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IDW Media Holdings, Inc. (OTCPK:IDWM) Q3 2020 Outcomes Earnings Conference Name September 14, 2020 5: 00 PM ET
Firm People
Ezra Rosensaft – Chief Government Officer
Brooke Feinstein – Chief Accounting Officer
Conference Name People
Operator
Appropriate evening, and welcome to the IDW Media Holdings Third Quarter Fiscal one year 2020 Earnings Name. In at the present time’s presentation, IDW’s Chief Monetary Officer, Ezra Rosensaft will discuss about the corporate’s monetary and operational results for the three-months length ended July 31, 2020. After his presentation, you’ll be joined by IDW’s Chief Accounting Officer, Brooke Feinstein to reply to investor questions. At some level of Mr. Rosensaft’s willing remarks all participants shall be in a listen-only mode. [Operator Instructions]
Any forward-taking a look statements made all the contrivance by this convention call, either within the willing remarks or within the Q&A session, whether or no longer traditional or explicit in nature, are field to risks and uncertainties that would possibly maybe also fair trigger true results to differ materially from those which the corporate anticipates. These risks and uncertainties embody, nonetheless are no longer restricted to, explicit risks and uncertainties mentioned within the reviews that IDW posts periodically with the OTC market.
IDW assumes no responsibility either to interchange any forward-taking a look statements that they’ve made or would possibly maybe also fair form or to interchange the components that would possibly maybe also fair trigger true results to differ materially from other folks who they forecast. Please existing that the IDW earnings liberate is available on the Investor Relatives web impart of the IDW Media Holdings company web location.
I will turn the decision over to Mr. Rosensaft.
Ezra Rosensaft
Thanks, operator. And attributable to each person on the decision for becoming a member of us.
Our remarks this evening hide the third quarter of our 2020 fiscal one year, the three months ended July 31, 2020. At some level of, I will overview third quarter fiscal 2020 results to third quarter of fiscal 2019 results. I’m going to additionally contact upon our outlook for fiscal 2021 and some thrilling most original trends. After my remarks, Brooke Feinstein, IDW’s Chief Accounting Officer shall be part of me to take your questions.
Initially, a tall thanks to my IDW colleagues for his or her phenomenal work and dedication. Thanks for his or her efforts, IDW overcame the challenges of the COVID-19 pandemic to examine together a solid quarter with minimal disruption to our clients and companions.
Within the third quarter, IDW’s publishing operations persevered to be impacted by the closure of many silly shops and our speak market distributor, Diamond, within the spring. On Would maybe well also 20th, Diamond resumed operations on a restricted foundation. Alternatively, speak market volumes maintain no longer but recovered to pre-pandemic ranges.
Our publishing group, to its broad credit ranking, pivoted rapid, successfully pursuing gross sales by the indirect market and speak-to-consumer channels. Sales of standard backlisted titles, including the tiring Congressman John Lewis March trilogy, Alan Roberts Fantastic thing about Scare coloring e book, Teenage Mutant Ninja Turtles titles and Joe Hill’s and Gabriel Rodriquez’s Locke & Key titles were particularly stable. The latter maintain benefited a great deal from the success of season one among the eponymous Netflix series.
We were all saddened by the passing of Congressman John Lewis andgratefulto himfor his gigantic and multifaceted contributionstoracial justice and a stronger, more safe in Loving The US.
Publishing’s profits from operations is largely breakeven within the third quarter, a essential enchancment from the $1.2 million loss within the one year within the past quarter and a $646,000 loss within the prior quarter. We seek files from extra enchancment within the arriving quarters, as we right better economics from our licensing affords or building our IP library to align with our entertainment division’s pattern priorities.

We are additionally overhauling publishing’s web location and roughly, which make contributions to the lengthy timeframe boost of the more and more valuable B2C speak-to-consumer channel.
At Entertainment, the first six episodes of Wynonna Earp season 4 maintain now aired on SYFY. Manufacturing of the 2d half of the season delayed by COVID-19 has resumed. The starting up of manufacturing of Locke & Key season 2, which became once ordered by Netflix this spring following the success of season one, is deliberate for later this month.
Entertainment’s earnings became once $3.3 million within the third quarter when in comparison with gorgeous $31,000 within the one year within the past quarter. We generated most of the earnings on provide of five of the 12 Wynonna Earp season 4 episodes to SYFY all the contrivance by the quarter. The sixth episode of segment one among season 4 became once delivered in Q4.
We snatch up some extra earnings adjusting for an below accrual connected to October Faction tax credits. Entertainment’s loss from operations attributable to this truth became once $3.2 million when in comparison with a loss of $765,000 within the third quarter of 2019.
This loss for this quarter is primarily mirrored – reflecting costs diagnosed on provide of the five Wynonna Earp episodes all the contrivance by the quarter, as well to an adjustment for a legacy V Wars over accrual of tax credits.
We maintain previously mentioned our resolution to pivot entertainment to diminish possibility manufacturing financing objects that can yield predictable profits. Sadly, the phrases Wynonna Earp fourth season reset sooner than that pivot. And extra losses shall be diagnosed as we verbalize the closing episodes in our capability as it reveals distributor.
SEVEN24 Movies primarily primarily based in Canada capacity the studio and manufacturing company at the abet of Wynonna Earp Taking a look ahead, entertainment has developed a stable pattern slate and made correct progress in negotiations with diverse doable top rate investors. I am optimistic that we are going to maintain very correct news document within the arriving length. Appropriate endure in thoughts that the investors in these affords dictate the timing and impart material of bulletins of most original series.
Following the quarter close, we affirm our contractual rights to accomplish effective rights for prior seasons of Wynonna Earp that we intend to marketplace for global distribution. Also, in phrases of future earnings timing, we gained’t receive payment for Locke & Key season 2 on with the episodes are produced and delivered. Thanks to the most original submit COVID-19 manufacturing time table, that seemingly would possibly maybe also fair no longer be except we’re effectively into the original calendar one year.
Turning now to CTM. This quarter we presented an settlement to sell CTM to our Chairman, Howard Jonas. The sale is conditioned on the consent of the lender and the SBA connected to CTMs PPP loan. Or no longer it’s no longer but determined when we would be in a position to construct up the consent and close this deal, nonetheless we’re working to construct up it done as quickly as that you would possibly maybe seemingly seemingly take into consideration. Within the meantime, we’re reporting CTMs $1.1 million loss this quarter in discontinued operations. CTMs results are no longer including consolidated earnings or consolidated loss from operations in either this quarters or the one year within the past quarters results.
Consolidated earnings for the quarter became once $8.5 million, an elevate from $5.4 million within the one year within the past quarter, primarily on story of the Wynonna Earp episode deliveries. Our bag loss became once $0.47 per fragment, of which $0.12 became once contributed by CTM, when in comparison with a loss of $0.20 within the one year within the past quarter. The loss is diagnosed upon provide of the five episodes of Wynonna Earp and the mountainous impact of COVID-19 on CTMs commerce drove the rise within the consolidated loss.
Turning to our balance sheet. We proceed to shed debt and are no longer off beam to get rid of it by this calendar years reside. As I eminent while wearing my previous CFO hat, we’re transitioning to an asset-gentle financing mannequin to form more efficient spend of our capital.

All in all, this became once a solid quarter wherein we overcame most of the operational challenges, and we proceed to of COVID-19. Our monetary results are impacted by the legacy manufacturing and financing affords that we are going to now not replicate going forward.
Turning now to the tall image. The impart material arms plug and the massive seek files from in streaming services and cable networks, as they battle for world viewers offers IDW with an distinctive replacement. To plot close it, we’re aligning our publishing and entertainment businesses in speak that we holistically overview IP and produce franchises all the contrivance by our commerce. We are one IDW.
We took essential steps within the true direction all the contrivance by and after the quarter by bringing in original leadership and promoting internally to hang key positions. Final week, we presented that Nachie Marsham, formerly the executive editor at Disney Publishing worldwide, will relief as our original writer. He’ll be working closely with Jerry Bennington, who became once promoted to President of IDW Publishing earlier this one year.
We additionally promoted Veronica Brooks to VP of Inventive Affairs, Veronica and Rebekah Cahalin, whom we earlier named General Manager and EVP Operations, covering both IDW Publishing and IDW Entertainment will level of curiosity on the seamless integration of the commerce’s inventive and operational processes.
Wrapping up. I’d worship to thank our Chairman, Howard Jonas, and IDW’s Board of Administrators for entrusting me with the CEO command. Or no longer it is a broad honor to handbook this talented group and I perceive forward to working with them to meet the promise and doable of IDW.
One closing existing at the corporate stage, we proceed to hump forward in direction of reregistration with SEC and can fair then behold a national alternate listing to raise IDW’s visibility and liquidity within the capital markets.
Now, Brooke and I shall be overjoyed to take your questions. Operator, abet to you for Q&A.
Inquire of-and-Acknowledge Session
Operator
Operator
As there are now not any questions at the present, this concludes our put apart a query to-and-acknowledge session and convention call. Thanks to your attending for at the present time’s presentation. Prospects are you’ll maybe seemingly also fair now disconnect.

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