Yellow Pages Ltd
TSX:Y
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
8.7
11.92
|
| Price Target |
|
We'll email you a reminder when the closing price reaches CAD.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Yellow Pages Ltd
You don't have any saved screeners yet
Good morning, ladies and gentlemen. Welcome to the Yellow Pages' Fourth Quarter 2018 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 2018. This call is being recorded and webcast, and all of the disclosure documents are available on SEDAR and shortly on the company's website. I would now like to turn the meeting over to Mr. David Eckert, President and Executive Officer. Please go ahead, sir.
Good morning. Thank you, for joining us today. Appreciate that very much. As is our custom, I'd like to make a few brief comments to kick off the call and then our Chief Financial Officer, Franco Sciannamblo, had a little bit more commentary on the quarter and the year end, and then we will be delighted to take your questions.And it's a snowy day here in Montréal, but things otherwise are actually quite good. We feel we're really at somewhat of a watershed moment in the history of our company. We have, over the last year, been able to accomplish two things, which I think are very, very important. First, we have taken drastic but very careful steps to align our spending with our revenue. And at the same time, shed a series of unprofitable and/or non-synergistic businesses. And those steps have allowed us two things: Dramatically increase the company's EBITDA minus CapEx. We today report the fourth quarter in a row of substantially increased EBITDA minus CapEx over the previous year comparable period, including a 48% increase for the full year 2018 in that measure compared to the prior year. And the other thing it has allowed us to do is pay down a significant amount of the company's debt, so that our debt net of cash, if you set aside the leases, is down by almost half compared to what it was only a year ago. And that same measure is now, I believe, slightly less than 1x EBITDA. So the first thing we've been able to accomplish is that, which rests on a tremendous amount of work and good progress over this year that we're reporting on today. The second thing is we've also simultaneously been laying the groundwork to improve our revenue trends. We have -- we recently announced that we have completely restructured the collective bargaining agreements that the company has had for a very long time with the unions representing our sales professionals. And the restructuring that has been done there, I would say, for the first time in a very, very long time, allows management to actually manage and -- properly manage and properly reward our sales professionals. The previous agreements I believe were relics of a bygone era and we don't operate in a bygone era and we don't operate in a bygone situation. So we are very enthusiastic about the progress that has been made and that shackles have been removed from the hands of management's ability to properly manage our selling effort and compete in a competitive marketplace in which we operate. Now we're in a position to address years of antiquated ways of deploying and managing our selling effort and our sales force to get about bending the revenue curve, which everybody on this call knows is the top priority now. We're very excited about where we stand. We really do think that it's a bit of a watershed moment in the history of the company. And let me turn the microphone over to Franco for a couple of minutes to run through some of the numbers from the fourth quarter and the full year. And then we'll answer your questions. Thank you.
Thanks, David. Good morning, everyone. I will now take you through our financial results for the fourth quarter ended December 31, 2018. Total revenues for the quarter amounted $124.5 million, which represents a decrease of 30.3% year-over-year or $54 million, of which $16.2 million is attributable to divested businesses. Other than the impact from the divestitures, the decrease was mainly attributable to digital revenue declines in all segments and print revenue decline in the YP segment. Total digital revenues for the fourth quarter amounted to $96.5 million or 77.5% of total revenues, representing a decrease of 29.4% year-over-year or $40.1 million, of which $11.6 million is attributable to the divested businesses. Other than the impact from the divestitures, the decrease was mainly attributable to a $70 million or a 17.4% decline in YP segment digital revenues, mostly in our higher margin YP digital media products, thereby creating pressure on our gross margin. Excluding the impact of the sale of RFD, the YP segment digital revenue decline was 16.4%. Total digital revenue for the quarter was further impacted by the wind down of Mediative activities and by the closure of certain U.S. operations in the Agency segment to improve profitability. Total print revenues amounted to $28.1 million, representing a decline of 33.2% year-over-year or $14 million, of which $4.7 million was attributable to divested businesses. Other than the impact from the divestitures, the print revenue decline is attributable to the YP segment where results were obviously impacted by a decline in a number of print customers and lower spend by customer. Gross profit decreased to $74.5 million or 59.8% of total revenues for the fourth quarter of 2018 compared to $92.6 million or 51.8% of total revenues for the same period last year. Other than the $6.8 million impact from divestitures, the decrease is mainly attributable to the decline in revenues in the YP segment, the company's most profitable segment. The increase in gross margin percentage from 51.8% last year to 59.8% this year is due to the company's cost-reduction measures and focus on profitability to products and services offsetting the pressures from reduced revenues and change in product mix. The company's other operating costs were reduced by $13.5 million or 28.8% to $33.4 million in the fourth quarter of 2018 versus $46.9 million for the same period last year mainly as a result of our cost-reduction measures and divestitures. Adjusted EBITDA decreased by $4.5 million to $41.1 million during the fourth quarter of 2018 compared to $45.7 million for the same period last year. Our adjusted EBITDA margin for the quarter was 33% compared to 25.6% last year. The decrease in adjusted EBITDA for the fourth quarter of 2018 was impacted by lower overall revenues and unfavorable changes in product mix. However, revenue pressures were mostly offset by an expansion in adjusted EBITDA margin as a percentage of revenues due to reductions in our cost structure, including reductions in our workforce and associated employee costs, reduction in our office space footprint and other spending reductions across the company. Our workforce as of December 31, 2018, totaled 1,010 active employees, which represents a 63% decrease versus the same date last year. Adjusted EBITDA less CapEx increased by $7.3 million or approximately 25% to $41.1 million during the fourth quarter of 2018, compared to $29.8 million last year. The increase in adjusted EBITDA less CapEx was due to decreased spending on software development, office and computer equipment and leasehold improvements associated with office relocations, partly offset by lower adjusted EBITDA. The company recorded restructuring and other charges of $1.2 million in the fourth quarter of 2018 as compared to $17.6 million for the same period last year associated primarily with internal reorganizations and workforce reductions, offset by a favorable litigation settlement on a contractual obligation with a vendor. The company recorded net earnings of $40 million and a net loss of $584.6 million during the three months' period ended December 31, 2018 and 2017, respectively. Other than the impact from the $507 million impairment charge recorded in the fourth quarter of 2017, the improvement in net earnings is mainly due to decreased depreciation and amortization expenses, restructuring and other charges and income taxes. During the quarter, the company made a $114.5 million redemption payment on the senior secured notes. Excluding this payment, the company generated cash of $43.9 million in the fourth quarter of 2018, mainly from cash from operating activities to close the period with $81.5 million in cash. As at December 31, 2018, Yellow Pages had $257.5 million of debt net of cash and restricted cash compared to $442.7 million as at December 31, 2017. This concludes our formal remarks. Thank you for taking the time to join us this morning. We'll now take your questions. And I'll pass it back over to our operator, Marie.
We will now take questions from the telephone lines. [Operator Instructions] We have a question from Aravinda Galappatthige from Canaccord Genuity.
I'll start with a question for David, high-level. Obviously with the collective agreements now, the issue is predominantly resolved. Can you just talk about what your plans are for the -- to set of restructure and enhance the sales team and at the same time to sort of present a -- perhaps a refreshed digital strategy to get the digital side of the business back into growth territory?
Well, first, we've been significantly limited for a very long time in our ability to just do the basic blocking and tackling in managing a selling effort and managing a sales force. It wasn't something that was probably appropriate for me to talk about while we were spending a year engaged in collective bargaining discussions, or even before that. But it is a -- was a significant impediment to doing even the basic things in any competitive industry, in any competitive enterprise, when especially what the company is primarily is a selling organization. And some people in this global industry over the last 15 years have had mistaken ideas about what these legacy Yellow Pages companies are, and those -- that has led to lots of loss of value all around the globe. In the instances where there's been value created in the last decade in this industry, it's where there's been a proper understanding of what the real competitive source of potential competitive advantage in these business is. And that is, indeed, in our being a selling and distribution channel to the small- and medium-sized enterprises in our countries and, in our case, Canada. So the sales force and the ability to nimbly and effectively operate the sales force is far, far, far more important in these businesses than in a typical business or typical industry. So if you have your hands tied behind your back in your ability to manage your selling effort, to reward success and withhold rewards from failure, to assign accounts, to do all the basic things that go almost without saying and almost without thought and have for 50 years or more in almost any competitive enterprise, in almost any country around the globe, then you're not able to have any degree of success and you can talk about digital strategies and all kinds of other stuff till you're blue in the face, and it might convince some unknowledgeable distant observers that you're doing something that sounds good, but it leads to destruction of value and lack of success for all of the constituencies. We now have an opportunity -- that's why I mentioned that it's a bit of a watershed moment for our company. We have an opportunity to go out there and compete. And while we always are in a process of considering upgrades to our products and we always are in situations where we are considering different or new products or partnerships and all that, there's nothing fundamentally wrong with our products. There's absolutely nothing wrong with our marketplace. There's nothing wrong with small- and medium-sized enterprises throughout Canada. There's nothing wrong with our relationships, with hundreds of thousands of small- and medium-sized enterprises in the country. We need to get about doing the doing of selling. But that doesn't mean that we don't refine it every day and we are in the midst of as serious a refinement of that as we were -- had been over the last year, a serious refinement of how we spend our money. But whenever we have seen people talk about fancy revised digital strategies and invest -- so-called investment in those, in this industry in the last 10 years, almost invariably what has followed has been destruction of value and loss of jobs and loss of momentum in the company involved. We are making appropriate investments. We're actually hiring people into certain customer-facing selling and other positions, we are making necessary investments in our product lines. We are excited about the prospect of paying more money to our sales professionals who deliver good, strong results. And we're bullish about the ability of these things to produce. So there is a whole lot of basic blocking and tackling that's not been done in the past, not been able to be done in the past, which now is done and -- which now is able to be done and which we are getting about doing immediately.
Excellent, David. And just a follow-up there. Can I sort of take away from those comments that your sort of high-level view is that your preferences to invest in the sales team and think about selling to SMEs, whatever they desire, whether it's lower-margin products, whether it's differentiated products, and you want to put your investment and resources into nourishing that as opposed to putting a lot of investment into the platform and try to sell and try to drive more eyeballs and take that sort of approach? Is that a proper characterization?
Primarily, a proper characterization. Let me suggest just a couple of refinements. One, we want -- we need to have, we want to have, we will have excellent platforms. But in some cases -- but in every case, it doesn't matter whether we own those or whether others own them, whether we form great partnerships. Others outside, who are not legacy Yellow Pages companies, often are in a much better position to provide up-to-the-minute technology and innovations and investments in that kind of thing. So I see no sacrifices in any way being made there, in that respect. Second, yes, investment in the sales force and the selling effort, absolutely investment, innovation, attention, management and all of that, absolutely. Also investment in customer service; we want to delight every customer, every minute of every day. We want to be the partner of choice, the vendor of choice, if you will. We want to be warming the hearts of all of our customers and our prospective customers entirely. So -- and all of that, by the way, fortunately, generally doesn't require a whole bunch of spending that other companies have convinced the accountants and the analysts to call capital expenditures, which is just cash spending by another name, of course. That generally is not -- high levels of that are not required. And the situations around the globe in the last 10 years, and there haven't been very many, I don't think, but the situations where value has actually been created, the value's been created behind the strategy that we are implementing here now in these years; and behind that strategy, a lot of value has been created around the globe in the last five or six years in a very small number of situations. So yes, we're investing money where we think -- where we know we have a very good shot at having, the old buzzword is, a sustainable competitive advantage. But that's really what it is whether they use the buzzword or not. And that is in our ability to sell and distribute products. And you said whatever the small- and medium-sized enterprise wants, at the highest level, yes, that, but are we -- if they want automobiles, are we going to sell them automobiles? Of course, not. If there is some degree of focus and logic and coherence, and so on which we could talk about at great length. But yes, we're interested first and foremost and second and third as well in what our marketplace, the small- and medium-sized enterprises in Canada would find very useful and valuable. And that's what we intend to deliver.
Just two quick questions for Franco, #1 on the lease obligations, I think it's about $71 million.
$75 million.
Sorry, $75 million balance. Can just you give me a sense of the nature of those obligation? Is that real estate? Is there equipment there? I'm trying to get if it belongs in debt or not? And real quickly, if you don't mind, a second question, with respect to the legal settlement charge of $15 million for the year, has that all been settled in cash? Is that spilling over to '19?
So on the first question, the lease obligation, it's entirely due to real estate, virtually entirely and it is as a result of the IFRS 16 rules were now -- what used to be recorded in operating expenses is now capitalized as a right use of asset and the corresponding liability is represented as a lease liability. So that's what that is for the base rents only. And it reflects the fact that we have reduced our real estate locations from -- that we were using and this is -- that's part of what you're seeing in the margin expansion for our results. We used to have 35 locations that we were using. We are now down to 6. Until the -- accounting-wise until those locations are surrendered, they stay as a liability. And in some cases, we're getting the leases surrendered so the liability disappears. And we're in the process of doing that. In other cases, we sublease, and you see a subleased asset on the balance sheet right under the right of use, and that represents the spaces that we're now getting cash back. So that's what those leases are and how you should look at them. Does that answer your question on the lease?
Yes, just relating to, because you bought up IFRS 16. Obviously you are going to IFRS 16 in '19. The lease payments and the computed interest on the lease payments, does that now go under the EBITDA line, thereby boosting the EBITDA line for '19?
So -- just so you're clear, we early adopted. So -- because we already had to restate for IFRS 15, right, this year? So we're probably one of the only companies that early adopted the IFRS 16, which is that lease standard. So for us, the numbers that we have been reporting all years since Q1 they've already all been restated and they're all apples-to-apples. So there's no anomalies or be caused by the change in GAAP, and there's no new change that's going to happen in our results going forward, because we're fully compliant. '18 and '19 -- sorry, '17 and '18 are apples-to-apples, right? And '19 will be the same way as '18 and '17 have been. So they are all restated in all those numbers. That's why you see in the financials and everywhere restated.
Right. And then on the other legal settlement cash spillover.
Yes. The legal settlement is done. We had accrued, which is an old item, that litigation, that has now been settled and there has been no cash outlay as part of that settlement. And that's what you're seeing the reversal of. It's a noncash item in the restructuring and other charges line. It's a credit in this case.
We have a question from Bentley Cross from TD Securities.
The first one is a follow-on with some of the questions earlier from Aravinda, and part of your opening script David about having your hands tied behind your back. Can you maybe just give us an example of kind of how you were tied up earlier and how you now are -- you're better incented with you sales force?
Sure. Let me give you two examples, it will take a few minutes. First, the previous agreements required us at the beginning of every year to assign accounts and let's speak about our face-to-face salespeople, we have face-to-face salespeople, and we have telesales salespeople. And what I'm going to talk about is analogously true for our telesales people, but let me focus on the face-to-face to answer your questions and describe the example. It required us at the beginning of every year to assign accounts to each and every salesperson that equaled a certain number of dollars. And that had several effects. So it had the equal number of dollars; that had several effects. First, it rewarded failure and it punished success. Because if you and I were two of those people and you would -- and let me just use hypothetical round numbers. Let's say we both started out the year with $1 million worth of accounts in the beginning of the previous year and let's say because you're very effective, you had grown that to $1.5 million and because I'm not effective, I shrunk mine to a $0.5 million. What this required is, I had to take $0.5 million of your accounts -- the boss had to take $0.5 million of your accounts and give them to me, so that starting out the next year, we're equal, again. The effect of -- the effects of that are far-reaching. First, it meant that every January, we spent most of January reassigning accounts. We had to reassign often 40% of the accounts all around among our hundreds of salespeople. If you want to have a trusting, great relationship with your customer, you don't reassign 40% of the different salespeople every year. That makes absolutely no sense. Also, it clearly would reward my failure, in my example of me and you. It provides me an incentive not to produce to the very best I could, because I'm going to get a whole new book of accounts anyway on January 1. And you, boy, it punished your success, you busted your numbers and your backside getting there last year, and we took away a big chunk of your success. The other thing -- and so why should you have worked as hard as you did if the primary beneficiary of your hard work was me. Also, let's say that you're partway through the year or largely through the year and you're wondering whether to invest some time in some of your accounts, which you think might produce some very good benefit for you, the salesperson, and for us, your employer, over the next few years. Well, you know, there's a good chance those won't be your accounts next year, so why should you do that. Now I'm not suggesting that -- look -- I think our salespeople are terrific. I think they are not only professionals, but they are extremely talented. But they are human like I'm. And if I were in that kind of a situation, what I would do if it's November and I think there's a good chance that this account that really needs some investment, is it going to be my account come January, what am I going to do? So the reassigning of accounts is brought about by that restriction was very corrosive and very counterproductive. And, oh, by the way, it also meant that because it was a specific dollar number per salesperson that we, the management, it was dictated to us exactly how many salespeople we could have, because, again, let me just give you a round number. Let's say the number was $1 million of revenue per salesperson. And let's say that our company ended the year with $100 million of revenue and let's say it was down 10%, from $110 million before, that means that this year I have to have exactly $100 million of revenue divided by $1 million per salesperson. I'd have exactly 100 salespeople. I don't want to have to be -- have exactly any number of salespeople, I want to have the freedom to have fewer or especially more salespeople either way, regardless of that. So those are 2 examples. Let me give you another one and that is in the competitive marketplace in which all of these the legacy Yellow Pages businesses all over the world have operated for many years now, at least 5 or 10 as opposed to the, I won't use an objective, but the sort of printed Yellow Page book environment of, say, a decade ago and 2 decades ago, is hotly competitive. We have to be very nimble. Part of that being nimble is we have to be able to structure and restructure incentives and rewards and so forth as we wish. And previously all of the compensation and incentives and so forth, virtually all, was dictated by collective bargaining agreement that's been in place perhaps for years and allowed no flexibility. In our new agreements, the entirety of the variable compensation is completely at the discretion of management and does not require approval of anyone. And we intend to compensate our salespeople extremely fairly. I will be excited to be able to pay more money to people to reward great -- good and great productivity. And we have the flexibility to do that and to be nimble in the ways that we do that. And those are a couple of examples of things -- of freedoms that we have now that we didn't have before. Another example, or 2, we can make management decisions about managing our valuable colleagues now based on performance, not just based on seniority. And there's a whole host of other freedoms where the restrictions in the past were, I believe, incompatible with any level of success, of any business in any competitive marketplace, in any country ever. We now have those shackles removed. They've been in place for a long time. They have been a severe impediment, in my opinion. It's my opinion. And we are very excited and especially because our salespeople are very talented. And any talented salesperson I think loves to have an opportunity to be rewarded and to be rewarded over a period of time for superior investment and superior performance over a period of time, and where the best ones are not then punished every January and where we can be nimble on our feet in the ways that we reward them. So I can go on for hours. This is not a complete list. But it is as much a part of what I referred to as a watershed moment as any and all of the financial milestones that we referred to earlier.
That is certainly great color. And just -- I expect it is going to be pretty hard to quantify, but either for yourself or for Franco, can you try to quantify the impact from the lockouts in the quarter, both on the revenue and cost side?
It is hard.
Can I just say a couple of -- the way our business works, as you probably know, the reported -- the actual -- the revenue that gets called revenue by the accountants and the auditors, so revenue, there is quite a bit of a lag of revenue behind what actions that actually take place. There are what you might call bookings in most businesses and those bookings then in all these whether it's ours or whether it's, I won't mention any others in particular around the globe legacy Yellow Pages companies, there is a -- and I won't be precise, but it's something measured in some quarters, weeks and months and quarters, lag effect. So the lockout in -- it was the September, October, November time period, had undoubtedly some negative effect on the revenue that's actually in the quarter. But also there's a lag effect of any negatives from that, that would take place over a bit of time. So we may have taken a bit of a hit in the fourth quarter, we may have taken a bit of a hit for a little period of time in the future on the revenue side. And on the cost side, I think we had to spend some extra money for certain things. And there was probably some -- just from a cash and accounting standpoint, some expenditures that we didn't make, that we otherwise would have made. I don't think either one of those 2 piles is a really big pile compared to the other numbers that we look at on an income statement. And so to quantify, there's some pluses and minuses and it's not huge. Franco, would you correct any of the things I just mentioned?
No, I think it is bang on. There is nothing that would have distorted the results in Q4. And the lag effect between the reported and what we call published for bookings, you wouldn't have seen it yet. And how much of the decline in the quarter of the bookings is due to the lockout versus other factors, it's difficult to say. But they're definitely not in the Q4 numbers.
Okay. And then last one from me. Just the cash build continues to grow. Is there any logic in paying down debt early and suffering the early repayment penalty or kind of how are you thinking about that, Franco?
Well, we're looking at that because we are sitting on $81.5 million of cash. And so that is part of the things that we're looking out with what to do because we have various options, as you know,. We have the ability to pay a portion voluntarily on the senior notes and it's at a 100 -- so it's 2 points, basically. So that's something that we're looking at. And so we will keep you posted when we have something to say there.
We have a question from Drew McReynolds from RBC.
Maybe, I guess, for you, Franco, as we look kind of forward just given all the asset sales, all the work you guys have done underneath the hood here, maybe you could provide an update on what kind of CapEx, cash taxes, pension funding kind of profile the company has going forward? If you can just help us out for modeling purposes that would be great.
Yes. In terms of cash taxes for 2019, we're not expecting any. So we're not going to be in a payable position in '19. For CapEx, like we've been saying, we're going to be in the low single digits percentage.
As a percentage of revenue.
Yes, as a percentage of revenue, so what you have been seeing in Q4 is typical, because this year we're also a bit lower in some quarters as a result of lease incentives that relate to the prior year that we got. But I think Q4 was more of a pure quarter. So that's kind of the level that you should be looking at going forward. And so you asked about tax and pension. Pension funding on our cash flow, you see, it's above $5 million. So it will be lower than that in 2019. And that will be in the middle to low end of that -- in a range, so 0 to $3 million range.
Okay. Is that cash funding? Is that in excess of the expense in the P&L?
Exactly. That's what you see on the cash flow to fund the deficit, essentially to fund the pension deficit.
Okay. That's great. And I could probably go back and look at this, but when you did the IFRS 16 and would have restated 2017 numbers, just what was the EBITDA list that you got? Is that something you have off the top of your head?
It's -- when -- if you go back in the -- our Q1, I think it's up on our website, we stated all the quarters for both IFRS 15 and 16. It was really not significant. If you look at full year impact, it wasn't large, because we had some drag because of the IFRS 15 stuff offset by some of the upside of now having some of the base rents effectively showing up as interest and depreciation. So there was some uplift there. But there -- we definitely have it all restated for you in the -- in our Q1 reports that's still on our website.
Okay. I'll take a look at that. And lastly, maybe for you, David, a lot of heavy lift obviously over the last kind of 12 months to 24 months. When you look kind of going forward, in terms of additional restructuring or efficiencies that you're looking at in the cost structure, I guess in a baseball analogy, are we in this kind of the late innings now, and now really its truly about improving the revenue profile?
Improving the revenue profile is the top priority. Managing properly and reducing our spending is never finished. It must and has become a way of life. And that would be true always even if we didn't have revenue continuing to decline, but everybody on this call knows what we do, have revenue continuing to decline. One of the biggest mistakes that this company has made in the last 5 or 10 years is not to align its spending with the realities of its revenue. We intend to always align our spending with the realities of our revenue. But having said that, the year 2018 saw an almost unprecedented, in any company, anywhere, in any time, amount of reduction in spending, in real estate footprint, in employment and employees, and everything else you can think of almost. And that sort of thing is not what we're looking to do during 2019. Of course, we're going to continue to, and we have continued every month during 2018 to be very, very, very good stewards of every dollar of revenue that comes in the front door, and make sure that not a single dollar hopefully is spent on anything that doesn't -- that isn't really, really important to leading to good revenue, either immediately or in the near and medium term, as we work on tackling the revenue issue. So the answer, of course, has to be shades of gray. But I don't expect 2019 on that front to look like 2018 will, that's for sure.
[Operator Instructions] We have a question from Adam Shine from National Bank.
So, David, 2 questions for you. One maybe just building on the Drew questions in terms of where you're at on M&A or specifically divestitures. Are those largely done or there is still pockets to be identified for further closure or sale?
Okay. Well, first what we did and what we said we would do, what we've said publicly, what we've started saying publicly from the very beginning of when I started here was that we would look at each and every piece of the corporation's operations and business, including every subsidiary of every line. And we would ask a series of questions about that. Is it -- what is its value at its true synergy to the core business that we have because collectively all of those non-core businesses were contributing, maybe 20% of our revenue or more, and yet, very, very, very little EBITDA less CapEx. And we are not really contributing any growth. And so we would look at it and say, what's the value, the synergistic value, what's the value to the corporation in terms of growth or profit or any other factors. And what might the value be either to someone else or in a wind down or liquidation or whatever fashion. So with every business we have asked those clear objective questions one business at a time. And where we have come out, the constant result of that process over the last 1.5 years has been that almost all of those businesses have not cleared that hurdle. And so almost all of them have been either divested now for money at a good amount of money, cash, and/or closed down or dealt with. Of the entire list, I believe there are only two small ones that remain. And one of them, we're involved in some discussions with very small thing. And one other very small one is actually quite related to our core business and we don't have any intention of -- we won't optimize it, but we don't have any intention of making any divestiture or shutdown of it. So that's a very long way of saying, I don't think you're going to see any -- I was going to say, material, but I don't want to use an accounting firm material. I don't think you're going to see any significant divestitures because there's nothing left.
Okay. Just going back to your comments vis-à-vis the prospect of revenue with your discussion with Bentley, has the hypothetical "you" in that example or the underperformers in the equation be already dealt with as we entered or began 2019? Or is that still something that you need to address? More specifically, on the back of all the adjustments to the new labor contracts, have you had enough time entering 2019 to sort of making some of the initial adjustments you wish to make to kick-start revenue?
We have had some time to make some good adjustments. And by the way, the adjustments I'm not sure exactly which direction is in the back of your mind. But let me say that if -- in the "me," in my hypothetical example, I don't view -- let's look at that picture. I don't view that the problem in that picture is necessarily the "me" in that picture. The problem is us. The problem was the shackles, the restrictive -- the restrictions on the ability of management to do what management needs to do. And in that picture with the me, might actually be able to be the hero, because the "me" there was in a situation where I was being rewarded for doing what I described occurred. And the -- was it Bentley who was asking the question in the picture? He got good results, but he was kind of being punished for those with the ability of management now to avoid doing all those stupid things and instead have proper rewards and so on. The "me" in that situation could well become a very fabulous and very well paid and very successful and extremely valuable to this company, star and performer. So it's properly structured, instead of me taking that hypothetical $1 million book of business and shrinking it to $0.5 million, maybe the "me" under the new situation could take that hypothetical $1 million of book of business and grow it to $3 million, because suddenly and, frankly, I think that a lot of people and salespeople probably even more than average, if they are good, work their comp system. They're smart. They're real smart or else they wouldn't be salespeople. And they know what they're rewarded for doing, and they know what they're not rewarded for doing. And so to the extent that's true, the "me" in the example could well be ignited by the prospect of being able to be recognized and rewarded both in the immediate term and the long term for doing that which is good for the company and for all our constituencies and all our stakeholders. So the problem isn't -- so I am not sure what was behind the idea, but my first step wouldn't be necessarily to find the "me" in that example and ask him to leave the company or something. On the contrary, we defined the "me" in the example to say, hey, you know, we now cleaned up our act, we're going to be able to actually reward you for doing the right stuff. And so let's altogether figure out how you can go do the right stuff and really benefit the company and yourself.
Okay. David, I hear you. And we'll see how many heroes emerge over coming quarters.
Well, give us a little bit of time here. Rome wasn't built in a day. But we are very bullish about being able to actually tackle something that I don't think has been tackled in many, many years.
There are no further questions registered at this time. I would like to turn back the meeting over to you, Mr. Eckert.
Okay. Thank you very much for joining us. And we look forward to certainly keeping you all up to date and hearing from you, again, and answering all your questions, if not sooner, three months from now. Take care.
Thank you.
Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.