Lee Enterprises, Incorporated

Welcome to Lee Enterprises' 2024 second quarter webcast and conference call. This call is being recorded and will be available for replay at investors.lee.net. At the close of the planned remarks, there will be an opportunity for questions. Participants accessing this call by webcast may submit questions through the website and they will be answered during the call as time permits. Otherwise, you will receive a response later. A link to the live webcast can be found at investors.lee.net. I will now turn the call over to your host, Josh Reinholz, Vice President, Finance. Sir, please begin.

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 2024. 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. 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 in our SEC filings. During the call, we refer to certain non-GAAP financial measures. Reconciliation to the relevant GAAP measures are included in the tables accompanying the release. And now to open the discussion, is our President and Chief Executive Officer, Kevin Mowbray.

Good morning, everyone, and thank you for joining us in your interest in Lee. I'm excited to share with you our solid second quarter operating results as well as update you on our digital transformation progress. Tim will cover the quarter in more detail later on the call, but in summary, our second quarter operating results were strong as we improved our overall revenue trends managed our costs well, and grew adjusted EBITDA. Lee is rapidly transforming from a print-centric to a digital-centric company, demonstrated by another quarter of strong execution of our three-pillar digital growth strategy. Our focus is on expanding our digital audiences, growing our digital subscriber base and revenue, and diversifying or expanding our offerings for local advertisers. The long-term results of our strategy are expected to generate more than $450 million of recurring sustainable digital revenue within five years. With our performance through the second quarter of FY24, we're steadily becoming sustainable solely through cash flow generation from our digital products. I'm extremely encouraged by the progress of our strategy thus far and the pace at which we're transforming Lee into a vibrant, digital-centric company. Lee continues to demonstrate digital leadership. We are the fastest-growing digital subscription platform in local media and was amplified by the fastest-growing digital marketing solution agency by significant margins. Digital subscriber growth has outpaced our industry peers for the last 17 quarters. We have now more than 745,000 digital subscribers, which is up 25% compared to prior year. We've also increased average rates for our digital subscriptions by an exceptionally strong 17% over that same period. Growing digital subscribers in concurrence with successful price increases highlights the strong demand, resilience, and value of the trusted local content we provide our markets. This consistent industry-leading performance gives us even more confidence in achieving our long-term goals, which we'll revisit later on this call. Anti-digital achieved 8% revenue growth over the last 12 months despite the soft advertising environment. Revenue total $92 million has grown an outstanding 35% annually over the last three years, far outpacing others in the industry. Fueled by these industry-leading metrics, total digital revenue has grown to $285 million over the last 12 months, which is driving the rapid change in our revenue composition as evidenced on the next slide. One key milestone of our digital transformation is reaching a digital inflection point where more than 50% of our revenue is derived from digital sources. When we first launched our three-pillar digital growth strategy, digital revenue represented just 21% of our total operating revenue. This significant growth of our digital revenue from our three-pillar digital growth strategy has transformed the composition of WE's overall revenue over the last few years. Today, digital revenue represents 40% of our revenue expected to pass the inflection point next quarter. This marks a key milestone in our digital transformation. And now I'd like to revisit our long-term outlook that we shared last year. This slide provides insight into the long-term trajectory of our digital subscriptions and associated revenue. The acceleration of digital subscription revenue growth over the past few years is driven by investments we've made in top talent in the areas of content, branding, and consumer marketing. These investments are producing strong results through engaging local content, effective branding campaigns, and KPI-driven marketing campaigns, and we expect the results to continue to push us forward. With these investments and actions, we expect to achieve $150 million of recurring digital subscription revenue by fiscal year 2028, fueled by 1.2 million digital subscribers. On the advertising side, we are the fastest-growing digital marketing service provider, and our platform uniquely positions us to reach local advertisers' high demand for omni-channel advertising and marketing services. We have strong relationships with more than 25,000 local advertisers across the U.S., and we partner with them to achieve their marketing goals. These owned and operated digital products infused with our valuable hyper-local content remains a key advertising channel for our local communities. Combining with the powerful AppSci Digital agency, we can serve these local advertisers the high-quality, data-rich, omni-channel campaigns they need to drive their business. Through this approach, we are expecting to drive $300 million of digital advertising revenue by 2028. Combining all of our revenue and digital revenue sources, including digital subscriptions, digital advertising and marketing services, and digital services revenue from Vox Digital, we expect to generate between $310 million and $330 million in digital revenue in FY24. The midpoint of our guidance represents a 70% growth rate over FY23. With this level of execution, we're well on our way of achieving $450 million of digital revenue by 2028. With that, I'll hand it over to Tim to discuss the results for the quarter.