Positive Results Precede the Company’s
Annual Stockholder Meeting on August 31st
Cinedigm Corp. (NASDAQ: CIDM) today announced financial results
for the first quarter Fiscal 2018, which ended June 30, 2017.
Financial Summary
Results for first quarter 2018:
- Consolidated revenues were $15.2
million
- Content and Entertainment revenues were
$5.5 million
- Content and Entertainment EBITDA was
($3.2) million, inclusive of Corporate overhead, an improvement of
18%, or over $700k from prior year quarter
- Consolidated adjusted EBITDA was $5.4
million
- Non-deployment adjusted EBITDA was
($1.4) million, inclusive of operating costs incurred in the ramp
up of Over-The-Top (OTT) channels.
First Quarter Highlights
- The Company announced a Stock Purchase
Agreement with Bison Entertainment Investment Limited, the wholly
owned subsidiary of Bison Holding Company Ltd. (“Bison Capital”).
Cinedigm has agreed to sell to Bison Capital 20,000,000 shares of
Cinedigm’s Class A common stock for an aggregate purchase price of
$30 million
- The Company has signed agreements to
extinguish over $50 million of our Convertible Notes in an
accretive set of exchanges for $18.9 million in cash, approximately
3.5 million shares of stock and $1.46 million in second lien debt,
which exchanges have begun and will be completed at closing of the
Bison transaction
- After closing, Cinedigm will have
completed the elimination of all of the $64 million in Convertible
Notes that were on the balance sheet less than a year ago
- The Company paid down nearly $7 million
in non-recourse debt related to the Digital Cinema business
- The Company announced plans to
significantly extend the availability of its fast-growing OTT
services by supporting Google’s Chromecast and Android TV
Platforms, as well as Amazon Fire TV for the first time, expanding
reach by over 60+ million potential consumers
- The Company’s OTT group has focused on
completing a substantial upgrade of technical and distribution
infrastructure to support three imminent deals with major MVPDs and
Telcos, which are expected to go live in the second half of
FY2018
- The Company announced the launch of
Dove KIDS, a 24/7 Programmed Children’s Network featuring
children’s movies, television series, animation, and educational
programming geared at kids 5-12 years of age
- The Company announced that it had
selected Verizon Digital Media Services to power the streaming and
syndication of linear content for its portfolio of over the top
digital networks
- The Company announced an agreement with
JungoTV, a leading global OTT provider and content distributor, to
distribute Cinedigm’s portfolio of digital networks to cable,
satellite, telco, and technology companies in emerging and
fast-growth markets with a total population of over 2.5 billion
consumers
- The Company announced the acquisition
of the IP MAN TV Series. Based on the popular martial arts film
franchise that has grossed over $250M at the international box
office, Cinedigm will be distributing the TV series across all
digital platforms, including TV-VOD, TV EST, EST, IVOD, SVOD, AVOD
& CIDM OTT channels, as well as DVD, in the United States,
Canada, UK & Ireland
- Subsequent to quarter end, the Company
closed a significant distribution deal to embed our OTT Networks
with a "top three" CE Device manufacturer. The deal will afford us
critical placement usually only available to companies like
Netflix, Amazon and Hulu, and reflects the rising consumer value
manufacturers, telcos, and MSOs are placing on our portfolio of
channels
- Subsequent to quarter end, the Company
launched The Dove Channel on the Amazon Fire TV platform, which
according to eMarketer, has a reach of over 39 million viewers a
month
- Subsequent to quarter end, the Company
made the first international launch of their OTT business by
bringing the Dove channel into Canada on iOS and Android.
“We are pleased with our first quarter results and remain very
focused on closing the Bison deal, which will be a game-changing
opportunity for Cinedigm operationally, strategically and
financially. To that end, we want to remind our Stockholders that
we have set a Stockholders’ Meeting for August 31, 2017, which
will include the Bison transaction approval,” said Chris McGurk,
Chairman and CEO. “We want to emphasize the opportunity for our
Stockholders to vote regarding this important transaction at that
meeting or, before, by proxy.”
“As we prepare for the closing of the Bison transaction, we are
pleased with the continued improvement in our Content and
Entertainment Group mindful that Q1 and Q2 are our seasonally
slowest quarters. Our losses to fund the growth in our OTT area
continue to decrease year over year and the cost cutting measures
we put in place throughout the Company during this past fiscal year
are now being fully realized,” said Jeffrey Edell, Chief Financial
Officer. “Additionally, we are now seeing more financially viable
revolving credit facility options in light of the positive market
narrative realized in conjunction with the Bison transaction.
Having $20 million of net additional liquidity that we expect to
receive, combined with the complete elimination of the over $50
million in convertible debt, makes for a much more attractive
balance sheet and Company.”
Adjusted EBITDA is defined by the Company for the periods
presented to be earnings before interest, taxes, depreciation and
amortization, other income, net, goodwill impairment, litigation
related expenses and recoveries, stock-based compensation and
expenses, restructuring, transition and acquisitions expenses, net,
and certain other items. Pursuant to the requirements of Regulation
G, the Company has provided a reconciliation in the tables attached
to this release of adjusted EBITDA to loss from continuing
operations calculated in accordance with accounting principles
generally accepted in the United States of America (“GAAP”).
Adjusted EBITDA is not a measurement of financial performance under
GAAP and may not be comparable to other similarly titled measures
of other companies. The Company calculated and communicated
adjusted EBITDA in the tables because the Company's management
believes it is of importance to investors and lenders by providing
additional information with respect to the performance of its
fundamental business activities. Management presents adjusted
EBITDA because it believes that adjusted EBITDA is a useful
supplement to net loss as an indicator of operating performance.
Management also believes that adjusted EBITDA is an industry-wide
financial measure that is useful both to management and investors
when evaluating the Company's performance and comparing our
performance with the performance of our competitors. Management
also uses adjusted EBITDA for planning purposes, as well as to
evaluate the Company's performance because it believes that
adjusted EBITDA more accurately reflects the Company's results, as
it excludes certain items, such as stock-based compensation
charges, that management believes are not indicative of the
Company's operating performance. The Company believes that adjusted
EBITDA is a performance measure and not a liquidity measure.
Adjusted EBITDA should not be considered as an alternative to
operating or net loss as an indicator of performance or as an
alternative to cash flows from operating activities as an indicator
of cash flows, in each case as determined in accordance with GAAP,
or as a measure of liquidity. In addition, adjusted EBITDA does not
take into account changes in certain assets and liabilities as well
as interest and income taxes that can affect cash flows. The
Company's calculation of adjusted EBITDA may or may not be
consistent with the calculation of this measure by other companies
in the same industry. Investors should not view adjusted EBITDA as
an alternative to the GAAP operating measure of net income (loss).
In addition, adjusted EBITDA does not take into account changes in
certain assets and liabilities as well as interest and income taxes
that can affect cash flows. Management does not intend the
presentation of these non-GAAP measures to be considered in
isolation or as a substitute for results prepared in accordance
with GAAP. These non-GAAP measures should be read only in
conjunction with the Company's consolidated financial statements
prepared in accordance with GAAP.
Conference Call
Cinedigm will host a conference call to discuss its financial
results at 4:30 p.m. EDT on August 14, 2017.
To participate in the conference call, please dial (877)
754-5303 or for international callers (678)
894-3030 at least five minutes prior to the start of the call.
No passcode is required. An audio webcast of the call will be
accessible at http://investor.cinedigm.com/events.cfm. To listen to
the live webcast, please visit the site prior to the start of the
call in order to register, download and install any necessary audio
software.
For those unable to participate during the live broadcast, a
replay will be available beginning August 14,
2017 at 7:30 p.m. EDT, through August 19,
2017 at 7:30 p.m. EDT. To access the replay,
dial (855) 859-2056 (U.S.) or (404)
537-3406 (International) and use passcode: 66384346.
About Cinedigm
Cinedigm powers custom content solutions to the world’s largest
retail, media and technology companies. We provide premium feature
films and series to digital platforms including iTunes, Netflix,
and Amazon, cable and satellite providers including Comcast, Dish
Network and DirecTV, and major retailers including Walmart and
Target. Leveraging Cinedigm’s unique capabilities, content and
technology, the Company has emerged as a leader in the fast-growing
over-the-top channel business, with four channels under management
that reach hundreds of millions of devices while also providing
premium content and service expertise to the entire OTT ecosystem.
Learn more about Cinedigm at www.cinedigm.com.
Cinedigm™ and Cinedigm Digital Cinema Corp™ are trademarks of
Cinedigm Corp. www.cinedigm.com. [CIDM-E]
Safe Harbor Statement
Investors and readers are cautioned that certain statements
contained in this document, as well as some statements in periodic
press releases and some oral statements of Cinedigm officials
during presentations about Cinedigm, along with Cinedigm's filings
with the Securities and Exchange Commission, including Cinedigm's
registration statements, quarterly reports on Form 10-Q and annual
report on Form 10-K, are "forward-looking" statements within the
meaning of the Private Securities Litigation Reform Act of 1995
(the "Act"). Forward-looking statements include statements that are
predictive in nature, which depend upon or refer to future events
or conditions, which include words such as "expects,"
"anticipates," "intends," "plans," "could," "might," "believes,"
"seeks," "estimates" or similar expressions. In addition, any
statements concerning future financial performance (including
future revenues, earnings or growth rates), ongoing business
strategies or prospects, and possible future actions, which may be
provided by Cinedigm's management, are also forward-looking
statements as defined by the Act. Forward-looking statements are
based on current expectations and projections about future events
and are subject to various risks, uncertainties and assumptions
about Cinedigm, its technology, economic and market factors and the
industries in which Cinedigm does business, among other things.
These statements are not guarantees of future performance and
Cinedigm undertakes no specific obligation or intention to update
these statements after the date of this release.
CINEDIGM CORP. CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per
share data)
June 30, March 31,
2017 2017 ASSETS
(Unaudited) Current assets Cash and cash equivalents $ 9,792
$ 12,566 Accounts receivable, net 40,262 53,608 Inventory 803 1,137
Unbilled revenue 5,204 5,655 Prepaid and other current assets
12,320 13,484 Total current assets
68,381 86,450 Restricted cash 1,000 1,000 Property and equipment,
net 29,081 33,138 Intangible assets, net 18,833 20,227 Goodwill
8,701 8,701 Debt issuance costs 656 260 Other assets 1,558
1,558 Total assets $ 128,210 $ 151,334
LIABILITIES AND DEFICIT Current liabilities Accounts payable
and accrued expenses $ 61,451 $ 73,679 Current portion of notes
payable 19,599 19,599 Current portion of notes payable,
non-recourse 5,854 6,056 Current portion of capital leases 36 66
Current portion of deferred revenue 2,186
2,461 Total current liabilities 89,126 101,861 Notes
payable, non-recourse, net of current portion and unamortized debt
issuance costs and debt discounts of $2,567 and $2,701,
respectively 48,408 55,048 Notes payable, net of current portion
and unamortized debt issuance costs and debt discounts of $5,168
and $5,340 respectively 60,008 59,396 Deferred revenue, net of
current portion 4,954 5,324 Other long-term liabilities 382
408 Total liabilities 202,878 222,037
Stockholders’ deficit Preferred stock, 15,000,000 shares
authorized; Series A 10% - $0.001 par value per share; 20 shares
authorized; 7 shares issued and outstanding at December 31, 2016
and March 31, 2016, respectively. Liquidation preference of $3,648
3,559 3,559 Common stock, $0.001 par value; Class A and Class B
stock; Class A stock 25,000,000 shares authorized; 12,386,702 and
11,841,983 shares issued and 12,386,702 and 11,841,983 shares
outstanding at June 30, 2017 and March 31, 2017, respectively;
1,241,000 Class B stock authorized and issued and zero shares
outstanding at June 30, 2017 and March 31, 2017, respectively 12 12
Additional paid-in capital 288,672 287,393 Accumulated deficit
(365,650 ) (360,415 ) Accumulated other comprehensive loss
(41 ) (38 ) Total stockholders’ deficit of Cinedigm Corp.
(73,448 ) (69,489 ) Deficit attributable to noncontrolling interest
(1,220 ) (1,214 ) Total deficit (74,668 )
(70,703 ) Total liabilities and deficit $ 128,210 $
151,334
CINEDIGM CORP. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except for share and per
share data)
For the Three Months Ended June 30,
2017 2016 Revenues
$ 15,240 $ 22,475 Costs and expenses: Direct operating (excludes
depreciation and amortization shown below) 4,066 5,691 Selling,
general and administrative 6,318 6,432 Restructuring, transition
and acquisition expenses, net — 90 Depreciation and amortization of
property and equipment 4,357 8,524 Amortization of intangible
assets 1,395 1,463 Total operating
expenses 16,136 22,200 (Loss) income
from operations (896 ) 275 Interest expense, net (4,041 ) (4,935 )
Other (expense) income, net (69 ) 125 Change in fair value of
interest rate derivatives 40 27 Loss
from operations before income taxes (4,966 ) (4,508 ) Income tax
expense (186 ) (67 ) Net loss (5,152 ) (4,575 ) Net
loss attributable to noncontrolling interest 6
21 Net loss attributable to controlling interests (5,146 )
(4,554 ) Preferred stock dividends (89 ) (89 ) Net
loss attributable to common stockholders $ (5,235 ) $ (4,643 ) Net
loss per Class A and Class B common stock attributable to common
stockholders - basic and diluted: Net loss attributable to common
stockholders $ (0.48 ) $ (0.70 ) Weighted average number of Class A
and Class B common stock outstanding: basic and diluted
10,920,446 6,638,353
Following is the reconciliation of our
consolidated net loss to Adjusted EBITDA:
For the Three Months Ended June 30,
($ in thousands) 2017
2016 Net loss $ (5,152 ) $ (4,575 )
Add Back:
Income tax expense 186 67 Depreciation and amortization of property
and equipment 4,357 8,524 Amortization of intangible assets 1,395
1,463 Gain on termination of capital lease — — Interest expense,
net 4,041 4,935 Loss on extinguishment of debt — — Other income,
net 269 (125 ) Change in fair value of interest rate derivatives
(40 ) (27 ) Provision for doubtful accounts — — Stock-based
compensation and expenses 317 278 Goodwill impairment — —
Restructuring, transition and acquisition expenses, net — 90
Professional fees pertaining to activist shareholder proposals and
compliance — — Litigation settlement recovery, net of related
expenses — — Net loss attributable to noncontrolling interest
6 21 Adjusted EBITDA $ 5,379 $ 10,651
Adjustments related
to the Phase I and Phase II Deployments:
Depreciation and amortization of property and equipment $ (4,201 )
$ (8,272 ) Amortization of intangible assets (11 ) (11 ) Provision
for doubtful accounts — — Income from operations (2,602 )
(3,593 ) Adjusted EBITDA from non-deployment businesses $
(1,435 ) $ (1,225 )
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CinedigmJill Newhouse
Calcaterra310-466-5135jcalcaterra@cinedigm.com
Cinedigm (NASDAQ:CIDM)
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