Q2 2026 Yellow Pages Ltd Earnings Call

Speaker #1: Call. Today's conference call contains forward-looking information about Yellow Pages Outlook objectives and strategy. These statements are based on assumptions and are subject to important risk and uncertainties.

Speaker #1: results could differ materially from expectations discussed. The details of Yellow Pages' caution regarding forward-looking information, including key assumptions and risks, can be found in Yellow Pages' management discussion and analysis for the second quarter of 2026.

Speaker #1: on CedarPlus. I would now like to turn the meeting over to Mrs. Charlene King, president and chief executive officer. Please go ahead, Madam.

Speaker #1: on CedarPlus. I would now like to turn the meeting over to Mrs. Charlene King, president and chief executive officer. Please go ahead, Madam.

Speaker #2: Roy. Good morning, everyone. Thank you, Welcome to our second quarter 2026 analyst call. We really appreciate your interest in joining our call today. Today I'm joined by Asunta Tordes, our chief financial officer.

Speaker #2: I will begin with some overview comments, and then Asunta will provide you more details on our financial results for this quarter. And then we will take any questions you may have at the end of this call.

Speaker #2: We are pleased with our results reported for our second quarter of 2026. In the second quarter, we delivered solid profitability and cash generation despite ongoing revenue pressures resulting from macroeconomic uncertainty.

Speaker #2: Revenue declined 8% year over year, while our adjusted EBITDA remained solid at 19.1% margin. Supported by our ongoing cost discipline and operating efficiencies. During the second quarter, we completed the previously announced plan of arrangement.

Speaker #2: Distributing 25 million to shareholders through a share buyback. In connection with the plan of arrangement, we also contributed an additional 2 million to the defined benefit pension plan in April of 2026.

Speaker #2: Following these disbursements to our shareholders and the pension plan, our steady cash generation has grown to cash on hand to approximately 38 million as of July 31, 2026.

Speaker #2: And lastly, our board has declared a dividend of 25 cents per common share to be paid on September 15, 2026, to shareholders of record as of August 17, 2026.

Speaker #2: I will now pass it over to Asunta to provide you additional details on the numbers.

Speaker #3: Thanks, Siske. Good morning, everyone. Let me take you through our financial results for the second quarter ended June 30, 2026. Our total revenues decreased by 4.1 million or 8% year over 47.6 million for the second quarter.

Speaker #3: The year-over-year decrease in revenues is mainly due to the decline of our higher-margin digital media and print products and to a lesser extent our lower-margin digital services products.

Speaker #3: Thereby creating pressure on our gross profit margin. The total revenues decline of 8% for the three-month period ended June 30 compares to 7.4% reported for the same period last year.

Speaker #3: The higher revenue decline rate is driven by the decline in print revenue, while the decline rate for digital revenue has improved slightly year over year.

Speaker #3: Digital revenues decreased 6.2% year over year, and amounted to 38.4 million during the second quarter. The improvement of the digital revenue decline from 6.4 reported in the second quarter 2025 to 6.2% in the second quarter of 2026 was mainly due to a higher average spend per customer, partially offsetting the decrease in digital customer count.

Speaker #3: Print revenues decreased 14.8% year over year, and amounted to 9.1 million for the three-month period ended June 30. The decline in print revenue is mainly due to the decrease in the number of print customers, while the spend per print customer improved year over year as the proportion of lower spending accounts has declined.

Speaker #3: Adjusted EBITDA for the second quarter was impacted by lower revenues, pressure from the product mix, higher bad debt expense, and the impact of the company's share price on cash flow-based compensation expense.

Speaker #3: These factors were partially offset by optimization in cost of sales and reductions in other operating costs, including reductions in our workforce and associated employee expenses.

Speaker #3: As a result, adjusted EBITDA decreased year over year by 1.6 million or 15.1% to 9.1 million for the second quarter. Adjusted EBITDA margin decreased to 19.1% compared to 20.7 for the same period last year.

Speaker #3: Revenue pressures and changes in product mix partially offset by continued optimizations of cost reductions will continue to cause some pressure on margins in upcoming quarters.

Speaker #3: Adjusted EBITDA less capex for the second quarter decreased by 1.7 million to 8.6 million. Mainly driven by lower adjusted EBITDA. During the second quarter, we completed the previously announced plan of arrangement, whereby the company repurchased from shareholders on a pro-rata basis an aggregate of 2,037,489 common shares including 28,137 shares held by the trustees.

Speaker #3: At a purchase price of 1,227 per share for a total of 25.3 million, including 0.1 million of transaction costs, 0.5 million of tax on repurchase of equity, and net of 0.3 million related to the cancellation of the shares held by trustees.

Speaker #3: In connection to the 2026 arrangement, the company also voluntarily contributed 2 million to the defined benefit pension plan in April 2026. Net income increased to 3.3 million for the second quarter of 2026 compared to 1.5 million for the same period last year.

Speaker #3: This increase was mainly due to the settlement loss of annuity purchase recorded in 2025 and lower financial charges partially offset by lower adjusted EBITDA and an increase in restructuring and other charges.

Speaker #3: As Charlene mentioned, our cash on hand at the end of July stood at 38 million. Finally, the board has declared a cash dividend of 25 cents per common share, payable on September 15, 2026, to shareholders of record as at August 17, 2026.

Speaker #3: This concludes our formal remarks. Thank you for taking the time to join us this morning. We will now take your questions.

Speaker #4: Thank you. We will now be open to question and answer session. If you would like to ask a question, press star, then the number 1 on your telephone keypad.

Speaker #4: To withdraw a question, please press star 1 again. Thank you. We will be standing by briefly for the questions to come in. Thank you.

Speaker #4: Again, if you would like to ask a question, please press star, then the number 1 on your telephone keypad. That concludes with our question and answer session.

Speaker #4: I will now like to turn the call over back to Mrs. Charlene King for closing remarks.

Speaker #2: Thank you, Roy. Thank you, everyone, for joining our call today. And we look forward to having you join us in November for our Q3 release.

Speaker #2: Thank you.