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Yellow Media Limited Reports Full Year and Fourth Quarter 2013 Financial Results
MONTREAL, QUEBEC--(Marketwired - Feb. 13, 2014) - Yellow Media Limited (TSX:Y)
2013 full year digital revenues grow 10.6% year-over-year to reach $406.3 million. For the fourth quarter of 2013, digital revenues represented 45.1% of total revenues
Strong adoption of our digital products and services, as advertiser penetration of the Yellow Pages 360° Solution increases to 27.1% as at December 31, 2013 compared to 16.5% last year
2013 free cash flow grows 38.4% year-over-year to reach $274.6 million. The Company further strengthens its balance sheet, reducing net debt by 32% to $533.1 million as at December 31, 2013 compared to $781.7 million last year
Company records net earnings of $176.5 million in 2013, which compares to net earnings of $182.4 million in 2012 before impairment charges and gain on settlement of debt
Yellow Media Limited (TSX:Y) (the "Company") releases full year and fourth quarter 2013 operational and financial results, ending the first phase of digital transformation with continued digital revenue growth and a strengthened capital structure. Yellow Media, a Canadian digital media company, champions the neighbourhood economy by fostering strong business relationships between local businesses and consumers.
Full Year 2013 Financial Results
Revenues in 2013 decreased to $971.8 million, representing a 12.3% year-over-year decline. On a comparable basis, when adjusting for the discontinuation of Canpages directories in 2012, revenues decreased by 10.7% versus last year's results. This decrease is primarily impacted by lower print revenues, as larger advertisers reduce their print advertising spend, alongside a lower advertiser count among smaller, low-spend advertisers.
Digital revenues in 2013 increased 10.6% to $406.3 million, as compared to $367.2 million last year. On a comparable basis, when adjusting for the discontinuation of Canpages directories in 2012, digital revenues grew 12.5% year-over-year. Growth in digital revenues is mainly due to the active migration of traditional media advertisers towards digital products and services and continued adoption of the Yellow Pages™ 360º Solution across Yellow Pages Group's ("YPG's") sales channels.
As at December 31, 2013, the penetration of the Yellow Pages 360º Solution offering among YPG's advertiser base, which is defined as advertisers who purchase three product categories or more, grew to 27.1%. This compares to 16.5% at the end of the same period last year.
Print revenues declined steadily to reach $565.4 million during 2013, decreasing 23.6% compared to the same period in 2012, as expected.
EBITDA declined to $416.1 million in 2013, as compared to $569.4 million the year prior. The EBITDA margin in 2013 decreased to 42.8% versus 51.4% in 2012, primarily due to revenue pressure, a change in product mix and investments required to advance the Company's digital transformation.
For the year ending December 31, 2013, the Company recorded net earnings of $176.5 million. This compares to a $2 billion net loss for the same period last year. In 2012, the Company recorded an impairment charge of $3.3 billion on its goodwill, and certain of its intangible assets and property, plant and equipment, as well as a gain on settlement of debt of $978.6 million pursuant to its recapitalization. When adjusting for the impairment charge and gain on settlement of debt, the Company recorded net earnings of $182.4 million in 2012. This decrease is due primarily to lower EBITDA, partly offset by lower financial charges, a lower depreciation and amortization expense, and lower restructuring and special charges.
For the year ending December 31, 2013, the Company recorded basic earnings per share of $6.34, which compares to basic earnings per share of $5.76 in 2012 before the impairment charge and gain on settlement of debt.
Free cash flow in 2013 increased to $274.6 million, which compares to $198.3 million in 2012. The increase in free cash flow is attributable to a favourable change in working capital, lower interest and income taxes paid and lower restructuring and special charges, partly offset by higher capital expenditures and lower EBITDA. Capital expenditures in 2013 totaled $66.1 million, up from $40.2 million last year.
"2013 marked the completion of Yellow Media's first phase of digital transformation, where we made significant investments to strengthen our digital foundation," said Ginette Maillé, Chief Financial Officer of Yellow Media. "The Company will continue investing in its digital transformation in 2014, while also executing projects that improve the efficiency of the organization and support long-term profitability."
As at December 31, 2013, Yellow Media had reduced net debt to $533.1 million. This compares to $781.7 million of net debt as at December 31, 2012. In 2013, the Company repaid $153.4 million of its 9.25% Senior Secured Notes, exceeding the minimum mandatory requirement of $100 million.
Fourth Quarter 2013 Financial Results
Revenues for the fourth quarter ended December 31, 2013 decreased 10% to $238 million, compared to $264.4 million in the last quarter of 2012.
Digital revenues for the fourth quarter ended December 31, 2013 grew 7.7% to $107.4 million, compared to $99.7 million for the same period last year.
Digital revenues represented 45.1% of total revenues during the fourth quarter of 2013, up from 37.7% during the same period in 2012. Print revenues declined steadily to reach $130.6 million during the fourth quarter of 2013, decreasing 20.7% compared to the same period in 2012.
EBITDA declined to $91.3 million during the fourth quarter of 2013, compared to $141.7 million the year prior.
The EBITDA margin decreased to 38.3% for the fourth quarter of 2013, compared to 53.6% for the same period last year. The EBITDA margin for the fourth quarter of 2013 was impacted by revenue pressure, a change in product mix, investments required to advance the Company's digital transformation, and non-recurring provisions related to a legal dispute and sales tax assessments. The EBITDA margin for the fourth quarter of 2012 was impacted by a non-cash benefit related to the amendment of our employees' pension and post-retirement benefit plans. Excluding these non-recurring elements, the EBITDA margin for the fourth quarter of 2013 decreased to 41.2%, compared to 48.0% for the same period last year on the same basis.
For the quarter ending December 31, 2013, the Company recorded net earnings of $31 million. This compares to net earnings of $821.9 million for the same period last year. During the fourth quarter of 2012, the Company recorded a $300 million impairment charge related to certain of its intangible assets and property, plant and equipment, as well as a gain on settlement of debt of $994.9 million pursuant to its recapitalization. When adjusting for the impairment charge and gain on settlement of debt, the Company recorded net earnings of $27.6 million in the fourth quarter of 2012. The increase is due primarily to lower financial charges and a lower provision for income taxes, partly offset by lower EBITDA.
For the quarter ending December 31, 2013, the Company recorded basic earnings per share of $1.11, which compares to basic earnings per share of $0.83 for the quarter ending December 31, 2012 before the impairment charge and gain on settlement of debt.
Free cash flow for the fourth quarter of 2013 increased to $74.2 million, compared to $48 million last year. This increase results from a favorable change in working capital and lower interest and income taxes paid, partly offset by lower EBITDA.
Operational Update
"Yellow Media is strongly positioned to proceed with the second phase of its digital transformation, and will make targeted strategic investments throughout 2014 to promote long-term revenue growth and profitability," said Julien Billot, President and Chief Executive Officer of Yellow Media. "We are currently conducting a full business review to guide our efforts and investments in the short-to-medium term. Our end goal is to grow Yellow Media into a sustainable local digital media company by extending the reach of our brand, attracting new digital audiences, better addressing our advertisers' needs and investing in our employees."
Strengthening our Brand Image
The Company extended its advertising campaign to promote the download and use of the Yellow Pages mobile application, targeting over 260,000 millennials across university campuses in Toronto, Vancouver and Montreal.
YPG launched Shop The Neighbourhood™ across the Greater Toronto Area, an event buoyed by a multimedia campaign to promote local shopping and support small businesses. This initiative took place on November 30, 2013, attracting over 1,800 local businesses and offering over 2,000 exclusive deals across our digital properties. The campaign also garnered support from all levels of government and local celebrities.
The Company will continue developing national and local advertising campaigns throughout 2014 to increase brand awareness with both consumers and advertisers, as well as underscore the brand's digital transformation.
Enhancing our Properties to Reach an Increasing Number of Canadian Shoppers
YPG launched a ShopWise iPad application, alongside a new version of its mobile application, to help Canadians shop more efficiently through a digitally-responsive e-flyer experience and easier-to-find geo-localized deals and savings.
The Company continued to deploy its Online Merchant Management tool, which improves the quality, completeness and relevance of its content by eliminating all duplicate and stale business listings.
In 2014, the Company will continue developing accurate, reliable and enriched local content to strengthen the user experience, improve user engagement and boost the relevance of its digital properties. The Company will invest in key traffic and distribution partnerships to further expand its partner eco-system and grow local audiences.
Providing Advertisers with Valuable Digital Marketing Products and Services
Mobile priority placement remains the Company's fastest growing digital product offering, with advertiser penetration having increased to 14.9% as at December 31, 2013 compared to 8% at the end of the same period in 2012.
YPG extended its value proposition to local businesses by providing them with presence across social media. YPG is now able to use advertisers' business content, which includes location, contact information, websites and images, to automatically generate and update basic Facebook® business pages.
The Company will provide advertisers with more comprehensive social media advertising campaigns in 2014. A new digital display advertising service will also be launched, and existing products and services will be repackaged into new offerings to enhance advertisers' digital presence and stimulate ROI.
Attracting and Retaining a Growing Number of Advertisers
Total advertiser count was 276,000 as at December 31, 2013, compared to 309,000 at the end of the same period last year.
Advertiser acquisition for the twelve month period ended December 31, 2013 stood at 13,600. Advertiser acquisition improved slightly versus the twelve month period ended September 30, 2013, where 11,900 new advertisers were acquired.
The Company will continue rolling out its national acquisition strategy throughout 2014. New programs, processes and technologies will also be implemented to help its sales channels find and attract new advertisers, enhance lead nurturing, and improve conversions.
Investing in its Employees
The Company has aligned its workforce with the realities of its digital transformation, transferring resources from its legacy operations towards its digital platform. In 2013, the Company hired approximately 200 professionals within the domains of information technology and digital media.
The Company will continue investing in its workforce and anticipates hiring an additional 200 professionals within information technology and digital media in 2014. The Company will also invest in developing a stronger digital culture, offering training programs, tools and resources to elevate digital literacy and promote change management across all facets of the organization.
Investor Conference Call
Yellow Media Limited will hold an analyst and media call at 1:00 p.m. (Eastern Time) on February 13, 2014 to discuss the full year and fourth quarter 2013 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/2013/quarterly-reports/fourth-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 February 13 to February 20, 2014 by dialing (905) 694-9451 within the Toronto area, or 1 800 408-3053 outside Toronto.
The conference passcode is 4993633.
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