Dex One Corporation (
Q3 2010 Earnings Call
November 09, 2010 08:30 pm ET
Tyler Gronbach - SVP, Administration and Communications
Alfred Mockett - CEO
Steve Blondy - EVP & CFO
Jonathan Levine - Jefferies
Andrew Peranick - BTIG
Todd Morgan - Oppenheimer
Good morning and welcome to Dex One Corporation’s Third Quarter 2010 Results Conference Call. (Operator Instructions) I would now like to turn the call over to Mr. Tyler Gronbach. Sir, you may proceed.
Thank you, and good morning everyone. I am the Senior Vice President of Administration and Communications at Dex One Corporation. Hosting the call today are Alfred Mockett, Chief Executive Officer and Steve Blondy, Executive Vice President and Chief Financial Officer.
I would like to remind you certain statements made today may be forward looking as defined by the Private Securities Litigation Reform Act. We call your attention to our press release for the quarter ended June 30, 2010 and the company’s Form 8-K, furnished to the SEC this morning. These documents discuss third quarter 2010 results and the 8-K also includes the results information package, a presentation that contains information pertaining to the quarter.
We encourage you to review these materials and the company’s other periodic filings with the SEC, which set forth important risks and other factors that could cause actual results to differ materially from those contained in, or suggested by, any forward looking statements. In addition, please review the risk factors described in the Safe Harbor language. Electronic versions of Dex One’s SEC filings can be obtained by contacting us, visiting our web site at dexone.com, or visiting the SEC’s web site at sec.gov. The press release and results information package are available on our corporate web site and can be accessed by going to dexone.com and clicking the Investor Relations tab.
Commencing on February 1, 2010, the company adopted fresh start accounting as required under GAAP, which had a significant impact on the reported results of operations. These reported results are not indicative of our underlying operating and financial performance, and are not comparable to any prior period presentation. In addition, 2010 GAAP year-to-date figures only include results from the most recent eight months.
During the call, we will refer to certain adjusted and combined adjusted figures that are non-GAAP financial measures such as revenue, expenses, EBITDA, free cash flow and net debt. Some of these exclude items such as impairment charges, reorganization costs, stock-based compensation, and long-term incentive program expenses, fair value adjustment, and the impact of fresh start accounting.
Additional information about non-GAAP financial measures, as well as the reconciliation between these items and the comparable GAAP measures can be found in the press release and related 8-K furnished to the SEC. One final reminder: This call is the property of Dex One Corporation and any retransmission or broadcast, without the expressed consent of the company, is strictly prohibited. With that, I’d now like to turn the call over to Alfred.
Thanks you Todd. Good morning ladies and gentlemen. I am delighted to join you in my inaugural investor call with Dex One. I am going to start by explaining why I am here, then talk about what I have learnt so far and finally the expectations for the future. I have never had the privilege nor perhaps the misfortune of managing in such a state environment. And Dex One is no exception. Our company and the industry is at an inflexion point. We are operating in a period of discontinuous change.
The opportunity in front of us requires a new way of thinking, big bold ideas that support step function change. This is the kind of work I thoroughly enjoy and was the major reason why I decided to come on board. I believe I can help transform this business and generate value for our shareholders.
To succeed we need to consistently exhibit three behaviors. First we must be realistic. Second be decisive and third be bold in all our actions. Acting in this manner we will able to arrest for the customer loss, invigorate the sales effort, flex the business strategy, attack the cost base and ultimately put the company back on a path to profitable growth.
I spent the majority of my career leading such activities, and the Dex One opportunities and issues are very similar to the circumstances I have been able to capitalize on and overcome throughout my carrier. British Telecom helped transform a government utility into a global technology company that operated in 30 countries and 24 time zones. I ran several operating divisions including oversight of their business communication and global internet and broadband communications divisions.
During my time there we removed more than $1 billion of cost, rationalized the disparate set of assets down to a core group of profitable businesses, employed a build, buy or partner approach to expansion, and right sized the workforce with a bargain-for environment.
At the software development and systems integration company, America Management Systems, I directed a business transformation effort that overhauled the operation, flattened the management structure, refocused the sales force on recurring revenue opportunities and increased the breadth and depth of our solution suite. Ultimately, we eliminated more than $300 million in cost, doubled the share price and positioned the business to be acquired by CGI Group.
Most recently, I narrowed the focus in the enterprise to concentrate on mobile and high-speed internet software services for the communications sector, optimized its limited resources and aligned its top-line opportunities with areas of higher profit potential while overseeing an inherited seven-year financial restatement. Two and a half years into the turnaround with the company and a solid operating position, our channel and development partner Alcatel Lucent purchased the company for integration into its digital home strategy.