false000005836100000583612024-08-012024-08-010000058361us-gaap:CommonStockMember2024-08-012024-08-010000058361lee:PreferredSharePurchaseRightsMember2024-08-012024-08-01

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 1, 2024
_______________________________________________________________________________________
LEE ENTERPRISES, INCORPORATED
(Exact name of Registrant as specified in its charter)
_______________________________________________________________________________________
Delaware1-622742-0823980
(State of Incorporation)(Commission File Number)(I.R.S. Employer Identification No.)
4600 E. 53rd Street, Davenport, Iowa 52807
(Address of Principal Executive Offices)
(563) 383-2100
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $.01 per shareLEEThe Nasdaq Global Select Market
Preferred Share Purchase RightsLEEThe Nasdaq Global Select Market
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o


Item 2.02.    Results of Operations and Financial Condition.
On August 1, 2024, Lee Enterprises, Incorporated (the “Company”) reported its preliminary results for the third quarter ended June 23, 2024. In connection with the preliminary results, the Company issued a news release, which is attached hereto as Exhibit 99.1 (“News Release”). The Company also prepared presentation materials which were presented by management during the Company’s earnings conference call, which are attached hereto as Exhibit 99.2 and have been made available on the Company’s website, investors.lee.net (“Presentation Materials”). In addition to the information in the News Release, the Presentation Materials include content and financial figures showing its expectation to be sustainable without reliance on print media within five years.
The information furnished by and incorporated by reference in this Item 2.02, including the attached Exhibits, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Item 7.01. Regulation FD Disclosure
The disclosure contained in Item 2.02 is incorporated herein by reference.
Item 9.01.    Financial Statements and Exhibits.
(d)Exhibits
99.1
99.2
104Cover Page Interactive Data File (embedded within the Inline XBRL document)


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
LEE ENTERPRISES, INCORPORATED
Date:August 1, 2024By:/s/ Timothy R. Millage
Timothy R. Millage
Vice President, Chief Financial Officer and Treasurer


leelogoa.jpg
Lee Enterprises nears digital sustainability with revenue inflection point

Total Digital Revenue(1) represented 50% of total revenue
Digital-only subscription revenue increased 34%(2) with subscriptions up 23%
Amplified Digital® Agency revenue totaled $26M, up 12% YOY(2)

DAVENPORT, Iowa (August 1, 2024) — Lee Enterprises, Incorporated (NASDAQ: LEE), a digital-first subscription platform providing high quality, trusted, local news, information and a major platform for advertising in 73 markets, today reported preliminary third quarter fiscal 2024 financial results(3) for the period ended June 23, 2024.

“We made tremendous progress on our digital transformation in the third quarter, and we are pleased to announce we have achieved the inflection point where more than 50% of our revenue is digital," said Kevin Mowbray, Lee's President and Chief Executive Officer. “The revenue inflection point is important as it stabilizes our operating performance, making us less impacted by the print business going forward. Nearly two-thirds of our total company gross margin was derived from digital sources, positioning us close to our goal of being sustainable from our digital products only. This positions us well to be vibrant and growing in the medium and long-term with the rapid growth of our digital revenue streams.”

“Our investment thesis is grounded in this transformation as we replace print revenue and margin with digital revenue and margin that are growing at a rapid clip. Total Digital Revenue has grown 17% annually over the last three years, and we expect this strong growth to continue,” Mowbray added.

“Our third quarter performance was highlighted by a marked improvement in revenue trends alongside effective management of operating expenses. As a result of our engaging hyper-local content, improved brand awareness, and sophisticated marketing campaigns, we now have 748,000 digital subscribers, a 23% increase over the prior year. Digital-only subscription revenue grew 34%(2) and totaled $79 million over the last twelve months, more than halfway towards our long-term target of $150 million. On the advertising side, Amplified Digital® Agency’s third quarter revenue grew 12%(2) over the prior year with annualized revenue more than $100 million,” Mowbray added.

“As a result of the persistent acceleration of print revenue declines, we are updating our full year Adjusted EBITDA(4) outlook to the range of $73 million to $78 million and Total Cash Costs(4) between $550 million and $560 million. This update is necessary as we manage operating expenses through the acceleration of secular print revenue trends combined with moving through cyclical changes in the advertising environment. The print business will be less impactful on future operating results due to the digital revenue inflection point and margin transformation. With only one-third of the Company’s gross margin tied to print products in the third quarter, changes in the print business will be less impactful on our operating results in the future,” said Mowbray.

“Given the strong performance of our digital revenue streams, we are reaffirming our Total Digital Revenue outlook of between $310 million and $330 million.”

"The rapid and consistent growth of our digital subscriptions and revenue, the expansion of Amplified Digital® Agency marketing solutions, and thoughtful investments into our digital business are proof we are steadily becoming sustainable solely from the revenue and cash flow generated from our digital products," added Mowbray.

Key Third Quarter Highlights:

•Total operating revenue was $151 million. Operating revenue was affected by accelerated declines of our print revenue streams and eliminated certain print products, partially offset by growth in digital revenue.
1

•Total Digital Revenue was $76 million, a 9% increase over the prior year(2), and represented 50% of our total operating revenue.
•Revenue from digital-only subscribers totaled $21 million up 34% over the prior year(2).
•Digital advertising and marketing services revenue represented 72% of our total advertising revenue and totaled $50 million.
•Digital services revenue, which is predominantly from BLOX Digital, totaled $5 million in the quarter.
•Operating expenses totaled $147 million and Cash Costs totaled $138 million, a 8% and 8% decrease compared to the prior year, respectively.
•Adjusted EBITDA totaled $15 million.
2024 Fiscal Year Outlook (updated):
Total Digital Revenue
$310 million (+13% YOY) - $330 million (+21% YOY)
Digital-only subscribers
771,000 (+7% YOY)
Adjusted EBITDA
$73 million (-14% YOY) - $78 million (-8% YOY)
Debt and Free Cash Flow:
The Company has $453 million of debt outstanding under our Credit Agreement(5) with BH Finance. The financing has favorable terms including a 25-year maturity, a fixed annual interest rate of 9.0%, no fixed principal payments, and no financial performance covenants.
As of and for the period ended June 23, 2024:
•The principal amount of debt decreased $3 million year to date, and totals $453 million.
•Cash on the balance sheet totaled $13 million. Debt, net of cash on the balance sheet, totaled $439 million.
•Capital expenditures totaled $4 million for the quarter and $7 million year to date. We expect approximately $10 million of capital expenditures in FY24.
•We expect cash paid for income taxes to total between $9 million and $14 million in 2024.
•We do not expect any material pension contributions in the fiscal year as our plans are fully funded in the aggregate.
Conference Call Information:
As previously announced, we will hold an earnings conference call and audio webcast today at 9 a.m. Central Time. The live webcast will be accessible at www.lee.net and will be available for replay 24 hours later. Analysts have been invited to ask questions on the call. Questions from other participants may be submitted by participating in the webcast. To participate in the live conference call via telephone, please register here. Upon registering, a dial-in number and unique PIN will be provided to join the conference call.

About Lee:
Lee Enterprises is a major subscription and advertising platform and a leading provider of local news and information, with daily newspapers, rapidly growing digital products and nearly 350 weekly and specialty publications serving 73 markets in 26 states. Our core commitment is to provide valuable, intensely local news and information to the communities we serve. Our markets include St. Louis, MO; Buffalo, NY; Omaha, NE; Richmond, VA; Lincoln, NE; Madison, WI; Davenport, IA; and Tucson, AZ. Lee Common Stock is traded on NASDAQ under the symbol LEE. For more information about Lee, please visit www.lee.net.
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
2

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:

•We may be required to indemnify the previous owners of BH Media or The Buffalo News for unknown legal and other matters that may arise;
•Our ability to manage declining print revenue and circulation subscribers;
•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 “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 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 report. 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
3

CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

Three months endedNine months ended
(Thousands of Dollars, Except Per Common Share Data)June 23,
2024		June 25,
2023		June 23,
2024		June 25,
2023
Operating revenue:
Print advertising revenue18,941 29,216 62,118 102,503 
Digital advertising and marketing services revenue
49,903 49,904 141,747 143,903 
Advertising and marketing services revenue68,844 79,120 203,865 246,406 
Print subscription revenue47,605 61,842 148,443 193,799 
Digital subscription revenue20,701 15,715 60,429 42,039 
Subscription revenue68,306 77,557 208,872 235,838 
Print other revenue8,278 9,773 24,839 30,542 
Digital other revenue5,150 4,860 15,230 14,343 
Other revenue13,428 14,633 40,069 44,885 
Total operating revenue150,578 171,310 452,806 527,129 
Operating expenses:
Compensation59,278 63,582 175,757 207,859 
Newsprint and ink4,096 6,346 13,101 20,244 
Other operating expenses74,177 80,010 221,247 249,353 
Depreciation and amortization6,850 7,478 21,438 23,097 
Assets (gain) loss on sales, impairments and other, net(1,421)(900)4,727 (4,255)
Restructuring costs and other3,795 3,780 12,199 8,120 
Total operating expenses146,775 160,296 448,469 504,418 
Equity in earnings of associated companies1,122 1,194 3,869 3,534 
Operating income4,925 12,208 8,206 26,245 
Non-operating (expense) income:
Interest expense(10,082)(10,235)(30,427)(31,144)
Pension and OPEB related benefit and other, net617 555 1,096 2,255 
Curtailment/Settlement gains— — 3,593 — 
Total non-operating expense, net(9,465)(9,680)(25,738)(28,889)
(Loss) income before income taxes(4,540)2,528 (17,532)(2,644)
Income tax (benefit) expense(849)394 (3,438)(1,237)
Net (loss) income(3,691)2,134 (14,094)(1,407)
Net income attributable to non-controlling interests(575)(631)(1,663)(1,876)
(Loss) income attributable to Lee Enterprises, Incorporated(4,266)1,503 (15,757)(3,283)
Loss per common share:
Basic:(0.73)0.26 (2.68)(0.56)
Diluted:(0.73)0.25 (2.68)(0.56)
4

DIGITAL / PRINT REVENUE COMPOSITION
(UNAUDITED)
Three months EndedNine months Ended
(Thousands of Dollars)June 23,
2024		June 25,
2023		June 23,
2024		June 25,
2023
Digital Advertising and Marketing Services Revenue49,903 49,904 141,747 143,903 
Digital Only Subscription Revenue20,701 15,715 60,429 42,039 
Digital Services Revenue5,150 4,860 15,230 14,343 
Total Digital Revenue75,754 70,479 217,406 200,285 
Print Advertising Revenue18,941 29,216 62,118 102,503 
Print Subscription Revenue47,605 61,842 148,443 193,799 
Other Print Revenue8,278 9,773 24,839 30,542 
Total Print Revenue74,824 100,831 235,400 326,844 
Total Operating Revenue150,578 171,310 452,806 527,129 

5

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
The table below reconciles the non-GAAP financial performance measure of Adjusted EBITDA to Net loss, its most directly comparable U.S. GAAP measure:
Three months endedNine months ended
(Thousands of Dollars)June 23, 2024June 25, 2023June 23, 2024June 25, 2023
Net (loss) income(3,691)2,134 (14,094)(1,407)
Adjusted to exclude
Income tax (benefit) expense(849)394 (3,438)(1,237)
Non-operating expenses, net9,465 9,680 25,738 28,889 
Equity in earnings of TNI and MNI(1,122)(1,194)(3,869)(3,534)
Depreciation and amortization
6,850 7,478 21,438 23,097 
Restructuring costs and other3,795 3,780 12,199 8,120 
Assets (gain) loss on sales, impairment and other, net(1,421)(900)4,727 (4,255)
Stock compensation474 462 1,189 1,384 
Add:
Ownership share of TNI(6) and MNI EBITDA(6) (50%)
1,323 1,406 4,644 4,128 
Adjusted EBITDA14,824 23,240 48,534 55,185 
The table below reconciles the non-GAAP financial performance measure of Cash Costs to Operating expenses, the most directly comparable U.S. GAAP measure:
Three months endedNine months ended
(Thousands of Dollars)June 23, 2024June 25, 2023June 23, 2024June 25, 2023
Operating expenses146,775 160,296 448,469 504,418 
Adjustments
Depreciation and amortization6,850 7,478 21,438 23,097 
Assets (gain) loss on sales, impairments and other, net(1,421)(900)4,727 (4,255)
Restructuring costs and other3,795 3,780 12,199 8,120 
Cash Costs137,551 149,938 410,105 477,456 
6


The table below reconciles the non-GAAP financial performance measure of Same-store Revenues to Operating Revenues, its most directly comparable U.S. GAAP measure:
Three months endedNine months ended
(Thousands of Dollars)June 23,
2024		June 25,
2023		June 23,
2024		June 25,
2023
Print Advertising Revenue
18,941 29,216 62,118 102,503 
Exited operations
(2)(4,030)(908)(18,262)
Same-store, Print Advertising Revenue
18,939 25,186 61,210 84,241 
Digital Advertising and Marketing Services Revenue
49,903 49,904 141,747 143,903 
Exited operations
— (800)(95)(2,454)
Same-store, Digital Advertising and Marketing Services Revenue
49,903 49,104 141,652 141,449 
Total Advertising Revenue
68,844 79,120 203,865 246,406 
Exited operations
(2)(4,830)(1,004)(20,716)
Same-store, Total Advertising Revenue
68,842 74,290 202,861 225,690 
Print Subscription Revenue
47,605 61,842 148,443 193,799 
Exited operations— (528)(174)(1,789)
Same-store, Print Subscription Revenue
47,605 61,314 148,269 192,010 
Digital Subscription Revenue
20,701 15,715 60,429 42,039 
Exited operations— (282)(84)(776)
Same-store, Digital Subscription Revenue
20,701 15,433 60,345 41,263 
Total Subscription Revenue
68,306 77,557 208,872 235,838 
Exited operations— (810)(259)(2,566)
Same-store, Total Subscription Revenue
68,306 76,747 208,613 233,272 
Print Other Revenue
8,278 9,773 24,839 30,542 
Exited operations— (107)(1)(323)
Same-store, Print Other Revenue
8,278 9,666 24,838 30,219 
Digital Other Revenue
5,150 4,860 15,230 14,343 
Exited operations— — 1 (1)
Same-store, Digital Other Revenue
5,150 4,860 15,231 14,342 
Total Other Revenue
13,428 14,633 40,069 44,885 
Exited operations— (107)(1)(324)
Same-store, Total Other Revenue
13,428 14,526 40,068 44,561 
Total Operating Revenue
150,578 171,310 452,806 527,128 
Exited operations(1)(5,748)(1,263)(23,605)
Same-store, Total Operating Revenue
150,577 165,562 451,543 503,523 

7

NOTES
(1)Total Digital Revenue is defined as digital advertising and marketing services revenue (including Amplified Digital® Agency), digital-only subscription revenue and digital services revenue.
(2)Same-store revenues is a non-GAAP performance measure based on U.S. GAAP revenues for Lee for the current period, excluding exited operations. Exited operations include (1) business divestitures and (2) the elimination of stand-alone print products discontinued within our markets.
(3)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.
(4)The following are non-GAAP (Generally Accepted Accounting Principles) financial measures for which reconciliations to relevant U.S 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.
(5)The Company's debt is the $576 million term loan under a credit agreement with BH Finance LLC dated January 29, 2020 (the "Credit Agreement"). Excess Cash Flow is defined under the Credit Agreement as any cash greater than $20,000,000 on the balance sheet in accordance with U.S. GAAP at the end of each fiscal quarter, beginning with the quarter ending June 28, 2020.
(6)TNI refers to TNI Partners publishing operations in Tucson, AZ. MNI refers to Madison Newspapers, Inc. publishing operations in Madison, WI.
8
THIRD QUARTER FY2024 EARNINGS AUGUST 1, 2024

 
2 SAFE HARBOR The information provided in this presentation may include forward-looking statements relating to future events or the future financial performance of the Company. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Words such as “aims”, “anticipates,” “plans,” “expects,” “intends,” “will,” “potential,” “hope” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based upon current expectations of the Company and involve assumptions that may never materialize or may prove to be incorrect. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of various risks and uncertainties. Detailed information regarding factors that may cause actual results to differ materially from the results expressed or implied by statements relating to the Company may be found in the Company’s periodic filings with the Commission, including the factors described in the sections entitled “Risk Factors,” copies of which may be obtained from the SEC’s website at www.sec.gov. The Company does not undertake any obligation to update forward-looking statements contained in this presentation.

 
3 LEE’S THREE PILLAR DIGITAL GROWTH STRATEGY LEE IS RAPIDLY TRANSFORMING FROM A PRINT-CENTRIC TO A DIGITAL-CENTRIC COMPANY PILLAR 1 Expand our audience by providing compelling local content PILLAR 2 Accelerate digital subscription growth PILLAR 3 Diversify and expand offerings for local advertisers Lee expects the Three Pillar Digital Growth Strategy to drive more than $450 million of digital revenue by 2028, resulting in a business that is sustainable and vibrant from solely our digital products

 
4 Digital Sub Revenue Growth Leads Industry Digital Agency Revenue Growth Leads Industry Total Digital Revenue Growing Significantly $79M LTM Digital Sub Revenue $94M LTM Amplified Digital® Agency $290M LTM Total Digital Revenue Industry-leading 51% YOY(1) LTM growth Mar 2024 3-Year CAGR Industry-leading 8% YOY(1) LTM growth Mar 2024 3-Year CAGR 17% YOY LTM annual growth LTM June 2024 3-Year CAGR INDUSTRY-LEADING DIGITAL GROWTH LTM Jun '21 LTM Jun '24 (1) Same-store revenues is a non-GAAP performance measure based on U.S. GAAP revenues for Lee for the current period, excluding exited operations. Exited operations include (1) business divestitures and (2) the elimination of stand-alone print products discontinued within our markets. $290M $181M

 
5 DIGITAL REVENUE REACHES INFLECTION POINT Digital Advertising Digital-only Subscription Digital Other Total Digital Revenue Q3 FY2024 Revenue Mix Q3 FY24 % of Total Revenue $50M % Variance to Prior Year(1) +2% YOY $21M +34% YOY $5M +6% YOY $76M +9% YOY (1) Same-store revenues is a non-GAAP performance measure based on U.S. GAAP revenues for Lee for the current period, excluding exited operations. Exited operations include (1) business divestitures and (2) the elimination of stand-alone print products discontinued within our markets. 3% 14% 33% Amplified Digital® Agency $26M +12% YOY18% 50% Digital 50% Print 50%

 
6 FY21 FY22 FY23 FY24E FY25E FY26E FY27E FY28E Digital Margin SG&A Digital transformation Digital sustainability LEE NEARS SUSTAINABILITY FROM DIGITAL REVENUE KEY HIGHLIGHTS • Digital revenue replacing print revenue and growing at more than 17% CAGR since 2021 • Digital gross margin(1) growing at a 14% CAGR since 2021 • Digital subscription revenue and gross margin growing at a 46% CAGR since 2021 • Amplified Digital® Agency revenue growing at a 32% CAGR since 2021 • Digital gross margin(1) expected to exceed total SG&A costs in FY26 GROSS MARGIN FY24 Est. Total Company Gross Margin (1) Digital Gross Margin is a non-GAAP performance measure calculated by Digital Revenue less Cost of Good Sold (“COGS”) directly tied to digital products. Digital Margin excludes all Selling, General, and Administrative (“SG&A”) costs.

 
7 THIRD QUARTER 2024 RESULTS (1) Same-store revenues is a non-GAAP performance measure based on U.S. GAAP revenues for Lee for the current period, excluding exited operations. Exited operations include (1) business divestitures and (2) the elimination of stand-alone print products discontinued within our markets. (2) Adjusted EBITDA and Cash Costs are non-GAAP financial measures. See appendix. Continued digital revenue growth Strong cost control of legacy business Investments to drive digital transformation Q3 Revenue Total Digital Revenue $76M, +9% YOY on a Same-store basis(1) • Digital subscription revenue $21M, +34%(1) • Digital advertising revenue $50M, +2%(1) • Amplified Digital® Agency revenue $26M, +12%(1) Total Print Revenue $75M, -22%(1) Total Operating Revenue $151M, -9%(1) Q3 Cash Costs(2) • Total Cash Costs $138M, -8% Q3 Adjusted EBITDA(2) • Adjusted EBITDA $15M

 
8 STRONG TRACK RECORD OF SUSTAINABLE COST MANAGEMENT KEY TAKEAWAYS • Proficient in driving efficiencies • Current base of $237M of direct costs associated with our legacy revenue streams that will be managed with associated revenue trends • Ongoing initiatives aimed at optimizing manufacturing, distribution, and corporate services • Digital transformation fueled by thoughtful investments • Significant investments in talent and technology of $10M are expected to fund successful execution of Lee’s Three Pillar Digital Growth Strategy • Incremental investments in marketing & branding of $1M are expected to drive more than $20M of Digital Subscription revenue growth • Digital COGS are expected to grow $6M YOY to support revenue growth at BLOX Digital, Amplified Digital® Agency, and other Digital Advertising $1.0B $705M $693M $615M 2017 2020 2022 2023 Total Cash Costs(1) Managing legacy business & investing in digital future (1) Adjusted EBITDA and Cash Costs are non-GAAP financial measures. See appendix. (2) Same-store revenues is a non-GAAP performance measure based on U.S. GAAP revenues for Lee for the current period, excluding exited operations. Exited operations include (1) business divestitures and (2) the elimination of stand-alone print products discontinued within our markets. $615M $550- 560M $75-85M $20M

 
9 Q2 2020 Q3 2024 STRENGTHENED BALANCE SHEET • $123M debt reduction since refinancing in March 2020 • Favorable credit agreement with Berkshire Hathaway • 25-year runway with no breakage costs or prepayment penalties • Fixed annual interest rate, no financial performance covenants and no fixed amortization • Pension plans now frozen and fully funded in the aggregate with no material pension contributions expected in 2024 • Asset sales of $6.9M year to date • Identified approximately $25M of noncore assets to monetize Monetization of noncore assets will propel debt reduction $576M $453M Significant Gross Debt Reduction

 
10 2024 OUTLOOK UPDATED 2023 2024 Outlook Total Digital Revenue $273M $310-$330M YoY 14% 13% to 21% Digital-only subscribers 721,000 771,000 YoY 36% 7% Cash Costs(1) $615M $550-$560M YoY -11% -11% to -9% Adjusted EBITDA(1) $85M $73-$78M YoY -11% -14% to -8% (1) Adjusted EBITDA and Cash Costs are non-GAAP financial measures. See appendix

 
11 LEE INVESTMENT THESIS WE BELIEVE OUR THREE PILLAR DIGITAL GROWTH STRATEGY WILL CREATE SUBSTANTIAL VALUE: Increased Shareholder Value Enhanced cash generation Debt reduction drives shareholder value Multiple expansion fueled by increased recurring, high-margin digital revenue Continued Debt Reduction & Strengthened Balance Sheet Expect to reach <2.5x leverage target within five years Execute Three Pillar Digital Growth Strategy Generate long-term sustainable digital revenue growth, margin expansion, and strong free cash flow

 

 
13 NON-GAAP RECONCILIATION The Company uses non-GAAP financial performance measures to supplement the financial information presented on a U.S. GAAP basis. These non-GAAP financial measures, which may not be comparable to similarly titled measures reported by other companies, should not be considered in isolation from or as a substitute for the related U.S. GAAP measures and should be read together with financial information presented on a U.S. GAAP basis. The Company defines its non-GAAP measures as follows: 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. Same-store revenues is a non-GAAP performance measure based on U.S. GAAP revenues for Lee for the current period, excluding exited operations. Exited operations include (1) business divestitures and (2) the elimination of stand-alone print products discontinued within our markets. Gross Margin is a non-GAAP financial performance measure that enhances financial statement users overall understanding of the operating performance of the Company. The measure isolates operating costs that directly support revenue. Depreciation and amortization, assets loss (gain) on sales, impairments and other, net, other non-cash operating expenses, Selling, General, and Administrative (“SG&A”) compensation and SG&A other operating expenses are excluded from Gross Margin. TNI and MNI – TNI refers to TNI Partners publishing operations in Tucson, AZ. MNI refers to Madison Newspapers, Inc. publishing operations in Madison, WI. Management’s Use of Non-GAAP Measures These Non-GAAP Measures are not measurements of financial performance under U.S. GAAP and should not be considered in isolation or as an alternative to income from operations, net income (loss), revenues, or any other measure of performance or liquidity derived in accordance with U.S. GAAP. We believe these non-GAAP financial measures, as we have defined them, are helpful in identifying trends in our day-to-day performance because the items excluded have little or no significance on our day-to-day operations. These measures provide an assessment of controllable expenses and afford management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieve optimal financial performance. We use these Non-GAAP measures of our day-to-day operating performance, which is evidenced by the publishing and delivery of news and other media and excludes certain expenses that may not be indicative of our day-to-day business operating results. Limitations of Non-GAAP Measures Each of our non-GAAP measures have limitations as analytical tools. They should not be viewed in isolation or as a substitute for U.S. GAAP measures of earnings. Material limitations in making the adjustments to our earnings to calculate Adjusted EBITDA using these non-GAAP financial measures as compared to U.S. GAAP net income (loss) include: the cash portion of interest / financing expense, income tax (benefit) provision, and charges related to asset impairments, which may significantly affect our financial results. Management believes these items are important in evaluating our performance, results of operations, and financial position. We use non-GAAP financial measures to supplement our U.S. GAAP results in order to provide a more complete understanding of the factors and trends affecting our business.

 
14 QUARTERLY REVENUE COMPOSITION (1) Same-store revenues is a non-GAAP performance measure based on U.S. GAAP revenues for Lee for the current period, excluding exited operations. Exited operations include (1) business divestitures and (2) the elimination of stand-alone print products discontinued within our markets. Same-store revenue trends are displayed for year-over-year comparisons. (2) Total Digital Revenue is defined as digital advertising and marketing services revenue (including Amplified), digital-only subscription revenue and digital services revenue. Rounding – Items may not foot due to rounding. (Millions of Dollars) Q1 FY2023 Q2 FY2023 Q3 FY2023 Q4 FY2023 FY 2023 Q1 FY2024 Q2 FY2024 Q3 FY2024 Digital Advertising and Marketing Services 47.7 46.3 49.9 49.3 193.2 46.5 45.4 49.9 YoY % (1) 11.3% 6.2% 7.8% 1.1% 6.4% -1.1% -0.2% 1.6% Digital Only Subscription Revenue 12.3 14.0 15.7 18.7 60.7 19.5 20.3 20.7 YoY % (1) 56.2% 38.7% 43.3% 67.5% 51.4% 60.2% 47.6% 34.1% Digital Services Revenue 4.7 4.8 4.9 5.0 19.4 5.0 5.1 5.2 YoY % (1) 2.2% 2.1% 12.6% 15.3% 7.8% 4.9% 7.6% 6.0% Total Digital Revenue(2) 64.8 65.0 70.5 73.0 273.2 70.9 70.8 75.8 YoY % (1) 16.9% 11.5% 14.4% 13.6% 14.1% 11.0% 10.7% 9.2% % of Total Revenue 35.0% 38.1% 41.1% 44.5% 39.5% 45.5% 48.3% 50.3% Print Advertising Revenue 41.8 31.5 29.2 23.3 125.8 24.4 18.7 18.9 YoY % (1) -24.3% -23.2% -26.9% -30.2% -26.0% -27.6% -29.4% -24.8% Print Subscription Revenue 67.4 64.6 61.8 58.8 252.6 51.9 49.0 47.6 YoY % (1) -15.4% -16.3% -20.7% -25.0% -19.3% -22.5% -23.5% -22.4% Other Print Revenue 11.1 9.6 9.8 9.0 39.5 8.5 8.1 8.3 YoY % (1) -2.2% -6.7% -8.3% -14.8% -7.9% -22.8% -15.5% -14.4% Total Print Revenue 120.3 105.7 100.8 91.1 417.9 84.8 75.8 74.8 YoY % (1) -17.2% -17.5% -21.4% -25.5% -20.3% -24.0% -24.3% -22.2% Total Revenue 185.1 170.7 171.3 164.0 691.1 155.7 146.5 150.6 YoY % (1) -7.4% -8.2% -9.6% -12.1% -9.3% -11.3% -10.6% -9.1%

 
15 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES 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. TNI and MNI – TNI refers to TNI Partners publishing operations in Tucson, AZ. MNI refers to Madison Newspapers, Inc. publishing operations in Madison, WI. Rounding – Items may not visually foot due to rounding. (Millions of Dollars) Q3 FY2024 Net loss (3.7) Adjusted to exclude Income tax benefit (0.8) Non-operating expenses, net 9.5 Equity in earnings of TNI and MNI (1.1) Depreciation and amortization 6.9 Restructuring costs and other 3.8 Assets gain on sales, impairments and other, net (1.4) Stock compensation 0.5 Add Ownership share of TNI and MNI EBITDA (50%) 1.3 Adjusted EBITDA 14.8

 
16 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES 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. Rounding – Items may not visually foot due to rounding. (Millions of Dollars) Q3 FY2024 Q3 FY2023 Operating Expenses 146.8 160.3 Adjusted to exclude Depreciation and amortization 6.9 7.5 Assets gain on sales, impairments and other, net (1.4) (0.9) Restructuring costs and other 3.8 3.8 Cash Costs 137.6 149.9

 
17 SAME-STORE NON-GAAP REVENUE RECONCILIATION(1) (1) Same-store revenues is a non-GAAP performance measure based on U.S. GAAP revenues for Lee for the periods presented, excluding exited operations. Exited operations include (1) businesses divested and (2) the elimination of stand-alone print products discontinued within our markets. Rounding – Items may not foot due to rounding. (Millions of Dollars) Q3 FY2024 Q3 FY2023 $ Change % Change Print Other Revenue 8.3 9.8 (1.5) (15.3)% Exited operations - (0.1) 0.1 NM Same-store, Print Other Revenue 8.3 9.7 (1.4) (14.4)% Digital Other Revenue 5.2 4.9 0.3 6.0% Exited operations - - - NM Same-store, Digital Other Revenue 5.2 4.9 0.3 6.0% Total Other Revenue 13.4 14.6 (1.2) (8.2)% Exited operations - (0.1) 0.1 NM Same-store, Total Other Revenue 13.4 14.5 (1.1) (7.6)% (Millions of Dollars) Q3 FY2024 Q3 FY2023 $ Change % Change Total Operating Revenue 150.6 171.3 (20.7) (12.1)% Exited operations (0.0) (5.7) 5.7 NM Same-store, Total Operating Revenue 150.6 165.6 (15.0) (9.1)% (Millions of Dollars) Q3 FY2024 Q3 FY2023 $ Change % Change Print Advertising Revenue 18.9 29.2 (10.3) (35.2)% Exited operations (0.0) (4.0) 4.0 NM Same-store, Print Advertising Revenue 18.9 25.2 (6.2) (24.8)% Digital Advertising and Marketing Services Revenue 49.9 49.9 (0.0) (0.0)% Exited operations 0.0 (0.8) 0.8 NM Same-store, Digital Advertising and Marketing Services 49.9 49.1 0.8 1.6% Total Advertising Revenue 68.8 79.1 (10.3) (13.0)% Exited operations (0.0) (4.8) 4.8 NM Same-store, Total Advertising Revenue 68.8 74.3 (5.4) (7.3)% (Millions of Dollars) Q3 FY2024 Q3 FY2023 $ Change % Change Print Subscription Revenue 47.6 61.8 (14.2) (23.0)% Exited operations - (0.5) 0.5 NM Same-store, Print Subscription Revenue 47.6 61.3 (13.7) (22.4)% Digital Subscription Revenue 20.7 15.7 5.0 31.7% Exited operations (0.0) (0.3) 0.3 NM Same-store, Digital Subscription Revenue 20.7 15.4 5.3 34.1% Total Subscription Revenue 68.3 77.6 (9.3) (11.9)% Exited operations (0.0) (0.8) 0.8 NM Same-store, Total Subscription Revenue 68.3 76.7 (8.4) (11.0)%

 
v3.24.2.u1
Cover
Aug. 01, 2024
Document Information [Line Items]  
Document Type 8-K
Document Period End Date Aug. 01, 2024
Entity Registrant Name LEE ENTERPRISES, INC
Entity Incorporation, State or Country Code DE
Entity File Number 1-6227
Entity Tax Identification Number 42-0823980
Entity Address, Address Line One 4600 E. 53rd Street
Entity Address, City or Town Davenport
Entity Address, State or Province IA
Entity Address, Postal Zip Code 52807
City Area Code (563)
Local Phone Number 383-2100
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Amendment Flag false
Entity Central Index Key 0000058361
Common Stock, par value $.01 per share  
Document Information [Line Items]  
Title of 12(b) Security Common Stock, par value $.01 per share
Trading Symbol LEE
Security Exchange Name NASDAQ
Preferred Share Purchase Rights  
Document Information [Line Items]  
Title of 12(b) Security Preferred Share Purchase Rights
Trading Symbol LEE
Security Exchange Name NASDAQ
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