UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 11, 2015
HEMISPHERE MEDIA GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware |
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001-35886 |
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80-0885255 |
2000 Ponce de Leon Boulevard
Suite 500
Coral Gables, FL 33134
(Address of principal executive offices) (Zip Code)
(305) 421-6364
(Registrants telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On August 11, 2015, Hemisphere Media Group, Inc. (the Company) issued a press release announcing its results of operations for the quarter ended June 30, 2015. A copy of the press release is attached as Exhibit 99.1 to this report and is incorporated by reference into this item.
Within the Companys press release, the Company makes reference to the non-GAAP financial measure Adjusted EBITDA, which has a directly comparable generally accepted accounting principles (GAAP) financial measure. Management uses this measure to assess the operating results and performance of the business, perform analytical comparisons and identify strategies to improve performance. Management believes Adjusted EBITDA is relevant to investors because it allows them to analyze the operating performance of the Companys business using the same metrics used by management and is important to investors understanding of the Companys business.
The information included in this Current Report on Form 8-K, including the exhibit attached hereto, is furnished solely pursuant to Item 2.02 of this Current Report on Form 8-K. Consequently, it is not deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934 (Exchange Act), or otherwise subject to the liabilities of that section. It may only be incorporated by reference in another filing under the Securities Act of 1933 or the Exchange Act if such subsequent filing specifically references this Current Report on Form 8-K.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit |
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Description of Exhibit |
99.1 |
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Press Release issued by the Company on August 11, 2015 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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HEMISPHERE MEDIA GROUP, INC. | |||
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Date: |
August 11, 2015 |
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By: |
/s/ Alex J. Tolston |
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Name: Alex J. Tolston | |
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General Counsel and Corporate Secretary |
Exhibit 99.1
Hemisphere Media Group Announces Second Quarter 2015 Financial Results; Affirms Full-Year Financial Guidance
MIAMI (August 11, 2015) Hemisphere Media Group, Inc. (NASDAQ:HMTV) (Hemisphere or the Company), the only publicly traded pure-play U.S. media company targeting the high growth Spanish-language television and cable networks business in the U.S. and Latin America, today announced financial results for the second quarter ended June 30, 2015.
Alan Sokol, CEO of Hemisphere, stated, Hemisphere delivered double-digit growth in net revenues and EBITDA in the second quarter. Despite the extremely challenging economic environment in Puerto Rico, we significantly expanded WAPAs market share year-over-year, and achieved exceptional advertising revenue growth, as well as robust retransmission fee growth. Additionally, we continue to experience meaningful subscriber growth at our cable networks, in stark contrast to the trend of general market U.S. cable networks. We recently converted Cinelatino to an ad supported network, and we are excited about the opportunity this presents.
On April 1, 2014, Hemisphere closed on the acquisition of three Spanish-language television networksPasiones, Centroamerica TV and Television Dominicana (the Acquired Cable Networks). Results of the Acquired Cable Networks are included in the Companys condensed consolidated statements of operations from the acquisition date. The Companys results for the three months ended June 30, 2015 are comparable with the prior year period, however, the comparability of the Companys results are affected for the six months ended June 30, 2015.
Net revenues for the three months ended June 30, 2015 were $32.6 million, an increase of 12%, compared to net revenues of $29.1 million for the same period in 2014. Net revenues for the six months ended June 30, 2015 were $62.1 million, an increase of 24%, compared to net revenues of $50.0 million for the same period in 2014. These increases, in both the three and six month periods, were driven by growth in advertising revenues and subscriber and retransmission fees across all of the Companys networks. The increase for the six months ended June 30, 2015 was also due to the inclusion of the Acquired Cable Networks, which were not included in the prior years first quarter.
Operating expenses were $23.8 million for the three months ended June 30, 2015, an increase of 6% from operating expenses of $22.4 million for the comparable period in 2014. Operating expenses were $46.3 million for the six months ended June 30, 2015, an increase of 16% from operating expenses of $39.7 million in the year ago period. The increases, in both the three and six month periods, were due to the Companys investment in programing at the Acquired Cable Networks, as well as continued growth in infrastructure to support the Companys expansion. The increase for the six months ended June 30, 2015, was also due to the inclusion of the Acquired Cable Networks, which were not included in the prior years first quarter.
Net income was $3.4 million for the three months ended June 30, 2015, a decrease of $1.9 million compared to net income of $5.3 million for the same period in 2014. Net income was $5.9 million for the six months ended June 30, 2015, an increase of $0.3 million compared to $5.6 million for the same period in 2014. The net income for the three and six months ended June 30, 2014,
benefited from the reversal of a $2.5 million valuation allowance related to foreign tax credits, which reduced income tax expense in the periods.
Adjusted EBITDA was $14.7 million for the three months ended June 30, 2015, an increase of $1.5 million, or 12%, compared to $13.2 million for the same period in 2014. Adjusted EBITDA was $27.5 million for the six months ended June 30, 2015, an increase of $6.3 million, or 30%, compared to $21.2 million for the same period in 2014. These increases, in both the three and six month periods, were due to growth in advertising revenues and subscriber and retransmission fees. The increase for the six month period was also due to the inclusion of the Acquired Cable Networks which were not included in the prior years first quarter.
The following tables set forth the Companys financial performance for the three and six months ended June 30, 2015 and 2014 (in thousands):
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Three Months Ended |
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Six Months Ended |
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2015 |
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2014 |
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2015 |
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2014 |
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Net revenues |
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$ |
32,618 |
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$ |
29,055 |
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$ |
62,089 |
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$ |
50,006 |
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Operating Expenses: |
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Cost of revenues |
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9,908 |
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9,292 |
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19,360 |
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16,890 |
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Selling, general and administrative |
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9,325 |
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8,241 |
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17,909 |
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15,122 |
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Depreciation and amortization |
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4,265 |
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4,832 |
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8,646 |
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7,410 |
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Other expenses |
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306 |
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62 |
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306 |
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311 |
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Loss on disposition of assets |
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34 |
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16 |
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31 |
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14 |
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Total operating expenses |
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23,838 |
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22,443 |
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46,252 |
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39,747 |
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Operating income |
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8,780 |
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6,612 |
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15,837 |
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10,259 |
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Other Expenses: |
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Interest expense, net |
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(3,008 |
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(2,936 |
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(5,991 |
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(5,843 |
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Income before income taxes |
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5,772 |
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3,676 |
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9,846 |
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4,416 |
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Income tax (expense) benefit |
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(2,341 |
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1,642 |
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(3,952 |
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1,150 |
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Net income |
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$ |
3,431 |
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$ |
5,318 |
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$ |
5,894 |
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$ |
5,566 |
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Reconciliation of net income to Adjusted EBITDA: |
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Net income |
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$ |
3,431 |
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$ |
5,318 |
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$ |
5,894 |
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$ |
5,566 |
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Add (deduct): |
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Income tax expense (benefit) |
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2,341 |
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(1,642 |
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3,952 |
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(1,150 |
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Interest expense, net |
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3,008 |
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2,936 |
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5,991 |
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5,843 |
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Loss on disposition of assets |
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34 |
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16 |
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31 |
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14 |
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Depreciation and amortization |
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4,265 |
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4,832 |
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8,646 |
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7,410 |
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Stock-based compensation |
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1,361 |
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1,702 |
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2,687 |
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3,216 |
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Transaction expenses |
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306 |
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62 |
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306 |
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311 |
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Adjusted EBITDA |
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$ |
14,746 |
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$ |
13,224 |
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$ |
27,507 |
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$ |
21,210 |
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Selected Balance Sheet Data
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As of |
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As of |
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June 30, 2015 |
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December 31, 2014 |
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(Unaudited) |
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(Audited) |
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Cash |
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$ |
159,678 |
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$ |
142,010 |
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Debt |
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220,857 |
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221,791 |
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Leverage ratio (a): |
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4.0 |
x |
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Net leverage ratio (b): |
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1.1 |
x |
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(a) Represents the sum of gross debt and the unamortized balance of original issue discount of $1.9 million as of June 30, 2015, divided by Adjusted EBITDA for the last twelve months.
(b) Represents the sum of net debt and the unamortized balance of original issue discount of $1.9 million as of June 30, 2015, divided by Adjusted EBITDA for the last twelve months.
The following table presents estimated subscriber information:
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Subscribers (a) |
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June 30, 2015 |
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December 31, 2014 |
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U.S. Cable Networks: |
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WAPA America |
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5,218 |
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5,115 |
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Cinelatino |
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4,367 |
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4,297 |
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Pasiones |
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4,298 |
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4,004 |
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Centroamerica TV |
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3,921 |
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3,571 |
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Television Dominicana |
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2,856 |
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2,437 |
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Total |
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20,660 |
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19,424 |
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Latin America Cable Networks: |
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Cinelatino |
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11,103 |
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10,544 |
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Pasiones |
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9,421 |
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8,702 |
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Total |
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20,524 |
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19,246 |
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(a) Amounts presented are based on most recent remittances received from the Companys distributors as of the respective dates shown above.
Non-GAAP Reconciliations
Within Hemispheres second quarter 2015 press release, Hemisphere makes reference to the non-GAAP financial measure - Adjusted EBITDA. Whenever such information is presented, Hemisphere has complied with the provisions of the rules under Regulation G and Item 2.02 of Form 8-K. The specific reasons why Hemispheres management believes that the presentation of this non-GAAP financial measures provides useful information to investors regarding Hemispheres financial condition, results of operations and cash flows has been provided in the Form 8-K filed in connection with this press release.
Conference Call
Hemisphere will conduct a conference call to discuss its first quarter financial results at 10:00AM ET on Wednesday, August 11, 2015. A live broadcast of the conference call will be available online via the companys Investor Relations website located at http://ir.hemispheretv.com/. Alternatively, interested parties can access the conference call by dialing (855) 631-5368, or from outside the United States at (330) 863-3283, at least five minutes prior to the start time. The conference ID for the call is 97442451.
A replay of the call will be available beginning at approximately 2:00PM Eastern Time August 11 by dialing (855) 859-2056, or from outside the United States by dialing (404) 537-3406. The conference ID for the replay is 97442451.
Forward-Looking Statements
This press release may contain certain statements about Hemisphere that are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These include, but are not limited to, statements relating to Hemispheres future financial and operating results (including growth and earnings), plans, objectives, expectations and intentions and other statements that are not historical facts. These statements are based on the current expectations of the management of Hemisphere and are subject to uncertainty and changes in circumstance, which may cause actual results to differ materially from those expressed or implied in such forward-looking statements. Without limitation, any statements preceded or followed by or that include the words targets, plans, believes, expects, intends, will, likely, may, anticipates, estimates, projects, should, would, expect, positioned, strategy, future, or words, phrases or terms of similar substance or the negative thereof, are forward-looking statements. In addition, these statements are based on a number of assumptions that are subject to change. Factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements are discussed under the heading Risk Factors and Forward-Looking Statements in Hemispheres most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission (SEC), as they may be updated in any future reports filed with the SEC. If one or more of these factors materialize, or if any underlying assumptions prove incorrect, Hemispheres actual results, performance, or achievements may vary materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements included herein are made as of the date hereof, and Hemisphere undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances.
About Hemisphere Media Group, Inc.
Hemisphere Media Group (NASDAQ:HMTV) is the only publicly-traded pure-play U.S. media company targeting the high growth Spanish-language television and cable networks business in the U.S. and Latin America. Headquartered in Miami, Florida, Hemisphere owns and operates five leading U.S. Hispanic cable networks, two Latin American cable networks, and the leading broadcast television network in Puerto Rico. Hemispheres networks consist of:
· Cinelatino, the leading Spanish-language movie channel with over 15 million subscribers across the U.S., Latin America and Canada, including 4.4 million subscribers in the U.S. and 11.1 million subscribers in Latin America, featuring the largest selection of contemporary Spanish-language blockbusters and critically-acclaimed titles from Mexico, Latin America, Spain and the Caribbean.
· WAPA, Puerto Ricos leading broadcast television network with the highest primetime and full day ratings in Puerto Rico. Founded in 1954, WAPA produces more than 65 hours per week of top-rated news and entertainment programming.
· WAPA America, the leading cable network targeting Puerto Ricans and other Caribbean Hispanics living in the U.S., featuring the highly-rated news and entertainment programming produced by WAPA. WAPA America is distributed in the U.S. to over 5 million subscribers.
· Pasiones, dedicated to showcasing the most popular telenovelas and drama series, distributed in the U.S. and Latin America. Pasiones has 4.3 million subscribers in the U.S. and 9.4 million subscribers in Latin America.
· Centroamerica TV, the leading network targeting Central Americans living in the U.S., the third-largest U.S. Hispanic group, featuring the most popular news, entertainment and soccer programming from Central America. Centroamerica TV is distributed in the U.S. to 3.9 million subscribers.
· Television Dominicana, the leading network targeting Dominicans living in the U.S., featuring the most popular news, entertainment and baseball programming from the Dominican Republic. Television Dominicana is distributed in the U.S. to over 2.8 million subscribers.
Contacts
Hemisphere Media Group, Inc.
Robin Weinberg/Patrick Scanlan, 212-687-8080