Entravision Communications (EVC)

Walter Ulloa Chairman and Chief Executive Officer
Chris Young Chief Financial Officer
Michael Kupinski NOBLE Capital Markets
Call transcript
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Good afternoon everyone and welcome to Entravision’s Third Quarter 2019 Earnings Conference Call. [Operator Instructions]. At this time I’d like to turn the conference over to Mr. Walter Ulloa, Chairman and Chief Executive Officer. Please go ahead.

Walter Ulloa

Jamie. you, Thank and Conference everyone Entravision’s Quarter Third Good welcome Earnings Call. XXXX afternoon to

on is Financial Joining President call the me today and Young and Jeffery Chris our Chief Officer. COO; our Liberman

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

financial the form is Communications of Any The expressed today’s call include company strictly Entravision This SEC the property this with financial measures will Corporation. measures call comparable on is release. most consent press non-GAAP company’s filed redistribution X-K. has is of in of prohibited. measures. GAAP directly website provided their rebroadcast a available call written this Also non-GAAP the Entravision Corporation press Form retransmission without or Communications in these to release on The was on and reconciliation of any the

third impacted declines and our audio compared by business prior results adversely segments Our in digital to revenue the were quarter year.

television division in prior in remain period constant revenues despite the retransmission increases usage non-recurring revenues due political to rights spectrum did year from and our revenue. However, consent

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

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

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

financial and to quarter. operating million EBITDA $X.X consolidated our expenses last performance, were compared decreased Revenues Now $XX.X third X% X% Consolidated million million in adjusted was year. down $XX.X the turning to to

were sales by due advertising third of the period. the lower revenues national $X.X million X% during Turning quarter was the revenue to year impacted in revenue to Television the quarter year. flat third primarily prior Television prior in political compared television down segment, to our during absence the

X% down revenue advertising were advertising compared period. the to national the was Retransmission local quarter while last was revenue during same political year. the X% in compared quarter Excluding third up up prior to year’s third revenues quarter X%

from initiatives totaled the quarter agreement total period in service a the television versus revenues political revenues $X.X rights were revenue telecom spectrum as a generated Revenue to or usage local during in X%. All prior million third in year from well excluding multicast. primarily spectrum operator million leasing $X.X up prior year the as related non-advertising the with

was our TV total XX% advertising largest down our revenue. segment approximately and Automotive category advertising television our X% of for represented

result in increase a in Tier X% growth X. X an X Tier was offset spending X were by Toyota Tier expenditures increased both saw Ford of by in that You Tier The declines and of

Hyundai Volkswagen Audi. and

were automotive grew Beyond services XX travel service third quick that X%; restaurants top and care during health X%; categories and were quarter which increased advertising XX%; generated leisure up the growth XX%. increased

Care Adjusters. XX added in new we in spending quarter than and brands the third quarter during International advertisers spent $XX,XXX Optics from approximately Floridian new the the Box, totaled Del Hut, third in McDonald’s. Jack Weston Taco Now While Pizza increased Notable revenue. Zuech $XXX,XXX who included advertising Overall more Chevy and Car which Council

upon July their XXXX. ratings marketing our leadership Univision in television performance, to Turning our built stations

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

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

X and one competitors markets. number ranked late in two Our English or Spanish local news against are

to Telemundo’s our cumulative of X X plus. audience a UniMs X plus have million Univision million During persons and a combined compared full persons week stations X.X

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

the XX markets in XX top XX During adults Among all XX XX show of of prime markets for big broadcast time regardless adults XX to least time for compared XX the networks ranked Univision ratings XX. The one of the XX in higher we XX July our TV to the among the top to language. award Premio XX in telecast among four Univision’s night XX at among adults and and respectively Juventud show of on among XX prime regardless and the of language. to comparing markets weekday our programs in XX among in stations XX all and was markets adults – had XX television when XX XX to

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

core decline key the radio our political revenues down X% that two to quarter. the in Excluding third division. were contributed were in areas There radio

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

in seen QX. pace continuing quarter On starting revenue XXXX a have positive in each of local and in basis QX we and improvement

to are a Jose station We radio a market. be that competitive Los announce continues to our station Angeles pleased highly top-ranking in

station September language language drive. ranked in Spanish For as the to radio language one Hispanic adults number three the the XX in ranked in morning Jose the adults XX. as number of Spanish to XX metro XX two Hispanic station afternoon and station among KLYY in prime during drive also radio Spanish month radio the number

radio success this we XXXX fourth the continued results in with With see cluster. to expect Angeles and improved our Los quarter

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

released QX. nationwide network declines are lower year two times declines. Our These which ratings revenues a to led for saw

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

Besides overall presented audio added in ratings the a advance the meetings number help New York we’ve our high-level We with agencies our the in portfolio XXXX fine Entravision top us recently the ratings increase strengthen audio at network our stations audio national to of lineup of of will season. also of series a that network network.

Gas the largest digital presentation of in our Immigrantes in It personalities by insurance X% coverage category over our quarter unique Our on came Electric from by the The year increase value third category audio. Matian focused and spending in AudioEngage. and and spending saw Service period. the Firm Freeway technology proposition an increase for is advertising Pacific top services was increased improving via that prior syndicated only Law audio our

advertisers categories the included other quarter Law who audio more Firm, during brands All third business DCH of the third Torrance Khorshidi The XX and spent advertising added Toyota our Overall totaled Primero. new than quarter JLF of which new approximately Firm, in $XXX,XXX $XX,XXX were down. America. revenue.Notable in Bank

division Hispanic XX for ratings among Hispanic audio stations is our radio summer Chokolata summer markets in including for among language adults Erazno markets show our in number La at adults one Spanish among XXXX ties; to and ranked six XX released y performance to six one XX. Looking XX five of number

Show Hispanics Genio and Lucas and reached the Chokolata and Erazno on de y including XX. and O&O will La drive XXX,XXX network Across La our and midday show our stations Los than more Piolin El El morning show Suavecita on to XX Angeles Other seven anchor Jose spots shows Riverside. high-profile

released XX six show XX show summer markets adults and language five and to Spanish – a Spanish XX. number Piolin midday ranked of adults XX ties. For in in of markets to including XX XXXX as Lucas XX adults the one among Hispanic language XX Genio adults our our to El XX two Hispanic to number or Hispanic one El out was six And among Genio among five stations of Hispanic

our to Now let’s move business. digital over

solutions mind generating more transparency that the million basis has Smadex third over in market a $X.X looking decrease consistently digital and represents For our programmatic same the customers evolving due monthly to as revenues been on is currently $XX.X quarters. control. versus is million which of mostly year.The shift and the of XX% programmatic last performance trend we a for period were last developing to decrease demand are are quarter which With few

continue growth for double-digit unit. see expect to this We to

also increase versus Other XX% experienced with the during XX% by last units increase double-digit growth quarter digital business programmatic audio quarter an unit third and over quarter. followed our with led our a by last units video

programmatic of our overarching of Number digital growth with one for Our key is reach. solutions platform demand products also and inventory center strengthening double-digit Smadex scale the integrated side are strategic we and where our our comprises strategy marketing front both through four components.

season a key We’ve such Mexico Lat put to while national United untapped expansion of Stabilizing States – our in line performance foster markets. and markets experience solutions we overseen U.S. in put place in three sales. and growth Number helping management. improved our Am operations as with and

four. Number

are investment margins. We creating on while value strengthening client return gross and focused on

division the all one that the last innovation. merge these digital into in decided opportunities Entravision We in groups same versus quarter. period We third digital on margins currently for the synergies operations continuously gross growth Our margin XX% increasing between believe at XX% focuses business significant to gross year. present digital and unit

XXXX. are our the create combined help boost digital a will will united of our specialists We know-how that confident that in front performance

a the more of our a seeing consistent is excited efficiently offering. aligned digital As to I I’m mentioned great merger and we before say forward digital has of units to podcasts outcome step one the are already brands since under audio. and that product We’ve streams beginning our very positive. business our offering units of XXXX AudioEngage in and the results been our been

led figures XX% XX% growth of Results XXX% a encouraging XXXX revenue are looking XX% programmatic. when when to and at in more growth compared in even increased deals. programmatic year-to-date a QX Revenue increase in with by

compared of loud last consumption when grown We’ll audio XXX% to it a which share to more come. million about in has X.X keep comes XXXX podcast quarters represents to compared when We That’s new third heard increase and needs. industry reaching business digital clear growth. the to when quarter we this why Our developing also new year. and to the projects are the fostering downloads unit this solutions audio significantly

digital a the stories as efforts versus a XX% quarter And we connecting various – our third the throughout previous including result of quarter with of This versus XXX our represents and XXX% of XX year views local a versus growth millions our over communities Entravision’s the is Latinos the to points. touch – at core video in company.As and prior. videos distributed purpose million growth X,XXX

also to a XXXX. in clients which value our help will year. XX% represents growth proposition our engagement delivered consumers boost X.X us fans versus and increased audio unique prior We This both million streams for

prior the year’s it’s to approximately quarter. is our generated turning quarter revenue important $X.X our XX%. That we fourth said million fourth that television minus in Now pacing remember political in total pacings, to revenue

Excluding fourth TV political currently is the our quarter. business minus in X% pacing

the Our is minus XX% audio business in fourth currently pacing quarter.

audio minus business political X%. is our Excluding pacing

X% revenues were are TV in year while the over summary digital our currently quarter by period. the results plus Digital year in radio compared were our pacing the fourth largely continued and softness prior driven third period. flat quarter results In our prior to businesses

audience our work continue capabilities executing to build unique managing targeting reach and proactively on while We further strategy costs. to on our our

Starting several third changes digital we quarter our in and the broadcast in management business important units. made

units seeing changes our improvement of to and steady to digital the As continue strengthen result a fourth these this we quarter and improvement expect broadcast are we in management in XXXX. in

take call the us to over now Young I through turn the numbers. to will Chris? Chris

Chris Young

and Thank good everyone. you, Walter afternoon

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

in the For were revenues million. quarter $XX.X our flat at segment TV

an During was we the million last did million shortfall $X.X spectrum usage in during not the which in return. from rights revenue million which $X.X generated additional quarter. third political This $X.X quarter totaled year offset

to $XX.X consent of for revenue revenue. year. down primarily segment the quarter national $XX.X in the in for was Retransmission last to net was local the to year was quarter revenue slightly revenue prior million related a over the million by in period. due radio and World Radio offset up Cup in same an X% X% was advertising million from The quarter our compared decrease decrease increase $X.X

growing quarter the to XX% same million was $XX.X year. digital last compared advertising decrease $XX.X programmatic and due in both trend in the markets. to over was revenue primarily of Digital platform The a quarter to of to more million the months recently recent international for in down domestically moving

in decrease The division from control million $XX.X X% measures expense year primarily X% was decrease division prior an increase $XX.X our to undertook digital and the year XX% language fees the related TV our arising Operating at at offset million partially division increase an our operating English to company arising from last X% stations. TV expenses agreements April due in in decrease in due consent decreased period. certain to a expenses retransmission by a to in of networks at radio primarily from our

X% quarter $XXX,XXX. million Corporate down Income paid the to quarter million taxes were stock-based to primarily cash the $X.X quarter decrease expenses to a while for of $X.X The non-cash the in same year. million for $X.X last was was compensation. decrease was due in tax expense compared actually

goodwill. an to in digital charge the same quarter $X.XX quarter per the year. of to for Earnings share related negative was per $X.XX our to due share last This were impairment primarily compared

per onetime Excluding the this of was charge EPS impact $X.XX share. non-cash

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

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

as trailing total books September Turning $XX.X on in XXXX million XXXX. was was of Cash as $XXX sheet, the total securities million our our was cash marketable our $XX Net EBITDA and $XXX.X debt books XX our unrestricted as to in of consolidated our of of million. XX. adjusted million September the leverage and defined balance XX-month

as XX. of times agreement September was X.X credit Our

remarks. take and marketable cash now total times. securities Jeff our of I net was will formal X.XX This leverage our Walter questions. concludes and Net your

you Jamie the it turn we’ll over for to queue.


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

Michael Kupinski

little in all particularly course can quarter you. what core if pacings of for a TV color on wondering you’re bit a in give I terms auto us was more First of you category for which the is seeing the big of fourth

us some the categories. you just If give can thoughts on

Chris Young

from auto pacing been the fourth Right on is settled arising that at has strike business. that has some a a negative is activity the our Michael a now had X%. impact quarter fourth for There quarter primarily minus got auto minus recently but softness X%.

Michael Kupinski

– little with especially in primary thoughts then forth. fourth in expectations might you the terms there California in what get I – if the was you political give political. Got are you, in and of wondering thought so Because on fourth the a your quarter? for votes political is early can that quarter and just might some the us

Chris Young

for advertising the is be Well California start ballots month constituency are hot got us that’s you going will And event the concerned. real such going their quarter. a California still the first of December quarter that – as early. political mailing big because feel as be the And for to part in the in actually pretty political a far us we they’re primaries primaries. It’s fourth had to

much be per that here We’ll have do some primary And yield interesting we on early material. in money expect we also already that could today. But we’re have we that don’t on sit se as in see a So amount could really results. trickle speak. starting as Nevada we also to the books pretty

Michael Kupinski

that Got guidance with thoughts not into factoring TV political at you. least now down I And the pacing your in – much least least for at XX% suppose? you’re at for

Chris Young

political That’s that’s factored correct. pace into got that just the and no XX% Yes. we’ve real minus

Walter Ulloa

we’re has in states early haven’t moved in are March of up But Nevada forecasting we operate of we not be will an we well Yes. in political any March. QX now seeing have signs to Texas activity political – some primary. where certainly as dollars in as the And we California Michael – not well.

we the see So any on December. we to in have in books even But activity don’t any political yet nothing again though – don’t have forecasted. significant expect revenue some we

Michael Kupinski

a are see area? significant that And in stumble you company of Got prospect Walter area. digital in changed recent this you. the past in your the What your as digital the like I to you’d investments that about mind know the your indicated thoughts portion and Has terms this of terms to growth in really you of business? of where cash of traction? and a see around And what turn you your are start lot of might there can Are of lot in terms you thoughts of the opportunities? that optimistic a having the had seek M&A in

Walter Ulloa


to be continue our We and about positive bullish digital businesses.

had we some corrected. We to we We missteps the have had that whatever that pleased including for strongly changes. make I management Certainly corrections but with pace year I’m believe QX. made this

information that as much relates units operation. have a reporting different weekly monthly running particularly platform throughout it our people our have better sales information I think to we the our we digital

to on I digital. as continue So believe to the that to right be relates – it we’re track

as As ad better. you well the of or all digital. I are know dollars new Most as into going

expertise Using the So that’s expect work the Latino every where something and our we the is to U.S. is which I’ll Latino market call continue to team our that or on. the day. transferring about products to that’s technology to Developing where continuing talk market we and growth particular say our expertise to to that is around special something via that continue it are focus. also in digital I’m

at something relates say M&A As – I radio mean at second look interested we activity then opportunities we be would mean would I first that we I television and with digital maybe to opportunities television Univision opportunities eye certainly on third. M&A probably it would in. or we’re an look and

to continued consolidators. consolidate market two don’t – major three into not or market that or way the already of – moving general are and us see because that certainly has Beyond the I general not fact there

we’re got right always now. products. sure a at to want more digital looking cultural now about We’ve make digital that looking unit they And we that And fit more a or only products – I’ll three we and well it at – looking call strategic fit. we not are digital digital two So we’re much that our much are at business certainly I’m organized. assertive have then

Michael Kupinski

a final question. And

some about itself? little at And the that for bit you the Has was ratings a the ratings ratings overall. talked You for of stations. the of network stabilized? least Univision are seeing network I wondering slide the stabilization

Walter Ulloa

Yes we are.

our starting attention ratings we We’re markets improvement I seeing in mean we terms pay we’re the see market at in Univision of certainly ratings. to and network performance. to but improvement look in our more

some track gives would – knew programming on So they We is – confidence that that’s for years. the XX us always that Univision that been have. back the Spanish they They’ve language leader in right they here. bounce

today’s a some certainly prime were call had their touch p.m. just believe XX D.C. the offering. they’re audience. in And updating and and hugely them seen Tampa Denver has and mention interesting. years novellas Diego in our focus. them in few retooling of news on more setbacks chapters Las increases this XX:XX to XX We’ve they’ve regained but it the time Vegas. time and making Washington old seen had late rating increased slot more occasionally So positive they’ve I’ll ago increases. we’ve classic doing something Univision ratings And in we impact They’re They’re San local a terms with popular shorter in

Michael Kupinski

sorry I’m question. do And X have I more

the border of by has affected You being maybe were were to Are or still economies affected – earlier some – some – that you come that markets they in your started that Or suffering? your issues immigration back? that especially are were markets earlier out of – the those indicated by being stabilized markets of Washington. seeing we calls your and

Walter Ulloa

despite is bounced there in has performing manager occurred summer. track. is a they’re Paso – and say back quarters Paso. No El doing San even the tragedy the excellent had and performance in they’ve past by that Centro El I’ll that in come great in on Diego got well the led few El an of it earlier. is back. particular But We’ve there well.

media certainly cluster. So that’s the of the of helps our overall performance –

team that some market that seen radio things some it more us. very in business do more television for there one McAllen and doing and have important We around. to largest giving support It’s down our strengthen to We a and markets. obviously media with attention. we’re the It’s want providing our management softness of turn to but market

to level. highest make it’s So we the at sure want certainly that performing


I’m for [Operator the call at turn not ladies like additional closing to to Instructions] I’d And and questions. management gentlemen back showing time over conference remarks. this

Walter Ulloa

call. of our So We thank pacings you quarter as total our all everyone participating speaking XXXX. results well results. for fourth New for for report XXXX look Year and our also XXXX in you our results Jamie to forward as in thank earnings and the you third year to and QX of And quarter

thank you. So


that gentlemen Ladies Thank and call. conference joining. does concludes for today you

You may now disconnect your lines.