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Entravision Communications (EVC)

Participants
Walter Ulloa Chairman and Chief Executive Officer
Chris Young Chief Financial Officer
Michael Kupinski NOBLE Capital Markets
Aaron Watts Deutsche Bank
Call transcript
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Operator

Good afternoon and welcome to the Entravision’s Second Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note today’s event is being recorded. At this time, I would like to turn the conference call over to Walter Ulloa, Chairman and CEO. ahead. go please Sir,

Walter Ulloa

Good earnings and everyone conference safe times. healthy Jamie. second is to quarter and difficult these XXXX call. in afternoon, you, welcome everyone, Entravision’s staying Thank I hope

call me today Joining the is Young, Financial our Chris Officer. Chief on

this any I written measures with financial cause begin, that the you and is differ. our This rebroadcast expressed non-GAAP refer on actual measures forward-looking results inform available on will risks form and provided SEC this Communications subject to a risk measures. that was The consent to The Corporation. uncertainties in company’s press are SEC company property must impact Corporation and to most release call list reconciliation their Any without in filings uncertainties financial will X-K. prohibited. filed contain actual we or non-GAAP Form call is today’s Before call of retransmission the conference these statements of could release. website has include Entravision call that of for GAAP Also, of Communications could comparable Entravision that a redistribution, this Please to of is the results. strictly press the

the later remarks. you steps various segments, second economic business facing. the our operations for adverse crisis, saving efficient we compared and the affected cost to challenges in continued to with most which period. align of in manage Our expense quarter have prior anticipate manner order all by due our economic a to continue our were the pandemic the the caused effectively across balance presently resulting through results to the my undertaken COVID-XX of I’ll we revenue are We we environment in declines structure pandemic Accordingly, XXXX. year walk most a

million $XXX.X At in business books quarter, total be in on securities industry cash to X.Xx. of $XXX the difficult of end among the balance and sheet versus beyond the million. Looking approximately with the environment, leverage strongest second the net approximately marketable the our a was today total continues our debt

Turning XX% adjusted to Consolidated was to to of the down decreased $XX.X expenses quarter. XX%, in $X.X EBITDA compared second operating was in same to the last consolidated Net to compared $X.X year. were loss down million, performance, our $XX.X year. and million million, financial revenues million $XX.X million a income period XX% last

prior in results, down million, segment revenue was second Turning $XX briefly revenues advertising quarter due local retransmission while to revenue was television the National pandemic. XX%, our down compared X%. up was to revenue to year television the the television advertising revenue to and while down multicast operating advertising period down consent XX% were Total XX%, was XX%. television

into Looking in advertising health for television note, our ad our XX% quarter our services, category, was represented XX% up in On television of actually second quarter, television category, Auto, largest XX total segment our the television categories largest minus down advertising approximately X% our for of top second our XX% our revenue. spend. and quarter, brighter the largest ad the was and in over the of ad year our care, spend. XX% a represented approximately represented prior fourth and television category was XX%

in exception year the the versus were prior down in prior All significantly year. the We the with quarter, of significantly also political, represented which in million in financial over were increase top $XX,XXX saw period. a – X% category television categories other $X.X the revenue XX

Univision radio’s our performance, to Turning affiliates built May their upon television market our XXXX. in leadership

Last ties. Newscast week, different regardless early an adults or Entravision television pleased XX XX tied finished to XX and including Telemundo Emmy against and markets ranked that we eight Emmys being Juan for for Among categories, were competitors number head-to-head in late newscasts two news, language. led won also Best ahead impressive local for late number to across our including stations or awarded to News this News announce English of Univision adult record-breaking local Congratulations of have XX Spanish we where Emmys our XX language XX, our one competitor a competition. by to XX operation and Carlos For had Gutierrez, our of team, Denver in markets, are single with early our market. Evening in Colorado XX

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

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

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

Local audio market were revenues revenues Audio down we XX% were we Kaplan the revenues market while our the combined. that to data, the Miller In spot to to Turning compared revenue quarter. the XX% X XX%, division. by total down the were markets in second down outperformed during in subscribed year. XX national prior quarter, points

our in year and our for was and top compared with the political, other second revenue, declined while audio Turning audio, briefly for services, category advertising last quarter, of $X,XXX represented categories quarter which in significantly represented $XXX,XXX down exception XX the XX% in versus year audio audio prior approximately of the our All in XX% category the auto, our year quarter, to audio, the largest were to by of revenue. represented XX% advertising the our period down over categories, prior total largest ad XX% period.

Los in followed Los XX one Hispanics de is Morning Angeles, are in two Lucas audio and in Piolin. Drive stations number division perform language we among to in an Angeles Spring continues June XXXX. to the at with Spanish both for ratings high with extremely KLYY, level performance ratings This ranked Genio middays XX. Riverside, number in our by at Looking program. rank In

Genio Riverside, in time slot. with drive. number continue y Chokolata released be markets, XX the Erazno number XX to This su one among latest Angeles, our We Sacramento, the La Show show In El Hispanic Phoenix XXXX. Spanish Piolin one XX afternoon y two Chokolata, the lineup among and in and Hispanic Chokolata ranked XX XX like, to also Los drive Denver, is In Erazno program one y XX Pandilla, network respective as language markets to number day Hispanic morning Flaco of regardless the shows audio Spanish Tricolor language XX adults show XX in one spring number ranked in two, their to in XX spring our to gained Hispanic La XXXX. is XX ranked to XX and Hispanic the markets in the ranked or are ranked traction to spring Erazno The adults y afternoon and XX. Show parts XX La and among XX to addition for adults all of in key number among the El adults XX. one for number

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

in Angeles, we talent incredible particularly the about the excited Los in audio division, number market one have assembled are our United in the States. We audio

We strong very to recent Angeles working Los feverishly our stronger are convert to in ratings revenue.

businesses of the Entravision launch Now consumer Earlier this Entravision year, the Digital, under we our let’s go marketing announced brand. businesses. our technology media, digital, and Entravision digital over which consolidated to insights

consumer technology the to a capabilities. digital a advertisers that businesses several consumers ScrollerAds, insights; AudioEngage, consumers. mobile-first, digital track This a branding platform; to a assets and international includes solutions creative Smadex, audio build these Over programmatic, U.S. connecting audience offering have management DSP an unified engage digital Latino Digital the These reach, provides of video solution; globally. businesses programmatic years, marketing DataXpand, Hispanic into possess insights television, marketplace an brings this portfolio record for optimized targeting data be that agencies media past and and the have and small- advertising serving And worked with medium-sized technology our data we marketing to and platform continue a advertising targeted digital and marketplace; will performance complement and market. radio Entravision Hispanic assets our audiences. and an single U.S. businesses and to content platform source exceptional solutions of capabilities of successful with

COVID-XX and for growth agencies focuses rate The and $XX.X the a during and prior the We year branding Smadex, the economy. the registered year. X branding share gaming, demand-side our to last our was in the win main period app ad-tech to show decrease United XX% developers Smadex the period. and produce we provides quarter, deploying app of year value-added the operating growth inside X% strong were a mechanism performance is continues over States, in QX brand remain related U.S. to continue bright services versus have market continued in the revenues plan environment versus Smadex, pandemic. of services. directly decrease for digital One optimistic in million, our and which fin-tech on digital the XX% growth which For performance. second works same awareness, services to globally The Smadex that spot quarter current difficult platform, In with with to regarding the prospects we divisions: for represents despite prior

process to was reduction This encourage focus the performance, ad and Smadex digital process review was the by to on Gold created certification continue IAB for we in practices, the successfully brand the fraud and advertising. transparency passed including best the IAB safety products As certification. Standard of cutting-edge prestigious awarded our programmatic

launched outbreak, May which video prospects the the ad while about the the looking point scrollers momentum division’s short, in-game of of both improving We the was the the confidence capturing beyond low us gives great second quarter the version gaming and second to revenue affected in we by vertical. June, focus have saw which half our on progressively for advertising, quarter year. sequentially, our digital April, was coronavirus In new of of

We’re markets, advancements expanding also and into new tapping led excited Smadex. local new well in prospects about by technology our footprint as our as the categories

have recently our turn Arizona Texas, of it’s and to the where near encountered to of cases, a Entravision the regions important we operates now that Florida, for including note surge many California. As coronavirus the term, outlook

economic in revenue versus overall despite uncertainty to have shown operations improvement Our current QX the of solid date the environment. QX

and XXXX. As pacing third our businesses of is quarter the XX%, of business radio today, are versus advertising pacing minus digital XX% our pacing our minus television is business minus X%,

more finish. quarter currently second than have As on a footnote, revenue our books today we our

the These crisis. steps previously steps have a XX%, our to X we approximately share cancellation of over reduction we XX% level. shareholders by payroll, past on to reduction at $X.XXX reduction this for of mentioned, operating reduction of last As include quarter; elimination difficult of our by our the company-wide the still and multiple corporate initiated program, the a lastly, taken of and both expenses buyback stock the ensure dynamic workforce salaries various to dividend and we’ve per those weather months, the

of result million period. as third with prior be a cost Also, expect should corporate, would We and one so struggles reductions quarters in pandemic, $XX the quarter. difficult year-over-year the maintain platforms reductions year the as performs most company’s in contend audio of quarter effective doing to to in cuts how in the in the quarter necessary economy $XX of QX, these depending approximately revenue our to and and result on well our in these cost it $XX digital fixed QX, fixed second the In and reduction to television, across challenging additional beyond variable history. as the million compared in the expense summary, variable to was impact million

go this to in foresee restructuring now are necessary progress these a also call endures, the times. financial ensure to the the as are efforts we base we we quarter furthermore, and were in to QX, by we encouraged regarding While decisions positive pandemic I financial our difficult our made will signs revenue through over difficult revenue. seeing turn Chris with that cost third believe

Chris Young

afternoon Thank you, Walter everyone. and good

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

XXXX, was to totaled division, $XX For year. quarter, the that net million the $X.X share quarter of million quarter and Cash to compared radio for million, TV quarter was expenditures expenses compared decreased primarily of both quarter year. declined second quarter, cash million $X.X million benefit the XXXX. SG&A to in in the consent anticipate $X.X national local million, the to an for revenue was Digital for the cost-cutting operations $X.X year. million net months segment our the to per $XX.X compared expenses last our costs quarter the the in million, same down to was primarily XX% the XX% to to for $XX.X to ongoing million million, revenue, to paid actually expense revenue. for for revenue quarter was to were will a were to in were economic the advertising our our period XX% taxes million a XX% of ended quarter $X.X $XX.X in $X.X in share last due June $X to X items retransmission year same the approximately environment. XX% compared from for while period. decreased Political decreased Direct compared XX% same revenues million compared The the million down Corporate a year per Earnings year bring prior same in period. line $X.XX year. the in $X.X due difficult with for Tax million million decrease $XX.X expense quarter expenses $XX.X in prior full the to compared last representing to decrease revenue million, in positive in $XX.X capital decreases The operating cash in in the to the line be a loss our quarter of $X.X XX, $X.X expenditures both prior $XX.X the totaled $X.X million. year for prior interest $X.XX, X%. year. increase We $XXX,XXX. capital was on of Radio million Net million period. of last quarter

remarks. our Net XXXX and agreement was $XXX.X was Turning will of million balance our total as total XX. the consolidated was million. debt now securities cash to $XX Net adjusted unrestricted $XXX.X of as happy Walter sheet, was June and in over our of was $XX as our books XX-month XX, EBITDA cash books, million, XX, trailing marketable and the June XXXX, Cash our million XXXX. leverage marketable credit This formal will on on your questions. defined be it as net our X.XXx you. our total I to securities, of total hand leverage of and X.XXx. I June to concludes take Jamie, of

Operator

from go [Operator from first Kupinski Our Markets. your with Capital Instructions] question comes Please ahead Michael today question. NOBLE

Michael Kupinski

and the you questions. Thank thanks for taking

and all, my flow through and a and know difficult of actually positive been very actually real sacrifices I have that showing cash must environment of on cash congratulations managing a lot expectation overachieving struggle, a First flow. there.

your is, number you radio question board. how maybe in bit much In TV anticipating are QX, QX also a numbers maybe are my of the expecting kind pretty into little number, So well? you much political as actually are or look better that and we what then your as for was I than across pacing pacing

Walter Ulloa

was For gave television, that the I X%. pace – believe I minus we that you

Chris Young

Right.

Walter Ulloa

core would XX% But quarter. the minus for be

Chris Young

taking up. Yes,

Walter Ulloa

up Taking political, yes.

Michael Kupinski

a was it little Are you what Yes, it. actually because, kind it of had same in yes. And than political better Got there I but bit mean, for well? thousand I was the as then was hundred political, dollars, the few radio with quarter second a expecting. in better actually, radio, seeing radio

Walter Ulloa

television do information? We pivot certainly radio political, much have you business. certainly as are political Chris, as But with our seeing not that

Chris Young

pacing minus and minus XX%, think, got I XX%, have radio core radio, Well, a at have radio minus core got – I a and it’s I just XX%. got I at not have total

Walter Ulloa

of That’s minus points... XX%. correct, A couple

Michael Kupinski

Okay. Yes.

political? specific Okay. about And just wondering it’s the being year? – was year I markets. your give about can in been in of just like presidential are can for I political, you the thoughts you seems us that terms understand of guess, but I booked, give your there’s thoughts it What if of us balance the balance you the some money

Walter Ulloa

first our political, well a Well, quarter we huge surpassing had budgets.

be QX But And political. feel the for going now. year the budgeted. political right have QX what to we biggest of we $X.X good number about was million pretty for than was feel course, a of QX and certainly Our will pretty slightly QX, certainly have good. our year. We we got larger achieve. achieve But to it we under much are quarter we feel the about budgets like

So far, track do we on are that. to

So on we go.

Michael Kupinski

we that What should how look thing? cost further fixed cost mean, to thoughts you I some What trigger And of need pull we to there? cost indicated of you cost, in be cutting? how understand your QX. see QX I kind terms of expenses? in expenses were and to, on action just cutting back variable even your in determine Or reduce am cost variable the at if be to that going am the in not the to the can the pace terms just trying of throttle back trigger what and understand or terms I indicated the move What’s revenues you trying further in in? of modeling. of you terms versus are would – of – could whether sort about

Walter Ulloa

going information made I the have Revenue followed we severe give year. those Michael, – rest any manage us you Chris, we you. the some through of as in QX. we And out, the best do how determine expenses pointed mean, can QX. you think, comments? that’s into I as will move Well, pretty cuts cuts our I have

Chris Young

if to start with better barebones to sand creep we the is are threshold, confident in starts level call line incremental more hit feeling feeling right expense revenue environment the when we start will When this the saying return. variable at right factor in in. expenses Yes. start I operating to a don’t draw about think we and we will everything, it’s some now. the

Walter Ulloa

out, are point all and severe that though been and Michael, feel operating and will clients have I are that certainly we needs customers. we our cuts made these they I even the of we addressing and have deep, efficiently,

at people a highest operated the I levels our one operating have that And as so ever are we company. think of

So see that. I to am pleased certainly

Michael Kupinski

stock right cash I your terms that last second question pacing what fact think my better actually flow that of thing? quarter. are I the your cash sort you than the your positive is that in canceled allocation, program? flow positive, QX in thoughts hear are you Given is Did expected, of capital repurchase

Chris Young

So the earlier conservation stock been since cash dividend. canceled. Right cut has that in buyback mode, program We canceled. did the we active but has are We Michael. been were in year, the now,

we as a are generate. to big should this whatever – able CapEx should we taxpayer, de with conversion significant far we some So generate able year, not are EBITDA we incremental cash be flow as free to minimis

this we right what trying focused on moment to environment. our just the that’s cash And is net So for a are protect. balance we are I that now think safety difficult in

Michael Kupinski

everyone. you well Thank be and

Walter Ulloa

you, Michael. Thank

Chris Young

too, Michael. You

Operator

Instructions] Aaron [Operator from your question. Our next with question Please comes Bank. from ahead Deutsche Watts go

Aaron Watts

Chris. for Hi. Thanks on. Hi. Walter. me having

Walter Ulloa

Aaron. Hi.

Chris Young

you. Thank

Aaron Watts

and position their TV have were you I where in people cars. a so stations. in and hit And obviously, are as over radio maybe stuck just prevalence am TV was So at – home not than radio both harder unique you

you television as with what look the TV advertising? third stripping you’ll seeing to to you in normal? ahead? in is political. are as pacing traffic in close gap than radio on months you more are the you do side the What’s though, seems, What patterns As expectation radio stronger quarter, expect what return And radio, it obviously, to see seeing even of kind out your ahead the

Walter Ulloa

the that our improve. we as radio to national shared alive. Local with is – I in from that national improved, you will it’s our expect – Well, radio certainly is quarter. quarter. continue has improvement through the come the versus the improved now has better business. mean, has the quarter can second rebounded for tell – believe We in radio to we certainly third everyone, information But than pace starting

the positive show Our is pass they that work as we rep to starting us. – with some information to

being And of we move so in confident out, by And faring it’s that the both quarter. rest in as and television opposed But continue local driven television quarter will national alive did is pointed radio to radio. as we which the radio, is feel the fueled by radio better is, than second to to and And starting local is national through you right improve. as mostly it now. pretty come

Aaron Watts

you great. Okay, very much. Thank

Walter Ulloa

Aaron. Thanks,

Chris Young

Thank you.

Operator

will to remarks. like that, and today’s management conclude back for session. to the ladies we with I turn closing question-and-answer any And conference gentlemen, call would over

Walter Ulloa

in quarter Thank with you, We you look safe all everyone Jamie a conference Have our of to investor thank early participating thank for day, you results quarter great sharing and our in be you. second and forward November. call. third

Operator

conclude that, with for joining. gentlemen, we call. today’s and Ladies you conference thank will We do

You your lines. may now disconnect