Conference Call scheduled for October 22 at 9 a.m. ET
Proven proprietary Intellectual Property
(IP) acquisition and development strategy
demonstrated through the building of global brands including
Highway Thru Hell (100th episode), Kim's Convenience
(Season 4) and The Last Kids on Earth (NYT
Bestseller)
Strong growth in the
core business: Kids and Family and Factual Divisions
Decision to eliminate low margin, non-core
business results in revenue decrease to $61.5 million (F2018: $142
million), while EBITDA margin increases from 7% to
17%
One-time non-cash go public charge of
$5.3 million impacts net
earnings
VANCOUVER, Oct. 21, 2019 /CNW/ - Thunderbird
Entertainment Group Inc. (TSXV:TBRD) (Thunderbird or
the Company), today announced its financial results for
the fiscal year ended June 30, 2019
("Fiscal 2019"), and provided a corporate update.
"2019 has been a year of incredible transformation and
growth across Thunderbird, as the Company has made tough yet
strategic decisions to ensure it is well positioned to deliver
higher-budget, higher margin, premium-quality productions that will
enhance the value of our content library," said Jennifer
Twiner McCarron, Chief Executive Officer, Thunderbird
Entertainment. "We look to the future with excitement as we further
establish Thunderbird as a preferred content creator and supplier
for the world's leading Over-the-Top (OTT) platforms, by expanding
our Company-wide strategy of acquiring, partnering, and building
iconic IP and brands. We also recognize that our people are the
foundation of Thunderbird's success, and we remain dedicated to
attracting, enabling and retaining the very best talent to continue
our industry leading trajectory."
"As we look forward to 2020, I am thrilled at the opportunities
before us. Thunderbird is poised to build momentum, building off
the Company's track record of strong IP development and ownership
witnessed in its Factual Division," said Brian Paes-Braga, Chair, Thunderbird
Entertainment. "Jenn, and her entire team, are ready to execute on
our robust pipeline of shows in development. With shows like The
Last Kids on Earth, Highway Thru Hell, and Kim's Convenience,
Thunderbird is becoming a widely acknowledged leader in IP
development and ownership along with being a dependable, go to
partner for some of the world's largest media companies. It's
an exciting time to be in content development, and a Thunderbird
shareholder. This is just the beginning."
Financial Highlights for the Three and Twelve Months
Ended June 30, 2019
Summary of results
for June 30, 2019
|
Three months
ended
June 30, 2019
|
Twelve months
ended
June 30, 2019
|
Revenue
|
$
|
13.7
|
$
|
61.5
|
Net
loss
|
$
|
(1.1)
|
$
|
(3.8)
|
Adjusted EBITDA
1
|
$
|
(0.4)
|
$
|
10.3
|
Results for the year
ended June 30, 2019 compared to the year ended June 30,
2018:
|
|
|
|
|
|
|
|
For the three
months ended
|
For the year
ended
|
($000's, except
per share data)
|
June 30,
2019
|
June 30,
2018
|
June 30,
2019
|
June 30,
2018
|
|
|
|
|
|
Revenue
|
$
|
13,663
|
$
|
11,378
|
$
|
61,478
|
$
|
142,402
|
Expenses
1
|
14,759
|
11,615
|
65,298
|
139,041
|
Net (loss) income
from continuing operations
|
(1,096)
|
(237)
|
(3,820)
|
3,361
|
Loss from
discontinued operations
|
-
|
(139)
|
-
|
(46)
|
Non-controlling
interest
|
-
|
-
|
(9)
|
-
|
Foreign currency
translation adjustment
|
30
|
(2)
|
(5)
|
(89)
|
Comprehensive net
(loss) income for the
year attributable to owners of the parent
|
$
|
(1,066)
|
$
|
(378)
|
$
|
(3,834)
|
$
|
3,226
|
|
|
|
|
|
Basic earnings
per share - continuing operations
|
$
|
(0.024)
|
$
|
(0.021)
|
$
|
(0.106)
|
$
|
0.061
|
Diluted earnings
per share - continuing operations
|
$
|
(0.024)
|
$
|
(0.021)
|
$
|
(0.106)
|
$
|
0.049
|
Basic earnings per
share – discontinued operations
|
$
|
-
|
$
|
(0.005)
|
$
|
-
|
$
|
(0.002)
|
Diluted earnings per
share – discontinued operations
|
$
|
-
|
$
|
(0.005)
|
$
|
-
|
$
|
(0.002)
|
Adjusted
EBITDA
|
$
|
(351)
|
$
|
1,243
|
$
|
10,288
|
$
|
10,116
|
|
|
|
|
|
1 Expenses
includes a non-cash charge related to Public company listing of
$5,316 in the year ended June 30, 2019.
|
- On October 30, 2018, the Company
completed the acquisition of all of the issued and outstanding
shares of a private company, Thunderbird Entertainment Inc.
("TEI"), through a reverse takeover transaction (the "RTO
Transaction"). The Company is considered to be a continuation of
TEI with the net assets of the Company at the date of the RTO
Transaction deemed to have been acquired by TEI. The RTO
Transaction was approved by the TSX Venture Exchange and the
Resulting Issuer (renamed Thunderbird Entertainment Group Inc.)
commenced trading on November 2, 2018
under the ticker symbol "TBRD".
- Prior to the RTO Transaction TEI completed a brokered private
placement financing of 5,125,000 subscription receipts at a price
of $2.00 per subscription receipt for
aggregate gross proceeds of $10.25
million. On October 30, 2018,
each subscription receipt was exchanged for one post-consolidation
common share of the Resulting Issuer. Concurrent with the brokered
private placement, TEI raised an additional $2.25 million by the issuance of 8% convertible
debentures that were converted into common shares at a price of
$2.00 per share upon completion of
the RTO Transaction.
- During the year ending June 30,
2019, the Company paid down $4.6
million of a $6 million
three-year non-revolving term loan drawn in July 2018. The term loan was drawn in order to
repurchase common shares of certain shareholders of TEI on an
accretive basis and was part of an overall credit facility
negotiated with the Royal Bank of Canada that also included an increased
production line of credit and an acquisition facility.
- The Company adopted and implemented IFRS 15, Revenue from
contracts with customers, which established a new comprehensive
framework on revenue recognition. Under IFRS 15, the Company has
determined that licensing and distribution revenue should be
recognized at the later of the start date of the license term and
the satisfaction of the contractual performance obligations.
Previously, licensing revenue was recognized at the earlier date of
delivery when certain conditions were met.
- Consolidated revenue for the three months and year ended
June 30, 2019 was $13.7 million and $61.5
million as compared to $11.4
million and $142.4 million for
the comparative periods of fiscal 2018, an increase of $2.3 million and a decrease of $80.9 million respectively. The majority of the
annual decrease ($69.6 million) was
related to the Company's decision in fiscal 2018 to not renew its
multi season service agreement to produce the live action
television series The Man in the High Castle.
Although the series generated significant revenues, the profit
margins were small and management decided to re-direct valuable
corporate resources to the creation of owned IP programming and
other core operations. The remainder of the year end decrease was
related to a large budget proprietary television series for ABC
Network which was completed and delivered by the Company in fiscal
2018. There was no comparative series completed in fiscal 2019 and
therefore this resulted in a decrease in revenues of $21.6 million. These decreases were partially
offset by increases in both the animation and factual divisions. A
portion of the fourth quarter revenue increase over the comparative
quarter in 2018 related to growth in the animation division.
- Consolidated net loss was $1.0
million and $3.8 million for
the three months and year ending June 30,
2019, compared to net loss of $0.4
million and net income of $3.2
million for the comparative periods of fiscal 2018, and a
decrease of $0.6 million and
$7.0 million respectively. During the
year, the Company incurred a one-time charge of $5.3 million relating to the RTO Transaction.
This non-cash charge represented the difference between the net
assets acquired and the fair value of the Golden Secret shares,
options and warrants that were exchanged. Other differences relate
to both one-time and recurring public company costs, an increase in
capital amortization (due to animation expansion) and an increase
in share based compensation. These decreases were offset by
growth in both the animation and factual division.
- Adjusted EBITDA was ($0.3
million) and $10.3 million for
the three months and year ending June 30,
2019, compared to $1.2 million
and $10.1 million for the comparative
periods of fiscal 2018, a decrease of $1.5
million and an increase of $0.2
million, respectively. The quarterly decrease was due to
timing differences with recognition of revenue in the factual
division. The year-over-year increase was due to growth in the
animation and factual divisions, offset partially by decreases due
to public company costs.
The Company's audited annual financial statements along with its
Management's Discussion and Analysis for Financial Year End
June 2019 are available on the
Company's website at http://www.thunderbird.tv and under the
Company's profile at www.sedar.com.
Media Industry Trends
- Inspired by Netflix, new entrants like Disney, Apple and
NBCUniversal are developing extensive direct-to-consumer
relationships by offering premium quality subscription-based
streaming services and video on demand (SVOD) content.
- Thunderbird welcomes these new and current expanding SVOD
players. Content budgets are being established and growing,
creating significant opportunities for high quality content
producers – 2019 estimates are: Disney: $24
billion1, Netflix: $15
billion2, NBC Universal: $13 billion3, and Apple: $6 billion.4
- Smart devices are quickly becoming primary viewing vehicles
amongst Millennials.5
- In 2019, streaming TV surpassed traditional cable TV for the
first time in history.6
- Toy manufacturer Hasbro's intent to purchase Entertainment One
– the company behind the popular children's animated show Peppa
Pig as well as many other properties, such as Ricky Zoom
and PJ Masks – for $4 billion
demonstrates expanding interest in the entertainment industry.
Thunderbird's 2019 Transformation Highlights
- Company remained laser-focussed on generating long term value
through the expansion of its content library and its owned or
controlled IP.
- Throughout fiscal 2019, 134.5 half hours of owned-IP were
delivered collectively from the Factual, Scripted, and Kids and
Family Divisions.
- The Company strategically moved away from productions with high
top line revenue yet smaller profit margins, to concentrate on
premium content from its expanding client base, which includes
Disney+, Nickelodeon, PBS and NBCUniversal, among others.
- Strategic business decisions resulted in a short-term revenue
decrease of 57%, however EBITDA margins are up from 7% to 17%.
- In line with the Company's growth and development plan,
subsequent to the year-end, the Company delivered its largest ever
fall lineup, with eight productions premiering across multiple
platforms, including deals with partners like Netflix, PBS/WGBH,
Discovery Channel and Disney+.
- The Ottawa production hub
continues to experience impressive growth and attract leading
talent.
- By adding the Ottawa studio,
the Company demonstrated its ability to scale infrastructure to
service the oncoming OTT and SVOD wave. By June 2020, the Ottawa studio anticipates it will employ 150
people. The Vancouver studio
currently employs 550 animators.
- During the fourth quarter, the Company had 14 programs in
various stages of production, and deals with Netflix, NBCUniversal,
Nickelodeon, PBS, WGBH, Bell Media's Discovery, APTN, Corus
Entertainment and the CBC, among others.
- Subsequent to the year-end, Brian
Paes-Braga was appointed Chair of the Company's Board
of Directors.
Kids & Family Division, Atomic Cartoons,
Continues to Produce Premium Content and Expand
Company's Strong Library of Children's Programming
- During the quarter, the Company was in various stages of
production on nine animated television programs; these series
reflect a blend of both proprietary and service-based productions,
including The Last Kids on Earth (IP), and the following
service-based productions: Hello Ninja, Molly of
Denali, LEGO Jurassic World, Marvel Superhero
Adventures, 101 Dalmatian Street, Curious George:
Royal Monkey, and Incredible Ant among others.
- Subsequent to the year-end, the Company's IP-owned series,
The Last Kids on Earth began streaming September 17, 2019 on Netflix, and the Company
announced a video game inspired by the series that will launch in
2021. Book five of The Last Kids on Earth series was
published alongside the September release, and is #2 on The
New York Times bestseller list.
This is in addition to a worldwide merchandise line that will be
launched in 2020.
- In conjunction with Netflix, Hello Ninja was announced
and will premiere on the streaming platform in November 2019. This animated production reflects
the Company's strategy to develop top quality children's book
series that have a built-in fan base.
- Further demonstrating the Company's dedication to telling
diverse stories, Molly of Denali premiered subsequent to the
year end on PBS/WGBH in the United
States and CBC in Canada.
During the first two weeks of its US premiere, Molly of
Denali was among the top five most streamed programs across PBS
KIDS digital platforms, with 27.4 million streams7.
- A feature-length animated film, Curious George: Royal
Monkey, was delivered to Universal 1440 Entertainment, the
original content production arm of Universal Pictures Home
Entertainment, and Imagine Entertainment.
Factual Division, Great Pacific Media, A Stalwart for Strong
Performance in the Factual Category
- During the quarter, Thunderbird's factual division was in
production on four shows: Highway Thru Hell (Season 8),
Heavy Rescue: 401 (Season 4), Worst to First (Season
2), and High Arctic Haulers (season 1).
- Subsequent to the year end, the Company delivered the
100th episode of Highway Thru Hell to Discovery
Canada. Highway Thru Hell is available in more than 200
territories worldwide, in a dozen languages. Season eight consists
of 17 episodes and began airing on October
7, 2019. Production of its 9th season was
announced in October 2019 and will
feature the largest number of episodes in the series' history.
Highway Thru Hell is the top-rated series on Discovery
Canada.
- The Company also delivered the second season of the lifestyle
series $ave My Reno to HGTV
Canada, which was comprised of fourteen episodes. The series
continues to be a ratings success on the network.
- During the quarter, seven of ten episodes of Worst to First
(Season 2) were delivered and began airing in May 2019 on HGTV Canada.
- With the launch of its UK Division, Thunderbird further
demonstrated its commitment to producing premium factual
content.
Thunderbird Scripted Continues to Attract Audiences
Globally
- Season 3 of Kim's Convenience was delivered in the 2019
fiscal year, and during the fourth quarter, the Company was in
production on the fourth season of the award-winning comedy
series.
- Kim's Convenience airs on CBC in Canada and is available on Netflix
worldwide. The show has worldwide distribution through a mix
of streaming, cable and VOD partnerships, including in Asia.
- The hit series was recognized as the Most Popular Foreign
Drama of the Year Award by the Seoul Drama Awards 2019 in
South Korea.
Investor Relations Contract
Thunderbird has entered into an investor relations services
agreement (the "IR Agreement") with Proactive Investors
Canada ("Proactive"), of Vancouver, British Columbia. Proactive
is a multimedia news organization, investor portal and events
management company and operates financial news websites and
organizes investor forums. Proactive has no direct or
indirect interest in Thunderbird or its securities and has no right
to acquire any such interests. Services to be provided by
Proactive to Thunderbird include ongoing editorial coverage of
Thunderbird's news releases, preparing interview-based feature
articles regarding Thunderbird, including reference to Thunderbird
on websites maintained by Proactive, and the promotion of content
prepared by Proactive through social media. The IR Agreement
has a term of 12 months commencing in [October] 2019
and may be renewed for subsequent 12 month periods.
Thunderbird will pay a fee of $20,000
(plus applicable taxes) annually to Proactive for such
services. The fees will be paid from Thunderbird's working
capital.
Conference Call Webcast on October 22,
2019 at 9 a.m. Eastern Standard
Time
Thunderbird will hold a conference call and
webcast to share the Company's 2019 fourth quarter and year-end
financial results on Tuesday, October 22, 2019 at 6 a.m. PST/ 9 a.m.
EST. A live webcast of the conference call can be accessed
by clicking here. The call will be recorded for webcasting purposes
and will be available at www.thunderbird.tv two hours after
the initial scheduled time.
Q4 & Year-End
Conference Call:
|
Tuesday, October 22,
2019 at 6 a.m. PST/9 a.m. EST
|
Canadian Dial-In
Numbers:
|
(+1) 416 764 8609
(Toronto)
|
|
(+1) 778 383
7417 (Vancouver)
|
North American
Toll-Free Number:
|
(+1) 888 390
0605
|
Conference ID
Number:
|
52347421
|
Alternatively, you may access a replay of the conference call by
calling (+1) 416 764 8677 or toll-free at (+1) 888
390 0541 (passcode 347421 #) two hours after the initial
scheduled time.
About Thunderbird Entertainment Group Inc.
Thunderbird
Entertainment Group is a Vancouver-based global multiplatform
entertainment company with offices in Vancouver, Los
Angeles, Toronto,
Ottawa and London. 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 divisions, including Thunderbird Kids and Family (Atomic
Cartoons), Thunderbird Factual (Great Pacific Media) and
Thunderbird Productions. Thunderbird also has a division based in
the United Kingdom dedicated to establishing partnerships
with production companies to develop the Company's intellectual
property (IP) and growth in key international territories.
Thunderbird is on Facebook, Twitter and Instagram at @tbirdent. For
more information, visit: www.thunderbird.tv
On Behalf of Thunderbird Entertainment Group Inc.
Jennifer Twiner
McCarron
Chief Executive Officer
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 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 Filing Statement and
other public documents filed on SEDAR at www.sedar.com; and other
matters discussed in this news release. 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
This news release contains references to certain measures that
do not have a standardized meaning under International Financial
Reporting Standards ("IFRS") as prescribed by the International
Accounting Standards Board and are therefore unlikely to be
comparable to similar measures presented by other companies.
Rather, these measures are provided as additional information to
complement IFRS measures by providing a further understanding of
operations from management's perspective. Accordingly, non-IFRS
measures should not be considered in isolation nor as a substitute
for analysis of financial information reported under IFRS. The
Company believes that non-IFRS measures, specifically EBITDA and
Adjusted EBITDA, are frequently used by securities analysts,
investors and other interested parties as measures of financial
performance and to provide supplemental measures of operating
performance and thus highlight trends that may not otherwise be
apparent when relying solely on IFRS financial measures.
____________________________
|
1 IGN:
https://ca.ign.com/articles/2019/08/08/disney-outspending-netflix-streaming-original-content-budget
|
|
2 The
Hollywood Reporter
https://www.hollywoodreporter.com/features/netflix-at-a-crossroads-hollywoods-dominant-disrupter-adjusts-growing-pains-1229618
|
|
3 IGN:
https://ca.ign.com/articles/2019/08/08/disney-outspending-netflix-streaming-original-content-budget
|
|
4 Financial Times:
https://www.ft.com/content/4f7f4326-c2bf-11e9-a8e9-296ca66511c9
|
|
5 Open X: 2018 Consumer Holiday
Shopping Report:
https://www.openx.com/resources/thought-leadership/2018-holiday-consumer-report/
|
|
6 The
Verge:
https://www.theverge.com/2019/3/21/18275670/mpaa-report-streaming-video-cable-subscription-worldwide
|
|
7Source: Google Analytics July
2019
|
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SOURCE Thunderbird Entertainment Group Inc.