In This Article:
-
Total Operating Revenue: $147 million in Q2.
-
Print Revenue: Decreased by 24% on a same property basis.
-
Digital Revenue Growth: Increased by 11% year-over-year.
-
Digital Subscription Revenue: Grew 48%, driving total digital revenue growth.
-
Amplified Digital Revenue: Increased by 5.2% in Q2.
-
Adjusted EBITDA: Grew 5% in the quarter, totaling $15 million.
-
Digital Direct Margin: Remained strong at 70%, resulting in $49 million of digital direct margin.
-
Cost Savings: Expected to yield between $45 million and $65 million in 2024, mostly from actions taken in FY23.
-
Debt Reduction: Principal amount of debt decreased by $2 million year-to-date, totaling $454 million.
-
Asset Sales: Closed $3 million year-to-date, with an additional $25 million identified for potential monetization.
Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
-
Lee Enterprises Inc (NASDAQ:LEE) reported strong second quarter operating results with improved overall revenue trends and managed costs.
-
The company is successfully transitioning from a print-centric to a digital-centric model, with digital revenue now representing 40% of total revenue.
-
Digital subscriber growth was robust, with a 25% increase year-over-year, and digital subscription rates also increased by 17%.
-
LEE's digital advertising and marketing services are growing, with expectations to drive $300 million of digital advertising revenue by 2028.
-
Cost management initiatives have been effective, with cash costs down 16% in the quarter, contributing to a 5% growth in adjusted EBITDA.
Negative Points
-
Print revenue declined by 24% on a same property basis, continuing the trend of decreasing print media demand.
-
The decline in print revenue was partly due to the elimination of certain print products that did not meet profitability standards.
-
While digital revenue growth is strong, the total operating revenue was only modestly improved, indicating ongoing challenges in offsetting print declines.
-
The transformation to digital, while necessary, requires significant ongoing investment in talent and technology, which could impact short-term profitability.
-
Despite reductions in debt, LEE still has a substantial debt load with a principal amount of $454 million.
Q & A Highlights
Q: Can you provide more details about the cost management strategies that are offsetting the decline in print revenue? A: Timothy Millage, CFO of Lee Enterprises, explained that cash costs were down 16% year-over-year, largely due to managing the print product portfolio and eliminating less profitable print products. This strategy not only impacts revenue but significantly reduces costs. Additionally, the company has transformed some print products in smaller markets to digital editions, saving costs while impacting print subscription revenue minimally.