Management to host a live webcast on May 15,
2023, at 4:30 pm ET
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 first
quarter ended March 31, 2023.
“Our first quarter came in line with our guidance,” said William
J. Rouhana, Jr., chairman and chief executive officer of Chicken
Soup for the Soul Entertainment. “As we saw in March, we’re
anticipating that when new release movies begin to appear in our
kiosks and our TVOD service consistently, consumers would return to
rent. Starting in the second half of May and over the next several
months, we will have, on average, two or more new release titles a
week – many of which will be major releases. As a result, we expect
to see a meaningful increase in rentals at our Redbox kiosks.”
First Quarter 2023 Financial Summary
- Net revenue of $110 million, compared with net revenue of $29
million in the year-ago period
- Adjusted EBITDA of $20.1 million, compared with Adjusted EBITDA
of $3.7 million in the year-ago period
- Net loss of $58.6 million, compared with a net loss of $14.1
million in the year-ago period; $54.5 million net loss before
income taxes and preferred dividends, compared with $11.9 million
net loss in the year-ago period
- Earnings per share of $0.94 (adjusted, -$2.76 unadjusted per
share)
Recent Business Highlights
- Continued strength in TVOD following the largest TVOD revenue
week ever in April, with revenue up 14% year-over-year and up 13%
week-over-week
- Partnered with international social media and entertainment
company TaTaTu to license content and expand the global reach of
Chicken Soup for the Soul Entertainment’s catalog of film and
television series
- Signed a deal with Amazon Publisher Services to integrate
next-generation advertising technologies into Redbox, Crackle, and
Chicken Soup for the Soul apps, including shoppable ads, Amazon’s
Demand Side Platform (DSP) integration, and Server Side Ad
Insertion (SSAI)
- Signed FAST deals with AMC Networks, Fremantle, Revry, and Love
Stories TV to bring popular channels, including The Walking Dead,
Portlandia, Supermarket Sweep, and The Jamie Oliver Channel, to the
lineup of premium FAST content on Redbox Free Live TV, which is
approaching 180 channels
- Crackle Connex joined advertising industry standard Geopath for
digital out-of-home audience measurement and Upwave to measure
positive ad-lift for television series
- Crackle Connex, representing over 20 ad-rep partners, signed a
deal with Vidgo, one of the fastest-growing live TV streaming
services, to exclusively represent its ad sales and operations in
the US
- Rana Naidu, the Indian-language series produced by Chicken Soup
for the Soul Entertainment-owned production company Locomotive
Global, received a greenlight from Netflix India for a second
season after the success of Season 1, which was the number one most
streamed series in India after launch and on Netflix’s Global Top
10 Series for two weeks
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.
For further information on the matters discussed in this
release, please see our Quarterly Report on Form 10-Q for the three
months ended March 31, 2023 to be filed with the Securities and
Exchange Commission on or about May 15, 2023.
Conference Call Information
- Date & Time: Monday, May 15, 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 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 nearly 180 FAST channels as well as
a transaction video on demand (TVOD) service, and a network of
approximately 31,000 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 years ended December 31, 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 Annual Report on Form 10-Q for the quarter ended
March 31, 2023 filed on May 15, 2023, 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 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 December 31, 2022 filed with the SEC
on March 31, 2023. 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, November 14, 2022 and thereafter from time to
time, and all exhibits filed with respect to such reports. 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.
Tables Follow
Chicken Soup for the Soul Entertainment, Inc. Condensed
Consolidated Balance Sheets March 31, December
31,
2023
2022
ASSETS Cash, cash equivalents and restricted cash $
5,467,393
$
18,738,395
Accounts receivable, net of allowance for doubtful accounts of
$1,592,078 and $1,277,597, respectively
149,938,518
113,963,425
Prepaid expenses and other current assets
11,757,709
13,196,180
Operating lease right-of-use assets
15,429,760
16,315,342
Content assets, net
115,036,955
126,090,508
Intangible assets, net
297,808,803
305,425,709
Goodwill
260,969,417
260,748,057
Other assets, net
27,797,720
29,401,793
Total assets $
884,206,275
$
883,879,409
LIABILITIES AND EQUITY
Accounts payable $
54,414,979
$
50,960,682
Accrued expenses
94,160,793
87,817,015
Due to affiliated companies
5,292,617
3,778,936
Programming obligations
61,591,834
55,883,788
Film library acquisition obligations
31,191,155
39,750,121
Accrued participation costs
45,911,280
28,695,713
Debt, net
499,643,035
479,653,611
Contingent consideration
7,066,699
7,311,949
Put option obligation
6,650,000
11,400,000
Operating lease liabilities
17,104,784
18,079,469
Other liabilities
21,775,004
20,800,186
Total liabilities
844,802,180
804,131,470
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;
5,113,527 and 4,496,345 shares issued and outstanding,
respectively; redemption value of $127,838,175 and $112,408,625,
respectively
511
450
Class A common stock, $.0001 par value, 140,000,000 shares
authorized; 17,621,244 and 15,621,562 shares issued, 15,198,402 and
13,198,720 shares outstanding, respectively
1,761
1,559
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
373,720,902
355,185,280
Deficit
(306,329,579
)
(247,752,446
)
Accumulated other comprehensive income
(41,708
)
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
39,186,740
79,317,224
Noncontrolling interests
217,355
430,715
Total equity
39,404,095
79,747,939
Total liabilities and equity $
884,206,275
$
883,879,409
Chicken Soup for the Soul Entertainment, Inc. Condensed
Consolidated Statements of Operations (unaudited)
Three Months Ended Mach 31,
2023
2022
Net revenues $
109,599,293
$
29,206,197
Costs and expenses Operating
96,306,368
22,575,408
Selling, general and administrative
32,763,551
12,816,520
Amortization and depreciation
11,183,717
1,648,258
Management and license fees
7,852,141
2,920,620
Total costs and expenses
148,105,777
39,960,806
Operating loss
(38,506,484
)
(10,754,609
)
Interest expense
16,666,259
1,310,459
Other non-operating income, net
(694,690
)
(201,792
)
Loss before income taxes and preferred dividends
(54,478,053
)
(11,863,276
)
Income tax (benefit) provision
1,214,151
20,000
Net loss before noncontrolling interests and preferred
dividends
(55,692,204
)
(11,883,276
)
Net loss attributable to noncontrolling interests
(127,662
)
(38,385
)
Net loss attributable to Chicken Soup for the Soul
Entertainment, Inc.
(55,564,542
)
(11,844,891
)
Less: preferred dividends
3,012,591
2,282,069
Net loss available to common stockholders $
(58,577,133
)
$
(14,126,960
)
Net loss per common share: Basic and diluted $
(2.76
)
$
(0.92
)
Weighted-average common shares outstanding: Basic and
diluted
21,249,105
15,331,743
Chicken Soup for the Soul Entertainment, Inc. Adjusted
EBITDA (unaudited)
Three Months Ended March 31,
2023
2022
Reported loss per share (GAAP) $
(58,577,133
)
$
(14,126,960
)
Preferred dividends
3,012,591
2,282,069
Net (loss) income attributable to noncontrolling interests
(127,662
)
38,385
Provision for income taxes
1,214,151
20,000
Other Taxes
252,879
80,372
Interest Expense
16,666,259
1,310,459
Film Library & Program Amortization
40,875,543
9,687,024
Stock-based Compensation
914,571
996,797
Reserve for bad debt and video returns
1,157,703
581,834
Amortization and depreciation
11,183,717
2,004,073
Other non-operating income
(694,690
)
(201,792
)
Non-cash settlement of management and licensing fees
3,450,000
—
Transitional expenses and other nonrecurring costs
747,105
989,832
Adjusted EBITDA $
20,075,034
$
3,662,093
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version on businesswire.com: https://www.businesswire.com/news/home/20230515005786/en/
(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
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