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, 2023.
First Quarter 2023 Highlights
- Record first quarter revenue
- Net revenue up 21% over the prior-year quarter
- Net income attributable to common stockholders up 8% over the
prior-year quarter
- Consolidated EBITDA down 28% compared to the prior-year
quarter
- Operating cash flow down 31% compared to the prior-year
quarter
- Free cash flow down 73% compared to the prior-year quarter
- Quarterly cash dividend of $0.05 per share
- Entered into $275 Million Credit Facility
“Entravision saw continued growth in the first quarter of 2023,
with revenue up 21% year-over-year," said Chris Young, Interim
Chief Executive Officer and Chief Financial Officer. “Growth for
the quarter was led by our digital segment, which is impressive
given difficult macro conditions and decreased political
advertising revenue from last year."
Mr. Young continued, “With a solid balance sheet in place,
strong free cash flow generation, and an acute focus on expense
management, Entravision is well-equipped to navigate the current
economic environment. As we progress through additional quarters,
we will continue to seek out opportunities, including acquisitions,
that will enhance our digital offerings and strengthen our ability
to compete internationally."
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 $4.4 million. The quarterly dividend will be payable on June 30,
2023 to shareholders of record as of the close of business on June
16, 2023, and the common stock will trade ex-dividend on June 15,
2023. 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.
$275 Million Credit Facility
On March 17, 2023, the Company entered into the 2023 Amended and
Restated Credit Facility (the "2023 Credit Facility"), which
consists of a $200 million senior secured Term A Facility, which
was drawn in full, and a $75 million Revolving Credit Facility, of
which $11.5 million was drawn. In addition, the 2023 Amended and
Restated Credit Agreement (the "2023 Credit Agreement") provides
that the Company may increase the aggregate principal amount of the
2023 Credit Facility by an additional amount equal to $100 million
plus the amount that would result in the Company’s first lien net
leverage ratio (as such term is used in the 2023 Credit Agreement)
not exceeding 2.25 to 1.0, subject to the Company satisfying
certain conditions.
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 9.
Unaudited Financial Highlights (In
thousands, except share and per share data)
Three-Month Period
Ended March 31,
2023
2022
% Change
Net revenue
$
239,006
$
197,172
21
%
Cost of revenue - digital (1)
167,756
129,891
29
%
Operating expenses (2)
52,630
43,862
20
%
Corporate expenses (3)
10,502
8,724
20
%
Foreign currency (gain) loss
(956
)
(847
)
13
%
Consolidated EBITDA (4)
13,022
18,113
(28
)%
Free cash flow (5)
$
3,908
$
14,327
(73
)%
Net income (loss)
$
1,699
$
1,887
(10
)%
Net (income) loss attributable to
noncontrolling interest
$
342
$
-
*
Net income (loss) attributable to common
stockholders
$
2,041
$
1,887
8
%
Net income (loss) per share attributable
to common stockholders, basic and diluted
$
0.02
$
0.02
0
%
Weighted average common shares
outstanding, basic
87,623,887
86,522,378
Weighted average common shares
outstanding, diluted
89,786,585
88,630,216
(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 $1.9 million and $1.0 million of
non-cash stock-based compensation for the three-month periods ended
March 31, 2023 and 2022, respectively.
(3)
Corporate expenses include $2.2
million and $1.6 million of non-cash stock-based compensation for
the three-month periods ended March 31, 2023 and 2022,
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.
Unaudited Financial Results (In
thousands)
Three-Month Period
Ended March 31,
2023
2022
% Change
Net revenue
$
239,006
$
197,172
21
%
Cost of revenue - digital (1)
167,756
129,891
29
%
Operating expenses (1)
52,630
43,862
20
%
Corporate expenses (1)
10,502
8,724
20
%
Depreciation and amortization
6,471
6,395
1
%
Change in fair value of contingent
consideration
(4,065
)
5,100
*
Foreign currency (gain) loss
(956
)
(847
)
13
%
Other operating (gain) loss
-
(119
)
(100
)%
Operating income (loss)
6,668
4,166
60
%
Interest expense, net
(3,168
)
(1,430
)
122
%
Dividend income
18
3
500
%
Realized gain (loss) on marketable
securities
(32
)
-
*
Gain (loss) on debt extinguishment
(1,556
)
-
*
Income (loss) before income taxes
1,930
2,739
(30
)%
Income tax benefit (expense)
(231
)
(852
)
(73
)%
Net income (loss)
1,699
1,887
(10
)%
Net (income) loss attributable to
noncontrolling interest
342
-
*
Net income (loss) attributable to common
stockholders
$
2,041
$
1,887
8
%
(1)
Cost of revenue, operating
expenses and corporate expenses are defined on page 2.
Net revenue in the first quarter of 2023 totaled $239.0 million,
up 21% from $197.2 million in the prior-year period. Of the overall
increase, $42.8 million was attributable to our digital segment and
was primarily due to advertising revenue growth from our digital
commercial partnerships business, and due to our VIEs, which did
not contribute to our financial results in our digital segment in
the comparable period. The overall increase was partially offset by
a decrease of $0.6 million attributable to our television segment,
primarily due to decreases in political advertising revenue and
national advertising revenue, partially offset by increases in
local advertising revenue, spectrum usage rights revenue and
retransmission consent revenue. In addition, the overall increase
was partially offset by a decrease of $0.4 million attributable to
our audio segment, primarily due to a decrease in political
advertising revenue, and decreases in local and national
advertising revenue.
Cost of revenue in the first quarter of 2023 totaled $167.8
million, up 29% from $129.9 million in the prior-year period. The
increase was primarily due to increased cost of revenue related to
advertising revenue growth from our digital commercial partnerships
business, and due to our VIEs, which did not contribute to our
financial results in our digital segment in the comparable
period.
Operating expenses in the first quarter of 2023 totaled $52.6
million, up 20% from $43.9 million in the prior-year period. Of the
overall increase, $6.3 million was attributable to our digital
segment and was primarily due to our VIEs, which did not contribute
to our financial results in our digital segment in the comparable
period, an increase in salary expense, an increase in non-cash
stock-based compensation, and an increase in expenses associated
with the increase in digital advertising revenue. Additionally, of
the overall increase in operating expenses, $0.9 million was
attributable to our television segment primarily due to an increase
in non-cash stock-based compensation, increased rent expense in the
temporary office space until the move to our new permanent offices
is completed, and an increase in bad debt expense. In addition, of
the overall increase in operating expenses, $1.6 million was
attributable to our audio segment primarily due to increases in
salaries and music license fees, and increased rent expense in the
temporary office space until the move to our new permanent offices
is completed. The increases in non-cash stock-based compensation
are mainly a result of the 2023 annual restricted stock unit
("RSU") grant, which was made in February 2023 compared to the 2022
annual grant, which was made in December 2022.
Corporate expenses in the first quarter of 2023 totaled $10.5
million, up 20% from $8.7 million in the prior-year period. The
increase was primarily due to an increase in non-cash stock-based
compensation, which is mainly a result of the 2023 annual RSU
grant, which was made in February 2023 compared to the 2022 annual
grant, which was made in December 2022, an increase in professional
service fees, and an increase in audit fees.
Balance Sheet and Related Metrics
Cash and marketable securities as of March 31, 2023 totaled
$179.8 million. Total debt under the Company’s credit agreement was
$211.5 million. Net of $50 million of cash and marketable
securities, total leverage as defined in the Company’s credit
agreement was 1.7 times as of March 31, 2023. Net of total cash and
marketable securities, total leverage was 0.3 times.
Unaudited Segment Results (In
thousands)
Three-Month Period
Ended March 31,
2023
2022
% Change
Net Revenue
Digital
$
196,482
$
153,711
28
%
Television
30,312
30,867
(2
)%
Audio
12,212
12,594
(3
)%
Total
$
239,006
$
197,172
21
%
Cost of Revenue - digital (1)
Digital
$
167,756
$
129,891
29
%
Operating Expenses (1)
Digital
21,539
15,235
41
%
Television
20,099
19,240
4
%
Audio
10,992
9,387
17
%
Total
$
52,630
$
43,862
20
%
Corporate Expenses (1)
$
10,502
$
8,724
20
%
Consolidated EBITDA (1)
$
13,022
$
18,113
(28
)%
(1)
Cost of revenue, operating
expenses, corporate expenses, and consolidated EBITDA are defined
on page 2.
Notice of Conference Call
Entravision Communications Corporation will hold a conference
call to discuss its first quarter 2023 results on Thursday, May 4,
2023 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 and reference Conference ID number
10176751. 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 in
40 countries. We have commercial partnerships with Meta, Twitter,
TikTok, and Spotify, 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,
2023
2022
Net revenue
$
239,006
$
197,172
Expenses:
Cost of revenue - digital
167,756
129,891
Direct operating expenses
29,862
27,823
Selling, general and administrative
expenses
22,768
16,039
Corporate expenses
10,502
8,724
Depreciation and amortization
6,471
6,395
Change in fair value of contingent
consideration
(4,065
)
5,100
Foreign currency (gain) loss
(956
)
(847
)
Other operating (gain) loss
—
(119
)
232,338
193,006
Operating income (loss)
6,668
4,166
Interest expense
(4,028
)
(1,836
)
Interest income
860
406
Dividend income
18
3
Realized gain (loss) on marketable
securities
(32
)
—
Gain (loss) on debt extinguishment
(1,556
)
—
Income (loss) before income taxes
1,930
2,739
Income tax benefit (expense)
(231
)
(852
)
Net income (loss)
1,699
1,887
Net (income) loss attributable to
noncontrolling interest
342
—
Net income (loss) attributable to common
stockholders
$
2,041
$
1,887
Basic and diluted earnings per share:
Net income (loss) per share attributable
to common stockholders, basic and diluted
$
0.02
$
0.02
Cash dividends declared per common share,
basic and diluted
$
0.05
$
0.03
Weighted average common shares
outstanding, basic
87,623,887
86,522,378
Weighted average common shares
outstanding, diluted
89,786,585
88,630,216
Entravision Communications
Corporation
Consolidated Balance
Sheets
(In thousands;
unaudited)
March 31,
December 31,
2023
2022
ASSETS
Current assets
Cash and cash equivalents
$
141,455
$
110,691
Marketable securities
38,367
44,528
Restricted cash
757
753
Trade receivables, net of allowance for
doubtful accounts
191,486
224,713
Assets held for sale
301
—
Prepaid expenses and other current
assets
30,135
27,238
Total current assets
402,501
407,923
Property and equipment, net
65,868
61,362
Intangible assets subject to amortization,
net
58,908
61,811
Intangible assets not subject to
amortization
207,453
207,453
Goodwill
86,991
86,991
Deferred income taxes
2,591
2,591
Operating leases right of use asset
45,883
44,413
Other assets
8,088
8,297
Total assets
$
878,283
$
880,841
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities
Current maturities of long-term debt
$
5,778
$
5,256
Accounts payable and accrued expenses
233,791
237,415
Operating lease liabilities
6,029
5,570
Total current liabilities
245,598
248,241
Long-term debt, less current maturities,
net of unamortized debt issuance costs
207,016
207,292
Long-term operating lease liabilities
44,580
42,151
Other long-term liabilities
27,168
30,198
Deferred income taxes
67,357
67,590
Total liabilities
591,719
595,472
Stockholders' equity
Class A common stock
8
8
Class U common stock
1
1
Additional paid-in capital
776,198
776,298
Accumulated deficit
(502,334
)
(504,375
)
Accumulated other comprehensive income
(loss)
(1,368
)
(1,510
)
Total stockholders' equity
272,505
270,422
Noncontrolling interest
14,059
14,947
Total equity
286,564
285,369
Total liabilities and equity
$
878,283
$
880,841
Entravision Communications
Corporation
Consolidated Statements of
Cash Flows
(In thousands;
unaudited)
Three-Month Period
Ended March 31,
2023
2022
Cash flows from operating
activities:
Net income (loss)
$
1,699
$
1,887
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
6,471
6,395
Deferred income taxes
(205
)
(359
)
Non-cash interest
133
280
Amortization of syndication contracts
120
116
Payments on syndication contracts
(120
)
(118
)
Non-cash stock-based compensation
4,053
2,573
(Gain) loss on marketable securities
32
—
(Gain) loss on disposal of property and
equipment
68
(151
)
(Gain) loss on debt extinguishment
1,556
-
Change in fair value of contingent
consideration
(4,065
)
5,100
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable
33,157
29,380
(Increase) decrease in prepaid expenses
and other current assets, operating leases right of use asset and
other assets
948
(2,405
)
Increase (decrease) in accounts payable,
accrued expenses and other liabilities
(7,152
)
10,521
Net cash provided by operating
activities
36,695
53,219
Cash flows from investing
activities:
Proceeds from sale of property and
equipment and intangibles
—
164
Purchases of property and equipment
(6,750
)
(1,547
)
Purchases of marketable securities
(9,397
)
(85,517
)
Proceeds from sale of marketable
securities
15,704
—
Purchases of investments
(120
)
—
Net cash used in investing
activities
(563
)
(86,900
)
Cash flows from financing
activities:
Proceeds from stock option exercises
313
218
Tax payments related to shares withheld
for share-based compensation plans
(80
)
(257
)
Payments on debt
(211,748
)
(750
)
Dividends paid
(4,932
)
(2,167
)
Repurchase of Class A common stock
—
(7,142
)
Payment of contingent consideration
—
(14,730
)
Principal payments under finance lease
obligation
(38
)
(10
)
Proceeds from borrowings on debt
212,405
—
Payments for debt issuance costs
(1,285
)
—
Net cash used in financing
activities
(5,365
)
(24,838
)
Effect of exchange rates on cash, cash
equivalents and restricted cash
1
(1
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
30,768
(58,520
)
Cash, cash equivalents and restricted
cash:
Beginning
111,444
185,843
Ending
$
142,212
$
127,323
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,
2023
2022
Consolidated EBITDA (1)
$
13,022
$
18,113
EBITDA attributable to noncontrolling
interest
230
-
Interest expense
(4,028
)
(1,836
)
Interest income
860
406
Dividend income
18
3
Realized gain (loss) on marketable
securities
(32
)
-
Income tax expense
(231
)
(852
)
Amortization of syndication contracts
(120
)
(116
)
Payments on syndication contracts
120
118
Non-cash stock-based compensation included
in direct operating expenses
(1,856
)
(958
)
Non-cash stock-based compensation included
in corporate expenses
(2,197
)
(1,615
)
Depreciation and amortization
(6,471
)
(6,395
)
Change in fair value of contingent
consideration
4,065
(5,100
)
Non-recurring cash severance charge
(125
)
-
Other operating gain (loss)
-
119
Gain (loss) on debt extinguishment
(1,556
)
-
Net (income) loss attributable to
noncontrolling interest
342
-
Net income (loss) attributable to common
stockholders
2,041
1,887
Depreciation and amortization
6,471
6,395
Deferred income taxes
(205
)
(359
)
Non-cash interest
133
280
Amortization of syndication contracts
120
116
Payments on syndication contracts
(120
)
(118
)
Non-cash stock-based compensation
4,053
2,573
Realized (gain) loss on marketable
securities
32
-
(Gain) loss on debt extinguishment
1,556
-
(Gain) loss on disposal of property and
equipment
68
(151
)
Change in fair value of contingent
consideration
(4,065
)
5,100
Net income (loss) attributable to
noncontrolling interest
(342
)
-
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable
33,157
29,380
(Increase) decrease in prepaid expenses
and other current assets, operating leases right of use asset and
other assets
948
(2,405
)
Increase (decrease) in accounts payable,
accrued expenses and other liabilities
(7,152
)
10,521
Cash flows from operating activities
36,695
53,219
(1)
Consolidated EBITDA is defined on
page 2.
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,
2023
2022
Consolidated EBITDA (1)
$
13,022
$
18,113
Net interest expense (1)
(3,035
)
(1,150
)
Dividend income
18
3
Cash paid for income taxes
(72
)
(1,211
)
Capital expenditures (2)
(6,750
)
(1,547
)
Landlord incentive reimbursement
850
-
Non-recurring cash severance charge
(125
)
-
Other operating gain (loss)
-
119
Free cash flow (1)
3,908
14,327
Capital expenditures (2)
6,750
1,547
Landlord incentive reimbursement
(850
)
-
EBITDA attributable to noncontrolling
interest
230
-
(Gain) loss on disposal of property and
equipment
68
(151
)
Cash paid for income taxes
72
1,211
Deferred income taxes
(205
)
(359
)
Income tax (expense) benefit
(231
)
(852
)
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable
33,157
29,380
(Increase) decrease in prepaid expenses
and other current assets, operating leases right of use asset and
other assets
948
(2,405
)
Increase (decrease) in accounts payable,
accrued expenses and other liabilities
(7,152
)
10,521
Cash Flows From Operating Activities
$
36,695
$
53,219
(1)
Consolidated EBITDA, net interest
expense, and free cash flow are defined on page 2.
(2)
Capital expenditures are not part
of the consolidated statement of operations.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230503006128/en/
Christopher T. Young Interim Chief Executive Officer, and Chief
Financial Officer and Treasurer Entravision Communications
Corporation 310-447-3870 Kimberly Esterkin ADDO Investor Relations
310-829-5400 evc@addo.com
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