Yellow Pages Limited Reports Third Quarter 2015 Financial Results
- Digital revenues grew 12.5% year-over-year to reach $127.8 million for the three-month period ended September 30, 2015. For the third quarter of 2015, digital revenues represented 60.7% of total revenues.
- EBITDA adjusted for restructuring and special charges (“Adjusted EBITDA”), totaled $63.8 million for the three-month period ended September 30, 2015, as compared to $75.3 million the year prior. The Adjusted EBITDA margin reached 30.3% for the third quarter ended September 30, 2015, as compared to 34.5% for the same period last year.
- The Company acquired 27,200 new customers during the twelve-month period ended September 30, 2015, up from 20,200 new customers the year prior. The customer renewal rate remained stable year-over-year at 85%.
- Total organic digital visits grew 11.8% year-over-year to reach 123.1 million for the three-month period ended September 30, 2015. This compares to 110.2 million visits made to the Company’s network of digital properties over the same period last year.
- The Company anticipates making a total principal mandatory redemption payment of $66.1 million on its 9.25% Senior Secured Notes (the “Notes”) on November 30, 2015. Principal mandatory redemption payments will total $100.3 million in 2015, reducing the outstanding balance of Notes to $406.7 million as at November 30, 2015.
Montreal (Quebec), November 11, 2015 — Yellow Pages Limited (TSX: Y) (the “Company”) released its operational and financial results today for the third quarter ended September 30, 2015, announcing continued progress in its transformation into Canada’s leading local digital company.
“We are on track to returning Yellow Pages to revenue and EBITDA growth in 2018,” said Julien Billot, President and Chief Executive Officer of Yellow Pages. “With 246,000 customers purchasing our marketing solutions, Yellow Pages is best positioned to champion Canada’s local digital economy. We will continue to actively leverage our unique market positioning to empower Canadian users and merchants and provide them with effective offerings to interact and transact in an evolving digital marketplace.”
Third Quarter 2015 Financial Results
On a consolidated basis, revenues for the three-month period ended September 30, 2015 totaled $210.6 million. This represents a year-over-year decline of 3.6% relative to revenues of $218.4 million as at the same period last year.
Digital revenues grew 12.5% year-over-year to total $127.8 million for the three-month period ended September 30, 2015, as compared to $113.6 million the year prior. Growth in digital revenues was driven by the acquisition of the ComFree/DuProprio Network (“CFDP”) on July 1, 2015, in addition to accelerated customer acquisition and growth in digital spending among renewing customers. For the quarter ended September 30, 2015, digital revenues represented 60.7% of total revenues, up from 52% during the same period last year.
Print revenue decline rates continue to show signs of stabilization. Print revenues decreased 21% year-over-year to reach $82.8 million for the three-month period ended September 30, 2015. The stabilization in print revenue decline rates continues to be sustained by content enhancement and pricing initiatives geared at encouraging renewal of print advertising spending among customers.
Adjusted EBITDA totaled $63.8 million for the three-month period ended September 30, 2015, as compared to $75.3 million the year prior. Adjusted EBITDA for the third quarter of 2015 was principally impacted by revenue pressure and a change in product mix, partly offset by benefits realized from cost saving initiatives. The Adjusted EBITDA margin for the third quarter of 2015 reached 30.3%, as compared to 34.5% for the same period in 2014.
“The Return to Growth Plan has strengthened the Company’s financial profile,” said Ginette Maillé, Chief Financial Officer of Yellow Pages. “Long-term, sustainable growth in digital revenues is being supported by accelerated customer acquisition and an enhanced merchant offering, as well as Yellow Pages’ growing presence within new search verticals and national channels. Complemented by a reduction in investment spending and the deployment of cost saving initiatives, declines in EBITDA are diminishing and helping support free cash flow generation, debt repayment and a stronger capital structure.”
Net earnings for the third quarter of 2015 reached $13.2 million, as compared to $26.5 million for the same period last year, principally impacted by lower Adjusted EBITDA and higher restructuring and special charges. For the third quarter ended September 30, 2015, the Company recorded basic earnings per share of $0.49. This compares to basic earnings per share of $0.98 for the same period last year.
Free cash flow for the three-month period ended September 30, 2015 totaled $34.6 million, as compared to $37.6 million during the same period in 2014. The change in free cash flow is mainly attributable to lower Adjusted EBITDA, partly offset by net income taxes received of $6.9 million following the receipt of a previously announced tax settlement. This compares to net income taxes paid of $7.1 million during the third quarter of 2014.
Net debt decreased to $455.8 million as at September 30, 2015. This compares to net debt of $494.1 million as at December 31, 2014. The Company will make a $66.1 million principal mandatory redemption payment on the Notes on November 30, 2015 (the “November Payment”), bringing total principal mandatory redemption payments in 2015 to $100.3 million. Following the November Payment, the Company will hold $406.7 million of Notes outstanding, having repaid $393.3 million since the Notes’ inception on December 20, 2012.
“Enhancements made to Yellow Pages’ consumer and merchant value proposition are allowing us to deliver a strengthened operational and financial profile,” continued Mr. Billot. “Our network of media properties is hosting richer, more verticalized content and user experiences. Coupled with accelerated customer acquisition and an improved end-to-end customer experience, we have grown adoption and usage of our digital properties, while significantly reducing declines in our customer count. These achievements are key drivers, and thereby bring us closer, to returning Yellow Pages to revenue and EBITDA growth.”
Strengthening its Media Assets
- Total digital visits, which measures the number of visits made across the YP, YP Shopwise, YP Dine, RedFlagDeals, Canada411, Bookenda and dine.TO online and mobile properties, grew to 123.1 million for the three-month period ended September 30, 2015. This represents a year-over-year growth of 11.8% relative to 110.2 million visits made on the Company’s network of digital properties during the same period last year.
- Yellow Pages owns one of Canada’s richest and most comprehensive databases of local information. YP’s network of digital properties hosts over 1.8 million business listings, alongside a growing base of diversified editorials to help Canadians discover their neighbourhoods. Recognizing the richness of Yellow Pages’ content, Apple Maps has started syndicating YP’s business information across its Canadian search engine results pages. Syndicated information will include addresses, phone numbers, hours of operations, geo-coordinates, website URLs, photos, ratings and reviews. Yellow Pages will also receive brand attribution on Apple Maps, helping promote increased adoption of YP’s digital properties and enhanced return on investment for merchants advertising on the Company’s media.
Enhancing its Customer Value Proposition
- The Company’s customer count totaled 246,000 as at September 30, 2015, as compared to 260,000 as at the same period last year. This represents a customer count decline of 14,000 during the twelve-month period ended September 30, 2015, a significant improvement from a customer count decrease of 23,000 the year prior.
- Customer acquisition for the twelve-month period ended September 30, 2015 totaled 27,200, an acceleration relative to 20,200 the year prior. Sales incentive programs, alongside an enhanced customer relationship management platform, a growing acquisition sales team and the introduction of the Presence suite of digital solutions, have played a key role in accelerating customer acquisition during seasonally slower sales periods.
- For the twelve-month periods ended September 30, 2015 and 2014, renewal among Yellow Pages’ customers remained stable at 85%. The Company’s customer renewal rate continues to land ahead of internal expectations, supported by the delivery of systems, processes and technologies that enhance customers’ sales, service and digital fulfillment experience.
- As the Company advances in its digital transformation and strengthens its offerings to audiences and merchants Canada-wide, material interdependencies between Yellow Pages’ information technology, strategy and marketing functions have been created. In addition, legacy systems and platforms are in the process of being decommissioned to best respond to the Company’s growing digital operations. In light of these dynamics, and to promote continued success in the execution of its Return to Growth Plan, Yellow Pages has undertaken a comprehensive organizational review (the “Corporate Realignment”) to build a leaner, agile and more collaborative organization. The Corporate Realignment reduced the Company’s workforce by approximately 300 during the third and fourth quarters of 2015, principally affecting roles that have been integrated within other functions or that are no longer aligned with Yellow Pages’ digital reality.
Yellow Pages Limited will hold an analyst and media call at 2 p.m. (Eastern Time) on November 11, 2015 to discuss third quarter 2015 results. The call may be accessed by dialing (416) 340-2216 within the Toronto area, or 1 866 223-7781 outside of Toronto.
The call will be simultaneously webcast on the Company’s website at https://corporate.yp.ca/en/yellow-pages-news/events/2015-third-quarter-earnings-release/.
The conference call will be archived in the Investors section of the site at https://corporate.yp.ca/en/investors/financial-events-presentations/.
The conference passcode is 9361319.
About Yellow Pages Limited
Yellow Pages Limited (TSX: Y) is a Canadian digital media and marketing solutions company that supports local economies by helping neighbourhood businesses reach new customers and foster stronger relationships with existing clients through its various media and products. Yellow Pages holds some of Canada’s leading local online properties including YP.ca™, RedFlagDeals.com™, Canada411.ca, Bookenda.com, dine.TO, DuProprio.com, ComFree.com and YP NextHome. The Company also holds the YP, YP Shopwise, YP Dine, RedFlagDeals, Canada411, Bookenda, DuProprio, ComFree and YP NextHome mobile applications and Yellow Pages™ print directories. In addition, Yellow Pages is a leader in national digital advertising through Mediative, a division of Yellow Pages devoted to digital marketing and performance media services for national-scale agencies and customers. More at 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 11, 2015, 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 6 of our November 11, 2015 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.
Amanda Di Gironimo
Director, Corporate Planning and Investor Relations
Tel.: (514) 934-2680
Director, Public Relations and Corporate Communications
Tel.: (514) 934-2672