Walter Ulloa - Chairman and Chief Executive Officer Christopher Young - Executive Vice President and Chief Financial Officer Jeffery Liberman - President and Chief Operating Officer.

Michael Kupinski - ‎Noble Financial Capital Markets Gordon Hodge - Tracker Research LLC.

Good afternoon and welcome to the Entravision Third Quarter 2017 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Walter Ulloa. Please go ahead..

first, branding and customer engagement platform alongside our premium digital brands, content and communities; second, an ad stack that provides of that and will go to reach through our publishers; third, a sophisticated mobile programmatic and performance demand side with data reach platforms, clear attribution and machine learning optimization to better support our clients and our margins; fourth and last are strong 14 country distribution and sales organization to grow with new products and new markets.

Foreign synergies and value will be created to advance our existing legacy media datasets, and business intelligence as well as our integrated media and digital services. Digital services Pulpo and Headway.

These synergies will improve our overall digital product offerings, our digital margins, our digital growth, and research and development, and product development capabilities. On this front Entravision continues to build a leading database of Latino online navigation and purchasing behavior.

Also, we're building our data manager platform to enable efficiencies, productivity, powerful insightful product offerings to our clients on broadcast digital and in great solutions. Entravision continues to attract a diverse range of well-known brands to its digital platform.

Major advertisers in the third quarter included Subway, Toyota, Charter Communications, Buffalo Wild Wings, P&G, U.S. Army, BMW, Chevy, Wells Fargo, LA Care, and Unilever. In terms of reach Entravision remains a number one digital Latino platform to reach Latinos in the United States.

Based on the most recent comScore data, we connect with 41 million unique U.S. Latinos across all acculturation levels delivering the total Hispanic to our advertisers. According to [Apple fire] [ph] rankings, MoBrain is the third mobile ad volume platform in Latin America and the number 12 worldwide.

To put this information in context, we've reached more online Latinos in the U.S. than Facebook, and in Latin America, we have greater app mobile ad inventory volume than Twitter, right behind Facebook and Google. So we believe mobile will continue to be a driver of revenue growth for Entravision in the years ahead.

To service this massive audience, Entravision has doubled its effort on content quality, digital video protection, social interaction and user experience as published over 6,000 news, sports and entertainment content image and video pieces during the third quarter.

These stories produced over 9 million views across our owned and operated websites and over 75 million views on all platforms, which represent an increase of 119% in the third quarter when compared to the previous quarter.

In the digital audio front, Entravision also experienced some impressive growth based on a very strong community and engagement strategy focus. During the third quarter, we streamed over 7.3 million hours of digital audio reaching 750,000 unique listeners.

We'll soon release audio engage design is one of the leading digital auto marketplaces to reach Latinos, in the U.S., and in Latin America. We believe this has great synergies with our traditional audio business.

As we continue to strengthening the bonds with our local communities, we're thrilled to see that our community in social media following surpassed 9.4 million followers across key networks including Facebook, Twitter and Instagram.

Overall Entravision continues to strengthen its digital platform through its commitment to product high-quality content, increased community engagement and above all to provide the most powerful set of Latino data and digital services to advertisers. We will continue to form strong alliances, acquisitions and digital skill development.

Turning now to our pacing for the fourth quarter. Television revenues are currently pacing minus 23% in the fourth quarter. As a reminder, on July 1 of this year our XHAS station serving the San Diego market switched its affiliation from Telemundo to Azteca América, excluding the impact of this change our TV revenues are pacing minus 7%.

Recall also that we are up against 5.3 million in non-returning political in the fourth quarter of last year, excluding the Telemundo Azteca affiliation swap and political, our TV pace is flat for the fourth quarter.

Our audio advertising revenue is currently pacing minus 13% in the fourth quarter, excluding political core audio revenue is pacing minus 6%. Digital revenues are currently pacing up mid-teens on a pro forma basis with the Headway acquisition.

To clarify totaled pro forma digital revenue in Q4 of last year, including Headway was approximately $17.7 million. In summary, with the Univision affiliation extension not completed and the FCC auction behind us.

We now find ourselves in an excellent financial position to execute our strategy of building on our existing unique audience reach and targeting capabilities, while carefully managing our costs. We'll continue to focus on growing our free cash flow through acquisitions and existing operations.

We'll continue to evaluate and remain committed to returning increasing amounts of capital to our shareholders. As we began doing in August with an increased dividend and share buyback plans.

We will also focus on putting to a portion of our auction proceeds to work in an accretive tax efficient manner by seeking M&A opportunities within our existing broadcasting footprint in order to strengthen our competitive position in the same vein as our recently closed acquisition of the NBC affiliate in Palm Springs.

So in addition, we'll continue to seek digital assets that can complement our current digital portfolio and strategy. Importantly, we'll pursue this acquisition strategy, while keeping a net leverage profile of a less than three times. I'll now turn the call over to Chris to cover the numbers in more detail..

Thank you, Walter, and good afternoon, everyone. As Walter has discussed, total net revenue for the quarter was up 412% at $334.6 million compared to $65.3 million in the same quarter of last year. Operating expenses increased 7% to $43 million in consolidated adjusted EBITDA was $262.4 million.

Excluding revenue and expenses relating to the auction total revenue was up 8% over the prior year to $70.6 million, while EBITDA was down 29% versus the prior year at $12.7 million. During the third quarter of 2017, the company paid a cash dividend of $0.05 per share to shareholders of the company's Class A, B and U common stock.

The total amount of cash dispersed for the dividend was $4.5 million. The company announced today that the Board of Directors has declared a quarterly cash dividend of $0.05 per share to shareholders of the company's common stock payable on December 29, 2017.

The total amount of cash to be dispersed with this quarterly dividend will be approximately $4.5 million. As previously announced, we currently anticipate making cash dividends on a quarterly basis in future periods.

The company also announced today that on October 2, 2017, the company entered into a new affiliation agreement, which is superseded and replace the company's prior affiliation agreement with Univision.

Additionally, on the same date, the company entered into a new proxy agreement, and new marketing and sales agreement with Univision, each of which superseded and replace the company's prior such agreements with Univision.

The terms of each of these agreements expire on December 31, 2026 for all of the companies Univision and UniMas network affiliates stations. Except that the new agreements will expire on December 31, 2021, with respect to the company's Univision and UniMas network affiliate stations in Orlando, Tampa and Washington, D.C.

On November 1, 2017, the company completed the acquisition of television stations KMIR-TV, the local NBC affiliate and KPSE-LD, the local MyNetworkTV affiliate serving the Palm Springs, California area for an aggregate purchase price of $21 million.

For the quarter, TV net revenue from advertising and retransmission consent revenue was down 9% to $36.5 million compared to $40.4 million in the same quarter of last year.

The decrease in our TV segment revenue was primarily attributable to a decrease in local and national revenue and a decrease in political advertising revenue, which was not material in 2017, partially offset by an increase in retransmission consent revenue.

Retransmission consent revenue for the three months period ended September 30, 2017 and 2016 were $8.5 million and $7.4 million respectively. For the quarter net revenue from spectrum usage rates was $263.9 million. Radio net revenue for the quarter was down 12% to $16.9 million compared to $19.2 million in the same quarter of last year.

The decrease was primarily attributable to decreases in local and national advertising revenue and a decrease in political advertising revenue, which was not material in 2017. Digital net revenues for the quarter was up 198% to $17.1 million compared to $5.7 million in the same quarter of last year.

The increase in our digital segment was primarily attributable to the acquisition of Headway during the second quarter of 2017, which did not contribute to our results of operations in prior periods. For the quarter, cost of revenue and our digital media segment was up $9.9 million for the - compared to $2.3 million in the same quarter of last year.

The increase was primarily attributable to the acquisition of Headway during the second quarter of 2017, which did not contribute to the cost of revenue in prior periods. Cost of revenue related to television revenue from spectrum usage rights was $12.1 million for the quarter. Operating expenses for the quarter were $43.0 million, up 7%.

TV operating expenses, excluding non-cash compensation expense were down 5% at $20 million. Audio operating expenses, excluding non-cash compensation expense were down 4% at $15.9 million. Digital operating expenses, excluding non-cash compensation expense were up 163% at $6.9 million.

Corporate expenses for the quarter were up 43% to $8.2 million compared to $5.7 million in the same quarter of last year. Excluding non-cash compensation expense, corporate expense for the quarter was $7.4 million versus $5.1 million in the same quarter of last year, an increase of 46%.

Excluding non-cash compensation expense, the increase of corporate expenses was primarily due to increases in expenses associated with FCC auction for broadcast spectrum and an increase in salary expense. Income tax expense was $96.2 million for the quarter, while cash taxes paid were $0.1 million.

Given the elimination of our full valuation allowance in the fourth quarter of 2013, future income tax expense will run at approximately 40% of pretax income, although most of this expense will continue to be non-cash given our NOL offsets.

Earnings per share for the quarter increased to $1.71 per share compared to $0.06 per share in the third quarter of last year. Free cash flow as defined in our earnings release increased to $268.9 million for the quarter compared to $11.9 million for the same quarter of last year.

Cash interest expense for the quarter was $3.3 million compared to $3.6 million in the same quarter of last year. Cash capital expenditures for the quarter were $2.3 million. Capital expenditures for the 2017 year are expected to be approximately $13 million. Turning to our balance sheet.

As of September 30, 2017, our total debt was $290 million and our trailing 12-month consolidated adjusted EBITDA was $310.5 million. Cash on the books was $287 million, as of September 30, 2017. Net of $20 million of unrestricted cash in the books, our total leverage as defined in our 2013 credit agreement was 0.9 times as of 9/30/2017.

That concludes our formal remarks. So Walter and I will now hand it back over to Anita for questions.

Anita?.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] At this time, we will pause momentarily to assemble our roster. The first question comes from Michael Kupinski with Noble Capital. Please go ahead..

Thank you. And thanks for taking my questions.

First, I was just wondering, in terms of your TV pacings how is that reflective of the TV acquisitions that you made in this quarter? Is it reflected in those numbers or how do you account for those?.

No, Michael, the pacings, that deal just closed yesterday and the pacings are not factoring in the incremental revenue and expense, or the revenue I should say from the KMIR acquisition..

Got you, and I was wondering if you can, do you have any thoughts in terms of either annual revenues or what type of quarterly revenues those stations might generate?.

Yeah, Michael, I don't know if we're going to break those out on this call. I think what we want to do is get our arms around the operation and convey those on our next quarterly call..

Okay. In terms of the….

And I just - go ahead..

I'm sorry..

Go ahead, Mike..

Yeah, in terms of the loss of the San Diego affiliation, I thought that was roughly $1.5 million in the quarter in revenues and cash flow and I was just wondering, based on the pacing data, it would seem like the impact was more than that.

Can you just kind of give us some color on what that affiliation change means in terms of the quarter?.

Sure. It was about $3 million in revenue against $1 million in expense, so that was kind of contributing about $2 million in cash flow. And then offset by - so that's the loss. And then offset by the incremental about, call it, little less than a $1 million in revenue from Azteca with $0.5 million in expense.

So there is about $0.5 million of incremental cash flow to offset. So net of those two, you're correct, it's about $1.5 million cash flow hit as a result of the affiliation swap..

Got you, and in terms of the corporate expenses, we're a little elevated. Is that what you're referring to by the $2.1 million extra expenses related to spectrum auction? Is that where it's….

There were $2.1 million in incremental corporate expenses associated with the auction that we booked, commensurate with the booking of the revenue..

And so, $6 million would be roughly a good run-rate for that line item going into the next quarter?.

Going into the next quarter, yeah, a little less than that, maybe around between $5.7 million and $5.8 million..

And can you just talk a little bit about what's going on with - in terms of radio what the weakness is related. I know that you got a big lift your of your networks there for a while with La Chokolata and so forth. But the - it seems like your radio is certainly underperforming the rest of the industry at this point.

Can you just kind of talk what the issues are?.

Yeah, Michael, this is Jeff Liberman. We've been working really hard on, as we call it, a revenue enhancement plan and we've been concentrating really on the Lucas show and also the De Erazno y La Chokolata show at first year.

And we are starting to see some improvement through that enhancement plan in our outside markets, meaning outside markets, not in Los Angeles as rapidly. As you know, LA is a very competitive marketplace and it's going to take us a little bit longer to get to that point where we're starting to see these increases in Los Angeles..

Just I'd add a little bit of color to that Michael, just to put it in the context. It's really about our competition in the Los Angeles market. We talked about that core pace being at minus 6 for fourth quarter. If you were to exclude LA, we're down to a minus one, so for the radio division.

So really it's one market that we're focused on getting turned around..

Got you. And are you - on your television side, given the pacing data, that's also pretty weak.

Is there any specific issues in the television space as well?.

I think the real headwind for TV, once you kind of filter out the Telemundo issue, you're essentially looking at flattish pacing. The real concern with the TV segment is just auto. Autos is weakening on us and I don't think that's much of a surprise. But that's something that we have to contend with, not TVB numbers just came out earlier today.

And excluding political TV growth rates were minus 10 for the industry. So to finish off flat, I guess, we'll take it compared to where the industry ended up..

Yeah, and some of that are related to an AE [ph] stabilization and the ratings at Univision?.

Yeah, ratings for Univision have actually improved somewhat over the past, I will call it 9 to 12 months, so if you're looking at the annual comps, they're getting easier and their ratings are starting to improve. So if anything we're hoping that will be a tailwind going forward..

And also, Michael, in terms of Univision's ratings….

Are you on mute?.

No, no..

Okay. I can hear you, never mind..

We haven't seen the impact of any decline in the ratings from the Univision programming like across our markets. Now, granted we're in high-density, high growth Latino markets. So perhaps that's part of the reason.

And the other reason I think is the fact that we - our news programming is so strong and number one in 14 of 18 markets, when you go head-to-head against Telemundo..

Got you. And can you just talk quickly in my question, I promise. Last question, the M&A environment and what the outlook is there, I know, that you have a lot of cash to deploy at this point.

So if you can give us an update?.

We continue to look at a number of opportunities, but nothing to announce. Our focus is, we're looking in two areas, right.

First, television, where we might be able to bolster existing clusters by adding an English language television affiliate like we did in Palm Springs, but we're looking for markets that are high density Hispanic markets, if we're going that direction.

The area we're looking at is in digital, we continue to look for digital acquisitions, it might enhance our current platform. We're pleased with what we've done so far with digital. Digital will be 20% or more of our total revenue by the end of the year. That's what we forecast to that kind of growth less than two years ago.

And we believe, we are well-positioned to reach that goal, and then, of course, we're now going to move on to increasing that goal to 30%, but that will be for 2018 and beyond..

Got you. Thanks. That's all my questions. Thank you..

Thank you..

Thank you, Mike..

[Operator Instructions] The next question comes from Gordon Hodge with Tracker Research. Please go ahead..

Yeah, good afternoon. I just had a couple of questions.

One, just want to verify that the fourth quarter TV pacing whether that included retrans or not?.

Fourth quarter does not include retrans. No, that's just advertising pace..

That's just - that's what I thought. Okay, great. And then, on the subject of retrans, nice increase this quarter. I was wondering, I know with the renegotiation with innovation. I'm just wondering, if that reflected any kind of catch up, where they haven't been paying you on a new split basis, they're enjoying new higher retrans numbers.

And if that's an indicative number going forward or was there someone - like I said, one-time catch up in that?.

No, that's a good point. There was about a $700.000 catch up payment in that $8.5 million number that we booked for third. So you're looking at retrans - overall you're looking at retrans rates to go up between mid and high single digits for the next - through the end of our new term of 2026. So that's the growth profile, we're looking at now.

But you should not run rate that $8.5 million into the next quarter. It should be somewhere in the mid-$7 million dollar range..

Okay, very good. And then, last question, just I'm curious whether you had a noticeable impact or enjoyed a noticeable impact from the Gold Cup this year. I think it was held for last year, but it was in second quarter instead of third this year. Or the Copa….

I think the Gold Cup was generally a positive experience but you're not talking about anything that really was material towards our overall performance was concerned..

Got it, very good. Thanks..

Thanks, Gordon..

Next question is a follow-up from Michael Kupinski with ‎Noble Capital. Please go ahead..

Thank you. I was wondering if you can give us a little update on the prospect of further spectrum sales. I know that you were potential working on at least one market for that.

I was wondering if that is still ongoing or if there's been some resolution there?.

There are conversations that are ongoing on multiple markets - in multiple markets on that front, Michael. But we don't have anything to report as of right now..

Okay. And then in terms of, I think that in one of your other markets that your - there were some prospects that there you might see that the ability maybe to rent the station.

Is that still on the table at this point?.

Yes, all of the one-offs with respect to channel sharing opportunities that we're still hunting down on, Michael. So that I don't think anything definitive in either direction has been determined yet. It's all still open..

Okay, but they're still ongoing. That's a good thing. Okay, that's all I have. Thank you..

Thank you, Michael..

This concludes our question-and-answer session. I would like to turn the conference back over to Walter Ulloa for any closing remarks..

Thank you, Anita. And thank you everyone for participating in our third quarter investor call and earnings results. We look forward to speaking to all of your in the first quarter of 2018, when we will announce our fourth quarter 2017 earnings results and full year results. Thank you..

This conference has now concluded. Thank you for attending today's presentation. You may now disconnect..