DallasNews Corporation

Hello and welcome to the Dallas News Corporation first quarter 2025 investor call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star 1 on your telephone keypad. I would now like to turn the conference over to Gary Cobley, Vice President and Controller. You may begin.

Good morning, everyone. This is Gary Combley, Vice President and Controller of Dallas News Corporation. Welcome to our first quarter 2025 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 first quarter 2025 results and filed our first quarter 10Q. 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 first quarter 2025 performance against first quarter 2024 performance. Our discussion today will include forward-looking statements, including statements concerning our transition of print operations and associated expense savings. are business outlook or future economic performance, revenues, expenses, cash balance, investments, business initiatives, working capital, and other financial and non-financial items that are not historical facts. Forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those statements, including those identified in the earnings release we issued yesterday. 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 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 will 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 $28.3 million, or $5.28 per share, and operating income of $34.2 million. which includes a net gain of 36.2 million from the Plano printing facility sale. In the first quarter last year, we reported a net loss of $1.4 million and an operating loss of 1.8 million. On a non-GAAP basis for the quarter, we reported an adjusted operating loss of 1.2 million, a decrease of $400,000 when compared to an adjusted operating loss of 800,000 reported for the same period last year. The decline is primarily due to a total revenue decrease of $2 million, partially offset by expense savings of $1.2 million in employee compensation and benefits. We reported total revenue of $29.1 million compared to $31.1 million reported for Q1 last year. Advertising and marketing services revenue was $10.8 million, a decrease of $800,000 or 7.2% compared to 11.6 million reported last year, and is primarily due to a print advertising revenue decline of $700,000, or 12.2%. Circulation revenue was $15.4 million, a decrease of $900,000, or 5.2%, compared to the $16.3 million reported last year. The decline is primarily due to a print circulation revenue decrease of $700,000, or 6%. Total membership, including both print and digital, was 125,972 as of March 31st compared to 126,973 as of December 31st and 129,857 as of March last year. Digital-only subscriptions of 65,028 reflect an increase of 1.1% as of March 31st compared to December 31st, and an increase of 4.2% compared to March of last year. Shortly, Grant will provide additional commentary on our digital strategy to drive additional membership volume. On a non-GAAP basis, total adjusted operating expenses for the quarter improved $1.6 million due to employee compensation and benefits expense savings of $1.2 million. As of March 31st, total headcount was 461, down 70 compared to last year, primarily resulting from the transition to a smaller, more efficient printing facility requiring less staff. Consistent with interim periods, the company uses the estimated annual effective tax rate method and recorded $6 million of tax expense for the quarter due to an estimated $600,000 for the Texas franchise tax and the $36.2 million gain generated from the sale of the Plano property. However, the utilization of our net operating loss carry-forwards will reduce our cash taxes to approximately $700,000 for federal and state purposes. The Plano property sale strengthened our balance sheet, and at the end of March, cash and cash equivalents were $44.2 million. And as of the end of April 25th, following the pension funding, We had $36 million in cash and cash equivalents. I will now turn the call over to Katie. Thank you, Kathy.