Lee Enterprises Inc (LEE) 2025 Q2 法說會逐字稿

Welcome to the Lee Enterprises 2025 second quarter webcast and conference call. The call is being recorded and will be available for replay at investors.lee.net. (Operator Instructions) A link to the live webcast can be found at investors.lee.net.

歡迎參加 Lee Enterprises 2025 第二季網路廣播和電話會議。此通話已被錄音，並可在 investors.lee.net 上重播。 （操作員指示）可以在 investors.lee.net 上找到現場網路直播的連結。

Now I will turn the call over to your host, Jared Marks, Vice President, Finance.

現在我將把電話轉給主持人、財務副總裁賈里德·馬克斯 (Jared Marks)。

Good morning. Thank you for joining us. In addition to myself, speaking on this morning's call are Kevin Mowbray, President and Chief Executive Officer; and Tim Millage, Vice President, Chief Financial Officer and Treasurer. Earlier today, we issued a news release with preliminary results for our second fiscal quarter of 2025. It is available at lee.net as well as major financial websites. Please also refer to our earnings presentation found at investors.lee.net, which includes supplemental information.

早安.感謝您加入我們。除了我本人之外，今天上午參加電話會議發言的還有總裁兼執行長 Kevin Mowbray；以及副總裁、財務長兼財務主管 Tim Millage。今天早些時候，我們發布了一份新聞稿，其中包含我們 2025 財年第二季的初步業績。您可以在 lee.net 以及各大財經網站上查閱。另請參閱 investors.lee.net 上的收益報告，其中包含補充資訊。

As a reminder, this morning's discussion will include forward-looking statements based on our current expectations. These statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially. Such factors are described in this morning's news release and is in our SEC filings. During the call, we refer to certain non-GAAP financial measures. Reconciliations to the relevant GAAP measures are included in the tables accompanying the release.

提醒一下，今天上午的討論將包括基於我們目前預期的前瞻性陳述。這些聲明受某些風險、趨勢和不確定性的影響，可能導致實際結果大不相同。這些因素在今天上午的新聞稿和我們提交給美國證券交易委員會的文件中都有描述。在通話過程中，我們參考了某些非公認會計準則財務指標。本新聞稿隨附的表格中包含了與相關 GAAP 指標的對帳資訊。

And now to open the discussion is our President and Chief Executive Officer, Kevin Mowbray.

現在由我們的總裁兼執行長凱文·莫布雷 (Kevin Mowbray) 開始討論。

Thanks, Jared, and good morning, everyone. I'd like to start by expressing my appreciation for the entire Lee team. The past quarter has been a testament to the resilience, focus and innovation of our team. Our company experienced a significant cyber event by malicious actor in February. The attack impacted all operations causing significant disruption. Our dedicated employees worked around the clock to get our operations up and running again. I'm also grateful to our advertisers and subscribers for their patience during this difficult time.

謝謝，賈里德，大家早安。首先，我要向整個李氏團隊表達感謝。過去一個季度證明了我們團隊的韌性、專注力和創新力。我們公司在二月遭遇了一起由惡意行為者發起的重大網路事件。這次襲擊影響了所有運營，造成嚴重破壞。我們敬業的員工日以繼夜地工作，使我們的營運恢復正常。我也感謝我們的廣告商和訂閱者在這段困難時期的耐心。

While the cybersecurity incident hamstrung our overall financial performance in the quarter, I'm proud of how the team navigated the challenges and remain focused on executing our strategy as we are now fully recovered from the cyber incident. We remain committed to our digital transformation, and we're confident in our ability to drive sustainable growth and deliver long-term value to our shareholders. As a reminder, our three-pillar digital growth strategy is expected to result in $450 million of digital revenue by 2028.

雖然網路安全事件阻礙了我們本季的整體財務業績，但我對團隊如何應對挑戰並繼續專注於執行我們的策略感到自豪，因為我們現在已經完全從網路事件中恢復過來。我們始終致力於數位轉型，並有信心推動永續成長並為股東創造長期價值。提醒一下，我們的三大支柱數位成長策略預計到 2028 年將帶來 4.5 億美元的數位收入。

The strength of our core digital business is built on a solid foundation of over $303 million of digital revenue annually, and our new innovative suite of AI products is expected to accelerate our pace in achieving our long-term target. I'll share more on our AI advancements in a bit. Lee continues to consistently outpace our industry peers in several important measures of digital growth, both digital subscriptions and digital agency revenue growth. Digital subscription revenue grew 40% annually over the last three years, nearly doubling the nearest industry competitor.

我們核心數位業務的實力建立在每年超過 3.03 億美元的數位收入的堅實基礎之上，而我們新的創新 AI 產品套件預計將加快我們實現長期目標的步伐。稍後我將分享更多有關我們的人工智慧進步的資訊。 Lee 在數位成長的幾個重要指標（包括數位訂閱量和數位代理商收入成長）上繼續領先我們的行業同行。過去三年，數位訂閱收入每年增長 40%，幾乎是該行業最接近的競爭對手的兩倍。

On the advertising side, Amplified Digital agency revenue growth has significantly outpaced our nearest competitor, growing 18% annually over the past three years. Total digital revenue was $303 million on a trailing 12-month basis, including $103 million within Amplified Digital Agency, well on our way to achieving our long-term target. Our second quarter digital revenue grew 4% year over year on a same-store basis. Digital subscription revenue continued to lead the way, growing 20% year over year on a same-store basis. Our core digital business is diverse, robust and growing, and the innovative AI products that we launched in our second quarter puts us in a position to accelerate our digital revenue growth in the near term.

在廣告方面，Amplified Digital 代理公司的營收成長明顯超過了我們最接近的競爭對手，過去三年每年增長 18%。過去 12 個月的數字總收入為 3.03 億美元，其中包括 Amplified Digital Agency 的 1.03 億美元，我們預計將順利實現長期目標。我們第二季的數位收入以同店計算年增了 4%。數位訂閱收入持續領先，同店營收年增 20%。我們的核心數位業務多樣化、強勁且不斷成長，我們在第二季度推出的創新人工智慧產品使我們能夠在短期內加速數位收入成長。

In March, we launched a suite of AI products designed to provide local businesses with the tools they need to thrive in a competitive environment. This innovative offering comes from Amplified Digital Agency and leverages cutting-edge artificial intelligence technology. The first product offering in this innovative product suite is called AI Enablement, and AI-empowered advertising and automation solution that generates high-quality content for businesses. The AI Enablement product is aimed to prepare local businesses for the AI transformation of the advertising model. We've also announced additional add-on tools that are available, including AI social and SmartSites.AI. We're extremely thrilled to be able to offer these innovative products to our advertisers and we'd be happy to share more on our AI product suites on future calls.

今年三月，我們推出了一套人工智慧產品，旨在為本地企業提供在競爭環境中蓬勃發展所需的工具。這項創新產品來自 Amplified Digital Agency，並利用了尖端的人工智慧技術。這款創新產品套件中的第一款產品名為 AI Enablement，它是一款由 AI 驅動的廣告和自動化解決方案，可為企業產生高品質的內容。 AI Enablement 產品旨在協助本地企業為廣告模式的 AI 轉型做好準備。我們也宣布了其他可用的附加工具，包括 AI social 和 SmartSites.AI。我們非常高興能夠為我們的廣告商提供這些創新產品，我們也很樂意在未來的電話會議上分享更多關於我們的人工智慧產品套件的資訊。

Next, I'll pass the call over to Tim.

接下來，我會把電話轉給提姆。

Thank you, Kevin. Digital revenue has grown more than 17% annually since fiscal year 2021, and that has translated to comparable annual growth in digital gross margin. Replacing our print revenue with growing and profitable digital revenue will help us achieve long-term sustainability, and we're nearing that point. Speaking to the quarter's operating results, total operating revenue in the second quarter was $137 million, which represented an improvement in trend from our first quarter. The trend improvement was muted by the cyber incident, which had a significant impact on our quarterly operating results.

謝謝你，凱文。自 2021 財年以來，數位收入每年增長超過 17%，這意味著數位毛利率每年也實現可比增長。以不斷成長且獲利的數位收入取代我們的印刷收入將幫助我們實現長期永續發展，而我們正接近這一點。談到本季的經營業績，第二季的總經營收入為 1.37 億美元，較第一季有所改善。網路事件抑制了趨勢的改善，對我們的季度經營業績產生了重大影響。

Advertising revenue trends were impacted as our product portfolio was limited in February and early March. Subscription revenue was affected as single copy products were not available for a short period of time and our normal process for activating new digital subscribers was hampered, significantly impacting units in the quarter. Despite the incident, total digital revenue continued to show growth over the prior year, up 4%, led by digital subscription revenue growth of 20% and revenue growth at Amplified Digital of 9%. It's still early days for us in our journey as we're building out our AI library. However, we expect them to help drive profitable and recurring digital revenue growth in the second half of the fiscal year.

由於我們的產品組合在二月和三月初有限，廣告收入趨勢受到了影響。由於單份產品在短時間內無法供應，並且我們啟動新數位訂閱用戶的正常流程受到阻礙，訂閱收入受到影響，從而嚴重影響了本季的銷售量。儘管發生了這一事件，但總數位收入仍比上年增長 4%，其中數位訂閱收入增長 20%，Amplified Digital 收入增長 9%。我們的 AI 庫建置之旅還處於早期階段。然而，我們預計它們將有助於推動本財年下半年獲利和經常性數位收入的成長。

Moving over to the cost side. Lee has a successful track record of effective cost management and thoughtfully investing in strategies that fuel long-term growth. Following up on our last call, we executed approximately $40 million in annualized cost reductions in the second quarter aimed at driving margin in our revenue streams and lowering costs with an emphasis on print. Operating expenses in the second quarter were impacted by the cyber incident, which included $2 million of restoration costs. Many of these costs are subject to reimbursement by our insurance carrier and the claims process remains ongoing.

轉到成本方面。 Lee 在有效的成本管理和深思熟慮地投資於促進長期成長的策略方面有著成功的記錄。根據我們上次的通話結果，我們在第二季度削減了約 4000 萬美元的年度成本，旨在提高收入流的利潤率並降低成本，重點是印刷成本。第二季的營運費用受到網路事件的影響，其中包括 200 萬美元的恢復費用。其中許多費用均需由我們的保險公司報銷，且索賠過程仍在進行中。

In addition to tightening our operating spending, we have also lowered anticipated capital and restructuring spending. Top line trend improvement, combined with these changes are expected to drive significant improvement in free cash flow in the back half of the year. Over to the balance sheet. Our credit agreement with Berkshire Hathaway includes favorable terms, which include a 20-year runway, a fixed interest rate and no financial performance covenants. These better-than-market trends allow us to stay laser-focused on executing our strategy. The cyber incident also had an impact on our balance sheet as it hampered our ability to bill and collect from our customers and it limited our ability to pay vendors.

除了縮減營運支出外，我們還降低了預期資本和重組支出。預計營收趨勢的改善，加上這些變化，將推動下半年自由現金流的顯著改善。轉到資產負債表。我們與波克夏海瑟威達成的信貸協議包含優惠條款，包括 20 年的期限、固定利率和無財務績效契約。這些優於市場的趨勢使我們能夠專注於執行我們的策略。網路事件也對我們的資產負債表產生了影響，因為它妨礙了我們向客戶開立帳單和收款的能力，並限制了我們向供應商付款的能力。

While technical recovery is complete, there are some lingering impacts on our balance sheet as we aim to improve working capital by reducing both accounts receivable and outstanding accounts payable throughout the remainder of the fiscal year. In response to the cyber incident and in an effort to provide short-term liquidity, Berkshire waived payment of the company's interest and basic rent payments for March, April and May. The waived payments were added to the principal amount due under the credit agreement. This is an example of how our credit agreement benefited us in the wake of the cyber incident.

雖然技術恢復已經完成，但我們的資產負債表仍會受到一些持續的影響，因為我們的目標是透過在本財政年度剩餘時間內減少應收帳款和未償應付帳款來改善營運資金。為了因應網路事件並提供短期流動性，波克夏免除了支付公司3月、4月和5月的利息和基本租金。免除的付款被添加到信貸協議規定的應付本金中。這是我們的信用協議在網路事件發生後如何使我們受益的一個例子。

Despite the temporary addition to our principal debt balance, we have made considerable progress paying down debt in recent years and remain committed to reducing debt going forward. We continue to identify opportunities to monetize our noncore assets, which improves liquidity and facilitates debt repayment. Year-to-date through the second quarter, we closed over $6 million of asset sales, and we have an additional $25 million to monetize. $8 million of that is slated to close this fiscal year. The monetization of these noncore assets will provide a source of liquidity in 2025 and beyond.

儘管我們的主要債務餘額暫時增加，但近年來我們在償還債務方面取得了長足的進步，並將繼續致力於減少未來的債務。我們繼續尋找機會將非核心資產貨幣化，以提高流動性並促進債務償還。截至第二季度，我們已完成超過 600 萬美元的資產銷售，另外還有 2,500 萬美元可供貨幣化。其中 800 萬美元預計將於本財年完成。這些非核心資產的貨幣化將在2025年及以後提供流動性來源。

Despite first half results lagging expectations, we expect to build upon the digital revenue growth achieved in the first half of the fiscal year. Our core digital business led by digital subscriptions is expected to continue to grow rapidly as the value of our high-quality local news is second to none. We also anticipate our new AI revenue stream gaining momentum as we finish the fiscal year. With that, our updated outlook reflects improved total digital revenue growth trends in the second half of the fiscal year. While the first half adjusted EBITDA was not where we'd like it to be, our updated outlook reflects year over year growth in the second half.

儘管上半年業績落後於預期，但我們預期數位營收將延續上半年財年的成長動能。由於我們高品質本地新聞的價值是首屈一指的，因此我們以數位訂閱為主導的核心數位業務預計將繼續快速成長。我們也預計，隨著本財年的結束，我們的新 AI 收入流將獲得強勁成長。因此，我們最新的展望反映了本財年下半年整體數位營收成長趨勢的改善。雖然上半年調整後的 EBITDA 未達到我們的預期，但我們更新後的展望反映了下半年的年成長。

And with that, I will turn it back to Kevin for closing comments.

最後，我將把話題交還給凱文，請他發表最後評論。

I'd like to reiterate my gratitude to the entire Lee team for navigating the challenges in the quarter and the progress made on our digital transformation. We're paving the way for Lee to lead the industry in this era of AI-driven transformation. This concludes our remarks. The team will remain on the line for any questions you may have.

我想再次感謝整個李氏團隊克服了本季的挑戰並在數位轉型方面取得了進展。我們正在為李在人工智慧驅動轉型的時代引領產業鋪路。我們的發言到此結束。團隊將持續在線上解答您的任何問題。

Operator, please open the line for questions.

接線員，請打開熱線來回答問題。

(Operator Instructions)

（操作員指示）

I'll now read our first question from the web. Net loss totaled $12 million in the quarter and free cash flow was minimal. Does that include the interest deferral? When does Lee expect to be free cash flow positive?

我現在要讀來自網路的第一個問題。本季淨虧損總計 1,200 萬美元，自由現金流極少。這包括利息延期嗎？李預計什麼時候能實現自由現金流為正？

It's a good question. With respect to the net loss in the quarter, that certainly includes the expense associated with our debt, even though the payments were waived. With respect to free cash flow, the company has made significant changes in our cost structure, both from an operating expense standpoint as well as capital and restructuring. As a result of those changes and the total digital revenue outlook that we provided, we do expect free cash flow positive -- or to be positive in the second half of fiscal year 2025.

這是個好問題。就本季的淨虧損而言，這肯定包括與我們的債務相關的費用，即使付款被免除了。就自由現金流而言，公司對成本結構做出了重大改變，包括從營運費用以及資本和重組的角度。由於這些變化以及我們提供的總數位收入前景，我們確實預計自由現金流將為正值——或在 2025 財年下半年為正值。

That concludes the question-and-answer session. Turn it back to Kevin for any other closing remarks.

問答環節到此結束。請將發言稿交還給 Kevin，讓他做其他結語。

Would like to thank everybody for joining the call this morning. Our focus remains on transforming our business for the long-term benefit of our shareholders, our employees, our readers and our advertisers. We appreciate your time and your interest in Lee. Thank you again.

感謝大家今天上午參加電話會議。我們的重點仍然是轉變業務，以造福我們的股東、員工、讀者和廣告商的長期利益。我們感謝您抽出時間並關注李。再次感謝您。