UPDATE: Lee Enterprises (LEE) Reports Q1 EPS of $0.28 on Revenues of $211.8M

(Updated - February 4, 2021 7:17 AM EST)

Lee Enterprises (NYSE: LEE) reported Q1 EPS of $0.28, versus $0.09 reported last year. Revenue for the quarter came in at $211.8 million, versus $122.34 million reported last year.

FIRST QUARTER HIGHLIGHTS

• Total operating revenue was $211.8 million compared to $122.3 million in the same quarter last year, reflecting the acquisition of BH Media and Buffalo News. On a pro forma basis, total operating revenue was down 10.9% to the same quarter last year.
• Subscription revenue totaled $90.5 million, a 1.9% increase compared to the prior year. Digital-only subscriptions at the end of the quarter totaled 286,000, or up 69.2% compared to the same period last year.
• Our audiences remain strong in both print and digital due to our focus on relevant news in our local markets. Monthly average page views totaled 488 million, a 13.2% increase compared to the prior year, and monthly average unique visitors totaled 55 million.
• Total advertising revenue was $102.6 million, a 20.0% decrease compared to the same quarter last year on a pro forma basis. We improved our advertising revenue trends sequentially 670 bps compared to fourth quarter 2020 trends.
• Revenue at TownNews increased 8.5% in the first quarter and revenue over the last twelve months totaled $25.6 million.
• Total digital revenue, including digital advertising, digital subscription revenue and digital services, was $62.5 million and represented 29.4% of our operating revenue.
• Operating expenses totaled $192.5 million and Cash Costs(3) on a pro forma basis were down 10.1%. Since the acquisition in March 2020, we achieved $103 million of cash cost synergies, reaching our target established for September 2021.
• 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 $16.4 million and Adjusted EBITDA totaled $40.0 million.

“We are off to a great start in fiscal year 2021 as we continue to improve our operating results mitigating the effects of the pandemic,” said Kevin Mowbray, President and Chief Executive Officer. “Adjusted EBITDA totaled $40.0 million in the first quarter as we continue to see sequential revenue trend improvement as total operating revenue on a pro forma basis was down 10.9% in the first quarter compared to third and fourth quarter of fiscal year 2020 trends that were down 16.9% and 24.7%, respectively. As we remain focused on executing at a high level in today’s uncertain advertising revenue environment, we are keenly focused on transforming our business models for the long term benefit of our shareholders, our consumers, our advertisers and our employees.”

“To that end, we have made significant progress on our digital transformation strategy. Total digital revenue in the quarter totaled $62.5 million, or 29.4% of our total operating revenue. Digital-only subscriptions continue to grow at a rapid rate – up 69.2% compared to the prior year, and we now have 286,000 paid digital-only subscribers to our products that are helping drive our audience revenue performance. The growth in digital-only subscriptions and digital-only revenue helped drive a 1.9% quarter over quarter growth in subscription revenue.”

“On the advertising side, we are focused on diversifying the products and services that we offer to local advertisers. We are seeing growth at Amplified Agency, our full service digital marketing agency, and in video revenue, which combined posted a 16.5% increase in revenue in the first quarter compared to last year. Additionally, through strong relationships in our local communities, we earned $3.0 million in advertising revenue from state and local political campaigns. Total advertising revenue on a pro forma basis was down 20.0% in the first quarter, a 670 bps sequential trend improvement from the fourth quarter 2020 trends,” Mowbray added.

“TownNews is the digital backbone of our operations and provides a platform for enhancing our product development efforts across the organization. Revenue at TownNews on a standalone basis increased 8.5%, continuing a long line of quarter over quarter revenue growth. With growth in audience revenue and revenue at TownNews, 45% of our total operating revenue is now subscription-based," said Mowbray.

“The first quarter marked a significant milestone in our transformation efforts as we achieved our $100 million cost reduction target,” said Tim Millage, Vice President, Chief Financial Officer and Treasurer. “We established this challenging goal in the spring of last year and we reached our target nine months early. We realized $103 million in cost synergies since the BH Media(4) and Buffalo(4) acquisitions through acquisition integration and efforts to reign in our legacy print cost structure. Strong revenue performance combined with appropriate cost management resulted in Adjusted EBITDA(3) of $40.0 million in the first quarter. With a learner organization, a solid post-pandemic operating strategy and a proven ability to execute give us a lot of optimism as we move past the pandemic and continue to transform into a strong digital subscription business," Millage added.

For earnings history and earnings-related data on Lee Enterprises (LEE) click here.

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