DallasNews Corporation (NASDAQ:DALN) Q4 2024 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings report shows declines in revenue and advertising, and management's evasive answers in the Q&A raise concerns. Despite some positive aspects like improved net income and cash position, the lack of clear guidance and ongoing challenges in print advertising and circulation suggest a negative market reaction.
Key Financial Performance
Net Income (Q4 2024) $4 million (compared to a net loss of $2.2 million in Q4 2023) due to improved operational performance.
Operating Loss (Q4 2024) $1.8 million (compared to an operating loss of $2.5 million in Q4 2023) due to reduced severance expenses.
Adjusted Operating Loss (Q4 2024) $1.3 million (decrease of $1.9 million from adjusted operating income of $600,000 in Q4 2023) due to revenue decline.
Total Revenue (Q4 2024) $31.1 million (decrease from $34 million in Q4 2023) primarily due to declines in advertising and circulation revenue.
Advertising and Marketing Services Revenue (Q4 2024) Decreased by $1.3 million (6% decline) compared to Q4 2023 due to a decline in print advertising.
Circulation Revenue (Q4 2024) Decreased by $800,000, primarily due to a $700,000 decline in print circulation revenue.
Other Revenue (Q4 2024) Decreased by $800,000 (19.4% decline) due to a canceled commercial printing partnership and non-recurring revenue from World Series product sales.
Net Income (Full Year 2024) $131,000 (compared to a net loss of $7.1 million in 2023) due to a non-cash tax benefit.
Operating Loss (Full Year 2024) $7.1 million (compared to an operating loss of $8.1 million in 2023) due to reduced severance expenses.
Adjusted Operating Loss (Full Year 2024) $1.6 million (improvement of $1.1 million from $2.7 million in 2023) due to expense savings.
Total Revenue (Full Year 2024) $125.4 million (compared to $139.7 million in 2023) due to a decline in advertising and circulation revenue.
Advertising and Marketing Services Revenue (Full Year 2024) Decreased by $11.1 million (18.9% decline) year over year due to discontinued product lines.
Circulation Revenue (Full Year 2024) Decreased by $500,000 due to print circulation decline.
Other Revenue (Full Year 2024) Decreased by $2.7 million (17.7% decline) primarily due to a canceled commercial printing partnership.
Total Adjusted Operating Expense (Q4 2024) $32.4 million (improvement of $1 million from Q4 2023) due to expense savings in employee compensation and newsprint.
Total Adjusted Operating Expense (Full Year 2024) $127 million (improvement of $15.4 million or 10.8% from $142.4 million in 2023) due to significant expense savings.
Cash and Short-term Investments (Dec 31, 2024) $9.6 million (increased to $47 million by March 17, 2025) due to the sale of the Plano property.
Federal Net Operating Loss Carryforward (Dec 31, 2024) $60.1 million, with $17.5 million expiring in 2037 and $42.5 million with no expiration.
Pension Plan Funding (End of January 2025) Approximately 94% funded, with expected contributions of $14 million to $16 million to complete funding.
Operating Highlights
Digital Subscription Growth: In Q4 2024, digital subscription base grew by 3,119, marking the strongest volume growth in eight quarters.
Website and App Enhancements: Investments were made in website performance and app upgrades, resulting in a 19% improvement in page load speed and positive consumer feedback.
In-Article Video Player: Launched an in-article video player in the sports section, with plans to roll it out across the entire website, leading to increased time spent on page by 3.2 times.
Market Positioning: Focus on stabilizing the digital audience before expanding the digital product portfolio due to a decline in the digital audience for core products.
Operational Efficiency: Transitioned print operations to a smaller facility, generating over $5 million in annualized expense savings starting in 2025.
Cost Reduction: Total adjusted operating expenses improved by $15.4 million or 10.8% year-over-year, primarily due to savings in employee compensation, distribution, and newsprint.
Strategic Shift: Shifted focus from creating new digital products to enhancing existing digital platforms to stabilize the audience.
Pension Plan Funding: Sale of the Plano property provided capital to fully fund the pension plan, which is viewed as a debt by the company.
Risk or Challenges
Revenue Decline: Total revenue decreased by $14.3 million year-over-year, with significant declines in advertising and circulation revenue due to the discontinuation of certain products and a general decline in print advertising.
Operating Loss: The company reported an operating loss of $7.1 million for the year, which includes severance expenses related to operational transitions.
Print Advertising Decline: Print advertising revenue decreased by $11.1 million or 18.9% year-over-year, indicating competitive pressures and a shift in consumer behavior.
Digital Audience Decline: The digital audience for core products has begun to decline after years of growth, posing a risk to digital subscription and advertising revenue.
Supply Chain Challenges: Potential price increases and tariffs in 2025 could impact newsprint costs, which are currently favorable but subject to change.
Employee Reduction: Headcount reduction from 526 to an expected 460 employees may impact operational capacity and employee morale.
Pension Funding: While the company plans to fully fund its pension plan, the reliance on the sale of the Plano property for capital raises concerns about financial stability.
Guidance & Outlook
Transition of Print Operations: Transitioned print operations to a smaller, more efficient facility, generating over $5 million in annualized expense savings starting in 2025.
Sale of Plano Property: Monetized the Plano facility for $43.5 million, providing capital to fully fund the pension plan.
Digital Subscription Strategy: Shifted focus to balance pricing and volume strategies for digital subscriptions, resulting in a growth of 3,119 digital subscriptions in Q4 2024.
Website and App Enhancements: Improved website performance and upgraded core app, leading to positive consumer feedback and increased engagement.
In-Article Video Player: Launched an in-article video player across the website, increasing time spent on page by 3.2 times.
Pension Plan Funding: Expect to contribute between $14 million and $16 million to complete the purchase of an annuity contract and fully fund the pension plan by the end of Q2 2025.
Digital Subscription Growth: Continue to focus on growing digital subscriptions and improving digital products in 2025.
Financial Outlook: Encouraged by results seen so far in 2025, with a strong balance sheet bolstered by the sale of the Plano property.
Cost Management: Continued focus on expense savings and operational efficiency.
Shareholder Return Plan
Shareholder Return Plan: In 2024, DallasNews Corporation plans to contribute between $14 million and $16 million to fully fund its pension plan, viewing it as a debt to ensure retirement benefits for employees are secure.
Property Sale Impact: The sale of the Plano property for $43.5 million has provided capital that will allow the company to strengthen its financial position and eliminate its only debt.
Key Q&A
Earnings Word Cloud
DALN Transcript
The earnings call summary presents a mixed outlook. While the net income and operating income have improved due to asset sales, revenue has declined, and digital membership growth is slow. The Q&A reveals cautious optimism about future improvements and cost savings, but uncertainties remain, especially in advertising revenue and digital growth. The fully funded pension plan is a positive, but the lack of strong guidance on future margins adds to the uncertainty. Overall, these factors suggest a neutral short-term stock price movement.
The earnings report shows declines in revenue and advertising, and management's evasive answers in the Q&A raise concerns. Despite some positive aspects like improved net income and cash position, the lack of clear guidance and ongoing challenges in print advertising and circulation suggest a negative market reaction.
Despite improved net income and reduced losses, the company faces declining revenue across key segments and unclear guidance on future cash flow positivity. The Q&A highlighted concerns about print advertising declines and lack of clarity on digital subscription metrics and expense specifics. The asset sale proceeds offer some relief, but overall, the financial health and future strategy remain uncertain, leading to a negative sentiment.
The earnings call reveals significant declines in revenue and advertising, a substantial operating loss, and unclear guidance on cash flow positivity. Despite improvements in pension funding and digital margins, the overall financial health remains concerning. The Q&A section highlights management's lack of transparency, particularly regarding expenses and digital circulation. Although there are some positive aspects, such as asset sale proceeds and cost savings, the overall sentiment leans negative due to revenue declines and management's evasive responses.
DALN Report
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