MONTREAL, Nov. 13, 2019 /CNW Telbec/ - Yellow Pages Limited
(TSX: Y) (the "Company"), a leading Canadian digital media and
marketing company, released its operational and financial results
today for the quarter and nine-month periods ended September 30, 2019 and announces that on
December 2, 2019 the Company will
make a mandatory redemption payment of $50.7
million, including accrued and unpaid interest of
$0.4 million on its Senior Secured
Notes (the "Notes"), at which date the Notes will be fully
repaid.
"Fuelled by another quarter of strong Adjusted EBITDA less CAPEX
margin, the cash we generated in the quarter will allow us to fully
repay our Notes on December 2, 2019,
three years ahead of maturity. Our net debt excluding lease
obligations1 at the end of the quarter stood at only
$82.5 million.
"And on the revenue front, for the third consecutive quarter we
produced an improved year-on-year rate of revenue change in our YP
segment, as our various initiatives to 'bend the revenue curve'
continued to bear fruit" said David A.
Eckert, President and CEO of Yellow Pages Limited.
Financial
Highlights
|
(In thousands of
Canadian dollars, except percentage information and per share
information)
|
Yellow Pages
Limited
|
For the
three-month periods
ended September 30,
|
For the nine-month
periods
ended September 30,
|
|
2019
|
2018
|
2019
|
2018
|
YP revenues
|
$98,147
|
$117,647
|
$308,432
|
$374,820
|
Other revenues and
Intersegment Eliminations
|
-
|
12,503
|
1,274
|
77,856
|
Total
revenues
|
$98,147
|
$130,150
|
$309,706
|
$452,676
|
Adjusted
EBITDA1
|
$37,786
|
$46,261
|
$126,589
|
$151,416
|
Adjusted EBITDA
margin1
|
38.5%
|
35.5%
|
40.9%
|
33.4%
|
Net
earnings
|
$13,839
|
$27,125
|
$41,072
|
$42,852
|
Basic earnings per
share
|
$0.52
|
$1.03
|
$1.55
|
$1.62
|
Diluted earnings per
share
|
$0.49
|
$0.89
|
$1.44
|
$1.49
|
CAPEX1
|
$2,351
|
$2,185
|
$7,757
|
$7,996
|
Adjusted EBITDA less
CAPEX1
|
$35,435
|
$44,076
|
$118,832
|
$143,420
|
Adjusted EBITDA less
CAPEX margin1
|
36.1%
|
33.9%
|
38.4%
|
31.7%
|
Cash flow from
operating activities
|
$50,559
|
$35,895
|
$112,734
|
$92,877
|
Third Quarter of 2019 Results
- Despite revenue pressures, the Adjusted EBITDA less CAPEX
margin1 increased to 36.1% as compared to 33.9% for the
same period last year as a result of the divestiture of
unprofitable or non-synergistic businesses and revenues as well as
cost reductions in the YP segment. Adjusted EBITDA less
CAPEX1 decreased by $8.7
million year-over-year and amounted to $35.4 million.
- Net earnings decreased by $13.3
million to $13.8 million, or
$0.49 per diluted share.
- On November 1, 2019, as
previously announced, the Company made a $30.0 million optional redemption payment toward
the principal amount of the Notes.
- The Company will also make a mandatory redemption payment of
$50.7 million on its Notes, including
accrued and unpaid interest of $0.4
million, on December 2, 2019.
With this payment the Company will have repaid the Notes in
full.
Segmented Information
The Company's operations are categorized into two reportable
segments:
- The YP segment provides small and medium-sized businesses
across Canada digital and
traditional marketing solutions, including online and mobile
priority placement on Yellow Pages' owned and operated media,
content syndication, search engine solutions, website fulfillment,
social media campaign management, digital display advertising,
video production and print advertising. This segment also includes
the 411.ca digital directory service helping users find and connect
with people and local businesses.
- The Other segment includes YP Dine and Bookenda until their
sale on April 30, 2019 and the
Mediative division until its liquidation on January 31, 2019. The operations of the
businesses sold in 2018 are also included in this segment until
their respective disposal dates, namely: JUICE Mobile,
RedFlagDeals.comâ„¢, Yellow Pages NextHome, ComFree/DuProprio, Totem
and Western Media Group.
An overview of each segment and the performance of each segment
for the three-month and nine-month periods ended September 30, 2019 can be found in the
November 12, 2019 Management's
Discussion and Analysis.
Financial Results for the Third Quarter of 2019
Total revenues for the three-month period ended September 30, 2019 decreased by $32.1 million or 24.6% year-over-year and
amounted to $98.1 million as compared
to $130.2 million for the same period
last year. The decline in total revenues for the three-month period
ended September 30, 2019 was due to
lower digital and print revenues in the YP segment as well as the
divestitures in the Other segment.
Revenues for the YP segment for the third quarter of 2019
decreased by $19.5 million or 16.6%
year-over-year and amounted to $98.1
million compared to $117.6
million for the same period last year. The decrease for the
quarter ended September 30, 2019 is
mainly due to the decline of our higher margin YP 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.
Adjusted EBITDA decreased by $8.5 million or 18.3% to $37.8 million during the third quarter of
2019, compared to $46.3 million
during the same period last year. The Company's Adjusted EBITDA
margin for the third quarter of 2019 was 38.5% compared to 35.5%
for the third quarter of 2018. The decrease in Adjusted EBITDA was
the result of the revenue pressures in the YP segment as well as
the divestitures in the Other segment.
Adjusted EBITDA for the YP segment for the third quarter of 2019
totalled $37.8 million compared to
$46.0 million for the same period
last year as a result of lower overall revenues, pressures from the
change in product mix and investments in customer care. The
Adjusted EBITDA margin for the YP segment for the third quarter of
2019 was 38.5% compared to 39.1% for the same period last year. The
slight decrease in Adjusted EBITDA margin for the third quarter is
due to the revenue pressures and investments in customer care being
mostly offset by an increased focus on the profitability of our
products and services and reductions in both our cost of sales and
other operating costs.
Adjusted EBITDA less CAPEX decreased by $8.7 million or 19.6% to $35.4 million during the third quarter of
2019, compared to $44.1 million
during the same period last year mainly due to lower Adjusted
EBITDA partially offset by decreased spending on software
development. Adjusted EBITDA less CAPEX was further negatively
impacted by lease incentives received in 2018.
The Company recorded net earnings of $13.8 million during the third quarter of
2019 as compared to $27.1 million
during the third quarter of 2018. The decrease in net earnings in
the third quarter of 2019 compared to the same period last year is
mainly due to the net earnings for the three-month period ended
September 30, 2018 benefiting from a
$7.5 million gain on the sale of the
assets related to the operations of RedFlagDeals and a reversal of
income tax provisions of $18.3
million recorded with respect to previous taxation years.
Furthermore, net earnings were impacted by lower Adjusted
EBITDA which was more than offset by lower depreciation and
amortization expenses mainly from lower software development
expenditures and by lower financial charges from a reduced level of
indebtedness.
Cash flows from operating activities increased by $14.7 million to $50.6
million for the three-month period ended September 30, 2019 from $35.9 million for the same period last year
mainly due to an additional $13.7
million generated by the change in operating assets and
liabilities mainly from strong collection of trade receivables.
As at September 30, 2019, the
Company had $235.9 million of total
debt, compared to $339.0 million as
at December 31, 2018. As at
September 30, 2019, the Company had
$82.5 million of net debt excluding
lease obligations1, compared to $182.2 million as at December 31, 2018.
Conference Call & Webcast
Yellow Pages Limited will hold an analyst and media call and
simultaneous webcast at 8:30 a.m. (Eastern
Time) on November 13, 2019 to
discuss third quarter 2019 results. The call may be accessed by
dialing 416-340-2216 within the Toronto area, or 1-800-273-9672 outside of
Toronto. 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.ca 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, results of
operations and businesses of the Company. These statements are
forward-looking as they are based on our current expectations, as
at November 12, 2019, 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 November 12, 2019 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 earnings
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.
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 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 less lease incentives received as reported in
the Investing Activities section of the Company's interim condensed
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 its ongoing profitability. We believe that certain
investors and analysts use Adjusted EBITDA less CAPEX and Adjusted
EBITDA less CAPEX margin to evaluate the performance of a
business.
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 5 and
page 12 of the November 12, 2019
MD&A for a reconciliation of CAPEX and Adjusted EBITDA less
CAPEX, respectively.
Net debt excluding lease obligations
Net debt excluding lease obligations is a non-GAAP financial
measure and does not have any standardized meaning under IFRS.
Therefore, it is unlikely to be comparable to similar measures
presented by other publicly traded companies. Net debt
excluding lease obligations is comprised of Senior Secured Notes
(including current portion) and Exchangeable debentures less Cash
and restricted cash as presented in our interim condensed
consolidated statements of financial position. We use net debt as
indicator of the Company's ability to cover financial obligations
and reduce debt and associated interest charge as it represents the
amount of debt excluding lease obligations that is not covered by
available cash. We believe that certain investors and analysts use
net debt to determine a company's financial leverage.
The most comparable IFRS financial measure is total debt, as
presented in the capital disclosures note on page 53 in our annual
consolidated financial statements. The table below provides a
reconciliation of total debt to net debt excluding lease
obligations.
|
Net debt excluding
lease obligations
|
(In thousands of
Canadian dollars)
|
As
at
|
September 30,
2019
|
December 31,
2018
|
Senior Secured
Notes
|
$79,502
|
$167,489
|
Exchangeable
debentures
|
97,925
|
96,179
|
Lease
obligations
|
58,499
|
75,320
|
Total debt
|
$235,926
|
$338,988
|
Lease
obligations
|
(58,499)
|
(75,320)
|
Cash and restricted
cash
|
(94,903)
|
(81,452)
|
Net debt excluding
lease obligations
|
$82,524
|
$182,216
|
1Adjusted 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, Adjusted EBITDA
margin, CAPEX, Adjusted EBITDA less CAPEX, Adjusted EBITDA less
CAPEX margin and Net debt excluding lease obligations are
non-GAAP financial measures and do not have any standardized
meaning under IFRS. Therefore, they are unlikely to be comparable
to similar measures presented by other public companies. Refer to
the section on Non-GAAP financial measures on page 5 of this
document for more details.
|
|
1Net
debt excluding lease obligations is a non-GAAP financial measure
and does not have any standardized meaning under IFRS. Therefore,
it is unlikely to be comparable to similar measures presented by
other public companies. Refer to the section on Non-GAAP financial
measures on page 5 of this document for more details including
reconciliations to the most comparable IFRS financial
measure.
|
SOURCE Yellow Pages Limited