CIBC reportYellow Media Inc.
In-line Q1 And Forward Tone - Buyback For 50 Mln.
Shares Is In The Works
We had anticipated a modest Q1 for YLO, and these results were largely in line, with the focus squarely on Directories after the deal to sell the Traders asset. With the stock getting hammered in recent months, management announced a material share buy-back program starting next week.
Q1 takeaways:
1) NCIB announced to purchase some 50 million shares over the next year;
2) Directories results modest, as expected;
3) Online revenues now represent ~25% of consolidated revenues, net of Verticals segment; and
4) Management outlook remains consistent.
Q1 revenues of $349.4 million were in-line with our $353.0 million estimate. Adjusted EBITDA of $190.0 million was also bang on our estimate of $189.7 million. Adjusted EPS of
.23 was bang on our estimate of
.23 and ahead of the Street of
.19.
YLO is performing as expected, with little sign of accelerating structural decline. The outsized yield is safe in the NT, and an NCIB should allay some pressure from record short positions. However, we remain at SP with a $5.50 target (from $6.50), lowering on conservatism given business risks.