Thryv Holdings Inc (THRY) 2013 Q3 法說會逐字稿

Good morning and welcome to Dex Media's third quarter 2013 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 reports filed by Dex Media and its predecessor companies 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 passcode is 80391370. The replay will be available through November 19, 2013.

In addition, a webcast and presentation slides will be available on Dex Media's website in the investor relations section at www.dexmedia.com. At the end of the Company's prepared remarks there will be a question-and-answer session.

And now I would like to turn the call over to Peter McDonald. Peter?

Thank you, Lori, and good morning everyone. Welcome to the Dex Media third-quarter earnings call.

In addition to reporting on current results, today I will give a brief update on our merger integration and evolution as a business. I will provide more context around our position in the marketplace, how we do business and what sets us apart from the competition.

I will also share highlights of some of the opportunity ahead of us, the comprehensive marketing solutions we offer, the difference we're making for small and medium-size businesses across the country and the reason we believe in our positive future. After my remarks Dee Jones will follow with more detail on third-quarter financial results.

First, a few financials. Year-to-date our pro forma operating revenue is $1.7 billion. Throughout the business we continue to control costs, generating an adjusted EBITDA -- pro forma EBITDA of $674 million, which translates to a margin of 40%. We also generated adjusted pro forma free cash flow of $312 million through the third quarter.

Our current debt balance at par value is $3.1 billion. Since 2010 our combined companies have paid down more than $3 billion in debt -- $356 million in 2013, of which $35 million was paid in October.

Many of investors have asked for more visibility into our digital capabilities, so I would like to provide a quick snapshot of our business. Dex Media helps small and medium-size businesses grow by offering an array of multiplatform solutions for local advertising, including online, mobile and social platforms as well as print solutions.

Our 2000 highly trained, Google-certified marketing consultants serve about 600,000 clients in 43 states. As consumers expand their use of smart phones and tablets to search for local services, an increasing number of our clients recognize the importance of digital marketing to the success of their businesses. Currently more than 200,000 of our clients use our digital solution, and about one fourth of our revenue is sourced from digital solutions.

Our annual average value per order or AVO for digital clients is 2400 to 2500. The potential for continued improvements in results in this area remain strong.

The third quarter was the first full quarter we operated as a new unified Company, combining the former Dex One and the former SuperMedia. During the months of July, August, September the integration efforts were a key focus as we continue to -- continued the complex work of combining products, pricing, processes, systems and staffing across the enterprise.

I am proud of the significant progress we have made with these initiatives, particularly in the area of marketing, human resources and operations. To date we have completed hundreds of integration actions including the identification and placement of our management teams and the reorganization of our sales force.

Our sales training and product rollouts are on schedule. We have made advances across all functional areas, taking the best practices from each organization and deploying them across the new Company. This foundational work not only moves us closer to our integration synergy targets, but also helps us define and build a path for the future.

I am continually impressed by the strength of this Company and look forward to completing further integration activity efforts in 2014.

As we continue our integration and look ahead to 2014, here are some of the reasons we believe Dex Media is well-positioned for future growth. Borrell Associates forecasts local online advertising spending annual will reach $24.5 billion in 2013. As the trends in digital advertising remain strong, we believe this bodes well for the future of Dex Media.

A recent survey conducted by Thrive Analytics provides valuable insight into the marketing needs of local businesses. More than 1000 business owners responding to the survey admitted they do not have the knowledge, time or resources to manage their own digital marketing program. And they prefer to receive marketing help from one company or a trusted individual instead of multiple providers.

Local business owners also indicated 12 areas of marketing and promotion where they need the most help -- functions like search engine optimization, social media and reputation management, all of which we offer at Dex Media. The opportunity is clear. We have the expertise and the products local businesses need.

Despite misconceptions of who we are in the marketplace, our comprehensive suite of multiplatform marketing solutions make us that one-stop shop for our clients. We are an outsourced marketing department for local business owners, helping them navigate the complicated and confusing world of promoting their business across digital media.

We intend to capitalize on growing business needs by increasing digital relationships with our existing clients and by attracting new ones. We are also working to better support our clients with high touch service and tools that improve their results and enhance our relationship with them. As we move into 2014 we look for these initiatives to positively impact our trends in our business.

Our strategic relationships with a vast number of major search engines and social media sites give our clients access to the largest players in local search. Google, Facebook, Foursquare, OpenTable, YP.com, and many more. We have the distinction of being one of Google's premier SMB partners in North America with a large force of marketing consultants that is 100% Google AdWords certified.

In addition to our digital expertise, our network of more than 250 distribution partners ensures our clients have consistent presence across all platforms, a task that is often too overwhelming for local businesses to tackle on their own. Our Google certification and industry partnerships combined with our unique digital platforms and technical expertise uniquely position us to address the needs of local businesses.

Most importantly, we deliver value for our clients. Our marketing consultants guide clients through the process of building an effective multiplatform marketing program. We help them establish an online presence with accurate information across online and mobile site listings.

Next, we focus on promoting their business in places potential customers shop or interact online. We also help them build relationships with their customers through solutions such as text marketing and loyalty programs.

Our interaction with a client doesn't stop with the sale. As you can see on slide 12, we actively track our clients' results to ensure they are receiving value. Our internal optimizer teams proactively monitor and track client accounts by looking at how many days they're online, how many calls and other conversions they receive and their average cost per call. This practice sets us apart from many others in the industry.

We report results to our clients online and through regular emails, so they can see for themselves the value our comprehensive programs deliver for their investments.

To illustrate how we help local businesses grow, I would like to share an experience of a family business outside of Seattle that installs, repairs and maintains water wells. Three generations in the family work together doing what it takes to keep the business going.

When construction slowed down during the economic downturn, the family saw a decline in the calls to their business. Our marketing consultant suggested a premium search solution be optimized to increase the business's online presence and get the phone ringing again. In just a few months the family business went from receiving 30 calls per month to up to 200.

I believe the experience of this business is similar to many of our clients. Local business owners are experts in their field, but unsure about how to undertake local digital marketing. This is just one example of results we deliver, and there are thousands more.

By matching our clients' needs to a combination of digital and print solutions, we are helping our clients obtain cost-effective leads from all sources and achieve positive results.

We know from internal research that we can't offer a one-size-fits-all approach to marketing for every local business owner. So we have designed custom solutions that offer competitive cost per lead for each client.

For example, our recently launched [Start Smart] bundle helps move clients with limited budgets from a print-centric marketing to establishing an online presence. Start Smart is an integrated mix of essential and affordable marketing solutions to help our clients get found and chosen in places their potential customers search.

The solution is attractive to new and existing clients, because it offers a quick and cost effective entry into digital marketing. Early feedback from our sales teams indicates that Start Smart bundle's simplicity, high value and competitive pricing are clear wins for our clients.

Our multiplatform approach helps our clients businesses grow, and also helps Dex Media grow its relationship with clients. As we look across our current client base, we find clients who by a bundle of complementary marketing solutions experience better results and tend to stay with us longer than those buying just one solution.

Bundled packages give our clients multiple ways to increase visibility of their business and generate quality leads. Our products help local businesses grow by generating more calls from potential customers. And the number of leads we deliver continue to increase year-over-year.

About 80% of our clients renew their relationship with us, which gives us confidence that we are delivering good value, which they will continue to invest in.

Combining Dex One and SuperMedia has allowed us to improve the breadth of our digital solutions. By cross-launching products previously available in only one company or the other to local business in all of our markets, by offering more comprehensive solutions and bundled combinations, we have the opportunity to increase the digital relationships with our client base beyond the 200,000 who use Dex Media solutions today.

For example, we offer text marketing and social lead solutions to the Dex One client base and search engine optimization and display brand awareness to the SuperMedia client base. Across all markets, flexible bundles allow us to match clients' individual needs with customized solution packages. With the flexibility to combine solutions into a wide array of bundles, we are confident we can match individual clients with the right solutions for their business.

At the same time as we grow our relationship with existing clients, we are diligently working to acquire new clients. Our local marketing consultants are pursuing new client prospects in communities and business categories where we see the most potential for growth. We are confident we can increase our market presence by offering local business owners targeted solutions at attractive entry-level prices.

In closing, I want to summarize why Dex Media has a unique opportunity within the local marketing services industry. First, we have more than 2000 well-trained, Google-certified marketing consultants across 43 states serving more than 600,000 advertisers. Next, we have a significant presence in local digital marketing with a comprehensive suite of solutions.

We manage multiplatform programs for more than 200,000 advertisers, which represents 34% of our client base. Close to one-fourth of our year-to-date revenues were sourced from these digital solutions. We achieve results for our clients and our optimizers track and proactively manage their accounts daily.

We continue to find ways to manage our expenses and create efficiencies that drive cash flow, EBITDA and margin performance while achieving our synergy targets. We have an incredible team that is dedicated to making this Company successful, and by helping local businesses grow with our comprehensive local marketing solutions tailored to their individual needs.

I want to thank the leadership teams for their hard work as we have gone through this integration, and launched our new tactical initiatives. We appreciate your continued interest and support, and now let me turn it over to Dee.

Thank you, Peter, and good morning everyone. While Peter gave you an update on where we will focus as we move towards 2014, I will provide the financial results for the quarter and year to date.

Before we begin I will mention that some of the results I will be speaking to this morning are non-GAAP numbers. We have provided a reconciliation of non-GAAP to GAAP results in the appendix of this presentation.

Moving on to the financial results, total multiplatform ad sales for the second quarter declined 15.3% as compared to the same period last year. Print declined 20.6% and digital results were flat. As Peter noted earlier, we are focused on the many actions needed to improve sales performance.

Recent performance was impacted by the slowdown of incremental bundle penetration in the former Dex markets and the retention level of digital solutions in the former SuperMedia market. We will be looking to address both these areas by the cross-launch of existing products that Peter spoke of, as well as the new Start Smart solution.

Also, flex bundles and text marketing will provide additional areas for improvement. These efforts are being implemented throughout Q4 and into 2014.

For the third quarter Dex Media reported pro forma combined revenue of $537 million, a 17.4% decline compared to the same period last year. Adjusted expenses were [$317 million], and adjusted pro forma EBITDA was $220 million with a margin of 41%.

For the year to date period, pro forma combined revenue was $1.686 billion, a 17.4% decline compared to the same period in the prior year. Year-to-date adjusted expenses were $1.012 billion and adjusted pro forma EBITDA was $674 million with a margin of 40%.

Adjusted pro forma EBITDA for the quarter excludes $14 million of merger integration costs and $42 million year-to-date.

For the third quarter our total debt balance for all four silos was $3.183 billion. Payments made in Q3 were $112 million. Year-to-date total debt obligations have been reduced by $305 million.

Pro forma free cash flow for the nine months ended September 30 was $312 million, representing pro forma cash from operations of $339 million less pro forma capital expenditures of $27 million. This includes merger integration cash costs of $35 million and excludes $34 million of cash merger transaction costs.

Cash on hand as of September 30, 2013, was $234 million.

While we did not step into the market in Q3 to make open market repurchases, let me reiterate what we have said in the past. We do see open market debt repurchases as an economically effective utilization of cash. And while I am not commenting as to specific timing, we would expect to be in the market in the future to take advantage of these opportunities.

Now before we open the line for questions I wanted to reiterate some of the metrics Peter and I have spoken about today. Total clients is approximately 600,000. Of these, we have digital relationships with more than one-third or over 200,000 clients. 24% of total revenues are sourced from digital solutions, up from 17% at the same time a year ago. Our annual digital AVO range is 2400 to 2500 annually.

Finally, with respect to integration efforts in regard to cost synergies, we are on track for the overall synergy range originally held out. We continue to believe there are efficiency opportunities in the business, and we will continually evaluate and execute on ways to deliver against these opportunities.

As we continue to integrate and implement new initiatives, 2014 will be about driving for improved performance as we continue to transform the business. This concludes the Q3 financial results. Operator, we are now ready for questions.

(Operator Instructions). Gary Moorman, Alpine Associates.

I briefly got distracted just a minute ago. You were saying something about watching the opportunities to repurchase securities in the market. Is that correct?

Yes, what I indicated there was that we do see that open market debt repurchases is an economically effective way to utilize cash, and as we look out here we're going to be evaluating those opportunities. I am not going to comment as to specific timing, though.

Understood. I just wanted to make sure I heard you correctly. Thank you.

Steve Hill, Hill Partnership.

Question for you on the digital side, just looking at the numbers from some of the guys that you resell for, like Google, where their cost per click was down 8% year-over-year, I am just curious when you guys are looking at price/volume as you go through, is there some attribution of the flat or the growth rate being due to price versus volume that you could provide some color on? Or, I guess, directly, did you see that same type of price compression in your digital sales?

You know, we are not seeing that degree of price compression. We don't just sell AdWords. Given what we sell in regard to total solutions across the space, and the manner in which we sell most of our solutions and packages, we're actually seeing continued movement in the average value per order. Not dramatic, but we are seeing it move upward, actually, as far as average value per quarter.

And from a pricing perspective with the packages that we sell, you can't just look at AdWords or a specific component of those solutions. So we are not seeing necessarily the price compression that you might expect. As consumer behavior continues to move and shift, I think advertising spend will continue to move and shift with it. We still see the trend line going upward in regard to the digital aspect of that.

Thank you, Dee. That's extremely helpful. Appreciate it.

Chad Quinn, Bennett Management.

In your press release you disclosed the advertising sales for print and digital. I was wondering if you can give the revenue growth rates in the period for each of those.

I think you can derive those from the factors that we indicated. I think we indicated of our revenues, 24% now is sourced from digital, up from 17% for the same period a year ago. I don't have those mathematics right in front of me. I think as we move forward this type of metric disclosure is probably how we are going to proceed.

The aspect of it is we are a local advertising sales enterprise, and we sell a lot of solutions in a bundled integrated fashion. So, isolating specific products is not necessarily how we want to look at the business. But we understand the marketplace's desire for a view as to our magnitude and strength in the digital space, and that's why we have chosen to disclose in the fashion that we have.

But I think you can derive fairly closely based on the metrics we provided what those rates might be.

Okay, you also -- Dee, you also gave a digital metric of AVO range. What has been the trend there?

Yes, as I indicated earlier, we have seen slight improvement in the AVO there. As we enhance bundles and we enhance the solutions packages that we are selling, and you are selling bigger packages, you are taking folks across a broader space in the digital arena, I think those packages will command more value.

Consumer behavior is going to also influence that, and where people are looking for our advertisers and looking for our businesses. We'll continue to move that, and that's what we have seen in the AVO ranges.

Okay, my final question, Dee, is around the time of the merger you had given some guidance around synergies. Can you talk about where you are on the synergies and if you feel those (multiple speakers) still achievable?

Yes, yes, and as I indicated in the opening remarks, we do see the synergy opportunity as continuing to be very achievable, and continue to look for additional opportunities for efficiencies on the cost side of this business. You can see the year to date cost takeouts that have been made, some of which are attributable to synergies, some of which are attributable to normal course cost takeouts.

You lose identity in regard to specific synergy elements as you move through time. But we do continue to see the opportunity that was held out originally of [150 to 175], and at the merger time as being a very achievable element of this integration and merger, and we believe we are on track.

Thank you.

Colin Wilson-Murphy, Bowery Investment.

What was the overall renewal rate in the third quarter?

We're not holding out a specific renewal rate, but we have indicated that about 80% of our advertisers are renewing. We have seen improvement and trending in the right direction with respect to renewals.

Further progress needs to be made in that regard, and I think some of the solutions that we are rolling out as we move through the fourth quarter and especially into the first part of the year as we get complete rollouts made, we are looking for lift in that regard. But we have seen slight improvement in it, but as we called out before from a client perspective, we renewed about 80% of our clients. And that has been fairly consistent.

Okay, and how does that compare to the renewal rates for the bundled products and the guaranteed products?

It depends on the market you are in. The bundled solutions tend to give us a lift in regard to retention and anywhere from 5% to 8% of lift with bundled solutions. And that's one of the reasons that we are taking the path that we are taking with respect to that, because the value proposition to the advertisers is better and stickier with respect to bundled solutions.

Okay, and then in the second quarter of fiscal year 2013 your digital ad sales were up about 6%. And we understood that the weakness was largely due to one or more national customers impacting that growth rate by, I believe, at the time it was about 240 basis points. And we know now that digital ad sales did not grow at all year-over-year in the third quarter. Was that once again the result of one or more national advertisers who deflected?

No, the national advertising component of the digital space was essentially flat as well. It was consistent with what we saw in totality. As I mentioned in my remarks, we were looking for additional lift or additional effect in the Dex One markets of the bundled solutions that didn't come to fruition to the degree we were looking for.

We also did not get the lift in retention rates on -- in the SuperMedia markets with some of those. We are looking to address those with some of the cross-rollouts of the respective products and some of the new solutions. As well as, as Peter indicated, there's a lot of activities around the integration.

There was a lot of elements that we were driving for in the business to position it for the future. Isolating exactly what the component was that changed those trend lines or moved those trend lines to the flat level is, as you expect, putting specific metrics around it is very difficult to do. But there was a lot of contributing factors there.

We are looking to address all of those with solutions as we move through fourth quarter and into 2014 to change that trend line.

Can you give us any color as to maybe some of the customers that you did lose on the digital front?

I think when you think about the clients, it's not one or two. Nobody makes up that significant portion. And if I look at the third quarter, kind of playing off Dee here, integration was the biggest issue.

And if you look at where we are, and I think what the message is we're trying to send today is, we have built up a very substantial portfolio of multiproduct products and solutions. And we have 200,000 clients, which is a great base to build on in the digital area. So -- and we are getting then results.

And that's -- one of the things that sets us apart in thinking about this is every one of our clients that allows us to, which is most all of them, we track to make sure that we getting results for our advertisers. And so from a color standpoint I wouldn't think about a client or a couple of clients.

I think that what you're looking at is what we have built as a client base. And we believe that we have a bright future with the opportunities we have with the solutions that are out there.

Okay, and given the fact that we are in the month of November now, and I know certainly your revenue as well as your EBITDA visibility for the next several quarters is fairly robust, can you give the market a sense, even a range, of where you expect to end 2013 as relates to revenue and EBITDA?

The policies continue to be, with the Board, is that we do not provide guidance that respect. So I appreciate the question, but at this point the policy is not to provide guidance.

Okay, thank you guys.

Andrew Hamerling, Wavelength Asset Management.

Calling because I'm looking at schedule F in the third quarter release versus schedule F in the second quarter release, and what it looks like to me -- if I'm looking at this right, and please confirm -- is that year-to-date as of 3Q you generated $229 million in free cash flow. And that compares to, in 2Q, you had year-to-date $127 million in free cash flow, which if my math serves, is $102 million in net free cash flow that we generated this quarter? Is that correct?

Yes, but, Andrew, you got to be careful with those cash flow schedules in there, because of the GAAP and the fresh start impacts of those. When I spoke about free cash flow in my remarks, that is the adjusted free cash flow as if you had normal course accounting, and weren't impacted by those elements.

So the $339 million less the $27 million of CapEx giving us $312 million of free cash flow. The only element of that that is the $35 million or so of transaction costs that are excluded from that calculation.

Okay, terrific.

I think that's a better way to look at the cash generation than looking at the GAAP calculations, because it is influenced by some required entries around fresh start accounting.

Okay, now with respect to next year, when do we start seeing the benefits of the merger kick in, in terms of synergies?

Some measure of the synergy benefits of already embedded in the cost take-outs that we have got. We are seeing benefits of the synergies as we move through since May 1. And May 1 we continue to look at opportunities to accelerate the full-year forecast.

If you will recall, we had about $125 million of synergy opportunity identified for 2014, and then a steady-state of $150 million to $175 million in 2015. Obviously, we are looking for ways to accelerate those benefits and get closer to those full-year elements from a synergy perspective.

We are also looking for opportunities to get normal course takeouts above and beyond any synergy opportunities. So we will continue to drive for cost efficiencies in the business and get as much of that as we can.

Okay, so I guess looking forward with the business, can we grow digital? Can we actually take the business -- because, frankly, we were surprised to see digital flat in terms of overall growth year-over-year. And we are fine with it, recognizing you guys are merging two businesses together that are very unique, I guess.

My question is will we see an acceleration of digital in, let's say, the coming six months? If we do, we are fine with this.

We believe we have an opportunity to grow the digital. And the solutions and the tactical plans that we are putting into the marketplace and getting out right now to start to drive that result, we believe we will see them bear fruit and change these trend lines.

The question as we move through the markets and the fourth quarter and into 2014, but we do believe we have opportunity. We have the solutions. We have the assets in place to drive digital.

Okay, guys. We wish you luck. And we're sticking by you. Thank you.

Mark Hetrick, Wells Fargo Advisors.

Thanks for the opportunity here. Two quick questions. I missed initially what you had to say in regards to your initial guidance. Were you talking about you are still on track to reduce your debt in regards to your guidance, or what did you initially say? I missed that -- got on the call a little late.

We haven't provided explicit guidance since merger, and it's our policy not to provide guidance in regard to any of the metrics. You can see from -- you can look at the cash flow trends and where we are at, feel good about the debt and the cash flow levels that we've been able to generate.

We are going to have to continue to find more efficiencies and change the topline trends to get at better results as we move forward, but certainly focused on cost and debt, and debt reduction. I did indicate that while we weren't in the open market for the more efficient reduction in debt, utilizing the cash that we can. We weren't in the market in the third quarter.

We do see that as an economically efficient way to utilize cash. And while we're not going to comment on specific timing, we would expect to be in the market in the future.

Is that something that you would put out a press release on? Or is it just something we would catch in your next quarterly earnings results as far as if you did buy some?

In order to effect open market repurchases under the terms of the credit agreement, we will have to launch a tender.

Okay.

So people will be aware of it. The press release, 8-K or some communication from the respective agents.

Okay, and one quick question then. You talked about you currently have -- you're rolling out -- if I understand correctly, you have 200,000 customers that you are rolling out the digital side to, from Dex One. And now you're going to be living that over to the SuperMedia to capture or give additional solutions to all 600,000 customers. Is that correct?

No, no. The combined companies have 200,000 digital clients.

Okay.

And so we are rolling out -- and part of the merger, part of this integration, part of the benefit is that some of the products that were in one company we will share across the other company and vice versa. So we can expand our product launch to the entire footprint over the next couple of quarters.

Okay.

We have a base of 200,000 clients with digital solutions already. So over a third of our existing client base have digital solutions with us. With the cross-launch of the products we are looking to drive that penetration higher.

And that would, I would think, eventually lead to a higher digital sales, which would be certainly important. So, okay. Okay, all right, guys, appreciate -- go ahead, I'm sorry.

I said that's the objective.

Yes, I appreciate your time. Thank you.

Sam Sequin, ALJ Capital.

Can you comment just a little about the number of books that you are printing and maybe just what that trend looks like?

Yes, we are continuously evaluating our distribution. I don't have the specific quantities in front of me. I think that gets released on an annual basis and in the K.

We will continue to try to find more efficient ways and effective ways of distributing the books without diminishing the value proposition to the advertiser. I will say the number of books being printed in the overall footprint is coming down and is trending downward. But I don't have a specific number for you, but we will continue to look for efficiencies there.

But we also are cognizant that we need to preserve the value proposition. Print still continues to be a valuable source of leads in a lot of markets; over 7 billion references last year coming from -- sourced from the print product in the industry. And when we look at our individual clients and where their leads are being sourced from, print is a valuable source of leads, and we will continue to manage to preserve that to the degree that we can.

But, at the same time, we were also cognizant that we have to find efficient ways and efficient cost aspects to the business. Distribution quantities that aren't effective for us, that's one of the sources we will continue to look at.

And when I am looking at the total ad sales, I guess, is there a way to break that up between volume and price with the negative 20% growth?

You know, we -- AVO has been fairly stable, slightly declining. There are some decreases in the market. Plus with the bundled solutions that we put out some of the discounting programs that we utilize, we are seeing a slight decline in average order price in aggregate. The digital side has moved up, but the aggregate has come down slightly.

If you look at retention versus overall, you see that is more -- it's probably more client loss and volume. But the mix of clients that you're losing, you are seeing some decrease in average value order.

And maybe if you can help me understand with the way you guys bundle, is there flexibility for the sales agent to negotiate the pricing of print down to get more on the digital side? Or how does that exactly work?

The rep has rules and specific tools basically to determine the price of what bundle they put together. We call them flexible bundles, because there is flexibility as to the elements that can go in there.

Dependent upon what elements are in there, the size of the program, the market that you are in, and all those pieces there are tools that apply the pricing rules that the rep has to follow. They don't have pricing flexibility per se. There is flexibility for the client as to what they put into those bundles, and that will determine an ultimate discount level and an ultimate pricing level.

And I know you guys mentioned that you had about 200,000 clients that are digital customers. Out of those 200,000 how many are digital only?

We haven't held that out specifically. We do have a measure of clients that are digital only, and we will continue to look to drive that piece of it as well. But, really, overall we are looking at selling whatever solution it is that those advertisers need, whether that is digital only or combined with print.

Or if someone still wants to just buy print we will sell it to them. But ultimately it's about getting the value proposition across the full multi-platform suite of solutions that we offer so that you can drive value proposition. So it's not about digital only or digital bundles.

But we do have good measure of digital only. We will evaluate the disclosure elements around that as we move forward.

Okay, thanks. That's it for me.

Tim Daggett, Citigroup.

Hi, guys, sorry if I missed it, but did you buy back any debt in October or November?

Tim, I am sorry, can you repeat that? We couldn't -- you're not coming across very clear.

Sure, sorry if I missed this, but did you guys buy back any debt after the quarter end in October or November?

No. Like I said in the statement, I am not going to comment on timing as to open market repurchases. But we have not stepped into the market as yet with open market repurchases.

But I do want to reiterate once again that we see that as an economically efficient way to utilize cash. And you can look for us in the future to take advantage of those opportunities. But we have not had a tender as yet in the marketplace.

Okay, thanks.

That does conclude the question and answer session and today's conference call. We thank you for your presentation. You may now disconnect.

Thanks, everyone.