Business News
R.H. Donnelley Reports Solid First Quarter Revenues and EBITDA
Thursday 08. May 2008 - - Soft Advertising Sales In-Line with Full Year Guidance - Launches Refinancing
R.H. Donnelley Corporation (NYSE:RHD), one of the nation’s leading Yellow Pages and online local commercial search companies, today reported first quarter 2008 net revenues of $675 million, up 2 percent over the same period in the prior year. Adjusted EBITDA(1) in the quarter was $357 million and adjusted EBITDA margin was 52.9%. Adjusted free cash flow in the quarter was $92 million based on cash flow from operations of $100 million, capital expenditures of $10 million and $2 million of adjustments related to other compensation expense at Business.com. First quarter advertising sales were $718 million, down 4.8 percent from pro forma advertising sales for the same period in the prior year. Net loss for the quarter was $1.6 billion, reflecting a goodwill impairment charge of $2.5 billion. Excluding the effect of goodwill impairment recorded in the quarter, net income would have been $15 million. As of March 31, 2008, RHD’s net debt outstanding was $9,951 million, excluding the purchase accounting fair value adjustment of $100 million.
“We generated strong revenues in the quarter driven by the pull through of ad sales from the prior year, lower claims and allowances and the addition of Business.com. This resulted in solid EBITDA in the quarter. Ad sales, a leading indicator of revenues, reflected weak economic conditions in our markets as we expected,” said David C. Swanson, chairman and CEO of R.H. Donnelley. “We are aggressively managing costs in response to this operating environment.”
Swanson continued, “We are also launching a series of refinancings today that are expected to reduce near-term mandatory debt repayments, extend our maturity profile and reduce debt levels. These actions provide us with greater flexibility to navigate through this business cycle and manage the business for sustainable growth when a better climate returns.”
The Company recorded a $2.5 billion non-cash, pre-tax charge associated with goodwill impairment in the quarter to reflect the recent decline in the market value of the Company’s debt and equity securities. The charge does not impact the Company’s current or future cash flow, compliance with debt covenants, tax attributes or management’s outlook for the business.
Refinancing
The Company announced its intention to refinance the Dex West credit facility and amend the R.H. Donnelley Inc. credit agreement to provide additional covenant flexibility as well as extend the maturity date of the revolving credit facility.
Outlook
The Company affirms its full year 2008 guidance last updated on February 28, 2008 on the basis on which it was provided, which excludes the impact of the announced refinancings.
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.