NEW YORK--(BUSINESS WIRE)--Nov 14, 2022--
Chicken Soup for the Soul Entertainment, Inc. (Nasdaq: CSSE), one of the largest providers of premium content to value-conscious consumers, today announced its financial results for the third quarter ended September 30, 2022.
“This has been the best financial quarter in our history, and our position in the free and low-cost streaming ecosystem is stronger than ever after completing the acquisition of Redbox during the quarter,” said William J. Rouhana, Jr., chairman and chief executive officer of Chicken Soup for the Soul Entertainment. “We saw tremendous growth, with revenue increasing 149% and Adjusted EBITDA 97% year over year. Despite a slowing economy, I am optimistic about the days ahead as we continue to serve value-conscious consumers across kiosk, transactional and ad-supported video on demand services.”
Third Quarter 2022 Financial Summary
Recent Business Highlights
Operating loss for the quarter ended September 30, 2022, was $42.0 million, compared with an operating loss of $16.8 million in the second quarter of 2022, and $13.2 million in the year-ago period. The increase in operating loss in the third quarter was driven partially by one-time transaction expenses related to the merger with Redbox Entertainment.
Net loss was $20.1 million, or $1.13 per share, compared with a net loss of $20.8 million, or $1.39 per share, in the second quarter of 2022, and a net loss of $16.7 million, or $1.04 per share in the prior-year period.
Adjusted EBITDA for the quarter ended September 30, 2022, was $9.6 million, compared with $5.6 million in the second quarter of 2022, and $4.9 million in the same period last year.
As of September 30, 2022, the company had $36.3 million of cash and cash equivalents compared with $44.3 million as of December 31, 2021, and net debt of $461.3 million as of September 30, 2022, compared with $55.3 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.
The company also appointed Jason Meier as the Chief Financial Officer of Chicken Soup for the Soul Entertainment effective November 15, 2022. Jason, who has served as the company’s Chief Accounting Officer since September 2021, brings a breadth of experience and is well suited for the role. Chris Mitchell will continue as the Chief Financial Officer of the parent company, Chicken Soup for the Soul Holdings and will remain a member of the Board of Directors of Chicken Soup for the Soul Entertainment.
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About Chicken Soup for the Soul Entertainment
Chicken Soup for the Soul Entertainment (Nasdaq: CSSE) provides premium content to value-conscious consumers. The company is one of the largest advertising-supported video-on-demand (AVOD) companies in the US, with three flagship AVOD streaming services: Redbox, Crackle and Chicken Soup for the Soul. In addition, the company operates Redbox Free Live TV, a free ad-supported streaming television service (FAST), with over 150 channels as well as a transaction video on demand (TVOD) service, and a network of approximately 34,000 kiosks across the US for DVD rentals. To provide original and exclusive content to its viewers, the company creates, acquires and distributes films and TV series through its Screen Media and Chicken Soup for the Soul TV Group subsidiaries. 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 nine-month periods ended September 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 and integration related expenses comprised of non-recurring redundant costs including technology, marketing, payroll and certain overhead associated with business combination. 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 nine-months period ended September 30, 2022 to be filed on November 14, 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 to Item 1A (Risk Factors) in the Company’s Quarterly Report on Form 10-Q for the three- and nine-month period ended September 30, 2022, filed with the SEC on November 14, 2022. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by the forward-looking statements contained in this press release. Information regarding the acquisition of Redbox and related transactions is qualified by reference to the Company’s Current Reports on Form 8-K filed with the SEC on May 11, 2022 (as amended May 12, 2022), June 6, 2022, August 12, 2022, and November 14, 2022, and all exhibits filed with respect to such reports and the aforementioned registration statement. The forward-looking statements contained in this press release 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. Chicken Soup for the Soul Entertainment, Inc.Condensed Consolidated Balance SheetsSeptember 30,December 31,
2022
2021(unaudited)
ASSETSCash, cash equivalents and restricted cash$
36,303,799$
44,286,105Accounts receivable, net of allowance for doubtful accounts of $974,426, and $786,830, respectively
96,089,197
60,213,807Prepaid expenses and other current assets
19,621,665
1,904,273Operating lease right-of-use assets
17,317,175
—Content assets, net
142,538,634
63,645,396Intangible assets, net
292,932,777
18,035,091Indefinite lived intangible assets
12,163,943
12,163,943Goodwill
277,083,097
39,986,530Other assets, net
23,348,656
5,190,954Total assets$
917,398,943$
245,426,099 LIABILITIES AND EQUITYAccounts payable$
41,876,561$
12,963,902Accrued expenses
88,021,429
23,185,368Due to affiliated companies
2,589,867
489,959Programming obligations
55,159,246
1,641,250Film library acquisition obligations
40,739,418
24,673,866Accrued participation costs
25,030,611
12,323,329Debt, net
461,287,515
55,275,628Contingent consideration
7,556,856
9,764,256Put option obligation
11,400,000
11,400,000Operating lease liabilities
19,064,596
—Other liabilities
39,374,480
2,109,388Total liabilities
792,100,579
153,826,946 EquityStockholders' Equity:Series A cumulative redeemable perpetual preferred stock, $.0001 par value, liquidation preference of $25.00 per share, 4,300,000 shares authorized; 4,073,491 and 3,698,318 shares issued and outstanding, respectively; redemption value of $101,837,275 and $92,457,950, respectively
407
370Class A common stock, $.0001 par value, 140,000,000 shares authorized; 15,550,276 and 8,964,330 shares issued, 13,195,738 and 8,019,828 shares outstanding, respectively
1,555
899Class B common stock, $.0001 par value, 20,000,000 shares authorized; 7,654,506 shares issued and outstanding, respectively
766
766Additional paid-in capital
343,374,588
240,609,345Deficit
(191,432,641)
(136,462,244)Accumulated other comprehensive income
36,957
571Class A common stock held in treasury, at cost (2,354,538 and 944,502 shares, respectively)
(27,158,429)
(13,202,407)Total stockholders’ equity
124,823,203
90,947,300Noncontrolling interests
475,161
651,853Total equity
125,298,364
91,599,153Total liabilities and equity$
917,398,943$
245,426,099 Chicken Soup for the Soul Entertainment, Inc.Condensed Consolidated Statements of Operations(unaudited) Three Months Ended September 30,Nine Months Ended September 30,
2022
2021
2022
2021Net revenues$
72,392,263$
29,096,855$
139,235,407$
74,428,631Costs and expensesOperating
60,155,906
22,856,374
114,327,838
54,533,027Selling, general and administrative
27,632,865
14,837,193
55,795,064
34,500,620Amortization and depreciation
6,349,026
1,538,650
9,677,727
4,114,355Management and license fees
4,774,758
2,909,686
11,459,073
7,442,863Merger and transaction costs
15,476,452
201,106
17,503,791
736,860Total costs and expenses
114,389,007
42,343,009
208,763,493
101,327,725Operating loss
(41,996,744)
(13,246,154)
(69,528,086)
(26,899,094) Interest expense
7,658,665
1,304,952
10,991,894
3,533,940Other non-operating income, net
(4,551,004)
(101,898)
(5,032,201)
(247,037)Loss before income taxes and preferred dividends
(45,104,405)
(14,449,208)
(75,487,779)
(30,185,997)Income tax (benefit) provision
(27,320,839)
30,000
(27,286,839)
59,000Net loss before noncontrolling interests and preferred dividends
(17,783,566)
(14,479,208)
(48,200,940)
(30,244,997)Net (loss) income attributable to noncontrolling interests
(167,289)
9,085
(348,024)
9,085Net loss attributable to Chicken Soup for the Soul Entertainment, Inc.
(17,616,277)
(14,488,293)
(47,852,916)
(30,254,082)Less: preferred dividends
2,443,970
2,253,385
7,117,481
6,760,155Net loss available to common stockholders$
(20,060,247)$
(16,741,678)$
(54,970,397)$
(37,014,237) Net loss per common share:Basic and diluted$
(1.13)$
(1.04)$
(3.43)$
(2.53)Weighted-average common shares outstanding:Basic and diluted
17,802,522
16,145,808
16,040,097
14,622,787 Chicken Soup for the Soul Entertainment, Inc.Adjusted EBITDA(unaudited)Three Months Ended September 30,Nine Months Ended September 30,
2022
2021
2022
2021Net loss available to common stockholders$
(20,060,247)$
(16,741,678)$
(54,970,397)$
(37,014,237)Preferred dividends
2,443,970
2,253,385
7,117,481
6,760,155Net (loss) income attributable to noncontrolling interests
(167,289)
—
(167,289)
—Income tax (benefit) provision
(27,320,839)
30,000
(27,286,839)
59,000Other taxes
62,428
62,279
321,203
250,626Interest expense
7,658,665
1,304,952
10,991,894
3,533,940Film library amortization and related costs
18,222,417
10,111,885
42,576,433
23,881,901Share-based compensation expense
3,094,532
3,474,231
5,049,188
3,937,919Expense for bad debt and video returns
779,507
554,259
2,053,636
2,156,308Amortization and depreciation
6,349,026
1,921,982
11,027,992
5,264,353Other non-operating income, net
(3,551,025)
(101,898)
(4,032,222)
(247,037)Transitional expenses
2,942,070
213,813
3,305,470
405,867All other nonrecurring costs
19,118,394
1,775,232
22,816,463
3,583,130Adjusted EBITDA$
9,571,609$
4,858,442$
18,803,013$
12,571,925
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CONTACT: (INVESTOR RELATIONS)
Zaia Lawandow
Chicken Soup for the Soul Entertainment
zlawandow@chickensoupforthesoul.com(PRESS)
Peter Binazeski
Chicken Soup for the Soul Entertainment
pbinazeski@chickensoupforthesoul.com
KEYWORD: NEW YORK UNITED STATES NORTH AMERICA
INDUSTRY KEYWORD: OTHER ENTERTAINMENT GENERAL ENTERTAINMENT ENTERTAINMENT BOOKS
SOURCE: Chicken Soup for the Soul Entertainment, Inc.
Copyright Business Wire 2022.
PUB: 11/14/2022 04:01 PM/DISC: 11/14/2022 04:02 PM
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