Welcome to the Lee Enterprises 2021 First Quarter Webcast and Conference Call. The call is being recorded and will be available for replay beginning later this morning at 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 later. A link to the live webcast can be found at www.lee.net. Now, I will turn the call over to your host, Josh Rinehults, Vice President Finance FP&A.

Good morning. Thank you for joining us. Speaking on this morning's call are Kevin Mowbray, our President and Chief Executive Officer; and Tim Millage, Vice President and Chief Financial Officer and Treasurer. Also with us on today's call and available for questions is Nathan Bekke, Vice President, Consumer Sales and Marketing.

Thank you, Josh. Good morning and thank you all for joining the call. We're off to a great start with fiscal year 2021 as we dramatically improved our operating results, helping to mitigate the effects of the pandemic. We're pleased with the revenue trend improvement with strong cost management. We're most excited and optimistic about our post-dynamic strategy that is well underway. We remain keenly focused on our local operations with an emphasis to drive local audience and advertising revenue, and the results are paying off. We achieved significant revenue trend improvement in the first quarter with total operating revenue down 10.8% on a pro forma basis compared to the third and fourth quarters of fiscal year 2020 trends that were down 16.9% and 24.7%, respectively. With strong cost management, adjusted EBITDA totaled $40 million in the first quarter. We made significant progress on our digital transformation strategy already. Total digital revenue in the quarter totaled $62.5 million, or 29.5% of our total operating revenue, a 26% improvement from the prior year. Digital-only subscriptions continue to grow at a rapid rate, up 69% from the prior year, and we grew digital-only subscription revenue by 69% as well, both industry-leading metrics. We now have 286,000 paid digital-only subscriptions, which is helping to drive audience revenue performance. The growth in digital-only subscriptions and digital-only revenue contributed to the 1.9% quarter-over-quarter growth in subscription revenue, again a leading metric in the industry.

Thank you, Kevin, and good morning, everyone. In June 2020, we laid out a target to achieve $100 million in cost synergies by the end of fiscal year 2021. We established plans and executed quickly, and we are excited to report that at the end of the first quarter 2021, we have realized $103 million in cost synergies, exceeding our goal nine months ahead of schedule.

Thank you. At this time we will be conducting a question-and-answer session.

Okay. Our first question from the web is, are there further opportunities for cost synergies in the second quarter?

I'll go ahead and answer that. Certainly, we talked about achieving our $100 million cost synergy target, and managing our cost structure is something that the management team has a proven track record of doing over the last several years, over a decade. So we're committed to continuing to manage our cost structure, drive efficiencies, reduce our print legacy cost structure, and at the same time, make the required investments to grow revenue, especially transforming our business and growing digital revenue.

Our next question is, what are the company's expectations for digital revenue growth?

Well, obviously, that's an important metric for us. And as we mentioned in our opening remarks, our three pillars are really focused on our digital growth in the company. Tripling our digital-only subscriptions between now and 2025 is a key metric for us that we're well on the way to achieving. And then really moving into new revenue achievements related to video sales, e-commerce, and first-party data are three big categories for us to grow digital advertising and digital revenue for the company.

Okay. Our next question is, what is the company's debt reduction target for fiscal year 2021?

We haven't provided any guidance as to where we think we will go. We have seen considerable debt reduction since the refinancing in March of last year, with $52 million. We've provided some incremental free cash flow information in our release to help bridge the gap from adjusted EBITDA to free cash flow. We do have outstanding pension obligations with the required pension contributions. We've given some guidance as to what we expect for CapEx and income taxes as well. So it helps bridge the gap. But we do expect to use especially all of our cash flow and excess cash flow to repay our debt.

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

Well, thank you for joining the call, and thank you for your interest in Lee. Have a great day.

Thank you. Ladies and gentlemen, at this time we have reached the end of our question-and-answer session. This concludes our call.