Entravision Communications Corporation Reports First Quarter 2024 Results

Published

Declares Quarterly Cash Dividend of $0.05 Per Share Payable on June 28, 2024

SANTA MONICA, Calif.--(BUSINESS WIRE)-- Entravision Communications Corporation (NYSE: EVC), a leading global advertising solutions, media and technology company, today announced financial results for the three-month period ended March 31, 2024.

“On March 4, 2024, we received a communication from Meta that it intends to wind down its authorized sales partner, or ASP, program globally and end its relationship with all of its ASPs, including us, by July 1, 2024. While we are disappointed in Meta’s decision, we have a solid balance sheet and a strong cash position, and we are confident in Entravision’s long-term opportunities. We have initiated a thorough review of our current digital strategy, operations and cost structure,” said Michael Christenson, Chief Executive Officer.

Mr. Christenson continued, “We remain focused on our 2024 priorities: maximize our political revenue in a year in which our audience will be critical to determining the outcome of the 2024 U.S. elections, provide highly-rated news and content to our audience, and build Smadex, our programmatic ad purchasing platform.”

Unaudited Financial Highlights (In thousands, except share and per share data)

 

Three-Month Period

 

 

Ended March 31,

 

 

2024

 

 

2023

 

 

% Change

 

Net revenue

$

277,445

 

 

$

239,006

 

 

 

16

%

Cost of revenue - digital (1)

 

203,229

 

 

 

167,756

 

 

 

21

%

Operating expenses (2)

 

62,267

 

 

 

52,630

 

 

 

18

%

Corporate expenses (3)

 

12,248

 

 

 

10,502

 

 

 

17

%

Foreign currency (gain) loss

 

449

 

 

 

(956

)

 

*

 

 

 

 

 

 

 

 

 

 

Consolidated EBITDA (4)

 

4,530

 

 

 

13,022

 

 

 

(65

)%

 

 

 

 

 

 

 

 

 

Free cash flow (5)

$

(2,831

)

 

$

3,908

 

 

*

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

(51,669

)

 

$

1,699

 

 

*

 

Net (income) loss attributable to redeemable noncontrolling interest

$

2,779

 

 

$

-

 

 

*

 

Net (income) loss attributable to noncontrolling interest

$

-

 

 

$

342

 

 

 

(100

)%

Net income (loss) attributable to common stockholders

$

(48,890

)

 

$

2,041

 

 

*

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share attributable to common stockholders, basic and diluted

$

(0.55

)

 

$

0.02

 

 

*

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding, basic

 

89,518,058

 

 

 

87,623,887

 

 

 

 

Weighted average common shares outstanding, diluted

 

89,518,058

 

 

 

89,786,585

 

 

 

 

(1)

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 and selling, general and administrative expenses. Included in operating expenses are $1.8 million and $1.9 million of non-cash stock-based compensation for the three-month periods ended March 31, 2024 and 2023, respectively.

(3)

Corporate expenses include $3.7 million and $2.2 million of non-cash stock-based compensation for the three-month periods ended March 31, 2024 and 2023, respectively.

(4)

Consolidated 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 operating gain (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, EBITDA attributable to redeemable noncontrolling interest, acquisitions and dispositions and certain pro-forma cost savings. We use the term consolidated EBITDA because that measure is defined in our 2017 Credit Agreement and 2023 Credit Agreement, 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, EBITDA attributable to redeemable noncontrolling interest, acquisitions and dispositions and certain pro-forma cost savings.

(5)

Free cash flow is defined as consolidated EBITDA less cash paid for income taxes, net interest expense, capital expenditures (less amounts reimbursed by landlord) and non-recurring cash expenses plus dividend income, and other operating gain (loss). Net interest expense is defined as interest expense, less non-cash interest expense relating to amortization of debt finance costs, and less interest income.

Net revenue for the first quarter of 2024 increased primarily due to increases in advertising revenue from our digital business units in our digital segment, and political advertising revenue in our television and audio segments, partially offset by decreases in national advertising revenue, spectrum usage rights revenue and retransmission consent revenue in our television segment, and decreases in local and national advertising revenue in our audio segment.

Cost of revenue for the first quarter of 2024 increased primarily due to the increase in digital advertising revenue.

Operating expenses for the first quarter of 2024 increased primarily due to expenses associated with the increase in advertising revenue and an increase in salary expense, partially offset by a decrease in rent expense.

Corporate expenses for the first quarter of 2024 increased primarily due to an increase in non-cash stock-based compensation and an increase in salary expense, partially offset by a decrease in audit fees.

Quarterly Cash Dividend

The Company announced today that its Board of Directors approved a quarterly cash dividend to shareholders of $0.05 per share on the Company's Class A and Class U common stock, in an aggregate amount of $4.5 million. The quarterly dividend will be payable on June 28, 2024 to shareholders of record as of the close of business on June 14, 2024. 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.

Non-GAAP Financial Measures

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 7.

Balance Sheet and Related Metrics

Cash and marketable securities as of March 31, 2024 totaled $132.7 million. Total debt as defined in the Company’s credit agreement was $200.1 million. Net of $50 million of cash and marketable securities, total leverage as defined in the Company’s credit agreement was 3.1 times as of March 31, 2024. Net of total cash and marketable securities, total leverage was 1.4 times.

Unaudited Segment Results (In thousands)

 

Three-Month Period

 

 

Ended March 31,

 

 

2024

 

 

2023

 

 

% Change

 

Net Revenue

 

 

 

 

 

 

 

 

Digital

$

237,491

 

 

$

196,482

 

 

 

21

%

Television

 

28,549

 

 

 

30,312

 

 

 

(6

)%

Audio

 

11,405

 

 

 

12,212

 

 

 

(7

)%

Total

$

277,445

 

 

$

239,006

 

 

 

16

%

 

 

 

 

 

 

 

 

 

Cost of Revenue - digital (1)

 

 

 

 

 

 

 

 

Digital

$

203,229

 

 

$

167,756

 

 

 

21

%

 

 

 

 

 

 

 

 

 

Operating Expenses (1)

 

 

 

 

 

 

 

 

Digital

 

28,077

 

 

 

21,539

 

 

 

30

%

Television

 

22,968

 

 

 

20,099

 

 

 

14

%

Audio

 

11,222

 

 

 

10,992

 

 

 

2

%

Total

$

62,267

 

 

$

52,630

 

 

 

18

%

 

 

 

 

 

 

 

 

 

Corporate Expenses (1)

$

12,248

 

 

$

10,502

 

 

 

17

%

 

 

 

 

 

 

 

 

 

Consolidated EBITDA (1)

$

4,530

 

 

$

13,022

 

 

 

(65

)%

(1)

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

Notice of Conference Call

Entravision will hold a conference call to discuss its first quarter 2024 results on Thursday, May 2, 2024 at 5:00 p.m. Eastern Time. To access the conference call, please dial (844) 836-8739 (U.S.) or (412) 317-5440 (Int’l) ten minutes prior to the start time. The call will also be available via live webcast on the investor relations portion of the Company's website located at www.entravision.com.

About Entravision Communications Corporation

Entravision is a global advertising solutions, media and technology company. Over the past three decades, we have strategically evolved into a digital powerhouse, expertly connecting brands to consumers in the U.S., Latin America, Europe, Asia and Africa. Our digital segment, the company’s largest by revenue, offers a full suite of end-to-end advertising services. We have commercial partnerships with global media companies, and marketers can use our Smadex and other platforms to deliver targeted advertising to audiences around the globe. In the U.S., we maintain a diversified portfolio of television and radio stations that target Hispanic audiences and complement our global digital services. Entravision remains the largest affiliate group of the Univision and UniMás television networks. Shares of Entravision Class A Common Stock trade on the NYSE under ticker: EVC. Learn more about our offerings at entravision.com or connect with us on LinkedIn and Facebook.

Forward-Looking Statements

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.

 

Entravision Communications Corporation

Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)

 

 

 

Three-Month Period

 

 

Ended March 31,

 

 

2024

 

2023

Net revenue

 

$

277,445

 

 

$

239,006

 

 

 

 

 

 

Expenses:

 

 

 

 

Cost of revenue - digital

 

 

203,229

 

 

 

167,756

 

Direct operating expenses

 

 

35,572

 

 

 

29,862

 

Selling, general and administrative expenses

 

 

26,695

 

 

 

22,768

 

Corporate expenses

 

 

12,248

 

 

 

10,502

 

Depreciation and amortization

 

 

7,133

 

 

 

6,471

 

Change in fair value of contingent consideration

 

 

(1,420

)

 

 

(4,065

)

Impairment charge

 

 

49,438

 

 

 

 

Foreign currency (gain) loss

 

 

449

 

 

 

(956

)

 

 

 

333,344

 

 

 

232,338

 

Operating income (loss)

 

 

(55,899

)

 

 

6,668

 

Interest expense

 

 

(4,559

)

 

 

(4,028

)

Interest income

 

 

1,130

 

 

 

860

 

Dividend income

 

 

10

 

 

 

18

 

Realized gain (loss) on marketable securities

 

 

(113

)

 

 

(32

)

Gain (loss) on debt extinguishment

 

 

(40

)

 

 

(1,556

)

Income (loss) before income taxes

 

 

(59,471

)

 

 

1,930

 

Income tax benefit (expense)

 

 

7,802

 

 

 

(231

)

 

 

 

 

 

Net income (loss)

 

 

(51,669

)

 

 

1,699

 

Net (income) loss attributable to redeemable noncontrolling interest

 

 

2,779

 

 

 

 

Net (income) loss attributable to noncontrolling interest

 

 

 

 

 

342

 

Net income (loss) attributable to common stockholders

 

$

(48,890

)

 

$

2,041

 

 

 

 

 

 

Basic and diluted earnings per share:

 

 

 

 

Net income (loss) per share attributable to common stockholders, basic and diluted

 

$

(0.55

)

 

$

0.02

 

 

 

 

 

 

Cash dividends declared per common share, basic and diluted

 

$

0.05

 

 

$

0.05

 

 

 

 

 

 

Weighted average common shares outstanding, basic

 

 

89,518,058

 

 

 

87,623,887

 

Weighted average common shares outstanding, diluted

 

 

89,518,058

 

 

 

89,786,585

 

 

Entravision Communications Corporation

Consolidated Balance Sheets

(In thousands; unaudited)

 

 

 

March 31,

 

December 31,

 

 

2024

 

2023

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

128,410

 

 

$

105,739

 

Marketable securities

 

 

4,335

 

 

 

13,172

 

Restricted cash

 

 

774

 

 

 

770

 

Trade receivables, net of allowance for doubtful accounts

 

 

206,065

 

 

 

235,837

 

Assets held for sale

 

 

301

 

 

 

301

 

Prepaid expenses and other current assets

 

 

40,095

 

 

 

30,036

 

Total current assets

 

 

379,980

 

 

 

385,855

 

Property and equipment, net

 

 

69,294

 

 

 

71,475

 

Intangible assets subject to amortization, net

 

 

34,660

 

 

 

51,784

 

Intangible assets not subject to amortization

 

 

195,174

 

 

 

195,174

 

Goodwill

 

 

55,272

 

 

 

90,672

 

Deferred income taxes

 

 

5,175

 

 

 

4,991

 

Operating leases right of use asset

 

 

43,543

 

 

 

43,941

 

Other assets

 

 

21,892

 

 

 

22,054

 

Total assets

 

$

804,990

 

 

$

865,946

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Current liabilities

 

 

 

 

Current maturities of long-term debt

 

$

3,360

 

 

$

9,969

 

Accounts payable and accrued expenses

 

 

263,484

 

 

 

254,802

 

Operating lease liabilities

 

 

7,518

 

 

 

7,282

 

Total current liabilities

 

 

274,362

 

 

 

272,053

 

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

 

 

195,762

 

 

 

199,552

 

Long-term operating lease liabilities

 

 

44,901

 

 

 

45,665

 

Other long-term liabilities

 

 

21,404

 

 

 

23,009

 

Deferred income taxes

 

 

55,186

 

 

 

59,381

 

Total liabilities

 

 

591,615

 

 

 

599,660

 

 

 

 

 

 

Redeemable noncontrolling interest

 

 

39,840

 

 

 

43,758

 

Stockholders' equity

 

 

 

 

Class A common stock

 

 

8

 

 

 

8

 

Class U common stock

 

 

1

 

 

 

1

 

Additional paid-in capital

 

 

743,339

 

 

 

743,246

 

Accumulated deficit

 

 

(568,702

)

 

 

(519,812

)

Accumulated other comprehensive income (loss)

 

 

(1,111

)

 

 

(915

)

Total stockholders' equity

 

 

173,535

 

 

 

222,528

 

Total liabilities, redeemable noncontrolling interest and equity

 

$

804,990

 

 

$

865,946

 

 

Entravision Communications Corporation

Consolidated Statements of Cash Flows

(In thousands; unaudited)

 

 

 

Three-Month Period

 

 

Ended March 31,

 

 

2024

 

2023

Cash flows from operating activities:

 

 

 

 

Net income (loss)

 

$

(51,669

)

 

$

1,699

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

 

7,133

 

 

 

6,471

 

Impairment charge

 

 

49,438

 

 

 

 

Deferred income taxes

 

 

(4,224

)

 

 

(205

)

Non-cash interest

 

 

92

 

 

 

133

 

Amortization of syndication contracts

 

 

113

 

 

 

120

 

Payments on syndication contracts

 

 

(115

)

 

 

(120

)

Non-cash stock-based compensation

 

 

5,447

 

 

 

4,053

 

(Gain) loss on marketable securities

 

 

113

 

 

 

32

 

(Gain) loss on disposal of property and equipment

 

 

97

 

 

 

68

 

(Gain) loss on debt extinguishment

 

 

40

 

 

 

1,556

 

Change in fair value of contingent consideration

 

 

(1,420

)

 

 

(4,065

)

Changes in assets and liabilities:

 

 

 

 

(Increase) decrease in accounts receivable

 

 

29,473

 

 

 

33,157

 

(Increase) decrease in prepaid expenses and other current assets, operating leases right of use asset and other assets

 

 

(7,150

)

 

 

948

 

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

 

 

6,007

 

 

 

(7,152

)

Net cash provided by operating activities

 

 

33,375

 

 

 

36,695

 

Cash flows from investing activities:

 

 

 

 

Purchases of property and equipment

 

 

(2,743

)

 

 

(6,750

)

Purchases of marketable securities

 

 

 

 

 

(9,397

)

Proceeds from sale of marketable securities

 

 

8,842

 

 

 

15,704

 

Purchases of investments

 

 

 

 

 

(120

)

Net cash provided by (used in) investing activities

 

 

6,099

 

 

 

(563

)

Cash flows from financing activities:

 

 

 

 

Proceeds from stock option exercises

 

 

 

 

 

313

 

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

 

 

(27

)

 

 

(80

)

Payments on debt

 

 

(10,275

)

 

 

(211,748

)

Dividends paid

 

 

(4,476

)

 

 

(4,932

)

Distributions to noncontrolling interest

 

 

(1,078

)

 

 

 

Payment of contingent consideration

 

 

(900

)

 

 

 

Principal payments under finance lease obligation

 

 

(41

)

 

 

(38

)

Proceeds from borrowings on debt

 

 

 

 

 

212,405

 

Payments for debt issuance costs

 

 

 

 

 

(1,285

)

Net cash provided by (used in) financing activities

 

 

(16,797

)

 

 

(5,365

)

Effect of exchange rates on cash, cash equivalents and restricted cash

 

 

(2

)

 

 

1

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

22,675

 

 

 

30,768

 

Cash, cash equivalents and restricted cash:

 

 

 

 

Beginning

 

 

106,509

 

 

 

111,444

 

Ending

 

$

129,184

 

 

$

142,212

 

 

Entravision Communications Corporation

Reconciliation of Consolidated 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

 

 

Ended March 31,

 

 

2024

 

2023

 

 

 

 

 

Consolidated EBITDA (1)

 

$

4,530

 

 

$

13,022

 

EBITDA attributable to redeemable noncontrolling interest

 

 

167

 

 

 

 

EBITDA attributable to noncontrolling interest

 

 

 

 

 

230

 

Interest expense

 

 

(4,559

)

 

 

(4,028

)

Interest income

 

 

1,130

 

 

 

860

 

Dividend income

 

 

10

 

 

 

18

 

Realized gain (loss) on marketable securities

 

 

(113

)

 

 

(32

)

Income tax expense

 

 

7,802

 

 

 

(231

)

Amortization of syndication contracts

 

 

(113

)

 

 

(120

)

Payments on syndication contracts

 

 

115

 

 

 

120

 

Non-cash stock-based compensation included in direct operating expenses

 

 

(1,785

)

 

 

(1,856

)

Non-cash stock-based compensation included in corporate expenses

 

 

(3,662

)

 

 

(2,197

)

Depreciation and amortization

 

 

(7,133

)

 

 

(6,471

)

Change in fair value of contingent consideration

 

 

1,420

 

 

 

4,065

 

Impairment charge

 

 

(49,438

)

 

 

 

Non-recurring cash severance charge

 

 

 

 

 

(125

)

Gain (loss) on debt extinguishment

 

 

(40

)

 

 

(1,556

)

Net (income) loss attributable to redeemable noncontrolling interest

 

 

2,779

 

 

 

 

Net (income) loss attributable to noncontrolling interest

 

 

 

 

 

342

 

Net income (loss) attributable to common stockholders

 

 

(48,890

)

 

 

2,041

 

 

 

 

 

 

Depreciation and amortization

 

 

7,133

 

 

 

6,471

 

Impairment charge

 

 

49,438

 

 

 

 

Deferred income taxes

 

 

(4,224

)

 

 

(205

)

Non-cash interest

 

 

92

 

 

 

133

 

Amortization of syndication contracts

 

 

113

 

 

 

120

 

Payments on syndication contracts

 

 

(115

)

 

 

(120

)

Non-cash stock-based compensation

 

 

5,447

 

 

 

4,053

 

Realized (gain) loss on marketable securities

 

 

113

 

 

 

32

 

(Gain) loss on debt extinguishment

 

 

40

 

 

 

1,556

 

(Gain) loss on disposal of property and equipment

 

 

97

 

 

 

68

 

Change in fair value of contingent consideration

 

 

(1,420

)

 

 

(4,065

)

Net income (loss) attributable to redeemable noncontrolling interest

 

 

(2,779

)

 

 

 

Net income (loss) attributable to noncontrolling interest

 

 

 

 

 

(342

)

Changes in assets and liabilities:

 

 

 

 

(Increase) decrease in accounts receivable

 

 

29,473

 

 

 

33,157

 

(Increase) decrease in prepaid expenses and other current assets, operating leases right of use asset and other assets

 

 

(7,150

)

 

 

948

 

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

 

 

6,007

 

 

 

(7,152

)

Cash flows from operating activities

 

 

33,375

 

 

 

36,695

 

(1)

Consolidated 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

 

 

Ended March 31,

 

 

2024

 

2023

Consolidated EBITDA (1)

 

$

4,530

 

 

$

13,022

 

Net interest expense (1)

 

 

(3,337

)

 

 

(3,035

)

Dividend income

 

 

10

 

 

 

18

 

Cash paid for income taxes

 

 

(1,291

)

 

 

(72

)

Capital expenditures (2)

 

 

(2,743

)

 

 

(6,750

)

Landlord incentive reimbursement

 

 

 

 

 

850

 

Non-recurring cash severance charge

 

 

 

 

 

(125

)

Free cash flow (1)

 

 

(2,831

)

 

 

3,908

 

 

 

 

 

 

Capital expenditures (2)

 

 

2,743

 

 

 

6,750

 

Landlord incentive reimbursement

 

 

 

 

 

(850

)

EBITDA attributable to redeemable noncontrolling interest

 

 

167

 

 

 

 

EBITDA attributable to noncontrolling interest

 

 

 

 

 

230

 

(Gain) loss on disposal of property and equipment

 

 

97

 

 

 

68

 

Cash paid for income taxes

 

 

1,291

 

 

 

72

 

Deferred income taxes

 

 

(4,224

)

 

 

(205

)

Income tax (expense) benefit

 

 

7,802

 

 

 

(231

)

Changes in assets and liabilities:

 

 

 

 

(Increase) decrease in accounts receivable

 

 

29,473

 

 

 

33,157

 

(Increase) decrease in prepaid expenses and other current assets, operating leases right of use asset and other assets

 

 

(7,150

)

 

 

948

 

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

 

 

6,007

 

 

 

(7,152

)

Cash Flows From Operating Activities

 

$

33,375

 

 

$

36,695

 

(1)

Consolidated 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.

 

Christopher T. Young Chief Financial Officer and Treasurer Entravision 310-447-3870 ir@entravision.com

Roy Nir VP, Financial Reporting and Investor Relations Entravision 310-447-3870 ir@entravision.com

Source: Entravision Communications Corporation

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