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01/10 05:04
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals several negative indicators: declining profits across digital, TV, and audio segments, significant net loss due to Meta's program termination, and increased corporate expenses. Despite a rise in digital revenue, operating margins fell. The Q&A highlights substantial revenue dependency on Meta, now terminated, and negative free cash flow. No positive catalysts or new partnerships were noted. These factors suggest a negative stock price reaction over the next two weeks.
Quarterly Revenue $277.4 million, up 16% compared to Q1 of 2023. The increase was driven by our digital segment and political advertising revenue.
Net Loss $48.9 million, compared to income of $2.0 million in Q1 of 2023. The decline was primarily driven by a $49.4 million impairment charge related to the wind down of Meta's ASP program and lower margins in our digital segment.
EBITDA $4.5 million, down 65% compared to Q1 of 2023.
Free Cash Flow Negative $2.8 million, compared to positive $3.9 million in Q1 of 2023. The decline was primarily due to higher cash interest and taxes.
Digital Segment Revenue $237.5 million, up 21% compared to Q1 of 2023. The growth was driven by our digital businesses, Entravision Global Partners, Smadex, and Mobile Growth Solutions.
Digital Segment Operating Profit $2.3 million, down 34% compared to Q1 of 2023.
Digital Segment Operating Margin 1%, compared to 2% in Q1 of 2023. The decline was attributed to lower margins in our partnerships business.
TV Segment Revenue $28.5 million, down 6% compared to Q1 of 2023. This decrease was driven by decreases in national advertising revenue, spectrum usage rights revenue, and retransmission consent revenue.
TV Segment Operating Profit $2.7 million, down 65% compared to Q1 of 2023.
TV Operating Margin 9%, compared to 25% in Q1 of 2023. The decline was primarily due to the expansion of local news operations.
Audio Segment Revenue $11.4 million, down 7% compared to Q1 of 2023. This decrease was primarily driven by decreases in local and national advertising revenue.
Audio Operating Margin Negative 2%, compared to 8% in Q1 of 2023. The decline was primarily due to the challenging national spot environment.
Corporate Expenses $12.2 million, up 17% compared to Q1 of 2023, primarily due to an increase in non-cash stock-based compensation and an increase in salaries.
Cash and Marketable Securities $132.7 million as of March 31, 2024.
Total Debt $199.1 million.
Capital Expenditures $2.7 million for the quarter, representing 8% of net cash provided by operating activities, compared to 16% in Q1 of 2023.
Dividends Paid $4.5 million, or $0.05 per share, representing 13% of net cash provided by operating activities.
New Product Launch: Launched Fuego on KFUE FM 106.7 with an urban Latino format targeting bilingual Latinos 18 to 34.
Market Expansion: Expanded news production capabilities, providing morning, midday, early evening, and late news in all markets, and weekend news in select cities.
Political Advertising: Invested in a sales organization to engage directly with political decision makers.
Operational Efficiency: Despite the wind down of Meta's ASP program, the company maintains a strong balance sheet with substantial cash and modest debt.
Cost Management: Corporate expenses increased by 17% due to non-cash stock-based compensation and salary increases.
Strategic Shift: Transitioning away from Meta's business model and focusing on core digital segment growth through Smadex and other digital businesses.
News Operations Expansion: Expanded local news operations, hiring 70 new employees to enhance news capacity.
Impact of Meta Termination: Meta's termination of the authorized sales partner program will significantly impact Entravision's strategy and operations, as it accounted for half of the company's revenue and cash flow in 2023.
Financial Losses: The company reported a net loss of $48.9 million in Q1 2024, primarily due to a $49.4 million impairment charge related to the wind down of Meta's program.
Declining Margins: The digital segment's operating profit decreased by 34%, and the operating margin fell from 12% to 7%, attributed to lower margins in partnerships.
TV Segment Revenue Decline: TV segment revenue decreased by 6%, driven by lower national advertising revenue and retransmission consent revenue, with core TV revenue down by 7%.
Audio Segment Challenges: Audio segment revenue fell by 7%, primarily due to decreases in local and national advertising revenue, with core audio revenue down by 8%.
Increased Corporate Expenses: Corporate expenses rose by 17%, mainly due to increased non-cash stock-based compensation and salaries.
Debt Levels: Total debt stands at $199.1 million, with a leverage ratio of 3.1 times, indicating potential financial strain.
Meta Business Wind Down: Entravision is working with Meta to wind down the authorized sales partner program, which constituted half of their revenue and cash flow in 2023.
News Production Expansion: Investments have been made to expand news production capabilities, providing comprehensive news coverage across all markets.
Sales Organization Investment: Entravision has invested in a sales organization to engage directly with political decision makers.
Smadex Platform Development: The Smadex programmatic advertising platform is focusing on building AI capabilities and a scalable sales organization.
Political Advertising Revenue: Political advertising is expected to be a significant revenue driver in 2024.
Audio Segment Launch: Launched Fuego on KFUE FM targeting bilingual Latinos 18 to 34, part of a broader audience engagement strategy.
Q2 Revenue Expectations: TV segment is currently pacing at a minus 1% over the prior year period.
Q2 Audio Segment Expectations: Audio segment is currently pacing at a minus 1% over the prior year period.
Capital Expenditures: Projected capital expenditures for the year are approximately $6 million.
Dividends: A quarterly dividend of $0.05 per share has been approved, payable on June 28, 2024.
Financial Position: Entravision has a strong balance sheet with $132.7 million in cash and marketable securities and a leverage ratio of 3.1 times.
Dividends Paid: $4.5 million, or $0.05 per share, paid to stockholders in Q1 2024.
Dividend Declaration: Quarterly dividend of $0.05 per share approved, payable on June 28, 2024, to stockholders of record as of June 14, 2024.
Share Buyback Program: None
The earnings call reveals a mixed financial performance with significant challenges. While consolidated revenue increased, the Media segment faced a severe decline in revenue and operating loss. High restructuring costs and impairment charges further impacted profitability. Despite positive developments in the ATS segment and dividend payments, the overall financial health is concerning due to increased operating losses and debt. The Q&A section provided clarity but highlighted reliance on political advertising, which is uncertain. Given these factors, a negative sentiment with potential stock price decline is anticipated.
Strong revenue growth in both media and advertising segments, coupled with strategic investments and cost reductions, indicate positive momentum. Despite the net loss, optimistic revenue expectations and consistent dividends support a positive outlook. The absence of unclear management responses in the Q&A further strengthens confidence.
The earnings call reveals several negative indicators: declining profits across digital, TV, and audio segments, significant net loss due to Meta's program termination, and increased corporate expenses. Despite a rise in digital revenue, operating margins fell. The Q&A highlights substantial revenue dependency on Meta, now terminated, and negative free cash flow. No positive catalysts or new partnerships were noted. These factors suggest a negative stock price reaction over the next two weeks.
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