Joseph Walsh - President and Chief Executive Officer Paul Rouse - Executive Vice President, Chief Financial Officer and Treasurer.

Chris Mathewson - Ares Management Chad Quinn - Bennett Management Jan Gonsey - Newmark Capital Steve Huffman - PineBridge Investments Colin Wilson-Murphy - Bowery Seth Crystall - RW Pressprich Michael Fey - Babson Capital.

Good morning, and welcome to Dex Media’s First Quarter 2015 Conference Call. With me today are Joe Walsh, President and Chief Executive Officer; and Paul Rouse, Executive Vice President, Chief Financial Officer and Treasurer. 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 factors that could cause actual results to differ materially from those in the forward-looking statement.

These factors are listed at the beginning of this presentation a well as in the report filed by Dex Media with the Securities and Exchange Commission. The Company has no obligation to update any forward-looking statement. 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 pass code is 32259145. The replay will be available through May 28, 2015. In addition, a webcast will be available on Dex Media’s Web site in the Investor Relations section at ir.dexmedia.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 President and CEO, Joe Walsh. Please go ahead..

Thank you, Kris and good morning everyone. I’ll start by sharing an overview of our strategy for 2015 and then I’ll provide some insight into our progress during the first quarter. Paul will then get into more detailed quarterly results and I’ll wrap up with some closing remarks.

When I became CEO of Dex in October of last year, I mentioned my mandate from the board to accelerate the company’s transformation from a print direct re-publisher into a full service digital media company.

That work began in the fourth quarter and we’re continuing to work urgently across every functional department to reshape and redefine the business. Earlier this week, we announced the departure of EVP and Chief Revenue Officer, Del Humenik, who resigned to pursue other opportunities.

As a result our sales leadership will report directly to me, giving me the opportunity to work closely with our sales leaders and to continue to transform and reinvigorate our business. Our mission is simple, to help local business thrive. The market place is crowded with competitors in the commoditized industry.

We see an opportunity to differentiate Dex from all others in the space by improving our legacy products, simplifying our digital product suit and offering innovative new products delivered with outstanding client service. Where clients trust us to guide them and manage their entire online presence.

We will increasingly focus on high margins, low churn recurring revenue products. These products may have lot of price points than digital products we’ve sold in the past, but we believe they’ll have larger addressable markets and attractive economics. Thanks to the lower churn rates.

As part of that strategy, we’ll aggressively pursue new customer acquisition via all available channels including digital downloads of our products, some available through premium offers.

We want to create a new business, where we’ll sit side by side with our clients and help them, not only attracting retained customers, but also stay in touch with those customers and reward their loyalty.

Sales reps in this environment will nurture their book of business and they’ll see a long future with us because of our relationship with clients will be recurring and stable rather than transactional in an environment [ph]. Pilot testing of these new products began in April and I’ll provide more details later in this morning’s presentation.

Although the revenue we have projected for new products will not be material to 2015 results, we believe they’ll become an important part of revenue mix for 2016 and beyond. In 2015, we’re laying the foundation for a sustainable future with the following key themes in mind.

Simplifying and automating across the business, offering products we’re proud of, winning and retaining clients, creating a culture of energy and purpose. We realize we have room for improvements in our core systems, which represent processes and products from another time in our company’s history.

Our project to update those systems kicked off in the first quarter, with delivery targeted for the end of the year. The result of this massive effort will be a single set of system, leading to simplification and improvement across sales, marketing, fulfillment, client service and billing.

Our client service team is preparing for this month’s launch of our consolidated client care platform based on salesforce.com. The new platform offers a 360 degree view of our clients across all markets within a single system.

Later this year we’ll launch a mobile app for Apple and android devices, that gives clients 24/7 access to review program results, update content, view and pay bills, adjust budgets and contact our client service reps.

To facilitate the many system changes, we successfully consolidated our program management teams into a single enterprise changed management organization. Over the last 90 days, we began the work of transforming our client services function from a product centric approach to one centered on the client.

The new model consolidates most digital operations functions in one location, minimizes the number client touch points and streamlines our processes for on boarding and outreach services.

Organized into three service tiers to find by client spend, our new platinum, gold and silver campaign management teams are important steps toward improving the overall client experience. Our new approach is more consultative, streamlines content collection, minimizes hand offs and enable us to build meaningful relationships with our clients.

Serving our highest spending clients, our campaign managers are dedicated client support representatives, who care for the client’s needs across all digital product solutions. The campaign manager provides indispensible service and consultation to the client, maximizing their marketing investment with Dex.

Similarly, our gold campaign managers are dedicated to our mid-tier clients and a semi dedicated silver campaign management team, serves our clients with lower value digital bundles. Training on the new service models was completed in April and our pilot platinum team launched earlier this week.

We are excited about this new approach to service and will continue to update you on our progress. While we work to reshape our organization and streamline operations, we also began implementing revenue enhancement activities during the first quarter.

Some of our newly redesigned print directories began distribution in March, featuring attractive new covers with images of local landmarks, bigger more readable types and standardized trim sizes.

To prepare for these changes to our legacy products, we retrained all 1,500 marketing consultants on the value of print advertising, understanding its core user base and the role it plays in a multiplatform marketing program.

Using a combination of in person and video based modules, our MCs gained a new appreciation for the viability of print advertising in an increasingly digital world. We simplified our rate card by reducing the number of print advertising choices to seven standard sizes with tier pricing by market.

Changes to our distribution continued into the first quarter, as we consolidated titles as appropriate to the market. Although consumers increasingly search for local businesses online, we know a portion of the population relies on print and we believe these improvements to make our directories the best available in the market.

All sales regions now carry the new rate card along with prototypes of our new directories and our reps are using new sales lyrics based on print industry research. While it’s too soon to gauge the impact on our sales results, we’re encouraged by the pickup we’re seeing in early market launches.

Looking across our digital portfolio, we took action to consolidate our vendor relationships ensuring consistently high quality across our footprint and the opportunity to deliver services not found elsewhere in the market. In late March, we announced an expanded partnership with Yext, involving directory submissions and listings claiming.

Our clients clearly benefit from the custom solutions Yext provides. Reputation monitoring, which was developed for Dex in 2010, allows clients to easily track reviews from their listings in one place.

Another product custom built for Dex and launched in 2015, Competitor Watch, enables clients to see reviews, ranks and average star ratings for up to five of their competitors. As we look at what’s happening in the industry and listen to feedback from our clients, we know we have an opportunity to improve our digital offerings.

During the quarter we began the work to simplify, reload and rebuild our digital product portfolio. We’re examining every product with the intention of enhancing functionality and adding innovative new features that produce measurable results for our clients.

One visible enhancement is the recent design refresh of our internet yellow pages highlight people at our Dex Knows.com and Superpages.com. This phase lift marks the first phase in a series of enhancement, including a more comprehensive makeover currently underway.

There’s more work to do to improve the sites, but plan changes will deliver more relevant search results and deeper business content, including user generated photos, reviews and videos. Other product enhancement efforts helped our clients capitalize on consumer’s increasing use of mobile devices to search for local businesses and services.

For example, we’re developing a more aggressive digital display product that helps clients use location targeting to send alerts for offers to newer existing customers in close proximity to their business.

We’re revamping our website product to offer more adaptive capabilities that cut that optimized viewing across multiple devices as well as social media. Our new search engine marketing or SEM Plus product, represents the best features of our two legacy products combined into one offering.

Built on our own proprietary platform, SEM Plus is optimized to create the most efficient program that will deliver a clear return on the clients investment.

A new agreement with our search engine optimization provider will improve processes, pricing and results, as well as provide additive services such as widgets, our clients can use to create custom coupons and special offers.

We also plan to provide our clients with better and broader video distribution capability, thus giving them more ways to reach their customers. Beyond our existing suit of digital products, we continue to monitor local marketing trends and make note of the tools on our client’s wish list.

For example, many clients are increasingly looking for more effective ways to reach their customers online, build relationships and reward loyalty. We began a pilot that meets those needs called DexLink. It offers clients a platform for managing all customer data and communication in one place.

The primary functions of the product are scheduling, appointment management and customer messaging along with customer database management. We look forward to updating you on our pilot tests on future calls.

Helping our clients better manage their online presence across all formats, desktop, mobile, tablets and social media, such as Facebook, is a main idea behind another new product we’re developing DexHub. It’s an online presence builder featuring adaptive design where a client’s businesses will become highly visible across the web.

And additional features such CRM or ecommerce can be integrated easily and intuitively. It’s a place where clients will be able to view, monitor and manage their marketing across all platforms, backed by a client service agent, who ensures clients stay current.

As consumers increasingly use smartphones and tablets to search for and contact local businesses, we know our clients need trusted advice and guidance on mobile solutions.

In response to the recent announcement by Google, about changes to the company’s search algorithm, rewarding mobile friendly sites and punishing non-mobile friendly ones, called Mobilegeddon by some industry pundits.

We proactively contacted our clients to offer free analysis of their websites to determine their mobile friendliness and offered immediate solutions in the event these sites needed upgrades for mobile platforms.

Small businesses preferred to work with one company, that can offer a wide range of marketing solutions and we want to be their preferred provider. Across all our product enhancement efforts, client needs will always be top of mind. And now I’ll turn the call over to Paul, so he can provide more detail on our results for the first quarter..

Thank you, Joe and good morning everyone. Before I begin with the first quarter financial results, I’ll reference the non-GAAP financial numbers. We’ve provided a reconciliation of GAAP to non-GAAP measures in the appendix of this presentation, as well as the financial schedules on the company’s investor relations website under quarterly results.

As I mentioned on the last earnings call, the company would be reviewing the financial and operational measures to make sure we’re providing the type of metrics to investors that reflect the company’s performance. As a result we’ve decided to provide company quarterly guidance.

We’ll continue to review and monitor various performance metrics and make update as necessary. For the second quarter of 2015, the company expects reported revenue to be in the range of $390 million to $410 million. Adjusted EBITDA is expected to be in the range of $140 million to $150 million, with a margin of 35.9% to 36.6%.

In addition, guidance for free cash flow is expected to be in the range of $70 million to $80 million. Now, the first quarter ad sales results. Total ad sales declined 27.1% for the first quarter as compared to a decline of 12.7% for the same period last year. Print ad sales declined 26% as compared to a decline of 19.6% for the same period last year.

There were several drivers that led to this decline. Over the course of 2014, there was a sales initiative to increase the level of digital sales mix from the existing print client base coupled with the continuation of client losses that exacerbated the prints clients.

In addition, there was less focus on providing a print product conductive to print usage. For example, the font size was too small and the product was not user friendly for people who wanted to use the print book.

As Joe mentioned earlier, we’ve been working on adding enhancements to the print product and are seeing some pickup in our early market launches. Digital ad sales declined 29.6% as compared to an increase of 9.6% for the same period last year.

We believe several factors contributed to these slower ad sales results, including a de-layering of the sales management teams resulting in a temporary dislocation as sales managers adjust to their new geographies and teams.

In addition, right sizing of the sales force resulted in reassignment of accounts and impacted the timing of servicing of our clients. This 29.6% decline was driven by the following factors. Approximately 20 percentage points due to the timing of servicing, approximately 5 percentage points was driven by lower renewal rates on search products.

Approximately 3 percentage points was driven by the continued decline in national accounts and the other 2 percentage points was driven by the change in product mix. Management believes the impact of these factors will lessen overtime.

As we’ve defined this metric in the past, ad sales is intended as a leading indicator of reported revenues on a combined basis for print and digital. However, it’s important to note that the linkage from ad sales to revenue is not direct as one might expect.

Print ad sales, represents what has been delivered and started to build within the reported quarter, which is more directly linked to reported revenue. Digital ad sales, consists of local and national accounts. The national account portion of this calculation is more closely aligned with the print ad sales calculation.

Local digital ad sales, represents what has been sold within the quarter, to be fulfilled and built in subsequent months, which are not as directly linked to reported revenue. This difference in digital ad sales, impacts the timing of reported revenue due impart to when and how we deliver the digital solutions.

The differences range from a month to several months depending on the clients business, billing cycle and marketing program. As we change our products, we’ll continue to evaluate how sales performance is reflected in the ad sales metric. Joe talked earlier about digital enhancements that we have just started or starting to try on certain markets.

These innovative new products such as DexLink and DexHub are some of the ways we’re addressing the sales performance and they will offer something new and exciting to our existing clients and attract new clients.

We believe that by offering products that go beyond selling just leads, we can a build a solid foundation for positive results in the future. Now, turning to our reported financials. The company reported revenue of $406 million, a 16.5% decline compared to our profound results last year.

Adjusted expenses were $263 million, a 9% decline compared to the same quarter last year. As a result the first quarter adjusted EBIDA was $143 million, with a margin of 35.2%.

Sales and cost of sales expense contributed to the total expense decline, primarily driven by headcount reductions coupled with lower variable cost associated with lower revenue. This expense decline would have been even greater had it not been for a $15 million of onetime credit item in the first quarter of 2014.

Excluding these credits, adjusted EBITDA margins would have been 37.4%. In addition, I want to point out for the fourth quarter adjusted EBITDA margin of 40%, had onetime credits of approximately $16 million. Excluding these credits, adjusted EBITDA margins would have been 36.3%.

As part of the company’s organizational restructuring plan announced in December, 2014, the company will incur onetime cost to achieve identified - we identified as business transaction cost. As of March 31, 2015, inception [ph] to date we have recorded a total of $52 million. $43 million of severance was recorded in the fourth quarter of 2014.

$3 million for system consolidations, $5 million associated with leases and $1 million of other expenses recorded in the first quarter of 2015. In addition to the company’s business transition cost, the company announced cost savings related to the organizational restructuring of $110 million for 2015.

As of March 31, 2015, we’ve realized approximately $20 million of the $110 million of cost savings, primarily related to headcount reductions.

We’ve updated the run rate of annual savings target to the high end to be at $160 million from $150 million, primarily driven by increased reductions of print and distribution and other operational efficiencies. Now, turning to the balance sheet and cash flow activities.

As of March 31, 2015, our total bank debt amount at par was $2.57 billion, retirements of principals made through the end of the first quarter was $38 million. When you net this with $10 million pick associated with the bonds, it results in overall debt reduction of $29 million.

We’ve provided debt balances at par and cash by silo in the appendix of this presentation. For the first quarter of 2015, the company generated free cash flow of $43 million, representing cash from operations of $46 million, less capital expenditures of $3 million. This included payments of business transformation cost of $28 million.

Cash on hand as of March 31, 2015 was $171 million. I also want to comment on our approaching debt maturity in 2016. We realize that our net debt leverage is higher than some of our industry peers in light of which, the company continues to evaluate its capital structure, considers various alternatives, while also considering its strategic options.

This concludes the prepared remarks for the financial results. I will like to turn the call back over to Joe..

Thanks, Paul. As we work to reshape the business in terms of operational efficiency, core assistance, key processes, client service and product offerings, we haven’t lost sight of the people who will make our vision a reality.

We’re working to create shared cultural understanding of what needs to be done to improve our business and why? We know that above all, culture will drive crucial changes in our business and differentiate Dex within the market place.

To facilitate our vision of enhanced client services, we’re investing in the development of our employees with new programs designed to raise the digital IQ of our workforce. We also recently added dynamic new talent to revitalize our sales training.

Our newly implemented pay for performance program ties achievements for long term incentives, with emphasis on creating value for shareholders. This week the top 90 leader of the company gathered in Dallas, for sessions that outlined our vision for the future and created alignment with our 2015 goals.

Over the next couple of months, these leaders will take vision forward to share with their own teams in a series of corporate meetings and sales rallies designed to energize the employees and activate our strategy. The idea is to ensure every Dex employee can articulate our goals, no matter where they work or what role they play in the company.

We hope today’s call provided some sense of the progress we’re making across every functional department to transform the company. Our first quarter activities lay the foundation for strategic changes that will differentiate Dex in the market place and expand our product portfolio, while significantly enhancing the client experience.

While our change efforts are ongoing, our ad sales performance in the first quarter was unsatisfactory. Sales performance is driven by many factors, including legacy, product offerings and outdated client service model overly complicated sales processes.

We’re diligently working to change these issues and believe our changes will lead to more new client acquisitions, higher margin sales and reduced client turnover.

In close, we know there are no easy fixes for transforming a 100 year old business, but with the talent, knowledge and dedication of employees throughout the organization, we remain confident we can create a thriving business with a solid client base, steady stream of revenue. Thank you, for your continued interest in our company.

We’re now ready to take your questions..

[Operator Instructions] Your first question comes from Chris Mathewson with Ares Management..

Thanks, can you give us some color on how your ad sales are pacing in the second quarter, both print and digital?.

As we mentioned in the prepared remarks, in December of last year, we announced the very big reorganization really of the whole company and is expected about [ph] the core of the workforce across the entire business.

Closing offices, de-layering, doing all kinds of things and then we clearly disrupted things because lots of people got different assignments and had different geographies that they were covering, different reporting relationships , so we’re picking back up from that now and things are improving.

I don’t have any numerical guidance I can give you, but we’re seeing momentum pick up. In fact, as I mentioned there’s a big group of leaders here this week, we’re all together with and people are really excited about the vision of where we’re going with the business and excited to get back and talk to their people about it..

So, I mean - and I hate to press on this, but I mean, ad sales on the digital front were down 30% in the first quarter. So is it - can you directionally say it’s 20% the rate, way to think about the 10, like got to be something you can give us, given the performance in the first quarter..

Yeah, I mean I think that’s part of why we gave the guidance in the second quarter to kind of give you something more concrete to work with. The challenge with the ad sales metric is, it’s kind of sales velocity, it’s not as much directly linked to what your actual outcome is going to be.

We haven’t seen any tremendous change in how we believe revenue is going to track going forward. We just had a little bit of change in velocity, some timing differences in when we service some of the accounts..

So then why not provide kind of an annual guidance range to kind of provide people with a huge [ph] where we think things can go.

Give some comfort around the first quarter was horrible, but the rest of the year this is what we think we can do?.

Yeah, I mean we made a lot of progress in the quarter, it was maybe one of the best quarters the company has had in a long time if you measure it across all factors. Looking narrowly at the speed with which they closed accounts, it was a little bit slower. We’ll take your suggestion about considering giving guidance further on the future.

Today we’re giving it for this quarter, we thought that would be helpful. We’re trying to look for ways to give you more visibility into the future. What we’re really focused on is, recognized GAAP reported revenue, I mean that’s our main thing that we’re really focused on.

But we appreciate that you’re looking for some kind of peak at what forward trends are because recognized revenue is kind of backward looking..

Do you - kind of looking how much disruption there was in the first quarter, how would you rate the decision to get rid of so many layers as you said and sales people in such a fast manner? Why not kind of have taken up a little more gradual approach?.

I would rate it a 10, on a scale of one to ten. It was long overdue. What had happened over the prior numbers of years is that - if you remember, if you go back and you look at what this kind of combined company was, it was sort of double the size that it is now and it’s been declining.

And in the process of trying to adjust for that overtime, the sales force was reduced in size, but the management hierarchy, the management kind of super structures in place was really the same or very similar structure that they’d had for many, many years when the company was much larger with a much bigger customer base and many more sales people.

So what we have now is, we have a flatter and nimbler organization where we can get at it and move and drive the business forward. It was long overdue, much needed, saved us tens of millions of dollars and we now are focused directed organization that we can really manage and work with.

And I appreciate the disappointment in that speed of sales metric that you’re focused on.

We’re fixing this business, we’re getting the cost out of it, we’re getting it cleaned up, we’re getting the service model repaired, so that our clients actually have a good experience, we’ll stay, pay and retain, we’ve something to build and we’re focused on changing the mix of the products that we sell to recurring revenue streams that are sticky and stay with us and where we can make decent margin on.

So there’s a lot going on to fix this business and while we certainly care about the speed of servicing, we’re not concerned at all about servicing all the accounts that we need to service in this year or what the overall outcome would be for the year..

And I guess the last question.

Given I guess the changes in the - that have been made in the management structure and the weakness or I guess the pressure that’s put on performance and a whole bunch of debt coming due next year, what’s the plan? It’s like, I know strategic alternatives and we’re going to talk to people and others , there’s going to be something more concrete because the numbers you were pretty soft..

Yeah, we work regularly with our board thinking about our options and where we’re going and what we’re going to do in terms of addressing this.

We’ve got a year and a half and we just got here and as you accurately underlined, some of the things that we’re doing to make the business really move forward, you have to take a - have a step back to really be able to benefit from in the future.

The company had been selling yellow pages ads and search engine marketing and a couple of other digital products and really was not experiencing any growth, it was continuing to go backward. And we’ve come in and really tried to give the company a pass to new revenue streams, to new growth and to a more sustainable longer term future.

So that’s going to take a little bit of time to materialize and I think you’re asking this, are we plunging into some process right away? I think from our standpoint, in the not too distant future, we think we’ll be able to show some green shoots and some early evidence of the progress that we’re making.

And we’re making a lot of progress, there’s a lot being done kind of under the hood here and it’s going to be a very good story in the fullness of time. So right this minute, it’s not our shining moment obviously, but we’re looking forward to some better days ahead with the changes that we’re making..

Thanks for answering the questions..

Your next question is from Chad Quinn with Bennett Management..

Just to follow on Ares question in a slightly different way.

What are the ad sales assumptions that are driving the guidance, the second quarter guidance? Do you have ad sales assumptions?.

We aren’t planning to give any ad sales guidance going forward. I mean, that’s again kind of a velocity run rate issue. And I would tell you that given the fact we’re servicing a little slower in Q1 in, we obviously are speeding up, we’re speeding up right now.

But we aren’t prepared to give the numerical guidance for the space at which we’re going to sell in the second quarter..

Okay, and just understanding the timing, the 20 percentage points of timing in the digital as sales number, do some of the other sort of declines - does that give you pass that may be some of the change you’re making have not been or received by your customer base?.

No, not at all. First of all, the new products, the new services that we’re launching are only heading into pilot right now, they’re not reflected in any way in what happened in Q1. And in fact the very early returns of those pilots are actually pretty positive and we’ll be back to tell you more in future calls about how that’s developing.

So I don’t think that’s word [ph] on where we’re going on. I think it’s a little bit of word on what we did do last year quite frankly.

There was a pretty big push last year, to try to sell more digital and that resulted in a lot of those digital sales being search engine marketing and those search engine marketing campaigns were variable campaigns, where the customers could pause them or raise lower than as they went.

And it didn’t have anywhere near the stickiness or the predictability that our previous, obviously print products had or even our bundles that featured primarily fixed type programs. These variable programs were much less reliable and so the revenue retention was less and in many cases the campaigns didn’t even run for a year.

You guys who follow the space know that the churn rate for search engine marketing is pretty high. It ranges around the industry 3%, 4%, or 5% per month churning out. And as this company put more emphasis on search engine marketing, it got more into that churn and that’s figured prominently into what we saw.

And it meant any words [ph], we’re not here to be a search engine marketing shop, I mean we’ve got a much bigger idea and much better plan and there’ll be some SEM mix in what we sell, but we’re moving the business more toward what we believe will be much higher retention, recurring revenue stream kind of monthly subscription type products that will be indispensible service that we’ll provide to our local customers.

And we’re rapidly building those out and rolling those out. So no, I don’t think the first quarter reflected anything about where we’re going with that. .

Okay and one last one for me, just with the cost associated with the savings.

Are those all cash costs in the period?.

Yes..

Okay, thank you..

Your next question is from Jan Gonsey with Newmark Capital..

Hi, thanks so much for taking the questions. So just as I guess a quick follow up on some of the other questions regarding the sales decline this year - this quarter rather. With print ad sales being down 26% versus, I guess they were more in like the lower 20’s in previous quarter.

Is that also due to the sort of sales force restructuring as well?.

No, but shortly, when you look at the print sales, it related more to some of the - the way the packaging and the programs were build last year.

There was a discount or a bundle - a system of selling that discounted print or essentially moved some of the print revenue to digital, sort of migrated that over and that’s kind of what we’re seeing, reflected in that Q1 number.

And I think there’s a mix also on top of there, the print products that we were publishing had very tiny type in it and was formatted in a way that really was seizing to be as useful or attractive to our target audience.

And so the work that we’ve done to reformate our products put really attractive, iconic, local photographs on them to reformat the books that are little bit bigger with less columns and much bigger typefaces and kind of open formats. We really eliminated all the small ads, ads are medium sized, big and really big.

So our target audience, which tends to be kind of 45 and older home owners, when they pick up that book, don’t necessarily have to go find their reading glasses. They’ll be able to pick this book up and use it. And we believe that the positive effects of those changes, you’ll see flowing into the business later this year.

So just to put a wind up on it, no, I don’t really think that the minus 26 in print ad sales was related to those changes..

Okay, so I guess just in terms of the acceleration, in print ad sales decline this quarter, that was - I mean I’m just curious like why it accelerated this quarter versus prior quarters in terms of the - if it was pretty steady like below 20’s in the past whatever - eight quarters or whatever you want to call it?.

Yeah, I don’t have really anymore of an answer. I think that those changes that we talked about were just a steady kind of building trend and we’re doing things to turn that trend around now and well, we don’t have any numerical guidance to give you today.

We’re seeing some pretty good reaction, people are carrying around prototypes that these new formatted directories, customers are engaging, they’re interested, they’re excited, they’re saying it’s about time, the pizza market that uses your book and needs a book that they can read. I’m pretty [indiscernible] about what you’re doing.

I’m going to keep my ad this year, I’m going to buy an ad that I hadn’t had one before. So we’re pretty optimistic about being able to emulate [ph] the decline rates in print as we move out. That’s suggesting it’s going to grow, just that it doesn’t have to decline by minus 26, it can decline at a slower rate than that we believe..

Did you have any - did you know what that rate would be?.

I’m not prepared to give you guidance on that, I just think that it can be better. Just to sort of sight and this is a lot different, but just to sort of sight something to give a sense for it.

There are independent publishers in the US, people that aren’t affiliated with phone companies, that aren’t a former incumbent publisher, that are just out there trying to publish directories that can compete. In many cases they don’t have a lot in the way of digital choices or alternatives to package or bundle with.

They’re just out there selling their print products and many of those publishers are riding gains or coming in flat. They’re not really experiencing minus 26s and minus 22s and all that.

There is not necessarily a reason we need to decline at the rate that we have and if we publish the best available directories, markets and fairly if we shoulder the needs of the customer and don’t steer the sales call too much one way or the other, but really work with our customers and try to give them the best possible products to deliver the leads that need.

We think that the print declines can be less than what you’ve seen in the past..

Okay, that’s fair enough and then just in terms of - I mean, I know I guess previous management had mentioned, client retention rate had been in sort of the mid 80s area, is that what you’re seeing or have you seen like sort of an acceleration from there? Just sort of looking at these numbers here, I’m just wondering kind of how you guys are looking at thinking about retention rate?.

Yeah, the metrics that we use there, we’ve got this great big process to look at what retention is and it backs out this and it puts in that. We’re examining that right now to see if that’s really a good measure. But the measure as it’s been presented in the past is exactly the same, it really hasn’t moved.

But we believe that going forward, we won’t have people running as fast away from print. By the way, that doesn’t mean that we’re luddites and we’re here to build a print business. I’m just saying that that’s a really valuable asset that we have and it needs to be cared for and it’s glide path needs to be as gentle as possible.

And so we’re going to manage it as skillfully as we know how and some of you guys have followed us before in other businesses and we’re pretty good at bringing the absolute most of that print product to fund the growth that we’ve got in this digital space and to help us go build a new business..

Okay and then just in terms of the newer rate on search a products, is that being down, is that due to the sales force realignment, just the minus 5% that you have on page 12 of the presentation?.

No, that’s just the mix.

That’s moving from selling these fixed bundles that they had in the past that had some more presence oriented digital product that were linked to a print ad and really leaving that stuff behind and going to full on search engine marketing on a variable budget basis, which proved to be not very productive for the company or in many cases for its clients.

So we saw a renewal rate tick down and be very clear, while we can’t instantly change the fact that they had sold that way, so some of that is still flowing through. In terms of our strategy, what we’re doing going forward? We are really deemphasizing, just selling variable price SEM.

We’re really focused on monthly recurring revenue streams with products that we can retain and renew overtime and have decent margins..

Okay, so I mean, I guess that makes sense.

And in terms of the sales forces go to market, I mean is it sort of like lead with digital and see if the client is still interested in print or just sort of give them like the whole big pitch print and digital, what do you want type of thing?.

I’m not sure I’m ready to say exactly how we felt as far our competitors are listening to these calls. But we really feel that, we’ve got I think a pretty small way to package these things together and explain them to customers.

In fact the matter is, all advertising works to some degree, it’s a question of a particular business, the type of business they’re in, the category they’re in, where they’re at geographically, as to what they best set of solutions for them or our media consultants are pretty skilled at using the data that we provide them to find the best way to present to these customers and present them across, what we call the multiplatform approach.

And we’re now adding campaign managers behind them particularly for the bigger accounts, that will look after those customers and really explain to them how to optimally use the services that they’re getting and make sure that they’re up to date and fresh, that they’re just not a dead website or dead pages.

But we’re updating them and changing them and working closely with them and providing them a much needed advice layer that’s really not out there right now..

Okay and then just in terms of your margins, I mean it looks like they’re - you guys are implementing all these cost cuts, which is great, but I guess you’re not really seeing the margins like when can we kind of start - when do you think we’ll start seeing some margin improvement?.

Thank you, for the compliment on the cost cuts. We worked very hard to try to streamline and rebuild this business. And you’ve got a pretty rapid fall in revenue, so working to keep margins where they are is not that easy and our margins are good when you look at other industry comparison.

So as we improve the revenue curve, obviously that will be helpful for margins as we move forward in the future. If we can I think we’re going to move on to the next question..

Our next question is from Steve Huffman [ph] with PineBridge Investments..

Hi, this is Steve Huffman from PineBridge investments.

I wanted to ask you what’s your current capacity to buyback term loan below par, it seems like you have a decent amount of cash on hand and if you could also indicate how much cash do you need to operate?.

Paul is going to give that one to you..

We’re constantly evaluating opportunities to market place and where there’s opportunity to help the company by a below par payment and within our debt covenants we will. And the cash needs to fluctuate based on quarter and the needs of the company, so there is money available for our below par payments now and we’ll opportunistically buyback..

Thanks for the question..

Okay and just another follow up question is, if you look at the market right now, do you think that there is opportunities for consolidation of the directory space among companies?.

Yes..

Okay, okay. Thank you..

Your next question is from Colin Wilson-Murphy with Bowery..

Yes, thanks for taking my question. Joe, with G&A up 61% year-over-year of $40 million and a 500 basis point decline in EBITDA of Q1 of ‘15 and if you take the midpoint of 2Q guidance, I think its 36% EBITDA margin guidance for the second quarter.

How should we think about a normalized EBITDA margin for the rest of 2015, as you transition to a more digital company?.

Well, that’s a lot of question there. We’ve clearly got a declining revenue number, so what we’re working very hard to do is, variablize as many of the cost in the business as we can. So they flow up and down with the revenue and we’ve made a lot of progress in that in a very short period of time.

I think we mentioned that we were on a 160 million run rate take out.

So there’s more work to be done and the systems changes that I mentioned in the prepared remarks have got us very focused right now, essentially taking the old kind of Dex One company and the old SuperMedia companies, back office operating systems and integrating all that into one new more nimble system and there’ll be additional cost flow out as we completed that.

And importantly more flexibility and more capability to help us better sell and better market these services going forward. So we’re going to do everything we can to hold the margin as we move along. We think - I don’t have any specific margin guidance, I guess that’s where I’m going to..

Okay, I guess certain other way is a 35% EBITIDA margin, is that sustainable, is that realistic?.

Well, I mean, look you probably follow other companies in this space that have margins that are lower than that, that are invested in various other digital initiatives.

There’s no question, there’ll be pressure because the print margin - print product provides so much margin and as that continues to decline, some of that cost caring capability goes away.

The print product itself, we think we can variablize the cost structure on, but as it provides less of a revenue cover for the business that we’re now building, there’ll be margin pressure. So I would say to you that there will be margin pressure overtime, but we will run this business efficiently as we possibly can.

And we’ve got a team in there that really knows their around the cost and we’re turning every little screw and tapping on every little nail we can, trying to get this thing as tight as we can..

Understood, I appreciate that.

And then lastly Joe, is the 20% timing impacted digital sales in Q1, does that mean that we’re going to see that that it’s in the bag for 2Q, meaning that timing impact will be reversed and we will see a benefit in Q2?.

Ad sales are not that precise, it’s kind of like throwing hand grenades around, it really is not a super precise thing. But yes, I think broadly speaking, if we sold a little slower in the first quarter, if we’re going to in the full year take care of all the accounts and do everything that we need to do, there will be a pick up.

I think that’s a reasonable assumption for you to make and we’re not seeing anything that would indicate that’s not true..

Okay and my last question is, given the market prices of the bank debt, are you going to be in the market to do debt repurchases?.

Like I answered earlier, we’re going to view the opportunities up there and where it makes sense, we will..

Next question?.

Next question is from [indiscernible]..

This explanation on what’s going on is very helpful. I mean, we definitely encourage you guys continue doing this.

I mean we [indiscernible] sort of you spent a lot [indiscernible] market six months ago, so as and when it’s coming out, [indiscernible] to market what you’re doing on the granular level, I think will benefit almost everyone on this call..

Thank you, it’s an interesting question, that how much of the strategy we really want to review? Because as I had mentioned, competitors listen to these calls and we really wanted to get the pilot sorted out, going in the market get a little experience before we came out and really started to talk about it. The strategy -.

I mean maybe [indiscernible] suggestion, I mean we can all appreciate that some of them in the call are bank debt investors, some people may be equity.

But people on the bank debt side, I mean look we’re in Seattle we’re happy to host you, it’s sunny here, I mean we can invite [indiscernible] Dallas, but why not just have the meeting where you invite some of your larger bank debt guys and walk us through what you’re thinking.

I mean [indiscernible]?.

That’s true. Thank you for that suggestion, that’s something that we’ve talked a little bit about. We really - we frankly we wanted to get some progress under our belt before we really started to say what we were going to do. I mean some of you guys know who we are and know we’ve done this before, know we kind of no over doing.

We’re doing open heart surgery, we got a lot of stuff torn apart and it’s going really, really well and I know that you look at the ad sales and say my god, they’ve left the company [ph], but we haven’t, it’s gone really well. We’re building something here that’s going to be very successful in the long term and we’re excited about it.

Next question?.

Our next question is from Seth Crystall with RW Pressprich..

Gentlemen, thanks for taking my call.

I was just curious, a few things, first of all, for the first quarter, it's disappointing you as it was for investors in the market, did it meet kind of your internal plans or was this disappointment for you too?.

Mixed, we were obviously disappointed to see the digital ad sales number that you sighted, but by every other measure we’re on or ahead of plan and we managed to find some additional savings and efficiencies that we hadn’t found when we made that initial announcement in December. So that was really great.

We’ve on earth some amazing people, amazing leaders, executives, people that are stepping up, that want to be a part of this, but we weren’t sure that we’re here and they raised their hand, put their cap on and flown up and said, we’re ready to help you make you this happen, so we’re pleased about that and we’ve been very successful in terms of kind of vendor alliances that we wanted to put together or maybe even a little ahead of what we thought we were going to be able to do.

We’re right on track in terms of the major initiative to merge these back office processes and they’re big and hard and we’re right on track to get that done, so we’re really pleased about that.

We managed to rebuild the sales presentation and kind of put an eye pad sales presentation that gives the sales force a real track to run on, to tell their story to a customer and that’s been embraces and people are excited about that.

So there’s a really long list of things that are going well, that we’re pleased about, so I would say we’re right on track in terms of the turn and going forward I think you’ll start to see some of that improvement as well.

Those of you guys who have been investing in this space for a while know that, this is kind of a half year [ph] look back in this business and we’ve been here about a half a year. So going forward I think we’ll really be able to be more proud of the kind of numerical stuff we’re showing here..

Okay and not that I like to use sports analogies.

But it would seem to me on the product side, you're early in the early innings of getting things done, maybe the first or second inning in the cost side, maybe fourth inning on or off that stair in terms of reviewing what you're doing, but it seems like there's a long way to go and you talked about building this for the long term, but obviously as people pointed out, the bank debt at the end of 2016.

How well do you think within let say the next 12 months, you'll be able to really be able to go into a bank group and just say, hey, look here, really what we've obtained, what would be the reason, the things we should look for that.

No, I mean you've given us underlying, but like three or four bullets that would make me feel like, hey, this is a Company that is going to be here for the long term..

Well, the first is that is that we’re tapping in to a new high growth segment in where we’re going. If you look right now at the businesses that we’re in, the directories businesses, plus IYP and the print directories businesses are in a long term decline and that’s been the major focus of the company and we’re sort of shifting away from that.

Although we’re going to, I think slow the rate of decline there. If you look at the other digital products that we’re selling, it’s dominated on a dollars and cents basis by search engine marketing.

And that’s a tough business, it’s a pretty matured business, it’s one that’s very commoditized, there’s not a lot of money we’ve made in it to be honest with you and it’s not going to lead us to the promised land.

So we really need to do something else and we’re focused really in this marketing automation, CRM space, really getting into the business operations of our local customers. And it’s interesting situation in the United States that you’ve got giant companies, national companies, regional companies, have got all the data, all the tools.

They’ve got marketing departments, they’ve got agencies and they’re very skillfully competing with the local mom and pops, our local advertisers and they’re just skimming business away from them in a really effective way. And our local businesses need somebody to show them how to do that too.

How to market on a mobile phone, how to use the data that’s available, how to develop a direct dialogue with their clients, with their customers and that’s what DexLink is going to do.

And then you’ve got this blizzard of confusing places that a small business needs to try to put their message out, between social, between all the different kinds of mobile sites and desktop sites that they need to try to tell their story.

They really need a DexHub, a central place to manage that and they need someone to do it with them, to show them how to do it because the real time nature of marketing today is killing the local business.

And we’re there to help them, we’re building a set of services that are going to do that, so I think we’re going to be able to explain that too and show you some early metrics that are going to demonstrate that we actually are doing this effectively and that there’s a high growth business here.

So I guess the biggest thing is just tapping into high a growth segment and really leading the development of that new category is what we’re doing with this set of assets and I think that you’ll be - I think we’ll be able to show you that we’ve got a great plan to do that and then we’re making good progress to do that.

And yeah, I think we need a little bit more time and we kind of just got here and we spent the first few months just trying to take cost out and get things going. So I again I feel great about where we are, it’s early days. I can’t show you finished products, but we’re making good progress..

Okay, great. Thanks a lot. Good luck..

Thanks..

Our final question comes from Michael Fey with Babson Capital..

This is Mike Fey. First of all thanks for finally providing guidance. I think it’s a step in the positive direction and I would say that goes to really comment at a full year look or more granularity into your assumptions that are driving some of those would be helpful to further take that.

As far as the cost of the - I think you said, there should be one system by year end, what are the cost associated with that, implementation of that?.

I don’t know Paul, if you have a number to hand or not..

Yeah, I think we gave guidance last time, originally came out between 70 and 100 in our December 15 and I think we guided towards the high end of that, that we went for the high ends of the range in cost savings. So we’re continuing to monitor that and we’re going try they’re coming under that, but we’ll stay with the high range for now..

So that - I mean that whole cost to achieve is not around the systems. He’s trying to get underneath of the actual the systems change. What’s that costing to make that change? I don’t have that number to hand, I don’t know if you do either.

I mean we - a fair amount of this IT, we were spending anyway, we’re just spending it on 27, 37 initiatives rather than just this one gigantic one to get this system merged.

And we just kind of took all those resources and focus them like a magnifying glass, right on that point and we’re holding it there until we get the systems convergence finished, which will open up really a whole new list of opportunities for us, once we get on one platform and one system..

Okay and then you also mentioned that the mobile apps and kind of website launches.

I think you said, those are in pilot or they have - they’ve already been launched? If they’ve been launched what is the customer view of that? Again, in the past this is something that I think the Dex Knows and the SuperPages whatever the - the websites themselves were not highly successful because it just wasn’t - people go to Google or wherever they go and so you were partnering up in the past.

So you got any initial read into how some of those are playing through?.

Yes, we did have some sense. Let me try to see like in - there are two distinct areas here that I’m going to talk about based on the way you asked that question. The first, this will take me a minute, is the IYP, the internet yellow pages, Dex Knows and SuperPages. You’re right, those have been sort of left to float out like their chunk.

We’ve really have not innovated, improved or invested in doing anything with those and yet money has been spent by a department that looks after it. We’re just kind of redirecting that logo, we’ve given both of those sites a facelift.

The Dex knows site, we rewrote the code underneath of it, it was taking four or four and a half seconds for it to respond to a query. We’re now down to - the slow queries are four one hundreds of a second. So we got the underlying search running well and moving quickly.

We gave both sites a facelift, where we optically where we put an all new facelift on them and made them look more contemporary, made them better. And now we’ve got a series of - not big investments, we’re kind of working with the budgets that was already there.

But we’ve got a series of new search capabilities that we’re going to bring to them and we’re going to kind of unify what the product and simply what the product offering that we’re selling, if you will on those IYPs is.

Now for those of you that are shaking your head and looking at each other saying, he thinks he is going out of Google, Google it, I am not saying that, but there is a market that uses these IYPs, there is now a market and they are not very good these IYPs today. So we think we can give a much better search experience to those customers.

And those owned and operated lease that come through those IYPs convert very highly. These are very close to the point of transaction there people who are about to buy and when they go to an IYP, they are not just shopping there are about buy. So we want to publish good IYPs that we’re proud of that give consumers a good experience.

And we’re just not willing to put anything out there what are name on, that we’re not proud of. So it’s not going to become the next high growth area for us, but it doesn’t need to decline anywhere near as fast as it has and this is a very high margin and important revenue stream to us. So it’s worth a little bit of love and care, that’s the IYPs.

Now second question, you’ve kind of sort to asked that I mentioned in my prepare remarks is this mobile app. And I want to be very clear what I describing. I was describing a portal away for us to do business with our customers, so not necessarily a consumer facing app but an app for small business facing. Yeah, client facing, thank you.

So we do have that in pilot in two markets right now and we are putting success some kind of finishing touches on it and see it rolling out a little bit later this year. And you know we heard over the place people say mobile first. You know our business is mobile first. The good thing to say, we are mobile first. Mobile is everything now.

I mean if you go to deal small businesses, they are running their businesses on smartphones and tablets. To such a degree, it’s amazing when you are out in field.

So just want to give them a simple app button they can touch, that when it pops up, their name is, welcome you know Fleming, whoever you are and there is a little photograph of their media consultant along with the blue highlighted contact buttons and a little photograph of their client services rep who takes care of their accounts, it’s dedicated to them.

And on that app, they can pay their bill, check on their account, they can look at a dashboard that shows how the campaigns that they are running are performing. They can really almost anything they would want to do, they can do right there on that app.

And that’s going to be an important - it’s not just for them, that’s actually the place that we’re going to work with them on to and we contact them to review how their campaigns are going, we’re going to go there with them and walk him through.

So that’s a big part of the vision of where we are going and it will also support the other products and services that we plan to lay on that platform. So that’s big, that happens a little bit later this year. We’ve made a lot of progress on that one..

Okay. And then also on the - in the ad sales decline, you did mention client loss, but there is no kind of number around that.

What’s high as better as, what are your retention rates running out right now?.

The broad all customers’ retention rates are flattish but what we’ve been doing is drilling down and looking at retention rate by individual products and really digging in. And what we are seeing is that our retention rates on search engine marketing are not anywhere near we like to be, they are not that great.

And since the mix have shifted so dramatically last year to more search engine marketing, we are seeing more of a client loss because of that in that first quarter number.

And again we are going to continue in that direction, we’re going to move in a different direction going forward, but there will be a little fly well fact as we go forward because so much momentum was around selling search engine marketing..

Okay and then just finally there some other comments on the maturities coming up obviously I think one caller suggested a meeting probably would be helpful, because I think all just aware the 2016 will come sooner than you know..

We are keenly aware. We are the new guys here remember we just showed out, we came with that as a backdrop. And I think the idea putting a communication session together where we can tell you our story when we are just a little bit further along and when we got some more details to show you is a good idea..

Okay, thank you guys..

We had enough lot of time for our questions today, I will now hand the program back over to Joe Walsh for any closing comments or remarks..

Now I’ll just thank you everybody. We appreciate the support and we’re here working hard and trying to fix this business. Thank you..

Ladies and gentlemen, this concludes today’s conference call. You may now disconnect your lines..