Welcome to the Lee Enterprises 2025 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. 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 webcast can be found at investors.lee.net. Now I will turn the call over to your host, Garrett Marks, Vice President of Finance.

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. Earlier today, we issued a news release with preliminary results for our third fiscal quarter of 2025. It is available at Lee.net, as well as major financial websites. 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. During the call, we refer to certain non-GAAP financial measures. Reconciliations to the relevant GAAP measures are included in the tables accompanying the And now to open the discussion is our President and Chief Executive Officer, Kevin Mowbray.

Thanks, Jared. And good morning, everyone. During this call, I'm pleased to share an update on our digital transformation, as well as our third quarter operating results, which represented significant growth in adjusted EBITDA over Q2. We also have an important update on our management team, Nathan Vecchi was named Chief Operating Officer. With a strong background in strategic leadership and operational excellence, Nathan will continue to play a pivotal role in driving our digital growth and innovation. The third quarter demonstrated solid growth amid continued recovery from last quarter's cyber events. Notably, local advertising revenue trends showed meaningful improvement with a year-over-year trend favorable seven points fueled by sustained strength across our core base of 20,000 local advertisers. We launched our first-to-market AI-powered suite in Q2. Our AI enablement program offers a full suite of AI products. Since our last update in partnership with WeLevel, Amplify Agency has launched an expanded suite of AI-powered packages designed to drive lead capture, customer engagement, and business automation. These packages are called Smart Answer, Smart Team, and Smart Suite HQ, designed to provide scalable solutions for businesses at every stage from handling inbound calls to fully automating content, communications, and sales workflows. This rollout marks a pivotal key catalyst for accelerating digital advertising growth. On the digital subscription front, we delivered same-store revenue growth of 16% year-over-year, driven by an impressive 28% growth. We ended June with 670,000 digitally-only subscribers, which is down sequentially. The progress in these revenue categories gives us confidence in our ability to drive sustainable growth and deliver long-term value to our shareholders. As a result of our three-pillar digital growth strategies expected to result in $450 million of digital revenue. After navigating the cyber event back in February, our entire team is back to full steam ahead. With an excellent foundation of $305 million annual digital revenue as of this quarter, we're confident our strategy will achieve digital revenue of $450 million by 2020. As a testament to our three-fillar digital growth strategy, we have consistently outpaced our industry peers in several key measures of digital growth, both digital subscription and digital agency revenue growth. Digital subscription revenue grew 33% over the last three years, nearly doubling the nearest industry peer. On the advertising side, anti-digital agency revenue growth has significantly outpaced our nearest competitor, growing 10% annually for the last three years. Total digital revenue was $305 million on a trailing 12-month basis, well on our way to achieving our long-term target. Our digital revenue continues to grow with an increase of 4% on a same-store basis over the prior quarter. Digital subscription revenue continued to lead the way, growing 16% year-over-year on a same-store basis. Ampidigital Agency had another solid quarter of double-digit growth as well with an increase of 10% on the same-store basis over the prior year. Our third quarter revenue clearly demonstrates that our digital transformation is in full effect with our digital revenue reaching 55% of our overall revenue this quarter. The strength of our core digital business is foundational to the long-term success of LEED, but I'll add that the innovative ag products that we recently launched puts us in a position to accelerate our digital revenue growth even further. And now I'll pass it over to Tim.

Thank you, Kevin. Our core digital business has driven digital revenue growth of more than 17% annually from fiscal 2021 to fiscal 2024, and that has translated to comparable annual growth in digital gross margins. Replacing our print revenue with growing and profitable digital revenue sets us up to achieve long-term sustainability, and we are nearing this sustainability point. As Kevin alluded to and as we shared in our last call, we launched our suite of AI products last quarter designed to provide local businesses with the tools they need to thrive in a competitive environment. This innovative offering comes from Amplify Digital Agency and leverages cutting-edge artificial intelligence technology. We are excited about this AI product suite. While the February cyber incident interrupted efforts on this project, we believe that AI products will provide FY25 digital revenue and, more importantly, help us over the long term to reach sustainability through digital revenue. Speaking to this quarter's results, total operating revenue in the third quarter was $141 million, which represented a year-over-year trend in line with our second quarter operating results. Third quarter trends were impacted by the after-effects of the cyber incident, particularly on the subscription side. We mentioned on our last call that our normal process for activating new digital subscribers was hampered, which significantly impacted units in the quarter. Despite the unit challenges, digital subscription revenue grew to 16% on a same-store basis due to a multitude of successes on the pricing side. For Amplify Digital Agency, we saw a nice pickup in revenue trends, a percentage point better than prior quarter, and a promising return to double-digit growth year over year. This all led to $78 million of total digital revenue in the third quarter, representing growth over the prior year of 4% on a same-store basis. Moving over to the cost side, Lee has a successful track record of effective cost management and thoughtfully investing in strategies that fuel long-term growth. Following up on our last call, we executed approximately $40 million in annualized cost reductions in the second quarter aimed at lowering costs across the board with an emphasis on non-core print operations while preserving the integrity of our core operations. In the third quarter, cash costs decreased 7% compared to the same quarter last year, in acceleration from the first half trend due to our cost continue. We anticipate fiscal year will finish with cash costs between $522 and $532 million, representing a 3% to 5% decline over the prior year. Keep in mind that as we enter FY26, about half of the $40 million in annualized cost reductions we took this year will flow through and benefit next year's operating results. We remain steadfast in our commitment to long-term financial sustainability and the continued delivery of high-quality local journalism. By enhancing operational rigor this quarter without compromising quality, we've strengthened our long-term positions and are poised to drive sustainable shareholder value over the long term. Next, I'll move over to the balance sheet. our credit agreement with Berkshire Hathaway includes favorable terms which include a 20-year runway a fixed interest rate and no financial performance covenants these better than market terms allow us to stay laser focused on executing our strategy in response to the cyber incident and to provide short-term liquidity Berkshire waived payment of the company's interest in basic rent payments in March, April, and May. The waived payments were added to principal model due under our credit agreement. This is a fitting example of how our credit agreement benefited us in the wake of the cyber incident. Since May of 2025, however, all mandatory principal and interest payments required under our credit agreement have been made from our internal operating cash flows this is an important milestone in our cyber recovery despite the temporary addition of our principal debt balance we've made considerable progress paying down debt in recent years and remain committed to reducing our debt going forward we continue to identify opportunities to monetize our non core assets which improve liquidity and facilitates accelerated debt repayment. Year-to-date through the third quarter, we closed $9 million of asset sales. We've identified an additional $20 million of non-core assets to monetize. The monetization of these non-core assets will provide a significant source of liquidity in 2025. Our operating results in the third quarter put us on pace to achieve our outlook of digital revenue and adjusted growth in the second half. In the fourth quarter, we expect our core digital business, led by digital subscriptions, to continue to grow as the value of our high-quality local news is unmatched. We have new AI revenue streams which we expect to help drive momentum as we finish the fiscal year strong. And with that, I will turn it back to Kevin for closing comments. Thanks, Tim. I'd like to

reiterate my thanks to the entire lead team for their tremendous efforts during the quarter driving our progress on our digital transformation. We're paving the way for Lee to lead the industry in this era of AI digital transformation. This concludes our remarks. The team will remain on the line for questions you may have.

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 poll for questions. I'll now read our first question from the web.

Recent trends suggest readers are spending less time per visit on news websites. How is Lee addressing this shift in how readers consume news? I can start, certainly. Yeah, thanks for

the questions, one of the competitive advantages that Lee has over kind of the national media is our asset portfolio, which typically does not act in the same manner as certainly as major metros. In fact, we have seen some strong metrics specifically from our loyal reader base in terms of engagement. Additionally, we are hyper-focused on enhancing our digital user experience by providing state-of-the-art digital products. We're also focused on expanding the depth and breadth of local content and growing subscribers and driving subscription revenue. So that's how we're aiming to address changes in consumer behavior.

We have no more questions from our participants.

I'll turn it back to Kevin for closing remarks. Well, thank you all for joining us this morning. Our focus remains on transforming our business for the long-term benefit of our shareholders, our employees, our readers, and our advertisers. We appreciate your time. Thank you again.

Thank you. At this time, we have reached the end of our question and answer session. This concludes our call, and you may now disconnect.