling interests	(13)		(12)		(1)		8	%	(97)		(147)		50		(34)	%
Net loss attributable to Gannett	$	(12,677)	$	(53,688)	$	41,011	(76)	%	$	(2,333)	$	(56,655)	$	54,322	(96)	%

Loss per share attributable to Gannett - basic	$	(0.09)	$	(0.39)	$	0.30	(77)	%	$	(0.02)	$	(0.41)	$	0.39	(95)	%
Loss per share attributable to Gannett - diluted	$	(0.09)	$	(0.39)	$	0.30	(77)	%	$	(0.02)	$	(0.41)	$	0.39	(95)	%

(a) Amounts are net of intersegment eliminations of $37.9 million and $35.6 million for the three months ended June 30, 2023 and 2022, respectively, and $72.3 million and $69.0 million for the six months ended June 30, 2023 and 2022, respectively, which represent digital advertising marketing services revenues and expenses associated with products sold by our U.S. local Gannett Media sales teams but fulfilled by our DMS segment. When discussing segment results, these revenues and expenses are presented gross but are eliminated in consolidation.

*** Indicates an absolute value percentage change greater than 100.

Operating revenues

Advertising and marketing services revenues are generated by both the Gannett Media and DMS segments. At the Gannett Media segment, Advertising and marketing services revenues are generated by the sale of local, national, and classified print advertising products, digital advertising offerings such as digital classified advertisements, digital media such as display advertisements run on our platforms as well as third-party sites, and digital marketing services delivered by our DMS segment. At the DMS segment, Advertising and marketing services revenues are generated through multiple services, including search

Table of Contents

advertising, display advertising, search optimization, social media, website development, web presence products, customer relationship management, and software-as-a-service solutions.

Circulation revenues, which are generated at the Gannett Media segment, are derived from home delivery, digital distribution and single copy sales of our publications.

Other revenues, which are primarily generated at the Gannett Media segment, are derived mainly from commercial printing, distribution arrangements, revenues from our events business, digital content syndication and affiliate revenues and third-party newsprint sales, and to a lesser extent generated at our Corporate and other category, mainly driven by sales of cloud-based products with expert guidance and support.

Operating expenses

Operating expenses consist primarily of the following:

•Operating costs at the Gannett Media segment include labor, newsprint and delivery costs and at the DMS segment include the cost of online media acquired from third parties and costs to manage and operate our marketing solutions and technology infrastructure;

•Selling, general and administrative expenses include labor, payroll, outside services, benefits costs and bad debt expense;

•Depreciation and amortization;

•Integration and reorganization costs include severance charges and other costs, including those for the purpose of consolidating our operations (i.e., facility consolidation expenses and integration-related costs);

•Impairment charges, including costs incurred related to goodwill, intangible assets and property, plant and equipment;

•Gains or losses on the sale or disposal of assets; and

•Other operating expenses, including third-party debt expenses as well as acquisition-related costs.

Refer to Segment results below for a discussion of the results of operations by segment.

Non-operating (income) expense

Interest expense: For the three and six months ended June 30, 2023, Interest expense was $28.6 million and $56.9 million, respectively, compared to $26.1 million and $52.1 million for the three and six months ended June 30, 2022, respectively. The increase in interest expense for the three and six months ended June 30, 2023, compared to the same periods in 2022 was primarily due to the impact of the increase in interest rates on our Senior Secured Term Loan, partially offset by a lower debt balance, mainly driven by quarterly amortization payments and required prepayments on our Senior Secured Term Loan and repurchases of our 2026 Senior Notes.

(Gain) loss on early extinguishment of debt: For the three months ended June 30, 2023, there was no gain or loss on the early extinguishment of debt compared to a loss of $0.7 million for the three months ended June 30, 2022. For the three months ended June 30, 2022, the loss on the early extinguishment of debt was due to refinancing activities related to our Senior Secured Term Loan during the second quarter of 2022. For the six months ended June 30, 2023, there was a gain of $0.5 million compared to a loss of $3.5 million for the six months ended June 30, 2022. For the three and six months ended June 30, 2023, the change in the (Gain) loss on the early extinguishment of debt compared to the same periods in 2022 was mainly due to refinancing activities related to our 2026 Senior Notes and our Senior Secured Term Loan.

Non-operating pension income: For the three and six months ended June 30, 2023, Non-operating pension income was $2.3 million and $4.1 million, respectively, compared to $18.2 million and $36.4 million for the three and six months ended June 30, 2022, respectively. The decrease in Non-operating pension income for the three and six months ended June 30, 2023, compared to the same periods in 2022 was primarily due to a decrease in the expected return on plan assets mainly driven by a decrease in assets following the annuity contract entered into during the three months ended September 30, 2022 related to the Gannett Retirement Plan (the "GR Plan").

Other non-operating (income) expense, net: Other non-operating (income) expense, net consisted of certain items that fall outside of our normal business operations. For the three and six months ended June 30, 2023, we recorded Other non-operating income, net of $1.4 million and $0.4 million, respectively, compared to Other non-operating expense, net of $1.6 million and Other non-operating income, net of $0.2 million for the three and six months ended June 30, 2022, respectively.

Table of Contents

Provision (benefit) for income taxes

The following table outlines our pre-tax net loss before income taxes and income tax accounts:


	Three months ended June 30,						Six months ended June 30,
In thousands	2023			2022			2023			2022
Loss before income taxes	$	(11,357)		$	(31,542)		$	(18,426)		$	(42,251)
Provision (benefit) for income taxes	1,333			22,158			(15,996)			14,551
Effective tax rate	(11.7)		%	(70.3)		%	86.8		%	(34.4)		%

Net loss attributable to Gannett and diluted loss per share attributable to Gannett

For the three months ended June 30, 2023, Net loss attributable to Gannett and diluted loss per share attributable to Gannett were $12.7 million and $0.09, respectively, compared to Net loss attributable to Gannett and diluted loss per share attributable to Gannett of $53.7 million and $0.39, respectively, for the three months ended June 30, 2022. For the six months ended June 30, 2023, Net loss attributable to Gannett and diluted loss per share attributable to Gannett were $2.3 million and $0.02, respectively, compared to Net loss attributable to Gannett and diluted loss per share attributable to Gannett of $56.7 million and $0.41, respectively, for the six months ended June 30, 2022. The change for the three and six months ended June 30, 2023, compared to the same periods in the prior year reflects the various items discussed above.

Table of Contents

Segment Results

Gannett Media segment

A summary of our Gannett Media segment results is presented below:


	Three months ended June 30,								Six months ended June 30,
					Change								Change
In thousands	2023		2022		$		%		2023		2022		$		%
Operating revenues:
Advertising and marketing services	$	268,429	$	301,201	$	(32,772)	(11)	%	$	530,852	$	599,963	$	(69,111)	(12)	%
Circulation	233,612		274,624		(41,012)		(15)	%	474,897		563,226		(88,329)		(16)	%
Other	83,762		89,019		(5,257)		(6)	%	169,149		172,074		(2,925)		(2)	%
Total operating revenues	585,803		664,844		(79,041)		(12)	%	1,174,898		1,335,263		(160,365)		(12)	%
Operating expenses:
Operating costs	372,561		431,075		(58,514)		(14)	%	752,126		857,191		(105,065)		(12)	%
Selling, general and administrative expenses	148,158		183,732		(35,574)		(19)	%	300,806		360,664		(59,858)		(17)	%
Depreciation and amortization	29,756		38,558		(8,802)		(23)	%	63,265		75,989		(12,724)		(17)	%
Integration and reorganization costs	2,310		11,041		(8,731)		(79)	%	6,959		16,762		(9,803)		(58)	%
Asset impairments	1,177		85		1,092		***		1,182		939		243		26	%

(Gain) loss on sale or disposal of assets, net	80		353		(273)		(77)	%	(16,188)		(2,615)		(13,573)		***
Other operating expenses	—		34		(34)		(100)	%	—		775		(775)		(100)	%
Total operating expenses	554,042		664,878		(110,802)		(17)	%	1,108,150		1,309,705		(201,555)		(15)	%
Operating income (loss)	$	31,761	$	(34)	$	31,761	***		$	66,748	$	25,558	$	41,190	***

*** Indicates an absolute value percentage change greater than 100.

Operating revenues

The following table provides the breakout of Operating revenues by category:


	Three months ended June 30,								Six months ended June 30,
					Change								Change
In thousands	2023		2022		$		%		2023		2022		$		%
Local and national print	$	86,114	$	105,721	$	(19,607)	(19)	%	$	168,263	$	208,465	$	(40,202)	(19)	%
Classified print	63,161		67,732		(4,571)		(7)	%	128,966		138,506		(9,540)		(7)	%
Print advertising	149,275		173,453		(24,178)		(14)	%	297,229		346,971		(49,742)		(14)	%

Digital media	67,995		77,259		(9,264)		(12)	%	134,128		156,030		(21,902)		(14)	%
Digital marketing services	37,658		35,057		2,601		7	%	71,917		67,696		4,221		6	%
Digital classified	13,501		15,432		(1,931)		(13)	%	27,578		29,266		(1,688)		(6)	%
Digital advertising and marketing services	119,154		127,748		(8,594)		(7)	%	233,623		252,992		(19,369)		(8)	%

Advertising and marketing services	268,429		301,201		(32,772)		(11)	%	530,852		599,963		(69,111)		(12)	%

Print circulation	195,756		242,151		(46,395)		(19)	%	401,210		500,627		(99,417)		(20)	%
Digital-only subscription	37,856		32,473		5,383		17	%	73,687		62,599		11,088		18	%
Circulation	233,612		274,624		(41,012)		(15)	%	474,897		563,226		(88,329)		(16)	%

Other	83,762		89,019		(5,257)		(6)	%	169,149		172,074		(2,925)		(2)	%

Total operating revenues	$	585,803	$	664,844	$	(79,041)	(12)	%	$	1,174,898	$	1,335,263	$	(160,365)	(12)	%

For the three and six months ended June 30, 2023, Local and national print advertising revenues decreased compared to the three and six months ended June 30, 2022, primarily due to a decrease in advertiser inserts, mainly due to volume declines, and

Table of Contents

a decrease in local and national print advertisements, mainly due to the ongoing decline associated with secular trends and both a shift and a reduction in spend from customers driven by macroeconomic factors. In addition, the decrease in Local and national print advertising revenues for the three and six months ended June 30, 2023 was also due to the absence in 2023 of revenues of $7.8 million and $16.1 million, respectively, associated with non-core products and divestitures which were sunset in 2023 and 2022. For the three and six months ended June 30, 2023, Classified print advertising revenues decreased compared to the three and six months ended June 30, 2022, primarily due to lower spend on classified advertisements, mainly driven by lower spend on obituary notifications, partially offset by an increase in spend on employment advertisements. In addition, the decrease in Classified print advertising revenues for the three and six months ended June 30, 2023 was also due to the absence in 2023 of revenues of $1.7 million and $3.7 million, respectively, associated with non-core products which were sunset in 2023 and 2022.

For the three and six months ended June 30, 2023, Digital media revenues decreased compared to the three and six months ended June 30, 2022, driven by decreases in both national and local revenue volumes and a reduction in digital advertising demand as a result of a more challenging macroeconomic environment, including declining CPMs (cost per thousand impressions). For the three and six months ended June 30, 2023, Digital marketing services revenues increased compared to the three and six months ended June 30, 2022, primarily due to an increase in rates, partially offset by a decrease in client counts. For the three and six months ended June 30, 2023, Digital classified revenues decreased compared to the three and six months ended June 30, 2022, primarily due to lower spend on employment and obituary notifications, partially offset by higher spend on automotive advertisements.

For the three and six months ended June 30, 2023, Print circulation revenues decreased compared to the three and six months ended June 30, 2022, due to a decline in home delivery sales, mainly driven by a reduction in the volume of subscribers, partially offset by an increase in rates, as well as a decline in single copy sales reflecting a reduction in volume related to increasing sensitivity from customers due to price increases and product changes. In addition, the decrease in Print circulation revenues for the three and six months ended June 30, 2023 was due to the absence in 2023 of revenues of $1.9 million and $4.2 million, respectively, associated with non-core products which were sunset in 2023 and 2022. For the three and six months ended June 30, 2023, Digital-only subscription revenues increased compared to the three and six months ended June 30, 2022, driven by an increase of 4.6% in paid digital-only subscriptions, including those subscribers on introductory subscription offers, to approximately 1.95 million as of June 30, 2023. In addition, the increase in Digital-only subscription revenues was driven by a 6.2% and a 3.5% increase in Digital-only subscription average revenue per user ("Digital-only ARPU") for the three and six months ended June 30, 2023, compared to the three and six months ended June 30, 2022, respectively, mainly due to product mix. Refer to "Key Performance Indicators" below for further discussion of Digital-only ARPU.

For the three and six months ended June 30, 2023, Other revenues decreased compared to the three and six months ended June 30, 2022, primarily due to a decline in commercial print volume and a decline in digital content syndication, partially offset by an increase in other digital revenues, mainly due to affiliate agreements, and an increase in event revenues (though not to pre-pandemic levels), mainly driven by an increase in registration fees and higher merchandising revenues, mainly due to higher attendance, partially offset by fewer events due to a shift in timing.

Operating expenses

For the three and six months ended June 30, 2023, Operating costs decreased $58.5 million and $105.1 million, respectively, compared to the three and six months ended June 30, 2022. The following table provides the breakout of Operating costs:


	Three months ended June 30,								Six months ended June 30,
					Change								Change
In thousands	2023		2022		$		%		2023		2022		$		%
Newsprint and ink	$	30,391	$	37,075	$	(6,684)	(18)	%	$	63,884	$	71,707	$	(7,823)	(11)	%
Distribution	86,387		99,720		(13,333)		(13)	%	173,759		202,118		(28,359)		(14)	%
Compensation and benefits	109,311		140,430		(31,119)		(22)	%	222,203		280,559		(58,356)		(21)	%
Outside services	86,770		89,113		(2,343)		(3)	%	169,664		171,897		(2,233)		(1)	%
Other	59,702		64,737		(5,035)		(8)	%	122,616		130,910		(8,294)		(6)	%
Total operating costs	$	372,561	$	431,075	$	(58,514)	(14)	%	$	752,126	$	857,191	$	(105,065)	(12)	%

Table of Contents

For the three and six months ended June 30, 2023, Newsprint and ink costs decreased compared to the three and six months ended June 30, 2022, primarily due to a decline in the volume of home delivery and single copy sales, as well as the reduction of print offerings and declines associated with lower commercial print revenues, partially offset by an increase in the price of newsprint.

For the three and six months ended June 30, 2023, Distribution costs decreased compared to the three and six months ended June 30, 2022, primarily due to the reduced volume of home delivery and single copy sales, cost savings driven by the reduction of print offerings, a decrease in third-party distribution costs, as well as the absence of expenses associated with both businesses divested and non-core products which were sunset in 2023 and 2022, partially offset by higher postage costs.

For the three and six months ended June 30, 2023, Compensation and benefits costs decreased compared to the three and six months ended June 30, 2022, primarily due to lower payroll expense driven by a decrease in headcount tied to ongoing cost control initiatives, and to a lesser extent, lower employee benefit costs, mainly due to a decrease in employer 401(k) matching contributions, which were suspended in the third quarter of 2022.

For the three and six months ended June 30, 2023, Outside services costs, which includes professional services fulfilled by third parties, media fees and other digital costs, and paid search and ad serving services, decreased compared to the three and six months ended June 30, 2022, primarily due to a decrease in various expenses, including costs related to news and editorial, professional services, and software licensing, partially offset by an increase in third-party media fees.

For the three and six months ended June 30, 2023, Other costs decreased compared to the three and six months ended June 30, 2022, primarily due to the absence of expenses associated with both businesses divested and non-core products which were sunset in 2023 and 2022, and decreases in promotion expenses and facility related expenses, reflecting lower lease expenses and lower costs for supplies and utilities, as well as a decline in property taxes, mainly due to real estate sales, partially offset by an increase in technology costs.

For the three and six months ended June 30, 2023, Selling, general and administrative expenses decreased $35.6 million and $59.9 million, respectively, compared to the three and six months ended June 30, 2022. The following table provides the breakout of Selling, general and administrative expenses:


	Three months ended June 30,								Six months ended June 30,
					Change								Change
In thousands	2023		2022		$		%		2023		2022		$		%
Compensation and benefits	$	75,179	$	91,477	$	(16,298)	(18)	%	$	148,864	$	178,343	$	(29,479)	(17)	%
Outside services and other	72,979		92,255		(19,276)		(21)	%	151,942		182,321		(30,379)		(17)	%
Total selling, general and administrative expenses	$	148,158	$	183,732	$	(35,574)	(19)	%	$	300,806	$	360,664	$	(59,858)	(17)	%

For the three and six months ended June 30, 2023, Outside services and other costs, which include services fulfilled by third parties, decreased compared to the three and six months ended June 30, 2022, due to a decrease in various expenses, including costs related to technology, promotions, and professional services. In addition, for the three months ended June 30, 2023, the decrease was also due to lower bad debt expense.

For the three and six months ended June 30, 2023, Depreciation and amortization expense decreased compared to the three and six months ended June 30, 2022, reflecting the impact of fewer print facilities in the first and second quarters of 2023 compared to the first and second quarters of 2022.

For the three and six months ended June 30, 2023, Integration and reorganization costs decreased compared to the three and six months ended June 30, 2022, mainly due to a decrease in severance costs of $8.9 million and $8.0 million, respectively, and an increase in other costs of $0.2 million and a decrease in other costs of $1.9 million, respectively. For the six months ended June 30, 2023, the decrease in other costs was primarily due to the reversal of a withdrawal liability related to a multiemployer pension plan.

Table of Contents

For the three and six months ended June 30, 2023, we recognized a net loss on the sale of assets of $0.1 million and a net gain of $16.2 million, respectively. For the six months ended June 30, 2023, the net gain primarily related to the sale of a domestic production facility as part of our plan to monetize non-core assets. For the three and six months ended June 30, 2022, we recognized a net loss on the sale of assets of $0.4 million and a net gain of $2.6 million, respectively. For the six months ended June 30, 2022, the net gain primarily related to sales of real estate, partially offset by losses on the sales of non-core products which were divested.

Gannett Media segment Adjusted EBITDA


	Three months ended June 30,										Six months ended June 30,
							Change										Change
In thousands	2023			2022			$		%		2023			2022			$		%
Net income attributable to Gannett	$	35,925		$	19,145		$	16,780	88	%	$	70,952		$	61,959		$	8,993	15	%


Non-operating pension income	(2,263)			(18,160)			15,897		(88)	%	(4,078)			(36,373)			32,295		(89)	%
Depreciation and amortization	29,756			38,558			(8,802)		(23)	%	63,265			75,989			(12,724)		(17)	%
Integration and reorganization costs	2,310			11,041			(8,731)		(79)	%	6,959			16,762			(9,803)		(58)	%
Other operating expenses	—			34			(34)		(100)	%	—			775			(775)		(100)	%
Asset impairments	1,177			85			1,092		***		1,182			939			243		26	%

(Gain) loss on sale or disposal of assets, net	80			353			(273)		(77)	%	(16,188)			(2,615)			(13,573)		***
Other items	(1,166)			(200)			(966)		***		990			2,068			(1,078)		(52)	%
Adjusted EBITDA (non-GAAP basis)(a)	$	65,819		$	50,856		$	14,963	29	%	$	123,082		$	119,504		$	3,578	3	%
Net income attributable to Gannett margin	6.1		%	2.9		%					6.0		%	4.6		%
Adjusted EBITDA margin (non-GAAP basis)(a)(b)	11.2		%	7.6		%					10.5		%	8.9		%

*** Indicates an absolute value percentage change greater than 100.

(a)See "Non-GAAP Financial Measures" below for additional information about non-GAAP measures.

(b)We define Adjusted EBITDA margin as Adjusted EBITDA divided by total Operating revenues.

For the three and six months ended June 30, 2023, the increase in Adjusted EBITDA compared to the three and six months ended June 30, 2022, was primarily attributable to the changes discussed above.

Table of Contents

Digital Marketing Solutions segment

A summary of our DMS segment results is presented below:


	Three months ended June 30,								Six months ended June 30,
					Change								Change
In thousands	2023		2022		$		%		2023		2022		$		%
Operating revenues:
Advertising and marketing services	$	122,789	$	118,013	$	4,776	4	%	$	235,606	$	227,722	$	7,884	3	%

Total operating revenues	122,789		118,013		4,776		4	%	235,606		227,722		7,884		3	%
Operating expenses:
Operating costs	85,199		81,110		4,089		5	%	164,189		157,441		6,748		4	%
Selling, general and administrative expenses	22,120		22,597		(477)		(2)	%	44,264		44,795		(531)		(1)	%
Depreciation and amortization	5,927		6,829		(902)		(13)	%	11,787		13,287		(1,500)		(11)	%
Integration and reorganization costs	(48)		293		(341)		***		(28)		444		(472)		***


Loss on sale or disposal of assets, net	66		19		47		***		101		176		(75)		(43)	%
Total operating expenses	113,264		110,848		2,416		2	%	220,313		216,143		4,170		2	%
Operating income	$	9,525	$	7,165	$	2,360	33	%	$	15,293	$	11,579	$	3,714	32	%

*** Indicates an absolute value percentage change greater than 100.

Operating revenues

For the three and six months ended June 30, 2023, Advertising and marketing services revenues increased compared to the three and six months ended June 30, 2022, primarily due to growth in the core direct business, including growth in revenues associated with local markets, and an increase in core platform average revenue per user ("Core platform ARPU") of 10.4% and 9.7% for the three and six months ended June 30, 2023, respectively, partially offset by the impact of the sunset of non-core products. Refer to "Key Performance Indicators" below for further discussion of Core platform ARPU.

Operating expenses

For the three and six months ended June 30, 2023, Operating costs increased $4.1 million and $6.7 million, respectively, compared to the three and six months ended June 30, 2022. The following table provides the breakout of Operating costs:


	Three months ended June 30,								Six months ended June 30,
					Change								Change
In thousands	2023		2022		$		%		2023		2022		$		%
Outside services	$	75,021	$	71,038	$	3,983	6	%	$	144,117	$	137,265	$	6,852	5	%
Compensation and benefits	8,611		7,928		683		9	%	17,051		15,803		1,248		8	%
Other	1,567		2,144		(577)		(27)	%	3,021		4,373		(1,352)		(31)	%
Total operating costs	$	85,199	$	81,110	$	4,089	5	%	$	164,189	$	157,441	$	6,748	4	%

For the three and six months ended June 30, 2023, Outside services costs, which includes professional services fulfilled by third parties, media fees and other digital costs, and paid search and ad serving services, increased compared to the three and six months ended June 30, 2022, due to an increase in expenses associated with third-party media fees, driven by a corresponding increase in revenues.

For the three and six months ended June 30, 2023, Other costs decreased compared to the three and six months ended June 30, 2022, primarily due to a decrease in lease expenses, mainly as a result of exiting space associated with the sunset of non-core products.

For both the three and six months ended June 30, 2023, Selling, general and administrative expenses decreased $0.5 million compared to the three and six months ended June 30, 2022. The following table provides the breakout of Selling, general and administrative expenses:

Table of Contents


	Three months ended June 30,								Six months ended June 30,
					Change								Change
In thousands	2023		2022		$		%		2023		2022		$		%
Compensation and benefits	$	19,172	$	18,835	$	337	2	%	$	38,238	$	37,433	$	805	2	%
Outside services and other	2,948		3,762		(814)		(22)	%	6,026		7,362		(1,336)		(18)	%
Total selling, general and administrative expenses	$	22,120	$	22,597	$	(477)	(2)	%	$	44,264	$	44,795	$	(531)	(1)	%

For the three and six months ended June 30, 2023, Compensation and benefits costs increased compared to the three and six months ended June 30, 2022, primarily due to an increase in payroll expense driven by higher headcount as well as an increase in incentive pay, driven by a corresponding increase in revenues, partially offset by lower employee benefit costs, mainly due to a decrease in employer 401(k) matching contributions, which were suspended in the third quarter of 2022.

For the three and six months ended June 30, 2023, Outside services and other costs decreased compared to the three and six months ended June 30, 2022, due to a decrease in various miscellaneous expenses, including lower outsourcing costs and lower facility related expenses, reflecting lower lease expenses and lower costs for supplies. For the six months ended June 30, 2023, these decreases were partially offset by higher promotion and marketing expenses, mainly driven by lead generation.

For the three and six months ended June 30, 2023, Depreciation and amortization expense decreased compared to the three and six months ended June 30, 2022, primarily due to a decrease in amortization expense, mainly due to the impact of intangibles becoming fully amortized in the fourth quarter of 2022, partially offset by an increase in depreciation expense related to capitalized software.

DMS segment Adjusted EBITDA


	Three months ended June 30,										Six months ended June 30,
							Change										Change
In thousands	2023			2022			$		%		2023			2022			$		%
Net income attributable to Gannett	$	9,273		$	4,306		$	4,967	***		$	14,896		$	9,563		$	5,333	56	%
Depreciation and amortization	5,927			6,829			(902)		(13)	%	11,787			13,287			(1,500)		(11)	%
Integration and reorganization costs	(48)			293			(341)		***		(28)			444			(472)		***


Loss on sale or disposal of assets, net	66			19			47		***		101			176			(75)		(43)	%
Other items	252			2,859			(2,607)		(91)	%	397			2,016			(1,619)		(80)	%
Adjusted EBITDA (non-GAAP basis)(a)	$	15,470		$	14,306		$	1,164	8	%	$	27,153		$	25,486		$	1,667	7	%
Net income attributable to Gannett margin	7.6		%	3.6		%					6.3		%	4.2		%
Adjusted EBITDA margin (non-GAAP basis)(a)(b)	12.6		%	12.1		%					11.5		%	11.2		%

*** Indicates an absolute value percentage change greater than 100.

(a)See "Non-GAAP Financial Measures" below for additional information about non-GAAP measures.

(b)We define Adjusted EBITDA margin as Adjusted EBITDA divided by total Operating revenues.

For the three and six months ended June 30, 2023, the increase in Adjusted EBITDA compared to the three and six months ended June 30, 2022, was primarily attributable to the changes discussed above. In addition, for the three and six months ended June 30, 2023, Other items decreased compared to the same periods in the prior year, mainly due to a decrease in foreign currency losses.

Corporate and other category

For the three and six months ended June 30, 2023, Corporate and other operating revenues were $1.7 million and $3.1 million, respectively, compared to $1.4 million and $2.7 million for the three and six months ended June 30, 2022, respectively.

Table of Contents

For the three and six months ended June 30, 2023, Corporate and other operating expenses decreased $0.3 million and $11.4 million, respectively, compared to the three and six months ended June 30, 2022. The following table provides the breakout of Corporate and other operating expenses:


	Three months ended June 30,								Six months ended June 30,
					Change								Change
In thousands	2023		2022		$		%		2023		2022		$		%
Operating expenses:
Operating costs	$	6,244	$	(578)	$	6,822	***		$	12,270	$	217	$	12,053	***
Selling, general and administrative expenses	13,849		21,507		(7,658)		(36)	%	19,447		44,214		(24,767)		(56)	%
Depreciation and amortization	4,101		4,143		(42)		(1)	%	8,430		8,037		393		5	%
Integration and reorganization costs	5,025		4,411		614		14	%	12,483		9,937		2,546		26	%
(Gain) loss on sale or disposal of assets, net	—		—		—		—	%	(1,448)		7		(1,455)		***
Other operating expenses	229		280		(51)		(18)	%	458		641		(183)		(29)	%
Total operating expenses	$	29,448	$	29,763	$	(315)	(1)	%	$	51,640	$	63,053	$	(11,413)	(18)	%

*** Indicates an absolute value percentage change greater than 100.

For the three and six months ended June 30, 2023, Corporate and other operating expenses decreased compared to the three and six months ended June 30, 2022, primarily due to a decrease in Selling, general and administrative expenses, mainly driven by a decrease in compensation costs, partially offset by an increase in Operating costs and an increase in Integration and reorganization costs. For the six months ended June 30, 2023, the increase in Integration and reorganization costs was mainly driven by an increase in severance costs, partially offset by a decrease in other costs related to the outsourcing of corporate functions. In addition, the six months ended June 30, 2023 also reflected a $1.4 million gain on the sale of intellectual property.

LIQUIDITY AND CAPITAL RESOURCES

Our primary cash requirements are for working capital, debt obligations, and capital expenditures.

We expect to fund our operations and debt service requirements through cash provided by our operating activities. We expect we will have adequate capital resources and liquidity to meet our ongoing working capital needs, borrowing obligations, and all required capital expenditures for at least the next twelve months. However, a further economic downturn or an increased rate of revenue declines would negatively impact our revenue, cash provided by operating activities and liquidity. We continue to implement cost reduction initiatives to reduce our ongoing level of operating expense. We believe our ability to realize benefits from our cost reduction initiatives will be necessary to offset the continued secular decline in our legacy print business revenue streams. We believe that these measures are important in response to the overall challenging macroeconomic environment that we are facing. Refer to "Overview - Macroeconomic Environment" above for further discussion.

Table of Contents

Details of our cash flows are included in the table below:


	Six months ended June 30,
In thousands	2023		2022
Cash provided by operating activities	$	52,786	$	1,688
Cash provided by (used for) investing activities	15,005		(9,649)
Cash used for financing activities	(54,560)		(35,047)
Effect of currency exchange rate change on cash	98		(1,140)
Increase (decrease) in cash, cash equivalents and restricted cash	$	13,329	$	(44,148)

Cash flows provided by operating activities: Our largest source of cash provided by our operations is Advertising revenues, primarily generated from Local and national advertising and marketing services revenues (retail, classified, and online). Additionally, we generate cash through circulation subscribers, commercial printing and delivery services to third parties, and events. Our primary uses of cash from our operating activities include compensation, newsprint, delivery, and outside services.

Our cash flow provided by operating activities was $52.8 million for the six months ended June 30, 2023, compared to $1.7 million for the six months ended June 30, 2022. The increase in cash flow provided by operating activities was primarily due to a net increase in working capital, due to lower inventory, lower receivables driven by improved collections, a decrease in contributions to our pension and other postretirement benefit plans, and lower compensation costs, partially offset by lower cash receipts related to deferred revenues, an increase in accounts payable due to timing and an increase in severance payments.

Cash flows provided by (used for) investing activities: Cash flows provided by investing activities was $15.0 million for the six months ended June 30, 2023, compared to cash used of $9.6 million for the six months ended June 30, 2022. The change in cash flows provided by investing activities was primarily due to a decrease in cash paid for acquisitions, net of cash acquired, of $15.4 million, a decrease in purchases of property, plant and equipment of $6.8 million and an increase in proceeds from the sale of real estate and other assets of $1.8 million.

Cash flows used for financing activities: Cash flows used for financing activities was $54.6 million for the six months ended June 30, 2023, compared to $35.0 million for the six months ended June 30, 2022. The increase in cash flows used for financing activities was primarily due to lower borrowings, net of repayments of long-term debt of $26.4 million, offset by a decrease in payments related to treasury stock of $3.9 million, a decrease in the acquisition of noncontrolling interests of $2.1 million and a $1.0 million decrease in payments related to deferred financing costs.

Debt

As of June 30, 2023, the carrying value of our outstanding debt totaled $1.121 billion, which consisted of $383.4 million related to the Senior Secured Term Loan, $324.9 million related to the 2026 Senior Notes, $409.0 million related to the 2027 Notes (defined below), and $3.3 million related to the remaining 4.75% convertible senior notes due April 15, 2024 (the "2024 Notes").

The Senior Secured Term Loan bears interest at a per annum rate equal to Adjusted Term SOFR (which shall not be less than 0.50% per annum) plus a margin equal to 5.00% or an alternate base rate (which shall not be less than 1.50% per annum) plus a margin equal to 4.00%. We are required to repay the Senior Secured Term Loan from time to time with (i) the proceeds of non-ordinary course asset sales and casualty and condemnation events, (ii) the proceeds of indebtedness not permitted under the Senior Secured Term Loan, and (iii) the aggregate amount of cash and cash equivalents on hand at the Company and its restricted subsidiaries in excess of $100 million at the end of each fiscal year. Subsequent to the amendment effective as of April 8, 2022, the Senior Secured Term Loan is amortized at $15.1 million per quarter (or, if the ratio of debt secured on an equal basis with the Senior Secured Term Loan less unrestricted cash of the Company and its restricted subsidiaries to Consolidated EBITDA (as such terms are defined in the Senior Secured Term Loan) (such ratio, the "First Lien Net Leverage Ratio"), for the most recently ended period of four consecutive fiscal quarters is equal to or less than 1.20 to 1.00, $7.6 million per quarter). For the three and six months ended June 30, 2023, we made $15.1 million and $46.4 million, respectively, of prepayments, including quarterly amortization payments, on the Senior Secured Term Loan.

Interest on the 2026 Senior Notes is payable semi-annually in arrears. The 2026 Senior Notes mature on November 1, 2026,

Table of Contents

unless redeemed or repurchased earlier pursuant to the 2026 Senior Notes Indenture.

Interest on the 6.0% Senior Secured Convertible Notes due 2027 (the "2027 Notes") is payable semi-annually in arrears. The 2027 Notes mature on December 1, 2027, unless earlier repurchased or converted. The 2027 Notes may be converted at any time by the holders into cash, shares of our common stock, par value $0.01 per share (the "Common Stock") or any combination of cash and Common Stock, at our election. The initial conversion rate is 200 shares of Common Stock per $1,000 principal amount of the 2027 Notes, which is equal to a conversion price of $5.00 per share of Common Stock (the "Conversion Price"). For the six months ended June 30, 2023, no shares were issued upon conversion, exercise, or satisfaction of the required conditions.

Our Senior Secured Term Loan, 2024 Notes, 2026 Senior Notes and 2027 Notes all contain usual and customary covenants and events of default. As of June 30, 2023, we were in compliance with all such covenants and obligations.

Refer to Note 6 — Debt for additional discussion regarding our debt.

Additional information

We continue to evaluate our results of operations, liquidity and cash flows, and as part of these measures, we have taken steps to manage cash outflow by rationalizing expenses and implementing various cost management initiatives. We do not presently pay a quarterly dividend and there can be no assurance that we will pay dividends in the future. In addition, the terms of our indebtedness, including the Senior Secured Term Loan, the 2026 Senior Notes Indenture and the 2027 Notes Indenture have terms that restrict our ability to pay dividends.

On February 1, 2022, our Board of Directors authorized the repurchase of up to $100 million (the "Stock Repurchase Program") of our Common Stock. Repurchases may be made from time to time through open market purchases or privately negotiated transactions, pursuant to one or more plans established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, or by means of one or more tender offers, in each case, as permitted by securities laws and other legal requirements. The amount and timing of the purchases, if any, will depend on a number of factors, including, but not limited to, the price and availability of our shares, trading volume, capital availability, our performance and general economic and market conditions. The Stock Repurchase Program may be suspended or discontinued at any time. Further, future repurchases under our Stock Repurchase Program may be subject to various conditions under the terms of our various debt instruments and agreements, unless an exception is available or we obtain a waiver or similar relief.

During the three and six months ended June 30, 2023, we did not repurchase any shares of Common Stock under the Stock Repurchase Program. As of June 30, 2023, the remaining authorized amount under the Stock Repurchase Program was approximately $96.9 million. We do not currently anticipate repurchasing any shares of Common Stock pursuant to the Stock Repurchase Program during the second half of 2023.

Beginning with the quarter ended December 31, 2022, and ending with the quarter ending September 30, 2024, the GR Plan's appointed actuary will certify the GR Plan's funded status for each quarter (the "Quarterly Certification") in accordance with U.S. GAAP. If the GR Plan is less than 100% funded, the Company will make a $1.0 million contribution to the GR Plan no later than 60 days following the receipt of the Quarterly Certification, provided, however, that the Company's obligation to make additional contractual contributions will terminate the earlier of (a) the day following the date that a contractual contribution would be due for the quarter ending September 30, 2024, and (b) the date the Company has made a total of $5 million of contractual contributions subsequent to June 30, 2022. As of June 30, 2023, the GR Plan was more than 100% funded.

We expect our capital expenditures for the remainder of 2023 to total approximately $23.6 million. These capital expenditures are anticipated to be primarily comprised of projects related to digital product development, costs associated with our print and technology systems, and system upgrades. The level of capital expenditures may vary based on investment decisions associated with further opportunities to consolidate systems, improve our product offerings, and other initiatives designed to improve the Company's operating efficiency.

Our leverage may adversely affect our business and financial performance and restricts our operating flexibility. The level of our indebtedness and our ongoing cash flow requirements may expose us to a risk that a substantial decrease in operating cash flows due to, among other things, continued or additional adverse economic conditions or adverse developments in our business, could make it difficult for us to meet the financial and operating covenants contained in our Senior Secured Term Loan, the 2026 Senior Notes, and the 2027 Notes. In addition, our leverage may limit cash flow available for general corporate

Table of Contents

purposes such as capital expenditures as well as share repurchases and acquisitions and our flexibility to react to competitive, technological, and other changes in our industry and economic conditions generally. We continue to closely monitor economic factors, including, but not limited to, the current inflationary market and rising interest rates, and we expect to continue to take the steps necessary to appropriately manage liquidity.

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

See our most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for a discussion of our critical accounting policies and use of estimates. There have been no material changes to our critical accounting policies and use of estimates discussed in such report.

NON-GAAP FINANCIAL MEASURES

A non-GAAP financial measure is generally defined as one that purports to measure historical or future financial performance, financial position, or cash flows, but excludes or includes amounts that would not be so excluded or included in the most comparable U.S. generally accepted accounting principles ("U.S. GAAP") measure.

Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures we believe offer a useful view of the overall operation of our businesses and may be different than similarly-titled measures used by other companies. We define Adjusted EBITDA as Net income (loss) attributable to Gannett before (1) Income tax expense (benefit), (2) Interest expense, (3) Gains or losses on the early extinguishment of debt, (4) Non-operating pension income, (5) Loss on convertible notes derivative, (6) Depreciation and amortization, (7) Integration and reorganization costs, (8) Other operating expenses, including third-party debt expenses and acquisition costs, (9) Asset impairments, (10) Goodwill and intangible impairments, (11) Gains or losses on the sale or disposal of assets, (12) Share-based compensation, and (13) certain other non-recurring charges. We define Adjusted EBITDA margin as Adjusted EBITDA divided by total Operating revenues.

Management's use of Adjusted EBITDA and Adjusted EBITDA margin

Adjusted EBITDA and Adjusted EBITDA margin are not measurements of financial performance under U.S. GAAP and should not be considered in isolation or as an alternative to income (loss) from operations, net income (loss), or any other measure of performance or liquidity derived in accordance with U.S. GAAP. We believe these non-GAAP financial measures, as we have defined them, are helpful in identifying trends in our day-to-day performance because the items excluded have little or no significance on our day-to-day operations. These measures provide an assessment of controllable expenses and afford management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieve optimal financial performance.

We use Adjusted EBITDA and Adjusted EBITDA margin as measures of our day-to-day operating performance, which is evidenced by the publishing and delivery of news and other media and excludes certain expenses that may not be indicative of our day-to-day business operating results.

Limitations of Adjusted EBITDA and Adjusted EBITDA margin

Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools. They should not be viewed in isolation or as a substitute for U.S. GAAP measures of earnings or cash flows. Material limitations in making the adjustments to our earnings to calculate Adjusted EBITDA and Adjusted EBITDA margin and using these non-GAAP financial measures as compared to U.S. GAAP net income (loss) include: the cash portion of interest/financing expense, income tax (benefit) provision, and charges related to asset impairments, which may significantly affect our financial results.

Management believes these items are important in evaluating our performance, results of operations, and financial position. We use non-GAAP financial measures to supplement our U.S. GAAP results in order to provide a more complete understanding of the factors and trends affecting our business.

Adjusted EBITDA and Adjusted EBITDA margin are not alternatives to Net income (loss) attributable to Gannett and margin as calculated and presented in accordance with U.S. GAAP. As such, they should not be considered or relied upon as substitutes or alternatives for any such U.S. GAAP financial measures. We strongly urge you to review the reconciliation of Net income (loss) attributable to Gannett to Adjusted EBITDA and Adjusted EBITDA margin along with our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. We also strongly urge you not to rely on any single financial measure to evaluate our business. In addition, because Adjusted EBITDA and Adjusted EBITDA

Table of Contents

margin are not measures of financial performance under U.S. GAAP and are susceptible to varying calculations, the Adjusted EBITDA and Adjusted EBITDA margin measures as presented in this report may differ from and may not be comparable to similarly titled measures used by other companies.

The table below shows the reconciliation of Net loss attributable to Gannett to Adjusted EBITDA and Net loss attributable to Gannett margin to Adjusted EBITDA margin:


	Three months ended June 30,						Six months ended June 30,
In thousands	2023			2022			2023			2022
Net loss attributable to Gannett	$	(12,677)		$	(53,688)		$	(2,333)		$	(56,655)
Provision (benefit) for income taxes	1,333			22,158			(15,996)			14,551
Interest expense	28,559			26,084			56,889			52,090
(Gain) loss on early extinguishment of debt	—			749			(496)			3,492
Non-operating pension income	(2,263)			(18,160)			(4,078)			(36,373)
Depreciation and amortization	39,784			49,530			83,482			97,313
Integration and reorganization costs	7,287			15,745			19,414			27,143
Other operating expenses	229			314			458			1,416
Asset impairments	1,177			85			1,182			939

(Gain) loss on sale or disposal of assets, net	146			372			(17,535)			(2,432)
Share-based compensation expense	5,047			5,385			8,783			8,778
Other items	2,529			2,277			4,283			4,760
Adjusted EBITDA (non-GAAP basis)	$	71,151		$	50,851		$	134,053		$	115,022
Net loss attributable to Gannett margin	(1.9)		%	(7.2)		%	(0.2)		%	(3.8)		%
Adjusted EBITDA margin (non-GAAP basis)	10.6		%	6.8		%	10.0		%	7.7		%

KEY PERFORMANCE INDICATORS

A key performance indicator ("KPI") is generally defined as a quantifiable measurement or metric used to gauge performance, specifically to help determine strategic, financial, and operational achievements, especially compared to those of similar businesses.

We define Digital-only ARPU as digital-only subscription average monthly revenues divided by the average digital-only subscriptions within the respective period. We define Core platform ARPU as core platform average monthly revenues divided by average monthly customer count within the period. We define Core platform revenues as revenue derived from customers utilizing our proprietary digital marketing services platform that are sold by either our direct or local market teams.

Management believes Digital-only ARPU, Core platform ARPU, digital-only subscriptions, and core platform average customer count are KPIs that offer useful information in understanding consumer behavior, trends in our business, and our overall operating results. Management utilizes these KPIs to track and analyze trends across our segments.

The following tables provide information regarding certain KPIs for both the Gannett Media and DMS segments:


	Three months ended June 30,								Six months ended June 30,
In thousands, except ARPU	2023		2022		Change		% Change		2023		2022		Change		% Change
Gannett Media:
Digital-only ARPU	$	6.35	$	5.98	$	0.37	6.2	%	$	6.17	$	5.96	$	0.21	3.5	%

DMS:
Core platform ARPU	$	2,642	$	2,393	$	249	10.4	%	$	2,590	$	2,362	$	228	9.7	%
Core platform average customer count	15.3		16.2		(0.9)		(5.6)	%	15.0		15.8		(0.8)		(5.1)	%

Table of Contents


	As of June 30,
In thousands	2023	2022	% Change
Gannett Media:
Digital-only subscriptions	1,952	1,866	4.6	%

Table of Contents

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk, including from changes in interest rates and foreign currency exchange rates. Changes in these factors could cause fluctuations in earnings and cash flow. In the normal course of business, exposure to certain of these market risks is managed as described below.

Interest Rates

We generally manage our risk associated with changes in interest rates through the use of a combination of variable and fixed-rate debt. As of June 30, 2023, we had variable and fixed-rate debt totaling $392.0 million and $827.7 million, respectively. Our variable-rate debt consisted of the Senior Secured Term Loan, which bears interest at the Adjusted Term Secured Overnight Financing Rate. A hypothetical interest rate increase of 150 basis points would have increased our interest expense related to our variable-rate debt and likewise decreased our income and cash flows by approximately $1.5 million and $2.9 million, respectively, for the three and six months ended June 30, 2023. See Note 6 — Debt to our condensed consolidated financial statements for further discussion of our debt.

Foreign Currency

We are exposed to foreign exchange rate risk due to our operations in the U.K., for which the British pound sterling is the functional currency. We are also exposed to foreign exchange rate risk due to our DMS segment which has operating activities denominated in currencies other than the U.S. dollar, including the Australian dollar, Canadian dollar, Indian rupee, and New Zealand dollar.

At June 30, 2023 and 2022, cumulative foreign currency translation losses reported as part of equity were $2.7 million and $14.1 million, respectively. The fluctuation in cumulative foreign currency translation losses was driven by the impact of changing exchange rates, primarily due to the British pound sterling. A hypothetical 10% fluctuation of the price of the British pound sterling and the currencies in our DMS segment against the U.S. dollar would not have materially impacted operating income for the three and six months ended June 30, 2023.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), as of the end of the period covered by this Quarterly Report under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures were effective in recording, processing, summarizing and reporting on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and were effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Table of Contents

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There have been no material developments with respect to the information previously reported under Part I, Item 3 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should consider the risks described in Part I, Item 1A, "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2022. Except as set forth below, there have been no material changes from the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022. Any of these risks and uncertainties, including those discussed below, could materially and adversely affect our business, results of operations, financial condition, and/or the market price of our Common Stock. The risks described below and in our Annual Report on Form 10-K for the year ended December 31, 2022, are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our financial condition and/or operating results.

Risks Related to Macroeconomic Factors

Actual or perceived events involving banking volatility or limited liquidity, defaults or other adverse developments that affect the U.S. or international financial systems, may result in market-wide liquidity problems which could have a material and adverse impact on our available cash and results of operations.

At any point in time, the funds in our operating accounts with financial institutions or financial services industry companies with which we have financial or business relationships may exceed the applicable Federal Deposit Insurance Corporation ("FDIC") insurance limits. While we monitor the cash balances in our operating accounts and adjust the cash balances as appropriate, these cash balances could be impacted if the underlying financial institutions fail. There is no guarantee that the FDIC, the Financial Services Compensation Scheme in the U.K., or the applicable deposit insurance, if any, in other countries in which we conduct significant business, will provide access to all or some uninsured funds in the event of the closure, default or non-performance of the financial institution or financial services industry company with which we have a relationship, or that they would do so in a timely manner. Additionally, if any parties with whom we conduct business are unable to access funds with their financial institutions or financial services industry companies with which they have relationships, such parties may be unable to satisfy their obligations to us. To date, we have not experienced significant losses of cash in our operating accounts or our invested cash or cash equivalents as a result of any banking volatility; however, we can provide no assurances that access to our operating cash or invested cash and cash equivalents will not be impacted by adverse conditions in the financial markets. Further, banking volatility or adverse developments impacting financial systems may make equity or debt financing more difficult to obtain, and additional equity or debt financing might not be available on reasonable terms, if at all. Difficulties obtaining equity or debt financing could have a material adverse effect on our financial condition and results of operations.

Risks Related to Artificial Intelligence

We use artificial intelligence and may use new technologies in our business, and challenges with properly managing their use by us or third parties could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations.

We have incorporated and may continue to incorporate artificial intelligence ("AI") solutions and other new technologies into our platform, offerings, services and features, and these applications may become important in our operations over time. Our competitors or other third parties may incorporate AI into their products more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations. If our competitors and other third parties adopt AI applications that use our content without end users visiting our network of websites, our digital advertising revenue could be reduced and we could lose additional monetization opportunities. The introduction of AI applications into our business may disrupt our relationship with employees if the AI tools are viewed as displacing work from newsrooms, which could adversely affect our business and results of operations. Additionally, if the content, analyses, or recommendations that AI applications assist in producing are or are alleged to be deficient, inaccurate, or biased, our reputation, business, financial condition, and results of operations may be adversely affected.

Table of Contents

The use of AI applications has resulted in, and may in the future result in, cybersecurity incidents that implicate the personal data of end users of such applications. Any such cybersecurity incidents related to our use of AI applications could adversely affect our reputation and results of operations. AI applications also introduce risks to our ability to protect our intellectual property, to the extent large language models have used our content to train AI tools. Similarly, if we use open-source AI applications, we could be subject to claims of infringement of others’ intellectual property, which could adversely affect our business and results of operations.

AI also presents emerging ethical issues and if our use of AI becomes controversial, we may experience brand or reputational harm, competitive harm, or legal liability. The rapid evolution of AI, including potential government regulation of AI, will require significant resources to develop, test and maintain our platform, offerings, services, and features to help us implement AI ethically in order to minimize unintended, harmful impact.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table details our monthly share repurchases of Common Stock during the three months ended June 30, 2023:


In thousands, except per share amounts	Total number of shares purchased (a)	Average price paid per share (a)		Total number of shares purchased as part of publicly announced program (b)	Maximum approximate dollar value of shares that may yet be purchased under the Stock Repurchase Program (b)
Period
April 1, 2023 - April 30, 2023	8	$	1.70	—	$	—
May 1, 2023 - May 31, 2023	—	$	—	—	$	—
June 1, 2023 - June 30, 2023 (b)	57	$	2.14	—	$	—
Total	65	$	2.09	—	$	—

(a)Represents shares of Common Stock withheld pursuant to the 2020 Omnibus Incentive Compensation Plan to cover employee tax-withholding obligations upon vesting of restricted stock awards that vested in the second quarter of 2023. Amounts in the average price paid per share column reflect the weighted average price for shares withheld in satisfaction of these tax-withholding obligations.

(b)In February 2022, the Company's Board of Directors authorized the repurchase of up to $100 million of Common Stock (the "Stock Repurchase Program"). Repurchases may be made from time to time through open market purchases or privately negotiated transactions, pursuant to one or more plans established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, or by means of one or more tender offers, in each case, as permitted by securities laws and other legal requirements. During the three months ended June 30, 2023, the Company did not repurchase any shares of Common Stock under the Stock Repurchase Program. As of June 30, 2023, the remaining authorized amount under the Stock Repurchase Program was approximately $96.9 million. The Company does not anticipate repurchasing any shares of Common Stock pursuant to the Stock Repurchase Program during the second half of 2023.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

This item is not applicable.

ITEM 5. OTHER INFORMATION

None.

Table of Contents

ITEM 6. EXHIBITS

Exhibit Number

Description

Location

3.1

Certificate of Elimination of the Series A Junior Participating Preferred Stock of Gannett Co., Inc.

Incorporated by reference to Exhibit 3.1 to the Company 's Current Report on Form 8-K, filed May 8, 2023 .

10.1

Gannett Co., Inc. 2023 Stock Incentive Plan.*

Incorporated by reference to Exhibit 99.1 to the Company's Registration Statement on Form S-8 (Registration No. 333-272656), filed on June 15, 2023 .

31.1

Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.

Filed herewith.

31.2

Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.

Filed herewith.

32.1

Section 1350 Certification of Principal Executive Officer.

Furnished herewith.

32.2

Section 1350 Certification of Principal Financial Officer.

Furnished herewith.

101

The following financial information from Gannett Co., Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations and Comprehensive Income; (iii) Condensed Consolidated Statements of Cash Flow; (iv) Condensed Consolidated Statements of Equity; and (v) Notes to Condensed Consolidated Financial Statements

Attached.

104

Cover Page Interactive Data File (formatted as Inline XBRL and embedded within the Inline XBRL document)

Attached.

Management contract or compensatory plan or arrangement.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: August 3, 2023			GANNETT CO., INC.

			/s/ Douglas E. Horne
			Douglas E. Horne
			Chief Financial Officer and Chief Accounting Officer
			(On behalf of the Registrant and as principal financial and principal accounting officer)