Entravision Communications Corporation
07/05/2024 | Press release | Distributed by Public on 07/05/2024 04:06
ENTRAVISION COMMUNICATIONS CORPORATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION Form 8 K
ENTRAVISION COMMUNICATIONS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Overview
On June 28, 2024, Entravision Communications Corporation (the "Company") completed the previously-announced sale of its Entravision Global Partners business (the "Business") to IMS Internet Media Services, Inc. ("IMS"), pursuant to an Equity Purchase Agreement entered into on June 13, 2024 among the Company, Entravision Digital Holdings, LLC ("Seller") and IMS.
Cash proceeds from the transaction, net of working capital and other adjustments, received at the closing were $16.4 million. Immediately after the closing, an amount equal to $6.5 million of the proceeds was paid by the Company to the parties who sold MediaDonuts Pte. Ltd. to Seller on July 1, 2021 (the "MediaDonuts Founders"), pursuant to a previously-disclosed Assignment, Assumption and Release Agreement dated June 13, 2024 among the Company, Seller, IMS and the MediaDonuts Founders.
The Company was also required to make a mandatory debt payment of $4.9 million under its 2023 Credit Facility as a result of the sale.
Unaudited Pro Forma Condensed Consolidated Financial Information
The sale of the Business constitutes a significant disposition for purposes of Item 2.01 of Form 8-K. The Company has also determined that the sale of the Business represents a strategic shift that will have a major effect on the Company's operations and financial results. Accordingly, the Company will account for the Business as discontinued operations beginning in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2024. As part of this strategic shift, the Company also sold two other businesses during the quarter as described below. As the sales of these three businesses (collectively, the "Businesses") were all part of a single strategic shift and will be reported together as discontinued operations in future filings, they will also be reflected in the unaudited pro forma condensed financial information presented in this filing.
Sale of Adsmurai
As previously announced, on May 6, 2024, the Company entered into a Share Purchase Agreement (the "Purchase Agreement"), among Adsmurai, S.L. ("Adsmurai"), the Company and the other stockholders of Adsmurai (the "Buyers"). Adsmurai is a Spanish company engaged in the sale and marketing of digital advertising technology platforms.
Pursuant to the Purchase Agreement, as of the Effective Date (as defined in the Purchase Agreement) (i) the Company sold its 51% equity interest in Adsmurai to Buyers, (ii) the Company terminated loans it made to Buyers in the principal amount of €12.3 million and (iii) the parties terminated other previous agreements made between them, including an Options Agreement which contained put redemption features for Buyers and call redemption features for the Company. As consideration, the Company received €15.0 million (approximately $16.2 million as of the Effective Date) ("Total Consideration"). The Purchase Agreement also contains representations, warranties, covenants, indemnities and releases of the parties thereto.
The Total Consideration is payable to the Company as follows:
•
€10.0 million paid on the Effective Date (approximately $10.7 million); and
•
€5.0 million to be paid within six months of the Effective Date (approximately $5.4 million).
Sale of Jack of Digital
On June 28, 2024, the Company completed the sale of Jack of Digital, a digital marketing services company serving clients in Pakistan. The total consideration was $0.1 million.
The Company has prepared the accompanying unaudited pro forma condensed consolidated financial statements ("Pro Forma Information") in accordance with Article 11 of Regulation S-X. The Pro Forma Information has been derived from the Company's historical consolidated financial statements and reflects certain assumptions and adjustments that management believes are reasonable under the circumstances and given the information available at this time. The Pro Forma Information reflects adjustments that, in the opinion of management, are necessary to present fairly the pro forma financial position as of March 31, 2024 and results of operations for the three-month period ended March 31, 2024 and years ended December 31, 2023, 2022 and 2021. The Pro Forma Information is provided for informational purposes only and is not intended to represent what the Company's financial position or results of operations
would have been had the sale of the Businesses occurred on March 31, 2024 for the unaudited pro forma condensed consolidated balance sheet and as of January 1, 2021, the beginning of the earliest period presented, for the unaudited pro forma consolidated statements of income, nor is it indicative of its future financial position or results of operations. The Pro Forma Information should be read in conjunction with the Company's historical consolidated financial statements and accompanying notes.
# # #
(Financial Table Follows)
Entravision Communications Corporation
Pro Forma Condensed Consolidated Balance Sheet
(In thousands; unaudited)
|
March 31, 2024 |
|||||||
|
Historical |
Pro Forma |
||||||
|
Results |
Adjustments (a) |
Pro Forma |
|||||
|
ASSETS |
|||||||
|
Current assets |
|||||||
|
Cash and cash equivalents |
$ |
128,410 |
$ |
29,988 |
(b) |
$ |
98,422 |
|
Marketable securities |
4,335 |
- |
4,335 |
||||
|
Restricted cash |
774 |
- |
774 |
||||
|
Trade receivables, net of allowance for doubtful accounts |
206,065 |
147,912 |
58,153 |
||||
|
Assets held for sale |
301 |
- |
301 |
||||
|
Prepaid expenses and other current assets |
40,095 |
4,549 |
35,546 |
||||
|
Total current assets |
379,980 |
182,449 |
197,531 |
||||
|
Property and equipment, net |
69,294 |
4,179 |
65,115 |
||||
|
Intangible assets subject to amortization, net |
34,660 |
28,500 |
6,160 |
||||
|
Intangible assets not subject to amortization |
195,174 |
- |
195,174 |
||||
|
Goodwill |
55,272 |
4,599 |
(c) |
50,673 |
|||
|
Deferred income taxes |
5,175 |
5,118 |
57 |
||||
|
Operating leases right of use asset |
43,543 |
1,068 |
42,475 |
||||
|
Other assets |
21,892 |
6,186 |
15,706 |
||||
|
Total assets |
$ |
804,990 |
$ |
232,099 |
$ |
572,891 |
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||
|
Current liabilities |
|||||||
|
Current maturities of long-term debt |
$ |
3,360 |
$ |
860 |
$ |
2,500 |
|
|
Accounts payable and accrued expenses |
263,484 |
222,173 |
41,311 |
||||
|
Operating lease liabilities |
7,518 |
561 |
6,957 |
||||
|
Total current liabilities |
274,362 |
223,594 |
50,768 |
||||
|
Long-term debt, less current maturities, net of unamortized debt issuance costs |
195,762 |
6,424 |
(d) |
189,338 |
|||
|
Long-term operating lease liabilities |
44,901 |
501 |
44,400 |
||||
|
Other long-term liabilities |
21,404 |
17,191 |
(e) |
4,213 |
|||
|
Deferred income taxes |
55,186 |
7,548 |
47,638 |
||||
|
Total liabilities |
591,615 |
255,258 |
336,357 |
||||
|
Redeemable noncontrolling interest |
39,840 |
39,840 |
- |
||||
|
Stockholders' equity |
|||||||
|
Class A common stock |
8 |
8 |
|||||
|
Class U common stock |
1 |
1 |
|||||
|
Additional paid-in capital |
743,339 |
(79,903 |
) |
823,242 |
|||
|
Accumulated deficit |
(568,702 |
) |
17,206 |
(f) |
(585,908 |
) |
|
|
Accumulated other comprehensive income (loss) |
(1,111 |
) |
(302 |
) |
(809 |
) |
|
|
Total stockholders' equity |
173,535 |
(62,999 |
) |
236,534 |
|||
|
Total liabilities and stockholders' equity |
$ |
804,990 |
$ |
232,099 |
$ |
572,891 |
Entravision Communications Corporation
Pro Forma Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
|
Three-Month Period Ended March 31, 2024 |
|||||||||
|
Historical |
Pro Forma |
||||||||
|
Results |
Adjustments (g) |
Pro Forma |
|||||||
|
Net revenue |
$ |
277,445 |
$ |
199,269 |
$ |
78,176 |
|||
|
Expenses: |
|||||||||
|
Cost of revenue - digital |
203,229 |
180,571 |
22,658 |
||||||
|
Direct operating expenses |
35,572 |
3,771 |
31,801 |
||||||
|
SG&A |
26,695 |
12,361 |
14,334 |
||||||
|
Corporate expenses |
12,248 |
- |
12,248 |
||||||
|
Depreciation and amortization |
7,133 |
2,394 |
4,739 |
||||||
|
Impairment charge |
49,438 |
49,438 |
- |
||||||
|
Change in fair value of contingent consideration |
(1,420 |
) |
(1,200 |
) |
(220 |
) |
|||
|
Foreign currency (gain) loss |
449 |
184 |
265 |
||||||
|
Operating income (loss) |
(55,899 |
) |
(48,250 |
) |
(7,649 |
) |
|||
|
Interest expense |
(4,559 |
) |
(116 |
) |
(h) |
(4,443 |
) |
||
|
Interest income |
1,130 |
552 |
578 |
||||||
|
Dividend income |
10 |
- |
10 |
||||||
|
Realized gain (loss) on marketable securities |
(113 |
) |
- |
(113 |
) |
||||
|
Gain (loss) on debt extinguishment |
(40 |
) |
- |
(40 |
) |
||||
|
Income (loss) before income taxes |
(59,471 |
) |
(47,814 |
) |
(11,657 |
) |
|||
|
Income tax benefit (expense) |
7,802 |
3,655 |
4,147 |
||||||
|
Net income (loss) |
(51,669 |
) |
(44,159 |
) |
(7,510 |
) |
|||
|
Net (income) loss attributable to redeemable noncontrolling interest |
2,779 |
2,779 |
- |
||||||
|
Net income (loss) attributable to common stockholders |
$ |
(48,890 |
) |
$ |
(41,380 |
) |
$ |
(7,510 |
) |
|
Basic and diluted earnings per share: |
|||||||||
|
Net income (loss) per share attributable to common stockholders, basic |
$ |
(0.55 |
) |
$ |
(0.08 |
) |
|||
|
Net income (loss) per share attributable to common stockholders, diluted |
$ |
(0.55 |
) |
$ |
(0.08 |
) |
|||
|
Weighted average common shares outstanding, basic |
89,518,058 |
89,518,058 |
|||||||
|
Weighted average common shares outstanding, diluted |
89,518,058 |
89,518,058 |
Entravision Communications Corporation
Pro Forma Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
|
Year Ended December 31, 2023 |
||||||||
|
Historical |
Pro Forma |
|||||||
|
Results |
Adjustments (g) |
Pro Forma |
||||||
|
Net revenue |
$ |
1,106,867 |
$ |
809,824 |
$ |
297,043 |
||
|
Expenses: |
||||||||
|
Cost of revenue - digital |
800,401 |
723,187 |
77,214 |
|||||
|
Direct operating expenses |
128,470 |
15,239 |
113,231 |
|||||
|
SG&A |
91,979 |
42,218 |
49,761 |
|||||
|
Corporate expenses |
50,294 |
- |
50,294 |
|||||
|
Depreciation and amortization |
28,007 |
11,615 |
16,392 |
|||||
|
Impairment charge |
13,267 |
13,267 |
||||||
|
Change in fair value of contingent consideration |
(2,539 |
) |
(3,360 |
) |
821 |
|||
|
Foreign currency (gain) loss |
900 |
(1,050 |
) |
1,950 |
||||
|
Other operating (gain) loss |
609 |
- |
609 |
|||||
|
Operating income (loss) |
(4,521 |
) |
21,975 |
(26,496 |
) |
|||
|
Interest expense |
(17,291 |
) |
(458 |
) |
(h) |
(16,833 |
) |
|
|
Interest income |
5,055 |
1,650 |
3,405 |
|||||
|
Dividend income |
35 |
- |
35 |
|||||
|
Realized gain (loss) on marketable securities |
(93 |
) |
- |
(93 |
) |
|||
|
Gain (loss) on debt extinguishment |
(1,556 |
) |
- |
(1,556 |
) |
|||
|
Income (loss) before income taxes |
(18,371 |
) |
23,167 |
(41,538 |
) |
|||
|
Income tax benefit (expense) |
2,750 |
(5,642 |
) |
8,392 |
||||
|
Net income (loss) |
(15,621 |
) |
17,525 |
(33,146 |
) |
|||
|
Net (income) loss attributable to redeemable noncontrolling interest |
(158 |
) |
(158 |
) |
- |
|||
|
Net (income) loss attributable to noncontrolling interest |
342 |
342 |
- |
|||||
|
Net income (loss) attributable to common stockholders |
$ |
(15,437 |
) |
$ |
17,709 |
$ |
(33,146 |
) |
|
Basic and diluted earnings per share: |
||||||||
|
Net income (loss) per share attributable to common stockholders, basic |
$ |
(0.18 |
) |
$ |
(0.38 |
) |
||
|
Net income (loss) per share attributable to common stockholders, diluted |
$ |
(0.18 |
) |
$ |
(0.38 |
) |
||
|
Weighted average common shares outstanding, basic |
87,901,938 |
87,901,938 |
||||||
|
Weighted average common shares outstanding, diluted |
87,901,938 |
87,901,938 |
Entravision Communications Corporation
Pro Forma Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
|
Year Ended December 31, 2022 |
|||||||
|
Historical |
Pro Forma |
||||||
|
Results |
Adjustments (g) |
Pro Forma |
|||||
|
Net revenue |
$ |
956,209 |
$ |
632,218 |
$ |
323,991 |
|
|
Expenses: |
|||||||
|
Cost of revenue - digital |
623,916 |
553,329 |
70,587 |
||||
|
Direct operating expenses |
122,611 |
13,291 |
109,320 |
||||
|
SG&A |
75,165 |
28,177 |
46,988 |
||||
|
Corporate expenses |
49,404 |
- |
49,404 |
||||
|
Depreciation and amortization |
25,697 |
10,050 |
15,647 |
||||
|
Impairment charge |
1,600 |
1,600 |
|||||
|
Change in fair value of contingent consideration |
14,210 |
16,010 |
(1,800 |
) |
|||
|
Foreign currency (gain) loss |
2,972 |
1,729 |
1,243 |
||||
|
Other operating (gain) loss |
382 |
(41 |
) |
423 |
|||
|
Operating income (loss) |
40,252 |
9,673 |
30,579 |
||||
|
Interest expense |
(10,876 |
) |
(340 |
) |
(h) |
(10,536 |
) |
|
Interest income |
2,864 |
124 |
2,740 |
||||
|
Dividend income |
20 |
- |
20 |
||||
|
Realized gain (loss) on marketable securities |
(532 |
) |
- |
(532 |
) |
||
|
Income (loss) before income taxes |
31,728 |
9,457 |
22,271 |
||||
|
Income tax benefit (expense) |
(11,559 |
) |
(2,688 |
) |
(8,871 |
) |
|
|
Net income (loss) |
20,169 |
6,769 |
13,400 |
||||
|
Net (income) loss attributable to noncontrolling interest |
(2,050 |
) |
(2,049 |
) |
(1 |
) |
|
|
Net income (loss) attributable to common stockholders |
$ |
18,119 |
$ |
4,720 |
$ |
13,399 |
|
|
Basic and diluted earnings per share: |
|||||||
|
Net income (loss) per share attributable to common stockholders, basic |
$ |
0.21 |
$ |
0.16 |
|||
|
Net income (loss) per share attributable to common stockholders, diluted |
$ |
0.21 |
$ |
0.15 |
|||
|
Weighted average common shares outstanding, basic |
85,391,163 |
85,391,163 |
|||||
|
Weighted average common shares outstanding, diluted |
87,769,762 |
87,769,762 |
Entravision Communications Corporation
Pro Forma Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
|
Year Ended December 31, 2021 |
|||||||
|
Historical |
Pro Forma |
||||||
|
Results |
Adjustments (g) |
Pro Forma |
|||||
|
Net revenue |
$ |
760,192 |
$ |
484,757 |
$ |
275,435 |
|
|
Expenses: |
|||||||
|
Cost of revenue - digital |
466,517 |
426,216 |
40,301 |
||||
|
Direct operating expenses |
116,449 |
11,988 |
104,461 |
||||
|
SG&A |
56,585 |
14,731 |
41,854 |
||||
|
Corporate expenses |
32,993 |
- |
32,993 |
||||
|
Depreciation and amortization |
22,420 |
7,284 |
15,136 |
||||
|
Impairment charge |
3,023 |
1,319 |
1,704 |
||||
|
Change in fair value of contingent consideration |
8,224 |
8,224 |
- |
||||
|
Foreign currency (gain) loss |
508 |
601 |
(93 |
) |
|||
|
Other operating (gain) loss |
(6,998 |
) |
- |
(6,998 |
) |
||
|
Operating income (loss) |
60,471 |
14,394 |
46,077 |
||||
|
Interest expense |
(7,020 |
) |
(198 |
) |
(h) |
(6,822 |
) |
|
Interest income |
245 |
9 |
236 |
||||
|
Dividend income |
213 |
- |
213 |
||||
|
Income (loss) before income taxes |
53,909 |
14,206 |
39,703 |
||||
|
Income tax benefit (expense) |
(18,679 |
) |
(3,725 |
) |
(14,954 |
) |
|
|
Net income (loss) |
35,230 |
10,481 |
24,749 |
||||
|
Net (income) loss attributable to redeemable noncontrolling interest |
(5,938 |
) |
(5,938 |
) |
- |
||
|
Net income (loss) attributable to common stockholders |
$ |
29,292 |
$ |
4,543 |
$ |
24,749 |
|
|
Basic and diluted earnings per share: |
|||||||
|
Net income (loss) per share attributable to common stockholders, basic |
$ |
0.34 |
$ |
0.29 |
|||
|
Net income (loss) per share attributable to common stockholders, diluted |
$ |
0.33 |
$ |
0.28 |
|||
|
Weighted average common shares outstanding, basic |
85,301,603 |
85,301,603 |
|||||
|
Weighted average common shares outstanding, diluted |
87,910,603 |
87,910,603 |
Entravision Communications Corporation
Notes to Unaudited Pro Forma Condensed Consolidated Financial Information
(a)
Adjustments reflect the elimination of assets and liabilities of the Businesses.
(b)
The pro forma impact on cash and cash equivalents is as follows (in thousands):
|
Cash Proceeds from sale of the Businesses |
$ |
27,248 |
|
Payment to MediaDonuts Founders |
(6,500 |
) |
|
Mandatory debt repayment |
(4,900 |
) |
|
Cash distributed from the Business before closing |
43,460 |
|
|
59,308 |
(c)
Reflects the elimination of an estimated $4.6 million of goodwill based on the relative fair value of the Businesses as of the date of sale.
(d)
Adjustment includes the mandatory repayment of $4.9 million of debt as a result of the sale of the Business.
(e)
Adjustment includes the payment of $6.5 million to the MediaDonuts Founders as a result of the sale of Business.
(f)
Represents the equity impact of the proforma balance sheet adjustments discussed in (a) - (e) above.
(g)
Adjustments reflect the elimination of revenue, cost of revenue, expenses and taxes which are specific to the operations of the Businesses.
(h)
Adjustment reflects the reduction of interest expense in connection with the mandatory payment of debt of $4.9 million as a result of the sale of the Business.