Shares of DallasNews Corporation (DALN Quick QuoteDALN - Free Report) have declined 12.4% since the company reported its earnings for the quarter ended March 31, 2025, underperforming the S&P 500 index’s 1.6% growth over the same period. Over the past month, DALN stock has moved down 12.3%, again trailing the broader index, which gained 11.6%.

For the first quarter of 2025, DallasNews reported net income of $5.28 per share against a net loss of 25 cents per share in the prior-year period. This sharp reversal was driven primarily by a $36.2 million gain from the sale of its Plano printing facility. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Total revenue fell 6.4% year over year to $29.1 million from $31.1 million, with declines across advertising, circulation, and other revenue lines. On a non-GAAP basis, adjusted operating loss widened to $1.2 million from $0.8 million last year, reflecting continued revenue pressures despite some cost containment.

DallasNews reported net income of $28.3 million against a net loss of $1.4 million in the prior-year period.

Other Key Business Metrics

Advertising and marketing services revenue declined 7.2% to $10.8 million, primarily due to a 12.2% drop in print advertising. Digital advertising also softened slightly, falling to $1.9 million from $2 million a year ago. Circulation revenue fell 5.2% to $15.4 million, largely driven by a 6% decline in print circulation, while digital circulation saw a more modest decrease. Revenue from printing, distribution and other services fell 9.2%, impacted by a canceled commercial printing contract and reduced mail advertising volume.

In terms of segment performance, the core TDMN segment posted a 28.3% year-over-year decline in profit to $3.8 million. Meanwhile, the Agency segment, operated under Medium Giant, posted a $0.6 million year-over-year improvement, swinging from a $0.4 million loss to a $0.2 million profit, aided by tighter control over compensation and production costs.

Management Commentary

CEO Grant Moise described the quarter as a milestone in DallasNews' “Return to Growth Plan,” emphasizing the strategic sale of the Plano printing facility. The transaction not only unlocked capital for reinvestment and shareholder return considerations but also enabled full funding of the company’s pension obligations. Moise highlighted that this marked the removal of what management viewed as DallasNews’ sole long-term debt. The move, he stated, “ensures that former and current employees will receive the retirement benefits they earned,” while reducing balance sheet risk.

Additionally, the company completed its printing operations transition and anticipates realizing the first full month of cost savings in May. Moise was optimistic about Medium Giant’s performance, citing expanded operating margins and expressing confidence in the agency's future positioning.

Factors Influencing the Headline Numbers

The headline net income figure was significantly influenced by the $36.2 million gain on the sale of the Plano property, which materially boosted GAAP profitability. However, underlying operations continued to struggle with a $1.2 million adjusted operating loss, reflecting persistent top-line erosion. The revenue downturn stemmed from industry-wide structural challenges in print media, including declining print advertising demand and print circulation. These declines were only partially offset by $1.2 million in employee compensation and benefit savings, achieved through a 13.2% reduction in workforce year over year.

The company’s total adjusted operating expenses decreased 4.9% year over year to $30.3 million, driven primarily by headcount rationalization and lower severance and depreciation costs.

Other Developments

In April, DallasNews used a portion of the Plano property sale proceeds to fully fund its pension liabilities. It entered into an annuity purchase agreement with an insurance company, thereby transferring all future financial obligations for pension administration and benefit payments. The company stated that there would be no changes in benefit amounts, timing, or form for recipients. This annuitization relieved DallasNews of its long-term pension obligations and simplified its balance sheet, a move aligned with broader efforts to streamline operations and reduce financial risk.