DallasNews Corporation Announces Second Quarter 2021 Financial Results

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