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Entravision Communications Corporation Reports Second Quarter 2020 Results

Entravision Communications Corporation Reports Second Quarter 2020 Results

- Announces Quarterly Cash Dividend of $0.025 Per Share -

PR Newswire

SANTA MONICA, Calif., Aug. 4, 2020 /PRNewswire/ -- Entravision Communications Corporation (NYSE: EVC) today reported financial results for the three- and six-month periods ended June 30, 2020.

Historical results, which are attached, are in thousands of U.S. dollars (except share and per share data). This press release contains certain non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measure most directly comparable to each of these non-GAAP financial measures, and a table reconciling each of these non-GAAP financial measures to its most directly comparable GAAP financial measure is included beginning on page 12. Unaudited financial highlights are as follows:



Three-Month Period





Six-Month Period





Ended June 30,





Ended June 30,





2020





2019





%

Change





2020





2019





%

Change



Net revenue

$

45,116





$

69,241







(35)

%



$

109,365





$

133,921







(18)

%

Cost of revenue - digital media (1)



6,447







8,859







(27)

%





13,794







16,501







(16)

%

Operating expenses (2)



33,037







43,200







(24)

%





73,307







85,944







(15)

%

Corporate expenses (3)



5,384







6,501







(17)

%





12,224







13,395







(9)

%

Foreign currency (gain) loss



(155)







(82)







89

%





1,353







50





*



















































Consolidated adjusted EBITDA (4)



1,724







12,579







(86)

%





11,402







20,636







(45)

%

















































Free cash flow (5)

$

(1,408)





$

1,860





*





$

3,821





$

3,153







21

%

















































Net income (loss)

$

2,338





$

(16,279)





*





$

(33,254)





$

(14,855)







124

%

















































Net income per share, basic and diluted

$

0.03





$

(0.19)





*





$

(0.39)





$

(0.17)







129

%

















































Weighted average common shares outstanding, basic



84,123,530







85,359,998















84,220,649







85,728,820











Weighted average common shares outstanding, diluted



84,669,250







85,359,998















84,220,649







85,728,820















(1)

Cost of revenue – digital media consists primarily of the costs of online media acquired from third-party publishers. Media cost is classified as cost of revenue in the period in which the corresponding revenue is recognized.

(2)

For purposes of presentation in this table, the operating expenses line item includes direct operating and selling, general and administrative expenses. Included in operating expenses are $0.1 million of non-cash stock-based compensation for each of the three-month periods ended June 30, 2020 and 2019, and $0.2 million of non-cash stock-based compensation for each of the six-month periods ended June 30, 2020 and 2019. Also for purposes of presentation in this table, the operating expenses line item does not include corporate expenses, foreign currency (gain) loss, depreciation and amortization, impairment charge, gain (loss) on sale of assets, gain (loss) on debt extinguishment, other income (loss) and change in fair value of contingent consideration.

(3)

Corporate expenses include $0.7 million of non-cash stock-based compensation for each of the three-month periods ended June 30, 2020 and 2019, and $1.4 million of non-cash stock-based compensation for each of the six-month periods ended June 30, 2020 and 2019.

(4)

Consolidated adjusted EBITDA means net income (loss) plus gain (loss) on sale of assets, depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation included in operating and corporate expenses, net interest expense, other operating gain (loss), gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from the Federal Communications Commission, or FCC, spectrum incentive auction less related expenses, expenses associated with investments, acquisitions and dispositions and certain pro-forma cost savings. We use the term consolidated adjusted EBITDA because that measure is defined in the agreement governing our current credit facility ("the 2017 Credit Facility") and does not include gain (loss) on sale of assets, depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation, net interest expense, other income (loss), gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from FCC spectrum incentive auction less related expenses, expenses associated with investments, acquisitions and dispositions and certain pro-forma cost savings.

(5)

Free cash flow is defined as consolidated adjusted EBITDA less cash paid for income taxes, net interest expense, capital expenditures and non-recurring cash expenses plus dividend income, and other operating gain (loss). Net interest expense is defined as interest expense, less non-cash interest expense relating to amortization of debt finance costs, and less interest income.

Commenting on the Company's earnings results, Walter F. Ulloa, Chairman and Chief Executive Officer, said, "Our second quarter results were affected by the COVID-19 pandemic and the resulting economic crisis, which resulted in declines in our television, radio and digital segments compared to the prior year. We expect a sustained adverse impact in future periods, depending upon the extent and duration of the economic downturn brought on by the pandemic. Nonetheless, we continue to maintain a solid balance sheet, have reduced costs and will continue to undertake an extensive review of our business in order to more efficiently align operations and further reduce costs. Looking ahead, we remain well positioned to build on our success in further attracting Latino and other audiences worldwide, as we execute our multiplatform strategy to the benefit of our shareholders."

Quarterly Cash Dividend

The Company announced today that its Board of Directors approved a quarterly cash dividend to shareholders of $0.025 per share on the Company's Class A, Class B and Class U common stock, in an aggregate amount of approximately $2.1 million. The quarterly dividend will be payable on September 30, 2020 to shareholders of record as of the close of business on September 15, 2020, and the common stock will trade ex-dividend on September 14, 2020. The Company currently anticipates that future cash dividends will be paid on a quarterly basis; however, any decision to pay future cash dividends will be subject to approval by the Board.

Financial Results



Three-Month period ended June 30, 2020 Compared to Three-Month Period Ended

June 30, 2019

(Unaudited)





Three-Month Period





Ended June 30,





2020





2019





% Change



Net revenue

$

45,116





$

69,241







(35)

%

Cost of revenue - digital media (1)



6,447







8,859







(27)

%

Operating expenses (1)



33,037







43,200







(24)

%

Corporate expenses (1)



5,384







6,501







(17)

%

Depreciation and amortization



3,873







4,306







(10)

%

Change in fair value contingent consideration



-







(2,735)







(100)

%

Impairment charge



-







22,368







(100)

%

Foreign currency (gain) loss



(155)







(82)







89

%

Other operating (gain) loss



(2,030)







(1,597)







27

%

























Operating income (loss)



(1,440)







(11,579)







(88)

%

Interest expense, net



(1,485)







(2,697)







(45)

%

Dividend income



-







251







(100)

%

























Income (loss) before income taxes



(2,925)







(14,025)







(79)

%

























Income tax benefit (expense)



5,263







(2,252)





*



Net income (loss) before equity in net income (loss) of nonconsolidated affiliates



2,338







(16,277)





*



Equity in net income (loss) of nonconsolidated affiliates, net of tax



-







(2)







(100)

%

Net income (loss)

$

2,338





$

(16,279)





*







(1)

Cost of revenue, operating expenses and corporate expenses are defined on page 1.

Net revenue decreased to $45.1 million for the three-month period ended June 30, 2020 from $69.2 million for the three-month period ended June 30, 2019, a decrease of $24.1 million. Of the overall decrease, approximately $11.1 million was attributable to our television segment due to decreases in revenue from spectrum usage rights and local and national advertising revenue, partially offset by increases in political advertising revenue and retransmission consent revenue. The decrease in local and national advertising revenue was primarily a result of the continuing economic crisis resulting from the COVID-19 pandemic, ratings declines, competitive factors with other Spanish-language broadcasters, and changing demographic preferences of audiences. We have previously noted a trend for advertising to move increasingly from traditional media, such as television, to new media, such as digital media, and we expect this trend to continue. In addition, approximately $5.4 million of the overall decrease was attributable to our digital segment and was primarily due to declines in international revenue and the continuing economic crisis resulting from the COVID-19 pandemic.  This decline in digital revenue is being driven by a trend whereby revenue is shifting more to programmatic revenue. In addition, approximately $7.6 million of the overall decrease was attributable to our radio segment and was primarily due to decreases in local and national advertising revenue, partially offset by an increase in political advertising revenue. The decrease in local and national advertising revenue was primarily a result of the continuing economic crisis resulting from the COVID-19 pandemic, ratings declines and competitive factors with other Spanish-language broadcasters, and changing demographic preferences of audiences. We have previously noted a trend for advertising to move increasingly from traditional media, such as radio, to new media, such as digital media, and we expect this trend to continue. 

Cost of revenue in our digital segment decreased to $6.4 million for the three-month period ended June 30, 2020 from $8.9 million for the three-month period ended June 30, 2019, a decrease of $2.5 million, primarily due to a decrease in expenses associated with the decrease in revenue in our digital segment.

Operating expenses decreased to $33.0 million for the three-month period ended June 30, 2020 from $43.2 million for the three-month period ended June 30, 2019, a decrease of $10.2 million. The decrease was primarily due to decreases in salary expense, as a result of the company-wide reduction in salaries implemented effective April 16, 2020, and expenses associated with the decrease in advertising revenue.

Corporate expenses decreased to $5.4 million for the three-month period ended June 30, 2020 from $6.5 million for the three-month period ended June 30, 2019, a decrease of $1.1 million. The decrease was primarily due to decreases in salary expense, as a result of the company-wide reduction in salaries implemented effective April 16, 2020, and audit fees. 

Our historical revenues have primarily been denominated in U.S. dollars, and the majority of our current revenues continue to be, and are expected to remain, denominated in U.S. dollars. However, our operating expenses are generally denominated in the currencies of the countries in which our operations are located, and we have operations in countries other than the United States, primarily those operations related to our Headway business. As a result, we have operating expense, attributable to foreign currency, which is primarily related to the operations related to our Headway business. We had a foreign currency gain of $0.2 million for the three-month period ended June 30, 2020 compared to a foreign currency gain of $0.1 million for the three-month period ended June 30, 2019. Foreign currency gain was primarily due to currency fluctuations that affected our digital segment operations located outside the United States, primarily those related to the Headway business.

Six-Month period ended June 30, 2020 Compared to Six-Month Period Ended

June 30, 2019

(Unaudited)





Six-Month Period





Ended June 30,





2020





2019





% Change



Net revenue

$

109,365





$

133,921







(18)

%

Cost of revenue - digital media (1)



13,794







16,501







(16)

%

Operating expenses (1)



73,307







85,944







(15)

%

Corporate expenses (1)



12,224







13,395







(9)

%

Depreciation and amortization



8,385







8,222







2

%

Change in fair value contingent consideration



-







(2,376)







(100)

%

Impairment charge



39,835







22,368







78

%

Foreign currency (gain) loss



1,353







50





*



Other operating (gain) loss



(2,866)







(3,593)







(20)

%

























Operating income (loss)



(36,667)







(6,590)







456

%

Interest expense, net



(3,542)







(5,268)







(33)

%

Dividend income



24







506







(95)

%

























Income (loss) before income taxes



(40,185)







(11,352)







254

%

























Income tax benefit (expense)



6,931







(3,345)





*



Net income (loss) before equity in net income (loss) of nonconsolidated affiliates



(33,254)







(14,697)







126

%

Equity in net income (loss) of nonconsolidated affiliates, net of tax



-







(158)







(100)

%

Net income (loss)

$

(33,254)





$

(14,855)







124



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