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Spin Master Reports Q2 2025 Financial Results image

Spin Master Reports Q2 2025 Financial Results

Toronto, Canada – Spin Master Corp.  announced its financial results for the three and six months ended June 30, 2025. T

“Our second quarter results underscore our commitment to building a diversified, resilient portfolio across Toys, Entertainment, and Digital Games,” said Christina Miller, Spin Master’s Chief Executive Officer. “While we experienced revenue pressure due to a shift in retailer ordering patterns driven by global tariffs, strong double-digit growth in our Digital Games segment helped to offset some of that impact in the quarter. Looking ahead, we are positioning Spin Master to navigate broader macroeconomic headwinds by remaining sharply focused on the consumer, accelerating innovation, scaling our global franchise brands, and unlocking new opportunities through our creative centres — laying the foundation for long-term, sustainable growth.”

“We are pleased with our top-line performance, particularly in light of the challenging macroeconomic environment,” said Jonathan Roiter, Spin Master’s Chief Financial Officer. “We maintained and gained market share across the majority of our Toy revenue base, while also continuing to grow Digital Games, driven by our refocused strategy anchoring our efforts in our Toca Boca World and Piknik digital platforms. Profitability was impacted by a lower revenue base and ongoing strategic investments. From a structural cost perspective, we achieved our targeted run-rate cost synergies related to Melissa & Doug, as well as made meaningful progress against our tariff mitigation plan, positioning us well to navigate through the temporary macroeconomic uncertainties.”

Consolidated Financial Highlights for Q2 2025 as compared to the same period in 2024

  • Q2 2025 Revenue was $400.7 million, a decrease of 2.7%, primarily driven by a decrease in Toy Revenue, partially offset by an increase in Digital Games Revenue.
  • Q2 2025 Operating Loss was $52.4 million compared to $23.0 million.
  • Q2 2025 Net Loss was $46.5 million or $(0.46) per share compared to $24.5 million or $(0.24) per share. Adjusted Net Loss1 was $7.4 million or $(0.07) per share compared to Adjusted Net Income of $9.6 million or $0.09 per share (diluted).
  • Q2 2025 Adjusted EBITDA1 was $28.7 million, compared to $53.6 million, a decrease of $24.9 million. Adjusted EBITDA Margin1 was 7.2% compared to 13.0%.
  • Q2 2025 Total Net Cost Synergies2 of $5.6 million related to the acquisition of Melissa & Doug were realized which represent annualized Run-rate Net Cost Synergies2 of $26.5 million, achieving the target of $25 million to $30 million ahead of plan.
  • Q2 2025 Cash provided by operating activities was $26.1 million compared to $25.4 million.
  • Q2 2025 Free Cash Flow1 was $(15.2) million compared to $(3.6) million.
  • Repurchased and cancelled 636,632 subordinate voting shares for $10.5 million (C$14.8 million) in Q2 2025 through the Company’s Normal Course Issuer Bid (the “NCIB”) program. Subsequent to June 30, 2025, the Company repurchased and cancelled 110,188 subordinate voting shares for $2.0 million.
  • Subsequent to June 30, 2025, the Company declared a quarterly dividend of C$0.12 per outstanding subordinate voting share and multiple voting share, payable on October 10, 2025.

Consolidated Financial Results as compared to the same period in 2024

Six Months Ended Jun 30,
(US$ millions, except per share information) Q2 2025 Q2 2024 $ Change 2025 2024 $ Change
Consolidated Results
Revenue 400.7 412.0 (11.3) 760.0 728.2 31.8
Operating Loss (52.4) (23.0) (29.4) (74.5) (84.8) 10.3
Operating Margin2 (13.1) % (5.6) % (9.8) % (11.6) %
Adjusted Operating (Loss) Income1,3 (0.9) 23.6 (24.5) (6.8) 9.1 (15.9)
Adjusted Operating Margin1 (0.2) % 5.7 % (0.9) % 1.2 %
Net Loss (46.5) (24.5) (22.0) (71.0) (79.3) 8.3
Adjusted Net (Loss) Income1,3 (7.4) 9.6 (17.0) (19.4) (9.9) (9.5)
Adjusted EBITDA1,3 28.7 53.6 (24.9) 50.3 72.2 (21.9)
Adjusted EBITDA Margin1 7.2 % 13.0 % 6.6 % 9.9 %
Earnings Per Share (“EPS”)
Basic EPS $(0.46) $(0.24) $(0.70) $(0.76)
Diluted EPS $(0.46) $(0.24) $(0.70) $(0.76)
Adjusted Basic EPS1 $(0.07) $0.09 $(0.19) $(0.10)
Adjusted Diluted EPS1 $(0.07) $0.09 $(0.19) $(0.10)
Weighted average number of shares (in millions)
Basic 101.6 103.9 101.9 103.8
Diluted 104.5 106.0 104.5 106.0
Selected Cash Flow Data
Cash provided by operating activities 26.1 25.4 0.7 50.9 49.7 1.2
Cash used in investing activities (43.1) (27.4) (15.7) (79.7) (1,007.8) 928.1
Cash (used in) provided by financing activities (4.2) (49.0) 44.8 (74.5) 408.2 (482.7)
Free Cash Flow1 (15.2) (3.6) (11.6) (26.0) (4.2) (21.8)
1 Non-GAAP financial measure or ratio. See “Non-GAAP Financial Measures and Ratios, Supplementary Financial Measures”.
2 Operating Margin is calculated as Operating Income (Loss) divided by Revenue.
3 Refer to the “Reconciliation of Non-GAAP Financial Measures” section for further details on the adjustments.

Q2 2025 Operating Loss was $52.4 million, a change of $29.4 million from $23.0 million, primarily driven by the declines of $19.8 million in the Digital Games segment as result of impairment for digital game and app development assets, reflecting a strategic decision to streamline the Digital Games business and concentrate investments in core areas with long-term growth potential, $4.8 million in the Toys segment, and $2.1 million in the Entertainment segment.

Q2 2025 Adjusted Operating Loss1 was $0.9 million, a change of $24.5 million from Adjusted Operating Income1 of $23.6 million. The change was mainly driven by an increase in Adjusted Operating Loss1 of $22.1 million in the Toys segment, a decline in Adjusted Operating Income1 of $2.3 million in the Entertainment segment, partially offset by an increase in Adjusted Operating Income1 in Digital Games segment of $1.8 million.

Q2 2025 Adjusted EBITDA1 was $28.7 million compared to $53.6 million. The decrease was primarily driven by the Toys segment, with lower Toy Revenue due to a decrease in Toy Gross Product Sales1 and an increase in Sales Allowances. During the quarter, the decline in Toys Gross Product Sales1 was primarily attributable to a temporary slowdown in U.S. retailer orders early in the second quarter due to broader market uncertainty resulting from ongoing changes to global tariff policies. In addition, Adjusted EBITDA1 was impacted by higher investments in marketing to support key brand initiatives and retailer programs and higher selling expenses due to royalties arising from an increase in partner licensed brands sales. This decline was partially offset by the Digital Games segment, which delivered revenue growth driven by continued user engagement and new content releases. Additionally, Adjusted EBITDA1 improved from lower distribution expenses due to operational efficiencies and administrative expenses from ongoing cost synergies related to the acquisition of Melissa & Doug.

Adjusted EBITDA Margin1 was 7.2% compared to 13.0%.  The decline was primarily driven by the Toys segment due to a shift in product mix, higher Sales Allowances, marketing and selling expenses. The decline was partially offset by lower distribution expenses due to operational efficiencies and administrative expenses from ongoing cost synergies related to the acquisition of Melissa & Doug.

Segmented Financial Results as compared to the same period in 2024

(US$ millions) Q2 2025 Q2 2024
Toys Entertain-
ment
Digital
Games
Corporate
& Other1
Total Toys Entertain-
ment
Digital
Games
Corporate
& Other1
Total
Revenue 322.3 32.1 46.3 400.7 340.9 36.4 34.7 412.0
Operating (Loss) Income (39.7) 15.7 (15.5) (12.9) (52.4) (34.9) 17.8 4.3 (10.2) (23.0)
Adjusted Operating (Loss) Income2 (20.8) 17.7 7.7 (5.5) (0.9) 1.3 20.0 5.9 (3.6) 23.6
Adjusted EBITDA2 (0.7) 24.3 10.6 (5.5) 28.7 20.9 28.4 7.9 (3.6) 53.6
1 Corporate & Other includes certain corporate costs, foreign exchange, transaction and integration costs, and investment income (loss), net.
2 Non-GAAP financial measure or ratio. See “Non-GAAP Financial Measures and Ratios, Supplementary Financial Measures”.

Toys Segment Results

The following table provides a summary of the Toys segment operating results, for the three months ended June 30, 2025 and 2024:

(US$ millions) Q2 2025 Q2 2024 $ Change % Change
Preschool, Infant & Toddler and Plush 185.0 165.0 20.0 12.1 %
Activities, Games & Puzzles and Dolls & Interactive 88.3 129.3 (41.0) (31.7) %
Wheels & Action 88.8 75.7 13.1 17.3 %
Outdoor 8.9 14.7 (5.8) (39.5) %
Toy Gross Product Sales1 371.0 384.7 (13.7) (3.6) %
Sales Allowances2 (48.9) (45.7) (3.2) 7.0 %
Sales Allowances % of Toy Gross Product Sales1 13.2 % 11.9 % 1.3 %
Toy Net Sales 322.1 339.0 (16.9) (5.0) %
Toy – Other Revenue 0.2 1.9 (1.7) (89.5) %
Toy Revenue 322.3 340.9 (18.6) (5.5) %
Toys Operating Loss (39.7) (34.9) (4.8) 13.8 %
Toys Operating Margin3 (12.3) % (10.2) % (2.1) %
Toys Adjusted EBITDA1 (0.7) 20.9 (21.6) (103.3) %
Toys Adjusted EBITDA Margin1 (0.2) % 6.1 % (6.3) %
1 Non-GAAP financial measure or ratio. See “Non-GAAP Financial Measures and Ratios, Supplementary Financial Measures”.
2 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.
3 Operating Margin is calculated as segment Operating Income divided by segment Revenue.
  • Toy Revenue declined by $18.6 million to $322.3 million.
  • Toy Gross Product Sales1 decreased by $13.7 million to $371.0 million, primarily attributable to a temporary slowdown in U.S. retailer orders due to broader market uncertainty early in the second quarter resulting from ongoing changes to global tariff policies.
  • Sales Allowances increased by $3.2 million to $48.9 million. As a percentage of Toy Gross Product Sales1, Sales Allowances increased to 13.2% from 11.9% driven by a change in customer mix and higher markdowns.
  • Toys Operating Loss was $39.7 million compared to $34.9 million. The increase in Toys Operating Loss was driven by lower Gross Profit due to lower sales volume, higher selling and marketing expenses, partially offset by lower distribution and administrative expenses.
  • Toys Operating Margin was (12.3)% compared to (10.2)%.
  • Toys Adjusted EBITDA1 was $(0.7) million compared to $20.9 million.
  • Toys Adjusted EBITDA Margin1 was (0.2)% compared to 6.1%. The decrease in Toys Adjusted EBITDA Margin1 was driven by a change in product mix, higher Sales Allowances, higher selling expenses due to royalties arising from an increase in partner licensed brands sales and higher investments in marketing to support key brand initiatives and retailer programs, partially offset by lower administrative expenses from ongoing cost synergies related to the acquisition of Melissa & Doug and lower distribution expenses due to operational efficiencies.

Entertainment Segment Results

The following table provides a summary of Entertainment segment operating results, for the three months ended June 30, 2025 and 2024:

(US$ millions) Q2 2025 Q2 2024 $ Change % Change
Entertainment Revenue 32.1 36.4 (4.3) (11.8) %
Entertainment Operating Income 15.7 17.8 (2.1) (11.8) %
Entertainment Operating Margin 48.9 % 48.9 % — %
Entertainment Adjusted Operating Income1 17.7 20.0 (2.3) (11.5) %
Entertainment Adjusted Operating Margin1 55.1 % 54.9 % 0.2 %
1 Non-GAAP financial measure or ratio. See “Non-GAAP Financial Measures and Ratios, Supplementary Financial Measures”.
  • Entertainment Revenue declined by $4.3 million to $32.1 million, primarily driven by lower distribution and licensing & merchandising revenue.
  • Entertainment Operating Income declined by $2.1 million to $15.7 million, primarily due to lower Entertainment Revenue.
  • Entertainment Operating Margin was flat at 48.9%.
  • Entertainment Adjusted Operating Income1 declined by $2.3 million to $17.7 million.
  • Entertainment Adjusted Operating Margin1 was relatively flat at 55.1% compared to 54.9%.

Digital Games Segment Results

The following table provides a summary of Digital Games segment operating results, for the three months ended June 30, 2025 and 2024:

(US$ millions) Q2 2025 Q2 2024 $ Change % Change
Digital Games Revenue 46.3 34.7 11.6 33.4 %
Digital Games Operating (Loss) Income (15.5) 4.3 (19.8) (460.5) %
Digital Games Operating Margin (33.5) % 12.4 % (45.9) %
Digital Games Adjusted Operating Income1 7.7 5.9 1.8 30.5 %
Digital Games Adjusted Operating Margin1 16.6 % 17.0 % (0.4) %
1 Non-GAAP financial measure or ratio. See “Non-GAAP Financial Measures and Ratios, Supplementary Financial Measures”.
  • Digital Games Revenue increased by $11.6 million to $46.3 million driven by higher in-game purchases in Toca Boca World and continued growth in subscriptions across Piknik.
  • Digital Games Operating Loss was $15.5 million, compared to Operating Income of $4.3 million, primarily due to $17.1 million of impairment for digital game and app development assets. This impairment reflects a strategic decision to streamline the Digital Games business and concentrate investments in core areas with long-term growth potential.
  • Digital Games Operating Margin decreased from 12.4% to (33.5)%.
  • Digital Games Adjusted Operating Income1 increased by $1.8 million to $7.7 million.
  • Digital Games Adjusted Operating Margin1 decreased from 17.0% to 16.6%, primarily due to higher marketing expenses related to paid user acquisition costs across the Digital Games portfolio to drive the increase in Digital Games Revenue.

Liquidity

The Company has an unsecured revolving credit facility (the “Facility”) with a borrowing capacity of $510.0 million and contains certain financial covenants. On June 27, 2025, the Company entered into an agreement to amend its existing Facility, which now matures on June 27, 2030.

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 and contains certain financial covenants. On June 27, 2025, the Company entered into an agreement to amend its existing Acquisition Facility, which now matures on June 27, 2027.

During the six months ended June 30, 2025, the Company drew $25.0 million (2024 – $300.0 million) and repaid $30.0 million (2024 – $65.0 million) against the Facility. As at June 30, 2025, there was $160.0 million outstanding (December 31, 2024 – $165.0 million) under the Facility and $225.0 million outstanding (December 31, 2024 – $225.0 million) under the Acquisition Facility. For the six months ended June 30, 2025, the weighted average interest rates on the Facility and Acquisition Facility were 5.9% and 5.6%, respectively (2024 – 6.6% and 6.6%).

As at June 30, 2025, the Company had available liquidity of $473.2 million, comprised of $128.0 million in cash and $345.3 million under the Company’s credit facilities.

Cash Flows for Q2 2025 as compared to the same period in 2024

Cash flows provided by operating activities were $26.1 million compared to $25.4 million driven by the change in non-cash working capital and lower income taxes paid, offset by lower Net Loss, adjusted for non-cash items. Change in non-cash working capital decreased by $45.9 million as compared to a decrease of $11.8 million, due to changes in trade payables and accrued liabilities, partially offset by changes in trade receivables and prepaid expenses.

Cash flows used in financing activities were $4.2 million compared to $49.0 million, due to proceeds of $25.0 million from the Facility, no repayment  (2024 – $15.0 million) towards the Facility and repurchase of shares under the Company’s NCIB for $10.6 million (2024 – $20.5 million), partially offset by higher dividends payment of $8.0 million (2024 – $4.6 million).

Free Cash Flow1 in 2025 was $(15.2) million compared to $(3.6) million, due to higher investment in computer software and Entertainment content development.

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 October 10, 2025 to shareholders of record at the close of business on September 26, 2025. 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 June 30, 2025 were 101.9 million and 104.5 million, compared to 103.8 million and 106.0 million in the prior year, respectively.

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

 

Condensed consolidated interim statements of financial position

Jun 30, Jun 30, Dec 31,
(In US$ millions) 2025 2024 2024
Assets
Current assets
  Cash and cash equivalents 128.0 154.6 233.5
  Restricted cash 3.1
  Trade receivables, net 355.9 315.7 499.4
  Other receivables 61.9 57.8 54.9
  Inventories, net 225.0 275.4 184.7
  Income tax receivable 46.0 68.4
  Prepaid expenses and other assets 65.7 39.2 48.7
882.5 914.2 1,021.2
Non-current assets
  Intangible assets 858.5 825.0 837.4
  Goodwill 368.6 378.7 368.1
  Right-of-use assets 147.3 168.6 149.5
  Property, plant and equipment 63.7 66.3 60.2
  Deferred income tax assets 168.3 160.1 167.1
  Other assets 28.5 36.4 29.9
1,634.9 1,635.1 1,612.2
Total assets 2,517.4 2,549.3 2,633.4
Liabilities
Current liabilities
  Trade payables and accrued liabilities 375.7 364.4 429.5
  Loans and borrowings 382.2 458.4 389.1
  Provisions 21.6 23.9 24.7
  Lease liabilities 22.4 32.2 22.3
  Deferred revenue 35.2 13.7 22.0
837.1 892.6 887.6
Non-current liabilities
  Deferred income tax liabilities 209.7 225.1 209.9
  Lease liabilities 126.9 127.6 123.0
  Provisions 11.0 11.5 10.5
347.6 364.2 343.4
Total liabilities 1,184.7 1,256.8 1,231.0
Shareholders’ equity
  Share capital 762.3 776.6 765.6
  Retained earnings 544.7 505.6 640.1
  Contributed surplus 34.1 34.0 45.5
  Accumulated other comprehensive loss (8.4) (23.7) (48.8)
Total shareholders’ equity 1,332.7 1,292.5 1,402.4
Total liabilities and shareholders’ equity 2,517.4 2,549.3 2,633.4

Condensed consolidated interim statements of loss and comprehensive loss

Six Months Ended Jun 30,
(In US$ millions, except earnings per share) Q2 2025 Q2 2024 2025 2024
Revenue 400.7 412.0 760.0 728.2
Cost of sales 190.7 212.4 355.1 372.1
Gross Profit 210.0 199.6 404.9 356.1
Expenses
Selling, general and administrative 221.0 200.3 416.3 398.0
Depreciation and amortization 16.9 15.3 34.0 35.1
Other expense, net 19.1 2.2 19.2 3.4
Foreign exchange loss, net 5.4 4.8 9.9 4.4
Operating Loss (52.4) (23.0) (74.5) (84.8)
Interest expense 9.9 12.2 20.2 25.0
Interest income (0.8) (1.1) (1.5) (2.4)
Loss before income tax recovery (61.5) (34.1) (93.2) (107.4)
Income tax recovery (15.0) (9.6) (22.2) (28.1)
Net Loss (46.5) (24.5) (71.0) (79.3)
Loss per share
Basic (0.46) (0.24) (0.70) (0.76)
Diluted (0.46) (0.24) (0.70) (0.76)
Weighted average number of shares (in millions)
Basic 101.6 103.9 101.9 103.8
Diluted 104.5 106.0 104.5 106.0
Six Months Ended Jun 30,
(In US$ millions) Q2 2025 Q2 2024 2025 2024
Net Loss (46.5) (24.5) (71.0) (79.3)
Items that may be subsequently reclassified to Net Loss
Foreign currency translation gain (loss) 27.0 (1.9) 40.4 (8.9)
Other comprehensive income (loss) 27.0 (1.9) 40.4 (8.9)
Total comprehensive loss (19.5) (26.4) (30.6) (88.2)

Condensed consolidated interim statements of cash flows

Six Months Ended Jun 30,
(Unaudited, in US$ millions) 2025 2024
Operating activities
Net Loss (71.0) (79.3)
Adjustments to reconcile net loss to cash provided by operating activities
Income tax recovery (22.2) (28.1)
Interest expense 14.4 18.9
Interest income (1.5) (2.4)
Depreciation and amortization 60.7 66.6
Loss on disposal of non-current assets 0.9 0.3
Accretion expense 5.2 5.4
Amortization of facility fee costs 0.3 0.7
Loss on portfolio investments, net 0.2 0.3
Impairment of non-current assets 18.7 2.1
Unrealized foreign exchange loss (gain), net 0.5 (0.7)
Share-based compensation expense 7.4 13.5
Fair value adjustment on inventory sold 44.7
Net changes in non-cash working capital 70.7 81.9
Net change in non-cash provisions and other assets (0.3) (23.0)
Income taxes paid (24.5) (41.8)
Income taxes received 0.4 3.7
Interest paid (10.5) (15.8)
Interest received 1.5 2.7
Cash provided by operating activities 50.9 49.7
Investing activities
Investment in property, plant and equipment (21.7) (17.8)
Investment in intangible assets (55.2) (37.1)
Business acquisitions, net of cash acquired (952.9)
Portfolio investments (2.0)
Minority interest investments (0.8)
Cash used in investing activities (79.7) (1,007.8)
Financing activities
Proceeds from loans and borrowings 25.0 525.0
Repayment of loans and borrowings (30.0) (65.0)
Payment of lease liabilities (20.4) (17.0)
Dividends paid (17.1) (9.2)
Repurchase of subordinate voting shares (32.0) (25.6)
Cash (used in) provided by financing activities (74.5) 408.2
Effect of foreign currency exchange rate changes on cash (2.2) (1.2)
Net decrease in cash during the period (105.5) (551.1)
Cash, beginning of period 233.5 705.7
Cash, end of period 128.0 154.6

NThe following table presents a reconciliation of Operating Loss to Adjusted Operating (Loss) Income, Adjusted EBITDA, Adjusted Net (Loss) Income, and cash from operating activities to Free Cash Flow for the six months ended June 30, 2025 and 2024:

Six Months Ended Jun 30,
(in US$ millions) 2025 2024 $ Change % Change
Operating Loss (74.5) (84.8) 10.3 (12.1) %
Adjustments:
Impairment of intangible assets1 18.5 1.8 16.7 927.8
Transaction and integration costs2 15.2 23.0 (7.8) (33.9) %
Restructuring and other related costs3 13.5 3.5 10.0 285.7 %
Foreign exchange loss4 9.9 4.4 5.5 125.0 %
Share based compensation5 5.2 12.3 (7.1) (57.7) %
Amortization of intangible assets acquired6 3.6 3.5 0.1 2.9 %
Acquisition related deferred incentive compensation7 1.2 2.6 (1.4) (53.8) %
Investment loss, net8 0.3 0.4 (0.1) (25.0) %
Impairment of property, plant and equipment9 0.2 0.3 (0.1) (33.3) %
Acquisition related deferred consideration10 0.1 (2.1) 2.2 (104.8) %
Legal settlement recovery (0.6) 0.6 (100.0) %
Fair value adjustment for inventories acquired11 44.8 (44.8) (100.0) %
Adjusted Operating (Loss) Income (6.8) 9.1 (15.9) (174.7) %
Depreciation and amortization12 57.1 66.6 (9.5) (14.3) %
Adjusted EBITDA 50.3 72.2 (21.9) (30.3) %
Income tax recovery 22.2 28.1 (5.9) (21.0) %
Interest expense (18.7) (22.6) 3.9 (17.3) %
Depreciation and amortization14 (57.1) (63.1) 6.0 (9.5) %
Tax effect of adjustments13 (16.1) (24.5) 8.4 (34.3) %
Adjusted Net Loss (19.4) (9.9) (9.5) 96.0 %
Cash provided by operating activities 50.9 49.7 1.2 2.4 %
Cash used in investing activities (79.7) (1,007.8) 928.1 (92.1) %
Add:
Cash used in business acquisitions, asset acquisitions, portfolio investments, investment
in associate and minority interest investments, net of investment distribution income
2.8 953.9 (951.1) (99.7) %
Free Cash Flow (26.0) (4.2) (21.8) 519.0 %
________________________________________
1 Impairment of intangible assets primarily related to Digital game and app development projects.
2 Transaction and integration costs incurred relating to acquisitions.
3 Restructuring and other related costs related to the reduction in the Company’s global workforce.
4 Includes foreign exchange (gains) losses 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.
5 Related to non-cash expenses associated with the Company’s long-term incentive plan and the mark to market (gain)/loss related to DSUs.
6 Relates to the amortization of intangible assets acquired with Melissa & Doug.
7 Related to non-cash expenses associated with the Company’s share option expense and long-term incentive plan.
8 Investment loss (income), net includes unrealized and realized (gain)/loss on portfolio investments and minority interest investments and share of (income)/loss from an investment in associate.
9 Impairment of property, plant and equipment related to tooling.
10 Expense associated with contingent consideration for acquisitions.
11 Relates to fair value adjustment to Melissa & Doug inventory recorded as part of the acquisition on January 2, 2024.
12 Depreciation and amortization for the calculation of Adjusted EBITDA excludes $3.6 million of amortization of intangible assets acquired with Melissa & Doug.
13 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 June 30, 2025 and 2024 are as follows:

(US$ millions) Q2 2025 Q2 2024
Toys Entertain-
ment
Digital
Games
Corporate
& Other1
Total Toys Entertain-
ment
Digital
Games
Corporate
& Other1
Total
Revenue 322.3 32.1 46.3 400.7 340.9 36.4 34.7 412.0
Operating (Loss) Income (39.7) 15.7 (15.5) (12.9) (52.4) (34.9) 17.8 4.3 (10.2) (23.0)
Adjusting items:
Impairment of intangible assets 0.5 0.9 17.1 18.5 1.8 1.8
Restructuring and other related costs 9.3 0.8 2.0 12.1 0.5 0.5
Transaction and integration costs 2.9 2.9 1.7 7.5 4.3 2.0 6.3
Foreign exchange loss 5.4 5.4 4.8 4.8
Share based compensation 3.7 0.3 0.7 0.1 4.8 5.5 0.4 0.9 (0.6) 6.2
Amortization of intangible assets acquired 1.8 1.8 3.5 3.5
Acquisition related deferred incentive compensation 0.2 0.5 0.7 0.4 0.7 1.1
Acquisition related deferred consideration 0.5 0.5 (0.5) (0.5)
Investment loss, net 0.2 0.2 0.4 0.4
Fair value adjustment for inventories acquired 44.8 44.8
Adjusted Operating (Loss) Income (20.8) 17.7 7.7 (5.5) (0.9) 1.3 20.0 5.9 (3.6) 23.6
Adjusted Operating Margin (6.5) % 55.1 % 16.6 % n.m. (0.2) % 0.4 % 54.9 % 17.0 % n.m. 5.7 %
Depreciation and amortization2 20.1 6.6 2.9 29.6 19.6 8.4 2.0 30.0
Adjusted EBITDA (0.7) 24.3 10.6 (5.5) 28.7 20.9 28.4 7.9 (3.6) 53.6
Adjusted EBITDA Margin (0.2) % 75.7 % 22.9 % n.m. 7.2 % 6.1 % 78.0 % 22.8 % n.m. 13.0 %
1 Corporate & Other includes certain corporate costs, foreign exchange, transaction and integration costs, and investment income (loss), net.
2 Depreciation and amortization for the calculation of Adjusted EBITDA excludes $1.8 million (Q2 2024 – $3.5 million) of amortization of intangible assets acquired with Melissa & Doug.

 

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