DJCO Daily Journal Corp

During fiscal 2024, Daily Journal Corporation (NASDAQ:DJCO) had consolidated revenues of $69,931,000 as compared to $67,709,000 in the prior year. This increase of $2,222,000 was primarily from increases in (i) Journal Technologies’ license and maintenance fees of $4,762,000, and other public service fees of $1,577,000, partially offset by decreased consulting fees of $4,690,000, and (ii) the Traditional Business’ advertising revenues of $370,000 and advertising service fees and other of $144,000.

The Traditional Business’ pretax income decreased by $102,000 to $1,579,000 from $1,681,000 in the prior fiscal year. This decrease was primarily resulting from increased merchant discount fees, additional promotional expenses, postage and press repairs and maintenance, partially offset by an increase in revenues of $573,000. Journal Technologies’ business segment pretax income decreased by $2,480,000 to $2,491,000 from $4,971,000 in the prior fiscal year primarily resulting from increased operating expenses of $4,129,000, mostly due to (i) increased personnel costs because of annual salary adjustments, (ii) additional contractor services and the hiring of additional staff members to strengthen operational efficiencies, conduct product development, address technical debt, and bolster teams working on the Company’s installation projects, and (iii) increased third-party hosting fees which were billed to clients. These increases in expenses were partially offset by increased operating revenues of $1,649,000.

At September 30, 2024, the Company held marketable securities valued at $358,691,000, including net pretax unrealized gains of $219,597,000, and accrued a deferred tax liability of $57,100,000, for estimated income taxes due only upon the sales of the net appreciated securities. During March 2024, the Company sold a portion of its marketable securities for approximately $40,579,000, realizing net gains of $14,261,000, and used these proceeds and excess cash from operations to pay down the Company’s margin loan balance to $27,500,000 from $75,000,000 at September 30, 2023, aggregating a paydown of approximately $47,500,000 during fiscal 2024.

The Company’s non-operating income, net of expenses, increased by $78,758,000 to $100,208,000 from $21,450,000 in the prior fiscal year primarily because of the recording of net realized and unrealized gains on marketable securities of $96,142,000 as compared with $17,446,000 in the prior fiscal year. These increases were partially offset by a decrease in dividends and interest income of $1,238,000 to $7,102,000 from $8,340,000.

Consolidated pretax income was $104,278,000, as compared to $28,102,000 in the prior fiscal year. There was consolidated net income of $78,113,000 ($56.73 per share) for fiscal 2024, as compared with $21,452,000 ($15.58 per share) in the prior fiscal year.

During fiscal 2024, the Company recorded an income tax provision of $26,165,000 on pretax income of $104,278,000.   The income tax provision consisted of tax expense of $24,534,000 on the realized and unrealized gains on marketable securities, and $2,175,000 on operating income, partially offset by a tax benefit of $544,000 for the dividends received deduction and other permanent differences.  Consequently, the overall effective tax rate for fiscal 2024 was 25.1%, after including the taxes on the realized and unrealized gains on marketable securities.

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Certain statements contained in this press release are “forward-looking” statements that involve risks and uncertainties that may cause actual future events or results to differ materially from those described in the forward-looking statements. Words such as “expects,” “intends,” “anticipates,” “should,” “believes,” “will,” “plans,” “estimates,” “may,” variations of such words and similar expressions are intended to identify such forward-looking statements. We disclaim any intention or obligation to revise any forward-looking statements whether as a result of new information, future developments, or otherwise. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in documents we file with the Securities and Exchange Commission.

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Contact: Tu To  (213) 229-5436