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Wilhelmina International, Inc. Reports Results for Third Quarter 2022
Source: Nasdaq GlobeNewswire / 10 Nov 2022 15:15:53 America/Chicago
Third Quarter Financial Results
(in thousands)
Q3 22
Q3 21YOY
ChangeQ3 22
YTDQ3 21
YTDYOY
ChangeTotal Revenues $ 16,264 $ 15,109 7.6 % $ 50,513 $ 41,595 21.4 % Operating Income 671 1,018 (34.1 %) 2,585 2,009 28.7 % Income Before Provision for Taxes 776 1,473 (47.3 %) 2,789 5,190 (46.3 %) Net Income 1,887 1,153 (63.7 %) 3,547 4,495 (21.1 %) EBITDA* 820 1,711 (52.1 %) 2,944 5,979 (50.8 %) Adjusted EBITDA* 768 1,251 (38.6 %) 2,898 2,755 5.2 % Pre-Corporate EBITDA* 1,015 1,451 (30.0 %) 3,621 3,398 6.6 % * Non-GAAP measures referenced are detailed in the disclosures at the end of this release. DALLAS, Nov. 10, 2022 (GLOBE NEWSWIRE) -- Wilhelmina International, Inc. (Nasdaq:WHLM) ("Wilhelmina" or the "Company") today reported revenues of $16.3 million and net income of $1.9 million for the three months ended September 30, 2022, compared to revenues of $15.1 million and net income of $1.2 million for the three months ended September 30, 2021. For the nine months ended September 30, 2022, Wilhelmina reported revenues of $50.5 million and net income of $3.5 million compared to revenue of $41.6 million and net income of $4.5 million for the nine months ended September 30, 2021.
Increased revenues in 2022 were primarily due to increased bookings as the cities where Wilhelmina operates reopened and business activity increased as COVID-19 restrictions were moderated or rescinded. In 2022, net income was significantly impacted by the release of a $1.5 million valuation allowance on the Company’s deferred tax assets. In 2021, net income was significantly impacted by gain on forgiveness of PPP loans and employee retention payroll tax credits.
For the year ended December 31, 2021, Wilhelmina maintained a full $1.5 million valuation allowance against its deferred tax assets. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. In connection with its assessment for the third quarter of 2022, management determined that there was sufficient evidence to conclude that it was more likely than not that all deferred tax assets were realizable. This evidence included three years of cumulative pretax income, excluding nonrecurring items. Consequently, the full valuation allowance against deferred tax assets was released as of September 30, 2022, resulting in a $1.5 million income tax benefit. The Company will continue to assess the evidence used to determine the need for a valuation allowance and may reinstate the valuation allowance in future periods if warranted by changes in estimated future income and other factors.
Financial Results
Net income for the three months ended September 30, 2022 was $2.9 million, or $0.37 per fully diluted share, compared to net income of $1.2 million, or $0.22 per fully diluted share, for the three months ended September 30, 2021. Net income for the nine months ended September 30, 2022 was $3.5 million, or $0.69 per fully diluted share, compared to net income of $4.5 million, or $0.87 per fully diluted share, for the nine months ended September 30, 2021.
Pre-Corporate EBITDA was $1.0 million and $3.6 million for the three and nine months ended September 30, 2022, compared to Pre-Corporate EBITDA of $1.5 million and $3.4 million for the three and nine months ended September 30, 2021.
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, 2022 and 2021.
(in thousands) Three months ended
September 30,Nine months ended
September 30,2022 2021 2022 2021 Net income 1,887 1,153 3,547 4,495 Interest expense 2 7 7 49 Income tax expense (1,111 ) 320 (758 ) 695 Amortization and depreciation 42 231 148 740 EBITDA** 820 1,711 2,944 5,979 Foreign exchange (gain) loss (107 ) (4 ) (211 ) 84 Non-recurring items* - (458 ) - (3,314 ) Share-based payment expense 55 2 165 6 Adjusted EBITDA** 768 1,251 2,898 2,755 Corporate overhead 247 200 723 643 Pre-Corporate EBITDA** 1,015 1,451 3,621 3,398 *Non-recurring items include gain on forgiveness of loans and employee retention credit during the three and nine months ended September 30, 2022
**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, 2022, when compared to the three and nine months ended September 30, 2021, were primarily the result of the following:
- Revenues net of model costs for the three and nine months ended September 30, 2022 increased by 1.6% and 15.9% primarily due to increased bookings as the cities where Wilhelmina operates reopened and business activity increased as COVID-19 vaccination rates rose;
- Salaries and service costs for the three and nine months ended September 30, 2022 increased by 22.8% and 31.3% primarily due to personnel hires and payroll changes to better align Wilhelmina staffing with the needs of each office and geographical region;
- Office and general expenses for the three months ended September 30, 2022 increased by 6.7% primarily due to increased marketing expense, legal expense, insurance, and bad debt expense. Office and general expense for the nine months ended September 30, 2022 decreased by 5.2% primarily due to reduced rent expense, other office related expenses, and computer expenses, partially offset by an increase in bad debt expense and legal expense in 2022;
- Income tax net benefit of $1.1 million and $0.8 million for the three and nine months ended September 30, 2022 was primarily the result of the release of a $1.5 million valuation allowance on the Company’s deferred tax assets;
- Amortization and depreciation expense for the three and nine months ended September 30, 2022 decreased by 81.8% and 80.0%, primarily due to reduced depreciation of assets that became fully amortized in 2021;
- Non-recurring items included $2.0 million of gain on forgiveness of PPP loans in the nine months ended September 30, 2021 and $0.5 million and $1.3 million of employee retention credit in the three and nine months ended September 30, 2021; and
- Corporate overhead expenses for the three and nine months ended September 30, 2022 increased by 23.5% and 12.4%, primarily due to increased securities compliance costs.
WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)(Unaudited) September 30,
2022December 31,
2021ASSETS Current assets: Cash and cash equivalents $ 10,529 $ 10,251 Accounts receivable, net of allowance for doubtful accounts of $1,647 and $1,580, respectively 10,890 8,858 Prepaid expenses and other current assets 218 91 Total current assets 21,637 19,200 Property and equipment, net of accumulated depreciation of $1,186 and $4,094, respectively 164 168 Right of use assets-operating 1,386 1,745 Right of use assets-finance 154 199 Trademarks and trade names with indefinite lives 8,467 8,467 Goodwill 7,547 7,547 Other assets 319 98 TOTAL ASSETS $ 39,674 $ 37,424 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued liabilities $ 4,221 $ 3,707 Due to models 8,958 8,090 Deferred revenue - 535 Lease liabilities – operating, current 408 463 Lease liabilities – finance, current 61 64 Total current liabilities 13,648 12,859 Long term liabilities: Deferred income tax, net 985 2,048 Lease liabilities – operating, non-current 1,080 1,361 Lease liabilities – finance, non-current 100 143 Total long term liabilities 2,165 3,552 Total liabilities 15,813 16,411 Shareholders’ equity: Common stock, $0.01 par value, 9,000,000 shares authorized; 6,472,038 shares issued at September 30, 2022 and December 31, 2021 65 65 Treasury stock, 1,314,694 shares at September 30, 2022 and December 31, 2021, at cost (6,371 ) (6,371 ) Additional paid-in capital 88,745 88,580 Accumulated deficit (57,691 ) (61,238 ) Accumulated other comprehensive loss (887 ) (23 ) Total shareholders’ equity 23,861 21,013 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 39,674 $ 37,424
WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
For the Three and Nine Months Ended September 30, 2022 and 2021
(In thousands, except per share data)
(Unaudited)Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Revenues: Service revenues $ 16,256 $ 15,101 $ 50,490 $ 41,569 License fees 8 8 23 26 Total revenues 16,264 15,109 50,513 41,595 Model costs 11,822 10,736 36,824 29,787 Revenues, net of model costs 4,442 4,373 13,689 11,808 Operating expenses: Salaries and service costs 2,753 2,241 8,102 6,169 Office and general expenses 729 683 2,131 2,247 Amortization and depreciation 42 231 148 740 Corporate overhead 247 200 723 643 Total operating expenses 3,771 3,355 11,104 9,799 Operating income 671 1,018 2,585 2,009 Other (income) expense: Foreign exchange (gain) loss (107 ) (4 ) (211 ) 84 Gain on forgiveness of loan - - - (1,994 ) Employee retention payroll tax credit - (458 ) - (1,320 ) Interest expense 2 7 7 49 Total other income (105 ) (455 ) (204 ) (3,181 ) Income before provision for income taxes 776 1,473 2,789 5,190 (Provision) benefit for income taxes: Current (221 ) (48 ) (305 ) (158 ) Deferred 1,332 (272 ) 1,063 (537 ) (Provision) benefit for income taxes, net 1,111 (320 ) 758 (695 ) Net income $ 1,887 $ 1,153 $ 3,547 $ 4,495 Other comprehensive loss: Foreign currency translation adjustment (352 ) (117 ) (864 ) (120 ) Total comprehensive income $ 1,535 $ 1,036 $ 2,683 $ 4,375 Basic net income per common share $ 0.37 $ 0.22 $ 0.69 $ 0.87 Diluted net income per common share $ 0.37 $ 0.22 $ 0.69 $ 0.87 Weighted average common shares outstanding-basic 5,157 5,157 5,157 5,157 Weighted average common shares outstanding-diluted 5,157 5,157 5,157 5,157
WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For the Three and Nine Months Ended September 30, 2022 and 2021
(In thousands)Common
SharesStock
AmountTreasury
SharesStock
AmountAdditional
Paid-in
CapitalAccumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
TotalBalances at December 31, 2020 6,472 $ 65 (1,315 ) $ (6,371 ) $ 88,487 $ (65,756 ) $ 81 $ 16,506 Share based payment expense - - - - 3 - - 3 Net income to common shareholders - - - - - 2,221 - 2,221 Foreign currency translation - - - - - - (19 ) (19 ) Balances at March 31, 2021 6,472 $ 65 (1,315 ) $ (6,371 ) $ 88,490 $ (63,535 ) $ 62 $ 18,711 Share based payment expense - - - - 1 - - 1 Net income to common shareholders - - - - - 1,121 - 1,121 Short-swing profit disgorgement - - - - 32 - - 32 Foreign currency translation - - - - - - 16 16 Balances at June 30, 2021 6,472 $ 65 (1,315 ) $ (6,371 ) $ 88,523 $ (62,414 ) $ 78 $ 19,881 Share based payment expense - - - - 2 - - 2 Net income to common shareholders - - - - - 1,153 - 1,153 Foreign currency translation - - - - - - (117 ) (117 ) Balances at September 30, 2021 6,472 $ 65 (1,315 ) $ (6,371 ) $ 88,525 $ (61,261 ) $ (39 ) $ 20,919 Common
SharesStock
AmountTreasury
SharesStock
AmountAdditional
Paid-in
CapitalAccumulated
DeficitAccumulated
Other
Comprehensive
Income (Loss)Total Balances at December 31, 2021 6,472 $ 65 (1,315 ) $ (6,371 ) $ 88,580 $ (61,238 ) $ (23 ) $ 21,013 Share based payment expense - - - - 55 - - 55 Net income to common shareholders - - - - - 739 - 739 Foreign currency translation - - - - - - (174 ) (174 ) Balances at March 31, 2022 6,472 $ 65 (1,315 ) $ (6,371 ) $ 88,635 $ (60,499 ) $ (197 ) $ 21,633 Share based payment expense - - - - 55 - - 55 Net income to common shareholders - - - - - 921 - 921 Foreign currency translation - - - - - - (338 ) (338 ) Balances at June 30, 2022 6,472 $ 65 (1,315 ) $ (6,371 ) $ 88,690 $ (59,578 ) $ (535 ) $ 22,271 Share based payment expense - - - - 55 - - 55 Net income to common shareholders - - - - - 1,887 - 1,887 Foreign currency translation - - - - - - (352 ) (352 ) Balances at September 30, 2022 6,472 $ 65 (1,315 ) $ (6,371 ) $ 88,745 $ (57,691 ) $ (887 ) $ 23,861
WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
For the Nine Months Ended September 30, 2022 and 2021
(In thousands)
(Unaudited)Nine Months Ended
September 30,2022 2021 Cash flows from operating activities: Net income: $ 3,547 $ 4,495 Adjustments to reconcile net income to net cash provided by operating activities: Amortization and depreciation 148 740 Share based payment expense 165 6 Gain on forgiveness of loan - (1,994 ) Gain on foreign exchange rates (211 ) 84 Deferred income taxes (1,063 ) 537 Bad debt expense 115 100 Changes in operating assets and liabilities: Accounts receivable (2,123 ) (3,140 ) Prepaid expenses and other current assets (140 ) 19 Right of use assets-operating 359 258 Other assets (228 ) (5 ) Due to models 1,086 1,420 Lease liabilities-operating (337 ) (234 ) Deferred revenue (535 ) - Accounts payable and accrued liabilities 455 456 Net cash provided by operating activities 1,238 2,742 Cash flows from investing activities: Purchases of property and equipment (96 ) (16 ) Net cash used in investing activities (96 ) (16 ) Cash flows from financing activities: Shareholder short-swing profit disgorgement - 32 Payments on finance leases (45 ) (65 ) Repayment of term loan - (743 ) Net cash used in financing activities (45 ) (776 ) Foreign currency effect on cash flows: (819 ) (45 ) Net change in cash and cash equivalents: 278 1,905 Cash and cash equivalents, beginning of period 10,251 5,556 Cash and cash equivalents, end of period $ 10,529 $ 7,461 Supplemental disclosures of cash flow information: Cash paid for interest $ - $ 23 Cash paid for income taxes $ 16 $ 12 Noncash investing and financing activities Gain on forgiveness of loan $ - $ 1,994 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, share-based payment expense and certain significant non-recurring items that the Company may include from time to time. For 2021, these non-recurring items represented gain on forgiveness of PPP loans and employee retention payroll tax credit. 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, 2022 filed with the Securities and Exchange Commission on November 10, 2022.
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 the Nasdaq Capital Market under the symbol WHLM. Wilhelmina is headquartered in New York and, since its founding, has grown to include operations in Los Angeles, Miami and London. 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 
- Revenues net of model costs for the three and nine months ended September 30, 2022 increased by 1.6% and 15.9% primarily due to increased bookings as the cities where Wilhelmina operates reopened and business activity increased as COVID-19 vaccination rates rose;