DallasNews Corporation

speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. And if you'd like to withdraw that question, again, press star one. 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.

Good morning, everyone. This is Gary Cobley, Vice President and Controller of Dallas News Corporation. Welcome to our fourth quarter and full year 2024 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 Moise, Chief Executive Officer, who will provide brief business remarks. Yesterday afternoon, we issued a press release announcing fourth quarter and full year 2024 results. and filed our 2024 10-K. 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. Additional information about these factors is detailed in the company's press releases and publicly available filings with the SDC. 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.

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 million, or 74 cents per share, and an operating loss of $1.8 million. In Q4 last year, we reported a net loss of $2.2 million and an operating loss of $2.5 million, which includes severance expense of $2.7 million for the 2023 voluntary severance offer. On a non-GAAP basis for the quarter, we reported an adjusted operating loss of $1.3 million, a decrease of $1.9 million, when compared to adjusted operating income of $600,000 reported for the same period last year. We reported $31.1 million of total revenue for the quarter, which compares to $34 million last year. Advertising and marketing services revenue decreased $1.3 million for the quarter due to a print advertising revenue decline of $1.1 million or 16.6% compared to the same period last year. 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 2023 for the Texas Rangers winning the 2023 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 $32.4 million, an improvement of $1 million 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 two cents per share, and an operating loss of $7.1 million, which includes severance expense of $2.8 million related to the transition of our print and distribution operations to a smaller printing facility. Net income includes a non-cash tax benefit of $5 million, resulting from a reduction in the valuation allowance, in anticipation of the use of net operating losses to offset the 2025 gain on the sale of the Plano property. For 2023, we reported a GAAP net loss of $7.1 million and an operating loss of $8.1 million. On a non-GAAP basis for the year, we reported an adjusted operating loss of $1.6 million, an improvement of $1.1 million, when compared to an adjusted operating loss of 2.7 million reported in 2023. The improvement is primarily due to expense savings of $15.4 million, with the greatest reductions in employee compensation and benefits, distribution expense, and newsprint, partially offset by a total revenue decline of $14.3 million. $10.7 million of the revenue decline and $9.1 million 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 $125.4 million of total revenue for the year, and this compares to $139.7 million last year. Advertising marketing services revenue decreased 11.1 million, or 18.9% year-over-year. Excluding the $10.7 million reduction in print advertising resulting from the discontinued product line, print advertising revenue declined $1.4 million or 5.7%, partially offset by an improvement of $1 million 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 31st, the news had 64,334 digital-only subscribers, an increase of 1,334, or 2.1% compared to last year. We continue to focus on finding the optimal balance between pricing and volume strategies for digital subscriptions, and Grant will provide additional commentary on those efforts shortly. Total subscribers, including both home delivery and digital subscribers, was 126,973 as of December 31st, compared to 132,694 as of December last year. Other revenues decreased $2.7 million 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 with $127 million, an improvement of $15.4 million, or 10.8%, when compared to the $142.4 million of adjusted operating expense last year.