HMTV - Earnings call transcript Q3 2018 | Hemisphere Media Group Inc

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Operator

Good day, ladies and gentlemen, and welcome to the Hemisphere Media Group, Inc.

Third Quarter 2018 Financial Results Conference Call. My name is Imani, and I will be your operator today. A replay of the call will be available beginning at approximately 8:00 p.m. Eastern Time today Monday, November 5, 2018, by dialing 855-859-2056 or from outside the United States by dialing 404-537-3406. the XXXXXXX. for ID conference replay is The I to Ms. like to call over turn the would now Danielle O'brien.

Danielle O'Brien

I’m I’m Thank I’d outside everyone call. like operator, Investor to O'Brien, you, and welcome to good Relations firm. today’s Communications, Edelman Financial with morning, everyone. Danielle Hemisphere’s and conference

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

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

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

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

Alan Sokol

Thank you, everyone. and Danielle, afternoon, good

growth Third in strong the overall revenue over another advertising revenue once affiliate QX, growth XXXX. solid quarter WAPA our in quarter delivered EBITDA increases across U.S. excellent defying trends and and in advertising strong We at performance. networks experienced of represented again revenue

ad of was true both in the and While versus comparison grew August strength revenue in due the impressively also testament months September to July to comparable favorable a XXXX, a hurricanes. WAPA the and Rico ongoing as recovery. rate well an market and in favorable The as low. remain Rico’s WAPA’s is power. Economic reflect Puerto September study indicators historic Puerto recovery that unemployment dominant

June car August, higher New the XX%, in period sales percentage by pre-storm hotel were points through rates and occupancy comparable five XXXX. increased in than

call, projections. estimated $XXX,XXX, net As was I of currently approximately migration Puerto last at mentioned early most than in Rico our out lower

continue of fiscal PROMESA returning funds. over is proceeds optimistic this by and of growth. years, to will plan families billion drive fueled insurance the We federal $XX The project start and shrink insurance for year. private are of with number coming the which Moreover, federal recovery that the school discontinued inflow the the being economic updated

I inadequate As a implementation depend upon of will needed infrastructure. Rico’s discussed Puerto power and in had prior reforms solution also to calls, permanent growth structural long-term

power authority. a encouraged plan, the progress Puerto still government the and aligned has While fiscal in PROMESA we not are by on privatizing Rico

population face are resiliency the the horrific importantly, Rico of we More the impressed Puerto disaster. by of natural a in

and to much Nielsen optimism has and the and hurricanes ratings long-term clear done, for Ricans pride been first the island. While there the Puerto was believe remains truly to WAPA full This is since work leader. of we of the the inspiring outlook speaks be the healthy quarter

which Universe Puerto programs rate September, Rico, including all three obviously In broadcast this programs rating. fact, the WAPA highest household XX Miss year were in of

networks, and Turning defy we channel as U.S. U.S. groups. overall to once across other We growth all trends outperform to cable subscriber subscriber again our channels. cable organic strong dramatically our continue show

impressive delivered growth new significant have optimistic shortly we once Importantly, year MVPD that an announcement a again increases regarding over with sales also launch. ad numbers. ago robust a will we’re Cinelatino,

our to and an reinforcing roll Cinelatino and excited our originals, theatrical that unprecedented unique We’re of compelling provide slate viewers. premium blockbusters commitment to content for

We’re nominated five The outstanding creative cable large for prime highest our most Awards was revenue Cinelatino, of WAPA in any for proud history. team achievement audience also time in in also QX which Promax WAPA at QX. growing of ad its extremely robust Hispanic in ratings and with network. increases the America’s marketing. marketing America’s drove

first robust QX, Pasiones out beating them In to we of seventh received true series XX% were This more struggles the Pasiones be has deliver immigrants from Univision in rated consecutive versus telenovelas XX% the and by day history, the total been relevant, in the quarter, not well by growth in exploring Centroamerica highest XXXX. could audience TV, America. and the [ph] Inmigrantes For ratings experienced proud time its Central for or triumphs original QX, launch incredibly series new channel, view timely and ever community. our our primetime. and

look QX the entirely graphics stylized folkloric October Baseball Professional League Dominican Dominicans. began modern Television which most of on-air September, new in in an an season launched air and sport a U-verse and among launched and AT&T package, to retaining in we successfully Finally, games, is edge. while the popular new Dominicana in

will original and its in Columbia grow will Turning continues premium Canal we broaden further. strategic Pantaya the its accelerate which to productions transactions appeal even introducing pipeline, exciting its and we soon our our series and will impressive continues believe to have believe which some growth be offering, ratings share, investments. growth. we to in subscriber Uno and trajectory,

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

turn that on over you pipeline M&A Craig. to We these everyone. more now Thank opportunities. execute the have can I’ll we an call optimistic or one of active are and

Craig Fischer

for were of XXXX everyone. the revenues Net a XX% $XX.X nine afternoon $XXX.X advertising our increase revenues the in the The of compared period net good million for quarter ended were period. to and month third Alan, Net XX, growth ago you, year in was across million Thank revenue networks, revenues for due as advertising in negative to all decline increase revenue. $XX.X year increase including to affiliate a of our advertising period. other Maria advertising revenue half the impact due revenue ago on revenues was at higher was The million September first decline by in by increase by WAPA cable and offset XXXX revenue. the driven The offset the to networks. by Hurricane in million $XXX.X an compared primarily in

Dominicana in were in of the fees a hurricane increases revenues $XX.X of adoption expenses to the including was respectively. production and quarter million growth period. fees due place and the in Rico Hurricane increases increase did for expenses primarily of The Puerto offset in Affiliate nine were net and slightly part broadcast for and compared the third XXXX achieved nine $XXX,XXX for production was Affiliate interruption Additionally, Universe third to quarter not pay programming blackout third were and the to recognition our primarily the $X.X $XX.X incurred period the by XXXX. revenues, million up growth. the million current expenses million both rate as the Television to year DIRECTV the standard. Operating September three in termination new the Maria, which content. which to for to due TV of were the nine expenses from were termination was the $XX.X This half periods of higher period. the despite increases by month nine-month $XXX,XXX $XXX,XXX period in of second as month on $XX.X subscriptions the and increase These three by year-ago of increase impacted Rico, rate the and positively fees in overall increased licensing due subscriber increased to of compared of first Miss overall by in Other XXXX. content WAPA DIRECTV. in by period. quarter revenue licensing million to related aforementioned Television prior DIRECTV the and caused Puerto higher The to subscriber related Dominicana year-ago periods during the of take due period Operating due our primarily parties, to month the are

for received period. as backed an of result to the new required. income, vacating recognition proceeds are the the of EBITDA million The Adjusted earlier ago Adjusted for increased the a period on than year the compared was million year but $XX.X spectrum gain in of period adoption period. payment adjusted periods for EBITDA ago adjusted payment the to out $XXX,XXX of repack, both EBITDA of compared $XXX,XXX offset operating for to the related month SEC for included million the was million as nine EBITDA. $XX.X $XX.X as both EBITDA standard, expenses of month period for spectrum from current of and $XX.X operating revenue three and incentive proceeds incentive by Additionally, the SEC the

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

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

We to as expect impact our roll hurricanes. tighten leverage by year ratios off we the of the end

quarter, $XX.XX Capital aggregate $X.X in repack. $XXX,XXX. FCC During and damaged spectrum million of for purchases of including expenditures million average to we price million an of $X.X mandated equipment third required common Hurricane by $X.X replace a by repurchased XX,XXX weighted price Maria, stock approximately at this the equipment approximately shares purchase for were the quarter,

reimbursements received damage insurance During and the million quarter, proceeds of FCC for we XXX,XXX. property net $X.X third of the from

required to proceeds by replace of insurance by spectrum expenditures. damaged CapEx incur to FCC equipment the continue the repack. We will equipment and that and Hurricane reimbursements Maria cover most anticipate We

the including $X.X million concession. into million we funded for of installment $XX.X the During an quarter, Uno, Canal

growth we With unique open to XXXX full and our and the Puerto Rico’s We’ll EBITDA and questions. and as revenue recovery call full issued we’re of guidance the that, will EBITDA in the for year in our With our year offerings business mid-teen to adjusted XXXX. growth. reaffirming compelling believe drive continues improve now content economy, previously percentage continue channel to compared to the your of

Operator

question Canada. Instructions] with [Operator Steven Cahall first Thank of comes Bank from you. Royal Our

Your is open. line now

Steven Cahall

Thanks. you getting WAPA rates. Maybe add storm. low back It double prior I to the off run run in normalized to sort your of maybe start had Rico. for of rate like revenue in teens to QX, ad kind even you’re sounds digits Puerto on

WAPA thinking in feel like I as we’re in back it normalized at for Rico year, mean rates run ad how about out revenue? I’m So does you this ad Puerto come to PR now revenue

Alan Sokol

advertising normalcy. starting of a to we’re level see Steve, think, return I to

I think post-storm the history. reluctant a that too a of far we’re future we to don’t given lot have bit into forecast

a pent-up So we normal we long-term it be is demand. that optimistic how much I think quarter will short-term quarter. fairly That said, fourth know cautiously versus don’t feel,

to annually. Puerto Before the low storm, Rico mid-single as been you had ad declining revenue know, digits by

think, good in we think, we the I I if continued declines, quarter. reasonably so, of those are feel sorts where that And fourth you apply about

Steven Cahall

about can talked also as I some revenue you I Yes. upfront growth so being networks, by in as then driven ad Thanks. pricing do And think much we there – we Should you guess we how think should that about there about of at sort scatter think well? cable well. the ratings? as don’t

Alan Sokol

particularly can year, I WAPA good results – think in very we’ve this Cinelatino in and you advertising had America.

of sales it’s largely think improved I and execution. function audience, efforts ad and improved just a

we same to Telemundo fill of time, advertise also ratings, the this, for should which and think that a I decline just have through expect Univision, the the in in two one years unable would and counter-veiling – been market advertisers so volume continue beneficiary the we’ve audiences to not direct probably into being Univision’s to requirements response that continue solid. past playing there on term factors you are they near as that taking that. One of taken. both are Univision their remains At as are is grow are long

Craig Fischer

we seen networks would that I positive the by Univision cable up leading have in But even drop add the to DISH. trends

Steven Cahall

subscribers the of loss to cycling cable we the then on through of talked things. part cable some being growth some well? that allocated That networks, the revenue about business I as all And you’re network as cable million is side have you you should total that affiliate that think the retrans? still Okay. Because of $X.X Just that about, of of or on know your

Alan Sokol

to it well. network cable is allocated the as Some of businesses

While subscribers prior well. year, we some from continue certainly increases obviously, to we as our still annual see had rate year-over-year overall in delays and the growth

Steven Cahall

after current is And deals kind still reported subscribers on ad Dominicana? to got? TV are rate subscribers Or run that new the the getting you recent you of the backs

Alan Sokol

recent the new that believe that back AT&T. the I on is run reflects rate – relaunch

the more that current So should be the install base. –

Steven Cahall

Puerto launch. not Great. got in upcoming that’s you that And Rico? to then mainland launch, mentioned assume correct you’ve a an U.S. Is MVPD that, it

Alan Sokol

Correct.

Steven Cahall

Pantaya would how is any And then You give update the going? success numbers could is mentioned release any bit it subscriber be great. us little the having, you in on a and

Alan Sokol

feel have business to we’re will indicative product we that of pleased good not, don’t the release the us. unfortunately differentiated we’re and Yes, here. and but growth. and growth that all and really introduce subscriber the function decided that’s the in about for Lionsgate we’re We to a product, in have – numbers, we’re feel say demand, suffice on, product, that we we we’re the the really series an take-up, the to Steve, We churn boys concept are a big a which step a improved and really to growth focus – not original rates believe service, create some with product

Steven Cahall

then last for me. And one

repack, on CapEx is got a tighten QX capital working tons you’ve up the You and expect basically of that mentioned that kind in just the you’re to and know leverage swing, so the leverage? tightening, going insurance I between Craig,

Craig Fischer

actually No, a because an the up leverage perspective challenged off current quarter, QX XXXX so.. it’s rolling we’ll and be in from LTM fourth ratio of picking

Steven Cahall

sense, makes makes sense. Yes,

Okay. you. Thank

Alan Sokol

Steve. Thanks,

Operator

Thank you.

next with Our Guggenheim. from comes Curry question Baker

open. Your line is now

Curry Baker

there? Could Sort that and of the advertiser Canal market more share you network? how you’re doing the us The of ad thanks for guys, terms a question. update little Hey broadcast in health for demand Uno? overall maybe on of

Alan Sokol

Sure.

with share and and We’re so plus eight, two essentially competitive, share, right about feel into entrenched going a a share this existence no strong now the of eight, network market competitors. at very we year well to nine from an good in nine

So that. very we positive about feel

growth. of programming also new significantly We we the growth of the deals pipe, we terms in have – the that as some working on At we feel as be could our some that transformational will minimum, have well network. we are accelerate somewhat a believe in

that not we we to it’s Advertisers, believe a we the of number a what the think size few – As business of network a we depend any we one have said this our too need don’t market, make before, don’t be to in in that’s the but we one not in it’s this, in will years, has we have in on not order in that’s not mid-teens, two distant kind we not option of – that’s that we very viable. be plan, success, of a This market in and believe has future, and duopoly been third at the the the if we point this XX market incumbent welcoming broadcasters. only world market. are for only the what

I advertisers viewers welcome third, So in a both innovative original option market. think, and the

Curry Baker

pre-hurricanes to Okay. delta TV still And a how us in exists you Any Can you might be versus between pay are they sense now there Puerto of where one Rico on sense there? ground give that another where more maybe year? make currently the were last retrans. much up subs think of

Alan Sokol

in a have real-time the We growth statements receive to subscribers on among generally Yes, two-month mean, continue We month-over-month lag. market. numbers. we we I – think that see don’t

now, XX% to that have most of that the August, expect the of on growth but as numbers is were we The and – based where – from everything we’re we we population an definitely trends right see continue, we’ve is the up, are loss maybe kind pre-storm. ending on that the there continuing. distributors you recent we down are but seeing subs, of population, will heard around So sub-numbers, today overall impact they have

Curry Baker

guys about I expect provide quarter? in third timeframe color did a think that to million for I you issued in there million terms pace authorization in or finally how new August, any have the And helpful. $X.X buyback? you you you that’s Okay, me, can a guess $XX of

Craig D. Fischer

design level of million announced was of to limitations Yes, used $XX to the in result the activity intended overall quarter our trading the the a in plan flexibility. maximum the that us The August is opportunistically in and volume be give we stock.

as guidance far much give be how really will that it can’t So beyond utilized. as

Curry Baker

Thanks Understood. Okay. guys.

Alan Sokol

concludes to turn now call you. closing session. Alan Q&A you. for back This Sokol I Thank would over today’s like remarks. Thank to the

Alan Sokol

joining Thank afternoon, we this you for us remarks. everybody to and soon. will No talk you further

Operator

you Ladies program. does conference. and gentleman, This conclude participating today’s in thank for the

all disconnect. day. may You great Everyone, a have

Hemisphere Media (HMTV) 5 Nov 182018 Q3 Earnings call transcript