Q3 2020 Entravision Communications Corp Earnings Call

Greetings and welcome to the edge revision Communications Corporation third quarter 2020 earnings call.

At this time all participants are in a listen only mode.

<unk> question and answer session will follow the formal presentation.

Please press release the.

The press releases available on the company's website and was filed with the SEC on form 8-K.

I will now turn the call over to Walter Ulloa, Entravision, Chief Executive Officer.

Thank you Kimberley and good afternoon, everyone. We appreciate you joining us today for interventionist third quarter, 20th 20 earnings call Entravision had a strong third quarter with revenues improving sequentially across all three of our operating segments business picked up nicely in the quarter. Following the lows of the second quarter, we're excited about our.

Its grew by over 10% and this election cycle and now represent over 20% of the total electric which bodes well for entravision as prospects and future national elections with that as a background, let's speak about each of our three operating segments in further detail.

And represents 25% of our total TV advertising revenue.

On a sequential basis surfaces improved 28%.

Auto our second largest AD category declined 19% year over year, but improved 94% from Q2 2020 health care, our fourth largest category was up 27% over the prior year and also improved 12% sequentially grocery stores were also up 8% year over year and up over 100.

14% sequentially. The remaining six categories were down from the prior year with the exception of political next.

Next lets discuss our television ratings performance for the quarter in all cases, I will be referring to performance. Among Hispanic adults ages 18 to 49, unless otherwise noted our Univision television affiliates built upon their market leadership in August in early local news our Univision television stations finished ahead or tied with their telemundo competitor in.

The segment are moving in the right direction on a sequential basis audio revenues up 70% from the second quarter further in the 12 markets that we subscribed to Miller Kaplan data, we outperformed the market by 13.9 points in total revenue combined.

49.

On our tree color network, our morning, and mid day programming or both top choices among Hispanics radio listeners in the morning, and Luckily is upon the contingent to see success and markets such as Denver Phoenix in Sacramento and ranked as the number one Spanish morning drive show in these markets amongst Hispanic adults 20th five to 54.

Including ties I profile shows have handled Lucas it'll show the appealing anchor a morning drive and midday spots.

Have a seat the network and on Jose in Los Angeles in Riverside for Summer 2020, feeling ranked as the number one or second Spanish language midday show and four of our non markets, including in Los Angeles, unless that amongst panic adults 18, 49, and Hispanic adults 25, 54, including ties in hand, you Lucas ranked first or.

An unprecedented acceleration and their adoption by consumers. That's why we were proud of the work done by our product engineering and data science teams, who continue to improve our competitive solutions aesthetics becomes one of those leading performance oriented programmatic platforms for App and brand marketers.

Turning a growth rate of 9% during the third quarter also we're happy to announce aesthetics has been shortlisted by industry publication digit day is one of the best buy side advertising platforms.

Further about.

The sequential growth our core.

In the quarter compared to 326000 in the prior year period earnings.

An incremental EBITDA to our fourth quarter results with that said I'll turn the call back to Walter to speak more about our recent strategic investment into Cisneros Interactive Walter.

And the first one or two years.

As well as contribute significant cash flow to the company.

Summary, entravision third quarter, along with the overall economy, how does challenges that said, our business and making it very positive turn and training in the right direction I shown by a strong third quarter results and fourthquarter pacing. In addition to the attic dissipated strength of our political advertising revenues other key add categories from audited financial services are made.

Good progress our television and radio programming had a strong summer season, and we are anticipating continued ratings strength in the fall.

You again for your for your time today and for your continued supportive entravision.

Chris and I will not be open for questions.

Thank you we will now be conducting a question and answer session you.

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One moment, please while we pull for your questions.

Our first question was come from the line of Michael <unk> Noble capital markets. Please proceed with your questions.

Yes first of all congratulations on your quarter really really strong results on the cashflow why just to help me do the math here. So regarding the cute for political you already gave the political total for the year, but what is political for T V and what is it for radio in queue for.

Let it go.

Thanks, Michael So political for Q4 ended up being approximately 11.1 million for television.

And approximately 3 million for radio.

About 150000 for digital.

Okay.

Besides the the.

She said it's interactive it's basically three businesses. One is it is the is the wholesaler of advertising for some of the world's leading digital technology companies, including Facebook spot of filings and that's about 90% of the business and the other 10% is is add add audio ads, which is <unk> complementary.

Sorry to our audio engage digital digital business I will say that audio ads is about one of the largest digital audio business in Latin America. So we're certainly pleased with that in terms of what that will get what would kind of expertise and ER and that will give our current audio business as well as or our linear our linear business.

Oh linear RT business in a in the U.S. The other part of of season. Editas is is just mobs, which is a mobile video network AD network. It sits within the mobile gaming ecosystem and HM the significance of that business is that is aligned with unity, which is one of the world's largest gaming.

Platforms, which is used by gamers to be compatible with Android and iOS operating systems, but in exchange for that the gamers give of unity inventory in their game. So we're gonna be wrapping them in <unk> in that business in Latin America. So we're certainly excited about this acquisition, we think it's going to be already added a lot of.

Lift to our digital business the people that that operated starting with the CEO Victor Kong, our experienced digital people they've been in the business for you know.

20 years, and so were certainly excited about them being part of a part of Entravision.

Sounds like a great opportunity can you also give us a little more color on your cost reductions and how that's going to flow into the Q4, you indicated that some of those cost reductions looked like they're not going to be as temporary as expected it might be more permanent can you kind of give us some thoughts about how that is going to look in Q4.

Well I think what you can do since revenue was also significantly you're going to have a variable expense increase sequentially certainly from Q3 to Q4.

That will be you know call. It given the pacing numbers, we gave that'll be $3 million to $4 million all in as far as the sequential increase.

You're also probably looking at the incremental expense associated with Cisneros it'll be about 3.9 million in the quarter although.

Otherwise for the bulk of the other expenses they should remain in place.

Gotcha, and obviously now you guys are really.

Sitting on the cash flow generation and doing much better than expected when might the company consider boosting its dividend or maybe reinstating its prior dividend.

That on is that a plan or what are your thoughts on that.

Well, there's no plan Michael I mean are you know due to the the covert and then of course, the economic crisis, followed a we took measures to conserve cash into the <unk> and certainly reduce expenses and one of the one of the comp conservation measures was the reduction of the dividend.

Our next question is come from the line of Corded Hodge with tracker Research. Please proceed with your question.

Yes, good afternoon.

Just had a couple questions sort of following on.

From Michael Michael's questions on the TV Pacings I'm just.

Just trying to get a feel for are there. There's obviously some squeeze out probably from political that affected October and a bit of November I'm. Just curious what you can tell us about the.

Pacings for November and.

December just sort of post post political has has.

As local bounce back and national and so forth well the numbers that I have in front of me on the pacing front, you're looking for post political so let's just talk about core the core pays for TV right now for the quarter is plus one you've got national.

Got local pacing at a minus five and national pacing at a plus seven so it feels like there was pent up demand building as political crowded out so much of the revenue I'm in the first month of the quarter now that's all starting to break.

And as a result, you seem to core business backed as some you know we're back to positive territory, which is great.

Yeah Ana excellent okay. Good.

And then on the Cisneros just to understand it a little bit better it sounds like so for fourth quarter they'll do 55.

Looking at revenue roughly I assume they have that there's there's a wholesale margin. So there's a there's a.

If there are wholesaling.

Inventory.

I guess, if I back into it is it about like maybe 50 million.

Well I guess, you've got to wonder if you do $1 million of EBITDA and you have 3 million 2.9 million of expense.

I would presume the difference between 55 million and those two numbers would be.

Roughly the wholesale cost of the inventories are right right. It's about a 5% to 6% EBITDA margin business. The way, it's going to work on our financials, We're gonna book.

The full revenue and the full expense on our PML, but we're going to take out below the line the minority interest of about 49% of earnings.

So you're not going down to able to add the expense and revenue come up with a casual or the actual cash flow of the entity will be double what we end up showing on our piano.

Got it after that Iraq, the minority interest got you okay.

Very good and then just you know more strategically on that acquisition is it.

If you were to describe what the moat around that business is in terms of what's the.

What's.

You know is it is it the relationship with Cisneros, which obviously is a influential media company in Latin America is it.

<unk> third quarter 5.1 million, but now going forward.

You should see the cash taxes or beat the minimus.

Okay, great. Thank you thanks, Michael Thanks, Michael.

There are no further questions at this time I would like to turn the floor back over to Walter Oh, you are for closing comments. Thank you Darryl I want to thank everyone for participating on today's Ah Entravision investors.