MONTREAL, Nov. 10,
2022 /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 nine
months ended September 30, 2022.
"Today we report continued strong profitability and yet more
progress toward revenue stability," said David A. Eckert, President and CEO of Yellow
Pages Limited.
Eckert commented on the key developments:
- Ever closer to revenue stability. "For the eighth
consecutive quarter since COVID-19 hit, and the thirteenth of the
last fifteen quarters overall, we report a favorable 'bending of
the revenue curve' in Q3, with a better rate of change in revenue
than reported for the previous quarter."
- Strong quarterly earnings. "Our Adjusted
EBITDA2 for the quarter was 39.8% of revenue, even
higher than last year's third quarter, despite our continued,
productive investments in revenue initiatives and evolving product
mix."
- Cash to Shareholders and to Pension Plan. "On
October 4, 2022, we completed the
previously announced plan of arrangement. The Company used
$100 million of discretionary cash to
buy back the Company's shares and contributed $12 million of the planned $24 million voluntary contributions to the
Defined Benefit Pension Plan (the "Pension Plan"). The remaining
voluntary contributions to the Pension Plan will be made by the end
of the year as necessitated by the plan of arrangement. In
addition, consistent with our previously announced
deficit-reduction plan, in the third quarter of 2022, we made
$1 million of voluntary incremental
payments toward our Pension Plan's wind-up deficit."
- Healthy cash balance. "Even after the disbursements to
shareholders and the Pension Plan, our cash balance at the end of
October was approximately $39
million."
- Quarterly dividend declared. "Our Board has declared a
dividend of $0.15 per common share,
to be paid on December 15, 2022 to
shareholders of record as of November 24,
2022."
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,
|
|
2022
|
2021
|
2022
|
2021
|
Revenues
|
$66,310
|
$70,920
|
$203,683
|
$219,022
|
Adjusted
EBITDA2
|
$26,390
|
$26,617
|
$75,589
|
$77,640
|
Adjusted EBITDA
margin2
|
39.8 %
|
37.5 %
|
37.1 %
|
35.4 %
|
Earnings before income
taxes
|
$22,209
|
$19,004
|
$59,467
|
$43,990
|
Net earnings
|
$16,693
|
$13,747
|
$44,001
|
$31,900
|
Basic earnings per
share
|
$0.66
|
$0.52
|
$1.72
|
$1.21
|
Diluted earnings per
share
|
$0.60
|
$0.51
|
$1.64
|
$1.19
|
CAPEX2
|
$1,282
|
$1,269
|
$4,018
|
$3,854
|
Adjusted EBITDA less
CAPEX2
|
$25,108
|
$25,348
|
$71,571
|
$73,786
|
Adjusted EBITDA less
CAPEX margin2
|
37.9 %
|
35.7 %
|
35.1 %
|
33.7 %
|
Cash flows from
operating activities
|
$20,906
|
$24,685
|
$50,120
|
$75,804
|
|
|
(1)
|
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.
|
|
|
(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 interim condensed consolidated statements of
income. Adjusted EBITDA, Adjusted EBITDA margin, CAPEX, 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, 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.
|
Third Quarter of 2022 Results
- Total revenues decreased 6.5% year-over-year and amounted to
$66.3 million for the
three-month period ended September 30,
2022, an improvement from the decrease of 6.7% reported last
quarter.
- Adjusted EBITDA less CAPEX1 totalled $25.1 million and the EBITDA less CAPEX
margin1 was 37.9%.
- Net earnings increased to $16.7
million, or to $0.60 per
diluted share.
Financial Results for the
Third Quarter of 2022
Total revenues for the third quarter ended September 30, 2022 decreased by 6.5% to
$66.3 million, as compared to
$70.9 million for the same period
last year. The decrease in revenues is mainly due to the decline of
our higher margin 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.
The decline rates for total revenues, digital revenues and print
revenues all improved significantly year-over-year. Total revenue
decline of 6.5% this quarter compares to a decline of 11.7%
reported for the same period last year. Digital revenue decline of
5.0% this quarter compares to a decline of 10.3% reported for the
same period last year. Print revenue decline of 11.7% this quarter
compares to a decline of 16.0% reported for the same period last
year. These improvements were due to better spend per customer,
increased renewal rates as well as improvement in customer claims.
The improved customer spend per customer is due in part to
increased pricing.
Adjusted EBITDA1 decreased by $0.2 million or 0.9% to $26.4 million for the three-month period ended
September 30, 2022, compared to
$26.6 million for the same period
last year. The Adjusted EBITDA margin1 increased by 2.3%
to 39.8% for the third quarter of 2022 compared to 37.5% for the
same period last year. The decrease in Adjusted EBITDA is the
result of revenue pressures as well as ongoing investments in
our tele-sales force capacity, partially offset by price increases,
the efficiencies from optimization in cost of sales, reductions in
other operating costs including reductions in our workforce and
associated employee expenses, the decrease in bad debt expense and
the decrease in cash-settled stock-based compensation expense.
Revenue pressures, coupled with increased headcount in our
salesforce partially offset by continued optimization, will
continue to cause some pressure on margin in upcoming quarters.
Adjusted EBITDA less CAPEX decreased by $0.2 million or 0.9% to $25.1 million for the three-month period ended
September 30, 2022, compared to
$25.3 million for the same period
last year. The decrease is driven by the decrease in Adjusted
EBITDA. The adjusted EBITDA less CAPEX margin has increased to
37.9% for the third quarter of 2022 from 35.7% for the same period
last year.
Net earnings increased to $16.7
million for the three-month period ended September 30, 2022 compared to net earnings of
$13.7 million, for the same period
last year. The increase in net earnings of $3.0 million for the three-month period ended
September 30, 2022, compared to the
same period last year, is explained principally by the decrease in
Adjusted EBITDA1 and higher provision for income taxes,
being more than offset by decreases in depreciation and
amortization, restructuring and other charges and financial
charges.
Cash flows from operating activities decreased by $3.8 million to $20.9
million for the three-month period ended September 30, 2022. The decrease is mainly due to
lower Adjusted EBITDA of
$0.2 million and to a decrease of
$6.2 million from the change in
operating assets and liabilities, partially offset by income taxes
received of $0.4 million, lower
funding of post-employment benefit plans of $0.6 million, lower stock-based compensation cash
payments of $1.0 million and lower
restructuring and other charges paid of $0.8
million. The change in operating assets and liabilities is
mainly due to the timing in the collection of trade receivables and
the timing of payment of trade payables as well as the impact of
the share price on cash settled share-based compensation.
As at September 30, 2022, the
Company had $144.7 million of
cash.
(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 interim condensed
consolidated statements of income. Adjusted EBITDA, Adjusted EBITDA
margin, CAPEX, Adjusted EBITDA less CAPEX, Adjusted EBITDA less
CAPEX margin 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.
|
Plan of Arrangement
On August 4, 2022, the Board
approved a distribution to shareholders of approximately
$100.0 million by way of a share
repurchase from all shareholders pursuant to a statutory
arrangement under the Business Corporations Act (British Columbia) (the ''Arrangement''). Under
the Arrangement, the Company will also advance the previously
announced voluntary incremental cash contributions to the Defined
Benefit Pension Plan's (the "Pension Plan") wind-up deficit by an
amount of $24.0 million during the
year ending December 31,
2022.
The shareholders of the Company (the "Shareholders") approved
the Arrangement at a special meeting of the Shareholders held on
September 23, 2022 and the Company
subsequently obtained the final order from the Supreme Court of
British Columbia approving the
Arrangement on
September 27, 2022. On October 4, 2022, the Company repurchased from
shareholders pro rata an aggregate of 7,949,125 common shares at a
purchase price of $12.58 per share
pursuant to the plan of arrangement. During October 2022, also pursuant to the plan of
arrangement, the Company advanced $12.0
million to the Pension Plan's wind-up deficit and will
advance the additional
$12.0 million prior to December 31, 2022.
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
10, 2022 to discuss third quarter 2022 results. The call may be
accessed by dialing 416-695-6725 within the Toronto area, or 1-866-696-5910 outside of Toronto,
Passcode 2713953#. 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 and results of operations and businesses of
YP (including, without limitation, payment of a cash dividend per
share per quarter to its common shareholders). These
statements are forward-looking as they are based on our current
expectations, as at November 9,
2022, 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
9, 2022 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. 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 14 of our November
9, 2022 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-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
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 9 of the November
9, 2022 MD&A for a reconciliation of Adjusted EBITDA less CAPEX.
SOURCE Yellow Pages Limited