Core Streaming and Content Business Adjusted EBITDA Increased by $2.3 million or 103% versus Prior Year, Positive for Second Consecutive Quarter
Ad Supported Streaming Revenues Increased by 48% Versus Prior Quarter and 28% Versus Prior Year Quarter with Linear Ad-Supported Viewership up 93% Versus Quarter Ending March 31, 2020 to 29 Million Viewers
LOS ANGELES–(BUSINESS WIRE)–Cinedigm Corp. (NASDAQ: CIDM) today announced its financial results for the three-month period ended June 30, 2020.
Key Financial Results:
Key Business Highlights During Q1 FY2021 (Quarter ended June 30, 2020):
Key Business Highlights Subsequent to Quarter End:
“Continuing the trend from last quarter, our core streaming and content distribution business generated positive Adjusted EBITDA, with a $2.3 million or 103% increase versus the prior year quarter,” said Chris McGurk, Cinedigm’s Chairman and CEO. “This strong performance reflects the expansion of our streaming business, particularly AVOD, where revenues were up 48% versus the prior quarter despite COVID-19 impacts on the overall advertising market, strong digital content sales from our highest revenue quarter in over five years and the continued positive impacts of our aggressive cost streamlining efforts. We have several additional new channels teed up for launch over the coming quarters that we expect will add significant revenue and profits as we move through the year and beyond. Importantly, with our streaming infrastructure in place and now broadly recognized in the industry as top notch, as each additional channel reaches full carriage, we gain an incremental stream of recurring revenue that accelerates the monetization of our investment. Clearly, we are now uniquely well positioned to continue to capture a meaningful share of the rapidly expanding global streaming business.”
“The consumer shift towards on-demand, premium entertainment and the adoption of cord-cutting alternatives continues at a dramatic and accelerating pace,” said Erick Opeka, President of Digital Networks. “We took advantage of this with the launch or signing of six new streaming channels during the quarter, which will be available on a number of key streaming platforms including Roku, Xumo, Peacock and Plex among many others. Our streaming device platform reach has now expanded to over 800 million global devices and will only continue to grow.”
Gary Loffredo, Chief Operating Officer and General Counsel, added, “Due to COVID-19, advertisers ‘pressed pause’ industry-wide in late March through mid-May and we were impacted like everyone else. Despite this, we generated strong streaming results in the quarter with 48% AVOD growth over the prior three months and our ad-fill rates are now exceeding pre-COVID-19 levels with CPMs also back to 90% of pre-COVID-19 rates. We remain very bullish as TV ad dollars continue to migrate to OTT due to the superior targeting and addressability OTT offers and as our streaming channel portfolio and distribution footprint continue to rapidly expand. We are also very pleased that we strengthened our balance sheet through two equity raises for $18.8 million in gross proceeds, with one of them occurring shortly after the quarter closed. We also reduced total debt by $13.1 million or 22% versus the prior year.”
Fiscal First Quarter Financial Summary (comparing the three months ended June 30, 2020 to the three months ended June 30, 2019)
Income Statement
Revenue was $6.0 million, a decrease of 39% compared to $9.8 million in the prior year period, due to the expected decline in the legacy Cinema Equipment business and the negative impact of COVID-19 on theatrical revenues. This was partially offset by growth in OTT / streaming revenues. Overall OTT/streaming revenues, including digital content licensing, were up 22% and with sales billings up 30%. OTT AVOD Channel revenues increased 28% versus last year and 48% versus the prior 3-month period.
Total operating expenses were $8.6 million, compared to $12.5 million the prior year period, a decrease of $3.9 million, or 31%, which was primarily driven by lower selling, general and administrative expenses and lower depreciation and amortization expense. Selling, general and administrative expenses for the first quarter of fiscal year 2021 were $3.8 million compared to $5.8 million in the prior year period, a decrease of $2 million, or 34%, due largely to the Company’s cost streamlining efforts and shift to streaming. Amortization of intangible assets was $0.6 million for the first quarter of fiscal year 2021 compared to $1 million in the prior year period, a decrease of $0.4 million, or 41%.
The Company reported a consolidated net loss of $19.9 million for the first quarter of fiscal year 2021. Excluding the unrealized change in fair value of our equity investment in Starrise Media, the operating net loss was $4.1 million compared to a net loss of $5.1 million in first quarter of fiscal year 2020, an improvement of $1 million or 19%. The equity investment in Starrise Media at fair value included in our balance sheet is $35 million.
For the first quarter of fiscal year 2021, Consolidated Adjusted EBITDA was negative $182 thousand, compared to $539 thousand in the year-ago period. The decrease was primarily due to the expected decline of our legacy Cinema Equipment business and the negative impact of COVID-19 on theatrical revenues.
Balance Sheet
As of June 30, 2020, the Company had cash and cash equivalents of $16.3 million compared to $14.3 million for the fourth quarter of fiscal year 2020 March 31, 2020. We completed an equity raise with common stock for gross proceeds of $8.0 million during the quarter.
Total debt was reduced by $13.1 million, or 22%, versus June 30, 2019.
Conference Call
Cinedigm will host a conference call to discuss its financial results at 7:00 am. PDT / 10:00 am. EDT on August 14, 2020.
To participate in the conference call, please dial 877-407-0782 or for international callers 201-689-8567 at least five minutes prior to the start of the call. No passcode is required. An audio webcast is available directly at the following link https://www.webcaster4.com/Webcast/Page/2478/36632 and will also 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 by dialing 877-481-4010 (U.S.) or 919-882-2331 (International) and use passcode: 36632
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 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 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.
About Cinedigm
Since inception, Cinedigm (NASDAQ: CIDM) has been a leader at the forefront of the digital transformation of content distribution. Adapting 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.
|
CINEDIGM CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except for share and per share data) |
|||||||
|
|
June 30, 2020 |
|
March 31, 2020 |
||||
|
ASSETS |
(Unaudited) |
|
|
||||
|
Current assets |
|
|
|
||||
|
Cash and cash equivalents |
$ |
16,301 |
|
|
$ |
14,294 |
|
|
Accounts receivable, net |
26,549 |
|
|
34,785 |
|
||
|
Inventory, net |
437 |
|
|
582 |
|
||
|
Unbilled revenue |
1,801 |
|
|
1,992 |
|
||
|
Prepaid and other current assets |
8,345 |
|
|
9,409 |
|
||
|
Total current assets |
53,433 |
|
|
61,062 |
|
||
|
Restricted cash |
1,000 |
|
|
1,000 |
|
||
|
Equity investment in Starrise, a related party, at fair value |
34,963 |
|
|
23,433 |
|
||
|
Property and equipment, net |
6,457 |
|
|
7,967 |
|
||
|
Right-of-use assets |
204 |
|
|
1,210 |
|
||
|
Intangible assets, net |
6,333 |
|
|
6,924 |
|
||
|
Goodwill |
8,701 |
|
|
8,701 |
|
||
|
Other long-term assets |
5 |
|
|
143 |
|
||
|
Total assets |
$ |
111,096 |
|
|
$ |
110,440 |
|
|
LIABILITIES AND DEFICIT |
|
|
|
||||
|
Current liabilities |
|
|
|
||||
|
Accounts payable and accrued expenses |
$ |
65,382 |
|
|
$ |
77,085 |
|
|
Current portion of notes payable, including unamortized debt discount of $347 and $460 respectively |
32,364 |
|
|
37,249 |
|
||
|
Current portion of notes payable, non-recourse including unamortized debt discount of $564 and $763, respectively |
11,544 |
|
|
11,442 |
|
||
|
Operating lease liabilities |
137 |
|
|
593 |
|
||
|
Current portion of deferred revenue |
1,661 |
|
|
1,645 |
|
||
|
Total current liabilities |
111,088 |
|
|
128,014 |
|
||
|
Notes payable |
2,152 |
|
|
— |
|
||
|
Operating lease liabilities, noncurrent |
67 |
|
|
684 |
|
||
|
Deferred revenue, net of current portion |
400 |
|
|
919 |
|
||
|
Other long-term liabilities |
8 |
|
|
110 |
|
||
|
Total liabilities |
113,715 |
|
|
129,727 |
|
||
|
Commitments and contingencies |
|
|
|
||||
|
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 June 30, 2020 and March 31, 2020. Liquidation preference of $3,648 |
3,559 |
|
|
3,559 |
|
||
|
Common stock, $0.001 par value; Class A stock 150,000,000 shares authorized at June 30, 2020 and March 31, 2020; 104,606,655 and 63,251,429 shares issued and 103,292,819 and 61,937,593 shares outstanding at June 30, 2020 and March 31, 2020, respectively |
103 |
|
|
62 |
|
||
|
Additional paid-in capital |
437,450 |
|
|
400,784 |
|
||
|
Treasury stock, at cost; 1,313,836 Class A common shares at June 30, 2020 and March 31, 2020 |
(11,603 |
) |
|
(11,603 |
) |
||
|
Accumulated deficit |
(430,849 |
) |
|
(410,904 |
) |
||
|
Accumulated other comprehensive income |
12 |
|
|
92 |
|
||
|
Total stockholders’ deficit of Cinedigm Corp. |
(1,328 |
) |
|
(18,010 |
) |
||
|
Deficit attributable to noncontrolling interest |
(1,291 |
) |
|
(1,277 |
) |
||
|
Total deficit |
(2,619 |
) |
|
(19,287 |
) |
||
|
Total liabilities and deficit |
$ |
111,096 |
|
|
$ |
110,440 |
|
|
CINEDIGM CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except for share and per share data) |
|||||||
|
|
Three Months Ended June 30, |
||||||
|
|
2020 |
|
2019 |
||||
|
Revenues |
$ |
6,018 |
|
|
$ |
9,803 |
|
|
Costs and expenses: |
|
|
|
||||
|
Direct operating (excludes depreciation and amortization shown below) |
2,679 |
|
|
3,612 |
|
||
|
Selling, general and administrative |
3,840 |
|
|
5,849 |
|
||
|
Provision for doubtful accounts |
— |
|
|
270 |
|
||
|
Depreciation and amortization of property and equipment |
1,524 |
|
|
1,774 |
|
||
|
Amortization of intangible assets |
590 |
|
|
995 |
|
||
|
Total operating expenses |
8,633 |
|
|
12,500 |
|
||
|
Loss from operations |
(2,615 |
) |
|
(2,697 |
) |
||
|
Interest expense, net |
(1,290 |
) |
|
(2,282 |
) |
||
|
Gain on extinguishment of notes payable |
23 |
|
|
— |
|
||
|
Changes in fair value of equity investment in Starrise, a related party |
(15,794 |
) |
|
— |
|
||
|
Other expense, net |
(194 |
) |
|
(13 |
) |
||
|
Loss from operations before income taxes |
(19,870 |
) |
|
(4,992 |
) |
||
|
Income tax expense |
— |
|
|
(47 |
) |
||
|
Net loss |
(19,870 |
) |
|
(5,039 |
) |
||
|
Net loss attributable to noncontrolling interest |
14 |
|
|
6 |
|
||
|
Net loss attributable to controlling interests |
(19,856 |
) |
|
(5,033 |
) |
||
|
Preferred stock dividends |
(89 |
) |
|
(89 |
) |
||
|
Net loss attributable to common stockholders |
(19,945 |
) |
|
(5,122 |
) |
||
|
Net loss per Class A common stock attributable to common stockholders – basic and diluted: |
|
|
|
||||
|
Net loss attributable to common stockholders |
$ |
(0.21 |
) |
|
$ |
(0.13 |
) |
|
Weighted average number of Class A common stock outstanding: basic and diluted |
94,416,684 |
|
|
38,351,161 |
|
||
Contacts
Jill Newhouse Calcaterra
Cinedigm
jcalcaterra@cinedigm.com
310-466-5135
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