DallasNews Corporation (Nasdaq: DALN) today reported a third
quarter 2023 net loss of $1.4 million, or
$(0.26) per share, and an operating loss of $1.6 million.
In the third quarter of 2022, the Company reported a net loss of
$2.6 million, or $(0.48) per share, and an operating loss
of $2.3 million.
For the third quarter of 2023, on a non-GAAP basis, DallasNews
reported an operating loss adjusted for certain items (“adjusted
operating loss”) of $0.9 million, an improvement of
$0.7 million or 44.8 percent when compared to an adjusted
operating loss of $1.6 million reported in the third quarter
of 2022. The improvement is primarily due to expense savings of
$3.9 million, partially offset by a total revenue decline of
$3.2 million.
Grant Moise, Chief Executive Officer, said, “In 2023, we have
experienced mixed revenue results. Core print advertising revenue,
excluding the shared mail program we discontinued August 31,
2023, has outperformed our expectations, and digital marketing
services have been slower than expected. In the third quarter, we
announced our voluntary severance offering to align our expenses
with these new revenue trends as we enter 2024. On the journalism
side of the business, our 30-day series on fentanyl entitled
‘Deadly Fake’ was one of the most ambitious projects our
newsroom has taken on in years. The audience results from the
series were impressive, and it further positioned The News as
a nationally renowned newsroom.”
Third Quarter Results
Total revenue was $34.5 million in the third quarter of
2023, a decrease of $3.2 million or 8.5 percent when
compared to the third quarter of 2022.
Revenue from advertising and marketing services, including print
and digital revenues, was $14.7 million in the third quarter
of 2023, a decrease of $2.8 million or 16.1 percent when
compared to the $17.5 million reported for the third quarter
of 2022. The decline is primarily due to a $2.0 million or
18.0 percent decrease in print advertising revenue, driven by
a $1.8 million or 36.8 percent reduction in preprint
advertising revenue resulting from the Company’s strategic decision
to exit its shared mail program to deliver weekly preprints and
inserts.
Circulation revenue was $16.2 million in the third quarter
of 2023, flat when compared to the third quarter of 2022. The
digital-only subscription revenue increase of $0.7 million or
21.4 percent mostly offset the print circulation revenue
decline of $0.8 million or 6.1 percent.
Printing, distribution and other revenue was $3.6 million,
a decrease of $0.3 million or 8.3 percent when compared
to the third quarter of 2022, primarily due to a decline in
commercial printing revenue.
Total consolidated operating expense in the third quarter of
2023, on a GAAP basis, was $36.1 million, an improvement of
$3.9 million or 9.7 percent when compared to the third
quarter of 2022. The improvement is primarily due to expense
savings of $1.7 million in distribution, $0.9 million in
outside services and $0.8 million in newsprint.
On a non-GAAP basis, adjusted operating expense was
$35.4 million, an improvement of $3.9 million or
9.9 percent when compared to the third quarter of 2022.
As of September 30, 2023, the Company had 608 employees, a
decrease of 60 full-time equivalents, or 9.0 percent, when
compared to the prior year period. Cash and cash equivalents along
with short-term investments were $24.5 million and the Company
had no debt.
Non-GAAP Financial
Measures
Reconciliations of operating loss to adjusted operating loss 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 24, 2023, 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 1-844-291-5495
and enter the following access code when prompted: 664314. A replay
line will be available at 1-866-207-1041 from 12:00 p.m. CDT on
October 24, 2023 until 11:59 p.m. CDT on
October 30, 2023. The access code for the replay is
5834196.
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 (the “Company”) business outlook or future economic
performance, revenues, expenses, cash balance, investments,
business initiatives, working capital, 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. Words such as “anticipate,”
“assume,” “believe,” “can,” “could,” “estimate,” “forecast,”
“intend,” “expect,” “may,” “project,” “plan,” “seek,” “should,”
“target,” “will,” “would” and their opposites and similar
expressions are intended to identify forward-looking statements.
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 and distribution prices; program costs; the
success of the Company’s digital strategy; labor relations;
cybersecurity incidents; and technological obsolescence. Among
other risks, there can be no guarantee that the board of directors
will approve a quarterly dividend in future quarters or that our
financial projections are accurate, 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 Murray214-977-8869Kmurray@dallasnews.com
DallasNews Corporation and
SubsidiariesConsolidated Statements of
Operations
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
In thousands, except share and per share amounts
(unaudited) |
2023 |
|
2022 |
|
2023 |
|
2022 |
Net Operating Revenue: |
|
|
|
|
|
|
|
|
|
|
|
Advertising and marketing services |
$ |
14,699 |
|
|
$ |
17,525 |
|
|
$ |
46,231 |
|
|
$ |
51,246 |
|
Circulation |
|
16,194 |
|
|
|
16,230 |
|
|
|
48,201 |
|
|
|
48,576 |
|
Printing, distribution and other |
|
3,606 |
|
|
|
3,933 |
|
|
|
11,281 |
|
|
|
11,726 |
|
Total net operating revenue |
|
34,499 |
|
|
|
37,688 |
|
|
|
105,713 |
|
|
|
111,548 |
|
Operating Costs and
Expense: |
|
|
|
|
|
|
|
|
|
|
|
Employee compensation and benefits |
|
16,565 |
|
|
|
16,428 |
|
|
|
51,174 |
|
|
|
49,642 |
|
Other production, distribution and operating costs |
|
16,778 |
|
|
|
19,691 |
|
|
|
52,099 |
|
|
|
58,665 |
|
Newsprint, ink and other supplies |
|
2,382 |
|
|
|
3,161 |
|
|
|
6,912 |
|
|
|
8,059 |
|
Depreciation |
|
388 |
|
|
|
699 |
|
|
|
1,118 |
|
|
|
2,127 |
|
Asset impairments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
102 |
|
Total operating costs and expense |
|
36,113 |
|
|
|
39,979 |
|
|
|
111,303 |
|
|
|
118,595 |
|
Operating loss |
|
(1,614 |
) |
|
|
(2,291 |
) |
|
|
(5,590 |
) |
|
|
(7,047 |
) |
Other income (loss), net |
|
342 |
|
|
|
(94 |
) |
|
|
1,082 |
|
|
|
(48 |
) |
Loss Before Income
Taxes |
|
(1,272 |
) |
|
|
(2,385 |
) |
|
|
(4,508 |
) |
|
|
(7,095 |
) |
Income tax provision |
|
139 |
|
|
|
201 |
|
|
|
397 |
|
|
|
550 |
|
Net Loss |
$ |
(1,411 |
) |
|
$ |
(2,586 |
) |
|
$ |
(4,905 |
) |
|
$ |
(7,645 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Per Share
Basis (1) |
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.26 |
) |
|
$ |
(0.48 |
) |
|
$ |
(0.92 |
) |
|
$ |
(1.43 |
) |
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 September 30, 2023 and 2022,
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
SubsidiariesConsolidated Balance
Sheets
|
September 30, |
|
December 31, |
In thousands (unaudited) |
2023 |
|
2022 |
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
13,782 |
|
|
$ |
27,825 |
|
Short-term investments |
|
10,672 |
|
|
|
— |
|
Accounts receivable, net |
|
10,407 |
|
|
|
14,023 |
|
Other current assets |
|
6,019 |
|
|
|
6,077 |
|
Total current assets |
|
40,880 |
|
|
|
47,925 |
|
Property, plant and equipment, net |
|
7,294 |
|
|
|
7,438 |
|
Operating lease right-of-use assets |
|
16,439 |
|
|
|
14,811 |
|
Deferred income taxes, net |
|
304 |
|
|
|
282 |
|
Other assets |
|
1,795 |
|
|
|
1,809 |
|
Total assets |
$ |
66,712 |
|
|
$ |
72,265 |
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
$ |
4,413 |
|
|
$ |
5,041 |
|
Accrued compensation and other current liabilities |
|
9,966 |
|
|
|
8,214 |
|
Contract liabilities |
|
10,420 |
|
|
|
9,504 |
|
Total current liabilities |
|
24,799 |
|
|
|
22,759 |
|
Long-term pension liabilities |
|
18,778 |
|
|
|
19,455 |
|
Long-term operating lease liabilities |
|
17,251 |
|
|
|
16,546 |
|
Other liabilities |
|
1,026 |
|
|
|
1,142 |
|
Total liabilities |
|
61,854 |
|
|
|
59,902 |
|
Total shareholders' equity |
|
4,858 |
|
|
|
12,363 |
|
Total liabilities and shareholders’ equity |
$ |
66,712 |
|
|
$ |
72,265 |
|
|
|
|
|
|
|
|
|
DallasNews Corporation - Non-GAAP
Financial MeasuresReconciliation of Operating Loss
to Adjusted Operating Loss
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
In thousands (unaudited) |
2023 |
|
2022 |
|
2023 |
|
2022 |
Total net operating revenue |
$ |
34,499 |
|
|
$ |
37,688 |
|
|
$ |
105,713 |
|
|
$ |
111,548 |
|
Total operating costs and expense |
|
36,113 |
|
|
|
39,979 |
|
|
|
111,303 |
|
|
|
118,595 |
|
Operating Loss |
$ |
(1,614 |
) |
|
$ |
(2,291 |
) |
|
$ |
(5,590 |
) |
|
$ |
(7,047 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expense |
$ |
36,113 |
|
|
$ |
39,979 |
|
|
$ |
111,303 |
|
|
$ |
118,595 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
388 |
|
|
|
699 |
|
|
|
1,118 |
|
|
|
2,127 |
|
Severance expense |
|
336 |
|
|
|
(19 |
) |
|
|
1,161 |
|
|
|
541 |
|
Asset impairments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
102 |
|
Adjusted Operating Expense |
$ |
35,389 |
|
|
$ |
39,299 |
|
|
$ |
109,024 |
|
|
$ |
115,825 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net operating revenue |
$ |
34,499 |
|
|
$ |
37,688 |
|
|
$ |
105,713 |
|
|
$ |
111,548 |
|
Adjusted operating expense |
|
35,389 |
|
|
|
39,299 |
|
|
|
109,024 |
|
|
|
115,825 |
|
Adjusted Operating Loss |
$ |
(890 |
) |
|
$ |
(1,611 |
) |
|
$ |
(3,311 |
) |
|
$ |
(4,277 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company calculates adjusted operating income (loss) by
adjusting operating income (loss) to exclude depreciation,
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.
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.
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