Chicken Soup for the Soul Entertainment Reports Record Q3 2019 Revenue of $17.0 Million
First full quarter with AVOD business Crackle Plus drives record top line results
Third Quarter 2019 Financial Highlights
- Total revenue of
$17.0 million , compared to$6.6 million in the year-ago period - Net loss of
$13.3 million ; with a net loss of$12.4 million before preferred dividends, compared to a net loss of$0.2 million in the year-ago period and a net income of$0.2 million before preferred dividends - Adjusted EBITDA was a loss of
$0.4 million , compared to positive adjusted EBITDA of$3.4 million in the year-ago period - Online networks, which includes Crackle, Popcornflix and Pivotshare, generated
$14.4 million in revenue compared to$1.8 million in the year-ago period
Recent Business Highlights
- Crackle Plus delivers solid results in first full quarter
- New Crackle original series, ‘Going From Broke’ drives unprecedented engagement
Launched Landmark Studio Group in partnership with entertainment industry veteranDavid Ozer - Foresight film library acquisition expands Screen Media library and enhances distribution capabilities
“Our record third quarter results show the early promise of our transformation of our company into a leading AVOD network operator,” said
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 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
- Date, Time:
Thursday, November 14, 2019 ,4:30 p.m. ET . - Toll-free: (833) 832-5128
- International: (484) 747-6583
- Conference ID: 4392318
- 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: 4392318
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 and nine 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 Annual Report on Form 10-K, filed with the
INVESTOR RELATIONS | MEDIA CONTACT |
Taylor Krafchik | Kate Barrette |
Ellipsis | RooneyPartners LLC |
CSSE@ellipsisir.com | kbarrette@rooneyco.com |
646-776-0886 | (212) 223-0561 |
Tables Follow
Chicken Soup for the
Condensed Consolidated Balance Sheets
September 30, | December 31, | |||||||
2019 | 2018 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 6,194,964 | $ | 6,451,758 | ||||
Restricted cash | — | 750,000 | ||||||
Accounts receivable, net | 27,731,931 | 12,841,099 | ||||||
Prepaid expenses | 1,117,969 | 218,736 | ||||||
Inventory, net | 291,917 | 262,068 | ||||||
Goodwill | 17,466,681 | 2,537,079 | ||||||
Indefinite lived intangible assets | 12,163,943 | 12,163,943 | ||||||
Intangible assets, net | 47,081,028 | 2,971,637 | ||||||
Film library, net | 31,997,384 | 25,338,502 | ||||||
Due from affiliated companies | 7,010,065 | 1,213,436 | ||||||
Programming costs, net | 13,961,506 | 12,790,489 | ||||||
Program rights | 826,567 | — | ||||||
Deferred tax asset | — | 452,000 | ||||||
Other assets, net | 316,878 | 356,221 | ||||||
Total assets | $ | 166,160,833 | $ | 78,346,968 | ||||
LIABILITIES AND EQUITY | ||||||||
Current maturities of commercial loan | $ | 3,200,000 | $ | 1,000,000 | ||||
Commercial loan and revolving line of credit, net of unamortized deferred finance cost of $188,803 and $334,554, respectively | 12,611,197 | 6,582,113 | ||||||
Accounts payable and accrued expenses | 19,792,234 | 5,078,805 | ||||||
Ad Representation fees payable | 8,421,104 | — | ||||||
Film library acquisition obligations | 5,735,100 | 2,715,600 | ||||||
Programming Obligations | 6,005,154 | — | ||||||
Accrued participation costs | 1,308,575 | 1,539,139 | ||||||
Other liabilities | 5,142,105 | 414,506 | ||||||
Deferred revenue | — | 6,469 | ||||||
Total liabilities | 62,215,469 | 17,336,632 | ||||||
Commitments and contingencies (Note 16) | ||||||||
Equity | ||||||||
Stockholder's Equity: | ||||||||
Series A cumulative redeemable perpetual preferred stock, $.0001 par value, liquidation preference of $25.00 per share, 10,000,000 shares authorized; 1,599,002 and 918,497 shares issued and outstanding, respectively, redemption value of $39,975,050 and $22,962,425, respectively | 160 | 92 | ||||||
Class A common stock, $.0001 par value, 70,000,000 shares authorized; 4,259,920 and 4,227,740 shares issued, 4,185,685 and 4,153,505 shares outstanding, respectively | 425 | 421 | ||||||
Class B common stock, $.0001 par value, 20,000,000 shares authorized; 7,813,938 and 7,817,238 shares issued and outstanding, respectively | 782 | 782 | ||||||
Additional paid-in capital | 88,077,143 | 59,360,583 | ||||||
Retained (deficit) earnings | (20,335,402 | ) | 2,281,187 | |||||
Class A common stock held in treasury, at cost (74,235 shares) | (632,729 | ) | (632,729 | ) | ||||
Total stockholders’ equity | 67,110,379 | 61,010,336 | ||||||
Subsidiary convertible preferred stock (Note 17) | 36,350,000 | — | ||||||
Noncontrolling interests (Note 17) | 484,985 | — | ||||||
Total Equity | 103,945,364 | 61,010,336 | ||||||
Total liabilities and equity | $ | 166,160,833 | $ | 78,346,968 |
Chicken Soup for the
Condensed Consolidated Statements of Operations
(unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018* | 2019 | 2018* | |||||||||||||
Revenue: | ||||||||||||||||
Online networks | $ | 14,383,659 | $ | 1,809,689 | $ | 25,128,001 | $ | 3,339,901 | ||||||||
Television and film distribution | 2,613,872 | 2,510,462 | 6,058,862 | 7,785,427 | ||||||||||||
Television and short-form video production | 48,557 | 2,283,933 | 596,252 | 4,720,094 | ||||||||||||
Total revenue | 17,046,088 | 6,604,084 | 31,783,115 | 15,845,422 | ||||||||||||
Less: Television & film distribution returns and allowances | (255,394 | ) | (107,300 | ) | (828,785 | ) | (553,294 | ) | ||||||||
Net revenue | 16,790,694 | 6,496,784 | 30,954,330 | 15,292,128 | ||||||||||||
Cost of revenue | 13,614,648 | 2,471,136 | 23,568,743 | 7,398,107 | ||||||||||||
Gross profit | 3,176,046 | 4,025,648 | 7,385,587 | 7,894,021 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative | 6,371,870 | 2,324,632 | 13,894,351 | 7,467,654 | ||||||||||||
Amortization | 4,695,522 | 149,596 | 5,631,136 | 197,751 | ||||||||||||
Management and license fees | 1,676,303 | 647,603 | 3,091,093 | 1,512,687 | ||||||||||||
Total operating expenses | 12,743,695 | 3,121,831 | 22,616,580 | 9,178,092 | ||||||||||||
Operating (loss) income | (9,567,649 | ) | 903,817 | (15,230,993 | ) | (1,284,071 | ) | |||||||||
Interest income | 8,997 | 16,883 | 34,546 | 20,530 | ||||||||||||
Interest expense | (195,881 | ) | (133,121 | ) | (483,363 | ) | (251,939 | ) | ||||||||
Loss on extinguishment of debt | (350,691 | ) | — | (350,691 | ) | |||||||||||
Acquisition-related costs | (1,078,637 | ) | (182,832 | ) | (3,735,373 | ) | (228,132 | ) | ||||||||
(Loss) income before income taxes and preferred dividends | (11,183,861 | ) | 604,747 | (19,765,874 | ) | (1,743,612 | ) | |||||||||
Provision for income taxes | 1,248,000 | 375,000 | 557,000 | 579,000 | ||||||||||||
Net (loss) income before noncontrolling interests and preferred dividends | (12,431,861 | ) | 229,747 | (20,322,874 | ) | (2,322,612 | ) | |||||||||
Net (loss) attributable to noncontrolling interests | (37,473 | ) | — | (36,960 | ) | — | ||||||||||
Net (loss) income attributable to Chicken Soup for the Soul Entertainment, Inc. | (12,394,388 | ) | 229,747 | (20,285,914 | ) | (2,322,612 | ) | |||||||||
Less: Preferred dividends | 929,387 | 422,779 | 2,330,675 | 422,779 | ||||||||||||
Net (loss) available to common stockholders | $ | (13,323,775 | ) | $ | (193,032 | ) | $ | (22,616,589 | ) | $ | (2,745,391 | ) | ||||
Net (loss) per common share: | ||||||||||||||||
Basic and diluted | $ | (1.11 | ) | $ | (0.02 | ) | $ | (1.89 | ) | $ | (0.23 | ) |
* In accordance with ASC Subtopic 805‑50 "Transactions between entities under common control", results of operations for the 2018 period have been retrospectively adjusted for the acquisition of A Plus on December 28, 2018 to furnish comparative information as required. The effects of intra-entity transactions have been eliminated as a part of the consolidation, where applicable.
Adjusted EBITDA
Three Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Net loss available to common stockholders, as reported | $ | (13,323,775 | ) | $ | (193,032 | ) | ||
Preferred dividends | 929,387 | 422,779 | ||||||
Provision for income taxes | 1,248,000 | 375,000 | ||||||
Other Taxes | 54,590 | — | ||||||
Interest expense, net of interest income | 186,884 | 116,238 | ||||||
Film library and program rights amortization, included in cost of revenue (non-cash) | 1,369,874 | 1,033,983 | ||||||
Share-based compensation expense | 303,205 | 243,592 | ||||||
Acquisition-related costs and other one-time consulting fees | 1,078,637 | 527,832 | ||||||
Reserve for bad debt & video returns | 722,729 | 574,355 | ||||||
Amortization | 4,695,522 | 138,551 | ||||||
Loss on extinguishment on debt | 350,691 | — | ||||||
Transitional Expenses (a) | 1,634,771 | — | ||||||
All other nonrecurring costs | 377,184 | 198,973 | ||||||
Adjusted EBITDA | $ | (372,301 | ) | $ | 3,438,271 |
Nine Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Net loss available to common stockholders, as reported | $ | (22,616,589 | ) | $ | (2,745,391 | ) | ||
Preferred dividends | 2,330,675 | 422,779 | ||||||
Provision for income taxes | 557,000 | 579,000 | ||||||
Other Taxes | 386,265 | — | ||||||
Interest expense, net of interest income | 448,817 | 231,409 | ||||||
Film library and program rights amortization, included in cost of revenue (non-cash) | 3,804,268 | 3,656,515 | ||||||
Share-based compensation expense | 794,149 | 736,792 | ||||||
Acquisition-related costs and other one-time consulting fees | 3,735,373 | 698,132 | ||||||
Reserve for bad debt & video returns | 1,275,059 | 714,506 | ||||||
Amortization | 5,631,136 | 197,751 | ||||||
Loss on extinguishment on debt | 350,691 | — | ||||||
Transitional Expenses (a) | 2,876,124 | — | ||||||
All other nonrecurring costs | 564,239 | 296,251 | ||||||
Adjusted EBITDA | $ | 137,207 | $ | 4,787,744 |
(a) Represents transitional acquisition related expenses primarily associated with the Crackle Plus business combination. Costs include primarily non recurring payroll and related expenses and redundant non recurring technology costs incurred to transition the acquired business.
Source: Chicken Soup for the Soul Entertainment, Inc.