HMTV - Earnings call transcript Q4 2018 | Hemisphere Media Group Inc

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Operator

Good day, ladies and gentlemen. Welcome to the Hemisphere Media Group, Inc.'s Fourth Quarter and Full Year 2018 Financial Results Conference Call. My name is Chris, and I will be your operator for today's call. A replay of the call will be available beginning at approximately 11:30 a.m. Eastern time today, Tuesday, March 5, 2019, 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

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

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

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

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

Alan Sokol

Thank and morning, good everyone. you, Danielle,

of subscriber to solid was streams now #X in We overall demographics. Rico the in We again is U.S. audience of our are key levels, fourth across full the once and and and XXXX. leader. market growth defy station with revenue and strong and the remains continue Puerto stable delivered year pre-storm quarter business total all trends. performance WAPA economy the sales pleased all approaching Rico's our in Puerto WAPA

Rican we and steady decades. its ahead, we is the expect Puerto are by look continue The metrics ongoing the of across restoration in the Puerto Rico's recent we reflect rate economy recovery. encouraged to lowest the As unemployment recovery, key economic X.X%, one this island. efforts

highest XX New and car XXXX. sales their in XX% cement versus at were years, level in were up XXXX sales

$XX a X/X has that Rico island's for court and strengthening tax the profile step out Puerto won of wipes sales restructuring back approval to access a capital financial markets. good Importantly, its billion bonds, providing in significant

Significantly, impressive our is fourth XX% of as U.S. I novelas day with driven will telenovelas and of for increasing quarter, and time. consecutive unique over being quarter ratings Univision and highest compelling audience channels. The ratings result delivered the cable and growth content prior strong second of period. year by straight by series by the nontraditional ratings, the India. an prime markets, total channel's beat Pasiones such from are record XX% in the Turkey quarter its strong the across and Turning a it networks, start growth Pasiones, all ever We to which making of our saw in profile eighth our our audience. which

strong few a We in and again growth. ad channels and Pasiones launched, Pasiones' major momentum, the the it continuing channel X the Spectrum Spectrum, Pasiones in being will the nationally are when impending markets achievement and a compelling and maintained the large are first New York. including launch available impressive This across HD, making in excited of content milestone is validates to accomplishment Moreover, HD Hemisphere Los Hispanic Nielsen-rated once its sales and Angeles cable be a the network time Spanish, unique Pasiones in very for offering. as U.S., announce is in At delivered this Hemisphere. U.S. second-highest on Cinelatino very

Cinelatino programs was in nonsports and X During Christmas for cable of rated the Eve accounted #X on X quarter, the Day. Christmas the highest-rated and both network Spanish-language

the highly network about season. in We most X, a record strongly total are and productions. America Centroamerica as evidenced very ambitious another will set for strength lineup El continues WAPA Desconocido the programming series the surpass to of by experienced ratings, unprecedented month, excited launching day cable and which our confident top-rank, slate XXXX will quarter TV sales fringe hits ad in its original Spanish-language robust XX% is our we period. over This yet early ever, original successful featuring the first perform XXXX. blockbuster ratings we're quarter of QX. in fourth of position growing America nonsports, of WAPA The time be

of the the singular news February it region. This QX, made With and telecast the demonstrates cable presidential recent we Centroamerica Salvadoran for for Bowl, all TV's Snap the the the Super exception impressive highest-rating In as breaking of X coverage role of acquisition, our Spanish-language destination network. is Media. TV's particularly most elections closed events and the Spanish-language Centroamerica major

co-production expertise for identify are valuable and co-productions outlets. These content to and in drive and We to emerging opportunities content content existing generate America. the sales networks to about Snap's existing excited opportunities and licensing opportunity to new provide Latin for our will leverage Hemisphere's

the Canal producers entered accelerated investments. Uno strategic impressively. of share leading QX, volume and world. with In ratings our licensing growth Canal Uno's one a have multiyear deal NBCUniversal/Telemundo, into content to in Turning the

this under XX.X% time. XX% Hay Overall, Canal with network Colombia. a and has share The Uno prime the #X Canal audience averaging day increased Friday Monday Sin share in audience ever, been share hit regularly a to first Uno's had biggest making Paraíso, in total to Senos Sí XX% series deal,

series strong growth XXXX, we starting further of We hosted by Pantaya proud with Mexico, History, continued will Pantaya's only biggest the Derbez. trajectory, Eugenio Drunk with subscriber original its these believe a accomplishments are growth very after premium star in years. of X.X in accelerate strong and pipeline

has dispute DISH our of and impact subscriber between Univision. Before has to meaningful overall numbers. affected the which I of closing, DISH suffered subscribers, wanted address a ongoing loss the

can't or when a left subscribers who will will to prediction resolved, that if we believe have issue other this DISH make migrate be we While distributors.

We view are already to a beginning see trend this a displacement as and, subscribers. not situation loss this and therefore, of short-term permanent

accelerate Finally, call everyone. pipeline a Thank turn we in pursue over continue and you, M&A have will closing, I growth. will that opportunities the now to Craig. our to healthy

Craig Fischer

compared of in year-ago everyone. million you, and net Thank morning, the million, XX% were of quarter the $XX to revenues good as revenues Net period. $XX for fourth an Alan, increase

period. the For a year XXX% increases quarter million, period, all net million were and across of for favorable or by XX% increased the our the by growth over an full negatively streams. compared driven benefited comparison the over revenues with XXXX, period. million million the $XX.X fourth periods, Hurricane comparable which XX.X% increased year $XXX.X were prior the revenue or comparable impacted year, the Advertising in revenue were year-ago $XX.X to for from Advertising Maria. of $XXX.X revenue These increase

revenues over fourth the of recognition in the we revenue Affiliate new benefited increased networks period. the the growth $X.X standard. of current cable comparable adoption sales ad in our impact addition, in or In quarter XX% and from the period million

increase were XX-month were $XX.X November million, and $XXX.X production million to to year-ago the the period. increase increases $X.X well compared consisted as $X.X well revenues increased expenses driven quarter for costs increases programming periods, savings rate due overall increase of increases also proceeds year $X.X compared and fees normalization fourth expenses the hurricane-related affiliate insurance the of For The X% maintain million Irma million million the in quarter licensing in These primarily which was Operating to of primarily These to revenues measures cost from period. pay year-ago an increase to fourth $XX.X in due higher X- and business These the closed benefited XXXX, including in interruption X% period WAPA $X.X to for Maria. increased to primarily of of Hurricane with as higher or of increases WAPA's full as were Hurricanes policies million $XX.X over XXXX our was which following on transmission in and were subscriber Puerto due by Media, continued signal production as programming cost X% as TV Snap XXXX, Other Rico. content, our contribution subscribers at the in million, Puerto growth, The of an XX-month implemented of Maria. in Operating from in of restoration expenses, quarter comparable due the as the received period. XXXX. for we Rico. connection expenses respectively. fourth and to million were rental the of tower in due

out as $XX.X of year period. was quarter for to received XXXX increased compared of $X.X adoption in EBITDA and gains the the the incentive $XX.X insurance to for offset of The the our proceeds of Adjusted year EBITDA $X.X period. of of in both by recognition from EBITDA the an XXX% million related vacating Adjusted to the increase for backed Adjusted and the million for an standard, revenue as earlier Additionally, incentive line both FCC an was XX% due guidance. periods as fourth to operating a compared comparable the increase current business $XX.X equipment the repack operating gains spectrum with reimbursements full EBITDA. also million. excludes for but expenses result on interruption payment spectrum million, the required. Adjusted purchases proceeds was our XXXX for comparable income new than in payment million, for periods FCC included growth full period EBITDA are

Turning $XX.X the in balance We debt sheet. cash million and $XXX.X XX. December million as had to of of

ratios and approximately at approximately leverage was gross and including net ratio was insurance and are X.Xx leverage net interruption ratio proceeds gross EBITDA, leverage adjusted the leverage X.Xx. at approximately When lower with Our X.Xx. leverage business approximately X.Xx our ratio meaningfully ratio

During purchase of at we full million. XXXX price of of average year approximately the repurchases an to XX,XXX common fourth weighted price brings for shares quarter, our aggregate $XX.XX $XXX,XXX. stock repurchased approximately approximately This a $X.X share

replace year and equipment had to plan. $XX.X purchases required repurchase original expenditures share approximately FCC-mandated equipment million including by $XXX,XXX of repack. $X.X for our we Hurricane on As remaining the full $X.X Capital damaged year-end, Maria for by million spectrum million the XXXX, were

on FCC received the we reimbursements our year, $X.X insurance and million of the policies of million. $X.X from During

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

Turning investments. to strategic

to investments During the This $XX.X and strategic million brings into into Canal a our joint full million. of $XX.X quarter, we including total Pantaya. ventures, into million funded $XX.X year our Uno million $X.X XXXX

We guidance that, our and are are your our Rico growth are Puerto confident now to content and call to normalization growth. approaching that and that of we questions. the unique compared issuing will With XXXX channel extremely offerings open We'll is accelerate pleased percent as to XXXX. mid-teen adjusted EBITDA differentiated continue

Operator

our from And first Bank with Canada. of Instructions]. comes [Operator question Cahall Steven Royal

Steven Cahall

what's Maybe you talked first, on about going just DISH. with

I think on in impact DISH And down the you think us sequentially. you were your help U.S. Could a if the those temporary subs trend? subs? that's maybe quantify

Alan Sokol

starting a distributors. give by can't said, migrate publicly on It's was which and to relates try been subs, see disclosed other DISH But with are to definitely There That loss as Alan. both some Univision. resettle talk it guidance. and we you DISH let those any specific subs We numbers has me to distributor. meaningful

the exception nice though worth look for ecosystem you other proxy better and for not which excluding Television give our actual mentioning see, of channels. that our distributors, all on Dominicana, channels. DISH. at distributors growth a all DISH another robust the among that And of the with And carried a other you five even numbers organic way If four our as of is contracting. carry overall carries will is DIRECTV, can you is at point growth somewhat our DISH, continues

of five DISH have our So extent another migration. subscriber terms that of we channels, our a that carries distributor as the migrates a will towards to of a that in meaningful result pickup all subscriber fees

Steven Cahall

from I year? be to And to the maybe congrats kind if it's you of your EBITDA is launch could that guidance provide expect growth wondering that a Do kicker us Great. was alone. on Spectrum. is even EBITDA major if to you then relatedly, Pasiones the that -- qualitative, on contribution what the adjusted of for

Craig Fischer

change It is in subsequent as addition Pasiones. comment to Well, sub we on a EBITDA significant growth. Yes, it. you'll can't obviously, the we quarters, our report see,

what on contribution us. be a draw meaningful contribution is. the probably able But to view You'll a for it's

Steven Cahall

was able then Rico. on And ad ad if affiliate give of that Great. and affiliate might U.S. and the I at side? you breakdown Or qualitative versus just us revenue Puerto to be wondering anything revenue. on

Craig Fischer

get Puerto mix. don't We Rico into on details the between specifically

You this as -- skews advertising to do of Rico that to is fees faster-growing had Puerto affiliate revenue in affiliate stream That our revenue said, Puerto more Rico fees. know given there. than we've subscribers of a deals pay the levels, throughout also from historic the as, year, online back renewals TV our came And retransmission and we as well. that as we've benefited reached

We into forward will continue going that XXXX.

Steven Cahall

couple then And lastly, of OTT a maybe questions. just

acquired talkings Pluto I some about to look us saw Pantaya. on strong recently for you yet. think said if there Viacom There the might tier. you Spanish-language counts like I be then sub willing growth a are Alan, you TV. wondering sub that also, was And tell what

So see them as a you're in could indication whether I you give if cetera. whether your content, that wondering with discussions us any was threat, you et as for

Alan Sokol

growth the and, we in we been not starting Steve, that Lionsgate that growth over from of the launch. trajectory that, you have And past fact, premium quarter. -- really will though not agreed the the with standpoint has we're a to unfortunately, further good and believe that we tell specific just to accelerate on I are Pantaya. original accelerated can numbers series has introduction disclose

this already and we to first Our viewing tremendous that past launched one And Friday. saw series. response

for potential, opportunity So and growth plan very on we're good we're feeling that. about the the and

think content We space. advantage, we don't in we a lock there. like there's that market. and have there's we We excited think in proof-of-concept feel best think We about else it. we're anything major So that the first-mover on have the also

I speaking excited So very for about as -- opportunity we our there. the we're well, partners think both think I

and I Viacom say Hispanic frankly, a intent or Pluto what acquisition comment think of And complementary is think I I for strategy one. our will a they're us, for think comments doing. that ongoing their terms on But -- to the I develop Pluto, it's In can't we're of to discussions. their good a Spanish-language I that

in content with be tremendous would them the would very platform, of available and them that way and a have that amount launch to make Pantaya. I and we which potentially no we that to growth help have We of valuable accelerate think competitive what could them is content on

Operator

with last question And Guggenheim our comes from Baker securities. Curry

Curry Baker

update ad were give we at maybe then you terms WAPA, you a as the little a sort counts as Puerto in Puerto are Rico's in us subscriber relative Rico XX% were Could color where relative to also, little Are where like and maybe Puerto more we of to pre-storm? could where of in levels? pacing the we kind recovery, stand color Rico ad currently market retransmission And to of back on they pre-storm? provide just they

Alan Sokol

Sure.

Puerto think I speaking, is generally Curry, think, Rico normalized fairly I now.

Craig XXX% can market's sales getting good I the in amount is characterize and that growth return to your yet, normalization. the time It's finish and but there, think rebuild. is you ad versus the perspective, there. about an down accurate I visibly and comment ongoing will pre-storm spend think not would it. improvement and From comment, to percent that's XX-plus a I way it see I and of ongoing improvements, the continue market to be efforts there a an

it call population -- around growth, there. levels. close will it did X% people, of But it Rico to that XXX,XXX or sub know pre-storm think relatively the so. get On will Puerto number. I we estimates that its is back mean, get back so are I don't not lose to that fully

loss to probably good it's see think some feeling you're by of alone, that to I where going So subscribers. was close But we're going to getting see that of -- virtue it pre-storm.

Craig Fischer

behind we're so are. a we're months throughout year. where month-over-month We've lag a remember, on basis continued still And of they growth couple from seen the

Curry Baker

outlook provide well for Any for Okay, Can upcoming as your Pantaya or us great. helpful. this you year? would commitments breakdown Canal joint be any for Uno cadence on And then venture XXXX. commitments for and your funding maybe

Craig Fischer

funding for Yes. I get the year. the on specifics into can't

of is as XX-year the two far Canal concession, recall, over payable you if years. in cadence the As concession renewable Uno, the case

made have four we'll So XXXX. payments in

one that in will remaining quarter made the of be We first have XXXX.

largely that in will away portion funding of XXXX. go So

the capital funding ongoing the the So will working around be business.

Curry Baker

pretty That more had business this of Or fourth was disruption on disruption question. further Okay. you the payment? much a business insurance expect in the the housekeeping proceeds you And million $X.X the of insurance front? quarter. come Do any meaningful

Craig Fischer

This much payment is pretty we were the that expecting.

Curry Baker

Okay. not finally, are close there could the me. guys or deals you provide what guess Is just pipeline, expect any color I seeing? you M&A And any to 'XX? incremental in on for you Whether

Alan Sokol

it's can't we're are say encouraged we Curry, It and or existing that execute on comment looking that and about opportunities said that the is and can our are deals been at. Obviously, that feel we're we will enthusiastic opportunities next really there. negotiations we do will quarters. deals them -- that But in some mean I enthusiastic I any the get there, couple of we But in of more there hopeful or out done. that doesn't out interesting or before. encouraging one we

Operator

question-and-answer today's Mr. Thank call any further like that Alan back Sokol to would I does to for turn you. remarks. And the session. now conclude

Alan Sokol

No further operator. remarks, Everybody, day. a have nice

Operator

for you today's participating This does conclude thank today's gentlemen, and Ladies in conference. program.

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

Hemisphere Media (HMTV) 5 Mar 192018 Q4 Earnings call transcript