DallasNews Corporation Announces Second Quarter 2022 Financial Results

DALLAS, July 26, 2022 (GLOBE NEWSWIRE) -- DallasNews Corporation (Nasdaq: DALN) today reported a second quarter 2022 net loss of $2.4 million, or $(0.45) per share, and an operating loss of $2.3 million. In the second quarter of 2021, the Company reported a net loss of $1.5 million, or $(0.28) per share, and an operating loss of $3.0 million.

For the second quarter of 2022, on a non-GAAP basis, DallasNews reported an operating loss adjusted for certain items (“adjusted operating loss”) of $1.0 million, a $0.5 million greater loss when compared to an adjusted operating loss of $0.6 million reported for the second quarter of 2021. The decrease is primarily due to a decline in total revenue of $1.1 million, partially offset by expense improvements of $0.5 million in distribution and $0.3 million in employee compensation and benefits.

Grant Moise, Chief Executive Officer, said, “The second quarter showed steady progress in our pursuit to become a sustainably profitable digital media company and DallasNews’ financial performance was in line with our internal expectations. We continue to invest in our growing digital business, while efficiently managing our more mature print business which continues to experience headwinds from significantly higher newsprint and fuel costs. Medium Giant had a strong quarter closing new business, while the subscription side of our business continued to grow year-over-year.”

Second Quarter Results

Total revenue was $37.6 million in the second quarter of 2022, a decrease of $1.1 million or 2.8 percent when compared to the second quarter of 2021.

Revenue from advertising and marketing services, including print and digital revenues, was $17.5 million in the second quarter of 2022, a decrease of $1.1 million or 6.2 percent when compared to the $18.6 million reported for the second quarter of 2021. The decline is primarily due to a $0.8 million decrease in print advertising revenue.

Circulation revenue was $16.3 million in the second quarter of 2022, an increase of $0.2 million when compared to the $16.1 million reported for the second quarter of 2021. Digital-only subscription revenue increased $1.0 million or 42.9 percent, partially offset by a print circulation decline of $0.8 million or 5.9 percent.

Printing, distribution and other revenue decreased $0.1 million, or 2.7 percent, to $3.9 million, primarily due to a slight reduction in commercial printing and distribution revenue.

Total consolidated operating expense in the second quarter of 2022, on a GAAP basis, was $39.9 million, an improvement of $1.8 million or 4.4 percent compared to the second quarter of 2021. The improvement is primarily due to decreases of $1.3 million in employee compensation and benefits expense and $0.5 million in distribution expense.

In the second quarter of 2022, on a non-GAAP basis, adjusted operating expense was $43.9 million, an improvement of $1.7 million or 3.7 percent when compared to $45.6 million of adjusted operating expense in the second quarter of 2021.

As of June 30, 2022, the Company had 671 employees, a decrease of 53 full-time equivalents, or 7.3 percent, when compared to the prior year period. Cash and cash equivalents were $26.6 million and the Company had no debt.

The Company expects to receive cash proceeds of $22.5 million on July 29, 2022, from the collection of the Charter DMN Holdings, LP note receivable, related to the sale of the Company’s former headquarters.

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, July 27, 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 1-844-291-5489 and enter the following access code when prompted: 9691263. A replay line will be available at 1-866-207-1041 from 12:00 p.m. CDT on July 27, 2022 until 11:59 p.m. CDT on August 2, 2022. The access code for the replay is 9944335.

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, 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. 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.

Contact:
Katy Murray
214-977-8869

DallasNews Corporation and Subsidiaries
Consolidated Statements of Operations

		Three Months Ended June 30,								Six Months Ended June 30,
In thousands, except share and per share amounts (unaudited)		2022				2021				2022				2021
Net Operating Revenue:
Advertising and marketing services		$	17,457			$	18,601			$	33,721			$	35,370
Circulation			16,250				16,093				32,346				32,115
Printing, distribution and other			3,866				3,974				7,793				7,998
Total net operating revenue			37,573				38,668				73,860				75,483
Operating Costs and Expense:
Employee compensation and benefits			16,804				18,116				33,214				36,063
Other production, distribution and operating costs			19,725				20,151				38,974				39,241
Newsprint, ink and other supplies			2,504				2,378				4,898				4,719
Depreciation			716				1,035				1,428				2,109
Amortization			—				—				—				64
Gain on sale/disposal of assets, net			—				—				—				(1	)
Asset impairments			102				—				102				—
Total operating costs and expense			39,851				41,680				78,616				82,195
Operating loss			(2,278	)			(3,012	)			(4,756	)			(6,712	)
Other income, net			28				1,613				46				2,867
Loss Before Income Taxes			(2,250	)			(1,399	)			(4,710	)			(3,845	)
Income tax provision			165				83				349				402
Net Loss		$	(2,415	)		$	(1,482	)		$	(5,059	)		$	(4,247	)
Per Share Basis (1)
Net loss
Basic		$	(0.45	)		$	(0.28	)		$	(0.95	)		$	(0.79	)
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 June 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

		June 30,				December 31,
In thousands (unaudited)		2022				2021
Assets
Current assets:
Cash and cash equivalents		$	26,560			$	32,439
Accounts receivable, net			13,600				16,012
Notes receivable			22,400				22,400
Other current assets			6,103				5,677
Total current assets			68,663				76,528
Property, plant and equipment, net			8,091				8,822
Operating lease right-of-use assets			15,655				17,648
Deferred income taxes, net			210				257
Other assets			2,200				2,197
Total assets		$	94,819			$	105,452
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable		$	5,873			$	7,821
Accrued compensation and other current liabilities			9,397				9,505
Contract liabilities			10,683				10,592
Total current liabilities			25,953				27,918
Long-term pension liabilities			14,456				14,275
Long-term operating lease liabilities			16,864				19,181
Other liabilities			1,480				1,501
Total liabilities			58,753				62,875
Total shareholders' equity			36,066				42,577
Total liabilities and shareholders’ equity		$	94,819			$	105,452

DallasNews Corporation - Non-GAAP Financial Measures
Reconciliation of Operating Loss to Adjusted Operating Loss

		Three Months Ended June 30,								Six Months Ended June 30,
In thousands (unaudited)		2022				2021				2022				2021
Total net operating revenue		$	37,573			$	38,668			$	73,860			$	75,483
Total operating costs and expense			39,851				41,680				78,616				82,195
Operating Loss		$	(2,278	)		$	(3,012	)		$	(4,756	)		$	(6,712	)
Total net operating revenue		$	37,573			$	38,668			$	73,860			$	75,483
Addback:
Advertising contra revenue			5,189				6,234				11,110				12,312
Circulation contra revenue			84				95				160				190
Adjusted Operating Revenue		$	42,846			$	44,997			$	85,130			$	87,985
Total operating costs and expense		$	39,851			$	41,680			$	78,616			$	82,195
Addback:
Advertising contra expense			5,189				6,234				11,110				12,312
Circulation contra expense			84				95				160				190
Less:
Depreciation			716				1,035				1,428				2,109
Amortization			—				—				—				64
Severance expense			428				1,398				560				1,606
Gain on sale/disposal of assets, net			—				—				—				(1	)
Asset impairments			102				—				102				—
Adjusted Operating Expense		$	43,878			$	45,576			$	87,796			$	90,919
Adjusted operating revenue		$	42,846			$	44,997			$	85,130			$	87,985
Adjusted operating expense			43,878				45,576				87,796				90,919
Adjusted Operating Loss		$	(1,032	)		$	(579	)		$	(2,666	)		$	(2,934	)

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.