Yellow Pages Q3 2024 Earnings Report

Yellow Pages EPS Results

• Actual EPS: C$0.46
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Yellow Pages Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Yellow Pages Announcement Details

• Quarter: Q3 2024
• Date: 11/12/2024
• Time: Before Market Opens
• Conference Call Date: Tuesday, November 12, 2024
• Conference Call Time: 8:30AM ET

Yellow Pages (TSE:Y) Ltd is a media and marketing solutions company in Canada, offering small and medium-sized enterprises (SMEs) services to help them connect with local consumers. The company has two reportable segments namely Yellow Pages and Other. It generates maximum revenue from the Yellow Pages segment.

Yellow Pages Q3 2024 Earnings Call Transcript

Key Takeaways

• Revenues decreased 9.4% year-over-year to $52.6 million in Q3 2024, an improvement from an 11% decline in the prior quarter.
• New customer acquisitions surged 36% year-over-year, helping to decelerate the overall customer count decline and bolster future revenue potential.
• Adjusted EBITDA fell 30.1% year-over-year to $12.5 million, with the margin contracting to 23.8% from 30.9% due to lower revenues and continued investment in telesales capacity.
• Cash on hand grew to approximately $43 million by the end of October, driven by steady cash generation and voluntary pension plan contributions.
• The Board declared a quarterly dividend of $0.25 per common share, payable December 16, 2024, to shareholders of record as of November 27, 2024.

Presentation

[Operator]

Good morning, ladies and gentlemen. Welcome to Yellow Pages Third Quarter 2024 Earnings Release Call. Today's conference call contains forward-looking information about Yellow Pages Outlook, objectives, and strategy. These statements are based on assumptions and are subject to important risks and uncertainties. Yellow Pages' actual results could differ materially from expectations discussed. The details of Yellow Pages' discussion regarding forward-looking information, including key assumptions and risks, can be found in Yellow Pages' management discussion and analysis for the third quarter of 2024. This call is being recorded and webcast, and all of the disclosure documents are available on the company's website and on SEDAR. I would now like to turn the meeting over to Mr. David Eckert, President and Chief Executive Officer. Please go ahead, sir.

[David Eckert, President and CEO at Yellow Pages]

Thank you very much, and good morning, everyone. Thank you for joining us for our Third Quarter Analyst Call. As usual, today I'm joined by Franco Sciannamblo, our Senior Vice President and Chief Financial Officer, and by Sherilyn King, our Senior Vice President of Sales, Marketing, and Customer Service. First, also, as usual, I'd like to make some overview comments, and then Franco will provide some details, and then we'd be happy to try to answer any questions you might have. Our third quarter was a good quarter as we continued to progress toward revenue stability and as we delivered good profitability and a very healthy cash balance. For the third consecutive quarter, we report a favorable bending of the revenue curve in the third quarter as our rate of change in revenue is better than the change reported in the previous quarter.

[David Eckert, President and CEO at Yellow Pages]

We're also particularly pleased with our progress on metrics that underlie our revenue generation, and especially the acquisition of new customers, which for the quarter were 36% higher than in the same quarter last year. We believe that that and other underlying fundamentals bode well for our medium and long-term future. We also delivered very solid quarterly earnings, which were Adjusted EBITDA for the quarter on track at 23.8% of revenue, even with our continued investments in revenue initiatives, including the steady continued expansion of our sales force. We also report today, as a result of very steady cash generation, that our cash on hand has grown to approximately CAD 43 million at the end of October. That's the end of October. We also continue to see the funding of our defined benefit pension plan to be on track, consistent with our deficit reduction plan that we announced in 2021.

[David Eckert, President and CEO at Yellow Pages]

the third quarter of 2024, we made CAD 1.5 million of voluntary incremental payments toward that plan's wind-up deficit during the quarter. Also, our board has declared a dividend of CAD 0.25 per common share to be paid on December 16th to shareholders of record as of November 27th. Overall, we're quite pleased. We feel we're on track, and we're optimistic about the future. I'd like to ask Franco Sciannamblo now to provide some more details, and then, as I said, we'll be happy to take any questions you might have. Thank you.

[Franco Sciannamblo, SVP and CFO at Yellow Pages]

Thanks, David, and good morning to everyone. Let me take you through our financial results for the third quarter ended September 30th, 2024. Starting with revenues, they decreased by CAD 5.5 million, or 9.4% year-over-year, and amounted to CAD 52.6 million for the third quarter, an improvement from the decrease of 11% reported last quarter. The year-over-year decrease in revenues is mainly due to the decline of our higher margin digital media and print products, and to a lesser extent, our lower margin digital services products, thereby creating pressure on our gross profit margins. For digital revenues, they decreased 8.7% year-over-year and amounted to CAD 42.6 million for the three-month period ended September 30th, 2024, an improvement from the decrease of 10.2% reported last quarter.

[Franco Sciannamblo, SVP and CFO at Yellow Pages]

The year-over-year decline was mainly attributable to a decrease in digital customer count and to a lesser extent, the decrease in spend per customer. Print revenues decreased 12.4% year-over-year and amounted to CAD 10 million for the quarter, and then the decline in revenue was mainly attributable 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 30th, 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 a slight increase in churn. In addition, 2023 decline rates were negatively impacted by customer claim rates, remaining stable in 2023, while in 2022, it benefited from a substantial improvement in customer claims.

[Franco Sciannamblo, SVP and CFO at Yellow Pages]

On adjusted EBITDA for the third quarter, it was impacted by pressures from lower revenues, change in product mix, continued investment in our telesales force capacity, a slight increase in bad debt expense, partially offset by price increases, the efficiencies from optimization and cost of sales, and reductions in other operating costs, including reductions in our workforce and associated employee expenses, as well as variable comp. As a result, adjusted EBITDA decreased year-over-year by CAD 5.4 million, or 30.1% to CAD 12.5 million. Adjusted EBITDA margin decreased to 23.8% compared to 30.9% for the same period last year. Revenue pressures and continued investments in our telesales force capacity, partially offset by continued optimizations, will continue to cause some pressure on margins in upcoming quarters.

[Franco Sciannamblo, SVP and CFO at Yellow Pages]

On Adjusted EBITDA and CapEx for the third quarter, it decreased by CAD 5 million year-over-year to CAD 12.2 million, mainly due to the decrease in Adjusted EBITDA, partially offset by the decrease in CapEx spend year-over-year, due in part to the nature of the IT spend, whereby more of the expense was classified as operating rather than capital. On net income, it decreased to CAD 6.3 million for the quarter of 2024, compared to CAD 10.1 million for the same period last year due to lower Adjusted EBITDA. Our workforce, as of September 30th, decreased to 590 employees, compared to 597 at the same date last year. Sales force headcount increased by 19, while all other headcount decreased by 26.

[Franco Sciannamblo, SVP and CFO at Yellow Pages]

As David mentioned, on pension contributions, consistent with our deficit reduction plan announced in May 2021, during the third quarter of 2024, the company made CAD 1.5 million in voluntary incremental cash contributions to the pension plan's wind-up deficit. Also, as David mentioned, our cash on hand at the end of October stood at approximately CAD 43 million. The board has declared a cash dividend of CAD 0.25 per common share payable on December 16th, 2024, to shareholders of record as of November 27th, 2024. This concludes our formal remarks. Thank you for taking the time to join us today. We'll now take your questions, and I'll pass it back to Mirna.

[Operator]

Thank you. We will now take questions from the telephone lines. If you have a question, please press star one. You may cancel your questions at any time by pressing star two. Please press star one at this time if you have a question. Once again, please press star one if you have a question. There are no questions registered at this time. I would now like to turn the meeting over to Mr. David Eckert. Please go ahead.

[David Eckert, President and CEO at Yellow Pages]

Yes. Thank you all again for joining us this morning. We really appreciate your support. We look forward to getting with you again for next quarter, and have a great day. Thank you very much. Bye now.

[Operator]

Thank you. The conference has now ended. Please disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Franco Sciannamblo, SVP and CFO
• David Eckert, President and CEO