Lee Enterprises Stock (LEE): Why The Price Jumped Today

By Amit Chowdhry ● Dec 9, 2021
  • The stock price of Lee Enterprises, Incorporated (NASDAQ: LEE) increased by over 12% pre-market today. This is why it happened.

The stock price of Lee Enterprises, Incorporated (NASDAQ: LEE) – a leading provider of high quality, trusted, local news, information, and a major digital and subscription platform in 77 markets – increased by over 12% pre-market today. Investors are responding positively to Lee Enterprises’ fourth quarter and year-to-date results for the period ended September 26, 2021. On a GAAP basis, total operating revenue was $193.9 million and net income totaled $5.3 million in the fourth quarter.

Q4 HIGHLIGHTS:

— Total operating revenue increased for the second consecutive quarter.

— Subscription revenue totaled $87.8 million, a 1.6% decrease compared to the prior year. Digital-only subscriptions at the end of the quarter totaled 402,000, or up 65% compared to the same period last year.

— Audiences remain strong in both print and digital due to a focus on relevant news in local markets. Monthly average page views totaled 

393 million and monthly average unique visitors totaled 50 million.

— Revenue at TownNews, the company’s SaaS content platform, increased 8% in the fourth quarter, and revenue for the full year totaled $27.2 million.

— Total digital revenue, including digital advertising, digital subscription, and digital services revenue, was $66.5 million and represented 34% of total operating revenue. Total digital revenue increased 37% in the quarter.

— Amplified revenue totaled $12.0 million in the quarter, a 71% increase from the same quarter last year. Video revenue in the quarter grew to 

$2.1 million, a 213% increase over last year.

— Operating expenses totaled $181.9 million and Cash Costs were up 2% in the quarter as a result of the one-time costs measures taken in last year as a result of the pandemic as well as investments in talent and technology made in 2021 to fuel digital growth. Since completing the acquisition of BH Media publications in March 2020, the company achieved $112 million of cash cost synergies, exceeding its target for 2021.

— Net income totaled $5.3 million and Adjusted EBITDA totaled $25.8 million, both up over the prior-year quarter.

FISCAL YEAR 2021 HIGHLIGHTS:

— Total operating revenue was $794.6 million compared to $618.0 million last year, reflecting the acquisition of BH Media and Buffalo(3). On a pro forma basis, total operating revenue was down 3% to last year.

— Subscription revenue totaled $357.7 million, a 1% increase compared to the prior year on a pro forma(4) basis.

— Total advertising revenue was $369.3 million, a 6% decrease compared to last year on a pro forma basis.

— Revenue at TownNews increased 9% compared to last year.

— Total digital revenue, including digital advertising, digital subscription and digital services revenue, was $253.5 million and represented 32% of total operating revenue. Total digital revenue increased 34% on a pro forma basis.

— Amplified revenue totaled $41.6 million for the year, a 43% increase compared to last year. Video revenue for the year grew to $8.1 million, a 157% increase over last year.

— Operating expenses totaled $744.5 million and Cash Costs on a pro forma basis were down 2.7%.

— Due to changes in one of their employee contracts, the company recognized a $23.8 million non-cash curtailment gain associated with elimination of retiree medical benefits. Additionally, the company recognized a $12.9 million liability associated with the withdrawal from various multi-employer pension plans. Payments toward the liabilities will be made over 20 years.

— Net Income totaled $24.8 million and Adjusted EBITDA totaled $116.6 million.

KEY QUOTES:

“Our strong fourth quarter and full-year results clearly demonstrate the significant progress we have made since we launched our Three Pillar Digital Growth Strategy in early 2021, positioning us with strong momentum in our digital transformation as we enter 2022. Total operating revenue grew for the second straight quarter and totaled $193.9 million, driven by 71% growth in Amplified, our full-service digital marketing services agency, 28% growth in digital-only subscription revenue and 8% revenue growth at TownNews, our SaaS content platform. Total digital revenue increased 37% in the fourth quarter and now represents 34% of our total operating revenue.” 

“Almost 55% of our total operating revenue, representing $106 million, is subscription-based recurring revenue. Digital-only subscribers grew 65% compared to last year and 19% sequentially over the third quarter, with digital-only subscribers now totaling 402,000. Based on this strong performance, Lee remains the fastest growing digital subscription platform in local media.” 

“Total advertising and marketing services revenue increased 6% in the quarter driven by the continued growth of Amplified. Amplified continues to diversify and expand its suite of products for local advertisers. We are providing robust custom video offerings, leveraging our relationships with local advertisers to build or enhance their e-commerce capabilities, and leveraging our first-party data to better monetize our digital inventory. Video continues to be a major growth driver, with revenue more than double that of last year as we better monetize our sponsorship and branded content. I couldn’t be more proud of our sales organization and the commitment they have shown to our growth strategy and delivering value to advertisers.”

— Kevin Mowbray, President and Chief Executive Officer

“In fiscal 2021, we made excellent progress on strengthening our balance sheet and reducing costs, while continuing to provide readers with high quality local journalism. We realized $112 million in cost synergies from the BH Media(3) acquisition, exceeding our target. We also de-risked our pension plans which are now in the aggregate fully funded. We also paid down $55.7 million in debt in fiscal 2021, reducing our net leverage to 3.9x adjusted EBITDA.”

— Tim Millage, Vice President, Chief Financial Officer and Treasurer

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.