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DallasNews Corporation Announces Second Quarter 2022 Financial Results

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DallasNews Corporation
DallasNews Corporation

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.