Earnings call transcript Q1 2023

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Operator

Welcome to the Lee Enterprises 2023 First Quarter Webcast and Conference Call. The 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 under the event section.

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

Josh Rinehults

Good morning. us. joining for you Thank

Speaking on Chief Chief Mowbray, and are Officer, morning’s Officer; and call Executive President, Treasurer. Kevin Tim and President this Millage, Financial Vice

for news Earlier found issued at at earnings supplemental Please lee.net at includes XXXX. release also our as available first information. well investors.lee.net financial with It today, that is fiscal a presentation preliminary major we as refer of quarter our results websites. to

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

including in cash which measures the During the call, news we our are accompanying refer the measures, EBITDA are included costs, adjusted to relevant defined release. Reconciliations financial certain to release. tables GAAP in and non-GAAP

open Mowbray. presentation Chief following is to the earnings our for now open discussion Slide of and on will conversation Kevin along. President the X And Kevin those Officer, Executive the

Kevin Mowbray

everyone. Josh, vibrant really good company. digitally morning, into by I’m transforming you, Thank pace centric encouraged at a which we’re and the Lee

digital XXX,XXX, and compared subscription our subscribers now digital total with pleased the prior We’re an strong XX% of increase growth to year.

rates XX% Amplified with Digital We’re subscriptions increased XX%. from revenue increased year. higher revenue also XX% driving prior digital revenue as advertising compared to Digital the of

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

transformation to Pillar Our Three Digital company. centric digitally Growth vibrant a guiding our is Strategy

our subscriber result We’re XXXX. The recurring offerings digital our $XXX expanding execution expected revenue sustainable to for million and focused and on expanding digital digital of revenue growing our local are advertisers. in strategy diversifying audiences, and base by

at first revenue outpaced Digital has more the subscriber well industry months. platform Anti-digital an in quarter. last XX growing up agency outpace growth subscription last is for continues to the nearly quarters. Lee XX $XXX in the impressive million peers Lee than the last our subscribers, from significantly Total to XXX,XXX has digital digital the with with XX% industry media digital as XX growth grown over revenue XX% months. the fastest

a change represents digital quarter. Our revenue. of total in now digital operating the transformation our rapid is revenue of the in Total first revenue our driving mix XX%

BLOX Before solution, modern digital BLOX first even testament rich With BLOX solutions. refreshed Digital will success The to of we brand new operating new CMS. is identity and we’re as history to into as flagship software-as-a-service integrated month. within TownNews chapter celebrates a valuable Digital the positioned a get share results, a name portfolio, its the next quarter began last about BLOX excited announced our Digital to a deliver look, and mission the better is

transformation expansion Lee subscribers we and as Digital the customers, our and value for BLOX execute Supporting modernization Lee, our and priority a shareholders. for is of enhance digital enterprise-wide

strong many revenue Strategy. pace, is Total digital the first strong a Pillar operating had Digital XXX,XXX with the to quarter consecutive at digital-only was growth we XX%, our after delivered consistent XX% significant subscribers in our growth quarters digital driven end We Moving subscription growth of the of of by first continued This in rate million to up Digital quarter, revenue. Growth total $XXX the products. At operating digital XX% growth. growth quarter. execution with revenue revenue Three results. a

digital revenue now the at $XX XX% a Digital. the increased by side, quarter. Amplified Amplified advertising year, in the in advertising totals compared On revenue million to first revenue growth last XX% quarter driven

We in cyclical have quarter. accelerated revenue been decline XX% of million, pace challenges the the presented $XXX first year-over-year, with Total print an as was headwinds decline.

industry-leading commitments be Three our our year and adjusted execution our team growth EBITDA the smart of to rapid digital Strategy have towards However, reaffirm These this kept track adjusted to couldn’t their I a us proud on and full commitment Digital our importantly plans toward Growth more for guidance for Pillar thinking, drive of achieving goals. efforts revenue EBITDA. steadfast

over it on Tim more turn first I’ll now, results. with our details And to quarter

Timothy Millage

and Kevin, you, good morning, everyone. Thank

revenue industry-leading of maximizing to were digital talent expenses addition in Decreases cash down driving strategy, prices. achieving digital growth the we leverage strategic cost of efforts, growth, increased on target. sold general costs to were million, and are long-term and tied in our business Operating investments digital and $XXX by our rising technology focused legacy to In goods X%. business attributed continued and costs totaled cash partially transformation our digital offset profitability

EBITDA For the $XX million. quarter, we of reported adjusted

this, the earlier, faced to on managing number of for market as profitability we our demand as cyclical a in As of uncertain we and changes these by business begin conditions. One accelerated we headwinds have driven services. way largely are the products are headwinds mentioned fiscal Kevin XXXX, print addressing focused

further We as manufacturing our well continue services. cost in and as to identify corporate opportunities distribution structure optimize to

various XXXX. quarter, reductions executed $XX $XX an early additional Executing achieve more began to our we expect the realized and end, $XX early be year. of of that remainder million in the To cost million cash costs to in the the than fiscal which will reduction quarter, million second second the annualized actions of we in in year

annualized identified X last cost the and $XXX of implemented actions. Over years, million we have over

growth. in business steadfast. technology tied sustainable While our areas we we reducing our and and drive to structure Therefore, revenue and main of on our focused news to to and print digital our excellence digital business invest our to remain growing cost is in of local legacy the future, operational continue commitment profits, priority long-term high-quality talent remains

cash our future will and fiscal costs drive our impact XXXX. targeted investments year digital will The in

the investments expected in goods impact transformation. and in by expect we to our fiscal million our of margin These digital sold cash costs but on talent We approximately making increase $XX year. Lee’s new increased have costs short-term the and cost digital are total technology a will drive profile, to are

the strengthen sheet. end our principal debt We was balance the continue million. of amount to $XXX of quarter first at The

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

which opportunities that continue net second to and to first non-core assets, facilitate sale were closed pay of our we asset quarter, monetize accelerated we down In proceeds sales, to reduction. Finally, quarter. identify debt the the from used the debt $X.X million in

sale phases are additional to various We monetize, have which in an $XX of non-core process. the million of assets identified

goal our our As well Growth our with commitment our long-term is Pillar as target Three balance to of a sheet, under solid Digital to achieve X.X leverage as of reminder, improving our execution times. Strategy,

conditions, focused digital of our reduction XX% a the time, with implemented current At guidance, cost lowering summarizing XX, of XXXX significant between midpoint Slide are the range the growth account outlook. total on our we fiscal for expected XX% we our are year-over-year. print market the To On that widening support range the revenue and business. same costs we

progress on continued year million. our digital cost adjusted With $XX our we’re reaffirming to $XXX and these target EBITDA of actions fiscal transformation, million

over to up. And with that, to I it will turn wrap Kevin back

Kevin Mowbray

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

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

to efforts our it Lee their in entire for thank team I’d like wrap To driving the transformation. up,

ever right better the create positioned than the readers, shareholders. believe long-term and team have advertisers the We we’re and board, users, value strategy, our our right and our right for to I

you team please questions. for Operator, our remarks. the have. concludes This on questions the for The will line line open remain may

Operator

this a from [Operator of session. question-and-answer Our line question Thank Markets. Instructions] Capital we you. the comes conducting time, NOBLE will be Michael At Kupinski from

You open. line is

Michael Kupinski

you’re we’re you in in terms So against, or now because, a decline, thanks taking questions. us hearing a sense the quarter, print against year? what of And Any for in couple from the of here. A currently Can obviously, print kind my current morning. comps pacing we’re what that of Good questions give of us last what now? you. comping right pacing kind advertisers? seeing can easing specifics from quick advertising how is of sense Thank give you of driving is

Timothy Millage

Yeah. Thanks the for Thanks, Mike. question.

saw what quarter. think some we we’re is I in that seeing the the headwinds first of cyclical

there. And on We’re we in action for subscription well, guidance seeing we some think performance us At have really good really feel do some improvement. we’ve is there is We the out our the we got well of our strong, second quarter digital the some the with same quick about guidance that what as ad opportunity that side the expectations. which digital pacing is and the trend time, take to prompted did. digital as that

Michael Kupinski

aggressively. were or at of of are And you know been just And kind print of you’ve side, sense those give restructuring I charges can And kind terms if taken us rightsizing you of some – magnitude give reductions? the us not And What us guys of really sense whether pretty a the can of was point us Great. we doing wondering sense if of types I can you’re kind kind have a on cost give going? business the cost those. you actions just give of in that you of if can doing you you there. expecting cost the actually reductions this of that on

Timothy Millage

Yeah. That’s a good question.

digital a we again, are still lot two-thirds of have of costs business. departments all directly still related of So, that our costs a lot transformation. of are that the have to we part as revenue, of We revenue. to It’s print our organization tied and our that continue to evaluate

facing trends, we’ve got because some as cyclical trends, those there. we’re revenue affected support that to headwinds levers so costs the of And have revenue pull the

comp side. on of it lot the a was So

as at our costs our also costs. a vendor other those, some and We’re production, lot so to manage distribution looking of vendor well of

amount is our have it So significant of some our cost business, print to of we tied a percent sizable given still revenue.

In your restructuring looking in digits, we the on in question to at for year. high-single the millions, terms the charges are fiscal restructuring of charges, mid-

we than what a seeing bit So little year. were less last

Michael Kupinski

give us anything not side, you’re the point? you days On print on this sense point, can decreasing of what a this Are at at the – print that or that? of kind you doing you’re like

Timothy Millage

Yeah.

So we a levers of lot on side. Yeah, on we’re at the looking all options print that can options. pull

Michael Kupinski

in give costs that I know is of terms doing? portion total print you what I you. us expenses little sense, they you Can newsprint then kind give this have us been sense a know, got bit. of of can And on moderating your a -- a smaller I side. are a

Timothy Millage

prices, over Yeah. wild them ride last months rising current level seeing we are and After moderate pretty XX the at the base. a of off rapidly

Michael Kupinski

is And give us quarter? then revenue of the current growth of in you side, how the pacing digital a kind can on digital sense

Timothy Millage

with consistent quarter. the it’s in saw very So first what we

as and digital total second was revenue there the pacing we’re around up well Our quarter. XX%, in

Michael Kupinski

changes digital subscription, that we’re in in the on were of there some then And marketing account of specific for in kind changes paywalls seeing the any that growth there? you. might quarter, Got

Timothy Millage

that It’s that’s nothing and enjoy, our the and that’s all users subscription through just mining of part of the same the just that foundation our our And of that kind we tactics subscription growth. part No, time, local grind of is of platform. we’re the are deploying the to that’s we’re that decisions. data of marketing At informing digital foundation the one, content strategy. part drive going And specific. digital

at average quarters of in perspective, growing growth quarter, rates. which saw growth. is from growth same And XX the you we’re time, the industry-leading as consecutive year-over-year, unit a great And XX%

revenue that units increase in up average XX% So grow to having year-over-year XX%, we’re rate. with starting see

subs So we’re side. what digital really happy on with we’re the seeing

Michael Kupinski

a What I That’s rebranded? of the side. the change to the I are assume was to TownNews on me you Yeah. show why terrific. improvement wondering there if what led can rebrand. just well margins of the starting would as digital was And was kind give reason some you sense

Kevin Mowbray

got CMS from We’ve with beyond services. outside terms media And really and been media really go a BLOX of performance hence focused opportunity TownNews, we’ve landscape, BLOX pleased TownNews and those primarily to the it’s believe the I the great name in of sector its been above of in providing services to the Digital.

Michael Kupinski

you. Got

Thanks. right. all All Okay. have. you. Thank That’s I

Josh Rinehults

we all Kevin for it to for questions. is turn That back I remarks. will have closing

Kevin Mowbray

thank you. Well, Great.

As long-term for I mentioned appreciate our transforming employees, our on joining benefits your our business shareholders, and our remain model and for Thank we from readers the in time focused earlier, again your keenly interest We advertisers. you employers, our call. Lee. the

Operator

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

Lee Enterprises (LEE) 2 Mar 232023 Q1 Earnings call transcript