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Montreal (Quebec), November 9, 2023 — 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, 2023.


“In the third quarter, we continued to produce strong profitability and cash generation, despite headwinds in the global economy hindering our progress on the revenue front,” said David A. Eckert, President and CEO of Yellow Pages Limited.


Eckert commented on the key developments:


·     Healthy earnings. “Our Adjusted EBITDA2 for the quarter was 30.9% of revenue, despite our continued

investments in revenue initiatives, including the expansion of our sales force.”


·     Growing cash balance. “Our steady, strong cash generation has grown cash on hand to approximately

$76 million at the end of October.”


·     Continued progress on revenue initiatives. “The headwinds in the global economy contributed to a

challenging quarter for revenue. However, we remain pleased with our progress on underlying metrics,

including the size of our sales force, our rate of churn of customers, and our rate of gaining new

accounts. We believe these fundamentals bode well for our medium- and long-term future.”   


·     Quarterly dividend declared. “Our Board has declared a dividend of $0.20 per common share, to be

paid on December 15, 2023 to shareholders of record as of November 24, 2023.”


·     Quarterly funding of pension plan on track. “Consistent with our deficit-reduction plan announced in

May 2021, in the third quarter of 2023 we made $1.5 million of voluntary incremental payments toward

our Defined Benefit Pension Plan’s wind-up deficit.”


·     Cash to Shareholders and to Pension Plan by year-end. “As previously announced on October 19,

2023, our Board approved the use of discretionary cash of $50 million to buy back the Company’s shares

and $12 million to accelerate our planned voluntary contributions to the Defined Benefit Pension Plan,

as part of a plan of arrangement. We remain on track to complete the plan of arrangement by the end

of the year.”


Financial Highlights

 (In thousands of Canadian dollars, except percentage information and per share information) 



(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 at the end of this document for more details.



Third Quarter of 2023 Results

•      Total revenues decreased 12.4% year-over-year and amounted to $58.1 million for the three-month

period ended September 30, 2023 compared to the decrease of 6.5% reported for the same period

last year.

•      Adjusted EBITDA less CAPEX1 totalled $17.2 million and the EBITDA less CAPEX margin1 was 29.7%.

•      Net income amounted to $10.1 million, or to $0.56 per diluted share.


Financial Results for the Third Quarter of 2023

Total revenues for the third quarter ended September 30, 2023 decreased by 12.4% to $58.1 million, as compared to $66.3 million for the same period last year.


Total digital revenues decreased 10.6% year-over-year and amounted to $46.7 million for the three-month period ended September 30, 2023, as compared to $52.2 million for the same period last year. The revenue decline for the three-month period ended September 30, 2023, was mainly attributable to a decrease in digital customer count partially offset by an increase in spend per customer.


Total print revenues decreased 19.1% year-over-year and amounted to $11.4 million for three-month period ended September 30, 2023. The revenue decline for the three-month period ended September 30, 2023, is mainly attributable to the decrease in the number of print customers and to a lesser extent, a decrease in spend per customer.


The decline rate of revenues increased year-over-year and compared to prior quarter. The higher decline rate is attributable, in part, to (a) the headwinds in the global economy, whereby, customer renewal rates have remained strong but stable while the improvements in average spend per customer has slowed as customers look to optimize their spend and (b) a cybersecurity incident which resulted in the Company’s operations and IT systems being suspended for approximately three weeks of the second quarter of 2023.


For the three-month period ended September 30, 2023 Adjusted EBITDA decreased by $8.5 million or 32.1% to $17.9 million, compared to $26.4 million for the same period last year. The adjusted EBITDA margin decreased for the third quarter of 2023 to 30.9%, compared to 39.8% for the same period last year. The decrease in Adjusted EBITDA and Adjusted EBITDA margin for the three-month period ended September 30, 2023 is the result of pressures from lower revenues, change in product mix, the ongoing investments in our tele-sales force capacity, as well as the impact of the Company’s share price on cash settled stock-based compensation expense, partially offset by price increases, the efficiencies from optimization in cost of sales and reductions in other operating costs including reductions in our workforce and associated employee expenses, a decrease in bad debt expense and lower variable compensation expense. Revenue pressures, coupled with increased headcount in our salesforce partially offset by continued optimization, will continue to cause pressure on margins in upcoming quarters.


For the three-month period ended September 30, 2023 Adjusted EBITDA less CAPEX decreased by $7.9 million or 31.4% to $17.2 million, compared to $25.1 million for the same period last year. The decrease in Adjusted EBITDA less CAPEX and Adjusted EBITDA less CAPEX margin is driven by the decrease in Adjusted EBITDA, partially offset by the decrease in CAPEX spend. The decrease in CAPEX spend is partly due to the nature of Information Technology spend whereby more of the spend was classified as operating versus capital in nature.


Net income decreased to $10.1 million for the three-month period ended September 30, 2023 compared to $16.7 million for the same period last year.


Cash flows from operating activities decreased by $10.6 million to $10.3 million for the three-month period ended September 30, 2023. The decrease is mainly due to lower Adjusted EBITDA of $8.5 million, the increase in stock-based compensation cash settlements of $2.1 million and higher income taxes paid of $1.0 million, partially offset by an increase of $1.4 million from changes 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 payment of trade receivables as well as the impact of the share price on the cash settled stock-based compensation.


As at September 30, 2023, the Company had $69.8 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 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 November 9, 2023 to discuss third quarter 2023 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 and completion of the plan of arrangement).

These statements are forward-looking as they are based on our current expectations, as at November 8, 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 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, 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.


Contact:

Investors & Media

Franco Sciannamblo

Senior Vice-President and Chief Financial Officer

investors@yp.ca



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 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 12 of our November 8, 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 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 7 of the November 8, 2023 MD&A for a reconciliation of Adjusted EBITDA less CAPEX. 

 

Yellow Pages Limited Reports Third Quarter 2023 Financial and Operating Results and Declares a Cash Dividend1

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