Davenport publisher Lee Enterprises, Inc., reported preliminary earnings today of 28 cents per diluted common share for its first fiscal quarter ended Dec. 30, compared with 32 cents a year ago.
Excluding unusual matters, adjusted earnings per diluted common share totaled 20 cents, compared with earnings of 37 cents a year ago, primarily due to higher interest cost in the current year quarter.
“Lee continues to post strong cash flow and reduce debt ahead of schedule as we build on our ability to resume revenue growth,” Mary Junck, Lee’s chairman and chief executive officer, said in a news release.
Junck also noted:
• Mobile advertising revenue continues to grow at a rapid pace, up 147 percent in the quarter to $1.3 million.
• Paid content initiatives have been introduced in nearly all markets and are receiving good reception. Circulation revenue, which includes digital subscriptions, increased 3.9 percent in the quarter.
• Lee reduced cash costs 3.7 percent in the quarter compared with a year ago, a result of improved efficiencies through an ongoing transformation of business models. Lee now expects operating expenses, excluding depreciation, amortization and unusual matters, to be down 3.5 percent to 4.5 percent for the year.
• Debt payments totaled $29.0 million in the quarter, reducing the balance to $916.9 million, and keeping Lee more than a year ahead of projections in reducing debt.
Lee announced that operating revenue for the 13 weeks ended Dec. 30 totaled $185.5 million, a decrease of 3.4 percent compared with a year ago. Combined print and digital advertising revenue decreased 6.3 percent to $128.7 million. Circulation revenue increased 3.9 percent.
Operating expenses decreased 4 percent. Compensation decreased 4.9 percent with the average number of full-time equivalent employees down 8.1 percent. Newsprint and ink expense decreased 13.1 percent due to a reduction in newsprint volume of 12.6 percent.
Operating cash flow decreased 2.8 percent from a year ago to $51.5 million. Operating cash flow margin increased to 27.8 percent from 27.6 percent a year ago.
Operating income increased 1.2 percent to $39.3 million in the current year quarter, compared with $38.8 million a year ago. Non-operating expenses increased 11.6 percent due to higher interest rates on debt, partially offset by a $6.9 million gain on sale of an investment.
Lee completed its previously announced sale of the North County Times in the quarter, resulting in a gain of $1.2 million after income taxes. Income attributable to Lee Enterprises, Inc. for the quarter totaled $14.6 million, the same as a year ago.
Lee announced it has entered into an agreement to sell The Garden Island newspaper and digital operations based in Lihue, Hawaii to Oahu Publications, Inc. for $2 million. The transaction is expected to be completed in February.
Headquartered in Davenport, Lee Enterprises owns 47 daily newspapers, including the Quad-City Times, and a joint interest in four others as well as rapidly growing digital products and nearly 300 specialty publications in 23 states.