LEE - Earnings call transcript Q2 2018 | Lee Enterprises, Incorporated

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Operator

Good day, and welcome to the Lee Enterprises 2018 Second Quarter Webcast and Conference Call. Today's conference is being recorded and will be available for replay beginning later this morning at lee.net. [Operator Instructions]. Several analysts have been invited to participate.

So participants accessing this call by webcast may submit written questions through the website, and they will be answered during the call as time permits. a receive will you response later. Otherwise, to www.lee.net. link the live at found be can webcast A

would to I Tim Now like Millage, your over Corporate host, to Controller. turn the conference

Tim Millage

you us. for Good morning. Thank joining

speaking on Chairman; news Digital; at Earlier and are with Nathan Also James for of Executive Mowbray, Consumer with In addition President, on Kevin for to we second preliminary this call major release Bekke, call well Mary a our Sales and Executive and results will Chief and President, at questions today, today's Green, morning's XXXX. issued President us Vice Junck, be Officer. available myself, Marketing. websites. It lee.net Vice fiscal as financial quarter is as available and

discussion based news this that morning's differ results statements SEC filings. forward-looking As materially. and risks, These expectations. actual factors a on in also current subject that are will are morning's to are certain to release our Such uncertainties and trends this statements in include cause our could reminder, described

the open call, our to Chairman, measures measures, in And Mary certain defined are Reconciliations non-GAAP news the tables we to is reference release. which in accompanying the included now our relevant will are the to GAAP discussion financial During release. make Junck. Executive

Mary Junck

Tim, and joining the call all you, thank Thank for you this morning.

our Ron Before discussing on our morning. Vice this Lee's Mayo, that CFO let I President, Treasurer, wanted know March not call quarter, you and is to

serve company's return As CFO medical leave Tim Controller, and procedure. to filing, absence appointed has Corporate we during his his as is to acting in noted Millage, yesterday's from the a work. Ron's X-K to recovery Ron during prior a Lee's taking been

March strategic to And to We audiences later trends line We and audience We're made Tim TownNews.com. industry-leading quarter. and revenue maintained our in accelerate March growth the growing made moves the financial the again top quarter. from performance strides hear revenue improving at significant now margins in on in call. pleased with and the the You'll engagement.

leading Beyond improving of global financial metrics, information news, we the the advertising all we are and to that serve. markets provider of remain proud in

in moment, -- in quarter best is and more increased board. was March will Total down the quarterly revenue Digital a trends which X.X%, the than quarter. revenue Kevin the clip, across trend revenue revenue our a As at discuss years. improved two solid to continues in X.X% in subscription March grow in

are solid XXXX. We of that in fiscal financial upbeat the this continue we remainder can performance

combined and audience in daily engaged our to To which and maximize in content and sites center digital readers quarter, to real-time our of interest, to driving loyal responding Another that program, subscription million, approximately sites XX%. revenue. high-interest is newsrooms track relationships With ultimately is reach our reason The stronger to audiences audiences. reader Monthly for Understanding page and center audience designed engagement revenue. the grow develops mind, in all over and routinely and advertising a of grow rates a subscription readers, program our X million for develop our reached adjust also more measure and views, print increase highest. our visits recently LEAP. content their at or we and interest print basis. both on essential content equipped digital all digital of to introduced that drive digital increase audience LEAP huge to digital users' page audiences are with in drove and created optimism, Further, content centralized an views year average an Lee's we've prior the with across remain were company. XX.X engagement, a XX.X% Sweeps and increase averaged when acquires our

improvement strong continued saw also We TownNews second quarter. from the in

rapidly company. this of XX.X% owns Lee past, the growing in digital mentioned we've As

technology is the its source growth needs last in revenue developing technologies to contributed app. quarter. is mentioned new on a platform million of its and and expanding with the TownNews for business experienced content industry-leading customers. management, technology and We in the capabilities, primary our the call provides evolving XX% FieldXX, has In OTT acquired meet strong TownNews acquisition advertising revenue of the at While acquiring current $XX.X digital to revenue. of the TownNews mobile quickly margins. new EBITDA We adjusted to of our another improve our video expand which quarter, additional quarter, driving

publicly adjusted the since XX Over has company's than debt peers. reduced last we operating is Debt the $XXX strong of debt. With our XXXX aggressively by our our traded our in been And reduced months, the was are million. was $XX.X margins EBITDA, margin significantly quarter. refinancing, higher the million XX.X%, which reducing

Now in the quarter March detail. Kevin call our CEO, I'll operating to performance more to discuss turn our over in the Mowbray,

Kevin Mowbray

Thank you, Mary.

revenue, As programmatic and March in Mary We're advertising with X.X% categories. quarter which TownNews.com. digital XX.X% by the the a and X.X% mentioned, includes increased a revenue quarter. improved the services revenue, trends revenue increase pleased digital increase in retail, a at in March key performance increase revenue driven in digital XX% in financial in Total quarter digital many the in

have we're and positioned markets. advertising in opportunities While for headwinds unique classified, we with dollars unprecedented retailers believe to faced big-box in the and local well our we compete

our with and audiences digital combined average are an in mentioned, As reach XX%. Mary of print huge,

which and media over traditional Our local audiences are advantage our gives competitors. powerful a us huge unmatched,

length advertising. These this We strong way March the XX% than the our remains be, quarter, launched XX% serve. than far, Project over digital. compared and in advertisers We focus in have advertising advertising of XX.X% which quarter partners, the transform advertising, exists grew been coming with increased midsized to QX, our we contracts programmatic XX.X% the our to increased print customers organization. of also quarter. we revenue we of represented markets in and our by audiences contracts digital Total Edison of in XX.X% we by of expand XX.X% more the the Opportunity We and in and media length, for the revenue for sales XX%. year to of and total accounts increased -- more market, a total which and increased retail contract the for and the collectively by ago of March In dominant advertising digital Digital of group. grew second extend business the second advertising small go continue a local quarter, X.X%; combination March a through fiscal X.X% in digital to digital the the Edison number in grew among XXXX. quarter digital

quarter. a up XX.X% audience and visits grew million. engagement. session were indicator totaled increased audience Page digits XX.X the in per the Average audiences in monthly in significantly engagement of quarter, key increased digital the low and Our views

smart the attribute earlier, two growth premium revenue to the these in peak engagement a period. March our models, acquisitions, gains Subscription Sweeps programmatic and coupled years. periodic which quarter. performance strategic noted national As audience company-wide with revenue, in pricing strong for or increased program, Through be XX.X% during and advertising maximum to continues strongest company. our the X.X% revenue and sound implementation We the performer in subscription an digital pricing content stable our national represents and drives advertising, of opportunity

subscription company. Over XX of the total months, represents revenue XX.X% last revenue for the

X.X% ongoing cash remain and March quarter, a with Compensation same-property X% on decreased compared staffing our and as of majority quarter. decreases costs, same-property excluding to the year outsourcing. the revenue stable. to We expect strong adjustments of workforce primarily associated other, subscription total the result basis, on decreased prior staffing is a and or reduced basis XXXX In business X.X% a as levels. The transformation

a by a basis and same-property expenses expenses quarter, X.X% which newsprint, Newsprint of in continued due cost increases. change of to delivery, revenue Other lower costs, unit and the basis in basis and outsourcing. weight both investments decreased ink print-related as of grow offset operating and same-property result other increases quarter, the X.X% driven which to on cash decreased were a by postage for digital lower part from reductions the other a to volume limited lower impact on price primarily primarily

here's highlights. some additional financial Now with Tim

Tim Millage

you, Thank Kevin.

As our in we'll Kevin business aggressively are XXXX. noted, managing and transform costs, the continue to we

additional XXXX and and for we with costs X% X.X% fiscal that cash from expect underway, between transformation will We XXXX. reduce impact year year the our fiscal carryover currently changes business

mentioned, over at the in Mary term million million reduced million from $XX.X debt real of XX reduced last In the payments. and March was flow, million. par. X.X% over the the debt the both substantial Pulitzer our quarter, $X.X As during The million paid down amount estate $X.X fallen of months quarterly $XX.X loan or $X.X has and been has March of $XXX.X the quarter excess cash principal to Interest and the both by due months. XX quarter end expense increased was we at quarter the million sales second-lien last debt

the $X.X X.XXx flow months par. by of last company's the June from excess second-lien loan is leverage Pulitzer XXXX With excess cash We -- from an the debt EBITDA, expect term net the to lower pay strong adjusted at additional million down adjusted and cash quarter now in EBITDA. XX

We continue to be evaluating an our refinancing. opportunistic advisers actively engaged with

today, The fully years. repay for debt a the not with end X X due loan balance remainder as million the the our to calendar $XX.X The expect term of is quickly, first-lien year. and of of of loan, to we before is amortizing another

reduce to tax rates As our our maximize structure. refinance new interest the as deductibility our are capital and as priorities laws we look well under to simplify to debt,

are which than $XX premiums. call with refinancing the benefits million more includes of in We today, weighing costs, its

details be We million listed that currently of these updated you will which can more close. transactions $XX keep sale, to under no although contract, is our real refinancing continue will of finalized. progress $X.X have are assurance for or there all of as on We approximately with any estate million

to the be federal utilize from In to owned and be reduce subject rate pension review those term recent in As federal complex make Pulitzer event cash changes Act second-lien is and The sold, the million. expected to a changes loan par. due proceeds NOLs Tax is XXXX, to contributions at one of XXXX The XXXX, are and a reducing $X.X total our we of taxpayer. million capital our all interpretation, will to is the a of XX% expect and cash property tax law, $XX beyond. to anticipate tax the repay subsidiaries to XXXX to resulting fiscal expect reminder, ongoing. of the by remaining income in which we become statutory fiscal our federal taxes expenditures used the XX%, from

the Lastly, with always, remarks. also line will for data And supplemental be to it on information our file have. will as Lee our concludes X-K we you results Pulitzer tomorrow. An the questions filed and tomorrow. include financial team on any may SEC with expectations. additional our and expect XX-Q will Legacy The remain This

asked webcast. the will telephone, any the Following we during answer line for submitted questions. questions by the open please Operator,

Operator

[Operator Instructions].

Andrew Gadlin

my Kevin, This is Andrew curve -- on Odeon On line. Gadlin definitely been improvements. Group. revenue my from the a is real the in first question advertising, bend some Capital Where there's improvement expect of thing and think you this this longer you would Would term? And to year? can do you -- goes? continue you where do get back fiscal the we half seeing think question through

Kevin Mowbray

-- do for which local second dramatically continue really Edison where year. us categories. can we expect release, and seeing nice small program, working have in half in of success Well, we it We're businesses bet. there. You know mentioned see grow aimed we fiscal our almost and to we midsized improvement, the through all at the is continue as is this What's

very All at declining. Circulation, big see categories what's on remember, stores, And We've don't accounts, seen well. are QX. we a performing of the that remains be we big-box as to are horizon key over the category our look which digital improve driver. there,

factor not or towards that'll advertising, advertising total be While a total revenue. --

Andrew Gadlin

recent grows. revenue And has from standpoint, item revenues it Are and line been the a you reports? me remind that included Can advertising where in in the getting the more it. marketing just Got focused overall embedded? Town TownNews' are TownNews a advertising lot revenues reporting company then as quarters of

Tim Millage

TownNews of enterprise. with this Tim. rest of consolidate the We the Yes, results is the

Andrew Gadlin

it marketing. and advertising go So It through the line, goes doesn't through though. other

piece So year-over-year seeing advertising in and bigger some we're that of a better this -- or overall? marketing benefit is the really trend becoming of TownNews

Tim Millage

driving revenue, significant in the What a would at we're is any say is that line. increase is I XX% way. trends advertising. majority When TownNews But other of in looking attributed advertising revenue not Yes. that TownNews' to of the the some Lee that's vast in

Operator

[Operator Instructions].

Barry Lucas

stronger positive X.X% at talked versus described overall, Barry It's Lucas growth digital Kevin, only up Gabelli. side. the you digital and was trends retail. fairly in But on

working not what's digital? So in

Kevin Mowbray

a to growth that depressing our is what's degree digital categories. with working, classified not What's advertising associated

Mary Junck

programmatic strong, digital our words, other very In retail was digital. was as

a drag Kevin as said, as classified on it. it's So

Barry Lucas

it's or down online employment what even it's it a services, bit you, the we is or real whether little whether deeper, ventures major auto, or that's And not or if helping? classified drilled the have -- estate Cars.com

Kevin Mowbray

biggest decline classified for the in The is employment. category digital

we obituary, is as bright characterize all classified actually up. revenue classified, almost was side, what the On which other

the is auto. employment downdraft So and then

Barry Lucas

if and is least -- second And balance this the with at sheet just to the you're Great. think I said call we flip your advisers. you've discussing refinancings because

So we've past the XX. not and X gone and X from date, first far XX call away change that

think it? how markets environment? against call how And premium, about do the kind do balance or or rising open you rate How available the balance interest credit leverage? So how -- the you that additional of are a

Mary Junck

That's we time, open, at balance can lead the what we Well, have let we rates, Tim rising substantial add. is call pretty premiums. then the interest what exactly markets to same believe are off, me have and but

So be a we and those deal balance need things to to off would able company. the good see for be that

Tim Millage

Yes.

I echo Mary said. just think would what I

year, return we pay seeing You're in those this what on sort runway. of that first-lien And at are once a things exactly position have right, a there we off all X-year refinancing. term looking a again, is of where and loan we

factor what premiums another get. we of that we're time the with So call right now is the rates and along considering, could is sort and

Operator

Millage, would questions discuss to turn call are from Tim from There host, now our further to no callers. the over to questions back webcast. like I the

Tim Millage

Yes.

from question to do not that? the is expect sold summarized. would our in advertising this filings We're Yes. that web more think detail others doing. has level The year. webcast our the classified, real of been industry estate continue retail, what are in much I answer consistent So question first is be breakdown et cetera. just we from out more have Lee the how to with of do the I breaking to we changed And our next has

estate We the real in year. months first have sold approximately $X six of the fiscal million of

have We more participants. from questions our no web

turn back the for I'll remarks. Mary call to closing Now

Mary Junck

said have at margins, remained level. Well, performing leader we industry focused earlier, the we as in high and steadfastly are a I on

We that debt. adjusted make are confident to our company, EBITDA and sound continue continue in to produce strong strategies reductions and to place significant have tactics we in total transform the

and our our under and ability extend thank the the portion discussions economics regarding capital, with and noted tax Tim in be call, of refinancing the and us the in cost of Q&A advisers our we much will of deductibility interest As new Lee as your a Lee or very law. maturities are of reduce We we of our the on joining debt debt to our appreciate for on session debt. The discussed Board Directors decision interest of maximize and the all of based time timing your total you the today. and

Operator

and our reached end have concludes call. At ladies this you, the question-and-answer our session. of gentlemen. This Thank we time,

Lee Enterprises (LEE) 5 May 182018 Q2 Earnings call transcript