DallasNews Corporation (Nasdaq: DALN) today reported third
quarter 2021 net income of $1.6 million, or
$0.30 per share, and an operating loss of $2.6 million.
In the third quarter of 2020, the Company reported a net loss of
$0.1 million, or $(0.02) per share, and an operating loss of
$2.4 million. Third quarter 2021 net income includes 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 2021, on a non-GAAP basis, DallasNews
reported an operating loss adjusted for certain items (“adjusted
operating loss”) of $1.2 million, a decline of
$1.1 million when compared to an adjusted operating loss of
$0.1 million reported in the third quarter of 2020. The
decline is due to increases of $0.9 million in employee
compensation and benefits expense and $0.7 million in
revenue-related outside services expense, partially offset by an
increase in total revenue of $0.6 million.
Robert W. Decherd, chairman, president and Chief Executive
Officer, said, “While employment expense was adjusted back to
pre-pandemic levels and there were some reserves released in the
prior year third quarter, operating trends were generally positive.
We are particularly pleased that total revenue was slightly higher
than the prior year and that digital subscription growth continued
at a positive pace. Adjusted operating income / loss will be under
pressure for the next 15 months as
The Dallas Morning News continues to invest in
digital products and digital marketing initiatives. These
investments have the highest potential for long-term returns for
the Company and its shareholders.”
Third Quarter Results
Total revenue was $38.3 million in the third quarter of
2021, an increase of $0.6 million or 1.5 percent when
compared to the third quarter of 2020.
Revenue from advertising and marketing services, including print
and digital revenues, was $18.1 million in the third quarter
of 2021, an increase of $0.6 million or 3.6 percent when
compared to the $17.5 million reported for the third quarter
of 2020. The improvement is primarily due to a $0.9 million
increase in digital advertising revenue.
Circulation revenue was $16.2 million in the third quarter
of 2021, a slight increase when compared to the $16.1 million
reported for the third quarter of 2020. Digital-only subscription
revenue increased $0.7 million or 42.5 percent, offset by
a print circulation decline of $0.7 million or 4.9
percent.
Printing, distribution and other revenue decreased
$0.1 million, or 2.5 percent, to $4.1 million,
primarily due to a reduction in commercial printing revenue.
Total consolidated operating expense in the third quarter of
2021, on a GAAP basis, was $40.9 million, an increase of
$0.7 million or 1.8 percent compared to the third quarter
of 2020. The change is primarily due to increases of
$0.7 million in revenue-related outside services expense and
$0.6 million in employee compensation and benefits expense,
partially offset by a decrease of $0.7 million in depreciation
expense. The employee compensation and benefits expense increase is
primarily due to medical cost savings in the third quarter of 2020
and restoring employees’ base salaries to pre-pandemic amounts.
In the third quarter of 2021, on a non-GAAP basis, adjusted
operating expense was $46.2 million, an increase of
$5.2 million or 12.7 percent when compared to
$41.0 million of adjusted operating expense in the third
quarter of 2020. The change is primarily due to increases of
$3.6 million in contra expense, which includes items like
certain cost of sales, $0.7 million in outside services
expense, and $0.9 million in employee compensation and
benefits expense.
As of September 30, 2021, the Company had 672 employees, a
decrease of 78 full-time equivalents, or 10.4 percent, when
compared to the prior year period. Cash and cash equivalents were
$34.7 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
Tuesday, October 26, 2021, 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 1-844-867-6169
and enter the following access code when prompted: 670105. A replay
line will be available at 1-866-207-1041 from 12:00 p.m. CDT on
October 26, 2021 until 11:59 p.m. CDT on
November 1, 2021. The access code for the replay is
2131223.
About DallasNews
Corporation
DallasNews Corporation is the leading local news and information
publishing company in Texas. The Company has a growing presence in
emerging media and digital marketing, and maintains capabilities
related to commercial printing, distribution and direct mail.
DallasNews delivers news and information in innovative ways to a
broad range of audiences with diverse interests and lifestyles. 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, and other financial
and non-financial items that are not historical facts,
including statements about the Company’s expectations relating to
the reverse stock split, are “forward-looking statements” as the
term is defined under applicable federal securities laws.
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; 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.
DallasNews Corporation and
SubsidiariesConsolidated Statements of
Operations
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Three Months Ended September 30, |
|
Nine Months Ended September 30, |
In thousands, except share and per share amounts
(unaudited) |
|
2021 |
|
|
2020 |
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2021 |
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|
2020 |
|
Net Operating Revenue: |
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|
|
|
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|
Advertising and marketing services |
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$ |
18,101 |
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$ |
17,474 |
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$ |
53,471 |
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$ |
52,392 |
|
Circulation |
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16,157 |
|
|
|
16,111 |
|
|
|
48,272 |
|
|
|
48,248 |
|
Printing, distribution and other |
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|
4,053 |
|
|
|
4,157 |
|
|
|
12,051 |
|
|
|
12,860 |
|
Total net operating revenue |
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38,311 |
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|
37,742 |
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|
113,794 |
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|
113,500 |
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Operating Costs and
Expense: |
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Employee compensation and benefits |
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17,131 |
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16,499 |
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53,194 |
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52,512 |
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Other production, distribution and operating costs |
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20,041 |
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19,307 |
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59,282 |
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58,958 |
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Newsprint, ink and other supplies |
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2,439 |
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|
2,476 |
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7,158 |
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|
|
8,018 |
|
Depreciation |
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|
1,018 |
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|
|
1,753 |
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|
|
3,127 |
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|
|
5,320 |
|
Amortization |
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— |
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|
63 |
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|
64 |
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|
191 |
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Loss on sale/disposal of assets, net |
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30 |
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61 |
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29 |
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|
56 |
|
Asset impairments |
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|
232 |
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|
— |
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|
232 |
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— |
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Total operating costs and expense |
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40,891 |
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40,159 |
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|
123,086 |
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|
125,055 |
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Operating loss |
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|
(2,580 |
) |
|
|
(2,417 |
) |
|
|
(9,292 |
) |
|
|
(11,555 |
) |
Other income, net |
|
|
1,827 |
|
|
|
2,095 |
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|
|
4,694 |
|
|
|
4,778 |
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Loss Before Income
Taxes |
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(753 |
) |
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(322 |
) |
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(4,598 |
) |
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|
(6,777 |
) |
Income tax benefit |
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(2,384 |
) |
|
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(224 |
) |
|
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(1,982 |
) |
|
|
(1,644 |
) |
Net Income
(Loss) |
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$ |
1,631 |
|
|
$ |
(98 |
) |
|
$ |
(2,616 |
) |
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$ |
(5,133 |
) |
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Per Share
Basis |
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Net income (loss) |
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Basic and diluted (1) |
|
$ |
0.30 |
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|
$ |
(0.02 |
) |
|
$ |
(0.49 |
) |
|
$ |
(0.96 |
) |
Number of common shares used in the per share calculation: |
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Basic and diluted (1) |
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5,352,490 |
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5,352,490 |
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5,352,490 |
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|
5,352,490 |
|
(1) All share and per share amounts have been
retroactively adjusted to reflect the one-for-four reverse stock
split effective June 8, 2021. All fractional shares were
settled in cash in connection with the reverse stock split.
DallasNews Corporation and
SubsidiariesConsolidated Balance
Sheets
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September 30, |
|
December 31, |
In thousands (unaudited) |
|
2021 |
|
2020 |
Assets |
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Current assets: |
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Cash and cash equivalents |
|
$ |
34,659 |
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$ |
42,015 |
Accounts receivable, net |
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|
14,249 |
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|
16,562 |
Notes receivable |
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|
22,400 |
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|
22,775 |
Other current assets |
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7,417 |
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|
6,754 |
Total current assets |
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78,725 |
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88,106 |
Property, plant and equipment, net |
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9,208 |
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11,959 |
Operating lease right-of-use assets |
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18,219 |
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|
20,406 |
Intangible assets, net |
|
|
— |
|
|
64 |
Deferred income taxes, net |
|
|
102 |
|
|
76 |
Other assets |
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|
2,203 |
|
|
2,604 |
Total assets |
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$ |
108,457 |
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$ |
123,215 |
Liabilities and Shareholders’ Equity |
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Current liabilities: |
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Accounts payable |
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$ |
6,197 |
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$ |
7,759 |
Accrued compensation and other current liabilities |
|
|
12,151 |
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|
10,829 |
Contract liabilities |
|
|
12,139 |
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|
12,896 |
Total current liabilities |
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30,487 |
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|
31,484 |
Long-term pension liabilities |
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14,317 |
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|
18,520 |
Long-term operating lease liabilities |
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19,863 |
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21,890 |
Other liabilities |
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|
1,487 |
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|
4,913 |
Total liabilities |
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|
66,154 |
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|
76,807 |
Total shareholders' equity |
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|
42,303 |
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|
46,408 |
Total liabilities and shareholders’ equity |
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$ |
108,457 |
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$ |
123,215 |
DallasNews Corporation - Non-GAAP
Financial MeasuresReconciliation of Operating Loss
to Adjusted Operating Loss
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|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
In thousands (unaudited) |
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Total net operating revenue |
|
$ |
38,311 |
|
|
$ |
37,742 |
|
|
$ |
113,794 |
|
|
$ |
113,500 |
|
Total operating costs and expense |
|
|
40,891 |
|
|
|
40,159 |
|
|
|
123,086 |
|
|
|
125,055 |
|
Operating
Loss |
|
$ |
(2,580 |
) |
|
$ |
(2,417 |
) |
|
$ |
(9,292 |
) |
|
$ |
(11,555 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net operating revenue |
|
$ |
38,311 |
|
|
$ |
37,742 |
|
|
$ |
113,794 |
|
|
$ |
113,500 |
|
Addback: |
|
|
|
|
|
|
|
|
|
|
|
|
Advertising contra revenue |
|
|
6,596 |
|
|
|
3,012 |
|
|
|
18,908 |
|
|
|
5,400 |
|
Circulation contra revenue |
|
|
106 |
|
|
|
104 |
|
|
|
296 |
|
|
|
205 |
|
Adjusted Operating
Revenue |
|
$ |
45,013 |
|
|
$ |
40,858 |
|
|
$ |
132,998 |
|
|
$ |
119,105 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expense |
|
$ |
40,891 |
|
|
$ |
40,159 |
|
|
$ |
123,086 |
|
|
$ |
125,055 |
|
Addback: |
|
|
|
|
|
|
|
|
|
|
|
|
Advertising contra expense |
|
|
6,596 |
|
|
|
3,012 |
|
|
|
18,908 |
|
|
|
5,400 |
|
Circulation contra expense |
|
|
106 |
|
|
|
104 |
|
|
|
296 |
|
|
|
205 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
1,018 |
|
|
|
1,753 |
|
|
|
3,127 |
|
|
|
5,320 |
|
Amortization |
|
|
— |
|
|
|
63 |
|
|
|
64 |
|
|
|
191 |
|
Severance expense |
|
|
115 |
|
|
|
418 |
|
|
|
1,721 |
|
|
|
621 |
|
Loss on sale/disposal of assets, net |
|
|
30 |
|
|
|
61 |
|
|
|
29 |
|
|
|
56 |
|
Asset impairments |
|
|
232 |
|
|
|
— |
|
|
|
232 |
|
|
|
— |
|
Adjusted Operating
Expense |
|
$ |
46,198 |
|
|
$ |
40,980 |
|
|
$ |
137,117 |
|
|
$ |
124,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating revenue |
|
$ |
45,013 |
|
|
$ |
40,858 |
|
|
$ |
132,998 |
|
|
$ |
119,105 |
|
Adjusted operating expense |
|
|
46,198 |
|
|
|
40,980 |
|
|
|
137,117 |
|
|
|
124,472 |
|
Adjusted Operating
Loss |
|
$ |
(1,185 |
) |
|
$ |
(122 |
) |
|
$ |
(4,119 |
) |
|
$ |
(5,367 |
) |
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.
The Company adopted the new revenue guidance (Topic 606) using
the modified retrospective approach as of January 1, 2018.
While the Company adjusts operating revenue and expense for
non-GAAP presentation, 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.
Contact:Katy Murray214-977-8869
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