Chicken Soup for the Soul Entertainment Announces FY 2017 Results
Highlights Opportunities with Acquisition of Screen Media; Board Approves
Management Conference Call to Be Held at
Full Year 2017 and Subsequent Business Highlights
- Completed
$30.0 million IPO inAugust 2017 - Completed acquisition of
Screen Media Ventures, LLC (“Screen Media”), substantially transforming the company from primarily production to a top-tier player in the exploding direct-to-consumer entertainment market - Obtained sponsors for four series: Chicken Soup for the Soul’s Hidden Heroes, Being Dad, Vacation Rental Potential and The New Americans
- Board approved a
$5.0 million Share Repurchase Program - Secured an independent, third-party valuation opinion that the newly acquired assets from Screen Media are valued at approximately
$31.4 million , with the Popcornflix® direct-to-consumer online video service and associated content rights and the Screen Media TV and film library assets - As a result of this valuation, the Company recognized a non-recurring gain on bargain purchase of
$24.1 million , recorded in the fourth quarter of 2017 - Expanded management team by promoting
Elana Sofko to the new position of chief operating officer, namingSusan Kravitz as executive vice president of sales and strategic sponsorships, and appointingLou Occhicone as its senior vice president of business affairs and distribution - Agreed to a commercial credit proposal from a bank for
$7.5 million consisting of a 5-year$5.0 million term loan and a 3-year$2.5 million revolving credit facility which is expected to close shortly - Reiterated 2018 outlook of approximately
$36.0 million in revenue and$18.0 million in Adjusted EBITDA
Rouhana continued, “We have already increased the value of the Screen Media assets and continue to see opportunities for additional growth. In the first two months of 2018, Screen Media’s revenue is up 67% on a stand-alone basis compared to its revenue in the first two months last year, and Screen Media’s Adjusted EBITDA increased 96% during the same period year-over-year. In addition, the advertising rates we charge for Popcornflix are up over 10% compared to this time last year, before the addition of analytics and the impact of direct sales efforts. Additionally, app downloads since
“We are reiterating our full-year 2018 outlook of
Q4 2017 Financial Summary
Net income for the three months ended
Total revenue for the three months ended
- Online networks, which include A Plus and Popcornflix, generated
$570,000 in revenue in the fourth quarter of 2017 compared to$398,000 in the fourth quarter last year. - Television and film distribution generated
$2.9 million in the fourth quarter. - Television and short-form video production generated
$5.2 million in the fourth quarter, compared to$5.3 million in the fourth quarter last year.
Gross profit for the three months ended
Operating income for the three months ended
Full Year 2017 Financial Summary
Net income for the 12 months ended
Total revenue for the 12 months ended
Gross profit for the 12 months ended
Operating income for the 12 months ended
Adjusted EBITDA for the 12 months ended
As of
The company had outstanding debt of
The company will be filing an annual report on Form 10-K with the
Q1 and Full Year 2018 Outlook
For Q1 2018, the company expects to report:
- Revenue between
$5.5 million and $6.2 million compared to$1.4 million for the prior year - Adjusted EBITDA, a non-GAAP measure, between
$1.5 million and $2.0 million compared to$670,000 for the prior year
On a pro forma basis in 2017, the company (including Screen Media as if it had been owned for the full year) had revenue of
Building on this base, for the full-year 2018, the company expects to report:
- Revenue of approximately
$36.0 million - Adjusted EBITDA of approximately
$18.0 million
On
The company agreed to a commercial credit proposal from a bank on
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:
Tuesday, March 27, 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: 6275659
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.
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 | ||||||||||||||||
Consolidated Statements of Cash Flows | ||||||||||||||||
Year Ended December 31, | ||||||||||||||||
2017 |
2016 |
|||||||||||||||
Cash flows from Operating Activities: | ||||||||||||||||
Net income | $ | 22,789,498 | $ | 781,133 | ||||||||||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||||||||||
Share-based compensation | 638,258 | 1,542,044 | ||||||||||||||
Amortization of programming costs | 2,973,399 | 3,155,668 | ||||||||||||||
Amortization of deferred financing costs | 43,747 | 40,859 | ||||||||||||||
Amortization of debt discount | 865,833 | 383,712 | ||||||||||||||
Amortization of leasehold improvements | 9,819 | - | ||||||||||||||
Amortization of film library | 1,378,869 | - | ||||||||||||||
Bad debt expense | 112,568 | - | ||||||||||||||
Impairment of programming costs | 21,121 | - | ||||||||||||||
Loss on debt extinguishment | 24,803 | - | ||||||||||||||
Gain on bargain purchase of Screen Media | (24,321,747 | ) | - | |||||||||||||
Deferred income taxes | (182,000 | ) | 439,000 | |||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Trade accounts receivable | (5,613,851 | ) | (151,417 | ) | ||||||||||||
Prepaid expenses and other current assets | 163,972 | (200,199 | ) | |||||||||||||
Inventory | (25,656 | ) | - | |||||||||||||
Programming costs | (6,732,930 | ) | (5,120,254 | ) | ||||||||||||
Film library | (1,094,363 | ) | - | |||||||||||||
Prepaid distribution fees | (1,300,021 | ) | (592,786 | ) | ||||||||||||
Other assets | (184,838 | ) | - | |||||||||||||
Accounts payable and accrued expenses | (596,193 | ) | 671,338 | |||||||||||||
Film library acquisition obligation | (60,200 | ) | - | |||||||||||||
Accrued participation costs | 482,435 | - | ||||||||||||||
Other liabilities | (66,313 | ) | - | |||||||||||||
Deferred revenue | 443,572 | (3,428,571 | ) | |||||||||||||
Net cash used in operating activities | (10,230,219 | ) | (2,479,473 | ) | ||||||||||||
Cash flows from Investing Activities: | ||||||||||||||||
Payment for acquisition of Screen Media, net of cash acquired | (4,683,814 | ) | - | |||||||||||||
Purchase of video content license from affiliate | - | (5,000,000 | ) | |||||||||||||
Net cash used in investing activities | (4,683,814 | ) | (5,000,000 | ) | ||||||||||||
Chicken Soup for the Soul Entertainment, Inc | ||||||||||||||||
Consolidated Statements of Cash Flows (Cont'd) | ||||||||||||||||
Year Ended December 31, | ||||||||||||||||
2017 |
2016 |
|||||||||||||||
Cash flows from Financing Activities: | ||||||||||||||||
Proceeds from revolving credit facility | 4,825,000 | 4,530,000 | ||||||||||||||
Repayments of revolving credit facility | (6,805,000 | ) | (1,050,000 | ) | ||||||||||||
Payment of deferred financing cost | - | (84,606 | ) | |||||||||||||
Due from affiliated companies | (4,756,112 | ) | 739,039 | |||||||||||||
Proceeds from notes payable in private placement | 2,030,000 | 2,970,000 | ||||||||||||||
Repayments of notes payable, from proceeds of IPO | (4,082,000 | ) | - | |||||||||||||
Payment of stock issuance cost in IPO | (2,330,824 | ) | - | |||||||||||||
Payment of stock issuance cost in private placements | (618,980 | ) | (197,600 | ) | ||||||||||||
Proceeds from issuance of common stock in IPO | 26,903,348 | - | ||||||||||||||
Proceeds from issuance of common stock in private placements | 1,413,400 | 1,075,809 | ||||||||||||||
Net cash provided by financing activities | 16,578,832 | 7,982,642 | ||||||||||||||
Net increase in cash and cash equivalents | 1,664,799 | 503,169 | ||||||||||||||
Cash, cash equivalents and restricted cash at beginning of period | 507,247 | 4,078 | ||||||||||||||
Cash, cash equivalents and restricted cash at end of the period | $ | 2,172,046 | $ | 507,247 | ||||||||||||
Supplemental data: | ||||||||||||||||
Interest paid | $ | 298,048 | $ | 110,092 | ||||||||||||
Income taxes paid | $ | 52,000 | $ | - | ||||||||||||
Non-cash operating activity | ||||||||||||||||
Fair value of shares issued to executive producer | $ | 625,500 | $ | - | ||||||||||||
Non-cash financing activities | ||||||||||||||||
Fair value of warrants issued with revolving credit facility and term notes | $ | 415,477 | $ | 863,370 | ||||||||||||
Fair value of shares issued for Trema rights | $ | - | $ | 792,000 | ||||||||||||
Conversion of senior secured notes payable to Class A common stock | $ | 918,000 | $ | - | ||||||||||||
See accompanying notes to the consolidated financial statements | ||||||||||||||||
Chicken Soup for the Soul Entertainment, Inc. | ||||||||||||||
Consolidated Balance Sheets | ||||||||||||||
December 31, |
December 31, | |||||||||||||
2017 | 2016 |
|||||||||||||
ASSETS |
||||||||||||||
Cash and cash equivalents | $ | 2,172,046 | $ | 507,247 | ||||||||||
Accounts receivable, net | 8,058,352 | 151,417 | ||||||||||||
Prepaid expenses | 228,145 | 216,397 | ||||||||||||
Inventory, net | 368,964 | - | ||||||||||||
Intangible asset - video content license | 5,000,000 | 5,000,000 | ||||||||||||
Prepaid distribution fees | 1,892,806 | 592,786 | ||||||||||||
Other intangible asset | 125,000 | - | ||||||||||||
Popcornflix film rights and other assets | 7,163,943 | - | ||||||||||||
Film library, net | 22,655,645 | - | ||||||||||||
Due from affiliated companies | 6,128,629 | 1,372,517 | ||||||||||||
Programming costs, net | 7,651,145 | 3,977,553 | ||||||||||||
Other assets, net | 298,133 | - | ||||||||||||
Total assets | $ | 61,742,808 | $ | 11,817,917 | ||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||||||||
Senior secured notes payable, net of unamortized debt discount of $0 and $318,992, respectively, and unamortized deferred financing costs of $0 and $40,902, respectively | $ | - | $ | 2,610,106 | ||||||||||
Senior secured notes payable under revolving line of credit to related party, net of unamortized debt discount of $0 and $160,667, respectively, and unamortized deferred financing costs of $0 and $2,845, respectively | 1,500,000 | 3,316,488 | ||||||||||||
Accounts payable and accrued expenses | 1,002,536 | 694,368 | ||||||||||||
Accrued programming costs | 375,761 | 1,061,980 | ||||||||||||
Film library acquisition obligation | 663,400 | - | ||||||||||||
Accrued participation costs | 2,620,417 | - | ||||||||||||
Other liabilities | 144,533 | - | ||||||||||||
Deferred tax liability, net | 257,000 | 439,000 | ||||||||||||
Deferred revenue | 515,000 | 71,429 | ||||||||||||
Total liabilities | 7,078,647 | 8,193,371 | ||||||||||||
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; 3,746,054 and 893,369 shares, issued and outstanding, respectively | 374 | 89 | ||||||||||||
Class B common stock, $.0001 par value, 20,000,000 shares authorized; 7,863,938 shares issued and outstanding | 786 | 807 | ||||||||||||
Additional paid-in capital | 32,324,500 | 4,074,646 | ||||||||||||
Accumulated earnings (deficit) | 22,338,501 | (450,996 | ) | |||||||||||
Total stockholders' equity | 54,664,161 | 3,624,546 | ||||||||||||
Total liabilities and stockholders' equity | $ | 61,742,808 | $ | 11,817,917 | ||||||||||
See accompanying notes to consolidated financial statements | ||||||||||||||
Chicken Soup for the Soul Entertainment, Inc. | |||||||||||||||
Consolidated Statements of Income and Comprehensive Income | |||||||||||||||
Q4 ended December 31, | Year Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenue: | |||||||||||||||
Television and short-form video production | $ | 5,213,334 | $ | 5,315,943 | $ | 7,244,998 | $ | 7,720,489 | |||||||
Television and film distribution | 2,937,678 | - | 2,937,678 | - | |||||||||||
Online networks | 570,051 | 398,143 | 796,664 | 398,143 | |||||||||||
Total revenue | 8,721,063 | 5,714,086 | 10,979,340 | 8,118,632 | |||||||||||
Less: returns and allowances | (322,339 | ) | - | (322,339 | ) | - | |||||||||
Net revenue | 8,398,724 | 5,714,086 | 10,657,001 | 8,118,632 | |||||||||||
Cost of revenue (1) | 3,940,811 | 2,066,941 | 4,735,734 | 3,155,668 | |||||||||||
Gross profit | 4,457,913 | 3,647,145 | 5,921,267 | 4,962,964 | |||||||||||
Operating expenses: | |||||||||||||||
Selling, general and administrative (2) | 1,691,857 | 156,876 | 3,197,446 | 2,370,912 | |||||||||||
Management and license fees | 839,872 | 571,409 | 1,065,700 | 811,863 | |||||||||||
Total operating expenses | 2,531,729 | 728,285 | 4,263,146 | 3,182,775 | |||||||||||
Operating income | 1,926,184 | 2,918,860 | 1,658,121 | 1,780,189 | |||||||||||
Interest income | 8,320 | 2 | 10,888 | 13 | |||||||||||
Interest expense (3) | (13,531 | ) | (303,675 | ) | (1,190,111 | ) | (560,069 | ) | |||||||
Acquisition-related costs | (2,193,147 | ) | - | (2,193,147 | ) | - | |||||||||
Gain on bargain purchase | 24,321,747 | - | 24,321,747 | - | |||||||||||
Income before income taxes | 24,049,572 | 2,615,186 | 22,607,498 | 1,220,133 | |||||||||||
(Benefit from) provision for income taxes | (95,000 | ) | 1,026,000 | (182,000 | ) | 439,000 | |||||||||
Net income and comprehensive income | 24,144,572 | 1,589,186 | $ | 22,789,498 | $ | 781,133 | |||||||||
Net income per common share: | |||||||||||||||
Basic net income per common share | $ | 2.08 | $ | 0.18 | $ | 2.26 | $ | 0.09 | |||||||
Diluted net income per common share | $ | 2.05 | $ | 0.17 | $ | 2.23 | $ | 0.09 | |||||||
Weighted average basic shares outstanding | 11,593,977 | 9,066,502 | 10,063,732 | 8,835,930 | |||||||||||
Weighted average diluted shares outstanding | 11,762,407 | 9,165,985 | 10,232,162 | 8,996,636 | |||||||||||
(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 | ||||||
Year Ended December 31, | ||||||
2017 | 2016 | |||||
Net income, as reported | $ | 22,789,498 | $ | 781,133 | ||
Provision for (benefit from) income taxes | (182,000 | ) | 439,000 | |||
Interest expense, net of interest income (a) | 1,179,224 | 560,056 | ||||
Film library amortization, included in cost of revenue (non-cash) | 1,378,869 | - | ||||
Acquisition-related costs related to Screen Media | 2,193,147 | - | ||||
Share-based compensation expense (b) | 638,258 | 1,542,041 | ||||
Severance cost - former officer | - | 225,828 | ||||
Consulting fees relating to the acquisition of Screen Media | 33,333 | - | ||||
Amortization of leasehold improvements | 9,819 | - | ||||
Organization costs and directors costs (c) | 290,124 | 228,615 | ||||
Adjusted EBITDA | $ | 28,330,272 | $ | 3,776,673 | ||
(a) Includes non-cash amortization of debt discounts and amortization of deferred financing costs of $909,580 and $424,571 for the years ended December 31, 2017 and 2016, respectively. | ||||||
(b) For 2017, this includes the fair value of shares of Class A common stock at the date of issuance, issued to our outside directors and to individuals for services rendered. For 2016, this includes the fair value of shares of Class A common stock at the date of issuance, issued to a former officer of our Company, to our outside directors and to individuals for services rendered. | ||||||
(c) 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. | ||||||