Lee Enterprises, Incorporated (NYSE:LEE), a major provider of
local news, information and advertising in 50 markets, today
reported earnings(1) of $3.5 million for its fourth fiscal
quarter ended September 24, 2017, or 6 cents per diluted common
share. For the same quarter a year ago, earnings totaled $0.7
million, or 1 cent per diluted common share. For the fiscal year,
earnings totaled $28.6 million, or 50 cents per diluted common
share, compared to $36.0 million, or 64 cents per diluted common
share, in the prior year.
"Adjusted EBITDA(2) for the fourth quarter
totaled $36.7 million and was down 1.1% from the prior year. This
is an improving trend and the best quarterly Adjusted EBITDA
performance, as compared to the prior year quarter, in two years,"
Chief Executive Officer Kevin Mowbray said. "We also maintained our
industry-leading margins in both the fourth quarter and fiscal
2017. For the fiscal year, Adjusted EBITDA was $144.6 million, a
decline of 6.0% from the prior year."
The analysis of fourth quarter and year-end
revenue and cash costs are presented on a same property
basis(2) unless otherwise noted.
"Digital advertising revenue increased 6.1% and
represented 29.3% of total advertising revenue for the quarter,"
Mowbray said. "For the fiscal year, digital advertising revenue
increased 8.0% and accounted for 27.8% of total advertising
revenue, making it our best annual performance in the category
since 2014.
"Our pricing and premium content strategies
drove a subscription revenue increase of 0.6% in the fourth
quarter," Mowbray added. "The past two quarters of positive
subscription revenue resulted in the fiscal year subscription
revenue being down only 0.6%.
"A soft print advertising environment
contributed to overall revenue declines," Mowbray said. "Fourth
quarter total revenue was down 6.8%, a performance very close to
last quarter and better than the trend from earlier in the year.
Total revenue was down 7.1% in fiscal year 2017."
Mowbray also noted the following same-property
financial highlights for the quarter and fiscal year:
- Digital retail advertising, which represented 61% of total
digital advertising in the September quarter, grew 7.9% in the
quarter and 9.4% for the fiscal year, driven by advertising from
local retailers.
- Total digital revenue, including digital advertising and
digital services, totaled $26.7 million for the quarter, an
increase of 3.8% over the prior year. Total digital revenue
increased 6.7% for the 2017 fiscal year. Monthly page views of Lee
mobile, tablet, desktop and app sites averaged 244.2 million, an
increase of 11.6% over the prior year quarter.
- Total advertising and marketing services revenue decreased
10.2% in the quarter.
"Cash costs(2) in the quarter, excluding workforce
adjustments and other, were down 8.8% compared to the prior year,"
said Treasurer and Chief Financial Officer Ron Mayo. "For fiscal
2017, cash costs decreased 7.7%, exceeding guidance from earlier
this year of 6.5%. We expect the carryover impact from these cost
reductions to positively impact 2018.
"The company continues to aggressively reduce debt," Mayo added.
"Debt reduction in the September quarter was $20.1 million and
totaled $68.8 million for the fiscal year, resulting in reduced
interest expense of $6.7 million, or 10.4%, in the past twelve
months."
As of September 24, 2017, the principal amount of debt was
$548.4 million, Mayo said. Leverage net of cash was 3.72 times
Adjusted EBITDA compared to 3.91 times Adjusted EBITDA one year
ago, he added.
FOURTH QUARTER OPERATING RESULTS
Operating revenue for the 13 weeks ended September 24, 2017
totaled $140.2 million, a decrease of 5.4% compared with a year
ago. On a same property basis, total operating revenue for the 13
weeks ended September 24, 2017 decreased 6.8%. Unless otherwise
noted, revenue and operating expense trends below are presented on
a same property basis.
Advertising and marketing services revenue combined decreased
10.2% to $77.1 million, with retail advertising down 9.9%,
classified down 12.1% and national down 1.2%. Digital advertising
and marketing services revenue on a stand-alone basis increased
6.1% to $23.1 million, and digital retail advertising, which
represents 61% of total digital advertising, grew 7.9% in the
quarter. Digital advertising represents 29.3% of total advertising
revenue.
Total digital revenue, including digital advertising and digital
services, was $26.7 million for the quarter, up 3.8% compared with
a year ago. Mobile, tablet, desktop and app sites, including TNI
and MNI(3), attracted monthly average page views of 244.2 million
for the 13 weeks ended September 24, 2017, an increase of 11.6%
over the prior year.
Subscription revenue increased 0.6% in the current year quarter
due to price increases and additional revenue from premium
content.
Average daily newspaper circulation, including TNI and MNI and
digital subscribers, totaled 0.8 million in the 13 weeks ended
September 24, 2017. Sunday circulation totaled 1.1 million.
Operating expenses for the 13 weeks ended September 24, 2017
decreased 9.7%. Cash costs, excluding workforce adjustments and
other, decreased 8.8%. Compensation decreased 9.6%, primarily as a
result of a reduction in staffing levels and lower self-insured
medical costs. Newsprint and ink expense decreased 16.2%, due to
lower volumes from unit declines and using lower basis weight
newsprint increasing copies printed per ton of newsprint. Other
operating expenses decreased 6.9%, primarily driven by lower
delivery and other print-related costs offset in part by higher
costs associated with growing digital revenue.
Workforce adjustment and other costs totaled $1.2 million in the
2017 quarter compared to $0.2 million in the 2016 quarter.
Including equity in earnings of associated companies,
depreciation and amortization, gain on sales of assets, curtailment
gains, as well as workforce adjustments and other in both years,
operating income totaled $21.7 million in the current year quarter,
compared with $24.2 million a year ago.
In the 13 weeks ended September 24, 2017, interest expense
decreased 9.1%, or $1.4 million, due to lower debt balances. The
company recognized non-operating income of $0.2 million in the
current year quarter compared to non-operating expense of $7.1
million in the same quarter of the prior year due to a change in
fair value of stock warrants. Lee recognized $1.4 million of debt
refinancing and administrative costs in the current quarter and
$1.4 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.
Income attributable to Lee Enterprises, Incorporated for the
quarter totaled $3.2 million, compared with income of $0.4 million
a year ago. Adjusted EBITDA for the quarter was $36.7 million.
ADJUSTED EARNINGS AND EPS FOR THE QUARTER
The following table summarizes the impact from warrant fair
value adjustments 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 |
|
September 24 |
|
September 25 |
|
|
|
2017 |
|
|
|
2016 |
(Thousands of Dollars, Except Per Share Data) |
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
|
|
|
|
|
|
|
Income attributable to
Lee Enterprises, Incorporated, as reported |
3,185 |
|
0.06 |
|
404 |
|
0.01 |
Adjustments: |
|
|
|
|
|
|
|
Warrants fair value adjustment |
237 |
|
|
|
7,115 |
|
|
|
237 |
|
-- |
|
7,115 |
|
0.13 |
Income
attributable to Lee Enterprises, Incorporated, as adjusted |
3,422 |
|
0.06 |
|
7,519 |
|
0.14 |
|
|
|
|
|
|
|
|
FISCAL YEAR OPERATING RESULTS(4)
Operating revenue for 52 weeks ended September 24, 2017 totaled
$566.9 million, a decrease of 7.7% compared with the 52 weeks ended
September 25, 2016. On a same property basis, total operating
revenue for the 52 weeks ended September 24, 2017 decreased 7.1%.
Unless otherwise noted, revenue and operating expense trends below
are presented on a same property basis.
Advertising and marketing services revenue combined decreased
10.6% to $328.7 million, retail advertising decreased 10.0%,
classified decreased 12.2% and national decreased 8.6%. Digital
advertising and marketing services revenue on a stand-alone basis
increased 8.0% to $91.9 million. Digital advertising represented
27.8% of total advertising.
Total digital revenue was $106.0 million in 2017, up 6.7%
compared to 2016.
Subscription revenue decreased 0.6% in 2017 compared to
2016.
Operating expenses for 2017 decreased 6.8%. Cash costs,
excluding workforce adjustments and other, decreased 7.7% compared
to 2016. Compensation decreased 8.4% primarily as a result of a
decrease in the average number of full-time equivalent employees of
8.5% and lower self-insured medical costs. Newsprint and ink
expense decreased 4.7%, due to a reduction in newsprint volume
partially offset by higher prices. Other operating expenses
decreased 7.4%.
Including equity in earnings of associated companies,
depreciation and amortization, gain on sales of assets, curtailment
gains, as well as workforce adjustments and other in both years,
operating income was $92.5 millions in 2017, compared with $104.0
millions a year ago.
The change in non-operating income (expense) in 2017 compared to
2016 is primarily due to the $30.6 million gain on an insurance
settlement in the prior year period. Interest expense decreased
10.4%, or $6.7 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 $10.2
million in 2017 compared to non-operating expense of $7.5 million
for the change in fair value of stock warrants in the prior year.
The fair value of the warrants fluctuates with the market value of
our common stock. In the current fiscal year, $4.8 million of debt
financing and administrative costs were expensed compared to $5.9
million in the same period a year ago, the majority of which were
non-cash expenses. 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 $27.5 million, compared to income of $35.0 million a
year ago.
Adjusted EBITDA for the 52 weeks ended September 24, 2017 was
$144.6 million, including the impact of acquisition and disposition
transactions.
ADJUSTED EARNINGS AND EPS FOR THE YEAR TO DATE
The following table summarizes the impact from warrant fair
value adjustments and the gain on insurance settlement on income
attributable to Lee Enterprises, Incorporated and earnings per
diluted common share. Per share amounts may not add due to
rounding.
|
|
|
|
|
|
|
|
|
|
|
52 Weeks Ended |
|
September 24 |
|
September 25 |
|
|
|
2017 |
|
|
|
2016 |
(Thousands of Dollars, Except Per Share Data) |
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
Income attributable to
Lee Enterprises, Incorporated, as reported |
27,481 |
|
0.50 |
|
34,961 |
|
0.64 |
Adjustments: |
|
|
|
|
|
|
|
Warrants
fair value adjustment |
(10,181) |
|
|
|
7,519 |
|
|
Gain on insurance settlement |
-- |
|
|
|
(30,646) |
|
|
|
(10,181) |
|
|
|
(23,127) |
|
|
Income
tax effect of adjustments, net |
-- |
|
|
|
10,726 |
|
|
|
(10,181) |
|
(0.18) |
|
(12,401) |
|
(0.23) |
Income
attributable to Lee Enterprises, Incorporated, as adjusted |
17,300 |
|
0.31 |
|
22,560 |
|
0.42 |
|
|
|
|
|
|
|
|
DEBT AND FREE CASH FLOW
Debt was reduced $20.1 million in the quarter and $68.8 million
during the fiscal year. As of September 24, 2017 the principal
amount of debt was $548.4 million. The principal amount of our
debt, net of cash, is 3.72 times our adjusted EBITDA for the past
12 months ended September 24, 2017.
We expect to continue to reduce debt in fiscal 2018.
At September 24, 2017, including $10.6 million in cash and
availability under our revolving facility(3), liquidity totaled
$44.4 million compared to $30.2 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 340951 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 50 markets in 22 states. Year to
date, Lee's newspapers have average circulation of 0.8 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;
- Our ability to manage declining print revenue;
- 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;
- Changes in technology that impact our ability to deliver
digital advertising;
- 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.
Contact:Charles Arms Director of CommunicationsIR@lee.net (563)
383-2100
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
|
|
|
|
|
13 Weeks Ended |
|
|
|
|
|
|
52 Weeks Ended |
|
(Thousands of Dollars,
Except |
Sept
24 |
|
|
Sept
25 |
|
|
Percent |
|
|
Same |
|
|
Sept
24 |
|
|
Sept
25 |
|
|
Percent |
|
|
Same |
|
Per Share
Data) |
2017 |
|
|
2016 |
|
|
Change |
|
|
Property |
|
|
2017 |
|
|
2016 |
|
|
Change |
|
|
Property |
|
Advertising
and marketing services: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
49,915 |
|
|
54,339 |
|
|
(8.1 |
) |
|
(9.9 |
) |
|
212,737 |
|
|
238,641 |
|
|
(10.9 |
) |
|
(10.0 |
) |
Classified |
21,972 |
|
|
24,528 |
|
|
(10.4 |
) |
|
(12.1 |
) |
|
88,429 |
|
|
101,077 |
|
|
(12.5 |
) |
|
(12.2 |
) |
National |
5,071 |
|
|
5,108 |
|
|
(0.7 |
) |
|
(1.2 |
) |
|
20,049 |
|
|
22,114 |
|
|
(9.3 |
) |
|
(8.6 |
) |
Niche
publications and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other |
2,586 |
|
|
2,826 |
|
|
(8.5 |
) |
|
(14.4 |
) |
|
10,145 |
|
|
11,631 |
|
|
(12.8 |
) |
|
(13.9 |
) |
Total advertising
and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
marketing
services revenue |
79,544 |
|
|
86,801 |
|
|
(8.4 |
) |
|
(10.2 |
) |
|
331,360 |
|
|
373,463 |
|
|
(11.3 |
) |
|
(10.6 |
) |
Subscription |
50,616 |
|
|
49,753 |
|
|
1.7 |
|
|
0.6 |
|
|
191,922 |
|
|
194,002 |
|
|
(1.1 |
) |
|
(0.6 |
) |
Digital services |
3,618 |
|
|
3,969 |
|
|
(8.8 |
) |
|
(8.5 |
) |
|
14,008 |
|
|
14,240 |
|
|
(1.6 |
) |
|
(1.3 |
) |
Commercial
printing |
1,924 |
|
|
2,884 |
|
|
(33.3 |
) |
|
(34.8 |
) |
|
9,742 |
|
|
12,269 |
|
|
(20.6 |
) |
|
(20.0 |
) |
Other |
4,510 |
|
|
4,771 |
|
|
(5.5 |
) |
|
(5.7 |
) |
|
19,911 |
|
|
20,390 |
|
|
(2.3 |
) |
|
(2.3 |
) |
Total
operating revenue |
140,212 |
|
|
148,178 |
|
|
(5.4 |
) |
|
(6.8 |
) |
|
566,943 |
|
|
614,364 |
|
|
(7.7 |
) |
|
(7.1 |
) |
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation |
50,645 |
|
|
55,019 |
|
|
(7.9 |
) |
|
(9.6 |
) |
|
209,692 |
|
|
229,752 |
|
|
(8.7 |
) |
|
(8.4 |
) |
Newsprint
and ink |
5,688 |
|
|
6,767 |
|
|
(15.9 |
) |
|
(16.2 |
) |
|
24,904 |
|
|
26,110 |
|
|
(4.6 |
) |
|
(4.7 |
) |
Other
operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
expenses |
49,647 |
|
|
52,394 |
|
|
(5.2 |
) |
|
(6.9 |
) |
|
199,754 |
|
|
218,726 |
|
|
(8.7 |
) |
|
(7.4 |
) |
Workforce adjustments and other |
1,150 |
|
|
209 |
|
|
NM |
|
|
NM |
|
|
7,523 |
|
|
1,825 |
|
|
NM |
|
|
NM |
|
Cash
costs |
107,130 |
|
|
114,389 |
|
|
(6.3 |
) |
|
(7.9 |
) |
|
441,873 |
|
|
476,413 |
|
|
(7.3 |
) |
|
(6.5 |
) |
|
33,082 |
|
|
33,789 |
|
|
(2.1 |
) |
|
(3.3 |
) |
|
125,070 |
|
|
137,951 |
|
|
(9.3 |
) |
|
(9.4 |
) |
Depreciation |
3,936 |
|
|
4,316 |
|
|
(8.8 |
) |
|
|
|
16,026 |
|
|
17,291 |
|
|
(7.3 |
) |
|
|
Amortization |
6,352 |
|
|
6,373 |
|
|
(0.3 |
) |
|
|
|
25,256 |
|
|
26,150 |
|
|
(3.4 |
) |
|
|
Gain on sales of assets
and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other, net |
111 |
|
|
(1,573 |
) |
|
NM |
|
|
|
|
(3,667 |
) |
|
(3,139 |
) |
|
16.8 |
|
|
|
Impairment of
intangible and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other assets |
2,517 |
|
|
2,382 |
|
|
5.7 |
|
|
|
|
2,517 |
|
|
2,185 |
|
|
15.2 |
|
|
|
Equity in earnings
of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
associated companies |
1,575 |
|
|
1,900 |
|
|
(17.1 |
) |
|
|
|
7,609 |
|
|
8,533 |
|
|
(10.8 |
) |
|
|
Operating
income |
21,741 |
|
|
24,191 |
|
|
(10.1 |
) |
|
|
|
92,547 |
|
|
103,997 |
|
|
(11.0 |
) |
|
|
Non-operating
income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
(13,654 |
) |
|
(15,027 |
) |
|
(9.1 |
) |
|
|
|
(57,573 |
) |
|
(64,233 |
) |
|
(10.4 |
) |
|
|
Debt
financing and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
administrative costs |
(1,354 |
) |
|
(1,384 |
) |
|
(2.2 |
) |
|
|
|
(4,818 |
) |
|
(5,947 |
) |
|
(19.0 |
) |
|
|
Gain on
insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
settlement |
- |
|
|
- |
|
|
NM |
|
|
|
|
- |
|
|
30,646 |
|
|
NM |
|
|
|
Other, net |
(874 |
) |
|
(7,514 |
) |
|
(88.4 |
) |
|
|
|
10,060 |
|
|
(6,268 |
) |
|
NM |
|
|
|
|
(15,882 |
) |
|
(23,925 |
) |
|
(33.6 |
) |
|
|
|
(52,331 |
) |
|
(45,802 |
) |
|
14.3 |
|
|
|
Income before income
taxes |
5,859 |
|
|
266 |
|
|
NM |
|
|
|
|
40,216 |
|
|
58,195 |
|
|
(30.9 |
) |
|
|
Income
tax expense |
2,358 |
|
|
(395 |
) |
|
NM |
|
|
|
|
11,611 |
|
|
22,176 |
|
|
(47.6 |
) |
|
|
Net income |
3,501 |
|
|
661 |
|
|
NM |
|
|
|
|
28,605 |
|
|
36,019 |
|
|
(20.6 |
) |
|
|
Net income attributable
to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
non-controlling interests |
(316 |
) |
|
(257 |
) |
|
23.0 |
|
|
|
|
(1,124 |
) |
|
(1,058 |
) |
|
6.2 |
|
|
|
Income attributable to
Lee |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enterprises, Incorporated |
3,185 |
|
|
404 |
|
|
NM |
|
|
|
|
27,481 |
|
|
34,961 |
|
|
(21.4 |
) |
|
|
Earnings per common
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
0.06 |
|
|
0.01 |
|
|
NM |
|
|
|
|
0.51 |
|
|
0.66 |
|
|
(22.7 |
) |
|
|
Diluted |
0.06 |
|
|
0.01 |
|
|
NM |
|
|
|
|
0.50 |
|
|
0.64 |
|
|
(21.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
52 Weeks Ended |
|
|
|
|
Sept 24 |
|
|
Sept
25 |
|
|
Sept
24 |
|
|
Sept
25 |
|
(Thousands of Dollars) |
|
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
Net Income |
|
|
|
|
3,501 |
|
|
661 |
|
|
28,605 |
|
|
36,019 |
|
Adjusted to
exclude |
|
|
|
|
|
|
|
|
|
|
|
Income
tax expense |
|
|
|
|
2,358 |
|
|
(395 |
) |
|
11,611 |
|
|
22,176 |
|
Non-operating expenses (income), net |
|
|
|
|
15,882 |
|
|
23,925 |
|
|
52,331 |
|
|
45,802 |
|
Equity in
earnings of TNI and MNI |
|
|
|
|
(1,575 |
) |
|
(1,900 |
) |
|
(7,609 |
) |
|
(8,533 |
) |
Gain on
sale of assets and other, net |
|
|
|
|
111 |
|
|
(1,573 |
) |
|
(3,667 |
) |
|
(3,139 |
) |
Impairment of intangible and other assets |
|
|
|
|
2,517 |
|
|
2,382 |
|
|
2,517 |
|
|
2,185 |
|
Depreciation and amortization |
|
|
|
|
10,288 |
|
|
10,689 |
|
|
41,282 |
|
|
43,441 |
|
Workforce
adjustments and other |
|
|
|
|
1,150 |
|
|
209 |
|
|
7,523 |
|
|
1,825 |
|
Stock
compensation |
|
|
|
|
524 |
|
|
592 |
|
|
2,088 |
|
|
2,306 |
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
Ownership share of TNI and MNI EBITDA (50%) |
|
|
|
1,985 |
|
|
2,560 |
|
|
9,927 |
|
|
11,705 |
|
Adjusted
EBITDA |
|
|
|
|
36,741 |
|
|
37,150 |
|
|
144,608 |
|
|
153,787 |
|
|
SELECTED BALANCE SHEET
INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 24 |
|
|
September 25 |
|
(Thousands of Dollars) |
|
|
|
|
|
|
|
|
2017 |
|
|
2016 |
|
Cash |
|
|
|
|
|
|
10,621 |
|
|
16,984 |
|
|
Debt (Principal
Amount): |
|
|
|
|
|
|
|
|
|
|
|
1st Lien
Term Loan |
|
|
|
|
|
|
45,145 |
|
|
101,304 |
|
Notes |
|
|
|
|
|
|
385,000 |
|
|
385,000 |
|
2nd Lien
Term Loan |
|
|
|
|
|
|
118,240 |
|
|
130,863 |
|
|
|
|
|
|
|
|
548,385 |
|
|
617,167 |
|
|
SELECTED STATISTICAL INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended |
|
|
|
52 Weeks Ended |
|
Sept 24 |
|
Sept
25 |
|
Percent |
|
|
Sept
24 |
|
|
Sept
25 |
|
|
Percent |
|
(same
property, except shares) |
2017 |
|
2016 |
|
Change |
|
|
2017 |
|
|
2016 |
|
|
Change |
|
|
Capital
expenditures (Thousands of Dollars) |
850 |
|
1,304 |
|
(34.8 |
) |
|
4,078 |
|
|
7,072 |
|
|
(42.3 |
) |
Newsprint
volume (Tonnes) |
9,749 |
|
10,841 |
|
(10.1 |
) |
|
39,902 |
|
|
45,467 |
|
|
(12.2 |
) |
Average full-time
equivalent |
|
|
|
|
|
|
|
|
|
|
|
employees |
3,437 |
|
3,820 |
|
(10.0 |
) |
|
3,597 |
|
|
3,930 |
|
|
(8.5 |
) |
Average common shares -
basic |
|
|
|
|
|
|
|
|
|
|
|
(Thousands of
Shares) |
54,226 |
|
53,264 |
|
1.8 |
|
|
53,990 |
|
|
53,198 |
|
|
1.5 |
|
Average common shares -
diluted |
|
|
|
|
|
|
|
|
|
|
|
(Thousands of
Shares) |
55,575 |
|
55,059 |
|
0.9 |
|
|
55,392 |
|
|
54,224 |
|
|
2.2 |
|
Shares outstanding at
end of period |
|
|
|
|
|
|
|
|
|
|
|
(Thousands of Shares) |
|
|
|
|
|
|
56,712 |
|
|
55,771 |
|
|
1.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES
- 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.
- 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 and other 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.
Depreciation, amortization, impairment charges, other non-cash
operating expenses and other unusual and infrequent transactions
are excluded. Cash Costs are also presented excluding workforce
adjustments and other.
- 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, a weekly publication purchased in 2017, and the purchase of
the Dispatch-Argus on June 30, 2017. 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.
- 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.
- 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.
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