Thunderbird Entertainment Group Reports Fiscal 2023 Q1 Results

Rhea-AI Summary

Thunderbird Entertainment Group Inc. (OTCQX: THBRF) reported a revenue increase of 25% to $43.7 million for Q1 2023 compared to last year. Free cash flow grew 29% to $4.4 million. Adjusted EBITDA decreased 35% to $4.1 million, attributed to project delivery mix and scheduling. The company has 28 programs in production, a slight increase from 27 last year. Notable projects include productions for Netflix and PBS. A shareholder has also announced intentions to nominate new directors, leading to a postponement of the Annual General Meeting.

Positive

• Q1 2023 revenue increased by $8.6 million (25%) to $43.7 million.
• Free cash flow rose by $1.0 million (29%) to $4.4 million.
• 28 programs in production, signaling growth in content creation.

Negative

• Adjusted EBITDA decreased by $2.2 million (35%) to $4.1 million.
• Gross margin compression due to project delivery mix affecting profitability.
• Shareholder nomination for new directors may lead to governance instability.

Q1 2023 Revenue increased $8.6 million (25%) to $43.7 million compared to the prior year’s Q1

Free cash flow of $4.4 million in the quarter

28 shows in production; 12 are IP or partner-managed

Conference call and webcast today, Thursday, November 17 at 11 a.m. PT/ 2 p.m. ET

VANCOUVER, British Columbia--(BUSINESS WIRE)-- Thunderbird Entertainment Group Inc. (TSXV: TBRD, OTCQX: THBRF) (Thunderbird or the Company) today announced its financial results for fiscal Q1 2023, which ended September 30, 2022, and provided a corporate update.

Financial Summary

• Revenue increased by $8.6 million (25%) to $43.7 million for the three months ended September 30, 2022, as compared to $35.1 million for the comparative quarter in the prior year. Both the number of episodes of owned IP projects delivered and recognized and the number and magnitude of production services projects increased quarter-over-quarter (45 half hours of IP deliveries in the current quarter compared to 32 half hours in the prior year’s first quarter).
• Free cash flow increased by $1.0 million (29%) to $4.4 million compared to $3.4 million for the comparative period in the prior year. The increase is primarily due to positive changes in working capital partially offset by net production loan repayments.
• Adjusted EBITDA decreased by $2.2 million (35%) to $4.1 million compared to $6.3 million for the comparative quarter in the prior year. The decrease is attributable to the mix of IP projects delivered and recognized in the quarter and the timing of production services scheduling and jurisdictions where the services were performed. In addition, the Company invested in several key hires in Kids & Family and scripted development, consumer products and distribution and business affairs, and software and technology upgrades to improve production processes and create production efficiencies providing the Company the ability to continue to deliver industry-leading, quality programming that will further facilitate long term growth. There was some margin compression in the current quarter, compared to last year’s Q1 due to the mix of IP project deliveries and production schedules on several significant production services projects – the gross margin in the preproduction and early production stages is impacted by where the services are performed (U.S. versus Canada).

“Our award-winning teams are continuing to deliver outstanding content,” said Jennifer Twiner McCarron, Thunderbird’s Chief Executive Officer. “We are making excellent progress lifting and developing long-term value through the leveraging of our owned and controlled intellectual property. The last half of FY23 will showcase our strongest quarters and we can’t wait to share more great news with you in the months to come.”

Thunderbird Entertainment’s Q1 2023 Corporate Highlights

• At September 30, 2022, the Company had 28 programs in various stages of production, compared to 27 at the same time last year.
• Of the 28 programs in production, 10 were Thunderbird IP, and 18 were service productions. Two of the service productions were 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. One such production, Princess Power, was originally optioned by the Company then acquired by Netflix with the Company participating in an increased percentage of net profits from merchandising and licensing.
• Thunderbird Kids & Family, producing under the brand Atomic Cartoons (“Atomic”), was in production on 18 programs, including Oddballs for Netflix, Molly of Denali (Season 2) for GBH/PBS, CoComelon Lane for Moonbug for Netflix, Young Love for Sony and HBO Max, Teenage Euthanasia (Season 2) for Adult Swim, and Little Demon for FX Network, among others. Princess Power, the partner-managed production for Netflix that Atomic developed with Allison Oppenheim, Savannah Guthrie and Drew Barrymore’s Flower Films, was announced.
• Thunderbird Unscripted, producing under the brand Great Pacific Media (“GPM”), was in production on six unscripted series and one documentary, including: Mud Mountain Haulers (Season 2), Highway Thru Hell (Season 11) Heavy Rescue: 401 (Season 7), Deadman’s Curse (Season 1), Styled (Season 2), Dr. Savannah: Wild Rose Vet (Season 2), and After the Storm, a documentary based on the 2021 flooding in B.C. which will premiere on December 15, 2022.
• In Q1, GPM was also in production on two scripted programs. It acquired the film and TV rights to the Wattpad property Boot Camp, which has had 26 million reads to date, and began producing a movie of the week for Thunderbird Scripted. GPM was also working on Reginald the Vampire, which debuted in October on SyFy (US) and Amazon Prime Video (Canada).
• In Q1, Thunderbird acquired global media and consumer product rights to the new preschool series, Mittens & Pants, which will debut on CBC and CBC Gem in Canada, and in the UK on Sky Kids in early 2023.
• In Q1, Thunderbird was also in production on the scripted series Strays (Season 2).
• Subsequent to Q1, PBS KIDS series Molly of Denali, produced by GBH with Atomic Cartoons, received two Children's & Family Emmy nominations. The series is nominated for Outstanding Animated Preschool Series and Outstanding Writing for a Preschool Animated Program. The third season premiered on PBS on November 7th.
• Subsequent to Q1, The Last Kids on Earth, from Atomic Cartoons and based on Max Brallier’s best selling novels, has been licensed for a digital battle-card game by SMART Technologies. The Last Kids on Earth: Hit the Deck! will be made available for free to US schools with SMART boards and will also be available for purchase by consumers in early 2023.
• Marsha Newbery was appointed to the new role of Senior Director, Sustainability & Business Affairs at Thunderbird and is overseeing the Company's ESG efforts. She joins from the Canadian Media Producers Association, where she served as Director, BC Industrial Relations.
• Subsequent to the quarter, Thunderbird received notice from a shareholder, Voss Capital LLC of Texas, stating its intention to nominate a slate of new directors for the Company. As a result, Thunderbird postponed the Annual General Meeting (“AGM”) previously scheduled for December 6, 2022. Thunderbird will determine next steps, including a new date for the AGM, in due course.

Results of Operations
	For the three months ended
			Sept 30, 2022		Sept 30, 2021
($000’s, except per share data)			$		$
Revenue			43,746		35,072
Expenses			43,653		33,186
Net income for the period			93		1,886
Foreign currency translation adjustment			(20	)	6
Comprehensive net income for the period			73		1,892
Basic income per share			0.002		0.039
Diluted income per share			0.002		0.037

EBITDA, Adjusted EBITDA and Free Cash Flow
	For the three months ended
			Sept 30, 2022		Sept 30, 2021
($000’s)			$		$
Net income for the period			93		1,886
Income tax expense (recovery)			(139	)	765
Deferred income tax expense			12		113
Finance costs
Interest			392		413
Dividends on redeemable preferred shares			7		11
Amortization
Property and equipment			560		1,011
Right-of-use assets			2,886		1,478
Intangible assets			68		68
			3,786		3,859
EBITDA			3,879		5,745
Share-based compensation			162		275
Unrealized foreign exchange loss			25		3
Gain on disposal of property and equipment			(1	)	-
Severance costs			-		208
Other			-		70
			186		556
Adjusted EBITDA			4,065		6,301
Cash inflows (outflows) from operations			7,179		(936	)
Purchase of property and equipment			(1,275	)	(1,043	)
Net (repayment) advances of interim production financing			(1,534	)	5,416
Free Cash Flow			4,370		3,437

For more information please see the Financial Statements and the Management’s Discussion and Analysis for the three months ended September 30, 2022 available on SEDAR and the Company’s website.

Conference Call Webcast on Thursday, November 17, 2022, at 11 a.m. PT/ 2 p.m. ET

Thunderbird will hold a conference call and webcast to share the Company’s Q1 2023 results on Thursday, November 17, 2022, at 11 a.m. PT/ 2 p.m. ET. The conference call will be webcast live and available for replay via the “Investors” section of the Thunderbird website.

Conference Call & Webcast Information
Date: November 17, 2022
Time: 11 a.m. PT/ 2 p.m. ET
Canada dial-in number (Toll Free): 1 (833) 950-0062
United States: 1 (844) 200-6205
All other locations: +1 (929) 526-1599
Access Code: 573895
Press *1 to ask a question, *2 to withdraw your question, or *0 for operator assistance.
Webcast: https://events.q4inc.com/attendee/655076286

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

This news release includes certain “forward-looking statements” under applicable Canadian securities legislation that are not historical facts. Forward-looking statements involve risks, uncertainties, and other factors that could cause actual results, performance, prospects, and opportunities to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements in this news release include, but are not limited to, statements with respect to the last half of FY23 showcasing Thunderbird’s strongest quarters and the ability of the Company to share more great news in the months to come; the Company’s ability to continue to deliver industry-leading, quality programming that will further facilitate long term growth; timing of productions being made available for free to US schools with SMART boards and also being available for purchase by consumers in early 2023; timing related to the premiering of productions in the future; timing for holding the Company’s AGM; timing for holding a conference call and webcast to share the Company’s Q1 2023 results; and the Company’s objectives, goals or future plans and the business and operations of the Company. 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; those additional risks set out in the Company’s Management’s Discussion and Analysis for the three months ended September 30, 2022 and other public documents filed on SEDAR at www.sedar.com. 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 news release, 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, Cash Required for Use in Productions and Gross Margin.

“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 Intellectual Property (“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.

“Gross Margin” is calculated based on revenue less direct operating costs. Gross Margin is not an earnings measure recognized by IFRS and therefore does not have a standardized meaning prescribed by IFRS; accordingly, Gross Margin may not be comparable to similar measures presented by other issuers. Gross Margin is a useful measure of profitability before considering operating and other expenses and can be used to assess the Company’s ability to generate positive net earnings and cash flows.

View source version on businesswire.com: https://www.businesswire.com/news/home/20221117005495/en/

For further information, please contact:

Investor Relations Contacts:

Glen Akselrod, Bristol Capital

Phone: + 1 905 326 1888 ext 1

Email: glen@bristolir.com

Media Relations Contact:

Lana Castleman, Director, Marketing & Communications

Phone: 416-219-3769

Email: lcastleman@thunderbird.tv

Corporate Communications

Julia Smith, Finch Media

Email: Julia@finchmedia.net

Source: Thunderbird Entertainment Group Inc.

FAQ

What were Thunderbird Entertainment's Q1 2023 revenue results?

Thunderbird Entertainment reported Q1 2023 revenue of $43.7 million, a 25% increase from the prior year.

How much free cash flow did Thunderbird generate in Q1 2023?

Thunderbird generated free cash flow of $4.4 million in Q1 2023, up 29% from last year.

What challenges did Thunderbird face in Q1 2023?

Thunderbird faced a 35% decrease in adjusted EBITDA and margin compression due to project delivery mix.

What is the significance of the 28 programs in production at Thunderbird?

The 28 programs indicate ongoing growth and content production capabilities for Thunderbird Entertainment.

What governance changes are being proposed at Thunderbird Entertainment?

A shareholder has announced intentions to nominate new directors, leading to the postponement of the Annual General Meeting.