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?

Thanks, Walter, and good afternoon, everyone. As Walter discussed, revenue for Q2 2021 totaled $178.4 million, an increase of 295% from the second quarter of 2020. When comparing on a pro forma basis and including Cisneros Interactive's revenue in our 2020 results, revenue increased 105% year over year. For our digital division, revenue totaled $130.2 million, up more than 1,000% year over year. When comparing on a pro forma basis, including Cisneros Interactive's revenue in our 2020 results, digital revenue increased 144% year over year. For our TV division, total revenue was $34.1 million, up 26% year-over-year. Excluding political, core, ad, and spectrum-related revenue was up 57% year-over-year. Retransmission consent revenue for the quarter totaled $9.3 million, which was flat year-over-year. Lastly, for our audio division, revenue totaled $14.1 million, up 108% over the prior year period. Excluding political, core audio revenue was up 129% over Q2 of last year. Now let's turn to expenses, which, as Walter mentioned, remained very lean. SG&A expenses were $13.1 million for the quarter, an increase of 20.3% compared to $10.9 million in the year-ago period. Excluding CISNAROS-related SG&A, SG&A expenses were down 9.1% compared to the prior year quarter. Direct operating expenses totaled $28.3 million for Q2-21, up 28% from $22.1 million in Q2 of 2020. Excluding the Cisneros acquisition, direct operating expenses were up 15.7% year-over-year. Finally, corporate expenses for the second quarter increased 36% to total $7.3 million compared to $5.4 million in the same quarter of last year. The primary drivers of corporate expense increases were audit-related expenses, salary expense, and due diligence costs related to our acquisition of Media Donuts on July 1st. During the second quarter, our share buyback remained on hold. We also maintained our dividend at 2.5 cents per share and continued to eliminate expenses at the operating and corporate levels deemed secondary to serving our core media business. We will continue to evaluate our buyback and dividend each quarter, which will be at the discretion of our Board of Directors. Consolidated adjusted EBITDA totaled $17.8 million for the second quarter compared to $1.7 million in the second quarter of last year. On a pro forma basis, accounting for the Cisneros Interactive acquisition, adjusted EBITDA was up 548% year-over-year. Entrevision's 51% portion of Cisneros Interactive's adjusted EBITDA represented a $4.2 million contribution to our total EBITDA in the second quarter. Free cash flow, as defined in our earnings release, was approximately $12.4 million in the quarter compared to a loss of $1.4 million in the second quarter of last year. Strong free cash flow has long been a cornerstone of VentureVision's business and supported our ability to grow both organically and through acquisitions without the need to take on leverage. We expect this high free cash flow conversion rate to continue for the foreseeable future. Earnings per share for the second quarter of 2021 were $0.09, compared to $0.03 per share in the same quarter of last year. Cash paid for income taxes was $3.3 million for the quarter compared to $0.3 million in the same quarter of last year. Net cash interest expense was $1.6 million for the second quarter compared to $1.3 million in the same quarter of last year. Cash capital expenditures for Q2 totaled $1 million compared to $3 million in the prior year period. Capital expenditures for the year are expected to be approximately $8 million. Turning to our balance sheet, which remains very strong, cash and marketable securities as of June 30, 2021, totaled $181.9 million. Total debt was $213.8 million. Net of $75 million of cash and marketable securities on the books. Our total leverage, as defined in our credit agreement, was 1.7 times as of the end of the second quarter. Net of total accessible cash and marketable securities, our total net leverage was 0.66 times. Turning to our pacings for the third quarter of 2021. As of today, our digital business, including revenue from Cisneros Interactive and Media Donuts, is pacing a positive 948% over the prior year. Factoring in Cisneros and Media Donuts revenue generated in the third quarter of last year, our digital business on a pro forma basis is pacing at a plus 89%. Our TV business is pacing at a minus 4% over the prior year period, with core TV advertising, excluding $4.9 million in political in the prior year, pacing at a plus 13%. Lastly, our audio business is pacing at a plus 25%, with core audio, excluding $1.2 million in political in the prior year, pacing at a plus 40%. All in, our total revenue compared to last year is pacing at a plus 219%. Pro forma are Cisneros and Media Donuts acquisitions in the prior year. As a result, our total revenue is currently pacing at a plus 57%. With that, I'll turn the call back to Walter. Walter?

Thank you, Chris. As I mentioned at the beginning of my prepared remarks, we are very pleased with our results for the second quarter with our digital businesses surging and our core broadcasting businesses also performing very well. Now I'd like to take a few moments to speak to EnterVision's global growth strategies. The heart of the IntraVision platform has been the Hispanic media industry, targeting Latino consumers throughout the United States and Mexico. The U.S. Latino population alone is a $1.7 trillion market, the largest U.S. ethnic or racial group, and continues to grow significantly. It's expected the Latino spend in the U.S. will reach $2.3 trillion in the next three years. We recognize the strength of this target market and will continue to grow our business with Latino consumers. At the same time, EnterVision continues its digital transformation into a leading global marketing technology and digital media company. As part of this transformation, at the beginning of the third quarter, we acquired MediaDonuts, a leading marketing performance and branding company with operations in Thailand, Malaysia, Indonesia, Vietnam, Singapore, the Philippines, and India. MediaDonuts maintains strategic partnerships with some of the world's leading technology platforms, including Twitter, TikTok, Spotify, and Kiteo. adding to the partnerships we have developed through our majority investment in Sustainables Interactive. Media Donuts digital solutions experts serve a client base of more than 500 technology and consumer brands. With this addition, EnterVision is now also a key digital player in Southeast Asia, which has some of the world's fastest-growing populations, something we understand from our years serving the rapidly-growing Hispanic population in the United States and beyond. We are seeing significant consolidation in the digital space, the type of consolidation that reminds me of the broadcast market in the 1990s. That said, we will continue to be opportunistic when it comes to investing in strategic assets with great management that bring us new clients and opportunities for growth. We will continue to expand our geographic footprint in key emerging markets with connected growing middle classes where interventions, decades of expertise, substantial digital platform, and solid balance sheets can be leveraged to quickly take hold and succeed. I could not be prouder of the growth Entervision produced in the second quarter and so far this year. I would like to thank our entire team for their efforts and contribution to our strong performance to date. Going forward now with the incredible talent and capabilities of our team, we will continue to offer the best in digital, Spanish-language television, and audio advertising services. At the same time, we will continue to ensure that we are running our business efficiently to produce strong returns for our shareholders. That concludes our prepared remarks. I want to thank you again for your continued In support of IntraVision, Chris and I will now open the call to your questions. Operator?

And at this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start keys. One moment, please, while we pull for questions. Our first question is from Michael Kupinski with Noble Capital Markets. Please proceed with your question.

Good afternoon. My first comment is, wow. Congratulations on a great quarter. A couple of questions. If we can just go back to Cisneros for a second. I know that you were able to increase the credit facility there, which drove a lot of revenue growth. was just wondering, are you cycling against that now, or were you able to once again increase the credit facility there, and what's the key driver that you're seeing as it narrows before I get into the other aspects of digital?

That credit line, Michael, continues to grow without getting into specifics, but we've not cycled up against The ramp up really happened in the fourth quarter of last year. So we've got another third quarter in front of us of we'll call it easier comps without restraint on that credit line issue.

Gotcha. And then can you kind of just frame a little bit about media donuts and the opportunity there? You know, obviously, you know, there's some thought there that you might be able to pick up Facebook. There's also thought that, If it's similar to Cisneros in terms of credit facility, if you have the ability to kind of see that type of growth that you did with Cisneros, I was just wondering maybe if you could just frame for us what type of revenue opportunity might be there.

Well, Michael, it's Walter. You know, we think that the acquisition of media donuts adds even greater scale to our digital business, particularly our international rep business. It's a region where you've got some of the fastest growing economies and populations in the world. All of these territories and economies border China. We certainly understand the strength and the power of China as an economic force. We believe that there's a possibility or there's a strong possibility we'll be able to expand our current relationships with partners in the region. We already have a strong relationship with TikTok and with Twitter and with Spotify, and we think there's opportunity to even increase that or expand the number of partnerships that the company currently enjoys. Additionally, we've got a great management team in Southeast Asia based in Singapore. We're very pleased with... With this team, we think they're going to be able to manage the business efficiently, and with our support, grow it beyond what our expectations are.

I'm just trying to understand, like, the growth opportunity, because obviously Cisneros grew at triple digits versus, you know, what we were anticipating, you know, in the double-digit realm. Can media donuts grow in triple digits, or is that, I mean, with, you know, picking up or, I mean, I guess I'm just trying to understand what types of growth rate trajectory would you expect with media donuts at this point?

Well, I mean, I'll just say that the growth rate that we anticipate for third quarter, which is when we will be including media donuts in our financial information right now, is expected to be above 50% for the quarter versus their 2020 third quarter results. Okay, gotcha.

And then can you frame for me what's going on with radio again? You know, the numbers seem exceptionally strong. And was that all driven by L.A.? Or what was the – is that just the key growth driver there? Or what else is happening on there?

Well, you know, you're correct in – In your comment, Michael, we're seeing great growth in radio this quarter. I think it's a combination of, you know, strong content programming. It's the management that we have in place right now, headed by Carl Meyer, our media group revenue officer, our chief revenue officer, is doing a terrific job. And we've got a great, uh, executive increase when you're a former Univision executive who joined us about a year ago. And Chris has just done a tremendous job in raising the level of national sales. Uh, one of the standout, uh, units within national sales is our network radio sales. And, uh, that business just, uh, continues to amaze us in terms of how well it's, it's, uh, performing not only in Q2, but in Q3. So you go ahead.

No, I'm sorry. I didn't mean to interrupt you, Walter.

No, so anyway, so then, of course, Los Angeles is performing well, as I pointed out in Q2, continues to perform well in Q3. But national sales in radio has just exploded. And local is doing very well as well, but national is, and particularly led by network radio. The performance there is not surprising at all, but certainly... We knew it was going to do well, but it's gone beyond our expectations. Gotcha.

And you switched some stations to English language, I understand. Is that right?

We made a switch in Sacramento. We made a switch to a country format. That's correct. And we've also switched some stations to our Fuego format, which is kind of a bilingual format in a sense. Gotcha.

And then can you talk a little bit about M&A? You know, obviously, you kind of hit upon a struck a chord with Cisneros and Media Donuts and was wondering if there are other opportunities in the digital space, anything pressing, anything imminent at this point that you're looking at?

Well, we continue to, you know, seek opportunities where there's high growth and certainly acquisitions that are created and come with positive cash flow. And we're looking all the time to whatever is presented to us in terms of potential opportunity. But I can't speak to anything specific at this time.

And what are the benchmarks in terms of increasing the dividend or maybe looking at other return to capital to shareholders, including the buyback? Are there certain benchmarks that you would like to see at this point? Because it seems like you're generating free cash now at this point and Debt leverage obviously is very low. The opportunities seem a little bit like maybe there might be a little bit of allocation to return capital to shareholders.

Right. Well, as you recall, we reduced the dividend in the middle of the COVID crisis. And then the economy did improve. Our business improved. We had a strong fourth quarter, excellent first quarter, now a good second quarter. We continue, the board will continue to review, you know, what else it might be able to do to return value to shareholders. We're also looking at acquisitions at the same time. So, you know, we're in a high growth phase of our business right now. Chris, you want to add something there?

No, Michael, we're taking it quarter by quarter, being mindful of our cash position, but also being mindful of potential acquisition opportunities. So it's a quarter by quarter process.

All right, guys. Thanks so much. That's all I have. Thank you. Thank you, Michael. Thank you. Thank you, Mike.

And our next question is from James Dix with Industry Capital Research. Please proceed with your question.

Hey, guys. Good evening. Good evening. Just one thing on the digital growth. You know, I know a lot of Cisneros' business at the moment relates to Facebook as a partner. Facebook had a particularly strong growth. They don't break out results by Latin America per se, but their rest world business grew quite a bit. I'm just wondering, like, as we think about the fundamentals of Cisneros beyond just what you've done at a company level, expanding the credit line, you know, how much is what's going on at Facebook kind of the key context to what's going on at Cisneros?

Well, Facebook has been the key, I'd say the core driver of the Cisneros results. We're seeing strength in the other platforms, but nothing in the same zip code as what we're seeing with the Facebook numbers. It's operating in markets that are just, you know, they're less mature than the U.S. market as far as the Facebook platform is concerned, and we're capturing that growth just as that platform blossoms in those markets.

And is there any platform that's similarly significant for Media Donuts, or is that more spread across the kind of three platforms that you highlighted?

James, let me just add to what Chris has said. You know, Spotify, we just launched it in Latin America last year, or I should say Cisneros Interactive did, and we're seeing pretty strong growth with Spotify as well. not only in the fourth quarter, but through this year, through the first half. And your question about media donuts was what? Can you repeat it, please?

Yeah, it sounds like at the moment, Facebook is the dominant partner for Cisneros. Is there any similar dominant partner for media donuts among the three that you described? Or is it a little bit more evenly split for them at the moment?

Twitter right now is the strongest partner, I'll call it, within Media Donuts. But another social media partner that we see with tremendous potential is TikTok in Southeast Asia. Okay.

And just on the M&A side of things, I mean, is there some prospect for you to expand kind of organically to some significant degree um, you know, internationally. So, you know, supporting Cisneros business as it moves into other markets or, or doing a similar thing with media donuts, or is the growth strategy, uh, internationally a little bit more focused on, you know, buying additional, um, you know, companies.

Well, I mean, part of our, of our growth strategy is to continue to, um, to increase, uh, the high growth of both Cicero's Interactive and Media Donuts, and to produce as much operating cash flow as possible. We're also looking at adding, with our current roster of partners, we're also looking at adding more partners in each of these territories, or these regions, I should say, Latin America and Southeast Asia. That's something that we're... that we're thinking about and working on every day. Uh, we're also, um, you know, we've also got a, uh, other digital products. Our U S digital business is a great second quarter and is having a very strong, uh, third quarter. Um, and that business is, is focused on in, in our U S territories, our U S markets where we have opera broadcast, uh, uh, sales, um, and the 29 markets in the U S and, uh, It's performing, like I said, beyond expectations in second, as well as third. Within our U.S. digital business, we have an audio programmatic business. We are connected to major audio buying platforms, including CAD, SADWIT, and Frighten. And we offer our O&O inventory on these major audio platforms, as well as our audio exchange network. And then thirdly, we have our international – we call it EBC International – Our core product there in this unit is SMATICS, our mobile-first program at DSP. And this product focuses on or drives the downloads of apps by users. That business is doing well as we speak. Had a good second quarter, and it's carried that momentum in the third quarter. We've got three businesses, three digital businesses that we think have strong potential, both our internet business, our Hispanics product as well as our U.S. digital business.

Okay, great. Just turning to the rest of the business, Chris, do you have any outlook for kind of, it sounds like expenses, if anything, were a little less than at least what I was expecting. I know last quarter you gave a little bit of an outlook as to what to expect in terms of core expenses in the second quarter versus the first quarter. any outlook that we should be expecting in the third quarter versus the second, kind of, you know, relatively small growth, or what are you seeing there?

Yeah, well, since we've got the comps, we're comping against the quarter where we didn't have, we had neither Cisneros or Media Donuts, you're going to see some expense creeps. So call total expenses in the mid-30% range year over year, with our core business without Cisneros and Media Donuts being about the 8% to the positives, and then the balance of that being driven by the acquired entity expenses. And that's at the operating level, and at the corporate level, call it low single digit. We did have due diligence expense associated with Cisneros in the third quarter of last year that we don't have this year, so that will keep that number in the low single digit range.

Okay, so that core expense number, if you're excluding kind of the acquisitions, may it look like in the second quarter it was up maybe 2.5% versus the first, which is a little bit lower than I was expecting. Any way of thinking about it that way in the third quarter versus the second?

Third quarter versus the second, call it maybe 10% or 11% sequentially. Okay. With the acquired businesses representing the bulk of that, if you take the acquired businesses out, it's more in the 3% range sequentially.

Okay, so somewhat similar to what you saw in the last quarter. Correct. This quarter. Yes. Okay. Cash taxes were a little higher than I was expecting. Any reason for that? And do you have any updated outlook on what those are going to be for the year?

Yeah, cash taxes usually run around $3 million a year. Where the cash payments are falling sometimes gets a little lumpy, and this was a quarter where we saw that. So you had about a million and a half of cash tax payments in this past quarter that related actually to 2020. And if you're modeling our cash taxes out for the balance of the year, probably $750,000 per quarter is the right way to think about it, another $1.5 million. That'll take you to an overall annual of about $4.5 million, which represents that original $3 million plus that $1.5 million that we didn't see coming as far as that 2020 look-back payment was concerned.

Okay, great. And then... Just one last one from me. In terms of the auto category, I know it's important. It sounds like, Walter, you were flagging that the supply chain disruptions have been a little bit greater than perhaps the industry is expecting. Any material impact you think that's going to have on your growth at TV or audio versus your expectations for the balance of the year?

I think we're going to see some of the impact in third quarter, James, in our national business. You know, we're just finishing up the Summer of Champions and the Gold Cup, Copa America, and Euro Cup, and we've seen we have some pretty strong budgets that we had in place for those three events. And we did well, but not as well as we wanted, as well as we planned. And we all believe that it's because of the weakness in national auto sales. But this is temporary. We think that by fourth quarter, we'll be back on track with our national sales in television.

Okay. And those two events, I mean, do you have a sense as to how much they're going to bring in now between them total?

Our current calculation is between two and two and a half million.

Oh, okay. You did miss by much. Okay. Great. That's it for me.

Thank you, James. Thank you, James.

Our next question is from Lisa Springer with Singular Research. Please proceed with your question.

Thank you. Well, congratulations on a really great quarter. And I just have a quick question probably for Chris. How do the gross margins on Media Donut compared to Cisneros? Are they in a similar range or a little bit higher for one than the other?

They're actually a little bit higher than what we see at Cisneros. Okay. The cash flow margins for that business are going to be, you know, in the 10% range versus what we're seeing right now with Cisneros. Okay. Thank you. Great. Thank you.

And our next question is from Michael Kopinski with Noble Capital Markets. Please proceed with your question.

Thanks. I just have a quick follow-up to the expense question. So, obviously, you kind of re-margined this business in a way because you're now, you know, such the majority of the digital is, you know, the vast majority has a little bit lower margins than some of your other businesses, legacy businesses. And so can you give us a sense of where you see margins, how you anticipate margins to grow, and how you see the margin outlook maybe even as we go into next year or the year after?

Michael, so, yeah, if you look at the business platforms, there's obviously – some disparity between all of them, right? So TV cash flow margins were 43% in second quarter. Radio cash flow margins were 30%. By the way, the last time we had 30% margins in a radio business was back in 2010, so we're really pleased with the way that unit's performing, right? And digital margins all in before the minority interest shuffle that you have to do on the accounting, digital margins right now are at 7%. And we think those digital margins are capable of growing. It's a function of scale as far as revenue growth is concerned. But we don't want to guide as far as what growth capacity there is in front of us. But I do think there's definitely room for improvement. And that's kind of how we're seeing. And the radio margins should continue in this range, as should TV. Okay. All right. Perfect. Thank you. Thank you.

And we have reached the end of our question and answer session. I'll now turn the call over to Walter Loyola for closing remarks.

Thank you. Thank you again for joining us today and for your support. We remain optimistic about the future of Venture Vision and look forward to sharing our progress with you on our third quarter earnings call in early November. Thank you.

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.