DALLAS, Oct. 25, 2022 (GLOBE NEWSWIRE) -- DallasNews Corporation (Nasdaq: DALN) today reported a third quarter 2022 net loss of $2.6 million, or $(0.48) per share, and an operating loss of $2.3 million. In the third quarter of 2021, the Company reported net income of $1.6 million, or $0.30 per share, and an operating loss of $2.6 million. Third quarter 2021 net income included a tax benefit of $2.4 million primarily related to the release of a non-cash uncertain tax reserve whereby the federal statute of limitations lapsed.
For the third quarter of 2022, on a non-GAAP basis, DallasNews reported an operating loss adjusted for certain items ("adjusted operating loss") of $1.6 million, a $0.4 million greater loss when compared to an adjusted operating loss of $1.2 million reported for the third quarter of 2021. The decrease is primarily due to a decline in total revenue of $0.6 million and an expense increase of $0.7 million in newsprint, partially offset by improvements of $0.6 million in employee compensation and benefits expense and $0.7 million in distribution expense.
On July 29, 2022, the Company received cash proceeds of $22.5 million from the collection of the Charter DMN Holdings, LP note receivable and interest, related to the sale of the Company's former headquarters. In the third quarter, the Company made a board approved voluntary pension contribution of $5.0 million and paid a special dividend of $1.50 per share, returning $8.0 million to shareholders.
Grant Moise, Chief Executive Officer, said, "I am pleased with the steady progress the team is making as we seek to build a sustainably profitable digital business here in North Texas. While we have seen short-term inflationary pressure in some areas of our business, we are finding innovative ways to overcome it."
Third Quarter Results
Total revenue was $37.7 million in the third quarter of 2022, a decrease of $0.6 million or 1.6 percent when compared to the third quarter of 2021.
Revenue from advertising and marketing services, including print and digital revenues, was $17.5 million in the third quarter of 2022, a decrease of $0.6 million or 3.2 percent when compared to the $18.1 million reported for the third quarter of 2021. Digital advertising and marketing services revenue declined $0.4 million or 6.0 percent and print advertising revenue declined $0.2 million or 1.5 percent.
Circulation revenue was $16.2 million in the third quarter of 2022, an increase of less than $0.1 million when compared to the $16.2 million reported for the third quarter of 2021. Digital-only subscription revenue increased $1.0 million or 39.6 percent, partially offset by a print circulation decline of $0.9 million or 6.7 percent.
Printing, distribution and other revenue decreased $0.1 million, or 3.0 percent, to $3.9 million, primarily due to a slight reduction in revenue from mailed advertisements for business customers.
Total consolidated operating expense in the third quarter of 2022, on a GAAP basis, was $40.0 million, an improvement of $0.9 million or 2.2 percent compared to the third quarter of 2021. The improvement is primarily due to savings of $0.7 million in employee compensation and benefits expense and $0.7 million in distribution expense, partially offset by an increase of $0.7 million in newsprint expense.
In the third quarter of 2022, on a non-GAAP basis, adjusted operating expense was $44.8 million, an improvement of $1.4 million or 3.1 percent when compared to $46.2 million of adjusted operating expense in the third quarter of 2021.
As of September 30, 2022, the Company had 668 employees, a decrease of 4 full-time equivalents when compared to the prior year period. Cash and cash equivalents were $33.0 million and the Company had no debt.
Non-GAAP Financial Measures
Reconciliations of operating loss to adjusted operating loss, total net operating revenue to adjusted operating revenue, and total operating costs and expense to adjusted operating expense are included in the exhibits to this release.
Financial Results Conference Call
DallasNews Corporation will conduct a conference call on Wednesday, October 26, 2022, at 9:00 a.m. CDT to discuss financial results. The conference call will be available via webcast by accessing the Company's website at investor.dallasnewscorporation.com/events. An archive of the webcast will be available at dallasnewscorporation.com in the Investor Relations section.
To access the listen-only conference call, dial 1-877-336-4441 and enter the following access code when prompted: 7099740. A replay line will be available at 1-866-207-1041 from 12:00 p.m. CDT on October 26, 2022 until 11:59 p.m. CDT on November 1, 2022. The access code for the replay is 3178965.
About DallasNews Corporation
DallasNews Corporation is the Dallas-based holding company of The Dallas Morning News and Medium Giant. The Dallas Morning News is Texas' leading daily newspaper with a strong journalistic reputation, intense regional focus and close community ties. Medium Giant is a media and marketing agency of divergent thinkers who devise strategies that deepen connections, expand influence, and scale success for clients nationwide. For additional information, visit dallasnewscorporation.com or email invest@dallasnews.com.
Statements in this communication concerning DallasNews Corporation's business outlook or future economic performance, revenues, expenses, cash balance and other financial and non-financial items that are not historical facts are "forward-looking statements" as the term is defined under applicable federal securities laws. Words such as "anticipate," "believe," "could," "estimate," "intend," "expect," "may," "project," "plan," "will," "would" and their opposites and similar expressions are intended to identify forward-looking statements. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those statements. Such risks, trends and uncertainties are, in most instances, beyond the Company's control, and include changes in advertising demand and other economic conditions; consumers' tastes; newsprint prices; program costs; labor relations; cybersecurity incidents; technological obsolescence; and the current and future impacts of the COVID-19 pandemic. Among other risks, there can be no guarantee that the board of directors will approve a quarterly dividend in future quarters or that our financial projections are accurate, as well as other risks described in the Company's Annual Report on Form 10-K and in the Company's other public disclosures and filings with the Securities and Exchange Commission. Forward-looking statements, which are as of the date of this filing, are not updated to reflect events or circumstances after the date of the statement.
Contact:
Katy Murray
214-977-8869
DallasNews Corporation and Subsidiaries
Consolidated Statements of Operations
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| In thousands, except share and per share amounts (unaudited) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Net Operating Revenue: | ||||||||||||||||
| Advertising and marketing services | $ | 17,525 | $ | 18,101 | $ | 51,246 | $ | 53,471 | ||||||||
| Circulation | 16,230 | 16,157 | 48,576 | 48,272 | ||||||||||||
| Printing, distribution and other | 3,933 | 4,053 | 11,726 | 12,051 | ||||||||||||
| Total net operating revenue | 37,688 | 38,311 | 111,548 | 113,794 | ||||||||||||
| Operating Costs and Expense: | ||||||||||||||||
| Employee compensation and benefits | 16,428 | 17,131 | 49,642 | 53,194 | ||||||||||||
| Other production, distribution and operating costs | 19,691 | 20,041 | 58,665 | 59,282 | ||||||||||||
| Newsprint, ink and other supplies | 3,161 | 2,439 | 8,059 | 7,158 | ||||||||||||
| Depreciation | 699 | 1,018 | 2,127 | 3,127 | ||||||||||||
| Amortization | - | - | - | 64 | ||||||||||||
| Loss on sale/disposal of assets, net | - | 30 | - | 29 | ||||||||||||
| Asset impairments | - | 232 | 102 | 232 | ||||||||||||
| Total operating costs and expense | 39,979 | 40,891 | 118,595 | 123,086 | ||||||||||||
| Operating loss | (2,291 | ) | (2,580 | ) | (7,047 | ) | (9,292 | ) | ||||||||
| Other income (loss), net | (94 | ) | 1,827 | (48 | ) | 4,694 | ||||||||||
| Loss Before Income Taxes | (2,385 | ) | (753 | ) | (7,095 | ) | (4,598 | ) | ||||||||
| Income tax provision (benefit) | 201 | (2,384 | ) | 550 | (1,982 | ) | ||||||||||
| Net Income (Loss) | $ | (2,586 | ) | $ | 1,631 | $ | (7,645 | ) | $ | (2,616 | ) | |||||
| Per Share Basis(1) | ||||||||||||||||
| Net income (loss) | ||||||||||||||||
| Basic | $ | (0.48 | ) | $ | 0.30 | $ | (1.43 | ) | $ | (0.49 | ) | |||||
| Number of common shares used in the per share calculation: | ||||||||||||||||
| Basic | 5,352,490 | 5,352,490 | 5,352,490 | 5,352,490 | ||||||||||||
(1) The Company's Series A and Series B common stock equally share in the distributed and undistributed earnings. There were no options or RSUs outstanding as of September 30, 2022 and 2021, that would result in dilution of shares or the calculation of EPS under the two-class method as prescribed under ASC 260 - Earnings Per Share.
DallasNews Corporation and Subsidiaries
Consolidated Balance Sheets
| September 30, | December 31, | |||||
| In thousands (unaudited) | 2022 | 2021 | ||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 33,031 | $ | 32,439 | ||
| Accounts receivable, net | 13,256 | 16,012 | ||||
| Notes receivable | - | 22,400 | ||||
| Other current assets | 5,558 | 5,677 | ||||
| Total current assets | 51,845 | 76,528 | ||||
| Property, plant and equipment, net | 7,810 | 8,822 | ||||
| Operating lease right-of-use assets | 15,449 | 17,648 | ||||
| Deferred income taxes, net | 186 | 257 | ||||
| Other assets | 2,096 | 2,197 | ||||
| Total assets | $ | 77,386 | $ | 105,452 | ||
| Liabilities and Shareholders' Equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 4,623 | $ | 7,821 | ||
| Accrued compensation and other current liabilities | 10,819 | 9,505 | ||||
| Contract liabilities | 9,389 | 10,592 | ||||
| Total current liabilities | 24,831 | 27,918 | ||||
| Long-term pension liabilities | 9,546 | 14,275 | ||||
| Long-term operating lease liabilities | 16,815 | 19,181 | ||||
| Other liabilities | 1,469 | 1,501 | ||||
| Total liabilities | 52,661 | 62,875 | ||||
| Total shareholders' equity | 24,725 | 42,577 | ||||
| Total liabilities and shareholders' equity | $ | 77,386 | $ | 105,452 | ||
DallasNews Corporation - Non-GAAP Financial Measures
Reconciliation of Operating Loss to Adjusted Operating Loss
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| In thousands (unaudited) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Total net operating revenue | $ | 37,688 | $ | 38,311 | $ | 111,548 | $ | 113,794 | ||||||||
| Total operating costs and expense | 39,979 | 40,891 | 118,595 | 123,086 | ||||||||||||
| Operating Loss | $ | (2,291 | ) | $ | (2,580 | ) | $ | (7,047 | ) | $ | (9,292 | ) | ||||
| Total net operating revenue | $ | 37,688 | $ | 38,311 | $ | 111,548 | $ | 113,794 | ||||||||
| Addback: | ||||||||||||||||
| Advertising contra revenue | 5,350 | 6,596 | 16,460 | 18,908 | ||||||||||||
| Circulation contra revenue | 113 | 106 | 273 | 296 | ||||||||||||
| Adjusted Operating Revenue | $ | 43,151 | $ | 45,013 | $ | 128,281 | $ | 132,998 | ||||||||
| Total operating costs and expense | $ | 39,979 | $ | 40,891 | $ | 118,595 | $ | 123,086 | ||||||||
| Addback: | ||||||||||||||||
| Advertising contra expense | 5,350 | 6,596 | 16,460 | 18,908 | ||||||||||||
| Circulation contra expense | 113 | 106 | 273 | 296 | ||||||||||||
| Less: | ||||||||||||||||
| Depreciation | 699 | 1,018 | 2,127 | 3,127 | ||||||||||||
| Amortization | - | - | - | 64 | ||||||||||||
| Severance expense | (19 | ) | 115 | 541 | 1,721 | |||||||||||
| Loss on sale/disposal of assets, net | - | 30 | - | 29 | ||||||||||||
| Asset impairments | - | 232 | 102 | 232 | ||||||||||||
| Adjusted Operating Expense | $ | 44,762 | $ | 46,198 | $ | 132,558 | $ | 137,117 | ||||||||
| Adjusted operating revenue | $ | 43,151 | $ | 45,013 | $ | 128,281 | $ | 132,998 | ||||||||
| Adjusted operating expense | 44,762 | 46,198 | 132,558 | 137,117 | ||||||||||||
| Adjusted Operating Loss | $ | (1,611 | ) | $ | (1,185 | ) | $ | (4,277 | ) | $ | (4,119 | ) | ||||
The Company calculates adjusted operating income (loss) by adjusting operating income (loss) to exclude depreciation, amortization, severance expense, (gain) loss on sale/disposal of assets, and asset impairments ("adjusted operating income (loss)"). The Company believes that inclusion of certain noncash expenses and other items in the results makes for more difficult comparisons between years and with peer group companies.
Advertising contra represents agency fees related to digital advertising and marketing services. Circulation contra represents revenue recorded for the grace period of expired home delivery subscriptions. These adjustments have no effect on adjusted operating income (loss).
Adjusted operating income (loss) is not a measure of financial performance under generally accepted accounting principles ("GAAP"). Management uses adjusted operating income (loss) and similar measures in internal analyses as supplemental measures of the Company's financial performance, and for performance comparisons versus its peer group of companies. Management uses this non-GAAP financial measure for the purposes of evaluating consolidated Company performance. The Company therefore believes that the non-GAAP measure presented provides useful information to investors by allowing them to view the Company's business through the eyes of management and the Board of Directors, facilitating comparison of results across historical periods and providing a focus on the underlying ongoing operating performance of its business. Adjusted operating income (loss) should not be considered in isolation or as a substitute for net income (loss), cash flows provided by (used for) operating activities or other comparable measures prepared in accordance with GAAP. Additionally, this non-GAAP measure may not be comparable to similarly-titled measures of other companies.
