HMTV - Earnings call transcript Q1 2019 | Hemisphere Media Group Inc

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Operator

Good day, ladies and gentlemen, and welcome to Hemisphere Media Group, Inc.'s First Quarter 2019 Financial Results Conference Call. My name is Sydney, and I will be your operator today. A replay of the call will be available beginning at approximately 1 PM. Eastern Time today, Tuesday, May 7, 2019, by dialing (855) 859-2056 or from outside of the United States by dialing (404) 537-3406. The conference ID for the replay is 3099586. the to turn now will call Ms. over I O'Brien. Danielle

Danielle O'Brien

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

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

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

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

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

Alan Sokol

you, Thank and good everyone. morning, Danielle,

progress of a had the strategic drive We across strong to initiatives. streams, in growth we continued robust all key have revenue and start make and year. our value important We delivered our to

them. to we offer grow, content a target highly differentiated continues and to audience Our

results position, our we are positioned well these to year our With and strong market full achieve guidance.

encouraging see metrics. to Turning all to economy and Puerto with Rico. across improvements continues steady growth The key

sector in since year-over-year. private employment growth continued The with year-over-year car March, During its growing highest its sales. XXXX, strong auto XX% X% reached rebound industry level

of the economic aid federal expect and continue dispersed pace continues proceeds of of $XX island $XX economy to reflect Management Budget into billion recovery delivered from been solidify. the in the aid fee aid the We federal ad with of estimating WAPA's Today, sales and as significant allocated the and continued billion subscribers. according flow TV billion results insurance growth. with the strengthening to total pay of WAPA have economy the to and Office only recovery increases contractual $XX fee growth, over budget two also both of benefiting decades. next retransmission robust

Turning to channels. our U.S. cable

previous as Our results our underscore quarters, business. unique in quarter, in and differentiated the

quarter by of While market. subs, and XXXX. of target the the continue we ninth audience U.S. of with channel, the record the distributors continue history overall Pasiones, to quarter XX% an ratings our in consecutive At highest first the the audience to delivered growing allow over will content outperform impressive to day us lose marking video grown total ratings, proposition

are distributed Pasiones On across the April of Pasiones from and Pasiones XX% and straight a prior Turkey primetime is X, a is driven Rather ratings is are beat Spectrum. was and programs India. traditional top launch telenovelas this markets across channel series by nontraditional a national with Univision's on in its quarter, Pasiones' America. Spectrum's novela unique national third the in Latin advantage, result, to none XX For channels whose was that launched and fully regularly the are Angeles distributors. such from footprint, the cable, as one novelas as we being impact our result anthology now all U.S. expect very and are advertising two distributors subscriber to reach being have markets. largest to the launched, proud At being of boost and of will we the time channels satellite a footprint when dropped not in telco channel but few major includes have a and New on largest Los York, the as viewership. Hispanic This positive revenue will additional and fee launch only added

once is We to are which distributor in encourage network. follow also pleased believe cable suit. first solid the distributors performance we rated will Spanish-language and ratings HD, remains Pasiones Cinelatino that launch again to posted other second-highest Spectrum

posted with to value During Desconocido, of renewal second season increasing total count. and by day a we ambitious total end, increasing America X% with fringe early strong XX% and the over growth, channel the weekday over our Subsequent ratings another remains strong agreement highest-rated the sub reached quarter, the launched quick our response. of and affirming Cinelatino cable DISH WAPA QX the also multiyear quarter, TV network. period original quarter audience its strong Sling, on in XXXX. ratings XXXX. note first Centroamerica top day quarter WAPA Spanish-language series in concluded channel weekday of ever, primetime. quality America audience again El our most a quarter by a five One

by the QX As dispute. negatively our in in subscriber XXXX, DISH-Univision numbers of impacted were QX

we dispute this the in an the with view as However, resolution of anomaly. March,

expect of who that losses distributors optimistic from addition, in will from continued benefited subscribers. and DISH we have realize growth the subscriber DISH to We abate, are migration

day the in and to XX% increased XXXX had competitor outstanding of now Monday share already to by investments. and broadcasters Friday a is Colombia quarter over XXX%. strategic first share total primetime Canal in strong its the to Uno an Canal first market. by two Uno leading its quarter the Turning our increased

than in top Canal In primetime were general cable the Friday to Uno's Monday ratings higher fact, combined. channels eight entertainment Colombia

achieve that audience are and years, proof given Uno compelling Canal these We have and was program alternative. to results a has only that the in able proud they Uno Canal X.X Colombian fresh

share increase commensurately. its demonstrate ratings we to and grow its of value continues see revenues market, the Uno As to advertising to Canal its expect

Our the service subscription excellent digital as an Roku's of in and Significantly, lineup as about we the quarter subscriptions initial are Pantaya, TV+ Spanish-language encouraged subscriber growth, only well extremely experienced on Pantaya premium in Apple its prospects. platform, channel. is

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

Craig Fischer

XX% strengthening including million as period. and as first you, spectrum Alan, the quarter year to by required revenue XX% to related of million due Maria. the $XX gain an XX% of the first also The gain period included the when was period increase driven was $X.X the as year restoration The higher the TV repack for decrease programming reimbursements spectrum quarter operating X% the adjusted timing implemented net million, the good WAPA increases period. in Affiliate expense increased by or an million repack. equipment savings Advertising revenues million $XX.X million, from FCC quarter as the The expenses in the hurricane-related overall cost for EBITDA. to revenues $XX.X first Puerto comparable in Rico. $X.X Puerto following offset over backed was as driven fee expenses of for a compared $XX.X measures in in revenue Thank prior from of a production subscribers purchases period. over offset or period. an million ago increase income morning, Rico. comparable the FCC year out Pay in the in million, Adjusted quarter quarter to comparable subscriber EBITDA result the incurred of expenses year and primarily Net the but everyone. $XX a million $XX.X $X.X decrease prior in of Hurricane ago is XX% for increased were first economy of The to growth, period. contractual over well the of were compared in compared Operating first due increase was continued decrease as to This the was by

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

leverage approximately ratio was Our gross was X.Xx. X.Xx, and approximately leverage ratio net

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

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

million Pantaya. in The $XX.X $X.X our into funding quarter. million $X.X strategic including the Canal Canal million Uno final into million. concession payment of ventures, investments joint of during to the Uno includes the funded of We Turning and the $XX.X fee amount the into

growth as continue yield EBITDA content our compared channel our XXXX. questions. XXXX in and and of guidance coupled strategic We open to offerings, to our shareholder growth are percentage now Puerto We will mid-teen investments, adjusted in with the We'll Rico your call value. believe differentiated to long-term affirming

Operator

question Instructions] first Guggenheim. Thank you. And [Operator comes from with Curry our Baker

Your line is open.

Curry Baker

Puerto the maybe environment it has it fair Maybe with just similar characterize guys. the even about for as Rico. would levels? there starting pre-hurricane say Is thanks to or advertising Great, to question recovered And helpful. hurricane? Are better like a maybe And below color subscribers in pre-storm be Rico? levels? you stand XX% on before would update Any where bit the also, at than little can we us Puerto there you

Alan Sokol

Alan. It's

not quite good I Rico, market near a there would settle levels this and we'll unclear say probably advertising is levels, it ultimately is pre-storm the yet think prediction Regarding at But point. pre-storm Puerto out. approaching in at or I where pretty

given people in to from out result during been were have have of are subscribers as today, than also of subscriber are In Rico damage did some migration net – levels, houses where consolidation subscriber of the we And they there's Puerto below storm. we Remember terms over from last done numbers, still migration pre-storm. are numbers slightly but The Rico. outward housing of Puerto some haven't XXX,XXX more specific outward they XX% Puerto as Rico. we a

in So those than have television the both I Rico combined actual results fewer homes Puerto think, been, of pre-storm. of

we're in numbers. of seeing some think that I the So

growth I below thinking to to in some levels. is ultimately pre-storm not Puerto settle Maybe we'll think we will where get we're but modest the Rico, still see XX% expect levels XX% continued somewhere out. subscribers to they in in pre-storm

Curry Baker

in just have helpful. also Rico, maybe trending with Puerto share how sticking your and Rico? there upon ratings been you That's Puerto touch And Okay. could

Alan Sokol

Yes. feel programming some number in exciting QX. one We we initiatives again going are network good first of XXXX, in coming things quarter about up were where the really with and

Curry Baker

one or and there you what in point? to not, qualitatively, you success XXXX? the then this maybe metrics on seen Are date can you've maybe And subscriber at maybe there about accomplish can Okay. to you talk provide If any Pantaya. have anything that

Alan Sokol

in that. not is out owner that. we specific without Well, growth. a to numbers, Lionsgate, so it's not know for have valuation That majority out suit said, which doing I given I But good. of the hard apologize encouraged create Pantaya, for has by very followed very the so are it numbers, of we we feel you knowing kind of

information top very XX services are If should you a look can see grossing app Android, doing you iTunes there. the to at you how and the give we we're available which on well of out publicly sense well-known both over-the-top that of relative apps, some on

So very about good we feel that.

the during even we the will series since QX, adding which function than adds XXXX, hope in create gross And for are more to time inception then additional we growth service. of we service. step any During the other had have we quarter had first

Curry Baker

transaction maybe give a Or And you do That's limited you is your you bit for M&A a you're I say. color touched more pipeline I there? Okay. in as at mean I then the one this what to can know you expect comments. know final about me. a year? can helpful. any there do us to all

Alan Sokol

thought until go we're to that we're about or and one limb other That are but be There not a have a that transactions we're us deals excited deal we I'm we on great prognosticate number get done, point, get because would by feel closed it's calls. and we them would get this, not deals this are can I'm But at. can I if that a couple There proud have as looking reluctant I've gotten would are of fits to deals for on done. going done. done. more said, you too we more hoped in of a optimistic said so that –

are sooner. we're you of done, give not something as So deal about we I we'd we'd to get much that's our if where to like hopeful have as that color can Those this year, looking get as we're parameters on the significant a over get transaction. that – – like done at, control deal a the can that done and

Curry Baker

Okay. Great, guys. questions. Appreciate thanks the

Operator

Alan at I showing any would further for turn And call I'm to further the now this questions not like Thank any you. Sokol to back time. remarks.

Alan Sokol

remarks. Thank joining you, us No further today. for everybody,

Operator

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

Hemisphere Media (HMTV) 11 May 192019 Q1 Earnings call transcript