Lee Enterprises, Incorporated

Third-quarter adjusted EBITDA was $18 million, up 23% year over year, or 19% excluding $560,000 in business interruption insurance proceeds tied to the prior cyber event. Net income was $5.2 million, versus a loss in the comparable period implied by management’s comments, and adjusted EBITDA margin improved 400 basis points year over year. Over the last 12 months, Lee generated $517 million in revenue, with 57% from digital sources, and $61 million of adjusted EBITDA. Cash costs declined 15% or $19 million in the quarter, and year-to-date through June cash costs were down $55 million, or 14%. Management raised full-year adjusted EBITDA guidance to growth of 22% to 28%; no quarterly revenue or EPS guidance was provided.

CEO Nathan Bekke framed the quarter as evidence that Lee’s digital transformation is gaining momentum and that the business is becoming more resilient and profitable. He emphasized that digital is now the majority of revenue, that recurring digital revenue and operating discipline are strengthening the model, and that the Hoffman Media Group agreement validates Lee’s operating platform as something that can create value beyond owned assets. His tone was confident and forward-looking, with repeated references to disciplined execution, profitability, and long-term value creation.

CFO Josh Rinehults focused on the improving financial structure: cash costs were down $55 million year to date, including a $32 million reduction in SG&A and a $20 million reduction in legacy print costs. He said debt has been reduced by $121 million since refinancing in March 2020, and the recent strategic investment lowered the interest rate from 9% to 5%, which should generate about $18 million in annual interest savings, or as much as $90 million over five years. He also said the company finished June with $59 million of cash versus $14 million a year ago, identified about $20 million of non-core assets for monetization, and closed one sale after quarter-end.

The main shareholder/web questions centered on debt reduction and the long-term debt plan. Management said it paid down $1 million in the third quarter, about the same amount year to date, and then made another $2 million payment after quarter-end, bringing total paydown to $3 million to date. On the long-term plan, management said proceeds from non-core asset sales will continue to be used for debt reduction, and once cash balances rise above the $64 million cap in the debt agreement, excess cash flow will also go toward paydown.