What is the long-term plan for debt reduction?

Proceeds from monetizing non-core assets will be used for debt paydown. Additionally, once the cash balance exceeds a $64 million cap, excess cash flows will automatically go towards debt reduction, strengthening results over time. “So as we continue to monetize our non-core assets, the proceeds that we receive will continue to be used toward debt paydown. In addition, as we return to being cash flow positive, those excess funds, we have our debt agreement has a cap of $64 million. So as our cash balance goes above that $64 million mark, those excess cash flows will actually go toward debt paydown as well.”

LEE

Lee Enterprises (LEE) Q3 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q3 FY26)· Communication Services· Aug 6, 2026

Source: earnings call transcript

Executive summary

Lee Enterprises Q3 FY26 — Strong Adjusted EBITDA Growth and Digital Transformation Momentum

Lee Enterprises delivered a strong Q3 FY26, marked by significant adjusted EBITDA growth and a return to net income, driven by disciplined cost management and an accelerating digital transformation. The company also announced a new capital-light management agreement with Hoffman Media Group, validating its operating model and creating a recurring revenue stream, positioning it for continued digital-first growth and enhanced financial flexibility.

Highlights

Generated $5 million in net income in Q3 FY26, marking the first positive net income since FY24.
Adjusted EBITDA grew 23% year-over-year to $18 million in Q3 FY26.
Year-to-date adjusted EBITDA increased 51% or $15 million year-over-year.
Cash costs declined 15% or $19 million in Q3 FY26, driven by SG&A and print-related expense reductions.
Cash balance finished at a healthy $59 million, compared to $14 million a year ago.

Concerns

Evolving advertising environment

Guidance & targets

Category	Target	Timeline	Confidence
Full-year Adjusted EBITDA growth	22% to 28% high materiality	FY26	High
Digital revenue and digital gross margin support for business	Fully support the business high materiality	Within the next 3 years	High

Product announcements

Product	Type	Timeline	Details
Hudl partnership	expansion	Earlier this year
Community Center, America's 250th, VidMax, All Access	expansion	—

Deals & partnerships

Hoffman Media Group Long-term management agreement to operate Hoffman Media Group's portfolio of local media brands. long-term

Lee will manage Hoffman Media Group's portfolio, leveraging Lee's strengthened digital capabilities, optimized operations, and experienced management team. This validates Lee's operating model and creates a capital-light growth opportunity.

Risks & headwinds

Evolving advertising environment ongoing

unquantified

Mitigation:Prioritizing recurring high-margin opportunities, strengthening the quality of the revenue base, and focusing on profitable growth rather than simply revenue growth.

What to watch in Q4 FY26

Full-year Adjusted EBITDA growth

next quarter

Current YTD 51% increase

Target 22% to 28% growth

Why it matters

This is a key profitability metric and indicates overall business health and execution against the company's strategy.

Given the strength of our year-to-date results, we are improving our full-year adjusted EBITDA outlook to growth in the range of 22% to 28%.

Find out whether LEE delivers this. Inve re-checks your case every morning.

Q&A highlights

How much debt was paid down in the third quarter and year-to-date?

In Q3, $1 million in debt was paid down, which is also the year-to-date amount. An additional $2 million was paid subsequent to quarter-end, bringing the total to $3 million year-to-date.

“So in the third quarter, we paid down a total of $1 million, which is actually what we've paid around the same number year-to-date. Subsequent to the end of the third quarter, we've made an additional $2 million debt payment to bring the total to $3 million to date.”

asked by Jared Marks · answered by Unknown Executive

2 min read 5 chapters

Detailed narrative

Digital Transformation and Revenue Mix Shift

Lee Enterprises continues its digital transformation, with digital revenue now representing 57% of total company revenue in Q3 FY26, an increase of 170 basis points year-over-year. Digital revenue also accounts for 76% of the advertising business. This shift signifies a fundamental evolution from print dependency to a digital-first model, providing a more stable and recurring revenue foundation for long-term profitability.

Strong Profitability and Cost Management

The company reported $5.2 million in net income for Q3 FY26, its first positive net income since FY24 and largest since FY22. This was driven by a 23% year-over-year growth in adjusted EBITDA to $18 million, alongside a 400 basis point improvement in adjusted EBITDA margin.

Decisive cost actions led to a 15% ($19 million) decline in cash costs, with significant reductions in SG&A ($32 million year-to-date) and print-related expenses ($20 million year-to-date).

Strategic Partnership with Hoffman Media Group

Lee entered a long-term management agreement with Hoffman Media Group, a premier media network. This partnership validates Lee's operating model and creates a recurring management fee revenue stream, offering a capital-light growth opportunity. It allows Lee to monetize its operational expertise and platform beyond its owned portfolio, with potential for additional upside as Hoffman Media Group expands.

Strengthened Balance Sheet and Financial Flexibility

The company ended Q3 FY26 with a healthy cash balance of $59 million, significantly up from $14 million a year ago. Since March 2020, outstanding debt has been reduced by $121 million. A recent strategic investment lowered the interest rate from 9% to 5%, expecting to generate $18 million in annual interest savings, or $90 million over the next five years.

Lee is also monetizing $20 million in non-core assets to further accelerate deleveraging.

Subscription and Advertising Strategy

Lee's strategy focuses on expanding its digital-only subscriber base, which reached 584,000, by improving conversion, engagement, and retention. In advertising, the company prioritizes profitable, high-margin opportunities, with its Amplified Digital Agency driving sequential digital advertising revenue growth of 10%. New initiatives like the partnership with Hudl and platforms such as Community Center are enhancing content offerings and creating premium advertising inventory.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.