Q3 2022 Dallasnews Corp Earnings Call
Ladies and gentlemen, thank you for standing by welcome to the Dallas News Corporation Investor Conference call at.
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And as a reminder, your call today is being recorded I will now turn the conference call over to your host corporate Vice President and controller of Dallas Newspaper Corporation, Gary Cobley. Please go ahead.
Good morning, everyone. This is Gary <unk>, Vice President and controller of Dallas News Corporation.
Welcome to our third quarter 2022 investor call.
I am joined by Katie Murray, President and Chief Financial Officer, who will be reviewing financial results Grant Moise, Chief Executive Officer, who will provide brief business remarks, and Robert Decker Executive Chairman, who is available for questions. Yes.
Yesterday afternoon, we issued a press release announcing third quarter 2022 results and we filed our third quarter 10-Q.
Both of these are posted on our website Dallas News Corporation Dot com under the Investor Relations section.
Unless otherwise specified comparisons used on todays call measure third quarter 2022 performance against third quarter 2021 performance.
Our discussion today will include forward looking statements.
We're looking statements are subject to risks uncertainties and other factors that could cause actual results to differ materially from those statements.
The company assumes no obligation to update the information in this communication, except as otherwise required by law.
Determining performance comparisons to our peers a.
A reconciliation of GAAP to non-GAAP financial measures is included with our press release.
I will now turn the call over to Katie.
Good morning, everyone and thank you for joining today's call.
On a gap basis for the quarter Dallas News Corporation reported a net loss of $2.6 million or 48 cents per share and an operating loss of $2.3 million.
In Q3 last year, we reported net income of $1.6 million in an operating loss of $2.6 million.
As a reminder, in the third quarter last year net income included 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 had left.
On a non-GAAP basis for the quarter, we reported and adjusted operating loss of $1.6 million $400000 greater than the $1.2 million loss for the same period last year the.
The decrease is primarily due to a 600000 dollar decline in total revenue and a $700000 increase in newsprint expense.
Partially offset by improvements of $600000, an employee compensation and benefits and 700000 and distribution expense.
We reported 37 $7 million a total net revenue for the quarter and this compares to $38.3 million last year.
A year over year decline is primarily due to reductions of $400000 in digital advertising and marketing services revenue and 200000 and print advertising revenue the.
The digital advertising decline is due to the company's strategic decision to exit sales of a lineup promotional products that I carry a low margin.
<unk> $900000, a year over year revenue decline and promotional product sales with partially offset by more consultative marketing services.
Turning to circulation revenue increase of $100000 when compared to the third quarter of last year.
This growth follows the trend we experienced last year driven by a continued focus on growing digital subscriptions in revenue.
As of September 30th the news had 64172 digital only subscribers, which is a 7088 or $12, 4% year over year improvement.
Total subscribers, including both home delivery <unk> subscribers was 144631 as of September 30.
And this compares to 147976 as of September of last year, a summary of historical print and digital subscriptions by quarter is saved on our website under the Investor Relations section.
Total adjusted operating expense for the third quarter was $44 $8 million, an improvement of $1.4 million from last year, primarily related to savings and compensation and benefit expense and distribution offset by an increase in newsprint expense.
At the end of the third quarter head count with 668 down forehead count compared to September 30th of last year cash.
Cash on the balance sheet was $33 million on September 30th and as of October 21, cash was $32 million.
Consistent with interim periods last year, we I'm, sorry, consistent with the interim periods last year, we use the estimated annual tax rate method and recorded 201000 of tax expense for the Texas franchise tax.
As a reminder, last quarter, we paid 675000 of Texas franchise tax for fiscal year 2021.
On July 29th 2022, the company received cash proceeds of $22.5 million from the collection of the charter Holdings note paying the note in full including interest.
And the third quarter. The company made a board approved voluntary pension contribution of $5 million and paid a special dividend of $1.50 per share returning $8 million to shareholders.
Overall, we are pleased with the company's progress so far this year and we look forward to continued success throughout the remainder of the year I will now turn the call over to grant.
Thank you Judy the company performed well in the third quarter as we continued to see stability and some of our most important lines of revenue.
While digital subscription volume softened and the second and third quarters, we began to see volumes rebound in late July up to re adjusted our introductory pricing.
We were able to be more aggressive with our pricing because we're currently charging some of our highest prices in the country for digital newspaper subscriptions.
We will remain committed to this premium pricing strategy, but we will continue to test are discounting tactics and our effort to maximize book price and volume.
We cannot price subscriptions aggressively without outstanding journalism, I'm really proud of the work our newsroom an editorial board have produced this year and I was especially proud with the introduction of a new editorial series, we launched in the third quarter called the American Middle.
The focus of the series is to encourage politicians and citizens to focus our collective energy on the things we have in common rather than the issues that Tara support.
Work with the news are concerned about the binary mindset that has been adopted by so many Americans and we hope this series will give our readers a sense of hope that there are important issues, where we can find common ground.
Shifting the medium giant we just completed two consecutive quarters of strong sales performance, bringing new clients onto our agency roster. We began to see revenue recognized in the third quarter from those new clients, which provides a solid foundation of contracted revenue moving forward.
This revenue is helping offset lower advertising inventory levels on Dallas News Dot com, where we've experienced audience decline. This year in the mid 30% range. Many news companies are experiencing a similar decline in digital audiences and we're working diligently to improve on those trends.
On the expense side are two key expense lines impacted by inflation or fuel and newsprint pricing, while we hope some of those price pressures are temporary we continue to look at every option we have to minimize the impact of those inflated costs.
All things considered I'm very pleased with the team's performance as we continue to remain focused on our long term strategy of creating a sustainably profitable digital news company Allen, we will now open it up to questions.
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One moment please for our first question.
Speakers, we have no acute up for questions at this time.
Alan Thank you.
Again, we appreciate everyone joining us for our call and we look forward to providing full year results. When we enter next year. Thank you so much.
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