Q1 2021 Entravision Communications Corp Earnings Call

One of $3 million, a decrease of 4% year over year local audio revenues decreased 10% year over year, while national out of audio revenues were up 9% year over year, excluding radio political spend of $1 1 million in the prior year period core radio revenues increased 6% versus the first quarter of 2020.

In the 12 markets, where we subscribe to Miller Kaplan data for total spot revenue, we outperformed the market by 13 points in total revenue combined we outperformed the total market in 10 of the 12 markets for which we subscribed. This includes exceptional performance in three of our top radio markets, Our Los Angeles Radio cluster beat the market by 23 points.

Our Phoenix radio station of the outperformed the market by 15 points and our Macallan radio clusters surpassed the market in total spot revenue by 31 points. These three markets for all top 10 U S. Hispanic markets in terms of advertising categories services remains our largest category representing 42% of total audio revenue services improved 22%.

Year over year auto our second largest AD category declined 36% for the quarter as compared to the first quarter of 2020 as with TV Radio auto auto ads for impacted by the supply chain issues during the quarter, which had a larger impact on tier two and tier three auto dealer spending across all of our radio markets.

Our audio division the range remains very strong and as more people increase their driving time, we should see as rates improve even more in Los Angeles, the nation's number one radio market Jose was the number one the Spanish language radio station Monday through Friday of 687% for the winter measurement period. Among Hispanic adults 18 to 49 and Hispanic adults 25 to 54, including tight.

And show the <unk> ranked as the number of free Spanish mid day show among spanning adults 18 to 49 outperforming eight of our Spanish language competitors and a raft of electrical up the show is the leader in afternoon drive outperforming all of the Spanish language radio stations in Los Angeles, among Spanish adult 18 to 49 and Hispanic adults $25 of 54.

Overall, we had an outstanding 2021 first quarter performance, we believe that our first quarter earnings results will provide strong momentum for entravision is throughout the year and now I'm going to turn the call over to Chris Schott, our CFO to speak further about our first quarter 'twenty, one performance and second quarter of 2021 pacings, Chris. Thank you Walter and good afternoon, everyone.

As Walter discussed revenue for Q1, 2021 totaled $148 9 million, an increase of 132% from the first quarter of 2020 when.

When comparing on a pro forma basis, and including Cisneros interactive as revenue in 2020 results revenues increased 43% year over year.

For our television Division total AD and spectrum related revenue was $26 4 million down 11% year over year, excluding political core Ed and spectrum related revenue was up 9% year over year retransmission revenue totaled $9 6 million and was up 1% year over year.

For our digital Division digital revenues totaled 101, 5 million of 661% year over year, when comparing on a pro forma basis, and including Cisneros interactive revenue in our 2020 results digital revenues increased 90% year over year.

Lastly for our audio audio division revenues totaled $11 3 million down 4% over the prior year period, excluding political core audio revenue was up 6% over Q1 of last year.

As we spoke to on last quarter's call. During the second half of 2020, we took strategic steps to limit our expenses due to market conditions. Following a strong finish to the year. We were pleased of fully reinstate all employee salaries to pre COVID-19 levels and while salaries have been reinstated we were able to maintain most of the remaining expense cuts in <unk>.

'twenty one.

SG&A expenses were $13 9 million for the quarter, an increase of 2% compared to the $13 6 million in the year ago period, and excluding the CIS narrows the acquisition SG&A expenses were down 19%.

Operating expenses totaled $26 6 million for Q1 of 2021 down slightly from $26 7 million in Q1 of 2020, excluding the <unk> acquisition direct operating expenses were down 9% year over year.

Finally, corporate expenses for the quarter increased 5% to a total of $7 2 million compared to $6 8 million of the same quarter of last year. The primary driver of corporate expense was audit related expense and salary expense.

During the first quarter our share buyback remained on hold we also maintained the dividend at $2 $2.05 and continued to eliminate expenses at the operating and corporate level of deemed secondary to serving our core media businesses. We will continue to evaluate our buyback and dividend each quarter, which will be at the discretion of our board of directors.

Looking forward, we expect that our operating expenses, excluding digital cost of goods sold and corporate will be up approximately 3% in the second quarter as compared to the first quarter of this year.

Excluding expenses related to Cisneros operating expenses are expected to be approximately flat compared to the first quarter of this year.

Consolidated adjusted EBITDA totaled $14 2 million for the first quarter of 47% compared to the first quarter of last year on a pro forma basis accounting for this is narrows acquisition adjusted EBITDA was up 35% year over year.

This was the strong quarter of EBITDA generation. Despite the lack of political revenue Entravision is 51% portion of this narrows interactive adjusted EBITDA represented a $3 million contribution to our total EBITDA from the first quarter.

Free cash flow as defined in our earnings release was approximately $13 million in the quarter up 149% compared to the first quarter of last year strong free cash flow has been a cornerstone of entravision business and supported our ability to grow both organically and through acquisitions without the need to take on leverage we expect this high free cash flow conversion.

To continue for the foreseeable future.

Earnings per share for the quarter in 2021 with <unk>.

Compared to a loss of 42 per share in the same quarter of last year.

Net cash interest expense was $1 4 million for the first quarter compared to $1 9 million in the same quarter of last year.

Cash capital expenditures for Q1 totaled $1 8 million compared to $2 7 million in the prior year capital expenditures for the year are expected to be approximately $8 million.

Turning to our balance sheet, which remains very strong cash and marketable securities as of March 31 totaled $165 7 million total debt was $214 5 million net of $75 million of cash and marketable securities on the books, our total leverage as defined in our credit agreement was two five times at the end of the first quarter.

<unk> net of total accessible cash and marketable securities. Our total net leverage was one turn of EBITDA.

Turning to our pacings for the second quarter of 2021.

As of today, our television advertising business is pacing, 44% over the prior year period with core TV, excluding political pacing at plus 55%, our digital business, including revenue from Cisneros of interactive is pacing plus 900% factoring in Cisneros revenue generated in Q2 of last year.

<unk>, our digital business on a pro forma basis is pacing plus 115%.

Lastly, our audio business is pacing plus 84% with core audio excluding political pacing plus 103%.

All in our total revenue compared to last year is pacing at a plus 360% pro forma our CIS narrows. The acquisition. Our total revenue is currently pacing at a plus 87% with that I'll turn the call back to Walter alter.

Thanks, Chris as I mentioned at the beginning of our of my prepared remarks, we are very pleased with our results for the first quarter with our core broadcasting businesses performing well along with our digital segment that continues to see exceptional growth. The majority investment in <unk> Interactive has performed strongly since the closing of the acquisition in the fourth quarter of lag.

Last year, and we are excited to continue to expand and enhance our digital offerings. We are also very optimistic about the intravenous continued growth given the overall improvement of macroeconomic conditions with the more screening lots of streamline cost structure. We will continue to operate our businesses more efficiently while at the same time delivering high quality and.

<unk> services content and products to our customers. We appreciate your continued support of Entravision, Chris and I would now like to open up the call for your questions.

Later.

Thank you we will now begin the question and answer session.

The ask a question you May press Star then one on your telephone keypad.

You're using a speaker phone please pick up your handset before pressing the keys.

So let's get to your question. Please press Star then Paul.

At this time, well pause momentarily to assemble our roster.

Our first question comes from Michael Hoffman.

With noble capital markets. Please go ahead.

Thank you and congratulations on that.

The main thing quarter.

The data much better job in digital than I expected and I was wondering how did your legacy digital businesses performed in the quarter and then if you could just give us the flavor since net.

Arrows.

It did it far better than you expected.

Maybe give us the flavor of what's driving maybe their growth outside of.

You're adding the.

The business here.

The business I was just trying to understand how core.

Is going and what's driving that growth at this point.

Well thank you Michael.

So I'll start with the sale of the question first.

For a much better than with any of the effects.

Thanks for that.

I think.

I think the budget with plus.

Plus 40% versus first quarter last year, and we wound up finishing.

Over 100% growth.

In the first quarter with that business.

And then just the combination of of our team.

Our team our sales team executing better.

And.

Providing more.

<unk> solutions to our advertisers in Latin America.

And I guess, just the popularity and.

And I'll call it the performance of the.

Facebook Spotify Enlink channel primarily Facebook.

Of those three products.

As for the other for the rest of our digital businesses.

Free digital businesses I started off by giving you some color on our sales international sales Rep business.

We also have the U S digital business, which includes.

Providing digital advertising solutions to advertisers most of the Smbs, who primarily one of the reach Latino consumers and the more than 20 end markets, where we operate across the U S. So the this team works alongside our broadcast.

<unk> team as well and then other core part of our U S digital business of our audio programmatic business, where we are connected to major audio buying platforms, including cats AD with the title and then we offer our <unk> audio inventory for any of the major audio platforms as well as our audio.

The change of network so together.

These two business of the core business of businesses of our what we call our U S digital unit and they were up 39% compared to the first quarter of last year and then the third leg of the stool is our Entravision international.

As another important part of our our digital net.

<unk> of our core product in this unit aesthetics.

It's a programmatic mobile first DSP.

And it.

I'll call it core.

Mission is to provide the.

Marketers with the downloading of apps, primarily of gaming Fintech and entertainment categories.

This business operates internationally with about 68% of sales generated in international territories, and about 32% of sales coming from the U S from the first quarter and spat ex growth revenue of 21% over the prior year period. So that just gives you kind of a summary of our of our digital business as a whole.

Okay.

Targeted to see political advertising related to the California recall and can you give us your thoughts on political advertising for this year.

Well, obviously any of my thoughts and then Chris of I'm sure, we'll have some of some other thoughts.

We all believe here that.

In order for most of them continue to continue as governor of California.

He has to have the big turn out by the by the Latino voter electorate. So.

I think it's all of it depend on the Latino voter here in California in terms of who.

Who wins the election and I believe that Nielsen has the.

Certainly has the advantage of pain well familiar with the Latino community.

<unk>.

Have you had the server to the U S Senate.

I'm, sorry, the kind of that Alex by the yet for the U S Senate.

Was the.

Major appointment and certainly I know that the Latino community was very pleased with that decision so what.

What the number may be we don't know.

We kind of throw numbers around as to what it what it might look like at somewhere between maybe $2 million to $4 million of.

Of additional revenue and primary revenue primarily in the fourth quarter.

Great.

Great I think two of $4 million is probably the.

Right now for at least as we stand here today so.

Michael go ahead Bill.

Okay, Yes.

Volume if you could just talk a little bit about the soccer tournaments, and what the revenue impact might be in the upcoming quarters as well.

So we've got three tournaments coming up is going to be a lot of soccer both on television and radio <unk> got the Euro Cup you've got the Copa America, and then you've got the Gold Cup.

The right number to think about those incrementally as far as revenue is concerned, it's probably an incremental $2 million to $3 million.

Primarily falling in Q2, but some will bleed into Q3.

And again that won't be of both on television and radio.

Alright. Thank you very much of the comes from Europe.

Thank you Michael.

Again, if you have a question. Please press Star then one.

Showing no further questions. This concludes our question and answer session.

Like the turn the conference back over to Walter.

For any closing remarks.

Okay.

Thank you Sarah and thank you again, everyone for joining us today and for your support we are optimistic about the future of Entravision and look forward to sharing our progress with you on our second quarter earnings call in August.

Thank you.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.