Toronto, Canada – Spin Master Corp. reported preliminary Q4 and year-end 2023 results.

“We are very pleased with how our team navigated the challenging macroeconomic environment to deliver revenue growth in the 4th quarter,” said Max Rangel, Global President & CEO.  “We harnessed the strength of our three creative centres to meet our full-year revenue expectations. While our Toy revenue declined for the full year compared to 2022, our POS remained ahead of the industry2 and we grew market share globally, by introducing innovation into the toy aisle, engaging fans of popular franchises both licensed and owned, and growing our evergreen brands to create magical play experiences for millions of children globally. We saw strong increases in Entertainment from the PAW Patrol movie and the delivery of the Unicorn Academy series, and we grew Digital Games revenue, highlighting the power of our diversified portfolio to drive long-term growth.”

Preliminary Revenue Highlights for Q4 2023 as compared to the same period in 2022

Revenue was $502.6 million, up 7.9% from $465.8 million, due to increases in Entertainment, Toy and Digital Games revenue of 76.9%, 2.5% and 7.1% respectively. Constant Currency Revenue1 was $493.9 million, an increase of 6.0% from $465.8 million.

Toy Revenue

The following table provides a summary of preliminary Toy revenue, by product category, for the three months ended December 31, 2023 and 2022:

• Toy revenue increased by $10.1 million or 2.5% to $406.8 million driven by an increase in Toy Gross Product Sales1 partially offset by an increase in Sales Allowances.
• Toy Gross Product Sales1 grew by $23.1 million or 4.8% to $502.3 million from $479.2 million. Constant Currency Toy Gross Product Sales1 increased by $11.4 million or 2.4% to $490.6 million from $479.2 million. The increase was driven by Wheels & Action and Preschool and Dolls & Interactive, partially offset by a decline in Outdoor.
• The growth in Toy revenue and Toy Gross Product Sales1 arose from higher order volumes.
• Toy Gross Product Sales1 in Preschool and Dolls & Interactive grew by $3.0 million or 1.5% to $204.7 million from $201.7 million, primarily driven by Bitzee and Gabby’s Dollhouse, partially offset by PAW Patrol and Purse Pets.
• Toy Gross Product Sales1 in Activities, Games & Puzzles and Plush was flat at $160.6 million, with increases in GUND and Kinetic Sand offset by declines in Orbeez and Pixobitz.
• Toy Gross Product Sales1 in Wheels & Action increased by $23.3 million or 25.9% to $113.3 million from $90.0 million, from increases in Monster Jam and HEXBUG.
• Toy Gross Product Sales1 in Outdoor decreased by $3.2 million or 11.9% to $23.7 million from $26.9 million primarily driven by SwimWays.
• Sales Allowances increased to $95.5 million from $82.5 million. Sales Allowances as a percentage of Toy Gross Product Sales1 were 19.0%, compared to 17.2%, primarily driven by higher markdowns and promotional activity, caused by pressure on consumer discretionary spending levels.

Entertainment Revenue

• Entertainment revenue was $55.2 million, an increase of $24.0 million or 76.9% from higher distribution revenue associated with new content deliveries including Unicorn Academy, Rubble & Crew and Vida the Vet and from on-going distribution revenue from PAW Patrol: The Mighty Movie. Constant Currency Entertainment Revenue1 increased by $24.1 million or 77.2% to $55.3 million, from $31.2 million.

Digital Games Revenue

• Digital Games revenue was $40.6 million, an increase of $2.7 million or 7.1% from $37.9 million, due to higher in-game purchases in Toca Life World and higher subscription revenue from both the Piknik bundle and PAW Patrol Academy. Constant Currency Digital Games Revenue1 increased by $2.6 million or 6.9% to $40.5 million, from $37.9 million.

Preliminary Revenue Highlights for Year Ended December 31, 2023, as compared to the same period in 2022

Revenue was $1,904.9 million, a decrease of 5.7% from $2,020.3 million driven by a decline in Toy revenue, partially offset by an increase in Entertainment and Digital Games revenue. Constant Currency Revenue1 was $1,889.6 million, a decrease of 6.5% from $2,020.3 million. Revenue, excluding PAW Patrol: The Mighty Movie Distribution Revenue1 of $15.6 million, declined by 6.5% to $1,889.3 million.

Toy Revenue

The following table provides a summary of Spin Master’s preliminary Toy revenue, including by product category, for the year ended December 31, 2023 and 2022:

• Toy revenue declined by $196.7 million or 11.3% to $1,540.9 million with declines across all product categories and an increase in Sales Allowances.
• Toy Gross Product Sales1 declined by $191.6 million or 9.7% to $1,787.2 million from $1,978.8 million driven by declines across all product categories. Constant Currency Toy Gross Product Sales1 decreased by $215.7 million to $1,763.1 million from $1,978.8 million, a decline of 10.9%.
• Toy Gross Product Sales1 in Preschool and Dolls & Interactive decreased by $49.3 million or 5.7% to $817.7 million from $867.0 million, due to PAW Patrol, Purse Pets and Wizarding World, offset in part by Bitzee and Gabby’s Dollhouse.
• Toy Gross Product Sales1 in Activities, Games & Puzzles and Plush decreased by $74.2 million or 13.2% to $487.5 million from $561.7 million, mainly due to declines in the Games & Puzzles portfolio, Kinetic Sand, Cool Maker, Pixobitz and Orbeez, offset in part by Rubik’s.
• Toy Gross Product Sales1 in Wheels & Action decreased by $41.5 million or 9.2% to $409.3 million from $450.8 million, mainly due to DC and Bakugan, offset in part by an increase in Monster Jam and HEXBUG.
• Toy Gross Product Sales1 in Outdoor decreased by $26.6 million or 26.8% to $72.7 million from $99.3 million primarily driven by SwimWays.
• Sales Allowances increased by $5.1 million to $246.3 million from $241.2 million. Sales Allowances as a percentage of Toy Gross Product Sales1 were 13.8% compared to 12.2%, primarily driven by higher markdowns and promotional activity in the fourth quarter, caused by pressures on consumer discretionary spending in the second half of 2023.

Entertainment Revenue

• Entertainment revenue increased by $71.3 million or 60.0% to $190.1 million, from higher distribution revenue associated with new content deliveries including PAW Patrol: The Mighty Movie, Unicorn Academy, Rubble & Crew and Vida the Vet as well as the Company’s share of revenue from the PAW Patrol series and the continued distribution of PAW Patrol: The Movie. Constant Currency Entertainment Revenue1 increased by $71.3 million or 60.0% to $190.1 million, from $118.8 million.

Digital Games Revenue

• Digital Games revenue increased by $10.0 million or 6.1% to $173.9 million, from higher in-game purchases in Toca Life World. Constant Currency Digital Games Revenue1 increased by $12.7 million or 7.7% to $176.6 million, from $163.9 million.

Outlook

Toy Gross Product Sales1, declined by 9.7% for the year ended December 31, 2023 compared to 2022, consistent with the high single digits guidance provided on November 1, 2023.

Revenue, excluding PAW Patrol: The Mighty Movie Distribution Revenue of $15.6 million, declined by 6.5% for the year ended December 31, 2023 compared to 2022, consistent with the mid-single digits guidance provided on November 1, 2023.

The Company continues to expect 2023 Adjusted EBITDA Margin excluding PAW Patrol: The Mighty Movie Distribution Revenue of $15.6 million1 to be up compared to 2022 Adjusted EBITDA Margin, consistent with the guidance provided on November 1, 2023.

This press release contains certain preliminary unaudited financial metrics for the three months and year ended December 31, 2023. These financial metrics represent the most current information available to the Company’s management as financial closing procedures for the three months ended December 31, 2023, and the year ended December 31, 2023 are not yet complete. The Company’s actual consolidated financial statements for such periods may result in material changes to the financial metrics summarized in this press release (including by any one financial metric, or all of the financial metrics, being below or above the figures indicated) as a result of the completion of normal quarter and year end accounting procedures. Although the Company believes the expectations reflected in this press release are based upon reasonable assumptions, the Company can give no assurance that actual results will not differ materially from these expectations.

The following tables present the composition of Percentage change in Constant Currency Toy Gross Product Sales, Percentage change in Constant Currency Sales Allowance, Percentage change in Constant Currency Entertainment Revenue, Percentage change in Percentage change in Constant Currency Digital Games Revenue and Percentage change in Constant Currency Revenue for the three months and year ended December 31, 2023 and 2022: