Good afternoon, and welcome to the DexYP's Third Quarter 2017 Conference Call. With me today are Joe Walsh, Chief Executive Officer and President; and Paul Rouse, 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 the future events and trends affecting the company's business and are subject to risks and uncertainties. Actual results may vary materially from these forward-looking statements.

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 statements. These factors can be found in our press release dated October 30, 2017.

The company has no obligation to update any forward-looking statement. I would now like to turn the call over to Joe Walsh. .

Thank you, Paula. This morning, Paul and I will review our financial results for the third quarter and year-to-date October 2017. I will highlight a few key statements and then turn the call over to Paul to run through detailed financials. .

As you know, we are in the process of integrating YP onto the Dex platform, the DexYP organization. And for the first time, we'll be sharing integrated financial results. We are continuing to manage the business tightly to deliver on our goal of being a lean, efficient company.

Paul will be covering our results in more detail, but I'd like to speak to a few key highlights. .

We again delivered strong EBITDA margins, indicating robust operating performance. Our free cash flow is allowing us to reduce debt quickly. DexYP remains in a great position to integrate YP and future acquisitions. We spent the last 2 months training the YP sales team members on our local business automation software, Thryv.

They've responded enthusiastically. Eager to provide this unique offering to local independent business owners across the former YP footprint. Clients are already seeing the benefit of moving to our software platform and the benefit of expanding the offer to more prospects.

We are on plan for the integration and synergies that we targeted as part of the YP acquisition..

Now I want to turn the call over to Paul to take you through the financials from this past quarter.

Paul?.

Thank you, Joe, and good morning, everyone. We will now discuss, in more detail, our consolidated third quarter 2017 financial results as released on our website on October 30. Our results are presented on a consolidated basis for DexYP, as if YP had been acquired on January 1, 2016.

Breaking out separate financial results for Dex and YP would be misleading and not aligned with the way we view and are managing our business. .

We would like to point out that most of the financial measures presented and discussed this afternoon were presented on a non-GAAP adjusted pro forma basis. We believe these non-GAAP results provide more meaningful information to management and investors relative to the underlying financial performance of the company.

In addition, these non-GAAP financial measures are used in turnover by management for budgeting, forecasting and compensation. .

Slides 5 and 6 in the Appendix, provide reconciliations of GAAP results to non-GAAP adjusted pro forma results for revenue, EBITDA and free cash flow. .

The adjustments made to our GAAP results remove the impact of fresh start accounting [indiscernible] hired upon the emergence from bankruptcy on July 29, 2016. And our acquisition of YP on June 30, 2017.

In addition, nonrecurring costs associated with capital restructuring and business transformation and noncash expenses associated with pension and long-term stock-based incentive compensation were removed from our non-GAAP results. .

As discussed on prior earnings calls, we continue to work through the impact of an income tax accounting error related to 2010 tax year for Dex One, one of our predecessor companies. This error occurred prior to the merger of SuperMedia and Dex One and subsequent to the formation of Dex Media in 2013.

These complex historical income tax calculations have caused a delay in the issuance of our 2015 and 2016 financial statements. We expect to be able to correct the prior period income tax accounting error and issue our 2016 annual report, which will include our 2015 financial statements before December 31, 2017.

It is important to note that the correction of the prior period income tax accounting error will not have an impact on non-GAAP adjusted pro forma EBITDA, free cash flow or net debt for any of the periods presently presented. .

Additionally, we are evaluating YP revenue recognition policies to address multi-element arrangements, which essentially relate to the allocation of discounts, where there are multiple products on a single contract.

Possible adjustments to revenue that could result from this review could be the movement of revenue between print and digital products and the possibility of shifting of the recognition of revenue between periods. Any possible adjustments will have no impact on cash or how we bill our customers.

Multielement arrangements have already been addressed on the Dex side of the business. We expect this review to be completed and reflected in our year-end results. .

My comments today will focus on the combined DexYP results for the third quarter of 2017. Year-to-date results for 2016 and 2017 are also presented for comparative purposes. I am pleased to report that EBITDA results for the third quarter of 2017 came in ahead of plan.

Non-GAAP adjusted pro forma EBITDA was $139.3 million, with a corresponding EBITDA margin of 24.5%..

Now -- let's now discuss Page 3 of our third quarter 2017 financial flash. Client counts overall declined 18% during the third quarter of 2017 compared to the end of the third quarter of 2016, which is in line with industry trends. Multi-product clients declined 13.4%.

The majority of the decline relates to YP clients moving from multi-product to single-product programs. This decline is partially offset from clients on the Dex side of the business buying more multi-product programs, combining print with either our IYP or Thryv products.

This is a positive trend, since multi-product clients usually remain clients longer. This is evident in the fact that only 6% of our combined multi-local clients have canceled their subscriptions this quarter. .

Print-only clients declined 25.3%. The majority of the decline was on the Dex side of the business as more Dex clients became multi-product clients, as we just discussed.

Factoring out this shift, in Dex print-only clients to multi-product -- shifting to multi-product clients, a positive trend, our print client declines are roughly in line with industry trends. Digital-only clients declined 3.6%. The majority of the client loss was on the YP side of the business.

These declines were partially offset by strong growth in new customers on both the YP and Dex sides of the business. .

Now onto net revenue for the third quarter. Total pro forma net revenue was $568.2 million for the third quarter, a decline of [ 80% ]compared to the same quarter last year. This decline was primarily driven by reductions in pro forma print revenue.

Pro forma print net revenue was $274 million, a decline of 22.9% compared to the same quarter last year, which is consistent with industry trends. Total digital net revenue was $292.4 million in the third quarter, a decline of 12.6% compared to the same quarter last year.

This decline was driven by our planned deemphasis on reselling search engine marketing services, partially offset by the growth of our new Thryv software solution. As Joe previously mentioned, we believe Thryv will be a great value to our clients and help drive digital revenue growth for us in the future..

I would like to remind everyone that we [ de-emphasized ] the selling a search engine marketing, or SEM services, because of the low margins it provides to the company and the high cost of the leads provided to our clients.

In contrast, we have decided to emphasize our exclusive solution products, such as our network of proprietary and nonproprietary Internet Yellow Page sites, which include our own sites such as Superpages.com, DexKnows.com and now YP.com in an attempt to deliver leads at higher margins for the company and better value for our clients.

We will continue to provide SEM services as part of our product portfolio. But we anticipate that SEM revenue will comprise a smaller portion of our digital revenue prospectively. This strategy has been pursued on a -- by Dex Media for some time and we plan to apply the same strategy to YP.

Currently, for YP, a much larger portion of digital revenue has been provided by the sale of SEM services, generated by the large search engines. We expect SEM revenue from the previous YP clients to decline through 2018, while our EBITDA margins are expected to improve over this same period.

In short, we are very focused on improving the digital revenue mix of the business to improve EBITDA margins for the company and deliver better value for our clients..

Speaking of EBITDA performance, adjusted pro forma EBITDA for the third quarter of 2017 was $139.3 million, a decline of 22% from the third quarter of 2016. Our EBITDA margin for the third quarter of 2017 was 24.5%.

As we work to integrate YP onto the Dex platform, we are laser-focused on eliminating redundant and unnecessary costs in order to improve our EBITDA margins perspectively. In fact, for the second quarter of 2017, the combined EBITDA margin was 22.2%, and we were able to increase it to 24.5% in the third quarter.

This 2.3 percentage point increase in only 1 quarter, shows that we are able to achieve immediate synergies and improve our operating efficiency of the combined company. Free cash flow for the third quarter was $54.1 million, an increase of $6.4 million over the third quarter of 2016.

This improvement was primarily driven by reduced capital spending, and we are no longer making payments associated with our capital restructuring..

Net debt. As of September 30, 2017, our net debt was $877.8 million, which represents a reduction of $57 million over the first 90 days following the acquisition of YP on June 30. I am happy to report that we are reducing our net debt more quickly than we anticipated at the time of the acquisition.

In conclusion, I would like to reiterate that we, as a company, are laser-focused on reducing cost and maximizing free cash flow. That is our #1 goal. We are working diligently each day to bring YP onto the Dex platform [indiscernible] us and improve our Thryv platform for future growth.

Now I would like to turn the call back over to Joe for some closing remarks. .

Thank you, Paul. The numbers backup our plan to produce solid financial results. We are becoming a lean, efficient company with effective cost controls in place throughout the business. We continue to create better processes within DexYP in order to remove waste from the business.

This allows us to build our future, creating local business automation software that serves an operating -- that serves as an operating system for local businesses. To be fiercely devoted to enabling local independent businesses across the country to Thryv. With that, Paula, we'll turn it back over to you to manage the questions. .

[Operator Instructions] You have a question from Raymond Darrell of Theft Y&P. [Operator Instructions] At this time we have no questions. .

Okay, we would like to thank everybody for attending the call. We appreciate it, and we look forward to updating you on our results next quarter. Goodbye. .

Ladies and gentlemen, thank you for your participation in today's conference. This concludes today's call. You may now disconnect..