YPG Shows Modest Q1 YP Growth; RHD Declines Continue

Canada’s Yellow Pages Group reported fairly positive Q1 results today. From the earnings release:

“For the first quarter, Adjusted Revenues in Directories increased by 4.7 percent to $354 million and Adjusted EBITDA grew 3.2 percent to $209.8 million. Excluding the contribution of Volt (YPG USA), Adjusted Revenues grew by 0.9 percent to $340.9 million in the first quarter of 2009. The Adjusted EBITDA margin was 59.3 percent, compared to a margin of 60.2 percent for the first quarter of 2008.”   

Update 5/8/09: I finally had a chance to listen to the YPG earnings call, and here are a few highlights that add some color and context:

• Organic print directory growth declined by 3 percent in Q1, while online directories grew organically by 38 percent.
• YPG has introduced two new bundle programs, called the Finder and Builder bundles, which are aimed at smaller accounts and non-ads. The new products are based on the successful Showcase bundle but have stripped out some elements like video in order to get the price point into a range that will attract new accounts.
• The company’s Trader vertical media business is getting hit harder by Canada’s recession than the directories business. YPG is hopeful that a new Dealer Smart Solutions package will help turn things around. The company says early sales results from the Toronto area are encouraging.
• YPG is not counting on an economic recovery in 2010 in any of its planning, but does expect a rebound in 2011 that will be sustained for at least three subsequent years.
• The company described its decision to reduce its income trust unit payout from C$1.17 to C$0.80 as a precautionary measure to preserve cash in a challenging economic environment.

R.H. Donnelley posted its Q1 results today and the numbers continue heading downward, reflecting the double whammy of a bad economy and a market shifting from traditional to new media, particularly in large urban markets. RHD reported net revenues of US$609 million, down 11 percent over Q1 2008. The real number to watch, advertising sales, was down 17 percent, to US$598 million. RHD does not break out print and online revenues. Our back of the envelope estimate is that print ad sales were down roughly 20 percent.

RHD has previously announced it retained Lazard to explore “balance sheet alternatives” to ease it debt burden as some large maturities loom. In April, the company used its grace period to defer a $55 million interest payment as it tried to work out a deal with creditors.