- Earnings call transcript Q4 2022

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Operator

Welcome to the Lee Enterprise 2022 Fourth Quarter Webcast and Conference Call. This call is being recorded and will be available for replay 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 Josh Rinehults, Vice President, Finance.

Josh Rinehults

Good morning and thank you for joining us.

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

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

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

Kevin Mowbray

Pillar with Good execution Lee team we're transforming quarter us. vibrant centered morning, on a you digitally The encouraged I’m another And company. strong our pace everyone. join delivered I’m strategy. by which pleased could Digital Three really the Growth continued at Lee into

full all year results quarter exceeded our achieved of guidance adjusted EBITDA Digital and as our fourth Our guidance, revenue we well.

our growth. the we increases Only our XX%, resiliency consecutive to investment and support our in the to results industry-leading Digital the achieving business these of ability demonstrates success of Our expectations of grew long-term our fourth strategy and quarter exceed subscribers industry-leading In produce thesis XXth quarter, goals. conviction model

revenue guidance XXX,XXX as Subscriptions are fourth and Subscription at digital well. encouraged digital Digital year-over-year. subscriber the full end exceeded quarter revenue, driving outpaced Only for quarter grew Digital with of Digital we up Only guidance XX% year. rates We grew for our the XX% We subscription average our the also that subscribers revenue

revenue to advertising and digital exceeded in results. the grew of the quarter DMS digital for side, achieved industry-leading revenue Amplified ahead guidance XX% team for in and well Digital our the totaling full year, Lee I year our more for the the fiscal XX% $XX metrics, and of with proud million On revenue solutions pacing guidance. couldn't all be the we other revenue fourth we of achieving industry digital digital consecutive platform market. just scratched and strong With attractiveness Lee fastest-growing XX product results growth a the our that our our the lead guidance last XXX,XXX is the digital Lee subscription vast growth quarters. more offerings, for and attributed vibrant metrics the today, of than addressable is our digital exceed with subscription we into further transform centric industry-leading subscribers surface company. industry, digitally the of

results. to advertising several and we size Amplified fiscal audiences at to regional key fourth Amplified growth growth increased addition for million the of more industry-leading engagement, a in Revenue Amplified our solutions through created we digital offers years rates and in strategy Xx peer. is nearest the market. year XX% a $XX industry totaled the the quarter than significant addressable suite growing from and local are seeing and In marketing advertisers We scratch and to ago, tremendous Amplified. full omnichannel with of

compound rate annual the revenue growth, the million, for growth As $XXX year result a prior X years. XX% accelerating year of was to XX% compared driving total industry-leading over and from digital fiscal a last digital up the

for digital XXXX to company the be plans thinking We steadfast and our execution proud Digital their be drive our I rapid operational represented this Strategy successful toward revenue fourth total times of couldn't to Pillar and are on of transforming agile more has the rapidly of revenue. for of Three revenue, operating Lee. Growth year mix the in of uncertainty. commitment a team total was value and our our This during shareholders. for strategic XX% excellence quarter, our delivering that allowed our

deeper the our go strategy into and later discuss I in to to call presentation, Before over the will fourth I in on quarter year results fiscal Tim detail. turn more

Tim Millage

$XXX $XXX decline sentiment, of outperformance expectations the To increased in $XX the and year totaled ago. Services Thank subscription morning, Kevin, the Digital XX% digital a of by growth in fourth in with revenue everyone. at the in investments And print was the in guidance to revenue the in due our by fourth revenue prior Amplified quarter. quarter down totaled X%. well. strategic revenue quarter to rapid advertising million XX% were digital headwinds, digital were year results growth $XX many the we expenses $XX digital as print. business and subscriptions. prices. cost in general full our costs fourth fourth transformation and as declines quarter, good by overall adjusted million, and technology XX% subscribers cash Total XX% fourth Advertising at growth Decreases and and costs our our an in operating secular our stream. exceeded Total compared increased our for The fourth decline our cash to offset attributed in in In driven offset totaled despite XX% Marketing XX% the driven to was pleased Digital quarter, you, streams sold the at Digital as partially the XX% and revenue year and revenue to revenue for represented Kevin's efforts, to revenue. million, reiterate was continued a the quarter, Amplified. Subscription achieved ago and goods digital and of prior EBITDA $XXX year transformation million increases of the increase compared million from year tied Only Operating digital Only talent due continued Digital we digital strategy, rates. and rising was revenue revenue increased million over quarter the rapid and flat a in increase in revenue, total same Lee are digital up print the and total we to revenue quarter growth demand the quarter,

the the quarter, prior compared we EBITDA the reported of $X.X For Adjusted XX% noncash a of an largely driven net by in loss increase to $XX year. impairments. million million, totaled quarter,

totaled $XXX year, it For in Net digital year, our digital achieving the our in income more discuss In million. XX% XX%. revenue over up was total million down Growth Kevin revenue, transformation revenue to $XX was million I the guidance. than to our less year year. from of the now detail. $XXX hand our to X% operating to Total the prior increased full million, totaled or strategy compared year, revenue XX% and the $XX $X will and fiscal Three Digital to back year million digital fiscal adjusted Pillar EBITDA full for

Kevin Mowbray

a Tim. platform. you, Lee Thank subscription is digital

grow omnichannel to Our and across our content audiences compelling strategy of to also marketing engagement local platforms, full and local providing by rich suite advertisers. solutions using offering while advertising digital aims multimedia best-in-class storytelling

pillars: centric digital information; subscription Pillar Pillar Growth is news growing about and guiding offerings our audiences a transforming digital presentation company. is and Our our Pillar three the by three Strategy and our for focused two about one digitally Three and local on base Digital The vibrant expand to of expanding revenue; strategy is is Pillar transformation local advertisers. diversifying

XXXX more growth. room year progress fiscal transformation, for Our and results demonstrate Lee's in digital significant there's even

journalism at million of of more $XXX than goal X leads to up towards one, Pillar communities to Slide as expanding the news XXXX. by recurring [indiscernible] we meaningful on local reporting our that This look encompasses halfway digital coverage are everything breaking with an focused We change in of local revenue foundation. serve. digital sustainable investigative audiences and business offers end from the

and in expand presentations emphasis by experience dog to and storytelling and that by using with video investments with one of an and our digital We've digital have towards we growth. made numbers. our our native our talent. Pillar a Pillar digital our and subscribers on the audience by about we redesigned XXX,XXX content, uplift investigative and our to comes type community improving user progress area products audio. we serve. change using accelerating leads subscribers significant data world grow conversation public the the journalism audiences. in analysis reflects this XXX,XXX Our This halfway digital the to We've goal talent two on recently digital as We outside tremendous transformation subscription made XXXX. storytelling on content about watch digital that goal and order progress our top best-in-class providing digital in in how of understand our communities door. our right work enhance hiring are local compelling the important enhance can an substantial the We've or products approach than is products These from more hired digital focused technology service team reporting multimedia is

data We our nearly and X users to are users million we known deploying market have known leveraging technology and subscribers. a addressable and huge of to tactics cutting-edge convert digital

Slide Turning to XX.

and year offerings third video local to through and tech In and fiscal XXXX, Our powerful both specialized Amplified over looking driven first-party advanced achieved partner access, million, With custom full and prior and for growth. year strong of operated revenue $XX expanding on category advertisers our content data year. for Amplified our data XX% diversify has products. expertise, up Amplified digital the a scalable regional drive businesses focuses pillar ad owned

revenue, fuel advertising digital for margin our audience While Amplified operated engine high owned line has the revenue. and top digital growth massive

attract Our owned properties and operated massive audiences.

more management. of through three annual advertising will content to digital offering Execution XXXX. $XXX Tim our advertising opportunities video our in revenue inventory strong of take drive are expected million boost taxes branded Pillar We track of now cost sustainable digital us record is to and revenue.

Tim Millage

environment million newsprint headwinds including structure. on print profitability our structure. our prices demand faced the of managing of of example way as that are our the fiscal for rising in in our products. and a number impact We on $X during the cost cost is dealing increase XX% impacting remained a changes a year, focused increase One as this Xx with are in One business total prices we XXXX, addressing had we inflationary see has print

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

these actions that As action an reduction to we $XX million. executed to annualized expense a from last and we cash in early than our reduce $XX of our we the began XXXX. result on review, achieved on cost $XX to by of these structure expect cost in And we more expect Execution million basis reduce quarter, flow-through third costs million by reductions cash the of quarters two FY in 'XX. impact the this

we as transformation legacy continued As cost year XX, fiscal shown expect on reductions XXXX. our in of business Slide part

'XX, remain The investments Three to Pillar our we the incremental our on is transformation and at priority aligned include and expect driving short-term realized we expected to legacy sustainable in summarized in fiscal we low our fiscal focused that year improve outlook. on digital will development $XXX continued with million expect subscriber year, our expected between growth. digital growth on be through which main products Lee's is Slide revenue Total While began profitability XX% reducing to print transparency give local are to of short-term to fiscal invest and revenue million providing year. talent million In that drive that we of revenue $XX cost to clarity aim results. and progress. drive where fiscal Amplified growth. margin And continue better revenue strategy. 'XX long-term digital drive both through At in we content, in that to have be the of a and mind, impact Digital digital digital end, our $XXX Strategy the we XX, to growth, digital investments and we year Growth digital transformation. long-term efficiencies are on metrics practice our With business, areas In our

the guiding of to Only a nearly at fiscal increase XXX or are We or XXX,XXX subscribers growth. end year Digital in the subscribers XX%

we in side, digital expect costs offset by cost fiscal X% cash between business transformation On 'XX the to and year to due investments. efforts, reduce continued by X% partially incremental

a to are and our with guiding strong digital year full reduction continued to guidance cost million. million With the between structure, $XX revenue adjusted we of combined $XXX EBITDA

amount since refinancing. the end down debt at quarter Moving the million to $XXX of of $XXX principal million, was fourth Slide The XX. our

important a our as we As us reminder, strategy. favorable that Berkshire has agreement incredibly terms with our for are credit execute

Importantly, with the agreement flexibility fixed a amortization payments and no to XX-year runway. covenants us performance fixed These our financial a factors, give transform make rate has investments interest and necessary the no and lead. along

during any XXXX. pension not Our year expect pensions aggregate the we fiscal in do [indiscernible], contributions

to opportunities we monetize facilitates real identify to Finally, our which debt estate, repayment. continue accelerated

have generated We more asset estate. from million real of opportunities sales X monetize last and the exist proceeds $XX to over years

a And back that, to target leverage achieve Kevin is wrap reminder, goal by will end our it to of of turn XXXX. long-term As the X.Xx our to under up. with I

Kevin Mowbray

on Directors our growth our significant value long-term Board of execution Thanks, leadership sets for strategy, Under stage the Tim. continued oversight guidance creation. our the of team and and

We year tremendous Digital results our we in towards Growth and progress fourth the Strategy. are and very are pleased the full Three quarter making with target our Pillar

for Digital Pillar that our at creating core strategy Three Strategy is execution value of shareholders. the is Our the the thesis Growth of and foundation investment of

creation the creates our up, revenue entire cash recurring to cash sustainable long-term drive to multiple for expansion and driving efforts sheet path debt and A stronger reduction. significant will value aims grow their in fuel team by fueled thank a for shareholders. strategy which balance revenue operating with wrap flow, transformation. digital To increasing Our improved digital combined flow Lee I'd to free strong our like

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

Operator

Michael with [Operator Instructions] NOBLE Our from first comes Kupinski Markets. question Capital

open. is Your line

Michael Kupinski

of first congratulate expectations, so my of I and congratulations. want questions. all, you. Thank your team. to Couple Well, Exceeded job. you Great

were Your which it changes Digital obviously have in know obviously, quarter. just accelerated the all of terms expectations. but have growth like from acceleration any my And wondering in you you any digital changes strong, significant have there more your or was I pay of quarters. that the But quarter, accounted in promotions may anything that, I the Only previous exceeded if subscriptions were driving may the been time, in that the wall had for that successful subscriptions the

Kevin Mowbray

have using doing convert didn't data drive in we analytical and are to than subscribers. pay they our any But seeing payroll. We our success that wall, time once using insight one more our approach thing changes analytics sophisticated we more are ever big is Only that users to with Digital before hit and

Michael Kupinski

guidance if way, fiscal Got in my the for Digital And 'XX just but is that yet provide you. Subscription by of provided in which on your XXXX? guidance, wondering theme, prospect will discounts? Only XXXX a line you staying terms with very plan of be Or the did expectations, was revenue, to in not you Or would do driving I drive subscriber due Only that guidance. of rate, fiscal more was strategy? rate strong that the you Digital to

Tim Millage

Hey, Mike, Tim. this is

I successful as driving well in rate growth think been at growth we’ve throughout digital as subscribers. FY unit 'XX

subscription September September, fact, a to rates. XX% In we increase digital in from saw

expect that subscription And to XXXX. success growing so throughout we've in and forward lot of our rates a had carry

digital revenue, to. fuel for we that that So expect we continued revenue digital in going outlined significant to subscription do growth targets we've the help total that's and guided

Michael Kupinski

Got you.

or starting some might to be slowing in Are seen little some the the looking seeing and And of print Fed, down advertising revenue print economy. XX% what the on side decline bit the just kind from anticipating you of of we increases tone advertising are of terms rate if first talk quarter. of now quarter? see I about in can fiscal moderation in what at you the you the as rate was that that a in are the further wondering mentioned we've in was just You

Kevin Mowbray

call given Well, choppiness or though with where success are advertising these business really into be seeing models. accounts down what we Walmart's a what's world of for the of national we and going seeing are is of key let buckets What on me that for your couple break we've you. relationships Target's, years. sort had on to their advertiser, with the is we many, local Where strong that many

the business. right have help We solutions really print-digital their to them grow

Michael Kupinski

on particular mean, add there? color of business results strong mean, grew color Got there you I I more you. Amplified that regions? delivered specific Amplified. was growth And additional can that add can you fueling quarter. very any on exceptional that you in what's wondering the then fueled strongly categories that if the I Were other on growth

Kevin Mowbray

driver 'XX, in would had will lot we the well. continue we a outside services success throughout Sure. But I selling video and of sell of what year fiscal as Well, is of for our Digital have characterize of is year big 'XX. our a Lee, and and services outside fiscal it in Amplified too all markets also Amplified growth

Michael Kupinski

Got question. final you. a just And then

what newsprint been see have other particularly indicated a starting costs any inflationary the earlier what labor bit. in Are moderation to to you’ve starting year or moderation cost seem has you companies what terms little some and seen be of seeing whether any now? you're Some see in impact that it or in this trends and be there see cost, from you're from things -- you to earlier moderating

Tim Millage

Yes.

is you what said that's exactly right. think I

a down to that in see comments stable. we we see to little bit. to may actually, And related start that's more are that We moderation. our been starting factor to come pointed The newsprint, big

in [indiscernible]. what seeing So you mentioned certainly, as is some that's that well are of we what

Michael Kupinski

through year, some guidance really not then trends of are of additional in moderation million earlier went $XX your -- in any XXXX, factored that because fiscal those for you're be indicating type XXXX, and fiscal cuts in savings, terms expense terms this savings that $XX million in that you correct? cost would in And of of into

Tim Millage

me let Well, clarify.

will year actions the impact. million I mentioned realize was $XX last impact this the that have that full on we So we as took incremental that year an

And $XX were about million. talking what so the really that's we

Michael Kupinski

you. Okay, got

all Congratulations. you. Thank That’s Okay. I have.

Kevin Mowbray

Mike. Thanks,

We more web from have the no either. questions

Operator

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

Lee Enterprises (LEE) 8 Dec 222022 Q4 Earnings call transcript