DallasNews Corporation Announces Second Quarter 2021 Financial Results

July 26, 2021 at 4:30 PM EDT

DALLAS, July 26, 2021 (GLOBE NEWSWIRE) -- DallasNews Corporation (Nasdaq: DALN) today reported a second quarter 2021 net loss of $1.5 million, or $(0.28) per share, and an operating loss of $3.0 million. In the second quarter of 2020, the Company reported a net loss of $3.4 million, or $(0.64) per share, and an operating loss of $4.4 million. The 2021 net loss includes severance expense of $1.4 million related to the previously announced voluntary severance offer.

For the second quarter of 2021, on a non-GAAP basis, DallasNews reported an operating loss adjusted for certain items (“adjusted operating loss”) of $0.6 million, an improvement of $1.9 million when compared to an adjusted operating loss of $2.5 million reported in the second quarter of 2020.

Robert W. Decherd, chairman, president and Chief Executive Officer, said, “We continue to see signs of progress across DallasNews’ businesses and are encouraged by the surprisingly rapid pace at which the United States and Texas are returning to pre-pandemic levels of activity. The Company’s primary objective of becoming a sustainably profitable digital news and information provider remains paramount to the Board and management. Growth in total membership revenue in the second quarter extends a trend that has been in evidence now for more than a year. The addition of Katrice Hardy as Executive Editor of The Dallas Morning News will significantly advance the Company’s strategy. With almost $39 million in cash and no debt, DallasNews Corporation continues to occupy a highly-preferred position in the newspaper and digital media space.”

Second Quarter Results

Total revenue was $38.7 million in the second quarter of 2021, an increase of $3.3 million or 9.2 percent when compared to the second quarter of 2020.

Revenue from advertising and marketing services, including print and digital revenues, was $18.6 million in the second quarter of 2021, an increase of $3.0 million or 19.3 percent when compared to the $15.6 million reported for the second quarter of 2020. The improvement is due primarily to a $3.4 million increase in print advertising revenue.

Circulation revenue was $16.1 million, an increase of $0.4 million or 2.4 percent when compared to the second quarter of 2020. Home delivery revenue decreased 2.4 percent and single copy revenue decreased 7.6 percent, offset by an increase of $0.8 million or 52.3 percent in digital-only subscription revenue.

Printing, distribution and other revenue decreased $0.1 million, or 3.1 percent, to $4.0 million, primarily due to a reduction in commercial printing revenue.

Total consolidated operating expense in the second quarter of 2021, on a GAAP basis, was $41.7 million, an increase of $1.9 million or 4.7 percent compared to the second quarter of 2020. The change is primarily due to expense increases of $1.1 million in employee compensation and benefits related to the voluntary severance offer; $1.1 million in advertising and promotion; and $0.9 million in distribution. These increases were partially offset by expense decreases of $0.8 million in depreciation and $0.3 million in outside services.

In the second quarter of 2021, on a non-GAAP basis, adjusted operating expense was $45.6 million, an increase of $6.7 million or 17.1 percent when compared to $38.9 million of adjusted operating expense in the second quarter of 2020. The change is primarily due to increases of $5.3 million in contra expense and $1.1 million in advertising and promotion expense.

As of June 30, 2021, the Company had 724 employees, a decrease of 45 full-time equivalents, or 5.9 percent, when compared to the prior year period. Cash and cash equivalents were $37.8 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, July 27, 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 1-844-291-6362 and enter the following access code when prompted: 8079115. A replay line will be available at 1-866-207-1041 from 12:00 p.m. CDT on July 27, 2021 until 11:59 p.m. CDT on August 2, 2021. The access code for the replay is 9670389.

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 public health crisis. 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 June 30,   Six Months Ended June 30,
In thousands, except share and per share amounts (unaudited) 2021
  2020
  2021
  2020
Net Operating Revenue:                      
Advertising and marketing services $ 18,601     $ 15,591     $ 35,370     $ 34,918  
Circulation   16,093       15,723       32,115       32,137  
Printing, distribution and other   3,974       4,101       7,998       8,703  
Total net operating revenue   38,668       35,415       75,483       75,758  
Operating Costs and Expense:                      
Employee compensation and benefits   18,116       16,997       36,063       36,013  
Other production, distribution and operating costs   20,151       18,659       39,241       39,651  
Newsprint, ink and other supplies   2,378       2,271       4,719       5,542  
Depreciation   1,035       1,802       2,109       3,567  
Amortization         64       64       128  
Gain on sale/disposal of assets, net               (1 )     (5 )
Total operating costs and expense   41,680       39,793       82,195       84,896  
Operating loss   (3,012 )     (4,378 )     (6,712 )     (9,138 )
Other income, net   1,613       1,331       2,867       2,683  
Loss Before Income Taxes   (1,399 )     (3,047 )     (3,845 )     (6,455 )
Income tax provision (benefit)   83       367       402       (1,420 )
Net Loss $ (1,482 )   $ (3,414 )   $ (4,247 )   $ (5,035 )
                       
Per Share Basis                      
Net loss                      
Basic and diluted (1) $ (0.28 )   $ (0.64 )   $ (0.79 )   $ (0.94 )
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

           
           
  June 30,   December 31,
In thousands (unaudited) 2021   2020
Assets          
Current assets:          
Cash and cash equivalents $ 37,770   $ 42,015
Accounts receivable, net   14,585     16,562
Notes receivable   22,400     22,775
Other current assets   7,093     6,754
Total current assets   81,848     88,106
Property, plant and equipment, net   9,996     11,959
Operating lease right-of-use assets   19,112     20,406
Intangible assets, net       64
Deferred income taxes, net   94     76
Other assets   2,208     2,604
Total assets $ 113,258   $ 123,215
Liabilities and Shareholders’ Equity          
Current liabilities:          
Accounts payable $ 6,621   $ 7,759
Accrued compensation and other current liabilities   11,507     10,829
Contract liabilities   13,137     12,896
Total current liabilities   31,265     31,484
Long-term pension liabilities   15,718     18,520
Long-term operating lease liabilities   20,527     21,890
Other liabilities   4,580     4,913
Total liabilities   72,090     76,807
Total shareholders' equity   41,168     46,408
Total liabilities and shareholders’ equity $ 113,258   $ 123,215

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) 2021   2020   2021   2020
Total net operating revenue $ 38,668     $ 35,415     $ 75,483     $ 75,758  
Total operating costs and expense   41,680       39,793       82,195       84,896  
Operating Loss $ (3,012 )   $ (4,378 )   $ (6,712 )   $ (9,138 )
                       
Total net operating revenue $ 38,668     $ 35,415     $ 75,483     $ 75,758  
Addback:                      
Advertising contra revenue   6,234       934       12,312       2,388  
Circulation contra revenue   95       63       190       101  
Adjusted Operating Revenue $ 44,997     $ 36,412     $ 87,985     $ 78,247  
                       
Total operating costs and expense $ 41,680     $ 39,793     $ 82,195     $ 84,896  
Addback:                      
Advertising contra expense   6,234       934       12,312       2,388  
Circulation contra expense   95       63       190       101  
Less:                      
Depreciation   1,035       1,802       2,109       3,567  
Amortization         64       64       128  
Severance expense   1,398       17       1,606       203  
Gain on sale/disposal of assets, net               (1 )     (5 )
Adjusted Operating Expense $ 45,576     $ 38,907     $ 90,919     $ 83,492  
                       
Adjusted operating revenue $ 44,997     $ 36,412     $ 87,985     $ 78,247  
Adjusted operating expense   45,576       38,907       90,919       83,492  
Adjusted Operating Loss $ (579 )   $ (2,495 )   $ (2,934 )   $ (5,245 )

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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Source: DallasNews Corporation

Investor Relations
Katy Murray
Executive Vice President / Chief Financial Officer
DallasNews Corporation
214-977-8869

invest@dallasnews.com

DallasNews Corporation Headquarters
Mailing Address:
P.O. Box 224866
Dallas, Texas 75222-4866
Street Address:
1954 Commerce Street
Dallas, Texas 75201
214-977-8222
214-977-8285 (fax)