Gannett Co., Inc. (NYSE:GCI) Q2 2020 Earnings Conference Call - Final Transcript

Aug 06, 2020 • 08:30 am ET

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Gannett Co., Inc. (NYSE:GCI) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Douglas Horne

and intangible impairment charge, as well as valuation allowances associated with our deferred tax assets related to interest expense.

We ended the quarter with $1.74 billion of debt, after paying down $6.3 million during the quarter. Our cash balance was $158.6 million at the end of Q2, resulting in net debt of $1.58 billion. Capital expenditures totaled approximately $8.4 million during Q2, reflecting investments related to digital product development and real estate transactions, due to ongoing facility consolidations.

In addition to our expense measures, we also preserved cash by relying on certain provisions of the CARES Act, which will enable us to defer over $50 million of payments relating to ERISA pension contributions and employer FICA taxes. We were also able to defer the timing of certain required additional pension contributions that were originally scheduled as lump payments in 2020 and 2021. Those will now be made in quarterly installments beginning in Q4 of this year, through Q3 of 2022. We're also effectively managing our capital expenditures, which we expect to be more than 20% lower for 2020 than we had originally planned.

During the quarter, we completed our first interest payment under our credit facility of approximately $125 million. That payment represented interest that had accrued since our closing in November of 2019. Going forward, we're going to be paying approximately $50 million per quarter in interest, and this will decline as we continue to pay down debt. Paying down our debt continues to be our top fiscal priority. In the second quarter, we used proceeds from real estate sales to further reduce debt by $6.3 million. Some planned real estate sales are taking a bit longer to complete than we had originally hoped, but we have over $15 million of property currently under contract and remain confident in our ability to sell $100 million to $125 million of property by the end of 2021. We ended the quarter with over $158 million of cash on the balance sheet, so we are in a strong liquidity position heading into the second half of the year. We remain very confident in our ability to satisfy our obligations under our term loan.

Later today, we plan to put in place an at-the-market equity offering program for up to $50 million of our common stock. While we have no current intention to sell common stock at current prices, we decided to put the program in place for good housekeeping and added flexibility. More details on this program will be available in our prospectus supplement, which we expect to file later today in conjunction with the filing of our second quarter Form 10-Q.

Ashley, I'll hand it back to you.

Executive
Ashley Higgins

Thanks so much, Doug. Natalia, could you please remind everyone how to put a question through, if they have interest?