Gannett Earnings Cheat Sheet: Margins Shrink as Revenue and Net Income Fall

S&P 500 (NYSE:SPY) component Gannett Co. Inc. (NYSE:GCI) reported its results for the first quarter. Gannett is an international news and information company operating mainly in the realms of publishing, digital and broadcasting.

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Gannett Earnings Cheat Sheet for the First Quarter

Results: Net income for Gannett Co. Inc. fell to $68.2 million (28 cents per share) vs. $90.5 million (37 cents per share) a year earlier. This is a decline of 24.6% from the year-earlier quarter.

Revenue: Fell 2.6% to $1.22 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Gannett Co. Inc. reported adjusted net income of 34 cents per share. By that measure, the company beat the mean estimate of 31 cents per share. Analysts were expecting revenue of $1.24 billion.

Quoting Management: Gracia Martore, president and chief executive officer, said, “We are pleased with the progress we are making on the strategic initiatives underway across the company that will position Gannett for success in the digital age. Key highlights from the first quarter include launching a new all-access, all-platform content subscription model in six markets, rolling out Digital Marketing Services in our top markets and paving the way for important new advertising and marketing revenue opportunities through the expansion of our USA TODAY Sports Media Group. We also completed approximately $20 million of the $65 million of planned 2012 strategic initiative investments. We expect to see returns on our strategic initiative investments as the year progresses and for many years to come. We are squarely focused on leveraging the iconic brands, local connections and financial strength that differentiate our business to implement our growth plan while returning $1.3 billion to investors by 2015.”

Key Stats:

Gross margins went down 1.9 percentage points to 40.7%. The change appaered to be driven by falling revenue, as the figure dropped 2.6% from the year-earlier quarter, while costs rose 0.7%.

For four consecutive quarters, revenue has fallen. Revenue declined 5.1% to $1.39 billion in the fourth quarter of the last fiscal year. The figure fell 3.5% in the third quarter of the last fiscal year from the year earlier and dropped 2.2% in the second quarter of the last fiscal year from the year-ago quarter.

The company has beaten estiamtes for two quarters in a row. In the fourth quarter of the last fiscal year, it topped expectations with net income of 72 cents versus a mean estimate of net income of 69 cents per share.

Net income has dropped 20.9% year-over-year on average across the last five quarters. Performance was hurt by a 32.8% decline in the fourth quarter of the last fiscal year from the year-earlier quarter.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the second quarter is 56 cents per share, down from 58 cents ninety days ago. For the fiscal year, the average estimate has moved down from $2.22 a share to $2.19 over the last sixty days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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