Ms. Jennifer Twiner McCarron reports

THUNDERBIRD ENTERTAINMENT GROUP REPORTS FISCAL 2024 Q1 RESULTS

Thunderbird Entertainment Group Inc. has released its Q1 2024 financial results, which ended Sept. 30, 2023, and has provided a corporate update.

Financial summary:

• Revenue decreased from $43.7-million to $33.6-million for the three months ended Sept. 30, 2023, as compared with the comparative quarter in the prior year, a variance of $10.1-million (23 per cent). 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 flow decreased from $4.4-million to ($2.4-million) for the three months ended Sept. 30, 2023, as compared with the comparative quarter, a variance of $6.8-million (155 per cent). The decrease for the current quarter is primarily due to the repayment of interim production financing offset by positive changes in working capital.
• AEBITDA (adjusted earnings before interest, taxes, depreciation and amortization) decreased from $4.1-million to $2.5-million for the three months ended Sept. 30, 2023, as compared with the comparative quarter, a variance of $1.6-million (39 per cent). 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 chief executive officer and chair, Jennifer Twiner McCarron. "In response, we've embraced a pro-active 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."

Ms. 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-calibre content to all of our valued customers and delivering value to shareholders."

Financial outlook

Thunderbird's market strategy is centred 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 its goals for fiscal 2024, targeting over 20-per-cent growth in AEBITDA. Additionally, the company's current expectations are for 5-per-cent revenue growth in fiscal 2024 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-per-cent increase in AEBITDA 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 pro-active. 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.

Co-operation agreement, strategic review and share buyback news

In fiscal 2023, Thunderbird was in a proxy contest with Voss Capital LLC. Thunderbird entered into a co-operation agreement with Voss and certain of its affiliates on Jan. 19, 2023, which was amended on Jan. 27, 2023, and is detailed in the company's Jan. 19, 2023, news release. On Nov. 10, 2023, Thunderbird entered into an amended and restated co-operation agreement (the A&R co-operation agreement) with Voss. The A&R co-operation agreement amends and replaces the existing co-operation agreement in its entirety.

The A&R co-operation agreement, which is detailed in the company's Nov. 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 at the company's coming 2023 annual general and special meeting of shareholders scheduled for Dec. 14, 2023, which appointment is subject to the approval of the TSX Venture Exchange, 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 co-operation agreement, Linda Michaelson and Mark Trachuk have agreed not to stand for re-election at the 2023 annual meeting.

Thunderbird's strategic advisory 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, coming 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 pro-active engagement ultimately commences to ensure maximum value for shareholders.

In the interim, the board has approved the implementation of a normal course issuer bid (NCIB), pursuant to which the company may repurchase its own common shares for cancellation through the facilities of the TSX-V in an amount not to exceed 10 per cent of its public float, as may be permitted by the TSX-V 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 financed 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 and Family, producing under Atomic Cartoons, 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 2 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 toy maker Jazwares as global master toy licensee for Mermicorno: Starfall. The licensing program for the Thunderbird IP series could include a multicategory toy line (that is, 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 continuing 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 Sept. 30, 2023, available on SEDAR+ and the company's website.

Thunderbird's Q1 2024 conference call and webcast information

Date: Nov. 29, 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 for joining by webcast or telephone:

Webcast: Q4 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: 216217

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 Inc.

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.

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