Yellow Pages Q2 2024 Earnings Call Transcript

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Provided by Quartr
August 7, 2024

There are 3 speakers on the call.

Operator

Good morning, ladies and gentlemen. Welcome to Yellow Pages' 2nd 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.

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 Q2 of 2024. This call is being recorded and webcast, and all of the disclosure documents are available in 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. Thank you for joining our quarter 2 analyst call. I'm joined today by Franco Chienamblo, our Senior Vice President and Chief Financial Officer and by Cherilyn King, our Senior Vice President of Sales and

Operator

Customer

Speaker 1

Care. As usual, I'd like to begin our meeting today with a few comments and Frankl will provide some additional details and then we'll be happy to take any questions that you may have. We are quite pleased with our 2nd quarter results, which reflect our continuing progress toward revenue stability, reflect good profitability and reflect as usual a very healthy cash balance, all despite the continued headwinds in the global economy and in the Canadian Small Business Sector in particular. For the 2nd consecutive quarter, we today report a favorable bending of the revenue curve as we call it in the second quarter as our rate of change in revenue was better than the change reported for the previous quarter. And we're particularly pleased with our progress on the metrics that underlie our revenue generation, including the size of our sales force and our rate of gaining new accounts, while still maintaining a very solid rate of customer churn In the category of gaining new accounts, we're very pleased that for the quarter we are reporting, it was 17% higher than the previous quarter.

Speaker 1

And the reason I mentioned these is because it's these fundamentals given our strategy that we think bode very well for our medium and long term future. We're also reporting solid earnings for the quarter. Our adjusted EBITDA for the quarter was 26.5 percent of revenue even with our continued intentional sizable investments in initiatives to improve our revenue, including the steady continuation of our sales force. And we, as I mentioned, have a very healthy cash balance. The strong cash generation that we continue to display has grown our cash on hand to approximately $34,000,000 at the end of July.

Speaker 1

That's the end of July. Even after we have kept our pension plan funding on track consistent with our deficit reduction plan announced a few years ago, in the Q2 of 2024, we made a $1,500,000 voluntary incremental payment toward our defined benefit pension plans wind up deficit. So, our Board has declared a dividend of $0.25 per common share to be paid on September 16 this year to shareholders of record as of August 26. So in summary, we feel that we're very much on track. We are confident about the future and are pleased in particular with the underlying metrics that are we feel right on track given the strategy that we have.

Speaker 1

Now Frank will provide additional details and then we'll be happy to take any questions you might have.

Speaker 2

Thanks, David, and good morning, everyone. Let me take you through our financial results for the Q2 ended June 30, 2024, and I'm going to start with revenues. Our total revenues decreased by $6,900,000 or 11% year over year and amounted to $255,800,000 for the Q2, an improvement from the decrease of 12.3% 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 for lower margin digital services products, thereby creating some pressure on our gross profit margins. Digital revenues decreased 10.2% year over year and amounted to $243,800,000 for the 3 month period ended June 30, 2024, an improvement from the decrease of 11.9% 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. For print revenues, it decreased 13.6% year over year and amounted to $12,100,000 for the quarter. The decline in revenue was mainly attributable to the decrease in the number of print customers, while spend per customer has increased year over year driven by price increases. The decline rate of revenues increased year over year and the higher decline rate is attributable in part to the headwinds in the global economy as David mentioned earlier, whereby customer renewal rates decreased or remained strong, while average spend per customer slowed as customers look to optimize their spend. These factors were partially offset by an increase in the number of new accounts and increases in pricing.

Speaker 2

Our adjusted EBITDA for the quarter, it was impacted by pressures from lower revenue, change in product mix, continued investments in our telesales capacity, the impact of the change in the company share price, increasing bad debt and IT expenses. In the latter case, in terms of IT expenses, it was the nature of the IT spend, which was classified as operating rather than capital. These factors were partially offset by price increases, efficiencies from optimization in 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 7,200,000 dollars or 32.7 percent to $14,800,000 Adjusted EBITDA margin decreased to 26.5% compared to 35% for the same period last year. Revenue pressures and continued investments in our telosales force capacity partially offset by continued optimizations will continue to cause some pressure on margins in upcoming quarters.

Speaker 2

Adjusted EBITDA less CapEx for the 2nd quarter decreased by $6,500,000 year over year to 14.1 dollars mainly due to the decrease in adjusted EBITDA, partially offset by the decrease in CapEx spend year over year. The decrease in CapEx spend, as I mentioned earlier, was due to the nature of the IT spend whereby more of the expenses was classified as operating rather than capital. Net income decreased to 7,600,000 dollars for the Q2 of 2024 compared to $12,700,000 for the same period last year due to lower adjusted EBITDA. For our workforce, as at June 30, it decreased to 603 employees compared to 639 at the same date last year. Salesforce headcount increased by 16, while all other headcount decreased by 52.

Speaker 2

And consistent with our deficit reduction plan announced in May 2021 during the Q2 of 2024, the company made $1,500,000 involuntary incremental cash contributions to the pension plans wind up deficit. Also as Dave mentioned earlier, our cash on hand at the end of July stood at a healthy $34,000,000 Finally, the Board has declared a cash dividend of $0.25 per common share payable on September 16, 2024 to shareholders of record as at August 26, 2024. This concludes our formal remarks. Thank you for taking the time to join us this morning. We will now take your questions.

Speaker 2

So back over to you, Mona.

Operator

Thank you. We will now take questions from the telephone

Speaker 1

Yes, this is David. I don't see any questions. If anybody's got a question, we'd be happy to take it. Well, we thank you all for joining us this morning and look forward to meeting with you again in 90 days. Thank you.

Speaker 1

Thank you all very much for all of your support as we continue to execute on our strategy, which we think is going quite well. And please have a very nice day and a nice rest of the summer. Take care, everyone.

Operator

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

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Earnings Conference Call
Yellow Pages Q2 2024
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