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.

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.

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.

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