The Dolan Company, parent company to The Daily Record, experienced a challenging third quarter, largely due to a reduction of revenue at the company’s previously strong e-discovery business, DiscoverReady.
The company’s third-quarter revenue was $35.5 million, a decrease of 20.7 percent over the same quarter of the preceding year, and its net loss attributable to the company was $27.5 million, or 91 cents per diluted share.
DiscoverReady’s revenue declined 33 percent from the third quarter of 2012, which was a record high quarter for the business. The Dolan Company had expected a decrease from one year before and from the previous quarter, but had not expected revenue to be as low as it was.
“The declines were driven mostly by DiscoverReady, but also to a lesser extent by softness in our public notice advertising,” said James P. Dolan, The Dolan Company’s chairman, president and CEO.
The Dolan Company continued to experience a decrease in revenue in the business information division as well, which, at $15.6 million for the third quarter, showed a 9.9 percent decrease in revenue year-over-year.
Dolan attributed DiscoverReady’s results to a decrease in new work for that company’s largest customer, which made up 43 percent of the business in the third quarter of 2012. Since Sept. 30, that client has come to DiscoverReady for new work.
“We believe they reduced our file because they were concerned with our financial condition. That concern hasn’t changed,” said Scott J. Pollei, executive vice president and COO. “We’re working hard to fix those situations, but we’re uncertain as to [the] exact file flow that will come in the near term.”
As far as the continued decrease in public notice advertising across the business information segment, Dolan blamed a slowdown in mortgage defaults.
Because of declining public notice advertising revenue, the company recorded a non-cash goodwill impairment charge of $35.4 million, which contributed to the net loss of $27.5 million. Such a charge represents the reduced value of an intangible asset of the company.
“We’ve tried to be frank with our near-term challenges at DiscoverReady and with the financial condition of the company,” said Dolan. “We’re dealing with those challenges very aggressively.”
When asked by analysts on the company’s conference call, he would not go into detail on specific methods under consideration to improve finances. He did mention that the company’s sale of mortgage default operations NDeX South, NDeX Indiana and NDeX Michigan brought in $5.8 million, part of which went to pay down its net debt of $128.7 million.
“We’re not happy to be where we are right now with the company,” Dolan said, “but we are working very hard to develop and pursue the best possible options.”