LEE - Earnings call transcript Q3 2022 | Lee Enterprises, Incorporated

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Operator

Welcome to the Lee Enterprise 2022 Third Quarter Webcast and Conference Call. The call is being recorded and will be available for replay beginning later this morning at investors.lee.net. [Operator Instructions] A link to the live webcast can be found at investors.lee.net.

Now, I'll turn the call over to your host Mr. Josh Rinehults, Vice President, Finance. sir. ahead Go Thank you.

Josh Rinehults

for you us. thank joining and morning Good

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

refer conversation financial Kevin GAAP measures the in in the Kevin Reconciliations relevant our release. the to defined During accompanying to tables Executive certain news are adjusted now we Chief our measures will EBITDA the Officer, presentation are cash three which non-GAAP Slide the President following And open and is discussion along. of open to the call earnings release. costs on and those including included Mowbray. for

Kevin Mowbray

really us. Lee Josh. I'm at Good into join company. and you I'm pace encouraged vibrant digitally-centric you by Thank morning and we're a everyone the could which transforming pleased

subscribers, to Digital third to track a quarter Digital moving digital revenue right and the million. demonstrate In XX% of growth have million revenue, results and the in quarter quarter, the with $XX achieve adjusted transformation. quarter right Amplified in whole revenue. towards metrics exceeded on we growth $XX XX% we're clearly digital many third velocity and growth Our results, subscription our Lee's are early we our in reported XX% Digital guidance strategy, With third year our have of EBITDA full we team, we

For full to schedule. we initiatives. our impressive testament our on and all ability team's guidance our year-end of a performance ahead to strategic us is a three our This execute exceeded operational metrics, putting efficiencies quarter

debt Our transform strategy of operating for creation execution free to sheet. shareholders. our reduction, stronger long-term sheet and A combined at strong balance base driving of is by and Growth revenue Three Three expansion, for our expansions with Pillar revenue balance investment value fueled shareholders. margin creates cash the the digital Digital our of a thesis foundation strategy of our increasing and our revenue mix the generation, initiatives, will fuel growth, the will significant long-term creating digital path the enhance Pillar from which core stronger our improved is Sustainable flow cash flow multiple value

to and achieve strengths strategy leverages long-term Digital Advertising base market our local growth, news industry-leading revenue. in to increased of quality Digital $XXX a revenue Our key -- This our and by being top commitment these growth and is subscriptions to growth. expertise, our highest revenue key increased expected recurring line driven generate revenue build the larger and XXXX Digital million digital

outsize driving focuses higher multimedia in high-value engagement, one audiences on in-house Pillar traffic, content for format, leveraging experience, with presentation and position and and our digital digitally-centric advertisers. our Our trusted regional and monetization, the growing base a Pillar strategy offerings our strong and local Digital and for audiences on digital digital brand's revenue our to guiding expanding expanding Growth rich diversifying investments market expanding user Three transformation We're capabilities. and is vibrant our company. subscription focused and

on and subscription revenue pace media in of third fastest-growing we're have digital goal the These exceeding At it's in and We additional Lee's content position subscribers, are paying up revenue. of XXX,XXX the been from continued third in and growth. Digital addressable about expansion Digital-only our increasing the We're achieve and prior the our of quarter, We offerings of to fiscal us end ahead over subscribers Digital-only more two niche average quarter. we're XX% our and subscription-based because unique compared driving of time, X% a XXX,XXX our are And base transformation quarter where paid Pillar increase in by have subscribers digital converting the tactics for Digital-only our the the drive cutting-edge have value and significant digital year. the which XX end by to rapid at were increase XXXX. is Digital-only and subscriptions leveraging now data add subscriber quarters. same subscribers rates we reaching average expertise second an expanded in off goal to quarter of platform Reaching Digital-only guidance Digital-only the of for straight subscribers. make an continue positions. to growth topics, our technology market rates subscribers the local base investments XXX,XXX up year and vast schedule. that a important selling as to driving subscription of total increase

diversifying and two ways. on focuses we're pillar offerings and advertisers expanding doing for that in third Our

local service full provides including agency that our and buying with solutions, Digital, media analytics. omnichannel Amplified and digital regional advertisers and custom marketing consulting, through First, sophisticated

revenue Lee's digital by platforms. opportunities Second, on maximizing

Vision this expected platform for Amplified next its advertising two us supported to in enablement video operated continue The in and platform to more is And of growth by by powered execution Vision software Our and massive digital Digital. Both inventory offering drive branded growth attract audiences. tool, and Lee's significant capture local category. the proprietary the initiatives ad for revenue. Lee. opportunities allows transformed content double-digit advertisers omnichannel Industry-wide Vision sales We're platform. local properties has owned a these is years. advertising that Vision are to

is next in the XXX,XXX industry recurring XXXX. third percentage XX And revenue Digital digital by agency industry sustainable launch, tremendous million digital industry outpaced counting. as Lee third early expected launched in quarters with outpacing peers and as Digital Digital up media fastest-growing industry-leading subscribers, We've peer. has I Our quarter. platform made strategy well, last agency for typically the than reaching since subscription And execution our closest to subscriber in quarter points growth our of the We've mentioned XX% with strategy in half XXXX. earlier, more revenue. Digital is ahead way growth and Amplified our XX revenue than significantly we're are more subscribers including and the our the digital digital results, in result $XXX of progress three-pillar there.

grew of to million, a total the growth, result industry-leading up XX year. last As our prior the compared over to revenue $XXX digital digital XX% months

We for revenue total be changing mix up fiscal now national have XXXX revenue. our in advertising year-to-date. And done, Lee. chain year-in challenges demand year of proud on the aspects out, advertising, their us driven are significant putting for growth rapidly a structure. And of team choppy accelerated ahead XX% fantastic thinking, our with advertising national shortages declines of guidance supply But year the this to adjusted for many for local cost rapid the our like many we certainly digital and and on team in to more has overcome of of couldn't operating our our track plan impacted is the year, our digital third demand be much team this successful of had headwinds revenue, of targets for keeping been revenue. that has Growth growing and presented value of represents quarter, us in shareholders. full substantial shaping Digital EBITDA. We of the for smart digital achieve print to revenue at including all The importantly, Pillar commitment efforts I our year the and plans to strategy affecting inflation add and execution Three

Our on to demonstrate Digital our now, into the to third for Lee our results and over Growth third Pillar digitally for FY quarter turn success transform vibrant and it quarter company. the XXXX. Tim the centric with I'll results a strategy outlook And more details clearly of Three

Tim Millage

subscribers, quarter third Digital of Digital subscription revenue good total driven of stream by the as Digital and was in our and quarter, digital million, to third our our and third we in less at of a million, morning down We have subscription whole to third the our operating year-end in year, increased revenue XXX,XXX. exceeds XX% up $XX revenue third thrilled Digital-only the target the Revenue you, report X% Digital-only paid year everyone. XX% reiterate To than Print Amplified our growth XX% from with decline increased sentiment, In revenue. results are schedule. million revenue, pleased and revenue the targets in in XX% year XX% our metrics rapid progressing Digital-only and and revenue quarter of the ahead Digital our $XX Lee almost in achieved up quarter. transformation we're stream. offset prior $XXX the Total Thank growth to of that have ago. digital now quarter the Revenue Kevin, on totaled was XXX,XXX Kevin's many

Amplified Digital quarter. full we point in in the up in solutions over pacing with last of to increased of were due the months in million. the -- and Marketing totaled fiscal the in increase and was to Advertising costs sold totaled agency general we title $XX chain the talent $XX the digital advertising. year digital Digital Operating service XX services inflection strategy, of million and remain totaled held revenue total in million, Services the our quarter, digital XX% our advertising $XX constraints $XXX Advertising $XX strategic national in our overall year-end the due reached costs subscription X%. quarters. and revenue $XX exceeding inflationary prices million over cash technology have XX As growth mentioned earlier, supply a target and to secular last Digital-only XX% and the last estimate compared of now marketing third year digital Print ahead revenue XX%. the same cash decline million. Kevin to and of XX% declines a million the Digital ago, subscription $XX Total in to months, quarter, our affecting fastest-growing and attributed marketing quarter. media, up revenue investments represents our for full the digital expenses goods XX revenue revenue million million a revenue continued Digital, quarter totaled $XXX Amplified environment. platform of $XX fueled tied cost well million were growth increased Increases

totaled quarter. million third income Lastly, the in million totaled and $XX $X.X net adjusted EBITDA

are that impacting earlier, year mentioned cost XXXX, of Kevin faced dealing number structure. rising we As our fiscal a in far including prices so with headwinds

prices example. one as For we we these cost addressing increased that's fiscal will of services. this, focused in newsprint example, on And a is products million are a in the $X secular XX% demand way on million increase One that annualized business to total managing the have changes year, our and several affect Print are times $X the impact our for just profitability structure.

long-term discussed the evaluated our our aspects of This capital a we our align optimizing and cost early well in better and As third spending structure process dive cost structure human we XX-week as the completed to services. was as quarter IT all corporate content, strategy. distribution, marketing, our last Print manufacturing, deep finance, national done organization, and external quarter, other with into

to we two review, than that and quarter As on the $XX basis expect the on on reduce Execution this in our to to an the of a annual these cost third $XX result cost expansive achieve actions are XXXX. early million. began we by of executed FY cash we track more last actions reduction million on quarters various in

the and structure While aligned Digital our growth. content, digital Pillar strategy. business digital process, areas well aim are throughout of Lee's digital with digital is of reducing main great investments digital on revenue on as to investment million $XX our our fiscal Lee Local of maximizing X to that short-term This but strategy. as a investments a transformation. These have key this expect have priority and legacy Print we to efficiencies drive talent incremental margin and year, to drive will drive profile, impact are our growing transformation. We areas in results cost development our remain expected return products and are the in for sustainable focused year long-term our Growth in our our invest we

digital subscriptions, our the revenue for As on a and digital digital growth provide quarter our mentioned our digital our we as in earlier, guidance year-end expectations in us fiscal We resulted solid year fourth revenue previously we wanted communicated third finish revenue in additional quarter subscription total to achieving quarter thoughts some early. September.

quarter. growth in result in in year. the will continued for subscription in expect digital-only in earning fiscal million $XX fourth We revenue million This the revenue subscribers, digital-only $XX

On $XX million digital revenue fourth million the quarter, and Advertising side, coming that the of from we in with of services Amplified expect Digital. advertising about marketing $XX

EBITDA XX% perspective, to to adjusted are $XX results over services For million million year $XXX than of a the these marketing guidance EBITDA advertising we XX% improvements prior million of of more and revenue million adjusted million, Digital cash Amplified fiscal $XX $XX we of flow of expect revenue. outlook. digital our previous from in million From the year. and our fourth reaffirming full expectations are Both $XX year or to $XX which quarter

combined three our give revenue confidence metrics outlook. to reaffirm EBITDA expectations for the the to our Our results first improve the fiscal of we tactics of our many the us and continue through adjusted year with quarters execute, to digital

Moving the to $XXX refinancing of quarter the in The was since next end of amount down million slide. March debt $XXX our million, of at principal XXXX. the

as with our necessary reminder, it favorable has our us, investments recurring us and make lender, Berkshire a sole we ability talent credit that sustainable incredibly the important in terms as our to the growth. As fuel strategy, technology are allows execute agreement revenue that our Hathaway, for

the pension so year. are not overfunded, pensions do contributions in Our in expect aggregate the we any fiscal

which opportunities nine already to the the our million have real estate over from years real of last facilitates generated proceeds Finally, sales accelerated months and debt first repayment. $XX We monetize estate, million to identify $XX we of asset continue two in year. of the closed

reminder, X.X our XXXX. target under times a of As our by to is leverage the goal end of achieve long-term

summarizes give transparency in progress outlook, improved our XXXX shared clarity calls, goals. better two and our towards are our have progress. table providing our we we to digital fiscal transformation XXXX As on last quarterly the metrics This demonstrating

As you to we expect on continued transformation progress years. continue can several significant and see we next making are digital our over the this

we're the record goal already accelerating track and established our have subscription We and subscribers strong to Digital-only growth technology on in XXX,XXX incremental talent in of Digital planned investments for a track XXXX. with paid reach

Digital dramatic exceeding Continued execution million. growth our of digital $XXX expected generate subscription Advertising is to Amplified is strategy that trajectory revenue recurring, fueling sustainable Digital's five-year outlook.

to capitalize strong double-digit data content advanced Our Vision growth. data-driven looking omnichannel access expertise, Amplified advertising. platform drive With growth for immediately businesses ad in positions a category is us custom specialized on tech local and digital scalable video regional partner first-party and Digital to powerful

We which, with XXXX annual come digital from be in Digital to revenue will And $XXX of expect XXXX. $XXX revenue Kevin, back million million advertising $XXX turn Total of expected million is Digital. reach about that, it wrap-up. by I'll to to to Amplified

Kevin Mowbray

audience To in revenue the digital The with Advertising digital Digital and continued wrap-up, is the value of we're The third Services target stage the like creation. of our We're entire the oversight Three Growth combined is source and in team, Digital strong rapid sets strategy results pleased information as of subscription of and Under our making execution transformation. growth communities their our the trusted serve, of to team's capability for significant of quarter the our thank the for the efforts in we our with and Marketing guidance driving the reflected Directors cutting-edge very Tim. of progress Digital-only Pillar continued success growth our towards transformation Thanks foundation Lee our our presence leadership in Board strategy. the Digital results. transformation. long-term I'd

questions. team right to than we're for may right positioned please We have remain right will ever line believe long-term users, the and I the The better And open strategy. our our the readers, on concludes questions you line any remarks. for for This create have. value the advertisers the shareholders. team Board, and Operator,

Operator

will be we At a [Operator this session. you. question-and-answer Thank time, conducting Instructions]

Mike Kupinski

Mike a have couple is just of I This questions. Hi. Kupinski.

beating us guide First hear you guidance job. I can't the than your in correct on want It for. about a -- talk better you, and it QX. had maybe a someone such there. little of I also follow-up QX, great your progress much wrong, this of for me talking give XX% Amplified? anticipating the seeing you color the looking And I like how with have Can if seeing in you're to congratulate a that what you're a little they're Why mean, growth? relief with a then, of I of I'm questions. growth all, you're in expectations quarter. What you've bit tell to couple actually XX% on little And my for questions, just quarter the a Amplified Amplified you is, strong is A seems customers? other was very almost obviously And about? environment. What couple over I did

Kevin Mowbray

Yeah, to start and that too. I'll add to can anybody wants

local we've campaigns got success lot I is strong advertisers. and key platform and create of campaign generate omnichannel drives of we're a And level, that success finding we've Vision real-time the to results what marketing advertisers. push regional advertising couple what ability talked gives pretty really to the about the a a of the for a really campaign. in for of campaign the our I reps sales the backup that with analytics local calls, retention an an of for the on deliver sophisticated button to the because know at is the advertiser think the

Mike Kupinski

will come give we from? the start in where you quarter. a of little cost most cost was did, and can you what did cutting just us on that? wondering, start And actually color If when some reductions those? cycling implemented obviously those you. I when Got just And month the like against

Tim Millage

Yes.

of number They a lot April, throughout a May. took place them third the actions made we began quarter. in So in

-- terms -- it entire the worked really really departments So of for the cost effectively in of structure. terms organization in

is those I as to remain think the we we're to of cost significant investing sort at cost we distribution -- the our of One continue the the focus supports generation, other price revenue focused say areas our, was focus revenue portfolio A streams focused to that. products Anything that those are at our were areas looking to digital area streams one on our development content Print of, print as area real mature. thing on costs. and reductions the estate continuing the that product the same streams. like products drive revenue on continue to by like I at that of areas Print could focused local different profitability those was want where on managing driving profitability really areas time invest, where but looking

Mike Kupinski

And can decreases bit any the promotions, accounted the particular you like the Digital-only the up that What you. that growth average things talk mentioned the Digital-only? if then rate a you for rate but in were now? changes in may only growth, paywall, Thank in there increases subscribers were promotions, rates And is have X%. not little about saw promotions, in you

Tim Millage

the on range. In terms comment can of the rates, I

little Digital-only $X a subscriptions. under for we're So month a

on our using and to decisions been to drive so And product on to market continuing focus successful. market we're our has data on it how we go

Mike Kupinski

my then last – sorry. I And am

Kevin Mowbray

about us. is I high-margin that great business of Michael the piece very one things a wanted that's for to say,

Mike Kupinski

key here go margins just driving expectations cash to as in thing of was Digital little talk kind flow I of XXXX? And will And fiscal margins. bit margins. you and obviously be you a to ask your expansion growth the into going the your improve about Right. Can about

Tim Millage

do that. can I Yes, Yes.

expansion in the investments to ad latter So impact short-term get making. revenue were of we into digital we what came were respect of have some on they XXXX -- we're with part XXXX margin thinking we terms would see margin the and into that and but temporary we margins, have impact do the investments we that as as to our expect making our we on a those returns XXXX will with move we into that start of

Mike Kupinski

I congratulations had. Okay. Great. That’s again. Well, Thank all you.

Kevin Mowbray

was that's call. for interest us your -- appreciate I in questions. really you lots Well, and thank of on today's joining Lee

Operator

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

Lee Enterprises (LEE) 5 Aug 222022 Q3 Earnings call transcript