Gannett reduces debt by $164 million in Q1 using free cash flow

By Jennifer Lanning Drey

Savannah, Ga., April 18 - Gannett Co., Inc. generated $216 million of free cash flow in the first quarter, which was partially used to reduce debt by $164 million, chief operating officer Gracia Martore said Monday during the company's quarterly earnings conference call.

Gannett had long-term debt of $2.2 billion and cash of $142 million at March 31.

The debt-to-EBITDA ratio was about 1.9 times, providing the company "tremendous financial flexibility," Martore said.

"We have substantially delevered the balance sheet over the past two years, from $3.8 billion of debt at the end of 2008 to $2.2 billion at the end of the quarter, and we have the financial flexibility to invest in all of our businesses, especially digital," she said.

Gannett reported operating revenues of $1.25 billion in the first quarter, down from operating revenues of $1.3 billion in the same period of 2010.

The company said digital segment growth was strong in the quarter, while publishing segment revenue results were impacted by softer ad demand. The absence of advertising associated with the Olympics, the Super Bowl and elections that benefited the first quarter of 2010 resulted in lower revenue in the broadcasting segment.

"[Revenue results] reflect the general health of the economy here in the U.S. and U.K. and the uneven recovery we are experiencing. They reflect strength in some sectors as well as continued softness in others such as real estate," Martore said.

At the same time, operating expenses were also lower in the first quarter by almost 1% compared to the same period last year, helping the company to be "solidly profitable," she said.

Reported operating income was $178.6 million in the first quarter, compared with operating income of $217.0 million in the 2010 period.

Gannett is a McLean, Va.-based news and information company.

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