PR Newswire | Nov 12, 2020 07:30AM EST

Remainder of Year

11/12 06:30 CST

Thryv(r) Reports Third Quarter 2020 Financial Results, Provides Outlook for Remainder of Year DALLAS, Nov. 12, 2020

DALLAS, Nov. 12, 2020 /PRNewswire/ -- Thryv Holdings, Inc. (NASDAQ: THRY), the provider of Thryv(r) software, the end-to-end client experience platform for small businesses, today announced financial results for third quarter and provided forward-looking guidance for the remainder of 2020.

Key highlights:

* Total revenue was $240.3 million for the quarter, a decrease of 25% from the third quarter of 2019 * Revenue from the SaaS business was $31.8 million for the quarter, an increase of 2% from the third quarter of 2019 * Marketing Services revenue was $208.5 million for the quarter, a decrease of 28% from the third quarter of 2019 * Net loss was $0.1 million, or $0.00 per share, basic and diluted, for the quarter, compared to net loss of $0.3 million, or ($0.01) per share, basic and diluted, in the third quarter of 2019 * Loss before income taxes was $24.4 million for the quarter, compared to income before income taxes of $1.1 million in the third quarter of 2019 * Adjusted EBITDA was $69.3 million for the quarter, representing a 28.8% Adjusted EBITDA margin; compared to $98.3 million, or a 30.8% Adjusted EBITDA margin, in the third quarter of 2019 * Net Leverage of 1.4x for the quarter, as defined by the Thryv, Inc. Credit Agreement

"This was a milestone quarter for Thryv as we re-entered the market as a public entity and saw our SaaS business return to growth," said Thryv CEO Joe Walsh. "While the COVID-19 pandemic continued to hurt local businesses across America, the Thryv software platform helped small and medium-sized businesses survive by enabling them to do business virtually."

"We continue to see a more engaged set of clients and higher usage of our software and expect that positive trend to continue into 2021. The direct listing on the Nasdaq underscored our belief in the long-term growth prospects of this business and the strategic steps we are taking to drive consistent value to shareholders."

Thryv serves approximately 350,000 small-to medium-sized businesses ("SMB") clients through two segments: SaaS and Marketing Services. Our SaaS offerings include Thryv, our flagship SMB end-to-end customer experience platform, and Thryv Leads, an automated lead generation service that integrates with our Thryv platform. Our Marketing Services segment provides both print and digital solutions, including our owned and operated Print Yellow Pages ("PYP"), which carry the "The Real Yellow Pages" tagline, our proprietary Internet Yellow Pages ("IYP"), known by the Yellowpages.com, Superpages.com, and Dexknows.com URLs and other digital media solutions.

Outlook

"For fiscal year 2020, we expect SaaS revenue of $128 million," said Thryv CFO Paul Rouse. "This represents flat year-over-year growth when compared to fiscal year 2019. This implies SaaS revenue of $33 million for the fourth quarter, representing an anticipated year-over year increase in the low single digits. We believe SaaS will end 2020 with a solid run-rate and we are confident that momentum will continue into 2021."

In addition, for fiscal year 2020, we expect Marketing Services revenue in the range of $955 million to $965 million. This implies Marketing Services revenue in the range of $190 million to $200 million for the fourth quarter."

For fiscal year 2020, Thryv expects Adjusted EBITDA in the range of $358 million to $363 million, which we calculate to an Adjusted EBITDA margin of 33% for fiscal year 2020 and implies fourth quarter Adjusted EBITDA in the range of $58 million to $63 million.

Non-GAAP Measures

In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), this press release and the accompanying tables contain, and the conference call will contain, non-GAAP financial measures. We present non-GAAP measures including: Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow. The non-GAAP financial information is presented for supplemental informational purposes only and is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Please refer to the supplemental information presented in the tables for reconciliations of the non-GAAP financial measures used in this press release to the most comparable GAAP financial measures.

We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects and allow for greater transparency with respect to important metrics used by our management for financial and operational decision-making. We believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry. However, it is important to note that the particular items we exclude from, or include in, our non-GAAP financial measures may differ from the items excluded from, or included in, similar non-GAAP financial measures used by other companies in the same industry.

The Company is unable to reconcile the forward-looking non-GAAP measures, Adjusted EBITDA and Adjusted EBITDA margin, discussed during today's third quarter 2020 earnings call because not all of the information necessary for a quantitative reconciliation of these forward-looking non-GAAP measures to the most directly comparable GAAP financial measure, is available to the Company without unreasonable efforts. For the same reasons, the Company is unable to address the significance of the unavailable information; however, the GAAP measures could be materially different than the non-GAAP measures.

Thryv Holdings, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (in thousands, except share and per share data) (unaudited)



Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

Revenue $240,325 $319,116 $862,507 $1,076,244

Operating expenses:

Cost of services (exclusive of depreciation and 87,347 109,588 278,941 364,873 amortization)

Sales and marketing 60,775 83,730 201,939 266,643

General and administrative 34,176 34,352 116,723 130,727

Depreciation and amortization 35,454 50,471 110,883 155,285

Impairment charges 1,184 60 19,414 5,059

Total operating expenses 218,936 278,201 727,900 922,587



Operating income 21,389 40,915 134,607 153,657

Other income (expense):

Interest expense (11,442) (17,464) (39,648) (51,998)

Interest expense, related party (4,167) (6,202) (13,903) (19,070)

Other components of net periodic pension cost (30,175) (16,111) (31,312) (19,797)

Loss on early extinguishment of debt - - - (6,375)

(Loss) income before benefit (provision) for income taxes (24,395) 1,138 49,744 56,417

Benefit (provision) for income taxes 24,250 (1,410) (10,323) (18,860)

Net (loss) income $(145) $(272) $39,421 $37,557



Net (loss) income per common share:

Basic $- $(0.01) $1.25 $0.87

Diluted $- $(0.01) $1.16 $0.82

Weighted-average shares used in computing basic and diluted net (loss) income per common share:

Basic 30,857,61733,468,55631,621,03943,323,602

Diluted 30,857,61733,468,55633,990,77146,028,655

Thryv Holdings, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in thousands, except share data)



September 30, 2020December 31, 2019

(unaudited)

Assets

Current assets

Cash and cash equivalents $1,771 $1,912

Accounts receivable, net of allowance of $34,535 and $26,828326,240 369,690

Contract assets, net of allowance of $404 and $0 12,484 11,682

Taxes receivable 27,818 37,460

Deferred costs 11,821 15,321

Prepaid expenses and other 18,203 12,715

Indemnification asset 25,911 29,789

Total current assets 424,248 478,569

Fixed assets and capitalized software, net 86,429 101,512

Operating lease right-of-use assets, net 20,015 39,046

Goodwill 609,457 609,457

Intangible assets, net 60,561 147,480

Debt issuance costs 2,760 3,451

Other assets 10,576 8,777

Total assets $1,214,046 $1,388,292

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable $16,215 $16,067

Accrued liabilities 165,903 140,261

Current portion of financing obligations 698 580

Current portion of operating lease liability 5,947 9,579

Accrued interest 9,899 13,164

Current portion of unrecognized tax benefits 32,259 53,111

Contract liabilities 18,769 24,679

Total current liabilities 249,690 257,441

Senior Term Loan, net of debt issuance costs of $482 and 348,528 420,036 $593

Senior Term Loan, related party 155,600 189,371

ABL Facility 81,641 104,985

Financing obligations, net of current portion 55,005 55,537

Pension obligations, net 198,290 193,533

Stock option liability 37,661 43,026

Long-term disability insurance 10,003 10,874

Deferred tax liabilities 12,391 54,738

Unrecognized tax benefits, net of current portion 1,911 1,833

Operating lease liability, net of current portion 25,848 28,783

Other liabilities 623 875

Total long-term liabilities 927,501 1,103,591

Commitments and contingencies (see Note 12)

Stockholders' equity

Common stock - $0.01 par value, 250,000,000 shares authorized; 57,469,391, shares issued and 30,903,450 shares outstanding at September 30, 2020; and 57,443,282 shares 575 574 issued and 33,490,526 shares outstanding at December 31, 2019

Additional paid-in capital 1,008,243 1,008,701

Treasury stock - 26,565,941 shares at September 30, 2020 and(467,331) (437,962) 23,952,756 shares at December 31, 2019

Accumulated deficit (504,632) (544,053)

Total stockholders' equity 36,855 27,260

Total liabilities and stockholders' equity $1,214,046 $1,388,292

Thryv Holdings, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited)



Nine Months Ended September 30,

2020 2019

Cash Flows from Operating Activities

Net income $39,421 $37,557

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 110,883 155,285

Amortization of debt issuance costs 801 856

Deferred income taxes (42,346) (25,517)

Provision for bad debt 27,709 21,945

Provision for service credits 28,268 20,752

Stock-based compensation (benefit) expense (4,195) 9,536

Other components of net periodic pension cost 31,312 19,797

Loss on early extinguishment of debt - 6,375

Loss on disposal/write-off of fixed assets and capitalized software 3,476 5,294

Impairment charges 19,414 5,059

Non-cash loss from remeasurement of indemnification asset 3,878 4,646

Changes in working capital items, excluding acquisitions:

Accounts receivable 15,742 51,659

Contract assets (803) 1,885

Deferred costs 3,500 4,105

Prepaid and other assets (7,285) (8,822)

Accounts payable and accrued liabilities (81,292) (89,270)

Accrued income taxes, net 36,912 11,217

Operating lease liability (3,998) (7,078)

Contract liabilities (5,911) (3,236)

Settlement of stock option liability (896) (33,901)

Net cash provided by operating activities 174,590 188,144



Cash Flows from Investing Activities

Additions to fixed assets and capitalized software (17,030) (13,296)

Proceeds from the sale of building and fixed assets 1,546 846

Acquisition of a business, net of cash acquired - (147)

Net cash (used in) investing activities (15,484) (12,597)



Cash Flows from Financing Activities

Payments of Senior Term Loan (72,629) (108,262)

Payments of Senior Term Loan, related party (32,761) (48,738)

Proceeds from Senior Term Loan, net - 193,625

Proceeds from Senior Term Loan, related party - 225,000

Proceeds from ABL Facility 868,811 814,672

Payments of ABL Facility (892,155) (844,586)

Payments of financing obligations (414) (946)

Debt issuance costs - (774)

Purchase of treasury stock (see Note 9) (30,626) (437,962)

Proceeds from private placement 445 -

Proceeds from exercise of stock options 82 439

Net cash (used in) financing activities (159,247) (207,532)



(Decrease) in cash and cash equivalents (141) (31,985)

Cash and cash equivalents, beginning of period 1,912 34,169

Cash and cash equivalents, end of period $1,771 $2,184



Supplemental Information

Cash paid for interest $56,845 $58,972

Cash paid for income taxes, net $15,757 $33,159

Thryv Holdings, Inc. and Subsidiaries Free Cash Flow (in thousands) (unaudited)



Nine Months Ended September 30,

2020 2019

Net cash provided by operating activities $ $ 174,590 188,144

Additions to fixed assets and capitalized software(17,030) (13,296)

Free Cash Flow $ $ 157,560 174,848

The following is a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, net income (in thousands):

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

Reconciliation of Adjusted EBITDA

Net (loss) income $(145) $(272) $39,421 $37,557

Interest expense 15,609 23,666 53,551 71,068

(Benefit) provision for income (24,250)1,410 10,323 18,860 taxes

Depreciation and amortization 35,454 50,471 110,883 155,285 expense

Loss on early extinguishment of - - - 6,375 debt

Restructuring and integration 6,710 8,288 23,902 31,192 expenses ^(1)

Transaction costs ^(2) 4,913 143 14,679 143

Stock-based compensation expense1,289 (4,863) (4,195) 9,536 (benefit) ^(3)

Other components of net periodic30,175 16,111 31,312 19,797 pension cost ^(4)

Non-cash (gain) loss from remeasurement of indemnification(540) 3,736 3,878 4,646 asset ^(5)

Impairment charges ^(6) 1,184 60 19,414 5,059

Other ^(7) (1,105) (410) (2,960) $(390)

Adjusted EBITDA $69,294$98,340$300,208$359,128

For the three and nine months ended September 30, 2019, restructuring and integration charges include severance benefits, facility exit costs, system consolidation and integration costs, and professional consulting and^ advisory services costs related to the YP Acquisition. For the three and(1) nine months ended September 30, 2020, expenses relate to periodic efforts to enhance efficiencies and reduce costs, and include severance benefits, loss on disposal of fixed assets and capitalized software, and costs associated with abandoned facilities and system consolidation. A portion of the severance benefits, amounting to $5.0 million, resulted from COVID-19.

^ Expenses related to the Company's direct listing and other transaction(2) costs.

^ Company records stock-based compensation expense related to the(3) amortization of grant date fair value of the Company's liability classified stock-based compensation awards. Additionally, stock-based compensation expense includes the remeasurement of these awards at each period end.

Other components of net periodic pension cost is from our non-contributory defined benefit pension plans that are currently frozen and incur no additional service costs. The most significant component of other^ components of net periodic pension cost relates to the mark to market(4) pension remeasurement. As a result of an interim actuarial valuation due to the settlements of the pension plans, the Company recognized a remeasurement loss of $29.5 million and $30.2 million in the three and nine months ended September 30, 2020, respectively, and a remeasurement loss of $13.6 million in both the three and nine months ended September 30, 2019.

^ In connection with the YP Acquisition, the seller provided the Company indemnity for future potential losses associated with certain federal and^ state tax positions taken in tax returns filed by the seller prior to the(5) Acquisition Date. The indemnity covers potential losses in excess of $8.0 million and is capped at an amount equal to the lesser of the uncertain tax position liability or the current fair value of the 1,804,715 shares of the Company's common stock issued to the seller as part of the purchase consideration.

Impairment charges of $1.2 million and $19.4 million recorded during the three and nine months ended September 30, 2020, respectively, are primarily due to the Company closing certain office buildings as part of becoming a^ "Remote First" company and consolidating operations at certain locations.(6) Impairment charges of $0.1 million and $5.1 million recorded during the three nine months ended September 30, 2019, respectively, are due to consolidating operations at certain locations and are included in Restructuring and integration charges in the condensed consolidated statements of operations.

^ Other primarily includes expenses related to potential non-income-based tax(7) liabilities.

Earnings Conference Call InformationThryv will host a conference call on Thursday, November 12, 2020 at 8:30 a.m. (Eastern Time) to discuss the Company's third quarter 2020 results. The conference call will be available via the Internet at www.thryv.com. There will be several slides accompanying the webcast. Please go to the website at least 15 minutes prior to the call to register, download and install any necessary software. The recorded webcast will also be available on the Company's website.

If you are unable to participate in the conference call, a replay will be available. To access the replay, please dial (888) 869-1189 or (706) 643-5902 and enter "1446957".

About Thryv, Inc.Thryv, Inc. owns the easy-to-use Thryv(r) end-to-end customer experience software built for small business that helps over 40,000 SaaS clients with the daily demands of running a business. With Thryv, they can get the job, manage the job and get credit. Thryv's award-winning platform provides modernized business functions, allowing small-to-medium-sized businesses (SMB) to reach more customers, stay organized, get paid faster and generate reviews. These include building a digital customer database, automated marketing through email and text, updating business listings across the internet, scheduling online appointments, sending notifications and reminders, managing ratings and reviews, generating estimates and invoices and processing payments.

Thryv supports SMBs with Hub by Thryv(tm), a software console that enables businesses with multiple locations, such as franchises, to manage and oversee their operations using the Thryv software.

Thryv also provides consumer services through our search, display and social media management products-and connects local businesses via The Real Yellow Pages(r) from the over 30 million monthly visitors of DexKnows.com(r), Superpages.com(r) and Yellowpages.com search portals; and local print directories. For more information about the company, visit thryv.com.

Thryv delivers business services to more than 360,000 SMBs across America that enable them to compete and win in today's economy.

Learn more about Thryv on LinkedIn and Medium.

Forward-Looking StatementsSome statements included in this release constitute forward-looking statements. Statements that include the words "may", "will", "could", "should", "would", "believe", "anticipate", "forecast", "estimate", "expect", "preliminary", "intend", "plan", "project", "outlook" and similar statements of a future or forward-looking nature identify forward-looking statements. You should not place undue reliance on these statements, as they are not guarantees of future performance. Forward-looking statements provide current expectations with respect to our financial performance and future events with respect to our business and industry in general. Forward-looking statements are based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to, the risks related to the following: risks related to the COVID-19 pandemic, the Company's ability to maintain adequate liquidity to fund operations; the Company's future operating and financial performance; limitations on our operating and strategic flexibility and the ability to operate our business, finance our capital needs or expand business strategies under the terms of our credit facilities; our ability to retain existing business and obtain and retain new business; general economic or business conditions affecting the markets we serve; declining use of print yellow page directories by consumers; our ability to collect trade receivables from clients to whom we extend credit; credit risk associated with our reliance on small and medium sized businesses as clients; our ability to attract and retain key managers; increased competition in our markets; our ability to obtain future financing due to changes in the lending markets or our financial position; our ability to maintain agreements with major Internet search and local media companies; reduced advertising spending and increased contract cancellations by our clients, which causes reduced revenue; and our ability to anticipate or respond effectively to changes in technology and consumer preferences. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by such cautionary statements.

If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. All forward-looking statements included in this press release are expressly qualified in their entirety by the foregoing cautionary statements. These forward-looking statements speak only as of the date hereof and, other than as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Media Contact:Paige BlankenshipThryv, Inc. 972.453.3012 paige.blankenship@thryv.com

Investor Contact:Cameron Lessard Thryv, Inc.214.773.7022 cameron.lessard@thryv.com

KJ ChristopherThryv, Inc.972.453.7068 KJ.Christopher@thryv.com

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SOURCE Thryv Holdings, Inc.