Chicken Soup for the Soul Entertainment Announces First Quarter 2018 Results
Results In-Line with Guidance; Reiterates Outlook for 2018
Management Conference Call to Be Held at
First Quarter 2018 and Subsequent Business Highlights
- Total revenue of
$6.0 million , in line with guidance - Net loss of
$562,000 - Adjusted EBITDA
$1.7 million , in line with guidance - Expanded agreement with HomeAway® to produce a second season of the hit series “Vacation Rental Potential”
- Secured
$7.5 million in bank financing consisting of a 5-year,$5.0 million term loan and a 3-year,$2.5 million revolving credit facility
Rouhana continued, “On the distribution side of our business, our pipeline is the most important predictor of our future results and to date, we have successfully acquired enough content to fill our pipeline through the end of the first quarter of 2019, further increasing our visibility into 2018 results. With one of the largest independently-owned libraries of filmed entertainment in the world and license agreements across all forms of media, our distribution capabilities enable direct distribution, significantly reducing third-party distribution fees, which enhances the profitability of our productions.”
Rouhana concluded, “With the expansion of our relationship with HomeAway for the production of a second season of “Vacation Rental Potential” and series that are already in the works, we have good visibility into the production side of our business. We are tracking nicely towards our full-year targets for half-hours of production, which has historically been heavily weighted towards the fourth quarter of the year. Thus far in 2018, we are encouraged by the early start to securing and identifying series that will help to reduce the impact from the seasonality of our production business.”
“We are reiterating our full-year 2018 outlook of
Q1 2018 Financial Summary
Total revenue for the three months ended
- Online networks, which include A Plus and Popcornflix, generated
$662,000 in revenue in the first quarter of 2018 compared to$86,000 in the first quarter of 2017. - Television and film distribution generated
$3.2 million in the first quarter of 2018. - Television and short-form video production generated
$2.1 million in the first quarter of 2018, compared to$1.3 million in the first quarter last year.
Gross profit for the three months ended
Operating loss for the three months ended
Adjusted EBITDA for the three months ended
As of
The company had outstanding debt of
The company closed on a previously announced bank financing from
On
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 which 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 approximately 5 to 10 minutes before the beginning of the call.
- Date, Time:
Thursday, May 10, 2018 ,4:30 p.m. ET . - Toll-free: (833) 832-5128
- International: (484) 747-6583
- 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: 3396517
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 our 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 which 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 our underlying assumptions for the projections contained herein prove inaccurate or that known or unknown risks or uncertainties materialize, actual results could vary materially from our expectations and projections.
INVESTOR RELATIONS
Hayden IR
james@haydenir.com
(646) 755-7412
MEDIA CONTACT
kbarrette@rooneyco.com
(212) 223-0561
Tables Follow
| Chicken Soup for the Soul Entertainment, Inc. | |||||||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||||||
| (unaudited) | |||||||||||||||
| Three Months Ended | |||||||||||||||
| March 31, | |||||||||||||||
| 2018 | 2017 | ||||||||||||||
| Revenue: | |||||||||||||||
| Online networks | $ | 661,866 | $ | 86,310 | |||||||||||
| Television and film distribution | 3,243,147 | - | |||||||||||||
| Television and short-form video production | 2,129,281 | 1,330,788 | |||||||||||||
| Total revenue | 6,034,294 | 1,417,098 | |||||||||||||
| Less: returns and allowances | (320,349 | ) | - | ||||||||||||
| Net revenue | 5,713,945 | 1,417,098 | |||||||||||||
| Cost of revenue (including $1,454,140 and $0 of non-cash | |||||||||||||||
| amortization of film library for the three months ended March 31, | |||||||||||||||
| 2018 and 2017, respectively) | 3,103,062 | 474,206 | |||||||||||||
| Gross profit | 2,610,883 | 942,892 | |||||||||||||
| Operating expenses: | |||||||||||||||
| Selling, general and administrative (including $254,195 and $132,785 of non-cash share-based compensation expense for the three months ended March 31, 2018 and 2017, respectively) | |||||||||||||||
| 2,199,247 | 260,008 | ||||||||||||||
| Management and license fees | 571,395 | 141,710 | |||||||||||||
| Total operating expenses | 2,770,642 | 401,718 | |||||||||||||
| Operating (loss) income | (159,759 | ) | 541,174 | ||||||||||||
| Interest income | 161 | 6 | |||||||||||||
| Interest expense (1) | (21,555 | ) | (475,826 | ) | |||||||||||
| Acquisition-related costs | (45,300 | ) | - | ||||||||||||
| (Loss) income before income taxes | (226,453 | ) | 65,354 | ||||||||||||
| Provision for income taxes | 336,000 | 199,000 | |||||||||||||
| Net loss | $ | (562,453 | ) | $ | (133,646 | ) | |||||||||
| Net loss per common share: | |||||||||||||||
| Basic net loss per common share | $ | (0.05 | ) | $ | (0.01 | ) | |||||||||
| Diluted net loss per common share | $ | (0.05 | ) | $ | (0.01 | ) | |||||||||
| Weighted average basic shares outstanding | 11,609,992 | 9,066,034 | |||||||||||||
| Weighted average diluted shares outstanding | 11,609,992 | 9,066,034 | |||||||||||||
| See accompanying notes to unaudited condensed consolidated financial statements. | |||||||||||||||
| (1) Includes $0 and $385,087 of non-cash amortization of debt discount and deferred financing costs for the three months ended March 31, 2018 and 2017, respectively. | |||||||||||||||
| (1) Includes $1.3 million of non-cash amortization in both 2017 periods, related to Screen Media's film and television library. | |||||||||||||||
| (2) Includes $203,938, $28,733, $638,258 and $1,542,044 of non-cash share-based compensation expense in Q4 2017, Q4 2016, FY 2017 and FY 2016, respectively. | |||||||||||||||
| (3) Includes $0, $210,436, $865,833 and $383,712 of non-cash amortization of debt discount in Q4 2017, Q4 2016, FY 2017 and FY 2016, respectively. | |||||||||||||||
| Includes $1,500, $20,975, $48,247 and $40,859 non-cash amortization of deferred financing costs in Q4 2017, Q4 2016, FY 2017 and FY 2016, respectively. | |||||||||||||||
| Adjusted EBITDA | ||||||||||||
| Three Months Ended March 31, | ||||||||||||
| 2018 | 2017 | |||||||||||
| Net loss as reported | $ | (562,453 | ) | $ | (133,646 | ) | ||||||
| Provision for income taxes | 336,000 | 199,000 | ||||||||||
| Interest expense, net of interest income (a) | 21,394 | 475,820 | ||||||||||
| Film library amortization, included in cost of revenue (non-cash) | 1,454,140 | - | ||||||||||
| Share-based compensation expense | 254,195 | 132,785 | ||||||||||
| Acquisition-related costs and consulting fees, related to Screen Media | 95,300 | - | ||||||||||
| Reserve for bad debts | 87,632 | - | ||||||||||
| Amortization of leasehold improvements | 13,033 | - | ||||||||||
| Organization costs and directors costs (b) | - | 18,750 | ||||||||||
| Adjusted EBITDA | $ | 1,699,241 | $ | 692,709 | ||||||||
| (a) Includes non-cash amortization of debt discounts and amortization of deferred financing costs of $0 and $385,087 for the three months ended March 31, 2018 and 2017, respectively. | ||||||||||||
| (b) For the three months ended March 31, 2017, this includes costs incurred to form our Company and to prepare for the offering of our common stock to the public. This includes costs of maintaining a board of directors prior to being a publicly traded company. | ||||||||||||
| Chicken Soup for the Soul Entertainment, Inc. | |||||||||||
| Condensed Consolidated Balance Sheets | |||||||||||
| March 31, | December 31, | ||||||||||
| 2018 | 2017 | ||||||||||
| (unaudited) | |||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 1,751,689 | $ | 2,172,046 | |||||||
| Accounts receivable, net | 8,432,155 | 8,058,352 | |||||||||
| Prepaid expenses | 239,637 | 228,145 | |||||||||
| Inventory, net | 317,203 | 368,964 | |||||||||
| Intangible asset - video content license | 5,000,000 | 5,000,000 | |||||||||
| Prepaid distribution fees | 1,846,529 | 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 | 22,258,060 | 22,655,645 | |||||||||
| Due from affiliated companies | 6,003,404 | 6,128,629 | |||||||||
| Programming costs, net | 7,869,441 | 7,651,145 | |||||||||
| Other assets, net | 275,954 | 298,133 | |||||||||
| Total assets | $ | 61,293,620 | $ | 61,742,808 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Senior secured notes payable under revolving line of credit to related party | $ | 1,700,000 | $ | 1,500,000 | |||||||
| Accounts payable and accrued expenses | 1,272,923 | 1,002,536 | |||||||||
| Accrued programming costs | 591,326 | 375,761 | |||||||||
| Film library acquisition obligation | 185,600 | 663,400 | |||||||||
| Accrued participation costs | 2,487,759 | 2,620,417 | |||||||||
| Other liabilities | 148,110 | 144,533 | |||||||||
| Deferred tax liability, net | 552,000 | 257,000 | |||||||||
| Deferred revenue | - | 515,000 | |||||||||
| Total liabilities | 6,937,718 | 7,078,647 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders' equity | |||||||||||
| Preferred stock, $.0001 par value, 10,000,000 shares authorized; | |||||||||||
| none issued or outstanding | - | - | |||||||||
| Class A common stock, $.0001 par value, 70,000,000 shares | |||||||||||
| authorized; 3,750,554 and 3,746,054 shares, issued and outstanding, | |||||||||||
| respectively | 375 | 374 | |||||||||
| Class B common stock, $.0001 par value, 20,000,000 shares | |||||||||||
| authorized; 7,859,438 and 7,863,938 shares issued and outstanding, | |||||||||||
| respectively | 786 | 786 | |||||||||
| Additional paid-in capital | 32,578,694 | 32,324,500 | |||||||||
| Retained earnings | 21,776,047 | 22,338,501 | |||||||||
| Total stockholders' equity | 54,355,902 | 54,664,161 | |||||||||
| Total liabilities and stockholders' equity | $ | 61,293,620 | $ | 61,742,808 | |||||||
| See accompanying notes to unaudited condensed consolidated financial statements. | |||||||||||