GlobeNewswire Inc | Aug 11, 2021 04:05PM EDT

August 11, 2021

64% Q2 Net Revenue Growth Year-Over-Year to $22.1 Million

Robust Viewership Growth Driven by Distribution Touchpoint Expansion

Strategic Progress on Key International Expansion Initiatives

COS COB, Conn., Aug. 11, 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 second quarter ended June 30, 2021.

We saw continued momentum in the second quarter. We generated solid year-over-year revenue and Adjusted EBITDA growth as we continue to deliver great original content and increase distribution touchpoints that are driving viewership gains as we expand distribution of our networks. This in turn is eliciting a strong response from advertisers, as demonstrated at the recent Upfronts, said William J. Rouhana Jr., chairman and chief executive officer of Chicken Soup for the Soul Entertainment. The second half of 2021 will be busy as we begin to capitalize on the recently completed Sonar asset acquisition; continue expanding our distribution and production activities; launch our new Chicken Soup for the Soul streaming service and roll out our new tech platforms and viewer interfaces; and accelerate our international strategy. We continue to anticipate a strong performance in 2021 as we build further on our foundation to drive long-term growth and shareholder value.

Second Quarter 2021 Financial Summary

-- Net revenue of $22.1 million, compared to $23.2 million in the first quarter of 2021, and $13.5 million in the year-ago period. The 64% year-over-year growth was driven by an increase in ad sales and licensing. -- Net loss of $11.1 million compared to a net loss of $9.2 million in the first quarter of 2021, and a net loss of $10.0 million in the year-ago period; $8.8 million net loss before preferred dividends, compared to $6.9 million net loss in the first quarter 2021, and $9.0 million net loss in the year-ago period. -- Adjusted EBITDA of $3.2 million, compared to $4.6 million in the first quarter 2021, and $2.7 million in the year-ago period. The 19% year-over-year growth was enhanced by an increase in ad sales, licensing, and Going From Brokes performance.

Recent Business Highlights

-- Upfront orders projected to increase more than 130% over last year, with significant commitments from new advertisers and larger commitments from existing advertisers. -- Closed acquisition of Sonar Entertainment assets and began integration of Sonars content into existing library and network programming strategy. -- Put key pieces in place for international expansion, including a new streaming partnership with Israel-based broadcaster Keshet Media and the acquisition of international trademarks for Crackle Plus. -- Continued to expand streaming network distribution touchpoints, helping drive meaningful viewership increases, and remain on plan to reach over 100 touchpoints by year-end. Signed agreement with Millennium Media for Screen Media to exclusively distribute 15 movies over the next three years. -- Completed work on new Crackle technology platform which will imminently launch on Vizio Smartcast televisions, and launched the new Popcornflix app on the Web, iOS, and Android with plans to roll out each of these platforms across remaining distribution touchpoints in 2021.

Gross profit for the quarter ended June 30, 2021, was $6.7 million, or 30% of net revenue, compared to $7.0 million in the first quarter of 2021, or 30% of net revenue, and compared to $0.6 million, or 4% of net revenue for the year-ago period.

Operating loss for the quarter ended June 30, 2021, was $7.8 million compared to an operating loss of $5.8 million in the first quarter 2021, and $13.1 million in the year-ago period.

Net loss was $11.1 million, or $0.79 per share, compared to a net loss of $9.2 million, or $0.67 per share, in the first quarter 2021, and a net loss of $10.0 million, or $0.83 per share in the prior-year period. Excluding preferred dividends, the net loss in the second quarter of 2021 would have been $8.8 million, or $0.63 per share, compared to net loss of $9.0 million, or $0.75 per share last year.

Adjusted EBITDA for the quarter ended June 30, 2021, was $3.2 million, compared to $4.6 million in the first quarter 2021, and $2.7 million in the same period last year.

As of June 30, 2021, the company had $18.4 million of cash and cash equivalents compared to $14.7 million as of December 31, 2020, and outstanding debt net of deferred financing costs of $48.9 million as of June 30, 2021, compared to $33.6 million as of December 31, 2020. The company completed a common stock offering in July 2021 that raised gross proceeds of $75 million.

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 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, August 11, 2021, 4:30 p.m. ET. -- Toll-free: (833) 832-5128 -- International: (484) 747-6583 -- Conference ID: 9436326 -- A live webcast and replay will be available at https://ir.cssentertainment.com/ under the News & Events tab

Conference Call Replay Information

-- Toll-free: (855) 859-2056 -- International: (404) 537-3406 -- Reference ID: 9436326

ABOUT CHICKEN SOUP FOR THE SOUL ENTERTAINMENTChicken Soup for the Soul Entertainment, Inc. (Nasdaq: CSSE) (the Company) 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 within the meaning of the federal securities laws. Forward-looking statements are statements that are not historical facts. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of management and are not predictions of actual performance. Such assumptions involve a number of known and unknown risks and uncertainties, including but not limited to our core strategy, operating income and margin, seasonality, liquidity, including cash flows from operations, available funds, and access to financing sources, free cash flows, revenues, net income, profitability, stock price volatility, future regulatory changes, price changes, the ability of the Companys content offerings to achieve market acceptance, the Companys success in retaining or recruiting officers, key employees, or directors, the ability to protect intellectual property, the ability to complete strategic acquisitions, the ability to manage growth and integrate acquired operations, the ability to pay dividends, regulatory or operational risks, and general market conditions impacting demand for the Companys services. For a more complete description of these and other risks and uncertainties, please refer the Companys Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 31, 2021, and for further information regarding our recent acquisition of the Sonar library and related assets, please see our Current Reports on Form 8-K, as amended, filed with the SEC on May 27, 2021, and July 1, 2021. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. These forward-looking statements speak only as of the date hereof and the Company expressly disclaims any obligation 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.

INVESTOR RELATIONS Taylor KrafchikEllipsisCSSE@ellipsisir.com646-776-0886

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

Chicken Soup for the Soul Entertainment, Inc.Condensed Consolidated Balance Sheets June30, December31, 2021 2020 (unaudited) ASSETS Cash and cash equivalents $ 18,404,254 $ 14,732,726 Accounts receivable, net 44,866,479 25,996,947 Prepaid expenses and other current assets 2,008,231 1,382,502 Goodwill 41,269,946 21,448,106 Indefinite lived intangible assets 12,163,943 12,163,943 Intangible assets, net 20,459,587 19,370,490 Film library, net 72,403,995 35,239,135 Due from affiliated companies 705,499 5,648,652 Programming costs and rights, net 16,916,653 15,781,183 Other assets, net 5,019,737 4,517,102 Total assets $ 234,218,324 $ 156,280,786 LIABILITIES AND EQUITY 9.50% Notes due 2025, net of deferredissuance costs of $1,600,656 and $ 31,295,244 $ 31,097,467 $1,798,433, respectivelyNotes payable under revolving credit ? 2,500,000 facilityRevolving loan 17,585,699 ? Film acquisition advance 6,130,245 8,659,136 Accounts payable and accrued other 45,500,596 21,394,957 expensesFilm library acquisition obligations 20,776,600 8,616,562 Programming obligations 1,849,375 4,697,316 Accrued participation costs 24,740,388 12,535,651 Put option obligation 11,400,000 ? Other liabilities 2,345,494 1,677,906 Total liabilities 161,623,641 91,178,995 Equity Stockholders' Equity: Series A cumulative redeemable perpetualpreferred stock, $.0001 par value,liquidation preference of $25.00 per 370 210 share, 10,000,000 shares authorized;1,599,002 shares issued and outstanding,redemption value of $39,975,050Class A common stock, $.0001 par value,70,000,000 shares authorized; 4,267,725 678 516 and 4,259,920 shares issued, 4,193,490 and4,185,685 shares outstanding, respectivelyClass B common stock, $.0001 par value,20,000,000 shares authorized; 7,813,938 766 766 shares issued and outstandingAdditional paid-in capital 170,440,677 106,425,548 Deficit (97,315,079 ) (77,247,982 )Class A common stock held in treasury, at (632,729 ) (632,729 )cost (74,235 shares)Total stockholders? equity 72,494,683 28,546,329 Subsidiary convertible preferred stock ? 36,350,000 Noncontrolling interests 100,000 205,462 Total equity 72,594,683 65,101,791 Total liabilities and equity $ 234,218,324 $ 156,280,786

Chicken Soup for the Soul Entertainment, Inc.Condensed Consolidated Statements of Operations(unaudited) Three Months Ended June30, Six Months Ended June30, 2021 2020 2021 2020Net revenue $ 22,134,934 $ 13,520,540 $ 45,331,776 $ 26,764,613 Cost of revenue 15,433,719 12,933,545 31,676,653 22,843,935 Gross profit 6,701,215 586,995 13,655,123 3,920,678 Operating expenses: Selling, general 10,964,362 7,052,776 20,199,181 13,892,673 and administrativeAmortization and 1,337,678 5,241,415 2,575,705 10,446,143 depreciationManagement and 2,213,493 1,352,054 4,533,177 2,676,461 license feesTotal operating 14,515,533 13,646,245 27,308,063 27,015,277 expensesOperating loss (7,814,318 ) (13,059,250 ) (13,652,940 ) (23,094,599 )Interest expense 1,141,044 333,903 2,228,988 663,028 Acquisition-related ? ? ? 98,926 costsOther non-operating (144,569 ) (4,331,409 ) (145,139 ) (4,337,847 )income, netLoss before incometaxes and preferred (8,810,793 ) (9,061,744 ) (15,736,789 ) (19,518,706 )dividendsProvision for 15,000 18,000 29,000 67,000 income taxesNet loss beforenoncontrolling (8,825,793 ) (9,079,744 ) (15,765,789 ) (19,585,706 )interests andpreferred dividendsNet lossattributable to ? (43,889 ) ? (96,743 )noncontrollinginterestsNet lossattributable toChicken Soup for (8,825,793 ) (9,035,855 ) (15,765,789 ) (19,488,963 )the SoulEntertainment, Inc.Less: preferred 2,253,385 974,272 4,506,770 1,948,544 dividendsNet loss availableto common $ (11,079,178 ) $ (10,010,127 ) $ (20,272,559 ) $ (21,437,507 )stockholdersNet loss per common share:Basic and diluted $ (0.79 ) $ (0.83 ) $ (1.46 ) $ (1.79 )

Chicken Soup for the Soul Entertainment, Inc.Adjusted EBITDA Three Months Ended June30, 2021 2020Net loss available to common stockholders $ (11,079,178 ) $ (10,010,127 )Preferred dividends 2,253,385 974,272 Provision for income taxes 15,000 18,000 Other taxes 103,854 51,240 Interest expense 1,141,044 333,903 Film library and program rights 6,841,349 6,407,283 amortizationShare-based compensation expense 231,844 229,273 Acquisition-related costs ? ? Reserve for bad debt and video returns 907,837 812,741 Amortization and depreciation 1,721,011 5,496,972 Other non-operating income, net (144,569 ) (4,331,409 )Transitional expenses 192,054 2,239,876 All other nonrecurring costs 967,848 469,392 Adjusted EBITDA $ 3,151,479 $ 2,691,416 Six Months Ended June30, 2021 2020Net loss available to common stockholders $ (20,272,559 ) $ (21,437,507 )Preferred dividends 4,506,770 1,948,544 Provision for income taxes 29,000 67,000 Other Taxes 188,347 104,651 Interest expense 2,228,988 663,028 Film library and program rights 13,770,016 8,902,115 amortizationShare-based compensation expense 463,688 474,108 Acquisition-related costs ? 98,926 Reserve for bad debt & video returns 1,602,049 2,534,336 Amortization and depreciation 3,342,371 10,701,700 Other non-operating income, net (145,139 ) (4,337,847 )Transitional expenses 192,054 4,353,345 All other nonrecurring costs 1,807,898 656,340 Adjusted EBITDA $ 7,713,483 $ 4,728,739