WHLM Wilhelmina International Inc

Wilhelmina International, Inc. (Nasdaq: WHLM) ("Wilhelmina" or the "Company") today reported revenues of $15.2 million and net income of $23 thousand for the three months ended December 31, 2021, compared to revenues of $12.0 million and net income of $0.4 million for the three months ended December 31, 2020. For the fiscal year ended December 31, 2021, Wilhelmina reported revenues of $56.8 million and net income of $4.5 million compared to revenue of $41.6 million and net loss of $4.9 million for the fiscal year ended December 31, 2020. During the three months and fiscal years of 2021 and 2020, the novel coronavirus (COVID-19) pandemic had a material impact on revenues. In recent quarters, the Company’s revenue has trended positively as the cities where it operates are reopening and COVID-19 vaccination rates increase.

Financial Results

Net income for the three months ended December 31, 2021 was $23 thousand, or $0.00 per fully diluted share, compared to net income of $0.4 million, or $0.08 per fully diluted share, for the three months ended December 31, 2020. Net income for the fiscal year ended December 31, 2021 was $4.5 million, or $0.88 per fully diluted share, compared to net loss of $4.9 million, or $0.96 per fully diluted share, for the fiscal year ended December 31, 2020.

EBITDA was $0.3 million and $6.2 million for the three months and fiscal year ended December 31, 2021, compared to $1.0 million and ($2.7) million for the three months and fiscal year ended December 31, 2020. Adjusted EBITDA was $0.9 million and $3.6 million for the three months and fiscal year ended December 31, 2021, compared to $1.1 million and ($1.9) million for the three months and fiscal year ended December 31, 2020. Pre-Corporate EBITDA was $1.1 million and $4.5 million for the three months and fiscal year ended December 31, 2021, compared to $1.3 million and ($1.0) million for the three months and fiscal year ended December 31, 2020.  

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, 2021 and 2020.

(in thousands)		Three months endedDecember 31,					Year endedDecember 31,
		2021			2020		2021		2020
Net income (loss)	$23			$397		$4,518			(4,941	)
Interest expense		2			15		51		86
Income tax expense		128			235		823		902
Amortization and depreciation		115			363		855		1,249
EBITDA*		268		$1,010			6,247		(2,704	)
Foreign exchange loss		(4	)		49		80		(16	)
Non-recurring items**		575			-		(2,739	)	800
Share-based payment expense		55			3		61		16
Adjusted EBITDA*		894		$1,062			3,649		(1,904	)
Corporate overhead		254			196		897		888
Pre-Corporate EBITDA*		1,148		$1,258			4,546		(1,016	)
*  Non-GAAP measures referenced are detailed in the disclosures at the end of this release.** Non-recurring items include cybersecurity incident expenses for the three months ended December 31, 2021 and gain on forgiveness of loans, employee retention payroll tax credit, and cybersecurity incident expenses during the year ended December 31, 2021 and goodwill impairment during the 12 months ended December 31, 2020

Changes in net income, EBITDA, Adjusted EBITDA and Pre-Corporate EBITDA for the three months and fiscal year ended December 31, 2021, when compared to the three months and fiscal year ended December 31, 2020, were primarily the result of the following:

• Revenues net of model costs for the three months and fiscal year ended December 31, 2021 increased by 27.0% and 36.6% 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 increased 57% for the three months ended December 31, 2021 primarily due to temporary reductions in staff salaries in the prior year, which returned to full salary in July 2021, as well as new employee hires during 2021. Salaries and service costs decreased 5.4% for the fiscal year ended December 31, 2021 primarily due to employee layoffs in July 2020, temporary reductions in staff salaries and the closure of the hair and makeup artist division in the second half of 2020, partially offset by new employee hires during 2021;
• Office and general expenses for the three months and fiscal year ended December 31, 2020 decreased by 10.3% and 17.6%, primarily due to reduced rent expense, computer expenses, recruiting costs, and other office expenses, partially offset by an increase in legal expense in 2021;
• Amortization and depreciation expense for the three months and fiscal year ended December 31, 2021 decreased by 68.3% and 31.5%, primarily due to reduced depreciation of assets that became fully amortized in 2020;
• Non-recurring items included $2.0 million of gain on forgiveness of PPP loans and $1.3 million of employee retention payroll tax credit in the fiscal year ended December 31, 2021, as well as $0.6 million of cybersecurity incident expenses in the three months and fiscal year ended December 31, 2021, all compared to a $0.8 million goodwill impairment charge in the fiscal year December 31, 2020; and
• Corporate overhead increased by 29.6% and 1.0% for the three months and fiscal year ended December 31, 2021, primarily due to temporary reduction in fees paid to corporate employees and the Company’s directors in the prior year that returned to full fee in July 2021.

Cybersecurity Incident Expenses

In November 2021, the Company determined that it had recently been the victim of criminal fraud known to law enforcement authorities as “business e-mail compromise fraud” which involved employee e-mail impersonation and fraudulent payment requests targeting the finance department of a division of the Company. The Company recorded a charge of $0.6 million in the fourth quarter of 2021 for unrecovered unauthorized payments and professional service fees associated with the fraud. The Company is continuing to pursue the recovery of the remaining unauthorized payments and is cooperating with U.S. federal law enforcement authorities who are actively pursuing an investigation.

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In thousands, except share data) 

		2021					2020
ASSETS
Current assets:
Cash and cash equivalents		$	10,251				$	5,556
Accounts receivable, net of allowance for doubtful accounts of $1,580 and $1,635, respectively			8,858					7,146
Prepaid expenses and other current assets			91					105
Total current assets			19,200					12,807
Property and equipment, net of accumulated depreciation of $4,094 and $5,451, respectively			168					928
Right of use assets-operating			1,745					585
Right of use assets-finance			199					218
Trademarks and trade names with indefinite lives			8,467					8,467
Goodwill			7,547					7,547
Other assets			98					93
TOTAL ASSETS		$	37,424				$	30,645
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities		$	3,707				$	2,867
Due to models			8,090					6,265
Deferred revenue			535					-
Lease liabilities – operating, current			463					435
Lease liabilities – finance, current			64					77
Term loans - current			-					414
Total current liabilities			12,859					10,058
Long term liabilities:
Deferred income tax, net			2,048					1,449
Lease liabilities – operating, non-current			1,361					180
Lease liabilities – finance, non-current			143					149
Term loan - non-current			-					2,303
Total long-term liabilities			3,552					4,081
Total liabilities			16,411					14,139
Shareholders’ equity:
Common stock, $0.01 par value, 9,000,000 shares authorized; 6,472,038 shares
issued at December 31, 2021 and December 31, 2020			65					65
Treasury stock, 1,314,694 shares at December 31, 2021 and December 31, 2020, at cost			(6,371	)				(6,371	)
Additional paid-in capital			88,580					88,487
Accumulated deficit			(61,238	)				(65,756	)
Accumulated other comprehensive income			(23	)				81
Total shareholders’ equity			21,013					16,506
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	37,424				$	30,645

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)For the Years Ended December 31, 2021 and 2020 (In thousands, except per share data)

		Three Months Ended								Year Ended
		December 31,								December 31,
		2021				2020				2021				2020
Revenues:
Service revenues		$	15,211			$	11,973			$	56,780			$	41,577
License fees			7				5				33				26
Total revenues			15,218				11,978				56,813				41,603
Model costs			10,924				8,338				40,711				29,885
Revenues, net of model costs			4,294				3,640				16,102				11,718
Operating expenses:
Salaries and service costs			2,475				1,576				8,644				9,142
Office and general expenses			726				809				2,973				3,608
Amortization and depreciation			115				363				855				1,249
Cybersecurity incident expenses			575				-				575				-
Goodwill impairment			-				-				-				800
Corporate overhead			254				196				897				888
Total operating expenses			4,145				2,944				13,944				15,687
Operating income (loss)			149				696				2,158				(3,969	)
Other (income) expense:
Foreign exchange (gain) loss			(4	)			49				80				(16	)
Gain on forgiveness of loan			-				-				(1,994	)			-
Employee retention payroll tax credit			-				-				(1,320	)			-
Interest expense			2				15				51				86
Total other (income) expense, net			(2	)			64				(3,183	)			70
Income (loss) before provision for income taxes			151				632				5,341				(4,039	)
Provision for income taxes:
Current			(66	)			(138	)			(224	)			(178	)
Deferred			(62	)			(97	)			(599	)			(724	)
Provision for income taxes, net			(128	)			(235	)			(823	)			(902	)
Net income (loss)		$	23			$	397			$	4,518			$	(4,941	)
Other comprehensive income (loss):
Foreign currency translation adjustment			16				198				(104	)			79
Total comprehensive income (loss)			39				595				4,414				(4,862	)
Basic net income (loss) per common share		$	0.00			$	0.08			$	0.88			$	(0.96	)
Diluted net income (loss) per common share		$	0.00			$	0.08			$	0.88			$	(0.96	)
Weighted average common shares outstanding-basic			5,157				5,157				5,157				5,158
Weighted average common shares outstanding-diluted			5,157				5,157				5,157				5,158

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES`CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY For the Years Ended December 31, 2021 and 2020 (In thousands)

	CommonShares		StockAmount			TreasuryShares		StockAmount			AdditionalPaid-inCapital			AccumulatedDeficit				AccumulatedOtherComprehensiveLoss		Total
Balances at December 31, 2019	6,472		$	65		(1,310	)	$	(6,352	)	$	88,471		$	(60,815	)	$	2		$	21,371
Share based payment expense	-			-		-			-			16			-			-			16
Net loss to common shareholders	-			-		-			-			-			(4,941	)		-			(4,941	)
Purchases of treasury stock	-			-		(5	)		(19	)		-			-			-			(19	)
Foreign currency translation	-			-		-			-			-			-			79			79
Balances at December 31, 2020	6,472		$	65		(1,315	)	$	(6,371	)	$	88,487		$	(65,756	)	$	81		$	16,506
Share-based payment expense	-			-		-			-			61			-			-			61
Net income to common shareholders	-			-		-			-			-			4,518			-			4,518
Short swing profit disgorgement	-			-		-			-			32			-			-			32
Foreign currency translation	-			-		-			-			-			-			(104	)		(104	)
Balances at December 31, 2021	6,472		$	65		(1,315	)	$	(6,371	)	$	88,580		$	(61,238	)	$	(23	)	$	21,013

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWFor the Years Ended December 31, 2021 and 2020 (In thousands)                                                                                              

		Year Ended
		2021					2020
Cash flows from operating activities:
Net income (loss):		$		4,518			$				(4,941		)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Amortization and depreciation				855							1,249
Goodwill impairment				-							800
Share based payment expense				61							16
Gain on forgiveness of loan				(1,994	)						-
Loss (gain) on foreign exchange rates				80							(16		)
Deferred income taxes				599							724
Bad debt expense				168							173
Changes in operating assets and liabilities:
Accounts receivable				(1,961	)						2,144
Prepaid expenses and other current assets				16							138
Right of use assets-operating				375							676
Other assets				(6	)						22
Due to models				1,753							(1,230		)
Deferred revenue				535							-
Lease liabilities-operating				(326	)						(768		)
Accounts payable and accrued liabilities				863							(954		)
Net cash provided by (used in) operating activities				5,536							(1,967		)
Cash flows from investing activities:
Purchases of property and equipment				(19	)						(154		)
Net cash used in investing activities				(19	)						(154		)
Cash flows from financing activities:
Purchases of treasury stock				-							(19		)
Shareholder short swing profit disgorgement				32							-
Proceeds of term loan				-							1,975
Payments on finance leases				(76	)						(93		)
Repayment of term loan				(743	)						(1,258		)
Net cash (used in) provided by financing activities				(787	)						605
Effect of exchange rate changes on cash:				(35	)						79
Net change in cash and cash equivalents:				4,695							(1,437		)
Cash and cash equivalents, beginning of year				5,556							6,993
Cash and cash equivalents, end of year		$		10,251			$				5,556
Supplemental disclosures of cash flow information:
Cash paid for interest		$		23			$				77
Cash paid for income taxes		$		96			$				233
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 plus share-based payment expense and certain significant non-recurring items that the Company may include from time to time. For 2020, these non-recurring items represented goodwill impairments. For 2021, these non-recurring items represented cybersecurity incident expenses, 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-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, 2021 filed with the Securities and Exchange Commission on March 16, 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