VANCOUVER, British Columbia, Aug. 28, 2019 (GLOBE NEWSWIRE) -- WOW! Unlimited Media Inc. (“WOW!” or the “Company”) (TSX-V: WOW; OTCQX: WOWMF) announced its results for the three and six months ended June 30, 2019.
The Company completed the second quarter of 2019 with revenue of $26.6 million, as compared to $16.3 million for the second quarter of 2018.
Q2 2019 HIGHLIGHTS
- During the quarter, WOW! commenced production on a major animated series for a leading US studio with a committed 2+ year production and delivery schedule
Strong production pipeline
- As of June 30, 2019, WOW!’s animation production backlog was $71.9 million; Animation Production segment revenue was $6.9 million for the three months ended June 30, 2019
Networks & Platforms
- On August 30, 2019, WOW! will officially own the Category B Canadian specialty service license acquired under an agreement with its strategic investor, Bell Media. Management is exploring strategic partnerships to structure a financially attractive business plan for a potential WOW!-branded linear channel
- On June 8, 2019, the Company announced that a key channel affiliate, ADME (CY), Ltd. (“ADME”), would repatriate certain of its YouTube channels from Frederator; Frederator would continue to distribute and manage certain other ADME channels and it will have the opportunity to distribute and manage certain new ADME YouTube channels as they are developed. As of June 30, 2019, ADME channels represented approximately 85% of overall viewership on the Channel Frederator Network. Pursuant to the agreement, on July 31, 2019, Frederator transferred to ADME channels representing approximately 40% of the viewership of the ADME owned channels. While the ADME-owned channels contribute a significant portion of the Networks and Platforms revenues, they do not represent a significant portion of the Company’s overall profitability. Further, given the nature of their content i.e. crafts and hobbies, the loss of ADME channels do not affect the Company's core objectives on YouTube - those of finding great animation talent and IP, and using the platform to build audiences for its animated shorts and series.
- Channel Frederator Network had 3,129 channels as at June 30, 2019
Financial highlights & guidance
- Revenue for the three months ended June 30, 2019 was $26.6 million
- Operating EBITDA for the three months ended June 30, 2019 was ($0.6) million
- The Company maintains its revised fiscal 2019 guidance as presented in the June 7, 2019, press release which indicated revenues in excess of $85 million and Operating EBITDA between $2.4-$3.4 million
OVERVIEW OF RESULTS
|For the three months ended||For the six months ended|
|$000's, except per share amounts||June 30, |
|June 30, |
|June 30, |
|June 30, |
|Operating loss per share|
|- basic and diluted||$||(0.07||)||$||(0.09||)||$||(0.18||)||$||(0.10||)|
|Net loss per share|
|- basic and diluted||$||(0.07||)||$||(0.08||)||$||(0.19||)||$||(0.09||)|
|Weighted average number of shares outstanding:|
|- basic and diluted||31,963,696||25,524,434||31,079,549||25,352,474|
|1 Operating EBITDA and operating loss include amortization of investment in film and television programming. Refer to discussion under Consolidated Results for a reconciliation of Operating EBITDA and Operating loss to Net loss.|
- Revenue for the three months ended June 30, 2019 was $26.6 million. This included $19.8 million generated by the Networks and Platforms segment, which continues to build viewership. Revenue for the Animation Production segment was $6.9 million for the three months ended June 30, 2019, bolstered by the continued production of the Costume Quest Christmas Special, Barbie Dreamhouse Adventures, season 2, Made by Maddie, the Octonauts specials, and Octonauts, season 5.
- Operating EBITDA was a $0.6 million loss and net loss was $2.4 million for the three months ended June 30, 2019.
“WOW! believes that the worldwide animation business will continue to expand and we are pleased that our backlog substantiates that belief. The investments that we are making to build our studio infrastructure and proprietary pipelines are yielding production efficiencies and expanding our creative capabilities going forward. We are in a strong position to benefit from the growing international demand for top-notch animation and story-telling”, reported Michael Hirsh, Chairman and Chief Executive Officer.
|For the three months ended||For the six months ended|
|$000's||June 30, |
|June 30, |
|June 30, |
|June 30, |
|Amortization of investment in film and television programming||$||293||$||936||$||657||$||1,883|
|Depreciation and amortization1||1,059||781||2,064||1,541|
|Items affecting comparability:|
|Share-based compensation expense||147||217||273||478|
|Deferred income tax recovery||–||(448||)||–||(838||)|
|1 Excludes amortization of investment in film and television programming|
Revenue and Operating EBITDA
Revenue for the three and six months ended June 30, 2019, increased by $10.3 million and $14.2 million, respectively, compared to the same periods in 2018. For the three and six months ended June 30, 2019, revenues for the Networks and Platforms segment increased by $10.8 million and $19.4 million, respectively, and revenues for the Animation Production segment decreased by $0.5 million and $5.2 million, respectively, in comparison to the same periods in 2018. The growth in revenues for the Networks and Platforms segment for the three and six months ended June 30, 2019, was driven by increased views and revenues generated by Channel Frederator Network. The decrease in revenue for the Animation Production segment for the three months ended June 30, 2019, was primarily due to a higher mix of IP production work at Frederator Studios for the three months ended June 30, 2019, as Frederator continued production of Bee & Puppy Cat, season 2 as well as Castlevania, season 3 which are both expected to be delivered late in 2019 when revenue recognition will occur. The higher mix of IP production work in progress at Frederator also contributed to the decrease in revenue for the Animation Production segment for the six months ended June 30, 2019. In addition, the Company recognized revenue from the licensing of international SVOD rights for Reboot: The Guardian Code during the six months ended June 30, 2018 which resulted in higher revenues for the six months period ending June 30, 2018 compared to 2019.
Operating EBITDA for the three and six months ended June 30, 2019, increased by $0.6 million and decreased by $2.0 million, respectively, compared to the same periods in 2018. The higher operating EBITDA for the six months ended June 30, 2018 compared to 2019 was driven by gross margin on the revenue from Reboot: The Guardian Code, as noted above. The higher operating EBITDA for the three months ended June 30, 2019 compared to the same period in 2018 was primarily as a result of decreased professional fees and corporate employee costs.
The Company will host a conference call at 8:30 a.m. Eastern Time on Thursday, August 29, 2019, featuring management's quarterly remarks and follow-up question and answer period with analysts. The conference call can be accessed live by dialing 1 (877) 825-9920 five minutes prior to the scheduled start time. The Conference ID is 5369867.
A digital recording of the call will be available for one month (until midnight Eastern Time, September 28, 2019) by dialing 1 (855) 859-2056 or (404) 537-3406 and using the Conference ID 5369867.
NON-IFRS FINANCIAL MEASURES
In addition to results reported in accordance with IFRS, the Company reports using certain non-IFRS financial measures as supplemental indicators of the Company’s financial and operating performance. These non-IFRS financial measures include operating profit or loss, operating profit or loss per share and operating EBITDA. The Company believes these supplemental financial measures reflect the Company's on-going business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in its business.
The Company defines operating profit or loss as net profit or loss excluding the impact of specified items affecting comparability, including, where applicable, share of gain or loss of equity accounted investees, other non-operational income and expenses, deferred taxes and other gains or losses. The use of the term "non-operational income and expenses" is defined by the Company as those that do not impact operating decisions taken by the Company's management and is based upon the way the Company's management evaluates the performance of the Company's business for use in the Company's internal management reports. Operating profit or loss per share is calculated using diluted weighted average shares outstanding and does not represent actual profit or loss per share attributable to shareholders. The Company believes that the disclosure of operating profit or loss and operating profit or loss per share allows investors to evaluate the operational and financial performance of the Company's ongoing business using the same evaluation measures that management uses, and is therefore a useful indicator of the Company's performance or expected performance of recurring operations.
The Company defines operating EBITDA as profit or loss net of amortization of investment in film and television programming, but before interest, taxes, depreciation and amortization, adjusted for certain items affecting comparability as specified in the calculation of operating profit or loss. Operating EBITDA is presented on a basis consistent with the Company's internal management reports. The Company discloses operating EBITDA to capture the profitability of its business before the impact of items not considered in management's evaluation of operating performance. Unless otherwise stated, the Company includes the amortization of investment in film and television programming in the calculation of operating EBITDA.
The Company defines backlog as the undiscounted value of signed agreements for production services and intellectual property (“IP”) in relation to licensing and distribution agreements for work that has not yet been performed, but for which the Company expects to recognize revenue in future periods. Backlog excludes estimates of variable consideration for transactions involving sales or usage-based royalties in exchange for licences of intellectual property. The extent of eventual revenue recognized in future periods may be materially higher or lower than this amount, depending upon factors which include, but are not limited to the following: (i) contract modifications, (ii) fluctuations in foreign exchange rates for contracts not denominated in Canadian dollars, (iii) changes to production and delivery schedules, or (iv) valuation issues in connection with the collectability of fees.
Operating profit or loss, operating profit or loss per share, operating EBITDA, and backlog do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies. The Company cautions readers to consider these non-IFRS financial measures in addition to, and not as an alternative for, measures calculated in accordance with IFRS.
This news release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "achieve", "could", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "outlook", "expect", "may", "will", "project", "should" or similar words, including negatives thereof, suggesting future outcomes.
In particular, this news release contains forward-looking statements relating to, among other things: (i) general economic conditions; (ii) future revenues to be received by WOW!; (iii) WOW!’s future business prospects and opportunities; (iv) WOW!’s ability to complete any or all of its proposed production work; and (v) the ability of the Company to raise financing in the future.
Management of the Company believes the expectations reflected in such forward-looking statements are reasonable as of the date hereof but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. Various material factors and assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Those material factors and assumptions are based on information currently available to the Company, including data from publicly available governmental sources as well as from market research and industry analysis and on assumptions based on data and knowledge of this industry which the Corporation believes to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, such data is inherently imprecise.
Forward-looking statements are not a guarantee of future performance and are subject to and involve a number of known and unknown risks and uncertainties, many of which are beyond the control of the Company, which may cause the Company's actual performance and results to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks identified in the Company's annual information form for the year ended December 31, 2017, which has been filed with the Canadian Securities Administrators and is available on www.sedar.com. Any forward-looking statements are made as of the date hereof and, except as required by law, the Company assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
About Wow Unlimited Media Inc.
WOW! Unlimited Media is creating a leading animation-focused entertainment company by producing top-end content, and building brands and audiences on the most engaging media platforms. The Company produces animation in its two established studios: Frederator Studios in Los Angeles, which has a 20-year track record; and one of Canada's largest, multi-faceted animation production studios, Mainframe Studios in Vancouver, which has a 25-year track record. The Company’s media assets include Channel Frederator Network which comprises 3,000+ channels on YouTube, as well as WOW! branded programming on Crave, Canada’s leading streaming entertainment platform, owned by Bell Media. The Company operates out of offices in Toronto, New York, Vancouver and Los Angeles. The common voting shares of the Company (the “Common Voting Shares”) and variable voting shares of the Company (the “Variable Voting Shares”) are listed on the TSX Venture Exchange (the “TSX-V”) (WOW.V) and the OTCQX Best Market (WOWMF).
Further information available at:
Contact: Bill Mitoulas, Investor Relations
Tel: (416) 479-9547