HMTV - Earnings call transcript Q2 2020 | Hemisphere Media Group Inc

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Operator

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

Second Quarter 2020 Financial Results Conference Call. My name is Towanda and I will be your operator today. A replay of the call will be available beginning at approximately 1:00 P.M. Eastern Time today, Monday, August 10, 2020 by dialing 855-859-2056 or from outside of the United States by dialing 404-537-3406. the XXXXXXX. for ID conference replay is The I Firlan. turn the to Ashley call over will now

begin. may You

Ashley Firlan

current Thank you, Ashley statements are statements Private good of Securities Investor Act may are those to with operator, which circumstance Litigation contain of results based and of from Financial and within the Relations expectations today's welcome like Edelman in These about differ or and conference the actual to everyone firm. to Hemisphere certain Today's uncertainty the meaning call. our U.S. Hemisphere's management such statements forward-looking I'm the and Communications Firlan to announcement I'm morning, and outside everyone. comments of on I'd may that Reform subject forward-looking implied cause expressed materially Hemisphere XXXX. statements. in are changes

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

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

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

Alan Sokol

through protecting healthy measures. families news been viewers employees I the these of safety good while hope we've during the pandemic, of entertainment our stay and and profile difficult focused and our safe morning, and your our and with on Ashley, you, are uninterrupted Since health times. onset continuing and cost-reduction safeguarding Thank the to colleagues programming, and financial you everyone. providing

of seeing year-over-year Puerto we a challenging April and while over set island continued decline XX%, we WAPA's we of efforts, May In year. weathering endured declined are and for May's by revenue ourselves results success was a was tough up to environment, As April the have Rico, result the as a somewhat gross these the subject the ad steeper. balance improving lockdown.

economy per decade in August and auto improved has our advertising month to saw in consumer sales, June. dominant ratings were primaries year. Rico solid Rico positive Puerto insurance Rico from increasing Moreover, flat $XXX for This half from in for Following a from accelerated sales XX% the and and With have which optimistic improved its Puerto spending a decline. and supplemental versus consumer spending and adjusting June, quick metrics to bolstered X the position, a the WAPA Miss Most significantly after Universe the One rescheduled a was sports improving second economy performance June XX% on of partial ago. robust comeback. XXXX including federal year including best June Puerto has combination in led gubernatorial excluding advertising. aid reopening we actually an revenue June actually of regarding results to revenues and the July into XX% are The political with of political note by yesterday the The XXXX X. continued political. unemployment trend week in

failed locations yesterday to and to many significant a result as However, Ricans receive were unable ballots a percentage Puerto polling of vote.

in that XX from did those Difficulty] ballots. June, saw revenue political take place locations will voting at second August that primaries no appears we quarter. Due advertising it morning, this receive of not As on [Technical the

fairly QX Telemundo continues spend a XXXX. original see of primary an the breaking from during high Difficulty]. in by pre-COVID set XX benefited XX election. ratings for to versus rating the WAPA's XX week combined. adults record prime pandemic July WAPA our QX August astounding and ad the political to first Univision [Technical XX comparable year to expectation [Technical However, and the first this among record XX% an all-time we gubernatorial reached the to ratings of strong adults time have growing quarter WAPA's of audiences among and equaled and Difficulty] as

Turning cable networks. our to

our networks and the improvement course X% demonstrated Television XXXX the in versus declined the growth performance. continued of second resilience sales quarter quarter ad of of the quarter. experienced Dominicana QX All in Ad and with actually networks terrific and ratings versus sales July quarter XXXX. trends affirming These importance defining U.S. July trends its with the robust grew revenue our in XX% have market. the by growth over ad cable continued market in a into for all positive XX%

can of growth the sustain year. Although remainder are we we that visibility over the is limited, optimistic

was performance by all terrific their sales Pasiones, ad according our highest Three Centroamerica our growth all-time ratings Our quarterly comScore. cable to audience at and TV networks. networks of delivered driven Cinelatino

to interest with cast program Our and grew the from driven News Salvador its and growth XXth prime TV dramas its India, audiences second around and in growth, language opportunity TV ratings remained seven growth the Turkey, highest-rated coverage ratings major highest-rated networks by The XXX%. continues all its compared original as restricted according cable discussions audience. in year-over-year with strong ratings time in driven to to the of two year-over-year had best drive ratings also comparable unique Central outstanding remain than an comScore. a nearing from to the importance new them XX doubling to America of increasing compelling on now compelling programming consecutive of world as Puerto provided quarter their marked Cinelatino news for increase for distributors Central by Republic the the quarter. impressive Brazil. on XX% with had quarter entertainment the compared Subscriber primarily homes. ratings the and ago of of America El outstanding films XX% growing consecutive ago Centroamerica our Spanish to most These by including over ratings grow crisis Pasiones top-quality record we top has America XXXX. from Pasiones year and Rico, Centroamerica its audience well basis. by its and throughout and of lineup their more its the declines to from by XX% during challenged period quarters Hispanic the accounted are year. growth. outstanding all-time Cinelatino and Pasiones year prior the current COVID our Dominican and were WAPA our had comprehensive audiences an

we've announce entered that there several major distributors renewal to to a of into pleased Verizon and all remain us opportunities. increases are with subscriber confidence five show multiyear for our that cable continue growth We remain encouraged that giving we networks

In addition we as offerings. will virtual program into language are such and Spanish optimistic the their MVPDs YouTube add that Hulu

already a revenue noted and our I movies believe of for our generate As content. us we we deep have source revenue of unique of series. will in this our previously calls, We seen from be strong and are that to licensing as library viewership impressive beginning

platforms see ratings In entered and Pluto into are with Canal partnership well. other and prior grow revenue Latin XX% by year. agreements from to recently Uno to to We Tubi continue have our compared total in with with negotiating as America continues its with we day both Amazon audience Colombia, solid the and increasing

of aggressive market cases on TV and Uno sales Canal not lot to while been but Colombia a demonstrate ad result in greatly limit country outperformed COVID-XX revenue subscribers. continued ad significantly continues the been has Uno has has has have declines. accelerate. growth costs to Latin restrictions far actions there now cases. overall has adversely spread reduce which of XXX,XXX been the all Canal programming government by taken has the the However, American to administrative to visibility pandemic. hit trajectory the offset Pantaya the hard in attempting number of Like and a the affected by thus imposed The as paying and countries, is of have

of and audiences viewing pipeline second at series to the content the success produced the Pantaya the a reaffirms programs source Movies benefiting and Hemisphere Pantaya our value by on of content most-viewed quarter. wealth accounted of dominant for continue in in The has majority a while additional of for for a much become production remainder has their spend expanded service Pantaya's year. strategy of time Hemisphere. streaming the driving of As our home,

seven recognizing Imagen honored for and Latinos are by nominations Pantaya that in has excellence We movies received TV. Awards

the during were and we focused costs Regarding revenue. our quarter on M&A managing maximizing heavily

take months. to coming the of and over With strong across we serve. of opportunities available advantage attractive the that opportunities. America anticipate arise well-positioned conclusion, are we monitor In in U.S. pandemic sheet of balance we cash, continue all the we the geographies may to these Latin the our impact However, and

while on costs entertainment We audiences. are responsibly focused for producing critical compelling content news managing our and

uncertain regarding Craig. still you positive to remain at guidance we trends. I'll this Although continued call provide too to is the now over the everyone. environment optimistic Thank point, turn

Craig Fischer

morning good you, Thank and everyone. Alan

the in our We June prior $XX quarter. of Let's debt position. increase had of million $XXX with from ended as with cash million million quarter an liquidity We $XXX the start XXth. of

In covenants. liquidity, the call, earnings To XXXX XXXX. payments focused and maturities We into on we through maintenance optimizing we on preserve research. costs. certain to programming of lowered and in our prior into agreements the marketing quarter, near-term costs and we half mentioned personnel As no SG&A our have second renegotiated reductions defer our remain or

during employee Additionally, taxes we and deferral the payroll pursuant quarter. the which payroll until to credits the claimed participated payment employer Act, and defers retention XXXX we XXXX the CARES tax in of

to the of of the Pro and our and relative June quarter from single-digits in and respectively quarter or events impact due the and million ended Puerto down negative the months currency We political to the XX% second three for quarter due the compared from and the licensing the and produced or in in These decline million primarily and revenue compared six-month XXXX revenues Puerto -- second networks Rican due These revenues million revenue XXXX, periods We period certain ago pandemic which or the May. the low and movements. million Other of not ended gubernatorial Advertising a primarily of Moving the Miss ago six in not the any the June primarily were $X.X XXXX. for the decreases Affiliate of offset as the period. showing net these $XX.X million a periods postponement third were revenues events periods in and foreign XX% date. over X% revenues were XXXX. the were XX% and six were decreases across for impact for XX% decreased increases in $XX.X the unfavorable period. of June the as political periods of $X.X year other the of in June licensing decrease televised sporting revenue million parties. did $XX.X over see for comparable $X.X XXXX second $X.X million in These all advertising advertising increased were XXXX of the for August. cancellation or Latin the over million subscribers strong timing the quarter $X.X period due of content and on for from million August or improved period U.S. to Universe six-month second forma and content. in an revenue comparable XX comparable XXXX. advertising decreased in our have revenue Rico and but six-month three decreased which XX% did to April three-month trend to of to million, our declines in advertising or XXth, XX% decrease a to due Net revenues results, respectively year for revenues $X.X decreases in months by to to $XX.X net were July were in primaries XX% America to in of affiliate part to or the to

debt of $XX.X more cost Cost million third titles. As Operating for an license in WAPA's were the $XX.X ongoing XX% Operating compared quarter of second our Guerreros resulted noted acquired expenses loss of licensing content the was a as million compared implemented compared were partially the to the Adjusted period availability to and comparable Miss disposal and and the sporting no a can Universe utilized and higher of in for be Operating a million production in cancellation compared pandemic of in by in Rico reserves. due also comparable the timing expenses stock-based increases operations period offset were before, certain comparable to revenue $XX.X uneven million $XX.X or decrease of six-month increased decrease investment second quarter of for X% the daily period. to in which successful These production for in events. including due as to the $XX.X programming of cost the higher expenses EBITDA non-operating we $XX bad given professional period. incurred an a expenses increase offset by longer compensation the Adjusted million six-month show as increase the reductions assets for as first of the timing for six-month on SG&A to a $XX.X of period. pursuit began million Cost measures required quarter the purchases year comparable the savings response and of $XX.X our FCC decline this transactions which parties revenues reality was million increased of May the for repack in in specifically XX% reimbursements equipment as the of the were increased the period. than business. of in XXXX. advisory spectrum XX% period received for in the result fees revenue connection with with connection of million to in strategic for Puerto from EBITDA to and

the in leverage approximately was Our $XXX,XXX approximately and X.X quarter. consistent times expenditures ratio XXXX. were million net QX to compared This with was in X.X leverage times quarter. prior ratio Capital gross the is $X.X

into reprioritized to capital reminder, capital have for the and second our projects XXXX. of and XXXX half the a have As deferred plans we year certain

Turning investments. to strategic

Therefore, to progress. favorable of through funding the We a seen look we in no current the our positive the indicators we the and business pleased period. been advantage into now to in in the our elected noted and operating difficult We July questions. last your there and well open rate call, forward exchange we second As quarter on to in first updating financial August. maintained take quarter. Uno environment. Canal are call have with you on our position prefunding We'll believe the a strong We is has on

Operator

from Steven [Operator Instructions] Thank Fargo. Cahall the with of you. Our Wells first comes line question

open. is line Your

Steven Cahall

Thanks. morning. Good

maybe positive could you WAPA up at sounded Puerto this could been sense political? or think ad of have So us of like the network say on a and give whether first And trending? with commentary you maybe sales QX maybe Rico. point be cable ad not you sales without It most will how was

just as trying So what understand is cable to dynamic well. the

Alan Sokol

of on we've bought weekly by you a far July, we there's off a being not is Good decisions on strictly August sometimes. start sales the you good visibility We Yes, what listen the we morning, had know. And are as today. visibility a Steve. about a the so a daily kind is are very numbers But that positive. I things basis indicated are made strong seen basis being where the very feel gave to even and a to market so extent positive. have it's good of lot as in scatter Ad or

of July the that sustain as I year we numbers XX% can side, I for really U.S. the are quarter. a balance the as and On had up those going -- mentioned, a we we strong also forward ago versus optimistic

Steven Cahall

trends sounds dispersion on then really it declines of a like I there. And wide the sub Great. mean

some at heard imply pretty then the distributors. guess I And if that you're down distributors. I you're you other said up would heavily I some numbers things at correctly think

decline base step we consistently what your or if you maybe more point? to the you base of sub then it getting the Spanish And TV So is this language you back do of think how it that think about track think from I shrinking overall sort growing with doing? mean at kind is pay do

Alan Sokol

subscribers, I by a on socioeconomic of treated And profile, subscriber base subscriber are they different. base. differently are demographic have just But a is distributors, most importantly. profile. different the Hispanic Well. subset think the different which focused We're our overall they

your premium, buy and say sort afford package continue bad the Hispanics, So two against in towards also to performance. appropriately least marketed priced engage would they have the subscribers mean are see we a that market have to have of that that against to in pay -- two discriminatory abandoned really The by just by English which those that Hispanics I unfortunately prices. distributors either And market behavior, And package. distributors the solid to which subscribe way subscribe feel Hispanic or in have business. poorly, order Hispanic in to them, through policies have that I that then pricing market, channels, to the discriminating bad to a ones the pricing is to by -- performed you heavy an that the can failing

we be can they their trends as that So can if well. corrected, that feel we think reverse

Steve Cahall

it, maybe on major or year out of you you Got programming business? and of million flow changes Alan, in or minority you'd in the back sheet. the And cash think, free the the then, cash the Do some on CapEx you or looks any took Craig, balance investments, up that have then, profile comes that half also SG&A. of like cost cash either just $XXX

might or So those look after on, SG&A initiatives? outlook any what forward, guidance like going

Craig Fischer

Sure.

CapEx total for projects we the the half We're so, million the around anticipating year. of capital the some deferred still I second in As of noted, or into $X year.

of remains around FCC the here in QX. repack. will and So About that pick still half spectrum QX it though up

a we cash the that look, second the in But although anticipate from So good to in quarter. the continue we the lags would reimbursement feel generation, sometimes the half we of anticipate, free quarter. to, cash flow of timing that, here generate about And year.

-- pre-funded investments. will second We Uno. We noted had think through, as Canal quarter. I I the you about We minority funded asked Uno -- Canal about

I the $X funding think to, QX was half the in in the be second which of made similar million. funding about we the will year

job good funding a costs there their done reducing as they've requirement. So the managing well, of

base. than good on feel we'll more continue the we year with cash right So now that to have that and end build we

closely. the On costs to we manage SG&A, continue

Some of the cost savings were nature. in variable

here So those time as the We've of sort between health to end but rebound of the the -- will cost July, -- issue over particularly variable changes costs seen in on in the some management we've continue return. -- management we'll cost and of the an it as now -- eye revenue year. keep

we cost effectively year. the so the have of to ability control balance the And through

of savings what that the will on come of variable the in I seen will So -- think we quarter, good the bit. probably in little a cost back a we've continue chunk that just

Steve Cahall

you. Thank Great.

Operator

callers, thank have in all today's you Instructions] you. for time. questions conference. a And participating showing And you further concludes may Ladies this I'm no disconnect. and Thank wonderful program. Everyone, the [Operator from gentlemen, This at our day.

Hemisphere Media (HMTV) 10 Aug 202020 Q2 Earnings call transcript