Summary of Lee Enterprises Q3 2026 Earnings Call

1Key Financial Results and Metrics

Net Income: $5 million, marking the first quarter with positive net income since 2024.

Adjusted EBITDA: Grew 23% year-over-year to $18 million, the strongest since Q1 FY2024. Year-to-date adjusted EBITDA increased 51% to $61 million.

Revenue: Total revenue for the last 12 months reached $517 million, with digital revenue comprising 57% of total revenue.

Digital Subscribers: 584,000 digital-only subscribers, generating $22 million in quarterly subscription revenue.

Cash Position: Ended the quarter with $59 million in cash, up from $14 million a year ago.

Debt Management: Paid down $1 million in Q3, totaling $3 million year-to-date.

2Strategic Updates and Business Highlights

Management Agreement: Entered a long-term management agreement with Hoffman Media Group, aimed at leveraging Lee's operational capabilities and enhancing revenue streams without capital deployment.

Digital Transformation: Continued focus on digital capabilities, with 57% of revenue coming from digital sources, and a strong emphasis on recurring digital revenue.

Cost Management: Cash costs declined by 15% year-over-year, with significant reductions in SG&A and print-related expenses.

Advertising Growth: Digital advertising revenue grew 10% sequentially, while print advertising saw a 1% sequential increase, indicating early signs of stabilization.

3Forward Guidance and Outlook

Adjusted EBITDA Growth: Full-year adjusted EBITDA growth is now projected between 22% to 28%.

Digital Revenue Goals: Aiming for digital gross margin to fully cover SG&A costs within the next three years, reflecting confidence in the sustainability of the digital-first business model.

4Bad News, Challenges, or Points of Concern

Debt Levels: While debt management is improving, the company is still in a position where it needs to focus on reducing debt further.

Advertising Environment: Although there are signs of stabilization, the advertising market remains challenging, requiring continued discipline in revenue growth strategies.

Operational Risks: The ongoing transformation towards a digital-first model may encounter unforeseen challenges, including competition and market dynamics.

5Notable Q&A Insights

Debt Paydown Strategy: The company plans to use proceeds from monetizing non-core assets and excess cash flow to pay down debt, with a cap of $64 million on cash balances before excess funds are allocated to debt reduction.

Future Growth: Management emphasized a commitment to maintaining operational discipline and strategic investments to support long-term growth, indicating a cautious but optimistic approach moving forward. Overall, Lee Enterprises reported a strong quarter with significant progress in its digital transformation and financial health, while also acknowledging ongoing challenges in the advertising market and the need for continued focus on debt management.