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Yellow Pages Income Fund Reports Third Quarter Financial Results Distributable cash per unit up 8.8% to $0.37 Strong EBITDA margin performance in both platforms Targeted initiatives to position 2009 MONTREAL, QUEBEC--(MARKET WIRE)--Nov 6, 2008 -- Yellow Pages Income Fund (Toronto:YLO-UN.TO - News) reported third quarter
results today highlighted by gains in EBITDA margin performance
in both Directories and Vertical Media. The company continues
to strengthen its leading position through investments to
expand its product portfolio and improve its market coverage.
For the third quarter ending September 30, 2008, consolidated net earnings increased 19.6% to $146.1 million compared to $122.1 million for the same period in 2007. Income from operations during the quarter reached $204.4 million, a 24.8% increase over the $163.8 million reported last year. Cash flow from operating activities amounted to $187.5 million during the quarter. Consolidated Adjusted Revenues(1) and revenues in the third quarter of 2008 reached $426 million. Consolidated Adjusted EBITDA(1) grew by 4.3% to $237.5 million. EBITDA (income from operations before depreciation and amortization) increased by 4.1% to reach $237.8 million. "We continue to deliver best-in-class financial and operational results, which enable us to grow distributable cash, offering investors a solid current distribution," said Marc P. Tellier, President and Chief Executive Officer of Yellow Pages Group. "Our long-term strategy has been and remains to position our various assets for sustained growth." Online revenues from both Directories and Vertical Media reached $62.4 million in the quarter. This represents organic growth of 38.4% over the third quarter of 2007. On an annualized basis, online revenues reached $249.5 million. In the third quarter, Distributable cash(1) was $192.4 million, an increase of 5.2% over the same period last year. Distributable cash per unit grew by 8.8% to reach $0.37, compared to $0.34 in the third quarter of 2007. Directories For the third quarter, Adjusted Revenues in Directories reached $343.9 million, an increase of 3.7% over the third quarter of 2007. This represents growth of 3.0% on a comparable basis for the third quarter. Adjusted EBITDA increased by 4.8% to reach $208.0 million. This represents 4.5% growth on a comparable basis over the third quarter of last year. Adjusted EBITDA margin was 60.5% compared to a margin of 59.8% reported in the third quarter of 2007. In September, YPG introduced its new "Showcase Bundle", a multimedia advertising solution that combines compelling print and innovative online elements. Showcase offers Profile Plus featuring the business' profile page that can include a dynamic video, photos and text, visibility on YellowPages.ca(TM), a search engine presence, a display ad in the Yellow Pages(TM) print directory and a listing in the alphabetical section of the business directory. YPG has also revamped its Canada411.ca(TM) site, after taking ownership of the trademark earlier this year. Canada411.ca is the country's preferred website for finding people and is now fully integrated with YellowPages.ca(TM)'s database. It now has a more user-friendly interface with only two search boxes on the home page, enabling visitors to locate individuals more easily and quickly. Canada411.ca additionally offers popular mapping and driving directions functions. Vertical Media During the third quarter of 2008, Trader continued to make progress in positioning itself for sustained profitability by further integrating operations across Canada and improving productivity through the implementation of harmonized business processes, the deployment of new technology and improved product sets for advertisers. Revenues at Trader were $82.2 million in the quarter, a decrease of 4.4% over the same period last year. EBITDA increased by 0.8% to reach $29.5 million compared to $29.2 million reported in the third quarter of 2007. Trader's EBITDA margin was 35.8% in the quarter compared with 34% for the third quarter of 2007. Trader continues to focus on delivering a better online experience to its users and advertisers, while seeking a deeper understanding of their needs to develop tailored value-added marketing propositions. A key highlight of the quarter was the signing of a four-year partnership with the Canadian International AutoShow (CIAS), making Auto Trader the presenting Title Sponsor, Show Program Publisher and sole online partner of the CIAS. Recent Developments During the quarter, YPG acquired "Get It Pages" which publishes four directories in Saskatchewan: Battleford, Meadow Lake and area; Prince Albert and area; Yorkton, Melville and area; and Estevan, Weyburn and area. This acquisition represents YPG's first entry into the province. To complement these new print directories, YPG began selling online advertising in these four communities and in the major centres of Regina and Saskatoon. On September 5, 2008, the company closed the acquisition of the assets of Volt Information Sciences, Inc., namely Volt's directory systems and services and its directory publishing operations. An 18-month integration plan was launched immediately following the close of the transaction, and YPG has since identified additional opportunities for further cost savings and incremental efficiencies. In Vertical Media, Trader's management conducted a review of its operations in the United States. The decision was taken to sell these publications. The transaction closed on October 31, 2008. Concurrently, the team has begun to execute initiatives to further improve Trader's revenue and EBITDA, including business process changes in its call centers, the shutdown of underperforming publications and other cost containment efforts. "We recognize that the business environment is facing highly uncertain times," said Christian M. Paupe, Executive Vice President, Corporate Services and Chief Financial Officer of Yellow Pages Group. "We are focusing on those aspects of our business that we control. With our strong capital structure and certain targeted initiatives to improve returns and bolster cash flow in both Directories and Vertical Media, we expect to further grow distributable cash and thus sustain our peer-leading performance in 2009." Investor Conference Call Yellow Pages Income Fund will hold an analyst and media call at 1:00 p.m. (Eastern Time) on Thursday, November 6, 2008 to discuss third quarter results. The call may be accessed by dialing (416) 641-6105 within the Toronto area, or 1 866 696-5895 outside of Toronto. The call will be simultaneously webcast on the Company's web site at http://www.ypg.com/page.php/en/1/535.html. The conference call will be archived in the Investor Center of the site at www.ypg.com. A playback of the call can be accessed from November 6 to November 14, 2008 by dialling (416) 695-5800 from within the Toronto area, or 1 800 408-3053 outside Toronto. The conference passcode is 3273604. About Yellow Pages Income Fund Yellow Pages Income Fund indirectly holds an approximate 98% ownership interest in Yellow Pages Group and Trader Corporation. Yellow Pages Group is Canada's leading local commercial search provider. It publishes annually more than 340 Yellow Pages(TM) and residential directories. The Company owns and manages Canada's most visited online directories, YellowPages.ca(TM) and Canada411.ca(TM), as well as CanadaPlus.ca(TM), a network of seven local city sites. Trader Corporation is a Canadian leader in print and online vertical media with approximately 200 publications and 20 web sites covering four product verticals: automotive, real estate, generalist, as well as employment and other. Its main brands include Auto Trader(TM), Auto Hebdo(TM), The Bargain Finder(TM), Buy&Sell(TM), Renters News(TM) and Home Renters' Guide(TM). For more information about the Fund, 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 Fund. These statements are forward-looking as they are based on our current expectations, as at November 6, 2008, 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 November 6, 2008 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 unit information)
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For the three-month For the nine-month
periods ended periods ended
September 30, September 30,
Yellow Pages Income Fund 2008 2007 2008 2007
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Revenues $426,141 $416,507 $1,271,154 $1,211,858
Income from operations 204,424 163,756 560,974 493,506
Net earnings 146,063 122,137 408,737 370,661
Basic earnings per unit $0.28 $0.23 $0.78 $0.70
Cash flow from
operating activities $187,528 $187,908 $514,705 $515,632
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Adjusted Revenues(1) $426,156 $417,649 $1,271,905 $1,215,578
Adjusted EBITDA(1) 237,481 227,645 699,528 650,026
Adjusted EBITDA margin 55.7% 54.5% 55.0% 53.5%
Distributable cash(1) $192,362 $182,894 $566,323 $524,194
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Weighted average number
of units outstanding 519,908,187 530,752,506 525,335,325 530,537,607
Distributable cash
per unit $0.37 $0.34 $1.08 $0.99
Distributions declared $150,252 $144,637 $448,628 $433,803
Distributions declared
per unit $0.29 $0.27 $0.85 $0.82
--------------------------------------------------------------------------(1) Non-GAAP Measures In order to provide a better understanding of the results, the Fund uses the term EBITDA (income from operations before depreciation and amortization. In addition, the terms Adjusted Revenues and Adjusted EBITDA are used to reflect revenues and EBITDA adjusted for certain items. Management believes these measures are reflective of ongoing operations. The Fund also uses the term Distributable cash (cash flow from operating activities, net of change in operating assets and liabilities, maintenance capital expenditures, amounts to service debt obligations, taxes and other items affecting cash generated from the ongoing operations of the business). These terms do not have any standardized meaning prescribed by Canadian GAAP and may not be comparable to similar measures presented by other issuers. Management believes EBITDA, Adjusted Revenues, Adjusted EBITDA, and Distributable cash to be important measures as they allow management to assess the performance of the ongoing business. The tables below are a reconciliation of Adjusted Revenues, EBITDA, Adjusted EBITDA, and Distributable cash to the most comparable Canadian GAAP financial measures.
Adjusted Revenues and Adjusted EBITDA
For the three-months For the nine-months
periods ended periods ended
September 30, September 30,
2008 2007 2008 2007
Revenues $426,141 $416,507 $1,271,154 $1,211,858
Elimination of purchase
accounting impact 15 1,142 751 3,720
Adjusted Revenues $426,156 $417,649 $1,271,905 $1,215,578
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Income from operations $204,424 $163,756 $560,974 $493,506
Depreciation and
amortization 33,369 64,746 140,193 158,758
Income from operations
before depreciation
and amortization 237,793 228,502 701,167 652,264
Elimination of purchase
accounting impact (312) (857) (1,639) (2,238)
Adjusted EBITDA $237,481 $227,645 $699,528 $650,026
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Distributable Cash
For the three-months For the nine-months
periods ended periods ended
September 30, September 30,
2008 2007 2008 2007
Cash flow from
operating activities $187,528 $187,908 $514,705 $515,632
Operating non-cash items(1) (5,146) (5,601) (16,035) (16,752)
Change in operating assets
and liabilities(2) 13,406 4,325 76,163 39,075
Maintenance capital
Expenditures(3) (5,280) (6,416) (15,808) (16,379)
Other(4) 1,854 2,678 7,298 2,618
Distributable cash $192,362 $182,894 $566,323 $524,194
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Weighted average number
of units outstanding 519,908,187 530,752,506 525,335,325 530,537,607
Distributable cash
per unit $0.37 $0.34 $1.08 $0.99
Distributions declared $150,252 $144,637 $448,628 $433,803
Distributions declared
per unit $0.29 $0.27 $0.85 $0.82
Payout ratio(5) 78% 79% 79% 83%
(1) Represents operating items with no impact on current cash flow such as
pension expense and employee-related expenses through restricted unit
awards. The likelihood of those elements materializing into outflows on
a long-term basis is such that management believes it should be
included in the calculation in order to reflect the cash generated from
the ongoing operations.
(2) Changes in operating assets and liabilities are not considered a source
or use of distributable cash. As a result, it is excluded from the
calculation as it would introduce cash flow variability and affect
underlying cash flow available for distributions.
Various working capital items, including but not limited to the timing
of receivables collected and payment of payables and accruals, can have
a significant impact on the determination of free cash flow available
for distribution. Accordingly, management excludes the impact of
changes in non-cash working capital items to remove the resulting
variability of including such amounts in the determination of free cash
flow available for distribution. Realized changes in working capital
and working capital acquired by way of acquisition are typically funded
from excess free cash flow available for distribution or the Fund's
cash on hand and available credit facilities.
(3) Maintenance capital expenditures refer to capital expenditures that are
necessary to sustain current productive capacity. Management believes
that maintenance capital expenditures should be funded by cash flow
from operating activities. Capital spending for new initiatives are
expected to improve future distributable cash and as such are not
deducted from cash flow from operating activities. Transition capital
is provided for as part of the financing plan of specific business
acquisitions and is therefore not funded from distributable cash.
(4) Includes non-controlling interest related to the LesPAC partnership
formed in April 2007, tax related amounts and other amounts that do not
reflect the ongoing operations of the business.
(5) The level of distributions paid is reviewed periodically to take into
account the current and prospective performance of the business and
other items considered to be prudent.Contact: Contacts:
Media Relations
Annie Marsolais
Director, Corporate Communications
514-934-4016
annie.marsolais@ypg.com
Investor Relations
Anne-Sophie Roy
Director, Corporate Finance and Investor Relations
514-934-2828
anne-sophie.roy@ypg.com
Source: Yellow Pages Income Fund
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