HMTV - Earnings call transcript Q4 2017 | Hemisphere Media Group Inc

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Hemisphere Media Group Incorporated fourth quarter and full year 2017 financial results conference call. My name is Crystal and I'll be your operator today. [Operator Instructions] A replay of the call will be available beginning at approximately 1:00 PM Eastern Time, March 5, 2018, by dialing 855-859-2056 or from outside the United States by dialing 404-537-3406. The conference ID for the replay is 2689749. [Operator Instructions] I would now like to turn the call over to Ms. Bartsch. Erica

Erica Bartsch

outside and conference I'd and call. Sloane Company, operator, everyone to I'm morning, & today's firm. to I'm Hemisphere's good you, like everyone. welcome with Thank Relations Investor Erica Bartsch,

the me Private about Officer; on Craig announcement Hemisphere forward-looking Executive and that the Hemisphere's Officer. may Securities comments within Chief and today Alan are Fischer, is Joining Sokol, meaning on contain U.S. Chief our Financial Litigation based Hemisphere's of the Today's call certain statements to are statements current statements in These those XXXX. of implied such Hemisphere results subject Act the expressed of are circumstance, actual in of from forward-looking uncertainty the management differ cause Reform expectations changes materially statements. to or which and may and

on recent statements of annual public on our to our these of change. filings more company. are number for to subject and discussion risk addition, assumptions report most refer forward-looking are statements to company's a and applicable other Please the based a factors Form XX-K the that In complete

statements as events date circumstances. undertakes and Hemisphere reflect update of obligation statements or made included to herein hereof no subsequent publicly the such Forward-looking are to

discussing earnings business. non-GAAP over generally in During release, is was today. I will addition are in which GAAP our call turn non-GAAP to included press important understanding now the is to information accordance of financial to this measure. information with to of believes will non-GAAP that is that issued earlier Alan. investors' Management a our today's to in adjusted accepted call, calculated we principles, which accounting results refer EBITDA, A reconciliation

Alan Sokol

the Puerto for of challenging a in viewers employees Rico and we storm Restoration including in company, protracted following The fourth Maria. devastation through Thank you, The Erica process. weeks that our arduous caused pace homes. of had good and by today, news as to and history, hurricanes, a has restored quarter vital homes. Rican to fourth been By Hurricane Puerto our services of recent destructive the has and the of two process, accelerated quarter, power Rican restored Rico's managed of most is the was Puerto encouraging as XX% been in recovery Puerto modern and been XX% only of a difficult difficult has everyone. one morning, end recovery power the approximately

forward. continued has foundation sustainable of a stable more In Authority for of the forecast, for insurance hit and population the water addition, has long with In other of the next over now in and the access to reform, growth. the improve and economic Rico’s extent over life accounting entire will Puerto months. Everyday highly potable a few establish from of Power stabilized ultimately virtually drive dependent be telecommunication of should to has Puerto recovery regulatory face unique issues, expenses. to Rico on services. a continue and has for The next and amount aid and In This will costs marks and our the economic plan improvement bankruptcy longer these much to proceeds. deficit these timing large the consensus Rico now the Puerto released fiscal $X.X which needed after February calls The the by button the reset Rico years. enactment through experience The government’s XXXX, financial and much payments term, driven Puerto updated view the of inflow growth and a privatization team in our billion Puerto is projects a Rico that surplus fiscal term expected the Rico of opportunity federal all five Puerto significant package. business January's

voices of information Our in Ricans real vital and that are of time community news and apprised Puerto keep our all the to heard. WAPA focus at to has been ensure

has on rely to during news these difficult Our indispensable organization times. can be an people that relentlessly resource worked

entire often work proud extremely extraordinary has team are performed, the under high of We our risk conditions.

caused As other was the during by ad loss approximately vital the XXXX. disruption expected, improvement sequential Reflective quarter, the XX% monthly the the challenging. market course QX, services, XX% December of over business there of power and the TV fourth in was fourth quarter down versus was down of although with

not power in We to we of spend. lag though there negative real the ad be time, to back have power couple homes. because and restored XXXX impact advertising expect seen has ratings first during been term continued has second will short a as the quarter. on restoration online between Nielsen some be is do Nielsen months of spending, bought had Nonetheless, Also, improvement unavailability more the in of

status revenue the retransmission ad half current and we the other each was declines significantly of the year. power through quarter, we services, normalize by believe affected of will of remain second will lower that over in business the Given are the will Similarly, the and that diminish market that but QX loss optimistic month power. second

as We levels restored subscriber rebound to strong power the coming over have months. numbers to and will see are normalized widely begun return optimistic is in a that they

we’ve on the As on without for transmission to signal. term interruption expect we WAPA a of we a previously close transmission our long loss soon solution disclosed, area. suffered tower the serving we San Nonetheless, and the remained Juan of air

are shared have a lot developments. positive we some we of have information about very the While facing, also challenges we

WAPA’s and executed Rican market. new challenging have the the leadership a notwithstanding our environment, business This in at we indispensability fee increases retransmission a position Puerto validation is overall the largest successfully renewal agreement history. to multi-year First, clear of

Rico. rich exclusive most the Universes, in front, and Miss acquired Puerto Rico important produced rights having a the content Puerto and event five proud to Puerto franchise With we Rico. pageant entertainment on recently Miss the has programming history Universe is Second, and

year. By have must for a TV will television, us. will see, fully the this expand throughout that event be live integrating this and events revenue expect to we we excited make digital created content will generate the our are to year-round of pageant streams We all event the platforms and with multiple brand across opportunity rights, that

channels, we to our trends continue organic growth. now our US Turning overall defy with subscriber to cable

subscriber quarter in subscriber the Our hurricanes. Nonetheless, in US Puerto we losses expansion opportunity fourth to the benefit US continued the by Pay Rico temporary excluding of continued Puerto organic a reflecting Rico, was growth Hispanic result as growth, from in TV. masked

the in only coverage and As response was call, Puerto news their we America viewers. to carriage noted network America to continuous added customer hurricanes on demand several distributors In US of provide America WAPA to our WAPA their WAPA and substantially packages, value following of WAPA last Rico and the affirming the distributors from aftermath. expanding major the to basic America’s storm, overall the

the to expanded larger the Although through receiving with WAPA increased provide successfully monetize wider exposure subscriber audience ad fees additional is America WAPA does America a larger and revenue. that WAPA distribution, America begun for carriage audience not base.

revenue audience heading Cinelatino’s In America’s into a Cinelatino its was highest record the history XXXX. to strong WAPA fact, unique coming QX advertisers. quarter us These was quarter with off tremendous value ad in also setting and momentum results affirm proposition revenue. and gives ad

from new Johnson and the During Sprint. QX, XXXX to Honda, recognize number GoDaddy, Johnson Allstate, national results including we of buys our with a successes & upfront of from [indiscernible] began advertisers,

significant and in In and deliver Pasiones its both continues world. impressive other programming to expect robust revenue generate from America. strategy continues ratings growth. with advertisers the Latin the results Cinelatino and Pasiones partner serialized best We these US the drive dramas major to XXXX to with of US, in the throughout

Latin Indian the well performed have leader. we extremely novellas extremely first Pasiones America, be with television Spanish launched results. to and Turkish In a novella early recently continues aired on Our ever ratings promising

just the itself of rated full from information network in TV has Pasiones has XX to growth. day solid channels, XX% with an source DirecTV in X Centroamerica also Americans US. for TV Central Colombia, had As sports and an a living year-over-year Centroamerica and and primetime ratings be excluding for number news, example, number on sports to authoritative the quarter PM. been four cable kids one proven

and and to live, information basic following with value elections, network controversial During else. the added to provides QX, they At distributors channel Dominican of Centroamerica Verizon the Altice Television anywhere not reflecting and unique their coverage news could TV Americans. both packages the aired Honduran Presidential providing find hurricanes, day the the Dominicana, audiences full

new investments, welcome three would the Columbia our strong fresh months differentiated that tremendous ago, a virtually with now network Canal belief competitive our to validate launch number to Turning a strategic to the of was upside. Canal alternative nonexistent. Luna networks. is and Six continues It Luna incumbent two

Our ratings performance XX% ahead a had and record share. XX, high February we on of day plan full audience Saturday, is

performed advertising our extremely to revenue months. for new We which OTT QX, with planned in Lionsgate venture has program share have first we drive its several Pantaya, growth. and few believe will well continue launches

results very ranks notably of Pantaya that platform M&A. apps so are far clearly and the opportunity. among grossing Univision Android and highest we early growth note both entertainment Although iOS A the is now. the in a on ahead confirm quick this of significant innings, represents

investment pursue to continued that our accelerate strategic will We profile. growth

by our been opportunities of we're Rico stopped months, attractive our pursuit in Puerto past in we've acquisition our While encouraged steadying focused business the few and we on not over pipeline. have

now We Thank Craig. our you call will keep turn progress. the I’ll updated on to you. over

Craig Fischer

in the fees month period increases the revenue. the XXX.X XXXX. net you, offset subscriber was decline revenues retransmission comparable quarter compared lower to million revenue in revenues, in of of advertising revenues offset were as the XX.X period period XX The Hurricane in by decline good Net driven The in parties. other million XX-month revenue comparable growth in revenue the of was in other revenues and fees were net revenues result million Net by three and the to partially related primarily content third as million our retransmission the for full revenue Alan XXX.X in compared year to and by morning everyone. for and a as licensing advertising XXXX. period declines Thank driven of to Maria, in by

net prior Excluding and loss decreases political widespread the XX-month driven particularly million power revenue revenue in periods decrease which were throughout period, The the the and the respectively. declined XX.X million and of XX-month XX.X XX.X Hurricane million the Maria, periods quarter. three in million respectively. XX.X Advertising impact three revenue advertising of in year negative the persisted and by

Maria impact the quarter hurricanes fourth to Maria and from three to by XXXX. in full due Hurricane to Puerto increased Maria period X.X Subscriber the the by XX-month by Dominicana respectively. Televisión of by comparable Irma to year, and related offset expenses million retransmission fees savings Maria for Hurricane the of to offset cost million in related security stock period as decrease carriage Maria rate Dominicana and protect to aforementioned This partially of Other the Televisión in three retransmission compensation by expense. which implemented compared period to well in to These were and the the related programming and for benefited period annual of X.X in and as due cost included increases advertising WAPA X.X which period XXXX, X.X of the AT&T of lower costs XX-month primarily carriage expense. XX.X television to not revenues, in subscriber X.X growth, transaction month and were AT&T. we was million to fuel was the the period. period caused XXXX, in the based measures assistance the Subscriber XX.X $XXX,XXX, cost content subscriptions parties was EBITDA our our termination and to XX.X Operating in XX.X was in Operating for comparable the our connection are as term in occur three fees month million comparable to in due decreases signal, of million did which compared refinancing period September. X.X critical incremental third million cost and to first million grew compared lower XXX,XXX Adjusted interruption the paid as Adjusted production XX-month lower XXXX. sites provided quarter expenses offset our Additionally, three following as and month decreased compared XXXX. our were the by in part the Hurricane as generators, with as compensation XX.X incremental million to power Hurricane XXXX. XX-month diesel loan to for for to and in for in in period due to termination million XX.X This increase million million periods expenses maintain period enhanced based of the political higher million XX.X comparable the in the incurred the for employees. to million EBITDA licensing stock and Rico

the reported Jobs our and on corporate Rico loss. lower the XX.X due income increasing by three A taxes paid EBITDA foreign On expense periods US revenue, quick XX-month and revaluation the and created tax XXXX, of of respectively. and December note lowered XX-month by and Code the periods, million the Revenue income likelihood political rate. reduction in to decreased in at This million XX.X Act deferred our net in utilization the three rate. effect adjusted the of asset XX, XX.X million amended Tax credits and federal Puerto had Excluding the the tax for net tax the of tax tax corporate primarily Cuts the Internal

our in cash source the will from income the expect Going US. reduction of mix the but from portion by driven the the forward, US US, the our and income that outside given from taxes, of be income of outside taxes is cash we a

to the in had balance and we XXX.X of sheet, debt Turning million cash. XXX.X million

leverage X.X gross and net leverage approximately Our was X.X was times. times ratio approximately ratio

repurchase previously As we share plan implemented announced, XXXX. in a

fourth aggregate weighted a XX.X price for price at million. average approximately $XX.XX quarter, purchase an of we of the XXX,XXX During common stock shares repurchased of

As original XX, on XXXX, of million the had we X.X million plan. December remaining $XX

As we overall of capital context we current evaluate share the repurchase will program regularly plans. our allocation the in do,

we in million million the line investments, announced XX During funded of year, the XX which range guidance million. $XX previously with to is in

an claims what payout. fourth adjusters in the not expected is sites to the is in our property million but a carriers, good be we front, we quarter, to principal on the show On damage. the insurance total In by insurance island. received X.X advance casualty faith proceeds had have a related visit and against a larger This settlement,

$XX claims prepared million. approximately and our under policies property have totaling We casualty

our losses receive in and to of We subject costs. XXXX property are that we optimistic payments deductibles will other on all

of Additionally, per our business interruption occurrence. $XX policies million combined limits have

interruption portion business claims Hurricanes are income We the a from loss preparing of Maria. significant to Irma and recover

these portion to incurred and insurance that over receipt proceeds predict. of significant the of XXXX and we in spectrum higher by and the expect be due several We proceeds precise the property damaged well expenditures FCC mandated The hurricane is will reimbursed next by repack. quarters. a capital FCC. that expect the the the Most We of significantly amount to received timing as difficult such cover will will replacement of of will be as insurance the expenditures losses be anticipate both

for As we given previously situation XXXX, Rico. announced, the Puerto we withdrew guidance in

conditions visibility the we at this while time. XXXX, For lack necessary Rico Puerto have the still guidance provide improved, in to

call any open and a the expansion reestablishing and that, sheet well growth fund decide about our succeed efforts initiatives. and recovery have to to as balance we to recovering strategic in will and ongoing pursue. ample executing confident the solid let’s will overall your XXXX We as business With we liquidity the on we are both operations questions. be opportunities

Operator

Markets. our And first Steven question comes Capital Cahall from RBC from Instructions] [Operator

Kutgun Maral

pre-storm Maybe on on the any to first, It’s levels. know but more in be expect it's market for I returning Steve. since hurricanes the been related outlook you us the Puerto very getting seeing situation, would near can timeline or to to for the in advertising fluid either a of and provide improvements kind Rico, what Kutgun still prudent Maral you've color

in think retrains should for broader current dynamics, the over XXXX? especially of I retrans, encouraging, with the in helpful market, pricing is to we And color think given very you sub back normalcy the the year, be pay TV for given but called more relatedly, over out losses growth the new would perhaps getting the closer any there. half how outlook but the deal the

Alan Sokol

It’s Alan.

those me I Let questions handle in order. if see can

think business sequentially the we're quarter optimistic So by The hopefully ratings, was of the I happen going has essentially market back island the second essentially, fourth normal be in up with But island reeling we’ll year, there's December, given given power as to October the is we the storm, from a well as dynamic which situation this expect the -- That and the and products, restoration think we second going XX% to of advertising about year was the of and mentioned, when and government I and best few storm. to a Nielsen of were demand of say quarter. last of it months hopefully doing economy what after we proceeds inflow the advertising was the was the month back to dependent unavailable business advertiser think and pent out our way early over the improved that stimulate of half is essentially in demand impetus and will normalization, every growth. year, was power to expect right normal inventory, we insurance that improve the is to returning to past on continue returns tell it going of for to to to return power and has that situation forward, up of pent as we proceeds also restored to we we I near a as month be you in every and and that can or life. further normal exactly normal as it continued because will now lot ago. create Difficult the improvement expect for for get island because the return

rebounding pleased us. unprecedented Hard out On as been power into, where know for We've the numbers with subscriber new the and restored. we’re month the strong entered ultimately at. settle to really month we've side, deal growth retrans really over seen has strong

out parity. if at they I that numbers close at the were -- think, not to all ultimately XXX% the where settle think will we pre-storm,

Kutgun Maral

organic of you your out market growth ad record America. to in further XXXX? or anything cable on accelerate and the fees well there thinking had opportunity called your how you performance as affiliate Cinelatino you're at then and WAPA share terms as US And could you sub about the Is in carriage improved networks,

Alan Sokol

given the continental expect of quarter in First little in think we to continue We and because really of the – a have pay of continue US of temporary be -- Puerto one it's to sub fill we fourth break think we’ll hard look Hispanics that, of and that the Hispanics case, will growth in was of TV, positive US that Rico US numbers of Continental because we out lumpy number to market. as have short still the all, fourth we’re good we opportunities did have in shrinking but in really in a the loss Rico underpenetration and from sales, -- operators that it the optimistic nice and within to we sources make the organic distribution some the have, and of sort of growth few announcements term. holes some Puerto that to fact to the we quarter some

Kutgun Maral

me, given in XXXX, same should ongoing trajectory pressures Understood. the the And cost I think the half first margins the have least content still the of the so management at you at balance the continued spend, of throughout we year? time, how in from hurricane, in top line for think out about of should cost but maybe lastly how think you some called we year,

Craig Fischer

coincide expectation for some it of and throughout with revenue year. in year, will the sort the manage to returning continue We'll second programming investments half the of of the the in

Operator

next question from Guggenheim. And Curry our from Baker comes

Curry Baker

and AT&T? that on solution see subscriber near networks On can confirm Dominicana? still do other you AT&T you front, term the your TV to And any are

Alan Sokol

in advised regarding that can't does they our Yeah, Dominicana in or to other in of TV discussions really discussions in their the living has with whether successful to And and million AT&T Dominicana, though nature the on a Dominicana networks. us. audience, service will for outcome obviously not affected with drop US. result them, constant was the Dominicans them We not comment particularly those X.X think TV TV I situation of we're ill of but the negotiations any decision

Curry Baker

M&A front, buying forward obvious How a M&A at third of pipeline And I you capital also do give working prices you you're can stock. is guess of disruption in have on of been and any color the business guys stock more these us back buying lot terms think you of through? in the fourth allocation in XXXX there about and the back kind relative the in still going versus to terms also quarter,

Alan Sokol

and I’ll Craig. I'll handle the to hand first part of question off the

M&A one and hopeful think guarantee those with we’re there's are line, we in pipeline some We Again, finish get immersed that the over that few get opportunities more no done really opportunities, but it's out really of can and deals interesting we we have. over we will happy the we’re execute next there those months. the it heavily or

Craig Fischer

answer the capital that of of we our plan the the call driver earnings approved evaluate our slowed. earnings we repurchase our plan over the share be part share call, M&A X And to strategy, within allocation a repurchases question, your left November, in have million our second QX cash. the Since of available overall primary little to on year. pace share continues had We’ll but last repurchase

Curry Baker

that now key whether then in that you also we’re into think that And and can on counts, XXXX? seen you you guys metrics any metrics and sort service me benchmarks the us maybe engagement the for few of have for Pantaya, have subscriber priorities give I finally months

Alan Sokol

to take We've early disclosing of that do to the not into But very returns seen that. specific receptivity the Lionsgate made encouraged for early the not great platform. We're up it. decision numbers. now are We by the and on us have venture both and

robust the among grow any apps expect We performing very continue As a are on Android shows to definitely to and proof out entertainment our concept I this grow of we it think of which there. said, iOS and publicly to and available highest in are both way. rankings

really a there's leadership the seeking run seize to we drive basis. it position here We quality, we content space in have think on and commercial to will continue a think free we opportunity for to and and growth the content the to first the invest continue OTT to but opportunity for platform make Hispanics go programming great this that in first

Operator

Thank Alan showing conference I turn any Sokol the to further from I now for phone you. And over back closing would questions our am no lines. like to remarks.

Alan Sokol

you Nothing much. very further Thank there. out

Operator

thank today's you conference. wonderful participating and does for you in the a gentlemen, This conclude disconnect. have may and Ladies day. all program Everyone,

Hemisphere Media (HMTV) 5 Mar 182017 Q4 Earnings call transcript