Lee Enterprises, Incorporated · NASDAQ:LEE
Lee Enterprises — Q4 FY2023 Earnings Presentation
25 slides from Lee Enterprises's earnings presentation, Dec 7, 2023
Slide 1: Fourth Quarter FY2023 Earnings
FOURTH QUARTER FY2023 EARNINGS DECEMBER 7, 2023
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: Key Themes for Today
KEY THEMES FOR TODAY 1 FOURTH QUARTER AND FISCAL YEAR 2023 RESULTS 2 THREE PILLAR DIGITAL GROWTH STRATEGY 3 WELL-POSITIONED TO DRIVE VALUE FOR STAKEHOLDERS 3
Slide 4: Lee Achieved All Fiscal Year Guidance
LEE ACHIEVED ALL FISCAL YEAR GUIDANCE 2023 2023 Achieved Fastest growing digital subscription platform in local Actual Updated Guidance (1) Guidance media • Digital Only Subscribers +36% YOY • Digital Only Subscription Revenue +51% YOY(3) $273M Total Digital Revenue $270-285M Total Digital Revenue
Slide 5: Fourth Quarter and Full Year 2023 Results
FOURTH QUARTER AND FULL YEAR 2023 RESULTS Q4 Revenue FY23 Revenue Total Operating Revenue $164M, -12% on a Same-store Total Operating Revenue $691M, -9% on a Same-store basis(1) basis(1) Total Digital Revenue $73M, +14%(1) Total Digital Revenue $273M, +14%(1) • Digital subscription revenue $19M, +68
Slide 6: 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 7: Digital Transformation: Strengthened Balance Sheet
DIGITAL TRANSFORMATION: STRENGTHENED BALANCE SHEET • $120M debt reduction since refinancing in March 2020 Significant Gross Debt Reduction • Favorable credit agreement with Berkshire Hathaway $576M • 25-year runway w/ no breakage costs or prepayment penalties • Fixed annual interest rate, no financi
Slide 8: Key Themes for Today
KEY THEMES FOR TODAY 1 FOURTH QUARTER AND FISCAL YEAR 2023 RESULTS 2 THREE PILLAR DIGITAL GROWTH STRATEGY 3 WELL-POSITIONED TO DRIVE VALUE FOR STAKEHOLDERS 8
Slide 9: 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 10: Strategy Is Producing Industry-Leading Digital Growth
STRATEGY IS PRODUCING INDUSTRY-LEADING DIGITAL GROWTH Digital Subscriber Digital Agency Revenue Total Digital Revenue Growth Leads Industry Growth Leads Industry Growing Significantly 721K Current Digital-only Subscribers $91M Amplified LTM Revenue $273M LTM Total Digital Revenue 16 quarters of lead
Slide 11: Strategy Is Transforming the Composition of Revenue
STRATEGY IS TRANSFORMING THE COMPOSITION OF REVENUE FY2020 Q4 FY2023 REVENUE MIX 21% 44% % Digital Industry-leading digital Prior to launch of Three Pillar Digital Growth Strategy revenue growth is transforming the mix of revenue 7% Becoming less reliant on print business 11
Slide 12: Key Themes for Today
KEY THEMES FOR TODAY 1 FOURTH QUARTER AND FISCAL YEAR 2023 RESULTS 2 THREE PILLAR DIGITAL GROWTH STRATEGY 3 WELL-POSITIONED TO DRIVE VALUE FOR STAKEHOLDERS 12
Slide 13: 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 14: Long-Term Outlook: Digital Subscriptions
LONG-TERM OUTLOOK: DIGITAL SUBSCRIPTIONS Digital Subscription Growth 1.2M • Content that Drives Conversion $150M • Impactful local journalism that informs and connects our local communities 771K 721K • Branding: WHERE YOUR STORY LIVES $90M • Sophisticated marketing campaign maximizes 532K subscriber
Slide 15: Digital Transformation: Expand Digital Advertising Services
DIGITAL TRANSFORMATION: EXPAND DIGITAL ADVERTISING SERVICES LEVERAGE “FIRST TO MARKET” POSITION WITH ARRAY OF DIGITAL PRODUCT OFFERINGS, SERVICES AND MARKETING SOLUTIONS PILLAR 1 PILLAR 2 PILLAR 3 Diversify and Expand Offerings to Local Advertisers Amplified: Lee’s Omnichannel Marketing Solution Max
Slide 16: 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: • Maximize the monetization of O&O products 2023 • Retain and grow spending from local advertising partners Digital Revenue $273M • Increase ARPU with local
Slide 17: 2024 Outlook
2024 OUTLOOK 2023 2024 Outlook Total Digital Revenue $273M $310-$330M YoY(1) 14% 13% to 21% Digital-only subscribers 721,000 771,000 YoY 37% 7% Cash Costs(2) $615M $570-$590M YoY -9% -4% to -7% Adjusted EBITDA(2) $85M $83-$90M YoY -10% -3% to 6% (1) Same-store revenues is a non-GAAP performance meas
Slide 18: Lee Enterprises
EE ENTERPRISES
Slide 19: 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 20: Quarterly Revenue Composition
QUARTERLY REVENUE COMPOSITION (Millions of Dollars) Q1 FY2022 Q2 FY2022 Q3 FY2022 Q4 FY2022 FY 2022 Q1 FY2023 Q2 FY2023 Q3 FY2023 Q4 FY2023 FY 2023 Digital Advertising and Marketing Services 42.8 43.4 46.2 49.1 181.5 47.7 46.3 49.9 49.3 193.2 YoY % (1) 18.8% 36.1% 26.6% 32.7% 28.3% 11.3% 6.2% 7.8% 1
Slide 21: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Adjusted EBITDA is a non-GAAP financial performance (Millions of Dollars) Q4 FY2023 measure that enhances financial statement users overall understanding of the operating performance of the Net Loss (1.3) Company. The measure isolates unusual, infrequent
Slide 22: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Q4 Q4 Cash Costs represent a non-GAAP financial performance (Millions of Dollars) measure of operating expenses which are measured on an FY2023 FY2022 accrual basis and settled in cash. This measure is useful to investors in understanding the components
Slide 23: Same-Store Non-GAAP Revenue Reconciliation
SAME-STORE NON-GAAP REVENUE RECONCILIATION(1) Q4 Q4 $ % Q4 Q4 $ % (Millions of Dollars) (Millions of Dollars) FY2023 FY2022 Variance Variance FY2023 FY2022 Variance Variance Print Advertising Revenue 23.3 39.9 (16.6) -41.6% Print Other Revenue 9.0 10.5 (1.6) -14.9% Exited operations (0.0) (6.6) Exit
Slide 24: Same-Store Non-GAAP Revenue Reconciliation
SAME-STORE NON-GAAP REVENUE RECONCILIATION(1) $ % $ % (Millions of Dollars) FY2023 FY2022 (Millions of Dollars) FY2023 FY2022 Variance Variance Variance Variance 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 opera
Slide 25: Direct Costs Reconciliation
DIRECT COSTS RECONCILIATION (Millions of Dollars) FY2023 Direct Costs is a non-GAAP financial performance measure that enhances financial statement users overall Operating expenses 660.5 understanding of the operating performance of the Company. The measure isolates operating costs that directly Adj