CARLSBAD, Calif., March 17, 2020 /PRNewswire/ -- NTN Buzztime,
Inc. (NYSE American: NTN), reported financial results for the
fourth quarter and year ended December
31, 2019.
Allen Wolff, CEO, said, "During
the fourth quarter, we gained traction with Buzztime Basic, our
lighter mobile-based, in-venue solution that complements our full
featured Buzztime Elite offering, and we shipped the first
installment of a substantial hardware contract. Our programmatic
advertising continues to grow and augment our subscription revenue.
We are proud 2019 closed with these significant operational
accomplishments and our fourth consecutive year of positive
EBITDA.
"In January 2020, we seized the
opportunity to monetize a non-core business and sold our
hosted-events asset. We will continue to explore all types of
go-to-market partnerships and to prioritize our most compelling
opportunities to leverage our foundation for scalable growth. The
economic and market conditions throughout the United States and the world have been
dynamic and evolving as a result of the COVID-19 pandemic. Its
effect on the restaurant and bar industry has been rapid, and its
scope and magnitude is uncertain. We will continue to monitor the
situation and evaluate steps we can take to respond to its effects.
In 2020, we will remain focused on growing our digital
entertainment and hardware businesses in an efficient manner and
are evaluating financing alternatives to better position us to do
so."
Financial Results
Fourth quarter 2019 total revenues
were $5.2 million, compared to
$4.6 million in the third quarter of
2019 and $5.9 million in the fourth
quarter of 2018. The fourth quarter 2019 recorded increased
hardware revenue compared to prior periods. Revenue for 2019 was
$19.8 million, compared to
$23.3 million in 2018. As
anticipated, 2019 results reflected lower subscription and
advertising revenue due to reduced site count, which, taking into
account the fourth quarter departure of Buffalo Wild Wings venues,
was 1,440 at December 31,
2019.
During the fourth quarter of 2019, Buzztime received from
Buffalo Wild Wings a substantial number of tablets with Buzztime's
new technology for only the cost of shipping, enabling the company
to write off its older tablets. Fourth quarter 2019 direct costs
were $2.9 million, compared to
$2.1 million for the same period in
2018. Fourth quarter 2019 gross margin was 43%, compared to 65% for
the same period in 2018. The increase in direct costs and the
decrease in gross margin were both primarily attributable to higher
equipment expense related to increased hardware sales and a
$676,000 write-down associated with
older tablets and related cases. Full year 2019 gross margin was
62%, compared to 65% for 2018. Although revenue mix will continue
to result in margin fluctuations, the company continues to seek to
optimize gross margin and anticipates it will be higher in future
quarters than the fourth quarter of 2019.
Selling, general and administrative expense was $2.9 million and $13.2
million for the three and twelve months ended December 31, 2019, decreasing from $3.4 million and $14.5
million for the same periods in 2018, respectively. The
reduction reflects management's efforts to lower operating
expenses.
For the fourth quarter 2019, net loss attributable to common
shareholders was $1.3 million, or
$0.45 per share, compared to a net
income attributable to common shareholders of $44,000, or $0.02
per share, in the prior year quarter. Net loss attributable
to common shareholders was $2.1
million, or $0.72 per share,
compared to $275,000, or $0.10 per share, for 2019 and 2018,
respectively.
For the fourth quarter 2019, the company had negative EBITDA of
$557,000, compared to positive EBITDA
of $732,000 in the prior year
quarter. For the year, EBITDA was $1.1
million in 2019, compared to $2.8
million in 2018.
EBITDA is defined as earnings before interest, taxes,
depreciation and amortization and is not intended to represent a
measure of performance in accordance with accounting principles
generally accepted in the United
States (GAAP). Although EBITDA was positive for the
full year, it may not be positive in future years. A detailed
description and reconciliation of EBITDA and management's reasons
for using this measure is set forth at the end of this press
release.
Liquidity
Cash, cash equivalents and restricted cash
was $3.4 million at December 31, 2019, compared to $2.8 million at December
31, 2018. For 2019, cash flow from operations was
$2.7 million, increasing from
$1.4 million in 2018.
Conference Call
Management will review the results on
a conference call with a live question and answer session today,
March 17, 2020, at 4:30 p.m. ET. To access the call, please use
passcode 8114999 and dial:
- (877) 307-1373 for the live call and (855) 859-2056 for the
replay, if calling from the United
States or Canada; or
- (678) 224-7873 for the live call and (404) 537-3406 for the
replay, if calling internationally.
The call will also be accompanied live by webcast that will be
accessible at the company's website at
http://www.buzztime.com/investors. The replay of the call
will be available until March 24,
2020
Forward-looking Statements
This release
contains forward-looking statements that reflect management's
current views of future events and operations, including that we
will continue to explore all types of go-to-market
partnerships and to prioritize our most compelling opportunities to
leverage our foundation for scalable growth, that we will continue
to monitor the effects of the COVID-19 pandemic and evaluate steps
we can take to response thereto, that we will remain focused on
growing our digital entertainment and hardware businesses in an
efficient manner, and that we anticipate gross margin will be
higher in future quarters than the fourth quarter of 2019.
Among the factors that could cause or contribute to
material differences between our actual results and the
expectations indicated by the forward-looking statements are risks
and uncertainties that include, but are not limited to: our ability
to raise additional capital, on favorable terms or at all, to allow
us to meet our debt service obligations and to fund our working
capital needs and the effect that the COVID-19 pandemic may have on
the capital markets generally; the impact of the COVID-19 pandemic
on our business, the restaurant and bar industry generally and the
broader macroeconomic environment; our ability to maintain or grow
our revenue and successfully implement our other business
strategies to make up for the revenue we have historically received
from Buffalo Wild Wings corporate-owned restaurants and its
franchisees after our existing relationships with them terminated
in November 2019; the negative impact
that measures we recently implemented and may implement to reduce
our operating expenses and planned capital expenses (including
investments in our business) may have on our ability to effectively
manage and operate our business; our ability to comply with our
financial covenants in our loan and security agreement with
Avidbank and its right to declare a default if we do not, which
could lead to all payment obligations becoming immediately due and
payable; our ability to compete effectively within the highly
competitive interactive games, entertainment and marketing services
industries, including our ability to successfully commercially
launch attractive product offerings, and the impact of new products
and technological change, especially in the mobile and wireless
markets, on our operations and competitiveness; our ability to
adequately protect our proprietary rights and intellectual
property;; and the other risks and uncertainties described in Part
I, Item 1A "Risk Factors" of the Company's Annual Report on Form
10-K for the fiscal year ended December 31,
2019, and described in other documents we file from time to
time with the Securities and Exchange Commission thereafter.
Please see NTN Buzztime, Inc.'s recent filings with the Securities
and Exchange Commission for information about these and other risks
that may affect the Company. All forward-looking statements
included in this release are based on information available to us
on the date hereof. These statements speak only as of the date
hereof and NTN Buzztime, Inc. does not undertake to publicly update
or revise any of its forward-looking statements, even if experience
or future changes show that the indicated results or events will
not be realized.
About Buzztime:
Buzztime (NYSE American: NTN) delivers
interactive entertainment and innovative technology that helps its
customers acquire, engage and retain its patrons. Most frequently
used in bars and restaurants in North
America, the Buzztime tablets, mobile app and technology
offer engaging solutions to establishments that have guests who
experience dwell time, such as casinos, senior living, and more.
Casual dining venues license Buzztime's customizable solution to
differentiate themselves via competitive fun by offering guests
trivia, card, sports and arcade games. Buzztime's platform creates
connections among the players and venues and amplifies guests'
positive experiences. Buzztime's in-venue TV network creates
one of the largest digital out of home ad audiences in the US and
Canada. Buzztime hardware
solutions leverages the company's experience manufacturing durable
tablets and charging systems, enabling a diverse group of
businesses including corrections, point-of-sale and loyalty with
product implementation. Buzztime games have also been
recently licensed by other businesses serving other markets.
For more information, please
visit http://www.buzztime.com or follow us
on Facebook or Twitter@buzztime.
IR AGENCY CONTACT:
Kirsten
Chapman, LHA Investor Relations, buzztime@lhai.com
415-433-3777
NTN BUZZTIME, INC.
AND SUBSIDIARIES Consolidated Balance
Sheets (In thousands, except par value
amount)
|
|
|
|
|
ASSETS
|
December
31,
2019
|
|
December
31,
2018
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
3,209
|
|
$
2,536
|
Restricted
cash
|
50
|
|
50
|
Accounts receivable,
net
|
1,195
|
|
1,143
|
Site equipment to be
installed
|
1,090
|
|
2,539
|
Prepaid expenses and
other current assets
|
526
|
|
517
|
Total current
assets
|
6,070
|
|
6,785
|
|
|
|
|
Restricted cash,
long-term
|
150
|
|
200
|
Operating lease
right-of-use assets
|
2,101
|
|
--
|
Fixed assets,
net
|
2,822
|
|
4,667
|
Software development
costs, net
|
1,915
|
|
2,018
|
Deferred
costs
|
274
|
|
424
|
Goodwill
|
696
|
|
667
|
Other
assets
|
97
|
|
103
|
|
|
|
|
Total
assets
|
$
14,125
|
|
$
14,864
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts
payable
|
$
835
|
|
$
271
|
Accrued
compensation
|
588
|
|
572
|
Accrued
expenses
|
490
|
|
444
|
Sales taxes
payable
|
131
|
|
87
|
Income taxes
payable
|
3
|
|
1
|
Current portion of
long-term debt
|
2,739
|
|
1,000
|
Current portion of
obligations under operating leases
|
409
|
|
--
|
Current portion of
obligations under financing leases
|
21
|
|
45
|
Current portion of
deferred revenue
|
460
|
|
1,267
|
Other current
liabilities
|
419
|
|
337
|
Total current
liabilities
|
6,095
|
|
4,024
|
|
|
|
|
Long-term
debt
|
--
|
|
2,729
|
Obligations under
operating leases
|
2,891
|
|
--
|
Obligations under
financing leases
|
20
|
|
41
|
Deferred
revenue
|
2
|
|
30
|
Deferred
rent
|
--
|
|
1,123
|
Other
liabilities
|
26
|
|
--
|
Total
liabilities
|
9,034
|
|
7,947
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
Series A 10%
cumulative convertible preferred stock, $0.005 par value, $156
liquidation preference, 156 shares authorized; 156 shares issued
and outstanding at December 31, 2019 and
2018
|
1
|
|
1
|
Common stock, $0.005
par value, 15,000 shares authorized at December 31, 2019
and 2018; 2,901 and 2,875 shares
issued at December 31, 2919 and 2018, respectively
|
14
|
|
14
|
Treasury stock, at
cost, 10 shares at December 31, 2091 and 2018
|
(456)
|
|
(456)
|
Additional paid-in
capital
|
136,721
|
|
136,552
|
Accumulated
deficit
|
(131,457)
|
|
(129,394)
|
Accumulated other
comprehensive income
|
268
|
|
200
|
Total shareholders'
equity
|
5,091
|
|
6,917
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
14,125
|
|
$
14,864
|
NTN BUZZTIME, INC.
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS (In thousands, except per share
data)
|
|
|
|
|
|
Three months
ended
December
31,
|
|
Twelve months
ended
December
31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenues
|
|
|
|
|
|
|
|
Subscription
revenue
|
$
2,922
|
|
$
3,920
|
|
$
14,278
|
|
$ 16,031
|
Hardware
revenue
|
1,539
|
|
1,162
|
|
2,350
|
|
3,589
|
Other
revenue
|
707
|
|
837
|
|
3,178
|
|
3,715
|
Total
revenues
|
5,168
|
|
5,919
|
|
19,806
|
|
23,335
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Direct operating costs
(includes depreciation and amortization)
|
2,938
|
|
2,051
|
|
7,483
|
|
8,070
|
Selling, general and
administrative
|
2,872
|
|
3,363
|
|
13,175
|
|
14,463
|
Impairment of
capitalized software
|
498
|
|
--
|
|
550
|
|
23
|
Impairment of
goodwill
|
--
|
|
261
|
|
--
|
|
261
|
Depreciation and
amortization (excluding depreciation and amortization included in
direct costs
|
87
|
|
71
|
|
360
|
|
315
|
Total operating
expenses
|
6,395
|
|
5,746
|
|
21,568
|
|
23,132
|
Operating (loss)
income
|
(1,227)
|
|
173
|
|
(1,762)
|
|
203
|
Other expense,
net
|
(69 )
|
|
(221)
|
|
(258)
|
|
(526)
|
Loss before income
taxes
|
(1,296)
|
|
(48)
|
|
(2,020)
|
|
(323)
|
Income tax benefit
(provision)
|
3
|
|
100
|
|
(27)
|
|
64
|
Net (loss)
income
|
(1,293)
|
|
52
|
|
(2,047)
|
|
(259)
|
Series A preferred
stock dividend
|
(8)
|
|
(8)
|
|
(16)
|
|
(16)
|
Net (loss) income
attributable to common shareholders
|
$
(1,301)
|
|
$
44
|
|
$
(2,063)
|
|
$
(275)
|
|
|
|
|
|
|
|
|
Net (loss) income per
common share – basic and diluted
|
$
(0.45)
|
|
$
0.02
|
|
$
(0.72)
|
|
$
(0.10)
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding – basic and diluted
|
2,888
|
|
2,864
|
|
2,875
|
|
2,688
|
|
|
|
|
|
|
|
|
Comprehensive
loss:
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
(1,293)
|
|
$
52
|
|
$
(2,047)
|
|
$
(259)
|
Foreign currency
translations adjustment
|
21
|
|
(93)
|
|
68
|
|
(145)
|
Total comprehensive
loss
|
$
(1,272)
|
|
$
(41)
|
|
$
(1,979)
|
|
$
(404)
|
|
|
|
|
|
|
|
|
NTN BUZZTIME, INC.
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH
FLOWS (In thousands)
|
|
|
|
Twelve months
ended
December
31,
|
|
2019
|
|
2018
|
Cash flows provided
by operating activities:
|
|
|
|
Net loss
|
$
(2,047)
|
|
$
(259)
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
2,877
|
|
2,764
|
Provision for doubtful
accounts
|
196
|
|
78
|
Amortization of
operating lease right-of-use assets
|
291
|
|
--
|
Transfer of fixed
assets to sales-type lease
|
10
|
|
23
|
Stock-based
compensation
|
206
|
|
443
|
Amortization of debt
issuance costs
|
9
|
|
59
|
Loss from sale or
disposition of equipment
|
689
|
|
242
|
Loss from disposition
of capitalized software
|
550
|
|
23
|
Loss from impairment
of goodwill
|
--
|
|
261
|
Changes in assets and
liabilities:
|
|
|
|
Accounts
receivable
|
(248)
|
|
(507)
|
Site equipment to be
installed
|
337
|
|
431
|
Operating lease
liabilities
|
(215)
|
|
--
|
Prepaid expenses and
other assets
|
(5)
|
|
29
|
Accounts payable and
accrued expenses
|
669
|
|
(186)
|
Income taxes
payable
|
1
|
|
(10)
|
Deferred
costs
|
151
|
|
350
|
Deferred
revenue
|
(835)
|
|
(2,227)
|
Deferred
rent
|
--
|
|
(190)
|
Other
liabilities
|
108
|
|
41
|
Net cash provided by
operating activities
|
2,744
|
|
1,365
|
|
|
|
|
Cash flows used in
investing activities:
|
|
|
|
Capital
expenditures
|
(128)
|
|
(648)
|
Capitalized software
development expenditures
|
(966)
|
|
(964)
|
Proceeds from sale of
equipment
|
29
|
|
33
|
Net cash used in
investing activities
|
(1,065)
|
|
(1,579)
|
|
|
|
|
Cash flows used in
financing activities:
|
|
|
|
Net proceeds from
issuance of common stock related to registered direct offering
|
--
|
|
1,375
|
Proceeds from
long-term debt
|
--
|
|
4,000
|
Payment on long-term
debt
|
(1000)
|
|
(5,373)
|
Debt issuance costs on
long-term debt
|
--
|
|
(23)
|
Principal payments on
financing leases
|
(45)
|
|
(249)
|
Payment of preferred
stockholder dividends
|
(16)
|
|
(16)
|
Tax withholding
related to net share settlement of vested restricted stock units
|
(37)
|
|
(17)
|
Net cash used in
financing activities
|
(1,098)
|
|
(303)
|
|
|
|
|
Effect of exchange
rate on cash
|
42
|
|
(75)
|
Net increase
(decrease) in cash and cash equivalents
|
623
|
|
(592)
|
Cash, cash
equivalents and restricted cash at beginning of period
|
2,786
|
|
3,378
|
Cash, cash
equivalents and restricted cash at end of period
|
$
3,409
|
|
$
2,786
|
|
|
|
|
NTN BUZZTIME, INC. AND SUBSIDIARIES
RECONCILIATION of GAAP TO NON-GAAP
(In
thousands)
A schedule reconciling the Company's consolidated net (loss)
income calculated in accordance with GAAP to EBITDA is included in
the supplemental table below. The Company defines EBITDA as
earnings before interest, taxes, depreciation and amortization.
EBITDA is not intended to represent a measure of performance in
accordance with GAAP, nor should EBITDA be considered as an
alternative to statements of cash flows as a measure of liquidity.
EBITDA is included herein because the Company believes it is a
measure of operating performance that financial analysts, lenders,
investors and other interested parties find to be a useful tool for
analyzing companies like Buzztime that carry significant levels of
non-cash depreciation and amortization charges in comparison to
their net income or loss calculation in accordance with GAAP.
The following table reconciles our net (loss) income per GAAP
(in thousands) to EBITDA:
|
Three months
ended
December
31,
|
|
Twelve months
ended
December
31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net (loss) income per
GAAP
|
$
(1,293)
|
|
$
52
|
|
$
(2,047)
|
|
$
(259)
|
Interest expense,
net
|
53
|
|
84
|
|
249
|
|
389
|
Income tax (benefit)
provision
|
(3)
|
|
(100)
|
|
27
|
|
(64)
|
Depreciation and
amortization
|
686
|
|
696
|
|
2,877
|
|
2,764
|
Total
EBITDA
|
$
(557)
|
|
$
732
|
|
$
1,106
|
|
$
2,830
|
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SOURCE NTN Buzztime, Inc.