ENTRAVISION COMMUNICATIONS CORP [EVC] Filings

10-Q 1 evc-20240630.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2024


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 1-15997

ENTRAVISION COMMUNICATIONS CORPORATION

(Exact name of registrant as specified in its charter)

    Delaware

    95-4783236

    (State or other jurisdiction of
incorporation or organization)

    (I.R.S. Employer
Identification No.)

2425 Olympic Boulevard, Suite 6000 West

Santa Monica, California 90404

(Address of principal executive offices) (Zip Code)

(310) 447-3870

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common stock	EVC	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of August 5, 2024, there were 80,634,381 shares, $0.0001 par value per share, of the registrant’s Class A common stock outstanding, and 9,352,729 shares, $0.0001 par value per share, of the registrant’s Class U common stock outstanding.

ENTRAVISION COMMUNICATIONS CORPORATION

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2024

TABLE OF CONTENTS


		Page Number
	PART I. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	4
	CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) AS OF JUNE 30, 2024 AND DECEMBER 31, 2023	4
	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE-AND SIX-MONTH PERIODS ENDED JUNE 30, 2024 AND JUNE 30, 2023	5
	CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) FOR THE THREE- AND SIX-MONTH PERIODS ENDED JUNE 30, 2024 AND JUNE 30, 2023	6
	CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) FOR THE THREE- AND SIX-MONTH PERIODS ENDED JUNE 30, 2024 AND JUNE 30, 2023	7
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2024 AND JUNE 30, 2023	9
	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	10
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	28
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	37
ITEM 4.	CONTROLS AND PROCEDURES	37
	PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	38
ITEM 1A.	RISK FACTORS	38
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	38
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	38
ITEM 4.	MINE SAFETY DISCLOSURES	38
ITEM 5.	OTHER INFORMATION	38
ITEM 6.	EXHIBITS	39

GENERAL NOTE

As discussed in more detail throughout this report, during the second quarter of 2024 we sold our Entravision Global Partners (“EGP”) business, which was the largest business unit of our digital operations. We have continuing operations from certain other digital operations, primarily Smadex, our programmatic ad purchasing platform, and Adwake, our mobile growth solutions business. Unless the context indicates otherwise, references throughout this report to our digital segment refer to our continuing digital operations and references to discontinued operations refer to EGP prior to its sale.

Forward-Looking Statements

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.

Forward-looking statements may include the words “may,” “could,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect”, “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Except for our ongoing obligation to disclose material information as required by the federal securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement.

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. Some of the key factors impacting these risks and uncertainties include, but are not limited to:

•

risks related to our substantial indebtedness and/or our ability to raise capital;

•

provisions of our debt instruments, including the agreement dated as of March 17, 2023, or the 2023 Credit Agreement, which governs our current credit facility, or the 2023 Credit Facility, the terms of which restrict certain aspects of the operation of our business;

•

our continued compliance with all of our obligations under the 2023 Credit Agreement, including compliance with financial covenants and ratios thereunder;

•

the impact of changing preferences, if any, among audiences favoring newer forms of media, including digital and other forms of media, over traditional media, including television and radio;

•

the ability to keep up with rapid technological and other changes, and compete effectively, in new forms of media, including digital media;

•

the ability to compete effectively in the television and radio broadcast industries;

•

the impact of existing and possible additional legislative and/or regulatory action, as well as evolving industry standards applicable to our business;

•

the ability to hire and retain qualified personnel;

•

cancellations or reductions of advertising due to the then-current economic environment or otherwise;

•

changes in advertising rates due to the then-current economic environment or otherwise;

•

the impact of rigorous competition in Spanish-language media and in the advertising industry generally;

•

the impact of changing preferences among U.S. Hispanic audiences for Spanish-language programming, especially among younger age groups;

•

the success of our emphasis on local news, including, but not limited to, the impact such effort may have in generating political advertising revenue in 2024;

•

our relationship with TelevisaUnivision, Inc., or TelevisaUnivision;

•

the extent to which we continue to generate revenue under retransmission consent agreements and spectrum usage rights;

•

the risk of impairment of our assets, including but not limited to our remaining digital assets;

•

the impact of a strengthening U.S. dollar on our overseas operations, including but not limited to our exposure between the time that we invoice in local currency and deposit the related collections into U.S. dollar-denominated accounts; and

•

legal, political and other risks associated with our rapidly expanding operations located outside the United States.

For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see the section entitled “Risk Factors,” beginning on page 11 of our Annual Report on Form 10-K for the year ended December 31, 2023 (our “2023 10-K”) and on page 37 of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024.

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ENTRAVISION COMMUNICATIONS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share and per share data)


	June 30,			December 31,
	2024			2023
ASSETS
Current assets
Cash and cash equivalents	$	85,136		$	67,398
Marketable securities		3,160			13,172
Restricted cash		779			770
Trade receivables, (including related parties of $8,098 and $10,051) net of allowance for doubtful accounts of $2,626 and $2,399		68,847			70,082
Assets held for sale		-			301
Prepaid expenses and other current assets (including related parties of $274 and $274)		46,681			16,863
Current assets of discontinued operations		-			217,269
Total current assets		204,603			385,855
Property and equipment, net of accumulated depreciation of $160,070 and $189,708		63,418			66,932
Intangible assets subject to amortization, net of accumulated amortization of $61,374 and $59,647 (including related parties of $2,321 and $2,785)		5,372			7,100
Intangible assets not subject to amortization		195,174			195,174
Goodwill		50,673			50,674
Deferred income taxes		87			265
Operating leases right of use asset		42,799			42,868
Other assets		7,480			21,223
Noncurrent assets of discontinued operations		-			95,855
Total assets	$	569,606		$	865,946
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt	$	-		$	8,750
Accounts payable and accrued expenses (including related parties of $1,292 and $1,071)		59,547			47,776
Operating lease liabilities		7,736			6,748
Current liabilities of discontinued operations		-			208,779
Total current liabilities		67,283			272,053
Long-term debt, less current maturities, net of unamortized debt issuance costs of $903 and $1,116		186,847			197,884
Long-term operating lease liabilities		44,127			45,178
Other long-term liabilities		4,370			4,624
Deferred income taxes		46,571			46,849
Noncurrent liabilities of discontinued operations		-			33,072
Total liabilities		349,198			599,660
Commitments and contingencies (note 6)
Redeemable noncontrolling interest - discontinued operations		-			43,758
Stockholders' equity
Class A common stock, $0.0001 par value, 260,000,000 shares authorized; shares issued and outstanding at June 30, 2024 80,634,381 and December 31, 2023 80,150,506		8			8
Class U common stock, $0.0001 par value, 40,000,000 shares authorized; shares issued and outstanding at June 30, 2024 and December 31, 2023 9,352,729		1			1
Additional paid-in capital		821,590			743,246
Accumulated deficit		(600,382	)		(519,812	)
Accumulated other comprehensive income (loss)		(809	)		(915	)
Total stockholders' equity		220,408			222,528
Total liabilities, redeemable noncontrolling interest and equity	$	569,606		$	865,946

See Notes to Condensed Consolidated Financial Statements

ENTRAVISION COMMUNICATIONS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except share and per share data)


	Three-Month Period						Six-Month Period
	Ended June 30,						Ended June 30,
	2024			2023			2024			2023
Net Revenue	$	82,654		$	73,719		$	160,830		$	141,366
Expenses:
Cost of revenue - digital		24,424			19,649			47,082			36,516
Direct operating expenses (including related parties of $1,536, $1,543, $2,936 and $2,964) (including non-cash stock-based compensation of $1,499, $2,158, $2,882 and $3,667)		31,756			28,856			63,557			55,458
Selling, general and administrative expenses		14,363			12,610			28,697			25,417
Corporate expenses (including non-cash stock-based compensation of $2,734, $3,243, $6,396 and $5,440)		10,811			12,042			23,059			22,544
Depreciation and amortization (including related parties of $232, $232, $464 and $464)		4,428			3,713			9,167			7,214
Change in fair value of contingent consideration		240			21			20			721
Foreign currency (gain) loss		(24	)		792			241			1,006
Operating income (loss)		(3,344	)		(3,964	)		(10,993	)		(7,510	)
Interest expense		(4,118	)		(4,195	)		(8,561	)		(8,118	)
Interest income		577			720			1,155			1,328
Dividend income		-			14			10			32
Realized gain (loss) on marketable securities		4			(29	)		(109	)		(61	)
Gain (loss) on debt extinguishment		(51	)		-			(91	)		(1,556	)
Income (loss) from continuing operations before income taxes		(6,932	)		(7,454	)		(18,589	)		(15,885	)
Income tax benefit (expense)		10,664			1,628			14,811			2,043
Net income (loss) from continuing operations		3,732			(5,826	)		(3,778	)		(13,842	)
Net income (loss) from discontinued operations, net of tax		(35,412	)		3,837			(76,792	)		13,894
Net income (loss) attributable to common stockholders	$	(31,680	)	$	(1,989	)	$	(80,570	)	$	52
Basic and diluted earnings per share:
Net income (loss) per share from continuing operations, basic and diluted	$	0.04		$	(0.07	)	$	(0.04	)	$	(0.16	)

Net income (loss) per share from discontinued operations, basic and diluted	$	(0.39	)	$	0.04		$	(0.86	)	$	0.16

Net income (loss) per share attributable to common stockholders, basic and diluted	$	(0.35	)	$	(0.02	)	$	(0.90	)	$	0.00

Cash dividends declared per common share	$	0.05		$	0.05		$	0.10		$	0.10

Weighted average common shares outstanding, basic		89,820,737			87,787,772			89,669,397			87,706,282
Weighted average common shares outstanding, diluted		90,721,280			87,787,772			89,669,397			87,706,282

See Notes to Condensed Consolidated Financial Statements

ENTRAVISION COMMUNICATIONS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(In thousands)


	Three-Month Period						Six-Month Period
	Ended June 30,						Ended June 30,
	2024			2023			2024			2023
Net income (loss) attributable to common stockholders	$	(31,680	)	$	(1,989	)	$	(80,570	)	$	52
Other comprehensive income (loss), net of tax:
Change in foreign currency translation		302			(71	)		7			(55	)
Change in fair value of marketable securities		-			101			99			227
Total other comprehensive income (loss)		302			30			106			172
Comprehensive income (loss) attributable to common stockholders	$	(31,378	)	$	(1,959	)	$	(80,464	)	$	224

See Notes to Condensed Consolidated Financial Statements

ENTRAVISION COMMUNICATIONS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share and per share data)


	Number of Common Shares				Common Stock										Accumulated
									Additional Paid-in			Accumulated			Other Comprehensive			Noncontrolling
	Class A		Class U		Class A		Class U		Capital			Deficit			Income (Loss)			Interest		Total
Balance, December 31, 2023		80,150,506		9,352,729	$	8	$	1	$	743,246		$	(519,812	)	$	(915	)	$	-	$	222,528
Issuance of common stock upon exercise of stock options or awards of restricted stock units		224,369		-		-		-		-			-			-			-		-
Tax payments related to shares withheld for share-based compensation plans		-		-		-		-		(490	)		-			-			-		(490	)
Stock-based compensation expense		-		-		-		-		5,447			-			-			-		5,447
Dividends paid		-		-		-		-		(4,476	)		-			-			-		(4,476	)
Dividends equivalents payable		-		-		-		-		(388	)		-			-			-		(388	)
Change in fair value of marketable securities		-		-		-		-		-			-			15			-		15
OCI release due to realized gain (loss) on marketable securities		-		-		-		-		-			-			84			-		84
Foreign currency translation gain (loss)		-		-		-		-		-			-			(295	)		-		(295	)
Net income (loss) attributable to common stockholders		-		-		-		-		-			(48,890	)		-			-		(48,890	)
Balance, March 31, 2024		80,374,875		9,352,729		8		1		743,339			(568,702	)		(1,111	)		-		173,535
Issuance of common stock upon exercise of stock options or awards of restricted stock units		259,506		-		-		-		-			-			-			-		-
Tax payments related to shares withheld for share-based compensation plans		-		-		-		-		(273	)		-			-			-		(273	)
Stock-based compensation expense		-		-		-		-		3,287			-			-			-		3,287
Dividend paid		-		-		-		-		(4,496	)		-			-			-		(4,496	)
Dividends equivalents payable		-		-		-		-		(170	)		-			-			-		(170	)
Change in fair value of marketable securities		-		-		-		-		-			-			4			-		4
OCI release due to realized gain (loss) on marketable securities		-		-		-		-		-			-			(4	)		-		(4	)
Foreign currency translation gain (loss)		-		-		-		-		-			-			302			-		302
Accounting for discontinued operations		-		-		-		-		79,903			-			-			-		79,903
Net income (loss) attributable to common stockholders		-		-		-		-		-			(31,680	)		-			-		(31,680	)
Balance, June 30, 2024		80,634,381		9,352,729	$	8	$	1	$	821,590		$	(600,382	)	$	(809	)	$	-	$	220,408


	Number of Common Shares				Common Stock										Accumulated
									Additional Paid-in			Accumulated			Other Comprehensive			Noncontrolling
	Class A		Class U		Class A		Class U		Capital			Deficit			Income (Loss)			Interest			Total
Balance, December 31, 2022		78,172,827		9,352,729	$	8	$	1	$	776,298		$	(504,375	)	$	(1,510	)	$	14,947		$	285,369
Issuance of common stock upon exercise of stock options or awards of restricted stock units		164,474		-		-		-		313			-			-			-			313
Tax payments related to shares withheld for share-based compensation plans		19,189		-		-		-		(80	)		-			-			-			(80	)
Stock-based compensation expense		-		-		-		-		4,053			-			-			-			4,053
Dividends paid		-		-		-		-		(4,386	)		-			-			-			(4,386	)
Distributions to noncontrolling interest		-		-		-		-		-			-			-			(546	)		(546	)
Change in fair value of marketable securities		-		-		-		-		-			-			103			-			103
OCI release due to realized gain (loss) on marketable securities		-		-		-		-		-			-			23			-			23
Foreign currency translation gain (loss)		-		-		-		-		-			-			16			-			16
Net income (loss) attributable to common stockholders		-		-		-		-		-			2,041			-			(342	)		1,699
Balance, March 31, 2023		78,356,490		9,352,729		8		1		776,198			(502,334	)		(1,368	)		14,059			286,564
Issuance of common stock upon exercise of stock options or awards of restricted stock units		260,527		-		-		-		241			-			-			-			241
Tax payments related to shares withheld for share-based compensation plans		-		-		-		-		(15	)		-			-			-			(15	)
Stock-based compensation expense		-		-		-		-		5,968			-			-			-			5,968
Dividend paid		-		-		-		-		(4,396	)		-			-			-			(4,396	)
Distributions to noncontrolling interest		-		-		-		-		-			-			-			(3,810	)		(3,810	)
Change in fair value of marketable securities		-		-		-		-		-			-			79			-			79
OCI release due to realized gain (loss) on marketable securities		-		-		-		-		-			-			22			-			22
Foreign currency translation gain (loss)		-		-		-		-		-			-			(71	)		-			(71	)
Acquisition of noncontrolling interest		-		-		-		-		(750	)		-			-			(624	)		(1,374	)
Accounting for Adsmurai transaction		-		-		-		-		(37,675	)		-			-			(9,625	)		(47,300	)
Net income (loss) attributable to common stockholders		-		-		-		-		-			(1,989	)		-			-			(1,989	)
Balance, June 30, 2023		78,617,017		9,352,729	$	8	$	1	$	739,571		$	(504,323	)	$	(1,338	)	$	-		$	233,919

See Notes to Condensed Consolidated Financial Statements

ENTRAVISION COMMUNICATIONS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)


	Six-Month Period
	Ended June 30,
	2024	2023
Cash flows from operating activities: