SILVER SPRING, Md.,
May 11, 2017 /PRNewswire/ -- RLJ
Entertainment, Inc. ("RLJ Entertainment," "RLJE" or "the Company")
(NASDAQ: RLJE), today announced financial results for the quarter
ended March 31, 2017.
First Quarter 2017 Highlights:
- Digital Channels paying subscribers of over 520,000 increased
90% compared to the first quarter of 2016, driving Digital Channels
segment revenue up 103.7% to $6.0
million from first quarter 2016.
- Digital Channels segment contribution income increased 170.5%
to $2.6 million from $1.0 million in first quarter 2016.
- Gross margin increased 560 basis points to 34.3%, from first
quarter 2016, primarily attributable to a higher proportion of
higher-margin proprietary Digital Channels revenue.
- Net loss improved by $7.4 million to
$6.1 million compared to a net loss of $13.5 million in the first quarter of 2016. The
improvement is primarily due to the $5.3
million decrease in the change in fair value of stock
warrants and other derivatives, reduced interest expense and
improved operational efficiencies.
- Adjusted EBITDA improved by $0.5
million to a net earnings of $0.1
million. This improvement is primarily attributable to the
continued growth of our Digital Channels segment, which delivers a
higher profit margin.
- On January 31, 2017, the Company
further enhanced its capital structure by completing the
refinancing of its subordinated debt issued in 2012. RLJE amended
its credit facility with AMC Networks to, among other things,
expand the Tranche A Term Loan from $5
million to $13 million to repay its $8.6 million in subordinated debt, extend the
maturity date of the Tranche A Term Loan to June 30, 2019, and modify the related financial
covenants to reflect the repayment and extended maturity date. The
refinancing reduced the Company's cash interest cost by 800 basis
points.
Robert L. Johnson, Chairman of
RLJ Entertainment, stated, "RLJ Entertainment's digital channel
subscriber growth demonstrates the increasing presence that Acorn
TV and UMC are enjoying in the growing OTT landscape. As
consumers increasingly choose standalone branded channels, that
offer compelling content supported by effective, direct subscriber
engagement, Acorn TV and UMC are poised to continue to drive
substantial value to subscribers, partners and shareholders."
Miguel Penella, Chief
Executive Officer of RLJ Entertainment, stated, "Our focus on
strategic execution is clearly reflected in our first quarter 2017
results as new subscribers respond to the expanding wealth of
content delivered by our Digital Channels, in turn driving a new,
higher growth and higher margin business model. This year, we are
increasing our investment in original, exclusive and high-quality
content to expand our Digital Channels programming, growing the
content pipeline of our IP licensing and wholesale business units,
and leveraging this programming capability to expand our Digital
Channels' platform and geographical footprint. Our programming
strength and our expertise in engaging with our targeted audience
position us well to achieve our objective of one million Acorn TV
and UMC combined subscribers within the next 24 months."
Nazir Rostom, Chief Financial
Officer of RLJ Entertainment, commented, "Strong first quarter
execution on Digital Channels increased our gross margin, drove
higher Adjusted EBITDA and combined with our debt refinancing,
improved our cash flow which we used to reinvest into our business
through increased content investment. We are very excited about
achieving positive Adjusted EBITDA in our seasonally slowest
quarter. We expect continued Adjusted EBITDA momentum
throughout the rest of the year."
Conference Call Information
RLJE will hold a
conference call today at 11:30 a.m. ET to discuss these
results. To participate in the live conference call,
interested parties may dial +1.844.348.1685 (+1.213.358.0890
outside the U.S. and Canada) and
provide the conference ID number 10567790, or listen via webcast at
www.rljentertainment.com. The webcast will be archived in the
investors section of RLJE's website.
About RLJ Entertainment, Inc.
RLJ Entertainment, Inc.
(NASDAQ: RLJE) is a premium digital channel company serving
distinct audiences primarily through its popular OTT branded
channels, Acorn TV (British TV) and UMC (Urban Movie Channel),
which have rapidly grown through development, acquisition, and
distribution of its exclusive rights to a large library of
international and British dramas, independent feature films and
urban content. RLJE's titles are also distributed in multiple
formats including broadcast and pay television, theatrical and
non-theatrical, DVD, Blu-ray, and a variety of digital distribution
models (including EST, VOD, SVOD and AVOD) in North America, the United Kingdom, and Australia. Additionally, through Acorn Media
Enterprises, its UK development arm, RLJE co-produces and develops
new programs and owns 64% of Agatha Christie Limited. For more
information, please visit RLJEntertainment.com, Acorn.tv, and
UMC.tv.
Forward Looking Statements
This press release may
include "forward looking statements" within the meaning of the
"safe harbor" provisions of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. Other than statements of historical fact,
all statements made in this press release are forward-looking,
including, but not limited to, statements regarding goals, industry
prospects, future results of operations or financial position, and
statements of our intent, belief and current expectations about our
strategic direction, prospective and future results and
condition. In some cases, forward-looking statements may be
identified by words such as "will," "should," "could," "may,"
"might," "expect," "plan," "possible," "potential," "predict,"
"anticipate," "believe," "estimate," "continue," "future,"
"intend," "project" or similar words.
Forward-looking statements involve risks and uncertainties
that are inherently difficult to predict, which could cause actual
outcomes and results to differ materially from our expectations,
forecasts and assumptions. Factors that might cause such
differences include, but are not limited to:
- Our financial performance, including our ability to achieve
improved results from operations and improved earnings before
income tax, depreciation and amortization, non-cash royalty
expense, interest expense, non-cash exchange gains and losses on
intercompany accounts, goodwill impairments, severance costs,
change in fair value of stock warrants and other derivatives,
stock-based compensation, basis-difference amortization in equity
earnings of affiliate and dividends received from affiliate in
excess of equity earnings of affiliate (or Adjusted
EBITDA);
- Our expectation that revenues and financial performance of
our digital channels will continue to grow and have a positive
effect on our liquidity, cash flows and operating results;
- The effects of limited cash liquidity on operational
performance;
- Our obligations under the credit agreement;
- Our ability to satisfy financial ratios;
- Our ability to generate sufficient cash flows from operating
activities;
- Our ability to fund planned capital expenditures and
development efforts;
- Our inability to gauge and predict the commercial success of
our programming;
- Our ability to maintain relationships with customers,
employees and suppliers, including our ability to enter into
revised payment plans, when necessary, with our vendors that are
acceptable to all parties;
- Our ability to realize anticipated synergies and other
efficiencies in connection with the AMC transaction;
- Delays in the release of new titles or other
content;
- The effects of disruptions in our supply chain;
- The loss of key personnel;
- Our public securities' limited liquidity and trading;
or
- Our ability to meet the NASDAQ Capital Market continuing
listing standards and maintain our listing.
You should carefully consider and evaluate all of the
information in this press release, including the risk factors
listed above and in our Form 10-K filed with the Securities
Exchange Commission (or SEC), including "Item 1A. Risk
Factors." If any of these risks occur, our business, results
of operations, and financial condition could be harmed, the price
of our common stock could decline and you may lose all or part of
your investment, and future events and circumstances could differ
significantly from those anticipated in the forward-looking
statements contained in this press release. Unless otherwise
required by law, we undertake no obligation to release publicly any
updates or revisions to any such forward-looking statements that
may reflect events or circumstances occurring after the date of
this press release.
Readers are referred to the most recent reports filed with
the SEC by RLJ Entertainment. Readers are cautioned not to place
undue reliance upon any forward-looking statements, which speak
only as of the date made, and we undertake no obligation to update
or revise the forward-looking statements, whether as a result of
new information, future events or otherwise.
Media Contact:
Traci Otey Blunt, 301-830-6204
RLJ Entertainment, Inc.
tblunt@rljentertainment.com
Investor Contact:
Jody Burfening/Carolyn Capaccio, 212-838-3777
LHA
ir@rljentertainment.com
RLJ ENTERTAINMENT,
INC.
|
Consolidated
Balance Sheets
|
(Unaudited)
|
As of March 31, 2017
and December 31, 2016
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
(In thousands,
except share data)
|
|
2017
|
|
2016
|
ASSETS
|
|
|
|
|
|
|
Cash
|
|
$
|
3,981
|
|
$
|
7,834
|
Accounts receivable,
net
|
|
|
10,264
|
|
|
19,569
|
Inventories,
net
|
|
|
5,984
|
|
|
6,215
|
Investments in
content, net
|
|
|
64,330
|
|
|
60,737
|
Prepaid expenses and
other assets
|
|
|
1,120
|
|
|
798
|
Property, equipment
and improvements, net
|
|
|
1,192
|
|
|
1,336
|
Equity investment in
affiliate
|
|
|
17,319
|
|
|
16,491
|
Other intangible
assets, net
|
|
|
8,711
|
|
|
9,309
|
Goodwill
|
|
|
13,742
|
|
|
13,691
|
Total
assets
|
|
$
|
126,643
|
|
$
|
135,980
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
9,105
|
|
$
|
11,995
|
Accrued royalties and
distribution fees
|
|
|
51,444
|
|
|
55,614
|
Deferred
revenue
|
|
|
2,198
|
|
|
2,152
|
Debt, net of discounts
and debt issuance costs
|
|
|
42,191
|
|
|
42,053
|
Deferred tax
liability
|
|
|
1,742
|
|
|
1,715
|
Stock warrant and
other derivative liabilities
|
|
|
12,655
|
|
|
9,763
|
Total
liabilities
|
|
|
119,335
|
|
|
123,292
|
Commitments and
contingencies (see Note 13)
|
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
|
|
Redeemable convertible
preferred stock, $0.001 par value, 1,000,000 shares
authorized; 31,046 shares issued and
30,198 outstanding at March 31, 2017 and December 31, 2016; liquidation preference of $35,048
at March 31, 2017 and $34,366 at
December 31, 2016
|
|
|
39,085
|
|
|
38,708
|
Common stock, $0.001
par value, 250,000,000 shares authorized, 5,472,023
shares issued and outstanding at March
31, 2017; and 5,240,085 shares issued and outstanding at December 31,
2016
|
|
|
5
|
|
|
5
|
Additional paid-in
capital
|
|
|
106,372
|
|
|
106,059
|
Accumulated
deficit
|
|
|
(133,510)
|
|
|
(127,388)
|
Accumulated other
comprehensive loss
|
|
|
(4,644)
|
|
|
(4,696)
|
Total shareholders'
equity
|
|
|
7,308
|
|
|
12,688
|
Total liabilities and
shareholders' equity
|
|
$
|
126,643
|
|
$
|
135,980
|
RLJ ENTERTAINMENT,
INC.
|
Consolidated
Statements of Operations
|
(Unaudited)
|
Three Months Ended
March 31, 2017 and 2016
|
|
|
|
|
Three Months Ended
March 31,
|
(In thousands,
except share data)
|
|
2017
|
|
2016
|
Revenues
|
|
$
|
13,887
|
|
$
|
17,741
|
Cost of
sales
|
|
|
|
|
|
|
Content amortization
and royalties
|
|
|
6,068
|
|
|
8,345
|
Manufacturing and
fulfillment
|
|
|
3,052
|
|
|
4,308
|
Total cost of
sales
|
|
|
9,120
|
|
|
12,653
|
Gross
profit
|
|
|
4,767
|
|
|
5,088
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
2,284
|
|
|
2,124
|
General and
administrative expenses
|
|
|
4,523
|
|
|
4,845
|
Depreciation and
amortization
|
|
|
873
|
|
|
624
|
Total operating
expenses
|
|
|
7,680
|
|
|
7,593
|
LOSS FROM
CONTINUING OPERATIONS
|
|
|
(2,913)
|
|
|
(2,505)
|
|
|
|
|
|
|
|
Equity earnings of
affiliate
|
|
|
551
|
|
|
499
|
Interest expense,
net
|
|
|
(1,886)
|
|
|
(2,205)
|
Change in fair value
of stock warrants and other derivatives
|
|
|
(2,892)
|
|
|
(8,176)
|
Gain on
extinguishment of debt
|
|
|
895
|
|
|
—
|
Other income
(expense), net
|
|
|
284
|
|
|
26
|
LOSS FROM
CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES
|
|
|
(5,961)
|
|
|
(12,361)
|
Provision for income
taxes
|
|
|
(161)
|
|
|
(41)
|
LOSS FROM
CONTINUING OPERATIONS, NET OF INCOME TAXES
|
|
|
(6,122)
|
|
|
(12,402)
|
LOSS FROM
DISCONTINUED OPERATIONS, NET OF INCOME TAXES
|
|
|
—
|
|
|
(1,073)
|
NET
LOSS
|
|
|
(6,122)
|
|
|
(13,475)
|
Accretion on
preferred stock
|
|
|
(377)
|
|
|
(1,126)
|
NET LOSS
ATTRIBUTABLE TO COMMON SHAREHOLDERS
|
|
$
|
(6,499)
|
|
$
|
(14,601)
|
Net loss per common
share attributable to common shareholders:
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
(1.26)
|
|
$
|
(3.16)
|
Discontinued
operations
|
|
|
—
|
|
|
(0.25)
|
Basic and diluted net
loss per common share attributable to common shareholders
|
|
$
|
(1.26)
|
|
$
|
(3.41)
|
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
Basic and
diluted
|
|
|
5,164
|
|
|
4,280
|
RLJ ENTERTAINMENT,
INC.
|
UNAUDITED Adjusted
EBITDA
|
Three Months Ended
March 31, 2017 and 2016
|
|
|
We define "Adjusted
EBITDA" as earnings before income tax, depreciation, amortization,
non-cash royalty expense, interest expense, non-cash exchange gains
and losses on intercompany accounts, goodwill impairments,
severance costs, change in fair value of stock warrants and other
derivatives, stock-based compensation, basis-difference
amortization in equity earnings of affiliate and dividends received
from affiliate in excess of equity earnings of affiliate.
Management believes Adjusted EBITDA to be a meaningful
indicator of our performance that provides useful information to
investors regarding our financial condition and results of
operations because it removes material non-cash items that allows
investors to analyze the operating performance of the business
using the same metric management uses. The exclusion of
non-cash items better reflects our ability to make investments in
the business and meet obligations. Presentation of Adjusted
EBITDA is a non-GAAP financial measure commonly used in the
entertainment industry and by financial analysts and others who
follow the industry to measure operating performance.
Management uses this measure to assess operating results and
performance of our business, perform analytical comparisons,
identify strategies to improve performance and allocate resources
to our business segments. While management considers Adjusted
EBITDA to be an important measure of comparative operating
performance, it should be considered in addition to, but not as a
substitute for, net income and other measures of financial
performance reported in accordance with U.S. GAAP. Not all
companies calculate Adjusted EBITDA in the same manner and the
measure, as presented, may not be comparable to similarly-titled
measures presented by other companies.
|
|
The following table
includes the reconciliation of our consolidated U.S. GAAP net loss
to our consolidated Adjusted EBITDA:
|
|
|
Three Months Ended
March 31,
|
(In
thousands)
|
|
2017
|
|
2016
|
Net loss
|
|
$
|
(6,122)
|
|
$
|
(13,475)
|
Interest
expense
|
|
|
1,886
|
|
|
2,205
|
Provision for income
tax
|
|
|
161
|
|
|
41
|
Depreciation and
amortization
|
|
|
873
|
|
|
624
|
Basis-difference
amortization in equity earnings of affiliate
|
|
|
111
|
|
|
128
|
Change in fair value
of stock warrants and other derivatives
|
|
|
2,892
|
|
|
8,176
|
Stock-based
compensation
|
|
|
154
|
|
|
309
|
Restructuring
|
|
|
(615)
|
|
|
—
|
Loss from discontinued
operations
|
|
|
—
|
|
|
1,073
|
Foreign currency
exchange gain on intercompany accounts
|
|
|
(283)
|
|
|
(3)
|
Non-cash royalty
expense
|
|
|
1,040
|
|
|
488
|
Adjusted
EBITDA
|
|
$
|
97
|
|
$
|
(434)
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/rlj-entertainment-reports-first-quarter-2017-financial-results-300455654.html
SOURCE RLJ Entertainment, Inc.