Good afternoon and welcome to the Entravision Communications Corp. Second Quarter 2016 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Walter Ulloa, CEO. Please go ahead. Please go ahead, sir.

Oh, thank you, Danielle. Good afternoon, everyone, and welcome to Entravision's second quarter 2016 earnings conference call. Joining me today on the call is Chris Young, our Executive Vice President and Chief Financial Officer. Before we begin, I must inform you that this conference call will contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ. Please refer to our SEC filings for a list of risks and uncertainties that could impact actual results. This call is a property of Entravision Communications Corporation. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Entravision Communications Corporation is strictly prohibited. Also, this call will include non-GAAP financial measures. The company has provided a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures in today's press release. The press release is available on the company's Web site and was filed with the SEC on Form 8-K. Turning now to our second quarter results. We continued to execute our multi-platform strategy during the second quarter and made solid progress in both our television and digital businesses. While, we remained to work on the audio side, as we cycled against challenging comparisons from last year. That said, our radio assets remain well-positioned that we are benefiting from our Entravision Solution's network as one other industry leading content line-up. We also continue to return capital to shareholders to meet our quarterly dividend. Looking now to our financial results, revenues increased 8% to $64.8 million in the second quarter as higher TV and digital revenues offset a flat audio performance. Consolidated adjusted EBITDA also increased 8% to $18.2 million in the quarter compared to the same period last year. Free cash flow which we defined in our press…

Thank you, Walter and good afternoon everyone. As Walter discussed net revenue for the quarter was up 8% at $64.8 million compared to $59.9 million in the same quarter of last year. Operating expenses increased 6% to $39.9 million and consolidated adjusted EBITDA was $18.2 million. During the second quarter of 2016, the company paid a cash dividend of $3.125 of share to shareholders of the company's Class A, B and U common stock. The total amount of cash dispersed for the dividend was $2.8 million. The company also announced today that the Board of Directors has to clear the quarterly cash dividend of $3.125 per share to the shareholders of the company's common stock payable on September 30, 2016. The total amount of cash we dispersed for this quarterly dividend will be approximately $2.8 million. As previously announced we currently anticipate making cash dividends on a quarterly basis in future periods. For the quarter, TV net revenue was up 8% to $39.2 million compared to $36.4 million in the same quarter of last year. The increase in our TV segment was primarily attributable to an increase in national advertising revenue and increase in political advertising revenue, which was not material in 2015 and an increase in retransmission content revenue. Political revenue for the quarter was approximately $700,000 compared to $100,000 in the same quarter of last year. Retransmission content revenue for the quarter was $7.5 million compared to $7.2 million in the same quarter of last year. Radio net revenue for the quarter remained constant at $19.6 million compared to the same quarter of last year. Political revenue for the quarter was approximately $200,000 compared to $100,000 in the same quarter of last year. Digital net revenue for the quarter was up 55% to $6.1 million compared to $3.9…

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Michael Kupinski of Noble Financial. Please go ahead.

Thanks for taking the question. Can you talk about the extraordinary growth in the auto category and a little bit about the pacings as it looks into the third quarter? And if you can remind me, what was auto as a percent of total television revenues and what was it at the peak? And just finally, is the strong performance in auto similar to kind of like that late stage economic cycles that the company experienced in the past or is it something pretty extraordinary that what we're seeing right now?

Well, auto just to look back, you're looking for peak levels, back in 2006 and we've talked about this before Michael. Auto saw a peak of around 30%, 31% of our total TV revenue. Auto and for television in the prior quarter represented 34% so we're beyond that peak, we are at peak levels as we speak. So, it's kind of a good news, bad news story, we'll take the revenue, but we are very wary of where we are in the cycle as a result.

Are there other categories Chris that are -- I'm sorry, are there other categories that are kind of emerging that might kind of look like that they're gaining some strength as we kind of go into the second half?

Well, the legal services category which is a number two category that showed significant strength that was up double digits in the quarter as well. Grocery stores seem to be picking up as well with finance, so there are other categories, but nothing is coming close to the auto category. That's always been our number one category. And the primary driver of that over the past of couple of quarters hasn't been the national dollar per se but the local dealerships. Local dealerships were up almost 40% for a television group and that momentum for the past quarter and that momentum continues into the third quarter.

Michael, to what Chris has said already, our automotive category continues to produce great result for the company. Part of this of our success in auto this last quarter was due to Copa Centenario, which is a soccer tournament that was held during the month of June that was certainly a great event for our audiences as well as for advertisers and automotive category was certainly a part of that. Total automotive was up 25% over the second quarter for including all of our entire platform, which would be our TV our radio and digital. So…

I’m sorry.

Go ahead.

Finally, on an aggregate basis you talked about specifics on some of your radio programs and supports, but on an aggregate basis are rating up for the radio group?

The ratings are slightly off year-over-year compared to where we were this point last year.

And what that would be attributable to?

I think the environment -- really what's happening in Los Angeles and Phoenix in particular that that market place has got much more competitive on the content standpoint. You have folks that have been tweaking -- competitors that have been tweaking their content and it's been showing progress. So that's something that we need to address and we're doing that as we speak.

And finally, you mentioned the bookings were pretty strong on the political -- in the second half, is it -- is there anyway they couldn't add any color on that or frame bring that in terms of whether the rates are kind of improving now, is it tax money that's coming in, is it candidate money, any thoughts and guidance maybe in terms of political for the second half?

Well, as you're aware Michael 80% of the political revenue will now -- well, for all of us will fall in the third and fourth quarters. The first and second quarter or the first half of the year, our political was certainly above 2012, but it was slightly behind where we wanted to be, but we are seeing strong momentum building for third and fourth. I think I mentioned that we have more bookings on the books at this time than we had in 2012. But, the conventions are over now; the campaign is starting to focus on the advertising and getting ready for the final push, which will be in September and October. So, we expect to see momentum continue to build here as we move through August and get towards the end of August and we'll see where we're at in terms of how bookings have developed.

Walter, in past cycles what was the percent of presidential versus other political advertising whether it would be [indiscernible] or advocacy advertising?

That's a good question Michael. All I can say to is, I know that it was substantially -- it was the major part of our total political advertising for 2012 and 2008. So had to take a number, I'd say probably 70, 30.

I got it. Okay. All right. Thanks guys. I appreciate it.

The next question comes from Tracy Young of Evercore ISI. Please go ahead.

Yes. Hi. Could you give us some color on digital expenses and for margins or where you think digital cost as a percentage of revenue by next year?

Well, Tracy our expenses -- our revenue is up and as we indicated in our remarks. It was up 55% in Q2. And I think we're up over 40% through the first six months of the year. So we're very pleased with how our digital platform is performing, portfolio is the number one digital network to reach Latinos across all levels of acculturation. We also are spending more or investing more in our digital product through -- especially in the side of content, but our margins are probably somewhere, I think in second quarter what…

12%.

12%, we expect them to be higher for the year certainly. We also expect that our total digital revenues will be about 10% of total revenue. And -- but, our goal is to get our digital to 20% of total revenues for the company by the end of 2017 and that would be through a combination of organic growth and as well as some acquisitions that we're looking at and adding to our current digital platform.

Just add to that Tracy I would, looking at that 12% performance for Q2, I would look for a margin expansion of somewhere between 2 to 3 points per quarter over the next couple of quarters to get us through the year on top of that 12%.

Okay. Thank you very much. And then, just going back to the radio division, you mentioned on [cap] [ph] and you actually performed in line with the industry, so when -- as you look ahead is that you expecting deceleration or do you think that's where the industries had, could you just talk a little bit about that?

Well, Tracy I think one of the things that we're up against in the back half of the year that's when really our radio division started to shine. Q3, we talked about the pace early in Walter's remarks, remember Q3 for us last year our local ended up at plus 10, our national business ended up a whopping plus 27%. And all-end, the radio division was up 15%. So we're up against tough comps. If you look at the radio business sequentially this year, we continue to expect to see gains in the third and fourth quarter now where that stands against prior year numbers are different story just because prior year numbers were so strong that's kind of how we're looking at it right now.

We also expect Tracy that political will have a -- will drive our radio revenue growth into quarter as well.

Okay. Thank you.

Okay.

[Operator Instructions] The next question comes from James Dix of Wedbush Securities. Please go ahead.

Thanks. Good afternoon guys. I guess three things, just in terms of auto, you mentioned the strength in the dealers. I'm just wondering whether you've seen particular volatility or acceleration, deceleration from particular tiers historically and whether what you're seeing now is kind of consistent with that, but just simply the greater level, or whether you're seeing a different mix of growth than you've seen historically. And then second, just on political, I think Sinclair today called out an expectation for maybe a little bit more of a fourth quarter waiting to political this year, do you have a similar sense? They mentioned particularly the Trump campaign, so not sure whether that would affect you as much, but just curious whether you have any sense on the seasonality political being any different in particular this year than 2012? And then, I just have one follow-up.

And so the question was, is the political, I will call it, cycle this year than in -- different than in…

Yes. Do you think your political might just form, I saw a little bit more in fourth quarter than in prior election cycles?

Well, it always…

As it is, of course, at 3Q?

Yes. As I said earlier like 80% of all of the political revenue falls in the third and fourth quarter. But we could see to your -- to the question you raised is, we could see even more of that total political revenue fall in the third and fourth quarter this year maybe five points more then we'll see 85% more this year in terms of the split between the first half and the second half. It is building later than we anticipated. But and it hasn't been a year that has a little harder to predict in terms of which was its headed. But, we continue to remain optimistic about our performance. We believe that our media assets that we operate in the fourth key swing states will be vital at this time as well to grow in our political revenue. All roads lead to Florida, we have media assets in Central Florida -- I mean Orlando and Tampa. Then we believe that that winner Florida will eventually have to persuade the Latino were elected to support them in order to come out with the victory. And the same with Colorado, Nevada and Virginia.

Of the automotive question between the tires the best trends are concerned, what I will say is that, we are sitting here looking at Q2 at about 10% of our total auto revenue was Tire 1 and 90% was Tire 2 and 3. Three, four, five years ago, it was about 30% of our auto revenue was coming from Tire 1 and the balance 70% was coming from Tires 2 and 3. So, it clearly looks like the local and regional side of the auto business is accelerating while the rate for growth for the Tire-1 money seems to be decelerating. I believe that's helpful. That's an observation.

Yes. That's very helpful. And then, just my follow-up is, and just thoughts on the M&A environment. You mentioned a little bit the potential will require some digital assets over time. But I'm curious as to what you think might be your priorities in terms of just core TV stations, core radio stations, any sense as to where the market might be -- when and if the spectrum margin finally clears? Thanks.

James, as far as traditional assets are concerned, media assets, there are a lot of opportunities for us out there right now. I mean look around and we continue to receive the calls from brokers and other people that are involved in these transactions. But, in terms of what we are looking for and there is not the right fit, it hasn't come along. That doesn't mean that the market will change and suddenly there maybe some more opportunities to grow our traditional media assets. But, a lot of our focus is on digital. We think that certainly the performance of our digital business and it gives us great confidence that we are on the right track. Mobile first is certainly first and foremost -- how we look at digital and as well as marketing technology, data and branded content. So, I think you are going to see us more and more looking for ways to grow a digital media platform, if there are some traditional media assets that are out there that we think are interesting, certainly that will enhance our total media platform as well. But, anyway, I think that's…

Great.

That number is out of our [indiscernible].

James, I think you are done right?

Yes, done.

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

Danielle, thank you. And thank you everyone for participating on our second quarter 2016 investor call. We look forward to speaking to all of you in November. So, we will announce our earnings results for the third quarter. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.