Ms. Jennifer Twiner McCarron reports

THUNDERBIRD ENTERTAINMENT GROUP REPORTS FISCAL 2023 YEAR END RESULTS

Thunderbird Entertainment Group Inc. has released its year-end results for fiscal 2023, which ended June 30, 2023, and provided a corporate update.

Financial summary:

• Revenue decreased from $44.1-million to $37.7-million and increased from $149-million to $166.7-million for the three months and year ended June 30, 2023, as compared with the comparative periods in the prior year, variances of $6.4-million (14 per cent) and $17.7-million (12 per cent), respectively. Both the number of episodes of intellectual property (IP) projects delivered and recognized, and the magnitude of production services projects have increased year-over-year (125 total half-hours of IP deliveries in the current year compared with 120 total half-hours in the prior year).
• Free cash flow increased from negative $700,000 to $8-million and decreased from $13.9-million to $4.3-million for the three months and year ended June 30, 2023, as compared with the prior year, variances of $8.7-million (1,169 per cent) and $9.6-million (69 per cent), respectively. The decrease for the annual period is primarily due to repayment of interim production financing offset by positive changes in working capital.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (AEBITDA) decreased from $2.4-million to $700,000 and from $20.1-million to $12.8-million for the three months and year ended June 30, 2023, as compared with the prior year, variances of $1.7-million (71 per cent) and $7.3-million (36 per cent), respectively. The decrease is attributable to an increase in general and administrative expenses, and industry-wide economic factors resulting in the delay of several productions.

"Thunderbird's steady growth is due to our robust -- and diversified -- production slate, which includes legacy IP like Highway Thru Hell and new company originals like Rocket Saves the Day, as well as repeat service production on big brands such as our Lego productions, and Marvel's Spidey and His Amazing Friends for Disney Jr.," said Jennifer Twiner McCarron, Thunderbird's chief executive officer and chair. "I am proud of the teams' hard work, and how they continue to create so many wins despite the headwinds the industry and company faced in 2023. Our healthy balance sheet continues to serve Thunderbird well as we assess opportunities, including a liquidity event, to not only enhance but maximize shareholder value.

"We have made great strides with our owned IP work and we're thrilled to have started production on several exciting IP projects that span multiple genres -- including the sale of our first original IP adult animated series. These projects were greenlit in 2023 and we expect net income to start hitting our books in fiscal 2025 and beyond. To see these efforts coming to fruition affirms the strategic decisions we have made on our path to becoming the next major global studio. We have several exciting announcements on the horizon, and look forward to sharing more about these productions when we are able," Ms. Twiner McCarron said.

Strategic review advisory committee and share buyback update

Pursuant to the co-operation agreement between Thunderbird and Voss Capital LLC, which is detailed in the company's Jan. 19, 2023, news release, Thunderbird formed a strategic advisory committee composed of three directors (including two of the independent directors put forward by Voss) and a Voss-appointed non-voting observer.

Since March, 2023, the committee has been assessing Thunderbird's capital allocation strategy and all opportunities to maximize shareholder value for ultimate recommendation to the board of directors. This has involved working alongside ACF Investment Bank to evaluate any unsolicited inbound expressions of interest that may be received by the company from time to time and handle the potential sale of Thunderbird in the event that an offer is received that meets the company's standard for shareholder value creation.

The committee's most recent analysis has indicated a considerable difference between the company's internal assessment of Thunderbird's valuation, based on management's line of sight on production services bookings, promising owned IP pipeline and expectations for margin expansion, versus the valuation that prospective buyers might be willing to currently offer given the negative macro environment in the media industry. The committee believes that this discrepancy does not reflect the true potential and long-term value of the company. As such, it is in the best interest of the company and its respective shareholders to wait until Thunderbird's strategic initiatives begin to materialize to demonstrate its true worth. While the committee will continue to evaluate any unsolicited inbound expressions of interest in Thunderbird, this approach will ensure that when pro-active engagement begins with such opportunities, it will be from a position of strength, ensuring maximum value for shareholders.

In the interim, the board has approved pursuing the implementation of a normal course issuer bid (NCIB), pursuant to which the company may repurchase its own common shares through the facilities of the TSX Venture Exchange, as may be permitted by the TSX-V and applicable securities laws. Implementation of an NCIB remains subject to obtaining the prior acceptance of the TSX-V. Further details regarding the proposed NCIB will be provided in a subsequent news release, as they become available.

Outlook

With the majority of its forecasted service revenue contracted for the year, management is targeting double-digit revenue growth in fiscal 2024, as well as meaningful growth to AEBITDA to return to levels attained prior to fiscal 2023.

Looking to the next few years, the company anticipates a double-digit compound annual revenue growth rate (CAGR) from fiscals 2023 to 2026, with forecasted revenue of approximately $220-million in fiscal 2026 (fiscals 2021 to 2023 revenue CAGR of 22 per cent). Additionally, management is targeting AEBITDA margin growth with double-digit margins projected in fiscals 2025 and 2026. The company greenlit multiple animated IP projects in fiscal 2023, all of which are currently in production, which are projected to contribute to net income starting in fiscal 2025.

Management is, however, mindful of the current industry challenges. Uncertain conditions, including cost-cutting from major buyers, has led to a slowdown in greenlights, which could impact the company's outlook for the next fiscal year. Thunderbird continues to focus on strategic priorities of growing key brands, and investing in owned IP while continuing to expand and deliver consistent service revenue from a robust slate of returning and new series. To address the uncertain market conditions, the company is committed to maintaining a strong balance sheet and prudently managing its cost base while pursuing sustainable growth.

Thunderbird's fiscal 2023 corporate highlights:

• At June 30, 2023, the company had 28 programs in various stages of production and was working with 24 clients. Of the 28 programs in production, 10 were Thunderbird IP and 18 were service productions.
• Thunderbird Kids and Family, producing under Atomic Cartoons, was in production on several animated series throughout fiscal 2023, including: Oddballs for Netflix, Molly of Denali (season 3) for GBH/PBS, 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, Young Love for Sony and Max, Teenage Euthanasia (season 2) for Adult Swim, and Little Demon for FX Network, among others.
• In fiscal 2023, Atomic commenced production on the first season (26 episodes of 22 minutes) of the children's series Mermicorno: Starfall, inspired by tokidoki's hit toy brand of the same name. Atomic is producing this series as original IP in partnership with tokidoki. Warner Bros. Discovery has acquired the exclusive United States television rights. Renowned toymaker Jazwares has also been announced as global master toy licensee and will focus on producing a mass-market toy line for all distribution channels, including mass-market, e-commerce and direct-to-consumer platforms.
• Thunderbird Unscripted, producing under Great Pacific Media (GPM), was in production on several series in fiscal 2023, including: Heavy Rescue: 401 (season 7), Deadman's Curse (season 2), Styled (season 2), Dr. Savannah: Wild Rose Vet (season 2); After the Storm (documentary for Discovery); and Highway Thru Hell (season 11 and 12).
• GPM was also in production on two scripted programs in fiscal 2023. It acquired the film and TV rights to the Wattpad property Boot Camp and produced a movie of the week based on the property. GPM also produced Reginald the Vampire, which debuted its first season in October, 2022, on SyFy (U.S.) and Amazon Prime Video (Canada). GPM recently wrapped production on season 2 of this series.
• In fiscal 2023, GPM-owned IP Deadman's Curse (season 1) premiered on History Channel. The series ranked as one of the top-10 Canadian original specialty series. The companion podcast, Deadman's Curse: Slumach's Gold, also premiered and hit No. 4 on Apple's history charts. Production on seasons 2 and 3 is under way.
• In fiscal 2023, Thunderbird launched a Los Angeles-based scripted team, with several scripted projects representing an array of New York Times bestselling books and award-winning authors, at various stages in the development pipeline, including Mad Honey. Co-written by Jodi Picoult and Jennifer Finney Boylan, Mad Honey will be adapted by Thunderbird into a premium series.
• Thunderbird also launched Thunderbird Brands, a key growth area for the company, representing product, experience and service licensing rights for Thunderbird's original series and select third party properties under the company's management. Under Thunderbird Brands, season 1 of Mittens & Pants, a CBC Kids/Sky Kids preschool series, was sold to international buyers, including Warner Bros. Discovery.
• Thunderbird appointments included Marsha Newbery being appointed to the new role of vice-president of sustainability and business affairs at Thunderbird to oversee the company's ESG (environmental, social and governance) efforts, Hillary Zwick Turner to the new role of senior vice-president of scripted content, and Mike Armitage joining GPM as vice-president of development.
• In fiscal 2023, Thunderbird began development of a robust ESG action plan and road map to reflect the company's desire to be a purpose-led, people-first, net-positive company. While this is a long-term initiative, Thunderbird has already taken steps forward, including exploring sustainability and storytelling initiatives, joining Creative B.C.'s Reel Green industry initiative, and more.
• Company recognitions in fiscal 2023 included Thunderbird ranking in the top 10 of all independent production companies in Canada on Playback's 2023 Indie List, Atomic being included on the annual Kidscreen Hot50 list of top production companies (No. 7), Molly of Denali receiving a 2022 B.C. Reconciliation Award, a 2022 Kidscreen Award for best web/app series -- branded, and GPM being named to Realscreen's Global 200 list, for the 11th consecutive year. Thunderbird was also recognized on The Globe and Mail's fifth-annual ranking of Canada's Top Growing Companies in September, 2023.

For more information, please see the financial statements, and the management's discussion and analysis (MD&A) for fiscal 2023, which ended June 30, 2023, available on SEDAR and the company's website.

Loan forgiveness

On Dec. 16, 2021, Thunderbird's president received a non-interest-bearing loan from the company to cover taxes payable in respect of the exercise of certain stock options. On Oct. 4, 2023, the board of the company agreed to forgive the loan in full.

Thunderbird's year-end fiscal 2023 conference call and webcast information

Date:  Oct. 5, 2023

Time:  11 a.m. PT/ 2 p.m. ET

Preregistration:  Preregister for this call on the NetRoadShow website to receive access details via e-mail.

If you are unable to preregister, please see the information below for joining by webcast or telephone.

Webcast:  At the Q4Inc website

Canada toll-free:  1-833-950-0062

United States (toll-free):  1-833-470-1428

All other locations:  1-929-526-1599

Access code:  412284

Press star-one to ask a question, star-two to withdraw your question or star-zero 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.

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 Brands and Thunderbird Distribution manage global media and consumer products rights, respectively, for the company.

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