VANCOUVER, British Columbia, Nov. 26, 2019 (GLOBE NEWSWIRE) -- WOW! Unlimited Media Inc. (“WOW!” or the “Company”) (TSX-V: WOW; OTCQX: WOWMF) announced its results for the three and nine months ended September 30, 2019.
The Company completed the third quarter of 2019 with revenue of $23.3 million, as compared to $17.7 million for the third quarter of 2018.
Q3 2019 HIGHLIGHTS
Operating highlights
- WOW!’s popular series Bee and Puppy Cat won the Animated Series Competition Award at the Ottawa Animation Festival in September 2019
- Animation Production segment revenue was $10.0 million for the three months ended September 30, 2019
- The production pipeline continues to be strong - as of September 30, 2019, WOW!’s animation production backlog was $64.7 million
- WOW! plans to expand its majority-owned Frederator Books digital publishing business following significant growth and customer engagement over the past few months. Frederator Books, aimed at preschool to middle-school age children, features an array of titles from its stable of popular children’s characters and franchises led by Catbug, Lucy the Dinosaur and Wow! Wow! Wubbzy. The Company plans to more than double its library over the next year, which currently consists of nearly 50 titles. Available on leading kids’ e-book platforms such as Epic!, Frederator Books has seen very strong initial growth in engagement
Financial highlights & guidance
- Revenue for the three months ended September 30, 2019 was $23.3 million
- Operating EBITDA for the three months ended September 30, 2019 was $0.8 million
- The Company had previously issued guidance indicating revenues in excess of $85 million and Operating EBITDA between $2.4-$3.4 million. The Company revises its guidance to revenues in excess of $90 million and Operating EBITDA in excess of $0.6 million.
OVERVIEW OF RESULTS
| For the three months ended | For the nine months ended | ||||||||||||
| $000's, except per share amounts | September 30, 2019 | September 30, 2018 | September 30, 2019 | September 30, 2018 | |||||||||
| Revenue | $ | 23,349 | $ | 17,711 | $ | 69,459 | $ | 49,644 | |||||
| Operating EBITDA1 | 831 | (1,502 | ) | (1,608 | ) | (1,911 | ) | ||||||
| Operating loss1 | (723 | ) | (2,659 | ) | (6,204 | ) | (5,262 | ) | |||||
| Operating loss per share | |||||||||||||
| - basic and diluted | $ | (0.02 | ) | $ | (0.10 | ) | $ | (0.20 | ) | $ | (0.20 | ) | |
| Net loss | $ | (1,356 | ) | $ | (3,051 | ) | $ | (7,110 | ) | $ | (5,294 | ) | |
| Net loss per share | |||||||||||||
| - basic and diluted | $ | (0.04 | ) | $ | (0.11 | ) | $ | (0.23 | ) | $ | (0.20 | ) | |
| Weighted average number of shares outstanding: | |||||||||||||
| - basic and diluted | 32,024,314 | 27,759,773 | 31,397,931 | 26,163,726 | |||||||||
| 1 Operating EBITDA and operating loss include amortization of investment in film and television programming. Refer to discussion under Consolidated Results for a reconciliation of Operating EBITDA and Operating loss to Net loss. | |||||||||||||
- Revenue for the three months ended September 30, 2019 was $23.3 million. This included $13.3 million generated by the Networks and Platforms segment, and $10.0 million from the Animation Production segment.
- Operating EBITDA was $0.8 million and net loss was $1.4 million for the three months ended September 30, 2019.
“WOW! had a successful operating quarter - both Animation and Networks & Platforms grew year-over-year, and we continued ramping up our ancillary revenues within initiatives like its majority-owned Frederator Books. We're also seeing higher levels of interest in a few of our key original animation characters, as demonstrated by their substantial digital audience growth," reported Michael Hirsh, Chairman and Chief Executive Officer.
CONSOLIDATED RESULTS
| For the three months ended | For the nine months ended | ||||||||||||
| $000's | September 30, 2019 | September 30, 2018 | September 30, 2019 | September 30, 2018 | |||||||||
| Revenue | $ | 23,349 | $ | 17,711 | $ | 69,459 | $ | 49,644 | |||||
| Amortization of investment in film and television programming | $ | 2,109 | $ | 582 | $ | 2,767 | $ | 2,465 | |||||
| Operating EBITDA | $ | 831 | $ | (1,502 | ) | $ | (1,608 | ) | $ | (1,911 | ) | ||
| Finance costs | 505 | 359 | 1,484 | 1,012 | |||||||||
| Depreciation and amortization1 | 1,049 | 798 | 3,112 | 2,339 | |||||||||
| Operating loss | (723 | ) | (2,659 | ) | (6,204 | ) | (5,262 | ) | |||||
| Items affecting comparability: | |||||||||||||
| Share-based compensation expense | 633 | 183 | 906 | 661 | |||||||||
| Deferred income tax expense (recovery) | – | 209 | – | (629 | ) | ||||||||
| 633 | 392 | 906 | 32 | ||||||||||
| Net loss | $ | (1,356 | ) | $ | (3,051 | ) | $ | (7,110 | ) | $ | (5,294 | ) | |
| 1 Excludes amortization of investment in film and television programming | |||||||||||||
Revenue and Operating EBITDA
Revenue for the three and nine months ended September 30, 2019, increased by $5.6 million and $19.8 million, respectively, compared to the same periods in 2018. For the three and nine months ended September 30, 2019, revenues for the Networks and Platforms segment increased by $1.2 million and $20.7 million, respectively, and revenues for the Animation Production segment increased by $4.4 million and decreased by $0.9 million, respectively, in comparison to the same periods in 2018. The growth in revenues for the Networks and Platforms segment for the three and nine months ended September 30, 2019, was driven by increased views and revenues generated by Channel Frederator Network.
The increase in revenue for the Animation Production segment for the three months ended September 30, 2019, was a result of a higher volume of service contracts in comparison to the three months ended September 30, 2018, and revenue recognized from the delivery of IP during the period. Revenue for the Animation Production segment for the nine months ended September 30, 2018, was higher in comparison to the same period in 2019 as a result of the recognition of revenue from the sale of international licensing rights on IP during the period.
Operating EBITDA for the three and nine months ended September 30, 2019, increased by $2.3 million and $0.3 million, respectively, compared to the same periods in 2018. The higher operating EBITDA for the three and nine months ended September 30, 2019, resulted primarily from higher refundable tax credits on animation production, and a decrease in rent and occupancy costs from the adoption of IFRS 16.
CONFERENCE CALL
The Company will host a conference call at 8:30 a.m. Eastern Time on Wednesday, November 27, 2019, featuring management's quarterly remarks and follow-up question and answer period with analysts. The conference call can be accessed live by dialing 1 (877) 825-9920 five minutes prior to the scheduled start time. The Conference ID is 5337367.
A digital recording of the call will be available for one month (until midnight Eastern Time, December 27, 2019) by dialing 1 (855) 859-2056 or (404) 537-3406 and using the Conference ID 5337367.
NON-IFRS FINANCIAL MEASURES
In addition to results reported in accordance with IFRS, the Company reports using certain non-IFRS financial measures as supplemental indicators of the Company’s financial and operating performance. These non-IFRS financial measures include operating profit or loss, operating profit or loss per share and operating EBITDA. The Company believes these supplemental financial measures reflect the Company's on-going business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in its business.
The Company defines operating profit or loss as net profit or loss excluding the impact of specified items affecting comparability, including, where applicable, share of gain or loss of equity accounted investees, other non-operational income and expenses, deferred taxes and other gains or losses. The use of the term "non-operational income and expenses" is defined by the Company as those that do not impact operating decisions taken by the Company's management and is based upon the way the Company's management evaluates the performance of the Company's business for use in the Company's internal management reports. Operating profit or loss per share is calculated using diluted weighted average shares outstanding and does not represent actual profit or loss per share attributable to shareholders. The Company believes that the disclosure of operating profit or loss and operating profit or loss per share allows investors to evaluate the operational and financial performance of the Company's ongoing business using the same evaluation measures that management uses, and is therefore a useful indicator of the Company's performance or expected performance of recurring operations.
The Company defines operating EBITDA as profit or loss net of amortization of investment in film and television programming, but before interest, taxes, depreciation and amortization, adjusted for certain items affecting comparability as specified in the calculation of operating profit or loss. Operating EBITDA is presented on a basis consistent with the Company's internal management reports. The Company discloses operating EBITDA to capture the profitability of its business before the impact of items not considered in management's evaluation of operating performance. Unless otherwise stated, the Company includes the amortization of investment in film and television programming in the calculation of operating EBITDA.
The Company defines backlog as the undiscounted value of signed agreements for production services and intellectual property (“IP”) in relation to licensing and distribution agreements for work that has not yet been performed, but for which the Company expects to recognize revenue in future periods. Backlog excludes estimates of variable consideration for transactions involving sales or usage-based royalties in exchange for licences of intellectual property. The extent of eventual revenue recognized in future periods may be materially higher or lower than this amount, depending upon factors which include, but are not limited to the following: (i) contract modifications, (ii) fluctuations in foreign exchange rates for contracts not denominated in Canadian dollars, (iii) changes to production and delivery schedules, or (iv) valuation issues in connection with the collectability of fees.
Operating profit or loss, operating profit or loss per share, operating EBITDA, and backlog do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies. The Company cautions readers to consider these non-IFRS financial measures in addition to, and not as an alternative for, measures calculated in accordance with IFRS.
Forward-looking Statements
This news release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "achieve", "could", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "outlook", "expect", "may", "will", "project", "should" or similar words, including negatives thereof, suggesting future outcomes.
In particular, this news release contains forward-looking statements relating to, among other things: (i) general economic conditions; (ii) future revenues to be received by WOW!; (iii) WOW!’s future business prospects and opportunities; (iv) WOW!’s ability to complete any or all of its proposed production work; and (v) the ability of the Company to raise financing in the future.
Management of the Company believes the expectations reflected in such forward-looking statements are reasonable as of the date hereof but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. Various material factors and assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Those material factors and assumptions are based on information currently available to the Company, including data from publicly available governmental sources as well as from market research and industry analysis and on assumptions based on data and knowledge of this industry which the Corporation believes to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, such data is inherently imprecise.
Forward-looking statements are not a guarantee of future performance and are subject to and involve a number of known and unknown risks and uncertainties, many of which are beyond the control of the Company, which may cause the Company's actual performance and results to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks identified in the Company's annual information form for the year ended December 31, 2017, which has been filed with the Canadian Securities Administrators and is available on www.sedar.com. Any forward-looking statements are made as of the date hereof and, except as required by law, the Company assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
About Wow Unlimited Media Inc.
WOW! Unlimited Media is creating a leading animation-focused entertainment company by producing top-end content, and building brands and audiences on the most engaging media platforms. The Company produces animation in its two established studios: Frederator Studios in Los Angeles, which has a 20-year track record; and one of Canada's largest, multi-faceted animation production studios, Mainframe Studios in Vancouver, which has a 25-year track record. The Company’s media assets include Channel Frederator Network which comprises 3,000+ channels on YouTube, as well as WOW! branded programming on Crave, Canada’s leading streaming entertainment platform, owned by Bell Media. The Company operates out of offices in Toronto, New York, Vancouver and Los Angeles. The common voting shares of the Company (the “Common Voting Shares”) and variable voting shares of the Company (the “Variable Voting Shares”) are listed on the TSX Venture Exchange (the “TSX-V”) (TSX-V: WOW) and the OTCQX Best Market (OTCQX: WOWMF).