Thunderbird Entertainment Group Inc. (TBRD.V) Earnings Call Transcript

Greetings, and welcome to the Thunderbird Entertainment Investor Presentation. [Operator Instructions] It is now my pleasure to introduce our host, Glen Akselrod, President of Bristol Capital. Thank you. You may begin.

Thank you, Diego, and thank you, everybody, for joining our webcast today with Thunderbird Entertainment. Again, the purpose of today's presentation is to give our audience a better understanding of the business through the presentation, and then questions with management. The discussion today is going to be led by CEO, Jennifer McCarron; who is also joined by CFO, Barb Harwood; and President and CCO, Matthew Berkowitz. You should see the presentation in the webcast. We'll break for questions, as Diego mentioned, at the end of the formal presentation. When we do break, we encourage those questions. And as a reminder, we're only taking questions through the web portal. If you're listening over the telephone, please access that web link sent earlier to ask a question. Remember, you could submit a question using the text box at any time. I’ll ask the questions on the air for everyone to hear, and then Jennifer, Barb or Matt will answer. I'm not going to reference any names, but simply read the questions asked. As we have a fairly large audience today. If I can't get to your question online in time and it has not yet been addressed during the call, then [ Kambi ] , I'll come back to you by e-mail. I'm not going to read the forward-looking statements, but I do state that they apply, and I reference them on Page 2 of this PowerPoint. With that said, once again, thank you for joining us. Remember, this is fairly informal, and we do encourage those questions to help you better understand the business and its growth path. And now I'll turn the call over to Jennifer to start her part of the discussion and presentation.

Thank you so much, Glen. I want to start by saying, first of all, thank you for tuning in because there is a World Cup match starting right now. So, Go France, Go Morocco, whoever you're cheering for. I also want to say that we will not be talking about the current proxy fight. We're going to be talking about the health of the business and where we're at. So please refrain from any questions along that line. For everyone now joining us, a little bit about Thunderbird. We are a high-quality global content company. We create, own and distribute award-winning factual, animated and scripted content worldwide. We are well on our way to becoming next major global studio, and have over 250 partnerships such as Netflix, HBO, Max, Apple, Disney, Discovery Channel, NBC Universal and many more. Our mission is to create -- I'm going to go past the forward-looking statement. Our mission is to create content that makes the world a better place, makes people happy and provides a much needed escape, especially during these unprecedented times. Featured here are some of our amazing LEGO characters that were just nominated for 2 Emmy Awards. We continue to enjoy a long and fruitful relationship with LEGO, with work planned for years to come. On our journey, we were founded in 2003 with the mission of creating libraries to lift and fund IP exploitation and create major global brands. In 2014, Great Pacific Media was acquired, and in 2016, Atomic Cartoons, and the original mission remains very much alive today as our major global brands delight audiences around the world and are increasingly moving into ancillary business like distribution, consumer products, toys and video games. Our service and IP production fleet continue to grow with Thunderbird working alongside of all of the major players, keeping quality of our North Star. As buyers create more quality over quantity and look for that elusive hit, Thunderbird is the destination of choice. In our executive summary, we're a micro-cap company with our fiscal year '22 year-end revenue of over $149 million, increasing 34% in fiscal year '22 and adjusted EBITDA of over $20 million, and we're growing. We have 28 shows in production, 8 of which are IP and 2 of which are partner managed, and I'll discuss more of that delineation later. We are debt free and free cash flow increased year-over-year in fiscal year '22 by 13% from $12.3 million to $13.9 million. In Q2, we plan to release some financial guardrails, helping to guide the predicted growth of Thunderbird over the next 3 years. We're just waiting for several project time lines to lock. The 2 main drivers of our company are Atomic Cartoons, Kids & Family, and Great Pacific Media, our factual division. Our award-winning team of over 1,200 artists is based in Los Angeles, Vancouver, Ottawa and Toronto. In 2022, Thunderbird was awarded more than 21 industry and business awards, ranging from Great Pacific Media, receiving a BC, Business of Good Award for diversity and inclusion, to Molly of Denali, receiving a 2022 NAMIC Vision Award, to Atomics Head of Production, Joel Bradley being recognized as one of business in Vancouver's top 40 under 40. We're very proud to announce that the Canadian government is awarding Atomic Cartoons the prestigious reconciliation award this January for our work on Molly of Denali in -- with indigenous communities. Thunderbird Productions were also awarded 3, 2022 Canadian Screen Awards, 6 Leo, and just today, just hot off the press, Kidscreen awarded Atomic a top 10 hot production company. Our extensive library continues to generate recurring revenue for us for names such as Kim's Convenience, DaVinci's code, Beat Bugs, Game of Homes and more. With new alliances with toy and gaming companies, we're further able to leverage our IP and content into the world of merchandise, gaming, microtransactions, which will open up new and possibly very lucrative revenue streams for our company. We've entered a new phase of the streaming revolution, but this is really good news for Thunderbird. Major streamers are adjusting their offerings to attract and retain subscribers by creating tiered packages and opening the doors for more advertising to support and to stay competitive and to win in a fierce market. What investors in Thunderbird should take confidence in is that, while streaming [ world ] may be entering a new era, Thunderbird is a beneficiary of these events. Our high-quality family-oriented programming will be in greater demand, as large players cut back internally and turn the Thunderbird for excellent content. Again, we have 0 corporate debt. Our free cash flow is on the rise, and we're young, we're nimble and we're growing. Our experienced executive team, Barb, Sarah and myself are all highly operational. We've all grown up in this industry. And Matt and Richard are key to our growth. Their talent, gravitas and respect within the industry is incredibly well known, and being in L.A. with the push for IP ownership and ancillary business, plus an ever commanding presence in L.A., nurturing relationships with all of our key buyers. Taking a closer look at our Atomic Cartoons, our Kids & Family division. We produce high-end content across multiple 2D and 3D pipelines and genres, spanning pre-school, comedy, action, adventure and everything in between. Some of our titles you recognize are: Spidey and His Amazing Friends, Disney Zombies, our ongoing LEGO content work that includes Star Wars and Marvel franchises with more announcements to come, My Little Pony, Young Love, that's the upcoming Sony animated series that will be on HBO MAX based on the Academy award-winning short film Hair Love, Teenagers in Asia. This is another adult series and great follow-up to our doing Little Demon, another adult series, and several yet to be announced very exciting Netflix shows. Plus we do CoComelon, with anyone listening in with kids 3 and under will likely know that show. Our partner managed show, Oddballs, which just launched on Netflix, debuted #1 on Netflix Kids top 10 in the U.S. and multiple other territories, and stayed in the top 10 of all Netflix shows, including adult. We're increasing our IP ownership, again, providing ancillary revenue in toys, merchandise, music, gaming. We also embark on [ co-pros ] like the highly successful Molly of Denali. Our work is highly sought after as evidenced by being trusted to handle major global brands like Donald Duck, 101 Dalmatians, Spider Man, Troll, My Little Pony, and the list goes on. Taking a look at our Unscripted division, Great Pacific Media. We are a global leader in factual television, widely regarded as best-in-class, add to this relying heavily on unscripted programming during the pandemic and witnessing this genre store, broadcasters and streamers continue to order and provide a steady flow of unscripted programming. Concerns over potential writer strike in May 2023 have further fueled the demand with unscripted programming, having lower production costs and high approval ratings. They will remain a key part of buyer's strategies. GPM generates its own IP, almost 100% owned and developed by award-winning content creators with an eye for diverse entertainment across genres, with authenticity and aspiration befitting the times in our Vancouver and Toronto studios. New IP announced are shows like Styled for HGTV, and Hulu renewed into Season 2, and Deadman's Curse for History in Hulu, also renewed into Season 2. Highway Thru Hell is going into its 12th season with more to come. The international hits keep on tracking and Highway Thru Hell is really one of the most successful, independently-owned Unscripted brands in the world, with 2 spin-offs, Heavy Rescue: 401, which was in seventh season, and Mud Mountain Haulers, which is now in its third season. Great Pacific Media also produces for our Thunderbird Scripted division, 2 dramatic projects in 2022, Reginald The Vampire, and our movie of the week, Boot Camp for Wattpad Studios. Taking a look at our Premium Scripted division, which I'll touch on more later. Our move into Premium Scripted content will build out that third key content vertical on our path to becoming a major global studio, while adding incredible value to our existing library. We are well established in Animation and Unscripted, and this is our chance to grow in another area of content that's booming. Live action scripted is currently the biggest spend for all TV streamers, networks and broadcasters. 2022 is already outpacing 2021 by 16%. We are well on our way with our first show, Officer Down, which Matt Berkowitz will tell you a little bit about later. Going forward, this slide, you can see, supports the move into Premium Scripted. It is a boom. Taking a closer look at our consumer products and distribution division. In 2021, we were thrilled to announce the hire of industry heavyweight, Richard Goldsmith, well regarded as one of the best in the industry, having worked at Disney, Warner Brothers, The Jim Henson Company. Richard joined our company because he saw the incredible work taking place. This division allows us to further increase and exploit our IP ownership, video games, merge all across media exploitation and increased ownership as we distribute content around the globe. Owned IP translates into toys, bedsheets, videogames, you name it. Unannounced properties like Mermicorno from Tokidoki, the insanely popular Japanese lifestyle brand, will be set up under this division. And instead of hiring a third-party consumer products and distribution company, we will be able to further increase and leverage ownership for Thunderbird. Additionally, we can now serve as a distributor and consumer products agent for other companies requiring this expertise, further opening up a new line of business for us. As an example, most recently, we acquired global media and CP rights to Mittens & Pants. This pre-school series will debut on CBC Kids, Canada and Sky Kids, U.K., in 2023, and is currently having very good success being sold to platforms globally. There are more content acquisitions to distribute like Mittens & Pants to come. Stay tuned for some get announcements. Now taking a look at our financial overview. Our business model -- I really love this slide as it breaks down the business of Thunderbird. We have 3 buckets: IP, which is where we fully own it. The content lives in our library forever. This full control allows us to leverage for distribution, consumer products and other ancillary revenue streams. Examples would be Highway Thru Hell, Mud Mountain Haulers, Strays, Kim's, The Last Kids on Earth. We get paid upon delivery. Service. This is where we're hired to execute on all projects 100% cash flow plus a very healthy producer fee, which allows for smoother quarters at a very nice balance. Examples would be My Little Pony, Trolls, Pinecone & Pony, the list goes on. The great news in service, and we do an amazing job with our partners, it's that much easier to turn around and sell our own IP. The third bucket is a global IP buyout, Partner Managed. The differentiation is, a global IP buyout is when we develop the show and then sell it to a streamer. They retain the copyright, but we retain part of the back end, the ever-elusive merchandise. Partner Managed may come to us from our partners. But because we are hired to handle everything from tip-to-tail, we again are awarded a piece of the back grip end after the project is fully cash flowed, plus a substantial producer fee, and again, a percentage of back end sales of consumer products, merchandise, gaming, all across media exploitation. Examples will be Princess Power, which Matt's going to walk us through an example of coming up, Oddballs, Hello Ninja, and Dogs in Space. Tax incentives and other government support. A wonderful part of being a Canadian domiciled company are the incredible tax incentives that have been around for well over 30 years. There was a new bill introduced in November of 2020 by the Canadian government, which requires streamers to invest in and buy a certain percentage of Canadian content. Streamers will go with their trusted partners like Thunderbird, and as a result, when this finally passes, this will just allow us to further turn on more of our own IP. Essentially, in a nutshell, up to 50% of Canadian resident salary will be covered by the government. This allows us to put higher quality on the screen and present high-quality budgets to broadcasters that are impossible to say no to. With that, I'm going to turn over for our revenue side to our CFO, Barb Harwood.

Thanks, Jen, and hello, everyone. As you can see, over the last 3 fiscal years from fiscal 2020 to fiscal 2022, Thunderbird has had an 83% in revenue increase from $81.3 million to $149 million. During the same 3 fiscal years, adjusted EBITDA has increased 30% from $15.5 million in 2020 to $20.1 million in 2022, which ended June 30, 2022. We have no corporate debt, as Jen said, and increasing free cash flow year-over-year. Here on the next slide is a snapshot of our financial statements for the last 2 fiscal years and our most recently reported quarter, being the first quarter of fiscal 2023. A couple of significant line items in the balance sheet are the following: At the end of September 30, 2022, we had cash of $32.2 million. This cash is further segmented into cash that is set aside for production of $22.4 million and cash that is available for both working capital and other uses of almost $10 million. The majority of trade receivables here are federal and provincial tax credit receivables, which are claimed at the end of the taxation year in the various production companies. These tax credits help fund between 20% to 40% of our production budget, and are assigned to the bank as part of our interim financing of each production. Interim production financing is how we cash flow each production. Each production is 100% financed before we go into production, with a combination of license fees, distribution advances and tax credits. In particular cases, Thunderbird will self-finance up to 20% of a production budget in exchange for distribution rights. Because the cash inflows of the financing components don't match the production cash outflows, we use the exploitation agreements and tax credits to secure interim financing, which are repaid once we receive the cash inflows from the customers and the filing of the tax returns. Turning to the next slide of the income statement. We recognized production revenue and related expenses in 2 different ways: Production Service and Partner Managed are the business models where Thunderbird doesn't own the copyright. These are recognized using the percentage of completion method. As we do the production work, we recognize the related revenue. The Service business models help with the seasonality inherent in the industry, and helps smooth our results. In the Partner Managed model where we retain an ownership of CP and merge revenues in the back end, those particular back end revenues will be recognized once we receive an indication of the sales. Revenue related to our owned IP, on the other hand, where we retain the copyright, is recognized once the production is complete and delivered to the customer, being a broadcaster streamer or a distributor. Expenses are recognized by amortizing a portion of the production cost, much in the same way a regular asset would be recognized, and by estimating the production's useful life or how long the company estimates, it will generate value. Therefore, we might be in production 2 years before revenue and expenses can be recognized in our financial statements, which explains some of the seasonality that you can see in the financial statements if you've followed the company for a while. Gross margin for these 2 business models varies. Production services are typically between 20% to 30%, depending on what stage the production is at and where the work is being performed. At the start of a service production, margins tend to be lower than in the middle of the production because there is more labor in the middle of the production to help us with the tax credit. In the IP model, gross margin varies depending on what type of production we are doing. Our weather in [ crash ] type production like Highway Thru Hell, will generate a higher gross margin than a lifestyle show because the weather shows have a longer life in terms of revenue generation. And as you can see here, we ended fiscal '22 with adjusted EBITDA of $20.1 million and have started off fiscal '23 with adjusted EBITDA of $4.1 million. Turning to the next slide. The most recent closed price was $2.95, resulting in a market cap of $146 million, and we have total share capital of over $52 million with, again, no corporate debt. And now I'd like to turn it over to Matt Berkowitz, Thunderbird's President and Chief Creative Officer, who will take us through various Thunderbird projects.

Thank you so much, Barb, and thanks, everybody, for joining us today. So I wanted to highlight a few recent sales in owned IP. Reginald The Vampire which launched for us on SyFy, Hulu and Amazon Prime in October, has some additional new sales. We've sold it to Sky in the U.K. and Ireland, NBCU International Networks and DTC for SyFy in France, Spain, Portugal, Belgium and Switzerland, and SyFy in Poland and the Balkans as well as AMC Networks International covering Latin America. We're really pleased with the global launch on this. Additionally, Kim's Convenience, our CBC series that rose to global fame on Netflix, we've now leveraged that in the newly emerging FAST channels, and it's being -- we licensed it to FilmRise, and it's currently being showcased on major U.S. platforms, including Pluto TV, Samsung TV Plus, Amazon FreeVee, and I believe we're also now on the DB channel. FAST channels are going to continue to be a growing source of revenue, and longer tail on IP, now that those are emerging more and more. Moving ahead to the next slide. Some additional recent sales and renewals. As Jen spoke to in Unscripted with Great Pacific Media, we're really thrilled with the launch of Deadman's Curse, which has now been renewed for Season 2 by Corus Studios, and of course, Season 1 is going to be airing on Hulu. Mud Mountain Haulers was renewed for Season 3 by Bell Media. Styled, renewed for Season 2 by Corus, and also picked up by Hulu. Queen of the Oil Patch, we have now sold both seasons to OutTv in the U.K. And then looking to Kids & Family, we're very excited about the launch that we have coming next year. Princess Power, which was developed internally at Atomic Cartoons, and we sold it to Netflix as a global IP buyout, which we'll walk through on the next slide. And we can't quite take the lid off of it yet, but we have several IP productions in various stages of production, financing and several more actively in network development that we hope to announce very soon once they are in full production. We'd love to walk through an IP buyout or a Partner Managed case study, utilizing Princesses Wear Pants. The book, Princesses Wear Pants, that will now be the big launch Princess Power on Netflix. So in September 2018, we met with authors, Savanna Guthrie and Alli Oppenheim. We loved their book. We love their approach to the idea of a princess series that isn't just about finding Prince charming, but instead about utilizing your platform to make a difference in the world. We then partnered up with incredibly talented show runner, Elis Allen, who's done a number of big children's series and is also a best-selling author, and worked with Elis and Savannah and Ali as well as Drew Barrymore and her production company to say this show, we wanted to think about princesses as a verb, not a noun, and really thinking about the impact that you can make in the world, and these princesses certainly do that. So in June 2019, Netflix acquired the series from us and put it into [ network ] development as the streaming giants only princess show to go head-to-head with some of those other big princess brands around the world. In 2020, we went into full production with Netflix, receiving a very sizable production order, and we renamed the series Princess Power. We love the name Princesses Wear Pants, but it might have different connotations around the world, as you can imagine. Pants means a different thing in the U.K. And so on this, we received an increased producer fee for handling all the creative and production commenced. Just this past September, Netflix announced that Princess Power will debut in early calendar 2023. And then as we look to turn the calendar, I think you're going to see a lot of news in the coming days and weeks as we work towards our launch. And the series and consumer products will come on the heels of the show launch, and we will receive a significant share of the back-end revenues. So in this instance, our risk was on the front end in the option fees and initial wave of development, and then we were thrilled to be able to partner with Netflix on a very big budget series where they then financed the entirety of it from there, and then we had a very significant share in the upside of it. So that helps us speak to the other side of the IP model when we're doing buyouts versus license fees. And I'd love to hand it back over to Jen.

Thanks so much, Matt. Well said. Taking a look now at our industry overview and landscape. This slide here is just noting that OTT and streaming continue to boom and set to increase to $3.8 billion or 48% of the world's population by 2025. Everyone needs content. Even in recessions, people stay home and bake and watch TV. So here we are. This slide are published commitments to content spending from Disney, Comcast, Amazon, Hulu, Discovery and Netflix and more through 2025, and it's huge. Thunderbird remains extremely well positioned to capitalize on this need for content. Taking a closer look at our Kids & Family and Unscripted division. We're uniquely positioned in that both, factual and kids & family -- are the cornerstone of each streamer strategy to glue that key co-viewing audience, which is families at home gathering to watch content together. This is the stickiest of all demographics as people are less likely to subscribe and unsubscribe when kids in family are glued. For example, the hit kids property CoComelon with its nursery rhymes generating over 2 billion views per month on YouTube. Netflix saw that and licensed compilation of these videos, which we are proud to be producing for Netflix and [ Moonbug ]. And these episodes have been one of the top 10 most popular shows in one country or another for all but a handful of days this year. The power of kids' brands can be very significant. We're developing content for generation alpha. This slide illustrates an area where we specialize in -- and the Generation Alpha is forecasted to be the wealthiest, most educated and technically literate in history. They are the first generation to be completely global, expected to be the most influential generation of the 21st century and #2 billion people globally, reaching them with content will be key. Okay, going into our growth initiatives, the expansion strategy, this is my favorite slide, where are we going? We have key new hires in marketing business affairs, ESG focused, book scouting, agencies to source more IP, to facilitate continued growth. In-house consumer products and Global Distribution division to exploit IP ownership. For example, again, Global Media and CP rights for Mittens & Pants, which I spoke of earlier, and offers coming in from broadcasters around the world. We're developing and acquiring more IP to build franchises with ancillary revenue streams. We launched a Premium Scripted division, which I spoke of, to enhance overall library value and to increase the global footprint through elevated content. We've invested in software and technology upgrades to deliver premium quality programming and provide continued work from home options. This will also allow to go between animated features and television more seamlessly. We're looking at M&A that is strategic, financial and a cultural fit to expand talent pool, studio capacity and create an international footprint. We're looking at Unscripted expansion into the U.S. I think format sets like Formula One, we haven't tapped into that market. We're investing more in our IR strategy and eventual uplifting when the company is at the right critical size to land with [ Gravitas ], make strong first impressions and increase visibility. We attract outstanding partners. We're working with everyone on this slide and have been very careful to maintain great relationships with all of our buyers. We work in over 200 territories and over 40 different languages. We attract top talent. As a content creation company, we are nothing without the amazing talent and creative force that we work with. People have joined Thunderbird from Disney, DreamWorks, National Geographic, Pixar, to name a few. They're coming to Thunderbird because they do see something special happening and want to be part of this amazing journey that we're on. We're investing in the future. I touched on this earlier, but here are some of the amazing new hires that we've recently invested in, adding to our team to make sure that we can continue to grow in excellence. As you can see, we're investing heavily in lifting our own IP, selling and marketing that IP as well as a focus on sustainability and ESG initiatives, key to retaining and attracting both new talent and young investors alike. Now I'm going to pass it back to Matt, who's going to walk us through some of the IP development.

Thanks so much, Jen. So we are creating a very robust content development pipeline. It's been a priority of ours for years. And we're happy to say that we have 41 projects in various stages of development across our divisions. Starting with Kids & Family over at Atomic Cartoons. We have 15 projects underway in development, including Mermicorno, which Jen mentioned earlier, based on TokiDoki's hit brand. Eerie Elementary, which is Max Brallier follow-up to the Last Kids on Earth. This book series has already sold 2.5 million copies and growing. And The Hall Monitors, a new 2D comedy from the first-ever Canadian Adult Swim Creators, Bart Batchelor and Chris Nielsen. We have many more projects behind this. And to give a sense, all of these projects here that we mentioned in Atomic are in various stages of network financing and development, with offers already in on them. In Unscripted over at GPM, we have 16 projects on the go, including Fandemonium with Paul Sun-Hyung Lee from Kim's Convenience and The Mandalorian. And we're also really excited about our development of the Wilderness Quest, which we are developing in association with Wapanatahk Media, and hope to be able to share much more on that in short order. Additionally, Scripted has rapidly built a development pipeline that currently includes 10 projects at various stages, including a police medical procedural called Officer Down. That series was the first project that we brought out to networks to test the waters. And within 2 hours of our first pitch, we were called with a verbal offer and proceeded to close that offer with a major U.S. network. Additionally, we're developing formats such as a big Danish dramedy called Akavet, and we also have multiple New York Times Bestsellers on the slate, and we're very excited about continuing to bring those projects out as we cross into the calendar year 2023. That's over to Jen to talk about some of our IT strategic initiatives.

Thanks so much, Matt. So on this slide, just featuring examples of where we've invested in software like the cloud infrastructure, again, which will allow us to grow the studio as required in burst growth without having to make further long-term investments. We're trying to optimize now. So these investments in hardware, software storage and rendering should prove to be for increased efficiency and cost savings down the road. We want to seamlessly transition between all levels of production, and we want to support our staff. Tools should be invisible for all of our artists as they focus on their art. Our approach to M&A -- accretive M&A, we don't need to get bigger for the sake of getting bigger. Rather, again, when we look at the acquisitions, they need to make financial, strategic and cultural sense. We've had great organic growth and again, don't need to enter into any type of roll-up strategy. And we will not use our shares at a multiple greater than which we are trading at. Moving on to our IR strategy. These are some metrics on this slide of what our IR strategy looks like for fiscal year '23. Essentially, we would like to reach more investors and get our teams amazing story out to help recognize the true value of our company. We're also planning an LA Investor Day in the spring, so please stay tuned for more details there. Our ESG initiatives, I think this is important to touch on as because we are leading a purpose-led people-first net positive company that will create value for all stakeholders, investors, shareholders and clients alike. We just finished an amazing session on storytelling sustainability in partnership with Netflix as well as very impactful. And companies with strong ESG strategies outperformed traditional offerings, and there is many stats to back that up. Taking a look at why inclusion matters to us. The most diverse companies are now more likely than ever to outperform less diverse peers on profitability. Companies in the top quartile for gender diversity on teams were 25% more likely to have above average profitability. And this is how our diversity wins at Thunderbird. We are so proud of shows that highlight characters from diverse background, like Peabody winter, Molly of Denali, on which we worked with over 16 indigenous actors, writers and producers from Denali in Alaska, many of which are now working full time in the industry today. Great Pacific Media partnered in the launch of fully independent female-led indigenous production company Wapanatahk Media and has created shows like Queen of the Oil Patch and Deadman's Curse. I'd like to announce, well first of all, we're continuing to focus on a safe and healthy workforce, keeping diversity and inclusion at the forefront of our culture always. We're also going to be having a Thunderbird naming ceremony. We've been concerned about any type of cultural appropriation with Thunderbird name. But The Sts'ailes and [ maximum ] communities have let us know that they actually think we're doing a very good job and what -- would like us to keep the Thunderbird name. They appreciate our D&I initiatives and would like us to keep the name in recognition of the outstanding work Thunderbird has been carrying out, with indigenous communities and diversity and inclusivity initiatives in general. We're so proud to announce that the naming ceremony will take place this December 16th on Sts'ailes Nation land, and we could not be more honored to officially being awarded the Thunderbird name. In summary, we're a small-cap company with a fiscal year '22 year-end revenue of $149 million, increasing 34% and EBITDA of over $20 million, and we're growing. We have 28 shows in production, 8 of which are IP and to our Partner Managed. We're debt-free and free cash flow increased year-over-year in fiscal year '22 by 13% from $12.3 million to $13.9 million. In Q2, we plan to release financial guardrails to give everyone a better understanding of what true growth potential of Thunderbird is over the next 3 years. We're just waiting for some delivery timing to settle. Increasing ownership in major global brands is incredibly lucrative. The reason that has were bought E1 was -- $5 billion was because of Peppa The Pig and PJ Mask. They are now selling E1, but holding on to Peppa The Pig and PJ Mask. The value of these global brands, when they hit, is massive. Never has there been a better time to be in content, and I believe, never has there been a better company than Thunderbird to capitalize on this amazing time and become the next major global studio. Thank you so much for joining us. And Barb, Matt and I are now pleased to take any of your questions.

Super. Thank you, Jennifer. [Operator Instructions] We do have quite a few questions in the queue already. I think some of these were already answered, Jen, but I'll ask it, maybe you could elaborate it -- a little bit on some of these themes. And I do notice quite a few repetitive themes amongst the questions, so I'll just combine them into one, and hopefully, that addresses it for everybody. So the first question is, out of your current distinct business units, can you comment on which is going the fastest? And what do you envision as driving revenue growth, I guess, the highest going forward?

Well, I think we focus on all of our business units equally. We are stronger together than in part what I'm really encouraged by is, alongside Matt, how much we've begun to integrate the units and really come together and push for growth and synergies amongst Unscripted and Kids & Family and Scripted. So we want all cylinders to be firing equally. And I believe -- I know we have the amazing teams in place to make that happen.

I've got quite a few questions regarding your margins. So I guess, from a historical standpoint, there's been some margin squeezing over the last little while. What is the plan to get back to 20% plus EBITDA margins? Is that attainable in your viewpoint?

I'm going to toss this one to Barb.

Yes, we've had some declining margins just over the last 3 quarters because we've done a lot of investment into team retention and team recruitment, into our IT, as Jen mentioned in the slides. We're hoping to get back, back to where we were in 2021 in couple more quarters. A lot of the decrease in gross margin is due to timing of where the productions are in their sort of life cycle. We tend to have lower gross margins at the beginning of shows on the production service side, as right in the middle, due to the fact that we have a lot more labor running through right the mill, the production that generates tax credits, which help the margins increase. So to -- the 2 answers to the margin compression are, one, we've invested heavily in talent in the last 3 quarters, which won't continue at that growth. And secondly, that it's due to the timing of the productions, which will soon make up once the productions get to the middle of their life cycle.

I've got a number of questions regarding M&A. And I know you touched on it, Jen. Just maybe if you could expand on it. I guess, number one, what is the strategy or the company's strategy around M&A? What type of deals and what size deals would you consider? Just any additional color that you gave on M&A strategy and I guess the thought process around it?

Yes. So we want to have an international footprint. We really need financial, strategic and cultural all to line up. This is a way for us to grow. Streamers, you look where they need to expand. Subscriptions are tapping out in North America, both Disney and Netflix have publicly announced they need to make more inroads in Europe and Asia to grow subscribers and their business. By us having ownership in those areas, we can help turn on more content with our really strong LA base. We can increase IP. We can increase studio capacity. And it makes a lot of strategic sense. We could really be stronger together than apart. Size of deals, I think Thunderbird's at an interesting point in its trajectory, in that, there's going to be some industry condensing as streamers focus more on quality over quantity. And it's a time for a company like ours with a very clean balance sheet to possibly be opportunistic. Deals, we look at always perhaps using a balance of shares and cash. We would not buy something that would not be accretive or that would dilute our current shareholders and offer shares at a multiple higher than what we're trading at. So that's where we're currently at. We've been very fortunate to experience fantastic organic growth. But of course, we are always looking for that next level of growth. And we want to become a major global studio having an international footprint is important, and we don't want to take 10 more years to get there. So every conversation is on the book, and we are really hoping to continue to grow in a smart strategic way.

Again, a margin question, asked I guess slightly a different way. What EBITDA margins should investors expect as Thunderbird pushes more into Premium Scripted content, and then margins were in Scripted versus Unscripted versus Animated?

Barb, do you want to attempt to talk on that one?

Yes. I mean on the different business models. On the Production Service side, we try to get between 20% and 30% gross margin because the types of shows are very similar. On the IT side and specifically Unscripted, it can vary anywhere from 40% up to 80%, and that is dependent on the type of show that we're producing and our estimation of kind of the [ usefulness ] of that project. Shows like crash shows and weather shows like Highway Thru Hell, we know it in our experience. We're in season 12, they still sell as well in the 12 season as they did in the first season where it shows like -- Styled where it's a lifestyle show where trends change, have a little bit of a shorter life. And so those gross margins are less than, say, the crash shows. So the answer is that it really depends on the shows that we're doing. I always look at it as sort of a portfolio approach of the types of shows that we're doing. On the Scripted side, the revenues tend to be higher. So even though we might be earning more or the same than some of the unscripted shows, the margins will look less, but it's still going to be growth in the company.

Where do you see the largest opportunity for international expansion? Is it getting existing IP into other countries or creating new IP specifically for other geographies? Or is it more about expanding production services?

I think it's a combination of both. I think we have a really robust pipeline over, and I'll allow Matt to jump in here, but we can expand our capacity, look at talent as one as well as add to our already robust IP slate and then funnel that through our budgeting consumer products and distribution line to increase our library content. Matt, did you want to add anything there?

No, Jen, you nailed it. I think part of what we're very excited about and what we're already underway on is, we've been a company that in the past was traditionally more focused on the North American sales and take it from there. And we remain, obviously, with a heavy focus on North America, but also simultaneously piecing together these productions with key anchor sales in various territories globally with top networks in each territory that obviously then supports all of the ancillary revenue and brand building and franchise building.

Next question. Putting yourself in the position of a prospective investor, can you comment on what KPIs you suggest people look at to understand the earnings power of your business say 2 years from now?

Yes, I think that's a good question and part of what we hope to provide more financial guardrails on. Certainly, revenue and EBITDA growing together. I think cash flow is a strong one. I think the types of work we're doing is a real signal when you see a company like ours handling major global brands. That's a real strong indicator that buyers trust us and see us as the top destination of choice. For example, we're going into multiple seasons of Spider-Man, LEGO, Star Wars. You don't end up working on that if all [ cylinders ] are [ expiring ]. So I think those are going to continue to watch. Matt or Bard, did you have anything to add to that?