8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

    Date of Report (Date of earliest event reported): June 28, 2024

   

ENTRAVISION COMMUNICATIONS CORPORATION

(Exact name of Registrant as Specified in Its Charter)


Delaware	001-15997	95-4783236
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

2425 Olympic Boulevard Suite 6000 West
Santa Monica, California		90404
(Address of Principal Executive Offices)		(Zip Code)

    Registrant’s Telephone Number, Including Area Code: 310 447-3870

   

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock	EVC	The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.01 Completion of Acquisition or Disposition of Assets.

On June 28, 2024, Entravision Communications Corporation (the "Company") completed the previously-announced sale of its Entravision Global Partners business (the "Business") to IMS Internet Media Services, Inc. ("IMS"), pursuant to an Equity Purchase Agreement entered into on June 13, 2024 among the Company, Entravision Digital Holdings, LLC ("Seller") and IMS.

Cash proceeds from the transaction, net of working capital and other adjustments, received at the closing were $16.4 million. Immediately after the closing, an amount equal to $6.5 million of the proceeds was paid by the Company to the parties who sold MediaDonuts Pte. Ltd. to Seller on July 1, 2021 (the "MediaDonuts Founders"), pursuant to a previously-disclosed Assignment, Assumption and Release Agreement dated June 13, 2024 among the Company, Seller, IMS and the MediaDonuts Founders.

Item 9.01 Financial Statements and Exhibits.

(b) Pro Forma Financial Information.

The Company's unaudited pro forma consolidated financial information giving effect to the sale of the Business is attached hereto as Exhibit 99.1 and incorporated herein by reference.

(d) Exhibits


99.1	Unaudited Pro Forma Consolidated Financial Statements
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


			Entravision Communications Corporation

Date:	July 5, 2024	By:	/s/ Michael Christenson
			Michael Christenson, Chief Executive Officer

EX-99.1

Exhibit 99.1

ENTRAVISION COMMUNICATIONS CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

Overview

The Company was also required to make a mandatory debt payment of $4.9 million under its 2023 Credit Facility as a result of the sale.

Unaudited Pro Forma Condensed Consolidated Financial Information

The sale of the Business constitutes a significant disposition for purposes of Item 2.01 of Form 8-K. The Company has also determined that the sale of the Business represents a strategic shift that will have a major effect on the Company’s operations and financial results. Accordingly, the Company will account for the Business as discontinued operations beginning in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2024. As part of this strategic shift, the Company also sold two other businesses during the quarter as described below. As the sales of these three businesses (collectively, the “Businesses”) were all part of a single strategic shift and will be reported together as discontinued operations in future filings, they will also be reflected in the unaudited pro forma condensed financial information presented in this filing.

Sale of Adsmurai

As previously announced, on May 6, 2024, the Company entered into a Share Purchase Agreement (the “Purchase Agreement”), among Adsmurai, S.L. ("Adsmurai"), the Company and the other stockholders of Adsmurai (the “Buyers”). Adsmurai is a Spanish company engaged in the sale and marketing of digital advertising technology platforms.

Pursuant to the Purchase Agreement, as of the Effective Date (as defined in the Purchase Agreement) (i) the Company sold its 51% equity interest in Adsmurai to Buyers, (ii) the Company terminated loans it made to Buyers in the principal amount of €12.3 million and (iii) the parties terminated other previous agreements made between them, including an Options Agreement which contained put redemption features for Buyers and call redemption features for the Company. As consideration, the Company received €15.0 million (approximately $16.2 million as of the Effective Date) ("Total Consideration"). The Purchase Agreement also contains representations, warranties, covenants, indemnities and releases of the parties thereto.

The Total Consideration is payable to the Company as follows:

•

€10.0 million paid on the Effective Date (approximately $10.7 million); and

•

€5.0 million to be paid within six months of the Effective Date (approximately $5.4 million).

Sale of Jack of Digital

On June 28, 2024, the Company completed the sale of Jack of Digital, a digital marketing services company serving clients in Pakistan. The total consideration was $0.1 million.

The Company has prepared the accompanying unaudited pro forma condensed consolidated financial statements (“Pro Forma Information”) in accordance with Article 11 of Regulation S-X. The Pro Forma Information has been derived from the Company's historical consolidated financial statements and reflects certain assumptions and adjustments that management believes are reasonable under the circumstances and given the information available at this time. The Pro Forma Information reflects adjustments that, in the opinion of management, are necessary to present fairly the pro forma financial position as of March 31, 2024 and results of operations for the three-month period ended March 31, 2024 and years ended December 31, 2023, 2022 and 2021. The Pro Forma Information is provided for informational purposes only and is not intended to represent what the Company's financial position or results of operations

would have been had the sale of the Businesses occurred on March 31, 2024 for the unaudited pro forma condensed consolidated balance sheet and as of January 1, 2021, the beginning of the earliest period presented, for the unaudited pro forma consolidated statements of income, nor is it indicative of its future financial position or results of operations. The Pro Forma Information should be read in conjunction with the Company's historical consolidated financial statements and accompanying notes.

# # #

(Financial Table Follows)

Entravision Communications Corporation

Pro Forma Condensed Consolidated Balance Sheet

(In thousands; unaudited)


	March 31, 2024
	Historical			Pro Forma
	Results			Adjustments (a)				Pro Forma
ASSETS
Current assets
Cash and cash equivalents	$	128,410		$	29,988		(b)	$	98,422
Marketable securities		4,335			-				4,335
Restricted cash		774			-				774
Trade receivables, net of allowance for doubtful accounts		206,065			147,912				58,153
Assets held for sale		301			-				301
Prepaid expenses and other current assets		40,095			4,549				35,546
Total current assets		379,980			182,449				197,531
Property and equipment, net		69,294			4,179				65,115
Intangible assets subject to amortization, net		34,660			28,500				6,160
Intangible assets not subject to amortization		195,174			-				195,174
Goodwill		55,272			4,599		(c)		50,673
Deferred income taxes		5,175			5,118				57
Operating leases right of use asset		43,543			1,068				42,475
Other assets		21,892			6,186				15,706
Total assets	$	804,990		$	232,099			$	572,891
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt	$	3,360		$	860			$	2,500
Accounts payable and accrued expenses		263,484			222,173				41,311
Operating lease liabilities		7,518			561				6,957
Total current liabilities		274,362			223,594				50,768
Long-term debt, less current maturities, net of unamortized debt issuance costs		195,762			6,424		(d)		189,338
Long-term operating lease liabilities		44,901			501				44,400
Other long-term liabilities		21,404			17,191		(e)		4,213
Deferred income taxes		55,186			7,548				47,638
Total liabilities		591,615			255,258				336,357
Redeemable noncontrolling interest		39,840			39,840				-
Stockholders' equity
Class A common stock		8							8
Class U common stock		1							1
Additional paid-in capital		743,339			(79,903	)			823,242
Accumulated deficit		(568,702	)		17,206		(f)		(585,908	)
Accumulated other comprehensive income (loss)		(1,111	)		(302	)			(809	)
Total stockholders' equity		173,535			(62,999	)			236,534
Total liabilities and stockholders' equity	$	804,990		$	232,099			$	572,891

Entravision Communications Corporation

Pro Forma Condensed Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)


	Three-Month Period Ended March 31, 2024
	Historical			Pro Forma
	Results			Adjustments (g)				Pro Forma
Net revenue	$	277,445		$	199,269			$	78,176
Expenses:
Cost of revenue - digital		203,229			180,571				22,658
Direct operating expenses		35,572			3,771				31,801
SG&A		26,695			12,361				14,334
Corporate expenses		12,248			-				12,248
Depreciation and amortization		7,133			2,394				4,739
Impairment charge		49,438			49,438				-
Change in fair value of contingent consideration		(1,420	)		(1,200	)			(220	)
Foreign currency (gain) loss		449			184				265
Operating income (loss)		(55,899	)		(48,250	)			(7,649	)
Interest expense		(4,559	)		(116	)	(h)		(4,443	)
Interest income		1,130			552				578
Dividend income		10			-				10
Realized gain (loss) on marketable securities		(113	)		-				(113	)
Gain (loss) on debt extinguishment		(40	)		-				(40	)
Income (loss) before income taxes		(59,471	)		(47,814	)			(11,657	)
Income tax benefit (expense)		7,802			3,655				4,147
Net income (loss)		(51,669	)		(44,159	)			(7,510	)
Net (income) loss attributable to redeemable noncontrolling interest		2,779			2,779				-
Net income (loss) attributable to common stockholders	$	(48,890	)	$	(41,380	)		$	(7,510	)

Basic and diluted earnings per share:
Net income (loss) per share attributable to common stockholders, basic	$	(0.55	)					$	(0.08	)
Net income (loss) per share attributable to common stockholders, diluted	$	(0.55	)					$	(0.08	)

Weighted average common shares outstanding, basic		89,518,058							89,518,058
Weighted average common shares outstanding, diluted		89,518,058							89,518,058

Entravision Communications Corporation

Pro Forma Condensed Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)


	Year Ended December 31, 2023
	Historical			Pro Forma
	Results			Adjustments (g)				Pro Forma
Net revenue	$	1,106,867		$	809,824			$	297,043
Expenses:
Cost of revenue - digital		800,401			723,187				77,214
Direct operating expenses		128,470			15,239				113,231
SG&A		91,979			42,218				49,761
Corporate expenses		50,294			-				50,294
Depreciation and amortization		28,007			11,615				16,392
Impairment charge		13,267							13,267
Change in fair value of contingent consideration		(2,539	)		(3,360	)			821
Foreign currency (gain) loss		900			(1,050	)			1,950
Other operating (gain) loss		609			-				609
Operating income (loss)		(4,521	)		21,975				(26,496	)
Interest expense		(17,291	)		(458	)	(h)		(16,833	)
Interest income		5,055			1,650				3,405
Dividend income		35			-				35
Realized gain (loss) on marketable securities		(93	)		-				(93	)
Gain (loss) on debt extinguishment		(1,556	)		-				(1,556	)
Income (loss) before income taxes		(18,371	)		23,167				(41,538	)
Income tax benefit (expense)		2,750			(5,642	)			8,392
Net income (loss)		(15,621	)		17,525				(33,146	)
Net (income) loss attributable to redeemable noncontrolling interest		(158	)		(158	)			-
Net (income) loss attributable to noncontrolling interest		342			342				-
Net income (loss) attributable to common stockholders	$	(15,437	)	$	17,709			$	(33,146	)

Basic and diluted earnings per share:
Net income (loss) per share attributable to common stockholders, basic	$	(0.18	)					$	(0.38	)
Net income (loss) per share attributable to common stockholders, diluted	$	(0.18	)					$	(0.38	)

Weighted average common shares outstanding, basic		87,901,938							87,901,938
Weighted average common shares outstanding, diluted		87,901,938							87,901,938

Entravision Communications Corporation

Pro Forma Condensed Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)


	Year Ended December 31, 2022
	Historical			Pro Forma
	Results			Adjustments (g)				Pro Forma
Net revenue	$	956,209		$	632,218			$	323,991
Expenses:
Cost of revenue - digital		623,916			553,329				70,587
Direct operating expenses		122,611			13,291				109,320
SG&A		75,165			28,177				46,988
Corporate expenses		49,404			-				49,404
Depreciation and amortization		25,697			10,050				15,647
Impairment charge		1,600							1,600
Change in fair value of contingent consideration		14,210			16,010				(1,800	)
Foreign currency (gain) loss		2,972			1,729				1,243
Other operating (gain) loss		382			(41	)			423
Operating income (loss)		40,252			9,673				30,579
Interest expense		(10,876	)		(340	)	(h)		(10,536	)
Interest income		2,864			124				2,740
Dividend income		20			-				20
Realized gain (loss) on marketable securities		(532	)		-				(532	)
Income (loss) before income taxes		31,728			9,457				22,271
Income tax benefit (expense)		(11,559	)		(2,688	)			(8,871	)
Net income (loss)		20,169			6,769				13,400
Net (income) loss attributable to noncontrolling interest		(2,050	)		(2,049	)			(1	)
Net income (loss) attributable to common stockholders	$	18,119		$	4,720			$	13,399

Basic and diluted earnings per share:
Net income (loss) per share attributable to common stockholders, basic	$	0.21						$	0.16
Net income (loss) per share attributable to common stockholders, diluted	$	0.21						$	0.15

Weighted average common shares outstanding, basic		85,391,163							85,391,163
Weighted average common shares outstanding, diluted		87,769,762							87,769,762

Entravision Communications Corporation

Pro Forma Condensed Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)


	Year Ended December 31, 2021
	Historical			Pro Forma
	Results			Adjustments (g)				Pro Forma
Net revenue	$	760,192		$	484,757			$	275,435
Expenses:
Cost of revenue - digital		466,517			426,216				40,301
Direct operating expenses		116,449			11,988				104,461
SG&A		56,585			14,731				41,854
Corporate expenses		32,993			-				32,993
Depreciation and amortization		22,420			7,284				15,136
Impairment charge		3,023			1,319				1,704
Change in fair value of contingent consideration		8,224			8,224				-
Foreign currency (gain) loss		508			601				(93	)
Other operating (gain) loss		(6,998	)		-				(6,998	)
Operating income (loss)		60,471			14,394				46,077
Interest expense		(7,020	)		(198	)	(h)		(6,822	)
Interest income		245			9				236
Dividend income		213			-				213
Income (loss) before income taxes		53,909			14,206				39,703
Income tax benefit (expense)		(18,679	)		(3,725	)			(14,954	)
Net income (loss)		35,230			10,481				24,749
Net (income) loss attributable to redeemable noncontrolling interest		(5,938	)		(5,938	)			-
Net income (loss) attributable to common stockholders	$	29,292		$	4,543			$	24,749

Basic and diluted earnings per share:
Net income (loss) per share attributable to common stockholders, basic	$	0.34						$	0.29
Net income (loss) per share attributable to common stockholders, diluted	$	0.33						$	0.28

Weighted average common shares outstanding, basic		85,301,603							85,301,603
Weighted average common shares outstanding, diluted		87,910,603							87,910,603

Entravision Communications Corporation

Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

(a)

Adjustments reflect the elimination of assets and liabilities of the Businesses.

(b)

The pro forma impact on cash and cash equivalents is as follows (in thousands):


Cash Proceeds from sale of the Businesses	$	27,248
Payment to MediaDonuts Founders		(6,500	)
Mandatory debt repayment		(4,900	)
Cash distributed from the Business before closing		43,460
		59,308

(c)

Reflects the elimination of an estimated $4.6 million of goodwill based on the relative fair value of the Businesses as of the date of sale.

(d)

Adjustment includes the mandatory repayment of $4.9 million of debt as a result of the sale of the Business.

(e)

Adjustment includes the payment of $6.5 million to the MediaDonuts Founders as a result of the sale of Business.

(f)

Represents the equity impact of the proforma balance sheet adjustments discussed in (a) – (e) above.

(g)

Adjustments reflect the elimination of revenue, cost of revenue, expenses and taxes which are specific to the operations of the Businesses.

(h)

Adjustment reflects the reduction of interest expense in connection with the mandatory payment of debt of $4.9 million as a result of the sale of the Business.