Welcome to the Lee Enterprises 2022 First Quarter Webcast and Conference Call. The call is being recorded, and will be available for replay beginning later this morning at investors.lee.net. At the close of the planned remarks, there will be an opportunity for questions. Participants accessing those call via 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 later. A link to the live webcast can be found at investors.lee.net. Now, I'll turn the call over to your host, Josh Rinehults, Vice President of Finance.

Good morning. And thank you for joining us. Speaking on this morning's call are Kevin Mowbray, President and Chief Executive Officer; and Tim Millage, Vice President, Chief Financial Officer and Treasurer. Also with us on today's call and available for questions is Nathan Bekke, Vice President Audience Strategy. Earlier today, we issued a news release with preliminary results for our first fiscal quarter of 2022. It is available at lee.net as well as at major financial websites. We will be walking through an earnings presentation on today's call that can also be found at lee.net. As a reminder, this morning's discussion will include forward-looking statements that are 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 also in our SEC filings. During the call, we refer to certain non-GAAP financial measures including adjusted EBITDA and cash costs, which are defined in our news release. Reconciliations to the relevant GAAP measures are included in tables accompanying the release. And now I'll open the discussion to our President and Chief Executive Officer, Kevin Mowbray. Kevin will open the conversation on Slide 3 of the earnings presentation for those following along.

Thank you, Josh. Good morning, everyone. I'm pleased you to join us. Before we dive into the agenda you see on this slide. I want to note that this call is focused on our first quarter results, growth strategy and outlook. We won't be commenting on all the global capital during our prepared remarks or in our Q&A. For more information on this, we encourage you to review our 2022 definitive proxy statement and related announcements, which are on file with the SEC. And in it and also available on our 2022 Annual Meeting section of our Investor Relations website. We appreciate your cooperation. Our agenda begins with an overview of Lee's compelling investment thesis, including the progress we've already made in our digital transformation, and a review of our three pillar digital growth strategy. Then I'll hand the call over to Tim to review our first quarter results and fiscal 2022 guidance in detail. At our core, Lee Enterprises is a leading provider of digital products and services, and high quality trusted local news and information to communities across the country. Seven out of 10 adults in our markets depend on the local, relevant and engaging local news that only we provide. Our platforms reach more than 47 million unique visitors each month across 77 attractive, mid-sized markets. With a strong presence as a trusted source of information the communities we serve, combined with a cutting edge digital capabilities is the foundation of our digital transformation. The success of our transformation is reflected in the continued rapid growth of our digital subscriptions, and digital only audience revenue. We are the fastest growing digital subscription platform and local media. We achieved an exciting milestone in the first quarter reaching 450,000 digital only subscribers representing 57% year-over-year growth and exceeding the…

Thank you, Kevin. I'm now moving to Slide 20. We're very pleased with our results and the progress we continue to make on our three pillar digital growth strategy. At a high level, we finished the quarter with solid revenues, especially strong in our digital growth categories, and continue to control costs in our legacy print business. We also continue to make targeted investments in our platform to fuel our digital transformation. This performance has us on track to achieve our full-year targets for digital revenue and adjusted EBITDA. Moving into our first quarter financial highlights and outlook, total operating revenue was $202 million in the first quarter. Total digital revenue increased 17% in the first quarter to $55 million, excluding political advertising, which generated high revenue during the 2020 campaign season, total digital revenue increased 25% in the quarter, total digital revenue was driven by the rapid growth at Amplified and growth in digital only subscription revenue. Digital only subscription revenue increased 26% and totaled $8 million. We now have over 450,000 paid digital only subscribers up 57% in the quarter, which represents half of our long-term target of 900,000 digital only subscribers. Digital Advertising and Marketing Services revenue increased 19% in the quarter to $43 million, excluding the digital political revenue, digital advertising and marketing services revenue increased 30%. Digital Marketing Services revenue at Amplified fueled the growth with revenue of 69% totaling $15 million in the quarter and $47 million over the last 12 months. Total print revenue was $147 million in the first quarter and 11% decline compared to the same quarter a year ago due to continued secular declines and supply chain constraints affecting the demand for national advertising. Operating expenses totaled $179 million and cash costs were up 2.5%. Increases in cash costs were…

Thanks, Tim. To wrap up, I'd like to thank the entire Lee team for their efforts in driving our transformation with the right board, right team and the right strategy. And I believe we're better positioned than ever to create long-term value for our readers, users, advertisers, and shareholders. This concludes our remarks, the team will remain on the line for questions you may have. Operator, please open the line for questions.

Thank you. At this time we will be conducting a question-and-answer session. . And we'll now take our first question. Caller your line is open.

Thank you. It's always nice when a company beats expectations. So that's great. Congratulations. A couple of questions. Can you remind me again, what the digital political advertising number was in the year prior quarter?

Yes, thanks, Mike. I appreciate the comments. Yes, we had around $3 million of political revenue in the prior year that Lee was associated with various campaigns across our markets.

Great. And can you tell me when do you cycle against the changes in the paywall with your digital sites? What - when we cycle against that?

Yes, most of those changes were cycle in the middle of FY22. We didn't - fairly late in the fiscal year in '21.

Got you. And then on terms of amplify, obviously very strong growth there. Can you discuss the tone of the current market? And maybe also discuss that on the print advertising side if you can? I'm just kind of curious to see, how, if there were any impacts with the Omicron variant, issues with how the pace of the recovery looks, in terms of both on the digital side and whether or not we're starting to see more moderation on the print side. Can you just kind of give us a color of the current advertising environment?

Sure, I'll start. This is Kevin. I'll give you an answer in a couple of bites. I would say the recovery, as it relates to regional local advertisers is really strong. And I think that's clear, based on the really strong growth we saw in Q1 of 69% of them is by digital. Recoveries a little bit slower type primarily tied to a supply chain issues with key accounts, if they're not getting products on the shelves that's the contract target. Kohl's, and others. So we think there is different impact there.

And does that also affect the auto category? I'm just curious, because I understand that cars are selling pretty well. And that they haven't been advertising as strongly. I was just curious, how important of a category that is that now still for you? And if you could just talk a little bit about that category in particular?

Sure, we have, as we mentioned in our remarks, we got a really great relationship with Mudd Advertising, which allows us to participate in the share of revenue based on our Vision platform. We feel good about that. But you're right car sales have been selling briskly, particularly used cars. And as a result, we do see revenues done in that category. I would point out though, that category is the largest category to classified, it's really old that are much larger in terms of revenue segment.

Yes, and then and just to clarify, you mentioned about the $14 million in closed real estate sales in the quarter, just to clarify the $20 million to $30 million for fiscal 2022, that did not include the - that was inclusive of the $14 million, correct?

That's correct. That's correct. That fiscal year '22 guidance of $20 million to $30 million in close sales, which $14 million were closed in the first quarter.

Got you. And I think that's all I have for now. Thank you so much. I'll let others ask questions. Thank you.

Thank you.

Great, thanks Mike. We will turn over to webcast questions. Okay, so our first question from the webcast is, you had another great quarter with digital sub growth of 48,000. But our full-year guidance only requires averaging 15,000 per quarter to achieve is that because the target is conservative or because you're expecting a slowdown?

What I would say is our target, our goal of hitting 900,000 digital only subscribers is our target, long-term target and getting there's not going to be a perfectly linear line from where we are here to 900,000 and the reason for that is we're trying to grow both our units as well as growing our rates. And we think we have the opportunity to look at the market specific factors and some quarters we will outperform on the rate at some quarters, we will outperform on the volumes.

Next question, there appears to be a lot of embedded value in Lee, what are your thoughts on selling or spinning off Amplified or TownNews?

Yes, I think Amplified and TownNews are both really important factors in our digital growth strategy. Amplified as we spend a lot of time talking about this morning is one of the major growth engines of our digital advertising and reaching the targets that we have there right now $47 million of LTM revenue with a relatively small base, but we do expect it to expand and grow in the future. And TownNews remains a key priority for Lee as it helps us develop the tactics and strategies and technology to execute on our three pillar digital growth strategy. So I would say the better value is to leverage the digital businesses to execute on our three pillar digital growth strategy.

Okay, next question is warrants issued in 2014 are due to expire at the end of March of this year? Have any been redeemed in Excel, how many?

That's a good question. And as a reminder, we do have warrants that were issued in 2014 associated with the debt refinancing that allows for issuing up to 600,000 shares of Lee's stock. The exercise price of the warrants is $41.90, none have been exercised as of now. But as you rightly pointed out, it expires March 31 of 2022.

We have no more questions from our web participants. So I'll turn the call back to Kevin for closing remarks.

Thank your interest in Lee and thank you for joining the call today.

Thank you, ladies and gentlemen. At this time, we have reached the end of our question-and-answer session. And that concludes our call. We thank you all for your participation.