Entravision Communications Corporation Reports First Quarter 2014 Results

Three-Month Period

Ended March 31,

2014

2013

% Change

Net revenue

$        52,656

$        49,087

7%

Operating expenses (1)

33,507

31,908

5%

Corporate expenses (2)

4,836

4,497

8%

Consolidated adjusted EBITDA (3)

14,985

13,380

12%

Free cash flow (4)

$          9,353

$          3,438

172%

Free cash flow per share, basic (4)

$            0.11

$            0.04

175%

Free cash flow per share, diluted (4)

$            0.10

$            0.04

150%

Net income (loss) 

$          4,388

$           (957)

NM

Net income (loss) per share, 

basic and diluted

$            0.05

$          (0.01)

NM

Cash dividends declared per common share 

$            0.03

$                  -

100%

Weighted average common shares outstanding, basic

88,683,948

86,459,017

Weighted average common shares outstanding, diluted

90,943,866

86,459,017

(1) Operating expenses include direct operating, selling, general and administrative expenses. Included in operating expenses are $0.1 and $0.2 million of non-cash stock-based compensation for the three-month periods ended March 31, 2014 and 2013, respectively. Operating expenses do not include corporate expenses, depreciation and amortization, impairment charge, gain (loss) on sale of assets, gain (loss) on debt extinguishment and other income (loss).

(2) Corporate expenses include $0.6 million and $0.7 million of non-cash stock-based compensation for the three-month periods ended March 31, 2014 and 2013, respectively.

(3) Consolidated adjusted 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 income (loss), gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses and syndication programming amortization less syndication programming payments. We use the term consolidated adjusted EBITDA because that measure is defined in our credit facility 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 and syndication programming amortization and does include syndication programming payments. While many in the financial community and we consider consolidated adjusted EBITDA to be important, it should be considered in addition to, but not as a substitute for or superior to, other measures of liquidity and financial performance prepared in accordance with accounting principles generally accepted in the United States of America, such as cash flows from operating activities, operating income and net income. As consolidated adjusted EBITDA excludes non-cash gain (loss) on sale of assets, non-cash depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation expense, 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 and syndication programming amortization and includes syndication programming payments, consolidated adjusted EBITDA has certain limitations because it excludes and includes several important non-cash financial line items. Therefore, we consider both non-GAAP and GAAP measures when evaluating our business. Consolidated adjusted EBITDA is also used to make executive compensation decisions.

(4) Free cash flow is defined as consolidated adjusted EBITDA less cash paid for income taxes, net interest expense, and capital expenditures. Net interest expense is defined as interest expense, less non-cash interest expense relating to amortization of debt finance costs, less non-cash interest expense relating to discount amortization on our $324 million aggregate principal amount of 8.750% senior secured first lien notes (the "Notes"), which were fully redeemed on August 2, 2013, and less interest income. Free cash flow per share is defined as free cash flow divided by the basic or diluted weighted average common shares outstanding.

Financial Results

Three-Month Period Ended March 31, 2014 Compared to Three-Month Period Ended
March 31, 2013
(Unaudited)

Three-Month Period

Ended March 31,

2014

2013

% Change

Net revenue

$      52,656

$      49,087

7%

Operating expenses (1)

33,507

31,908

5%

Corporate expenses (1)

4,836

4,497

8%

Depreciation and amortization

3,515

3,955

(11)%

Operating income (loss)

10,798

8,727

24%

Interest expense, net

(3,426)

(7,777)

(56)%

Income (loss) before income taxes

7,372

950

676%

Income tax (expense) benefit 

(2,984)

(1,907)

56%

Net income (loss)

$        4,388

$         (957)

NM

(1) Operating expenses and corporate expenses are defined on page 1.

Three-Month Period

Ended March 31,

2014

2013

% Change

Net Revenue

Television

$        37,741

$        34,952

8%

Radio

$        14,915

$        14,135

6%

Total

$        52,656

$        49,087

7%

Operating Expenses (1)

Television

$        19,451

$        18,914

3%

Radio

14,056

12,994

8%

Total

$        33,507

$        31,908

5%

Corporate Expenses (1)

$          4,836

$          4,497

8%

Consolidated adjusted EBITDA (1)

$        14,985

$        13,380

12%

(1) Operating expenses, Corporate expenses, and Consolidated adjusted EBITDA are defined on page 1.

Entravision Communications Corporation

Consolidated Balance Sheets

(In thousands)

March 31,

December 31,

2014

2013

(Unaudited)

ASSETS

Current assets

Cash and cash equivalents

$        47,125

$        43,822

Trade receivables, net

53,721

57,043

Deferred income taxes

6,100

6,100

Prepaid expenses and other current assets

4,892

4,087

Total current assets

111,838

111,052

Property and equipment, net

57,709

58,765

Intangible assets subject to amortization, net 

19,186

19,812

Intangible assets not subject to amortization

220,701

220,701

Goodwill

36,647

36,647

Deferred income taxes

81,894

83,856

Other assets

6,802

7,404

Total assets

$      534,777

$      538,237

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Current maturities of long-term debt

$          3,750

$          3,750

Advances payable, related parties

118

118

Accounts payable and accrued expenses

24,313

31,246

Total current liabilities

28,181

35,114

Long-term debt, less current maturities

359,375

360,313

Other long-term liabilities

7,320

6,786

Total liabilities

394,876

402,213

Stockholders' equity

Class A common stock

6

6

Class B common stock

2

2

Class U common stock

1

1

Additional paid-in capital

927,497

927,377

Accumulated deficit

(787,208)

(791,596)

Accumulated other comprehensive income (loss)

(397)

234

Total stockholders' equity

139,901

136,024

Total liabilities and stockholders' equity

$      534,777

$      538,237

Entravision Communications Corporation

Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)

Three-Month Period

Ended March 31,

2014

2013

Net revenue

$

52,656

$

49,087

Expenses:

Direct operating expenses

24,876

24,225

Selling, general and administrative expenses

8,631

7,683

Corporate expenses

4,836

4,497

Depreciation and amortization

3,515

3,955

41,858

40,360

Operating income (loss)

10,798

8,727

Interest expense

(3,438)

(7,784)

Interest income

12

7

Income (loss) before income taxes

7,372

950

Income tax (expense) benefit

(2,984)

(1,907)

Net income (loss) 

$

$

Basic and diluted earnings per share:

Net income (loss) per share,

basic and diluted

$

0.05

$

Cash dividends declared per common share 

$

0.03

$

-

Weighted average common shares outstanding, basic 

88,683,948

86,459,017

Weighted average common shares outstanding, diluted

90,943,866

86,459,017

Entravision Communications Corporation

Consolidated Statements of Cash Flows

(In thousands; unaudited)

Three-Month Period

Ended March 31,

2014

2013

Cash flows from operating activities:

Net income (loss)

$                4,388

$                 (957)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization

3,515

3,955

Deferred income taxes

2,495

1,842

Amortization of debt issue costs

201

455

Amortization of syndication contracts

122

151

Payments on syndication contracts

(158)

(325)

Non-cash stock-based compensation

708

872

Changes in assets and liabilities:

(Increase) decrease in accounts receivable

3,510

1,916

(Increase) decrease in prepaid expenses and other assets

(993)

(828)

Increase (decrease) in accounts payable, accrued expenses and other liabilities

(7,041)

(8,692)

Net cash provided by (used in) operating activities

6,747

Cash flows from investing activities:

Purchases of property and equipment and intangibles

(1,918)

(2,555)

Net cash provided by (used in) investing activities

(1,918)

(2,555)

Cash flows from financing activities:

Proceeds from stock option exercises

1,636

351

Payments on long-term debt

(938)

-

Dividends paid

(2,224)

-

Net cash provided by (used in) financing activities

(1,526)

351

Net increase (decrease) in cash and cash equivalents

3,303

(3,815)

Cash and cash equivalents:

Beginning

43,822

36,130

Ending

$              47,125

$              32,315

Entravision Communications Corporation

Reconciliation of Consolidated Adjusted 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,

2014

2013

Consolidated adjusted EBITDA (1)

$    14,985

$    13,380

Interest expense

(3,438)

(7,784)

Interest income

12

7

Income tax (expense) benefit

(2,984)

(1,907)

Amortization of syndication contracts

(122)

(151)

Payments on syndication contracts

158

325

Non-cash stock-based compensation included in direct operating  expenses

(90)

(184)

Non-cash stock-based compensation included in corporate expenses

(618)

(688)

Depreciation and amortization

(3,515)

(3,955)

Net income (loss)

4,388

Depreciation and amortization

3,515

3,955

Deferred income taxes

2,495

1,842

Amortization of debt issue costs

201

455

Amortization of syndication contracts

122

151

Payments on syndication contracts

(158)

(325)

Non-cash stock-based compensation

708

872

Changes in assets and liabilities, net of effect of acquisitions and dispositions:

(Increase) decrease in accounts receivable

3,510

1,916

(Increase) decrease in prepaid expenses and other assets

(993)

(828)

Increase (decrease) in accounts payable, accrued expenses and other liabilities

(7,041)

(8,692)

Cash flows from operating activities

$      6,747

$     (1,611)

(1) Consolidated adjusted EBITDA is defined on page 1.

Entravision Communications Corporation

Reconciliation of Free Cash Flow to Net Income (Loss)

(In thousands; unaudited)

The most directly comparable GAAP financial measure is net income (loss). A reconciliation of this non-GAAP measure to net income (loss) for each of the periods presented is as follows:

Three-Month Period

Ended March 31,

2014

2013

Consolidated adjusted EBITDA (1)

$      14,985

$      13,380

Net interest expense (1)

3,225

7,322

Cash paid (refunded) for income taxes

489

65

Capital expenditures (2)

1,918

2,555

Free cash flow (1)

9,353

3,438

Capital expenditures (2)

1,918

2,555

Amortization of debt issue costs

(201)

(455)

Non-cash income tax expense

(2,495)

(1,842)

Amortization of syndication contracts

(122)

(151)

Payments on syndication contracts

158

325

Non-cash stock-based compensation included in direct operating

 expenses

(90)

(184)

Non-cash stock-based compensation included in corporate expenses

(618)

(688)

Depreciation and amortization

(3,515)

(3,955)

Net income (loss)

$        4,388

$         (957)

(1) Consolidated adjusted EBITDA, net interest expense, and free cash flow are defined on page 1.

(2) Capital expenditures is not part of the consolidated statement of operations.