Lee Enterprises, Inc. – owner of the Quad City Times and 46 other daily newspapers – reported Thursday (5/5) morning second quarter earnings of $19.5 million, or 36 cents per share, thanks largely to a one-time insurance gain of $30.6 million.
Without the insurance proceeds, the company would have reported a 1 cent per share loss for the 3-month period ended March 27, compared with a 3 cents per share gain for the same quarter a year ago.
Operating revenue for the second quarter totaled $147 million, down 6.2 percent from the same period last year. The decline reflected an 8.8 percent drop in retail advertising, a 14 percent decline in classified ad revenue and a 3 percent decline in subscription revenue.
Offsetting the decline in revenues were lower compensation expenses (down 3.9 percent), lower newsprint costs (down 21 percent) and lower interest expense (down 11.5 percent).
The company cited digital ad revenue growth among the second quarter highlights, stating the firm experienced an 18.2 percent growth in mobile advertising revenues. The company, however, does not provide a dollar revenue breakdown for mobile advertising in its financial statement.
"Shifts in print advertising demand continue to be a challenge," Kevin Mowbray, the new president and chief executive officer, stated in the company's news release. "However, in the third and fourth quarters, we're cycling through the prior year's lower preprint volumes and the slowdown in our energy markets. We believe year-over-year declines will be smaller. Also, while subscription revenue was down in the March quarter, we're optimistic the trend will improve for the remainder of the fiscal year with retention, start pressure and pricing."
Chief Financial Officer and Treasurer Ron Mayo stated the company continues to be "committed to reducing our debt which we believe translates directly into equity value for our shareholders. In the second quarter, debt was reduced by $47.5 million. . ." According to Mayo, the company reduced debt by $107.8 million during the past 12 months. Total debt at the end of March was $656.5 million.
The company expects to lower cash costs, excluding workforce adjustments, by 3.5 to 4 percent for the full year, according to Mayo. The total number of "average full-time equivalent employees" at the end of March totaled 3,947, an 8.5 percent reduction in employment from March 29, 2015.
CLICK HERE to view the Lee earnings release. As of noon Friday (5/6), the company's quarterly financial statement was not yet available on the U.S. Security and Exchange Commission (SEC) web site.
