MONTREAL, Feb. 15,
2023 /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 year ended December 31, 2022.
"We are pleased with our fourth quarter and full year results
which reflect sustained strong profitability and cash generation
and more progress toward revenue stability," said David A. Eckert, President and CEO of Yellow
Pages Limited.
Eckert commented on the key developments:
- Strong quarterly earnings. "Our Adjusted
EBITDA2 for the quarter and full year was 32.5% and
36.0% of revenue, respectively, despite our continued, productive
investments in revenue initiatives and evolving product mix."
- Cash to Shareholders and to Pension Plan. "During the
quarter, we completed the previously announced plan of arrangement,
distributing $100.0 million to
shareholders and $24.0 million of
voluntary contributions to our Defined Benefit Pension Plan's
wind-up deficit, in addition to our previously announced
$1.0 million of voluntary incremental
payments toward our Defined Benefit 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
January was approximately $50
million."
- Quarterly dividend declared. "Our Board has declared a
dividend of $0.15 per common share,
to be paid on March 15, 2023 to
shareholders of record as of February 24,
2023."
- Ever closer to revenue stability. "For the ninth
consecutive quarter since COVID-19 hit, and the fourteenth of the
last sixteen quarters overall, we report a favorable 'bending of
the revenue curve' in Q4 2022, with a better rate of change in
revenue than reported for the previous quarter."
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 year
ended December 31,
|
|
2022
|
2021
|
2022
|
2021
|
Revenues
|
$64,595
|
$68,624
|
$268,278
|
$287,646
|
Adjusted
EBITDA2
|
$20,979
|
$24,360
|
$96,568
|
$102,000
|
Adjusted EBITDA
margin2
|
32.5 %
|
35.5 %
|
36.0 %
|
35.5 %
|
Income before income
taxes
|
$16,665
|
$15,924
|
$76,132
|
$59,914
|
Net income
|
$29,431
|
$38,735
|
$73,432
|
$70,635
|
Basic income per
share
|
$1.64
|
$1.48
|
$3.10
|
$2.68
|
Diluted income per
share
|
$1.63
|
$1.46
|
$3.02
|
$2.64
|
CAPEX2
|
$986
|
$1,220
|
$5,004
|
$5,074
|
Adjusted EBITDA less
CAPEX2
|
$19,993
|
$23,140
|
$91,564
|
$96,926
|
Adjusted EBITDA less
CAPEX margin2
|
31.0 %
|
33.7 %
|
34.1 %
|
33.7 %
|
Cash flows (used in)
from operating activities*
|
$(620)
|
$28,775
|
$49,500
|
$104,579
|
*Includes voluntary
contributions to the Defined Benefit Pension Plan (the "Pension
Plan") of $24.0 million, made during the fourth quarter of 2022
pursuant to the plan of arrangement (the
"Arrangement").
|
(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 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 at the end of
this document for more details.
|
Fourth Quarter of 2022 Results
- Total revenues decreased 5.9% year-over-year and amounted to
$64.6 million for the three-month
period ended December 31, 2022, an
improvement from the decrease of 6.5% reported last quarter.
- Adjusted EBITDA less CAPEX1 totalled $20.0 million and the EBITDA less CAPEX
margin1 was 31.0%.
- Net income decreased to $29.4
million, or to $1.63 per
diluted share.
- Cash flows from operating activities decreased year-over-year
mainly due to the voluntary funding contribution payment of
$24.0 million to the Pension Plan
pursuant to the Arrangement.
Financial Results for the
Fourth Quarter of 2022
Total revenues for the fourth quarter ended December 31, 2022 decreased by 5.9% to
$64.6 million, as compared to
$68.6 million for the same period
last year. The decrease in revenues 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.
The decline rates for total revenues, digital revenues and print
revenues all improved significantly year-over-year. Total revenue
decline of 5.9% this quarter compares to a decline of 10.5%
reported for the same period last year. Digital revenue decline of
4.3% this quarter compares to a decline of 8.7% reported for the
same period last year. Print revenue decline of 11.7% this quarter
compares to a decline of 16.5% reported for the same period last
year. These improvements were due to better spend per customer in
digital, increased renewal rates as well as improvement in customer
claims. The improved spend per customer is due in part to increased
pricing.
Adjusted EBITDA1 decreased to $21.0 million or 32.5% of revenues in the fourth
quarter ended December 31, 2022,
relative to $24.4 million or 35.5% of
revenues for the same period last year. The decrease in Adjusted
EBITDA and Adjusted EBITDA margin1 is the result of
revenue pressures, ongoing investments in our tele-sales force
capacity, the increase in cash-settled stock-based
compensation expense due to movements in YP's share
price and lower wage subsidies received, partially offset by price
increases, efficiencies from optimization in cost of sales and
reductions in other operating costs including reductions in our
workforce and associated employee expenses and the decrease in bad
debt 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 $3.1 million to $20.0
million for the fourth quarter of 2022, compared to
$23.1 million for the same period
last year. The decrease in Adjusted EBITDA less CAPEX for the
three-month period ended December 31,
2022 is mainly due to lower Adjusted EBITDA partially offset
by lower capital expenditures.
Net income for the three-month period ended December 31, 2022 amounted to $29.4 million as compared to net income of
$38.7 million for the same period
last year. The decrease is mainly attributable to higher
recognition of previously unrecognized tax attributes and temporary
differences in 2021. Income before taxes increased from
$15.9 million for the fourth quarter
of 2021 to $16.7 million for the
three-month period ended December 31,
2022, explained principally by lower Adjusted EBITDA being
more than offset by decreases in restructuring and other charges,
depreciation and amortization and financial charges.
Cash flows from operating activities decreased by $29.4 million to $(0.6)
million for the three-month period ended December 31, 2022 from $28.8 million for the same period last year. The
decrease is mainly due to increased funding of post-employment
benefits plans of $23.5 million,
lower Adjusted EBITDA of $3.4
million, and a decrease of $3.0
million from the change in operating assets and liabilities,
partially offset by income taxes received of $0.1 million, and lower restructuring and other
charges paid of $0.6 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 stock-based compensation.
(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 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 at the end of this document for more
details.
|
Financial Results for the Year Ended December 31, 2022
Total revenues for the year ended December 31, 2022 decreased by 6.7% to
$268.3 million, as compared to
$287.6 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.
For the year ended December 31,
2022 Adjusted EBITDA1 decreased by $5.4 million or 5.3% to $96.6 million, compared to $102.0 million for the same period last year. The
adjusted EBITDA margin1 increased during the year ended
December 31, 2022 to 36.0%, compared
to 35.5% for the same period last year. The decrease in Adjusted
EBITDA for the year ended December 31,
2022, 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.
For the year ended December 31,
2022 Adjusted EBITDA less CAPEX1 decreased by
$5.4 million or 5.5% to $91.6 million, compared to $96.9 million for the same period last year. The
decrease is driven by the decrease in Adjusted EBITDA. The adjusted
EBITDA less CAPEX margin1 increased during the period
ended December 31, 2022 to 34.1%
compared to 33.7% for the same period last year.
Net income increased to $73.4
million for the year ended December
31, 2022 compared to net income of $70.6 million, for the same period last year due
to higher income before income taxes partially offset by higher
income taxes due to lower recognition of previously unrecognized
tax attributes and temporary differences. The increase in income
before income taxes for the year-ended
December 31, 2022 of $16.2 million is explained by lower Adjusted
EBITDA, being more than offset by the decrease in financial charges
due to lower debt and higher cash balances as well as the decrease
in depreciation and amortization and restructuring and other
charges. Furthermore, the year-ended December 31, 2021 was impacted by the loss on the
early repayment of debt of $7.8
million.
Cash flows from operating activities decreased by $55.1 million to $49.5
million for the year ended December
31, 2022 from $104.6 million
last year. The decrease is mainly due to income taxes paid of
$7.8 million, of which $5.5 million related to the full year 2021 and
$2.3 million related to instalments
for 2022, increased stock-based compensation cash settlements of
$1.6 million, increased funding of
post-employment benefit plans of $24.6
million mainly pursuant to the Arrangement, lower Adjusted
EBITDA of $5.4 million, and by a
decrease of $21.4 million from the
change in operating assets and liabilities. 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. The first quarter of 2022 also benefited
from the cancellation of the forward contracts resulting in a
decrease in other receivables of $3.1
million.
As at December 31, 2022, the
Company had $43.9 million of
cash.
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 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
(including 388,082 shares held in treasury) at a purchase price of
$12.58 per share pursuant to the
Arrangement for a total of $101.0
million, including $1.0
million of transaction costs. The $101.0 million cash outlay was reduced by
$4.9 million for the cancellation of
388,082 of the Corporation's 1,298,994 shares held in Treasury for
a net cash outlay of $96.1 million.
Also pursuant to the Arrangement, the Company advanced $24.0 million to the Pension Plan's wind-up
deficit for the year ended December 31,
2022
(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 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 at the end of this document for more
details.
|
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
15, 2023 to discuss fourth 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 February 14,
2023, 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 February14, 2023 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 income 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, debt principal reductions and other sources and uses
of cash, which are disclosed on page 19 of our February
14, 2023 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 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 consolidated statements of
income. Refer to pages 8 and 14 of the February 14, 2023 MD&A for a reconciliation
of Adjusted EBITDA less CAPEX.
SOURCE Yellow Pages Limited