DexYP™ Announces Second Quarter 2017 Financial Results (a)

DALLAS--()--DexYP™, one of the largest national providers of local business automation software, today announced financial results for second quarter 2017.(a)

“As we bring YP’s customers onto the streamlined Dex platform there will be many benefits, both in cost savings and in revenue opportunity.”

Key highlights for Dex Media Holdings, Inc. (these are provided on a standalone basis and do not include results of YP Holdings LLC):

  • Generated $101.4 million of Net Digital Revenue
  • Achieved $79.6 million of Adjusted Pro Forma EBITDA on $254.5 million Pro Forma Revenue
  • Completed the acquisition of YP Holdings LLC on June 30, 2017, creating DexYP

“Dex is an ideal platform to acquire YP,” said Joe Walsh, DexYP CEO and president. “We have found efficiency in simplifying our operations; this can be seen in the Dex YTD margins.

“As we bring YP’s customers onto the streamlined Dex platform there will be many benefits, both in cost savings and in revenue opportunity.”

“The YP sales organization is anxious to be able to offer our local business automation software, Thryv. This enables them to be much more productive offering a unique solution for real problems faced by independent business owners and reduces their reliance on commoditized digital advertising products.”

 

Dex Media Holdings, Inc. Standalone Second Quarter 2017 Results (a)

       
Q2 YTD
        Variance         Variance
2017   2016 Fav (Unfav)   % 2017   2016 Fav (Unfav)   %
Client Count, Period End (000) (a)        
Multi-Product 101 107 (7 ) -6.2 %
Digital 55 51 3 6.8 %
Print 188     246   (58 )   -23.6 %
Total Clients 343 404 (61 ) -15.1 %
 
Net Revenue ($mm)
Print $151.2 $197.5 ($46.3 ) -23.4 % $325.4 $405.2 ($79.8 ) -19.7 %
Digital 101.4 98.1 3.3 3.4 % 193.6 201.9 (8.3 ) -4.1 %
Other 2.0     2.6   (0.6 )   -23.9 % 4.1     3.1   1.0     31.7 %
Total Net Revenue (a), (b) $254.5 $298.1 ($43.6 ) -14.6 % $523.1 $610.2 ($87.1 ) -14.3 %
                       
Adjusted Pro Forma EBITDA ($mm) (a), (c) $79.6     $89.8   ($10.2 )   -11.3 % $172.1     $177.4   ($5.3 )   -3.0 %
Adjusted Pro Forma EBITDA Margin % 31.3 % 30.1 % 1.2 % 32.9 % 29.1 % 3.8 %
                     
Free Cash Flow ($mm) (a), (d), (e) ($14.9 )   $38.2   ($53.1 )   -139.1 % $91.8     $55.3   $36.6     66.1 %
 
Footnotes:
(a) All figures presented are preliminary, subject to change, and unaudited. Material changes may result from audit procedures, purchase accounting and finalization of the working capital calculations and true-up associated with the YP acquisition agreement.
(b) Revenue for Q2 2017 and YTD June 2017 is on a pro forma basis as a result of fresh-start accounting. Revenue for Q2 2016 and YTD June 2016 has been adjusted to reflect proper recognition of contracts with both print and digital advertising components.
(c) Adjusted Pro Forma EBITDA reflects operating revenues and expenses, excluding the impact of depreciation, amortization, interest expense and other non-cash/non-recurring items, such as YP acquisition/transaction fees and pro forma adjustments associated with fresh-start accounting.
(d) Free Cash Flow reflects cash generated from operating activities, less capital expenditures, interest payments, capital restructuring and reorganization costs.
(e) Q2 2017 free cash flow includes the payment of income taxes of $64.4 million of which $31.6 million related to Q1 2017, YP acquisition/transaction fees of $21.8 million and other non-recurring costs of $2.6 million.
 

Also provided on a pro forma basis are DexYP Combined and YP Holdings standalone results. DexYP Combined and YP Holdings are presented as if the acquisition had occurred prior to January 1, 2016 and excludes the impact of acquisition accounting, as required by U.S. GAAP. Adjusted Pro forma EBITDA represents earnings before interest, taxes, depreciation and amortization and other non-recurring items, including acquisition/transaction fees, capital restructuring costs, business transformation costs, reorganization items and severance costs. Adjusted Pro forma EBITDA margin is calculated by dividing Adjusted Pro forma EBITDA by Pro forma Net Revenue. Pro forma adjusted results do not necessarily reflect what the underlying operational or financial performance of DexYP would have been had the Dex Media/YP transaction been consummated prior to January 1, 2016.

         

DexYP Combined Pro Forma Second Quarter 2017 Results

 
Q2 YTD
        Variance         Variance
2017   2016 Fav (Unfav)   % 2017   2016 Fav (Unfav)   %
Client Count, Period End (000) (a), (b)        
Multi-Product 221 254 (34 ) -13.2 %
Digital 118 121 (3 ) -2.6 %
Print 328     417   (89 )   -21.3 %
Total Clients 667 792 (126 ) -15.9 %
 
Net Revenue ($mm)
Print $283.1 $372.7 ($89.6 ) -24.0 % $598.4 $770.1 ($171.7 ) -22.3 %
Digital 306.4 337.3 (30.9 ) -9.2 % 610.5 685.9 (75.4 ) -11.0 %
Other 2.0     2.6   (0.6 )   -23.9 % 4.1     3.1   1.0     31.7 %
Total Net Revenue (b), (c) $591.5 $712.6 ($121.1 ) -17.0 % $1,213.0 $1,459.2 ($246.2 ) -16.9 %
                       
Adjusted Pro Forma EBITDA ($mm) (b), (d) $131.4   $172.8   ($41.4 )   -24.0 % $270.9     $350.8   ($79.9 )   -22.8 %
Adjusted Pro Forma EBITDA Margin % 22.2 % 24.3 % -2.0 % 22.3 % 24.0 % -1.7 %
                       
Free Cash Flow ($mm) (b), (e), (f) $4.4     $87.2   ($82.8 )   -95.0 % $115.6     $142.1   ($26.5 )   -18.6 %
 
Debt ($mm)
Term Note $780.0 $2,667.8 $1,887.8 70.8 %
ABL 174.1     156.5   ($17.6 )   -11.2 %
Outstanding Debt $954.1 $2,824.3 $1,870.2 66.2 %
 
Cash (g) ($19.3 ) ($145.0 ) ($125.7 ) 86.7 %
           
Net Debt $934.8     $2,679.2   $1,744.5     65.1 %
 

Footnotes:

(a) DexYP combined Client Counts do not include the impact of any market overlaps.
(b) All figures presented are preliminary, subject to change, and unaudited. Material changes may result from audit procedures, purchase accounting and finalization of the working capital calculations and true-up associated with the YP acquisition agreement.
(c) Revenue for Q2 2017 and YTD June 2017 is on a pro forma basis as a result of fresh-start accounting. Revenue for Q2 2016 and YTD June 2016 has been adjusted to reflect proper recognition of contracts with both print and digital advertising components. YP's historical accounting treatment for multi-element arrangements is currently being evaluated for conformity with Dex Media's current methodology and therefore subject to change. Any differences will be addressed as part of purchase accounting.
(d) Adjusted Pro Forma EBITDA reflects operating revenues and expenses, excluding the impact of depreciation, amortization, interest expense and other non-cash/non-recurring items, such as YP acquisition/transaction fees and pro forma adjustments associated with fresh-start accounting.
Adjusted Pro Forma EBITDA includes certain adjustments in order to exclude YP acquisition related items.
(e) Free Cash Flow reflects cash generated from operating activities, less capital expenditures, interest payments, capital restructuring and reorganization costs.
(f) Q2 2017 free cash flow includes the payment of income taxes of $98.5 million of which $31.6 million related to Q1 2017, YP acquisition/transaction fees of $42.5 million and other non-recurring costs of $6.9 million.
(g) Cash balance presented is subject to finalization of the working capital calculations and true-up associated with the YP acquisition agreement.
 
 

YP Holdings Standalone Second Quarter 2017 Results (a)

         
Q2 YTD
        Variance         Variance
2017   2016 Fav (Unfav)   % 2017   2016 Fav (Unfav)   %
Client Count, Period End (000) (a)        
Multi-Product 120 147 (27 ) -18.3 %
Digital 63 70 (7 ) -9.5 %
Print 140     171   (31 )   -18.1 %
Total Clients 324 388 (64 ) -16.6 %
 
Net Revenue ($mm)
Print $134.2 $177.3 ($43.1 ) -24.3 % $276.6 $368.1 ($91.5 ) -24.9 %
Digital 207.4 241.0 (33.7 ) -14.0 % 420.5 486.8 (66.3 ) -13.6 %
Other -     -   -     NM   -     -   -     NM  
Total Net Revenue (a), (d) $341.5 $418.3 ($76.8 ) -18.4 % $697.1 $854.9 ($157.8 ) -18.5 %
                       
Adjusted EBITDA ($mm) (a), (b) $51.7     $83.0   ($31.2 )   -37.6 % $98.8     $173.4   ($74.6 )   -43.0 %
Adjusted EBITDA Margin % 15.2 % 19.8 % -4.7 % 14.2 % 20.3 % -6.1 %
                       
Free Cash Flow ($mm) (a), (c), (e) $19.3     $49.0   ($29.7 )   -60.6 % $23.8     $86.8   ($63.0 )   -72.6 %
 

Footnotes:

(a) All figures presented are preliminary, subject to change, and unaudited. Material changes may result from audit procedures, purchase accounting and finalization of the working capital calculations and true-up associated with the YP acquisition agreement.
(b) Adjusted EBITDA reflects operating revenues and expenses, excluding the impact of depreciation, amortization, interest expense and other non-cash/non-recurring costs, such as YP transaction related fees.
Adjusted EBITDA includes certain adjustments in order to exclude YP acquisition related items.
(c) Free Cash Flow reflects cash generated from operating activities, less capital expenditures and interest payments.
(d) YP's historical accounting treatment for multi-element arrangements is currently being evaluated for conformity with Dex Media's current methodology and therefore subject to change. Any differences will be addressed as part of purchase accounting.
(e) Q2 2017 free cash flow includes the payment of income taxes of $34.1 million, YP transaction fees of $20.7 million and other non-recurring costs of $4.3 million.
 

Earnings Conference Call Information

DexYP will host an investor conference call at 10 a.m. CDT on August 15, 2017. Individuals within the United States can access the conference call by dialing (888) 603-6873. International participants should dial 973-582-2706. The passcode is: 61276124.

Basis of Presentation and Non-GAAP Financial Measures

The financial information accompanying this release provides a reconciliation of GAAP to non-GAAP and adjusted pro forma non-GAAP results. Dex Media believes that the use of non-GAAP financial measures provides useful information to investors to gain an overall understanding of its current financial performance. Specifically, Dex Media believes the non-GAAP results provide useful information to management and investors by excluding certain nonrecurring items that Dex Media believes are not indicative of its core operating results. In addition, non-GAAP financial measures are used by management for budgeting and forecasting as well as subsequently measuring Dex Media's performance, and Dex Media believes that non-GAAP results provide investors with financial measures that most closely align to its internal financial measurement processes.

About DexYP

DexYP helps local businesses win and retain their customers, delivering measurable, lasting results. As the business management resource for hundreds of thousands of local businesses across the U.S., DexYP helps business owners manage their customer relationships, internet presence, bookings, analytics and more from a single mobile platform. DexYP provides critical expertise and support so business owners have a trusted, expert advisor just a click or phone call away. The company’s widely used consumer services include the YP.com, DexKnows.com® and Superpages.com® search portals, mobile applications, as well as local print directories. To learn how DexYP can help automate and streamline your business, please visit DexYP.com.

Forward-Looking Statements

Some statements included in this release constitute forward-looking statements. Statements that include the words “may”, “will”, “could”, “should”, “would”, “believe”, “anticipate”, “forecast”, “estimate”, “expect”, “preliminary”, “intend”, “plan”, “project”, “outlook” and similar statements of a future or forward-looking nature identify forward-looking statements. You should not place undue reliance on these statements, as they are not guarantees of future performance. Forward-looking statements provide current expectations with respect to our financial performance and future events with respect to our business and industry in general. Forward-looking statements are based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to, the risks related to the following: the Company's ability to maintain adequate liquidity to fund operations; the Company’s future operating and financial performance; limitations on our operating and strategic flexibility and the ability to operate our business, finance our capital needs or expand business strategies under the terms of our credit facilities; our ability to retain existing business and obtain and retain new business; general economic or business conditions affecting the markets we serve; declining use of print yellow page directories by consumers; our ability to collect trade receivables from clients to whom we extend credit; credit risk associated with our reliance on small and medium sized businesses as clients; our ability to attract and retain key managers; increased competition in our markets; our ability to obtain future financing due to changes in the lending markets or our financial position; our ability to maintain agreements with major Internet search and local media companies; reduced advertising spending and increased contract cancellations by our clients, which causes reduced revenue; and, our ability to anticipate or respond effectively to changes in technology and consumer preferences; and our ability to successfully integrate the YP business with the Company’s business. With respect to the acquisition, important factors could cause actual results to differ materially from those indicated by forward-looking statements and projections included herein, including, but not limited to: the risk that anticipated cost savings, growth opportunities and other financial and operating benefits as a result of the transaction may not be realized or may take longer to realize than expected, the risk that benefits from the transaction may be significantly offset by costs incurred in integrating the companies, including, coordinating geographically separate organizations, integrating business cultures, which could prove to be incompatible, difficulties and costs of integrating information technology systems; and the potential difficulty in retaining key officers and personnel. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by such cautionary statements.

If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. All forward-looking statements included in this press release are expressly qualified in their entirety by the foregoing cautionary statements. These forward-looking statements speak only as of the date hereof and, other than as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Contacts

Media:
DexYP
Paige Blankenship, 972-453-3012
paige.blankenship@dexmedia.com
or
Investor:
DexYP
Nicholas Haughey, 972-453-7637
nicholas.haughey@dexmedia.com

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