Entravision Communications Corporation (EVC)
Q4 2008 Earnings Call Transcript
February 26, 2009; 5:00 pm ET
Walter Ulloa - Chairman and Chief Executive Officer
Chris Young - Executive Vice President and Chief Financial Officer
Philip Wilkinson - President and Chief Operating Officer
Marci Ryvicker - Wachovia Wells Fargo
James Dix - Wedbush Morgan
David Miller - Caris & Company
Previous Statements by EVC
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I would like to turn the conference over to Walter Ulloa, Chairman and Chief Executive Officer. Mr. Ulloa the floor is your sir.
Thank you, Mike. Good afternoon everyone and welcome to Entravision’s fourth quarter 2008 earnings conference call. Joining me today is Philip Wilkinson, our President and Chief Operating Officer and Chris Young, our Executive Vice President and Chief Financial 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 website 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 fourth quarter results reflect the continuing impact of the global financial crises and recession resulting in an advertising downturn. You will see weakness across our markets as advertisers continue to adjust our marketing budgets to changes in consumers spending. As result we recorded a decline in advertising revenue at our TV and Radio properties.
We are continuing to focus on debt reduction and our committed to further reducing our cost and operating as efficiently as possible in order to maximize our cash flows without sacrificing the quality of our content or marketing efforts.
Our audience shares remain strong in the nations most density populated and faster growing expanding markets. Our sales teams remain very active and we are aggressively pursuing business.
We previously announce a number of cost initiatives which are on track and expected to lower operating cost by $11million in 2009 versus 2008. We continue to take a prudent approach to expenses and additional actions are under review.
Turning to our financial results for the quarter, our consolidated fourth quarter revenues fell 16% versus the same period in 2007 to $52.8; consolidated adjusted EBITDA decrease 37% of $30.9 million versus last year. While free cash flow per share decrease 73% during the quarter we benefited from $4.7 million of political revenue.
For the full year 2008 consolidated revenue fell 7% versus 2007 to $232.3 million. Consolidated adjusted EDBITDA decreased 19% to $74.1versus last year. Free cash flow per share decrease 47%. In 2008 we generate 8.2 million of political revenue versus 6.4 million in 2004 a 28% increase in this important category.
Turning to our television segment; revenue decrease 15% in the fourth quarter versus the prior year period. Local and national revenue fell 20% and 9% respectively. The decrease is primarily attributable to softness in the retail and fast food categories and the unprecedented declines within the automotive segment.
The retail category was significantly affected by the Mervyn’s liquidation announcement and a shift in priority market from CBS pharmacy and Macy’s. The fast food decline was a result of significant budget cuts at Sonic Drive-Ins, Olive Garden and KFC restaurants.
Automotive dipped 54% in the fourth quarter 2008 as U.S. sales figures continue to make national headlines with historic decreases among all major brands, General Motors and Dodge, Chrysler, Jeep led the way inters of declining name plate revenues for Entravision, partially offsetting these were increases in healthcare and media categories and 3.4 million in political television revenue in the fourth quarter.
With the full year television revenue decrease 7% with local loss 6% and national down 7%. Our strongest categories for the year included services, healthcare and grocery convenient stores while retail, fast food and automotive were down. Automotive declined 32% in 2008.
We recorded a record $6.1 million in television political revenue for the year, driven by a very active primary and presidential election cycle and a proactive political parity by our sales groups. The increase focus on the Hispanic voter that we have seen goes well for future political cycles.
Our sales and marketing teams remained focused on new account development and growth categories, these efforts are designed to diversify our client and revenue base and help effect or offset the impact of auto.
In the fourth quarter 34 new clients advertise with our television division spending over $10,000 each and for the full year we have 242 new clients spending over 10,000 with our TV properties.