MONTREAL,
Feb. 13, 2020 /CNW Telbec/ -
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 year
ended December 31, 2019.
"We continued our strong Adjusted EBITDA less CAPEX
margin1 in the Fourth Quarter and for the full year
2019. As we predicted last quarter, this allowed us to fully
repay our notes on December 2, 2019,
three years ahead of maturity. And today we announce our intention
to make an optional redemption payment of $107.1 million toward the principal amount to
fully repay all of our remaining debt, our exchangeable debentures,
on or shortly after May 31, 2021, at
par.
"We also
intend to initiate a regular quarterly dividend of 11 cents per common share per quarter,
beginning in the second quarter of 2020.
"In addition, we continue to invest appropriately in our
business, including significant expansion of our tele-sales force
to support further 'bending of the revenue curve.' We are
heartened that, including this most recent quarter, we produced an
improved year-on-year rate of revenue change in our YP segment for
four consecutive quarters, 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 December 31,
|
For the years
ended December 31,
|
2019
|
2018
|
2019
|
2018
|
YP revenues
|
$93,507
|
$110,782
|
$401,939
|
$485,602
|
Other revenues
and Intersegment Eliminations
|
−
|
13,737
|
1,274
|
91,593
|
Total revenues
|
$93,507
|
$124,519
|
$403,213
|
$577,195
|
Adjusted EBITDA1
|
$34,756
|
$41,149
|
$161,345
|
$192,565
|
Adjusted EBITDA margin1
|
37.2%
|
33.0%
|
40.0%
|
33.4%
|
Net earnings
|
$53,597
|
$39,957
|
$94,669
|
$82,809
|
Basic earnings per share
|
$2.02
|
$1.51
|
$3.57
|
$3.13
|
Diluted earnings per
share
|
$1.70
|
$1.28
|
$3.16
|
$2.78
|
CAPEX1
|
$1,981
|
$4,040
|
$9,738
|
$12,036
|
Adjusted EBITDA less
CAPEX1
|
$32,775
|
$37,109
|
$151,607
|
$180,529
|
Adjusted EBITDA
less CAPEX margin1
|
35.1%
|
29.8%
|
37.6%
|
31.3%
|
Cash flow from operating
activities
|
$32,025
|
$41,782
|
$144,759
|
$134,659
|
Fourth Quarter of 2019 Results
- Despite revenue pressures, the Adjusted EBITDA less CAPEX
margin1 increased to 35.1% as compared to 29.8% 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 $4.3
million year-over-year and amounted to $32.8 million.
- Net earnings increased by $13.6
million to $53.6 million, or
$1.70 per diluted share.
- On December 2, 2019, as
previously announced, the Company made a mandatory redemption
payment of $50.3 million toward the
principal amount on its Senior Secured Notes (the "Notes"). With
this payment the Company has 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.com™, 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 periods
and years ended December 31, 2019
and 2018 can be found in the
February 12, 2020
Management's Discussion and Analysis.
Financial Results for the Fourth Quarter of 2019
Revenues for the YP segment for the fourth quarter of 2019
decreased by $17.3 million or 15.6%
year-over-year and amounted to $93.5
million compared to $110.8
million for the same period last year. This compares to a
decrease of $26.4 million or 19.2%
for the fourth quarter of 2018 compared to the same period in 2017.
The decrease for the quarter ended December
31, 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 for the YP segment for the fourth quarter of
2019 totalled $34.8 million compared
to $38.9 million for the same period
last year. The decrease in Adjusted EBITDA is a result of lower
overall revenues, pressures from the change in product mix and
investments in customer care and investments in new customer
acquisition. The Adjusted EBITDA margin for the YP segment for the
fourth quarter of 2019 was 37.2% compared to 35.1% for the same
period last year. The increase in Adjusted EBITDA margin for the
fourth quarter is due to the revenue pressures, investments in
customer care and investments in new customer acquisition being
more than 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.
Total revenues for the three-month period ended December 31, 2019 decreased by $31.0 million or 24.9% year-over-year and
amounted to $93.5 million as compared
to $124.5 million for the same period
last year. The decline in total revenues for the quarter ended
December 31, 2019 was due to lower
digital and print revenues in the YP segment as well as the
divestitures in the Other segment.
Adjusted EBITDA decreased by $6.4
million to $34.8 million
during the fourth quarter of 2019, compared to $41.1 million during the same period last year.
The Company's Adjusted EBITDA margin for the three-month period
ended December 31, 2019 was 37.2%
compared to 33.0% for the same period last year. The decrease in
Adjusted EBITDA for the three-month period ended December 31, 2019 is the result of revenue
pressures in the YP segment as well as the divestitures in the
Other segment. The increase in Adjusted EBITDA margin is mainly due
to reductions in both our cost of sales and other operating costs
which fully offset the revenue pressures in the YP segment as well
as the dilutive effect on profitability of the lower margin Other
segment in 2018.
Adjusted EBITDA less CAPEX decreased by $4.3 million or 11.7% to $32.8 million during the fourth quarter of 2019
compared to $37.1 million during the
same period in 2018. Adjusted EBITDA less CAPEX for the three-month
period ended December 31, 2019 was
mainly impacted by lower Adjusted EBITDA partially offset by
decreased spending on software development.
We recorded net earnings of $53.6
million and $40.0 million
during the three-month periods ended December 31, 2019 and 2018, respectively. The
improvement in net earnings is mainly due to decreased depreciation
and amortization expenses due to lower software development
expenditures, lower financial charges from a reduced level of
indebtedness and higher recovery of income taxes partially offset
by lower Adjusted EBITDA and an increase in restructuring and other
charges.
Cash flows from operating
activities decreased by $9.8 million to $32.0 million for the
three-month period ended December 31,
2019 from $41.8 million for
the same period last year mainly due to a $17.1 million decrease in the change in operating
assets and liabilities mainly from reduced receivables due to the
divestitures.
As at December 31, 2019, the
Company had $156.4
million of total debt, compared to
$339.0 million as at December 31, 2018. As at December 31, 2019, the Company had $54.1 million of net debt excluding lease
obligations1, compared to $182.2
million as at December 31,
2018.
Financial Results for the Year Ended December 31, 2019
Revenues for the YP segment for the year ended December 31, 2019 decreased by $83.7 million or 17.2% year-over year and
amounted to $401.9 million compared
to $485.6 million for the same period
last year. The decrease for the year ended December 31, 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 for the YP segment for the year ended
December 31, 2019 totalled
$161.0 million compared to
$185.0 million for the same period in
2018. The decrease in Adjusted EBITDA is 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 year ended December 31, 2019
increased to 40.1% from 38.1% for the same period last year. The
increase in Adjusted EBITDA margin for the year ended December 31, 2019 is due to the revenue pressures
and investments in customer care and investments in new customer
acquisition being fully offset by an increased focus on the
profitability of our products and services and reductions in both
our costs of sales and other operating costs. The decrease in cost
of sales was mainly due to workforce reductions primarily in
non-customer facing areas in the first quarter of 2018 and to call
center consolidations and optimization of our servicing model in
the second quarter of 2018. The decrease in other operating costs
included reductions in our workforce and associated employee
expenses, reductions in the Company's office space footprint, other
spending reductions across the segment as well as an adjustment to
the variable compensation expense in the first quarter of 2019
mainly due to employee attrition and previous year
performances.
Total revenues for the year ended December 31, 2019 decreased by $174.0 million or 30.1% year-
over-year and amounted to $403.2 million
as compared to $577.2 million
for the same period last
year. The decline in total revenues was due to the divestitures
in the Other segment as well as
lower digital and print revenues in
the YP segment.
For the year ended December 31,
2019, Adjusted EBITDA decreased by $31.2 million or 16.2% to $161.3 million, compared to $192.6 million for the same period last year. The
Company's Adjusted EBITDA margin amounted to 40.0% for the year
ended December 31, 2019 compared to
33.4% for the same period last year. The decrease in Adjusted
EBITDA was the result of revenue pressures in the YP segment as
well as the divestitures in the Other segment. The increase in
Adjusted EBITDA margin for the year ended December 31, 2019 is mainly due to the dilutive
effect on profitability of the lower margin Other segment in 2018
and reductions in both our cost of sales and other operating costs.
The reductions fully offset the revenue pressures in the YP segment
for the year ended December 31,
2019.
For the year ended December 31,
2019, Adjusted EBITDA less CAPEX decreased by $28.9 million or 16.0% to $151.6 million compared to $180.5 million for the same period last year.
Adjusted EBITDA less CAPEX for the year ended December 31, 2019 was mainly impacted by lower
Adjusted EBITDA partially offset by decreased spending on software
development and was further negatively impacted by lease incentives
received in 2018.
The Company recorded net earnings of $94.7 million for the year ended December 31, 2019 as compared to $82.8 million for the same period last year. The
increase in net earnings for the year ended December 31, 2019 compared to the same period
last year is mainly due to the lower depreciation and amortization
expenses and lower financial charges from a reduced level of
indebtedness due to repayment of the Senior Secured Notes partially
offset by lower Adjusted EBITDA and lower recovery of income
taxes.
The Company recorded net earnings of $94.7 million for the year ended December 31, 2019 as compared to $82.8 million for the same period last year. The
increase in net earnings for the year ended December 31, 2019 compared to the same period
last year is mainly due to the lower depreciation and amortization
expenses and lower financial charges from a reduced level of
indebtedness due to repayment of the Senior Secured Notes partially
offset by lower Adjusted EBITDA and lower recovery of income
taxes.
Cash flows from operating activities increased by $10.1 million to $144.8
million from $134.7 million
for the year ended December 31, 2019
mainly due to lower payments for restructuring and other charges of
$18.4 million, lower interest paid of
$20.3 million due to a lower level of
indebtedness due to repayments of the Senior Secured Notes and
lower funding of post-employment benefit plans of $1.4 million, mainly offset by lower Adjusted
EBITDA of $31.2 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 February 13, 2020 to
discuss fourth 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, including
potential repayment of the Company's exchangeable debentures in
full on or shortly after May 31,
2021, at par, the initiation of a quarterly common share
dividend of $0.11 per common share
beginning in the second quarter of 2020, results of operations and
businesses of the Company. These statements are forward-looking as
they are based on our current expectations, as at February 12, 2020, 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 February 12, 2020 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 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 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 consolidated
statements of income. Refer to page 5 and page 12 of the
February 12, 2020 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 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 49 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
|
December 31,
2019
|
December 31,
2018
|
Senior Secured
Notes
|
$
−
|
$167,489
|
Exchangeable debentures
|
98,537
|
96,179
|
Lease obligations
|
57,885
|
75,320
|
Total debt
|
$156,422
|
$338,988
|
Lease obligations
|
(57,885)
|
(75,320)
|
Cash and
restricted cash
|
(44,408)
|
(81,452)
|
Net debt excluding
lease obligations
|
$54,129
|
$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 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