Release Date: May 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- DallasNews Corp reported an improvement in adjusted operating loss by $1.4 million or 64% compared to the same period last year, indicating effective cost management.
- The company achieved expense savings of $2.5 million in distribution, $1.6 million in employee compensation and benefits, and $900,000 in newsprint, contributing to overall cost reduction.
- Digital-only subscription revenue increased by $900,000 or 25.2%, demonstrating growth in digital content monetization despite a decline in digital subscribers.
- The relocation of printing operations to a smaller facility is expected to result in approximately $5 million in annualized operating expense savings, enhancing profitability.
- DallasNews Corp is exploring monetization opportunities for the North Plant property in Plano, which could provide additional financial benefits.
Negative Points
- DallasNews Corp reported a net loss of $1.4 million and an operating loss of $1.8 million for the quarter, indicating ongoing financial challenges.
- Total revenue declined by $4.1 million, primarily due to a significant decrease of 39.3% in print advertising revenue.
- The company experienced a 9.6% year-over-year decline in digital-only subscribers, raising concerns about digital audience retention.
- Printing distribution and other revenue decreased by $700,000 or 18.7%, reflecting challenges in commercial printing and distribution sectors.
- The Board of Directors decided to suspend the declaration and payment of dividends due to financial constraints and upcoming capital investments.
Q & A Highlights
Q: Can you discuss the financial impact of the relocation of printing operations announced recently?
A (Katy Murray - President, Treasurer, Corporate Secretary): The relocation of our printing operations to a smaller facility in Carrollton is expected to be completed in early 2025, leading to approximately $5 million in annualized operating expense savings. This will be achieved through a reduction in headcount by about 85 employees and other operating expense reductions related to the facility move.
Q: What were the key drivers behind the improvement in the adjusted operating loss in Q1 2024 compared to Q1 2023?
A (Katy Murray - President, Treasurer, Corporate Secretary): The improvement in the adjusted operating loss, which was $800,000 for Q1 2024, a 64% improvement year-over-year, was primarily due to expense savings of $2.5 million in distribution, $1.6 million in employee compensation and benefits, and $900,000 in newsprint expenses.
Q: How did the company's revenue streams perform in the first quarter, especially in terms of digital and print revenue?
A (Katy Murray - President, Treasurer, Corporate Secretary): Total revenue for the quarter was $31.1 million, a decline primarily due to a $3.7 million decrease in print advertising revenue. However, digital-only subscription revenue increased by $900,000 or 25.2%, offsetting the print circulation revenue decline. This increase in digital revenue is a result of the company's strategic focus on finding the optimal balance of volume and price.
Q: What are the company's expectations regarding newsprint costs and how do they affect the financial outlook?
A (Katy Murray - President, Treasurer, Corporate Secretary): Newsprint costs have been favorable, with the cost in March at $615 per metric ton, a 24.7% year-over-year decrease. We expect to continue realizing these savings in the second quarter, although pricing may level off later this year.
Q: Can you elaborate on the strategic decision to exit the Shared Mail business and its impact?
A (Grant Moise - CEO): Exiting the Shared Mail business last year was a strategic move as advertiser interest was waning. This allowed our Medium Giant sales team to focus on more relevant marketing solutions, contributing to a 1% revenue growth in continued operations for the first quarter.
Q: What are the plans for the North Plant property following the relocation of printing operations?
A (Grant Moise - CEO): The North Plant property in Plano, which is zoned as a light industrial property, offers various potential uses such as data centers or logistics operations. We are exploring the best options to monetize this property while we set up the new facility in Carrollton.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
