CIDM - Earnings call transcript Q2 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Cinedigm Corp Fiscal 2018 Second Quarter Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Later we will conduct a question-and-answer session, and instructions will follow at that time.

As a reminder, today’s conference is being recorded. I would now like to introduce your host for today’s conference, Ms. President, Vice Executive Calcaterra, Corporate Communications. Jill go please ahead. Ma’am,

Jill Calcaterra

Chief thank Thank Loffredo. earnings today's joining Jeffrey Good Edell; Chairman conference Financial General McGurk; and of you, afternoon you Digital and Cinedigm's second are and Participating and today's for Officer, Officer, in Chris Chief Liz. call. call Executive Counsel quarter Head our fiscal XXXX Gary Cinema,

are time-to-time. forward-looking this uncertainties assumptions. Company's call on Potential statements the forward-looking risks Before management, Company's could on and from are information to to statements that expectations the periodic current uncertainties results reports and differ are these based materially that business over from financial to call I filed statements. presented and in the with contains hand described note cause please certain SEC risks, These the management's subject and

this or discussed intend, does as All events future no on today, the undertakes Cinedigm and call of and XX, not November circumstances. is update XXXX to information of duty

financial Chris And to now, In addition, to measures. non-GAAP over like call information represents call certain the turn I'd financial McGurk. the in presented

Chris McGurk

that Very $XX stock. connection we notes the year we our we with the Thank discussed On Xst, Capital elimination completing in last $XX closed you, us funded for common on importantly convertible everyone outstanding million now majority with and been transaction game a two with have carrying in million beneficially full November you our Bison approximately changing A on that our we notes calls. the sheet, call the we Jill. Bison thanks Class ago. balance a that carrying of remaining were on And today. joining our owns have closing, retired in of that

benefits Mr. As Cinedigms significant Capital another both investment key us of operationally. of directors of Peng financially, Bison Jin brings and Board Directors. joined multiple transaction, to Bison strategically, Peixin Xu This Mr. this and part

key me benefits. those reiterate Let

business stock A our and their I of the elimination to common majority investment Class growth control Bison full interests convertible equity gives significant provides initiatives First, of those common after the investment capital other shareholders. aligns support our with This of all Bison's notes described. clearly voting remaining funding just

provide Bison by debt the retire million transaction December gives more in elimination, XX, provide another loan our the size convertible remaining $XX opportunity working growth refinance capital of this balance and/or a of also will note to form further to higher this transaction Additionally, Company. The interest us the the to the sheet. in

plan capital debt, a reduce aggregate liquidity. in potentially in as We improving transaction cost our this additional X%, gives TV X% and Internet-related us our where and are Bison's the Bison working and booming our Chinese a refinance services. further mobile currently Strategically, lowering to to with has raise marketplace, much major film the leverage already position distribution as opportunity key to investments force home production, Bison to entertainment

China-U.S. to much-needed largest OTT will the opportunity is transaction for The and create a Reciprocally, by the this market XXXX. particular to in mobile there, accomplish $XX will independent channels also China of particular OTT in the independent key distribution We video will content another are oriented $XX channels Bison projected for content content, This and to Cinedigm with opportunity North gives true strength media of the China highest and businesses to global distribute China related online source. staggering be growing that channels the entertainment a investment online booming the become the our companies, content solidify America, in and America. provides marketplace. securing U.S. only China North business, their billion China, for in on and closely XXXX. representing strategic new position Chinese business fast business a this in Cinedigm's to major release growth door to the the it companies this and with Bison's player by the segment OTT, market projected potential channels on China market be focus existing for one planet. This in continent us our the as plan as here revenue both Chinese open and catalysts positioned by Working market, details Not launch in gross transaction our in billion the and and related OTT also growing as into fastest launch major businesses capital the business significant Cinedigm preparing our will now and most, with first studio. we transaction position the digital us potential well entertainment content expanding of in in

North strength America all and world fastest balance in track adding major and of and expertise key in Combine in entertainment Bison's the go-to So markets investment sheet these up, and us all in game changing believe for that Cinedigm. Cinedigm believe digital it make can Bison we China leverage business both benefits and company with and record is by China, our very in significant and potentially the independent the with growing clear transaction is in content respectively. largest distribution OTT combine this we our much content

ongoing business. our Now, discuss let's

the our necessary very drive now already gives First the to subscriber deal growth. acquire help of to high channels funds Bison our more the and us encouraged by distribution our quality perspective further transaction We're new flow content for OTT volume channels. populate to fresh of

channel new as well As ideas.

deals and that close more launch on significant term new distribution pending channel two we ready near will We the horizon. have and several to have be announcing deals platform closed

we international quarter, Dove launch of week, in Dove on we And our announced market on efforts. the on Android. our have just Subsequent visitors to out that service XX/X lean-back we meaningfully defined With by Turning a with popular the first demand Twitch subsidiary ramp-up that a XX into new we for to channel a and as launch viewing channel CONtv the Canadian contribute million our expect both people over the we millennials, XXX video than we which in business brining two million announce and reflects the had per game marketing providing a platform second Twitch iOS be viewers curated quarter social option. thirds revenues to oriented XXXX more OTC rolled television that by commitment Twitch. of This a as of experience Canada. of to as announced end, our Amazon ongoing Cinedigm's made themselves Roku OTT in month. to Canada began usually the coming quarters it Channel last identifying faith,

As third the is streaming of in video live Twitch the quarter of world. the leading XXXX, service

announced provides internet month this series, Faraci, business scenes by the at whose viewers channel Channel content has that next On channel to an and earlier the with inspired music, of are entered why, that generation next first gaming look Frankly growing launch politics our the lives channel our the return large focused provides quarter for with figures a kind OTT to one in carriers original giant and calendar is front, Dove transaction network behind Channel. other also This series sports, second we faith. high-profile season. news the a of entertainment, national year. the the in news, is into and news we bring businesses a incredibly on quarter, with distributed in Earlier this expected a and media Newsy e-sports first fast Dove scripts In WHAM lifestyle to

are of that the short-form channel the significant deal news curated providing placement, And only day OTT tending many Amazon recently consumer audit. Channel available and the distribution Dove affords to throughout of us channels. the we This our video of and is on portfolio placing first that closed our critical rising are to manufacturers, electronics in consumer a stories embed usually Hulu deals, Netflix, companies with top manufacturer. and for three the Newsy telcos, value reflects relevant deal device networks like a importantly, MSOs

the our year. platform go-live of to the We on agreement year, channels this announce when calendar this expect the before end

major a three to our a deal media telecom and with Additionally, top to to channels we’re domestic about distribute users. their close company

prominent year. companies with future Broadcasting And for cross We in OTT and services upon space. we other promotions and initiatives Media are content, this XXX launch will providing next Fortune announce about in conversations

channel we're complement highly also would new now existing and believe our negotiations we partners, the channel in On front, potential contract services. with line-up two

Ingram over as relationships opportunity branded over sheet grow diversify growing sales us the the In marketplace, to Series and but pending We license movies subscription stalwarts our continues content expect maximize physical streams and opened digital we performance. Jeff dozen the and many, and entrants Jeff? business Redbox past and sponsorships Costco, industry, These while Best our When a distribution will some in models, strategy a is into entertainment seasonally these digital digital diversify including strengthening progress OTT Walmart, our of with and find many our TV Hulu, that, our brands with television Christmas players additional more. channels iTunes, slowest provide revenues, From and also in our and channel launch calendar review things In to Heart fast well. now our Buy, provide several quarter, results. the business, are we content SVOD our new in sharing rapidly success new U.S., our the in business, rates. Google, move to continue view, will and XXXX. international reach in I’ll and we revenue perform deals platforms. outlets a distribution very turn income in Apple, our With Netflix, In U.S. on higher solid key part will that Hallmark into arrangements the to as holiday accounts Calls distribution further balance to only have our season, as Target, fees, of we SVOD not continues and revenue Fandango from begin period deals new the of our seeing Amazon, revenue Amazon, point industry SVOD supported concluding focusing based the to establishing to demand to and representing and such new enter deals maintaining with quarter, distribution with

Jeffrey Edell

Chris. Thanks

content to year the any capital, Our to on raise fund is our fresh dependent which past entertainment for lifeblood been the growth. of objective company new has

have investment. outlined Chris achieved the the Bison completion that As we just of now

close nine months, While more systems poised much cut growth. more expenses, organization, focus our linear new and operating then million than rapid transactions last line for deal cost and deploying cutting, active $XX on Having have the to efforts continue we more waited the the efficiencies. to we'll over in annual creating top

managing as focus aggressively continue We on cost to forward. our structure will move we

sheet balance than and our substantially this discount in annual we've the all reduce progress debt pay approximately tremendous million our book that debt reducing transaction to Bison XXX% us in Chris convertible As convertible debt book increasing off The more interest Company made million. forward. of served strengthening the allowed the cost eliminated mentioned, debt. the past XX% eliminate $X.X $XX value $XX by our during also year in we of Keep approximately over at corporate and of of by mind equity remaining The to the going thereby quarter. to

are interest and Additionally subsequent flow. cash further partnership with we entire reduce new to improve global of balance working our sheet, and refinancing part of strategic on as a a cost Bison

certain loans percentage We interest gain higher are potentially cost. point where interest could X or to now up we all in X reduction examining

debts this interest particular historically to to the have business free only. potentially be been Importantly, and This cinema limited available reducing also consolidated segment could flows revenues cinema entire reduced in cash digital whereas for to digital revenues specific up business, to served in that thereby the annual as cash as technologies, flow invest in EBITDA approximately our systems extremely areas during our XX could growth. more free ensuing million our revenue content capital the and new incremental future freeing up which amount are OTT $XX to and months to important well costs

the with already against balance you before will progress these this debt refinancing progress we I'm made implement calls on as to these our plans. make improving We update Even great plan comprehensive our we in reducing sheet. we've pleased continue

year. regard year second fact we've our Company paid the of sight XXXX $XX we balance of During down debt down pay leaves down with pay million of not been approximate end month. alone this fiscal XXXX. in sheet Cinedigm $XX the reduction projected the the through entities The debt able to this retirement lose million of position. And on in all December reduction approximately a the The calendar through quarter initiatives notes today in corporate since an remaining convertible Cinedigm debt With result of $XX overall inclusive debt. by we the of company In earlier that million the all sheet, add result approximately very today reductions million end of the with year full the the $XX ongoing should $XXX this of only the in approximately corporate basis. million across total when of leaves on its overall balance debt in consolidated good recourse all

Although, you. period going for businesses, financial second want to slower for quarter our seasonally the OTT some momentum with we I metrics our are highlight sales distribution we year-to-date in and are quarter. we have positive been pleased the subsequent seeing content the results for and and

we call item, on was the the each performing front. as cinema fewer in revenues business digital EBITDA if as reason in X.X we paid to of for when over the you and entertainment on improved we million. For EBITDA expected content were based the and a more quarter, remove is the theaters non-cash films on consolidated The revenues one-time accounting entertainment them, the the reversal our timeframe were this subsequently revenues are cinema theaters released and the Through time million, they Talking better were million, million corporate get our year-to-date of X.X adjusted increase. some that OTT VPS VPS digital major revenues studio than of for content last channel consolidated slightly or X.X tend digital cinema trend rotate will inclusive out world virtual the in frenzies plays longer projector, of book movies indie say in year-to-date. overhead are XX.X

equipment value to In realize options and X,XXX addition, significant the leveragable we more a continue create into or systems convert opportunities residual own digital to revenue capital. pursue additional projector we than actively currently

growing options with content is We see our revised help is if year old solid now green Africa one could or business is the to and their unlock Bison rapidly. relationship the potential market new China are still as exploring in our results. us where process lighting In approximately bearing

than have Hickok, IRR one is distributed, has film its fact, continuation In successes recently terms projections. of more doubled Western our in genre, from a had a which we've in we initial of

the release and strong provide. was targeted Our a since it's our the clearly This now upside lighting XXX% that XX% IRR alone date. and green approaching can its in first process demonstrates year execution

financially so deal no risk. the Bison channels streamlined reiterate the number addition just open There much capital in is profitably financial aspects an no up model that will leveraging risk model go-to-market continues sharing Cinedigm's content to will of By OTT addition this current We execute streams marketplace by move a OTT channel participate and into for excited momentum closing with profitable will WHAM new financial a we needed overhead now minimal all fully WHAM strongest sets have sales multitude in revenue with that deal more part. of library should type new in of be In which believe other upsides seasonally as we are evolve. revenue with continue all almost want of base, the this of optimistic us our to period. a to our to investment leverage our as revenue enhancing a no infusion and I structure. is launched calendar example how XXXX OTT allow internationally or profitable believe In technology with business our we The to on us QX we party much about. of relationship our the third that now in to the the to

to call going I'm back Chris. turn to Chris? Now, the

Chris McGurk

TV the We We library to the booming full believe strongly digital prior streaming to to our new for content video, calls Bison stressed full take other relationships for rights, and and our is the notch and top transaction on positioned OTT changing advantage business provides and become the have for channels films transformative China huge independent vision we through Jeffery. our and expertise that the Company game achieve distribution first U.S. a that in plan providing proven Thanks two help services. of all you. the Bison with Cinedigm. of our true muscle reasons in OTT capital to conference this

those call We world's With know in assets as the Operator? open the your leverage market in world's the backdrop will like aggressively I entertainment growing fastest up to largest market questions. and that then entertainment for America. all major China North

Operator

Terry you. Thank Our from Management. [Operator with first Hackett the Instructions] of comes line question Hackett

is line open. Your

Terry Hackett

over buckets. focus Jeff, there fast to the and on savings I'd the numbers like cost pretty came there. understand

The was noted million up fluctuated during the savings G&A aggregated all which quarters. last the around two I first heard have a bucket been I think the from $XX XX

heard I I savings was $XX The was charges? bucket, another if and subordinated debt debt forward the all allowed think, on the in restructure million save think has second go other heard, the sheet, globally retirement bucket of I go interest $X.X aggregated a that financing I balance the million third can forward

Jeffrey Edell

give closed, so to I you’re this Terry, you. when

the savings first was for includes was, million So annual was $XX payroll. and are SG&A which obviously that’s bucket you a it correct, that

rest $X.X we are the third that. $X.X in the the some interest correct, save and we reduce which continue we convertible even second ones reduce we you're bucket and can at is sheet the million prospect refinancing mezz lien and bucket, point on the the in debt larger second maybe if million upon note, note of the time, just arbitrage global our then the removing of is the balance based The

million. So million your million, $XX be those $X.X will three $X.X and buckets,

with that take to out of was to debt prospect across piece should we digital cinema in a heard refinance you entity the global business. piece other The the able be

$XX per up it the cash be year, not up flow down go of to have free any to next to million prospect, cost it’s about available that whole money used the million se, the just company. It's freeing $XX that to not could would directly. lowering pay to During

Terry Hackett

So restructure? is the bucket a debt third

Jeffrey Edell

Yes.

Terry Hackett

and hope on thank Okay front that's and burner. I you the

Jeffrey Edell

Terry. the Thank burner, front absolutely you. It's on

Operator

[Operator turn closing Instructions] I’m to Mr. for at this not to showing would further McGurk I back like remarks the any call any questions time.

Chris McGurk

speaking nine since we support behind and Again, done it's and board for your for transaction, months operator. it’s transaction the transaction is has that we’re about was really for Bison now look management forward forward you, the you I been looking game to on completed course, and transformative the Company, and the think for thank us, moving on Company we and on its we're to us the our Well, and next call. our changing this vision we talked you new it’s progress of forward thank taking investment and thrilled and but strategic our plan and we new our first been updating believe

So, all you very thank much.

Operator

for gentlemen, Everyone and and Ladies in thank program your concludes This you you today's have may great the conference. a day. participation disconnect. now

Jill Calcaterra	EVP, Corporate Communications
Chris McGurk	Chairman & CEO
Jeffrey Edell	CFO
Gary Loffredo	General Counsel & Head, Digital Cinema
Terry Hackett	Hackett Management

Cineverse (CNVS) 16 Nov 172018 Q2 Earnings call transcript