Gannett - Earnings Call - Q1 2020
May 7, 2020
Transcript
Speaker 0
Ladies and gentlemen, thank you for standing by, and welcome to the Gannett First Quarter Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. I would now like to hand the conference over to your speaker today, Ashley Higgins. Please go ahead.
Speaker 1
Thank you, Marcella. Good morning, everyone, and thank you for joining our call today to discuss Gannett's first quarter twenty twenty results. Presenting on today's call will be Mike Reed, Chairman and CEO of the public company Doug Horn, Chief Financial Officer and Paul Boscobert, CEO of the operating company. During this call, we will discuss Gannett's financial results for the quarter. If you navigate to the Gannett website, you will find that we have posted an earnings supplement in addition to our earlier press release.
We will be referencing it today on the call as it provides you with additional detail on this quarter's performance. Before we begin, please let me remind you that this call is being recorded. In addition, statements made during this call with respect to future results and events are forward looking statements that are based upon current expectations. Actual events and results could differ materially from those discussed today. We encourage you to read the forward looking statements disclaimer in the presentation as well as the risk factors described in Gannett's filings made with the SEC.
In addition, we will be discussing some non GAAP and pro form a financial information during the call today. You can find reconciliations of our non GAAP measures to the most comparable GAAP measures in the earnings supplement. The pro form a information presents legacy New Media and legacy Gannett on a consolidated basis. Lastly, I would like to remind you that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase any interest in Gannett. The webcast and audiocast is copyrighted material of Gannett and may not be duplicated, reproduced or rebroadcasted without our consent.
With that, I would like to turn the call over to Mike Reed, Gannett's Chairman and CEO.
Speaker 2
Thanks, Ashley. Good morning, everyone. Thanks for joining our call this morning from wherever you happen to be situated this morning. Prior to getting into my remarks about the company, I wanted to take a moment to recognize the unique and incredibly challenging time we are in today. It is truly unprecedented.
The personal tragedies and economic devastation experienced across the country and in the communities our company serves were unimaginable just a few months ago. The toll on people, families and on businesses is overwhelming at times, and my heart and prayers are with those most directly impacted by this pandemic and the sudden change in economic conditions. With the COVID-nineteen pandemic, we've also been witness to the absolutely heroic work by so many across our country, fighting back for our collective health and safety, from health care workers and first responders to those on the front lines providing us with essential products and services. Our news organization here at Gannett highlights this work through impactful journalism every day. We chronicle the stories of these heroes who put themselves at risk every day to serve and to save.
Finally, I want to acknowledge the work of my nearly 20,000 colleagues here at Gannett. As an essential business ourselves, our team has risen to the challenge of this pandemic, honoring their professional commitments while balancing the immense personal responsibilities of keeping families and loved ones safe in a time of great stress. This has enabled our company to provide uninterrupted, accurate and up to date news and resources to our customers and our communities, helping everyone manage through this pandemic. I want to express my gratitude to all of my Gannett colleagues for their hard work and continued commitment to our mission as we navigate through this crisis. And before diving in this morning, I would also like to take a minute to welcome our new CFO, Doug Horn, who joined the team about a month ago.
Doug brings deep accounting and finance skills as well as a significant experience with large scale integration projects, of which we have. Doug has done a fantastic job diving in with the team and making immediate contributions. We are really glad to have him on board, and you'll hear from Doug this morning. And now to today's business. Paul and Doug are with me on the call, as Ashley mentioned.
We'll cover our first quarter earnings, which were solid and in line with our internal expectations despite the headwinds we felt during the last couple of weeks of March. We'll cover our response to COVID-nineteen, which came upon the country and us so quickly, so fast that required immediate actions to keep our employees safe, to keep our business running and to improve financial outlook, all of which I think we accomplished. Our team moved very quickly to respond to this unprecedented event. The actions we have taken have been significant and I believe have positioned us to weather Q2, which will be a difficult quarter for most businesses and for our country. We'll also review important balance sheet items and liquidity, along with some key details of our credit facility.
And we have an update on operations and importantly, our progress on the integration and realization of synergies. So lots to cover this morning. I'll start with a review of our first quarter financial performance, which, as I mentioned, was solid and largely in line with our expectations. After the first couple of weeks of March, in fact, we were actually pacing ahead of our internal expectations for both revenue and EBITDA. However, we saw significant declines in advertising over the last two weeks of March, a direct impact of the COVID-nineteen pandemic.
We estimate the decline we experienced in revenue from this was about $17,000,000 during those last two weeks. Despite the impact of the decline, our same store revenue trend was consistent with that of 2019. Without the COVID impact, same store revenue would have improved to being down 8.4%, an improvement of about 150 basis points versus our Q4 same store trend. Adjusted EBITDA was down 3% versus the prior year on a pro form a basis and was pacing ahead of prior year heading into the last two weeks of March. Our integration and synergy realization remained on plan for the first quarter.
We implemented $75,000,000 of annualized synergies, which resulted in $19,000,000 of cost reductions recorded in the first quarter. We also paid down $12,700,000 in debt during the quarter, primarily with proceeds from real estate sales. Later on the call, we will provide an update on expected debt repayment in the second quarter with proceeds from real estate sales that are under contract and expected to close during the second quarter. We closed the first quarter with $200,000,000 of cash on the balance sheet, which grew from $156,000,000 at year end. We are pleased with the progress of our integration efforts and remain confident in our ability to outperform our synergy plan and to aggressively pay down debt through real estate sales despite the economic crisis we are in the midst of.
While the first quarter was in line with our expectations, the COVID crisis has changed things dramatically since mid March, as I am sure many of you feel as well. Our company has had to adapt and respond quickly as the disruption to our lives, how we do our jobs to the economy, all of these things are just unprecedented. As I mentioned a few minutes ago, our leadership team took immediate and deliberate action to support the health and safety of our employees and to preserve our ability to deliver high quality journalism to our customers and to the communities we serve. I am proud of the speed and decisiveness our team has shown in responding to this pandemic. In addition to the changes taken to operate safely, we have also taken actions to enhance and improve our liquidity position and financial performance.
I'll highlight four of those actions for you this morning. First, we implemented measures that we expect to temporarily reduce expenses in the second quarter by an additional 100,000,000 to 125,000,000 through implementation of furloughs, pay reductions, reductions in force, cancellation of nonessential travel and spending and an expected reduction in cost of goods sold. These additional cost saving measures are additive to synergy cost reductions we will realize in Q2 as well and also additive to the roll forward of previous regular way cost actions. As a result of all these measures, we expect Q2 expenses to be down versus the prior year by approximately 25%. For context, that compares to a 10.5% decline in costs in Q1.
Second, we took immediate action to significantly reduce our CapEx spend. We have lowered our planned spend by more than 20% for the remainder of the year. That equates to about $10,000,000 in cash savings. Third, the Board has suspended our quarterly dividend until conditions improve. And finally, fourth, we are also leveraging the CARES Act to defer FICA payments and ERISA pension payments.
The CARES Act allows companies to defer these payments until 2021 and 2022 interest free. This improves our 2020 liquidity by a little more than $50,000,000 over the remainder of this year. Obviously, none of this is reflected in our Q1 cash balance of $200,000,000 We believe all of these actions will improve liquidity and our financial performance, helping us to navigate through the uncertainty we are facing from the pandemic. We also remain confident in our ability to continue to execute on our integration plan. We mentioned on our last earnings call four priorities we have for 2020 and 2021.
Those priorities have not changed. We are simply executing on those priorities against the backdrop of the pandemic. Now let me recap those priorities for you with a little update on how we're doing. First, we expect to implement at least 150,000,000 or roughly half of our $300,000,000 annualized synergy target during 2020. Through Q2, we expect to have executed on $140,000,000 of annualized synergies.
We expect that these measures will enable us to realize 35,000,000 to $40,000,000 of run rate expense reduction in the second quarter alone. We remain confident that we will achieve our target with regard to synergies, both in terms of amount and timing. Second, we have continued our normal cost normal course cost reductions. That's reflected in our Q1 total cost savings of 10.5%. Of the total, approximately 2% is attributable to synergies and about 8.5% is attributable to regular way cost reductions.
The 8.5% of regular way cost reductions is made up of permanent cost actions as well as lower cost of goods sold resulting from lower revenues. Third, we are aggressively paying down debt with the goal to refinance the term loan when leverage is about 2x EBITDA, which we expect to achieve at the 2021. Since entering into the term loan in November, we have paid down approximately $50,000,000 of debt, and we expect to make additional voluntary prepayments in the second quarter with the proceeds from approximately $50,000,000 of real estate sales that are under contract and expected to close in the second quarter. Further, we have another 50,000,000 to $75,000,000 of real estate that we intend to sell throughout the remainder of this year and into next year. Lastly, we remain focused on improving our same store revenue trends.
As I mentioned, we had seen a very strong start to the year. Performance in January and February was good, above our expectations. And as I mentioned, when you exclude the $17,000,000 of revenue we lost in late March due to the COVID situation, our revenue trend would have improved by 150 basis points from down 9.9 in Q4 to down 8.4% in Q1. Talked a lot this morning about cost reductions. And while cost reductions are a major priority, we are balancing that against our efforts to produce quality content, have quality products, have product development and along with making improvements to our sales structure so that we are positioned to report improving revenue trends once we get to the other side of this crisis.
Now let's talk for a minute about our debt and our credit facility. We have also detailed the points I'm going to make now in our Q1 earnings supplement, which Ashley mentioned, that can be found on the Investor Relations section of our website. And first, let me say, we remain very confident in our ability to satisfy all our obligations under our term loan. Importantly, there is only one financial covenant that is tested on a quarterly basis, and that covenant is a requirement to maintain $20,000,000 of cash on the balance sheet at the end of every quarter. As of the end of Q1, we had $200,000,000 of cash, and we're generating positive cash flow.
We feel very confident in our ongoing ability to satisfy this covenant. Importantly, our term loan does not have any event of default tied to compliance with any financial ratio. Our term loan does use debt to EBITDA ratios to determine whether we are permitted to make restricted payments, such as dividends or stock buybacks. But this should not be confused with a true financial covenant requiring maintenance of a debt to EBITDA ratio to avoid an event of default. Under our loan, the consequence of failing to comply with the debt to EBITDA ratio is solely a heightened restriction on our ability to make restricted payments as opposed to a trigger for an event of default.
Next, the term loan restricts our ability to spend more than $60,000,000 on capital expenditures annually. We are highly confident in our ability to remain in compliance with this covenant. In 2020, we do not anticipate spending more than $45,000,000 in CapEx. And the last point I want to highlight is that we are required to commence making quarterly interest payments in June. The June payment encompasses seven point five months of interest, so it will be approximately $125,000,000 With $200,000,000 of cash on the balance sheet at the March and the business continuing to generate positive cash flow, we are highly confident we can make our required interest payments.
Given the current debt balance, the Q3 and Q4 interest payments would be approximately $50,000,000 each. However, assuming additional debt pay downs with proceeds from real estate sales in Q2 of approximately 50,000,000 the actual interest payments in Q3 and Q4 could be about $2,500,000 lower. And I'll reiterate, we are highly confident in our ongoing ability to make interest payments. We are highly confident in our ongoing ability to stay in compliance with our credit facility. Obviously, no one knows how the current crisis will play out.
Hopefully, the worst is behind us, but we just don't know. Some reports are suggesting that we should brace for new outbreaks of the virus and renewed lockdowns in the fall and or the winter. Let's all hope that that's not true. But it's still very hard today to know what next year will look like. However, we have a great relationship and a very open dialogue with our lenders, which gives us comfort that we can deal with the unknown, the uncertainty and the unforeseen should the need arise.
I'd now like to turn things over to Paul, who will give us all an update on operations, the important integration we have underway and the very important COVID-nineteen response efforts our company has undertaken. Thank you. And Paul, I'll turn it over to you.
Speaker 3
Great. Thanks, Mike. I wanted to open with congratulations to the staff of the Louisville Courier Journal, who were awarded on Monday with the Pulitzer Prize and breaking news for their coverage of the hundreds of last minute pardons by Kentucky's Governor, Matt Bevin, during his final days in office. It's an incredible story, and we couldn't be more proud of this work and that of all of our journalists. It's really a reminder for all of us why we are here, to create an enduring platform for this important work to continue in our communities.
As Mike mentioned, I'd like to speak in a little bit more detail about how we responded to the COVID-nineteen pandemic, some Q1 operational details and an update on integration. Regarding our COVID-nineteen response, by March 20, we had migrated 95% of our non production and delivery workers to a work from home position, which is over 12,000 employees. We also implemented social distancing measures and hygiene best practices for all of our production and delivery facilities, in line with CDC and WHO guidelines. This has included spreading out our teams and our shifts, distributing personal protective equipment, implementing multiple daily cleanings. In addition, we've also procured and distributed masks and other protective supplies to any employee who needs to travel outside of the home for work.
Across the company, we've set up communication channels for people to report infections and any workplace concerns, which we monitor and respond to in real time. On April 1, as Mike mentioned, we also implemented cost measures to save an additional 100,000,000 to $125 Most of these measures are temporary in nature, such as furloughs and salary reductions, and were designed to give us some flexibility as to how to adapt based on how the future plays out. And while every function area is participating in these cost management programs, we did work to minimize the impact on some select groups such as lower salaried staffs and people who were directly involved in the systems integration and transformation projects. So we are now beginning to plan for the future return to our offices. We are working to develop office specific plans to ensure sufficient supplies are at all locations, to monitor recommendations from government officials and health care leaders.
This is really the final step to returning to the office, but it's not one that we are looking to rush in any particular way, especially given the company is in a highly functional position right now. We will ensure that we're prepared, so when the time comes, we'll be prepared to transition smoothly and safely. Turning to our performance. As Mike mentioned, January and February were also very strong revenue months that meaningfully outperformed our Q4 trends. As the pandemic significantly affected The U.
S. In March, we also saw a spike in advertising cancellations and a slowdown in new sales across both print and digital. Results are still preliminary for April. However, our initial view is that same store revenue was down approximately 30%. In response, we've adjusted our new sales focus around business segments that are better positioned during the crisis.
We're also working with our existing clients, particularly our small businesses, to make sure their digital presence is strong. We're able to ship messaging for them, emphasizing features that build online presence, e commerce capabilities and also to implement digital marketing programs to help them be discovered online. Given the range of advertisers we touch from the very smallest local business to the largest advertisers in the world, we expect to have a front row seat on the recovery. We're ready to adjust resources, messaging and products as opportunities present themselves. I want to take just a brief moment to just say how proud I am of all the work that our journalists have done through this crisis.
Like so much of our team, they're working remotely and managing through furloughs, and yet they continue reporting from the front lines of this pandemic. They're telling the stories of human impact. They're holding our public officials accountable, and they've investigated the problems with testing, the lack of medical and protective equipment and the crisis in our nation's nursing homes. Our journalists have met readers' needs by swarming the story, creating new coronavirus beats and teams and reassigning reporting resources away from other areas such as sports to make sure that we're providing this critical information. USA TODAY moved quickly to condense certain print sections to make way for a new daily section called Nations Health, which is being shared with subscribers across all our local sites as well.
Digital traffic proves that America depends on our news. Our brands reached more than 170,000,000 viewers in March and achieved 29% growth in digital subscriptions in the quarter despite keeping much of our coronavirus coverage outside of the payroll as a public service. I know our communities will continue to be strongly served by our news teams as states begin to open back up, and we'll be there to make sure our readers can navigate the changes and remain safe. In consumer marketing, subscriptions hold pretty steady while we've had a rapid increase in new digital subscriptions, as I just mentioned. In all our markets, we're seeing a recognition of the value of our local news organizations and what they bring to their communities and the need for consumer support to continue in the face of advertising decline.
We believe this crisis actually has the potential to accelerate the paid digital subscription model across all our markets. Our events business faced an initial wave of canceled events for late March and beyond, but the team quickly pivoted, converting many races and award shows to new virtual experience. It rescheduled many of the events later in the year when we anticipate they may be allowed. The team has done a phenomenal job of maintaining our sponsors as they completed the pivot to virtual formats. We're finding actually that participants at these virtual events are offering a welcome reprieve to stay at home orders.
Attendance has been fantastic. And while not the same as an in person experience, events continue to provide an important sense of community. Using a virtual format, we reduced the revenue in some cases that would have been generated through attendance and ticket sales. However, we're also significantly reducing our operating costs by forgoing the venue and in person production costs. Finally, I'd like to highlight the significant work completed on our integration during the first quarter.
Our focus here is not just on cutting costs, but on rebuilding the business to take advantage of our scale, and we're well on our way. Sales has now rolled out their new regional leadership team and rebranded the organization under the LocalIQ brand. Our editorial team has completed its new regionalized structure, leveraging our expanded footprint and strong newsroom staff. We have implemented or announced 23 printing facilities for consolidation and have begun migrating to a common technology platforms
Speaker 2
for
Speaker 3
all of our key functions. Collectively, these decisions will lead to a streamlined and simplified operating foundation for Gannett for the years ahead. Importantly, we do not expect disruption from our COVID related cost reductions on our continued synergy implementation. In the second quarter, we will implement additional measures that we expect to lead to $140,000,000 in savings on an annualized basis, which puts us nearly at our full year 2020 synergy target as we sit here today. In closing, I want to thank all of my colleagues across the organization.
We are asking so much of everyone, delivering results, integrating companies, cutting costs, accepting furloughs and wage reductions, working remotely or navigating closed communities to get to production facilities. I just want everyone on this call to know what an incredible and committed team we have here. With that, I'll now turn it over to Doug to discuss our detailed financial performance.
Speaker 4
Thank you, Paul, and good morning, everyone. I'm very excited to be with you this morning and even more excited to be part of the Gannett team moving forward. For Q1, total operating revenues were $948,700,000 which was up 144.8% as compared with the prior year quarter as a result of the acquisition of Legacy Gannett in 2019. On a pro form a basis, operating revenues were down 9.7% as compared with the prior year quarter, which is in line with what we experienced during 2019. On a same store basis, revenues were down 10%, largely in line with the fourth quarter trend as well.
Total operating revenues, as Mike mentioned, reflect approximately $17,000,000 of negative impact from the COVID-nineteen situation, primarily as a result of the cancellation or pausing of advertising campaigns during March. Adjusted EBITDA totaled $99,100,000 in the quarter. This reflects the impact of lower revenues, partially offset by cost reductions and synergy savings. The adjusted EBITDA margin in the quarter was 10.4%. In the first quarter, expenses fell approximately 10.5% on a pro form a basis, reflecting compensation savings from various cost reduction and synergy initiatives, significant newsprint savings from both lower volumes and prices as well as continued production and distribution efficiencies.
Moving on to the segments. Within the Publishing segment, revenue in the first quarter was $858,200,000 and print advertising revenue was down 21.2 to the prior year on a same store pro form a basis. That is reflecting both continued secular pressures as well as the disruption from the COVID-nineteen situation in the last weeks of the quarter. Digital advertising and marketing services revenues increased 1.7% on a same store pro form a basis, driven by national campaigns during the quarter as well as gains in digital marketing services within our local markets, offset again by the disruption from COVID-nineteen during the March. Circulation revenues decreased 7.5% to the prior year on a same store pro form a basis, which reflects reductions in Siegel copy distribution and home delivery sales and includes the negative impact of COVID-nineteen during the March.
The year over year decline in Q1 reflects an improvement of 160 basis points as compared to the fourth quarter due to seasonality in our Snowbird markets. Paid digital only subscribers grew 29% year over year on a pro form a basis to approximately 863,000 subscriptions. Digital only subscriber revenue grew 36.6% on a pro form a basis as compared with the prior year. As a result, adjusted EBITDA for the Publishing segment totaled $110,900,000 representing a margin of 12.9% in the first quarter. Turning now to the Marketing Solutions segment.
Total revenue in the first quarter was $121,300,000 an increase year over year of 3.8% on a same store pro form a basis. The increase in pro form a revenue was driven by sales of marketing services in our local markets, which was also offset by the negative impact of COVID-nineteen during March. Adjusted EBITDA for the Marketing Solutions segment totaled $7,900,000 representing a margin of 6.5% in the first quarter. Our Q1 GAAP net loss attributable to Gannett was $80,200,000 which reflects $78,000,000 of depreciation and amortization, dollars 34,200,000.0 of cash charges related to integration, reorganization and transaction related costs, dollars 18,500,000.0 related to non operating pension income and $9,000,000 for the quarterly income tax provision, the vast majority of which is non cash. Additionally, the company incurred $57,900,000 of interest expense during the quarter.
We ended the quarter with $1,747,000,000 of debt after paying down the $12,700,000 during the quarter. Our cash balance, as Mike mentioned, was $199,700,000 at the end of Q1, resulting in net debt of $1,543,000,000 Capital expenditures totaled $13,800,000 during Q1, reflecting investments related to digital product development, technology and ongoing facility consolidations. And with that, I will hand it back to Ashley.
Speaker 1
Thanks, Doug. Marcello, we can open it now to questions.
Speaker 0
Your first question comes from the line of Kyle Evans. Your line is open.
Speaker 5
Thank you. Thanks for taking my questions.
Speaker 2
Hey, Kyle.
Speaker 5
So a lot of discussion about real estate sales as a source of liquidity. Could you provide a little bit more detail there on what you're going to bring to the market and maybe some supporting thoughts on why you're confident you can get those done in this current environment?
Speaker 2
Well, yes. So the real estate sales I mentioned for Q2, Kyle, are actually under contract with scheduled closing dates, down payments made, etcetera. So we feel highly confident that those transactions are nearly completed and will be completed. These are pieces of property generally that are in good strategic locations in these towns across the country. And so the buyers for these types of facilities generally have very long term plans for what they want to use the building or the land for.
And so the kind of disruption of the COVID pandemic doesn't alter or change the long term view of local developers, local contractors, etcetera, maybe the business next door that want that's wanted that land for a long time. So these these transactions we're on a region to sell real estate are with strategic local buyers who have a very long term view, on the market and what they want to do with the property. So we feel highly confident that the disruption that the pandemic has caused will have little impact on our real estate sales. Obviously, a lot of real estate that we're trying to sell over the next two years, so there could be some hiccups and some delays. But primarily, the bulk of what we're trying to do is tied to, say, eight or 10 properties that we feel really good about.
Speaker 5
Got it. And you weren't going to get by me without talking about circulation. Obviously, the declines you had in 1Q were a pretty considerable improvement over the 4Q, but still running down more than the first three quarters of 'nineteen. What do you think the pandemic does to the circulation line Is it considered a discretionary spend that people will eliminate?
And then what were the underlying volume numbers there in the down 7% and change?
Speaker 2
So we had about $375,000,000 of revenue in the first quarter in circulation. About $60,000,000 of that is digital subscriptions, about $315,000,000 is print. So and we mentioned digital subscriptions were up 29 in the first quarter, and we've seen that growth accelerate more than 30% in April. So I expect, as a result of the pandemic and just our more importantly, our ongoing efforts to grow our digital subscriber base that we'll see that growth accelerate and be in that revenue part of our total revenue coming from digital subscriptions will continue to represent a bigger piece of the pie, and that will help drive a positive change in trend. So when you think about the first quarter, our print trends were down kind of 8% to 8.5, offset by the digital growth of, say, 8.5%.
And then the volume we're not doing much on pricing right now. So we're doing a small amount of pricing. So volumes are a little bit north of 10% declines. But I think what I've been impressed with is the resiliency of our products, both print and digital, during the crisis. And what it's really showed our communities and our own customers is how important and how vital your local media organization is, how important and how vital your local news organization is.
So I think Paul mentioned we haven't really seen any change to the negative in our print circulation trends other than in single copy. And so that's been favorable. So right now, it's really hard to obviously see long term what the pandemic and crisis looks like for our country. But right now, we've seen some improvement overall in our circulation trends, and that's primarily driven by digital, but print has been resilient as well.
Speaker 5
And what are your thoughts on pricing going forward in this current environment?
Speaker 2
Yes. We're not raising prices in the current environment.
Speaker 5
And I asked you this question just recently, but it was in a completely different universe, it feels like. Would you consider eliminating some of the unprofitable print days across the system going forward?
Speaker 2
Kyle, that's not part of our plan today. We've been pretty consistent with that view. Everything's on the table if depending on what happens with revenues and how things evolve in our world, nothing is off the table. But as we sit here today, and it's been pretty consistent in our view that we want our consumers to habitually come to us every day for their local news and information, and we don't want to drive our consumers to other places by eliminating products in the market that we produce today. So that's our current view.
I mean, everything is subject to change, obviously. But as we sit here today, our view is to keep our schedules as they are now.
Speaker 5
Got it. That's all I got. Just also a quick thanks on given the liquidity balance sheet metrics. Very helpful.
Speaker 2
Thanks, Kyle.
Speaker 5
Thank you.
Speaker 0
Your next question comes from the line of Ryan Vaughan. Your line is open.
Speaker 6
Hi, thank you for Hi, taking my Hi, Ryan. Just a couple of questions. You referenced the current trends that you saw through April. Just to be a little bit more granular, I guess, first off, did you notice any have you noticed anything on your trends just from over the last five weeks, call it, whether it's just been pretty steady at that rate? And then the second question, just so I'm clear, just does that include obviously, prints in there, but as far as digital advertising, does it also include the marketing service?
Just trying to get an idea when you reference the current trends, what's included in that? And if one is if digital is holding up better than print? Yes.
Speaker 2
So thanks, Ryan. Yes, 30 that we are anticipating that April is going to close out at, we're still in the process of closing the books for April, but our best view today is down 30. But that's for the whole company, so it includes encompasses everything. Obviously, we've seen the biggest hit during the crisis come to print advertising, which is down more than 30%. Our digital business has definitely held up better.
It's been more resilient than print advertising. Our circulation, as we just talked about with Kyle, has been probably the most resilient part of our business. The events part of our business, Paul talked about that, that we've been resilient there with virtual events, but it's still probably going to be a down 40% to 50% revenue quarter for events. But to your specific question on how it's played out over the last five weeks, we definitely saw it's really, really more than that now. The last couple of weeks of March, things worsened.
The first couple of weeks of April were probably the worst. And I I I wouldn't say the the back half of April improved a lot, in terms of helping April. But what we really have seen over the last two weeks, late April and early May, is more meetings, more conversations, more, businesses now entertaining coming off positive with their spend, so it's encouraging. It's not, you know, it's not really we can't really reflect it in our numbers yet because we don't know for sure. But the tone of our conversations with our customers, the number of meetings and the discussions around getting back to business and restarting campaigns, marketing campaigns with us are positive right now.
So that's not a prognosis on the second quarter or May or June. I mean, I think our best view right now is April is down 30. The tone has improved. So we're cautiously optimistic that the worst is behind us.
Speaker 6
That would be great. And then just the other point about the real estate sales. You had mentioned, look, we could take the $50,000,000 and pay down that term loan and knock down interest by a couple of million bucks over the next couple of quarters. To be clear, you don't have to pay down that term loan. Obviously, that's part of your plan.
If you wanted to, you could just put that in the cash, put that in the books and on the balance sheet here and just in case this is prolonged and second wave of those things, no obligation to pay that down, correct?
Speaker 2
No. Actually, we are required in the credit agreement if we sell assets to pay down debt.
Speaker 0
There are no further questions at this time. I'll turn the call over to Mike for final remarks.
Speaker 2
Okay. Thanks, everyone. I'd just like to reiterate pretty solid performance in the first quarter. We're pleased with it despite how it ended. I want to reiterate the very strong liquidity position we have today with $200,000,000 of cash on the balance sheet and our expectation to continue to generate positive cash flows.
I also mentioned the CARES Act and the liquidity enhancement there. That's going to be more than $50,000,000 that you have to add to the cash position we have today. Our integration plan, as you heard from me and from Paul, is progressing really well. We have 140,000,000 of annualized savings that we expect to have in place by the end of the second quarter. And we've taken the steps necessary to create additional flexibility and to be able to create additional cost savings during the crisis.
And we're in a position to continue to adapt as conditions evolve. So generally, feel really good. We continued to reduce our debt during the quarter. We remain optimistic about our ability to continue to do that with real estate asset sales. And as I mentioned, in my remarks on the call, we are highly confident in our ability to be in compliance and stay in compliance with our credit agreement.
Just a reminder, it's a five year term loan. We're only six months into it, so we have four point five years left. So we have nothing hanging hanging or dangling out there that we have to deal with. So, a very unfortunate situation, that we're in today, and it impacts everybody across, you know, our country and really most people around the world. It's unfortunate, but, you know, I feel I feel good about the efforts we've made to position our company to come out of the other side of this crisis.
Hopefully, that's sooner, not later, but come out of the other side of this crisis with a with a better, stronger and leaner company. So thanks for your time this morning, and we look forward to updating you again at the end of the second quarter. And in the meantime, everybody be safe and be healthy. Thanks. Bye.
Speaker 0
This concludes today's conference call. You may now disconnect.