DallasNews Corporation (NASDAQ:DALN), the parent company of The Dallas Morning News, Inc., has entered into a significant lease agreement for a new printing and production facility in Carrollton, Texas, according to a recent 8-K filing with the Securities and Exchange Commission.
On Monday, the company disclosed that it had signed a lease on June 24, 2024, for approximately 67,600 square feet of light industrial office space at 1433 Frankford Road. The five-year agreement with Texas Dugan Limited Partnership includes a 4.5 percent annual increase in base rent starting from July 1, 2025.
The Dallas Morning News, Inc. will commence tenant improvements to prepare the space for occupation, with the facility expected to be operational by January 1, 2025. The new site will serve as the company’s central hub for its printing and production operations.
In conjunction with the lease, DallasNews Corporation has provided a guaranty of lease, ensuring the performance and adherence to the lease terms by The Dallas Morning News, Inc. This move indicates the company's commitment to its subsidiary's obligations and the importance of the new facility to its operations.
In other recent news, DallasNews Corporation disclosed its Q1 2024 results revealing a net loss of $1.4 million and an operating loss of $1.8 million, both showing improvements compared to the previous year's losses. The company's total revenue fell by $4.1 million, mainly due to a decline in print advertising revenue, yet digital-only subscription revenue saw a 25.2% increase. In a strategic move, DallasNews Corporation announced plans to relocate its printing operations to a smaller facility in Carrollton, a change anticipated to yield significant cost savings.
Despite a decrease in digital-only subscribers, the company's management expressed confidence in their strategic direction and cost-saving measures. The transition of printing operations to Carrollton, expected to complete in early 2025, is predicted to save about $5 million annually in operating expenses. Furthermore, the company will invest an estimated $8 million in new equipment for the relocated printing operations.
These recent developments reflect DallasNews Corporation's efforts to balance traditional print business with digital growth. The company's focus on operational efficiency and strategic repositioning, including the consolidation of print operations, demonstrates a commitment to long-term profitability. As DallasNews Corporation continues to adapt to the evolving media landscape, stakeholders can anticipate further updates in the second quarter earnings call.
InvestingPro Insights
In light of DallasNews Corporation's (NASDAQ:DALN) recent lease agreement for a new printing and production facility, certain financial metrics and InvestingPro Tips could provide investors with additional context on the company's condition. According to InvestingPro data, DALN holds a market capitalization of $19.11 million and is currently trading near its 52-week low, at a price of $3.59 per share. With a significant dividend yield of 17.83%, reflecting payments maintained for 14 consecutive years, the company shows a strong commitment to returning value to shareholders.
InvestingPro Tips suggest that DALN holds more cash than debt, which is a positive sign for financial stability, and it has liquid assets that exceed short-term obligations, indicating good short-term financial health. However, the company has been quickly burning through cash, and it suffers from weak gross profit margins, as evidenced by a gross profit margin of -0.4% for the last twelve months as of Q1 2024. Additionally, DALN's valuation implies a poor free cash flow yield and it is trading at a high Price/Book multiple of 11.23, suggesting that the stock may be overvalued relative to its book value.
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