Boat Rocker Media Reports Third Quarter 2023 Financial Results

Q3 Adjusted EBITDA of $21.3 million, a 41% YoY Increase

Total Cash of $85.5 million and Debt-Free¹ 

Cash Available for Use of $40.9 million, an Increase of $13.8 million from Q2

Updates Fiscal 2023 Outlook

TORONTO, Nov. 8, 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 September 30, 2023 ("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, 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 $201.9 million for Q3 2023 versus $80.7 million for Q3 2022, an increase of 150%. Year-to-date revenue of $410.4 million versus $193 million, an increase of 112.7%.
• Adjusted EBITDA² of $21.3 million for Q3 2023 versus $15.1 million for Q3 2022, an increase of 41%. Year-to-date Adjusted EBITDA of $25 million versus $17.3 million, an increase of 44.9%.
• Net loss of $8.5 million for Q3 2023 versus net income of $3.9 million for Q3 2022, a decrease of $12.4 million. Net loss for the quarter includes a non-cash goodwill impairment charge of $15.2 million ($0.27 loss per share). Adjusting for the impact of this, net income would be $6.6 million ($0.10 income per share) in the quarter.
• Debt-free¹ with total cash at September 30, 2023 of $85.5 million. $40.9 million of Cash Available for Use, an increase of $9.3 million year-to-date.

"Our performance this quarter demonstrates the strength of Boat Rocker's IP engine" said John Young, Chief Executive Officer of Boat Rocker. "Our Television segment generated significant results through the delivery and sale of our owned IP, notably our premium sci-fi series Beacon 23. Despite our solid output, we are still operating against a backdrop of considerable industry disruption. The WGA strike was prolonged and the SAG-AFTRA strike is ongoing, both of which have slowed progress in key areas of our business, therefore impacting our outlook for 2023 and 2024. Nevertheless, we remain confident in Boat Rocker's IP, diverse and international capabilities, strong balance sheet and cash position, and streamlined Studio to build for and perform in the long-term."

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

²  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 nine months ended September 30, 2023. 

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, MGM+, Disney and Max, as well as key domestic platforms including CTV, CBC and Global. 

Recent highlights include:

Television

Scripted

• Sold Beacon 23, starring Lena Headey (Game of Thrones) and Stephan James (Homecoming), to MGM+. The series will premiere in the U.S. on the steaming service on November 12^th.
• Completed delivery of season two of American Rust, starring Jeff Daniels (The Newsroom) and Maura Tierney (The Affair), to Amazon's Freevee.
• Robyn Hood, from Director X and Chris Roberts, premiered on Global Television and STACK TV on September 27^th.
• Sold highly anticipated scripted series Orphan Black: Echoes, starring Krysten Ritter (Jessica Jones) and Keeley Hawes (Bodyguard), to multiple global buyers including ITV (UK), Stan Entertainment (Australia), and TVNZ (New Zealand).

Unscripted

• The Great Canadian Baking Show season seven is currently airing on CBC.
• The Amazing Race Canada was renewed for its 10^th season by CTV.
• Season one of Listing Large is currently airing on CTV Life Channel.
• The second annual Legacy Awards aired on September 24^th on CBC.
• Season three of Mary Makes it Easy is currently airing on CTV Life Channel.
• Disney+ UK commissioned World War Shoe: Adidas vs. Puma, a docuseries about the rivalry between the two brands. The three-part series is being produced alongside David Beckham's Studio 99.
• BS High (HBO) and Pretty Baby: Brooke Shields (Hulu) were both nominated for Critics Choice Documentary Awards.

Kids and Family

• The Next Step has been greenlit for its ninth season by CBBC, making it Boat Rocker's longest-running scripted series.
• Dino Ranch season three is now airing on Disney+ and CBC.
• Announced partnership with global toy manufacturer Tonies to release Love Monster and Dino Ranch onto its bestselling interactive audio platform.
• Praise Petey premiered on July 21^st on Hulu.

Representation

• Client Chris Rock is set to direct a Universal Pictures biopic about the life of Martin Luther King Jr. based on the acclaimed biography King: A Life.
• Five Untitled clients were featured in Variety's coveted annual "Power of Young Hollywood" list: Noah Schnapp (Stranger Things), Sophia Lillis (It), Lexi Underwood (Little Fires Everywhere), Maya Hawke (Stranger Things), and Emma Myers (Wednesday).

Selected Financial Information

(Amounts in thousands CAD)	Three months ended September 30,
	2023		2022	% change
Revenue
Television	185,521		42,142	340 %
Kids and Family	10,788		27,988	(61) %
Representation	5,612		10,580	(47) %
Total revenue	201,921		80,710	150 %
Net income (loss)	(8,547)		3,872	(321) %
Adjusted EBITDA*	21,347		15,145	41 %

(Amounts in thousands CAD)	Nine months ended September 30,
	2023		2022	% change
Revenue
Television	341,984		97,631	250 %
Kids and Family	45,121		66,603	(32) %
Representation	23,304		28,758	(19) %
Total revenue	410,409		192,992	113 %
Net income (loss)	(23,840)		(3,903)	(511) %
Adjusted EBITDA*	25,014		17,262	45 %

Financial Review

Revenue for Q3 2023 was $201.9 million versus $80.7 million in Q3 2022, an increase of $121.2 million or 150.2%. Revenue for the nine months ended September 30, 2023 was $410.4 million versus $193 million for the same period in 2022, an increase of $217.4 million or 113%. This significant rise in  the quarter was largely attributable to the sale of Beacon 23. The Representation segment recorded lower revenues in the quarter than in the same period in 2022 owing to the U.S. labour strikes, while Kids and Family also recorded a decline due to lower content deliveries.

Adjusted EBITDA* for the three months ended September 30, 2023 was $21.3 million versus $15.1 million for the same period in Q3 2022. Adjusted EBITDA for the nine months ended September 30, 2023 was $25 million versus $17.3 million in 2022. The delivery and sale of owned, scripted IP in the Television segment largely drove the significant increase, offset by declines in Kids and Family and Representation.

Net loss for the three months ended September 30, 2023 was $8.5 million versus net income of $3.9 million for the same period in Q3 2022, a negative variance of $12.4 million. Net loss for the nine months ended September 30, 2023 was $23.8 million versus a net loss of $3.9 million for the same period in 2022, a negative variance of $19.9 million. The negative variance in the quarter and year-to-date periods reflects a non-cash goodwill impairment charge of $15.2 million in the Company's Unscripted CGU.³

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*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  nine months ended September 30, 2023.  

³ Cash generating unit (CGU). For the purposes of allocating goodwill, the Company has determined it has six groups of CGUs: Scripted, Unscripted, Insight, Kids and Family, Animation and Representation.

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 nine months ended September 30, 2023 and 2022:

(Amounts in thousands CAD)		Nine months ended September 30,
		2023		2022		$ change
Cash provided by (used in) operating activities		$      39,048		$    (31,684)		$      70,732
Proceeds from interim production financing		119,486		122,128		(2,642)
Repayments of  interim production financing		(147,292)		(60,214)		(87,078)
Repayment of lease liabilities		(5,837)		(5,734)		(103)
Acquisition of property and equipment		(693)		(792)		99
Free Cash Flow*		$       4,712		$      23,704		$    (18,992)
Less: distributions to non-controlling interest shareholders		(4,560)		(6,277)		1,717
Free Cash Flow Attributable to Owners of the Company*		$          152		$      17,427		$    (17,275)

Total cash at September 30, 2023 was $85.5 million, of which $40.9 million represents Cash Available for Use*. In Q3 2023, Cash Available for Use increased $13.8 million from Q2 2023 and increased by $9.3 million year-to-date. As previously stated, Cash Available for Use is the key cash metric used by management given the Company's Cash Required for Use in Production and Free Cash Flow fluctuate more significantly with the production cycle. The following table presents the breakdown of cash as at September 30, 2023 and December 31, 2022:

(Amounts in thousands CAD)	September 30, 2023		December 31, 2022		$ change		% change
Cash Available for Use*	$                         40,858		$                         31,524		$       9,334		30 %
Cash Required for Use in Productions*	44,678		54,270		(9,592)		(18) %
Total cash	$                         85,536		$                         85,794		$        (258)		— %

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*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 nine months ended September 30, 2023.

Outlook

Boat Rocker is producing a high profile slate of premium scripted series this year and anticipates delivering all remaining episodes in 2023 while ramping up international distribution for its owned IP. However, with the WGA strike prolonged and the SAG-AFTRA strike ongoing, the Company's ability to conduct business in the normal course has been disrupted, particularly within its Representation segment and in respect of the development and production of scripted series. As such, Boat Rocker is now targeting 2023 Adjusted EBITDA to be approximately $30 million. The negative impact of the strikes on the media and entertainment industry as a whole will continue to be felt throughout 2024 given the current delays on development, greenlights and the time it will take for the industry to ramp up its production activities once the SAG-AFTRA strike is concluded. As a result, the Company anticipates its 2024 performance to be affected, specifically in its Television and Representation segments.

Despite these challenges, with a strong cash position⁴, balance sheet and no corporate debt,** Boat Rocker believes that it is well positioned to successfully operate in a changing media and entertainment landscape over the long-term. Additionally, 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.

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 November 8, 2023, and subject to certain risks as outlined in the Company's Annual Information Form for the year ended December 31, 2022 and quarterly MD&A dated November 8, 2023.

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*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 nine months ended September 30, 2023. 
**Other than interim production financing (including through two borrowing base facilities) in the ordinary course of operations.
⁴ Boat Rocker anticipates having positive Cash Available for Use in fiscal 2023. This cash metric replaces the prior metric of Free Cash Flow as management's main cash focus. The prior Free Cash Flow guidance is withdrawn.

Fiscal 2023 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. EST on November 8, 2023.

The audio webcast can be accessed at https://app.webinar.net/d2yogELZrpw or on the Company's investor relations page at https://www.boatrocker.com/investor-relations/events-and-presentations/default.aspx

Or to participate by phone, dial 1-877-550-1875.

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

To access a replay of the call, dial 757-849-6722 (Local) or 800-645-7964 (North America), re-entry code 3054#. The replay will be available until midnight EST on November 15, 2023.

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 and in its quarterly MD&A dated November 8, 2023. 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.

Contact:

Investors:

Madeleine Cohen
Boat Rocker Media, Investor Relations
[email protected]
[phone]

Media:

Matt Salvatore
Boat Rocker Media, Corporate Communications
[email protected]
[phone]

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 September 30, 2023 and 2022:

(Amounts in thousands CAD)		Three Months Ended September 30,
		2023		2022
Net income (loss)		(8,547)		3,872
Amortization of property and equipment, right-of-use assets and other intangible assets		3,477		4,423
Finance costs, net		2,518		1,765
Income taxes		5,576		330
EBITDA*		3,024		10,390
Adjustments:
Change in fair value of unsettled forward exchange contracts^1		88		1,942
Change in fair value of other financial liabilities^2		1,697		1,786
Unrealized losses on foreign exchange^3		(152)		(2,244)
Amortization of acquired program intangibles^4		105		2,252
Transaction-related and other costs^5		256		—
Share-based compensation^6		1,096		313
Goodwill impairment^7		15,160		—
Reorganization costs^8		73		706
Adjusted EBITDA*		21,347		15,145

* 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 September 30, 2022 as previously reported was $17,389.

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

(Amounts in thousands CAD)		Nine Months Ended September 30,
		2023		2022
Net income (loss)		(23,840)		(3,903)
Amortization of property and equipment, right-of-use assets and other intangible assets		11,009		13,195
Finance costs, net		6,009		4,317
Income taxes		6,682		230
EBITDA*		(140)		13,839
Adjustments:
Change in fair value of contingent consideration^9		—		(6,533)
Change in fair value of unsettled forward exchange contracts^10		(330)		1,460
Change in fair value of other financial liabilities^11		4,814		4,577
Unrealized losses on foreign exchange^12		1,226		(1,779)
Amortization of acquired program intangibles^13		705		3,512
Transaction-related and other costs^14		296		—
COVID-19 related costs^15		129		—
Share-based compensation^16		2,533		1,320
Goodwill impairment^17		15,160		—
Reorganization costs^18		621		866
Adjusted EBITDA*		25,014		17,262

* 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 nine months ended September 30, 2022 as previously reported was $19,041.

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¹ Change in fair value of the unrealized forward currency contracts.

² 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.

³ Movements in balances denominated in non-functional currencies not yet realized through settlement.

⁴ Amortization of program intangibles acquired in business combinations included in production, distribution and service costs.

⁵ 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.

⁶ Non-cash expenses associated with share-based compensation granted to certain officers, directors and employees.

⁷ Impairment of goodwill associated with the Unscripted cash generating unit.

⁸ Restructuring charges primarily related to personnel costs.

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 Impairment of goodwill associated with the Unscripted cash generating unit.

¹⁸ Restructuring charges primarily related to personnel costs.

SOURCE Boat Rocker Media Inc.