Net Loss to Common Stockholders Improves
44% Versus the Prior Year Quarter Based on Reduced Interest Costs
and Improved Content and Entertainment Performance
Cinedigm Corp. (NASDAQ: CIDM) today announced financial results for
the third quarter fiscal 2019, which ended December 31, 2018.
Key Third Quarter Financial
Results:
- Consolidated revenues were $14.6 million, down 21% due to the
expected decline in the legacy cinema equipment business (down
37%)
- Net loss to common stockholders reduced by $2.7 million, a 44%
improvement versus the prior year quarter based on reduced interest
costs and improved content and entertainment performance
- Total Content and Entertainment Adjusted EBITDA improved 256%
for the quarter and 77% year-to-date
Acquisitions:
- Acquired ComicBlitz, a subscription digital comic service, and
announced the acquisitions of Viewster and Viewster Anime, both
pop-culture ad-supported streaming services, which subsequently
closed in January
- These acquisitions add more than 7,100 premium film, television
and digital publishing assets to Cinedigm’s content library from
more than 70 new partners
Key Business Highlights:
- Closed content licensing deal for new OTT streaming channel
BAMBU with key partner China Lion for over 40 popular films
- Created a partnership with China International TV Corporation
to bring over 500 hours of popular Chinese content to the U.S. for
Bambu
- Completed the sale of 311 Digital Cinema Projection
Systems, which closed subsequent to quarter end
- Announced agreement with Samsung to give viewers access to
digital-first networks CONtv and DOVE CHANNEL, available on
Samsung’s TV Plus Video Service
- Launched DOVE CHANNEL on Comcast’s Xfinity X1
- Announced matchpoint™, a next-generation OTT
platform and application framework that speeds time to market while
reducing the total operating expense for channel operators and
content distributors; launched matchpoint™
subsequent to quarter end.
- Launched digital-first network CONtv on OONA Indonesia TV via
partnership with JungoTV
- Acquired North American rights to Status Media’s THE FINAL
WISH
- Acquired all North American distribution rights to festival
favorite HOLY LANDS
- Acquired Michael Franti documentary STAY HUMAN
Other Recent Key Business Achievements
Include:
- Achieved over 370% year-over-year growth in ad-supported user
base across linear and ad-supported video on demand platforms
- Accumulated an estimated 2.4 million monthly active
ad-supported viewers and 109,000 active subscribers who now enjoy
Cinedigm’s suite of entertainment networks, which deliver to
viewers across North America nearly 12,000 hours of premium film,
television and live entertainment.
- Achieved over 212% quarter-over-quarter growth in connected
television ad-requests
- Grew content library by 6,200 film and television assets – more
than 116% year-over-year
- Grew total social media footprint to 857,000 followers across
YouTube, Facebook, and Instagram
- Completed 26 channel launches across 10 new distribution
partners over the last two quarters, including Dish Network, Sling
TV, Comcast Xfinity, Samsung TV Plus, Xumo, Pluto TV, Sinclair’s
Stirr, Vizio Watch Free TV, and The Roku Channel, representing a
total addressable base of more than 126 million customers and
devices. Cinedigm’s Digital Networks are now available across over
340 million consumer devices
- Transitioned two networks, CONtv and Dove Channel, to the new
matchpoint™ platform. Using
matchpoint™ internally, Cinedigm was able to
relaunch the Dove Channel in under 3 weeks and delivered more than
20,000 hours of content to new partners at approximately 80%
reduction in OPEX in the past quarter
- Continued expanding partnership with Samsung, giving viewers
access to two more popular digital-first networks—the Asian Culture
outlet HALLYPOP in partnership with JungoTV; and the fact-focused
DOCURAMA—available now on Samsung’s TV Plus video service. HALLYPOP
and DOCURAMA joined fellow Cinedigm networks CONtv and DOVE
CHANNEL, which both launched on the TV Plus platform in November
2018
- Launched faith-based DOVE CHANNEL and the documentary-devoted
DOCURAMA on DISH as part of its customizable On Demand subscription
offerings
- Launched faith-based DOVE CHANNEL and the fandom lifestyle
network CONtv on STIRR, Sinclair Broadcast Group’s new free live
and on-demand streaming service
“We continue to rapidly increase our ad-supported user base
across a growing number of linear and ad-supported video on demand
platforms, a key measurement of the progress we are making to
position Cinedigm as an integral player in the OTT space,” said
Chris McGurk, Chairman and CEO. “We remain focused on
simultaneously growing our user base, launching new channels and
investing in technology to monetize our existing assets, expand our
addressable market and drive revenue growth.”
Jeffrey Edell, Chief Financial Officer,
commented, “The 256% improvement for the quarter in our Content and
Entertainment Adjusted EBITDA illustrates clearly how our
transformation to becoming a leading OTT and streaming company is
coming to fruition. We look forward to continued success in this
area.”
Gary Loffredo, General Counsel and President of Cinema Equipment
Business, added, “Our legacy cinema equipment business continues to
run-off as expected as we transition towards a higher growth,
higher margin portfolio of OTT revenue sources. Subsequent to the
third fiscal quarter we completed the sale of 311 digital
cinema projection systems bringing the total number of systems sold
to date to 328. As previously announced, we are in the process
of selecting an advisory firm with expertise in this area to
help monetize the remaining available systems and expect
to announce more sales in the coming months.”
Financial Summary
Revenue
Revenue for the three months ended December 31,
2018 was $14.6 million, compared to $18.5 million for the year ago
period. This decrease was driven by the expected lower revenue from
virtual print fees (“VPF”) in our legacy business, which are earned
when movies distributed by studios are displayed on screens
utilizing the Company’s systems that are installed in movie
theatres. The Company continues to shift its strategy toward
building a portfolio of revenue streams in the OTT business as the
cinema equipment business winds down.
Direct Operating Expenses
Direct operating expenses for the third quarter
of fiscal 2019 decreased by 18% to $5.2 million compared to $6.4
million for the year ago period. The decrease was primarily due to
a reduction in content advance amortization in the Company’s
Content & Entertainment business segment.
Selling, General and Administrative
Expenses
Selling, general and administrative expenses
decreased by $2.8 million, or 31%, to $6.4 million for the three
months ended December 31, 2018 compared to $9.3 million for the
three months ended December 31, 2017.
Interest Expense, Net
Net interest expense decreased by $0.6 million,
or 18%, to $2.6 million for the three months ended December 31,
2018 compared to $3.1 million for the three months ended December
31, 2017. The decrease was primarily due to lower interest expense
on a lower outstanding debt balance compared to the third quarter
of fiscal 2018.
Net Income / (loss)
For the three months ended December 31, 2018, the Company had a
net loss of $3.2 million, a 45% improvement versus the prior year
quarter based on reduced interest costs and improved content and
entertainment performance, and after giving effect to preferred
stock dividends of $0.1 million, a net loss to common stockholders
of $3.3 million or ($0.09) per basic and diluted share based on a
weighted average of 38,033,756 shares outstanding. In comparison,
for the three months ended December 31, 2017, the Company had a net
loss of $5.9 million, and after giving effect to preferred stock
dividends of $0.1 million, a net loss available to common
stockholders of $6.0 million or ($0.20) per basic and diluted share
based on a weighted average of 29,389,017 shares outstanding.
Adjusted EBITDA
Adjusted EBITDA decreased by $1.9 million, or
34%, to $3.6 million for the three months ended December 31, 2018
compared to $5.5 million for the three months ended December 31,
2017. The decrease was due to the expected cinema equipment VPF
decline in the legacy business, which was partially offset by a
256% gain in the content and entertainment business.
Adjusted EBITDA is defined by the Company for the
periods presented to be earnings before interest, taxes,
depreciation and amortization, other income, net, goodwill
impairment, litigation related expenses and recoveries, stock-based
compensation, expenses, restructuring, transition and acquisitions
expenses, net, and certain other items. Pursuant to the
requirements of Regulation G, the Company has provided a
reconciliation in the tables attached to this release of loss from
continuing operations calculated in accordance with accounting
principles generally accepted in the United States of America
(“GAAP”) to Adjusted EBITDA. Adjusted EBITDA is not a measurement
of financial performance under GAAP and may not be comparable to
other similarly titled measures of other companies. The Company
calculated and communicated Adjusted EBITDA in the tables because
the Company's management believes it is of importance to investors
and lenders by providing additional information with respect to the
performance of its fundamental business activities. Management
presents Adjusted EBITDA because it believes that Adjusted EBITDA
is a useful supplement to net loss as an indicator of operating
performance. Management also believes that Adjusted EBITDA is an
industry-wide financial measure that is useful both to management
and investors when evaluating the Company's performance and
comparing our performance with the performance of our competitors.
Management also uses adjusted EBITDA for planning purposes, as well
as to evaluate the Company's performance because it believes that
adjusted EBITDA more accurately reflects the Company's results, as
it excludes certain items, such as stock-based compensation
charges, that management believes are not indicative of the
Company's operating performance. The Company believes that Adjusted
EBITDA is a performance measure and not a liquidity measure.
Adjusted EBITDA should not be considered as an alternative to
operating or net loss as an indicator of performance or as an
alternative to cash flows from operating activities as an indicator
of cash flows, in each case as determined in accordance with GAAP,
or as a measure of liquidity. In addition, adjusted EBITDA
does not take into account changes in certain assets and
liabilities as well as interest and income taxes that can affect
cash flows. The Company's calculation of Adjusted EBITDA may
or may not be consistent with the calculation of this measure by
other companies in the same industry. Investors should not view
Adjusted EBITDA as an alternative to the GAAP operating measure of
net income (loss). In addition, Adjusted EBITDA does not take into
account changes in certain assets and liabilities as well as
interest and income taxes that can affect cash flows. Management
does not intend the presentation of these non-GAAP measures to be
considered in isolation or as a substitute for results prepared in
accordance with GAAP. These non-GAAP measures should be read only
in conjunction with the Company's consolidated financial statements
prepared in accordance with GAAP.
Conference Call
Cinedigm will host a conference call to discuss its financial
results at 1:30 p.m. PT / 4:30 p.m. ET on February 13,
2019.
To participate in the conference call, please dial (877)
754-5303 or for international callers (678) 894-3030 at
least five minutes prior to the start of the call. No passcode is
required. An audio webcast of the call will be accessible
at http://investor.cinedigm.com/events.cfm.
To listen to the live webcast, please visit the site prior to the
start of the call in order to register, download and install any
necessary audio software.
For those unable to participate during the live broadcast, a
replay will be available beginning February 13, 2019
at 7:30 p.m. EST, through February 20, 2019 at 7:30
p.m. EST. To access the replay, dial (855)
859-2056 (U.S.) or (404) 537-3406 (International)
and use passcode: 9492299.
About
Cinedigm
Since inception, Cinedigm has been a leader at the forefront of the
digital transformation of content distribution. Adjusting to the
rapidly transforming business needs of today’s entertainment
landscape, Cinedigm remains a change-centric player focused on
providing content, channels and services to the world’s largest
media, technology and retail companies. Cinedigm’s Content and
Networks groups provide original and aggregated programming,
channels and services that entertain consumers globally across
hundreds of millions of devices. For more information, visit
www.cinedigm.com.
[CIDM-E]
Safe Harbor Statement
Investors and readers are cautioned that certain
statements contained in this document, as well as some statements
in periodic press releases and some oral statements of Cinedigm
officials during presentations about Cinedigm, along with
Cinedigm's filings with the Securities and Exchange Commission,
including Cinedigm's registration statements, quarterly reports on
Form 10-Q and annual report on Form 10-K, are "forward-looking''
statements within the meaning of the Private Securities Litigation
Reform Act of 1995 (the "Act''). Forward-looking statements include
statements that are predictive in nature, which depend upon or
refer to future events or conditions, which include words such as
"expects," "anticipates,'' "intends,'' "plans,'' "could," "might,"
"believes,'' "seeks," "estimates'' or similar expressions. In
addition, any statements concerning future financial performance
(including future revenues, earnings or growth rates), ongoing
business strategies or prospects, and possible future actions,
which may be provided by Cinedigm's management, are also
forward-looking statements as defined by the Act. Forward-looking
statements are based on current expectations and projections about
future events and are subject to various risks, uncertainties and
assumptions about Cinedigm, its technology, economic and market
factors and the industries in which Cinedigm does business, among
other things. These statements are not guarantees of future
performance and Cinedigm undertakes no specific obligation or
intention to update these statements after the date of this
release.
For more information:Jill Newhouse
CalcaterraCinedigmjcalcaterra@cinedigm.com 310-466-5135
PART I - FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTS
(UNAUDITED)
CINEDIGM CORP.CONDENSED
CONSOLIDATED BALANCE SHEETS(In thousands, except for share
and per share data)
|
December 31, 2018 |
|
March 31, 2018 |
ASSETS |
(Unaudited) |
|
|
Current assets |
|
|
|
Cash and cash
equivalents |
$ |
17,141 |
|
|
$ |
17,952 |
|
Accounts
receivable, net |
38,893 |
|
|
38,128 |
|
Inventory, net |
632 |
|
|
792 |
|
Unbilled
revenue |
1,946 |
|
|
6,799 |
|
Prepaid
and other current assets |
9,397 |
|
|
10,497 |
|
Total current
assets |
68,009 |
|
|
74,168 |
|
Restricted cash |
1,000 |
|
|
1,000 |
|
Property
and equipment, net |
16,312 |
|
|
21,483 |
|
Intangible assets, net |
10,685 |
|
|
14,653 |
|
Goodwill |
8,701 |
|
|
8,701 |
|
Other
long-term assets |
1,107 |
|
|
1,177 |
|
Total assets |
$ |
105,814 |
|
|
$ |
121,182 |
|
LIABILITIES AND DEFICIT |
|
|
|
Current
liabilities |
|
|
|
Accounts
payable and accrued expenses |
$ |
67,511 |
|
|
$ |
69,225 |
|
Current
portion of notes payable, including unamortized debt discount of
$1,217 and $225 respectively |
24,772 |
|
|
4,775 |
|
Current
portion of notes payable, non-recourse |
279 |
|
|
512 |
|
Current
portion of deferred revenue |
1,728 |
|
|
1,821 |
|
Total current
liabilities |
94,290 |
|
|
76,333 |
|
Notes
payable, non-recourse, net of current portion and unamortized debt
issuance costs and debt discounts of $1,663 and $2,140
respectively |
24,742 |
|
|
37,570 |
|
Notes
payable, net of current portion and unamortized debt issuance costs
and debt discounts of $813 and $3,352 respectively |
14,989 |
|
|
25,435 |
|
Deferred
revenue, net of current portion |
2,728 |
|
|
3,842 |
|
Other
long-term liabilities |
229 |
|
|
306 |
|
Total
liabilities |
136,978 |
|
|
143,486 |
|
Stockholders’
deficit |
|
|
|
Preferred stock,
15,000,000 shares authorized; Series A 10% - $0.001 par value per
share; 20 shares authorized; and 7 shares issued and outstanding at
December 31, 2018 and March 31, 2018. Liquidation preference of
$3,648 |
3,559 |
|
|
3,559 |
|
Common stock, $0.001
par value; Class A stock 60,000,000 shares authorized at December
31, 2018 and March 31, 2018; 36,830,922 and 36,261,975 shares
issued and 35,517,086 and 34,948,139 shares outstanding at December
31, 2018 and March 31, 2018, respectively |
36 |
|
|
35 |
|
Additional paid-in
capital |
367,630 |
|
|
366,223 |
|
Treasury stock, at
cost; 1,313,836 Class A common shares at December 31, 2018 and
March 31, 2018 |
(11,603 |
) |
|
(11,603 |
) |
Accumulated
deficit |
(389,496 |
) |
|
(379,225 |
) |
Accumulated other
comprehensive loss |
3 |
|
|
(38 |
) |
Total stockholders’
deficit of Cinedigm Corp. |
(29,871 |
) |
|
(21,049 |
) |
Deficit attributable to
noncontrolling interest |
(1,293 |
) |
|
(1,255 |
) |
Total deficit |
(31,164 |
) |
|
(22,304 |
) |
Total liabilities and
deficit |
$ |
105,814 |
|
|
$ |
121,182 |
|
|
|
|
|
|
|
|
|
CINEDIGM CORP.CONDENSED
CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)(In thousands,
except for share and per share data)
|
Three Months Ended December
31, |
|
Nine Months Ended December
31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenues |
$ |
14,643 |
|
|
$ |
18,492 |
|
|
$ |
41,465 |
|
|
$ |
50,010 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
Direct
operating (excludes depreciation and amortization shown below) |
5,246 |
|
|
6,363 |
|
|
12,287 |
|
|
14,470 |
|
Selling,
general and administrative |
6,425 |
|
|
9,259 |
|
|
19,455 |
|
|
21,824 |
|
Provision
for doubtful accounts |
113 |
|
|
631 |
|
|
1,245 |
|
|
1,580 |
|
Depreciation and amortization of property and equipment |
2,074 |
|
|
2,213 |
|
|
6,239 |
|
|
10,215 |
|
Amortization of intangible assets |
1,397 |
|
|
1,395 |
|
|
4,187 |
|
|
4,185 |
|
Total operating
expenses |
15,255 |
|
|
19,861 |
|
|
43,413 |
|
|
52,274 |
|
Loss from
operations |
(612 |
) |
|
(1,369 |
) |
|
(1,948 |
) |
|
(2,264 |
) |
Interest
expense, net |
(2,593 |
) |
|
(3,147 |
) |
|
(7,860 |
) |
|
(11,163 |
) |
Debt
conversion expense and loss on extinguishment of notes payable |
— |
|
|
(1,299 |
) |
|
— |
|
|
(4,504 |
) |
Other
expense, net |
(12 |
) |
|
(40 |
) |
|
(40 |
) |
|
(242 |
) |
Change in
fair value of interest rate derivatives |
— |
|
|
44 |
|
|
— |
|
|
127 |
|
Loss from operations
before income taxes |
(3,217 |
) |
|
(5,811 |
) |
|
(9,848 |
) |
|
(18,046 |
) |
Income tax expense |
(55 |
) |
|
(113 |
) |
|
(194 |
) |
|
(495 |
) |
Net loss |
(3,272 |
) |
|
(5,924 |
) |
|
(10,042 |
) |
|
(18,541 |
) |
Net loss attributable
to noncontrolling interest |
14 |
|
|
15 |
|
|
38 |
|
|
32 |
|
Net loss attributable
to controlling interests |
(3,258 |
) |
|
(5,909 |
) |
|
(10,004 |
) |
|
(18,509 |
) |
Preferred stock
dividends |
(89 |
) |
|
(89 |
) |
|
(267 |
) |
|
(267 |
) |
Net loss attributable
to common stockholders |
$ |
(3,347 |
) |
|
$ |
(5,998 |
) |
|
$ |
(10,271 |
) |
|
$ |
(18,776 |
) |
Net loss per Class A
and Class B common stock attributable to common stockholders -
basic and diluted: |
|
|
|
|
|
|
|
Net loss
attributable to common stockholders |
$ |
(0.09 |
) |
|
$ |
(0.20 |
) |
|
$ |
(0.27 |
) |
|
$ |
(1.02 |
) |
Weighted
average number of Class A and Class B common stock outstanding:
basic and diluted |
38,033,756 |
|
|
29,389,017 |
|
|
37,793,845 |
|
|
18,399,597 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Following is the reconciliation of our consolidated net loss to
Adjusted EBITDA:
|
|
Three Months Ended December
31, |
($ in
thousands) |
|
2018 |
|
2017 |
Net loss |
|
$ |
(3,272 |
) |
|
$ |
(5,924 |
) |
Add
Back: |
|
|
|
|
Income
tax expense |
|
55 |
|
|
113 |
|
Depreciation and amortization of property and equipment |
|
2,074 |
|
|
2,213 |
|
Amortization of intangible assets |
|
1,397 |
|
|
1,395 |
|
Interest
expense, net |
|
2,593 |
|
|
3,147 |
|
Debt
conversion expense and loss on extinguishment of notes payable |
|
— |
|
|
1,299 |
|
Other
expense, net |
|
366 |
|
|
1,491 |
|
Change in
fair value of interest rate derivatives |
|
— |
|
|
(44 |
) |
Provision
for doubtful accounts |
|
— |
|
|
204 |
|
Stock-based compensation and expenses |
|
361 |
|
|
1,567 |
|
Net loss
attributable to noncontrolling interest |
|
14 |
|
|
15 |
|
Adjusted EBITDA |
|
$ |
3,588 |
|
|
$ |
5,476 |
|
|
|
|
|
|
Adjustments related to the Cinema Equipment Business |
|
|
|
|
Depreciation and amortization of property and equipment |
|
$ |
(1,942 |
) |
|
$ |
(2,066 |
) |
Amortization of intangible assets |
|
(11 |
) |
|
(11 |
) |
Provision
for doubtful accounts |
|
— |
|
|
(208 |
) |
Stock-based compensation and expenses |
|
(3 |
) |
|
— |
|
Other
(income) expense, net |
|
— |
|
|
(59 |
) |
Income
from operations |
|
(1,895 |
) |
|
(2,834 |
) |
Adjusted EBITDA from
non-cinema equipment business |
|
$ |
(263 |
) |
|
$ |
298 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Following is the reconciliation of our
consolidated net loss to Adjusted EBITDA:
|
|
Nine Months Ended December 31, |
($ in
thousands) |
|
2018 |
|
2017 |
Net loss |
|
$ |
(10,042 |
) |
|
$ |
(18,541 |
) |
Add
Back: |
|
|
|
|
Income
tax expense |
|
194 |
|
|
495 |
|
Depreciation and amortization of property and equipment |
|
6,239 |
|
|
10,215 |
|
Amortization of intangible assets |
|
4,187 |
|
|
4,185 |
|
Interest
expense, net |
|
7,860 |
|
|
11,163 |
|
Debt
conversion expense and loss on extinguishment of notes payable |
|
— |
|
|
4,504 |
|
Other
expense, net |
|
394 |
|
|
1,993 |
|
Change in
fair value of interest rate derivatives |
|
— |
|
|
(127 |
) |
Provision
for doubtful accounts |
|
— |
|
|
597 |
|
Stock-based compensation and expenses |
|
763 |
|
|
2,214 |
|
Net loss
attributable to noncontrolling interest |
|
38 |
|
|
32 |
|
Adjusted EBITDA |
|
$ |
9,633 |
|
|
$ |
16,730 |
|
|
|
|
|
|
Adjustments related to
the Cinema Equipment Business |
|
|
|
|
Depreciation and amortization of property and equipment |
|
$ |
(5,844 |
) |
|
$ |
(9,743 |
) |
Amortization of intangible assets |
|
(34 |
) |
|
(34 |
) |
Provision
for doubtful accounts |
|
— |
|
|
(601 |
) |
Stock-based compensation and expenses |
|
(8 |
) |
|
— |
|
Other
(income) expense, net |
|
— |
|
|
(59 |
) |
Income
from operations |
|
(8,824 |
) |
|
(8,407 |
) |
|
|
$ |
(5,077 |
) |
|
$ |
(2,114 |
) |
|
|
|
|
|
|
|
|
|
Cinedigm (NASDAQ:CIDM)
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From Aug 2024 to Sep 2024
Cinedigm (NASDAQ:CIDM)
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From Sep 2023 to Sep 2024