MONTREAL, Aug. 5, 2016 /CNW Telbec/ - Yellow Pages Limited (TSX: Y) (the "Company") released its operational and financial results today for the quarter ended June 30, 2016. The Company continues to make progress on the implementation of its Return to Growth Plan, and remains on track to returning to revenue and Adjusted EBITDA growth in 2018.

• Digital revenues grew 22.4% year-over-year to reach $142.5 million for the three-month period ended June 30, 2016, representing 67.7% of total revenues.
• EBITDA adjusted for restructuring and special charges ("Adjusted EBITDA") totalled $58.9 million, or 28% of revenues, for the three-month period ended June 30, 2016, as compared to $61.6 million, or 30.1% of revenues, for the same period last year. Adjusted EBITDA for the quarter ended June 30, 2016 declined 4.3% year-over-year, a significant improvement when compared to a year-over-year decline of 24.2% during the same period last year.
• The Company's customer count totalled 244,000 customers as at June 30, 2016, as compared to 248,000 customers as at the same time last year. Customer acquisition continued to accelerate, with 38,600 new customers acquired during the twelve-month period ended June 30, 2016, as compared to 24,800 new customers acquired during the same period last year.
• The Company made principal mandatory redemption payments on its 9.25% senior secured notes (the "Notes") of $36 million on May 31, 2016. Total principal mandatory redemption payments on the Notes are expected to amount to approximately $100 million in 2016.

"The performance of our operational and financial metrics demonstrates our ability to successfully transform Yellow Pages into a growing digital company," said Julien Billot, President and Chief Executive Officer of Yellow Pages. "Yellow Pages strives to champion local neighbourhoods, and continues to optimize the way small businesses, national advertisers and consumers connect with one another. With access to Canada's most comprehensive suites of marketing solutions, one of the country's largest databases of business and consumer information, proprietary advertising technologies and a top-rated network of media properties, Yellow Pages is uniquely positioned to capture market share of the Canadian digital media and marketing solutions industry."

Second Quarter 2016 Financial Results
Revenues for the quarter ended June 30, 2016 increased 2.8% year-over-year to reach $210.5 million, as compared to $204.8 million for the same period last year. Included in revenues for the quarter ended June 30, 2016 were revenues generated by ComFree/DuProprio ("CFDP") and JUICE Mobile ("JUICE"), acquired on July 1, 2015 and March 17, 2016, respectively. On a pro forma basis, which adjusts revenues for the full inclusion of CFDP and JUICE during the second quarter of 2015, revenues decreased 5% year-over-year for the three-month period ended June 30, 2016.

Digital revenues grew 22.4% year-over-year to total $142.5 million for the quarter ended June 30, 2016, representing 67.7% of total revenues. This compares to $116.4 million, or 56.9% of revenues, during the same period last year.

On a pro forma basis, digital revenues during the second quarter of 2016 grew 6% year-over-year. Yellow Pages' local operations contributed favourably to pro forma digital revenue growth, a result of accelerated customer acquisition and an increase in digital spending among the Company's renewing customer base. Pro forma digital revenue growth was also favourably impacted by CFDP's growing network of home sellers and buyers in Quebec and Ontario, as well as by revenue growth at JUICE and Mediative, the Company's national advertising operations. Yellow Pages reaffirms its 2016 guidance and anticipates delivering, for the year ending December 31, 2016, year-over-year pro forma digital revenue growth between 9% and 11%.

Print revenues decreased 23% year-over-year to $68 million during the second quarter of 2016, following a decline in the number of print customers and the ongoing migration of customers' print advertising spending to digital. Yellow Pages anticipates print revenue decline rates to remain relatively stable in 2016.

Adjusted EBITDA totalled $58.9 million for the three-month period ended June 30, 2016, as compared to $61.6 million during the same period last year. The Adjusted EBITDA margin for the second quarter of 2016 was 28%, as compared to 30.1% for the second quarter of 2015. The decrease in Adjusted EBITDA and Adjusted EBITDA margin was principally due to lower print revenues and a change in product mix, partly offset by the ongoing realization of cost saving initiatives. The Adjusted EBITDA margin was also impacted by the acquisition of JUICE, who operates at a lower Adjusted EBITDA margin relative to Yellow Pages' prior to the acquisition. Most notably, the Company continues to experience significant improvements in the annual decline rate of profitability, with Adjusted EBITDA decreasing 4.3% year-over-year for the second quarter ended June 30, 2016, relative to a decline of 24.2% over the same period last year. Yellow Pages reaffirms its 2016 guidance and anticipates delivering, for the year ending December 31, 2016, Adjusted EBITDA margins of approximately 28%.

Free cash flow for the three-month period ended June 30, 2016 increased to $19.7 million, as compared to $17.4 million during the same period last year. The increase in free cash flow was mainly due to lower capital expenditures, as well as a decrease in the funding of the pension deficit following the adoption of new funding measures. This was partly offset by higher restructuring and special charges, as well as an increase in the receivables of Yellow Pages' newly acquired businesses.

Net debt totalled $448.5 million as at June 30, 2016, as compared to $488.8 million the year prior. The Company made a $36 million principal mandatory redemption payment on its Notes on May 31, 2016, with principal mandatory redemption payments expected to total approximately $100 million in 2016.

"The progress made in our digital transformation is evidenced by our strengthening financial profile," said Ginette Maillé, Chief Financial Officer of Yellow Pages. "Fuelled by sustainable pro forma digital revenue growth and a reduction in operating expenses resulting from the realization of cost saving initiatives, Adjusted EBITDA declines are decelerating. Combined with lower capital expenditures, Yellow Pages has grown free cash flow and decreased outstanding debt, all while improving its value proposition to Canadian merchants, brands and consumers."

Net earnings for the three-month period ended June 30, 2016 amounted to $11 million, as compared to net earnings of $16.5 million the year prior. Net earnings were principally impacted by higher depreciation and amortization expenses, resulting from the implementation of new technologies and platforms, as well as by lower Adjusted EBITDA. For the quarter ended June 30, 2016, the Company recorded basic earnings per share of $0.41, as compared to basic earnings per share of $0.62 the year prior.

Operational Update
"Customers are at the core of our digital transformation, and we are on track to returning our customer count to growth by 2017," continued Mr. Billot. "Supported by targeted acquisitions and an improved sales culture, Yellow Pages has entered new verticals and approached new customer segments with digital solutions better designed to meet their marketing needs. In conjunction, we continue to empower our employees, providing our teams with the tools required to help them deliver a richer end-to-end customer experience and embody their role as Chief Marketing Officers for small and medium-sized businesses nationwide."

Enhancing its Customer Value Proposition

• The Company's customer count totalled 244,000 customers as at June 30, 2016, as compared to 248,000 customers as at June 30, 2015. This represents a year-over-year net customer count decline of 4,000, down significantly from 17,000 net customers lost during the same period last year.
• Yellow Pages continues to accelerate customer acquisition, acquiring 38,600 new customers during the twelve-month period ended June 30, 2016, up from 24,800 new customers acquired during the same period last year. Various initiatives are being deployed to promote lead generation and conversion within the Company's sales force. These include the launch of business-to-business branding campaigns designed to raise public awareness of Yellow Pages' marketing solutions, as well as the development of new offerings serving to better address the marketing needs of merchants. The Company is also implementing new sales tools and automated platforms that leverage proprietary data and competitive intelligence to grow the productivity and effectiveness of its sales force.
• The customer renewal rate was of 83% for the twelve-month period ended June 30, 2016, as compared to a renewal rate of 85% during the same period last year. The customer renewal rate was adversely impacted by accelerated levels of customer acquisition. Recently acquired customers are generally newly founded businesses that are smaller in size and hold a more digital-centric marketing profile, causing them to experience higher levels of churn relative to the Company's older customer cohorts. In an effort to protect customer renewal rates, Yellow Pages continues to actively improve the performance of its sales, customer service and digital fulfillment operations, while also providing these teams with the resources required to help them design and fulfill valuable digital marketing campaigns.

Strengthening its Media Assets

• Total digital visits ("TDV") totalled 106.2 million for the quarter ended June 30, 2016, as compared to 116.4 million during the same period last year. TDV performance during the second quarter of 2016 remained adversely impacted by a change made to the layout of Google's mobile web search results pages in late 2015, which pushed organic results for all mobile web publishers lower on Google's search pages. Yellow Pages' leading ranking among Google's organic listings on mobile web, however, remained relatively unchanged despite this layout change, a reflection of the high relevance and quality of the Company's listings.
• New versions of the YP mobile application were launched on iOS and Android, offering users a contextualized home page designed to push relevant geolocalized content. With a focus on growing usage across its network of properties, a national multimedia campaign was also launched to support awareness and adoption of Yellow Pages' dining application, YP Dine. The campaign places a spotlight on three animated characters (the heart, the brain and the stomach), who represent three important elements of the decision making process when choosing a restaurant. The campaign will run until December 2016 across key Canadian urban markets, and can be viewed at YP Dine's dedicated Facebook page: https://www.facebook.com/ypdine/videos

Extending its Brand Promise

• In an effort to raise awareness of Yellow Pages' digital marketing programs and the effect they have on the growth of local businesses, the Company recently opened its own small business, The Lemonade Stand, in the Beaches neighbourhood of Toronto, Ontario. Operating as a pop-up store selling lemonade and lemon-based treats, the Company grew The Lemonade Stand from a nonexistent enterprise using nothing but Yellow Pages' digital marketing solutions. Over a two-week period, The Lemonade Stand's digital advertisements generated over 500,000 impressions and its website attracted 1,700 unique visitors, ultimately resulting in weekly sales of over $5,000. The success of The Lemonade Stand will be communicated via a national multimedia campaign running until November 2016, and can be viewed at the Company's 360^o Business Center: https://businesscentre.yp.ca/the-lemonade-stand

Conference Call

Yellow Pages Limited will hold an analyst and media call at 11 a.m. (Eastern Time) on August 5, 2016 to discuss second quarter 2016 results. The call may be accessed by dialing (416) 340-2219 within the Toronto area, or 1 866 225-0198 outside of Toronto.

The call will be simultaneously webcast on the Company's website at https://corporate.yp.ca/en/yellow-pages-news/events/release-q2-2016-financial-and-operational-results/

The conference call will be archived in the Investors section of the site at https://corporate.yp.ca/en/investors/financial-events-presentations/

A playback of the call can also be accessed from August 5 to September 5, 2016 by dialing (905) 694-9451 within the Toronto area, or 1 800 408-3053 outside of Toronto.

The conference passcode is 3158611.

About Yellow Pages Limited
Yellow Pages Limited (TSX: Y) is a Canadian digital media and marketing solutions company that supports local economies by helping businesses reach new customers and foster stronger relationships with existing clients through its various media and products. Yellow Pages holds some of Canada's leading local online properties including YP.ca™, RedFlagDeals.com™, Canada411.ca, 411.ca, Bookenda.com, dine.TO, DuProprio.com, ComFree.com and YP NextHome. The Company also holds the YP, YP Shopwise, YP Dine, RedFlagDeals, Canada411, 411, Bookenda, DuProprio, ComFree and YP NextHome mobile applications and Yellow Pages™ print directories. Through Mediative, Yellow Pages is a leader in national advertising through its various channels and services devoted to North American businesses. The Company also owns JUICE Mobile, a mobile advertising technology company whose proprietary programmatic platforms facilitate the automatic buying and selling of mobile advertising between brands and publishers. 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 August 5, 2016, 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 August 5, 2016 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.

SOURCE Yellow Pages Limited