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Wilhelmina International, Inc. Reports Results for Third Quarter 2019

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Third Quarter Financial Results

(in thousands)


Q3 19


Q3 18

YOY
Change

Q3 19
YTD

Q3 18
YTD

YOY
Change

Total Revenues

$

17,241

$

19,153

(10.0

%)

$

57,245

$

59,465

(3.7

%)

Operating (Loss) Income

(149

)

281

(153.0

%)

488

1,167

(58.2

%)

(Loss) Income Before Provision for Taxes

(173

)

238

(172.7

%)

399

1,030

(61.3

%)

Net (Loss) Income

(166

)

208

(179.8

%)

176

797

(77.9

%)

EBITDA**

151

516

(70.7

%)

1,373

1,830

(25.0

%)

Adjusted EBITDA**

197

617

(68.1

%)

1,538

2,174

(29.3

%)

Pre-Corporate EBITDA**

448

915

(51.0

%)

2,372

3,069

(22.7

%)

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

DALLAS, Nov. 12, 2019 (GLOBE NEWSWIRE) -- Wilhelmina International, Inc. (WHLM) ("Wilhelmina" or the "Company") today reported revenues of $17.2 million and net loss of $0.2 million for the three months ended September 30, 2019, compared to revenues of $19.2 million and net income of $0.2 million for the three months ended September 30, 2018. For the nine months ended September 30, 2019, Wilhelmina reported revenues of $57.2 million and net income of $0.2 million compared to revenue of $59.5 million and net income of $0.8 million for the nine months ended September 30, 2018. The decrease in revenues when compared to the same periods of the prior year was primarily due to a decrease in bookings in the Wilhelmina Studios division and core model bookings in the United States, partially offset by an increase in core model bookings in the London office and bookings from the Aperture division. For the three and nine months ended September 30, 2019 compared to the three and nine months ended September 30, 2018, operating income, EBITDA, Adjusted EBITDA, and Pre-Corporate EBITDA decreased, primarily due to decreased revenues, partially offset by decreased operating expenses.

Bill Wackermann, Wilhelmina’s Chief Executive Officer, commented, “Despite challenges in the third quarter of 2019, I feel optimistic about the Company's path forward. We are focused on strengthening our core business and encouraged by our growth in international markets.”

Financial Results

Net loss for the three months ended September 30, 2019 was $0.2 million or $0.03 per fully diluted share and net income for the nine months ended September 30, 2019 was $0.2 million or $0.03 per fully diluted share, compared to net income of $0.2 million and $0.8 million, or $0.04 and $0.15 per fully diluted share, for the three and nine months ended September 30, 2018.

Pre-Corporate EBITDA was $0.4 million and $2.4 million for the three and nine months ended September 30, 2019, compared to $0.9 million and $3.1 million for the three and nine months ended September 30, 2018.

The following table reconciles reported net income under generally accepted accounting principles to EBITDA, Adjusted EBITDA and Pre-Corporate EBITDA for the three and nine months ended September 30, 2019 and 2018.

Three months ended

Nine months ended

(in thousands)

September 30,

September 30,

2019

2018

2019

2018

Net (loss) income

$

(166

)

$

208

$

176

$

797

Interest expense

27

26

89

73

Income tax (benefit) expense

(7

)

30

223

233

Amortization and depreciation

297

252

885

727

EBITDA**

$

151

$

516

$

1,373

$

1,830

Foreign exchange (gain) loss

(3

)

17

-

64

Share-based payment expense

49

84

165

280

Adjusted EBITDA**

$

197

$

617

$

1,538

$

2,174

Corporate overhead

251

298

834

895

Pre-Corporate EBITDA**

$

448

$

915

$

2,372

$

3,069



**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 and nine months ended September 30, 2019, when compared to the three and nine months ended September 30, 2018, were primarily the result of the following:

  • Revenues net of model costs for the three and nine months ended September 30, 2019 decreased by 12.4% and 5.1% primarily due to decreases in bookings in the Wilhelmina Studios division and core model bookings in the United States, partially offset by an increase in core model bookings in the London office and bookings from the Aperture division. The decrease in core model bookings in the United States was primarily due to staff turnover;

  • Salaries and service costs for the three months ended September 30, 2019 decreased by 6.1% primarily due to a decrease in employee salaries and a reduction in share based payment expense. Salaries and service costs for the nine months ended September 30, 2019 were relatively stable;

  • Office and general expenses for the three and nine months ended September 30, 2019 decreased by 2.3% and 9.4%, primarily due to reduced rent expense, computer expense and bad debt 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 and nine months ended September 30, 2019 increased by 17.9% and 21.7%, 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; and

  • Corporate overhead expenses for the three and nine months ended September 30, 2019 decreased by 15.8% and 6.8%, primarily due to lower securities compliance costs.

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

(Unaudited)

September 30,
2019

December 31,
2018

ASSETS

Current assets:

Cash and cash equivalents

$

5,521

$

6,748

Accounts receivable, net of allowance for doubtful accounts of $1,484 and $1,791, respectively

12,083

11,901

Prepaid expenses and other current assets

274

197

Total current assets

17,878

18,846

Property and equipment, net of accumulated depreciation of $4,032 and $3,264, respectively

2,103

2,567

Right of use assets-operating

1,602

-

Right of use assets-finance

129

-

Trademarks and trade names with indefinite lives

8,467

8,467

Other intangibles with finite lives, net of accumulated amortization of $8,720 and $8,684, respectively

17

53

Goodwill

13,192

13,192

Other assets

113

114

TOTAL ASSETS

$

43,501

$

43,239

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued liabilities

$

3,824

$

5,071

Due to models

8,840

8,809

Lease liabilities – operating, current

1,125

-

Lease liabilities – finance, current

94

-

Term loan – current

750

623

Total current liabilities

14,633

14,503

Long term liabilities:

Net deferred income tax liability

654

631

Lease liabilities – operating, non-current

623

-

Lease liabilities – finance, non-current

44

-

Term loan – non-current

1,435

2,000

Total long term liabilities

2,756

2,631

Total liabilities

17,389

17,134

Shareholders’ equity:

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

issued at September 30, 2019 and December 31, 2018

65

65

Treasury stock, 1,301,917 and 1,264,154 shares at September 30, 2019 and December 31, 2018, at cost

(6,320

)

(6,093

)

Additional paid-in capital

88,420

88,255

Accumulated deficit

(55,853

)

(56,029

)

Accumulated other comprehensive loss

(200

)

(93

)

Total shareholders’ equity

26,112

26,105

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

43,501

$

43,239


WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Three and Nine Months Ended September 30, 2019 and 2018
(In thousands, except per share data)
(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

Revenues:

Service revenues

$

17,224

$

19,143

$

57,199

$

59,425

License fees and other income

17

10

46

40

Total revenues

17,241

19,153

57,245

59,465

Model costs

12,534

13,777

41,166

42,524

Revenues, net of model costs

4,707

5,376

16,079

16,941

Operating expenses:

Salaries and service costs

3,266

3,478

10,571

10,509

Office and general expenses

1,042

1,067

3,301

3,643

Amortization and depreciation

297

252

885

727

Corporate overhead

251

298

834

895

Total operating expenses

4,856

5,095

15,591

15,774

Operating (loss) income

(149

)

281

488

1,167

Other expense:

Foreign exchange gain (loss)

3

(17

)

-

(64

)

Interest expense

(27

)

(26

)

(89

)

(73

)

Total other expense

(24

)

(43

)

(89

)

(137

)

(Loss) income before provision for income taxes

(173

)

238

399

1,030

Provision for income taxes (expense) benefit:

Current

(47

)

(80

)

(200

)

(220

)

Deferred

54

50

(23

)

(13

)

Income tax (expense) benefit

7

(30

)

(223

)

(233

)

Net (loss) income

$

(166

)

$

208

$

176

$

797

Other comprehensive expense:

Foreign currency translation adjustment

(76

)

(24

)

(107

)

(56

)

Total comprehensive (loss) income

(242

)

184

69

741

Basic net (loss) income per common share

$

(0.03

)

$

0.04

$

0.03

$

0.15

Diluted net (loss) income per common share

$

(0.03

)

$

0.04

$

0.03

$

0.15

Weighted average common shares outstanding-basic

5,176

5,309

5,189

5,353

Weighted average common shares outstanding-diluted

5,176

5,318

5,189

5,361

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For the Three and Nine Months Ended September 30, 2019 and 2018
(In thousands)
(Unaudited)

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

-

-

-

-

109

-

-

109

Net income to common shareholders

-

-

-

-

-

225

-

225

Purchases of treasury stock

-

-

(6

)

(36

)

-

-

-

(36

)

Foreign currency translation

-

-

-

-

-

-

43

43

Balances at March 31, 2018

6,472

$

65

(1,096

)

$

(4,929

)

$

88,001

$

(56,660

)

$

47

$

26,524

Share based payment expense

-

-

-

-

87

-

-

87

Net income to common shareholders

-

-

-

-

-

364

-

364

Purchases of treasury stock

-

-

(7

)

(46

)

-

-

-

(46

)

Foreign currency translation

-

-

-

-

-

-

(75

)

(75

)

Balances at June 30, 2018

6,472

$

65

(1,103

)

$

(4,975

)

$

88,088

$

(56,296

)

$

(28

)

$

26,854

Share based payment expense

-

-

-

-

84

-

-

84

Net income to common shareholders

-

-

-

-

-

208

-

208

Purchases of treasury stock

-

-

(100

)

(706

)

-

-

-

(706

)

Foreign currency translation

-

-

-

-

-

-

(24

)

(24

)

Balances at September 30, 2018

6,472

$

65

(1,203

)

$

(5,681

)

$

88,172

$

(56,088

)

$

(52

)

$

26,416


Common
Shares

Stock
Amount

Treasury
Shares

Stock
Amount

Additional
Paid-in
Capital

Accumulated
Deficit

Accumulated
Other
Comprehensive
Loss

Total

Balances at December 31, 2018

6,472

$

65

(1,264

)

$

(6,093

)

$

88,255

$

(56,029

)

$

(93

)

$

26,105

Share based payment expense

-

-

-

-

64

-

-

64

Net income to common shareholders

-

-

-

-

-

(109

)

-

(109

)

Purchases of treasury stock

-

-

(4

)

(24

)

-

-

-

(24

)

Foreign currency translation

-

-

-

-

-

-

28

28

Balances at March 31, 2019

6,472

$

65

(1,268

)

$

(6,117

)

$

88,319

$

(56,138

)

$

(65

)

$

26,064

Share based payment expense

-

-

-

-

52

-

-

52

Net income to common shareholders

-

-

-

-

-

451

-

451

Purchases of treasury stock

-

-

(25

)

(149

)

-

-

-

(149

)

Foreign currency translation

-

-

-

-

-

-

(59

)

(59

)

Balances at June 30, 2019

6,472

$

65

(1,293

)

$

(6,266

)

$

88,371

$

(55,687

)

$

(124

)

$

26,359

Share based payment expense

-

-

-

-

49

-

-

49

Net loss to common shareholders

-

-

-

-

-

(166

)

-

(166

)

Purchases of treasury stock

-

-

(9

)

(54

)

-

-

-

(54

)

Foreign currency translation

-

-

-

-

-

-

(76

)

(76

)

Balances at September 30, 2019

6,472

$

65

(1,302

)

$

(6,320

)

$

88,420

$

(55,853

)

$

(200

)

$

26,112

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


WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
For the Three and Nine Months Ended September 30, 2019 and 2018
(In thousands)
(Unaudited)

Nine Months Ended
September 30,

2019

2018

Cash flows from operating activities:

Net income:

$

176

$

797

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

Amortization and depreciation

885

727

Share based payment expense

165

280

Deferred income taxes

23

13

Bad debt (recovery) expense

(1

)

70

Changes in operating assets and liabilities:

Accounts receivable

(181

)

(296

)

Prepaid expenses and other current assets

(77

)

(107

)

Right of use assets-operating

802

-

Other assets

1

20

Due to models

31

(635

)

Lease liabilities-operating

(854

)

-

Accounts payable and accrued liabilities

(1,038

)

862

Net cash (used in) provided by operating activities

(68

)

1,731

Cash flows used in investing activities:

Purchases of property and equipment

(304

)

(293

)

Net cash used in investing activities

(304

)

(293

)

Cash flows (used in) provided by financing activities:

Purchases of treasury stock

(227

)

(788

)

Payments on finance leases

(83

)

-

Proceeds from term loan

-

700

Repayment of term loan

(438

)

(390

)

Net cash used in financing activities

(748

)

(478

)

Foreign currency effect on cash flows:

(107

)

(56

)

Net change in cash and cash equivalents:

(1,227

)

904

Cash and cash equivalents, beginning of period

6,748

4,256

Cash and cash equivalents, end of period

$

5,521

$

5,160

Supplemental disclosures of cash flow information:

Cash paid for interest

$

88

$

71

Cash paid (refund) of income taxes

$

5

$

(10

)

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-Q Filing

Additional information concerning the Company's results of operations and financial position is included in the Company's Form 10-Q for the third quarter ended September 30, 2019 filed with the Securities and Exchange Commission on November 12, 2019.

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