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CORRECTION to Certain Line Items Within the Adjusted EBITDA Table -- Chicken Soup for the Soul Entertainment Reports Q1 2021 Results

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·12 min read
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75% Q1 net revenue growth year-over-year reinforces outlook for 2021

Fully integrated business model driving revenue growth and profitability

COS COB, Conn., May 13, 2021 (GLOBE NEWSWIRE) -- In a release issued under the same headline earlier today by Chicken Soup for the Soul Entertainment, Inc. (Nasdaq: CSSE) please note that certain changes were made in the Adjusted EBITDA table, specifically in the following lines: Film library and program rights amortization, Share-based compensation expense and Reserve for bad debt and video returns. The corrected release follows:

Chicken Soup for the Soul Entertainment, Inc. (Nasdaq: CSSE), one of the largest operators of streaming advertising-supported video-on-demand (AVOD) networks, today announced its financial results for the first quarter ended March 31, 2021.

“Our first quarter results are a good start on our growth plans for the year, and we’ve made outstanding progress on our strategy so far in 2021,” said William J. Rouhana Jr., chairman and chief executive officer of Chicken Soup for the Soul Entertainment. “Our performance is starting to show the power of our now fully integrated business model focused on delivering original and exclusive content to our growing AVOD networks, reflected in strong growth in net revenue and EBITDA.

“In just over five months’ time, we will have significantly expanded our content library while greatly expanding our capabilities to create and deliver new content,” Rouhana continued. “We’ve also announced a new company-branded AVOD network and our new television production unit, Halcyon, and continued to aggressively implement our viewership growth strategy, which will include the launch of an enhanced user experience and platform over the summer. At the same time, we continue to grow our fully-owned library through our strong pipeline of original and exclusive content. With these developments in place, 2021 is shaping up to be a game-changing year for Chicken Soup for the Soul Entertainment.”

First Quarter 2021 Financial Summary

  • Net revenue of $23.2 million, compared to $20.2 million in the seasonally high fourth quarter of 2020, and $13.2 million in the year-ago period. The 75% year-over-year growth was driven by strong performances of original content releases and international and advertising sales.

  • Net loss of $9.2 million compared to a net loss of $10.1 million in the fourth quarter of 2020, and a net loss of $11.4 million in the year-ago period; $6.9 million net loss before preferred dividends, compared to $8.9 million net loss in the fourth quarter 2020, and $10.5 million net loss in the year-ago period.

  • Adjusted EBITDA of $4.6 million, compared to $2.8 million in the fourth quarter 2020, and $2.0 million in the year-ago period. The 124% year-over-year growth was enhanced by efficiencies and cost savings associated with the fully integrated business model.

Recent Business Highlights

  • First company produced film, Willy’s Wonderland, was ranked as the #1 horror movie on Amazon for a period in the first quarter.

  • Crackle Plus viewership in March 2021 reached its highest level since the shelter-in-place peak of April 2020.

  • Announced the largest content deal in company history with the pending acquisition of the Sonar Entertainment assets, which, when consummated, will add IP rights to 372 television series with 1,825 episodes and over 700 films, to an already-robust library.

  • Presented a diverse new slate of original and exclusive content at NewFronts, which includes numerous exciting, star-studded titles.

  • Announced Halcyon, a new television studio to be headed by David Ellender, which will grow the high-quality content pipeline.

  • Announced launch of Chicken Soup for the Soul AVOD network that aligns with the company brand and mission.

Gross profit for the quarter ended March 31, 2021 was $7.0 million, or 30% of net revenue, compared to $5.9 million in the fourth quarter of 2020, or 29% of net revenue, and compared to $3.3 million, or 25% of net revenue for the year-ago period.

Operating loss for the quarter ended March 31, 2021 was $5.8 million compared to an operating loss of $9.9 million in the fourth quarter 2020, and $10.0 million in the year-ago period.

Net loss was $9.2 million, or $0.67 per share, compared to a net loss of $10.1 million, or $0.79 per share, in the fourth quarter 2020, and a net loss of $11.4 million, or $0.95 per share in the prior-year period. Excluding preferred dividends, the net loss in the first quarter of 2021 would have been $6.9 million, or $0.51 per share, compared to net loss of $10.5 million, or $0.87 per share last year.

Adjusted EBITDA for the quarter ended March 31, 2021 was $4.6 million, compared to $2.8 million in the fourth quarter 2020, and $2.0 million in the same period last year.

As of March 31, 2021, the company had $24.6 million of cash and cash equivalents compared to $14.7 million as of December 31, 2020, and outstanding debt of $31.2 million as of March 31, 2021 compared to $33.6 million as of December 31, 2020.

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 and Pro Forma 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.

Conference Call Information

  • Date, Time: Thursday, May 13, 2021, 4:30 p.m. ET.

  • Toll-free: (833) 832-5128

  • International: (484) 747-6583

  • Conference ID: 9352518

  • A live webcast and replay will be available at http://ir.cssentertainment.com/ under the “News & Events” tab

Conference Call Replay Information

  • Toll-free: (855) 859-2056

  • International: (404) 537-3406

  • Conference ID: 9352518

ABOUT CHICKEN SOUP FOR THE SOUL ENTERTAINMENT
Chicken Soup for the Soul Entertainment, Inc. (Nasdaq: CSSE) operates streaming video-on-demand networks (VOD). The company owns Crackle Plus, which owns and operates a variety of ad-supported and subscription-based VOD networks including Crackle, Popcornflix, Popcornflix Kids, Truli, Pivotshare, Españolflix and FrightPix. The company also acquires and distributes video content through its Screen Media subsidiary and produces original long and short-form content through Landmark Studio Group, Chicken Soup for the Soul Unscripted, APlus.com, and Halcyon Television. 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
The company’s consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). It uses a non-GAAP financial measure to evaluate its results of operations and as a supplemental indicator of operating performance. The non-GAAP financial measure that is used 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. Management believes this non-GAAP financial measure enhances the understanding of the company’s historical and current financial results and enables the board of directors and management to analyze and evaluate financial and strategic planning decisions that will directly affect operating decisions and investments. The presentation of Adjusted EBITDA should not be construed as an inference that future results will be unaffected by unusual 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, the company’s actual operating results included in its condensed consolidated financial statements.

“Adjusted EBITDA” means earnings before interest, taxes, depreciation, amortization and non-cash share-based compensation expense, and also includes the gain on bargain purchase of subsidiary and adjustments for other identified charges such as costs incurred to form the company and to prepare for the offering of its Class A common stock to the public, prior to its IPO. Identified charges also include the cost of maintaining a board of directors prior to being a publicly traded company. As the IPO has been completed, director fees will be deducted from Adjusted EBITDA going forward. Adjusted EBITDA is not an earnings measure recognized by 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. Management believes Adjusted EBITDA to be a meaningful indicator of the company’s performance that provides useful information to investors regarding its financial condition and results of operations. The most comparable GAAP measure is operating income.

A reconciliation of net loss to Adjusted EBITDA is provided in the company’s Annual Report on Form 10-K for the year ended December 31, 2020 under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Reconciliation of Unaudited Historical Results to Adjusted EBITDA.”

FORWARD-LOOKING STATEMENTS
This press release includes forward-looking statements that involve risks and uncertainties. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are subject to risks (including those set forth in the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 31, 2021) and uncertainties which could cause actual results to differ from the forward-looking statements. The company expressly disclaims any obligations 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. Investors should realize that if our underlying assumptions for the projections contained herein prove inaccurate or that known or unknown risks or uncertainties materialize, actual results could vary materially from our expectations and projections.

INVESTOR RELATIONS
Taylor Krafchik
Ellipsis
CSSE@ellipsisir.com
646-776-0886

MEDIA CONTACT
Kate Barrette
RooneyPartners LLC
kbarrette@rooneyco.com
(212) 223-0561



Chicken Soup for the Soul Entertainment, Inc.

Condensed Consolidated Balance Sheets

March 31,

December 31,

2021

2020

(unaudited)

ASSETS

Cash and cash equivalents

$

24,569,875

$

14,732,726

Accounts receivable, net of allowance for doubtful accounts of $821,070, and $1,035,643, respectively

26,854,738

25,996,947

Prepaid expenses and other current assets

1,612,155

1,382,502

Goodwill

21,448,106

21,448,106

Indefinite lived intangible assets

12,163,943

12,163,943

Intangible assets, net

18,165,038

19,370,490

Film library, net

38,709,850

35,239,135

Due from affiliated companies

4,389,378

5,648,652

Programming costs and rights, net

13,841,702

15,781,183

Other assets, net

4,476,459

4,517,102

Total assets

$

166,231,244

$

156,280,786

LIABILITIES AND EQUITY

9.50% Notes due 2025, net of deferred issuance costs of $1,699,544 and $1,798,433, respectively

$

31,196,356

$

31,097,467

Notes payable under revolving credit facility

2,500,000

Film acquisition advance

6,195,174

8,659,136

Accounts payable and accrued other expenses

20,884,463

21,394,957

Film library acquisition obligations

14,854,918

8,616,562

Programming obligations

2,804,125

4,697,316

Accrued participation costs

7,529,515

12,535,651

Other liabilities

2,767,892

1,677,906

Total liabilities

86,232,443

91,178,995

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; 3,698,318 and 2,098,318 shares issued and outstanding, respectively; redemption value of $92,457,950 and $52,457,950, respectively

370

210

Class A common stock, $.0001 par value, 70,000,000 shares authorized; 6,400,766 and 5,157,053 shares issued, 6,326,531 and 5,082,818 shares outstanding, respectively

640

516

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

166,865,655

106,425,548

Deficit

(86,235,901

)

(77,247,982

)

Class A common stock held in treasury, at cost (74,235 shares)

(632,729

)

(632,729

)

Total stockholders’ equity

79,998,801

28,546,329

Subsidiary convertible preferred stock

36,350,000

Noncontrolling interests

205,462

Total equity

79,998,801

65,101,791

Total liabilities and equity

$

166,231,244

$

156,280,786



Chicken Soup for the Soul Entertainment, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

Three Months Ended March 31,

2021

2020

Net revenue

$

23,196,842

$

13,244,073

Cost of revenue

16,242,934

9,910,390

Gross profit

6,953,908

3,333,683

Operating expenses:

Selling, general and administrative

9,234,819

6,839,897

Amortization and depreciation

1,238,027

5,204,728

Management and license fees

2,319,684

1,324,407

Total operating expenses

12,792,530

13,369,032

Operating loss

(5,838,622

)

(10,035,349

)

Interest expense

1,087,944

329,125

Acquisition-related costs

98,926

Other non-operating income, net

(570

)

(6,438

)

Loss before income taxes and preferred dividends

(6,925,996

)

(10,456,962

)

Provision for income taxes

14,000

49,000

Net loss before noncontrolling interests and preferred dividends

(6,939,996

)

(10,505,962

)

Net loss attributable to noncontrolling interests

(52,854

)

Net loss attributable to Chicken Soup for the Soul Entertainment, Inc.

(6,939,996

)

(10,453,108

)

Less: preferred dividends

2,253,385

974,272

Net loss available to common stockholders

$

(9,193,381

)

$

(11,427,380

)

Net loss per common share:

Basic and diluted

$

(0.67

)

$

(0.95

)



Chicken Soup for the Soul Entertainment, Inc.

Adjusted EBITDA

Three Months Ended March 31,

2021

2020

Net loss available to common stockholders

$

(9,193,381

)

$

(11,427,380

)

Preferred dividends

2,253,385

974,272

Provision for income taxes

14,000

49,000

Other taxes

84,493

53,411

Interest expense

1,087,944

329,125

Film library and program rights amortization

6,928,667

2,494,832

Share-based compensation expense

231,844

244,835

Acquisition-related costs

98,926

Reserve for bad debt and video returns

694,212

1,721,595

Amortization and depreciation

1,621,360

5,204,728

Other non-operating income, net

(570

)

(6,438

)

Transitional expenses

2,113,469

All other nonrecurring costs

840,050

186,948

Adjusted EBITDA

$

4,562,004

$

2,037,323