Chicken Soup for the Soul Entertainment, Inc. (Nasdaq: CSSE) today announced its financial results for the first quarter ended March 31, 2022.
“We are off to a great start to the year, with strong financial results and continued momentum in viewership growth driven by delivery of compelling original content across our streaming services,” said William J. Rouhana Jr., chairman and chief executive officer of Chicken Soup for the Soul Entertainment. “We continued the rollout of our distribution touchpoint expansion strategy, which has driven higher levels of viewership, and our new tech platform, which is increasing viewer engagement as well. We also made great progress expanding one of the largest AVOD libraries of owned and operated content, and expanded and diversified our ad rep partnerships.”
“All of these factors position us well to execute on our efforts to meaningfully scale the business and today we announced separately a major transaction that will accelerate those efforts, our proposed acquisition of Redbox.”
First Quarter 2022 Financial Summary
- Net revenue of $29.2 million, compared to $36.0 million in the seasonally high fourth quarter of 2021, and $23.2 million in the year-ago period, an increase of 26% year over year.
- Net loss of $14.1 million compared with a net loss of $22.4 million in the fourth quarter of 2021, and a net loss of $9.2 million in the year-ago period; $11.8 million net loss before dividends, compared with $20.2 million net loss in the fourth quarter 2021, and $6.9 million net loss in the year-ago period.
- Adjusted EBITDA of $3.7 million, compared with $9.3 million in the fourth quarter 2021, and $4.6 million in the year-ago period.
Recent Business Highlights
- Announced planned acquisition of Redbox Entertainment Inc., creating leading independent, integrated direct-to-consumer media platform delivering premium entertainment for value conscious consumers
- Grew Crackle Plus viewership by 11.5% quarter over quarter driven by distribution touchpoint rollout strategy
- Original and exclusive content viewership grew to 27% of total viewership in the first quarter
- Rolled out new technology platform for Crackle on Samsung (KS:005930) TVs, improving the user experience and increasing time spent on the platform
- Launched the Chicken Soup for the Soul AVOD on VIZIO, bringing thousands of hours of lifestyle programming, Hollywood blockbusters and classic scripted TV series to viewers
- Expanded Crackle Plus AVOD to 70 touchpoints, remaining on track for 90-touchpoint goal in 2022
Gross profit for the quarter ended March 31, 2022 was $6.6 million, or 23% of net revenue, compared with $11.4 million in the fourth quarter of 2021, or 32% of net revenue, and compared with $7.0 million, or 30% of net revenue for the year-ago period.
Operating loss for the quarter ended March 31, 2022 was $10.8 million compared with an operating loss of $19.1 million in the fourth quarter of 2021, and $5.8 million in the year-ago period.
Net loss was $14.1 million, or $0.92 per share, compared with a net loss of $22.4 million, or $1.38 per share, in the fourth quarter 2021, and a net loss of $9.2 million, or $0.67 per share in the prior-year period. Excluding preferred dividends, the net loss in the first quarter of 2022 would have been $11.8 million, or $0.77 per share, compared with a net loss of $6.9 million, or $0.51 per share for the year-ago period.
Adjusted EBITDA for the quarter ended March 31, 2022, was $3.7 million, compared with $9.3 million in the fourth quarter of 2021, and $4.6 million in the same period last year.
As of March 31, 2022, the Company had $21.5 million of cash, cash equivalents and restricted cash compared with $44.3 million as of December 31, 2021, and outstanding debt of $67.9 million as of March 31, 2022, compared with $56.7 million as of December 31, 2021.
For a discussion of the financial measures presented herein that 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 results included herein will be filed in our Quarterly Report on Form 10-Q for the three-months ended March 31, 2022 to be filed with the SEC on May 11, 2022.
Conference Call Information
- Date, Time: Wednesday, May 11, 2022, 8:30 a.m. ET
- Toll-free: (888) 428-7458
- International: (862) 298-0702
- A live webcast is available at https://ir.cssentertainment.com/ under the “News & Events” tab
Conference Call Replay Information
- A webcast replay will be made available at https://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, Inc. (Nasdaq: CSSE) operates video-on-demand (VOD) streaming services. The company owns Crackle Plus, which owns and operates a variety of ad-supported VOD streaming services including Crackle, Chicken Soup for the Soul, Popcornflix, Popcornflix Kids, Truli, Pivotshare, Españolflix and FrightPix. The company also acquires and distributes video content through its Screen Media and 1091 Pictures subsidiaries and produces original video content through the Chicken Soup for the Soul Television Group. 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, cash and non-recurring expenses recognized during the three months ended March 31, 2022 and 2021, and the likelihood of material non-cash, 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), amortization and certain costs related to our film library, 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 our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Reconciliation of Unaudited Results to Adjusted EBITDA.”
Forward-Looking Statements
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 the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 31, 2022. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. These forward-looking statements 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.
Investor Relations
Taylor Krafchik
Ellipsis
CSSE@ellipsisir.com
(646) 776-0886
Media Contact
Kate Barrette
RooneyPartners LLC
kbarrette@rooneyco.com
(212) 223-0561
Tables Follow
| Chicken Soup for the Soul Entertainment, Inc. | |||||||||
| Condensed Consolidated Balance Sheets | |||||||||
| March 31, | December 31, | ||||||||
| 2022 | 2021 | ||||||||
| (unaudited) | |||||||||
| ASSETS | |||||||||
| Cash, cash equivalents and restricted cash | $ | 21,499,311 | $ | 44,286,105 | |||||
| Accounts receivable, net of allowance for doubtful accounts of $785,497, and $786,830, respectively | 66,224,566 | 60,213,807 | |||||||
| Prepaid expenses and other current assets | 3,043,049 | 1,904,273 | |||||||
| Due from affiliated companies | 684,946 | — | |||||||
| Operating lease right-of-use assets | 8,385,948 | — | |||||||
| Content assets, net | 86,816,164 | 63,645,396 | |||||||
| Intangible assets, net | 21,649,516 | 18,035,091 | |||||||
| Indefinite lived intangible assets | 12,163,943 | 12,163,943 | |||||||
| Goodwill | 44,906,055 | 39,986,530 | |||||||
| Other assets, net | 5,570,677 | 5,190,954 | |||||||
| Total assets | $ | 270,944,175 | $ | 245,426,099 | |||||
| LIABILITIES AND EQUITY | |||||||||
| Accounts payable and accrued other expenses | $ | 43,836,814 | $ | 34,984,226 | |||||
| Due to affiliated companies | — | 489,959 | |||||||
| Programming obligations | 15,570,000 | 1,641,250 | |||||||
| Film library acquisition obligations | 19,139,499 | 24,673,866 | |||||||
| Accrued participation costs | 18,118,463 | 12,323,329 | |||||||
| Film acquisition advances | 12,970,779 | 6,196,909 | |||||||
| Revolving loan | 22,035,713 | 17,585,699 | |||||||
| 9.50% Notes due 2025, net of deferred issuance costs of $1,303,991 and $1,402,880, respectively | 31,591,909 | 31,493,020 | |||||||
| Contingent consideration | 6,639,061 | 9,764,256 | |||||||
| Put option obligation | 11,400,000 | 11,400,000 | |||||||
| Operating lease liabilities | 9,799,043 | — | |||||||
| Other liabilities | 5,481,387 | 3,274,432 | |||||||
| Total liabilities | 196,582,668 | 153,826,946 | |||||||
| 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; 3,830,378 and 3,698,318 shares issued and outstanding, respectively; redemption value of $95,759,450 and $92,457,950, respectively | 383 | 370 | |||||||
| Class A common stock, $.0001 par value, 70,000,000 shares authorized; 9,423,330 and 8,964,330 shares issued, 7,701,722 and 8,019,828 shares outstanding, respectively | 945 | 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 | 245,978,573 | 240,609,345 | |||||||
| Deficit | (150,589,204 | ) | (136,462,244 | ) | |||||
| Accumulated other comprehensive loss | (18 | ) | 571 | ||||||
| Class A common stock held in treasury, at cost (1,721,608 and 944,502 shares, respectively) | (21,786,509 | ) | (13,202,407 | ) | |||||
| Total stockholders’ equity | 73,604,936 | 90,947,300 | |||||||
| Noncontrolling interests | 756,571 | 651,853 | |||||||
| Total equity | 74,361,507 | 91,599,153 | |||||||
| Total liabilities and equity | $ | 270,944,175 | $ | 245,426,099 | |||||
| Chicken Soup for the Soul Entertainment, Inc. | |||||||||
| Condensed Consolidated Statements of Operations | |||||||||
| (unaudited) | |||||||||
| Three Months Ended March 31, | |||||||||
| 2022 | 2021 | ||||||||
| Net revenue | $ | 29,206,197 | $ | 23,196,842 | |||||
| Cost of revenue | 22,575,408 | 16,242,934 | |||||||
| Gross profit | 6,630,789 | 6,953,908 | |||||||
| Operating expenses: | |||||||||
| Selling, general and administrative | 12,816,520 | 9,234,819 | |||||||
| Amortization and depreciation | 1,648,258 | 1,238,027 | |||||||
| Management and license fees | 2,920,620 | 2,319,684 | |||||||
| Total operating expenses | 17,385,398 | 12,792,530 | |||||||
| Operating loss | (10,754,609 | ) | (5,838,622 | ) | |||||
| Interest expense | 1,310,459 | 1,087,944 | |||||||
| Other non-operating income, net | (201,792 | ) | (570 | ) | |||||
| Loss before income taxes and preferred dividends | (11,863,276 | ) | (6,925,996 | ) | |||||
| Provision for income taxes | 20,000 | 14,000 | |||||||
| Net loss before noncontrolling interests and preferred dividends | (11,883,276 | ) | (6,939,996 | ) | |||||
| Net loss attributable to noncontrolling interests | (38,385 | ) | — | ||||||
| Net loss attributable to Chicken Soup for the Soul Entertainment, Inc. | (11,844,891 | ) | (6,939,996 | ) | |||||
| Less: preferred dividends | 2,282,069 | 2,253,385 | |||||||
| Net loss available to common stockholders | $ | (14,126,960 | ) | $ | (9,193,381 | ) | |||
| Net loss per common share: | |||||||||
| Basic and diluted | $ | (0.92 | ) | $ | (0.67 | ) | |||
| Weighted-average common shares outstanding: | |||||||||
| Basic and diluted | 15,331,743 | 13,635,759 | |||||||
| Chicken Soup for the Soul Entertainment, Inc. | ||||||||
| Adjusted EBITDA | ||||||||
| (unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Net loss available to common stockholders | $ | (14,126,960 | ) | $ | (9,193,381 | ) | ||
| Preferred dividends | 2,282,069 | 2,253,385 | ||||||
| Provision for income taxes | 20,000 | 14,000 | ||||||
| Other taxes | 80,372 | 84,493 | ||||||
| Interest expense | 1,310,459 | 1,087,944 | ||||||
| Film library amortization and related costs | 9,687,024 | 6,928,667 | ||||||
| Share-based compensation expense | 996,797 | 231,844 | ||||||
| Expense for bad debt and video returns | 581,834 | 694,212 | ||||||
| Amortization and depreciation | 2,004,073 | 1,621,360 | ||||||
| Other non-operating income, net | (201,792 | ) | (570 | ) | ||||
| Transitional expenses | 107,785 | — | ||||||
| All other nonrecurring costs | 920,432 | 840,050 | ||||||
| Adjusted EBITDA | $ | 3,662,093 | $ | 4,562,004 | ||||
| Chicken Soup for the Soul Entertainment, Inc. | |||||||||
| Adjusted Earnings Per Share | |||||||||
| (unaudited) | |||||||||
| Three Months Ended March 31, | |||||||||
| 2022 | 2021 | ||||||||
| Basic and diluted loss per share | $ | (0.92 | ) | $ | (0.67 | ) | |||
| Amortization related to acquired intangible assets | 0.09 | 0.09 | |||||||
| Adjusted basic and diluted loss per share | $ | (0.83 | ) | $ | (0.58 | ) | |||
