Lee Enterprises(LEE)2020-08-08 12:08Financial Data and Key Metrics Changes - Total operating revenue on a GAAP basis was $182.5 million in the quarter, exceeding the range of $177 million to $180 million provided last quarter [21] - On a pro forma basis, total revenue was down 25% compared to the prior year due to the significant negative effects from COVID-19 [21] - Adjusted EBITDA totaled $26.3 million in the third quarter, which was $2.8 million higher than the high end of the outlook [14][24] - Cash costs on a pro forma basis were down 22.1% in the quarter due to a combination of temporary and permanent cost reductions [22] Business Line Data and Key Metrics Changes - Subscription revenue was down 5% in the quarter on a pro forma basis, with single-copy sales down 26.9% due to COVID-19 impacts [10] - Excluding single-copy revenue, subscription revenue was down just 1.6% compared to the prior year on a pro forma basis, showing improvement from Q1 and Q2 trends [11] - Digital-only subscribers increased to 222,000, representing a 35.1% annualized increase over the March 2020 quarter [12] Market Data and Key Metrics Changes - Advertising demand has changed dramatically during COVID-19, with a significant negative impact on advertising revenue [12] - Trends in advertising revenue showed a slow and steady improvement, with June trends being 15 percentage points better than in April [13] Company Strategy and Development Direction - The company aims to transform the way it presents local news, focusing on improving digital presentations and creating new content channels [15][16] - The post-pandemic strategy includes diversifying and transforming services and products offered to advertisers [17] - The company is committed to remaining a leading provider of local news and information while focusing on digital audience growth [18] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the future despite significant negative impacts from COVID-19, emphasizing the importance of local news and robust digital products [18][19] - The company has secured financing that eliminates financing risk for 25 years, which contributes to a positive outlook [19] Other Important Information - The company executed a temporary compensation reduction for all employees, which reduced costs by $10 million in the quarter [23] - The company expects to achieve more than $100 million in cost synergies due to business transformation initiatives and acquisition integration [26] Q&A Session Summary Question: What is the difference between EBITDA and excess cash flow? Can debt reduction continue at this pace going forward? - Adjusted EBITDA is a non-GAAP financial performance measure used to monitor operating results, while excess cash flow is defined as cash on the balance sheet in excess of $20 million [31][32] Question: Did Lee buy back any stock in the past quarter or the past year? - The company did not buy back any stock in the past quarter or year due to restrictions under the current credit agreement [33] Question: Did Lee make any asset sales in the quarter? - The company is still focused on its real estate monetization program, which slowed down due to government shutdowns, but remains active with $34 million of real estate for sale [34] - After the quarter end, the company monetized part of its private equity investment, realizing $3.9 million of a $10 million investment [35]