Lee Enterprises(LEE)2024-08-03 18:15Financial Data and Key Metrics - Total operating revenue in Q3 2024 was $151 million, showing a 150 basis point sequential improvement [12] - Digital revenue grew to $290 million over the last 12 months, with a 17% annual growth rate over the last three years [9] - Digital subscription revenue totaled $21 million, growing 34% year-over-year [9] - Digital advertising revenue reached $50 million, with Amplified Digital Agency contributing $26 million, growing 12% year-over-year [9] - Print revenue declined 22% year-over-year, but showed a modest sequential improvement [13] - Adjusted EBITDA for the quarter was $15 million [13] - The company expects to achieve $75 million to $85 million in cost savings in FY 2024 [14] Business Line Data and Key Metrics - Digital subscribers grew 23% year-over-year, reaching 748,000 [7] - Digital-only ARPU showed strong year-over-year growth [12] - Amplified Digital Agency grew 12% in Q3, with annualized revenue exceeding $100 million [8] - Digital margin stood at an impressive 72%, indicating high profitability [10] Market Data and Key Metrics - The company is the fastest-growing digital subscriptions platform in local media, both in terms of revenue and subscribers [6] - Digital subscription unit growth has outpaced industry peers since the implementation of the digital transformation strategy four years ago [6] - The company expects to end the year with 771,000 digital subscribers [16] Company Strategy and Industry Competition - The company has achieved a digital revenue inflection point, with digital revenue surpassing print revenue [5] - The three-pillar digital growth strategy focuses on digital subscriptions, digital advertising, and digital services [11] - The company aims to achieve digital sustainability by 2026, with gross margin from digital products expected to exceed remaining SG&A costs [11] - The company continues to invest in talent and technology to drive long-term sustainable digital revenue growth [14] Management Commentary on Operating Environment and Future Outlook - The company is optimistic about the growth potential in the digital subscription and digital services marketplace [11] - The company expects digital revenue growth to accelerate, with significant opportunities ahead [18] - The company is well-positioned to capitalize on the momentum gained in Q3 2024 [18] Other Important Information - The principal amount of debt decreased by $3 million year-to-date, totaling $453 million, a $123 million reduction since March 2020 [15] - The company has identified $25 million of non-core assets for monetization, with $7 million closed year-to-date and an additional $10 million expected to close by the end of the fiscal year [16] - The company has updated its adjusted EBITDA outlook to $73 million to $78 million, reflecting incremental cost reductions [17] Q&A Session Question: Cost savings and transformation efforts - The company has a track record of effective cost management, with $75 million to $85 million in business transformation savings expected in FY 2024 [20] - The company has improved cost guidance by $20 million on the low end, reflecting tightening costs primarily within the print business [20] Question: Asset sales and future expectations - The company is optimistic about closing the remaining $25 million in non-core asset sales in 2025, with potential benefits from lower interest rates and construction costs [22] - The company will continue to evaluate its real estate portfolio to increase the amount of non-core assets available for monetization [22]