HMTV - Earnings call transcript Q4 2021 | Hemisphere Media Group Inc

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Operator

Good day, ladies and gentlemen. And welcome to the Hemisphere Media Group, Inc.’s Fourth Quarter and Full Year 2021 Financial Results Conference Call. My name is Paul, and I'll be your operator today. I will now turn the call over to Danielle O’Brien.

You may begin.

Danielle O’Brien

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

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

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

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

Alan Sokol

U.S. partnerships in continued with a by performance XXXX WAPA, Pantaya, MVPDs strong highlighted leadership U.S. important and for year of record of solid and fourth year everyone. the finished the networks. another virtual our good results was the cable you, positions morning, with and launches at acquisition in Thank Danielle, our business, quarter. several and our we breaking was the This

Pantaya, delivered a achieved revenues. increase revenue we the For growth at impact And even the streams. net all across without our include of of year, in we XX%

simply, I has want does our address in of recent our into the reflect any Very our which company. way fundamental business, to strength months. deteriorated value not the of in and Before our I briefly stock dive performance, value market price

and during all-time in headwinds language we growth us particular, We coming consistently U.S., records. the and leading set which acquired growth we Last and the delivered we major strong results the industry for have year, streaming platform the XXXX, engine growth leading pandemic, despite revenue the relating years. delivered and be to over XXXX will in a Spanish

Our difficult agility Rico global earthquakes and and in perform including has hurricanes and pandemic. a seasoned very through talented creativity navigating to to and Puerto team macroeconomic prove despite ability continued speed, its circumstances, with successfully

is proven for Our business growth. model and runway has tremendous

about have We for never more been Hemisphere. prospects excited the

to be movies. our and premiere Pantaya premium Spanish destination original performance. the to language continues series exclusive for Turning

reduction result of due contraction, a slowdowns a year-end, we to production X modest quarter-over-quarter to As fresh million as the largely during of content a had subscribers, close of pandemic.

We marketing also the not pulled during to amount subscribers QX chose spending content limited new inefficiently. chase back and given on of

growth and original and release and in one on February year, we Eugenio recently, indicated, XX expect many acclaimed increasing content. and marketing subscriber XXXX number Derbez Among of to Señorita lineup both latest premiere Most an production we're star unprecedented XX. projects, the series starring we representing universe. Hispanic ramped series box Radical, commencing production [ph], class second in the programming previously retention. the many world our U.S. XXXX to we office the premiered of half of As on extraordinary and our investment movies, highly XX drive And in up This film we

with prolific of popular some the talent and Over we've into entered most most past and also development few studios. deals production months, the co-production

lane than have emphasize we a that significantly to are completely language our swimming important in also we expanded different While streamers. it's production, English

streamer at subscription efficient serving small to premium community. produce presently fast super infrastructure, us fraction language very And production a XX-plus-million are cost enables U.S. the and a of we which a only Hispanic of have growing We cost series. English the

significantly American such further as exposure rights rights. pay We production by our ability to reduce for which and exchange streamers, Latin us over content licensing XX% to to cost Amazon, Plus, in Disney well budget of have our the typically Netflix these

a At time, will with Regarding be several are we Pantaya's in other deliver in also we of negotiations in connected bundled telco major distribution a a subscribers. are partners. advanced we meaningful package, believe TV the distribution, to same included which with number negotiations major and telco new

are the year we by our above significant subscribers track the million reasons, remain to on drive subscriber will For X.X long-term growth XXXX. of of over all million target and confident that to we of the X course achieve

Turning Puerto now Rico. to

throughout the the We revenues. $XX that restrictions the that Executive and economy In an XX%. with strongest debt will payments. about many with retransmission and bankruptcy save capacity Puerto strengthen issuance COVID-related The planning the are its year anticipating most very across further it WAPA Puerto second the the deal reduces Rico's had to funds volume a best federal also bankruptcy island future hotel the COVID-related rates bolstered has government this year to situation of even Puerto vaccination be high trend a lockdowns. finally in by very years since end infrastructure XXXX. Puerto that economic also business, to is to certainty with of total exit highest to in Commonwealth's posed and activity in than banks the bolstered restrictions. auto yet received compared by emergence largest in tourists more Similarly, position the eliminating The restructuring especially actually in and will XXXX year is be of pre-pandemic half that Rico economic debt an and in funds Rico's the records these metrics indicators in in of commercial levels passenger of tens result stages macroeconomic dispersed. further by spur economic will by will government of XXXX currently their government Rico long-term had billion levels. The from portion beyond. is very the key XXXX. occupancy convenience This start been X% in proud by growth as key that should be that bankruptcy to exceeded the plan continues revenue the the positive in are The early announce all-time flowing The Rico's shortages, Puerto challenges positively Puerto with very impressive and doubled Order have versus consumer given economy for will approval and week exit continue history January, increased inventory travel the growth. now by engage X% Rico Rico attracted cycle. by XXXX Puerto XXXX. Employment expectation from both have were Airport provide By trending of sales all tourism surpassed through billions with rates. advertising Virtually investments. to recovery metrics positively. is and for

continue the QX, we In uninterrupted. years in adults despite consecutive impacting its XX WAPA's I highest of to chain highest Miss quarter fourth XX advertising and now XX% share benefit supply quarter and quarter again in growth market this Puerto in highest viewing WAPA, the position of year's confident station the an very XX had fourth of proud XX. maintained delivered XX rated television. to going solidified and the that XXXX. XX, selling ratings the to dominant the of demographic faced fact will Universe astounding among this of contest, this further XXXX. auto, was XX% which over for was has XX profile. share second growth history market which programs that was the and XXXX, performance once history in issues WAPA number in retail the the its by The strong to Rico difficult of quarter WAPA principal We're has quarter. which comparison fourth women strong one been WAPA's am quarter highlighted revenue quarter has a Nonetheless, of All with will

be were of four our primetime Monday Notably, coverage in Turning on cable top XX cable [indiscernible] rated Friday. to newscast XX. cable rated content Spanish the was among network Based top Early language WAPA the among now language networks the Fringe on language leaders America's our their in to three were Spanish number cable the continue And networks and two to networks highest any in daypart. Spanish rated categories. was U.S. our highest ratings, respective channels, newscast

Last agreement expanding on to with distribution have with our we trend expect successful We and year, virtual this MVPDs been continue. into an entered in YouTube. launches

occur soon meaningful believe Hispanic but its of we expect will now that to delayed, result has subscriber YouTube's been launch launch it package growth. in and

of package. our FUBO's March channels five launched of as Additionally, on have X, all Latino

on are are We in optimistic securing that with additional discussions other platforms launches.

continue to organic carriage we cable new these we subscribers, agreements. with have While experience losses our expanded and with launches mitigated attrition

and the a Turning market to strong COVID and cases strong see presidential is economy over in XXXX, TV election in heading spike XXXX political there The Canal increased should advertising. despite variant. momentum and recent Omicron Colombia XX% Uno, to improving QX is our is in of the due investment QX the which year to by advertising

and are of optimistic heading extraordinary have we believe slate managing unprecedented. of we a of closing, value improved opportunity fourth assets are the ratings is In Our creation quarter over in content XXXX upcoming of Pantaya's and we us. XXXX. front an tremendous portfolio into

now, license kinds of that We that premium been movies until U.S. monetize have available content we are to producing the ability have the series outside and and of the never and

and creating dominate everyone. well Thank from are long-term shareholder will now market confident as angles turn I'll call untapped and the over that prosper unique a business to you, our are value. to result, We transformed Craig. this positioned significant multiple

Craig Fischer

an same contributed Thank Subscriber for revenues for to the XX%, Pantaya, quarter were million due everyone. continued and compared million, of the morning, period XX.X Net XXXX. which or as XX% strong in inclusion have our the We're increased for revenue end million. to fourth XX.X excited of increase to year. the of the XX.X XX.X primarily you, Alan, good performance million

Our rate new increases launches. networks cable from benefited and contractual

or year's benefited increases were to content offset advertising driven healthcare the these licensing parties. prior pay revenue pent-up million record pandemic demand compared However, X.X in spending. X advertising, decreased to revenue quarter, million decline the our increased from TV to by and of subscribers. related which third setting political by Advertising XX% unprecedented a Other

of X.X of in was Net year prior XX%, primarily or decreased quarter year which revenue or year full the million political contributed to period, revenue increase as Advertising the as fourth compared X%. XXX.X revenues XXXX. were Excluding XX% advertising the to million the for up of million. an XXX.X increased XXXX. million due XX% for XX.X Pantaya revenue the million, to compared XX.X Subscriber inclusion

Our to million revenue launches, cable X%, were rate television but networks these subscribers. by in new increased and from a increases growth or offset market. primarily pay X.X due decline contractual in increases Advertising benefitted the advertising in Puerto Rico part TV

political, revenue advertising XXXX XXXX. by to our Excluding increased compared as the XX% of XX%, million full revenue X.X for third licensing or was driven Advertising year parties. content revenue XX%. up to Other increased

expenses. were XX% Cost year or million Pantaya. the revenues increases inclusion quarter increased XX%. the for million. to of Turning for fourth million year the and increased These and million driven X.X the increased XX increased for SG&A of or the by expenses XX.X for fourth primarily XX.X quarter

higher of XX.X charges, the the amortization assets We X.X part million compensation, as year. higher which for the stock-based incurred collectively quarter in non-cash also and and of including Pantaya increased full acquisition intangible million recognized

year reductions as cancellation postponement not company events, or CARES certain well including have of prior provided pandemic, programming Act, of sporting the salary cost which by and could year. reductions the the current result a the reflected employee credits retention Additionally, the in as as and the

to inclusion being XX to compared as marketing on content XX.X EBITDA year which period. million because of back quarter, was year for the in These spend. As tied Pantaya so the the Adjusted launch prior released, XX.X vary due of were of last million fourth we year Adjusted on XX.X pulled XXXX. decreases a investment million for Pantaya is mode. for the in In fourth of growth may be the compared the as the fresh quarter EBITDA we to marketing and full said spend million was costs from product quarter, marketing quarter-to-quarter. lack will to

XX.X fourth XX.X the Excluding as revenue, was EBITDA full Pantaya in quarter prior for advertising and million political the million adjusted year year. compared the to XX.X million prior the XXXX million period, up for compared of in XX.X XXXX, and year as to was

sheet. balance the to Turning

XX, of As we million debt December of approximately in and had XX cash. XXX million

end, were leverage gross includes which and is X.Xx net quarter operating ratios the Pantaya's X.Xx, Our since our respectively, acquisition. approximately results and At revolver currently undrawn.

continue and to up the invest as X expect four quarter, full quarter, leverage million expect a We to as funding quarters trend CapEx the we programming Pantaya total pick trailing leverage to operating approximately roll million bringing matures. as bringing the Pantaya's we we of were in over year in our results. and funded X.X to for X.X marketing year. in lower year million. Uno We Canal in Capital expenditures the million Further, to X.X into

in cash portion premiere our production we drive original to and invest in a U.S. our growth. investment be in we in to particularly remains note and spend It's increase to fund inflows to offsetting subscriber Pantaya have XXXX, capital Rico. and service expecting will of marketing the will allocation our for Puerto XXXX. business the For the content priority Accordingly, license content growth, material outside our are of XXXX, year that full on which for that we as will of content important content the

terms licensing in multiple agreements on Latin we have already fact, In America. finalized

your momentum pleased strong a the to on and are year questions. continue We'll open the note. to We now our finish call

Operator

We question-and-answer will session. [Operator now begin Instructions]. the

question Steve Fargo. of first Cahall Wells line the Your with from is

is open. line Your

Steven Cahall

for few this Thanks. me A morning.

we So first, are this on And some about particularly Pantaya of I you wondering could what the quarters your seen launching there with acceleration since of seasonality business type subscriber the if you've us any be that of maybe details drops? will content year, Señorita as on XX. was heavy give think

Alan Sokol

plethora well We Good little just viewing morning. Obviously, XX not gotten. the really that the and a a attention terms Steve. as XX series series, we growth acclaim half movies subscriber the cadence and early expect tell. But equal. And Hi, here. overall over the launched growth, dropping, by about it's a are all see and just both in the Señorita of we're numbers ago, have has week movies new to numbers encouraged because growth so as and this the a series of of year we course new all are to not

that. growth But growth can of may on So vary somewhat you I see expect course the think over occur depending the to year.

Steven Cahall

content Great. a spend marketing And costs. then about and talked you lot

particularly would spend. us, those about cash you be think size amortization? as Just of to Often any increase that's or to wondering if being of kind subscribers we for able spend investments the content, whether correlated content in

if So growth or you number, just color there's more can year-on-year whether wondering there? any it's provide total dollar

Craig Fischer

not Yes, as the Obviously, we're that noted. the going into on dollar specific programming. build year, will to throughout Alan amounts get

growth in prudently be It increase would subscriber growth. is plan to Our investment is premieres. that the to those expect to tied content you right subscribers content to in accelerate

basis. about the pretty a given programming on optimistic fresh regular think content a having we're this cadence I lineup year, consistent of new have we

that your expect expenditure, Obviously, about subscriber they’re funding programming the we're production know, growth. spend point an tied right? and To as you series the to to would is continue think you cash I programming. So trend of movies. upfront the timing, So with the

Latin So that America time, licensing happen in won't not third content At content of some until to will out outflow where the and parties this in XXXX. be actually also XXXX is same releases upfront, will this that Pantaya expenditure we're available. happen for

also we've the that licensing actually in starting into of will recouping entered in from That of majority deals delivery so sort production we've of costs. And a product. and seen our come of this couple we're a currently year revenue

upfront a ROI. relative positive recoup that over will cost expenditure, we to generate but time that delayed and will So the be

Steven Cahall

Great. of month, And was in getting a maybe X.XX ARPU I right QX which is around pretty to strong. then,

first, just their telcos bundling early some on bundles I wondering make sort And maybe appears to of So there. a is in then comment with arrangement. or distribution help could the the distribution. ballpark? especially lot how expand a like you was that wondering streaming, in of direct good any you versus I'm think using number deals media if distribution about a are

Alan Sokol

it's question. Steve, good a So,

important sort streamers which a have one them the I and to date, time. we're think that. think said, it's To English not time. That to enter we to major any of hope chunks subscribers million bundle I virtually subscribers think have deal that's we one language a bundle We given our of other into X at at close and deals. we deals, of all subscriber built nearly entered note

the cognizant our very think seen value are have product, our and think had, of of results, I that highly the telcos very it. have we've seen

step And help that the you're step short kind our you're on least some promotional to the spending when against growth ARPU ARPU, it on same going term, run taking clearly, a function think those I a wash doing to the but will And subscribers, out. step probably us at create not in long should all you're in in subscribers. of subscribers. back back So although for extent dollars you're marketing take

profitable you a Craig subscribers be those let the to time So ultimately to to the one I'll the ARPU may more question. at subscribers. respond than

Craig Fischer

Yes.

Your estimate mid zone, range. is in the $X the

what wholesale, But a so promotional that a are distribution, have we've basis the rather annual the fee against we every splits than would seen carry a We plans. at the strong revenue you And plan Pantaya.com also welcome us, our monthly typically direct on splits no As I share plans, our we lower ARPU obviously, index annual than proven And successful over where has retail relationships. including know, we've revenue in $X.XX. that direct then be higher the to distributors you the we think revenue on subscribers blended those. And renewal on XX.XX. have come to would subscribers web number splits those those day. monthly. splits do obviously But do rates wholesale And have at all have than an that. of subscriber past, through this relationships have platform rather we for is sizable lower. And said to revenue pricing

So that's through why you're the flow seeing high ARPU. the on

Steven Cahall

And this then growth be able just cable networks, over the are YouTube to what to and switching from the launches maybe size network the Great. year? you FUBO will

Alan Sokol

They because in they're [ph] existence. are both easier

a they've going it's subscribers of the So pace. inception, be and from impressive at to figures each six nice for growing and been networks very

that we're continue So will to grow. optimistic

have from Hispanic does to significantly Hispanic their priced not us against invest to starting language us zero, they also, intent success. English Hispanic be require an which intend package key but And will is indicated expressed they have that to audience. a to YouTube that through. low to launch in its -- buy now they And

Steven Cahall

Interesting.

maybe follow And so you're but levels, pretty is few not at interesting the lastly then the of for we Okay. where companies just me, pre-pandemic pandemic probably below here, below of kind just media stock that you're one a level levels.

had market to investors consolidation. your spooked year the issues that maybe in last participate willingness with raise think thinking some and the equity I potential about

that options just other the how Hemisphere? help if think how unlock you strategic as you So wondering pursue any to And I'm you the think make about optionality can ways some to future? for the of comments might you in value, about

Alan Sokol

$XX was value. which to was a value intrinsic what this terms as share. Thanks, -- to believe in our we at is our And of value. even announced Steve. stock least equity over relation we price company think equal bears that it are fundamental well I look, of fundamental that our was the no real true before. undervalued Well, The I mentioned, We offering,

legacy business, strong. business, core Our the remains

streams over fact in we you're other there, the U.S. strength Rico revenue which and distributors, time the unique in a anything is we'll do our number so television, expanded we expect like parts around Puerto especially are that they've still that have from advertisers -- other world. the new of need And with Puerto and the that opportunities significantly our working that don't and because offset that soon. Puerto cannot have to not and seeing to Hispanic et have and that else will market, attrition in are in that and viewership we In out we some side, mitigated and We subject cable sense continued packages and announce there us through on value order proposition Rico. to attrition the virtual subscriber And in which else. is the of network, launches, have seen broadcast good hopefully continue differentiated YouTube, we to the on with of FUBO drive Puerto to of develop U.S. Rico the that buy are to a everybody of new dominance We've asset cetera. Rico, compete WAPA carriage that

reflected price. is upside in in market confident the market recognized, the that gives the So market and that tremendous this seems million We then it's stock that that obviously our a tremendous Hispanic we addressable feel market Pantaya. to We is trepidation it phenomenal tremendous value is in U.S. around serving. And us there's we're not else has think not tremendous us but some super of nobody currently plus opportunity. think -- XX Pantaya,

exposure, value think mitigate is cost serving English That parties that value and American our at that small space by product production costs. to arms kind Pantaya, said, American the Latin are risk pretty an third priced. our we among don't fraction that in for America the we a while a effectively the of is asset and We're the mitigating both to of incredibly now. ourselves streamers. we on stock which attractively building remaining competitive cost We dealer Latin also have Latin We getting is cost further produce streamers, licensing tremendous language stream risk at right that the the rights having

We or price. sales in this a transaction interest at have near no anywhere

absolutely do seller went at when current would stock equity our valued at price. thought $X a to unlock to I'm a are to we we look that strategically now clearly we price will right fact, than a we to $X, or options In we ways looking the frustrated And value. continue our way offering that seller. this rather level, down we value, and very continue buyer But price for stock are rather all buyer with be to pulled at is a the increase so. than and

Steven Cahall

Great. Thank you.

Operator

Your is Curry Baker next question Securities. Guggenheim from with

open. is line Your

Curry Baker

with could morning, first your at you a any in year, Good little advertising, Puerto more just on seeing Rico to the us maybe starting comps give Maybe And bit quarter? what expectations color flag you're then overall for any the guys. Hi. in maybe point?

Alan Sokol

momentum it do with Hi, where see XXXX. strong Curry. frankly, that Good morning. ratings for tell feel saw maintained I dominant since selling We for has advertising cable don't as in lead don't think we in It's of results consistent comment I because position all on a And that networks a continue in U.S. WAPA. the all the my that this such, say acquired will its Rico little XXXX. about to the scatter. asset commercial market. market that XXXX. the hitting I is, very where to will result going speech to current U.S., in Puerto to continue going we're And in strong into optimistic in our the in this quarter. combination we we that way cylinders early as sort And XXXX. think very is But We upfront we we And said The on hasn't economy WAPA really

the for this out point. year project at really to hard full it's So

Curry Baker

a stable. you color? Maybe give you trends just alluded Rico, think bit sticking Can can I agreements And know you to this us early year or more Puerto do if little that? confirm there any then year? we next Okay. being distribution with are up sub

Alan Sokol

fourth been low There's trends But sorry, XXXX. quarter, sub question? remained modest stable have trends sub continue very your seeing single the second digits. in And of part of we're those Yes, the very kind stable. attrition I'm into

Curry Baker

Do any distribution guys agreements --? if we you know have

Alan Sokol

small coming of the the have We end one year. renewal at up

Curry Baker

Pantaya. tier? then guys And consider a you Okay. one an quick on Would advertising

Alan Sokol

the the going obviously we aware what's market, of in Yes, of cetera. We it. course Disney are consider et announcement, on

is I subscriber to would revenue we now be build to think time to the that forward. will I significant an goes we're a small as don't That do advertising. we as look continue that revenue little will moving enough by the know our -- justify realized and base. something at

Curry Baker

questions, Thanks guys. the Okay. for

Operator

are There for turn Sokol to further questions closing call the back no will time. at now this remarks. I Alan

Alan Sokol

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

Operator

Thank Ladies conference and Thank for you, this call. you gentlemen, joining. today's concludes sir.

now You may disconnect.

Hemisphere Media (HMTV) 8 Mar 222021 Q4 Earnings call transcript