Chicken Soup for the Soul Entertainment Reports Q2 2020 Results
Second Quarter 2020 Financial Summary
- Gross revenue of
$13.9 million , compared to$12.2 million in the year-ago period. - Net loss of
$10.0 million compared to net loss of$5.9 million in the year-ago period;$9.0 million net loss before preferred dividends, compared to$5.1 million net loss before preferred dividends in the year-ago period. - Adjusted EBITDA was
$2.7 million , compared to$1.3 million in the year-ago period. Year-to-date Adjusted EBITDA increased approximately 10x over year-to-date 2019 results. - Online networks, which include Crackle and Popcornflix, generated
$5.4 million in net revenue compared to$10.0 million in the year-ago period. The year-over-year decline reflects the absence of approximately$4.0 million in advertising revenue in the 2020 period due to the closing of Playstation Vue, the elimination of$1.2 million of intercompany revenue share payments to our Distribution & Production business, and the weaker 2020 advertising market environment. - Distribution & Production generated
$8.5 million in revenue, compared to$2.2 million in the year-ago period due to strength in the performance of Screen Media’s content on Crackle Plus and TVOD revenue.
Recent Business Highlights
- Original & Exclusive content represented 17.5% of total viewing on Crackle Plus in the quarter up from 15% last quarter and 0% a year ago, reflecting the company’s strategic focus on original programming.
- Continued to expand pipeline of Original & Exclusive content. Crackle Plus is fully programmed into early 2021 despite industry production delays and has announced agreements including 200 hours of new original and exclusive programming.
- Acquired an in-process next-generation technology platform to support delivery and growth of AVOD networks from Sony for
$4.6 million ; acquisition will enable Chicken Soup for theSoul Entertainment to accelerate completion of platform, which will improve service and drive ongoing operating cost efficiencies beginning immediately. - Increased liquidity through bond issuance that raised an aggregate principal amount of more than
$22.1 million after underwriters exercised their over-allotment option.
“Despite a challenging Q2 advertising market, we were able to exceed top line expectations and increase our EBITDA by 10-fold for the six months ended
Gross profit for the quarter ended
Operating loss for the quarter ended
Net loss was
Adjusted EBITDA for the quarter ended
As of
For a discussion of the financial measures presented herein which are not calculated or presented in accordance with
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
- Date, Time:
Thursday, August 13, 2020 ,4:30 p.m. ET . - Toll-free: (833) 832-5128
- International: (484) 747-6583
- Conference ID: 6999674
- A live webcast and replay will be available at http://ir.cssentertainment.com/ under the “News & Events” tab
Conference Call Replay Information
- Toll-free: (855) 859-2056
- International: (404) 537-3406
- Conference ID: 6999674
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 Annual Report on Form 10-Q for the three and six month periods 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 Annual Report on Form 10-K, filed with the
INVESTOR RELATIONS
Ellipsis
CSSE@ellipsisir.com
646-776-0886
MEDIA CONTACT
kbarrette@rooneyco.com
(212) 223-0561
Chicken Soup for the |
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Condensed Consolidated Balance Sheets | ||||||||||
2020 |
2019 |
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(unaudited) | ||||||||||
ASSETS | ||||||||||
Cash and cash equivalents | $ | 4,655,317 | $ | 6,447,402 | ||||||
Accounts receivable, net | 22,573,432 | 34,661,119 | ||||||||
Prepaid expenses and other current assets | 1,485,557 | 1,173,223 | ||||||||
21,448,106 | 21,448,106 | |||||||||
Indefinite lived intangible assets | 12,163,943 | 12,163,943 | ||||||||
Intangible assets, net | 25,093,057 | 35,451,951 | ||||||||
Film library, net | 41,105,470 | 33,250,149 | ||||||||
Due from affiliated companies | 4,996,754 | 7,642,432 | ||||||||
Programming costs and rights, net | 16,418,308 | 15,113,574 | ||||||||
Other assets, net | 5,303,550 | 313,585 | ||||||||
Total assets | $ | 155,243,494 | $ | 167,665,484 | ||||||
LIABILITIES AND EQUITY | ||||||||||
Current maturities of commercial loan | $ | 3,200,000 | $ | 3,200,000 | ||||||
Commercial loan, net of unamortized deferred finance cost of |
10,230,781 | 11,810,475 | ||||||||
Notes payable under revolving credit facility | 5,000,000 | 5,000,000 | ||||||||
Accounts payable and accrued expenses | 30,041,385 | 26,646,390 | ||||||||
Ad representation fees payable | 8,511,033 | 12,429,838 | ||||||||
Film library acquisition obligations | 8,335,600 | 5,020,600 | ||||||||
Programming obligations | 6,416,012 | 7,300,861 | ||||||||
Accrued participation costs | 12,064,073 | 5,066,512 | ||||||||
Other liabilities | 1,484,050 | 170,106 | ||||||||
Total liabilities | 85,282,934 | 76,644,782 | ||||||||
Commitments and contingencies | ||||||||||
Equity | ||||||||||
Stockholders' Equity: | ||||||||||
Series A cumulative redeemable perpetual preferred stock, |
160 | 160 | ||||||||
Class A common stock, |
426 | 425 | ||||||||
Class B common stock, |
782 | 782 | ||||||||
Additional paid-in capital | 88,084,137 | 87,610,030 | ||||||||
Deficit | (54,133,136 | ) | (32,695,629 | ) | ||||||
Class A common stock held in treasury, at cost (74,235 shares) | (632,729 | ) | (632,729 | ) | ||||||
Total stockholders’ equity | 33,319,640 | 54,283,039 | ||||||||
Subsidiary convertible preferred stock | 36,350,000 | 36,350,000 | ||||||||
Noncontrolling interests | 290,920 | 387,663 | ||||||||
Total equity | 69,960,560 | 91,020,702 | ||||||||
Total liabilities and equity | $ | 155,243,494 | $ | 167,665,484 | ||||||
Chicken Soup for the |
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Condensed Consolidated Statements of Operations | |||||||||||||||||
(unaudited) | |||||||||||||||||
Three Months Ended |
Six Months Ended |
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2020 |
2019 |
2020 |
2019 |
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Revenue: | |||||||||||||||||
Online networks | $ | 5,360,693 | $ | 10,009,078 | $ | 14,386,403 | $ | 10,744,342 | |||||||||
Distribution and Production | 8,537,956 | 2,202,451 | 13,630,745 | 3,992,685 | |||||||||||||
Total revenue | 13,898,649 | 12,211,529 | 28,017,148 | 14,737,027 | |||||||||||||
Less: returns and allowances | (378,109 | ) | (241,047 | ) | (1,252,535 | ) | (573,391 | ) | |||||||||
Net revenue | 13,520,540 | 11,970,482 | 26,764,613 | 14,163,636 | |||||||||||||
Cost of revenue | 12,933,545 | 8,321,994 | 22,843,935 | 9,954,095 | |||||||||||||
Gross profit | 586,995 | 3,648,488 | 3,920,678 | 4,209,541 | |||||||||||||
Operating expenses: | |||||||||||||||||
Selling, general and administrative | 7,052,776 | 4,700,424 | 13,892,673 | 7,522,481 | |||||||||||||
Amortization and depreciation | 5,241,415 | 729,991 | 10,446,143 | 935,614 | |||||||||||||
Management and license fees | 1,352,054 | 1,195,520 | 2,676,461 | 1,414,790 | |||||||||||||
Total operating expenses | 13,646,245 | 6,625,935 | 27,015,277 | 9,872,885 | |||||||||||||
Operating loss | (13,059,250 | ) | (2,977,447 | ) | (23,094,599 | ) | (5,663,344 | ) | |||||||||
Interest expense | 333,903 | 146,359 | 663,028 | 287,482 | |||||||||||||
Acquisition-related costs | — | 2,258,801 | 98,926 | 2,656,736 | |||||||||||||
Other non-operating income, net | (4,331,409 | ) | (12,024 | ) | (4,337,847 | ) | (25,549 | ) | |||||||||
Loss before income taxes and preferred dividends | (9,061,744 | ) | (5,370,583 | ) | (19,518,706 | ) | (8,582,013 | ) | |||||||||
Provision for (benefit from) income taxes | 18,000 | (253,000 | ) | 67,000 | (691,000 | ) | |||||||||||
Net loss before noncontrolling interests and preferred dividends | (9,079,744 | ) | (5,117,583 | ) | (19,585,706 | ) | (7,891,013 | ) | |||||||||
Net (loss) income attributable to noncontrolling interests | (43,889 | ) | 513 | (96,743 | ) | 513 | |||||||||||
Net loss attributable to Chicken Soup for the |
(9,035,855 | ) | (5,118,096 | ) | (19,488,963 | ) | (7,891,526 | ) | |||||||||
Less: preferred dividends | 974,272 | 797,981 | 1,948,544 | 1,401,288 | |||||||||||||
Net loss available to common stockholders | $ | (10,010,127 | ) | $ | (5,916,077 | ) | $ | (21,437,507 | ) | $ | (9,292,814 | ) | |||||
Net loss per common share: | |||||||||||||||||
Basic and diluted | $ | (0.83 | ) | $ | (0.49 | ) | $ | (1.79 | ) | $ | (0.78 | ) | |||||
Chicken Soup for the |
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Adjusted EBITDA | ||||||||||
Three Months Ended |
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2020 |
2019 |
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Net loss available to common stockholders | $ | (10,010,127 | ) | $ | (5,916,077 | ) | ||||
Preferred dividends | 974,272 | 797,981 | ||||||||
Provision for income taxes | 18,000 | (253,000 | ) | |||||||
Other taxes | 51,240 | 50,465 | ||||||||
Interest expense | 333,903 | 146,359 | ||||||||
Film library and program rights amortization | 6,407,283 | 1,563,268 | ||||||||
Share-based compensation expense | 229,273 | 275,097 | ||||||||
Acquisition-related costs | — | 2,258,801 | ||||||||
Reserve for bad debt and video returns | 812,741 | 218,111 | ||||||||
Amortization and depreciation | 5,496,972 | 729,991 | ||||||||
Other non-operating income, net | (4,331,409 | ) | (12,024 | ) | ||||||
Transitional expenses | 2,239,876 | 1,241,353 | ||||||||
All other nonrecurring costs | 469,392 | 162,901 | ||||||||
Adjusted EBITDA | $ | 2,691,416 | $ | 1,263,226 | ||||||
Six Months Ended |
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2020 |
2019 |
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Net loss available to common stockholders | $ | (21,437,507 | ) | $ | (9,292,814 | ) | ||||
Preferred dividends | 1,948,544 | 1,401,288 | ||||||||
Provision for income taxes | 67,000 | (691,000 | ) | |||||||
Other Taxes | 104,651 | 331,675 | ||||||||
Interest expense | 663,028 | 287,482 | ||||||||
Film library and program rights amortization | 8,902,115 | 2,434,394 | ||||||||
Share-based compensation expense | 474,108 | 490,944 | ||||||||
Acquisition-related costs | 98,926 | 2,656,736 | ||||||||
Reserve for bad debt & video returns | 2,534,336 | 518,514 | ||||||||
Amortization and depreciation | 10,701,700 | 935,614 | ||||||||
Other non-operating income, net | (4,337,847 | ) | (25,549 | ) | ||||||
Transitional expenses | 4,353,345 | 1,241,353 | ||||||||
All other nonrecurring costs | 656,340 | 187,056 | ||||||||
Adjusted EBITDA | $ | 4,728,739 | $ | 475,693 | ||||||
Source: Chicken Soup for the Soul Entertainment, Inc.