[FORM 10-Q Cover Page](index=1&type=section&id=FORM%2010-Q%20Cover%20Page) Provides essential registration details for Lee Enterprises, Incorporated, including its status as an accelerated and smaller reporting company [Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides basic information about Lee Enterprises, Incorporated as the registrant, including its state of incorporation, principal executive offices, telephone number, and securities registered on The Nasdaq Global Select Market, noting its status as an accelerated and smaller reporting company - Company Name: **LEE ENTERPRISES, INCORPORATED**[1](index=1&type=chunk) - State of Incorporation: **Delaware**[1](index=1&type=chunk) - Principal Executive Offices: **4600 E. 53rd Street, Davenport, Iowa 52807**[1](index=1&type=chunk) Securities Registration Information | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | Common Stock, par value $.01 per share | LEE | The Nasdaq Global Select Market | | Preferred Share Purchase Rights | LEE | The Nasdaq Global Select Market | Filing Status | Filer Type | Status | | :-------------------- | :----- | | Large accelerated filer | o | | Accelerated filer | x | | Non-accelerated filer | o | | Smaller reporting company | x | | Emerging growth company | o | - As of July 31, 2025, **6,262,967 shares of common stock** were outstanding[3](index=3&type=chunk) [FORWARD LOOKING STATEMENTS](index=3&type=section&id=FORWARD%20LOOKING%20STATEMENTS) This section outlines the nature of forward-looking statements within the report and the inherent risks and uncertainties that could cause actual results to differ materially from expectations [Safe Harbor Statement and Risks](index=3&type=section&id=Safe%20Harbor%20Statement%20and%20Risks) This section details the 'safe harbor' provisions under the Private Securities Litigation Reform Act of 1995, addressing risks, trends, and uncertainties that may cause actual results to differ materially from forward-looking statements in the report - The report contains forward-looking statements based on current expectations and subject to specific risks, trends, and uncertainties[6](index=6&type=chunk) - Forward-looking statements are not guarantees of performance, and the company does not undertake to publicly update or revise them unless required by law[7](index=7&type=chunk) - Major risks include: - Potential indemnification for unknown legal and other matters to former owners of BH Media or Buffalo News - Ability to manage declines in print revenue and subscribers - Impact and duration of unfavorable economic conditions on business - Changes in advertising and subscription demand - Technological changes affecting digital advertising delivery - Potential changes in newsprint, other commodity, and energy costs - Interest rates and labor costs - Significant cybersecurity breaches or information technology system failures - Ability to achieve planned expense reductions and anticipated benefits from acquisitions - Ability to maintain employee and customer relationships - Ability to manage increased capital costs - Ability to maintain Nasdaq listing status - Market competition[8](index=8&type=chunk) [PART I FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents the company's unaudited financial information, including statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited consolidated financial statements, including balance sheets, statements of loss and comprehensive loss, stockholders' equity (deficit), and cash flows, along with detailed notes for the quarter and nine months ended June 29, 2025 [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time Consolidated Balance Sheet Key Data (Thousands of Dollars) | (Thousands of Dollars) | June 29, 2025 | September 29, 2024 | | :--------------------- | :------------ | :----------------- | | **ASSETS** | | | | Cash and cash equivalents | 14,125 | 9,598 | | Total current assets | 96,869 | 97,773 | | Property and equipment, net | 39,733 | 44,372 | | Goodwill | 323,858 | 328,040 | | Total assets | 622,652 | 649,171 | | **LIABILITIES AND EQUITY** | | | | Total current liabilities | 117,876 | 115,354 | | Long-term debt, net of current maturities | 455,469 | 445,943 | | Total liabilities | 660,849 | 656,505 | | Total Lee Enterprises, Inc. Stockholders' deficit | (40,499) | (9,889) | | Total deficit | (38,197) | (7,334) | | Total liabilities and deficit | 622,652 | 649,171 | - As of June 29, 2025, **total assets were $622.7 million**, a **4.1% decrease** from $649.2 million on September 29, 2024[11](index=11&type=chunk) - As of June 29, 2025, **total liabilities were $660.8 million**, a **0.6% increase** from $656.5 million on September 29, 2024[13](index=13&type=chunk) - As of June 29, 2025, **stockholders' deficit expanded to $40.5 million**, compared to $9.89 million on September 29, 2024[13](index=13&type=chunk) [Consolidated Statements of Loss and Comprehensive Loss](index=6&type=section&id=Consolidated%20Statements%20of%20Loss%20and%20Comprehensive%20Loss) This section presents the company's financial performance over specific periods, detailing revenues, expenses, and net loss Consolidated Statements of Loss and Comprehensive Loss Key Data (Thousands of Dollars) | (Thousands of Dollars) | Three months ended June 29, 2025 | Three months ended June 23, 2024 | Nine months ended June 29, 2025 | Nine months ended June 23, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Total operating revenue | 141,294 | 150,578 | 423,235 | 452,806 | | Total operating expenses | 137,318 | 146,775 | 429,391 | 448,469 | | Operating (loss) income | 4,662 | 4,925 | (3,193) | 8,206 | | Loss before income taxes | (4,420) | (4,540) | (31,196) | (17,532) | | Net loss | (1,676) | (3,691) | (29,915) | (14,094) | | Loss attributable to Lee Enterprises, Incorporated | (1,920) | (4,266) | (31,179) | (15,757) | | Basic Loss per common share | (0.31) | (0.73) | (5.16) | (2.68) | | Diluted Loss per common share | (0.31) | (0.73) | (5.16) | (2.68) | - Total operating revenue for the third quarter of 2025 **decreased by 6.2% year-over-year to $141.3 million**[15](index=15&type=chunk) - Total operating revenue for the first nine months of 2025 **decreased by 6.5% year-over-year to $423.2 million**[15](index=15&type=chunk) - Net loss for the third quarter of 2025 **narrowed to $1.7 million**, compared to $3.7 million in the prior-year period[15](index=15&type=chunk) - Net loss for the first nine months of 2025 **expanded to $29.9 million**, compared to $14.1 million in the prior-year period[15](index=15&type=chunk) [Consolidated Statements of Stockholders' Equity (Deficit)](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Deficit)) This section outlines changes in the company's equity or deficit over time, reflecting accumulated earnings, stock transactions, and other comprehensive income Consolidated Statements of Stockholders' Equity (Deficit) Key Data (Thousands of Dollars) | (Thousands of Dollars) | September 30, 2024 | June 29, 2025 | | :--------------------- | :----------------- | :------------ | | Accumulated Deficit | (292,341) | (323,520) | | Common Stock | 62 | 63 | | Additional paid-in capital | 262,470 | 263,383 | | Accumulated Other Comprehensive Income | 19,920 | 19,575 | | Non Controlling Interests | 2,555 | 2,302 | | Total | (7,334) | (38,197) | - As of June 29, 2025, **accumulated deficit increased to $323.5 million**, compared to $292.3 million on September 30, 2024[17](index=17&type=chunk) - As of June 29, 2025, **total deficit was $38.2 million**, a significant increase from $7.3 million on September 30, 2024[17](index=17&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section details the inflows and outflows of cash from operating, investing, and financing activities, providing insight into the company's liquidity Consolidated Statements of Cash Flows Key Data (Thousands of Dollars) | (Thousands of Dollars) | Nine months ended June 29, 2025 | Nine months ended June 23, 2024 | | :--------------------- | :------------------------------ | :------------------------------ | | Net cash provided by (required for) operating activities | 765 | 1,378 | | Net cash provided by investing activities | 5,134 | 514 | | Net cash required for financing activities | (1,372) | (3,015) | | Net increase (decrease) in cash and cash equivalents | 4,527 | (1,123) | | Cash and cash equivalents, End of period | 14,125 | 13,425 | - Net cash provided by operating activities for the first nine months of 2025 was **$0.765 million**, a decrease from $1.378 million in the prior-year period[20](index=20&type=chunk) - Net cash provided by investing activities for the first nine months of 2025 **significantly increased to $5.134 million**, compared to $0.514 million in the prior-year period[20](index=20&type=chunk) - Net cash required for financing activities for the first nine months of 2025 was **$1.372 million**, a decrease from $3.015 million in the prior-year period[20](index=20&type=chunk) - As of June 29, 2025, the **cash and cash equivalents balance was $14.125 million**, an increase from $13.425 million in the prior-year period[20](index=20&type=chunk) [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the consolidated financial statements, clarifying accounting policies and significant events [1 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=10&type=section&id=1%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines the fundamental principles and key accounting policies used in preparing the financial statements, including consolidation and fiscal year details - The financial statements are unaudited and include all adjustments management deems necessary for a fair presentation of the financial position and results of operations as of June 29, 2025[22](index=22&type=chunk) - The company's fiscal year ends on the last Sunday in September, with fiscal year 2025 having **52 weeks** and fiscal year 2024 having **53 weeks**[23](index=23&type=chunk) - Consolidated financial statements include the company and its wholly-owned subsidiaries, an **82.5% interest** in INN Partners, L.C. (BLOX Digital), and **50% interests** in TNI Partners and Madison Newspapers, Inc. accounted for using the equity method[24](index=24&type=chunk) - Cybersecurity Incident: - On February 3, 2025, the company experienced a cybersecurity attack, causing system disruptions, encryption of critical applications, and data exfiltration[25](index=25&type=chunk) - The company initiated its incident response plan and engaged third-party cybersecurity experts[26](index=26&type=chunk) - The incident may have resulted in access to or acquisition of personal information of customers and subscribers, for whom the company has offered identity theft protection services[27](index=27&type=chunk) - The company incurred **$1.2 million** and **$3.1 million** in cybersecurity incident-related expenses for the third quarter and first nine months of 2025, respectively, recorded in 'Restructuring and other' expenses[28](index=28&type=chunk) - The incident had a significant negative impact on fiscal year 2025 operating results, affecting revenue lines, increasing operating expenses, and delaying projects[29](index=29&type=chunk) - The company has cyber insurance, has submitted claims, and has received **$0.707 million** in payments to date[30](index=30&type=chunk) [2 REVENUE](index=11&type=section&id=2%20REVENUE) This section details the company's revenue recognition policies and provides a breakdown of revenue by source, including advertising and subscription categories Revenue by Source (Thousands of Dollars) | (Thousands of Dollars) | Three months Ended June 29, 2025 | Three months Ended June 23, 2024 | Nine months ended June 29, 2025 | Nine months ended June 23, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Print advertising revenue | 17,474 | 18,941 | 53,867 | 62,118 | | Digital advertising revenue | 49,097 | 49,903 | 139,766 | 141,747 | | Advertising and marketing services revenue | 66,571 | 68,844 | 193,633 | 203,865 | | Print subscription revenue | 38,076 | 47,605 | 122,587 | 148,443 | | Digital subscription revenue | 23,482 | 20,701 | 68,836 | 60,429 | | Subscription revenue | 61,558 | 68,306 | 191,423 | 208,872 | | Other revenue | 13,165 | 13,428 | 38,179 | 40,069 | | Total operating revenue | 141,294 | 150,578 | 423,235 | 452,806 | - Revenue recognition principle: Revenue is recognized when performance obligations are satisfied by transferring control of promised goods or services to customers[31](index=31&type=chunk) - Contract liabilities primarily arise from deferred subscription revenue, expected to be recognized within the next twelve months[32](index=32&type=chunk) Allowance for Credit Losses (Thousands of Dollars) | (Thousands of Dollars) | June 29, 2025 | September 29, 2024 | | :--------------------- | :------------ | :----------------- | | Balance, beginning of period | 6,514 | 5,260 | | Additions charged to expense | 10,853 | 13,633 | | Deductions from reserves | (12,370) | (12,379) | | Balance, end of period | 4,997 | 6,514 | [3 INVESTMENTS IN ASSOCIATED COMPANIES](index=12&type=section&id=3%20INVESTMENTS%20IN%20ASSOCIATED%20COMPANIES) This section describes the company's equity method investments in associated companies, including their operational responsibilities and financial performance - TNI Partners: The company holds a **50% interest** in TNI in Tucson, Arizona, responsible for printing, distribution, advertising, and subscription activities, with pre-tax profit and loss shared equally between the company's subsidiary Star Publishing and Gannett's subsidiary Citizen[35](index=35&type=chunk)[36](index=36&type=chunk) TNI Partners Performance Summary (Thousands of Dollars) | (Thousands of Dollars) | Three months ended June 29, 2025 | Three months ended June 23, 2024 | Nine months ended June 29, 2025 | Nine months ended June 23, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Operating revenue | 5,320 | 6,667 | 17,609 | 21,018 | | Operating income | 1,556 | 1,591 | 4,559 | 5,811 | | Net income | 1,529 | 1,544 | 4,596 | 5,764 | | Equity in earnings of TNI | 765 | 772 | 2,298 | 2,882 | - Madison Newspapers, Inc. (MNI): The company holds a **50% interest** in MNI in Madison, Wisconsin, responsible for publishing newspapers and related digital platforms, with after-tax net profit and loss shared equally between the company and The Capital Times Company[37](index=37&type=chunk) MNI Performance Summary (Thousands of Dollars) | (Thousands of Dollars) | Three months ended June 29, 2025 | Three months ended June 23, 2024 | Nine months ended June 29, 2025 | Nine months ended June 23, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Operating revenue | 9,136 | 10,136 | 27,974 | 30,560 | | Operating income | 1,700 | 2,182 | 5,867 | 6,811 | | Net income | (157) | 699 | 1,330 | 1,973 | | Equity in earnings of MNI | (79) | 350 | 665 | 987 | [4 GOODWILL AND OTHER INTANGIBLE ASSETS](index=13&type=section&id=4%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS) This section provides a breakdown of the company's goodwill and other intangible assets, including details on amortization and changes due to business activities Goodwill and Other Intangible Assets (Thousands of Dollars) | (Thousands of Dollars) | June 29, 2025 | September 29, 2024 | | :--------------------- | :------------ | :----------------- | | Goodwill, end of period | 323,858 | 328,040 | | Non-amortized intangible assets: Mastheads | 10,917 | 10,917 | | Amortizable intangible assets, net | 49,990 | 59,158 | | Total intangibles, net | 384,765 | 398,115 | - For the first nine months of 2025, the company's sale of non-core businesses resulted in a **$4.2 million decrease in goodwill**[41](index=41&type=chunk) - The weighted-average amortization period for amortizable assets is approximately **ten years**[40](index=40&type=chunk) [5 DEBT](index=13&type=section&id=5%20DEBT) This section details the company's debt structure, including a long-term term loan, its fair value, and changes due to principal payments and waivers - The company's debt includes a **25-year term loan** with a total principal amount of **$455.9 million**, bearing a **fixed annual interest rate of 9%**, maturing on March 16, 2045[42](index=42&type=chunk) - As of June 29, 2025, the **fair value of this loan was $375.6 million**[42](index=42&type=chunk) - For the first nine months of 2025, net cash proceeds from asset sales totaled **$6.5 million**, and the company paid **$1.4 million** in principal debt[43](index=43&type=chunk) - In response to the cybersecurity incident, BH Finance LLC waived interest and lease payments in February, April, and May 2025, resulting in an **$11.3 million increase** in the outstanding debt balance as a modification to the existing credit agreement[44](index=44&type=chunk) [6 PENSION, POSTRETIREMENT AND POSTEMPLOYMENT DEFINIT BENEFIT PLANS](index=14&type=section&id=6%20PENSION,%20POSTRETIREMENT%20AND%20POSTEMPLOYMENT%20DEFINED%20BENEFIT%20PLANS) This section details the company's defined benefit plans, including pension, postretirement, and postemployment benefits, and their associated costs and liabilities Net Periodic Pension (Benefit) Cost (Thousands of Dollars) | PENSION PLANS (Thousands of Dollars) | Three months ended June 29, 2025 | Three months ended June 23, 2024 | Nine months ended June 29, 2025 | Nine months ended June 23, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net periodic pension (benefit) cost | (72) | 155 | (214) | (1,826) | Net Periodic Postretirement Medical Benefits (Thousands of Dollars) | POSTRETIREMENT MEDICAL PLANS (Thousands of Dollars) | Three months ended June 29, 2025 | Three months ended June 23, 2024 | Nine months ended June 29, 2025 | Nine months ended June 23, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net periodic postretirement benefit | (664) | (560) | (1,994) | (2,865) | - For the first nine months of 2025, the company made **no contributions to its pension plans**, and no mandatory contributions are required for 2025[47](index=47&type=chunk) - In the first nine months of 2024, the company offered a voluntary lump-sum payment option for future benefits to **522 terminated vested participants**, resulting in a **$22.6 million settlement of pension plan liabilities** and recognition of a **$2.4 million non-cash settlement gain**[48](index=48&type=chunk) - As of June 29, 2025, and September 29, 2024, the company had **$22.7 million** and **$23.6 million**, respectively, in accrued exit liabilities, payable over **20 years**[49](index=49&type=chunk) [7 INCOME TAXES](index=15&type=section&id=7%20INCOME%20TAXES) This section provides an overview of the company's income tax benefits and effective tax rates, explaining key differences from the statutory federal rate Income Tax Benefit and Effective Tax Rate | Period | Loss before income taxes (Thousands of Dollars) | Income tax benefit (Thousands of Dollars) | Effective income tax rate | | :-------------------------------- | :-------------------------------------- | :---------------------------------------- | :------------------------ | | Three months ended June 29, 2025 | (4,420) | (2,744) | 61.4% | | Nine months ended June 29, 2025 | (31,196) | (1,281) | 4.2% | | Three months ended June 23, 2024 | (4,540) | (849) | 18.7% | | Nine months ended June 23, 2024 | (17,532) | (3,438) | 19.6% | - Key differences between the effective tax rate and the **U.S. federal statutory rate of 21%** arise from state taxes, non-deductible expenses, increases in valuation allowances, and adjustments to uncertain tax positions[51](index=51&type=chunk) - The company is evaluating the impact of the **One Big Beautiful Bill Act (OBBBA)**, which is expected to be reflected in the fiscal year 2025 10-K annual report[53](index=53&type=chunk) [8 LOSS PER COMMON SHARE](index=16&type=section&id=8%20LOSS%20PER%20COMMON%20SHARE) This section details the calculation of basic and diluted loss per common share, along with information on the company's shareholder rights plan Loss Per Common Share Calculation (Thousands of Dollars and Shares) | (Thousands of Dollars and Shares) | Three months ended June 29, 2025 | Three months ended June 23, 2024 | Nine months ended June 29, 2025 | Nine months ended June 23, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Loss attributable to Lee Enterprises, Incorporated | (1,920) | (4,266) | (31,179) | (15,757) | | Basic average common shares | 6,112 | 5,865 | 6,043 | 5,885 | | Diluted average common shares | 6,112 | 5,865 | 6,043 | 5,885 | | Basic Loss per common share | (0.31) | (0.73) | (5.16) | (2.68) | | Diluted Loss per common share | (0.31) | (0.73) | (5.16) | (2.68) | - No dilutive common shares were considered in the calculation of diluted earnings per share due to the company recording a net loss[55](index=55&type=chunk) - Rights Agreement: - On March 28, 2024, the Board of Directors adopted a shareholder rights plan, distributing one preferred share purchase right for each share of common stock[56](index=56&type=chunk) - The rights become exercisable if any person or group (with certain exceptions) acquires beneficial ownership of **15% or more** of the company's common stock[57](index=57&type=chunk) - Upon exercisability, each right holder, except for the acquiring person, is entitled to purchase additional common stock at a **50% discount**, or the company may exchange each right for one share of common stock[57](index=57&type=chunk) - The expiration date of the rights agreement has been **extended from March 27, 2025, to March 27, 2026**[57](index=57&type=chunk) [9 COMMITMENTS AND CONTINGENT LIABILITIES](index=16&type=section&id=9%20COMMITMENTS%20AND%20CONTINGENT%20LIABILITIES) This section outlines the company's commitments and contingent liabilities, including ongoing legal proceedings and their potential financial implications - The company is involved in various legal proceedings arising in the normal course of business, with insurance coverage mitigating potential losses, and management believes the disposition of these matters will not have a material adverse effect on the consolidated financial statements[59](index=59&type=chunk)[60](index=60&type=chunk) - Video Privacy Protection Act Litigation Settlement: - The company was sued for alleged violations of the VPPA, for tracking subscriber video viewing activities and sharing data with Meta without consent[61](index=61&type=chunk) - The company has agreed to a preliminary settlement of **$9.5 million**, which will be fully covered by insurance[62](index=62&type=chunk) - Cybersecurity Incident Litigation: - Multiple class action lawsuits have been filed against the company regarding the cybersecurity incident in the second quarter of 2025, alleging failure to adequately protect sensitive personal information[63](index=63&type=chunk) - The company is actively defending these lawsuits, and given the early stage of litigation, potential losses cannot be estimated[64](index=64&type=chunk) - The company holds cyber liability insurance and believes potential losses will be covered by insurance, subject to deductibles and policy limits[64](index=64&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's discussion and analysis of the company's financial condition and results of operations for the three and nine months ended June 29, 2025, focusing on business strategy, operating performance, non-GAAP financial measures, and liquidity and capital resources [EXECUTIVE OVERVIEW](index=18&type=section&id=EXECUTIVE%20OVERVIEW) This section provides a high-level summary of Lee Enterprises' business model, core strategy, product portfolio, and revenue generation methods - Lee Enterprises is a digital-first subscription business providing local news, information, advertising, and marketing services to **72 mid-sized communities**, with **670,000 digital subscribers**[67](index=67&type=chunk) - The company's core strategy is to grow audience and engagement by creating, collecting, and distributing trusted local news and information, continuously improving the subscriber experience, and offering a full suite of omnichannel advertising and marketing services to **over 20,000 local advertisers**[67](index=67&type=chunk) - The product portfolio includes digital subscription platforms, daily, weekly, monthly, and niche products, offering original local news alongside national and international news[68](index=68&type=chunk) - The company generates revenue through subscription products, advertising and marketing solutions for local advertisers, and digital services for a diverse customer base[70](index=70&type=chunk)[71](index=71&type=chunk) [STRATEGY](index=18&type=section&id=STRATEGY) This section outlines the company's strategic positioning and core operational pillars aimed at expanding its digital audience, subscription base, and advertising offerings - The company positions itself as a leading subscription and advertising platform, a trusted local news provider, and an innovative digital marketing solutions company, focused on local markets[72](index=72&type=chunk) - Operational strategy revolves around three core pillars: - Digital Subscription Platform: The fastest-growing digital subscription platform in local media - Amplified Digital Agency: A digital marketing services agency offering a full suite of digital marketing solutions - BLOX Digital (TownNews): One of North America's largest web hosting and content management SaaS providers, serving **over 2,000 clients**[72](index=72&type=chunk) - Strategic objectives include: - Expanding digital audience by transforming how local news and information is presented - Growing the digital subscription base and revenue through audience growth and continuous conversion of large digital audiences - Diversifying and expanding advertiser offerings through rapidly growing digital products, a large digital sales force, and the Amplified agency[73](index=73&type=chunk) [RESULTS OF OPERATIONS](index=19&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes the company's financial performance, detailing revenue and expense trends for both the quarterly and nine-month periods [Three Months Ended June 29, 2025](index=19&type=section&id=Three%20Months%20Ended%20June%2029,%202025) This section provides a detailed analysis of the company's operating performance for the three months ended June 29, 2025, highlighting key revenue and expense drivers Q3 2025 Operating Results Summary (Thousands of Dollars) | (Thousands of Dollars) | June 29, 2025 | June 23, 2024 | Percent Change | | :--------------------- | :------------ | :------------ | :------------- | | Total operating revenue | 141,294 | 150,578 | (6.2)% | | Advertising and marketing services revenue | 66,571 | 68,844 | (3.3)% | | Print advertising revenue | 17,474 | 18,941 | (7.7)% | | Digital advertising revenue | 49,097 | 49,903 | (1.6)% | | Subscription revenue | 61,558 | 68,306 | (9.9)% | | Digital subscription revenue | 23,482 | 20,701 | 13.4 % | | Other revenue | 13,165 | 13,428 | (2.0)% | | Total operating expenses | 137,318 | 146,775 | (6.4)% | | Compensation | 47,436 | 59,278 | (20.0)% | | Newsprint and ink | 3,268 | 4,096 | (20.2)% | | Other operating expenses | 77,252 | 74,177 | 4.1 % | | Restructuring costs and other | 7,141 | 3,795 | 88.2 % | | Depreciation and amortization | 3,783 | 6,850 | (44.8)% | | Operating income | 4,662 | 4,925 | (5.3)% | | Net loss | (1,676) | (3,691) | (54.6)% | | Diluted Loss per common share | (0.31) | (0.73) | (56.8)% | - Total operating revenue **decreased by 6.2% to $141.3 million**, primarily due to declines in print advertising and subscription revenue, partially offset by growth in digital subscription revenue[78](index=78&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk) - Digital subscription revenue **increased by 13.4%**, and digital services revenue **increased by 3.5%**[80](index=80&type=chunk)[81](index=81&type=chunk) - Total digital revenue (including digital advertising, digital subscription, and digital services) **grew by 2.8% to $77.9 million**, representing **55.1% of total operating revenue**[82](index=82&type=chunk) - Total operating expenses **decreased by 6.4%**, primarily due to reductions in compensation (**-20.0%**) and newsprint and ink costs (**-20.2%**), partially offset by increases in other operating expenses (**+4.1%**) and restructuring and other costs (**+88.2%**)[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk) - Restructuring and other costs **increased by 88.2%**, primarily stemming from cybersecurity incident recovery costs, outsourced production facility closures, business transformation, and severance expenses[87](index=87&type=chunk) - Operating income **decreased by 5.3% to $4.7 million**[89](index=89&type=chunk) - Net loss **narrowed by 54.6% to $1.7 million**, with diluted loss per common share at **$0.31**[95](index=95&type=chunk) [Nine Months Ended June 29, 2025](index=22&type=section&id=Nine%20Months%20Ended%20June%2029,%202025) This section provides a detailed analysis of the company's operating performance for the nine months ended June 29, 2025, highlighting key revenue and expense trends First Nine Months 2025 Operating Results Summary (Thousands of Dollars) | (Thousands of Dollars) | June 29, 2025 | June 23, 2024 | Percent Change | | :--------------------- | :------------ | :------------ | :------------- | | Total operating revenue | 423,235 | 452,806 | (6.5)% | | Advertising and marketing services revenue | 193,633 | 203,865 | (5.0)% | | Print advertising revenue | 53,867 | 62,118 | (13.3)% | | Digital advertising revenue | 139,766 | 141,747 | (1.4)% | | Subscription revenue | 191,423 | 208,872 | (8.4)% | | Digital subscription revenue | 68,836 | 60,429 | 13.9 % | | Other revenue | 38,179 | 40,069 | (4.7)% | | Total operating expenses | 429,391 | 448,469 | (4.3)% | | Compensation | 164,349 | 175,757 | (6.5)% | | Newsprint and ink | 9,996 | 13,101 | (23.7)% | | Other operating expenses | 223,387 | 221,247 | 1.0 % | | Restructuring costs and other | 18,806 | 12,199 | 54.2 % | | Depreciation and amortization | 15,218 | 21,438 | (29.0)% | | Operating (loss) income | (3,193) | 8,206 | NM | | Loss before income taxes | (31,196) | (17,532) | 77.9 % | | Net loss | (29,915) | (14,094) | NM | | Diluted Loss per common share | (5.16) | (2.68) | 92.7 % | - Total operating revenue **decreased by 6.5% to $423.2 million**, primarily due to declines in print advertising (**-13.3%**) and print subscription (**-17.4%**) revenue, partially offset by growth in digital subscription revenue (**+13.9%**)[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) - Total digital revenue **grew by 3.0% to $223.8 million**, representing **52.9% of total operating revenue**[104](index=104&type=chunk) - Total operating expenses **decreased by 4.3%**, primarily due to reductions in compensation (**-6.5%**) and newsprint and ink costs (**-23.7%**), partially offset by increases in other operating expenses (**+1.0%**) and restructuring and other costs (**+54.2%**)[106](index=106&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) - Operating loss was **$3.2 million**, compared to operating income of $8.2 million in the prior-year period[112](index=112&type=chunk) - Net loss **expanded to $29.9 million**, with diluted loss per common share at **$5.16**[119](index=119&type=chunk) [NON-GAAP FINANCIAL MEASURES](index=24&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) This section explains the company's use of non-GAAP financial measures, such as Adjusted EBITDA and Cash Costs, to provide a clearer view of operational performance - The company uses non-GAAP financial performance measures, such as Adjusted EBITDA and Cash Costs, to supplement GAAP financial information for a better understanding of operating performance and to exclude the impact of certain non-recurring or non-cash transactions[120](index=120&type=chunk)[121](index=121&type=chunk) - Adjusted EBITDA is defined as net loss plus non-operating expenses, income tax expense, depreciation and amortization, loss (gain) on asset sales, impairment and other, restructuring costs and other, equity-based compensation, and 50% share of EBITDA from TNI and MNI, less equity in earnings of TNI and MNI[122](index=122&type=chunk)[123](index=123&type=chunk) - Cash Costs are defined as compensation, newsprint and ink, and other operating expenses, excluding depreciation and amortization, loss (gain) on asset sales, impairment and other, other non-cash operating expenses, and restructuring costs and other[124](index=124&type=chunk) [RECONCILIATION OF NON-GAAP FINANCIAL MEASURES](index=25&type=section&id=RECONCILIATION%20OF%20NON-GAAP%20FINANCIAL%20MEASURES) This section provides reconciliation tables for non-GAAP financial measures, including Adjusted EBITDA and Cash Costs, to their most directly comparable GAAP counterparts Reconciliation of Adjusted EBITDA to Net Loss (Thousands of Dollars) | (Thousands of Dollars) | Three months ended June 29, 2025 | Three months ended June 23, 2024 | Nine months ended June 29, 2025 | Nine months ended June 23, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net loss | (1,676) | (3,691) | (29,915) | (14,094) | | Adjusted EBITDA | 14,944 | 14,824 | 30,319 | 48,534 | Reconciliation of Cash Costs to Operating Expenses (Thousands of Dollars) | (Thousands of Dollars) | Three months ended June 29, 2025 | Three months ended June 23, 2024 | Nine months ended June 29, 2025 | Nine months ended June 23, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Operating expenses | 137,318 | 146,775 | 429,391 | 448,469 | | Cash Costs | 127,956 | 137,551 | 397,732 | 410,105 | - Adjusted EBITDA for the third quarter of 2025 was **$14.9 million**, a slight increase from the prior-year period[126](index=126&type=chunk) - Adjusted EBITDA for the first nine months of 2025 was **$30.3 million**, a significant decrease from $48.5 million in the prior-year period[126](index=126&type=chunk) - Cash costs **decreased by 7.0%** in the third quarter of 2025 and **decreased by 3.0%** for the first nine months of 2025[84](index=84&type=chunk)[106](index=106&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=26&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section analyzes the company's liquidity position and capital resources, examining cash flows from operating, investing, and financing activities [Operating Activities](index=26&type=section&id=Operating%20Activities) This section details the cash flows generated from or used in the company's primary business operations - Net cash required for operating activities for the first nine months of 2025 was **$0.8 million**, compared to net cash provided by operating activities of $1.4 million in the prior-year period, a **decrease of $0.6 million**[130](index=130&type=chunk) - The decrease was primarily due to a **$24.1 million reduction in operating results**, partially offset by **$10.1 million in non-cash interest expense** and a **$13.4 million increase in working capital**[130](index=130&type=chunk) [Investing Activities](index=26&type=section&id=Investing%20Activities) This section outlines the cash flows related to the acquisition and disposal of long-term assets and other investments - Net cash provided by investing activities for the first nine months of 2025 was **$5.1 million**, compared to $0.5 million in the prior-year period[132](index=132&type=chunk) - This includes **$8.7 million** for the first nine months of 2025 and **$7.1 million** for the prior-year period from asset sales, primarily from the divestiture of non-core real estate[132](index=132&type=chunk) - Capital expenditures for 2025 are projected to be up to **$7.0 million**, funded by internally generated cash[133](index=133&type=chunk) [Financing Activities](index=26&type=section&id=Financing%20Activities) This section details the cash flows related to debt, equity, and dividend transactions, reflecting how the company raises and repays capital - Net cash required for financing activities for the first nine months of 2025 was **$1.4 million**, compared to $3.0 million in the prior-year period[135](index=135&type=chunk) - Debt reduction accounted for almost all of the cash used in both periods[135](index=135&type=chunk) [Additional Information on Liquidity](index=26&type=section&id=Additional%20Information%20on%20Liquidity) This section provides further details on the company's liquidity position, including cash balances, factors affecting cash flow, and measures taken to maintain sufficient liquidity - As of June 29, 2025, the company's liquidity (cash on the balance sheet) was **$14.1 million**[137](index=137&type=chunk) - The current operating environment, business transformation expenditures, and the cybersecurity incident have reduced net cash flow and pressured the company's liquidity[137](index=137&type=chunk) - The company has implemented plans to maintain adequate liquidity, including reducing operating and capital expenditures and decreasing outstanding accounts receivable[138](index=138&type=chunk) - Following the cybersecurity incident, the company received a **three-month waiver** of interest and lease payments to improve liquidity[138](index=138&type=chunk) - Operating results improved during the **13 weeks ended June 29, 2025**, with all mandatory and principal payments since May 2025 funded by operating cash flow[139](index=139&type=chunk)[140](index=140&type=chunk) [CHANGES IN LAWS AND REGULATIONS](index=27&type=section&id=CHANGES%20IN%20LAWS%20AND%20REGULATIONS) This section discusses potential impacts of changes in laws and regulations, specifically regarding minimum wage increases, on the company's operations - U.S. federal, state, and local governments are considering minimum wage increases, but the specific impact is yet to be determined as most employees are paid above current minimum wage[141](index=141&type=chunk)[142](index=142&type=chunk) [Item 3. Controls and Procedures](index=27&type=section&id=Item%203.%20Controls%20and%20Procedures) This section states that there were no changes in the company's internal control over financial reporting that materially affected or are reasonably likely to materially affect internal control during the 13 weeks ended June 29, 2025 - No material changes occurred in internal control over financial reporting during the **13 weeks ended June 29, 2025**[143](index=143&type=chunk) [PART II OTHER INFORMATION](index=27&type=section&id=PART%20II%20OTHER%20INFORMATION) This section provides additional disclosures not covered in Part I, including legal proceedings, risk factors, and other significant events [Item 1. Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) This section details the company's legal proceedings, including Video Privacy Protection Act litigation and cybersecurity incident-related class action lawsuits, reiterating the company's position and insurance coverage - The company is involved in various legal proceedings arising in the normal course of business, with insurance coverage mitigating potential losses, and management believes the disposition of these matters will not have a material adverse effect on the consolidated financial statements[145](index=145&type=chunk) - Video Privacy Protection Act Litigation Settlement: - The company was sued for alleged violations of the VPPA, for tracking subscriber video viewing activities and sharing data with Meta without consent[146](index=146&type=chunk) - The company has agreed to a preliminary settlement of **$9.5 million**, which will be fully covered by insurance[147](index=147&type=chunk) - Cybersecurity Incident Litigation: - Multiple class action lawsuits have been filed against the company regarding the cybersecurity incident in the second quarter of 2025, alleging failure to adequately protect sensitive personal information[148](index=148&type=chunk) - The company is actively defending these lawsuits, and given the early stage of litigation, potential losses cannot be estimated[149](index=149&type=chunk) - The company holds cyber liability insurance and believes potential losses will be covered by insurance, subject to deductibles and policy limits[149](index=149&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) This section indicates no material changes to the risk factors previously disclosed in the 2024 Form 10-K, except as otherwise noted in this report - Except as otherwise noted in this report, there have been **no material changes** to the risk factors disclosed in the 2024 Form 10-K[150](index=150&type=chunk) [Item 5. Other Information](index=28&type=section&id=Item%205.%20Other%20Information) This section provides additional information on the cybersecurity incident and the shareholder rights agreement, including event details, financial impact, insurance coverage, and the terms and extension of the rights agreement [Cybersecurity Incident](index=28&type=section&id=Cybersecurity%20Incident) This section details the cybersecurity attack, its financial impact, and the company's response, including insurance claims and identity theft protection services - On February 3, 2025, the company experienced a cybersecurity attack, causing system disruptions, encryption of critical applications, and data exfiltration[151](index=151&type=chunk) - The incident may have resulted in access to or acquisition of personal information of customers and subscribers, for whom the company has offered identity theft protection services[152](index=152&type=chunk) - For the third quarter and first nine months of 2025, the company incurred **$1.2 million** and **$3.1 million**, respectively, in cybersecurity incident-related expenses[153](index=153&type=chunk) - The incident had a significant negative impact on fiscal year 2025 operating results, with an estimated revenue impact exceeding **$10 million**[154](index=154&type=chunk) - The company has cyber insurance, has submitted claims, and has received **$0.707 million** in payments to date, with claim processing ongoing[155](index=155&type=chunk) [Rights Agreement](index=28&type=section&id=Rights%20Agreement) This section describes the shareholder rights plan, including its terms, conditions for exercisability, and the recent extension of its termination date - On March 28, 2024, the Board of Directors adopted a shareholder rights plan, distributing one preferred share purchase right for each share of common stock[156](index=156&type=chunk) - The rights become exercisable if any person or group (with certain exceptions) acquires beneficial ownership of **15% or more** of the company's common stock[157](index=157&type=chunk) - Upon exercisability, each right holder, except for the acquiring person, is entitled to purchase additional common stock at a **50% discount**, or the company may exchange each right for one share of common stock[157](index=157&type=chunk) - The expiration date of the rights agreement has been **extended from March 27, 2025, to March 27, 2026**[157](index=157&type=chunk) - The rights agreement aims to protect all shareholders' interests but may make mergers, tender offers, or other business combinations not supported by the Board more difficult[158](index=158&type=chunk)[159](index=159&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with this quarterly report, including amendments to the rights agreement, waivers and amendments to the credit agreement, and various certification documents Exhibit List | Number | Description | | :----- | :---------- | | 4.2* | Amendment No. 1 to Rights Agreement, dated as of March 26, 2025 | | 10.1* | Waiver and Amendment to Credit Agreement among Lee Enterprises, Incorporated, BH Finance LLC, and BH Media Group, Inc. dated May 1, 2025 | | 31.1 | Rule 13a-14(a) Certification of Chief Executive Officer | | 31.2 | Rule 13a-14(a) Certification of Chief Financial Officer | | 32.1 | Section 1350 Certification of Chief Executive Officer | | 32.2 | Section 1350 Certification of Chief Financial Officer | | 101.INS | Inline XBRL Instance Document | | 101.SCH | Inline XBRL Taxonomy Extension Schema Document | | 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | | 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | | 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | 104 | Cover Page Interactive Data File | [SIGNATURES](index=30&type=section&id=SIGNATURES) This section contains the required signatures for the report, affirming its submission by duly authorized officers of the registrant [Report Signature](index=30&type=section&id=Report%20Signature) This section contains the report information signed by the registrant's duly authorized officer, as required by the Securities Exchange Act of 1934 - The report was signed by **Timothy R. Millage**, Vice President, Chief Financial Officer, and Treasurer of Lee Enterprises, Incorporated, on **August 8, 2025**[163](index=163&type=chunk)

[Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) Lee Enterprises reported strong Q3 2025 results, with 92% sequential Adjusted EBITDA growth and digital revenue comprising 55% of total operating revenue Q3 2025 Key Financial Metrics | Metric | Value (million USD) | Year-over-Year Change | | :--- | :--- | :--- | | Total Operating Revenue | $141 | -6.2% | | Total Digital Revenue | $78 | +3% | | Digital-Only Subscription Revenue | $23 | +13% | | Adjusted EBITDA | $15 | +1% | | Net Loss | $2 | Improvement from $3.7M loss | - Digital revenue now represents **55%** of the company's total operating revenue, underscoring the ongoing strategic shift to digital[1](index=1&type=chunk)[2](index=2&type=chunk) - Digital-only subscribers reached **670,000**, with same-store digital subscription revenue growing **16% YoY**, driven by higher average rates[1](index=1&type=chunk)[2](index=2&type=chunk) - Amplified Digital Agency revenue grew by an industry-leading **10%** on a same-store basis over the prior year, reaching **$29 million**[1](index=1&type=chunk) - The company achieved significant reductions in print-related expenses and corporate overhead, which contributed to the expansion of Adjusted EBITDA[1](index=1&type=chunk) [Financial Condition](index=2&type=section&id=Financial%20Condition) The company reported $455 million in outstanding debt with favorable terms, with recent payments funded by organic free cash flow Debt and Liquidity as of June 29, 2025 | Metric | Value (million USD) | | :--- | :--- | | Principal Amount of Debt | $455 | | Cash on Balance Sheet | $14 | | Debt, Net of Cash | $441 | - The company's debt is under a Credit Agreement with BH Finance, featuring a **25-year maturity**, a **9.0% fixed annual interest rate**, no fixed principal payments, and no financial performance covenants[3](index=3&type=chunk) - As a result of a cyber event, interest and rent payments for March, April, and May 2025 were waived and added to the principal. However, since May 2025, all principal and interest payments have been satisfied through organic free cash flow[4](index=4&type=chunk)[1](index=1&type=chunk) - Fiscal year 2025 outlook includes up to **$5 million** in capital expenditures and **$3 million to $9 million** in cash paid for income taxes. No material pension contributions are expected[4](index=4&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's consolidated statements of operations, including revenue, expenses, net loss, and a detailed revenue composition [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Q3 2025 reported total operating revenue of $141.3 million, an operating income of $4.7 million, and a net loss of $1.7 million, showing improvement year-over-year Q3 Statement of Operations Highlights (in thousands) | Account | Q3 2025 (thousand USD) | Q3 2024 (thousand USD) | | :--- | :--- | :--- | | Total Operating Revenue | $141,294 | $150,578 | | Total Operating Expenses | $137,318 | $146,775 | | Operating Income | $4,662 | $4,925 | | Net Loss | $(1,676) | $(3,691) | | Loss Per Share (Basic) | $(0.31) | $(0.73) | Nine Months Statement of Operations Highlights (in thousands) | Account | Nine Months 2025 (thousand USD) | Nine Months 2024 (thousand USD) | | :--- | :--- | :--- | | Total Operating Revenue | $423,235 | $452,806 | | Operating Loss | $(3,193) | $8,206 | | Net Loss | $(29,915) | $(14,094) | | Loss Per Share (Basic) | $(5.16) | $(2.68) | [Revenue Composition](index=6&type=section&id=Revenue%20Composition) Q3 2025 Total Digital Revenue grew to $77.9 million, partially offsetting print declines, with digital now representing 55% of total operating revenue Q3 Revenue Composition (in thousands) | Revenue Type | Q3 2025 (thousand USD) | Q3 2024 (thousand USD) | % Change | | :--- | :--- | :--- | :--- | | Total Digital Revenue | $77,907 | $75,754 | +2.8% | | Total Print Revenue | $63,387 | $74,824 | -15.3% | | **Total Operating Revenue** | **$141,294** | **$150,578** | **-6.2%** | Nine Months Revenue Composition (in thousands) | Revenue Type | Nine Months 2025 (thousand USD) | Nine Months 2024 (thousand USD) | % Change | | :--- | :--- | :--- | :--- | | Total Digital Revenue | $223,843 | $217,406 | +3.0% | | Total Print Revenue | $199,392 | $235,400 | -15.3% | | **Total Operating Revenue** | **$423,235** | **$452,806** | **-6.5%** | [Reconciliation of Non-GAAP Financial Measures](index=6&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This section reconciles non-GAAP financial measures such as Adjusted EBITDA, Cash Costs, and Same-store revenues to their GAAP equivalents [Adjusted EBITDA Reconciliation](index=6&type=section&id=Adjusted%20EBITDA%20Reconciliation) Q3 2025 Adjusted EBITDA was $14.9 million, a slight increase year-over-year, reconciled from net loss with various non-cash and non-operating adjustments Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Description | Q3 2025 (thousand USD) | Q3 2024 (thousand USD) | | :--- | :--- | :--- | | Net Loss | $(1,676) | $(3,691) | | Adjustments (Net) | $16,620 | $18,515 | | **Adjusted EBITDA** | **$14,944** | **$14,824** | [Cash Costs Reconciliation](index=7&type=section&id=Cash%20Costs%20Reconciliation) Q3 2025 Cash Costs decreased by 7% to $128.0 million, derived by adjusting total operating expenses for non-cash items and certain restructuring costs Reconciliation of Operating Expenses to Cash Costs (in thousands) | Description | Q3 2025 (thousand USD) | Q3 2024 (thousand USD) | | :--- | :--- | :--- | | Operating Expenses | $137,318 | $146,775 | | Adjustments (Non-Cash) | $(9,362) | $(9,224) | | **Cash Costs** | **$127,956** | **$137,551** | [Same-Store Revenue Reconciliation](index=8&type=section&id=Same-Store%20Revenue%20Reconciliation) Q3 2025 same-store total operating revenue was $141.3 million, with digital subscription revenue growing strongly by 15.6% year-over-year Same-Store Revenue Highlights (in thousands) | Revenue Category | Q3 2025 (thousand USD) | Q3 2024 (thousand USD) | % Change | | :--- | :--- | :--- | :--- | | Same-store, Digital Subscription Revenue | $23,482 | $20,322 | +15.6% | | Same-store, Digital Advertising Revenue | $49,097 | $49,597 | -1.0% | | Same-store, Total Operating Revenue | $141,297 | $149,235 | -5.3% | [Company Information & Disclosures](index=4&type=section&id=Company%20Information%20%26%20Disclosures) This section provides a corporate overview of Lee Enterprises, outlines key business risks, and defines non-GAAP financial measures used in the report - Lee Enterprises is a subscription and advertising platform and a leading provider of local news, serving **72 markets** in **25 states**[6](index=6&type=chunk) - Key business risks include managing declining print revenue, changes in advertising demand, significant cyber security breaches, and competition[10](index=10&type=chunk) - The report utilizes non-GAAP measures like Adjusted EBITDA, Cash Costs, and Same-store revenues to provide a clearer understanding of the company's core operating performance, excluding unusual or non-cash items[16](index=16&type=chunk)

Financial Data and Key Metrics Changes - The third quarter total operating revenue was $141 million, showing a year-over-year trend consistent with the second quarter results [14] - Digital revenue reached $305 million on a trailing twelve-month basis, with a goal of achieving $450 million by 2028 [10][19] - Cash costs decreased by 7% compared to the same quarter last year, with expectations of finishing the fiscal year with cash costs between $522 million and $532 million, representing a 3% to 5% decline over the prior year [16] Business Line Data and Key Metrics Changes - Digital subscription revenue grew 16% year-over-year on a same-store basis, driven by a 28% increase in ARPU [8][15] - Amplify Digital agency revenue grew 10% on a same-store basis over the prior year, indicating a return to double-digit growth [11][15] - Total digital revenue in the third quarter was $78 million, representing a 4% increase on a same-store basis [15] Market Data and Key Metrics Changes - Local advertising revenue trends improved significantly, with a year-over-year trend favorable by seven points [7] - Digital revenue now constitutes 55% of overall revenue, highlighting the strength of the digital business [11] Company Strategy and Development Direction - The company is focused on a three-pillar digital growth strategy aimed at achieving $450 million in digital revenue by 2028 [9][10] - The launch of AI-powered products is expected to drive lead capture, customer engagement, and business automation, enhancing the product catalog [8][14] - The company aims to replace print revenue with growing and profitable digital revenue to achieve long-term sustainability [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in reaching long-term unit targets despite recent challenges, including the cyber event [9] - The company anticipates continued growth in digital subscriptions and new AI revenue streams to drive momentum [21] - Management emphasized the importance of enhancing operational rigor without compromising quality to strengthen long-term positioning [16] Other Important Information - The company executed approximately $40 million in annualized cost reductions aimed at lowering costs across non-core print operations [16] - The credit agreement with Berkshire Hathaway includes favorable terms, allowing the company to focus on executing its strategy [17] Q&A Session Summary Question: How is Lee addressing the shift in how readers consume news? - Management highlighted the competitive advantage of their asset portfolio and the focus on enhancing digital user experience and expanding local content to address changes in consumer behavior [24][25]

Financial Performance - Q3 FY2025 - Total operating revenue reached $141 million, a decrease of 6% year-over-year (YoY), or 5% on a same-store basis[13] - Total digital revenue amounted to $78 million, reflecting a 4% YoY increase[13] - Print revenue totaled $63 million, experiencing a 15% decline[13] - Adjusted EBITDA stood at $15 million, showing a 1% YoY growth[14] - Total cash costs were $128 million, a reduction of 7% YoY[14] Digital Revenue Growth - Digital-only subscription revenue was $23 million, up by 13% YoY, or 16% on a same-store basis[6] - Amplified Digital® Agency revenue reached $29 million, an increase of 9% YoY, or 10% on a same-store basis[6] - Digital advertising revenue was $49 million, a decrease of 2% YoY, or 1% on a same-store basis[6] - The company expects to drive more than $450 million of digital revenue by 2028[4] Strategic Initiatives and Outlook - The company is implementing a Three Pillar Digital Growth Strategy to transform from a print-centric to a digital-centric business[3] - The company anticipates YoY growth in the low single digits for both total digital revenue and adjusted EBITDA in the second half of FY25[24]

Core Insights - Lee Enterprises reported a significant growth in Adjusted EBITDA of 92% over Q2, indicating strong operational performance and effective cost management [1][2] - Total Digital Revenue reached $78 million, accounting for 55% of total revenue, reflecting the company's successful transition to a digital-first model [1][6] - Digital-only subscription revenue increased by 16% year-over-year, showcasing the growing demand for digital content among consumers [1][6] Financial Performance - Total operating revenue for the quarter was $141 million, with a net loss of $2 million and Adjusted EBITDA of $15 million, a 1% increase compared to the previous year [6][15] - Operating expenses decreased by 6% to $137 million, while cash costs fell by 7% to $128 million, demonstrating effective cost control measures [6][17] - The company achieved organic free cash flow growth, fulfilling all mandatory principal and interest payments through cash from operations since May 2025 [2][10] Digital Growth - Digital advertising and marketing services revenue totaled $49 million, representing 74% of total advertising revenue [6][16] - Amplified Digital Agency revenue grew by 10% year-over-year, highlighting the company's competitive position in the digital marketing space [1][2] - The number of digital-only subscribers reached 670,000, contributing $23 million in revenue, a 13% increase over the prior year [6][16] Debt and Cash Flow - The company has $455 million in outstanding debt with favorable terms, including a fixed annual interest rate of 9.0% and no fixed principal payments [5][10] - Cash on the balance sheet totaled $14 million, resulting in a net debt of $441 million after accounting for cash [10][20] - Capital expenditures for the quarter were $1 million, with expectations of up to $5 million for FY25 [10][20]

Company Overview - Lee Enterprises, Incorporated is a major subscription and advertising platform providing high-quality local news and information in 72 markets across 25 states [3] - The company operates daily newspapers, rapidly growing digital products, and nearly 350 weekly and specialty publications [3] - Key markets include St. Louis, MO; Buffalo, NY; Omaha, NE; Richmond, VA; Lincoln, NE; Madison, WI; Davenport, IA; and Tucson, AZ [3] Upcoming Events - Lee Enterprises has scheduled an audio webcast and conference call for August 7, 2025, at 9 a.m. Central Time to discuss preliminary results for the quarter ended June 29, 2025 [1] - A news release will be issued before the market opens on the same day [1] - The live webcast can be accessed via the Investor Relations section of Lee's website and will be available for replay 24 hours later [2]

Core Insights - Nathan Bekke has been appointed as the Chief Operating Officer of Lee Enterprises, succeeding his role as Operating Vice President and Vice President of Audience Strategy [1][2] - Kevin Mowbray, the President and CEO of Lee, highlighted Bekke's significant contributions to the company's digital transformation and revenue growth, particularly in digital-only audience expansion [2] - Bekke expressed his commitment to accelerating Lee's digital transformation and building on the company's progress as a digital-first organization [2] Company Overview - Lee Enterprises is a major subscription and advertising platform, providing local news and information through daily newspapers and nearly 350 weekly and specialty publications across 72 markets in 25 states [6] - The company is focused on delivering valuable local news and information to its communities, with key markets including St. Louis, MO; Buffalo, NY; Omaha, NE; and Richmond, VA [6] - Lee's common stock is traded on NASDAQ under the symbol LEE [6]

Core Viewpoint - The approval of Arizona's application for primacy to oversee underground injection wells marks a significant milestone for the state's energy sector, allowing for direct regulation of these wells used in oil, gas, and helium production [2][4]. Group 1: Regulatory Developments - The U.S. Environmental Protection Agency (EPA) Administrator Lee Zeldin approved Arizona's application, empowering the state to regulate underground injection wells under the Safe Drinking Water Act [1][2]. - Desert Mountain Energy Corp. expressed gratitude to Administrator Zeldin and local congressmen for their support in achieving this regulatory milestone [4]. Group 2: Company Developments - Desert Mountain Energy is optimistic about the future of domestic energy and helium production in Arizona, emphasizing its commitment to sustainable resource development [5]. - The company recently closed the fourth tranche of its non-brokered private placement, raising an additional C$10,000, bringing the total raised to C$981,500 through the issuance of 3,926,000 Units [6][7]. Group 3: Company Profile - Desert Mountain Energy Corp. focuses on the exploration, development, and production of helium, hydrogen, natural gas, and condensate, aiming to supply critical elements for renewable energy and high technology industries [8].

Core Insights - Lee Enterprises, Inc. is hosting a "Draw Off" event series featuring editorial cartoonists Phil Hands and Adam Zyglis alongside D.J. Coffman from VeeFriends, aimed at blending local news with a broader digital audience through creativity and storytelling [1][3][4] Event Details - The events will be streamed live on Facebook, with the first session on May 20, 2025, featuring Phil Hands, and the second on May 22, 2025, featuring Adam Zyglis [2][4] - Each session will last one hour, allowing viewers to engage by commenting and voting while the cartoonists create new sketches in real time [2][3] Company Background - Lee Enterprises serves 72 markets across 25 states, focusing on quality journalism and digital innovation to provide valuable content and advertising solutions [5] - VeeFriends is an entertainment company that creates a universe of over 250 characters, promoting storytelling and community-driven experiences [6]

Revenue Performance - Total operating revenue was $137.4 million in the 2025 Quarter, down $9.2 million, or 6.3%, compared to the 2024 Quarter[68]. - Total operating revenue for the six months ended March 30, 2025, was $281.9 million, down $20.3 million, or 6.7%, compared to the 2024 Period[91]. - Subscription revenue decreased to $129.9 million in the 2025 Period, a decline of 7.6%, despite a 14.2% growth in digital-only subscription revenue, which now totals 728,000[93]. - Advertising and marketing services revenue totaled $60.5 million in the 2025 Quarter, down 5.7% compared to the 2024 Quarter[69]. - Advertising and marketing services revenue totaled $127.1 million in the 2025 Period, down 5.9% compared to the 2024 Period, with digital advertising representing 71.4% of total revenue[92]. Digital Revenue Growth - Digital subscription revenue grew 17.4% to $23.8 million in the 2025 Quarter, with digital-only subscribers totaling 728,000[70]. - Total digital revenue reached $72.6 million in the 2025 Quarter, an increase of 2.5%, representing 52.8% of total operating revenue[72]. - Total digital revenue increased by 3.0% to $145.9 million in the 2025 Period, representing 51.8% of total operating revenue[95]. Operating Expenses - Total operating expenses decreased by 6.1% to $143.0 million in the 2025 Quarter, with significant reductions in newsprint and ink costs by 25.3%[74][75]. - Total operating expenses were $292.1 million in the 2025 Period, a decrease of 3.2% compared to the 2024 Period[97]. Net Loss and Financial Performance - Net loss for the 2025 Quarter was $12.0 million, with diluted loss per share at $2.07, compared to a net loss of $11.6 million and diluted loss per share of $2.06 in the 2024 Quarter[86]. - Net loss for the 2025 Period was $28.2 million, with diluted loss per share of $4.87, compared to a net loss of $10.4 million and diluted loss per share of $1.94 in the 2024 Period[110]. Cash Flow and Liquidity - Cash required for operating activities totaled $8.1 million in the 2025 Period, a decrease of $11.4 million compared to cash provided by operating activities of $3.3 million in the 2024 Period[121]. - Cash provided by investing activities totaled $3.2 million in the 2025 Period, compared to $0.2 million in the 2024 Period, including proceeds from the sale of non-core real estate[123]. - The company's liquidity totaled $4.7 million on March 30, 2025, with plans to reduce operating and capital spending to maintain sufficient liquidity[128]. Restructuring Costs - Restructuring costs increased by 57.4% to $6.5 million in the 2025 Quarter, primarily due to costs associated with recovering from a Cyber Incident[77]. - Restructuring costs increased by $3.3 million in the 2025 Period, primarily due to costs associated with recovering from the Cyber Incident and ongoing business transformation efforts[100]. Interest Expense - Interest expense decreased by 2.6% to $10.0 million in the 2025 Quarter, attributed to a lower average outstanding balance on the Term Loan[82]. Capital Expenditures - The company anticipates capital expenditures of up to $7.0 million in 2025 will be funded from internally generated funds[124].