Entravision Communications Corporation Reports Third Quarter 2015 Results

- Third Quarter 2015 Net Revenue and Consolidated Adjusted EBITDA Increases 11% and 15% Respectively -

Nov 05, 2015, 16:15 ET from Entravision Communications Corporation

SANTA MONICA, Calif., Nov. 5, 2015 /PRNewswire/ -- Entravision Communications Corporation (NYSE: EVC) today reported financial results for the three- and nine-month periods ended September 30, 2015.

Historical results, which are attached, are in thousands of U.S. dollars (except share and per share data). This press release contains certain non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measure most directly comparable to each of these non-GAAP financial measures, and a table reconciling each of these non-GAAP financial measures to its most directly comparable GAAP financial measure is included beginning on page 10. Unaudited financial highlights are as follows:

 

Three-Month Period

Nine-Month Period

Ended September 30,

Ended September 30,

2015

2014

% Change

2015

2014

% Change

Net revenue

$

69,261

$

62,274

11

%

$

188,702

$

176,776

7

%

Cost of revenue - digital media (1)

1,881

1,489

26

%

4,633

1,489

211

%

Operating expenses (2)

38,804

35,944

8

%

113,518

104,452

9

%

Corporate expenses (3)

5,535

4,899

13

%

15,578

14,996

4

%

Consolidated adjusted EBITDA (4)

23,878

20,812

15

%

57,542

57,944

(1)%

Free cash flow (5)

$

17,793

$

15,060

18

%

$

36,150

$

41,080

(12)%

Free cash flow per share, basic (5)

$

0.20

$

0.17

18

%

$

0.41

$

0.46

(11)%

Free cash flow per share, diluted (5)

$

0.20

$

0.17

18

%

$

0.40

$

0.45

(11)%

Net income (loss)

$

9,293

$

8,057

15

%

$

19,818

$

21,180

(6)%

Net income (loss) per share, basic

$

0.11

$

0.09

22

%

$

0.23

$

0.24

(4)%

Net income (loss) per share, diluted

$

0.10

$

0.09

11

%

$

0.22

$

0.23

(4)%

Weighted average common shares outstanding, basic

88,090,143

89,179,192

87,820,029

89,048,459

Weighted average common shares outstanding, diluted

90,423,333

91,239,798

90,202,389

91,130,613

(1)

Cost of revenue consists primarily of the costs of online media acquired from third-party publishers. Media cost is classified as cost of revenue in the period in which the corresponding revenue is recognized.

(2)

Operating expenses include direct operating, selling, general and administrative expenses. Included in operating expenses are $0.3 million of non-cash stock-based compensation for each of the three-month periods ended September 30, 2015 and 2014, and $1.0 million and $0.5 million of non-cash stock-based compensation for the nine-month periods ended September 30, 2015 and 2014, respectively. Operating expenses do not include corporate expenses, depreciation and amortization, impairment charge, gain (loss) on sale of assets, gain (loss) on debt extinguishment and other income (loss).

(3)

Corporate expenses include $0.6 million of non-cash stock-based compensation for each of the three-month periods ended September 30, 2015 and 2014, and $1.7 million of non-cash stock-based compensation for each of the nine-month periods ended September 30, 2015 and 2014.

(4)

Consolidated adjusted EBITDA means net income (loss) plus gain (loss) on sale of assets, depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation included in operating and corporate expenses, net interest expense, other income (loss), gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses and syndication programming amortization less syndication programming payments. We use the term consolidated adjusted EBITDA because that measure is defined in our credit facility and does not include gain (loss) on sale of assets, depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation, net interest expense, other income (loss), gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses and syndication programming amortization and does include syndication programming payments. While many in the financial community and we consider consolidated adjusted EBITDA to be important, it should be considered in addition to, but not as a substitute for or superior to, other measures of liquidity and financial performance prepared in accordance with accounting principles generally accepted in the United States of America, such as cash flows from operating activities, operating income and net income. As consolidated adjusted EBITDA excludes non-cash gain (loss) on sale of assets, non-cash depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation expense, net interest expense, other income (loss), gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses and syndication programming amortization and includes syndication programming payments, consolidated adjusted EBITDA has certain limitations because it excludes and includes several important non-cash financial line items. Therefore, we consider both non-GAAP and GAAP measures when evaluating our business. Consolidated adjusted EBITDA is also used to make executive compensation decisions.

(5)

Free cash flow is defined as consolidated adjusted EBITDA less cash paid for income taxes, net interest expense, and capital expenditures. Net interest expense is defined as interest expense, less non-cash interest expense relating to amortization of debt finance costs, and less interest income. Free cash flow per share is defined as free cash flow divided by the basic or diluted weighted average common shares outstanding.

Commenting on the Company's earnings results, Walter F. Ulloa, Chairman and Chief Executive Officer, said, "During the third quarter, we achieved revenue growth driven by increases in our television, radio and digital media segments. We also achieved record free cash flow while posting solid gains in net income over the prior year period.  We continued to build our digital footprint through the acquisition of Pulpo Media in June 2014, which provides us with an integrated platform to allow advertisers and marketers to connect with Latino audiences.  Looking ahead, we remain well positioned to build on our success in attracting Latino audiences, expanding our advertiser base and monetizing our reach to the benefit of our shareholders."

Financial Results

 

Three-Month Period Ended September 30, 2015 Compared to Three-Month Period Ended

September 30, 2014

(Unaudited)

Three-Month Period

Ended September 30,

2015

2014

% Change

Net revenue

$

69,261

$

62,274

11

%

Cost of revenue - digital media (1)

1,881

1,489

26

%

Operating expenses (1)

38,804

35,944

8

%

Corporate expenses (1)

5,535

4,899

13

%

Depreciation and amortization

4,030

3,785

6

%

Operating income (loss)

19,011

16,157

18

%

Interest expense, net

(3,274)

(3,489)

(6)

%

Income (loss) before income taxes

15,737

12,668

24

%

Income tax (expense) benefit

(6,444)

(4,611)

40

%

Net income (loss)

$

9,293

$

8,057

15

%

(1)   Cost of revenue, operating expenses and corporate expenses are defined on page 1.

 

Net revenue increased to $69.3 million for the three-month period ended September 30, 2015 from $62.3 million for the three-month period ended September 30, 2014, an increase of $7.0 million. Of the overall increase, approximately $2.1 million was attributed to our television segment and was primarily attributable to approximately $5.5 million of revenue associated with television station channel modifications made by the Company in order to accommodate the operations of a telecommunications operator, an increase in national advertising revenue, and an increase in retransmission consent revenue. This increase was partially offset by decreases due to the absence of World Cup and significant political advertising revenue in 2015 compared to 2014, and a decrease in local advertising revenue. Additionally, $2.8 million of the overall increase was attributed to our radio segment and was primarily attributable to increases in local and national advertising revenue, partially offset by the absence of World Cup and significant political advertising revenue in 2015 compared to 2014. The remaining $2.1 million of the overall increase was attributed to our digital segment, and was primarily attributable to an increase in local revenue.

Cost of revenue increased to $1.9 million for the three-month period ended September 30, 2015 from $1.5 million for the three-month period ended September 30, 2014, an increase of $0.4 million, due to increased online media costs associated with the increase in net revenue.

Operating expenses increased to $38.8 million for the three-month period ended September 30, 2015 from $35.9 million for the three-month period ended September 30, 2014, an increase of $2.9 million. The increase was primarily attributable to expenses associated with the increase in advertising revenue, increased operating expenses of Pulpo, which we acquired in June 2014, and increases in rent expense, salary expense, and promotional expenses, including event expenses associated with our annual Reventon concert in Los Angeles, and expenses for our radio network upfront.

Corporate expenses increased to $5.5 million for the three-month period ended September 30, 2015 from $4.9 million for the three-month period ended September 30, 2014, an increase of $0.6 million. The increase was primarily attributable to an increase in salary expense and legal expense.

 

 

 

Nine-Month Period Ended September 30, 2015 Compared to Nine -Month Period Ended

September 30, 2014

(Unaudited)

Nine-Month Period

Ended September 30,

2015

2014

% Change

Net revenue

$

188,702

$

176,776

7

%

Cost of revenue - digital media (1)

4,633

1,489

211

%

Operating expenses (1)

113,518

104,452

9

%

Corporate expenses (1)

15,578

14,996

4

%

Depreciation and amortization

11,950

10,803

11

%

Operating income (loss)

43,023

45,036

(4)

%

Interest expense, net

(9,738)

(10,371)

(6)

%

Income (loss) before income taxes

33,285

34,665

(4)

%

Income tax (expense) benefit

(13,467)

(13,485)

(0)

%

Net income (loss)

$

19,818

$

21,180

(6)

%

(1)   Operating expenses and corporate expenses are defined on page 1.

 

Net revenue increased to $188.7 million for the nine-month period ended September 30, 2015 from $176.8 million for the nine-month period ended September 30, 2014, an increase of $11.9 million. Of the overall increase, approximately $5.1 million was attributed to our radio segment and was primarily attributable to increases in local and national advertising revenue, partially offset by the absence of World Cup and significant political advertising revenue in 2015 compared to 2014. Additionally, $9.7 million of the overall increase was attributed to our digital segment, resulting from our acquisition of Pulpo in June 2014 and which did not contribute to results in the full comparable period in 2014. These increases were partially offset by a decrease of $2.9 million that was attributed to our television segment and was primarily attributable to the absence of World Cup and significant political advertising revenue in 2015 compared to 2014, and decreases in local and national advertising revenue, partially offset by approximately $10.5 million of revenue associated with television station channel modifications made by the Company in order to accommodate the operations of a telecommunications operator, and an increase in retransmission consent revenue.

Cost of revenue was $4.6 million for the nine-month period ended September 30, 2015 compared to $1.5 million for the nine-month period ended September 30, 2014, resulting from our acquisition of Pulpo in June 2014 and which did not contribute to results in the full comparable period in 2014.

Operating expenses increased to $113.5 million for the nine-month period ended September 30, 2015 from $104.5 million for the nine-month period ended September 30, 2014, an increase of $9.0 million. The increase was primarily attributable to expenses associated with the increase in advertising revenue, increased operating expenses of Pulpo, which we acquired in June 2014, and increases in rent expense, salary expense, and promotional expenses, including event expenses associated with our annual Reventon concert in Los Angeles, and expenses for our radio network upfront.

Corporate expenses increased to $15.6 million for the nine-month period ended September 30, 2015 from $15.0 million for the nine-month period ended September 30, 2014, an increase of $0.6 million. The increase was primarily attributable to an increase in salary expense and legal expense, partially offset by transaction costs associated with the acquisition of Pulpo in June 2014 that did not recur in 2015.

 

 

 

Segment Results

          The following represents selected unaudited segment information:

Three-Month Period

Nine-Month Period

Ended September 30,

Ended September 30,

2015

2014

% Change

2015

2014

% Change

Net Revenue

Television

$

43,393

$

41,301

5

%

$

119,292

$

122,193

(2)

%

Radio

20,855

18,081

15

%

56,785

51,691

10

%

Digital

5,013

2,892

73

%

12,625

2,892

337

%

Total

$

69,261

$

62,274

11

%

$

188,702

$

176,776

7

%

Cost of Revenue - digital media (1)

Digital

$

1,881

$

1,489

26

%

$

4,633

$

1,489

211

%

Operating Expenses (1)

Television

$

20,445

$

20,123

2

%

$

59,928

$

59,760

0

%

Radio

15,865

14,281

11

%

45,997

43,152

7

%

Digital

2,494

1,540

62

%

7,593

1,540

393

%

Total

$

38,804

$

35,944

8

%

$

113,518

$

104,452

9

%

Corporate Expenses (1)

$

5,535

$

4,899

13

%

$

15,578

$

14,996

4

%

Consolidated adjusted EBITDA (1)

$

23,878

$

20,812

15

%

$

57,542

$

57,944

(1)

%

(1)   Cost of revenue, operating expenses, corporate expenses, and consolidated adjusted EBITDA are defined on page 1.

 

Entravision Communications Corporation will hold a conference call to discuss its 2015 third quarter results on November 5, 2015 at 5 p.m. Eastern Time. To access the conference call, please dial 412-858-4600 ten minutes prior to the start time. The call will be webcast live and archived for replay on the investor relations portion of the Company's Web site located at www.entravision.com.

Entravision Communications Corporation is a diversified media company serving Latino audiences and communities with an integrated platform of solutions and services that includes television, radio and digital media to reach Latino audiences across the United States and Latin America. Entravision has 58 primary television stations, including in 20 of the nation's top 50 Latino markets, and is the largest affiliate group of both the top-ranked Univision television network and Univision's UniMás network. Entravision also operates one of the nation's largest groups of primarily Spanish-language radio stations, consisting of 49 owned and operated radio stations, and Entravision Solutions, a national sales representation and marketing organization specializing in Spanish-language media platforms and radio networks. Entravision also offers a variety of digital media platforms and services, including digital content and digital advertising platforms, including the #1-ranked online advertising platform in Hispanic reach according to comScore Media Metrix®, designed to maximize the opportunity for advertisers and marketers to connect with the growing Latino consumer market. Entravision shares of Class A Common Stock are traded on The New York Stock Exchange under the symbol: EVC.

This press release contains certain forward-looking statements. These forward-looking statements, which are included in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, may involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results and performance in future periods to be materially different from any future results or performance suggested by the forward-looking statements in this press release. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that actual results will not differ materially from these expectations, and the Company disclaims any duty to update any forward-looking statements made by the Company. From time to time, these risks, uncertainties and other factors are discussed in the Company's filings with the Securities and Exchange Commission.

 

(Financial Table Follows)

 

Entravision Communications Corporation

Consolidated Balance Sheets

(In thousands; unaudited)

September 30,

December 31,

2015

2014

ASSETS

Current assets

Cash and cash equivalents

$

58,008

$

31,260

Trade receivables, net of allowance for doubtful accounts

64,802

64,956

Deferred income taxes

5,900

5,900

Prepaid expenses and other current assets

6,273

5,295

Total current assets

134,983

107,411

Property and equipment, net

59,012

56,784

Intangible assets subject to amortization, net

17,541

20,193

Intangible assets not subject to amortization

220,701

220,701

Goodwill

50,081

50,081

Deferred income taxes

55,319

66,558

Other assets

5,421

6,039

Total assets

$

543,058

$

527,767

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Current maturities of long-term debt

$

3,750

$

3,750

Advances payable, related parties

118

118

Accounts payable and accrued expenses

28,898

32,195

Total current liabilities

32,766

36,063

Long-term debt, less current maturities

333,750

336,563

Other long-term liabilities

15,581

9,583

Total liabilities

382,097

382,209

Stockholders' equity

Class A common stock

6

6

Class B common stock

2

2

Class U common stock

1

1

Additional paid-in capital

910,068

912,161

Accumulated deficit

(744,656)

(764,474)

Accumulated other comprehensive income (loss)

(4,460)

(2,138)

Total stockholders' equity

160,961

145,558

Total liabilities and stockholders' equity

$

543,058

$

527,767

 

 

 

Entravision Communications Corporation

Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)

Three-Month Period

Nine-Month Period

Ended September 30,

Ended September 30,

2015

2014

2015

2014

Net revenue

$

69,261

$

62,274

$

188,702

$

176,776

Expenses:

Cost of revenue - digital media

1,881

1,489

4,633

1,489

Direct operating expenses (1)

27,624

26,307

81,353

76,732

Selling, general and administrative expenses (1)

11,180

9,637

32,165

27,720

Corporate expenses

5,535

4,899

15,578

14,996

Depreciation and amortization

4,030

3,785

11,950

10,803

50,250

46,117

145,679

131,740

Operating income (loss)

19,011

16,157

43,023

45,036

Interest expense

(3,286)

(3,501)

(9,769)

(10,408)

Interest income

12

12

31

37

Income (loss) before income taxes

15,737

12,668

33,285

34,665

Income tax (expense) benefit

(6,444)

(4,611)

(13,467)

(13,485)

Net income (loss)

$

9,293

$

8,057

$

19,818

$

21,180

Basic and diluted earnings per share:

Net income (loss) per share, basic

$

0.11

$

0.09

$

0.23

$

0.24

Net income (loss) per share, diluted

$

0.10

$

0.09

$

0.22

$

0.23

Cash dividends declared per common share

$

0.03

$

0.03

$

0.08

$

0.08

Weighted average common shares outstanding, basic

88,090,143

89,179,192

87,820,029

89,048,459

Weighted average common shares outstanding, diluted

90,423,333

91,239,798

90,202,389

91,130,613

(1)   Certain amounts in the prior period consolidated financial statements have been reclassified to conform to current period presentation.

 

 

 

Entravision Communications Corporation

Consolidated Statements of Cash Flows

(In thousands; unaudited)

Three-Month Period

Nine-Month Period

Ended September 30,

Ended September 30,

2015

2014

2015

2014

Cash flows from operating activities:

Net income (loss)

$

9,293

$

8,057

$

19,818

$

21,180

Adjustments to reconcile net income (loss) to net cash provided by    (used in) operating activities:

Depreciation and amortization

4,030

3,785

11,950

10,803

Deferred income taxes

6,394

4,480

12,764

12,771

Amortization of debt issue costs

202

207

595

611

Amortization of syndication contracts

91

110

262

354

Payments on syndication contracts

(131)

(129)

(377)

(441)

Non-cash stock-based compensation

877

889

2,684

2,192

Changes in assets and liabilities:

(Increase) decrease in accounts receivable

(8,573)

(1,891)

2,845

(5,523)

(Increase) decrease in prepaid expenses and other assets

(795)

(907)

(1,078)

(2,168)

Increase (decrease) in accounts payable, accrued expenses    and other liabilities

1,625

(186)

(2,579)

(5,670)

Net cash provided by (used in) operating activities

13,013

14,415

46,884

34,109

Cash flows from investing activities:

Purchases of property and equipment and intangibles

(2,963)

(2,339)

(11,546)

(6,390)

Purchase of a business, net of cash acquired

-

-

-

(15,048)

Net cash provided by (used in) investing activities

(2,963)

(2,339)

(11,546)

(21,438)

Cash flows from financing activities:

Proceeds from stock option exercises

233

78

1,814

1,817

Payments on long-term debt

(938)

-

(2,813)

(1,875)

Dividends paid

(2,203)

(2,223)

(6,591)

(6,687)

Repurchase of Class A common stock

-

(3,482)

-

(3,482)

Payment of contingent consideration

-

-

(1,000)

-

Net cash provided by (used in) financing activities

(2,908)

(5,627)

(8,590)

(10,227)

Net increase (decrease) in cash and cash equivalents

7,142

6,449

26,748

2,444

Cash and cash equivalents:

Beginning

50,866

39,817

31,260

43,822

Ending

$

58,008

$

46,266

$

58,008

$

46,266

 

 

 

Entravision Communications Corporation

Reconciliation of Consolidated Adjusted EBITDA to Cash Flows From Operating Activities

(In thousands; unaudited)

The most directly comparable GAAP financial measure is operating cash flow. A reconciliation of this non-GAAP measure to cash flows from operating activities for each of the periods presented is as follows:

Three-Month Period

Nine-Month Period

Ended September 30,

Ended September 30,

2015

2014

2015

2014

Consolidated adjusted EBITDA (1)

$

23,878

$

20,812

$

57,542

$

57,944

Interest expense

(3,286)

(3,501)

(9,769)

(10,408)

Interest income

12

12

31

37

Income tax (expense) benefit

(6,444)

(4,611)

(13,467)

(13,485)

Amortization of syndication contracts

(91)

(110)

(262)

(354)

Payments on syndication contracts

131

129

377

441

Non-cash stock-based compensation included in direct operating

   expenses

(274)

(278)

(980)

(495)

Non-cash stock-based compensation included in corporate expenses

(603)

(611)

(1,704)

(1,697)

Depreciation and amortization

(4,030)

(3,785)

(11,950)

(10,803)

Net income (loss)

9,293

8,057

19,818

21,180

Depreciation and amortization

4,030

3,785

11,950

10,803

Deferred income taxes

6,394

4,480

12,764

12,771

Amortization of debt issue costs

202

207

595

611

Amortization of syndication contracts

91

110

262

354

Payments on syndication contracts

(131)

(129)

(377)

(441)

Non-cash stock-based compensation

877

889

2,684

2,192

Changes in assets and liabilities:

(Increase) decrease in accounts receivable

(8,573)

(1,891)

2,845

(5,523)

(Increase) decrease in prepaid expenses and other assets

(795)

(907)

(1,078)

(2,168)

Increase (decrease) in accounts payable, accrued expenses and other liabilities

1,625

(186)

(2,579)

(5,670)

Cash flows from operating activities

$

13,013

$

14,415

$

46,884

$

34,109

(1)   Consolidated adjusted EBITDA is defined on page 1.

 

 

 

Entravision Communications Corporation

Reconciliation of Free Cash Flow to Net Income (Loss)

(In thousands; unaudited)

The most directly comparable GAAP financial measure is net income (loss). A reconciliation of this non-GAAP measure to net income (loss) for each of the periods presented is as follows:

Three-Month Period

Nine-Month Period

Ended September 30,

Ended September 30,

2015

2014

2015

2014

Consolidated adjusted EBITDA (1)

$

23,878

$

20,812

$

57,542

$

57,944

Net interest expense (1)

3,072

3,282

9,143

9,760

Cash paid for income taxes

50

131

703

714

Capital expenditures (2)

2,963

2,339

11,546

6,390

Free cash flow (1)

17,793

15,060

36,150

41,080

Capital expenditures (2)

2,963

2,339

11,546

6,390

Amortization of debt issue costs

(202)

(207)

(595)

(611)

Non-cash income tax expense

(6,394)

(4,480)

(12,764)

(12,771)

Amortization of syndication contracts

(91)

(110)

(262)

(354)

Payments on syndication contracts

131

129

377

441

Non-cash stock-based compensation included in direct operating

   expenses

(274)

(278)

(980)

(495)

Non-cash stock-based compensation included in corporate expenses

(603)

(611)

(1,704)

(1,697)

Depreciation and amortization

(4,030)

(3,785)

(11,950)

(10,803)

Net income (loss)

$

9,293

$

8,057

$

19,818

$

21,180

(1)   Consolidated adjusted EBITDA, net interest expense, and free cash flow are defined on page 1.

(2)   Capital expenditures is not part of the consolidated statement of operations.

 

 

 

 

 

SOURCE Entravision Communications Corporation