Entravision(EVC) - 2024 Q1 - Quarterly Results

First Quarter 2024 Results Overview This section summarizes Entravision's Q1 2024 performance, covering CEO commentary, unaudited financial highlights, and the quarterly cash dividend CEO Commentary and Strategic Outlook CEO Michael Christenson discussed Meta's ASP program wind-down, Entravision's strategic review, and 2024 priorities including political revenue, content, and Smadex development - Meta intends to wind down its authorized sales partner (ASP) program globally and end its relationship with all ASPs, including Entravision, by July 1, 2024[3] - Entravision has initiated a thorough review of its current digital strategy, operations, and cost structure in response to Meta's decision[3] - The company's 2024 priorities include maximizing political revenue, providing highly-rated news and content, and building its programmatic ad purchasing platform, Smadex[4] Unaudited Financial Highlights Entravision reported a 16% increase in net revenue to $277.4 million, but a net loss of $51.7 million and a 65% decrease in Consolidated EBITDA to $4.5 million Q1 2024 Unaudited Financial Highlights (YoY Change) | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | % Change | | :----------------------------------- | :--------------------- | :--------------------- | :------- | | Net revenue | $277,445 | $239,006 | 16 % | | Cost of revenue - digital | $203,229 | $167,756 | 21 % | | Operating expenses | $62,267 | $52,630 | 18 % | | Corporate expenses | $12,248 | $10,502 | 17 % | | Consolidated EBITDA | $4,530 | $13,022 | (65 )% | | Free cash flow | $(2,831 ) | $3,908 | * | | Net income (loss) | $(51,669 ) | $1,699 | * | | Net income (loss) attributable to common stockholders | $(48,890 ) | $2,041 | * | | Net income (loss) per share, basic and diluted | $(0.55 ) | $0.02 | * | - Net revenue increased primarily due to increases in advertising revenue from digital business units and political advertising revenue in television and audio segments, partially offset by decreases in national advertising, spectrum usage rights, and retransmission consent revenue in television, and decreases in local and national advertising revenue in audio[8] - Cost of revenue, operating expenses, and corporate expenses all increased, driven by higher digital advertising revenue, salary expenses, and non-cash stock-based compensation[9][10] Quarterly Cash Dividend Declaration The Board of Directors approved a quarterly cash dividend of $0.05 per share for Class A and Class U common stock, totaling $4.5 million Q1 2024 Quarterly Cash Dividend | Metric | Value | | :-------------------------------- | :---------- | | Dividend per share | $0.05 | | Aggregate amount | $4.5 million | | Payable date | June 28, 2024 | | Record date | June 14, 2024 | Detailed Financial Performance This section provides a detailed analysis of Entravision's financial performance, including consolidated statements of operations, segment results, balance sheets, and cash flows Consolidated Statements of Operations The consolidated statements show a shift from Q1 2023 operating income of $6.7 million to a Q1 2024 operating loss of $55.9 million, primarily due to a $49.4 million impairment charge Consolidated Statements of Operations (Q1 2024 vs. Q1 2023) | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | | :----------------------------------------- | :--------------------- | :--------------------- | | Net revenue | $277,445 | $239,006 | | Total Expenses | $333,344 | $232,338 | | Operating income (loss) | $(55,899 ) | $6,668 | | Income (loss) before income taxes | $(59,471 ) | $1,930 | | Net income (loss) | $(51,669 ) | $1,699 | | Net income (loss) attributable to common stockholders | $(48,890 ) | $2,041 | | Basic and diluted EPS | $(0.55 ) | $0.02 | - An impairment charge of $49.4 million was recorded in Q1 2024, significantly contributing to the operating loss, compared to no impairment charge in Q1 2023[20] Segment Results The Digital segment's revenue grew 21% to $237.5 million, while Television and Audio segments declined by 6% and 7% respectively, with operating expenses increasing across all segments Q1 2024 Segment Net Revenue (YoY Change) | Segment | Q1 2024 (in thousands) | Q1 2023 (in thousands) | % Change | | :-------- | :--------------------- | :--------------------- | :------- | | Digital | $237,491 | $196,482 | 21 % | | Television | $28,549 | $30,312 | (6 )% | | Audio | $11,405 | $12,212 | (7 )% | | Total | $277,445 | $239,006 | 16 % | Q1 2024 Segment Operating Expenses (YoY Change) | Segment | Q1 2024 (in thousands) | Q1 2023 (in thousands) | % Change | | :-------- | :--------------------- | :--------------------- | :------- | | Digital | $28,077 | $21,539 | 30 % | | Television | $22,968 | $20,099 | 14 % | | Audio | $11,222 | $10,992 | 2 % | | Total | $62,267 | $52,630 | 18 % | Consolidated Balance Sheets Total assets decreased to $805.0 million as of March 31, 2024, with cash and marketable securities at $132.7 million and total debt at $200.1 million Consolidated Balance Sheet Highlights (March 31, 2024 vs. December 31, 2023) | Metric | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :----------------------------------- | :---------------------------- | :---------------------------- | | Total assets | $804,990 | $865,946 | | Cash and cash equivalents | $128,410 | $105,739 | | Marketable securities | $4,335 | $13,172 | | Goodwill | $55,272 | $90,672 | | Intangible assets subject to amortization, net | $34,660 | $51,784 | | Total liabilities | $591,615 | $599,660 | | Total stockholders' equity | $173,535 | $222,528 | - Cash and marketable securities totaled $132.7 million as of March 31, 2024[13] - Total debt, as defined in the credit agreement, was $200.1 million, with a total leverage ratio of 1.4 times net of total cash and marketable securities[13] Consolidated Statements of Cash Flows Net cash from operating activities decreased to $33.4 million, while investing activities generated $6.1 million, and financing activities resulted in a $16.8 million outflow Consolidated Statements of Cash Flows (Q1 2024 vs. Q1 2023) | Cash Flow Activity | Q1 2024 (in thousands) | Q1 2023 (in thousands) | | :-------------------------------- | :--------------------- | :--------------------- | | Net cash provided by operating activities | $33,375 | $36,695 | | Net cash provided by (used in) investing activities | $6,099 | $(563 ) | | Net cash provided by (used in) financing activities | $(16,797 ) | $(5,365 ) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $22,675 | $30,768 | | Ending cash, cash equivalents and restricted cash | $129,184 | $142,212 | - Purchases of property and equipment decreased significantly to $2.7 million in Q1 2024 from $6.8 million in Q1 2023[24] - Payments on debt were $10.3 million in Q1 2024, a substantial decrease from $211.7 million in Q1 2023, which also included significant proceeds from borrowings[24] Non-GAAP Financial Measures This section provides reconciliations for non-GAAP financial measures, specifically Consolidated EBITDA and Free Cash Flow, to their most directly comparable GAAP measures Reconciliation of Consolidated EBITDA Consolidated EBITDA for Q1 2024 was $4.5 million, a 65% decrease from $13.0 million in Q1 2023, reflecting a decline in profitability Reconciliation of Consolidated EBITDA to Cash Flows From Operating Activities (Q1 2024 vs. Q1 2023) | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | | :----------------------------------------- | :--------------------- | :--------------------- | | Consolidated EBITDA | $4,530 | $13,022 | | Cash flows from operating activities | $33,375 | $36,695 | - Consolidated EBITDA decreased by 65% from $13.0 million in Q1 2023 to $4.5 million in Q1 2024[4][25] Reconciliation of Free Cash Flow Free cash flow for Q1 2024 was negative $2.8 million, a significant decrease from positive $3.9 million in Q1 2023 Reconciliation of Free Cash Flow to Cash Flows From Operating Activities (Q1 2024 vs. Q1 2023) | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | | :----------------------------------------- | :--------------------- | :--------------------- | | Consolidated EBITDA | $4,530 | $13,022 | | Net interest expense | $(3,337 ) | $(3,035 ) | | Dividend income | $10 | $18 | | Cash paid for income taxes | $(1,291 ) | $(72 ) | | Capital expenditures | $(2,743 ) | $(6,750 ) | | Free cash flow | $(2,831 ) | $3,908 | | Cash Flows From Operating Activities | $33,375 | $36,695 | - Free cash flow shifted from positive $3.9 million in Q1 2023 to negative $2.8 million in Q1 2024[4][27] Company Information This section provides essential company information, including an overview of Entravision, forward-looking statements, and details regarding the Q1 2024 conference call About Entravision Communications Corporation Entravision is a global advertising solutions, media, and technology company, with its digital segment as the largest revenue driver and a diversified U.S. media portfolio - Entravision is a global advertising solutions, media, and technology company, with its digital segment being the largest by revenue[17] - The company offers end-to-end advertising services through platforms like Smadex and maintains a diversified portfolio of U.S. television and radio stations targeting Hispanic audiences[17] Forward-Looking Statements This section outlines forward-looking statements, subject to inherent risks and uncertainties, with the company disclaiming any obligation to update them - The press release contains forward-looking statements subject to risks, uncertainties, and other factors that may cause actual results to differ materially from expectations[18] - The company disclaims any duty to update any forward-looking statements[18] Conference Call Details A conference call to discuss Q1 2024 results was held on May 2, 2024, at 5:00 p.m. Eastern Time, accessible via dial-in or webcast - A conference call to discuss Q1 2024 results was held on Thursday, May 2, 2024, at 5:00 p.m. Eastern Time[16] - Access to the call was available via dial-in (U.S. and Int'l) and a live webcast on www.entravision.com[16](index=16&type=chunk)