Entravision(US:EVC)2023-11-03 00:44Financial Data and Key Metrics Changes - Consolidated advertising revenue reached a record $274.4 million, up 14% year-over-year, slightly below the previously disclosed pacing of plus 15% [4] - Free cash flow was $4 million, representing a conversion rate of 28% of consolidated adjusted EBITDA, compared to $15.4 million in the same quarter of the prior year [10] - Consolidated adjusted EBITDA totaled $14.2 million, down 45% from $26 million in the prior year period [44] - Diluted earnings per share for Q3 2023 were $0.03 compared to $0.11 in the same quarter last year [45] Business Line Data and Key Metrics Changes - Core television revenue increased by 1%, local core revenue increased by 7%, while national core revenue decreased by 14% year-over-year [6] - Digital revenues improved by 18% on a pro forma basis compared to the prior year period [5] - Audio revenue totaled approximately $13.4 million, a decrease of 19% year-over-year, driven by lower national and local advertising revenue [41] - Digital segment revenue was $231.5 million for the quarter, up 23% year-over-year, with the commercial partnerships business revenue up 19% [37] Market Data and Key Metrics Changes - The auto category saw growth of 14% in the quarter compared to the same period last year, driven by Tier 2 and Tier 3 spending [17] - Political revenue is expected to increase in Q4, with key elections in several states, including Nevada, California, Arizona, Colorado, and Texas [7] - International sales partnership with Pinterest was established to enhance advertising outreach in various regions [15] Company Strategy and Development Direction - The company is focused on maximizing political revenue in 2024, with a significant audience in the Latino market [49] - Investments are being made to increase local news capacity and enhance AI and machine learning capabilities in technology businesses [26][27] - The capital allocation plan prioritizes dividends and reinvestment in business growth [27] Management's Comments on Operating Environment and Future Outlook - Management anticipates improvement in political spending in Q4, despite current softness in national advertising [7] - The company acknowledges that all businesses are correlated with global ad spending, which may present challenges in the upcoming year [51] - Management is optimistic about the potential for growth in 2024, particularly in political advertising [49] Other Important Information - Cash and marketable securities as of September 30, 2023, totaled $128.7 million, with total debt at $211.1 million [22] - Corporate expenses increased by 40% to $13.3 million for the quarter, primarily due to timing of RSU grants and increased professional service fees [20] Q&A Session Summary Question: What is the expected political advertising revenue for Q4? - Management expects between $300,000 and $400,000 in political revenue for Q4, with a ramp-up anticipated after Thanksgiving [53] Question: What are the margins for the digital segment? - The cash flow margin for digital was 4.5% in Q3, with a goal to exceed 5% in Q4 [55] Question: What sectors are underperforming? - Travel, leisure, retail, and restaurants are currently underperforming due to economic conditions [65] Question: What are the capital expenditure expectations for 2024? - CapEx is expected to normalize next year in the $11 million to $12 million range, down from current levels [66] Question: Are there any potential acquisitions being considered? - The focus for 2024 will be on organic growth and improving operations rather than acquisitions [90]