Q FINANCIAL FLASH

Transcription

1 Q FINANCIAL FLASH

2 DISCLAIMER The following information is preliminary financial information only. None of the information has been reviewed or audited by our independent certified public accountants. Finalization of the 2016 and 2017 financial statement audit of multi-element revenue accounting could result in a non-cash shift between reported Print and Digital Net Revenue and between reporting periods. The information is subject to adjustment for normal period-end items as well as for other adjustments that may be required when quarterly or annual information is reported. The adjustments could be material. The Company's results can fluctuate from month to month depending on a variety of factors, some of which are beyond the Company's control or are difficult to predict, so no inference as to future results should be drawn from this information. The following information does not necessarily include all material information about the Company or its securities that an investor would consider in making a decision to purchase or sell securities, and, therefore, no person should place undue reliance on this information. The Company disclaims any duty to update the information disclosed below or to provide any information in the future. The financial, or non-financial information, is presented as if the acquisition of YP Holdings had occurred on 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 and integration costs, pension, long-term incentive compensation, capital restructuring, business transformation, and adjustments for reorganization (emergence), fresh start and acquisition accounting. Adjusted pro forma EBITDA margin is calculated by dividing adjusted pro forma EBITDA by pro forma net revenue. Adjusted pro forma results do not necessarily reflect what the underlying operational or financial performance of the Company would have been, had the Dex Media and YP transaction been consummated prior to January 1,

3 DexYP NON-GAAP KPI Client Count, Period End (000) (a), Multi-Product (28) -12.0% Digital % Print (98) -25.9% Total Clients (124) -17.1% Q4 Full Year Fav (Unfav) % Fav (Unfav) % Pro Forma Net Revenue ($mm), (c) Print $ $ $ (91.2) -26.5% $ 1,131.0 $ 1,513.1 $ (382.0) -25.2% Digital (30.0) -9.6% 1, ,280.0 (109.2) -8.5% Other (0.9) -35.8% (0.6) -7.9% Total Pro Forma Net Revenue $ $ $ (122.1) -18.5% $ 2,309.4 $ 2,801.3 $ (491.9) -17.6% Adjusted Pro Forma EBITDA ($mm), (d) $ $ $ (47.8) -26.0% $ $ $ (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), (e), (f) $ 67.3 $ 97.0 $ (29.7) -30.6% $ $ $ (113.2) -32.3% Debt ($mm) Term Note $ $ $ % ABL % Total Outstanding Debt $ $ $ % Cash $ (2.0) $ (44.7) $ (42.6) 95.4% Net Debt (f) $ $ $ % (a) (c) (d) (e) (f) Duplicative local clients were removed from 2017 but not All figures presented are preliminary, subject to change, and unaudited. Material changes may result from audit procedures. Pro Forma Net Revenue for Q 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. 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, longterm incentive compensation, capital restructuring, business transformation and adjustments for reorganization (emergence), fresh start and acquisition accounting, and other pro forma adjustments. 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. 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 Q were $4.4 million. 3

4 DexYP Net Revenue and EBITDA Adjusted Pro Forma $mm Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year Pro Forma Net Revenue (After Conformity Adjustments) Print $ $ $ $ $ 1,513.1 $ $ $ $ $ 1,131.0 Digital , ,170.9 Other Total Adjusted Pro Forma Net Revenue (After Conformity Adjustments) $ $ $ $ $ 2,801.3 $ $ $ $ $ 2,309.4 Adjusted Pro Forma EBITDA (After Conformity & Other One-Time Adjustments) $ $ $ $ $ $ $ $ $ $ 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% (a) Print and digital revenue has been adjusted for each quarter in 2016 and 2017 to reflect proper recognition of former YP sales contracts with both print and digital advertising components, consistent with former Dex Media's accounting methodology. Adjusted pro forma EBITDA (non-gaap) has been adjusted for each quarter in 2016 and 2017 to reflect proper recognition of former YP sales compensation costs and bad debt expense on an incurred basis rather than on an amortized basis, consistent with former Dex Media's accounting methodology. Additionally, large one-time adjustments associated with former YP, recorded in Q4 2017, have been properly aligned to the appropriate quarters in

5 APPENDIX 5

6 DexYP ADJUSTED PRO FORMA EBITDA RECONCILIATION Q4 Full Year $mm Fav (Unfav) % Fav (Unfav) % Net income (loss) - GAAP $ (22.2) $ (506.3) $ % $ (290.2) $ $ (1,062.5) 137.6% Add/(subtract) non-operating items: Provision for income taxes (95.5) (197.4) % 7.6 (182.1) % Interest expense, net (6.8) -22.2% (111.6) -50.5% Other (income) expense (10.5) -87.5% (0.1) 12.5 (12.6) % Gains on early extinguishment of debt - (0.1) % (0.8) (1.1) % Impairment charge (615.5) % (615.5) % Add/(subtract) fresh start adjustments/reorganization items: Fresh start adjustments % - (417.9) % Reorganization - Emergence adjustments % - (976.5) % Operating income (loss) $ (92.5) $ (46.0) $ (46.6) 101.4% $ (174.2) $ 43.6 $ (217.8) % Depreciation and amortization % (32.6) -8.8% EBITDA $ 20.9 $ 54.5 $ (33.7) -61.8% $ $ $ (250.3) -60.4% Adjustments: Adjustments for acquisition and fresh start accounting (a) $ 59.8 $ 98.5 $ (38.7) -39.3% $ $ $ % Accounting conformity and other adjustments (7.5) 1.3 (8.8) % (2.0) -72.6% Pension expense (0.5) 32.6 (33.1) % (22.7) -61.0% Stock warrants - (28.0) % - (28.0) % Long term incentive compensation (1.3) % (1.5) 1.6 (3.1) % Capital restructuring costs % (22.5) % Business transformation costs (c) (4.9) -54.8% (15.6) -57.3% YP acquisition integration & transaction costs % % Severance - YP acquisition related % % Contingent lease obligations % % Other one-time costs (d) (8.2) -56.9% (47.4) -78.1% Adjusted Pro Forma EBITDA - (non-gaap) $ $ $ (47.8) -26.0% $ $ $ (157.2) -21.8% Operating Revenue - GAAP $ $ $ (62.8) -12.0% $ 2,002.8 $ 2,555.2 $ (552.5) -21.6% Pro forma revenue excluded from GAAP revenue (59.4) -44.4% % Pro Forma and Operating Revenue - (non-gaap) $ $ $ (122.1) -18.5% $ 2,309.4 $ 2,801.3 $ (491.9) -17.6% Net Cash Provided by Operating Activities - GAAP $ 75.6 $ $ (37.4) -33.1% $ $ $ (137.6) -33.9% Less: Additions to fixed assets and capitalized software (8.3) (16.0) % (30.8) (55.3) % Free Cash Flow, after Capital Restructuring Costs and Reorganization Costs (e) $ 67.3 $ 97.0 $ (29.7) -30.6% $ $ $ (113.2) -32.3% (a) Acquisition and fresh start accounting requires that deferred revenue and deferred costs be written off. This adjustment adds back revenue, net of expenses, for what would have been recognized in EBITDA, absent acquisition and fresh start accounting. Capital restructuring costs represent advisory fees incurred by Dex Media in connection with their evaluation of the Company's capital structure, prior to filing a prepackaged Chapter 11 plan of reorganization with the U.S. Bankruptcy Court. (c) Business transformation costs represent expenses incurred by Dex Media in connection with their organizational restructuring program, which included the launch of virtual sales offices, enabling the Company to eliminate field sales offices, plus the automation of the sales process, integration of systems to eliminate duplicative systems and workforce reductions. (d) Other one-time costs for full year 2017 primarily represents YP litigation costs of $3.8 million, YP professional services fees of $2.0 million and other YP project costs of $7.4 million. Other one-time costs for 2016 primarily represents YP severance (not related to the YP acquisition) of $1.0 million in Q4 and $18.8 million for the full year, YP litigation costs of $5.7 million in Q4 and $13.3 million for the full year, and YP other project costs. (e) Free cash flow in 2017 includes the payment of YP acquisition integration and transaction fees of $29.2 million in Q4 and $70.5 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. 6

7 DexYP FREE CASH FLOW RECONCILIATION Q4 Full Year $mm Fav (Unfav) % Fav (Unfav) % Adjusted Pro Forma EBITDA $ $ $ (47.8) -26.0% $ $ $ (157.2) -21.8% Tax refunds/(payments) (6.8) (14.4) % (131.1) (63.4) (67.7) % YP acquisition integration & transaction costs (29.2) - (29.2) NM (70.5) - (70.5) NM Business transformation costs (a) (2.5) (8.4) % (11.6) (32.6) % Other cash costs - (7.5) % (8.8) (43.3) % Pension funding - (0.1) % (4.3) (5.5) % Working capital/other 1.4 (11.0) % (18.4) -45.6% Cash from Operating Activities $ 98.9 $ $ (43.4) -30.5% $ $ $ (257.0) -41.7% Capital expenditures (8.3) (16.0) % (30.8) (55.3) % Free Cash Flow (before Debt Service) $ 90.6 $ $ (35.7) -28.3% $ $ $ (232.6) -41.5% Interest payments (23.3) (29.4) % (90.9) (167.0) % Free Cash Flow, before Capital Restructuring Costs & Reorganization Costs $ 67.3 $ 96.9 $ (29.6) -30.5% $ $ $ (156.5) -39.8% Capital restructuring costs (c) NM - (29.4) % Reorganization costs (d) (0.1) % - (13.9) % Free Cash Flow, after Capital Restructuring Costs & Reorganization Costs $ 67.3 $ 97.0 $ (29.7) -30.6% $ $ $ (113.2) -32.3% (a) (c) (d) Business transformation costs represent amounts paid by Dex Media in connection with their organizational restructuring program, which included the launch of virtual sales offices, enabling the Company to eliminate field sales offices, plus the automation of the sales process, integration of systems to eliminate duplicative systems and workforce reductions. Other cash costs in 2017 primarily represents YP severance (not related to the YP acquisition) and YP other project costs through YTD June. Other cash costs in 2016 primarily represents YP severance (not related to the YP acquisition) of $1.0 million in Q4 and $18.8 million for the full year, YP litigation costs of $5.7 million in Q4 and $13.3 million for the full year, and YP other project costs. Capital restructuring costs represent advisory fees paid by Dex Media in 2016 in connection with their evaluation of the Company's capital structure, prior to filing a prepackaged Chapter 11 plan of reorganization with the U.S. Bankruptcy Court. Reorganization costs represent charges paid by Dex Media in 2016 that were directly associated with the process of reorganizing the business under Chapter 11 of the U.S. Bankruptcy Code. 7