DallasNews Corporation Announces Fourth Quarter and Full Year 2021 Financial Results

Rhea-AI Summary

DallasNews Corporation (Nasdaq: DALN) reported a fourth quarter 2021 net income of $2.1 million, or $0.40 per share, compared to a net loss of $1.7 million in Q4 2020. The operating loss for Q4 2021 was $0.7 million, improved from a $4.0 million loss a year prior. For 2021, the net loss was $0.5 million, an improvement over a $6.9 million loss in 2020. Key revenue metrics showed a slight increase in digital-only subscription revenue by 48.5%. The total revenue for 2021 was $154.4 million, up marginally from 2020.

Positive

• Fourth quarter 2021 net income of $2.1 million versus a net loss of $1.7 million in Q4 2020.
• Digital-only subscription revenue increased by 48.5% in Q4 2021.
• Full year 2021 total revenue of $154.4 million, a slight increase from 2020.

Negative

• Operating loss of $0.7 million in Q4 2021 compared to a $4.0 million loss in Q4 2020.
• Full year 2021 net loss of $0.5 million, although improved from a $6.9 million loss in 2020.
• Decline in print circulation revenue by 6.2% in Q4 2021.

DALLAS, March 07, 2022 (GLOBE NEWSWIRE) -- DallasNews Corporation (Nasdaq: DALN) today reported fourth quarter 2021 net income of $2.1 million, or $0.40 per share, and an operating loss of $0.7 million. The fourth quarter 2021 net income includes a non-cash pension benefit of $1.0 million and cash proceeds of $1.3 million related to the sale of inactive IP addresses. In the fourth quarter of 2020, the Company reported a net loss of $1.7 million, or $(0.32) per share, and an operating loss of $4.0 million.

For the fourth quarter of 2021, on a non-GAAP basis, DallasNews reported operating income adjusted for certain items (“adjusted operating income (loss)”) of $0.3 million, a decrease of $0.2 million when compared to adjusted operating income of $0.5 million reported in the fourth quarter of 2020. The decline is primarily due to expense increases of $0.6 million in newsprint, $0.4 million in outside services, and $0.2 million in distribution, and an operating revenue decline of $0.2 million, partially offset by a $1.3 million improvement in employee compensation and benefits expense.

For the full year 2021, the Company reported a net loss of $0.5 million, or $(0.09) per share, and an operating loss of $10.0 million. The 2021 net loss includes a non-cash pension benefit of $4.2 million, a non-cash tax benefit of $2.6 million related to the release of an uncertain tax reserve and cash proceeds of $1.3 million related to the sale of inactive IP addresses. For the full year 2020, the Company reported a net loss of $6.9 million, or $(1.28) per share, and an operating loss of $15.6 million.

For the full year 2021, on a non-GAAP basis, the Company reported an adjusted operating loss of $3.8 million, an improvement of $1.1 million when compared to an adjusted operating loss of $4.9 million reported for the full year 2020. The improvement is primarily due to a decrease of $1.8 million in employee compensation and benefits expense, partially offset by an increase of $0.8 million in advertising and promotion expense.

Robert W. Decherd, chairman, president and Chief Executive Officer, said, “DallasNews Corporation continued to make progress in 2021 toward being a sustainably profitable digital news and information company. Our management team and every employee contributed to this progress during another trying year caused by the pandemic and related factors. The directors and I express our thanks and appreciation to all.

“DALN experienced important growth in digital membership volume and pricing during 2021, while print circulation and print subscription pricing held up well. The resultant increase in digital membership revenue and total subscription revenue are important indicators that the Company is moving in the right direction. We are also pleased with the inroads Medium Giant is making in developing a meaningful revenue stream in its agency business.

“In parallel with these business activities, The Dallas Morning News continued to excel in its journalistic endeavors throughout 2021 and in the vital matter of diversity, equity and inclusion. At the corporate level, the Company's name was changed in 2021 to reflect our long-standing values and DALN began trading on the Nasdaq exchange midyear.

“DALN continues to be advantaged by its strong balance sheet and the Board regularly reviews the Company's cash position in relation to shareholder interests and the pension plans.”

Fourth Quarter Results

Total revenue was $40.6 million in the fourth quarter of 2021, a decrease of $0.2 million or 0.5 percent when compared to the fourth quarter of 2020.

Revenue from advertising and marketing services, including print and digital revenues, was $19.8 million in the fourth quarter of 2021, flat when compared to the fourth quarter of 2020. Digital advertising revenue improved $0.3 million or 4.8 percent, offset by a print advertising decline of $0.3 million or 2.6 percent.

Circulation revenue was $16.7 million in the fourth quarter of 2021, flat when compared to the fourth quarter of 2020. Digital-only subscription revenue increased $0.9 million or 48.5 percent, offset by a print circulation decline of $0.9 million or 6.2 percent.

Printing, distribution and other revenue decreased $0.2 million, or 4.2 percent, to $4.1 million, primarily due to a reduction in commercial printing revenue.

Total consolidated operating expense in the fourth quarter of 2021, on a GAAP basis, was $41.2 million, an improvement of $3.6 million or 8.0 percent compared to the fourth quarter of 2020, primarily due to expense decreases of $3.4 million in employee compensation and benefits, and $0.8 million in depreciation, partially offset by increases of $0.6 million in newsprint expense and $0.4 million in outside services expense.

In the fourth quarter of 2021, on a non-GAAP basis, adjusted operating expense was $47.9 million, an increase of $1.8 million or 3.9 percent when compared to $46.1 million of adjusted operating expense in the fourth quarter of 2020. The increase is primarily due to $1.9 million in contra expense, which includes agency fees related to digital advertising and marketing services.

Full Year Results

Total revenue was $154.4 million for the full year 2021, a slight increase of $0.1 million when compared to the full year 2020.

Revenue from advertising and marketing services, including print and digital revenues, was $73.3 million in 2021, an increase of $1.1 million or 1.5 percent when compared to the $72.2 million reported for the full year 2020. The improvement is due to a $1.2 million or 2.5 percent increase in print advertising revenue.

Circulation revenue was $64.9 million in the full year 2021, flat when compared to the full year 2020. Digital-only subscription revenue increased $3.1 million or 47.3 percent, offset by a print circulation decline of $3.1 million or 5.3 percent.

Printing, distribution and other revenue decreased $1.0 million, or 5.8 percent, to $16.2 million, primarily due to a reduction in commercial printing and distribution revenue.

Total consolidated operating expense for the full year 2021, on a GAAP basis, was $164.3 million, an improvement of $5.5 million or 3.3 percent compared to the full year 2020. The improvement is primarily due to expense decreases of $3.0 million in depreciation, $2.7 million in employee compensation and benefits, and $0.3 million in newsprint, partially offset by increases of $0.8 million in advertising and promotion expense, and $0.6 million in distribution expense.

For the full year 2021, on a non-GAAP basis, adjusted operating expense was $185.0 million, an increase of $14.5 million or 8.5 percent when compared to $170.6 million of adjusted operating expense in the full year 2020. The increase is primarily due to $15.5 million in contra expense.

As of December 31, 2021, the Company had 656 employees, a decrease of 87 full-time equivalents, or 11.7 percent, when compared to the prior year period. Cash and cash equivalents were $32.4 million and the Company had no debt.

Non-GAAP Financial Measures

Reconciliations of operating loss to adjusted operating income (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, March 8, 2022, at 9:00 a.m. CST 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: 215776. A replay line will be available at 1-866-207-1041 from 12:00 p.m. CST on March 8, 2022 until 11:59 p.m. CDT on March 14, 2022. The access code for the replay is 7869676.

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 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 December 31,								Years Ended December 31,
In thousands, except share and per share amounts (unaudited)	2021				2020				2021				2020
Net Operating Revenue:
Advertising and marketing services	$	19,800			$	19,822			$	73,271			$	72,214
Circulation		16,671				16,687				64,943				64,935
Printing, distribution and other		4,109				4,290				16,160				17,150
Total net operating revenue		40,580				40,799				154,374				154,299
Operating Costs and Expense:
Employee compensation and benefits		15,884				19,260				69,078				71,772
Other production, distribution and operating costs		21,759				21,050				81,041				80,008
Newsprint, ink and other supplies		2,720				2,150				9,878				10,168
Depreciation		875				1,696				4,002				7,016
Amortization		—				64				64				255
Loss on sale/disposal of assets, net		—				34				29				90
Asset impairments		—				563				232				563
Total operating costs and expense		41,238				44,817				164,324				169,872
Operating loss		(658	)			(4,018	)			(9,950	)			(15,573	)
Other income, net		2,638				2,236				7,332				7,014
Income (Loss) Before Income Taxes		1,980				(1,782	)			(2,618	)			(8,559	)
Income tax benefit		(169	)			(43	)			(2,151	)			(1,687	)
Net Income (Loss)	$	2,149			$	(1,739	)		$	(467	)		$	(6,872	)
Per Share Basis
Net income (loss)
Basic and diluted(1)	$	0.40			$	(0.32	)		$	(0.09	)		$	(1.28	)
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 on June 9, 2021, in connection with the reverse stock split.

DallasNews Corporation and Subsidiaries
Consolidated Balance Sheets

	December 31,			December 31,
In thousands (unaudited)	2021			2020
Assets
Current assets:
Cash and cash equivalents	$	32,439		$	42,015
Accounts receivable, net		16,012			16,562
Notes receivable		22,400			22,775
Other current assets		5,677			6,754
Total current assets		76,528			88,106
Property, plant and equipment, net		8,822			11,959
Operating lease right-of-use assets		17,648			20,406
Intangible assets, net		—			64
Deferred income taxes, net		257			76
Other assets		2,197			2,604
Total assets	$	105,452		$	123,215
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	7,821		$	7,759
Accrued compensation and other current liabilities		9,505			10,829
Contract liabilities		10,592			12,896
Total current liabilities		27,918			31,484
Long-term pension liabilities		14,275			18,520
Long-term operating lease liabilities		19,181			21,890
Other liabilities		1,501			4,913
Total liabilities		62,875			76,807
Total shareholders' equity		42,577			46,408
Total liabilities and shareholders’ equity	$	105,452		$	123,215

DallasNews Corporation - Non-GAAP Financial Measures
Reconciliation of Operating Loss to Adjusted Operating Income (Loss)

	Three Months Ended December 31,								Years Ended December 31,
In thousands (unaudited)	2021				2020				2021				2020
Total net operating revenue	$	40,580			$	40,799			$	154,374			$	154,299
Total operating costs and expense		41,238				44,817				164,324				169,872
Operating Loss	$	(658	)		$	(4,018	)		$	(9,950	)		$	(15,573	)
Total net operating revenue	$	40,580			$	40,799			$	154,374			$	154,299
Addback:
Advertising contra revenue		7,550				5,643				26,458				11,043
Circulation contra revenue		88				110				384				315
Adjusted Operating Revenue	$	48,218			$	46,552			$	181,216			$	165,657
Total operating costs and expense	$	41,238			$	44,817			$	164,324			$	169,872
Addback:
Advertising contra expense		7,550				5,643				26,458				11,043
Circulation contra expense		88				110				384				315
Less:
Depreciation		875				1,696				4,002				7,016
Amortization		—				64				64				255
Severance expense		95				2,127				1,816				2,748
Loss on sale/disposal of assets, net		—				34				29				90
Asset impairments		—				563				232				563
Adjusted Operating Expense	$	47,906			$	46,086			$	185,023			$	170,558
Adjusted operating revenue	$	48,218			$	46,552			$	181,216			$	165,657
Adjusted operating expense		47,906				46,086				185,023				170,558
Adjusted Operating Income (Loss)	$	312			$	466			$	(3,807	)		$	(4,901	)

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.

Advertising contra represents agency fees related to digital advertising and marketing services. Circulation contra represents revenue recorded for the grace period of expired home delivery subscriptions. 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

 

FAQ

What were DallasNews Corporation's fourth quarter 2021 earnings results?

DallasNews Corporation reported a net income of $2.1 million or $0.40 per share for Q4 2021.

How did DallasNews Corporation perform in the full year 2021?

For the full year 2021, DallasNews reported a net loss of $0.5 million, improving from a $6.9 million loss in 2020.

What was the main driver of revenue growth for DallasNews Corporation in 2021?

The main driver of revenue growth was a 48.5% increase in digital-only subscription revenue.

How did advertising revenue change for DallasNews Corporation in the fourth quarter of 2021?

In Q4 2021, total advertising and marketing services revenue was $19.8 million, flat compared to Q4 2020.

What are the future growth prospects for DallasNews Corporation?

DallasNews aims to enhance profitability by focusing on digital membership growth and diversifying revenue streams.