Hemisphere Media Group Announces Second Quarter 2021 Financial Results

Rhea-AI Summary

Hemisphere Media Group (HMTV) reported strong financial results for Q2 2021, achieving net revenues of $50.5 million, a 45% increase from the prior year. The company also recorded a 67% growth in subscriber revenue attributed to the acquisition of Pantaya, now nearing 1 million subscribers. Advertising revenue grew by 40% due to market gains in Puerto Rico. Operating expenses rose by 68% due to higher costs related to Pantaya. The net loss narrowed to $6.3 million compared to $6.7 million a year earlier, while Adjusted EBITDA decreased by 8% to $12.3 million.

Positive

• Net revenues increased 45% to $50.5 million.
• Subscriber revenue grew 67% due to Pantaya acquisition.
• Advertising revenue rose 40% in Puerto Rico.
• Net loss narrowed to $6.3 million from $6.7 million a year ago.
• Adjusted EBITDA for H1 2021 increased 13% to $28.0 million.

Negative

• Operating expenses increased 68% to $43.3 million.
• Adjusted EBITDA decreased 8% from $13.3 million in Q2 2020.

MIAMI, Aug. 9, 2021 /PRNewswire/ -- Hemisphere Media Group, Inc. (NASDAQ: HMTV) ("Hemisphere" or the "Company"), the only publicly traded pure-play U.S. media company targeting the high growth U.S. Hispanic and Latin American markets with leading broadcast and cable television and digital content platforms, today announced financial results for the second quarter ended June 30, 2021.

President and Chief Executive Officer of Hemisphere, Alan Sokol, said "Our business continues to fire on all cylinders as we experienced yet another great quarter of growth. Importantly, we experienced strong advertising growth over 2019, which speaks to the power of our channels, content and fast-growing audience, as well as our ability to execute our stated strategy.

"Pantaya is demonstrating strong results, and as of quarter end, we had close to 1 million subscribers. We are proud of the subscriber increases we have experienced in just the first quarter since our acquisition, and are incredibly excited about our upcoming pipeline of original content. With our compelling and unique lineup of originally produced series and movies, we are confident we will continue to drive accelerated subscriber growth.  We have already seen strong growth from the promotional synergies offered by the Hemisphere networks, including Pantaya's rise to the #1 position on Android among entertainment apps in Puerto Rico as of July 31, ahead of Netflix, Disney+ and HBOMax.

"The Puerto Rican economy is stronger than it has been in years, with great metrics for both business trends and consumer activity, and we expect this growth to continue, with major public projects funded by federal aid expected to commence in 2022. WAPA continues to be the clear ratings and advertising leader by a wide margin.

"We are also excited to announce that we have signed a distribution agreement with YouTube TV for carriage of Pantaya, Cinelatino, Pasiones and WAPA America, with an anticipated launch prior to year-end.

"I am incredibly proud of our performance, and I'd like to thank all of our employees, audiences, and partners. We had a very strong first half of the year, and have strong momentum heading into the second half of 2021."

Financial Results for the Three and Six Months Ended June 30, 2021

Net revenues were $50.5 million for the three months ended June 30, 2021, an increase of 45%, as compared to $34.7 million for the same period in 2020. Net revenues were $88.0 million for the six months ended June 30, 2021, an increase of 31%, as compared to $67.1 million for the same period in 2020. The increases in both periods were due to growth in both subscriber and advertising revenue. For the three- and six-month periods, subscriber revenue increased $12.9 million, or 67%, and $13.1 million, or 33%, respectively, primarily due to the inclusion of Pantaya, which the Company acquired on March 31, 2021, as well as contractual rate increases and new launches of our networks, offset in part by a decline in U.S. cable subscribers. For the three- and six-month periods, advertising revenue increased $4.9 million, or 40%, and $9.0 million, or 37%, respectively, primarily due to growth in the Puerto Rico television advertising market, coupled with an increase in WAPA's share of the market, as well as an increase in advertising revenue at our cable networks. For the three- and six-month periods, other revenue decreased $2.1 million, or 69%, and $1.1 million, or 30%, respectively, driven primarily by the timing of the licensing of content.

Operating expenses were $43.3 million for the three months ended June 30, 2021, an increase of 68%, as compared to operating expenses of $25.8 million for the same period in 2020. Operating expenses were $75.8 million for the six months ended June 30, 2021, an increase of 40%, as compared to operating expenses of $54.1 million for the same period in 2020. The increases were primarily due to the inclusion of Pantaya, as well as higher advertising sales commissions due to higher advertising revenue, increased depreciation and amortization expense and costs incurred in connection with the acquisition of Pantaya. Additionally, the prior year periods reflected cost reductions as a result of the pandemic, including the postponement or cancellation of certain programming and sporting events, as well as voluntary salary reductions and employee retention credits that we did not have in the current year periods.

Net loss attributable to Hemisphere Media Group, Inc. was $6.3 million for the three months ended June 30, 2021, as compared to a net loss of $6.7 million for the same period in 2020. Net income was $27.1 million for the six months ended June 30, 2021, as compared to a net loss of $16.1 million for the same period in 2020. The increase for the six-month period was primarily due to a $30.1 million one-time non-cash gain recognized on the existing 25% equity interest in Pantaya upon the step acquisition of the remaining 75% equity interest on March 31, 2021.

Adjusted EBITDA was $12.3 million for the three months ended June 30, 2021, a decrease of 8%, as compared to Adjusted EBITDA of $13.3 million for the same period in 2020. Adjusted EBITDA was $28.0 million for the six months ended June 30, 2021, an increase of 13%, as compared to Adjusted EBITDA of $24.8 million for the same period in 2020.

As of June 30, 2021, the Company had $253.6 million in debt and $72.4 million of cash. The Company's gross leverage ratio was approximately 3.8x, and net leverage ratio was approximately 2.7x, which reflects Pantaya's operating results as of the acquisition date.

The following tables set forth the Company's financial performance for the three and six months ended June 30, 2021 and 2020, as well as select financial data as of June 30, 2021 and December 31, 2020:

HEMISPHERE MEDIA GROUP, INC.
Comparison of Consolidated Operating Results
(amounts in thousands)
	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Unaudited)				(Unaudited)
Net revenues	$     50,460		$     34,735		$       88,037		$      67,144
Operating expenses:
Cost of revenues	14,798		12,560		26,577		23,527
Selling, general and administrative	24,908		10,208		36,299		21,441
Depreciation and amortization	4,337		2,794		7,002		5,925
Other expenses	1,363		27		8,091		3,048
(Gain) loss from FCC spectrum repack and other	(2,124)		182		(2,176)		173
Total operating expenses	43,282		25,771		75,793		54,114
Operating income	7,178		8,964		12,244		13,030
Other (expense) income:
Interest expense and other, net	(3,165)		(2,496)		(5,523)		(5,282)
(Loss) gain on equity method investment activity	(8,569)		(10,189)		24,040		(17,208)
Impairment of equity method investment	-		-		-		(5,479)
Other expense, net	-		-		(668)		-
Total other (expense) income	(11,734)		(12,685)		17,849		(27,969)
(Loss) income before income taxes	(4,556)		(3,721)		30,093		(14,939)
Income tax expense	(1,785)		(2,884)		(3,053)		(1,209)
Net (loss) income	$       (6,341)		$     (6,605)		$      27,040		$   (16,148)
Net loss (income) attributable to noncontrolling interests	55		(77)		32		38
Net (loss) income attributable to Hemisphere Media Group, Inc.	$       (6,286)		$       (6,682)		$       27,072		$   (16,110)
Reconciliation of net (loss) income attributable to Hemisphere Media Group, Inc. to Adjusted EBITDA:
Net (loss) income attributable to Hemisphere Media Group, Inc.	$      (6,286)		$       (6,682)		$    (27,072)		$   (16,110)
Add (Deduct):
Net (loss) income attributable to noncontrolling interests	(55)		77		(32)		(38)
Income tax expense	1,785		2,884		3,053		1,209
Other expense, net	-		-		668		-
Impairment of equity method investment	-		-		-		5,479
Loss (gain) on equity method investment activity	8,569		10,189		(24,040)		17,208
Interest expense and other, net	3,165		2,496		5,523		5,282
(Gain) loss from FCC spectrum repack and other	(2,124)		182		(2,176)		173
Transaction and non-recurring expenses	1,372		27		8,100		3,048
Depreciation and amortization	4,337		2,794		7,002		5,925
Stock-based compensation	1,490		1,356		2,795		2,636
Adjusted EBITDA	$       12,253		$       13,323		$       27,965		$      24,812

 

Selected Financial Data:
(amounts in thousands)
	As of		As of
	June 30, 2021		December 31, 2020
	(Unaudited)		(Audited)
Cash	$72,439		$134,471
Debt (a)	$253,646		$204,813
Leverage ratio (b):	3.8x		3.2x
Net leverage ratio (c):	2.7x		1.1x

(a)	Represents the aggregate principal amount of the debt.
(b)	Represents the sum of gross debt divided by Adjusted EBITDA for the last twelve months, including Pantaya's operating results as of the acquisition date.
(c)	Represents gross debt less cash divided by Adjusted EBITDA for the last twelve months, including Pantaya's operating results as of the acquisition date. This ratio differs from the calculation contained in the Company's amended term loan.

The following table presents estimated cable television subscriber information (unaudited):

		Subscribers (a)
		(amounts in thousands)
		June 30, 2021		December 31, 2020		June 30, 2020
U.S. Cable Networks:
WAPA America (b)		3,448		3,672		3,847
Cinelatino		3,648		3,822		3,958
Pasiones		3,879		4,125		4,278
Centroamerica TV		3,343		3,468		3,598
Television Dominicana		2,246		2,178		2,213
Total		16,564		17,265		17,894
Latin America Cable Networks:
Cinelatino		13,968		14,096		14,081
Pasiones		15,522		14,250		13,935
Total		29,490		28,346		28,016

(a)	Amounts presented are based on most recent remittances received from our Distributors as of the respective dates shown above, which are typically two months prior to the dates shown above.
(b)	Excludes digital basic subscribers.

Non-GAAP Reconciliations

Within Hemisphere's second quarter 2021 press release, Hemisphere makes reference to the non-GAAP financial measure, "Adjusted EBITDA." Whenever such information is presented, Hemisphere has complied with the provisions of the rules under Regulation G and Item 2.02 of Form 8-K. When presenting Adjusted EBITDA, Hemisphere's management adds back (deducts) from net (loss) income attributable to Hemisphere Media Group, Inc., net (loss) income attributable to non-controlling interest, depreciation expense, amortization of intangibles, (gain) loss from FCC spectrum repack and other, other expense, net, loss (gain) on equity method investment activity, interest expense and other, net, impairment charges, transaction and non-recurring expenses, income tax expense, and stock-based compensation. The specific reasons why Hemisphere's management believes that the presentation of this non-GAAP financial measure provides useful information to investors regarding Hemisphere's financial condition, results of its operations and cash flows has been provided in the Form 8-K filed in connection with this press release. A reconciliation of net (loss) income attributable to Hemisphere Media Group, Inc. to Adjusted EBITDA can be found above in the table that sets forth Hemisphere's financial performance for the three and six months ended June 31, 2021 and 2020.

Conference Call

Hemisphere will conduct a conference call to discuss its second quarter 2021 results at 10:00 AM ET on Monday, August 9, 2021. A live broadcast of the conference call will be available online via the Company's Investor Relations website located at www.hemispheretv.com. Alternatively, interested parties can access the conference call by dialing (833) 952-1501, or from outside the United States at (236) 714-2110, at least five minutes prior to the start time. The conference ID for the call is 9608079.

A replay of the call will be available beginning at approximately 1:00 PM ET on Monday, August 9, 2021 by dialing (800) 585-8367, or from outside the United States by dialing (416) 621-4642. The conference ID for the replay is 9608079.

Forward-Looking Statements

Statements in this press release and oral statements made from time to time by representatives of Hemisphere may contain certain statements that are "forward-looking statements"  within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, that are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding the impact of the acquisition of Pantaya on the Company's business and financial performance, Pantaya's subscriber growth prospects, the Company's business plans, and the U.S. Hispanic population growth. Without limitation, any statements preceded or followed by or that include the words "targets," "plans," "believes," "expects," "intends," "will," "likely," "may," "anticipates," "estimates," "projects," "should," "would," "could," "might," "expect," "positioned," "strategy," "future," or words, phrases or terms of similar substance or the negative thereof, are forward-looking statements. Forward-looking statements are neither historical facts nor assurances of future performance. These forward-looking statements are subject to change, and actual results may materially differ from those set forth in this press release due to certain risks and uncertainties. Factors that could cause or contribute to changes in such forward-looking statements include, but are not limited to deterioration of general economic conditions, political instability, social unrest, and public health crises, such as the occurrence of a global pandemic like COVID-19, either nationally or in the local markets in which Hemisphere operates, Puerto Rico's uncertain political climate, as well as delays in the disbursement of earmarked federal funds on the local economy and advertising market, the effects of extreme weather and climate events on Hemisphere's business as well as Hemisphere's counterparties, customers, employees, third-party vendors and suppliers, changes in the distribution and viewing of television programming, including the expanded deployment of personal video recorders, subscription and advertising video on demand, internet protocol television, mobile personal devices and personal tablets and their impact on advertising and affiliate revenue, short and long-term migration shifts in Puerto Rico, Hemisphere's ability to timely and fully recover proceeds under our insurance policies and Hemisphere's ability to successfully integrate acquired assets, in particular, Pantaya, and achieve anticipated synergies, statements relating to Hemisphere's future financial and operating results (including growth and earnings), plans, objectives, expectations and intentions and other statements that are not historical facts. . The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements set forth in Hemisphere's reports filed with the Securities and Exchange Commission ("SEC"), including Hemisphere's quarterly reports on Form 10-Q and its annual report on Form 10-K. If one or more of these factors materialize, or if any underlying assumptions prove incorrect, Hemisphere's actual results, performance, or achievements may vary materially from any future results, performance or achievements expressed or implied by these forward-looking statements. We may also be faced with unforeseen risks and uncertainties related to Pantaya's business. Additionally, many of these risks are currently amplified by and may, in the future, continue to be amplified by the prolonged impact of the COVID-19 pandemic. Forward-looking statements included herein are made as of the date hereof, and Hemisphere undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances.

About Hemisphere Media Group, Inc.

Hemisphere Media Group, Inc. (HMTV) is the only publicly traded pure-play U.S. media company targeting the high-growth U.S. Hispanic and Latin American markets with leading television, streaming and digital content platforms. Headquartered in Miami, Florida, Hemisphere owns and operates five leading U.S. Hispanic cable networks, two Latin American cable networks, the leading broadcast television network in Puerto Rico, the leading Spanish-language subscription streaming service in the U.S., a Spanish-language content distribution company and has an ownership interest in a leading broadcast television network in Colombia.

Contact:
Edelman Financial Communications for Hemisphere Media Group
Danielle O'Brien
917-444-6325
danielle.obrien@edelman.com

 

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SOURCE Hemisphere Media Group, Inc.

FAQ

What were Hemisphere Media Group's earnings for Q2 2021?

Hemisphere Media Group reported net revenues of $50.5 million for Q2 2021, a 45% increase from the same period in 2020.

How did subscriber numbers change for Hemisphere Media Group?

As of the end of Q2 2021, Hemisphere Media Group had close to 1 million subscribers, primarily due to the acquisition of Pantaya.

What are the advertising revenue trends for Hemisphere Media Group?

Advertising revenue for Q2 2021 increased by 40%, driven by a strong performance in the Puerto Rico television advertising market.

What is Hemisphere Media Group's future outlook after Q2 2021 results?

Hemisphere's management is optimistic about continued growth, particularly due to the positive trends in the Puerto Rican economy and subscriber increases.

What were the operating expenses for Hemisphere Media Group for Q2 2021?

Operating expenses for Q2 2021 were $43.3 million, a 68% increase compared to Q2 2020.