Kartoon Studios (NYSE American:TOON) today
provided a business update for the third quarter of 2023.
Andy Heyward, Chairman & CEO of Kartoon Studios, stated,
“Following the settlement of the Writers Guild of America (WGA) and
Screen Actors Guild (SAG) disputes, we are witnessing a turnaround
from the recent industry-wide slowdown of program orders by
broadcasters and streaming networks, which impacted Mainframe
Studios. Even though Kartoon Studios and its related companies and
subsidiaries aren't part of WGA or SAG, the strikes had a
noticeable impact on the entire industry in the third quarter, with
a marked decrease in spending and new content orders. Now, there is
significant pent-up demand, and we are benefiting from a
substantial increase in activities. We are already seeing orders
coming into Mainframe for a meaningful number of new content
series. We anticipate these forthcoming orders will positively
impact revenue in upcoming quarters, allowing the Company to resume
the growth trajectory that it had been experiencing prior to the
strikes. Animation is a timeless and reliable performer that is a
staple for broadcasters and streamers alike. Mainframe Studios,
Kartoon Studios’ affiliated work-for-hire and original content
production studio based in Vancouver, Canada, has become an
integral part of our company and our future success. Mainframe
Studios has built a well-earned reputation as one of the premier
content suppliers to Netflix, Disney+, YouTube, Hulu, Mattel, Spin
Master, and others, which we are very confident will continue, as
they deliver reliable and top-performing brands. During this recent
quarter, we delivered our longstanding production of BARBIE to
Netflix, shortly after the blockbuster success of the live Barbie
movie. We also delivered our UNICORN ACADEMY series produced for
Spin Master, which debuted as the #1 ANIMATED SERIES ON NETFLIX.
Concurrently, as a result of the US ad market regaining momentum,
we are also seeing an uptick in business at our Beacon Media Group
subsidiary, which is a leader in buying children’s media for many
of the top toy companies in the world and has been winning new
clients and increasing its buying base, and revenues.”
“We are thrilled to report remarkable improvement in Kartoon
Channel!, through the first three quarters of 2023, compared to the
same period in 2022. Our EBITDA has shown a significant
year-over-year improvement of 91% during this period, reflecting
our focused efforts on enhancing profitability and financial
stability. In a turnaround that bucks the trend of the rest of the
industry, we have successfully reversed a nearly $1 million loss
from Q3 2022, achieving near break-even results this quarter. This
is a significant milestone, considering it has only been three
years since we began investing in and growing the platform. This
not only marks a substantial financial milestone but also sets a
strong foundation for our future growth trajectory and underscores
our team’s dedication to operational excellence and strategic
planning.”
“Kartoon Channel! is quickly becoming a ‘go to’ streaming option
for kids and families, carrying not only our own programs such as
RAINBOW RANGERS and SUPERHERO KINDERGARTEN, but also successful and
iconic programs such as PEPPA PIG, SUPER MARIO BROS., STRAWBERRY
SHORTCAKE, and SONIC THE HEDGEHOG. Looking ahead to 2024, we are
confident that Kartoon Channel!, will continue this positive trend,
making a significant contribution to revenues and EBITDA, as well
as exposing our brands to drive retail sales of licensed products
based on our characters. This achievement is particularly notable
when we consider the broader streaming market, where profitability
is rare. To our knowledge, Netflix is the only other streaming
service currently operating profitably, with most others in the
industry experiencing operational losses. Our platform's rapid
progress towards profitability stands as a testament to the
Company’s strategic approach and the noteworthy ‘stickiness’ to the
growing brands of STAN LEE’S SUPERHERO KINDERGARTEN, RAINBOW
RANGERS, and others. The channel’s viewer rankings continue to
outperform all of its major competitors in the Apple app store,
with 4.9 out of 5 stars, besting Disney+, Netflix Kids, YouTube,
and others, as Kartoon Channel! takes root and grows, to become a
valuable asset for the company.”
“Furthermore, SHAQ’S GARAGE is now available on Tubi, part of
Fox Corporation's ad-supported streaming service, which boasts a
substantial audience of over 74 million monthly active users. In
tandem with this launch, we're also introducing a special Kartoon
Channel! branded Video on Demand (VOD) collection, designed to
complement the primary channel. The rollout strategy for SHAQ’S
GARAGE is comprehensive, encompassing availability on popular
platforms like YouTube and YouTube Kids and this expansion aligns
with our strategic goal to enhance the reach and accessibility of
our content, ensuring that a wider audience can enjoy our diverse
offerings. By collaborating with a high-profile platform like Tubi
and leveraging its vast user base, we're set to significantly grow
our viewership and solidify our presence in the competitive
streaming market.”
“Recently, we welcomed Brian Parisi, a highly accomplished CFO
with a proven track record, as our new Chief Financial Officer of
the Company. Having run successful business units of the NFL and at
Live Nation, Brian is focused on unlocking value, growing revenues
and delivering earnings. Brian’s appointment also underscores our
unwavering dedication to refining our operations and maintaining
rigorous cost control measures as we aim for long-term, sustainable
EBITDA growth. In line with these goals, we are in the midst of
executing a comprehensive strategy to reduce operating costs across
the Company, as we grow our core businesses and brands. Brian's
arrival has introduced a new perspective to our organization, which
has already been instrumental in driving positive changes as we
have identified over $2 million of annual reductions in operating
expenses and significant improvements to EBITDA. This achievement
marks a crucial step towards enhancing the overall financial health
and sustainability of our organization.”
Mr. Heyward concluded, “Our confidence in the business'
trajectory remains strong. We are seeing promising signs that point
towards a meaningful increase in revenue as we move into next year
and beyond. We are experiencing an influx of content orders for the
Mainframe production business, which we believe will prove to be a
significant driver of our future growth. Our commitment to
financial discipline remains unwavering as we rigorously manage our
expenses, with a focus on efficiency and effectiveness. Our recent
endeavors to streamline and optimize various aspects of our
operations are already yielding significant results, and we have
the most robust development pipeline in the history of our company.
We believe these strategic initiatives are crucial for steering the
Company towards a path of sustainable profitability, aligning with
our long-term objectives, and reinforcing our position in the
industry.”
Kartoon Studios reported revenue of $10.1 million and $35.3
million, for the three and nine months ended September 30, 2023. As
of September 30, 2023, Kartoon Studios had current assets of $61.4
million, working capital of $11.8 million, and total stockholders’
equity of $74.0 million.
Complete details of the Company’s financial results for the
third quarter ended September 30, 2023 are available in the
Company’s Form 10-Q, which has been filed with the Securities &
Exchange Commission and is available on the Company’s website.
About Kartoon Channel!Available everywhere and
anywhere kids are today, Kartoon Studios’ Kartoon Channel! is a
family entertainment destination that delivers 1000s of episodes of
carefully curated and safe family-friendly content. The channel
features original content, including Stan Lee’s Superhero
Kindergarten, starring Arnold Schwarzenegger, Rainbow Rangers, and
Shaq’s Garage, starring Shaquille O’Neal and Rob “Gronk”
Gronkowski. Kartoon Channel! also delivers animated classics for
little kids, such as Peppa Pig Shorts, Super Simple Songs,
Melodee’s, Finny the Shark, Strawberry Shortcake, as well as
content for bigger kids, like Angry Birds and Yu-Gi-Oh! Kartoon
Channel! also offers STEM-based content through its Kartoon
Classroom, including Baby Genius and more, as well as a Spanish
language collection on the platform, KC En Espanol.
Kartoon Channel! is available across multiple platforms,
including iOS, Android Mobile, Web, Amazon Prime Video, Apple TV,
Amazon Fire, Roku, Pluto TV, Comcast, Cox, Dish, Sling TV, Android
TV, Tubi, Xumo, Samsung and LG Smart TVs.
Internationally, Kartoon Channel! is currently available in key
territories around the world, including Africa and Sub-Sahara
Africa (StarTimes), Australia and New Zealand (Samsung TV Plus),
Germany (Waipu), Philippines (Tapp Digital) and Maldives
(Dhiraagu). Kartoon Channel! Branded blocks are also currently
available daily in 69 countries across the Middle East, Africa,
Latin America, and Europe.
About Kartoon Studios Kartoon Studios (NYSE
AMERICAN: TOON) is a global end-to-end creator, producer,
distributor, marketer, and licensor of entertainment brands. The
Company’s IP portfolio includes original animated content,
including the Stan Lee brand, Stan Lee’s Superhero
Kindergarten, starring Arnold Schwarzenegger, on Kartoon
Channel!; Shaq’s Garage, starring Shaquille O’Neal, on Kartoon
Channel!; Rainbow Rangers on Kartoon Channel! and
Netflix; the Netflix Original, Llama Llama, starring Jennifer
Garner, and more.
In 2022, Kartoon Studios acquired Canada’s WOW! Unlimited Media
and made a strategic investment becoming the largest shareholder in
Germany’s Your Family Entertainment AG (FRA:RTV), one of Europe’s
leading distributors and broadcasters of high-quality programs for
children and families.
Toon Media Networks, the company’s wholly-owned digital
distribution network, consists of Kartoon Channel!, Kartoon
Channel! Worldwide, Frederator Network, and Ameba. Kartoon Channel!
is a globally distributed entertainment platform with near full
penetration of the U.S. television market and international
expansion underway with launches in key markets around the world,
including Germany, Malaysia, India, Africa and Sub-Sahara Africa,
Australia, New Zealand, Philippines and Maldives. Kartoon Channel!
and Ameba are available across multiple platforms,
including iOS, Android Mobile, Web, Amazon Prime Video,
Apple TV, Amazon Fire, Roku, Pluto TV, Comcast, Cox, Dish,
Sling TV, Android TV, Tubi, Xumo,
Samsung and LG Smart TVs. Frederator Network owns
and operates the largest global animation network on YouTube, with
channels featuring over 2000 exclusive creators and influencers,
garnering billions of views annually.
For additional information, please
visit www.kartoonstudios.com
Forward-Looking Statements: Certain statements
in this press release constitute "forward-looking statements"
within the meaning of the federal securities laws. Words such as
"may," "might," "will," "should," "believe," "expect,"
"anticipate," "estimate," "continue," "predict," "forecast,"
"project," "plan," "intend" or similar expressions, or statements
regarding intent, belief, or current expectations, are
forward-looking statements. While the Company believes these
forward-looking statements are reasonable, undue reliance should
not be placed on any such forward-looking statements, which are
based on information available to us on the date of this release.
These forward looking statements are based upon current estimates
and assumptions and are subject to various risks and uncertainties,
including without limitation, our ability to generate revenue or
achieve profitability; our ability to obtain additional financing
on acceptable terms, if at all; the potential issuance of a
significant number of shares, which will dilute our equity holders;
fluctuations in the results of our operations from period to
period; general economic and financial conditions; our ability to
anticipate changes in popular culture, media and movies, fashion
and technology; competitive pressure from other distributors of
content and within the retail market; our reliance on and
relationships with third-party production and animation studios;
our ability to market and advertise our products; our reliance on
third-parties to promote our products; our ability to keep pace
with technological advances; our ability to protect our
intellectual property and those other risk factors set forth in the
“Risk Factors” section of the Company’s most recent Annual Report
on Form 10-K and in the Company's subsequent filings with the
Securities and Exchange Commission (the "SEC"). Thus, actual
results could be materially different. The Company expressly
disclaims any obligation to update or alter statements whether as a
result of new information, future events or otherwise, except as
required by law.
MEDIA CONTACT
:pr@kartoonstudios.com
INVESTOR RELATIONS CONTACT
:ir@kartoonstudios.com
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