Yellow Pages Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
February 14, 2024

There are 3 speakers on the call.

Operator

Good morning, ladies and gentlemen, and welcome to Yellow Pages Limited 4th Quarter 2023 Earnings Conference 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 differ materially from expectations discussed. 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 Q4 of 2023.

Operator

This call is being recorded in 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. Good morning, everyone. Welcome to our Q4 2023 analyst call. I'm joined here today by Cherilyn King, our Senior Vice President of Sales, Marketing and Customer Service and by Franco Chinnamblo, our Senior Vice President and Chief Financial Officer. As usual, We'll start out, Franco and I will make some introductory comments, and then we will be available to answer questions.

Speaker 1

Looking at the Q4 and the full year 2023, we are very pleased with the results Of the quarter and the year and especially considering the strong headwinds that have existed through or did exist through the year in the Canadian Small Business Sector of the Economy. We continue to generate strong earnings. Our adjusted EBITDA for the quarter was 29.1% and for the full year, 32.1 percent of revenue. As we have announced previously During the Q4, we completed a plan of arrangement under which we distributed $62,000,000 of cash to our shareholders and voluntarily to our Defined benefit pension plan, even after those cash distributions, We have a good healthy cash balance on hand, which at the end of January, after continuing to generate cash stood at approximately $27,000,000 We feel good about the progress we've continued to make on our initiatives to support Bending our revenue curve, including importantly continuing to expand our sales force In spite of the headwinds in the economy, we have made really good progress we think on A number of our underlying metrics, including the current size of the sales force, our rate of churn of customers And our rate of gaining new accounts, those all bode well for the future.

Speaker 1

In particular, our rate of gaining new accounts was 28.5% higher than it was in the previous year. And we are firmly convinced that these fundamentals bode very well for our medium term and long term future. In fact, as we look at the quarter that we're now in, the Q1 of 2024, After looking back at 4 quarters of declining rate of change of revenue compared to the prior year, We expect this quarter to resume our climb toward revenue stability, what we call our revenue curve bending in the right direction. Reflecting all of this, yesterday our Board of Directors voted to increase our dividend, should we change our dividend policy, to pay a cash dividend to common shareholders of $0.25 per common share per quarter increased from $0.20 and did indeed declare a dividend of $0.25 per common share per quarter to be paid on March 15. So all in all, we are continuing to Realize that there remains some headwinds in the economy, but we feel we're doing very well and we're very bullish about the future and we're very pleased about the continued strong cash and profitability performance of the company.

Speaker 1

We'd like to pass the baton to Frank Occhinabllo, Chief Financial Officer, who will provide some additional details on the things that I've just mentioned and then we'll be available to answer questions. Thank you.

Speaker 2

Thanks David and good morning everyone. Me take you through our financial results for the Q4 ended December 31, 2023. We'll start with revenues. Our total revenues increased by $8,700,000 or 13.4 percent year over year and amounted to $55,900,000 for the 4th quarter. 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.

Speaker 2

Digital revenues decreased by 12.1% year over year and amounted to 45 $3,000,000 for the 3 month period ended December 31, 2023. The decline was mainly attributable to a decrease in digital customer count, partially offset by an increase in spend per customer. Print revenues decreased by 18.7% year over year and amounted to $10,600,000 for the quarter. The decline in revenues was mainly attributable to the decrease in number of print customers and to a lesser extent a decrease in spend per customer. The decline rate of total revenues increased year over year.

Speaker 2

Total revenue decline of 13.4% this year compares to of 5.9% reported for the same period last year. Digital revenues declined of 12.1% this quarter compares to a decline of 4.3% reported for the same period last year and print revenue decline of 18.7% this quarter compares to a decline of 11.7% reported for the same period last year. The higher decline rates are attributable to a decrease in customer count in both digital and print and to customer claims rates remaining stable in 2023, while 2022 benefited from a substantial improvement. These pressures augmented by the economic headwinds were partially offset by higher spend per customer in digital, driven in part by increased pricing. Total revenues for the full year 2023 totaled $239,400,000 a decrease of 10.8% year over year.

Speaker 2

On adjusted EBITDA for the quarter, it was impacted by pressures from lower revenue and ongoing investments in our telesales force capacity, partially offset by the impact of the company's share price on cash settled stock based compensation expense, price efficiencies from optimization and cost of sales and reductions in other operating costs, including reductions in our workforce and associated employee expenses. As a result, adjusted EBITDA decreased year over year by $4,700,000 or 22.6 percent to $16,200,000 Adjusted EBITDA margin decreased to 29.1% compared to 32.5% for the same period last year. Revenue pressures coupled with increased headcount in our sales force partially offset by continued optimization will continue to cause some pressure on margins in upcoming quarters. Adjusted EBITDA for the full year 2023 was $76,900,000 or 32.1 percent of revenues. On net income, it decreased to $12,200,000 for the Q4 of 2023 compared to $29,400,000 for the same period last year.

Speaker 2

The decrease is mainly attributable to a higher recognition of previously unrecognized tax attributes and temporary differences in 2022. Income before taxes decreased from $16,700,000 for the Q4 of 2022 to $12,400,000 for the same period in 2023, mainly due to lower adjusted EBITDA. For the full year 2023, net income totaled 47,400,000 On our workforce, as of December 31, it decreased to 627 employees compared to 629 at the same date year sales force headcount increased by 15, while all other headcount decreased by 17. On the plan of arrangement, as David mentioned, during the Q4, we completed the previously announced plan of arrangement, whereby the company repurchased from shareholders pro rata an aggregate of 4,440,497 common shares, including 207,717 shares held by trustee at a purchase price of $11.26 per share for a total of 50 $500,000 including $500,000 of transaction costs. The $50,500,000 cash outlay was reduced by $2,300,000 for the cancellation of 2 17 207, 717 of YP's shares held by the trustee for a net cash outlay of 48,200,000 Also pursuant to the plan of arrangement, the company advanced $12,000,000 of voluntary incremental cash contribution to the pension plans wind up deficit during the Q4.

Speaker 2

In addition, consistent with our deficit reduction plan announced in May 2021, during the Q4 of 2023, the company made 1,500,000 involuntary incremental cash contribution to the pension plans wind up deficit, including the amounts pursuant to the plan arrangement. Brings the full year total of voluntary incremental payments to $18,000,000 toward the pension plans wind up deficit. And after all that our cash on hand at the end of January stood at approximately $27,000,000 Also as David announced, the Board of Directors has modified the dividend policy and improved an in the quarterly cash dividend from $0.20 to $0.25 per common share, up 25% from previous quarterly dividends. Consequently, the Board also declared a cash dividend of $0.25 per common share payable on March 15 shareholders of record as at February 27, 2024. This concludes our formal remarks.

Speaker 2

Thank you for taking the time to join us This morning, we'll now take your questions. Back over to you, Maud.

Operator

Thank you. We will now take questions from the telephone lines. We thank you for your patience. And we have no questions registered at this time. I would now like to turn the meeting back over to Mr.

Operator

Eckert.

Speaker 1

Thank all of you for joining us today. We appreciate your interest. We appreciate your support. And we look forward to chatting with you again in a quarter from now In May. Thank you very much and have a great day.

Speaker 1

Bye now.

Operator

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

Powered by Quartr
Earnings Conference Call
Yellow Pages Q4 2023
00:00 / 00:00