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Montreal (Quebec), November 12, 2024 — 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, 2024.
“In the third quarter, we report continued progress toward revenue stability, along with good profitability and a healthy cash balance,” said David A. Eckert, President and CEO of Yellow Pages Limited.
Eckert commented on the key developments:
Continued climb toward revenue stability. “For the third consecutive quarter, we report a favorable ‘bending of the revenue curve’ in Q3, as our rate of change in revenue was better than the change reported for the previous quarter.”
Progress on revenue initiatives. “We are pleased with our progress on metrics underlying our revenue generation, including the size of our sales force, as well as a deceleration of the customer count decline rate fueled by an increase in new customer acquisitions, which were 36% higher than in the same quarter last year. We believe these fundamentals bode well for our medium- and long-term future.”
Solid quarterly earnings. “Our Adjusted EBITDA2 for the quarter was on track at 23.8% of revenue, even with our continued investments in revenue initiatives, including the steady continued expansion of our sales force.”
Healthy cash balance. “Our steady cash generation has grown cash on hand to approximately $43 million at the end of October.”
Pension plan funding on track. “Consistent with our deficit-reduction plan announced in May 2021, in the third quarter of 2024 we made $1.5 million of voluntary incremental payments toward our Defined Benefit Pension Plan’s wind-up deficit.”
Quarterly dividend declared. “Our Board has declared a dividend of $0.25 per common share, to be paid on December 16, 2024 to shareholders of record as of November 27, 2024.”
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 2024 Results
Total Revenues decreased 9.4% year-over-year and amounted to $52.6 million for the three-month period ended September 30, 2024, an improvement from the decrease of 11.0% reported last quarter.
Adjusted EBITDA less CAPEX1 totalled $12.2 million and the EBITDA less CAPEX margin1 was 23.2%.
Net income amounted to $6.3 million, or to $0.46 diluted income per share.
Financial Results for the Third Quarter of 2024
Total revenues for the third quarter ended September 30, 2024 decreased by 9.4% to $52.6 million, as compared to $58.1 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.
Total digital revenues decreased 8.7% year-over-year and amounted to $42.6 million for the three-month period ended September 30, 2024, as compared to $46.7 million for the same period last year. The revenue decline was mainly attributable to a decrease in digital customer count and to a lesser extent, a decrease in the average spend per customer.
Total print revenues decreased 12.4% year-over-year and amounted to $10.0 million for three-month period ended September 30, 2024. The revenue decline is mainly due to the decrease in the number of print customers while the spend per customer has improved year-over-year driven by price increases.
The decline rate of revenues improved during the quarter ended September 30, 2024, compared to the same period last year. The improvement is partly due to the deceleration of the customer count decline rate fueled by an increase in new customer acquisitions partially offset by an increase in churn. In addition, 2023 decline rates were negatively impacted by customer claim rates remaining stable in 2023, while 2022 benefited from a substantial improvement in customer claims.
Adjusted EBITDA1 decreased to $12.5 million or 23.8% of revenues in the third quarter ended September 30, 2024, relative to $17.9 million or 30.9% of revenues for the same period last year. The decrease in Adjusted EBITDA and Adjusted EBITDA margin for the third quarter of 2024 is the result of revenue pressures, the ongoing investment in our tele-sales force capacity and increase in bad debt expense, partially offset by optimizations in cost of sales and reductions in other operating costs including reductions in our workforce and associated employee expenses including variable compensation. Revenue pressures, partially offset by continued optimizations, will continue to cause some pressure on margins in upcoming quarters.
Adjusted EBITDA less CAPEX decreased by $5.0 million or 29.1% to $12.2 million during the third quarter of 2024, compared to $17.2 million during 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 year-over-year, due in part, to the nature of the Information Technology (“IT”) spend, whereby, more of the expense was classified as operating rather than capital.
Net income for the three-month period ended September 30, 2024 amounted to $6.3 million as compared to net income of $10.1 million for the same period last year due to lower Adjusted EBITDA, partially offset by the decrease in income taxes.
Cash flows from operating activities increased by $1.2 million to $11.5 million for the three-month period ended September 30, 2024 from $10.3 million for the same period last year. The increase is mainly due to lower stock-based compensation cash payments of $4.2 million, an increase of $1.8 million from changes in operating assets and liabilities and lower income taxes paid of $0.6 million, partially offset by lower Adjusted EBITDA of $5.4 million. 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.
(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 12, 2024 to discuss thirdquarter 2024 results. The call may be accessed by dialing 416-695-6725 within the Toronto area, or 1-866-696-5910 outside of Toronto, Passcode 6613383#. 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 November 11, 2024, 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 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 11, 2024 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