Yellow Media Ltd (TSX:Y) continues to deliver abysmal results to shareholders.
The company released its first-quarter earnings before markets opened on Wednesday, which disappointed on all fronts. Revenue fell from $203.6 million to $189.5 million on a year-over-year basis, a decline of nearly 7%. Adjusted EBITDA fell from $61.9 million to $46.5 million, with EBITDA margins plunging from 30.4% to 24.5%.
Earnings per share came in at $0.49 during 2016’s first quarter. They fell all the way to $0.02 in the company’s most recent quarter. Even free cash flow, which ignores various restructuring costs, was weak, falling from $24.3 million a year ago to $16.7 million in the most recent quarter.
Not surprisingly, the weakness came primarily from the print division. Print revenues were 24% softer, while digital revenues continued to show steady growth. Sales from the company’s collection of digital properties – which includes 411.ca, yp.ca, Comfree, and other prominent Canadian web sites – were up 2.4%.
Yellow Media’s outlook was also disappointing. It projects revenue of between $770 and $785 million for the year, versus 2016’s results of $818 million. Free cash flow is expected to be between $50 and $55 million, a steep decline versus last year’s results of $94.6 million.
Shares are taking today’s poor results on the chin, falling $2.00 or 25.9% to $5.71 each. Shares haven’t been this low since 2012.
Yellow Pages shares are incredibly cheap on a price-to-sales and price-to-free cash flow metric, even after today’s poor results. But can investors count on the top line stabilizing? That is the question.
