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Wilhelmina International, Inc. Reports Results for the Year Ended 2019

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Financial Results

(in thousands)


Q4 19


Q4 18

YOY
Change

Year Ended
2019

Year Ended
2018

YOY
Change

Total Revenues

$

18,259

$

18,386

(0.7

%)

$

75,504

$

77,851

(3.0

%)

Operating (Loss) Income

(4,660

)

206

*

(4,172

)

1,373

*

(Loss) Income Before Provision for Taxes

(4,785

)

159

*

(4,386

)

1,189

*

Net (Loss) Income

(4,962

)

59

*

(4,786

)

856

*

EBITDA**

(4,450

)

450

*

(3,077

)

2,280

*

Adjusted EBITDA**

543

552

(1.6

%)

2,081

2,726

(23.7

%)

Pre-Corporate EBITDA**

747

782

(4.5

%)

3,119

3,851

(19.0

%)

**Non-GAAP measures referenced are detailed in the disclosures at the end of this release.
*Not Meaningful

DALLAS, March 30, 2020 (GLOBE NEWSWIRE) -- Wilhelmina International, Inc. (WHLM) ("Wilhelmina" or the "Company") today reported revenues of $18.3 million and net loss of $5.0 million for the three months ended December 31, 2019, compared to revenues of $18.4 million and net income of $0.1 million for the three months ended December 31, 2018. For the fiscal year ended December 31, 2019, Wilhelmina reported revenues of $75.5 million and net loss of $4.8 million compared to revenue of $77.9 million and net income of $0.9 million for the fiscal year ended December 31, 2018. In the fourth quarter of 2019, Wilhelmina recorded a non-cash goodwill impairment charge of $4.8 million, triggered by a sustained decline in share price of the Company’s common stock. The Company does not expect the impairment charge to have any impact on future operations, affect its liquidity, affect cash flows from operating activities, or affect compliance with the financial covenants set forth in its credit agreement. The net loss in 2019, when compared to net income in the same periods of the prior year, was primarily due to the goodwill impairment charge, a change in board revenue mix and an increase in revenue from the Aperture division, which is lower margin than traditional core model bookings, as well as current income tax expense of $0.3 million primarily related to the deferred tax asset impact of the termination of stock options previously granted to the Company’s former Chief Executive Officer, all partially offset by a decrease in operating expenses and a $0.3 million deferred tax benefit related to the goodwill impairment charge.

Financial Results

Net loss for the three months and fiscal year ended December 31, 2019 was $5.0 million and $4.8 million, or $0.96 and $0.92 per fully diluted share, compared to net income of $0.1 million and $0.9 million, or $0.01 and $0.16 per fully diluted share, for the three months and fiscal year ended December 31, 2018.

Pre-Corporate EBITDA was $0.7 million and $3.1 million for the three months and fiscal year ended December 31, 2019, compared to $0.8 million and $3.9 million for the three months and fiscal year ended December 31, 2018.

The following table reconciles reported net income under generally accepted accounting principles to EBITDA, Adjusted EBITDA and Pre-Corporate EBITDA for the fourth quarter and year ended December 31, 2019 and 2018.

(in thousands)

Three months ended
December 31,

Year ended
December 31,

2019

2018

2019

2018

Net (loss) income

$

(4,962

)

$

59

$

(4,786

)

$

856

Interest expense

28

28

117

101

Income tax expense

177

100

400

333

Amortization and depreciation

307

263

1,192

990

EBITDA**

$

(4,450

)

$

450

$

(3,077

)

$

2,280

Foreign exchange loss

97

19

97

83

Non-recurring items

4,845

-

4,845

-

Share-based payment expense

51

83

216

363

Adjusted EBITDA**

$

543

$

552

$

2,081

$

2,726

Corporate overhead

204

230

1,038

1,125

Pre-Corporate EBITDA**

$

747

$

782

$

3,119

$

3,851


**Non-GAAP measures referenced are detailed in the disclosures at the end of this release.

Changes in net income, EBITDA, Adjusted EBITDA and Pre-Corporate EBITDA for the three months and fiscal year ended December 31, 2019, when compared to the three months and fiscal year ended December 31, 2018, were primarily the result of the following:

  • Revenues net of model costs for the three months and fiscal year ended December 31, 2019 decreased by 2.5% and 4.5% primarily due to decreases in core model bookings and in bookings in the Wilhelmina Studio division, partially offset by an increase in bookings in the Aperture division;

  • Salaries and service costs for the three months and fiscal year ended December 31, 2019 decreased by 3.8% and 0.5% primarily due to a decrease in employee salaries and a reduction in share-based payment expense;

  • Office and general expenses for the three months ended December 31, 2019 was relatively unchanged. Office and general expenses for the fiscal year ended December 31, 2019 decreased by 7.2%, primarily due to reduced rent expense, bad debt expenses, and office expenses, as well as the reclassification of certain lease payments as amortization expense under new lease accounting rules;

  • Amortization and depreciation expense for the three months and fiscal year ended December 31, 2019 increased by 16.7% and 20.4%, primarily due to new equipment being placed in service in recent months and certain lease payments previously included within office and general expenses now being classified as amortization under new lease accounting rules;

  • A significant non-recurring $4.8 million goodwill impairment charge triggered by a sustained decline in share price; and

  • Corporate overhead expenses for the three months and fiscal year ended December 31, 2019 decreased by 11.3% and 7.7%, primarily due to lower travel and securities compliance costs.

On March 11, 2020, the World Health Organization declared the outbreak of novel coronavirus (COVID-19) as a pandemic, which continues to spread throughout the United States. There have been mandates from federal, state, and local authorities requiring forced closures of non-essential businesses. As a result, the Company has temporarily closed some offices and has seen a reduction in customer bookings, resulting in a negative impact to Company revenue and earnings. In addition to reduced revenue, business operations could be adversely affected by potential reductions in productivity, delays or limitations on the ability of customers to make timely payments, disruptions in talents’ ability to travel to photography locations, or supply chain disruptions impeding clothing or footwear wardrobe from reaching destinations in time for photoshoots. While this disruption is currently expected to be temporary, there is uncertainty around the duration. The Company’s revenues are heavily dependent on the level of economic activity in the United States and the United Kingdom, particularly in the fashion, advertising and publishing industries, all of which have been negatively impacted by the pandemic and may not recover as quickly as other sectors of the economy. Therefore, while we expect this matter to negatively impact our business, results of operations, and financial position, the related financial impact cannot be reasonably estimated at this time. As a result, the Company is currently evaluating and executing strategies to curtail expenses.


WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

2019

2018

ASSETS

Current assets:

Cash and cash equivalents

$

6,993

$

6,748

Accounts receivable, net of allowance for doubtful accounts of $1,423 and $1,791, respectively

9,441

11,901

Prepaid expenses and other current assets

243

197

Total current assets

16,677

18,846

Property and equipment, net of accumulated depreciation of $4,300 and $3,264, respectively

1,925

2,567

Right of use assets-operating

1,261

-

Right of use assets-finance

316

-

Trademarks and trade names with indefinite lives

8,467

8,467

Other intangibles with finite lives, net of accumulated amortization of $8,737 and $8,684, respectively

-

53

Goodwill

8,347

13,192

Other assets

115

114

TOTAL ASSETS

$

37,108

$

43,239

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued liabilities

$

3,815

$

5,071

Due to models

7,495

8,809

Lease liabilities – operating, current

1,055

-

Lease liabilities – finance, current

94

-

Term loan – current

1,257

623

Total current liabilities

13,716

14,503

Long term liabilities:

Net deferred income tax liability

725

631

Lease liabilities – operating, non-current

328

-

Lease liabilities – finance, non-current

225

-

Term loan – non-current

743

2,000

Total long term liabilities

2,021

2,631

Total liabilities

15,737

17,134

Shareholders’ equity:

Common stock, $0.01 par value, 9,000,000 shares authorized; 6,472,038 shares

issued at December 31, 2019 and December 31, 2018

65

65

Treasury stock, 1,309,861 and 1,264,154 shares at December 31, 2019 and December 31, 2018, at cost

(6,352

)

(6,093

)

Additional paid-in capital

88,471

88,255

Accumulated deficit

(60,815

)

(56,029

)

Accumulated other comprehensive loss

2

(93

)

Total shareholders’ equity

21,371

26,105

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

37,108

$

43,239


WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
For the Years Ended December 31, 2019 and 2018
(In thousands, except per share data)

Three Months Ended

Year Ended

December 31,

December 31,

2019

2018

2019

2018

Revenues:

Service revenues

$

18,253

$

18,366

$

75,452

$

77,791

License fees and other income

6

20

52

60

Total revenues

18,259

18,386

75,504

77,851

Model costs

13,083

13,076

54,249

55,600

Revenues net of model costs

5,176

5,310

21,255

22,251

Operating expenses:

Salaries and service costs

3,373

3,506

13,944

14,015

Office and general expenses

1,107

1,105

4,408

4,748

Amortization and depreciation

307

263

1,192

990

Goodwill impairment

4,845

-

4,845

-

Corporate overhead

204

230

1,038

1,125

Total operating expenses

9,836

5,104

25,427

20,878

Operating (loss) income

(4,660

)

206

(4,172

)

1,373

Other expense:

Foreign exchange loss

97

19

97

83

Interest expense

28

28

117

101

Total other expense

125

47

214

184

(Loss) income before provision for income taxes

(4,785

)

159

(4,386

)

1,189

Provision for income taxes:

Current

(106

)

(4

)

(306

)

(224

)

Deferred

(71

)

(96

)

(94

)

(109

)

Income tax benefit (expense)

(177

)

(100

)

(400

)

(333

)

Net (loss) income

$

(4,962

)

$

59

$

(4,786

)

$

856

Other comprehensive income (loss):

Foreign currency translation benefit (expense)

202

(27

)

95

(97

)

Total comprehensive (loss) income

(4,760

)

32

(4,691

)

759

Basic net (loss) income per common share

$

(0.96

)

$

0.01

$

(0.92

)

$

0.16

Diluted net (loss) income per common share

$

(0.96

)

$

0.01

$

(0.92

)

$

0.16

Weighted average common shares outstanding-basic

5,169

5,254

5,184

5,328

Weighted average common shares outstanding-diluted

5,169

5,254

5,184

5,328


WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES`
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For the Years Ended December 31, 2019 and 2018
(In thousands)

Common
Shares

Stock
Amount

Treasury
Shares

Stock
Amount

Additional
Paid-in
Capital

Accumulated
Deficit

Accumulated
Other
Comprehensive
Loss

Total

Balances at December 31, 2017

6,472

$

65

(1,090

)

$

(4,893

)

$

87,892

$

(56,885

)

$

4

$

26,183

Share based payment expense

-

-

-

-

363

-

-

363

Net income to common shareholders

-

-

-

-

-

856

-

856

Purchases of treasury stock

-

-

(174

)

(1,200

)

-

-

-

(1,200

)

Foreign currency translation

-

-

-

-

-

-

(97

)

(97

)

Balances at December 31, 2018

6,472

$

65

(1,264

)

$

(6,093

)

$

88,255

$

(56,029

)

$

(93

)

$

26,105

Share based payment expense

-

-

-

-

216

-

-

216

Net loss to common shareholders

-

-

-

-

-

(4,786

)

-

(4,786

)

Purchases of treasury stock

-

-

(46

)

(259

)

-

-

-

(259

)

Foreign currency translation

-

-

-

-

-

-

95

95

Balances at December 31, 2019

6,472

$

65

(1,310

)

$

(6,352

)

$

88,471

$

(60,815

)

$

2

$

21,371


The accompanying notes are an integral part of these consolidated financial statements.


WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
For the Years Ended December 31, 2019 and 2018
(In thousands)

Year Ended

2019

2018

Cash flows from operating activities:

Net (loss) income:

$

(4,786

)

$

856

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Amortization and depreciation

1,192

990

Goodwill impairment

4,845

-

Share based payment expense

216

363

Deferred income taxes

94

110

Bad debt expense

11

58

Changes in operating assets and liabilities:

Accounts receivable

2,449

1,668

Prepaid expenses and other current assets

(46

)

(17

)

Right of use assets-operating

1,143

-

Other assets

(1

)

23

Due to models

(1,314

)

(1,381

)

Lease liabilities-operating

(1,219

)

-

Accounts payable and accrued liabilities

(1,047

)

1,086

Net cash provided by operating activities

1,537

3,756

Cash flows from investing activities:

Purchases of property and equipment

(394

)

(443

)

Net cash used in investing activities

(394

)

(443

)

Cash flows from financing activities:

Purchases of treasury stock

(259

)

(1,200

)

Payments on finance leases

(111

)

-

Proceeds from term loan

-

1,000

Repayment of term loan

(623

)

(524

)

Net cash used in financing activities

(993

)

(724

)

Foreign currency effect on cash flows:

95

(97

)

Net change in cash and cash equivalents:

245

2,492

Cash and cash equivalents, beginning of period

6,748

4,256

Cash and cash equivalents, end of period

$

6,993

$

6,748

Supplemental disclosures of cash flow information:

Cash paid for interest

$

114

$

99

Cash paid for income taxes

$

5

$

44

Non-GAAP Financial Measures

EBITDA, Adjusted EBITDA and Pre-Corporate EBITDA represent measures of financial performance that are not calculated and presented in accordance with U.S. generally accepted accounting principles (“non-GAAP financial measures”). The Company considers EBITDA, Adjusted EBITDA and Pre-Corporate EBITDA to be important measures of performance because they:

  • are key operating metrics of the Company's business;

  • are used by management in its planning and budgeting processes and to monitor and evaluate its financial and operating results; and

  • provide stockholders and potential investors with a means to evaluate the Company's financial and operating results against other companies within the Company's industry.

The Company's calculation of non-GAAP financial measures may not be consistent with similar calculations by other companies in the Company's industry. The Company calculates EBITDA as net income plus interest expense, income tax expense, and depreciation and amortization expense. The Company calculates “Adjusted EBITDA” as EBITDA plus foreign exchange gain/loss plus share-based payment expense and certain significant non-recurring items that the Company may include from time to time. The Company calculates “Pre-Corporate EBITDA” as Adjusted EBITDA plus corporate overhead expense, which includes director compensation, securities laws compliance costs, audit and professional fees, and other public company costs.

Non-GAAP financial measures should not be considered as alternatives to net and operating income as an indicator of the Company's operating performance or cash flows from operating activities as a measure of liquidity or any other measure of performance derived in accordance with generally accepted accounting principles.

Form 10-K Filing

Additional information concerning the Company's results of operations and financial position is included in the Company's Form 10-K for the fiscal year ended December 31, 2019 filed with the Securities and Exchange Commission on March 30, 2020.

Forward-Looking Statements

This press release contains certain “forward-looking” statements as such term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relating to the Company are based on the beliefs of the Company’s management as well as information currently available to the Company’s management. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect” and “intend” and words or phrases of similar import, as they relate to the Company or Company management, are intended to identify forward-looking statements. Such forward-looking statements include, in particular, projections about the Company’s future results, statements about its plans, strategies, business prospects, changes and trends in its business and the markets in which it operates. Additionally, statements concerning future matters such as gross billing levels, revenue levels, expense levels, and other statements regarding matters that are not historical are forward-looking statements. Management cautions that these forward-looking statements relate to future events or the Company’s future financial performance and are subject to business, economic, and other risks and uncertainties, both known and unknown, that may cause actual results, levels of activity, performance, or achievements of its business or its industry to be materially different from those expressed or implied by any forward-looking statements. Should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. The Company does not undertake any obligation to publicly update these forward-looking statements. As a result, no person should place undue reliance on these forward-looking statements.

About Wilhelmina International, Inc. (www.wilhelmina.com):

Wilhelmina, together with its subsidiaries, is an international full-service fashion model and talent management service, specializing in the representation and management of leading models, celebrities, artists, photographers, athletes, and content creators. Established in 1967 by fashion model Wilhelmina Cooper, Wilhelmina is one of the oldest and largest fashion model management companies in the world. Wilhelmina is publicly traded on Nasdaq under the symbol WHLM. Wilhelmina is headquartered in New York and, since its founding, has grown to include operations in Los Angeles, Miami, London and Chicago. Wilhelmina also owns Aperture, a talent and commercial agency located in New York and Los Angeles. For more information, please visit www.wilhelmina.com and follow @WilhelminaModels.

CONTACT:

Investor Relations
Wilhelmina International, Inc.
214-661-7488
ir@wilhelmina.com