Lee Enterprises, Incorporated (NYSE:LEE) Q1 2019 Earnings Conference Call Transcript

Feb 07, 2019 • 03:00 am ET


Lee Enterprises, Incorporated (NYSE:LEE) Q1 2019 Earnings Conference Call Transcript


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Welcome to the Lee Enterprises 2019 First Quarter Webcast and Conference Call. This call is being recorded and will be available for replay beginning later this morning at lee.net.

At the close of the planned remarks, there will be an opportunity for questions.

(Operator Instructions)

Now I will turn the call over to your host, Jaime Serats (ph), Corporate Controller.

Jaime Serats

Good morning. Thank you for joining us.

Speaking on this morning's call will be Mary Junck, Executive Chairman, Kevin Mowbray, President and Chief Executive Officer, and Tim Millage, Vice President and Chief Financial Officer. Also with us on today's call and available for questions are Nathan Bekke, Vice President, Consumer Sales and Marketing, Paul Farrell, Vice President, Sales, and James Green, Vice President, Digital.

Earlier today, we issued a news release with preliminary results for our first fiscal quarter of 2019. It is available at lee.net as well as at major financial websites. Before we proceed, I wanted to point out an error in our preliminary earnings release. The prior year compensation expense is overstated by $708,000. Our discussion today will include the correct trends. We apologize for the error and will issue a corrected release later today.

As a reminder, this morning's discussion will include forward-looking statements that are 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 also in our SEC filings.

During the call, we make certain references to non-GAAP financial measures, which are defined in our news release. Reconciliations to the relevant GAAP measures are included in tables accompanying the release.

And now to open the discussion is Executive Chairman, Mary Junck.

Mary E. Junck

Thank you, Jamie, and good morning and thank you all for joining our call. We're off to a good start in our fiscal year 2019, and are pleased with our performance in the quarter, especially as it relates to our digital transformation.

Total digital revenue, which includes digital advertising and digital services revenue, was up 10.7% in the first quarter and totaled more than $150 million over the last 12 months. This double-digit growth was fueled by strong digital advertising performance especially from our local retail accounts, and substantial growth at TownNews. Digital advertising and marketing services increased 8% in the first quarter, driven by good growth from local retail accounts. As we've mentioned before, local retail accounts are the core of our business.

In the first quarter, print and digital revenue from our local retail accounts, which represents more than 50% of our advertising and marketing services revenue, was down 2.6%, better than our overall revenue trend. Kevin will provide more detail on our improving performance with these local accounts in a moment. Digital services revenue, principally TownNews, increased 27.7% in the first quarter. Strategic investments in video and streaming technology drove this growth. TownNews is also gaining market share from local media operations and broadcast customers.

We also earned