Entravision Communications Corporation Reports Fourth Quarter and Full Year 2020 Results
– Reports Quarter Over Quarter Net Income Attributable to Common Stockholders Growth of 176% –
– Reports Quarter Over Quarter Consolidated Adjusted EBITDA Growth of 195% –
– Reports Quarter Over Quarter Operating Cash Flow Growth of 369% –
– Reports Quarter Over Quarter Free Cash Flow Growth of 495% –
– Quarterly Cash Dividend of $0.025 Per Share –
SANTA MONICA, Calif.–(BUSINESS WIRE)–Entravision Communications Corporation (NYSE: EVC) today reported unaudited financial results for the three- and twelve-month periods ended December 31, 2020.
“Entravision capped off a very challenging year with an exceptionally strong fourth quarter,” said Walter F. Ulloa, Chairman and Chief Executive Officer. “In addition to achieving record political revenues in the fourth quarter of 2020, our digital business expanded significantly and was up 424% over the prior-year period due in large part to our acquisition of a majority interest in Cisneros Interactive. Importantly, all three of our business segments grew in the fourth quarter of 2020 compared to the prior year, positioning us well for 2021.”
Mr. Ulloa continued, “This past quarter, as we focused on streamlining our cost structure to maintain the stability of our business, we also made great progress in strengthening our digital segment. In November, we appointed industry veteran and member of our Board of Directors Juan Saldívar as our new Chief Digital, Strategy and Accountability Officer. Juan’s appointment followed a number of strategic moves in 2020 to strengthen our portfolio of digital assets, including both the formation of Entravision Digital and our majority investment in Cisneros Interactive. We will continue to build upon our digital offerings, while also maintaining and strengthening our television and radio segments.”
Unaudited historical results, which are attached, are in thousands of U.S. dollars (except share and per share data). 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 12. Unaudited financial highlights are as follows:
|
|
Three Months Ended |
|
Twelve Months Ended |
|||||||||||||||||||
|
|
December 31, |
|
December 31, |
|||||||||||||||||||
|
|
2020 |
|
2019 |
|
% Change |
|
2020 |
|
2019 |
|
% Change |
|||||||||||
|
Net revenue |
$ |
171,683 |
|
$ |
70,838 |
|
142 |
% |
$ |
344,026 |
|
$ |
273,575 |
|
26 |
% |
||||||
|
Cost of revenue – digital (1) |
|
85,326 |
|
|
10,314 |
|
727 |
% |
|
106,928 |
|
|
36,757 |
|
191 |
% |
||||||
|
Operating expenses (2) |
|
45,945 |
|
|
44,169 |
|
4 |
% |
|
153,313 |
|
|
173,377 |
|
(12 |
)% |
||||||
|
Corporate expenses (3) |
|
9,296 |
|
|
7,887 |
|
18 |
% |
|
27,807 |
|
|
28,067 |
|
(1 |
)% |
||||||
|
Foreign currency (gain) loss |
|
(1,725 |
) |
|
(223 |
) |
674 |
% |
|
(1,052 |
) |
|
754 |
|
* |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Consolidated adjusted EBITDA (4) |
|
32,646 |
|
|
11,056 |
|
195 |
% |
|
60,419 |
|
|
41,209 |
|
47 |
% |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Free cash flow (5) |
$ |
28,641 |
|
$ |
4,813 |
|
495 |
% |
$ |
43,029 |
|
$ |
8,292 |
|
419 |
% |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Net income (loss) |
$ |
22,851 |
|
$ |
7,360 |
|
210 |
% |
$ |
(1,387 |
) |
$ |
(19,712 |
) |
(93 |
)% |
||||||
|
Net (income) loss attributable to redeemable noncontrolling interest |
$ |
(2,523 |
) |
$ |
– |
|
* |
|
$ |
(2,523 |
) |
$ |
– |
|
* |
|
||||||
|
Net income (loss) attributable to common stockholders |
$ |
20,328 |
|
$ |
7,360 |
|
176 |
% |
$ |
(3,910 |
) |
$ |
(19,712 |
) |
(80 |
)% |
||||||
|
|
|
|
|
|
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|
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|
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|
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||||||
|
Net income (loss) per share attributable to common stockholders, basic and diluted |
$ |
0.24 |
|
$ |
0.09 |
|
167 |
% |
$ |
(0.05 |
) |
$ |
(0.23 |
) |
(78 |
)% |
||||||
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
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||||||
|
Weighted average common shares outstanding, basic |
|
84,297,592 |
|
|
84,226,135 |
|
|
|
|
84,231,212 |
|
|
85,107,301 |
|
|
|
||||||
|
Weighted average common shares outstanding, diluted |
|
85,985,630 |
|
|
85,449,374 |
|
|
|
|
84,231,212 |
|
|
85,107,301 |
|
|
|
||||||
|
(1) |
Cost of revenue – digital consists primarily of the costs of online media acquired from third-party publishers. Media cost is classified as cost of revenue in the period in which the corresponding revenue is recognized. |
|
|
|
||
|
(2) |
For purposes of presentation in this table, the operating expenses line item includes direct operating and selling, general and administrative expenses. Included in operating expenses are $0.9 million and $0.4 million of non-cash stock-based compensation for the three-month periods ended December 31, 2020 and 2019, respectively, and $1.2 million and $0.7 million of non-cash stock-based compensation for the twelve-month periods ended December 31, 2020 and 2019, respectively. Also for purposes of presentation in this table, the operating expenses line item does not include corporate expenses, foreign currency (gain) loss, depreciation and amortization, impairment charge, gain (loss) on sale of assets, gain (loss) on debt extinguishment, other income (loss) and change in fair value of contingent consideration. |
|
|
(3) |
Corporate expenses include $1.9 million and $1.5 million of non-cash stock-based compensation for the three-month periods ended December 31, 2020 and 2019, respectively, and $3.9 million and $3.6 million of non-cash stock-based compensation for the twelve-month periods ended December 31, 2020 and 2019, respectively. |
|
|
(4) |
Consolidated adjusted EBITDA means net income (loss) plus gain (loss) on sale of assets, depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation included in operating and corporate expenses, net interest expense, other operating gain (loss), gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from the Federal Communications Commission, or FCC, spectrum incentive auction less related expenses, expenses associated with investments, EBITDA attributable to redeemable noncontrolling interest, acquisitions and dispositions and certain pro-forma cost savings. We use the term consolidated adjusted EBITDA because that measure is defined in the agreement governing our current credit facility (“the 2017 Credit Facility”) and does not include gain (loss) on sale of assets, depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation, net interest expense, other income (loss), gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from FCC spectrum incentive auction less related expenses, expenses associated with investments, EBITDA attributable to redeemable noncontrolling interest, acquisitions and dispositions and certain pro-forma cost savings. |
|
|
|
||
|
(5) |
Free cash flow is defined as consolidated adjusted EBITDA less cash paid for income taxes, net interest expense, capital expenditures and non-recurring cash expenses plus dividend income, and other operating gain (loss). Net interest expense is defined as interest expense, less non-cash interest expense relating to amortization of debt finance costs, and less interest income. |
|
Quarterly Cash Dividend
As previously announced by the Company on March 3, 2021, the Company’s Board of Directors approved a quarterly cash dividend to shareholders of $0.025 per share on the Company’s Class A, Class B and Class U common stock, in an aggregate amount of approximately $2.1 million. The quarterly dividend will be payable on March 31, 2021 to shareholders of record as of the close of business on March 16, 2021, and the common stock will trade ex-dividend on March 15, 2021. The Company currently anticipates that future cash dividends will be paid on a quarterly basis; however, any decision to pay future cash dividends will be subject to approval by the Board.
Expects to File Form 12b-25 for Extension of Filing Deadline for 2020 Form 10-K
The Company also announced today that it expects to file a notification of late filing on Form 12b-25 with the Securities and Exchange Commission, which provides an automatic 15-day extension of the filing deadline for its Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (the “2020 Form 10-K”), to March 31, 2021. The Company expects to file the 2020 Form 10-K as soon as practicable within the extension period.
Unaudited Financial Results
The financial results included in this press release are unaudited and represent the most current information available to management. The Company’s independent registered public accounting firm has informed the Company that they have not completed their audit procedures as of the date of this press release. During the course of the completion of these audit procedures, items may be identified that would require the Company to make adjustments which could result in material changes to the Company’s unaudited financial results included in this press release. Consequently, the unaudited financial results included in this press release should not be viewed as substitutes for the Company’s audited results that will be included in the Company’s Annual Report on Form 10-K. Unaudited financial results are as follows:
|
Three-Month Period Ended December 31, 2020 Compared to Three-Month Period Ended December 31, 2019 |
|||||||||||
|
(Unaudited) |
|||||||||||
|
|
|||||||||||
|
|
|
Three Months Ended |
|||||||||
|
|
|
December 31, |
|||||||||
|
|
|
2020 |
|
2019 |
|
% Change |
|||||
|
Net revenue |
|
171,683 |
|
|
70,838 |
|
142 |
% |
|||
|
Cost of revenue – digital (1) |
|
85,326 |
|
|
10,314 |
|
727 |
% |
|||
|
Operating expenses (1) |
|
45,945 |
|
|
44,169 |
|
4 |
% |
|||
|
Corporate expenses (1) |
|
9,296 |
|
|
7,887 |
|
18 |
% |
|||
|
Depreciation and amortization |
|
4,963 |
|
|
4,236 |
|
17 |
% |
|||
|
Change in fair value of contingent consideration |
|
— |
|
|
(4,102 |
) |
(100 |
)% |
|||
|
Impairment charge |
|
200 |
|
|
654 |
|
(69 |
)% |
|||
|
Foreign currency (gain) loss |
|
(1,725 |
) |
|
(223 |
) |
674 |
% |
|||
|
Other operating (gain) loss |
|
(1,346 |
) |
|
(829 |
) |
62 |
% |
|||
|
|
|
|
|
|
|
|
|
|
|||
|
Operating income (loss) |
|
29,024 |
|
|
8,732 |
|
232 |
% |
|||
|
Interest expense, net |
|
(1,474 |
) |
|
(2,350 |
) |
(37 |
)% |
|||
|
Dividend income |
|
2 |
|
|
171 |
|
(99 |
)% |
|||
|
Gain (loss) on debt extinguishment |
|
— |
|
|
(255 |
) |
(100 |
)% |
|||
|
|
|
|
|
|
|
|
|
|
|||
|
Income before income taxes |
|
27,552 |
|
|
6,298 |
|
337 |
% |
|||
|
|
|
|
|
|
|
|
|
|
|||
|
Income tax (expense) benefit |
|
(4,701 |
) |
|
1,107 |
|
* |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
|
Net income (loss) before equity in net income (loss) of nonconsolidated affiliates |
|
22,851 |
|
|
7,405 |
|
209 |
% |
|||
|
Equity in net income (loss) of nonconsolidated affiliates |
|
— |
|
|
(45 |
) |
(100 |
)% |
|||
|
|
|
|
|
|
|
|
|
|
|||
|
Net income (loss) |
|
22,851 |
|
|
7,360 |
|
210 |
% |
|||
|
Net (income) loss attributable to redeemable noncontrolling interest |
|
(2,523 |
) |
|
— |
|
* |
|
|||
|
Net income (loss) attributable to common stockholders |
$ |
20,328 |
|
$ |
7,360 |
|
176 |
% |
|||
|
(1) |
Cost of revenue, operating expenses and corporate expenses are defined on page 1. |
|
Net revenue increased to $171.7 million for the three-month period ended December 31, 2020 from $70.8 million for the three-month period ended December 31, 2019, an increase of approximately $100.9 million. Of the overall increase, approximately $13.6 million was attributable to our television segment and was primarily due to increases in political advertising revenue and an increase in national advertising revenue, partially offset by a decrease in local advertising revenue. The decrease in local advertising revenue was primarily a result of the continuing economic crisis resulting from the COVID-19 pandemic, ratings declines, competitive factors with another Spanish-language broadcaster, and changing demographic preferences of audiences. We have previously noted a trend for advertising to move increasingly from traditional media, such as television, to new media, such as digital media, and we expect this trend to continue. Additionally, approximately $84.9 million of the overall increase was attributable to our digital segment and was primarily due to the acquisition of a majority interest in Cisneros Interactive during the fourth quarter of 2020, which did not contribute to net revenue in prior periods, partially offset by a decrease in advertising revenue as a result of declines in pre-acquisition digital revenue, and the continuing economic crisis resulting from the COVID-19 pandemic. We have previously noted a trend in our domestic digital operations whereby revenue is shifting more to programmatic revenue, and this trend is now growing in markets outside the United States. As a result, advertisers are demanding more efficiency and lower cost from intermediaries like us. In response to this trend, we are offering programmatic alternatives to advertisers, which is putting pressure on margins. We expect this trend will continue in future periods, likely resulting in a permanent higher volume, lower margin business in our digital segment. The digital advertising industry remains dynamic and is continuing to undergo rapid changes in technology and competition. We expect this trend to continue and possibly accelerate. We must continue to remain vigilant to meet these dynamic and rapid changes including the need to further adjust our business strategies accordingly. No assurances can be given that such adjustments will be successful. Additionally, approximately $2.3 million of the overall increase was attributable to our radio segment and was primarily due to an increase in political advertising revenue and an increase in national advertising revenue, partially offset by decreases in local advertising revenue. The decrease in local advertising revenue was primarily a result of the continuing economic crisis resulting from the COVID-19 pandemic, ratings declines and competitive factors with other Spanish-language broadcasters, and changing demographic preferences of audiences. We have previously noted a trend for advertising to move increasingly from traditional media, such as radio, to new media, such as digital media, and we expect this trend to continue. This trend has had a more significant impact on our radio revenue as compared to television revenue, and we expect that this trend will also continue.
Cost of revenue in our digital segment increased to $85.3 million for the three-month period ended December 31, 2020 from $10.3 million for the three-month period ended December 31, 2019, an increase of $75.0 million, primarily due to increased costs of revenue associated with Cisneros Interactive during the fourth quarter of 2020, following its acquisition during the fourth quarter of 2020, which did not incur cost of revenue for us in prior periods.
Operating expenses increased to $45.9 million for the three-month period ended December 31, 2020 from $44.2 million for the three-month period ended December 31, 2019, an increase of $1.7 million. Of the overall increase, approximately $0.7 million was attributable to our television segment and was primarily due to expenses associated with the increase in political and national advertising revenue, partially offset by decreases in salary expense associated with furloughs and layoffs. Additionally, approximately $4.1 million of the overall increase was attributable to our digital segment primarily due to the acquisition of a majority interest in Cisneros Interactive during the fourth quarter of 2020, which did not incur direct operating expenses for us in prior periods, partially offset by decreases in salary expense associated with furloughs and layoffs, and expenses associated with the decrease in advertising revenue as a result of declines in pre-acquisition digital revenue. The overall increase was partially offset by a decrease of approximately $3.1 million attributable to our radio segment and was primarily due to decreases in salary expense associated with furloughs and layoffs, and payroll tax expense.
Corporate expenses increased to $9.3 million for the three-month period ended December 31, 2020 from $7.9 million for the three-month period ended December 31, 2019, an increase of $1.4 million. The increase was primarily due to retroactive restoration and payments of previously reduced salaries to the levels prior to the reduction in salaries due to the COVID-19 pandemic.
Our historical revenues have primarily been denominated in U.S. dollars, and the majority of our current revenues continue to be, and are expected to remain, denominated in U.S. dollars. However, our operating expenses are generally denominated in the currencies of the countries in which our operations are located, and we have operations in countries other than the United States, primarily those operations related to our digital business. As a result, we have operating expense, attributable to foreign currency, that is primarily related to the operations related to our digital business. We had a foreign currency gain of $1.7 million for the three-month period ended December 31, 2020 compared to a foreign currency gain of $0.2 million for the three-month period ended December 31, 2019. Foreign currency gain was primarily due to currency fluctuations that affected our digital segment operations located outside the United States.
Impairment charge related to certain FCC licenses in our radio reporting unit was $0.2 million for the three-month period ended December 31, 2020. Impairment charge related to indefinite life intangible assets in our television and radio reporting units was $0.7 million for the three-month period ended December 31, 2019.
|
Twelve-Month Period Ended December 31, 2020 Compared to Twelve-Month Period Ended December 31, 2019 |
|||||||||||
|
(Unaudited) |
|||||||||||
|
|
|||||||||||
|
|
|
Twelve Months Ended |
|||||||||
|
|
|
December 31, |
|||||||||
|
|
|
2020 |
|
2019 |
|
% Change |
|||||
|
Net revenue |
|
344,026 |
|
|
273,575 |
|
26 |
% |
|||
|
Cost of revenue – digital (1) |
|
106,928 |
|
|
36,757 |
|
191 |
% |
|||
|
Operating expenses (1) |
|
153,313 |
|
|
173,377 |
|
(12 |
)% |
|||
|
Corporate expenses (1) |
|
27,807 |
|
|
28,067 |
|
(1 |
)% |
|||
|
Depreciation and amortization |
|
17,282 |
|
|
16,648 |
|
4 |
% |
|||
|
Change in fair value of contingent consideration |
|
— |
|
|
(6,478 |
) |
(100 |
)% |
|||
|
Impairment charge |
|
40,035 |
|
|
32,097 |
|
25 |
% |
|||
|
Foreign currency (gain) loss |
|
(1,052 |
) |
|
754 |
|
* |
|
|||
|
Other operating (gain) loss |
|
(6,895 |
) |
|
(5,994 |
) |
15 |
% |
|||
|
|
|
|
|
|
|
|
|
|
|||
|
Operating income (loss) |
|
6,608 |
|
|
(1,653 |
) |
(500 |
)% |
|||
|
Interest expense, net |
|
(6,517 |
) |
|
(10,330 |
) |
(37 |
)% |
|||
|
Dividend income |
|
28 |
|
|
918 |
|
(97 |
)% |
|||
|
Gain (loss) on debt extinguishment |
|
— |
|
|
(255 |
) |
(100 |
)% |
|||
|
|
|
|
|
|
|
|
|
|
|||
|
Income before income taxes |
|
119 |
|
|
(11,320 |
) |
* |
|
|||
|
Income tax (expense) benefit |
|
(1,506 |
) |
|
(8,158 |
) |
(82 |
)% |
|||
|
|
|
|
|
|
|
|
|
|
|||
|
Net income (loss) before equity in net income (loss) of nonconsolidated affiliates |
|
(1,387 |
) |
|
(19,478 |
) |
(93 |
)% |
|||
|
Equity in net income (loss) of nonconsolidated affiliates |
|
— |
|
|
(234 |
) |
(100 |
)% |
|||
|
|
|
|
|
|
|
|
|
|
|||
|
Net income (loss) |
|
(1,387 |
) |
|
(19,712 |
) |
(93 |
)% |
|||
|
Net (income) loss attributable to redeemable noncontrolling interest |
|
(2,523 |
) |
|
— |
|
* |
|
|||
|
Net income (loss) attributable to common stockholders |
$ |
(3,910 |
) |
$ |
(19,712 |
) |
(80 |
)% |
|||
|
(1) |
Cost of revenue, operating expenses and corporate expenses are defined on page 1. |
|
Net revenue increased to $344.0 million for the year ended December 31, 2020 from $273.6 million for the year ended December 31, 2019, an increase of approximately $70.4 million. Of the overall increase, approximately $4.8 million was attributable to our television segment and was primarily due to increases in political advertising revenue and retransmission consent revenue, partially offset by decreases in local and national advertising revenue and revenue from spectrum usage rights. The decrease in local and national advertising revenue was primarily a result of the continuing economic crisis resulting from the COVID-19 pandemic, ratings declines, competitive factors with another Spanish-language broadcaster, and changing demographic preferences of audiences. We have previously noted a trend for advertising to move increasingly from traditional media, such as television, to new media, such as digital media, and we expect this trend to continue. Additionally, approximately $74.4 million of the overall increase was attributable to our digital segment and was primarily due to the acquisition of a majority interest in Cisneros Interactive during the fourth quarter of 2020, which did not contribute to net revenue in prior periods, partially offset by a decrease in advertising revenue as a result of declines in pre-acquisition digital revenue, and the continuing economic crisis resulting from the COVID-19 pandemic. We have previously noted a trend in our domestic digital operations whereby revenue is shifting more to programmatic revenue, and this trend is now growing in markets outside the United States. As a result, advertisers are demanding more efficiency and lower cost from intermediaries like us. In response to this trend, we are offering programmatic alternatives to advertisers, which is putting pressure on margins. We expect this trend will continue in future periods, likely resulting in a permanent higher volume, lower margin business in our digital segment. The digital advertising industry remains dynamic and is continuing to undergo rapid changes in technology and competition. We expect this trend to continue and possibly accelerate. We must continue to remain vigilant to meet these dynamic and rapid changes including the need to further adjust our business strategies accordingly. No assurances can be given that such adjustments will be successful. The overall increase in net revenue was partially offset by a decrease of approximately $8.7 million attributable to our radio segment and was primarily due to decreases in local and national advertising revenue, partially offset by an increase in political advertising revenue. The decrease in local and national advertising revenue was primarily a result of the continuing economic crisis resulting from the COVID-19 pandemic, ratings declines and competitive factors with other Spanish-language broadcasters, and changing demographic preferences of audiences. We have previously noted a trend for advertising to move increasingly from traditional media, such as radio, to new media, such as digital media, and we expect this trend to continue. This trend has had a more significant impact on our radio revenue as compared to television revenue, and we expect that this trend will also continue.
Cost of revenue in our digital segment increased to $106.9 million for the year ended December 31, 2020 from $36.8 million for the year ended December 31, 2019, an increase of $70.1 million, primarily due to increased costs of revenue associated with Cisneros Interactive during the fourth quarter of 2020, following its acquisition during the fourth quarter of 2020, which did not incur cost of revenue for us in prior periods.
Operating expenses decreased to $153.3 million for the year ended December 31, 2020 from $173.4 million for the year ended December 31, 2019, a decrease of approximately $20.1 million. Of the overall decrease, approximately $3.5 million was attributable to our television segment and was primarily due to decreases in salary expense associated with furloughs and layoffs, payroll tax expense and expenses associated with the decrease in local and national advertising revenue. Additionally, approximately $1.7 million of the overall decrease was attributable to our digital segment primarily due to decreases in salary expense associated with furloughs and layoffs, and expenses associated with the decrease in advertising revenue as a result of declines in pre-acquisition digital revenue, partially offset by an increase associated with the acquisition of a majority interest in Cisneros Interactive during the fourth quarter of 2020, which did not incur direct operating expenses for us in prior periods. Additionally, approximately $14.9 million of the overall decrease was attributable to our radio segment and was primarily due to decreases in salary expense associated with furloughs and layoffs, payroll tax expense and expenses associated with the decrease in advertising revenue.
Corporate expenses decreased to $27.8 million for the year ended December 31, 2020 from $28.
Contacts
Christopher T. Young
Chief Financial Officer
Entravision Communications Corporation
310-447-3870
Kimberly Esterkin
ADDO Investor Relations
310-829-5400
evc@addoir.com