EVC - Earnings call transcript Q1 2020 | Entravision Communications Corporation

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Operator

Good afternoon, and welcome to Entravision's First Quarter 2020 Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Walter Ulloa Chairman and CEO. Please go ahead.

Walter Ulloa

Grant. you, Thank and Call. everyone, Entravision's Quarter First Good welcome Earnings XXXX afternoon, to I safe healthy times. staying hope is everyone and in difficult these With Young, today and call me Liberman, on President our is COO; Chief our Jeff Chris Financial Officer. and the

and you or actual must contain that of Please that SEC press is to without results of uncertainties to measures to to Entravision of begin, release. subject conference Communications consent. include Corporation. uncertainties and today's filings Any directly of company statements most this list our express inform differ. their measures. we call redistribution, Also actual call that for of impact form Before that results. reconciliation GAAP retransmission has any are property financial non-GAAP risks the call measures a in I will will forward-looking could risks a could rebroadcast non-GAAP these cause in refer financial written comparable this this the The provided Call

The filed with press on website and SEC on was available Form X-K. release the company's the is

compared our the and results first which by pandemic in and in economic Our to the quarter, affected crisis year. late declines first were resulting the segments in quarter digital prior the resulted COVID-XX broadcast

from the we in advertising and pandemic. economic extent impact of residential to in depending adverse primaries XXXX Expect of However, did the significantly a our periods, from quarter greater political growth across turndown compared the the on as from duration first achieve television segment healthy we a future benefited arising the country.

you million. marketable environment, this $XXX.X undertaken beyond on on to sheet and align debt of securities review actions this call. we So in our reduce have an our the later and we cash extensive be various undertaken solid costs. extremely walk I'll the of efficiently operations through continues versus approximately books approximately total And $XXX business have million a difficult today business balance

up $X.X X% in XXX% $XX expenses last $XX.X first that compared Consolidated to XX% to quarter. Interesting $X.X to we note decreased early performance, growth financial was up million for to year. Consolidated were March, flow the million quarter. the compared to forecasting $X.X operating to X%. million was down EBITDA were revenues Our XX% million cash EBITDA in Free million adjusted

largest percentage Our the our in growth in history. quarter

Fortunately, as we the second our all the platforms of crisis revenue week March to unravel started accelerated. our across COVID and entered

results, $X.X period, X%, first the up compared television revenue related was Turning were million absence last operating spectrum million the approximately to X% up was TV excluding basis, $X.X offset while the local million revenues first by to X%. political, political revenue primarily $X.X On revenue due advertising quarter advertising a in our XX%, X%. of core year and period year. the the in prior nonrecurring the revenue, television local quarter National slightly advertising X% in down in segment, down during in prior to National quarter, was down advertising quarter, down

quarter same revenues were $X.X X%, First million the year. to last quarter retransmission up compared

not COVID-XX the Automotive, television total Taking of of to U.S. revenue. traffic. a looked XX% advertising or online as significantly traffic to production units substitute incentives been the yet closed recession, range to quarter. XXXX. crisis foot for a to was the continue. categories impact April to XX this while Unlike are significant XX% X%. auto are has sales compared our XXXX advertising to level outlook to some auto XX.X ad April look be health led million in manufacturing been XX.X The XXXX, the care Services, year category, to and at XX% and full compared our has was sector Many to represented up revised sold second Media to and largest and our the quarter, in navigate million major of automotive X% our approximately has of lower prices expected largest up has negative was was down in down category, have but the been first reduced. expected to U.S. virus record financing dealerships XX% special

markets we competition their Turning XX our leadership late to competition. our XX local we Telemundo ahead head-to-head XX to February Univision their ahead affiliates our market adults early In we to of television finished competitors in built sweeps. XX, the where ratings XX stations of performance. of upon compete. news, have XX in Belts XX Division, local television XX in finished XXXX Telemundo where markets the news, among of

number local Additionally, markets. two or in English ranked against eight are early competitors Spanish newscasts one number and our

plus two Our versus Spanish news one $X.X in million our Telemundo's combined late Unimás cast or local number two television English competitors against ranks Full million compared a number plus. and to two markets. stations seven Univision and audience X.X cumulative of versus week, have

We have our in television in XX% viewers footprint. more Telemundo

live to Audio [indiscernible] down Local X% audio quarter. broadcast XXXX-XXXX up season NFL XXXX-XXXX were from and prior X%, first Entravision XX% in approximately the the $X our with sales revenue audio million down in revenues XX% down of our coverage the XX% in Turning the were revenues the increase best-performing the performance to national saw quarter Florida. of Super revenue the fifth season were while the first Miami, our of with the relationship This season. year. over an the was concluded audio live in and quarter Bowl compared in our our division. of were political NFL season. during revenues

for audio in to compared of and last of by in came the law improved approximately was our quarter platform representing several by revenue total category Service year. ad spending Spanish is audio down advertising season. audio, the the extend increase in prior XX% revenue. marketplace. the NFL its XXXX-XX Auto largest The XX% audio, services the and firms largest period audio over large with our represented to for spend LA increased our total rights from was year Our second category XX% the XX%

among winter The of language ranked released X division XXXX Angeles, Electrocoat Looking performance our X at stations. Los is Spanish our audio the markets, in X #X winter including Hispanics radio XX. to Show for radio ratings Hispanic owned adults and ties. to among Lacolite Across XX XXX,XXX XX book the XX, reached operated including than our Erazno stations, for Show more Erazno

we this which and Let's under businesses. our our digital, marketing talk about week, digital Entravision insights digital businesses the of Entravision launch our media, brand. - digital consumer consolidates technology Earlier Entravision the announced

expand data international possess DSP and X know, data and with for capabilities. audio SMB, a audio creative engaged platform consumer and marketing built As reach, and prudently our we of over years digital insights management insights and and solution, programmatic digital includes audience national platform data Smadex, optimize mobile-first many that advertising you a from marketplace portfolio scroller-ads assets This and have the of past solutions U.S. advertisers. advertising and marketplace, Hispanic programmatic

Entravision the Hispanic this television, assets content States solutions audiences offering and digital and component to to targeted continue have marketing source unified single performance globally. exceptional these provides and be a businesses brings record Businesses consumers radio to and that into technology a - our capabilities will market. serving the a our complement United engage agencies technology of an connecting platform digital with branding of and track advertisers successful to media

revenues X% decrease the is current digital related $XX.X the first year. period This a same versus to COVID-XX were directly last quarter, million the pandemic. of For decrease represents

spot during during digital One this audio was digital bright its improved the crisis. for performance quarter our business, which

proven in growth to compared and our in distribution expand We business quarters, third-party increase a first content have quarter be boasting over the to unique past margins unit our with offering Entravision the audio able has to revenue Digital for XX% been the last gain solid same year. momentum quarter both when to a and few offering.

seen serve Our as to demand compared could same business, we verticals affecting increase to COVID from revenue also the growth crisis we and period XX% impacted year. when platform by of pivot of so this have client this and continues base, also have terms show pandemic. our product clients the in The an had to side less is in semantics last we

our the we in month, As and is a less sales sales strengthened see created this accelerate and We States. it United new campaigns In And focus while dozens growth. own from short, U.S. our we technology results in unit markets our mobile our of X hard about coronavirus led division's are than expanding we've having flexibility new the to first as programmatic. in affected by our Smadex on as offered as the advancements business States grew, the force we and new the has by opportunities. value-added upcoming services closed the working United technology, are already continue local by digital footprint in well quarter quarters and promotion, was the app expanding outbreak, prospects to excited positive on

near remember since middle is down have majority of been lockdown It to February. been in regions of operates mode Turning have Entravision important while in in the locked Spain our March, term. digital the to that outlook operations our since where the

advertisers are TV is side, across a of On the dislocation of our our virus. are negative in revenue the world all down ratings up course, The platforms. significantly our positive causing advertising under significant side, the shelters place most of our combat as also locked advertising to

back returning advertising the both to the and While have recovery, given some economy our of globally our length Today, opening operations. have of timing process on pacing and up visibility future low XX%. business is the regions minus extremely gradually the the begun of we the the uncertainty workplace, television

for quarter. minus XX%, XX% Our at our pacing radio pacing second digital the minus is business and

approximately second soon reduction additional audio reduction of of ranging program, result quarters possible, elimination on fourth steps it in by and of versus as various those the a shareholders broadcast of result our They reduction Company-wide digital lastly, $XX and Also, our levels. difficult following: an be safely stock corporate these the prior and to our cancellation so in and several on and units to reduction economic include the the year-over-year our we quarter payroll helps still and digital doing while buyback as million impact the of of period. fixed compensation workforce based beyond would corporate. these in XX%. expense. should or as and combination X.X% as at The for returns work in cost reduction across platforms over year the fixed salaries television, by cost third temporary The maintain dividend to expenses necessary of Taking whether XX.X% this the cost the well as approximately between million as crisis. reduction world $X.X well our hope effective XX%; second will cuts to quarter, reductions the of

by impacted our COVID-XX summary, the In negatively first were flow from improved a Right modestly perspective. results quarter pandemic. cash being

second pandemic, While there's whether we the taken will difficult survival now in the have difficult I the necessary Young. the to over be no ensure doubt, extremely quarter call turn to times. Christopher these to will steps

Christopher Young

Thank and good everyone. you, Walter, afternoon,

As discussed, year. last million. $XX.X Operating quarter decreased revenue Walter adjusted has the same XX% $X.X consolidated the million to was down $XX.X of X% $XX.X EBITDA net million to and in to compared to quarter expenses X% million for increased

division, due TV million primarily XX.X first in the our revenues For the quarter revenue $X.X to to X% in quarter. for political approximately increased

consent was X% Excluding was the in the quarter. $X.X prior political ad was and quarter up period, $X.X Retransmission the revenue period. for revenue X% over spectrum year in core for the down million prior related nonrecurring and million TV year revenue

in to to for revenue last radio for revenues, radio in revenue. the advertising $X $XX.X Decrease approximately quarter $XX $X last declined revenue net X% Digital due revenue $XX.X compared quarter the year. segment were million national down to to and the first our quarter in $XX.X net local primarily million of in quarter decreases down was both million same excluding quarter Core X% in political Radio of compared in XX%. million same was the million - million year. the to

prior at ended to due decrease March due Operating XX% $XX.X increase our $X.X increase improved our our and an the digital EBITDA X% our million decrease increased division million expenses Consolidated primarily $XX.X in expense, million. over unit revenue press to expenses the in from $X.X same due in offset expense, audio prior year. for defined our $X.X unit. in period. for in quarter The commissionable increase an year, the in audit-related was year at in decrease decrease to our the X% a to to partially arising million to quarter primarily by million TV were XX, adjusted was to X% was down decreased offset X-month prior Free cash increase the XX% legal primarily $X.X XXXX, improvement declines costs. slightly digital as XXX% The from a offset release, by by million XX% an XX% year. in last fees decrease compared severance Corporate to a fees. U.S. in in of The period international flow, headway

During events current SCC updated the interim assessments the related had of economic fixed quarter, required triggering due crisis, and assets to performance impairment forecast to the of our onset internal the and that goodwill, determine future occurred assets. we

As a $XX.X in we of our these of business recognized million result impairment X segments noncash QX. totaling across onetime assessments, all a charge

in negative As was share of compared quarter, for income $X.X $XXX,XXX. same million benefit a cash the year. were $X.XX per actually for a impairment, to a result tax Earnings share the per the of was paid taxes last expense $X.XX the while quarter

impairment was share. $X.XX charge, per Excluding the EPS onetime

cash During economic of amount dispersed shareholders related uncertainties dividend to company company's today of due stock. payable disbursed million. common dividend per B of share cash has to will to the pandemic shareholders cash June dividend Directors million. total quarterly that temporarily the to the and the amount the of of the XXXX. cash quarter, have the be by $X.XXX XX, per Class for paid and XX% stock to reduce company impacted that The $X.X quarterly common business. this to on announced the The dividend approximately decided be was company's our share ongoing A, $X.XX $X.X The for U a total

Board to Also of price repurchased temporary an we XXX,XXX share. dividend conditions. review this reduction quarter next economic during approximately at the continue as quarter, revisit intends we to shares $X.XX average per

crisis, economic for same $X.X company capital all to current the between were the the expense to million compared for the and foreseeable be that for $X.X $X last We million $X.X $X year. expenditures future. million Cash buyback the activity expenditures Cash period. ceased million in around quarter uncertainties was has anticipate million Given quarter quarter interest the our capital year in compared $X.X prior the million. will

our balance to Turning sheet.

total XX, of $XXX.X $XXX our $XX.X the EBITDA total XX-month adjusted debt was securities of to was XXXX questions. cash, X/XX/XXXX. million. This leverage March securities, our Net million, I'll the X/XX/XXXX. credit marketable Cash X.Xx. our X.Xx XXXX, as net-net As it our trailing of as remarks. million was leverage as was and consolidated now marketable total I defined in Walter our books, and of formal Grant unrestricted concludes was on of agreement our $XX total million over Net will of on books cash cash you. and and your take hand

Operator

Instructions]. [Operator

Michael question first Capital Noble comes Our with from Markets. Kupinski

Michael Kupinski

And year? are third total? done Okay. - to cost cuts of I whether second terms in or you've the you terms are that the that for not in quarter, metrics the going costs to last of determine is that are in cuts that cost So those addition cuts? in the in off the you've you is of that quarters? to of the some for okay. the in keep and incremental fourth back or quarters would fourth What done cost began, be I'm that those may So trying the guess, sorry. this to And and on use triggers third or place what

Walter Ulloa

revenue. as revenue think I

Michael Kupinski

upon for what cost, consolidation you it what your you that can terms then does expand just involved the forward? And like cost that about And consolidation associated revenues your general, the the back can in still U.S. strategy move? develop are why the to through trying of reasons business, and And kind the it that expand went strategy? U.S. to I footprint. in of you be the just start okay? was savings in So would layering digital mean, what and what for your you means the in going talk the increase, doing mean digital you're of then with strategy sounds can

if more color little just just can I wondering add was a you bit So there.

Walter Ulloa

services digital we've under the our complements our approach he the people Entravision purpose businesses. and branding businesses U.S. reason organization role of But our within it business our also servicing tailor our the has. most and radio with marketing digital our one get But named consolidated consolidation small business. the a the brand. as an Certainly, of [indiscernible] midsized [indiscernible] national take and business of digital the existing robust was was the experience television U.S. in just - multiplatform to and products. organized digital we to to Well, for again that have the service, by recently performance-based was our But those the

And our steps, out, solutions broadcast digital assets, then I'll business by for say, digital pointed - solutions, our clients. our our to the U.S. business, as better marketing We're - assets. the able international the to product. integrating able better with Smadex growth that provide so of integrating we're And in our taking to I accelerate U.S.

bringing everything efficient So units. under our it's more business way for just digital and create of of X umbrella a a to all platform

Michael Kupinski

Entravision in And for something of full you're going U.S., Or be you that point? your to U.S., that digital as Entravision go? products does have at is instance, the this layering suite that

Walter Ulloa

just just It we made. of consolidation latest has full the suite that products,

Michael Kupinski

Got a you. then big for obviously, auto, you. And category

back? forth, starting X Can category, of to a hearing you You point, give said your the as you're bit are to if starting could from flavor and you of economies little open see so kind dealerships just what your us it What here? a it talk you are know it's believe of XX%. whether you I come almost that was about XX% and at that XX%, business. will

Walter Ulloa

to and up. - and that motive out, I like open see the starting Well, Florida this Texas - some we'd right and Colorado opening we're pointed have. difficult There's really estimate. to to to California It's it's as now - But steps have taken is being we also feedback just week up capacity. here don't haven't

million million we're I U.S. think forecast to is about to there, adjustment information as you [indiscernible] in the forecasting revised that auto we source the how $XX Chris? going anything, going in unit some for compared to by but major $XX XXXX it's end able in were in I of challenges auto a about that million face up. almost industry all the there's been terms right to gave to sales $XX

Christopher Young

they're Well, offer to ton got when They incentives ton unloading. be finally they're of the They've going opens a world to come inventory. record incentives advertise to up. back and incentives. and message going breaking, to need and of those a to And start those have are going

expect fairly it will question does when it auto come actually that when does So a be but to we we're confident robustly, back. when back strong that back, happens The come come way. it is pretty

Walter Ulloa

I also systemic change in think because of that attitudes. the

who the and more buy hadn't younger not going younger programs to of we're Some going vehicle and to The share - that, the public looking to the change see entered market demos ride millennials and transportation. vehicles. [indiscernible] demographics is entered pandemic

Michael Kupinski

you And second and political? any that political and on out toward fourth a the you. trend Can obviously, thoughts as little the quarter? strong shakes very quarters, are for the about you thoughts stronger Any your just talk do seeing was political you have first in - bit third how then Got quarter. on in you you

Walter Ulloa

the was our the pleased we're In - huge we we're business second certainly, Well, quite turned data quarter point political - core very well. about very a categories. [indiscernible] - our We're categories, outlook advertising positive. also just looking - other out, advertising a very important performing had

to as above our we forecasted concerned seeing we budget be - for be we're everything is but to be second feel for in had confident a to the be constantly. political Expecting And what probably, quarter. quarter. the at then far budget, we budget fairly is will quarter, review look As numbers

to Now tell. for QX and early X, it's too still

QX then pretty And We have is large is budget. QX budget - than higher you can imagine, then QX QX.

see. we'll So

million read the swing the by Latino Texas. investment X White still believe in with you the ADA, win going think including we're in of spend states of well probably five to key and I to that in that this Colorado, And think that states. Latino voter. $XX believe I week, is states, purchase one vote - too, impressive the media to this X Florida Anyway, biding the in to but advantage campaign assets, strong or things you're by need to of just the binding still I in House, the states We rather order take Latino. we're campaign to mobilize going read to announcement positioned of and I buys they're And important those

Michael Kupinski

like a lot a is people Got have see of cash are position, of may And just there terms trip in the out? Are out at you it you. looking radio, are Or covenants. right digital a assets, things talking? some they this if now? environment companies And is preference that you point? appears at that you there are shake large how and distressed M&A to there waiting for TV like or What

Walter Ulloa

- we to think don't M&A I any front. there's conversations any the on haven't been Well, [indiscernible]

And summer, is think do of about brakes be what you late to don't start that starting is of summer kind as do a what do and get perhaps. state everyone start still as lenders this you're early now we until in then happens. to numbers, going before covenants tripped in lingering with concerned, up reporting the far conversations I pandemic covenant QX to about in

turn start to So had. But out. be we're that not where kind of your do in conversations we'll realm out. and sitting have wait point, that what here and But shakes and we see we're those we're watching, to a and not see how cushion, we're and we'll wait cash things said, -

are to I tuck-in on us. priorities TV run continues be Should opportunistic. then, be platform think would And radio. an be end opportunity? would third, concerned, it I guess, interest as of the market also digital far As kind

Michael Kupinski

like which there that and something just there in I that a $X.X million. good - Or was And number number? last that forward? X unusual in item. line, number question depreciation was were going items housekeeping assume is amortization the that Is some D&A, and a

Christopher Young

repack That was related to depreciating. the assets

will accelerated out. number, it's that smooth So itself slightly but

Michael Kupinski

you. Got

Christopher Young

the the go Now repack was auction to temporary that why that's spike. was FCC and came had buy that on equipment a and and front, after

Operator

I'm questions question the [Operator Instructions]. no time, showing in At this queue.

back will to for closing I'd our conclude So remarks. Ulloa question-and-answer this Walter to any over conference like session. the turn

Walter Ulloa

Grant, Thank thank participating everyone, earnings call. you. reporting look you, you, in and early Thank Stay investor We for quarter today's on August. results second our an Safe. call to on forward

Entravision Communications (EVC) 7 May 202020 Q1 Earnings call transcript