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 Murray214-977-8869
DallasNews Corporation and
SubsidiariesConsolidated Statements of
Operations
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
In thousands, except share and per share amounts
(unaudited) |
|
2022 |
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|
2021 |
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2022 |
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|
2021 |
|
Net Operating Revenue: |
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Advertising and marketing services |
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$ |
17,525 |
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$ |
18,101 |
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$ |
51,246 |
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$ |
53,471 |
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Circulation |
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16,230 |
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16,157 |
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48,576 |
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48,272 |
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Printing, distribution and other |
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3,933 |
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|
|
4,053 |
|
|
|
11,726 |
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|
|
12,051 |
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Total net operating revenue |
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37,688 |
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38,311 |
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111,548 |
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113,794 |
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Operating Costs and
Expense: |
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Employee compensation and benefits |
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16,428 |
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17,131 |
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49,642 |
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53,194 |
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Other production, distribution and operating costs |
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19,691 |
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20,041 |
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58,665 |
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59,282 |
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Newsprint, ink and other supplies |
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3,161 |
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2,439 |
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8,059 |
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7,158 |
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Depreciation |
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|
699 |
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|
1,018 |
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|
|
2,127 |
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|
3,127 |
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Amortization |
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— |
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— |
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— |
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64 |
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Loss on sale/disposal of assets, net |
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— |
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30 |
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— |
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29 |
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Asset impairments |
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— |
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232 |
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|
102 |
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232 |
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Total operating costs and expense |
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39,979 |
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40,891 |
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118,595 |
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|
123,086 |
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Operating loss |
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(2,291 |
) |
|
|
(2,580 |
) |
|
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(7,047 |
) |
|
|
(9,292 |
) |
Other income (loss), net |
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|
(94 |
) |
|
|
1,827 |
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(48 |
) |
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4,694 |
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Loss Before Income
Taxes |
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(2,385 |
) |
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(753 |
) |
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(7,095 |
) |
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(4,598 |
) |
Income tax provision (benefit) |
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201 |
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(2,384 |
) |
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550 |
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(1,982 |
) |
Net Income
(Loss) |
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$ |
(2,586 |
) |
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$ |
1,631 |
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$ |
(7,645 |
) |
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$ |
(2,616 |
) |
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Per Share
Basis(1) |
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Net income (loss) |
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Basic |
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$ |
(0.48 |
) |
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$ |
0.30 |
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$ |
(1.43 |
) |
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$ |
(0.49 |
) |
Number of common shares used in the per share calculation: |
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Basic |
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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 |
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(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
SubsidiariesConsolidated Balance
Sheets
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September 30, |
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December 31, |
In thousands (unaudited) |
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2022 |
|
2021 |
Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
33,031 |
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$ |
32,439 |
Accounts receivable, net |
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13,256 |
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16,012 |
Notes receivable |
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— |
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22,400 |
Other current assets |
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5,558 |
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5,677 |
Total current assets |
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51,845 |
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76,528 |
Property, plant and equipment, net |
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7,810 |
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8,822 |
Operating lease right-of-use assets |
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15,449 |
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17,648 |
Deferred income taxes, net |
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|
186 |
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|
257 |
Other assets |
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2,096 |
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2,197 |
Total assets |
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$ |
77,386 |
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$ |
105,452 |
Liabilities and
Shareholders’ Equity |
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Current liabilities: |
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Accounts payable |
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$ |
4,623 |
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$ |
7,821 |
Accrued compensation and other current liabilities |
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10,819 |
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9,505 |
Contract liabilities |
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9,389 |
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10,592 |
Total current liabilities |
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24,831 |
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27,918 |
Long-term pension liabilities |
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9,546 |
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14,275 |
Long-term operating lease liabilities |
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16,815 |
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19,181 |
Other liabilities |
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1,469 |
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1,501 |
Total liabilities |
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52,661 |
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62,875 |
Total shareholders' equity |
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24,725 |
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42,577 |
Total liabilities and shareholders’ equity |
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$ |
77,386 |
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$ |
105,452 |
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) |
|
2022 |
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2021 |
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2022 |
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|
2021 |
|
Total net operating revenue |
|
$ |
37,688 |
|
|
$ |
38,311 |
|
|
$ |
111,548 |
|
|
$ |
113,794 |
|
Total operating costs and expense |
|
|
39,979 |
|
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|
40,891 |
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|
|
118,595 |
|
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|
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: |
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Advertising contra revenue |
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5,350 |
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6,596 |
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16,460 |
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18,908 |
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Circulation contra revenue |
|
|
113 |
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|
106 |
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|
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: |
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Advertising contra expense |
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5,350 |
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6,596 |
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|
16,460 |
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|
18,908 |
|
Circulation contra expense |
|
|
113 |
|
|
|
106 |
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|
273 |
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|
296 |
|
Less: |
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|
|
|
|
|
|
|
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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.
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