Hemisphere Media Announces First Quarter 2014 Financial Results

  Hemisphere Media Announces First Quarter 2014 Financial Results

Business Wire

MIAMI -- May 7, 2014

Hemisphere Media Group,Inc. (NASDAQ: HMTV) (“Hemisphere”), the only publicly
traded pure-play U.S. media company targeting the high growth Hispanic
TV/cable networks business, today announced financial results for the first
quarter ended March31, 2014.

Alan Sokol, CEO of Hemisphere, stated, “We achieved solid revenue and EBITDA
growth during the first quarter, with increases in all of our key revenue
streams. This is a result of the continued strong performance of all of our
networks, highlighted by double digit ratings growth at WAPA PR, and the
attractiveness of the Hispanic market to advertisers and pay-TV distributors.
We also grew our portfolio with the addition of three market-leading and
highly complementary networks acquired on April1, 2014 (the “Cable Networks
Acquisition”). We are moving aggressively to grow these networks by expanding
their subscriber base and advertising revenue to drive real value creation.”

On April4, 2013, Hemisphere completed a series of mergers pursuant to which
InterMedia Español Holdings, LLC, (“WAPA”), and Cine Latino,Inc.
(“Cinelatino”) became indirect, wholly owned subsidiaries of Hemisphere (the
“Transaction”). WAPA was the accounting acquirer and predecessor, whose
historical results became the historical results of Hemisphere.

Net revenues for the three months ended March31, 2014 were $21.0 million, an
increase of 55%, compared to net revenues of $13.5 million for the same period
in 2013. This increase is primarily a result of the inclusion in the current
quarter of the net revenues of Cinelatino which was not included in the prior
year’s quarter, as well as growth in net revenues at WAPA. Pro forma for the
Transaction occurring on January1, 2013, net revenues increased by $1.4
million, or 7%, due to growth in retransmission and subscriber fees and
advertising revenue.

Operating expenses were $17.3 million for the three months ended March31,
2014, an increase of 27% from operating expenses of $13.6 million for the same
period in 2013. This increase was primarily due to the inclusion in the
current quarter of Cinelatino’s operating expenses, corporate overhead,
amortization of intangibles created in connection with the Transaction and
stock-based compensation in the operating results, all of which were not
included in the prior year’s quarter, offset in part by lower transaction
costs incurred in the current quarter in connection with the Cable Networks
Acquisition as compared to transaction costs incurred in connection with the
Transaction in the prior year’s quarter. Additionally, expenses at WAPA
increased in large part due to a full quarter of production costs for two
daily series on both WAPA PR and WAPA America that were launched during the
first and second quarters of 2013, and which were not fully reflected in the
prior year’s first quarter. The increase in production costs in the current
quarter was anticipated.

Net income was $0.2 million for the three months ended March31, 2014, an
increase of $0.8 million compared to a net loss of $0.5 million for the same
period in 2013.

Adjusted EBITDA increased $3.8 million, or 90%, to $8.0 million for the three
months ended March31, 2014. This increase in the quarter was due to the
inclusion of Cinelatino’s operating results in the current quarter, offset in
part by the incurrence of corporate overhead. Pro forma for the inclusion of
the operating results of Cinelatino and corporate overhead in the three month
period ended March31, 2013, Adjusted EBITDA increased 7%.

The following tables set forth the Company’s financial performance for the
three months ended March31, 2014 and 2013 (in thousands):

                                        
                                             Three Months Ended March 31,
                                             2014              2013
Net revenues                                 $20,951            $13,495
Operating Expenses:
Cost of revenues                             7,598              5,856
Selling, general and administrative          6,881              3,429
Depreciation and amortization                2,578              1,010
Other expenses                               249                3,292
(Gain) loss on disposition of assets         (2)                25
Total operating expenses                     17,304             13,612
Operating income (loss)                      3,647              (117)
                                                                
Other Expenses:
Interest expense, net                        (2,907)            (759)
Other expense, net                           -                  (12)
                                             (2,907)            (771)
Income (loss) before income taxes            740                (888)
                                                                
Income tax (expense) benefit                 (492)              363
Net income (loss)                            $248               $(525)
                                                                
                                                                
Reconciliation of net income (loss) to Adjusted EBITDA:
Net income (loss)                            $248               $(525)
Income tax expense (benefit)                 492                (363)
Other expenses, net                          2,907              771
(Gain) loss on disposition of assets         (2)                25
Depreciation and amortization                2,578              1,010
Stock-based compensation                     1,514              -
EBITDA                                       7,737              918
Transaction and other non-recurring          249                3,292
expenses
Adjusted EBITDA                              $7,986             $4,210
                                                                

The below reconciliation gives pro forma effect to include Cinelatino in the
first quarter of 2013 (in thousands):

                                             Three Months Ended March 31,
                                             2014           2013
Reconciliation of pro forma net income (loss)
to pro forma Adjusted EBITDA:
Pro forma net income (loss) (1)              $248            $ (1,702)
Income tax expense                           492             458
Other expenses, net                          2,907           1,775
(Gain) loss on disposition of assets         (2)             25
Depreciation and amortization                2,578           2,592
Stock-based compensation                     1,514           -
EBITDA                                       7,737           3,148
Transaction and other non-recurring expenses 249             5,360
Corporate overhead (2)
                                             -               (1,046)

Pro forma adjusted EBITDA                    $7,986          $7,462
                                                             

1 - Pro forma net income (loss) for 2013 reflects incremental amortization
expense and write-off of deferred loan costs in connection with the final
accounting for the Transaction. This adjustment did not impact pro forma
adjusted EBITDA.

2 - Corporate overhead for the three months ended March 31, 2014 is included
in SG&A and thus reflected in net income for the 2014 period.

Non-GAAP Reconciliations

Within Hemisphere’s first quarter 2014 press release, Hemisphere makes
reference to certain non-GAAP financial measures such as “EBITDA” and
“Adjusted EBITDA.” Whenever such information is presented, Hemisphere has
complied with the provisions of the rulesunder Regulation G and Item 2.02 of
Form8-K. The specific reasons why Hemisphere’s management believes that the
presentation of these non-GAAP financial measures provides useful information
to investors regarding Hemisphere’s financial condition, results of operations
and cash flows has been provided in the Form8-K filed in connection with this
press release.

Conference Call

Hemisphere will conduct a conference call to discuss its third quarter
financial results at 10:00AM ET on Wednesday, May7, 2014. A live broadcast of
the conference call will be available online via the company’s Investor
Relations website located at http://ir.hemispheretv.com/. Alternatively,
interested parties can access the conference call by dialing (866) 700-5192,
or from outside the United States at (617) 213-8833, at least five minutes
prior to the start time. The conference ID for the call is 20211629.

A replay of the call will be available beginning at approximately 2:00PM
Eastern Time May7 by dialing (888) 286-8010, or from outside the United
States by dialing (617) 801-6888. The conference ID for the replay is
79186200. The replay will be archived for 30 days on the investor relations
section of www.hemispheretv.com.

Forward-Looking Statements

This press release may contain certain statements about Hemisphere that are
“forward-looking statements” within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. These statements are based on the current
expectations of the management of Hemisphere and are subject to uncertainty
and changes in circumstance, which may cause actual results to differ
materially from those expressed or implied in such forward-looking
statements.. Without limitation, any statements preceded or followed by or
that include the words “targets,” “plans,” “believes,” “expects,” “intends,”
“will,” “likely,” “may,” “anticipates,” “estimates,” “projects,” “should,”
“would,” “expect,” “positioned,” “strategy,” “future,” or words, phrases or
terms of similar substance or the negative thereof, are forward-looking
statements. In addition, these statements are based on a number of assumptions
that are subject to change. Factors that could cause actual results to differ
materially from those expressed or implied by the forward-looking statements
are discussed under the heading “Risk Factors” and “Forward-Looking
Statements” in Hemisphere’s most recent Annual Report on Form10-K, filed with
the Securities and Exchange Commission (“SEC”), as they may be updated in any
future reports filed with the SEC. If one or more of these factors
materialize, or if any underlying assumptions prove incorrect, Hemisphere’s
actual results, performance, or achievements may vary materially from any
future results, performance or achievements expressed or implied by these
forward-looking statements. Forward-looking statements included herein are
made as of the date hereof, and Hemisphere undertakes no obligation to update
publicly such statements to reflect subsequent events or circumstances.

About Hemisphere Media Group,Inc.

Hemisphere Media Group (NASDAQ:HMTV) is the only publicly-traded pure-play
U.S. Spanish-language TV/cable network business serving the high-growth U.S.
Hispanic population. Headquartered in Miami, Florida. As of April1, 2014,
Hemisphere owns and operates five leading U.S. Hispanic cable networks, two
Latin American cable networks, and the leading broadcast television network in
Puerto Rico. Hemisphere’s networks consist of:

  *Cinelatino, the leading Spanish-language movie channel distributed in the
    U.S., Latin America and Canada, featuring the largest selection of
    contemporary Spanish-language blockbusters and critically-acclaimed titles
    from Mexico, Latin America, Spain and the Caribbean.
  *WAPA PR, Puerto Rico’s leading broadcast station with the highest
    primetime and full day ratings in Puerto Rico. Founded in 1954, WAPA PR
    produces more than 65 hours per week of top-rated news and entertainment
    programming.
  *WAPA America, the leading cable network targeting Puerto Ricans and other
    Caribbean Hispanics living in the U.S., featuring the highly-rated news
    and entertainment programming produced by WAPA PR.
  *Pasiones, dedicated to showcasing the most popular telenovelas and drama
    series, distributed in the U.S. and Latin America.
  *Centroamerica TV, the leading network targeting Central Americans living
    in the U.S., the third largest U.S. Hispanic group, featuring the most
    popular news, entertainment and soccer programming from Central America.
  *TV Dominicana, the leading network targeting Dominicans living in the
    U.S., featuring the most popular news, entertainment and baseball
    programming from the Dominican Republic.

Contact:

Hemisphere Media Group,Inc.
Robin Weinberg/Patrick Scanlan, 212-687-8080
 
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