Entravision Communications Corporation (EVC)
Q3 2008 Earnings Call Transcript
November 5, 2008, 5:00 pm ET
Walter Ulloa – Chairman and CEO
Chris Young – EVP and CFO
Philip Wilkinson – President and COO
David Miller – Caris & Company
Marci Ryvicker – Wachovia
Lee Westerfield – BMO Capital Markets
Linda Karn – Credit Suisse
Jessica Ford [ph] – Western Group [ph]
Paul Fitzpatrick [ph] – DC Bank [ph]
Troy Isaacson [ph] – Princeton Advisory Group
Previous Statements by EVC
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(Operator instructions) For your information, this conference is being recorded.
I would like to turn the conference over to Walter Ulloa, Chairman and Chief Executive Officer. Mr. Ulloa?
Thank you, Amy. Good afternoon everyone and welcome to Entravision's third quarter 2008 earnings conference call.
Joining me today is Chris Young, our Executive Vice President and Chief Financial Officer and Philip Wilkinson, our President and Chief Operating Officer.
Before we begin, I must inform you that this conference call will contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ. Please refer to our SEC filings for a list of risks and uncertainties that could impact actual results. In addition, this call is the property of Entravision Communications Corporation. Any redistribution, retransmission, or rebroadcast of this call in any form, without the express written consent of Entravision Communications Corporation, is strictly prohibited.
Also this call will include certain non-GAAP financial measures. The company has provided a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures in today's press release. The press release is available on the company’s web site and was filed with the SEC in a Form 8-K. In addition, with the announced sale of the company's Outdoor Division at March 31, 2008, Outdoor was classified as a discontinued operation and the results of operations are separately reported for all periods.
Our third quarter results reflect the impact of the economic downturn and related advertising market weakness across the majority of our markets. During the third quarter, advertisers continued to pull back on committing marketing dollars in the face of reduced outlays among consumers across a wide range of sectors. As a result, we saw a quarter of decline in our advertising revenue for both our TV and radio businesses. Fortunately these declines were partially offset by revenue from Reventon, Super Estrella, enormously popular concerts hosted by our Los Angeles based KSSE.
This year’s event attracted more than 22,000 people to the Home Depot center and these fans of Super Estrella saw performances from 10 artists including Juanes, Alejandro Fernandez and Julieta Venegas. It was our most successful Reventon in our history.
Notwithstanding the effects of the recessionary environment on our financials, our operating performance once again continued to be impressive as we continue to deliver strong audience shares across our markets.
Given the pressure on our top line since our last call, we took steps to reduce cost across all of our organization including reductions in personnel, insurance and other corporate expenses. We believe these cost cuts will lead to a reduction in our total operating expenses of approximately $6.5 million in 2009 compared to 2008. This will ensure that we are well-positioned to maximize profits when advertising revenue begins to improve. While we believe this is a prudent move at this time, we will continue to monitor expenses closely in 2009 and we are prepared to take additional steps to reduce expenses if necessary. It is important to note that these reductions will have no impact on the quality of our content or marketing efforts.
Finally, given our strong audience shares and the growing importance of Latino-America to advertisers, our sales teams continue to service existing accounts while actively courting new advertisers who have yet to directly participate in targeting our Spanish-speaking audiences. We have made notable progress on this front and we intend to continue to uncover additional opportunities and may reduce the negative effects of the current advertising slowdown. This includes expectations of additional revenue generated by political dollars being spent in some in of the swing states in which we have a strong media presence.
Turning to our financial results for the third quarter, our consolidated third quarter revenue fell 4.9% versus the same period in 2007 to $70 million. Consolidated adjustment EBIDTA decreased 16.4% to $21.1 million versus last year while free cash flow per share decreased 29%.
During the quarter, we benefited from $1.6 million of revenue received from Reventon, KSSE signature event, which continues to gain popularity in the Los Angeles area. These results were in line with the guidance we provided during our second quarter earnings conference call.
For our television division, the economic environment and ongoing uncertainty of creating new challenges for our industry and Entravision has not been immune to the effects. Our television division posted a 6% decline in third quarter 2008 ad revenues versus prior year. Local and national revenues fell 5% and 7% respectively. The drop was primarily due to continued softness in the domestic automotive category. Overall, our auto category slumped 34% as General Motors and Dodge, Chrysler, Jeep made significant cuts to their quarterly advertising media budgets.
It is important to note that no other top 10 advertising category declined by more than 5% and that we saw a growth of 20% or more within our healthcare, grocery store, and finance categories for our television division. Our focused efforts towards political advertising opportunities paid dividends as our television group attracted $1 million in the third quarter 2008 political revenue. Additionally, our local and national sales teams continued their new business development efforts and successfully added 58 new advertisers to our client roster, investing over $10, 000 in the quarter.