Jared Marks: The call is being recorded and will be available for replay at investors.lee.net. At the close of the planned remarks, there will be an opportunity for questions. Participants accessing this call by webcast may submit written questions through the website and they will be answered during the call as time permits. Otherwise, you will receive a response letter. A link to the live webcast can be found at investors.lee.net. I would now like to turn the call over to your host, Jared Marks, Vice President, Finance. Please go ahead.

Jared Marks: Thank you, and good morning, everyone. We appreciate you joining us today. With me on this morning’s call are Nathan Becky, President and Interim Chief Executive Officer, and Josh Reinholz, Vice President, Interim Chief Financial Officer, and Treasurer. Earlier today, we issued a news release announcing preliminary results for our 2026. The release and the accompanying presentation are available at investors.lee.net. As a reminder, this morning’s discussion will include forward-looking statements based on current expectations. These statements are subject to certain risks, trends, and uncertainties that could cause actual results to differ. Such factors are described in this morning’s news release and in our SEC filings. During the call, we refer to certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are included in the tables accompanying the release. With that, I’ll turn the call over to Nathan Becky.

Nathan Becky: Thank you, Jared. Good morning, everyone, and thank you for joining us. Lee Enterprises delivered a strong start to fiscal 2026, highlighted by significant first-quarter adjusted EBITDA growth and a transformational improvement to our capital structure. Adjusted EBITDA grew 61% year over year to $12 million, driven by consistent execution across the core business and disciplined cost management. Last week, we completed a $50 million equity investment that materially strengthens our balance sheet and significantly improves our liquidity. In this morning’s call, we’ll provide a closer look at the financial stability that the transaction provides and the transition following the closing of the deal. Before we dive into that, let me begin by reinforcing the fundamentals of our three-pillar digital growth strategy which has enabled Lee to rapidly transform over the last five years into a digital-first company.

Our transformation into a strong and stable digital media company is not theoretical. It’s measurable, repeatable, and scalable. Digital is no longer an emerging segment inside a legacy business but the primary economic engine of the company. The trajectory of Lee is increasingly governed by digital growth rates, digital markets, and digital unit economics. This shift represents disciplined execution, expanding our audience through rich local content, accelerating digital subscription growth, and building a digital advertising business that delivers results. With nearly $300 million in digital revenue over the last twelve months, we are well-positioned to reach our $450 million digital revenue target by 2030. Our investment thesis is centered on a strengthened balance sheet and continued debt reduction.

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The $50 million common stock private placement shores up our balance sheet in both the near and long term and will lead to future deleveraging. Furthermore, with the close of this deal, our already favorable credit agreement will see a significant boost. We’ll touch on the details of this transaction and the amended credit agreement in just a moment. But for now, I’d just point out the transformational impact these will have on our future. By strengthening the balance sheet and improving the company’s capital structure, we are putting the company in a much better position to execute our strategy and deliver long-term value to our shareholders. I’m excited to share the details of the strategic deal that closed this past week. We raised $50 million in gross proceeds through a private placement of common stock at $3.25 per share.

The private placement was anchored and backstopped by David Hoffman, with additional existing investors also participating. This transaction followed a comprehensive review of the company’s performance and capital structure, consideration of alternatives, and approval by both the Board and shareholders who recognize that by strengthening the balance sheet and reducing the interest rate under our credit agreement, the company would be in a better position to execute and create long-term shareholder value. As part of the closing of the transaction, we welcome Mr. Hoffman as Chairman of the Board of Directors. Concurrently, with this private placement, the credit agreement has been amended to reduce the interest rate on our outstanding debt to 5% from 9% for the next five years.

On $455 million in debt, the interest rate is expected to generate approximately $18 million in annual interest savings or up to $90 million over the five-year period. That significant cash flow improvement over the five-year horizon will allow us the flexibility to invest in our core business and drive digital growth. The proceeds from the deal will be used primarily for working capital and to fund current and future digital transformation projects. This transaction accelerates our ability to strengthen our digital platforms, enhance the consumer’s experience, and deliver measurable performance for our local advertising clients. In the near term, it improves operating efficiency while positioning us with a more flexible, scalable digital infrastructure designed to support sustainable long-term growth.

Fiscal 2026 presents a tremendous opportunity for growth driven by the strength of our digital businesses and operational discipline. Particularly as we’ve already delivered strong first-quarter results. At a macro level, we are a leading provider of high-quality local news information, and advertising in 72 markets across the US. Our local journalism is what sets us apart. As a digital-first subscription platform, we provide breaking news and local content that commands a strong audience, and attracts advertisers within the local communities we serve. Over the last twelve months, sustained growth of 14% in our digital-only subscription revenue has further diversified our revenue mix and boosted our reliance on growing revenue streams. At the same time, we’ve maintained disciplined cost management across the organization, particularly in legacy costs and corporate overhead.

These efforts are driving steady momentum in adjusted EBITDA which was $50 million over the last twelve months. Now I’ll hand the call over to Josh to run through our first-quarter results. Thanks, Nathan.

Josh Reinholz: Our strong first quarter was marked by meaningful year-over-year improvement in adjusted EBITDA driven by continued progress in our digital transformation and disciplined cost. Q1 adjusted EBITDA increased by a significant 61% or $5 million over the prior year reflecting improved operating efficiency and higher expense control. These results demonstrate the company’s ability to expand profitability even as we navigate dynamic changes in the digital media landscape. On the digital subscription front, we finished the quarter with $23 million in revenue, from our 609,000 digital-only subscribers. 5% growth in digital-only subscription revenue was fueled by increased efforts to maximize engagement within our subscriber base as well as to optimize price within our highly engaged subscriber cohorts.

Targeted investments in personalization content delivery, and life cycle marketing are increasing subscriber lifetime value and improving overall monetization. Q1 finished with over $70 million in total digital revenue. Which represented over 54% of our total rep. This progress builds on the continued evolution of our revenue with digital revenue mix improving 330 basis points year over year digital-only subscription revenue growing 5%, and digital sources representing 71% of total advertising revenue. Underscoring the transformational effect of our digital growth strategy. The strength of our first-quarter performance clearly demonstrates a strong foundation for Lee’s future as a digital-first company. Lastly, and most significantly, Q1 saw substantial growth in adjusted EBITDA.

Up $5 million or 61% over the prior year. Our first-quarter growth in adjusted EBITDA was driven by strong cost control. Particularly tied to our legacy revenue streams. With total cash costs declining $17 million over the prior year. The operational efficiency demonstrated this quarter was primarily driven by reduced headcount, and legacy print costs. This quarter represents our third consecutive quarter of adjusted EBITDA growth on a comparable basis. The year-over-year improvement in adjusted EBITDA margin was also quite substantial. With the 2026 representing 9.4% compared to 5.3% in the prior year. Another brief note on the quarter. Our results included $2 million in business interruption insurance proceeds tied to the cyber incident last year.

Excluding these proceeds, Q1 adjusted EBITDA showed very strong 35% growth. We expect to receive further insurance proceeds as the fiscal year progresses. Overall, our first-quarter results highlight the strength of our digital strategy and our continued path towards transforming local media. Compared to our broader peer group, we have consistently outperformed across several key indicators of digital growth. Including digital subscription revenue, and digital agency rep. Over the past three years, digital subscription revenue has grown significantly. More than double that of our nearest competitor. Reflecting the consistent strength of our local journalism, effective subscription strategies for managing both volume and rate, and continual improvement in digital platforms.

Over the past year, we have continued to modernize our technology and expand our product ecosystem using data-driven marketing, and audience insights to deepen engagement and enhance monetization. Post-transaction, we expect to further bolster our digital products and technology. Ultimately, our goal is improving the user’s experience by delivering journalism that is credible, and timely as well as intuitive, accessible, and engaging across devices. Our roadmap will ensure our platforms evolve alongside audience expectations also supporting sustainable business outcomes. On the advertising side, revenue from our amplified digital agency has also outpaced peers. Growing at a 5% annual rate over the last three years. This performance underscores our ability to generate sustainable, digital advertising growth through scalable solutions, innovative services, and highly skilled digitally focused teams.

Looking ahead, our trajectory toward 90% digital revenue by fiscal 2030 positions us to operate a sustainable business model that is no longer dependent on print products. As Nathan mentioned earlier, our focus remains on strengthening our digital products enhancing audience engagement, and building scalable capabilities that position the company for sustained performance in a digital media landscape. Just six years ago, our revenue was primarily print. Making up nearly 80% of our operating. As of 2026, 54% of our revenue is now digital. This transformational shift demonstrates that we’re less reliant on legacy print than ever before. As we move forward, we will continue to build on this digital revenue growth momentum while also managing our declining legacy revenue streams all driving us towards a day when we are sustainable solely from our digital platforms.

Our core digital business has grown 12% annually from fiscal 2021 to fiscal 2025. And that is translated to comparable annual growth in digital gross margin. Replacing our print revenue with growing and profitable digital revenue, sets us up to achieve long-term sustainability. By fiscal 2030, we will be sustainable from just our digital revenue and margin. Which is something we’re more confident in now than ever as post-transaction, we begin to realize the impact of the transformational Vistas project we have underway and that are forthcoming. From a cost perspective, we have a consistent track record of disciplined cost management. While making strategic investments that support long-term growth. We remain steadfast in our commitment to long-term financial sustainability and the continued delivery of high-quality local journals.

In fiscal 2026, reducing legacy costs and complexity throughout our business remains a top priority for us. By enhancing operational rigor this year, without compromising quality, we strengthened our long-term position and are poised to drive sustainable shareholder value over the long term. Lastly, before I pass it back to Nathan, I just like to reiterate how impactful the amended credit agreement is to our long-term financial. Since refinancing in March 2020, we have paid down $121 million of principal. With a strengthened balance sheet and a reduced interest rate, our path to debt reduction is stronger than ever. On $455 million in debt, the interest rate reduction of 5% is expected to generate approximately million dollars in annual interest savings or up to approximately $90 million over the five years.

This savings is a boost that will generate long-term debt reduction and shareholder value creation. Another recent improvement to our balance sheet is the strategic termination of the company’s fully funded defined benefit pension plan. Since the plan’s assets were sufficient to cover all obligations, the company is free from any future cost uncertainty. Lastly, we have identified $26 million in non-core that we are actively working to monetize. These asset sales will contribute toward future debt reduction. I’ll now pass the call over to Nathan for final remarks. Thanks, Josh.

Nathan Becky: Looking ahead to the full year, we’re reaffirming our outlook for fiscal 2026 of adjusted EBITDA growth in the mid-single digits. The strength of our first quarter positions us well to achieve our 2026 outlook.

Josh Reinholz: The transaction and interest reduction give us increased confidence in not only fiscal 2026, but also the next five years.

Nathan Becky: In other news,

Josh Reinholz: recently announced a new strategic partnership with Huddl. A leader in sports technology video analysis, and data. Huddl works with thousands of high schools and local sports teams across the nation, providing video, data, and tools to support athletes, coaches, and communities. This partnership represents one of the largest collaborations in local sports media and aligns with our mission to serve our communities with high school sports coverage at the core. It also reinforces our commitment to journalism and storytelling that bring communities together. This partnership with Huddl will allow us to serve our communities even better by adding video content with free access and continue to tell the amazing local sports stories that reflect the pride, passion, and connection people feel for their schools and teams.

Nathan Becky: What leaves deep roots in local communities

Josh Reinholz: we create meaningful value for both our readers and advertisers positioning our digital platforms as the place to go for local sports consumption and advertising. While in the early stages, we’re extremely excited to partner with the Huddl team and we’ll share more as the relationship develops.

Operator: With that,

Josh Reinholz: open the call for questions.

Nathan Becky: Lee?

Operator: Thank you. At this time, we will be conducting a question and answer session. As a reminder, if you are accessing this call by webcast, you may submit typed questions on your screen. Those questions will be answered during the call as time permits.

Nathan Becky: Questions.

Josh Reinholz: We have no questions from our live participants. I’ll now turn the call back to Nathan for closing remarks. Great. Thank you. I’ll reiterate that we are a leader in local content and are well underway on a significant digital transformation. We have become a digital-first organization growing our digital revenue mix to 54% as of this past quarter. More than doubling over the past five years. With the $50 million private placement transaction supporting both deleveraging and continued digital investment, and up to $90 million in interest savings over the next five years we’ve meaningfully strengthened our balance sheet and increased our financial flexibility. With a clear strategy, strong foundation, and a compelling future, we are set up now more than ever for our next stage of evolution as a digital media company. I want to thank our employees for their dedication, and our shareholders for their continued support.

Operator: Thank you. We have reached the end of our question and answer session. This concludes our call. You may now disconnect.

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LEE ENTERPRISES INC

Q1 2026

Earnings Transcript

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