Yellow Media Limited (TSX:Y) released its fourth-quarter and full-year results
today, ending 2012 with a stronger capital structure and continued progress on
its business transformation.
On July 23, 2012, Yellow Media Limited proposed a recapitalization transaction
(the "Recapitalization") aimed at significantly reducing the Company's debt and
improving its maturity profile, with new debt first maturing in 2018. The
Recapitalization aligns the Company's capital structure with its operating
strategy, providing it with the necessary financial flexibility to invest in its
digital transformation.
The Recapitalization was approved by the requisite majority of its debtholders
and shareholders on September 6, 2012. A settlement was later reached with the
lenders under the Company's senior unsecured credit facility on December 10,
2012.
The Quebec Superior Court issued its final order and approved the
Recapitalization on December 14, 2012. Closing and implementation of the
Recapitalization occurred on December 20, 2012.
"The completion of the Recapitalization allows us to accelerate our business
transformation into an industry-leading, technology and digitally-focused
marketing solutions company," said Marc P. Tellier, President and Chief
Executive Officer of Yellow Media. "We plan to provide superior value to
Canadian businesses by offering smarter, simpler ways to manage their digital
marketing needs and grow their customer base."
Board of Directors
Pursuant to the implementation of the Recapitalization on December 20, 2012, a
new Board of Directors of Yellow Media Limited was appointed and is comprised of
Craig Forman, David A. Lazzarato, David G. Leith, Robert F. MacLellan, Judith A.
McHale, Martin Nisenholtz, Kalpana Raina, Michael G. Sifton and Marc P. Tellier.
Robert F. MacLellan will serve as Chairman of the Board of Directors.
The new Board of Directors brings forth extensive expertise within the online,
media and communications industries necessary to further accelerate the
Company's digital transformation, alongside corporate finance, capital markets
and corporate development.
Lenders under the Company's senior unsecured credit facility are currently in
the process of proposing a nominee for the Board of Directors, who will also be
a member of the Audit Committee. The nominee is subject to approval from the
Board of Directors.
Full Year 2012 Results
Revenues in 2012 decreased 16.6% to $1.11 billion, compared to $1.33 billion
last year. The decline is due principally to lower print revenues, the
discontinuation of duplicate directories published by Canpages, the divestiture
of LesPAC.com in November 2011, and the sale of Deal of the Day in August 2012.
On a comparable basis, excluding the impact of the changes to the Canpages
business, the LesPAC.com divestiture, the sale of Deal of the Day, and YPG USA,
revenues decreased by 11.9% versus last year's results.
Online revenues in 2012 grew to $367.2 million compared to $346.1 million the
year prior, representing growth of 6.1%. On a comparable basis, excluding the
impact of the changes to the Canpages business, the LesPAC.com divestiture, the
sale of Deal of the Day, and YPG USA, online revenues grew 15.7% versus the same
period last year. Online revenues represented approximately 38% of total
revenues during the fourth quarter of 2012, compared to 29% in 2011.
As at December 31, 2012, the number of advertisers, excluding Canpages, was
309,000. During the year, the Company experienced an advertiser renewal rate of
86% and acquired approximately 17,000 new advertisers.
"Our business continues to experience a decline in revenues, as online growth is
currently unable to fully compensate for print revenue pressure. This trend was
expected, and we do not anticipate it to reverse in the near future. We're
focused on delivering long-term value through improvement of services to larger
advertisers, as well as on the successful execution of our 360 degrees Solution.
Our Yellow Pages 360 degrees Solution addresses Canadian small to medium-sized
enterprises' fundamental need to generate valuable leads to grow their
business," continued Tellier.
EBITDA declined from $679.7 million in 2011 to $570.6 million in 2012, mainly
attributable to print revenue pressure. The EBITDA margin for the year remained
stable at 51.5%, compared to 51.1% last year. EBITDA margins are reflective of
lower margins associated with our growing digital products, offset by the impact
of our significant cost containment initiatives.
Free cash flow for the year decreased from $275.2 million in 2011 to $198.3
million, mainly attributable to lower EBITDA.
For the fiscal year ending December 31, 2012, the Company recorded a net loss of
$2.0 billion. The net loss was affected by an impairment charge of $3.3 billion
on our goodwill, and certain of our intangible assets and property, plant and
equipment. This impairment charge was partly offset by a gain on settlement of
debt pursuant to the Recapitalization of $978.6 million. In 2011, the Company
recorded a net loss from continuing operations of $2.7 billion, which was
impacted by a $2.9 billion goodwill impairment charge and a $50.3 million
impairment of investment in associate.
For the fiscal year ending December 31, 2012, net earnings before impairment and
the gain on settlement of debt decreased to $189.5 million, compared to net
earnings from continuing operations before impairment of $222.8 million in 2011.
Net earnings per share before impairment and gain on settlement of debt was of
$6.02 for 2012, compared to net earnings per share from continuing operations
before impairment of $8.98 last year.
Fourth Quarter 2012 Results
Fourth quarter revenues were $264.4 million, as compared to $313.3 million in
the last quarter of 2011, mainly due to lower print revenues, the
discontinuation of duplicate directories published by Canpages, the divestiture
of LesPAC.com, and the sale of Deal of the Day. On a comparable basis, excluding
the impact of the changes to the Canpages business, the LesPAC.com divestiture,
the sale of Deal of the Day and YPG USA, fourth quarter revenues decreased by
9.7% versus last year's results.
Online revenues for the quarter were $99.7 million, as compared to $89.9 million
in the last quarter of 2011. On a comparable basis, excluding the impact of the
changes to the Canpages business, the LesPAC.com divestiture, the sale of Deal
of the Day and YPG USA, fourth quarter online revenues grew by 20.9% versus last
year's results.
EBITDA for the fourth quarter declined from $147.2 million in 2011 to $141.6
million, mainly attributable to print revenue pressure. The EBITDA margin for
the quarter increased to 53.5%, as compared to 47.0% last year, as a result of
various cost containment initiatives.
Free cash flow for the fourth quarter decreased from $78.2 million in 2011 to
$48.0 million in 2012. The decrease was due to a lower EBITDA and higher cash
interest paid pursuant to the Recapitalization, partly offset by lower cash
taxes.
During the fourth quarter of 2012, the Company recorded net earnings of $823.5
million. When adjusting for the $300 million impairment charge related to
certain of our intangible assets and property, plant and equipment, alongside
the gain on settlement of debt, the Company recorded net earnings of $24.0
million. This compares to net earnings from continuing operations of $48.2
million recorded in 2011.
Net earnings per share before impairment and gain on settlement of debt was of
$0.70 during the fourth quarter of 2012, compared to net earnings per share from
continuing operations of $1.53 last year.
Successful Execution of Yellow Pages 360 degrees Solution
Launched in 2011, Yellow Pages 360 degrees Solution offers Canadian small to
medium-sized enterprises ("SMEs") dedicated single-point access to a
comprehensive suite of products and services. Its value proposition resides in
how customers can access expert support and visibility through online, mobile
and print media platforms, in addition to services such as managed website
services, customized search engine marketing and search engine optimization, and
performance reporting tools such as Yellow Pages(TM) Analytics.
As at December 31, 2012, the advertiser penetration of YPG's 360 degrees
Solution (defined as advertisers who subscribe to three product categories or
more) was 16.5% compared to 5.5% at the end of the same period last year.
In order to further expand its product and service offering, the Company
established a High Priority Accounts ("HPA") program in early 2012 to best serve
the needs of larger advertisers. Fully deployed across the country, the HPA
program is aimed at mitigating revenue risk and optimizing revenue growth of
larger advertisers through a differentiated product and servicing model. A
comprehensive advertiser profiling methodology is currently in place to guide
the evaluation of account needs and opportunities through the review of Yellow
Pages Analytics results, website audits and competitive rankings, search engine
marketing estimates, and social media and search engine reviews. This profiling
is also followed by the definition of an appropriate strategy, determined by the
sales representative, sales manager and performance marketing advisor.
Mediative is also supporting YPG's efforts to best serve the needs of larger
advertisers through a new product line called Digital PowerPlay. Introduced
during the third quarter of 2012, Digital PowerPlay establishes and optimizes a
business' digital presence by determining the necessary steps to maximize
qualified leads across various digital channels while offering the highest level
of service and support.
To promote and demonstrate the relevance of the Company's digital tools,
platforms and expertise in connecting consumers with businesses, YPG launched a
new ad campaign in the fourth quarter of 2012. The campaign focuses on "Meet the
New Neighborhood," and communicates the Company's ability to address the
societal, cultural and technological trends that have changed the way consumers
and local businesses find and interact with one another.
Continued Growth in Mobile
Mobile remains a growing component of the Yellow Pages 360 degrees Solution
product suite. As at December 31, 2012, the Company had approximately 24,600
Canadian SMEs purchasing mobile products, representing approximately 46,600
mobile units.
YPG's mobile applications continue to earn positive industry recognition. The
Company was awarded "Best in Digital Advertising" at the 2012 Digi Awards for a
mobile contest which promoted the deals feature on the YellowPages.ca(TM) mobile
application. The award marks the second Digi Award for YPG, having won "Best in
Mobile" at last year's event for the location-based services of the
YellowPages.ca mobile application.
In an effort to further enhance its mobile offering to advertisers, the Company
launched two new mobile products during the fourth quarter of 2012: Mobile
Sponsored Placement Prestige and Mobile Placement Leader. Mobile Sponsored
Placement Prestige secures maximum, exclusive visibility for business listings
by offering larger displays and ensuring listings appear in the top spot of
mobile search results. Mobile Placement Leader also promotes enhanced visibility
by positioning business listings within a search's top five results.
Proving Advertiser Value through an Enhanced User Experience
To promote increased traffic across its network of properties and provide
valuable business leads to Canadian advertisers, YPG continues to invest in the
online user experience. YPG's network of sites currently reaches 9 million
unduplicated unique visitors, representing 32% of Canada's online population.
During 2012, the Company improved the search engine optimization of
YellowPages.ca to ensure increased indexation on search engines. YPG also
launched a redesigned Canpages.ca(TM) website based on the concept of "Life
Around Me." The website proposes a new user experience, focusing on the user's
geographic location and life needs within the context of a local search.
The Company's mobile applications also continue to grow in popularity, with
total downloads having exceeded 5 million by year-end 2012. This compares to 3.7
million downloads at the same period last year.
In 2012, the YP.ca application was fully redesigned to include more user
relevant content, including quick access to relevant groupings of business
listings and neighborhood deals pertaining to the user's search category. The
YP.ca application continues to rank high among productivity applications, and
was selected as one of Apple's "Best of 2012".
The ShopWise(TM) mobile application was also enhanced in 2012 to include
improved content and functionalities. Innovations included the integration of a
product catalogue featuring more than seven million items, and a list of 600
local and national retailers. The product and merchant data stemmed from a
partnership with Shoptoit, whereby the Shoptoit platform was fully integrated
into the ShopWise application. Shoptoit is currently one of the leading shopping
search engines in Canada.
Since its initial launch in late 2010, YellowAPI.com has embodied YPG's digital
leadership and gained industry recognition, having enrolled over 2,500
application developers. These developers generate visibility to Canadian
advertisers by powering their mobile applications with valuable content from
YPG's database of 1.5 million business listings.
In the fourth quarter of 2012, YPG and Yahoo! Canada announced they had expanded
their six-year partnership to provide Yahoo! Canada users with an enhanced local
search experience. Through YPG's YellowAPI technology and database of business
listings, Yahoo! Canada users now have access to local business information
based on their point of location. Partnering with Yahoo! Canada enables YPG to
significantly extend its advertisers' reach on a platform outside its network of
properties.
Mediative
Mediative is a leading Canadian digital media advertising company, offering
extensive display, mobile and other location-based marketing solutions to
national advertisers. Reaching approximately 16.5 million unique visitors per
month, Mediative's online ad network matches advertisers with the websites of
premium online brands.
During 2012, Mediative enhanced its location-based offering with the launch of a
flexible mobile advertising network enabling advertisers to reach consumers
based on their intent to buy. In addition to providing broad and flexible
local-based targeting options via connections to multiple ad exchanges,
Mediative also offers a premium network of 20+ mobile-enabled sites and
applications to help marketers reach specific audiences.
Capital Structure
As at December 31, 2012, Yellow Media had approximately $782 million of net
debt. This compares to $2.1 billion of net debt and preferred shares (Series 1
and 2) as at December 31, 2011.
The net debt to Latest Twelve Month EBITDA ratio as at December 31, 2012 was 1.4
times compared to 2.5 times as at December 31, 2011 respectively.
Pursuant to the Recapitalization, the Company currently has outstanding:
-- $800 million face value of 9.25% Senior Secured Notes maturing November
30, 2018;
-- $107.5 million face value of Senior Subordinated Unsecured Exchangeable
Debentures due November 30, 2022, with interest payable in cash at 8% or
in additional debentures at 12%;
-- 27,955,077 New Common Shares
-- 2,995,506 Warrants.
The Senior Subordinated Unsecured Exchangeable Debentures, New Common Shares and
Warrants are currently trading on the Toronto Stock Exchange under the following
symbols:
-- Senior Subordinated Unsecured Exchangeable Debentures: YPG.DB
-- New Common Shares: Y
-- Warrants: Y.WT
Details of the Recapitalization are currently available on SEDAR (www.sedar.com)
and the Company's website
(http://www.ypg.com/en/investors/recapitalization-transaction).
Investor Conference Call
Yellow Media Limited will hold an analyst and media call at 1:30 p.m. (Eastern
Time) on February 5, 2013 to discuss the fourth quarter and full year 2012
results. The call may be accessed by dialing (416) 340-2218 within the Toronto
area, or 1 866 226-1793 outside of Toronto.
The call will be simultaneously webcast on the Company's website at
http://www.ypg.com/en/investors/financial-reports/2012/quarterly-reports/fourth-quarter.
The conference call will be archived in the Investor Center of the site at
www.ypg.com.
A playback of the call can also be accessed from February 5 to February 12, 2013
by dialing (905) 694-9451 within the Toronto area, or 1 800 408-3053 outside
Toronto. The conference passcode is 3875901.
About Yellow Media Limited
Yellow Media Limited (TSX:Y) is a leading media and marketing solutions company
in Canada. The Company owns and operates some of Canada's leading properties and
publications including Yellow Pages(TM) print directories, YellowPages.ca(TM),
Canada411.ca and RedFlagDeals.com(TM). Its online destinations reach 9 million
unique visitors monthly and its mobile applications for finding local businesses
and deals have been downloaded over 5 million times. Yellow Media Limited is
also a leader in national digital advertising through Mediative, a digital
advertising and marketing solutions provider to national agencies and
advertisers. For more information, visit www.ypg.com.
Caution Concerning Forward-Looking Statements
This press release contains forward-looking statements about the objectives,
strategies, financial conditions, results of operations and businesses of the
Company. These statements are forward-looking as they are based on our current
expectations, as at February 5, 2013, 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 6 of our February 5, 2013
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.
Financial Highlights
(in thousands of Canadian dollars - except share and per share information)
----------------------------------------------------------------------------
For the three-month periods For the years ended
ended December 31, December 31,
Yellow Media Limited 2012 2011 2012 2011
----------------------------------------------------------------------------
Revenues $264,447 $313,315 $1,107,715 $1,328,866
Income (loss) from
operations ($199,942) $109,731 ($2,846,463) ($2,415,084)
Net earnings (loss)
from continuing
operations $823,536 $48,222 ($1,954,005) ($2,708,122)
Basic earnings
(loss) per share
from continuing
operations
attributable to
common shareholders $29.30 $1.53 ($70.66) ($97.66)
Cash flow from
operating
activities from
continuing
operations $61,749 $92,964 $238,573 $336,573
----------------------------------------------------------------------------
EBITDA(1) $141,564 $147,198 $570,600 $679,707
EBITDA margin(1) 53.5% 47.0% 51.5% 51.1%
----------------------------------------------------------------------------
Weighted average
number of common
shares outstanding 27,955,077 27,955,077 27,955,077 27,955,077
Dividends on common
shares - - - $207,345
Dividends declared
per common share - - - $0.40
----------------------------------------------------------------------------
Non-IFRS Measures(1)
In order to provide a better understanding of the results, the Company uses the
term EBITDA, defined as income from operations before depreciation and
amortization, impairment of goodwill, intangible assets and property, plant and
equipment, acquisition-related costs and restructuring and special charges.
Management believes this measure is reflective of ongoing operations. This term
is not a performance measure defined under IFRS. EBITDA does not have any
standardized meaning and is therefore not likely to be comparable to similar
measures used by other publicly traded companies. Management believes EBITDA to
be an important measure.
FOR FURTHER INFORMATION PLEASE CONTACT:
Investor Relations
Amanda Di Gironimo
Senior Manager, Corporate Finance and Investor Relations
(514) 934-2680
Amanda.DiGironimo@ypg.com
Media
Fiona Story
Senior Manager, Public Relations
(514) 934-2672
Fiona.Story@ypg.com
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