With its share price near zero and bond holders thinking out loud about what it might take to privatize the company to recoup at least some of their investments, Yellow Media said late Monday that the business is worth far less than they believed only a few months ago as it recorded a $2.9-billion impairment charge. The company cancelled its AGM today, but will take questions from analysts.
Call is about to start - the woman singing on the hold music keeps singing "do you think you're better offffff, do you think you're better offfff."
Context for call: Just reported a first quarter loss of $2.9-million. Without the impairment charge – a non-cash item that reflects the perceived value of a company – the company earned $57.5-million in the quarter, compared to $70.5-million a year ago.
Management continues to make progress, Tellier says. But "path remains uncertain, in term of outcome and length of time. Can't manage this business on a quarterly basis..."
Call can be accessed here: Yellow Media Inc. will hold an analyst and media call at 9:00 a.m. (Eastern Time) onMay 8, 2012 to discuss the first quarter results. The call may be accessed by dialing(416) 340-2216 within the Toronto area, or 1 866 226-1792 outside of Toronto. The callwill be simultaneously webcast on the Company’s website athtp://www.ypg.com/en/investors/financial-reports/2012/quarterly-reports/first quarter.
Last 12 month company sold 13,000 websites for SMEs...
We're just going through press release at this point, should get interesting once the Q&A begins.
Capital structure: Face of increasing secular pressure change in way consumers search for info... challenges for capital structure, Tellier says. Looking to refinance maturities, "broad range of options" being examined including debt and equity issues. There is a special committee in place, that's not new.
Assets impaired: Changes in revenue trends, update to five year plan, and recent third party transactions in our industry.
Talking about AGM now - 18% of total shares issued were represented, need 25% to meet quorom. Current board continues in light of no meeting, "has no impact" on business operations.
"Not for the company to speculate on why [shareholders] did not vote, but the market understands we are focusing on refinancing alternatives and nobody was expecting an update for the time being," says CEO Tellier.
"AT&T transaction highlights the challenge in the industry we operate," says CFO.
Revenue being hit in "large urban" centres. Big clients walking, and company needs to get them spending on digital products. Digital revenues climbed about 3 per cent from last year....
Online revenue now worth 30% of Yellow Media revenue, but not "expected to replace print anytime in the near future."
Online revenue was 30% of revenue last quarter, 24% a year ago.
World is becoming increasingly digital, Canadian shoppers looking across more platforms than before - print, online, mobile. But customer needs haven't changed - maintain high local presence across right media mix to attract customers (says CEO).
First question is about the 360 product, which provides a range of services. Analyst wants company to "open the kimono." CEO says customers that are embracing product are showing positive growth overall.
Follow up: Colour on issues with the higher valued customers? Why take a harder look at what their needs are?
Tellier: Customer segmentation is a big priority for us in last 10 years or so. Important given growing product portfolio and we're trying to break the cycle of only having the dialogue with customers in the traditional print selling window while trying to change that to have conversations through year on our entire product portfolio. 82% of customer base growing or stable - which means 18% of our customers seeing revenue declines. But hey may have been about 40% of our revenue.
We estimate we're in second place as largest SEO provider in the country, says CEO. Top three or four website providers in the country, with 13,000 sold last year. But take website portfolio - $250 websites isn't the product we need for higher spend advertisers. They need inventory capabilities and so on...
There's a gap for customers that have larger needs, Tellier says.
CFO: No determination on preferred shares. Process continues and we are evaluating alternatives, I can't give you guidance in terms of timing at this point.
Worth noting that many of these analysts have $0 price targets on these shares, which are down more than 95 per cent in last year.
Current outstanding common shareholders are the ones who didn't respond to meeting requests - CEO says company retained proxy notification firm to reach out to maximum number of shareholders. "Clearly the shareholder mix had meaningfully changed in last 12 months to be much more retail held. Istitutional ownership at an all time low."
Customers are taking smaller print items - going from full page to half page, half page to quarter page. Still, retention rate is around 88%.
Analyst pushing about the cost of publishing phone books. "How can you mitigate the decline in revenue, how much flexibility on cost side to face decline in revenue?"
CFO: Print revenue dimished, but ebitda margin same. Online product have margins similar to print.
Is there a timeline that must be achieved on debt, analyst asks?
Company says it's just being proactive as it tries to refinance by end of year, currently has ablility to "meet all of its obligations."
Analyst: You've drawn down a credit line, why?
"Made determination to hold liquidity in form of cash. doesn't reflect tighething of company's liquidity or covenants wants to secure resources and make sure it will be fully available when needed," says CFO.
Analyst pushes on Yellow's decision to draw down line of credit at cost of $15-million a year, asks why the company wants to waste its money if money is so hard to come by. CEO says they'll have to agree to disagree, and then says he'll only take one more question.
And with that, the call is over.
The main news would be that the company has "initiated conversations" with a group of bondholders who are trying to essentially buy out common shareholders so they could control their own fate.
And that's that. Thanks for following.