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OFFON

DALLASNEWS CORPORATION

(AHC)
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DallasNews : Announces Third Quarter 2021 Financial Results - Form 8-K

10/25/2021 | 04:46pm EST

DallasNewsCorporationAnnouncesThird Quarter 2021Financial Results



DALLAS- DallasNewsCorporation(Nasdaq:DALN)todayreportedthirdquarter2021net incomeof $1.6 million, or $0.30pershare, and an operating loss of $2.6 million. In the third quarter of2020, the Company reported a net loss of $0.1 million, or $(0.02) per share, and an operating loss of $2.4million.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, DallasNewsreported an operating lossadjusted for certain items ("adjusted operating loss") of $1.2million, a decline of $1.1million when compared to an adjusted operating loss of $0.1 millionreported 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 TheDallasMorningNews continues to invest in digital products and digital marketinginitiatives. These investments have the highest potential for long-term returns for the Company and its shareholders."

Third Quarter Results



Total revenue was $38.3million in the third quarter of 2021, anincrease of $0.6million or1.5percent when compared to thethird quarter of 2020.

DallasNewsCorporationAnnouncesThirdQuarter2021Financial Results

October 25, 2021

Page2

Revenue from advertising and marketing services, including print and digital revenues, was $18.1 million in the third quarter of 2021, an increase of $0.6million or 3.6percent when compared to the $17.5 million reportedforthe third quarter of 2020. The improvement is primarily due to a $0.9 million increasein digital advertising revenue.

Circulation revenue was $16.2million 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 printingrevenue.

Total consolidated operating expense in the third quarter of 2021, on a GAAP basis,was $40.9million, an increaseof $0.7million or 1.8percent compared to thethird 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 expensewas$46.2million, an increase of $5.2million or 12.7percent whencompared to $41.0 million of adjusted operating expense in the third quarter of2020. 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.

DallasNewsCorporationAnnouncesThirdQuarter2021Financial Results

October 25, 2021

Page3

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.

DallasNewsCorporationAnnouncesThirdQuarter2021Financial Results

October 25, 2021

Page4

Non-GAAPFinancialMeasures





Reconciliationsof operating loss to adjusted operating loss, total net operating revenue to adjusted operating revenue,and total operating costs and expense to adjusted operating expense areincludedin the exhibits to this release.

DallasNewsCorporationAnnouncesThirdQuarter 2021Financial Results

October 25, 2021

Page5

Financial Results Conference Call





DallasNews Corporation will conduct a conference call on Tuesday, October26,2021, at 9:00 a.m. CDT to discuss financial results. The conference call will be available via webcast by accessing the Company's website atinvestor.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 October26, 2021 until 11:59 p.m. CDT on November1, 2021. The access code for the replay is 2131223.

DallasNewsCorporationAnnouncesThirdQuarter 2021Financial Results

October 25, 2021

Page6

AboutDallasNewsCorporation





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 theCompany'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 January1, 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'sbusiness 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.

Disclaimer

Dallasnews Corporation published this content on 25 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 October 2021 20:45:20 UTC.


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Financials (USD)
Sales 2020 154 M - -
Net income 2020 -6,87 M - -
Net cash 2020 17,8 M - -
P/E ratio 2020 -4,70x
Yield 2020 15,9%
Capitalization 35,0 M 35,0 M -
EV / Sales 2019 0,20x
EV / Sales 2020 0,09x
Nbr of Employees 743
Free-Float 76,7%
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Managers and Directors
Robert William Decherd Chairman, President & Chief Executive Officer
Kathryn Mary Murray Chief Financial Officer, Treasurer & EVP
Ronald D. McCray Independent Director
Louis E. Caldera Independent Director
John A. Beckert Lead Independent Director
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