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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 | |
---|---|---|---|---|---|---|---|---|---|---|
0.51 | 4.72% | 11.32 | 9.40 | 12.67 | 11.35 | 11.02 | 11.02 | 252 | 01:00:00 |
“Lee delivered strong first quarter digital growth with consistent execution of our Three Pillar Digital Growth Strategy,” said Kevin Mowbray, President and Chief Executive Officer. “We are pleased with our impressive digital subscription growth and digital subscribers now total 564,000, a 25% increase over the prior year. We are also driving higher rates as revenue from digital subscriptions was up 56% in the quarter. Digital advertising revenue increased 12%, with Amplified Digital revenue growth of 45%.
“We are facing broader economic headwinds, and as a result, we took swift action and implemented significant reductions mainly focused on costs that support our print business. We continue to invest in our digital business and key metrics demonstrate we are well on our way to driving our digital transformation.
“We expect strong fiscal year digital revenue growth combined with the changes we've made to the organization to keep us on track to achieve our overall Adjusted EBITDA(2) guidance for the fiscal year.” Mowbray added.
Key First 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 | $94 million (-2% YOY) - $100 million (+4% YOY) |
Debt and Free Cash Flow:
The Company has $463 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 December 25, 2022:
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 over 350 weekly and specialty publications serving 77 markets in 26 states. Year to date, Lee's newspapers have average daily circulation of 1.0 million, and our legacy websites, including acquisitions, reach more than 38 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 | ||||||
(Thousands of Dollars, Except Per Common Share Data) | December 25, 2022 | December 26, 2021 | Percent Change | |||
Operating revenue: | ||||||
Print advertising revenue | 41,836 | 55,970 | (25)% | |||
Digital advertising revenue | 47,749 | 42,784 | 12% | |||
Advertising and marketing services revenue | 89,585 | 98,754 | (9)% | |||
Print subscription revenue | 67,370 | 79,628 | (15)% | |||
Digital subscription revenue | 12,329 | 7,891 | 56% | |||
Subscription revenue | 79,699 | 87,519 | (9)% | |||
Print other revenue | 11,120 | 11,385 | (2)% | |||
Digital other revenue | 4,727 | 4,624 | 2% | |||
Other revenue | 15,847 | 16,009 | (1)% | |||
Total operating revenue | 185,131 | 202,282 | (8)% | |||
Operating expenses: | ||||||
Compensation | 75,446 | 84,694 | (11)% | |||
Newsprint and ink | 7,432 | 7,644 | (3)% | |||
Other operating expenses | 86,774 | 85,982 | 1% | |||
Depreciation and amortization | 7,886 | 9,676 | (18)% | |||
Assets gain on sales, impairments and other | (2,563 | ) | (12,274 | ) | (79)% | |
Restructuring costs and other | 646 | 3,200 | (80)% | |||
Total operating expenses | 175,621 | 178,922 | (2)% | |||
Equity in earnings of associated companies | 1,668 | 1,754 | (5)% | |||
Operating income | 11,178 | 25,114 | (55)% | |||
Non-operating income (expense): | ||||||
Interest expense | (10,408 | ) | (10,663 | ) | (2)% | |
Curtailment gain | — | 1,027 | (100)% | |||
Pension and OPEB related benefit (cost) and other, net | 1,494 | 3,072 | (51)% | |||
Total non-operating expense, net | (8,914 | ) | (6,564 | ) | 36% | |
Income before income taxes | 2,264 | 18,550 | (88)% | |||
Income tax expense | 440 | 5,351 | (92)% | |||
Net Income | 1,824 | 13,199 | (86)% | |||
Net income attributable to non-controlling interests | (725 | ) | (541 | ) | 34% | |
Income attributable to Lee Enterprises, Incorporated | 1,099 | 12,658 | (91)% | |||
Earnings (loss) per common share: | ||||||
Basic | 0.19 | 2.21 | (91)% | |||
Diluted | 0.19 | 2.17 | (91)% |
DIGITAL / PRINT REVENUE COMPOSITION(UNAUDITED)
Three months ended | ||
(Thousands of Dollars) | December 25, 2022 | December 26, 2021 |
Digital Advertising and Marketing Services Revenue | 47,749 | 42,784 |
Digital Only Subscription Revenue | 12,329 | 7,891 |
Digital Services Revenue | 4,727 | 4,624 |
Total Digital Revenue | 64,805 | 55,299 |
Print Advertising Revenue | 41,836 | 55,970 |
Print Subscription Revenue | 67,370 | 79,628 |
Other Print Revenue | 11,120 | 11,385 |
Total Print Revenue | 120,326 | 146,983 |
Total Operating Revenue | 185,131 | 202,282 |
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 | ||||
(Thousands of Dollars) | December 25, 2022 | December 26, 2021 | ||
Net income | 1,824 | 13,199 | ||
Adjusted to exclude | ||||
Income tax expense | 440 | 5,351 | ||
Non-operating expenses, net | 8,914 | 6,564 | ||
Equity in earnings of TNI and MNI | (1,668 | ) | (1,754 | ) |
Depreciation and amortization | 7,886 | 9,676 | ||
Restructuring costs and other | 646 | 3,200 | ||
Assets gain on sales, impairments and other, net | (2,563 | ) | (12,274 | ) |
Stock compensation | 349 | 186 | ||
Add: | ||||
Ownership share of TNI(5) and MNI EBITDA(5) (50%) | 1,791 | 1,939 | ||
Adjusted EBITDA | 17,619 | 26,087 |
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 | ||||
(Thousands of Dollars) | December 25, 2022 | December 26, 2021 | ||
Operating expenses | 175,621 | 178,922 | ||
Adjustments | ||||
Depreciation and amortization | 7,886 | 9,676 | ||
Assets gain on sales, impairments and other, net | (2,563 | ) | (12,274 | ) |
Restructuring costs and other | 646 | 3,200 | ||
Cash Costs | 169,652 | 178,320 |
NOTES
(1) 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.
(2) 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:
(3) Total Digital Revenue in the prior year was reclassified to conform to the current year presentation. Total Digital Revenue is defined as digital advertising and marketing services revenue (including Amplified Digital®), digital-only subscription revenue and digital services revenue. Previously other digital subscription revenue was included. All periods have been restated for the reclassification.
(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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