Lee Enterprises(US:LEE)2023-08-06 06:20Financial Data and Key Metrics Changes - Total operating revenue for the third quarter was $171 million, with digital revenue growth at 15% driven by a 43% increase in digital subscription revenue and a 15% increase at Amplified Digital [33][34] - Adjusted EBITDA totaled $23 million in the quarter, reflecting year-over-year growth of 1% [13] - Cash costs decreased by 14% due to cost reduction efforts in response to the soft revenue environment [13] Business Line Data and Key Metrics Changes - Amplified Digital revenue grew by 15% in the third quarter and has increased by 40% annually over the last three years, totaling $89 million [31][34] - Digital subscription revenue saw a 43% growth, with total digital revenue reaching $265 million over the last 12 months, an 18% increase year-over-year [9][30] - Print revenue continues to decline, with print advertising down 33% as reported, and down 25% when excluding certain products [45] Market Data and Key Metrics Changes - The broader industry is experiencing a pullback in local advertising spend, which has accelerated declines in print revenue streams [12] - Digital-only subscribers are expected to total 632,000, with a goal of reaching 900,000 by 2026 [18][42] Company Strategy and Development Direction - The company aims for more than half of its revenue to come from digital by 2026, focusing on digital transformation through a three-pillar strategy [10][19] - Continued investment in talent and technology is prioritized to drive long-term sustainable digital revenue growth [15][19] Management Comments on Operating Environment and Future Outlook - Management remains optimistic about digital revenue streams despite the soft advertising environment, reaffirming guidance for total digital revenue between $270 million and $285 million for 2023 [18][40] - The company is focused on managing the decline of print businesses while driving digital growth, with expectations for adjusted EBITDA to benefit from cost actions in the second half of the year [40][41] Other Important Information - The principal amount of debt at the end of the third quarter was $460 million, with favorable terms from the credit agreement with Berkshire Hathaway [16] - The company has identified an additional $30 million of non-core assets to monetize, with nearly $5 million expected to close in the fourth quarter [17] Q&A Session Summary Question: What is the trajectory of print advertising decline in the coming quarter? - Management indicated that trends observed in late Q3 will carry into Q4, with print advertising down 33% as reported and down 25% when excluding certain products [45][46] Question: What is driving the revenue growth in digital? - Key drivers include strong performance in digital subscription offerings and Amplified Digital, with significant growth in sectors like healthcare and universities [55][56] Question: Are asset sale proceeds earmarked for debt reduction? - Yes, all proceeds from asset sales are required for debt payment [57]