Lee Enterprises' leadership told shareholders Wednesday that the company is growing its audiences across markets, age groups and platforms as digital gains and other innovations help drive the business' transformation.
"We have proven ourselves to be flexible and nimble at rethinking, repositioning and redeveloping all aspects of our business," Executive Chairman Mary Junck told stockholders gathered at Lee's downtown Davenport headquarters. "We see a bright future for Lee."
About 60 shareholders, mostly made up of Lee employees, were on hand for the annual meeting and management presentation. Lee owns newspapers and websites in 50 markets across 22 states, including the Quad-City Times and Muscatine Journal. Last June, Lee acquired the Moline Dispatch and Rock Island Argus.
"We are, by far, the dominant source of local news and information in the communities we serve," Junck said. She shared estimates that Lee publishes more than 700 local stories and 700 photographs each day, or about 275,000 stories and 275,000 photos a year.
In addition, she said Lee journalists also are exposing "news that matters" in its large and small markets.
Junck added that Lee reaches 74 percent of adults in its largest markets, including 46 percent print readers and 35 percent digital users. "We are highly relevant to all age groups, including millennials, and we reach 64 percent of that group," she said.
Kevin Mowbray, the company's president and CEO, discussed how the company continues to expand its digital audiences and products with assistance from the rapidly growing TownNews.com, the digital services company of which Lee is the majority owner.
"These digital gains are a key element of our transformation, and action plans have been developed to maintain and increase the digital momentum," he said, adding that digital revenue has increased by more than 50 percent since 2012.
A number of new products serve Lee's advertising customers, including Digital Connect, a digital services package aimed at small and mid-sized businesses. "We've launched a highly innovative design center and a digital content center, and formed innovative content partnerships with Meredith and other publishers," Mowbray added.
To improve efficiencies and cut costs, Lee also centralized the finance, human resources, procurement and circulation marketing and management and outsourced ad production, the circulation call center and some printing and distribution.
According to Mowbray, subscription revenue also has become a larger share of total revenue and is expected to continue to grow as a percentage of revenue. On a same-property basis, subscription revenue is down less than 1 percent since 2015.
In a financial update, Ron Mayo, vice president, chief financial officer and treasurer, said Lee continues to aggressively reduce its debt. Since its March 2014 refinancing, or 15 quarters ago, Lee has reduced its debt by $313 million, or 37 percent. The reduction includes $67.5 million paid off in the 12 months ended in December. It ended the quarter at $532 million in debt.
With its First Lien Term Loan due in March 2019 and its long-term debt due in 2022, he said "We are actively engaged in discussions and analysis with our advisors regarding the timing and economics of refinancing all or a portion of our long-term debt."
Mayo added that Lee's industry-leading margins, solid revenue and cost performance are producing "strong adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the past several years, and it continues to be a top priority for management." For the 12 months ended in December, adjusted EBITDA was $141.7 million.
Shareholders posed no questions during an open question-and-answer period during the meeting, which lasted less than 30 minutes.
"With our proven track record of transformation, we are well-positioned and experienced to seize new opportunities and thrive in the future," Mowbray said.