LEE - Earnings call transcript Q4 2018 | Lee Enterprises, Incorporated

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Operator

Please standby. Welcome to the Lee Enterprises’ 2018 Fourth Quarter Webcast and Conference Call. The call is being recorded and will be available for replay beginning later this morning at lee.net. At the close of the planned remarks, there’ll be an opportunity for questions. Several analysts have been invited to participate. permits. call the by be website, the as this written may answered accessing call through questions and time participants may webcast -- submit during Also, they will Otherwise, you a will response receive later. webcast live the to link can found at be www.lee.net. A

over the Vice Chief Now, Officer. host, and your call will Tim to I Financial turn Millage, President

Tim Millage

Thank morning. us. joining Good for you

news today’s President and major our XXXX will Digital. to Vice expenses. at is call President, with Executive included Chairman; Junck, In results myself, with addition Mary calendar, available Also questions preliminary for fourth speaking financial to our available Farrell, week James Consumer as fiscal Officer. and XXXX. Kevin operating and year on President Earlier and Mowbray, are an issued be us revenue Vice for Green, Executive as this well websites. and additional It Sales; today, on of lee.net Marketing; our Due at morning’s release call Bekke, Vice quarter fourth fiscal we fiscal Chief our quarter and President, Nathan Paul of and Sales

the as We GAAP of of and over and divested excludes two additional basis. a noted, below last Certain the divestitures. are the our well impact acquired otherwise denoted of same-property operations on Unless which the as trends week as discussed are also years. property impact acquisitions results

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

in the which release. to financial measures, our to accompanying relevant tables are included make certain During the release. the are we’ll measures reference GAAP news call, in Reconciliations non-GAAP defined

participating those to our included webcast, slides we’ve the facilitate on For discussion.

Junck. be discussion slide by our Executive participating those a open Mary our later Chairman, phone, is now And lee.net to posted will to For today.

Mary Junck

And call. Tim. morning, you joining thank our you, Thank for good And everyone.

for strong We XXXX. flat advertisers, performance performance our BH pleased the to extra revenue total TownNews, of the operating management QX, and year fiscal at with as quarter almost fourth agreement, Group are In growth very as operations was year, from the from local Media week to prior revenue significant XXXX. due in well in our revenue

research, the third-party our were share. the fiscal And margins according steady to have we a industry at XX.X% X.X% decade. for On the to and top down down cost digital. we strong the side, XXXX, same-property in programmatic transition in We average. more rates we guidance. that average believe XXXX, totaling industry industry. at Google, digital the our were in cost than fiscal twice the $XXX.X X.X% Also, to highest cost the a EBITDA and previously capture announced basis are cash in managing margins held the industry on maintained according In more hitting cash million our year have our We we the of twice than QX, a than in more adjusted year, market

both our particularly across on we digital growing revenue our and our are seven audience paying-off. Clearly, face remain to groups of compound digital audiences optimistic and A at audiences While large remain age strategies industry huge. continues all last years, over print X.X% We because we few headwinds, the digital. a huge growth rate annual comments audiences. delivered in grew our in

you'll significantly year. day over from across this our are a as reach XX% XX% And shown slide, seven digital of note, in readers adults XX% all markets, products, highly As larger last are print those access Of our and period. we we relevant on visitors XX% XX.X% unique XX.X% engagement most the our reach the monitor metric increased that where monthly a to including paid recent use session, millennials XX% of In digital XX.X group. million in we in up categories, quarter, were year. per view fiscal total and we age average up

Let to digital our me everyday. in our time real are underscore drive newsrooms audience working that hard here

best On at July a audience ways. is engage X.X%. selected national compound last us over digital in their retail leadership was recognized revenue digital up subscription manage of rate, We’re Hathaway our The XXXX. monetizing revenue annual and operations to years, our and beginning in was many XX% flat, to the growth industry up three executives advertising Berkshire

reminder, business our provides managed own initiatives operations. us our and agreement with revenue the media flexibility to local how consistent a have As transformation we implement with

under directly that to working fee generated the our fixed $X a deploy benchmarks. transition we’re burden minimum at which are renew revenue We other with a to end. the from and words, period. into the to playbook, Lee no the option the more $XX percentage translates to success additional a agreement has agreement operators for In agreement the year confident million over management over of overhead or receive been cost The with achieve million We directly of management profits This means is in EBITDA. five-year years the ability per plus five or BH is there Lee.

growth results. to Lee. aimed markets optimism. growth discuss when recognize while performance growth, the midsize industry we our We’ve steadfast in strategy have strategy it will outperformed margin. and digital expect this remain revenues including audiences. point We inflection time, to turn the huge to digital we digital-related industry million exceed revenue over our operating subscription performance print-related metrics, Kevin explain revenue. many We with our At operate was achieving in attractive XXXX in And a $X and we key further least a at I revenue financial successful at headwinds, in XXXX. And a at year recognize

Kevin Mowbray

Mary. you, Thank

be build to local to digital growth Mary grow account retain metrics revenue To position, our through optimistic leading As margin. strategy services. revenues consumers. we’re three The main consumers, of revenue is categories: to the category grow and strong in from we’re we and our industry pleased mentioned and and on key aim our key

We’re of in serve. information dominant local source far by news the the we and communities

competitors. on street all than subscribers our of have more the reporting We

brands are We our around to groups. Our and the local breaking engaging publish in clock the updates audiences. news deep large that community is well-established

We’re and local delivering information to committed driving valuable by to news consumers. audience growth

content center content pages local the digital and the Our of other million XXXX, DCC world In operations news syndication XXX national supports including released. and due generated to news. over recontent

rolled today only our print out digital context, XXXX, and content. [SCL] model, full digital all For traffic. subscribers our receive of generates where In subscription access access to we more full

full subscribers of for increased drive Nearly digital access of more subscriptions digital-only business. In Local Since had in accounts acquisitions in competitive activated remained subscribers digital-only offer a markets. basis revenue, digital-only on high-quality is SMB the and local all our the revenue over has have have have local our a of and of testaments XX%. our XXXX, is in number direct year. sales of comprised that retail advertising a We advantage. content local that, divestitures, premium The increases significant and with the also and doubling their aim of including digital-only We strong same-property content XXXX. was the This in fourth than our fiscal subscription. of time quarter key down subscribers XXXX, of X.X% number spot XX% on our strategies. decision-makers. control the down are we because teams is our positive period. It’s core subscriptions Subscription local trusted accounts. XXXX, XX% was X.X% of in top In impact XXXX category revenue subscription sweet content represents of and a revenue our our we to a

last was the our in basis. results. down the X.X% revenue on this the same-property three better In been SMBs Over overall fourth have the revenue from quarter years, trends category than

category huge our significant Edison by compound local revenue Our this the growing with we X.X% local retail and to revenue by programs industry. a We well-trained rate advertisers. since audiences category retail XX% for to an growth salesforce lead opportunity controllable our is annual Digital as our large, XX% local grew XXXX. key are program advertising us grew these at XXXX, leverage a aimed believe controllable in accounts

a launched at We’ve resources forward, has package to We’ll It to Digital digital was targeted Louis the and campaign includes of the digital across combined is Going Post-Dispatch St. full-service to had a move and initiative-based email business this our in talent all We’ve the operating campaign. an drive centralized at because revenue. Agency in aggressively expertise talent, markets. they digital revenue. digital Amplified success our successfully and already there Agency our aimed Amplified execution. XXXX key more growing to number programmatic out Amplified display of level drive approach Lee. display. we’ll largest been plus rolled the rapid strong very Digital [SEM] to pace always particular with our with even agency get One selling Digital targeted

becoming systems services preferred the our While drive has partner programmatically, are Agency Amplified digital we commoditized, that is competition. Digital advantage great outperform organizations analytics TownNews giving content web in and strong status earned media creative advantage marketing the data a strategy, that key especially other The us including competitive Google state-of-the-art in with to management revenue additional X,XXX powerful drive and another competitive hosting represents broadcast. marketplace. the opportunity digital providing

are XXXX. reiterate, with grow In was we’re seven Tim margins value remain by XX for stations, and widely services years technology, as XXXX And significant broadcast. we as with revenue gain future. as excess substantially and in continue broadcast, past over-the-top grow regarded and in this is the highlights. TownNews growth. and optimistic XXXX rate including well made we in of position significant expect Because us compound grew propositions share XX% to results enhanced to Meredith about growth the category. market content best-in-class, video we our We discuss annual video XX%. management operating posed Over with [Golf]. additional XX.X% well and of the to To financial here’s expand our and revenue capabilities in recently pleased To our technologies more TownNews’ signed television TownNews to in capabilities investments

Tim Millage

Kevin. you, Thank

cost have responsibly We a managing track of long our record structure.

our ongoing fourth on Compensation result costs a a were with our staffing year removed three quarter, have in decade. cost basis quarter, transformation, operations, than business we for and basis million decreases fiscal decreased outsourcing centralization our $XX.X guidance. cash levels. business X.X% down and outsourcing. in same-property constant same-property primarily on and margin more of our cash down fourth the transformation a our Over achieving X.X%, on and a in were same-property are In regionalization, announced associated of years, that’s cash reduced a through costs majority previously the basis XXXX the cost The including as staffing X.X% from the last held

now management, XXXX and trends lower limited and decreased by costs, our fallen is of volumes outsourcing. EBITDA, X.XX debt $X.X the the same-property Newsprint due million been the limited the has cost payment. EBITDA million increases. of X.X% With debt $XX.X due fiscal quarter in and basis to the reduced Favorable months quarter, XX same-property million. million. quarter on XX to of Interest XXXX decreased a company's last last at offset the the has in delivery $XXX.X the amount expense reduced significant lower price partially in The adjusted impact on and refinancing. revenue end ink in print expenses uses for $XXX,XXX With strong was debt months totaled million quarterly expense strong basis in $XXX primarily times leverage was XX.X% adjusted $XXX million the of increases. price operating quarter, March a adjusted increased year, XXXX, Other X.X% net the of the and EBITDA driven other adjusted since debt by over EBITDA. $XX cash cash, and responsible principal Lower or our substantial

four refinancing. to of engaged our year, the debt of subsequent first years. The our evaluating not to end for fiscal the three is months the another maturity. remaining ahead opportunistic lien continue of in We remainder of be advisories its our five million $X.X with we term to an loan repaid due actively November, In almost

maximize economics approximately based of the million at an of of our Currently, extend the various ability we the process. our sale on under As the listed XX sale deductibility the stage tax cost of our of timing we opportunistic maturities reduce of capital, interest for evaluate be real-estate total debt and decision will the law. debt and refinancing, have new to

one XXXX. to loan in income remaining by The of will in As a those subsidiaries federal used our cash will property change NOLs tax the to Pulitzer statutory be recent a reminder, event all rate sold, used expected owned tax XX% to owe. the fiscal of XX% repay tax taxes at second from is In reduce the become year the of lien our par. we XXXX, federal we reducing to and law total proceeds payer the federal term

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

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

Operator

have one lines phone a the to no we question. over And queuing Instructions]. [Operator ask

Millage questions our So I to will the to over call host Tim back hand webcast. the discuss from

Tim Millage

Great. Thank you.

comment they you is, offer on hearing views? on digital the remain webcast boot solution, question I'm Lee marketing the the company can The superior and in first high

Kevin Mowbray

I jump Yes, in. will

vendors work to with drive we our the we are add? across certainly over with to into Agency look Amplified anything and familiar we not that myself digital said would when Digital spoke regarding you have efforts we With personally on the with James pretty pleased like that it. XX and I'm we it to rollout that phone We have results the Lee.

James Green

can No, sure which services of and at I Amplified those, to I mention, do and making figures, I’d has key that’s believe making tune marketing you that we we Agency so and into part think performance I those I our it. sure value translate probably of advertisers and forefront for what you’re valuing we’re believe the that on of kind is looking and of some think digital that

Tim Millage

Next will to when you is repurchasing over question start webcast the be able stock?

Mary Junck

and every and ability do about meeting answer -- to to buy Mary that. continue covenants have shares, we is Board back buy is, it’s talk our we at in But back limited that the something This to that stock. single we will repurchase

Tim Millage

could you win current years your huge digital The digital, business next is, be as transition what do few for a see that to within you specifically a out?

Kevin Mowbray

digital A in drive couple see our just we significant revenue, growth begun of rollout current this tied to in Agency quarter. Digital to things, ability that our Amplified

our for we in a upside know And we digital spoke have TownNews to a release we as poised initiatives we they under growth. development couple through Secondly, of then significant and new have lot thirdly, are of digital that would I very in be out our QX now in looking increase to period results. revenue at will digital we’re that rolling QX the current right will substantially promising. that looks And and also say be

Tim Millage

so does a The a we next through after long into webcast question wait and comes, why results? quarter does quarterly the why

Kevin Mowbray

revolver extend of our This XX-K, today. the Can later conjunction filing our quarter so reported comment the is before to this the refinancing our of we end on fiscal filing get would out to that of opportunistic maturity year and December. cycles been extended end be at ended relative end September, question, our at that initial amend normal expect in our is has year-end, provide annual next December? amended revolver the The Lee our is the Typically with peers. have now the it our of and about several refinancing? normal on which to you fiscal advisors for as at expires talking you an quarters. clarity and with right Can working of We’re we

Mary Junck

yes can. I and again This Mary is

new maximize our the a four of debt noted, under we and point, to As three And we've of good refinance our ability have to debt talking the the based this we the note our to laws. as is years. our cost runway tax and be maturities very total at interest to we capital our on to advisors have extend and been to to reduce decision going

treat we So this very going are opportunistically. to

Tim Millage

came as next give was BH of is, agreement Hathaway The $X.X idea adjusted adjusted in of EBITDA. quarter EBITDA for from recognized in revenue all management in about you question can an million that the the the how much Berkshire talked agreement? us and of We we’ve EBITDA the

Tim Millage

I the question remarks. turn will the it I it to for have closing concludes over we Mary over will back That web. turn --

Mary Junck

in much for so you continued your thank Well interest Lee.

steadfastly As performing noted performance on industry managing to believe the financial leader we’re we’re industry high at in a we at and focused we’re at We top of digital. the transition and digital level. the the

reductions to Lee, consumers, joining us interest about and and as to our services. through business We significant adjusted we’ll with our make We’re on your thank optimistic local produce appreciate our future will you we accounts, our strong grow and today. for structure and keen in debt. digital EBITDA aim execution continue your focus combined retail in time Top-line cost

Operator

and the our This Ladies concludes gentlemen, reached we’ve of this session. Thank our at you. question-and-answer call. time, end

Lee Enterprises (LEE) 14 Dec 182018 Q4 Earnings call transcript