Thunderbird Entertainment Group Inc

XTSX:TBRD

Earnings Call Transcript 2019-Q4

[Operator]

Good morning and thank you for joining us. We are here to provide a corporate update and report on the fourth quarter and 2019 fiscal year-end results, which ended June 30, 2019, for Thunderbird Entertainment Group. Speaking on today's call is Mr. Brian Paes-Braga; Chair of Thunderbird's Board of Directors; Ms. Jennifer Twiner McCarron, Thunderbird's CEO; and Ms. Barb Harwood, the company's CFO. Mr. Paes-Braga and Ms. Twiner McCarron will provide a strategic overview of Thunderbird Entertainment Group. Ms. Harwood will review the company's fourth quarter and year-end financials. Following the corporate update and financial review, the call will be open for a question-and-answer session. [Operator Instructions] Alternatively, if you have any questions, you can call 1 [phone] or email [e-mail] and the company will follow-up directly following the call. [Operator Instructions] 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 securities laws. Forward-looking statements and information discussed on this conference call include, but are not limited to statements with respect to the company's objective, goals or future plans and the business and operations of the company. Forward-looking statements are necessarily based on a number of estimates and assumptions that while considered reasonable are subject to known and unknown risks, uncertainties and other factors, which may cause actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to, general business, economic and social uncertainties; litigation, legislative, environmental and other judicial regulatory, political and competitive developments. Those additional risks set out in the Company's Filing Statement and other public documents filed on SEDAR at www.sedar.com and other matters discussed in the company's Q4 and year-end news release. Although, the company believes that the assumptions and factors used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this presentation and no assurance can be given that such events will occur in the disclosed time frames or at all. Except where required by law, the company disclaims any intention or obligation to update or revise any forward-looking statement whether as a result of new information, future events or otherwise. For your convenience, the press release, the MD&A and audited annual financial statement for the 3 months and year ended June 30, 2019, of Thunderbird Entertainment Group are filed on SEDAR 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. Mr. Paes-Braga and Ms. Twiner McCarron will now provide the corporate update.

[Brian Alexander Paes-Braga]

Good morning, everyone. Thanks for joining us today. My name is Brian Paes-Braga, and I was recently appointed Chair of the Board for Thunderbird Entertainment Group. I'm honored to be here with Jen and Barb to share milestones and provide updates about where we're going with Thunderbird. I also want to offer insight into how Thunderbird has transformed over the past year, and highlight a significant value-creation opportunity around the company as it continues to grow exponentially stronger in a very competitive arena. Around the world, we are in the midst of an exploding need for content. Described by the media as the streaming wars, many deep pocket companies are entering the market to compete for valuable streaming customers and their high content needs, attracting them with iconic brands and premium content, but also needing to retain them by adding to their content libraries every single month.Inspired by Netflix, new entrants like Disney, Apple and NBCUniversal are developing subscription-based streaming services. Content budgets for these major players are huge. Recent estimates include Disney at $24 billion; Netflix at $15 billion; NBCUniversal, $13 billion and Apple $6 billion. Now consider how quickly people are consuming this content with smart devices becoming primary viewing platforms. And 2019 is also the first year in history where streaming TV has surpassed traditional cable TV consumption. When you put this all together, you can clearly see the incredible demand for premium content, the type of content that Thunderbird delivers every single quarter. Renowned as a producer of worldwide hits like Highway Thru Hell, Kim's Convenience, Beat Bugs and $ave My Reno, Thunderbird is undergoing transformational growth and is extremely well positioned to benefit from this growing demand for [ content ]. Thunderbird's client based [ ordering ] includes Netflix, Disney, Nickelodeon, PBS, Hulu, NBCUniversal, CBC, Discovery Canada and The Weather Channel among many others. These strong relationships are built on a track record of past success and demonstrate the confidence Thunderbird's partners have in the company to deliver high-quality programming. Thunderbird intends to continue establishing itself as a preferred supplier of programming for leading streaming platforms and the company will continue to maintain and foster strategic business relationships with key North American and international broadcasters and with international distributors and major global platforms. Thunderbird expects to grow organically and via acquisition. Currently, its productions are a mix of proprietary, owned IP and service work. As the company continues to grow, we will see a strategic shift to more and more IP work and the building of more global brands, like we've already started to see with Highway Thru Hell, Kim's Convenience and The Last Kids on Earth. Throughout fiscal 2019, 134.5 half hours of owned-IP were delivered collectively from the Factual, Scripted and Kids & Family divisions. Thunderbird is becoming a widely acknowledged leader in IP development ownership. Building off the company's track record of strong IP development and ownership witnessed in its Factual Division, Thunderbird has been ramping up its production of IP-owned children contents through Atomic Cartoons, its Kids & Family Division.Owned IP opens the door to additional revenue streams, including licensing and merchandise. For example, Thunderbird's owned IP production, The Last Kids on Earth, already has a worldwide toy deal with JAKKS Pacific and Cyber Group Studios and a video game deal with Outright Games. The toy line is set to hit shelves in 2020 and the video game in 2021. We have witnessed transformational value creation for companies like ours, for example, like Peppa The Pig (sic) [ Peppa Pig ], a children's property owned by Entertainment One, which was already acquired by Hasbro in August for $4 billion. Thunderbird also has a proven track record of building and scaling infrastructure to service the subscription video-on-demand wave. In December 2018, the company opened its Ottawa studio with one employee. By June 2020, it is expected to employ 150 animators and production staff. Our Vancouver studio currently employs 550 animators, and this only represents the animation side of the business. Our Factual and Scripted divisions are also firing on all cylinders, creating award-winning programming such as Highway Thru Hell, Heavy Rescue: 401 and Kim's Convenience. 2019 has been a -- one of transformation for Thunderbird. Management made some tough decisions to let go of top line revenue to focus on the creation of IP owned and higher margin business for our expanding client base. This resulted in a revenue decrease to $61.5 million from $142 million in 2018, while EBITDA margin increased from 7% to 17%. The company also absorbed a one-time noncash go public charge of $5.3 million, which impacted net earnings. And while Barb will go more thoroughly through the numbers, I'll add that the company's experiencing strong growth in its core businesses, the Kids & Family and Factual divisions. As we look forward to 2020, I'm thrilled at the opportunities before us and remain dedicated to filling the metaphorical digital shelves with higher budget, higher margin, premium quality productions that are embraced by audiences internationally while enhancing the value of our content library. Jen was going to share some of the exciting highlights that took place in 2019. Unfortunately, she has completely lost her voice, but she's going to say a quick hello, and I'll continue with her script. Before passing things onto her, Barb will also -- sorry, she is next and Barb will also give an overview of the financial report. And Jen, I'll say -- I'll give you a second to say hello to everyone.

[Jennifer Twiner McCarron, CEO & Director]

Yes. I apologize for the sound of my voice. So like a true team, Brian is got to jump in and read my script. I do want everyone to know that I'm beyond excited about what's happening in the company right now, and the trajectory is up and up. And again, apologies for my terrible voice, but I am very grateful to Brian for reading my script. Thank you.

[Brian Alexander Paes-Braga]

Jen has been traveling all over the world. So Jen, thank you for your hard work and commitment. So we are thrilled to share some of the exciting company highlights from our most recent quarter and also throughout Thunderbird's first year as a public company. During the fourth quarter, the company had 14 programs in various stages of production and deals with Netflix, NBCUniversal, Nickelodeon, PBS, Discovery Canada, Corus Entertainment and the CBC. And this fall, Thunderbird excitedly announced the company's largest ever fall up -- fall lineup in history. In Kids & Family, we launched: Molly of Denali, September 2nd, 2019, with CBC Kids; Curious George: Royal Monkey, September 10, 2019, with Hulu; LEGO Jurassic World, September 14 with Nickelodeon; Last Kids on Earth, September 17 with Netflix. And that was worldwide streaming to almost 200 countries around the world. Super Dino with -- in October with Amazon; Hello Ninja, November 1 with Netflix; the Legend of the Three Caballeros with Disney+; 101 Dalmatians with Disney+; and in Factual, we launched Highway Thru Hell with Discovery Canada. We're incredibly proud of this company milestone and these productions, and can't wait to see how they're embraced by audiences around the world. Shifting focus to our Kids & Family Division, Atomic Cartoons. During the quarter, the company was at various stages of production on 9 animated television programs. These series reflect a blend of both proprietary and service-based productions, including The Last Kids on Earth owned IP and the following service-based productions: Hello Ninja, Molly Denali, LEGO Jurassic World, Marvel Superhero Adventures, 101 Dalmatians, Curious George and Incredible Ant among others. Our company's IP owned series, The Last Kids on Earth, began streaming on September 17, 2019, as previously mentioned on Netflix. Alongside the launch of book #5, titled The Midnight Blade, of the series. Book #5 has instantly shot to #2 on The New York Times bestseller list. A worldwide toy line is also in development for this series and will be available in the spring of 2020 with the video game launching a year later in 2021. The Last Kids on Earth is such a captivating series, and it's awesome to see it being embraced by audiences internationally. Working with the author Max Brallier and evolving his stories into a global franchise that includes books, an animated series, a video game and a toy line is an incredible experience for everyone at Atomic. Our new production hub out east, Atomic Cartoons Ottawa, continued to experience impressive growth and attract incredible talent. Most recently, renowned creative innovator, David Gerhard, joined our team and will be relocating from Los Angeles to Ottawa to become the studio's Creative Director. David is highly regarded for his past work at Nickelodeon, Cartoon Network and many others. Our animation business is truly thriving. And as I shared earlier, by June 2020, the Ottawa's studio anticipates it will employ 150 people. If you add this to the 550 animators and production staff in Vancouver, we anticipate our animation team has surpassed 700 of highly talented people in 2020. We champion our people and are incredibly proud of this growth and our ability to scale up to meet the demand for premium content. During the quarter and subsequent to the year-end, some of the incredible productions we announced and we're working on include, based on a popular child book by N. D. Wilson, Hello Ninja will premiere on Netflix in November 2019. This animated production reflects the company's strategy to develop quality children's books that have a built-in fan base. Molly of Denali premiered on PBS in the United States and CBC in Canada. This production received critical acclaim for its production quality and dedication to accurately depicting indigenous peoples and communities, and it has been embraced by audiences around the world. And during the first 2 weeks of its U.S. premier, Molly of Denali was among the top 5 most streamed programs across PBS digital platforms with 27.4 million streams. We also delivered a feature-length animated film, Curious George: Royal Monkey, to Universal 1440 Entertainment, which is the original content production arm of Universal Pictures Home Entertainment and Imagine Entertainment. Moving to our Factual division, Great Pacific Media, we've equally exciting highlights. We're in production on 4 shows during the fourth quarter: Highway Thru Hell, Season 8; Heavy Rescue: 401, Season 4; Worst to First, Season 2; and our recently launched High Arctic Haulers, Season 1. We also delivered the second season of a lifestyle series, $ave My Reno, to HGTV Canada, which is comprised of 14 episodes. 7 of 10 episodes of Worst to First were also delivered to HGTV Canada. During the quarter, Thunderbird also delivered the hundredth episode of our worldwide hit series Highway Thru Hell to Discovery Canada. This marks an incredible milestone for the series, the television genre and also our company. Highway Thru Hell is top-rated series on Discovery Canada. It is available in more than 200 territories and in a dozen languages. Season 8 is currently being broadcast on Discovery Canada on Monday nights and production of season 9 was announced this fall. Season 9 will feature the largest number of episodes in the series history. The global success of the series is a testament to its quality and to the talented teams behind and in front of the cameras. Highway Thru Hell currently airs on platforms that include Discovery Canada; The Weather Channel in United States; ABC in Australia; National Geographic in Norway, the U.K. and Ireland; RMC Découverte in France; and IRIB Mostanad in Iran. It also streams worldwide on Netflix. We also expanded our Factual production capabilities with the launch of our U.K. division, led by Ed Sayer, a seasoned industry executive, who most recently was a commissioner at Discovery International. Our new U.K. division will establish partnerships with production companies to develop Thunderbird's intellectual property and grow in key international territories. Our first announced partnership for the division was a joint venture with Shine Endemol Group's Workerbee. And now touching on Thunderbird's scripted division, which continue to attract audiences around the world with popular series like Kim's Convenience. This hit series continues to draw large audiences. And in season 3 premier, which aired in January 2019, attracted 1.3 million viewers on CBC, which is an increase in viewership of 7% from the previous season. Kim's airs on CBC in Canada, and is available on Netflix worldwide. The show has additional worldwide distribution through a mix of streaming, cable and video on demand partnerships, including in Europe and Asia. Kim's is also recently recognized as a most popular foreign drama of the year award by Seoul Drama Awards in 2019 in South Korea. In the fourth quarter, we're in production on the fourth season of Kim's Convenience, which will premiere in early 2020. Another really cool piece of news that comes from our maiden scripted team involves Kim's Convenience star, Simu Liu, who describes himself as an action hero super fan, being selected as Marvel's next superhero. Simu will play martial artist, Shang-Chi, in the next Marvel theatrical release. Scheduled for release in 2021, the film marks the first time that Marvel Cinematic Universe has ever centered one of its movies around an Asian superhero. As you can see, at every level of the company, the teams are working hard on top quality productions that align with our vision to create content that makes the world better place. We are truly proud of the progress we have made this past year and excited for what's coming down the pipeline. At Thunderbird, the word team is as important as our people at the heart of everything that we do. Their talents, creativity and energy are an inspiration, and we are proud of how our company continues to grow because of their important contributions. By year-end, Thunderbird was comprised of approximately 1,000 crewmembers across its Vancouver, Los Angeles, London, Toronto and Ottawa facilities. And throughout our first year as a public company, we continue to strengthen our talented team by making key promotions and strategic hires, including Kristen Cummins moved from DreamWorks to join our team in a joint role of VP Originals at Atomic Cartoons. Aaron Behl was promoted internally to the joint role of VP Originals at Atomic Cartoons. Chris Wightman as Studio Manager for Atomic Cartoons in Ottawa. Wendy McKernan being appointed VP at Great Pacific Media. Matthew Berkowitz being promoted to the role of Chief Creative Officer for Atomic Cartoons with additional responsibility for Thunderbird Scripted. Discovery International's Ed Sayer joined Thunderbird's Executive Vice President of the company's International Division, which is based in the U.K. Lindsay Macadam hired as Head of Scripted Development at Great Pacific Media, a new role that'll oversee the company's push into productions based on Factual events. Before turning things over to Barb, I want to congratulate the team members across Thunderbird for their hard work in this quarter and fiscal year. Their dedication and passion have translated into a transformative year, and I believe this is only the beginning as our company continues to look to the future. I also want to thank all of you for joining this call today. As exciting as 2019 has been, we anticipate 2020 will build on this success as Thunderbird remains laser-focused on generating long-term value through the expansion of our content library. Now I would like to ask Barb Harwood to discuss our financial performance and other corporate matters.

[Barb Harwood, Chief Financial Officer]

Thanks, Brian, and thanks everybody for joining us on this call. I'll first mention some of the key financial results and then go further into discussing the differences between fiscal 2019 versus fiscal 2018. In fiscal 2019, consolidated revenue for the year ended with $61.5 million. Net loss was $3.8 million and adjusted EBITDA for the year ended was $10.3 million. Consolidated revenue for the year, June 30, 2019, was $61.5 million as compared to $142.4 million for fiscal 2018, a decrease of $80.9 million. As Brian mentioned earlier, the majority of the annual decrease, $69.6 million, was related to the company's decision in fiscal 2018 to not renew its service agreement to produce the live-action television series Man in the High Castle. Although the series generated significant revenues, the profit margins were small and management decided to redirect valuable corporate resources to the creation of owned IP programming and other core operations. The remainder of the year-end decrease was related to a large-budget proprietary television series for ABC Network, which was completed and delivered by the company in the fiscal 2018. There was no comparative series completed in fiscal 2019 and therefore, this resulted in a decrease in revenues of $21.6 million. These decreases were partially offset by increases in both animation and the Factual divisions. Consolidated net loss was $3.8 million for the year ended June 30, 2019, compared to net income of $3.2 million for fiscal 2018, a decrease of $7 million. Again, as Brian mentioned, during the year, the company incurred a one-time charge of $5.3 million related to RTO Transaction. This noncash charge represented the difference between the net assets acquired and the fair value of the Golden Secret shares, options and warrants that were exchanged on the RTO Transaction. Other differences between fiscal '19 and fiscal '18 relate to both one-time and recurring public company costs, such as legal, accounting and IR costs, an increase in capital asset amortization due to the growth in animation, and an increase in share-based compensation. These decreases were offset by growth in both the factual and animation divisions. Adjusted EBITDA for the year ended was $10.3 million compared to $10.1 million for fiscal 2018, an increase of $0.2 million. This year-over-year increase was due to growth in the animation and factual divisions, as I mentioned before, offset partially by decreases due to public company cost. During the year ended June 30, 2019, the company paid down $4.6 million of a $6 million 3-year nonrevolving term loan drawn in July of 2018. The term loan was drawn in order to repurchase common shares of certain shareholders of the previous Thunderbird Entertainment before the public company transaction on an accretive basis. And was part of an overall credit facility negotiated with RBC, that also include an increased production line of credit and an acquisition facility. Before turning this call back to Brian, I'd like to thank everybody on the call for joining us, and especially all of you that are putting your faith in the Thunderbird story.

[Brian Alexander Paes-Braga]

Thank you, Barb. In closing, I look forward to the Q&A. Again, want to say thank you to our -- attending the call today. And I can't say how excited I am to be supporting this company, and I see just so much growth and such great happy customers that are spending more and more money every year, and there is just too many trends that are in the favor of this wonderful company. So I'm very excited to share it with all of you -- continue to share it with all of you and to support the management team to the best of my ability in this great company.

[Operator]

[Operator Instructions] And your first question is from Aravinda Galappatthige of Canaccord Genuity.

[Aravinda Suranimala Galappatthige, Managing Director]

I wanted to start with sort of the growth outlook. Obviously, what's -- what I'm trying to do is sort of -- put some sort of trajectory around a lot of the comments you've made about the underlying growth you talked about, the growth in the headcount in both locations. A few -- last month, you announced your largest fall lineup with a number of real high-quality platforms in there. When I look at the financial side of it, obviously, you've moved from sort of $2 million in EBITDA in '15 to $10 million last year. I know there is a bunch of sort of nonrecurring items this year. How -- when I put all that together, how should I think about the financial trajectory from here on? I realize you can't give guidance, but is there any kind of qualitative comments you can make to sort of help us sort of assess that sort of incline?

[Brian Alexander Paes-Braga]

Thank you, Aravinda. I would -- again, we've chosen not to give guidance, so I'll start with that. I'd say that the growth you've seen from 2015 to 2019, I don't think it's out of this team's realm to continue to grow EBITDA in a very strong trajectory. I would just comment that off the baseline of $2 million to $10 million is probably different percentage growth, but in terms of actual growth that both Jen and Mark are leading with their different customers. I think that there is great growth ahead on the EBITDA. I just don't think it would be fair to say that over 500% over 4 years is -- we're just starting with a much different baseline now. But I think the other thing that we're very focused on is also growing top line. We don't want to be taking on shows like Man in the High Castle that make no margin, but we're very cognizant of companies like Netflix spending tens of billions and great relationship we have with them. I think we've just scratched the surface in terms of how much service work we can take from them -- take on from them. And we will be cognizant of EBITDA, but we're also very focused -- I'm very focused on scaling this business with great top line revenue. So I hope that answers your question.

[Aravinda Suranimala Galappatthige, Managing Director]

Yes. Yes. And I guess what I'm also looking for is sort of that -- some of the lineup that you've announced. I just want to make sure that do they all sort of hit fiscal '20 as well? That probably maybe helps us give us some sort of trajectory without sort of getting into -- into numbers. But I also wanted to touch on one other thing. It seems that one of the real upside scenarios here is The Last Kids on Earth rollout. Can you -- is there any more color you can provide on sort of what the retail rollout in 2020 would look like? Is it starting in the U.S.? Is there any sort of more specificity around what that rollout path is like?

[Jennifer Twiner McCarron, CEO & Director]

Yes. Sorry Aravinda for my voice. This is Jen. So the toy line launches in 2020. It will be an international rollout. The video game in 2021, again international. So when we dropped this show on September 17, it dropped in almost 200 countries, 40 different languages. And with the book being the #2 on New York Times bestseller list, they're supporting. So it's -- we are putting those into our projections right now because anything on top of that is going to be gravy, but 2020 is international dollars and so is 2021.

[Brian Alexander Paes-Braga]

And I'll just -- Aravinda, did you hear that okay?

[Aravinda Suranimala Galappatthige, Managing Director]

I did, I did. Thank you. Thank you, Jen and sorry about -- sorry to...

[Brian Alexander Paes-Braga]

And if I can just -- Barb would like to add one thing, Aravinda, on the first part of your question there. And then thank you for your question. Do you want ask one?

[Barb Harwood, Chief Financial Officer]

Yes. Aravinda, I was just saying you were asking like which shows would drop in 2020?

[Aravinda Suranimala Galappatthige, Managing Director]

Yes.

[Barb Harwood, Chief Financial Officer]

Yes. A lot of shows that we mentioned in the script, the service shows of course will -- will have -- will drop throughout 2020 because they'll be in active production in 2020. I mean basically, I could say 101 Dalmatians, Hello Ninja, the LEGO Jurassic series, Incredible Ant, Molly of Denali, those are all service shows that Brian mentioned before, that will continue to be produced during 2020. And then of course, on the IP side, Last Kids on Earth is a big one for us that started airing in September. So that's one that will drop in 2020. Most of the GPM shows have been renewed -- announced to be renewed, and they will drop in 2020. $ave My Reno, Worst to First, Season 2, it's completion. Highway Thru Hell, season 8; 401, season 4; High Arctic Haulers, and then of course, the season 4, again, as Brian mentioned before, Kim's Convenience. So those are all shows that the last part of those are all IP shows that will hit 2020.

[Brian Alexander Paes-Braga]

And Aravinda, I'll just finish with this that part of the hesitation of giving guidance is we just don't know how big and how to qualify -- quantify merchandising, and these games can be, just given this power of going across 200 countries in a launch of Netflix and then being a #2 bestseller on the New York Times list. Ahead of books like Harry Potter, like Diary for the Wimpy Kid (sic) [Diary of a Wimpy Kid]. I mean these are global brands that in the fifth book series, The Last Kids on Earth is #2, it's ahead of them. It really is an amazing position to be in, but it's very hard to quantify. So to everyone on this call, I would just say that it's -- that's something you got to watch that it could be such incredible growth for us.

[Aravinda Suranimala Galappatthige, Managing Director]

I just have 2 quick accounting clarifications for Barb, if you don't mind. Just on the IFRS 15 and 16, Barb, can you just give us a sense of the impact in fiscal '19 and then in '20? And also the investment in content. I know you and I have talked about this, the $16 million number in fiscal '19, how should we think about that on a go-forward basis?

[Barb Harwood, Chief Financial Officer]

Sure. So you want to find out the impact of IFRS 15 and IFRS 16. IFRS 15 hit our deal -- our July 1st, 2018, so they hit our 2019 financial statements. Essentially, the difference between the previous standard and IFRS 15 is that previously we were allowed to recognize revenue once we delivered an IP series under certain conditions, if the broadcaster could exploit publicity, for example even before their term didn't start. Now under IFRS 15, we recognize revenue when both delivery and the term has started essentially. So that pushed a couple of shows that we had already delivered in fiscal 2018 into the fiscal 2019, such as Last Kids, which was delivered in June 30, 2018. So this is just a transition year and everything will catch up by 2020. The other one you've mentioned is IFRS 16, which is on leases. And essentially, the guidance says that every lease that we have like the corporate head office all the way down to renting a photocopier, instead of those lease expenses being expensed on the P&L, they're now going to be capitalized with a corresponding liability on the balance sheet. And this starts in our fiscal 20 -- 2020 Q1. And so what you're going to see is instead of an -- basically a rent expense, you're going to see an amortization of the right to use assets and an accretion on the liability side to interest. So my understanding is that if -- those items will be added back to EBITDA, so -- in a lot of company's cases, the EBITDA will look like it's going up because of that accounting difference. Can you repeat your last question, Aravinda, about investment in content?

[Aravinda Suranimala Galappatthige, Managing Director]

Yes. I mean just a sense of, I mean -- I don't -- you know that I refer to as the production budget. I just wanted to get a sense of what that investment number would look like. This is the number that is in the cash flow statement. That was $13.7 million last year -- sorry, in '18 and then $16 million in '19. Just wanted to get a sense of what -- based on the productions you've announced, what that number could look like?

[Barb Harwood, Chief Financial Officer]

I think it's going to be fairly similar because most of the productions that are going into fiscal 2020 are renewals, like everything except for Last Kids, is a renewal. So it'll -- I think it will look fairly similar.

[Operator]

Your next question is from David McFadgen from Cormark Securities.

[David John McFadgen, Director of Institutional Equity Research]

So couple of questions. So you guys talked about the streaming wars. I believe you have one show right now that you are working on for Disney+, Legend of the Three Caballeros. And I was just wondering if you had any other shows that you're working on for either Disney+ or some of the -- the Apple TV or some of the other new services that are starting up in the next 6 months?

[Jennifer Twiner McCarron, CEO & Director]

Yes. I can take that. Apologies for my voice, David. So we have Legend of the Three Caballeros, which is Donald Duck for Disney, 101 Dalmatians, which is for Disney+. We also have a new show, a marquee Disney show that I can't speak to you that will be announced shortly, that is huge win for us. That will also be on Disney+. We also are doing a considerable amount of LEGO work that will be featured on Disney+. We are commencing relationships with HBO Max, Apple. We are already delivering to Hulu and as well, we're in discussions with Peacock, which is NBC streaming.

[David John McFadgen, Director of Institutional Equity Research]

Okay. All right. Well, that all sounds very promising. Maybe a question for Barb. How much of the cash on the balance sheet is pledged for interim financing?

[Barb Harwood, Chief Financial Officer]

How much is the -- of the cash is pledged for interim financing?

[David John McFadgen, Director of Institutional Equity Research]

Yes. Is there any?

[Barb Harwood, Chief Financial Officer]

As of June?

[David John McFadgen, Director of Institutional Equity Research]

Yes.

[Barb Harwood, Chief Financial Officer]

You know what, David, I'll have to get back to you on those details. Can I get back later on that?

[David John McFadgen, Director of Institutional Equity Research]

Okay. Yes. Yes. Yes. No problem. Because I was just reading through the MD&A, and it talks about the debt service covenant. You're a bit offside there and when I look at your total debt outside the interim financing, it's almost nothing. So just kind of perplexed as to why that would be?

[Barb Harwood, Chief Financial Officer]

It's -- you know what, it's because of the -- it's because of the growth in the animation division. Our lease, we've got quite a few leases because of the build out in Ottawa and the build out here in Vancouver, and those lease obligations -- those lease obligations go into the debt service calculations. The -- and you're right. We hardly have any debt on the balance sheet. It's basically a loan out of the U.K. and our loan with RBC, and both of those will be paid out in March of 2020.

[David John McFadgen, Director of Institutional Equity Research]

Okay. So I imagine, this -- like this shouldn't be any -- of any concern, right?

[Barb Harwood, Chief Financial Officer]

No, it's not at all. I'm constantly in contact with RBC. And as mentioned in the MD&A, they've already given a tolerance letter for it, and we're negotiating a decrease -- a possible decrease in that covenant.

[David John McFadgen, Director of Institutional Equity Research]

Okay. All right. And then I'll try another growth question. I don't know if you can answer it, but do you think that the EBITDA in fiscal 2020 could actually grow, say, low double-digit like 10%?

[Brian Alexander Paes-Braga]

I don't think, David, we want to -- I know where you're getting. I don't think we want to be quoting that. We just -- we have so many new revenue streams coming online next year that will positively affect EBITDA. And we just -- there's just too many scenarios to even guess at that. We're very confident in growth on the EBITDA line, but also as I said, it's important to look at this company as we take a step back, this is a high-growth business and we don't want to just live and die by the sword of EBITDA because we already are trading, if it's a low multiple. This is really a high-growth business, that we're focused on growing with our customers, growing market share in the service business and investing in our IP, not for the quarter by quarter but for 2 years or 3 years down the line of building an incredibly valuable business.

[David John McFadgen, Director of Institutional Equity Research]

All right. While I just thought I'd try anyways.

[Brian Alexander Paes-Braga]

I appreciate it. I am going to try to convince you to stop looking at the EBITDA quarter-by-quarter and believing in the 2- to 3-year plan for this business, but I will do my best to answer your questions that you want answered.

[David John McFadgen, Director of Institutional Equity Research]

Yes. No, I don't look at it quarter-by-quarter, I'm just looking at it more on an annual basis but anyways, okay, go ahead.

[Brian Alexander Paes-Braga]

We're cognizant of it, but it's not -- all the efforts -- all the efforts can be a high-growth business needs to be flexible with growing and as Barb said, debt will be paid off by March of next year and in our industry, we pride ourselves in having a very strong balance sheet to be able to be opportunistic on either M&A or opportunistic on investing in our own IP library that's proven with The Last Kids on Earth to be very, very valuable.

[Operator]

[Operator Instructions] We have no further questions. You may proceed.

[Brian Alexander Paes-Braga]

Great. I think that's everything. Jen, we all hope you get feeling better. And everyone, I'm available. So please reach out to me any time to chat through any other questions you may have. I very much appreciate everyone's time.

[Operator]

This concludes our call today. If you have any questions please call 1 [phone] or email [e-mail]. Thank you.