DallasNews Corporation Reports Mixed Q4 Earnings Amid Share Declines
Shares of DallasNews Corporation (DALN) have fallen 19% since the company released its earnings report for the quarter ending December 31, 2024. In contrast, the S&P 500 index has shown a modest gain of 0.3% during the same period. Over the last month, DallasNews stock has declined by 8.5%, while the S&P 500 has decreased by 5.6%.
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Fourth Quarter Performance Overview
In Q4 2024, DallasNews reported a net income of 74 cents per share, a turnaround from a net loss of 41 cents per share in the same quarter last year.
Total revenues decreased by 8.5%, coming in at $31.1 million, down from $34 million in the previous year. The company recorded a slightly narrowed operating loss of $1.8 million, compared to $2.5 million last year.
On a non-GAAP basis, the adjusted operating loss was $1.3 million, contrasting with an adjusted operating income of $0.6 million in the prior-year quarter. Conversely, the company achieved a net income of $4 million, reversing a net loss of $2.2 million from the previous period. This improvement was aided by a non-cash tax benefit of $5.3 million linked to deferred tax assets.
Key Business Metrics
Advertising and marketing services revenues fell 10.3% year-over-year, totaling $11.5 million, largely due to a 16.6% drop in print advertising. Circulation revenues dropped 4.7% to $16.3 million, impacted by a decline in print subscriptions and the absence of one-off gains from Texas Rangers-related sales last year. Additionally, printing, distribution, and other revenues plummeted 19.4% to $3.2 million, affected by the termination of a commercial printing partnership and a lack of special product sales tied to the Rangers’ championship run.
On the expense side, total consolidated operating expenses amounted to $32.8 million for the quarter, marking a 9.9% decline year-over-year. This reduction was driven by savings of $3.3 million in employee compensation and benefits, which included severance payments, along with $0.5 million in lower newsprint costs. Adjusted operating expenses only fell 2.9% to $32.4 million.
Management Insights
Management underscored progress in transitioning to a more compact and efficient printing facility, projected to yield $5 million in annual savings beginning in Q2 2025. CEO Grant Moise highlighted improved performance from the Medium Giant agency, which added $1.2 million to its contributions. Enhancements to digital platforms, including a 19% improvement in page load time and an upgraded app, have also bolstered digital subscription growth.
President Katy Murray outlined the strategic $43.5 million sale of the Plano printing facility, which will help eliminate pension liabilities and strengthen the balance sheet. As of January 2025, the pension plan is 94% funded, with an expected contribution of $14-$16 million aimed at completing annuitization in the second quarter.
Revenue Declines Explained
The revenue decline was significantly attributed to the strategic discontinuation of the shared mail program and print-only editions of niche publications in August 2023, which accounted for $10.7 million of the full-year revenue drop totaling $14.3 million. However, a corresponding cost reduction of $9.1 million offset some of the profitability impact. Declines in print circulation and advertising also pressured revenues, though digital-only subscription revenues increased by 11.7% year-over-year.
In the fourth quarter, digital subscriptions enjoyed their strongest growth in two years, adding over 3,100 subscribers owing to a new pricing strategy. Nonetheless, gains were partially offset by declines in classified advertising and a lack of one-off revenue related to World Series sales.
Annual Financial Update
For the full year 2024, revenues fell 10.2% to $125.4 million. DallasNews reported a modest net income of $0.1 million, a recovery from a net loss of $7.1 million in 2023, mainly due to a $5 million tax benefit. The company achieved a net income of 2 cents per share, reversing a net loss of $1.33 per share from the prior year.
Recent Notable Events
A significant development in the quarter was the $43.5 million sale of the Plano, TX, printing facility, which is expected to yield around $39 million in net proceeds after expenses and taxes. The majority of these funds are aimed at fully addressing pension obligations, likely enhancing the company’s financial flexibility.
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Originally published on Zacks Investment Research (zacks.com).
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