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Boat Rocker Media Reports Q4 and Fiscal Year 2020 Financial Results

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TORONTO, March 31, 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 fourth quarter and year ended December 31, 2020. The Company's audited financial statements and accompanying notes and Management's Discussion and Analysis ("MD&A") for the three-month period and year ended December 31, 2020 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

  • Revenue of $55.6 million in Q4 2020 vs $59.4 million in Q4 2019. Full year 2020 revenue of $226.8 million vs $244.2 million in 2019.

  • Net loss of $0.4 million in Q4 2020 vs net loss of $6.2 million in Q4 2019. Full year 2020 net loss of $44.0 million vs net loss of $19.5 million in 2019.

  • Adjusted EBITDA of $8.3 million in Q4 2020 vs $7.1 million in Q4 2019. Full year 2020 adjusted EBTIDA was $14.3 million vs $32.5 million in 2019.

  • On March 24, 2021, the Company successfully completed its Initial Public Offering ("IPO") raising gross proceeds of $170.1 million. A significant portion of the net proceeds were used to repay all of the Company's corporate credit facility, resulting in a positive net cash position in excess of $100.0 million.

"Our financial performance for the fourth quarter and fiscal year largely reflects the impact of the COVID-19 pandemic that delayed live-action production and drove increased costs in 2020 but was partially offset by improved performance in our Kids and Family segment, which benefitted from a smoother transition to work-from-home protocols," said John Young, Chief Executive Officer of Boat Rocker. "The expected delay in delivery dates resulted in a substantial portion of revenues that would have been recognized in 2020 being expected to shift into 2021. With continued robust global demand for content, our strengthened balance sheet in the wake of our recently completed IPO and a strong slate of shows 'greenlit' or already in production under enhanced COVID-19 protocols, including approximately $475.0 million in revenue already confirmed and expected to be delivered in the year ahead, Boat Rocker is well positioned to act on an array of both organic and inorganic initiatives to support growth over both the near and longer term."

COVID-19 Pandemic Update

The COVID-19 pandemic is unprecedented and negatively impacted Boat Rocker's financial results for the year ended December 31, 2020. The content production industry 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. Expected delivery dates were delayed on several of the Company's series resulting in a shift of revenue from 2020 into 2021. The Kids and Family segment was the least affected of Boat Rocker's three segments. More than 200 new employees were hired during the period from March to December 2020 to support the growth in the Company's animation studio. Revenue earned in the Representation segment was negatively affected as the Company's clients, mainly on-screen talent, had less opportunity to work.

As jurisdictions began to lift restrictions on large gatherings in the third quarter of 2020, Boat Rocker worked diligently to pioneer and implement leading COVID-19 protocols, which allowed many of the Company's series to resume production.

Selected Financial Information

(in thousands of Canadian dollars) (audited)

Three months ended December 31

Year ended December 31

Revenue

2020

2019

2020

2019

Television

29,251

30,831

134,298

150,193

Kids and Family

16,693

17,077

63,851

58,055

Representation

9,670

11,527

28,654

35,917

Total revenue

55,614

59,435

226,803

244,165

Net loss attributable to shareholders

(2,222)

(7,106)

(48,744)

(23,707)

Adjusted EBITDA1

8,284

7,098

14,303

32,469

1 See "Non-IFRS Measures"





Financial Review

Q4 2020 revenue was $55.6 million compared with $59.4 million in the same prior year quarter. Full year 2020 revenue decreased by $17.4 million to $226.8 million compared with $244.2 million in the prior year. The decrease for both periods was primarily attributed to declines in the Television and Representation segments, driven by the impact of the COVID-19 pandemic. In the full year 2020, the decrease was partially offset by an increase in the Kids and Family segment which delivered mainly animated content in 2020.

Net loss attributable to shareholders of the Company for the three months ended December 31, 2020 was $2.2 million, compared to $7.1 million in the same period of 2019, a decrease of $4.9 million. The decrease was primarily driven by Canadian Emergency Wage Subsidy (CEWS) funds recognized in the three months ended December 31, 2020. Net loss attributable to shareholders of the Company for the year ended December 31, 2020 was $48.7 million, compared to $23.7 million in 2019, an increase of $25.0 million. The increased loss was mainly driven by the impact of the COVID-19 pandemic on revenue and a goodwill impairment charge of $13.0 million, partially offset by CEWS funds recognized.

Adjusted EBITDA for the three months ended December 31, 2020 was $8.3 million, compared to $7.1 million in the same period of 2019, an increase of $1.2 million. The increase is primarily attributed to funds received from the CEWS and decreases to general and administrative expenses attributed to COVID-19. Adjusted EBITDA for the year ended December 31, 2020 was $14.3 million, compared to $32.5 million in 2019, a decrease of $18.2 million. Adjusted EBITDA for 2020 included the full year impact of operating costs incurred at Platform One Media (now renamed Boat Rocker Studios, Scripted), which was acquired on August 31, 2019. Until delivery of the two scripted series in 2021, Boat Rocker Studios, Scripted will continue to incur operating expenses but not earn any revenue from these series. Adjusted EBITDA is a non-IFRS measure. See "Non-IFRS Measures" below.

The following table presents the Company's net debt as at December 31, 2020 and 2019.

(in thousands of Canadian dollars) (audited)



Dec 31, 2020

Dec 31, 2019

Loans and borrowings, excluding interim financing



93.595

87,869

Lease liabilities



31,543

29,626

Plus: loan fees, net of amortization



314

1,305

Less: loan modification



(2,501)

(4,317)

Less: cash available for use



(32,162)

(29,666)

Net Debt



90,789

84,817






Cash Available for Use



32,162

29,666

Cash Required for Use in Productions



39,592

29,602

Total cash



71,754

59,268

Net Debt at December 31, 2020 was $90.8 million, up 7.0% from $84.8 million at the end of the prior year. In July 2020, the Company amended its existing corporate credit facility with the Bank of Montreal ("BMO") and drew down an additional $13.4 million. On March 24, 2021 Boat Rocker completed its IPO, raising gross proceeds of $170.1 million. The Company used $90.5 million of the net proceeds from the IPO to repay all of its term debt under the BMO corporate credit facility. Net Debt, Cash Available for Use, and Cash Required for Use in Productions are non-IFRS measures. See "Non-IFRS Measures" below.

Outlook

As further set out in the Company's final prospectus dated March 19, 2021 and filed on SEDAR in respect of its IPO (the "Prospectus"), the Company expects 2021 to be a year of significant investment in content, funded in part by a portion of the IPO net proceeds, and is forecasting revenues in 2021 of approximately $700.0 million. This forecast is based on a number of assumptions, as outlined in the Prospectus. Management believes that, in light of the projected significant growth in the demand for content by buyers worldwide, the Company is well-positioned to continue to grow by capitalizing on its competitive strengths and implementing its growth strategies.

Fiscal 2020 Fourth Quarter Conference Call

Boat Rocker will host a conference call to discuss its fiscal 2020 fourth quarter and fiscal year end financial results at 8:30 a.m. EDT on March 31, 2021. The call will be hosted by John Young, CEO, and Michelle Abbott, CFO. To participate in the call, dial (416) 764-8650 or (888) 664-6383 (using the conference ID 94402000). 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: EBTIDA, Adjusted EBITDA, Cash Available for Use, Cash Required for Use in Productions, Free Cash Flow, and Net Debt.

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

Adjusted EBITDA is defined as EBITDA adjusted for amortization of non-cash program intangibles, change in fair value of financial liabilities, change in fair value of contingent consideration, share-based compensation, transaction and reorganization costs, goodwill impairment, loss on debt modifications 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 Debt is defined as the carrying value of loans and borrowings (excluding interim production financing and convertible debentures), adjusted for the loss on loan modification and loan fees, plus lease liabilities, less Cash Available for Use. Net Debt represents obligations the Company has to fund from its earnings and is viewed by management as a consistent measure of the Company's liquidity position. In contrast, interim production financing is drawn to bridge the timing between cash inflows from the license fees and production service fees of the buyer, the film and television tax credits earned on valid production expenses, and cash outflows of the production expenses. As such, interim production financing is excluded from management's calculation of Net Debt. The Company does not include other liabilities in the Net Debt calculation such as: other financial liabilities that are based on estimates and probabilities, rather than specific amounts owing, and liabilities that may not be payable in cash. For further details, refer to the "Liquidity and Capital Resources" section of the Company's MD&A.

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 and is subject to a number of risks and uncertainties, many of which are beyond the Company's control. Such assumptions, risks and uncertainties include, but are not limited to, the factors discussed under "Risk Factors" and the assumptions discussed under "Outlook" in the final prospectus. Actual results could differ materially from those projected herein. Boat Rocker does not undertake any obligation to update such 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

(in thousands of Canadian dollars) (audited)

Three months ended December 31

Year ended December 31


2020

2019

2020

2019






Net loss

(446)

(6,204)

(43,990)

(19,483)

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

4,749

4,996

18,566

18,989

Finance costs, net

2,774

2,116

10,634

8,415

Income taxes

1,264

858

1,884

1,067

EBITDA1

8,341

1,766

(12,906)

8,988

Adjustments:





Amortization of program intangibles2

718

839

2,926

7,196

Change in fair value of contingent consideration3

(3,180)

(18)

(2,300)

368

Gain on sale of assets4

(1,356)

(3,079)

(1,356)

(3,079)

Transaction costs5

(460)

840

254

4,292

Change in fair value of embedded derivative and other financial liabilities6

1,792

2,007

8,743

8,710

Share-based compensation7

2,429

242

5,449

721

Goodwill impairment8

-

-

12,959

-

Loss on debt modification9

-

4,317

342

4,317

Reorganization costs10

-

182

192

956

Adjusted EBTIDA1

8,284

7,098

14,303

32,469






1) See "Non IFRS Financial Measures".

2) Amortization of program intangibles acquired from business combinations included in production service and distribution expenses.

3) Change in value of contingent consideration associated with acquisition of Platform One.

4) Gain on sale of an equity accounted investee in fourth quarter of 2020 and the sale of land and a building in the fourth quarter of 2019.

5) Transaction costs represent professional fees incurred in support of acquisitions in 2019.

6) Change in fair value of other financial liabilities represent the non-cash expenses on certain put options.

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

8) Impairment of Goodwill associated with the Unscripted cash generating unit in the third quarter of 2020.

9) Non-cash expenses incurred because of amendments to the Company's corporate credit facility during 2020 and in the fourth quarter of 2019.

10) Restructuring charges primarily related to personnel related costs.

SOURCE Boat Rocker Media Inc.

Cision
Cision

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