Chicken Soup for the Soul Entertainment Reports Second Quarter 2023 Earnings
Management to host a live webcast on
Board of Directors to create a Strategic Review Committee to explore strategic options
“August 11 marked the first anniversary of our Redbox acquisition. It’s been an incredible year integrating two companies to create one of the largest providers of premium entertainment to value-conscious consumers,” said
Second Quarter 2023 Financial Summary
-
Net revenue of
$79.9 million , compared with net revenue of$37.6 million in the year-ago period -
Net loss of
$43.7 million , compared with a net loss of$20.8 million in the year-ago period;$40.5 million net loss before income taxes and preferred dividends, compared with$18.5 million net loss in the year-ago period -
Adjusted EBITDA of
$0.7 million , compared with Adjusted EBITDA of$5.6 million in the year-ago period
Recent Business Highlights
-
Saw record-breaking performance at kiosks and TVOD driven by The Super
Mario Bros . Movie, including becoming the top movie rental in 2023, the most rented movie in its first week since Top Gun: Maverick, and the most first-week rentals for a family film since The Croods: A New Age. The film also broke week one TVOD revenue records, and its Premium VOD/EST debut surpassed the previous record held by Avatar: The Way of Water -
Crackle Connex signed a deal with
TikTok to provide content from its platform to over 3,000 kiosk digital video screens, allowing brands to leverage Redbox’s digital-out-of-home network - Began the rollout of the previously announced 1,500 kiosk expansion program with key retail partner Dollar General
-
Crackle Connex signed a deal with Coinstar’s adPlanet
Retail Media Group and Velocity MSC to bring its reach of digital-out-of-home video screens to over 10,000 - Signed FAST deals with AMC Networks, Fremantle, Revry, and Love Stories TV bringing on channels including The Walking Dead, Portlandia, Supermarket Sweep, and The Jamie Oliver Channel
-
Locomotive Global’s
Rana Naidu was named a top 10 globally streamed series on Netflix by Parrot Analytics; Locomotive Global also recently signed deals withAll3Media ,Endemol Shine , andApplause Entertainment - Premiered At Home with Genevieve on Crackle, presented by PetSmart through a branded partnership agreement with Crackle Connex
- Redbox launched its Christmas and Holiday FAST channel on the Redbox free streaming app, the Roku channel, and LG FAST
- Launched the Chicken Soup for the Soul FAST channel on the Philo streaming TV service which can be accessed through numerous devices, including Roku, Samsung TVs, and Amazon Fire TV
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 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.
For further information on the matters discussed in this release, please see our Quarterly Report on Form 10-Q for the three and six months ended
Conference Call Information
-
Date & Time:
Monday, August 14, 2023 ,4:30 p.m. ET - To access a dial-in number, the company encourages participants to register in advance by visiting the following pre-registration link here
- Please note that a dial-in option is not available without registering at the provided link.
-
A live webcast of the event will also be available in the “Event Calendar” section under the “News & Events” tab of the Chicken Soup for the
Soul Entertainment investor relations website at http://ir.cssentertainment.com
Conference Call Replay Information
- A webcast replay will be made available at http://ir.cssentertainment.com/ in the “Event Calendar” section under the “News & Events” tab following the completion of the call
About Chicken Soup for the
Chicken Soup for the
Note Regarding Use of Non-GAAP Financial Measures
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in
The presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual, infrequent or non-recurring items or by non-cash items. This non-GAAP financial measure should be considered in addition to, rather than as a substitute for, our actual operating results included in our condensed consolidated financial statements.
We define Adjusted EBITDA as consolidated operating income (loss) adjusted to exclude interest, taxes, depreciation, amortization (including tangible and intangible assets), film library amortization and related costs (film library amortization, film library revenue shares and participation costs, theatrical release costs) as well as amortization for certain program rights, acquisition-related costs, consulting fees related to acquisitions, dividend payments, non-cash share-based compensation expense, and adjustments for other unusual and infrequent in nature identified charges, including transition related expenses. Adjusted EBITDA is not an earnings measure recognized by
A reconciliation of net loss to Adjusted EBITDA will be provided in the company’s Quarterly Report on Form 10-Q for the three and six months ended
Forward-Looking Statements and Available Information
This press release includes forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are statements that are not historical facts. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of management and are not predictions of actual performance. Such assumptions involve a number of known and unknown risks and uncertainties, including but not limited to risks relating to our core strategy, operating income and margin, seasonality, liquidity, including cash flows from operations, available funds, and access to financing sources, free cash flows, revenues, net income, profitability, stock price volatility, future regulatory changes, price changes, ability to achieve and sustain market acceptance of our content streaming services and other content offerings, ability to recruit and retain officers, key employees, or directors, ability to protect our intellectual property, ability to complete and integrate into our existing operations future strategic acquisitions, ability to manage growth, ability to pay dividends and our debt obligations, as well as evolving regulatory or other operational risks, and risks presented by changing general market conditions impacting demand for our services. For a more complete description of these and other risks and uncertainties, please refer to Item 1A (Risk Factors) in the Company’s Annual Report on Form 10-K for the year ended
Tables Follow
Chicken Soup for the |
||||||
Condensed Consolidated Balance Sheets | ||||||
2023 |
2022 |
|||||
ASSETS | ||||||
Cash, cash equivalents and restricted cash | $ |
6,917,111 |
$ |
18,738,395 |
||
Accounts receivable, net of allowance for doubtful accounts of |
159,316,288 |
113,963,425 |
||||
Prepaid expenses and other current assets |
9,044,398 |
13,196,180 |
||||
Operating lease right-of-use assets |
14,549,978 |
16,315,342 |
||||
Content assets, net |
109,708,725 |
126,090,508 |
||||
Intangible assets, net |
290,025,906 |
305,425,709 |
||||
261,322,774 |
260,748,057 |
|||||
Other assets, net |
27,714,084 |
29,401,793 |
||||
Total assets | $ |
878,599,264 |
$ |
883,879,409 |
||
LIABILITIES AND EQUITY | ||||||
Accounts payable | $ |
65,156,863 |
$ |
50,960,682 |
||
Accrued expenses |
93,694,320 |
87,817,015 |
||||
Due to affiliated companies |
4,022,477 |
3,778,936 |
||||
Programming obligations |
58,228,000 |
55,883,788 |
||||
Film library acquisition obligations |
30,189,206 |
39,750,121 |
||||
Accrued participation costs |
46,333,084 |
28,695,713 |
||||
Debt, net |
511,902,350 |
479,653,611 |
||||
Contingent consideration |
6,866,449 |
7,311,949 |
||||
Put option obligation |
4,400,000 |
11,400,000 |
||||
Operating lease liabilities |
16,127,975 |
18,079,469 |
||||
Other liabilities |
22,868,837 |
20,800,186 |
||||
Total liabilities |
859,789,561 |
804,131,470 |
||||
Equity | ||||||
Stockholders' Equity: | ||||||
Series A cumulative redeemable perpetual preferred stock, |
555 |
450 |
||||
Class A common stock, |
2,579 |
1,559 |
||||
Class B common stock, |
766 |
766 |
||||
Additional paid-in capital |
396,992,240 |
355,185,280 |
||||
Deficit |
(350,061,978) |
(247,752,446) |
||||
Accumulated other comprehensive income |
(70,969) |
47,528 |
||||
Class A common stock held in treasury, at cost (2,422,842 and 2,422,842 shares, respectively) |
(28,165,913) |
(28,165,913) |
||||
Total stockholders’ equity |
18,697,280 |
79,317,224 |
||||
Noncontrolling interests |
112,423 |
430,715 |
||||
Total equity |
18,809,703 |
79,747,939 |
||||
Total liabilities and equity | $ |
878,599,264 |
$ |
883,879,409 |
||
Chicken Soup for the |
||||||||||||
Condensed Consolidated Statements of Operations | ||||||||||||
(unaudited) | ||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||
Net revenues | $ |
79,910,063 |
$ |
37,636,947 |
$ |
189,509,356 |
$ |
66,843,144 |
||||
Costs and expenses | ||||||||||||
Operating |
65,285,767 |
31,596,524 |
161,592,135 |
54,171,932 |
||||||||
Selling, general and administrative |
24,556,530 |
17,373,018 |
57,320,081 |
30,189,538 |
||||||||
Amortization and depreciation |
10,995,085 |
1,680,443 |
22,178,802 |
3,328,701 |
||||||||
Management and license fees |
4,926,349 |
3,763,695 |
12,778,490 |
6,684,315 |
||||||||
Total costs and expenses |
105,763,731 |
54,413,680 |
253,869,508 |
94,374,486 |
||||||||
Operating loss |
(25,853,668) |
(16,776,733) |
(64,360,152) |
(27,531,342) |
||||||||
Interest expense |
17,901,099 |
2,022,770 |
34,567,358 |
3,333,229 |
||||||||
Other non-operating income, net |
(1,370,495) |
(279,405) |
(2,065,185) |
(481,197) |
||||||||
Loss before income taxes and preferred dividends |
(42,384,272) |
(18,520,098) |
(96,862,325) |
(30,383,374) |
||||||||
Income tax provision |
(1,898,687) |
14,000 |
(684,536) |
34,000 |
||||||||
Net loss before noncontrolling interests and preferred dividends |
(40,485,585) |
(18,534,098) |
(96,177,789) |
(30,417,374) |
||||||||
Net loss attributable to noncontrolling interests |
(76,942) |
(142,350) |
(204,604) |
(180,735) |
||||||||
Net loss attributable to Chicken Soup for the |
(40,408,643) |
(18,391,748) |
(95,973,185) |
(30,236,639) |
||||||||
Less: preferred dividends |
3,323,756 |
2,391,442 |
6,336,347 |
4,673,511 |
||||||||
Net loss available to common stockholders | $ |
(43,732,399) |
$ |
(20,783,190) |
$ |
(102,309,532) |
$ |
(34,910,150) |
||||
Net loss per common share: | ||||||||||||
Basic and diluted | $ |
(1.50) |
$ |
(1.39) |
$ |
(4.07) |
$ |
(2.30) |
||||
Weighted-average common shares outstanding: | ||||||||||||
Basic and diluted |
29,171,223 |
14,950,458 |
25,163,744 |
15,152,222 |
||||||||
Chicken Soup for the |
||||||||||||
Adjusted EBITDA | ||||||||||||
(unaudited) | ||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||
Net loss available to common stockholders | $ |
(43,732,399) |
$ |
(20,783,190) |
$ |
(102,309,532) |
$ |
(34,910,150) |
||||
Preferred dividends |
3,323,756 |
2,391,442 |
6,336,347 |
4,673,511 |
||||||||
Net (loss) income attributable to noncontrolling interests |
(76,942) |
(142,350) |
(204,604) |
(103,965) |
||||||||
Income tax (benefit) provision |
(1,898,687) |
14,000 |
(684,536) |
34,000 |
||||||||
Other Taxes |
172,859 |
178,403 |
425,738 |
258,775 |
||||||||
Interest Expense |
17,901,099 |
2,022,770 |
34,567,358 |
3,333,229 |
||||||||
10,782,476 |
14,666,992 |
51,658,019 |
24,354,016 |
|||||||||
Stock-based Compensation |
912,841 |
957,859 |
1,827,412 |
1,954,656 |
||||||||
Reserve for bad debt and video returns |
658,363 |
692,295 |
1,816,066 |
1,274,129 |
||||||||
Amortization and depreciation |
10,995,085 |
2,674,893 |
22,178,802 |
4,678,966 |
||||||||
Other non-operating income, net |
(1,370,495) |
(279,405) |
(2,065,185) |
(481,197) |
||||||||
Non-cash settlement of management and licensing fees |
1,231,587 |
255,615 |
4,681,587 |
255,615 |
||||||||
Transitional expenses and other non-recurring costs |
1,759,127 |
2,919,987 |
2,506,232 |
3,909,819 |
||||||||
Adjusted EBITDA | $ |
658,670 |
$ |
5,569,311 |
$ |
20,733,704 |
$ |
9,231,404 |
||||
(a) Includes amortization of deferred financing costs of |
(b) Includes film library amortization, film library revenue shares and participation costs, theatrical release costs as well as amortization for certain program rights and impairment of content assets. Includes impairment of content assets of |
(c) Represents expense related to common stock equivalents issued to certain employees and officers under the Long-Term Incentive Plan. In addition to common stock grants issued to employees, directors, and consultants. |
(d) Includes depreciation and amortization of intangibles, property and equipment and amortization of technology expenditures included in operating costs. |
(e) Other non-operating income is primarily comprised of interest income earned on cash deposits, other non-operating income including settlements, debt extinguishment costs, and changes to fair market value of warrants. |
(f) Represents transitional and integration costs primarily associated with business combinations . Costs include non-recurring payroll and redundant or non-recurring costs including technology, marketing, and certain overhead as well as legal, consulting, accounting and other non-recurring operating costs. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230814669903/en/
(INVESTOR RELATIONS)
Zaia Lawandow
Chicken Soup for the
zlawandow@chickensoupforthesoul.com
(PRESS)
Chicken Soup for the
pbinazeski@chickensoupforthesoul.com
Source: Chicken Soup for the