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Entravision Communications Corporation Reports Fourth Quarter And Full Year 2016 Results

SANTA MONICA, Calif., March 2, 2017 /PRNewswire/ -- Entravision Communications Corporation (EVC) today reported financial results for the three- and twelve-month periods ended December 31, 2016.

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 10. Unaudited financial highlights are as follows:

 



Three Months Ended



Twelve Months Ended




December 31,



December 31,




2016



2015



% Change


2016



2015



% Change

Net revenue


$

70,291



$

65,432




7

%


$

258,514



$

254,134




2

%

Cost of revenue - digital media (1)



3,043




2,609




17

%



9,536




7,242




32

%

Operating expenses (2)



41,102




39,620




4

%



160,237




153,138




5

%

Corporate expenses (3)



7,918




6,942




14

%



24,543




22,520




9

%


























Consolidated adjusted EBITDA (4)



20,620




18,782




10

%



69,243




76,324




(9)

%


























Free cash flow (5)


$

14,919



$

13,523




10

%


$

45,204



$

49,673




(9)

%


























Net income


$

7,003



$

5,807




21

%


$

20,405



$

25,625




(20)

%


























Net income per share, basic


$

0.08



$

0.07




14

%


$

0.23



$

0.29




(21)

%

Net income per share, diluted


$

0.08



$

0.06




33

%


$

0.22



$

0.28




(21)

%


























Weighted average common shares outstanding, basic



89,733,294




88,217,563








89,340,589




87,920,230






Weighted average common shares outstanding, diluted



91,642,487




90,570,304








91,303,056




90,295,185






 

(1)

Cost of revenue 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)

Operating expenses include direct operating, selling, general and administrative expenses. Included in operating expenses are $0.6 million and $1.0 million of non-cash stock-based compensation for the three-month periods ended December 31, 2016 and 2015, respectively and $1.3 million and $1.9 million of non-cash stock-based compensation for the twelve-month periods ended December 31, 2016 and 2015, respectively. Operating expenses do not include corporate expenses, depreciation and amortization, impairment charge, gain (loss) on sale of assets, gain (loss) on debt extinguishment and other income (loss).



(3)

Corporate expenses include $1.8 million and $1.6 million of non-cash stock-based compensation for the three-month periods ended December 31, 2016 and 2015, respectively and $3.7 million and $3.3 million of non-cash stock-based compensation for the twelve-month periods ended December 31, 2016 and 2015, 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 and syndication programming amortization less syndication programming payments. We use the term consolidated adjusted EBITDA because that measure is defined in our 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 and syndication programming amortization and does include syndication programming payments. While many in the financial community and we consider consolidated adjusted EBITDA to be important, it should be considered in addition to, but not as a substitute for or superior to, other measures of liquidity and financial performance prepared in accordance with accounting principles generally accepted in the United States of America, such as cash flows from operating activities, operating income and net income. As consolidated adjusted EBITDA excludes non-cash gain (loss) on sale of assets, non-cash depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation expense, 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 and syndication programming amortization and includes syndication programming payments, consolidated adjusted EBITDA has certain limitations because it excludes and includes several important non-cash financial line items. Therefore, we consider both non-GAAP and GAAP measures when evaluating our business. Consolidated adjusted EBITDA is also used to make executive compensation decisions.



(5)

Free cash flow is defined as consolidated adjusted EBITDA less cash paid for income taxes, net interest expense, and capital expenditures. 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, "During the fourth quarter, we achieved revenue growth driven by increases in our television, radio and digital media segments. We also improved our free cash flow and net income over the fourth quarter of 2015.  Additionally, we continued to grow our digital segment revenue and build our digital footprint through Pulpo Media, which provides us with an integrated platform to connect advertisers and marketers with Latino audiences. Looking ahead, we remain well positioned to build on our success in further attracting Latino audiences, expanding our advertiser base and monetizing our reach to the benefit of our shareholders."

FCC Auction for Broadcast Spectrum

The Federal Communication Commission recently completed the reverse auction for broadcast spectrum which resulted in anticipated proceeds of approximately $264 million for the Company. The anticipated proceeds reflect the FCC's acceptance of one or more bids placed by the Company during the auction to modify and/or relinquish spectrum usage rights for certain of its television stations.  We do not expect that the modification and/or relinquishment of the spectrum usage rights will result in material changes in the operations or results of the Company.  The Company expects to receive the proceeds in the second half of 2017.

Quarterly Cash Dividend and Prepayment of Outstanding Debt

The Company announced today that its Board of Directors has approved a quarterly cash dividend to shareholders of $0.03125 per share of the Company's Class A, Class B and Class U common stock, in an aggregate amount of approximately $2.8 million. The quarterly dividend will be payable on March 31, 2017 to shareholders of record as of the close of business on March 14, 2017, and the common stock will trade ex-dividend on March 10, 2017. 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.

During the fourth quarter of 2016, the Company voluntarily prepaid $20.0 million of term loans under its senior secured term loan credit facility.

Definitive Agreement to Acquire the Digital Performance Marketing Provider Headway

The Company has entered into a definitive agreement to acquire the business of Headway, a leading provider of mobile, programmatic, data and performance digital marketing solutions focused primarily in the United States, Mexico and Latin America.  The transaction, which will be funded from the Company's cash on hand, is expected to close early in the second quarter. 

 

Financial Results


Three-Month Period Ended December 31, 2016 Compared to Three-Month Period Ended

December 31, 2015

(Unaudited)







Three Months Ended




December 31,




2016



2015



% Change


Net revenue


$

70,291



$

65,432




7

%

Cost of revenue - digital media (1)



3,043




2,609




17

%

Operating expenses (1)



41,102




39,620




4

%

Corporate expenses (1)



7,918




6,942




14

%

Depreciation and amortization



3,618




4,039




(10)

%

Operating income



14,610




12,222




20

%

Interest expense, net



(3,746)




(3,264)




15

%

Gain (loss) on debt extinguishment



(161)




(204)




(21)

%

Income before income taxes



10,703




8,754




22

%

Income tax (expense) benefit



(3,700)




(2,947)




26

%

Net income


$

7,003



$

5,807




21

%

 

(1)

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

 

Net revenue increased to $70.3 million for the three-month period ended December 31, 2016 from $65.4 million for the three-month period ended December 31, 2015, an increase of $4.9 million. Of the overall increase, approximately $3.6 million was attributed to our television segment and was primarily attributable to an increase in political advertising revenue, which was not material in 2015, partially offset by decreases in local and national advertising revenue. Additionally we had an increase of $0.9 million in the radio segment primarily attributable to an increase in political advertising revenue, which was not material in 2015, and an increase in national advertising revenue partially offset by a decrease in local advertising revenue.  The remaining $0.4 million was attributed to our digital segment and was primarily attributable to increases in local and national revenue.

Cost of revenue increased to $3.0 million for the three-month period ended December 31, 2016 from $2.6 million for the three-month period ended December 31, 2015, an increase of $0.4 million, due to increased online media costs associated with generating increased net revenue in our digital segment.

Operating expenses increased to $41.1 million for the three-month period ended December 31, 2016 from $39.6 million for the three-month period ended December 31, 2015, an increase of $1.5 million. The increase was primarily attributable to expenses associated with generating increased advertising revenue and increases in salary expense, insurance expense and promotional expense. 

Corporate expenses increased to $7.9 million for the three-month period ended December 31, 2016 from $6.9 million for the three-month period ended December 31, 2015, an increase of $1.0 million. The increase was primarily attributable to legal and financial due diligence costs related to the pending acquisition of Headway and increases in salary expense and non-cash stock-based compensation expense.

 

Twelve-Month Period Ended December 31, 2016 Compared to Twelve-Month Period Ended

December 31, 2015

(Unaudited)







Twelve Months Ended




December 31,




2016



2015



% Change

Net revenue


$

258,514



$

254,134




2

%

Cost of revenue - digital media (1)



9,536




7,242




32

%

Operating expenses (1)



160,237




153,138




5

%

Corporate expenses (1)



24,543




22,520




9

%

Depreciation and amortization



15,342




15,989




(4)

%

Operating income



48,856




55,245




(12)

%

Interest expense, net



(15,169)




(13,002)




17

%

Gain (loss) on debt extinguishment



(161)




(204)




(21)

%

Income before income taxes



33,526




42,039




(20)

%

Income tax (expense) benefit



(13,121)




(16,414)




(20)

%

Net income


$

20,405



$

25,625




(20)

%

 

(1)

Operating expenses and corporate expenses are defined on page 1.

 

Net revenue increased to $258.5 million for the twelve-month period ended December 31, 2016 from $254.1 million for the twelve-month period ended December 31, 2015, an increase of $4.4 million. Of the overall increase, $4.3 million was attributed to our digital media segment and was primarily attributable to increases in local and national advertising revenue. Additionally, approximately $0.4 million of the overall increase was attributed to our television segment and was primarily attributable to an increase in political revenue, which was not material in 2015, and an increase in national advertising revenue. This increase was offset by a decrease of approximately $10.5 million of revenue associated with television station channel modifications made by the Company in order to accommodate the operations of a telecommunications operator in 2015, which did not recur in 2016. These increases were partially offset by a decrease of $0.3 million that was attributed to our radio segment, primarily attributable to a decrease in local advertising revenue, partially offset by an increase in political advertising revenue, which was not material in 2015

Cost of revenue increased to $9.5 million for the twelve-month period ended December 31, 2016 from $7.2 million for the twelve-month period ended December 31, 2015, an increase of $2.3 million, due to increased online media costs associated with generating increased net revenue in our digital media segment.

Operating expenses increased to $160.2 million for the twelve-month period ended December 31, 2016 from $153.1 million for the twelve-month period ended December 31, 2015, an increase of $7.1 million. The increase was primarily attributable to expenses associated with generating increased advertising revenue and increases in salary expense and insurance expense. 

Corporate expenses increased to $24.5 million for the twelve-month period ended December 31, 2016 from $22.5 million for the twelve-month period ended December 31, 2015, an increase of $2.0 million. The increase was primarily attributable to legal and financial due diligence costs related to the pending acquisition of Headway and increases in salary expense and non-cash stock-based compensation expense.

Segment Results

       The following represents selected unaudited segment information:

 



Three Months Ended



Twelve Months Ended




December 31,



December 31,




2016




2015



% Change


2016




2015



% Change

Net Revenue

























Television


$

43,380



$

39,789




9

%


$

159,523



$

159,081




0

%

Radio



20,242




19,376




4

%



75,847




76,161




(0)

%

Digital



6,669




6,267




6

%



23,144




18,892




23

%

Total


$

70,291



$

65,432




7

%


$

258,514



$

254,134




2

%


























Cost of Revenue - digital media (1)

























Digital



3,043




2,609




17

%



9,536




7,242




32

%


























Operating Expenses (1)

























Television


$

21,312



$

20,738




3

%


$

83,611



$

80,666




4

%

Radio



16,904




15,973




6

%



65,390




61,970




6

%

Digital



2,886




2,909




(1)

%



11,236




10,502




7

%

Total


$

41,102



$

39,620




4

%


$

160,237



$

153,138




5

%


























Corporate Expenses (1)


$

7,918



$

6,942




14

%


$

24,543



$

22,520




9

%


























Consolidated adjusted EBITDA (1)


$

20,620



$

18,782




10

%


$

69,243



$

76,324




(9)

%

 

(1)

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

 

Entravision Communications Corporation will hold a conference call to discuss its 2016 fourth quarter and full year results on March 2, 2017 at 5 p.m. Eastern Time. To access the conference call, please dial 412-317-5440 ten minutes prior to the start time. The call will be webcast live and archived for replay on the investor relations portion of the Company's web site located at www.entravision.com.  

Entravision Communications Corporation is a leading media company that reaches and engages U.S. Latinos across acculturation levels and media channels, as well as consumers in Mexico. The Company's comprehensive portfolio incorporates integrated media and marketing solutions comprised of acclaimed television, radio, digital properties, events, and data analytics services. Entravision has 54 primary television stations and is the largest affiliate group of both the Univision and UniMás television networks. Entravision also owns and operates 49 primarily Spanish-language radio stations featuring nationally recognized talent, as well as the Entravision Audio Network and Entravision Solutions, a coast-to-coast national spot and network sales and marketing organization representing Entravision's owned and operated, as well as its affiliate partner, radio stations. According to comScore Media Metrix®, Entravision's digital operating group, Pulpo, is the #1-ranked online advertising platform in Hispanic reach, and Pulpo's comprehensive media offering, data, and consumer insights lead the industry. Entravision shares of Class A Common Stock are traded on The New York Stock Exchange under the symbol: EVC.

This press release contains certain forward-looking statements. These forward-looking statements, which are included in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, may involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results and performance in future periods to be materially different from any future results or performance suggested by the forward-looking statements in this press release. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that actual results will not differ materially from these expectations, and the Company disclaims any duty to update any forward-looking statements made by the Company. From time to time, these risks, uncertainties and other factors are discussed in the Company's filings with the Securities and Exchange Commission.

 

(Financial Table Follows)

 

 

Entravision Communications Corporation

Consolidated Balance Sheets

(In thousands; unaudited)










December 31,



December 31,




2016



2015


ASSETS









Current assets









Cash and cash equivalents


$

61,520



$

47,924


Trade receivables, net of allowance for doubtful accounts



65,072




66,399


Prepaid expenses and other current assets



4,870




5,705


Total current assets



131,462




120,028


Property and equipment, net



55,368




57,874


Intangible assets subject to amortization, net



13,120




16,656


Intangible assets not subject to amortization



220,701




220,701


Goodwill



50,081




50,081


Deferred income taxes



44,677




57,929


Other assets



2,512




1,693


Total assets


$

517,921



$

524,962


LIABILITIES AND STOCKHOLDERS' EQUITY









Current liabilities









Current maturities of long-term debt


$

3,750



$

3,750


Accounts payable and accrued expenses



30,810




29,787


Total current liabilities



34,560




33,537


Long-term debt, less current maturities, net of unamortized debt issuance costs



286,697




309,587


Other long-term liabilities



13,208




14,565


Total liabilities



334,465




357,689


Stockholders' equity









Class A common stock



7




6


Class B common stock



2




2


Class U common stock



1




1


Additional paid-in capital



904,867




910,228


Accumulated deficit



(718,444)




(738,849)


Accumulated other comprehensive income (loss)



(2,977)




(4,115)


Total stockholders' equity



183,456




167,273


Total liabilities and stockholders' equity


$

517,921



$

524,962


 

 

Entravision Communications Corporation

Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)










Three-Month Period



Twelve-Month Period




Ended December 31,



Ended December 31,




2016



2015



2016



2015


Net revenue


$

70,291



$

65,432



$

258,514



$

254,134


Expenses:

















Cost of revenue - digital media



3,043




2,609




9,536




7,242


Direct operating expenses



29,098




28,970




113,439




110,323


Selling, general and administrative expenses



12,004




10,650




46,798




42,815


Corporate expenses



7,918




6,942




24,543




22,520


Depreciation and amortization



3,618




4,039




15,342




15,989





55,681




53,210




209,658




198,889


Operating income



14,610




12,222




48,856




55,245


Interest expense



(3,850)




(3,278)




(15,469)




(13,047)


Interest income



104




14




300




45


Gain (loss) on debt extinguishment



(161)




(204)




(161)




(204)


Income before income taxes



10,703




8,754




33,526




42,039


Income tax (expense) benefit



(3,700)




(2,947)




(13,121)




(16,414)


Net income


$

7,003



$

5,807



$

20,405



$

25,625


Basic and diluted earnings per share:

















Net income per share, basic


$

0.08



$

0.07



$

0.23



$

0.29


Net income per share, diluted


$

0.08



$

0.06



$

0.22



$

0.28



















Cash dividends declared per common share, basic


$

0.03



$

0.03



$

0.13



$

0.11


Cash dividends declared per common share, diluted


$

0.03



$

0.03



$

0.12



$

0.10



















Weighted average common shares outstanding, basic



89,733,294




88,217,563




89,340,589




87,920,230


Weighted average common shares outstanding, diluted



91,642,487




90,570,304




91,303,056




90,295,185


 

 

Entravision Communications Corporation

Consolidated Statements of Cash Flows

(In thousands; unaudited)










Three-Month Period



Twelve-Month Period




Ended December 31,



Ended December 31,




2016



2015



2016



2015



















Cash flows from operating activities:

















Net income


$

7,003



$

5,807



$

20,405



$

25,625


Adjustments to reconcile net income to net cash provided by operating activities:

















Depreciation and amortization



3,618




4,039




15,342




15,989


Deferred income taxes



3,641




2,900




12,528




15,664


Amortization of debt issue costs



197




202




776




797


Amortization of syndication contracts



109




98




398




360


Payments on syndication contracts



(118)




(133)




(388)




(510)


Non-cash stock-based compensation



2,401




2,556




5,035




5,240


(Gain) loss on debt extinguishment



161




204




161




204


Changes in assets and liabilities, net of effect of acquisitions and dispositions:

















(Increase) decrease in trade receivables



(4,407)




(1,974)




1,397




871


(Increase) decrease in prepaid expenses and other current assets



1,391




579




439




(499)


Increase (decrease) in accounts payable, accrued expenses and other liabilities



4,395




1,121




1,203




(1,458)


Net cash provided by operating activities



18,391




15,399




57,296




62,283


Cash flows from investing activities:

















Purchases of property and equipment and intangibles



(2,093)




(2,150)




(9,053)




(13,696)


Purchases of short term investments: CDs



-




-




(30,000)




-


Proceeds from short term investments: CDs



-




-




30,000




-


Purchases of investments



(250)




-




(500)




-


Net cash used in investing activities



(2,343)




(2,150)




(9,553)




(13,696)


Cash flows from financing activities:

















Proceeds from issuance of common stock



298




363




2,183




2,177


Tax payments related to shares withheld for share-based compensation plans



(1,403)




-




(1,403)




-


Payments on long-term debt



(20,937)




(20,937)




(23,750)




(23,750)


Dividend paid



(2,806)




(2,759)




(11,177)




(9,350)


Payment of contingent consideration



-




-




-




(1,000)


Net cash used in financing activities



(24,848)




(23,333)




(34,147)




(31,923)


Net increase (decrease) in cash and cash equivalents



(8,800)




(10,084)




13,596




16,664


Cash and cash equivalents:

















Beginning



70,320




58,008




47,924




31,260


Ending


$

61,520



$

47,924



$

61,520



$

47,924


 

 

Entravision Communications Corporation
Reconciliation of Consolidated Adjusted EBITDA to Cash Flows From Operating Activities
(In thousands; unaudited)

The most directly comparable GAAP financial measure is operating cash flow. A reconciliation of this non-GAAP measure to cash flows from operating activities for each of the periods presented is as follows:

 



Three-Month Period



Twelve-Month Period




Ended December 31,



Ended December 31,




2016




2015



2016




2015


Consolidated adjusted EBITDA (1)


$

20,620



$

18,782



$

69,243



$

76,324


Interest expense



(3,850)




(3,278)




(15,469)




(13,047)


Interest income



104




14




300




45


Gain (loss) on debt extinguishment



(161)




(204)




(161)




(204)


Income tax (expense) benefit



(3,700)




(2,947)




(13,121)




(16,414)


Amortization of syndication contracts



(109)




(98)




(398)




(360)


Payments on syndication contracts



118




133




388




510


Non-cash stock-based compensation included in direct operating

















 expenses



(630)




(951)




(1,330)




(1,931)


Non-cash stock-based compensation included in corporate expenses



(1,771)




(1,605)




(3,705)




(3,309)


Depreciation and amortization



(3,618)




(4,039)




(15,342)




(15,989)


Net income



7,003




5,807




20,405




25,625


Depreciation and amortization



3,618




4,039




15,342




15,989


Deferred income taxes



3,641




2,900




12,528




15,664


Amortization of debt issuance costs



197




202




776




797


Amortization of syndication contracts



109




98




398




360


Payments on syndication contracts



(118)




(133)




(388)




(510)


Non-cash stock-based compensation



2,401




2,556




5,035




5,240


(Gain) loss on debt extinguishment



161




204




161




204


Changes in assets and liabilities:

















(Increase) decrease in accounts receivable



(4,407)




(1,974)




1,397




871


(Increase) decrease in prepaid expenses and other assets



1,391




579




439




(499)


Increase (decrease) in accounts payable, accrued expenses and other liabilities



4,395




1,121




1,203




(1,458)


Net cash provided by (used in ) operating activities


$

18,391



$

15,399



$

57,296



$

62,283


 

(1)

Consolidated adjusted EBITDA is defined on page 1.

 

 

Entravision Communications Corporation
Reconciliation of Free Cash Flow to Cash Flows From Operating Activities
(In thousands; unaudited)

The most directly comparable GAAP financial measure is operating cash flow. A reconciliation of this non-GAAP measure to cash flows from operating activities for each of the periods presented is as follows:

 



Three-Month Period



Twelve-Month Period




Ended December 31,



Ended December 31,





2016




2015




2016




2015


Consolidated adjusted EBITDA (1)


$

20,620



$

18,782



$

69,243



$

76,324


Net interest expense (1)



3,549




3,062




14,393




12,205


Cash paid for income taxes



59




47




593




750


Capital expenditures (2)



2,093




2,150




9,053




13,696


Free cash flow (1)



14,919




13,523




45,204




49,673



















Capital expenditures (2)



2,093




2,150




9,053




13,696


Changes in assets and liabilities:

















(Increase) decrease in accounts receivable



(4,407)




(1,974)




1,397




871


(Increase) decrease in prepaid expenses and other assets



1,391




579




439




(499)


Increase (decrease) in accounts payable, accrued expenses and other liabilities



4,395




1,121




1,203




(1,458)


Cash Flows From Operating Activities


$

18,391



$

15,399



$

57,296



$

62,283


 

(1)

Consolidated adjusted EBITDA, net interest expense, and free cash flow are defined on page 1.

(2)

Capital expenditures are not part of the consolidated statement of operations.

 

 

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