In its first quarterly earnings results since merging with New Media Investment Group, Gannett Co., Inc. (NYSE: GCI) reported total revenue of $948.7 million, an increase of 144.8%. Advertising and marketing services revenue was $487.0 million, circulation revenue was $374.7 million, and other revenue was $86.9 million for the quarter. Despite strong revenue increases and cost savings, both due to the acquisition, Gannett had a net loss of $80.6 million with $80.2 million, or $0.61 diluted earnings per share, of that loss attributable to Gannett.

“We are pleased to announce solid first quarter financial results this morning,” said Michael Reed, Gannett Chairman and CEO, in a May 7 news release. “Revenue and EBITDA performance were strong, despite the disruption experienced over the last two weeks of March from the COVID-19 pandemic. The impact on our business from the pandemic came fast and is significant.”

“However, we continue to execute on our operating and integration plans from the acquisition of Legacy Gannett last year. The realization of synergies remains on track and debt pay down remains ahead of schedule. We have also moved aggressively to manage through the current economic crisis by taking measures to preserve and increase liquidity and financial performance, including further cost reductions, limits on capital expenditures, and the suspension of our quarterly dividend. We continue to evaluate additional options to strengthen our company as we navigate through this crisis,” Reed added.

Gannett also reported $75 million in annualized synergies with $19 million in cost savings realized in the first quarter. During the second quarter, the company expects to achieve $140 million in annualized synergies, including $35 million to $40 million in savings to be realized in the second quarter.

Other financial and operational highlights from the quarter include the following:

• Gannett now has 863,000 paid digital-only subscribers, an increase of about 30%.
• Cash flow from operations was $60.5 million, compared to $31.7 million in Q1 2019.
• Adjusted EBITDA was $99.1 million.
• The company sold $10.3 million in real estate holdings, using the net proceeds to pay down debt.
• The company repaid $12.7 million in debit.
• At the end of the quarter, Gannett had $199.7 million in cash and cash equivalents.

The company also highlighted some of the impacts the coronavirus pandemic has had on operations and revenue.

• The company reduced expenses by $100 million to $125 million through furloughs, pay cuts, staff reductions, and reducing non-essential travel and spending.*
• The company will cut capital spending in 2020 by 20%.
• Quarterly dividends are suspended until conditions improve.
• By late March, 95% of non-production and delivery staff were working from home.
• Gannett-owned newspapers have provided COVID-19 coverage to the communities they serve, getting more than 650 million views since launching in mid-February.
• USA Today launched a coronavirus newsletter which has 160,000 subscribers.

*In March, Gannett asked its employees to make a “collective sacrifice” during the pandemic, as the company made deep cuts, including unpaid furloughs, pay reductions and layoffs.

Since the May 7 earnings report, Gannett stock has been up and down, closing at $0.98 per share on May 7, rising to $1.39 per share on May 11 and dropping back down to $1.11 per share yesterday.

Insider Take:

You know that saying about putting lipstick on a pig? Well, it may apply here. Gannett is attempting to paint a rosy picture here, when there is nothing rosy about an $80.2 million loss or achieving “synergies” with significant pay cuts, furloughs and layoffs. Gannett is targeting even steeper cost cutting measures and synergies in the second quarter which may mean more staff cuts. We understand that, for the sake of their shareholders, they want to appear to be optimistic and that they have a solid plan in place, but no one really knows what the second quarter will look like. We can only assume it will be worse than the first quarter of the year when COVID-19 first took hold in the U.S. Gannett will not be any different or any luckier.