Conference call and webcast today, November
29, at 11 a.m. PT/ 2 p.m. ET
Thunderbird Entertainment Group Inc. (TSXV: TBRD, OTCQX:
THBRF) (“Thunderbird” or the “Company”) today announced its Q1
2024 financial results, which ended September 30, 2023, and
provided a corporate update.
Financial Summary
- Revenue decreased from $43.7 million to $33.6 million for the
three months ended September 30, 2023, as compared to the
comparative quarter in the prior year, a variance of $10.1 million
(23%). The decrease in revenue is primarily due to the decrease in
the intellectual property (“IP”) deliveries over the comparative
quarter, partially offset by the increase in production services
revenue.
- Free Cash Flow1 decreased from $4.4 million to ($2.4) million
for the three months ended September 30, 2023, as compared to the
comparative quarter, a variance of $6.8 million (155%). The
decrease for the current quarter is primarily due to the repayment
of interim production financing offset by positive changes in
working capital.
- AEBITDA1 decreased from $4.1 million to $2.5 million for the
three months ended September 30, 2023, as compared to the
comparative quarter, a variance of $1.6 million (39%). The decrease
is attributable to the reduction in IP deliveries during the
quarter due to the seasonality nature of the industry.
“In the first quarter of 2024, Thunderbird encountered carryover
from the previous year's challenges. Our agility was put to the
test by external pressures that broadly impacted the industry and
our business, especially in light of the writers' strike that,
despite not directly affecting our animation division, exerted a
negative influence across the sector,” said Thunderbird’s CEO and
Chair, Jennifer Twiner McCarron. “In response, we've embraced a
proactive approach, enacting strategic cost-saving initiatives that
enhance our operational efficiency and optimize processes. This
strategic realignment ensures our operations are well-suited to the
current market dynamics.”
Twiner McCarron added, “Our strong bookings for the year have
set the stage for a robust second half of 2024. With clear insight
into our deliveries, we are poised for a solid double-digit AEBITDA
increase in 2024. Furthermore, our company maintains a strong
financial standing, free of debt, and bolstered by a substantial
cash reserve. This positions us well to continue providing
high-caliber content to all of our valued customers and delivering
value to shareholders.”
Financial Outlook
Thunderbird's market strategy is centered on key priorities,
including the growth of core brands, substantial investments in
proprietary IP, and the expansion of consistent service revenue
through both established and new series. In fiscal 2023, the
greenlighting of several animated IP projects set the stage for
anticipated contributions to net income in fiscal 2025. Management
is ambitious in their goals for fiscal 2024, targeting over 20%
growth in AEBITDA1. Additionally, the Company’s current
expectations are for 5% revenue growth in fiscal 24 over fiscal
2023. These projections are anchored in the completion of 43
additional hours of content delivery in the remaining months of
fiscal 2024. Looking ahead, the Company aims for sustained growth
with a compounded 20% increase in AEBITDA1 forecasted through to
2026.
While navigating current industry challenges, such as
cost-cutting measures from major buyers and a general slowdown in
greenlighting, Thunderbird remains proactive. The Company
streamlined operational processes, including reductions in travel
and entertainment expenses, as well as the elimination of certain
roles. These measures were strategically implemented to address
market uncertainties and create capacity for investment in growth
opportunities. Thunderbird remains committed to maintaining a
robust balance sheet, and to exercising prudent management
decisions to stay nimble in evolving conditions while steadfastly
pursuing sustainable growth.
1 AEBITDA and Free Cash Flow are Non-IFRS
Measures, see “Non-IFRS Measures” section below for their
respective definitions, and in the September 30, 2023 MD&A for
detailed calculations and reconciliations.
Cooperation Agreement, Strategic Review & Share Buyback
News
In fiscal 2023, Thunderbird was in a proxy contest with Voss
Capital, LLC (“Voss”). Thunderbird entered into a cooperation
agreement with Voss and certain of its affiliates on January 19,
2023, which was amended on January 27, 2023, and is detailed in the
Company’s January 19, 2023 news release. On November 10, 2023,
Thunderbird entered into an amended and restated cooperation
agreement (the “A&R Cooperation Agreement”) with Voss. The
A&R Cooperation Agreement amends and replaces the existing
cooperation agreement in its entirety.
The A&R Cooperation Agreement, which is detailed in the
Company’s November 10, 2023 news release, provides for (i) the
nomination of Taylor Henderson, a representative and employee of
Voss for election to the board of directors of Thunderbird (the
“Board”) at the Company’s upcoming 2023 annual general and special
meeting of shareholders scheduled for December 14, 2023 (the “2023
Annual Meeting”), which appointment is subject to the approval of
the TSX Venture Exchange (“TSXV”), and (ii) the appointment of one
additional independent director to be mutually agreed by the
Company and Voss following the 2023 Annual Meeting. In connection
with the A&R Cooperation Agreement, Linda Michaelson and Mark
Trachuk have agreed not to stand for re-election at the 2023 Annual
Meeting.
Thunderbird’s Strategic Advisory Committee (“Committee”)
continues to assess Thunderbird’s capital allocation strategy and
all opportunities to maximize shareholder value for ultimate
recommendation to the Board. This involves Thunderbird working
alongside ACF Investment Bank to evaluate any unsolicited inbound
expressions of interest in the Company and to handle the potential
sale in the event that the Company officially goes to market.
The current macro environment has resulted in a delta between
Thunderbird’s internal assessment of the Company’s valuation, based
on management’s line of sight on production services bookings,
upcoming owned IP, and expectations for margin expansion, versus
the valuation that prospective buyers might be willing to offer.
This allows the Company to operate from a position of strength when
proactive engagement ultimately commences to ensure maximum value
for shareholders.
In the interim, the Board has approved the implementation of a
normal course issuer bid (the “NCIB”), pursuant to which the
Company may repurchase its own common shares for cancellation
through the facilities of the TSXV in an amount not to exceed 10%
of its public float, as may be permitted by the TSXV and applicable
securities laws.
Thunderbird’s Q1 2024 Corporate Highlights
- In Q1 2024, the Company had 30 programs in various stages of
production and was working with 23 clients. Of the 30 programs in
production, 10 were Thunderbird IP, and 20 were service
productions. Two service productions are partner-managed, which are
funded by the partner, but developed and managed by the Company
with Thunderbird then entitled to receive a percentage of the net
profits from merchandise and licensing.
- Thunderbird Kids & Family, producing under Atomic Cartoons
(“Atomic”), was in production on 22 programs including: Princess
Power (Season 2) for Netflix, CoComelon Lane for Moonbug for
Netflix, Marvel's Spidey and His Amazing Friends (Seasons 2, 3 and
4) for Disney Junior, My Little Pony: Make Your Mark for
eOne/Hasbro, The Mindful Adventures of Unicorn Island for
Headspace, Zombies: The Re-Animated Series for Disney TVA, and LEGO
Jurassic Park: The Unofficial Retelling for NBCUniversal, among
others.
- Atomic also announced a new original one-hour special, Rocket
Saves the Day, will debut on PBS KIDS in December. Rocket Saves the
Day is Thunderbird IP and the Company manages and controls global
media rights to this special.
- In Q1, Atomic also started production on its first owned IP
adult-targeted animation series.
- Thunderbird Unscripted, producing under Great Pacific Media
(“GPM”), was in production on seven programs in Q1 2024, including:
Deadman’s Curse (Seasons 2 and 3) for History Channel, Styled
(Season 2) for Hulu, Wild Rose Vets (Season 3), formerly known as
Dr. Savannah: Wild Rose Vet, for APTN; Timber Titans (Season 1) for
Discovery, and Highway Thru Hell (Season 12) for Discovery.
- GPM was also in production on one scripted program, Reginald
the Vampire (Season 2). NBCUniversal International Networks
acquired season two of this series, introducing it to new European
markets. 6play streaming platform, owned by Groupe M6 in France,
also bought the series – and it recently debuted in Canada on Bell
Media's CTV Sci-Fi channel, which also acquired seasons 1 and
2.
- GPM’s companion podcast Deadman’s Curse: Slumach’s Gold
received three 2023 Signal Awards: History Series (Gold); Best
Writing - Unscripted (Silver), and Listener’s Choice for Best
Writing - Unscripted.
- Thunderbird Distribution sold the first season of Windy Isle
Entertainment’s adorable preschool series Mittens & Pants
across 34 international territories. Television platforms included
in this agreement are: France TV, Warner Bros. Discovery’s
Cartoonito, Cartoon Network and Boomerang channels (Australia, New
Zealand, Southeast Asia, Hong Kong and Taiwan), Hop! Channel
(Israel), and DR Denmark.
- Thunderbird Brands, together with tokidoki, announced the
appointment of renowned toymaker Jazwares as global master toy
licensee for Mermicorno: Starfall. The licensing program for the
Thunderbird IP series could include a multi-category toy line (
i.e. figures, dolls, playsets, vehicles, Squishmallows, costumes,
musical instruments, and novelty items) for all distribution
channels, including mass-market, e-commerce and direct-to-consumer
platforms.
- Thunderbird Distribution has also acquired global media and
consumer products rights to new kids mixed-media series BooSnoo!,
which was designed with a neurodiverse-friendly approach. BooSnoo!
debuted in October 2023 at mipjunior in Cannes, France, and ranked
as the sixth most-watched show among the more than 600 titles
contained in the event’s screening library.
- The Company’s ongoing sustainability commitments on-and
off-screen were underscored throughout Q1 with Molly of Denali
being recognized by Fast Company for being a catalyst for climate
change conversations with young children and their families, and
with Reginald the Vampire (Season 2) being awarded an Environmental
Media Association Gold Seal for its dedication to
sustainability.
- The Company currently has 20 scripted projects in active
development, two of which are in active networking
development.
Results of Operations
For the three months
ended
($000’s)
Sept 30, 2023
Sept 30, 2022
Revenue
$
33,600
$
43,746
Expenses
34,327
43,653
Net income (loss) for the
period
$
(727
)
$
93
AEBITDA1
$
2,488
$
4,065
AEBITDA Margin1
7.4
%
9.3
%
Free Cash Flow1
$
(2,433
)
$
4,370
1 AEBITDA, AEBITDA Margin, and Free Cash
Flow are Non-IFRS Measures, see “Non-IFRS Measures” section below
for their respective definitions, and in the September 30, 2023
MD&A for detailed calculations and reconciliations.
For more information, please see the financial statements and
the management’s discussion and analysis (MD&A) for Q1 fiscal
2024, which ended September 30, 2023, available on SEDAR+ and the
Company’s website.
Thunderbird’s Q1 2024 Conference Call & Webcast
Information
Date: November 29, 2023 Time: 11 a.m. PT/ 2 p.m. ET
Pre-Registration: To pre-register for this call, please go to the
following link and you will receive access details via email:
https://www.netroadshow.com/events/login?show=f9059398&confId=56793
If you are unable to pre-register, please see the information
for joining by webcast or telephone:
Webcast: https://events.q4inc.com/attendee/806610589
Canada Toll Free: +1 833 950 0062 United States
(Toll-Free): +1 833 470 1428 All other locations: +1 929
526 1599 Access Code: 216217
Press *1 to ask a question, *2 to withdraw your question, or *0
for operator assistance. Participants joining by phone are
requested to call the conference line 10 minutes early to avoid
wait times while connecting to the call. The conference call will
be webcast live and available for replay via the “Investors”
section of the Thunderbird website.
For information on Thunderbird and to subscribe to the Company’s
investor list for news updates, go to www.thunderbird.tv.
ABOUT THUNDERBIRD ENTERTAINMENT GROUP
Thunderbird Entertainment Group is a global award-winning,
full-service multiplatform production, distribution and rights
management company, headquartered in Vancouver, with additional
offices in Los Angeles and Ottawa. Thunderbird creates
award-winning scripted, unscripted, and animated programming for
the world’s leading digital platforms, as well as Canadian and
international broadcasters. The Company develops, produces, and
distributes animated, factual, and scripted content through its
various content arms, including Thunderbird Kids and Family (Atomic
Cartoons), Thunderbird Unscripted (Great Pacific Media) and
Thunderbird Scripted. Productions under the Thunderbird umbrella
include The Last Kids on Earth, Molly of Denali, Highway Thru Hell,
Kim’s Convenience, Reginald the Vampire and Boot Camp. Thunderbird
Distribution and Thunderbird Brands manage global media and
consumer products rights, respectively, for the Company and select
third parties. Thunderbird is on Facebook, Twitter, and Instagram
at @tbirdent. For more information, visit: www.thunderbird.tv.
Neither the TSX-V nor its Regulation Services Provider (as that
term is defined in the policies of the TSX-V) accepts
responsibility for the adequacy or accuracy of this release, which
has been prepared by management.
Cautionary Statement Regarding Forward-Looking
Information
Thunderbird’s public communications may include written, or oral
“forward-looking statements” and “forward-looking information” as
defined under applicable Canadian securities legislation. To the
extent any forward-looking information in this news release
constitutes “financial outlooks” or “future-oriented financial
information” within the meaning of applicable Canadian securities
laws, the reader is cautioned not to place undue reliance on such
information. All such statements may not be based on historical
facts that relate to the Company’s current expectations and views
of future events and are made pursuant to the “safe harbour”
provisions of applicable securities laws.
Forward-looking statements or information may be identified by
words such as “anticipate”, “continue”, “estimate”, “expect”,
“forecast”, “may”, “will”, “plan”, “project”, “should”, “believe”,
“intend”, or similar expressions concerning matters that are not
historical facts. Forward-looking statements in this document
include, but are not limited to, statements with respect to the
Company having a robust second half of 2024; projections and
forecasted growth in revenue and AEBITDA; continuing to provide
high-caliber content and delivering value to shareholders;
anticipated contributions to net income in fiscal 2025; maintaining
a robust balance sheet; changes to the composition of the Board;
maximizing shareholder value; unsolicited inbound expressions of
interest in the Company; the potential sale of the Company in the
event it goes to market; strategic initiatives materializing; and
details regarding the proposed NCIB being provided.
Financial outlook and future-oriented financial information, as
with forward-looking information generally, are, without
limitation, based on the assumptions and subject to various risks.
The targets included herein, and the related assumptions, involve
known and unknown risks and uncertainties that may cause actual
results to differ materially. The purpose of the information is to
provide readers with a more complete perspective on the Company’s
anticipated future operations and business activities. Readers are
cautioned that the information may not be appropriate for other
purposes. While management of Thunderbird believes there is a
reasonable basis for these targets, such targets may not be met.
The Company’s actual financial position and results of operations
may differ materially from management’s current expectations and,
as a result, the Company’s future revenue and AEBITDA may differ
materially from the financial outlooks and future-oriented
information provided in this news release. Accordingly, investors
are cautioned not to place undue reliance on the foregoing
information.
Forward looking statements are necessarily based on a number of
estimates and assumptions that, while considered reasonable, are
subject to known and unknown risks, uncertainties and other factors
which may cause actual results and future events to differ
materially from those expressed or implied by such forward-looking
statements. Such factors include, but are not limited to: general
business, economic and social uncertainties; market segment
conditions; litigation, legislative, environmental and other
judicial, regulatory, political and competitive developments;
product capability and acceptance; international risk and currency
exchange rates; and technology changes. An assessment of these
risks that could cause actual results to materially differ from
current expectations is contained in the “Risks and Uncertainty”
section of June 30, 2023 MD&A. The foregoing is not an
exhaustive list. Additional risks and uncertainties not presently
known to Thunderbird or that management believes to be less
significant may also adversely affect the Company. Although the
Company believes that the assumptions and factors used in preparing
the forward-looking statements or information contained in this
document are reasonable, undue reliance should not be placed on
these statements which represent our views as of the date hereof
and as such information should not be relied upon as representing
our views as of any date subsequent to the date of this document.
The Company undertakes no obligation to update publicly or revise
any forward-looking statements or information, whether as a result
of new information, future events or otherwise, unless so required
by applicable securities laws. Accordingly, readers are cautioned
not to place undue reliance on forward-looking statements or
information.
NON-IFRS MEASURES
In addition to the results reported in accordance with IFRS, the
Company uses various non-IFRS financial measures which are not
recognized under IFRS, and therefore do not have standardized
meanings prescribed by IFRS, as supplemental indicators of our
operating performance and financial position. The Company’s method
of calculating such financial measures may differ from the methods
used by other issuers and, accordingly, our definition of these
non-IFRS financial measures may not be comparable to similar
measures presented by other issuers. These non-IFRS financial
measures are provided to enhance the user’s understanding of our
historical and current financial performance and our prospects for
the future. Management believes that these measures provide useful
information in that they exclude amounts that are not indicative of
our core operating results and ongoing operations and provide a
more consistent basis for comparison between periods. The following
discussion explains the Company’s use of EBITDA, AEBITDA, Free Cash
Flow, and AEBITDA Margins.
“EBITDA” is calculated based on earnings before interest, income
taxes, depreciation and amortization. “AEBITDA” is calculated based
on EBITDA before share-based compensation, unrealized foreign
exchange gain/loss and items of an unusual or one-time nature that
do not reflect our ongoing operations. EBITDA and AEBITDA are
commonly reported and widely used by investors and lenders as an
indicator of a company’s operating performance and ability to incur
and service debt, and as a valuation metric. The most directly
comparable measure under IFRS is net income.
“Free Cash Flow” is calculated based on cash flows from
operations, purchase of property and equipment and net interim
production financing. Free Cash Flow represents the cash a company
generates after accounting for cash outflows to support operations
and maintain its capital assets. The most directly comparable
measure under IFRS is cash flows from operations.
“AEBITDA Margins” is calculated as a ratio of AEBITDA over total
revenues. Margin is a non-IFRS ratio when applied to non-IFRS
financial measures.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231129830036/en/
Investor Relations: Glen Akselrod, Bristol Capital Phone:
+ 1 905 326 1888 ext 1 Email: glen@bristolir.com
Media Relations: Lana Castleman, Director, Marketing
& Communications Phone: 416-219-3769 Email:
lcastleman@thunderbird.tv
Corporate Communications Julia Smith, Finch Media Email:
Julia@finchmedia.net
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