Lee Enterprises reports improved earnings for June quarter
BY Hugin
— 9:00 AM ET 07/23/2013
DAVENPORT, Iowa (July 23, 2013) -- Lee Enterprises, Incorporated (LEE) , a major provider of local news, information and advertising in 50 markets, reported today that earnings for its third fiscal quarter ended June 30, 2013, totaled 3 cents per diluted common share, compared with a loss of 3 cents a year ago. Excluding unusual matters, adjusted earnings per diluted common share totaled 6 cents, compared with 3 cents a year ago.
"Continued digital growth and cost reduction again resulted in strong, and improving, cash flow and operating income, enabling even faster debt reduction," said Mary Junck, Lee chairman and chief executive officer. "Looking ahead, we see many more digital opportunities, especially in subscription revenue, mobile advertising and digital marketing services."
She also noted:
* Total digital revenue for the quarter, including advertising, subscriptions and all digital businesses, totaled $19.9 million, an increase of 4.9% from a year ago.
* Mobile advertising revenue increased 89.2% over a year ago, to $1.5 million.
* Preprinted advertising revenue continues to grow, up 1.7% for the quarter compared with a year ago.
* Lee expects 2013 full year operating expenses, excluding depreciation, amortization and unusual matters, to decrease 4.5-5.5% from their 2012 level, improved 1% from previous guidance of a decrease of 3.5-4.5%.
* Interest expense decreased 10.1% for the quarter compared with the prior year quarter as a result of overall debt reduction and refinancing of the Pulitzer Notes in May 2013.
* Debt reduction in the quarter totaled $19.5 million. Since completion of refinancing in January 2012, debt has been reduced $122 million to $873.5 million.
THIRD QUARTER OPERATING RESULTS
Operating revenue for the 13 weeks ended June 30, 2013 totaled $167.0 million, a decrease of 2.8% compared with a year ago. Combined print and digital advertising and marketing services revenue decreased 5.7% to $113.6 million, with retail advertising down 4.2%, classified down 8.4% and national down 14.9%. Combined print and digital classified employment revenue decreased 11.1%, while automotive decreased 11.8%, real estate decreased 2.5% and other classified decreased 6.2%. Digital advertising and marketing services revenue on a stand-alone basis decreased 0.2% to $16.9 million. Print advertising and marketing services revenue on a stand-alone basis decreased 6.7%. Subscription revenue increased 3.5%.
Operating expenses, excluding depreciation, amortization and unusual matters, decreased 4.1%. Compensation decreased 8.3%, with the average number of full- time equivalent employees down 8.4%. Newsprint and ink expense decreased 15.3%, primarily a result of a reduction in newsprint volume of 11.9%. Other operating expenses increased 4.2%.
Operating cash flow increased 5.6% from a year ago to $39.8 million. Operating cash flow margin increased to 23.8% from 21.9% a year ago. Including equity in earnings of associated companies, depreciation and amortization, as well as unusual matters in both years, operating income increased 16.1% to $26.9 million in the current year quarter, compared with $23.2 million a year ago. Non-operating expenses, primarily interest expense and debt financing costs, decreased 11.0%, due to lower debt balances and refinancing of the Pulitzer Notes. Adjustments to deferred income taxes increased income tax expense approximately $1 million in the quarter, resulting in a high effective tax rate. The adjustments were made to maximize available fiscal 2012 tax loss carrybacks and also to reflect current expectations related to the company's income tax attributes. Income attributable to Lee Enterprises, Incorporated (LEE) for the quarter totaled $1.8 million, compared with a loss of $1.5 million a year ago.
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