DallasNews Corporation

Ladies and gentlemen, thank you for standing by and welcome to the Dallas News Corporation Q1 2022 investor call. At this point, all the participants are in a listen-only mode. However, there will be an opportunity for your questions. Instructions will be given at that time. If you should require any assistance during the call, please press star zero and Operator will assist you offline. As a reminder, today's call is being recorded. I'll turn the call now over to Mr. Gary Kabley. Please go ahead.

Good morning, everyone. This is Gary Cobley, Vice President and Controller of Dallas News Corporation. Welcome to our first quarter 2022 investor call. I'm joined by Katie Murray, Executive Vice President and Chief Financial Officer, who will be reviewing financial results. Robert Deckard, Chairman, President, and Chief Executive Officer of Dallas News Corporation. And Grant Moyes, Publisher and President of the Dallas Morning News. Last Friday, we issued a press release announcing first quarter 2022 results, and we filed our first quarter 10Q. Both of these have been posted on our website, dallasnewscorporation.com, under the investor relations section. Unless otherwise specified, comparisons used on today's call measure first quarter 2022 performance against first quarter 2021 performance. Our discussion today will include forward-looking statements. Forward-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. Additional information about these factors is detailed in the company's press releases and publicly available filings with the SEC. Today's discussion will include non-GAAP financial measures. We believe that non-GAAP financial measures provide useful supplemental information to assist investors in determining performance comparisons to our peers. A reconciliation of GAAP to non-GAAP financial measures is included with our press release. I'll now turn the call over to Katie.

Good morning, everyone, and thank you for joining today's calls. On a GAAP basis for the quarter, we reported a net loss of 2.6 million or 49 cents per share and an operating loss of 2.5 million. In Q1 last year, we reported a net loss of 2.8 million and an operating loss of 3.7 million. On a non-GAAP basis for the quarter, we reported an adjusted operating loss of 1.6 million and improvement of 700,000 or 30.6% compared to 2.4 million for the same period last year. The improvement is primarily due to a decrease of $1.5 million in employee compensation and benefits, partially offset by a decrease in total revenue of half a million dollars. We reported $36.3 million of total net revenue for the quarter, and this compares to $36.8 million last year. The $500,000 decline year over year is primarily due to a $600,000 reduction in print advertising revenue, partially offset by a $100,000 increase in digital advertising and marketing services revenue. Medium Giant continues to see supply chain issues for certain advertisers in some key categories, but in the month of March, we saw robust activity in our marketing and agency service offerings, which Grant will expand on shortly. Circulation revenue increased $100,000 when compared to the first quarter of last year. This growth follows the trend we experienced in 2021, driven by more total members, print and digital combined, and our pricing strategies. As of March 31, the Dallas Morning News had 62,356 digital-only subscribers, which is an 11,504, or 22.6%, year-over-year improvement and a 2,885 sequential improvement. Total subscribers as of March 31 was 149,117 compared to 148,061 as of March 31 of last year and 148,742 as of December 31. Total adjusted operating expense for the quarter was $43.9 million, reflecting an improvement of $1.4 million from last year primarily related to the reduction of $1.5 million in compensation and benefit expense. As of the end of the quarter, headcount was 662 compared to 713 as of March 31st of last year. Cash on the balance sheet was $31 million, and as of April 22nd, it was $31 million. Consistent with the interim periods last year, we used the estimated annual tax rate method, and we recorded a $184,000 tax expense for the Texas margin tax. we expect the Texas margin tax to be approximately $600,000 for this year. A few other notable items. Charter Holdings continues to make its interest payments timely. We anticipate receipt of $22.7 million, including interest and principal payments, on June 30th. Overall, we are encouraged by the progress thus far in 2022 and look forward to a year focused on becoming a sustainably profitable digital news an information company supported by our strong balance sheet. I will now turn the call over to Grant.