TORONTO, May 14, 2021 /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 March 31, 2021 ("first quarter" or "Q1"). The Company's unaudited financial statements and accompanying notes and Management's Discussion and Analysis ("MD&A") for Q1 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

  • Total revenue of $52.5 million in Q1 2021 vs. $42.2 million in Q1 2020, an increase of 24%, with the increase driven mainly by higher production revenue from the delivery of multiple unscripted shows.
  • Net loss of $5.0 million in Q1 2021 vs net loss of $13.9 million in Q1 2020.
  • EBITDA of $1.8 million in Q1 2021 vs EBITDA loss of $7.7 million in Q1 2020.
  • Adjusted EBITDA loss of $1.7 million in Q1 2021 vs a loss of $3.8 million in Q1 2020.
  • On March 24, 2021, the Company successfully completed its Initial Public Offering ("IPO") raising gross proceeds of $170.1 million. Boat Rocker exited the quarter with a cash position of $133.0 million and Net Cash of $53.9 million.

Selected Operation Highlights

The Company is executing against its business plan which in Q1 2021 focused on building and monetizing global entertainment brands, increasing sources of intellectual property ("IP"), and capitalizing on operating leverage. Examples include: 

  • After premiering on January 16th on CBC in Canada and January 18th on Disney Junior in the U.S., the animated kids' series Dino Ranch remained the number one cable series for children aged two to five in the U.S.
  • Dino Ranch recently launched on Disney+ in the UK and Australia and has additional strong international sales momentum with a number of global broadcasters picking up the title.
  • Launched Maven, a new production company pod, headed by industry veteran Jessica Sebastian-Dayeh.
  • New sci-fi series Beacon 23 (Spectrum/AMC), based on the Hugh Howey bestseller and starring Lena Headey from Game of Thrones with showrunner Zak Penn (Avengers, X-Men 2), is now in pre-production.
  • Production continued on scripted series American Rust (Showtime), season two of unscripted series Dear… (Apple TV+) and the new unscripted series Mary Makes it Easy (CTV).

"We delivered solid year-over-year revenue growth versus the first quarter of 2020, with multiple revenue streams driving our results as we continue to execute against our business plan," said John Young, Chief Executive Officer of Boat Rocker. "Our Representation and Kids & Family segments are performing well and in our Television segment we have a strong content slate expected to deliver late in the year that will contribute to a material improvement in top-line performance. While many of the effects of COVID-19 are abating, we are still seeing lingering disruptions, particularly to live-action production. Nevertheless, with our clean balance sheet, strong cash position, and robust global demand for content, we are ideally positioned to continue advancing our long-term growth strategy."

COVID-19 Pandemic Update

The COVID-19 pandemic did not significantly impact Boat Rocker's revenue results for the quarter ended March 31, 2021, nor the comparable period of 2020. The content production industry first experienced a temporary pause on live-action production during the second quarter of 2020, which impacted Boat Rocker's Television segment in both the scripted and unscripted production groups. Although production had largely resumed by the end of the year, expected delivery dates were delayed on several of the Company's series resulting in a shift of revenue from 2020 into 2021. Kids and Family has been the least affected of Boat Rocker's three segments. Revenue earned in the Representation segment has started to recover as the Company's clients, mainly on-screen talent, returned to production with increased frequency under enhanced COVID-19 protocols.

As previously disclosed, while production has resumed, the Company is expecting larger overall production budgets and incremental COVID-19-related production costs through 2021, which is reflected in the segment profit in its Television business and in the consolidated Adjusted EBITDA margin.


Selected Financial Information

(in thousands of Canadian dollars except per share amounts) (unaudited)


Three months ended

March 31,



2021


2020


$ change

% change

Revenue





Television

30,554


22,540


8,014


35.6

%

Kids and Family

12,467


10,673


1,794


16.8

%

Representation

9,473


8,964


509


5.7

%

Total revenue

52,494


42,177


10,317


24.5

%

Net loss attributable to shareholders of the Company

(6,406)


(14,896)


8,490


57.0

%

EBITDA*

1,801


(7,718)


9,519


123.3

%

Adjusted EBITDA*

(1,650)


(3,818)


2,168


56.8

%

* See "Non-IFRS Measures"


Financial Review

Revenue for the three months ended March 31, 2021 was $52.5 million compared to $42.2 million for the same period of 2020, an increase of $10.3 million or 24%. The revenue increase was supported by all revenue streams excluding distribution. Production revenue was higher due to the delivery of a greater number of shows in the first quarter of 2021 versus the prior year period.

Net loss attributable to shareholders of the Company for the three months ended March 31, 2021 was $6.4 million, compared with $14.9 million in the same period of 2020, a favourable variance of $8.5 million. Three non-cash gains recognized in the three months ended March 31, 2021 with no comparable balance in the prior period constitute the majority of the variance. The gain on the settlement of the Company's loans and borrowings was $2.3 million, the change in fair value of the 2020 convertible debentures was $4.4 million and the change in fair value relating to the settlement of the consideration for the Matador acquisition was $2.4 million.

Adjusted EBITDA for the three months ended March 31, 2021 was a loss of $1.7 million compared with a loss of $3.8 million for the same period of 2020, a favourable variance of $2.2 million. The increase in production deliveries in the 2021 period compared with the 2020 period, partially offset by increased general and administrative costs, accounted for the improvement in Adjusted EBITDA. Adjusted EBITDA for the three months ended March 31, 2021 includes the impact of $3.8 million of costs incurred within the following pre-revenue businesses: Boat Rocker Studios, Scripted (formerly Platform One Media) and the franchise and brand management operations. In the three months ended March 31, 2020, these costs amounted to $2.5 million. Adjusted EBITDA is a non-IFRS measure. See "Non-IFRS Measures" below.

Total cash at March 31, 2021 was $133.0 million, of which $84.0 million represents Cash Available for Use*. Boat Rocker's IPO raised gross proceeds of $170.1 million and the Company used $90.5 million of the net proceeds from the IPO to repay all of its term debt under its corporate credit facility. The following table presents the Company's Net Cash* position as at March 31, 2021:

(Amounts in thousands CAD)


March 31, 2021


Cash Available for Use*


83,999


Less: lease liabilities


(30,097)


Net Cash*


53,902






 *Net Cash and Cash Available for Use are non-IFRS measures. See "Non-IFRS Measures" below.

Outlook

In light of the high demand for content from buyers worldwide and the Company's diversified business model, strong balance sheet and track record, management believes that the Company is well-positioned for continued growth. The Company remains on track to deliver a very significant step-up in total revenue for 2021, compared with the $226.8 million recognized in 2020.

The Company's performance remains strong overall, with the Representation and Kids and Family segments both tracking in line with management's expectations. This said, the Company, and the global entertainment industry as a whole, continue to experience the ongoing effects of the COVID-19 pandemic. The Company's two premium scripted dramas (Invasion for Apple TV+ and American Rust for Showtime) are on track and scheduled to be delivered in the latter part of 2021, but an additional premium scripted series that was expected to be produced and delivered in 2021 has not yet been greenlit and, if it proceeds, will likely not be fully delivered in 2021.

These and other factors, including the strengthening of the Canadian dollar, may make it more challenging for the Company to achieve its previously stated full-year 2021 revenue outlook. That said, management is not changing its guidance and continues to work towards delivering on its targets. The Company expects to provide any material updates on its outlook with its financial results later this year. 

Boat Rocker continues to focus on sourcing, assessing, and monetizing IP to drive results for 2021 and beyond. The Company recently launched Maven, a new production company pod focused on creating premium unscripted content with a strong emphasis on producing female-led narratives and championing emerging voices. Headed by industry veteran Jessica Sebastian-Dayeh, Maven will also actively seek collaboration opportunities with the Boat Rocker Studios, Scripted and Kids & Family divisions to drive IP expansion.

Boat Rocker continues to build and monetize global entertainment brands. Dino Ranch (Disney Junior) had multiple international sales including Disney+ in the UK and Australia, Super RTL (Germany), Gulli/TiJi (France), Gulli Africa, NRK (Norway), YLE (Finland) and DR (Denmark) as it continues building a global audience. Boat Rocker's franchise and brand management team has secured deals to launch toy lines and merchandise for the series with major retailers online in the late summer of 2021 and brick and mortar in Q4 of 2021. A new scripted brand on the horizon is Beacon 23, which is currently in pre-production. The sci-fi series for Spectrum/AMC, based on the Hugh Howey bestseller, is being showrun by Zak Penn (X-Men: The Last Stand, The Avengers), and stars Lena Headey from Game of Thrones.

Fiscal 2021 First 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 May 14, 2021. To participate in the call, dial (416) 764-8650 or (888) 664-6383 (using the conference ID 71949112). 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 is an independent, integrated global entertainment company that harnesses the power of creativity and commerce to tell stories and build iconic brands for audiences around the world. Boat Rocker Studios (the "Studio"), the Company's creative engine, creates, produces and distributes award-winning content and franchises across all major genres via its Scripted, Unscripted, and Kids & Family divisions. The Studio distributes and licenses thousands of hours of its own and third-party content worldwide. Boat Rocker owns or invests in companies in the entertainment industry that bolster the company's strategic and operational goals, including Insight Productions (Unscripted), Jam Filled Entertainment (2D and 3D Animation), Industrial Brothers (Kids & Family Animation) and Untitled Entertainment, a leading global talent management company that represents leading on-screen talent and celebrities. A selection of Boat Rocker's projects include: Orphan Black (BBC AMERICA, CTV Sci-Fi Channel), Dear…(Apple TV+), Lip Sync Battle (Paramount Network), The Amazing Race Canada (CTV), MasterChef Canada (CTV), The Next Step (Family Channel, CBC), The Loud House (Nickelodeon), Remy & Boo (Universal Kids, CBC), and Dino Ranch (CBC, Disney Junior). Boat Rocker's subordinate voting shares are listed on the Toronto Stock Exchange under the ticker BRMI. 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, Net Cash, Cash Available for Use, and Cash Required for Use in Productions.

EBITDA is defined as net income or loss before interest, taxes, depreciation and amortization.

Adjusted EBITDA is defined as EBITDA adjusted for amortization of non-cash program intangibles, change in fair value of financial assets and liabilities, change in fair value of contingent consideration, share-based compensation, transaction and reorganization costs, goodwill impairment, loss on debt modifications, gain on settlement of loans and borrowings and gain or loss on sale of assets. Adjusted EBITDA is used by management as a measure of the Company's profitability. For further details refer to the "Reconciliation of non-IFRS measures" section of this press release.

Net Cash is defined as Cash Available for Use less lease liabilities and is used by management as a consistent measure of the Company's liquidity position in the periods after the Company's loans and borrowings have been fully extinguished.

Cash Available for Use is defined as the total cash and cash equivalents 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 demand loans 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 final prospectus. 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 dated March 31, 2021 and in the Company's annual MD&A of the same date. 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 of 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 financial measures

The Company uses the non-IFRS measure Adjusted EBITDA to evaluate performance. The following table presents the reconciliation from net loss to Adjusted EBITDA for the three months ended March 31, 2021 and 2020:

(Amounts in thousands CAD)


Three months

ended March 31,



2021


2020


Net loss


(5,016)


(13,932)


Amortization of property and equipment, right-of-use assets and other

intangible assets


4,679


4,757


Finance costs, net


2,275


2,981


Income taxes


(137)


(1,524)


EBITDA*


1,801


(7,718)








Adjustments:






Amortization of acquired program intangibles1


712


770


Gain on settlement of loans and borrowings2


(2,334)


—


Change in fair value of convertible debt3


(4,382)


—


Change in fair value of financial assets4


266


54


Change in fair value of other financial liabilities5


(564)


1,609


Change in fair value of contingent consideration6


127


799


Transaction costs7


—


203


Share-based compensation8


2,531


273


Reorganization costs9


193


192


Adjusted EBITDA*

—


(1,650)


(3,818)











* See "Non-IFRS Measures"

_______________________________________

1 

Amortization of program intangibles acquired in business combinations included in production, service and distribution expense

2 

Non-cash gain recorded on the settlement of the Company's long term debt

3 

Change in fair value of convertible debt represents the non-cash gain on the convertible debt issued by the Company

4 

Change in fair value of other financial assets represents the non-cash expense on certain financial assets held by the Company

4 

Change in fair value of other financial liabilities represents the non-cash expense on certain put options and the gain on settlement of a purchase price liability.

6 

Change in value of contingent consideration associated with acquisition of Platform One

7 

Transaction costs represent professional fees incurred in support of acquisitions in 2019

8 

Share-based compensation related to non-cash expenses associated with stock options granted to certain officers and employees

9 

Restructuring charges primarily related to personnel costs

 

SOURCE Boat Rocker Media Inc.

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