Entravision Communications Corporation Reports Third Quarter 2015 Results

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

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Entravision Communications Corporation

Nov 05, 2015, 04:15 ET

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

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