|By Marketwired .||
|May 8, 2014 07:00 AM EDT||
MONTREAL, QUEBEC -- (Marketwired) -- 05/08/14 -- Yellow Media Limited (TSX:Y)
-- The Company experiences a 10.6% year-over-year growth in digital revenues across its core YPG operations during the first quarter of 2014 -- Customer penetration of the Yellow Pages 360 degrees Solution reaches 29.9% as at March 31, 2014, as compared to 18.9% last year -- The Company records net earnings of $39.2 million during the first quarter of 2014, as compared to $53.5 million for the same period last year -- A $73.5 million principal mandatory redemption payment on the 9.25% Senior Secured Notes is anticipated to be made on June 2, 2014 -- Yellow Media develops a Return to Growth Plan to support its digital transformation and return the Company to revenue growth and stable profitability
Yellow Media Limited (TSX:Y) (the "Company" or "Yellow Media") released its operational and financial results today for the first quarter ended March 31, 2014. The Company continues to advance the second phase of its digital transformation, designed to bring Yellow Media closer to its long-term objective of becoming Canada's leading local digital company.
"Supported by a healthier capital structure, the first phase of our transformation established a solid digital foundation for us to build upon," said Julien Billot, President and Chief Executive Officer of Yellow Media. "We are currently executing the second phase of our digital transformation, using this strengthened foundation to gain a leadership position within Canada's local digital advertising market while returning the Company to growth."
First Quarter 2014 Financial Results
Revenues for the first quarter of 2014 decreased 11.9% to $223.2 million, as compared to $253.3 million for the same period last year.
For the first quarter of 2014, digital revenues across our core YPG operations, which exclude the impact of Mediative and Wall2Wall, increased by 10.6% year-over-year. Consolidated digital revenues reached $104 million in the first quarter of 2014, representing a growth of 5.1%, and were negatively impacted by the loss of a national account at Mediative during the second quarter of 2013. During the first quarter of 2014, consolidated digital revenues represented 46.6% of total revenues, up from 39.1% during the same period in 2013.
Growth in digital revenues continues to result from the ongoing migration of traditional media customers towards digital products and services, as well as continued customer adoption of the Yellow Pages(TM) 360 degrees Solution. The penetration of the Yellow Pages 360 degrees Solution offering amongst Yellow Media's customer base, which is defined as customers who purchase three product categories or more, grew to 29.9% as at March 31, 2014 compared to 18.9% the year prior.
Print revenues continued to show stable declines during the first quarter of 2014, decreasing 22.7% year-over-year to reach $119.3 million.
EBITDA decreased to $94.6 million during the first quarter of 2014, as compared to $115.5 million last year. EBITDA remains adversely impacted by print revenue pressure and a lower EBITDA margin.
The EBITDA margin decreased to 42.4% for the three-month period ended March 31, 2014, as compared to 45.6% for the same period last year. The EBITDA margin for the first quarter of 2014 was primarily affected by lower print revenues, a change in product mix and investments required to advance the Company's digital transformation. The EBITDA margin for the first quarter of 2014 was also impacted by a non-recurring benefit associated with a litigation outcome. Excluding this element, the EBITDA margin for the first quarter of 2014 decreased to 41%.
In an effort to promote long-term profitability, the Company continues to invest in business efficiencies and the streamlining of operational processes. During the first quarter of 2014, YPG enhanced its digital fulfillment processes by automating the creation of Virtual Business Profiles. In addition, the Company is presently standardizing its existing legacy architecture through consolidation of print publishing systems and IT data centers.
For the first quarter ended March 31, 2014, the Company recorded net earnings of $39.2 million and basic earnings per share of $1.43. This compares to net earnings of $53.5 million and basic earnings per share of $1.91 for the same period last year. The decrease is mainly explained by lower EBITDA.
The Company used free cash flow of $3.3 million for the first quarter of 2014, as compared to free cash flow generation of $67.7 million last year. This decline results mainly from higher income taxes paid in 2014, as the Company was not required to pay income tax installments in 2013, lower EBITDA and higher restructuring payments related to the November 2013 workforce realignment.
Yellow Media expects to generate sufficient cash flow from its operations to invest in its digital transformation and service all future debt obligations. As at March 31, 2014, net debt totaled $541.2 million, which compares to $533.1 million as at December 31, 2013. On June 2, 2014, the Company anticipates making a $73.5 million mandatory redemption payment on its Senior Secured Notes.
"Yellow Media remains committed to delivering long-term, sustainable value to its shareholders," said Ginette Maille, Chief Financial Officer of Yellow Media. "We will increase shareholder value through execution of our digital transformation, thereby investing in projects that promote revenue growth and protect profitability. In addition, we will further strengthen and optimize our capital structure by maintaining a focus on debt repayment."
"Yellow Media's long-term objective remains unchanged, and we strive to develop into Canada's leading local digital company," said Billot. "The realization of this objective will come in multiple, distinct phases to be executed over the medium-to-long-term. As part of our second phase of transformation and Return to Growth Plan, we have focused our investments in projects that enhance our brand, media assets and go-to-market strategy, and, ultimately, improve our positioning within the local digital advertising market."
Extending our Brand Promise
-- The Company repositioned its flagship local search property from "yellowpages.ca" to "YP.ca" to boost brand recognition and strengthen the Company's digital identity. -- A television and digital advertising campaign was launched across Canada to grow usage and traffic on the YP mobile application. The campaign introduces Canadians to the new YP brand, while also highlighting the enhancements made on the mobile application to provide shoppers with an improved search experience.
Strengthening our Media Assets
-- Total digital visits, which measures the number of visits made across the YP, RedFlagDeals and ShopWise desktop and mobile properties, grew to 94.1 million. This compares to 93.8 million visits for the same period last year. -- The Company launched its redesigned YP online and mobile properties to provide users with more relevant search results, quick access to trending local search themes, an improved ability to discover local deals and popular merchants in and around their neighborhoods, as well as faster response times. -- Yellow Media expanded its database of business information by creating 250,000 new, more targeted business categories and adding richer information to its national and local merchant pages. The Company also continued the rollout of Merchant Content Collection Applications across its sales force to promote the real-time collection and publishing of customer information.
Enhancing our Go-to-Market Strategy
a) Promoting Customer Acquisition
-- Total customer count was 270,000 as at March 31, 2014, compared to 300,000 at the end of the same period last year. -- Customer acquisition for the twelve-month period ended March 31, 2014 stood at 16,500. The rate of customer acquisition continued to improve, with customer acquisition for the twelve month periods ended March 31, 2013 and December 31, 2013 having totaled 16,400 and 15,200, respectively. -- A new Customer Relationship Management platform was implemented across the Company's acquisition call centers, automating the routing and assignment of incoming leads to promote effective leads management and nurturing.
b) Promoting Customer Retention
-- The customer renewal rate declined slightly to reach 85% as at March 31, 2014, as compared to 86% for the same period last year. -- The Company remains committed to providing local businesses with the industry's most valuable, diversified and comprehensive digital services. Yellow Media recently launched Smart Digital Display across its sales channels, a display advertising solution that helps small and medium enterprises ("SMEs") build an online presence by exposing their digital banner ads to local online audiences. -- Yellow Media also introduced a social media solution to help SMEs establish and maintain visibility on Facebook. Currently being rolled out to customers in Ontario and Western Canada and anticipated to be launched nationally by June 2014, this solution provides customers with professional Facebook Page creation, optimization of their social media presence and Facebook Ad campaign management.
The Return to Growth Plan
Following the Company's progress in the first quarter of 2014, the Return to Growth Plan (the "Plan") has been established to efficiently guide the Company as it continues to execute upon its second phase of digital transformation. The Plan serves to leverage investments made in 2013, as well as the Company's strengthened digital foundation, to gain a leadership position within Canada's local digital advertising market.
Successful implementation of the Plan will be promoted through ongoing focus on the following pillars of transformation:
-- Extending the Brand Promise - Investments will be made to evolve legacy perceptions of the brand and boost awareness of the Company's platforms and solutions. A simplified brand architecture will be implemented, positioning Yellow Media as a differentiated, unique digital player within the local neighborhood economy. National multi-media campaigns will also be deployed to increase usage of its properties and promote customer acquisition. -- Strengthening its Media Assets - Investments will be made across the Company's owned and operated digital media to attract and grow audiences. Improved content and functionalities will be added onto the YP properties to help users best fulfill their daily needs. In addition, the Company will develop new verticals to deliver a more targeted search experience and expand Yellow Media's share of business search in underpenetrated categories such as shopping, restaurants, real-estate and leisure. An enhanced focus will also be maintained on evolving the Company's mobile and tablet properties and providing an upgraded on-the- go local search experience. -- Enhancing its Go-to-Market Strategy - The Company will evolve its suite of digital products and services by introducing simplified and more verticalized offerings, as well as performance-based solutions that best leverage the power of its owned and operated digital properties and protect profitability. In conjunction with improved customer acquisition and retention efforts, Yellow Media anticipates returning to a growth in customer count by 2017. An expanded sales force, as well as new technologies, processes and training programs, will be developed to promote an acquisition-centric sales culture throughout the organization. Furthermore, Yellow Media will enhance customer satisfaction by improving basic service levels and introducing more personalized levels of customer service to its clients. Lastly, Meditative will invest to strengthen its offerings to national agencies, customers and retailers. They will also engage in research, development and innovation within digital marketing to help support Yellow Media's ongoing transformation.
The Company has put in place an internal Transformation Office to implement the Return to Growth Plan. Reporting to the Chief Executive Officer, the Transformation Office will be led by Stephen Port, Vice President - Transformation Office, and assume full ownership and delivery of projects supporting the Plan.
"Successful execution of our Return to Growth Plan will significantly improve our relationship with Canadian businesses and audiences," said Billot. "Upon completion of the Return to Growth Plan, Yellow Media will be equipped with a strengthened platform onto which it can diversify, start new digital businesses and, ultimately, meet its objective of becoming Canada's leading local digital company."
The Plan is expected to allow the Company to achieve consolidated revenue growth by 2018. Digital revenues are anticipated to surpass print revenues in 2015 and grow at high single-digit annual rates thereafter. As print revenue stabilization remains challenging to forecast, the Company will continue to optimize the profitability of the print platform through redesigned offers, targeted directory distribution, as well as the streamlining of operational processes. Profitability will also be promoted through the automation of various digital fulfillment processes and improved productivity across our sales channels.
The Company will be required to make incremental operating and capital expenditures over the short-to-medium term to promote proper execution of the Return to Growth Plan. Consequently, EBITDA margins will remain under pressure relative to 2013, as additional investments will be made during the remainder of 2014 and in 2015 to strengthen the brand promise, improve the user experience and grow and maintain digital audiences.
Annual capital expenditures will increase to approximately $85 to $90 million in 2014 and $70 to $75 million in 2015 as the Company develops IT platforms to support growth in digital audiences, customer acquisition, customer retention and new product introduction.
By 2018, upon returning to revenue growth, the Company anticipates EBITDA margins to stabilize between 30% and 35% and capital expenditures to be maintained at approximately 5% of consolidated revenues.
"The Return to Growth Plan will significantly strengthen Yellow Media's financial profile, allowing it to maintain a sustainable level of revenue growth and profitability," said Maille. "In conjunction, the Company will continue to maintain an enhanced focus on debt repayment and aim to significantly delever its balance sheet by 2018."
The Company has made organizational changes to ensure it has the right expertise in place to implement the Return to Growth Plan. Among these changes, Rene Poirier, Chief Information Officer of Yellow Media, will lead the organization's Information Services and Information Technology functions and direct the end-to-end fulfillment of all related projects. Paul Ryan, previously Chief Technology Officer of Yellow Media, will become Mediative's Chief Technology Officer to support their growth in the Canadian national digital advertising market as well as foster an environment of continued digital innovation.
Investor Conference Call
Yellow Media Limited will hold an analyst and media call at 2:00 p.m. (Eastern Time) on May 8, 2014 to discuss the first quarter 2014 results. The call may be accessed by dialing (416) 340-2218 within the Toronto area, or 1 866 225-2055 outside of Toronto.
The call will be simultaneously webcast on the Company's website at http://www.ypg.com/en/investors/financial-reports/2014/quarterly-reports/first-quarter-webcast.
The conference call will be archived in the Investors section of the site at www.ypg.com.
A playback of the call can also be accessed from May 8 to May 15, 2014 by dialing (905) 694-9451 within the Toronto area, or 1 800 408-3053 outside Toronto.
The conference passcode is 3237581.
About Yellow Media Limited
Yellow Media Limited (TSX:Y) is a Canadian digital and print media company, offering businesses comprehensive media solutions to meet their key marketing objectives and providing consumers with platforms to access reliable local business information. By helping local businesses foster stronger relationships with their consumers through its various media, the Company encourages the growth of thriving neighbourhood economies. Yellow Media holds some of Canada's leading local search properties and publications including YP.ca(TM), Canada411.ca and RedFlagDeals.com(TM), the YP, ShopWise and RedFlagDeals mobile applications and Yellow Pages(TM) print directories. Yellow Media is also a leader in national digital advertising through Mediative, a division of Yellow Pages Group devoted to digital marketing and performance media services for national-scale agencies and customers. For more information, visit www.ypg.com.
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 8, 2014, 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 7 of our May 8, 2014 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.
Financial Highlights (in thousands of Canadian dollars - except share information) ---------------------------------------------------------------------------- For the three-month periods ended March 31, Yellow Media Limited 2014 2013 ---------------------------------------------------------------------------- Revenues $223,203 $253,277 Income from operations $73,302 $95,595 Net earnings $39,222 $53,465 Basic earnings per share attributable to common shareholders $1.43 $1.91 Cash flow from operating activities $10,910 $86,588 ---------------------------------------------------------------------------- EBITDA(1) $94,621 $115,478 EBITDA margin(1) 42.4% 45.6% ---------------------------------------------------------------------------- Weighted average shares outstanding 27,419,026 27,955,077 ----------------------------------------------------------------------------
In order to provide a better understanding of the results, the Company uses the term EBITDA, defined as income from operations before depreciation and amortization and restructuring and special charges. Management believes this measure is reflective of ongoing operations. This term is not a performance measure defined under IFRS. EBITDA does not have any standardized meaning and are therefore not likely to be comparable to similar measures used by other publicly traded companies. Management believes EBITDA to be an important measure.
Information technology is an industry that has always experienced change, and the dramatic change sweeping across the industry today could not be truthfully described as the first time we've seen such widespread change impacting customer investments. However, the rate of the change, and the potential outcomes from today's digital transformation has the distinct potential to separate the industry into two camps: Organizations that see the change coming, embrace it, and successful leverage it; and...
Dec. 2, 2016 03:30 PM EST Reads: 3,179
In IT, we sometimes coin terms for things before we know exactly what they are and how they’ll be used. The resulting terms may capture a common set of aspirations and goals – as “cloud” did broadly for on-demand, self-service, and flexible computing. But such a term can also lump together diverse and even competing practices, technologies, and priorities to the point where important distinctions are glossed over and lost.
Dec. 2, 2016 03:15 PM EST Reads: 1,434
All clouds are not equal. To succeed in a DevOps context, organizations should plan to develop/deploy apps across a choice of on-premise and public clouds simultaneously depending on the business needs. This is where the concept of the Lean Cloud comes in - resting on the idea that you often need to relocate your app modules over their life cycles for both innovation and operational efficiency in the cloud. In his session at @DevOpsSummit at19th Cloud Expo, Valentin (Val) Bercovici, CTO of Soli...
Dec. 2, 2016 02:15 PM EST Reads: 1,497
Without a clear strategy for cost control and an architecture designed with cloud services in mind, costs and operational performance can quickly get out of control. To avoid multiple architectural redesigns requires extensive thought and planning. Boundary (now part of BMC) launched a new public-facing multi-tenant high resolution monitoring service on Amazon AWS two years ago, facing challenges and learning best practices in the early days of the new service. In his session at 19th Cloud Exp...
Dec. 2, 2016 02:02 PM EST Reads: 215
Predictive analytics tools monitor, report, and troubleshoot in order to make proactive decisions about the health, performance, and utilization of storage. Most enterprises combine cloud and on-premise storage, resulting in blended environments of physical, virtual, cloud, and other platforms, which justifies more sophisticated storage analytics. In his session at 18th Cloud Expo, Peter McCallum, Vice President of Datacenter Solutions at FalconStor, discussed using predictive analytics to mon...
Dec. 2, 2016 02:00 PM EST Reads: 4,807
Keeping pace with advancements in software delivery processes and tooling is taxing even for the most proficient organizations. Point tools, platforms, open source and the increasing adoption of private and public cloud services requires strong engineering rigor – all in the face of developer demands to use the tools of choice. As Agile has settled in as a mainstream practice, now DevOps has emerged as the next wave to improve software delivery speed and output. To make DevOps work, organization...
Dec. 2, 2016 01:30 PM EST Reads: 5,686
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo 2016 in New York. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place June 6-8, 2017, at the Javits Center in New York City, New York, is co-located with 20th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry p...
Dec. 2, 2016 01:30 PM EST Reads: 1,803
20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy.
Dec. 2, 2016 01:15 PM EST Reads: 2,070
Join Impiger for their featured webinar: ‘Cloud Computing: A Roadmap to Modern Software Delivery’ on November 10, 2016, at 12:00 pm CST. Very few companies have not experienced some impact to their IT delivery due to the evolution of cloud computing. This webinar is not about deciding whether you should entertain moving some or all of your IT to the cloud, but rather, a detailed look under the hood to help IT professionals understand how cloud adoption has evolved and what trends will impact th...
Dec. 2, 2016 01:00 PM EST Reads: 2,441
Traditional on-premises data centers have long been the domain of modern data platforms like Apache Hadoop, meaning companies who build their business on public cloud were challenged to run Big Data processing and analytics at scale. But recent advancements in Hadoop performance, security, and most importantly cloud-native integrations, are giving organizations the ability to truly gain value from all their data. In his session at 19th Cloud Expo, David Tishgart, Director of Product Marketing ...
Dec. 2, 2016 01:00 PM EST Reads: 1,382
More and more brands have jumped on the IoT bandwagon. We have an excess of wearables – activity trackers, smartwatches, smart glasses and sneakers, and more that track seemingly endless datapoints. However, most consumers have no idea what “IoT” means. Creating more wearables that track data shouldn't be the aim of brands; delivering meaningful, tangible relevance to their users should be. We're in a period in which the IoT pendulum is still swinging. Initially, it swung toward "smart for smar...
Dec. 2, 2016 12:11 PM EST Reads: 233
Internet of @ThingsExpo, taking place June 6-8, 2017 at the Javits Center in New York City, New York, is co-located with the 20th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. @ThingsExpo New York Call for Papers is now open.
Dec. 2, 2016 12:00 PM EST Reads: 1,825
"ReadyTalk is an audio and web video conferencing provider. We've really come to embrace WebRTC as the platform for our future of technology," explained Dan Cunningham, CTO of ReadyTalk, in this SYS-CON.tv interview at WebRTC Summit at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
Dec. 2, 2016 12:00 PM EST Reads: 176
Everyone knows that truly innovative companies learn as they go along, pushing boundaries in response to market changes and demands. What's more of a mystery is how to balance innovation on a fresh platform built from scratch with the legacy tech stack, product suite and customers that continue to serve as the business' foundation. In his General Session at 19th Cloud Expo, Michael Chambliss, Head of Engineering at ReadyTalk, discussed why and how ReadyTalk diverted from healthy revenue and mor...
Dec. 2, 2016 11:45 AM EST Reads: 1,456
In an era of historic innovation fueled by unprecedented access to data and technology, the low cost and risk of entering new markets has leveled the playing field for business. Today, any ambitious innovator can easily introduce a new application or product that can reinvent business models and transform the client experience. In their Day 2 Keynote at 19th Cloud Expo, Mercer Rowe, IBM Vice President of Strategic Alliances, and Raejeanne Skillern, Intel Vice President of Data Center Group and G...
Dec. 2, 2016 11:30 AM EST Reads: 1,847