Entravision Communications Corporation Reports Fourth Quarter And Full Year 2013 Results

SANTA MONICA, Calif., Feb. 27, 2014 /PRNewswire/ -- Entravision Communications Corporation (NYSE: EVC) today reported financial results for the three- and twelve-month periods ended December 31, 2013.

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 9.  Unaudited financial highlights are as follows:

(1)     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 December 31, 2013 and 2012, and $1.1 million and $0.9 million of non-cash stock-based compensation for the twelve-month periods ended December 31, 2013 and 2012, 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).

(2)     Corporate expenses include $1.0 million and $0.6 million of non-cash stock-based compensation for the three-month periods ended December 31, 2013 and 2012, respectively, and $3.7 million and $1.7 million of non-cash stock-based compensation for the twelve-month periods ended December 31, 2013 and 2012, respectively.

(3)     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. 

(4)     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, less non-cash interest expense relating to discount amortization on our $324 million aggregate principal amount of 8.750% senior secured first lien notes (the "Notes"), which were fully redeemed on August 2, 2013, 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 fourth quarter, we achieved continued growth in core advertising revenue (excluding retransmission consent revenue and political advertising revenue) as our television segment once again outperformed the television broadcast industry. Continuing the trend of the last several years, we also experienced an increase in retransmission consent revenue.  Nonetheless, our improved core revenue performance was offset by decreased political revenue, which benefited from the presidential election last year, and was not material in 2013. As a result, net revenue was lower in the quarter.  However, we improved our net income over the fourth quarter of 2012 as we benefited from the successful refinancing of our debt.  Also for the year 2013, we are particularly pleased to have achieved nominal revenue growth over 2012, during which we benefited from a record $17 million in political advertising revenue. Our audience shares remain strong in the nation's most densely populated Hispanic markets, and we believe we are well positioned to benefit as the U.S. Hispanic market continues to expand and advertisers increasingly recognize the importance of reaching our target audience."

Announces Quarterly Cash Dividend

The Company announced today that its Board of Directors has approved a quarterly cash dividend to shareholders of $0.025 per share of the Company's Class A, Class B and Class U common stock, in an aggregate amount of approximately $2.2 million. The quarterly dividend will be payable on March 31, 2014 to shareholders of record as of the close of business on March 14, 2014, and the common stock will trade ex-dividend on March 12, 2014. As previously announced, the Company currently anticipates that future cash dividends will be paid on a quarterly basis. Any decision to pay future cash dividends will be subject to further approval by the Board.

Interest Rate Swaps, Prepayment of Outstanding Debt and Cash Dividend

On December 16, 2013, the Company entered into three forward-starting interest rate swap agreements with an aggregate notional amount of $186.0 million, as a requirement under the Company's senior secured term loan credit facility entered into on May 31, 2013. The swaps take effect on December 31, 2015 with a maturity date of December 31, 2018.  During that period, the swaps provide for a fixed interest rate of 5.23% on $186.0 million of the Company's outstanding debt.

During the fourth quarter of 2013, the Company prepaid $10 million of term loans under the Company's senior secured term loan credit facility.

Also during the fourth quarter of 2013, the Company declared and paid a cash dividend of $0.125 per share to shareholders of the Company's Class A, Class B and Class U common stock. The dividend consisted of a special cash dividend of $0.10 per share and a quarterly cash dividend of $0.025 per share. The total amount of cash disbursed for the dividends was $11.0 million.

Financial Results

Note Regarding Preliminary Quarterly Results

In connection with the preparation of our financial statements for the three- and twelve-month periods ended December 31, 2013, we are currently in the process of finalizing the provision for income taxes, specifically as it relates to the continued need for a valuation allowance against our deferred tax assets. We intend to complete this process in time to permit a timely filing of our annual report for the period ended December 31, 2013.

Three-Month Period Ended December 31, 2013 Compared to Three-Month Period Ended
December 31, 2012
(Unaudited)

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

Net revenue decreased to $60.1 million for the three-month period ended December 31, 2013 from $63.8 million for the three-month period ended December 31, 2012, a decrease of $3.7 million. Of the overall decrease, $2.7 million was generated by our television segment and was primarily attributable to a decrease in political advertising revenue, which was not material in 2013, partially offset by increases in local advertising revenue and retransmission consent revenue.  Additionally, $1.0 million of the overall decrease was generated by our radio segment and was primarily attributable to a decrease in political advertising revenue, which was not material in 2013, partially offset by an increase in local advertising revenue.

Operating expenses increased to $35.9 million for the three-month period ended December 31, 2013 from $33.7 million for the three-month period ended December 31, 2012, an increase of $2.2 million. The increase was primarily attributable to an increase in performance based commissions and bonuses associated with the increase in local revenue, and an increase in salary expense.

Corporate expenses increased to $5.5 million for the three-month period ended December 31, 2013 from $5.4 million for the three-month period ended December 31, 2012, an increase of $0.1 million. The increase was primarily attributable to an increase in non-cash compensation expense.

Twelve Months Ended December 31, 2013 Compared to Twelve Months Ended December 31, 2012
 (Unaudited)

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

Net revenue increased to $223.9 million for the year ended December 31, 2013 from $223.3 million for the year ended December 31, 2012, an increase of $0.6 million. Of the overall increase, $0.5 million was generated by our radio segment and was primarily attributable to an increase in local advertising revenue, partially offset by a decrease in political advertising revenue, which was not material in 2013. Additionally, the balance of the overall increase was generated by our television segment and was primarily attributable to increases in local advertising revenue and retransmission consent revenue, partially offset by a decrease in political advertising revenue, which was not material in 2013.

Operating expenses increased to $135.2 million for the year ended December 31, 2013 from $130.1 million for the year ended December 31, 2012, an increase of $5.1 million. The increase was primarily attributable to an increase in performance based commissions and bonuses associated with the increase in local revenue, and an increase in salary expense, partially offset by a decrease in bad debt expense.

Corporate expenses increased to $19.8 million for the year ended December 31, 2013 from $18.0 million for the year ended December 31, 2012, an increase of $1.8 million. The increase was primarily attributable to an increase in non-cash stock-based compensation expense.

Loss on debt extinguishment increased to $29.7 million for the year ended December 31, 2013 from $3.7 million for the year ended December 31, 2012, an increase of $26.0 million. The increase was primarily attributable to the premium associated with the redemption of our Notes, the unamortized bond discount, and finance costs.

Segment Results

The following represents selected unaudited segment information:

(1) Operating expenses, Corporate expenses, and Consolidated adjusted EBITDA are defined on page 1.

Entravision Communications Corporation will hold a conference call to discuss its 2013 fourth quarter and full year results on February 27, 2014 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 Spanish-language media company utilizing a combination of television, radio and digital operations to reach Latino consumers across the United States, as well as the border markets of Mexico. Entravision is the largest affiliate group of both the top-ranked Univision television network and Univision's UniMas network, with television stations in 20 of the nation's top 50 Latino markets. The company owns and/or operates 58 primary television stations and also operates one of the nation's largest groups of primarily Spanish-language radio stations, consisting of 49 owned and operated radio stations. Additionally, Entravision has a variety of cross-platform digital content and sales offerings designed to capitalize on the company's leadership position within the Latino broadcasting community. 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.

Entravision Communications Corporation
Consolidated Balance Sheets
(In thousands)

Entravision Communications Corporation
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)

Entravision Communications Corporation
Consolidated Statements of Cash Flows
(In thousands; unaudited)

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:

(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:

(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