Entravision Communications Corporation

Greetings and welcome to the EntraVision Communications Corporation second quarter 2021 earnings conference call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kimberly Estakin of Investor Relations. Thank you. You may begin.

Thank you, Operator. Good afternoon, everyone, and welcome to EntraVision's 2021 second quarter earnings conference call. I hope everyone is staying healthy and safe. Joining me on the call today is Walter Ulloa, Chairman and Chief Executive Officer of and Chris Young, Chief Financial Officer. Before we begin, I must inform you that this conference call will contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ. Please refer to Entrevision's SEC filings for a list of risks and uncertainties that could impact actual results. This call is the property of Entrevision Communications Corporation. Any redistribution, retransmission, or rebroadcast of this call in any form without the express written consent of EnterVision Communications Corporation is strictly prohibited. This call will include non-GAAP financial measures. The company has provided a reconciliation of these non-GAAP financial measures to their most comparable GAAP measures in today's press release. The press release is available on the company's website and was filed with the SEC on Form 8K. I will now turn the call over to Walter Ulloa, Entrevision's Chief Executive Officer.

Thank you, Kimberly, and good afternoon, everyone. We appreciate your joining us for Entrevision's second quarter 2021 earnings call. Entrevision maintains strong upward momentum, with all of our platforms continuing to form well in the second quarter. Our business is firing on all cylinders, and I cannot be prouder of the success Entrevision has experienced over the last 12 months and this past quarter. At the time of last year's second quarter call, our business, like that of all global companies, was experiencing the brunt of the pandemic. We proactively approached the challenges of COVID-19 by making key changes to our expense structure to keep our business intact. As Chris Young, our Chief Financial Officer, will note later on today's call, we have been able to maintain our lean cost structure and have emerged from the pandemic even stronger than before. Net revenue for the second quarter totaled $178.4 million, up a tremendous 295% year-over-year. On a pro forma basis, including Cisneros Interactive revenue in our prior year results, revenue increased 105% over the second quarter of 2020. Growth during the quarter was largely driven by our digital business, which is now our largest revenue segment, as well as the continued sequential and year-over-year improvements of our core television and audio businesses. When we compared this year's Q2 results with our 2019 second quarter pre-COVID numbers on a pro-forma basis, total revenue grew 62% in Q2 2021 versus second quarter 2019. For the six months ended June 30th, revenue totaled $327.3 million, nearly tripling compared to the same time period in 2020. Similar to the quarter, year-to-date revenue benefited from the continued sequential, and year-over-year improvement of each of all three business segments, with digital leading the way. Our second quarter and first half of 2021 results give us an optimistic outlook for the balance of the year. Adjusted EBITDA totaled $17.8 million for the second quarter, over 10 times compared to $1.7 million in the prior year period. On a pro forma basis, accounting for Sustainability Interactive, adjusted EBITDA increased 548% year-over-year, As I previously noted, we've been able to maintain many of our cost reductions, while at the same time we have seen an improved top line, which helped drive our incredibly strong EBITDA growth. When we compare our Q2 2021 finish with our pre-COVID 2019 second quarter results, on a pro forma basis, EBITDA grew a whopping 42% in the second quarter of 2021 versus the second quarter of 2019. Now let's take a look at our segment performance for the quarter beginning with digital, our largest revenue segment. Digital revenue totaled 130.2 million for the second quarter, up significantly compared to 11.4 million in the prior year period. Digital revenue represented 73% of total revenue for the company in the second quarter. The primary driver of the growth was our acquisition of the majority interest in Sustentos Interactive in the fourth quarter of 2020. On a pro forma basis, our digital revenue increased 144% compared to the prior year period. Meanwhile, the integration of Cisneros Interactive continues. Cisneros Interactive maintains sales partnerships with major technology platforms like Facebook, Spotify, and LinkedIn in Latin America, and the business is performing quite well. As part of our strategy, we have streamlined Cisneros Interactive's cost structure and enhanced its team in the 17 countries where the business operates. Other key growth drivers of digital revenue in the second quarter included Smatics, our global programmatic and performance product, which grew its revenue 49% compared to the second quarter of 2020, and our U.S. local advertising solutions business, which was up 104% year over year. Including media donors, our most recent acquisition that closed just after the end of the second quarter, our digital segment now serves more than 1,400 clients each month in more than 30 countries. with campaigns running in over 120 countries. I will address our digital transformation and global growth in more detail later in the call. Now let's turn to our television segment, which comprises 19% of revenue for the second quarter. Television revenue is $34.1 million for Q2, up 26% compared to the prior year period, primarily due to a number of key factors, including local and national advertising revenue, partially offset by a decrease in political revenue and revenue spectrum usage rights. Excluding $1.3 million in non-returning television political spend in Q2 2020, core television advertising increased 57%, with national advertising revenue increasing 36% and local advertising revenue up 79% year-over-year. The strength in our core television revenue in Q2 was driven by growth in automotive and services. Auto, our largest advertising category, increased 70% year-over-year. The auto category, and in particular new car sales, continues to face supply chain pressures related to the international supply of electronic chips. While consumer demand for cars remains strong, the availability of new cars is being affected by delays in production. And so we are seeing more impact to the auto category than initially anticipated. Services were up 31% and healthcare was up 21% in Q2 compared to last year's same period. Retail, restaurants, travel, and leisure all grew, assisted by overall improving macro conditions. Turning to our ratings performance, our Univision television affiliates built upon their market leadership in June 2021. For adults 18 to 49 in early local news, our Univision television stations finished ahead of their Telemundo competitor in 14 of 17 markets where we have head-to-head competition plus one tie. In late local news, we finished ahead of Telemundo's competitors among adults 18 to 49 in 11 markets, among the 17 markets where we have head-to-head competition. Long-anticipated soccer tournaments, Copa America and Euro Cup, kicked off in mid-June, drawing audiences to our Univision and Unimax television stations. Copa America's Brazil versus Ecuador on June 27th propelled our Univision television stations to number one in the time period, regardless of language, in 11 markets. among adults 18 to 49 and adults 25 to 54. While EuroCup's Germany versus Portugal on June 19th made our television station number one in the time period in 13 markets, among adults 18 to 49, regardless of language. I'm also pleased to report that InterVision's news team at Univision's KCCTV in Colorado, in Denver, Colorado, was recently awarded 22 Emmy Awards in six categories, validating our excellent news coverage and strong connection with Colorado's Latino communities. Finally, let's turn to our audio segment, which comprises the remaining 8% of the second quarter revenue. Audio revenue totaled $14.1 million for the second quarter, a sizable increase of 108% year-over-year. Local audio revenue increased 92% year-over-year, while national audio revenue was up 141% year-over-year. Excluding radio political spend of $620,000 in the prior year period, core radio revenue increased 129% versus the second quarter of 2020. Q2 of last year was definitely a low point for our audio business. That said, even with this easy year-over-year comparison, our audio revenue is coming back in a very meaningful way. In InterVision's PPM market, Hispanic listening is recovering at a faster rate than a total market average. In our number one market, the Los Angeles radio cluster has the best quarterly performance since 2017. Our Los Angeles team delivered core ad revenue up by 133% compared to last year, while also outpacing our 2019 ad revenue performance by 15%. For the first half of 2021, the InterVision Los Angeles cluster has outperformed the total market by 24%, a remarkable achievement. In the 11 markets where we subscribed to Miller Kaplan data, the total spot revenue, we outperformed the market by 20% in total revenue combined. We outperformed the total market in eight of the 11 markets to which we subscribe. In terms of advertising categories, we saw growth in each of our top categories. Services remains our largest category, representing 40% of total audio revenue. Services improved 101% year-over-year, and healthcare, our third largest category, was up 106% as compared to the prior year period. Auto, our second largest ad category, saw growth in each tier and improved 114% for the quarter, as compared to the second quarter of 2020. Other ad categories which achieved strong growth on our audio platform in the second quarter were restaurants, which improved 228%, retail, which grew 106%, and travel and leisure, which surged 493% all on a year-over-year basis. Looking at our audio division ratings performance for spring 2021, among Spanish-language radio stations, The Erasmo y la Chocolata show is ranked number one in seven of our nine markets, including Los Angeles, for spring, among Hispanic adults 18 to 49 and Hispanic adults 25 to 54, including Thai. Across our nine ONL stations, the Erasmo y la Chocolata show reached more than 518,000 Hispanic adults 18 to 49 on a weekly basis. In summary, Enter Vision had an outstanding second quarter and an even stronger first half of the year. This performance provides us great momentum as we enter the second half of 2021. Before speaking further, I'll turn the call over to Chris Sheehan, our CFO, to discuss the second quarter 2021 performance and third quarter 2021 facing. Chris?