Greetings and welcome to Gannett Co., Inc. 1Q Earnings Conference Call. As a reminder this conference is being recorded. I would now like to turn the conference over to your host Matthew Esposito with Investor Relations. Thank you, and over to you, sir.

Thank you. Good morning, everyone. And thank you for joining our call today to discuss Gannett's first quarter 2022 results. Presenting on today's call will be Mike Reed, Chairman and Chief Executive Officer; and Doug Horne, Chief Financial Officer. During this call, we will discuss Gannett 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'll 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, certain statements made during this call are or may be deemed to be forward-looking statements, including those with respect to future results and events, and are based upon current expectations. These statements involve risks and uncertainties that may cause actual results and events to differ materially from those discussed today. We encourage you to read the cautionary statement regarding forward-looking statements in the earnings supplement, as well as the risk factors described in Gannett filings made with the SEC. Except as required by law, we undertake no obligation to publicly update or correct any of the forward-looking statements made during this call. In addition, we will be discussing non-GAAP financial information during the call including same-store revenues, free cash flow, adjusted EBITDA and adjusted net income attributable to Gannett. You can find reconciliations of our non-GAAP measures to the most comparable U.S. GAAP measures in the earnings supplement. Lastly, I would like to remind you that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase any interest in Gannett. The webcast and audiocast are copyrighted material of Gannett and may not be duplicated, reproduced or rebroadcast without our prior written consent. With that, I'd like to turn the call over to Mike Reed, Gannett Chairman and CEO.

Thanks, Matt. Good morning, everyone. Thanks for joining us this morning on our first quarter call. The first quarter was slightly better than we expected despite the challenging macro environment. Our performance was in line with our plan and we believe consistent with providing the foundation for future growth at Gannett as outlined in our last earnings call. In the quarter we exceeded 1.75 million digital-only subscribers and experienced strong quarter-over-quarter growth with 118,000 net new digital subscribers. Year-over-year our digital subscriber base grew 44%, which is in line with the 40% CAGR we outlined in our long-range guidance last quarter. In lockstep with the increase in our digital-only subscribers, our digital marketing solutions business has experienced year-over-year core revenue and core client growth of 14% and 13%, respectively, and we've now seen four consecutive quarters of double-digit adjusted EBITDA margins. As expected, we experienced the usual Q4 to Q1 seasonality in our DMS revenue, but still saw strong year-over-year growth in our core platform revenue as I mentioned, 14%. Looking at our print business, we launched an evolved Saturday experience in the first quarter, which further embraces our digital future and caters to the evolving shift of our readers engaging with our content online. Through March of this year, 136 newspapers in the USA TODAY NETWORK transitioned from delivering Saturday additions in print to providing subscribers with access to our full Saturday e-editions portfolio across the entire network, including USA TODAY. We are seeing great traction with our Digital Saturday initiative and are excited to share our progress later in the call. Lastly, adjusted EBITDA decreased year-over-year as we expected and outlined in our last earnings call. The decrease reflects not only inflationary pressure on some cost lines, but also the investments we have made in our key operating pillars, which are critical to continuing our successful transformation to a digitally focused and subscription-led company, and a company that has long-term sustainable revenue and cash flow growth. Evidence of this is the growing success we have with our digital initiatives and our digital revenues, which were $251 million in the first quarter, growing 9.7% and equaling over a third of our total revenues. As I do each quarter, let me give you an update on each of our five strategic pillars of our strategy. Regarding our first strategic pillar, accelerating digital subscription growth, we've accumulated five consecutive quarters of at least 40% digital-only subscriber growth. We ended the first quarter with over 1.75 million digital-only subscribers. To continue growing and accelerating our digital subscriber base, we intend to capitalize on our large organic audience of 191 million average monthly unique visitors. 145 million of those visitors come from our USA TODAY NETWORK, as measured by comScore, and 46 million come from our UK digital properties. Given our massive reach, our focus will be on showcasing the power of our content in front of the users who come into our ecosystem, breaking down the friction in our funnel, and demonstrating the value proposition of our digital subscription offering. In the U.S. alone, we currently have 4 million registered users who are not yet subscribers, as well as 7 million newsletter subscribers who are not yet registered users. Right there we have 11 million consumers we are interacting with on a regular basis. Our goal is to build on those relationships, activate those users, and convert a portion of this highly engaged pool of users into subscribers. Over the past year and into the first quarter of this year, the number of registered users has continued to grow, and we typically see significantly higher subscription conversion rates from our registered users than we do from anonymous users. Additionally, the investments we've made and continue to make in content and product improvements led to an outstanding 86% growth in newsletter subscribers year-over-year in Q1. Newsletters and other email acquisition channels are our second leading conversion channel for digital-only subscriptions, only behind premium content. Our product organization continues to focus on both the registered user and subscriber experience with personalization and exclusive features being key priorities. Features such as the ability to follow topics and journalists, save articles, and access augmented reality are part of the product roadmap for registered users. Our paid subscriber base has already seen new features such as personalized fronts and Hear This Story capabilities that we've implemented, and we continue to test our subscriber-only features including a reduced disruptive ad load, which has shown up to a 5% lift in new starts in the markets we tested in 2021. Moving forward, we expect our digital-only subscriber growth will come from scaling new products and adding additional premium content at both the local and national level along with creating an emotional connection with our users through a more personalized experience, also improving the product and checkout experience and improving user engagement. In addition, part of our Q2 efforts will focus on additional ways for us to interact with key audience segments within our communities to further enhance consumer engagement. Turning to our second strategic pillar, we remain committed to running our current digital marketing solutions business at high levels of growth and profitability, while also expanding our product offerings to target an expanded customer base through a premium experience, combined with compelling do-it-yourself offerings through a buy-online experience. Our current target audience has traditionally been focused on premium and mid-sized SMBs that spend between $12,000 and $240,000 annually and, to a lesser extent, mid-to-large companies that spend up to $2 million annually. However, we are beginning to expand from the 1.2 million U.S. businesses we target today to the broader 31 million businesses that spend less than $12,000 annually on marketing. We believe there's significant opportunity for growth in future years as we build out our freemium, buy-online and do-it-yourself product portfolio. Regarding our premium entry, we are in the early stages of this effort, but we are starting to attract registered users and to generate self-sales qualified leads from this initiative. We expect this effort to scale over time. However, we already have seen steady registration growth since launch, and early signs are promising. We expect this initiative to expand our current total addressable market, and drive new registered users who will purchase our do-it-yourself products and engage with our local IQ platform and create upsell opportunities. Complementing our premium entry will be our do-it-yourself offerings, which are a series of entry-level service products, designed around the small SMB, to deliver a quality marketing solution for lower-tier marketing budgets. It provides a clear step from premium offerings, transitioning customers into paid products, and is completely enabled through the buy-online channel, requiring no additional provisioning steps from service. At the end of the first quarter, we began to launch multiple do-it-yourself products. These do-it-yourself products will be streamlined, simpler, and have much lower price points than our current products, as they will cater to smaller businesses, which happen to represent approximately 96% of SMBs in the U.S. Sequentially we have witnessed revenue declines in our DMS business over the past two quarters but this trend is not surprising and in line with the seasonality of some of the industries and sales channels that we traffic in. However, importantly, we have seen double-digit revenue growth in our core DMS business when compared to the same quarter in the prior year. We have traditionally seen our multi-location customers such as Home Services and Education pare back spending during the off-season winter months. Over time, we expect to grow the overall business in a way that shifts the business mix to reduce seasonal impacts. As I mentioned earlier, our digital marketing solutions business experienced year-over-year core revenue and core client growth of 14% and 13% in the first quarter, respectively. It is also important to note that we are doing a tremendous amount of work to expand and enhance our lead generation and sales conversion. This is an exciting growth driver for the future and will allow us to accelerate our core base and revenue. Similar to Q2 2021, we expect to see healthy sequential growth in core revenue, customer count and profitability in the second quarter of 2022. Now looking at our third strategic pillar, optimizing our traditional print business. In March of this year, we launched our Digital Saturday initiative in 136 markets. We are seeing great traction and have experienced an increase in our Saturday digital e-edition usage, which was up 55% since the Digital Saturday initiative was launched. And the impact on our home delivery subscriber volumes has been minimal and on track with our expectations. And while the move has benefited our customers, it has also helped Gannett mitigate overall secular trends as well as rising headwinds from inflation tied to newsprint, delivery and fuel costs. And to further reduce costs in the first quarter, we eliminated approximately 70 small free newspaper products that were primarily ad-driven, which we believe will further improve our bottom line and enhance our move to a more subscription-based company. It is important to stress that our traditional print business remains a strong source of cash flow, which still has a long tail to it. Utilizing the cash flow from this business gives us the ability to improve the balance sheet through debt repayment and to invest in our digital growth opportunities. We want to manage the tail of print as efficiently as possible, which is why we have stepped up our efforts to reduce churn with print subscribers. Turning to our fourth strategic pillar, prioritizing investment in growth businesses. Our Events business, which is branded USA TODAY NETWORK Ventures, experienced strong revenue growth of 83% year-over-year in the quarter, driven by a return to in-person events and endurance races. Throughout the quarter, Gannett hosted 115,000 attendees across 25 in-person events compared to 60,000 attendees and 12 events in the same quarter of the prior year. One example is the Hot Chocolate run series, which was the largest contributor to our growth in the first quarter of 2022, with races in eight different cities and an aggregate of 52,000 attendees. Another example is the Columbus Home & Garden Show, which was the largest attended event in Q1 2022 with nearly 24,000 attendees. While we have seen a return to live events, our vendors experienced supply chain and staffing issues that negatively impacted exhibitor participation. As the world returns to normal following the pandemic, we are continuing to work on increasing participation levels at our in-person events and expect to see continued growth in the second quarter as we head into the seasonally warmer months and growth over the back half of the year. Looking ahead to Q2 and our expanding partnerships with sports, the Golfweek team partnered with Ventures for the Masters Legends Party, which was held at Topgolf in Augusta, Georgia in early April. Client sponsors LAB Golf and Tito's Vodka were able to interact with guests and celebrity attendees of the event, including VIPs such as major winner and Ryder Cup captain Davis Love III, and golf personality and former PGA Tour player Colt Knost. Now rounding out our key operating pillars is building on our inclusive and diverse culture. The first quarter was very exciting for Gannett as we published our second annual inclusion report and our inaugural ESG report. Looking at our inclusion report, we are in year two of our journey of more intentionally building a culture of belonging, and we have made meaningful progress. In our second annual inclusion report, you will see how our commitment is moving the needle and how we connect, how we invest in our employees, how our impactful journalism and storytelling improves our communities and how we empower one another to succeed through education and learning. As a result, we've increased representation across all levels while continuing to provide a full breakdown of our workforce. Further, this was the first year we gathered intersectional data on identity from our workforce to enhance our visibility of inclusion among our employees. Year-over-year, Gannett's commitment to inclusion, diversity and equity has evolved, but we are just getting started. We are going to keep listening, keep learning, keep growing and keep making progress in this category. Meanwhile, the ESG report reflects an important and initial step towards providing increased transparency of Gannett's sustainability. We published our inaugural 2022 ESG report detailing the alignment of our efforts across our company's corporate social responsibility pillars, which are people, planet and communities, and with the UN Sustainable Development Goals. The company selected reduced inequalities, climate action and peace, justice and strong institutions as its key priorities, and we expect to have defined goals against each of them by the end of 2022. Each year, we plan to update you on our progress and share more details about how we are working to achieve our goals. I'm going to turn things over to Doug now for a deeper dive into an update on our financial performance for the first quarter of 2022 and our guidance. As I do so, it's really important to note that we are reiterating our full year 2022 guidance. Further, there is no change to our longer-term expectation of free cash flow growth at a 40% CAGR and to hit our revenue inflection point in 2024. Doug?

Thank you, Mike, and good morning, everyone. For Q1, total operating revenues were $748.1 million, a decrease of 3.7% as compared to the prior year quarter. On a same-store basis, operating revenues decreased 2.5% year-over-year. Both our total operating revenues and same-store revenue declines were in line with our Q1 guidance expectations. If you step back and think about our journey over the last couple of years, prior to the pandemic, our pro forma same-store revenue declines were approximately 9%. The stabilization of print advertising, coupled with our growth in digital revenues highlights the significant progress we've made in the past two years and gives us confidence as we look ahead to an expected inflection point for revenue growth in 2024. The foundation of that inflection point is our digital revenue growth. And in Q1 2022, digital revenues were $251.1 million and represented over one-third of total revenues, increasing 9.7% on a same-store basis year-over-year. Adjusted EBITDA totaled $64.2 million in the quarter, down $36.3 million or 36.1% year-over-year, but above our Q1 guidance range of $55 million to $60 million. Adjusted EBITDA margin was 8.6%, down 430 basis points from the 12.9% recorded in the prior year quarter. Expenses included in adjusted EBITDA were $683.9 million, which increased 1.1% year-over-year. The decline in adjusted EBITDA year-over-year represents the secular pressures of print revenue declines along with approximately $29 million in expenses associated with investments in our strategic pillars as well as ongoing inflationary pressures related to raw materials and labor. To break that down a bit more, our Q1 results reflect approximately $14 million of investments in our strategic pillars across content, marketing, digital marketing solutions and data. In addition, we estimate that rising costs associated with newsprint, fuel, delivery and postage resulted in an incremental $15 million of expense as compared to the prior year quarter. On the bottom line, we ended the first quarter with a net loss of $3.1 million and $4.5 million of adjusted net income attributable to Gannett. Our net loss of $3.1 million compares favorably to the prior year quarter. We benefited in part year-over-year as a result of 34% lower interest expense. Moving now to our segments. The Publishing segment revenue in the first quarter was $670.4 million, a decrease of 4.2% as compared to the prior year and down 2.9% on a same-store basis. Print advertising revenue decreased 7% compared to the prior year on a same-store basis, reflecting a stabilization in print revenue trends. The elimination of 70 advertising-based products that Mike referenced earlier contributed approximately $3.4 million of print advertising revenue in the prior year, which has been excluded from our same-store revenue calculation. Digital advertising and marketing services revenues increased 4.4% on a same-store basis, primarily driven by growth in digital marketing services and digital classified, which increased 15.6% and 5.7%, respectively. Digital media was relatively flat year-over-year with improved premium sell-through rates offsetting the tightening of inventory with more digital content available only to our digital subscribers as well as changes in our affiliate monetization. The digital marketing services revenue in the Publishing segment was $32.6 million in the first quarter. We saw core client count increase 30% over the prior year quarter as a result of the continued focus of our local sales teams. Moving now to circulation. Revenues decreased 10.9% compared to the prior year on a same-store basis, in part due to lower overall pricing of premium additions, which was scaled back in Q2 of 2021. While print circulation, which declined 14% year-over-year on a same-store basis, remains under pressure from secular declines, our digital-only circulation revenues grew 29.9% compared to the prior year. Digital-only subscribers grew 43.7% year-over-year to approximately 1.75 million subscriptions. Digital-only ARPU experienced declines year-over-year, but growth of 2.5% sequentially. As we've mentioned in previous earnings calls, we expect that ARPU will stabilize and begin to increase throughout 2022 as the higher volume of digital-only subscribers roll off their introductory pricing plans. Adjusted EBITDA for the Publishing segment totaled $68.6 million, representing a margin of 10.2% in the first quarter. As we mentioned earlier, the Q1 margin reflects cost pressures we are experiencing in a number of key categories, including postage, contract labor as well as higher newsprint prices which were up 37% in the first quarter as compared to the prior year, all of which equates to approximately $15 million negative impact to adjusted EBITDA on top of the investments made in content and marketing to support growth in our key pillars. For the digital marketing solutions segment, total revenue in the first quarter was $109.7 million, an increase of 8.2% year-over-year on a same-store basis. As compared to Q4 of 2021, revenue declined slightly due to seasonality from the home services and education categories, which were impacted the most during Q4 and Q1 of each year. Looking at core customers, which are those customers that utilize our proprietary digital marketing services platform, there was an increase from 15,200 customers in Q4 of 2021 to 15,400 customers in Q1 of 2022. Comparing to the prior year quarter, the core business revenue, which accounts for over 97% of the revenue in the digital marketing solutions segment, increased 14% year-over-year. Average customer count increased 1,800 year-over-year, which represents a 13% increase. ARPU grew 4.5% versus the prior year and reflects both the more focused product portfolio as well as steady growth from our publishing sales channel. Adjusted EBITDA for the digital marketing solutions segment totaled $11.2 million, representing a strong margin of 10.2% in the first quarter and the fourth consecutive quarter of double-digit margins. Our consolidated Q1 net loss attributable to Gannett was $3 million and includes $47.8 million of depreciation and amortization. The company's effective tax rate for the quarter was impacted primarily by limits on the deductibility of our interest expense. In Q1, interest expense was approximately $26 million, which is down 34% from the prior year. Let's now turn to the balance sheet. Our cash balance was $152.2 million at the end of Q1, resulting in net debt of approximately $1.22 billion. Capital expenditures totaled approximately $10.7 million in Q1, reflecting investments related to digital products, technology transformation and operating infrastructure. Free cash flow in the quarter was $21.7 million, above our expectations as we benefited from favorable timing of accounts receivable collections as compared to our initial outlook. We ended the quarter with approximately $1.37 billion of total debt and our first lien net leverage was 1.84x, reflecting $48 million of total debt paydown from an excess cash payment of $30.8 million and $17.2 million of asset sales. We remain committed to reducing our first lien net leverage to below 1x during 2023. In January, in connection with our share repurchase plan, we obtained an incremental $50 million under our existing senior secured term loan, and we transitioned the interest rate base from LIBOR to adjusted term SOFR due to regulatory requirements. Subsequently, in a privately negotiated agreement in March of this year, we repurchased $22.5 million of our 2026 senior notes without any fees or premium for an additional $22.5 million of borrowing under our senior secured term loan. A similar $7.5 million repurchase of 2026 senior notes was also completed in April. These exchanges give us the ability to be more proactive in paying down our first lien debt without paying additional premiums. First lien debt currently stands at $882.1 million. As a result of the short trading window during Q1, we did not repurchase any common stock under the share repurchase program announced in the first quarter. Although debt repayment remains our first priority, we will be opportunistic about using our share repurchase program moving forward. During Q1, we completed 12 real estate sales totaling $18.1 million and had five small asset dispositions totaling $2.4 million. We expect approximately $10 million of asset sales to close in Q2 and have increased our 2022 asset sales target from $50 million to $60 million to $70 million. Lastly, during the quarter, we performed two small tuck-in acquisitions, Archant and imATHLETE. Archant owns several news brands around the U.K. and its portfolio includes some of Britain's best-known local newspapers. The acquisition is a great strategic fit with our Newsquest footprint and aligns well with our commitment to grow in digital-only subscriptions and digital marketing services. Further, we increased our opportunity in the events registration space with the acquisition of imATHLETE as well as the minority interest in Motive. Both of these additions will allow us to further capitalize on our events business as we continue to see improvements in the performance of in-person events. Turning now to guidance. For the second quarter of 2022, we expect total revenues between $780 million and $790 million, which reflects low single-digit declines on a same-store basis. We expect adjusted EBITDA in the range of $80 million to $85 million and net income attributable to Gannett to be approximately breakeven. Further, we anticipate digital-only subscribers to surpass 1.85 million subscribers. We expect free cash flow to be slightly negative in the quarter given the timing of our cash interest payment on the 2026 senior notes, which occurs in Q2 and Q4 of each year as well as some seasonal working capital impact. However, we anticipate and reiterate full year free cash flow of $160 million to $180 million, which is expected to nearly double year-over-year. Looking at the full year, we are reiterating our prior guidance as described in today's earnings release with respect to same-store total revenues, net income (loss) attributable to Gannett, net cash flow provided by operating activities, free cash flow, adjusted EBITDA and ending digital-only subscribers. We have raised our revenue range to $3.1 billion to $3.2 billion, reflecting the impact of the recent acquisitions. Our quarterly earnings supplement posted on our website at investors.gannett.com provides additional information regarding our forward-looking guidance and includes reconciliations of non-GAAP measures to the most comparable U.S. GAAP measures. Overall, I am very pleased with what our team has accomplished during Q1 as well as over the last two years. I also remain very optimistic about Gannett's opportunity to create long-term shareholder value as we continue to improve our capital structure and demonstrate the success of our strategic objectives. I will now turn it back to the operator so we can give everyone an opportunity for questions.

We have a first question from the line of Doug Arthur with Huber Research. Please go ahead.

Can you hear me?

Yes, we can hear you, Doug.

Yes. Okay. Two quick questions, and unfortunately, I got to hop on another call. Mike, it looked like the digital sub number exceeded your initial expectation in Q1, not by huge amounts, but modestly. So I guess the question is, do you feel better or worse about the 2 million plus by year-end goal for digital subs? And then Doug, just on the cost side, this inflation pressure in newsprint, fuel, et cetera, should one assume that that will continue at least through Q2 and then we'll see about the second half. So those are my two initial questions.

I'll start with the inflation point. I think right now, as we sit here today, we're expecting many of those pressures to continue throughout the year, and that's been baked into our outlook and what we're expecting in terms of performance, especially when you look at the commodity of newsprint, we don't see any immediate relief in terms of the market dynamics that are driving that year-over-year price increase. So that's something that we're planning for for the remainder of the year. Although I think it's important to note that we started to see some of this in Q4 of last year, and so the year-over-year impact will start to cycle in Q4. So the variance won't be as significant then.

And Doug, to your first question, yes, given the outperformance in the first quarter on digital subs and expecting to surpass 1.85 million by the end of Q2, which we announced this morning, that does make us feel much better about our year-end targets. So the answer is yes.

We have next question from the line of Lee Cooperman with Omega Family. Please go ahead.

I just wanted to double check a couple of numbers. You said net debt was now about $1.22 billion. Can I assume that the free cash flow that you gave of $160 million to $180 million, plus the asset sales minus whatever you spend on stock repurchase will result in net debt at year-end closer to maybe $1 billion? And then secondly, if the stock stayed at this price, would you think you'd spend most of the $100 million on repurchase this year?

So in terms of the first question, I mean, right now, for Q1, the principal remaining on first lien debt was $882.1 million, and we had $152.2 million of cash on the balance sheet. We are projecting the $160 million to $180 million of free cash flow as well as we increase the asset sale target. So all of that will either go through to debt repayment or some portion of that could be used for share repurchases. So outside of that, the net debt should come down by those amounts, less any repurchases we choose to do.

My question, should I assume the net debt will go down by the amount of free cash flow plus asset sales, minus whatever you spend on stock repurchase?

Yes.

Yes.

Right. Okay. And then the question that follows on is I was surprised, I guess, you had a short window, but the stock seems very underpriced relative to your expectations. Do you think you'll spend $100 million, which would represent a 15% reduction in the share count? Do you think you would spend it all, assuming the stock stays at these approximate levels?

I think it's important from our perspective, just given the broader macroeconomic environment that I think everybody is facing right now, that we maintain an appropriate level of liquidity for Gannett. I think having some flexibility in our liquidity is important. Also debt repayment does remain our first priority. And we're focused on debt repayment. We're also focused very much on making sure we're investing appropriately in our strategic pillars. But as I mentioned earlier, we absolutely will be opportunistic where we see opportunities where we believe our share price is trading below its implied fair value.

And Lee, this is Mike. I would add to Doug's comment that I just want to make sure everyone understands that the share repurchase plan is not optics, it's not promotional. We are going to be opportunistic in repurchasing shares when we see the opportunities. It's hard to — we're not prepared to commit to the exact dollar amount of what we'll do this year. But I do want to assure everybody that this is not optics, it's not promotional. We do intend to take advantage of the opportunities when we see the share price significantly mispriced to where we see fair value.

We have next question from the line of an analyst with Citi. Please go ahead.

How are the trends in Q2 for live events looking given the economy has opened quite a bit? And then if you could touch a bit on the margins on that segment, that would be helpful. And then I have a second one as well.

So in terms of events, we are continuing to see live events return in a really strong fashion. I would say we're not back at levels we saw pre-pandemic. And specifically, the endurance and obstacle course races, which involve a lot more contact between participants, are probably seeing a slower return to what we consider normal. But we see upticks across the board, which is great. From a margin perspective, we don't break out separate margins necessarily, but I would say that those events run at margins which are multiples of our overall margins — two to three times what our overall margin is.

Got it. That's helpful. And then on my second question, what kind of retention are you seeing on the digital subs post the promotion you're running? I guess, the runoff of subs material, how is that looking?

We are constantly testing different offers and tracking how different offers perform. Over time, through the step-up period in terms of introductory pricing stepping up to more full-rate pricing, we're in that 65% to 70% retention range depending upon the cohort.

We have next question from the line of Greg Lewin with Lewin Capital Partners. Please go ahead.

Just a quick perspective for me, please. So your goals of midpoint $170 million of free cash flow. Your projection of $65 million, just the midpoint of additional asset sales, $235 million. Your share count is still below 150,000. If it was 150,000, we're dealing with something like $1 of free cash flow per share for equity holders, which is what I'm focused on. So we're dealing with some multiple that's in a sense almost 3x, which is kind of insane by any metric. Would you please describe to me the financial justification you have for buying back sub-6% debt versus using money on the stock?

Yes, Greg. Part of the rationale there — a big part of the rationale there is we believe, and this is through experience over the last 10 to 15 years, that a traditional media company carrying two to three turns of leverage creates a lot of additional overhang on the equity. And so there's a material overhang that gets reduced as we continue to repay that debt. Bringing that net debt below 1x, which Doug indicated we plan to do by next year, we think actually relieves the burden the leverage creates and allows us to take all of EBITDA and trade a couple of points higher from a multiple perspective. Also, the reason that we are paying down debt is we are significantly increasing free cash flow as we move our total debt from $1.3 billion gross to $400 million gross over the next few years, we're going to save close to $60 million a year in interest payments, which is then available for free cash flow. And our capital allocation strategy can start to shift at that point. So we believe repaying debt is going to be great for not only near-term but long-term shareholder value creation.

In just that point, Mike, and I don't want to belabor it, but I'm just going to — I just want to bring it out. Why do you care about an overhang when you can retire equity at prices such as they are today, which, by any metric, benefit the shareholders extraordinarily? So why are you talking about getting a multiple improvement in the future for other shareholders when you can have a financial boondoggle for current shareholders by buying in shares excessively?

We don't agree that there's necessarily a boondoggle. And I think that — look, we have to be mindful of the company's liquidity position. What if we're in a recession later this year? What if we're in a recession in the first quarter of next year? We can't — once you buy back shares, the capital is gone. And so we have to be mindful. We can't run liquidity down to zero. So we have to be as smart as we can be on capital allocation. Having said that, we are going to be opportunistic. So it's not like we won't be in the market buying back shares, but it's not an all-or-nothing proposition. And we are running the company to create the most upside for shareholders. Mid-term, long-term the investment in the organic side of the business and creating organic growth has to continue to be one of the top priorities of the company. We can't manage the company for the share price tomorrow. We have to manage it for the share price six months and six years from now. So we believe our capital is being allocated the right way right now.

Okay. I do not have any issue with the way you're running your business and you are investing in the future and to just make one further comment, and then I'll just leave it be, you were not a traditional newspaper company. You don't intend to be. Your largest, most profitable businesses are not even in the newspaper business. And so I'm only bringing up those points to never — I love the way you're running the business. I love the way you're investing in the business. You're not skimping on any of those things. You're driving the business in the right direction. I just have an argument about how you're using capital, free capital, not necessary capital, free capital. That's my only contention, but everything else, I'm very appreciative of the way you're running the business and I think you're doing a great job. So appreciate it. Thank you.

Thanks, Greg.

Ladies and gentlemen, we have reached the end of the question-and-answer session. Now I'd like to turn the call back to Mike Reed, CEO, for closing remarks. Over to you, sir.

All right. Thanks, everyone. I'd like to close today by thanking, first of all, our teammates here at Gannett for the consistent execution against our strategic plan and for allowing us to hit the ground running in 2022. We are incredibly excited about our operating progress that we've made and consistent with transforming the business. If you look back at where we were a year ago or at the time of the acquisition and where this business is today, it is in a fundamentally different place, and we believe we are positioned to be a growing business that generates significant free cash flow. We have created solid building blocks for future growth and believe we have positioned ourselves to nicely capitalize on this momentum moving forward. Our long-standing commitment to empowering communities to thrive by delivering impactful, trusted content and best-in-class marketing solutions for our customers is expected to enable us to continue to grow and achieve our long-term financial targets. We look forward to updating you on our progress on our next earnings call. Talk to you soon. Thank you all for joining us today.

Thank you. Ladies and gentlemen, this concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.