COS COB, Conn., May 14, 2020 (GLOBE NEWSWIRE) — Chicken Soup for the Soul Entertainment, Inc. (Nasdaq: CSSE), one of the largest operators of streaming advertising-supported video-on-demand (AVOD) networks, today announced its financial results for the first quarter ended March 31, 2020.
First Quarter 2020 Financial HighlightsGross revenue of $14.1 million, compared to $2.5 million in the year-ago periodNet loss of $11.4 million compared to net loss of $3.4 million in the year-ago period; $10.5 million net loss before preferred dividends, compared to $2.8 million net loss before preferred dividends in the year-ago periodAdjusted EBITDA was $2.0 million, compared to $(0.8) million in the year-ago periodOnline networks, which include Crackle and Popcornflix generated $9.0 million in revenue compared to $0.7 million in the year-ago periodDistribution & Production revenue increased 184% to $5.1 million compared to $1.8 million in the year-ago periodRecent Business HighlightsViewership and registered user strength in the first quarter drove Crackle Plus networksOriginal and exclusive content rose to more than 14% of total viewing on Crackle PlusDistribution & Production growth driven by revenue share from Crackle Plus and an increased pace of new releases“We delivered solid year-over-year growth across our Online Networks and Distribution & Production businesses in the first quarter, continuing the momentum we began building late last year. While early second quarter trends reflect the initial impacts of the COVID-19 pandemic on advertisers, we believe our performance over the past six months demonstrates the potential of our differentiated business model,” said William J. Rouhana Jr., chairman and chief executive officer of Chicken Soup for the Soul Entertainment. “We’ve seen strong growth in viewership on our Crackle Plus networks, with accelerating interest in our original and exclusive content. Our revamped Distribution & Production strategy is driving rapid growth as well, benefitting from our strong pipeline of new content and the value of our library, and this business is expected to help buffer our performance in a weaker advertising environment. While our long-term outlook is promising, we are managing through a period of significant uncertainty. We remained focused on managing our costs and maintaining a healthy balance sheet and liquidity position. These efforts combined with continued solid execution of our strategy should put us in a position to emerge with a stronger business well-positioned for the long term.”Gross profit for the quarter ended March 31, 2020 was $3.3 million, or 25% of net revenue, compared to $0.6 million, or 26% of net revenue for the year-ago period. The change in the percentage of gross profit resulted in part from $2.4 million of non-cash amortization of the film library in the company’s traditional distribution business. Without this non-cash film library amortization expense, the gross profit would have been $5.7 million or 43% of total net revenue.Operating loss for the quarter ended March 31, 2020 was $10.0 million compared to an operating loss of $2.7 million for the year-ago period. Without the film library amortization expense included in cost of revenue and the amortization expense of acquired intangible assets resulting from the Crackle transaction, the operating loss for the quarter ended March 31, 2020 would have been $2.3 million compared to $1.9 million in the year ago period.Net loss was $11.4 million, or $0.95 per share, compared to a net loss of $3.4 million, or $0.28 per share in the prior-year first quarter. Excluding preferred dividends, the net loss in the first quarter of 2020 would have been $10.5 million, or approximately $0.87 per share, compared to net loss of $2.8 million, or $0.23 per share last year.Adjusted EBITDA for the quarter ended March 31, 2020 was $2.0 million, compared to $(0.8) million in the same period last year.As of March 31, 2020, the company had $7.1 million of cash and cash equivalents compared to $6.4 million as of December 31, 2019, and outstanding debt of $19.4 million as of March 31, 2020 compared to $20.2 million as of December 31, 2019.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.Conference Call InformationDate, Time: Thursday, May 14, 2020, 4:30 p.m. ET.Toll-free: (833) 832-5128International: (484) 747-6583Conference ID: 7998306A live webcast and replay will be available at http://ir.cssentertainment.com/ under the “News & Events” tabConference Call Replay InformationToll-free: (855) 859-2056International: (404) 537-3406Conference ID: 7998306ABOUT CHICKEN SOUP FOR THE SOUL ENTERTAINMENT
Chicken Soup for the Soul Entertainment, Inc. (Nasdaq: CSSE) operates streaming video-on-demand networks (VOD). The company owns a majority stake in Crackle Plus, a company formed with Sony Pictures Television, which owns and operates a variety of ad-supported and subscription-based VOD networks including Crackle, Popcornflix, Popcornflix Kids, Truli, Pivotshare, Españolflix and FrightPix. The company also acquires and distributes video content through its Screen Media subsidiary and produces original long and short-form content through Landmark Studio Group, its Chicken Soup for the Soul Originals division and APlus.com. 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
The company’s consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). It uses a non-GAAP financial measure to evaluate its results of operations and as a supplemental indicator of operating performance. The non-GAAP financial measure that is used 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. Management believes this non-GAAP financial measure enhances the understanding of the company’s historical and current financial results and enables the board of directors and management to analyze and evaluate financial and strategic planning decisions that will directly affect operating decisions and investments. The presentation of Adjusted EBITDA should not be construed as an inference that future results will be unaffected by unusual 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, the company’s actual operating results included in its condensed consolidated financial statements.“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-K for the year ended December 31, 2019 under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Reconciliation of Unaudited Historical Results to Adjusted EBITDA.”FORWARD-LOOKING STATEMENTSThis 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 Securities and Exchange Commission on March 30, 2020) 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.
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