Yellow Pages Limited Reports Fourth Quarter and Full Year 2024 Financial and Operating Results and Declares a Cash Dividend (1)

CNW Group

Thu, Feb 13, 2025, 5:30 AM 15 min read

Continued climb toward revenue stability. "For the fourth consecutive quarter, we report a favorable 'bending of the revenue curve' in Q4, as our rate of change in revenue was better than the change reported for the previous quarter."
Progress on revenue initiatives. "We are pleased with our progress on metrics underlying our revenue generation, including the size of our sales force, as well as a deceleration of the customer count decline rate fueled by an increase in new customer acquisitions, which were 6% higher than in the same quarter last year and 28% higher for the year. We believe these fundamentals bode well for our medium- and long-term future."
Solid quarterly earnings. "Our Adjusted EBITDA² for the quarter and full year was 16.0% and 23.7% of revenue, respectively, even with our continued significant investments in revenue initiatives, including the steady continued expansion of our sales force. In addition, the 23% increase in the market price of our shares during the fourth quarter resulted in a non-cash charge to our reported earnings, due to the way we account for stock-based compensation, which put additional pressure on Adjusted EBITDA."
Healthy cash balance. "Our steady cash generation has grown cash on hand to approximately $49 million at the end of January."
Pension plan voluntary payments completed. "Consistent with our deficit reduction plan announced in May 2021, we made $1.5 million of voluntary incremental payments in the fourth quarter of 2024 and $6.0 million for the full year toward our Defined Benefit Pension Plan's wind-up deficit, these marking the last voluntary payments intended under the deficit reduction plan. As a result of the deficit reduction plan and the advancement of the voluntary incremental cash contributions to the Pension Plan pursuant to the Plans of Arrangement in 2022 and 2023, the wind-up ratio of our Defined Benefit Pension Plan reached over 95%. As a result, our Board approved a plan to derisk the Pension Plan and protect the realized investment gains and the wind-up ratio."
Quarterly dividend declared. "Our Board has declared a dividend of $0.25 per common share, to be paid on March 17, 2025 to shareholders of record as of February 26, 2025."

Financial Highlights
(In thousands of Canadian dollars, except percentage information and per share information)

Yellow Pages Limited	For the three-month periods ended December 31,		For the year ended December 31,
	2024	2023	2024	2023
Revenues	$51,401	$55,909	$214,829	$239,432
Adjusted EBITDA²	$8,243	$16,245	$50,836	$76,860
Adjusted EBITDA margin²	16.0 %	29.1 %	23.7 %	32.1 %
Income before income taxes	$4,070	$12,398	$34,428	$60,264
Net income	$2,687	$12,177	$24,977	$47,399
Basic income per share	$0.20	$0.72	$1.84	$2.70
Diluted income per share	$0.20	$0.71	$1.82	$2.65
CAPEX²	$485	$944	$2,480	$3,960
Adjusted EBITDA less CAPEX²	$7,758	$15,301	$48,356	$72,900
Adjusted EBITDA less CAPEX margin²	15.1 %	27.4 %	22.5 %	30.4 %
Cash flows from operating activities*	$8,307	$6,663	$39,024	$46,767

*Includes voluntary contributions to the Defined Benefit Pension Plan (the "Pension Plan") of $12.0 million in the fourth quarter of 2023 pursuant to the plan of arrangement (the "Arrangement").

⁽¹⁾ The dividend will be designated as an eligible dividend pursuant to subsection 89(14) of the Income Tax Act (Canada) and any applicable provincial legislation pertaining to eligible dividends.

⁽²⁾ 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 Yellow Pages Limited's consolidated statements of income. Adjusted EBITDA, Adjusted EBITDA margin, CAPEX, Adjusted EBITDA less CAPEX and Adjusted EBITDA less CAPEX margin are non-GAAP financial measures and do not have any standardized meaning under IFRS* Accounting Standards. Therefore, they are unlikely to be comparable to similar measures presented by other public companies. Refer to the section on Non-GAAP financial measures at the end of this document for more details.

Financial Results for the Fourth Quarter of 2024

Total revenues for the fourth quarter ended December 31, 2024 decreased by 8.1% year-over-year and amounted to $51.4 million as compared to $55.9 million for the same period last year. 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.

Total digital revenues decreased 7.2% year-over-year and amounted to $42.0 million during the fourth quarter of 2024 compared to $45.3 million for the same period last year. The revenue decline is mainly attributable to a decrease in digital customer count and to a lesser extent, a decrease in the average spend per customer.

Total print revenues decreased 11.5% year-over-year and amounted to $9.4 million during the fourth quarter of 2024 compared to $10.6 million in the fourth quarter of 2023. The revenue decline was mostly attributable to decreases in the number of print customers while the spend per customer has improved year-over-year driven by price increases.

The decline rate for total revenues, digital revenues and print revenues all improved during the quarter ended December 31, 2024, compared to the same period last year. The improvements were partly due to the deceleration of the customer count decline rate fueled by an increase in new customer acquisitions partially offset by an increase in churn. In addition, 2023 decline rates were negatively impacted by customer claim rates remaining stable in 2023, while 2022 benefited from a substantial improvement in customer claims.

Adjusted EBITDA¹ decreased to $8.2 million or 16.0% of revenues in the fourth quarter ended December 31, 2024, relative to $16.2 million or 29.1% of revenues for the same period last year. The decrease in Adjusted EBITDA and Adjusted EBITDA margin¹ for the three-month period ended December 31, 2024 is the result of revenue pressures, the ongoing investments in our tele-sales force capacity, higher bad debt expense, the impact of the Company's share price on cash settled stock-based compensation expense and the nature of Information Technology ("IT") spend, whereby more of the expense was classified as operating rather than capital, partially offset by price increases, the efficiencies from optimization in cost of sales and reductions in other operating costs including reductions in our workforce and associated employee expenses. The revaluation of cash settled stock-based compensation liabilities resulted in a charge of $1.5 million for the three-month period ended December 31, 2024 compared to a recovery of $1.6 million for the same period last year. This was driven by the 23% increase in YP's share price during the fourth quarter of 2024 compared to a decline of 8% during the same quarter in 2023. Revenue pressures, coupled with continued investments in our tele-sales force capacity, partially offset by continued optimization, will continue to cause some pressure on margins in upcoming quarters.

Adjusted EBITDA less CAPEX decreased by $7.5 million to $7.8 million during the fourth quarter of 2024, compared to $15.3 million during the same period last year. The decrease in Adjusted EBITDA less CAPEX and Adjusted EBITDA less CAPEX margin for the three-month period ended December 31, 2024 is mainly due to lower Adjusted EBITDA partially offset by a decrease in CAPEX spend year-over-year, due in part, to the nature of IT spend, whereby more of the expense was classified as operating rather than capital.

Net income for the three-month period ended December 31, 2024 amounted to $2.7 million as compared to net income of $12.2 million for the same period last year. The decrease is explained principally by the decrease in Adjusted EBITDA and higher tax expense for the three-month period ended December 31, 2024.

Cash flows from operating activities increased by $1.6 million to $8.3 million for the three-month period ended December 31, 2024 from $6.7 million for the same period last year. The increase is mainly due to a decrease in funding of post-employment benefits plans of $11.8 million due to the funding pursuant to the 2023 Arrangement, lower restructuring and other charges paid of $0.3 million and lower income taxes paid of $0.3 million, partially offset by lower Adjusted EBITDA of $8.0 million, the increase in stock-based compensation cash payments of $1.6 million and a decrease of $1.2 million from changes in operating assets.

Financial Results for the Year Ended December 31 of 2024

Total revenues for the year ended December 31, 2024 decreased by 10.3% to $214.8 million, as compared to $239.4 million for the same period last year. 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.

Total digital revenues decreased 9.6% year-over-year and amounted to $172.1 million for the year ended December 31, 2024, as compared to $190.3 million for the same period last year. The revenue decline for the year ended December 31, 2024, was mainly attributable to a decrease in digital customer count and to a lesser extent, a decrease in the average spend per customer.

Total print revenues decreased 13.0% year-over-year and amounted to $42.7 million for year ended December 31, 2024. The revenue decline is mainly due 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 total revenues and print revenues improved year-over-year while the digital revenue rate of decline increased slightly. Total revenue decline of 10.3% for 2024 compares to 10.8% reported for 2023. The print revenue decline of 13.0% for 2024, compares to 17% for 2023. The digital revenue decline of 9.6% compares to a decline of 9.0% for the year-ended 2023.The improvement in the decline rate of total revenues was partly due to the deceleration of the customer count decline rate fueled by an increase in new customer acquisitions and price increases, partially offset by an increase in churn. In addition, 2023 decline rates were negatively impacted by customer claim rates remaining stable, while 2022 benefited from a substantial improvement in customer claims.

For the year ended December 31, 2024 Adjusted EBITDA decreased by $26.0 million or 33.9% to $50.8 million, compared to $76.9 million for the same period last year. The adjusted EBITDA margin decreased during the year ended December 31, 2024 to 23.7%, compared to 32.1% for the same period last year. The decrease in Adjusted EBITDA¹ and Adjusted EBITDA margin¹ for the year ended December 31, 2024 is the result of revenue pressures and the ongoing investments in our tele-sales force capacity, increase in bad debt expense, and the impact of the Company's share price on cash settled stock-based compensation expense, partially offset by optimizations in cost of sales and reductions in other operating costs including reductions in our workforce and associated employee expenses. The revaluation of the cash settled stock-based compensation liabilities based on the change in the Company's share price resulted in a recovery of $1.7 million for the year ended December 31, 2024, compared to a recovery of $4.4 million for the same period last year. Revenue pressures from product mix and investments in our tele-sales force capacity, partially offset by continued optimizations and cost reductions, will continue to cause pressure on margins in upcoming quarters.

For the year ended December 31, 2024 Adjusted EBITDA less CAPEX¹ decreased by $24.5 million or 33.7% to $48.4 million, compared to $72.9 million for the same period last year. The adjusted EBITDA less CAPEX margin¹ decreased during the year ended December 31, 2024 to 22.5%, compared to 30.4% for the same period last year. The decrease in Adjusted EBITDA less CAPEX and Adjusted EBITDA less CAPEX margin for the year ended December 31, 2024 is driven by the decrease in Adjusted EBITDA, partially offset by the decrease in CAPEX spend year-over-year, due in part, to the nature of IT spend, whereby more of the expense was classified as operating rather than capital.

Net income decreased to $25.0 million for the year ended December 31, 2024 compared to net income of $47.4 million for the same period last year. The decrease in net income for the year ended December 31, 2024 is mainly due to lower Adjusted EBITDA, partially offset by the decrease in income taxes.

Cash flows from operating activities decreased by $7.7 million to $39.0 million for the year ended December 31, 2024 from $46.8 million for the same period last year. The decrease is mainly due to lower Adjusted EBITDA of $26.0 million, partially offset by a decrease in funding of post-employment benefit plans of $11.9 million due to the funding pursuant to the 2023 Arrangement, the decrease in stock-based compensation cash payments of $3.1 million, lower income taxes paid of $2.3 million and an increase of $0.7 million from changes in operating assets and liabilities.

⁽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 Yellow Pages Limited's consolidated statements of income. Adjusted EBITDA, Adjusted EBITDA margin, CAPEX, Adjusted EBITDA less CAPEX, Adjusted EBITDA less CAPEX margin are non-GAAP financial measures and do not have any standardized meaning under IFRS Accounting Standards. Therefore, they are unlikely to be comparable to similar measures presented by other public companies. Refer to the section on Non-GAAP financial measures at the end of this document for more details.

Conference Call & Webcast

Yellow Pages Limited will hold an analyst and media call and simultaneous webcast at 8:30 a.m. (Eastern Time) on February 13, 2025 to discuss fourth quarter 2024 results. The call may be accessed by dialing 416-695-6725 within the Toronto area, or 1-866-696-5910 outside of Toronto, Passcode 7057902#. Please be prepared to join the conference at least 5 minutes prior to the conference start time.

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

Yellow Pages Limited (TSX: Y) is a Canadian digital media and marketing company that creates opportunities for buyers and sellers to interact and transact in the local economy. Yellow Pages holds some of Canada's leading local online properties including YP.ca, Canada411 and 411.ca. The Company also holds the YP, Canada411 and 411 mobile applications and Yellow Pages print directories. For more information visit www.corporate.yp.ca.

Caution Concerning Forward-Looking Statements

This press release contains forward-looking statements about the objectives, strategies, financial conditions and results of operations and businesses of YP (including, without limitation, payment of a cash dividend per share per quarter to its common shareholders). These statements are forward-looking as they are based on our current expectations, as at February 12, 2025, about our business and the markets we operate in, and on various estimates and assumptions. Our actual results could materially differ from our expectations if known or unknown risks affect our business, or if our estimates or assumptions turn out to be inaccurate. As a result, there is no assurance that any forward-looking statements will materialize. Risks that could cause our results to differ materially from our current expectations are discussed in section 5 of our February 12, 2025 Management's Discussion and Analysis. We disclaim any intention or obligation to update any forward-looking statements, except as required by law, even if new information becomes available, as a result of future events or for any other reason.

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 Yellow Pages Limited's consolidated statements of income. Adjusted EBITDA margin is defined as the percentage of Adjusted EBITDA to revenues. Adjusted EBITDA and Adjusted EBITDA margin are not performance measures defined under IFRS Accounting Standards and are not considered an alternative to income from operations or net income in the context of measuring Yellow Pages performance. Adjusted EBITDA and Adjusted EBITDA margin do not have a standardized meaning under IFRS Accounting Standards and are therefore not likely to be comparable to similar measures used by other publicly traded companies. Adjusted EBITDA and Adjusted EBITDA margin should not be used as exclusive measures of cash flow since they do not account for the impact of working capital changes, income taxes, interest payments, pension funding, capital expenditures, debt principal reductions and other sources and uses of cash, which are disclosed on page 19 of our February 12, 2025 MD&A. Management uses Adjusted EBITDA and Adjusted EBITDA margin to evaluate the performance of its business as it reflects its ongoing profitability. Management believes that certain investors and analysts use Adjusted EBITDA and Adjusted EBITDA margin to measure a company's ability to service debt and to meet other payment obligations or as common measurement to value companies in the media and marketing solutions industry as well as to evaluate the performance of a business.

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 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-GAAP financial measures and do not have any standardized meaning under IFRS Accounting Standards. 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 financial measure under IFRS Accounting Standards 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 Yellow Pages Limited's consolidated statements of income. Refer to table below for reconciliation of Adjusted EBITDA less CAPEX.

Adjusted EBITDA less CAPEX
(In thousands of Canadian dollars, except percentage information)

For the three-month period and year ended December 31,	2024		2023		2024		2023
Income from operations before depreciation and amortization and restructuring and other charges (Adjusted EBITDA)	$	8,243	$	16,245	$	50,836	$	76,860
CAPEX		485		944		2,480		3,960
Total Adjusted EBITDA less CAPEX	$	7,758	$	15,301	$	48,356	$	72,900