Lee Enterprises — Third Quarter 2026 Earnings Summary

Financial Performance

• Total operating revenue for the quarter ended June 28, 2026, was $126 million, down from $141.3 million in the prior-year quarter.
• Total digital revenue was $72 million, representing 57% of total operating revenue.
• Digital-only subscription revenue was $22 million; digital-only subscribers totaled 584,000 at quarter-end.
• Digital advertising and marketing services revenue was $45 million, accounting for 76% of total advertising revenue.
• Amplified Digital® Agency revenue totaled $27 million.
• Digital services revenue (predominantly BLOX Digital) was $5 million.
• Total print revenue was $54 million.
• Operating expenses were $118 million, a 14% decrease year-over-year.
• Cash costs were $109 million, a 14% decrease year-over-year.
• Net income was $5 million, an improvement of $7 million compared to the prior-year quarter.
• Adjusted EBITDA was $18 million, a 23% increase year-over-year ($14.9 million in the prior year).
• Adjusted EBITDA excluding insurance reimbursements received increased 19% year-over-year.
• Interest expense declined 45% ($5 million) year-over-year, dropping from $10.1 million to $5.6 million.
• The company ended the quarter with $59 million in cash on the balance sheet.
• Debt outstanding totaled $455 million; debt net of cash was $395 million.
• Capital expenditures for the quarter were $1 million.

Guidance and Future Outlook

• Fiscal 2026 Adjusted EBITDA outlook increased to year-over-year growth between 22% and 28%.
• Excluding insurance proceeds related to the prior year's cyber event, the updated outlook implies year-over-year Adjusted EBITDA growth near 10%.
• Full-year capital expenditures are expected to be up to $7 million.
• Cash paid for income taxes in FY26 is expected to total between $3 million and $9 million.
• The company does not expect any pension contributions in the fiscal year.

Business Segments and Product Lines

• Digital revenue now represents the majority of the business at 57% of total revenue.
• Digital-only subscription revenue has increased 12% annually over the past three years.
• The company announced a new management agreement with Hoffmann Media Group to leverage technology, operational capabilities, and best practices.
• The company is executing a strategic termination of its fully funded benefit pension plan to eliminate long-term volatility and improve balance sheet flexibility.

Market and Competitive Landscape

• Lee operates as a digital-first subscription platform in 114 markets across 25 states.
• The company highlighted the strength and scalability of its operating platform in deepening relationships with partners like Hoffmann Media Group.
• Management noted continued execution of strategy and sustained operational discipline as key drivers of profitability.

Risks and Challenges

• Potential risks include managing declining print revenue and circulation subscribers.
• Adverse economic conditions affecting advertising and subscription demand.
• Technology changes impacting digital advertising delivery.
• Fluctuations in newsprint, commodities, energy, and labor costs.
• Interest rate changes and cyber security breaches.
• Risks related to maintaining NASDAQ listing status and potential indemnification obligations from previous acquisitions.

Management Commentary and Tone

• CEO Nathan Bekke stated results demonstrate continued execution of the digital-first strategy and meaningful progress.
• CFO Josh Rinehults noted the return to positive net income reflects progress in strengthening the business and improving the financial foundation.
• Management expressed confidence in the direction of the business, citing disciplined cost management and operational improvements.
• The tone is confident regarding the operating model's strength and the ability to drive long-term profitability.

Other Key Points

• A $50 million private placement of common stock closed in February 2026, which triggered amendments to the Credit Agreement with BH Finance.
• The fixed annual interest rate on the 25-year term loan was reduced from 9% to 5% for a five-year period.
• The company received $6.4 million in business interruption reimbursements related to a February 2025 cyber event, recorded as a reduction in operating expenses.
• The company has no fixed principal payments on its debt and no financial performance covenants.
• The company operates in major markets including St. Louis, Buffalo, Omaha, Richmond, Lincoln, Madison, Davenport, and Tucson.