First full quarter with AVOD business Crackle Plus drives record top line results

COS COB, Conn., Nov. 14, 2019 (GLOBE NEWSWIRE) -- Chicken Soup for the Soul Entertainment, Inc. (Nasdaq: CSSE), a growing media company building advertising-supported video-on-demand (AVOD) networks and a provider of video content for all screens, today announced its financial results for the third quarter ended September 30, 2019.

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 veteran David 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 William J. Rouhana Jr., chairman and chief executive officer of Chicken Soup for the Soul Entertainment. “Crackle Plus is performing as expected, and our new original series ‘Going From Broke’ provides initial evidence of our growing network reach and engagement potential. We are also reinventing our distribution and production business to support our networks under a capital-light model focused on innovative studio launches, library content acquisitions and sponsor-funded original productions. We already see significant positive business momentum in the fourth quarter, where we expect to see a combination of all our primary strategic pieces in place for the first time, setting the stage for potentially significant growth in 2020.” Gross profit for the quarter ended September 30, 2019 was $3.2 million, or 19% of net revenue, compared to $4.0 million, or 62% of net revenue for the year-ago period. The reduction in the percentage of gross profit was a result of an increase in online networks revenue which has a lower gross profit percentage.

Operating loss for the quarter ended September 30, 2019 was $9.6 million compared to an operating income of $0.9 million for the year-ago period. The quarterly operating loss reflects certain non-cash or one-time expenses including $4.7 million in non-cash amortization, $1.6 million of transitional expenses related to the Crackle Plus joint venture, and $1.2 million in film library amortization. If such expenses were excluded from SG&A or cost of revenue, the company would have reported a quarterly operating loss of $2.1 million.

Net loss was $13.3 million, or $1.11 per share, compared to a net loss of $0.2 million, or $0.02 per share in the prior-year third quarter. Excluding preferred dividends, the net loss in the third quarter of 2019 would have been $12.4 million, or approximately $1.03 per share, compared to net income of $0.2 million, or $0.02 per share last year.

Adjusted EBITDA for the quarter ended September 30, 2019 was a loss of $0.4 million, compared to $3.4 million in the same period last year.

As of September 30, 2019, the company had $6.2 million of cash and cash equivalents compared to $7.2 million as of December 31, 2018, and outstanding debt of $16.0 million as of September 30, 2019 compared to $7.9 million as of December 31, 2018.

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 CHICKEN SOUP FOR THE SOUL ENTERTAINMENTChicken Soup for the Soul Entertainment, Inc. (Nadsaq: CSSE) is a growing media company building and acquiring streaming video-on-demand networks (VOD) that provide content for all screens. The company owns a majority stake in Crackle Plus, a joint venture 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 long and short-form original content through Landmark Studio Group, its Chicken Soup for the Soul Originals division and through 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 Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2019 under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Reconciliation of Unaudited Historical Results to Adjusted EBITDA.”

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 Securities and Exchange Commission on April 1, 2019, as amended April 30, 2019 and June 4, 2019) 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.

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 Soul Entertainment, Inc.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 12,611,197 6,582,113 finance cost of $188,803 and $334,554, respectively 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; 160 92 1,599,002 and 918,497 shares issued and outstanding, respectively, redemption value of $39,975,050 and $22,962,425, respectively 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 425 421 outstanding, respectively Class B common stock, $.0001 par value, 20,000,000 shares authorized; 782 782 7,813,938 and 7,817,238 shares issued and outstanding, respectively 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 Soul Entertainment, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

Three Months Ended September Nine Months Ended September 30, 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 (255,394 ) (107,300 ) (828,785 ) (553,294 ) and allowances - ----------- - - --------- - - ----------- - - ---------- - 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 (11,183,861 ) 604,747 (19,765,874 ) (1,743,612 ) preferred dividends Provision for income taxes 1,248,000 375,000 557,000 579,000 - ----------- - - --------- - - ----------- - - ---------- - Net (loss) income before noncontrolling (12,431,861 ) 229,747 (20,322,874 ) (2,322,612 ) interests and preferred dividends Net (loss) attributable to noncontrolling (37,473 ) — (36,960 ) — interests - ----------- - - --------- - - ----------- - - ---------- - Net (loss) income attributable to Chicken (12,394,388 ) 229,747 (20,285,914 ) (2,322,612 ) Soup for the Soul Entertainment, Inc. 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.

Chicken Soup for the Soul Entertainment, Inc.

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 1,369,874 1,033,983 (non-cash) 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 3,804,268 3,656,515 (non-cash) 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.

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