VANCOUVER, British Columbia, Aug. 26, 2021 (GLOBE NEWSWIRE) -- WOW! Unlimited Media Inc. (“WOW!” or the “Company”) (TSX-V: WOW; OTCQX: WOWMF) announced today its results for the three and six months ended June 30, 2021.
Michael Hirsh, Chairman & CEO, commented: “WOW!’s second quarter performance continued to build on the momentum from the first quarter. The Company delivered its fourth consecutive quarter of positive EBITDA and both reporting segments continued to generate positive operating income. We announced critical growth initiatives – Mainframe’s foray into 2D production and live action, as well as the addition of a virtual studio in Toronto. We remain focused on execution of our significant animation pipeline and to delivering a strong finish to the remainder of 2021.”
KEY HIGHLIGHTS
- The Company completed the second quarter of 2021 with operating EBITDA of $1.9 million for the three months ended June 30, 2021, as compared to a loss of $0.7 million for the same period in 2020.
- For the second quarter of 2021, the Company reported net income of $0.5 million as compared to a net loss of $2.1 million for the same period in 2020.
- Both reporting segments, Animation Production and Networks & Platforms, reported segment profits for the second quarter of 2021.
- As at June 30, 2021, the Company’s production backlog was $77.5 million, which did not include $3.2 million of additional contracts signed subsequent to quarter-end, representing animation work to be completed primarily over the next 24 months.
- The fourth and final season of Castlevania completed delivery in Q2 2021 and premiered on Netflix on May 13, 2021.
- Mainframe Studios commenced production on a new 2D-animated series entitled The Guava Juice Show in partnership with Studio71 and YouTube sensation Roi Fabito. The show will build on the appeal of Roi’s blockbuster (16.5 million subscriber) Guava Juice channel on YouTube. This project marked the entry of Mainframe into 2D animation with an original IP production.
- In August 2021, the Company commenced production on Ukulele U, WOW!’s first live-action preschool series for the Canadian Broadcasting Corporation (“CBC”) in Canada. Renowned music producer Bob Ezrin (Alice Cooper, Pink Floyd, U2, Peter Gabriel) and award-winning performer Melanie Doane are spearheading the project. Deliveries will commence before the end of the year. International broadcast and merchandising licenses are under consideration.
- Additional production includes a number of new and exciting Barbie projects for its longstanding customer Mattel, Seasons 5 through 8 of the series Octonauts for Silvergate, Bee & PuppyCat: Lazy in Space for Netflix, a new, internally developed, animated series which is being produced in partnership with a leading US based studio, and a significant new project in partnership with Spin Master, a global Canadian toy and entertainment company.
- On April 29, 2021, the Company announced that the Board of Directors, working closely with Management, has commenced a process to explore and evaluate potential strategic alternatives focused on maximizing shareholder value. These alternatives could include, among other things, an acquisition, a merger or other business combination, a financing, a sale of assets, a sale of the Company, or other strategic transactions that may be available to the Company.
- On July 29, 2021, the Company amended its credit facility with a Canadian bank. to increase its equipment lease line to $8.0 million from $7.0 million. In addition, amendments were made to certain financial covenants under the Facility.
- On August 16, 2021, the Company’s Mainframe division announced the opening of a virtual studio in Toronto. The studio will be virtually connected to Mainframe’s Global Studio Pipeline, without incurring any additional physical lease requirements. Mainframe’s commitment to a long-term work from home strategy provides flexibility to its teams with a strong focus on work-life balance and this approach will provide opportunities for talent across Ontario.
FINANCIAL HIGHLIGHTS
- Revenue for the quarter was $18.8 million
- Operating EBITDA for the quarter was $1.9 million.
OVERVIEW OF RESULTS
| For the three months ended | For the six months ended | |||||||||||
| $000's, except per share amounts | June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | ||||||||
| Revenue | $ | 18,798 | $ | 11,528 | $ | 33,753 | $ | 25,223 | ||||
| Operating EBITDA1 | 1,858 | (664 | ) | 3,725 | (553 | ) | ||||||
| Operating profit (loss)1 | 549 | (2,131 | ) | 1,352 | (3,518 | ) | ||||||
| Operating profit (loss) per share | ||||||||||||
| - basic | $ | 0.02 | $ | (0.07 | ) | $ | 0.04 | $ | (0.11 | ) | ||
| - diluted | $ | 0.01 | $ | (0.07 | ) | $ | 0.03 | $ | (0.11 | ) | ||
| Net income (loss) | $ | 477 | $ | (3,368 | ) | $ | 1,809 | $ | (4,836 | ) | ||
| Earnings (loss) per share | ||||||||||||
| - basic | $ | 0.01 | $ | (0.11 | ) | $ | 0.06 | $ | (0.15 | ) | ||
| - diluted | $ | 0.01 | $ | (0.11 | ) | $ | 0.05 | $ | (0.15 | ) | ||
| Weighted average number of shares outstanding: | ||||||||||||
| - basic | 32,024,314 | 32,024,314 | 32,024,314 | 32,024,314 | ||||||||
| - diluted | 40,775,654 | 32,024,314 | 40,656,107 | 32,024,314 | ||||||||
| 1 Operating EBITDA and operating profit (loss) include amortization of investment in film and television programming. Refer to discussion | ||||||||||||
| under Consolidated Results for a reconciliation of Operating EBITDA and Operating profit (loss) to Net income (loss). | ||||||||||||
- Revenue for the three months ended June 30, 2021, was $18.8 million. This included $7.3 million generated by the Networks and Platforms segment and $11.5 million for the Animation Production segment for the three months ended June 30, 2021, bolstered by the continued production of Madagascar: A Little Wild, Octonauts, seasons 5 through 8, a significant new project in partnership with Spin Master, various projects for our long-standing customer Mattel, and the delivery of the final episode of season 4 of Castlevania.
- Operating EBITDA was $1.9 million, and the net income was $0.5 million, for the three months ended June 30, 2021.
CONSOLIDATED RESULTS
| For the three months ended | For the six months ended | ||||||||||||
| $000's | June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |||||||||
| Revenue | $ | 18,798 | $ | 11,528 | $ | 33,753 | $ | 25,223 | |||||
| Amortization of investment in film and television programming | $ | 3,361 | $ | 559 | $ | 4,996 | $ | 1,124 | |||||
| Operating EBITDA | $ | 1,858 | $ | (664 | ) | $ | 3,725 | $ | (553 | ) | |||
| Finance costs | 461 | 440 | 859 | 1,003 | |||||||||
| Depreciation and amortization1 | 848 | 1,027 | 1,514 | 1,962 | |||||||||
| Operating profit (loss) | 549 | (2,131 | ) | 1,352 | (3,518 | ) | |||||||
| Items affecting comparability: | |||||||||||||
| Share-based compensation expense | 72 | 137 | 128 | 293 | |||||||||
| Restructuring costs | – | 1,100 | – | 1,100 | |||||||||
| Forgiveness of CRTC tangible benefits obligation | – | – | (585 | ) | – | ||||||||
| Deferred income tax expense (recovery) | – | – | – | (75 | ) | ||||||||
| 72 | 1,237 | (457 | ) | 1,318 | |||||||||
| Net income (loss) | $ | 477 | $ | (3,368 | ) | $ | 1,809 | $ | (4,836 | ) | |||
| 1 Excludes amortization of investment in film and television programming | |||||||||||||
Revenue and Operating EBITDA
Revenue for the three and six months ended June 30, 2021, increased by $7.3 million and $8.5 million, respectively, compared to the same periods in 2020. For the three and six months ended June 30, 2021, revenues for the Networks and Platforms segment increased by $3.1 million and $3.4 million, respectively, and revenues for the Animation Production segment increased by $4.1 million and $5.1 million, respectively, in comparison to the same periods in 2020. The increase in revenue for the Networks and Platforms segment for the three months ended June 30, 2021, was primarily the result of an increase in advertising revenue generated on YouTube in comparison to the prior year. The growth in revenue for the Animation Production segment for the three and six months ended June 30, 2021, was primarily driven by the delivery of IP during the period.
Operating EBITDA for the three and six months ended June 30, 2021, increased by $2.5 million and $4.3 million, respectively, compared to the same periods in 2020. The higher operating EBITDA for the three months ended June 30, 2021, was driven primarily by the delivery of IP during the period. The higher operating EBITDA for the six months ended June 30, 2021, was driven by the recognition of the Paycheck Protection Program loan forgiveness in addition to the delivery of IP during the period.
CONFERENCE CALL
The Company will host a conference call at 9:00 a.m. Eastern Time on Friday, August 27, 2021, to discuss the Company’s financial results.
The conference call can be accessed live by dialling 1 (877) 825-9920 five minutes prior to the scheduled start time. The Conference ID is 1529947.
A digital recording of the call will be available for one month (until 11:59 p.m. Eastern Time, September 26, 2021) by dialling 1 (855) 859-2056 or (404) 537-3406 and using the Conference ID 1529947. Alternatively, the call recording can also be accessed on the WOW! website’s Investors page.
NON-IFRS FINANCIAL MEASURES
In addition to results reported in accordance with International Financial Reporting Standards (“IFRS”), this news release includes financial terms that the Company utilizes to assess the financial performance of its business that are not measures recognized under IFRS. These non-IFRS financial measures include operating profit or loss, operating profit or loss per share, operating EBITDA, and backlog. 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. These non-IFRS measures have been consistently calculated in all periods presented.
The Company defines operating profit or loss as net income or loss excluding the impact of specified items affecting comparability, including, where applicable, share of gain or loss of equity accounted investees, impairment of other intangible assets and goodwill, 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 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.
For additional information regarding the Company's use of non-IFRS measures, including the calculation of these measures and a reconciliation of operating EBITDA and operating profit (loss) to net income (loss), please refer to the “Reconciliations” section of the Company's management's discussion and analysis for the year ended December 31, 2020, available on the Company's website at www.wowunlimited.co and on SEDAR at www.sedar.com.
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; (v) the impact of overhead and cost savings initiatives at the Company’s Frederator operations; (vi) Mainframe’s plans to adapt its work from home model; and (vii) deliveries of Mainframe Studios’ production on a new animated series.
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. Specific material factors and assumptions include, but are not limited to: (i) the performance of WOW!'s business, including current business and economic trends; (ii) capital expenditure programs and other expenditures by WOW! and its customers; (iii) dependence on key personnel and the ability of WOW! to retain and hire qualified personnel; (iv) the ability of WOW! to market its content successfully to existing and new customers; (v) the ability of WOW! to retain customers; (vi) the ability of WOW! to obtain timely financing on acceptable terms; (vii) a stable competitive environment; (viii) WOW!’s ability to anticipate and adapt to changes in technology and product consumption patterns; (ix) a stable industry regulatory environment; (x) ongoing relationships with WOW!’s distributors and business partners; and (xi) competitive forces within the entertainment industry. 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 Management’s Discussion and Analysis for the year ended December 31, 2020, 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!
WOW! 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 the USA, which has a 20-year track record; and one of Canada’s largest, multi-faceted animation production studios, Mainframe Studios, which has a 25-year track record. The Company also operates Channel Frederator Network on YouTube. The common voting shares of the Company and variable voting shares of the Company are listed on the TSX Venture Exchange (TSX-V: WOW) and the OTCQX Best Market (OTCQX: WOWMF).
Neither the 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.
