Yellow Pages Ltd
TSX:Y
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Yellow Pages Ltd
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Good morning, ladies and gentlemen. Welcome to the Yellow Pages First Quarter 2022 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. 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 first quarter of 2022.
This call is being recorded and webcast, and all the disclosure documents are available on the company's website and on SEDAR.
I will now turn the meeting over to David Eckert, President and Chief Executive Officer. Please go ahead, sir.
Thank you very much. Good morning, everyone, and welcome to our First Quarter 2022 Analyst Call. We're very glad you can all be with us. This is David Eckert, and I am joined today by Franco Sciannamblo, our Senior Vice President and Chief Financial Officer; and by Sherilyn King, our Senior Vice President and Head of Sales, Marketing and Customer Service.
As usual, I'd like to start by making a few quick comments, and then Franco will provide some additional details, and then we'd be happy to answer any questions that you might have today.
The results that we're providing today, I think, are quite good news. We have reported an acceleration in our steady march toward revenue stability while we are continuing to produce excellent earnings. On the revenue front, our rate of change this quarter in revenue was almost 3 points better than what we reported last quarter.
Second, even though we don't announce the data here, the details, I can say that we continue to see favorable trends in our bookings. And of course, bookings are the leading indicator of the future reported revenue. And also, our programs to expand our telesales force and to add and strengthen our product portfolio are continuing to bear fruit.
Second, on the earnings front. Today, for the first quarter, we announced adjusted EBITDA of 37.5% of revenue, which is even higher than the same quarter in the prior year. And that's in spite of the fact that we are making all of the investments that we think are appropriate in our various initiatives, including our revenue initiatives and supporting our good product mix.
And third, on the cash front. Despite disbursements during the quarter for, I think it was 5 quarters' worth of income tax, and a significant disbursement relating to our NCIB, and disbursements for certain stock-based long-term compensation, regular annual bonuses, cash on hand as of the end of April still was approximately $125 million.
Our pension plan funding continues. In the quarter, we made another $1 million of voluntary incremental payments towards the defined benefit pension plan's wind-up deficit in addition to the regular payments that we make. Our Board yesterday declared another regular dividend of $0.15 per common share to be paid the middle of June. And as I mentioned, our NCIB program continues. And under that program, the company purchased shares for cash of $6.3 million in the first quarter.
So very good acceleration of our march to revenue stability; good, strong earnings; very healthy cash balance. We are very optimistic about the future as we move forward and as we continue to approach revenue stability.
I'd like to ask Franco to take a couple of minutes and just provide you a few more details behind those headlines, and then we'd be happy to take your questions. Thank you.
Thanks, David, and good morning to everyone. Let me take you through our financial results for the first quarter ended March 31, 2022.
I'll start with revenues. Our revenues decreased by $5.7 million or 7.8% year-over-year and amounted to $67.8 million for the first quarter, an improvement from the decrease of 10.5% reported last quarter. The decrease in revenues for the quarter is due to the decline of our higher-margin digital and print products, and to a lesser extent, our lower-margin digital service and resale products. This change in product mix does continue to put pressure on our margins.
The decline rates for total revenues, digital revenues as well as print revenues, all improved significantly year-over-year. Total revenue decline of 7.8% this quarter compares to a decline of 16.8% reported for the same period last year. Digital revenue decline of 7.7% this quarter compares to a decline of 15.7% reported for the same period last year. Print revenue declined of 7.9% this quarter compares to a decline of 20.2% reported for the same period last year. These improvements were due to better spend per customer as well as increased renewal rates. The improved customer spend per customer is due in part to increased pricing.
On adjusted EBITDA for the quarter, it was impacted by the pressure from revenues; partially offset by price decreases; the efficiencies from continued optimization and cost of sales; reductions in other operating costs, including reductions in our workforce and associated employee expenses; and the impact of the company's share price on cash-settled stock-based compensation expense. As a result, adjusted EBITDA decreased slightly year-over-year by $1.2 million or 4.4% to $25.4 million, while EBITDA margin increased by 1.3% to 37.5% compared to 36.2% for the same period last year. Revenue pressures, coupled with investments in our telesales force capacity, partially offset by continued optimization, will continue to create some pressure on margin in upcoming quarters.
On adjusted EBITDA less CapEx. For the first quarter, it decreased by $1.4 million or 5.7% year-over-year to $23.9 million, mainly driven by the decrease in adjusted EBITDA. While adjusted EBITDA less CapEx margin increased from 34.5% to 35.3%. Our workforce as at March 31 decreased to 608 employees compared to 677 at the same date last year.
Net earnings for the first quarter increased to $14.6 million compared to $12.1 million for the same period last year, as lower adjusted EBITDA was more than offset by a decrease in financial charges due to lower debt as well as decreases in restructuring and other charges and depreciation and amortization.
An update on our NCIB program. You'll recall, in August 2021, we entered into a normal course issuer bid to purchase up to $16 million of common shares in the open market for cancellation over a 12-month period. The company purchased 448,036 common shares for cash of $6.3 million in the first quarter, bringing the cumulative total to 699,412 common shares for cash of $9.9 million as of March 31, 2022.
As David mentioned, in 2022, the Board approved a voluntary incremental $4 million annual cash contribution to the company's defined benefit pension plan wind-up deficit as part of our deficit reduction plan. During the first quarter, the company made payments totaling $1 million in voluntary incremental cash contribution to the plan's wind-up deficit.
Our cash on hand stood at approximately $125 million at the end of April, and this is despite disbursements, as David alluded to, in the first quarter, that included: Income tax payments of $6.8 million, of which, $5.7 million related to full year 2021, and $1.1 million related to installments for 2022; the repurchase of $6.3 million of common shares through our NCIB program; as well as in those disbursements, stock-based compensation cash payments of $3.7 million and our regular annual bonus payments.
And finally, the Board of Directors approved a cash dividend of $0.15 per common share payable on June 15 to shareholders of record as at May 27, 2022.
This concludes our formal remarks. Thank you for taking the time to join us this morning. We will now take your questions.
Operator, we'd be happy to take any questions, if there are.
[Operator Instructions] We have a question from Paul Tepsich with High Rock Capital.
Congratulations on another great quarter. Given your cash build here and the dividend in place and the NCIB, is there any further talk with management at the Board level about increasing either the NCIB or the dividend or a special dividend or SIB? Anything else to help utilize some of that cash that continues to build?
Thank you for that question. Obviously, we're very aware of that. Just to make it clear, our priority continues to be making all the investments that are needed to make this company a smashing success. We do think we're doing that, but that continues to be our top priority for all of our resources, cash and time and otherwise.
We are very aware that we also have obligations to our defined benefit pension plan. We have tried to pay a lot of very careful attention there consistently over the years, and we continue to do that.
Obviously, there's a range of options for further deployment of that cash. And while I don't have anything to say on that specifically today, we're very aware of that and are evaluating what the best course of action is to use that cash responsibly.
One thing I am certain we will never do is let it burn a hole in our pocket, so to speak. So we're very carefully considering the alternatives that you allude to.
So that would be a combination of pension funding, growth in the business and distributions of some sort to shareholders, whether it's dividend or continued NCIB. Is that correct?
Yes. I mean, our priority always is and has been and continues to be investing in the business wherever it's warranted. And that kind of goes without saying, although I know I'm saying it kind of 3 times. And yes, the other 2 things you mentioned are very much on the table. But I have nothing to announce today. We're very carefully looking at all of that.
Operator, do we have any more questions?
[Operator Instructions] There are no further questions registered at this time. I would like to turn the meeting back over to Mr. Eckert.
Thank you, everyone, for participating today. And thank you very much for your continued support. We look forward to seeing you.
[Audio Gap]
Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.