Entravision Communications Corporation Reports First Quarter 2024 Results

Rhea-AI Summary

Entravision Communications (NYSE: EVC) reported its financial results for the first quarter of 2024, declaring a quarterly cash dividend of $0.05 per share payable on June 28, 2024. The company is adjusting its digital strategy due to Meta winding down its authorized sales partner program. Despite the challenges, Entravision remains confident in its long-term opportunities and is focused on maximizing political revenue, providing quality content, and enhancing its programmatic ad platform, Smadex.

Financially, the company saw a 16% increase in net revenue, driven by growth in digital and political advertising revenue. However, there was a decline in consolidated EBITDA by 65% compared to the previous year. The company's balance sheet shows cash and marketable securities of $132.7 million, with total debt of $200.1 million.

Positive

• 16% increase in net revenue for the first quarter of 2024, led by growth in digital and political advertising revenue.

• Company maintaining a solid balance sheet with $132.7 million in cash and marketable securities.

• Focus on maximizing political revenue and providing quality content to enhance audience engagement.

Negative

• Consolidated EBITDA decreased by 65% compared to the previous year.

• Total debt as defined in the company's credit agreement amounted to $200.1 million.

• Meta's decision to wind down its authorized sales partner program presents challenges for Entravision's digital strategy.

Insights

Financial Analyst

Examining Entravision's first-quarter financials reveals a company navigating a significant transition. The end of the Meta ASP program poses as a crossroads; however, the increase in net revenue by 16%, mainly from digital advertising and political advertising, indicates resilience. Noteworthy is the decline in consolidated EBITDA by 65%, a stark contrast to last year’s figures, reflecting increased costs that outpaced revenue growth. The negative free cash flow of <-money>$2,831 compared to a positive $3,908 in the previous year should be a flag for investors, as it suggests tighter cash management may be needed moving forward.

Digital Media Strategist

From a digital strategy perspective, Entravision's pivot post-Meta ASP program is critical. The 21% growth in digital net revenue suggests a strong underlying demand for their digital advertising solutions. However, the operation’s success now heavily hinges on the optimization of Smadex, their programmatic ad platform. The strategic realignment and cost structure review must focus on exploiting this potential to offset the lost Meta revenues. The company's ability to adapt to the digital segment's rapidly evolving landscape will be imperative.

Investment Strategist

For long-term investors, Entravision's robust balance sheet with $132.7 million in cash and marketable securities provides a cushion amid strategic shifts. The declared dividend reflects confidence in sustaining shareholder returns, even as they chart through uncertain waters. However, the leverage ratio, although improved to 1.4 times net of cash, still needs monitoring as the company adjusts to the Meta ASP phase-out. The strategic outlook hinges on leveraging electoral cycles and enhancing digital platforms, which could yield positive outcomes if executed effectively.

Declares Quarterly Cash Dividend of $0.05 Per Share Payable on June 28, 2024

SANTA MONICA, Calif.--(BUSINESS WIRE)-- 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, 2024.

“On March 4, 2024, we received a communication from Meta that it intends to wind down its authorized sales partner, or ASP, program globally and end its relationship with all of its ASPs, including us, by July 1, 2024. While we are disappointed in Meta’s decision, we have a solid balance sheet and a strong cash position, and we are confident in Entravision’s long-term opportunities. We have initiated a thorough review of our current digital strategy, operations and cost structure,” said Michael Christenson, Chief Executive Officer.

Mr. Christenson continued, “We remain focused on our 2024 priorities: maximize our political revenue in a year in which our audience will be critical to determining the outcome of the 2024 U.S. elections, provide highly-rated news and content to our audience, and build Smadex, our programmatic ad purchasing platform.”

Unaudited Financial Highlights (In thousands, except share and per share data)

	Three-Month Period
	Ended March 31,
	2024				2023				% Change
Net revenue	$	277,445			$	239,006				16	%
Cost of revenue - digital (1)		203,229				167,756				21	%
Operating expenses (2)		62,267				52,630				18	%
Corporate expenses (3)		12,248				10,502				17	%
Foreign currency (gain) loss		449				(956	)		*
Consolidated EBITDA (4)		4,530				13,022				(65	)%
Free cash flow (5)	$	(2,831	)		$	3,908			*
Net income (loss)	$	(51,669	)		$	1,699			*
Net (income) loss attributable to redeemable noncontrolling interest	$	2,779			$	-			*
Net (income) loss attributable to noncontrolling interest	$	-			$	342				(100	)%
Net income (loss) attributable to common stockholders	$	(48,890	)		$	2,041			*
Net income (loss) per share attributable to common stockholders, basic and diluted	$	(0.55	)		$	0.02			*
Weighted average common shares outstanding, basic		89,518,058				87,623,887
Weighted average common shares outstanding, diluted		89,518,058				89,786,585

(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 $1.8 million and $1.9 million of non-cash stock-based compensation for the three-month periods ended March 31, 2024 and 2023, respectively.
(3)		Corporate expenses include $3.7 million and $2.2 million of non-cash stock-based compensation for the three-month periods ended March 31, 2024 and 2023, respectively.
(4)		Consolidated 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 EBITDA because that measure is defined in our 2017 Credit Agreement and 2023 Credit Agreement, 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 EBITDA less cash paid for income taxes, net interest expense, capital expenditures (less amounts reimbursed by landlord) 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.

Net revenue for the first quarter of 2024 increased primarily due to increases in advertising revenue from our digital business units in our digital segment, and political advertising revenue in our television and audio segments, partially offset by decreases in national advertising revenue, spectrum usage rights revenue and retransmission consent revenue in our television segment, and decreases in local and national advertising revenue in our audio segment.

Cost of revenue for the first quarter of 2024 increased primarily due to the increase in digital advertising revenue.

Operating expenses for the first quarter of 2024 increased primarily due to expenses associated with the increase in advertising revenue and an increase in salary expense, partially offset by a decrease in rent expense.

Corporate expenses for the first quarter of 2024 increased primarily due to an increase in non-cash stock-based compensation and an increase in salary expense, partially offset by a decrease in audit fees.

Quarterly Cash Dividend

The Company announced today that its Board of Directors approved a quarterly cash dividend to shareholders of $0.05 per share on the Company's Class A and Class U common stock, in an aggregate amount of $4.5 million. The quarterly dividend will be payable on June 28, 2024 to shareholders of record as of the close of business on June 14, 2024. 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.

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 7.

Balance Sheet and Related Metrics

Cash and marketable securities as of March 31, 2024 totaled $132.7 million. Total debt as defined in the Company’s credit agreement was $200.1 million. Net of $50 million of cash and marketable securities, total leverage as defined in the Company’s credit agreement was 3.1 times as of March 31, 2024. Net of total cash and marketable securities, total leverage was 1.4 times.

Unaudited Segment Results (In thousands)

	Three-Month Period
	Ended March 31,
	2024				2023				% Change
Net Revenue
Digital	$	237,491			$	196,482				21	%
Television		28,549				30,312				(6	)%
Audio		11,405				12,212				(7	)%
Total	$	277,445			$	239,006				16	%
Cost of Revenue - digital (1)
Digital	$	203,229			$	167,756				21	%
Operating Expenses (1)
Digital		28,077				21,539				30	%
Television		22,968				20,099				14	%
Audio		11,222				10,992				2	%
Total	$	62,267			$	52,630				18	%
Corporate Expenses (1)	$	12,248			$	10,502				17	%
Consolidated EBITDA (1)	$	4,530			$	13,022				(65	)%

(1)

Cost of revenue, operating expenses, corporate expenses, and consolidated EBITDA are defined on page 1.

Notice of Conference Call

Entravision will hold a conference call to discuss its first quarter 2024 results on Thursday, May 2, 2024 at 5:00 p.m. Eastern Time. To access the conference call, please dial (844) 836-8739 (U.S.) or (412) 317-5440 (Int’l) ten minutes prior to the start time. The call will also be available via live webcast on the investor relations portion of the Company's website located at www.entravision.com.

About Entravision Communications Corporation

Entravision is a global advertising solutions, media and technology company. Over the past three decades, we have strategically evolved into a digital powerhouse, expertly connecting brands to consumers in the U.S., Latin America, Europe, Asia and Africa. Our digital segment, the company’s largest by revenue, offers a full suite of end-to-end advertising services. We have commercial partnerships with global media companies, and marketers can use our Smadex and other platforms to deliver targeted advertising to audiences around the globe. In the U.S., we maintain a diversified portfolio of television and radio stations that target Hispanic audiences and complement our global digital services. Entravision remains the largest affiliate group of the Univision and UniMás television networks. Shares of Entravision Class A Common Stock trade on the NYSE under ticker: EVC. Learn more about our offerings at entravision.com or connect with us on LinkedIn and Facebook.

Forward-Looking Statements

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.

Entravision Communications Corporation Consolidated Statements of Operations (In thousands, except share and per share data) (Unaudited)
		Three-Month Period
		Ended March 31,
		2024				2023
Net revenue		$	277,445			$	239,006
Expenses:
Cost of revenue - digital			203,229				167,756
Direct operating expenses			35,572				29,862
Selling, general and administrative expenses			26,695				22,768
Corporate expenses			12,248				10,502
Depreciation and amortization			7,133				6,471
Change in fair value of contingent consideration			(1,420	)			(4,065	)
Impairment charge			49,438				—
Foreign currency (gain) loss			449				(956	)
			333,344				232,338
Operating income (loss)			(55,899	)			6,668
Interest expense			(4,559	)			(4,028	)
Interest income			1,130				860
Dividend income			10				18
Realized gain (loss) on marketable securities			(113	)			(32	)
Gain (loss) on debt extinguishment			(40	)			(1,556	)
Income (loss) before income taxes			(59,471	)			1,930
Income tax benefit (expense)			7,802				(231	)
Net income (loss)			(51,669	)			1,699
Net (income) loss attributable to redeemable noncontrolling interest			2,779				—
Net (income) loss attributable to noncontrolling interest			—				342
Net income (loss) attributable to common stockholders		$	(48,890	)		$	2,041
Basic and diluted earnings per share:
Net income (loss) per share attributable to common stockholders, basic and diluted		$	(0.55	)		$	0.02
Cash dividends declared per common share, basic and diluted		$	0.05			$	0.05
Weighted average common shares outstanding, basic			89,518,058				87,623,887
Weighted average common shares outstanding, diluted			89,518,058				89,786,585

Entravision Communications Corporation Consolidated Balance Sheets (In thousands; unaudited)
		March 31,				December 31,
		2024				2023
ASSETS
Current assets
Cash and cash equivalents		$	128,410			$	105,739
Marketable securities			4,335				13,172
Restricted cash			774				770
Trade receivables, net of allowance for doubtful accounts			206,065				235,837
Assets held for sale			301				301
Prepaid expenses and other current assets			40,095				30,036
Total current assets			379,980				385,855
Property and equipment, net			69,294				71,475
Intangible assets subject to amortization, net			34,660				51,784
Intangible assets not subject to amortization			195,174				195,174
Goodwill			55,272				90,672
Deferred income taxes			5,175				4,991
Operating leases right of use asset			43,543				43,941
Other assets			21,892				22,054
Total assets		$	804,990			$	865,946
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt		$	3,360			$	9,969
Accounts payable and accrued expenses			263,484				254,802
Operating lease liabilities			7,518				7,282
Total current liabilities			274,362				272,053
Long-term debt, less current maturities, net of unamortized debt issuance costs			195,762				199,552
Long-term operating lease liabilities			44,901				45,665
Other long-term liabilities			21,404				23,009
Deferred income taxes			55,186				59,381
Total liabilities			591,615				599,660
Redeemable noncontrolling interest			39,840				43,758
Stockholders' equity
Class A common stock			8				8
Class U common stock			1				1
Additional paid-in capital			743,339				743,246
Accumulated deficit			(568,702	)			(519,812	)
Accumulated other comprehensive income (loss)			(1,111	)			(915	)
Total stockholders' equity			173,535				222,528
Total liabilities, redeemable noncontrolling interest and equity		$	804,990			$	865,946

Entravision Communications Corporation Consolidated Statements of Cash Flows (In thousands; unaudited)
		Three-Month Period
		Ended March 31,
		2024				2023
Cash flows from operating activities:
Net income (loss)		$	(51,669	)		$	1,699
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization			7,133				6,471
Impairment charge			49,438				—
Deferred income taxes			(4,224	)			(205	)
Non-cash interest			92				133
Amortization of syndication contracts			113				120
Payments on syndication contracts			(115	)			(120	)
Non-cash stock-based compensation			5,447				4,053
(Gain) loss on marketable securities			113				32
(Gain) loss on disposal of property and equipment			97				68
(Gain) loss on debt extinguishment			40				1,556
Change in fair value of contingent consideration			(1,420	)			(4,065	)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable			29,473				33,157
(Increase) decrease in prepaid expenses and other current assets, operating leases right of use asset and other assets			(7,150	)			948
Increase (decrease) in accounts payable, accrued expenses and other liabilities			6,007				(7,152	)
Net cash provided by operating activities			33,375				36,695
Cash flows from investing activities:
Purchases of property and equipment			(2,743	)			(6,750	)
Purchases of marketable securities			—				(9,397	)
Proceeds from sale of marketable securities			8,842				15,704
Purchases of investments			—				(120	)
Net cash provided by (used in) investing activities			6,099				(563	)
Cash flows from financing activities:
Proceeds from stock option exercises			—				313
Tax payments related to shares withheld for share-based compensation plans			(27	)			(80	)
Payments on debt			(10,275	)			(211,748	)
Dividends paid			(4,476	)			(4,932	)
Distributions to noncontrolling interest			(1,078	)			—
Payment of contingent consideration			(900	)			—
Principal payments under finance lease obligation			(41	)			(38	)
Proceeds from borrowings on debt			—				212,405
Payments for debt issuance costs			—				(1,285	)
Net cash provided by (used in) financing activities			(16,797	)			(5,365	)
Effect of exchange rates on cash, cash equivalents and restricted cash			(2	)			1
Net increase (decrease) in cash, cash equivalents and restricted cash			22,675				30,768
Cash, cash equivalents and restricted cash:
Beginning			106,509				111,444
Ending		$	129,184			$	142,212

Entravision Communications Corporation Reconciliation of Consolidated EBITDA to Cash Flows From Operating Activities (In thousands; unaudited)
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
		Ended March 31,
		2024				2023
Consolidated EBITDA (1)		$	4,530			$	13,022
EBITDA attributable to redeemable noncontrolling interest			167				—
EBITDA attributable to noncontrolling interest			—				230
Interest expense			(4,559	)			(4,028	)
Interest income			1,130				860
Dividend income			10				18
Realized gain (loss) on marketable securities			(113	)			(32	)
Income tax expense			7,802				(231	)
Amortization of syndication contracts			(113	)			(120	)
Payments on syndication contracts			115				120
Non-cash stock-based compensation included in direct operating expenses			(1,785	)			(1,856	)
Non-cash stock-based compensation included in corporate expenses			(3,662	)			(2,197	)
Depreciation and amortization			(7,133	)			(6,471	)
Change in fair value of contingent consideration			1,420				4,065
Impairment charge			(49,438	)			—
Non-recurring cash severance charge			—				(125	)
Gain (loss) on debt extinguishment			(40	)			(1,556	)
Net (income) loss attributable to redeemable noncontrolling interest			2,779				—
Net (income) loss attributable to noncontrolling interest			—				342
Net income (loss) attributable to common stockholders			(48,890	)			2,041
Depreciation and amortization			7,133				6,471
Impairment charge			49,438				—
Deferred income taxes			(4,224	)			(205	)
Non-cash interest			92				133
Amortization of syndication contracts			113				120
Payments on syndication contracts			(115	)			(120	)
Non-cash stock-based compensation			5,447				4,053
Realized (gain) loss on marketable securities			113				32
(Gain) loss on debt extinguishment			40				1,556
(Gain) loss on disposal of property and equipment			97				68
Change in fair value of contingent consideration			(1,420	)			(4,065	)
Net income (loss) attributable to redeemable noncontrolling interest			(2,779	)			—
Net income (loss) attributable to noncontrolling interest			—				(342	)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable			29,473				33,157
(Increase) decrease in prepaid expenses and other current assets, operating leases right of use asset and other assets			(7,150	)			948
Increase (decrease) in accounts payable, accrued expenses and other liabilities			6,007				(7,152	)
Cash flows from operating activities			33,375				36,695

(1)

Consolidated EBITDA is defined on page 1.

Entravision Communications Corporation Reconciliation of Free Cash Flow to Cash Flows From Operating Activities (In thousands; unaudited)
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
		Ended March 31,
		2024				2023
Consolidated EBITDA (1)		$	4,530			$	13,022
Net interest expense (1)			(3,337	)			(3,035	)
Dividend income			10				18
Cash paid for income taxes			(1,291	)			(72	)
Capital expenditures (2)			(2,743	)			(6,750	)
Landlord incentive reimbursement			—				850
Non-recurring cash severance charge			—				(125	)
Free cash flow (1)			(2,831	)			3,908
Capital expenditures (2)			2,743				6,750
Landlord incentive reimbursement			—				(850	)
EBITDA attributable to redeemable noncontrolling interest			167				—
EBITDA attributable to noncontrolling interest			—				230
(Gain) loss on disposal of property and equipment			97				68
Cash paid for income taxes			1,291				72
Deferred income taxes			(4,224	)			(205	)
Income tax (expense) benefit			7,802				(231	)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable			29,473				33,157
(Increase) decrease in prepaid expenses and other current assets, operating leases right of use asset and other assets			(7,150	)			948
Increase (decrease) in accounts payable, accrued expenses and other liabilities			6,007				(7,152	)
Cash Flows From Operating Activities		$	33,375			$	36,695

(1)		Consolidated EBITDA, net interest expense, and free cash flow are defined on page 1.
(2)		Capital expenditures are not part of the consolidated statement of operations.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240502925590/en/

Christopher T. Young

Chief Financial Officer and Treasurer

Entravision

310-447-3870

ir@entravision.com

Roy Nir

VP, Financial Reporting and Investor Relations

Entravision

310-447-3870

ir@entravision.com

Source: Entravision Communications Corporation

FAQ

What is the quarterly cash dividend declared by Entravision for the first quarter of 2024?

Entravision declared a quarterly cash dividend of $0.05 per share payable on June 28, 2024.

What led to the 16% increase in net revenue for Entravision in the first quarter of 2024?

The growth in net revenue was driven by increases in advertising revenue from digital business units and political advertising revenue.

What was the consolidated EBITDA percentage change for Entravision in the first quarter of 2024 compared to the previous year?

Consolidated EBITDA decreased by 65% for Entravision in the first quarter of 2024 compared to the previous year.

What is the total debt amount as defined in Entravision's credit agreement as of March 31, 2024?

Total debt as defined in Entravision's credit agreement was $200.1 million as of March 31, 2024.