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Item 2. Management’s Discussion and Analysis

2026-02-11 compared with 2025-08-08 · 138 added, 191 removed, 85 unchanged (79% of the section changed)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion includes comments and analysis relating to our results of operations and financial condition as of and for the three months ended June 29, 2025.

The following discussion includes comments and analysis relating to our results of operations and financial condition as of and for the three months ended December 28, 2025.

This discussion should be read in conjunction with the Consolidated Financial Statements and related Notes thereto, included herein, and our 2025 Annual Report on Form 10-K.

RECENT DEVELOPMENTS

PRIVATE PLACEMENT FINANCING AND RELATED AGREEMENTS

Private Placement Agreement

At the closing of the private placement on February 5, 2026, we issued an aggregate of 16,000,000 shares of Common Stock, consisting of 15,384,615 shares of Common Stock to certain investors and 615,385 shares of Common Stock to service providers as reimbursement for certain expenses incurred by certain investors, at a price of $3.25 per share through the private placement.

The aggregate gross proceeds from the private placement were approximately $50.0 million, before deducting offering expenses.

We expect to use the net proceeds for working capital and for other general corporate purposes.

Further, in connection with the closing, we amended our Certificate of Incorporation, increasing the number of authorized shares from 12,000,000 to 40,000,000.

Registration Rights Agreement

At the closing, in connection with the private placement agreement, we entered into a registration rights agreement pursuant to which we will agree to provide certain customary registration rights, including the registration of the Shares for resale.

We are required to use commercially reasonable efforts to file a registration statement with the Securities and Exchange Commission covering the resale by the investors of their shares within 60 days following the closing.

Credit Agreement Amendment

Additionally, concurrently with the execution of the private placement agreement, we entered into the Second Amendment to Credit Agreement.

The amendments became operative concurrently with the closing.

The amendments include among other things, a reduction of the applicable margin on our 25-year term loan from 9.00% to 5.00% for a period of five years following the closing and amending the definition of “Excess Cash Flow” such that the minimum amount of cash-on-hand held by us before being deemed Excess Cash Flow would be equal to $64.0 million for a period of five years.

Rights Agreement Amendment

On February 4, 2026, in connection with the closing of the private placement, the Board of Directors amended the termination date of the Rights Agreement to February 4, 2026, causing each Right to expire and to be extinguished and for the Rights Agreement to be terminated.

See Note 12 of the unaudited condensed consolidated financial statements for additional discussion.

PRESIDENT AND CHIEF EXECUTIVE OFFICER TRANSITION

As discussed in Note 12, in connection and concurrently with the closing of the private placement, Kevin Mowbray, our President and Chief Executive Officer, entered into an agreement to voluntarily retire from his positions at the Company and its subsidiaries and affiliates.

Pursuant to this agreement, we have agreed to pay (i) a severance payment to Mr.

Mowbray of $1,500,000 payable in thirty-six installments and (ii) COBRA medical premiums for a period of 18 months for Mr.

Mowbray and his spouse.

In addition, Mr.

Mowbray agreed to provide consultation, advice and assistance in the transition and operation of our business as reasonably requested by us through May 31, 2026.

In connection with the closing and the planned retirement of the Chief Executive Officer, Nathan Bekke, our current Chief Operating Officer, assumed the role of Interim Chief Executive Officer.

VICE PRESIDENT, CHIEF FINANCIAL OFFICER TRANSITION

On November 17, 2025, Timothy R.

Millage, Vice President, Chief Financial Officer informed us of his decision to resign from his positions with us to pursue an opportunity in church ministry.

His resignation became effective February 3, 2026, and he has agreed to provide consulting services to the Company through May 31, 2026.

In connection with Mr.

Millage’s resignation, we and Mr.

Millage entered into a separation agreement, dated November 20, 2025 (the “Separation Agreement”).

Under the terms of the Separation Agreement, Mr.

Millage will receive (a) his full compensation through the end of his consulting role, (b) a severance payment equaling twenty-six weeks of his base salary, (c) the vesting of all unvested stock awards on February 3, 2026, and (d) survival of the indemnification terms under his employment agreement and indemnity agreement.

The Separation Agreement also includes customary non-compete, non-solicitation, and release of claims provisions.

We have initiated a search process to identify a new Chief Financial Officer.

Josh Rinehults, the Company’s current Vice President of Operations and Finance, has been appointed as Vice President, Interim Chief Financial Officer, and Treasurer, effective as of February 3, 2026.

EXECUTIVE OVERVIEW

Lee Enterprises, Incorporated, together with its subsidiaries, is a digital-first subscription business providing local markets with valuable, high quality, trusted, intensely local news, information, advertising and marketing services.

We inform consumers in 72 mid-sized local communities in 25 states with a rapidly growing digital subscription platform including 670,000 digital subscribers.

Our core strategy aims to grow audiences and engagement through creating, collecting, and distributing trusted local news and information, continuous improvements to subscriber experience, and offering a full suite of omni-channel advertising and marketing to more than 20,000 local advertisers.

Our product portfolio includes digital subscription platforms, daily, weekly and monthly newspapers and niche products, all delivering original local news and information as well as national and international news.

Our products offer digital and print editions, and our content and advertising is available in real time through our websites and mobile apps.

We operate in predominately mid-sized communities with products ranging from large daily newspapers and associated digital products, such as the St.

Louis Post-Dispatch and The Buffalo News , to non-daily newspapers with news websites and digital platforms serving smaller communities.

We have made investments in talent and technology to improve user experience, content, data visualization and marketing to align with the shift in spending habits by both consumers and advertisers toward digital products.

We aim to grow our business through three main categories:

subscriptions to our product offerings, advertising and marketing solutions to local advertisers, and digital services to a diverse set of customers.

Execution of this strategy is expected to transform Lee into a growing and sustainable local media organization.

• Our digital subscription platforms are the fastest growing digital subscription platforms in local media.

• Amplified Digital ® Agency("Amplified"), our digital marketing services agency, offers a full suite of digital marketing solutions to local advertisers.

• BLOX Digital (formerly known as TownNews), our software as a service (SaaS) content platform, is one of the largest web-hosting and content management SaaS providers in North America.

BLOX Digital represents a powerful opportunity to drive additional digital revenue by providing state-of-the-art web hosting and content management services to more than 2,000 customers who rely on BLOX Digital for their web, over-the-top display, mobile, video and social media products.

We generate revenue primarily through advertising and marketing services, subscriptions to our digital and print products, and digital services, primarily through our majority-owned subsidiary, BLOX Digital.

We are a major subscription and advertising platform, a trusted local news provider and innovative, digitally-focused marketing solutions company.

Our focus is on the local market - including local news and information, local advertising and marketing services to top local accounts, and digital services to local content curators.

To align with the core strength of our Company, our operating strategy is locally focused around three pillars:

• Grow digital audiences by transforming the way we present local news and information.

• Expand our digital subscription base and revenue through audience growth and continued conversion of our massive digital audiences.

• Diversify and expand offerings for advertisers through our vast array of rapidly growing digital products, our large digitally adept sales force, and Amplified, our full-service digital agency.

RESULTS OF OPERATIONS

Three Months Ended June 29, 2025

For the three months ended December 28, 2025, our total operating revenue was $130.1 million, down 10.0% from the three months ended December 29, 2024.

Total Digital Revenue was $70.3 million and represented 54.1% of our total operating revenue.

Total Print Revenue was $59.7 million, a 16.1% decrease to the three months ended December 29, 2024.

We continued to deliver positive performance in our digital-only subscription business totaling $22.7 million, driving year-over-year revenue growth of 5.3%.

Another key piece of our digital business, Amplified Digital® agency revenue totaled $23.6 million in the quarter.

Operating expenses totaled $125.9 million and Cash Costs (a non-GAAP financial measure) totaled $121.2 million, a 15.5% decrease and a 12.5% decrease, respectively, compared to the three months ended December 29, 2024 due to continued strong cost management, particularly in legacy revenue streams.

Operating expenses during the quarter included $2.0 million in business interruption insurance reimbursements related to the Cyber claim.

The remaining business-interruption claims remain under review.

See Note 10 for further discussion.

Net loss totaled $5.1 million and Adjusted EBITDA (a non-GAAP financial measure) totaled $12.3 million, a 68% and 61% increase, respectively, due primarily to the cost reduction actions noted above.

Net loss for the quarter included $2.0 million in insurance reimbursements discussed above.

Cash on the balance sheet totaled $12.6 million.

Debt, net of cash on the balance sheet, totaled $443 million.

Since May 2025, we have satisfied all principal and interest payments through organic free cash flow generation.

We are a leading digital-first subscription and marketing services company committed to delivering high-quality, trusted, and deeply local news and information.

Our mission is to strengthen and enrich the communities we serve by providing compelling local content, superior subscriber experiences, and innovative, data-driven advertising and marketing solutions.

Through a premium, high-margin portfolio of digital products and marketing services — including owned-and-operated platforms, branded content, over-the-top advertising, AI-powered solutions, and targeted print — we enable more than 15,000 local advertisers to meaningfully engage customers, strengthen their brands, and accelerate growth.

Our core strategy is to expand audiences and deepen engagement by delivering robust, hyper-local content that informs and connects our communities.

We are committed to creating, collecting, and distributing trusted local news and information across platforms designed to meet audiences wherever they are — print, web, mobile, social, and emerging channels.

At the same time, we are investing in world-class digital products that elevate the subscriber experience through personalization, seamless access, and continuous innovation.

RESULTS OF OPERATIONS

Three Months Ended December 28, 2025

Operating results are summarized below.

(Thousands of Dollars, Except Per Common Share Data) June 29, 2025 June 23, 2024 Percent

(Thousands of Dollars, Except Per Common Share Data) December 28, 2025 December 29, 2024 Percent

Operating revenue:

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Newsprint and ink 2,963 3,616 (18.1) %

Insurance proceeds (2,000) — 100.0 %

Other operating expenses 68,814 74,680 (7.9) %

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Interest expense (10,248) (10,282) (0.3) %

Pension and OPEB related benefit and other, net 1,050 617 70.2 %

Pension and other post employment benefits ("OPEB") related and other, net 845 653 29.4 %

Total non-operating expense, net (9,403) (9,629) (2.3) %

Loss before income taxes (4,195) (12,981) (67.7) %

Income tax benefit (2,744) (849) NM

Income tax benefit 931 3,243 (71.3) %

Net loss (5,126) (16,224) (68.4) %

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Diluted (0.92) (2.80) (67.2) %

References to the “2025 Quarter” refer to the three months ended June 29, 2025.

Similarly, references to the “2024 Quarter” refer to the three months ended June 23, 2024.

*** Indicates an absolute value percentage change greater than 100.

Operating Revenue

Total operating revenue was $141.3 million in the 2025 Quarter, down $9.3 million, or 6.2%, compared to the 2024 Quarter.

Advertising and marketing services revenue totaled $66.6 million in the 2025 Quarter, down 3.3% compared to the 2024 Quarter.

Print advertising revenues were $17.5 million in the 2025 Quarter, down 7.7% compared to the 2024 Quarter due to continued secular declines in demand for print advertising and impacts from the Cyber Incident, which limited capacity for print advertising for certain publications for a short period of time.

Digital advertising and marketing services totaled $49.1 million in the 2025 Quarter, down 1.6% compared to the 2024 Quarter.

Digital advertising and marketing services represented 73.8% of the 2025 Quarter total advertising and marketing services revenue, compared to 72.5% in the same period last year.

Subscription revenue totaled $61.6 million in the 2025 Quarter, down 9.9% compared to the 2024 Quarter.

Decline in full access volume, consistent with historical and industry trends were partially offset by selective increases on our full access subscriptions, and price increases on digital subscriptions.

Digital-only subscribers now total 670,000.

Digital-only subscription revenue grew 13.4% compared to the 2024 Quarter.

Other revenue, which primarily consists of commercial printing revenue and digital services from BLOX Digital, decreased $0.3 million, or 2.0%, in the 2025 Quarter compared to the 2024 Quarter.

Digital services revenue totaled $5.3 million in the 2025 Quarter, a 3.5% increase compared to the 2024 Quarter.

Commercial printing revenue totaled $4.2 million in the 2025 Quarter, a 4.9% decrease compared to the 2024 Quarter, primarily driven by reduction in print volumes from our partners.

Total digital revenue including digital advertising revenue, digital subscription revenue and digital services revenue totaled $77.9 million in the 2025 Quarter, an increase of 2.8% over the 2024 Quarter, and represented 55.1% of our total operating revenue in the 2025 Quarter.

Equity in earnings of TNI and MNI decreased $0.4 million in the 2025 Quarter.

Total operating revenue was $130.1 million in the three months ended December 28, 2025, down $14.5 million, or 10.0%, compared to the the three months ended December 29, 2024.

Advertising and marketing services revenue totaled $60.0 million in the three months ended December 28, 2025, down 9.9% compared to the three months ended December 29, 2024.

Print advertising revenues were $17.2 million in the three months ended December 28, 2025, down 13.4% compared to the three months ended December 29, 2024 related to continued secular declines in demand for print advertising.

Digital advertising and marketing services totaled $42.8 million in the three months ended December 28, 2025, down 8.4% compared to the three months ended December 29, 2024.

Digital advertising and marketing services represented 71.3% of the three months ended December 28, 2025 total advertising and marketing services revenue, compared to 70.2% in the same period last year.

Subscription revenue totaled $57.7 million in the three months ended December 28, 2025, down 11.2% compared to the three months ended December 29, 2024.

Declines in volumes, consistent with historical and industry trends were partially offset by strategic rate increases.

Digital-only subscribers now total 609,000 as December 28, 2025.

Digital-only subscription revenue grew 5.3% compared to the the three months ended December 29, 2024.

Other revenue, which primarily consists of commercial printing revenue and digital services from BLOX Digital, decreased $0.6 million, or 4.6%, in the three months ended December 28, 2025 compared to the three months ended December 29, 2024.

Digital services revenue totaled $4.8 million in the three months ended December 28, 2025, a 5.1% decrease compared to the three months ended December 29, 2024.

Commercial printing revenue totaled $3.9 million in the three months ended December 28, 2025, a 5.7% decrease compared to the three months ended December 29, 2024, primarily driven by lower print volumes from our partners.

Total digital revenue including digital advertising revenue, digital subscription revenue and digital services revenue totaled $70.3 million in the three months ended December 28, 2025, a decrease of 4.2% over the three months ended December 29, 2024, and represented 54.1% of our total operating revenue in the the three months ended December 28, 2025

Equity in earnings of TNI and MNI in the three months ended December 28, 2025 is essentially flat to the three months ended December 29, 2024.

Operating Expenses

Total operating expenses were $137.3 million in the 2025 Quarter, a 6.4% decrease compared to the 2024 Quarter.

Cash Costs, a non-GAAP financial measure used to summarize certain operating expense (see reconciliation of Non-GAAP financial measures below), were down 7.0% in the 2025 Quarter.

Compensation expense decreased $11.8 million in the 2025 Quarter, or 20.0%, compared to the 2024 Quarter from reductions in full time employees ("FTEs") due to continued business transformation efforts, partially offset by investments in digital talent and higher expenses related to the Company's self-insured medical plan.

Newsprint and ink costs decreased $0.8 million in the 2025 Quarter, or 20.2%, compared to the 2024 Quarter.

The decrease is attributable to declines in newsprint volumes.

Other operating expenses increased $3.1 million in the 2025 Quarter, or 4.1%, compared to the 2024 Quarter.

Total operating expenses were $125.9 million in the three months ended December 28, 2025, a 15.5% decrease compared to the three months ended December 29, 2024.

Cash Costs, a non-GAAP financial measure used to summarize certain operating expense (see reconciliation of Non-GAAP financial measures below), were down 12.5% in the three months ended December 28, 2025.

These decreases were primarily due to cost reduction actions put in place in year ended September 28, 2025.

Compensation expense decreased $10.8 million in the three months ended December 28, 2025, or 18.0%, compared to the three months ended December 29, 2024 from reductions in full time employees due to continued business transformation efforts.

Newsprint and ink costs decreased $0.7 million in the three months ended December 28, 2025, or 18.1%, compared to the three months ended December 29, 2024.

The decrease is attributable to declines in newsprint volumes and delivery costs.

Other operating expenses decreased $5.9 million in the three months ended December 28, 2025, or 7.9%, compared to the three months ended December 29, 2024.

Other operating expenses include all operating costs not considered to be compensation, newsprint, depreciation and amortization, or restructuring costs and assets loss on sales, impairments, and other, net.

The largest components are costs associated with printing and distribution of our printed products, digital cost of goods sold and facility expenses.

The increase is attributable to investments to our digital growth.

Restructuring costs and other increased $3.3 million, or 88.2%, compared to the 2024 Quarter.

The increase is primarily driven from costs associated with recovering from the Cyber Incident, closing down outsourced production facilities, ongoing business transformation efforts, and severance.

Restructuring costs and other include severance costs, litigation expenses, restructuring expenses, cyber restoration costs, and advisor expenses.

Depreciation and amortization expense decreased $3.1 million, or 44.8%, in the 2025 Quarter.

The decrease in both is attributable to assets becoming fully depreciated or amortized.

Assets gain on sales, impairments and other, was a net gain of $1.6 million in the 2025 Quarter compared to a net gain of $1.4 million in the 2024 Quarter.

Assets gain on sales in both quarters were due to asset sales.

The factors noted above resulted in an operating income of $4.7 million in the 2025 Quarter compared to $4.9 million in the 2024 Quarter.

Restructuring costs and other decreased $2.0 million, or 38.9% in the three months ended December 28, 2025, compared to the three months ended December 29, 2024.

The prior year quarter included significant costs associated with the shutdown of one of our production facilities.

Depreciation and amortization expense decreased $2.7 million, or 42.9%, in the three months ended December 28, 2025.

The decrease in both is attributable to assets being fully depreciated or amortized.

Assets gain on sales, impairments and other, was de minimis in the three months ended December 28, 2025 (a net gain of $0.0 million) compared to a net gain of $0.9 million in the the three months ended December 29, 2024.

Total operating expenses during the quarter included $2.0 million in business interruption reimbursements.

The factors noted above resulted in an operating income of $5.2 million in the three months ended December 28, 2025 compared to an operating loss of $3.4 million in the three months ended December 29, 2024.

Non-operating Income and Expense

Non-operating income and expense decreased by $0.2 million, or 2.3%.

The decrease is primarily driven by an increase in Pension and OPEB related benefits offset by an increase in Interest expense of $0.1 million, or 0.5%, to $10.1 million in the 2025 Quarter, compared to the same Quarter last year.

The increase to interest expense was due to the interest and rent waivers received in the second quarter which was added to the outstanding balance on our Term Loan.

Our weighted average cost of debt was 9% at the end of the 2025 Quarter and 2024 Quarter.

Income Tax Benefit

We recorded an income tax benefit of $2.7 million, or 61.4% of pretax loss in the 2025 Quarter.

In the 2024 Quarter, we recognized an income tax benefit of $0.8 million, or 18.7% of pretax loss.

Net loss and Loss Per Share

Net loss was $1.7 million and diluted loss per share were $0.31 for the 2025 Quarter compared to net loss of $3.7 million and diluted losses per share of $0.73 for the 2024 Quarter.

The change reflects the various items discussed above.

Nine Months Ended June 29, 2025

Operating results are summarized below.

(Thousands of Dollars, Except Per Common Share Data) June 29, 2025 June 23, 2024 Percent Change

Operating revenue:

Print advertising revenue 53,867 62,118 (13.3) %

Digital advertising revenue 139,766 141,747 (1.4) %

Advertising and marketing services revenue 193,633 203,865 (5.0) %

Print subscription revenue 122,587 148,443 (17.4) %

Digital subscription revenue 68,836 60,429 13.9 %

Subscription revenue 191,423 208,872 (8.4) %

Print other revenue 22,938 24,839 (7.7) %

Digital other revenue 15,241 15,230 0.1 %

Other revenue 38,179 40,069 (4.7) %

Total operating revenue 423,235 452,806 (6.5) %

Operating expenses:

Compensation 164,349 175,757 (6.5) %

Newsprint and ink 9,996 13,101 (23.7) %

Other operating expenses 223,387 221,247 1.0 %

Depreciation and amortization 15,218 21,438 (29.0) %

Assets loss (gain) on sales, impairments and other (2,365) 4,727 NM

Restructuring costs and other 18,806 12,199 54.2 %

Total operating expenses 429,391 448,469 (4.3) %

Equity in earnings of associated companies 2,963 3,869 (23.4) %

Operating (loss) income (3,193) 8,206 NM

Non-operating income (expense):

Interest expense (30,365) (30,427) (0.2) %

Pension and OPEB related benefit and other, net 2,362 1,096 NM

Curtailment/Settlement gains — 3,593 NM

Total non-operating expense, net (28,003) (25,738) 8.8 %

Loss before income taxes (31,196) (17,532) 77.9 %

Income tax expense (benefit) (1,281) (3,438) (62.7) %

Net loss (29,915) (14,094) NM

Loss per common share:

Basic (5.16) (2.68) 92.7 %

Diluted (5.16) (2.68) 92.7 %

References to the “2025 Period” refer to the nine months ended June 29, 2025.

Similarly, references to the “2024 Period” refer to the nine months ended June 23, 2024.

Operating Revenue

Total operating revenue was $423.2 million in the 2025 Period, down $29.6 million, or 6.5%, compared to the 2024 Period.

Advertising and marketing services revenue totaled $193.6 million in the 2025 Period, down 5.0% compared to the 2024 Period.

Print advertising revenues were $53.9 million in the 2025 Period, down 13.3% compared to the 2024 Period due to continued secular declines in demand for print advertising and impacts from the Cyber Incident, which limited capacity for print advertising for certain publications for a short period of time.

Digital advertising and marketing services totaled $139.8 million in the 2025 Period, down 1.4% compared to the 2024 Period.

Digital advertising and marketing services represented 72.2% of the 2025 Period total advertising and marketing services revenue, compared to 69.5% during the 2024 Period.

Subscription revenue totaled $191.4 million in the 2025 Period, down 8.4% compared to the 2024 Period.

Digital-only subscribers now total 670,000.

Digital-only subscription revenue grew 14.0% compared to the 2024 Period.

Other revenue, which primarily consists of commercial printing revenue and digital services from BLOX Digital, decreased $1.9 million, or 4.7%, in the 2025 Period compared to the 2024 Period.

Digital services revenue totaled $15.2 million in the 2025 Period, a 0.1% increase compared to the 2024 Period.

Commercial printing revenue totaled $12.1 million in the 2025 Period, a 8.0% decrease compared to the 2024 Period, primarily driven by reductions in print volumes from our partners.

Total digital revenue including digital advertising revenue, digital subscription revenue and digital services revenue totaled $223.8 million in the 2025 Period, an increase of 3.0% over the 2024 Period, and represented 52.9% of our total operating revenue in the 2025 Period.

Equity in earnings of TNI and MNI decreased $0.9 million in the 2025 Period.

Operating Expenses

Total operating expenses were $429.4 million in the 2025 Period, a 4.3% decrease compared to the 2024 Period.

Cash Costs, a non-GAAP financial measure used to summarize certain operating expense (see reconciliation of Non-GAAP financial measures below), were down 3.0% in the 2025 Period.

Compensation expense decreased $11.4 million in the 2025 Period, or 6.5%, compared to the 2024 Period from reductions in full time employees ("FTEs") due to continued business transformation efforts, partially offset by investments in digital talent and higher expenses related to the Company's self-insured medical plan.

Newsprint and ink costs decreased $3.1 million in the 2025 Period, or 23.7%, compared to the 2024 Period.

The decrease is attributable to declines in newsprint volumes.

Other operating expenses increased $2.1 million in the 2025 Period, or 1.0%, compared to the 2024 Period.

Other operating expenses include all operating costs not considered to be compensation, newsprint, depreciation and amortization, or restructuring costs and assets loss (gain) on sales, impairments, and other, net.

The largest components are costs associated with printing and distribution of our printed products, digital cost of goods sold and facility expenses.

The increase is attributable to investments to our digital growth.

Restructuring costs and other increased $6.6 million in the 2025 Period, compared to the 2024 Period.

The increase is primarily driven from costs associated with recovering from the Cyber Incident, closing down outsourced production facilities, ongoing business transformation efforts, and severance.

Restructuring costs and other include severance costs, litigation expenses, restructuring expenses, cyber restoration costs, and advisor expenses.

Depreciation and amortization expense decreased $6.2 million in the 2025 Period, or 29.0%, compared to the 2024 Period.

The decrease in both is attributable to assets becoming fully depreciated or amortized.

Assets loss (gain) on sales, impairments and other, was a net gain of $2.4 million in the 2025 Period compared to a net loss of $4.7 million in the 2024 Period.

Assets loss (gain) on sales, impairments and other in the 2024 Period were primarily due to non-cash charges of $7.6 million that were recorded to reduce the carrying value of

mastheads, which are non-amortized intangible assets.

Assets gain on sales, impairments and other in the 2025 Period were the result of the disposition of non-core assets, including real estate.

The factors noted above resulted in an operating loss of $3.2 million in the 2025 Period compared to operating income of $8.2 million in the 2024 Period.

Non-operating Income and Expense

Interest expense decreased $0.1 million, or 0.2%, to $30.4 million in the 2025 Period, compared to the same period last year.

The decrease was due to a lower average outstanding balance on our Term Loan.

Our weighted average cost of debt was 9% at the end of the 2025 Period and 2024 Period.

Other non-operating income and expense consists of benefits associated with our pension and other postretirement plans.

We recorded $2.2 million of periodic pension and other postretirement benefits in the 2025 Period compared to $4.7 million in the 2024 Period.

The decrease was attributable due to the Company recognizing a non-cash curtailment gain of $1.2 million in the 2024 Period as a result of outsourcing certain postemployment defined benefit plan functions.

Additionally, during the 2024 Period, the Company completed a voluntary lump sum payment of future benefits to terminated vested participants.

The offer was accepted by 522 participants, representing a $22.6 million pension plan liability.

As a result of the offer, a non-cash settlement gain of $2.4 million was recorded in Curtailment/Settlement gain on the Consolidated Statements of Loss and Comprehensive Loss.

Both assets and liabilities of the plan were reduced by $22.6 million.

The decrease is primarily driven by an increase in Pension and OPEB related benefits.

Our weighted average cost of debt was 9% at the end of both the three months ended December 28, 2025 and the three months ended December 29, 2024.

Income Tax Benefit

We recorded an income tax expense of $1.3 million, or 4.1% of pretax loss in the 2025 Period.

In the 2024 Period, we recognized an income tax benefit of $3.4 million, or 19.6% of pretax loss.

We recorded an income tax expense of $0.9 million, or (21.4)% of pretax loss in the three months ended December 28, 2025.

In the three months ended December 29, 2024, we recorded an income tax expense of $3.2 million, or (25.0)% of pretax loss.

Net loss and Loss Per Share

Net loss was $29.9 million and diluted loss per share were $5.16 for the 2025 Period compared to net loss of $14.1 million and diluted losses per share of $2.68 for the 2024 Period.

Net loss was $5.1 million and diluted loss per share were $0.92 for the three months ended December 28, 2025 compared to net loss of $16.2 million and diluted losses per share of $2.80 for the the three months ended December 29, 2024.

The change reflects the various items discussed above.

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In this report, we present Adjusted EBITDA and Cash Costs which are non-GAAP financial performance measures that exclude from our reported GAAP results the impact of certain items consisting primarily of restructuring charges and non-cash charges.

We believe such expenses, charges and gains are not indicative of normal, ongoing operations, and their inclusion in results makes for more difficult comparisons between years and with peer group companies.

We believe such expenses, charges and gains are not indicative of normal, on-going operations, and their inclusion in results makes for more difficult comparisons between years and with peer group companies.

In the future, however, we are likely to incur expenses, charges and gains similar to the items for which the applicable GAAP financial measures have been adjusted and to report non-GAAP financial measures excluding such items.

1 unchanged sentence

We define our non-GAAP measures, which may not be comparable to similarly titled measures reported by other companies, as follows:

Adjusted EBITDA is a non-GAAP financial performance measure that enhances financial statement users' overall understanding of the operating performance of the Company.

Adjusted EBITDA is a non-GAAP financial performance measure that enhances financial statement users' overall understanding of our operating performance.

The measure isolates unusual, infrequent, or non-cash transactions from the operating performance of the business.

This allows users to easily compare operating performance among various fiscal periods and how management measures the performance of the business.

This measure also provides users with a benchmark that can be used when forecasting future operating performance of the Company that excludes unusual, nonrecurring or one-time transactions.

This measure also provides users with a benchmark that can be used when forecasting our future operating performance that excludes unusual, nonrecurring or one-time transactions.

Adjusted EBITDA is also a component of the calculation used by stockholders and analysts to determine the value of our business when using the market approach, which applies a market multiple to financial metrics.

It is also a measure used to calculate the leverage ratio of the Company, which is a key financial ratio monitored and used

by the Company and its investors.

Adjusted EBITDA is defined as net income (loss), plus non-operating expenses, income tax expense, depreciation and amortization, assets loss (gain) on sales, impairments and other, restructuring costs and other, stock compensation and our 50% share of EBITDA from TNI and MNI, minus equity in earnings of TNI and MNI.

It is also a measure used to calculate our leverage ratio, which is a key financial ratio monitored and used by us and our investors.

Adjusted EBITDA is defined as net income (loss), plus non-operating expenses, net, income tax expense (benefit), depreciation and amortization, assets loss (gain) on sales, impairments and other, restructuring costs and other, stock compensation and our 50% share of EBITDA from TNI and MNI, minus equity in earnings of TNI and MNI.

Cash Costs represent a non-GAAP financial performance measure of operating expenses which are measured on an accrual basis and settled in cash.

This measure is useful to investors in understanding the components of the Company’s cash-settled operating costs.

Generally, the Company provides forward-looking guidance of Cash Costs, which can be used by financial statement users to assess the Company's ability to manage and control its operating cost structure.

Cash Costs are defined as compensation, newsprint and ink and other operating expenses.

Depreciation and amortization, assets loss (gain) on sales, impairments and other, other non-cash operating expenses and other expenses are excluded.

Cash Costs also exclude restructuring costs and other, which are typically settled in cash.

This measure is useful to investors in understanding the components of our cash-settled operating costs.

Generally, we provide forward-looking guidance of Cash Costs, which can be used by financial statement users to assess our ability to manage and control its operating cost structure.

Cash Costs are defined as compensation, newsprint and ink and other operating expenses and exclude restructuring costs and other, which are typically settled in cash.

Adjusted EBITDA and Cash Costs are reconciled to net income (loss) and operating expenses, below, the closest comparable numbers under GAAP.

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The table below reconciles the non-GAAP financial performance measure of Adjusted EBITDA to net income, the most directly comparable GAAP measure:

Three months ended Nine months ended

(Thousands of Dollars) June 29, 2025 June 23, 2024 June 29, 2025 June 23, 2024

Three months ended

(Thousands of Dollars) December 28, 2025 December 29, 2024

Net loss (5,126) (16,224)

Adjusted to exclude

Income tax benefit (2,744) (849) (1,281) (3,438)

Income tax expense 931 3,243

Non-operating expenses, net 9,403 9,629

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Restructuring costs and other 3,148 5,150

Assets (gain) loss on sales, impairments and other, net (1,562) (1,421) (2,365) 4,727

Assets gain on sales, impairments and other, net (3) (929)

Stock compensation 328 430

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The table below reconciles the non-GAAP financial performance measure of Cash Costs to Operating expenses, the most directly comparable GAAP measure:

Three months ended Nine months ended

(Thousands of Dollars) June 29, 2025 June 23, 2024 June 29, 2025 June 23, 2024

Three months ended

(Thousands of Dollars) December 28, 2025 December 29, 2024

Operating expenses 125,934 149,036

Depreciation and amortization 3,579 6,265

Assets (gain) loss on sales, impairments and other, net (1,562) (1,421) (2,365) 4,727

Assets gain on sales, impairments and other, net (3) (929)

Restructuring costs and other 3,148 5,150

Insurance proceeds (2,000) —

Cash Costs 121,210 138,550

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Operating Activities

Cash required for operating activities totaled $0.8 million in the 2025 Period compared to cash provided by operating activities of $1.4 million in 2024 Period, a decrease of $0.6 million.

The decrease was primarily driven by a decrease in operating results of $24.1 million (defined as net loss adjusted for non-working capital items), partially offset by non-cash interest expense of $10.1 million and an increase in working capital of $13.4 million.

The increase in working capital is primarily related to the cyber incident, which increased both accounts payable and accounts receivable.

Cash provided by operating activities totaled $4.5 million in the three months ended December 28, 2025 compared to cash used by operating activities of $7.3 million in the three months ended December 29, 2024, an increase of $11.8 million.

The increase was primarily driven by an increase in operating results of $8.3 million (defined as net loss adjusted for non-working capital items) and an increase in working capital of $3.5 million.

The increase in working capital is primarily related to elevated prepaid offering costs and accrued liabilities related to the private offering transaction.

Investing Activities

Cash provided by investing activities totaled $5.1 million in the 2025 Period compared to cash provided by investing activities of $0.5 million in the 2024 Period.

2025 Period and 2024 Period included $8.7 million and $7.1 million, respectively, in proceeds from the sale of assets as the Company divested non-core real estate.

We anticipate that funds necessary for capital expenditures, which are expected to total up to $7.0 million in 2025, and other requirements, will be available from internally generated funds.

Cash used in investing activities totaled $0.8 million in the three months ended December 28, 2025 compared to cash provided by investing activities of $3.9 million in the in the three months ended December 29, 2024.

The three months ended December 29, 2024 included $5.4 million in proceeds from the sale of assets as we divested non-core real estate.

Financing Activities

Cash required for financing activities totaled $1.4 million in the 2025 Period compared to $3.0 million required in the 2024 Period.

The Debt reduction accounted for nearly all the usage of funds in both periods.

Cash required for financing activities was $1.1 million for the three months ended December 28, 2025 due to offering costs that will offset the proceeds from the private placement.

Additional Information on Liquidity

Our liquidity, consisting of cash on the balance sheet, totaled $14.1 million on June 29, 2025.

PRIVATE PLACEMENT FINANCING AND RELATED AGREEMENTS

As discussed in Note 12, on December 30, 2025, we entered into an agreement pursuant to which we agreed to issue and sell an aggregate of 15,384,615 shares of our common stock at a purchase price of $3.25 per share in a private placement.

The aggregate gross proceeds from the private placement are expected to be approximately $50.0 million, before deducting offering expenses.

We expect to use the net proceeds for working capital and for other general corporate purposes.

Our liquidity, consisting of cash on the balance sheet, totaled $12.6 million on December 28, 2025.

This liquidity amount excludes any future cash flows from operations.

For the nine months ending June 29, 2025, cash provided by operating activities totaled $0.8 million.

The current operating environment, business transformation spending, and impacts from the Cyber Incident have reduced net cash flows and put pressure on the Company's liquidity.

In response to the current challenges, the Company has implemented specific plans to maintain sufficient liquidity for the foreseeable future.

The Company's plan includes reducing operating and capital spending and reducing outstanding accounts receivable.

Reductions in operating expenses and capital spending largely impact the Company's print businesses and future products that are not generating revenue today.

Due to the cyber incident and in an effort to improve liquidity, the Company was granted waivers of interest and rent for three months.

The Company executed its plan in the 13 weeks ended June 29, 2025, resulting in an improvement in operating results (defined as net loss adjusted for non-working capital items).

This improvement marked a significant

milestone in the cyber recovery, as since May 2025 all mandatory and principal payments were funded through cash from operations.

The Company anticipates the improvement to continue into future quarters.

For the three months ending December 28, 2025, cash provided by operating activities totaled $4.5 million.

The current operating environment, business transformation spending, and impacts from the Cyber Incident have reduced net cash flows and put pressure on our liquidity.

In response to the current challenges, we have implemented specific plans to maintain sufficient liquidity for the foreseeable future, including for at least the next 12 months.

Our plan includes reducing operating and capital spending and reducing outstanding accounts receivable.

Reductions in operating expenses and capital spending largely impact our print businesses and future products that are not generating revenue today.

We executed our plan in the quarter ended December 28, 2025, resulting in an improvement in operating results (defined as net loss adjusted for non-working capital items).

This improvement marked a significant milestone in the cyber recovery, as all mandatory and principal payments were funded through cash from operations since May 2025.

We anticipate the improvement to continue into future quarters.

Please see “Recent Developments” for discussion of the Credit Agreement Amendment, which became operative upon the closing of the private placement.

CHANGES IN LAWS AND REGULATIONS

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EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

There have been no changes in our internal control over financial reporting that occurred during the 13 weeks ended June 29, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Under the supervision and with the participation of our senior management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”).

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the Evaluation Date, our disclosure controls and procedures were effective.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in our internal control over financial reporting that occurred during the 13 weeks ended December 28, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis