"We are very pleased with our second quarter results, and today we make a number of significant announcements," said
Eckert commented on the major developments:
- Adjusted EBITDA less CAPEX of 45.8%. "Our Adjusted EBITDA less CAPEX margin1 was an almost-unprecedented 45.8%, reflecting continued strength in our business."
- Modest effect of COVID-19 crisis on revenue. "When the COVID-19 crisis hit, virtually all of our employees were efficiently working from home within a week. And we retained virtually all of them, avoiding furloughs and layoffs, so that we could serve our customers and maintain our momentum. That allowed the downward effect of the crisis on our revenues in the quarter to be only a handful of percentage points."
- Encouraging revenue outlook. "The trends in our bookings, although suggesting a very modest additional hit to our revenue curve for another couple of quarters, are nearing pre-COVID levels. And our analysis suggests that the bulk of our COVID-related revenue declines are due to lower spending levels by individual customers, which we believe can be regained, rather than business closures or increased losses of accounts."
- Net Debt extinguished. "As of today, our cash on hand, approximately
$110 million , exceeds our debt, so our net debt excluding lease obligations1 is better than zero. And we recommit to fully paying off our Exchangeable Debentures, at par, on or aroundMay 31, 2021 ." - Major new revenue initiatives. "Over the next 120 days, we are phasing three exciting new products into our offering. Also, by year-end, we expect to have doubled our tele-sales capacity, to significantly ramp up our acquisition of new accounts. These moves, long in the making and testing, are carefully designed to further bend our revenue curve toward stability."
- Quarterly dividend2 declared. "Our Board has declared a dividend of
$0.11 per common share, to be paid onSeptember 15, 2020 to shareholders of record as ofAugust 28, 2020 ." - Doubling of contribution to pension plan. "As we announced we would, we have begun doubling the currently required contributions to our Defined Benefit Pension Plan, for the benefit of our retirees."
- Launching purchases of stock. "Today we are also announcing an NCIB to repurchase shares of our common stock." Further detail on the NCIB is found below.
Financial Highlights | ||||
(In thousands of Canadian dollars, except percentage information and per share information) | ||||
Yellow Pages Limited | For the three-month periods | For the six-month periods | ||
2020 | 2019 | 2020 | 2019 | |
YP Revenues | ||||
Other revenues and Intersegment Eliminations | - | 162 | - | 1,274 |
Total revenues | ||||
Adjusted EBITDA1 | ||||
Adjusted EBITDA margin1 | 47.5% | 40.7% | 42.2% | 42.0% |
Net earnings | ||||
Basic earnings per share | ||||
Diluted earnings per share | ||||
CAPEX1 | ||||
Adjusted EBITDA less CAPEX1 | ||||
Adjusted EBITDA less CAPEX margin1 | 45.8% | 38.1% | 40.6% | 39.4% |
Cash flows from operating activities |
Second Quarter of 2020 Results
- Adjusted EBITDA less CAPEX totaled
$40.4 million and the EBITDA less CAPEX margin1 was 45.8%. - Net earnings increased by
$7.4 million at$22.0 million , or$0.73 per diluted share. - Cash position at the end of the period was
$97.7 million and was$109.7 million as atAugust 5, 2020 .
(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 |
(2) | The dividend will be designated as an eligible dividend pursuant to subsection 89(14) of the Income Tax Act ( |
Segmented Information
The Company's operations are categorized into two reportable segments: YP and other.
- The YP segment provides small and medium-sized businesses across
Canada digital and traditional marketing solutions, including online and mobile priority placement on Yellow Pages' owned and operated media, content syndication, search engine solutions, website fulfillment, social media campaign management and digital display advertising, video production and print advertising. This segment also includes the 411.ca digital directory service helping users find and connect with people and local businesses. - The Other segment includes YP Dine digital property until its sale on
April 30, 2019 and the Mediative division until its liquidation onJanuary 31, 2019 .
An overview of each segment and the performance of each segment for the three and six-month periods ended
Financial Results for the Second Quarter of 2020
Revenues for the YP segment for the second quarter of 2020 decreased by
Adjusted EBITDA for the YP segment for the three-month period ended
Total revenues for the second quarter ended
Adjusted EBITDA1 decreased by 3.4% to
Adjusted EBITDA less CAPEX1 decreased by
Net earnings for the three-month period ended
Cash flows from operating activities increased by
As at
Common Share NCIB
Pursuant to TSX policies, the maximum amount of Shares that may be purchased in one day pursuant to the Bid will be approximately 2,510 Shares, representing 25% of 10,041 Shares, being the average daily trading volume of the Shares on the TSX for the six months ended
In connection with the Bid, the Company entered into an automatic securities purchase plan ("ASPP") with a designated broker. The ASPP is intended to allow for the purchase of Shares when the Company would ordinarily not be permitted to purchase Shares due to regulatory restrictions and customary self-imposed blackout periods. Pursuant to the ASPP, before entering into a blackout period, the Company may, but is not required to, instruct the designated broker to make purchases under the Bid in accordance with the terms of the ASPP and TSX policies during the blackout period. Such purchases will be determined by the designated broker at its sole discretion based on purchasing parameters set by the Company in accordance with the rules of the TSX and any applicable alternative Canadian trading system, applicable securities laws and the terms of the ASPP. The ASPP will be in effect for the term of the bid. All purchases made under the ASPP will be included in computing the number of Shares purchased under the Bid.
The Board of Directors of the Company (the "Board") believes that during the course of the Bid the market price of the Shares may not reflect the value of the Company's underlying business and the repurchase of Shares may be an attractive use of the Company's cash on hand and means of creating shareholder value. As a result, depending upon future price movements and other factors, the Board believes that the purchase of the Shares may be in the best interest of the Company and its shareholders. Furthermore, the purchases are expected to benefit all persons who continue to hold Shares by increasing their equity interest in the Company when the repurchased Shares are cancelled.
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 |
Conference Call & Webcast
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
Caution Concerning Forward-Looking Statements
This press release contains forward-looking statements about the objectives, strategies, financial conditions, including potential full repayment of the Company's remaining exchangeable debentures on or shortly after
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
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-IFRS 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
Net debt excluding lease obligations
Net debt excluding lease obligations is a non-GAAP 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. Net debt excluding lease obligations is comprised of Exchangeable debentures less Cash as presented in our consolidated statements of financial position. We use net debt as indicator of the Company's ability to cover financial obligations and reduce debt and associated interest charge as it represents the amount of debt excluding lease obligations that is not covered by available cash. We believe that certain investors and analysts use net debt to determine a company's financial leverage.
The most comparable IFRS financial measure is total debt, as presented in the capital disclosures note on page 49 of our Audited consolidated financial statements for the years ended 2019 and 2018. The table below provides a reconciliation of total debt to net debt excluding lease obligations.
Net debt excluding lease obligations | ||
(In thousands of Canadian dollars) | ||
As at | ||
Exchangeable debentures | $ 99,783 | $ 98,537 |
Lease obligations | 54,319 | 57,885 |
Total debt | ||
Lease obligations | (54,319) | (57,885) |
Cash | (97,691) | (44,408) |
Net debt excluding lease obligations | $ 2,092 | $ 54,129 |
SOURCE
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