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Entravision Communications Corporation Reports Fourth Quarter And Full Year 2019 Results

Cision

- Announces Quarterly Cash Dividend of $0.05 Per Share -

SANTA MONICA, Calif., March 5, 2020 /PRNewswire/ -- Entravision Communications Corporation (NYSE: EVC) today reported financial results for the three- and twelve-month periods ended December 31, 2019 .

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 11. Unaudited financial highlights are as follows:



Three Months Ended



Twelve Months Ended




December 31,



December 31,




2019



2018



% Change



2019



2018



% Change


Net revenue


$

70,838



$

82,073




(14)

%


$

273,575



$

297,815




(8)

%

Cost of revenue - digital media (1)



10,314




9,847




5

%



36,757




45,096




(18)

%

Operating expenses (2)



44,169




44,568




(1)

%



173,377




176,777




(2)

%

Corporate expenses (3)



7,887




7,711




2

%



28,067




26,865




4

%

Foreign currency (gain) loss



(223)




1,085



*




754




1,616




(53)

%


























Consolidated adjusted EBITDA (4)



11,056




20,936




(47)

%



41,209




54,038




(24)

%


























Free cash flow (5)


$

4,813



$

12,237




(61)

%


$

8,292



$

25,001




(67)

%


























Net income (loss)


$

7,360



$

6,913




6

%


$

(19,712)



$

12,161



*



























Net income (loss) per share, basic


$

0.09



$

0.08




13

%


$

(0.23)



$

0.14



*


Net income (loss) per share, diluted


$

0.09



$

0.08




13

%


$

(0.23)



$

0.13



*



























Weighted average common shares
outstanding, basic



84,226,135




88,357,076








85,107,301




89,115,997






Weighted average common shares
outstanding, diluted



85,449,374




89,598,683








86,224,517




90,328,583







(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 $0.4 million and $0.3 million of non-cash stock-based compensation for the three-month periods ended December 31, 2019 and 2018, respectively, and $0.7 million of non-cash stock-based compensation for each of the twelve-month periods ended December 31, 2019 and 2018. 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 $1.5 million and $1.8 million of non-cash stock-based compensation for the three-month periods ended December 31, 2019 and 2018, respectively, and $3.6 million and $5.1 million of non-cash stock-based compensation for the twelve-month periods ended December 31, 2019 and 2018, respectively.



(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 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 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, FCC reimbursement for broadcast television repack and revenue from FCC auction for broadcast spectrum less related cash expenses. 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 fourth quarter results were impacted by declines in our television and radio segments compared to the prior year. However, we did achieve growth in our digital segment compared to the fourth quarter of 2018. We continue to maintain a solid balance sheet and return capital to our shareholders through our share repurchase program and dividend. 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 has approved a quarterly cash dividend to shareholders of $0.05 per share of the Company's Class A, Class B and Class U common stock, in an aggregate amount of approximately $4.2 million . The quarterly dividend will be payable on March 31, 2020 to shareholders of record as of the close of business on March 16, 2020 , and the common stock will trade ex-dividend on March 13, 2020 . As previously announced, 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 December 31, 2019 Compared to Three-Month Period Ended December 31, 2018

(Unaudited)




Three Months Ended




December 31,




2019



2018



% Change


Net revenue



70,838




82,073




(14)

%

Cost of revenue - digital media (1)



10,314




9,847




5

%

Operating expenses (1)



44,169




44,568




(1)

%

Corporate expenses (1)



7,887




7,711




2

%

Depreciation and amortization



4,236




4,221




0

%

Change in fair value of contingent consideration



(4,102)




(2,275)




80

%

Impairment charge



654




-



*


Foreign currency (gain) loss



(223)




1,085



*


Other operating (gain) loss



(829)




(565)




47

%














Operating income (loss)



8,732




17,481




(50)

%

Interest expense, net



(2,350)




(3,261)




(28)

%

Dividend income



171




473




(64)

%

Gain (loss) on debt extinguishment



(255)




(550)




(54)

%

Impairment loss on investment



-




(1,320)




(100)

%














Income before income taxes



6,298




12,823




(51)

%

Income tax (expense) benefit



1,107




(4,713)



*















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



7,405




8,110




(9)

%

Equity in net income (loss) of nonconsolidated affiliates



(45)




(1,197)




(96)

%

Net income (loss)


$

7,360



$

6,913




6

%


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

Net revenue decreased to $70.8 million for the three-month period ended December 31, 2019 from $82.1 million for the three-month period ended December 31, 2018 , a decrease of $11 .3 million. Of the overall decrease, approximately $8.8 million was attributable to our television segment and was primarily due to a decrease in political advertising revenue, which was not material in 2019, and decreases in national and local advertising revenue, as a result primarily of ratings declines, competitive factors with other Spanish-language broadcasters, and changing demographic preferences of audiences. Additionally, as we have previously noted, there is 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 $2.9 million of the overall decrease was attributable to our radio segment and was primarily due to a decrease in political advertising revenue, which was not material in 2019, and decreases in national and local advertising revenue, as a result primarily of ratings declines, competitive factors with other Spanish-language broadcasters, and changing demographic preferences of audiences. Additionally, as we have previously noted, there is 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. This overall decrease was partially offset by an increase of approximately $0.3 million that was attributable to our digital segment.

Cost of revenue in our digital media segment increased to $10.3 million for the three-month period ended December 31, 2019 from $9.8 million for the three-month period ended December 31, 2018 , an increase of $0.5 million . The increase was primarily due to the increase in costs associated with the increase in revenue.

Operating expenses decreased to $44.2 million for the three-month period ended December 31, 2019 from $44.6 million for the three-month period ended December 31, 2018 , a decrease of $0.4 million . The decrease was primarily due to the decrease in expenses associated with the decrease in revenue and a decrease in salary expense, partially offset by an increase in severance expense in our radio segment.

Corporate expenses increased to $7 .9 million for the three-month period December 31, 2019 from $7.7 million for the three-month period ended December 31, 2018 , an increase of $0 .2 million, primarily due to an increase in legal expense, partially offset by a decrease in non-cash stock-based compensation expense.

Our historical revenues have primarily been denominated in U.S. dollars, and the majority of our current revenues continue to be, and is 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 U.S., primarily related to the Headway business. As a result, we have operating expense, attributable to foreign currency loss, that is primarily related to the operations related to the Headway business. We had a foreign currency gain of $0.2 million for the three-month period December 31, 2019 , compared to foreign currency loss of $1.1 million for the three-month period December 31, 2018 . Foreign currency gains and losses are primarily due to currency fluctuations that affected our digital segment operations located outside the U.S., primarily related to the Headway business.

Impairment charge related to indefinite life intangible assets in our television and radio reporting units was $0.7 million for the three-month period ended December 31, 2019. 

We recognized an impairment loss on investment of $1 .3 million for the three-month period ended December 31, 2018 , related to a decrease in value of a cost method investment.

Twelve-month Period Ended December 31, 2019 Compared to Twelve-month Period Ended December 31, 2018

(Unaudited)




Twelve Months Ended




December 31,




2019



2018



% Change


Net revenue



273,575




297,815




(8)

%

Cost of revenue - digital media (1)



36,757




45,096




(18)

%

Operating expenses (1)



173,377




176,777




(2)

%

Corporate expenses (1)



28,067




26,865




4

%

Depreciation and amortization



16,648




16,273




2

%

Change in fair value of contingent consideration



(6,478)




(1,202)




439

%

Impairment charge



32,097




-



*


Foreign currency (gain) loss



754




1,616




(53)

%

Other operating (gain) loss



(5,994)




(1,187)




405

%














Operating income (loss)



(1,653)




33,577




(105)

%

Interest expense, net



(10,330)




(11,770)




(12)

%

Dividend income



918




1,475




(38)

%

Gain (loss) on debt extinguishment



(255)




(550)




(54)

%

Impairment loss on investment



-




(1,320)




(100)

%














Income before income taxes



(11,320)




21,412



*


Income tax (expense) benefit



(8,158)




(7,877)




4

%














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



(19,478)




13,535



...