On Friday, media organization Lee Enterprises, Inc. (NYSE: LEE) reported its fourth quarter results for fiscal year 2018, for the period ended September 30, 2018. Among the highlights for the quarter were earnings of $4.4 million, or $0.07 per diluted common share, compared to $3.5 million, or $0.06 per diluted common share, for the same period last year. For the full fiscal year 2018, Lee posted earnings of $47.0 million, or $0.82 per diluted share, an increase of $18.4 million compared to $28.6 million, or $0.50 per diluted share, for fiscal year 2017.

Lee president and CEO Kevin Mowbray said the company is very pleased with the company’s fourth quarter results.

“Revenue was almost flat in the fourth quarter, driven by strong performance from local advertisers, significant revenue growth from TownNews, revenue from the BH Media Group management agreement, as well as an extra week of operations in 2018,” said Mowbray.

“We believe we are at the top of the industry at managing the transition to digital,” Mowbray said. “Our margins have remained steady for more than a decade and are currently more than double the industry average. Also, based on third party research, we believe we capture more than twice the industry average in digital market share.”

Other financial highlights for the fourth quarter and full year 2018 include:

• Subscription revenue grew 4.1 percent for the fourth quarter due to premium content and an extra week of operations.
• For the full fiscal year, subscription revenue grew 1.7 percent. Over the last three years, subscription revenue growth was 0.3 percent.
• Average daily newspaper subscriptions, including digital subscribers, were 0.7 million for the fourth quarter. Sunday circulation was approximately 1.0 million. Rate increases and additional revenue from premium content partially offset revenue lost from lower print circulation.
• In 2018, digital-only subscribers increased by more than 70 percent.
• Total revenue decreased 5.9 percent in the fourth quarter.
• TownNews revenue grew 34.5 percent, offsetting declines in other revenue.
• Advertising and marketing services revenue decreased 7.4 percent to $73.7 million, due to “softness” print advertising demand.
• Digital advertising revenue grew 8.5 percent for the quarter, representing 34.3 percent of total ad revenue. For the fiscal year, digital advertising revenue grew 2.9 percent.
• Digital retail advertising for the quarter grew 5.2 percent, driven by advertising from local retailers.
• Operating expenses for the quarter increased 2.9 percent, partially offset by a 9.9 percent decrease in compensation costs due to staff cuts.
• Newsprint and ink expenses increased 15.1 percent.
• Restructuring costs were $1.4 million in the fourth quarter, compared to $1.2 million for the same period last year.
• Adjusted EBITDA for the quarter was $35.9 million, a decrease of 2.4 percent. For the full year, adjusted EBITDA was $134.8 million, a 6.8 percent decrease over fiscal 2017.
• The company reduced debt in the fourth quarter by $15.0 million and $63.5 million for fiscal 2018. Over the last three years, lee has paid down $240 million in debt.
• Monthly visits to Lee mobile, tablet, desktop and apps averaged 79.8 million, a 12.4 percent increase.

“We are optimistic about the future of our local media operations,” Mowbray added. “We believe we can grow our business by providing high quality, trusted, local content to consumers, remaining focused on local controllable retail accounts and expanding our digital services capabilities at TownNews.”

On the earnings call, Mowbray said that Lee products are dominant in the communities they serve, and they are a well-established brand, engaging their local audiences through breaking news and round-the-clock updates to large local audiences. The company plans to double the number of digital-only subscribers in 2019.

Based in Davenport, Iowa, Lee Enterprises provides local news, information and an advertising platform through daily newspapers, digital products, close to 300 weekly and specialty publications in 20 states and covering 49 markets, including St. Louis, Missouri, Lincoln, Nebraska, Bloomington, Illinois and Tucson, Arizona.

Investors were not particularly impressed. On December 13, the day before earnings were released, Lee’s stock was valued at $2.07 per share. As of 4:03 p.m. EST Friday, stock had dropped $0.13 per share to $1.94.

Insider Take:

While Lee was able to post sizable earnings in the fourth quarter and for the full year, the financial report for the fourth quarter and full fiscal year 2018 was really a mixed bag. Some categories went up, while others went down. The management team is certainly optimistic, particularly in the company’s position within the industry, but their optimism seems a bit premature.