Chicken Soup for the Soul Entertainment Announces $3.1 Million in Revenue for the Second Quarter of 2018
Reiterates Full-Year 2018 Expectations for
Signs Definitive Agreement to Acquire Leading Subscription-Based Video-On-Demand Service
Second Quarter 2018 and Subsequent Business Highlights
- Total revenue of
$3.1 million , in line with expectations - Net loss of
$1.4 million - Adjusted EBITDA of
$400,000 , in line with expectations - Announced a definitive agreement to acquire Pivotshare, a global subscription-based VOD service offering channels online across a variety of categories, including music, sports, religion, arts and culture, lifestyle and family
- Launched production of a new series, The Fixer (executive produced by actor and investor
Ashton Kutcher ), which is aimed at helping millennials overcome their financial struggles and the issues that cause them - Entered into agreements with four new sponsors for The Fixer: Acorns,
Chegg , Handy and Adobe - Completed the sale of 646,497 shares of CSS Entertainment’s Series A Cumulative Redeemable Perpetual Preferred Stock (“Series A Preferred Stock”) at a price of
$25.00 per share with gross proceeds of approximately$16.2 million - Repurchased 74,235 shares of Class A common stock at a cost of approximately
$633,000 - Declared a special one-time dividend of
$0.45 per share, totaling approximately$5.2 million , on shares of Class A and Class B common stock
Rouhana continued, “There is no doubt that the total value of online VOD services is increasing. AMC’s acquisition of
“The production portion of our business remains ahead of schedule compared to prior years with our latest series, The Fixer, bringing our total half-hours of TV episodes to 20 out of our total goal of 60 episodes committed for production this year,” Rouhana added. “This quarter’s television and short-form video production revenue was driven by already existing series being sold internationally. Our pipeline of additional series is growing, and we are on track to exceed commitments for more than 60 half-hour episodes. We have also begun to work on commitments to fill our 2019 pipeline.”
“We are reiterating our full-year 2018 outlook of
“We continued to strengthen our balance sheet in the second quarter by successfully placing a public offering of redeemable perpetual preferred stock that was oversubscribed for gross proceeds of
Q2 2018 Financial Summary
Total revenue for the three months ended
- Online networks, which include A Plus and Popcornflix, generated
$725,000 in revenue in the second quarter of 2018 compared to$92,000 in the second quarter of 2017. - Television and film distribution generated
$2.0 million in the second quarter of 2018. - Television and short-form video production generated
$306,000 in the second quarter of 2018, compared to$701,000 in the second quarter last year.
Gross profit for the three months ended
Operating loss for the three months ended
Adjusted EBITDA for the three months ended
Year-to-Date 2018 Financial Summary
Total revenue for the six months ended
- Online networks, which include A Plus and Popcornflix, generated
$1.4 million in revenue in the first six months of 2018 compared to$178,000 in the year-ago period. - Television and film distribution generated
$5.3 million in the first six months of 2018. - Television and short-form video production generated
$2.4 million in the first six months of 2018, compared to$2.0 million in the year-ago period.
Gross profit for the six months ended
Operating loss for the six months ended
Adjusted EBITDA for the six months ended
As of
Subsequent to quarter end in
As of
The company has filed a quarterly report on Form 10-Q with the
Full Year 2018 Outlook
For the full-year 2018, the company expects to report:
- Revenue of approximately
$36.0 million - Adjusted EBITDA, a non-GAAP measure, of approximately
$18.0 million
For a discussion of the financial measures presented herein that are not calculated or presented in accordance with U.S. generally accepted accounting principles ("GAAP"), see "Note Regarding Use of Non-GAAP Financial Measures" below and the schedules to this press release for additional information and reconciliations of non-GAAP financial measures.
The company presents non-GAAP measures such as Adjusted EBITDA and Pro Forma Adjusted EBITDA to assist in an analysis of its business. These non-GAAP measures should not be considered an alternative to GAAP measures as an indicator of the Company's operating performance.
Conference Call Information
To participate in this event, dial in approximately 5 to 10 minutes before the beginning of the call.
- Date, Time:
Tuesday, August 14, 2018 ,4:30 p.m. ET - Toll-free: (833) 832-5128
- International: (484) 747-6583
- Conference ID: 3565988
A live webcast is available at http://ir.cssentertainment.com/ under the “News & Events” tab
Conference Call Replay Information
- Toll-free: (855) 859-2056
- International: (404) 537-3406
- Reference ID: 3565988
About
Note Regarding Use of Non-GAAP Financial Measures
The company’s consolidated financial statements are prepared in accordance with generally accepted accounting principles in
“Adjusted EBITDA” means earnings before interest, taxes, depreciation, amortization and non-cash share-based compensation expense, and also includes the gain on bargain purchase of subsidiary and adjustments for other identified charges such as costs incurred to form the company and to prepare for the offering of its Class A common stock to the public, prior to its IPO. Identified charges also include the cost of maintaining a board of directors prior to being a publicly traded company. As the IPO has been completed, director fees will be deducted from Adjusted EBITDA going forward. Adjusted EBITDA is not an earnings measure recognized by GAAP and does not have a standardized meaning prescribed by GAAP; accordingly, Adjusted EBITDA may not be comparable to similar measures presented by other companies. Management believes Adjusted EBITDA to be a meaningful indicator of the company’s performance that provides useful information to investors regarding its financial condition and results of operations. The most comparable GAAP measure is operating income.
A reconciliation of net loss to Adjusted EBITDA is provided in the company’s Quarterly Report on Form 10-Q for the three months ended
Forward-Looking Statements
This press release includes forward-looking statements that involve risks and uncertainties. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are subject to risks (including those set forth in the offering circular) and uncertainties that could cause actual results to differ from the forward-looking statements. The company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the company’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based. Investors should realize that if the company’s underlying assumptions for the projections contained herein prove inaccurate or that known or unknown risks or uncertainties materialize, actual results could vary materially from the company’s expectations and projections.
INVESTOR RELATIONS
Hayden IR
james@haydenir.com
(646) 755-7412
MEDIA CONTACT
RooneyPartners LLC
mjanic@rooneyco.com
(212) 223-4017
Tables Follow | ||||||||||||||||||||||||||
Chicken Soup for the Soul Entertainment, Inc. | ||||||||||||||||||||||||||
Condensed Consolidated Statements of Operations | ||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
Online networks | $ | 724,717 | $ | 91,840 | $ | 1,386,583 | $ | 178,150 | ||||||||||||||||||
Television and film distribution | 2,031,818 | - | 5,274,965 | - | ||||||||||||||||||||||
Television and short-form video production | 306,000 | 700,877 | 2,435,281 | 2,031,665 | ||||||||||||||||||||||
Total revenue | 3,062,535 | 792,717 | 9,096,829 | 2,209,815 | ||||||||||||||||||||||
Less: returns and allowances | (125,645 | ) | - | (445,994 | ) | - | ||||||||||||||||||||
Net revenue | 2,936,890 | 792,717 | 8,650,835 | 2,209,815 | ||||||||||||||||||||||
Cost of revenue (including $1,168,393 and $0 of non-cash | ||||||||||||||||||||||||||
amortization of film library for the three months ended June 30, | ||||||||||||||||||||||||||
2018 and 2017, respectively, and $2,622,532 and $0 for the six | ||||||||||||||||||||||||||
months ended June 30, 2018 and 2017, respectively) | 1,788,416 | 320,717 | 4,891,478 | 794,923 | ||||||||||||||||||||||
Gross profit | 1,148,474 | 472,000 | 3,759,357 | 1,414,892 | ||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||
Selling, general and administrative (including $239,005 and $159,406 | ||||||||||||||||||||||||||
of non-cash share-based compensation expense for the three months | ||||||||||||||||||||||||||
ended June 30, 2018 and 2017, respectively, and $493,200 and $292,191) | ||||||||||||||||||||||||||
for the six months ended June 30, 2018 and 2017, respectively) | 2,115,264 | 554,905 | 4,314,511 | 814,913 | ||||||||||||||||||||||
Management and license fees | 293,689 | 79,272 | 865,083 | 220,982 | ||||||||||||||||||||||
Total operating expenses | 2,408,953 | 634,177 | 5,179,594 | 1,035,895 | ||||||||||||||||||||||
Operating (loss) income | (1,260,479 | ) | (162,177 | ) | (1,420,237 | ) | 378,997 | |||||||||||||||||||
Interest income | 3,460 | 3 | 3,621 | 9 | ||||||||||||||||||||||
Interest expense | (97,263 | ) | (576,612 | ) | (118,818 | ) | (1,052,438 | ) | ||||||||||||||||||
Acquisition-related costs | - | - | (45,300 | ) | - | |||||||||||||||||||||
Loss before income taxes | (1,354,282 | ) | (738,786 | ) | (1,580,734 | ) | (673,432 | ) | ||||||||||||||||||
Provision for (benefit from) income taxes | 79,000 | (40,000 | ) | 415,000 | 159,000 | |||||||||||||||||||||
Net loss | $ | (1,433,282 | ) | $ | (698,786 | ) | $ | (1,995,734 | ) | $ | (832,432 | ) | ||||||||||||||
Net loss per common share: | ||||||||||||||||||||||||||
Basic and diluted net loss per common share | $ | (0.12 | ) | $ | (0.08 | ) | $ | (0.17 | ) | $ | (0.09 | ) | ||||||||||||||
Weighted average basic and diluted shares outstanding | 11,574,924 | 9,144,282 | 11,592,555 | 9,105,949 | ||||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements. | ||||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||
2018 | 2017 |
2018 | 2017 | |||||||||||||||||
Net loss as reported | $ | (1,433,282 | ) | $ | (698,786 | ) | $ | (1,995,734 | ) | $ | (832,432 | ) | ||||||||
Provision for (benefit from) income taxes | 79,000 | (40,000 | ) | 415,000 | 159,000 | |||||||||||||||
Interest expense, net of interest income (a) | 93,804 | 576,609 | 115,198 | 1,052,429 | ||||||||||||||||
Film library amortization, included in cost of revenue (non-cash) | 1,168,393 | - | 2,622,532 | - | ||||||||||||||||
Share-based compensation expense | 239,005 | 159,406 | 493,200 | 292,191 | ||||||||||||||||
Acquisition-related costs and consulting fees, related to Screen Media | 50,000 | - | 145,300 | - | ||||||||||||||||
Bad debt expense | 52,519 | - | 140,151 | - | ||||||||||||||||
Amortization of leasehold improvements | 13,033 | - | 26,066 | - | ||||||||||||||||
Organization costs and directors costs (b) | - | 169,028 | - | 188,745 | ||||||||||||||||
Nonrecurring costs | 122,276 | - | 122,276 | - | ||||||||||||||||
Adjusted EBITDA | $ | 384,748 | $ | 166,257 | $ | 2,083,991 | $ | 859,933 | ||||||||||||
(a) Includes non-cash amortization of debt discounts and amortization of deferred financing costs of $14,290 and $849,640 for the six month periods ended June 30, 2018 and 2017, respectively. | ||||||||||||||||||||
(b) Includes the costs incurred to form our Company and to prepare for the offering of our common stock to the public. This includes the costs of maintaining a board of directors prior to being a publicly traded company. | ||||||||||||||||||||
PART I: FINANCIAL INFORMATION | |||||||||||||||
Item 1: Financial Statements | |||||||||||||||
Chicken Soup for the Soul Entertainment, Inc. | |||||||||||||||
Condensed Consolidated Balance Sheets | |||||||||||||||
June 30, | December 31, | ||||||||||||||
2018 | 2017 | ||||||||||||||
(unaudited) | |||||||||||||||
ASSETS |
|||||||||||||||
Cash and cash equivalents | $ | 18,208,439 | $ | 2,172,046 | |||||||||||
Restricted cash | 629,975 | - | |||||||||||||
Accounts receivable, net | 7,615,198 | 8,058,352 | |||||||||||||
Prepaid expenses | 247,345 | 228,145 | |||||||||||||
Inventory, net | 477,123 | 368,964 | |||||||||||||
Intangible asset - video content license | 5,000,000 | 5,000,000 | |||||||||||||
Prepaid distribution fees | 1,749,178 | 1,892,806 | |||||||||||||
Other intangible asset | 125,000 | 125,000 | |||||||||||||
Popcornflix film rights and other assets | 7,174,548 | 7,163,943 | |||||||||||||
Film library, net | 23,992,541 | 22,655,645 | |||||||||||||
Due from affiliated companies | 6,743,535 | 6,128,629 | |||||||||||||
Programming costs, net | 8,879,282 | 7,651,145 | |||||||||||||
Other assets, net | 320,627 | 298,133 | |||||||||||||
Total assets | $ | 81,162,791 | $ | 61,742,808 | |||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||||||||||
Senior secured notes payable under revolving line of credit to related party | $ | - | $ | 1,500,000 | |||||||||||
Senior secured term loan and revolving line of credit to third party lender, net of | |||||||||||||||
unamortized deferred finance cost of $301,051 and $0, respectively | 7,115,616 | - | |||||||||||||
Accounts payable and accrued expenses | 1,418,991 | 1,002,536 | |||||||||||||
Accrued programming costs | 48,833 | 375,761 | |||||||||||||
Film library acquisition obligations | 2,240,600 | 663,400 | |||||||||||||
Accrued participation costs | 2,526,033 | 2,620,417 | |||||||||||||
Other liabilities | 105,382 | 144,533 | |||||||||||||
Deferred tax liability, net | 625,000 | 257,000 | |||||||||||||
Deferred revenue | 900,000 | 515,000 | |||||||||||||
Total liabilities | 14,980,455 | 7,078,647 | |||||||||||||
Commitments and contingencies | |||||||||||||||
Stockholders' equity | |||||||||||||||
Series A cumulative redeemable perpetual preferred stock, $.0001 par value, liquidation | |||||||||||||||
preference of $25.00 per share, 10,000,000 shares authorized; 600,000 and 0 shares issued | |||||||||||||||
and outstanding, respectively, redemption value of $15,000,000 and $0, respectively | 60 | - | |||||||||||||
Class A common stock, $.0001 par value, 70,000,000 shares | |||||||||||||||
authorized; 3,798,454 and 3,746,054 shares issued, 3,724,219 | |||||||||||||||
and 3,746,054 outstanding, respectively | 379 | 374 | |||||||||||||
Class B common stock, $.0001 par value, 20,000,000 shares | |||||||||||||||
authorized; 7,817,238 and 7,863,938 shares issued and outstanding, | |||||||||||||||
respectively | 782 | 786 | |||||||||||||
Additional paid-in capital | 46,471,079 | 32,324,500 | |||||||||||||
Retained earnings | 20,342,765 | 22,338,501 | |||||||||||||
Class A common stock held in treasury, at cost (74,235 shares) | (632,729 | ) | - | ||||||||||||
Total stockholders' equity | 66,182,336 | 54,664,161 | |||||||||||||
Total liabilities and stockholders' equity | $ | 81,162,792 | $ | 61,742,808 | |||||||||||
See accompanying notes to unaudited condensed consolidated financial statements. | |||||||||||||||