Boat Rocker Media Reports Strong Third Quarter 2022 Financial Results

Adjusted EBITDA¹ of $17.4 million for Q3 2022 versus $11.6 million for Q3 2021;

Net income of $3.9 million for Q3 2022 versus a net loss of $1.8 million for Q3 2021;

No corporate debt²

TORONTO, Nov. 9, 2022 /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 September 30, 2022 ("third quarter" or "Q3"). The Company's consolidated financial statements and accompanying notes and Management's Discussion and Analysis ("MD&A") for the three and nine months ended September 30, 2022 and 2021 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

• Adjusted EBITDA¹ of $17.4 million for Q3 2022 versus $11.6 million for Q3 2021, an increase of 50%, and $19.0 million for the nine months ended September 30, 2022 versus $12.7 million in the same period of 2021, an increase of 50%.
• Net income of $3.9 million for Q3 2022 compared with a net loss of $1.8 million for Q3 2021, an increase of $5.6 million, and a net loss of $3.9 million for the nine months ended September 30, 2022 compared to a net loss of $15.6 million in the same period of 2021, an increase of $11.7 million.
• Debt-free² with total cash at September 30, 2022 of $106.4 million.
• Generated positive Free Cash Flow¹ in the nine months ended September 30, 2022 of $18.2 million as compared to negative Free Cash Flow¹ in same period of 2021 of $30.4 million.

"Our strong results this quarter reflect the anticipated improvement in both Adjusted EBITDA and Adjusted EBITDA margin as we began to deliver programming across multiple segments and make the first meaningful sales of Dino Ranch merchandise through the back-to-school period and leading into the all important holiday season," said John Young, Chief Executive Officer of Boat Rocker. "Lower revenue over the comparative quarter reflects both changing revenue mix, as well as the timing of deliveries, particularly of premium scripted dramas, that are back-end loaded for this year and will deliver across year-end into 2023. In 2022, we have one of the largest slate of shows in our history in production and continue to grow our owned IP catalog. All of this sets us up to deliver meaningful Adjusted EBITDA in the fourth quarter and get off to a strong start in 2023."

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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 our Third Quarter 2022 Management's Discussion and Analysis. 

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 Operational Highlights

Boat Rocker continues to see high overall activity levels across its three reporting segments: Television, Kids and Family, and Representation. Representation, in particular, saw 15% year over year revenue growth. For 2022, the Company is producing high-quality scripted, unscripted and Kids and Family titles for major buyers around the world including Netflix, Apple TV+, AMC, The ROKU Channel, Amazon Freevee, Nickelodeon and Discovery+ as well as key domestic platforms including CTV, CBC and Global. At the end of Q3 Boat Rocker had delivered 16 shows so far in 2022 with another 40 in various stages of production.

Recent highlights include:

Television

• Season two of American Rust, starring Jeff Daniels and Maura Tierney, is currently in pre-production. The second season will stream exclusively on Amazon Freevee and begins production at the end of November. Boat Rocker is producing and will distribute the series globally.
• Keeley Hawes (Bodyguard, Line of Duty) joined Krysten Ritter (Breaking Bad, Jessica Jones) as co-lead in Orphan Black: Echoes, the highly anticipated spin-off series of international hit show Orphan Black, currently in production in Toronto.
• New series, Sarah's Mountain Escape, starring acclaimed designer Sarah Richardson, premiered on HGTV Canada on October 19^th.
• Season six of The Great Canadian Baking Show premiered October 2^nd on CBC.
• Returning for an incredible 10^th season with the biggest grand prize ever, Top Chef Canada premiered September 26^th on Food Network Canada.
• Production has started on upcoming Bishop Sycamore football documentary, titled B.S. High, which will debut on HBO in 2023.
• Signed a first-look deal with actor, writer, director, and producer Jay Baruchel, under which Baruchel will develop and produce original television, film and digital projects for the Company.

Kids & Family

• Dino Ranch was renewed for a third season (52 x 11 mins) and will air on Disney Junior and Disney+ in the U.S. in Fall 2023, followed by an international rollout on Disney Junior in Latin America and streaming on Disney+ in the UK, Ireland, Australia and New Zealand.
• Dino Ranch is now available to view in 170 countries with a total of 50 consumer product licensees globally.
• Dino Ranch remains the #1 preschool U.S. cable show for kids aged two to five in its 7pm time slot.
• Boat Rocker's exciting new supernatural animated series, Daniel Spellbound, started streaming on Netflix on October 27^th and debuted in the Netflix "Top 10 Kids" in most major markets globally, including Canada, U.S., UK, Germany, and France.
• Season eight of The Next Step premiered on September 26th on CBBC (UK) and Corus' YTV in Canada.
• Two Boat Rocker Kids & Family productions have been nominated for Children's & Family Emmy Awards. A Tale Dark & Grimm, is nominated for Outstanding Animated Series. The Kids Tonight Show is nominated for Outstanding Host. The inaugural awards ceremony takes place over two days, December 10-11, in Los Angeles.

Representation

• This year was another stellar showing at the Emmys, with more than 10 projects receiving nominations and client Jean Smart winning Best Actress in a Comedy for Hacks for the second consecutive year.
• Cobra Kai Season 5, starring client Ralph Macchio, debuted at #1 on Netflix's most watched TV series list with 107 million viewing hours in its first week.
• Client Rhea Seehorn was announced as the lead in an untitled Vince Gilligan project for Apple TV+, which has received a two-season straight-to-series order.
• Client Laura Benanti was booked in Sony comedy No Hard Feelings, starring opposite Jennifer Lawrence.
• Client Emma Watson is the face of the new fragrance Prada Paradoxe, for which she also directed the commercial. The fragrance launch has been a major success to date.
•  

Selected Financial Information

(Amounts in thousands CAD)	Three months ended September 30,
	2022	2021	% change
Revenue
Television	42,142	166,930	(75) %
Kids and Family	27,988	27,191	3 %
Representation	10,580	9,211	15 %
Total revenue	80,710	203,332	(60) %
Net income (loss)	3,872	(1,758)	320 %
Adjusted EBITDA*	17,389	11,591	50 %

(Amounts in thousands CAD)	Nine months ended September 30,
	2022	2021	% change
Revenue
Television	97,631	239,153	(59) %
Kids and Family	66,603	51,501	29 %
Representation	28,758	27,260	5 %
Total revenue	192,992	317,914	(39) %
Net income (loss)	(3,903)	(15,593)	75 %
Adjusted EBITDA*	19,041	12,662	50 %

Financial Review

Revenue for Q3 2022 was $80.7 million versus $203.3 million in Q3 2021, a decrease of $122.6 million. Revenue for the nine months ended September 30, 2022 was $193.0 million compared with $317.9 million for the same period of 2021, a decrease of $124.9 million or 39%.  In the three and nine months ended September 30, 2021, the Company delivered several episodes of two big budget scripted productions. Despite having several similar sized scripted dramas currently underway, there were no deliveries of such productions in the current year periods. While revenue decreased in the Television segment, revenue in both the Kids and Family and Representation segments increased.   

Adjusted EBITDA* for Q3 2022 was $17.4 million compared with $11.6 million for the same period of 2021, an increase of $5.8 million. Adjusted EBITDA for nine months ended September 30, 2022 was $19.0 million versus $12.7 million in 2021, an increase of $6.4 million.

Net income for Q3 2022 was $3.9 million compared with a loss of $1.8 million for the same period of 2021, an increase of $5.6 million. Net loss for the nine months ended September 30, 2022 was $3.9 million, compared with a net loss of $15.6 million in the same period of 2021, a positive variance of $11.7 million.

*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 our Third Quarter 2022 Management's Discussion and Analysis.

Total cash at September 30, 2022 was $106.4 million, of which $21.4 million represents Cash Available for Use*. The following table presents the breakdown of cash as at September 30, 2022 and December 31, 2021:

(Amounts in thousands CAD)	September 30, 2022		December 31, 2021		% change
Cash Available for Use*	$           21,362		$               57,247		(63) %
Cash Required for Use in Productions*	85,041		39,703		114 %
Total cash	$          106,403		$               96,950		10 %

Outlook

As a result of ordinary course and COVID-related production schedule extensions, together with some delayed greenlights in the US unscripted business, Boat Rocker projects Adjusted EBITDA* will fall below its previously stated guidance for the year, as scripted deliveries and anticipated US unscripted greenlights push into next year.  

However, management expects to generate appreciable growth in Adjusted EBITDA* for 2022 over its 2021 results as the Company continues to anticipate that its expanded slate of premium scripted dramas, expected continued success of its Kids & Family programming led by Dino Ranch, and the steady growth of its Representation segment will contribute meaningfully to the Company's performance in 2022 and beyond.

For 2022, as in 2021, the Company expects a strong fourth quarter, supported principally by anticipated deliveries and consumer product revenue. Boat Rocker remains focused on annual Adjusted EBITDA* as the most important measure of the Company's performance, as well as Adjusted EBITDA* growth over multiple years given the length and variability of the Company's production cycles.

Management expects sustained demand for new and returning series in 2023, with major buyers having confirmed their commitment to continued content spend and international buyers eager for original premium scripted, unscripted and kids and family shows. Boat Rocker anticipates growth in each segment over the long term, including greater revenue from consumer products which is expected to contribute to higher margins, and further synergies attributable to Boat Rocker's enhanced scale. With its diverse content creation engine and long track record of successfully delivering multi-genre programming at all budget levels to the world's leading broadcasters and streamers, Boat Rocker believes that it is well positioned to capitalize on the ongoing demand for high quality programming.

The Company's expected performance in Q4 is based on certain assumptions which are outlined in the Company's annual MD&A dated March 31, 2022, and subject to certain risks as outlined in the Company's Annual Information Form for the year ended December 31, 2021.

*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 our Third Quarter 2022 Management's Discussion and Analysis.

Fiscal 2022 Third Quarter Conference Call

Boat Rocker management will host a conference call to discuss its fiscal third quarter financial results at 8:30 a.m. EDT on November 9, 2022. To participate in the call, dial [phone] or [phone] (using the conference ID 60326350). 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+), 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, Cash Available for Use, and Cash Required for Use in Productions.

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 adjusted for 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, IPO and transaction-related costs, 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 and unrealized gain or loss on forward currency contracts. Adjusted EBITDA includes the gain on remeasurement of other financial liabilities as the gain is directly related to a production and is considered by management to be operational. Adjusted EBITDA is used by management as a measure of the Company's operating performance. For further details refer to the "Reconciliation of Non-IFRS Measures" section of this press release.

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 repayments of interim production financing, payments of lease liabilities and distributions to non-controlling interests. While these types of cash flows are excluded from cash provided by operations, management believes they add value to evaluating the ability of the business to generate cash flow. In particular, interim production financing is crucial to the funding of productions and thus has been included in the calculation of Free Cash Flow. Similarly, repayment of lease liabilities and distributions made to non-controlling shareholders have also been included as management considers these to be operating cash flows.

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 31, 2022. 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, 2021. 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 tables present the reconciliation from net income (loss) to Adjusted EBITDA for the three and nine months ended September 30, 2022 and 2021:

(Amounts in thousands CAD)		Three months ended September 30,
		2022		2021
Net income (loss)		3,872		(1,758)
Amortization of property and equipment, right-of-use assets and other intangible assets		4,423		4,457
Finance costs, net		1,765		842
Income taxes		330		601
EBITDA*		10,390		4,142
Adjustments:
Change in fair value of contingent consideration^3		—		132
Change in fair value of unsettled forward exchange contracts^4		1,942		(61)
Change in fair value of other financial liabilities^5		1,786		1,741
Amortization of acquired program intangibles^6		2,252		971
COVID-19 related costs^7		—		3,800
Share-based compensation^8		313		792
Reorganization costs^9		706		74
Adjusted EBITDA*		17,389		11,591

* See "Non-IFRS Measures"

Note: Adjusted EBITDA as previously reported included the change in fair value of unsettled forward exchange contracts and excluded the change in fair value of financial assets. Adjusted EBITDA for the three months ended September 30, 2021 as previously reported was $11,536. The definition of Adjusted EBITDA has been changed to better reflect the Company's performance.

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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 our Third Quarter 2022 Management's Discussion and Analysis.

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.

³ Change in value of contingent consideration represents the non-cash expense associated with certain acquisitions.

⁴ Change in fair value of the unrealized forward currency contracts.

⁵ 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.

⁶ Amortization of program intangibles acquired in business combinations included in production, distribution and service costs.

⁷ Incremental non-recoupable production costs specifically incurred due to COVID-19.

(Amounts in thousands CAD)		Nine months ended September 30,
		2022		2021
Net income (loss)		(3,903)		(15,593)
Amortization of property and equipment, right-of-use assets and other intangible assets		13,195		13,985
Finance costs, net		4,317		3,844
Income taxes		230		1,188
EBITDA*		13,839		3,424
Adjustments:
Change in fair value of convertible debt^10		—		(4,382)
Change in fair value of contingent consideration^11		(6,533)		398
Change in fair value of unsettled forward exchange contracts^12		1,460		247
Change in fair value of other financial liabilities^13		4,577		3,056
Gain on settlement of loans and borrowings^14		—		(2,334)
Amortization of acquired program intangibles^15		3,512		2,649
IPO and transaction-related costs^16		—		972
COVID-19 related costs^17		—		4,651
Share-based compensation^18		1,320		3,561
Reorganization costs^19		866		420
Adjusted EBITDA*		19,041		12,662

* See "Non-IFRS Measures"

Note: Adjusted EBITDA as previously reported included the change in fair value of unsettled forward exchange contracts and excluded the change in fair value of financial assets. Adjusted EBITDA for the nine months ended September 30, 2021 as previously reported was $12,665. The definition of Adjusted EBITDA has been changed to better reflect the Company's performance.

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⁸ Non-cash expenses associated with share-based compensation granted to certain officers and employees.

⁹ Restructuring charges primarily related to personnel costs.

¹⁰ Change in fair value of convertible debt represents the non-cash gain on the conversion of certain debentures issued by the Company.

¹¹ Change in value of contingent consideration represents the non-cash expense associated with certain acquisitions.

¹² Change in fair value of the unrealized forward currency contracts.

¹³ 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.

¹⁴ Non-cash gain recorded on the settlement of the Company's loans and borrowings.

¹⁵ Amortization of program intangibles acquired in business combinations included in production, distribution and service costs.

¹⁶ Includes professional fees and other expenses related to transactions such as the Company's IPO, acquisitions, and special projects which are non-recurring and are not related to or are not reflective of regular business operation.

¹⁷ Incremental non-recoupable production costs specifically incurred due to COVID-19.

¹⁸ Non-cash expenses associated with share-based compensation granted to certain officers and employees.

¹⁹ Restructuring charges primarily related to personnel costs.

SOURCE Boat Rocker Media Inc.

Nick Hurst, Boat Rocker Media, Investor Relations, [email protected], [phone]; Or Matt Salvatore, Boat Rocker Media, Corporate Communications, [email protected], [phone]