2008-08-06 15:00:00
Entravision Communications Corporation Reports Second Quarter 2008 Results
-Second Quarter 2008 Net Revenue Decreases 5% -
-Repurchases 2.3 Million Shares in the Second Quarter-
SANTA MONICA, Calif., Aug. 6 /EMWNews/ -- Entravision
Communications Corporation (NYSE: EVC) today reported financial results for
the three- and six-month periods ended June 30, 2008.
Historical results, which are attached, are in thousands of U.S.
dollars (except share and per share data). The results of our outdoor
operations are presented in discontinued operations within the statements
of operations in accordance with SFAS 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets". This press release contains certain
non-GAAP financial measures as defined by SEC Regulation G. The GAAP
financial measure most directly comparable to each of these non-GAAP
financial measures, and a table reconciling each of these non-GAAP
financial measures to its most directly comparable GAAP financial measure,
is included beginning on page 8. Unaudited financial highlights are as
follows:
Three-Month Period
Ended June 30,
2008 2007 % Change
Net revenue $62,932 $66,536 (5)%
Operating expenses (1) 36,898 36,773 0%
Corporate expenses (2) 4,477 4,373 2%
Consolidated adjusted EBITDA (3) 22,371 25,932 (14)%
Free cash flow (4) $9,871 $15,086 (35)%
Free cash flow per share, basic and
diluted (4) $0.11 $0.14 (21)%
Net income from continuing operations $11,661 $11,771 (1)%
Net income applicable to common
stockholders $10,742 $8,598 25%
Net income per share from continuing
operations applicable to common
stockholders, basic and diluted $0.13 $0.11 18%
Net income per share applicable
to common stockholders, basic and
diluted $0.12 $0.08 50%
Weighted average common shares
outstanding, basic 91,573,187 104,174,725
Weighted average common shares
outstanding, diluted 91,835,027 105,124,162
Six-Month Period
Ended June 30,
2008 2007 % Change
Net revenue $118,585 $123,431 (4)%
Operating expenses (1) 72,307 71,818 1%
Corporate expenses (2) 8,931 9,002 (1)%
Consolidated adjusted EBITDA (3) 39,034 44,217 (12)%
Free cash flow (4) $14,289 $23,145 (38)%
Free cash flow per share, basic and
diluted (4) $0.15 $0.22 (32)%
Net income from continuing operations $4,611 $12,680 (64)%
Net income applicable to common
stockholders $3,038 $5,311 (43)%
Net income per share from continuing
operations applicable to common
stockholders, basic and diluted $0.05 $0.12 (58)%
Net income per share applicable
to common stockholders, basic and
diluted $0.03 $0.05 (40)%
Weighted average common shares
outstanding, basic 93,495,230 104,018,118
Weighted average common shares
outstanding, diluted 93,811,980 104,705,891
(1) Operating expenses include direct operating, selling, general and
administrative expenses. Included in operating expenses are $0.4 million
and $0.2 million of non-cash stock-based compensation for the three-month
periods ended June 30, 2008 and 2007, respectively and $0.7 million and
$0.7 million of non-cash stock-based compensation for the six-month periods
ended June 30, 2008 and 2007, respectively. Operating expenses do not
include corporate expenses, depreciation and amortization and gain (loss)
on sale of assets.
(2) Corporate expenses include $0.5 million and $0.4 million of
non-cash stock-based compensation for the three-month periods ended June
30, 2008 and 2007, respectively and $0.9 million and $1.0 million of
non-cash stock-based compensation for the six-month periods ended June 30,
2008 and 2007, respectively.
(3) Consolidated adjusted EBITDA means operating income (loss) plus
(gain) loss on sale of assets, depreciation and amortization, non-cash
stock-based compensation included in operating and corporate expenses and
syndication programming amortization less syndication programming payments.
We use the term consolidated adjusted EBITDA because that measure is
defined in our syndicated bank credit facility and does not include (gain)
loss on sale of assets, depreciation and amortization, non-cash stock-based
compensation, net interest expense, income tax expense (benefit), equity in
net income (loss) of nonconsolidated affiliate, loss from discontinued
operations and syndication programming amortization and does include
syndication programming payments. The definition of operating income
(loss), and thus consolidated adjusted EBITDA, excludes (gain) loss on sale
of assets, depreciation and amortization, non-cash stock-based
compensation, net interest expense, income tax expense (benefit), equity in
net income (loss) of nonconsolidated affiliate, loss from discontinued
operations and syndication programming amortization. While many in the
financial community and we consider consolidated adjusted EBITDA to be
important, it should be considered in addition to, but not as a substitute
for or superior to, other measures of liquidity and financial performance
prepared in accordance with accounting principles generally accepted in the
United States of America, such as cash flows from operating activities,
operating income and net income. As consolidated adjusted EBITDA excludes
non-cash (gain) loss of sales of assets, non-cash depreciation and
amortization, non- cash stock-based compensation, net interest expense,
income tax expense (benefit), equity in net income (loss) of
nonconsolidated affiliate, loss from discontinued operations and
syndication programming amortization and includes syndication programming
payments, consolidated adjusted EBITDA has certain limitations because it
excludes and includes several important non-cash financial line items.
Therefore, we consider both non-GAAP and GAAP measures when evaluating our
business. Consolidated adjusted EBITDA is also used to make executive
compensation decisions.
(4) Free cash flow is defined as consolidated adjusted EBITDA less cash
paid for income taxes, net interest expense and capital expenditures. Net
interest expense is defined as interest expense, less non-cash interest
expense relating to amortization of debt finance costs, less interest
income less the change in the fair value of our interest rate swaps. Free
cash flow per share is defined as free cash flow divided by the diluted
weighted average common shares outstanding.
Commenting on the Company's earnings results, Walter Ulloa, Chairman
and Chief Executive Officer, said, "During the second quarter we continued
to drive audience growth and strengthen the position of our TV and radio
stations in an advertising market that remains weak due to general economic
conditions. We are taking additional steps to control our costs while
continuing to make prudent investments in our content, marketing and sales
capabilities. In addition, our balance sheet remains strong and we have
ample financial flexibility. The nation's Hispanic population continues to
grow and we remain optimally positioned to capitalize on this opportunity
over the long-term."
The Company also announced that it repurchased 2.3 million shares of
Class A common stock for approximately $13.7 million in the second quarter
of 2008. The Company announced that it repurchased an additional 1.0
million shares of Class A common stock for approximately $3.4 million so
far in the third quarter of 2008.
Financial Results
Three Months Ended June 30, 2008 Compared to Three Months Ended June
30, 2007
(Unaudited)
Three-Month Period
Ended June 30,
2008 2007 % Change
Net revenue $62,932 $66,536 (5)%
Operating expenses (1) 36,898 36,773 0%
Corporate expenses (1) 4,477 4,373 2%
Depreciation and amortization 5,642 5,603 1%
Operating income 15,915 19,787 (20)%
Interest expense, net 3,458 (505) NM
Income before income taxes 19,373 19,282 0%
Income tax expense (7,674) (7,671) 0%
Income before equity in net income
(loss) of nonconsolidated
affiliates and discontinued operations 11,699 11,611 1%
Equity in net income (loss) of
nonconsolidated affiliates (38) 160 NM
Income from continuing operations 11,661 11,771 (1)%
Loss from discontinued operations,
net of tax (919) (3,173) (71)%
Net income $10,742 $8,598 25%
(1) Operating expenses and corporate expenses are defined on page 1.
Net revenue decreased to $62.9 million for the three-month period ended
June 30, 2008 from $66.5 million for the three-month period ended June 30,
2007, a decrease of $3.6 million. Of the overall decrease, $2.3 million
came from our radio segment and was primarily attributable to a decrease in
second quarter revenue of $1.2 million associated with moving our annual
Los Angeles promotional event from the second quarter to the third quarter
in 2008, as well as a decrease in local advertising sales and local
advertising rates, which in turn was primarily due to the weak economy.
Additionally, $1.3 million of the decrease came from our television segment
and was primarily attributable to a decrease in national advertising sales
and national advertising rates, which in turn was primarily due to the weak
economy.
Operating expenses increased to $36.9 million for the three-month
period ended June 30, 2008 from $36.8 million for the three-month period
ended June 30, 2007, an increase of $0.1 million. The increase was
primarily attributable to an increase in wages, utility and rent expense,
partially offset by a decrease in second quarter expenses associated with
moving our annual Los Angeles promotional event from the second quarter to
the third quarter in 2008 and a decrease in expenses associated with the
decrease in net revenue.
Corporate expenses increased to $4.5 million for three-month period
ended June 30, 2008 from $4.4 million for the three-month period ended June
30, 2007, an increase of $0.1 million. The increase was attributable to an
increase in non-cash stock-based compensation of $0.1 million.
Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
(Unaudited)
Six-Month Period
Ended June 30,
2008 2007 % Change
Net revenue $118,585 $123,431 (4)%
Operating expenses (1) 72,307 71,818 1%
Corporate expenses (1) 8,931 9,002 (1)%
Depreciation and amortization 11,187 11,323 (1)%
Operating income 26,160 31,288 (16)%
Interest expense, net (18,706) (10,351) 81%
Income before income taxes 7,454 20,937 (64)%
Income tax expense (2,679) (8,417) (68)%
Income before equity in net income
(loss) of nonconsolidated affiliates
and discontinued operations 4,775 12,520 (62)%
Equity in net income (loss) of
nonconsolidated affiliates (164) 160 NM
Income from continuing operations 4,611 12,680 (64)%
Loss from discontinued operations,
net of tax (1,573) (7,369) (79)%
Net income $3,038 $5,311 (43)%
Net revenue decreased to $118.6 million for the six-month period ended
June 30, 2008 from $123.4 million for the six-month period ended June 30,
2007, a decrease of $4.8 million. Of the overall decrease, $2.8 million
came from our radio segment and was primarily attributable to a decrease in
revenue of $1.2 million associated with moving our annual Los Angeles
promotional event from the second quarter to the third quarter in 2008, as
well as a decrease in local advertising sales and local advertising rates,
which in turn was primarily due to the weak economy. Additionally, $2.0
million of the decrease came from our television segment and was primarily
attributable to a decrease in national advertising rates, which in turn was
primarily due to the weak economy.
Operating expenses increased to $72.3 million for the six-month period
ended June 30, 2008 from $71.8 million for the six-month period ended June
30, 2007, an increase of $0.5 million. The increase was primarily
attributable to an increase in wages, utility and rent expense, partially
offset by a decrease in second quarter expenses associated with moving our
annual Los Angeles promotional event from the second quarter to the third
quarter in 2008 and a decrease in expenses associated with the decrease in
net revenue.
Corporate expenses decreased to $8.9 million for six-month period ended
June 30, 2008 from $9.0 million for the six-month period ended June 30,
2007, a decrease of $0.1 million. The decrease was attributable to a
decrease in non-cash stock-based compensation of $0.1 million.
Segment Results
The following represents selected unaudited segment information:
Three-Month Period
Ended June 30,
2008 2007 % Change
Net Revenue
Television $38,944 $40,287 (3)%
Radio 23,988 26,249 (9)%
Total $62,932 $66,536 (5)%
Operating Expenses (1)
Television $21,712 $21,605 0%
Radio 15,186 15,168 0%
Total $36,898 $36,773 0%
Corporate Expenses (1) $4,477 $4,373 2%
Consolidated adjusted EBITDA (1) $22,371 $25,932 (14)%
(1) Operating expenses, Corporate expenses, and Consolidated adjusted
EBITDA are defined on page 1.
Guidance
The following is the Company's guidance for the third quarter of 2008.
Guidance constitutes a "forward-looking statement." Please see below
regarding statements that are forward-looking.
Operating expenses and corporate expenses include non-cash stock-based
compensation to comply with Statement of Financial Accounting Standards
("SFAS") No. 123 (Revised 2004), "Share-Based Payment" ("SFAS 123R"). The
Company expects approximately $0.4 million in operating expenses and $0.5
million in corporate expenses related to equity compensation in the third
quarter of 2008.
For the third quarter of 2008, the Company expects net revenues to
decrease by low- to mid-single digit percentages and operating expenses to
increase by low-single digit percentages as compared to the third quarter
of 2007. Excluding the non-cash stock-based compensation, corporate
expenses are expected to be approximately the same as compared to the third
quarter of 2007.
Entravision Communications Corporation will hold a conference call to
discuss its 2008 second quarter results on August 6, 2008 at 5 p.m. Eastern
Time. To access the conference call, please dial 412-858-4600 ten minutes
prior to the start time. The call will be webcast live and archived for
replay at http://www.entravision.com.
Entravision Communications Corporation is a diversified
Spanish-language media company utilizing a combination of television and
radio operations to reach Hispanic consumers across the United States, as
well as the border markets of Mexico. Entravision is the largest affiliate
group of both the top-ranked Univision television network and Univision's
TeleFutura network, with television stations in 20 of the nation's top 50
Hispanic markets. The company also operates one of the nation's largest
groups of primarily Spanish- language radio stations, consisting of 48
owned and operated radio stations. Entravision shares of Class A Common
Stock are traded on The New York Stock Exchange under the symbol: EVC.
This press release contains certain forward-looking statements. These
forward-looking statements, which are included in accordance with the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995,
may involve known and unknown risks, uncertainties and other factors that
may cause the Company's actual results and performance in future periods to
be materially different from any future results or performance suggested by
the forward-looking statements in this press release. Although the Company
believes the expectations reflected in such forward-looking statements are
based upon reasonable assumptions, it can give no assurance that actual
results will not differ materially from these expectations, and the Company
disclaims any duty to update any forward-looking statements made by the
Company. From time to time, these risks, uncertainties and other factors
are discussed in the Company's filings with the Securities and Exchange
Commission.
(Financial Table Follows)
Entravision Communications Corporation
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
Three-Month Period Six-Month Period
Ended June 30, Ended June 30,
2008 2007 2008 2007
Net revenue (including
related parties of $32,
$150, $182 and $300) $62,932 $66,536 $118,585 $123,431
Expenses:
Direct operating
expenses (including
related parties of
$3,079, $3,202, $5,572
and $5,929)(including
non-cash stock-based
compensation of $165,
$97, $289 and $251) 25,942 25,009 50,676 49,225
Selling, general and
administrative
expenses (including
non-cash stock-based
compensation of $207,
$135, $362 and $400) 10,956 11,764 21,631 22,593
Corporate expenses
(including non-cash
stock-based
compensation of $468,
$370, $903 and $1,018) 4,477 4,373 8,931 9,002
Depreciation and
amortization
(includes direct
operating of $4,382,
$4,412, $8,726 and
$8,891; selling,
general and
administrative of
$983, $975, $1,985
and $2,001; and corporate
of $277, $216, $476
and $431)(including
related parties of $580,
$580, $1,160 and $1,160) 5,642 5,603 11,187 11,323
47,017 46,749 92,425 92,143
Operating income 15,915 19,787 26,160 31,288
Interest expense
(including related
parties of $54, $68,
$112 and $141) 3,172 (1,807) (19,423) (12,917)
Interest income 286 1,302 717 2,566
Income before income
taxes 19,373 19,282 7,454 20,937
Income tax expense (7,674) (7,671) (2,679) (8,417)
Income before equity
in net income
(loss) of
nonconsolidated
affiliate and
discontinued
operations 11,699 11,611 4,775 12,520
Equity in net income
(loss) of
nonconsolidated
affiliate (38) 160 (164) 160
Income from continuing
operations 11,661 11,771 4,611 12,680
Loss from discontinued
operations, net of tax
(expense) benefit of
($369), $1,514, $604 and
$4,160 (919) (3,173) (1,573) (7,369)
Net income applicable to
common stockholders $10,742 $8,598 $3,038 $5,311
Basic and diluted
earnings per share:
Net income per share
from continuing
operations applicable
to common stockholders,
basic and diluted $0.13 $0.11 $0.05 $0.12
Net loss per share from
discontinued
operations, basic and
diluted $(0.01) $(0.03) $(0.02) $(0.07)
Net income per share
applicable to common
stockholders,
basic and diluted $0.12 $0.08 $0.03 $0.05
Weighted average common
shares outstanding,
basic 91,573,187 104,174,725 93,495,230 104,018,118
Weighted average common
shares outstanding,
diluted 91,835,027 105,124,162 93,811,980 104,705,891
Entravision Communications Corporation
Consolidated Statements of Cash Flows
(In thousands, except share and per share data)
(Unaudited)
Three-Month Period Six-Month Period
Ended June 30, Ended June 30,
2008 2007 2008 2007
Cash flows from operating activities:
Net income $10,742 $8,598 $3,038 $5,311
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 5,642 5,603 11,187 11,323
Deferred income taxes 6,877 9,598 1,660 7,233
Amortization of debt issue costs 101 101 202 202
Amortization of syndication
contracts 689 399 1,555 415
Payments on syndication contracts (715) (459) (1,422) (478)
Equity in net (income) loss of
nonconsolidated affiliate 38 (160) 164 (160)
Non-cash stock-based compensation 840 602 1,554 1,669
Change in fair value of
interest rate swap agreements (10,832) (6,082) 3,211 (2,796)
Changes in assets and
liabilities, net of effect of
acquisitions and dispositions:
(Increase) decrease in
accounts receivable (6,317) (8,699) 158 (5,983)
(Increase) decrease in
prepaid expenses and other
assets 733 322 78 (131)
Increase (decrease) in
accounts payable, accrued
expenses and other
liabilities (659) 1,806 (1,760) (1,456)
Effect of discontinued
operations (1,569) 712 (2,230) 8,818
Net cash provided by
operating activities 5,570 12,341 17,395 23,967
Cash flows from investing activities:
Proceeds from sale of property
and equipment and intangibles 101,407 20 101,498 20
Purchases of property and
equipment and intangibles (4,404) (5,978) (8,408) (9,403)
Purchase of a business - - (22,885) -
Effect of discontinued operations (64) (823) (194) (1,182)
Net cash provided by (used
in) investing activities 96,939 (6,781) 70,011 (10,565)
Cash flows from financing activities:
Proceeds from issuance of common
stock - 2,925 486 5,477
Payments on long-term debt (1,007) (1,068) (11,034) (1,144)
Repurchase of Class U common
stock - - (10,380) -
Repurchase of Class A common
stock (13,793) - (36,293) (2,840)
Change in excess tax benefits
from exercise of stock options (25) 353 (25) 476
Net cash provided by (used
in) financing activities (14,825) 2,210 (57,246) 1,969
Net increase in cash and
cash equivalents 87,684 7,770 30,160 15,371
Cash and cash equivalents:
Beginning 29,421 126,126 86,945 118,525
Ending $117,105 $133,896 $117,105 $133,896
Entravision Communications Corporation
Reconciliation of Consolidated Adjusted EBITDA to Cash Flows From Operating
Activities
(Unaudited; in thousands) The most directly comparable GAAP financial measure is operating cash
flow. A reconciliation of this non-GAAP measure to cash flows from
operating activities for each of the periods presented is as follows:
Three-Month Period Six-Month Period
Ended June 30, Ended June 30,
2008 2007 2008 2007
Consolidated adjusted EBITDA (1) $22,371 $25,932 $39,034 $44,217
Interest expense 3,172 (1,807) (19,423) (12,917)
Interest income 286 1,302 717 2,566
Income tax expense (7,674) (7,671) (2,679) (8,417)
Amortization of syndication
contracts (689) (399) (1,555) (415)
Payments on syndication contracts 715 459 1,422 478
Non-cash stock-based compensation
included in direct operating
expenses (165) (97) (289) (251)
Non-cash stock-based compensation
included in selling, general
and administrative expenses (207) (135) (362) (400)
Non-cash stock-based compensation
included in corporate expenses (468) (370) (903) (1,018)
Depreciation and amortization (5,642) (5,603) (11,187) (11,323)
Equity in net income (loss) of
nonconsolidated affiliates (38) 160 (164) 160
Loss from discontinued operations (919) (3,173) (1,573) (7,369)
Net income 10,742 8,598 3,038 5,311
Depreciation and amortization 5,642 5,603 11,187 11,323
Deferred income taxes 6,877 9,598 1,660 7,233
Amortization of debt issue costs 101 101 202 202
Amortization of syndication
contracts 689 399 1,555 415
Payments on syndication contracts (715) (459) (1,422) (478)
Equity in net (income) loss of
nonconsolidated affiliate 38 (160) 164 (160)
Non-cash stock-based compensation 840 602 1,554 1,669
Change in fair value of interest
rate swap agreements (10,832) (6,082) 3,211 (2,796)
Changes in assets and liabilities,
net of effect of acquisitions and
dispositions:
(Increase) decrease in accounts
receivable (6,317) (8,699) 158 (5,983)
(Increase) decrease in prepaid
expenses and other assets 733 322 78 (131)
Increase (decrease) in accounts
payable, accrued expenses and
other liabilities (659) 1,806 (1,760) (1,456)
Effect of discontinued operations (1,569) 712 (2,230) 8,818
Cash flows from operating
activities $5,570 $12,341 $17,395 $23,967
(1) Consolidated adjusted EBITDA is defined on page 1.
Entravision Communications Corporation
Reconciliation of Free Cash Flow to Net Income
(Unaudited; in thousands)
The most directly comparable GAAP financial measure is net income. A
reconciliation of this non-GAAP measure to net income for each of the periods
presented is as follows:
Three-Month Period Six-Month Period
Ended June 30, Ended June 30,
2008 2007 2008 2007
Consolidated adjusted EBITDA (1) $22,371 $25,932 $39,034 $44,217
Net interest expense (1) 7,274 6,486 15,293 12,945
Cash paid for income taxes 822 366 1,044 708
Capital expenditures (2) 4,404 3,994 8,408 7,419
Free cash flow (1) 9,871 15,086 14,289 23,145
Capital expenditures (2) 4,404 3,994 8,408 7,419
Non-cash interest (expense) income
relating to amortization of debt
finance costs and interest rate
swap agreements 10,732 5,981 (3,413) 2,594
Non-cash income tax expense (6,852) (7,305) (1,635) (7,709)
Amortization of syndication contracts (689) (399) (1,555) (415)
Payments on syndication contracts 715 459 1,422 478
Non-cash stock-based compensation
included in direct operating
expenses (165) (97) (289) (251)
Non-cash stock-based compensation
included in selling, general
and administrative expenses (207) (135) (362) (400)
Non-cash stock-based compensation
included in corporate expenses (468) (370) (903) (1,018)
Depreciation and amortization (5,642) (5,603) (11,187) (11,323)
Equity in net income (loss) of
nonconsolidated affiliates (38) 160 (164) 160
Loss from discontinued operations (919) (3,173) (1,573) (7,369)
Net income $10,742 $8,598 $3,038 $5,311
(1) Consolidated adjusted EBITDA, net interest expense and free cash
flow are defined on page 1.
(2) Capital expenditures is not part of the consolidated statement of
operations.
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