IDW Reports First Quarter Fiscal Year 2020 Results

IDW Entertainment Debuts Three New Series

NEWARK, NJ and LOS ANGELES, CA / ACCESSWIRE / March 12, 2020 / IDW Media Holdings, Inc. (OTCPINK:IDWM), an integrated media company, today reported a first quarter net loss per share of $(0.91) on revenue of $14.1 million for the three months ended January 31, 2020.

Media Highlights

  • IDW Entertainment (IDWE)’s ‘Locke & Key,’ a supernatural horror drama based on the IDWP comic series by best-selling author and Eisner award winner Joe Hill, premiered on Netflix on February 7th. Following its debut, ‘Locke & Key’ quickly became one of Netflix’s most popular shows and reached the #1 position on TV Time’s The Binge Report (Week of February 10, 2020) based on viewership tracking.
  • During 1Q20, IDWE’s series ‘V Wars’ and ‘October Faction’ also premiered on Netflix. ‘V Wars’ was named the #1 Show on the Rise following its debut by TV Time. ‘V Wars’ was also the #4 show on TV Time’s The Binge Report (Week of December 2, 2019).
  • Season four (S4) of IDWE’s ‘Wynonna Earp,’ a live action Western horror drama and winner of the People’s Choice Awards for Best Sci-Fi/Fantasy Show in 2018, starring E! Awards winner Melanie Scrofano and based on the IDWP comic series by Beau Smith, is now in production. Ms. Scrofano will direct one S4 episode for her directorial debut.
  • IDW Games garnered over $800 thousand in orders for ‘Teenage Mutant Ninja Turtles Adventures: City Fall‘ through a Kickstarter campaign, and has received pledges of $1.5 million to date for its campaign for ‘Batman: The Animated Series Adventures.’ Kickstarter is an online platform for creators to share and finance their creation. The highly successful campaigns reflect IDW’s 360̊ approach to franchise development including games, merchandising and other offerings for global fanbases.
  • IDW Publishing (IDWP) is preparing to release ‘Sleeping Beauties,’ in April. This captivating ten issue comic book series is based on the bestselling novel by Stephen King and Owen King. Author Rio Youers (The Forgotten Girl) and artist Alison Sampson (Winnebago Graveyard) inspired this wonderfully rich adaptation.
  • Capitalizing on the success of ‘Locke & Key,’ IDWP announced a ‘Locke & Key’ crossover book initiative with DC Comics’ popular ‘Sandman Universe.’ ‘Locke & Key’ creator Joe Hill and artist and artist Gabriel Rodríguez will lead the creative effort which is expected to debut in October, 2020.

Comments of IDW Chairman and CEO, Howard Jonas

“The first quarter was a momentous one for IDW, highlighted by the debuts of ‘V-Wars,’ ‘October Faction,’ and, following the quarter close, of ‘Locke & Key’ – all on Netflix. The three shows were very well received and I’m grateful to our authors, illustrators and the many creative members of our IDW team who worked so hard and successfully over the years on the comics and, more recently, these three shows. We have discussed potential renewals of the shows with Netflix and expect that Netflix will announce any decisions this summer.

“Financially, our topline results for the first quarter improved significantly compared to the prior year reflecting our delivery of the three remaining episodes of ‘October Faction’ in November. The bottom line was impacted primarily by the production financing deal for ‘October Faction” while IDW Publishing delivered significantly improved results. The success of ‘Locke & Key’ on Netflix helped drive sales of ‘Locke & Key’ books, and IDW Games had a strong quarter propelled by early sales of its Teenage Mutant Ninja Turtles Adventures game.

“We expect that IDW Entertainment’s and IDW Publishing’s results will continue to improve this year. Most notably, in 2Q20 we will recognize the revenues and expenses of season one of ‘Locke & Key,’ which we expect to contribute positively to income from operations.

“Thanks to our shareholders, employees and management team – notably our media-savvy CFO, Ezra Rosensaft, IDW’s balance sheet and financial outlook have improved significantly over the past year. To further increase our visibility and provide our investors with enhanced liquidity and transparency, we intend to apply to list our Class B common stock on the NYSE American and again become an SEC reporting company.”

Consolidated P&L Highlights

(Numbers may not add up due to rounding)

(in millions, except net loss per share, unaudited)
    1Q20       4Q19       1Q19  
Revenue
  14.1     33.9     9.3  
Direct cost of revenue
  13.3     42.0     5.1  
Gross profit (loss)
  0.8     (8.1 )   4.2  
SG&A including non-cash compensation
  7.3     8.7     7.8  
Non-cash compensation
  0.3     0.6     1.0  
Depreciation & amortization
  0.3     0.4     0.4  
Loss from operations
  (6.8 )   (17.2 )   (4.0 )
Net loss attributable to IDW Media Holdings
  (6.8 )   (17.1 )   (4.1 )
Net loss per share
  (0.91 )   (2.29 )   (0.67 )

Segment P&L Highlights

(Numbers may not correspond to consolidated totals due to rounding)

(in millions, unaudited)
    1Q20       4Q19       1Q19  
Revenue
                       
IDW Publishing*
  6.3     5.8     5.2  
IDW Entertainment
  4.0     22.6     0.1  
CTM
  3.8     5.5     4.1  
 
                       
Income (loss) from operations
                       
IDW Publishing*
  0.1     (0.8 )   (1.5 )
IDW Entertainment
  (5.6 )   (17.2 )   (1.2 )
CTM
  (1.1 )   0.8     (1.3 )

* Results include Clover Press, which operates independently of IDW Publishing; excluding Clover results, IDW Publishing 1Q20 income from operations was $0.3 million

Financial Take-Aways and Outlook

  • Revenue Increase: After delivering seven of ten episodes of ‘October Faction’ to Netflix in 4Q19, IDWE delivered the remaining three in 1Q20 increasing consolidated revenue to $14.1 million from $9.3 million in 1Q19. Revenue and amortized production expenses for the series were recognized as episodes were delivered to the client.
  • Loss from Operations: IDW’s consolidated loss from operations increased to ($6.8) million from ($4.0) million in 1Q19. The loss primarily reflects the production costs and related overages associated with the three episodes of “October Faction” that IDWE delivered in 1Q20 as well as a loss from operations of ($1.1) million at CTM.
  • Return to Profitability:
    • In the remainder of FY 2020, IDW expects to generate improved financial performance including positive operating contribution from the delivery of season one of “Locke & Key” in 2Q20.
    • In FY 2021, given reasonable macroeconomic conditions, IDW currently anticipates that the company and each of its three segments will operate profitably.
  • Balance Sheet Highlights: IDW’s cash balance at January 31st was $4.6 million. Related party debt was $9.0 million. Working capital (current assets less current liabilities) was $8.9 million. Following the quarter close, IDW completed a private placement of 2.050 million shares of its Class B common stock at a sale price of $6.00 per share for aggregate gross proceeds of $12.3 million inclusive of a $4.0 million debt-to-equity conversion by IDW’s Chairman and CEO, Howard Jonas.

Earnings Conference Call

IDW’s management will host an earnings conference call beginning at 5:00 PM Eastern to present results, outlook and strategy followed by Q&A with investors.

To listen to the call and participate in the Q&A, dial 1-877-300-8521 (toll free – U.S.) or 1-412-317-6026 (toll – international) and request the ‘IDW call.’

A replay of the conference call can be accessed approximately three hours after the call concludes through March 19, 2020 by dialing 1-844-512-2921 (toll free – U.S.) or 1-412-317-6671 (toll – international) and providing this replay number: 10139931. A replay will also be available via streaming audio through the IDW investor relations website.

About IDW

IDW Media Holdings, Inc. (OTCPINK:IDWM) is an integrated media company. IDW’s businesses include IDW Publishing – a leading publisher of comic books and graphic novels, IDW Entertainment – a producer and distributor of franchise content through television and other media, and CTM Media Group – one of North America’s largest distributors of information for tourists and travelers.

Investor Contact

IDW Media
Ezra Rosensaft, Chief Financial Officer
ezra@idwmh.com

IDW MEDIA HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)
  January 31,
2020 (unaudited)
    October 31,
2019
 
Assets
           
Current assets:
           
Cash and cash equivalents
  4,604     10,165  
Trade accounts receivable, net
    46,309       45,253  
Inventory
    3,582       3,313  
Prepaid expenses
    2,164       2,092  
Total current assets
    56,659       60,823  
Property and equipment, net
    2,216       3,078  
Right-of-use assets, net
    7,121       0  
Non-current assets
               
Trade accounts receivable – non-current portion
           
Taxes receivable – non-current
    513       513  
Intangible assets, net
    380       455  
Goodwill
    2,309       2,309  
Television costs
    3,029       9,388  
Other assets
    692       571  
Total non-current assets
    6,923       13,236  
Total assets
  72,919     77,137  
Liabilities and stockholders’ equity
               
Current liabilities:
               
Trade accounts payable
  2,018     2,625  
Accrued expenses
    4,868       4,173  
Deferred revenue
    2,083       2,255  
Bank loans payable – current portion
    36,430       29,242  
Related party loans payable – current portion
    50       4,550  
Income taxes payable
    76       73  
Operating lease obligations – current portion
    1,775        
Finance lease obligations – current portion
    390       396  
Other current liabilities
    83       2,068  
Total current liabilities
    47,773       45,382  
Non-current liabilities
               
Operating lease obligations – long term portion
    4,797        
Finance lease obligations – long term portion
    569       683  
Bank loans payable – long term portion
    9,000       10,500  
Related party loans payable – long term portion
          4,500  
Total non-current liabilities
    14,366       15,683  
Total liabilities
    62,139       61,065  
Stockholders’ equity (see note 1):
               
Preferred stock, $.01 par value; authorized shares – 500; no shares issued at January 31, 2020 and October 31, 2019
           
Class B common stock, $0.01 par value; authorized shares – 12,000; 7,460 and 7,419 shares issued and 6,941 and 6,899 shares outstanding at January 31, 2020 and October 31, 2019, respectively
    75       74  
Class C common stock, $0.01 par value; authorized shares – 2,500; 545 shares issued and outstanding at January 31, 2020 and October 31, 2019
    5       5  
Stock subscription receivable
    (500)       (1,000 )
Additional paid-in capital
    97,799       96,671  
Accumulated other comprehensive loss
    (109)       (60 )
Retained deficit
    (85,295)       (78,457 )
Treasury stock, at cost, consisting of 519 shares of Class B common stock at January 31, 2020 and October 31, 2019
    (1,196)       (1,196 )
Total IDW Media Holdings Inc. stockholders’ equity
    10,779       16,037  
Non-controlling interest
    1       35  
Total stockholders’ equity
    10,780       16,072  
Total liabilities and stockholders’ equity
  72,919     77,137  

IDW MEDIA HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 
  Three Months Ended
January 31,
 
(in thousands, except per share data)
  2020     2019  
 
           
Revenues
           
Product revenue
    6,299       5,212  
Service revenue
    7,846       4,137  
Total Revenues
    14,145       9,349  
Costs and expenses:
               
Direct cost of product revenue
    3,527       3,148  
Direct cost of service revenue
    9,780       1,955  
Selling, general and administrative (i)
    7,285       7,820  
Depreciation and amortization
    338       403  
Bad debt expense
    51       16  
Total costs and expenses
    20,981       13,342  
Loss from operations
    (6,836)       (3,993 )
Interest expense
    (19)       (105 )
Other (expense) income, net
    (17)       5  
(Loss) Income before income taxes
    (6,872)       (4,093 )
(Provision for) benefit from income taxes
           
Net loss
  (6,872)     (4,093 )
Net loss attributable to non-controlling interests
    84        
Net loss attributable to IDW Media Holdings, Inc.
    (6,788)       (4,093 )
 
               
Basic and diluted loss per share (note 3):
               
Net loss per share
  (.91)     (0.67 )
 
               
Weighted-average number of shares used in the calculation of basic and diluted income per share:
    7,455       6,098  
 
               
Interest Expense
  19     115  
 
               
(i) Stock-based compensation included in selling, general and administrative expenses
  341     998  

IDW MEDIA HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Three months ended January 31,
(in thousands)
  2020     2019  
Operating activities:
           
Net loss
  (6,872)       (4,093 )
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
               
Depreciation and amortization
    420       403  
Bad debt expense
    51       16  
Stock based compensation
    341       998  
Stock options
    304        
Other non-cash adjustments, net
    26        
Changes in assets and liabilities:
               
Trade accounts receivable
    (1,107)       5,578  
Inventory
    (269)       301  
Prepaid expenses and other assets
    (193)       (90 )
Television costs
    6,359       (15,741 )
Trade accounts payable, accrued expenses and other current liabilities
    (1,660)       (4,403 )
Deferred revenue
    (172)       287  
Net cash used in operating activities
    (2,772)       (16,744 )
Investing activities:
               
Business acquisitions
          (12 )
Capital expenditures
    (307)       (126 )
Net cash used in investing activities
    (307)       (138 )
Financing activities:
               
Proceeds from issuance of common stock
    783        
Non-controlling interest investment in subsidiary
    201        
Repayments of finance lease obligations
    (105)        
Repayments of capital lease obligations
          (105 )
Proceeds of related party loans
          9,000  
Proceeds of bank loans
    1,195       16,955  
Repayments of related party loans
          (11,000 )
Repayments of bank loans
    (4,507)       (3,688 )
Net cash (used in) provided by financing activities
    (2,433)       11,162  
Effect of exchange rate changes on cash and cash equivalents
    (49)       127  
Net decrease in cash and cash equivalents
    (5,561)       (5,593 )
Cash and cash equivalents at beginning of period
    10,165       13,445  
 
               
Cash and cash equivalents at end of period
  4,604       7,852  

SOURCE: IDW Media Holdings Inc.

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