Q1 2017 Investor Presentation and Strategy Update May 10th, 2017 · 2017-06-28 · 1.165 Million...
Transcript of Q1 2017 Investor Presentation and Strategy Update May 10th, 2017 · 2017-06-28 · 1.165 Million...
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Q1 2017 Investor Presentation
and Strategy Update
May 10th, 2017
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Disclaimer
2
This presentation contains forward-looking statements about the objectives, strategies,financial condition, results of operations and businesses of Yellow Pages Limited. Thesestatements are considered “forward-looking” because they are based on currentexpectations about our business and the markets we operate in, and on various estimatesand assumptions. Our actual results could be materially different from our expectations ifknown or unknown risks affect our business, or if our estimates or assumptions turn out tobe inaccurate.
As a result, we cannot guarantee that any forward-looking statements will materialize.Forward-looking statements do not take into account the effect that transactions ornon-recurring items announced or occurring after the statements are made may have onour business.
We disclaim any intention or obligation to update any forward-looking statements, except asrequired by law, even if new information becomes available through future events or for anyother reason.
Risks that could cause our actual results to differ materially from our current expectationsare discussed in section 6 of our May 10th, 2017 Management's Discussion and Analysis.
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Agenda
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1
2
3
4
5
Overview of Q1 2017 Financial and Operating Results
Update on Corporate Strategy
Overview of the Market
Operational Plans
Outlook
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61.9 58.9 56.9 57.4
46.5
Margin30% 28% 28% 28% 25%
Q1 Q2 Q3 Q4 Q1
2016 2017
72.0 68.062.6 59.6
54.7
YoY Change(23%) (23%) (24%) (25%) (24%)
Q1 Q2 Q3 Q4 Q1
2016 2017
131.6142.5 138.6 143.1
134.8
YoY Change17% 22% 8% 11% 2%
Q1 Q2 Q3 Q4 Q1
2016 2017
Key Financial Metrics
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Total RevenuesDigital Revenuesin millions in millions
Print Revenuesin millions
Adjusted EBITDAin millions
203.6 210.5 201.1 202.7189.5
YoY Change(1%) 3% (4%) (3%) (7%)
Q1 Q2 Q3 Q4 Q1
2016 2017
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100.2 106.2 109.4
148.9 149.9
Q1 Q2 Q3 Q4 Q1
2016 2017
60.567.2
72.276.8
80.7
Q1 Q2 Q3 Q4 Q1
2016 2017
244.0 244.0 243.0 241.5 239.5
Q1 Q2 Q3 Q4 Q1
2016 2017
34.638.6 40.2 41.1 41.7
Q1 Q2 Q3 Q4 Q1
2016 2017
Key Operational Metrics
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Customer CountCustomer Acquisitionin thousands and on a trailing twelve month basis in thousands and on a trailing twelve month basis
Digital Only Customersin thousands and on a trailing twelve month basis
Total Digital Visitsin thousands and on a trailing twelve month basis
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Overview of Capital Structure and Net Debt
in millions, unless otherwise noted
Dec. 31, 2012 Dec. 31, 2015 Dec. 31, 2016 March 31, 2017
Senior Secured Notes1 800 407 310 310
Exchangeable Debentures2 87 90 92 93
Obligations Under Finance Leases 2 1 0 0
Total Debt 888 498 402 403
Cash and Cash Equivalents 107 67 17 16
Total Net Debt 782 431 385 387
Total Equity 286 760 369 378
Net Debt / Adjusted EBITDA 1.4x 1.7x 1.6x 1.8x
Average Interest Rate on Debt 9.0% 9.0% 8.9% 8.9%
$490 million of Senior Notes has been repaid since issuance
Note: The Company has in place a $50 million Asset-Based Loan expiring in August 2018, which may be used for general corporate purposes1 9.25% Senior Secured Notes due November 30, 20182 8.0% (or 12.0% paid in kind) Subordinated Unsecured Exchangeable Debentures due November 30, 2022 6
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We create opportunities for buyers and sellers to discover, find, interact and transact in the local economy
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Our Mission
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The Local Digital Marketing Ecosystem is Rapidly Evolving
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Leading Local Platforms in Canada
The Sunset of the Offline Era
Online Reaches Critical Mass
Digital Fragmentation Surges
Offline Still Dominates
Internet = Desktop
Digital Marketing = Placement
Search is King
Transition to Mobile Begins
Digital Marketing = Keywords
Social Reaches “Prime Time”
Internet = Mobile
Digital Marketing =Content
2008 2010 2012 2014 2018 2020
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SMEs Require Expertise & Lack Time and Resources
9Source: YP Consumer Research (April 2017, n=1,002) & YP Customers and Non-customers Interviews (March 2017)
Level of Digital Marketing Knowledge
0%
20%
40%
60%
80%
100%
ExtensiveKnowledge
UnderstandDifferent Tactics
Familiar withBasics Only
Very LittleKnowledge
“It would be nice to have an outside source to manage that side of the business for me”
“To be quite honest, I don’t know enough about digital marketing”
“I don’t have time to sit there and learn Google. I am a paralegal not a marketing guy”
“Should I go with something like AdWords or SEO? What is SEO?”
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Large Market Opportunity
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Local Digital Advertising Spend to Grow by$1 Billion in the Next Two Years
5.2 ; 48%5.8 ; 54% 6.2 ; 57%
5.7 ; 52%5.0 ; 46%
4.7 ; 43%
10.9 10.8 10.9
2016 2018F 2019F
Digital Offline
Total Canadian SME-marketing Spend (CAD Billions, estimates)
1.165 Million SMEs in Canada
Source: Key Small Business Statistics June 2016 : Innovation, Science and Economic Development Canada Small Business Branch (KSBS-PSRPE)Source: Statistics Canada, BCG Customer Survey (July 2016, n=795), IDC
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Managing the SME “Digital Headache” by Offering Simple, Digital Solutions
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Sellers
Be active on the digital properties where customers
are, where conversations happen and where
transactions are made
Buyers
Find relevant local information, products,
services and convenient ways to obtain them
Yellow Pages Network
Apple Ecosystem
Microsoft Ecosystem
Facebook Ecosystem
Google Ecosystem
Other Publishers
Cre
atin
g L
oc
al
Op
po
rtu
nit
ies
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Five Key Initiatives
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1
2
3
4
5
Reshape the Customer Value Proposition
Implement New Ways of Selling
Redefine the Customer Journey
Continue Growth in Subsidiaries
Build the Future State of the Business
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Syndication on Local Search Network
Enhanced Organic Search Engine Visibility
Visibility Solutions
YP Network Syndication
Business Leader
Business Branding
Business Essentials
Facebook Couponing
Social Presence
Reputation Management
Free Call Support
On-demand Self Serve
Social ReputationManagement
Customer Value Proposition: Simpler, Content-Driven Offering
Entry Point for Customers
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Small to Very Small Businesses Medium Sized Businesses
Free Basic Plus Premium Basic Plus Premium
•1
•2
•3
Visibility
•1
•2
•3
•4
BusinessProfile
•1
•2
•3
ProfessionalService
•1
•2
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Free Basic Plus Premium
Visibility
Business Profile
Professional Service
Social Reputation
Management
New Customer Value Proposition
Upsell Potential: Tiered Service Levels with Targeted Add-ons
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Entry Point for Customers
Un
ive
rsa
l N
ee
d
Tie
rs B
oo
ste
r
Boost Your Engagement
Facebook Management
Reputation Management
Boost Your Awareness
First Position on YP, Website Management, Content Creation, SEO & Retargeting
Pe
rfo
rman
ce
Ne
ed Generate
Leads
Range of Meaningful Contacts Across Platforms:Mobile, Desktop, YP,Facebook & SEM
Generate Transactions
Expand Booking & Scheduling Capability
Add-ons
+
Print Presence in Local Directories
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Microsoft Ecosystem
Facebook Ecosystem
Yellow Pages
YP Acts as SME’s Hub and Plugs into Digital Ecosystems
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Sellers Buyers
Google Ecosystem
Apple Ecosystem
YP’s Owned & Operated
Other Publishers
Customer Value
Proposition
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Cu
sto
me
rS
eg
me
nt
1 2 3 4 5
High Potential High Potential Mid Potential Mid Potential Low Potential
Se
rvic
eLe
vel
• Comprehensive approach to sales and service, across portfolio ofproducts
• Clear point of contact forseamless delivery and support
• Access to deep product expertise
• Comprehensive approach to sales and service, across portfolio of products
• Clear point of contact for seamless delivery and support
• Guidance on solutions for specific business objectives
• Seamless experience across multiple products
• Guidance on solutions for specific business objectives
• Responsive support and issue resolution
• Guidance on products for specific business objectives
• Responsive support and issue resolution
One-Stop Shop
Implement New Ways of Selling: Sales Effort to Address Five Customer Segments
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Higher Spend Lower SpendCustomer Spend Potential
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Evergreen Contracts, Monthly
Subscriptions
Provide a Seamless Product Delivery
Experience
Redefine the Customer Journey:Seamless Delivery and Flexible Relationships
17
Maximize Self-serve & Auto-fulfill
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• New products offered in Quebec, with continued expansion to Ontario and Western Canada
• Focus on acquisition and retention of high-spend customers
• Growth potential in Canada with expansion plans for the US
• Self-serve platform for agencies, opening a new business line
Continue Growth in Subsidiaries
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Build the Future State of the Business: Transactional Offerings
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YP Dine
Access to a Proven C2C Marketplace
On Demand Ordering Integrated Booking Engine
Providing YP Dine Customers with Solutions to Interact & Transact with Customers
Connecting Buyers to Our Advertisers Directly
ComFree / DuProprio
Scheduling & customer relationship management software to be introduced shortly
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Operational Plan to Deliver
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Success Drivers Value Creation
• Customer Count
• Customer Retention
• Grow Through Upsell
• Improve Customer Economics
• Improve Customer Experience and Referrals
• Organic Growth
• Sustainable Profitability
• Free Cash Flow Growth
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Digital Revenues4% Growth Over 2016
Adjusted EBITDA$170 Million to $180 Million
CAPEXApproximately $65 MillionNet of Related Lease Incentives
Free Cash Flow$50 Million to $55 Million
2017 Operational & Financial Guidance
21
Total Revenues$770 Million to $785 Million
Customer Count240,000 Customers
Please refer to the Outlook section of the May 10th, 2017 Press Release for the assumptions driving guidance
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Appendix
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• Data on advertising, search and purchase behaviours of Canadian SMEs, consumers and global brands
• Reach via owned & operated digital media and third party platforms
• Single access point to critical online ecosystems (Google, Facebook, Apple, etc.)
Competitive Advantages
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Unique Local Content Broad Consumer Reach
• Extensive information on 1.8 million Canadian businesses
• Natural partner for global technology leaders
Nationwide Salesforce
• Large sales team (approximately 900 MACs)
• 239,500 local customers
• Strong ties to businesses in Canada
Extensive Proprietary Data
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888
735
597
498
402 403
33%42%
50%59%
68% 70%
-140%
-130%
-120%
-110%
-100%
-90%
-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
250
300
350
400
450
500
550
600
650
700
750
800
850
900
950
1,000
Dec. 31,2012
Dec. 31,2013
Dec. 31,2014
Dec. 31,2015
Dec. 31,2016
Mar. 31,2017
Total Debt Digital Revenues as a % of Total Revenues
YP’s Path to a Digital-First Enterprise
25
in millions, digital revenues as a percentage of total revenues is on a trailing twelve month basis
Yellow Pages has established a digital business while reducing debt
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RedFlagDeals & RFD ForumsCanada’s leading provider of online and mobile promotions, deals, coupons and shopping tools
YP ShopwiseEveryday shopping app to help Canadians save time and money
Canada411 & 411.caNetwork of Canada’s most frequented and trusted online and mobile destinations for personal and local business information
YPDiscover everything your localneighbourhood has to offer
ComFree / DuProprio NetworkC2C marketplace offering homeowners a professional and cost effective service to market and sell their properties
YP NextHomeProvides Canadians with valuable real estate information to help them make the right buying, selling, and/or renting decision
YP DineDiscover, search for and book local restaurants based on time of day, mood and expert suggestions
BookendaLeading online transaction platform for users and merchants to easily interact and manage bookings
YP GroceryCombs flyers and coupons to get Canadians the most savings on their grocery list
Owned & Operated Media Properties
Business & People Search Retail
Dining
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Real Estate
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Mobile & Desktop Placement Advertising Across YP Network
Professional Website Fulfillment & Management
Content Syndication Across 25+ Search Partners
Digital Marketing Solutions
27
Search Engine OptimizationPresence on SERPs
Facebook Campaign Management
Digital Display Advertising Solutions
Search Engine Marketing
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Subsidiaries1
Digital Services & Resale Segment
Print Segment
Owned & Operated Segment(Includes Placement and Visibility Products [NetSync])
Gross Profit Analysis by Business Segment
Gross Profit as a Percentage of Related Revenues
28Yellow Pages’ subsidiaries include: Mediative, JUICE, ComFree / DuProprio, 411, YP NextHome, Western Media Group and Totem
Ind
icat
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Mar
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