Entravision Communications Corporation (EVC)
Q2 2009 Earnings Call Transcript
August 5, 2009 5:00 pm ET
Walter Ulloa – Chairman and CEO
Chris Young – EVP, Treasurer and CFO
James Dix – Wedbush Morgan Securities
John Kornreich – Sandler Capital
Bishop Cheen – Wells Fargo
Alec Serenely [ph] – SM Investors
Previous Statements by EVC
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Thank you, Vijay. Good afternoon, everyone, and welcome to Entravision’s second quarter 2009 earnings conference call. Joining me today is Philip Wilkinson, our 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 expressed 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 presented.
We continue to operate in a very challenging environment and our results reflect the soft local and national advertising markets that are impacting virtually all media businesses. Despite the macro challenges, we are aggressively managing our costs, capitalizing on nontraditional revenue opportunities and focusing on driving audience share.
Our cost initiatives are on track to generate approximately $20 million in savings in 2009, and we continue to review our operations for additional efficiencies. Our assets remain well-positioned in key Hispanic markets, and we are committed to ensuring our stations have the proper support to deliver quality content and drive audience shares. The successful execution of these initiatives will ensure we are maximizing our cash flows and will place us in a solid position when the economy improves.
Turning to our financial results for the quarter; our consolidated second quarter revenue fell 22% versus the same period in 2008 to $48.7 million. Consolidated adjusted EBITDA decreased 27% to $16.3 million versus last year, while free cash flow per share decreased 45%. The second quarter of 2008 benefited from $231,000 of political revenue versus only $32,000 of political revenue in this year’s second quarter.
Turning to our television division; excluding retransmission fees revenue decreased 26% in the second quarter versus the prior year period. Local and national revenue fell 22% and 30% respectively. The decrease was primarily the result of continued softness in the automotive and fast food restaurant categories. Auto was off 67% in second quarter ’09, with weaknesses among all major brands and automotive tiers. Tier 1 declined 57%, Tier 2 spending was down 77% and Tier 3 investments were off 62%. However, July 2009, auto sales figures have confirmed that pent up demand exist among US consumers, and is providing local dealerships with a new sense of confidence which has us cautiously optimistic that the worst of our auto declines are indeed behind us. At the same time we are seeing encouraging signs for our fast food category that includes new activity from Burger King and Whataburger which bodes well for the category in the third quarter.
The growth of our services and health care categories continued in the second quarter. The services category was driven by strong performance from its auto insurance and legal sub categories. While health care providers and related services continued to see strong results from their investments in Spanish-language media.
Our sales teams continue to focus their efforts on the fastest-growing advertising categories and were successful in adding 66 new advertisers who invested $10,000 or more in the second quarter with our television group.
We generated $2.9 million in retransmission revenues in the second quarter, which reflects the recent execution of multiyear regional transmission agreements with cable and satellite providers. These agreements represent new incremental revenue and are structured to deliver significant revenue increases in the early years of the contract.
Turning to our recent ratings performance; our Univision Affiliates continued their solid performance and ability to grow their audience share. This is a significant accomplishment when traditional media outlets are seeing their audiences erode and speak to the power of the Univision brand and the resilience of the Hispanic market. In fact, the July Nielsen survey, which ended last week, was a huge success for our nine meter markets, where Entravision and Univision affiliates experienced continued audience growth. Our stations and the meter markets are up 14% year-to-year in households. And in our local people meter markets we are up 20% in adults 18 to 34, 25% in adults 18 to 49, and 50% in adults 25 to 54. With results like what we’ve received in our meter markets, we are looking forward to the July results for all of our television markets, which will be published later this month.