Ladies and gentlemen, thank you for standing by, and welcome to the DallasNews Corporation second quarter investor call. At this time, all parties are in a listen-only mode. Later, we will conduct a Q&A session. The instructions will be given at that time. If you should require assistance, you can press star and then zero. As a reminder, this call is being recorded. I'd now like to turn the conference over to our host, Mr. Gary Cobleigh. Please go ahead, sir. Good morning, everyone. This is Gary Cobleigh, Vice President and Controller of DallasNews Corporation. Welcome to our second quarter 2022 investor call. I'm joined by Katy 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 Decherd, Executive Chairman, who's also available for questions. Yesterday afternoon, we issued a press release announcing second quarter 2022 results, and we will file our second quarter 10-Q 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 Katy. 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 GAAP basis for the second quarter, DallasNews Corporation reported a net loss of $2.4 million or $0.45 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-GAAP basis for the quarter, we reported an adjusted operating loss of $1.5 million dollars 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 $500,000 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, driven by a continued focus on growing digital circulation revenue by effectively monetizing our digital subscriber base. As of June 30, The Dallas Morning News had 62,688 digital-only subscribers, which is 9,758 or 18.4% year-over-year improvement. 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 in 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 periods 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 DallasNews 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. Thank you, Katy. Before I provide my thoughts on our second quarter performance and general economic conditions, I'd just like to say how excited I am to have this opportunity to lead DallasNews Corporation and our two core businesses, The Dallas Morning News and Medium Giant, in achieving our goal of becoming a sustainably profitable digital-first company. This is a wonderful time to be in the media and marketing services business, and my team and I see our role in this community as one of a convener and a catalyst to help shape the future of North Texas, which is one of the most dynamic markets in the country and is growing by 1 million residents every seven years. Turning to the second quarter, I'm pleased with our performance and how DallasNews Corporation is positioned entering the second half of 2022. Medium Giant had a very solid quarter of closing new digital advertising and marketing services business and closing significant contract renewals. We're very pleased to announce that this quarter, Taco Bueno selected Medium Giant to be its agency of record, and Medium Giant will be partnering with them to enhance their marketing strategy. We're also excited that the iconic Cotton Bowl New Year's Day game has selected Medium Giant as its agency of record. Clients like both of these ideally fit the profile of the digital marketing services agency we're building at Medium Giant. We continue to be pleased with circulation revenue trends at The Dallas Morning News. This is the second quarter in a row that we've seen year-over-year growth in total circulation revenue. While total subscribers declined by 499 year-over-year, our revenue growth is the result of optimized pricing. This past quarter taught us that price sensitivity is rising in the market, so we're adjusting our pricing strategy to offset that change in consumer behavior. Regarding operating expense, while the team continues to do a great job managing controllable expenses, we're still seeing expense pressure with newsprint and fuel prices. As mentioned last quarter, we are monitoring newsprint prices, which in the second quarter averaged $708 per metric ton. The average newsprint price was $544 per metric ton in the second quarter of 2021, reflecting a 31% increase year-over-year. In addition, as all consumers are keenly aware, average gas prices have increased from $2.65 per gallon in the second quarter of 2021 to $4.12 per gallon this quarter, which was a 55% increase. As Katie mentioned, this Friday we expect full payment of the $22.4 million note from Charter Holdings for the sale of our former headquarters. The board will continue its regular discussion of capital allocation, including the possibility of a special dividend and a voluntary pension contribution at its regular meeting in September. In closing, I'm very pleased with the progress we're making, and Brad, we'll pause here and open up the line for questions. Thank you. Ladies and gentlemen, if you do wish to ask a question, please press one and then zero on your telephone keypad. You can withdraw your question at any time by repeating the one-zero command. If you're using a speakerphone, please pick up the handset before pressing the numbers. Once again, if you have a question, you may press one and then zero at this time. One moment. We'll go first to Chris Mooney with Wedbush Securities. Please go ahead. Chris? Chris, are you still with us? Your line is open. Is your mute on by chance? We're not getting any audio from Mr. Mooney's line here. We can move on and then, Chris, if you wanna press one-zero again, we'll try again here. We'll next go to David Cohen with Minerva Advisors. Morning, folks. Hi, David. Good news that we expect the land sale to close this week. By my calculation, that would leave us with about $11 a share in cash using the $30 million July 22nd balance that you mentioned, Katy, and the stock is trading at $6.40-$6.50. A special dividend would help a little. Buying back some stock at that kind of discount would help a lot more. I'd really like to, in this quasi-public forum, push you on going that route instead, to allow those people that want some liquidity, full liquidity for their shares, and those people that wanna stick around can fully stick around. That's part one. Part two is, I guess, a question, which is, given the divergence between the stock price and the cash per share, why would the board wait until a September board meeting to make a decision about what to do next? Assuming this transaction closes on Friday, it just seems to me that this is important enough to the shareholders that you don't have to wait for your next scheduled quarterly board meeting. I'd appreciate understanding why there seems to be no sense of urgency. Thank you. Hi, David. This is Katy. I'll take the first part of this. I think, you know, thank you for calling in. You're right, we are pleased that this transaction is gonna be behind us on Friday. We do have a regularly scheduled board meeting in September. I appreciate your question around the sense of urgency, and that is something that from my position can bring that to the board and obviously, you know, give them that feedback. You know, from an option around capital allocation. You know, we have talked about the buyback before. We have done limited buybacks, as you know, and we're not in a current policy, you know, not a current open window buying right now. Those are all things, David, that the board would be considering around capital allocation, including the special dividend and including, as you know, how we feel about the pension, and making sure that we take care of that, very important liability that we have to our former employees. Those are all things that are gonna be discussed. We are pleased to be in a position where we can have those discussions after receiving the full payment, and there'll be more to come on that. I think, you know, with that, I'm gonna ask Robert to give some additional thoughts and, insights on that as well. David, good morning. I would just underscore what Katy said, excuse me. There is tremendous focus on this, and that may be, you know, a subtlety in the sense of urgency. As you know, we have anticipated this ever since the sale of the headquarters occurred almost three years ago and had to go through the deferrals as a result of external conditions and things way beyond our control. There will be plenty of conversation, excuse me, among the directors as soon as we have this payment. We're saying it's the September meeting because that's the next scheduled time, but there's nothing to say we wouldn't take action sooner. It's just not something we have decided one way or another. As you pointed out, there are choices as to whether we look again at share repurchase. We've done that from time to time. There are other aspects of that that are a little tricky. We already are thinly traded. That would make us even a more thinly traded, challenging security. All of those things are a part of the conversation. We work with external advisors. We always have. They are people who are not only experienced, but they're extremely insightful about what the choices are. It's not as if we're going into radio silence until September. We'll be on this as soon as we get the money, and we would have been last month if we'd gotten it timely. Fair enough. Thanks, Robert. Thanks, Katy. Good luck. Thank you, David. We'll go next again to Chris Mooney. Please go ahead. Chris, your line is open. You may be muted. We're still not hearing you. Yeah, I apologize, speakers. The line is open, but we're not getting any audio. Can you hear me now? We can. There we go. Go ahead. Hey, Chris. Good morning. Hey, first off, congratulations on the new roles to Grant and Katy. Thank you, Chris. Thank you. Look forward to continuing to work with both of you. Robert, I'm sure you'll be very involved. David's right. I mean, first off, a $30 million market cap company is pretty uninvestable for most people, and it's a very heavy cost burden to be a very small public company. I think he's correct in light of the probable cash that your share repurchase should be at the top of the list. You don't need to. You've already commented on that, so that's fine. Katy, the cash was just a sort of a seasonal thing, that you picked up additional cash by paying down receivables or something like that, I guess? It is, Chris. I mean, really, it's just the timing between, you know, payroll, accounts payable, receivables coming in and the like. It's just the timing. The $30 million is a good baseline right now. Again, feel really good. I mean, one, we have really strong collections. DSO is the best it's been in a number of years coming out of the last couple of years. Again, the reduced expenses has helped just in general on the payroll and the payables. Okay. Could you just give those numbers on subscriber counts again for both print and digital? I didn't have a pen in hand. Oh, yeah, absolutely. Then also, Chris, just a reminder, the digital subscriptions are also on the website under the investor relations side, if you would like to see that. On our subscription as of the end of June, we had 62,688, and then our total subscribers as of the end of June was 146,065. From a print perspective, it is 83,377. What was it in the prior period that you were noting on that? It was 146,564, and that was 52,930 digital subscriptions and 93,634. When you do the net, it really is the 499 is a decline on the print side. And it's offset obviously with the growth in the digital. That was year-over-year data? Yes. Yes. Okay. All right. On the Charter Holdings, I assume it seemed kind of odd to see the announcement and a specific date of July 29th. I assume that they came to you or with a request, and you raised the interest rate and feel confident that you're going to receive it in light of Ray Washburne being the keynote speaker at a symposium on downtown development in coming weeks. David, we do. The July 29th, I will say that that was my choice because the way that the first fell, I wanted this closed out in July. They did come to us. We did raise the interest. As you know, we're gonna be getting an additional $116,000. This purely was timing on their part. They were in the middle of their financing. They needed a few extra weeks to finalize some of the requirements for the bank. I'm fully confident that we're gonna be paid on Friday. To Gary's point, when we talked about filing the 10-Q later, we wanted to be able to get this in July, and we'll be able to file the 10-Q after that, so we can update the subsequent event footnote. Okay. Just out of curiosity, it might have made a little more sense, to me at least, to have actually done your earnings announcement after receiving the payment if you were that confident, just for what it's worth, then you would have been able to say, we received. Chris, we talked about that. Unfortunately, the way the schedules for next week worked, it was not possible. We did talk about that. We felt like, you know, putting this in the press release and being able to talk confidently about it today, would. I know it's not that we have received it, but we are confident that we're gonna be receiving it. Okay. Could maybe Grant chime in and put a little more information on the optimism that you're expressing in the business? Sure, happy to. You know, as Katy was just clarifying, Chris, obviously there's the volume piece of subscription revenue. You know, there's volume piece of the equation, and then there's pricing. My optimism is the fact that we are now growing and have grown now for a second consecutive quarter total consumer revenue, which means, you know, when you combine print subscriptions and digital subscriptions, growing that revenue line was a very important goal of ours as a leadership team. Now sustaining that and finding greater growth, will be a focus as we move forward. You know, that's an example of one where, you know, three short years ago, we were declining consumer revenue in the 4% range. Getting that back to stability, getting that into growth territory, to me, is a very encouraging sign of what we're able to accomplish. You know, one of the things I was mentioning in there in my prepared comments is that we have priced digital subscriptions at one of the more aggressive ends of the spectrum in the industry. We're averaging over $16 a month that we're charging. The industry overall is closer to $10 a month. That's okay. That gives me confidence too, that now we can go to, you know, go try to push volume. We're gonna discount a little bit more on some introductory offers to keep the volume strong, and we just feel confident in the way that the team has their arms around that. Shifting over to Medium Giant, as I was saying, giving the example of Taco Bueno, of the Cotton Bowl Classic, these are, you know, really full-service agency, retainer-based contracts that are. We had mentioned last quarter, Frisco Economic Development, and as you know, Chris, the city of Frisco is one of the fastest-growing cities in the United States. Obviously, the Cowboys have put their headquarters up there. Toyota Motor North America is up there. I'm just very pleased. Not only are we adding new substantial clients to Medium Giant, but more importantly, we are retaining over 90% of our top 20 clients at Medium Giant. What that tells me, Chris, is that our team is providing the types of marketing services that are giving these clients an ROI, or they wouldn't be staying with us. Those are a couple examples of just things that give me optimism of where we are in the business, and I think puts us on solid ground as we, you know, continue to kind of try and work our way back here to sustainable profitability. On the advertising trends for the print side, is there any change taking place? You know, the print side is interesting. Overall, I would say that the pre-print business is far more stressed than our display print business. Our display print business, Chris, is actually quite stable. And that's encouraging to me as well 'cause it's a higher margin, a higher gross margin piece of the advertising pie in print. Sunday pre-prints have really dropped off considerably and continue to meaning in the high teens range. Part of what that is, as we know, it's not only the vehicle of print shrinking, but it's also Predominantly big box retailers that have used those Sunday preprints. You know, big box retail is not the highest growth area in the market. One thing that we are encouraged by on preprints is Wednesday, which is predominantly grocery. For those of you on the call who are from North Texas, understand a very big grocery chain is entering our market in the fall of this year, an H-E-B, and we're starting to see some larger interest. They are a Wednesday preprint advertiser, and that I think is going to stabilize that line of revenue for a couple few quarters to come, just because it's a very competitive grocery market here in North Texas, and grocery is one of our largest advertising categories that we have in our company. Thank you. That's all I have for today. Thank you, Chris. Again, that's one zero to ask a question. We'll go next to Ramsey Sahyoun with Evergreen. Please go ahead. Morning, everyone. A couple- Morning Questions. Just what do you guys view the timeline to profitability? That's kinda question number one. The second question is just if you do go down the special dividend path, I agree with everything that's been said around the repurchase being preferable, but understand the constraints around being thinly traded and everything like that. What kind of magnitude could shareholders expect? Like, could it be, you know, as much as the $22.5 million or even more than that? You guys certainly have the cash to pay that kind of special dividend. How do you guys think about, you know, how much cash you need to keep versus what's sort of available to return to shareholders? Ramsey, thank you for your question. I'll give you some thoughts and then, we'll get some additional color both from Grant and Robert. You know, the timeline to profitability, we've talked about this. I think, you know, taking into consideration these last two years of impact from COVID have obviously been some headwinds for us, as we've talked very openly on prior earnings calls and in our press releases, we knew and know that returning to profitable or sustainably profitable financials, it's gonna take some time. I think as we think about this, we don't think about it just in the terms of 2022. We think about where are we gonna be in 2023 and 2024. I think this actually ties into your question around what could the, you know, the special dividend look like, and what kind of a cash balance do we need? Those really do tie together. We are investing in our business right now as we are using cash. We're investing in our products. We're investing in our applications. We're investing significantly in our newsroom to produce the content that is being made, and that is using cash. As we're thinking about, you know, where we need from a cash balance perspective, we're taking all of those considerations in. Again, this return to profitability is not a short term overnight. It's gonna take, you know, whether it's the next couple of years, Grant mentioned a minute ago, we are making progress, and we're showing that, and we're trying to do that diligently as we're working forward. You know, as to the size of a special dividend or whether a stock repurchase, I would go back to what Robert said that the board is gonna take consideration of any opportunity around capital allocation, but specifically around the size, that's gonna come back also to, as I mentioned a minute ago, where do we think the cash balance needs to be, as we think about where we're going over the next, you know, call it three to five years. With that, you know, I'll ask Robert to give some additional color on his thoughts. I would just reiterate the point about the quality of the content, and certainly I can defer to Grant on that. We are investing in the overall quality of the newspaper, all of our online presentation, and that's reflected in the growth of our digital subscription base and also the pricing that Grant talked about. That's a big gap between what he and the team have achieved versus the industry average. There's a correlation between the investment in the business and the quality of our journalism and the potential to get to the other side of this divide, which every newspaper in America is trying to sort out. To Katy's point, what we have to calibrate from a board standpoint is what's the cash requirement to enable the business to continue to improve and ultimately to have the stock price reflect the value of the business. I mean, as we've discussed on this call, and all of you have noted, for many investors, this is just about the cash, and there's no focus broadly on the quality of the business and no value assigned to it. All of those things have to happen synchronously over a period of two to three years, and that's the backdrop for the board's deliberation. All of the points made by you and our other investors are valid, and they're all part of the calculus that the board and its advisors are looking at. Yeah, the only thing, Ramsey, it's Grant, that I would add to it is, you know, Robert hit the nail on the head. Our two biggest investments are especially in the digital product itself, whether that be our website or our app. It's just a big part of what the user. Especially if we're gonna be charging $16 a month and higher for digital subscriptions, they're expecting a digital product that is commensurate with The Wall Street Journal or The New York Times or The Washington Post. We need to keep increasing our investments in those products if we wanna keep charging these prices. That, look, we're always talking to consumers, getting their feedback, and we understand that. However, look, we are and I just want you to know, I mean, we're committed in fact, as we all are, we know we need to get back to a profitable state. What we're really trying to figure out is what is the balancing act between investing in the business and finding those revenue lines that not only are going to help, you know, offset the expenses, but that are built in a way that's sustainable. That's why I go back to these Medium Giant contracts and things that I'm talking about. I'm, you know, I am looking for retainer-based work on that side of the business. Otherwise, that can be very wide swings in the advertising business without solid-based longer term retainers. That's just another example where we're looking for that monthly recurring revenue. Subscriptions, obviously, is a far more predictable line for us. But what I'm pleased about on the advertising side is that we are entering into longer term contracts. The one thing I will say that's an unknown on this is we're still seeing problems in the supply chain with some of the categories of advertising that used to be very big for us. Ramsey, I'll just give you the example of automotive advertising. You know, just, you know, four or five years ago, we had over $10 million in automotive advertising in our company. And now with supply chains at car dealerships and the fact that cars are selling before they even hit the lot, you know, that has pretty much gone away to almost nothing. I'm ready to go staff up a team in advertising sales once the car dealerships are ready to spend money again because they need to. Again, it's just an example of the supply chain where something that was a top three category of advertising for us, I do believe will come back at some point, probably not back to previous levels. You know, it's just an example of things where the supply chain is still kind of this question mark out there to us that I guess kind of surprises me two and a half years into the pandemic. I think we're seeing that in many different industries. Got it. That all makes sense. On timeline to profitability, it sounds like, you know, potentially multiple years is how we should think about the timeline there. You're correct. Like, Got it. Awesome. Well, appreciate that. I would just say that, as far as folks recognizing the value of the business, I think a big enough special dividend would go a long way there. Appreciate your and the board's consideration of that, and appreciate the time this morning. Thank you. Again, to ask a question, it's one and then zero. Giving it a moment here, no further questions in queue. All right, Brad. Well, it sounds like we've gone through the questions. I'd like to, you know, thank everybody for joining our second quarter call. We look forward to speaking again after our third quarter, and hope everybody on the call has an enjoyable rest of your summer. Thank you. Thank you. Ladies and gentlemen, this conference will be available for replay after 11:00 A.M. this morning and running through August 30th at midnight. You can access the AT&T Replay System at any time by dialing 1-866-207-1041 and entering the access code 9944335. International parties may dial 402-970-0847. Those numbers again, 1-866-207-1041 or international, 402-970-0847 with the access code 9944335. That does conclude our conference for today. Thanks for your participation in using AT&T Teleconference. You may now disconnect.