UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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| Item 2.02. | Results of Operations and Financial Condition. |
On August 11, 2022, Chicken Soup for the Soul Entertainment Inc. (the “Company”) issued a press release announcing its financial results for the three- and six-month periods ended June 30, 2022. The press release is attached to this Current Report as Exhibit 99.1.
Attached as Exhibit 99.2 to this Current Report on Form 8-K is an investor presentation that the Company plans to use for public relations and other purposes.
The information furnished under this Item 2.02, including the exhibit related thereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any disclosure document of the Company, except as shall be expressly set forth by specific reference in such document.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits: |
| Exhibit No. | Description | ||
| 99.1 | Press Release, dated August 11, 2022. | ||
| 99.2 | Investor Presentation, dated August 12, 2022. | ||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: August 12, 2022 | CHICKEN SOUP FOR THE SOUL ENTERTAINMENT INC. | |
| By: | /s/ William J. Rouhana, Jr. | |
| Name: William J. Rouhana, Jr. | ||
| Title: Chief Executive Officer | ||
Exhibit 99.1
Chicken Soup for the Soul Entertainment Reports Q2 2022 Results
Strong year-over-year revenue growth of 70%
Expanded scale driven by continued successful implementation of well-timed strategy
Closed acquisition of Redbox Entertainment Inc., creating the most complete entertainment platform for value-conscious consumers
Management to host a live webcast on August 11, 2022, at 4:30pm ET
COS COB, Conn. – August 11, 2022 – Chicken Soup for the Soul Entertainment, Inc. (Nasdaq: CSSE), one of the largest operators of advertising-supported video-on-demand (AVOD) streaming services, today announced its financial results for the second quarter ended June 30, 2022.
“We delivered outstanding results in our last quarter ahead of the transformational acquisition of Redbox, with 70% revenue growth and 77% Adjusted EBITDA growth on a year-over-year basis,” said William J. Rouhana Jr., chairman and chief executive officer of Chicken Soup for the Soul Entertainment. “Our growth reflects terrific execution by our ad sales team, supported by strong viewership growth, increased time spent on our new tech platform, and our growing pipeline of original and exclusive programming across our services.”
“Now we move forward with Redbox, which gives us immediate scale, growing our film and television library to over 51,000 titles, establishing a broad complement of AVOD, TVOD and FAST channel services reaching millions of viewers across dozens of platforms, and adding Redbox’s 36,000 kiosks nationwide, supported by a customer loyalty program with over 40 million members. These collective assets create an entertainment company for value-conscious consumers that will generate over $500 million in revenue and $100-$150 million in Adjusted EBITDA on an annualized basis exiting this year, with multiple opportunities to accelerate our growth in 2023 and beyond.”
Second Quarter 2022 Financial Summary
| · | Net revenue of $37.6 million, compared to $29.2 million in the first quarter of 2022, and $22.1 million in the year-ago period, an increase of 70% year-over-year |
| · | Net loss of $20.8 million compared with a net loss of $14.1 million in the first quarter of 2022, and a net loss of $11.1 million in the year-ago period; $18.4 million net loss before dividends, compared with $11.8 million net loss in the first quarter 2022, and $8.8 million net loss in the year-ago period |
| · | Adjusted EBITDA of $5.6 million, compared with $3.7 million in the first quarter of 2022, and $3.2 million in the year-ago period; an increase of 77% year-over-year |
Recent Business Highlights
| · | Closed acquisition of Redbox and began integrating key assets into Chicken Soup for the Soul Entertainment operations |
| · | Announced leadership appointments, including Galen Smith, former CEO of Redbox, as executive vice chairman of Chicken Soup for the Soul Entertainment and Redbox, and Jonathan Katz, former CEO of Scripps Networks, as president of Chicken Soup for the Soul Entertainment |
| · | Sold out ad inventory again in the second quarter, grew connected TV ad inventory, and expanded ad sales effort which now includes 12 ad rep partners in addition to the company’s in-house sales operation |
| · | Rapidly grew viewership through additional touchpoint rollouts, now on track to reach 110 by year-end (excluding Redbox) |
Gross profit for the quarter ended June 30, 2022, was $6.0 million, or 16% of net revenue, compared with $6.6 million in the first quarter of 2022, or 23% of net revenue, and compared with $6.7 million, or 30% of net revenue for the year-ago period.
Operating loss for the quarter ended June 30, 2022, was $16.8 million, compared with an operating loss of $10.8 million in the first quarter of 2022, and $7.8 million in the year-ago period.
Net loss was $20.8 million, or $1.39 per share, compared with a net loss of $14.1 million, or $0.92 per share, in the first quarter of 2022, and a net loss of $11.1 million, or $0.79 per share in the prior-year period. Excluding preferred dividends, the net loss in the second quarter of 2022 would have been $18.4 million, or $1.23 per share, compared with a net loss of $8.8 million, or $0.63 per share last year.
Adjusted EBITDA for the quarter ended June 30, 2022, was $5.6 million, compared with $3.7 million in the first quarter of 2022, and $3.2 million in the same period last year.
As of June 30, 2022, the company had $23.5 million of cash and cash equivalents compared with $44.3 million as of December 31, 2021, and outstanding debt of $87.0 million as of June 30, 2022, compared with $56.7 million as of December 31, 2021.
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 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.
| · | Date, Time: Thursday, August 11, 2022, 4:30 p.m. ET. |
| · | A 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. |
| · | To access a dial-in number, the company encourages participants to register in advance by visiting the following pre-registration link here. |
| · | Please note the format has changed, and a dial-in option is no longer available without pre-registering at the provided link. |
Conference Call Replay Information
| · | A webcast replay will be made available at http://ir.cssentertainment.com/ under the “News & Events” tab following the completion of the call. |
About Chicken Soup for the Soul Entertainment
Chicken Soup for the Soul Entertainment, Inc. (Nasdaq: CSSE) operates video-on-demand (VOD) streaming services. The company owns Crackle Plus, which owns and operates a variety of ad-supported VOD streaming services including Crackle, Chicken Soup for the Soul, Popcornflix, Popcornflix Kids, Truli, Pivotshare, Españolflix and FrightPix. The company also acquires and distributes video content through its Screen Media and 1091 Pictures subsidiaries and produces original video content through the Chicken Soup for the Soul Television Group. Chicken Soup for the Soul Entertainment is a subsidiary of Chicken Soup for the Soul, LLC, which publishes the famous book series and produces super-premium pet food under the Chicken Soup for the Soul brand name.
Note Regarding Use of Non-GAAP Financial Measures
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). We use a non-GAAP financial measure to evaluate our results of operations and as a supplemental indicator of our operating performance. The non-GAAP financial measure that we use is Adjusted EBITDA. Adjusted EBITDA (as defined below) is considered a non-GAAP financial measure as defined by Regulation G promulgated by the SEC under the Securities Act of 1933, as amended. Due to the significance of non-cash and non-recurring expenses recognized during the three and six months ended June 30, 2022 and 2021, and the likelihood of material non-cash, non-recurring, and acquisition related expenses to occur in future periods, we believe that this non-GAAP financial measure enhances the understanding of our historical and current financial results as well as provides investors with measures used by management for the planning and forecasting of future periods, as well as for measuring performance for compensation of executives and other members of management. Further, we believe that Adjusted EBITDA enables our board of directors and management to analyze and evaluate financial and strategic planning decisions that will directly affect operating decisions and investments. We believe this measure is an important indicator of our operational strength and performance of our business because it provides a link between operational performance and operating income. It is also a primary measure used by management in evaluating companies as potential acquisition targets. We believe the presentation of this measure is relevant and useful for investors because it allows investors to view performance in a manner similar to the method used by management. We believe it helps improve investors’ ability to understand our operating performance and makes it easier to compare our results with other companies that have different capital structures or tax rates. In addition, we believe this measure is also among the primary measures used externally by our investors, analysts and peers in our industry for purposes of valuation and comparing our operating performance to other companies in our industry.
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 U.S. 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. We believe Adjusted EBITDA to be a meaningful indicator of our performance that management uses and believes provides useful information to investors regarding our financial condition and results of operations. The most comparable GAAP measure is operating income (loss).
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 June 30, 2022 to be filed on August 12, 2022, under the section thereof entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Reconciliation of Unaudited Historical Results to Adjusted EBITDA.”
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 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, the ability of the Company’s content offerings to achieve market acceptance, the Company’s success in retaining or recruiting officers, key employees, or directors, the ability to protect intellectual property, the ability to complete strategic acquisitions, the ability to manage growth and integrate acquired operations, the ability to pay dividends, regulatory or operational risks, and general market conditions impacting demand for the Company’s services. For a more complete description of these and other risks and uncertainties, please refer the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 31, 2022, and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, filed with the SEC on May 11, 2022. On May 10, 2022, the Company entered into a merger agreement to acquire Redbox Entertainment, Inc. These forward-looking statements speak only as of the date hereof and the Company expressly disclaims any obligation 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. Information regarding Chicken Soup for the Soul Entertainment’s acquisition of Redbox is qualified by reference to the Company’s Current Reports on Form 8-K, filed on May 11, 2022 and amended on May 12, 2022 and June 6, 2022, and its Registration Statement on Form S-4 declared effective by the SEC on July 15, 2022, the risk factors described therein, and all exhibits filed with respect to such reports and registration statement. Chicken Soup for the Soul Entertainment will file a Current Report on Form 8-K disclosing consummation of the acquisition of Redbox and related transactions and other information on or about August 12, 2022.
###
| Investor Relations | Media Contact |
| Taylor Krafchik | Peter Binazeski |
| Ellipsis | Chicken Soup for the Soul Entertainment |
| CSSE@ellipsisir.com | pbinazeski@chickensoupforthesoul.com |
| (646) 776-0886 |
| Chicken Soup for the Soul Entertainment, Inc. | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Cash, cash equivalents and restricted cash | $ | 23,483,187 | $ | 44,286,105 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $817,395, and $786,830, respectively | 67,522,346 | 60,213,807 | ||||||
| Prepaid expenses and other current assets | 2,591,236 | 1,904,273 | ||||||
| Operating lease right-of-use assets | 10,900,297 | — | ||||||
| Content assets, net | 114,880,908 | 63,645,396 | ||||||
| Intangible assets, net | 17,827,323 | 18,035,091 | ||||||
| Indefinite lived intangible assets | 12,163,943 | 12,163,943 | ||||||
| Goodwill | 45,463,240 | 39,986,530 | ||||||
| Other assets, net | 5,441,580 | 5,190,954 | ||||||
| Total assets | $ | 300,274,060 | $ | 245,426,099 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Accounts payable and accrued other expenses | $ | 49,373,363 | $ | 34,984,226 | ||||
| Due to affiliated companies | 3,145,536 | 489,959 | ||||||
| Programming obligations | 17,547,500 | 1,641,250 | ||||||
| Film library acquisition obligations | 38,738,033 | 24,673,866 | ||||||
| Accrued participation costs | 19,689,040 | 12,323,329 | ||||||
| Film acquisition advances | 19,121,686 | 6,196,909 | ||||||
| Revolving loan | 22,993,443 | 17,585,699 | ||||||
| 9.50% Notes due 2025, net of deferred issuance costs of $2,005,118 and $1,402,880, respectively | 42,850,782 | 31,493,020 | ||||||
| Contingent consideration | 4,709,556 | 9,764,256 | ||||||
| Put option obligation | 11,400,000 | 11,400,000 | ||||||
| Operating lease liabilities | 12,724,357 | — | ||||||
| Other liabilities | 5,046,142 | 3,274,432 | ||||||
| Total liabilities | 247,339,438 | 153,826,946 | ||||||
| Equity | ||||||||
| Stockholders' Equity: | ||||||||
| Series A cumulative redeemable perpetual preferred stock, $.0001 par value, liquidation preference of $25.00 per share, 10,000,000 shares authorized; 3,943,148 and 3,698,318 shares issued and outstanding, respectively; redemption value of $98,578,700 and $92,457,950, respectively | 394 | 370 | ||||||
| Class A common stock, $.0001 par value, 140,000,000 shares authorized; 9,608,332 and 8,964,330 shares issued, 7,253,794 and 8,019,828 shares outstanding, respectively | 964 | 899 | ||||||
| Class B common stock, $.0001 par value, 20,000,000 shares authorized; 7,654,506 shares issued and outstanding, respectively | 766 | 766 | ||||||
| Additional paid-in capital | 250,874,126 | 240,609,345 | ||||||
| Deficit | (171,372,394 | ) | (136,462,244 | ) | ||||
| Accumulated other comprehensive loss | (11,314 | ) | 571 | |||||
| Class A common stock held in treasury, at cost (2,354,538 and 944,502 shares, respectively) | (27,158,429 | ) | (13,202,407 | ) | ||||
| Total stockholders’ equity | 52,334,113 | 90,947,300 | ||||||
| Noncontrolling interests | 600,509 | 651,853 | ||||||
| Total equity | 52,934,622 | 91,599,153 | ||||||
| Total liabilities and equity | $ | 300,274,060 | $ | 245,426,099 | ||||
| Chicken Soup for the Soul Entertainment, Inc. | ||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net revenue | $ | 37,636,947 | $ | 22,134,934 | $ | 66,843,144 | $ | 45,331,776 | ||||||||
| Cost of revenue | 31,596,524 | 15,433,719 | 54,171,932 | 31,676,653 | ||||||||||||
| Gross profit | 6,040,423 | 6,701,215 | 12,671,212 | 13,655,123 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | 17,373,018 | 10,964,362 | 30,189,538 | 20,199,181 | ||||||||||||
| Amortization and depreciation | 1,680,443 | 1,337,678 | 3,328,701 | 2,575,705 | ||||||||||||
| Management and license fees | 3,763,695 | 2,213,493 | 6,684,315 | 4,533,177 | ||||||||||||
| Total operating expenses | 22,817,156 | 14,515,533 | 40,202,554 | 27,308,063 | ||||||||||||
| Operating loss | (16,776,733 | ) | (7,814,318 | ) | (27,531,342 | ) | (13,652,940 | ) | ||||||||
| Interest expense | 2,022,770 | 1,141,044 | 3,333,229 | 2,228,988 | ||||||||||||
| Other non-operating income, net | (279,405 | ) | (144,569 | ) | (481,197 | ) | (145,139 | ) | ||||||||
| Loss before income taxes and preferred dividends | (18,520,098 | ) | (8,810,793 | ) | (30,383,374 | ) | (15,736,789 | ) | ||||||||
| Provision for income taxes | 14,000 | 15,000 | 34,000 | 29,000 | ||||||||||||
| Net loss before noncontrolling interests and preferred dividends | (18,534,098 | ) | (8,825,793 | ) | (30,417,374 | ) | (15,765,789 | ) | ||||||||
| Net loss attributable to noncontrolling interests | (142,350 | ) | — | (180,735 | ) | — | ||||||||||
| Net loss attributable to Chicken Soup for the Soul Entertainment, Inc. | (18,391,748 | ) | (8,825,793 | ) | (30,236,639 | ) | (15,765,789 | ) | ||||||||
| Less: preferred dividends | 2,391,442 | 2,253,385 | 4,673,511 | 4,506,770 | ||||||||||||
| Net loss available to common stockholders | $ | (20,783,190 | ) | $ | (11,079,178 | ) | $ | (34,910,150 | ) | $ | (20,272,559 | ) | ||||
| Net loss per common share: | ||||||||||||||||
| Basic and diluted | $ | (1.39 | ) | $ | (0.79 | ) | $ | (2.30 | ) | $ | (1.46 | ) | ||||
| Weighted-average common shares outstanding: | ||||||||||||||||
| Basic and diluted | 14,950,458 | 14,059,211 | 15,152,222 | 13,848,655 | ||||||||||||
| Chicken Soup for the Soul Entertainment, Inc. | ||||||||||||||||
| Adjusted EBITDA | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Three Months Ended March 31, | Six Months Ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net loss available to common stockholders | $ | (20,783,190 | ) | $ | (11,079,178 | ) | $ | (34,910,150 | ) | $ | (20,272,559 | ) | ||||
| Preferred dividends | 2,391,442 | 2,253,385 | 4,673,511 | 4,506,770 | ||||||||||||
| Provision for income taxes | 14,000 | 15,000 | 34,000 | 29,000 | ||||||||||||
| Other taxes | 178,403 | 103,854 | 258,775 | 188,347 | ||||||||||||
| Interest expense | 2,022,770 | 1,141,044 | 3,333,229 | 2,228,988 | ||||||||||||
| Film library amortization and related costs | 14,666,992 | 6,841,349 | 24,354,016 | 13,770,016 | ||||||||||||
| Share-based compensation expense | 957,859 | 231,844 | 1,954,656 | 463,688 | ||||||||||||
| Expense for bad debt and video returns | 692,295 | 907,837 | 1,274,129 | 1,602,049 | ||||||||||||
| Amortization and depreciation | 2,674,893 | 1,721,011 | 4,678,966 | 3,342,371 | ||||||||||||
| Other non-operating income, net | (279,405 | ) | (144,569 | ) | (481,197 | ) | (145,139 | ) | ||||||||
| Transitional expenses | 255,615 | 192,054 | 363,400 | 192,054 | ||||||||||||
| All other nonrecurring costs | 2,777,637 | 967,848 | 3,698,069 | 1,807,898 | ||||||||||||
| Adjusted EBITDA | $ | 5,569,311 | $ | 3,151,479 | $ | 9,231,404 | $ | 7,713,483 | ||||||||
| Chicken Soup for the Soul Entertainment, Inc. |
| Adjusted Earnings Per Share |
| (unaudited) |
| Three Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Basic and diluted loss per share | $ | (1.39 | ) | $ | (0.79 | ) | ||
| Amortization related to acquired intangible assets | 0.11 | 0.09 | ||||||
| Adjusted basic and diluted loss per share | $ | (1.28 | ) | $ | (0.70 | ) | ||
| Six Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Basic and diluted loss per share | $ | (2.30 | ) | $ | (1.46 | ) | ||
| Amortization related to acquired intangible assets | 0.21 | 0.18 | ||||||
| Adjusted basic and diluted loss per share | $ | (2.09 | ) | $ | (1.28 | ) | ||
Exhibit 99.2
| INVESTOR PRESENTATION August 2022 |
| FORWARD-LOOKING STATEMENTS 2 This presentation (the “Presentation”) relates to Chicken Soup for the Soul Entertainment, Inc. (“CSS Entertainment”, “CSSE”, or the “Company”). This presentation contains various information and projections regarding the Company’s business, including its operations through its newly acquired Redbox business, and the Company’s existing operating subsidiaries, including Crackle Plus, Screen Media Ventures, and Landmark Studio Group. Unless otherwise indicated, historic financial information of the Company presented herein does not give pro forma effect to the financial information of Redbox for such periods. The financial information presented herein for the year ended December 31, 2021 is derived from our Annual Report on Form 10-K as filed with the SEC on March 31, 2022. Financial information for the six months ended June 30, 2022 is derived from our Quarterly Report on Form 10-Q filed with the SEC on August 12, 2022. The pro forma results of the Company, giving effect to its acquisition of Redbox for the year ended December 31, 2021 and the three months ended March 31, 2022, are presented in the Company’s Current Report on Form 8-K, as filed on May 11, 2022, as amended on May 12, 2022 and June 6, 2022. This Presentation includes “forward-looking statements” and projections. CSS Entertainment’s actual results may differ from its expectations, estimates and projections and, consequently, you should not rely on these forward-looking statements or projections as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements and projections include, without limitation, estimates and projections of future performance, which are based on numerous assumptions about sales, margins, competitive factors, industry performance and other factors which cannot be predicted. Such assumptions involve a number of known and unknown risks, uncertainties, and other factors, many of which are outside of the Company’s control, including, among other things: 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; pricing changes; the ability of the company’s content offerings to achieve market acceptance, the company’s success in retaining or recruiting officers, key employees, or directors; the ability to protect intellectual property, the ability to complete strategic acquisitions, the ability to manage growth and integrate acquired operations, in particular the relatively large scale operations and assets of Redbox, which includes areas of operations that are new to the Company; the ability to pay dividends, regulatory or operational risks, and general market conditions impacting demand for the Company’s services. The Company faces enhanced risks as a result of its acquisition of Redbox, including all the risks Redbox has faced in connection with its historic businesses and operations. For a more complete description of these and other risks and uncertainties, please read the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, Registration Statement on S-4, declared effective by the Securities and Exchange Commission on July 15, 2022, the Company’s Current Report on Form 8-K filed May 11, 2022 and amended on May 12, 2022 and June 6, 2022, the Company’s Current Report on Form 8-K filed August 12, 2022, and the Company’s other filings that have been made and will be made with the SEC. Should one or more of the material risks faced by the Company occur or should the underlying assumptions of the information presented herein change or prove incorrect, the actual results of operations are likely to vary from the projections and the variations may be material and adverse. The forward-looking statements and projections herein should not be regarded as a representation or prediction that the Company will achieve or is likely to achieve any particular results. We caution readers not to place undue reliance upon any forward-looking statements and projections, which speak only as of the date made. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. All registered or unregistered service marks, trademarks and trade names referred to in this Presentation are the property of their respective owners, and CSS Entertainment’s use herein does not imply an affiliation with, or endorsement by, the owners of these service marks, trademarks or trade names. |
| AN ENTERTAINMENT DESTINATION FOR VALUE CONSCIOUS CONSUMERS… …IN THE MOST PLACES WHERE PEOPLE MAKE DECISIONS ON WHAT TO WATCH. 3 |
| INTEGRATED MEDIA COMPANY FOCUSED ON AVOD OPPORTUNITY 4 A large independent AVOD company and top 5 in monthly active viewers with >40M Leading film and television AVOD library with 51,000 assets Differentiated content and production capabilities 40m+ Monthly Active Viewers(1) CRACKLE PLUS AVOD Networks Massive Consumer Distribution Original Content + Large Library + Production Capability Highly Sought-after Demographic LOYALTY MEMBERS WEEKLY RETAIL IMPRESSIONS APP DOWNLOADS 360M 41M 36K 45M NATIONWIDE KIOSKS FROM REDBOX: (1) Does not include Redbox metrics. |
| MEETING CONSUMERS EVERYWHERE THEY MAKE VIEWING DECISIONS 140+ combined consumer touchpoints across devices, platforms & CTVs Drive further growth in Redbox by distributing it across our network of touchpoints Expanding internationally beyond Israel and India and with dozens of countries in discussion 5 |
| UNIQUELY POSITIONED TO CONVERT CUSTOMERS TO STREAMING 6 $22 $58 $72 $13 $14 $17 $0 $20 $40 $60 $80 $100 Physical Rents Only Physical Rents & Previously Rented Movies Physical Rents, Previously Rented Movies & On Demand *Based on 2019 data Redbox Kiosk Only vs Total Enterprise 4-5x more Redbox transactions from customers that transact with multiple products Multi-Product Customers up to Higher Average Revenue Per User 5x Multi-Product Customers see Reduction in >11 Churn(1) percentage point |
| DIVERSE AND TARGETED AD SALES STRATEGY A data driven strategy with proven results Direct to brand across all of our AVOD networks with data-driven consumer targeting capabilities DIRECT SALES Offer advertisers access to premium long form video in real time across our network PROGRAMMATIC OTT has been an enhancement for the local resellers, and we provide these operators with local geo-targeted ad supply LOCAL RESELLERS 74% 12% 14% (1) Percent of ad sales for 2021 Multiple ad sales channels drive supply and demand optionality Percent of Ad Sales for January – June 2022 7 |
| 8 ORIGINAL & EXCLUSIVE AWARD-WINNING PROGRAMMING Original & Exclusive content drives viewership and margin Total Film Titles 17 K+ Episodes of Television 34 K+ Films drive customer acquisition TV series drive customer retention 105 Emmy Awards 446 Emmy Award nominations 15 Golden Globe Awards Sonar Library Original Series 4 series have received over 17 awards |
| NEAR TERM & IMMEDIATE VICTORIES DRIVE FCF GROWTH 9 Positive Free Cash Flow Adj. EBITDA $100 - $150m Revenue $500m 2022E Pro Forma Run Rate At Year-End Including Synergies Compelling Synergies $40M Capital Expenditure Avoidance Rental Rebound |
| COMPELLING SYNERGIES 10 The combination of Chicken Soup for the Soul Entertainment and Redbox creates a leading free streaming entertainment company with significant scale and compelling synergies Cross-selling and marketing to 41M+ loyalty members Ad-sales Screen Media distribution of Redbox titles Greater TVOD transactions Increased AVOD engagement and watch times Public company costs Licensing and product cost savings Compelling Synergies CapEx Avoidance Rental Rebound |
| CAPITAL EXPENDITURE AVOIDANCE 11 Combination unites complimentary content and distribution businesses to accelerate digital transformation and drive consumer touchpoints Compelling Synergies CapEx Avoidance Rental Rebound Loyalty Program TVOD & FAST Channel Platform Integrated Tech Team |
| RENTAL REBOUND 12 Studios are returning to theatrical distribution and output continues to improve sequentially driving normalization in rental levels Compelling Synergies CapEx Avoidance Rental Rebound Legacy DVD business expected to grow next 12-24 months First-run films expected to return to normalized levels and grow sequentially into 2023 Rents +37% +29% +20% Total Physical Customers +41% +30% +18% Theatrical hits drive week-over-week lifts April 2022 May 2022 June 2022 |
| STRATEGICALLY POSITIONED Accelerates the digital transformation of Redbox and allows Chicken Soup for the Soul Entertainment to expand its consumer offerings and distribution touchpoints (1) Percent of ad sales for 2021 13 Positioned for revenue growth, margin expansion, and positive FCF Data on how consumers choose and view content across channels and platforms Kiosks serve as powerful marketing tools and provide valuable data on consumer choice and preference Theatrical Release Premium Video on Demand (PVOD) / Electronic Sell Through (EST) Physical Disc Rental & Purchase Transactional Video On Demand (TVOD) Ad-Supported (AVOD) Ad-Supported (FAST) |
| HISTORY OF ACCRETIVE TRANSACTIONS 14 Building the premier AVOD destination through thoughtful transactions and low-cost content acquisition and production 2017 2019 2019 2019 2021 2022 2022 Valuable content library acquisition, global distribution capability and Popcornflix networks Acquired digital media company co-founded and chaired by Ashton Kutcher, now the producer of Going From Broke Launched content ownership, development, and production entity Established JV in May 2019; acquired full control from Sony Pictures Television in December 2020 Asset acquisition expands library and original television series production pipeline Acquired Sonar Film and Television Library; Launched Halcyon Studios Acquired content library and proprietary software capabilities Acquired Redbox with 36,000 kiosks and growing TVOD & AVOD businesses |
| IMPROVED CAPITAL STRUCTURE 15 Redbox debt restructured on favorable terms Future positive FCF to pay down debt and manage leverage and increase financial optionality $80M Line of Credit for Working Capital 5-year Maturity Favorable Financial Covenants Ability to PIK Interest |
| 16 CHICKEN SOUP FOR THE SOUL ENTERTAINMENT FULL YEAR 2021 RESULTS $ in millions $1.5 $8.1 $10.7 $26.8 $55.3 $66.4 $110.4 $0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 2015 2016 2017 2018 2019 2020 2021 Revenue $0.0 $3.8 $4.0 $10.0 $6.0 $11.8 $21.8 $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 2015 2016 2017 2018 2019 2020 2021 Adj. EBITDA (1) See our Annual Report on Form 10-K for the year ended December 31, 2021 filed March 31, 2022 |
| 17 CHICKEN SOUP FOR THE SOUL ENTERTAINMENT FIRST HALF 2022 RESULTS $ in millions $45.3 $66.8 $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 2021 2022 Revenue $7.7 $9.2 $6.5 $7.0 $7.5 $8.0 $8.5 $9.0 $9.5 2021 2022 Adj. EBITDA (1) See our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 filed August 12, 2022 (1) |
