Wilhelmina International, Inc. Reports Results for Third Quarter 2018

Third Quarter Financial Results

 
(in thousands)
Q3 18

Q3 17
YOY
Change
Q3 18
 YTD
Q3 17
 YTD
YOY
Change
Total Revenues $19,153 $18,718 2.3%   $  59,465 $  56,154   5.9%  
Operating Income   281   138  103.6%     1,167   312   274.0%  
Income Before Provision for Taxes   238   87 173.6%     1,030   130   *
Net Income (Loss)   208   26 *   797   (17)   *
EBITDA**    516   350 47.4%     1,830   890   105.6%  
Adjusted EBITDA**   617     515 19.8%     2,174     1,396   55.7%  
Pre-Corporate EBITDA**   915    751 21.8%     3,069   2,213   38.7%  
 *Not meaningful.  **Non-GAAP measures referenced are detailed in the disclosures at the end of this release.

DALLAS, Nov. 09, 2018 (GLOBE NEWSWIRE) — Wilhelmina International, Inc. (Nasdaq:WHLM) (“Wilhelmina” or the “Company”) today reported revenues of $19.2 million and net income of $0.2 million for the three months ended September 30, 2018, compared to revenues of $18.7 million and net income of $26 thousand for the three months ended September 30, 2017.  For the nine months ended September 30, 2018, Wilhelmina reported revenues of $59.4 million and net income of $0.8 million compared to revenue of $56.1 million and net loss of $17 thousand for the nine months ended September 30, 2017. The increases in revenues when compared to the same periods of the prior year were primarily due to an increase in model bookings and contributions from new initiatives. Increased operating income was primarily the result of increases in service revenues and reduced operating expenses partially offset by higher model costs. As a result, EBITDA, Adjusted EBITDA and Pre-Corporate EBITDA also increased during the first nine months of 2018 compared to the same period of the prior year.
Mark Schwarz, Executive Chairman of Wilhelmina, said, “Wilhelmina exhibited continued revenue growth for the third quarter in a row, growth in earnings, solid cash generation, improved working capital metrics and an ending cash balance of $5.2 million.”

William Wackermann, Chief Executive Officer of Wilhelmina, said, “I am inspired by the achievements of the Wilhelmina team as we continue to evolve and grow our iconic brand. In its third quarter, the company had steady performance in model bookings, along with momentum in our Studio and Aperture divisions. We remain on track to close the fiscal year successfully.”

Financial Results

Net income for the three and nine months ended September 30, 2018 was $0.2 million and $0.8 million, or $0.04 and $0.15 per fully diluted share, compared to net income of $26 thousand, or $0.00 per fully diluted share for the three months ended September 30, 2017 and net loss of $17 thousand or $0.00 per fully diluted share for the nine months ended September 30, 2017.

Pre-Corporate EBITDA was $0.9 million and $3.1 million for the three and nine months ended September 30, 2018, compared to $0.8 million and $2.2 million for the three and nine months ended September 30, 2017. 

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, 2018 and 2017.

(in thousands) Nine months ended
September 30,
Three months ended 
September 30,

  2018   2017 2018   2017
Net (loss) income $ 208 $ 26 $ 797 $  (17)
Interest expense 26   31 73   88
Income tax expense 30   61 233   147
Amortization and depreciation 252   232 727   672
EBITDA $ 516 $ 350  $ 1,830 $   890
Foreign exchange loss 17   18 64   54
Loss from unconsolidated affiliate   2   40
Share-based payment expense 84   145 280   412
Adjusted EBITDA   $ 617 $ 515 $ 2,174 $   1,396
Corporate overhead 298   236 895   817
Pre-Corporate EBITDA   $ 915 $ 751 $ 3,069 $  2,213

Changes in net income, EBITDA, Adjusted EBITDA and Pre-Corporate EBITDA for the three and nine months ended September 30, 2018, when compared to the three and nine months ended September 30, 2017, were primarily the result of the following:

  • Revenues net of model costs decreased slightly for the three months ended September 30, 2018.  For the nine months ended September 30, 2018, revenues net of model costs increased by 4.3% primarily due to an increase in core model bookings and new initiatives that contributed to growth during 2018;
     
  • Salaries and service costs for the three and nine months ended September 30, 2018 were relatively stable;
     
  • Office and general expenses decreased by 23.8% and 4.9% for the three and nine months ended September 30, 2018, primarily due to reduced legal fees, reduced bad debt expense, and reduced insurance expenses;
     
  • Amortization and depreciation expense increased by 8.6% and 8.2% for the three and nine months ended September 30, 2018, primarily due to new equipment being placed in service in recent months; and
     
  • Corporate overhead expenses increased by 26.3% and 9.5% for the three and nine months ended September 30, 2018, primarily due to higher stock exchange fees and SEC related legal costs.

During the first nine months of 2018, Wilhelmina repurchased an aggregate of 113,121 shares of its common stock under a previously approved stock repurchase program.  The aggregate purchase price of $0.8 million was funded through internal cash flow and a $0.7 million term loan.  As of September 30, 2018, the Company had repurchased a total of 1,203,491 shares and an additional 296,509 shares could yet be purchased under the Company’s stock repurchase program. 

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data) 
    (Unaudited)    
    September 30,
2018
  December 31,
 2017
ASSETS        
Current assets:        
Cash and cash equivalents   $ 5,160     $ 4,256  
Accounts receivable, net of allowance for doubtful accounts of $1,913 and $2,171, respectively     13,853       13,627  
Prepaid expenses and other current assets     287       180  
Total current assets     19,300       18,063  
             
Property and equipment, net of accumulated depreciation of $3,020 and $2,349, respectively     2,661       3,039  
Trademarks and trade names with indefinite lives     8,467       8,467  
Other intangibles with finite lives, net of accumulated amortization of $8,664 and $8,608, respectively     72       128  
Goodwill     13,192       13,192  
Other assets     117       137  
             
TOTAL ASSETS   $ 43,809     $ 43,026  
             
LIABILITIES AND SHAREHOLDERS’ EQUITY             
Current liabilities:            
Accounts payable and accrued liabilities   $ 4,847     $ 3,985  
Due to models     9,555       10,190  
Term loan – current     554       524  
Total current liabilities     14,956       14,699  
             
Long term liabilities:            
Deferred income tax liability     534       521  
Term loan – non-current     1,903       1,623  
Total long term liabilities     2,437       2,144  
             
Total liabilities     17,393       16,843  
             
Shareholders’ equity:            
Common stock, $0.01 par value, 9,000,000 shares authorized; 6,472,038 shares            
issued at September 30, 2018 and December 31, 2017     65       65  
Treasury stock, 1,203,491 and $1,090,370 at September 30, 2018 and December 31, 2017, at cost     (5,681 )     (4,893 )
Additional paid-in capital     88,172       87,892  
Accumulated deficit     (56,088 )     (56,885 )
Accumulated other comprehensive income (loss)     (52 )     4  
Total shareholders’ equity     26,416       26,183  
             
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $ 43,809     $ 43,026  
             
             

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
For the Three and Nine Months Ended September 30, 2018 and 2017
 (In thousands, except per share data)
(Unaudited)
 
    Three Months Ended   Nine Months Ended
    September 30,    September 30, 
    2018     2017     2018     2017  
Revenues:                
Revenues   $ 19,143     $ 18,712     $ 59,425     $ 56,120  
License fees and other income     10       6       40       34  
Total revenues     19,153       18,718       59,465       56,154  
                         
Model costs     13,777       13,265       42,524       39,910  
                         
Revenues net of model costs     5,376       5,453       16,941       16,244  
                         
Operating expenses:                        
Salaries and service costs     3,478       3,447       10,509       10,611  
Office and general expenses     1,067       1,400       3,643       3,832  
Amortization and depreciation     252       232       727       672  
Corporate overhead     298       236       895       817  
Total operating expenses     5,095       5,315       15,774       15,932  
Operating income     281       138       1,167       312  
                         
Other expense:                        
Foreign exchange loss     (17)       (18)       (64)       (54)  
Interest expense     (26)       (31)       (73)       (88)  
Loss from unconsolidated affiliate           (2)             (40)  
Total other expense     (43)       (51)       (137)       (182)  
                         
Income before provision for income taxes     238       87       1,030       130  
                         
Provision for income taxes: (expense) benefit                        
Current     (80)       (57)       (220)       (182)  
Deferred     50       (4)       (13)       35  
Income tax expense     (30)       (61)       (233)       (147)  
                         
Net income (loss)   $ 208     $ 26     $ 797     $ (17)  
                         
Other comprehensive income (expense):                        
Foreign currency translation income (expense)     (24)       20       (56)       85  
Total comprehensive income   $ 184     $ 46     $ 741     $ 68  
                         
Basic net income per common share   $ 0.04     $ 0.00     $ 0.15     $ 0.00  
Diluted net income per common share   $ 0.04     $ 0.00     $ 0.15     $ 0.00  
                         
Weighted average common shares outstanding-basic     5,309       5,382       5,353       5,382  
Weighted average common shares outstanding-diluted     5,318       5,382       5,361       5,382  
                         

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For the Three and Nine Months Ended September 30, 2018 and 2017
 (In thousands)

    Common
Shares
  Stock
Amount
  Treasury
Shares
    Stock
Amount
    Additional
Paid-in
Capital
    Accumulated
Deficit
      Accumulated
Other
Comprehensive
Loss
  Total
Balances at December 31, 2016     6,472   $ 65     (1,090 )     $ (4,893 )     $ 87,336     $ (57,048 )     $ (50 )   $ 25,410  
Share based payment expense                             124                     124  
Net income to common shareholders                                   9               9  
Purchases of treasury stock                                                  
Foreign currency translation                                           45       45  
Balances at March 31, 2017     6,472   $ 65     (1,090 )     $ (4,893 )     $ 87,460     $ (57,039 )     $ (5 )   $ 25,588  
Share based payment expense                             143                     143  
Net loss to common shareholders                                   (52 )             (52 )
Purchases of treasury stock                                                  
Foreign currency translation                                           20       20  
Balances at June 30, 2017     6,472   $ 65     (1,090 )     $ (4,893 )     $ 87,603     $ (57,091 )     $ 15     $ 25,699  
Share based payment expense                             145                     145  
Net income to common shareholders                                   26               26  
Purchases of treasury stock                                                  
Foreign currency translation                                           20       20  
Balances at September 30, 2017     6,472   $ 65     (1,090 )     $ (4,893 )     $ 87,748     $ (57,065 )     $ 35     $ 25,890  

    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  

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
For the Nine Months Ended September 30, 2018 and 2017
 (In thousands)
(Unaudited)
 
    Nine Months Ended
    September 30,
    2018     2017  
Cash flows from operating activities:            
Net income (loss):   $ 797     $ (17 )
Adjustments to reconcile net income to net cash used in operating activities:            
Amortization and depreciation     727       672  
Share based payment expense     280       412  
Deferred income taxes     13       (35
Bad debt expense     70       128  
Changes in operating assets and liabilities:            
Accounts receivable     (296 )     276  
Prepaid expenses and other current assets     (107 )     560  
Other assets     20       49  
Due to models     (635 )     (3,242 )
Accounts payable and accrued liabilities     862       (865 )
Contingent liability to seller           (97 )
Net cash (used in) provided by operating activities     1,731       (2,159 )
             
Cash flows from investing activities:            
Purchases of property and equipment     (293 )     (600 )
Net cash used in investing activities     (293 )     (600 )
             
Cash flows from financing activities:            
Purchases of treasury stock     (788 )      
Proceeds from term loan     700        
Repayment of term loan     (390 )     (374 )
Net cash used in financing activities     (478 )     (374 )
             
Foreign currency effect on cash flows:     (56 )     85  
             
Net change in cash and cash equivalents:     904       (3,048 )
Cash and cash equivalents, beginning of period     4,256       5,688  
Cash and cash equivalents, end of period   $ 5,160     $ 2,640  
             
Supplemental disclosures of cash flow information:            
Cash paid for interest   $ 71     $ 74  
Cash refund of income taxes   $ 10     $ 87  
             

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 gain/loss from unconsolidated affiliate 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, SEC 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 second quarter ended September 30, 2018 filed with the Securities and Exchange Commission on November 9, 2018.

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, and its other 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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