VANCOUVER, British Columbia, Nov. 25, 2021 (GLOBE NEWSWIRE) -- WOW! Unlimited Media Inc. (“WOW!” or the “Company”) (TSX-V: WOW; OTCQX: WOWMF) announced today its results for the three and nine months ended September 30, 2021.
Michael Hirsh, Chairman and CEO commented: This quarter’s continuing positive results substantiate the strong and continuing growth of the WOW! business. Our Board and management team are pleased with the results of our strategic review announced April 29th culminating in the announcement of our merger with Genius Brands. Together we are well positioned to grow the business dynamically with a combination of great management, great staff, great brands and solid financing.
KEY HIGHLIGHTS
- The Company completed the third quarter of 2021 with operating EBITDA of $2.4 million for the three months ended September 30, 2021, as compared to $0.6 million for the same period in 2020.
- For the third quarter of 2021, the Company reported net income of $1.0 million as compared to a net loss of $1.0 million for the same period in 2020.
- Both reporting segments, Animation Production and Networks & Platforms, reported segment profits for the third quarter of 2021.
- As at September 30, 2021, the Company’s production backlog was $70.0 million representing animation work to be completed primarily over the next 24 months.
- On October 27, 2021, the Company announced it had entered into a definitive arrangement agreement with Genius Brands International, Inc. ("Genius Brands") (NASDAQ: GNUS) whereby Genius Brands will acquire all of the issued and outstanding shares of the Company for approximately $66 million ($53 million USD) in cash and stock.
- The Company completed delivery of the 60-minute animated movie titled Barbie: Big City, Big Dreams, which premiered on Netflix on September 1, 2021.
- 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 significant new project in partnership with Spin Master, a global Canadian toy and entertainment company, a number of new and exciting Barbie projects for its longstanding customer Mattel, a new original IP 2d-animated series entitled The Guava Juice Show in partnership with Studio71 and YouTube sensation Roi Fabito, Seasons 5 through 8 of the series Octonauts for Silvergate, Bee & PuppyCat: Lazy in Space for Netflix, and a new, internally developed, animated series which is being produced in partnership with a leading US based studio.
- 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. 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 $20.2 million
- Operating EBITDA for the quarter was $2.4 million.
OVERVIEW OF RESULTS
| For the three months ended | For the nine months ended | |||||||||||
| $000's, except per share amounts | September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | ||||||||
| Revenue | $ | 20,188 | $ | 15,463 | $ | 53,941 | $ | 40,686 | ||||
| Operating EBITDA1 | 2,419 | 594 | 6,142 | 38 | ||||||||
| Operating profit (loss)1 | 1,108 | (891 | ) | 2,460 | (4,410 | ) | ||||||
| Operating profit (loss) per share | ||||||||||||
| - basic | $ | 0.03 | $ | (0.03 | ) | $ | 0.08 | $ | (0.14 | ) | ||
| - diluted | $ | 0.03 | $ | (0.03 | ) | $ | 0.06 | $ | (0.14 | ) | ||
| Net income (loss) | $ | 1,048 | $ | (1,001 | ) | $ | 2,857 | $ | (5,838 | ) | ||
| Earnings (loss) per share | ||||||||||||
| - basic | $ | 0.03 | $ | (0.03 | ) | $ | 0.09 | $ | (0.18 | ) | ||
| - diluted | $ | 0.03 | $ | (0.03 | ) | $ | 0.08 | $ | (0.18 | ) | ||
| Weighted average number of shares outstanding: | ||||||||||||
| - basic | 32,024,314 | 32,024,314 | 32,024,314 | 32,024,314 | ||||||||
| - diluted | 40,932,042 | 32,024,314 | 40,770,654 | 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 September 30, 2021, was $20.2 million. This included $12.6 million for the Animation Production segment and $7.6 million generated by the Networks and Platforms segment for the three months ended September 30, 2021.
- Operating EBITDA was $2.4 million, and net income was $1.0 million, for the three months ended September 30, 2021.
CONSOLIDATED RESULTS
| For the three months ended | For the nine months ended | ||||||||||||
| $000's | September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | |||||||||
| Revenue | $ | 20,188 | $ | 15,463 | $ | 53,941 | $ | 40,686 | |||||
| Amortization of investment in film and television programming | $ | 2,989 | $ | 1,742 | $ | 7,984 | $ | 2,866 | |||||
| Operating EBITDA | $ | 2,419 | $ | 594 | $ | 6,142 | $ | 38 | |||||
| Finance costs | 458 | 497 | 1,316 | 1,498 | |||||||||
| Depreciation and amortization1 | 853 | 988 | 2,366 | 2,950 | |||||||||
| Operating profit (loss) | 1,108 | (891 | ) | 2,460 | (4,410 | ) | |||||||
| Items affecting comparability: | |||||||||||||
| Share-based compensation expense | 60 | 110 | 188 | 403 | |||||||||
| Restructuring costs | – | – | – | 1,100 | |||||||||
| Forgiveness of CRTC tangible benefits obligation | – | – | (585 | ) | – | ||||||||
| Deferred income tax expense (recovery) | – | – | – | (75 | ) | ||||||||
| 60 | 110 | (397 | ) | 1,428 | |||||||||
| Net income (loss) | $ | 1,048 | $ | (1,001 | ) | $ | 2,857 | $ | (5,838 | ) | |||
| 1 Excludes amortization of investment in film and television programming | |||||||||||||
Revenue and Operating EBITDA
Revenue for the three and nine months ended September 30, 2021, increased by $4.7 million and $13.3 million, respectively, compared to the same periods in 2020. For the three and nine months September 30, 2021, revenues for the Animation Production segment increased by $3.7 million and $8.9 million, respectively, and revenues for the Networks and Platforms segment increased by $1.0 million and $4.4 million, respectively, in comparison to the same periods in 2020. The growth in revenue for the Animation Production segment for the three and nine months ended September 30, 2021, was primarily driven by the delivery of animation IP during the period. The increase in revenue for the Networks and Platforms segment for the three and nine months ended September 30, 2021, was primarily the result of an increase in advertising revenue generated on YouTube in comparison to the same periods in the prior year.
Operating EBITDA for the three and nine months ended September 30, 2021, increased by $1.8 million and $6.1 million, respectively, compared to the same periods in 2020. The higher operating EBITDA for the three months ended September 30, 2021, was driven primarily by the delivery of animation IP during the period. The higher operating EBITDA for the nine months ended September 30, 2021, was primarily driven by the delivery of animation IP during the period, in addition to the recognition of the US Paycheck Protection Program loan forgiveness.
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.
