MONTREAL, Nov. 12, 2020
/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 nine-month periods ended September
30, 2020.
"We are very pleased with our third quarter results and how our
Company continues to cope with the COVID-19 pandemic and build for
the future," said David A. Eckert,
President and CEO of Yellow Pages Limited.
Eckert commented on the key developments for the
quarter:
- Cash continued to build. "As of today, our cash on hand
is approximately $137 million. This
balance already significantly exceeds the $107 million principal amount of our Exchangeable
Debentures, which are our only remaining debt, excluding lease
obligations. As previously announced, we intend to fully pay off
those Exchangeable Debentures, at par, on or around May 31, 2021."
- Quarterly cash dividend2 declared. "Our Board
has declared a cash dividend of $0.11
per common share, to be paid on December 15,
2020 to shareholders of record as of November 27, 2020."
- Common stock NCIB effective. "Under our NCIB program, at
the end of the third quarter the Company had purchased 99,280
common shares for cash of $1.1
million. That program is continuing."
- Modest effect of COVID-19 crisis on revenue. "All of our
operations have continued unabated since the COVID-19 crisis began.
And the effect of the crisis on our revenues in the third quarter
was again only a handful of percentage points. Bookings trends
indicate only modest additional effects on our revenue curve over
the next couple of quarters, as the sales levels already booked
become reported revenue."
- Progress on revenue initiatives. "We are on track to
double our tele-sales capacity by the end of the year, aimed at
significantly ramping up our acquisition of new accounts. And we
are executing on our programs to add to our strong product
portfolio."
- Solid quarterly earnings. "Our Adjusted
EBITDA1 for the quarter was a healthy 34% of revenue,
despite the COVID-19 crisis, our investments in revenue
initiatives, and some 1-time expenses. We are committed to
generating good cash and profitability, while making the targeted
investments necessary to bend our revenue curve toward
stability."
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,
|
|
2020
|
2019
|
2020
|
2019
|
YP Revenues
|
$80,281
|
$98,147
|
$256,869
|
$308,432
|
Other revenues and
Intersegment Eliminations
|
-
|
-
|
-
|
1,274
|
Total
revenues
|
$80,281
|
$98,147
|
$256,869
|
$309,706
|
Adjusted
EBITDA1
|
$27,312
|
$37,786
|
$101,803
|
$126,589
|
Adjusted EBITDA
margin1
|
34.0%
|
38.5%
|
39.6%
|
40.9%
|
Net earnings
|
$9,041
|
$13,839
|
$43,483
|
$41,072
|
Basic earnings per
share
|
$0.34
|
$0.52
|
$1.63
|
$1.55
|
Diluted earnings per
share
|
$0.34
|
$0.49
|
$1.52
|
$1.44
|
CAPEX1
|
$1,340
|
$2,351
|
$4,099
|
$7,757
|
Adjusted EBITDA less
CAPEX1
|
$25,972
|
$35,435
|
$97,704
|
$118,832
|
Adjusted EBITDA less
CAPEX margin1
|
32.4%
|
36.1%
|
38.0%
|
38.4%
|
Cash flows from
operating activities
|
$32,739
|
$50,559
|
$91,560
|
$112,734
|
(1) 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.
|
(2) The dividend
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.
|
Third Quarter of 2020 Results
- Adjusted EBITDA less CAPEX1 totaled $26.0 million and the EBITDA less CAPEX
margin1 was 32.4%.
- Net earnings decreased by $4.8
million to $9.0 million, or
$0.34 per diluted share.
- Cash position at the end of the period was $124.5 million and approximately $137.0 million as at November 11, 2020.
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
and nine-month periods ended September
30, 2020 and 2019 can be found in the November 12, 2020
Management's Discussion and Analysis.
Financial Results for the Third Quarter of 2020
Revenues for the YP segment for the third quarter of 2020
decreased by $17.8 million or 18.2%
year-over year and amounted to $80.3
million compared to $98.1
million for the same period last year. The decrease for the
quarter ended September 30, 2020 is
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. Revenues for the third quarter of 2020 were also impacted
by the COVID-19 pandemic which impacted customer spend and to a
lesser extent customer renewal rates.
Adjusted EBITDA for the YP segment for the three-month period
ended September 30, 2020 totaled
$27.3 million or 34.0% of revenues
compared to $37.8 million or 38.5% of
revenues for the same period last year. The decrease in Adjusted
EBITDA and Adjusted EBITDA margin in the third quarter ended
September 30, 2020 is the result of
the revenue pressures in the YP segment as well as certain one-time
items partially offset by efficiencies in sales and operations from
optimization and reductions in other operating costs including
reductions in our workforce and associated employee expenses,
reduction in the Company's office space footprint and other
spending reductions across the segment. The one-time items include
a $4.0 million increase for the
expense related to the vesting of the CEO's long term incentive
plan (LTIP) upon completion of his first contract term in the third
quarter of 2020, resulting from the increase in the Company's share
price, partially offset by a $1.2
million emergency wage subsidy received during the
three-month period ended September 30,
2020. Continued modest effects on revenue of the COVID-19
pandemic, coupled with increased headcount in our salesforce, will
create some pressure on margin in upcoming quarters.
Total revenues for the third quarter ended September 30, 2020 decreased by 18.2%
year-over-year and amounted to $80.3
million as compared to $98.1
million for the same period last year.
Adjusted EBITDA1 decreased by 27.7% to $27.3 million or 34.0% of revenues in the third
quarter ended September 30, 2020,
relative to $37.8 million or 38.5% of
revenues for the same period last year.
Adjusted EBITDA less CAPEX decreased by $9.4 million to $26.0
million during the third quarter of 2020, compared to
$35.4 million during the same period
last year.
Net earnings for the three-month period ended September 30, 2020, amounted to $9.0 million as compared to net earnings of
$13.8 million for the same period
last year. The decrease in profitability of $4.8 million for the three-month period ended
September 30, 2020, compared to the
same period last year, is explained principally by lower Adjusted
EBITDA and an increase in restructuring and other charges partially
offset by decreases in financial charges and depreciation and
amortization expenses.
1) 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.
|
Cash flows from operating activities decreased by $17.9 million to $32.7
million for the three-month period ended September 30, 2020 from $50.6 million for the same period last year,
mainly due to lower Adjusted EBITDA1 of $10.5 and a reduction of $6.3 million from the change in operating assets
and liabilities, as 2019 benefited by the collection of Juice and
Mediative accounts receivable.
As at September 30, 2020, the
Company had $153.9 million of total
debt, compared to $156.4 million as
at December 31, 2019. As at
September 30, 2020, the Company had
($24.0) million net debt excluding
lease obligations1, compared to $54.1 million net debt excluding lease
obligations as at December 31,
2019.
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
12, 2020 to discuss third quarter 2020 results. The call may be
accessed by dialing 416-695-6725 within the Toronto area, or 1-866-696-5910 outside of Toronto,
Passcode # 8902057.
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 November
11, 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 November 11, 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.
1) 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.
|
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. 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, business acquisitions, debt principal
reductions and other sources and uses of cash, which are disclosed
on page 17 of this 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 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 11 of the November
11, 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 of 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
|
September 30,
2020
|
December 31,
2019
|
Exchangeable debentures
|
$
100,433
|
$
98,537
|
Lease obligations
|
53,507
|
57,885
|
Total debt
|
$
153,940
|
$ 156,422
|
Lease obligations
|
(53,507)
|
(57,885)
|
Cash
|
(124,475)
|
(44,408)
|
Net debt excluding
lease obligations
|
$
(24,042)
|
$
54,129
|
SOURCE Yellow Pages Limited