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Globe Newswire 2-May-2024 7:00 AM
Adjusted EBITDA(1) growth of 5% YOY
Digital-only subscription revenue increased 48%(2) with subscriptions up 25%
Total Digital Revenue(3) of $71M represented 48% of total revenue
DAVENPORT, Iowa, May 02, 2024 (GLOBE NEWSWIRE) -- Lee Enterprises, Incorporated (NASDAQ:LEE), a digital-first subscription platform providing high quality, trusted, local news, information and a major platform for advertising in 73 markets, today reported preliminary second quarter fiscal 2024 financial results(4) for the period ended March 24, 2024.
"Lee delivered strong second quarter operating results as we improved overall revenue trends, managed operating expenses, and grew Adjusted EBITDA," said Kevin Mowbray, Lee's President and Chief Executive Officer. "We are pleased with our impressive digital subscription revenue growth and expanding digital subscriber base. We now have 745,000 digital subscribers, a 25% increase over the prior year. Digital-only subscription revenue grew 48%(2), and totaled nearly $75 million over the last twelve months, positioning us toward our long-term target of $150 million."
"Due to significant growth in digital subscription revenue along with solid performance at Amplified Digital®, digital revenue finished the quarter representing 48% of total operating revenue. Achieving the digital inflection point, where more than 50% of our revenue is digital, is a key milestone in our digital transformation. We anticipate reaching that inflection point next quarter," Mowbray added.
"The rapid growth of our digital subscriptions and revenue, the expansion of Amplified Digital® marketing solutions, and thoughtful investments into our digital infrastructure are proof we are steadily becoming sustainable solely from the revenue and cash flow generated from our digital products," said Mowbray.
Key Second Quarter Highlights:
2024 Fiscal Year Outlook (unchanged):
Total Digital Revenue | $310 million (+13% YOY) - $330 million (+21% YOY) |
Digital-only subscribers | 771,000 (+7% YOY) |
Adjusted EBITDA | $83 million (-3% YOY) - $90 million (+6% YOY) |
Debt and Free Cash Flow:
The Company has $454 million of debt outstanding under our Credit Agreement(5) with BH Finance. The financing has favorable terms including a 25-year maturity, a fixed annual interest rate of 9.0%, no fixed principal payments, and no financial performance covenants.
As of and for the period ended March 24, 2024:
Conference Call Information:
As previously announced, we will hold an earnings conference call and audio webcast today at 9 a.m. Central Time. The live webcast will be accessible at www.lee.net and will be available for replay 24 hours later. Analysts have been invited to ask questions on the call. Questions from other participants may be submitted by participating in the webcast. To participate in the live conference call via telephone, please register here. Upon registering, a dial-in number and unique PIN will be provided to join the conference call.
About Lee:
Lee Enterprises is a major subscription and advertising platform and a leading provider of local news and information, with daily newspapers, rapidly growing digital products and nearly 350 weekly and specialty publications serving 73 markets in 26 states. Lee's markets include St. Louis, MO; Buffalo, NY; Omaha, NE; Richmond, VA; Lincoln, NE; Madison, WI; Davenport, IA; and Tucson, AZ. Lee Common Stock is traded on NASDAQ under the symbol LEE. For more information about Lee, please visit www.lee.net.
FORWARD-LOOKING STATEMENTS — The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. This release contains information that may be deemed forward-looking that is based largely on our current expectations, and is subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those anticipated. Among such risks, trends and other uncertainties, which in some instances are beyond our control, are:
Any statements that are not statements of historical fact (including statements containing the words "may", "will", "would", "could", "believes", "expects", "anticipates", "intends", "plans", "projects", "considers" and similar expressions) generally should be considered forward-looking statements. Statements regarding our plans, strategies, prospects and expectations regarding our business and industry and our responses thereto may have on our future operations, are forward-looking statements. They reflect our expectations, are not guarantees of performance and speak only as of the date the statement is made. Readers are cautioned not to place undue reliance on such forward-looking statements, which are made as of the date of this report. We do not undertake to publicly update or revise our forward-looking statements, except as required by law.
Contact:
IR@lee.net
(563) 383-2100
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended | Six months ended | |||||||
(Thousands of Dollars, Except Per Common Share Data) | March 24, 2024 | March 26, 2023 | March 24, 2024 | March 26, 2023 | ||||
Operating revenue: | ||||||||
Print advertising revenue | 18,742 | 31,450 | 43,177 | 73,286 | ||||
Digital advertising revenue | 45,392 | 46,250 | 91,844 | 93,999 | ||||
Advertising and marketing services revenue | 64,134 | 77,700 | 135,021 | 167,285 | ||||
Print subscription revenue | 48,966 | 64,586 | 100,838 | 131,956 | ||||
Digital subscription revenue | 20,261 | 13,996 | 39,728 | 26,325 | ||||
Subscription revenue | 69,227 | 78,582 | 140,566 | 158,281 | ||||
Print other revenue | 8,069 | 9,649 | 16,561 | 20,769 | ||||
Digital other revenue | 5,120 | 4,756 | 10,080 | 9,483 | ||||
Other revenue | 13,189 | 14,405 | 26,641 | 30,252 | ||||
Total operating revenue | 146,550 | 170,687 | 302,228 | 355,818 | ||||
Operating expenses: | ||||||||
Compensation | 56,803 | 68,831 | 116,479 | 144,277 | ||||
Newsprint and ink | 4,162 | 6,466 | 9,005 | 13,898 | ||||
Other operating expenses | 72,294 | 82,569 | 147,070 | 169,343 | ||||
Depreciation and amortization | 7,293 | 7,733 | 14,588 | 15,619 | ||||
Assets loss (gain) on sales, impairments and other, net | 7,617 | (792 | ) | 6,148 | (3,355 | ) | ||
Restructuring costs and other | 4,139 | 3,694 | 8,404 | 4,340 | ||||
Total operating expenses | 152,308 | 168,501 | 301,694 | 344,122 | ||||
Equity in earnings of associated companies | 1,206 | 672 | 2,747 | 2,340 | ||||
Operating (loss) income | (4,552 | ) | 2,858 | 3,281 | 14,036 | |||
Non-operating (expense) income: | ||||||||
Interest expense | (10,214 | ) | (10,501 | ) | (20,345 | ) | (20,909 | ) |
Pension and OPEB related benefit and other, net | 293 | 206 | 479 | 1,700 | ||||
Curtailment/Settlement gains | — | — | 3,593 | — | ||||
Total non-operating expense, net | (9,921 | ) | (10,295 | ) | (16,273 | ) | (19,209 | ) |
Loss before income taxes | (14,473 | ) | (7,437 | ) | (12,992 | ) | (5,173 | ) |
Income tax benefit | (2,837 | ) | (2,071 | ) | (2,589 | ) | (1,631 | ) |
Net loss | (11,636 | ) | (5,366 | ) | (10,403 | ) | (3,542 | ) |
Net income attributable to non-controlling interests | (543 | ) | (519 | ) | (1,088 | ) | (1,244 | ) |
Loss attributable to Lee Enterprises, Incorporated | (12,179 | ) | (5,885 | ) | (11,491 | ) | (4,786 | ) |
Loss per common share: | ||||||||
Basic: | (2.06 | ) | (1.01 | ) | (1.94 | ) | (0.82 | ) |
Diluted: | (2.06 | ) | (1.01 | ) | (1.94 | ) | (0.82 | ) |
DIGITAL / PRINT REVENUE COMPOSITION
(UNAUDITED)
Three months ended | Six months ended | |||
(Thousands of Dollars) | March 24, 2024 | March 26, 2023 | March 24, 2024 | March 26, 2023 |
Digital Advertising and Marketing Services Revenue | 45,392 | 46,250 | 91,844 | 93,999 |
Digital Only Subscription Revenue | 20,261 | 13,996 | 39,728 | 26,325 |
Digital Services Revenue | 5,120 | 4,756 | 10,080 | 9,483 |
Total Digital Revenue | 70,773 | 65,002 | 141,652 | 129,807 |
Print Advertising Revenue | 18,742 | 31,450 | 43,177 | 73,286 |
Print Subscription Revenue | 48,966 | 64,586 | 100,838 | 131,956 |
Other Print Revenue | 8,069 | 9,649 | 16,561 | 20,769 |
Total Print Revenue | 75,777 | 105,685 | 160,576 | 226,011 |
Total Operating Revenue | 146,550 | 170,687 | 302,228 | 355,818 |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
The table below reconciles the non-GAAP financial performance measure of Adjusted EBITDA to Net loss, its most directly comparable U.S. GAAP measure:
Three months ended | Six months ended | |||||||
(Thousands of Dollars) | March 24, 2024 | March 26, 2023 | March 24, 2024 | March 26, 2023 | ||||
Net loss | (11,636 | ) | (5,366 | ) | (10,403 | ) | (3,542 | ) |
Adjusted to exclude | ||||||||
Income tax benefit | (2,837 | ) | (2,071 | ) | (2,589 | ) | (1,631 | ) |
Non-operating expenses, net | 9,921 | 10,295 | 16,273 | 19,209 | ||||
Equity in earnings of TNI and MNI | (1,206 | ) | (672 | ) | (2,747 | ) | (2,340 | ) |
Depreciation and amortization | 7,293 | 7,733 | 14,588 | 15,619 | ||||
Restructuring costs and other | 4,139 | 3,694 | 8,404 | 4,340 | ||||
Assets loss (gain) on sales, impairment and other, net | 7,617 | (792 | ) | 6,148 | (3,355 | ) | ||
Stock compensation | 501 | 573 | 715 | 922 | ||||
Add: | ||||||||
Ownership share of TNI(6)and MNI EBITDA(6)(50%) | 1,269 | 930 | 3,321 | 2,722 | ||||
Adjusted EBITDA | 15,061 | 14,324 | 33,710 | 31,944 |
The table below reconciles the non-GAAP financial performance measure of Cash Costs to Operating expenses, the most directly comparable U.S. GAAP measure:
Three months ended | Six months ended | |||||
(Thousands of Dollars) | March 24, 2024 | March 26, 2023 | March 24, 2024 | March 26, 2023 | ||
Operating expenses | 152,308 | 168,501 | 301,694 | 344,122 | ||
Adjustments | ||||||
Depreciation and amortization | 7,293 | 7,733 | 14,588 | 15,619 | ||
Assets loss (gain) on sales, impairments and other, net | 7,617 | (792 | ) | 6,148 | (3,355 | ) |
Restructuring costs and other | 4,139 | 3,694 | 8,404 | 4,340 | ||
Cash Costs | 133,259 | 157,866 | 272,554 | 327,518 |
The table below reconciles the non-GAAP financial performance measure of Same-store Revenues to Operating Revenues, its most directly comparable U.S. GAAP measure:
Three months ended | Six months ended | ||||||
(Thousands of Dollars) | March 24, 2024 | March 26, 2023 | March 24, 2024 | March 26, 2023 | |||
Print Advertising Revenue | 18,742 | 31,450 | 43,177 | 73,286 | |||
Exited operations | — | (4,812 | ) | (77 | ) | (13,032 | ) |
Same-store, Print Advertising Revenue | 18,742 | 26,638 | 43,100 | 60,254 | |||
Digital Advertising Revenue | 45,392 | 46,250 | 91,844 | 93,999 | |||
Exited operations | — | (779 | ) | (91 | ) | (1,631 | ) |
Same-store, Digital Advertising Revenue | 45,392 | 45,471 | 91,753 | 92,368 | |||
Total Advertising Revenue | 64,134 | 77,700 | 135,021 | 167,285 | |||
Exited operations | — | (5,592 | ) | (168 | ) | (14,663 | ) |
Same-store, Total Advertising Revenue | 64,134 | 72,108 | 134,853 | 152,622 | |||
Print Subscription Revenue | 48,966 | 64,586 | 100,838 | 131,956 | |||
Exited operations | — | (578 | ) | (174 | ) | (1,260 | ) |
Same-store, Print Subscription Revenue | 48,966 | 64,008 | 100,664 | 130,696 | |||
Digital Subscription Revenue | 20,261 | 13,996 | 39,728 | 26,325 | |||
Exited operations | 11 | (259 | ) | (85 | ) | (495 | ) |
Same-store, Digital Subscription Revenue | 20,272 | 13,737 | 39,643 | 25,830 | |||
Total Subscription Revenue | 69,227 | 78,582 | 140,566 | 158,281 | |||
Exited operations | 11 | (837 | ) | (259 | ) | (1,755 | ) |
Same-store, Total Subscription Revenue | 69,238 | 77,745 | 140,307 | 156,526 | |||
Print Other Revenue | 8,069 | 9,649 | 16,561 | 20,769 | |||
Exited operations | — | (95 | ) | (1 | ) | (216 | ) |
Same-store, Print Other Revenue | 8,069 | 9,554 | 16,560 | 20,553 | |||
Digital Other Revenue | 5,120 | 4,756 | 10,080 | 9,483 | |||
Exited operations | — | — | — | — | |||
Same-store, Digital Other Revenue | 5,120 | 4,756 | 10,080 | 9,483 | |||
Total Other Revenue | 13,189 | 14,405 | 26,641 | 30,252 | |||
Exited operations | — | (95 | ) | (1 | ) | (217 | ) |
Same-store, Total Other Revenue | 13,189 | 14,310 | 26,640 | 30,035 | |||
Total Operating Revenue | 146,550 | 170,687 | 302,228 | 355,818 | |||
Exited operations | 11 | (6,524 | ) | (427 | ) | (16,635 | ) |
Same-store, Total Operating Revenue | 146,561 | 164,163 | 301,801 | 339,183 |
NOTES
(1) The following are non-GAAP (Generally Accepted Accounting Principles) financial measures for which reconciliations to relevant U.S GAAP measures are included in tables accompanying this release:
(2) Same-store revenues is a non-GAAP performance measure based on U.S. GAAP revenues for Lee for the current period, excluding exited operations. Exited operations include (1) business divestitures and (2) the elimination of stand-alone print products discontinued within our markets.
(3) Total Digital Revenue is defined as digital advertising and marketing services revenue (including Amplified Digital®), digital-only subscription revenue and digital services revenue.
(4) This earnings release is a preliminary report of results for the periods included. The reader should refer to the Company's most recent reports on Form 10-Q and on Form 10-K for definitive information.
(5) The Company's debt is the $576 million term loan under a credit agreement with BH Finance LLC dated January 29, 2020 (the "Credit Agreement"). Excess Cash Flow is defined under the Credit Agreement as any cash greater than $20,000,000 on the balance sheet in accordance with U.S. GAAP at the end of each fiscal quarter, beginning with the quarter ending June 28, 2020.
(6) TNI refers to TNI Partners publishing operations in Tucson, AZ. MNI refers to Madison Newspapers, Inc. publishing operations in Madison, WI.