Hemisphere Media Group, Inc.

good day ladies and gentlemen and welcome to the hemisphere media group inc fourth quarter and full year 2021 financial results conference call my name is paul and i'll be your operator today i will now turn a call over to danielle o'brien you may begin thank you operator and good morning everyone i'd like to welcome everyone to today's conference call i'm danielle o'brien i'm with edelman financial communications hemisphere's outside investor relations firm today's announcement

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 expectations 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 calculated in accordance with general 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 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. 2021 was another strong year for our business, and we finished with a solid performance in the fourth quarter. This year was highlighted by our acquisition of Pantaya, a year of record-breaking results at WAPA, several important partnerships and launches with virtual MVPDs in the U.S., and the continued leadership positions of our U.S. cable networks. For the year, we delivered a 29% increase in net revenues, and even without including the impact of Pantaya, we achieved growth across all of our revenue streams. Before I dive into our performance, I want to briefly address the market value of our business, which has deteriorated in recent months. Very simply, our stock price does not in any way reflect the fundamental value and strength of our company. We have consistently delivered strong results and growth. And in particular, during 2020 and 2021, we delivered industry leading growth. And despite the headwinds relating to the pandemic, we set all time revenue records. Last year, we acquired the leading Spanish language streaming platform in the US, which will be a major growth engine for us over the coming years. A very talented and seasoned team, has continued to prove its ability to perform with speed, creativity, and agility, despite difficult macroeconomic circumstances, including successfully navigating through hurricanes and earthquakes in Puerto Rico and a global pandemic. Our business model is proven and has tremendous runway for growth. We have never been more excited about the prospects for Hemisphere. Turning to our performance, Pantaya continues to be the premier destination for exclusive premium Spanish-language original series and movies. As of year-end, we had close to a million subscribers, a modest quarter-over-quarter contraction, largely due to a reduction of fresh content as a result of production slowdowns during the pandemic. We also pulled back on marketing spending during Q4, given the limited amount of new content, and chose not to chase subscribers inefficiently. As we previously indicated, we ramped up production in the second half of 2021 and are increasing investment in both programming and marketing in 2022 to drive subscriber growth and retention. This year, we expect to release 16 original series and many premiere movies, representing an extraordinary and unprecedented lineup of world-class content. Most recently, we premiered the highly acclaimed series Señorita 89 on February 27th. And among our many projects, we're commencing production on Radical, the latest film starring Eugenio Derbez, the number one box office star in the U.S. Hispanic universe. Over the past few months, We've also entered into development and co-production deals with some of the most popular talent and most prolific production studios. While we have significantly expanded our production, it's also important to emphasize that we are swimming in a completely different lane than the English language streamers. We are presently the only premium subscription streamer super serving the 60 plus million and fast growing US Hispanic community. And we have a very cost efficient production infrastructure which enables us to produce at a small fraction of the cost of English language series. We have the further ability to significantly reduce our cost exposure by licensing Latin American rights to content to streamers such as Amazon, Netflix, and Disney+, which typically pass well over 50% of our production budget in exchange for these rights. Regarding Pantai's distribution. We are in advanced negotiations with the major telco to be included in a bundled package, which we believe will deliver a meaningful number of new subscribers. At the same time, we are also in negotiations with several other major telco and connected TV distribution partners. For all of the above reasons, we are confident that we will drive significant subscriber growth over the course of the year and remain on track to achieve our long-term target of 2.5 to 3 million subscribers by 2025. Turning now to Puerto Rico. We are very proud to announce that WAPA had the highest revenue year in its history, with all-time records in both advertising and retransmission revenues. This result is especially impressive given the challenges posed by COVID-related restrictions and lockdowns. The macroeconomic situation in Puerto Rico continued to strengthen throughout the year, with key metrics across business, consumer, and tourism activity trending very positively. Puerto Rico is currently in the strongest economic position it has been in for many years, with very positive indicators for future growth. The economy should be further bolstered by the issuance of an executive order this week, eliminating most COVID-related travel and capacity restrictions. In January, Puerto Rico finally received approval to exit bankruptcy, with a restructuring plan that reduces the largest portion of the government's debt by about 80%. The deal will also save the government more than $50 billion in total debt payments. Puerto Rico's commercial banks are anticipating that the Commonwealth's emergence from bankruptcy will spur an island economy that is in the early stages of a growth cycle. The exit from bankruptcy will also provide the government with a certainty to engage in long-term planning and infrastructure investments. Virtually all key economic metrics in Puerto Rico continued to trend very positively through the end of 2021. Employment levels have now surpassed pre-pandemic levels. Despite inventory shortages, Auto sales had their best year since 2005. Airport passenger volume doubled compared to 2020 and even increased by 3% versus 2019. Similarly, hotel occupancy rates actually exceeded 2019 by 4% as tourists were attracted by Puerto Rico's convenience and high vaccination rates. Puerto Rico's economic recovery will be further bolstered by the tens of billions of federal funds that have yet to be dispersed. The expectation is that these funds will start flowing the second half of 2022 and beyond. All of this will benefit WAPA, which has once again maintained its dominant ratings position and market share and has further solidified its growth profile. The principal selling demographic of adults 25 to 54, WAPA had 24 of the 30 highest rated programs in the quarter. WAPA's quarter was highlighted by the Miss Universe contest, which delivered an astounding 69% viewing share among women 25 to 54. I am proud that WAPA has now been the number one station in the market for 12 consecutive years, uninterrupted. In Q4, we faced a difficult comparison to the fourth quarter of 2020, which was the highest advertising revenue quarter in the history of Puerto Rico television. Nonetheless, despite supply chain issues impacting retail and auto, this year's fourth quarter was very strong, and in fact, WAPA's second highest quarter in its history, with growth of 31% over the fourth quarter of 2019. We're confident that the strong performance will continue going into 2022. Turning now to our US cable channels, our networks continue to be leaders in their respective content categories. Based on coverage ratings, three of our networks were among the top 10 highest rated Spanish language cable networks, and four were among the top 15. Notably, Pasionas was the number two rated Spanish language cable network in prime time Monday to Friday. And WAP America's early fringe newscast with the highest rated newscast on Spanish language cable in any day part. We have been successful in expanding our distribution with launches on virtual MBPDs and expect this trend to continue. Last year, we entered into an agreement with YouTube. YouTube's launch of its Hispanic package has been delayed, but we now expect that launch to occur soon and believe it will result in meaningful subscriber growth. Additionally, as of March 1, all five of our channels have launched on Fubo's Latino package. We are in discussions with other platforms that are optimistic on securing additional launches. While we continue to experience organic attrition with our cable subscribers, we have mitigated these losses with new launches and expanded carriage agreements. Turning to Columbia and our investment in Canal Uno, the economy is improving despite the recent spike in COVID cases due to the Omicron variant. The TV advertising market increased in Q4 by 18% over Q4 of 2020, and there is strong momentum heading into 2022. which is a presidential election year and should see strong political advertising. Our ratings improved over the fourth quarter of 2020, and we are optimistic heading into 2022. In closing, we are managing an extraordinary portfolio of assets and believe we have a tremendous value creation opportunity in front of us. Pantaya's upcoming slate of content is unprecedented. We are producing the kinds of premium series and movies that have never been available until now, and we have the ability to monetize and license that content outside of the U.S. We are well positioned to dominate this unique and untapped market from multiple angles and are confident that our transformed business will prosper as a result, creating significant long-term shareholder value. Thank you, everyone. I'll now turn the call over to Craig.