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CST: 15/12/2019 01:26:00   

Wilhelmina International, Inc. Reports Results for Third Quarter 2019

32 Days ago

Third Quarter Financial Results

 
(in thousands)
Q3 19

Q3 18
YOY
Change
Q3 19
 YTD
Q3 18
 YTD
YOY
Change
Total Revenues $ 17,241   $ 19,153 (10.0 %) $ 57,245 $   59,465 (3.7 %)
Operating (Loss) Income   (149 )   281 (153.0 %)   488   1,167 (58.2 %)
(Loss) Income Before Provision for Taxes   (173 )   238 (172.7 %)   399   1,030 (61.3 %)
Net (Loss) Income   (166 )   208 (179.8 %)   176   797 (77.9 %)
EBITDA**    151     516 (70.7 %)   1,373   1,830 (25.0 %)
Adjusted EBITDA**   197     617 (68.1 %)   1,538   2,174 (29.3 %)
Pre-Corporate EBITDA**   448     915 (51.0 %)   2,372   3,069 (22.7 %)
 **Non-GAAP measures referenced are detailed in the disclosures at the end of this release.

DALLAS, Nov. 12, 2019 (GLOBE NEWSWIRE) --  Wilhelmina International, Inc. (Nasdaq:WHLM) ("Wilhelmina" or the "Company") today reported revenues of $17.2 million and net loss of $0.2 million for the three months ended September 30, 2019, compared to revenues of $19.2 million and net income of $0.2 million for the three months ended September 30, 2018. For the nine months ended September 30, 2019, Wilhelmina reported revenues of $57.2 million and net income of $0.2 million compared to revenue of $59.5 million and net income of $0.8 million for the nine months ended September 30, 2018. The decrease in revenues when compared to the same periods of the prior year was primarily due to a decrease in bookings in the Wilhelmina Studios division and core model bookings in the United States, partially offset by an increase in core model bookings in the London office and bookings from the Aperture division. For the three and nine months ended September 30, 2019 compared to the three and nine months ended September 30, 2018, operating income, EBITDA, Adjusted EBITDA, and Pre-Corporate EBITDA decreased, primarily due to decreased revenues, partially offset by decreased operating expenses.

Bill Wackermann, Wilhelmina’s Chief Executive Officer, commented, “Despite challenges in the third quarter of 2019, I feel optimistic about the Company's path forward. We are focused on strengthening our core business and encouraged by our growth in international markets.”

Financial Results

Net loss for the three months ended September 30, 2019 was $0.2 million or $0.03 per fully diluted share and net income for the nine months ended September 30, 2019 was $0.2 million or $0.03 per fully diluted share, compared to net income of $0.2 million and $0.8 million, or $0.04 and $0.15 per fully diluted share, for the three and nine months ended September 30, 2018.

Pre-Corporate EBITDA was $0.4 million and $2.4 million for the three and nine months ended September 30, 2019, compared to $0.9 million and $3.1 million for the three and nine months ended September 30, 2018. 

The following table reconciles reported net income under generally accepted accounting principles to EBITDA, Adjusted EBITDA and Pre-Corporate EBITDA for the three and nine months ended September 30, 2019 and 2018.

    Three months ended   Nine months ended 
(in thousands)      September 30,
   September 30,
    2019     2018   2019   2018
Net (loss) income $ (166 ) $   208 $ 176 $   797
Interest expense   27     26   89   73
Income tax (benefit) expense   (7 )   30   223   233
Amortization and depreciation   297     252   885   727
EBITDA** $ 151   $  516  $ 1,373 $    1,830
Foreign exchange (gain) loss   (3 )   17   -   64
Share-based payment expense   49     84   165   280
Adjusted EBITDA**   $ 197   $      617 $ 1,538 $    2,174
Corporate overhead   251     298   834   895
Pre-Corporate EBITDA**   $ 448   $    915 $ 2,372 $   3,069
 

**Non-GAAP measures referenced are detailed in the disclosures at the end of this release.

Changes in net income, EBITDA, Adjusted EBITDA and Pre-Corporate EBITDA for the three and nine months ended September 30, 2019, when compared to the three and nine months ended September 30, 2018, were primarily the result of the following:

  • Revenues net of model costs for the three and nine months ended September 30, 2019 decreased by 12.4% and 5.1% primarily due to decreases in bookings in the Wilhelmina Studios division and core model bookings in the United States, partially offset by an increase in core model bookings in the London office and bookings from the Aperture division. The decrease in core model bookings in the United States was primarily due to staff turnover; 
     
  • Salaries and service costs for the three months ended September 30, 2019 decreased by 6.1% primarily due to a decrease in employee salaries and a reduction in share based payment expense.  Salaries and service costs for the nine months ended September 30, 2019 were relatively stable;
     
  • Office and general expenses for the three and nine months ended September 30, 2019 decreased by 2.3% and 9.4%, primarily due to reduced rent expense, computer expense and bad debt expenses, as well as the reclassification of certain lease payments as amortization expense under new lease accounting rules;
     
  • Amortization and depreciation expense for the three and nine months ended September 30, 2019 increased by 17.9% and 21.7%, primarily due to new equipment being placed in service in recent months and certain lease payments previously included within office and general expenses now being classified as amortization under new lease accounting rules; and
     
  • Corporate overhead expenses for the three and nine months ended September 30, 2019 decreased by 15.8% and 6.8%, primarily due to lower securities compliance costs.

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data) 

    (Unaudited)      
    September 30 ,
2019
     December 31 ,
 2018
ASSETS          
Current assets:          
  Cash and cash equivalents   $ 5,521       $ 6,748  
  Accounts receivable, net of allowance for doubtful accounts of $1,484 and $1,791, respectively     12,083         11,901  
  Prepaid expenses and other current assets     274         197  
  Total current assets     17,878         18,846  
               
Property and equipment, net of accumulated depreciation of $4,032 and $3,264, respectively     2,103         2,567  
Right of use assets-operating     1,602         -  
Right of use assets-finance     129         -  
Trademarks and trade names with indefinite lives      8,467         8,467  
Other intangibles with finite lives, net of accumulated amortization of $8,720 and $8,684, respectively     17         53  
Goodwill     13,192         13,192  
Other assets     113         114  
               
TOTAL ASSETS   $ 43,501       $ 43,239  
               
LIABILITIES AND SHAREHOLDERS’ EQUITY               
Current liabilities:              
  Accounts payable and accrued liabilities   $ 3,824       $ 5,071  
  Due to models     8,840         8,809  
  Lease liabilities – operating, current     1,125         -  
  Lease liabilities – finance, current     94         -  
  Term loan – current     750         623  
  Total current liabilities     14,633         14,503  
               
Long term liabilities:              
  Net deferred income tax liability     654         631  
  Lease liabilities – operating, non-current     623         -  
  Lease liabilities – finance, non-current     44         -  
  Term loan – non-current     1,435         2,000  
  Total long term liabilities     2,756         2,631  
               
Total liabilities     17,389         17,134  
               
Shareholders’ equity:              
  Common stock, $0.01 par value, 9,000,000 shares authorized; 6,472,038 shares              
   issued at September 30, 2019 and December 31, 2018     65         65  
  Treasury stock, 1,301,917 and 1,264,154 shares at September 30, 2019 and December 31, 2018, at cost     (6,320 )       (6,093 )
  Additional paid-in capital     88,420         88,255  
  Accumulated deficit     (55,853 )       (56,029 )
  Accumulated other comprehensive loss     (200 )       (93 )
Total shareholders’ equity     26,112         26,105  
               
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $ 43,501       $ 43,239  


WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Three and Nine Months Ended September 30, 2019 and 2018
 (In thousands, except per share data)
(Unaudited)

    Three Months Ended     Nine Months Ended  
    September 30,      September 30,   
    2019       2018       2019       2018    
Revenues:                        
Service revenues   $ 17,224       $ 19,143       $ 57,199       $ 59,425    
License fees and other income     17         10         46         40    
Total revenues     17,241         19,153         57,245         59,465    
                                 
Model costs     12,534         13,777         41,166         42,524    
                                 
Revenues, net of model costs     4,707         5,376         16,079         16,941    
                                 
Operating expenses:                                
Salaries and service costs     3,266         3,478         10,571         10,509    
Office and general expenses     1,042         1,067         3,301         3,643    
Amortization and depreciation     297         252         885         727    
Corporate overhead     251         298         834         895    
Total operating expenses     4,856         5,095         15,591         15,774    
Operating (loss) income     (149 )       281         488         1,167    
                                 
Other expense:                                
  Foreign exchange gain (loss)     3         (17 )       -         (64 )  
  Interest expense     (27 )       (26 )       (89 )       (73 )  
  Total other expense     (24 )       (43 )       (89 )       (137 )  
                                 
(Loss) income before provision for income taxes      (173 )       238         399         1,030    
                                 
Provision for income taxes (expense) benefit:                                
  Current     (47 )       (80 )       (200 )       (220 )  
  Deferred     54         50         (23 )       (13 )  
  Income tax (expense) benefit     7         (30 )       (223 )       (233 )  
                                 
 Net (loss) income   $ (166 )     $ 208       $ 176       $ 797    
                                 
Other comprehensive expense:                                
  Foreign currency translation adjustment     (76 )       (24 )       (107 )       (56 )  
  Total comprehensive (loss) income     (242 )       184         69         741    
                                 
Basic net (loss) income per common share   $ (0.03 )     $ 0.04       $ 0.03       $ 0.15    
Diluted net (loss) income per common share   $ (0.03 )     $ 0.04       $ 0.03       $ 0.15    
                                 
Weighted average common shares outstanding-basic     5,176         5,309         5,189         5,353    
Weighted average common shares outstanding-diluted     5,176         5,318         5,189         5,361    

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For the Three and Nine Months Ended September 30, 2019 and 2018
 (In thousands)
(Unaudited)

    Common
Shares
  Stock
Amount
  Treasury
Shares
    Stock
Amount
    Additional
Paid-in
Capital
    Accumulated
Deficit
      Accumulated
Other
Comprehensive
Loss
  Total  
Balances at December 31, 2017     6,472   $ 65     (1,090 )     $ (4,893 )     $ 87,892     $ (56,885 )     $ 4     $ 26,183    
  Share based payment expense     -     -     -         -         109       -         -       109    
  Net income to common shareholders     -     -     -         -         -       225         -       225    
  Purchases of treasury stock     -     -     (6 )       (36 )       -       -         -       (36 )  
  Foreign currency translation     -     -     -         -         -       -         43       43    
Balances at March 31, 2018     6,472   $ 65     (1,096 )     $ (4,929 )     $ 88,001     $ (56,660 )     $ 47     $ 26,524    
  Share based payment expense     -     -     -         -         87       -         -       87    
  Net income to common shareholders     -     -     -         -         -       364         -       364    
  Purchases of treasury stock     -     -     (7 )       (46 )       -       -         -       (46 )  
  Foreign currency translation     -     -     -         -         -       -         (75 )     (75 )  
Balances at June 30, 2018     6,472   $ 65     (1,103 )     $ (4,975 )     $ 88,088     $ (56,296 )     $ (28 )   $ 26,854    
  Share based payment expense     -     -     -         -         84       -         -       84    
  Net income to common shareholders     -     -     -         -         -       208         -       208    
  Purchases of treasury stock     -     -     (100 )       (706 )       -       -         -       (706 )  
  Foreign currency translation     -     -     -         -         -       -         (24 )     (24 )  
Balances at September 30, 2018     6,472   $ 65     (1,203 )     $ (5,681 )     $ 88,172     $ (56,088 )     $ (52 )   $ 26,416    


    Common
Shares
  Stock
Amount
  Treasury
Shares
    Stock
Amount
    Additional
Paid-in
Capital
    Accumulated
Deficit
      Accumulated
Other
Comprehensive
Loss
  Total  
Balances at December 31, 2018     6,472   $ 65     (1,264 )     $ (6,093 )     $ 88,255     $ (56,029 )     $ (93 )   $ 26,105    
  Share based payment expense     -     -     -         -         64       -         -       64    
  Net income to common shareholders     -     -     -         -         -       (109 )       -       (109 )  
  Purchases of treasury stock     -     -     (4 )       (24 )       -       -         -       (24 )  
  Foreign currency translation     -     -     -         -         -       -         28       28    
Balances at March 31, 2019     6,472   $ 65     (1,268 )     $ (6,117 )     $ 88,319     $ (56,138 )     $ (65 )   $ 26,064    
  Share based payment expense     -     -     -         -         52       -         -       52    
  Net income to common shareholders     -     -     -         -         -       451         -       451    
  Purchases of treasury stock     -     -     (25 )       (149 )       -       -         -       (149 )  
  Foreign currency translation     -     -     -         -         -       -         (59 )     (59 )  
Balances at June 30, 2019     6,472   $ 65     (1,293 )     $ (6,266 )     $ 88,371     $ (55,687 )     $ (124 )   $ 26,359    
  Share based payment expense     -     -     -         -         49       -         -       49    
  Net loss to common shareholders     -     -     -         -         -       (166 )       -       (166 )  
  Purchases of treasury stock     -     -     (9 )       (54 )       -       -         -       (54 )  
  Foreign currency translation     -     -     -         -         -       -         (76 )     (76 )  
Balances at September 30, 2019     6,472   $ 65     (1,302 )     $ (6,320 )     $ 88,420     $ (55,853 )     $ (200 )   $ 26,112    

The accompanying notes are an integral part of these consolidated financial statements.


WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
For the Three and Nine Months Ended September 30, 2019 and 2018
 (In thousands)
(Unaudited)
                                                                                              

    Nine Months Ended
September 30,
      2019       2018  
Cash flows from operating activities:          
Net income:   $ 176       $ 797  
Adjustments to reconcile net income to net cash (used in) provided by operating activities:              
  Amortization and depreciation     885         727  
  Share based payment expense     165         280  
  Deferred income taxes     23         13  
  Bad debt (recovery) expense      (1 )       70  
Changes in operating assets and liabilities:              
  Accounts receivable     (181 )       (296 )
  Prepaid expenses and other current assets     (77 )       (107 )
  Right of use assets-operating     802           -  
  Other assets     1         20  
  Due to models     31         (635 )
  Lease liabilities-operating     (854 )       -  
  Accounts payable and accrued liabilities     (1,038 )       862  
Net cash (used in) provided by operating activities     (68 )       1,731  
               
Cash flows used in investing activities:              
  Purchases of property and equipment     (304 )       (293 )
Net cash used in investing activities     (304 )       (293 )
               
Cash flows (used in) provided by financing activities:              
  Purchases of treasury stock     (227 )       (788 )
  Payments on finance leases     (83 )       -  
  Proceeds from term loan     -         700  
  Repayment of term loan     (438 )       (390 )
Net cash used in financing activities     (748 )       (478 )
               
Foreign currency effect on cash flows:     (107 )       (56 )
               
Net change in cash and cash equivalents:     (1,227 )       904  
  Cash and cash equivalents, beginning of period     6,748         4,256  
  Cash and cash equivalents, end of period   $ 5,521       $ 5,160  
               
Supplemental disclosures of cash flow information:              
  Cash paid for interest   $ 88       $ 71  
  Cash paid (refund) of income taxes   $ 5       $ (10 )

Non-GAAP Financial Measures

EBITDA, Adjusted EBITDA and Pre-Corporate EBITDA represent measures of financial performance that are not calculated and presented in accordance with U.S. generally accepted accounting principles (“non-GAAP financial measures”). The Company considers EBITDA, Adjusted EBITDA and Pre-Corporate EBITDA to be important measures of performance because they:

  • are key operating metrics of the Company's business;
  • are used by management in its planning and budgeting processes and to monitor and evaluate its financial and operating results; and
  • provide stockholders and potential investors with a means to evaluate the Company's financial and operating results against other companies within the Company's industry. 

The Company's calculation of non-GAAP financial measures may not be consistent with similar calculations by other companies in the Company's industry. The Company calculates EBITDA as net income plus interest expense, income tax expense, and depreciation and amortization expense. The Company calculates “Adjusted EBITDA” as EBITDA plus foreign exchange gain/loss plus share-based payment expense and certain significant non-recurring items that the Company may include from time to time. The Company calculates “Pre-Corporate EBITDA” as Adjusted EBITDA plus corporate overhead expense, which includes director compensation, securities laws compliance costs, audit and professional fees, and other public company costs.

Non-GAAP financial measures should not be considered as alternatives to net and operating income as an indicator of the Company's operating performance or cash flows from operating activities as a measure of liquidity or any other measure of performance derived in accordance with generally accepted accounting principles.

Form 10-Q Filing

Additional information concerning the Company's results of operations and financial position is included in the Company's Form 10-Q for the third quarter ended September 30, 2019 filed with the Securities and Exchange Commission on November 12, 2019.

Forward-Looking Statements

This press release contains certain “forward-looking” statements as such term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relating to the Company are based on the beliefs of the Company’s management as well as information currently available to the Company’s management. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect” and “intend” and words or phrases of similar import, as they relate to the Company or Company management, are intended to identify forward-looking statements. Such forward-looking statements include, in particular, projections about the Company’s future results, statements about its plans, strategies, business prospects, changes and trends in its business and the markets in which it operates. Additionally, statements concerning future matters such as gross billing levels, revenue levels, expense levels, and other statements regarding matters that are not historical are forward-looking statements. Management cautions that these forward-looking statements relate to future events or the Company’s future financial performance and are subject to business, economic, and other risks and uncertainties, both known and unknown, that may cause actual results, levels of activity, performance, or achievements of its business or its industry to be materially different from those expressed or implied by any forward-looking statements. Should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. The Company does not undertake any obligation to publicly update these forward-looking statements. As a result, no person should place undue reliance on these forward-looking statements.

About Wilhelmina International, Inc. (www.wilhelmina.com):

Wilhelmina, together with its subsidiaries, is an international full-service fashion model and talent management service, specializing in the representation and management of leading models, celebrities, artists, photographers, athletes, and content creators. Established in 1967 by fashion model Wilhelmina Cooper, Wilhelmina is one of the oldest and largest fashion model management companies in the world. Wilhelmina is publicly traded on Nasdaq under the symbol WHLM. Wilhelmina is headquartered in New York and, since its founding, has grown to include operations in Los Angeles, Miami, London and Chicago. Wilhelmina also owns Aperture, a talent and commercial agency located in New York and Los Angeles. For more information, please visit www.wilhelmina.com and follow @WilhelminaModels.

CONTACT: Investor Relations
Wilhelmina International, Inc.
214-661-7488
ir@wilhelmina.com

 

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