DexYP™ Announces Fourth Quarter and Full Year 2017 Financial Results

DALLAS–(BUSINESS WIRE)–DexYP™, one of the largest national providers of local business
automation software, today announced financial results for fourth
quarter and full year 2017.


Key highlights for DexYP:

  • Generated $2.3 billion of Pro Forma Net Revenue in 2017
  • Became a majority digital revenue business in the second half of the
    year
  • Achieved $563.0 million of Adjusted Pro Forma EBITDA, a 24.4% EBITDA
    margin for the year
  • Delivered $237.0 million of combined free cash flow in 2017

“We closed out the year with strong performance,” said CEO Joe Walsh.
“Our operationally-efficient model continues to prove successful,
allowing us to focus on offering Thryv℠—our local business automation
software—helping local businesses work smarter.”

Fourth Quarter and Full Year 2017 Pro Forma Results

        Q4       Full Year
      Variance       Variance
2017     2016 Fav (Unfav)     % 2017     2016 Fav (Unfav)     %

Client Count, Period End (000)

(a), (b)                
Multi-Product 203 231 (28 ) -12.0 %
Digital 116 114 2 1.9 %
Print   282         380     (98 )     -25.9 %
Total Clients 601 725 (124 ) -17.1 %
 

Pro Forma Net Revenue ($mm)

(b), (c)
Print $ 252.9 $ 344.0 $ (91.2 ) -26.5 % $ 1,131.0 $ 1,513.1 $ (382.0 ) -25.2 %
Digital 282.5 312.6 (30.0 ) -9.6 % 1,170.9 1,280.0 (109.2 ) -8.5 %
Other   1.6         2.6     (0.9 )     -35.8 %   7.5         8.1     (0.6 )     -7.9 %
Total Pro Forma Net Revenue $ 537.0 $ 659.2 $ (122.1 ) -18.5 % $ 2,309.4 $ 2,801.3 $ (491.9 ) -17.6 %
                               
Adjusted Pro Forma EBITDA ($mm) (b), (d) $ 136.0       $ 183.8   $ (47.8 )     -26.0 % $ 563.0       $ 720.2   $ (157.2 )     -21.8 %
Adjusted Pro Forma EBITDA Margin % 25.3 % 27.9 % -2.6 % 24.4 % 25.7 % -1.3 %
                               
Free Cash Flow ($mm) (b), (e), (f) $ 67.3       $ 97.0   $ (29.7 )     -30.6 % $ 237.0       $ 350.1   $ (113.2 )     -32.3 %
 

Debt ($mm)

(b)
Term Note $ 652.0 $ 681.3 $ 29.3 4.3 %
ABL   160.0         228.0     68.0       29.8 %
Total Outstanding Debt $ 812.0 $ 909.3 $ 97.3 10.7 %
 
Cash $ (2.0 ) $ (44.7 ) $ (42.6 ) 95.4 %
               
Net Debt (f) $ 810.0       $ 864.7   $ 54.7       6.3 %

Footnotes:

(a)   Duplicative local clients were removed from 2017 but not 2016.
(b) All figures presented are preliminary, subject to change, and
unaudited. Material changes may result from audit procedures.
(c) Pro Forma Net Revenue for Q4 2017 and full year 2017 is presented on
a consolidated pro forma basis as a result of acquisition and fresh
start accounting. DexYP’s historical net revenue has been adjusted
to reflect proper recognition of contracts with both print and
digital components.
(d) Adjusted Pro Forma EBITDA excludes interest, taxes, depreciation and
amortization, and other non-cash/non-recurring expenses, such as
integration costs and transaction fees, pension, long-term incentive
compensation, capital restructuring, business transformation and
adjustments for reorganization (emergence), fresh start and
acquisition accounting, and other pro forma adjustments.
(e) Free Cash Flow reflects cash generated from operating activities,
less capital expenditures and interest payments. Free cash flow in
2017 includes the payment of YP acquisition integration and
transaction fees of $6.7 million in Q4 and $55.8 million for the
full year, income taxes of $6.8 million in Q4 and $131.1 million for
the full year, and other non-recurring costs of $2.5 million in Q4
and $20.4 million for the full year. Free cash flow in 2016 includes
capital restructuring costs of $29.4 million and reorganization
costs of $13.9 million for the full year.
(f) Net debt excludes capital lease obligations. Total capital lease
obligations as of December 31, 2017, and December 31, 2016, were
$69.5 million and $67.6 million, respectively. Total capital lease
payments in Q4 2017 were $4.4 million.
 

Re-Cast Results

The unaudited pro forma information below presents the combined
operating results of DexYP, with results prior to the acquisition date
adjusted, as if the transaction had occurred January 1, 2016. These pro
forma results include adjustments associated with the recognition of
certain deferred revenue and deferred costs, consistent with Dex Media’s
historical accounting policies. The historical financial information has
also been adjusted to give effect to pro forma events that are: (1)
directly attributable to the acquisition, (2) factually supportable and
(3) expected to have a continuing impact on the combined results of the
company. These pro forma results do not purport to be indicative of the
results that would have actually been obtained if the acquisition
occurred on January 1, 2016, nor does the pro forma data intend to be a
projection of results that may be obtained in the future.

    2016       2017
                               
$mm Q1     Q2     Q3     Q4     Full Year Q1     Q2     Q3     Q4     Full Year
 
Pro Forma Net Revenue
(After Conformity Adjustments)
Print $ 413.1 $ 388.8 $ 367.1 $ 344.0 $ 1,513.1 $ 318.8 $ 285.6 $ 273.8 $ 252.8 $ 1,131.0
Digital 329.4 319.5 318.6 312.6 1,280.0 296.0 300.5 291.8 282.5 1,170.9
Other   0.5         2.6         2.5         2.6         8.1     2.1         2.0         1.8         1.6         7.5  
Total Adjusted Pro Forma Net Revenue (After Conformity
Adjustments)
$ 743.0       $ 710.9       $ 688.1       $ 659.2       $ 2,801.3   $ 616.9       $ 588.1       $ 567.4       $ 537.0       $ 2,309.4  
 
                                                   
Adjusted Pro Forma EBITDA (After Conformity & Other One-Time
Adjustments)
$ 179.7       $ 175.4       $ 181.3       $ 183.8       $ 720.2   $ 136.9       $ 143.0       $ 147.2       $ 136.0       $ 563.0  
Adjusted Pro Forma EBITDA Margin % 24.2 % 24.7 % 26.4 % 27.9 % 25.7 % 22.2 % 24.3 % 25.9 % 25.3 % 24.4 %
 

Earnings Conference Call Information

DexYP will host an investor conference call at 2 p.m. CST on February
27, 2018. 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: 5997238.

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. DexYP 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, DexYP
believes the non-GAAP results provide useful information to management
and investors by excluding certain nonrecurring items that DexYP
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 DexYP’s performance, and
DexYP believes that non-GAAP results provide investors with financial
measures that most closely align to its internal financial measurement
processes.

About DexYP

DexYP
provides local business automation software and digital and print
marketing solutions to more than 500,000 local businesses that enable
them to compete and win in today’s on-demand economy. We provide the
digital tools and marketing sophistication that big businesses utilize,
arming local businesses with the deep resources they need to survive and
thrive. Our flagship product—Thryv—allows local businesses to automate
the business functions they performed manually in the past, or never
performed. These include building a digital customer list, communicating
with customers via email and text, updating business listings across the
internet, accepting appointments, sending notifications and reminders,
managing ratings and reviews, generating estimates and invoices,
processing payments, and issuing invoices and coupons.

DexYP also provides consumer services through our market-leading search,
display and social products— and connects local businesses to the 47.5
million monthly visitors of DexKnows.com®, Superpages.com® and
yellowpages.com search portals; and local print directories The Real
Yellow Pages®. For more information about the company, 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

DexYP
Media Contact:
Paige Blankenship, 972-453-3012
paige.blankenship@dexyp.com
or
Investor
Contact:

Nicholas Haughey, 972-453-7637
nicholas.haughey@dexyp.com