Mr. David Eckert reports

YELLOW PAGES LIMITED REPORTS FIRST QUARTER 2024 FINANCIAL AND OPERATING RESULTS AND DECLARES A CASH DIVIDEND

Yellow Pages Ltd. has released its operating and financial results today for the quarter ended March 31, 2024.

"In the first quarter, we resumed our march toward revenue stability and, as usual, we delivered good profitability and a healthy cash balance, all despite continued headwinds in the global economy and, particularly, the Canadian small business sector," said David A. Eckert, president and chief executive officer of Yellow Pages.

Mr. Eckert commented on the key developments:

• Resumption of climb toward revenue stability. "As expected, we resumed our climb toward revenue stability during the first quarter of 2024, as our rate of change in revenue was better than the change reported for the fourth quarter of 2023."
• Strong earnings. "Our adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] for the quarter was 27.8 per cent of revenue, even with our continued investments in revenue initiatives, including the steady further expansion of our sales force."
• Healthy cash balance. "Even after certain regular, seasonal cash disbursements during the quarter, cash on hand stood at approximately $27-million at the end of April."
• Progress on revenue initiatives. "Although we continue to deal with the challenges of the current Canadian economic conditions, we are pleased with our progress on underlying metrics, including the size of our sales force, our rate of customer churn and our rate of gaining new accounts. In particular, our rate of gaining new accounts was 20 per cent higher than in the previous year. We believe these fundamentals bode well for our medium- and long-term future."
• Pension plan funding on track. "Consistent with our deficit-reduction plan announced in May, 2021, in the first quarter of 2024 we made $1.5-million of voluntary incremental payments toward our defined benefit pension plan's wind-up deficit."
• Quarterly dividend declared. "Our board has declared a dividend of 25 cents per common share, to be paid on June 17, 2024, to shareholders of record as of May 28, 2024."

First quarter of 2024 results:

• Total revenues decreased 12.3 per cent year-over-year and amounted to $55-million for the three-month period ended March 31, 2024, an improvement from the decrease of 13.4 per cent reported last quarter.
• Adjusted EBITDA less capital expenditure totalled $14.3-million and the EBITDA less capex margin was 26 per cent.
• Net income amounted to $8.4-million, or to 61 cents diluted income per share.

Financial results for the first quarter of 2024

Total revenues for the first quarter ended March 31, 2024, decreased by 12.3 per cent to $55-million, as compared with $62.7-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.

Total digital revenues decreased 11.9 per cent year-over-year and amounted to $43.7-million for the three-month period ended March 31, 2024, as compared with $49.6-million for the same period last year. The revenue decline for the period ended March 31, 2024, was mainly attributable to a decrease in digital customers and, to a lesser extent, a decrease in spend per customer.

Total print revenues decreased 13.9 per cent year-over-year and amounted to $11.3-million for three-month period ended March 31, 2024. The revenue decline is mainly attributable to the decrease in the number of print customers while the spend per customer has improved year-over-year driven by price increases.

The decline rate of revenues increased year-over-year. The higher decline rate is attributable, in part, to (a) the headwinds in the global economy, whereby customer renewal rates decreased slightly but remained strong while average spend per customer slowed as customers look to optimize their spend, and (b) customer claim rates remaining stable in the first quarter of 2024, while the first quarter of 2023 benefited from a substantial improvement. These factors were partially offset by an increase in the number of new accounts and increases in pricing.

Adjusted EBITDA decreased to $15.3-million or 27.8 per cent of revenues in the first quarter ended March 31, 2024, relative to $20.8-million or 33.1 per cent of revenues for the same period last year. The decrease in adjusted EBITDA for the first quarter of 2024 is the result of revenue pressures, partially offset by optimizations in cost of sales and reductions in other operating costs, including reductions in the company's work force and associated employee expenses. Revenue pressures partially offset by continued optimizations, will continue to cause some pressure on margins in coming quarters.

Adjusted EBITDA less capex decreased by $5.5-million or 27.8 per cent to $14.3-million during the first quarter of 2024, compared with $19.8-million during 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, while the capex spend was stable year-over-year.

Net income for the three-month period ended March 31, 2024, amounted to $8.4-million as compared with net income of $12.4-million for the same period last year due to lower adjusted EBITDA.

Cash flows from operating activities decreased by $4.3-million to $5.5-million for the three-month period ended March 31, 2024, from $9.8-million for the same period last year. The decrease is mainly due to lower adjusted EBITDA of $5.5-million, partially offset by the decrease in stock-based compensation cash settlements of $500,000 and lower income taxes paid of $500,000.

As at March 31, 2024, the company had $23.7-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 9, 2024, to discuss first quarter 2024 results. The call may be accessed by dialling 416-695-6725 within the Toronto area, or 1-866-696-5910 outside of Toronto, passcode 6613383 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 the YP, Canada411 and 411 website. The company also holds the YP, Canada411 and 411 mobile applications and Yellow Pages print directories.

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