SILVER SPRING, Md.,
March 23, 2017 /PRNewswire/
-- RLJ Entertainment, Inc.
("RLJ Entertainment," "RLJE" or "the Company") (NASDAQ: RLJE),
today announced financial results for the fiscal year ended
December 31, 2016.
Highlights for the year ended December 31, 2016 and
other significant events are as follows:
- Our Digital Channels paying subscribers increased by 125.1%
from 203,000 to 457,000 in 2016.
- Revenues from our Digital Channels segment increased 115.6% to
$16.3 million. After costs of sales
and operating expenses, our Digital Channels segment contributed
$6.3 million of income from
continuing operations for the current period compared to a loss
from continuing operations of $1.5
million for the same period last year.
- Gross profit increased by 18.4% to $26.4
million and gross margin increased to 32.9% for the year
ended December 31, 2016 compared to
22.5% for the year ended December 31,
2015. The improvements in gross profit and gross margin are
primarily attributable to the growth of our proprietary Digital
Channels, which deliver a higher profit margin.
- Net loss was $21.9 million for
the year compared to a net loss last year of $55.0 million. The improvement is primarily
driven by a goodwill impairment charge recognized last year with no
similar impairments this year.
- Adjusted EBITDA improved by $5.1 million
to $13.1 million for 2016. This primarily reflects improved
operating results due to increased gross margins attributable to
our Digital Channels segment, increased equity earnings from
affiliate (Agatha Christie Ltd.) and reduced selling expenses.
- In October 2016 and January 2017, we refinanced our senior debt and
repaid our subordinated notes, respectively. After repayment of our
prior loans and expenses, we received net proceeds of $7.4 million. Our new senior loan facility
improves our debt servicing payment by lowering our cash interest
rate by 800 basis points and requiring no principal payments until
June 2019.
Highlights of key goals for 2017 and beyond:
- Increase investment in unique, exclusive and high quality
content to strengthen and expand programming of our Digital
Channels, and increase the content pipeline of our complimentary IP
licensing and wholesale business units.
- Increase our 2017 total revenue and operating margins.
- Expand the platform and geographical footprint of our Digital
Channels.
- Grow Acorn TV and UMC subscriber base to one million within the
next 24 months.
Robert L. Johnson, Chairman of
RLJ Entertainment, stated "2016 has been a transformational
year for RLJ Entertainment both from a strategic and operational
initiative. We have not only developed our digital channels, Acorn
TV and UMC, to meet the growing trend of consumers in cord cutting
by cable and satellite subscribers, we have also strategically
aligned ourselves with AMC Network to further propel RLJE's growth.
We see the next 12 to 24 months as instrumental to enhance our
unique Acorn TV and UMC brands to serve an audience that demands
our carefully curated programs."
"In 2016, we made excellent progress in our execution of our
digital channel growth strategy. We doubled our subscriber base
year over year and recently achieved a significant milestone when
we crossed half a million subscribers at the end of February 2017. By significantly increasing our
investments in high quality, original and exclusive content,
enhancing our marketing efforts and expanding our platform and
territory footprint, in 2017 we expect to grow our top line revenue
and continue to improve our operational margins. We see the one
million subscriber target to be achievable in the next 24 months,"
added Miguel Penella,
Chief Executive Officer of RLJ Entertainment.
Nazir Rostom, Chief Financial
Officer of RLJ Entertainment, said "In 2016, we improved our
balance sheet by refinancing and lowering our cost of debt, adding
more liquidity, and increasing our shareholder's equity. With a
stronger balance sheet and improved financial position, we are
increasing our investment in our fast growing Digital Channels
which will further improve our 2017 financial performance."
Conference Call Information. RLJE will hold a
conference call on Thursday, March 23,
2017, at 11:30 a.m. ET to
discuss its results for the year ended December 31, 2016. To participate in the
live conference call, interested parties may dial +1.844.348.1685
(+1.213.358.0890 outside the U.S. and Canada) and provide conference ID number
85261255, or via webcast at RLJEntertainment.com. The
webcast will be archived in the investors section of RLJE's
website.
RLJ Entertainment, Inc. (NASDAQ: RLJE) is an
entertainment content distribution company in primarily
North America, the United Kingdom, and Australia. RLJ Entertainment's titles are
distributed in multiple formats including broadcast television
(including satellite and cable), theatrical and non-theatrical,
DVD, Blu-Ray, digital download, and digital streaming.
With its popular OTT branded channels, Acorn TV (British TV)
and UMC (Urban Movie Channel), RLJ Entertainment targets distinct,
premium audiences and Urban niche audiences. The company grows its
proprietary digital channels through development, acquisition, and
distribution of exclusive rights of program franchises and feature
film content.
Through Acorn Media Enterprises, its UK development arm, RLJE
owns all rights to the hit UK mystery series Foyle's War and is
developing new programs. RLJE owns 64% of Agatha Christie Limited,
which manages the intellectual property and publishing rights to
some of the greatest works of mystery fiction, including stories of
the iconic sleuths Miss Marple and
Poirot.
For more information, please visit
RLJEntertainment.com, Acorn.TV, and
UrbanMovieChannel.com.
Forward Looking Statements
This press release may include "forward looking statements"
within the meaning of the "safe harbor" provisions of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Other than
statements of historical fact, all statements made in this press
release are forward-looking, including, but not limited to,
statements regarding goals, industry prospects, future results of
operations or financial position, and statements of our intent,
belief and current expectations about our strategic direction,
prospective and future results and condition. In some cases,
forward-looking statements may be identified by words such as
"will," "should," "could," "may," "might," "expect," "plan,"
"possible," "potential," "predict," "anticipate," "believe,"
"estimate," "continue," "future," "intend," "project" or similar
words.
Forward-looking statements involve risks and uncertainties
that are inherently difficult to predict, which could cause actual
outcomes and results to differ materially from our expectations,
forecasts and assumptions. Factors that might cause such
differences include, but are not limited to:
- Our financial performance, including our ability to achieve
improved results from operations and improved earnings before
income tax, depreciation and amortization, non-cash royalty
expense, interest expense, non-cash exchange gains and losses on
intercompany accounts, goodwill impairments, severance costs,
change in fair value of stock warrants and other derivatives,
stock-based compensation, basis-difference amortization in equity
earnings of affiliate and dividends received from affiliate in
excess of equity earnings of affiliate (or Adjusted
EBITDA);
- Our expectation that revenues and financial performance of
our digital channels will continue to grow and have a positive
effect on our liquidity, cash flows and operating results;
- The effects of limited cash liquidity on operational
performance;
- Our obligations under the credit agreement;
- Our ability to satisfy financial ratios;
- Our ability to generate sufficient cash flows from operating
activities;
- Our ability to fund planned capital expenditures and
development efforts;
- Our inability to gauge and predict the commercial success of
our programming;
- Our ability to maintain relationships with customers,
employees and suppliers, including our ability to enter into
revised payment plans, when necessary, with our vendors that are
acceptable to all parties;
- Our ability to realize anticipated synergies and other
efficiencies in connection with the AMC transaction;
- Delays in the release of new titles or other
content;
- The effects of disruptions in our supply chain;
- The loss of key personnel;
- Our public securities' limited liquidity and trading;
or
- Our ability to meet the NASDAQ Capital Market continuing
listing standards and maintain our listing.
You should carefully consider and evaluate all of the
information in this press release, including the risk factors
listed above and in our Form 10-K filed with the Securities
Exchange Commission (or SEC), including "Item 1A. Risk
Factors." If any of these risks occur, our business, results
of operations, and financial condition could be harmed, the price
of our common stock could decline and you may lose all or part of
your investment, and future events and circumstances could differ
significantly from those anticipated in the forward-looking
statements contained in this press release. Unless otherwise
required by law, we undertake no obligation to release publicly any
updates or revisions to any such forward-looking statements that
may reflect events or circumstances occurring after the date of
this press release.
Readers are referred to the most recent reports filed with
the SEC by RLJ Entertainment. Readers are cautioned not to place
undue reliance upon any forward-looking statements, which speak
only as of the date made, and we undertake no obligation to update
or revise the forward-looking statements, whether as a result of
new information, future events or otherwise.
Contact:
Traci Otey
Blunt, 301-830-6204
RLJ Entertainment, Inc.
tblunt@rljentertainment.com
RLJ ENTERTAINMENT,
INC.
|
Consolidated
Balance Sheets
|
(Unaudited)
|
As of December 31,
2016 and 2015
|
|
|
|
December
31,
|
|
(In thousands,
except share data)
|
|
2016
|
|
|
2015
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
7,834
|
|
|
$
|
4,530
|
|
Accounts receivable,
net
|
|
|
19,569
|
|
|
|
23,886
|
|
Inventories,
net
|
|
|
6,215
|
|
|
|
8,325
|
|
Investments in
content, net
|
|
|
60,737
|
|
|
|
60,407
|
|
Prepaid expenses and
other assets
|
|
|
798
|
|
|
|
833
|
|
Property, equipment
and improvements, net
|
|
|
1,336
|
|
|
|
1,815
|
|
Equity investment in
affiliate
|
|
|
16,491
|
|
|
|
20,098
|
|
Other intangible
assets, net
|
|
|
9,309
|
|
|
|
9,233
|
|
Goodwill
|
|
|
13,691
|
|
|
|
14,631
|
|
Assets of discontinued
operations
|
|
|
—
|
|
|
|
6,870
|
|
Total
assets
|
|
$
|
135,980
|
|
|
$
|
150,628
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
11,995
|
|
|
$
|
16,370
|
|
Accrued royalties and
distribution fees
|
|
|
55,614
|
|
|
|
51,552
|
|
Deferred
revenue
|
|
|
2,152
|
|
|
|
1,203
|
|
Debt, net of discounts
and debt issuance costs
|
|
|
42,053
|
|
|
|
61,250
|
|
Deferred tax
liability
|
|
|
1,715
|
|
|
|
1,839
|
|
Stock warrant and
other derivative liabilities
|
|
|
9,763
|
|
|
|
10,678
|
|
Liabilities of
discontinued operations
|
|
|
—
|
|
|
|
7,560
|
|
Total
liabilities
|
|
|
123,292
|
|
|
|
150,452
|
|
Commitments and
contingencies (see Note 21)
|
|
|
|
|
|
|
|
|
Redeemable convertible
preferred stock
|
|
|
—
|
|
|
|
21,346
|
|
Shareholders' Equity
(Deficit):
|
|
|
|
|
|
|
|
|
Redeemable convertible
preferred stock, $0.001 par value, 1,000,000 shares
authorized; 31,046
shares issued and 30,198 shares outstanding at December
31, 2016 and
31,046 shares issued and outstanding at December 31, 2015;
liquidation preference of $34,366 at December
31, 2016 and $32,617 at December 31, 2015
|
|
|
38,708
|
|
|
|
—
|
|
Common stock, $0.001
par value, 250,000,000 shares authorized, 5,240,085 shares
issued and outstanding at December 31, 2016 and
4,717,324 shares
issued and outstanding at December 31,
2015
|
|
|
5
|
|
|
|
5
|
|
Additional paid-in
capital
|
|
|
106,059
|
|
|
|
85,400
|
|
Accumulated
deficit
|
|
|
(127,388)
|
|
|
|
(105,514)
|
|
Accumulated other
comprehensive loss
|
|
|
(4,696)
|
|
|
|
(1,061)
|
|
Total shareholders'
equity (deficit)
|
|
|
12,688
|
|
|
|
(21,170)
|
|
Total liabilities and
shareholders' equity (deficit)
|
|
$
|
135,980
|
|
|
$
|
150,628
|
|
RLJ ENTERTAINMENT,
INC.
|
Consolidated
Statements of Operations
|
(Unaudited)
|
Years Ended December
31, 2016 and 2015
|
|
|
|
Years Ended
December 31,
|
|
(In thousands,
except per share data)
|
|
2016
|
|
|
2015
|
|
Revenues
|
|
$
|
80,238
|
|
|
$
|
98,970
|
|
Cost of
sales
|
|
|
|
|
|
|
|
|
Content amortization
and royalties
|
|
|
36,946
|
|
|
|
54,030
|
|
Manufacturing and
fulfillment
|
|
|
16,901
|
|
|
|
22,656
|
|
Total
cost of sales
|
|
|
53,847
|
|
|
|
76,686
|
|
Gross
profit
|
|
|
26,391
|
|
|
|
22,284
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
9,298
|
|
|
|
10,915
|
|
General and
administrative expenses
|
|
|
17,841
|
|
|
|
17,746
|
|
Depreciation and
amortization
|
|
|
2,957
|
|
|
|
4,137
|
|
Goodwill
impairment
|
|
|
—
|
|
|
|
30,260
|
|
Total operating
expenses
|
|
|
30,096
|
|
|
|
63,058
|
|
LOSS FROM
CONTINUING OPERATIONS
|
|
|
(3,705)
|
|
|
|
(40,774)
|
|
|
|
|
|
|
|
|
|
|
Equity earnings of
affiliate
|
|
|
3,078
|
|
|
|
2,217
|
|
Interest expense,
net
|
|
|
(8,400)
|
|
|
|
(9,968)
|
|
Change in fair value
of stock warrants and other derivatives
|
|
|
(4,573)
|
|
|
|
1,373
|
|
Loss on
extinguishment of debt
|
|
|
(3,549)
|
|
|
|
—
|
|
Other
expense
|
|
|
(1,293)
|
|
|
|
(1,402)
|
|
LOSS FROM
CONTINUING OPERATIONS
BEFORE PROVISION FOR INCOME TAXES
|
|
|
(18,442)
|
|
|
|
(48,554)
|
|
Provision for income
taxes
|
|
|
(155)
|
|
|
|
(165)
|
|
LOSS FROM
CONTINUING OPERATIONS,
NET
OF INCOME TAXES
|
|
|
(18,597)
|
|
|
|
(48,719)
|
|
LOSS FROM
DISCONTINUED OPERATIONS,
NET
OF INCOME TAXES
|
|
|
(3,277)
|
|
|
|
(6,261)
|
|
NET
LOSS
|
|
|
(21,874)
|
|
|
|
(54,980)
|
|
Accretion on
preferred stock
|
|
|
(4,301)
|
|
|
|
(2,626)
|
|
NET LOSS
ATTRIBUTABLE TO COMMON
SHAREHOLDERS
|
|
$
|
(26,175)
|
|
|
$
|
(57,606)
|
|
Net loss per common
share attributable to common shareholders:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
(4.97)
|
|
|
$
|
(12.08)
|
|
Discontinued
operations
|
|
|
(0.72)
|
|
|
|
(1.47)
|
|
Basic and diluted net
loss per common share attributable to
common shareholders
|
|
$
|
(5.69)
|
|
|
$
|
(13.55)
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
|
4,603
|
|
|
|
4,251
|
|
RLJ ENTERTAINMENT, INC.
UNAUDITED
Adjusted EBITDA
Years Ended December
31, 2016 and 2015
We define "Adjusted EBITDA" as earnings before income tax,
depreciation, amortization, non-cash royalty expense, interest
expense, non-cash exchange gains and losses on intercompany
accounts, goodwill impairments, severance costs, change in fair
value of stock warrants and other derivatives, stock-based
compensation, basis-difference amortization in equity earnings of
affiliate and dividends received from affiliate in excess of equity
earnings of affiliate. Management believes Adjusted
EBITDA to be a meaningful indicator of our performance that
provides useful information to investors regarding our financial
condition and results of operations because it removes material
non-cash items that allows investors to analyze the operating
performance of the business using the same metric management
uses. The exclusion of non-cash items better reflects our
ability to make investments in the business and meet
obligations. Presentation of Adjusted EBITDA is a non-GAAP
financial measure commonly used in the entertainment industry and
by financial analysts and others who follow the industry to measure
operating performance. Management uses this measure to assess
operating results and performance of our business, perform
analytical comparisons, identify strategies to improve performance
and allocate resources to our business segments. While management
considers Adjusted EBITDA to be an important measure of comparative
operating performance, it should be considered in addition to, but
not as a substitute for, net income and other measures of financial
performance reported in accordance with U.S. GAAP. Not all
companies calculate Adjusted EBITDA in the same manner and the
measure, as presented, may not be comparable to similarly-titled
measures presented by other companies.
The following table includes the reconciliation of our
consolidated U.S. GAAP net loss to our consolidated Adjusted
EBITDA:
|
|
Years
Ended
December
31,
|
|
(In
thousands)
|
|
2016
|
|
|
2015
|
|
Net loss
|
|
$
|
(21,874)
|
|
|
$
|
(54,980)
|
|
Interest
expense
|
|
|
8,400
|
|
|
|
9,968
|
|
Provision for income
tax
|
|
|
155
|
|
|
|
165
|
|
Depreciation and
amortization
|
|
|
2,957
|
|
|
|
4,137
|
|
Goodwill
impairment
|
|
|
—
|
|
|
|
30,260
|
|
Basis-difference
amortization in equity earnings of affiliate
|
|
|
484
|
|
|
|
546
|
|
ACL dividends in
excess of earnings
|
|
|
—
|
|
|
|
537
|
|
Change in fair value
of stock warrants and other
derivatives
|
|
|
4,573
|
|
|
|
(1,373)
|
|
Stock-based
compensation
|
|
|
1,010
|
|
|
|
302
|
|
Restructuring
|
|
|
5,938
|
|
|
|
447
|
|
Loss from discontinued
operations
|
|
|
3,277
|
|
|
|
6,261
|
|
Foreign currency
exchange loss on intercompany accounts
|
|
|
1,487
|
|
|
|
1,111
|
|
Non-cash royalty
expense
|
|
|
6,681
|
|
|
|
10,608
|
|
Adjusted
EBITDA
|
|
$
|
13,088
|
|
|
$
|
7,989
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/rlj-entertainment-reports-financial-results-for-the-fiscal-year-ended-december-31-2016-300428230.html
SOURCE RLJ Entertainment, Inc.