Entravision Communications Corporation Reports Third Quarter 2010 Results

News provided by

Entravision Communications Corporation

Nov 04, 2010, 04:05 ET

SANTA MONICA, Calif., Nov. 4, 2010 /PRNewswire-FirstCall/ -- Entravision Communications Corporation (NYSE: EVC) today reported financial results for the three- and nine-month periods ended September 30, 2010.

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


Nine-Month Period







Ended September 30,


Ended September 30,







2010


2009


% Change


2010


2009


% Change

Net revenue




$        53,325


$        50,754


5%


$      149,829


$      141,165


6%

Operating expenses (1)


31,224


30,572


2%


92,145


92,031


0%

Corporate expenses (2)


3,823


3,351


14%


11,048


10,602


4%


















Consolidated adjusted EBITDA (3)


18,444


17,268


7%


46,938


40,307


16%


















Free cash flow (4)



$          8,109


$          5,058


60%


$        12,643


$          9,176


38%

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

$            0.10


$            0.06


67%


$            0.15


$            0.11


36%


















Net income (loss) applicable to common stockholders

$          6,408


$             673


NM


$        11,187


$      (15,648)


NM


















Net income (loss) per share applicable














to common stockholders, basic and diluted

$            0.08


$            0.01


NM


$            0.13


$          (0.19)


NM


















Weighted average common shares outstanding, basic

84,512,128


83,683,908




84,479,299


84,049,423



Weighted average common shares outstanding, diluted

85,089,605


83,935,319




85,215,491


84,049,423















(1)  Operating expenses include direct operating, selling, general and administrative expenses. Included in operating expenses are $0.3 million and $0.4 million of non-cash stock-based compensation for the three-month periods ended September 30, 2010 and 2009, respectively and $0.8 million and $1.1 million of non-cash stock-based compensation for the nine-month periods ended September 30, 2010 and 2009, 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 $0.4 million and $0.3 million of non-cash stock-based compensation for the three-month periods ended September 30, 2010 and 2009, respectively and $0.8 million and $1.1 million of non-cash stock-based compensation for the nine-month periods ended September 30, 2010 and 2009, 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, gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate 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, net interest expense, gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate 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, gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate 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 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 third quarter, we generated revenue growth primarily driven by retransmission consent revenue and World Cup and political advertising.  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 audience."

Senior Secured Notes and Revolving Credit Facility

On July 27, 2010, the Company completed the offering and sale of $400,000,000 aggregate principal amount of its 8.75% Senior Secured First Lien Notes (the "Notes").   Net proceeds from the Notes were used to pay all indebtedness outstanding under the Company's then-existing syndicated bank credit facility, pay fees and expenses related to the offering of the Notes and for general corporate purposes.  Also on July 27, 2010, the Company entered into a new $50,000,000 revolving credit facility and terminated its then-existing syndicated bank credit facility.

These transactions are more fully described in the Company's Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on July 27, 2010.

Financial Results

Three Months Ended September 30, 2010 Compared to Three Months Ended September 30, 2009

(Unaudited)









Three-Month Period








Ended September 30,








2010


2009


% Change

Net revenue





$      53,325


$      50,754


5%

Operating expenses (1)




31,224


30,572


2%

Corporate expenses (1)




3,823


3,351


14%

Depreciation and amortization



4,867


5,272


(8)%













Operating income




13,411


11,559


16%

Interest expense, net




(4,302)


(8,157)


(47)%

Loss on debt extinguishment



(987)




NM













Income before income taxes




8,122


3,402


139%













Income tax expense




(1,764)


(2,802)


(37)%

Net income  before equity in net income of








nonconsolidated affiliates



6,358


600


NM

Equity in net income of nonconsolidated affiliates, net of tax

50


73


(32)%













Net income





$        6,408


$           673


NM











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



Net revenue increased to $53.3 million for the three-month period ended September 30, 2010 from $50.8 million for the three-month period ended September 30, 2009, an increase of $2.5 million. Of the overall increase, $2.3 million came from our television segment and was primarily attributable to retransmission consent revenue, advertising revenue from the World Cup and political advertising revenue. Additionally, $0.2 million of the overall increase came from our radio segment and was primarily attributable to advertising revenue from the World Cup and political advertising revenue.

Operating expenses increased to $31.2 million for the three-month period ended September 30, 2010 from $30.6 million for the three-month period ended September 30, 2009, an increase of $0.6 million. The increase was primarily attributable to an increase in national representation fees and other expenses associated with the increase in net revenue.

Corporate expenses increased to $3.8 million for the three-month period ended September 30, 2010 from $3.4 million for the three-month period ended September 30, 2009, an increase of $0.4 million. The increase was primarily attributable to expenses relating to the issuance of the Notes.  Excluding the expenses relating to the issuance of the Notes, corporate expenses remained at $3.4 million for each of the three-month periods ended September 30, 2010 and 2009.

Nine Months Ended September 30, 2010 Compared to Nine Months Ended September 30, 2009

(Unaudited)









Nine-Month Period








Ended September 30,








2010


2009


% Change

Net revenue





$    149,829


$    141,165


6%

Operating expenses (1)




92,145


92,031


0%

Corporate expenses (1)




11,048


10,602


4%

Depreciation and amortization



14,464


15,893


(9)%

Impairment charge




-


2,720


(100)%













Operating income




32,172


19,919


62%

Interest expense, net




(14,912)


(21,374)


(30)%

Loss on debt extinguishment



(987)


(4,716)


(79)%













Income (loss) before income taxes



16,273


(6,171)


NM













Income tax expense




(5,102)


(9,311)


(45)%

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








nonconsolidated affiliates



11,171


(15,482)


NM

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

16


(166)


NM













Net income (loss)




$      11,187


$    (15,648)


NM


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



Net revenue increased to $149.8 million for the nine-month period ended September 30, 2010 from $141.2 million for the nine-month period ended September 30, 2009, an increase of $8.6 million. Of the overall increase, $6.7 million came from our television segment and was primarily attributable to advertising revenue from the World Cup, retransmission consent revenue, and political advertising revenue. Additionally, $1.9 million of the overall increase came from our radio segment and was primarily attributable to advertising revenue from the World Cup, and political and census advertising revenue.

Operating expenses increased to $92.1 million for the nine-month period ended September 30, 2010 from $92.0 million for the nine-month period ended September 30, 2009, an increase of $0.1 million. The increase was primarily attributable to an increase in national representation fees and other expenses associated with the increase in net revenue, partially offset by a decrease in salary expense due to reductions of personnel and salary reductions implemented in 2009.

Corporate expenses increased to $11.0 million for the nine-month period ended September 30, 2010 from $10.6 million for the nine-month period ended September 30, 2009, an increase of $0.4 million. The increase was primarily attributable to expenses relating to the issuance of the Notes.  Excluding the expenses relating to the issuance of the Notes, corporate expenses remained at $10.6 million for each of the nine-month periods ended September 30, 2010 and 2009.

Segment Results

The following represents selected unaudited segment information:







Three-Month Period







Ended September 30,







2010


2009


% Change

Net Revenue










Television




$        34,322


$        32,019


7%


Radio




19,003


18,735


1%



Total




$        53,325


$        50,754


5%












Operating Expenses (1)









Television




$        18,041


$        17,601


2%


Radio




13,183


12,971


2%



Total




$        31,224


$        30,572


2%












Corporate Expenses (1)



$          3,823


$          3,351


14%












Consolidated adjusted EBITDA (1)


$        18,444


$        17,268


7%


(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 2010 third quarter results on November 4, 2010 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 at www.entravision.com.

Entravision Communications Corporation is a diversified Spanish-language media company utilizing a combination of television and radio operations to reach Hispanic consumers across the United States, as well as the border markets of Mexico.  Entravision owns and/or operates 53 primary television stations and 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.  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 Statements of Operations

(In thousands, except share and per share data)

(Unaudited)






Three-Month Period


Nine-Month Period





Ended September 30,


Ended September 30,





2010


2009


2010


2009













































Net revenue


$             53,325


$             50,754


$           149,829


$           141,165












Expenses:










Direct operating expenses

21,011


21,030


63,941


63,690


Selling, general and administrative expenses

10,213


9,542


28,204


28,341


Corporate expenses

3,823


3,351


11,048


10,602


Depreciation and amortization

4,867


5,272


14,464


15,893


Impairment charge

-


-


-


2,720





39,914


39,195


117,657


121,246



Operating income

13,411


11,559


32,172


19,919

Interest expense

(4,394)


(8,227)


(15,171)


(21,762)

Interest income


92


70


259


388

Loss on debt extinguishment

(987)


-


(987)


(4,716)



Income (loss) before income taxes

8,122


3,402


16,273


(6,171)

Income tax expense

(1,764)


(2,802)


(5,102)


(9,311)



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











nonconsolidated affiliate

6,358


600


11,171


(15,482)

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

50


73


16


(166)

Net income (loss) applicable to common stockholders

$               6,408


$                  673


$             11,187


$           (15,648)












Basic and diluted earnings per share:








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









basic and diluted

$                 0.08


$                 0.01


$                 0.13


$               (0.19)























Weighted average common shares outstanding, basic

84,512,128


83,683,908


84,479,299


84,049,423

Weighted average common shares outstanding, diluted

85,089,605


83,935,319


85,215,491


84,049,423



Entravision Communications Corporation

Consolidated Statements of Cash Flows

(Unaudited; in thousands)









Three-Month Period


Nine-Month Period








Ended September 30,


Ended September 30,








2010


2009


2010


2009





























Cash flows from operating activities:









Net income (loss)


$                6,408


$                   673


$              11,187


$            (15,648)


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









Depreciation and amortization

4,867


5,272


14,464


15,893



Impairment charge


-


-


-


2,720



Deferred income taxes


1,587


2,548


4,214


8,534



Amortization of debt issue costs

487


104


695


298



Amortization of syndication contracts

290


441


840


1,689



Payments on syndication contracts

(732)


(706)


(2,141)


(2,119)



Equity in net (income) loss of nonconsolidated affiliate

(50)


(73)


(16)


166



Non-cash stock-based compensation

608


702


1,603


2,205



Gain on sale of media properties and other assets

-


-


-


(102)



Non-cash expenses related to debt extinguishment

934


-


934


945



Change in fair value of interest rate swap agreements

(4,135)


(1,314)


(12,188)


(3,850)



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











Increase in restricted cash

(1,023)


-


(1,023)


-




(Increase) decrease in accounts receivable

1,765


(1,828)


(1,860)


(3,100)




(Increase) decrease in prepaid expenses and other assets

(474)


(810)


(426)


(621)




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

(2,691)


1,085


760


3,187





Net cash provided by operating activities

7,841


6,094


17,043


10,197

Cash flows from investing activities:









Proceeds from sale of property and equipment and intangibles

-


-


-


114


Purchases of property and equipment and intangibles

(1,033)


(2,589)


(7,078)


(9,207)





Net cash used in investing activities

(1,033)


(2,589)


(7,078)


(9,093)

Cash flows from financing activities:









Proceeds from issuance of common stock

14


53


233


255


Payments on long-term debt


(358,491)


(1,572)


(362,949)


(42,572)


Termination of swap agreements

(4,039)


-


(4,039)


-


Repurchase of Class A common stock

-


-


-


(1,075)


Proceeds from borrowings on long-term debt

394,888


-


394,888


-


Payments of deferred debt and offering costs

(9,691)


-


(10,554)


(1,182)





Net cash provided by (used in) financing activities

22,681


(1,519)


17,579


(44,574)





Net increase (decrease) in cash and cash equivalents

29,489


1,986


27,544


(43,470)

Cash and cash equivalents:










Beginning




25,721


18,838


27,666


64,294


Ending





$              55,210


$              20,824


$              55,210


$              20,824



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


Nine-Month Period









Ended September 30,


Ended September 30,









2010


2009


2010


2009














































Consolidated adjusted EBITDA (1)




$        18,444


$        17,268


$        46,938


$        40,307
















Interest expense





(4,394)


(8,227)


(15,171)


(21,762)

Interest income






92


70


259


388

Loss on debt extinguishment




(987)


-


(987)


(4,716)

Income tax expense





(1,764)


(2,802)


(5,102)


(9,311)

Amortization of syndication contracts




(290)


(441)


(840)


(1,689)

Payments on syndication contracts




732


706


2,141


2,119

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










(104)


(159)


(312)


(489)

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










(147)


(204)


(442)


(618)

Non-cash stock-based compensation included in corporate expenses

(357)


(339)


(849)


(1,098)

Depreciation and amortization




(4,867)


(5,272)


(14,464)


(15,893)

Impairment charge





-


-


-


(2,720)

Equity in net income (loss) of nonconsolidated affiliates



50


73


16


(166)

Net income (loss)





6,408


673


11,187


(15,648)































Depreciation and amortization




4,867


5,272


14,464


15,893

Impairment charge





-


-


-


2,720

Deferred income taxes





1,587


2,548


4,214


8,534

Amortization of debt issue costs




487


104


695


298

Amortization of syndication contracts




290


441


840


1,689

Payments on syndication contracts




(732)


(706)


(2,141)


(2,119)

Equity in net (income) loss of nonconsolidated affiliate



(50)


(73)


(16)


166

Non-cash stock-based compensation




608


702


1,603


2,205

Gain on sale of media properties and other assets



-


-


-


(102)

Non-cash expenses related to debt extinguishment



934


-


934


945

Change in fair value of interest rate swap agreements



(4,135)


(1,314)


(12,188)


(3,850)

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









Increase in restricted cash




(1,023)


-


(1,023)


-


(Increase) decrease in accounts receivable



1,765


(1,828)


(1,860)


(3,100)


(Increase) decrease in prepaid expenses and other assets


(474)


(810)


(426)


(621)


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

(2,691)


1,085


760


3,187

Cash flows from operating activities




$          7,841


$          6,094


$        17,043


$        10,197


(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


Nine-Month Period








Ended September 30,


Ended September 30,








2010


2009


2010


2009

Consolidated adjusted EBITDA (1)



$        18,444


$        17,268


$        46,938


$        40,307

Net interest expense (1)




9,125


9,367


27,579


24,926

Cash paid for income taxes




177


254


888


777

Capital expenditures (2)




1,033


2,589


5,828


5,428

Free cash flow (1)




8,109


5,058


12,643


9,176















Capital expenditures (2)




1,033


2,589


5,828


5,428

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









4,823


1,210


12,667


3,552

Loss on debt extinguishment



(987)


-


(987)


(4,716)

Non-cash income tax expense



(1,587)


(2,548)


(4,214)


(8,534)

Amortization of syndication contracts



(290)


(441)


(840)


(1,689)

Payments on syndication contracts



732


706


2,141


2,119

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









(104)


(159)


(312)


(489)

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









(147)


(204)


(442)


(618)

Non-cash stock-based compensation included in corporate expenses

(357)


(339)


(849)


(1,098)

Depreciation and amortization



(4,867)


(5,272)


(14,464)


(15,893)

Impairment charge




-


-


-


(2,720)

Equity in net income (loss) of nonconsolidated affiliates


50


73


16


(166)

Net income (loss)




$          6,408


$             673


$        11,187


$      (15,648)


(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