Entravision Communications Corporation Reports Third Quarter 2015 Results

Entravision Communications Corporation Reports Third Quarter 2015 Results

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

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 1,625 (186) (2,579) (5,670)
and other liabilities

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 (274) (278) (980) (495)

expenses

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 (274) (278) (980) (495)

expenses

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

Entravision Communications Corporation

CONTACT: Christopher T. Young, Chief Financial Officer, Entravision Communications Corporation, 310-447-3870, OR Mike Smargiassi/Brad Edwards, Brainerd Communicators, Inc., 212-986-6667


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