DallasNews Stock Falls 19% Despite Q4 Earnings Rising Y/Y

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$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$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]