Entravision Communications Corporation Reports Fourth Quarter And Full Year 2014 Results

SANTA MONICA, Calif., Feb. 26, 2015 /PRNewswire/ -- Entravision Communications Corporation (NYSE: EVC) today reported financial results for the three- and twelve-month periods ended December 31, 2014.

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:

(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 $0.8 million and $0.3 million of non-cash stock-based compensation for the three-month periods ended December 31, 2014 and 2013, respectively, and $1.3 million and $1.1 million of non-cash stock-based compensation for the twelve-month periods ended December 31, 2014 and 2013, 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 $1.4 million and $1.0 million of non-cash stock-based compensation for the three-month periods ended December 31, 2014 and 2013, respectively, and $3.1 million and $3.7 million of non-cash stock-based compensation for the twelve-month periods ended December 31, 2014 and 2013, respectively.

(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, 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 revenue growth driven by increases in our television, radio and digital media segments, as well as retransmission consent revenue and political advertising revenue.  We also improved our free cash flow, and 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."

Quarterly Cash Dividend, Prepayment of Outstanding Debt and Share Repurchase Program

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, 2015 to shareholders of record as of the close of business on March 12, 2015, and the common stock will trade ex-dividend on March 10, 2015. 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.

During the fourth quarter of 2014, the Company voluntarily prepaid $20.0 million of term loans under the Company's senior secured term loan credit facility.

The Company also announced that as part of its $20.0 million share repurchase program it repurchased 1.7 million shares of Class A common stock for approximately $9.1 million in the fourth quarter of 2014. As of February 26, 2015, the Company has repurchased a total of 2.5 million shares of Class A common stock for approximately $12.5 million under the plan.

Impairment of Radio Goodwill  

The Company recorded an impairment charge of $0.7 million related to radio goodwill. The write-down was pursuant to Accounting Standards Codification (ASC) 350, Intangibles – Goodwill and Other, which requires that goodwill and certain intangible assets be tested for impairment at least annually, or more frequently if events or changes in circumstances indicate the assets might be impaired.

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

Net revenue increased to $65.3 million for the three-month period ended December 31, 2014 from $60.1 million for the three-month period ended December 31, 2013, an increase of $5.2 million. Of the overall increase, approximately $0.6 million was generated by our television segment and was primarily attributable to an increase in political advertising revenue, which was not material in 2013, and an increase in retransmission consent revenue, partially offset by decreases in local and national advertising revenue. Additionally, $0.8 million of the overall increase was generated by our radio segment and was primarily attributable to an increase in political advertising revenue, which was not material in 2013, and an increase in national advertising revenue, partially offset by a decrease in local advertising revenue. The remaining $3.8 million of the overall increase was generated by our new digital media segment, resulting from our acquisition of Pulpo in June 2014 and which did not contribute to revenues in prior periods.

Operating expenses increased to $38.2 million for the three-month period ended December 31, 2014 from $35.9 million for the three-month period ended December 31, 2013, an increase of $2.3 million. The increase was primarily attributable to our acquisition of Pulpo in June 2014, and an increase in non-cash stock-based compensation.

Corporate expenses increased to $6.3 million for the three-month period ended December 31, 2014 from $5.5 million for the three-month period ended December 31, 2013, an increase of $0.8 million. The increase was primarily attributable to an increase in non-cash stock-based compensation and an increase in salary expense.

Cost of revenue was $1.5 million for the three-month period ended December 31, 2014 due to the acquisition of Pulpo in June 2014.

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

Net revenue increased to $242.0 million for the twelve-month period ended December 31, 2014 from $223.9 million for the twelve-month period ended December 31, 2013, an increase of $18.1 million. Of the overall increase, approximately $8.5 million was generated by our television segment and was primarily attributable to advertising revenue from the World Cup, an increase in retransmission consent revenue, and an increase in political advertising revenue, which was not material in 2013, partially offset by decreases in national and local advertising revenue. Additionally, $3.0 million of the overall increase was generated by our radio segment and was primarily attributable to advertising revenue from the World Cup, an increase in national advertising revenue, and an increase in political advertising revenue, which was not material in 2013, partially offset by a decrease in local advertising revenue. The remaining $6.6 million of the overall increase was generated by our new digital media segment, resulting from our acquisition of Pulpo in June 2014 and which did not contribute to revenues in prior periods.

Operating expenses increased to $142.7 million for the twelve-month period ended December 31, 2014 from $135.2 million for the twelve-month period ended December 31, 2013, an increase of $7.5 million. The increase was primarily attributable to our acquisition of Pulpo in June 2014, an increase in salary expense and an increase in employee benefits costs and payroll taxes associated with the increase in salary expense.

Corporate expenses increased to $21.3 million for the twelve-month period ended December 31, 2014 from $19.8 million for the twelve-month period ended December 31, 2013, an increase of $1.5 million. The increase was primarily attributable to fees associated with the acquisition of Pulpo and an increase in salary expense, partially offset by a decrease in non-cash stock-based compensation.

Cost of revenue was $3.0 million for the twelve-month period ended December 31, 2014 due to the acquisition of Pulpo in June 2014.

Segment Results

The following represents selected unaudited segment information:

(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 2014 fourth quarter and full year results on February 26, 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, digital media and data analytics 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 UniMas 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, digital advertising platforms, including the #1-ranked online advertising platform in Hispanic reach according to comScore Media Metrix®, and data analytics solutions 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)

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

(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