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DallasNews Corporation Announces First Quarter 2024 Financial Results

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DallasNews (Nasdaq: DALN) reported a Q1 2024 net loss of $1.4 million or $(0.25) per share, showing an improvement from the Q1 2023 net loss of $2.6 million or $(0.49) per share. The adjusted operating loss was $0.8 million, a 64% improvement from the previous year's $2.2 million. This improvement is attributed to cost reductions in distribution, employee compensation, and newsprint, despite a $4.1 million revenue decline. The revenue drop stemmed from the strategic exit of the shared mail program and discontinuation of print-only niche publications.

Total revenue for Q1 2024 was $31.1 million, down 11.6% from Q1 2023. Advertising revenue fell by 23.9% to $11.6 million, while circulation revenue increased by 1.8% to $16.3 million. The company recorded total operating expenses of $32.9 million, a 13.4% improvement from Q1 2023. DallasNews plans to relocate print operations, expecting $5 million in annual savings by early 2025.

As of March 31, 2024, the company had 531 employees, a reduction of 18.6% from the previous year. The company holds $18.4 million in cash and short-term investments and reported no debt.

Positive
  • Net loss reduced to $1.4 million in Q1 2024 from $2.6 million in Q1 2023.
  • Adjusted operating loss improved by 64%, reaching $0.8 million from $2.2 million in Q1 2023.
  • Total operating expenses decreased by 13.4% to $32.9 million.
  • Cost reductions in distribution ($2.5 million), employee compensation ($1.6 million), and newsprint ($0.9 million).
  • Circulation revenue increased by 1.8% to $16.3 million.
  • Digital-only subscription revenue grew by 25.2%.
  • Relocation of print operations expected to save $5 million annually by early 2025.
  • No debt reported; cash and short-term investments at $18.4 million.
Negative
  • Total revenue declined by 11.6% to $31.1 million.
  • Advertising and marketing services revenue dropped by 23.9% to $11.6 million.
  • Total revenue decrease primarily due to the end of the shared mail program and discontinuation of print-only niche publications.
  • Printing, distribution, and other revenue fell by 18.7% to $3.2 million.

Insights

DallasNews Corporation's first quarter 2024 results reflect a noteworthy improvement in reducing its losses compared to the same period last year. The company reported a net loss of $1.4 million, showing a significant reduction from the $2.6 million loss reported in Q1 of 2023. This improvement is largely credited to substantial expense savings, particularly in distribution, employee compensation and newsprint costs. Despite the reduction in expenses, the company experienced a revenue decline of $4.1 million, primarily due to the strategic exit from its shared mail program. This decision, while costly in terms of immediate revenue, aligns with the firm's broader strategic initiatives outlined in its Return to Growth Plan.

Revenue from advertising and marketing services dropped by $3.7 million, driven by a significant decrease in preprint advertising revenue. However, the slight increase in circulation revenue, particularly from digital-only subscriptions, indicates a positive shift towards digital transformation. The company's transition to a smaller facility in Carrollton is expected to generate $5.0 million in annual savings, further supporting the goal of achieving sustainable profitability.

For retail investors, the continuing losses, albeit reduced, might be a concern. However, the strategic cost-cutting measures and the shift towards digital could signal a positive long-term outlook. The absence of debt and a robust cash position of $18.4 million are also favorable indicators of financial stability.

The transition mentioned in the report suggests a strategic pivot towards a more digital-focused operational model. The growth in digital-only subscription revenue by 25.2% is a clear indicator of this shift. This move is essential in the current media landscape where digital content consumption is on the rise and print media is gradually declining. The company's efforts to streamline its operations, including the relocation of print operations, are aligned with industry trends aimed at cost optimization and digital transformation.

The decline in revenue from advertising and marketing services, particularly the drop in preprint advertising, reflects broader industry challenges in monetizing traditional print media. However, the increase in digital subscription revenue highlights the company's potential to capitalize on digital platforms, which could attract younger, tech-savvy audiences and advertisers.

Investors should note the company's proactive measures in addressing its operational inefficiencies and shifting market dynamics. The eventual profitability hinges on the successful implementation of these strategies and continued adoption of digital media by its readership.

DALLAS, May 15, 2024 (GLOBE NEWSWIRE) -- DallasNews Corporation (Nasdaq: DALN) (the “Company”) today reported a first quarter 2024 net loss of $1.4 million, or $(0.25) per share, and an operating loss of $1.8 million. In the first quarter of 2023, the Company reported a net loss of $2.6 million, or $(0.49) per share, and an operating loss of $2.8 million.

For the first quarter of 2024, on a non-GAAP basis, DallasNews reported an operating loss adjusted for certain items (“adjusted operating loss”) of $0.8 million, an improvement of $1.4 million or 64.0 percent when compared to an adjusted operating loss of $2.2 million reported in the first quarter of 2023. The improvement is primarily due to expense savings of $2.5 million in distribution, $1.6 million in employee compensation and benefits, and $0.9 million in newsprint, partially offset by a total revenue decline of $4.1 million. The $2.5 million expense savings in distribution and total revenue decline of $4.1 million are primarily the result of the Company’s strategic decision to exit its shared mail program to deliver weekly preprints and discontinue print-only editions of its niche publications at the end of August 2023.

Grant Moise, Chief Executive Officer, said, “I am pleased with the progress we saw in the first quarter reducing our adjusted operating loss 64 percent on a year-over-year basis. This improvement is consistent with the Company’s Return to Growth Plan and reassures me we are on the right path towards future profitability. From its inception, the Return to Growth Plan was designed to allow the Company to maintain a newsroom large enough to provide the North Texas market with exceptional journalism that responsibly serves over eight million residents, and we remain committed to this essential element of our Plan.

“Yesterday we announced that we will be relocating and streamlining our print operations from Plano to a smaller facility in Carrollton. We expect this transition to be completed in early 2025 and to generate $5.0 million of annualized operating expense savings, which is a pivotal step in our path to become a sustainably profitable enterprise. While we make this transition, we will evaluate opportunities for the 29 acres of property that we own in Collin County, including a potential sale.”

First Quarter Results

Total revenue was $31.1 million in the first quarter of 2024, a decrease of $4.1 million or 11.6 percent when compared to the first quarter of 2023.

Revenue from advertising and marketing services, including print and digital revenues, was $11.6 million in the first quarter of 2024, a decrease of $3.7 million or 23.9 percent when compared to the $15.3 million reported for the first quarter of 2023. The decline is primarily due to a $3.6 million decrease in preprint advertising revenue as a result of the Company ending its shared mail program.

Circulation revenue was $16.3 million in the first quarter of 2024, an increase of $0.3 million or 1.8 percent when compared to the $16.0 million reported for the first quarter of 2023. The digital-only subscription revenue increase of $0.9 million or 25.2 percent offset the print circulation revenue decline of $0.6 million or 5.0 percent.

Printing, distribution and other revenue was $3.2 million, a decrease of $0.7 million or 18.7 percent when compared to the first quarter of 2023, primarily due to a decline in revenue from commercial printing and distribution, and mailed advertisements for business customers.

Total consolidated operating expense in the first quarter of 2024, on a GAAP basis, was $32.9 million, an improvement of $5.1 million or 13.4 percent when compared to the first quarter of 2023. The improvement is primarily due to expense savings of $2.5 million in distribution, $1.3 million in employee compensation and benefits, including severance, and $0.9 million in newsprint.

On a non-GAAP basis, adjusted operating expense was $31.9 million, an improvement of $5.5 million or 14.7 percent when compared to the first quarter of 2023.

As of March 31, 2024, the Company had 531 employees, a headcount decrease of 121 or 18.6 percent when compared to the prior year period, resulting from the 2023 Voluntary Severance Program participants and additional first quarter headcount reductions. Cash and cash equivalents along with short-term investments were $18.4 million and the Company had no debt.

Non-GAAP Financial Measures

Reconciliations of operating loss to adjusted operating loss, and total operating costs and expense to adjusted operating expense are included in the exhibits to this release.

Financial Results Conference Call

DallasNews Corporation will conduct a conference call on Thursday, May 16, 2024, at 9:00 a.m. CDT to discuss financial results. The conference call will be available via webcast by accessing the Company’s website at investor.dallasnewscorporation.com/events. An archive of the webcast will be available at dallasnewscorporation.com in the Investor Relations section.

To access the listen-only conference call, dial 1-844-291-4185 and enter the following access code when prompted: 6757376. A replay line will be available at 1-866-207-1041 from 12:00 p.m. CDT on May 16, 2024 until 11:59 p.m. CDT on May 22, 2024. The access code for the replay is 4664664.

About DallasNews Corporation

DallasNews Corporation is the Dallas-based holding company of The Dallas Morning News and Medium Giant. The Dallas Morning News is Texas’ leading daily newspaper with an excellent journalistic reputation, intense regional focus and close community ties. With offices in Dallas and Tulsa, Medium Giant is a full-service advertising agency dedicated to designing, creating and delivering stories that drive customers to act. For additional information, visit dallasnewscorporation.com or email invest@dallasnews.com

Statements in this communication concerning the Company’s planned transition of print operations, expected capital investments and expense savings related to the transition, the Company’s business outlook or future economic performance, revenues, expenses, cash balance, investments, business initiatives, working capital, dividends, future financings, and other financial and non-financial items that are not historical facts are “forward-looking statements” as the term is defined under applicable federal securities laws. Words such as “anticipate,” “assume,” “believe,” “can,” “could,” “estimate,” “forecast,” “intend,” “expect,” “may,” “project,” “plan,” “seek,” “should,” “target,” “will,” “would” and their opposites and similar expressions are intended to identify forward-looking statements. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those set forth in forward-looking statements. Such risks, trends and uncertainties are, in most instances, beyond the Company’s control, and include changes in advertising demand and other economic conditions; volatility in the North Texas real estate market; consumers’ tastes; newsprint and distribution prices; program costs; the Company’s ability to successfully execute the Return to Growth Plan; the success of the Company’s digital strategy; labor relations; cybersecurity incidents; and technological obsolescence. Among other risks, there can be no guarantee that the board of directors will approve dividends in the future or that the Company’s financial projections are accurate, as well as other risks described in the Company’s Annual Report on Form 10-K and in the Company’s other public disclosures and filings with the Securities and Exchange Commission. Forward-looking statements, which are as of the date of this filing, are not updated to reflect events or circumstances after the date of the statement.

Contact:
Katy Murray
214-977-8869
KMurray@dallasnews.com


DallasNews Corporation and Subsidiaries
Consolidated Statements of Operations

       
       
  Three Months Ended March 31,
In thousands, except share and per share amounts (unaudited) 2024
 2023
Net Operating Revenue:      
Advertising and marketing services $11,646  $15,309 
Circulation  16,300   16,011 
Printing, distribution and other  3,156   3,882 
Total net operating revenue  31,102   35,202 
Operating Costs and Expense:      
Employee compensation and benefits  16,117   17,373 
Other production, distribution and operating costs  15,059   18,028 
Newsprint, ink and other supplies  1,284   2,184 
Depreciation  398   373 
Total operating costs and expense  32,858   37,958 
Operating loss  (1,756)  (2,756)
Other income, net  611   362 
Loss Before Income Taxes  (1,145)  (2,394)
Income tax provision  218   232 
Net Loss $(1,363) $(2,626)
       
Per Share Basis (1)      
Net loss      
Basic $(0.25) $(0.49)
Number of common shares used in the per share calculation:      
Basic  5,352,490   5,352,490 


(1) The Company’s Series A and Series B common stock equally share in the distributed and undistributed earnings. There were no options or RSUs outstanding as of March 31, 2024 and 2023, that would result in dilution of shares or the calculation of EPS under the two-class method as prescribed under ASC 260 – Earnings Per Share.

DallasNews Corporation and Subsidiaries
Consolidated Balance Sheets

         
         
  March 31, December 31,
In thousands (unaudited) 2024 2023
Assets        
Current assets:        
Cash and cash equivalents $7,946  $11,697 
Short-term investments  10,478   10,781 
Accounts receivable, net  8,582   9,923 
Other current assets  6,508   4,532 
Total current assets  33,514   36,933 
Property, plant and equipment, net  6,767   7,099 
Operating lease right-of-use assets  15,652   16,141 
Deferred income taxes, net  260   271 
Other assets  1,785   1,790 
Total assets $57,978  $62,234 
Liabilities and Shareholders’ Equity        
Current liabilities:        
Accounts payable $3,660  $3,963 
Accrued compensation and other current liabilities  7,878   10,449 
Contract liabilities  10,593   9,511 
Total current liabilities  22,131   23,923 
Long-term pension liabilities  16,766   17,353 
Long-term operating lease liabilities  16,356   16,924 
Other liabilities  1,028   1,076 
Total liabilities  56,281   59,276 
Contingent liabilities        
Total shareholders' equity  1,697   2,958 
       Total liabilities and shareholders’ equity $57,978  $62,234 


DallasNews Corporation - Non-GAAP Financial Measures
Reconciliation of Operating Loss to Adjusted Operating Loss

       
       
  Three Months Ended March 31,
In thousands (unaudited) 2024
 2023
Total net operating revenue $31,102  $35,202 
Total operating costs and expense  32,858   37,958 
Operating Loss $(1,756) $(2,756)
       
Total operating costs and expense $32,858  $37,958 
Less:      
Depreciation  398   373 
Severance expense  578   217 
Adjusted Operating Expense $31,882  $37,368 
       
Total net operating revenue $31,102  $35,202 
Adjusted operating expense  31,882   37,368 
Adjusted Operating Loss $(780) $(2,166)


The Company calculates adjusted operating income (loss) by adjusting operating income (loss) to exclude depreciation, severance expense, (gain) loss on sale/disposal of assets, and asset impairments (“adjusted operating income (loss)”). The Company believes that inclusion of certain noncash expenses and other items in the results makes for more difficult comparisons between years and with peer group companies.

Adjusted operating income (loss) is not a measure of financial performance under generally accepted accounting principles (“GAAP”). Management uses adjusted operating income (loss) and similar measures in internal analyses as supplemental measures of the Company’s financial performance, and for performance comparisons versus its peer group of companies. Management uses this non-GAAP financial measure for the purposes of evaluating consolidated Company performance. The Company therefore believes that the non-GAAP measure presented provides useful information to investors by allowing them to view the Company’s business through the eyes of management and the Board of Directors, facilitating comparison of results across historical periods and providing a focus on the underlying ongoing operating performance of its business. Adjusted operating income (loss) should not be considered in isolation or as a substitute for net income (loss), cash flows provided by (used for) operating activities or other comparable measures prepared in accordance with GAAP. Additionally, this non-GAAP measure may not be comparable to similarly-titled measures of other companies.


FAQ

What was DallasNews 's net loss for Q1 2024?

DallasNews reported a Q1 2024 net loss of $1.4 million, or $(0.25) per share.

How did DallasNews (DALN) perform financially in Q1 2023 compared to Q1 2024?

In Q1 2023, DallasNews had a net loss of $2.6 million or $(0.49) per share, while in Q1 2024, the net loss was reduced to $1.4 million or $(0.25) per share.

What was DallasNews 's total revenue for Q1 2024?

The total revenue for Q1 2024 was $31.1 million, a decrease of 11.6% from Q1 2023.

What are the cost-saving measures mentioned in the DallasNews Q1 2024 report?

The cost-saving measures included $2.5 million in distribution, $1.6 million in employee compensation, and $0.9 million in newsprint expenses.

Why did DallasNews 's revenue decline in Q1 2024?

The revenue decline was primarily due to the strategic decision to exit the shared mail program and discontinue print-only niche publications.

How much did DallasNews 's advertising revenue decline in Q1 2024?

Advertising and marketing services revenue declined by 23.9% to $11.6 million in Q1 2024.

What is the future plan for DallasNews 's print operations?

DallasNews plans to relocate and streamline its print operations to a smaller facility in Carrollton by early 2025, expecting to save $5 million annually.

How many employees did DallasNews have as of March 31, 2024?

As of March 31, 2024, DallasNews had 531 employees, a decrease of 18.6% from the prior year.

What is the status of DallasNews 's debt as of Q1 2024?

DallasNews reported no debt as of Q1 2024.

DallasNews Corporation Series A

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