MONTREAL,
May 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 ended
March 31, 2020. The Company also
announced that its Board of Directors has adopted a dividend policy
of paying a quarterly cash dividend1 to its common
shareholders of $0.11 per share.
"We are very pleased with our first quarter results. Our
Adjusted EBITDA less CAPEX margin2 continued to be
strong, at 35.5%. Supported by appropriate levels of investment in
our business, our various initiatives to "bend the revenue curve"
produced an improved year-on-year rate of revenue change in our YP
segment for the fifth consecutive quarter. And as of quarter-end,
we had a cash balance of $70.9
million and had driven down our net debt excluding lease
obligations2 to only $28.3
million.
"Beginning late in the first quarter, the COVID-19 pandemic has
created great anxiety across Canada and around the world, and we do expect
a financial impact from it in future quarters, as we have
experienced some decline in revenue "bookings." However, we are
well-positioned to weather the storm, as we expect more businesses
will be looking for ways to successfully serve their local
communities and we have been adapting quickly to the situation.
"We entered this period of uncertainty with high cash
generation, much lowered debt, and a hefty cash balance. And every
member of our team, all across the country and in every capacity,
has continued working steadily to serve our customers, despite the
obvious obstacles. As a result, we are announcing a first quarter
regular dividend of $0.11 per common
share, to be paid on June 15, 2020,
and we are reaffirming our intention to fully repay our remaining
debt, our exchangeable debentures, on or shortly after May 31, 2021, at par. Also, we intend to double
our current monthly contributions to the company's Defined Benefit
Pension Plan, beginning in June 2020
and extending through next
year," said David A. Eckert, President and CEO of
Yellow Pages Limited.
Following the Corporation's annual meeting of shareholders, the
Board of Directors will formally declare a cash
dividend1 of $0.11 per
common share, payable on June 15,
2020 to shareholders of record as at May 29, 2020.
Financial
Highlights
|
(In thousands of Canadian dollars,
except percentage information and per
share information)
|
Yellow Pages Limited
|
For the
three-month periods ended March 31,
|
|
2020
|
2019
|
YP Revenues
|
$88,308
|
$103,675
|
Other revenues and
Intersegment Eliminations
|
-
|
1,112
|
Total
revenues
|
$88,308
|
$104,787
|
Adjusted
EBITDA2
|
$32,563
|
$45,381
|
Adjusted EBITDA
margin2
|
36.9%
|
43.3%
|
Net
earnings
|
$12,403
|
$12,660
|
Basic earnings per
share
|
$0.47
|
$0.48
|
Diluted earnings per
share
|
$0.44
|
$0.45
|
CAPEX1
|
$1,231
|
$2,624
|
Adjusted EBITDA less
CAPEX2
|
$31,332
|
$42,757
|
Adjusted EBITDA less
CAPEX margin2
|
35.5%
|
40.8%
|
Cash flows from
operating activities
|
$27,148
|
$33,548
|
First Quarter of 2020 Results
- Adjusted EBITDA less CAPEX2 totaled $31.3 million and the EBITDA less CAPEX
margin2 was 35.5%.
- Net earnings remained relatively stable at $12.4 million, or $0.44 per diluted share.
- Cash at the end of the period stood at $70.9 million.
(1)
|
A portion of the
dividends paid will not be eligible dividends as they come from
earnings of acquired companies that were taxed at lower rates.
Therefore, $0.07 per share of the current dividend will not be
designated as an eligible dividend while the balance of $0.04 per
share will be designated as an eligible dividend pursuant to
subsection 89(14) of the Income Tax Act (Canada) and any applicable
provincial legislation pertaining to eligible
dividends.
|
|
|
(2)
|
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, 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 4 of this document for more
details.
|
Segmented Information
The Company's operations are categorized into two reportable
segments: YP and other.
- 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 and 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 digital property until its
sale on April 30, 2019 and the
Mediative division until its liquidation on January 31, 2019.
An overview of each segment and the performance of each segment for the three-month periods
ended March 31, 2020 and
2019 can be found in the May 12, 2020
Management's Discussion and Analysis.
Financial Results for the First Quarter of 2020
Revenues for the YP segment for the three-month period ended
March 31, 2020 totaled $88.3 million compared to $103.7 million for the same period last year. The
$15.4 million or 14.8% decrease for
the three-month period ended March 31,
2020 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 three-month period
ended March 31, 2020 totaled
$32.6 million compared to
$45.1 million for the same period
last year. The Adjusted EBITDA margin for the YP segment for the
first quarter of 2020 decreased to 36.9% compared to 43.5% for the
same period last year. The decrease in Adjusted EBITDA and Adjusted
EBITDA margins were mainly due to the revenue pressures,
investments in customer care and in new customer acquisition and an
increased bad debt provision related to the COVID-19 pandemic.
These impacts were only partly offset by reductions in both our
cost of sales and other operating costs including reductions in our
workforce and associated employee expenses, reductions in the
Company's office space footprint and other spending reductions
across the segment. The first quarter of 2019 was also favorably
impacted by an adjustment to the variable compensation expense due
to employee attrition and previous year performances.
Total revenues for the first quarter ended March 31, 2020 of $88.3
million decreased by 15.7% as compared to $104.8 million for the same period last year. The
decline in total revenue for the three-month period ended
March 31, 2020 was due mainly to
lower digital and print revenues in the YP segment.
Adjusted EBITDA decreased by 28.2% to $32.6 million in the first quarter ended
March 31, 2020, relative to
$45.4 million for the same period
last year. The Company's Adjusted EBITDA margin for the first
quarter of 2020 was 36.9% compared to 43.3% for the same period
last year. The decrease in Adjusted EBITDA and Adjusted EBITDA
margin was almost entirely due to the YP segment.
Adjusted EBITDA less CAPEX decreased by $11.4 million to $31.3
million during the first quarter of 2020, compared to
$42.8 million during the same period
last year. The decrease in Adjusted EBITDA less CAPEX for the
three-month period ended March 31,
2020 was mainly due to lower Adjusted EBITDA partially
offset by lower capital expenditures due to decreased spending in
software development in the YP segment.
Net earnings for the three-month period ended March 31, 2020, remained relatively stable at
$12.4 million as compared to net
earnings of $12.7 million for the
same period last year, as lower Adjusted EBITDA was essentially
offset by lower depreciation and amortization and lower financial
charges.
Cash flows from operating activities decreased by $6.4 million to $27.1
million from $33.5 million for
the three-month period ended March 31,
2019 mainly due to lower Adjusted EBITDA of $12.8 million partially offset by lower payments
for restructuring and other charges of $3.8
million and lower interest paid of $0.5 million. Cash flows also benefited by a
$1.3 million improvement in the
change in operating assets and liabilities.
As at March 31, 2020, the Company
had $157.7 million of total debt, compared
to $156.4 million as at
December 31, 2019. As at March 31, 2020, the Company
had $28.3 million of net debt
excluding lease obligations1,
compared to $54.1 million as at
December 31, 2019.
(1)
|
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 public
companies. Refer to the section on Non-GAAP financial measures on
page 4 of this document for more details including reconciliations
to the most comparable IFRS financial measure.
|
Conference Call & Webcast
Yellow Pages Limited
will hold an analyst and media call and simultaneous webcast
at 8:30 a.m. (Eastern Time) on May
13, 2020 to discuss first quarter 2020 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 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 full repayment of the Company's remaining exchangeable
debentures on or shortly after May 31,
2021, at par; to its common shareholders, a cash dividend
payment of $0.11 per share per
quarter; and results of operations and businesses of the Company.
These statements are forward-looking as they are based on our
current expectations, as at May 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 May 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 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 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 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-IFRS 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 5 and
page 10 of the May 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 Exchangeable debentures less 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 Audited
consolidated financial statements for the years ended 2019 and
2018. 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
|
March 31,
2020
|
December 31,
2019
|
Exchangeable debentures
|
$
99,173
|
$ 98,537
|
Lease obligations
|
58,527
|
57,885
|
Total debt
|
$
157,700
|
$ 156,422
|
Lease obligations
|
(58,527)
|
(57,885)
|
Cash
|
(70,864)
|
(44,408)
|
Net debt excluding
lease obligations
|
$
28,309
|
$54,129
|
SOURCE Yellow Pages Limited