Lee Enterprises, Incorporated (NYSE:LEE), a major provider of local
news, information and advertising in 49 markets, today reported
earnings(1) of $6.4 million for its second fiscal quarter ended
March 26, 2017, or 11 cents per diluted common share. For the
same quarter a year ago, earnings totaled $19.5 million, or 36
cents per diluted common share. The analysis of second quarter
results is presented on a same property basis unless otherwise
noted(2).
"We are accelerating the transformation of our company," said
Kevin Mowbray, president and chief executive officer. "Digital
advertising revenue increased 11.3% in the quarter and represented
28.7% of total advertising revenue. Total digital revenue,
including digital advertising and digital services, grew 10.0%.
"Cash costs(2) in the quarter, excluding unusual matters,
were down 8.2% compared to the prior year," Mowbray added.
"We expect the cost reductions we made in the March quarter to have
a significant impact on the second half of the year and into 2018.
We are increasing our previously announced guidance of cash costs
to down 6.0-6.5% for fiscal 2017.
"Lee is highly focused on driving cash flow performance and
reducing debt," Mowbray added. "Adjusted EBITDA(3) continues to be
strong, totaling $28.8 million in the quarter, and debt reduction
in the March quarter totaled $14.5 million.
"Total revenue was down 7.9% in the quarter, mostly as a result
of declines in print advertising," he said. "Partially offsetting
weaker print demand, we saw improvement in many of our revenue
trends, including classified, which had its best quarterly trend
performance in more than a year."
Mowbray also noted the following same-property financial
highlights for the quarter:
- Total digital revenue, including digital advertising and
digital services, totaled $25.7 million. Unique visitors to Lee
mobile, tablet, desktop and app sites averaged 26.7 million, an
increase of 6.2% over the prior year quarter, with page views up
4.4% to 228.9 million.
- Digital retail advertising, which represents 60% of total
digital advertising, grew 14.1%, mainly fueled by advertising from
local retailers.
- Total advertising and marketing services revenue decreased
11.1% in the quarter; subscription revenue decreased 2.5%.
"We remain optimistic that fiscal year 2017 will be similar to
our strong performance in subscription revenue last year, as we
continue to implement our strategy of sound pricing principles,
additional premium content revenue, and reduced customer churn,
which will have a greater impact in the second half of 2017,"
Mowbray noted.
"The company continues to significantly reduce interest expense
through aggressive debt reduction," Chief Financial Officer and
Treasurer Ron Mayo said. "We have reduced debt by $32.2 million
fiscal year to date and $71.6 million over the past twelve months,
lowering Interest expense by $8.2 million, or 12.0%, in the past
twelve months.
"As of March 26, 2017, the principal amount of debt was
$584.9 million," Mayo added. "We'll continue to reduce debt in
2017, which we believe will create additional shareholder
value."
SECOND QUARTER OPERATING RESULTS
Operating revenue for the 13 weeks ended March 26, 2017
totaled $133.4 million, a decrease of 9.2% compared with a year
ago. On a same property basis, total operating revenue for the 13
weeks ended March 26, 2017 decreased 7.9%. Unless otherwise noted,
revenue and operating expense trends below are presented on a same
property basis.
Advertising and marketing services revenue combined decreased
11.1% to $77.5 million, with retail advertising down 10.3%,
classified down 10.7% and national down 18.8%. Digital advertising
and marketing services revenue on a stand-alone basis increased
11.3% to $22.2 million, and digital retail advertising, which
represents 60% of total digital advertising, grew 14.1% in the
quarter. Digital advertising represents 28.7% of total advertising
revenue.
Total digital revenue, including digital advertising and digital
services, was $25.7 million for the quarter, up 10.0% compared with
a year ago. Mobile, tablet, desktop and app sites, including TNI
and MNI(3), attracted a monthly average of 26.7 million unique
visitors for the 13 weeks ended March 26, 2017, an increase of
6.2% over the prior year quarter. Average monthly page views
totaled 228.9 million page views for the 13 weeks ended
March 26, 2017, an increase of 4.4% over the prior year.
Subscription revenue decreased 2.5% in the current year
quarter.
Average daily newspaper circulation, including TNI and MNI and
digital subscribers, totaled 0.9 million in the 13 weeks ended
March 26, 2017. Sunday circulation totaled 1.2 million.
Research in our larger markets shows we continue to reach nearly
three-quarters of all adults in the market through the combination
of digital audience growth and strong print newspaper
readership.
Operating expenses for the 13 weeks ended March 26, 2017
decreased 9.2%. Cash costs, excluding unusual matters, decreased
8.2%. Compensation decreased 9.9%, primarily as a result of lower
self-insured medical costs and a reduction in staffing
levels. Newsprint and ink expense increased 2.4%, primarily the
result of several price increases in 2016 partially offset by the
reduction in newsprint volume. Other operating expenses decreased
7.6%, primarily driven by lower delivery and other print-related
costs offset in part by higher costs associated with growing
digital revenue.
Including equity in earnings of associated companies,
depreciation and amortization, gain on sales of assets, curtailment
gains, as well as unusual matters in both years, operating income
totaled $18.8 million in the current year quarter, compared with
$18.7 million a year ago.
In the 13 weeks ended March 26, 2017, interest expense
decreased 10.1%, or $1.6 million, due to lower debt balances.
The company recognized non-operating income of $4.3 million in the
current year quarter compared to non-operating expense of $0.1
million in the same quarter of the prior year due to a change in
fair value of stock warrants. Lee recognized $1.1 million of debt
refinancing and administrative costs in the current quarter and
$2.0 million in the same quarter of the prior year. The vast
majority of the debt refinancing and administrative costs represent
amortization of refinancing costs paid in 2014.
In the 13 weeks ended March 27, 2016, non-operating income
(expense) includes a $30.6 million gain from an insurance
settlement received in January 2016 from the company's share of a
subrogation recovery arising from the settlement of claims for
damages suffered as a result of a 2009 loss at one of the Lee
Legacy production facilities. The company also recognized a
$0.7 million gain on extinguishment of debt in the prior year
quarter.
Income attributable to Lee Enterprises, Incorporated for the
quarter totaled $6.1 million, compared with income of $19.2 million
a year ago. Adjusted EBITDA for the quarter was $28.8 million.
ADJUSTED EARNINGS AND EPS FOR THE QUARTER
The following table summarizes the impact from warrant fair
value adjustments, the gain on insurance settlement and curtailment
gains on income attributable to Lee Enterprises, Incorporated and
earnings per diluted common share. Per share amounts may not add
due to rounding.
|
13 Weeks Ended |
|
|
March 26 2017 |
|
|
March 27 2016 |
|
(Thousands of Dollars, Except Per Share Data) |
Amount |
|
|
Per Share |
|
|
Amount |
|
|
Per Share |
|
|
|
|
|
|
|
|
|
|
|
Income attributable to
Lee Enterprises, Incorporated, as reported |
6,128 |
|
|
0.11 |
|
|
19,228 |
|
|
0.36 |
|
Adjustments: |
|
|
|
|
|
|
|
Warrants fair value adjustment |
(4,283 |
) |
|
|
|
62 |
|
|
|
Gain
on insurance settlement |
— |
|
|
|
|
(30,646 |
) |
|
|
Curtailment gain |
(3,741 |
) |
|
|
|
— |
|
|
|
|
(8,024 |
) |
|
|
|
(30,584 |
) |
|
|
Income tax effect of
adjustments, net |
1,309 |
|
|
|
|
10,726 |
|
|
|
|
(6,715 |
) |
|
(0.12 |
) |
|
(19,858 |
) |
|
(0.37 |
) |
Loss attributable to Lee Enterprises, Incorporated, as
adjusted |
(587 |
) |
|
(0.01 |
) |
|
(630 |
) |
|
(0.01 |
) |
YEAR TO DATE OPERATING RESULTS(4)
Operating revenue for 26 weeks ended March 26, 2017 totaled
$287.4 million, a decrease of 8.8% compared with the 26 weeks ended
March 27, 2016. On a same property basis, total operating
revenue for the 26 weeks ended March 26, 2017 decreased
7.5%. Unless otherwise noted, revenue and operating expense
trends below are presented on a same property basis.
Advertising and marketing services revenue combined decreased
10.7% to $170.6 million, retail advertising decreased 9.8%,
classified decreased 12.4% and national decreased 12.4%. Digital
advertising and marketing services revenue on a stand-alone basis
increased 9.0% to $45.2 million. Mobile advertising revenue
increased 9.7%. National digital advertising increased 2.5%.
Digital advertising represented 26.5% of total advertising.
Total digital revenue was $52.1 million year-to-date, up 8.2%
compared to the same period a year ago.
Subscription revenue decreased 2.2% in the 26 weeks ended
March 26, 2017 compared to with a year ago.
Operating expenses for the 26 weeks ended March 26, 2017
decreased 7.3%. Cash costs, excluding unusual matters, decreased
7.1% compared to the same period a year ago. Compensation decreased
7.5% primarily as a result of lower self-insured medical costs and
a decrease in the average number of full-time equivalent employees
of 7.2%. Newsprint and ink expense increased 2.8%, primarily
as a result of several price increases in 2016 partially offset by
the reduction in newsprint volume. Other operating expenses
decreased 7.8%.
Including equity in earnings of associated companies,
depreciation and amortization, gain on sales of assets, curtailment
gains, as well as unusual matters in both years, operating income
was $50.2 million in 2017, compared with $55.2 million a year
ago.
The change in non-operating income (expense) in the 26 weeks
ended March 26, 2017 compared to the 26 weeks ended March 27,
2016 is primarily due to the $30.6 million gain on an insurance
settlement in the prior year period. Interest expense
decreased 11.5%, or $3.8 million, due to lower debt balances, and
we recognized a $1.3 million gain on the extinguishment of debt in
the prior year. We also recognized non-operating income of
$7.4 million in the 26 weeks ended March 26, 2017 compared to
no impact for the change in fair value of stock warrants in the
prior year, which fluctuates with the market value of our common
stock. $2.0 million of debt financing and administrative costs were
expensed in the current year to date period compared to $3.4
million in the prior year to date period. Debt financing and
administrative costs are mainly amortization of costs paid as part
of our refinancing in 2014.
Income attributable to Lee Enterprises, Incorporated for the
year totaled $18.3 million, compared to income of $30.5 million a
year ago.
Adjusted EBITDA for the 26 weeks ended March 26, 2017 was
$72.1 million.
ADJUSTED EARNINGS AND EPS FOR THE YEAR TO DATE
The following table summarizes the impact from warrant fair
value adjustments, the gain on insurance settlement and curtailment
gains on income attributable to Lee Enterprises, Incorporated and
earnings per diluted common share. Per share amounts may not add
due to rounding.
|
26 Weeks Ended |
|
|
March 26 2017 |
|
|
March 27 2016 |
|
(Thousands of Dollars, Except Per Share Data) |
Amount |
|
|
Per Share |
|
|
Amount |
|
|
Per Share |
|
|
|
|
|
|
|
|
|
|
Income attributable to
Lee Enterprises, Incorporated, as reported |
18,301 |
|
|
0.33 |
|
|
30,465 |
|
|
0.57 |
|
Adjustments: |
|
|
|
|
|
|
|
Warrants
fair value adjustment |
(7,378 |
) |
|
|
|
(11 |
) |
|
|
Gain on
insurance settlement |
— |
|
|
|
|
(30,646 |
) |
|
|
Curtailment gains |
(3,741 |
) |
|
|
|
— |
|
|
|
|
(11,119 |
) |
|
|
|
(30,657 |
) |
|
|
Income tax effect of
adjustments, net |
1,309 |
|
|
|
|
10,726 |
|
|
|
|
(9,810 |
) |
|
(0.18 |
) |
|
(19,931 |
) |
|
(0.37 |
) |
Income attributable to Lee Enterprises, Incorporated, as
adjusted |
8,491 |
|
|
0.15 |
|
|
10,534 |
|
|
0.20 |
|
DEBT AND FREE CASH FLOW
Debt was reduced $14.5 million in the quarter, $32.2 million
year to date and $71.6 million during the last twelve months. As of
March 26, 2017 the principal amount of debt was $584.9
million. The principal amount of our debt, net of cash, is 3.89
times and 4.0 times our adjusted EBITDA for the past 12 months
ended March 26, 2017 and March 27, 2016,
respectively.
We expect to continue to reduce debt in fiscal 2017.
At March 26, 2017, including $16.0 million in cash and
availability under our revolving facility(3), liquidity totaled
$49.3 million compared to $29.5 million of required debt principal
payments over the next twelve months.
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 two hours later. Several analysts have been invited to ask
questions on the call. Questions from other participants may be
submitted by participating in the webcast. The call also may be
monitored on a listen-only conference line by dialing (toll free)
866-564-7431 and entering a conference passcode of 211579 at least
five minutes before the scheduled start. Participants on the
listen-only line will not have the opportunity to ask
questions.
ABOUT LEE
Lee Enterprises is a leading provider of local news and
information, and a major platform for advertising, with daily
newspapers, rapidly growing digital products and nearly 300 weekly
and specialty publications serving 49 markets in 21 states. Lee's
newspapers have average circulation of 0.9 million daily and 1.2
million Sunday, and estimated to reach almost three million readers
in print alone. Lee's markets include St. Louis, MO; Lincoln, NE;
Madison, WI; Davenport, IA; Billings, MT; Bloomington, IL; and
Tucson, AZ. Lee Common Stock is traded on the New York Stock
Exchange 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
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:
- Our ability to generate cash flows and maintain liquidity
sufficient to service our debt;
- Our ability to comply with the financial covenants in our
credit facilities;
- Our ability to refinance our debt as it comes due;
- That the warrants issued in our refinancing will not be
exercised;
- The impact and duration of adverse conditions in certain
aspects of the economy affecting our business;
- Changes in advertising and subscription demand;
- Potential changes in newsprint, other commodities and energy
costs;
- Interest rates;
- Labor costs;
- Legislative and regulatory rulings;
- Our ability to achieve planned expense reductions;
- Our ability to maintain employee and customer
relationships;
- Our ability to manage increased capital costs;
- Our ability to maintain our listing status on the NYSE;
- 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. Readers are cautioned not to place undue reliance on
such forward-looking statements, which are made as of the date of
this release. We do not undertake to publicly update or revise our
forward-looking statements, except as required by law.
CONSOLIDATED STATEMENTS OF
OPERATIONS(UNAUDITED)
|
13 Weeks Ended |
|
26 Weeks Ended |
|
(Thousands of Dollars, Except Per Share Data) |
March 26 2017 |
|
March 27 2016 |
|
Percent Change |
|
Same Property |
|
March 26 2017 |
|
March 27 2016 |
|
Percent Change |
|
Same Property |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising and
marketing services: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
49,005 |
|
55,682 |
|
(12.0 |
) |
(10.3 |
) |
110,876 |
|
125,363 |
|
(11.6 |
) |
(9.8 |
) |
Classified |
21,786 |
|
24,721 |
|
(11.9 |
) |
(10.7 |
) |
44,023 |
|
50,842 |
|
(13.4 |
) |
(12.4 |
) |
National |
4,405 |
|
5,492 |
|
(19.8 |
) |
(18.8 |
) |
10,705 |
|
12,380 |
|
(13.5 |
) |
(12.4 |
) |
Niche
publications and other |
2,337 |
|
2,836 |
|
(17.6 |
) |
(16.4 |
) |
4,964 |
|
5,783 |
|
(14.2 |
) |
(13.5 |
) |
Total advertising and marketing services revenue |
77,533 |
|
88,731 |
|
(12.6 |
) |
(11.1 |
) |
170,568 |
|
194,368 |
|
(12.2 |
) |
(10.7 |
) |
Subscription |
45,009 |
|
46,658 |
|
(3.5 |
) |
(2.5 |
) |
93,896 |
|
97,089 |
|
(3.3 |
) |
(2.2 |
) |
Digital services |
3,481 |
|
3,414 |
|
2.0 |
|
2.0 |
|
6,955 |
|
6,730 |
|
3.3 |
|
3.3 |
|
Commercial
printing |
2,523 |
|
3,043 |
|
(17.1 |
) |
(15.8 |
) |
5,297 |
|
6,269 |
|
(15.5 |
) |
(14.4 |
) |
Other |
4,841 |
|
4,989 |
|
(3.0 |
) |
(2.8 |
) |
10,660 |
|
10,784 |
|
(1.1 |
) |
(1.0 |
) |
Total
operating revenue |
133,387 |
|
146,835 |
|
(9.2 |
) |
(7.9 |
) |
287,376 |
|
315,240 |
|
(8.8 |
) |
(7.5 |
) |
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation |
52,414 |
|
58,850 |
|
(10.9 |
) |
(9.9 |
) |
107,470 |
|
117,514 |
|
(8.5 |
) |
(7.5 |
) |
Newsprint
and ink |
6,200 |
|
6,053 |
|
2.4 |
|
2.4 |
|
13,093 |
|
12,738 |
|
2.8 |
|
2.8 |
|
Other
operating expenses |
48,756 |
|
54,107 |
|
(9.9 |
) |
(7.6 |
) |
101,533 |
|
112,977 |
|
(10.1 |
) |
(7.8 |
) |
Workforce
adjustments |
2,405 |
|
588 |
|
NM |
NM |
2,470 |
|
1,192 |
|
NM |
|
NM |
|
Cash costs |
109,775 |
|
119,598 |
|
(8.2 |
) |
(6.6 |
) |
224,566 |
|
244,421 |
|
(8.1 |
) |
(6.5 |
) |
|
23,612 |
|
27,237 |
|
(13.3 |
) |
(13.4 |
) |
62,810 |
|
70,819 |
|
(11.3 |
) |
(10.9 |
) |
Depreciation |
4,008 |
|
4,325 |
|
(7.3 |
) |
|
8,079 |
|
8,652 |
|
(6.6 |
) |
|
|
Amortization |
6,310 |
|
6,616 |
|
(4.6 |
) |
|
12,619 |
|
13,232 |
|
(4.6 |
) |
|
|
Gain on sales of assets
and other, net |
(3,783 |
) |
(438 |
) |
NM |
|
(3,716 |
) |
(1,409 |
) |
NM |
|
|
|
Equity in earnings of
associated companies |
1,729 |
|
2,009 |
|
(13.9 |
) |
|
4,417 |
|
4,808 |
|
(8.1 |
) |
|
|
Operating income |
18,806 |
|
18,743 |
|
0.3 |
|
|
50,245 |
|
55,152 |
|
(8.9 |
) |
|
|
Non-operating income
(expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Financial
income |
109 |
|
110 |
|
(0.9 |
) |
|
184 |
|
185 |
|
(0.5 |
) |
|
|
Interest
expense |
(14,637 |
) |
(16,281 |
) |
(10.1 |
) |
|
(29,588 |
) |
(33,423 |
) |
(11.5 |
) |
|
|
Debt
financing and administrative costs |
(1,075 |
) |
(2,034 |
) |
(47.1 |
) |
|
(2,026 |
) |
(3,367 |
) |
(39.8 |
) |
|
|
Gain on
insurance settlement |
— |
|
30,646 |
|
NM |
|
— |
|
30,646 |
|
NM |
|
|
|
Other,
net |
4,318 |
|
688 |
|
NM |
|
7,413 |
|
1,333 |
|
NM |
|
|
|
|
(11,285 |
) |
13,129 |
|
NM |
|
(24,017 |
) |
(4,626 |
) |
NM |
|
|
|
Income before income
taxes |
7,521 |
|
31,872 |
|
(76.4 |
) |
|
26,228 |
|
50,526 |
|
(48.1 |
) |
|
|
Income tax expense |
1,144 |
|
12,389 |
|
(90.8 |
) |
|
7,410 |
|
19,535 |
|
(62.1 |
) |
|
|
Net income |
6,377 |
|
19,483 |
|
(67.3 |
) |
|
18,818 |
|
30,991 |
|
(39.3 |
) |
|
|
Net
income attributable to non-controlling interests |
(249 |
) |
(255 |
) |
(2.4 |
) |
|
(517 |
) |
(526 |
) |
(1.7 |
) |
|
|
Income
attributable to Lee Enterprises, Incorporated |
6,128 |
|
19,228 |
|
(68.1 |
) |
|
18,301 |
|
30,465 |
|
(39.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
0.11 |
|
0.36 |
|
(69.4 |
) |
|
0.34 |
|
0.57 |
|
(40.4 |
) |
|
|
Diluted |
0.11 |
|
0.36 |
|
(69.4 |
) |
|
0.33 |
|
0.57 |
|
(42.1 |
) |
|
|
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES(UNAUDITED)
The table below reconciles the non-GAAP financial performance
measure of adjusted EBITDA to net income, its most directly
comparable GAAP measure:
|
13 Weeks Ended |
|
26 Weeks Ended |
|
(Thousands of Dollars) |
March 26 2017 |
|
March
27 2016 |
|
March 26 2017 |
|
March 27 2016 |
|
|
|
|
|
|
|
|
|
|
Net Income |
6,377 |
|
19,483 |
|
18,818 |
|
30,991 |
|
Adjusted to
exclude |
|
|
|
|
|
|
|
|
Income
tax expense |
1,144 |
|
12,389 |
|
7,410 |
|
19,535 |
|
Non-operating expenses (income), net |
11,285 |
|
(13,129 |
) |
24,017 |
|
4,626 |
|
Equity in
earnings of TNI and MNI |
(1,729 |
) |
(2,009 |
) |
(4,417 |
) |
(4,808 |
) |
Gain on
sale of assets and other, net |
(3,783 |
) |
(438 |
) |
(3,716 |
) |
(1,409 |
) |
Depreciation and amortization |
10,318 |
|
10,941 |
|
20,698 |
|
21,884 |
|
Workforce
adjustments |
2,405 |
|
588 |
|
2,470 |
|
1,192 |
|
Stock
compensation |
559 |
|
594 |
|
1,083 |
|
1,164 |
|
Add: |
|
|
|
|
|
|
|
|
Ownership
share of TNI and MNI EBITDA (50%) |
2,220 |
|
2,711 |
|
5,696 |
|
6,519 |
|
Adjusted EBITDA |
28,796 |
|
31,130 |
|
72,059 |
|
79,694 |
|
SELECTED BALANCE SHEET INFORMATION
(Thousands of Dollars) |
March 26 2017 |
September 25 2016 |
Cash |
16,003 |
16,984 |
Debt (Principal
Amount): |
|
|
1st Lien
Term Loan |
70,234 |
101,304 |
Notes |
385,000 |
385,000 |
2nd Lien
Term Loan |
129,684 |
130,863 |
|
584,918 |
617,167 |
SELECTED STATISTICAL INFORMATION
|
13 Weeks Ended |
|
26 Weeks Ended |
|
|
March 26 2017 |
|
March
27 2016 |
|
Percent Change |
|
March 26 2017 |
|
March 27 2016 |
|
Percent Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures,
net of insurance proceeds (Thousands of Dollars) |
989 |
|
1,800 |
|
(45.1 |
) |
2,079 |
|
3,264 |
|
(36.3 |
) |
Newsprint volume
(Tonnes) |
9,540 |
|
10,978 |
|
(13.1 |
) |
20,353 |
|
23,239 |
|
(12.4 |
) |
Average full-time
equivalent employees |
3,649 |
|
3,931 |
|
(7.2 |
) |
3,732 |
|
4,020 |
|
(7.2 |
) |
Average common shares -
basic (Thousands of Shares) |
54,055 |
|
53,176 |
|
1.7 |
|
53,789 |
|
53,158 |
|
1.2 |
|
Average common shares -
diluted (Thousands of Shares) |
55,470 |
|
53,751 |
|
3.2 |
|
55,420 |
|
53,777 |
|
3.1 |
|
Shares
outstanding at end of period (Thousands of Shares) |
|
|
|
|
|
|
56,634 |
|
55,710 |
|
1.7 |
|
NOTES
(1) |
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. |
|
(2) |
The
following are non-GAAP (Generally Accepted Accounting Principles)
financial measures for which reconciliations to relevant 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 also 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 nonoperating expenses, income tax expense
(benefit), depreciation, amortization, loss (gain) on sale of
assets, impairment charges, workforce adjustment costs, stock
compensation and our 50% share of EBITDA from TNI and MNI, minus
equity in earnings of TNI and MNI and curtailment gains. |
|
• |
Adjusted
Income (Loss) and Adjusted Earnings (Loss) Per Common Share are
non-GAAP financial performance measures that we believe offer a
useful metric to evaluate overall performance of the Company by
providing financial statement users the operating performance of
the Company on a per share basis excluding the impact of changes in
the warrant valuation as well as unusual and infrequent
transactions. It is defined as income (loss) attributable to Lee
Enterprises, Incorporated and earnings (loss) per common share
adjusted to exclude the impact of the warrant valuation, unusual
matters and those of a substantially non-recurring nature. |
|
• |
Cash Costs
is a non-GAAP financial performance measure of operating expenses
that are settled in cash and is useful to investors in
understanding the components of the Company’s cash operating costs.
Generally, 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 is defined as compensation, newsprint and
ink, other operating expenses and certain unusual matters, such as
workforce adjustment costs. Depreciation, amortization, impairment
charges, other non-cash operating expenses and other unusual
matters are excluded. Cash Costs are also presented excluding
workforce adjustments, which are paid in cash. |
|
• |
We also
present revenue and certain operating expense trends on a Same
Property basis which excludes the operating results of the Daily
Herald in Provo, Utah, which was sold in August 2016. Same Property
results are useful to investors in understanding the revenue and
operating expense trends excluding the impact of changes due to
operations no longer owned by the Company. |
|
(3) |
The 1st
Lien Term Loan is the $250 million first lien term loan and $40
million revolving facility under a First Lien Credit Agreement
dated as of March 31, 2014. The Notes are the $400 million senior
secured notes pursuant to an indenture dated March 31, 2014. The
2nd Lien Term Loan is the $150 million second lien term loan under
the Second Lien Loan Agreement dated as of March 31, 2014. TNI
refers to TNI Partners publishing operations in Tucson, AZ. MNI
refers to Madison Newspapers, Inc. publishing operations in
Madison, WI. |
|
(4) |
Certain
amounts as previously reported have been reclassified to conform
with the current period presentation. The prior periods have been
adjusted for comparative purposes, and the reclassifications have
no impact on earnings. |
Contact:
Charles Arms
Director of Communications
IR@lee.net
(563) 383-2100
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