Lee Enterprises(US:LEE)2019-08-09 03:16Financial Data and Key Metrics Changes - Total revenue decreased by 4% in the third quarter, consistent with the previous quarter [7] - Adjusted EBITDA for the third quarter was $30.7 million, down 1.3% compared to the prior year, with total adjusted EBITDA over the last 12 months amounting to $125.5 million [20] - Cash costs on a same-property basis decreased by 7.6% in the third quarter and are expected to decline between 4.75% and 5.5% for fiscal year 2019 [19][20] Business Line Data and Key Metrics Changes - Total digital revenue, including digital advertising and services, increased by 6.9% to nearly $120 million over the last 12 months [9] - Programmatic revenue grew by 6.2% on a same-property basis, marking nearly a decade of quarter-over-quarter digital advertising revenue growth [9] - Revenue from the Amplified Digital Agency increased by 32% in the third quarter [11] - Subscription revenue was down 3.2% on a reported basis and 5.3% on a same-property basis [13] Market Data and Key Metrics Changes - Digital-only subscriptions increased by 72%, totaling 79,000, with expectations to nearly double in fiscal year 2019 [14] - Local controllable retail accounts represent 50% of advertising revenue, with Edison revenue up 13.3% and customer accounts increasing by almost 8% over Q2 [10] Company Strategy and Development Direction - The company is focused on driving digital growth by leveraging its position in midsize markets and maintaining industry-leading margins and strong cash flow [7] - The relaunch of the Edison sales approach aims to improve local retail revenue trends [10] - TownNews is positioned for substantial future revenue growth through market share expansion and diversification of the customer base [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future performance despite industry challenges, highlighting strong execution on cost management and digital growth strategies [16][17] - The company anticipates improvements in subscription trends in the current quarter following the launch of the News+ membership model [13] Other Important Information - The company reduced debt by $17.9 million, with a leverage ratio net of cash standing at 3.5x [20] - The company has identified approximately $26 million of excess real estate for potential sale to reduce leverage [20] Q&A Session Summary Question: How does New Media's $1.8 billion, 11.5% coupon affect Lee's refinancing efforts? - Management indicated that there is no direct connection between the two situations, emphasizing Lee's strong financial metrics and position for opportunistic financing [24] Question: Did you repurchase the notes in the open market at a discount? - The notes repurchased were just below the current call price, indicating a discount to the call price but still above par [25] Question: At what date do you estimate that digital revenue will exceed print revenue? - Management did not provide specific guidance but emphasized a focus on driving digital transformation and monetizing large audiences [26] Question: What actions have been taken to buy back Lee stock since Board authorization? - To date, no shares have been repurchased, with management considering various factors including stock price and leverage ratio [27]