Mr. David Eckert reports

YELLOW PAGES LIMITED REPORTS FIRST QUARTER 2023 FINANCIAL AND OPERATING RESULTS AND ANNOUNCES AN INCREASE IN QUARTERLY CASH DIVIDENDS(1)

Yellow Pages Ltd. has released its operating and financial results for the quarter ended March 31, 2023.

"Our first quarter results reflect continued strong profitability and cash generation with solid progress on the revenue front and we are pleased to announce an increase in our quarterly cash dividend," said David A. Eckert, president and chief executive officer of Yellow Pages.

Mr. Eckert commented on the key developments:

• Strong quarterly earnings. "Despite our continued investments in revenue initiatives, including significant expansion of our sales force, our adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] for the quarter was 33.1 per cent of revenue."
• Pension plan financing on track. "Consistent with our deficit reduction plan announced in May, 2021, in the first quarter of 2023 we made $1.5-million of voluntary incremental payments toward our defined benefit pension plan's wind-up deficit."
• Healthy cash balance. "Even after certain regular, seasonal cash disbursements during the quarter, cash on hand stood at approximately $54-million at the end of April."
• Stable change in revenue. "Despite some increase in headwinds in the general economy, our change in revenue in the first quarter compared to prior year was slightly better than the same measure a year ago. And while we remain attentive to continued pressures in the global and Canadian economy, we are pleased with our company's progress on underlying metrics, including the size of our sales force, our rate of churn of customers and our rate of gaining new accounts."
• Increase in quarterly cash dividend. "Our board has modified the dividend policy of paying a quarterly cash dividend to common shareholders by increasing the dividend from 15 cents per share to 20 cents per share."
• Quarterly dividend declared. "Our board has declared a dividend of 20 cents per common share, to be paid on June 15, 2023, to shareholders of record as of May 25, 2023."

First quarter of 2023 results:

• Total revenues decreased 7.5 per cent year-over-year and amounted to $62.7-million for the three-month period ended March 31, 2023, an improvement from the decrease of 7.8 per cent reported for the same period last year.
• Adjusted EBITDA less capex totalled $19.8-million and the EBITDA less capex margin was 31.6 per cent.
• Net income decreased to $12.4-million, or to 68 cents per diluted share.

Financial results for the first quarter of 2023

Total revenues for the first quarter ended March 31, 2023, decreased by 7.5 per cent to $62.7-million, as compared with $67.8-million for the same period last year. The decrease in revenues is mainly due to the decline of the company's higher-margin digital media and print products and to a lesser extent to its lower-margin digital services products, thereby creating pressure on the company's gross profit margins.

The decline rates for total revenues and digital revenues improved year-over-year. Total revenue decline of 7.5 per cent this quarter compares with a decline of 7.8 per cent reported for the same period last year. Digital revenue decline of 5.7 per cent this quarter compares with a decline of 7.7 per cent reported for the same period last year. The improvements in total and digital revenues were due to increased average spend per customer in digital, increased renewal rates as well as continued improvements in customer claim rates. Print revenue decline of 13.7 per cent this quarter compares with a decline of 7.9 per cent reported for the same period last year. The higher decline rate for print revenue is attributable to the decrease in average spend per customer, partially offset by improvements in customer claim rates.

For the three-month period ended March 31, 2023, adjusted EBITDA decreased by $4.7-million or 18.3 per cent to $20.8-million, compared with $25.4-million for the same period last year. The adjusted EBITDA margin decreased for the first quarter of 2023 to 33.1 per cent, compared with 37.5 per cent for the same period last year. The decrease in adjusted EBITDA for the first quarter of 2023 is the result of revenue pressures as well as continuing investments in the company's tele-sales force capacity, partially offset by reductions in other operating costs, including reductions in its and associated employee expenses, and lower variable compensation expense. Revenue pressures, coupled with increased head count in the company's sales force, partially offset by continued optimization, will continue to cause some pressure on margins in coming quarters.

For the three-month period ended March 31, 2023, adjusted EBITDA less capex decreased by $4.1-million or 17.1 per cent to $19.8-million, compared with $23.9-million for the same period last year. The adjusted EBITDA less capex margin decreased during the period ended March 31, 2023, to 31.6 per cent compared with 35.3 per cent for the same period last year. The decrease in adjusted EBITDA less capex and adjusted EBITDA less capex margin is driven by the decrease in adjusted EBITDA, partially offset by the decrease in capex spend, since 2022 capex spend was impacted by the integration of new products.

Net income decreased to $12.4-million for the three-month period ended March 31, 2023, compared with net income of $14.6-million for the same period last year due to lower adjusted EBITDA, partially offset by lower depreciation and amortization, restructuring and other charges, financial charges, and lower income taxes.

Cash flows from operating activities increased by $5.4-million to $9.8-million for the three-month period ended March 31, 2023. The increase is mainly due to the decrease in stock-based compensation cash settlements of $3-million, lower income taxes paid of $5.9-million, and lower restructuring and other charges paid of $1.7-million, offset by lower adjusted EBITDA of $4.7-million. The first quarter of 2022 benefited from the cancellation of the forward contracts, resulting in a decrease in other receivables of $3.1-million.

As at March 31, 2023, the company had $49.7-million of cash.

Conference call and webcast

Yellow Pages will hold an analyst and media call and simultaneous webcast at 8:30 a.m. (Eastern Time) on May 11, 2023, to discuss first quarter 2023 results. The call may be accessed by dialling 416-695-6725 within the Toronto area, or 1-866-696-5910 outside of Toronto, passcode 2713953 followed by the pound key. Please be prepared to join the conference at least five minutes prior to the conference start time.

The call will be simultaneously webcast on the company's website.

The conference call will be archived in the investors section of the site.

About Yellow Pages Ltd.

Yellow Pages 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 on-line properties, including YP.ca, Canada411 and 411.ca. The company also holds the YP, Canada411 and 411 mobile applications and Yellow Pages print directories.

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