Entravision Communications Corporation

Good day, good evening, and welcome to the InterVision third quarter 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star, then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Kimberly Esterkin, Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon, everyone. and welcome to EnterVision's third quarter 2022 earnings conference call. Joining me today are Walter Ulloa, Chairman and Chief Executive Officer, 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 EnterVision'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 Entrevision Communications Corporation is strictly prohibited. Also, 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 to the SEC on Form 8K. In addition, all pro forma figures, including revenue, operating expenses, and consolidated adjusted EBITDA, noted throughout the prepared remarks, include the contributions of various acquisitions and investments in the prior year period. I will now turn the call over to Walter Ulloa, Chairman and Chief Executive Officer.

Thank you, Kimberly, and good afternoon, everyone. We appreciate you joining us for EntraVision's third quarter 2022 earnings call. EntraVision's solid performance in the third quarter and year to date demonstrates the resiliency and growth of our business in a tough macro environment. As we continue to strategically expand our operations throughout the globe, we now have a presence in 40 different countries across five continents. Net revenue for the third quarter totaled $241 million. up 21% year over year. On a pro forma basis, revenue increased 17% over the prior year period. The continued growth of our digital segment combined with strong political advertising revenue in our television and audio businesses were the main drivers for our third quarter performance. When the nine months ended September 30th, 2022, revenue totaled 659.9 million, up 25% year over year. Similar to the quarter year to date, revenue benefited from growth in our digital segment, as well as strong political advertising revenue in our television and audio businesses. Consolidated adjusted EBITDA totaled $26 million for the third quarter, up 12% year over year. Similar to the first two quarters of the year, in the third quarter, we lacked $5.5 million of non-returning revenue due to three discontinued Univision affiliations, than we had in the prior year same period in our television segment. Additionally, like many other multinational companies, due to the strength of the U.S. dollar, we experienced a currency impact during the quarter of $2 million. What is so remarkable about our third quarter EBITDA is that despite these two headwinds, we still managed to go EBITDA 12% in the quarter. Additionally, if we include the $2 million impact of foreign exchange rates during the quarter, adjusted EBITDA on a constant currency basis improved 20% compared to the prior year period. The nine months ended September 30, 2022, consolidated adjusted EBITDA totaled $66.6 million, up 21% year over year. Expense management undoubtedly drives this EBITDA growth while also contributing to our ability to provide returns to our shareholders. Speaking of shareholder returns, I am pleased to announce that our board of directors approved a cash dividend of 2.5 cents per share payable to shareholders on December 15th, 2022. With that as a background, now let's take a look at each of our segments performance for the third quarter, beginning with our largest digital. I'm pleased to report that for the third consecutive quarter, all of our digital units delivered solid revenue growth and positive operating margins. Digital segment revenue represented roughly 78% of consolidated revenue for the third quarter and totaled $188.9 million, up 29% year-over-year. Top quarterly achievements for the segment included a continued expansion of our client base into additional territories, particularly through our Meta, Spotify, and TikTok partnerships. The growth of our operations in the various continents and strong results in mobile through our DSP and mobile user acquisition business, Smatics. As we discussed on the last call, our mission for our digital segment is to continue building a global marketing sales operation in emerging territories, where a critical mass of connected consumers exists alongside a large and growing advertising industry. We continue to expand our digital operations across continents, both organically and through strategic tuck-in acquisitions. At present, EnterVision's digital operations service over 7,000 clients, for whom we provide two main offerings, marketing solution services that focus on strategic commercial representations with companies such as Meta and Spotify, and mobile user acquisition, including branding, performance, and programmatic services to top app publishers around the world. I'd like to provide an update on our progress in each of these areas, beginning with our commercial representation business, Latin America. This business was formerly known as Entrevision Cisneros Interactive, and is now referred to as Entrevision Latam. This business delivered solid results for the third quarter, with revenue increasing approximately 11% over the prior year period, driven largely by our commercial representation partnerships with Meta and Spotify. With a track record of strong performance, we believe that our partnership with Meta is strong and poised for continued growth throughout the globe. Beyond Latin America, EnterVision Media Donuts in the Southeast Asia region was also performing strongly during the quarter, with revenue improving 75% year-over-year. Revenue growth was largely driven by EnterVision Media Donuts' success with Twitter and TikTok, along with strong mobile acquisition performance. Also in the Asia region, in August we closed our previously announced investment in Jakob Digital, the exclusive commercial partner of TikTok in Pakistan. Jackup Digital taps into a market of over 100 million connected consumers and is part of a vibrant emerging economy with strong advertising spend. Just recently, Jackup Digital released what the digital advertising industry is calling one of the best TikTok campaigns of all time in Pakistan. TikTok then featured this particular campaign on their inspiration page. In Africa, EnterVision 365 Digital revenue in the third quarter increased 151% year-over-year on a pro forma basis. In October, after the end of the third quarter, EnterVision 365 Digital became the official authorized sales partner of Meta in Ghana. Here, EnterVision 365 Digital will provide training, lines of credit, and billing for advertisers, reinforcing our commitment to connect brands to consumers through local strategic support. Our operations in Ghana are just getting started under newly appointed country manager Stephen Sawyer, a local digital advertising veteran who is very well equipped to build a world-class team for AntriVision in West Africa. Last but not least is Smatics. our mobile user acquisition programmatic ad tech platform, headquartered in Barcelona, Spain. Smatics performed extremely well during the third quarter, with revenue improving an incredible 141% year over year. We continue to be excited about this proprietary programmatic platform. This growth was driven by specialized sales teams by industry, a strong geographical presence, and notable technological performance. Now let's turn to our television segment. which comprised 15% of revenue for the third quarter. Television revenue was $35.7 million in the third quarter, down 2% compared to the prior year period. This decline in revenue was anticipated primarily due to the discontinuance of three Univision affiliations, Washington, D.C., Tampa, and Orlando at the end of 2021. Excluding those three affiliate markets, Total television revenue was up 14% year-over-year, excluding those three affiliate markets, and $6 million in incremental political spend in the third quarter. Core television advertising revenue decreased 9%. National core advertising revenue decreased 14%, and local core advertising revenue decreased 6% year-over-year. Although the television market is choppy, strength in our political advertising revenue is more than making up for core broadcast revenue. following a strong third quarter in which we generated $7.9 million in political ad sales for the company. We now expect full-year political ad revenues to be approximately $30 million, up from our prior expectations of $17 to $19 million for the year. This impressive performance was primarily driven by the Nevada and Arizona elections, along with the South Texas congressional races impacting McAllen and Laredo. Looking at other ad categories, excluding the three discontinued Univision affiliations. Auto ad revenues were up 3% in the third quarter year-over-year, propelled by the Tier 2 auto segment, which improved by 15% versus the prior year period. Media and entertainment was up 3%, and retail was up 14% compared to the third quarter of 2021. Even more impressive were the finance and beverage categories, which improved 86% and 419% respectively year-over-year. With regards to our ratings performance during September 2022 for adults 18 to 49 and early local news, our Univision television stations finished ahead of their Telemundo competitor in nine of 14 markets plus two ties. In late local news, we finished ahead of Telemundo competitors among adults 18 to 49 in six of 14 markets plus two ties. Additionally, our early local newscasts are ranked number one or two against English and Spanish competitors in nine markets, including ties. For late local news, our newscasts are ranked number one or two against English and Spanish competitors in eight markets, including ties. Furthermore, the Telecast for Univision's Premios Juventud Awards show this past July was again among the top five programs in the time period in 14 markets among adults 18 to 49 and adults 25 to 54. Lastly, our audio segment, which comprised the remaining 7% of third quarter consolidated revenue. Audio revenue totaled approximately $16.5 million for the third quarter, consistent with the prior year period, excluding incremental political spend of $914,000 in the third quarter of 2022. Core audio revenue decreased 6% versus the third quarter of 2021. With regards to advertising categories, our local audio teams saw growth versus the prior year period in the following categories. Travel and leisure, telecom, retail, finance, product brands, and grocery. Auto advertising continued to struggle and declined 3% year-over-year, with Tier 3 auto local car dealerships seeing slight growth for the quarter and up 2% year-over-year. Looking at our audio segment ratings performance for the summer book among Hispanic stations, the Erazo y la Chocolata show is ranked number one in PM Drive. in six out of our nine markets released for summer among Hispanic adults 18 to 49 and Hispanic adults 25 to 54, including ties. Across our nine O and O stations, the Erazo y la Chocolata show reached more than 450,000 Hispanics 25 to 54. Just last month, Entrevision obtained exclusive syndication selling rights to the Erazo y la Chocolata show beginning this upcoming January. El Show de Hidrazno y la Chocolata has been on the air for 18 years. It has syndicated 97 cities coast to coast with an average of 2.3 million weekly listeners, or roughly 64% of the Hispanic listenership base. We are thrilled to obtain the exclusive rights to a radio show featuring one of the most influential Hispanic radio personalities today. Before speaking further, I will turn the call over to Chris Young, our CFO, to discuss our third quarter performance in future detail and provide our fourth quarter pacings. Chris?