Total operating revenue increased (+8%) over the prior year
Digital revenue totaled
Adjusted EBITDA(1) totaled
Digital-only subscribers grew 51% to 337,000
“We have made significant progress on our Three Pillar Digital Growth Strategy and our third quarter results clearly demonstrate that we are on a strong path forward to driving more recurring, sustainable revenue.” said
"Almost 55% of our total operating revenue, representing
“Total advertising and marketing services revenue increased 17.2% in the quarter, and I am very proud of the focus and determination our sales organization has shown in achieving these strong results,” Mowbray added. “Total digital revenue increased 48.3% in the quarter fueled by a 90.3% growth at Amplified, our full service digital marketing services agency, as we continue to expand our in-house capabilities on sophisticated campaigns. We have also expanded our suite of products for SMBs as well as large regional and national accounts, including our recently announced partnership with
“While we are investing in our digital transformation, we continue to strengthen our balance sheet,” said
Total Cash Costs(1) were
THIRD QUARTER HIGHLIGHTS
- Total operating revenue increased 7.6% in the quarter compared to the same quarter a year ago.
- Subscription revenue totaled
$88.8 million , almost flat compared to the prior year. Digital-only subscriptions at the end of the quarter totaled 337,000, or up 50.5% compared to the same period last year. - Audiences remain strong in both print and digital due to our focus on relevant news in our local markets. Monthly average page views totaled 400 million and monthly average unique visitors totaled 49 million.
- Total advertising and marketing services revenue was
$91.1 million , a 17.2% increase compared to the same quarter last year. - Revenue at TownNews, our SaaS content platform, increased 8.7% in the third quarter and revenue over the last twelve months totaled
$26.7 million . - Total digital revenue, including digital advertising, digital subscription and digital services revenue, was
$65.6 million and represented 33.4% of total operating revenue. Total digital revenue increased 48.3% in the quarter. - Operating expenses totaled
$184.4 million and Cash Costs on a pro forma basis were up 9.2% in the quarter as a result of the one-time costs measures taken in last year as a result of the pandemic. Since the acquisition inMarch 2020 , we achieved$110 million of cash cost synergies, reaching our target established forSeptember 2021 . - Net income totaled
$3.2 million and Adjusted EBITDA totaled$26.7 million .
YEAR TO DATE HIGHLIGHTS
- Total operating revenue was
$600.7 million year to date compared to$426.2 million through the first nine months last year, reflecting the acquisition of BH Media and Buffalo News. On a pro forma basis, total operating revenue was down 4.7% to last year. - Subscription revenue totaled
$269.9 million , a 1.3% increase compared to the prior year on a pro forma basis. - Total advertising revenue was
$279.3 million , a 9.3% decrease compared to the same period last year on a pro forma basis. - Revenue at TownNews increased 8.7% year to date.
- Total digital revenue, including digital advertising, digital subscription and digital services revenue, was
$187.0 million and represented 31.1% of total operating revenue. Total digital revenue increased 33.0% in the first nine months of 2021 on a pro forma basis. - Operating expenses totaled
$562.6 million and Cash Costs on a pro forma basis were down 4.2%. - Due to changes in one of our employee contracts, we recognized a
$23.8 million noncash curtailment gain associated with elimination of retiree medical benefits. Additionally, we recognized a$12.3 million liability associated with the withdrawal from a multiemployer pension plan. Payments toward the liability are made over 20 years. - Net Income totaled
$19.5 million and Adjusted EBITDA totaled$90.8 million .
DEBT AND FREE CASH FLOW
On
As of and for the 13 weeks ended
- The principal amount of debt totaled
$485.2 million , a$90.8 million reduction since theMarch 2020 refinancing. - Cash on the balance sheet totaled
$21.1 million . Debt, net of cash on the balance sheet, totaled$464.1 million . - Excess Cash Flow for the third quarter totaled
$1.1 million and was used to repay debt in the fourth quarter. - Capital expenditures totaled
$2.4 million in the 13 weeks endedJune 27, 2021 and totaled$5.4 million for the 39 weeks then ended. For 2021, we expect capital expenditures to total less than$8 million . - For 2021, we expect cash paid for income taxes to total between
$4 and$6 million . - We made no pension contributions in the third quarter and have contributed
$965,000 through the first nine months of FY2021. Due to new legislation reducing required pension contributions, we do not expect any additional pension contributions in FY2021.
CONFERENCE CALL INFORMATION
As previously announced, we will hold an earnings conference call and audio webcast today at
ABOUT LEE
FORWARD-LOOKING STATEMENTS — The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. This release contains information that may be deemed forward-looking that is based largely on our current expectations, and is subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those anticipated. Among such risks, trends and other uncertainties, which in some instances are beyond our control, are:
- Revenues may continue to diminish or declines in revenue could accelerate as a result of the COVID-19 pandemic;
- Revenues may continue to be diminished longer than anticipated as a result of the COVID-19 pandemic;
- The COVID-19 pandemic may result in material long-term changes to the publishing industry which may result in permanent revenue reductions for the Company and other risks and uncertainties;
- We may experience increased costs, inefficiencies and other disruptions as a result of the COVID-19 pandemic;
- We may be required to indemnify the previous owners of the BH Media or the
Buffalo for unknown legal and other matters that may arise; - Our ability to manage declining print revenue and circulation subscribers;
- The warrants issued in our 2014 refinancing will not be exercised;
- The impact and duration of adverse conditions in certain aspects of the economy affecting our business;
- Changes in advertising and subscription demand;
- Changes in technology that impact our ability to deliver digital advertising;
- Potential changes in newsprint, other commodities and energy costs;
- Interest rates;
- Labor costs;
- Significant cyber security breaches or failure of our information technology systems;
- Our ability to achieve planned expense reductions and realize the expected benefit of our acquisitions;
- Our ability to maintain employee and customer relationships;
- Our ability to manage increased capital costs;
- Our ability to maintain our listing status on NASDAQ;
- Competition; and
- Other risks detailed from time to time in our publicly filed documents.
Any statements that are not statements of historical fact (including statements containing the words "aim", “may”, “will”, “would”, “could”, “believes”, “expects”, “anticipates”, “intends”, “plans”, “projects”, “considers” and similar expressions) generally should be considered forward-looking statements. Statements regarding our plans, strategies, prospects and expectations regarding our business and industry, including statements regarding the impacts that the COVID-19 pandemic and our responses thereto may have on our future operations, are forward-looking statements. They reflect our expectations, are not guarantees of performance and speak only as of the date the statement is made. Readers are cautioned not to place undue reliance on such forward-looking statements, which are made as of the date of this release. We do not undertake to publicly update or revise our forward-looking statements, except as required by law.
Contact:
IR@lee.net
(563) 383-2100
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
13 Weeks Ended | 39 Weeks Ended | |||||||||||
(Thousands of Dollars, Except Per Share Data) | 2021 | 2020 | Percent Change | 2021 | 2020 | Percent Change | ||||||
Advertising and marketing services | 91,122 | 77,754 | 17.2 | 279,326 | 204,426 | 36.6 | ||||||
Subscription | 88,792 | 89,115 | (0.4 | ) | 269,905 | 178,234 | 51.4 | |||||
Other | 16,576 | 15,659 | 5.9 | 51,505 | 43,578 | 18.2 | ||||||
Total operating revenue | 196,490 | 182,528 | 7.6 | 600,736 | 426,238 | 40.9 | ||||||
Operating expenses: | ||||||||||||
Compensation | 82,731 | 72,396 | 14.3 | 250,048 | 164,330 | 52.2 | ||||||
Newsprint and ink | 7,051 | 7,572 | (6.9 | ) | 22,222 | 16,629 | 33.6 | |||||
Other operating expenses | 82,117 | 77,440 | 6.0 | 243,749 | 178,744 | 36.4 | ||||||
Cash costs | 171,899 | 157,408 | 9.2 | 516,019 | 359,703 | 43.5 | ||||||
Total operating revenue less cash costs | 24,591 | 25,120 | (2.1 | ) | 84,717 | 66,535 | 27.3 | |||||
Depreciation and amortization | 10,836 | 11,201 | (3.3 | ) | 33,794 | 25,196 | 34.1 | |||||
Assets loss (gain) on sales, impairments and other, net | 242 | 147 | 64.6 | 6,938 | (5,153 | ) | NM | |||||
Restructuring costs and other | 1,419 | 2,865 | (50.5 | ) | 5,880 | 6,422 | (8.4 | ) | ||||
Operating expenses | 184,396 | 171,621 | 7.4 | 562,631 | 386,168 | 45.7 | ||||||
Equity in earnings of associated companies | 1,689 | 842 | NM | 4,902 | 3,773 | 29.9 | ||||||
Operating income | 13,783 | 11,749 | 17.3 | 43,007 | 43,843 | (1.9 | ) | |||||
Non-operating income (expense): | ||||||||||||
Interest expense | (11,010 | ) | (13,135 | ) | (16.2 | ) | (34,129 | ) | (35,377 | ) | (3.5 | ) |
Debt financing and administrative costs | — | — | - | — | (11,865 | ) | NM | |||||
Curtailment Gain | — | — | - | 23,830 | — | NM | ||||||
Pension withdrawal cost | — | — | - | (12,310 | ) | — | NM | |||||
Other, net | 2,330 | 1027 | (28.3 | ) | 6,240 | 3,309 | 88.6 | |||||
Non-operating expenses, net | (8,680 | ) | (12,108 | ) | (28.3 | ) | (16,369 | ) | (43,933 | ) | (62.7 | ) |
Income before income taxes | 5,103 | (359 | ) | NM | 26,638 | (90 | ) | NM | ||||
Income tax expense (benefit) | 1,366 | 368 | NM | 7,106 | (92 | ) | NM | |||||
Net income (loss) | 3,737 | (727 | ) | NM | 19,532 | 2 | NM | |||||
Net income (loss) attributable to non-controlling interests | (510 | ) | (548 | ) | (6.9 | ) | (1,537 | ) | (1,322 | ) | 16.3 | |
Income (loss) attributable to Lee Enterprises, Incorporated | 3,227 | (1,275 | ) | NM | 17,995 | (1,320 | ) | NM | ||||
Earnings per common share: | ||||||||||||
Basic | 0.56 | (0.23 | ) | NM | 3.15 | (0.23 | ) | NM | ||||
Diluted | 0.55 | (0.23 | ) | NM | 3.10 | (0.23 | ) | NM | ||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
The table below reconciles the non-GAAP financial performance measure of Adjusted EBITDA to net income, its most directly comparable GAAP measure:
13 Weeks Ended | 39 Weeks Ended | |||||||
(Thousands of Dollars) | 2021 | 2020 | 2021 | 2020 | ||||
Net income (loss) | 3,737 | (727 | ) | 19,532 | 2 | |||
Adjusted to exclude | ||||||||
Income tax expense (benefit) | 1,366 | 368 | 7,106 | (92 | ) | |||
Non-operating expenses, net | 8,680 | 12,108 | 16,369 | 43,933 | ||||
Equity in earnings of TNI and MNI | (1,689 | ) | (842 | ) | (4,902 | ) | (3,773 | ) |
Loss (gain) on sale of assets and other, net | 242 | 147 | 6,938 | (5,153 | ) | |||
Depreciation and amortization | 10,836 | 11,201 | 33,794 | 25,196 | ||||
Restructuring costs and other | 1,419 | 2,865 | 5,880 | 6,422 | ||||
Stock compensation | 205 | 228 | 639 | 799 | ||||
Add: | ||||||||
Ownership share of TNI and MNI EBITDA (50%) | 1,923 | 955 | 5,421 | 4,464 | ||||
Adjusted EBITDA | 26,719 | 26,303 | 90,777 | 71,798 | ||||
NOTES
(1) The following are non-GAAP (Generally Accepted Accounting Principles) financial measures for which reconciliations to relevant GAAP measures are included in tables accompanying this release:
- Adjusted EBITDA is a non-GAAP financial performance measure that enhances financial statement users overall understanding of the operating performance of the Company. The measure isolates unusual, infrequent or non-cash transactions from the operating performance of the business. This allows users to easily compare operating performance among various fiscal periods and how management measures the performance of the business. This measure also provides users with a benchmark that can be used when forecasting future operating performance of the Company that excludes unusual, nonrecurring or one time transactions. Adjusted EBITDA is a component of the calculation used by stockholders and analysts to determine the value of our business when using the market approach, which applies a market multiple to financial metrics. It is also a measure used to calculate the leverage ratio of the Company, which is a key financial ratio monitored and used by the Company and its investors. Adjusted EBITDA is defined as net income (loss), plus non-operating expenses, income tax expense, depreciation and amortization, assets loss (gain) on sales, impairments and other, restructuring costs and other, stock compensation and our 50% share of EBITDA from TNI and MNI, minus equity in earnings of TNI and MNI.
- Cash Costs represent a non-GAAP financial performance measure of operating expenses which are measured on an accrual basis and settled in cash. This measure is useful to investors in understanding the components of the Company’s cash-settled operating costs. Periodically, the Company provides forward-looking guidance of Cash Costs, which can be used by financial statement users to assess the Company's ability to manage and control its operating cost structure. Cash Costs are defined as compensation, newsprint and ink and other operating expenses. Depreciation and amortization, assets loss (gain) on sales, impairments and other, other non-cash operating expenses and other expenses are excluded. Cash Costs also exclude restructuring costs and other, which are typically paid in cash.
(2) This earnings release is a preliminary report of results for the periods included. The reader should refer to the Company's most recent reports on Form 10-Q and on Form 10-K for definitive information.
(3) On
(4) The Company's debt is the
(5) Due to the BH Media acquisition, our basis of presentation includes (i) our actual GAAP results, which reflect a full quarter of Legacy Lee,
(6) TNI refers to
Source:
2021 GlobeNewswire, Inc., source