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Thunderbird Entertainment Reports First Quarter Fiscal 2024 Results, Q1 Revenues Down Sharply YoY to $33.6M, Company Cites 'External Pressures'
Thursday, December 7, 2023Company Profile | Follow Company
Vancouver, BC, December 7, 2023--(T-Net)--Thunderbird Entertainment Group Inc. (TSXV: TBRD) has announced its Q1 2024 financial results, which ended September 30, 2023, and provided a corporate update.
Financial Summary
"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 said in a release that it'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 said it is ambitious in their goals for fiscal 2024, targeting over 20% growth in AEBITDA (1).
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 AEBITDA (1) forecasted through to 2026.
While navigating current industry challenges, such as cost-cutting measures from major buyers and a general slowdown in greenlighting, Thunderbird said in its release that it 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 says it 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.
1 AEBITDA and Free Cash Flow are Non-IFRS Measures, see "Non-IFRS Measures" section below for their respective definitions, and in the September 30, 2023 MD&A for detailed calculations and reconciliations. |
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 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 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
Results of Operations |
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For the three months ended |
||||||||
($000's) |
Sept 30, 2023 |
Sept 30, 2022 |
||||||
|
|
|
|
|
|
|
||
Revenue |
$ |
33,600 |
|
$ |
43,746 |
|
||
Expenses |
|
34,327 |
|
|
43,653 |
|
||
Net income (loss) for the period |
$ |
(727 |
) |
$ |
93 |
|
||
AEBITDA1 |
$ |
2,488 |
|
$ |
4,065 |
|
||
AEBITDA Margin1 |
|
7.4 |
% |
|
9.3 |
% |
||
Free Cash Flow1 |
$ |
(2,433 |
) |
$ |
4,370 |
|
||
1 AEBITDA, AEBITDA Margin, and Free Cash Flow are Non-IFRS Measures, see "Non-IFRS Measures" section below for their respective definitions, and in the September 30, 2023 MD&A for detailed calculations and reconciliations. |
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.
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.
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