# Entravision Communications Corp: Form 10-Q for the period ended Sep 30, 2023

- Company: [Entravision Communications Corp](/companies/evc.md) (CIK 1109116)
- Form: 10-Q
- Filed: 2023-11-02
- Accepted by EDGAR: Nov 2, 2023, 16:17 ET
- Period: 2023-09-30
- Accession: 0000950170-23-058238
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1109116/000095017023058238/evc-20230930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1109116/000095017023058238/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $274.4m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2023-01-01 to 2023-09-30 | $786.8m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-07-01 to 2023-09-30 | $199.3m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2023-01-01 to 2023-09-30 | $562.9m | us-gaap:CostOfGoodsAndServicesSold |
| Selling, general and administrative | 3 months, 2023-07-01 to 2023-09-30 | $22.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2023-01-01 to 2023-09-30 | $68.3m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | $5.1m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | $12.3m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2023-07-01 to 2023-09-30 | $4.5m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2023-01-01 to 2023-09-30 | $12.8m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | −$530.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | −$1.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | $2.7m | us-gaap:ProfitLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | $2.4m | us-gaap:ProfitLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.03 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | $0.03 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.03 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | $0.03 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 89,888,721 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 89,835,363 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | $69.1m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-01-01 to 2023-09-30 | $19.9m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2023-01-01 to 2023-09-30 | $13.2m | us-gaap:PaymentsOfDividends |
| Cash and equivalents | at 2023-09-30 | $110.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-30 | $385.3m | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $876.1m | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $256.2m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-09-30 | $590.1m | us-gaap:Liabilities |
| Long-term debt | at 2023-09-30 | $201.3m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2023-09-30 | $8.6m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2023-09-30 | $238.7m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 69,855 characters.

### Overview

We are a leading global advertising solutions, media and technology company. Our operations encompass integrated, end-to-end advertising solutions across multiple media, comprised of digital, television and audio properties. For financial reporting purposes, we report in three segments based upon the type of advertising medium: digital, television and audio (formerly radio).

Our digital segment, whose operations are primarily located in Latin America, Europe, the United States, Asia and Africa, reaches a global market, with a focus on advertisers in emerging economies that wish to advertise on digital platforms owned and operated primarily by global media companies. Our television and audio operations reach and engage primarily U.S. Hispanics in the United States.

Our net revenue for the three-month period ended September 30, 2023 was $274.4 million. Of that amount, revenue attributed to our digital segment accounted for 84%, revenue attributed to our television segment accounted for 11% and revenue attributed to our audio segment accounted for 5%. Our digital segment now accounts for the majority of our revenues and we expect this to continue in future periods.

We provide digital end-to-end advertising solutions that allow advertisers to reach online users worldwide. These solutions are comprised of four business units:

- our digital commercial partnerships business;
- Smadex, our programmatic ad purchasing platform;
- our mobile growth solutions business; and
- our digital audio business.

Through our digital commercial partnerships business – the largest of our digital business units – we act as an intermediary between primarily global media companies and advertising customers or their ad agencies. The global media companies we represent include Meta Platforms, or Meta (formerly known as Facebook Inc.), X Corp., or X (formerly known as Twitter), ByteDance Ltd., or ByteDance, which owns the TikTok platform, and Spotify AB, or Spotify, as well as other media companies, in 40 countries throughout the world. Our dedicated local sales teams sell advertising space on these media companies' digital platforms to our advertising customers or their ad agencies for the placement of ads directed to online users of a wide range of Internet-connected devices. We also provide some of these customers billing, technological and other support services, including strategic marketing and training, which we refer to as managed services.

Smadex is our programmatic ad purchasing platform, on which advertisers can purchase ad inventory. This practice – the purchase and sale of advertising inventory electronically – is referred to in our industry as programmatic advertising. Smadex is also a “demand-side platform”, which allows advertisers to purchase space from online marketplaces on which media companies list their advertising inventory. Most advertisements acquired through Smadex are placed on mobile devices, but they may also be placed on computers and Internet-connected televisions. We also provide managed services to some of our advertising customers in connection with their use of our Smadex platform.

We also offer a mobile growth solutions business, which provides managed services to advertisers looking to connect with consumers, primarily on mobile devices. This business allows us to manage programmatic media buys for our advertising customers or their ad agencies through multiple ad purchasing platforms in real time across multiple channels.

Our digital audio business provides digital audio advertising solutions for advertisers in the Americas. Our advertising customers and their ad agencies use these solutions to promote their brands on online audio streams, and provides them with tools to target specific users by demographic and geographic categories.

We have a diversified media portfolio that targets primarily Hispanic audiences. We own and/or operate 49 primary television stations located primarily in California, Colorado, Connecticut, Florida, Kansas, Massachusetts, Nevada, New Mexico, Texas and Washington, D.C. Our television operations comprise the largest affiliate group of both the top-ranked primary Univision television network of TelevisaUnivision Inc., or TelevisaUnivision, and TelevisaUnivision’s UniMás network. We own and operate 45 radio stations in 14 U.S. markets. Our radio stations consist of 37 FM and 8 AM stations located in Arizona, California, Colorado, Florida, Nevada, New Mexico and Texas. We also sell advertisements and syndicate radio programming to more than 100 markets across the United States.

In our digital segment, we generate revenue primarily from sales of advertising that are placed by our advertising customers or their ad agencies on the digital platforms of third-party media companies for which we act as commercial partner or placed directly with online digital marketplaces through our Smadex platform. In our television and audio segments, we generate revenue primarily from sales of national and local advertising time on television stations and radio stations, retransmission consent agreements that are entered into with MVPDs, and agreements associated with our television stations’ spectrum usage rights. Advertising rates are, in large part, based on each medium’s ability to attract audiences in demographic groups targeted by advertisers.

In our digital segment, we recognize advertising revenue when display or other digital advertisements record impressions on the websites and mobile and Internet-connected television apps of media companies on whose digital platforms the advertisements are placed or as the advertiser’s previously agreed-upon performance criteria are satisfied. In our television and audio segments, we recognize advertising revenue when commercials are broadcast. We do not obtain long-term commitments from our advertisers across any of our operations and, consequently, they may cancel, reduce or postpone orders without penalties. In our television and audio segments, we pay commissions to agencies for local and national advertising. For contracts we have entered into directly with agencies, we record net revenue from these agencies.

We refer to the revenue generated by agreements with MVPDs as retransmission consent revenue, which represents payments from MVPDs for access to our television station signals so that they may rebroadcast our signals and charge their subscribers for this programming. We recognize retransmission consent revenue earned as the television signal is delivered to an MVPD.

Our FCC licenses grant us spectrum usage rights within each of the television markets in which we operate. These spectrum usage rights give us the authority to broadcast our stations’ over-the-air television signals to our viewers. We regard these rights as a valuable asset. With the proliferation of mobile devices and advances in technology that have freed up spectrum capacity, the monetization of our spectrum usage rights has become a significant source of revenue in recent years. We generate revenue from agreements associated with these television stations’ spectrum usage rights from a variety of sources, including but not limited to agreements with third parties to utilize spectrum for the broadcast of their multicast networks; charging fees to accommodate the operations of third parties, including moving channel positions or accepting interference with our broadcasting operations; and modifying and/or relinquishing spectrum usage rights while continuing to broadcast through channel sharing or other arrangements. Revenue generated by such agreements is recognized over the period of the agreement or when we have relinquished all or a portion of our spectrum usage rights for a station or have relinquished our rights to operate a station on the existing channel free from interference. In addition, subject to certain restrictions contained in our 2023 Credit Agreement, we will consider strategic acquisitions of television stations to further this strategy from time to time, as well as additional monetization opportunities expected to arise as the television broadcast industry implements the standards contained in ATSC 3.0.

In our digital segment, our primary expense is cost of revenue, which consists primarily of the costs of online media acquired from the media companies for which we act as commercial partner or purchased directly from online digital marketplaces through our Smadex platform, as well as third party server costs. Our primary expenses in our television and audio segments, and a secondary expense in our digital segment, is employee compensation, including commissions paid to our sales staff and amounts paid to our national sales representative firms, as well as expenses for general and administrative functions, promotion and selling, engineering, marketing, and local programming.

### Highlights

During the third quarter of 2023, our consolidated revenue increased to $274.4 million from $241.0 million in the prior year period, primarily due to an increase in revenue in our digital segment, partially offset by a decrease in revenue in our television and audio segments.

Net revenue in our digital segment increased to $231.5 million for the three-month period ended September 30, 2023 from $188.9 million for the three-month period ended September 30, 2022. This increase of $42.6 million, or 23%, in net revenue was primarily due to advertising revenue growth from our digital commercial partnerships business, and due to various acquisitions, which did not fully contribute to our financial results in our digital segment in the comparable prior period.

Net revenue in our television segment decreased to $29.6 million for the three-month period ended September 30, 2023 from $35.7 million for the three-month period ended September 30, 2022. This decrease of $6.1 million, or 17%, in net revenue was primarily due to decreases in political advertising revenue and national advertising revenue, partially offset by increases in local advertising revenue and spectrum usage rights revenue.

Net revenue in our audio segment decreased to $13.4 million for the three-month period ended September 30, 2023 from $16.5 million for the three-month period ended September 30, 2022. This decrease of $3.1 million, or 19%, in net revenue was primarily due to a decrease in political advertising revenue, and decreases in local and national advertising revenue.

### The Impact of the COVID-19 Pandemic on our Business

*This section of this report should be read in conjunction with the rest of this item, “Forward-Looking Statements” and Notes to Consolidated Financial Statements appearing herein, for a more complete understanding of the impact of the COVID-19 pandemic on our business.*

The COVID-19 pandemic did not have a material effect on our business, from either an operational or financial perspective, during the three- and nine-month periods ended September 30, 2023. Subject to the extent and duration of possible resurgences of the pandemic from time to time and the continuing uncertain economic environment that has resulted, in part, from the pandemic, we anticipate that the pandemic will continue to have little or no material effect on our business, from either an operational or financial perspective, in future periods. Nonetheless, we cannot give any assurance whether a resurgence of the pandemic in any location where our operations have employees or where we operate would not adversely affect our operations and/or results of operations.

### Relationship with TelevisaUnivision

Substantially all of our television stations are Univision- or UniMás-affiliated television stations. Our network affiliation agreement with TelevisaUnivision provides certain of our owned stations the exclusive right to broadcast TelevisaUnivision’s primary Univision network and UniMás network programming in their respective markets. Under the network affiliation agreement, we retain the right to sell no less than four minutes per hour of the available advertising time on stations that broadcast Univision network programming, and the right to sell approximately four and a half minutes per hour of the available advertising time on stations that broadcast UniMás network programming, subject to adjustment from time to time by TelevisaUnivision.

Under the network affiliation agreement, TelevisaUnivision acts as our exclusive third-party sales representative for the sale of certain national advertising on our Univision- and UniMás-affiliate television stations, and we pay certain sales representation fees to TelevisaUnivision relating to sales of all advertising for broadcast on our Univision- and UniMás-affiliate television stations. During the three-month periods ended September 30, 2023 and 2022, the amount we paid TelevisaUnivision in this capacity was $1.5 million and $2.0 million, respectively. During the nine-month periods ended September 30, 2023 and 2022, the amount we paid TelevisaUnivision in this capacity was $4.5 million and $5.4 million, respectively These amounts were included in Direct Operating Expenses in our Condensed Consolidated Statements of Operations.

We also generate revenue under a marketing and sales agreement with TelevisaUnivision, which give us the right to manage the marketing and sales operations of TelevisaUnivision-owned Univision affiliates in three markets – Albuquerque, Boston and Denver.

Under our proxy agreement with TelevisaUnivision, we grant TelevisaUnivision the right to negotiate the terms of retransmission consent agreements for our Univision- and UniMás-affiliated television station signals. Among other things, the proxy agreement provides terms relating to compensation to be paid to us by TelevisaUnivision with respect to retransmission consent agreements entered into with MVPDs. During the three-month periods ended September 30, 2023 and 2022, retransmission consent revenue accounted for $8.9 million and $8.9 million, respectively, of which $6.2 million and $6.2 million, respectively, relate to the TelevisaUnivision proxy agreement. During the nine-month periods ended September 30, 2023 and 2022, retransmission consent revenue accounted for $27.9 million and $27.2 million, respectively, of which $19.3 million and $18.7 million, respectively, relate to the TelevisaUnivision proxy agreement. The term of the proxy agreement extends with respect to any MVPD for the length of the term of any retransmission consent agreement in effect before the expiration of the proxy agreement.

On October 2, 2017, we entered into the current affiliation agreement with TelevisaUnivision, which superseded and replaced our prior affiliation agreements with TelevisaUnivision. Additionally, on the same date, we entered into the current proxy agreement and current marketing and sales agreements with TelevisaUnivision, each of which superseded and replaced the prior comparable agreements with TelevisaUnivision. The term of each of these current agreements expires on December 31, 2026 for all of our Univision and UniMás network affiliate stations, except that each current agreement expired on December 31, 2021 with respect to our Univision and UniMás network affiliate stations in Orlando, Tampa and Washington, D.C.

Univision currently owns approximately 11% of our common stock on a fully-converted basis. Our Class U common stock, all of which is held by TelevisaUnivision, has limited voting rights and does not include the right to elect directors. Each share of Class U common stock is automatically convertible into one share of Class A common stock (subject to adjustment for stock splits, dividends or combinations) in connection with any transfer of such shares of Class U common stock to a third party that is not an affiliate of TelevisaUnivision. In addition, as the holder of all of our issued and outstanding Class U common stock, so long as TelevisaUnivision holds a certain number of shares of Class U common stock, we may not, without the consent of TelevisaUnivision, merge, consolidate or enter into a business combination, dissolve or liquidate our company or dispose of any interest in any FCC license with respect to television stations which are affiliates of TelevisaUnivision, among other things.

### Critical Accounting Policies

For a description of our critical accounting policies, please refer to “Application of Critical Accounting Policies and Accounting Estimates” in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2022 10-K.

### Recent Accounting Pronouncements

For further information on recently issued accounting pronouncements, see Note 2, “The Company and Significant Accounting Policies” in the accompanying Notes to Condensed Consolidated Financial Statements.

### Three- and Nine-Month Periods Ended September 30, 2023 and 2022

The following table sets forth selected data from our operating results for the three- and nine-month periods ended September 30, 2023 and 2022 (in thousands):

| Statements of Operations Data: | Three-Month Period Ended September 30,% 2023 | 2022 | Change | Nine-Month Period Ended September 30,% 2023 | 2022 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net Revenue | $274,417 | $241,014 | 14% | $786,804 | $659,881 | 19% |
| Cost of revenue - digital | 199,289 | 157,095 | 27% | 562,881 | 431,951 | 30% |
| Direct operating expenses | 31,855 | 30,086 | 6% | 94,782 | 87,505 | 8% |
| Selling, general and administrative expenses | 21,954 | 19,208 | 14% | 68,287 | 53,022 | 29% |
| Corporate expenses | 13,292 | 9,525 | 40% | 35,836 | 26,769 | 34% |
| Depreciation and amortization | 7,356 | 6,554 | 12% | 20,336 | 19,212 | 6% |
| 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 | (72)% | 289 | 2,112 | (86)% |
| Other operating (gain) loss | - | (58) | (100)% | - | (1,011) | (100)% |
|  | 269,286 | 225,110 | 20% | 774,461 | 626,370 | 24% |
| Operating income (loss) | 5,131 | 15,904 | (68)% | 12,343 | 33,511 | (63)% |
| Interest expense | (4,454) | (3,055) | 46% | (12,788) | (7,225) | 77% |
| Interest income | 1,558 | 788 | 98% | 3,455 | 1,916 | 80% |
| Dividend income | - | 6 | (100)% | 32 | 20 | 60% |
| Realized gain (loss) on marketable securities | (33) | (473) | (93)% | (94) | (473) | (80)% |
| Loss on debt extinguishment | - | - | \* | (1,556) | - | \* |
| Income before income (loss) taxes | 2,202 | 13,170 | (83)% | 1,392 | 27,749 | (95)% |
| Income tax benefit (expense) | 530 | (4,080) | \* | 1,038 | (8,305) | \* |
| Net income (loss) | 2,732 | 9,090 | (70)% | 2,430 | 19,444 | (88)% |
| Net (income) loss attributable to redeemable noncontrolling interest | (13) | - | \* | (1) | - | \* |
| Net (income) loss attributable to noncontrolling interest | - | 303 | (100)% | 342 | 303 | 13% |
| Net income (loss) attributable to common stockholders | $2,719 | $9,393 | (71)% | $2,771 | $19,747 | (86)% |
| **Other Data:** |  |  |  |  |  |  |
| Capital expenditures | 3,991 | 4,221 |  | 18,837 | 7,629 |  |
| Consolidated EBITDA (1) |  |  |  | 41,420 | 66,566 |  |
| Net cash provided by operating activities |  |  |  | 69,117 | 78,142 |  |
| Net cash used in investing activities |  |  |  | (13,926) | (55,987) |  |
| Net cash used in financing activities |  |  |  | (55,244) | (85,657) |  |

(1) Consolidated EBITDA means net income (loss) plus gain (loss) on sale of assets, depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation included in operating and corporate expenses, net interest expense, other operating gain (loss), gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from the Federal Communications Commission, or FCC, spectrum incentive auction less related expenses, expenses associated with investments, EBITDA attributable to redeemable noncontrolling interest, acquisitions and dispositions and certain pro-forma cost savings. We use the term consolidated EBITDA because that measure is defined in both the 2017 Credit Agreement and the 2023 Credit Agreement, and does not include gain (loss) on sale of assets, depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation, net interest expense, other income (loss), gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from FCC spectrum incentive auction less related expenses, expenses associated with investments, EBITDA attributable to redeemable noncontrolling interest, acquisitions and dispositions and certain pro-forma cost savings.

Because consolidated EBITDA is a measure governing several critical aspects of our 2023 Credit Facility, and since our ability to borrow under our Revolving Credit Facility is subject to compliance with a consolidated EBITDA financial covenant, we believe that it is important to disclose consolidated EBITDA to our investors. Our 2023 Credit Facility contains a total net leverage ratio financial covenant. The total net leverage ratio, or the ratio of consolidated total debt (net of up to $50.0 million of unrestricted cash) to trailing-twelve-month consolidated adjusted EBITDA, affects both our ability to borrow from our Revolving Credit Facility and our applicable margin for the interest rate calculation. Under our 2023 Credit Agreement, our maximum total leverage ratio may not exceed 3.25 to 1.00. In addition, our 2023 Credit Agreement contains interest coverage ratio financial covenant (calculated as set forth in the 2023 Credit Agreement), with a minimum permitted ratio of 3.00 to 1.00. As of September 30, 2023, we believe that we are in compliance with all covenants in the 2023 Credit Agreement.

While many in the financial community and we consider consolidated EBITDA to be important, it should be considered in addition to, but not as a substitute for or superior to, other measures of liquidity and financial performance prepared in accordance with accounting principles generally accepted in the United States of America, such as cash flows from operating activities, operating income (loss) and net income (loss). As consolidated EBITDA excludes non-cash gain (loss) on sale of assets, non-cash depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation expense, net interest expense, other income (loss), non-recurring cash expenses, gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from FCC spectrum incentive auction less related expenses, expenses associated with investments, EBITDA attributable to redeemable noncontrolling interest, acquisitions and dispositions and certain pro-forma cost savings, consolidated EBITDA has certain limitations because it excludes and includes several important financial line items. Therefore, we consider both non-GAAP and GAAP measures when evaluating our business. Consolidated EBITDA is also used to make executive compensation decisions.

Consolidated EBITDA is a non-GAAP measure. The most directly comparable GAAP financial measure to consolidated EBITDA is cash flows from operating activities. A reconciliation of this non-GAAP measure to cash flows from operating activities follows (in thousands):

|  | Nine-Month Period Ended September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Consolidated EBITDA | $41,420 | $66,566 |
| EBITDA attributable to redeemable noncontrolling interest | 736 | — |
| EBITDA attributable to noncontrolling interest | 230 | (5) |
| Interest expense | (12,788) | (7,225) |
| Interest income | 3,455 | 1,916 |
| Dividend income | 32 | 20 |
| Realized gain (loss) on marketable securities | (94) | (473) |
| Income tax expense | 1,038 | (8,305) |
| Amortization of syndication contracts | (358) | (348) |
| Payments on syndication contracts | 366 | 304 |
| Non-cash stock-based compensation included in direct operating expenses | (7,218) | (2,878) |
| Non-cash stock-based compensation included in corporate expenses | (9,835) | (5,117) |
| Depreciation and amortization | (20,336) | (19,212) |
| Change in fair value of contingent consideration | 8,939 | (6,810) |
| Impairment charge | (989) | — |
| Non-recurring cash severance charge | (612) | — |
| Other operating gain (loss) | — | 1,011 |
| Gain (loss) on debt extinguishment | (1,556) | — |
| Net (income) loss attributable to redeemable noncontrolling interest | (1) | — |
| Net (income) loss attributable to noncontrolling interest | 342 | 303 |
| Net income (loss) attributable to common stockholders | 2,771 | 19,747 |
| Depreciation and amortization | 20,336 | 19,212 |
| Impairment charge | 989 | — |
| Deferred income taxes | (169) | (3,151) |
| Non-cash interest | 264 | 1,076 |
| Amortization of syndication contracts | 358 | 348 |
| Payments on syndication contracts | (366) | (304) |
| Non-cash stock-based compensation | 17,053 | 7,995 |
| Realized (gain) loss on marketable securities | 94 | 473 |
| (Gain) loss on debt extinguishment | 1,556 | — |
| (Gain) loss on disposal of property and equipment | (11) | (599) |
| Change in fair value of contingent consideration | (8,939) | 6,810 |
| Net income (loss) attributable to redeemable noncontrolling interest | 1 | — |
| Net income (loss) attributable to noncontrolling interest | (342) | (303) |
| Changes in assets and liabilities: |  |  |
| (Increase) decrease in accounts receivable | 16,261 | 22,296 |
| (Increase) decrease in prepaid expenses and other current assets, operating leases right of use asset and other assets | (7,199) | (183) |
| Increase (decrease) in accounts payable, accrued expenses and other liabilities | 26,460 | 4,725 |
| Cash flows from operating activities | $69,117 | $78,142 |

### Consolidated Operations

*Net Revenue.* Net revenue increased to $274.4 million for the three-month period ended September 30, 2023 from $241.0 million for the three-month period ended September 30, 2022, an increase of $33.4 million, or 14%. Of the overall increase, $42.6 million was attributable to our digital segment and was primarily due to advertising revenue growth from our digital commercial partnerships business, and due to various acquisitions, which did not fully contribute to our financial results in our digital segment in the comparable prior period. The overall increase was partially offset by a decrease of $6.1 million attributable to our television segment, primarily due to decreases in political advertising revenue and national advertising revenue, partially offset by increases in local advertising revenue and spectrum usage rights revenue. In addition, the overall increase was partially offset by a decrease of $3.1 million attributable to our audio segment, primarily due to a decrease in political advertising revenue, and decreases in local and national advertising revenue.

Net revenue increased to $786.8 million for the nine-month period ended September 30, 2023 from $659.9 million for the nine-month period ended September 30, 2022, an increase of $126.9 million, or 19%. Of the overall increase, $140.9 million was attributable to our digital segment and was primarily due to advertising revenue growth from our digital commercial partnerships business, and due to various acquisitions, which did not fully contribute to our financial results in our digital segment in the comparable prior period. The overall increase was partially offset by a decrease of $9.1 million attributable to our television segment, primarily due to decreases in political advertising revenue and national advertising revenue, partially offset by increases in local advertising revenue, spectrum usage rights revenue and retransmission consent revenue. In addition, the overall increase was partially offset by a decrease of $4.9 million attributable to our audio segment, primarily due to a decrease in political advertising revenue, and decreases in local and national advertising revenue.

We believe that for the full year 2023, net revenue will increase, primarily as a result of growth in our digital segment and operating various acquisitions, which did not fully contribute to our financial results in our digital segment in 2022.

*Cost of revenue-Digital.* Cost of revenue in our digital segment increased to $199.3 million for the three-month period ended September 30, 2023 from $157.1 million for the three-month period ended September 30, 2022, an increase of $42.2 million, or 27%, primarily due to increased cost of revenue related to advertising revenue growth from our digital commercial partnerships business, and due to various acquisitions, which did not fully contribute to our financial results in our digital segment in the comparable prior period. As a percentage of digital net revenue, cost of revenue increased to 86% for the three-month period ended September 30, 2023 from 83% for the three-month period ended September 30, 2022.

Cost of revenue in our digital segment increased to $562.9 million for the nine-month period ended September 30, 2023 from $432.0 million for the nine-month period ended September 30, 2022, an increase of $130.9 million, or 30%, primarily due to increased cost of revenue related to advertising revenue growth from our digital commercial partnerships business, and due to various acquisitions, which did not fully contribute to our financial results in our digital segment in the comparable prior period. As a percentage of digital net revenue, cost of revenue increased to 86% for the nine-month period ended September 30, 2023 from 84% for the nine-month period ended September 30, 2022.

*Direct Operating Expenses.* Direct operating expenses increased to $31.9 million for the three-month period ended September 30, 2023 from $30.1 million for the three-month period ended September 30, 2022, an increase of $1.8 million, or 6%. Of the overall increase, $1.3 million was attributable to our digital segment, primarily due to an increase in non-cash stock-based compensation, which is mainly a result of the timing of the 2023 annual restricted stock unit ("RSU") grant to certain employees, which was made in February 2023 compared to the 2022 annual grant, which was made in December 2022, and due to an increase in expenses associated with the increase in digital advertising revenue. In addition, of the overall increase, $0.1 million was attributable to our television segment. Additionally, of the overall increase, $0.5 million was attributable to our audio segment, primarily due to an increase in non-cash stock-based compensation, which is mainly a result of the 2023 annual RSU grant timing mentioned above, and due to an increase in salaries. As a percentage of net revenue, direct operating expenses remained constant at 12% for each of the three-month periods ended September 30, 2023 and 2022.

Direct operating expenses increased to $94.8 million for the nine-month period ended September 30, 2023 from $87.5 million for the nine-month period ended September 30, 2022, an increase of $7.3 million, or 8%. Of the overall increase, $4.6 million was attributable to our digital segment, primarily due to an increase in non-cash stock-based compensation, which is mainly a result of the 2023 annual RSU grant timing mentioned above, and due to an increase in expenses associated with the increase in digital advertising revenue. In addition, of the overall increase, $1.0 million was attributable to our television segment, primarily due to an increase in non-cash stock-based compensation, which is mainly a result of the 2023 annual RSU grant timing mentioned above. Additionally, of the overall increase, $1.6 million was attributable to our audio segment, primarily due to an increase in non-cash stock-based compensation, which is mainly a result of the 2023 annual RSU grant timing mentioned above, and due to an increase in salaries. As a percentage of net revenue, direct operating expenses decreased to 12% for the nine-month period ended September 30, 2023 from 13% for the nine-month period ended September 30, 2022.

We believe that for the full year 2023 direct operating expenses will increase, primarily as a result of growth in our digital segment and due to an increase in non-cash stock-based compensation.

*Selling, General and Administrative Expenses.* Selling, general and administrative expenses increased to $22.0 million for the three-month period ended September 30, 2023 from $19.2 million for the three-month period ended September 30, 2022, an increase of $2.8 million, or 14%. Of the overall increase, $2.9 million was attributable to our digital segment and was primarily due to an increase in salary expense, and due to various acquisitions, which did not fully contribute to our financial results in our digital segment in the comparable prior period. Additionally, of the overall increase, $0.1 million was attributable to our audio segment. The overall increase was partially offset by a decrease of $0.2 million in our television segment, primarily due to a decrease in bad debt expense.

As a percentage of net revenue, selling, general and administrative expenses remained constant at 8% for each of the three-month periods ended September 30, 2023 and 2022.

Selling, general and administrative expenses increased to $68.3 million for the nine-month period ended September 30, 2023 from $53.0 million for the nine-month period ended September 30, 2022, an increase of $15.3 million, or 29%. Of the overall increase, $13.6 million was attributable to our digital segment and was primarily due to an increase in salary expense, and due to various acquisitions, which did not fully contribute to our financial results in our digital segment in the comparable prior period. Additionally, of the overall increase, $1.8 million was attributable to our audio segment, primarily due to increased rent expense in the temporary office space until the move to our new permanent offices, which was completed in June 2023. The overall increase was partially offset by a decrease of $0.2 million in our television segment, primarily due to a decrease in bad debt expense. As a percentage of net revenue, selling, general and administrative expenses increased to 9% for the nine-month period ended September 30, 2023 from 8% for the nine-month period ended September 30, 2022.

We believe that for the full year 2023 selling, general and administrative expenses will increase, primarily as a result of growth in our digital segment and operating various acquisitions, which did not fully contribute to our financial results in our digital segment in 2022.

*Corporate Expenses.* Corporate expenses increased to $13.3 million for the three-month period ended September 30, 2023 from $9.5 million for the three-month period ended September 30, 2022, an increase of $3.8 million or 40%. The increase was primarily due to an increase in non-cash stock-based compensation, which is mainly a result of the 2023 annual RSU grant timing mentioned above and RSU grant to our new CEO, and increases in professional service fees. As a percentage of net revenue, corporate expenses increased to 5% for the three-month period ended September 30, 2023 from 4% for the three-month period ended September 30, 2022.

Corporate expenses increased to $35.8 million for the nine-month period ended September 30, 2023 from $26.8 million for the nine-month period ended September 30, 2022, an increase of $9.0 million or 34%. The increase was primarily due to an increase in non-cash stock-based compensation, which is mainly a result of the 2023 annual RSU grant timing mentioned above and RSU grant to our new CEO, and increases in professional service fees, audit fees and rent expense. As a percentage of net revenue, corporate expenses increased to 5% for the nine-month period ended September 30, 2023 from 4% for the nine-month period ended September 30, 2022.

We believe that for the full year 2023 corporate expenses will increase, without taking into consideration the expense incurred in 2022 upon the passing of our late CEO, primarily as a result of an increase in non-cash stock-based compensation and an increase in professional service fees.

*Depreciation and Amortization.* Depreciation and amortization increased to $7.4 million for the three-month period ended September 30, 2023 compared to $6.6 million for the three-month period ended September 30, 2022, an increase of $0.8 million or 12%. The increase was primarily attributable to amortization of intangible assets from our various acquisitions.

Depreciation and amortization increased to $20.3 million for the nine-month period ended September 30, 2023 compared to $19.2 million for the nine-month period ended September 30, 2022, an increase of $1.1 million or 6%. The increase was primarily attributable to amortization of intangible assets from our various acquisitions.

*Foreign currency (gain) loss.* Historically, our revenues have primarily been denominated in U.S. dollars, and the majority of our current revenues continue to be, and are expected to remain, denominated in U.S. dollars. However, we have operations in countries other than the United States, primarily related to our digital business, and as a result, a portion of our revenues is denominated in currencies other than the U.S. dollar, primarily the Mexican peso, Argentine peso, Uruguayan peso, Euro, certain other Latin American currencies and various Asian and African currencies. As a result, we have operating expense, attributable to foreign currency, that is primarily related to the operations of our digital business. We had a foreign currency loss of $0.5 million for the three-month period ended September 30, 2023 compared to a foreign currency loss of $2.0 million for the three-month period ended September 30, 2022. We had a foreign currency loss of $0.3 million for the nine-month period ended September 30, 2023 compared to a foreign currency loss of $2.1 million for the nine-month period ended September 30, 2022. Foreign currency gains and losses are primarily due to currency fluctuations that affect our digital segment operations located outside the United States. In our digital operations outside the United States, we typically pay our global media partners in U.S. dollars but bill certain of our customers in their local currency. Therefore, during times of a strengthening U.S. dollar relative to other currencies, we may incur a loss based on the difference in value between what we pay in U.S dollars and what we ultimately receive in a local currency, when expressed in U.S. dollars, and conversely, during times of a weakening U.S. dollar relative to other currencies we may have a gain.

*Other operating gain.* We did not have other operating gain for the three-month period ended September 30, 2023, compared to $0.1 million for the three-month period ended September 30, 2022. We did not have other operating gain for the nine-month period ended September 30, 2023, compared to $1.0 million for the nine-month period ended September 30, 2022.

*Impairment.* During the three- and nine-month periods ended September 30, 2023 we incurred an impairment charge related to intangible assets subject to amortization totaling $1.0 million, due to a termination of an agreement with a media company for which we act as commercial partner in our digital segment.

*Change in fair value of contingent consideration.* As a result of changes in the fair value of contingent consideration related to our various acquisitions, we recognized income of $6.0 million and incurred an expense of $0.7 million for the three-month periods ended September 30, 2023 and 2022, respectively. As a result of changes in the fair value of contingent consideration related to our various acquisitions, we recognized income of $8.9 million and incurred an expense of $6.8 million for the nine-month periods ended September 30, 2023 and 2022, respectively.

*Operating income (loss).* As a result of the above factors, operating income was $5.1 million for the three-month period ended September 30, 2023, compared to operating income of $15.9 million for the three-month period ended September 30, 2022.

As a result of the above factors, operating income was $12.3 million for the nine-month period ended September 30, 2023, compared to operating income of $33.5 million for the nine-month period ended September 30, 2022.

*Interest Expense, net.* Interest expense, net increased to $2.9 million for the three-month period ended September 30, 2023 from $2.3 million for the three-month period ended September 30, 2022. This increase was primarily due to a higher interest rate on our debt, partially offset by interest income on our available for sale securities.

Interest expense, net increased to $9.3 million for the nine-month period ended September 30, 2023 from $5.3 million for the nine-month period ended September 30, 2022. This increase was primarily due to a higher interest rate on our debt, partially offset by interest income on our available for sale securities.

We anticipate that interest expense will continue to increase in future periods as long as interest rates increase, since our borrowings under our 2023 Credit Facility bear interest at a variable rate.

*Realized gain (loss) on marketable securities.* For the three and nine-month periods ended September 30, 2023 we recorded a de minimis amount and $0.1 million, respectively, of realized loss, related to our available for sale securities. For each of the three- and nine-month periods ended September 30, 2022 we recorded a realized loss of $0.5 million, related to our available for sale securities.

*Loss on debt extinguishment.* We recorded a loss on debt extinguishment of $1.6 million for the nine-month period ended September 30, 2023 due to the refinancing of our 2017 Credit Facility with our 2023 Credit Facility.

*Income Tax Benefit (Expense).* Income tax benefit for the nine-month period ended September 30, 2023 was $1.0 million, or 75% of our pre-tax income. Income tax expense for the nine-month period ended September 30, 2022 was $8.3 million, or 30% of our pre-tax income. The effective tax rate for the nine-month period ended September 30, 2023 was different from our statutory rate due to foreign and state taxes, changes in valuation allowances on deferred tax assets, non deductible executive compensation, changes in the fair value of the contingent consideration liability, and non-taxable non-territorial income.

Our management periodically evaluates the realizability of the deferred tax assets and, if it is determined that it is more likely than not that the deferred tax assets are, or are not, realizable, adjusts the valuation allowance accordingly. Valuation allowances are established and maintained for deferred tax assets on a “more likely than not” threshold. The process of evaluating the need to maintain a valuation allowance for deferred tax assets and the amount maintained in any such allowance is highly subjective and is based on many factors, several of which are subject to significant judgment calls.

Based on our analysis, we determined that it was more likely than not that our deferred tax assets would be realized for all jurisdictions with the exception of certain of our digital operations and certain U.S. Foreign Tax Credit carryovers. As a result of historical losses from our digital operations primarily in Spain, Uruguay, Mexico and Argentina and certain U.S. Foreign Tax Credit carryovers, management has determined that it is more likely than not that deferred tax assets of $5.0 million at September 30, 2023 will not be realized and therefore we have established a valuation allowance in that amount on those assets.

The Organization for Economic Co-operation and Development (“OECD”) Pillar 2 guidelines address the increasing digitalization of the global economy, re-allocating taxing rights among countries. The European Union, many other member states and various other governments have adopted, or are in the process of adopting, Pillar 2 which calls for a global minimum tax of 15% to be effective for tax years beginning in 2024. The OECD guidelines published to date include transition and safe harbor rules around the implementation of the Pillar 2 global minimum tax. We are monitoring developments and evaluating the impacts these new rules will have on our tax rate, including eligibility to qualify for these safe harbor rules.

### Segment Operations

### Digital

*Net Revenue.* Net revenue in our digital segment increased to $231.5 million for the three-month period ended September 30, 2023 from $188.9 million for the three-month period ended September 30, 2022. This increase of $42.6 million, or 23%, in net revenue was primarily due to advertising revenue growth from our digital commercial partnerships business, and due to various acquisitions, which did not fully contribute to our financial results in our digital segment in the comparable prior period.

Net revenue in our digital segment increased to $657.9 million for the nine-month period ended September 30, 2023 from $517.0 million for the nine-month period ended September 30, 2022. This increase of $140.9 million, or 27%, in net revenue was primarily due to advertising revenue growth from our digital commercial partnerships business, and due to various acquisitions, which did not fully contribute to our financial results in our digital segment in the comparable prior period.

*Cost of revenue*. Cost of revenue in our digital segment increased to $199.3 million for the three-month period ended September 30, 2023 from $157.1 million for the three-month period ended September 30, 2022, an increase of $42.2 million, or 27%, primarily due to increased cost of revenue related to advertising revenue growth from our digital commercial partnerships business, and due to various acquisitions, which did not fully contribute to our financial results in our digital segment in the comparable prior period.

Cost of revenue in our digital segment increased to $562.9 million for the nine-month period ended September 30, 2023 from $432.0 million for the nine-month period ended September 30, 2022, an increase of $130.9 million, or 30%, primarily due to increased cost of revenue related to advertising revenue growth from our digital commercial partnerships business, and due to various acquisitions, which did not fully contribute to our financial results in our digital segment in the comparable prior period.

We have previously noted a trend in our digital operations globally whereby revenue is shifting more to programmatic revenue. As a result, advertisers are demanding more efficiency and lower cost from intermediaries like us. In response to this trend, we have been offering programmatic alternatives to advertisers, which continues to put pressure on margins. Among our programmatic solutions is our Smadex ad purchasing platform. Additionally, we are experiencing lower margins related to revenue generated from the primarily global media companies for which we act as commercial partner, as a result of relative negotiating strength and industry trends generally. We expect these trends will continue in future periods, likely further resulting in a more pronounced lower margin business in our digital segment. For example, based on communications with our largest commercial partner, we have received a lower rate of payment on our sales made on behalf of this company beginning in the second half of 2023, resulting in further lower margins. The digital advertising industry remains dynamic and is continuing to undergo rapid changes in technology, customer expectation and competition. We expect this trend to continue and possibly accelerate. We must continue to remain vigilant to meet these dynamic and rapid changes including the need to further adjust our business strategies accordingly. No assurances can be given that such strategies will be successful.

*Direct operating expenses*. Direct operating expenses in our digital segment increased to $9.3 million for the three-month period ended September 30, 2023 from $8.0 million for the three-month period ended September 30, 2022, an increase of $1.3 million, or 16%. The increase was primarily due to an increase in non-cash stock-based compensation, which is mainly a result of the 2023 annual RSU grant timing mentioned above, and due to an increase in expenses associated with the increase in digital advertising revenue.

Direct operating expenses in our digital segment increased to $27.6 million for the nine-month period ended September 30, 2023 from $23.0 million for the nine-month period ended September 30, 2022, an increase of $4.6 million, or 20%. The increase was primarily due to an increase in non-cash stock-based compensation, which is mainly a result of the 2023 annual RSU grant timing mentioned above, and due to an increase in expenses associated with the increase in digital advertising revenue.

*Selling, general and administrative expenses*. Selling, general and administrative expenses in our digital segment increased to $13.9 million for the three-month period ended September 30, 2023 from $11.0 million for the three-month period ended September 30, 2022, an increase of $2.9 million, or 26%. The increase was primarily due to an increase in salary expense, and due to various acquisitions, which did not fully contribute to our financial results in our digital segment in the comparable prior period.

Selling, general and administrative expenses in our digital segment increased to $42.2 million for the nine-month period ended September 30, 2023 from $28.6 million for the nine-month period ended September 30, 2022, an increase of $13.6 million, or 48%. The increase was primarily due to an increase in salary expense, and due to various acquisitions, which did not fully contribute to our financial results in our digital segment in the comparable prior period.

### Television

*Net Revenue.* Net revenue in our television segment decreased to $29.6 million for the three-month period ended September 30, 2023 from $35.7 million for the three-month period ended September 30, 2022. This decrease of $6.1 million, or 17%, in net revenue was primarily due to decreases in political advertising revenue and national advertising revenue, partially offset by increases in local advertising revenue and spectrum usage rights revenue.

Net revenue in our television segment decreased to $89.8 million for the nine-month period ended September 30, 2023 from $98.9 million for the nine-month period ended September 30, 2022. This decrease of $9.1 million, or 9%, in net revenue was primarily due to decreases in political advertising revenue and national advertising revenue, partially offset by increases in local advertising revenue, spectrum usage rights revenue and retransmission consent revenue.

In general, our television segment faces declining audiences, which we believe is present across the industry, competitive factors with the other major Spanish-language broadcasters, and changing demographics and preferences of audiences, particularly younger audiences, in terms of the media they prefer to view, including streaming and social media. We anticipate that these changes in viewer habits will persist and may accelerate at least for the foreseeable future and possibly permanently. Additionally, notwithstanding the increase in local advertising revenue, we have previously noted a trend for advertising to move increasingly from traditional media, such as television, to new media, such as digital media, and we expect this trend will also continue.

*Direct Operating Expenses.* Direct operating expenses in our television segment increased to $15.0 million for the three-month period ended September 30, 2023 from $14.9 million for the three-month period ended September 30, 2022.

Direct operating expenses in our television segment increased to $44.7 million for the nine-month period ended September 30, 2023 from $43.7 million for the nine-month period ended September 30, 2022, an increase of $1.0 million, or 2%. The increase was primarily due to an increase in non-cash stock-based compensation, which is mainly a result of the 2023 annual RSU grant timing mentioned above.

*Selling, General and Administrative Expenses.* Selling, general and administrative expenses in our television segment decreased to $4.9 million for the three-month period ended September 30, 2023 from $5.1 million for the three-month period ended September 30, 2022, a decrease of $0.2 million, or 3%. The decrease was primarily due to a decrease in bad debt expense.

Selling, general and administrative expenses in our television segment decreased to $15.1 million for the nine-month period ended September 30, 2023 from $15.3 million for the nine-month period ended September 30, 2022, a decrease of $0.2 million, or 1%. The decrease was primarily due to a decrease in bad debt expense.

### Audio

*Net Revenue*. Net revenue in our audio segment decreased to $13.4 million for the three-month period ended September 30, 2023 from $16.5 million for the three-month period ended September 30, 2022. This decrease of $3.1 million, or 19%, in net revenue was primarily due to a decrease in political advertising revenue, and decreases in local and national advertising revenue.

Net revenue in our audio segment decreased to $39.1 million for the nine-month period ended September 30, 2023 from $44.0 million for the nine-month period ended September 30, 2022. This decrease of $4.9 million, or 11%, in net revenue was primarily due to a decrease in political advertising revenue, and decreases in local and national advertising revenue.

In general, our audio segment faces declining audiences, which we believe is present across the industry, competitive factors with other major Spanish-language broadcasters, and changing demographics and preferences of listening audiences, particularly younger audiences, including podcasts and other streaming services. We anticipate that these changes in listener habits will persist and may accelerate at least for at least for the foreseeable future and possibly permanently. Additionally, we have previously noted a trend for advertising to move increasingly from traditional media, such as radio, to new media, such as digital media, and we expect this trend will also continue.

*Direct Operating Expenses.* Direct operating expenses in our audio segment increased to $7.6 million for the three-month period ended September 30, 2023 from $7.1 million for the three-month period ended September 30, 2022, an increase of $0.5 million, or 7%. The increase was primarily due to an increase in non-cash stock-based compensation, which is mainly a result of the 2023 annual RSU grant timing mentioned above, and due to an increase in salaries.

Direct operating expenses in our audio segment increased to $22.4 million for the nine-month period ended September 30, 2023 from $20.8 million for the nine-month period ended September 30, 2022, an increase of $1.6 million, or 8%. The increase was primarily due to an increase in non-cash stock-based compensation, which is mainly a result of the 2023 annual RSU grant timing mentioned above, and due to an increase in salaries.

*Selling, General and Administrative Expenses.* Selling, general and administrative expenses in our audio segment increased to $3.2 million for the three-month period ended September 30, 2023 from $3.1 million for the three-month period ended September 30, 2022.

Selling, general and administrative expenses in our audio segment increased to $11.0 million for the nine-month period ended September 30, 2023 from $9.2 million for the nine-month period ended September 30, 2022, an increase of $1.8 million, or 20%. The increase was primarily due to increased rent expense in temporary office space until the move to our new permanent offices, which was completed in June 2023.

### Liquidity and Capital Resources

While we have a history of operating losses in some periods and operating income in other periods, we also have a history of generating significant positive cash flows from our operations. We had net income attributable to common stockholders of $18.1 million and $29.3 million for the years ended December 31, 2022 and 2021, respectively, and a net loss attributable to common stockholders of $3.9 million for the year ended December 31, 2020. We had positive cash flow from operations of $78.9 million, $65.3 million and $63.4 million for the years ended December 31, 2022, 2021 and 2020, respectively. We had positive cash flow from operations of $69.1 million for the nine-month period ended September 30, 2023. For at least the next twelve months, we expect to fund our working capital requirements, capital expenditures and payments of principal and interest on outstanding indebtedness, with cash on hand and cash flows from operations.

We currently believe that our cash position is capable of meeting our operating and capital expenses and debt service requirements for at least the next twelve months from the issuance of this report. We believe that our position is strengthened by cash and cash equivalents on hand, in the amount of $110.6 million, and available for sale marketable securities in the additional amount of $18.1 million, as of September 30, 2023.

Our liquidity is not materially affected by the amounts held in accounts outside the United States. The majority of our cash and cash equivalents is held outside the United States, primarily in Uruguay, Spain, Ecuador and Singapore, none of which countries have foreign currency controls. We hold smaller amounts of cash in certain countries that do have foreign currency controls, including South Africa and Argentina, which could impact our ability to freely repatriate such funds from those countries to the United States.

### 2017 Credit Facility

*The following discussion pertains to the 2017 Credit Facility and the 2017 Credit Agreement. It does not purport to be a complete discussion of the full terms and conditions of the 2017 Credit Facility or the 2017 Credit Agreement. For more information, please refer to Note 2 to Notes to Consolidated Financial Statements and the 2017 Credit Agreement itself.*

On November 30, 2017 (the “2017 Closing Date”), we entered into its 2017 Credit Facility pursuant to the 2017 Credit Agreement. The 2017 Credit Facility consisted of a $300.0 million senior secured Term Loan B Facility (the “Term Loan B Facility”), which was drawn in full on the 2017 Closing Date.

Borrowings under the Term Loan B Facility were used on the 2017 Closing Date (a) to repay in full all of our and our subsidiaries’ outstanding obligations under our previous credit facility and to terminate the credit agreement relating thereto, (b) to pay fees and expenses in connection with the 2017 Credit Facility and (c) for general corporate purposes.

Our borrowings under the 2017 Credit Facility bore interest on the outstanding principal amount thereof from the date when made at a rate per annum equal to either: (i) the Eurodollar Rate (as defined in the 2017 Credit Agreement) plus 2.75%; or (ii) the Base Rate (as defined in the 2017 Credit Agreement) plus 1.75%. As of March 16, 2023, the interest rate on our Term Loan B was 7.38%. The Term Loan B Facility had an expiration date on November 30, 2024.

For information regarding other provisions, terms and conditions of the 2017 Credit Agreement and our 2017 Credit Facility, please see the discussion beginning on page 12 in Note 2 to Notes to Condensed Consolidated Financial Statements.

### 2023 Credit Facility

*The following discussion pertains to the 2023 Credit Facility and the 2023 Credit Agreement. It does not purport to be a complete discussion of the full terms and conditions of the 2023 Credit Facility or the 2023 Credit Agreement. For more information, please refer to Note 2 to Notes to Consolidated Financial Statements and the 2023 Credit Agreement itself.*

On March 17, 2023 (the “2023 Closing Date”), we entered into the 2023 Credit Facility, pursuant to the 2023 Credit Agreement, by and among us, Bank of America, N.A., as Administrative Agent (the “Agent”), and the other financial institutions party thereto as Lenders (collectively, the “Lenders” and individually each a “Lender”).

As provided for in the 2023 Credit Agreement, our 2023 Credit Facility consists of (i) a $200.0 million senior secured Term A Facility, which was drawn in full on the 2023 Closing Date, and (ii) a $75.0 million Revolving Credit Facility (the “Revolving Credit Facility”), of which $11.5 million was drawn on the 2023 Closing Date. In addition, the 2023 Credit Agreement provides that we may increase the aggregate principal amount of our 2023 Credit Facility by an additional amount equal to $100.0 million plus the amount that would result in our first lien net leverage ratio (as such term is used in the 2023 Credit Agreement) not exceeding 2.25 to 1.0, subject to our satisfying certain conditions.

Borrowings under our 2023 Credit Facility were used on the 2023 Closing Date (a) to repay in full all of our and our subsidiaries' outstanding obligations under the 2017 Credit Agreement, (b) to pay fees and expenses in connection with our 2023 Credit Facility and (c) for general corporate purposes. The 2023 Credit Facility matures on March 17, 2028 (the “Maturity Date”).

The 2023 Credit Facility is guaranteed on a senior secured basis by certain of our existing and future wholly-owned domestic subsidiaries, and secured on a first priority basis by our and those subsidiaries’ assets.

Our borrowings under the 2023 Credit Facility will bear interest on the outstanding principal amount thereof from the date when made at a rate per annum equal to either: (i) the Term SOFR (as defined in the 2023 Credit Agreement) plus a margin between 2.50% and 3.00%, depending on the Total Net Leverage Ratio or (ii) the Base Rate (as defined in the 2023 Credit Agreement) plus a margin between 1.50% and 2.00%, depending on the Total Net Leverage Ratio. In addition, the unused portion of the Revolving Credit Facility is subject to a rate per annum between 0.30% and 0.40%, depending on the Total Net Leverage Ratio.

As of September 30, 2023, the interest rate on our Term A Facility and the drawn portion of the Revolving Credit Facility was 8.16%.

The amounts outstanding under the 2023 Credit Facility may be prepaid at our option without premium or penalty, provided that certain limitations are observed, and subject to customary breakage fees in connection with the prepayment of a Term SOFR loan. The principal amount of the Term A Facility shall be paid in installments on the dates and in the respective amounts set forth in the 2023 Credit Agreement, with the final balance due on the Maturity Date.

### Consolidated EBITDA

Consolidated EBITDA decreased to $41.4 million for the nine-month period ended September 30, 2023 compared to $66.6 million for the nine-month period ended September 30, 2022. As a percentage of net revenue, consolidated EBITDA decreased to 5% for the nine-month periods ended September 30, 2023 from 10% for the nine-month periods ended September 30, 2022.

Consolidated EBITDA, which is defined in the 2023 Credit Agreement, is a non-GAAP measure. For a reconciliation of consolidated EBITDA to cash flows from operating activities, its most directly comparable GAAP financial measure, please see page 39.

### Share Repurchase Program

On March 1, 2022, our Board of Directors approved a share repurchase program of up to $20 million of our Class A common stock. Under this share repurchase program, we are authorized to purchase shares of our Class A common stock from time to time through open market purchases or negotiated purchases, subject to market conditions and other factors.

In the three- and nine-month periods ended September 30, 2023, we did not repurchase any shares of our Class A common stock. As of September 30, 2023, we have repurchased a total of 1.8 million shares of our Class A common stock under the current share repurchase program for an aggregate purchase price of $11.3 million, or an average price per share of $6.43. All such repurchased shares were retired as of September 30, 2023.

### Cash Flow

Net cash flow provided by operating activities was $69.1 million for the nine-month period ended September 30, 2023, compared to net cash flow provided by operating activities of $78.1 million for the nine-month period ended September 30, 2022. We had net income of $2.4 million for the nine-month period ended September 30, 2023, which included non-cash items such as deferred income taxes of $0.2 million, depreciation and amortization expense of $20.3 million, change in fair value of contingent consideration of $8.9 million, non-cash stock-based compensation of $17.1 million, and loss on debt extinguishment of $1.6 million. We had net income of $19.4 million for the nine-month period ended September 30, 2022, which included non-cash items such as deferred income taxes of $3.2 million, depreciation and amortization expense of $19.2 million, change in fair value of contingent consideration of $6.8 million, non-cash stock-based compensation of $8.0 million, and gain on disposal of property and equipment of $0.6 million. We expect to have positive cash flow from operating activities for the 2023 year.

Net cash flow used in investing activities was $13.9 million for the nine-month period ended September 30, 2023, compared to net cash flow used in investing activities of $56.0 million for the nine-month period ended September 30, 2022. During the nine-month period ended September 30, 2023, we spent $11.4 million on purchases of marketable securities and $19.9 million in net capital expenditures, made a loan of $13.6 million, spent $6.9 million on purchase of businesses, and received $38.1 million from the sale of marketable securities. During the nine-month period ended September 30, 2022, we spent $92.5 million on purchases of marketable securities, spent $7.9 million in net capital expenditures, spent $5.2 million on investments in VIEs, net of cash consolidated, received $46.9 million from the sale of marketable securities, and received $2.7 million from the sale of property and equipment and intangibles. We anticipate that our capital expenditures will be $21.5 million during the full year 2023. Of this amount, we have been reimbursed $3.5 million in connection with our new office lease as of September 30, 2023, and expect that an additional amount of $0.4 million will be reimbursed in connection therewith. The amount of our anticipated capital expenditures may change based on future changes in business plans and our financial condition and general economic conditions. We expect to fund capital expenditures with cash on hand and net cash flow from operations.

Net cash flow used in financing activities was $55.2 million for the nine-month period ended September 30, 2023, compared to net cash flow used in financing activities of $85.7 million for the nine-month period ended September 30, 2022. During the nine-month period ended September 30, 2023, we made debt payments of $214.5 million, dividend payments of $13.2 million, distributions to noncontrolling interest of $3.4 million, payments of contingent consideration of $35.1 million, payments of $1.8 million of debt issuance costs, payments for taxes related to shares withheld for share-based compensation plans of $0.2 million, and received $212.4 million proceeds from borrowings on debt and $0.6 million related to the issuance of common stock upon the exercise of stock options. During the nine-month period ended September 30, 2022, we made payments of contingent consideration of $65.3 million, dividend payments of $6.4 million, debt payments of $2.5 million, payments for taxes related to shares withheld for share-based compensation plans of $0.3 million, spent $11.3 million for the repurchase of Class A common stock, and received $0.2 million related to the issuance of common stock upon the exercise of stock options.

### Credit Risk

We have 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. We believe that we manage this credit risk effectively, in part by analyzing the creditworthiness of these customers; however, we can give no assurance that this will continue to be the case in future periods.

Additionally, we are dependent upon one single global media company for the majority of our consolidated revenue, which amounted to 54% and 53% of our consolidated revenue for the three- and nine-month periods ended September 30, 2023, respectively, and 49% and 51% of our consolidated revenue for the three- and nine-month periods ended September 30, 2022, respectively. We expect that this dependence will continue. The loss of all or a substantial part of this revenue would have a significant adverse effect on our liquidity and cash flow.

## Market risk

As filed, 4,037 characters.

### General

Market risk represents the potential loss that may affect our financial position, results of operations and/or cash flows due to adverse changes in the financial markets. We are also exposed to market risk from changes in the base rates on our 2023 Credit Facility.

### Interest Rates

As of September 30, 2023, we had $209.0 million of variable rate bank debt outstanding under our 2023 Credit Facility. Our borrowings bear interest on the outstanding principal amount thereof from the date when made at a rate per annum equal to either: (i) the Term SOFR (as defined in the 2023 Credit Agreement) plus a margin between 2.50% and 3.00%, depending on the Total Net Leverage Ratio or (ii) the Base Rate (as defined in the 2023 Credit Agreement) plus a margin between 1.50% and 2.00%, depending on the Total Net Leverage Ratio. In addition, the unused portion of the Revolving Credit Facility is subject to a rate per annum between 0.30% and 0.40%, depending on the Total Net Leverage Ratio.

Because our debt is subject to interest at a variable rate, our earnings will be affected in future periods by changes in interest rates. If the SOFR were to increase by a hypothetical 100 basis points, or one percentage point, from its September 30, 2023 level, our annual interest expense would increase and cash flow from operations would decrease by $2.1 million based on the outstanding balance of our term loan as of September 30, 2023.

### Foreign Currency

We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. dollar. Historically, our revenues have primarily been denominated in U.S. dollars, and the majority of our current revenues continue to be, and are expected to remain, denominated in U.S. dollars. However, we have operations in countries other than the United States, primarily related to our digital business, and as a result we expect an increasing portion of our future revenues to be denominated in currencies other than the U.S. dollar, primarily the Mexican peso, Argentine peso, certain other Latin American currencies and various Asian currencies. The effect of an immediate and hypothetical 10% adverse change in foreign exchange rates on foreign-denominated accounts receivable at September 30, 2023 would not be material to our consolidated results of operations or overall financial condition. Our operating expenses are primarily denominated in U.S. dollars. In addition, certain of our operating expenses are denominated in the currencies of the countries in which our operations are located, such as Spain, Latin American countries and other countries. Increases and decreases in our foreign-denominated revenue from movements in foreign exchange rates are partially offset by the corresponding decreases or increases in our foreign-denominated operating expenses.

Based on inflation data, the economy in Argentina has been classified as highly inflationary. As a result, we applied the guidance in ASC 830 by remeasuring non-monetary assets and liabilities at historical exchange rates and monetary-assets and liabilities using current exchange rates (see Note 2 to Notes to Condensed Consolidated Financial Statements).

We maintain certain cash and cash equivalents in Argentina and South Africa, which countries have foreign exchange controls that could impact our ability to freely repatriate such funds from those countries to the United States.

As our international operations continue to grow, our risks associated with fluctuation in currency rates will become greater and we will continue to reassess our approach to managing this risk. In addition, currency fluctuations or a weakening U.S. dollar can increase the amount of operating expense of our international operations, which are primarily related to our digital business. To date, we have not entered into any foreign currency hedging contracts, since exchange rate fluctuations historically have not had a material effect on our operating results and cash flows.

## Controls and procedures

As filed, 2,014 characters.

We conducted an evaluation, under the supervision and with the participation of management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this quarterly report. Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of the evaluation date, our disclosure controls and procedures were effective.

Our disclosure controls and procedures are designed to ensure that the information relating to our company, including our consolidated subsidiaries, required to be disclosed in our SEC reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow for timely decisions regarding required disclosure.

Our management, including our chief executive officer and chief financial officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

There have not been any changes in our internal control over financial reporting during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

### PART II.

### OTHER INFORMATION

Filed Nov 2, 2023.
Source: SEC EDGAR, the filing index for accession 0000950170-23-058238. Last ingested by Listed: Oct 26, 2026, 17:01 ET. No prices; not investment advice.