Entravision Communications Corporation (NYSE: EVC), a leading global advertising solutions, media and technology company, today announced financial results for the three-month period ended March 31, 2022.
First Quarter 2022 Highlights
- All-time first quarter record revenue, EBITDA and free cash flow
- Net revenue up 32% over the prior-year quarter
- Net income attributable to common stockholders down 65% over the prior-year quarter
- Consolidated adjusted EBITDA up 28% over the prior-year quarter
- Operating cash flow up 127% over the prior-year quarter
- Free cash flow up 10% over the prior-year quarter
- Quarterly cash dividend of $0.025 per share
- Repurchased $7.1 million in shares under the Company’s $20 million share repurchase program
- Post quarter entered into a definitive agreement to make an investment in Jack of Digital
“Entravision begins 2022 on very solid footing, with net revenue for the first quarter totaling $197.2 million, up 32% year-over year. Adjusted EBITDA also improved to total $18.1 million, an increase of 28% over the prior-year period,” said Walter Ulloa, Chairman and Chief Executive Officer. “Importantly, even as our top line continues to grow, we have maintained a lean, efficient cost structure, helping to drive our cash flow as well as our ability to provide consistent returns to our shareholders.”
Mr. Ulloa continued, “Our strength during the first quarter was largely driven by revenue growth of 51% in our digital segment, which comprised 78% of consolidated revenue. Our broadcast businesses, and, in particular, audio, helped drive our strong margins and cash flow. Simultaneously, our strategic expansion of our commercial partnerships with some of the world’s leading technology platforms has positioned us at the forefront of digital innovation across emerging economies, including Latin America, Southeast Asia, Africa, and Pakistan when we complete our investment in Jack of Digital. We are excited about the enormous opportunities that lie in front of us and look forward to sharing our progress throughout the year.”
Quarterly Cash Dividend
The Company announced today that its 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 June 30, 2022 to shareholders of record as of the close of business on June 16, 2022, and the common stock will trade ex-dividend on June 15, 2022. 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.
Share Repurchase Program
On March 1, 2022, the Board of Directors approved the repurchase of up to $20 million of the Company’s common stock. Under this share repurchase program, the Company is authorized to purchase shares from time to time through open market purchases or negotiated purchases, subject to market conditions and other factors. On the same date, the Board terminated the Company’s previous share repurchase program of the Company’s common stock. During the first quarter the Company repurchased $7.1 million of its Class A common stock.
Investment in Jack of Digital
As previously announced, the Company has entered into a definitive agreement to acquire a strategic stake in Jack of Digital, a digital marketing services company that serves as the exclusive advertising sales partner of TikTok in Pakistan. Subject to regulatory approvals and other pre-closing conditions, the Company anticipates that the investment will be completed during the second quarter of 2022. With this investment, the Company enhances its presence in South Asia.
Non-GAAP Financial Measures
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 9.
Unaudited Financial Highlights (In thousands, except share and per share data)
|
|
Three-Month Period |
|
|||||||||
|
|
Ended March 31, |
|
|||||||||
|
|
2022 |
|
|
2021 |
|
|
% Change |
|
|||
|
Net revenue |
$ |
197,172 |
|
|
$ |
148,880 |
|
|
|
32 |
% |
|
Cost of revenue – digital (1) |
|
129,891 |
|
|
|
84,756 |
|
|
|
53 |
% |
|
Operating expenses (2) |
|
43,862 |
|
|
|
40,414 |
|
|
|
9 |
% |
|
Corporate expenses (3) |
|
8,724 |
|
|
|
7,158 |
|
|
|
22 |
% |
|
Foreign currency (gain) loss |
|
(847 |
) |
|
|
586 |
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Consolidated adjusted EBITDA (4) |
|
18,113 |
|
|
|
14,195 |
|
|
|
28 |
% |
|
|
|
|
|
|
|
|
|
|
|||
|
Free cash flow (5) |
$ |
14,327 |
|
|
$ |
13,029 |
|
|
|
10 |
% |
|
|
|
|
|
|
|
|
|
|
|||
|
Net income (loss) |
$ |
1,887 |
|
|
$ |
7,002 |
|
|
|
(73 |
)% |
|
Net (income) loss attributable to redeemable noncontrolling interest |
$ |
– |
|
|
$ |
(1,573 |
) |
|
* |
|
|
|
Net income (loss) attributable to common stockholders |
$ |
1,887 |
|
|
$ |
5,429 |
|
|
|
(65 |
)% |
|
|
|
|
|
|
|
|
|
|
|||
|
Net income (loss) per share attributable to common stockholders, basic and diluted |
$ |
0.02 |
|
|
$ |
0.06 |
|
|
|
(67 |
)% |
|
Weighted average common shares outstanding, basic |
|
86,522,378 |
|
|
|
85,041,628 |
|
|
|
|
|
|
Weighted average common shares outstanding, diluted |
|
88,630,216 |
|
|
|
86,986,581 |
|
|
|
|
|
|
(1) |
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) |
Operating expenses include direct operating and selling, general and administrative expenses. Included in operating expenses are $1.0 million and $0.3 million of non-cash stock-based compensation for the three-month periods ended March 31, 2022 and 2021, respectively. |
|
|
(3) |
Corporate expenses include $1.6 million and $0.8 million of non-cash stock-based compensation for the three-month periods ended March 31, 2022 and 2021, 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. |
Unaudited Financial Results (In thousands)
|
|
Three-Month Period |
|
|||||||||
|
|
Ended March 31, |
|
|||||||||
|
|
2022 |
|
|
2021 |
|
|
% Change |
|
|||
|
Net revenue |
$ |
197,172 |
|
|
$ |
148,880 |
|
|
|
32 |
% |
|
Cost of revenue – digital (1) |
|
129,891 |
|
|
|
84,756 |
|
|
|
53 |
% |
|
Operating expenses (1) |
|
43,862 |
|
|
|
40,414 |
|
|
|
9 |
% |
|
Corporate expenses (1) |
|
8,724 |
|
|
|
7,158 |
|
|
|
22 |
% |
|
Depreciation and amortization |
|
6,395 |
|
|
|
5,184 |
|
|
|
23 |
% |
|
Change in fair value of contingent consideration |
|
5,100 |
|
|
|
– |
|
|
* |
|
|
|
Impairment charge |
|
– |
|
|
|
1,326 |
|
|
|
(100 |
)% |
|
Foreign currency (gain) loss |
|
(847 |
) |
|
|
586 |
|
|
* |
|
|
|
Other operating (gain) loss |
|
(119 |
) |
|
|
(1,913 |
) |
|
|
(94 |
)% |
|
|
|
|
|
|
|
|
|
|
|||
|
Operating income (loss) |
|
4,166 |
|
|
|
11,369 |
|
|
|
(63 |
)% |
|
Interest expense, net |
|
(1,430 |
) |
|
|
(1,577 |
) |
|
|
(9 |
)% |
|
Dividend income |
|
3 |
|
|
|
2 |
|
|
|
50 |
% |
|
|
|
|
|
|
|
|
|
|
|||
|
Income (loss) before income taxes |
|
2,739 |
|
|
|
9,794 |
|
|
|
(72 |
)% |
|
Income tax benefit (expense) |
|
(852 |
) |
|
|
(2,792 |
) |
|
|
(69 |
)% |
|
|
|
|
|
|
|
|
|
|
|||
|
Net income (loss) |
|
1,887 |
|
|
|
7,002 |
|
|
|
(73 |
)% |
|
Net (income) loss attributable to redeemable noncontrolling interest |
|
– |
|
|
|
(1,573 |
) |
|
* |
|
|
|
Net income (loss) attributable to common stockholders |
$ |
1,887 |
|
|
$ |
5,429 |
|
|
|
(65 |
)% |
|
(1) |
Cost of revenue, operating expenses and corporate expenses are defined on page 2. |
Net revenue in the first quarter of 2022 totaled $197.2 million, up 32% from $148.9 million in the prior-year period. Of the overall increase, approximately $52.2 million was attributable to our digital segment and was primarily due to advertising revenue growth from our digital commercial partnerships business and our acquisitions of MediaDonuts and 365 Digital during the third and fourth quarters of 2021, respectively, both of which did not contribute to net revenue in the comparable period ended March 31, 2021. In addition, of the overall increase, approximately $1.3 million was attributable to our audio segment primarily due to increases in local advertising revenue and political advertising revenue. The overall increase was partially offset by a decrease of approximately $5.2 million attributable to our television segment, primarily due to decreases in local and national advertising revenue, which was mainly attributed to the expiration of our Univision and UniMás network affiliation agreements in Orlando, Tampa and Washington, D.C. on December 31, 2021. Additionally, the decrease in our television segment was attributed to a decrease in revenue from spectrum usage rights, and a decrease in retransmission consent revenue, partially offset by an increase in political advertising revenue.
Cost of revenue in the first quarter of 2022 totaled $129.9 million, up 53% from $84.8 million in the prior-year period. The increase was primarily due to increased costs of revenue related to advertising revenue growth from our digital commercial partnerships business, and our acquisitions of MediaDonuts and 365 Digital during the third and fourth quarters of 2021, respectively, both of which did not incur cost of revenue for us in the comparable period ended March 31, 2021.
Operating expenses in the first quarter of 2022 totaled $43.9 million, up 9% from $40.4 million in the prior-year period. Of the overall increase, approximately $4.4 million was attributable to our digital segment and was primarily due to an increase in expenses associated with the increase in digital advertising revenue, an increase in salary expense and our acquisitions of MediaDonuts and 365 Digital during the third and fourth quarters of 2021, respectively, both of which did not incur operating expenses for us in the comparable period ended March 31, 2021. The overall increase was partially offset by a decrease of approximately $0.7 million that was attributable to our television segment primarily due to a decrease in expenses associated with the decrease in local and national advertising revenue, and a decrease of approximately $0.3 million that was attributable to our audio segment primarily due to a decrease in rating services expense.
Corporate expenses in the first quarter of 2022 totaled $8.7 million, up 22% from $7.2 million in the prior-year period. The increase was primarily due to increases in non-cash stock-based compensation, salaries, and audit fees.
Balance Sheet and Related Metrics
Cash and marketable securities as of March 31, 2022 totaled approximately $211.6 million. Total debt was $211.8 million. Net of $75 million of cash and marketable securities, total leverage as defined in the Company’s credit agreement was 1.5 times as of March 31, 2022. Net of total cash and marketable securities, total leverage was 0.0 times.
Unaudited Segment Results (In thousands)
|
|
Three-Month Period |
|
|||||||||
|
|
Ended March 31, |
|
|||||||||
|
|
2022 |
|
|
2021 |
|
|
% Change |
|
|||
|
Net Revenue |
|
|
|
|
|
|
|
|
|||
|
Digital |
$ |
153,711 |
|
|
$ |
101,482 |
|
|
|
51 |
% |
|
Television |
|
30,867 |
|
|
|
36,091 |
|
|
|
(14 |
)% |
|
Audio |
|
12,594 |
|
|
|
11,307 |
|
|
|
11 |
% |
|
Total |
$ |
197,172 |
|
|
$ |
148,880 |
|
|
|
32 |
% |
|
|
|
|
|
|
|
|
|
|
|||
|
Cost of Revenue – digital (1) |
|
|
|
|
|
|
|
|
|||
|
Digital |
$ |
129,891 |
|
|
$ |
84,756 |
|
|
|
53 |
% |
|
|
|
|
|
|
|
|
|
|
|||
|
Operating Expenses (1) |
|
|
|
|
|
|
|
|
|||
|
Digital |
|
15,235 |
|
|
|
10,850 |
|
|
|
40 |
% |
|
Television |
|
19,240 |
|
|
|
19,884 |
|
|
|
(3 |
)% |
|
Audio |
|
9,387 |
|
|
|
9,680 |
|
|
|
(3 |
)% |
|
Total |
$ |
43,862 |
|
|
$ |
40,414 |
|
|
|
9 |
% |
|
|
|
|
|
|
|
|
|
|
|||
|
Corporate Expenses (1) |
$ |
8,724 |
|
|
$ |
7,158 |
|
|
|
22 |
% |
|
|
|
|
|
|
|
|
|
|
|||
|
Consolidated adjusted EBITDA (1) |
$ |
18,113 |
|
|
$ |
14,195 |
|
|
|
28 |
% |
|
(1) |
Cost of revenue, operating expenses, corporate expenses, and consolidated adjusted EBITDA are defined on page 2. |
Notice of Conference Call
Entravision Communications Corporation will hold a conference call to discuss its first quarter 2022 results on Thursday, May 5, 2022 at 5 p.m. Eastern Time. To access the conference call, please dial (877) 407-9716 (U.S.) or (201) 493-6779 (Int’l) ten minutes prior to the start time and reference Conference ID number 13728063. The call will also be available via live webcast on the investor relations portion of the Company’s website located at www.entravision.com.
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