VANCOUVER, British Columbia, April 29, 2019 (GLOBE NEWSWIRE) -- Wow Unlimited Media Inc. (“WOW!” or the “Company”) (TSX-V: WOW; OTCQX: WOWMF), the next generation kids and youth entertainment company, announced its fourth quarter and fiscal year-end results for the period ended December 31, 2018.
The Company completed its second full year of operations with revenue of $78.6 million in 2018, as compared to $44.7 million in 2017.
2018 HIGHLIGHTS
Growth in series launches
WOW! Produced multiple series for Netflix, Amazon and other networks, streamers and international studios.
- WOW!’S Castlevania, season 2, debuted on Netflix in Q4 2018. Netflix also announced a 10-episode pick-up of season 3
- Additional WOW! produced titles on Netflix for 2018 include Barbie Dreamhouse Adventures, Spy Kids: Mission Critical and Reboot: The Guardian Code
- WOW!’s Costume Quest, which was produced throughout 2018, debuted on Amazon Prime Video in March 2019
- In partnership with Silvergate Media, WOW!’s production of season 5 of the series Octonauts continues in production
Awards and recognition
- WOW!’s Reboot: The Guardian Code and Bravest Warriors were nominated in multiple categories for Daytime Emmys, Canadian Screen Awards and Leo Awards
Growth in Advertising Video on Demand (“AVOD”)
- Channel Frederator Network also attracted a total of 34.3 billion views for the year ended December 31, 2018, representing a 206% increase over the prior year.
- The Frederator Network expanded its strength beyond animation to gaming and e-sports
Subscription Video on Demand (“SVOD”) brands
- The Company launched WOW! branded programming on Crave, Canada’s pre-eminent SVOD platform owned by Bell Media, under three programming blocks – WOW! Pre-school Playdate, WOW! World Kids, and WOW! High School Hall Pass
Strong production pipeline
- As of Dec 31, 2018, WOW!’s animation production backlog was $54.4 million, against 2018 Animation Production segment revenue of $33.7 million
Strategic partnership
- WOW! closed its asset purchase agreement with Bell Media, who became a 12% shareholder of WOW!
- WOW! appointed a nominee from Bell Media to its Board of Directors in November 2018
Financial highlights
- Revenue of $78.6 million was higher than previous guidance of $70.0-$72.0 million
- Operating EBITDA of ($2.8) million was better than previous guidance of ($3.0-$4.0) million
- Cash generated from operating activities in 2018 was $1.7 million compared to ($16.2) million cash used for 2017
| CONSOLIDATED FINANCIAL RESULTS | |||||||||||||
| For the three months ended | For the twelve months ended | ||||||||||||
| $000's, except per share amounts | December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | |||||||||
| Revenue | $ | 28,984 | $ | 16,675 | $ | 78,628 | $ | 44,660 | |||||
| Operating EBITDA1 | (920 | ) | (864 | ) | (2,831 | ) | (2,474 | ) | |||||
| Operating loss1 | (1,875 | ) | (2,226 | ) | (7,137 | ) | (7,795 | ) | |||||
| Operating loss per share | |||||||||||||
| - basic and diluted | $ | (0.06 | ) | $ | (0.09 | ) | $ | (0.26 | ) | $ | (0.31 | ) | |
| Net loss (profit) | $ | (1,429 | ) | $ | 251 | $ | (6,723 | ) | $ | (5,086 | ) | ||
| Net loss (profit) per share | |||||||||||||
| - basic and diluted | $ | (0.05 | ) | $ | 0.01 | $ | (0.25 | ) | $ | (0.20 | ) | ||
| Weighted average number of shares outstanding: | |||||||||||||
| - basic and diluted | 30,185,577 | 25,178,604 | 27,215,079 | 25,241,171 | |||||||||
| 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 Fiscal 2018 was $78.6 million. This included $44.9 million generated by the Networks and Platforms segment, which continues to build viewership. Revenue for the Animation Production segment was $33.7 million for Fiscal 2018, bolstered by the continued production of Costume Quest, Castlevania, season 2, Barbie Dreamhouse Adventures and Octonauts, season 5.
- Operating EBITDA was a $2.8 million loss and the net loss was $6.7 million for Fiscal 2018.
“WOW! continues to grow – our financial results have come ahead of previous guidance and the Company continues to build its brands domestically and internationally. We are also very pleased with the launch of WOW! Preschool Playdate, WOW! World Kids and WOW! High School Hall Pass on Crave, Canada’s premiere SVOD platform from Bell Media,” said Michael Hirsh, Chairman and CEO.
| YEAR END CONSOLIDATED RESULTS | |||||||||||
| $000's | 2018 | 2017 | 2016 | ||||||||
| Revenue | $ | 78,628 | $ | 44,660 | $ | 17,660 | |||||
| Amortization of investment in film and television programming | $ | 7,141 | $ | 7,455 | $ | – | |||||
| Operating EBITDA | $ | (2,831 | ) | $ | (2,474 | ) | $ | 1,188 | |||
| Finance costs | 1,177 | 443 | 1,663 | ||||||||
| Depreciation and amortization1 | 3,129 | 4,878 | 740 | ||||||||
| Operating loss | (7,137 | ) | (7,795 | ) | (1,215 | ) | |||||
| Items affecting comparability: | |||||||||||
| Share-based compensation expense | 799 | 1,342 | – | ||||||||
| Acquisition costs | – | – | 5,760 | ||||||||
| Impairment of Ratchet Productions, LLC | – | – | 566 | ||||||||
| Share of results of Ratchet Productions, LLC | – | – | 7,673 | ||||||||
| Deferred income tax recovery | (1,213 | ) | (4,051 | ) | (86 | ) | |||||
| (414 | ) | (2,709 | ) | 13,913 | |||||||
| Net loss | $ | (6,723 | ) | $ | (5,086 | ) | $ | (15,128 | ) | ||
| 1 Excludes amortization of investment in film and television programming | |||||||||||
Cumulative prior period information in the above table has been restated for purchase price allocation adjustments relating to the acquisition of Frederator.
Revenue and Operating EBITDA
Revenue for the year ended December 31, 2018, increased by $34.0 million, compared to 2017, as a result of an increase in revenues for the Networks and Platforms segment of $32.3 million which was driven by increased views and revenues generated by Channel Frederator. Revenues for the Animation Production segment in 2018 increased by $1.7 million compared to 2017, primarily resulting from the continued production of Costume Quest, Castlevania, season 2, Barbie Dreamhouse Adventures, Octonauts, season 5, and Spy Kids: Mission Critical, as well as revenue from the US licensing of Bravest Warriors, season 4, and proceeds from the licensing of international SVOD rights for Reboot: The Guardian Code.
Operating EBITDA decreased by $0.4 million for the year ended December 31, 2018 compared to 2017. The decrease in operating EBITDA for the year ended December 31, 2018, was primarily due to higher network affiliate payments, together with the Company’s investment in content and audience on Frederator’s owned and operated YouTube channels, as well as investing in content for the VRV platform and Crave.
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. These non-IFRS measures have been consistently calculated in all periods presented.
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.
Operating profit or loss, operating profit or loss per share and operating EBITDA 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 is creating a leading next generation kids and youth entertainment business by focusing on creating top end content, and by building and partnering with the most engaging platforms. The Company's key assets include: Frederator Networks Inc., which includes, Channel Frederator Network, the world's #1 digital animation network, Frederator Studios, an animation production company, as well as video-on-demand channels on digital platforms; and one of Canada's largest, multi-faceted animation production studios, Mainframe Studios, which produces computer-generated animated television series and long-form animated features.