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Entravision Communications (EVC)

Participants
Walter Ulloa CEO
Jeffery Liberman President & COO
Chris Young CFO
Michael Kupinski NOBLE Capital Markets
Gordon Hodge Tracker Research
Call transcript
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Operator

Good day and welcome to Entravision's Fourth Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would like to turn the conference over to Mr. CEO. Ulloa Walter ahead. Please go

Walter Ulloa

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

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

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

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

in quarter declines impacted in absence year fourth a cash primarily political slight digital in a the results our adversely offset business and increase increase compared modestly television the the quarter. by by revenue were revenues due to business revenue our in prior digital of fourth to significant audio Our segments our and flow from

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

at shares $X.XX stocks we're at During of buying XXX,XXX in share. price average quarter, back the fourth per an repurchased also active approximately

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

consolidated excuse quarter. last million for EBITDA XX% was the XXXX, million, and financial me. to to year in turning the were compared expenses $XX.X XXXX year to down fourth operating performance, our Now X% or $XX.X -- to Consolidated billion adjusted decreased $XX.X revenues in

X% to were adjusted by decreased million year. in to total to year $XXX.X $XXX.X prior million revenues operating in XX% million. For down decreased consolidated the X% the the year, Consolidated for $XX.X compared to EBITDA, expenses

mid-term revenues primarily Turning quarter the the period, election national down was to a was political down XX% in revenue approximately core while advertising down fourth television cycle. advertising quarter, absence the to non-recurring to and National the quarter to revenue segments, was down fourth million prior X%. during of X%. television down On million in local $XX.X excluding down due year compared revenue basis, XXXX with quarter revenue local in our XX% XX% were television the political X% fourth $X

Fourth XX% up were the the the year to quarter revenues to while to prior during compared period, period. $X.X compared multicast retransmission year prior $X.X quarter million revenue million X% up to was

for AT&T and new quarter, finalized negotiated were fourth agreements During retransmission both Univision the consent retransmission affiliates long-term language Spanish stations Frontier spectrum. Charter and our language with television Charter English agreements we and for

contract recorded million which XXXX, in million. during by was revenue retransmission year the $XX.X total spectrum revenue usage a XXXX. rights offset XXXX to of year, by million X% usage in rights approximately compared television declined primarily to to XXXX partially due million $XXX.X improved X% to while includes Total for by absence non-recurring spectrum million $XX.X approximately the revenue For political the $X.X in one-time $X.X in $X.X million for revenues

was local quarter. television for down our advertising year in were to and was down XXXX revenue For flat Services, our In in down revenue was million. X% represented total year, basis, largest quarter television largest down XX% respectively. political approximately national automotive television quarter, our advertising the grocery X% advertising was XXXX category up stores of a segment were X%. X%. total and National advertising fourth telecom category while the X% local television down down advertising XXX% in the the On core XX% for $XXX.X the down our excluding while revenues X% and XX% was second with and

XX advertising we than $XX,XXX which total added more fourth new and the advertisers approximately $XXX,XXX revenue. during quarter, spent Overall, in

During continued of shine XX. total bringing XX in our in for quarter, XXXX to additional news operation Emmys Rio Emmys, winning by the an local X El team Paso, news our X Valley Grande in Entravision the to and number

or leadership ratings XX Television we competition Univision XX television a in our performance, local their ties. upon two where XX to markets have in ahead in adults head to November Turning for Univision built affiliates of competitor XXXX news, Television market head plus our XX their early finished stations to

a a we have XX% full more persons have cumulative During million weekly compared audience in to our X.X Univision two a combined, million two stations UniMas of plus. than persons basis, footprint. X.X and plus in Telemundo's television On our week, Telemundo markets our viewers

TV Show broadcast to XX programs the the November in XX XX XXmarkets among among among was in regardless Award language. XX of XX on XX Telecast adults the Univision Among language. and top XX, XX Latin to night ranked for XXth show Grammy primetime to adults markets regardless XX for again of is top the

Local were XX% during in year. down Turning national quarter while the quarter fourth were X% to revenues radio to same audio approximately XX% million in revenues the X% down down our Core in fourth division. the over were quarter. Audio revenues the in political down excluding were $X.X compared the quarter. revenues prior to

revenues X% revenues million period. was political were XXXX million down while the were in Cup revenue $X.X for For XX% the World to Year, in approximately national revenues compared revenue $XX Core the to year down in the and year. radio in $XX.X XXXX. excluding down million in audio XX% XXXX million New down were in $X.X year prior prior X% over Local

be his Also La in into entered year Diaz of our with has Erazno and new markets. El to De Sotelo carried show Entravision agreement Entravision is program agreement run de clearly affiliation Show advertising XX the in through Chokolata and Oswaldo markets. There hit for December, hit "Piolin" XXXX. two contracts Eddie Show Piolín, with his December broadcast programming In extensional a his XX El y midday Entravision its extended representation

games debuted in Angeles station Viva the Sunday Live Bowl exciting in XXXX and the Pro Football on the XX-hour both coverage Latin December February. an music from games, Entravision's response of and market is Los Cumbia to exciting. NFL format XX Miami, is been the on in with live all night XX, Florida expanded only include and outstanding. Super QX the KDLD night culminated Bowl Monday in dance post-season has

and XX of aired XXXX Entravision XXXX a season. total this games

XX Katz extend and Super Bowl radio into to XX our XXXX. to rights all season, of on including a when this basis, agreement XXXX with past January. X, Florida December the from properties Live on an represent Media entered NFL In starting we Tampa, Our February national

this expense radio result into decrease better will XXXX. to significant in in also and business that lead our is revenue in Katz It change expect audio better to the has business come. a audio quarters the strategy to in in in national this visibility We our opinion performance national

sales performed an XX QX. operate to We will improvement network better continue radio in points than which organization. saw QX, We our

AM Monday year-over-year a X saw to We to Friday PM in and primetime X to audience increase of our in XX XX. also adults X%

We network our in audio business. are well positioned for for improved XXXX performance

FM superstation to we early and KSSE In XXXX, combined a create Los the format. successful KLYY FM care quarter in Angeles under first Jose

Angeles through are ranked Friday Los KLYY number Jose Spanish steadily the PM Metro stations this AM and closing the with number and two primetime AM has radio in for during X to XX that fall built XX. drive and standing to listeners XX across PM report amongst We three drive Monday adults Kirby's one number pleased to our language audience, station rules year XXXX

spending advertising firm, was Firm, audio, and platform improved down Insurance, by GLF up California The services over other were our with came of Cox category Communications was Public the largest which XX% in all an spending the for auto categories Health. including The from our prior to media XX%. Services, by the down category Law increase due Matian Department spin increase its Intercoast XX% year. by audio increased

Looking among y the La Erazno at XX and in XX one in in adults including Spanic XXX,XXX Erazno one markets our drive, more has adults Spanish ranked show performance our afternoon XX Chokolata among Chokolata our stations audio fall the fall La to XX markets Angeles XX division in for XX Hispanics XX the of stations show than to number in ratings Los to number O&O reach language XX. radio XXXX XX y Across XX survey.

move over let's to And Entravision digital.

million, the by prior increased quarter fourth, X% to period. million compared digital For to the revenues in year $XX XX.X

unit flow Our X.X increased digital from operating million cash in the quarter. our

to XXXX revenues by digital declined over year, the For XX.X million. XX%

particularly industry, earnings past represents the digital in method the a media programmatic the the which concerning buying addressed digital calls, now buying, primary States. United I've trends the of changes in During

tech international is offers DSP platform, Smadex time exchanges is media is connects marketplace. rapid real And to programmatic and With the at mind, buying compete online continue transparent advertising Smadex, space. new a in advent ad ad global of ad trends proprietary it evolve clear our going technology this global pace. is platform to to that Entravision's these bidding superb to and for

to a external across achieve the Smadex working state-of-the-art provides been with XX% and Mobile their that under These advertising be goals plug the the DSP agencies clients U.S. tools can digital aligned easily ad all ROI. is partners and globe. any goals. excellence spending. pillars unique technology and from three new direct accounts and advertisers Smadex play performance, has transparency, of with platform of now can

three all in excels DSP Smadex The criteria.

drives help performance month. Platform installs, run app more For Transparency We to our results what performance clients give clients product other campaigns also full is the over measurable every visibility provides best-in-class decision visits that than billion mobile ads every app mobile post from and on sales. X hand Smadex Smadex. features with store, campaigns, DSP at like promotion.

types detailed Advertisers how criteria interface are mobile access The they all optimizing can formats, of account optimization also see of a devices, where and models, the ads, and agencies system details to more. phone including much client's algorithms had connections state-of-the-art budget.

their importance clients is to ROI utmost our track reach to an keep goals. on

mind DSP built Our in achieve platform deliver industry. strongest indicators, data performance able idea tools to from to the the to in was our value thanks different When of the clients. accurately Smadex key our teams. one and science when for the one That's what we rest. is DSP comes algorithms campaign delivering with Smadex are makes it ROI, to scale

in optimize, to faster. per all The strategy quality have trading technology programmatic is added million per scale our in has grown which of million and that, XXX% measure and approximately we platform massive million and many Smadex gathering per revenue action, cost in XXXX, since adjust to supporting including available, $XX cost results allows $X click, action steadily more. generating publishers models the XXXX, get cost desired top the and view clients per acquisitions cost the $XX XXXX. highest in On in

Express, Furthermore, United such States is customers out more as Audi of causes the Europe expanding be proactively excited first lots XXXX. BMW American the rolling and Samsung, mobile and about in American Airlines, us confident Smadex Nike, in DSP to the sophisticated

Smadex creating to improve reduce in In strong revenue the which addition Gold brand safety. experience peers IAB the advertising prestigious the Standard, XXXX, ad was fraud, his industry digital recognized process, is the the including and by increase in certification

follow in quality of Smadex in teams who DSP traffic Smadex was learning added the on long XXXX and have user XXXX Smadex magazine the ranking the scoring value machine specifically constant also These term as recognized Analytics global Kochava of of retention mobile-first by DSP X being in reflect it and high as mobile and traffic and was built Innovation. leading category. Insight selected in quality top excellent to traffic the number focus index on the by DSP first top the index Headway for heels companies in acquisition improvement A the the Kochava the and recognitions one with in XX efforts

a our was In in transition year digital division, division our digital for short, Smadex while led XXXX by about we of prospects a for XXXX. excited are

we profitability, a significant the With cost driving quarters units structure in to forward look revenue growth both come. streamlined focus and reporting on the progress digital in our and renewed to

in now is plus the that we Turning it all-in total for important X.X With quarter. year's TV our the generated million said, to in first our approximately revenue pacing, quarter. first non-recurring X% usage rights pacing is prior that remember spectrum

in spectrum rights currently X.X% period, prior the plus television our non-recurring XX% business the in quarter. year revenue is Excluding first from taking the

spectrum Excluding political the is TV in non-recurring and revenue pacing X%. prior in the revenue our current advertising minus year, year core

core our excluding Our the X%. pacing business X% pacing audio currently minus political is in audio first plus business quarter,

pace, XXXX million cash from Digital budget approximately first significantly plus should compared in it annual audio revenues in $X the which have revenue flow the audio our currently enhance is important we are of prior our Looking to for the beyond part business, costs as quarter division XXXX. note removed that year profile process, X% pacing period. to in the

largely our were revenue were year summary, TV and our the partially over non-recurring, fourth results non-returning driven digital by due softness quarter results In while prior improved our period. audio continued political to units, in greatly

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

about XXXX. our cash start strong XXXX a enthusiastic As enhancing we strategy political and maximizing shareholders. flows quarter, part the to highly political remain content in multiplatform we pacing in off in our our and we good Thanks first distribution our in strategically the remain the committed our we're year. execute a to And benefit to assets, to and and invest performance of

media assets swing are Florida, and Latino a Colorado, positioned time in across most importantly continues number New key well population the grow Virginia influence. California, a and including and Mexico states Our at Nevada, to

to reporting to results forward those revenue XXXX. anticipate XXXX impressive continue increases We and look versus political during

with turn over now to will Chris the call numbers. to go We the

Chris Young

Thank for million. to XX% compared and decreased net good adjusted to you, to has Operating revenue million decreased $XX.X [indiscernible]. X% everyone. afternoon consolidated expenses EBITDA Walter to XX% quarter down was Walter, discussed, million $XX.X $XX.X the

consolidated Operating decreased For $XXX.X revenue adjusted X% million in million to to and was X% we Expenses EBITDA $XXX.X generated decreased $XX.X to compared the year, down million million. net XXXX. $XXX.X to

division, which return. approximately our fourth period, absence million to primarily of the due in political XX% to did in $XX.X For TV decline revenue in revenues million the prior quarter $X not year the

up TV was for quarter revenue year down revenue the core was was the prior the period. political net X% million Excluding and $X.X quarter. over quarter revenue $XX.X radio down the million X% year. both primarily for last for consent Radio ad quarter in decreases was to XX% same to Decrease advertising. local million $XX.X and a compared was in to due national in the segment Retransmission

programmatic quarter excluding in international X% to for $XX.X was The last revenue, year of Smadex approximately second platforms to to our Digital in the revenue radio fourth the in in year. $XX second compared million million the Core improved net growth in $X.X revenue quarter down due was improvement our quarter primarily by quarter. political the last markets. achieved of million by X% core

primarily year. expense quarter increase in an to compared was X.X based in decrease a up period. in severance a million X% million for the The from compensation Operating increase month X.X radio due were XX, three same expenses decrease expenses million Corporate our at $XX.X an offset noncash million expense. the for by decrease costs. was digital ended last in decreased to slightly December by division X% increase quarter $XX.X period to the in from The the X% X% legal expense in our stock due to prior primarily arising year increase offset to partially

and cash $X.XX in benefit for actually were million the the X.X paid quarter for of same year. expense interest Income the of to tax for of quarter last the in share Net per was while X.X last year. last Earnings cash the with per to quarter XXX,XXX. expenditures quarter million capital million for year. share taxes million X.X X.X was same compared $X.XX expense to Cash compared the were quarter quarter a second quarter of X compared million

in to usually the high XXXX Capital primary XX.X three is versus million and in XX for were million XXXX attributable expenditures year CapEx factors.

X.X to approximately will one-off the during a level for million third year of TV of totaled normalized our and million; project decentralization million SEC XXXX. $X to related of optimization CapEx million of relating Anticipate to and that approximately CapEx second, CapEx million involving core between repack; First, our XX.X which operations, X.X CapEx back the $X XXXX. go a full and reimbursable

debt as our books and leverage book was XX.X EBITDA times of total as of months X.XX times. XX/XX/XX. the marketable our was XX/XX/XX. million total the credit XX/XX/XXXX, was was of unrestricted a as trailing million Debt cash million, our was of our net Net of and our balance XXXX XXX.X X.XX are securities million. adjusted XX Cash and cash as consolidated sheet to agreement total Turning securities XX XXX leverage, defined on marketable

formal Walter, This be concludes questions. I our remarks, Jeff will and now over Ailee, hand happy your I you. take will to back to it

Operator

Michael today [Operator question Kupinski from NOBLE now And will instructions] the begin Markets. session. with Capital comes first question-and-answer We your

Michael Kupinski

First, did right in the quarter? that $X fourth you do television, million political number? Is about the in

Chris Young

Michael. political XXX,XXX quarter, the No, fourth about was in

Michael Kupinski

of far amount so can you first the talk about the quarter? that booked political And was in

Chris Young

X.X political on approximately of QX. have million for the We books

about of political. about radio, $XXX,XXX I and census, booked include also we of our we've QX part in census about included political XXX,XXX said for political in television For for as which and as and also it got number; dollars $XXX,XXX which

Michael Kupinski

And said X.X remind me, think Cup year? about million just that contributed last the World I you

Chris Young

XXXX. million About early X.X revenue, in in

Michael Kupinski

And the have of then gotten are they seeing? side? where you at in stabilized? couple And point? kind books on a right. seeing most terms positive in from this Or your what you radio of are impact XXXX, radio, ratings the Have of you

Chris Young

The Los to seen paid our the just be mean, of proven attention to its good tremendous Jose, that Los size and ratings format, is very decision. certainly consolidated a improvement over one market have the Los signals I we've most in because Angeles Angeles. we've stabilized, in Angeles We that's

think the I level. remaining to markets drive LA show markets, XX talent Angeles other XX XX is is Los in in Erazno in number number which markets. one it afternoon -- highest of one its and of our and the other or form continues at Chokolata, Our y La

making. show pleased So, the with we're progress really is that

which when market. El XX And Lucas, the or radio of our Piolin, then actually the number show And again, our X show against in stations in in demo Angeles. time market then, then is think, Spanish-language morning is is period. Piolin one compare in, our is Spanish-language the which other radio Spanish-language radio a Los number is shows continues its is we it two And in with stations midday number show, make. among to Genio every And in I

improvements in We're pleased the in made of lot a made programming that we've that XXXX. we

think contribute the for cost flow As I out said certainly million business. cash that's increase to greatly of we've to be taken in we the $X going earlier, about going structure And unit. to our that's

Lastly reduction sales around our also we as adjusted and engaged we've with they sales part of expense, all our radio Eastman, efforts. and that, of national our strategy effort in they're will managing be, national

Not more savings, increased only believe importantly, to a X the in we're also over expense quarters. believe that do this, only result see or revenue next not radio in going business but our we this and sales we audio business

Jeffery Liberman

to like each I'd here. strength improve as mention basis, in. that our of pace did did core a on ratings basis, some gain performance Jeff we Michael, quarter core year or the

Michael Kupinski

a your then, with have issue legal of you stations. And one

think an give you update on Can that? it performance I royalty. was

Walter Ulloa

performance -- matter litigation a non-material. it's it's and in all Well, -- It's the and I'll that's been being say. litigated that's its

Jeffery Liberman

material outcome, operations. the scenario not to the expecting outcome any we're to be of Regardless doing our

Michael Kupinski

think, for insurance that is Can what you right? have basically I

Jeffery Liberman

That's correct.

Michael Kupinski

at that terms of that us in might just you about then ownership any that? Univision, How recent all? you thoughts can the And impact changes give

Walter Ulloa

positive depend the them or time Look, Univision. don't We a it's but their, will has much brief Chris We learn new I make on, our leadership them. think for Jeff more know greatly early. from for the in right to probably it's here meet about probably all just that too comes I'll direction suddenly with programming. on for as comment. a me, step goes

improve. so will that good, in that And more believe programming to so improve delivery, will steps is anything We we think that come.

Operator

question next comes Hodge from Our Instructions] with Research. Tracker Gordon [Operator

Gordon Hodge

afternoon. Good a I just got question.

is a actually cost $X to million that last that with come Katz -- Was out of -- the Katz is though year? that's of Just given run Or the clarify changes the realized that's that to are of shifting expense structure. I more rate assume audio

Chris Young

cost contracts negotiated that majority renegotiated. we've is reduction the of of programming result million No, a that of $X or

Gordon Hodge

Great.

Okay,

Walter Ulloa

Realized.

Gordon Hodge

excellent. Okay,

would basic mean to either be Is about And thinking that's you'll And national your your pay so just way that somewhere I rep in the that you so else fee, them a essentially -- disappear. be shift work the Katz, then would -- sales commission reallocated correct? presume would or have is there right. force

Walter Ulloa

correct. That's

Gordon Hodge

it. got I Yes,

Okay.

So, so probably forward. out expense more coming going

Walter Ulloa

-- That $X expense referred reduction that the million to an I is includes

Gordon Hodge

includes okay, that that that, in there, Includes of some right.

it. increase that down then, sounds it. sounded one got even sounded Is perfect, with to pacing an good. certainly number it The still a And the That's It just encouraging TV core return there of encouraging. on clarify. so wanted much Okay, anyway, I in wasn't basis side? significant. pretty on

Walter Ulloa

advertising. just is That

Gordon Hodge

do and as kind cash that your on which are of to time. I'm about a very dividend, things? plenty then, the do approved loose just the terms you if Are has about then March. having about you how balance what you deploy cash? execute of cushion things you breaks thinks buybacks what wondering Or could just that ways of wanted? and the become of of I dynamics -- about And And for just thinks much of you have safety a of gets have think vice know I'll sort other how you And think could left uncertain in sort with board the whether or you of you --sort buybacks together capital versa. is

Walter Ulloa

that on briefly comment it is. just I'll the dividends as

Gordon Hodge

a it's great Yes, terrific yield. for sure, yield, that's

Walter Ulloa

of throughout kind the or to And also group in changes media our about, our tune not We business, broadcast And of we see We're how fine only year. a good to business. quarter. just XXXX, digital team. management We've but really first continue a of off made start your we comment to in confident add were number the in our future? to

one of new adding of process our talent taxes, the which most markets. and and Just management in is important talent

people been from by at optimum that to many capability. what its getting operate a pleased done. Certainly, There operation lot of work with we've

the of with but was quarter with strong year. first to work pleased all it then go course, I'm through difficult, as happens through tune the the we've the see it and done, find we we're we'll certainly and will again, continue that So, what very looks

Chris Young

place. take between we a a shareholders buyback approach program Right, capital paying and reiterate, have to And do we're just returning balanced what stock really trying and to is to down do in debt may and then opportunistic as not full just out scoping we're the bore well to landscape the opportunities side any it so be want because arise, for we on into going direction of just caution.

Walter Ulloa

good here take point be Chris. to We're future to to going a That's approach balanced a by to continue through a etcetera. work acquisitions buyback be via the stock

Gordon Hodge

are Is a there's is an Or if have to a through authorization? -- that there refresh my stock that yet? ways we go buyback memory, still we authorization,

Chris Young

We with opens plan up program we'll keep and refresh refresh in next place that still go ways The we'll that window that to week week have and running. and a that. next we'll

Operator

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

Walter Ulloa

quarter first reporting call. earnings Thank to Thank results in participating our you XXXX all for you, forward earnings Ailee. fourth look We in May. our early conference of and quarter the

Operator

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

now may disconnect. You