10-K: Wilhelmina International Reports Increased Net Income in 2024 Amidst Delisting from Nasdaq

Wilhelmina International, a fashion model management company, reports a rise in net income for 2024, despite its voluntary delisting from the Nasdaq Capital Market and subsequent trading on the OTCQX market.

Summary

• Wilhelmina International, Inc. filed its Form 10-K for the fiscal year ended December 31, 2024.
• The company's primary business is fashion model management, with operations in New York City, Los Angeles, Miami, and London.
• The company voluntarily delisted from the Nasdaq Capital Market on December 27, 2024, and its common stock is now quoted on the OTCQX market under the trading symbol WHLM.
• As of March 27, 2025, there were 4,919,844 shares of common stock outstanding, held by 436 holders of record.
• Service revenues increased by 2.3% to $17.58 million in 2024, primarily due to increased commissions from model bookings.
• Net income for 2024 was $0.6 million, compared to $0.4 million in 2023, primarily due to increased interest income.
• The company's cash balance increased to $8.5 million at December 31, 2024, from $6.1 million at December 31, 2023.
• Gross billings, a non-GAAP measure, increased by 2.0% to $67.22 million in 2024.
• The company repurchased 237,500 shares of its common stock at $3.75 per share on February 28, 2025, for a total of $890,625.
• As of December 31, 2024, the company had 89 full-time employees.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the company shows increased net income and revenue, the delisting from Nasdaq and ongoing legal proceedings temper the overall outlook.

Positives

• Service revenues increased by 2.3% in 2024, indicating growth in the core business.
• Net income increased from $0.4 million to $0.6 million, demonstrating improved profitability.
• The company's cash balance increased significantly, providing financial flexibility.
• Gross billings increased by 2.0%, reflecting higher overall business activity.
• The company has a diversified customer base, with no single customer accounting for more than 1.5% of gross revenues.
• The company maintains effective disclosure controls and procedures and internal control over financial reporting.

Negatives

• The company voluntarily delisted from the Nasdaq Capital Market, which may reduce its visibility and accessibility to investors.
• Operating margin decreased from 4.2% to 4.0% due to operating expenses outpacing revenue growth.
• The company is involved in ongoing legal proceedings, which could result in potential liabilities.
• The company operates in a highly competitive market, requiring continuous efforts to maintain a competitive advantage.
• The company's effective tax rate is high due to foreign taxes and income being attributable to states with high tax rates.

Risks

• The fashion model/talent management business is highly competitive.
• The company is subject to risks related to cybersecurity threats.
• The company is involved in ongoing legal proceedings, the outcomes of which are uncertain.
• Economic conditions and client spending patterns can impact the company's revenues.
• The company's reliance on key personnel and the ability to retain talent are critical to its success.
• The company's international operations are subject to foreign currency exchange rate fluctuations.

Future Outlook

Management believes that the Company has sufficient liquidity to meet its projected operational expenses and capital expenditure requirements for the next twelve months and beyond.

Management Comments

• Managements strategy is to increase value to shareholders through initiatives such as increasing brand awareness, expanding the womens high end fashion board, expanding the Aperture divisions representation, expanding social media influencer representation, expanding the Wilhelmina network, and promoting model search contests and events.
• The Company makes use of digital technology to effectively connect with clients and talent.

Industry Context

The fashion model/talent management business is highly competitive, with New York City, Los Angeles, and Miami, as well as London, Paris, and Milan, being the most important markets. Wilhelmina competes with other large fashion model management businesses and smaller agencies in local markets.

Comparison to Industry Standards

• Wilhelmina's principal competitors include IMG Models, Elite Model Management, Ford Models, Inc., DNA Model Management, NEXT Model Management, The Lions Model Management, The Society Management, Women 360 Management, and New York Model Management.
• Wilhelmina believes that its sources of revenue, mainly generated from commissions and service charges, are comparable to those of its principal competitors.
• Wilhelmina is the only publicly-owned fashion talent management company in the world.

Legal Proceedings

• The company is involved in ongoing legal proceedings, including the Shanklin Litigation and the Pressley Litigation, which allege breaches of contract and violations of New York Labor Law.
• The company believes the claims asserted in the Shanklin Litigation and Pressley Litigation are without merit and intends to continue to vigorously defend the actions.

Related Party Transactions

• The company utilizes facilities from Newcastle Capital Management, L.P. (NCM), a related party, on a month-to-month basis at $2,500 per month, pursuant to a services agreement.

Stakeholder Impact

• The company's performance impacts shareholders, employees, models/talent, and clients.
• The delisting from Nasdaq may affect shareholder value and investor confidence.
• The company's ability to attract and retain talent is crucial for its success.

Next Steps

• The company will continue to assess the evidence used to determine the need for a valuation allowance and may reinstate the valuation allowance in future periods if warranted by changes in estimated future income and other factors.
• The company intends to continue to vigorously defend the actions in the Shanklin Litigation and Pressley Litigation.

Key Dates

Keywords

model management, fashion, talent, OTCQX, revenues, net income, gross billings, licensing, advertising, Wilhelmina