Slide 1: Building Long-Term Value: May 2024 Investor Presentation
BUILDING LONG-TERM VALUE MAY 2024 INVESTOR PRESENTATION
Slide 2: Safe Harbor
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
Slide 3: Lee is a digital-first subscription platform providing communities with local news
LEE IS A DIGITAL-FIRST SUBSCRIPTION PLATFORM PROVIDING COMMUNITIES WITH VALUABLE, INTENSELY LOCAL NEWS Led by Total Revenue Digital-only subscriptions THREE PILLAR $638 million DIGITAL GROWTH 745,000 LTM March 2024 March 2024 STRATEGY 3
Slide 4: Strategy is transforming the composition of revenue
STRATEGY IS TRANSFORMING THE COMPOSITION OF REVENUE FY2020 Q2 FY2024 FY2028(1) REVENUE MIX 21% 48% 46% 100% % Digital Prior to launch of Three Pillar Industry-leading digital Achieve goal of becoming Digital Growth Strategy revenue growth is transforming the sustainable without reliance on 7% mix of
Slide 5: Lee Investment Thesis
LEE INVESTMENT THESIS WE BELIEVE OUR THREE PILLAR DIGITAL GROWTH STRATEGY WILL CREATE SUBSTANTIAL VALUE: Execute Three Pillar Digital Growth Strategy Generate long-term sustainable digital revenue growth, margin expansion, and strong free cash flow Continued Debt Reduction & Strengthened Balance She
Slide 6: Industry-leading digital growth
INDUSTRY-LEADING DIGITAL GROWTH Digital Sub Revenue Digital Agency Revenue Total Digital Revenue Growth Leads Industry Growth Leads Industry Growing Significantly $74M LTM Digital Sub Revenue $92M LTM Amplified Revenue $285M LTM Total Digital Revenue Industry-leading 54% YOY(1) LTM growth Industry-l
Slide 7: Lee's strategy for digital transformation: the three pillars
LEE’S STRATEGY FOR DIGITAL TRANSFORMATION: THE THREE PILLARS LEE IS RAPIDLY TRANSFORMING FROM A PRINT-CENTRIC TO A DIGITAL-CENTRIC COMPANY PILLAR 1 PILLAR 2 PILLAR 3 Expand our audience by Accelerate digital Diversify and expand providing compelling local subscription growth offerings content for lo
Slide 8: Strategies to drive subscription revenue
STRATEGIES TO DRIVE SUBSCRIPTION REVENUE ENHANCING CONVERSION WITHIN LEE’S ADDRESSABLE MARKET Addressable Market Key initiatives… ‒ Optimize subscription model for digital-only growth ‒ Monetize content through new digital niche products ‒ Maximize subscription rates by leveraging first-party data A
Slide 9: Long-term outlook: digital subscriptions
LONG-TERM OUTLOOK: DIGITAL SUBSCRIPTIONS • Content that Drives Conversion Digital Subscription Growth • Impactful local journalism that informs and connects 1.2M our local communities $150M • Branding: WHERE YOUR STORY LIVES • Sophisticated marketing campaign maximizes 771K subscriber & revenue grow
Slide 10: Expand digital advertising services
EXPAND DIGITAL ADVERTISING SERVICES LEVERAGE “FIRST TO MARKET” POSITION WITH ARRAY OF DIGITAL PRODUCT OFFERINGS, SERVICES AND MARKETING SOLUTIONS Diversify and Expand Offerings to Local Advertisers Amplified: Lee’s Omnichannel Marketing Solution Maximize Revenue on Lee’s Digital Platforms Amplified
Slide 11: Long-term outlook: digital revenue
LONG-TERM OUTLOOK: DIGITAL REVENUE DIGITAL REVENUE GROWTH IS FUELED BY AMPLIFIED AND DIGITAL SUBSCRIPTION GROWTH Digital Revenue Outlook • Amplified will drive digital marketing services revenue growth • Our owned & operated digital products provide a unique $500M $450M opportunity to grow high marg
Slide 12: Second Quarter 2024 Results
SECOND QUARTER 2024 RESULTS Q2 Revenue Adjusted EBITDA Total Digital Revenue $71M, +11% YOY on a Same-store basis(1) growth • Digital subscription revenue $20M, +48%(1) • Digital advertising revenue $45M, flat(1) Continued digital • Amplified Digital® revenue $23M, +5%(1) revenue growth Total Print
Slide 13: Lee expects to be sustainable without reliance on print in 5 years
LEE EXPECTS TO BE SUSTAINABLE WITHOUT RELIANCE ON PRINT IN 5 YEARS DIGITAL REVENUE, DIRECT COSTS, DIRECT MARGIN Key Transformation Priorities: Q2 FY24 • Maximize monetization of O&O products Digital Revenue $71M • Retain and grow spending from local advertising partners Digital Direct Costs(1) $21M
Slide 14: Strong track record of sustainable cost management
STRONG TRACK RECORD OF SUSTAINABLE COST MANAGEMENT KEY TAKEAWAYS Total Cash Costs(1) • Proficient in driving efficiencies $1.0B • Current base of $237M of direct costs associated with our $705M $693M legacy revenue streams that will be managed with $615M associated revenue trends • Ongoing initiativ
Slide 15: Chief Transformation and Commercial Officer
CHIEF TRANSFORMATION AND COMMERCIAL OFFICER MAY 2024 Les Ottolenghi, CT & CO Lee Enterprises • Fortune 500 Senior Executive: Stride Inc. (LRN), Caesars Entertainment Corp (CZR), Carlson WagonLit Travel (CWT), and Holiday Inn Worldwide (IHG) • Independent Board Member: Codere Group Inc. (CDRO), Neuru
Slide 16: Strengthened balance sheet
STRENGTHENED BALANCE SHEET • $122M debt reduction since refinancing in March 2020 Significant Gross Debt Reduction • Favorable credit agreement with Berkshire Hathaway • 25-year runway w/ no breakage costs or prepayment penalties $576M • Fixed annual interest rate, no financial performance covenants
Slide 17: 2024 Outlook (Unchanged)
2024 OUTLOOK (UNCHANGED) 2023 2024 Outlook Total Digital Revenue $273M $310-$330M YoY 14% 13% to 21% Digital-only subscribers 721,000 771,000 YoY 37% 7% Cash Costs(1) $615M $570-$590M YoY -11% -4% to -7% Adjusted EBITDA(1) $85M $83-$90M YoY -11% -3% to 6% (1) Adjusted EBITDA and Cash Costs are non-G
Slide 18: Lee Investment Thesis
LEE INVESTMENT THESIS WE BELIEVE OUR THREE PILLAR DIGITAL GROWTH STRATEGY WILL CREATE SUBSTANTIAL VALUE: Execute Three Pillar Digital Growth Strategy Generate long-term sustainable digital revenue growth, margin expansion, and strong free cash flow Continued Debt Reduction & Strengthened Balance She
Slide 19: Lee Enterprises
EE ENTERPRISES
Slide 20: Non-GAAP Reconciliation
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 i
Slide 21: Quarterly Revenue Composition
QUARTERLY REVENUE COMPOSITION (Millions of Dollars) Q1 FY2023 Q2 FY2023 Q3 FY2023 Q4 FY2023 FY 2023 Q1 FY2024 Q2 FY2024 Digital Advertising and Marketing Services Revenue 47.7 46.3 49.9 49.3 193.2 46.5 45.4 YoY (1) 11.3% 6.2% 7.8% 1.1% 6.4% -1.1% -0.2% Digital Only Subscription Revenue 12.3 14.0 15.
Slide 22: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Adjusted EBITDA is a non-GAAP financial performance (Millions of Dollars) Q2 FY2024 measure that enhances financial statement users’ overall understanding of the operating performance of the Net loss (11.6) Company. The measure isolates unusual, infreque
Slide 23: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Q2 Q2 Cash Costs represent a non-GAAP financial performance (Millions of Dollars) measure of operating expenses which are measured on an FY2024 FY2023 accrual basis and settled in cash. This measure is useful to investors in understanding the components
Slide 24: Same-Store Non-GAAP Revenue Reconciliation
SAME-STORE NON-GAAP REVENUE RECONCILIATION(1) Q2 Q2 $ % Q2 Q2 $ % (Millions of Dollars) (Millions of Dollars) FY2024 FY2023 Change Change FY2024 FY2023 Change Change Print Advertising Revenue 18.7 31.5 (12.7) -40.4% Print Other Revenue 8.1 9.6 (1.6) -16.4% Exited operations - (4.8) Exited operations
Slide 25: Same-Store Non-GAAP Revenue Reconciliation
SAME-STORE NON-GAAP REVENUE RECONCILIATION(1) $ % $ % (Millions of Dollars) FY2023 FY2022 (Millions of Dollars) FY2023 FY2022 Change Change Change Change Print Advertising Revenue 125.8 185.0 (59.2) -32.0% Print Other Revenue 39.5 43.0 (3.5) -8.0% Exited operations (14.6) (34.8) Exited operations (0
Slide 26: Direct Costs Reconciliation
DIRECT COSTS RECONCILIATION (Millions of Dollars) Q2 FY24 Direct Costs is a non-GAAP financial performance measure that enhances financial statement users overall understanding of the operating Operating expenses 152.3 performance of the Company. The measure isolates operating costs that directly su