Q3 2024 Lee Enterprises Inc Earnings Call

Good day and welcome to the Lee Enterprises 2024 third quarter webcast and conference call. 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.

Unknown Executive: Conference call. The call is being recorded and will be available for replay at investors.we.mit. At the close of the plan remarks, there will be an opportunity for questions. Participants accessing this call by webcast may submit written questions through the website, and they'll be answered during the call as time permits. Otherwise, you'll receive a response later.

Unknown Executive: call. The call is being recorded and will be available for replay at investors.we.edu. 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'll be answered during the call as time permits. Otherwise, you will receive a response later.

Participants accessing this call by webcast may submit written questions through the website and they'll be answered during the call as time permits. Otherwise, you will receive a response later. A link to the live webcast can be found at investors.lee.net

Unknown Executive: A link to the live webcast we found at investors.we.mit.

Jared Marks: Now, I will turn the call over to your host, Jared Marks, Vice President of Finance.

Now I will turn the call over to your host, Jared Marks, Vice President of Finance.

Jared Marks: Good morning. Thank you for joining us. In addition to myself, speaking on this morning's call, our Kevin Mowbray, President and Chief Fund Executive Officer, and Tim Millage, Vice President, Chief Financial Officer, and Treasurer.

Jared Marks: Good morning. Thank you for joining us. In addition to myself, speaking on this morning's call are Kevin Mowbray, President and Chief Executive Officer, and Tim Millage, Vice President, Chief Financial Officer, and Treasurer.

Unknown Executive: Earlier today, we issued a news release with preliminary results for our third fiscal quarter of 2024. It is available at me.net as well as major financial websites.

Unknown Executive: Earlier today, we issued a news release with preliminary results for our third fiscal quarter of 2024. It is available at me.net as well as major financial websites. Please also refer to our earnings presentation found at investors.we.net, which includes supplemental information.

Unknown Executive: Earlier today, we issued a news release with preliminary results for our third fiscal quarter of 2024. It is available at me.net as well as major financial websites.

Unknown Executive: Please also refer to our earnings presentation found at investors.lee.net, which includes supplemental information. As a reminder, this morning's discussion will include forward-looking statements based on our current expectations. These statements are subject to certain risks, trends, and uncertainties that could cause actual results to differ materially. Such factors are described in this morning's news release and in our SEC filings. And now, to open the discussion, is our President and Chief Executive Officer, Kevin Mowbray.

Please also refer to our earnings presentation found at investors.lee.net, which includes supplemental information.

Unknown Executive: As a reminder, this morning's discussion will include forward-looking statements based on our current expectations. These statements are subject to certain risks, trends, and uncertainties that could cause actual results to differ materially. Such factors are described in this morning's news release and in our SEC Violence.

As a reminder, this morning's discussion will include forward-looking statements based on our current expectations.

These statements are subject to certain risks, trends, and uncertainties that could cause actual results to differ materially. Such factors are described in this morning's news release and in our SEC filings.

Unknown Executive: During the call, we referred to certain non-GAAP financial measures. Reconciliation to the relevant gap measures is included in the tables accompanying the release.

Kevin Mowbray: During the call, we referred to certain non-GAAP financial measures. Reconciliations to the relevant GAAP measures are included in the tables accompanying the release. And now to open the discussion is our President and Chief Executive Officer, Kevin Mowbray.

Kevin Mowbray: And now to open the discussion is our president and chief executive officer, Kevin Mowbray.

Kevin Mowbray: Thank you, Jared. Good morning everyone, and thanks for joining our call this morning. I'm delighted to share that we've made significant progress in our digital transformation. In the third quarter, each of our digital revenue streams grew year over year, and we effectively managed costs. In our last call, we told you digital revenue would surpass print revenue in the third quarter. I'm happy to share that our third quarter operating results achieved this digital revenue inflection point.

Kevin Mowbray: Thank you, Jared.

Kevin Mowbray: Good morning, everyone, and thanks for joining our call this morning. I'm delighted to share that we've made significant progress in our digital transformation. In the third quarter, each of our digital revenue streams grew in year-to-year, and we effectively managed costs. In our last call, we told you digital revenue would surpass print revenue in the third quarter. And now we'd be to share that our third quarter operating results achieved this digital revenue inflection point. This marks an important milestone in our digital transformation as it reduces our lives on print. It's also important, as the volatility of the print business is the driving force behind the updates and our adjusted EBIT of guidance that Tim will share more on in a few minutes.

Kevin Mowbray: Thank you, Jared. Good morning, everyone, and thanks for joining our call this morning. I'm delighted to share that we've made significant progress in our digital transformation. In the third quarter, each of our digital revenue streams grew year over year, and we effectively managed costs.

Kevin Mowbray: In our last call, we told you digital revenue would surpass print revenue in the third quarter. I'm happy to share that our third quarter operating results achieved this digital revenue inflection point. This marks an important milestone in our digital transformation as it reduces our reliance on print.

Kevin Mowbray: This marks an important milestone in our digital transformation as it reduces our reliance on print. It's also important as the volatility of the print business is the driving force behind the updates and our adjusted EBITDA guidance, which Tim will share more on in a few minutes.

Kevin Mowbray: It's also important that the volatility of the print business is the driving force behind the updates and our adjusted EBITDA guidance that Tim will share more on in a few minutes.

Kevin Mowbray: Another reason the inflection point is important is, with nearly two-thirds of the company's gross margin derived from our digital businesses, we were approaching our goal of being sustainable from our digital products only. Nearing digital sustainability is a testament of the progress we've made on our three-dollar digital growth strategy. This remains an industry leader in several key digital categories where the fastest growing digital subscription platform and local media promote a revenue and subscriber perspective. Our digital subscription unit growth has outpaced industry peers since we first implemented our digital transformation strategy four years ago. We now have more than 748,000 digital subscribers, which is a significant 23% compared to the prior year.

Kevin Mowbray: Another reason the inflection point is important is that with nearly two-thirds of the company's gross margin derived from our digital businesses, we're approaching our goal of being sustainable from our digital products only. Nearing Digital Sustainability is a testament to the progress we've made on our three-pillar digital growth strategy. Lee remains an industry leader in several key digital categories. We're the fastest growing digital subscription platform in local media from both a revenue and subscriber perspective.

Kevin Mowbray: Nearing digital sustainability is a testament to the progress we've made on our three-pillar digital growth strategy.

Speaker Change: We are the fastest-growing digital subscription platform in local media from both a revenue and subscriber perspective.

Kevin Mowbray: Our digital subscription unit growth has outpaced industry peers since we first implemented our digital transformation strategy four years ago. We now have more than 748,000 digital subscribers, which is up a significant 23% compared to the prior year. We've also generated consistent and significant revenue growth from digital subscribers. This revenue category has grown 43% annually over the last three years, nearly doubling the nearest industry competitor. Simply put, we're growing digital subscribers faster than anyone else while demonstrating higher value to our readers and executing price increases for our digital subscribers. This clearly demonstrates our distinguished presence in local markets, as well as a strong demand for the valuable content we provide.

Tim: Our digital subscription unit growth has outpaced industry peers since we first implemented our digital transformation strategy four years ago.

Tim: We now have more than 748,000 digital subscribers, which is up a significant 23% compared to the prior year.

Kevin Mowbray: We've also generated consistent and significant revenue growth from digital subscribers. This revenue category has grown 43% annually over the last three years, nearly doubling the nearest industry competitors. Simply put, we're growing digital subscribers faster than anyone else while demonstrating higher value to our readers and executing price increases to our digital subscribers. This clearly demonstrates our distinguished presence in local markets as well as the strong demand for the valuable content we provide. We've expanded the amount of local news content delivered to our readers, ultimately to give them more opportunities to engage and to subscribe. We've strengthened our community connections and recommitted to the leading conversations throughout the communities we serve.

Tim: This clearly demonstrates our distinguished presence in local markets as well as a strong demand for the valuable content we provide.

Tim: We've strengthened our community connections and recommitted to the meeting conversations throughout the communities we serve. Publishing local news content that reflects the people and the work they do to uplift their communities is the driving force behind our digital subscription business.

Kevin Mowbray: Publishing local news content reflects the people and the work they do to uplift their communities. Is the driving force behind our digital subscription business. Our hyper-local content is a huge driver to our digital transformation, as our content provides the most robust monetization opportunities through subscriptions, advertising, potential content licensing agreements, and other opportunities. Our digital agency, F by Digital, grew 12% in the third quarter, and annualized revenue at F by Digital is more than 100 million. This represents an outstanding 37% annual growth rate over the last three years, far outpacing others within the industry. The industry-leading growth rates in these revenue streams are driving our digital transformation.

Kevin Mowbray: Our hyperlocal content is a key driver of our digital transformation as our content provides the most robust monetization opportunities through subscriptions, advertising, potential content licensing agreements, and other opportunities, far outpacing others within the industry. This digital growth has driven a rapid change in our revenue composition, helping us to achieve the revenue inflection points I mentioned earlier. Our commitment to digital transformation yielded strong digital results this quarter, seen most clearly by each digital revenue stream growing year-over-year. Digital advertising revenue reached $50 million and achieved year-over-year growth at healthy margins. The Anti-Digital Agency, which is a subset of our digital advertising revenue, totaled $26 million and grew 12% year-over-year.

Speaker Change: Our digital agency, Amplify Digital, grew 12% in the third quarter and annualized revenue at Amplify Digital is more than $100 million. This represents an outstanding 37% annual growth rate over the last three years, far outpacing others within the industry.

Kevin Mowbray: Total digital revenue has grown to $290 million over the last 12 months, a 70% growth rate annually over the last three years. This digital growth has rather changed in our revenue composition, helping us to achieve the revenue and selection point I mentioned earlier. Our commitment to digital transformation yielded strong digital results in the quarter, seen both clearly by each digital revenue stream growing year-over-year. Digital advertising revenue reached $50 million in achieved year-to-year growth at Healthy Margin's. F by Digital Agency, which is upset of our digital advertising revenue total $26 million in grew 12% year-to-year. Digital subscriptions revenue totaled $21 million in grew 34% year-to-year at the highest margins in our digital portfolio.

Kevin Mowbray: The industry-leading growth rates in these revenue streams are driving our digital transformation.

Speaker Change: Digital subscriptions revenue totaled $21 million and grew 34% year-over-year at the highest margins in our digital portfolio.

Kevin Mowbray: Our digital revenue is diverse, growing, and highly profitable. Of no, we're not relying on any one stream of digital revenue, but rather a collection of profitable and growing revenue streams. We're excited to surpass the revenue and selection point in this quarter. This important milestone demonstrates the success of our strategy of us far, the growth of our digital revenue streams, and reduces our lives on the print.

Kevin Mowbray: Our digital revenue is diverse, growing, and highly profitable. Of note, we're not reliant on any one stream of digital revenue, but rather a collection of profitable and growing revenue streams.

Kevin Mowbray: We're excited to surpass the revenue inflection point this quarter. This important milestone demonstrates the success of our strategy thus far, the growth of our digital revenue streams, and reduces our reliance on print. We've made great progress on our digital transformation over the last few years. Digital revenues have grown more than 17% annually since FY21, and that's translated to a 14% annual growth rate in digital growth margins over the same 3-year timescale. Our digital margin is also impressive at 72%, meaning our digital businesses are highly profitable.

Kevin Mowbray: We made great progress on our digital transformation over the last few years. Digital revenue has grown more than 70% annually since FY21, and that's translated to a 14% annual growth rate in digital growth margins, or the same three-year time span. Our digital margin is also impressive 72%, meaning our digital businesses are highly profitable. Replacing print revenue with growing and profitable digital revenue will help us achieve a long-term digital sustainability. We expect by 2026 to gross margins from our digital products will exceed the company's remaining SG&A costs. Said definitely within two years we expect revenue from our digital businesses to cover all of these cash costs excluding print.

Speaker Change: Our digital margin is also an impressive 72%, meaning our digital businesses are highly profitable. Replacing print revenue with growing and profitable digital revenue will help us achieve our long-term digital sustainability.

Kevin Mowbray: Replacing print revenue with growing and profitable digital revenue will help us achieve our long-term digital sustainability. It's quite exciting to see how close we are to being sustainable from our digital revenue streams. I'll share more updates in the coming quarters regarding our progress towards this digital milestone. But for now, I'll pass it over to Tim to talk more about our quarterly revenue stream.

Kevin Mowbray: The growth in our digital businesses is expected to accelerate. It's still scratching the surface of the addressable digital subscription and digital market digital services marketplace.

Kevin Mowbray: It's quite exciting to see how close we are to be sustainable from our digital revenue streams. I'll show more updates in the coming quarters regarding our progress towards this digital milestone.

Timothy Millage: But for now, I'll pass it over to Tim to talk more about our corner results.

Timothy Millage: Thank you, Kevin, and good morning, all. As Kevin noted, we're quite pleased with our business momentum and the progress we have made this quarter on our digital transformation. And this is reflected in our financial results. Total operating revenue in the third quarter was 151 million. These results represent a market improvement in same store revenue trends, representing a hundred and fifty basis point sequential improvement. Looking to the digital business, total digital revenue growth continued at a strong flip up 9%. The primary driver of the growth with our digital subscription revenue, which increased 34% year over year.

Timothy Millage: Thank you, Kevin, and good morning all. As Kevin noted, we're quite pleased with our business momentum and the progress we have made this quarter on our digital transformation, and this is reflected in our financial results. Total operating revenue in the third quarter was $151 million. These results represent a marked improvement in same-store revenue trends, representing a 150-basis point sequential improvement. Looking to the digital business, total digital revenue growth continued at a strong clip of 9%.

Timothy Millage: Digital subscribers grew in impressive 23% in digital only. Our group at a strong year over year growth as well. We also saw improvements in digital advertising revenue within our own and operated digital products, and our amplified digital revenue delivered double digit growth in the quarter. We're quite pleased with the digital digital momentum gained in the quarter, and we expect it will continue.

Timothy Millage: Digital subscribers grew an impressive 23%, and digital-only ARPU had strong year-over-year growth as well. We also saw improvement in digital advertising revenue within our own and operated digital products, and our amplified digital revenue delivered double-digit growth in the quarter. We are quite pleased with the digital momentum gained in the quarter, and we expect it will continue. On the expense side, we've managed our costs carefully, leading to cash costs in the quarter being down 8% compared to the prior year. Lee has a highly successful track record of effective cost management.

Timothy Millage: Digital subscribers grew an impressive 23%, and digital-only ARPU had a strong year-over-year growth as well.

Timothy Millage: On the print side, total print revenue declined 22% year over year but represented a monitor sequential improvement over the second quarter trend. On the expense side, we've managed our cost carefully, leading to cash costs in the quarter being down 8% compared to the prior year. All of that led to adjusted EBITDA of $15 million in the quarter. We have a highly successful track record of effective cost management. In fiscal year 24, our business transformation efforts will yield between 75 and 85 million cost savings. While we remain focused on operational excellence, reducing our cost structure of our legacy print business and growing profits, our main priority is to drive long-term sustainable digital revenue growth.

Speaker Change: On the expense side, we've managed our costs carefully, leading to cash costs in the quarter being down 8% compared to the prior year.

Timothy Millage: While we remain focused on operational excellence, reducing our cost structure of our legacy print business, and growing profits, our main priority is to drive long-term sustainable digital revenue growth. Therefore, we continue to invest in talent and technology in the areas of our business tied to our digital future. And our commitment to high-quality hyperlocal news remains primary. Let me remind you that our credit agreement with Berkshire Hathaway, our sole lender, has very favorable terms that are incredibly important as we execute our strategy.

Timothy Millage: Therefore, we continue to invest in talent and technology in the areas of our business tie to our digital future, and our commitment to high quality hyper low foods remains primary.

Timothy Millage: Therefore, we continue to invest in talent and technology in the areas of our business tied to our digital future, and our commitment to high-quality and hyper-local news remains primary.

Timothy Millage: As we progress with our digital transformation, we will continue to keep you updated on our digital investments, as there is an exciting pathway ahead.

Timothy Millage: Next, I'll move to the balance sheet. The principal amount of debt decreased by $3 million year to date and totaled $453 million, a $123 million reduction since March of 2020. We remind you that our credit agreement with Berkshire Halfway, our sole lender, has very favorable terms that are incredibly important as we execute our strategy. The longevity of our debt is a strategic advantage for us as it enables us the flexibility to make the necessary investments in talent and technology that is fueling our digital growth and will achieve our digital transformation. The agreement was executed in 2020, has a fixed interest rate and a 25-year maturity.

Speaker Change: The principal amount of debt decreased by $3 million year-to-date and totaled $453 million, a $123 million reduction since March of 2020.

Timothy Millage: Let me remind you that our credit agreement with Berkshire Hathaway, our sole lender, has very favorable terms that are incredibly important as we execute our strategy.

Timothy Millage: The longevity of our debt is a strategic advantage for us, as it enables us the flexibility to make the necessary investments in talent and technology that are fueling our digital growth and will achieve our digital transformation. These favorable terms have been quite beneficial in a rising rate environment we have seen over the last few years. We are updating Adjusted EMA to Outlook from $73 to $78 million, and this change is the result of the lagging print business and reflective of the incremental cost reductions we have taken in response.

Speaker Change: The longevity of our debt is a strategic advantage for us as it enables us the flexibility to make the necessary investments in talent and technology that is fueling our digital growth and will achieve our digital transformation.

Speaker Change: The agreement was executed in 2020, has a fixed interest rate, and a 25-year maturity. These favorable terms have been quite beneficial in a rising rate environment we have seen over the last few years.

Timothy Millage: These favorable terms have been quite beneficial, and in a rising rate environment we have seen over the last few years. We continue to identify opportunities to monetize our non-core assets, which facilitates accelerated debt reduction. We quoted nearly $7 million of asset sale of year-to-date and have identified an additional $25 million of non-core assets to monetize. While we cannot be sure of the detailed close, we do expect approximately $10 million of sale to close by the beginning of the fiscal year.

Speaker Change: Well, we cannot be sure if the details will close. We do expect approximately $10 million in sales to close by the end of the fiscal year.

Timothy Millage: I would like to point everyone to our 2024 outlook for total digital revenue, digital subscribers, cash costs, and adjusted EBITDA. We remain on track to deliver our total digital revenue and digital subscriber targets for the year. Improving digital advertising markets and the potential for incremental spend due to competitive political races in our markets has a point to achieve within the range of total digital revenue. Digital subscriber growth continues on pace with our full year expectations, and we expect to end the year with 771,000 digital subscribers. We are improving cash cost guidance in the range of $5.50 to $5.60, and this represents a $20 million improvement on the low end as we have been working towards a debt-reflectable tightening of our operating expenses tied to a persistent, persistent print revenue decline.

Timothy Millage: We remain on track to deliver our total digital revenue and digital subscriber targets for the year. Improving digital advertising markets and the potential for incremental spend due to competitive political races in our markets has us poised to achieve within the range of total digital revenues.

Speaker Change: We are improving cash cost guidance in the range of 550 to 560, and this represents a $20 million improvement on the low end as we have been working towards, and that reflects the tightening of our operating expenses tied to our persistent print revenue declines.

Timothy Millage: We are updating adjusted EBITDA outlook to $73 to $78 million, and this change has been resolved for the lagging print business and reflective of the incremental cost reductions we have taken in response.

Speaker Change: We are updating Adjusted EMA to Outlook to $73-78 million, and this change is the result of the lagging print business and reflective of the incremental cost reductions we have taken in response.

Kevin Mowbray: With that, I will turn it back to Kevin.

Kevin Mowbray: Thanks, Tim. To reiterate my excitement about performance this quarter, we believe we are on solid ground that reflects both a notable and sustained momentum in our digital transformation. Our investment thesis is founded on our 3 pillar digital growth strategy, which is guiding us on our digital transformation journey.

Unknown Executive: To reiterate my excitement about performance this quarter, we believe we are on solid ground that reflects both a notable and sustained momentum in our digital transformation. Our investment thesis is founded on our three-pillar digital growth strategy, which is guiding us on our digital transformation journey. Our progress thus far has been a total team effort, and I want to express my genuine gratitude to the entire LEAD team. We believe there's tremendous opportunity ahead for us, and we're well-positioned to capitalize on this quarter's momentum moving forward.

Speaker Change: And with that, I will turn it back to Kevin.

Kevin Mowbray: Our progress thus far has been a total team effort, and I want to express my genuine gratitude to the entire team. We believe there is tremendous opportunity ahead for us, and we are well positioned to capitalize on this quarter's momentum moving forward. Under the guidance on our side of our board of directors, our leadership teams continuing the execution of our strategy sets the stage for significant long-term value creation for our readers, users, advertisers, and shareholders.

Kevin Mowbray: Our progress thus far has been a total team effort, and I want to express my genuine gratitude to the entire LEAD team. We believe there's tremendous opportunity ahead for us, and we're well positioned to capitalize on this quarter's momentum moving forward.

Unknown Executive: Under the guidance and oversight of our Board of Directors, our leadership team's continued execution of our strategy sets the stage for significant, long-term value creation for our readers, users, advertisers, and shareholders. This concludes our remarks. The Q&A will remain online for any questions you may have. Operator, please open the line for questions.

Speaker Change: Under the guidance and oversight of our Board of Directors, our leadership team's continued execution of our strategy sets the stage for significant, long-term value creation for our readers, users, advertisers, and shareholders.

Unknown Executive: This concludes our remarks. Between our main line for any questions you may have. Operator, please open the line for questions.

Unknown Executive: 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. One moment, please, while we pull for questions.

Operator: Thank you. At this time, we'll be conducting a question and answer session. As a reminder, if you're accessing this call via webcast, you may submit typed questions on your screen. Those questions will be answered during the call as time permits. One moment, one moment, please, while we pull for questions. Thank you. Our first question comes from the line of Daniel Harriman from Sedati and Company. Daniel, your line is open.

Daniel Harriman: Thank you. Our first question comes from the line of Daniel Harriman from Sedotti and Company. Daniel, your line is open.

Daniel Harriman: Thank you. Good morning, everyone, and guys.

Daniel Harriman: Good morning, everyone. Guys, congratulations on the digital inflection that you have there. Obviously, we understand the reason for the EBITDA guide down with the print decline, but it seems like you're doing a lot of great work on the cost side, and you're expecting, you're obviously, like you said, 75 to 85 million in savings this year with the transformation.

Daniel Harriman: Congratulations on the digital inflection that you have there. Obviously, we understand the reason for the EBITDA guide down with the print decline, but it seems like you're doing a lot of great work on the cost side. And you're expecting, you know, obviously, like you said, 75 to 85 million in savings this year with the transformation. Can you just remind us a little bit more about what goes into that?

Speaker Change: We understand the reason for the EBITDA guide down with the print decline, but it seems like you're doing a lot of great work on the cost side, and you're expecting, you know, obviously, like you said, 75 to 85.

Timothy Millage: Can you just remind us a little bit more about what goes into that?

Speaker Change: in million in savings this year with the transformation. Can you just remind us a little bit more about what goes into that?

Timothy Millage: Yeah, thanks, Daniel. As you pointed out, we do have a good track record of managing our costs, and we do have about 75 to 85 million of business transformation baked into our forecast for FY 24. We have a significant number of print-spectake expenses, operating expenses, and we certainly monitor those expenses to ensure that our costs are in line with those revenue streams and to that effect with the persistent acceleration decline of print. We have improved the cost guidance by $20 million on the low end, and that reflects tightening costs primarily within that the print business.

Timothy Millage: Yeah, thanks, thanks, Daniel. As you pointed out, we do have a good track record of managing our costs. And we do have about 75 to 85 million of business transformation baked into our forecast for FY 24. We have a significant number of print expenses, and operating expenses, and we certainly monitor those expenses to ensure that our costs are aligned with those revenue streams. And to that effect, with the persistent acceleration decline of print, we have improved the cost guidance by $20 million on the low end.

Speaker Change: Yeah, thanks, thanks, Daniel. As you pointed out, we do have a significant good track record of managing our costs. And we do have about 75 to 85 million of business transformation baked into our forecast for FY 24.

Timothy Millage: And that reflects tightening costs primarily within the print business. All of that, you know, aligns with and speaks to the importance of our digital transformation and mentioned the inflection point. And I think that really is an important milestone as it positions us well to be less reliant on the volatile print business going forward and also demonstrates a significant change in the mix of our revenue and our gross margin to be more sustainable and grow.

Speaker Change: And to that effect, with the persistent acceleration and decline of print, we have improved the cost guidance by $20 million on the low end, and that reflects tightening costs primarily within the print business.

Timothy Millage: All of that aligns and speaks to the importance of our digital transformation, and you mentioned the inflection point. I think that really is an important milestone, as it positions us well to be less reliant on the quality of print business going forward and also demonstrates significant change in the mix of our revenue and our gross margin to be more sustainable and growing.

Speaker Change: All of that, you know, aligns and speaks to the importance of our digital transformation and you mentioned the inflection point, and I think that really is an important milestone as it positions us well to be less reliant on the volatile print business going forward, and also demonstrates, you know, significant change in the mix of our revenue and our gross margin to be, you know, more sustainable and growing.

Daniel Harriman: Okay, great.

Daniel Harriman: Thank you so much, Tim, and then just one more if I can quickly. With the asset sales that you've identified, the 25 million and non-core assets, obviously you're projecting to close a decent amount of those this year for the balance that you can't close in 24. Is it safe to assume that that will close in 25, or is there too much uncertainty surrounding that right now?

Timothy Millage: Yeah, I think there's always uncertainty with commercial real estate, but we are optimistic that we can get the remaining assets closed in 2025. I do think a lowering of interest rates will be helpful. Lowering of construction costs will be helpful as we start to see some more investment into commercial real estate on the horizon.

Unknown Executive: Yeah, I think there's always uncertainty with commercial real estate, but we are optimistic that we can get the remaining assets closed in 2025. I do think lowering of interest rates will be helpful. Lowering of construction costs will be helpful as we start to see some more investment into commercial real estate on the horizon. So we are optimistic that we can get the remaining amount closed in 2025. And the $25 million is not the top end. We're going to continue to evaluate our real estate portfolio and work to increase that amount going forward as well. Great.

Timothy Millage: So we are optimistic that we can get the remaining amount closed in 25. And the 25 million is not the top end. You know, we're going to continue to evaluate our real estate portfolio and work to increase that amount going forward as well.

Daniel Harriman: Great.

Daniel Harriman: Great. Kevin and Tim, thank you both so much, and I look forward to seeing what you do in the coming quarters.

Daniel Harriman: Kevin, Tim, thank you both so much, and I look forward to see what you do in the coming quarters.

Kevin Mowbray: We have no questions from the web, so I'll turn it back to Kevin for closing remarks.

Operator: We have no questions from the Web, so I'll turn it back to Kevin for closing remarks. Well, thank you.

Kevin Mowbray: Well, thank you all for joining the call this morning. We appreciate your time and your interest in the league. Thank you again.

Kevin Mowbray: Well, thank you all for joining the call this morning. We appreciate your time and your interest and leave. Thank you again. Thank you.

Speaker Change: We have no questions from the web, so I'll turn it back to Kevin for closing remarks. Well, thank you all for joining the call this morning. We appreciate your time and your interest in the league. Thank you again.

Operator: Thank you. At this time, we've reached the end of our question and answer session. This concludes our call.

Unknown Executive: At this time, we've reached the end of our question-and-answer session.

Unknown Executive: This concludes our call. Kevin Mowbray, Timothy Millage, Josh Rinehults, Kevin Mowbray, Timothy Millage, Kevin Mowbray, Timothy Millage,

Speaker Change: Thank you. At this time, we've reached the end of our question and answer session. This concludes our call.