MONTREAL, Nov. 8, 2018 /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, 2018 and is announcing that the Company
will make a redemption payment of $115.4 million, including accrued and unpaid interest of
$0.9 million, on its senior secured notes on November 30, 2018.
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Financial Highlights
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(In thousands of Canadian dollars, except percentage, per share and
customer count information)
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For the three-month periods
ended September 30,
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For the nine-month periods
ended September 30,
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Yellow Pages Limited
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2018
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2017
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2018
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2017
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Revenues
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$130,150
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$175,696
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$452,676
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$549,419
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Adjusted EBITDA1
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$46,261
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$45,944
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$151,416
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$137,420
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Adjusted EBITDA1 margin
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35.5%
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26.1%
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33.4%
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25.0%
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Net earnings (loss)
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$27,125
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$(7,181)
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$42,852
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$(9,880)
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Basic earnings (loss) per share
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$1.03
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$(0.27)
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$1.62
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$(0.37)
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Diluted earnings (loss) per share
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$0.89
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$(0.27)
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$1.49
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$(0.37)
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CAPEX1
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$2,185
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$18,251
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$7,996
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$44,994
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Adjusted EBITDA less CAPEX1
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$44,076
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$27,693
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$143,420
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$92,426
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Cash flow from operating activities
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$35,895
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$37,941
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$92,877
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$92,568
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"This quarter, for the third quarter in a row, we are reporting dramatically increased EBITDA less CAPEX, which is 59% higher
than last year. We continue to concentrate on aligning our spending with the realities of our revenue and laying the
groundwork for profitable growth. We have accelerated the shedding of unprofitable or non-synergistic businesses and
revenues, to allow us to concentrate on creating long-term value and growth," said David A.
Eckert, President and CEO of Yellow Pages Limited.
Third Quarter 2018 Results
- Adjusted EBITDA less CAPEX1 increased by $16.4 million, to $44.1 million, despite a $45.5 million revenue decline relative to the third
quarter of 2017.
- Net earnings increased by $34.3 million, to $27.1 million or
$0.89 per diluted share.
- The Company's cash flows in the six months ended September 30,2018 and the net proceeds from
the sales of ComFree/DuProprio and RedFlagDeals.com™ will result in a redemption payment of $115.4
million, including accrued and unpaid interest of $0.9 million, on its 10.00% Senior
Secured Notes on November 30, 2018.
Segmented Information
The Company's operations are divided into the following four segments:
- YP – digital and traditional marketing solutions, including owned and operated media, provided to small and medium sized
enterprises ("SMEs"). This segment included the operations of RedFlagDeals.com™, Canada's
leading provider of online and mobile promotions, deals, coupons and shopping forums, until its sale on August 22, 2018.
- Agency – national advertising services to brands and publishers, primarily through Mediative and JUICE, as well as Totem
until its divestiture as of May 31, 2018. Subsequent to the quarter ended September 30, 2018, the Company decided to exit the Agency segment by the end of the year through the
liquidation of its Mediative division and sale of its JUICE assets excluding working capital. The Company has entered into a
binding letter of intent (LOI) for the sale of its JUICE assets excluding working capital with the expected closing date of
December 31, 2018.
- Real Estate – media and expertise to help Canadians buy and sell their homes. Fully divested in July 2018: ComFree/DuProprio (CFDP) as of July 6, 2018 for cash consideration
of $51 million on a cash free debt free basis and Yellow Pages NextHome as of July 23, 2018.
- Other – 411.ca and included local lifestyles magazines specific to the Western Canadian market until the divestiture of
Western Media Group as of May 31, 2018.
An overview of each segment and the performance of each segment for the three and nine-month periods ended September 30, 2018 can be found in the November 8, 2018 Management's Discussion
and Analysis.
Financial Results for the Third Quarter of 2018
Total revenues for the three-month period ended September 30, 2018 decreased by $45.5 million or 25.9% year-over-year and amounted to $130.2 million as compared
to $175.7 million for the same period last year. The decline in total revenues for the three-month
period ended September 30, 2018 was due to both digital and print revenue declines in all segments and to the divestitures
that occurred in the second and third quarters of 2018.
Despite an overall $45.5 million decrease in revenues and pressures on margins, Adjusted EBITDA
increased by $0.3 million or 0.7% to $46.3 million during the third
quarter of 2018, compared to $45.9 million during the third quarter of 2017. Our Adjusted EBITDA
margin for the third quarter of 2018 was 35.5% compared to 26.1% for the third quarter of 2017. The increase in Adjusted EBITDA
and Adjusted EBITDA margin for the third quarter ended September 30, 2018 was mainly the result of
our focus on profitability of our products and services, reductions in our cost structure including reductions in our workforce
and associated employee costs, reductions in the Company's office space footprint, and other spending reductions across the
Company.
Adjusted EBITDA less CAPEX1 increased by $16.4 million or 59.2% to $44.1 million during the third quarter of 2018, compared to $27.7 million during
the third quarter of 2017. The increase in Adjusted EBITDA less CAPEX1 for the three-month period ended September 30, 2018 was mainly impacted by the result of higher Adjusted EBITDA and decreased spending on
software development, office and computer equipment and leasehold improvements associated with office relocations.
The Company recorded net earnings of $27.1 million during the third quarter of 2018 as compared
to a net loss of $7.2 million during the third quarter of 2017. The improvement in net earnings is
mainly due to higher Adjusted EBITDA, decreased depreciation and amortization expenses, a gain on the sale of the assets related
to the operations of RedFlagDeals and a reversal of income tax provisions of $18.3 million recorded
with respect to previous taxation years.
Cash flows from operating activities decreased by $2.0 million to $35.9
million from $37.9 million for the third quarter period ended September 30, 2018 mainly due to lower change in operating assets and liabilities of $5.0 million, and increased payments for restructuring and other charges of $5.0 million, partially offset by lower interest paid of $7.0 million. The
lower interest paid is due to the fact that the Company's 10.00% Senior Secured Notes interest payments are semi-annual in the
second and fourth quarter of 2018 whereas the 9.25% Senior Secured Notes they replaced had quarterly interest payments.
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 8, 2018 to discuss third quarter 2018 results. The call may be
accessed by dialing 647-484-0475 within the Toronto area, or 1-888-220-8451 outside of
Toronto, with both the password #6221731. 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.ca, 411.ca and Bookenda.com. The Company also holds the YP, YP
Shopwise, YP Dine, Canada411, 411, Bookenda, and mobile applications and Yellow Pages print directories. In addition, Yellow
Pages is a leader in national advertising through its businesses devoted to servicing the marketing needs of large North American
brands, including Mediative and JUICE. 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,
results of operations and businesses of the Company. These statements are forward-looking as they are based on our current
expectations, as at November 8, 2018, 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 8, 2018 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.
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Non-IFRS Measures
In order to provide a better understanding of the results, the Company uses the terms Adjusted EBITDA and
Adjusted EBITDA margin. Adjusted EBITDA is defined as income from operations before depreciation and amortization,
impairment of intangible assets and goodwill, and restructuring and other charges (recovery), or revenues less operating
costs, as shown in Yellow Pages Limited's interim condensed consolidated statements of income (loss). Adjusted EBITDA
margin is defined as the percentage of Adjusted EBITDA to revenues. Adjusted EBITDA and Adjusted EBITDA 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 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 to value
companies in the media and marketing solutions industry as well as to evaluate the performance of a business.
The Company also uses Adjusted EBITDA less CAPEX, which is defined as Adjusted EBITDA, or revenues less operating costs,
as shown in Yellow Pages Limited's consolidated statements of income (loss), less CAPEX which we define as additions to
intangible assets and additions to property and equipment less lease incentives received all as reported in the Investing
Activities section of the Company's interim condensed consolidated statements of cash flows. Adjusted EBITDA less CAPEX
is a non-IFRS 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. We use Adjusted EBITDA less CAPEX to
evaluate the performance of our business as it reflects its ongoing profitability. We believe that certain investors
and analysts use Adjusted EBITDA less CAPEX to evaluate the performance of a business. Refer to the November 8, 2018
MD&A for a reconciliation of CAPEX.
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SOURCE Yellow Pages Limited
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