Entravision(US:EVC)2025-08-05 20:11PART I. FINANCIAL INFORMATION Financial Statements Entravision's Q2 2025 financials reflect a net loss and negative operating cash flow, driven by strategic realignment and Q1 impairment charges Condensed Consolidated Balance Sheets As of June 30, 2025, total assets and stockholders' equity significantly decreased, while total liabilities saw a slight reduction Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $178,079 | $186,300 | | Total Assets | $417,998 | $487,278 | | Total Current Liabilities | $71,723 | $61,626 | | Total Liabilities | $327,989 | $341,258 | | Total Stockholders' Equity | $90,009 | $146,020 | - Assets held for sale of $7.2 million were recognized as of June 30, 2025, which were not present at year-end 202417 Condensed Consolidated Statements of Operations Despite a 22% net revenue increase in Q2 2025, the company reported a net loss from continuing operations due to significant Q1 charges Statement of Operations Highlights (in thousands, except EPS) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | $100,735 | $82,654 | $192,586 | $160,830 | | Operating Income (Loss) | ($848) | ($3,344) | ($53,618) | ($10,993) | | Net Income (Loss) from Continuing Operations | ($3,500) | $3,732 | ($51,275) | ($3,778) | | Net Income (Loss) Attributable to Common Stockholders | ($3,337) | ($31,680) | ($51,303) | ($80,570) | | Diluted EPS from Continuing Operations | ($0.04) | $0.04 | ($0.56) | ($0.04) | - For the six months ended June 30, 2025, the company recorded an impairment charge of $23.7 million and a loss on lease abandonment of $25.2 million, which were not present in the prior year period and significantly impacted the net loss18 Condensed Consolidated Statements of Cash Flows For the first six months of 2025, net cash used in operating activities was $7.4 million, a significant reversal from the prior year's positive cash flow Cash Flow Summary for Six-Month Periods Ended June 30 (in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | ($7,416) | $51,071 | | Net cash provided by (used in) investing activities | ($4,822) | ($26,937) | | Net cash provided by (used in) financing activities | ($19,163) | ($44,726) | | Net increase (decrease) in cash | ($31,401) | ($20,594) | - Significant non-cash charges in the first six months of 2025 included a $23.7 million impairment charge and a $25.2 million loss on lease abandonment, which were adjustments in the reconciliation of net loss to operating cash flow23 Notes to Condensed Consolidated Financial Statements Notes detail strategic realignment, Q1 2025 impairment and lease abandonment charges, a credit facility amendment, and a $31.45 million lawsuit - Effective July 1, 2024, the company realigned its operating segments into two reportable segments: Media and Advertising Technology & Services; prior periods have been recast to conform to this new presentation10127 - In Q2 2024, the company sold its Entravision Global Partners (EGP) business following Meta's decision to end its Authorized Sales Partners program; EGP results are reported as discontinued operations929135 - In Q1 2025, the company recorded a $23.7 million impairment charge related to two Mexico television stations which are now classified as assets held for sale3367182 - In Q1 2025, the company recorded a $25.2 million loss on lease abandonment after vacating its Santa Monica corporate headquarters69121182 - Subsequent to the quarter end, on July 15, 2025, the company amended its credit agreement to, among other things, increase the maximum permitted Total Net Leverage Ratio and reduce the minimum permitted Interest Coverage Ratio155 - On July 22, 2025, the former landlord of the Santa Monica property filed a lawsuit against the company seeking at least $31.45 million in damages for an alleged breach of lease157245 Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes Q2 2025 revenue growth to Advertising Technology & Services, with liquidity sufficient despite EGP divestiture's cash flow impact - The company has been reorganized into two segments: Media (television, radio, digital marketing) and Advertising Technology & Services (programmatic ad services via Smadex and Adwake)160 - The Media segment faces challenges from declining broadcast audiences and a shift in advertising from traditional to digital media204 - The Advertising Technology & Services segment is experiencing a global trend of revenue shifting to programmatic, demanding more efficiency and lower costs from intermediaries215 - The company made a voluntary prepayment of $10 million on its Credit Facility in June 2025166227 - Cash flow from operations was negative $7.4 million for the first six months of 2025, a sharp contrast to the positive $51.1 million in the same period of 2024, primarily due to working capital changes and a higher net loss228 Segment Operations Q2 2025 Media segment revenue declined 8% with 94% profit drop, while Advertising Technology & Services revenue surged 66% with 190% profit increase Segment Performance - Q2 2025 vs Q2 2024 (in thousands) | Segment | Net Revenue (Q2'25) | Revenue % Change | Segment Operating Profit (Q2'25) | Profit % Change | | :--- | :--- | :--- | :--- | :--- | | Media | $45,413 | (8)% | $354 | (94)% | | Advertising Technology & Services | $55,322 | 66% | $5,179 | 190% | - Media segment revenue decline was primarily due to a $3.2 million decrease in broadcast advertising and a $1.1 million decrease in retransmission consent revenue202 - Advertising Technology & Services segment direct operating expenses increased 94% to $10.9 million in Q2 2025, driven by higher cloud infrastructure costs and salary/bonus expenses to support revenue growth132216 Liquidity and Capital Resources Company liquidity is sufficient for 12 months, supported by $64.5 million cash and amended credit facility, despite EGP divestiture's cash flow impact - As of June 30, 2025, the company had cash and cash equivalents of $64.5 million and marketable securities of $4.8 million221 - The disposition of the EGP business is expected to continue to significantly lower consolidated revenue and materially adversely affect cash flow from operations in future periods223 - Anticipated capital expenditures for the full year 2025 are approximately $7.5 million230 Quantitative and Qualitative Disclosures About Market Risk Market risk stems from $177.8 million variable-rate debt and foreign currency exposure; a 100 basis point SOFR increase impacts annual interest expense by $1.8 million - As of June 30, 2025, the company had $177.8 million of variable rate bank debt outstanding234 - A hypothetical 100 basis point (1%) change in the SOFR interest rate would impact annual interest expense by $1.8 million235 - The company has foreign currency risk from operations denominated in currencies other than the U.S. dollar, primarily the Euro, but does not currently engage in hedging236238 Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report239 - No material changes to internal control over financial reporting occurred during the quarter242 PART II. OTHER INFORMATION Legal Proceedings The company faces ordinary legal proceedings, including a $31.45 million lawsuit from its former Santa Monica landlord for alleged lease breach - On July 22, 2025, the company was sued by its former landlord in Santa Monica for at least $31,450,000 in damages related to a terminated lease157245 Risk Factors The report states there are no new risk factors to disclose for the period - The report states there are no new risk factors to disclose246 Unregistered Sales of Equity Securities and Use of Proceeds No shares repurchased in Q2 2025; $11.3 million of $20 million share repurchase program utilized to date - No shares were repurchased during the first six months of 2025248 - As of June 30, 2025, the company has used $11.3 million of its $20 million authorized share repurchase program248 Other Information No Rule 10b5-1 trading arrangements were adopted or terminated; Board approved revised indemnification agreement for directors and officers - On August 1, 2025, the Board approved a revised, more comprehensive indemnification agreement for its directors and executive officers252 Exhibits This section lists exhibits filed with the Form 10-Q, including executive compensation, credit agreement amendments, and certifications