DallasNews Corporation - Ordinary Shares (DALN) Q2 Earnings call transcript Jul 31, 2024

In DallasNews Corporation's second quarter 2024 earnings call, the company highlighted significant progress and strategic shifts to improve financial performance and set a path for sustainable growth. Key executives including Gary Cobleigh, Vice President and Controller; Catherine Collins, Chief Financial Officer; Katy Murray, President; and Grant Moise, Chief Executive Officer, provided insights into the company's financial performance, strategic initiatives, and future outlook.

Financial Performance and Expense Management

The company reported a net income of $1.5 million, or $0.27 per share, and operating income of $600,000, representing a significant improvement from a net loss of $900,000 and an operating loss of $1.2 million in the same period last year. This improvement was primarily driven by expense savings in distribution, employee compensation, and newsprint, as well as a revenue decline due to the discontinuation of a shared mail program.

Expense management was a key focus for the company, with a particular emphasis on digital subscriptions and circulation revenue. Digital-only subscriptions decreased by 11.2%, but the company is working to find the optimal balance between volume and price to maximize digital subscription revenue. Total subscribers, including both home delivery and digital subscribers, stood at 126,405 as of June 30, down from 132,694 at December 31 and 142,436 as of June last year.

Strategic Initiatives and Future Outlook

A significant strategic initiative for DallasNews Corporation is the transition to a new crane facility, which is expected to generate annual expense savings of approximately $5 million. The company has entered into a 5-year lease for the new printing and production plant in Carrollton, Texas, and is actively marketing its existing plant in Plano for sale. The property, which includes a 620,000 square foot building and 29 acres, has garnered significant interest due to its strategic location and power requirements suitable for data center development.

In addition, DallasNews Corporation announced the introduction of segment reporting, which separates the Agency operating segment under Medium Giant and reports on all Dallas Morning News as a separate operating segment. This move is expected to provide investors with a clearer understanding of the company's component parts and allow for more effective management of the business.

Market Opportunities and Challenges

The company highlighted the potential of new digital products to drive future growth, with a focus on expanding high school sports coverage and adopting a hyperlocal digital strategy. However, the company is also investing in enhancing its current digital products and exploring new price points to find the inflection point for digital subscription growth. The company's focus on expense management, strategic real estate sales, and capital allocation for future growth initiatives underscores its commitment to sustainable profitability and long-term success.

Investor Relations and Shareholder Engagement

During the call, executives addressed investor concerns, providing updates on the company's financial performance, strategic initiatives, and future outlook. They also acknowledged the importance of investor engagement and addressed specific questions related to market studies, dividends, and stock repurchase programs. The company's transparency and openness to investor inquiries demonstrate a commitment to maintaining strong relationships with key stakeholders and fostering trust in the company's strategic direction.

Conclusion

DallasNews Corporation's second quarter earnings call highlighted the company's financial progress, strategic initiatives, and focus on sustainable growth. The company's emphasis on expense management, strategic real estate sales, and digital product development positions it well for future growth, while its commitment to transparency and investor engagement underscores its dedication to maintaining strong stakeholder relationships. As DallasNews Corporation navigates the transition to a new print facility and explores opportunities in digital media, investors will be keenly watching the company's progress toward sustainable profitability and long-term success.