DallasNews Corporation Announces Third Quarter 2021 Financial Results

·9 min read

DALLAS, Oct. 25, 2021 (GLOBE NEWSWIRE) -- 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 Subsidiaries
Consolidated Statements of Operations

Three Months Ended September 30,

Nine Months Ended September 30,

In thousands, except share and per share amounts (unaudited)

2021

2020

2021

2020

Net Operating Revenue:

Advertising and marketing services

$

18,101

$

17,474

$

53,471

$

52,392

Circulation

16,157

16,111

48,272

48,248

Printing, distribution and other

4,053

4,157

12,051

12,860

Total net operating revenue

38,311

37,742

113,794

113,500

Operating Costs and Expense:

Employee compensation and benefits

17,131

16,499

53,194

52,512

Other production, distribution and operating costs

20,041

19,307

59,282

58,958

Newsprint, ink and other supplies

2,439

2,476

7,158

8,018

Depreciation

1,018

1,753

3,127

5,320

Amortization

63

64

191

Loss on sale/disposal of assets, net

30

61

29

56

Asset impairments

232

232

Total operating costs and expense

40,891

40,159

123,086

125,055

Operating loss

(2,580

)

(2,417

)

(9,292

)

(11,555

)

Other income, net

1,827

2,095

4,694

4,778

Loss Before Income Taxes

(753

)

(322

)

(4,598

)

(6,777

)

Income tax benefit

(2,384

)

(224

)

(1,982

)

(1,644

)

Net Income (Loss)

$

1,631

$

(98

)

$

(2,616

)

$

(5,133

)

Per Share Basis

Net income (loss)

Basic and diluted (1)

$

0.30

$

(0.02

)

$

(0.49

)

$

(0.96

)

Number of common shares used in the per share calculation:

Basic and diluted (1)

5,352,490

5,352,490

5,352,490

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 Subsidiaries
Consolidated Balance Sheets

September 30,

December 31,

In thousands (unaudited)

2021

2020

Assets

Current assets:

Cash and cash equivalents

$

34,659

$

42,015

Accounts receivable, net

14,249

16,562

Notes receivable

22,400

22,775

Other current assets

7,417

6,754

Total current assets

78,725

88,106

Property, plant and equipment, net

9,208

11,959

Operating lease right-of-use assets

18,219

20,406

Intangible assets, net

64

Deferred income taxes, net

102

76

Other assets

2,203

2,604

Total assets

$

108,457

$

123,215

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable

$

6,197

$

7,759

Accrued compensation and other current liabilities

12,151

10,829

Contract liabilities

12,139

12,896

Total current liabilities

30,487

31,484

Long-term pension liabilities

14,317

18,520

Long-term operating lease liabilities

19,863

21,890

Other liabilities

1,487

4,913

Total liabilities

66,154

76,807

Total shareholders' equity

42,303

46,408

Total liabilities and shareholders’ equity

$

108,457

$

123,215


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)

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 Murray
214-977-8869


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