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Entravision Communications (EVC)

Participants
Walter Ulloa Chairman & CEO
Christopher Young CFO & Treasurer
Michael Kupinski NOBLE Capital Markets
Gordon Hodge Tracker Research
Call transcript
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Operator

Good afternoon, and welcome to the Entravision Second Quarter 2019 Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Mr. Walter Ulloa, CEO. sir. ahead, go Please

Walter Ulloa

Good Earnings and Conference Nancy. Second to Quarter XXXX Call. afternoon, you, welcome everyone, Entravision's Thank

Joining me Executive on our Chief President the Officer. call today COO; Financial Chris is and Young, our Vice and and President Jeff Liberman,

that filings that risks to Before will impact conference to differ. could subject risks Please contain inform could and that SEC are call and that refer this uncertainties we for statements cause results. must of begin, to I uncertainties a you list forward-looking actual actual our results

This a retransmission expressed Corporation is form call property call Communications Corporation. of prohibited. the Any or in Entravision redistribution, written without this Entravision strictly Communications consent of rebroadcast of is any

financial will measures. available directly non-GAAP financial most was call today's provided comparable on The GAAP this the measures a company's X-K. release. the include filed is to these release measures with The press SEC in their has Also, and non-GAAP website press on company reconciliation of Form

results digital with offset by quarter in being in at revenues second line decrease radio division with our segments. both our increased at TV a were Our and revenues our expectations,

in Looking the and business beyond balance million our continues marketable be $XXX the solid total $XXX approximately securities environment, to on debt a books with versus sheet of general cash million.

were of per $X.XX share. During back our in average price repurchased we active the stock quarter, shares buying also an with approximately at XXX,XXX

quarterly We to also our shareholders dividend. continue to capital return through our

McAllen you Paso. our next local of have D.C. El about total of on news won proud Washington, we update In is additional San Emmys call Emmys. very are markets, and We'll the XX Orlando, our in X and We TV teams Denver, these Diego a

-- $XX.X the Revenues million EBITDA operating turning adjusted $XX.X decreased quarter. performance. EBITDA was X%, down X% financial Consolidated Now and million $XX.X to million consolidated our compared CapEx in related we this quarter. $X.X cash repack to expenses television were second last to Free to in flow, which compared to the press year's defined million $X.X year was our million FCC due year. in second last to release,

spectrum flat revenues segment television to period. quarter national the million the up our to during year lower was prior the telecom the second local totaled advertising compared during X% $X due primarily initiatives was were down to National related revenues primarily the to remained well a nonadvertising results. quarter, revenue in to second with quarter, revenue period. advertising compared compared down second second spectrum was from second Advertising sales. service operating Retransmission as during a revenues prior agreement revenue Television same or from down the usage last quarter the year. to XX%, during Revenue leasing local multicast. quarter Turning rights generated arising as operator while year's X% quarter X%

retransmission, Excluding television down during and spectrum down revenues were down rights the X%, advertising core political with and local national X% revenues, usage quarter. X%

spending was X% an television our for X and Coast X Dealers. Dealers of Tier Honda and Chevy in The Tier advertising expenditures offset were in advertising of Tier both was X. and XX% that result Gulf saw Tier a by approximately Dealers represented Automotive We in declines increased growth revenue. X% General television Motors, X segment increase Association, down by total of Ford our

leisure, up their AT&T by were a which quarter travel that increasing services, and were up automotive, second restaurants X%; X%; was Beyond and increased telecom of The telecom growth the X%; advertising increased in result top the quarter. spending categories XXX% up XX during growth media, which XX%. generated was X%;

Department and second Notable Diego California & which $XXX,XXX included Tenet quarter, California in we in Services. Electric, San $XX,XXX of Overall, advertisers Gas more spent revenue. approximately added advertising the quarter the Health who than XX brands Healthcare the new new second -- totaled and during

to Turning ratings our performance.

television upon Univision built leadership Our market XXXX. their May in stations

of Telemundo XX in ahead to stations television adults we finished our XX early in For competition. local news, of competitor local have XX head-to-head Univision the news XX markets where

to ranked against English-Spanish adults our number early XX Additionally, markets. number among two or are newscast local one XX XX, competitors in in

Our newscast two X of or are in against markets English-Spanish late competitors local one regardless ranked number language. number

the million week, markets million Telemundo's cumulative had UniMás persons Univision During in of to X-plus. full and our combined our television X compared X X-plus audience combined a stations persons

Univision and XX% have Telemundo We viewers than footprint. UniMás more our in television

XX to when markets higher XX at XX XX to among all to stations time, of XX adults we X to total, least comparing ratings and markets in in prime weekday adults XX XX. had adults and During among XX big networks X the in

the Turning revenues during second year. compared were and revenues quarter national Audio decreased to the division. XX% were prior the our quarter. in down XX% to revenues X%, down Local audio

Two Excluding quarter. second revenues political, core down to radio areas in this were revenue. key the decline contributed in national XX% have

we a we form to which, on KLYY, into KSSE audio agencies results with combined where of set decline rules, combined be is to X X letters. usually and first call Los national Nielsen The to in revenue. months prior along Angeles, needed the superstation, can simulcast station. one change, in based in KSSD spot change on on placing see Based saw this business to The a format, national national

station time XX expect to XX results in adults XX among drive Jose adults the station XX ranked language Hispanic one pleased continued to adults as Hispanic for the its ranking audience, the Hispanic spot has to also business success, among metro half we of the to XX XXXX. number audio number afternoon XX period. see the better number already in one the XX of and and station month as to to XX prime This same announce Spanish our national adults language are drive and during We XXXX. in for our Jose second radio radio in Spanish among June that built two Hispanic morning

revenue our national was decline to radio network. the that contributed The other area

year, ratings, QX. times to led for Our released revenues declines These network saw national nationwide -- our which declines. a lower X are

Our spring summer. the the release be affiliate our ratings have with in to operated late increase stations, stations, that in reflected seen delivered owned in and along an will industry

the X%. were ratings other including advertising that down, are to services radio Firm, added and Geico X% our Matian increase audio, the increase also lineup Freeway X will network. Increase saw of in stations of October. the Law will came our us position our upfront number have overall spending X spending a Besides that in an ratings This we was by we well increase strengthen programming by improving the radio seeing, affiliate of in largest help categories that for in auto. us Insurance for Services, quarter, category spending. increased in Paid from categories Direct. All saw a

new included and XX more second which spent Adriana's during Overall, totaled advertisers Metrolink our in who quarter, than the approximately $XXX,XXX Insurance, in second audio brands the new added $XX,XXX Tenet Notable quarter advertising business revenue. Healthcare.

performance XX. XX drive, our among adults Hispanic of adults our Erazno number -- La audio division Spanish y XXXX Hispanic one X at among is XX, Looking in in Chokolata stations ranked X or for ratings to release spring to afternoon show XX language and spring radio X markets of

Suavecita our morning on El in Angeles and Jose Genio Riverside. La network Los Piolin drive and and de Lucas shows time and mid-day Anna Show High-profile anchor El period

XX language show XX among XX. Show among released spring our XX XX, Hispanic of midday in adults markets Lucas X Hispanic adults X El Hispanic de radio two X among number For markets out and ranked XX or out Piolin and XXXX, X one one number to stations to XX Genio XX ranked was adults El number Spanish to to as the Spanish in XX XX. language to of

about Now let's our digital talk business.

their Reduction The digital going of a products to these budgets. to stranger such digital unique growing pure no provide These that digital seeking growing previous solutions spending that news more shifts. revenue media with no mostly is companies their was Obviously, moving the XX, versus digital transparency pace, performance channels. and landscape that is XX% It buys. trend. in We're experiences around are for control a changed our in is last to buyers among trend in consumers mobile of strategies demand to are quarter period industry revenue investments higher transactional digital of and last ad Entravision most adapting a beyond at ad X the advertisers than and decrease marketing over is top second who in associated year. their with seeing many some as content network marketing disappointing. shifts also has and more programmatic dramatic Total saw have a years the affected and focus fast results. the the this same and the

and more and focus change can this our aligned programmatic removing the that results. undergoing clients solutions our to to steady grow and and at our Significant with industry and structure, that results that we a our by through offering short those of engage the providing been investing profit place objective and ad efficiencies plans delivering proprietary aligned is the are media trends, mid-term in of challenges internationally. currently to U.S. a focusing solutions of adapt of not to greater digital in is is newly The technology offering. our platform demands. a products digital platform these In currently evolve digital to increasing Entravision our generating XX% in This product revenue. so are have significant holistic and are Smadex There front pace on Through the delivering to current finding demand-side of are to by our continues meaningful order margins division. developing restructuring it achieve we Smadex, center

-- first on We're which putting of XXXX. increase AudioEngage, has compared last business, audio seen when digital to revenue focus an which the also XX% our more quarter has

that positive programmatic in We XXX% innovation and our in driving increase profit, to margins. our in thanks a an publisher model business are in agreements have also expansion seen changes

results audio million our are alliances, XXX,XXX X.X we O&O users. our solutions, seeing distribution hours third-party in-house solid content through over over to of delivering Regarding

the major Our which podcast in growing over success X.X playing a content in as the XX% first quarter. are represents offering increase downloads a our QX, story and climb seen to we is initiative million role have

report that owned over paramount are happy XX.X fans, strongly points. continues our reached communities X,XXX to and video QX We staying XXX Entravision views delivering to touch digital local of from in and million close that and importance, stories operated feel to million be we

As I Entravision is solution to our need the with to digital companies advertisers. consumer through before, a providing a of provide transformation mentioned objective spearhead media customers value holistic the to more experience driving for to

different Our approach points reach opposed stay is selling the siloed our throughout of within just experiences as offer that platforms. touch one company's to to

future the is omnichannel. us, For

quarter. Turning now to our pacings for the third

plus currently third in at X% Our is pacing the quarter. television business

down we pacing advertising too. audio XX%, down for Our currently revenue pacing build results second while pacing our quarter. QX line executing in track costs. were in XX% year. the to proactively largely unique revenues targeting down Digital currently our for is summary, company our X% versus is quarter Total third on audience last plans, in reach revenue remain In capabilities are our the our and and managing strategy on further with

execute cash of flows to strategically our to and our assets, in committed we invest and maximizing and our the remain benefit content shareholders. multi-platform our As we our performance strategy distribution enhancing

will I you call numbers. to through over to the turn take now the Chris

Christopher Young

and Walter, afternoon, you, Thank good everyone.

to adjusted discussed, As at to $XX.X decreased EBITDA last $XX.X of to consolidated X% million. same revenue XX% compared was million, and in Walter million quarter expenses down million the decreased X% the net Operating has year. quarter $XX.X for $XX.X

in agreement from during For segment rights, in in attributable leasing revenue of operator which million partially revenues the quarter, telecom X% advertising was to TV primarily revenue, million second to same our totaled year. revenue offset million decreases and the initiatives, from TV a last revenue compared spectrum non-advertising $XX.X national local arising to and an in primarily quarter, increase and quarter revenue. increase local with $XX.X our were generated segment service by a political The up usage $X the revenue advertising to related spectrum in

quarter Radio net national quarter period. consent prior quarter was Retransmission our over of to prior in in for advertising flat the well year and of the as achieved the same local year last absence radio was million $XX.X in and $XX.X revenue year. compared decreases The the Cup was down revenue period. revenue primarily million XX% segment to for World the $X.X due was as decrease million the to in revenue

arising measures $X.X quarter were up $XX.X the arising a XX-K due platforms X% for for by to undertook to same expenses offset Digital for the from partially costs. a severance in relating decreased $XX.X in million The April expenses quarter audit June division to period. primarily in both moving the a Corporate programmatic prior division Operating months, in down same XX, in fees expenses million net X-month X% markets. international last at to quarter of certain for revenue quarter to over primarily of million attributable million increase expense to last company decrease our was operating year, X-month due expenses XX% of XXXX at XX% trend increase in our period recent filing $XX.X last late was in to year. to control from decrease the growing TV the recently digital X% of in to compared million more The our and division of and million The was compared domestically primarily period. a from increase the advertising digital ended our our the the increase XXXX, year. $X.X for to radio $XX.X decrease an was X% primarily

per expense tax in taxes cash was This to a $X.XX quarter primarily million of due to quarter the an were quarter, $X.X $X.XX to related same compared the share impairment digital negative actually is Income for the our was year. last goodwill. share million. per while Earnings charge for $X.X paid

the flow, charge, Free of impact was earnings per the our the cash $X.X higher-than-usual last in the decreased channel relocation station associated auction. onetime primarily to million with million quarter the quarter by in during positions This as compared for to expenditures EPS same for share. conjunction Excluding $X.X the of was capital with noncash this of SEC broadcast quarter defined year. our decline release, driven CapEx, $X.XX

quarter $X.X prior the compared the $X.X quarter at expenditures Net and the year. year cash in the interest it of as expense to quarter was last Cash were was same for $X.X for million million capital period. million

to year $XX.X million during by the be expected that full expenditures capital SEC, anticipate reimbursed CapEx Excluding the our we be approximately will XXXX.

Turning balance sheet. to our

of million. XX, June adjusted June of unrestricted our our the leverage Net as was our million was of of as books consolidated as $XXX Net X/XX/XX. XXXX total in X.XXx defined debt XX. XX-month XXXX, credit X.XXx. and and securities in million securities $XXX.X $XX total total, of cash marketable Cash our $XX.X our was total of books, million leverage As marketable trailing was the cash and on agreement was net EBITDA

Jeff your Walter, you questions. I remarks. take be turn it formal over I'll to will our concludes now This for Nancy, back and happy to questions.

Operator

from [Operator Instructions]. And Capital our first question comes from Markets. Michael NOBLE Kupinski

Michael Kupinski

a begin First, me if since I Is Pulpo? was Headway? the the media to current segment, you down did environment Is looking forward, trouble? wondering can division in maybe seeing you take it acquisitions can you're bolster break suite or have where kind to most whether broader it digital for And to of the course -- that this of Or that have against in an thoughts going it for seeing? based you to looking product you if impairment you're you're strategy and the more you're grow obviously, business, few to business year, anticipate make was I the slower give that that of charge but if kind growth you current offer to on can can a your be a wondering not advertisers. is over us cycling next your the on

Walter Ulloa

remarks digital, in it's the call Michael, and that traditional the just advertisers away the our to first So about our Walter. from about more product. it, decline, my to the saw attributable that To moving I changes biggest -- question, Mobrain of answer Headway spoke was X programmatic units,

it track quarter to business in to -- expenses. growth. -- the we taking return and and third totality a dusting to the looking at on We're addition in steps better did In that, --

artificial As I focus intelligence seems putting nicely. That which learning, to said, product. increased is coming Smadex, be we're on also along programmatic our machine

first So I second the half. believe half Headway, that than for the better be in will particular,

business. the campaigns remain about take we sure in we're involve ourselves are terms producing business proper We in in the we prudent that margin. the make that more confident to we But that of

-- looking question, robust our, would digital a more that platform answer platform continue us your look those also more I'll look enhance to platform. We was Headway one. to perhaps at the -- continue forward tuck-ins call other will We're side that supply for it, to Smadex just overall. give create we

So we to confidence part great of and process have in of -- the business here back the growth. --

Michael Kupinski

that the your much that terms of how digital set think forward? would any And you've for wondering, I updating goals know thoughts Walter, to or revenues going you contribute you was digital revenues, on total that just in prospect I do company have segment parameters

Walter Ulloa

to the terms being Well, I'll direction. I -- is that in I in half, this XX% of going we back mean, our we target We've to get that business it We are in of -- said want second a the being a had we're take that headed revenue, -- but total here also in of get -- sure and campaigns the half. our to way. certainly right to That careful business answer we're give said, first here expect engage we're bit to the in margins. we just goal that that digital to track us the make

Michael Kupinski

turn And TV to Got -- agreements, does just TV, include for growth terms X% side, service if of gave, in on well? the for that you then that pacing as that second. agreements The spectrum in I you. the the a could data

Christopher Young

multicast, It retrans. does, and one-offs telecom all and streams, advertising includes Michael. revenue mobile It with the

Michael Kupinski

a auto even tend kind category some percent higher the be in that can And you of thoughts are what for is of where English of percent a the as just auto I problem? than -- the -- total your seeing for core as of big it auto business, revenues, to you. now how of revenues what total advertising you us terms as TV auto Got is you language know you? particularly is a just -- doing? give on stations. And is of And Because more

Christopher Young

which X%, business. the of it's think, the up. category of Auto, as I TV down TV XX% our second And and of Michael, is industry a about ended the kind where total quarter, was rest with, for line flat representing for in basically

So it's far historically as concerned. kind that consistent we've what total percentage seen of is with as

minus is X. pacing the in to out. but down, consistent I QX, far knows is a industry the spending resilient in the happening quarter quarter the cars in, but at think general drop, X-point as coming For auto Like are a still what compared Everyone is concerned. be sector relatively pretty to as seems that

Michael Kupinski

in flow, when you. that last second reduction you've Got is you that costs us your and How against cash reflection to expense of kind of might weak the you And a of the guys been pretty you expense in efforts. on some taken kind you some spite already of year? do strong revenues, some just generating start Can have half? this thoughts cycle some see give of beginning

Christopher Young

second cycling in And quarter QX we segment are same against I'll blend out for the made should QX in segment both that together. that range, of and it second last up color. you of be the year high-level if I range. give the the flattish goes those the generally you year. some by speaking break and by of They Sure. just half for radio, TV, mean, change kind back

point, so on be up follow to just should slightly side, digital, yes, the seeing expense -- to negative. on we easier digital comps flat slightly that For

Michael Kupinski

some is factored the opportunity areas. on in some that might that to initiatives into other been that and a have you I might there cost in a further the surprise? opportunity Chris, maybe And Or radio that be mentioned thoughts expenses? prospect -- that further Have your be think positive those already was there may cut

Christopher Young

finalized optimistic more that's savings all of is we're that yet, that work paper. are to that No, Michael, still expense -- on still there We've not decisions still on front but come. any

Operator

[Operator Instructions].

from We question Gordon have Research. Tracker Hodge Mr. a from

Gordon Hodge

pacings garbled Just couple I out phone I was you One, you but were the had digital giving repeating when mind I and those. a -- and Walter think if questions. apologize, pacings, wondering got of I wouldn't audio the my

Walter Ulloa

for digital So third quarter?

Christopher Young

quarter. Third

Gordon Hodge

Yes, the third quarter.

Walter Ulloa

Yes, it's minus pacing XX. at

Gordon Hodge

audio? then And

Walter Ulloa

Oh, is minus XX well. audio as

Gordon Hodge

was. it Oh,

good. Very Okay.

of I So on just I was One, a couple retrans. guess, things. wondering

is you. the elsewhere? innovation that little sub-losses Univision? full curious on function trends arrangement was Is function in, fact than that It Given -- up your of the believe, with a just DISH that second the back of a that was it's quarter, flat on a I Or I rather retrans for bit.

Christopher Young

some are So it's totaling a function million, as Gordon. had last comp. your actually $X.X year's high -- about payments really true-up those We of

$X meaningful forward, extent year-over-year almost that in it out comps year. call of quarter about, and QX QX Now some the to a should million, there's now call get million easier the we going end growth have sub-losses, it million almost, $X have because in the both for $XXX of because took full back the but some it, we back the

Gordon Hodge

change then I'm I being expound in approach announced a Maybe markets local that the just guess, us Okay, what was managed bit the is changing yesterday. through think two. the way what's one, last you level? local I and terrific. just bit of are and that at organized? sort on Walter, little the a talk wondering little And if could

Walter Ulloa

in the starting -- the revenue. great here with naming our changes months, few is a doing Karl made a Media as last of couple Karl we've job. Well, Group Myer of

to be digital us to to and used Navarro, Juan work to In it, our, is mid is markets. as we did is and for call I'll for, as to And -- of who to has Melendez responsible And a his elevated local President fact, Eddie I'll our then oversee broadcast largest company. local -- be -- just both XX call Juan back, with smaller local. few responsibility he Karl the Eddy And Local it, years going Media. well returned markets just

overseas Carina as Karl. our report our Juan who And well local and -- Martinez, will research And Serna Melendez. Martin well and to of national Eddie, -- oversees Jessica reports Eddie oversees effort and as and our who so Campo, to Santana course, Alejandro who business intelligence. digital marketing, report and Eddie Karl Del is to will report sales and then, Also, she'll Claudia to overseas

So we're local pleased has the sales broadcast the very digital Karl restructured with -- and effort.

the be we're going this. right we're results in to think longer the -- I right now, we on track and on expect

Gordon Hodge

concrete way any Or to the sales to made early are changes are the it Is talk multimedia they sales done? Or Is a there they there? is that? -- Have about any approach? combining? it is too it change

Walter Ulloa

No. emphasis combining Certainly, there's on multimedia, leading digital. more definitely more broadcast, sales, holistic with with approach to many digital in cases, local certainly,

So that -- then the ops. there's greater other definitely -- solutions and and other a radio television emphasis on combining our with like marketing with

Gordon Hodge

I'm off be one And that might if of last a you And it curious with know, present M&A, question, curious is they quite whether as some parts arising, is -- company, are it's And sell opposed the just opportunity just Univision. be Terrific. sort Okay. acquisition curious, in number off just quarter, I entire sell opportunities opportunity what relates think for then I to to you? that. would if which post some the to the small, second but of guess, small just a there of to you as the there be then you made plan -- the for were

Walter Ulloa

increase has started just whatever with I'll alternatives relationship terms a their of we Univision. in well, the understand process their, local certainly group call platform, close it, an they're working TV along And and We Well, strategic certainly -- have there's UniMás going portfolio the opportunity We're for see. to affiliates going us we'll -- monitor particularly just it. our if affiliates, seek. and way our television Univision to of to

Gordon Hodge

the comments And any on acquisition? then Texas

Walter Ulloa

We'll announcement. FCC the the to plans We to Gordon. just us through acquisition. we the give what wait FCC. we green and think on for the for we to that it filing made itself do I announce but the play rule that plans before TV process want Yes, are, We're The with going have light.

Operator

question And NOBLE Mr. we Michael Kupinski Capital have Markets. a follow-up from from

Michael Kupinski

question. other one Just

if primary might you that little any reported prospect fourth have in. political the that indicated was for even on broadcasters presidential seeing early? it is political. point? actually maybe flow the still visibility quarter already of of political booked that they Some have with you election. Certainly, wondering for have I booked at being being in a maybe the Or were some the Are this dollars kind too seeing you

Walter Ulloa

No, don't see have have we expectations not Michael, We we'll it's do -- our sure, it fourth for budgets but early. political. yet, that quarter still in have do

As the up March. been you moved know, California primary has to

So we very and nominee. to presidential be that's everyone's the if a California, certainly decide going in -- could California running primary, competitive

in So to fourth political some the we see expect quarter.

Operator

session. This to to I concludes like for remarks. our conference question-and-answer would the closing turn any Walter back Ulloa over Mr.

Walter Ulloa

announce Nancy, look our you, quarter you, our everyone, We thank results. and quarter we speaking Thank investor call. XXXX participating on forward to conference will you to for second all of third in November when

Operator

attending for has now Thank presentation. conference you today's concluded. The

disconnect. your the of day. rest now Enjoy may You