GlobeNewswire Inc | May 13, 2021 04:05PM EDT

May 13, 2021

75% Q1 net revenue growth year-over-year reinforces outlook for 2021

Fully integrated business model driving revenue growth and profitability

COS COB, Conn., May 13, 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 first quarter ended March 31, 2021.

Our first quarter results are a good start on our growth plans for the year, and weve made outstanding progress on our strategy so far in 2021, said William J. Rouhana Jr., chairman and chief executive officer of Chicken Soup for the Soul Entertainment. Our performance is starting to show the power of our now fully integrated business model focused on delivering original and exclusive content to our growing AVOD networks, reflected in strong growth in net revenue and EBITDA.

In just over five months time, we will have significantly expanded our content library while greatly expanding our capabilities to create and deliver new content, Rouhana continued. Weve also announced a new company-branded AVOD network and our new television production unit, Halcyon, and continued to aggressively implement our viewership growth strategy, which will include the launch of an enhanced user experience and platform over the summer. At the same time, we continue to grow our fully-owned library through our strong pipeline of original and exclusive content. With these developments in place, 2021 is shaping up to be a game-changing year for Chicken Soup for the Soul Entertainment.

First Quarter 2021 Financial Summary

-- Net revenue of $23.2 million, compared to $20.2 million in the seasonally high fourth quarter of 2020, and $13.2 million in the year-ago period. The 75% year-over-year growth was driven by strong performances of original content releases and international and advertising sales. -- Net loss of $9.2 million compared to a net loss of $10.1 million in the fourth quarter of 2020, and a net loss of $11.4 million in the year-ago period; $6.9 million net loss before preferred dividends, compared to $8.9 million net loss in the fourth quarter 2020, and $10.5 million net loss in the year-ago period. -- Adjusted EBITDA of $4.6 million, compared to $2.8 million in the fourth quarter 2020, and $2.0 million in the year-ago period. The 124% year-over-year growth was enhanced by efficiencies and cost savings associated with the fully integrated business model.

Recent Business Highlights

-- First company produced film, Willys Wonderland, was ranked as the #1 horror movie on Amazon for a period in the first quarter. -- Crackle Plus viewership in March 2021 reached its highest level since the shelter-in-place peak of April 2020. -- Announced the largest content deal in company history with the pending acquisition of the Sonar Entertainment assets, which, when consummated, will add IP rights to 372 television series with 1,825 episodes and over 700 films, to an already-robust library. -- Presented a diverse new slate of original and exclusive content at NewFronts, which includes numerous exciting, star-studded titles. -- Announced Halcyon, a new television studio to be headed by David Ellender, which will grow the high-quality content pipeline. -- Announced launch of Chicken Soup for the Soul AVOD network that aligns with the company brand and mission.

Gross profit for the quarter ended March 31, 2021 was $7.0 million, or 30% of net revenue, compared to $5.9 million in the fourth quarter of 2020, or 29% of net revenue, and compared to $3.3 million, or 25% of net revenue for the year-ago period.

Operating loss for the quarter ended March 31, 2021 was $5.8 million compared to an operating loss of $9.9 million in the fourth quarter 2020, and $10.0 million in the year-ago period.

Net loss was $9.2 million, or $0.67 per share, compared to a net loss of $10.1 million, or $0.79 per share, in the fourth quarter 2020, and a net loss of $11.4 million, or $0.95 per share in the prior-year period. Excluding preferred dividends, the net loss in the first quarter of 2021 would have been $6.9 million, or $0.51 per share, compared to net loss of $10.5 million, or $0.87 per share last year.

Adjusted EBITDA for the quarter ended March 31, 2021 was $4.6 million, compared to $2.8 million in the fourth quarter 2020, and $2.0 million in the same period last year.

As of March 31, 2021, the company had $24.6 million of cash and cash equivalents compared to $14.7 million as of December 31, 2020, and outstanding debt of $31.2 million as of March 31, 2021 compared to $33.6 million as of December 31, 2020.

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: Thursday, May 13, 2021, 4:30 p.m. ET. -- Toll-free: (833) 832-5128 -- International: (484) 747-6583 -- Conference ID: 9352518 -- 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: 9352518

ABOUT CHICKEN SOUP FOR THE SOUL ENTERTAINMENTChicken Soup for the Soul Entertainment, Inc. (Nasdaq: CSSE) operates streaming video-on-demand networks (VOD). The company owns Crackle Plus, 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 subsidiary and produces original long and short-form content through Landmark Studio Group, Chicken Soup for the Soul Unscripted, APlus.com, and Halcyon Television. 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 MeasuresThe 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 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 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 March 31, December 31, 2021 2020 (unaudited) ASSETS Cash and cash equivalents $ 24,569,875 $ 14,732,726 Accounts receivable, net of allowancefor doubtful accounts of $821,070, 26,854,738 25,996,947 and $1,035,643, respectivelyPrepaid expenses and other current 1,612,155 1,382,502 assetsGoodwill 21,448,106 21,448,106 Indefinite lived intangible assets 12,163,943 12,163,943 Intangible assets, net 18,165,038 19,370,490 Film library, net 38,709,850 35,239,135 Due from affiliated companies 4,389,378 5,648,652 Programming costs and rights, net 13,841,702 15,781,183 Other assets, net 4,476,459 4,517,102 Total assets $ 166,231,244 $ 156,280,786 LIABILITIES AND EQUITY 9.50% Notes due 2025, net of deferredissuance costs of $1,699,544 and $ 31,196,356 $ 31,097,467 $1,798,433, respectivelyNotes payable under revolving credit ? 2,500,000 facilityFilm acquisition advance 6,195,174 8,659,136 Accounts payable and accrued other 20,884,463 21,394,957 expensesFilm library acquisition obligations 14,854,918 8,616,562 Programming obligations 2,804,125 4,697,316 Accrued participation costs 7,529,515 12,535,651 Other liabilities 2,767,892 1,677,906 Total liabilities 86,232,443 91,178,995 Equity Stockholders' Equity: Series A cumulative redeemableperpetual preferred stock, $.0001 parvalue, liquidation preference of$25.00 per share, 10,000,000 sharesauthorized; 3,698,318 and 2,098,318 370 210 shares issued and outstanding,respectively; redemption value of$92,457,950 and $52,457,950,respectivelyClass A common stock, $.0001 parvalue, 70,000,000 shares authorized;6,400,766 and 5,157,053 shares 640 516 issued, 6,326,531 and 5,082,818shares outstanding, respectivelyClass B common stock, $.0001 parvalue, 20,000,000 shares authorized; 766 766 7,654,506 shares issued andoutstanding, respectivelyAdditional paid-in capital 166,865,655 106,425,548 Deficit (86,235,901 ) (77,247,982 )Class A common stock held in (632,729 ) (632,729 )treasury, at cost (74,235 shares)Total stockholders? equity 79,998,801 28,546,329 Subsidiary convertible preferred ? 36,350,000 stockNoncontrolling interests ? 205,462 Total equity 79,998,801 65,101,791 Total liabilities and equity $ 166,231,244 $ 156,280,786

Chicken Soup for the Soul Entertainment,Inc.Condensed Consolidated Statements of Operations(unaudited) Three Months Ended March 31, 2021 2020Net revenue $ 23,196,842 $ 13,244,073 Cost of revenue 16,242,934 9,910,390 Gross profit 6,953,908 3,333,683 Operating expenses: Selling, general and administrative 9,234,819 6,839,897 Amortization and depreciation 1,238,027 5,204,728 Management and license fees 2,319,684 1,324,407 Total operating expenses 12,792,530 13,369,032 Operating loss (5,838,622 ) (10,035,349 )Interest expense 1,087,944 329,125 Acquisition-related costs ? 98,926 Other non-operating income, net (570 ) (6,438 )Loss before income taxes and preferred (6,925,996 ) (10,456,962 )dividendsProvision for income taxes 14,000 49,000 Net loss before noncontrolling interests and (6,939,996 ) (10,505,962 )preferred dividendsNet loss attributable to noncontrolling ? (52,854 )interestsNet loss attributable to Chicken Soup for (6,939,996 ) (10,453,108 )the Soul Entertainment, Inc.Less: preferred dividends 2,253,385 974,272 Net loss available to common stockholders $ (9,193,381 ) $ (11,427,380 )Net loss per common share: Basic and diluted $ (0.67 ) $ (0.95 )

Chicken Soup for the Soul Entertainment, Inc.Adjusted EBITDA Three Months Ended March 31, 2021 2020 Net loss available to common stockholders $ (9,193,381 ) $ (11,427,380 )Preferred dividends 2,253,385 974,272 Provision for income taxes 14,000 49,000 Other taxes 84,493 53,411 Interest expense 1,087,944 329,125 Film library and program rights 8,005,963 2,494,832 amortizationShare-based compensation expense 346,773 244,835 Acquisition-related costs ? 98,926 Reserve for bad debt and video returns 1,304,635 1,721,595 Amortization and depreciation 1,621,360 5,204,728 Other non-operating income, net (570 ) (6,438 )Transitional expenses ? 2,113,469 All other nonrecurring costs 840,050 186,948 Adjusted EBITDA $ 4,562,004 $ 2,037,323