Q4 2019 Earnings Call

Planned remarks, there will be an opportunity for questions. Several analysts have been invited to participate.

Oh, so participants accessing this call by webcast, maybe resubmit written questions through the web site and there'll be answered during the call as time permits otherwise you will receive response later linked to live webcast can be found at www Dot Lee Dot net.

Now I'll turn the call over to your host Jamie Suresh Corporate controller. Please go ahead.

Good morning, Thank you for joining us speaking on this morning's call will be Kevin No, great President and Chief Executive Officer, and 10, No legend, Vice President and Chief Financial Officer also with up on todays call and available for questions or Nathan Becky Vice President consumer sales and marketing and James Green.

Vice President digital earlier today, we issued a news release with preliminary results for our fourth fiscal quarter of 2019.

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Right keeping item to start our fourth quarter last year included an extra week of operations. Additionally, we acquired certain properties in fiscal year 2019.

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These transactions are affecting quarter and year to date with trends.

We discuss certain revenue and operating.

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Hello, and welcome to the event center.

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Actual results.

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It's also in our SEC.

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During the call, we make reference to certain non-GAAP financial measures, which are defined in our news release reconciliations to the relevant GAAP measures are included in tables accompanying the release.

And now to open the discussion is our president and Chief Executive Officer, Kevin Mowbray. Thank you Jamie Good morning, and thank you all for joining.

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Total digital revenue, which includes advertising subscription and digital services was 144.6 million in fiscal year, an increase of 4.3 person on the same property basis through the fourth quarter digital advertising now represents 40% of total advertising.

Much of our.

Digital advertising.

Our local controllable retail accounts represent more than 50% of advertising revenue. These local accounts isn't huge audience reach accordingly, we leave the data we typically reach 70 side the presumably adults in our local markets between our print digital and.

Mobile platforms.

This advantage makes us much less rollout of national retail advertising revenue from this category has outperformed our overall advertising trends.

Lead and play digital agency, our centralized approach to find custom digital advertising and marketing campaign continues to outpace our expectations and consistently outperformed industry standards of performance with more than 160 digital experts on that and play digital finished 2000.

In the 19 with over 600 clients through 200 active campaigns.

Our agency approach is anchored by Q level created a complete suite, a digital media custom promotions and events when appropriate revenue from inside digital lit up 13, 1% in the fourth quarter with strong margins.

Through initiatives aimed at local retail accounts in our endpoint digital agency remain steadfast in our assets.

Confident we can grow revenue from local utility.

We continue to have large engage audiences will half of our audience continue to read our printed products. We are experiencing a significant increase in digital content consumption.

Remain keenly focused on growing digital only subscriber base.

Fourth quarter of 2019, we added 13000 net new digital only subscribers, bringing our total to 91000 in 2019, we grew digital only subscriptions 79.1%.

We completed the transitions lease plus membership and rewards program in the fourth quarter, you may remember that the new plus.

Program combined premium content rewards and offers more access to digital content for subscribers, new products and sightseers benefit and rewards reasonable access that include print and all digital assets into the tiers, our digital only we believe offering more engaging locally.

General and national content will stabilize our full access audience and stimulate continue digital only subscription growth. We expect some volatility is subscription revenue in the coming quarters due to timing.

She revenue improved modestly in the fourth quarter down 4.6% on a same property basis.

As a leading provider of integrated digital publishing and content management solutions. Tony continued its double digit top line growth total revenue town news on a standalone basis, which includes revenue earned serving the market increased 10.7% in fourth quarter in 2000 and.

Key revenue totaled 22.6 million with adjusted EBITDA margins of more than 44%.

Revenue growth at Tommy is due to an increase in market share for the core CMS product.

Print in broadcast customers and we saw growth in video streaming services as well with over 2000 customers utilizing RCM that and our dominant market share in the industry. We believe is poised to continue to drive substantial revenue growth.

We expect Tommy to further expand their market share continue to diversify their customer base as a preliminary broadcast in other markets and increase their average revenue per users by providing new products and services around programmatic and data analysis.

In 2019, we saw a 160% growth in these services alone.

We continue to transformer business reduce costs in the fourth quarter and Tim will provide more details in a moment adjusted EBITDA totaled 31.1 million in the quarter compared to 35.9 million in the prior quarter. We believe we as a REIT core strategy and we'll continue produced industry leading performing despite.

The challenges in the industry to reiterate overall, we're pleased with our fourth quarter operating results that when the optimistic about the future now here's Tim to discuss additional financial highlights.

Thank you Karen and good morning, everyone.

We continue to transform our business models drive efficiencies across our company and reduced our legacy cost structure.

Cash costs on a same property basis were down 8.1% in the fourth quarter with compensation costs down 9.7% due to reductions in headcount.

Newsprint and ink expense decreased 25.9% any quarter driven by declines in print circulation volumes as well as lower newsprint prices.

Other operating expenses decreased 4.2% in the quarter, primarily driven by lower delivery costs.

For fiscal year 2019 cash costs on a same property basis were down 5.9% exceeding the top end of our previously announced cash cost guidance.

We posted strong adjusted EBITDA in the fourth quarter totaling 31.1 million for the fiscal year adjusted EBITDA totaled $121.5 million.

Strong adjusted EBITDA and our commitment to use substantially all of our cash flow to repay debt allowed us to reduce debt by 14.9 million in the fourth quarter for the fiscal year debt reduction totaled 41.2 million or.

Our leverage net of cash in the balance sheet with 3.6 times down from the prior year.

Our outstanding debt obligations mature in March of 22, and we continue to evaluate addressing our debt maturity early one consideration is the breakage cost of our current debt, which totaled $8.6 million today, but it is reduced to zero and just more just more than three months.

We're committed to reducing our leverage in one way or doing this is to monetize noncore assets, including excess real estate and investments.

Currently we have identified $30.8 million of excess real estate to sale with the majority of these sales coming from our lead legacy side of the business.

Of that amount of $18.7 million is under contract and expected to close in the next six to nine months, although there can be no assurance that real estate under contract will ultimately close.

We have nine additional properties being evaluated to say in the future and we also have a private equity investment worth approximately $10 million that we're working to monetize.

As a reminder, in the event assets owned by one of our Pulitzer subsidiaries is sold those proceeds will be used to repay the second lien term loan at par.

We believe these actions will help us reduce our overall leverage.

These are using are meeting in 12, we became a taxpayer in 2019 paying $8.4 million in income taxes during fiscal year.

We expect to file our 10-K with the FCC tomorrow and as always it will recruit additional information on our results and expectations.

An 8-K with supplemental new legacy and Pulitzer financial data will also be filed tomorrow.

This concludes our remarks were down the line to answer questions from the web and I will turn it over to Jamie to facilitate the questions.

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Our first question from the lab.

Our revolver hit matures on December 28, 2019, what's the plan for extending it.

So we actually have extended that there was a release or an 8-K filed in November we've extended our runway 12 month on them on the revolver.

The revolver matures in December of 2020.

What involvement as any will lead haven't Facebooks recently announced Facebook live news tab that promises to some publishers.

He is involved in the past in three of our markets. It's too early to know the outcome of this.

Our next question will lead the able to complete a debt refinancing deal by March 2022.

We've talked a lot about our plan to look at an opportunistic refinancing and we're still in so looking at options, we've laid out our objectives.

Looking to reduce our cost of capital.

Leasing some of the company that we have today.

One other things that we talked about in our remarks is we do have a coughed up down in March of 15 minute that we're looking to consider so we're still evaluating all of our options in the meantime, our focus is to continue to reduce our leverage as could be began.

Our next question. Please provide further color on a $6 million of restructuring costs in the quarter and the 3.8 million related to withdrawals from multiemployer pension plans.

So with that I'll address the 3.8 million dollar withdraw offers because thats. The biggest piece of the $6 million. So we have a number of multiemployer pension plan that we have disclosed in our SEC filings.

And there's a lot of risk associated with those plans in one of the things we're doing mitigate those that risk.

As to effective withdraw from those plans and we did that with one of the plan, creating a liability of $3.8 million and the way that works is.

We paid that liability over a period of 20 years, given the laws around multiemployer plans.

The rest of the restructuring costs are predominantly severance costs due to our business transformation projects.

Our next question given that the December quarter as nearly over can you comment on debt pay down and bond buybacks and the December quarter.

Hi, yes, so far weve reduced debt by $7 million in the first quarter, we do expect our first quarter this year to be similar to.

What we've done historically in this quarter, so not done yet with the quarter, both but right now were up 7 million mountain.

And all of the buyback that weeks.

Sectors this quarter have been.

At are under Mark.

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And that we have no more questions from the web I'll turn it back to our Kevin for closing remarks.

Thank you joining us on today's call. We appreciate your timing variances in lease. Thank you again for being on the call.