Core Insights - DallasNews Corporation (DALN) shares have declined 12.4% since the earnings report for Q1 2025, underperforming the S&P 500 index which grew by 1.6% during the same period [1] - The company reported a net income of $5.28 per share for Q1 2025, a significant improvement from a net loss of $0.25 per share in the prior year, primarily due to a $36.2 million gain from the sale of its Plano printing facility [2] - Total revenue decreased by 6.4% year-over-year to $29.1 million, with declines across advertising, circulation, and other revenue lines [2] Financial Performance - Net income for the quarter was $28.3 million, compared to a net loss of $1.4 million in the prior-year period [3] - Advertising and marketing services revenue fell by 7.2% to $10.8 million, driven by a 12.2% drop in print advertising, while digital advertising slightly decreased to $1.9 million [4] - Circulation revenue declined by 5.2% to $15.4 million, largely due to a 6% drop in print circulation [4] Segment Analysis - The core TDMN segment experienced a 28.3% year-over-year decline in profit to $3.8 million, while the Agency segment improved from a $0.4 million loss to a $0.2 million profit [5] - The adjusted operating loss widened to $1.2 million from $0.8 million in the previous year, indicating ongoing revenue pressures despite cost containment efforts [2][8] Management Strategy - CEO Grant Moise described the quarter as a milestone in the "Return to Growth Plan," emphasizing the strategic sale of the Plano printing facility which unlocked capital for reinvestment and fully funded pension obligations [6] - The company completed its transition in printing operations and expects to realize cost savings starting in May [7] - Management highlighted that the sale of the Plano property significantly boosted GAAP profitability, although underlying operations continued to face challenges [8] Cost Management - Total adjusted operating expenses decreased by 4.9% year-over-year to $30.3 million, primarily due to headcount rationalization and lower severance and depreciation costs [9] - A 13.2% reduction in workforce year-over-year contributed to employee compensation and benefit savings of $1.2 million [8] Pension Obligations - In April, DallasNews used proceeds from the Plano property sale to fully fund its pension liabilities through an annuity purchase agreement, relieving the company of long-term pension obligations [11] - This move simplified the balance sheet and aligned with broader efforts to streamline operations and reduce financial risk [11]

Dallasnews (DALN) Q1 2025 Earnings Call May 01, 2025 10:00 AM ET Company Participants Gary Cobleigh - VP & ControllerCathy Collins - CFOKaty Murray - President, Treasurer and Corporate SecretaryGrant Moise - Chief Executive OfficerAdam Ballantyne - Founder & General Partner Operator and welcome to the Dallas News Corporation First Quarter twenty twenty five Investor Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer sess ...

Financial Data and Key Metrics Changes - For Q1 2025, Dallas News Corporation reported a net income of $28.3 million or $5.28 per share, compared to a net loss of $1.4 million in Q1 2024 [5] - Operating income for the quarter was $34.2 million, which includes a net gain of $36.2 million from the sale of the Plano printing facility [5] - Total revenue decreased to $29.1 million from $31.1 million in the same period last year, a decline of $2 million [5] - Non-GAAP adjusted operating loss was $1.2 million, an improvement of $400,000 compared to an adjusted operating loss of $800,000 in Q1 2024 [5] Business Line Data and Key Metrics Changes - Advertising and marketing services revenue was $800,000, a decrease of $800,000 or 7.2% compared to $11.6 million last year, primarily due to a print advertising revenue decline of 12.2% [6] - Circulation revenue was $15.4 million, down $900,000 or 5.2% from $16.3 million reported last year, mainly due to a print circulation revenue decrease of 6% [6] - Total membership, including both print and digital, was 125,972 as of March 31, down from 126,973 as of December 31 [6] Market Data and Key Metrics Changes - Digital-only subscriptions increased by 1.1% compared to December 31, and by 4.2% compared to March of last year, reaching 65,028 [6] - The company noted softness in print advertising, particularly in real estate and retail sectors, while financial services advertising remained robust [36] Company Strategy and Development Direction - The company is focused on transitioning to a smaller, more efficient printing facility, with expected expense savings starting in May [11] - There is an ongoing commitment to digital revenue growth, with plans to invest back into the business and return capital to shareholders [12] - The company is monitoring economic conditions and their impact on advertising budgets and client responses [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the return to growth plan, highlighting the successful funding of pension obligations and the transition of print operations [10][11] - The company anticipates realizing $5 million in savings from operational changes, with a gradual realization starting in May [23] - Management acknowledged slower-than-expected growth in digital subscriptions but is implementing more aggressive offers to stimulate growth [29] Other Important Information - The sale of the Plano property has strengthened the company's balance sheet, with cash and cash equivalents at $36 million as of April 25 [12] - The company has fully funded its pension obligations, which was a priority for the board [10] Q&A Session Summary Question: Are the profit improvement expectations still on track for 2025? - Management confirmed that they still expect to realize $5 million in savings, starting in May [23] Question: How is digital revenue trending? - Management noted a 16% lift in starts from the new dynamic paywall compared to the previous meter strategy, but subscriber growth is slower than desired [26][28] Question: What areas of advertising showed weakness in Q1? - Management indicated softness in real estate and retail advertising, while financial services remained strong [36] Question: Will newsprint usage normalize after the transition to the new printing facility? - Management confirmed that newsprint usage will return to 2024 levels, but pricing may vary [41][42] Question: What is the outlook for Medium Giant's profitability? - Management expressed optimism for continued improvement in margins, focusing on larger clients to enhance profitability [45][46]

Revenue Performance - Total net operating revenue for Q1 2025 was $29,125, a decrease of 6.4% from $31,102 in Q1 2024[120] - Advertising and marketing services revenue decreased by 7.2% to $10,813, while circulation revenue decreased by 5.2% to $15,447[121] - Circulation revenue accounted for 53.0% of total revenue in Q1 2025, up from 52.4% in Q1 2024[127] - Total operating revenue for the TDMN segment decreased to $25,152 in Q1 2025 from $27,053 in Q1 2024[161] Operating Income and Expenses - The company reported an operating income of $34,208 for Q1 2025, compared to an operating loss of $1,756 in Q1 2024[121] - Employee compensation and benefits decreased by 7.9% to $14,847, reflecting cost management efforts[121] - The company recognized an income tax provision of $5,988 in Q1 2025, primarily due to income from the sale of the Plano facility[138] - Other income decreased by 89.4% to $65 in Q1 2025, down from $611 in Q1 2024[134] Revenue Stream Changes - Print advertising revenue decreased by $690, or 12.2%, to $4,949 in Q1 2025 compared to Q1 2024[142] - Digital advertising revenue decreased by $67, or 3.4%, to $1,891 in Q1 2025 compared to Q1 2024[143] - Print circulation revenue decreased by $709, or 6.0%, to $11,047 in Q1 2025 compared to Q1 2024, driven by a decline in print subscriptions[147] - Digital circulation revenue decreased by $144, or 3.2%, to $4,400 in Q1 2025 compared to Q1 2024[148] Asset Management and Sales - The company completed the sale of its Plano printing facility for net cash proceeds of $40,651, generating a net gain of $36,206[116] - The company recorded a net gain of $36,206 from the sale of the North Plant Property in Q1 2025[157] - Cash and cash equivalents increased to $44,170 as of March 31, 2025, from $9,594 as of December 31, 2024[165] - Net cash provided by investing activities was $38,114 in Q1 2025, primarily from the sale of the North Plant Property[171] Strategic Focus and Future Outlook - The company is focusing on diversifying revenue streams through digital strategies and new advertising products to counteract declining print circulation[118] - The company continues to leverage its existing assets for cost-efficient commercial printing and distribution services[113] - The company expects annual expense savings of approximately $5,000 following the transition to a smaller, more efficient printing facility[167] - The Company is transitioning its print operations and expects capital investments and expense savings related to this transition[179] Risks and Uncertainties - There are anticipated pension settlement charges that may impact the Company's financial outlook[179] - The Company is focused on executing its Return to Growth Plan, which is subject to various risks and uncertainties[179] - The success of the Company's digital strategy is critical for future revenue growth[179] - The Company faces risks related to changes in advertising demand and economic conditions that could affect performance[179] - There is no guarantee that the Company's board will approve future quarterly dividends[179] - Forward-looking statements are subject to risks that could cause actual results to differ materially from projections[179] Reporting and Compliance - The Company filed its Annual Report on Form 10-K for the year ended December 31, 2024, on March 17, 2025, with the SEC[177] - No material changes were made to the Company's critical accounting policies as stated in the Annual Report on Form 10-K[178]

Financial Performance - For Q1 2025, DallasNews Corporation reported net income of $28.3 million, or $5.28 per share, compared to a net loss of $1.4 million, or $(0.25) per share, in Q1 2024[1]. - Total revenue for Q1 2025 was $29.1 million, a decrease of $2.0 million or 6.4% compared to Q1 2024[5]. - Operating income for the three months ended March 31, 2025, was $34,208,000, compared to a loss of $1,756,000 in 2024, indicating a significant turnaround[26]. - Total segment profit for the three months ended March 31, 2025, was $4,004,000, down from $4,848,000 in 2024, a decrease of 17.43%[26]. - Adjusted operating loss for the three months ended March 31, 2025, was $(1,197,000), compared to $(780,000) in 2024, reflecting a worsening of 53.21%[27]. Revenue Breakdown - Advertising and marketing services revenue was $10.8 million, down $0.8 million or 7.2% from $11.6 million in Q1 2024, primarily due to a 12.2% decline in print advertising revenue[6]. - Circulation revenue decreased to $15.4 million, down $0.9 million or 5.2% from $16.3 million in Q1 2024, mainly due to a 6.0% drop in print circulation revenue[7]. - Digital advertising revenue for TDMN was $1,891,000 in 2025, slightly down from $1,958,000 in 2024, a decrease of 3.42%[25]. - Print advertising revenue decreased to $4,949,000 in 2025 from $5,639,000 in 2024, a decline of 12.24%[25]. Operating Expenses - Total consolidated operating expense improved by $1.7 million or 5.3% compared to Q1 2024, excluding the gain from the printing facility sale[9]. - Total operating costs and expenses for the three months ended March 31, 2025, were $30,322,000, compared to $31,882,000 in 2024, a reduction of 4.88%[27]. - Employee compensation and benefits for TDMN decreased to $10,006,000 in 2025 from $10,593,000 in 2024, a reduction of 5.54%[26]. Asset Management - As of March 31, 2025, DallasNews had cash and cash equivalents of $44.2 million and no debt, reflecting a strong balance sheet[11]. - The company fully funded its pension liabilities and transitioned them to an insurance carrier through an annuity purchase agreement, relieving it of all future pension obligations[12]. Strategic Initiatives - The company plans to evaluate investment opportunities in digital growth and return capital to shareholders over the next 90 days[1]. - The Agency segment's operating margin improved by $600,000 year-over-year, indicating positive operational performance[3]. - The company recorded a net gain of $36.2 million from the sale of the Plano printing facility, which significantly impacted operating income[3].

Core Insights - DallasNews Corporation reported a significant turnaround in financial performance for Q1 2025, achieving a net income of $28.3 million compared to a net loss of $1.4 million in Q1 2024, largely due to the sale of the Plano printing facility [2][24]. - The company is focused on its Return to Growth Plan, which includes fully funding pension plans and transitioning printing operations, leading to expected expense savings [2][13]. Financial Performance - Total revenue for Q1 2025 was $29.1 million, a decrease of $2.0 million or 6.4% compared to Q1 2024 [4]. - Advertising and marketing services revenue was $10.8 million, down 7.2% from $11.6 million in the previous year, primarily due to a 12.2% decline in print advertising revenue [5]. - Circulation revenue decreased to $15.4 million, a drop of 5.2% from $16.3 million, mainly due to a 6.0% decline in print circulation revenue [6]. - The company recorded a net gain of $36.2 million from the sale of the Plano printing facility, which significantly impacted operating income, resulting in an operating income of $34.2 million [2][24]. Operating Expenses - Total consolidated operating expense was $(5.1) million, with an improvement of $1.7 million or 5.3% compared to Q1 2024 when excluding the gain from the facility sale [8]. - Adjusted operating expense was $30.3 million, reflecting a decrease of $1.6 million or 4.9% year-over-year, primarily due to savings in employee compensation and benefits [9]. Employee and Cash Position - As of March 31, 2025, the company had 461 employees, a reduction of 70 or 13.2% compared to the previous year, attributed to the transition to a more efficient printing facility [12]. - The company reported cash and cash equivalents of $44.2 million, significantly up from $9.6 million at the end of 2024, and has no debt [12][26]. Pension Plans - The company fully funded its pension liabilities using proceeds from the Plano printing facility sale and transitioned these obligations to an insurance carrier through an annuity purchase agreement [10][13].

Company Overview - DallasNews Corporation is the holding company for The Dallas Morning News and Medium Giant, based in Dallas [3] - The Dallas Morning News is recognized as Texas' leading daily newspaper, known for its strong journalistic reputation and community ties, having won nine Pulitzer Prizes [3] - Medium Giant is an integrated creative marketing agency that has received multiple industry awards, including the AAF Addy and AMA DFW Annual Marketer of the Year Award for Campaign of the Year in 2024 [4] Upcoming Financial Results - DallasNews Corporation will release its first quarter 2025 financial results before the market opens on May 1, 2025 [1] - A conference call to discuss the financial results will take place on May 1, 2025, at 9:00 a.m. CDT [1] - The conference call will be available via webcast on the company's investor relations website, with an archive accessible afterward [2]

Core Viewpoint - DallasNews Corporation has experienced a significant decline in its stock price and revenues, despite reporting a net income improvement due to a non-cash tax benefit. The company is undergoing strategic changes to enhance efficiency and financial stability. Financial Performance - In Q4 2024, DallasNews reported a net income of $0.74 per share, a turnaround from a net loss of $0.41 per share in the same quarter the previous year [2] - Total revenues decreased by 8.5% to $31.1 million from $34 million year-over-year, while the operating loss slightly narrowed to $1.8 million from $2.5 million [2] - On a non-GAAP basis, the company had an adjusted operating loss of $1.3 million compared to an adjusted operating income of $0.6 million in the prior-year quarter, with a net income of $4 million reversing a net loss of $2.2 million [3] Revenue Breakdown - Advertising and marketing services revenues fell by 10.3% year-over-year to $11.5 million, primarily due to a 16.6% decline in print advertising [4] - Circulation revenues decreased by 4.7% to $16.3 million, affected by lower print subscriptions and the absence of one-time gains from Texas Rangers-related sales in 2023 [4] - Printing, distribution, and other revenues dropped by 19.4% to $3.2 million due to the termination of a commercial printing partnership [4] Cost Management - Total consolidated operating expenses were $32.8 million, down 9.9% year-over-year, attributed to savings in employee compensation and benefits [5] - Adjusted operating expenses saw a smaller decline of 2.9% to $32.4 million [5] Strategic Initiatives - Management highlighted progress in transitioning to a smaller, more efficient printing facility, expected to yield $5 million in annualized savings starting Q2 2025 [6] - The recent sale of the Plano printing facility for $43.5 million will be used to eliminate pension liabilities and strengthen the balance sheet [7] Factors Influencing Revenue - The revenue decline was largely due to the strategic discontinuation of the shared mail program and print-only editions, which accounted for $10.7 million of the $14.3 million full-year revenue drop [8] - Digital-only subscription revenues increased by 11.7% for the year, with Q4 seeing the strongest volume growth in two years, adding over 3,100 subscribers [9] Full Year Update - For 2024, revenues fell by 10.2% to $125.4 million, with a net income of $0.1 million compared to a net loss of $7.1 million in 2023, largely due to a $5 million tax benefit [11] Other Developments - The sale of the Plano printing facility is expected to provide approximately $39 million in net proceeds, primarily aimed at fully funding pension obligations, thereby eliminating the company's "only debt" [12]

Financial Data and Key Metrics Changes - For Q4 2024, DallasNews Corporation reported a net income of $4 million or $0.74 per share, compared to a net loss of $2.2 million in Q4 2023 [6] - Total revenue for Q4 2024 was $31.1 million, down from $34 million in the same quarter last year [6] - For the full year 2024, the company reported a net income of $131,000 or $0.02 per share, an improvement from a net loss of $7.1 million in 2023 [10] - Total revenue for the year was $125.4 million, down from $139.7 million in 2023 [11] Business Line Data and Key Metrics Changes - Advertising and marketing services revenue decreased by $1.3 million in Q4 2024, primarily due to a 6% decline in print advertising revenue [7] - Circulation revenue decreased by $800,000 in Q4 2024, mainly due to a $700,000 decline in print circulation revenue [7] - For the full year, advertising marketing services revenue decreased by $11.1 million or 18.9% year over year [12] - Digital-only subscribers increased by 1,334 or 2.1% year over year, totaling 64,334 as of December 31, 2024 [13] Market Data and Key Metrics Changes - The average newsprint industry cost per metric ton decreased by 7.3% to $637 compared to $687 in 2023 [16] - The company had $60.1 million of federal net operating loss carryforward as of December 31, 2024 [19] Company Strategy and Development Direction - The company has transitioned print operations to a smaller, more efficient facility, generating over $5 million in annualized expense savings starting in 2025 [21] - The sale of the Plano property for $43.5 million will allow the company to fully fund its pension plan [22] - Investments in website and app enhancements were prioritized to stabilize the digital audience before expanding the digital product portfolio [27] Management's Comments on Operating Environment and Future Outlook - Management noted that print advertising revenue is volatile due to the lack of long-term contracts with advertisers, but there is potential for recovery [40] - The company is focused on becoming cash flow positive as soon as possible, although specific guidance was not provided [67] - Management expressed optimism about the progress made in 2024 and the expected benefits from operational changes in 2025 [19][20] Other Important Information - The company recorded a non-cash tax benefit of $5 million due to a reduction in the valuation allowance [10] - As of March 17, 2025, cash and short-term investments totaled $47 million [18] Q&A Session Summary Question: What led to the decrease in print advertising revenue? - Management indicated that print advertising is volatile, with less than 10% of advertisers on annual contracts, leading to a significant drop in classified revenue in Q4 2024 [39][40] Question: Can you provide details on the operating expenses related to the severance plan? - Management stated that specific fourth-quarter expenses would be clearer in the first quarter call, with substantial savings expected from the severance plan [43][45] Question: What are the expected after-tax proceeds from the asset sale? - The gross proceeds from the sale were $43.5 million, with expected net proceeds around $39 million after taxes and expenses [57][58] Question: What is the expected capital expenditure after the first quarter? - Management indicated that capital expenditures would return to a range of $250,000 to $500,000 per quarter after the initial expenses related to the new facility [59][75] Question: How are digital margins performing? - Management noted that video advertising yields higher returns than print, contributing positively to digital margins [91][92]

Financial Data and Key Metrics Changes - For Q4 2024, Dallas News Corporation reported a net income of $4 million or $0.74 per share, compared to a net loss of $2.2 million in Q4 2023 [6] - The total revenue for Q4 2024 was $31.1 million, down from $34 million in Q4 2023, marking a decline in advertising and marketing services revenue by $1.3 million [6][7] - For the full year 2024, the company reported a net income of $131,000 or $0.02 per share, compared to a net loss of $7.1 million in 2023 [8] - Total revenue for the year was $125.4 million, down from $139.7 million in 2023, reflecting a decline of $14.3 million [8][9] Business Line Data and Key Metrics Changes - Advertising and marketing services revenue decreased by $11.1 million or 18.9% year-over-year, with print advertising revenue declining by $10.7 million due to discontinued product lines [9] - Circulation revenue decreased by $500,000, driven by a decline in print circulation, although digital-only circulation revenue increased [9][10] - Total adjusted operating expenses for Q4 2024 were $32.4 million, an improvement of $1 million compared to the same period last year [7] Market Data and Key Metrics Changes - The average newsprint industry cost per metric ton decreased to $637 from $687 in 2023, a reduction of 7.3% [11] - As of December 31, 2024, the company had 64,334 digital-only subscribers, an increase of 1,334 or 2.1% compared to the previous year [9] Company Strategy and Development Direction - The company has transitioned its print operations to a smaller, more efficient facility, generating over $5 million in annualized expense savings starting in 2025 [15] - The sale of the Plano property for $43.5 million has strengthened the balance sheet and allowed the company to fully fund its pension plan [15][16] - The focus for 2025 includes enhancing digital products, growing digital subscriptions, and maintaining high-quality journalism [24] Management's Comments on Operating Environment and Future Outlook - Management noted that print advertising revenue has shown volatility, particularly in classified revenue, but expressed optimism for recovery in early 2025 [30] - The company is implementing new AI technology for its paywall to improve digital subscription growth, although initial results may be affected by market conditions [36] - Management emphasized the importance of stabilizing the digital audience before expanding the digital product portfolio [19] Other Important Information - The company recorded a non-cash tax benefit of $5 million due to a reduction in the valuation allowance, which is expected to offset gains from the sale of the Plano property [8][12] - As of March 17, 2025, cash and short-term investments were reported at $47 million [12] Q&A Session Summary Question: What led to the substantial decrease in print advertising? - Management indicated that print advertising is volatile, with less than 10% on annual contracts, and noted a significant drop in classified revenue in Q4 2024 [28][30] Question: Can you provide total operating expenses related to the Plano separation plan? - Management stated that detailed expenses would be clearer in the first quarter of 2025, with substantial savings expected from the transition [31][34] Question: What are the expected after-tax proceeds from the asset sale? - The expected net proceeds from the sale of the Plano property are approximately $39 million after taxes and sales costs [41][62] Question: What will be the capital expenditure requirements going forward? - Management indicated that capital expenditures would be minimal after the first quarter, estimating around $250,000 to $500,000 per quarter [45][59] Question: Are digital margins improving? - Management confirmed that digital margins are strong and improving, particularly with the addition of video content, which commands higher advertising rates [68][70]