GlobeNewswire Inc | Jul 26, 2021 04:30PM EDT

July 26, 2021

DALLAS, July 26, 2021 (GLOBE NEWSWIRE) -- DallasNews Corporation (Nasdaq: DALN) today reported a second quarter2021 net loss of $1.5million, or $(0.28)per share, and an operating loss of $3.0million. In the second quarter of 2020, the Company reported a net loss of $3.4million, or $(0.64) per share, and an operating loss of $4.4million. The 2021 net loss includes severance expense of $1.4million 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 $0.6million, an improvement of $1.9million when compared to an adjusted operating loss of $2.5million 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 Companys 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 TheDallasMorningNews will significantly advance the Companys strategy. With almost $39million 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 $38.7million in the second quarter of 2021, an increase of $3.3million or 9.2percent when compared to the second quarter of 2020.

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

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

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

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

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

As of June 30, 2021, the Company had 724 employees, a decrease of 45 full-time equivalents, or 5.9percent, when compared to the prior year period. Cash and cash equivalents were $37.8million and the Company had no debt.

Non-GAAPFinancialMeasures

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, July27, 2021, at 9:00a.m. CDT to discuss financial results. The conference call will be available via webcast by accessing the Companys 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 July27, 2021 until 11:59 p.m. CDT on August2,2021. The access code for the replay is 9670389.

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 Corporations business outlook or future economic performance, revenues, expenses, and other financial andnon-financialitems that are not historical facts, including statements about the Companys 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 Companys control, andinclude 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 Companys Annual Report on Form10-Kand in the Companys 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 SubsidiariesConsolidated Statements of Operations

Three Months Ended June30, Six Months Ended June30,In thousands,except share and 2021 2020 2021 2020per share amounts(unaudited)Net Operating Revenue:Advertising andmarketing $ 18,601 $ 15,591 $ 35,370 $ 34,918 servicesCirculation 16,093 15,723 32,115 32,137 Printing,distribution and 3,974 4,101 7,998 8,703 otherTotal net 38,668 35,415 75,483 75,758 operating revenueOperating Costs and Expense:Employeecompensation and 18,116 16,997 36,063 36,013 benefitsOther production,distribution and 20,151 18,659 39,241 39,651 operating costsNewsprint, inkand other 2,378 2,271 4,719 5,542 suppliesDepreciation 1,035 1,802 2,109 3,567 Amortization ? 64 64 128 Gain on sale/disposal of ? ? (1 ) (5 )assets, netTotal operating 41,680 39,793 82,195 84,896 costs and expenseOperating loss (3,012 ) (4,378 ) (6,712 ) (9,138 )Other income, net 1,613 1,331 2,867 2,683 Loss Before (1,399 ) (3,047 ) (3,845 ) (6,455 )Income TaxesIncome taxprovision 83 367 402 (1,420 )(benefit)Net Loss $ (1,482 ) $ (3,414 ) $ (4,247 ) $ (5,035 ) Per Share Basis Net loss Basic and diluted $ (0.28 ) $ (0.64 ) $ (0.79 ) $ (0.94 )^(1)Number of commonshares used in the per sharecalculation:Basic and diluted 5,352,490 5,352,490 5,352,490 5,352,490 ^(1)

(1)All share and per share amounts have been retroactively adjusted to reflect the one-for-four reverse stock split effective June8, 2021. All fractional shares were settled in cash in connection with the reverse stock split.

DallasNews Corporation and SubsidiariesConsolidated Balance Sheets

June30, December31,In thousands (unaudited) 2021 2020Assets Current assets: Cash and cash equivalents $ 37,770 $ 42,015Accounts receivable, net 14,585 16,562Notes receivable 22,400 22,775Other current assets 7,093 6,754Total current assets 81,848 88,106Property, plant and equipment, net 9,996 11,959Operating lease right-of-use assets 19,112 20,406Intangible assets, net ? 64Deferred income taxes, net 94 76Other assets 2,208 2,604Total assets $ 113,258 $ 123,215Liabilities and Shareholders? Equity Current liabilities: Accounts payable $ 6,621 $ 7,759Accrued compensation and other current liabilities 11,507 10,829Contract liabilities 13,137 12,896Total current liabilities 31,265 31,484Long-term pension liabilities 15,718 18,520Long-term operating lease liabilities 20,527 21,890Other liabilities 4,580 4,913Total liabilities 72,090 76,807Total shareholders' equity 41,168 46,408Total liabilities and shareholders? equity $ 113,258 $ 123,215

DallasNews Corporation - Non-GAAP Financial MeasuresReconciliation of Operating Loss to Adjusted Operating Loss

Three Months Ended Six Months Ended June30, June30,In thousands (unaudited) 2021 2020 2021 2020Total net operating revenue $ 38,668 $ 35,415 $ 75,483 $ 75,758 Total operating costs and 41,680 39,793 82,195 84,896 expenseOperating 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 $ 41,680 $ 39,793 $ 82,195 $ 84,896 expenseAddback: 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 ? ? (1 ) (5 )assets, netAdjusted 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 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 Companys 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 Companys 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 Murray214-977-8869