DallasNews Q4 2024 Earnings Call Transcript

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Provided by Quartr
March 18, 2025
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Operator

Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the Dallas News Fourth Quarter and Full Year twenty twenty four Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

Thank you. And I would now like to turn the conference over to Gary Cobley, Vice President and Controller of Dallas News Corporation. Gary, you may begin.

Gary Cobleigh
Gary Cobleigh
VP & Controller at Dallasnews

Good morning, everyone. This is Gary Cobley, Vice President and Controller of Dallas News Corporation. Welcome to our fourth quarter and full year '20 '20 '4 investor call. I'm joined by Kathy Collins, Dallas News' Chief Financial Officer, who will be reviewing financial results Katie Murray, President of Dallas News and Grant Moyse, Chief Executive Officer, who will provide brief business remarks. Yesterday afternoon, we issued a press release announcing fourth quarter and full year twenty twenty four results and filed our twenty twenty four ten ks.

Gary Cobleigh
Gary Cobleigh
VP & Controller at Dallasnews

Both of these are posted on our website, dallasnewscorporation.com under the Investor Relations section. Unless otherwise specified, comparisons used on today's call measure fourth quarter and full year 2024 performance against fourth quarter and full year 2023 performance. Our discussion today will include forward looking statements. Forward looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those statements. The company assumes no obligation to update the information in this communication, except as otherwise required by law.

Gary Cobleigh
Gary Cobleigh
VP & Controller at Dallasnews

Additional information about these factors is detailed in the company's press releases and publicly available filings with the SEC. Today's discussion will include non GAAP financial measures. We believe that non GAAP financial measures provide useful supplemental information to assist investors in determining performance comparisons to our peers. A reconciliation of GAAP to non GAAP financial measures is included with our press release. I'll now turn the call over to Kathy.

Cathy Collins
Cathy Collins
CFO at Dallasnews

Good morning, everyone, and thank you for joining today's call. On a GAAP basis for the quarter, Dallas News Corporation reported net income of $4,000,000 or 0.74 per share and an operating loss of $1,800,000 In Q4 last year, we reported a net loss of $2,200,000 and an operating loss of $2,500,000 which includes severance expense of $2,700,000 for the 2023 voluntary severance offer. On a non GAAP basis for the quarter, we reported an adjusted operating loss of $1,300,000 a decrease of $1,900,000 when compared to adjusted operating income of $600,000 reported for the same period last year. We reported $31,100,000 of total revenue for the quarter, which compares to $34,000,000 last year. Advertising and marketing services revenue decreased $1,300,000 for the quarter due to a print advertising revenue decline of $1,100,000 or 16.6% compared to the same period last year.

Cathy Collins
Cathy Collins
CFO at Dallasnews

Circulation revenue decreased $800,000 for the quarter, primarily due to a $700,000 decline in print circulation revenue, which included $200,000 from single copy sales for the fourth quarter of twenty twenty three for the Texas Rangers winning the twenty twenty three World Series. Other revenue decreased $800,000 or 19.4% for the quarter, resulting primarily from a canceled commercial printing partnership and non recurring revenue of $500,000 generated in 2023 from Texas Rangers World Series product sales. On a non GAAP basis, total adjusted operating expense for the quarter was $32,400,000 an improvement of $1,000,000 when compared to the same period last year, driven by expense savings of $600,000 in employee compensation and benefits and $500,000 in newsprint. Turning to full year results. On a GAAP basis, we reported net income of $131,000 or $0.02 per share and an operating loss of $7,100,000 which includes severance expense of $2,800,000 related to the transition of our print and distribution operations to a smaller printing facility.

Cathy Collins
Cathy Collins
CFO at Dallasnews

Net income includes a non cash tax benefit of $5,000,000 resulting from a reduction in the valuation allowance in anticipation of the use of net operating losses to offset the 2025 gain on the sales of Plano property. For 2023, we reported a GAAP net loss of $7,100,000 and an operating loss of $8,100,000 dollars On a non GAAP basis for the year, we reported an adjusted operating loss of $1,600,000 an improvement of $1,100,000 when compared to an adjusted operating loss of $2,700,000 reported in 2023. The improvement is primarily due to expense savings of $15,400,000 with the greatest reductions in employee compensation and benefits, distribution expense and newsprint, partially offset by a total revenue decline of 14.4 excuse me, $14,300,000 10 point 7 million dollars of the revenue decline and $9,100,000 of the expense savings are the results of the discontinuation of the shared mail program and print only edition of our niche publications in 2023. We reported $125,400,000 of total revenue for the year and this compares to $139,700,000 last year. Advertising marketing services revenue decreased $11,100,000 or 18.9% year over year.

Cathy Collins
Cathy Collins
CFO at Dallasnews

Excluding the $10,700,000 reduction in print advertising resulting from the discontinued product line, print advertising revenue declined $1,400,000 or 5.7%, partially offset by an improvement of $1,000,000 or 6.5% in marketing and media services revenue driven by new customer contracts that began in 2024. Circulation revenue decreased 500,000 from 2023, which was driven by a print circulation decline and $200,000 which is attributable to single copy sales for the Texas Rangers winning the World Series. The print circulation decline was partially offset by an increase in digital only circulation revenue. As of December 31, the news had 64,334 digital only subscribers, an increase of thirteen thirty four or 2.1% compared to last year. We continue to focus on finding the optimal balance between pricing and volume strategies for digital subscription and Grant will provide additional commentary on those efforts shortly.

Cathy Collins
Cathy Collins
CFO at Dallasnews

Total subscribers including both home delivery and digital subscribers was 126,973 as of December 31, compared to 132,694 as of December. Other revenue decreased $2,700,000 or 17.7% compared to last year, primarily due to a canceled commercial printing and distribution partnership of $900,000 in revenue. On a non GAAP basis, total adjusted operating expenses for the year was $127,000,000 an improvement of $15,400,000 or 10.8% when compared to the $142,400,000 of adjusted operating expense last year. The improvement is primarily due to expense savings of 5,500,000 in employee compensation and benefits, $6,500,000 in distribution and $3,500,000 in newsprint. Newsprint expense is favorable year over year.

Cathy Collins
Cathy Collins
CFO at Dallasnews

Newsprint expense is favorable year over year as the result of lower circulation and discontinuing print only additions of our niche publication. The niche print purchase price has continued to trend favorably. As of year end, the average newsprint industry cost per metric ton was $637 compared to $687 in 2023, a decrease of 7.3%. We are monitoring for any potential impact as they relate to potential price increases and tariffs in 2025. As of December 31, headcount was $5.26, down 75 compared to last year.

Cathy Collins
Cathy Collins
CFO at Dallasnews

As of the May, we expect headcount to be approximately $4.60 after the departure of production employees in the first quarter of this year. Cash along with short term investments was $9,600,000 on December 31. And as of March 17, cash was $47,000,000 In 2024, we paid $484,000 of Texas franchise tax for fiscal year 2023, net of tax refunds. We expect the Texas franchise tax in May of this year to be approximately the same for 2024. For the year, the company recorded a tax benefit of $5,000,000 due to a reduction in the valuation allowance for deferred tax assets that we determined to be realizable as an offset to the income from Plano property sale.

Cathy Collins
Cathy Collins
CFO at Dallasnews

As of 12/31/2024, the company had $60,100,000 of federal net operating loss carry forward, 17,500,000 which expire in 02/1937 and $42,500,000 that do not have an expiration. In the first quarter of twenty twenty five, we will record a gain on the sale of the Plano property and utilize a significant portion of our NOLs to offset the gain, which will minimize cash taxes. We're pleased with the progress the company has made this year towards our long term strategy and we were right in line to how we expected to end the year. We remain in a good position on our balance sheet made stronger with the recent sale of the property in Plano that Katie will elaborate on. And we're encouraged by the results we are seeing so far in 2025. I will now turn the call over to Katie.

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

Good morning, everyone, and thank you for joining our year end call. I am extremely pleased with the progress we made in 2024 on a number of initiatives. First, we have transitioned our print operations to a smaller, more efficient facility. And in addition to generating over $5,000,000 in annualized expense savings to start in 2025, the move has allowed us to successfully monetize the Plano facility for $43,500,000 We are truly excited that the DaNaygo EV will be repurposing the facility.

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

Second, the sale of the property has provided capital, which will allow us to voluntarily fully fund our pension plan. As Grant and I have always stated, we view the pension plan as our debt and have been committed to ensuring that the retirement benefits of 1,300 of our former and current employees is secure and fully funded. As of the January, the plan was approximately 94% funded and the investment allocation had been moved to 100% immunizing to limit market risk and volatility. We expect that we will contribute between $14,000,000 and $16,000,000 before the end of the second quarter to complete the purchase of an annuity contract from an insurance carrier and complete the transfer of the planned assets. I will now turn the call over to Grant.

Grant Moise
Grant Moise
Chief Executive Officer at Dallasnews

Thanks, Katie. Reflecting on 2024, the year was highlighted by transformational projects focused on the long term success of the company. As Katie noted, the transition of our print operations to a smaller and more efficient facility and the sale of the Plano property have been instrumental in our ability to strengthen our balance sheet by reducing expenses, adding cash and giving us the ability to eliminate the only debt the company has. In addition to these print production changes, Medium Giant's contribution to the company's operating income was a priority in 2024 and continues to be in 2025. As we reviewed the business at the end of twenty twenty three, I needed better visibility into the margin that we knew our agency business could deliver and this led to the implementation of segment reporting.

Grant Moise
Grant Moise
Chief Executive Officer at Dallasnews

Segment reporting not only gives us gives the management team and me the visibility we need into the business, but it also provides our investors that same insight. While Medium Giant has not hit the margin we are seeking, on a year over year basis, Medium Giant improved its contribution by $1,200,000 and is becoming more accretive to the company as John Keiker, President of Medium Giant, continues to implement his strategy. On the Dallas Morning News side of the business, investments in our website and our app were a priority last year. We chose to prioritize these product enhancements over the creation of new digital products in 2024, which was a deviation from our original plan to diversify our digital product portfolio. This change was necessary because our digital audience for our core products had begun to decline after many years of consistent growth.

Grant Moise
Grant Moise
Chief Executive Officer at Dallasnews

We need a growing digital audience to continue to fuel our digital subscriptions and digital advertising revenue from our core product. And we have chosen to stabilize that audience before shifting additional resources to expand the portfolio. These product enhancements in 2024 included our website performance. The speed of a website is one of the largest determining factors of its prioritization on search engines. In December of twenty twenty four, the page load speed of dallasnews.com was 5.9.

Grant Moise
Grant Moise
Chief Executive Officer at Dallasnews

This improvement is 19% better than the beginning of 2024 and forty six percent faster than where we were eighteen months ago. We also chose to upgrade our core app. We upgraded this app for both iOS and Android, and we've received positive feedback from consumers from those material upgrades and its user experience. We will continue to do the same thing in 2025, so our journalism can shine on all platforms. We launched an in article video player in our sports section last year and we are rolling it out of the video player across the entire website in the coming months.

Grant Moise
Grant Moise
Chief Executive Officer at Dallasnews

Early results are strong as we're meeting direct advertising goals and we've increased the time spent on page by 3.2 times than prior to the implementation of the same of this in article video player. In addition to video, we also brought back reader commenting on our website. We heard from our customers that not being able to comment on stories made our website experience less valuable than other news websites. Similar to how we launched video, we're starting with a single section of the website and we'll continue to roll out this functionality in the coming months. Going from product to digital subscriptions, as Kathy noted, when we think about digital subscriptions, we continue to focus on the right balance between price and volume.

Grant Moise
Grant Moise
Chief Executive Officer at Dallasnews

In the third quarter of twenty twenty four, we made an intentional shift from pricing to strategies that would grow our digital subscription volume. While we're still in the early stages of this new price strategy, we grew our digital subscription base by 3,119 in the fourth quarter, which was the strongest volume growth we had seen in eight quarters. Last but not least, our focus has and always will be on the excellence of our journalism. In 2024, we had an investigative series entitled Bleeding Out. Our journalists uncovered that tens of thousands of Americans die from preventable bleeding each year because ambulances were not carrying blood.

Grant Moise
Grant Moise
Chief Executive Officer at Dallasnews

As a result of this excellent journalism, a new program in Dallas has been implemented that will ensure paramedics have blood supplies in the field, which will help prevent deaths between accident sites in the hospital. For a journalism company focused on excellence, when we see that our work translates into policy changes that improve or in this case save lives, it reminds us why journalism is so important to our region and our country. As we look to 2025, our team remains focused on continuing to produce excellent journalism, improving our digital products, growing digital subscription excuse me, growing digital subscriptions and maintaining the excellence

Operator

Your first question comes from Rohan Gilmore. Please go ahead.

Rohan Gilmour
VP - Commercial Real Estate Resolutions at First Citizens Bank

Hey, good morning guys. Thanks for taking my questions.

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

Good morning.

Rohan Gilmour
VP - Commercial Real Estate Resolutions at First Citizens Bank

On the print advertising side, there was a pretty substantial decrease quarter over quarter and year over year. Can you guys share some color on kind of what led to that decrease and what you saw in the quarter and what you're seeing in the year to date for advertising?

Grant Moise
Grant Moise
Chief Executive Officer at Dallasnews

Yes. So Rohan, it's Grant. I'll answer that. Print advertising is unique because less than 10% of our print advertisers are on an annual contract. So what that means is that we get it sometimes just in time.

Grant Moise
Grant Moise
Chief Executive Officer at Dallasnews

It's like just in time inventory. We get these things in very short order. And what happened in the fourth quarter with that 16.6% drop was obviously much lower than the rest of the year. And it came from a variety of areas, but mostly in our classified revenue. Our classified revenue was just uniquely soft in the quarter.

Grant Moise
Grant Moise
Chief Executive Officer at Dallasnews

It continued a little bit into the early part of this year and we're seeing March start to pick up. So again, when it's one of those things that is not contracted, it has some volatility and that's the bad news as we saw, but the good news is that that pendulum can swing in the other direction as well.

Rohan Gilmour
VP - Commercial Real Estate Resolutions at First Citizens Bank

Got it. On the expense side, can you guys provide the total operating expenses incurred in the quarter that's associated with the 80 or so employees that are going to be leaving the company as related to the Plano separates plan?

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

So Rohan, I'll take that question. We're not going to provide the fourth quarter. There was a lot of activity happening then and I think everybody knows, we were really pleased that the sale was completed last week. It took a little bit longer than we had expected, but the patience was worthwhile and we've got the right buyer for the property. The first quarter on a year over year basis, that's really going to be clean is going to be the second quarter of this year.

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

Even in this first quarter, we've been incurring facility charges and employees, etcetera, because we've owned the building up through last week. And so, I think on the first quarter call, that'll be the really the first opportunity for us to get some insight into the second quarter where we're going to start seeing again year over year favorability. But what I will say is and I made in my comments, the $5,000,000 on an annualized basis is a good number. Again, that's annualized. So while we had hoped that it was started on January 1, it's not.

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

So it's going to be really kind of starting the March and the full first month April. But we'll get visibility to that on our first quarter call. But again, those savings are substantial and are going to be realized.

Rohan Gilmour
VP - Commercial Real Estate Resolutions at First Citizens Bank

Got it. And that makes sense. On the digital volume circulation, Grant, could you would you be willing to provide that year to date?

Grant Moise
Grant Moise
Chief Executive Officer at Dallasnews

Yes. I will tell you, I don't have the specific numbers, Rohan, of kind of where we are year to date. I'll tell you that 3,000 that over 3,100 where we were in the fourth quarter has slowed down in the first quarter. And some of that may be the market. I mean, I will for those of you on this call who track the industry, digital subscriptions overall across the industry have softened.

Grant Moise
Grant Moise
Chief Executive Officer at Dallasnews

However, we also are doing something on February 18, we implemented a new AI algorithm technology for our paywall. And so what that is going to do is measure the propensity of someone to subscribe when they get to the site. The technology will kind of intercept them based on who has the highest propensity to subscribe. And like any technology, again, that I said we implemented in mid February, it's just taking a little bit of time to for those algorithms to kind of read what's unique to our market. So again, we're going to be softer in the first quarter than we were in the fourth quarter.

Grant Moise
Grant Moise
Chief Executive Officer at Dallasnews

It is hard to tell at this point, Rohan, how much of that is just because we've done such a significant paywall technology change versus what is caused more by the market. But obviously, we'll have more to come on that at the end of the first quarter.

Rohan Gilmour
VP - Commercial Real Estate Resolutions at First Citizens Bank

Understood. That's all for me. Thank you for taking my questions.

Grant Moise
Grant Moise
Chief Executive Officer at Dallasnews

Thank you.

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

Thanks, Rohane.

Operator

Your next question comes from the line of Adam Balentine with Gondolin Capital. Please go ahead.

Adam Ballantyne
Founder & General Partner at Gondolin Capital, LP

Hey, everyone. Thanks for taking my questions this morning.

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

Hi, Adam.

Adam Ballantyne
Founder & General Partner at Gondolin Capital, LP

On the asset sale with the utilization of the NOLs, I was just curious what you might expect the after tax proceeds to be?

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

So on an after tax basis, so the growth proceeds were $43,500,000 We expect that we're probably going to be paying less than about $1,000,000 in taxes between state and federal. And then net of the sales costs, Adam, we're really looking at net proceeds probably close to $39,000,000

Adam Ballantyne
Founder & General Partner at Gondolin Capital, LP

Great. Okay. And then on a capital expenditure basis, I know I think you guys noted $2,000,000 in additional CapEx for the new facility and I think mostly in the first quarter. And then once that's completed, do you kind of go back to the pre-twenty twenty four run rate that you guys have of sort of 100,000 to 200,000 a quarter? Or maybe you could help me out on the CapEx intensity going forward after the first quarter?

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

Yes, Adam. You're exactly right. Look, the first quarter, we had some of the final payments of the press, and we also had some capitalized items as it related to the lease facility. Going forward, our capital requirements are going to be minimal, really just around laptops and things like that. So I would say each quarter substantially, probably in that $250,000 to $500,000 range, but that would be the max at $500,000

Adam Ballantyne
Founder & General Partner at Gondolin Capital, LP

Okay, great. And then on the I know that there was a lot of noise as you said in the fourth quarter, but just kind of looking at the consolidated expense lines for the other production and distribution operating costs that had a pretty major jump in the fourth quarter. And I was wondering if since I didn't see any fourth quarter non cash severance in there, it had a jump on from a margin point of view, so it becomes up 52%. Is that going to come down in 2025 or are we going to see the majority of the $5,000,000 savings come from the employee comp end side?

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

So Adam, it's a great question. So look, I think in the fourth quarter, we had some additional expenses, obviously, on a year over year basis related to the new Carrollton facility lease. That'll be consistent in 2025. However, we will see reductions along the production and distribution expenses. Again, probably not going to see a lot of those coming through until the second quarter of this year.

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

However, the $5,000,000 I would tell you is going to be majority is going to be sitting in comp and then, which would be the salary cost and then also the benefit cost. And then the remainder of that will be down in the production and distribution and operating expense line. As Kathy mentioned on newsprint and ink, right now we've been seeing favorability on newsprint pricing, but that's an area that we're going to continue to watch this year, especially as the discussions around tariffs increase.

Adam Ballantyne
Founder & General Partner at Gondolin Capital, LP

Great. Just one more for me, if I could. In terms of sort of cash flow and profitability and tie it all together, excluding the $2,000,000 CapEx spend and the gain you'll obviously see from that. Is it too soon to say if the business will be cash flow positive this year? Just given kind of cyclicality of advertising spending?

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

So Adam, what I would say, as you know, we don't give guidance. I'm not going to speculate on the cash flow of the company. It's everything that we are focused on, right? I mean, obviously, the CapEx will become more minimal throughout the year, but it really will depend on operations. Our goal is to be cash flow positive as soon as we possibly can.

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

But again, I can't speculate on the exact timing of that.

Adam Ballantyne
Founder & General Partner at Gondolin Capital, LP

Okay, great. Thanks for the questions guys.

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

Thanks, Adam.

Operator

Your next question comes from the line of Booker Smith with Smith Management. Please go ahead.

Analyst

Hi guys. Congrats on the sale. Thanks for taking the question. Can you comment more on the capital allocation? Understand you're annuitizing the pension and that will require, I think you said roughly $14,000,000 to $16,000,000 of cash contribution.

Analyst

But after that, how much CapEx exactly will be required for the remainder of the Carrollton facility? And after that, what do we think the proceeds are going to be used for? Is it going to is the Delta primarily going to be used for distribution to shareholders, do you think? Is there other CapEx that needs to be funded? I would like some color on that. Thank you.

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

Great, Booker. Thank you for joining our call. So great question. Look, I think as everybody knows, this sale of of this real estate was our last significant well, actually our last real estate that we had to sell and it just closed last week. As I mentioned in our prepared comments, we took the opportunity in January to immunize the investment allocation of the pension in anticipation that we would be able to annuitize that.

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

And historically, we've talked about three different things that one from a capital allocation perspective, the board really looks at it in three ways. One, what do we need as the investment in the business ongoing? How do we think about our ongoing obligation to the pension? And then what do we think about from a capital allocation for shareholders? We just answered the second question on the pension.

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

It's going to take really through the second quarter to fully annuitize that. What I would say though, as we think about capital allocation, back to your question, CapEx on an annual basis outside of the Carrollton facility expense or the capital in Q1, annual capital should be somewhere between $500,000 and $1,000,000 on the top end if there needs to be some replacement of something significant. Right now, the board is continuing to think about capital allocation, will continue over the next several months. As everybody knows, we've got board meetings every quarter. But right now, just really focused on eliminating this pension obligation that we have and really giving the management time to really assess what the capital needs are for the business to continue to invest in in our digital applications.

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

As we all know, digital growth is a key part of our return to growth plan.

Analyst

Okay, thanks. I might return to that in a second. I got one question in terms of your transaction expenses. So the gross purchase price on the Plano facility, I understand that was $43,500,000 and then there's a $600,000 escrow. Did I hear that right that you're anticipating net proceeds of roughly $39,000,000

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

Yes. And we had basically expenses related to whether that's commissions, legal expenses, environmental work that we had to do, that is the difference.

Analyst

Got it. So that am I right in taking that around 10%?

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

A little less than 10%.

Rohan Gilmour
VP - Commercial Real Estate Resolutions at First Citizens Bank

A little bit less than 10%, got it. Okay.

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

There will be some taxes as well. So we will have some cash taxes, but less than $1,000,000

Analyst

Okay. But so it's $39,000,000 the right number to think about in terms of net proceeds?

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

Yes.

Analyst

All right.

Analyst

Thank you. And actually last thing, how much is expected for Carrollton for the remainder for until it's

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

done? I'm sorry, were you asking about the capital expenditures?

Analyst

Yes, the CapEx for Carrollton.

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

They're going to be completed in Q1 with a couple of million dollars related to the press and then the finalization of any of the leasehold build out that we have to do. But they are basically all incurred at this point.

Analyst

Okay, great. And actually, I like one more. Your digital margins, are you seeing those accretive to your overall margins? Or are you seeing those like inch up, I guess, to your print margins? How would you describe the digital margins and your digital investments?

Grant Moise
Grant Moise
Chief Executive Officer at Dallasnews

Yes, Booker, it's Grant. I'll take that. On the digital margins, I'd mentioned video is an example. Video is really a good yield play for us because what advertisers are willing to pay for video advertising is considerably higher than print. And that's why every bit of video we can add to the site, one, it's great for the subscriber, but also two, it is very good for us to continue to improve the digital margin, which is already very strong on the Dallas Morning News side of the business.

Grant Moise
Grant Moise
Chief Executive Officer at Dallasnews

But again, that is the main financial driver for us behind this focus on video is that it just continues to make the margin better from the core digital asset.

Analyst

Okay. So your view is that margin will be accretive to the overall or I'm sorry, digital will be accretive to the overall margin for Dallas Morning News in total?

Grant Moise
Grant Moise
Chief Executive Officer at Dallasnews

Yes.

Analyst

Great. Thank you. That's all I had. Thank you for taking my questions.

Katy Murray
Katy Murray
President, Treasurer and Corporate Secretary at Dallasnews

Thanks, Booker.

Operator

And we have no further questions in our queue at this time. I will now turn the conference back over to Kathy Collins for closing remarks.

Cathy Collins
Cathy Collins
CFO at Dallasnews

Thank you, Christa, for your assistance this morning. And to everyone who has joined, thank you again for listening to our fourth quarter and full year twenty twenty four results. And we look forward to updating everyone on our first quarter twenty twenty five results, which will be held in mid April.

Operator

And ladies and gentlemen, this does conclude today's conference call. Thank you for your participation and you may now disconnect.

Analysts
    • Gary Cobleigh
      VP & Controller at Dallasnews
    • Cathy Collins
      CFO at Dallasnews
    • Katy Murray
      President, Treasurer and Corporate Secretary at Dallasnews
    • Grant Moise
      Chief Executive Officer at Dallasnews
    • Rohan Gilmour
      VP - Commercial Real Estate Resolutions at First Citizens Bank
    • Adam Ballantyne
      Founder & General Partner at Gondolin Capital, LP
    • Analyst
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Key Takeaways

  • Fourth-quarter GAAP net income of $4 million (Q4 2023 loss of $2.2 million) and full-year GAAP net income of $0.1 million reflect significant improvement, with non-GAAP operating losses narrowing by $1.1 million year-over-year despite a 10.7% revenue decline.
  • Sold the Plano printing facility for $43.5 million, netting approximately $39 million after costs and taxes, and transitioned to a smaller Carrollton press that will save $5 million annually starting in 2025.
  • Monetized sale proceeds to fully fund the pension plan, moving assets to an immunized portfolio at 94% funding and contributing $14–16 million for an annuity contract to eliminate the company’s only debt.
  • Digital subscription strategy drove the strongest quarterly growth in eight quarters with 3,119 new digital-only subscribers (now 64,334), supported by an AI-driven paywall, 46% faster website load times, upgraded apps, expanded in-article video and reinstated reader comments.
  • Ad agency segment “Medium Giant” improved its contribution by $1.2 million year-over-year through enhanced margin visibility via new segment reporting and ongoing efficiency initiatives.
AI Generated. May Contain Errors.
Earnings Conference Call
DallasNews Q4 2024
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