November 4, 2016 Last Updated 8:25 am

Hemisphere Media Group reports rising revenue, 49% jump in net income in Q3 earnings report

MIAMI, Fla. – November 4, 2016 — Hemisphere Media Group, Inc., 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 third quarter ended September 30, 2016.

Alan Sokol, CEO of Hemisphere, stated, “Our core business continued to perform well in the third quarter, a testament to the attractiveness of our differentiated business model serving the rapidly growing U.S. Hispanic and Latin American markets. Despite lighter than expected political spending in Puerto Rico, we continued to deliver solid top line revenue and earnings growth. Retransmission and subscriber fees grew meaningfully across all of our networks and we achieved strong organic subscriber growth, as well as some important new launches in the quarter. Although political spending in Puerto Rico will finish significantly below both our estimates and 2012 results, based on our strong underlying year-to-date performance and expectations for the remainder of the year, we expect to achieve our 2016 guidance.

“We are also excited to announce our new partnership with Lionsgate and Univision to launch the leading Spanish-language premium movie subscription video-on-demand (SVOD) service. The service is the first major SVOD movie service designed specifically for the tens of millions of Spanish-speaking and bilingual movie lovers in the U.S. The service will offer an unparalleled collection of great content from Hemisphere and our partners, and a compelling way for the growing number of Hispanic households in the U.S. that do not otherwise subscribe to pay television to digitally access this highly coveted product.”

Net revenues were $33.1 million for the three months ended September 30, 2016, an increase of 5%, as compared to net revenues of $31.5 million for the comparable period in 2015. Net revenues were $99.1 million for the nine months ended September 30, 2016, an increase of 6%, as compared to net revenues of $93.6 million for the comparable period in 2015. These increases, for both the three and nine month periods, were due to growth in subscriber and retransmission fees. The increase in the three month period was offset in part by a decline in advertising revenue, as WAPA was negatively impacted by a shift of advertising dollars to telecasts of the summer Olympics. The increase in the nine month period was also driven by political advertising. Excluding political advertising revenue, net revenues increased $1.5 million, or 5%, for the three months ended September 30, 2016, and increased $4.7 million, or 5%, for the nine months ended September 30, 2016.

Operating expenses were $23.5 million for the three months ended September 30, 2016, flat when compared to operating expenses for the comparable period in 2015. Operating expenses were $71.7 million for the nine months ended September 30, 2016, an increase of 3%, as compared to operating expenses of $69.8 million for the comparable period in 2015. The increase for the nine month period was driven primarily by increased investment in programming and higher costs related to advertising sales, consistent with the Company’s efforts to upgrade the content on, and drive advertising sales across its networks, including the launch of advertising on Cinelatino.

Net income was $4.3 million for the three months ended September 30, 2016, an increase of 49%, as compared to net income of $2.9 million for the comparable period in 2015. Net income for the nine months ended September 30, 2016 was $12.1 million, an increase of 37%, as compared to net income of $8.8 million for the comparable period in 2015.

Adjusted EBITDA was $15.1 million for the three months ended September 30, 2016, an increase of 10%, as compared to Adjusted EBITDA of $13.7 million for the comparable period in 2015. Adjusted EBITDA was $43.9 million for the nine months ended September 30, 2016, an increase of 6%, as compared to Adjusted EBITDA of $41.3 million for the comparable period in 2015.

The Company affirms its forecast of a low double-digit percentage increase in Adjusted EBITDA for 2016.

As of September 30, 2016, the Company had $211.9 million in debt and $150.6 million of cash. The Company’s leverage ratio was approximately 3.5 times, and net leverage ratio was approximately 1.0 times. The following tables set forth the Company’s financial performance for the three and nine months ended September 30, 2016 as well as select balance sheet data as of September 30, 2016:

hemi-q3-16

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