BRMI Boat Rocker Media Inc

Record Full year Adjusted EBITDA¹ of $36.2 million, up 14% over 2021;
Net income of $1.8 million in 2022 versus a loss of $12.1 million in 2021;
No corporate debt²

TORONTO, March 30, 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 December 31, 2022 ("fourth quarter" or "Q4") and for the year ended December 31, 2022. The Company's consolidated financial statements and accompanying notes for the years ended December 31, 2022 and 2021 and Management's Discussion and Analysis ("MD&A") for the three months and years ended December 31, 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 $17.2 million for Q4 2022 versus $19.0 million for Q4 2021, a decrease of 10%, and $36.2 million for the year ended December 31, 2022 versus $31.6 million in the same period of 2021, an increase of 14%.
• Net income of $5.7 million for Q4 2022 up from $3.5 million for Q4 2021, an increase of $2.2 million, and net income of $1.8 million for the year ended December 31, 2022 compared to a net loss of $12.1 million in the same period of 2021, an increase of $13.9 million.
• Debt-free² with total cash at December 31, 2022 of $85.8 million.
• Generated positive Free Cash Flow¹ in the year ended December 31, 2022 of $3.5 million versus negative Free Cash Flow¹ in same period of 2021 of $49.7 million.

"In 2022, we delivered meaningfully improved Adjusted EBITDA margins¹, which allowed us to generate a 14% increase in Adjusted EBITDA¹ over our strong performance in the prior year, despite lower overall revenue as a result of timing of deliveries and a different mix of budget levels and owned IP versus service productions," said John Young, Chief Executive Officer of Boat Rocker. "For 2023, our focus remains on driving Adjusted EBITDA growth as we deliver against our robust production slate, including the seven premium scripted dramas produced in 2022. We also expect to see a strong contribution from distribution revenue as we work to extract value from our established and growing library of premium shows across multiple genres, as well as continued steady growth in our Representation business."

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 12% 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 Q4 Boat Rocker had delivered 27 projects so far in 2022 with another 40 shows in various stages of production.

Recent highlights include:

General

• Boat Rocker productions were nominated for a total of 39 2023 Canadian Screen Awards across our Kids & Family and Unscripted divisions.

Television

• Girlshow, a new scripted series, was set up for development with Hulu. The show is being developed alongside Dakota Johnson and Ro Donnelly's TeaTime Pictures, in which Boat Rocker has a minority ownership stake.
• Slip, created by and starring Zoe Lister-Jones, had its world premiere at SXSW in Austin on March 16^th. The comedy-drama series is produced in partnership with TeaTime Pictures for The Roku Channel, where the series premieres on Roku on April 21^st.
• Partnered with Anonymous Content on a new political thriller feature documentary from award-winning filmmakers Jesse Moss and Tony Gerber.
• The Great Canadian Baking Show was renewed for a seventh season by CBC.
• Pretty Baby: Brooke Shields, a new documentary produced by Boat Rocker, premiered at the 2023 Sundance Film Festival to positive reviews, and premieres on Hulu on April 3^rd.
• The 2023 Juno Awards aired live from Edmonton on March 13^th and featured performances by Alexisonfire, Nickelback and Jesse Reyez and was hosted by Simu Liu.
• Big Brother Canada Season 11 is currently airing on Global Television.
• Canada's Ultimate Challenge, a new competition reality format that turns the entire country into a giant obstacle course, premiered February 16^th on CBC.

Kids & Family

• Secured new deals for Dino Ranch in the US, Canada, and Latin America with a multitude of new products including jigsaw puzzles, games, hand puppets, party goods, wheeled goods and protective gear, youth electronics, sound books and apparel.
• Under a new new global partnership with Microids, a French video game developer and publisher based in Paris, the first Dino Ranch video game is expected to roll out worldwide from Q4 2023.
• Season two of Daniel Spellbound, produced by Boat Rocker and Industrial Brothers, premiered on Netflix on January 26, 2023.

Representation

• Untitled client Andrea Riseborough was nominated for an Academy Award for Actress in a Leading Role for her performance in To Leslie.
• Signed several new clients in the quarter, including:
• • Brooke Shields: Actress, model, producer of documentary Pretty Baby (produced with Boat Rocker).
  • Paula Abdul: Singer, dancer, actress that has sold more 50 million records and is currently an American Idol judge.
  • Erin Doherty: Actress, The Crown.
• Cocaine Bear (produced and directed by Untitled client Elizabeth Banks) had a strong showing at the box office, premiering with $28 million its opening weekend.
• Untitled client Mark Consuelos is replacing Ryan Seacrest as co-host of Live with Kelly and Ryan (to be rebranded as Live with Kelly and Mark) joining his wife Kelly Ripa.
• Wednesday starring Untitled clients Gwendoline Christie, Christina Ricci and Emma Myers became Netflix's second most watched series ever.

Selected Financial Information

Financial Review

Revenue for Q4 2022 was $111.3 million versus $262.5 million in Q4 2021, a decrease of $151.2 million. Revenue for the year ended December 31, 2022 was $304.3 million compared with $580.4 million for the same period of 2021, a decrease of $276.1 million or 48%.  Although more half hours were delivered in the fourth quarter of 2022 in the Television segment (104 vs. 80 in Q4 2021) they were largely in the Unscripted genre (91). There were also fewer half hours delivered in the Kids & Family segment in Q4 2022 (14) over the prior year period (46), although distribution revenue grew by 55% over 2021. In the year ended December 31, 2021, the Company delivered two big budget scripted productions. Despite having several similar sized scripted dramas currently underway, delivery of these shows only began in the fourth quarter of 2022. While production and service revenue decreased in the Television and Kids & Family segments, due in part to the mix in revenue types and timing of delivery, distribution revenue in both of these segments increased due partly to continued sales of the Company's flagship titles of Orphan Black and The Next Step, as well as the result of increased consumer product revenue. Revenue in the Representation segment also saw an increase in 2022.  

Adjusted EBITDA* for Q4 2022 was $17.2 million compared with $19.0 million for the same period of 2021, a decrease of $1.8 million. Adjusted EBITDA for year ended December 31, 2022 was $36.2 million versus $31.6 million in 2021, an increase of $4.6 million. Adjusted EBTIDA margin* was 15% and 12% for the fourth quarter and year ended December 31, 2022, respectively versus 7% and 5% in the prior year periods.

Net income for Q4 2022 was $5.7 million compared with net income of $3.5 million for the same period of 2021, an increase of $2.2 million. Net income for the year ended December 31, 2022 was $1.8 million, compared with a net loss of $12.1 million in the same period of 2021, a positive variance of $13.9 million.

The Company generated positive Free Cash Flow* in the year ended December 31, 2022 of $3.5 million compared with negative Free Cash Flow* in 2021 of $49.7 million.

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 years ended December 31, 2022 and 2021:

Total cash at December 31, 2022 was $85.8 million, of which $31.5 million represents Cash Available for Use*. The following table presents the breakdown of cash as at December 31, 2022 and December 31, 2021:

Outlook

Boat Rocker expects to deliver improving financial performance again in 2023 as it anticipates delivering the balance of all episodes of the seven premium scripted shows that it commenced producing in 2022 and owing to higher anticipated distribution and representation revenue. More broadly, management continues to expect sustained demand for new and returning series, with major domestic and international buyers looking for original premium scripted, unscripted and kids & family programming. However, management is mindful of the current and near-term backdrop, including increasingly uncertain macroeconomic conditions, ongoing challenges in the retail industry, cost cutting from major buyers, and the concern of potential U.S. guild strikes commencing as early as Spring 2023, which could impact the Company's outlook for the year.

Boat Rocker remains focused on Adjusted EBITDA* as the most important measure of the Company's performance. For 2023, management is targeting modest Adjusted EBITDA growth over 2022.

With prudent cost management of general and administrative expenses 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.

With its multi-genre content creation engine and long track record of successfully delivering 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 2023 is based on certain assumptions that are outlined in the Company's annual MD&A dated March 30, 2023, and subject to certain risks as outlined in the Company's Annual Information Form for the year ended December 31, 2022.

Fiscal 2022 Fourth Quarter Conference Call

Boat Rocker management will host a conference call to discuss its fiscal fourth quarter financial results at 8:30 a.m. EDT on March 30, 2023. To participate in the call, dial (416) 764-8650 or (888) 664-6383 (using the conference ID 43556833). To rapidly join the call without operator assistance please visit https://bit.ly/3I3g0xx. 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 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, 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, unrealized gain or loss on forward currency contracts, and other costs not indicative of the Company's core operating results. 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.

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 tables present the reconciliation from net income (loss) to Adjusted EBITDA for the three months and years ended December 31, 2022 and 2021:

SOURCE Boat Rocker Media Inc.