DALLAS, Nov. 12, 2020 (GLOBE NEWSWIRE) -- Wilhelmina International, Inc. (Nasdaq:WHLM) today reported revenues of $10.5 million and net income of $22 thousand for the three months ended September 30, 2020, compared to revenues of $17.2 million and net loss of $0.2 million for the three months ended September 30, 2019. For the nine months ended September 30, 2020, Wilhelmina reported revenues of $29.6 million and net loss of $5.3 million compared to revenue of $57.2 million and net income of $0.2 million for the nine months ended September 30, 2019. During the three and nine months of 2020, the novel coronavirus (COVID-19) pandemic had a material impact on revenues. The decrease in revenues when compared to the same periods of the prior year was primarily due to postponement and cancellation of bookings by many of Wilhelmina’s customers while non-essential business activities were barred in the cities where the Company operates, as well as the closure of the Wilhelmina Studios division in the fourth quarter of 2019. The increase in net income for the third quarter of 2020 was due to a reduction in operating expenses from the Company’s cost savings initiatives, partially offset by lower revenue net of model costs. The increase in loss for the nine months ended September 30, 2020 was primarily due to the decrease in revenues net of model costs, partially offset by a decrease in operating expenses.

COVID-19 Pandemic

On March 11, 2020, the World Health Organization declared the outbreak of novel coronavirus (COVID-19) as a pandemic, which has spread rapidly throughout the United States and the world. The Company’s revenues are heavily dependent on the level of economic activity in the United States and the United Kingdom, particularly in the fashion, advertising and publishing industries, all of which have been negatively impacted by the pandemic and may not recover as quickly as other sectors of the economy. There have been mandates from federal, state, and local authorities requiring forced closures of non-essential businesses. As a result, beginning in March 2020, the Company has seen a significant reduction in customer bookings, resulting in a negative impact to revenue and earnings. During the third quarter of 2020, bookings increased from the preceding months, but remained significantly below pre-pandemic levels.

In addition to reduced revenue, business operations have been adversely affected by reductions in productivity, limitations on the ability of customers to make timely payments, disruptions in talents’ ability to travel to needed locations, and supply chain disruptions impeding clothing or footwear wardrobe from reaching destinations for photoshoots and other bookings. Many of the Company’s customers are large retail and fashion companies, which have had to close stores in the United States and internationally due to orders from local authorities to help slow the spread of COVID-19. Some of these customers have filed for bankruptcy in 2020 and others may be unable to pay amounts already owed to the Company, resulting in increased future bad debt expense. These customers also may not emerge from the pandemic with the financial ability, or need, to purchase Wilhelmina’s services to the extent that they did in previous years. Some of our model talent have been quarantined with family far from the major cities where Wilhelmina’s offices are located, and also away from where most modeling jobs take place. Many U.S. and international airlines have decreased their flight schedules which, as economic activities resumes and clients increase booking requests, may make it difficult for our talent to be available when and where they are needed. While these disruptions are currently expected to be temporary, there continues to be uncertainty around the duration.

Postponed and cancelled bookings related to the pandemic contributed significantly to reduced revenues and increased operating losses during the first nine months of 2020. Although some clients increased activity and bookings during the third quarter of 2020, rising COVID-19 infection rates in cities where Wilhelmina operates could lead to a slower economic recovery in those markets, and possible additional business closings or local mandates that could slow the recovery in our operations there. Since Wilhelmina extends customary payment terms to its clients, even as bookings resume, there is likely to be a lag before significant cash collections return. In the meantime, the Company continues to have significant employee, office rent, and other expenses.

Reduced outstanding accounts receivable available as collateral under the Company’s credit agreement with Amegy Bank has limited access to additional financing. Net losses in recent periods have also impacted compliance with the financial covenants under the Amegy Bank credit agreement, further impeding the Company’s ability to obtain additional financing. Since the pandemic began, many stock markets, including Nasdaq Capital Market where Wilhelmina’s common stock is listed, have been volatile. A further decline in the Company’s stock price would reduce our market capitalization and could require additional goodwill or intangible asset impairment writedowns.

The Company has taken the following actions to address the impact of COVID-19 and the current recessionary environment, in order to efficiently manage the business and maintain adequate liquidity and maximum flexibility:

• In April 2020, obtained approximately $2.0 million in loans under the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) administered by the U.S. Small Business Administration (“SBA”).
• Eliminated discretionary travel and entertainment expenses.
• Suspended share repurchases.
• Did not renew the leases on three New York City model apartments when the terms ended in June and August, 2020.
• Suspended efforts to fill two highly compensated executive roles following the resignation of the Company’s Chief Executive Officer and Vice President in early 2020.
• Obtained from the landlord of the Company’s New York City office a deferral of $41 thousand in July 2020 rent until January 2021.
• Negotiated discounts with various vendors and service providers, in effect through the remainder of 2020.
• Effective July 1, 2020, implemented layoffs of approximately 36% of its staff, including employees at each of the Company’s five offices, and effected temporary salary reductions for the remaining staff. The salary reductions are expected to return to full salaries when business conditions improve.

If the quarantines and limitations on non-essential work are re-implemented, or persist for an extended period, the Company may need to implement additional cost savings measures.

Financial Results

Net income for the three months ended September 30, 2020 was $22 thousand, or $0.00 per fully diluted share, compared to net loss of $0.2 million, or $0.03 per fully diluted share, for the three months ended September 30, 2019. Net loss for the nine months ended September 30, 2020 was $5.3 million, or $1.03 per fully diluted share, compared to net income of $0.2 million, or $0.03 per fully diluted share, for the nine months ended September 30, 2019.

Pre-Corporate EBITDA was $0.6 million and ($2.3) million for the three and nine months ended September 30, 2020, compared to Pre-Corporate EBITDA of $0.5 million and $2.4 million for the three and nine months ended September 30, 2019.

Changes in net income, EBITDA, Adjusted EBITDA and Pre-Corporate EBITDA for the three and nine months ended September 30, 2020, when compared to the three and nine months ended September 30, 2019, were primarily the result of the following:

• Revenues net of model costs for the three and nine months ended September 30, 2020 decreased by 36.2% and 49.8% primarily due to postponed and cancelled bookings resulting from COVID-19, as well as the closure of the Wilhelmina Studios division in the fourth quarter of 2019;
• Salaries and service costs for the three and nine months ended September 30, 2020 decreased by 49.4% and 28.4% primarily due to the closure of the Wilhelmina Studios division during the fourth quarter of 2019, employee layoffs in July 2020, temporary reductions in staff salaries, open positions for two executives that resigned in January 2020, and a reduction in share based payment expense;
• Office and general expenses for the three and nine months ended September 30, 2020 decreased by 23.5% and 15.2%, primarily due to reduced legal fees, rent expense, computer expense, utilities, postage, and other office expenses, partially offset by an increase in bad debt expense; and
• Corporate overhead expenses for the three and nine months ended September 30, 2020 decreased by 42.2% and 17.0%, primarily due to lower corporate travel costs and temporary reductions in fees to the Company’s Board of Directors.

Subsequent to September 30, 2020, the Company paid the final scheduled $0.6 million payment of principal and interest on one of its two Amegy Bank term loans.

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 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.