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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Lee Enterprises Inc | NASDAQ:LEE | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.03 | -0.24% | 12.51 | 10.99 | 15.80 | 12.6827 | 12.27 | 12.56 | 20,744 | 21:45:05 |
“Our third quarter digital subscription results continue to lead the industry by a significant margin, continuing the streak for the last 14 quarters. This long-standing out-performance gives us even more confidence in achieving our long-term goal of $100 million of digital-only subscription revenue," said Kevin Mowbray, Lee’s President and Chief Executive Officer. "Subscribers to our digital products totaled 606,000 in June, up 21% compared to last year and digital-only subscription revenue accelerated to 43% growth,” Mowbray added.
“Amplified Digital® revenue totaled $24 million in the quarter, a 15% increase over the prior year. Total Digital Revenue increased 15% in the third quarter, and represented 41% of our total operating revenue. The rapid pace of digital growth is tied to strong execution of our Three Pillar Digital Growth Strategy,” Mowbray added.
“Adjusted EBITDA(3) grew 1% in the third quarter. Despite a persistent industry-wide advertising slowdown and inflationary headwinds, our rapid digital growth and strong cost management is expected to drive solid Adjusted EBITDA growth in the fourth quarter,” said Mowbray.
Mowbray added, “With more visibility into the impact of persistent inflation and a softer macro environment on our operating results, we are updating our guidance resulting in full year Adjusted EBITDA of $85 million to $90 million. Our aggressive cost actions in FY23 will have a favorable impact on FY24 operating results.”
“Despite the near-term impact of the broader economic conditions on Adjusted EBITDA, the strong performance of our digital revenue streams through the first three quarters of FY23 position us well to reaffirm our FY23 targets for Total Digital Revenue and digital-only subscribers. As we continue to accelerate our digital transformation tied to our Three Pillar Digital Growth Strategy, we are confident we are well-positioned to achieve our long-term goals,” said Mowbray.
Key Third Quarter Highlights:
2023 Fiscal Year Outlook:
Total Digital Revenue | $270 million (+13% YOY) - $285 million (+19% YOY) |
Digital-only subscribers | 632,000 (+19% YOY) |
Adjusted EBITDA | $85 million (-12% YOY) - $90 million (-6% YOY) |
Debt and Free Cash Flow:
The Company has $460 million of debt outstanding under our Credit Agreement(4) 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 25, 2023:
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 75 markets in 26 states. Year to date, Lee's newspapers have an average daily circulation of 1.0 million, and our legacy websites, including acquisitions, reach more than 33 million digital unique visitors. Lee's 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:
Any statements that are not statements of historical fact (including statements containing the words “aim”, “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, including statements regarding the impacts that the COVID-19 pandemic 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 release. 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 | June 25, | June 26, | June 25, | June 26, | ||||
Data) | 2023 | 2022 | 2023 | 2022 | ||||
Operating revenue: | ||||||||
Print advertising revenue | 29,216 | 44,814 | 102,503 | 145,032 | ||||
Digital advertising revenue | 49,904 | 46,187 | 143,903 | 132,356 | ||||
Advertising and marketing services revenue | 79,120 | 91,001 | 246,406 | 277,388 | ||||
Print subscription revenue | 61,842 | 78,079 | 193,799 | 234,962 | ||||
Digital subscription revenue | 15,715 | 10,969 | 42,039 | 28,953 | ||||
Subscription revenue | 77,557 | 89,048 | 235,838 | 263,915 | ||||
Print other revenue | 9,773 | 10,671 | 30,542 | 32,430 | ||||
Digital other revenue | 4,860 | 4,317 | 14,343 | 13,600 | ||||
Other revenue | 14,633 | 14,988 | 44,885 | 46,030 | ||||
Total operating revenue | 171,310 | 195,037 | 527,129 | 587,333 | ||||
Operating expenses: | ||||||||
Compensation | 63,582 | 78,126 | 207,859 | 246,333 | ||||
Newsprint and ink | 6,346 | 7,542 | 20,244 | 22,254 | ||||
Other operating expenses | 80,010 | 88,004 | 249,353 | 258,665 | ||||
Depreciation and amortization | 7,478 | 8,818 | 23,097 | 27,445 | ||||
Assets (gain) loss on sales, impairments and other, net | (900 | ) | 1,086 | (4,255 | ) | (11,340 | ) | |
Restructuring costs and other | 3,780 | 6,072 | 8,120 | 19,862 | ||||
Total operating expenses | 160,296 | 189,648 | 504,418 | 563,219 | ||||
Equity in earnings of associated companies | 1,194 | 1,050 | 3,534 | 4,211 | ||||
Operating income | 12,208 | 6,439 | 26,245 | 28,325 | ||||
Non-operating (expense) income: | ||||||||
Interest expense | (10,235 | ) | (10,292 | ) | (31,144 | ) | (31,478 | ) |
Curtailment gain | — | — | — | 1,027 | ||||
Pension withdrawal cost | — | — | — | (2,335 | ) | |||
Pension and OPEB related benefit and other, net | 555 | 4,205 | 2,255 | 13,525 | ||||
Total non-operating expense, net | (9,680 | ) | (6,087 | ) | (28,889 | ) | (19,261 | ) |
Income (loss) before income taxes | 2,528 | 352 | (2,644 | ) | 9,064 | |||
Income tax expense (benefit) | 394 | 156 | (1,237 | ) | 2,363 | |||
Net income (loss) | 2,134 | 196 | (1,407 | ) | 6,701 | |||
Net income attributable to non-controlling interests | (631 | ) | (465 | ) | (1,876 | ) | (1,588 | ) |
(Loss) income attributable to Lee Enterprises, Incorporated | 1,503 | (269 | ) | (3,283 | ) | 5,113 | ||
Earnings (loss) per common share: | ||||||||
Basic: | 0.26 | (0.05 | ) | (0.56 | ) | 0.89 | ||
Diluted: | 0.25 | (0.05 | ) | (0.56 | ) | 0.87 | ||
DIGITAL / PRINT REVENUE COMPOSITION (UNAUDITED)
Three months ended | Nine months ended | |||
June 25, | June 26, | June 25, | June 26, | |
(Thousands of Dollars) | 2023 | 2022 | 2023 | 2022 |
Digital Advertising and Marketing Services Revenue | 49,904 | 46,187 | 143,903 | 132,356 |
Digital Only Subscription Revenue | 15,715 | 10,969 | 42,039 | 28,953 |
Digital Services Revenue | 4,860 | 4,317 | 14,343 | 13,600 |
Total Digital Revenue | 70,479 | 61,473 | 200,285 | 174,909 |
Print Advertising Revenue | 29,216 | 44,814 | 102,503 | 145,032 |
Print Subscription Revenue | 61,842 | 78,079 | 193,799 | 234,962 |
Other Print Revenue | 9,773 | 10,671 | 30,542 | 32,430 |
Total Print Revenue | 100,831 | 133,564 | 326,844 | 412,424 |
Total Operating Revenue | 171,310 | 195,037 | 527,129 | 587,333 |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)
The table below reconciles the non-GAAP financial performance measure of Adjusted EBITDA to net income, its most directly comparable GAAP measure:
Three months ended | Nine months ended | |||||||
June 25, | June 26, | June 25, | June 26, | |||||
(Thousands of Dollars) | 2023 | 2022 | 2023 | 2022 | ||||
Net income (loss) | 2,134 | 196 | (1,407 | ) | 6,701 | |||
Adjusted to exclude | ||||||||
Income tax expense (benefit) | 394 | 156 | (1,237 | ) | 2,363 | |||
Non-operating expenses, net | 9,680 | 6,087 | 28,889 | 19,261 | ||||
Equity in earnings of TNI and MNI(5) | (1,194 | ) | (1,050 | ) | (3,534 | ) | (4,211 | ) |
Depreciation and amortization | 7,478 | 8,818 | 23,097 | 27,445 | ||||
Restructuring costs and other | 3,780 | 6,072 | 8,120 | 19,862 | ||||
Assets (gain) loss on sales, impairments and other, net | (900 | ) | 1,086 | (4,255 | ) | (11,340 | ) | |
Stock compensation | 462 | 327 | 1,384 | 1,026 | ||||
Add: | ||||||||
Ownership share of TNI and MNI EBITDA (50%) | 1,406 | 1,268 | 4,128 | 4,864 | ||||
Adjusted EBITDA | 23,240 | 22,960 | 55,185 | 65,971 | ||||
The table below reconciles the non-GAAP financial performance measure of Cash Costs to Operating expenses, the most directly comparable GAAP measure:
Three months ended | Nine months ended | ||||||
June 25, | June 26, | June 25, | June 26, | ||||
(Thousands of Dollars) | 2023 | 2022 | 2023 | 2022 | |||
Operating expenses | 160,296 | 189,648 | 504,418 | 563,219 | |||
Adjustments | |||||||
Depreciation and amortization | 7,478 | 8,818 | 23,097 | 27,445 | |||
Assets gain on sales, impairments and other, net | (900 | ) | 1,086 | (4,255 | ) | (11,340 | ) |
Restructuring costs and other | 3,780 | 6,072 | 8,120 | 19,862 | |||
Cash Costs | 149,938 | 173,672 | 477,456 | 527,252 | |||
NOTES
(1) Total Digital Revenue is defined as digital advertising and marketing services revenue (including Amplified Digital®), digital-only subscription revenue and digital services revenue.
(2) 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.
(3) The following are non-GAAP (Generally Accepted Accounting Principles) financial measures for which reconciliations to relevant GAAP measures are included in tables accompanying this release:
(4) 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 GAAP at the end of each fiscal quarter, beginning with the quarter ending June 28, 2020.
(5) TNI refers to TNI Partners publishing operations in Tucson, AZ. MNI refers to Madison Newspapers, Inc. publishing operations in Madison, WI.
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