Lee Enterprises(LEE) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2022, total operating revenue was $194 million, flat compared to the prior year, as digital revenue growth offset print revenue decline [17] - Adjusted EBITDA totaled$30 million in Q4, an increase of 17% year-over-year, while net loss was $5.8 million due to noncash impairments [20] - For the full fiscal year, total operating revenue was$781 million, down less than 2% compared to the prior year, with net income totaling $1 million [20][21] Business Line Data and Key Metrics Changes - Digital Only subscribers grew by 32$49 million in Q4, a 33% increase over the prior year, representing 55% of total advertising revenue [18] - Print revenue declined by 11% in Q4 to $129 million due to ongoing secular declines in print demand [18] Market Data and Key Metrics Changes - Total digital revenue for the fiscal year was$240 million, up 27% compared to the prior year, with digital revenue representing 31% of total revenue, up from 24% [21][13] - Amplified Digital revenue grew 82% in Q4 and 83% for the full year, totaling $76 million for the fiscal year [10][12] Company Strategy and Development Direction - The company is focused on a Three Pillar Digital Growth Strategy aimed at expanding digital audiences, growing digital subscriptions, and diversifying offerings for local advertisers [23][25] - The goal is to achieve$435 million of recurring sustainable digital revenue by 2026, with significant progress made in digital transformation [25][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the digital transformation and the resilience of the business model despite headwinds [8][16] - The company expects continued digital revenue growth and a reduction in cash costs by 2% to 3% in fiscal year 2023 [39][36] Other Important Information - The principal amount of debt at the end of Q4 was $463 million, down$113 million since refinancing, with favorable credit agreement terms [40] - The company plans to invest 25 million in fiscal year 2023 to support its digital growth strategy [37] Q&A Session Summary Question: Were there any significant changes that may have driven digital subscriptions growth? - Management indicated no changes in the paywall but emphasized the use of sophisticated data analytics to convert users at the paywall [48] Question: What is the guidance for Digital Only Subscription revenue? - Management expects continued significant growth in digital subscription revenue, driven by both unit growth and rate growth [49] Question: What is the outlook for print advertising revenue? - Management noted choppiness in national advertising but strong relationships with local advertisers, indicating potential stability [51] Question: Can you provide more details on Amplified's growth? - Video was a significant driver for Amplified's growth, with success in selling services both within and outside of Lee's markets [53] Question: Are there signs of moderation in cost trends? - Management confirmed signs of moderation in costs, particularly in newsprint, which may stabilize or decrease [54] Question: Is the 25 million in savings for fiscal 2023 factored into cost moderation trends? - Management clarified that the $25 million savings are from actions taken last year and do not include potential cost moderation trends [55]