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Lee Enterprises(LEE) - 2023 Q1 - Earnings Call Transcript
LEELee Enterprises(LEE)2023-03-04 02:17
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Financial Data and Key Metrics Changes - Digital subscribers increased to 564,000, a 25% rise compared to the previous year [5][10] - Digital subscription revenue grew by 56% year-over-year, contributing to a total digital revenue increase of 17% [11][20] - Total operating revenue for the first quarter was 185million,withdigitalrevenuenowrepresenting35185 million, with digital revenue now representing 35% of total operating revenue [10][11] Business Line Data and Key Metrics Changes - Print revenue declined to 120 million, an 18% decrease year-over-year due to cyclical headwinds [32] - Digital advertising revenue increased by 12%, driven by a 45% growth in Amplified Digital revenue, totaling 21millionforthequarter[12][10]−AdjustedEBITDAforthequarterwasreportedat21 million for the quarter [12][10] - Adjusted EBITDA for the quarter was reported at 18 million, with operating expenses totaling 176million,reflectinga5176 million, reflecting a 5% decrease in cash costs [13][14] Market Data and Key Metrics Changes - Total digital revenue reached nearly 250 million over the last 12 months, indicating strong growth in the digital segment [10] - The company is experiencing industry-leading digital revenue growth, outpacing peers for 13 consecutive quarters [10] Company Strategy and Development Direction - The company is focused on its Three Pillar Digital Growth Strategy, aiming for 435millioninrecurringsustainabledigitalrevenueby2026[6][9]−Continuedinvestmentindigitaltalentandtechnologyisprioritizedtosupportlong−termdigitalrevenuegrowth[17][34]−TherebrandingofTownNewstoBLOXDigitalreflectsastrategicshifttoexpandservicesbeyondthemediasector[30][44]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementacknowledgedcyclicalheadwindsaffectingprintrevenueandemphasizedtheimportanceofdigitaltransformation[32][24]−ThecompanyreaffirmeditsadjustedEBITDAtargetforthefiscalyearat435 million in recurring sustainable digital revenue by 2026 [6][9] - Continued investment in digital talent and technology is prioritized to support long-term digital revenue growth [17][34] - The rebranding of TownNews to BLOX Digital reflects a strategic shift to expand services beyond the media sector [30][44] Management's Comments on Operating Environment and Future Outlook - Management acknowledged cyclical headwinds affecting print revenue and emphasized the importance of digital transformation [32][24] - The company reaffirmed its adjusted EBITDA target for the fiscal year at 94 million to 100million,despitecurrentmarketconditions[20][21]−Managementexpressedconfidenceindigitalsubscriptiongrowthandtheoveralldigitalrevenueguidance[24][52]OtherImportantInformation−Theprincipalamountofdebtattheendofthefirstquarterwas100 million, despite current market conditions [20][21] - Management expressed confidence in digital subscription growth and the overall digital revenue guidance [24][52] Other Important Information - The principal amount of debt at the end of the first quarter was 463 million, with no expected material pension contributions in fiscal 2023 [35] - The company executed an additional 60millioninannualizedcostreductions,with60 million in annualized cost reductions, with 40 million expected to be realized in fiscal year 2023 [15][19] Q&A Session Summary Question: How is print advertising pacing in the current quarter? - Management noted that cyclical headwinds observed in the first quarter are also present in the second quarter, but digital subscription guidance remains strong [24] Question: What are the types of cost reductions being implemented? - The company is evaluating all departments as part of its digital transformation, focusing on costs tied to the print business, which still represents a significant portion of revenue [49] Question: What is the current status of digital revenue growth? - Digital revenue growth is consistent with the first quarter, maintaining a 17% increase [52] Question: What led to the rebranding of TownNews? - The rebranding to BLOX Digital aims to expand service offerings beyond the media sector, reflecting the company's growth strategy [44]