Q3 2021 Entravision Communications Corp Earnings Call
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Transmission or rebroadcast of this call in any form without the express written consent of Entravision Communications Corporation is strictly prohibited also this call will include non-GAAP financial measures.
The company has provided a reconciliation of these non-GAAP financial measures.
Comparable GAAP measures in today's press release.
Press release is 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 Yellow Entravision, Chief Executive Officer.
Thank you Kimberly and good afternoon, everyone. We appreciate you joining us for Entravision as third quarter 2021 earnings call provisions.
Solutions business continues to perform very strongly in the third quarter was no exception, we are proud to see growth across all of our core businesses with digital in particular, our shining star.
Total is comfortably become the vast majority of our revenue representing 73% of total revenues in the third quarter as we evolve our business to become a global digital media powerhouse.
Top line results to help drive our incredibly strong EBITDA growth.
Top line results to help drive our incredibly strong EBITDA growth.
Let's take a look at our segment performance.
Hey, John Arabia totaled $146 1 million for the third quarter more than 10 times higher than the $13 7 million generated in the prior year period digital revenue represented 73% of total revenue for the company in the third quarter.
Along with strong organic growth. The primary drivers of this improvement was our acquisition of a majority interest in Sistema interactive.
In the fourth quarter of 2020, which became wholly owned during the third quarter of 2021, and our acquisition of immediate donuts at the beginning of the third quarter.
On a pro forma basis, our digital revenue increased 95% compared to the prior year period.
I just noted at the end of August we officially acquired the remaining 49% interest in Cystinosis interactive and now own 100% of the company, whose nanos interactive maintained sales partnerships with major technology platforms like Facebook Spotify and Linkedin in Latin America. The business has been performing extremely well and as a result, entravision has become a dominant.
Digital player in Latin America.
This is a focus on a combination of top tier global audience and media representations programmatic technology and local digital solutions, such as embarked on our digital audio App, which includes all of our radio broadcast shows talents in podcast that streamed over $3 5 million downloads per month during the third quarter.
Category and in particular, new car sales continues to fix upon chain pressures related to the international supply of electronic chips on consumer demand for cars remains strong the availability of new cars has been impacted by delays in production and so television auto AD sales were down 9% in the third quarter as compared to the prior year period.
I'm, saying these declines services were up 9% and healthcare was up 1% in Q3 compared to the last year same period retail restaurants travel and leisure also grew in the quarter assistant my overall, improving macro conditions and the rollout of the vaccine.
Turning to irradiate performance or Univision television affiliates built upon their market leadership in September 2021.
18 to 49 and early local news or Univision television stations finished ahead of their Telemundo competition, and 11 17 markets, where we had a head to head competition plus three times.
In late local news. We finished ahead of Telemundo competitors among adults 18 to 49 and nine markets alone 17 markets, where we have to add competition plus two ties.
The Coca Cola Cup tournament rounded up the summary of soccer on our Univision annuity mass television stations. The final match between the United States and Mexico National teams delivered impressive ruins. The game ranked number one or number two for the time period, among all local broadcast stations and 13 of our markets on the adults 18 to 49 and adults.
2500, 54, outperforming the NBC Summer Olympics.
Finally, this turn during audio segment, which comprised the remaining 9% of our third quarter revenue.
Our new revenue totaled $16.4 million for the third quarter, assuming that will increase of 42% year over year local audio revenue increased 13% year over year on National audio revenue was up 47% year over year, excluding political spent a $1.2 million in Q3 2020 related to the presidential election.
And $600000 a political spin in Q3 2021 related to the California recall election, Corrigo revenue increased 54% versus the third quarter of 2020, when comparing Q3 2021 total audio revenue with pre Covid Q3 2019 results.
Revenue grew 11% in Q3 2021 versus Q3 2019.
49, and Hispanic adults 25, 54, including ties across our land ONR stations. The Roswell electrical Polenta show reached more than 522000. Hispanic adults 18 to $49 and family Introversion had another fantastic quarter position and as well for the final three months of the year before speaking further I will turn the.
Call over to Krishna, our CFO to discuss our third quarter of 2021 financial performance and our fourth quarter of 2021 paced it's Chris.
Exactly one as Walter discussed revenue for the third quarter of 2021 totaled $199 million, an increase of 216% from the third quarter of 2020.
Comparing a profanity eases, including Cisneros interactive and media Donuts revenue in our 2020 results revenue increased 60% over the prior year period.
Totaled $23.2 million for the third quarter compared to $16 $4 million in the third quarter of last year on pro forma basis accounting for the Cisneros interactive and media Donuts acquisitions.
EBITDA was up 17% year over year.
Intuitions portion of Cisneros interactive adjusted EBITDA represented a 4.8 million dollar contribution toward totally the Doc in the third quarter, which represented 51% ownership through the end of August and 100% ownership starting September one.
Going forward, 100% of Cisneros interactive adjusted EBITDA will be attributed to Entravision.
Free cash flow as defined in our earnings release was approximately 112% to $22 $4 million in the quarter compared to 10 $6 million in the prior year period strong free cash flow remains the cornerstone of our business and we expect this high free cash flow conversion renewed to continue for the foreseeable future.
Earnings per share for the third quarter of 2021 or 14.
Compared to 11 per share in the same period last year.
And the call back over to Walter Walter.
Thank you Chris.
Who have been following us know that Entravision has been building. This digital growth strategy for some time, we are particularly proud to welcome media doughnuts in early July and to acquire the remaining important to 9% of systems Interactive this past August.
Enhance the acquisition of 365 digital bringing the Entravision into Africa. This is our third digital acquisition within a 13 month period in our digital operations now have a presence on five continents. This acquisition further positions entravision as a global digital marketing powerhouse turning platforms brands and local businesses with sophistic.
Hated advertising solutions.
65, digital which is headquartered in Cape Town, South Africa maintains exclusive selzer presentations with Tictoc one of the world's top mobile video user generated and advertising platforms training, a global digital audio streaming and podcast marketplace and attitude, a sophisticated and advanced and gained advertising platform.
Digital also offers end to end digital publishers solutions for Premier South African publishers, including the proprietary digital AD network, we plan to leverage $3 65, digital local and regional access to brands and agencies and putting expertise and existing unique commercial representations too.
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I'm always pleased when we poll for questions.
Our first question comes from the line of Michael Pinsky with Noble capital markets. Please proceed with your question.
Good afternoon, everyone.
Couple of questions regarding the Ah patients in Q4 for your TV and radio divisions is there any way to quantify what the impact might be from auto the auto category itself I mean in terms of the drag in terms of your pacing data.
Hey, Michael so.
The big issue in auto and as you know is the chip issue and it's really impacting our television business.
More so than the radio business for T V.
Auto is pacing at a minus 28 and Thats our number two category so thats.
That's a big deal.
For radio on the automotive side of the pages of minus 19, so not quite as bad look bad.
The good news is though because if we gave out the pace overall on a core basis Tvs at minus two but on a core basis radio is an a plus 15, which basically means that we've got other categories that are stepping up and filling in the gaps but that gives you the context on the amortization.
The filling in the gap is that coming from like sports betting and so forth or just other services. What can you kind of give us a flavor of what the categories are there that are strong.
Sure, it's coming from services and insurance and legal it's coming from government government messaging. The COVID-19 related pandemic type of messaging messaging. This government funded in healthcare those are the big movers for both TV and radio that are offsetting it.
Please don't represent tictoc, they represent more Facebook and so forth what are the opportunities for you to introduce Facebook and some of your Asian markets now tick talking to some of your Latin American market. How do you think that youre going to be able to integrate those and is there an opportunity there.
Michael It's Walter.
We represent tick tuck in.
In Southeast Asia, and then three important countries and then now with.
With this acquisition it will be.
Four countries in South Africa, we think this further strengthens our relationship with Tic Toc.
We believe that that's an important platform and now and in the future.
And we expect it to grow.
Certainly.
As well as it has this year and into next year.
As for Facebook.
We don't know I can't really comment on that.
We don't represent them in southeast Asia.
And.
Basically that's all I'll say there.
Plans and strategies are very private and certainly they don't they don't share them with us so, but we have a great relationship with Facebook via that we hope that we would expect that to continue.
Walter or another.
Provided that that has picked park in your Latin America markets I'm, just wondering if there was an opportunity for you to pick up tick tock.
With its narrowed in Latin America.
There is a new company emerging they've been around it had been in the business for for several years now but.
They are now emerging as a less and you'll probably be hearing more about them in the future and we understand they are representing tick tuck in.
I don't know a handful of Latin American countries.
Gotcha, and then in terms of acquisition prospects, obviously, you've or are there other developed companies that are in this.
Secondly, the industry, particularly in Europe, I know that you might have an angle in terms of maybe.
Maybe acquiring one in that marketplace, but are where are you seeing the most opportunities for further M&A in the space.
Well, Michael we continue to search the globe for opportunities.
Sure.
Right now.
In discussions with some potential opportunities as it relates to expanding our digital footprint, but we're looking at every every continent in every country.
Duction was primarily a response to the prevailing.
Economic and pandemic prices.
We know that dividends are important to our shareholders will remain in a camp cash compensation conversation conservation mode.
We know that dividends are important to our shareholders will remain in a camp cash compensation conversation conservation mode.
Two given the uncertainty of the current environment, both economic and the pandemic.
And we believe that reducing the pandemic of dependent the dividend at this time is a prudent thing to do that said the board revisits the dividend each quarter and we could see.
Certainly consider raising in the future.
Gotcha, that's all I have thank you. Thank.
Thank you Michael Thank you Mike.
<unk> announced what we're going to do with the stations as far as affiliations are concerned of programming.
But whatever we do there will offset that number so that's just the starting point a gross number.
Okay great.
And then in terms of the acquisition so I gather Walter.
Want to talk about the multiple.
That deal I think the press press release simply just said that there was a certain multiple youre going to based on.
Three years of cash flow.
Could you comment on just more generally on where you think where the multiples have been going over the past year I think you've said previously they've been they've been ticking up.
<unk> got for six times EBITDA.
Any sense as to where those multiples are at now in the market.
Yes, Sir.
So by the way.
Good to hear your voice.
My sense is in Chris's sense is that the.
The multiples for digital businesses.
The ones that we're targeting are somewhere between eight and 10 times.
In terms of looking for opportunities.
To support the existing businesses.
Okay and you are looking at all three of them.
Absolutely yes, okay.
And then just on the fundamentals of the digital business at the moment, especially internationally.
Facebook has talked about the impact of the changes.
The apples, making and causing a headwind on their platform.
Do you have a general sense that youre seeing a little bit less of that impact that narrows in particular just because.
The iOS platform as less penetration in those markets I'm, just curious as to what Youre hearing from them in terms of that dynamic in any potential headwind that could cause.
Well.
Certainly.
The launch of iOS $15 2 million.
Has created a lot of controversy within the digital ad business.
We have less exposure to that because of the.
The low penetration of Apple phones.
In our particular.
Territories and countries in Latin America, I believe are the Apple penetration of about 10%.
As it is in the other territories and countries, where we now operate.
But it is something we're going to have to work through we haven't seen any I'll call. It immediate impact, but it's something that we're what we're well aware of and we'll continue to.
To monitor and make adjustments, where we need to.
Provide their clients more support from a rep firms like ours.
Okay, Alright, great that's it for me.
Thank you James Thanks, James.
Thank you ladies and gentlemen, there are no further questions at this time I would now like to turn the floor back to.
Mr. Walter yellow, thank you [noise].
Oh. Thank you operator, certainly is a pleasure to.
To speak to everyone and thank you for joining.
All of us joining us today and for your support we remain optimistic about the future of Entravision and we look forward to sharing our progress with you on our fourth quarter earnings call in March of 2022. Thank you.
Thank you ladies and gentlemen. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.