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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 SEPTEMBER 30, 2023

OR

☐ 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 October 30, 2023, there were 78,644,012 shares, $0.0001 par value per share, of the registrant’s Class A common stock outstanding, 0 shares, $0.0001 par value per share, of the registrant’s Class B 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 THREE AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2023

TABLE OF CONTENTS

		Page Number
	PART I. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	4
	CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) AS OF SEPTEMBER 30, 2023 AND DECEMBER 31, 2022	4
	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE- AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2023 AND SEPTEMBER 30, 2022	5
	CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) FOR THE THREE- AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2023 AND SEPTEMBER 30, 2022	6
	CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) FOR THE THREE- AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2023 AND SEPTEMBER 30, 2022	7
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2023 AND SEPTEMBER 30, 2022	9
	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	10
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	34
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	48
ITEM 4.	CONTROLS AND PROCEDURES	48
	PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	50
ITEM 1A.	RISK FACTORS	50
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES	50
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	50
ITEM 4.	MINE SAFETY DISCLOSURES	50
ITEM 5.	OTHER INFORMATION	50
ITEM 6.	EXHIBITS	51

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 or our ability to raise capital;

•provisions of our debt instruments, including the agreement dated as of November 30, 2017, as amended and restated as of March 17, 2023 (the "2023 Credit Agreement"), which governs our current credit facility (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;

•rapid changes in the digital advertising industry;

•the impact of changing preferences among audiences favoring newer forms of media, including digital and other forms of such 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, and changes within digital media;

•the impact of existing and possible additional legislative and/or regulatory action, in various jurisdictions around the world, with respect to the digital media and digital advertising industries;

•the impact of possible legislative and/or regulatory action, in various jurisdictions around the world, with respect to artificial intelligence, or AI, and/or similar technologies, which we use and may use in our digital operations;

•the impact of existing and possible additional legislative and/or regulatory action, as well as evolving industry standards and controls, on data privacy; the collection and use of personal identifying information; or PII; and other protections for online users of Internet-connected devices;

•the ability to integrate successfully recently acquired businesses, primarily those in our digital segment, into our operations;

•the ability of management to oversee the rapid global expansion of our digital operations;

•the ability to hire and retain qualified personnel to manage the day-to-day operations of our digital properties throughout the world, as well as local management to establish and maintain internal financial and reporting systems that are of the type required of U.S. public companies;

•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 and digital 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 possible impact on our business as a result of changes in the way market share is measured by third parties;

•our relationship with TelevisaUnivision, Inc., or TelevisaUnivision;

2

•the extent to which we continue to generate revenue under retransmission consent agreements;

•subject to restrictions contained in the 2023 Credit Agreement, the overall success of our acquisition strategy and the integration of any acquired assets or businesses with our existing operations;

•industry-wide market factors and regulatory and other developments affecting our operations;

•the ability to manage our growth effectively, including having adequate personnel and other resources for both operational and administrative functions;

•general economic uncertainty, whether as a result of the COVID-19 pandemic or otherwise;

•current and longer-term economic and other impacts of the COVID-19 pandemic on our operations, results of operations and financial condition, including without limitation our advertisers’ response to the pandemic and resulting economic disruptions caused as a result of the pandemic;

•our dependence upon a single global media company for the majority of our revenue, which dependence we expect to continue;

•the effect inflation may have on decision-making by our advertisers to place ads with or through us across our operating segments;

•the effectiveness with which we handle credit risk in our digital segment insofar as we are required to pay the media companies for which we act as commercial partner for all inventory purchased regardless of whether we are able to collect on a transaction from the local advertiser or its ad agency;

•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;

•the impact of any potential future impairment of our assets;

•risks related to changes in accounting interpretations;

•consequences of, and uncertainties regarding, foreign currency exchange including fluctuations thereto from time to time;

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

•the effect of changes in broadcast transmission standards by the Advanced Television Systems Committee's 3.0 standard (“ATSC 3.0”), as they are being adopted in the broadcast industry and as they may impact our ability to monetize our spectrum assets.

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 38 of our Annual Report on Form 10-K for the year ended December 31, 2022 (our “2022 10-K”).

3

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ENTRAVISION COMMUNICATIONS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share and per share data)

	September 30,			December 31,
	2023			2022
ASSETS
Current assets
Cash and cash equivalents	$	110,624		$	110,691
Marketable securities		18,063			44,528
Restricted cash		765			753
Trade receivables, (including related parties of $10,334 and $5,814) net of allowance for doubtful accounts of $7,346 and $6,572		211,175			224,713
Assets held for sale		1,223			-
Prepaid expenses and other current assets (including related parties of $274 and $274)		43,404			27,238
Total current assets		385,254			407,923
Property and equipment, net of accumulated depreciation of $199,275 and $194,448		67,750			61,362
Intangible assets subject to amortization, net of accumulated amortization of $85,058 and $75,992 (including related parties of $3,017 and $3,714)		55,706			61,811
Intangible assets not subject to amortization		207,453			207,453
Goodwill		90,672			86,991
Deferred income taxes		2,591			2,591
Operating leases right of use asset		45,159			44,413
Other assets		21,550			8,297
Total assets	$	876,135		$	880,841
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt	$	8,643		$	5,256
Accounts payable and accrued expenses (including related parties of $1,222 and $1,215)		240,417			237,415
Operating lease liabilities		7,150			5,570
Total current liabilities		256,210			248,241
Long-term debt, less current maturities, net of unamortized debt issuance costs of $1,180 and $1,221		201,301			207,292
Long-term operating lease liabilities		46,849			42,151
Other long-term liabilities		17,294			30,198
Deferred income taxes		68,464			67,590
Total liabilities		590,118			595,472
Commitments and contingencies (note 6)
Redeemable noncontrolling interest		47,301			-
Stockholders' equity
Class A common stock, $0.0001 par value, 260,000,000 shares authorized; shares issued and outstanding at September 30, 2023 78,644,012 and December 31, 2022 78,172,827		8			8
Class B common stock, $0.0001 par value, 40,000,000 shares authorized; shares issued and outstanding at September 30, 2023 and December 31, 2022 0		-			-
Class U common stock, $0.0001 par value, 40,000,000 shares authorized; shares issued and outstanding at September 30, 2023 and December 31, 2022 9,352,729		1			1
Additional paid-in capital		742,040			776,298
Accumulated deficit		(501,604	)		(504,375	)
Accumulated other comprehensive income (loss)		(1,729	)		(1,510	)
Total stockholders' equity		238,716			270,422
Noncontrolling interest		-			14,947
Total equity		238,716			285,369
Total liabilities and equity	$	876,135		$	880,841

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						Nine-Month Period
	Ended September 30,						Ended September 30,
	2023			2022			2023			2022
Net Revenue	$	274,417		$	241,014		$	786,804		$	659,881
Expenses:
Cost of revenue - digital		199,289			157,095			562,881			431,951
Direct operating expenses (including related parties of $1,523, $2,029, $4,487 and $5,357) (including non-cash stock-based compensation of $2,637, $981, $7,218 and $2,878)		31,855			30,086			94,782			87,505
Selling, general and administrative expenses		21,954			19,208			68,287			53,022
Corporate expenses (including non-cash stock-based compensation of $4,395, $1,805, $9,835 and $5,117)		13,292			9,525			35,836			26,769
Depreciation and amortization (including related parties of $232, $232, $696 and $695)		7,356			6,554			20,336			19,212
Change in fair value of contingent consideration		(5,997	)		734			(8,939	)		6,810
Impairment charge		989			-			989			-
Foreign currency (gain) loss		548			1,966			289			2,112
Other operating (gain) loss		-			(58	)		-			(1,011	)
Operating income (loss)		5,131			15,904			12,343			33,511
Interest expense		(4,454	)		(3,055	)		(12,788	)		(7,225	)
Interest income		1,558			788			3,455			1,916
Dividend income		-			6			32			20
Realized gain (loss) on marketable securities		(33	)		(473	)		(94	)		(473	)
Gain (loss) on debt extinguishment		-			-			(1,556	)		-
Income (loss) before income taxes		2,202			13,170			1,392			27,749
Income tax benefit (expense)		530			(4,080	)		1,038			(8,305	)
Net income (loss)		2,732			9,090			2,430			19,444
Net (income) loss attributable to redeemable noncontrolling interest		(13	)		-			(1	)		-
Net (income) loss attributable to noncontrolling interest		-			303			342			303
Net income (loss) attributable to common stockholders	$	2,719		$	9,393		$	2,771		$	19,747
Basic and diluted earnings per share:
Net income (loss) per share attributable to common stockholders, basic and diluted	$	0.03		$	0.11		$	0.03		$	0.23
Cash dividends declared per common share	$	0.05		$	0.03		$	0.15		$	0.08
Weighted average common shares outstanding, basic		87,995,567			84,945,873			87,803,770			85,469,675
Weighted average common shares outstanding, diluted		89,888,721			87,417,501			89,835,363			87,671,726

See Notes to Condensed Consolidated Financial Statements

5

ENTRAVISION COMMUNICATIONS CORPORATION

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

(In thousands)

	Three-Month Period						Nine-Month Period
	Ended September 30,						Ended September 30,
	2023			2022			2023			2022
Net income (loss)	$	2,732		$	9,090		$	2,430		$	19,444
Other comprehensive income (loss), net of tax:
Change in foreign currency translation		(408	)		(23	)		(463	)		(66	)
Change in fair value of marketable securities		17			551			244			(982	)
Total other comprehensive income (loss)		(391	)		528			(219	)		(1,048	)
Comprehensive income (loss)		2,341			9,618			2,211			18,396
Comprehensive (income) loss attributable to redeemable noncontrolling interests		(13	)		-			(1	)		-
Comprehensive (income) loss attributable to noncontrolling interests		-			303			342			303
Comprehensive income (loss) attributable to common stockholders	$	2,328		$	9,921		$	2,552		$	18,699

See Notes to Condensed Consolidated Financial Statements

6

ENTRAVISION COMMUNICATIONS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share and per share data)

	Number of Common Shares								Common Stock												Accumulated
							Treasury		Class		Class		Class		Additional Paid-in			Accumulated			Other Comprehensive			Noncontrolling
	Class A		Class B		Class U		Stock		A		B		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	)