Hemisphere Media Group Announces Fourth Quarter and Full Year 2015 Financial Results

04 Mar 2016, 00:00 AM EST

– 2015 Net Revenues Increased 15.9% Year-over-Year –

– 2015 Adjusted EBITDA Increased 16.2% Year-over-Year –

– Strong Subscriber and Advertising Revenue Growth Across Networks –

MIAMI–(BUSINESS WIRE)–Hemisphere Media Group, Inc. (NASDAQ:HMTV) (“Hemisphere” or the
“Company”), the only publicly traded pure-play U.S. media company
targeting the high growth Spanish-language television and cable networks
business in the U.S. and Latin America, today announced financial
results for the fourth quarter and year-ended December 31, 2015.

Alan Sokol, CEO of Hemisphere, stated, “2015 was a very strong year for
our business. The 16% increase in revenues and Adjusted EBITDA for the
full year were the result of our unique business proposition and our
ability to seize on the opportunity to serve the highly attractive and
rapidly growing U.S. Hispanic and Latin America market. As we look ahead
to 2016, we are confident that our networks’ unique programming and
solid audience ratings will result in robust retransmission and
subscriber fee and advertising revenue growth.”

On April 1, 2014, Hemisphere closed on the acquisition of three
Spanish-language television networks—Pasiones, Centroamerica TV and
Television Dominicana (the “Acquired Cable Networks”). Results of the
Acquired Cable Networks are included in the Company’s consolidated
statements of operations from the acquisition date. The Company’s
results for the three months ended December 31, 2015 are comparable with
the prior year period; however, the comparability of the Company’s
results are affected for the full year ended December 31, 2015.

Net revenues increased $3.0 million, or 9.1%, for the three months ended
December 31, 2015, and increased $17.8 million, or 15.9%, for the full
year ended December 31, 2015. These increases, for both the three month
and full year periods, were primarily driven by growth in advertising
revenues and higher subscriber and retransmission fees. The increase for
the full year ended December 31, 2015 was also due to the inclusion of
the Acquired Cable Networks, which were not included in the prior year’s
first quarter.

Operating expenses were $25.2 million for the three months ended
December 31, 2015, an increase of 9.4%, as compared to operating
expenses of $23.0 million for the same period in 2014. Operating
expenses were $94.9 million for the full year ended December 31, 2015,
an increase of 10.4%, as compared to operating expenses of $86.0 million
for the same period in 2014. These increases, for both the three month
and full year periods, were driven primarily by increased investment in
programming and higher sales and marketing costs, consistent with
greater sales efforts across the Company’s networks, as well as the
launch of advertising on Cinelatino. The increase for the full year
ended December 31, 2015 was also due to the inclusion of the Acquired
Cable Networks, which were not included in the prior year’s first
quarter.

Net income was $4.9 million for the three months ended December 31,
2015, an increase of $0.6 million, as compared to net income of $4.3
million for the same period in 2014. Net income was $13.7 million for
the full year ended December 31, 2015, an increase of $3.2 million, as
compared to $10.6 million for the same period in 2014.

Adjusted EBITDA was $16.9 million for the three months ended December
31, 2015, an increase of 5.5%, as compared to Adjusted EBITDA of $16.0
million for the same period in 2014. Adjusted EBITDA was $58.1 million
for the full year ended December 31, 2015, an increase of 16.2%, as
compared to Adjusted EBITDA of $50.0 million for the same period in
2014. These increases, in both the three month and full year periods,
were due to growth in advertising revenues and subscriber and
retransmission fees. The increase for the full year period was also due
to the inclusion of the operating results of the Acquired Cable
Networks, which were not included in the prior year’s first quarter.

The Company forecasts a low double-digit percentage increase in Adjusted
EBITDA for 2016 driven by strong growth in subscriber and retransmission
fees and advertising revenue.

As of December 31, 2015, the Company had $219.9 million in debt and
$179.5 million of cash. The Company’s leverage ratio was approximately
3.8 times, and net leverage ratio was approximately 0.7 times. In
December 2015, the Company repurchased 1.3 million warrants at a total
cost of $1.8 million.

The following tables set forth the Company’s financial performance for
the three months and year-ended December 31, 2015 and 2014, as well as
select balance sheet data as of December 31, 2015 and 2014:

HEMISPHERE MEDIA GROUP, INC.
Comparison of Consolidated Operating Results for the
Three Months and Full Year Ended December 31

(amounts in thousands)
	Three Months Ended December 31,				Year Ended December 31,
	2015		2014		2015		2014
	(Unaudited)				(Audited)

Net revenues	$	36,236	$	33,202	$	129,790	$	111,989
Operating Expenses:
Cost of revenues		11,580		10,383		41,189		36,450
Selling, general and administrative		9,222		8,134		36,037		31,608
Depreciation and amortization		4,289		4,474		17,218		16,552
Other expenses		64		–		446		1,282
Loss on disposition of assets		2		–		33		70
Total operating expenses		25,157		22,991		94,923		85,962

Operating income		11,079		10,211		34,867		26,027

Other Expenses:
Interest expense, net		(3,015)		(3,053)		(12,086)		(11,925)
Loss on extinguishment of debt		–		–		–		(1,116)
		(3,015)		(3,053)		(12,086)		(13,041)
Income before income taxes		8,064		7,158		22,781		12,986

Income tax expense		(3,130)		(2,828)		(9,042)		(2,429)
Net income	$	4,934	$	4,330	$	13,739	$	10,557

Reconciliation of net income to Adjusted EBITDA:
Net income	$	4,934	$	4,330	$	13,739	$	10,557
Add:
Income tax expense		3,130		2,828		9,042		2,429
Interest expense, net		3,015		3,053		12,086		11,925
Loss on extinguishment of debt		–		–		–		1,116
Loss on disposition of assets		2		–		33		70
Depreciation and amortization		4,289		4,474		17,218		16,552
Stock-based compensation		1,452		1,314		5,575		5,920
Transaction & non-recurring expenses		64		–		446		1,455
Adjusted EBITDA	$	16,886	$	15,999	$	58,139	$	50,024



Selected Balance Sheet Data:
	As of		As of

(amounts in thousands)	December 31, 2015		December 31, 2014
	(Audited)

Cash	$	179,532	$	142,010
Debt	$	219,923	$	221,791

Leverage ratio (a):	3.8x		4.5x
Net leverage ratio (b):	0.7x		1.6x

(a) Represents the sum of gross debt and the unamortized balance of
original issue discount of $1.7 million as of December 31, 2015, divided
by Adjusted EBITDA for the last twelve months. This ratio differs from
the calculation contained in the Company’s amended term loan.

(b) Represents the sum of net debt and the unamortized balance of
original issue discount of $1.7 million as of December 31, 2015, divided
by Adjusted EBITDA for the last twelve months. This ratio differs from
the calculation contained in the Company’s amended term loan.

The following table presents estimated subscriber information
(unaudited):

	Subscribers ^(a) (amounts in thousands)
	December 31, 2015	December 31, 2014
U.S. Cable Networks:
WAPA America ^(b)	5,158	5,115
Cinelatino	4,443	4,297
Pasiones	4,374	4,004
Centroamerica TV	3,967	3,571
Television Dominicana	2,991	2,437
Total	20,933	19,424

Latin America Cable Networks:
Cinelatino	11,891	10,544
Pasiones	10,198	8,702
Total	22,089	19,246

_______________

(a)		Amounts presented are based on most recent remittances received from the Company’s distributors as of the respective dates shown above.

(b)		Excluding digital basic subscribers, subscribers to WAPA America on Hispanic programming tiers increased 3.4% from December 31, 2014 to December 31, 2015.

Non-GAAP Reconciliations

Within Hemisphere’s fourth quarter and year-end 2015 press release,
Hemisphere makes reference to the non-GAAP financial measure – “Adjusted
EBITDA.” Whenever such information is presented, Hemisphere has complied
with the provisions of the rules under Regulation G and Item 2.02 of
Form 8-K. The specific reasons why Hemisphere’s management believes that
the presentation of this non-GAAP financial measure provides useful
information to investors regarding Hemisphere’s financial condition,
results of its operations and cash flows has been provided in the Form
8-K filed in connection with this press release.

Conference Call

Hemisphere will conduct a conference call to discuss its fourth quarter
and year-end financial results at 10:00AM ET on Friday, March 4, 2016. 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 (877) 497-1436, or from outside the United States at (262)
558-6292, at least five minutes prior to the start time. The conference
ID for the call is 59360789.

A replay of the call will be available beginning at approximately
12:00PM ET on Friday, March 4, 2016 by dialing (855) 859-2056, or from
outside the United States by dialing (404) 537-3406. The conference ID
for the replay is 59360789.

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 include, but are not
limited to, statements relating to Hemisphere’s future financial and
operating results (including growth and earnings), plans, objectives,
expectations and intentions and other statements that are not historical
facts. 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 Form 10-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. media company targeting the high growth Spanish-language
television and cable networks business in the U.S. and Latin America.
Headquartered in Miami, Florida, 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 with over 16
million subscribers across the U.S., Latin America and Canada,
including 4.4 million subscribers in the U.S. and 11.9 million
subscribers in Latin America, featuring the largest selection of
contemporary Spanish-language blockbusters and critically-acclaimed
titles from Mexico, Latin America, Spain and the Caribbean.
WAPA, Puerto Rico’s leading broadcast television network with the
highest primetime and full day ratings in Puerto Rico. Founded in
1954, WAPA produces more than 75 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. WAPA
America is distributed in the U.S. to 5.2 million subscribers.
Pasiones, dedicated to showcasing the most popular telenovelas and
drama series, distributed in the U.S. and Latin America. Pasiones has
4.4 million subscribers in the U.S. and 10.2 million subscribers in
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. Centroamerica TV is distributed in the U.S. to 4.0
million subscribers.
Television Dominicana, the leading network targeting Dominicans living
in the U.S., featuring the most popular news, entertainment and
baseball programming from the Dominican Republic. Television
Dominicana is distributed in the U.S. to 3.0 million subscribers.