Entravision Communications Corporation Reports Second Quarter 2011 Results

News provided by

Entravision Communications Corporation

Aug 03, 2011, 04:05 ET

SANTA MONICA, Calif., Aug. 3, 2011 /PRNewswire/ -- Entravision Communications Corporation (NYSE: EVC) today reported financial results for the three- and six-month periods ended June 30, 2011.

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 7.  Unaudited financial highlights are as follows:



Three-Month Period


Six-Month Period



Ended June 30,


Ended June 30,



2011


2010


% Change


2011


2010


% Change

Net revenue

$      50,265


$      53,431


(6)%


$      94,309


$      96,504


(2)%

Operating expenses (1)

31,773


31,097


2%


61,837


60,921


2%

Corporate expenses (2)

3,772


3,477


8%


7,517


7,225


4%














Consolidated adjusted EBITDA (3)

15,599


18,966


(18)%


26,007


28,494


(9)%














Free cash flow (4)

$        4,967


$        7,134


(30)%


$        3,417


$        4,534


(25)%

Free cash flow per share, basic and diluted (4)

$          0.06


$          0.08


(25)%


$          0.04


$          0.05


(20)%














Net income (loss) applicable to common stockholders

$         (352)


$        6,963


NM


$      (4,784)


$        4,779


NM














Net income (loss) per share applicable













to common stockholders, basic and diluted

$          0.00


$          0.08


(100)%


$        (0.06)


$          0.06


NM














Weighted average common shares outstanding, basic

85,053,417


84,494,665




85,046,396


84,462,613



Weighted average common shares outstanding, diluted

85,053,417


85,373,021




85,046,396


85,278,162

















(1) Operating expenses include direct operating, selling, general and administrative expenses. Included in operating expenses are $0.2 million and $0.2 million of non-cash stock-based compensation for the three-month periods ended June 30, 2011 and 2010, respectively and $0.4 million and $0.5 million of non-cash stock-based compensation for the six-month periods ended June 30, 2011 and 2010, respectively. Operating expenses do not include corporate expenses, depreciation and amortization, impairment charge, gain (loss) on sale of assets and gain (loss) on debt extinguishment.

(2) Corporate expenses include $0.3 million and $0.3 million of non-cash stock-based compensation for the three-month periods ended June 30, 2011 and 2010, respectively and $0.4 million and $0.5 million of non-cash stock-based compensation for the six-month periods ended June 30, 2011 and 2010, 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, other income (loss), net interest expense, 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 revolving credit facility and does not include gain (loss) on sale of assets, depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation, other income (loss), net interest expense, 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, other income (loss), net interest expense, 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 $400 million aggregate principal amount of 8.750% senior secured first lien notes due 2017 (the "Notes"), less interest income and less the change in the fair value of our interest rate swaps. 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 second quarter of 2011, we faced challenging comparisons to last year's second quarter, when we benefited from World Cup, political and census advertising revenue.  Nevertheless, our audience shares remain strong, 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.  The release of the 2010 U.S. census data reconfirms the growth and importance of the U.S. Hispanic population and our position in some of the fastest-growing and most densely-populated Hispanic markets.  We remain focused on improving our operating performance while continuing to carefully manage our costs."

Financial Results

Three-Month Period Ended June 30, 2011 Compared to the Three-Month Period Ended June 30, 2010

(Unaudited)




Three-Month Period



Ended June 30,



2011


2010


% Change

Net revenue

$ 50,265


$ 53,431


(6)%

Operating expenses (1)

31,773


31,097


2%

Corporate expenses (1)

3,772


3,477


8%

Depreciation and amortization

4,425


4,874


(9)%








Operating income

10,295


13,983


(26)%

Interest expense, net

(9,459)


(5,179)


83%








Income (loss) before income taxes

836


8,804


(91)%








Income tax expense

(1,188)


(1,928)


(38)%

Net income (loss) before equity in net income (loss) of







nonconsolidated affiliates

(352)


6,876


NM

Equity in net income (loss) of nonconsolidated affiliates, net of tax

-


87


(100)%








Net income (loss)

$    (352)


$   6,963


NM


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




Net revenue decreased to $50.3 million for the three-month period ended June 30, 2011 from $53.4 million for the three-month period ended June 30, 2010, a decrease of $3.1 million. Of the overall decrease, $1.7 million came from our television segment and was primarily attributable to advertising revenue from the World Cup in 2010, which is absent in 2011, partially offset by an increase in retransmission consent revenue. Additionally, $1.4 million of the overall decrease came from our radio segment and was primarily attributable to advertising revenue from the World Cup in 2010, which is absent in 2011.

Operating expenses increased to $31.8 million for the three-month period ended June 30, 2011 from $31.1 million for the three-month period ended June 30, 2010, an increase of $0.7 million. The increase was primarily attributable to an increase in salary expense as a result of the partial restoration of employee salaries in 2011 and expenses associated with Lotus/Entravision Reps LLC, partially offset by a decrease in national representation fees and other expenses associated with the decrease in net revenue.

Corporate expenses increased to $3.8 million for the three-month period ended June 30, 2011 from $3.5 million for the three-month period ended June 30, 2010, an increase of $0.3 million. The increase was attributable to an increase in professional fees.

Six-Month Period Ended June 30, 2011 Compared to the Six-Month Period Ended June 30, 2010

(Unaudited)




Six-Month Period



Ended June 30,



2011


2010


% Change

Net revenue

$ 94,309


$ 96,504


(2)%

Operating expenses (1)

61,837


60,921


2%

Corporate expenses (1)

7,517


7,225


4%

Depreciation and amortization

9,157


9,597


(5)%








Operating income

15,798


18,761


(16)%

Interest expense, net

(18,900)


(10,610)


78%

Other income

687


-


NM








Income (loss) before income taxes

(2,415)


8,151


NM








Income tax expense

(2,369)


(3,338)


(29)%

Net income (loss) before equity in net loss of







nonconsolidated affiliates

(4,784)


4,813


NM

Equity in net loss of nonconsolidated affiliates, net of tax

-


(34)


(100)%








Net income (loss)

$ (4,784)


$   4,779


NM


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



Net revenue decreased to $94.3 million for the six-month period ended June 30, 2011 from $96.5 million for the six-month period ended June 30, 2010, a decrease of $2.2 million. Of the overall decrease, $1.5 million came from our radio segment and was primarily attributable to advertising revenue from the World Cup and census in 2010, both of which are absent in 2011. Additionally, $0.7 million of the overall decrease came from our television segment and was primarily attributable to advertising revenue from the World Cup and political advertising revenue in 2010, both of which are not material in 2011, partially offset by an increase in retransmission consent revenue.

Operating expenses increased to $61.8 million for the six-month period ended June 30, 2011 from $60.9 million for the six-month period ended June 30, 2010, an increase of $0.9 million. The increase was primarily attributable to an increase in salary expense as a result of the partial restoration of employee salaries in 2011 and expenses associated with Lotus/Entravision Reps LLC, partially offset by a decrease in national representation fees and other expenses associated with the decrease in net revenue.

Corporate expenses increased to $7.5 million for the six-month period ended June 30, 2011 from $7.2 million for the six-month period ended June 30, 2010, an increase of $0.3 million. The increase was attributable to an increase in professional fees.

Segment Results

The following represents selected unaudited segment information:




Three-Month Period




Ended June 30,




2011


2010


% Change

Net Revenue







Television

$ 33,118


$ 34,819


(5)%


Radio

17,147


18,612


(8)%



Total

$ 50,265


$ 53,431


(6)%









Operating Expenses (1)







Television

$ 18,656


$ 18,904


(1)%


Radio

13,117


12,193


8%



Total

$ 31,773


$ 31,097


2%









Corporate Expenses (1)

$   3,772


$   3,477


8%









Consolidated adjusted EBITDA (1)

$ 15,599


$ 18,966


(18)%


(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 2011 second quarter results on August 3, 2011 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 Hispanic 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 TeleFutura network, with television stations in 20 of the nation's top 50 Hispanic markets. The company also operates one of the nation's largest groups of primarily Spanish-language radio stations, consisting of 48 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 Hispanic 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.

(Financial Table Follows)

Entravision Communications Corporation

Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)






Three-Month Period


Six-Month Period





Ended June 30,


Ended June 30,





2011


2010


2011


2010













































Net revenue


$      50,265


$      53,431


$      94,309


$      96,504












Expenses:










Direct operating expenses (including related parties of $1,815, $3,151, $3,519 and $5,502) (including non-cash stock-based compensation of $53, $103, $104 and $208)

22,487


22,162


43,308


42,930


Selling, general and administrative expenses (including non-cash










stock-based compensation of $159, $147, $315 and $295)

9,286


8,935


18,529


17,991


Corporate expenses (including non-cash stock-based compensation










of $289, $286, $445 and $492)

3,772


3,477


7,517


7,225


Depreciation and amortization (includes direct operating of $3,352, $3,385, $6,678 and $6,874; selling, general and administrative of $798, $903, $1,619 and $1,841; and corporate of $275, $586, $860 and $883) (including related parties of $627, $846, $1,520 and $1,426)

4,425


4,874


9,157


9,597





39,970


39,448


78,511


77,743



Operating income (loss)

10,295


13,983


15,798


18,761

Interest expense (including related parties of $15, $25, $30 and $54)

(9,459)


(5,263)


(18,902)


(10,777)

Interest income

-


84


2


167

Other income (loss)

-


-


687


-



Income (loss) before income taxes

836


8,804


(2,415)


8,151

Income tax (expense) benefit

(1,188)


(1,928)


(2,369)


(3,338)



Income (loss) before equity in net income (loss) of











nonconsolidated affiliate

(352)


6,876


(4,784)


4,813

Equity in net income (loss) of nonconsolidated affiliate, net of tax

-


87


-


(34)

Net income (loss) applicable to common stockholders

$         (352)


$        6,963


$      (4,784)


$        4,779












Basic and diluted earnings per share:








Net income (loss) per share applicable to common stockholders,









basic and diluted

$          0.00


$          0.08


$        (0.06)


$          0.06























Weighted average common shares outstanding, basic

85,053,417


84,494,665


85,046,396


84,462,613

Weighted average common shares outstanding, diluted

85,053,417


85,373,021


85,046,396


85,278,162



Entravision Communications Corporation

Consolidated Statements of Cash Flows

(Unaudited; in thousands)









Three-Month Period


Six-Month Period








Ended June 30,


Ended June 30,








2011


2010


2011


2010





























Cash flows from operating activities:









Net income (loss)


$    (352)


$   6,963


$ (4,784)


$   4,779


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








Depreciation and amortization

4,425


4,874


9,157


9,597



Deferred income taxes


979


1,414


1,617


2,627



Amortization of debt issue costs

547


104


1,086


208



Amortization of syndication contracts

853


278


1,143


550



Payments on syndication contracts

(475)


(705)


(955)


(1,409)



Equity in net income (loss) of nonconsolidated affiliate

-


(87)


-


34



Non-cash stock-based compensation

501


536


864


995



Other income (loss)


-


-


(687)


-



Change in fair value of interest rate swap agreements

-


(4,123)


-


(8,053)



Changes in assets and liabilities, net of effect of acquisitions and dispositions:











(Increase) decrease in restricted cash

809


-


809


-




(Increase) decrease in accounts receivable

(5,202)


(8,665)


1,605


(3,625)




(Increase) decrease in prepaid expenses and other assets

645


140


47


48




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

9,844


3,339


(783)


3,451




Net cash provided by (used in) operating activities

12,574


4,068


9,119


9,202

Cash flows from investing activities:









Purchases of property and equipment and intangibles

(2,189)


(3,371)


(4,702)


(6,045)


Purchase of a business


(203)


-


(551)


-




Net cash provided by (used in) investing activities

(2,392)


(3,371)


(5,253)


(6,045)

Cash flows from financing activities:









Proceeds from issuance of common stock

15


69


42


219


Payments on long-term debt


(1,000)


(1,000)


(1,000)


(4,458)


Payments of deferred debt and offering costs

-


(501)


(29)


(863)




Net cash provided by (used in) financing activities

(985)


(1,432)


(987)


(5,102)




Net increase (decrease) in cash and cash equivalents

9,197


(735)


2,879


(1,945)

Cash and cash equivalents:










Beginning




66,072


26,456


72,390


27,666


Ending





$ 75,269


$ 25,721


$ 75,269


$ 25,721

















Entravision Communications Corporation

Reconciliation of Consolidated Adjusted EBITDA to Cash Flows From Operating Activities

(Unaudited; in thousands)


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


Six-Month Period






Ended June 30,


Ended June 30,






2011


2010


2011


2010





































Consolidated adjusted EBITDA (1)

$        15,599


$        18,966


$        26,007


$        28,494












Interest expense

(9,459)


(5,263)


(18,902)


(10,777)

Interest income

-


84


2


167

Income tax (expense) benefit

(1,188)


(1,928)


(2,369)


(3,338)

Amortization of syndication contracts

(853)


(278)


(1,143)


(550)

Payments on syndication contracts

475


705


955


1,409

Non-cash stock-based compensation included in direct operating









expenses

(53)


(103)


(104)


(208)

Non-cash stock-based compensation included in selling, general









and administrative expenses

(159)


(147)


(315)


(295)

Non-cash stock-based compensation included in corporate expenses

(289)


(286)


(445)


(492)

Depreciation and amortization

(4,425)


(4,874)


(9,157)


(9,597)

Other income (loss)

-


-


687


-

Equity in net income (loss) of nonconsolidated affiliates

-


87


-


(34)

Net income (loss)

(352)


6,963


(4,784)


4,779























Depreciation and amortization

4,425


4,874


9,157


9,597

Deferred income taxes

979


1,414


1,617


2,627

Amortization of debt issue costs

547


104


1,086


208

Amortization of syndication contracts

853


278


1,143


550

Payments on syndication contracts

(475)


(705)


(955)


(1,409)

Equity in net income (loss) of nonconsolidated affiliate

-


(87)


-


34

Non-cash stock-based compensation

501


536


864


995

Other (income) loss

-


-


(687)


-

Change in fair value of interest rate swap agreements

-


(4,123)


-


(8,053)

Changes in assets and liabilities, net of effect of acquisitions and dispositions:









(Increase) decrease in restricted cash

809


-


809


-


(Increase) decrease in accounts receivable

(5,202)


(8,665)


1,605


(3,625)


(Increase) decrease in prepaid expenses and other assets

645


140


47


48


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

9,844


3,339


(783)


3,451

Cash flows from operating activities

$        12,574


$          4,068


$          9,119


$          9,202


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




Entravision Communications Corporation

Reconciliation of Free Cash Flow to Net Income (Loss)

(Unaudited; in thousands)


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


Six-Month Period




Ended June 30,


Ended June 30,




2011


2010


2011


2010

Consolidated adjusted EBITDA (1)

$ 15,599


$ 18,966


$ 26,007


$ 28,494

Net interest expense (1)

8,912


9,197


17,814


18,454

Cash paid for income taxes

209


514


752


711

Capital expenditures (2)

1,511


2,121


4,024


4,795

Free cash flow (1)

4,967


7,134


3,417


4,534











Capital expenditures (2)

1,511


2,121


4,024


4,795

Non-cash interest expense relating to amortization of debt finance
   costs and interest rate swap agreements

(547)


4,018


(1,086)


7,844

Non-cash income tax expense

(979)


(1,414)


(1,617)


(2,627)

Amortization of syndication contracts

(853)


(278)


(1,143)


(550)

Payments on syndication contracts

475


705


955


1,409

Non-cash stock-based compensation included in direct operating
   expenses

(53)


(103)


(104)


(208)

Non-cash stock-based compensation included in selling, general
   and administrative expenses

(159)


(147)


(315)


(295)

Non-cash stock-based compensation included in corporate expenses

(289)


(286)


(445)


(492)

Depreciation and amortization

(4,425)


(4,874)


(9,157)


(9,597)

Other income (loss)

-


-


687


-

Equity in net income (loss) of nonconsolidated affiliates

-


87


-


(34)

Net income (loss)

$    (352)


$   6,963


$ (4,784)


$   4,779


(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