USA TODAY Co. runs the largest local news network in the United States and one of the largest in the United Kingdom, and the central change underway is whether a shrinking print business can fund its way into digital scale without running out of cash first. The company is executing a long-term plan to push digital past half of total revenue while cutting the cost base each year it does so.
The tension in the story is the debt stack, which sits above the cash flow the business generates. First lien net leverage improved to 2.3x at the end of the second quarter, a 14 percent reduction from a year ago. The company has survived a near-miss on covenants before, and the equity story depends on cash flow compounding faster than the amortization schedule.
In the second quarter, revenue of $536.3 million fell 8.3 percent year-over-year. Net income reached $9.1 million, the second straight profitable quarter. The question the next two quarters resolve is whether digital growth can outpace the print decline at the same time costs keep falling.