DallasNews (DALN) - 2023 Q3 - Quarterly Report

PART I Item 1. Financial Information This section presents DallasNews Corporation's unaudited consolidated financial statements as of September 30, 2023, detailing Q3 performance and balance sheet changes Consolidated Statements of Operations DallasNews reported a Q3 2023 net loss of $1.4 million on $34.5 million revenue, an improvement from prior year, driven by cost reductions Consolidated Statements of Operations (Q3 & Nine Months Ended Sep 30) | In thousands, except per share amounts | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total net operating revenue | $34,499 | $37,688 | $105,713 | $111,548 | | Advertising and marketing services | $14,699 | $17,525 | $46,231 | $51,246 | | Circulation | $16,194 | $16,230 | $48,201 | $48,576 | | Operating loss | $(1,614) | $(2,291) | $(5,590) | $(7,047) | | Net Loss | $(1,411) | $(2,586) | $(4,905) | $(7,645) | | Net loss per share (Basic) | $(0.26) | $(0.48) | $(0.92) | $(1.43) | Consolidated Balance Sheets As of September 30, 2023, total assets decreased to $66.7 million, with cash down to $13.8 million due to short-term investments Consolidated Balance Sheet Highlights | In thousands | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Current Assets | | | | Cash and cash equivalents | $13,782 | $27,825 | | Short-term investments | $10,672 | $0 | | Total current assets | $40,880 | $47,925 | | Total assets | $66,712 | $72,265 | | Current Liabilities | | | | Total current liabilities | $24,799 | $22,759 | | Total liabilities | $61,854 | $59,902 | | Total shareholders' equity | $4,858 | $12,363 | Consolidated Statements of Cash Flows Net cash used for operating activities improved significantly to $0.1 million for the nine months ended September 30, 2023, resulting in a $14.0 million net cash decrease Cash Flow Summary (Nine Months Ended Sep 30) | In thousands | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used for operating activities | $(114) | $(9,851) | | Net cash provided by (used for) investing activities | $(11,359) | $21,041 | | Net cash used for financing activities | $(2,570) | $(10,598) | | Net decrease in cash and cash equivalents | $(14,043) | $592 | | Cash and cash equivalents, beginning of period | $27,825 | $32,439 | | Cash and cash equivalents, end of period | $13,782 | $33,031 | Notes to the Consolidated Financial Statements Notes detail revenue disaggregation, showing print decline offset by digital growth, and $19.0 million in operating lease liabilities - The company operates as a single reportable segment, with the CEO acting as the Chief Operating Decision-Maker (CODM)[25] Disaggregated Revenue (Nine Months Ended Sep 30) | In thousands | 2023 | 2022 | | :--- | :--- | :--- | | Advertising and Marketing Services | | | | Print advertising | $28,672 | $33,082 | | Digital advertising and marketing services | $17,559 | $18,164 | | Circulation | | | | Print circulation | $36,489 | $38,863 | | Digital circulation | $11,712 | $9,713 | | Total Revenue | $105,713 | $111,548 | - A distribution agreement for preprinted advertisements ended on August 31, 2023, leading to the discontinuation of print editions for niche publications Al Dia and Briefing[32] - The company declared a dividend of $0.16 per share on September 21, 2023, payable on December 1, 2023[70] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q3 2023 financial results, highlighting an 8.5% revenue decline offset by improved operating loss due to cost reductions Results of Operations Q3 2023 saw an 8.5% revenue decline to $34.5 million, but operating expenses fell 9.7%, narrowing the operating loss Q3 2023 vs Q3 2022 Revenue and Operating Loss | In thousands | Q3 2023 | Q3 2022 | % Change | | :--- | :--- | :--- | :--- | | Advertising and marketing services | $14,699 | $17,525 | (16.1)% | | Circulation | $16,194 | $16,230 | (0.2)% | | Printing, distribution and other | $3,606 | $3,933 | (8.3)% | | Total Net Operating Revenue | $34,499 | $37,688 | (8.5)% | | Total Operating Costs and Expense | $36,113 | $39,979 | (9.7)% | | Operating Loss | $(1,614) | $(2,291) | 29.6% | - A distribution agreement for preprinted advertisements was not renewed and ended on August 31, 2023, forecasted to generate approximately $1 million per month in revenue[104] - Digital circulation revenue increased 21.4% in Q3 2023, driven by a 3.7% increase in digital-only subscriptions, reflecting a strategic focus on growth[110] - Operating costs decreased significantly, with other production, distribution, and operating costs down 14.8% and newsprint costs down 24.6% in Q3 2023 YoY, primarily due to lower circulation and distribution volumes[115][116][117] Liquidity and Capital Resources Cash and cash equivalents decreased to $13.8 million due to $10.5 million in CD investments and dividend payments - Cash and cash equivalents decreased from $27.8 million at year-end 2022 to $13.8 million at September 30, 2023[127] - In 2023, the Company invested $10.5 million in Certificates of Deposit (CDs), classified as short-term investments[127][131] - Net cash used for operating activities for the nine months ended September 30, 2023, was $114 thousand, a significant improvement from $9.851 million used in the same period of 2022[130] - The company paid $2.6 million in dividends during the first nine months of 2023[132] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of September 30, 2023, with no material changes in internal controls - Based on an evaluation as of September 30, 2023, management concluded that the Company's disclosure controls and procedures were effective[140] - No changes occurred in the Company's internal control over financial reporting during the third fiscal quarter that have materially affected, or are reasonably likely to materially affect, these controls[141] PART II - Other Information Item 1. Legal Proceedings Management believes current legal proceedings will not materially adversely affect the company's financial condition or results of operations - In the opinion of management, liabilities, if any, arising from currently existing legal claims against the Company would not have a material adverse effect on its financial condition or results of operations[144] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered equity sales occurred in Q3 2023, and the stock repurchase agreement expired, though board authority remains - There were no unregistered sales of the Company's equity securities during the period[145] - The agreement to repurchase the Company's stock expired and was not renewed, although a board-authorized repurchase authority remains in place[146] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[147] Item 4. Mine Safety Disclosures This item is not applicable to the company - None[148] Item 5. Other Information No other material information was reported for the period - None[149] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including SOX certifications from key officers and XBRL data - The report includes certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002[153][159]