Yellow Pages Ltd
TSX:Y
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Yellow Pages Ltd
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Good morning, ladies and gentlemen, and welcome to the Second 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 second 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 very much for joining our second quarter call. Today, we think we have a bunch of very exciting news. I am joined from the company by Sherilyn King, our Senior Vice President of Sales, Marketing and Customer Service; Franco Sciannamblo, our Chief Financial Officer and Senior Vice President; and Treena Cooper, our Senior Vice President, Secretary and General Counsel.
As we usually do, I'd like to make a few comments up top, summarizing where we stand. Franco Sciannamblo, our CFO, will then provide some additional details. And then we'd be happy to take your questions.
First, let me say, I think we've had another very good quarter in the second quarter. We continue to approach stability in our revenue. This makes the 7th quarter in a row and the 12th out of the last 14 quarters overall that we report, what I call a favorable bending of the revenue curve, where we have a better rate of change in revenue than we had the previous quarter. And not only that, but we're getting ever closer to having stability of revenue.
Looking forward, the best leading indicator of our future reported revenue, we don't make predictions, but I can tell you that our -- the trends in our bookings continue to be increasingly favorable. This quarter, we also report a continued strong earnings. Our adjusted EBITDA this quarter as a percent of revenue is 34.2%, which is an even higher percentage than it was the same quarter last year. And finally, on the performance of the business, our cash balance continues to steadily grow, reaching approximately $135 million as of the end of July. That's the end of July, not the end of the quarter.
Second, let me just point out that all of the uses of cash that we have described in the past during the second quarter move forward as expected. Funding -- extra funding of our pension plan, very much on track in the second quarter alone. We made $1 million of incremental voluntary payments toward our Defined Benefit Pension Plan's wind up deficit. The Board -- we paid a quarterly dividend during the quarter. And yesterday, our Board of Directors authorized payment of another quarterly dividend of the same magnitude to be paid in September.
And finally, during the second quarter, we completed our NCIB for our common stock, which ended up totaling $16 million of cash to acquire shares on the open market through that program. In addition to all that, I'm very pleased to announce today that we have put in place a plan to provide cash to our shareholders and additional cash into our Defined Benefit Pension Plan.
Under that plan, we will spend $100 million of cash buying back shares in the company, and we will advance -- accelerate payment of $24 million of previously planned voluntary contributions to Defined Benefit Pension Plan. And that -- those payments will be made by all of the above by the end of the year, we expect, and that will bring to $30 million during this year alone of incremental voluntary cash payments into our Defined Benefit Pension Plan.
All of the above will be done under -- by the end of the year as part of a plan of arrangement. So I think all of the news today, we're very excited about. I think all of it reflects a further strengthening of our company. And we are increasingly convinced that the company has a very bright future.
I'd like to turn it over now to Franco Sciannamblo, our Chief Financial Officer, to provide more details on the points that we just summarized. Franco?
Thanks, David, and good morning to everyone. Let me take you through now our financial results for the second quarter, June 30, 2022, and let me start with our revenues. They decreased $5 million or 6.7% year-over-year and amounted to $69.6 million for the second quarter, an improvement from the decrease of 7.8% 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 continues to put some 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 6.7% this quarter compares to a decline of 15.5% reported for the same period last year. Digital revenue decline of 5.2% this quarter compares to a decline of 13.6% reported for the same period last year. Print revenue decline of 11.2% this quarter compares to a decline of 20.8% 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 this was impacted by the pressure from revenues, partially offset by price increases, the efficiencies from continued optimization and cost of sales, reductions in other operating costs, including reductions in our workforce and associated employee expenses, the decrease in bad debt expense and the impact of the company's share price on cash-settled, stock-based compensation expense. As a result, adjusted EBITDA decreased year-over-year by $0.7 million or 2.7% to $23.8 million, while EBITDA margin increased by 1.4% to 34.2%. And this compares to 32.8% for the same period last year.
Revenue pressures, coupled with further investment in our tele-salesforce capacity, partially offset by continued optimization, will continue to cause some pressure on margin in upcoming quarters. As for our workforce, as at June 30, our total workforce decreased to 628 employees compared to 671 at the same date last year. Our net earnings for the second quarter, it increased to $12.7 million compared to $6 million for the same period last year. While the second quarter of 2021 was impacted by the loss on the early repayment of debt of $7.8 million, the decrease in net earnings for the second quarter of 2022 is also explained by lower adjusted EBITDA, the increase in restructuring and other charges being more than offset by the decrease in financial charges due to lower debt, as well as the decrease in depreciation and amortization.
In August you will recall, and as David alluded to earlier, 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 423,099 shares for cash of $6.1 million during this quarter. And this completed an NCI (sic) [ NCIB ] program, which we completed on May 30, which resulted in the company purchasing a cumulative total of 1,122,511 common shares for cash of $16 million.
For pension contributions, as you know, in 2021 the Board approved a voluntary incremental $4 million annual cash contribution to the company's deficit Defined Benefit Pension Plans, wind-up deficit as part of a Deficit Reduction Plan. During the second quarter, the company made payments totaling $1 million, bringing the year-to-date total to $2 million in voluntary incremental cash contribution to the plan's wind-up deficit.
And also, as David mentioned, our cash on hand stood at approximately $135 million at the end of July. And with that in mind, the Board of Directors declared a cash dividend of $0.15 per common share, payable on September 15 to shareholders of record as at August 25, 2022.
And finally, I'm going to give you some more details on the use of cash of $100 million to buy back the company shares and also advanced $24 million of the planned voluntary contributions to the Defined Benefit Pension Plan by the end of the year. This will be effected pursuant to a plan of arrangement, which provides that the company will repurchase from shareholders, pro rata, an aggregate of 7,949,125 common shares at a purchase price of $12.58 per share, which represents the volume weighted average price for the 5 consecutive trading days ending the trading day immediately prior to August 5, 2022.
Under the plan of arrangement, the company will also advance the previously announced voluntary incremental cash contributions to the Pension Plan's wind-up deficit by an amount of $24 million during the year ending December 31, 2022, bringing 2022 cash payments to the Pension Plan's wind-up deficit to $30 million by the end of this year. The incremental voluntary cash infusion of $24 million during the year ended December 31, 2022 represents advancing the voluntary $6 million contribution that was intended in years 2027, 2028, 2029 and 2030, that were part of the Deficit Reduction Plan that we announced in May of 2021. That increases the probability that the pension plan will be fully funded by 2030.
The arrangement is subject to the approval of at least 66 and 2/3 percentage of the votes, cast by the holders of shares at a special meeting of shareholders that will be called to approve the arrangement. Shareholders holding in excess of 78% of the outstanding shares have agreed with the company to vote in favor of the arrangement. The arrangement is also subject to the receipt of the approval of the Supreme Court of British Columbia.
This concludes our formal remarks. Thank you for taking the time to join us this morning. We will now take your questions.
[Operator Instructions] There are no questions being registered at this time, I will turn the call back to Mr. Eckert.
We thank you all very much for your continued support. We look forward to meeting with you this time next quarter. And hopefully, we'll have another quarter of really good news. Thank you very much, and have a good day.
Thank you, the conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.