Business News
R.H. Donnelley Reports Third Quarter Results
Friday 24. October 2008 - - Net Revenue of $648 million - Adjusted EBITDA of $334 million - Net Debt Reduced by More Than $150 Million
R.H. Donnelley Corporation (NYSE:RHD), one of the nation’s leading Yellow Pages and online local commercial search companies, today reported third quarter net revenues of $648 million. Adjusted EBITDA(1) in the quarter was $334 million. Adjusted free cash flow was $108 million, based on cash flow from operations of $110 million, capital expenditures of $17 million and $15 million of other adjustments. Third quarter advertising sales were $504 million, down 8.3 percent from pro forma advertising sales for the same period in the prior year. Net income and EPS for the quarter were $26 million and $0.38 per share, respectively. As of September 30, 2008, RHD’s net debt outstanding was $9,564 million, excluding the purchase accounting fair value adjustment of $91 million.
“We continue to make excellent progress streamlining operating processes and reducing costs,” said David C. Swanson, chairman and CEO of R.H. Donnelley. “The decline in third quarter ad sales was as expected due to weak consumer sentiment and the impact it is having on advertisers’ ability to make new growth investments, pay existing bills, and for some, stay in business. As a result of the continued deterioration in the economy, we are revising our full year 2008 guidance to the low end of the previous range.” Swanson continued, “While we are carefully managing expenses and maintain our focus on debt reduction, we remain committed to increasing the value we provide to advertisers and consumers. We continue to expand advertisers’ reach by connecting them with consumers looking for local products and services regardless of where they are searching. This month we rolled out our exciting new voice search platform, 1-800-CALL-DEX, across the 14-state Qwest region. This service allows consumers to use their phone to search our accurate and comprehensive database of local business information as well as locate businesses near landmarks or other convenient search criteria. By year-end, we will launch DexKnows.com 2.0, our next generation local search site. In addition, in the first half of 2009, we will be launching the Dex Search Network and a new DexKnows.com platform for mobile, continuing to increase consumers’ ability to access our unique and up to date content over additional convenient platforms. These initiatives are all about building the foundation for sustainable growth as the economy recovers.”
Capital Markets Activity
During the third quarter, the Company repurchased senior notes and senior discount notes of R.H. Donnelley Corporation having an aggregate principal value of approximately $187 million for $92 million.(2) In addition, the Company repaid approximately $35 million of bank debt during the same period.
On October 22, 2008, R.H. Donnelley Inc., a wholly owned subsidiary of the Company, obtained a waiver under its senior secured credit facility to permit voluntary prepayments of its Term Loan D-1 and Term Loan D-2 at a discount to their principal amounts. R.H. Donnelley Inc. is not obligated to make any such prepayments.
Outlook
The Company is clarifying its full year 2008 guidance to be at the low end of the previously announced range that was issued on July 30 for ad sales, adjusted EBITDA and adjusted free cash flow. Net debt at year end, excluding the fair value adjustment, is now expected to be less than $9.5 billion. Guidance for full year net revenue and weighted average diluted shares outstanding are unchanged. Current 2008 guidance is summarized below (all numbers are approximate):
— Ad sales decline of 8%.
— Net revenue of $2.6 billion.
— Adjusted EBITDA(3) of $1,350 million; operating loss of $2,345 million;
and adjusted operating income(3) of $860 million.
— Adjusted free cash flow(4) of $475 million and operating cash flow of
$505 million.
— Net debt at year end of less than $9.5 billion, excluding the fair
value adjustment of $0.1 billion.
— Weighted average diluted shares outstanding during 2008 of
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 revenues, which is recognized under the deferral and amortization method.