Thunderbird Entertainment Group Inc.

Thank you for joining us. We are here to provide a corporate update and report on Thunderbird Entertainment Group's year-end fiscal 2022 results, which ended June 30, 2022. Speaking on today's call are Ms. Jennifer Twiner-McCarran, Thunderbird's CEO, and Ms. Barb Harwood, Thunderbird's CSO. Ms. Twiner-McCarran will provide a strategic overview of Thunderbird Entertainment Group and Ms. Harwood will review the company's year-end 2022 financials. Following the corporate update and financial review, the call will open for a question-and-answer session. If you would like to ask a question during this time, simply press star then the number 1 on your telephone keypad. Alternatively, if you have any questions, you can call plus 1-604-683-3222. 555 or email investors at Thunderbird.tv and the company will follow up directly after the call. At this time, all lines have been placed on mute to prevent any background noise. I would like to remind everyone that certain statements made on today's call will be forward looking and constitute forward looking statements or forward looking information under applicable security laws. Forward-looking statements and information discussed on this conference call 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 that are necessarily based on a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risk. 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, or other judicial, regulatory, political, and competitive developments. Those additional risks set out in the company's filing statement and other public documents filed on CDAR at www.cdar.com and other matters discussed in the quarterly news release. Although the company believes that these assumptions and factors used in preparing these forward-looking statements are reasonable, Undue reliance should not be placed on these statements, which only apply as of the date of this presentation, and no assurance can be given that such events will occur in the disclosed timeframes 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. For your convenience, the press release, the MD&A, and unaudited financial statements for the fiscal 2022 of Thunderbird Entertainment Group, which ended June 30, 2022, are filed on CDAR and are available online under the Investor section of our website. We do not expect to update forward-looking statements continually as conditions change. This conference call is being webcast live, and the archive will be available on the company's website at www.thunderbird.tv following today's call. Please note that Thunderbird reports in Canadian dollars unless otherwise stated. Ms. Twyner McCarron will now provide the corporate update.

Thank you so much. My name is Jennifer Twyna McCarron, and I'm the CEO of Thunderbird Entertainment Group. On behalf of the company, I'd like to welcome you to today's call to discuss our year-end 2022 results, which ended June 30, 2022. Thunderbird CFO Barb Harwood is with me today, and we really appreciate you joining us and following Thunderbird's story. I will provide corporate updates, and Barb will share the financials. Once Barb and I are finished, we will be happy to answer any and all questions you may have. I want to start today's call reinforcing a message many of you have heard from me say. When it comes to content development, it's quality and quantity, quality more than anything. Quantity is going to win. It is a time of a need for quality. Premium quality content is king, and it's in great demand. 2022 has been a build year for us, investing millions in new hires, software and technology, and the development of great IP. From 2020 to 2022, Thunderbird's revenue has grown 85%, and our EBITDA has grown 35%, and the best is still yet to come. While there are fears of a recession, content will continue to be in demand. My dad, Don Twiner, ran Robin Hood Multifoods for many years. decades even, and used to say recessions were great for his business as people stayed home, bought his flour, and baked, and watched TV. There's always a need for content. And while change is inevitable as streamers and broadcasters adapt and shift their business models to remain competitive, the one constant is a need for A-plus content to attract and retain subscribers. Thunderbird is well known as an industry darling because of the amazing content and talented teams and premium content, which is what we create at Thunderbird. And this is the differentiator in this next phase of streaming. Thunderbird is going to be relied on more heavily than ever before to provide premium, diverse, and inclusive content. This was further reinforced this week when I had the privilege of attending Nipcom in Cairns, France with several members of our Thunderbird team. We met with many key buyers at global streamers and broadcast networks like Disney, Hulu, NBC Universal, Warner Media, just to name a few. Our development slate was incredibly well received, while our latest third-party distribution acquisition, such as something like Mittens and Pants, garnered a ton of interest from international buyers on its first trip to the markets. There will be a lot of positive follow-ups on many IP shows in the coming months. We also received a lot of attention at the market for our recently announced show, Oddballs, a newly animated partner-managed production with Netflix and YouTube creator James Rolison. Oddballs debuted number one on Netflix Kids Top 10. It was also the number six TV series globally. Adult content included for the week of October 10th to 16th and it's holding steady at the top. In fact, it had 11.9 million viewing hours during this week alone, which didn't include the first three days from its premiere. We own a nice piece of the backend for all cross media exploitation, and it's really exciting to see where this goes. The fact remains that content spending collectively continues to increase. Disney Plus has increased their content spend to almost $33 billion. And Netflix is projected to spend $17 billion again this year, and recently signaled it has started a comeback with the company posting better than expected Q3 results on the top and bottom lines, adding 2.41 million net subscribers during the quarter, which was also higher than the 1 million it had originally forecasted. Add to this, according to Digital TV Research, global SVOD subscriptions are forecasted to increase 39% to reach $1.68 billion by 2027, with global revenues forecasted at $132 billion. Included in this forecast is that six major platforms are projected to account for 47% of the world's total subscriptions in 2027. Netflix, Amazon, Disney+, Paramount+, HBO Max, Apple TV, We work with all of these buyers plus more. Thunderbird has trusted relationships with our partners and together with our reputation for premium award-winning content, we are positioned well, incredibly well for continued growth year over year in an ever-evolving landscape. What's more is that in July 22, we saw the highest rate of streaming content consumption on record, with audiences watching an average of 190.9 billion minutes of streamed content per week, surpassing the 169.9 billion minutes that audiences watched during the pandemic lockdown period back in April 2020. And according to Digital Eye, a media insights business magazine, kids' profiles on Netflix watched 3.6 times more content on Netflix at the start of 2022 compared with 2018, outpacing the growth in adult viewing. And Netflix subscribed households with kids now watch an average of 20 more minutes of content per day than households without kids. We are in the business of creating premium kids content. And this, along with unscripted content, remains a cornerstone in content strategies to glue co-viewing audiences. Thunderbird's strong industry position is the result of our team's concerted efforts to mindfully grow the company. Our management team and board are focused on building a sustainable business with the long-term goal of becoming the next major global studio. We are selective about the projects we take on, and this is a part of our strategy to build an impressive portfolio with recognizable brands and significant brand building capabilities. Why? To drive profitable growth and long-term shareholder returns while creating meaningful content that matters and brings happiness into people's lives. This past year, our focus was on our future. And again, this included investing in new roles within the company to help us grow, such as marketing and communications, distribution, restricted development, business affairs, ESG, and more. Speaking of growth, we expect strategic M&A, strategic and accretive M&A, to play a part in our long-term growth when the right opportunity arises. We won't do M&A unless it makes financial, strategic, and cultural sense, and we will not dilute our shareholder base. Again, a downturn in the market provides opportunities. for companies like ours with very strong balance sheets. Our company's strong and prudent fiscal management, which is highlighted by zero corporate debt, will allow us to take advantage of opportunities that allow for a creative growth, increased capacity, new talent, and IP and libraries to feed our consumer products and distribution division. We don't need to be bigger for the sake of getting bigger. Rather, we are looking at acquisitions that both align with our company's strong value system and also can add to our areas of expertise. When evaluating opportunities, we ask ourselves, what does this organization do better than us? What can they teach us? How can we elevate together with what we are already doing and what we're already delivering? We have a strategic and mindful approach when it comes to M&A, and we will be selective and patient. Similarly, investing in the content production and animation industry means investing in growth over longer-term horizons. This is because developing high-quality, compelling, and creative projects is time-intensive, and we want to get it right. As content producers, we typically can't discuss productions until they have been completed and delivered to our distribution partner. For example, our team has been working on Oddballs for over two and a half years. By its Netflix debut, it will be close to three years. Our Emmy award-winning, owned IP, The Last Kids on Earth, took well over two years with the initial conception to its Netflix premiere. For IP productions like Last Kids on Earth, revenues are only actualized when the production is delivered. Development of the brand new original series Dead Man's Curse, which airs on the History Channel Canada, was over two and a half years in the making. Lifestyle series like Styled came together in 21 months, with development starting in July 2020 and the shows premiering in May 2022. And we originally announced our partnership to develop Princess Power, the book Princesses Wear Pants, with Alison Oppenheim, Savannah Guthrie, and Drew Barrymore's Flower Films in the fall of 2018. This show was officially announced by Netflix this fall and will debut in 2023. Atomic Option then developed this show before selling it to Netflix. And like Oddballs, we have a healthy piece of the back end. Netflix is betting on this show as their only princess show And if it takes off, as we believe it will, we stand to benefit from all of the cross-media exploitation. At Thunderbird, we're working hard to maximize the value of our storytelling while capitalizing on the mass of opportunity ahead. This fall alone, we produced and were proudly connected to productions like Strays, Season 2 on CBC, Dead Man's Curse on History Canada, Highway Through Hell Season 11 on Discovery, Reginald the Vampire for SyFy, Amazon Prime in Canada, My Little Pony, Dogs in Space on Netflix, and a two-part documentary, After the Storm, produced by GPM, which will also be on Discovery Channel. Also, our content turns heads. For example, New York Times TV critic Mike Hale recently wrote an article describing Dogs in Space as a laudable animation series with humor that is consistently smart and deft, just snarky enough just silly enough and just sentimental enough. His article also gives a shout out to Atomic for throwback 2D animation that is both crisp and endearing. You can't put a price on feedback like this and the team deserves this type of praise. The talent at our studio is through the roof. Longstanding unscripted series Highway Through Hell is another example of our premium content. Now in its 11th season, this fall's episodes feature never seen footage and stories from communities impacted by the unprecedented weather disaster of the 2021 flood. With every production, we work to raise the bar, and we are growing to meet the ongoing demand. We are now at 1,400 and more employees across North America, and we've added many new faces and invested in our capabilities with our teams to support the company's long-term growth trajectory. Now, before providing the production updates, I'll pass things over to Barb to go over the numbers, and then after I'm done, we'll take your questions. Thanks so much.

Hello, everyone, and thank you for joining Jen and I today. Thunderbird's revenue increased from $26.1 million to $44 million in the three months ended June 30th, a 69% increase. while revenue for the year increased from $111.5 million to $149 million, a 34% increase over the prior year. This revenue consists primarily of animation production services, which experienced continued growth. Production service revenue for the quarter ending June 30th increased $32.5 million from $24 million and to $120 million from $77 million in the prior year, a 55% increase year over year. This was due to an increase in the number and size of contracts being produced at the company. Revenues from owned IP increased from 2.1 million to 11.6 million in the quarter, mainly due to the delivery and recognition of four episodes of Reginald the Vampire to sci-fi. The remaining episodes and recognition of revenue of this title will continue into fiscal 2023. During the quarter, the company also recognized 19 episodes of the two factual series, Gut Job and Styled. In the comparative quarter, there were no IP deliveries. However, significant distribution revenue was recognized for Kim's Convenience and Beatbox. Revenues from owned IP decreased to $29 million from $34 million from the prior year due to timing of deliveries of IP projects. In the prior year, 13 episodes of the animated series The Last Kids on Earth were delivered with no comparative delivery in the current year. Gross margin percentage in the current year and year decreased due to the mentioned timing and mix of IP deliveries, changes in production services schedules, and increased investments in production talent in fiscal 2022. In addition, The company recorded an accelerated amortization charge of $3.1 million related to a decrease in the estimated useful life of the title Last Kids on Earth. Consumer products for this title, such as toys and merchandise, were released in March 2020. Previous future estimates from this revenue stream have not met expectations due to the downturn in the consumer products market related to the COVID pandemic. The company is confident that other revenue streams of this title, such as distribution and video games, will continue to deliver future results as expected. The company ended fiscal 2022 with adjusted EBITDA of $2.4 million for the quarter and $20.1 million for the year ended, a 4% and 3% increase over the prior quarter and year. Adjusted EBITDA over both periods was relatively flat, due to the company investing in talent retention, key new hires, and software and technology upgrades to further facilitate long-term growth. Thank you. And now Jen will provide production updates throughout the company.