Entravision Communications Corporation Reports Second Quarter 2008 Results
Entravision Communications Corporation Reports Second Quarter 2008 Results
-Second Quarter 2008 Net Revenue Decreases 5% -
-Repurchases 2.3 Million Shares in the Second Quarter-
SANTA MONICA, Calif., Aug. 6 /PRNewswire-FirstCall/ -- Entravision Communications Corporation (NYSE:EVC) today reported financial results for the three- and six-month periods ended June 30, 2008.
Historical results, which are attached, are in thousands of U.S. dollars (except share and per share data). The results of our outdoor operations are presented in discontinued operations within the statements of operations in accordance with SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". 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 8. Unaudited financial highlights are as follows:
Three-Month Period Ended June 30, 2008 2007 % Change Net revenue $62,932 $66,536 (5)% Operating expenses (1) 36,898 36,773 0% Corporate expenses (2) 4,477 4,373 2% Consolidated adjusted EBITDA (3) 22,371 25,932 (14)% Free cash flow (4) $9,871 $15,086 (35)% Free cash flow per share, basic and diluted (4) $0.11 $0.14 (21)% Net income from continuing operations $11,661 $11,771 (1)% Net income applicable to common stockholders $10,742 $8,598 25% Net income per share from continuing operations applicable to common stockholders, basic and diluted $0.13 $0.11 18% Net income per share applicable to common stockholders, basic and diluted $0.12 $0.08 50% Weighted average common shares outstanding, basic 91,573,187 104,174,725 Weighted average common shares outstanding, diluted 91,835,027 105,124,162 Six-Month Period Ended June 30, 2008 2007 % Change Net revenue $118,585 $123,431 (4)% Operating expenses (1) 72,307 71,818 1% Corporate expenses (2) 8,931 9,002 (1)% Consolidated adjusted EBITDA (3) 39,034 44,217 (12)% Free cash flow (4) $14,289 $23,145 (38)% Free cash flow per share, basic and diluted (4) $0.15 $0.22 (32)% Net income from continuing operations $4,611 $12,680 (64)% Net income applicable to common stockholders $3,038 $5,311 (43)% Net income per share from continuing operations applicable to common stockholders, basic and diluted $0.05 $0.12 (58)% Net income per share applicable to common stockholders, basic and diluted $0.03 $0.05 (40)% Weighted average common shares outstanding, basic 93,495,230 104,018,118 Weighted average common shares outstanding, diluted 93,811,980 104,705,891
(1) Operating expenses include direct operating, selling, general and administrative expenses. Included in operating expenses are $0.4 million and $0.2 million of non-cash stock-based compensation for the three-month periods ended June 30, 2008 and 2007, respectively and $0.7 million and $0.7 million of non-cash stock-based compensation for the six-month periods ended June 30, 2008 and 2007, respectively. Operating expenses do not include corporate expenses, depreciation and amortization and gain (loss) on sale of assets.
(2) Corporate expenses include $0.5 million and $0.4 million of non-cash stock-based compensation for the three-month periods ended June 30, 2008 and 2007, respectively and $0.9 million and $1.0 million of non-cash stock-based compensation for the six-month periods ended June 30, 2008 and 2007, respectively.
(3) Consolidated adjusted EBITDA means operating income (loss) plus (gain) loss on sale of assets, depreciation and amortization, non-cash stock-based compensation included in operating and corporate expenses and syndication programming amortization less syndication programming payments. We use the term consolidated adjusted EBITDA because that measure is defined in our syndicated bank credit facility and does not include (gain) loss on sale of assets, depreciation and amortization, non-cash stock-based compensation, net interest expense, income tax expense (benefit), equity in net income (loss) of nonconsolidated affiliate, loss from discontinued operations and syndication programming amortization and does include syndication programming payments. The definition of operating income (loss), and thus consolidated adjusted EBITDA, excludes (gain) loss on sale of assets, depreciation and amortization, non-cash stock-based compensation, net interest expense, income tax expense (benefit), equity in net income (loss) of nonconsolidated affiliate, loss from discontinued operations and syndication programming amortization. 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 of sales of assets, non-cash depreciation and amortization, non- cash stock-based compensation, net interest expense, income tax expense (benefit), equity in net income (loss) of nonconsolidated affiliate, loss from discontinued operations 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 interest income 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 diluted weighted average common shares outstanding.
Commenting on the Company's earnings results, Walter Ulloa, Chairman and Chief Executive Officer, said, "During the second quarter we continued to drive audience growth and strengthen the position of our TV and radio stations in an advertising market that remains weak due to general economic conditions. We are taking additional steps to control our costs while continuing to make prudent investments in our content, marketing and sales capabilities. In addition, our balance sheet remains strong and we have ample financial flexibility. The nation's Hispanic population continues to grow and we remain optimally positioned to capitalize on this opportunity over the long-term."
The Company also announced that it repurchased 2.3 million shares of Class A common stock for approximately $13.7 million in the second quarter of 2008. The Company announced that it repurchased an additional 1.0 million shares of Class A common stock for approximately $3.4 million so far in the third quarter of 2008.
Financial Results
Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
(Unaudited) Three-Month Period Ended June 30, 2008 2007 % Change Net revenue $62,932 $66,536 (5)% Operating expenses (1) 36,898 36,773 0% Corporate expenses (1) 4,477 4,373 2% Depreciation and amortization 5,642 5,603 1% Operating income 15,915 19,787 (20)% Interest expense, net 3,458 (505) NM Income before income taxes 19,373 19,282 0% Income tax expense (7,674) (7,671) 0% Income before equity in net income (loss) of nonconsolidated affiliates and discontinued operations 11,699 11,611 1% Equity in net income (loss) of nonconsolidated affiliates (38) 160 NM Income from continuing operations 11,661 11,771 (1)% Loss from discontinued operations, net of tax (919) (3,173) (71)% Net income $10,742 $8,598 25% (1) Operating expenses and corporate expenses are defined on page 1.
Net revenue decreased to $62.9 million for the three-month period ended June 30, 2008 from $66.5 million for the three-month period ended June 30, 2007, a decrease of $3.6 million. Of the overall decrease, $2.3 million came from our radio segment and was primarily attributable to a decrease in second quarter revenue of $1.2 million associated with moving our annual Los Angeles promotional event from the second quarter to the third quarter in 2008, as well as a decrease in local advertising sales and local advertising rates, which in turn was primarily due to the weak economy. Additionally, $1.3 million of the decrease came from our television segment and was primarily attributable to a decrease in national advertising sales and national advertising rates, which in turn was primarily due to the weak economy.
Operating expenses increased to $36.9 million for the three-month period ended June 30, 2008 from $36.8 million for the three-month period ended June 30, 2007, an increase of $0.1 million. The increase was primarily attributable to an increase in wages, utility and rent expense, partially offset by a decrease in second quarter expenses associated with moving our annual Los Angeles promotional event from the second quarter to the third quarter in 2008 and a decrease in expenses associated with the decrease in net revenue.
Corporate expenses increased to $4.5 million for three-month period ended June 30, 2008 from $4.4 million for the three-month period ended June 30, 2007, an increase of $0.1 million. The increase was attributable to an increase in non-cash stock-based compensation of $0.1 million.
Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007 (Unaudited) Six-Month Period Ended June 30, 2008 2007 % Change Net revenue $118,585 $123,431 (4)% Operating expenses (1) 72,307 71,818 1% Corporate expenses (1) 8,931 9,002 (1)% Depreciation and amortization 11,187 11,323 (1)% Operating income 26,160 31,288 (16)% Interest expense, net (18,706) (10,351) 81% Income before income taxes 7,454 20,937 (64)% Income tax expense (2,679) (8,417) (68)% Income before equity in net income (loss) of nonconsolidated affiliates and discontinued operations 4,775 12,520 (62)% Equity in net income (loss) of nonconsolidated affiliates (164) 160 NM Income from continuing operations 4,611 12,680 (64)% Loss from discontinued operations, net of tax (1,573) (7,369) (79)% Net income $3,038 $5,311 (43)%
Net revenue decreased to $118.6 million for the six-month period ended June 30, 2008 from $123.4 million for the six-month period ended June 30, 2007, a decrease of $4.8 million. Of the overall decrease, $2.8 million came from our radio segment and was primarily attributable to a decrease in revenue of $1.2 million associated with moving our annual Los Angeles promotional event from the second quarter to the third quarter in 2008, as well as a decrease in local advertising sales and local advertising rates, which in turn was primarily due to the weak economy. Additionally, $2.0 million of the decrease came from our television segment and was primarily attributable to a decrease in national advertising rates, which in turn was primarily due to the weak economy.
Operating expenses increased to $72.3 million for the six-month period ended June 30, 2008 from $71.8 million for the six-month period ended June 30, 2007, an increase of $0.5 million. The increase was primarily attributable to an increase in wages, utility and rent expense, partially offset by a decrease in second quarter expenses associated with moving our annual Los Angeles promotional event from the second quarter to the third quarter in 2008 and a decrease in expenses associated with the decrease in net revenue.
Corporate expenses decreased to $8.9 million for six-month period ended June 30, 2008 from $9.0 million for the six-month period ended June 30, 2007, a decrease of $0.1 million. The decrease was attributable to a decrease in non-cash stock-based compensation of $0.1 million.
Segment Results The following represents selected unaudited segment information: Three-Month Period Ended June 30, 2008 2007 % Change Net Revenue Television $38,944 $40,287 (3)% Radio 23,988 26,249 (9)% Total $62,932 $66,536 (5)% Operating Expenses (1) Television $21,712 $21,605 0% Radio 15,186 15,168 0% Total $36,898 $36,773 0% Corporate Expenses (1) $4,477 $4,373 2% Consolidated adjusted EBITDA (1) $22,371 $25,932 (14)%
(1) Operating expenses, Corporate expenses, and Consolidated adjusted EBITDA are defined on page 1.
Guidance
The following is the Company's guidance for the third quarter of 2008. Guidance constitutes a "forward-looking statement." Please see below regarding statements that are forward-looking.
Operating expenses and corporate expenses include non-cash stock-based compensation to comply with Statement of Financial Accounting Standards ("SFAS") No. 123 (Revised 2004), "Share-Based Payment" ("SFAS 123R"). The Company expects approximately $0.4 million in operating expenses and $0.5 million in corporate expenses related to equity compensation in the third quarter of 2008.
For the third quarter of 2008, the Company expects net revenues to decrease by low- to mid-single digit percentages and operating expenses to increase by low-single digit percentages as compared to the third quarter of 2007. Excluding the non-cash stock-based compensation, corporate expenses are expected to be approximately the same as compared to the third quarter of 2007.
Entravision Communications Corporation will hold a conference call to discuss its 2008 second quarter results on August 6, 2008 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 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.
(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, 2008 2007 2008 2007 Net revenue (including related parties of $32, $150, $182 and $300) $62,932 $66,536 $118,585 $123,431 Expenses: Direct operating expenses (including related parties of $3,079, $3,202, $5,572 and $5,929)(including non-cash stock-based compensation of $165, $97, $289 and $251) 25,942 25,009 50,676 49,225 Selling, general and administrative expenses (including non-cash stock-based compensation of $207, $135, $362 and $400) 10,956 11,764 21,631 22,593 Corporate expenses (including non-cash stock-based compensation of $468, $370, $903 and $1,018) 4,477 4,373 8,931 9,002 Depreciation and amortization (includes direct operating of $4,382, $4,412, $8,726 and $8,891; selling, general and administrative of $983, $975, $1,985 and $2,001; and corporate of $277, $216, $476 and $431)(including related parties of $580, $580, $1,160 and $1,160) 5,642 5,603 11,187 11,323 47,017 46,749 92,425 92,143 Operating income 15,915 19,787 26,160 31,288 Interest expense (including related parties of $54, $68, $112 and $141) 3,172 (1,807) (19,423) (12,917) Interest income 286 1,302 717 2,566 Income before income taxes 19,373 19,282 7,454 20,937 Income tax expense (7,674) (7,671) (2,679) (8,417) Income before equity in net income (loss) of nonconsolidated affiliate and discontinued operations 11,699 11,611 4,775 12,520 Equity in net income (loss) of nonconsolidated affiliate (38) 160 (164) 160 Income from continuing operations 11,661 11,771 4,611 12,680 Loss from discontinued operations, net of tax (expense) benefit of ($369), $1,514, $604 and $4,160 (919) (3,173) (1,573) (7,369) Net income applicable to common stockholders $10,742 $8,598 $3,038 $5,311 Basic and diluted earnings per share: Net income per share from continuing operations applicable to common stockholders, basic and diluted $0.13 $0.11 $0.05 $0.12 Net loss per share from discontinued operations, basic and diluted $(0.01) $(0.03) $(0.02) $(0.07) Net income per share applicable to common stockholders, basic and diluted $0.12 $0.08 $0.03 $0.05 Weighted average common shares outstanding, basic 91,573,187 104,174,725 93,495,230 104,018,118 Weighted average common shares outstanding, diluted 91,835,027 105,124,162 93,811,980 104,705,891 Entravision Communications Corporation Consolidated Statements of Cash Flows (In thousands, except share and per share data) (Unaudited) Three-Month Period Six-Month Period Ended June 30, Ended June 30, 2008 2007 2008 2007 Cash flows from operating activities: Net income $10,742 $8,598 $3,038 $5,311 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,642 5,603 11,187 11,323 Deferred income taxes 6,877 9,598 1,660 7,233 Amortization of debt issue costs 101 101 202 202 Amortization of syndication contracts 689 399 1,555 415 Payments on syndication contracts (715) (459) (1,422) (478) Equity in net (income) loss of nonconsolidated affiliate 38 (160) 164 (160) Non-cash stock-based compensation 840 602 1,554 1,669 Change in fair value of interest rate swap agreements (10,832) (6,082) 3,211 (2,796) Changes in assets and liabilities, net of effect of acquisitions and dispositions: (Increase) decrease in accounts receivable (6,317) (8,699) 158 (5,983) (Increase) decrease in prepaid expenses and other assets 733 322 78 (131) Increase (decrease) in accounts payable, accrued expenses and other liabilities (659) 1,806 (1,760) (1,456) Effect of discontinued operations (1,569) 712 (2,230) 8,818 Net cash provided by operating activities 5,570 12,341 17,395 23,967 Cash flows from investing activities: Proceeds from sale of property and equipment and intangibles 101,407 20 101,498 20 Purchases of property and equipment and intangibles (4,404) (5,978) (8,408) (9,403) Purchase of a business - - (22,885) - Effect of discontinued operations (64) (823) (194) (1,182) Net cash provided by (used in) investing activities 96,939 (6,781) 70,011 (10,565) Cash flows from financing activities: Proceeds from issuance of common stock - 2,925 486 5,477 Payments on long-term debt (1,007) (1,068) (11,034) (1,144) Repurchase of Class U common stock - - (10,380) - Repurchase of Class A common stock (13,793) - (36,293) (2,840) Change in excess tax benefits from exercise of stock options (25) 353 (25) 476 Net cash provided by (used in) financing activities (14,825) 2,210 (57,246) 1,969 Net increase in cash and cash equivalents 87,684 7,770 30,160 15,371 Cash and cash equivalents: Beginning 29,421 126,126 86,945 118,525 Ending $117,105 $133,896 $117,105 $133,896 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, 2008 2007 2008 2007 Consolidated adjusted EBITDA (1) $22,371 $25,932 $39,034 $44,217 Interest expense 3,172 (1,807) (19,423) (12,917) Interest income 286 1,302 717 2,566 Income tax expense (7,674) (7,671) (2,679) (8,417) Amortization of syndication contracts (689) (399) (1,555) (415) Payments on syndication contracts 715 459 1,422 478 Non-cash stock-based compensation included in direct operating expenses (165) (97) (289) (251) Non-cash stock-based compensation included in selling, general and administrative expenses (207) (135) (362) (400) Non-cash stock-based compensation included in corporate expenses (468) (370) (903) (1,018) Depreciation and amortization (5,642) (5,603) (11,187) (11,323) Equity in net income (loss) of nonconsolidated affiliates (38) 160 (164) 160 Loss from discontinued operations (919) (3,173) (1,573) (7,369) Net income 10,742 8,598 3,038 5,311 Depreciation and amortization 5,642 5,603 11,187 11,323 Deferred income taxes 6,877 9,598 1,660 7,233 Amortization of debt issue costs 101 101 202 202 Amortization of syndication contracts 689 399 1,555 415 Payments on syndication contracts (715) (459) (1,422) (478) Equity in net (income) loss of nonconsolidated affiliate 38 (160) 164 (160) Non-cash stock-based compensation 840 602 1,554 1,669 Change in fair value of interest rate swap agreements (10,832) (6,082) 3,211 (2,796) Changes in assets and liabilities, net of effect of acquisitions and dispositions: (Increase) decrease in accounts receivable (6,317) (8,699) 158 (5,983) (Increase) decrease in prepaid expenses and other assets 733 322 78 (131) Increase (decrease) in accounts payable, accrued expenses and other liabilities (659) 1,806 (1,760) (1,456) Effect of discontinued operations (1,569) 712 (2,230) 8,818 Cash flows from operating activities $5,570 $12,341 $17,395 $23,967 (1) Consolidated adjusted EBITDA is defined on page 1. Entravision Communications Corporation Reconciliation of Free Cash Flow to Net Income (Unaudited; in thousands)
The most directly comparable GAAP financial measure is net income. A reconciliation of this non-GAAP measure to net income for each of the periods presented is as follows:
Three-Month Period Six-Month Period Ended June 30, Ended June 30, 2008 2007 2008 2007 Consolidated adjusted EBITDA (1) $22,371 $25,932 $39,034 $44,217 Net interest expense (1) 7,274 6,486 15,293 12,945 Cash paid for income taxes 822 366 1,044 708 Capital expenditures (2) 4,404 3,994 8,408 7,419 Free cash flow (1) 9,871 15,086 14,289 23,145 Capital expenditures (2) 4,404 3,994 8,408 7,419 Non-cash interest (expense) income relating to amortization of debt finance costs and interest rate swap agreements 10,732 5,981 (3,413) 2,594 Non-cash income tax expense (6,852) (7,305) (1,635) (7,709) Amortization of syndication contracts (689) (399) (1,555) (415) Payments on syndication contracts 715 459 1,422 478 Non-cash stock-based compensation included in direct operating expenses (165) (97) (289) (251) Non-cash stock-based compensation included in selling, general and administrative expenses (207) (135) (362) (400) Non-cash stock-based compensation included in corporate expenses (468) (370) (903) (1,018) Depreciation and amortization (5,642) (5,603) (11,187) (11,323) Equity in net income (loss) of nonconsolidated affiliates (38) 160 (164) 160 Loss from discontinued operations (919) (3,173) (1,573) (7,369) Net income $10,742 $8,598 $3,038 $5,311
(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.
First Call Analyst:
FCMN Contact:
Source: Entravision Communications Corporation
CONTACT: Christopher T. Young, Chief Financial Officer, Entravision
Communications Corporation, +1-310-447-3870; Mike Smargiassi or Joe Kessler,
Brainerd Communicators, Inc., +1-212-986-6667, for Entravision Communications
Corporation
Web site: http://www.entravision.com/
Profile: International Entertainment
posted by EntertainmentNews @ 1:03 PM
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