SuperMedia LLC (SPMD)
2011 Earnings Call
February 22, 2012 10:00 am ET
Peter J. McDonald - Chief Executive Officer, President and Director
Samuel D. Jones - Chief Financial Officer, Executive Vice President and Treasurer
Lance W. Vitanza - CRT Capital Group LLC, Research Division
Previous Statements by SPMD
» SuperMedia's CEO Discusses Q3 2011 Results - Earnings Call Transcript
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» SuperMedia's CEO Discusses Q1 2011 Results - Earnings Call Transcript
Good morning, and welcome to SuperMedia's Fourth Quarter and Full Year 2011 Earnings Conference Call. With me today are Peter McDonald, Chief Executive Officer; and Dee Jones, Chief Financial Officer.
Some statements made by the company today during this call are forward-looking statements. These statements include the company's beliefs and expectations as to future events and trends affecting the company's business, and are subject to risks and uncertainties. The company advises you not to place undue reliance on these forward-looking statements and to consider them in light of the risk factors set forth in the reports filed by SuperMedia with the Securities and Exchange Commission. The company has no obligation to update any forward-looking statements.
A replay of the teleconference will be available at (800) 585-8367. International callers can access the replay by calling (404) 537-3406. The replay passcode is 47153760. The replay will be available through March 10, 2012. In addition, a live webcast will be available on SuperMedia's website in the Investor Relations section at www.supermedia.com. At the end of the company's prepared remarks, there will be a question-and-answer session. And now, I'd like to turn the call over to Peter McDonald. Peter?
Peter J. McDonald
Thank you, Paula, and welcome to our Q4 and full year 2011 earnings call. We appreciate your time and interest. I'll share some of my thoughts and then pass -- on the past year and then Dee will review the financials.
2011 was what we called internally, the year of construction. There were 3 principal themes to our work. First, reduce cost and improve the productivity by doing more with less. Second, reduce our debts to deleverage the company. And third, adopt and implement a strategic approach that will affect the transformation of SuperMedia from a provider of Yellow Pages products to a trusted marketing adviser helping small- and medium-size businesses retain and add customers using the full spectrum of digital and traditional media. I've spoken to you about our prior of each of these scenarios during prior quarterly calls. Now, let's take a look back at the results for the whole year.
We attacked our cost structure making disciplined decisions about products and activities that should be eliminated. And also work intelligently to create efficiency in how we operate. I'm pleased to say that all departments participated in these initiatives. And everyone deserves the credits for the company's 420-basis-point year-over-year margin improvement. As a result of these reductions, we delivered 2011 annual adjusted EBITDA of $602 million, 7.5% less than in 2010, despite an 18% year-over-year decline in adjusted revenue. As reported previously, 2010 included a $40 million favorable non-recurring non-cash resolution of state generating tax claims. We paid equal attention to our debt and capital structure. Again, the results are good. We reduced our debt by $426 million over the course of 2011.
In total, we have now taken down over $1 billion in debt since January of 2010. We intend to continue to pursue further reductions in 2012. Good work on expense and debt reduction has been complemented with a coordinated effort by marketing, sales and operations to transform our approach and value proposition for our clients. This is the path to improving our top line results. As a company, our purpose always has been to help small- and medium-sized businesses attract and retain customers through local media. That remains unchanged. Our job is to bring clients leads and customers, so that they can focus on what they do best: Running their businesses.
As we started 2011, we knew that while the fundamental purpose of our job may not have changed, the world in which we did our job had changed a lot. We would have to change the way we engage with our clients. The changes we had already made to offer websites and online Yellow Pages and search engine marketing as products along with the print Yellow Pages were not enough. We challenged ourselves to find out directly from business owners what they needed and how we could provide it. Business owners told us that they felt overwhelmed, that they did not understand all of today's local media choices. The confusion of online, social, mobile apps, deals, key words, SEO, blogs, tweets and so on. They did not have the training to deal with it. They did not have the time to deal with it. They did not have the staff to deal with it. The owners also told us that they still needed to reach new customers. They still wanted proof that their advertising worked. And that they would love to have someone they could trust to simplify things and take care of it all for them.
So we took their advice. We developed integrated solutions offering presence and promotion. Presence, listings across the major search engines and portals and other sites. Social media maintenance and updating for Facebook, as well as reputation monitoring, and websites optimized for the web but also companion mobile sites optimized for the explosion of the use of smartphone and tablet formats. In promotion, lead and call generating solutions combining search engine marketing syndication through local sites and mobile ad networks and even print Yellow Pages. And we included measurement and reporting to track the performance and prove the value of each item. We tested the solutions in different markets. And as I mentioned on our Q3 call, we launched formal trials of the new approach in 6 selected markets during the fourth quarter. We wanted to answer 2 basic questions: What works best for explaining the value of the new solutions to existing clients? What works best when calling on prospective clients?