Thunderbird Entertainment Group Reports Fiscal 2023 Q3 Results

Revenue for the nine months ended 2023 increased $24.1 million (23%) to $129 million compared to the nine months ended 2022

27 shows in production; 11 are IP or a global IP buyout

Company anticipates strong fiscal 2024 post proxy contest

Conference call and webcast today, Thursday, May 25 at 11 a.m. PT/ 2 p.m. ET

Thunderbird Entertainment Group Inc. (TSXV: TBRD, OTCQX: THBRF) (Thunderbird or the Company) today announced its financial results for fiscal Q3 2023, which ended March 31, 2023, and provided a corporate update.

Financial Summary

• Revenue increased by $0.4 million (1%) to $37.3 million and $24.1 million (23%) to $129.0 million for the three and nine months ended March 31, 2023, as compared to $36.9 million and $104.9 million for the comparative periods in the prior year. Both the number of episodes of IP projects delivered and recognized and the number and magnitude of production services projects remained consistent quarter-over-quarter (26 total half hours of IP deliveries in the current quarter compared to 28 total half hours in the prior year’s third quarter).
• Adjusted EBITDA decreased by $2.7 million (42%) to $3.7 million and $5.6 million (32%) to $12.1 million for the three and nine months ended March 31, 2023, compared to $6.4 million and $17.7 million for the comparative periods in the prior year. The decrease is attributable to an increase in general and administrative expenses, and the delay of several productions as a result of industry-wide economic factors and the proxy contest.

“I am very proud of the talented teams working hard to create many wins in spite of the headwinds we faced as an organization in fiscal 2023,” said Jennifer Twiner McCarron, Thunderbird CEO and Chair. “With the proxy contest and its impact on us complete and with more visibility into next year, including increased production bookings, we are on track for Thunderbird’s fiscal 2024 to be one of the Company’s strongest years on record. Our healthy balance sheet with zero debt has also served the Company well in this rising interest rate environment and we are well equipped to fuel growth and maximize shareholder value."

Strategic Review Advisory Committee Update

On May 15, 2023, Thunderbird announced that it has engaged ACF Investment Bank (ACF) as part of the Company’s strategic review process of assessing all opportunities to maximize shareholder value. ACF is a leading, global mergers and acquisitions advisor in the Media and Entertainment industry and has completed more than 100 deals in this sector with a total deal value of more than $6 billion. Working with ACF maintains alignment with the Cooperation Agreement between Thunderbird and Voss Capital, LLC, which is detailed in the Company’s January 19, 2023 news release, while providing the Company with an important next step in support of its growth trajectory.

Outlook

Industry-wide economic factors and the proxy contest delayed the start of several productions, moving them from fiscal 2023 to fiscals 2024 and 2025. While the Company did not lose any planned work, the Company is no longer anticipating fiscal 2023 to be its strongest, and it will have a lower Adjusted EBITDA compared to fiscal 2022. With the shift in the timing of the Company’s production slate, and visibility well into fiscals 2024 and 2025, Thunderbird anticipates continued growth in Adjusted EBITDA, and revenues due to its robust pipeline. This includes the addition of several fully owned IP productions with adjacent merchandise opportunities coming to fruition. With increased production bookings in 2024, the Company is projecting strong financial results in fiscal 2024.

Thunderbird Entertainment’s Q3 2023 Corporate Highlights

• In Q3, the Company had 27 programs in various stages of production, up from 26 in the comparative period in the previous year. Of the 27 programs, 10 were Thunderbird IP and 17 were service productions. One of the service productions is a global IP buyout, where the production was originally optioned by the Company, then acquired by the partner with Thunderbird receiving an increased percentage of net profits from merchandising and licensing as a result.
• Thunderbird kids & family content, which is produced under Atomic Cartoons (Atomic), was comprised of 19 programs in production for 17 different clients. Productions included Princess Power for Netflix, Marvel's Spidey and His Amazing Friends (Season 2) for Disney Junior, CoComelon Lane for Moonbug for Netflix, My Little Pony: Make Your Mark for Eone/Hasbro, Young Love for Sony and HBO Max, and Teenage Euthanasia (Season 2) for Adult Swim.
• Working for four different clients, Thunderbird unscripted content, which is produced under Great Pacific Media (GPM), was comprised of six unscripted series, including: Highway Thru Hell (Season 12), Heavy Rescue: 401 (Season 7), Deadman’s Curse (Season 2), Styled (Season 2), Mud Mountain Haulers (Season 3), and Dr. Savannah: Wild Rose Vet (Season 2).
• During the quarter, GPM was in production on Reginald the Vampire (Season 2), starring Jacob Batalon, and Boot Camp, a scripted production based on the popular Wattpad story by Gina Musa.
• Subsequent to the quarter, Warner Bros. Discovery licensed the new Atomic original series Mermicorno: Starfall, produced in partnership with tokidoki, for Max in the U.S. The fully owned IP is also being distributed globally by Thunderbird Distribution and a mass-market consumer products program will be co-managed by Thunderbird and tokidoki.
• Following Q3, Thunderbird also appointed Hillary Zwick Turner to the new role of SVP, Scripted Content, and announced that the Company had optioned New York Times bestselling novel MAD HONEY, co-written by Jodi Picoult and Jennifer Finney Boylan for a premium series adaptation. Thunderbird’s scripted team has 13 projects at various stages in the development pipeline.
• Several Thunderbird productions debuted during the quarter, including: Molly of Denali, Season 3 (PBS Kids), Princess Power (Netflix), and Oddballs, Season 2 (Netflix), among others. Thunderbird acquisition Mittens and Pants also made its UK debut in February on Sky TV’s new Sky Kids channel.
• Company awards and accolades received during and subsequent to Q3 include, but are not limited to:
  • Thunderbird ranking in the top 10 of all independent production companies in Canada on Playback's 2023 Indie List,
  • Thunderbird COO Sarah Nathanson being recognized with a 2023 Best Executive Award from Report on Business Magazine in the operations category,
  • Thunderbird being included on Report on Business Magazine’s 2023 Women Lead Here list,
  • Thunderbird productions receiving 18 nominations from the 2023 Leo Awards,
  • Wayne-Michael Lee being recognized as a 2023 Rising Star of Animation by Animation Magazine,
  • Atomic ranking #3 on BIV’s list of the biggest digital arts companies in B.C., and
  • GPM being named to Realscreen’s Global 200 list, for the 11^th consecutive year.
• During the quarter, Thunderbird also welcomed Lisa Coulman to its Board of Directors and as Chair of the Audit Committee.

For more information please see the financial statements and the management’s discussion and analysis (MD&A) for the three and nine months ended March 31, 2023 available on SEDAR and the Company’s website.

Thunderbird will hold a conference call and webcast to share the Company’s Q3 2023 results today, Thursday, May 25, 2023, at 11 a.m. PT/ 2 p.m. ET.

Conference Call & Webcast Information

Date: May 25, 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=caec08d7&confId=49955

If you are unable to pre-register, please see the information for joining by webcast or telephone:

Webcast: https://events.q4inc.com/attendee/508004502

Canada Toll Free: +1 833 950 0062

United States (Toll-Free): +1 833 470 1428

All other locations: +1 929 526 1599

Access Code: 413021

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, Toronto, 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. Thunderbird’s vision is to produce high quality, socially responsible content that makes the world a better place. 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), formerly known as Thunderbird Factual, and Thunderbird Scripted. Productions under the Thunderbird umbrella include The Last Kids on Earth, Molly of Denali, Highway Thru Hell and Kim’s Convenience, among others. The Company also has a team dedicated to global distribution and consumer products. 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 of 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. 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. These statements represent management’s current beliefs and are based on information currently available to management and inherently involve numerous risks and uncertainties, both known and unknown. Many factors could cause actual results to differ materially including general economic and market segment conditions, competitor activity, product capability and acceptance, international risk and currency exchange rates and technology changes. An assessment of the risks that could cause actual results to materially differ from current expectations is contained in the “Risks and Uncertainty” section of the June 30, 2022 and March 31, 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.

The forward-looking statements or information contained in this document 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.

Forward-looking statements in this document include, but are not limited to, statements with respect to the Company’s belief that fiscal 2024 will be one of the Company’s strongest years on record; Thunderbird being well equipped to fuel growth and maximize shareholder value; the Company’s expectation that growth in Adjusted EBITDA and revenues due to its robust pipeline will continue; adjacent merchandise opportunities will come to fruition; projections related to strong financial results in fiscal 2024; timing for hosting the conference call and webcast; and Thunderbird’s vision to produce high quality, socially responsible content making the world a better place. 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; 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 March 31, 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 are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this document, and no assurance can be given that such events will occur in the disclosed time frames or at all. Except where required by law, the Company disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

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, as supplemental indicators of our operating performance and financial position. 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, Adjusted EBITDA, Free Cash Flow, Cash Available for Use, and Cash Required for Use in Productions.

“EBITDA” is calculated based on earnings before interest, income taxes, depreciation and amortization. “Adjusted EBITDA” 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 Adjusted EBITDA 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. EBITDA and Adjusted EBITDA are not earnings measures recognized by IFRS and therefore do not have a standardized meaning prescribed by IFRS. Therefore, EBITDA and Adjusted EBITDA may not be comparable to similar measures presented by other issuers.

“Free Cash Flow” (FCF) is calculated based on cash flows from operations, purchase of property and equipment and net interim production financing. FCF represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.

“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 from the development stage through to completion 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 the Company 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.

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