LEE - Earnings call transcript Q1 2022 | Lee Enterprises, Incorporated

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Operator

Welcome to the Lee Enterprises 2022 First Quarter Webcast and Conference Call. The call is being recorded, and will be available for replay beginning later this morning at investors.lee.net. At the close of the planned remarks, there will be an opportunity for questions. Participants accessing those call via webcast may submit written questions through the website and they will be answered during the call as time permits. Otherwise, you will receive a response later. live be the at to link webcast found can investors.lee.net. A

to turn Josh the I'll your call Finance. Now, of over host, President Rinehults, Vice

Josh Rinehults

thank us. And for morning. Good you joining

Chief are Speaking morning's Officer Nathan and and us Vice Kevin available Executive with Financial Officer; Also today's Mowbray, President, on Chief and call President on this Treasurer. for Millage, Tim is and call questions It fiscal with Strategy. available XXXX. Bekke, we release for today, as Audience lee.net websites. as is news Earlier major preliminary Vice quarter our well first President a issued results financial of at at

through earnings also walking be will that lee.net. call on can We found at an presentation today's be

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

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Kevin Mowbray

I'm to us. join everyone. you pleased morning, Good Josh. you, Thank

capital to I We during first global we or that you quarter Before slide. outlook. on strategy on call want growth our and Q&A. remarks commenting prepared won't all note agenda is dive into in on results, the this our this be focused the our see

our file appreciate you statement are related and announcements, our We our definitive on And and XXXX more XXXX on on your SEC. review Annual Meeting For cooperation. of to Investor website. the it section available this, Relations in encourage also which information we with proxy

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digital We will launched our in than Strategy recurring Pillar of continued XXXX. strategy revenue early more execution by expect XXXX. $XXX that million Three drive our sustainable and We

fiscal revenue. in on X, growth see, leading throughout progress we and including subscribers, tremendous the digital XXXX industry digital Slide can year you made As agency

XXXX, For million. total grew $XXX fiscal to revenue digital

long-term as will Strategy creating we're to revenue will this in saw drive value strong morning, and reduction strengthened Three by a of flow our creates Digital will cash the this multiple in sheet as from have margin free Enhanced initiatives X. profits balance long-term pillar our the Execution creation accelerating high is Lee three each digital fiscal shown supporting of and enhancements. stronger increasing sheet the momentum margin that on pillars growth results I'll and expansion cash flow, continued and deeper strategy. more significant of expansion which fuel three debt our revenue for core With for our overview growth speak you our into shareholders. detail, a digital Slide and XXXX. our balance operating initiatives Sustainable feel on Tim Growth in is recurring to As bit value shareholders path the Pillar dive at

Lee's strategy key Our strengths. leverages

industry XXXX revenue expertise, and on Slide X format, top-line increased million and experience, X and to We're higher market revenue look revenue $XXX recurring driving our audiences. a an investments growth, X. long-term digital in revenue to expected our Pillar offers to from and larger local value leading commitment user subscriptions digital driven and growth engagement, and quality from presentation digital generate Our digital by Pillar achieve highest the in is of rich build initiatives XX, means growth. This in high With at monetization. depth digital increase and multi-media X focused traffic, expanding advertising content. outsize Pillar base

Lee of our to have had of paid digital-only only and year-over-year, first the achieve on technology subscribers. subscribers video and increasing in halfway our expanded reaching off in vast for the increasing in increase the is as increase digital and our of subscription it XX% we unique capabilities. quarter. digital revenue I of continue subscriptions of XXX,XXX by digital-only rates mark that leveraging our modest position release, is our only to our digital offerings Lee is of tactics in and cutting us our our at more subscribers and trusted To niche based And [Indiscernible] the attractive addressable for of the average market positions. goals investments content was These This of where market selling topics base addressable At end end thereby noted digital positions subscribers brands, mentioned reaching XXX,XXX value-added the goal more important the expansion Lee to press XXXX, transformation. digital XXXX. already up digital is base this total to target. revenue increasing converting have additional XXX,XXX expertise earlier, growth. aims date a market subscription and important and drive driving We're subscribers. the This base of we strong is leveraging And by revenue. house indicative digital subscribers than XX% As opportunities the are to quarter in audiences increase of as make edge

reach overall. subscriptions next overtake year, will point subscriptions audience our of inflection majority expect print an digital-only our when the We and to make up

Slide subscriber on XX, market addressable requires growing shown digital rates. conversion both As to expanding our visitor subscribers strengthening our and

and X.X our loyal than million each readers more appeal market. deploying Today TownNews, we social have media These content two developed visits huge In per our targeted addition million engaged month, using visits data and attractive extensive to month. email advanced niche technology and subscriptions offering a XX addressable with on efforts are month. readers unique more strategies each with million we're four more audience, that to focused platform. attractive highly visitors by first-party SaaS XX also

goal turn Our into digital into base I these faster subscribers, of our as generating more recurring peers. And is than converting strong revenues. readers I'm digital there. to subscribers mentioned, XXX,XXX We're halfway readers than

record Slide growth with demonstrates we quarters strong to be talent far and York industry running. and Times continue level of we XX see can As Gannett This for investments, an Lee's track outpaces XX, you on digital a and believe coupled New will subscription the high technology execution leader.

modest in XXXX our in our of only because makes total portion market. digital momentum converting ability confident it XXX,XXX us requires continued a Our reach subscribers addressable to

expect deliver predict Importantly, faster digital increase even revenue a while growth approach. a in burst period and modest over our climb in subscribers, to we through steady we the

already to niche To revenue grow data we average record planned million subscription digital with XX, growth and clear Pillar on rate. of our path subscription goal for our and maximizing a only As have digital XXXX, XXX,XXX to recurring including only investments XXXX. in our we we we premium digital talent execute sum technology, using we're actions, targeted pricing to analytics of incremental $XXX reach combined growth products, sustainable have in offers, and a X and established paid plans, Slide subscribers track a on believe accelerating XX% representing pricing in

digital generate is sustainable Continued execution $XXX expected of recurring that exceeding strategy million. revenues subscription to

XX, third Slide we're focus to offerings on for Turning our in And advertisers. pillar expanding our that ways. two diversifying doing

digital local with advertisers consulting, sophisticated First, service that channel full provides agency analytics. solutions custom omni and media buying to marketing amplify including our

advertisers proprietary platforms, our these digital massive Advertising, revenue Vision a attract ad platform, by initiatives by these by our video double-digit local our content with to and to is to expected operated Mudd Platform efforts. strategic Innovative Industry powered [indiscernible] its Lee's Vision through Vision on channel advertising omni cross of advertising owned Second, absolutely enable advertising the category the opportunities medium automotive with to the two marketing a Vision Both our revenue. growth full service owned audiences Lee's is sales properties agency operated branded Platform with inventory, allows The next and to and partners enablement transformed offering maximizing digital partnership us platform for continue tool and for supported Digital, more in Amplified enterprises. wide The and boost local years. with this to fully in growth continue channel support has capture significant Vision

grew can including drive tech, businesses driven ad to are you ad expertise, is As XX, XX% local see our Amplified Amplified content With growth. partners. customer capabilities, out Agency growing strong our revenues In first Digital for partner new Amplified data party and and revenue data our to e-commerce scalable Slide solutions But year-over-year. offer specialized expand powerful to rapidly. looking quarter, regional access, first category video, on a continue advanced Amplified building

about is outlook, XXXX, to digital our Amplified. advertising million expect from target engine come to fiscal We million $XX execute we in growth $XXX revenue for as on transformation. XX, Slide our our Amplified's digital is Amplified digital our fueling Amplified $XXX of advertising year in by XXXX which of $XXX advertising projecting We're Amplified a a million revenue in major runway advertising see XXXX. strategy to significant annual Summing will million five up in year our reach growth dramatic we trajectory continue reach revenues in growth strategy.

to digital capitalize growth on advertising. Vision uniquely positioned platform the Our channel and omni us double-digit

first recurring to generate performance. expect our revenue discuss in million financial exceeding over now quarter Tim I will We turn XXXX. sustainable digital $XXX it And to to

Timothy Millage

continue revenues, and Thank you, digital high pleased categories, in growth level, control I'm business. quarter strategy. growth finished a make to results strong XX. very At pillar print to progress Slide our continue costs our now our moving and on to in we solid We're the with we our three with legacy the Kevin. digital especially

to digital and transformation. us in on adjusted fuel our continue achieve digital We also our revenue track This make to our full-year platform performance targeted for EBITDA. has to investments targets

and million advertising, and ago digital our for investments Increases and was high cost total demand revenue due the at $XX $X XX%. declines XX% XXX,XXX revenue digital the digital digital paid million cash growth political operating secular the same increased in million. first Marketing subscription total over and to the revenue totaling advertising. highlights national the Advertising to XX% XXXX advertising of Operating to digital chain months. strategic $XXX subscription growth first increased campaign cash $XX the quarter. our during revenue, the were in outlook, and print sold. the growth XX quarter, totaled decline supply year over in Digital digital Services Total costs digital and quarter revenue totaled Digital with Services only in digital technology which a in season, goods and the XX% Digital increased digital XX% million the total and quarter quarter Amplified in quarter subscribers in have Marketing in revenue. Amplified revenue was first million, X.X%. the the first target rapid affecting the excluding represents attributed generated and political into $XX to was increased growth revenue of the Moving XX% last $XXX increased up financial quarter expenses excluding XX% to tied constraints marketing in by quarter half XX% and XXX,XXX revenue quarter, costs driven increased strategy continued talent and revenue compared Total $XX revenue long-term at subscribers. million only in up revenue We now digital services which of were to $XXX million, million of our fueled revenue digital only only

cycled received prior-year, one-time medical. benefits the we As in principally

print Net We offsetting million continued $XX.X business our and transformation costs increases. partially reducing totaled EBITA efforts adjusted $XX.X legacy totaled the by million. income

revenue, growth only As expect to of of digital advertising $XX only revenue digital from adjusted in expect the outlook, EBITDA $XXX we subscribers, in XX for in in the marketing fiscal our million subscription 'XX continued total million achieve deliver million revenue, XXX,XXX million. and $XX execution strategy, we digital to digital to and services $XXX our range digital

continued cost efficiencies responsibly the XX, And capture since we across of structure. Media. long our Slide Moving history a to have BH acquisition business of managing our have we to

operations since In overall the to larger centralize addition to platform we significant synergies our cost certain achieved closing, remain reduce our focused on resources, structure. leveraging and share

to have base $XX million $XX cost our costs associated direct to We we revenue $XXX legacy expect in the 'XX current fiscal of Through a with of sustainable in costs than million achieve to reduction management, streams. compared legacy million more prior-year.

growth. focused remain digital and revenue the print of we efficiencies, sustainable is our to reducing business, While drive on legacy our and growing maximizing our cost priority main profits, long-term structure

result, drive digital are costs. will making a we our will and impact future that cash As targeted investments

making those we and Slide and in investments of by XX the digitally investments goods model business cost talent are from legacy targeted more new and $XX requires Lee's increased increase detail. costs vibrant approximately a technology. talent significant the a Transforming technology cash in to to print million. investments business digital centric expect sold centric We in describes

efficiently engagement. to growing data visualization investments first-party year that store analyze on into AI of grew infrastructure, our members user include our to focused producers reader of and as data In we're transform newsrooms at more of lake the anticipate news. and well as on video we XXXX. planned operators around the our year-over-year, experience with side, drive data bringing more technology local of and incremental as tools pool enable data, executive that XX% For experts products as to to more in expertise Amplified, content systems custom we and talent a presentation curate million lean $XX example on driven investments team our data We continue to enhanced fiscal

the Moving million refinancing. our was debt quarter to million million continue end of this strengthen $XXX or is The down first of down at balance $XXX to sheet. amount the XXXX Slide XX% we since sequentially. our XX, principal And $XX March

agreement investments Berkshire terms in are incredibly important contributions year strategy, that As pension as necessary a our talent has execute sustainable it as with us credit not and favorable in sole no growth. our allows make pension the and Hathaway, we expect quarter, fiscal us reminder, vendor in our we did for the XXXX. technology that revenue fuel first our We any recurring made contributions to

generated in facilitates asset already opportunities the debt additional $XX identify to with monetize an sales We million $XX are $XX first which XXXX, our accelerated real in fiscal proceeds targeting and to to $XX closed million continue we in repayment. Finally, quarter. million of million XXXX estate, in

our As under times by of half long-term is of our to goal achieve a a the reminder, 'XX. leverage target end two and

a Lee's financial I'll to Next, new metrics. five-year our rationale take for moment outlook and the outline

call, amplified As of transformation revenue better clarity to we digital as advertising the Kevin at including transparency the providing and metrics are marketing defined mentioned digital and this is and top revenue. our progress. Total services digital revenue, on digital-only get restated beyond. subscription services periods 'XX our for other outlook revenue fiscal digital was reclassification. Previously, summarizes This presentation this included has and table subscription in all been digital and revenue,

back As up. see, next digital our I'll it over continued the Kevin wrap to to that, you over can expect make we transformation years. with And several to on significant progress turn

Kevin Mowbray

have. positioned better advertisers, to concludes the To believe create right in driving the questions. for remarks, thank I board, for ever with and right our remain transformation for to line our strategy. may line wrap team shareholders. efforts the the team up, their the please team right like Tim. And will we're open I'd readers, Thanks, on This Lee long-term questions our the you than Operator, value users, and for entire

Operator

session. this first Thank now we'll open. take will question. our time you. we Caller Instructions]. At conducting a question-and-answer And line is be [Operator your

Unidentified Analyst

It's always when company nice you. beats Thank a expectations.

the in couple remind So what great. advertising the Can you political number me was questions. prior Congratulations. again, that's A of digital quarter? year

Timothy Millage

Mike. around our thanks, revenue Yes, various was year the Yes, had prior political I comments. in with campaigns that of across the Lee markets. $X million associated we appreciate

Unidentified Analyst

we you tell cycle the sites? in And changes with cycle that? against when - can do Great. digital you against paywall the your when me What

Timothy Millage

those of fiscal late didn't the in changes in most in - Yes, year 'XX. We were FYXX. middle the of fairly cycle

Unidentified Analyst

And on you. of amplify, there. the just variant, the Omicron terms market? maybe of discuss that if starting very were you tone kind both on see more the on pace how advertising the Got you side digital moderation the discuss And to of any then or looks, issues whether see, give obviously a current current if print us impacts growth strong recovery you not with print of in I'm Can of also terms of advertising curious how, the can? the on side. there side we're of environment? the color with and just kind Can to the

Kevin Mowbray

that's key to Kevin. think in saw on they're is I'll local I'll it not you and little is regional with the target. I recovery, relates of really of issues as growth others. Sure, give that's Kohl's, the a would Recoveries clear, chain strong type products strong. This shelves we really of bit on And based a bites. primarily advertisers accounts, start. if an is say the by tied contract I slower the answer XX% in couple getting digital. QX to them supply a

different is there there. think impact we So

Unidentified Analyst

in been because talk just pretty still does And understand of that selling now important And I they you advertising how that are category? for was that about the curious, just that affect well. auto just And little as a bit if strongly. I'm cars also category that category curious, that haven't you? is a I could particular?

Kevin Mowbray

based result, particularly that relationship as do But participate category. sales car terms to would allows feel Sure, that good Mudd we been category larger selling out have, in I that have revenue platform. is done us great remarks, got much Vision on classified, right a revenues are as we used briskly, largest with We Advertising, old really our you're share mentioned which see cars. about in that. we we of of the a it's revenue though, the in segment. our in category point And to really

Unidentified Analyst

fiscal $XX million, then the clarify, of Yes, XXXX, just to - about in not the did inclusive $XX sales the that real the was million the and correct? closed and in quarter, to $XX $XX to mentioned you estate just for clarify include that million million

Kevin Mowbray

That's first year of close sales, closed million correct. $XX which fiscal quarter. That $XX guidance the to That's million 'XX million were in correct. in $XX

Unidentified Analyst

think Got that's so for questions. Thank I let all you you. have you. now. others I'll I And ask much. Thank

Kevin Mowbray

Thank you.

Josh Rinehults

Great, thanks Mike.

questions. over turn webcast to We will

averaging you so Okay, with from quarter or conservative target quarter growth of because that webcast question full-year But only is to you're first our per digital because our XX,XXX. guidance the another sub XX,XXX the is expecting had great a slowdown? requires is, achieve

Kevin Mowbray

we XXX,XXX digital What the say outperform the some the the our growing of to units and have the hitting rates. quarters going at look outperform is linear would at volumes. And on from we're is quarters, where XXX,XXX for we our to opportunity target, target, line a and target there's well long-term are will to is our as be some not market I here trying think that perfectly we reason we subscribers grow rate as goal on only factors we will to and our both getting specific our

Josh Rinehults

a of are Lee, there in TownNews? appears spinning or Amplified to question, selling off your lot or Next on thoughts what be value embedded

Kevin Mowbray

the digital of lot TownNews and advertising right major $XX the have and relatively technology it and tactics morning Amplified strategies the reaching the talking both Amplified we our key to of Lee think to grow there I revenue three strategy. execute now is we million and helps pillar small of TownNews we really growth us digital one priority spend it growth targets as engines are as a develop that a And on factors this time of with and about expand in base, our in important Yes, a for LTM growth but our remains strategy. digital expect future. do

would say growth digital better leverage on digital businesses value three is strategy. I execute pillar So our the the to to

Josh Rinehults

is Have redeemed of are this due Okay, issued in been year? how the next warrants any question Excel, many? to March expire XXXX in of at end

Kevin Mowbray

That's a good pointed shares $XX.XX, for question. expires associated we now. XXX,XXX were have as stock. up The of And do of of reminder, XXXX the in you with as refinancing allows March a Lee's rightly XXXX. exercise But issued of price that issuing debt out, none that to have as exercised warrants is it the warrants XX been

Josh Rinehults

We questions from have web participants. no more our

the to closing So Kevin for I'll back turn remarks. call

Kevin Mowbray

Lee and Thank in call today. for you your joining the interest thank

Operator

Thank you, our reached concludes and your gentlemen. that participation. this call. the And We question-and-answer thank end At you session. we time, all of for ladies our have

Josh Rinehults	Vice President-FP&A
Kevin Mowbray	President and Chief Executive Officer
Timothy Millage	Vice President, Chief Financial Officer and Treasurer
Nathan Bekke	Operating Vice President and Vice President, Consumer Sales & Marketing

Lee Enterprises (LEE) 3 Feb 222022 Q1 Earnings call transcript