Yellow Pages Q3 2024 Earnings Call Transcript

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Provided by Quartr
November 12, 2024

There are 3 speakers on the call.

Operator

Good morning, ladies and gentlemen. Welcome to Yellow Pages Third Quarter 20 24 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.

Operator

The details of Yellow Pages' caution regarding forward looking information, including key assumptions and risks, can be found in Yellow Pages' management discussion and Analysis for the Q3 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.

Speaker 1

Thank you very much, and good morning to everyone. Thank you for joining us for our Q3 analyst call. As usual, today I'm joined by Franco Chenamblo, our Senior Vice President and Chief Financial Officer and by Cherilyn 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 Frank will provide some details and then we'd be happy to try to answer any questions you might have. Our Q3 was a good quarter as we continued to progress toward revenue stability and as we delivered good profitability and a very healthy cash balance.

Speaker 1

For the 3rd consecutive quarter, we report a favorable bending of the revenue curve in the 3rd quarter as our rate of change in revenue is better than the change reported in the previous quarter. 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 percent 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 $43,000,000 at the end of October.

Speaker 1

That's the end of October. We also continue to see our the funding of our defined benefit pension plan to be on track consistent with our deficit reduction plan that we announced in 2021. The Q3 of 2024, we made $1,500,000 of voluntary incremental payments toward that plan's wind up deficit during the quarter. Also, our Board has declared a dividend of $0.25 per common share to be paid on December 16 and to shareholders on record as of November 27. So overall, we're quite pleased.

Speaker 1

We feel we're on track and we're optimistic about the future. I'd like to ask Franco Chinnamo now to provide some more details. And then as I said, we'll be happy to take any questions you might have. Thank you.

Speaker 2

Thanks, David, and good morning to everyone. Let me take you through our financial results for the Q3 ended September 30, 2024 and starting with revenues. They decreased by $5,500,000 or 9.4 percent year over year and amounted to $52,600,000 for the 3rd 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 $42,600,000 for the 3 month period ended September 30, 2024, an improvement from the decrease of 10.2% reported last quarter.

Speaker 2

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 $10,000,000 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 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 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.

Speaker 2

On adjusted EBITDA for the Q3, 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 $5,400,000 or 30.1 percent to $12,500,000 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. On adjusted EBITDA less CapEx for the Q3, it decreased by $5,000,000 year over year to $12,200,000 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. Our net income decreased to $6,300,000 for the quarter of 2024 compared to $10,100,000 for the same period last year due to lower adjusted EBITDA.

Speaker 2

Our workforce as of September 30 decreased to 5.90 employees compared to 5.97 at the same date last year. Sales force headcount increased by 19, while all other headcount decreased by 26. As David mentioned, on pension contributions consistent with our deficit reduction plan announced in May 2021, during the Q3 of 2024, the company made $1,500,000 in voluntary incremental cash contributions to the pension plans wind up deficit. Also as David mentioned, our cash on hand at the end of October stood at approximately $43,000,000 The Board has declared a dividend, a cash dividend of $0.25 per common share payable on December 16, 2024 to shareholders of record as at November 27, 2024. This concludes our formal remarks.

Speaker 2

Thank you for taking the time to join us today. We'll now take your questions and I'll pass it back to Myrna.

Operator

Thank you. We will now take questions from the telephone lines. There are no questions registered at this time. I would now like to turn the meeting over to Mr. David Eckert.

Operator

Please go ahead.

Speaker 1

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.

Speaker 1

Bye now.

Operator

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

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Earnings Conference Call
Yellow Pages Q3 2024
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