Lee Enterprises, Incorporated (NASDAQ: LEE), a digital-first
subscription platform providing high quality, trusted, local news,
information and a major platform for advertising in 73 markets,
today reported preliminary third quarter fiscal 2024 financial
results(3) for the period ended June 23, 2024.
“We made tremendous progress on our digital
transformation in the third quarter, and we are pleased to announce
we have achieved the inflection point where more than 50% of our
revenue is digital," said Kevin Mowbray, Lee's President and Chief
Executive Officer. “The revenue inflection point is important as it
stabilizes our operating performance, making us less impacted by
the print business going forward. Nearly two-thirds of our total
company gross margin was derived from digital sources, positioning
us close to our goal of being sustainable from our digital products
only. This positions us well to be vibrant and growing in the
medium and long-term with the rapid growth of our digital revenue
streams.”
“Our investment thesis is grounded in this transformation as we
replace print revenue and margin with digital revenue and margin
that are growing at a rapid clip. Total Digital Revenue has grown
17% annually over the last three years, and we expect this strong
growth to continue,” Mowbray added.
“Our third quarter performance was highlighted
by a marked improvement in revenue trends alongside effective
management of operating expenses. As a result of our engaging
hyper-local content, improved brand awareness, and sophisticated
marketing campaigns, we now have 748,000 digital subscribers, a 23%
increase over the prior year. Digital-only subscription revenue
grew 34%(2) and totaled $79 million over the last twelve months,
more than halfway towards our long-term target of $150 million. On
the advertising side, Amplified Digital® Agency’s third quarter
revenue grew 12%(2) over the prior year with annualized revenue
more than $100 million,” Mowbray added.
“As a result of the persistent acceleration of
print revenue declines, we are updating our full year Adjusted
EBITDA(4) outlook to the range of $73 million to $78 million and
Total Cash Costs(4) between $550 million and $560 million. This
update is necessary as we manage operating expenses through the
acceleration of secular print revenue trends combined with moving
through cyclical changes in the advertising environment. The print
business will be less impactful on future operating results due to
the digital revenue inflection point and margin transformation.
With only one-third of the Company’s gross margin tied to print
products in the third quarter, changes in the print business will
be less impactful on our operating results in the future,” said
Mowbray.
“Given the strong performance of our digital
revenue streams, we are reaffirming our Total Digital Revenue
outlook of between $310 million and $330 million.”
"The rapid and consistent growth of our digital
subscriptions and revenue, the expansion of Amplified Digital®
Agency marketing solutions, and thoughtful investments into our
digital business are proof we are steadily becoming sustainable
solely from the revenue and cash flow generated from our digital
products," added Mowbray.
Key Third Quarter
Highlights:
- Total operating revenue was $151
million. Operating revenue was affected by accelerated declines of
our print revenue streams and eliminated certain print products,
partially offset by growth in digital revenue.
- Total Digital
Revenue was $76 million, a 9% increase over the prior year(2), and
represented 50% of our total operating revenue.
- Revenue from
digital-only subscribers totaled $21 million up 34% over the prior
year(2).
- Digital
advertising and marketing services revenue represented 72% of our
total advertising revenue and totaled $50 million.
- Digital services
revenue, which is predominantly from BLOX Digital, totaled $5
million in the quarter.
- Operating expenses
totaled $147 million and Cash Costs totaled $138 million, a 8% and
8% decrease compared to the prior year, respectively.
- Adjusted EBITDA
totaled $15 million.
2024 Fiscal Year Outlook
(updated):
Total Digital Revenue |
$310 million (+13% YOY) - $330 million (+21% YOY) |
Digital-only subscribers |
771,000 (+7% YOY) |
Adjusted EBITDA |
$73 million (-14% YOY) - $78 million (-8% YOY) |
|
|
Debt and Free Cash Flow:
The Company has $453 million of debt outstanding
under our Credit Agreement(5) with BH Finance. The financing has
favorable terms including a 25-year maturity, a fixed annual
interest rate of 9.0%, no fixed principal payments, and no
financial performance covenants.
As of and for the period ended June 23, 2024:
- The principal
amount of debt decreased $3 million year to date, and totals
$453 million.
- Cash on the balance sheet totaled
$13 million. Debt, net of cash on the balance sheet, totaled $439
million.
- Capital expenditures totaled $4
million for the quarter and $7 million year to date. We expect
approximately $10 million of capital expenditures in FY24.
- We expect cash paid for income
taxes to total between $9 million and $14 million in 2024.
- We do not expect any material
pension contributions in the fiscal year as our plans are fully
funded in the aggregate.
Conference Call Information:
As previously announced, we will hold an
earnings conference call and audio webcast today at 9 a.m. Central
Time. The live webcast will be accessible at www.lee.net and will
be available for replay 24 hours later. Analysts have been invited
to ask questions on the call. Questions from other participants may
be submitted by participating in the webcast. To participate in the
live conference call via telephone, please register here. Upon
registering, a dial-in number and unique PIN will be provided to
join the conference call.
About Lee:
Lee Enterprises is a major subscription and
advertising platform and a leading provider of local news and
information, with daily newspapers, rapidly growing digital
products and nearly 350 weekly and specialty publications serving
73 markets in 26 states. Our core commitment is to provide
valuable, intensely local news and information to the communities
we serve. Our markets include St. Louis, MO; Buffalo, NY; Omaha,
NE; Richmond, VA; Lincoln, NE; Madison, WI; Davenport, IA; and
Tucson, AZ. Lee Common Stock is traded on NASDAQ under the symbol
LEE. For more information about Lee, please visit www.lee.net.
FORWARD-LOOKING STATEMENTS — The Private
Securities Litigation Reform Act of 1995 provides a “safe harbor”
for forward-looking statements. This release contains information
that may be deemed forward-looking that is based largely on our
current expectations, and is subject to certain risks, trends and
uncertainties that could cause actual results to differ materially
from those anticipated. Among such risks, trends and other
uncertainties, which in some instances are beyond our control,
are:
- We may be required to indemnify the
previous owners of BH Media or The Buffalo News for unknown legal
and other matters that may arise;
- Our ability to manage declining
print revenue and circulation subscribers;
- The impact and duration of adverse
conditions in certain aspects of the economy affecting our
business;
- Changes in advertising and
subscription demand;
- Changes in technology that impact
our ability to deliver digital advertising;
- Potential changes in newsprint,
other commodities and energy costs;
- Interest rates;
- Labor costs;
- Significant cyber security breaches
or failure of our information technology systems;
- Our ability to achieve planned
expense reductions and realize the expected benefit of our
acquisitions;
- Our ability to maintain employee
and customer relationships;
- Our ability to manage increased
capital costs;
- Our ability to maintain our listing
status on NASDAQ;
- Competition; and
- Other risks detailed from time to
time in our publicly filed documents.
Any statements that are not statements of
historical fact (including statements containing the words “may”,
“will”, “would”, “could”, “believes”, “expects”, “anticipates”,
“intends”, “plans”, “projects”, “considers” and similar
expressions) generally should be considered forward-looking
statements. Statements regarding our plans, strategies, prospects
and expectations regarding our business and industry and our
responses thereto may have on our future operations, are
forward-looking statements. They reflect our expectations, are not
guarantees of performance and speak only as of the date the
statement is made. Readers are cautioned not to place undue
reliance on such forward-looking statements, which are made as of
the date of this report. We do not undertake to publicly update or
revise our forward-looking statements, except as required by
law.
Contact:IR@lee.net(563) 383-2100
CONSOLIDATED STATEMENTS OF
OPERATIONS(UNAUDITED)
|
Three months ended |
Nine months ended |
(Thousands of Dollars, Except Per Common Share Data) |
June 23,2024 |
June 25,2023 |
June 23,2024 |
June 25,2023 |
|
|
|
|
|
Operating revenue: |
|
|
|
|
Print advertising revenue |
18,941 |
|
29,216 |
|
62,118 |
|
102,503 |
|
Digital advertising and marketing services revenue |
49,903 |
|
49,904 |
|
141,747 |
|
143,903 |
|
Advertising and marketing services revenue |
68,844 |
|
79,120 |
|
203,865 |
|
246,406 |
|
Print subscription revenue |
47,605 |
|
61,842 |
|
148,443 |
|
193,799 |
|
Digital subscription revenue |
20,701 |
|
15,715 |
|
60,429 |
|
42,039 |
|
Subscription revenue |
68,306 |
|
77,557 |
|
208,872 |
|
235,838 |
|
Print other revenue |
8,278 |
|
9,773 |
|
24,839 |
|
30,542 |
|
Digital other revenue |
5,150 |
|
4,860 |
|
15,230 |
|
14,343 |
|
Other revenue |
13,428 |
|
14,633 |
|
40,069 |
|
44,885 |
|
Total operating revenue |
150,578 |
|
171,310 |
|
452,806 |
|
527,129 |
|
Operating expenses: |
|
|
|
|
Compensation |
59,278 |
|
63,582 |
|
175,757 |
|
207,859 |
|
Newsprint and ink |
4,096 |
|
6,346 |
|
13,101 |
|
20,244 |
|
Other operating expenses |
74,177 |
|
80,010 |
|
221,247 |
|
249,353 |
|
Depreciation and amortization |
6,850 |
|
7,478 |
|
21,438 |
|
23,097 |
|
Assets (gain) loss on sales, impairments and other, net |
(1,421 |
) |
(900 |
) |
4,727 |
|
(4,255 |
) |
Restructuring costs and other |
3,795 |
|
3,780 |
|
12,199 |
|
8,120 |
|
Total operating expenses |
146,775 |
|
160,296 |
|
448,469 |
|
504,418 |
|
Equity in earnings of associated companies |
1,122 |
|
1,194 |
|
3,869 |
|
3,534 |
|
Operating income |
4,925 |
|
12,208 |
|
8,206 |
|
26,245 |
|
Non-operating (expense) income: |
|
|
|
|
Interest expense |
(10,082 |
) |
(10,235 |
) |
(30,427 |
) |
(31,144 |
) |
Pension and OPEB related benefit and other, net |
617 |
|
555 |
|
1,096 |
|
2,255 |
|
Curtailment/Settlement gains |
— |
|
— |
|
3,593 |
|
— |
|
Total non-operating expense, net |
(9,465 |
) |
(9,680 |
) |
(25,738 |
) |
(28,889 |
) |
(Loss) income before income taxes |
(4,540 |
) |
2,528 |
|
(17,532 |
) |
(2,644 |
) |
Income
tax (benefit) expense |
(849 |
) |
394 |
|
(3,438 |
) |
(1,237 |
) |
Net (loss) income |
(3,691 |
) |
2,134 |
|
(14,094 |
) |
(1,407 |
) |
Net
income attributable to non-controlling interests |
(575 |
) |
(631 |
) |
(1,663 |
) |
(1,876 |
) |
(Loss) income attributable to Lee Enterprises, Incorporated |
(4,266 |
) |
1,503 |
|
(15,757 |
) |
(3,283 |
) |
Loss per
common share: |
|
|
|
|
Basic: |
(0.73 |
) |
0.26 |
|
(2.68 |
) |
(0.56 |
) |
Diluted: |
(0.73 |
) |
0.25 |
|
(2.68 |
) |
(0.56 |
) |
DIGITAL / PRINT REVENUE
COMPOSITION(UNAUDITED)
|
Three months Ended |
Nine months Ended |
(Thousands of Dollars) |
June 23,2024 |
June 25,2023 |
June 23,2024 |
June 25,2023 |
|
|
|
|
|
|
|
|
|
Digital Advertising and Marketing Services Revenue |
49,903 |
|
49,904 |
|
141,747 |
|
143,903 |
|
Digital Only Subscription Revenue |
20,701 |
|
15,715 |
|
60,429 |
|
42,039 |
|
Digital Services Revenue |
5,150 |
|
4,860 |
|
15,230 |
|
14,343 |
|
Total Digital Revenue |
75,754 |
|
70,479 |
|
217,406 |
|
200,285 |
|
Print Advertising Revenue |
18,941 |
|
29,216 |
|
62,118 |
|
102,503 |
|
Print Subscription Revenue |
47,605 |
|
61,842 |
|
148,443 |
|
193,799 |
|
Other Print Revenue |
8,278 |
|
9,773 |
|
24,839 |
|
30,542 |
|
Total Print Revenue |
74,824 |
|
100,831 |
|
235,400 |
|
326,844 |
|
Total Operating Revenue |
150,578 |
|
171,310 |
|
452,806 |
|
527,129 |
|
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES(UNAUDITED)
The table below reconciles the non-GAAP financial performance
measure of Adjusted EBITDA to Net loss, its most directly
comparable U.S. GAAP measure:
|
Three months ended |
Nine months ended |
(Thousands of Dollars) |
June 23,2024 |
June 25,2023 |
June 23,2024 |
June 25,2023 |
|
|
|
|
|
Net (loss) income |
(3,691 |
) |
2,134 |
|
(14,094 |
) |
(1,407 |
) |
Adjusted to exclude |
|
|
|
|
Income tax (benefit) expense |
(849 |
) |
394 |
|
(3,438 |
) |
(1,237 |
) |
Non-operating expenses, net |
9,465 |
|
9,680 |
|
25,738 |
|
28,889 |
|
Equity in earnings of TNI and MNI |
(1,122 |
) |
(1,194 |
) |
(3,869 |
) |
(3,534 |
) |
Depreciation and amortization |
6,850 |
|
7,478 |
|
21,438 |
|
23,097 |
|
Restructuring costs and other |
3,795 |
|
3,780 |
|
12,199 |
|
8,120 |
|
Assets (gain) loss on sales, impairment and other, net |
(1,421 |
) |
(900 |
) |
4,727 |
|
(4,255 |
) |
Stock compensation |
474 |
|
462 |
|
1,189 |
|
1,384 |
|
Add: |
|
|
|
|
Ownership share of TNI(6)and MNI EBITDA(6)(50%) |
1,323 |
|
1,406 |
|
4,644 |
|
4,128 |
|
Adjusted EBITDA |
14,824 |
|
23,240 |
|
48,534 |
|
55,185 |
|
The table below reconciles the non-GAAP
financial performance measure of Cash Costs to Operating expenses,
the most directly comparable U.S. GAAP measure:
|
Three months ended |
Nine months ended |
(Thousands of Dollars) |
June 23,2024 |
June 25,2023 |
June 23,2024 |
|
June 25,2023 |
|
|
|
|
|
|
Operating expenses |
146,775 |
|
160,296 |
|
448,469 |
|
504,418 |
|
Adjustments |
|
|
|
|
|
Depreciation and amortization |
6,850 |
|
7,478 |
|
21,438 |
|
23,097 |
|
Assets (gain) loss on sales, impairments and other, net |
(1,421 |
) |
(900 |
) |
4,727 |
|
(4,255 |
) |
Restructuring costs and other |
3,795 |
|
3,780 |
|
12,199 |
|
8,120 |
|
Cash Costs |
137,551 |
|
149,938 |
|
410,105 |
|
477,456 |
|
The table below reconciles the non-GAAP
financial performance measure of Same-store Revenues to Operating
Revenues, its most directly comparable U.S. GAAP measure:
|
Three months ended |
Nine months ended |
(Thousands of Dollars) |
June 23,2024 |
June 25,2023 |
June 23,2024 |
June 25,2023 |
|
|
|
|
|
Print Advertising Revenue |
18,941 |
|
29,216 |
|
62,118 |
|
102,503 |
|
Exited operations |
(2 |
) |
(4,030 |
) |
(908 |
) |
(18,262 |
) |
Same-store, Print Advertising Revenue |
18,939 |
|
25,186 |
|
61,210 |
|
84,241 |
|
Digital Advertising and Marketing Services Revenue |
49,903 |
|
49,904 |
|
141,747 |
|
143,903 |
|
Exited operations |
— |
|
(800 |
) |
(95 |
) |
(2,454 |
) |
Same-store, Digital Advertising and Marketing Services Revenue |
49,903 |
|
49,104 |
|
141,652 |
|
141,449 |
|
Total Advertising Revenue |
68,844 |
|
79,120 |
|
203,865 |
|
246,406 |
|
Exited operations |
(2 |
) |
(4,830 |
) |
(1,004 |
) |
(20,716 |
) |
Same-store, Total Advertising Revenue |
68,842 |
|
74,290 |
|
202,861 |
|
225,690 |
|
Print Subscription Revenue |
47,605 |
|
61,842 |
|
148,443 |
|
193,799 |
|
Exited operations |
— |
|
(528 |
) |
(174 |
) |
(1,789 |
) |
Same-store, Print Subscription Revenue |
47,605 |
|
61,314 |
|
148,269 |
|
192,010 |
|
Digital Subscription Revenue |
20,701 |
|
15,715 |
|
60,429 |
|
42,039 |
|
Exited operations |
— |
|
(282 |
) |
(84 |
) |
(776 |
) |
Same-store, Digital Subscription Revenue |
20,701 |
|
15,433 |
|
60,345 |
|
41,263 |
|
Total Subscription Revenue |
68,306 |
|
77,557 |
|
208,872 |
|
235,838 |
|
Exited operations |
— |
|
(810 |
) |
(259 |
) |
(2,566 |
) |
Same-store, Total Subscription Revenue |
68,306 |
|
76,747 |
|
208,613 |
|
233,272 |
|
Print Other Revenue |
8,278 |
|
9,773 |
|
24,839 |
|
30,542 |
|
Exited operations |
— |
|
(107 |
) |
(1 |
) |
(323 |
) |
Same-store, Print Other Revenue |
8,278 |
|
9,666 |
|
24,838 |
|
30,219 |
|
Digital Other Revenue |
5,150 |
|
4,860 |
|
15,230 |
|
14,343 |
|
Exited operations |
— |
|
— |
|
1 |
|
(1 |
) |
Same-store, Digital Other Revenue |
5,150 |
|
4,860 |
|
15,231 |
|
14,342 |
|
Total Other Revenue |
13,428 |
|
14,633 |
|
40,069 |
|
44,885 |
|
Exited operations |
— |
|
(107 |
) |
(1 |
) |
(324 |
) |
Same-store, Total Other Revenue |
13,428 |
|
14,526 |
|
40,068 |
|
44,561 |
|
Total Operating Revenue |
150,578 |
|
171,310 |
|
452,806 |
|
527,128 |
|
Exited operations |
(1 |
) |
(5,748 |
) |
(1,263 |
) |
(23,605 |
) |
Same-store, Total Operating Revenue |
150,577 |
|
165,562 |
|
451,543 |
|
503,523 |
|
NOTES
(1) Total Digital Revenue is defined as digital
advertising and marketing services revenue (including Amplified
Digital® Agency), digital-only subscription revenue and digital
services revenue.
(2) Same-store revenues is a non-GAAP
performance measure based on U.S. GAAP revenues for Lee for the
current period, excluding exited operations. Exited operations
include (1) business divestitures and (2) the elimination of
stand-alone print products discontinued within our markets.
(3) This earnings release is a preliminary
report of results for the periods included. The reader should refer
to the Company's most recent reports on Form 10-Q and on Form 10-K
for definitive information.
(4) The following are non-GAAP (Generally
Accepted Accounting Principles) financial measures for which
reconciliations to relevant U.S GAAP measures are included in
tables accompanying this release:
- Adjusted EBITDA is
a non-GAAP financial performance measure that enhances financial
statement users overall understanding of the operating performance
of the Company. The measure isolates unusual, infrequent or
non-cash transactions from the operating performance of the
business. This allows users to easily compare operating performance
among various fiscal periods and how management measures the
performance of the business. This measure also provides users with
a benchmark that can be used when forecasting future operating
performance of the Company that excludes unusual, nonrecurring or
one-time transactions. Adjusted EBITDA is a component of the
calculation used by stockholders and analysts to determine the
value of our business when using the market approach, which applies
a market multiple to financial metrics. It is also a measure used
to calculate the leverage ratio of the Company, which is a key
financial ratio monitored and used by the Company and its
investors. Adjusted EBITDA is defined as net income (loss), plus
non-operating expenses, income tax expense, depreciation and
amortization, assets loss (gain) on sales, impairments and other,
restructuring costs and other, stock compensation and our 50% share
of EBITDA from TNI and MNI, minus equity in earnings of TNI and
MNI.
- Cash Costs
represent a non-GAAP financial performance measure of operating
expenses which are measured on an accrual basis and settled in
cash. This measure is useful to investors in understanding the
components of the Company’s cash-settled operating costs.
Periodically, the Company provides forward-looking guidance of Cash
Costs, which can be used by financial statement users to assess the
Company's ability to manage and control its operating cost
structure. Cash Costs are defined as compensation, newsprint and
ink and other operating expenses. Depreciation and amortization,
assets loss (gain) on sales, impairments and other, other non-cash
operating expenses and other expenses are excluded. Cash Costs also
exclude restructuring costs and other, which are typically paid in
cash.
(5) The Company's debt is the $576 million term
loan under a credit agreement with BH Finance LLC dated January 29,
2020 (the "Credit Agreement"). Excess Cash Flow is defined under
the Credit Agreement as any cash greater than $20,000,000 on the
balance sheet in accordance with U.S. GAAP at the end of each
fiscal quarter, beginning with the quarter ending June 28,
2020.
(6) TNI refers to TNI Partners publishing
operations in Tucson, AZ. MNI refers to Madison Newspapers, Inc.
publishing operations in Madison, WI.
Lee Enterprises (NASDAQ:LEE)
過去 株価チャート
から 8 2024 まで 9 2024
Lee Enterprises (NASDAQ:LEE)
過去 株価チャート
から 9 2023 まで 9 2024