Company Exceeds Analyst Consensus Expectations
for the Third Quarter Across Key Financial Metrics, Including
Revenue, Adjusted EBITDA, and Adjusted Earnings per Share
Third Quarter Revenue was $72.4 million, up
149% year over year, Driven by Strong AVOD Streaming Revenues and
TVOD Performance
Net Loss was $20.1 million, or $1.13 Net Loss
per Share; Adjusted Earnings per Share of $0.54; Adjusted EBITDA
was $9.6 million, up 97% from the Prior Year
Successfully Closed Merger with Redbox
Entertainment Creating Premium Entertainment Destination for
Value-Conscious Consumers
Signs deals with world’s largest manufacturers
of TVs – VIZIO and Hisense – to add Crackle and Redbox buttons to
remotes in 2023
Expands Content Financing Partnership with
Publicis Media’s APX Content Ventures
Appoints Jason Meier Chief Financial
Officer
Management to host a live webcast on November
14, 2022, at 4:30pm 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 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
- Net revenue of $72.4 million, compared to $37.6 million in the
second quarter of 2022, and $29.1 million in the year-ago
period
- Net loss of $20.1 million compared with a net loss of $20.8
million in the second quarter of 2022, and a net loss of $16.7
million in the year-ago period; $45.1 million net loss before
dividends, compared with $18.4 million net loss in the second
quarter 2022, and $14.5 million net loss in the year-ago
period
- Adjusted EBITDA of $9.6 million, compared with $5.6 million in
the second quarter of 2022, and $4.9 million in the year-ago
period
Recent Business Highlights
- Successfully completed merger with Redbox Entertainment
creating leading premium entertainment company for value-conscious
consumers
- Partnered with VIZIO and Hisense to add Redbox and Crackle
buttons to remotes beginning in 2023
- Expanded content financing partnership with Publicis Media’s
APX Content Ventures, which elevates the voices of underserved
audiences
- 4,000% increase in viewed minutes on Chicken Soup for the Soul
streaming app from August to September driven by strong programming
slate
- Crackle and Popcornflix FAST channels launched on FuboTV,
further expanding digital distribution footprint
- Rapidly grew viewership through additional touchpoint rollouts;
now on track to reach 160 by year-end including Redbox
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.
Conference Call Information
- Date & Time: Monday, November 14, 2022, 4:30 p.m. ET.
- A 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.
- 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.
Conference Call Replay Information
- A webcast replay will be made available at
http://ir.cssentertainment.com/ 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 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 Sheets September 30,
December 31,
2022
2021
(unaudited)
ASSETS Cash, cash equivalents and restricted cash $
36,303,799
$
44,286,105
Accounts receivable, net of allowance for doubtful accounts of
$974,426, and $786,830, respectively
96,089,197
60,213,807
Prepaid expenses and other current assets
19,621,665
1,904,273
Operating lease right-of-use assets
17,317,175
—
Content assets, net
142,538,634
63,645,396
Intangible assets, net
292,932,777
18,035,091
Indefinite lived intangible assets
12,163,943
12,163,943
Goodwill
277,083,097
39,986,530
Other assets, net
23,348,656
5,190,954
Total assets $
917,398,943
$
245,426,099
LIABILITIES AND EQUITY Accounts payable $
41,876,561
$
12,963,902
Accrued expenses
88,021,429
23,185,368
Due to affiliated companies
2,589,867
489,959
Programming obligations
55,159,246
1,641,250
Film library acquisition obligations
40,739,418
24,673,866
Accrued participation costs
25,030,611
12,323,329
Debt, net
461,287,515
55,275,628
Contingent consideration
7,556,856
9,764,256
Put option obligation
11,400,000
11,400,000
Operating lease liabilities
19,064,596
—
Other liabilities
39,374,480
2,109,388
Total liabilities
792,100,579
153,826,946
Equity Stockholders' 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
370
Class 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
899
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
343,374,588
240,609,345
Deficit
(191,432,641)
(136,462,244)
Accumulated other comprehensive income
36,957
571
Class 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
90,947,300
Noncontrolling interests
475,161
651,853
Total equity
125,298,364
91,599,153
Total 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
2021
Net revenues $
72,392,263
$
29,096,855
$
139,235,407
$
74,428,631
Costs and expenses Operating
60,155,906
22,856,374
114,327,838
54,533,027
Selling, general and administrative
27,632,865
14,837,193
55,795,064
34,500,620
Amortization and depreciation
6,349,026
1,538,650
9,677,727
4,114,355
Management and license fees
4,774,758
2,909,686
11,459,073
7,442,863
Merger and transaction costs
15,476,452
201,106
17,503,791
736,860
Total costs and expenses
114,389,007
42,343,009
208,763,493
101,327,725
Operating loss
(41,996,744)
(13,246,154)
(69,528,086)
(26,899,094)
Interest expense
7,658,665
1,304,952
10,991,894
3,533,940
Other 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)
59,000
Net 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)
9,085
Net 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
6,760,155
Net 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
2021
Net 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
6,760,155
Net (loss) income attributable to noncontrolling interests
(167,289)
—
(167,289)
—
Income tax (benefit) provision
(27,320,839)
30,000
(27,286,839)
59,000
Other taxes
62,428
62,279
321,203
250,626
Interest expense
7,658,665
1,304,952
10,991,894
3,533,940
Film library amortization and related costs
18,222,417
10,111,885
42,576,433
23,881,901
Share-based compensation expense
3,094,532
3,474,231
5,049,188
3,937,919
Expense for bad debt and video returns
779,507
554,259
2,053,636
2,156,308
Amortization and depreciation
6,349,026
1,921,982
11,027,992
5,264,353
Other non-operating income, net
(3,551,025)
(101,898)
(4,032,222)
(247,037)
Transitional expenses
2,942,070
213,813
3,305,470
405,867
All other nonrecurring costs
19,118,394
1,775,232
22,816,463
3,583,130
Adjusted EBITDA $
9,571,609
$
4,858,442
$
18,803,013
$
12,571,925
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221114006021/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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