Good day. And welcome to the Entravision Communications Corporation First Quarter 2018 Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that today’s event is being recorded. I would now like to turn the conference over to Mr. Walter Ulloa, Chairman and CEO. Please go ahead.

Thank you, Andrea. Good afternoon, everyone. And welcome to Entravision's first quarter 2018 earnings conference call. Joining me on the call today is Jeff Liberman, our President and COO; and 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 the 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 website and was filed with the SEC on Form 8-K. Our first quarter results were in line with our expectations with increased revenue overall, thanks to our digital segment partially offset by decreased revenues at both our television and radio segments. To be clear, this was a difficult quarter. The acceleration seen with industry platform changes has negatively impacted our linear delivery, creating significant operating headwinds across the country. As a result, during the quarter we began taking some necessary steps to realign our cost structure, given this new market reality. These steps resulted in over $8 million of annualized expenditures been removed from the business effective Q2 of this year. We will continue to focus on additional cost reductions and provide our investors with an update on our Q2 earnings call in August. Looking beyond the general business environment, our balance sheet…

Thanks, Walter, and good afternoon, everyone. As Walter has discussed net revenue for the quarter was up 16% to $66.8 million, compared to $57.5 million in the same quarter of last year. Operating expenses increase 16% to $44.3 million and consolidated adjusted EBITDA was $6.9 million. For the quarter revenues in our TV segment were down 9% to $34.5 million, compared to $37.7 million in the same quarter last year. The decrease in our TV segment was primarily attributable to decreases in national and local advertising revenue, partially offset by an increase in retransmission consent revenue and an increase in political advertising revenue, which was not material in 2017. We generated retransmission consent revenue of $8.9 million for the three-month period ended March 31, 2018, compared to $8 million in the same quarter of last year. Radio net revenue for the quarter was down 10% to $14.1 million, compared to $15.7 million in the same quarter of last year. The decrease in our radio segment was primarily due to decreases in local and national advertising revenue. Digital net revenue for the quarter was up 347% to $18.2 million, compared to $4.1 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 our results prior year period. For the quarter cost of revenue in our digital media segment was up to $10.6 million, compared to $1.8 million in the same quarter of last year. The increase was primarily due to the acquisition of Headway during the second quarter of 2017, which did not contribute to the cost of revenue in the prior year period. Operating expenses increased to $44.3 million for the three-month period ended March 31, 2018 from $38.3 million for…

Thank you. [Operator Instructions] And our first question comes from Michael Kupinski of Noble Capital. Please go ahead.

Thank you. Good afternoon. Thanks for taking my questions. I was wondering if you can give me a little color on radio expenses in the quarter is it -- were they seemed to little elevated -- would -- can you just give me some color on that.

Yeah. Just a quick comment on that, you're correct radio expenses were elevated and when we -- as I mentioned in my remarks, we have taken a good look at radio and taken steps to reduce debt that expense line and you'll see the results of that action in Q’s 2, Q3 and Q4 going forward but anyway that's…

Where the one type of cost in there Walter is that or any one time cost in the direct operating expenses?

No. The cash expense was a minus 3 over the prior year that's what you're talking about Michael?

Yeah. I was just looking at the total operating expenses for radio in total?

Yeah. It’s $15.2 million.

$15.2, okay…

Yeah.

And SG&A expenses were a little elevated in the quarter, is that right, is that or should we use that going as the run rate going forward?

No. We have been working on taking expenses out of the radio model. I'd be reducing that going forward, Michael, but I'm not really ready to give you a run rate number at this point.

Okay. And then in terms of political, what was political on TV and radio in the quarter?

Political was 400 for TV and 100 for radio.

Okay. And then in terms of with a lot of cash sitting there, any pipeline of acquisition prospects, do you think you might just hold on to the cash, where are your thoughts at this point?

Michael, we will continue to look at a number of opportunities, but we're using a pretty strict – we are using strict models when we assess any acquisition opportunities. And so, like I said, we have a pipeline of certainly of digital opportunities that would complement our existing digital platform. Occasioned that we see some television that might work and then, of course, if there is anything with regards to radio, but that's kind of the order in terms of which -- how we're looking at the future?

And I know that auto such a big factor for you guys especially in television, can you give us a little color on what it's looking like in Q2 in light of your guidance or your pacing guidance?

Pacing better than Q1, Q1 was…

Q1 was a minus 19…

… for TV and radio was a minus 12 and I believe that Q2 for auto is minus 12, is that correct, minus12. So it has improved, I mean, like I said, earlier Q1 was a very tough quarter. We are seeing some improvement across the different categories. We continue to use all of our assets to drive better results for our advertisers.

And Walter, you mention about the ratings in terms of the station performance and I think you said 11 in the late night news of your ‘17 markets were ratings leader. How does that compare with previous quarters, has it been trending better, the same or can you just give me a flavor on the ratings.

Well, we've been giving this type of information for a long time.

Right.

And I would say, I mean, I didn't go back and look and compare, but I've been doing this a while, so I can have a feel for it. I mean, I would suggest that our ratings performance for our news products was as good or better than it's ever been. So we're quite pleased with our results for our early and local -- early and late news in our Univision television markets.

Great. Okay. That's all I have. Thank you.

Thank you, Michael.

[Operator Instructions] Our next question comes from Jason Crawshaw of ‎Polaris Capital Management. Please go ahead.

Hi, guys. A couple of questions, I guess, just when you look at the digital business and roughly looking at the numbers, obviously, that's where the growth is. It seems like that business leads in the first quarter run sort of at breakeven at the EBIT level. Is the idea to continue to run that business really for growth and anticipation is minimal probability for the foreseeable future or I guess, ultimately, when did that business starts to become profitable on and will it be more profitable business than the two other businesses, I guess will be the first question.

Well, Jason, the statement you made I think is a correct one, which we are investing steadily in our digital business and we're pleased with the revenue growth. At the same time, we’re investing in technology, we're investing in more products, we're expanding our market penetration. So -- and then we've got expenses in our radio -- in our digital that are tied to the acquisition that we did last year. So, to answer your question, we will continue to invest, we will see some cash flow production from our digital businesses, particularly the second half of the year. But I think you'll see that cash flow accelerate certainly as we move into the second half of 2018 and then into ‘19.

And to be clear we had about $600,000 in onetime expenses in digital in the first quarter that obviously by definition are non-recurring. And then to Walter's point, yeah, we're expecting this business to generate margins at least in the high-single digits by year end.

Yes. But I guess going forward, I mean, structurally would seem that, a double-digit margin out of a well managed digital business should be kind of a feasible target or is there something specific that makes this structural high single-digit margin?

No. I think this year I don't think that's feasible but certainly not going beyond 2018 getting into the double-digit range is certainly the goal of ours.

Got it. And then, I guess, the other question or rather another question would be just looking at the M&A opportunities out there in digital. I mean my guess is anything that is remotely interesting or certainly has at the high level of growth opportunity or high level probability. The multiples on that must be fairly pricey, I guess, A, that a fair comment and then how do you kind of reconcile, I mean, clearly enough cash to do a cash deal, but when you kind of reconcile the fact that the stock itself is obviously quite cheap relative to what you have to pay cash digital assets how higher are these multiples.

Well, I’ll answer this way. I mean the multiples anywhere from, let's say, 8 times to 10 times. The ones that we're looking at. But we're making every effort to structure any acquisition we do in digital around two, well, around a very strong management team to begin with. And number two digital assets to complement our existing digital platform. And three, we want to sell us to have a skin of the game. We want to be able to bring these digital assets into our platform and make sure that the management team that we are merging with has every intention to grow these businesses as strong as they, as well as they can going forward. So there's an earn-out model that we use and we've -- I’ll say perfected but we've had good results with it.

Okay. And then just the last question really, I guess, on the balance sheet. So, I mean, clearly, I assume you have aspirations to continue to add pieces of the business and certainly that cash gives you a lot of flexibility. I guess the one thing you kind of look at the interest cost leakage between what the debt services relative to what you're on the cash, somewhere probably in the two roughly of kind of $8 million a year, which is not insignificant given the current probability of the business now. Clearly, if you're going to fully deploy that cash in there, new properties or share buyback, and obviously, get the $30 million. But it just seems like a big delta given the size of the business, given the profitability of the business. I mean, how would you kind of reconcile or address that comment or criticism?

Well, it's a function of what's out there as far as deploying the capital. I mean, we've put the bulk of our cash to work. We should generate on an annualized basis somewhere in the range of about $5.5 million in interest income that will continue to monitor and then what we do with the cash, going forward, we're really be a function of what the operating environment. But the opportunities thus far, clearly if there's nothing out there that what’s our appetite as far as M&A is concerned we will take another look at possibly using a good chunk of that cash towards some kind of debt repayment into that. We're not there yet…

Okay.

… just sit back and watch what happens.

All right. Thank guys. Appreciate it.

Thank you.

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

Thank you, Andrea and thank everyone for participating on our first quarter 2018 earnings call. Please join us in August when we will report our second quarter earnings results. Thank you.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.