Lee Enterprises Inc (LEE) Q2 2025 Earnings Call Highlights: Navigating Cyber Challenges and ...
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Lee Enterprises Inc (NASDAQ:LEE) has shown resilience and focus in recovering from a significant cyber event that disrupted operations.
The company is committed to its digital transformation strategy, aiming for $450 million in digital revenue by 2028.
Digital subscription revenue has grown 40% annually over the last three years, significantly outpacing industry competitors.
LEE launched a suite of innovative AI products to support local businesses, which is expected to accelerate digital revenue growth.
The company has executed $40 million in annualized cost reductions, improving margins and lowering costs.
The cyber incident significantly impacted quarterly financial performance, including operating revenue and advertising trends.
Net loss for the quarter was $12 million, with minimal free cash flow.
The cyber event hampered the ability to bill and collect from customers, affecting working capital.
Despite recovery efforts, there are lingering impacts on the balance sheet, with increased accounts receivable and payable.
First-half results lagged expectations, and the company is working to improve digital revenue growth in the second half of the fiscal year.
Warning! GuruFocus has detected 7 Warning Signs with LEE.
Q: Net loss totaled $12 million in the quarter and free cash flow was minimal. Does that include the interest deferral? When do we expect to be free cash flow positive? A: The net loss includes the expense associated with our debt, even though the payments were waived. We expect to be free cash flow positive in the second half of fiscal year 2025 due to significant changes in our cost structure and the digital revenue outlook. - Tim Milledge, CFO
Q: How did the cyber incident impact your financial performance and operations? A: The cyber incident significantly disrupted our operations, impacting advertising revenue trends and subscription revenue. Despite this, digital revenue grew 4% year-over-year, led by a 20% increase in digital subscription revenue. - Kevin Mowbray, CEO
Q: Can you elaborate on your digital transformation and AI product offerings? A: We launched a suite of AI products in March to help local businesses thrive. Our AI Enablement product is designed to prepare businesses for AI transformation in advertising. We also introduced AISocial and Smart sites.AI as additional tools. - Kevin Mowbray, CEO
Q: What measures have you taken to manage costs and improve financial sustainability? A: We executed approximately $40 million in annualized cost reductions in the second quarter, focusing on driving margins and lowering costs, particularly in print. We also lowered anticipated capital and restructuring spending. - Tim Milledge, CFO
Q: How is your balance sheet affected by the cyber incident, and what steps are you taking to improve it? A: The cyber incident impacted our ability to bill and collect from customers, affecting our balance sheet. We are working to improve working capital by reducing accounts receivable and payable. Additionally, we are monetizing non-core assets to improve liquidity. - Tim Milledge, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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