DallasNews Corporation

Ladies and gentlemen, thank you for standing by and welcome to the Dallas News Corporation second quarter investor call. At this time, all parties are in a listen only mode. Later, we will conduct a question and answer session. The instructions will be given at that time. If you should require assistance, you can press star and then zero. And as a reminder, this call is being recorded. I'd now like to turn the conference over to our host, Mr. Gary Copley. Please go ahead, sir.

Good morning, everyone. Gary Cobley, Vice President and Controller of Dallas News Corporation. Welcome to our second quarter 2022 investor call. I'm joined by Katie Murray, President and Chief Financial Officer, who will be reviewing financial results. Grant Moyes, Chief Executive Officer, who will provide brief business remarks. And Robert Deckard, Executive Chairman, who is also available for questions. Yesterday afternoon, we issued a press release announcing second quarter 2022 results, and we will file our second quarter 10Q later this week. Both of these will be posted on our website, dallasnewscorporation.com, under the investor relations section. Unless otherwise specified, comparisons used on today's call measured second quarter 2022 performance against second 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 call. We are encouraged by the progress the company has made thus far in 2022 and are optimistic about the remainder of the year despite external market conditions. On a gap basis for the second quarter, Dallas News Corporation reported a net loss of 2.4 million, or 45 cents per share, and an operating loss of 2.3 million. In Q2 last year, we reported a net loss of 1.5 million and an operating loss of 3 million. On a non-gap basis for the quarter, we reported an adjusted operating loss of 1 million, $500,000 greater than the 600,000 loss for the same period last year. The decrease is primarily due to a decline in total revenue of $1.1 million, partially offset by expense improvements of half a million in distribution and $300,000 in employee compensation and benefits. We reported $37.6 million of total net revenue for the quarter, and this compares to $38.7 million last year. The $1.1 million decline year-over-year is primarily due to an $800,000 reduction in print advertising revenue. Turning to circulation, revenue increased 200,000 when compared to the second quarter of 2021. This growth follows the trend we experienced last year, driven by a continued focus on growing digital circulation revenue by effectively monetizing our digital subscriber base. As of June 30th, the Dallas Morning News had 62,688 digital-only subscribers, which is 9,758, or 18.4% year-over-year improvements. Total subscribers, including both home delivery and digital subscribers, was 146,065 as of June 30th, and that compares to 146,564 as of June last year. Total adjusted operating expense for the second quarter was $43.9 million, an improvement of $1.7 million from last year, primarily related to savings and distribution and compensation and benefit expense. At the end of Q2, headcount was 671 compared to 724 as of last year. Cash on the balance sheet was $27 million on June 30th, and as of July 22nd, last Friday, cash was $30 million. Consistent with the interim period, last year we used the estimated annual tax rate method and recorded $165,000 of tax expense for the Texas franchise tax. This quarter, we paid approximately $700,000 of Texas franchise tax for fiscal year 2021. On June 30th, the company signed an amendment with Charter Holdings to extend the maturity date of the $22.4 million note receivable to this Friday, July 29th. We expect full payment and an additional $116,000 in interest income to be paid in full on Friday. Overall, we are pleased with the company's progress in the first half of this year. Our strong balance sheet continues to provide Dallas News Corporation an advantage position, and we look forward to continued success throughout the remainder of this year. I will now turn the call over to Grant.