Total cash of $123.7 million with $77.6 million of Cash Available for Use1 and Debt-Free2
Boat Rocker logo (CNW Group/Boat Rocker Media Inc.)
TORONTO, Aug. 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 June 30, 2024 ("second quarter" or "Q2"). The Company's consolidated financial statements and accompanying notes and Management's Discussion and Analysis ("MD&A") for the three and six months ended June 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
On June 28, 2024, Boat Rocker announced the close of the sale of its 51% interest in Untitled Entertainment LLC ("Untitled") to TPG Group, LLC ("TPG"). The Company received gross cash proceeds of $52.1 million, net equity with a fair value of $11.3 million, and recognized an after-tax gain of $50.3 million from the sale.
Untitled comprised the majority of Boat Rocker's Representation reporting segment, and is reported as a discontinued operation in accordance with IFRS 5, Non-current assets held for sale and discontinued operations ("IFRS 5"). Accordingly, Untitled's financial performance has been classified as discontinued operations.
Q2 Adjusted EBITDA1 of $2.6 million versus $5.4 million in Q2 2023, a decrease of $2.9 million. Year-to-date Adjusted EBITDA1 increased by $2.1 million or 58.2% to $5.8 million compared to $3.7 million in the prior year comparative period.
Net income of $41.9 million in Q2, which includes the gain on the sale of Untitled, versus a net loss of $5.8 million in Q2 2023, an increase of $47.7 million. Year-to-date net income of $39.4 million versus a loss of $15.3 million in the comparative year period, an increase of $54.7 million or 357.6%
Q2 revenue of $47.5 million versus $120.9 million in Q2 2023, a decrease of 60.7%. Year-to-date revenue of $90.5 million decreased $100.6 million or 52.6% compared to $191.1 million in the prior year period.
Debt-free2 with total cash at June 30, 2024 of $123.7 million, including $77.6 million of Cash Available for Use1.
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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 the MD&A for the three and six months ended June 30, 2024.
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 Selected Financial Highlights include net income (loss) and Adjusted EBITDA* from both continuing and discontinued operations. Revenue excludes amounts from Untitled Entertainment, which are included in discontinued operations for all periods presented.
Corporate Updates
Agreement to Purchase Non-Controlling Interest in Insight Productions
Pursuant to the Insight Productions Limited ("Insight Productions") unanimous shareholders agreement (the "USA"), Boat Rocker has agreed to purchase the remaining 30% ownership interest from the minority shareholder of Insight Productions (the "Minority Shareholder") for the fair market value of the shares (the "Transaction"). The purchase price of the Minority Shareholder's shares will be based on fair market value as mutually agreed by the parties or as determined by an independent valuator. Boat Rocker anticipates that the closing of the Transaction will be completed within 30 to 180 days following the determination of fair market value. Boat Rocker purchased a 70% controlling ownership stake in Insight in May 2018.
Normal Course Issuer Bid
The Board of Directors has approved Boat Rocker filing with the Toronto Stock Exchange ("TSX") a notice of intention to renew its Normal Course Issuer Bid to purchase a maximum of approximately two million subordinate voting shares, equal to 10% of its public float ("NCIB", the current NCIB will expire on August 31, 2024). The notice will be subject to regulatory approval by the TSX and there can be no assurance that it will be accepted. The Company reviews its capital allocation strategy on an ongoing basis and given the trading price in the Company's stock and the volatility in the markets, management and the Board believe that the market price of the Company's subordinate voting shares does not reflect the intrinsic value of the Company and that the repurchase of stock would be in the best interests of the Company and its shareholders and would represent an attractive and appropriate use of available funds.
Statement on Q2 2024 from Boat Rocker Media CEO John Young
"Despite the media and entertainment industry continuing to face headwinds, our performance this quarter demonstrates solid deliveries from our Canadian unscripted business and a significant increase in cash reserves due largely to the recent sale of Untitled Entertainment. By using our capital strategically, including expanding our long-standing relationship with Insight Productions and deploying funds through our NCIB to repurchase our subordinate voting shares where possible, we remain committed to building shareholder value for the long-term. In parallel, as well as continuing to focus on targeted content investments, we will be looking to more proactively manage our cost base in the back half of the year."
Selected Content Highlights
Television
Scripted
Palm Royale, starring Kristen Wiig, Ricky Martin, with Laura Dern, Allison Janney, and extra special guest star Carol Burnett, received 11 Primetime Emmy nominations.
Orphan Black: Echoes, starring Krysten Ritter and Keeley Hawes premiered on AMC, AMC+, and BBC America on June 23rd.
Partnered with Don Cheadle's production company, This Radical Act, to develop a scripted television adaptation of Mindset, an acclaimed science fiction mystery from Vault Comics.
Unscripted
Season 10 of The Amazing Race Canada premiered on CTV, CTV.ca, and the CTV app on July 2nd.
War Game began a theatrical run on August 2nd through Submarine Deluxe and will be available on Video on Demand in fall through Decal Releasing.
Downey's Dream Cars, starring Robert Downey Jr., won a Daytime Emmy Award in the Lifestyle Program category.
Season 3 of Dark Side of the '90s premiered July 16th on VICE TV.
Taken Together: Who Killed Lyric and Elizabeth? premiered on Max on August 8th.
Kids and Family
No Time to Spy: A Loud House Movie premiered on Nickelodeon and Paramount+ on June 21st in the U.S. and on YTV on June 22nd in Canada.
2D animated series Exploding Kittens premiered July 12th on Netflix.
Selected Financial Information4
(Amounts in thousands CAD)
Three months ended June 30,
2024
2023
% change
Revenue
Television
36,444
102,232
(64) %
Kids and Family
11,044
18,662
(41) %
Total revenue
47,488
120,894
(61) %
Net income (loss)
41,888
(5,819)
820 %
Adjusted EBITDA*
2,570
5,438
(53) %
(Amounts in thousands CAD)
Six months ended June 30,
2024
2023
% change
Revenue
Television
66,877
156,770
(57) %
Kids and Family
23,669
34,333
(31) %
Total revenue
90,546
191,103
(53) %
Net income (loss)
39,402
(15,293)
358 %
Adjusted EBITDA*
5,800
3,667
58 %
*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 MD&A for the three and six months ended June 30, 2024.
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4 Selected Financial Information in the tables above include net income (loss) and Adjusted EBITDA* from both continuing and discontinued operations. Total revenue excludes amounts from Untitled Entertainment, which are included in discontinued operations for all periods presented.
Financial Review5
Revenue for the three months ended June 30, 2024 was $47.5 million versus $120.9 million in Q2 2023, a decrease of $73.4 million or 60.7%. Revenue for the six months ended June 30, 2024 was $90.5 million compared to $191.1 million in the comparative period. The decrease in both the three and six months ended June 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. 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 six months ended June 30, 2024.
Adjusted EBITDA* for the three months ended June 30, 2024 was $2.6 million versus $5.4 million in Q2 2023, a decrease of $2.9 million. Adjusted EBITDA* for the six months ended June 30, 2024 was $5.8 million compared to $3.7 million in the prior year comparative period, an increase of $2.1 million or 58.2%.
Net income for the three months ended June 30, 2024 was $41.9 million compared to a net loss of $5.8 million in Q2 2023, a positive variance of $47.7 million. In the six months ended June 30, 2024, net income was $39.4 million compared to a loss of $15.3 million in the comparative year period, an increase of $54.7 million. Net income in the three months ended June 30, 2024 included a net loss of $10.6 million from continuing operations, offset by net income of $52.4 million from discontinued operations. In the six months ended June 30, 2024, net income included a net loss of $15.5 million from continuing operations, offset by net income of $54.9 million from discontinued operations. The net income from discontinued operations in both the three and six-month periods ended June 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.
Total cash at June 30, 2024 was $123.7 million, of which $77.6 million represents Cash Available for Use*. The following table presents the breakdown of cash as at June 30, 2024 and December 31, 2023:
(Amounts in thousands CAD)
June 30, 2024
December 31, 2023
$ change
% change
Cash Available for Use*
$ 77,649
$ 37,048
$ 40,601
110 %
Cash Required for Use in Productions*
46,067
35,493
10,574
30 %
Total cash
$ 123,716
$ 72,541
$ 51,175
71 %
*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 MD&A for the three and six months ended June 30, 2024.
_________________________________
5 Financial information included in this section for all periods presented refers to net income (loss) and Adjusted EBITDA* from both continuing and discontinued operations. Revenue excludes amounts from Untitled Entertainment, which are included in discontinued operations for all periods presented.
Outlook
Boat Rocker reaffirms its expectation for Full Year 2024 Adjusted EBITDA* to be approximately $10 million. With enhanced Cash Available for Use* of $77.6 million at Q2 quarter end and no corporate debt**, Boat Rocker intends to seek out opportunities to rebuild Adjusted EBITDA* performance and increase shareholders' equity, by pursuing its IP content investment strategy as well as utilizing some of its cash on hand to purchase the outstanding minority stake of Insight Productions.
Boat Rocker also intends, where possible, to deploy capital to repurchase its subordinate voting shares pursuant to its NCIB which expires on August 31, 2024. The Company has received approval from its Board of Directors, subject to regulatory approval by the TSX6, to renew the NCIB to purchase a maximum of approximately two million subordinate voting shares, equal to 10% of its public float, given management and the Board's continued belief that the Company's share price is below its intrinsic value and that the repurchase of the stock should provide an attractive return on investment.
In light of the continuing industry wide slowdown in new content commissions, renewals, production, and paid development orders, Boat Rocker intends to pro-actively reduce costs to deliver savings in the current year and seek to set up the Company for long term success.
The Company's expected future performance is based on certain assumptions that are outlined in the Company's annual MD&A and MD&A dated May 15, 2024, and subject to certain risks as outlined in the Company's Annual Information Form for the year ended December 31, 2023.
*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 MD&A for the three and six months ended June 30, 2024.
**The Company currently has no corporate term debt, only interim production financing (including through two borrowing base facilities) in the ordinary course of operations.
__________________________________________
6 Such approval cannot be assured
Fiscal 2024 Second Quarter Conference Call
Boat Rocker management will host a conference call to discuss its fiscal second quarter financial results at 8:30 a.m. EDT on August 13, 2024.
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 715491#. The replay will be available until midnight (EDT) on August 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 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 June 30, 2024 and 2023:
(Amounts in thousands CAD)
Three Months Ended June 30,
2024
2023
$ change
% change
Net income (loss) from continuing operations
$ (10,558)
$ (5,725)
$ (4,833)
(84) %
Amortization of property and equipment, right-of-use assets and other intangible assets
1,889
2,353
(464)
(20) %
Finance costs, net
1,577
1,935
(358)
(19) %
Income tax expense
1,453
1,267
186
(15) %
EBITDA* from continuing operations
$ (5,639)
$ (170)
$ (5,469)
(3217) %
Adjustments:
Change in fair value of unsettled forward exchange contracts1
(72)
(145)
73
(50) %
Change in fair value of other financial liabilities2
2,385
(39)
2,424
(6215) %
Unrealized (gains) losses on foreign exchange3
(58)
1,100
(1,158)
105 %
Amortization of acquired program intangibles4
105
235
(130)
55 %
Transaction-related and other costs5
—
40
(40)
100 %
Share-based compensation6
243
1,163
(920)
79 %
Reorganization costs7
612
311
301
(97) %
Adjusted EBITDA* from continuing operations
$ (2,424)
$ 2,495
$ (4,919)
(197) %
Adjusted EBITDA* from discontinued operations8
4,993
2,943
$ 2,050
70 %
Adjusted EBITDA*
$ 2,569
$ 5,438
$ (2,869)
(53) %
* This item is a non-IFRS measure. See "Non-IFRS Measures" section for further information.
1 Change in fair value of the unrealized forward currency contracts.
2 Change in fair value of other financial liabilities represents the non-cash 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 and special projects which are not related to or are not reflective of regular business operations.
6 Non-cash expenses associated with share-based compensation granted to certain officers, directors and employees.
7 Restructuring charges primarily related to personnel costs.
8 Represents net income from discontinued operations adjusted for i) in the three months ended June 30, 2024: amortization of intangible assets of $1,267, change in fair value of other financial assets of $1,551, and gain on sale of Untitled of $(50,270), net of tax; ii) in the three months ended June 30, 2023: amortization of intangible assets of $1,418 and change in fair value of other financial assets of $1,619.
The following table presents the reconciliation from net income (loss) from continuing operations to Adjusted EBITDA* for the six months ended June 30, 2024 and 2023:
(Amounts in thousands CAD)
Six Months Ended June 30,
2024
2023
$ change
% change
Net income (loss) from continuing operations
(15,477)
(15,743)
266
2 %
Amortization of property and equipment, right-of-use assets and other intangible assets
3,915
4,687
(772)
16 %
Finance costs, net
3,165
3,496
(331)
9 %
Income taxes
1,406
1,106
300
(27) %
EBITDA* from continuing operations
(6,991)
(6,454)
(537)
(8) %
Adjustments:
Change in fair value of unsettled forward exchange contracts9
129
(418)
547
(131) %
Change in fair value of other financial liabilities10
2,356
(63)
2,419
(3840) %
Unrealized (gains) losses on foreign exchange11
(257)
1,378
(1,635)
119 %
Amortization of acquired program intangibles12
210
600
(390)
65 %
Transaction-related and other costs13
425
169
256
(151) %
Loss on sale of assets14
48
—
48
N/A
Share-based compensation15
673
1,437
(764)
53 %
Reorganization costs16
1,334
548
786
(143) %
Adjusted EBITDA* from continuing operations
$ (2,073)
$ (2,803)
$ 730
26 %
Adjusted EBITDA* from discontinued operations17
7,873
6,470
1,403
22 %
Adjusted EBITDA*
$ 5,800
$ 3,667
$ 2,133
58 %
* See "Non-IFRS Measures"
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9 Change in fair value of the unrealized forward currency contracts.
10 Change in fair value of other financial liabilities represents the non-cash accretion and changes in fair value on other liabilities.
11 Movements in balances denominated in non-functional currencies not yet realized through settlement.
12 Amortization of program intangibles acquired in business combinations included in production, distribution and service costs.
13 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; comparative period amounts include incremental non-recoupable production costs specifically incurred due to COVID-19.
14 Loss on sale of equity investment.
15 Non-cash expenses associated with share-based compensation granted to certain officers, directors and employees.
16 Restructuring charges primarily related to personnel costs.
17 Represents net income from discontinued operations adjusted for i) in the six months ended June 30, 2024: amortization of intangible assets of $2,572, change in fair value of other financial assets of $692, and gain on sale of Untitled of $(50,270), net of tax; ii) in the six months ended June 30, 2023: amortization of intangible assets of $2,845 and change in fair value of other financial assets of $3,180.
