Yellow Pages Ltd
TSX:Y
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Yellow Pages Ltd
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Good morning, ladies and gentlemen. Welcome to Yellow Pages’ First Quarter 2023 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 fourth quarter of 2022. 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.
Thank you very much. Good morning, everyone, and thank you all for joining our first quarter 2023 analyst call. We really appreciate your interest in our company and your participation here today.
As usual, I’ll start out in a moment by making some overview comments. And then Franco Sciannamblo, our Chief Financial Officer, will provide some more detail. And then Franco and Sherilyn King, our Senior Vice President of Sales, Marketing and Customer Service, and I will be happy to answer any questions that there might be.
As an overview, our first quarter results, we’re very pleased with what we have to report today, continued very strong profitability and very strong cash generation in spite of our continued investments in revenue initiatives, including significant expansion of our sales force.
We report adjusted EBITDA for the quarter of 33.1% of revenue continued very strong, consistent with our plan to reduce the deficit in our Defined Benefit Pension Plans, wind up deficit in the first quarter, we again made $1.5 million of voluntary incremental payments towards that plan. Even after that and after certain regular seasonal cash disbursements during the quarter, our cash on hand at the end of April was approximately $54 million of cash on hand.
Our revenue situation in spite of some increased headwinds in the general economy, our change in revenue in the first quarter compared to prior year was still slightly better than the same measure a year previous. And we’re very pleased with our continued progress on the underlying metrics, including the size of our sales force, which is expanding nicely, our rate of churn of customers, which is good and improving and our rate of gaining new accounts.
I’m very pleased to announce today that we are increasing our cash – quarterly cash stock dividend from $0.15 per share per quarter to $0.20 per share per quarter and to announce that our Board has indeed declared a dividend of $0.20 per common share to be paid on June 15 to shareholders of record as of May 25.
So overall, we feel continued good progress, and I’m happy to turn it over now to Franco for some additional details behind those headline points.
Thanks, David. And good morning to everyone. Let me take you through our financial results for the first quarter ended March 31, 2023.
On revenues, they decreased by $5.1 million or 7.5% year-over-year and amounted to $62.7 million for the first 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 continues to put pressure on our margins. The decline rates for total revenues and digital revenues improved year-over-year. Total revenue decline of 7.5% this quarter compares to a decline of 7.8% reported for the same period last year.
Digital revenue decline of 5.7% this quarter compares to a decline of 7.7% reported for the same period last year. These improvements were due to better spend per customer in digital, increased renewal rates as well as continued improvement in customer claims. The print revenue decline of 13.7% this quarter compares to a decline of 7.9% reported for the same period last year. The higher decline rate for print revenue is attributable to the decrease in average spend per customer, partially offset by improvements in customer claims.
On adjusted EBITDA for the quarter, it was impacted by revenue pressures as well as ongoing investments in our tele-sales force capacity partially offset by reductions in other operating costs, including reductions in our workforce and associated employee expenses and lower variable compensation expense. As a result, adjusted EBITDA decreased year-over-year by $4.7 million or 18.3% to $20.8 million, and EBITDA margin decreased to 33.1% compared to 37.5% 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 the upcoming quarters.
Adjusted EBITDA less CapEx for the first quarter decreased by $4.1 million year-over-year to $19.8 million, mainly due to the decrease in adjusted EBITDA, partially offset by lower capital expenditures as 2022 CapEx spend was impacted by the integration of new products.
On our workforce as of March 31, it increased to 656 employees compared to 608 at the same date last year. Sales force headcount increased by 64, while all other head count decreased by 16.
Net income for the first quarter amounted to $12.4 million compared to $14.6 million for the same period last year due to lower adjusted EBITDA, partially offset by lower depreciation and amortization, lower restructuring and other charges, financial charges and lower income taxes.
Diluted EPS for the quarter was $0.68, an increase of 21% versus Q1 2022 EPS of $0.56. This increase was due to lower shares outstanding.
Consistent with our Deficit Reduction Plan on pension contributions, in the first quarter of 2023, the company made $1.5 million in voluntary incremental cash contribution to the plan’s wind-up deficit.
As David mentioned, our cash on hand at the end of April stood at approximately $54 million. And as David announced the Board of Directors has modified the dividend policy and approved an increase in quarterly cash dividend from $0.15 to $0.20 per common share, up 33% from previous quarterly dividends.
Finally, the Board of Directors declared a cash dividend of $0.20 per common share payable on June 15 to shareholders of record as at May 25, 2023.
This concludes our formal remarks. Thank you for taking the time this morning. We will now take your questions. Over to you, operator.
Certainly sir. Ladies and gentlemen we will now take questions from the telephone line. [Operator Instructions] There are no questions at the moment, Mr. Eckert.
Okay. Well, we thank you all for your participation, for your support of our company, and we look forward to [indiscernible] you again one quarter from now. Thanks very much, and have a great day.
Thank you. Ladies and gentlemen, your conference has now ended. All callers are asked to hang up their lines at this time. And thank you for joining today’s call.