Hemisphere Media Group, Inc.

Excuse me, ladies and gentlemen, this is the operator. Today's call is scheduled to begin momentarily. Until that time, your lines will again be placed back on a music hold. Thank you for your patience. THE END THE END Oh, my God. Thank you. Good morning, ladies and gentlemen, and welcome to the Hemisphere Media Group, Inc.' 's second quarter 2021 financial results conference call. My name is Brandi, and I will be your conference operator today. Please be advised that today's conference is being recorded. I will now turn the call over to Danielle O'Brien. Please go ahead.

Thank you, operator, and good morning, everyone. I'd like to welcome everyone to today's conference call. I'm Danielle O'Brien, and I'm with Edelman Financial Communications, Hemisphere's outside investor relations firm. Today's announcements and our comments may contain certain statements about Hemisphere that are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on the current expectation of the management of Hemisphere and are subject to uncertainty and changes in circumstance which may cause actual results to differ materially from those expressed or implied in such forward-looking statements. In addition, these statements are based on a number of assumptions that are subject to change. Please refer to our company's most recent annual report on Form 10-K and other public filings for a more complete discussion of forward-looking statements and the risk factors applicable to our company. 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. During today's call, in addition to discussing results that are included in accordance with generally accepted accounting principles, we will refer to Adjusted EBITDA, which is a non-GAAP financial measure. A reconciliation of GAAP to non-GAAP information is included in our earnings press release, which was issued earlier this morning. Management believes that this non-GAAP information is important to investors' understanding of our business. I will now turn the call over to Alan.

Thank you, Danielle, and good morning, everyone. We continue to have strong momentum into the second quarter, following our industry-leading results over the three previous quarters. Our growth was driven by exceptional advertising revenue results and our acquisition of Pantaya. We're very excited by our early results at Pantaya. As we announced in March, we acquired Lionsgate State Capantaya, the first and leading Spanish-language subscription streaming platform, featuring the best and premium movies and series. As of June 30, following just our first quarter after the acquisition, we reached nearly 1 million subscribers, a terrific beginning for us. With a large and untapped addressable U.S. Hispanic market, which is expected to grow to 75 million by 2030, we have just begun to scratch the surface. Our previously stated goal is to attain 2.5 to 3 million subscribers by 2025, and we are very confident that we can achieve that objective. Pantaya offers subscribers an unparalleled, deep library of premium original content and has a significant first mover advantage in the Hispanic streaming space. Our second quarter programming of Pantaya was highlighted by the second season of our hit reality series, Derbez Family Vacation. which during its first 30 days was the second most watched series in Pantaya's history and helped drive a 90% increase in total hours viewed over the previous 30-day period. And as we have previously stated, we are meaningfully increasing investment in content. We've entered into a number of key talent deals and co-production arrangements with some of the leading producers in Latin America. We are very excited about our upcoming content pipeline as our production schedule is ramping up through the balance of the year. In September, we will be releasing season two of El Juego de las Yales, Pantaya's most successful series to date. Also, this past Friday, we released Peligro y Tu Mirada, our first movie produced by Hemisphere for Pantaya since the close of our acquisition. We're confident that this thriller with an all-star cast will be a big hit for Pantaya. We're also making great progress in growing Pantaya's distribution. Pantaya has entered into an important distribution agreement with YouTube TV, and is in advanced negotiations with several other key distribution partners. We have begun to leverage the Hemisphere portfolio of assets to help drive growth at Pantaya through promotion, production, and distribution, and we've already seen terrific results. With the support of a major promotional campaign on WAPA, since July 31st, Pantaya has been the number one entertainment app in Puerto Rico on Android, ahead of Netflix, Disney+, Amazon, and HBO Max. and we are strategically leveraging Hemisphere's other assets to drive further growth. Now, turning to our TV networks, we delivered an outstanding quarter of revenue growth, including an advertising revenue increase of 40% over the second quarter of 2020, as well as a 10% increase over 2019. In Puerto Rico, economic indicators for both business trends and consumer activity remain very encouraging. In fact, the economy is stronger than it has been in many years. In addition to the significant level of federal stimulus related to COVID, Puerto Rico still has billions in hurricane recovery funds that have yet to be dispersed and which we expect will now start flowing at a faster pace. The combined impact of these factors and improved consumer confidence should drive renewed strength in many sectors for the coming years, and we are well positioned to benefit from such growth. Key economic metrics reinforce Puerto Rico's improving economic picture. New water sales through June have more than doubled compared to the first half of 2020 and are up 31% from 2019. Cement sales through May were higher than the same periods in both 2018 and 2019 when the island was rebuilding following Hurricane Maria. And the tourism industry has seen a remarkable turnaround. Airport passenger traffic during June was the highest since privatization of the airport in 2013. We saw another outstanding quarter of revenue growth for WAPA as the network maintained its longstanding dominant position. As has been the case for every quarter since Nielsen began measuring the market, WAPA remains the number one station with at least 20 out of the top 30 shows in every key demographic category. WAPA experienced strong growth in both advertising and retransmission fee revenues. While the U.S. continues to see organic subscriber declines, Puerto Rico has been very stable and once again had a quarter with no subscriber losses. Our audience ratings and advertising share were both outstanding in Q2. Our airing of the Miss Universe pageant on May 16 was the highest rated program in Puerto Rico in the past six years and delivered an outstanding 75% of audiences in the key demographics. These results are a testament to the singular power of WAPA, as well as the continued overall strength of broadcast television in Puerto Rico. We are thrilled to announce that we have signed Jay Fonseca as a host and news commentator. Jay is a massively popular journalist, radio host, and political analyst, with a track record of very successful shows on WAPA's top competitor on the island, and has over a million Facebook fans and 600,000 Instagram followers. We're confident that as a member of the WAPA family, Jay will further drive ratings and advertising growth. Turning to our U.S. cable channels, our performance was strong and our channels continue to be leaders in their respective categories as we deliver solid advertising revenue growth. All four of our measured channels are among the top 15 rated Spanish cable channels in coverage ratings, with three of the four in the top 10 Monday to Friday, including Pasiones, the number two rated channel Monday to Friday. Regarding distribution, we're excited to announce that we have reached an agreement with YouTube TV to carry three of our channels, Cine Latino, Guapamerica, and Pasiones, with launches expected before year-end. We're encouraged that this new launch, together with our other recent launches, will mitigate organic subscriber declines. We're also optimistic that the YouTube launch will help accelerate the timeline for launches on other major virtual MVPDs. Turning to Colombia and our investment in Canal Uno, the market remains challenged by heightened COVID cases, though at a lower rate than seen in the past several quarters. Vaccines are becoming more widely distributed, and we are beginning to see a more normalized advertising activity return. Despite these challenges, Canal Uno delivered strong advertising growth in comparison to both 2020 and 2019, and we are cautiously optimistic that the remainder of the year we'll see a stronger overall advertising market. In closing, we're thrilled to have continued our strong momentum in the second quarter, and we're off to a great start to the back half of the year. Pantaya is off to an exciting beginning, and it's very well positioned for continued robust growth as the market leader in the Spanish-language streaming space. We look forward to continuing to transform the growth profile of our business and are committed to meaningful value creation for all of our stakeholders. Thank you, everyone. I'll now turn the call over to Craig.