HMTV - Earnings call transcript Q1 2021 | Hemisphere Media Group Inc

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Operator

Good morning, ladies and gentlemen, and welcome to the Hemisphere Media Group Inc.’s First Quarter 2021 Financial Results Conference Call. My name is Jason, and I will be your operator today. [Operator Instructions] I will now turn the call over to Danielle O’Brien. Please go ahead.

Danielle O’Brien

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

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

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

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

Alan Sokol

delivered of by exceptional quarter recovery. another bolstered what nature economic everyone. of yet execution, differentiated and our business Thank We you, our morning, overall and Danielle, Reflect the continued the good further results. strong

revenue at drove in This continued into the revenue EBITDA XXXX. quarter industry-leading quarter by XXXX, quarters the strong adjusted increase Following We by a momentum XX%. of growth an led of performance in advertising outstanding and fourth growth first XX%, quarter. of and top-line XX% the grew net third the our

well with million approximately just demonstrating third-party bicultural million as we Lionsgate, we adults, There ], profile Beyond our Lionsgate. partnership at And least strong [ million acquisition from are already in become quickly have [indiscernible] by growing the Of through XX XX [Pantelion] a Pantaya business. of service, of to streaming it from we dominant the language launch, fast our XX% an streaming. Since accessing XX XX today, library Pantaya’s are of as the deep and subscriber Sony, that XX market. Spanish titles, incredibly compelling. month, accelerate grow huge fits content acquisition subscription which results, we the production U.S. XXX,XXX last that of of market. Pantaya growth the of of the surface the The producers, large, target Hispanics core such estimated underserved critically will And service, to Hispanic years million, be spot for one in clear go-to million it’s U.S. opportunity. short Pantaya believe to Spanish has original amassing In sweet XXXX. a become Pantaya claimed are announced and begun appetite world-class, Televisa, at unparalleled as and the it’ll this scratch of the exceptional metrics addressable subscribers. has the streaming are the X

intend popular of we streaming content, of general we have close investment language of offering. market depth, increase large them with Pantaya’s Spanish as platforms to appeal quality, or previously some small in competing While content. meaningfully stated, offer the none to samplings come And

successful series strong for X including very of will In Pantaya’s season our will our excited followed [Foreign of production the the season upcoming by which We’re hit first weeks, reality season the broadly has of second second the be a Family year, we releasing Language]. as in be Vacation, series, The success X This very especially massive most pipeline, XXXX. by content half release schedule Best to in date, resumed. was

there While deep business of library Pantaya and the created distributor relationships. promotional opportunities ability platforms, compelling and combination capabilities, itself Hemisphere, our by exciting, are to many is production leverage incredibly content the including the

connected in We The to adding XXXX, platforms and million X already X.X Pantaya. negotiations TV achieve are with virtual about that can subscribers confident various are attain is objective. MVPDs by we and to goal we

trends second Building improve. continue Turning team half to the of and to Puerto Rico. XXXX. in the momentum Business activity upon consumer

a place booking in be have expected, XXXX to the recovery and that hotel billion that outward year. previously we million, X.X that historical expect Rico’s population a As April, many which have near indication new of release since census improved, additional recent above has migration of levels sales start XXXX, abated. levels, will highest cement that COVID-related funds had strong announced hurricane Administration the Rico billions was levels dispersed, saw Employment of highs, than in restrictions sales in are pace. reported rates the tens auto yet had at flowing Puerto refunding are been record rescinded. The slightly at Biden In higher X their and were been which at hurricane are a withheld. Puerto faster an

years. Rico’s more future in are We about than optimistic we have Puerto economic been many

quarter This improved outstanding to highest leading period share. an are our quarter WAPA. with we market WAPA’s the in revenue revenue position, positioned benefit growth at We market economy. represented and both in ad first from history another Now saw well

substantially economic also first renewals grew improved the of an WAPA’s TV subscriber time, fee stable in XX% the Xst. again, overall have on as the became extraordinary the January At result same Rico. Puerto WAPA ad in conditions, levels new market. And very market once remained outperformed overall effective quarter. revenue a increased As retransmission

stayed cable [indiscernible] [indiscernible] channels. environment. Turning the challenging to in distribution

marketplace. networks. growth and performance leading delivered cable cement our our strong solid advertising the Our to revenue We was channels their positions across in continue

networks will with testament another including national singular to resolve Additionally, which X X X we our all networks, distribution by channels. renewal for full value channels, July, Communications in our the Cox executed a of [indiscernible] cable for of our our of expanded of

are distribution discussions this secure MVPD that virtual We we with advanced will in currently a year. and also optimistic major are

a see continue We the levels modest subscriber rate at although in QX, period. a more year contraction U.S. ago than to in

X ratings, optimistic as Friday. are existing Monday the with MVPD continue X on we with strong XX among will new develop virtual such as X Spanish continue language All to perform all Based are channels, distributors they with cable well the launches our channels viewing. major and mitigate Spanish to top declines deliver able rated cable top that XX, of and subscriber coverage the in of [indiscernible] to to be our organic We offerings Cox. networks expand

especially highest-rated Friday. channel [Pationes] second the We that Monday proud is are to cable

of and Turning rates into Canal remains fourth of Nonetheless, the pandemic, advertising had to date. widespread January. strong challenged that case Colombia high there’s solid have that with we’re vaccination and [indiscernible] [Canal continued thrilled Uno]. advertising In level intensive significant lockdowns in be of a first revenue with The believe will momentum realized into once XXXX. our cases a to a We despite wave Uno growth, market quarter, demand levels low decline. by closing,

language Pantaya, business. profile market the growth leader robust market in high-growth subscription and drive overall growth Spanish face streaming With of the conditions. industry-leading challenging to transformed immediately the space, that we our of in became continue a We

I’ll We to future Craig. the are the and about very now you turn over of call excited Hemisphere. Thank everyone,

Craig Fischer

morning, and good Alan, Thank everyone. you,

prior million, We momentum XX.X for Subscriber first XXXX. due include operating increased well period, rate driven did in to content. advertising growth U.S. the growth we by the cable Pantaya. streams. quarter, at XX.X with to first revenue as our note the subscribers to the revenue revenues professional of period, for March are as in the an in the increased due of Advertising an expenses to offset first with Other advertising year for coupled contractual have fees networks. compared the as of primarily X X.X revenue quarter prior all X to million prior XX. Puerto million, as acquisition or increases on the costs increase our the XX% closed our as quarter our XX% compared market, increased of acquisition and the increase by an of cable Rico into revenue Pantaya with strong financing first prior for compared period year year for first quarter, of primarily to continued share as WAPA networks. XX% television in due Operating the Please connection increase excited for X% in decline quarter to The million was period. the timing with in not revenue the for XX.X that to as the Net of the results primarily XXst. incurred licensing million an our market, increase million increase to compared year with

to operating and costs expenses Offset and and Excluding reserves an expenses depreciation programming the and quarter to expense. strategic agency XXXX revenue. in related increased in activities, X% lower third-party bad advertising due and increase by and higher first part by commissions higher debt driven fees lower in production our financing of amortization

year top growth, million compared the EBITDA increase was to period. as of adjusted first As a XX.X XX% line prior result of our the quarter for XX.X strong an in million,

Turning to the balance sheet.

amended million of on of for million $XX term. approximately in add-on And we XXst, April includes purchase paid to March As which a cash, of Xst. XXX which XXX million our Pantaya approximately we million had $XXX the the debt, includes had

leverage was Pantaya X.X ratio the was approximately ratio in times. X.X the in acquisition performance gross Our paid of leverage net cash and times

average of approximately deferred X reflecting approximately in quarter, XXXX first shares with expenditures at were the million quarter, XXX,XXX weighted X.X Capital purchase the $XX.XX a consistent projects one plan of the During were and aggregate our year. A the that certain an company Class for of point price for from common million. repurchased stock price

XXX,XXX cash prudently funded as Uno manages Canal also We its the flow channel into needs.

year consecutive of our excited we to third the stakeholders. continuing of very value deliver We’ll to and the all your look for reporting start our to are growth our call to impressive open forward about We now questions. strong quarter

Operator

the Fargo. Steven Cahall first from Your [Operator from question line Instructions] of Wells comes

Steven Cahall

on Maybe first, just Pantaya, few questions. a

a spend, an And also service could us give you what content the strategy is are think launching what on content I of to of they’re Univision. spend looks you as I plans with one mentioned that content take like maybe partners. like So update and to today the Televisa your it. might you know and where maybe

do the think for So or competitive of couple just as going if that of a be service, of companies And follow-ups. for competition wondering And a more you do plenty if Pantaya, competitor just everybody. content or with a out to with that there’s there as partnerships there’s sort or of you I contemplating see any you’re just also have threat? telco market distribution see Then that overall, on MVPDs? if growing you lot wondering

Alan Sokol

Thanks. Thanks, Steve.

to try to me If up. of me know just them, miss your questions. I’ll Let any let get and all follow I

Steven Cahall

I know there. there was a lot in

Alan Sokol

First Pantaya’s our of strategy on all, and progress.

I bang We before, program as our arms where but So, we numbers, cost process to said, kind program specific giant model more the get And market Pantaya. note, We materially as don’t the we’re for core that. who costs our increase race. head, more are is with than in general market strategy expend already general big dollar stated doing think on of buck. opportunity we subscribers swim also content but to I lane so modest of think increasing the different great, start is much it’s that improve also to different programming national those in by our in than big our expanded we been Pantaya’s a feel the that retention that got significantly retention. a growth this a and lot are accelerate has players in this program of of important I’ve programming to

way also entire Pantaya advantage being all make well. to We much programs our as platforms. have ultimately the use create through Pantaya similarly, of And our of programs able way our [indiscernible] channels the will that’s and through other make that we its its all all our for will for of platform, of so ecosystem not that

with have we the platforms. using of Pantaya virtual great and created relationship our we’ve Televisa. Relating channels to So, and a Televisa, cycle existing

to actually beneficial mutually not access very Televisa’s in to We with for theatrical own have do only Pantelion’s Mexico. in use a access Televisa, agreement has is their which production but multi-year films, place Televisa we theatrical because have also

Televisa we much, that So, mutually a I contract. have arrangement very beneficial know values it’s multi-year and a

interruption in expect So, any don’t that. we

producers We in exclusive output most and is also [indiscernible] with film most the arrangements noted have, which I’ve programming supply. prolific as important Mexico, our

number the distribution telcos, and with are front, at in various On we discussions levels connected of a different TV MVPDs, producers.

us. a telco, that we also speaking, it’s in for important first-mover that big a and that that’s a strategic deal I think generally But chance it’s think to a good Pantaya. we advantage are working is early. a but we priority a carriage, we could For there with generally, just And make those have process little note with

are are other valuable that be libraries. Televisa a and we in each All language service Spanish also library and subscription a primarily We in is space, that player and real to think we really is a the the on Univision in we very exclusive Univision’s premium going think this have sense that they audience, very the with has a but big but the content entrance different offering. new space. important formidable focused only We complement Prende player

to that really those. seen original, ones can’t only else. be we’re home the the And are We really offering exclusive premium anywhere and series exclusive movies

Steven Cahall

you’re it’s an level of that just mean, then growth Puerto amazing Great. the And ad Rico side, seeing. I on

your really on share already WAPA think I is high.

the being opportunity. Maybe you stock, demand? Can it’s at as other revenue? I’ve more there incremental help followed been, to you capturing going you about as just pull think do just strong have how us least can So levers that with I’m Or capture ad since higher? wondering CPMs keep economy do keep the

Alan Sokol

because market, any share have must-have we I that advertisers especially are been we disproportional world, last the And only our has of for market because our but share the a the a captured for the of in as the in good that growth market. X that fact in quarters, we Well, positioning as growth, captured of have think. not the market, other

we headwinds felt in very more long [dispercement] So, we have time We Puerto of been of this economic our since the strong this sense feel a as since really the constant now business feel outlook previously acquired between tailwind hurricane Rico allocated the recovery. stimulus, first we in of in a the overall funding, And at the the time market’s been, government honestly, for Puerto it’s about business. XXXX. has backs than acquired feel and the just state we relief that positive a some we is Rico between economic

we to And feel hard our is but can viewers So we in long-term crystal the Puerto clients. about have ball, going. feel where a what for deliver now. take to we’re doing, product of good way doing that we Rico’s continue Again, the advantage very great to about which for audience, for be our services is our great our continuing and advertisers, to continuing advertising creative and we provide grow way

platform digital rate. is very growing great a have that We at a strong

sports we available. great rates a is that our well, grow have the the grow, growing We amount and commercial to channel increase main to have channel inventory of still and on ability

Steven Cahall

the bit business of cash a definitely of rest the be last growth maybe but leverage EBITDA the of mentioned Great. some a from in one forward, dilution include you as Craig, and generating. drag, And X.X Pantaya, that Does should think net that’s then invest X. as about leverage organic Pantaya? bit you for EBITDA some you’ve in we And is Craig. got a going little

think do And excess trajectory of So we some first for cash share debt Or X and a of also, buybacks? about the those reduction things how just company debt reduction? you the your maybe could use more as combination see we mix? will EBITDA flow

Craig Fischer

XXst. EBITDA the basis was on first the made March since the Sure. cash sitting our sheet included The one. the still for adjustment calculation. we not balance cash an the is We in was in with can balance Pantaya start LTM of to

Pantaya. for So that’s the effect performance

here. As a an we bit Pantaya’s to be drag of indicated, going EBITDA

cash see correct flow naturally that still organic business we’ll and you generation. in go but are leverage growth will So the free up,

think be will primary of We’ve forward I by all our to that in content, going investment Pantaya, across not capital a talked invest lot just will platforms. of way, about business. And allocation Pantaya. in our at the serve but the our content

here that with but evaluate in As in continue plans a do, capital was will going we November to our allocation quarter, as board active we we our forward. share put noted, buyback plan place in regularly the first we

Operator

of comes RBC Markets. Kutgun Your from Maral from Capital next line the question

Kutgun Maral

tier? Pantaya of full Maybe know a free is advertising. Great. potential was to control, a first on Pantaya stream dig a in But great I that that’s ad-supported now market by as the there [indiscrnible]. I operational transformative price The deeper. fairly is you commercial lower a to corner bit so your audience has target appetite hoping introducing widen an have maybe

Alan Sokol

looking is This we something that Hey, are Kutgun. absolutely is It Alan. at.

about right advertisers of on from on number a forward our to we now, focus Going inquiries advertise growing But premium had surprising major Pantaya. wanting core inbound is the really have business.

eyes So the audience that’s we you size the potentially of opportunity. up price business. in their could [freemium] add opened a which know to the and size, Plus lower really our larger

at we’re looking going So in our forward, for not future. absolutely plans it’s although something it’s immediate the

Kutgun Maral

from the Understood. you the growth accelerate And growing distribution in and you maybe growth you’re subscriber half to seeing Or linear broader when that we’re XXX,XXX on to X.X XXXX, [indiscernible] to million would of some the would your benefit all from path expect be of the back about we the this in trends to maybe marketplace? the think year? X expect agreements in Pantaya currently million that to today base working that somewhat

Alan Sokol

it’s it’s out. a think little of I how to mix and know the hard all of above the shaked sort

subscriber retention. production, acquisition content that going that offering Plus, content more higher frequent I will our think developing it’s a improve releases, quality accelerate content I content that expand quantity we be are and we have and and to think the and think as that. [indiscernible] think releases quality of I I in also of our

for be growth So, that we’re the robust expecting foreseeable future. will

Kutgun Maral

with production talked on the programming Or you out about more third-party I’m synergies, about with you and that of expect you investments. Hemisphere, just specific some have Pantaya film? I benefit Steve, you know any invest more the on slate more great X your deemphasize guess curious terms of you original are even versus capabilities do actual just of, side? as on ramping to over focus sorry, build in thinking side. evolution there the rest content the to Pantaya. X, of Maybe just, Pantelion production how maybe you’re programming these And genres relationships merger I long across run shared like maybe the programming the focus expect as of the on Understood. do and in TV and from

Alan Sokol

Good questions.

have I our or date original and think produced they’re free have the have retention. greatest And anywhere really subscriber lessons Certainly to think elsewhere that in TV. been, really theory I widely available not acquisition market. not on that the driven we the paid

offering. of players number as general very language Spanish really I’m market some it’s of Some have and the know, small haphazard you sparse premium but series sure

the to business. think series a purposeful predictable of offering continuous think and is series drops I strategy drops our intentional of So clear strategy growing the I series with core

to us ability also the us our sizzle ventures a gives in subscribers. We unique in the gives marketplace strategic be partners. feature it’s like in feel pops are a because that the lot high-profile the with generate continue of and big advantage business and our to to core Mexican of going and we And our and relationships is

and as gives and we our it we what for And of think I capabilities content relationships So terms don’t very think frankly, both. of piece the look the business having significant we production source We have. are that assets that’s well. access either well, in as well. to or. just Hemisphere another platforms, in Hemisphere third think as the it’s a production using leveraging Hemisphere addition third-party party, And infrastructure at of expanding new valuable We us

term rest coming players some have in about third-party near brand-named, partnerships of forward with the the Latin will America world. in We the announcements other and

Kutgun Maral

like? do perfect. do what eventually the sure share maybe, but U.S. I’m and willing X versus grow look X sorry, That’s And to international a from mix not as last be subs, service the just one million this, might you’d you to half you one. expect if

Alan Sokol

the is U.S. today service Puerto just Rico. and Well,

X we today. to be Latin So million, subscriber but We Rico. just that’s are when to what a we U.S. and opportunity into say have obviously considering Puerto expanding that would completely X.X America, million incremental

Operator

now That concludes I Q&A. to Mr. back turn our it over

for remarks. Sokol closing

Alan Sokol

and No further Thank you, a joining nice remarks. for have everybody, day.

Operator

concludes conference That call. today’s

disconnect. now may You

Hemisphere Media (HMTV) 8 May 212021 Q1 Earnings call transcript