Y Yellow Pages Limited

MONTREAL, Aug. 7, 2024 /CNW/ - Yellow Pages Limited (TSX: Y) (the "Company"), a leading Canadian digital media and marketing company, released its operating and financial results today for the quarter and six-months ended June 30, 2024.

"We are pleased with our second quarter results, which reflect our continuing progress toward revenue stability, good profitability and a healthy cash balance, all despite continued headwinds in the global economy and, particularly, the Canadian small business sector," said David A. Eckert, President and CEO of Yellow Pages Limited.

Eckert commented on the key developments:

• Continued climb toward revenue stability. "Although we continue to deal with the challenges of the current Canadian economic conditions, for the second consecutive quarter, we report a favorable 'bending of the revenue curve' in Q2, as our rate of change in revenue was better than the change reported for the previous quarter."
• Progress on revenue initiatives. "We are pleased with our progress on metrics underlying our revenue generation, including the size of our sales force and our rate of gaining new accounts, while maintaining a solid rate of customer churn. We are particularly pleased with our rate of gaining new accounts, which was 17% higher than last quarter. We believe these fundamentals bode well for our medium- and long-term future."
• Solid quarterly earnings. "Our Adjusted EBITDA² for the quarter was 26.5% of revenue, even with our continued investments in revenue initiatives, including the steady continued expansion of our sales force."
• Healthy cash balance. "Our steady cash generation has grown cash on hand to approximately $34 million at the end of July."
• Pension plan funding on track. "Consistent with our deficit-reduction plan announced in May 2021, in the second quarter of 2024 we made $1.5 million of voluntary incremental payments toward our Defined Benefit Pension Plan's wind-up deficit."
• Quarterly dividend declared. "Our Board has declared a dividend of $0.25 per common share, to be paid on September 16, 2024 to shareholders of record as of August 26, 2024."

Financial Highlights
(In thousands of Canadian dollars, except percentage information and per share information)

Second Quarter of 2024 Results

• Total Revenues decreased 11.0% year-over-year and amounted to $55.8 million for the three-month period ended June 30, 2024, an improvement from the decrease of 12.3% reported last quarter.
• Adjusted EBITDA less CAPEX¹ totalled $14.1 million and the EBITDA less CAPEX margin¹ was 25.2%.
• Net income amounted to $7.6 million, or to $0.55 diluted income per share.

Financial Results for the Second Quarter of 2024

Total revenues for the second quarter ended June 30, 2024 decreased by 11.0% to $55.8 million, as compared to $62.7 million for the same period last year. The decrease in revenues is mainly due to the decline of our higher margin digital media and print products and to a lesser extent to our lower margin digital services products, thereby creating pressure on our gross profit margins.

Total digital revenues decreased 10.2% year-over-year and amounted to $43.8 million for the three-month period ended June 30, 2024, as compared to $48.8 million for the same period last year. The revenue decline for the period ended June 30, 2024, was mainly attributable to a decrease in digital customer count and to a lesser extent, a decrease in the average spend per customer.

Total print revenues decreased 13.6% year-over-year and amounted to $12.1 million for three-month period ended June 30, 2024. The revenue decline is mainly due to the decrease in the number of print customers while the spend per customer has improved year-over-year driven by price increases.

The decline rate of revenues increased year-over-year. The higher decline rate is attributable, in part, to the headwinds in the global economy, whereby, customer renewal rates decreased but remained strong while average spend per customer slowed as customers look to optimize their spend.  These factors were partially offset by an increase in the number of new accounts and increases in pricing.

Adjusted EBITDA¹ decreased to $14.8 million or 26.5% of revenues in the second quarter ended June 30, 2024, relative to $21.9 million or 35.0% of revenues for the same period last year. The decrease in Adjusted EBITDA for the second quarter of 2024 is the result of revenue pressures, the ongoing investment in our tele-sales force capacity, increase in bad debt expense and Information Technology ("IT") expenses, due to the nature of the IT spend being classified as operating rather than capital expenditures, partially offset by optimizations in cost of sales and reductions in other operating costs including reductions in our workforce and associated employee expenses. Revenue pressures, partially offset by continued optimizations, will continue to cause some pressure on margins in upcoming quarters.

Adjusted EBITDA less CAPEX decreased by $6.5 million or 31.6% to $14.1 million during the second quarter of 2024, compared to $20.6 million during the same period last year. The decrease in Adjusted EBITDA less CAPEX and Adjusted EBITDA less CAPEX margin is driven by the decrease in Adjusted EBITDA, partially offset by the decrease in CAPEX spend year-over-year. The decrease in CAPEX spend is due to the nature of the IT spend, whereby, more of the expense was classified as operating rather than capital.

Net income for the three-month period ended June 30, 2024 amounted to $7.6 million as compared to net income of $12.7 million for the same period last year due to lower Adjusted EBITDA, partially offset by the decrease in income taxes.

Cash flows from operating activities decreased by $6.3 million to $13.7 million for the three-month period ended June 30, 2024 from $20.0 million for the same period last year. The decrease is mainly due to lower Adjusted EBITDA of $7.2 million, partially offset by lower income taxes paid of $0.9 million.

Conference Call & Webcast

Yellow Pages Limited will hold an analyst and media call and simultaneous webcast at 8:30 a.m. (Eastern Time) on August 7, 2024 to discuss second quarter 2024 results. The call may be accessed by dialing 416-695-6725 within the Toronto area, or 1-866-696-5910 outside of Toronto, Passcode 6613383#. Please be prepared to join the conference at least 5 minutes prior to the conference start time.

The call will be simultaneously webcast on the Company's website at:

https://corporate.yp.ca/en/investors/financial-reports. 

The conference call will be archived in the Investors section of the site at:

https://corporate.yp.ca/en/investors/financial-events-presentations. 

About Yellow Pages Limited

Yellow Pages Limited (TSX: Y) is a Canadian digital media and marketing company that creates opportunities for buyers and sellers to interact and transact in the local economy. Yellow Pages holds some of Canada's leading local online properties including YP.ca, Canada411 and 411.ca. The Company also holds the YP, Canada411 and 411 mobile applications and Yellow Pages print directories. For more information visit www.corporate.yp.ca.

Caution Concerning Forward-Looking Statements

This press release contains forward-looking statements about the objectives, strategies, financial conditions and results of operations and businesses of YP (including, without limitation, payment of a cash dividend per share per quarter to its common shareholders). These statements are forward-looking as they are based on our current expectations, as at August 6, 2024, about our business and the markets we operate in, and on various estimates and assumptions. Our actual results could materially differ from our expectations if known or unknown risks affect our business, or if our estimates or assumptions turn out to be inaccurate. As a result, there is no assurance that any forward-looking statements will materialize. Risks that could cause our results to differ materially from our current expectations are discussed in section 5 of our August 6, 2024 Management's Discussion and Analysis. We disclaim any intention or obligation to update any forward-looking statements, except as required by law, even if new information becomes available, as a result of future events or for any other reason.

Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted EBITDA margin

In order to provide a better understanding of the results, the Company uses the terms Adjusted EBITDA and Adjusted EBITDA margin. Adjusted EBITDA is equal to Income from operations before depreciation and amortization and restructuring and other charges (defined herein as Adjusted EBITDA), as shown in Yellow Pages Limited's interim condensed consolidated statements of income. Adjusted EBITDA margin is defined as the percentage of Adjusted EBITDA to revenues. Adjusted EBITDA and Adjusted EBITDA margin are not performance measures defined under IFRS and are not considered an alternative to income from operations or net income in the context of measuring Yellow Pages performance. Adjusted EBITDA and Adjusted EBITDA margin do not have a standardized meaning under IFRS and are therefore not likely to be comparable to similar measures used by other publicly traded companies. Adjusted EBITDA and Adjusted EBITDA margin should not be used as exclusive measures of cash flow since they do not account for the impact of working capital changes, income taxes, interest payments, pension funding, capital expenditures, debt principal reductions and other sources and uses of cash, which are disclosed on page 11 of our August 6, 2024 MD&A. Management uses Adjusted EBITDA and Adjusted EBITDA margin to evaluate the performance of its business as it reflects its ongoing profitability. Management believes that certain investors and analysts use Adjusted EBITDA and Adjusted EBITDA margin to measure a company's ability to service debt and to meet other payment obligations or as common measurement to value companies in the media and marketing solutions industry as well as to evaluate the performance of a business.

Adjusted EBITDA less CAPEX and Adjusted EBITDA less CAPEX margin

The Company also uses Adjusted EBITDA less CAPEX, which is defined as Adjusted EBITDA, as defined above, less CAPEX which we define as additions to intangible assets and additions to property and equipment as reported in the Investing Activities section of the Company's consolidated statements of cash flows. Adjusted EBITDA less CAPEX margin is defined as the percentage of Adjusted EBITDA less CAPEX to revenues. Adjusted EBITDA less CAPEX and Adjusted EBITDA less CAPEX margin are non-GAAP financial measures and do not have any standardized meaning under IFRS. Therefore, are unlikely to be comparable to similar measures presented by other publicly traded companies. We use Adjusted EBITDA less CAPEX and Adjusted EBITDA less CAPEX margin to evaluate the performance of our business as it reflects cash generated from business activities. We believe that certain investors and analysts use Adjusted EBITDA less CAPEX and Adjusted EBITDA less CAPEX margin to evaluate the performance of businesses in our industry.

The most comparable IFRS financial measure to Adjusted EBITDA less CAPEX is Income from operations before depreciation and amortization and restructuring and other charges (defined above as Adjusted EBITDA) as shown in Yellow Pages Limited's interim condensed consolidated statements of income. Refer to page 7 of the August 6, 2024 MD&A for a reconciliation of Adjusted EBITDA less CAPEX. 

SOURCE Yellow Pages Limited