BRMI Boat Rocker Media Inc

Total cash of $73.2 million with $52.7 million of Cash Available for Use¹ and Debt-Free²

TORONTO, Nov. 13, 2024 /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, 2024 ("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, 2024 and 2023 are available under the Company's profile on SEDAR+ (www.sedarplus.ca). 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 Highlights³

• Q3 Adjusted EBITDA¹ of a loss of $4.6 million versus a gain of $21.3 million in Q3 2023, a decrease of $26.0 million. Year-to-date Adjusted EBITDA¹ decreased by $23.8 million or 95.3% to $1.2 million compared to $25.0 million in the prior year comparative period. 
• Net loss of $18.0 million in Q3 versus a net loss of $8.5 million in Q3 2023, a decrease of  $9.5 million. Year-to-date net income of $21.4 million, which includes the gain on the sale of Untitled, versus a loss of $23.8 million in the comparative year period, an increase of $45.2 million or 189.8%.
• Q3 revenue of $36.8 million versus $196.4 million in Q3 2023, a decrease of 81.2%. Year-to-date revenue of $127.4 million decreased $260.1 million or 67.1% compared to $387.5 million in the prior year period.
• Debt-free² with total cash at September 30, 2024 of $73.2 million, including $52.7 million of Cash Available for Use¹.

Statement on Q3 2024 from Boat Rocker Media CEO John Young

"Despite continuing to operate in a challenging industry environment, our performance this quarter included greenlights and renewals on a number of key projects across divisions that showcase the power of our studio engine. We continue to be well positioned for a wider industry recovery with our strong balance sheet, robust development slate and distribution catalogue, and deep relationships with top global content buyers. We remain committed to disciplined cost management, while deploying our strategy focused on targeted content investments and owned IP, to rebuild shareholder value for the long-term."

Selected Content Highlights
Television

Scripted

• Bet, an upcoming scripted series for Netflix, is in post production . 
• Production has been completed on scripted co-production, Video Nasty. Virgin Media Television (Ireland), WDR (Germany), and BBC3 (UK) are attached as broadcasters.
• Mix Tape, an upcoming scripted co-production starring Jim Sturgess and Teresa Palmer, is in post-production. Binge (Australia) is attached as broadcaster.

Unscripted

• The Amazing Race Canada was renewed for its 11th season for CTV.
• Season 11 of Top Chef Canada premiered October 14th and was renewed for a 12th season by Corus.
• War Game was released on Video on Demand in September through Decal Releasing and was the #1 documentary on digital on Apple TV and Amazon Prime.
• Season 8 of The Great Canadian Baking Show premiered October 6th on CBC.
• The third annual Legacy Awards aired September 29th on CBC.
• Six-part documentary series K-Pop Idols premiered on Apple TV+ on August 30th.

Kids and Family

• The Next Step has been greenlit for its 10th season by CBBC/BBC iPlayer, extending its run as Boat Rocker's longest running scripted series.
• Dino Ranch: Island Explorers has been greenlit with CBC/Radio-Canada and Warner Bros. Discovery onboard as broadcast partners.  

Selected Financial Information⁴

Financial Review⁵

Revenue for the three months ended September 30, 2024 was $36.8 million versus $196.4 million in Q3 2023, a decrease of $159.5 million or 81.2%. Revenue for the nine months ended September 30, 2024 was $127.4 million compared to $387.5 million in the comparative period. The decrease in both the three and nine months ended September 30, 2024 is attributable to lower revenue in each segment, with production revenue declines resulting from the impact of the 2023 strikes on the current periods being the biggest driver. Additionally, in the prior year period, the Company delivered several episodes of two premium scripted dramas that had significantly higher average revenue per episode, with no comparable deliveries in the three and nine months ended September 30, 2024.

Adjusted EBITDA* for the three months ended September 30, 2024 was a loss of $4.6 million versus profit of $21.3 million in Q3 2023, a decrease of $26.0 million. Adjusted EBITDA* for the nine months ended September 30, 2024 was $1.2 million compared to $25.0 million in the prior year comparative period, a decrease of $23.8 million or 95.3%.

Net loss for the three months ended September 30, 2024 was $18.0 million compared to a net loss of $8.5 million in Q3 2023, a negative variance of  $9.5 million. In the nine months ended September 30, 2024, net income was $21.4 million compared to a loss of $23.8 million in the comparative year period, an increase of $45.2 million. In the nine months ended September 30, 2024, the net loss from continuing operations of $33.5 million was offset by net income of $54.9 million from discontinued operations. The net income from discontinued operations in the nine-month period ended September 30, 2024 included the post-tax gain on the sale of Untitled Entertainment of $50.3 million along with the operating results of Untitled Entertainment. In addition, goodwill impairment of $8.2 million was recorded in the Company's Scripted cash generating unit ("CGU") in the three and nine months ended September 30, 2024. In the three and nine months ended September 30, 2023, goodwill impairment of $15.2 million was recorded in the Company's Unscripted CGU.

Total cash at September 30, 2024 was $73.2 million, of which $52.7 million represents Cash Available for Use*. The following table presents the breakdown of cash as at September 30, 2024 and December 31, 2023:

Outlook

Boat Rocker continues to expect Full Year 2024 Adjusted EBITDA* to be approximately $10 million. However, with a few key titles scheduled to be delivered in the last month of the year, there is a risk that owing to ordinary course production and creative demands, the delivery of certain episodes may be delayed into the new year.

The content industry remains in a period of disruption. Overall content spend is down from 2022's peak, with buyers continuing to delay development and production orders and industry players seeking to consolidate and cut costs. To forge a path back to growth, the Company will continue to focus on distribution and rights management and will seek to invest not only in its own IP, but meaningfully in projects developed by third parties and partially financed that Boat Rocker can catalyze to greenlight. As the Company hones in on co-production, co-ownership and co-financing opportunities, it will also target material cost reductions across the organization.

With Cash Available for Use* of approximately $53 million at Q3 quarter end and no corporate debt**, Boat Rocker is in a strong balance sheet position from which to rebuild revenue growth and improve Adjusted EBITDA.* Boat Rocker also intends, where possible, to deploy capital to repurchase its subordinate voting shares pursuant to its NCIB (maximum purchase of approximately two million shares) which expires on September 5, 2025.

Despite a changing landscape for the content industry, Boat Rocker is optimistic that its strong balance sheet, cost reduction efforts and distribution and rights management focus position it well for success over the long term.

 The Company's expected future performance is based on certain assumptions that are outlined in the Company's annual MD&A dated March 28, 2024, and subject to certain risks as outlined in the Company's Annual Information Form for the year ended December 31, 2023

Fiscal 2024 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 13, 2024.

The audio webcast can be accessed at https://app.webinar.net/1pJA3MWQXKy 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 416-764-8650 (Local) or 888-664-6383 (North American Toll-Free).

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 416-764-8677 (Local) or 1-888-390-0541 (North American Toll-Free), Access Code 872905#. The replay will be available until midnight (EDT) on November 20, 2024.

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 and Family television production, distribution, brand & franchise management, a world-class animation studio, and talent management through a minority stake in The Initial Group, a new company launched by TPG. A selection of Boat Rocker's projects include: Invasion (Apple TV+), Palm Royale (Apple TV+), Orphan Black: Echoes (AMC), American Rust: Broken Justice (Prime Video), Beacon 23 (MGM+), Pretty Baby: Brooke Shields (Hulu), Downey's Dream Cars (Max), BS High (HBO), 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, Corus, 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, 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 before certain expenses, costs, charges or benefits incurred in the period which in management's view are not indicative of continuing or discontinued 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 (if any) 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.

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 28, 2024. 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, 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. In addition, there can be no assurance that the purchase of the minority interest in Insight Productions will be completed or as to the price thereof. 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

Reconciliation Tables

Reconciliation from Net Income (Loss) to Adjusted EBITDA*

The following table presents the reconciliation from net income (loss) from continuing operations to Adjusted EBITDA* for the three months ended September 30, 2024 and 2023:

The following table presents the reconciliation from net income (loss) from continuing operations to Adjusted EBITDA* for the nine months ended September 30, 2024 and 2023:

SOURCE Boat Rocker Media Inc.