Yellow Pages Limited Reports Significantly Improved First Quarter 2018 Financial Results and Announces $30 Million Senior Secured Debt Repayment

MONTREAL, May 11, 2018 /CNW Telbec/ - Yellow Pages Limited (TSX: Y) (the "Company"), a leading Canadian digital media and marketing company, released its financial results today for the quarter ended March 31, 2018 and is announcing that the Company will make a redemption payment of $30.5 million, including accrued and unpaid interest, on its senior secured notes on May 31, 2018.

"This quarter's financial results have begun to reflect our progress in aligning our spending with the realities of our revenue while setting the stage for profitable growth in the future.  We are gratified that Adjusted EBITDA less CAPEX is 59% higher than last year," said David A. Eckert, President and CEO of Yellow Pages Limited.  "We will keep stakeholders up to date as we continue making the improvements to our company that are necessary to build value for all concerned."

First Quarter of 2018 Results

• Adjusted EBITDA less CAPEX¹ increased $15.9 million year-over-year and amounted to $42.5 million.
• Total revenues decreased 11.6% year-over-year to $159.3 million.
• Customer count decreased 7.7% year-over-year.
• The Company's cash flows in the six months ended March 31,2018 will result in a $30.25 million redemption, at par, of its 10.00% Senior Secured Notes on May 31, 2018.

Segmented Information

The Company's operations are divided into the following four segments:

• YP – digital and traditional marketing solutions, including owned and operated media, provided to small and medium sized enterprises ("SMEs")
• Agency – national advertising services to brands and publishers, primarily through Mediative, Juice and Totem subsidiaries
• Real Estate – media and expertise to help Canadians buy and sell their homes, via ComFree/DuProprio ("CFDP") and Yellow Pages NextHome subsidiaries
• Other – diversified portfolio of media properties, including 411.ca and local lifestyles magazines specific to the Western Canadian market

An overview of each segment and the performance of each segment for the three-month periods ended March 31, 2018 can be found in the May 11, 2018 Management's Discussion and Analysis.

Financial Results for the First Quarter of 2018

Total revenues for the first quarter ended March 31, 2018 of $159.3 million decreased by 11.6% as compared to $180.2 million for the same period last year.  The decline in total revenue was due mainly to digital revenue declines in all segments, with the exception of the Real Estate segment which gained 5.2%, and also to a 19% decline in print revenues.

Adjusted EBITDA increased by $6.4 million to $47.9 million in the first quarter ended March 31, 2018 relative to $41.5 million for the same period last year.  The Company's Adjusted EBITDA margin for the first quarter of 2018 was 30.1% compared to 23.0% for the same period last year.  The increase in Adjusted EBITDA and Adjusted EBITDA margin for the first quarter ended March 31, 2018 was mainly the result of reductions in our cost structure including reductions in our workforce and associated employee expenses, reductions in the Company's office space footprint, and other spending reductions across the Company.

Net loss for the quarter ended March 31, 2018 was $0.9 million, or $0.03 per diluted share as compared to a net loss of $5,1 million, or $0.19 per diluted share for the same period last year.  The improvement in profitability of $4.2 million was driven by higher Adjusted EBITDA¹, lower depreciation and amortization expenses partially offset by increases in restructuring and other charges and provision for income taxes.

Adjusted EBITDA less CAPEX¹ increased by $15.9 million to $42.5 million during the first quarter of 2018, compared to $26.7 million during the same period last year.  The increase in Adjusted EBITDA less CAPEX¹ for the three-month period ended March 31, 2018 was mainly impacted by higher Adjusted EBITDA¹ and decreased spending on software development, office and computer equipment and leasehold improvements associated with office relocations.

Cash flows from operating activities increased by $15.4 million to $31.4 million from $16.0 million for the three-month period ended March 31, 2017 due to higher Adjusted EBITDA¹ of $6.4 million, lower interest paid of $6.6M and $6.3 million from changes in operating assets and liabilities, partially offset by higher payments for restructuring and other charges of $3.8 million.  The reduction in interest paid is due to the fact that the Company's first semi-annual interest payment on its 10.00% Senior Secured Notes did not occur until May 1, 2018.

Conference Call & Webcast
Yellow Pages Limited will hold an analyst and media call and simultaneous webcast at 8:30 a.m. (Eastern Time) on May 11, 2018 to discuss first quarter 2018 results.  The call may be accessed by dialing 416-340-2218 within the Toronto area, or 1-800-377-0758 outside of Toronto.

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, RedFlagDeals.com, Canada411.ca, 411.ca, Bookenda.com, DuProprio.com, ComFree.com and NextHome.  The Company also holds the YP, YP Shopwise, YP Dine, RedFlagDeals, Canada411, 411, Bookenda, DuProprio, ComFree and NextHome mobile applications and Yellow Pages print directories.  In addition, Yellow Pages is a leader in national advertising through its businesses devoted to servicing the marketing needs of large North American brands, including Mediative and JUICE.  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, results of operations and businesses of the Company.  These statements are forward-looking as they are based on our current expectations, as at May 11, 2018, 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 6 of our May 11, 2018 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.

Contacts:

Investors
Ken Taylor
Senior Vice-President, Chief Financial Officer
investorrelations@yp.ca

Media
Anca Bucur
Manager, Communications
Tel.: (514) 934-2422
anca.bucur@pj.ca  

¹ Non-IFRS Measures
In order to provide a better understanding of the results, the Company uses the terms Adjusted EBITDA and Adjusted EBITDA margin.  Adjusted EBITDA is defined as income from operations before depreciation and amortization, impairment of intangible assets and goodwill, and restructuring and other charges, or revenues less operating costs, as shown in Yellow Pages Limited's interim condensed consolidated statements of loss.  Adjusted EBITDA margin is defined as the percentage of Adjusted EBITDA to revenues.  Adjusted EBITDA and Adjusted EBITDA are not performance measures defined under IFRS and are not considered an alternative to income from operations or net earnings in the context of measuring Yellow Pages performance.  Adjusted EBITDA and Adjusted EBITDA margin do not have a standardized meaning and are therefore not likely to be comparable to similar measures used by other publicly traded companies.  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 to value companies in the media and marketing solutions industry as well as to evaluate the performance of a business.

The Company also uses Adjusted EBITDA less CAPEX, which is defined as Adjusted EBITDA, or revenues less operating costs, as shown in Yellow Pages Limited's consolidated statements of loss, less CAPEX which we define as additions to intangible assets and additions to property and equipment less lease incentives received all as reported in the Investing Activities section of the Company's interim condensed consolidated statements of cash flows.  Adjusted EBITDA less CAPEX is a non-IFRS financial measure and does not have any standardized meaning under IFRS.  Therefore, it is unlikely to be comparable to similar measures presented by other publicly traded companies.  We use Adjusted EBITDA less CAPEX to evaluate the performance of our business as it reflects its ongoing profitability.  We believe that certain investors and analysts use Adjusted EBITDA less CAPEX to evaluate the performance of a business.  Refer to the May 11, 2018 MD&A for a reconciliation of CAPEX.

² For the 12 month periods ended March 31.

SOURCE Yellow Pages Limited