Chicken Soup for the Soul Entertainment Reports Record Q3 2019 Revenue of $17.0 Million

          First full quarter with AVOD business Crackle Plus drives record top line resultsCOS COB, Conn., Nov. 14, 2019 (GLOBE NEWSWIRE) — Chicken Soup for the Soul Entertainment, Inc. (Nasdaq: CSSE), a growing media company building advertising-supported video-on-demand (AVOD) networks and a provider of video content for all screens, today announced its financial results for the third quarter ended September 30, 2019.Third Quarter 2019 Financial HighlightsTotal revenue of $17.0 million, compared to $6.6 million in the year-ago periodNet loss of $13.3 million; with a net loss of $12.4 million before preferred dividends, compared to a net loss of $0.2 million in the year-ago period and a net income of $0.2 million before preferred dividendsAdjusted EBITDA was a loss of $0.4 million, compared to positive adjusted EBITDA of $3.4 million in the year-ago periodOnline networks, which includes Crackle, Popcornflix and Pivotshare, generated $14.4 million in revenue compared to $1.8 million in the year-ago period            Recent Business HighlightsCrackle Plus delivers solid results in first full quarterNew Crackle original series, ‘Going From Broke’ drives unprecedented engagementLaunched Landmark Studio Group in partnership with entertainment industry veteran David OzerForesight film library acquisition expands Screen Media library and enhances distribution capabilities“Our record third quarter results show the early promise of our transformation of our company into a leading AVOD network operator,” said William J. Rouhana Jr., chairman and chief executive officer of Chicken Soup for the Soul Entertainment. “Crackle Plus is performing as expected, and our new original series ‘Going From Broke’ provides initial evidence of our growing network reach and engagement potential. We are also reinventing our distribution and production business to support our networks under a capital-light model focused on innovative studio launches, library content acquisitions and sponsor-funded original productions. We already see significant positive business momentum in the fourth quarter, where we expect to see a combination of all our primary strategic pieces in place for the first time, setting the stage for potentially significant growth in 2020.”
             
Gross profit for the quarter ended September 30, 2019 was $3.2 million, or 19% of net revenue, compared to $4.0 million, or 62% of net revenue for the year-ago period. The reduction in the percentage of gross profit was a result of an increase in online networks revenue which has a lower gross profit percentage.  Operating loss for the quarter ended September 30, 2019 was $9.6 million compared to an operating income of $0.9 million for the year-ago period. The quarterly operating loss reflects certain non-cash or one-time expenses including $4.7 million in non-cash amortization, $1.6 million of transitional expenses related to the Crackle Plus joint venture, and $1.2 million in film library amortization. If such expenses were excluded from SG&A or cost of revenue, the company would have reported a quarterly operating loss of $2.1 million.  Net loss was $13.3 million, or $1.11 per share, compared to a net loss of $0.2 million, or $0.02 per share in the prior-year third quarter. Excluding preferred dividends, the net loss in the third quarter of 2019 would have been $12.4 million, or approximately $1.03 per share, compared to net income of $0.2 million, or $0.02 per share last year.Adjusted EBITDA for the quarter ended September 30, 2019 was a loss of $0.4 million, compared to $3.4 million in the same period last year.As of September 30, 2019, the company had $6.2 million of cash and cash equivalents compared to $7.2 million as of December 31, 2018, and outstanding debt of $16.0 million as of September 30, 2019 compared to $7.9 million as of December 31, 2018.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 InformationDate, Time: Thursday, November 14, 2019, 4:30 p.m. ET.Toll-free: (833) 832-5128International: (484) 747-6583Conference ID: 4392318A live webcast is available at http://ir.cssentertainment.com/ under the “News & Events” tabConference Call Replay InformationToll-free: (855) 859-2056International: (404) 537-3406Reference ID: 4392318ABOUT CHICKEN SOUP FOR THE SOUL ENTERTAINMENT
Chicken Soup for the Soul Entertainment, Inc. (Nadsaq: CSSE) is a growing media company building and acquiring streaming video-on-demand networks (VOD) that provide content for all screens. The company owns a majority stake in Crackle Plus, a joint venture with Sony Pictures Television, 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 long and short-form original content through Landmark Studio Group, its Chicken Soup for the Soul Originals division and through APlus.com. 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 Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2019 under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Reconciliation of Unaudited Historical Results to Adjusted EBITDA.”FORWARD-LOOKING STATEMENTSThis 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 April 1, 2019, as amended April 30, 2019 and June 4, 2019) 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.Tables Follow
 
Chicken Soup for the Soul Entertainment, Inc.
Condensed Consolidated Balance Sheets