Total Digital Revenue(1) was $73M in the quarter, representing 44% of revenue
Digital-only subscribers total 721,000, exceeding guidance and up 36% YOY
Adjusted EBITDA(2) in line with full year guidance
DAVENPORT, Iowa, Dec. 07, 2023 (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 75 markets, today reported preliminary fourth quarter fiscal 2023 financial results(3) for the period ended September 24, 2023.
“Our fourth quarter digital subscription results lead the industry by a significant margin, continuing the streak for 16 consecutive quarters. Subscribers to our digital products totaled 721,000, up 36% compared to last year and digital-only subscription revenue accelerated--growing 68% on a Same-store basis(4)," said Kevin Mowbray, Lee's President and Chief Executive Officer. “Amplified Digital® revenue totaled $24 million in the quarter, leading to an 11% increase over the prior year(4). Total Digital Revenue increased 14% in the quarter(4), and represented 44% of our total operating revenue. The rapid pace of digital growth is driven by our strong execution of our Three Pillar Digital Growth Strategy,” Mowbray added.
“Adjusted EBITDA in the quarter was up 29% sequentially, due to our rapid digital growth and strong cost management execution," said Mowbray. "Our aggressive cost actions in FY23, as well as the strong performance of our digital revenue streams, will have a favorable impact on FY24 operating results. We anticipate full year FY24 Adjusted EBITDA to be in the range of $83 million to $90 million," added Mowbray.
"The long-standing industry-leading digital execution gives us even more confidence in our transformation. In fact, the best-in-class performance increases our long-term outlook on digital-only subscribers by one-third to 1.2 million and digital subscription revenue by approximately 50% to more than $150 million. These significant improvements to our long-term outlook demonstrate our confidence in Lee's digital transformation. We are on a clear path to becoming sustainable solely from the revenue and cash flow from our digital products," said Mowbray.
Key Fourth Quarter Highlights:
2024 Fiscal Year Outlook:
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) |
Long-Term Outlook (2024 - 2028):
Total Digital Revenue | $450 - $500 million |
Digital-only subscribers | 1.2 million |
Debt and Free Cash Flow:
The Company has $456 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 September 24, 2023:
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 75 markets in 26 states. Year to date, Lee's newspapers have an average daily circulation of 1.0 million, and our legacy websites, including acquisitions, reach more than 31 million digital unique visitors. 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 "aim", “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, including statements regarding the impacts that the COVID-19 pandemic 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 release. We do not undertake to publicly update or revise our forward-looking statements, except as required by law.
Contact:
[email protected]
(563) 383-2100
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended | Twelve months ended | |||||||||||
(Thousands of Dollars, Except Per Share Data) | September 24, 2023 | September 25, 2022 | Percent Change | September 24, 2023 | September 25, 2022 | Percent Change | ||||||
Operating revenue: | ||||||||||||
Print Advertising | 23,302 | 39,931 | (41.6 | ) | 125,804 | 184,963 | (32.0 | ) | ||||
Digital Advertising | 49,270 | 49,110 | 0.3 | 193,173 | 181,465 | 6.5 | ||||||
Advertising and marketing services revenue | 72,572 | 89,041 | (18.5 | ) | 318,977 | 366,428 | (12.9 | ) | ||||
Print Subscription | 58,792 | 78,541 | (25.1 | ) | 252,591 | 313,504 | (19.4 | ) | ||||
Digital Subscription | 18,661 | 11,168 | 67.1 | 60,700 | 40,120 | 51.3 | ||||||
Subscription revenue | 77,453 | 89,709 | (13.7 | ) | 313,291 | 353,624 | (11.4 | ) | ||||
Print Other | 8,966 | 10,532 | (14.9 | ) | 39,508 | 42,962 | (8.0 | ) | ||||
Digital Other | 5,020 | 4,355 | 15.3 | 19,362 | 17,955 | 7.8 | ||||||
Other revenue | 13,986 | 14,887 | (6.1 | ) | 58,870 | 60,917 | (3.4 | ) | ||||
Total operating revenue | 164,011 | 193,637 | (15.3 | ) | 691,138 | 780,969 | (11.5 | ) | ||||
Operating expenses: | — | |||||||||||
Compensation | 59,048 | 71,456 | (17.4 | ) | 266,907 | 317,789 | (16.0 | ) | ||||
Newsprint and ink | 5,102 | 7,847 | (35.0 | ) | 25,346 | 30,101 | (15.8 | ) | ||||
Other operating expenses | 73,714 | 86,240 | (14.5 | ) | 323,067 | 344,905 | (6.3 | ) | ||||
Depreciation and amortization | 7,524 | 9,099 | (17.3 | ) | 30,621 | 36,544 | (16.2 | ) | ||||
Assets loss (gain) on sales, impairments and other, net | 6,137 | 21,055 | (70.9 | ) | 1,882 | 9,716 | (80.6 | ) | ||||
Restructuring costs and other | 4,552 | 2,858 | 59.3 | 12,673 | 22,720 | (44.2 | ) | |||||
Operating expenses | 156,077 | 198,555 | (21.4 | ) | 660,496 | 761,775 | (13.3 | ) | ||||
Equity in earnings of associated companies | 2,993 | 1,446 | 107.0 | 6,527 | 5,657 | 15.4 | ||||||
Operating income | 10,927 | (3,472 | ) | (414.7 | ) | 37,169 | 24,851 | 49.6 | ||||
Non-operating (expense) income: | ||||||||||||
Interest expense | (10,326 | ) | (10,292 | ) | 0.3 | (41,471 | ) | (41,770 | ) | (0.7 | ) | |
Curtailment gain | — | — | — | — | 1,027 | (100.0 | ) | |||||
Pension withdrawal cost | (1,200 | ) | — | — | (1,200 | ) | (2,335 | ) | (48.6 | ) | ||
Pension and OPEB related benefit (cost) and other, net | 162 | 5,488 | (29.9 | ) | 2,420 | 19,022 | (87.3 | ) | ||||
Non-operating expenses, net | (11,364 | ) | (4,804 | ) | 136.6 | (40,251 | ) | (24,056 | ) | 67.3 | ||
Income (loss) before income taxes | (437 | ) | (8,276 | ) | NM | (3,082 | ) | 795 | (487.7 | ) | ||
Income tax (benefit) expense | 888 | (1,666 | ) | NM | (349 | ) | 698 | (150.0 | ) | |||
Net (loss) income | (1,325 | ) | (6,610 | ) | NM | (2,733 | ) | 97 | NM | |||
Net income attributable to non-controlling interests | (659 | ) | (526 | ) | 25.3 | (2,534 | ) | (2,114 | ) | 19.9 | ||
Loss attributable to Lee Enterprises, Incorporated | (1,984 | ) | (7,136 | ) | NM | (5,267 | ) | (2,017 | ) | 161.1 | ||
Earnings (loss) per common share: | ||||||||||||
Basic | (0.32 | ) | (1.23 | ) | NM | (0.90 | ) | (0.35 | ) | NM | ||
Diluted | (0.32 | ) | (1.23 | ) | NM | (0.90 | ) | (0.35 | ) | NM |
DIGITAL / PRINT REVENUE COMPOSITION
(UNAUDITED)
Three months ended | Twelve months ended | |||
(Thousands of Dollars) | September 24, 2023 | September 25, 2022 | September 24, 2023 | September 25, 2022 |
Digital Advertising and Marketing Services Revenue | 49,270 | 49,110 | 193,173 | 181,465 |
Digital Only Subscription Revenue | 18,661 | 11,168 | 60,700 | 40,120 |
Digital Services Revenue | 5,020 | 4,355 | 19,362 | 17,955 |
Total Digital Revenue | 72,951 | 64,633 | 273,235 | 239,540 |
Print Advertising Revenue | 23,302 | 39,931 | 125,804 | 184,963 |
Print Subscription Revenue | 58,792 | 78,541 | 252,591 | 313,504 |
Other Print Revenue | 8,966 | 10,532 | 39,508 | 42,962 |
Total Print Revenue | 91,060 | 129,004 | 417,903 | 541,429 |
Total Operating Revenue | 164,011 | 193,637 | 691,138 | 780,969 |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
The table below reconciles the non-GAAP financial performance measure of Adjusted EBITDA to net income, its most directly comparable GAAP measure:
Three months ended | Twelve months ended | |||||||
(Thousands of Dollars) | September 24, 2023 | September 25, 2022 | September 24, 2023 | September 25, 2022 | ||||
Net (loss) income | (1,325 | ) | (6,610 | ) | (2,733 | ) | 97 | |
Adjusted to exclude | ||||||||
Income tax (benefit) expense | 888 | (1,666 | ) | (349 | ) | 698 | ||
Non-operating expenses, net | 11,364 | 4,804 | 40,251 | 24,056 | ||||
Equity in earnings of TNI and MNI(6) | (2,993 | ) | (1,446 | ) | (6,527 | ) | (5,657 | ) |
Assets loss (gain) on sales, impairments and other, net | 6,137 | 21,055 | 1,882 | 9,716 | ||||
Depreciation and amortization | 7,524 | 9,099 | 30,621 | 36,544 | ||||
Restructuring costs and other | 4,552 | 2,858 | 12,673 | 22,720 | ||||
Stock compensation | 421 | 311 | 1,806 | 1,337 | ||||
Add: | ||||||||
Ownership share of TNI and MNI EBITDA (50%) | 3,476 | 1,676 | 7,604 | 6,541 | ||||
Adjusted EBITDA | 30,044 | 30,081 | 85,228 | 96,052 |
The table below reconciles the non-GAAP financial performance measure of Cash Costs to Operating expenses, the most directly comparable GAAP measure:
Three months ended | Twelve months ended | |||
(Thousands of Dollars) | September 24, 2023 | September 25, 2022 | September 24, 2023 | September 25, 2022 |
Operating expenses | 156,077 | 198,555 | 660,496 | 761,775 |
Adjustments | ||||
Depreciation and amortization | 7,524 | 9,099 | 30,621 | 36,544 |
Assets loss (gain) on sales, impairments and other, net | 6,137 | 21,055 | 1,882 | 9,716 |
Restructuring costs and other | 4,552 | 2,858 | 12,673 | 22,720 |
Cash Costs | 137,864 | 165,543 | 615,320 | 692,795 |
The table below reconciles the non-GAAP financial performance measure of Same-Store Revenues to Operating Revenues, its most directly comparable GAAP measure:
Three months ended | Twelve months ended | |||||||||||
(Thousands of Dollars) | September 24, 2023 | September 25, 2022 | Percent Change | September 24, 2023 | September 25, 2022 | Percent Change | ||||||
Print Advertising Revenue | 23,302 | 39,931 | (41.6 | ) | 125,804 | 184,963 | (32.0 | ) | ||||
Exited operations | (29 | ) | (6,609 | ) | NM | (14,595 | ) | (34,760 | ) | NM | ||
Same-store, Print Advertising Revenue | 23,273 | 33,322 | (30.2 | ) | 111,209 | 150,203 | (26.0 | ) | ||||
Digital Advertising Revenue | 49,270 | 49,110 | 0.3 | 193,173 | 181,465 | 6.5 | ||||||
Exited operations | (5 | ) | (370 | ) | NM | (1,083 | ) | (964 | ) | NM | ||
Same-store, Digital Advertising Revenue | 49,265 | 48,740 | 1.1 | 192,090 | 180,501 | 6.4 | ||||||
Total Advertising Revenue | 72,572 | 89,041 | (18.5 | ) | 318,977 | 366,428 | (12.9 | ) | ||||
Exited operations | (34 | ) | (6,979 | ) | NM | (15,679 | ) | (35,724 | ) | NM | ||
Same-store, Total Advertising Revenue | 72,538 | 82,062 | (11.6 | ) | 303,298 | 330,704 | (8.3 | ) | ||||
Print Subscription Revenue | 58,792 | 78,541 | (25.1 | ) | 252,591 | 313,504 | (19.4 | ) | ||||
Exited operations | (4 | ) | (182 | ) | NM | (382 | ) | (834 | ) | NM | ||
Same-store, Print Subscription Revenue | 58,788 | 78,359 | (25.0 | ) | 252,209 | 312,670 | (19.3 | ) | ||||
Digital Subscription Revenue | 18,661 | 11,168 | 67.1 | 60,700 | 40,120 | 51.3 | ||||||
Exited operations | — | — | NM | — | — | NM | ||||||
Same-store, Digital Subscription Revenue | 18,658 | 11,139 | 67.5 | 60,535 | 39,977 | 51.4 | ||||||
Total Subscription Revenue | 77,453 | 89,709 | (13.7 | ) | 313,291 | 353,624 | (11.4 | ) | ||||
Exited operations | (7 | ) | (211 | ) | NM | (547 | ) | (977 | ) | NM | ||
Same-store, Total Subscription Revenue | 77,446 | 89,498 | (13.5 | ) | 312,744 | 352,647 | (11.3 | ) | ||||
Print Other Revenue | 8,966 | 10,532 | (14.9 | ) | 39,508 | 42,962 | (8.0 | ) | ||||
Exited operations | — | (7 | ) | NM | (10 | ) | (82 | ) | NM | |||
Same-store, Print Other Revenue | 8,966 | 10,525 | (14.8 | ) | 39,498 | 42,880 | (7.9 | ) | ||||
Digital Other Revenue | 5,020 | 4,355 | 15.3 | 19,362 | 17,955 | 7.8 | ||||||
Exited operations | — | — | NM | — | — | NM | ||||||
Same-store, Digital Other Revenue | 5,020 | 4,355 | 15.3 | 19,362 | 17,955 | 7.8 | ||||||
Total Other Revenue | 13,986 | 14,887 | (6.1 | ) | 58,870 | 60,917 | (3.4 | ) | ||||
Exited operations | — | (7 | ) | NM | (10 | ) | (82 | ) | NM | |||
Same-store, Total Other Revenue | 13,986 | 14,880 | (6.0 | ) | 58,860 | 60,835 | (3.2 | ) | ||||
Total Operating Revenue | 164,011 | 193,637 | (15.3 | ) | 691,138 | 780,969 | (11.5 | ) | ||||
Exited operations | (41 | ) | (7,197 | ) | NM | (16,236 | ) | (36,783 | ) | NM | ||
Same-store, Total Operating Revenue | 163,970 | 186,440 | (12.1 | ) | 674,902 | 744,186 | (9.3 | ) |
NOTES
(1) Total Digital Revenue is defined as digital advertising and marketing services revenue (including Amplified Digital®), digital-only subscription revenue and digital services revenue.
(2) The following are non-GAAP (Generally Accepted Accounting Principles) financial measures for which reconciliations to relevant GAAP measures are included in tables accompanying this release:
(3) 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.
(4) Same-store revenues is a non-GAAP performance measure based on GAAP revenues for Lee for the current period, excluding exited operations. In 2023, exited operations include (1) businesses divested and (2) the elimination of stand-alone print products discontinued within our markets.
(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 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.
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