Business News
R.H. Donnelley Delivers Strong 2007 Results and Exceeds Free Cash Flow Guidance
Monday 03. March 2008 - - Grows Ad Sales in Fourth Quarter - Generates Operating Cash Flow of $692 Million - Revises 2008 Outlook to Reflect Softer Economy - Decides Not to Initiate Dividend
R.H. Donnelley Corporation (NYSE:RHD), one of the nation’s leading Yellow Pages and online local commercial search companies, today reported full year 2007 adjusted free cash flow of approximately $617 million based on cash flow from operations of $692 million, capital expenditures of $77 million and $2 million of adjustments related to Business.com. Full year advertising sales, pro forma for the impact of Business.com operations for the entire period, were $2,743 million, up 0.4 percent from pro forma advertising sales for the same period in the prior year. Net revenue for 2007 was $2,680 million. EBITDA for the full year was $1,368 million after $39 million of FAS 123 R expense and approximately $35 million of purchase accounting and related expenses. Net income and EPS for the same period were $47 million and $0.65 per share, respectively. Net income includes approximately $29 million of one-time costs related to the refinancing completed in the fourth quarter and the write-down of an intangible asset due to the recent rebranding of our print products in the Embarq territory. As of December 31, 2007, RHD’s net debt outstanding was $10,130 million, including the purchase accounting fair value adjustment of $104 million.
“We made significant progress addressing our strategic priorities in 2007,” said David C. Swanson, chairman and CEO of R.H. Donnelley. “We aggressively invested in key areas to improve our value proposition both to consumers and advertisers. We extended the Dex market brand across our footprint and now present a single identity in the markets we serve. In addition, we significantly advanced both our diversification in terms of online sales through our Triple Play solutions and the Business.com ad network, as well as our technology capabilities through the acquired Business.com team. These initiatives will help us to maintain our market leadership position in local search.”
Swanson continued, “Though we are pleased with our 2007 accomplishments, weaker economic conditions than originally anticipated have created a more difficult selling environment. As a result, we have lowered our outlook for 2008. Furthermore, given the recent decline in the share price and the near-term economic outlook, we have decided not to initiate a dividend in order to apply all cash flow towards debt repayment. I am confident that we remain well positioned for growth once we move past the current cyclical challenges.”
Jake Winebaum, founder of Business.com will be stepping down from his day to day role as President of RHD interactive (RHDi) to spend more time with his family. Brian Barnum, COO and CFO of Business.com and RHDi, will assume day to day responsibility until we determine a permanent replacement. Jake will serve as a strategic advisor to the Company and will sit on the RHDi advisory board.
Outlook
The Company is updating its full year 2008 guidance. Revised guidance is summarized below:
— Ad sales decline in the mid single digits.
— Net revenue of between $2.6 billion and $2.7 billion.
— Adjusted EBITDA of between $1.35 billion and $1.40 billion before FAS
123 R expense and other compensation expense related to the
Business.com acquisition, and operating income of between $820 million
and $870 million.
— Adjusted free cash flow of between $525 million and $575 million and
operating cash flow of between $585 million and $635 million.
— Net debt at year end of between $9.5 billion and $9.6 billion,
excluding the fair value adjustment of $0.1 billion.
— Weighted average fully diluted shares outstanding during 2008 of
approximately 70 million.
See Schedule 6 for a reconciliation of the foregoing non-GAAP measures to the most comparable GAAP measures.
Further important information regarding operating results and related reconciliations of non-GAAP financial measures to the most comparable GAAP measures can be found in the schedules and related footnotes of this press release, which should be thoroughly reviewed. Advertising sales is a statistical measure and consists of sales of advertising in print directories distributed during the period and Internet-based products and services with respect to which such advertising first appeared publicly during the period. It is important to distinguish advertising sales from net revenue, which is recognized under the deferral and amortization method.