What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-09 compared with 2025-02-07 · 148 added, 61 removed, 125 unchanged (63% 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 December 29, 2024.

The following discussion includes comments and analysis relating to our results of operations and financial condition as of and for the three months ended March 30, 2025.

This discussion should be read in conjunction with the Consolidated Financial Statements and related Notes thereto, included herein, and our 2024 Annual Report on Form 10-K.

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RESULTS OF OPERATIONS

Three Months Ended December 29, 2024

Three Months Ended March 30, 2025

Operating results are summarized below.

(Thousands of Dollars, Except Per Common Share Data) December 29, 2024 December 24, 2023 Percent

(Thousands of Dollars, Except Per Common Share Data) March 30, 2025 March 24, 2024 Percent

Operating revenue:

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Depreciation and amortization 5,171 7,293 (29.1) %

Assets gain on sales, impairments and other (929) (1,469) (36.8) %

Assets loss (gain) on sales, impairments and other 126 7,617 (98.3) %

Restructuring costs and other 6,516 4,139 57.4 %

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Equity in earnings of associated companies 1,155 1,206 (4.2) %

Operating (loss) income (3,352) 7,833 (142.8) %

Operating loss (4,503) (4,552) (1.1) %

Non-operating income (expense):

Interest expense (9,950) (10,214) (2.6) %

Pension and OPEB related benefit and other, net 653 186 251.1 %

Curtailment/Settlement gains — 3,593 NM

Pension and OPEB related benefit and other, net 658 293 NM

Total non-operating expense, net (9,292) (9,921) (6.3) %

(Loss) before income taxes (12,981) 1,481 NM

Income tax expense 3,243 248 NM

Net (loss) income (16,224) 1,233 NM

(Loss) earnings per common share:

Basic (2.80) 0.12 NM

Diluted (2.80) 0.12 NM

References to the “2025 Quarter” refer to the three months ended December 29, 2024.

Similarly, references to the “2024 Quarter” refer to the three months ended December 24, 2023.

Loss before income taxes (13,795) (14,473) (4.7) %

Income tax benefit (1,780) (2,837) (37.3) %

Net loss (12,015) (11,636) 3.3 %

Loss per common share:

Basic (2.07) (2.06) 0.7 %

Diluted (2.07) (2.06) 0.7 %

References to the “2025 Quarter” refer to the three months ended March 30, 2025.

Similarly, references to the “2024 Quarter” refer to the three months ended March 24, 2024.

Operating Revenue

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Advertising and marketing services revenue totaled $60.5 million in the 2025 Quarter, down 5.7% compared to the 2024 Quarter.

Print advertising revenues were $19.9 million in the 2025 Quarter, down 18.7% compared to the 2024 Quarter due to continued secular declines in demand for print advertising and a reduced product portfolio through sales and elimination of products that do not meet profitability standards.

Digital advertising and marketing services totaled $46.7 million in the 2025 Quarter, up 0.6% compared to the 2024 Quarter.

Print advertising revenues were $16.5 million in the 2025 Quarter, down 11.8% 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 $43.9 million in the 2025 Quarter, down 3.2% compared to the 2024 Quarter.

Digital advertising and marketing services represented 72.7% of the 2025 Quarter total advertising and marketing services revenue, compared to 70.8% in the same period last year.

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

Digital-only subscribers grew 5% since the 2024 Quarter and now total 774,000.

Digital-only subscribers now total 728,000.

Digital-only subscription revenue grew 17.4% compared to the 2024 Quarter.

Other revenue, which primarily consists of commercial printing revenue and digital services from BLOX Digital, decreased $1.2 million, or 8.7%, in the 2025 Quarter compared to the 2024 Quarter.

Digital services revenue totaled $5.1 million in the 2025 Quarter, a 2.6% increase compared to the 2024 Quarter.

Digital services revenue totaled $4.8 million in the 2025 Quarter, a 5.7% decrease compared to the 2024 Quarter.

Commercial printing revenue totaled $3.8 million in the 2025 Quarter, a 8.5% decrease compared to the 2024 Quarter, primarily driven by reduction in print volumes from our partners.

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Cash Costs, a non-GAAP financial measure used to summarize certain operating expense (see reconciliation of Non-GAAP financial measures below), were down 1.5% in the 2025 Quarter.

Compensation expense increased $0.6 million in the 2025 Quarter, or 1.0%, compared to the 2024 Quarter due to investments in digital talent.

Compensation expense decreased $0.1 million in the 2025 Quarter, or 0.3%, 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 $1.1 million in the 2025 Quarter, or 25.3%, compared to the 2024 Quarter.

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

The decrease is primarily attributable to lower delivery and other print-related costs due to lower volumes of our print edition.

Restructuring costs and other increased $0.9 million compared to the 2024 Quarter.

Restructuring costs and other include severance costs, litigation expenses, and restructuring expenses.

The decrease is attributable to lower delivery and other print-related costs due to lower volumes of our print edition, partially offset by investments to fund our digital growth strategy.

Restructuring costs and other increased $2.4 million, or 57.4%, 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 $2.1 million, or 29.1%, 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 $0.9 million in the 2025 Quarter compared to a net gain of $1.5 million in the 2024 Quarter.

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

The factors noted above resulted in an operating loss of $3.4 million in the 2025 Quarter compared to operating income of $7.8 million in the 2024 Quarter.

Assets loss (gain) on sales, impairments and other, was a net loss of $0.1 million in the 2025 Quarter compared to a net gain of $7.6 million in the 2024 Quarter.

Assets loss (gain) on sales, impairments and other in the 2024 Quarter 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.

The factors noted above resulted in an operating loss of $4.5 million in the 2025 Quarter compared to $4.6 million in the 2024 Quarter.

Non-operating Income and Expense

Interest expense increased $0.2 million, or 1.5%, to $10.3 million in the 2025 Quarter, compared to the same Quarter last year.

Non-operating income and expense decreased by $0.6 million , or 6.3%.

The decrease is primarily driven by a decrease in Interest expense of $0.3 million, or 2.6%, to $10.0 million in the 2025 Quarter, compared to the same Quarter 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 Quarter and 2024 Quarter.

Other non-operating income and expense consists of benefits associated with our pension and other postretirement plans and the fair value adjustment of our Warrants.

We recorded $0.7 million periodic pension and other postretirement benefits in the 2025 Quarter compared to $3.9 million in the 2024 Quarter.

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

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

The offer was accepted by 522 participants representing $22.6 million in plan liabilities.

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 Income and Comprehensive Income.

Income Tax Benefit

We recorded an income tax benefit of $1.8 million, or 12.9% of pretax loss in the 2025 Quarter.

In the 2024 Quarter, we recognized an income tax benefit of $2.8 million, or 19.6% of pretax loss.

Net loss and Loss Per Share

Net loss was $12.0 million and diluted loss per share were $2.07 for the 2025 Quarter compared to net loss of $11.6 million and diluted losses per share of $2.06 for the 2024 Quarter.

The change reflects the various items discussed above.

Six Months Ended March 30, 2025

Operating results are summarized below.

(Thousands of Dollars, Except Per Common Share Data) March 30, 2025 March 24, 2024 Percent Change

Operating revenue:

Print advertising revenue 36,393 43,177 (15.7) %

Digital advertising revenue 90,670 91,844 (1.3) %

Advertising and marketing services revenue 127,063 135,021 (5.9) %

Print subscription revenue 84,511 100,838 (16.2) %

Digital subscription revenue 45,354 39,728 14.2 %

Subscription revenue 129,865 140,566 (7.6) %

Print other revenue 15,101 16,561 (8.8) %

Digital other revenue 9,913 10,080 (1.7) %

Other revenue 25,014 26,641 (6.1) %

Total operating revenue 281,942 302,228 (6.7) %

Operating expenses:

Compensation 116,913 116,479 0.4 %

Newsprint and ink 6,727 9,005 (25.3) %

Other operating expenses 146,135 147,070 (0.6) %

Depreciation and amortization 11,436 14,588 (21.6) %

Assets loss (gain) on sales, impairments and other (803) 6,148 NM

Restructuring costs and other 11,666 8,404 NM

Total operating expenses 292,074 301,694 (3.2) %

Equity in earnings of associated companies 2,277 2,747 (17.1) %

Operating (loss) income (7,855) 3,281 NM

Non-operating income (expense):

Interest expense (20,232) (20,345) (0.6) %

Pension and OPEB related benefit and other, net 1,311 479 NM

Curtailment/Settlement gains — 3,593 NM

Total non-operating expense, net (18,921) (16,273) 16.3 %

Loss before income taxes (26,776) (12,992) NM

Income tax expense (benefit) 1,463 (2,589) NM

Net loss (28,239) (10,403) NM

Loss per common share:

Basic (4.87) (1.94) 150.4 %

Diluted (4.87) (1.94) 150.4 %

References to the “2025 Period” refer to the six months ended March 30, 2025.

Similarly, references to the “2024 Period” refer to the six months ended March 24, 2024.

Operating Revenue

Total operating revenue was $281.9 million in the 2025 Period, down $20.3 million, or 6.7%, compared to the 2024 Period.

Advertising and marketing services revenue totaled $127.1 million in the 2025 Period, down 5.9% compared to the 2024 Period.

Print advertising revenues were $36.4 million in the 2025 Period, down 15.7% 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 $90.7 million in the 2025 Period, down 1.3% compared to the 2024 Period.

Digital advertising and marketing services represented 71.4% of the 2025 Period total advertising and marketing services revenue, compared to 68.0% during the 2024 Period.

Subscription revenue totaled $129.9 million in the 2025 Period, down 7.6% compared to the 2024 Period.

Digital-only subscribers now total 728,000.

Digital-only subscription revenue grew 14.2% compared to the 2024 Period.

Other revenue, which primarily consists of commercial printing revenue and digital services from BLOX Digital, decreased $1.6 million, or 6.1%, in the 2025 Period compared to the 2024 Period.

Digital services revenue totaled $9.9 million in the 2025 Period, a 1.7% decrease compared to the 2024 Period.

Commercial printing revenue totaled $7.9 million in the 2025 Period, a 9.2% 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 $145.9 million in the 2025 Period, an increase of 3.0% over the 2024 Period, and represented 51.8% of our total operating revenue in the 2025 Period.

Equity in earnings of TNI and MNI increased $0.5 million in the 2025 Period.

Operating Expenses

Total operating expenses were $292.1 million in the 2025 Period, a 3.2% 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 1.0% in the 2025 Period.

Compensation expense increased $0.4 million in the 2025 Period, or 0.4%, compared to the 2024 Period due to higher expenses related to the Company's self-insured medical plan, investments in digital talent, partially offset by reductions in full time employees ("FTEs") due to continued business transformation efforts.

Newsprint and ink costs decreased $2.3 million in the 2025 Period, or 25.3%, compared to the 2024 Period.

The decrease is attributable to declines in newsprint volumes.

Other operating expenses decreased $0.9 million in the 2025 Period, or 0.6%, 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 decrease is attributable to lower delivery and other print-related costs due to lower volumes of our print edition, partially increases in investments to fund our digital growth strategy partially offset by investments to fund our digital growth strategy.

Restructuring costs and other increased $3.3 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 $3.2 million in the 2025 Period, or 21.6%, 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 $0.8 million in the 2025 Period compared to a net loss of $6.1 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 $7.9 million in the 2025 Period compared to operating income of $3.3 million in the 2024 Period.

Non-operating Income and Expense

Interest expense decreased $0.1 million, or 0.6%, to $20.2 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 9.0% 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 $1.5 million of periodic pension and other postretirement benefits in the 2025 Period compared to $4.3 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.

Income Tax (Benefit) Expense

We recorded an income tax expense of $3.2 million, or (25.0)% of pretax loss in the 2025 Quarter.

In the 2024 Quarter, we recognized an income tax expense of $0.2 million, or 16.7% of pretax income.

Net income (loss) and Earnings (Loss) Per Share

Net loss was $16.2 million and diluted loss per share were $2.80 for the 2025 Quarter compared to net income of $1.2 million and diluted earnings per share of $0.12 for the 2024 Quarter.

Income Tax Benefit

We recorded an income tax expense of $1.5 million, or 5.5% of pretax loss in the 2025 Period.

In the 2024 Period, we recognized an income tax benefit of $2.6 million, or 19.9% of pretax loss.

Net loss and Loss Per Share

Net loss was $28.2 million and diluted loss per share were $4.87 for the 2025 Period compared to net loss of $10.4 million and diluted losses per share of $1.94 for the 2024 Period.

The change reflects the various items discussed above.

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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.

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.

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.

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.

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

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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

(Thousands of Dollars) December 29, 2024 December 24, 2023

Net (loss) income (16,224) 1,233

Three months ended Six months ended

(Thousands of Dollars) March 30, 2025 March 24, 2024 March 30, 2025 March 24, 2024

Net loss (12,015) (11,636) (28,239) (10,403)

Adjusted to exclude

Income tax expense 3,243 248

Income tax (benefit) expense (1,780) (2,837) 1,463 (2,589)

Non-operating expenses, net 9,292 9,921 18,921 16,273

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Restructuring costs and other 6,516 4,139 11,666 8,404

Assets gain on sales, impairments and other, net (929) (1,469)

Assets loss (gain) on sales, impairments and other, net 126 7,617 (803) 6,148

Stock compensation 358 501 788 715

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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

(Thousands of Dollars) December 29, 2024 December 24, 2023

Three months ended Six months ended

(Thousands of Dollars) March 30, 2025 March 24, 2024 March 30, 2025 March 24, 2024

Operating expenses 143,038 152,308 292,074 301,694

Depreciation and amortization 5,171 7,293 11,436 14,588

Assets (gain) loss on sales, impairments and other, net (929) (1,469)

Assets loss (gain) on sales, impairments and other, net 126 7,617 (803) 6,148

Restructuring costs and other 6,516 4,139 11,666 8,404

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LIQUIDITY AND CAPITAL RESOURCES

Our operations have historically generated cash flow and are expected to provide sufficient liquidity, together with cash on hand, to meet our requirements, primarily operating expenses, interest expense and capital expenditures for at least the next twelve months.

A summary of our cash flows is included in the narrative below.

Operating Activities

Cash required by operating activities totaled $7.3 million in 2025 Period compared to cash provided by operating activities of $0.1 million in 2024 Period, a decrease of $7.4 million.

The decrease was driven by a decrease in operating results of $13.6 million (defined as net loss adjusted for non-working capital items) partially offset by an increase in working capital of $6.2 million, primarily related to favorable change in accounts receivable.

Cash required for operating activities totaled $8.1 million in the 2025 Period compared to cash provided by operating activities of $3.3 million in 2024 Period, a decrease of $11.4 million.

The decrease was primarily driven by a decrease in operating results of $23.4 million (defined as net loss adjusted for non-working capital items), partially offset by non-cash interest expense of $6.8 million and an increase in working capital of $5.2 million.

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

Investing Activities

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2025 Period and 2024 Period included $6.1 million and $3.2 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 approximately $10.0 million in 2025, and other requirements, will be available from internally generated funds.

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.

Financing Activities

No cash was required for financing activities in the 2025 Period compared to $1.4 million in 2024 Period.

Debt reduction accounted for nearly all the usage of funds in the prior period.

Cash provided by or required for financing activities totaled zero in the 2025 Period compared to $1.9 million required in the 2024 Period.

The Debt reduction accounted for nearly all the usage of funds in the 2024 Period.

Additional Information on Liquidity

Our liquidity, consisting of cash on the balance sheet, totaled $6.1 million on December 29, 2024.

Our liquidity, consisting of cash on the balance sheet, totaled $4.7 million on March 30, 2025.

This liquidity amount excludes any future cash flows from operations.

We expect all interest and principal payments due in the next twelve months will be satisfied by existing cash and our cash flows, which will allow us to maintain an adequate level of liquidity.

For the six months ending March 30, 2025, cash required for operating activities totaled $8.1 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.

The Company's working capital was impacted by the Cyber Incident, as statements to customers were delayed and collection efforts were challenged.

The Company expects improved collections as we recover from the Cyber Incident.

In addition to these tactics, the Company was granted waivers of interest and rent for three months, two of which are already reflected in the financial statements.

Notwithstanding the aforementioned waivers of interest and rent, and considering the plans outlined above, we expect all interest and principal payments due in the next twelve months will be satisfied by existing cash and our cash flows, which will allow us to maintain an adequate level of liquidity.

CHANGES IN LAWS AND REGULATIONS

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EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

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 Rules 13a-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 29, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no changes in our internal control over financial reporting that occurred during the 13 weeks ended March 30, 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