Wilhelmina International, Inc. Reports Results for the Year Ended 2017

Financial Results

DALLAS, March 22, 2018 (GLOBE NEWSWIRE) -- Wilhelmina International, Inc. (Nasdaq:WHLM) ("Wilhelmina" or the "Company") today reported revenues for the fiscal year ended December 31, 2017 of $73.2 million, compared to $82.2 million for 2016.  Net income was $0.2 million, or $0.03 per fully diluted share, for 2017, compared to $0.1 million, or $0.02 per fully diluted share, for 2016.  Net income for 2017 was favorably impacted by a $0.7 million income tax benefit largely attributable to passage of the U.S. Tax Cuts and Jobs Act.  Net cash used by operating activities was $0.3 million in 2017, compared to net cash provided by operating activities of $2.9 million in 2016.  Pre-Corporate EBITDA was $2.2 million in 2017, compared to $4.1 million in 2016.

On a quarterly basis, the Company reported total revenues of $17.0 million for the three months ended December 31, 2017, compared to $17.6 million for the same period of the prior year.  Net income for the fourth quarter of 2017 was $0.2 million, compared to $0.6 million net loss for the fourth quarter of 2016.  Net income for the three months ended December 31, 2017 was favorably impacted by a $0.8 million income tax income tax benefit largely attributable to passage of the U.S. Tax Cuts and Jobs Act.  Net cash provided by operating activities was $1.5 million for the three months ended December 31, 2017, compared to $2.6 million for the three months ended December 31, 2016.  Pre-Corporate EBITDA decreased to $29 thousand for the three months ended December 31, 2017, compared to $0.3 million for the three months ended December 31, 2016.

Mark Schwarz, Executive Chairman of Wilhelmina, said, “Our 2017 revenues were lower compared to the prior year primarily due to three factors: (1) the large-scale shifts in consumer behavior affecting many of our clients, especially those in retail and apparel industries; (2) changing patterns in advertising spending markets and preferences for talent; and (3) a transition period related to certain internal staffing changes.   Despite the unanticipated challenges experienced in 2017, we made progress developing new revenue streams, strengthened our celebrity representation, delivered strong show seasons and achieved an overall elevation of the agency.”

William Wackermann, Chief Executive Officer of Wilhelmina, said, “We remain committed to our strategy. Although a challenging first half of 2017 contributed to lower than anticipated results, we are starting to see signs of strength in our customers’ businesses.  We believe our focus on improved leadership and strengthening our core business while building new revenue streams will drive long-term growth for all stakeholders for years to come.”

Some recent highlights from our models’ activities:

MEN

• Jegor Venned – Tom Ford and Givenchy Campaigns
• William Los – Tommy Denim
• Serge Rigvava – Zara Campaign
• Francisco Henriques - Paco Rabonne PURE X/S Fragrance
• Francisco Lachowski - L’Oreal Hair, Cole Haan, and Tommy Hilfiger
• Fernando Cabral - Hugo Boss
• Kalib Besher - Calvin Klein
• Jonathan Bellini – Vogue Hommes Spring/Summer 2017 Cover
• Sven de Vries – L-Officiel Hommes Spain Winter Cover
• Hao Yun Xiang – Giorgio Armani Campaign
• Ton Heukels - Balmain Campaign
• Marlon Teixeira - Balmain Campaign

WOMEN

• Sora Choi – Louis Vuitton Spring/Summer & Fall/Winter 2017
• I-Hua Wu – Maybelline Cosmetics Campaign
• Jenna Kelly – Sam Edleman Spring 2017
• Makala Johnson – Chloe Spring/Summer 2018
• Tyg Davison – Y-3 Adidas Spring/Summer 2018
• Victoria Schons – Gucci Fall/Winter 2017
• Bruna Lirio – Victoria’s Secret Fashion Show 2017
• Avie Acosta – Marc Jacobs Fall/Winter 2017 Runway
• Briggs Rudder – Valentino Resort 2018 Runway
• Zhao Yan – Alexander Wang Fall/Winter 2018 Runway 
• Ally Ertel – Vogue Italia, Vogue Japan, Vogue Korea, and Vogue Russia Covers
• Kathleen Sorbara – Roxy Worldwide Campaign
• Adda Zmora - Catherine Malandrino Spring/Summer 2018
• Anne de Paula – Sports Illustrated Swimsuit
• Georgia Gibbs – Sports Illustrated Swimsuit
• McKenna Berkley – Sports Illustrated Swimsuit
• Hunter McGrady – Sports Illustrated Swimsuit
• Kate Wasley – Sports Illustrated Swimsuit

CELEBRITY

• Nicki Minaj - Face of  H&M Holiday Campaign and Capsule Campaign
• Shawn Mendes - Face of Emporio Armani Watches Campaign and Shawn Mendes “Signature” fragrance with Elizabeth Arden.
• Machine Gun Kelly - Face of the Fall/Winter John Varvatos Campaign

APERTURE

• Barbie Ferreira – Recurring on HBO’s Divorce and host of How to Behave on Vice network
• Tommy Martinez – Recurring on CW’s Riverdale
• Christian Yeager – Michelob Ultra Super Bowl Commercial
• Francois Dominick – Kia Super Bowl Commercial
• Bud Scully – E*Trade Super Bowl Commercial
• Noelle Brown – ULTA Beauty Campaign

HAIR AND MAKEUP ARTISTS

• Farren Jean Andrea – Dolce & Gabbana Spring/Summer Campaign
• Georgia Mitropoulos – Fantastics Magazine Cover
• Michaela Krebs – Nike Spring/Summer 2018 Style Guides
• Tatiana Cinquino – Grazia Magazine & Harper’s Bazaar
• Rebecca Grice – Haim and Charli XCX
• Caleb & Gladys – Vogue Taiwan, Elle Mexico, Marie Claire, Cosmopolitan

Financial Results

The following table reconciles reported net income under generally accepted accounting principles to EBITDA, Adjusted EBITDA, and Pre-Corporate EBITDA for the fourth quarter and year ended December 31, 2017 and December 31, 2016.

Changes in net income, EBITDA, Adjusted EBITDA and Pre-Corporate EBITDA for the three months and year ended December 31, 2017, when compared to the three months and year ended December 31, 2016, were primarily the result of the following:

• Revenues net of model costs decreased by $2.6 million, or 11.1%, for the year ended December 31, 2017 when compared to the year ended December 31, 2016, primarily due to lower core modeling bookings in the United States, partially offset by an increase in core model bookings in London, from the Aperture division, and from the Celebrity division.  Revenue net of model costs decreased by $0.2 million, or 4.6%, for the three months ended December 31, 2017, when compared to the three months ended December 31, 2016, primarily due to lower core modeling bookings in the United States.
   
• Salaries and service costs for the year ended December 31, 2017 decreased $0.8 million, or 5.3%, when compared to the year ended December 31, 2016 primarily due to severance paid to the Company’s former Chief Executive Officer and another employee in 2016, changes in personnel to better align the number of employees at each Wilhelmina office with the needs of each geographic region, and improved management of travel, meals, and entertainment costs in connection with delivering services to clients and models.
   
• Office and general expenses decreased $0.5 million, or 9.1%, for the year ended December 31, 2017 compared to the year ended December 31, 2016, due primarily to recruiting fees related to the hiring of the Company’s new Chief Executive Officer and new Chief Financial Officer and an accrual for non-income tax expenses during 2016, as well as decreases in marketing and model apartment costs in 2017.
   
• Amortization and depreciation expense increased $0.3 million for the year ended December 31, 2017, compared to 2016 primarily due to the Company’s new accounting software put into service in the second half of 2016.
   
• There were no non-recurring items during the year ended December 31, 2017.  In 2016, non-recurring items included an increase to contingent consideration relating to the 2015 acquisition of Wilhelmina London Limited, severance paid to former employees, the recruiting fees noted above, and non-income taxes to reconcile the Company’s liability for previous years.
   
• Corporate overhead expenses decreased $0.3 million for the year ended December 31, 2017, compared to 2016 primarily due to lower legal fees.
   
• Operating income decreased $1.3 million for the year ended December 31, 2017 compared to the prior year primarily due to decreased revenues outpacing saving in operating expenses.  For the fourth quarter, the operating loss of $0.6 million represented a 12.8% improvement from the $0.7 million operating loss in 2016 primarily as a result of decreased operating expenses and corporate overhead.
   
• Net income increased $0.1 million, or 71.6%, for the year ended December 31, 2017, compared to 2016, primarily due to a $1.5 million decrease in income tax expense due to the recognition of deferred income tax benefits partially offset by the $1.4 million decline in income before income taxes.

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 and executive officer compensation, legal, audit and professional fees, corporate office rent and travel.

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-K Filing

Additional information concerning the Company's results of operations and financial position is included in the Company's Form 10-K for the fiscal year ended December 31, 2017 filed with the Securities and Exchange Commission on March 22, 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 not 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, a publicly traded company, 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