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spk04: Thank you for joining Thunderbird Entertainment Group's fiscal 2023 year-end results call. Frank Alfano from Bristol Capital will read the forward-looking statement disclaimer.
spk07: Thank you all for joining us. We are here to provide a corporate update and report on Thunderbird Entertainment Group's results for the financial year ended June 30th, 2023. On today's call are Ms. Jennifer Twyner McCarron, the CEO and Chair of Thunderbird Board, as well as Ms. Barb Harwood, Thunderbird CFO. Ms. Twyner McCarron will provide a strategic overview of Thunderbird Entertainment Group, and Ms. Harwood will review the company's financial results for the 2023 year end. Following the corporate update and financial review, the call will open for a Q&A session. If you would like to ask a question during this time, simply press star, then the number then pardon me then the number one on your telephone keypad alternatively if you have any questions you could call 1604 683 3555 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'd like to remind everyone that certain statements made on today's call constitute forward-looking statements or information under applicable securities laws Forward-looking statements and information discussed on this conference call include, but are not limited to, statements with respect to evaluating unsolicited inbound expressions of interest or any offers for the sale of Thunderbird that are received by the company, the potential long-term value of the company, strategic initiatives materializing, and engagement with such opportunities, the actor strike, timing for the debut of new series and the rollout of toy lines, and estimates related to global toys, hobby and do-it-yourself e-commerce, details related to Thunderbird's first owned IP adult animation series, owned IP building long-term value, spending and growth rate projections of Netflix and Disney, future AVOD revenues, the expectation that Thunderbird will be the beneficiary of the renewed uptake in content, the proposed stock buyback program, timing for issuing a sustainability report, Debuting series to buyers at Amip Junior and Amipcom Keynes, actively pitching titles to various platforms, expectations regarding global fast revenues, and the company becoming the next major global studio. In addition, statements made today related to the financial outlook or future-oriented financial information have been approved by management of Thunderbird, Such financial outlook or future-oriented financial information is provided for the purpose of providing information about management's current expectations and plans relating to the future and may not be appropriate for other purposes. Forward-looking statements are based on estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which are set out in the company's most recent MD&A and other public documents filed under the company's profile on CDAR. Although the company believes that the 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. 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.
spk05: Thank you, Frank. My name is Jennifer Twyner McCarron, and I'm the CEO and Chair of Thunderbird Entertainment Group. On behalf of the company, I'd like to thank you for joining today's call to discuss our year-end 2023 results, which ended June 30th, 2023. Thunderbird CFO Barb Harwood is with me, and we appreciate you taking the time to hear the company's earnings updates. Once Barb and I are finished, we will be happy to answer any and all questions. Today, I am going to start by providing some clarity around the company's Strategic Advisory Committee updates. Since March, the Advisory Committee has been assessing Thunderbird's capital allocation strategy and all opportunities to maximize shareholder value for ultimate recommendation to the board. This has involved working along ACF, our 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 the company receives an offer that meets our standard for shareholder value creation. Our most recent analysis with the bank has indicated a considerable difference between our internal assessment of Thunderbird's valuation based on our line of sight on production services booking, promising owned IP pipeline, and expectations for margin expansion versus the valuations that prospective buyers might be willing to offer. given the current negative macro environment in the media industry. We believe that this discrepancy does not reflect the true potential and long-term value of Thunderbird. As such, we believe it is in the best interest of Thunderbird and our shareholders to wait to go to market until our strategic initiatives begin to materialize to demonstrate our true worth. While we continue to evaluate all unsolicited inbound expressions of interest. This approach will ensure that when we do begin proactive engagement, we will come from a position of strength to ensure maximum value for our shareholders. In the interim, to showcase our unwavering belief in our company's value and future prospects, we are announcing that the board yesterday approved the company to pursue a normal course issuer bid through the facilities of the TSX Venture Exchange, which is subject to prior acceptance by the TSX-V. This initiative underscores our commitment to our shareholders and our confidence in Thunderbird's direction. We will be doing this as expeditiously as possible. Once we complete and submit our application to the TSX Venture and designate a broker, we will be able to share more details with you such as the number of shares sought and what percentage of our public float are issued and outstanding shares that represent. I can say that TSX-C companies may apply to repurchase a maximum of 10% of their public float, and this is what we are seeking to do, and also commonplace with other companies we've looked at. Details regarding this will be provided in a subsequent news release as they become available. We appreciate the continued support of our shareholders, employees, and partners, and we remain dedicated to our mission as well as to delivering outstanding value to all stakeholders. As expected, our 2023 financials do not reflect what we had hoped at the start of the financial year due to headwinds Thunderbird faced and several productions living into fiscal 24 and 25. That being said, Thunderbird is very much a strong company with valuable assets. We have a very healthy balance sheet, solid financial projections, which we will go into over in more detail, a robust pipeline with an intentional mix of owned IP and service production, and internal capabilities for consumer products and global distribution. We have strong footholds in animation and unscripted content. We have several projects in development with various networks. And we have a newly launched scripted team based in LA that is now ready to hit the ground running as the actor's strike is officially wrapping up behind us. One of the productions we are excited to move forward with, just as an example, is New York Times bestselling novel, Mad Honey, co-written by renowned authors Jodi Picoult and Jennifer Finney Boylan for a premium series adaptation. Now let's take a deeper dive into our company's strengths to better understand how they put Thunderbird in an attractive position within the industry. We are focused on owned IP and the ancillary revenue streams that go alongside it. Owned IP is crucial to building the long-term value of our business, as it will increase our multiples in the marketplace. There is a lot of buzz around our company right now because of the team's amazing talent and its new and legacy IP. This week, we shared that renowned toy maker Jazzwares will act as a global master toy licensee for Mermacorno Starfall. This is the original animated series produced by Atomic Cartoons in partnership with Tokidoki, with the licensing program being co-managed by Thunderbird Brands and Tokidoki. This multi-category line will include, but is not limited to, figures, dolls, play sets, squish malice, I'm sure a lot of you have those in your house. Halloween costumes and pet costumes, all created for distribution channels, including mass market, e-commerce, and direct-to-consumer platforms. The Starfall line is set to launch with limited assortment of projects in spring 2025, with a larger rollout in the fall. Statistics Digital Market Outlook estimates that global toys, hobby, and DIY e-commerce are projected to reach more than $1 trillion by 2026. This underscores the value of our partnership with Jazwares and how it is a great win for Thunderbird as we leverage our own IP through all cross-media exploitation. For those of you who aren't familiar with Jazwares, it was named Master Toy Licensee for Sanrio Global Sensation, Hello Kitty, and Friends in North America. The Toy Foundation also recently announced Squishmallows from Jazwares as the winner of both the Toy of the Year and People's Choice Awards as part of the 23rd edition of the Toy of the Year Awards and Celebrations. We also recently announced that Rocket Saves the Day, an original TV special from Atomic, will debut on PBS Kids in the U.S. on December 26. This one-hour special is based on Todd Hill's New York Times best-selling Rocket book series. It's both entertaining and educational, with exceptional animation. Thunderbird will manage and control global media rights to this owned IP production. We are so proud of Rocket Saves the Day and its curriculum to help launch new readers. And we look forward to bringing families together for this captivating and, I think, adorable content. As we expand our portfolio of IP projects, we're looking forward to sharing more details about some of the exciting announcements we have on the rise. And these announcements span multiple genres. One of these represents our first owned IP adult animation series. We've recently sold this series and are now in full production, with Thunderbird handling global distribution as well. More details will come as soon as we're able to share. Critical to our growth is also the success we've had with the legacy IP like Highway Through Hell. With the 12th season having premiered in August, Highway Through Hell represents one of the longest running unscripted series in Canada. This is a testament to the hard work of the many individuals involved in making the show happen. And it's also an example of what it takes to create and foster a brand that makes an impact. We are proud to have Highway Through Hell as a key component of our Thunderbird Brands offering, with distribution in more than 170 territories and counting. We're also focused on service productions. The relationships these productions forge with big companies such as Disney, Netflix, Apple TV, Max, and Adult Swim, and the experiences they offer on big brands such as Curious George for Peacock, 101 Dalmatians for Disney, and Trolls for DreamWorks are second to none. Our production service work is a key element of our growth strategy. Service work is margin-driven and provides the opportunity for steady cash flow. Our service work includes several of what we call high-end building block shows, such as Marvel's Spidey and His Amazing Friends for Disney Junior, Lego Star Wars for Disney Plus, and My Little Pony for E1 and Hasbro. These multi-season shows provide ongoing work for the team, driving us forward at a time where the industry itself is shifting. Our long-running relationships with companies like Lego are resulting in multiple years of steady work ahead. And this work continues to be recognized broadly within the industry. Through Atomic, we've produced award-winning productions such as Molly of Denali, Last Kids on Earth, and Beat Bugs. And through GBM, recognitions include multiple awards for series such as Dead Man's Curse, Highway Through Hell, and Reginald the Vampire. In fiscal 2023, additional company recognitions included Thunderbird ranking in the top 10 of all independent production companies in Canada on Playback 2023 Indie List, Atomic being included on the annual Kids Screen Hot 50 list of top production countries around the world, Molly of Denali receiving a 2022 BC Reconciliation Award, a 2022 Kids Screen Award for Best Web and App Series branded, and GPM was named to RealScreen's Global 200 list for the 11th consecutive year. Excitingly, in September, the Globe and Mail also included Thunderbird as one of its top-growing companies with a verified three-year growth rate of 158%. It's no secret that the entertainment and media industry is at an important inflection point, and many companies have, and are reconfiguring their businesses, re-leveling spending, and adjusting growth rate projections. For example, Netflix expects to spend $17 billion in 2024, which is steady with 2023 levels. And after implementing several cost-cutting measures in 2023, Disney Plus is expected to increase its annual investment in original content by 82.8% between 2022 and 2027. Digital TV research noted that AVOD revenues for TV series and movies will reach 69 billion by 2029, which is up 30 billion from 39 billion in 23. However, while these figures demonstrate growth, it should be noted that they are lower than originally forecasted. The takeaways from these statistics are that growth is measured, and we are no longer in a period where streamers' content demand is insatiable. However, while growth is more measured, there's still a place for premium content. People always need entertainment and a healthy escape. This is especially true in an overall market downturn when people look to consume more content at home. Again, Thunderbird remains incredibly well positioned due to the excellent reputation of the team, the company, and the quality of work that we deliver. Importantly, we have also taken measures to right-size our business. and will continue to make decisions that ensure we remain both nimble and efficient while providing the highest quality productions to our clients. We have a close eye on expenditures and will ensure we are spending within our dollars in the areas of the business that need it most. In June, I had noted that we were the most booked we'd ever been for this time of year. While that is held true, over the summer with the strikes, despite them not affecting animation or unscripted, there was an overall slowdown in content orders. And we are now right-sizing the business to the work and making prudent decisions at every level of the business to operate as efficiently as possible. Finally, now that the strikes are ending and the industry is stabilizing, as a very well-regarded, high-quality studio, Thunderbird will be the beneficiaries of a renewed uptick in content. With this, I'll pass things over to Barb to go over the numbers. I will then share specific updates from the team before we move to our Q&A.
spk03: Thanks, Jen, and good morning and good afternoon to everybody, and thanks for joining. 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 30th, 2023, as compared to the comparative periods in the prior year, variances of 6.4 million and 17.7 million, respectively. Both the number of episodes of IP projects delivered and recognized and the magnitude of production service projects have increased year over year, 125 total half hours of IP deliveries in the current year compared to 120 total half hours in the prior year. Free cash flow increased from negative 0.7 million to 8 million, and decreased from $13.9 million to $4.3 million for the three months in year-ended June 30, 2023, as compared to the prior year, variances of $8.7 million and $9.6 million, respectively. The decrease for the annual period is primarily due to the repayment of interim production financing, offset by positive changes in working capital. Adjusted EBITDA decreased from $2.4 million to $0.7 million and from 21 million to 12.8 million for the three months and year ended June 30, 2023, as compared to the prior year, variances of 1.7 million and 7.3 million respectively. The decrease is attributable to an increase in general and administration expenses and industry-wide economic factors resulting in the delay of several productions. In the G&A expenses of 27 million are 2.7 million of costs related to the proxy contest that occurred in fiscal 2023 that have been added back in the calculations of adjusted EBITDA. The company is committed to managing the G&A expenses going forward and to respond appropriately to the changing industry conditions. Gross margin, which we define as revenue less direct cost divided by revenue, has stabilized in fiscal 2023 at 22%. Gross margin percentage changes due to many factors, including type of genre, size of budget, the timing of certain tax credit accruals, level of the company's investment in our own IP, and the company's ability to control inflationary costs in a timely manner. For IP, GM's percentage in the first year of completion is based on management's expectations of future cash flows over a 7-10 year period. These can change due to market conditions and cause a fair market value correction in subsequent periods. Also, each IP genre can have a different margin profile based on the company's ability to license it into future periods. In the last two years, the company has been recognizing the completion of Reginald the Vampire, a live action scripted series. Reginald's budget and related revenue is higher than other live action scripted series the company has recently produced. The gross margin dollars are significant. but the higher revenue creates a lower than average gross margin percentage as compared to the company's unscripted animation and smaller Canadian facing scripted series, and therefore has the effect of decreasing the overall average gross margin percentage. For production services, the gross margin percentage decrease over the last three years is somewhat due to the team retention and inflationary challenges that occurred during the first years of COVID. Several of the company's budgets were committed before these inflationary challenges, and though many of these costs could be passed on to clients, there was a portion that were not. In addition, there has been an increase in animation gross tax credit deals, where the tax credits are remitted back to the client. And though the gross margin dollars remain the same, the increase in both revenue and direct costs causes the gross margin percentage to be less than net tax credit deals. Thirdly, as we handle more work from tip to tail for major clients like Disney and other global players, the flow through work we handle for them, like scripts, voices, and post, lowers gross margin, but increases our value to these clients, leading to more repeat business and has led to significantly bigger projects. Finally, the company's productions have increased during the last three years. In fiscal 2020, the company delivered 89 half hours, with 125 half-hours being delivered in fiscal 2023, a 40% increase. In the latter six months of fiscal 2022, the company focused on team retention and investment in new hires to properly keep up with this production growth. As of the end of fiscal 2022, the company completed its investment and growth objectives with respect to labor costs. we will continue to monitor and adjust the labour base as both internal and external conditions change. 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 EBITDA dollars to return to levels attained prior to fiscal 2023. Looking to the next two years, The company anticipates a double digit compound annual revenue growth rate from fiscal 2023 to 2026 with forecasted revenue of approximately $220 million in fiscal 2026. Additionally, management is targeting adjusted EBITDA margin growth with double digit margins projected in fiscal 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 green light, which could impact the company's outlet for the next fiscal year. Underbird 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 plate of returning and new series. To address the uncertain market conditions, the company is committed to maintaining a strong balance sheet and prudently managing our cost base while pursuing sustainable growth. Thank you, Jen, and back to you.
spk05: Thank you, Barb. As of June 30th, 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 IT, which we get paid when we deliver, so we're not getting recurring revenue, and 18 were service production. One production is a global IT buyout, where the production was originally optioned by Thunderbird and then acquired by the partner. At the end of the fiscal, the company was in various stages of production on 21 animated series. Examples of these programs include Princess Power for Netflix, Marvel's Spidey and His Amazing Friends Seasons 2, 3, and 4 for Disney Junior, Cocomelon Lane for Moonbug and Netflix, My Little Pony for E1 and Hasbro, The Mindful Adventures of Unicorn Island for Headspace and YouTube, Zombies, the reanimated series shorts for Disney TVA, Rocket Saves the Day, licensed to PBS, and Murmur Corner Staff Call, licensed to Max. On the unscripted side of things, the company was in production on five unscripted series, including Highway Through Hell, season 12 for Discovery, Dead Man's Curse, season 2 and 3 for History Channel, and Style, season 2 for HGTV Canada. GPM was also in production on Reginald the Vampire, season 2, for Sci-Fi Amazon, starring Jacob Batalon, and Boot Camp, a scripted production based on the popular WattCod story by Gina Musa. Speaking of Reginald the Vampire, Season 2 of this series was recently awarded an Environmental Media Association Gold Seal for its dedication to sustainability, and the production won the Real Green Earth Day Challenge, raising over $35,000 for local park and conservation initiatives. We couldn't be prouder of these achievements and shows like Reginald, with sustainability built into it, are the way of the future. As part of our company's ESG plan, we recognize the distinct position and responsibility we have to advance and influence culture when it comes to critical issues facing the world, such as climate change and diversity and inclusion, both on and off screen. On screen, Thunderbirds Productions have long included and been recognized for their achievements in advancing diversity. We are also now starting to include environmental themes. More company examples include Princess Power having episodes dedicated to cleaning up beaches and saving the bees, and Molly of Denali being a catalyst for climate change conversations with young children and their families. Molly was also recently recognized by Fast Company for influencing these critical ESG conversations. Offscreen progress is transpiring as well, as Atomic, Thunderbird's animation group, is pursuing B Corporation certification and will join the global community of like-minded businesses that share a collective vision of creating an inclusive, equitable, and regenerative economy. Great Pacific Media, Thunderbird's unscripted group, is also looking into this. Thunderbird is tracking its carbon footprint, both at the company level and on all Thunderbird productions. through a new partnership with Watershed, an enterprise climate platform backed by climate luminaries like Al Gore and Mark Carney. And we will be issuing our first sustainability report later this year. We want to be leaders when it comes to sustainability and are excited to update you with our progress in this respect. Speaking of leadership, with every opportunity we are given to represent Thunderbird, both locally and globally, we strengthen our position as a leader in the entertainment industry. Recently, I was honored to participate in a panel, the Ottawa International Animation Festival, about the state of the industry. Specifically, we discussed how to stay resilient and thrive during times of change and uncertainty. A relevant topic for today's industry, as I touched on earlier. Among the key takeaways was the importance of looking for silver linings, and kids and unscripted content remain king as they still are the stickiest for all of the buyers in terms of gluing subscribers. Thunderbird President and CCO Matt Berkowitz also recently returned from Australia, where he was invited to attend the inaugural Children's Content Summit as a delegate to co-lead a discussion on navigating the Canadian content marketplace. Industry leaders from around the world gained insight into the state of the Canadian entertainment industry and how to successfully sell shows in today's global climate. As we identify opportunities to expand our beloved brands, to reach new audiences, These are the types of conversations that we need to be at in the forefront as industry leaders. These opportunities build trust in our leadership and trust in the Thunderbird brand. They enhance our profile and create buzz for our projects. So when we come to the market with our latest projects, buyers are excited to hear about what we've been working on. For example, next week, Thunderbird will be showing several series to buyers at MIP Junior and MIPcom in Cairns, including Thunderbird-owned IP Rocket Saves the Day, Thunderbird distribution of mittens and pants for CBC Kids, Sky Kids, which has recently just been sold to 34 territories. The team will also be actively pitching brand-new Thunderbird-owned IP Marmocorno Starfall to international buyers and catalog IPs such as Kim's Convenience and Strays, along with other select library titles to various broadcast, SVOD, and AVOD platforms. The Thunderbird booth showcasing the company will be chock-a-block with meetings, and I will be there enjoying it. FAST channels will also represent another opportunity for Thunderbird with FAST revenues for TV series and movies expected to reach $17 billion across 138 countries in 2029. Thunderbird is already making headway in this area, with two of our IP series mentioned above, Kim's Comedians and Strays, now streaming on CBC Comedy, the newly launched FAST channel for CBC. We are on the precipice of a really exciting time for Thunderbird. We have a robust production slate with new and legacy-owned IP, as well as service productions, and we have a lot more in the pipeline. We are still a huge go-to for the industry thought leadership, and we are furthering our expertise in important new areas, including sustainability and entertainment. Above all else, we are prolific, the teams are, at creating excellent quality content. This is the thread that carries us through each ebb and flow in the industry and this is what keeps us on track to becoming the next major global studio thank you for your continued support interest and investment in our journey we will now open things up for questions absolutely if you would like to ask a question please press star followed by one on your telephone keypad if for any reason you would like to remove that question please press star followed by two
spk04: Again, to ask a question, press star 1. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered. Our first question is from the line of Aravinda Galatahunj with Kinnikord Genuity.
spk00: You may proceed. My apologies, our agenda has dropped.
spk04: Our agenda has dropped. Again, to ask a question, press star one.
spk00: We now have a question from Alyssa Dong with Bloomberg. You may proceed. Hi Alyssa. Hello. Alyssa, your line is open. Alyssa, your line is open. Once again, to ask a question, press star 1.
spk04: We now have a question from the line of David McFadden with Coremark Security. You may proceed.
spk08: Question. So, just looking at the fourth quarter results, the fact that it was lower than consensus on what we were looking for, would you attribute that to mainly timing or was there some other issue?
spk05: I think it's definitely timing. You know, Thunderbird chased some headwinds in 23 that we're all aware of, some shifts internally and also just the market overall, developing content a bit longer. So we didn't actually lose any work. It just shifted.
spk08: Okay, okay. And then you talked about in the fourth quarter the G&A being maybe a little elevated. So can you just confirm? It seems like with your prepared marks, but can you just confirm that you have taken action to reduce G&A going forward? Is that true?
spk05: A hundred percent, yeah. We've been steadily making prudent cuts, you know, with looking at every aspect of the business right now to sort of right-size. As Barb noted, there's a lot of things that affect gross margin, but with G&A, certainly you should see, you will be pleased going forward the steps the company has taken. We built up with all the work expected, some of it shifted, and now we're quickly and as fast as possible right-sizing the business.
spk08: Okay, okay. And then, so you've given, you know, a bit of an outlook for 24 and beyond. Is it reasonable to expect that the 24 EBITDA would be in the range of, say, 18 to 20 million? Is that reasonable?
spk05: That's reasonable.
spk08: Okay. Okay, great. And then you announced, you know, Master Toy License with, I think it's Jax. right? Just wondering if you can comment on the potential upside from Jazzware. Thank you. It's huge. Yeah?
spk05: The potential upside? I mean, that's when things can get really exciting. It's a great toy line. As I explained, they've got the hottest selling toy, Squishmallows, which they'll be applying to our owned IP, plus every other way of possibly using the brand to market. It's exciting because Tokidoki is already a very well-known brand, and so the Mermacorno is an aspect of it that we own. So launching that new toy line with already having the notoriety of Tokidoki behind you is extremely promising. And when you look at case studies, like why Hasbro originally bought E1 for $3 billion, that whole deal was based on something like Peppa the Pig. So we have to keep taking calculated swings, which we're doing. And, you know, anyone I talk to that has done this for many, many years, it's a law of averages. Our time will come, and I believe in our team and the quality of the creative. So this is a really exciting potential upside for all of our stakeholders.
spk08: Okay. And you don't have approval yet for the NCIB, right? Like you're applying for that?
spk05: We've got approval for the board to apply, and we're already underway with the application process and have vetted some of the obstacles that we might face. So we are applying for the maximum that we can do, and that is underway. We had our year-end board meeting yesterday, so the application is going in.
spk08: Okay. And so assuming you get approval, which probably is easy to obtain, Do you expect to be active in the NCIB right away? It's just some companies apply for these NCIBs and they never actually do anything. So I'm just wondering what your intention is. Do you really intend to start buying back stock?
spk05: That is the intention. Otherwise, we wouldn't have done it. Certainly, we feel stock is undervalued. We want to reward shareholders that want to stay with us, provide an exit for those that might not show our belief. We couldn't believe more in the years to come. I think we've come out of a challenging period of headwinds, but they're behind us. And, you know, this is something we're earnest about. Of course, there can be mitigating factors. What if we sell the company in January? I mean, there's a whole bunch of things that we're streaming, but we have to do something to honor our loyal shareholder base.
spk08: Right. Okay. Okay, that's it for me. Thank you.
spk04: Thank you, David. Thank you, Mr. McFadden. Our next question is from the line of Masa Song with Canaccord Genuity. You may proceed.
spk06: Hi, it's Aravinda. Sorry, I cut off earlier. Just had a couple of questions. I wanted to maybe just go back to fiscal 23 for a second. Jennifer, I know that when you kind of talked about when you had initially indicated that fiscal 23 three would be lower than the previous year, you know, I certainly got the impression that it was not dramatically lower. So it's not like 12, 13 million. I'm trying to understand when sort of that variance occurred was like sort of the epitome number we ended up with is that something sort of, you know, you saw potentially coming on in the last couple of months and just trying to understand where sort of that deviation would have occurred based on your own budgeting as you sort of you know, look to update your own expectations?
spk05: Yeah, certainly. There's been headwinds with the strikes. And although the strikes can affect us directly because animation can still function and so can unscripted, the streamers are certainly, you know, using it as a bit of a time. The buyers had used it as a time to just completely shutter, re-strategize, retrench, you know, improve their balance sheets without ordering any content. you know, some forms of consolidation coming up amongst the buyers. So they also delayed green lights. They're managing their fiscal. You know, it's a bit of a juggling. So work did not go away. It just shifted more than we thought it would. You know, since the summer, things have really shifted. We are seeing now the good news that the strikes are wrapped up, that it's sort of an increased optimism And people need content. You can't run these major subscribers without new compelling content. Again, it's a focus on quality over quantity, which Thunderbird is absolutely at the forefront to excel upon. We have a Canadian base, which is getting more and more attractive with our ability to access tax credits. We're tapping into that heavily, the same time zone to all the major buyers. And we heard, you know, I was just in Los Angeles this week where we had our year-end board meeting. We heard from several major buyers that were their number one partner, not because of me, but because of the teams and their hard work. So we're very well positioned going forward. To answer your question directly, lots of shifts since June.
spk06: Okay, okay, that's good. Thank you. And then I wanted to get a sense, I know you've given pretty good feedback I think as much color as you can give on revenue trajectory and EBITDA. Is there any kind of puts and takes we should consider when we're looking to project free cash flow? I mean, if you're talking about kind of getting back to sort of pre-23 level EBITDA, should we also be thinking about pre-23 levels of free cash flow? Are there any other factors that would kind of deviate from that?
spk03: Yeah, I'll hop in for that conversation. You know, we have plans, you know, we're always trying to grow our IP and right now we are investing fairly heavily in our own IP so we can build it out and, you know, raise our results over the next couple of years and have all those in our library. So we will be focused. on having our cash invest in that IP to close financing and then taking those rights and selling them once the productions are done. So I think it's probably not going to get back to the levels where we weren't investing as heavily, but certainly that will come back once our investment in those projects returns through distribution and library sales.
spk05: Yeah, and to add to that, Barb, exactly that. We have tightened those teams, right? And, you know, we've made, you know, some real tightness across the board. Like, we're focusing in on a company. Let's bet on the ones we know we can bet on. And there's less content being ordered, but there's still a ton of content being ordered, and we want to be well-positioned to do that. So it allows us areas to be more prudent as well.
spk06: Okay, okay, thank you. And then lastly, in terms of that mix, I mean, you did like the IP proportion of your revenues did sort of tick up during fiscal 23 from 20% last year to 24. We should obviously expect that kind of, you know, movement towards 30% over the next couple of years, maybe past that. Is that the kind of general expectation you have?
spk03: Yeah, it's probably not so high. It really depends on the type of projects that, you know, we're after. But with the premium scripted division, you know, we are going to have expectation of those higher revenues and those higher budgets in that sort of division. So, you know, we do expect that growth rate.
spk06: Okay. Okay, great. Thank you. I'll pass the line.
spk05: Thank you, Aravinda.
spk04: Thanks. Thank you. Our next question is from the line of Zach Buckley with Buckley Capital. You may proceed.
spk01: I was just curious if you could provide any more detail around the strategic process, specifically around any bids that you may have received.
spk05: Oh, hi, Zach. Sorry, you cut out when you said specifically around and then there was a muffle.
spk02: Oh, sorry. I was just saying specifically around any bids you may have received.
spk05: Certainly, yes. You know, we have had inbound offers of interest. Even though we have not gone to market, we did not hang a for sale sign on the company and go out and canvas a bunch of people because, as I discussed, you know, you don't want to do that and then it kind of sticks you in a failed process. And because the visibility for the next three years is so good, why would we not wait to go out in a bigger position of strength? And I don't mean waiting three years. I mean waiting like, you know, into the next calendar year that's it um so but we do entertain all inbound offers it's just when we look at the headwinds we faced in 23 looking at the results today they're not really indicative of the company um when you look at what our overall epitel levels have been uh what's projected so instead of you know not waiting six months or three months um to kind of go to market at a position of strength we would not be doing the shareholders service uh for any inbound offers that are less than we know we're actually worth.
spk02: Got it. And just to clarify that, you're saying that theoretically you could look to sell the business as soon as calendar year 24?
spk05: Oh, 100%. Got it.
spk02: Okay. That's it for me. Thanks so much. Really appreciate it.
spk05: Thanks for clarifying that, Zach. I really appreciate it.
spk02: Absolutely. Have a good day. Thank you.
spk05: You too.
spk04: Thank you. This concludes our call today. If you have any questions, please call 1-604-683-3555 or email investors at thunderbird.tv.
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