SuperMedia LLC's CEO Discusses Q1 2012 Results - Earnings Call Transcript

SuperMedia LLC (SPMD)

Q1 2012 Earnings Call

May 08, 2012 10:00 am ET

Executives

Peter J. McDonald - Chief Executive Officer, President and Director

Samuel D. Jones - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Treasurer

Analysts

Steve Hasnain

Unknown Analyst

Colin Murphy

Joseph S. Rodbard - Providence Equity Partners LLC

Presentation

Operator

Good morning, and welcome to SuperMedia's First Quarter 2012 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 71843958. The replay will be available through May 25, 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, Lyn, and welcome to our first quarter 2012 earnings call. We appreciate your time and your interest. I will show some of my thoughts on events during the quarter and then Dee will review the financials in detail.

As I explained when we spoke last quarter, our themes for 2012 are execution and transformation. Both require focus and discipline, and the entire SuperMedia team demonstrated these skills during the first 3 months of the year.

The financial results provide a summary perspective of our performance. We continue to reduce expenses and find more efficient ways of operating the business in order to increase productivity. As a result, total expenses decreased by 24.3% compared to Q1 of 2011.

On a Q1 2012 to Q1 2011 comparison, adjusted EBITDA declined by 3.9% to $148 million. As the expense control largely offset a 17.1% decline in operating revenue from $438 million to $363 million.

Adjusted EBITDA margin improved by 560 basis points to 40.8%.

During the first quarter, we also made progress in reducing company debt. The total reduction was $64 million, resulting in a total debt of $1.681 billion at the end of the quarter, down from $1.745 billion at the end of 2011.

The reported financials show immediate impact of strong execution on the expense side of the business. What does not translate as immediately to the financials is the progress we have made to transform our business to address top line performance. Let me bring you up-to-date on those efforts.

As a reminder, our approach is to transform SuperMedia from a provider of Yellow Pages products to a trusted marketing adviser, helping small- and medium-sized businesses retain and add customers using the full spectrum of digital and traditional media. We characterize this as relationships and results.

First, getting to know individual business owners and their business objectives. Second, providing local media solutions that deliver cost-effective leads to meet their objectives, whether from search engine optimization or social media promotion, or print or online Yellow Pages or other digital media on the Web, or on mobile devices. And third, measuring and reporting the results to prove value and sustain our client relationships. We feel good about our approach to the market and the alignment and excitement that we are receiving from our media consultants and clients.

Our sales leadership trained over 850 media consultants and their managers in the first quarter. The remainder will be trained in the second quarter. The consultants now walk in to see each business owner in a new way, showing the owner an analysis of the business local's media profile on the consultant's iPad, explaining how SuperMedia can help them secure more leads and customers and providing examples of the results that we are obtaining for other clients like them.

Today, we are about Google and Facebook, and mobile apps and websites, and reputation monitoring. All combined with great service and a complete local media solution that deliver results.

The more complex local media becomes, the more local businesses need and welcome our expertise.

We simplify local media planning and management, so that business owners can do -- can focus on what they do best, serving their customers.

One of the interesting things that we have learned with our new approach, how important Yellow Page advertising remains as a cost-effective source of leads for many businesses. Not every business, but it is very often a great complement to digital media. The owners we meet with, know that they need to catch up with the best ways to apply digital, social and mobile media. As we have those discussions, the conversations always turned to results. For many businesses like roofers, plumbers, attorneys, doctors, exterminators, moving-in storage and lots more, the Yellow Pages offer terrific results at a lower cost per call than search engine marketing or digital display advertising.

I joined one of our marketing consultants for a client meeting recently. We had spent the entire team -- time talking about digital media and put together a great solution for him. And then he said, how about the Yellow Pages, can you help me with that, too?

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