WHLM Wilhelmina International Inc

Wilhelmina International, Inc. (Nasdaq: WHLM) ("Wilhelmina" or the "Company") today reported revenues of $4.1 million and net loss of $18 thousand for the three months ended December 31, 2022, compared to revenues of $4.3 million and net income of $23 thousand for the three months ended December 31, 2021. For the fiscal year ended December 31, 2022, Wilhelmina reported revenues of $17.8 million and net income of $3.5 million compared to revenue of $16.1 million and net income of $4.5 million for the fiscal year ended December 31, 2021.

Decreased revenues during the fourth quarter of 2022 were primarily due to lower core modeling bookings in the United States and London. Increased revenues during the full year ended December 31, 2022 were primarily due to increased bookings as the cities where Wilhelmina operates reopened and business activity increased as COVID-19 restrictions were moderated or rescinded.   In 2022, net income was significantly impacted by the release of a $1.5 million valuation allowance on the Company’s deferred tax assets. In 2021, net income was significantly impacted by gain on forgiveness of PPP loans and employee retention payroll tax credits.

Financial Results

Net loss for the three months ended December 31, 2022 was $18 thousand, or $0.00 per fully diluted share, compared to net income of $23 thousand, or $0.00 per fully diluted share, for the three months ended December 31, 2021. Net income for the fiscal year ended December 31, 2022 was $3.5 million, or $0.68 per fully diluted share, compared to net income of $4.5 million, or $0.88 per fully diluted share, for the fiscal year ended December 31, 2021.

EBITDA was $0.2 million loss and $2.8 million income for the three months and fiscal year ended December 31, 2022, compared to $0.3 million and $6.2 million for the three months and fiscal year ended December 31, 2021. Adjusted EBITDA was $0.1 million loss and $2.8 million income for the three months and fiscal year ended December 31, 2022, compared to $0.9 million and $3.6 million for the three months and fiscal year ended December 31, 2021. Pre-Corporate EBITDA was $0.3 million and $3.9 million for the three months and fiscal year ended December 31, 2022, compared to $1.1 million and $4.5 million for the three months and fiscal year ended December 31, 2021.

The following table reconciles the non-GAAP financial measure Gross Billings to GAAP total revenues, for the fourth quarter and year ended December 31, 2022 and 2021.

(in thousands)		Three months ended                December 31,				Year endedDecember 31,
		2022		2021		2022		2021
Total revenues	$	4,091	$	4,294	$	17,780	$	16,102
Model costs (1)		12,380		10,924		49,204		40,711
Gross billings*	$	16,471	$	15,218	$	66,984	$	56,813
* Non-GAAP measures referenced are detailed in the disclosures at the end of this release.(1) Model costs include amounts owed to talent, including taxes required to be withheld and remitted directly to taxing authorities, commissions owed to other agencies, and related costs such as those paid for photography.

The following table reconciles non-GAAP EBITDA, Adjusted EBITDA and Pre-Corporate EBITDA to GAAP net income for the fourth quarter and year ended December 31, 2022 and 2021.

(in thousands)		Three months ended December 31,						Year endedDecember 31,
		2022			2021			2022			2021
Net (loss) income	$	(18	)	$	23		$	3,529		$	4,518
Interest expense		1			2			8			51
Income tax (benefit) expense		(196	)		128			(954	)		823
Amortization and depreciation		45			115			193			855
EBITDA*	$	(168	)	$	268		$	2,776		$	6,247
Foreign exchange loss (gain)		47			(4	)		(164	)		80
Non-recurring items (2)		-			575			-			(2,739	)
Share-based payment expense		25			55			190			61
Adjusted EBITDA*	$	(96	)	$	894		$	2,802		$	3,649
Corporate overhead		370			254			1,093			897
Pre-Corporate EBITDA*	$	274		$	1,148		$	3,895		$	4,546
* Non-GAAP measures referenced are detailed in the disclosures at the end of this release.(2) 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.

Changes in net income, EBITDA, Adjusted EBITDA and Pre-Corporate EBITDA for the three months and fiscal year ended December 31, 2022, when compared to the three months and fiscal year ended December 31, 2021, were primarily the result of the following:

• Revenues for the three months ended December 31, 2022 decreased 4.7% primarily due to lower core modeling bookings in the United States and London. Revenues for the fiscal year ended December 31, 2022 increased by 10.4% 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 for the three months and fiscal year ended December 31, 2022 increased by 13.3% and 26.2% primarily due to personnel hires and payroll changes to better align Wilhelmina staffing with the needs of each office and geographical region;
• Office and general expenses for the three months and fiscal year ended December 31, 2022 increased by 42.8% and 6.6%, primarily due to increased legal expense, rent expense, and other office expenses;
• Amortization and depreciation expense for the three months and fiscal year ended December 31, 2022 decreased by 60.9% and 77.4%, primarily due to reduced depreciation of assets that became fully amortized in 2021;
• 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;   and
• Corporate overhead increased by 45.7% and 21.9% for the three months and fiscal year ended December 31, 2022, primarily due to increased securities compliance costs and 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.

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

		2022				2021
ASSETS
Current assets:
Cash and cash equivalents		$	11,998			$	10,251
Accounts receivable, net of allowance for doubtful accounts of $1,664 and $1,580, respectively			9,467				8,858
Prepaid expenses and other current assets			181				91
Total current assets			21,646				19,200
Property and equipment, net of accumulated depreciation of $1,216 and $4,094, respectively			307				168
Right of use assets-operating			3,565				1,745
Right of use assets-finance			138				199
Trademarks and trade names with indefinite lives			8,467				8,467
Goodwill			7,547				7,547
Other assets			322				98
TOTAL ASSETS		$	41,992			$	37,424
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities		$	4,306			$	3,761
Due to models			8,378				8,090
Contract liabilities			270				481
Lease liabilities – operating, current			385				463
Lease liabilities – finance, current			62				64
Total current liabilities			13,401				12,859
Long term liabilities:
Deferred income tax, net			985				2,048
Lease liabilities – operating, non-current			3,310				1,361
Lease liabilities – finance, non-current			85				143
Total long-term liabilities			4,380				3,552
Total liabilities			17,781				16,411
Shareholders’ equity:
Common stock, $0.01 par value, 9,000,000 shares authorized; 6,472,038 shares issued at December 31, 2022 and December 31, 2021			65				65
Treasury stock, 1,314,694 shares at December 31, 2022 and December 31, 2021, at cost			(6,371	)			(6,371	)
Additional paid-in capital			88,770				88,580
Accumulated deficit			(57,709	)			(61,238	)
Accumulated other comprehensive loss			(544	)			(23	)
Total shareholders’ equity			24,211				21,013
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	41,992			$	37,424

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOMEFor the Years Ended December 31, 2022 and 2021 (In thousands, except per share data)

		Three Months Ended								Year Ended
		December 31,								December 31,
		2022				2021				2022				2021
Revenues:
Service revenues		$	4,084			$	4,287			$	17,750			$	16,069
License fees and other income			7				7				30				33
Total revenues			4,091				4,294				17,780				16,102
Operating expenses:
Salaries and service costs			2,805				2,475				10,907				8,644
Office and general expenses			1,037				726				3,168				2,973
Amortization and depreciation			45				115				193				855
Cybersecurity incident expenses			-				575				-				575
Corporate overhead			370				254				1,093				897
Total operating expenses			4,257				4,145				15,361				13,944
Operating income			(166	)			149				2,419				2,158
Other expense (income):
Foreign exchange loss (gain)			47				(4	)			(164	)			80
Gain on forgiveness of loan			-				-				-				(1,994	)
Employee retention payroll tax credit			-				-				-				(1,320	)
Interest expense			1				2				8				51
Total other expense (income), net			48				(2	)			(156	)			(3,183	)
(Loss) income before provision for income taxes			(214	)			151				2,575				5,341
Benefit (provision) for income taxes:
Current			196				(66	)			(109	)			(224	)
Deferred			-				(62	)			1,063				(599	)
Benefit (provision) for income taxes, net			196				(128	)			954				(823	)
Net (loss) income		$	(18	)		$	23			$	3,529			$	4,518
Other comprehensive income (loss):
Foreign currency translation adjustment			343				16				(521	)			(104	)
Total comprehensive income			325				39				3,008				4,414
Basic net income per common share		$	0.00			$	0.00			$	0.68			$	0.88
Diluted net income per common share		$	0.00			$	0.00			$	0.68			$	0.88
Weighted average common shares outstanding-basic			5,157				5,157				5,157				5,157
Weighted average common shares outstanding-diluted			5,157				5,157				5,157				5,157

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIES`CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY For the Years Ended December 31, 2022 and 2021 (In thousands)

		CommonShares			StockAmount			TreasuryShares					StockAmount					AdditionalPaid-inCapital				AccumulatedDeficit						Accumulated Other Comprehensive Income (Loss)			Total
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
Share-based payment expense			-			-			-					-					190				-					-				190
Net income to common shareholders			-			-			-					-					-				3,529					-				3,529
Foreign currency translation			-			-			-					-					-				-					(521	)			(521	)
Balances at December 31, 2022			6,472		$	65			(1,315	)			$	(6,371	)			$	88,770			$	(57,709	)			$	(544	)		$	24,211

WILHELMINA INTERNATIONAL, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWFor the Years Ended December 31, 2022 and 2021 (In thousands)

			Year Ended
			2022					2021
Cash flows from operating activities:
Net income:			$		3,529			$			4,518
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and depreciation					193						855
Share based payment expense					190						61
Gain on forgiveness of loan					-						(1,994		)
(Gain) loss on foreign exchange rates					(164	)					80
Deferred income taxes					(1,063	)					599
Bad debt expense					174						168
Changes in operating assets and liabilities:
Accounts receivable					(747	)					(1,961		)
Prepaid expenses and other current assets					(98	)					16
Right of use assets-operating					500						375
Other assets					(227	)					(6		)
Due to models					398						1,753
Lease liabilities-operating					(470	)					(326		)
Contract liabilities					(211	)					481
Accounts payable and accrued liabilities					515						917
Net cash provided by operating activities					2,519						5,536
Cash flows from investing activities:
Purchases of property and equipment					(268	)					(19		)
Net cash used in investing activities					(268	)					(19		)
Cash flows from financing activities:
Shareholder short swing profit disgorgement					-						32
Payments on finance leases					(62	)					(76		)
Repayment of term loan					-						(743		)
Net cash used in financing activities					(62	)					(787		)
Foreign currency effect on cash flows:					(442	)					(35		)
Net change in cash and cash equivalents:					1,747						4,695
Cash and cash equivalents, beginning of year					10,251						5,556
Cash and cash equivalents, end of year			$		11,998			$			10,251
Supplemental disclosures of cash flow information:
Cash paid for interest			$		-			$			23
Cash paid for income taxes			$		268			$			198
Noncash investing and financing activities
Gain on forgiveness of loan			$		-						1,994

Non-GAAP Financial Measures

Gross Billings, 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 Gross Billings, 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 Gross Billings as the gross amount billed to customers on behalf of its models and talent for services performed. 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, share-based payment expense and certain significant non-recurring items that the Company may include from time to time. For 2021, these non-recurring items represented gain on forgiveness of PPP loans, employee retention payroll tax credit, and cybersecurity incident expenses. 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, 2022 filed with the Securities and Exchange Commission on March 22, 2023.

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 may include 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 Nasdaq 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