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Spin Master Reports Q3 2024 Financial Results

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Q3 2024 Revenue increases 25%; Reiterates 2024 Outlook

TORONTO, Oct. 30, 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 and nine months ended September 30, 2024. The Company’s full Management’s Discussion and Analysis (“MD&A”) for the three and nine months ended September 30, 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.

Consolidated Financial Highlights for Q3 2024 as compared to the same period in 2023

Revenue was $885.7 million, an increase of 24.7% from $710.2 million, and includes Melissa & Doug Revenue of $155.0 million.Revenue by operating segment reflected an increase of 34.8% in Toys and declines of 41.5% in Entertainment and 16.8% in Digital Games.Toy Revenue was $810.9 million compared to $601.5 million. Toy Gross Product Sales1 were $922.7 million, an increase of $244.1 million or 36.0% from $678.6 million, and includes Melissa & Doug Toy Gross Product Sales1 of $182.3 million. Toy Gross Product Sales, excluding Melissa & Doug1 were $740.4 million, an increase of $61.8 million or 9.1%.Operating income was $203.2 million compared to $197.2 million.Adjusted EBITDA1 was $277.5 million, including Melissa & Doug Adjusted EBITDA1 of $49.4 million, compared to $234.9 million, an increase of $42.6 million. Adjusted EBITDA Margin1 was 31.3% compared to 33.1%. Adjusted EBITDA, excluding Melissa & Doug1 was $228.1 million compared to $234.9 million. Included in Q3 2023 was distribution revenue of $15.6 million related to the initial delivery of PAW Patrol: The Mighty Movie. Excluding this distribution revenue, Adjusted EBITDA, excluding Melissa & Doug1 increased by $8.8 million, driven by higher Toy Revenue, partially offset by fewer Entertainment content deliveries and a decrease in the Digital Games Segment. Adjusted EBITDA Margin, excluding Melissa & Doug1 was 31.2%. Adjusted EBITDA Margin, excluding Melissa & Doug1 and the accretive effect of PAW Patrol: The Mighty Movie distribution revenue in the prior year, decreased by 40 basis points. The decrease is due to a higher proportion of Adjusted EBITDA1 contributed by the Toys Segment and a decrease in the Digital Games Segment.Net Income was $140.1 million or $1.32 per share (diluted) compared to $155.4 million or $1.45 per share (diluted).Adjusted Net Income1 was $169.7 million or $1.60 per share (diluted) compared to $143.6 million or $1.34 per share (diluted).Achieved $3.1 million in Net Cost Synergies2 and continues to expect to achieve approximately $6 million in Net Cost Synergies2 in 2024.Cash provided by operating activities was $74.9 million compared to $144.3 million.Free Cash Flow1 was $44.7 million compared to $118.9 million.Repurchased and cancelled 952,142 subordinate voting shares for $21.4 million (C$29.2 million) through the Company’s Normal Course Issuer Bid (the “NCIB”) program.Subsequent to September 30, 2024, the Company declared a quarterly dividend of C$0.12 per outstanding subordinate voting share and multiple voting share, payable on January 10, 2025.

“We are pleased with our revenue growth in third quarter, which was primarily driven by our Toys creative centre, including incremental revenue from Melissa & Doug,” said Max Rangel, Spin Master’s Global President & CEO. “Although the broader economic conditions remain a challenge, we generated toy sales growth across major markets reflecting our continued commitment to creating innovative products, powerful brands and magical play experiences. Both Entertainment and Digital Games revenue declined this quarter as a result of comparisons against the highly successful PAW Movie last year as well as lower in-game purchases in Toca Boca World. As part of our strategy of leveraging our IP across our creative centres, we launched Rubik’s Match, a match-3 mobile digital game. We believe we are well positioned to continue to grow market share and maintain our leadership position within the children’s entertainment industry through the execution of our long-term strategy and focus on reimagining everyday play.”

“We delivered revenue growth of 25% in the third quarter, driven by an increase in gross product sales in our Toys creative centre,” said Mark Segal, Spin Master’s Chief Financial Officer. “Melissa & Doug performed well, with revenue of $155 million and Adjusted EBITDA of $49 million. We are executing effectively on the integration, delivering $4.5 million in net cost synergies year to date and we are continuing to identify revenue growth opportunities. Adjusted EBITDA for the quarter was up just under $9 million comparatively, excluding Melissa & Doug and the PAW Movie in the prior year. We are maintaining our outlook for 2024 for both Spin Master and Melissa & Doug. We continued to execute our capital allocation strategy and by the end of Q3, we repurchased over 2 million shares under our NCIB. Over the long term, we will continue to invest to drive growth, while also managing our costs and preserving financial flexibility to maximize shareholder value.”

2024 Outlook

The Company continues to expect for 2024:

Toy Gross Product Sales, excluding Melissa & Doug1 to be in line with 2023.Revenue, excluding Melissa & Doug1, to be in line with 2023.Adjusted EBITDA Margin, excluding Melissa & Doug1 and Net Cost Synergies2 realized, to be in line with 2023.

Incrementally, the Company continues to expect for 2024:

Melissa & Doug Toy Gross Product Sales1 to be between $420 million to $430 million.Melissa & Doug Revenue to be 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 Synergies2 towards the target of approximately $25 million to $30 million in Run-rate Net Cost Synergies2 by the end of 2026.

Consolidated Financial Results as compared to the same period in 2023

Effective January 2, 2024, Melissa & Doug’s operating results for the three months ended September 30, 2024 are included in the Company’s consolidated results.

(US$ millions, except per share information)

Q3 2024

Q3 2023

$ Change

Consolidated Results

Revenue4

$

885.7

$

710.2

$

175.5

Operating Income

$

203.2

$

197.2

$

6.0

Operating Margin2

22.9 %

27.8 %

Adjusted Operating Income1,3

$

243.4

$

190.2

$

53.2

Adjusted Operating Margin1

27.5 %

26.8 %

Net Income

$

140.1

$

155.4

$

(15.3)

Adjusted Net Income1,3

$

169.7

$

143.6

$

26.1

Adjusted EBITDA1,3,4

$

277.5

$

234.9

$

42.6

Adjusted EBITDA Margin1

31.3 %

33.1 %

Earnings Per Share (“EPS”)

Basic EPS

$

1.36

$

1.50

Diluted EPS

$

1.32

$

1.45

Adjusted Basic EPS1

$

1.65

$

1.39

Adjusted Diluted EPS1

$

1.60

$

1.34

Weighted average number of shares (in millions)

Basic

103.0

103.6

Diluted

105.9

107.3

Selected Cash Flow Data

Cash provided by operating activities

$

74.9

$

144.3

$

(69.4)

Cash used in investing activities

$

(30.2)

$

(25.1)

$

(5.1)

Cash used in financing activities

$

(88.5)

$

(8.4)

$

(80.1)

Free Cash Flow1

$

44.7

$

118.9

$

(74.2)

1 Non-GAAP financial measure or ratio. See “Non-GAAP Financial Measures and Ratios and Supplementary Financial Measures”.

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.

4 Included in the operating results of the three months ended September 30, 2024 is Melissa & Doug Revenue of $155.0 million and Melissa & Doug Adjusted EBITDA1 of $49.4 million.

The following summarizes the impact of Melissa & Doug’s operating results on the three months ended September 30, 2024 consolidated results:

(US$ millions)

Q3 2024

Q3 2023

Revenue

885.7

710.2

Melissa & Doug Revenue

155.0

Revenue, excluding Melissa & Doug1

730.7

710.2

Toys Gross Product Sales1

922.7

678.6

Melissa & Doug Toy Gross Product Sales1

182.3

Toys Gross Product Sales, excluding Melissa & Doug1

740.4

678.6

Adjusted EBITDA1

277.5

234.9

Melissa & Doug Adjusted EBITDA1

49.4

Adjusted EBITDA, excluding Melissa & Doug1

228.1

234.9

Adjusted EBITDA Margin1

31.3 %

33.1 %

Adjusted EBITDA Margin, excluding Melissa & Doug1

31.2 %

33.1 %

1 Non-GAAP financial measure or ratio. See “Non-GAAP Financial Measures and Ratios and Supplementary Financial Measures”.

Segmented Financial Results as compared to the same period in 2023

(US$ millions)

Q3 2024

Q3 2023

Toys

Entertainment

Digital
Games

Corporate
& Other1

Total

Toys

Entertainment

Digital
Games

Corporate
& Other1

Total

Revenue

$    810.9

$            37.1

$      37.7

$          —

$   885.7

$    601.5

$           63.4

$      45.3

$          —

$   710.2

Operating Income
(Loss)

$    183.5

$            19.9

$        5.1

$       (5.3)

$   203.2

$    149.0

$           23.3

$      13.6

$      11.3

197.2

Adjusted Operating
Income (Loss)2

$    219.0

$            20.9

$        7.3

$       (3.8)

$   243.4

$    154.0

$           24.0

$      15.5

$       (3.3)

$   190.2

Adjusted EBITDA2

$    242.2

$            30.0

$        9.1

$       (3.8)

$   277.5

$    166.8

$           53.8

$      17.6

$       (3.3)

$   234.9

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 and Supplementary Financial Measures”.

Toys Segment Results

The following table provides a summary of the Toys segment operating results, for the three months ended September 30, 2024 and 2023:

(US$ millions)

Q3 2024

Q3 2023

$ Change

% Change

Preschool, Infant & Toddler and Plush1

$

469.6

$

301.4

$

168.2

55.8 %

Activities, Games & Puzzles and Dolls & Interactive

$

294.5

$

218.7

$

75.8

34.7 %

Wheels & Action

$

152.9

$

151.2

$

1.7

1.1 %

Outdoor

$

5.7

$

7.3

$

(1.6)

(21.9) %

Toy Gross Product Sales2,5

$

922.7

$

678.6

$

244.1

36.0 %

Sales Allowances3

$

(112.7)

$

(77.1)

$

(35.6)

46.2 %

Sales Allowances % of Toy Gross Product Sales2

12.2 %

11.4 %

0.8 %

Toy Net Sales

$

810.0

$

601.5

$

208.5

34.7 %

Toy – Other Revenue

$

0.9

$

$

0.9

n.m.

Toy Revenue

$

810.9

$

601.5

$

209.4

34.8 %

Toys Operating Income

$

183.5

$

149.0

$

34.5

23.2 %

Toys Operating Margin4

22.6 %

24.8 %

(2.2) %

Toys Adjusted EBITDA2

$

242.2

$

166.8

$

75.4

45.2 %

Toys Adjusted EBITDA Margin2

29.9 %

27.7 %

2.2 %

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 and Supplementary Financial Measures”.

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.

5 Effective January 1, 2024, the Company has changed its product categories to align with the Company’s product offerings going forward. Prior year comparative information has been updated to conform with the current disclosure. Refer to Addendum section for more details.

 

(US$ millions)

Q3 2024

Q3 2023

$ Change

% Change

Toy Revenue

810.9

601.5

209.4

34.8 %

Melissa & Doug Revenue

155.0

155.0

n.m.

Toy Revenue, excluding Melissa & Doug1

655.9

601.5

54.4

9.0 %

Toys Adjusted EBITDA1

242.2

166.8

75.4

45.2 %

Melissa & Doug Adjusted EBITDA1

49.4

49.4

n.m.

Toys Adjusted EBITDA, excluding Melissa & Doug1

192.8

166.8

26.0

15.6 %

Toys Adjusted EBITDA Margin1

29.9 %

27.7 %

Toys Adjusted EBITDA Margin, excluding Melissa & Doug1

29.4 %

27.7 %

1 Non-GAAP financial measure or ratio. See “Non-GAAP Financial Measures and Ratios and Supplementary Financial Measures”.

Toy Revenue increased by $209.4 million or 34.8% to $810.9 million.Toy Gross Product Sales1 was $922.7 million, an increase of $244.1 million or 36.0% from $678.6 million, including Melissa & Doug Toy Gross Product Sales1 of $182.3 million. Toy Gross Product Sales1 increased primarily as a result of the inclusion of Melissa & Doug, higher shipment volume driven by enhanced product innovation and a shift of customer orders into the third quarter from the second quarter. Toy Gross Product Sales, excluding Melissa & Doug1 was $740.4 million, an increase of $61.8 million or 9.1% from $678.6 million.Sales Allowances increased by $35.6 million to $112.7 million. As a percentage of Toy Gross Product Sales1, Sales Allowances increased to 12.2% from 11.4%, due to retail trade promotions related to Melissa & Doug.Toys Operating income was $183.5 million compared to Toy Operating Income of $149.0 million.Toys Operating Margin was 22.6% compared to 24.8%.Toys Adjusted EBITDA Margin1 was 29.9% compared to 27.7%. The increase in Toys Adjusted EBITDA Margin1 was driven primarily by the higher Toy Revenue and the inclusion of Melissa & Doug, resulting in improved operating leverage.

Entertainment Segment Results

The following table provides a summary of Entertainment segment operating results, for the three months ended September 30, 2024 and 2023:

(US$ millions)

Q3 2024

Q3 2023

$ Change

% Change

Entertainment Revenue

$

37.1

$

63.4

$

(26.3)

(41.5) %

Entertainment Operating Income

$

19.9

$

23.3

$

(3.4)

(14.6) %

Entertainment Operating Margin

53.6 %

36.8 %

16.8 %

Entertainment Adjusted Operating Income1

$

20.9

$

24.0

$

(3.1)

(12.9) %

Entertainment Adjusted Operating Margin1

56.3 %

37.9 %

18.4 %

1 Non-GAAP financial measure or ratio. See “Non-GAAP Financial Measures and Ratios and Supplementary Financial Measures”.

Entertainment Revenue decreased by $26.3 million or 41.5% to $37.1 million, primarily due to fewer Entertainment content deliveries. Distribution revenue in Q3 2023 included the initial delivery of PAW Patrol: The Mighty Movie ($15.6 million) and the delivery of Unicorn Academy.Entertainment Operating Income decreased by $3.4 million or 14.6% to $19.9 million. Entertainment Operating Margin increased to 53.6% from 36.8%.Entertainment Adjusted Operating Income1 decreased by $3.1 million or 12.9% to $20.9 million from $24.0 million, primarily due to fewer Entertainment content deliveries.Entertainment Adjusted Operating Margin1 increased to 56.3% from 37.9%, primarily due to fewer Entertainment content deliveries.

Digital Games Segment Results

The following table provides a summary of Digital Games segment operating results, for the three months ended September 30, 2024 and 2023:

(US$ millions)

Q3 2024

Q3 2023

$ Change

% Change

Digital Games Revenue

$          37.7

$          45.3

$              (7.6)

(16.8) %

Digital Games Operating Income

$            5.1

$          13.6

$              (8.5)

(62.5) %

Digital Games Operating Margin

13.5 %

30.0 %

(16.5) %

Digital Games Adjusted Operating Income1

$            7.3

$          15.5

$              (8.2)

(52.9) %

Digital Games Adjusted Operating Margin1

19.4 %

34.2 %

(14.8) %

1 Non-GAAP financial measure or ratio. See “Non-GAAP Financial Measures and Ratios and Supplementary Financial Measures”.

Digital Games Revenue declined by $7.6 million or 16.8% to $37.7 million, due to lower in-game purchases in Toca Boca World. Despite continued strong consumer engagement, increased competition in the marketplace has led to lower in-game spending per user. The revenue decline in Toca Boca World was offset in part by growth in subscription revenue in both Piknik and PAW Patrol Academy.Digital Games Operating Income decreased by $8.5 million or 62.5% to $5.1 million. Digital Games Adjusted Operating Income1 decreased by $8.2 million or 52.9% to $7.3 million from $15.5 million. Digital Games Operating Margin decreased from 30.0% to 13.5% and Digital Games Adjusted Operating Margin1 decreased from 34.2% to 19.4%.The decrease in Digital Games Operating Income, Adjusted Operating Income1, Operating Margin and Adjusted Operating Margin1 was due to the decline in revenue and increased investments in marketing across the Digital Games portfolio.

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 January 10, 2025 to shareholders of record at the close of business on December 27, 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 September 30, 2024 were 103.6 million and 106.1 million, compared to 103.4 million and 105.3 million in the prior year, respectively.

During the nine months ended September 30, 2024, the Company repurchased and cancelled, through the Company’s NCIB program, 2,063,723 (2023 – 397,700 shares) subordinate voting shares for $47.3 million (C$64.4 million) (2023 – $10.5 million). Subsequent to September 30, 2024, the Company repurchased and cancelled 265,900 subordinate voting shares for $6.3 million (C$8.5 million).

1 Non-GAAP financial measure or ratio. See “Non-GAAP Financial Measures and Ratios and Supplementary Financial Measures”.

2 Supplementary financial measure. See “Non-GAAP Financial Measures and Ratios and Supplementary Financial Measures”.

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 Thursday, October 31, 2024 at 9:30 a.m. (ET).

The call-in numbers for participants are (437) 900-0527 or (888) 510-2154. 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 approximately 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

Sep 30,

Dec 31,

(Unaudited, in US$ millions)

2024

2023

Assets

Current assets

  Cash and cash equivalents

114.2

705.7

  Trade receivables, net

643.5

414.4

  Other receivables

56.5

60.0

  Inventories, net

264.2

98.0

  Income tax receivable

14.0

  Prepaid expenses and other assets

46.2

40.9

1,138.6

1,319.0

Non-current assets

  Intangible assets

835.3

281.3

  Goodwill

381.4

165.9

  Right-of-use assets

160.7

53.6

  Property, plant and equipment

63.5

32.6

  Deferred income tax assets

162.6

110.8

  Other assets

36.5

26.5

1,640.0

670.7

Total assets

2,778.6

1,989.7

Liabilities

Current liabilities

  Trade payables and accrued liabilities

528.6

385.4

  Loans and borrowings

408.8

  Provisions

24.7

32.1

  Lease liabilities

28.3

11.4

  Deferred revenue

11.2

11.0

  Income tax payable

6.6

1,001.6

446.5

Non-current liabilities

  Deferred income tax liabilities

217.6

59.1

  Lease liabilities

125.9

50.7

  Provisions

12.1

14.3

355.6

124.1

Total liabilities

1,357.2

570.6

Shareholders’ equity

  Share capital

768.0

783.4

  Retained earnings

612.8

604.5

  Contributed surplus

40.0

27.4

  Accumulated other comprehensive income

0.6

3.8

Total shareholders’ equity

1,421.4

1,419.1

Total liabilities and shareholders’ equity

2,778.6

1,989.7

Spin Master Corp.
Condensed consolidated interim statements of earnings and comprehensive income

Nine Months Ended Sep 30,

(Unaudited, in US$ millions, except earnings per share)

Q3 2024

Q3 2023

2024

2023

Revenue

885.7

710.2

1,613.9

1,402.3

Cost of sales

416.4

323.3

788.5

625.9

Gross Profit

469.3

386.9

825.4

776.4

Expenses

Selling, general and administrative

247.0

202.1

645.0

530.9

Depreciation and amortization

18.7

6.0

53.8

18.3

Other expense, net

1.6

0.8

5.0

5.2

Foreign exchange (gain) loss, net

(1.2)

(19.2)

3.2

(3.5)

Operating Income

203.2

197.2

118.4

225.5

Interest income

(1.0)

(7.2)

(3.4)

(20.4)

Interest expense

14.4

4.8

39.4

11.2

Income before income tax expense

189.8

199.6

82.4

234.7

Income tax expense

49.7

44.2

21.6

53.2

Net Income

140.1

155.4

60.8

181.5

Earnings per share

Basic

1.36

1.50

0.59

1.75

Diluted

1.32

1.45

0.57

1.72

Weighted average number of shares (in millions)

Basic

103.0

103.6

103.6

103.4

Diluted

105.9

107.3

106.1

105.3

Nine Months Ended Sep 30,

(Unaudited, in US$ millions)

Q3 2024

Q3 2023

2024

2023

Net Income

140.1

155.4

60.8

181.5

Items that may be subsequently reclassified to Net Income

Foreign currency translation gain (loss)

5.7

(30.5)

(3.2)

(10.2)

Other comprehensive income (loss)

5.7

(30.5)

(3.2)

(10.2)

Total comprehensive income

145.8

124.9

57.6

171.3

Spin Master Corp.
Condensed consolidated interim statements of cash flows

Nine Months Ended Sep 30,

(Unaudited, in US$ millions)

2024

2023

Operating activities

Net Income

60.8

181.5

Adjustments to reconcile net income to cash provided by operating activities

Income tax expense

21.6

53.2

Interest expense

29.3

Interest income

(3.4)

(20.4)

Depreciation and amortization

102.5

88.4

Loss on disposal of non-current assets

0.1

1.0

Accretion expense

8.1

3.9

Amortization of Facility fee costs

1.0

0.3

Gain on investment in limited partnership, net

0.3

(0.3)

Impairment of non-current assets

2.2

3.6

Loss on minority interest and other investments

0.5

Unrealized foreign exchange loss, net

3.8

8.3

Share-based compensation expense

22.4

15.4

Net changes in non-cash working capital

(101.9)

(131.9)

Net change in non-cash provisions and other assets

(22.5)

(0.7)

Fair value adjustment on inventory sold

66.3

Income taxes paid

(50.7)

(64.1)

Income taxes received

4.1

0.6

Interest (paid) received

(19.9)

20.3

Cash provided by operating activities

124.6

159.1

Investing activities

Investment in property, plant and equipment

(25.1)

(22.3)

Investment in intangible assets

(60.0)

(61.5)

Business acquisitions, net of cash acquired

(952.9)

(26.5)

Investment distribution income

0.3

Minority interest and other investments

(2.0)

Cash used in investing activities

(1,038.0)

(112.0)

Financing activities

Proceeds from loans and borrowings

525.0

Repayment of loans and borrowings

(115.0)

Payment of lease liabilities

(28.4)

(11.4)

Dividends paid

(18.3)

(14.0)

Change in restricted cash

3.1

Repurchase of subordinate voting shares

(46.7)

(10.5)

Cash provided by (used in) financing activities

319.7

(35.9)

Effect of foreign currency exchange rate changes on cash

2.1

(4.8)

Net decrease in cash during the period

(591.5)

6.4

Cash, beginning of period

705.7

644.3

Cash, end of period

114.2

650.7

Non-GAAP Financial Measures and Ratios, Supplementary Financial Measures

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 SalesMelissa & Doug Toy Gross Product SalesToy Revenue, excluding Melissa & DougRevenue, excluding Melissa & DougAdjusted EBITDAMelissa & Doug Adjusted EBITDAToys Adjusted EBITDAEntertainment Adjusted EBITDADigital Games Adjusted EBITDAAdjusted 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 FlowAdjusted EBITDA, excluding Melissa & DougToys Adjusted EBITDA, excluding Melissa & DougToy Gross Product Sales, excluding Melissa & Doug

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:

Adjusted EBITDA MarginMelissa & Doug Adjusted EBITDA MarginToys Adjusted EBITDA MarginEntertainment Adjusted EBITDA MarginDigital Games Adjusted EBITDA MarginToys Adjusted Operating MarginEntertainment Adjusted Operating MarginDigital Games Adjusted Operating MarginAdjusted Operating MarginAdjusted Basic EPSAdjusted Diluted EPSSales Allowance as a percentage of Toy Gross Product SalesAdjusted EBITDA Margin, excluding Melissa & DougToys Adjusted EBITDA Margin, excluding Melissa & Doug

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.

References are made in this MD&A to the following terms, each of which is a supplementary financial measures:

Net Cost SynergiesRun-rate Net Cost Synergies

Management believes the Non-GAAP financial measures, Non-GAAP financial ratios, and Supplementary financial measures 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, Non-GAAP financial ratios, and Supplementary financial measures in the evaluation of issuers.

Non-GAAP Financial Measures

Toy Gross Product Sales represent Toy Revenue, 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 nine months ended September 30, 2024, as compared to the same period in 2023 in this Press Release.

Melissa & Doug Toy Gross Product Sales represent Toy revenue 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 Revenue, excluding Melissa & Doug represents Toy Revenue, 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.

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 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.

Toys Adjusted EBITDA is calculated as Toy Operating Income (Loss) 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.

Entertainment Adjusted EBITDA is calculated as Entertainment Operating Income (Loss) 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 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.

Adjusted EBITDA, excluding Melissa & Doug is calculated as Adjusted EBITDA excluding Melissa & Doug Adjusted EBITDA. Adjusted EBITDA, excluding Melissa & Doug 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, excluding Melissa & Doug is calculated as Toys Adjusted EBITDA excluding Melissa & Doug Adjusted EBITDA. Toys Adjusted EBITDA, excluding Melissa & Doug 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.

Toy Gross Product Sales, excluding Melissa & Doug represent Toy Revenue, 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.

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.

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.

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.

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.

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, 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.

Supplementary Financial Measures

Net Cost Synergies represent cost savings, net of costs to achieve, attributable to the integration of Melissa & Doug.

Run-rate Net Cost Synergies represent the expected ongoing cost savings, net of costs to achieve, attributable to the integration of Melissa & Doug.

Reconciliation of Non-GAAP Financial Measures

The following table presents a reconciliation of Operating Income to Adjusted Operating Income, Adjusted EBITDA, Adjusted Net Income, and cash used in operating activities and investing activities to Free Cash Flow for the three months ended September 30, 2024 and 2023:

(in US$ millions)

Q3 2024

Q3 2023

$ Change

% Change

Operating Income

203.2

197.2

6.0

3.0 %

Adjustments:

Fair value adjustment for inventories acquired1

21.5

21.5

n.m.

Share based compensation2

9.3

5.1

4.2

82.4 %

Transaction and integration costs3

3.9

5.2

(1.3)

(25.0) %

Restructuring and other related costs4

2.7

0.8

1.9

237.5 %

Amortization of intangible assets acquired5

1.8

1.8

n.m.

Acquisition related deferred incentive compensation6

0.9

1.8

(0.9)

(50.0) %

Net unrealized loss (gain) on investment7

0.4

0.4

n.m.

Acquisition related contingent consideration8

0.4

0.4

n.m.

Legal settlement expense (recovery)

0.4

(0.7)

1.1

(157.1) %

Impairment of property, plant and equipment9

0.1

0.1

n.m.

Impairment of intangible assets10

0.2

(0.2)

(100.0) %

Net realized gain on investment11

(0.2)

0.2

(100.0) %

Foreign exchange gain12

(1.2)

(19.2)

18.0

(93.8) %

Adjusted Operating Income

243.4

190.2

53.2

28.0 %

Depreciation and amortization13

34.1

44.7

(10.6)

(23.7) %

Adjusted EBITDA

277.5

234.9

42.6

18.1 %

Income tax expense

(49.7)

(44.2)

(5.5)

12.4 %

Interest (expense) income

(13.4)

2.4

(15.8)

(658.3) %

Depreciation and amortization12

(34.1)

(44.7)

10.6

(23.7) %

One-time income tax recovery

(6.6)

6.6

(100.0) %

Tax effect of normalization adjustments14

(10.6)

1.8

(12.4)

(688.9) %

Adjusted Net Income

169.7

143.6

26.1

18.2 %

Cash provided by operating activities

74.9

144.3

(69.4)

(48.1) %

Cash used in investing activities

(30.2)

(25.1)

(5.1)

20.3 %

Add:

Cash (used in) provided by business acquisitions, asset acquisitions, investment in
limited partnership, investment in associate and Minority interest and other
investments, net of investment distribution income

(0.3)

0.3

(100.0) %

Free Cash Flow

44.7

118.9

(74.2)

(62.4) %

_________________________________

1 Relates to fair value adjustment to Melissa & Doug inventory recorded as part of the acquisition on January 2, 2024.

2 Related to non-cash expenses associated with the Company’s long-term incentive plan and the mark to market (gain)/loss related to DSUs.

3 Professional fees and integration costs incurred relating to acquisitions (including Melissa & Doug), including $(1.0) million of transaction costs.

4 Restructuring expense in the prior year primarily relates to changes in personnel.

5 Relates to the amortization of intangible assets acquired with Melissa & Doug.

6 Deferred incentive compensation associated with acquisitions.

7 Net unrealized loss (gain) related to investment in limited partnership and minority interest and investments.

8 Recovery associated with contingent consideration for acquisitions.

9 Impairment of property plant and equipment related to tooling.

10 Impairment of intangible assets related to content development projects.

11 Net realized gain related to investment in limited partnership.

12 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.

13 Depreciation and amortization for the calculation of Adjusted EBITDA excludes $1.8 million of amortization of intangible assets acquired with Melissa & Doug.

14 Tax effect of adjustments (Footnotes 1-11). Adjustments are tax effected at the effective tax rate of the given period.

Segment Results

The Company’s results from operations by reportable segment for the three months ended September 30, 2024 and 2023 are as follows:

(US$ millions)

Q3 2024

Q3 2023

Toys

Entertainment

Digital
Games

Corporate
& Other1

Total

Toys

Entertainment

Digital
Games

Corporate
& Other1

Total

Revenue

810.9

37.1

37.7

885.7

601.5

63.4

45.3

710.2

Operating Income (Loss)

183.5

19.9

5.1

(5.3)

203.2

149.0

23.3

13.6

11.3

197.2

Adjusting items:

Fair value adjustment for inventories
acquired2

21.5

21.5

Share based compensation

6.6

0.5

1.1

1.1

9.3

3.7

0.4

0.7

0.3

5.1

Transaction and integration costs3

2.7

1.2

3.9

5.2

5.2

Restructuring and other related costs

2.0

0.1

0.6

2.7

0.6

0.1

0.1

0.8

Amortization of intangible assets acquired

1.8

1.8

Acquisition related deferred incentive
compensation

0.4

0.5

0.9

0.7

1.1

1.8

Net unrealized loss on investment

0.4

0.4

Legal settlement expense (recovery)

0.4

0.4

(0.7)

(0.7)

Acquisition related contingent consideration

0.4

0.4

Impairment of property, plant and equipment

0.1

0.1

Impairment of intangible assets

0.2

0.2

Net realized gain on investment

(0.2)

(0.2)

Foreign exchange gain

(1.2)

(1.2)

(19.2)

(19.2)

Adjusted Operating Income (Loss)4

219.0

20.9

7.3

(3.8)

243.4

154.0

24.0

15.5

(3.3)

190.2

Adjusted Operating Margin4

27.0 %

56.3 %

19.4 %

n.m.

27.5 %

25.6 %

37.9 %

34.2 %

n.m.

26.8 %

Depreciation and amortization5

23.2

9.1

1.8

34.1

12.8

29.8

2.1

44.7

Adjusted EBITDA4

242.2

30.0

9.1

(3.8)

277.5

166.8

53.8

17.6

(3.3)

234.9

Adjusted EBITDA Margin4

29.9 %

80.9 %

24.1 %

n.m.

31.3 %

27.7 %

84.9 %

38.9 %

n.m.

33.1 %

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 $(1.0) million of transaction cost recovery for the acquisition of Melissa and Doug.

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 $1.8 million (Q3 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 September 30, 2024: 

(US$ millions)

Q3 2024

Melissa & Doug Toy Gross Product Sales

182.3

Melissa & Doug Sales Allowance

(27.3)

Melissa & Doug Revenue

155.0

Melissa & Doug Operating Income

37.4

Depreciation and amortization

5.9

Melissa & Doug EBITDA

43.3

Adjustments1

6.1

Melissa & Doug Adjusted EBITDA

49.4

Melissa & Doug Adjusted EBITDA Margin

31.9 %

1 Includes foreign exchange (gain) loss, restructuring and other related costs, and transaction and integration costs.

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 September 30, 2024:

(US$ millions)

Q3 2024

Q3 2023

$ Change

% Change

Revenue

885.7

710.2

175.5

24.7 %

Melissa & Doug Revenue

155.0

155.0

n.m.

Revenue, excluding Melissa & Doug

730.7

710.2

20.5

2.9 %

Toys Gross Product Sales

922.7

678.6

244.1

36.0 %

Melissa & Doug Toy Gross Product Sales

182.3

182.3

n.m.

Toys Gross Product Sales, excluding Melissa & Doug

740.4

678.6

61.8

9.1 %

Adjusted EBITDA

277.5

234.9

42.6

18.1 %

Melissa & Doug Adjusted EBITDA

49.4

49.4

n.m.

Adjusted EBITDA, excluding Melissa & Doug

228.1

234.9

(6.8)

(2.9) %

Adjusted EBITDA Margin, excluding Melissa & Doug

31.2 %

33.1 %

Toy Revenue

810.9

601.5

209.4

34.8 %

Melissa & Doug Revenue

155.0

155.0

n.m.

Toy Revenue, excluding Melissa & Doug

655.9

601.5

54.4

9.0 %

Toys Adjusted EBITDA

242.2

166.8

75.4

45.2 %

Toys Adjusted EBITDA Margin

29.9 %

27.7 %

Toys Adjusted EBITDA, excluding Melissa & Doug

192.8

166.8

26.0

15.6 %

Toys Adjusted EBITDA Margin, excluding Melissa & Doug

29.4 %

27.7 %

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-q3-2024-financial-results-302291984.html

SOURCE Spin Master Corp.

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XTransfer and OCBC Jointly Announce Comprehensive Partnership

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“Global Multi-Currency Accounts” Empowers SMEs with New Market Opportunities

SHANGHAI, Dec. 23, 2024 /PRNewswire/ — XTransfer, the World’s Leading & China’s No.1 B2B Cross-Border Trade Payment Platform, and OCBC, the second largest financial services group in Southeast Asia, jointly announced the comprehensive partnership. OCBC China will leverage the OCBC Group’s extensive regional network and resources in its key markets of Singapore, Hong Kong SAR, Malaysia and Indonesia to collaborate with XTransfer to provide small and medium-sized enterprises (SMEs) engaging in international trade with one-stop innovative cross-border financial solutions, including payment, FX, risk control and wealth management. The Memorandum of Understanding was signed on 18 December 2024 by Bill Deng, Founder and CEO of XTransfer, and Ang Eng Siong, CEO of OCBC China.

Bill Deng, Founder and CEO of XTransfer, stated, “This collaboration marks a significant milestone for XTransfer, greatly enhancing our global payment capabilities. By leveraging OCBC’s extensive global payment network, XTransfer saves a substantial amount of market costs and accelerates our business expansion in Southeast Asia, saving on local expansion efforts. XTransfer looks forward to expanding its business with OCBC in the future in a variety of areas, including wealth management and lending, and is looking forward to working with them to capture the vast opportunities in Greater China and ASEAN.”

Ang Eng Siong, CEO of OCBC China, said, “OCBC uses Singapore and Hong Kong as our twin-hubs, radiating out to Greater China and ASEAN regions. XTransfer’s business development plans in these areas align closely with our network layout. As XTransfer’s global account manager, OCBC China will support XTransfer and its clients in facilitating cross-border settlements through close collaboration with various business subsidiaries of the group. This will help meet the growing demand for cross-border development and business growth, helping them achieve their aspirations in Greater China and ASEAN.”

XTransfer and OCBC collaborate in several areas of cross-border business. In particular, XTransfer leverages the strong banking networks and service capabilities of OCBC to offer its customers the “Global Multi-Currency Account” provided by OCBC Hong Kong, allowing clients to make payments and collect funds globally. The Global Multi-Currency Account supports not only major currencies, such as the Renminbi, US Dollar, British Pound, Euro, etc., but also currencies from ASEAN and various countries and regions. This will benefit SMEs in foreign trade settlement in the corresponding countries and enhance global cross-border trade efficiency. The partnership will provide XTransfer’s over 550,000 clients and their buyers with more payment and collection options. Additionally, clients can make payments and collect funds through CHATS or FPS, the local clearing network in Hong Kong, offering convenience similar to local bank transfers.

In recent years, trade exchanges between China and ASEAN have become increasingly close. According to data from XTransfer, from January to September 2024, the amount received by small and medium-sized foreign trade enterprises on the XTransfer platform from ASEAN grew by 80% compared to the previous year. The partnership between XTransfer and OCBC will address this growth in international trade by SMEs, and help them capture opportunities in trade and capital flow between China and ASEAN.

XTransfer continues to build its global payment infrastructure for foreign trade through partnerships with renowned international banks and financial institutions. This partnership with OCBC brings XTransfer a new upgrade in its global payment infrastructure, offering substantial benefits to global cross-border traders. By utilising the Global Multi-Currency Account provided by OCBC Hong Kong, buyers can easily make payments in various currencies to overseas suppliers and collect funds from worldwide customers. This partnership is expected to enhance cross-border trade by significantly broadening the payment methods and scope for SMEs.

View original content to download multimedia:https://www.prnewswire.com/apac/news-releases/xtransfer-and-ocbc-jointly-announce-comprehensive-partnership-302338240.html

SOURCE XTransfer

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TECHTRONIC INDUSTRIES JOINS THE UN GLOBAL COMPACT

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DEMONSTRATES TTI’S COMMITMENT TO SUSTAINABLE PRODUCTS AND PRACTICES

FORT LAUDERDALE, Fla., Dec. 23, 2024 /PRNewswire/ — Global cordless power tool, outdoor power equipment and floorcare company Techtronic Industries Co. Ltd. (“TTI” or the “Company”) (stock code: HK:0669, ADR symbol: TTNDY) today announced that it has joined the United Nations Global Compact, reaffirming its dedication to sustainability and social responsibility. With over 25,000 signatories in over 160 countries, the UN Global Compact is the world’s largest voluntary corporate sustainability reporting initiative. By joining, TTI is committing to communicating its progress to stakeholders annually through our ESG Report and UN Global Compact’s website. 

TTI’s CEO Steve Richman remarked: “As the industry pioneer in lithium-ion battery-powered, energy efficient power tools and outdoor power equipment, TTI’s commitment to sustainable products and business practices has long been a fundamental part of the way we do business. We began publishing ESG reports in 2015 and we aligned our goals and targets with the UN Sustainable Development Goals in 2018. Every year we make progress in areas including safety solutions, noise reduction, supply chain traceability, decarbonization, and governance. While we have demonstrated our commitment, by joining the UN Global Compact, we have officially aligned our sustainability strategy with the Ten Principles in the areas of human rights, labor, environment, and anti-corruption.”

As part of TTI’s ongoing sustainability efforts, our objective is to implement initiatives that deepen our support of the UN’s Sustainable Development Goals (SDGs) while fostering an inclusive and equitable workplace culture. We are dedicated to advancing our sustainability journey, setting measurable goals, and continuously monitoring our progress.

Learn more about TTI’s efforts by reading our latest ESG publications here. Our 2024 ESG report will be published in March 2025.

About TTI

Techtronic Industries Company Limited (“TTI” or the “Company”), founded in 1985 by German entrepreneur Horst Julius Pudwill, is a world leader in cordless technology. As a pioneer in Power Tools, Outdoor Power Equipment, Floorcare and Cleaning Products, TTI serves professional, industrial, Do It Yourself (DIY), and consumer markets worldwide. With more than 50,000 employees globally, the company’s relentless focus on innovation and strategic growth has established its leading position in the industries it serves.

MILWAUKEE is at the forefront of TTI’s professional tool portfolio. With global research and development headquartered in Brookfield, Wisconsin, the historic MILWAUKEE brand is renowned for driving innovation, safety, and jobsite productivity worldwide. The RYOBI brand, headquartered in Greenville, South Carolina, remains the top choice for DIYers and continues to set the standard in DIY tool innovation. TTI’s diverse brand portfolio also includes trusted brands like AEG, EMPIRE, HOMELITE, and leading floorcare names HOOVER, ORECK, VAX, and DIRT DEVIL (based in Charlotte, North Carolina).

TTI’s international recognition and renowned brand portfolio are supported by a strong ownership structure that underscores the company’s global reach and stability. The Pudwill family remains the company’s largest shareholder, with the remaining ownership held largely by institutional investors at North American and European-owned firms. TTI is publicly traded on the Hong Kong Stock Exchange and is a constituent stock of the Hang Seng Index, operating globally with a strong commitment to environmental, social, and corporate governance standards. For more information, visit www.ttigroup.com.

All trademarks listed other than AEG and RYOBI are owned by the Company. AEG is a registered trademark of AB Electrolux (publ.) and is used under license. RYOBI is a registered trademark of Ryobi Limited and is used under license.

View original content:https://www.prnewswire.com/news-releases/techtronic-industries-joins-the-un-global-compact-302338242.html

SOURCE Techtronic Industries Co. Ltd.

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New 2025 ezPaycheck Paycheck Payroll Software Is Now Available from Halfpricesoft.com

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REDMOND, Wash., Dec. 23, 2024 /PRNewswire/ — Halfpricesoft.com has just announced the release of 2025 ezPaycheck payroll software for support for small businesses, freelancers, and sole proprietors as well as many other clients. The new ezPaycheck includes 940, 941, W2 and W3 forms and 2025 tax tables.

 

Clients can still acquire the 2024-2025 bundle version at a cost reduction for a limited time. For those utilizing the 2024 ezPaycheck please note:

Do NOT install this new version before you complete 2024 paychecks. ezPaycheck 2025 installation will update the tax tables. With ezPaycheck 2025, you can still access your 2024 paychecks, view reports and print 2024 W2 forms.

Dr. Ge stated, “The software, ezPaycheck 2024 and 2025 is still available for purchase to those clients that need to process year-end tax forms.”

Priced at just $169 per installation for a single installation of 2025 ezPaycheck software. The bundle 2024-2025 version is $199 for a limited time. ezPaycheck payroll software is affordable for any business. With paycheck software, business owners can easily calculate taxes, deductions, and other payroll-related tasks. Potential clients are welcome to download ezPaycheck free demo version with no obligation and no risk at halfpricesoft.com

Despite its cost and ease of use, Accountants, CPA and Tax Professionals should not assume ezPaycheck 2024 runs short on features. ezPaycheck 2025 is packed with all the features a business needs to run payroll quickly and easily, including:

Supports daily, weekly, biweekly, semimonthly and monthly payroll periods. Features report functions, print functions, and pay stub functions.Automatically calculates Federal Withholding Tax, Social Security, Medicare Tax and Employer Unemployment Taxes.Includes built-in tax tables for all 50 states and the District of ColumbiaEasily calculates differential payPrints miscellaneous checks as well as payroll calculation checksPrints payroll checks on blank computer checks or preprinted checksCreates and maintains payroll for multiple companies, and does it simultaneouslyPrints Tax Forms NEW 943 Form, 940, 941, W2, and W3 (Copy A preprinted form required)Supports multiple accounts at no additional chargeSupports network access to share data from different computers and locations (additional cost)30 day no cost trial. No registration required and absolutely no obligation

ezPaycheck is compatible with Windows 11, 10, 8, 7, and other Windows systems. We also sell a MAC version separately.

ezPaycheck payroll software is affordable for any size business. Customers seeking a way to simplify payroll processing with more accuracy to start the no-obligation 30-day test at https://www.halfpricesoft.com/index.asp

About halfpricesoft.com

Halfpricesoft.com is a leading provider of small business software, including online and desktop payroll software, online employee attendance tracking software, accounting software, in-house business and personal check printing software, W2, software, 1099 software, accounting software, 1095 form software, and ezACH direct deposit software. Software from halfpricesoft.com is trusted by thousands of customers and will help US Business owners simplify payroll processing and streamline business management.

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SOURCE Halfpricesoft.com

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