TORONTO, May 7, 2024
/PRNewswire/ - Spin Master Corp. ("Spin Master" or the "Company")
(TSX: TOY) www.spinmaster.com), a leading global children's
entertainment company, today announced its financial results for
the three months ended March 31, 2024. The Company's full
Management's Discussion and Analysis ("MD&A") for the three
months ended March 31, 2024 is available under the Company's
profile on SEDAR+ (www.sedarplus.com) and posted on the Company's
web site at www.spinmaster.com. All financial information is
presented in United States dollars
("$", "dollars" and "US$") and has been rounded to the nearest
hundred thousand, except per share amounts and where otherwise
indicated.
"As we approach the 30th anniversary of Spin
Master's founding, I wanted to reflect on our growth and
evolution," said Max Rangel, Global
President & CEO. "Over the past 30 years, we have grown from an
innovative start-up toy company to become a global, fully-imagined
children's entertainment company. We've continued to build on our
leadership position in toys through disruptive innovation and have
diversified our robust portfolio through incremental licensed
partnerships, international expansion, the development of
entertainment content, digital games capabilities and compelling
acquisitions. Our Toy Gross Product Sales growth in the first
quarter reflects the addition of Melissa & Doug's trusted line
of open-ended and developmental play to our toy business. In 2024,
we will bring breakthrough innovation to the toy aisle, alongside
impressive launches within our core and licensed brand portfolios.
Our investment in the creation of multiplatform content including
our two new original series Unicorn Academy and Vida the
Vet, are expected to drive incremental toy and licensing and
merchandising opportunities later in 2024. We will continue to
expand our digital games ecosystem with the launch of
Toca Boca Days and
Rubik's Match in the coming months. These digital games are
designed to deepen and broaden our audience base, attracting kids
of all ages and spawning new fans and player communities. Given our
financial framework for value creation, the power of our three
creative centres and our strong financial position, we are
well-positioned to execute against our strategy of reimagining
everyday play and investing in innovation, content, geographic
expansion and acquisitions to drive long-term profitable growth and
shareholder value."
"As expected, Toy Gross Product Sales in Q1 2024, excluding
Melissa & Doug, were in line with 2023 in what is typically the
lowest quarter seasonally for the toy industry" said Mark Segal, Spin Master's EVP & Chief
Financial Officer. "Much of our focus was centered around Melissa
& Doug and our consolidated results now include their business.
Our integration efforts are well underway, and we've already begun
to capitalize on cost synergies and identify revenue growth
opportunities. Our capital allocation strategy for 2024 is focused
on innovative IP-driven revenue and profitability growth,
investment in entertainment content and digital games, and
enhancing total shareholder returns. We are maintaining our outlook
for 2024. During Q1, we began executing share purchases under our
recently approved Normal Course Issuer Bid. We are pleased to
increase our dividend from CA$0.06 to CA$0.12 per share. We will
continue to focus on strategic M&A and venture investments,
particularly in the Digital Games and Entertainment segments, as we
integrate Melissa & Doug into the Toys segment."
Consolidated Financial Highlights for Q1 2024 as compared to
the same period in 2023
- Revenue was $316.2 million, an
increase of 16.5% from $271.4
million, which includes Melissa & Doug Revenue of
$40.4 million. Revenue, excluding
Melissa & Doug1 was $275.8
million, an increase of 1.6% from $271.4 million.
- Constant Currency Revenue1 was $314.7 million, an increase of 16.0%, from
$271.4 million.
- Revenue by operating segment reflected increases of 21.5% in
Toys, 16.5% in Entertainment, and a decrease of 3.2% in Digital
Games.
- Toy Gross Product Sales1 was $264.1
million, an increase of $47.8
million or 22.1% from $216.3
million, including Melissa & Doug Toy Gross Product
Sales1 of $46.7 million.
Toy Gross Product Sales, excluding Melissa & Doug1
was $217.4 million, an increase of
$1.1 million or 0.5% from
$216.3 million.
- Operating Loss was $61.8 million
compared to Operating Loss of $6.1
million.
- Operating Margin2 was (19.5)% compared to
(2.2)%.
- Adjusted Operating Loss1 was $14.5 million compared to Adjusted Operating
Income1 of $12.7
million.
- Adjusted Operating Margin1 was (4.6)% compared to
4.7%.
- Net Loss was $54.8 million or
$(0.53) per share compared to
$1.9 million or $(0.02) per share.
- Adjusted Net Loss1 was $19.5
million or $(0.19) per share
compared to Adjusted Net income1 of $12.3 million or $0.12 per share.
- Adjusted EBITDA1 was $18.6
million compared to $30.6
million, a decrease of $12.0
million or 39.2%.
- Adjusted EBITDA, excluding Melissa & Doug1 was
$27.8 million compared to
$30.6 million, a decrease of
$2.8 million or 9.2%.
- Adjusted EBITDA Margin1 was 5.9% compared to
11.3%.
- Adjusted EBITDA Margin, excluding Melissa &
Doug1 was 10.1% compared to 11.3%.
- Cash provided by operating activities was $24.3 million compared to cash used of
$4.3 million.
- Free Cash Flow3 was $(0.6)
million compared to $(34.4)
million.
- During the three months ended March 31,
2024, the Company repurchased and cancelled 333,300
subordinate voting shares through the Company's Normal Course
Issuer Bid (the "NCIB") program for $8.4
million. Subsequent to March 31,
2024, the Company repurchased a further 255,621 subordinate
voting shares for cancellation at a cost of $6.3 million.
- Subsequent to March 31, 2024, the
Company declared a quarterly dividend of CA$0.12 per outstanding
subordinate voting share and multiple voting share, payable on
July 12, 2024.
Acquisition of Melissa & Doug
- On January 2, 2024, the Company
completed its previously announced acquisition of MND Holdings I
Corp ("Melissa & Doug") by acquiring all issued and outstanding
capital stock. Melissa & Doug is a leading brand in early
childhood play with offerings of open-ended, creative, and
developmental toys. The acquisition is reported in the Toys segment
within the Preschool, Infant & Toddler and Plush product
category.
- The first quarter results for 2024 include the operating
results of Melissa & Doug. A summary of key Melissa &
Doug's operating results for the three months ended March 31, 2024 is included below.
- On January 2, 2024, cash
consideration paid was $991.7
million, which includes $36.2
million in cash acquired, resulting in net purchase
consideration of $955.5 million.
- The Company funded the $991.7
million purchase price with $466.7
million in cash and $525.0
million in debt from its credit facilities to finance the
acquisition.
- During the three months ended March 31,
2024, the Company repaid $50.0
million towards its credit facilities (refer to the
Liquidity section for more details).
- The Company incurred $9.5 million
in transaction related costs for the three months ended
March 31, 2024.
- During the three months ended March 31,
2024, the Company recognized $0.2
million in Net Cost Synergies3 and continues to
expect to achieve approximately $6
million in Net Cost Synergies3 in 2024 towards
the target of approximately $25
million to $30 million in
Run-rate Net Cost Synergies4 by the end of 2026.
The following summarizes the impact of Melissa & Doug's
operating results on the first quarter consolidated results:
(US$
millions)
|
Q1
2024
|
Q1
2023
|
$
Change
|
%
Change
|
Revenue
|
316.2
|
271.4
|
44.8
|
16.5 %
|
Melissa & Doug
Revenue
|
40.4
|
—
|
40.4
|
n.m.
|
Revenue, excluding
Melissa & Doug1
|
275.8
|
271.4
|
4.4
|
1.6 %
|
|
|
|
|
|
Toys Gross Product
Sales1
|
264.1
|
216.3
|
47.8
|
22.1 %
|
Melissa & Doug Toy
Gross Product Sales1
|
46.7
|
—
|
46.7
|
n.m.
|
Toys Gross Product
Sales, excluding Melissa & Doug1
|
217.4
|
216.3
|
1.1
|
0.5 %
|
|
|
|
|
|
Adjusted
EBITDA1
|
18.6
|
30.6
|
(12.0)
|
(39.2) %
|
Melissa & Doug
Adjusted EBITDA1
|
(9.2)
|
—
|
(9.2)
|
n.m.
|
Adjusted EBITDA,
excluding Melissa & Doug1
|
27.8
|
30.6
|
(2.8)
|
(9.2) %
|
|
|
|
|
|
Adjusted EBITDA
Margin1
|
5.9 %
|
11.3 %
|
|
|
Adjusted EBITDA
Margin, excluding Melissa & Doug1
|
10.1 %
|
11.3 %
|
|
|
1
Non-GAAP financial measure or ratio. See
"Non-GAAP Financial Measures and Ratios".
|
Consolidated Financial Results as compared to the same period
in 2023
(US$ millions,
except per share information)
|
|
|
|
Q1
2024
|
Q1
2023
|
$
Change
|
Consolidated
Results
|
|
|
|
Revenue4
|
$
316.2
|
$
271.4
|
$
44.8
|
|
|
|
|
Constant Currency
Revenue1
|
$
314.7
|
|
$
43.3
|
|
|
|
|
|
|
|
|
Operating
Loss
|
$
(61.8)
|
$
(6.1)
|
$
(55.7)
|
Operating
Margin2
|
(19.5) %
|
(2.2) %
|
|
|
|
|
|
Adjusted Operating
Income (Loss)1,3
|
$
(14.5)
|
$
12.7
|
$
(27.2)
|
Adjusted Operating
Margin1
|
(4.6) %
|
4.7 %
|
|
|
|
|
|
Net Loss
|
$
(54.8)
|
$
(1.9)
|
$
(52.9)
|
Adjusted Net Income
(Loss)1,3
|
$
(19.5)
|
$
12.3
|
$
(31.8)
|
|
|
|
|
Adjusted
EBITDA1,3,4
|
$
18.6
|
$
30.6
|
$
(12.0)
|
Adjusted EBITDA
Margin1
|
5.9 %
|
11.3 %
|
|
Earnings Per Share
("EPS")
|
|
|
|
Basic EPS
|
$
(0.53)
|
$
(0.02)
|
|
Diluted EPS
|
$
(0.53)
|
$
(0.02)
|
|
Adjusted Basic
EPS1
|
$
(0.19)
|
$
0.12
|
|
Adjusted Diluted
EPS1
|
$
(0.19)
|
$
0.12
|
|
Weighted average
number of shares (in millions)
|
|
|
|
Basic
|
104.2
|
103.0
|
|
Diluted
|
106.3
|
106.6
|
|
|
|
|
Selected Cash Flow
Data
|
|
|
|
Cash provided by (used
in) operating activities
|
$
24.3
|
$
(4.3)
|
$
28.6
|
Cash used in investing
activities
|
$
(980.4)
|
$
(56.6)
|
$
(923.8)
|
Cash provided by (used
in) financing activities
|
$
457.2
|
$
(14.8)
|
$
472.0
|
Free Cash
Flow1
|
$
(0.6)
|
$
(34.4)
|
$
33.8
|
1
|
Non-GAAP financial
measure or ratio. See "Non-GAAP Financial Measures and
Ratios".
|
2
|
Operating Margin is
calculated as Operating Income divided by Revenue.
|
3
|
Refer to the
"Reconciliation of Non-GAAP Financial Measures" section for further
details on the adjustments for Q1 2024.
|
4
|
Included in the
operating results of Q1 2024 is Melissa & Doug Revenue of $40.4
million and Melissa & Doug Adjusted EBITDA1 of
$(9.2) million.
|
Segmented Financial Results as compared to the same period in
2023
|
|
|
(US$
millions)
|
Q1
2024
|
Q1
2023
|
|
Toys
|
Entertainment
|
Digital
Games
|
Corporate
& Other1
|
Total
|
Toys
|
Entertainment
|
Digital
Games
|
Corporate
& Other1
|
Total
|
Revenue
|
$
226.4
|
$
43.8
|
$ 46.0
|
$
—
|
$
316.2
|
$
186.3
|
$
37.6
|
$ 47.5
|
$
—
|
$
271.4
|
|
|
|
|
|
|
|
|
|
|
|
Operating (Loss)
Income
|
$ (90.8)
|
$
28.6
|
$ 13.2
|
$ (12.8)
|
$
(61.8)
|
$ (41.8)
|
$
29.3
|
$ 16.2
|
$
(9.8)
|
(6.1)
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Operating
Income (Loss)2
|
$ (56.2)
|
$
29.1
|
$ 15.2
|
$
(2.6)
|
$
(14.5)
|
$ (33.4)
|
$
29.9
|
$ 19.0
|
$
(2.8)
|
$
12.7
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA2
|
$ (32.5)
|
$
36.4
|
$ 17.3
|
$
(2.6)
|
$
18.6
|
$ (21.4)
|
$
33.6
|
$ 21.0
|
$
(2.6)
|
$
30.6
|
1
|
Corporate & Other
includes certain corporate costs, foreign exchange and merger and
acquisition-related costs, as well as fair value gains and
losses.
|
2
|
Non-GAAP financial
measure or ratio. See "Non-GAAP Financial Measures and
Ratios".
|
Toys Segment Results
The following table provides a summary of the Toys segment
operating results, for the three months ended March 31, 2024
and 2023:
(US$
millions)
|
Q1
2024
|
Q1
2023
|
$
Change
|
%
Change
|
Preschool, Infant &
Toddler and Plush1
|
$
122.8
|
$
82.6
|
$
40.2
|
48.7 %
|
Activities, Games &
Puzzles and Dolls & Interactive
|
$
80.5
|
$
62.6
|
$
17.9
|
28.6 %
|
Wheels &
Action
|
$
40.7
|
$
43.7
|
$
(3.0)
|
(6.9) %
|
Outdoor
|
$
20.1
|
$
27.4
|
$
(7.3)
|
(26.6) %
|
Toy Gross Product
Sales2
|
$
264.1
|
$
216.3
|
$
47.8
|
22.1 %
|
Constant Currency
Toy Gross Product Sales2
|
$
262.4
|
|
$
46.1
|
21.3 %
|
|
|
|
|
|
Sales
Allowances3
|
$
(38.2)
|
$
(30.0)
|
$
(8.2)
|
27.3 %
|
Sales Allowances %
of Toy Gross Product Sales2
|
14.5 %
|
13.9 %
|
|
0.6 %
|
Toy Net
Sales
|
$
225.9
|
$
186.3
|
$
39.6
|
21.3 %
|
Toy - Other
Revenue
|
$
0.5
|
$
—
|
$
0.5
|
n.m.
|
Constant Currency
Toy - Other Revenue2
|
$
0.5
|
|
$
0.5
|
n.m.
|
Toy
Revenue
|
$
226.4
|
$
186.3
|
$
40.1
|
21.5 %
|
|
|
|
|
|
Toys Operating
Loss
|
$
(90.8)
|
$
(41.8)
|
$
(49.0)
|
117.2 %
|
Toys Operating
Margin4
|
(40.1) %
|
(22.4) %
|
|
(17.7) %
|
Toys Adjusted
EBITDA2
|
$
(32.5)
|
$
(21.4)
|
$
(11.1)
|
(51.9) %
|
Toys Adjusted EBITDA
Margin2
|
(14.4) %
|
(11.5) %
|
|
(2.9) %
|
1
Melissa & Doug is included within the
Preschool, Infant & Toddler and Plush product categories
beginning from the date of acquisition.
|
2
Non-GAAP financial measure or ratio. See
"Non-GAAP Financial Measures and Ratios".
|
3
The Company enters arrangements to
provide sales allowances requested by customers relating to
cooperative advertising, contractual and negotiated promotional
discounts, volume rebates, markdowns, and costs incurred by
customers to sell the Company's products.
|
4
Operating Margin is calculated as segment
Operating Income divided by segment Revenue.
|
(US$
millions)
|
Q1
2024
|
Q1
2023
|
$
Change
|
%
Change
|
|
|
|
|
|
Toy Revenue
|
226.4
|
186.3
|
40.1
|
21.5 %
|
Melissa & Doug
Revenue
|
40.4
|
—
|
40.4
|
n.m.
|
Toy Revenue,
excluding Melissa & Doug1
|
186.0
|
186.3
|
(0.3)
|
(0.2) %
|
|
|
|
|
|
Toys Adjusted
EBITDA1
|
(32.5)
|
(21.4)
|
(11.1)
|
51.9 %
|
Melissa & Doug
Adjusted EBITDA1
|
(9.2)
|
—
|
(9.2)
|
n.m.
|
Toys Adjusted
EBITDA, excluding Melissa & Doug1
|
(23.3)
|
(21.4)
|
(1.9)
|
8.9 %
|
|
|
|
|
|
Toys Adjusted EBITDA
Margin1
|
(14.4) %
|
(11.5) %
|
|
|
Toys Adjusted EBITDA
Margin, excluding Melissa & Doug1
|
(12.5) %
|
(11.5) %
|
|
|
1
Non-GAAP financial measure or ratio. See
"Non-GAAP Financial Measures and Ratios".
|
- Effective January 1, 2024, the
Company has changed its product categories to align with the
Company's product offerings going forward: (1) Preschool, Infant
& Toddler and Plush; (2) Activities, Games & Puzzles and
Dolls & Interactive; (3) Wheels & Action; and (4) Outdoor.
(Refer to Addendum section for more details).
- Toy Revenue increased by $39.6
million or 21.3% to $225.9
million due to the inclusion of Melissa & Doug Toy revenue1 of $40.4 million.
- Toy Gross Product Sales1 was $264.1 million, increase of $47.8 million or 22.1% from $216.3 million, including Melissa & Doug Toy
Gross Product Sales1 of $46.7
million. Toy Gross Product Sales, excluding Melissa &
Doug1 was $217.4 million,
an increase of $1.1 million or 0.5%
from $216.3 million. The Toy industry
continues to be challenged by the macroeconomic environment causing
reduced consumer discretionary spending.
- Sales Allowances increased by $8.2
million to $38.2 million. As a
percentage of Toy Gross Product Sales1, Sales Allowances
increased to 14.5% from 13.9%, primarily driven by geographic
market mix and continued pressure on consumer discretionary
spending, driving promotional activity.
- Toys Operating Loss increased by $49.0
million to $90.8 million
compared to $41.8 million.
- Toys Operating Margin was (40.1)% compared to (22.4)%.
- Toys Adjusted EBITDA Margin1 was (14.4)% compared to
(11.5)%. Toys Adjusted EBITDA Margin1, excluding Melissa
& Doug1 was (12.5)% compared to (11.5)%.
- The decrease in Toys Operating Margin and Toys Adjusted EBITDA
Margin1 was driven by an increase in administrative
expenses with the inclusion of Melissa & Doug resulting in
lower operating leverage achieved due to higher relative
seasonality impact in the first quarter, a change in market and
customer mix and an increase in sales allowances partially offset
by a decrease in selling expenses due to a lower proportion of
sales of partner licensed brands resulting from the inclusion of
Melissa & Doug.
Entertainment Segment Results
The following table provides a summary of Entertainment segment
operating results, for the three months ended March 31, 2024
and 2023:
(US$
millions)
|
Q1
2024
|
Q1
2023
|
$
Change
|
%
Change
|
Entertainment
revenue
|
$
43.8
|
$
37.6
|
$
6.2
|
16.5 %
|
Entertainment Operating
Income
|
$
28.6
|
$
29.3
|
$
(0.7)
|
(2.4) %
|
Entertainment Operating
Margin
|
65.3 %
|
77.9 %
|
|
(12.6) %
|
Entertainment Adjusted
Operating Income1
|
$
29.1
|
$
29.9
|
$
(0.8)
|
(2.7) %
|
Entertainment Adjusted
Operating Margin1
|
66.4 %
|
79.5 %
|
|
(13.1) %
|
1
Non-GAAP financial measure or ratio. See
"Non-GAAP Financial Measures and Ratios".
|
- Entertainment revenue increased by $6.2
million or 16.5% to $43.8
million, from higher distribution revenue associated with
on-going distribution of PAW Patrol series and PAW
Patrol: The Mighty Movie, partially offset by lower licensing
and merchandising revenue. Constant Currency Entertainment
Revenue1 increased by $6.2
million or 16.5% to $43.8
million, from $37.6
million.
- Entertainment Operating Income decreased by $0.7 million or 2.4% to $28.6 million. Entertainment Adjusted Operating
Income1 decreased by $0.8
million or 2.7% to $29.1
million from $29.9 million,
from higher amortization of production costs and promotion costs
for Entertainment content, partially offset by distribution
revenue.
- Entertainment Operating Margin decreased to 65.3% from 77.9%
and Entertainment Adjusted Operating Margin1 decreased
to 66.4% from 79.5%, from lower licensing and merchandising revenue
and the dilutive effect of Entertainment content deliveries,
partially offset by higher distribution revenue.
Digital Games Segment Results
The following table provides a summary of Digital Games segment
operating results, for the three months ended March 31, 2024
and 2023:
(US$
millions)
|
Q1
2024
|
Q1
2023
|
$
Change
|
%
Change
|
Digital Games
revenue
|
$
46.0
|
$
47.5
|
$
(1.5)
|
(3.2) %
|
Digital Games Operating
Income
|
$
13.2
|
$
16.2
|
$
(3.0)
|
(18.5) %
|
Digital Games Operating
Margin
|
28.7 %
|
34.1 %
|
|
(5.4) %
|
Digital Games Adjusted
Operating Income1
|
$
15.2
|
$
19.0
|
$
(3.8)
|
(20.0) %
|
Digital Games Adjusted
Operating Margin1
|
33.0 %
|
40.0 %
|
|
(7.0) %
|
1
Non-GAAP financial measure or ratio. See
"Non-GAAP Financial Measures and Ratios".
|
- Digital Games revenue declined by $1.5
million or 3.2% to $46.0
million due to lower in-game purchases in Toca Life World, partially offset by higher
subscription revenue from both Piknik and PAW Patrol
Academy. Constant Currency Digital Games Revenue1
decreased by $1.6 million or 3.4% to
$45.9 million, down from $47.5 million.
- Digital Games Operating Income decreased by $3.0 million or 18.5% to $13.2 million. Digital Games Adjusted Operating
Income1 decreased by $3.8
million or 20.0% to $15.2
million from $19.0 million.
Digital Games Operating Margin decreased from 34.1% to 28.7% and
Digital Games Adjusted Operating Margin1 decreased from
40.0% to 33.0%.
- The decrease in Digital Games Operating Income, Digital Games
Adjusted Operating Income1, Digital Games Operating
Margin and Digital Games Adjusted Operating Margin1 was
due to a decline in revenue and higher marketing costs related to
Piknik and PAW Patrol Academy.
Liquidity
The Company has an unsecured revolving credit facility (the
"Facility") with a borrowing capacity of $510.0 million which matures on September 28, 2026, and contains certain
financial covenants.
The Company has a non-revolving credit facility (the
"Acquisition Facility") for the acquisition of Melissa & Doug,
with a borrowing capacity of $225.0
million which matures on November 19,
2024, and contains certain financial covenants.
As at March 31, 2024, there was
$250.0 million drawn (December 31, 2023 - $nil) under the Facility and
$225.0 million drawn (December 31, 2023 - $nil) under the Acquisition
Facility. For the three months ended March
31, 2024, the weighted average interest rate on the Facility
and the Acquisition Facility were both 6.6% (2023 - 0%).
The Company's Facility and Acquisition Facility bear interest at
variable rates. As a result, the Company is exposed to interest
rate cash flow risk due to fluctuations in lenders' base rates. The
Company manages its interest rate risk by using a variable to fixed
interest rate swap, where the Company pays the fixed interest rate.
On March 27, 2024, the Company
entered into four interest rate swaps with an aggregate notional
principal of $140.0 million,
effective on April 1, 2024, maturing
in four tranches until December 31,
2025.
As at March 31, 2024, the Company
had unutilized liquidity of $464.0
million, comprised of $205.5
million in Cash and $258.5
million under the Company's credit facilities.
Cash Flows
For the three months ended March 31, 2024, cash flow
provided by operating activities was $24.3
million, compared to cash flow used of $4.3 million. The increase was driven by the
change in non-cash working capital offset by lower Adjusted
Operating Income1. Change in non-cash working capital
increased by $70.1 million, due to
increases of $115.5 million in trade
receivables, $7.8 million in
inventories and $3.8 million in other
receivables, partially offset by an decrease of $75.0 million in trade payables and accrued
liabilities.
For the three months ended March 31,
2024, cash flow provided by financing activities was
$457.2 million, compared to cash flow
used of $14.8 million. The increase
is primarily driven by the proceeds from loans and borrowings of
$525.0 million, partially offset by
repayments of $50.0 million.
For the three months ended March 31, 2024, Free Cash
Flow1 was $(0.6) million
compared to $(34.4) million, due to
higher cash flow provided by operating activities and lower cash
flow used in investing activities.
Capitalization
The Company's Board of Directors declared a dividend of
C$0.12 per outstanding subordinate
voting share and multiple voting share, payable on July 12,
2024 to shareholders of record at the close of business on
June 28, 2024. The dividend is designated to be an
eligible dividend for purposes of section 89(1) of the Income
Tax Act (Canada).
The weighted average basic and diluted shares outstanding as at
March 31, 2024 were 104.2 million and
106.3 million, compared to 103.0 million and 106.6 million in the
prior year, respectively.
During the three months ended March 31, 2024, the Company
repurchased and cancelled 333,300 subordinate voting shares through
the Company's NCIB program for $8.4 million, of which $3.3 million was paid subsequent to March 31, 2024. Subsequent to March 31, 2024, the Company repurchased a further
255,621 subordinate voting shares for cancellation at a cost of
$6.3 million. In 2023, the Company
repurchased and cancelled 397,700 subordinate voting shares at a
cost of $10.5 million.
Subsequent to March 31, 2024, the
Company filed a short form base shelf prospectus dated April 12, 2024, pursuant to which, for a period
of 25 months thereafter, the Company (and shareholders of the
Company) may sell subordinate voting shares, preferred shares, debt
securities, subscription receipts, warrants or any combination
thereof as a unit. This filing provides the Company with the
flexibility to access debt and equity markets on a timely
basis.
2024 Outlook
The Company reiterated its previous guidance issued on
February 28, 2024. The Company
expects for 2024:
- Toy Gross Product Sales, excluding Melissa &
Doug1 to be in line with 2023.
- Toy Gross Product Sales, excluding Melissa &
Doug1 seasonality to be approximately 28% to 32% in the
first half.
- Revenue, excluding Melissa & Doug1, to be in line with
2023.
- Adjusted EBITDA Margin, excluding Melissa &
Doug1 and Net Cost Synergies3 realized to be
in line with 2023.
The Company also reiterated its previous guidance issued on
February 28, 2024. Incrementally, the
Company expects for 2024:
- Melissa & Doug Toy Gross Product Sales1 to
contribute between $420 million to
$430 million.
- Melissa & Doug Toy Gross Product Sales1
seasonality to be approximately 20% to 25% in the first half.
- Melissa & Doug Revenue to contribute between $370 million to $375
million.
- Melissa & Doug Adjusted EBITDA Margin1 of
approximately 19.5%.
- To achieve in addition approximately $6
million in Net Cost Synergies3 towards the target
of approximately $25 million to
$30 million in Run-rate Net Cost
Synergies4 by the end of 2026.
_________________________________________________________________________________
|
1
|
Non-GAAP financial
measure or ratio. See "Non-GAAP Financial Measures and
Ratios".
|
2
|
Operating Margin is
calculated as Operating Income divided by Revenue.
|
3
|
Net Cost Synergies
represents cost savings, net of costs to achieve, attributable to
the integration of Melissa & Doug.
|
4
|
Run-rate Net Cost
Synergies represents the expected ongoing cost savings, net of
costs to achieve, attributable to the integration of Melissa &
Doug.
|
Forward-Looking Statements
Certain statements, other than statements of historical fact,
contained in this Press Release constitute "forward-looking
information" within the meaning of certain securities laws,
including the Securities Act (Ontario), and are based on expectations,
estimates and projections as of the date on which the statements
are made in this Press Release. The words "plans", "expects",
"projected", "estimated", "forecasts", "anticipates", "indicative",
"intend", "guidance", "outlook", "potential", "prospects", "seek",
"strategy", "targets" or "believes", or variations of such words
and phrases or statements that certain future conditions, actions,
events or results "will", "may", "could", "would", "should",
"might" or "can", or negative versions thereof, "be taken",
"occur", "continue" or "be achieved", and other similar
expressions, identify statements containing forward-looking
information. Statements of forward-looking information in this
Press Release include, without limitation, statements with respect
to: the acquisition of Melissa & Doug, including its expected
impact on the Company's business, financial performance and
creation of value; the Company's outlook for 2024; future financial
performance and growth expectations, as well as the drivers and
trends in respect thereof; the Company's priorities, plans and
strategies; content, digital game and product pipeline and
launches, as well as their impacts; deployment of cash; dividend
policy and future dividends; financial position, cash flows,
liquidity and financial performance, and the creation of long term
shareholder value.
Forward-looking statements are necessarily based upon
management's perceptions of historical trends, current conditions
and expected future developments, as well as a number of specific
factors and assumptions that, while considered reasonable by
management as of the date on which the statements are made in this
Press Release, are inherently subject to significant business,
economic and competitive uncertainties and contingencies which
could result in the forward-looking statements ultimately being
incorrect. In addition to any factors and assumptions set forth
above in this Press Release, the material factors and assumptions
used to develop the forward-looking information include, but are
not limited to: the Company will be able to successfully integrate
the acquisition; the Company will be able to successfully expand
its portfolio across new channels and formats, and internationally;
achieve other expected benefits through this acquisition;
management's estimates and expectations in relation to future
economic and business conditions and other factors in relation to
the Company's financial performance in addition to the proposed
transaction and resulting impact on growth in various financial
metrics; the realization of the expected strategic, financial and
other benefits of the proposed transaction in the timeframe
anticipated; the absence of significant undisclosed costs or
liabilities associated with the transactions; Melissa & Doug's
business will perform in line with the industry; there are no
material changes to Melissa & Doug's core customer base; net
cost synergies towards the target of approximately $25 million to $30
million in Run-rate Net Cost Synergies by the end of 2026;
implementation of certain information technology systems and other
typical acquisition related cost savings; the Company's dividend
payments being subject to the discretion of the Board of Directors
and dependent on a variety of factors and conditions existing from
time to time; seasonality; ability of factories to manufacture
products, including labour size and allocation, tooling, raw
material and component availability, ability to shift between
product mix, and customer acceptance of delayed delivery dates; the
steps taken will create long term shareholder value; the expanded
use of advanced technology, robotics and innovation the Company
applies to its products will have a level of success consistent
with its past experiences; the Company will continue to
successfully secure, maintain and renew broader licenses from third
parties for premiere children's properties consistent with past
practices, and the success of the licenses; the expansion of sales
and marketing offices in new markets will increase the sales of
products in that territory; the Company will be able to
successfully identify and integrate strategic acquisition and
minority investment opportunities; the Company will be able to
maintain its distribution capabilities; the Company will be able to
leverage its global platform to grow sales from acquired brands;
the Company will be able to recognize and capitalize on
opportunities earlier than its competitors; the Company will be
able to continue to build and maintain strong, collaborative
relationships; the Company will maintain its status as a preferred
collaborator; the culture and business structure of the Company
will support its growth; the current business strategies of the
Company will continue to be desirable on an international platform;
the Company will be able to expand its portfolio of owned branded
intellectual property and successfully license it to third parties;
use of advanced technology and robotics in the Company's products
will expand; the Company will be able to continue to develop and
distribute entertainment content in the form of movies, TV shows
and short form content; the Company will be able to continue to
design, develop and launch mobile digital games to be distributed
globally via app stores; access of entertainment content on mobile
platforms will expand; fragmentation of the market will continue to
create acquisition opportunities; the Company will be able to
maintain its relationships with its employees, suppliers, retailers
and license partners; the Company will continue to attract
qualified personnel to support its development requirements; the
Company's key personnel will continue to be involved in the Company
products, mobile digital games and entertainment properties will be
launched as scheduled; and the availability of cash for dividends
and that the risk factors noted in this Press Release,
collectively, do not have a material impact on the Company.
By its nature, forward-looking information is subject to
inherent risks and uncertainties that may be general or specific
and which give rise to the possibility that expectations,
forecasts, predictions, projections or conclusions will not prove
to be accurate, that assumptions may not be correct, and that
objectives, strategic goals and priorities will not be achieved.
Known and unknown risk factors, many of which are beyond the
control of the Company, could cause actual results to differ
materially from the forward-looking information in this Press
Release. Such risks and uncertainties include, without limitation,
risks relating to the inability to successfully integrate the
Melissa & Doug business; the potential failure to realize
anticipated benefits from the proposed transaction; concentration
of manufacturing and geopolitical risks; uncertainty and adverse
changes in general economic conditions and consumer spending
habits; and the factors discussed in the Company's disclosure
materials, including the Annual or subsequent, most recent interim
MD&A and the Company's most recent Annual Information Form,
filed with the securities regulatory authorities in Canada and available under the Company's
profile on SEDAR+ (www.sedarplus.com). These risk factors are not
intended to represent a complete list of the factors that could
affect the Company and investors are cautioned to consider these
and other factors, uncertainties and potential events carefully and
not to put undue reliance on forward-looking statements.
There can be no assurance that forward-looking statements will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such statements.
Forward-looking statements are provided for the purpose of
providing information about management's expectations and plans
relating to the future, including the expected performance of the
Company. The Company disclaims any intention or obligation to
update or revise any forward-looking statements whether as a result
of new information, future events or otherwise, or to explain any
material difference between subsequent actual events and such
forward-looking statements, except to the extent required by
applicable law.
Conference call
Max Rangel, Global President and
Chief Executive Officer and Mark
Segal, Chief Financial Officer will host a conference call
to discuss the financial results on Wednesday, May 8, 2024 at 9:30 a.m.
(ET).
The call-in numbers for participants are (416) 764-8650 or (888)
664-6383. A live webcast of the call will be accessible via Spin
Master's website at: http://www.spinmaster.com/events.php.
Following the call, both an audio recording and transcript of the
call will be archived on the same website page for 12 months.
About Spin Master
Spin Master Corp. (TSX:TOY) is a leading global children's
entertainment company, creating exceptional play experiences
through its three creative centres: Toys, Entertainment and Digital
Games. With distribution in over 100 countries, Spin Master is best
known for award-winning brands PAW Patrol®, Bakugan®,
Kinetic Sand®, Air Hogs®, Melissa &
Doug®, Hatchimals®, Rubik's Cube®
and GUND®, and is the global toy licensee for other
popular properties. Spin Master Entertainment creates and produces
compelling multiplatform content, through its in-house studio and
partnerships with outside creators, including the preschool
franchise PAW Patrol and numerous other original shows,
short-form series and feature films. The Company has an established
presence in digital games, anchored by the Toca Boca®
and Sago Mini® brands, offering open-ended and creative
game and educational play in digital environments. Through Spin
Master Ventures, the Company makes minority investments globally in
emerging companies and start-ups. With 31 offices spanning nearly
20 countries, Spin Master employs close to 3,000 team members
globally. For more information visit spinmaster.com or follow-on
Instagram, Facebook and Twitter @spinmaster.
Spin Master
Corp.
Condensed consolidated interim statements of financial
position
|
|
|
|
|
Mar
31,
|
Dec
31,
|
(Unaudited, in US$
millions)
|
2024
|
2023
|
Assets
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
205.5
|
705.7
|
Restricted
cash
|
3.1
|
—
|
Trade
receivables, net
|
285.9
|
414.4
|
Other
receivables
|
62.4
|
60.0
|
Inventories,
net
|
252.1
|
98.0
|
Income tax
receivable
|
33.2
|
—
|
Prepaid expenses
and other assets
|
44.7
|
40.9
|
|
886.9
|
1,319.0
|
Non-current
assets
|
|
|
Intangible
assets
|
820.1
|
281.3
|
Goodwill
|
381.4
|
165.9
|
Right-of-use
assets
|
170.4
|
53.6
|
Property, plant
and equipment
|
65.1
|
32.6
|
Deferred income
tax assets
|
161.5
|
110.8
|
Other
assets
|
37.0
|
26.5
|
|
1,635.5
|
670.7
|
Total
assets
|
2,522.4
|
1,989.7
|
|
|
|
Liabilities
|
|
|
Current
liabilities
|
|
|
Trade payables
and accrued liabilities
|
270.2
|
385.4
|
Loans and
borrowings
|
473.2
|
—
|
Provisions
|
28.0
|
32.1
|
Lease
liabilities
|
33.5
|
11.4
|
Deferred
revenue
|
12.7
|
11.0
|
Income tax
payable
|
—
|
6.6
|
|
817.6
|
446.5
|
Non-current
liabilities
|
|
|
Deferred income
tax liabilities
|
221.9
|
59.1
|
Lease
liabilities
|
124.1
|
50.7
|
Provisions
|
14.7
|
14.3
|
|
360.7
|
124.1
|
Total
liabilities
|
1,178.3
|
570.6
|
|
|
|
Shareholders'
equity
|
|
|
Share
capital
|
783.7
|
783.4
|
Retained
earnings
|
534.5
|
604.5
|
Contributed
surplus
|
29.1
|
27.4
|
Accumulated
other comprehensive (loss) income
|
(3.2)
|
3.8
|
Total shareholders'
equity
|
1,344.1
|
1,419.0
|
Total liabilities
and shareholders' equity
|
2,522.4
|
1,989.7
|
Spin Master
Corp.
Condensed consolidated interim statements of loss and comprehensive
(loss) income
|
|
|
|
|
|
(Unaudited, in US$
millions, except earnings per share)
|
Q1
2024
|
Q1
2023
|
|
|
|
Revenue
|
316.2
|
271.4
|
Cost of
sales
|
159.7
|
112.9
|
Gross
Profit
|
156.5
|
158.5
|
|
|
|
Expenses
|
|
|
Selling, general and
administrative
|
197.7
|
149.3
|
Depreciation and
amortization
|
19.8
|
6.6
|
Other expense,
net
|
1.2
|
4.4
|
Foreign exchange (gain)
loss, net
|
(0.4)
|
4.3
|
Operating
Loss
|
(61.8)
|
(6.1)
|
Interest
income
|
(1.3)
|
(6.7)
|
Interest
expense
|
12.8
|
3.1
|
Loss before income
tax recovery
|
(73.3)
|
(2.5)
|
Income tax
recovery
|
(18.5)
|
(0.6)
|
Net
Loss
|
(54.8)
|
(1.9)
|
|
|
|
Loss per
share
|
|
|
Basic
|
(0.53)
|
(0.02)
|
Diluted
|
(0.53)
|
(0.02)
|
Weighted average
number of shares (in millions)
|
|
|
Basic
|
104.2
|
103.0
|
Diluted
|
106.3
|
106.6
|
|
|
|
|
|
(Unaudited, in US$
millions)
|
Q1
2024
|
Q1
2023
|
Net Loss
|
(54.8)
|
(1.9)
|
Items that may be
subsequently reclassified to Net (Loss) Income
|
|
|
Foreign currency
translation (loss) gain
|
(7.0)
|
2.6
|
Other comprehensive
(loss) income
|
(7.0)
|
2.6
|
Total comprehensive
(loss) income
|
(61.8)
|
0.7
|
Spin Master Corp.
Condensed consolidated interim statements of cash
flows
|
|
|
|
|
Three Months Ended
Mar 31,
|
(Unaudited, in US$
millions)
|
2024
|
2023
|
|
|
|
Operating
activities
|
|
|
Net Loss
|
(54.8)
|
(1.9)
|
Adjustments to
reconcile net loss to cash provided by operating
activities
|
|
|
Income tax
recovery
|
(18.5)
|
(0.6)
|
Interest expense
(income)
|
8.5
|
(6.7)
|
Depreciation and
amortization
|
34.8
|
17.9
|
(Gain) Loss on
disposal of non-current assets
|
(0.4)
|
0.4
|
Interest and accretion
expense
|
2.6
|
1.3
|
Amortization of
Facility fee costs
|
0.4
|
0.1
|
Impairment of
non-current assets
|
0.3
|
2.4
|
Unrealized foreign
exchange (gain) loss, net
|
(5.7)
|
0.6
|
Share-based
compensation expense
|
6.1
|
4.8
|
Net changes in non-cash
working capital
|
70.1
|
5.4
|
Net change in non-cash
provisions and other assets
|
(12.8)
|
4.5
|
Recognition of fair
value adjustment on inventory sold
|
20.6
|
—
|
Income taxes
paid
|
(21.7)
|
(39.2)
|
Income taxes
received
|
3.6
|
—
|
Interest (paid)
received
|
(8.8)
|
6.7
|
Cash provided by
(used in) operating activities
|
24.3
|
(4.3)
|
|
|
|
Investing
activities
|
|
|
Investment in property,
plant and equipment
|
(7.4)
|
(6.7)
|
Investment in
intangible assets
|
(17.5)
|
(23.4)
|
Business acquisitions,
net of cash acquired
|
(955.5)
|
(26.5)
|
Cash used in
investing activities
|
(980.4)
|
(56.6)
|
|
|
|
Financing
activities
|
|
|
Proceeds from loans and
borrowings
|
525.0
|
—
|
Repayment of loans and
borrowings
|
(50.0)
|
—
|
Payment of lease
liabilities
|
(8.1)
|
(3.9)
|
Dividends
paid
|
(4.6)
|
(4.6)
|
Repurchase of
subordinate voting shares
|
(5.1)
|
(6.3)
|
Cash provided by
(used in) financing activities
|
457.2
|
(14.8)
|
|
|
|
Effect of foreign
currency exchange rate changes on cash
|
(1.3)
|
0.7
|
|
|
|
Net decrease in cash
during the period
|
(500.2)
|
(75.0)
|
Cash, beginning of
period
|
705.7
|
644.3
|
Cash, end of
period
|
205.5
|
569.3
|
Non-GAAP Financial Measures and Ratios
In addition to using financial measures prescribed under
International Financial Reporting Standards ("IFRS"), references
are made in this Press Release to the following terms, each of
which is a non-GAAP financial measure:
- Toy Gross Product Sales
- Melissa & Doug Toy Gross Product Sales
- Toy Gross Product Sales, excluding Melissa & Doug
- Toy Revenue, excluding Melissa & Doug
- Revenue, excluding Melissa & Doug
- Constant Currency Toy Gross Product Sales
- Constant Currency Sales Allowance
- Constant Currency Toy Other Revenue
- Constant Currency Toy Revenue
- Constant Currency Digital Games Revenue
- Constant Currency Entertainment Revenue
- Constant Currency Revenue
- Adjusted EBITDA
- Melissa & Doug Adjusted EBITDA
- Adjusted EBITDA, excluding Melissa & Doug
- Toys Adjusted EBITDA
- Toys Adjusted EBITDA, excluding Melissa & Doug
- Entertainment Adjusted EBITDA
- Digital Games Adjusted EBITDA
- Adjusted Operating Income (Loss)
- Toys Adjusted Operating Income (Loss)
- Entertainment Adjusted Operating Income (Loss)
- Digital Games Adjusted Operating Income (Loss)
- Adjusted Net Income (Loss)
- Free Cash Flow
Non-GAAP financial measures do not have any standardized meaning
prescribed by IFRS and therefore may not be comparable to similar
measures presented by other issuers.
Additionally, references are made in this Press Release to the
following terms, each of which is a non-GAAP financial ratio:
- Percentage change in Constant Currency Toy Gross Product
Sales
- Percentage change in Constant Currency Sales Allowance
- Percentage change in Constant Currency Toy Other Revenue
- Percentage change in Constant Currency Toy Revenue
- Percentage change in Constant Currency Digital Games
Revenue
- Percentage change in Constant Currency Entertainment
Revenue
- Percentage change in Constant Currency Revenue
- Adjusted EBITDA Margin
- Melissa & Doug Adjusted EBITDA Margin
- Adjusted EBITDA Margin, excluding Melissa & Doug
- Toys Adjusted EBITDA Margin
- Toys Adjusted EBITDA Margin, excluding Melissa & Doug
- Entertainment Adjusted EBITDA Margin
- Digital Games Adjusted EBITDA Margin
- Toys Adjusted Operating Margin
- Entertainment Adjusted Operating Margin
- Digital Games Adjusted Operating Margin
- Adjusted Operating Margin
- Adjusted Basic EPS
- Adjusted Diluted EPS
- Sales Allowance as a percentage of Toy Gross Product Sales
Non-GAAP financial ratios are ratios or percentages that are
calculated using a Non-GAAP financial measure. Non-GAAP financial
ratios do not have any standardized meaning prescribed by IFRS and
therefore may not be comparable to similar measures presented by
other issuers.
Management believes the Non-GAAP financial measures and Non-GAAP
financial ratios defined above are important supplemental measures
of operating performance and highlight trends in the business.
Management believes that these measures allow for assessment of the
Company's operating performance and financial condition on a basis
that is consistent and comparable between reporting periods. The
Company believes that investors, lenders, securities analysts and
other interested parties frequently use these Non-GAAP financial
measures and Non-GAAP financial ratios in the evaluation of
issuers.
Non-GAAP Financial Measures
Toy Gross Product Sales represent Toy revenues, excluding the
impact of Sales Allowances. As Sales Allowances are generally not
associated with individual products, the Company uses Toy Gross
Product Sales to provide meaningful comparisons across product
categories and geographical results to highlight trends in Spin
Master's business. For a reconciliation of Toy Gross Product
Sales to Revenue, the closest IFRS measure, refer to the revenue
tables for the three and three months ended March 31, 2024, as compared to the same period in
2023 in this Press Release.
Melissa & Doug Toy Gross Product Sales represent Toy
revenues contributed by Melissa & Doug, excluding the impact of
Sales Allowances, to measure the underlying financial performance
of the business on a consistent basis over time. For a
reconciliation of Melissa & Doug Toy Gross Product Sales to
Melissa & Doug Revenue, the closest IFRS measure, refer to
"Reconciliation of Non-GAAP Financial Measures" section.
Toy Gross Product Sales, excluding Melissa & Doug represent
Toy revenues, excluding Melissa & Doug Toy Gross Product Sales
and the impact of Sales Allowances, to measure the underlying
financial performance of the business on a consistent basis over
time.
Toy Revenue, excluding Melissa & Doug represents Toy
revenues, excluding Melissa & Doug Toy Revenue, to measure the
underlying financial performance of the business on a consistent
basis over time. Refer to "Reconciliation of Non-GAAP Financial
Measures" section below for a reconciliation of this metric to Toy
Revenue, the closest IFRS measure.
Revenue, excluding Melissa & Doug is calculated as revenue
excluding Melissa & Doug Revenue, to measure the underlying
financial performance of the business on a consistent basis over
time. Refer to "Reconciliation of Non-GAAP Financial Measures"
section below for a reconciliation of this metric to Revenue, the
closest IFRS measure.
Constant Currency Toy Gross Product Sales, Constant Currency
Sales Allowances, Constant Currency Toy - Other Revenue, Constant
Currency Toy Revenue, Constant Currency Entertainment Revenue,
Constant Currency Digital Games Revenue, and Constant Currency
Revenue represent Toy Gross Product Sales, Sales Allowance, Toy -
Other Revenue, Toy revenue, Entertainment revenue, Digital Games
revenue, and Revenue presented excluding the impact from changes in
foreign currency exchange rates, respectively. The current period
and prior period results for entities reporting in currencies other
than the US dollar are translated using consistent exchange rates,
rather than using the actual exchange rate in effect during the
respective periods. The difference between the current period and
prior period results using the consistent exchange rates reflects
the changes in the underlying performance results, excluding the
impact from fluctuations in foreign currency exchange rates.
Management uses Constant Currency Toy Gross Product Sales, Constant
Currency Sales Allowances, Constant Currency Toy - Other Revenue,
Constant Currency Toy Revenue, Constant Currency Entertainment
Revenue, Constant Currency Digital Games Revenue, and Constant
Currency Revenue to measure the underlying financial performance of
the business on a consistent basis over time. Refer to the
"Reconciliation of Non-GAAP Financial Measures" section for a
reconciliation of these metrics to Revenue, the closest IFRS
measure.
Adjusted EBITDA is calculated as Operating Income before
interest income and interest expense and depreciation and
amortization (EBITDA) excluding adjustments that do not necessarily
reflect the Company's underlying financial performance. These
adjustments include restructuring and other related costs, foreign
exchange gains or losses, share based compensation expenses,
acquisition related contingent consideration, impairment of
intangible assets, impairment of goodwill, investment distribution
income, loss on Minority interest and other investments,
acquisition related deferred incentive compensation, net unrealized
gain or loss on investment, impairment of property, plant and
equipment, legal settlement, transaction cost and gain on disposal
of asset. Adjusted EBITDA is used by management as a measure of the
Company's profitability. Refer to the "Reconciliation of Non-GAAP
Financial Measures" section below for a reconciliation of this
metric to Operating Income (Loss), the closest IFRS measure.
Melissa & Doug Adjusted EBITDA is calculated as Melissa
& Doug Operating Income (Loss) before before interest income
and interest expense and depreciation and amortization (EBITDA)
excluding adjustments that do not necessarily reflect the Company's
underlying financial performance. These adjustments include
restructuring and other related costs, foreign exchange gains or
losses, share based compensation expenses, acquisition related
contingent consideration, impairment of intangible assets,
impairment of goodwill, investment distribution income, loss on
Minority interest and other investments, acquisition related
deferred incentive compensation, net unrealized gain or loss on
investment, impairment of property, plant and equipment, legal
settlement, transaction cost and gain on disposal of asset. Melissa
& Doug Adjusted EBITDA is used by management as a measure of
the Company's profitability. Refer to the "Reconciliation of
Non-GAAP Financial Measures" section below for a reconciliation of
this metric to Melissa & Doug Operating Income (Loss), the
closest IFRS measure.
Adjusted EBITDA, excluding Melissa & Doug is calculated as
Adjusted EBITDA excluding Melissa & Doug Adjusted
EBITDA. Adjusted EBITDA, excluding Melissa & Doug
Adjusted EBITDA is used by management as a measure of the Company's
profitability on a consistent basis over time. Refer to the
"Reconciliation of Non-GAAP Financial Measures" section below for a
reconciliation of this metric to Operating Income (Loss), the
closest IFRS measure.
Toys Adjusted EBITDA is calculated as Toy Operating Income
(Loss) before before interest income and interest expense and
depreciation and amortization (EBITDA) excluding adjustments that
do not necessarily reflect the Company's underlying financial
performance. These adjustments include restructuring and other
related costs, foreign exchange gains or losses, share based
compensation expenses, acquisition related contingent
consideration, impairment of intangible assets, impairment of
goodwill, investment distribution income, loss on Minority interest
and other investments, acquisition related deferred incentive
compensation, net unrealized gain or loss on investment, impairment
of property, plant and equipment, legal settlement, transaction
cost and gain on disposal of asset. Toys Adjusted EBITDA is used by
management as a measure of the Company's profitability. Refer to
the "Reconciliation of Non-GAAP Financial Measures" section below
for a reconciliation of this metric to Toys Operating Income
(Loss), the closest IFRS measure.
Toys Adjusted EBITDA, excluding Melissa & Doug is calculated
as Toys Adjusted EBITDA excluding Melissa & Doug Adjusted
EBITDA. Toys Adjusted EBITDA, excluding Melissa & Doug
Adjusted EBITDA is used by management as a measure of the Company's
profitability on a consistent basis over time. Refer to the
"Reconciliation of Non-GAAP Financial Measures" section below for a
reconciliation of this metric to Toys Operating Income (Loss), the
closest IFRS measure.
Entertainment Adjusted EBITDA is calculated as Entertainment
Operating Income (Loss) before before interest income and interest
expense and depreciation and amortization (EBITDA) excluding
adjustments that do not necessarily reflect the Company's
underlying financial performance. These adjustments include
restructuring and other related costs, foreign exchange gains or
losses, share based compensation expenses, acquisition related
contingent consideration, impairment of intangible assets,
impairment of goodwill, investment distribution income, loss on
Minority interest and other investments, acquisition related
deferred incentive compensation, net unrealized gain or loss on
investment, impairment of property, plant and equipment, legal
settlement, transaction cost and gain on disposal of asset.
Entertainment Adjusted EBITDA is used by management as a measure of
the Company's profitability. Refer to the "Reconciliation of
Non-GAAP Financial Measures" section below for a reconciliation of
this metric to Digital Games Operating Income (Loss), the closest
IFRS measure.
Digital Games Adjusted EBITDA is calculated as Digital Games
Operating Income (Loss) before before interest income and interest
expense and depreciation and amortization (EBITDA) excluding
adjustments that do not necessarily reflect the Company's
underlying financial performance. These adjustments include
restructuring and other related costs, foreign exchange gains or
losses, share based compensation expenses, acquisition related
contingent consideration, impairment of intangible assets,
impairment of goodwill, investment distribution income, loss on
Minority interest and other investments, acquisition related
deferred incentive compensation, net unrealized gain or loss on
investment, impairment of property, plant and equipment, legal
settlement, transaction cost and gain on disposal of asset. Digital
Games Adjusted EBITDA is used by management as a measure of the
Company's profitability. Refer to the "Reconciliation of Non-GAAP
Financial Measures" section below for a reconciliation of this
metric to Digital Games Operating Income (Loss), the closest IFRS
measure.
Adjusted Operating Income (Loss) is calculated as Operating
Income (Loss) excluding adjustments (as defined in Adjusted
EBITDA). Adjusted Operating Income (Loss) is used by management as
a measure of the Company's profitability. Refer to the
"Reconciliation of Non-GAAP Financial Measures" section below for a
reconciliation of this metric to Operating Income (Loss), the
closest IFRS measure.
Toys Adjusted Operating Income (Loss) is calculated as Toys
Operating Income (Loss) excluding adjustments (as defined in
Adjusted EBITDA). Toys Adjusted Operating Income (Loss) is used by
management as a measure of the Company's profitability. Refer to
the "Reconciliation of Non-GAAP Financial Measures" section below
for a reconciliation of this metric to Toys Operating Income
(Loss), the closest IFRS measure.
Entertainment Adjusted Operating Income (Loss) is calculated as
Entertainment Operating Income (Loss) excluding adjustments (as
defined in Adjusted EBITDA). Entertainment Adjusted Operating
Income (Loss) is used by management as a measure of the Company's
profitability. Refer to the "Reconciliation of Non-GAAP Financial
Measures" section below for a reconciliation of this metric to
Entertainment Operating Income (Loss), the closest IFRS
measure.
Digital Games Adjusted Operating Income (Loss) is calculated as
Digital Games Operating Income (Loss) excluding adjustments (as
defined in Adjusted EBITDA). Digital Games Adjusted Operating
Income (Loss) is used by management as a measure of the Company's
profitability. Refer to the "Reconciliation of Non-GAAP Financial
Measures" section below for a reconciliation of this metric to
Digital Games Operating Income (Loss), the closest IFRS
measure.
Adjusted Net Income (Loss) is calculated as Net Income (Loss)
excluding adjustments (as defined in Adjusted EBITDA), the
corresponding impact these items have on income tax expense.
Management uses Adjusted Net Income (Loss) to measure the
underlying financial performance of the business on a consistent
basis over time. Refer to the "Reconciliation of Non-GAAP Financial
Measures" section below for a reconciliation of this metric to
Operating Income (Loss), the closest IFRS measure.
Free Cash Flow is calculated as cash flows provided by/used in
operating activities reduced by cash flows used in investing
activities and adding back cash used for business acquisitions,
advance paid for business acquisitions, asset acquisitions,
investment in limited partnership, Minority interest and other
investments, proceeds from sale of manufacturing operations and net
of investment distribution income. Management uses the Free Cash
Flow metric to analyze the cash flows being generated by the
Company's business. Refer to the "Reconciliation of Non-GAAP
Financial Measures" section for a reconciliation of this metric to
Cash flow from operating activities, the closest IFRS measure.
Non-GAAP Financial Ratios
Sales Allowances as a percentage of Toy Gross Product Sales is
calculated by dividing Sales Allowances by Toy Gross Product Sales.
Management uses Sales Allowance as a percentage of Toy Gross
Product Sales to identify and compare the cost of doing business
with individual retailers, different geographic markets and amongst
various distribution channels.
Percentage change in Constant Currency Toy Gross Product Sales
is calculated by dividing the change in Toy Gross Product Sales
excluding the impact from changes in foreign currency exchange
rates by the Toy Gross Product Sales of the comparative period.
Management uses Percentage change in Constant Currency Toy Gross
Product Sales to measure the underlying financial performance of
the business on a consistent basis over time excluding the impact
from changes in foreign currency exchange rates.
Percentage change in Constant Currency Sales Allowances is
calculated by dividing the change in Sales Allowances excluding the
impact from changes in foreign currency exchange rates by the Sales
Allowances of the comparative period. Management uses Percentage
change in Constant Currency Sales Allowances to measure the
underlying financial performance of the business on a consistent
basis over time excluding the impact from changes in foreign
currency exchange rates.
Percentage change in Constant Currency Toy - Other Revenue is
calculated by dividing the change in Toy - Other Revenue excluding
the impact from changes in foreign currency exchange rates by the
Toy - Other Revenue of the comparative period. Management uses
Percentage change in Constant Currency Toy - Other Revenue to
measure the underlying financial performance of the business on a
consistent basis over time excluding the impact from changes in
foreign currency exchange rates.
Percentage change in Constant Currency Toy Revenue is calculated
by dividing the change in Toy Revenue excluding the impact from
changes in foreign currency exchange rates by the Toy Revenue of
the comparative period. Management uses Percentage change in
Constant Currency Toy Revenue to measure the underlying financial
performance of the business on a consistent basis over time
excluding the impact from changes in foreign currency exchange
rates.
Percentage change in Constant Currency Entertainment Revenue is
calculated by dividing the change in Entertainment revenue
excluding the impact from changes in foreign currency exchange
rates by the Entertainment revenue of the comparative period.
Management uses Percentage change in Constant Currency
Entertainment Revenue to measure the underlying financial
performance of the business on a consistent basis over time
excluding the impact from changes in foreign currency exchange
rates.
Percentage change in Constant Currency Digital Games Revenue is
calculated by dividing the change in Digital Games revenue
excluding the impact from changes in foreign currency exchange
rates by the Digital Games revenue of the comparative period.
Management uses Percentage change in Constant Currency Digital
Games Revenue to measure the underlying financial performance of
the business on a consistent basis over time excluding the impact
from changes in foreign currency exchange rates.
Percentage change in Constant Currency Revenue is calculated by
dividing the change in Revenue excluding the impact from changes in
foreign currency exchange rates by the Revenue of the comparative
period. Management uses Percentage change in Constant Currency
Revenue to measure the underlying financial performance of the
business on a consistent basis over time excluding the impact from
changes in foreign currency exchange rates.
Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided
by Revenue. Management uses Adjusted EBITDA Margin to evaluate the
Company's performance compared to internal targets and to benchmark
its performance against key competitors.
Melissa & Doug Adjusted EBITDA Margin is calculated as
Melissa & Doug Adjusted EBITDA divided by Melissa & Doug
Revenue. Management uses Melissa & Doug Adjusted EBITDA Margin
to evaluate the Company's performance compared to internal targets
and to benchmark its performance against key competitors.
Adjusted EBITDA Margin, excluding Melissa & Doug is
calculated as Adjusted EBITDA, excluding Melissa & Doug divided
by Revenue, excluding Melissa & Doug. Management uses Adjusted
EBITDA Margin, excluding Melissa & Doug to evaluate the
Company's performance compared to internal targets and to benchmark
its performance against key competitors.
Toys Adjusted EBITDA Margin is calculated as Toys Adjusted
EBITDA divided by Toy Revenue. Management uses Toys Adjusted EBITDA
Margin to evaluate the Company's performance compared to internal
targets and to benchmark its performance against key
competitors.
Toys Adjusted EBITDA Margin, excluding Melissa & Doug is
calculated as Toys Adjusted EBITDA, excluding Melissa & Doug
divided by Toy Revenue, excluding Melissa & Doug. Management
uses Toys Adjusted EBITDA Margin, excluding Melissa & Doug to
evaluate the Company's performance compared to internal targets and
to benchmark its performance against key competitor.
Entertainment Adjusted EBITDA Margin is calculated as
Entertainment Adjusted EBITDA divided by Entertainment Revenue.
Management uses Entertainment Adjusted EBITDA Margin to evaluate
the Company's performance compared to internal targets and to
benchmark its performance against key competitors.
Digital Games Adjusted EBITDA Margin is calculated as Digital
Games Adjusted EBITDA divided by Digital Games Revenue. Management
uses Digital Games Adjusted EBITDA Margin to evaluate the Company's
performance compared to internal targets and to benchmark its
performance against key competitors.
Adjusted Operating Margin is calculated as Adjusted Operating
Income (Loss) divided by Revenue. Management uses Adjusted
Operating Margin to evaluate the Company's performance compared to
internal targets and to benchmark its performance against key
competitors.
Toys Adjusted Operating Margin is calculated as Toys Adjusted
Operating Income (Loss) divided by Toy Revenue. Management uses
Toys Adjusted Operating Margin to evaluate the Company's
performance compared to internal targets and to benchmark its
performance against key competitors.
Entertainment Adjusted Operating Margin is calculated as
Entertainment Adjusted Operating Income (Loss) divided by Toy
Revenue. Management uses Entertainment Adjusted Operating Margin to
evaluate the Company's performance compared to internal targets and
to benchmark its performance against key competitors.
Digital Games Adjusted Operating Margin is calculated as Digital
Games Adjusted Operating Income (Loss) divided by Digital Games
Revenue. Management uses Digital Games Adjusted Operating Margin to
evaluate the Company's performance compared to internal targets and
to benchmark its performance against key competitors.
Adjusted Basic EPS is calculated by dividing Adjusted Net Income
(Loss) by the weighted average number of shares outstanding during
the period. Adjusted Diluted EPS is calculated by dividing Adjusted
Net Income (Loss) by the weighted average number of common shares
outstanding, assuming the conversion of all dilutive securities
were exercised during the period. Management uses Adjusted Basic
EPS and Adjusted Diluted EPS to measure the underlying financial
performance of the business on a consistent basis over time.
Sales Allowances as a percentage of Toy Gross Product Sales is
calculated by dividing Sales Allowances by Toy Gross Product Sales.
Management uses Sales Allowance as a percentage of Toy Gross
Product Sales to identify and compare the cost of doing business
with individual retailers, different geographic markets and amongst
various distribution channels.
Reconciliation of Non-GAAP Financial Measures
The following table presents a reconciliation of Operating Loss
to Adjusted Operating (Loss) Income, Adjusted EBITDA,
Adjusted Net (Loss) Income, and cash used in operating activities
and investing activities to Free Cash Flow for the three months
ended March 31, 2024 and 2023:
(in US$
millions)
|
Q1
2024
|
Q1
2023
|
$
Change
|
%
Change
|
Operating
Loss
|
(61.8)
|
(6.1)
|
(55.7)
|
913.1 %
|
Adjustments:
|
|
|
|
|
|
Fair value adjustment
for inventories acquired1
|
20.6
|
—
|
20.6
|
n.m.
|
|
Transaction and
integration costs2
|
16.7
|
0.6
|
16.1
|
2,683.3 %
|
|
Share based
compensation3
|
6.1
|
5.4
|
0.7
|
13.0 %
|
|
Restructuring and other
related costs4
|
3.0
|
3.8
|
(0.8)
|
(21.1) %
|
|
Amortization of
intangible assets acquired
|
1.7
|
—
|
1.7
|
n.m.
|
|
Acquisition related
deferred incentive compensation5
|
1.5
|
2.1
|
(0.6)
|
(28.6) %
|
|
Impairment of property,
plant and equipment6
|
0.3
|
0.2
|
0.1
|
50.0 %
|
|
Foreign exchange (gain)
loss7
|
(0.4)
|
4.3
|
(4.7)
|
(109.3) %
|
|
Legal settlement
(recovery) expense
|
(0.6)
|
0.2
|
(0.8)
|
(400.0) %
|
|
Acquisition related
contingent consideration8
|
(1.6)
|
—
|
(1.6)
|
n.m.
|
|
Impairment of
intangible assets9
|
—
|
1.2
|
(1.2)
|
(100.0) %
|
|
Impairment of
goodwill10
|
—
|
1.0
|
(1.0)
|
(100.0) %
|
Adjusted Operating
(Loss) Income
|
(14.5)
|
12.7
|
(27.2)
|
(214.2) %
|
|
Depreciation and
amortization 11
|
33.1
|
17.9
|
15.2
|
84.9 %
|
Adjusted
EBITDA
|
18.6
|
30.6
|
(12.0)
|
(39.2) %
|
|
Income tax
recovery
|
18.5
|
0.6
|
17.9
|
2,983.3 %
|
|
Interest (expense)
income
|
(11.5)
|
3.6
|
(15.1)
|
(419.4) %
|
|
Depreciation and
amortization11
|
(33.1)
|
(17.9)
|
(15.2)
|
84.9 %
|
|
Tax effect of
normalization adjustments12
|
(12.0)
|
(4.6)
|
(7.4)
|
160.9 %
|
Adjusted Net (Loss)
Income
|
(19.5)
|
12.3
|
(31.8)
|
(258.5) %
|
|
|
|
|
|
|
Cash provided by
operating activities
|
24.3
|
(4.3)
|
28.6
|
(665.1) %
|
Cash used in investing
activities
|
(980.4)
|
(56.6)
|
(923.8)
|
1,632.2 %
|
Add:
|
|
|
|
|
Cash provided by
business acquisitions, asset acquisitions, and investment in
limited partnership and Minority interest and other investments,
net of investment
distribution income
|
955.5
|
26.5
|
929.0
|
3,505.7 %
|
Free Cash
Flow
|
(0.6)
|
(34.4)
|
33.8
|
(98.3) %
|
__________________________________
|
1
|
Relates to fair value
adjustment to Melissa & Doug inventory recorded as part of the
acquisition on January 2, 2024.
|
2
|
Professional fees and
integration costs incurred relating to acquisitions (including
Melissa & Doug), including $9.5 million of transaction
costs.
|
3
|
Related to non-cash
expenses associated with the Company's share option expense and
long-term incentive plan.
|
4
|
Restructuring expense
in the prior year primarily relates to changes in
personnel.
|
5
|
Deferred incentive
compensation associated with acquisitions.
|
6
|
Impairment of property
plant and equipment related to tooling.
|
7
|
Includes foreign
exchange losses (gains) generated by the translation and settlement
of monetary assets/liabilities denominated in a currency other than
the functional currency of the applicable entity and losses (gains)
related to the Company's hedging programs.
|
8
|
Recovery associated
with contingent consideration for acquisitions.
|
9
|
Impairment of
intangible assets related to related to entertainment content
development, digital game and app development and computer
software.
|
10
|
Impairment of goodwill
associated with two separate CGUs.
|
11
|
Depreciation and
amortization for the calculation of Adjusted EBITDA excludes $1.7
million of amortization of intangible assets acquired with Melissa
& Doug.
|
12
|
Tax effect of
adjustments (Footnotes 1-10). Adjustments are tax effected at the
effective tax rate of the given period.
|
The following tables present reconciliations of
Revenue to Constant Currency Toy Gross Product Sales, Revenue to
Constant Currency Digital Games revenue, Revenue to Constant
Currency Entertainment Revenue, and Revenue to Constant Currency
Revenue for the three months ended March 31, 2024, and
2023:
(US$
millions)
|
Q1
2024
|
Q1
2023
|
Constant Currency Toy
Gross Product Sales
|
262.4
|
219.7
|
Impact of foreign
exchange
|
1.7
|
(3.4)
|
Toy Gross Product
Sales
|
264.1
|
216.3
|
Constant Currency Sales
Allowances
|
(37.9)
|
(30.9)
|
Impact of foreign
exchange
|
(0.3)
|
0.9
|
Sales
Allowances
|
(38.2)
|
(30.0)
|
Toy Net
Sales
|
225.9
|
186.3
|
Constant Currency Toy -
Other Revenue
|
0.5
|
—
|
Impact of foreign
exchange
|
—
|
—
|
Toy - Other
Revenue
|
0.5
|
—
|
Constant Currency Toy
Revenue
|
225.0
|
188.8
|
Toy
Revenue
|
226.4
|
186.3
|
|
|
|
Constant Currency
Entertainment revenue
|
43.8
|
37.6
|
Impact of foreign
exchange
|
—
|
—
|
Entertainment
revenue
|
43.8
|
37.6
|
|
|
|
Constant Currency
Digital Games revenue
|
45.9
|
49.2
|
Impact of foreign
exchange
|
0.1
|
(1.7)
|
Digital Games
revenue
|
46.0
|
47.5
|
|
|
|
Constant Currency
Revenue
|
314.7
|
275.6
|
Impact of foreign
exchange
|
1.5
|
(4.2)
|
Revenue
|
316.2
|
271.4
|
The following tables present the composition of Percentage
change in Constant Currency Toy Gross Product Sales, Percentage
change in Constant Currency Sales Allowances, Percentage change in
Constant Currency Entertainment Revenue, Percentage change in
Constant Currency Digital Games Revenue, and Percentage change in
Constant Currency Revenue for the three months ended March 31, 2024 and 2023:
|
|
|
$
Change
|
|
%
Change
|
(US$
millions)
|
Q1
2024
|
Q1
2023
|
|
As
reported
|
Impact of
foreign
exchange
|
In
Constant
Currency
|
|
As
reported
|
In
Constant
Currency
|
Toy Gross Product
Sales
|
264.1
|
216.3
|
|
47.8
|
(1.7)
|
46.1
|
|
22.1 %
|
21.3 %
|
Sales
Allowances
|
(38.2)
|
(30.0)
|
|
(8.2)
|
0.3
|
(7.9)
|
|
27.3 %
|
26.3 %
|
Toy Net
Sales
|
225.9
|
186.3
|
|
39.6
|
(1.4)
|
38.2
|
|
21.3 %
|
20.5 %
|
Toy - Other
Revenue
|
0.5
|
—
|
|
0.5
|
—
|
0.5
|
|
n.m.
|
n.m.
|
Toy
Revenue
|
226.4
|
186.3
|
|
40.1
|
(1.4)
|
38.7
|
|
21.5 %
|
20.8 %
|
Entertainment
revenue
|
43.8
|
37.6
|
|
6.2
|
—
|
6.2
|
|
16.5 %
|
16.5 %
|
Digital Games
revenue
|
46.0
|
47.5
|
|
(1.5)
|
(0.1)
|
(1.6)
|
|
(3.2) %
|
(3.4) %
|
Revenue
|
316.2
|
271.4
|
|
44.8
|
(1.5)
|
43.3
|
|
16.5 %
|
16.0 %
|
Segment Results
The Company's results from operations by reportable segment for
the three months ended March 31, 2024
and 2023 are as follows:
|
|
|
(US$
millions)
|
Q1
2024
|
Q1
2023
|
|
Toys
|
Entertainment
|
Digital
Games
|
Corporate
& Other1
|
Total
|
Toys
|
Entertainment
|
Digital
Games
|
Corporate
& Other1
|
Total
|
Revenue
|
226.4
|
43.8
|
46.0
|
—
|
316.2
|
186.3
|
37.6
|
47.5
|
—
|
271.4
|
|
|
|
|
|
|
|
|
|
|
|
Operating (Loss)
Income
|
(90.8)
|
28.6
|
13.2
|
(12.8)
|
(61.8)
|
(41.8)
|
29.3
|
16.2
|
(9.8)
|
(6.1)
|
Adjusting
items:
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustment
for inventories
acquired2
|
20.6
|
—
|
—
|
—
|
20.6
|
—
|
—
|
—
|
—
|
—
|
Transaction and
integration costs3
|
6.2
|
—
|
—
|
10.5
|
16.7
|
—
|
—
|
—
|
0.6
|
0.6
|
Share based
compensation
|
4.2
|
0.4
|
0.8
|
0.7
|
6.1
|
3.4
|
0.3
|
0.6
|
1.1
|
5.4
|
Restructuring and other
related costs
|
2.4
|
0.1
|
0.5
|
—
|
3.0
|
3.1
|
0.1
|
0.6
|
—
|
3.8
|
Amortization of
intangible assets acquired
|
1.7
|
—
|
—
|
—
|
1.7
|
—
|
—
|
—
|
—
|
—
|
Acquisition related
deferred incentive
compensation
|
0.8
|
—
|
0.7
|
—
|
1.5
|
0.7
|
—
|
1.4
|
—
|
2.1
|
Impairment of property,
plant and equipment
|
0.3
|
—
|
—
|
—
|
0.3
|
0.2
|
—
|
—
|
—
|
0.2
|
Impairment of
goodwill
|
—
|
—
|
—
|
—
|
—
|
1.0
|
—
|
—
|
—
|
1.0
|
Impairment of
intangible assets
|
—
|
—
|
—
|
—
|
—
|
—
|
0.2
|
0.2
|
0.8
|
1.2
|
Foreign exchange (gain)
loss
|
—
|
—
|
—
|
(0.4)
|
(0.4)
|
—
|
—
|
—
|
4.3
|
4.3
|
Legal settlement
(recovery) expense
|
—
|
—
|
—
|
(0.6)
|
(0.6)
|
—
|
—
|
—
|
0.2
|
0.2
|
Acquisition related
contingent consideration
|
(1.6)
|
—
|
—
|
—
|
(1.6)
|
—
|
—
|
—
|
—
|
—
|
Adjusted Operating
(Loss) Income4
|
(56.2)
|
29.1
|
15.2
|
(2.6)
|
(14.5)
|
(33.4)
|
29.9
|
19.0
|
(2.8)
|
12.7
|
Adjusted Operating
Margin4
|
(24.8) %
|
66.4 %
|
33.0 %
|
n.m.
|
(4.6) %
|
(17.9) %
|
79.5 %
|
40.0 %
|
n.m.
|
4.7 %
|
Depreciation and
amortization5
|
23.7
|
7.3
|
2.1
|
—
|
33.1
|
12.0
|
3.7
|
2.0
|
0.2
|
17.9
|
Adjusted
EBITDA4
|
(32.5)
|
36.4
|
17.3
|
(2.6)
|
18.6
|
(21.4)
|
33.6
|
21.0
|
(2.6)
|
30.6
|
Adjusted EBITDA
Margin4
|
(14.4) %
|
83.1 %
|
37.6 %
|
n.m.
|
5.9 %
|
(11.5) %
|
89.4 %
|
44.2 %
|
n.m.
|
11.3 %
|
1
Corporate & Other includes certain
corporate costs, foreign exchange and merger and
acquisition-related costs, as well as fair value gains and
losses.
|
2
Relates to the fair value adjustment to
Melissa & Doug's inventory recorded as part of the acquisition
on January 2, 2024.
|
3
Professional fees and integration costs
incurred relating to acquisitions (including Melissa & Doug),
including $9.5 million
of transaction costs.
|
4
Non-GAAP financial measure or ratio. See
"Non-GAAP Financial Measures and Ratios".
|
5
Depreciation and amortization for the
calculation of adjusted EBITDA excludes $1.7 million (Q1 2023 -
$nil) of amortization of intangible assets acquired with Melissa
& Doug.
|
The following table presents a reconciliation of Melissa &
Doug's Operating Income to Adjusted EBITDA for the three months
ended March 31, 2024:
(US$
millions)
|
Q1
2024
|
Melissa & Doug Toy
Gross Product Sales2
|
46.7
|
Melissa & Doug
Sales Allowance
|
(6.3)
|
Melissa & Doug
Revenue
|
40.4
|
|
|
Operating
Loss
|
(19.1)
|
Depreciation and
amortization
|
8.3
|
EBITDA
|
(10.8)
|
Adjustments1
|
1.6
|
Melissa & Doug
Adjusted EBITDA2
|
(9.2)
|
Melissa & Doug
Adjusted EBITDA Margin2
|
(22.8) %
|
1
Includes foreign exchange (gain)loss,
restructuring and other related costs, and transaction and
integration costs.
|
2
Non-GAAP financial measure or ratio. See
"Non-GAAP Financial Measures and Ratios".
|
The following table presents a reconciliation of Revenue to
Revenue, excluding Melissa & Doug, Toy Gross Product Sales to
Toy Gross Product Sales, excluding Melissa & Doug, Consolidated
Adjusted EBITDA to Adjusted EBITDA, excluding Melissa & Doug,
Toy Revenue to Toy Revenue, excluding Melissa & Doug, and Toys
Adjusted EBITDA to Toys Adjusted EBITDA, excluding Melissa &
Doug for the three months ended March
31, 2024:
(US$
millions)
|
Q1
2024
|
Q1
2023
|
$
Change
|
%
Change
|
Revenue
|
316.2
|
271.4
|
44.8
|
16.5 %
|
Melissa & Doug
Revenue
|
40.4
|
—
|
40.4
|
n.m.
|
Revenue, excluding
Melissa & Doug1
|
275.8
|
271.4
|
4.4
|
1.6 %
|
|
|
|
|
|
Toys Gross Product
Sales1
|
264.1
|
216.3
|
47.8
|
22.1 %
|
Melissa & Doug Toy
Gross Product Sales1
|
46.7
|
—
|
46.7
|
n.m.
|
Toys Gross Product
Sales, excluding Melissa & Doug1
|
217.4
|
216.3
|
1.1
|
0.5 %
|
|
|
|
|
|
Adjusted
EBITDA1
|
18.6
|
30.6
|
(12.0)
|
(39.2) %
|
Melissa & Doug
Adjusted EBITDA1
|
(9.2)
|
—
|
(9.2)
|
n.m.
|
Adjusted EBITDA,
excluding Melissa & Doug1
|
27.8
|
30.6
|
(2.8)
|
(9.2) %
|
|
|
|
|
|
Adjusted EBITDA
Margin, excluding Melissa & Doug1
|
10.1 %
|
11.3 %
|
|
|
|
|
|
|
|
Toy Revenue
|
226.4
|
186.3
|
40.1
|
21.5 %
|
Melissa & Doug
Revenue
|
40.4
|
—
|
40.4
|
n.m.
|
Toy Revenue,
excluding Melissa & Doug1
|
186.0
|
186.3
|
(0.3)
|
(0.2) %
|
|
|
|
|
|
Toys Adjusted
EBITDA1
|
(32.5)
|
(21.4)
|
(11.1)
|
51.9 %
|
Toys Adjusted EBITDA
Margin1
|
(14.4) %
|
(11.5) %
|
|
|
|
|
|
|
|
Toys Adjusted EBITDA,
excluding Melissa & Doug1
|
(23.3)
|
(21.4)
|
(1.9)
|
8.9 %
|
Toys Adjusted EBITDA
Margin, excluding Melissa & Doug1
|
(12.5) %
|
(11.5) %
|
|
|
1
Non-GAAP financial measure or ratio. See
"Non-GAAP Financial Measures and Ratios".
|
ADDENDUM
Effective January 1, 2024, Spin
Master has changed its product categories to align with the
Company's product offerings going forward. The following table
restates 2023 Toy Gross Product Sales1 in the same
format that the Company presents Toy Gross Product
Sales1 in 2024:
(US$
millions)
|
Q1
2023
|
Q2
2023
|
Q3
2023
|
Q4
2023
|
Total
|
Preschool, Infant &
Toddler and Plush
|
$
82.6
|
$
164.9
|
$
301.4
|
$
169.3
|
$
718.2
|
Activities, Games &
Puzzles and Dolls & Interactive
|
$
62.6
|
$
109.7
|
$
218.7
|
$
196.0
|
$
587.0
|
Wheels &
Action
|
$
43.7
|
$
101.1
|
$
151.2
|
$
113.3
|
$
409.3
|
Outdoor
|
$
27.4
|
$
14.3
|
$
7.3
|
$
23.7
|
$
72.7
|
Gross Product
Sales1
|
$
216.3
|
$
390.0
|
$
678.6
|
$
502.3
|
$
1,787.2
|
View original
content:https://www.prnewswire.com/news-releases/spin-master-reports-q1-2024-financial-results-including-melissa--doug-increases-quarterly-dividend-302138678.html
SOURCE Spin Master Corp.