Boat Rocker Media Reports Second Quarter 2023 Financial Results

TORONTO, Aug. 9, 2023 /CNW/ - Boat Rocker Media Inc. ("Boat Rocker" or the "Company") (TSX: BRMI), an independent, integrated global entertainment company, today reported its financial results for the three months ended June 30, 2023 ("second quarter" or "Q2"). The Company's consolidated financial statements and accompanying notes and Management's Discussion and Analysis ("MD&A") for the three and six months ended June 30, 2023 and 2022 are available under the Company's profile on SEDAR (www.sedar.com). All dollar amounts are expressed in Canadian currency, unless otherwise noted. Certain metrics, including those expressed on an adjusted basis, are non-IFRS measures (see "Non-IFRS Measures" below).

Selected Financial Highlights

• Total revenue of $128.7 million for Q2 2023 versus $65.4 million for Q2 2022, an increase of 96.7%. Year-to-date revenue increased 85.7% from $112.3 million to $208.5 million.
• Adjusted EBITDA¹ of $5.4 million for Q2 2023 compared to $8.1 million for Q2 2022, and year-to-date Adjusted EBITDA increase of 73.2% from $2.1 million to $3.7 million.
• Net loss of $5.8 million for Q2 2023 vs. net income of $4.6 million for Q2 2022.
• Debt-free² with total cash at June 30, 2023 of $57.0 million.

"Our second quarter results illustrate the strong year over year trajectory Boat Rocker is on, with improving overall performance" said John Young, Chief Executive Officer of Boat Rocker. "While the Company is gaining momentum, uncertainties in our macro environment, notably the current WGA and SAG-AFTRA labour actions, are having a dampening effect. Although the strikes make for a more challenging 2023, our diversified business, healthy balance sheet, and recently streamlined Studio operations enable us to stay flexible, resilient, and an effective partner for content creators and buyers internationally. These factors, along with the delivery of our scripted slate as planned, give us confidence that Boat Rocker can continue to generate strong results."

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¹ This is a Non-IFRS measure. For more information on non-IFRS financial measures, see "Non-IFRS Measures" and "Reconciliation of Non-IFRS Measures" below and see "Non-IFRS Financial Measures" in the Company's MD&A for the three and six months ended June 30, 2023.

² The Company currently has no corporate term debt, only interim production financing (including through two borrowing base facilities) in the ordinary course of operations.

Selected Content Highlights

In 2023, Boat Rocker is producing high-quality scripted, unscripted and Kids and Family titles for major buyers around the world including Netflix, Apple TV+, Amazon Prime, AMC, Roku, Disney and Discovery+, as well as key domestic platforms including CTV, CBC and Global. At the end of Q2, Boat Rocker had 34 shows in various stages of production.

Recent highlights include:

General:

• Secured the number one spot on leading Canadian media industry publication Playback's 2023 Indie List. The annual list measures production and development by volume on a calendar year basis, including service production.

Television

• The much anticipated second season of Invasion will premiere on Apple TV+ on August 23.
• Pretty Baby: Brooke Shields (ABC News, Hulu) was nominated for two Prime Time Emmy Awards for Best Directing and Best Editing.
• The Marriage Pact from Boat Rocker's Maven, premiered on The Roku Channel on August 4.
• Drag Me to Dinner, starring Neil Patrick Harris, premiered on Hulu on May 31.
• Downey's Dream Cars, starring Robert Downey Jr., premiered on Max on June 22.
• Feature documentary BS High premiered at New York's Tribeca Film Festival and will launch on HBO on August 23.

Kids and Family

• Dino Ranch season 3 will premiere on Disney+ in September.
• French company Microids is manufacturing a Dino Ranch video game entitled Dino Ranch – Ride to the Rescue. It will be available October 12 on Nintendo Switch in physical and digital editions.
• Producing the new animated comedy-mystery series The Sunnyridge 3 for Disney EMEA.
• Season seven of The Loud House premiered on Nickelodeon on May 19.
• Animated show Praise Petey premiered on Hulu on July 21.

Representation

• Untitled clients won four major Tony Awards: Victoria Clark (Best Leading Actress in a Musical: Kimberly Akimbo), Bonnie Milligan (Best Featured Actress in a Musical: Kimberly Akimbo), Michael Arden (Best Direction of a Musical: Parade) and LaChanze (Producer of Best Musical, Kimberly Akimbo, and Producer of Best Play Revival, Topdog/Underdog). 
• Client David Corenswet is set to star as Superman in DC Studios' new franchise film Superman: Legacy.
• Clients Christina Ricci and Jane Krakowski will each get a star on the Hollywood Walk of Fame.
• Untitled clients were nominated for four Primetime Emmy Awards: Rhea Seehorn for Outstanding Supporting Actress in a Drama Series (Better Call Saul), Nathalie Emmanuel for Outstanding Actress in a Short Form Comedy or Drama Series (Die Hart 2: Die Harter), Juliette Lewis for Outstanding Supporting Actress in a Limited or Anthology Series or Movie (Welcome to Chippendales) and Chris Rock for Best Variety Special (Live) (Chris Rock: Selective Outrage).

Selected Financial Information

(Amounts in thousands CAD)	Three months ended June 30,
	2023		2022	% change
Revenue
Television	102,003		36,736	178 %
Kids and Family	18,662		19,112	(2) %
Representation	8,063		9,585	(16) %
Total revenue	128,728		65,433	97 %
Net income (loss)	(5,819)		4,557	(228) %
Adjusted EBITDA*	5,438		8,147	(33) %

(Amounts in thousands CAD)	Six months ended June 30,
	2023		2022	% change
Revenue
Television	156,463		55,489	182 %
Kids and Family	34,333		38,615	(11) %
Representation	17,692		18,178	(3) %
Total revenue	208,488		112,282	86 %
Net income (loss)	(15,293)		(7,775)	(97) %
Adjusted EBITDA*	3,667		2,117	73 %

Corporate Update

As part of its ongoing capital allocation strategy, the Company's Board of Directors has approved Boat Rocker filing with the Toronto Stock Exchange ("TSX") a notice of intention to renew its normal course issuer bid ("NCIB"). The Company's current NCIB expires on August 31, 2023. The notice will be subject to regulatory approval by the TSX and there can be no assurance that it will be accepted. The Company reviews its capital allocation strategy on an ongoing basis and given the trading price in the Company's stock and the volatility in the markets, management and the Board believe that the market price of the Company's Subordinate Voting Shares does not reflect the intrinsic value of the Company and the repurchase of the stock would be in the best interests of the Company and its shareholders and would represent an attractive and appropriate use of available funds.

Financial Review

Revenue for Q2 2023 was $128.7 million versus $65.4 million in Q2 2022, an increase of $63.3 million or 96.7%. Revenue for the six months ended June 30, 2023 was $208.5 million compared to $112.3 million for the same period of 2022, an increase of $96.2 million or 86%. This significant rise in each period is principally owing to the delivery of several episodes of scripted dramas. Premium scripted dramas have higher average revenue per episode than the Company's Unscripted and Kids and Family shows. The revenue increase in the Television segment was offset by modest decreases in revenue in both the Kids and Family and Representation segments.

Adjusted EBITDA* for the three months ended June 30, 2023 was $5.4 million versus $8.1 million for the same period in Q2 2022. Adjusted EBITDA for the six months ended June 30, 2023 was $3.7 million compared with $2.1 million in the same period in 2022, a 73% increase.

Net loss for the three months ended June 30, 2023 of $5.8 million compared to a net income of $4.6 million for the same period in Q2 2022. Net loss for the six months ended June 30, 2023 was $15.3 million compared to a net loss of $7.8 million for the same period of 2022.

The following table presents the reconciliation from cash used in operating activities to Free Cash Flow* and Free Cash Flow Attributable to Owners of the Company* for the six months ended June 30, 2023 and 2022:

(Amounts in thousands CAD)		Six months ended June 30,
		2023		2022		$ change		% change
Cash provided by (used in) operating activities		$       3,620		$    (39,231)		$      42,851		109 %
Proceeds from interim production financing		84,426		93,374		(8,948)		(10) %
Repayments of interim production financing		(108,127)		(39,203)		(68,924)		(176) %
Repayment of lease liabilities		(4,047)		(3,737)		(310)		(8) %
Acquisition of property and equipment		(886)		(682)		(204)		(30) %
Free Cash Flow*		$    (25,014)		$      10,521		$    (35,535)		338 %
Less: distributions to non-controlling interest shareholders		(4,485)		(3,587)		(898)		(25) %
Free Cash Flow Attributable to Owners of the Company*		$    (29,499)		$       6,934		$    (36,433)		525 %

Total cash at June 30, 2023 was $57.0 million, of which $27.1 million represents Cash Available for Use*. The following table presents the breakdown of cash as at June 30, 2023 and December 31, 2022:

(Amounts in thousands CAD)	June 30, 2023		December 31, 2022		$ change		% change
Cash Available for Use*	$                         27,072		$                         31,524		$      (4,452)		(14) %
Cash Required for Use in Productions*	29,940		54,270		(24,330)		(45) %
Total cash	$                         57,012		$                         85,794		$    (28,782)		(34) %

*This is a Non-IFRS measure. For more information on non-IFRS financial measures, see "Non-IFRS Measures" and "Reconciliation of Non-IFRS Measures" below and see "Non-IFRS Financial Measures" in the our MD&A for the three and six months ended June 30, 2023.

Outlook

Boat Rocker continues to target modest Adjusted EBITDA growth over the prior year as it anticipates delivering the balance of all episodes of the seven premium scripted shows that it commenced producing in 2022 and ramps up international distribution of those titles. However, the Company is facing macro uncertainties outside of its control. Chiefly, if the U.S. actors' and writers' guild strikes are prolonged into the fall of this year, they will impact Boat Rocker's Representation and Television segments, therefore moderating the Company's outlook for 2023 and potentially impacting its results for 2024.

Despite these challenges, Boat Rocker believes that it is well positioned to successfully operate in a changing media and entertainment landscape. The Company has a multi-genre content creation engine, long track record of delivering programming at all budget levels to broadcasters and streamers internationally and highly diversified business lines across type and geography. Coupled with pro-active cost management, streamlined studio operations and strong discipline on investment spending, Boat Rocker anticipates it will continue to invest in owned IP and grow its content library, while generating positive free cash flow and remaining debt free** in 2023.

The Company's expected performance in 2023 is based on certain assumptions that are outlined in the Company's annual MD&A dated March 30, 2023 and quarterly MD&A dated August 9, 2023, and subject to certain risks as outlined in the Company's Annual Information Form for the year ended December 31, 2022.

*This is a Non-IFRS measure. For more information on non-IFRS financial measures, see "Non-IFRS Measures" and "Reconciliation of Non-IFRS Measures" below and see "Non-IFRS Financial Measures" in the our MD&A for the three and six months ended June 30, 2023.

**Other than interim production financing (including through two borrowing base facilities) in the ordinary course of operations.

Fiscal 2023 Second Quarter Conference Call

Boat Rocker management will host a conference call to discuss its fiscal first quarter financial results at 8:30 a.m. EDT on August 9, 2023.

To rapidly join the call without operator assistance please visit https://emportal.ink/3XNUd2V 

To participate in the call, dial 416-764-8650 or 888-664-6383 using the conference ID 09237306.

The audio webcast can be accessed at:
https://www.boatrocker.com/investor-relations/events-and-presentations/default.aspx.

Listeners should access the webcast or call 10-15 minutes before the start time to ensure they are connected.

About Boat Rocker

Boat Rocker (TSX: BRMI) is the home for creative visionaries. An independent, integrated global entertainment company, Boat Rocker's purpose is to tell stories and build iconic brands across all genres and mediums. With offices around the world, Boat Rocker's creative and commercial capabilities include Scripted, Unscripted, and Kids & Family television production, distribution, brand & franchise management, a world-class animation studio, and talent management through Untitled Entertainment. A selection of Boat Rocker's projects include: Invasion (Apple TV+), Pretty Baby: Brooke Shields (Hulu), Downey's Dream Cars (Max), Slip (Roku), Orphan Black (BBC AMERICA, CTV Sci-Fi Channel), Dear… (Apple TV+), Billie Eilish: The World's a Little Blurry (Apple TV+), The Next Step (BBC, Family Channel, CBC), Daniel Spellbound (Netflix), and Dino Ranch (Disney+, Disney Junior, CBC). For more information, please visit www.boatrocker.com.

Non-IFRS Measures

This press release makes reference to certain non-IFRS measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS. The intent of using non-IFRS measures is to provide investors with supplemental measures of the Company's operating performance and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS financial measures, in addition to providing a greater understanding of the Company's liquidity position and available financial resources. The Company's management uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets, and to determine components of management compensation. The Company also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers.

Definitions and reconciliations of non-IFRS measures to the relevant reported measures can be found in our MD&A. Such reconciliations can also be found in this press release under the heading Reconciliation of Non-IFRS Measures. The non-IFRS measures the Company uses include: EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Cash Available for Use, Cash Required for Use in Productions, Free Cash Flow and Free Cash Flow Attributable to Owners of the Company.

EBITDA is defined as net income or loss before interest, taxes, depreciation, amortization of property and equipment, right-of-use assets and other intangible assets.

Adjusted EBITDA is defined as EBITDA before certain expenses, costs, charges or benefits incurred in the period which in management's view are not indicative of continuing operations, including: amortization of non-cash program intangibles, change in fair value of other financial liabilities related to put options, certain other financial liabilities, convertible debt and contingent consideration, share-based compensation, professional and consulting fees relating to non-core operating activities, non-recoupable COVID-19 costs, goodwill impairment, reorganization costs, loss on debt modifications, gain on settlement of loans and borrowings, gain or loss on sale of assets, unrealized gains or losses on foreign exchange, unrealized gains or losses on forward currency contracts, and other costs not indicative of the Company's core operating results. Adjusted EBITDA is used by management as a measure of the Company's operating performance.

Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by revenue, expressed as a percentage.

Cash Available for Use is defined as the total cash of the Company less Cash Required for Use in Productions. Cash Available for Use funds ongoing working capital requirements, principal and interest payments on corporate debt as well as ongoing development and growth efforts and thus is an important liquidity measure that management uses to monitor the business on an ongoing basis.

Cash Required for Use in Productions is defined as cash required for the funding of productions in progress that is not considered by the Company to be available for other uses. The cash is not legally restricted and has not been classified as Restricted Cash on the consolidated statement of financial position. This cash has been provided by buyers and third-party IP owners that have engaged the Company to provide services, as well as banks with whom Boat Rocker has contracted to provide interim production financing. Management uses the amount of Cash Required for Use in Productions to determine the Company's Cash Available for Use.

Free Cash Flow is defined as cash flow provided by or used in operations adjusted for proceeds and repayment of interim production financing, repayment of lease liabilities and cash used to purchase property and equipment. Free Cash Flow is a key metric used by the management that measures the Company's ability to repay debt, finance strategic business acquisitions and investments, pay dividends and repurchase shares.

Free Cash Flow Attributable to Owners of the Company is defined as Free Cash Flow less distributions made to non-controlling interests. Distributions to non-controlling interests are made out of the operating cash flows of the consolidated entities that contain the non-controlling interests, and accordingly management believes that deducting these cash outflows from Free Cash Flow is an important measure when considering Free Cash Flow available to shareholders of the Company.

Forward-Looking Statements

This press release may contain forward-looking information within the meaning of applicable securities laws, which reflects the Company's current expectations regarding future events. Forward-looking information is based on a number of assumptions, many of which are beyond the Company's control. Such assumptions include, but are not limited to, the factors discussed under "Outlook" in the Company's annual MD&A dated March 30, 2023. Forward-looking information is also subject to a number of specific and general risks. A comprehensive summary of the risks and uncertainties that may affect the business of the Company is set out in the Company's Annual Information Form for the year ended December 31, 2022. The risks and uncertainties described therein are not the only ones Boat Rocker faces. Additional risks and uncertainties not presently known to the Company or that it currently believes to be immaterial may also materially adversely affect the Company's business, assets, liabilities, financial condition, results of operations, prospects, cash flows and the value and future trading price of the Subordinate Voting Shares. Boat Rocker does not undertake any obligation to update forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required under applicable securities laws.

Reconciliation of Non-IFRS Measures

The Company uses the non-IFRS measure Adjusted EBITDA to evaluate performance. The following table presents the reconciliation from net income (loss) to Adjusted EBITDA for the three months ended June 30, 2023 and 2022:

(Amounts in thousands CAD)		Three Months Ended June 30,
		2023		2022
Net income (loss)		(5,819)		4,557
Amortization of property and equipment, right-of-use assets and other intangible assets		3,771		4,413
Finance costs, net		1,935		1,316
Income taxes		1,267		652
EBITDA*		1,154		10,938
Adjustments:
Change in fair value of contingent consideration^1		—		(6,533)
Change in fair value of unsettled forward exchange contracts^2		(145)		867
Change in fair value of other financial liabilities^3		1,580		1,476
Unrealized losses on foreign exchange^4		1,100		334
Amortization of acquired program intangibles^5		235		630
IPO and transaction-related costs^6		40		—
Share-based compensation^7		1,163		370
Reorganization costs^8		311		65
Adjusted EBITDA*		5,438		8,147

* See "Non-IFRS Measures"

Note: Adjusted EBITDA as previously reported included the unrealized gains and losses on foreign exchange other than the change in fair value of unsettled forward exchange contracts. Management considers that all unrealized gains or losses on foreign exchange should be excluded from Adjusted EBITDA as they are not reflective of the Company's performance until such time that the amounts become realized. Adjusted EBITDA for the three months ended June 30, 2022 as previously reported was $7,813.

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¹ Change in value of contingent consideration represents the non-cash expense associated with certain acquisitions.

² Change in fair value of the unrealized forward currency contracts.

³ Change in fair value of other financial liabilities represents the non-cash expenses on certain put options and accretion and and changes in fair value on other liabilities.

⁴ Movements in balances denominated in non-functional currencies not yet realized through settlement.

⁵ Amortization of program intangibles acquired in business combinations included in production, distribution and service costs.

⁶ Includes professional fees and other expenses related to transactions such as the Company's IPO, acquisitions, and special projects which are not related to or are not reflective of regular business operation.

⁷ Non-cash expenses associated with share-based compensation granted to certain officers, directors and employees.

⁸ Restructuring charges primarily related to personnel costs.

The following table presents the reconciliation from net income (loss) to Adjusted EBITDA* for the six months ended June 30, 2023 and 2022:

(Amounts in thousands CAD)		Six Months Ended June 30,
		2023		2022
Net income (loss)		(15,293)		(7,775)
Amortization of property and equipment, right-of-use assets and other intangible assets		7,532		8,772
Finance costs, net		3,491		2,552
Income taxes		1,106		(100)
EBITDA*		(3,164)		3,449
Adjustments:
Change in fair value of contingent consideration^9		—		(6,533)
Change in fair value of unsettled forward exchange contracts^10		(418)		(482)
Change in fair value of other financial liabilities^11		3,117		2,791
Unrealized losses on foreign exchange^12		1,378		465
Amortization of acquired program intangibles^13		600		1,260
IPO and transaction-related costs^14		40		—
COVID-19 related costs^15		129		—
Share-based compensation^16		1,437		1,007
Reorganization costs^17		548		160
Adjusted EBITDA*		3,667		2,117

* See "Non-IFRS Measures"

Note: Adjusted EBITDA as previously reported included the unrealized gains and losses on foreign exchange other than the change in fair value of unsettled forward exchange contracts. Management considers that all unrealized gains or losses on foreign exchange should be excluded from Adjusted EBITDA as they are not reflective of the Company's performance until such time that the amounts become realized. Adjusted EBITDA for the six months ended June 30, 2022 as previously reported was $1,652.

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⁹ Change in value of contingent consideration represents the non-cash expense associated with certain acquisitions.

¹⁰ Change in fair value of the unrealized forward currency contracts.

¹¹ Change in fair value of other financial liabilities represents the non-cash expenses on certain put options and accretion and changes in fair value on other liabilities.

¹² Movements in balances denominated in non-functional currencies not yet realized through settlement.

¹³ Amortization of program intangibles acquired in business combinations included in production, distribution and service costs.

¹⁴  Includes professional fees and other expenses related to transactions and special projects which are not related to or are not reflective of regular business operations.

¹⁵ Incremental non-recoupable production costs specifically incurred due to COVID-19.

¹⁶ Non-cash expenses associated with share-based compensation granted to certain officers, directors and employees.

¹⁷  Restructuring charges primarily related to personnel costs.

SOURCE Boat Rocker Media Inc.

Investors: Madeleine Cohen, Boat Rocker Media, Investor Relations, [email protected], [phone]; Media: Matt Salvatore, Boat Rocker Media, Corporate Communications, [email protected], [phone]