GlobeNewswire Inc | Mar 31, 2021 04:05PM EDT

March 31, 2021

COS COB, Conn., March 31, 2021 (GLOBE NEWSWIRE) -- 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 fourth quarter and full year ended December 31, 2020.

The fourth quarter capped off a very successful 2020 as we continued to deliver growth in original and exclusive content on Crackle Plus and expanded our distribution to drive viewership growth into the future, said William J. Rouhana Jr., chairman and chief executive officer of Chicken Soup for the Soul Entertainment. Our strong 2020 results set the stage for what is shaping up to be a year of transformational growth in 2021. Our Distribution and Production business grew over 200% year-over-year and Crackle has seen strong viewership increases in the first quarter with continued increases in viewership of our original and exclusive content.

We are positioning Chicken Soup for the Soul Entertainment as a pure play AVOD network operator with a rich trove of content assets, differentiated production capabilities, a deep pipeline of exciting new original and exclusive content, and viewership that we expect to continue growing throughout the year as our new distribution touchpoints deliver results. We are building momentum toward our goal of creating the best AVOD experience.

Fourth Quarter 2020 Financial Summary

-- Gross revenue of $20.2 million, compared to $20.0 million in the third quarter of 2020, and $24.8 million in the year-ago period. -- Online Networks, which include Crackle and Popcornflix, gross revenue of $10.8 million, up 35% from $8.0 million in the third quarter of 2020, and compared to $15.9 million in the year-ago period. Gross revenue included intercompany revenue share payments of $1.7 million, $1.3 million, and $1.0 million, respectively. On a comparable basis, after the deduction of $5.6 million of revenue from the since-shuttered Playstation Vue, the year-over-year gross revenue grew from $10.1 million to $10.8 million, an increase of 7%. -- Distribution and Production revenue of $11.1 million compared to $13.3 million in the third quarter of 2020, and $9.9 million in the year-ago period. -- Net loss of $10.1 million compared to a net loss of $13.0 million in the third quarter of 2020, and a net loss of $12.4 million in the year-ago period; $8.9 million net loss before preferred dividends, compared to $12.1 million net loss in the third quarter 2020, and $11.4 million net loss before preferred dividends in the year-ago period. -- Adjusted EBITDA of $2.8 million, compared to $4.2 million in the third quarter 2020, and $5.9 million in the year-ago period.

Full Year 2020 Financial Summary

-- Record gross revenue of $68.2 million, compared to $56.6 million in 2019. -- Online networks generated $35.3 million in gross revenue compared to $41.7 million in 2019. Gross revenue included intercompany revenue share payments of $5.2 million and $1.7 million, respectively. On a comparable basis, after the deduction of $0.3 million and $15.9 million of revenue from the since-shuttered Playstation Vue, the year-over-year gross revenue grew from $25.8 million to $35.0 million, an increase of 36%. -- Distribution & Production gross revenue was $38.0 million in revenue compared to $16.6 million in 2019. -- Net loss of $44.6 million compared to $35.0 million in 2019; $40.4 million net loss before preferred dividends, compared to $31.7 million net loss before preferred dividends in 2019. -- Adjusted EBITDA was $11.8 million, compared to $6.0 million in 2019.

Recent Business Highlights

-- Continued to expand pipeline of Original & Exclusive content which represented nearly 20.0% of ad impressions for the fourth quarter and 18.5% for full year 2020. -- Increased distribution of Crackle Plus AVOD networks to 41 touchpoints and expanding this initiative with plans to reach a total of 64 consumer touchpoints. -- Signed agreement for Crackle-branded button to be included on approximately 2.5 million VIZIO SmartCast TV remotes in 2021. -- Obtained 100% ownership of Crackle Plus from Sony Pictures Television, strengthening relationship and positioning company for further growth. -- Strengthened balance sheet and enhanced liquidity with additional equity and long-term debt without covenants.

Gross profit for the year ended December 31, 2020 was $14.2 million, or 21% of net revenue, compared to $14.9 million, or 27% of net revenue in 2019.

Operating loss for the year ended December 31, 2020 was $44.3 million compared to an operating loss of $26.1 million in in 2019.

Net loss for the year ended December 31, 2020 was $44.6 million, or $3.62 per share, compared to a net loss of $35.0 million, or $2.92 per share, in the prior year. Excluding preferred dividends, the net loss in 2020 was $40.4 million, or $3.29 per share, compared to net loss of $31.7 million, or $2.64 per share, in the prior year.

Adjusted EBITDA for the year ended December 31, 2020 was $11.8 million, compared to $6.0 million in 2019.

As of December 31, 2020, the company had $14.7 million of cash and cash equivalents compared to $6.4 million at December 31, 2019, and outstanding debt of $33.6 million as of December 31, 2020 compared to $20.0 million as of December 31, 2019.

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: Wednesday, March 31, 2021, 4:30 p.m. ET. -- Toll-free: (833) 832-5128 -- International: (484) 747-6583 -- Conference ID: 2587209 -- 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: 2587209

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 a majority stake in Crackle Plus, a company formed 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, Espaolflix and FrightPix. The company also acquires and distributes video content through its Screen Media subsidiaryand produces original long and short-form content throughLandmark Studio Group, its Chicken Soup for the Soul Originals division andAPlus.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 companys 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 companys 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 companys 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 companys 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 companys Annual Report on Form 10-K for the year ended December 31, 2020 under Managements 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 companys 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 KrafchikEllipsisCSSE@ellipsisir.com646-776-0886

MEDIA CONTACTKate BarretteRooneyPartners LLCkbarrette@rooneyco.com(212) 223-0561

Chicken Soup for the Soul Entertainment,Inc.Condensed Consolidated Balance Sheets December 31, December31, 2020 2019ASSETS Cash and cash equivalents $ 14,732,726 $ 6,447,402 Accounts receivable, net of allowancefor doubtful accounts of $1,035,643, 25,996,947 34,661,119 and $1,531,247, respectivelyPrepaid expenses and other current 1,382,502 1,173,223 assetsGoodwill 21,448,106 21,448,106 Indefinite lived intangible assets 12,163,943 12,163,943 Intangible assets, net 19,370,490 35,451,951 Film library, net 35,239,135 33,250,149 Due from affiliated companies 5,648,652 7,642,432 Programming costs and rights, net 15,781,183 15,113,574 Other assets, net 4,517,102 313,585 Total assets $ 156,280,786 $ 167,665,484 LIABILITIES AND EQUITY Current maturities of commercial loan $ ? $ 3,200,000 Commercial loan, net of unamortizeddeferred finance costs of $0 and ? 11,810,475 $189,525, respectively9.50% Notes due 2025, net ofunamortized deferred issuance costs 31,097,467 ? of $1,798,433 and $0, respectivelyNotes payable under revolving credit 2,500,000 5,000,000 facilityFilm acquisition advance 8,659,136 ? Accounts payable and accrued expenses 18,445,925 26,646,390 Ad representation fees payable 2,949,032 12,429,838 Film library acquisition obligations 8,616,562 5,020,600 Programming obligations 4,697,316 7,300,861 Accrued participation costs 12,535,651 5,066,512 Other liabilities 1,677,906 170,106 Total liabilities 91,178,995 76,644,782 Equity Stockholders' Equity: Series A cumulative redeemableperpetual preferred stock, $.0001 parvalue, liquidation preference of$25.00 per share, 10,000,000 sharesauthorized; 2,098,318 and 1,599,002 210 160 shares issued and outstanding,respectively; redemption value of$52,457,950 and $39,975,050,respectivelyClass A common stock, $.0001 parvalue, 70,000,000 shares authorized;5,157,053 and 4,259,920 shares 516 425 issued, 5,082,818 and 4,185,685shares outstanding, respectivelyClass B common stock, $.0001 parvalue, 20,000,000 shares authorized; 766 782 7,654,506 and 7,813,938 shares issuedand outstanding, respectivelyAdditional paid-in capital 106,425,548 87,610,030 Deficit (77,247,982 ) (32,695,629 )Class A common stock held in (632,729 ) (632,729 )treasury, at cost (74,235 shares)Total stockholders? equity 28,546,329 54,283,039 Subsidiary convertible preferred 36,350,000 36,350,000 stockNoncontrolling interests 205,462 387,663 Total equity 65,101,791 91,020,702 Total liabilities and equity $ 156,280,786 $ 167,665,484

Chicken Soup for the Soul Entertainment,Inc.Condensed Consolidated Statements of Operations Three Months Ended December 31, Year Ended December 31, 2020 2019 2020 2019 Revenue: Online networks $ 9,106,260 $ 14,899,288 $ 30,145,225 $ 40,027,289 Distribution and 11,076,002 9,922,749 38,024,797 16,577,863 ProductionTotal revenue 20,182,262 24,822,037 68,170,022 56,605,152 Less: returns and 48,330 (412,461 ) (1,813,066 ) (1,241,246 )allowancesNet revenue 20,230,592 24,409,576 66,356,956 55,363,906 Cost of revenue 14,455,033 16,854,807 52,139,819 40,423,550 Gross profit 5,775,559 7,554,769 14,217,137 14,940,356 Operating expenses: Selling, general 8,379,145 8,347,681 31,573,368 22,242,032 and administrativeAmortization and 1,268,442 7,662,143 16,291,327 13,293,279 depreciationImpairment of 3,973,878 ? 3,973,878 ? content assetsManagement and 2,023,060 2,445,297 6,635,696 5,536,390 license feesTotal operating 15,644,525 18,455,121 58,474,269 41,071,701 expensesOperating loss (9,868,966 ) (10,900,352 ) (44,257,132 ) (26,131,345 )Interest expense 899,275 327,654 2,222,106 811,017 Loss onextinguishment of ? ? 169,219 350,691 debtAcquisition-related ? 232,916 98,926 3,968,289 costsOther non-operating (1,872,913 ) (5,645 ) (6,254,205 ) (40,191 )income, netLoss before incometaxes and preferred (8,895,328 ) (11,455,277 ) (40,493,178 ) (31,221,151 )dividendsProvision for 6,000 28,000 99,000 585,000 income taxesNet loss beforenoncontrolling (8,901,328 ) (11,483,277 ) (40,592,178 ) (31,806,151 )interests andpreferred dividendsNet lossattributable to (12,323 ) (97,322 ) (182,201 ) (134,282 )noncontrollinginterestsNet lossattributable toChicken Soup for (8,889,005 ) (11,385,955 ) (40,409,977 ) (31,671,869 )the SoulEntertainment, Inc.Less: preferred 1,176,141 974,272 4,142,376 3,304,947 dividendsNet loss availableto common $ (10,065,146 ) $ (12,360,227 ) $ (44,552,353 ) $ (34,976,816 )stockholdersNet loss per common share:Basic and diluted $ (0.79 ) $ (1.03 ) $ (3.62 ) $ (2.92 )

Chicken Soup for the Soul Entertainment, Inc.Adjusted EBITDA Three Months Ended December 31, Year Ended December31, 2020 2019 2020 2019 Net loss availableto common $ (10,065,146 ) $ (12,360,227 ) $ (44,552,353 ) $ (34,976,816 )stockholdersPreferred dividends 1,176,141 974,272 4,142,376 3,304,947 Provision for 6,000 28,000 99,000 585,000 income taxesOther taxes 110,483 73,940 312,600 460,205 Interest expense 899,275 327,654 2,222,106 811,017 Film library andprogram rights 6,641,019 6,878,959 23,563,772 10,683,227 amortizationShare-basedcompensation 310,634 267,777 1,131,515 1,061,926 expenseAcquisition-related ? 232,916 98,926 3,968,289 costsExpense for baddebt and video (688,201 ) 1,428,456 3,384,584 2,669,699 returnsAmortization and 1,655,473 7,662,143 17,317,247 13,293,279 depreciationOther non-operating (1,872,913 ) (5,645 ) (6,254,205 ) (40,191 )income, netLoss onextinguishment of ? ? 169,219 350,691 debtImpairment of 3,973,878 ? 3,973,878 ? content assetsTransitional ? 629,731 4,353,345 3,505,855 expensesAll other 660,907 (287,840 ) 1,789,569 276,400 nonrecurring costsAdjusted EBITDA $ 2,807,550 $ 5,850,136 $ 11,751,579 $ 5,953,528