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Gannett Co Inc (NYSE:GCI)
Q4 2019 Earnings Call
Feb 27, 2020, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning ladies and gentlemen, thank you for standing by, welcome to Gannett's Fourth Quarter 2019 Earnings Conference Call. My name is Marcella, and I will be your conference operator today. [Operator Instructions]. After the prepared remarks, the management from Gannett will conduct a question-and-answer session. The conference participants will be given instructions at that time. [Operator Instructions]. I would now like to turn the call over to Ms. Ashley Higgins of Investor Relations.

Ashley Higgins -- Investor Relations

Thank you, Marcella. Good morning everyone and thank you for joining us today to discuss Gannett's fourth quarter and fiscal year 2019 results. Presenting on today's call will be Mike Reed, Chairman and CEO of the public Company; Ali Engel, CFO; and Paul Bascobert, 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 results and events could materially differ 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 forma 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 forma 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 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 rebroadcast without our consent.

With that, I would like to turn the call over to Mike Reed, Gannett's Chairman and CEO.

Mike Reed -- Chief Executive Officer

Thanks, Ashley. Good morning, everyone. Thanks for joining our fourth quarter and full year 2019 earnings call. This is our first earnings call since the transformative acquisition we completed in November of last year. It is a pivotal moment for our Company as we report results on a consolidated basis for the first time, and as we set goals for 2020 as a much bigger and stronger enterprise.

Our stock price performance which has certainly been disappointing should not obscure the fact that the combination of New Media and Legacy Gannett creates a tremendous opportunity to significantly reduce costs, accelerate the path to revenue growth and create significant value for shareholders.

I would like to take a minute to thank all of our employees who have been working tirelessly on our integration efforts, while also improving our business in the first quarter. I know it has been an enormous amount of work, but the transaction better positions us for a faster path to revenue and profit growth.

Nearly three months post closing, we are making great progress on integration and synergies. We previously guided to the high end of a cost synergy target of $275 million to $300 million and we remain confident that we will implement the measures required to realize these savings by the end of 2021. We are already reaping the benefits of careful integration planning that began prior to closing.

By the end of this quarter, we expect to have implemented measures that will result in over $60 million in annualized savings. We expect these savings to ramp up each quarter until we achieve our $300 million target. At the same time, we are laser focused on improving our revenue performance driven by growth within the digital marketing services and events categories.

We are also ahead of schedule with debt repayment, having paid down $45.2 million to date, and we will continue to prioritize debt payment. We are targeting asset sales during the course of this year and next year that are expected to generate proceeds of between $100 million and $125 million, all of which will be used to repay debt. Even without these sales, we have highly achievable plan to aggressively reduce leverage.

We are pleased with the progress of our integration and we are confident in our ability to meaningfully improve our financial performance. We also expect to pay dividends in normal course beginning with the first quarter of 2020, and I'll touch further on that in a few minutes. Now turning to our recent financial results, I would like to point out that in addition to our GAAP results, which includes six weeks of Legacy Gannett operations, we have also provided pro forma financials to facilitate analysis of the consolidated Company's financial performance.

Pro forma financials represent the full quarter for Legacy New Media, plus the full quarter for Legacy Gannett. We have also provided revenue trends for each Legacy Company on a stand-alone basis as we believe it will be helpful for purposes of completing 2019 financial models. Going forward however, we intend to provide same-store trends on a consolidated basis.

As we review Q4 and full year 2019 performance, I'm going to focus on highlighting our pro forma performance for each period since this will serve as the starting point for future reporting and trends. On a pro forma basis, operating revenue was $1.054 [Phonetic] billion for the fourth quarter and $4.182 billion for the full year 2019, a decrease of 9.7% and 5.9% respectively.

On a same-store basis, revenue declined 9.9% in the fourth quarter, which was attributable in part to the employee distraction caused by the acquisition and the announcement of our synergy target. Also, as expected, we experienced a worsening trend in circulation in the fourth quarter, largely reflecting the run-off of more aggressive subscriber pricing -- subscriber pricing initiatives that Legacy Gannett enacted in Q4 2018.

However trends have improved in January and February to date. With new leadership teams in place, we expect to see an improved -- improvement in revenue trends throughout 2020. We also expect to drive meaningful EBITDA growth in 2020 as we realized, cost reductions, while improving revenue trends. Let me just repeat that. We expect to drive meaningful EBITDA growth in 2020. We have several key areas of focus in 2020 that will help drive an improved revenue trend.

The first is our Digital Marketing Services business or DMS, which generated $466 million in revenue on a pro forma basis in 2019. Digital Marketing Services is comprised of ReachLocal, UpCurve, and WordStream. They sell products both within our local markets via our local market sales teams as well as nationally via both field and inside sales teams within these businesses.

Our DMS revenue benefited from robust double-digit growth in the second half of 2019 in the Legacy Gannett local markets. This was partially offset by a slowdown experienced in the UpCurve business following the departure of that business' CEO. With the integration of our DMS business well under way, and with clearly defined sales and product leadership, we believe we are well positioned to achieve strong revenue performance in 2020.

In our events business, we are planning significant expansion into the Legacy Gannett markets. We are targeting 30% to 35% revenue growth in 2020 off of a significant base of nearly $70 million of revenue achieved in 2019 for the pro forma Company. We are also focused on growing circulation revenue by improving volumes through enhanced customer service, retention efforts and content. A component of our circulation strategy is to grow digital only circulation revenue. As of the end of 2019, we had over 800,000 paid digital-only subscribers, and nearly $51 million in pro forma revenue. The digital only circulation revenue category grew 46% on a pro forma basis in 2019, and we expect it will grow another 35% to 40% in 2020.

These focus areas will be key to improving our top line revenue trend, and all of these areas stand to significantly benefit from the New Media acquisition of Legacy Gannett, as we share best practices, expand markets for events and key products, share sales strategies and expand product suites.

Now for more detail, both operational and financial and the integration, I'd like to turn it over to Paul.

Paul Bascobert -- Chief Executive Officer

Thanks, Mike. As mentioned in our release this morning integration kicked off shortly after closing and has continued into the first quarter. By the end of the first quarter, we [Phonetic] implemented synergy savings totaling over $60 million on an annualized basis, with the first quarter benefiting from approximately $10 million to $15 million in savings. We will continue to execute on our synergy plans and are confident in our stated goal of implementing at least half of the $300 million in synergies during 2020.

We discussed our synergies in four categories. Newspaper operations, corporate and procurement, other operations, and systems. What we have implemented thus far has predominantly come from newspaper operations and corporate and procurement categories. We've announced the consolidation of 14 printing facilities across the country and reduced head count within the executive leadership and corporate support teams.

Across all categories, the teams are implementing thoughtful, strategic plans to most effectively bring these two businesses together. But more than just eliminating cost, we are working toward centralized and integrating all parts of our business on to common platforms for things like content, billing, circulation, web and mobile. As a result, some of those actions will take a longer lead time to implement, but will give us the cost efficiencies of our scale and the ability to quickly launch digital businesses across our network.

In addition to integration, the rest of the business continues to operate well. As Mike mentioned, we're beginning to see some momentum in our sales organization. Kevin Gentzel, our Chief Revenue Officer has moved quickly to close -- after close to integrate our sales organizations and announced leadership roles, so our sales teams could start the year focused on delivering our 2020 targets. Kevin and his team has done a nice job bringing everyone together under new Gannett and reenergizing sales.

On the product front, we completed redesign of USA TODAY on web and added several mobile features to modernize the design and significantly improve page load speeds. We also launched our first pilot of a marketplace business in Asbury Park. You can expect to see us launching more of these business models designed to directly connect our local buyers and sellers in the coming quarters. In our news division, we have recently announced senior leadership team led by Maribel Wadsworth who are hard at work integrating and unifying our 260 daily newsrooms across the country.

Together with USA TODAY, the work of our journalists reached just shy of 150 million unique visitors in January, according to Comscore. Also in January, The Des Moines Register played a major role in the national stage when it hosted the Democratic presidential debate in Iowa in partnership with CNN. The debate was watched by nearly 7.5 million people and featured the Register's chief political office -- Chief Political Reporter, Brianne Pfannenstiel as one of the three moderators. Our journalists were also named to numerous prestigious awards recently including 37 properties and 150 sports journalists being recognized by the Associated Press Sports Editors for outstanding entries in the APSE [Phonetic] contest.

We're very proud to produce high quality comprehensive local news that our communities care about and depend on. Bringing together two companies of this size is no small task and can create a lot of distraction from day-to-day operations. As such, we've also been very focused on regular communication with our teams through monthly all-hands meetings, leadership visits and just candid conversation.

Collectively, our organizations know we have a lot of change to adjust, but understand we are [Phonetic] heading and what they need to do. I've been incredibly impressed with the team and just how quickly and professionally they've responded and executed on our plan. This is hard work and I can't thank them enough and it's their commitment that energizes me and gives me such great confidence in our future.

Now, I'll turn it back to Mike to discuss capital allocation.

Mike Reed -- Chief Executive Officer

Thanks, Paul. So in the fourth quarter, we paid down $35.8 million in debt, which was earlier than originally expected. That brought our outstanding debt to approximately $1.76 billion when we ended the quarter and 3.6 turns of leverage. So far during the first quarter, we have paid down an additional $9.4 million with the proceeds from real estate sales.

As I mentioned before, we have identified an additional $100 million to $125 million in real estate sales that we plan to sell throughout 2020 and 2021, and we'll use the proceeds to accelerate debt pay down. Our expectation is for leverage to be approximately 2.75 times by the end of this year 2020, and we still expect to refinance this credit facility, when we reduce leverage to approximately two times, which we expect will occur by the end of 2021.

So we remain on track with our original plan. Looking ahead to the first quarter, we expect to announce our first post-acquisition dividend, when we report Q1 2020 earnings in early May, which is consistent with the timing of New Media's past dividends with respect to the first quarter.

This is also in line with our credit agreement, which allows for dividend payments to begin after our first full fiscal quarter as a consolidated Company. We expect the amount of the first quarter dividend to be $0.19, consistent with what we've told our shareholders from going back to last summer, subject to approval by our Board of Directors of course at the first quarter Board meeting. Now I'd like to turn it over to Ali to give us a much more detailed review of our financial performance in the quarter.

Ali Engel -- Chief Financial Officer, Treasurer

Thank you, Mike and good morning everyone. GAAP operating revenues in the first quarter were $699.3 million, up 68.1% to the prior year quarter due to the acquisition. On a pro forma basis, operating revenues were $1.05 billion, which were down 9.7% to the prior year quarter.

On a same-store basis, revenues were down 9.9% which reflects continued weakness in both print advertising and circulation revenues partially due to disruption from the transaction. As we had mentioned last quarter, part of the weakness in the circulation revenue trend was due to the cycling of more aggressive pricing initiatives that Legacy Gannett implemented in the fourth quarter of 2018.

GAAP adjusted EBITDA totaled $98.8 million in the quarter and on a pro forma basis totaled $141.2 million or down 19.4% versus the prior year quarter, reflecting lower revenues and higher than anticipated healthcare claims. The adjusted EBITDA margin in the quarter was 13.3% on a pro forma basis. In the fourth quarter, pro forma expenses fell approximately 8% reflecting payroll savings from various cost reduction initiatives each Company already had under way on a stand-alone basis, significant newsprint savings from both lower volumes and prices, and continued production and distribution efficiencies.

Turning to our segments, GAAP Publishing segment revenue in the fourth quarter was $653.9 million or $964.7 million on a pro forma basis. Print advertising revenues were down 20.1% on the same store basis for Legacy Gannett and down 16.3% at Legacy New Media reflecting continued secular pressures. Digital advertising and marketing services revenues decreased 1.6% on a same store basis at Legacy Gannett and 0.4% on a same store basis at Legacy New Media. Strong gains in digital marketing services revenues, especially at Legacy Gannett were offset by more muted results within digital media and continued weakness in digital classified revenues as expected.

Circulation revenues decreased 10.3% on a same store basis at Legacy Gannett and 7.2% on a same store basis at Legacy New Media. As mentioned earlier, the Legacy Gannett trend was expected and reflects the cycling of more aggressive pricing initiatives that were enacted in 2018. Paid digital only subscriber volume growth remained robust in the quarter, up 25.3% to the prior year on a pro forma basis to approximately 812,000 subscriptions. Paid digital only subscriber revenue grew 46.1% compared with the prior year on a pro forma basis. Turning to our marketing solutions segment, GAAP fourth quarter revenues totaled $69.3 million and $136.8 million on a pro forma basis.

On a same store basis, Legacy Gannett revenues increased 1.8% year-over-year similar to performance in the third quarter. Legacy Gannett continues to see strong double-digit gains in our local markets, driven by an increase in the number of clients, which we expect to continue into 2020.

GAAP adjusted EBITDA for the Marketing Solutions segment was $4 million on a reported basis or 5.8% margin. Our GAAP net loss attributable to Gannett for the quarter was $95.1 million as reported, reflecting a $100.7 million of non-cash writedowns, related to the revaluation of goodwills and intangibles and a $145.6 million of one-time charges related to restructuring and transaction-related costs. Turning to the balance sheet, we ended the quarter with $1.76 billion in debt as we paid down $35.8 million during the quarter.

Our cash balance was $156.0 million at the end of the quarter, resulting in net debt of $1.6 billion. Capital expenditures totaled approximately $6.7 million for the fourth quarter, reflecting investments related to digital product development as well as project supporting our ongoing facility consolidations and real estate transactions.

Operator, I think we're now ready for the questions.

Questions and Answers:

Operator

[Operator Instructions]. Your first question comes from the line of Kyle Evans from Stephens. Your line is open.

Kyle Evans -- Stephens -- Analyst

Hi, good morning. Thanks. Mike, the two Legacy companies have pretty different dividend strategies, I know you got to wait for Board approval for the 1Q '19, $0.19 was not official, but maybe you could talk at a high level about how this new entity is going to think about return on capital versus the lever [Phonetic] to the expensive debt you have and then more specifically, kind of what the right brackets are around the percent of free cash flow payout you expect going forward? [Speech Overlap].

Mike Reed -- Chief Executive Officer

Yeah. So we set the dividend at $0.76 a year targeting in the first year, about a 30% payout ratio. And Kyle, in an ideal world, we'd like to continue with a 30% payout ratio. So you would grow the dividend as you grow free cash flow over the years to come. However, you bring up good point from a capital allocation standpoint we have expensive debt, and we have a very low stock price.

And so with our stock price as low as it is now, and with the yield as high as it is now, from a capital allocation standpoint both buying back shares and paying down debt, 11.5% debt is more beneficial to the Company and its shareholders than just raising the dividend. So we have full intention to pay our current dividend as announced. But as we go forward in the years to come, we do have several levers to look at.

And so, part of that will depend on where our share price is and do we trade at better on fundamentals, because we're not trading on fundamentals today.

Kyle Evans -- Stephens -- Analyst

Right, thanks. You mentioned the expectation for improving revenue trends, and I think on page 5, it says -- excuse me, significant same-store revenue trend improvement, 2020. Can you bracket kind of what you expect pro forma revenue to look like in the cadence of that going across the four quarters of 2020. And then, behind that, what are the biggest moving parts that make you confident enough to put that in the deck?

Mike Reed -- Chief Executive Officer

About 150 basis points.

Kyle Evans -- Stephens -- Analyst

Of total pro forma revenue improvement in '20 versus '19?

Mike Reed -- Chief Executive Officer

Yes.

Kyle Evans -- Stephens -- Analyst

And how are we going to get there?

Mike Reed -- Chief Executive Officer

Improvement in the DMS revenues, improvement in the Events revenues, the stabilized print while down, not a worsening print trend, and then some slight improvement in circulation revenue toward the back half of the year. National is a good category for us as well. That will help us in 2020.

Kyle Evans -- Stephens -- Analyst

Got it. Your circulation comment is a good segue into the thing that you guys are sick of me asking, I'm sure, but you know, I'm obsessed with the circulation unit economics. You talked a little bit about -- well, not a little bit, three times about the rolling off of the aggressive pricing strategy like you see in Gannett and you're kind of aiming at those -- that negative 10% number to explain that. But I also see Legacy New Media kind of going from 5.5% to 6% in the first three quarters to 7% dip and just kind of wondering if you could talk a little bit about that 7% dip at New Media and then kind of talk about what you think the pricing -- the interplay between pricing and [Indecipherable] volume will look like in 2020?

Mike Reed -- Chief Executive Officer

Yeah. We -- while not as bulky Kyle, it's not significant. We at New Media had done some price increases in Q4 2018 too that cycled off in Q4 of 2019. And we also had done more premiums in the second half of '18 premium additions than we did in 2019. So those, those -- that's all part of the pricing strategy, and as we go forward, our strategy is much more around volumes through retention after better retention efforts, better customer service, better marketing and better content, not [Phonetic] pricing.

Kyle Evans -- Stephens -- Analyst

And when those 5.5% to 6% declines turned into the 7% and 10% at New Media and Gannett, did you see better, did you see unit volume improvements on a year-over-year basis?

Mike Reed -- Chief Executive Officer

Yes, we did.

Kyle Evans -- Stephens -- Analyst

Okay. And I guess to be specific and put a finer point on this line of questions, do you expect to be doing any aggressive rate hikes in 2020 for any of the either side of the business?

Mike Reed -- Chief Executive Officer

We do not.

Kyle Evans -- Stephens -- Analyst

Okay. Okay. Lastly, and then I'll quick hog [Phonetic] in the microphone here, $300 million in cost synergies that you plan to get, you talked about consolidating 14 print facilities, are there more print facility consolidations coming? And can you talk about the cost to achieve, cash cost to achieve synergies in 2020? Thank you.

Mike Reed -- Chief Executive Officer

Yeah. Well, the back half of that question, cost to achieve have been running about 20% of our synergies. We're about halfway done with the print consolidation project. So there's a lot more to do there, and of course there is a lot of long lead-time items that help us get to $300 million in synergies that roll into 2021, that's why it's a two-year project. But don't forget also Kyle, both companies had been doing regular way cost reductions before the merger and even after the merger. So those regular way cost reductions will roll into 2020 as well. So our cost will be down a lot more than just the synergies.

Kyle Evans -- Stephens -- Analyst

Great. And maybe, just to sneak one more in here, a lot of discussion around digital-only and the growth you're seeing there, solid growth but still quite small, as a percent of total. I'm sitting here in Little Rock, it's a smaller market than most of the Legacy Gannett, but than DMA 57, but it's a lot bigger than a lot of a Legacy New Media is. Our local paper here is printed only on Sundays and its digital the other six days of the week. How much in your mind would print advertising have to decline from where it is today, before you start to consider something fairly radical on the distribution side of the business model? Thanks.

Mike Reed -- Chief Executive Officer

A lot. I mean, we still make a lot of money off the print business [Phonetic] we really do.

Ali Engel -- Chief Financial Officer, Treasurer

And print circulation.

Mike Reed -- Chief Executive Officer

Print circulation and print, you know, advertising, so print subscribers are highly profitable and it would have to decline a lot from where it is today. [Speech Overlap]. So we don't have any plans in the near future to do anything like that.

Kyle Evans -- Stephens -- Analyst

Okay. Basically what I hear you saying is, you'll be refinancing your 11.5% debt at the end of next year before you're thinking about doing something radical.

Mike Reed -- Chief Executive Officer

As we sit here today, I would say yes, that -- that's correct.

Kyle Evans -- Stephens -- Analyst

Okay, great. Thanks, Mike.

Mike Reed -- Chief Executive Officer

Thanks Kyle.

Operator

Your next question comes from the line of Ryan Vaughan from Needham. Your line is open.

Ryan Vaughan -- Needham & Company -- Analyst

Hi, thanks for taking my questions. Just a couple here, one, encouraging to hear that you're seeing some improvement in January and February. Would you say that's just more kind of the industry advertising backdrop is improving or some of the merger initiatives that you guys have been highlighting that are starting to play out, and then I have one follow-up.

Paul Bascobert -- Chief Executive Officer

Sure. This is Paul. A couple of things; one, I think we've pulled together the team now across both companies, they've got some really strong momentum. We've done some sales rallies around the country, the team has a lot of energy. We've gotten the restructuring done early and so I think we're off and running. So operationally, I think we're just seeing a lift from that.

We also have the benefit now of a much broader base in which we can sell national programs, and so we've got a lot more properties that we can digest large buys from national advertisers, which we're starting to see some nice lift from that. So the combination of those two, plus just some overall strength in the advertising market here as we look toward political advertising and just I think a nice come back in the ad spend.

Ryan Vaughan -- Needham & Company -- Analyst

Got it. Thank you. And then just on the comment about expect meaningful EBITDA growth. In the press release, I appreciate all the -- the pro forma, I think there was a $485 million pro forma number, is that a good starting point for us to use, when you say expect meaningful EBITDA growth for 2020?

Mike Reed -- Chief Executive Officer

Yes, it is.

Ryan Vaughan -- Needham & Company -- Analyst

Excellent. And yeah, I'll take one more. Mike, I always appreciate your thoughts on the capital allocation. We've talked about this in the past, but to your point, with where the stock is today and obviously you are full intention, you're committed to the dividend. Can you just remind me or clarify the comment that you made before that, it's probably a better use of capital to be buying back shares at the plus or minus $5 level versus paying a dividend. Can you just extrapolate on that comment that you made?

Mike Reed -- Chief Executive Officer

Well, part of our overall strategy is to return capital to shareholders, that's why we have $0.19 a quarter dividend. My point on capital allocation was, do you increase that as you improve financial performance or do you buy back shares or pay down debt? With where our share price is today, the yield on the dividend is so high, we're not really getting credit for it. So it's going to make more sense in the near-term to take capital and pay down debt and buy back shares.

So that's what I meant by that. And also just to clarify on the second question, the significant EBITDA growth will come, primarily as we continue to realize synergies and every single quarter those synergies will continue to ramp up. So you don't expect to see the same percentage every quarter throughout 2020, that would indicate that all the synergies were already in place. So everything will continue to ramp up as the year goes on.

Ryan Vaughan -- Needham & Company -- Analyst

Thank you very much.

Operator

Your next question comes from the line of Leon Cooperman from Omega Family Office. Your line is open.

Leon Cooperman -- Omega Family Office, Inc. -- Analyst

Thank you. Good morning.

Mike Reed -- Chief Executive Officer

Good morning, Leon.

Leon Cooperman -- Omega Family Office, Inc. -- Analyst

I think I know the answers to all of these questions, because you've been very transparent and you've been very consistent, but I got it, I just don't believe where the stock is trading. So I got to ask the question again. In January or early January this year, you had an interview in Las Vegas, I think, with Jason Bassinet [Phonetic], and he asked you some interesting questions, one was, you know, you've bought a lot of stock, what are you thinking about valuation? And I think your response was, as you looked out a few years, you see the Company is going to have a valuation somewhere between $4 billion to $5 billion, I see a debt pay down to approximately $1 billion. So I see a market cap of $3 billion to $4 billion, which gives me a $25, $30 stock, which is I guess six times where we are trading currently. That was one comment you made.

The second comment you made was on the dividend at that time it was a 12% yield, it is now 15.5% yield. Would you -- and I had a third observation and that is, when you put out the S-4 in connection with the merger, you had a lot of projections out to 2022. Are the projections in the S-4 -- or is your comment to Jason in early January still operative in your view?

Mike Reed -- Chief Executive Officer

Yeah. Well, my comments to Jason are still operative that's still the way I feel. You're right, I do own a lot of shares, I see significant value over the next three years, as we grow EBITDA substantially and pay down debt. I think we're not changing our mindset at all in terms of what we put in the S-4. The Board has discussed at length whether we give specific guidance for 2020 and the decision was no specific guidance for 2020. But I am saying that our revenues are going to improve and are -- we're going to have significant EBITDA growth and all of the things I told Jason Bassinet in January still stand today.

Leon Cooperman -- Omega Family Office, Inc. -- Analyst

All right. I figured you're going to say that. If you take -- if the dividend was set at roughly 30% of free cash flow, the implicit if you take $0.76, divide that by 0.3, you're talking about $2.5 a share of free cash flow and stock is like less than two times free cash flow, I mean -- so $2.50 of free cash flow is what you're thinking for this year?

Mike Reed -- Chief Executive Officer

Yeah. So I'm not, actually I said the stock is not trading on fundamentals today and I think what's -- what's happening is there is a ton of shorts in the stock and there is a wait and see approach for a couple of quarters to see how Q1 and Q2 actually do. Can we grow EBITDA and can we improve revenue trends. And if we deliver on both of those in Q1 and Q2, I think we'll start to squeeze the shorts out and I think we will start to trade on fundamentals.

Leon Cooperman -- Omega Family Office, Inc. -- Analyst

All right. The -- you've made some conference comments about the dividend, I just want to make sure your comments were maybe -- you know, this is my interpretation, so just tell me if I'm on the wrong track, the $0.76 dividend is secure, what you're saying is, we may not grow the dividend as cash flow grows if the stocks trades down here that may be a better use of capital to pay down debt or buyback stock, but you're not talking about the vulnerability of the existing dividend. You're just talking about the growth of the dividend, is that correct?

Mike Reed -- Chief Executive Officer

I'm talking about the growth of the dividend.

Leon Cooperman -- Omega Family Office, Inc. -- Analyst

Okay. So I think that's great. Well, good luck. I mean, I've never seen such a disconnection from fundamentals, but hopefully I get [Phonetic] the opportunity. But thank you and good luck.

Mike Reed -- Chief Executive Officer

Thanks, Leon.

Operator

I will now turn the call over to Mike Reed for closing remarks.

Mike Reed -- Chief Executive Officer

Thank you. In closing, I'd like to highlight that in the short time since the closing of our acquisition, as mentioned earlier, we have made substantial progress on the integration. We have begun implementing measures that will result in significant cost savings both the first quarter and beyond.

We remain very confident in our ability to implement over $300 million of synergies and we target that by the end of next year 2021. We have already prepaid over $45 million of our term loan and we remain highly focused on deleveraging. We have identified $100 million to $125 million of real estate that we expect to sell by the end of 2021, which will also accelerate our deleveraging plans.

Our revenue trends so far in the first quarter are looking stronger than the fourth quarter and we are optimistic about our ability to continue to improve same-store revenue trends this year. We are also very optimistic about our ability to grow EBITDA in 2020. I want to say thank you again to our employees. We appreciate your hard work to date, your dedication, your motivation and commitment to a successful 2020.

And I also want to thank our shareholders for your support of the acquisition and your trust as we work to achieve our goals that we've laid out today. Look forward to speaking to you again in just a couple of months with Q1 earnings. Thank you.

Operator

[Operator Closing Remarks].

Duration: 37 minutes

Call participants:

Ashley Higgins -- Investor Relations

Mike Reed -- Chief Executive Officer

Paul Bascobert -- Chief Executive Officer

Ali Engel -- Chief Financial Officer, Treasurer

Kyle Evans -- Stephens -- Analyst

Ryan Vaughan -- Needham & Company -- Analyst

Leon Cooperman -- Omega Family Office, Inc. -- Analyst

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