Reaffirms 2019 Gross Product Sales Outlook
Amid Shift from Q3 to Q4
TORONTO, Nov. 5, 2019 /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 third quarter ended
September 30, 2019. The Company's full Management's Discussion
and Analysis ("MD&A") for the three and nine months ended
September 30, 2019 is available on SEDAR (www.sedar.com) and
posted on the Company's web site at
www.spinmaster.com/financial-info.php.
"We have made solid strides in executing our long-term growth
strategies," said Ronnen Harary,
Spin Master's Chairman and Co-CEO. "While our performance in the
third quarter was negatively affected by several challenges, we do
not believe it is indicative of our expected full year 2019
performance nor our long-term growth and value creation prospects.
We believe Spin Master's diversified portfolio of brands and
franchises, driven by our relentless focus on innovation and
storytelling, is strong and healthy and the power of our
international platform as well as our ability to capture the hearts
and minds of kids with engaging multiplatform entertainment and
digital content, will continue to drive long term profitable
growth."
Ben Gadbois, Spin Master's
President and Chief Operating Officer commented, "Our decision to
manage our brands more tightly using domestic replenishment and an
evolving retailer trend away from direct import orders towards
domestic orders shifted shipments from the third quarter to the
fourth quarter. In addition, increased inventory levels arising
from our decision to bring in inventory earlier to mitigate US
tariffs, together with short term disruption caused by our US East
Coast warehouse consolidation, created congestion in our US supply
chain. This resulted in a significant shift of both shipments and
orders from the third quarter to the fourth quarter. We are
pleased with the progress we have made in October, with both orders
and shipments off to a strong start. We remain on
track to deliver top line growth for the full year."
Q3 2019 Financial Highlights as compared to the same period
in 20181,3
- Revenue of US$548.1 million
decreased by 11.6% from US$620.0
million. In Constant Currency2 terms,
revenue decreased by 10.8%.
- Gross Product Sales2 decreased by 11.4% to
US$583.3 million from US$658.2 million, with an unfavourable foreign
exchange impact of US$5.4 million or
0.8%. The decline was driven primarily by a decline in
Hatchimals, which is in the Remote Control & Interactive
Characters segment, partially offset by growth in Boys Action and
High-Tech Construction.
- Gross Product Sales2 increased 1.6% in Europe and declined 15.3% and 12.1% in
North America and Rest of World,
respectively. International Gross Product Sales2
on a combined basis were 36.2% of total Gross Product
Sales2, increasing from 33.3%.
- Other Revenue increased by 3.4% to US$26.7 million.
- Sales Allowances2 decreased by US$2.2 million to US$61.9
million. The decrease was primarily driven by the timing of
promotional spending. As a percentage of Gross Product
Sales2, Sales Allowances2 increased 0.9% to
10.6% from 9.7%.
- Gross profit was US$286.9
million, representing 52.3% of revenue, compared to
US$317.8 million or 51.3%. The
increase in gross margin was primarily due to favourable changes in
product mix, partially offset by increased freight-related expenses
and higher Sales Allowances2.
- Selling, general and administrative expenses ("SG&A")
remained flat compared to the prior year. As a percentage of
revenue SG&A was 29.7% compared to 26.2%. This increase was
driven by higher selling expenses from increased sales of licensed
products, increased distribution expenses resulting from the shift
towards higher domestic sales compared to direct import sales,
primarily in the US and higher marketing expenses, partially offset
by lower administrative expenses.
- Net Income was US$92.1 million or
US$0.89 per share (diluted), compared
to US$107.9 million or US$1.06 per share (diluted).
- Adjusted Net Income2 was US$93.2 million or US$0.90 per share (diluted), compared to
US$117.7 million or US$1.15 per share (diluted).
- Adjusted EBITDA2 was US$150.2
million compared to US$179.8
million. Adjusted EBITDA Margin2 was 27.4%
compared to 29.0%.
- Free Cash Flow2 was US$128.6
million compared to US$149.8
million.
Q3 2019 Gross
Product Sales2 by Business Segment
(US$ millions)1
|
|
Q3
2019
|
Q3
2018
|
$
Change
|
%
Change
|
Activities, Games
& Puzzles and Plush
|
$152.4
|
$166.5
|
(14.1)
|
(8.5)
|
%
|
Remote Control and
Interactive
|
|
|
|
|
|
Characters
|
$117.3
|
$237.9
|
(120.7)
|
(50.7)
|
%
|
Boys Action and
High-Tech
|
|
|
|
|
|
Construction
|
$103.2
|
$37.3
|
66.0
|
177.0
|
%
|
Pre-School and
Girls
|
$204.0
|
$208.4
|
(4.4)
|
(2.1)
|
%
|
Outdoor
|
$6.4
|
$8.1
|
(1.7)
|
(21.1)
|
%
|
Gross Product
Sales2
|
$583.3
|
$658.2
|
(74.9)
|
(11.4)
|
%
|
Sales
Allowances2
|
$61.9
|
$64.0
|
(2.2)
|
(3.4)
|
%
|
Total Net
Sales2
|
$521.4
|
$594.2
|
(72.8)
|
(12.2)
|
%
|
Other
Revenue
|
$26.7
|
$25.8
|
0.9
|
3.4
|
%
|
Revenue
|
$548.1
|
$620.0
|
(71.9)
|
(11.6)
|
%
|
Q3 2019 Business Segment Gross Product Sales2 as
compared to the same period in 20181
Gross Product Sales2 decreased by US$74.9 million or 11.4%, to US$583.3 million with an unfavourable foreign
exchange impact of US$5.4 million or
0.8%.
Gross Product Sales2 in Activities, Games
& Puzzles and Plush decreased by US$14.1 million or 8.5% to US$152.4 million. The decrease was driven
primarily by lower sales of Bunchems and the Games &
Puzzles portfolio, partially offset by increases in Cool
branded products.
Gross Product Sales2 in Remote Control and
Interactive Characters decreased by US$120.7
million or 50.7% to US$117.3
million, primarily due to lower sales of Hatchimals,
while Luvabella, Zoomer and Air Hogs also
declined, partially offset by sales of Owleez, Monster
Jam RC and Juno.
Gross Product Sales2 in Boys Action and High-Tech
Construction increased by US$66.0
million or 177.0% to US$103.2
million. The increase was primarily driven by sales of
Bakugan, DreamWorks Dragons and Monster
Jam, partially offset by decreases in Boxer,
Fugglers and Flush Force.
Gross Product Sales2 in Pre-School and Girls
decreased by US$4.4 million or 2.1%
to US$204.0 million. The
decrease was driven primarily by declines in Party
Popteenies and Rusty Rivets, partially offset by
increases in PAW Patrol, Twisty Petz and sales of
Candylocks, Awesome Bloss'ems and Pre Cool.
Gross Product Sales2 in Outdoor decreased by
US$1.7 million or 21.1% to
US$6.4 million.
Nine Months Ended September 30, 2019 Financial
Highlights as compared to the same period in
20181,3
- Revenue of US$1,108.1 million decreased by
9.0% from US$1,217.2 million. In Constant
Currency2 terms, revenue decreased by 7.8%.
- Gross Product Sales2 decreased by US$102.0 million or 8.2% to US$1,140.5 million, compared to US$1,242.5 million with an unfavourable foreign
exchange impact of US$14.2 million or
1.1%.
- Gross Product Sales2 increased by 7.7% in
Europe and decreased by 7.7% in
Rest of World and 13.1% in North
America, respectively. International Gross Product
Sales2 on a combined basis represented 37.1% of total
Gross Product Sales2, increasing from 33.6%.
- Other Revenue decreased by US$2.8
million or 3.1% to US$86.0
million, driven by decreased royalty income from products
marketed by third parties using Spin Master's owned
intellectual property, partially offset by increased television
distribution revenue and app revenue from Toca Boca and Sago Mini.
- Sales Allowances2 increased by US$4.4 million to US$118.4
million, driven primarily by the timing of promotional
spending. Sales Allowances, as a percentage of Gross Product Sales
increased 1.2% to 10.4% from 9.2%.
- Gross profit decreased by 9.8% to US$558.9 million,
representing 50.4% of revenue compared to US$619.8 million or
50.9%. The decline was primarily due to increased
freight-related expenses, higher Sales Allowances, increased
depreciation and amortization and a decrease in other revenue,
partially offset by favourable changes in product mix.
- Selling, general and administrative expenses ("SG&A")
increased US$6.7 million or
1.6%. The increase in SG&A was driven by distribution
costs due to investments in the establishment of new distribution
centres in order to strengthen the Company's global distribution
network and costs arising from the shift towards higher domestic
sales compared to direct import sales, primarily in the US, as well
as selling expenses attributed to higher sales of licensed
products. The increase was partially offset by lower administrative
expenses.
- Net Income was US$81.5 million, or US$0.79 per share (diluted), compared to Net
Income of US$143.5 million or
US$1.41 per share
(diluted).
- Adjusted Net Income2 was US$100.6 million, or
US$0.98 per share (diluted),
compared to US$157.4 million, or
US$1.54 per share (diluted).
- Adjusted EBITDA2 was US$212.3 million, compared
to US$268.5 million. Adjusted EBITDA Margin2 was
19.2% compared to 22.1%.
- Free Cash Flow2 decreased to US$107.3 million compared to US$141.0
million.
Nine months ended
September 30, 2019 Gross Product Sales2 by Business
Segment (US$ millions)1
|
|
2019
|
2018
|
$
Change
|
%
Change
|
Activities, Games
& Puzzles and Plush
|
$295.6
|
$310.3
|
(14.8)
|
(4.8)
|
%
|
Remote Control and
Interactive
|
|
|
|
|
|
Characters
|
$192.8
|
$397.5
|
(204.6)
|
(51.5)
|
%
|
Boys Action and
High-Tech
|
|
|
|
|
|
Construction
|
$216.6
|
$75.2
|
141.5
|
188.2
|
%
|
Pre-School and
Girls
|
$363.8
|
$378.4
|
(14.6)
|
(3.9)
|
%
|
Outdoor
|
$71.7
|
$81.1
|
(9.4)
|
(11.6)
|
%
|
Gross Product
Sales2
|
$1,140.5
|
$1,242.5
|
(102.0)
|
(8.2)
|
%
|
Sales
Allowances2
|
$118.4
|
$114.1
|
4.4
|
3.9
|
%
|
Total Net
Sales2
|
$1,022.1
|
$1,128.4
|
(106.4)
|
(9.4)
|
%
|
Other
Revenue
|
$86.0
|
$88.8
|
(2.8)
|
(3.1)
|
%
|
Revenue
|
$1,108.1
|
$1,217.2
|
(109.1)
|
(9.0)
|
%
|
Nine Months Ended September 30,
2019 Business Segment Gross Product Sales2
as compared to the same period in 20181
Gross Product Sales2 decreased by US$102.0 million or 8.2% to US$1,140.5 million, with an unfavourable foreign
exchange impact of $14.2 million or
1.1%. The decrease was primarily attributed to lower sales of
Hatchimals products in the Remote Control and Interactive
Characters segment.
Gross Product Sales2 in Activities, Games &
Puzzles and Plush decreased by US$14.8
million or 4.8% to US$295.6
million, primarily driven by lower sales in the Games &
Puzzles portfolio and Bunchems, partially offset by
increases in Gund and Cool Maker.
Gross Product Sales2 in Remote Control and
Interactive Characters decreased by US$204.6
million or 51.5% to US$192.8
million, primarily due to declines in Hatchimals,
Zoomer, Luvabella and Air Hogs, partially
offset by sales of Owleez, Monster Jam RC and
Juno.
Gross Product Sales2 in Boys Action and High-Tech
Construction increased by US$141.5
million or 188.2% to US$216.6
million, primarily due to sales of Bakugan,
DreamWorks Dragons and Monster Jam, partially offset
by decreases in Flush Force, Boxer and Star
Wars licensed merchandise.
Gross Product Sales2 in Pre-School and Girls
decreased by US$14.6 million or 3.9%
to US$363.8 million, driven by
declines in Party Popteenies, PAW Patrol and Rusty
Rivets, partially offset by increases in Twisty Petz and
sales of Candylocks, Awesome Bloss'ems and
Pre Cool.
Gross Product Sales2 in Outdoor decreased by
US$9.4 million or 11.6% to
US$71.7 million.
Outlook
Spin Master continues to focus on driving growth. Its principle
strategies, which remain unchanged for 2019, include:
- Innovate using our global internal and external research and
development network;
- Developing evergreen global entertainment properties;
- Increasing international sales in developed and emerging
markets; and
- Leveraging the Company's global platform through strategic
acquisitions.
On a full year comparative basis, consistent with prior
guidance, the Company continues to expect to grow organic
Gross Product Sales2 in the low single digit range
relative to 2018. The Company now expects to deliver Adjusted
EBITDA Margin2 for 2019 slightly below 2018. Previous
guidance expected Adjusted EBITDA Margin2 in-line with
2018.
Conference call
Ronnen Harary, Chairman and
Co-Chief Executive Officer, Ben
Gadbois, Global President and Chief Operating Officer, and
Mark Segal, Executive Vice President
and Chief Financial Officer will host a conference call to discuss
these results on Wednesday, November 6,
2019 at 9:30 a.m. (ET).
The call-in numbers for participants are (647) 427-7450 or (888)
231-8191. 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.
About Spin Master
Spin Master (TSX:TOY; www.spinmaster.com) is a leading
global children's entertainment company that creates, designs,
manufactures, licenses and markets a diversified portfolio of
innovative toys, games, products and entertainment properties. Spin
Master is best known for award-winning brands including Zoomer®,
Bakugan®, Erector® by Meccano®, Hatchimals®, Air
Hogs® and PAW Patrol®. Since 2000, Spin Master has received
103 TIA Toy of The Year (TOTY) nominations with 30 wins across a
variety of product categories, including 13 TOTY nominations for
Innovative Toy of the Year. To date, Spin Master has produced nine
television series, including the relaunched Bakugan: Battle Planet
and current hit PAW Patrol, which is broadcast in over 160
countries and territories globally. Spin Master employs over 1,800
people in countries around the world including Canada, United
States, Mexico, France, Italy, United Kingdom,
Russia, Slovakia, Poland, Germany, Sweden, the Netherlands, China, Hong
Kong, Japan, Vietnam, India and Australia.
Non-IFRS Financial Measures
In addition to using financial measures prescribed under IFRS,
references are made in this Press Release to "EBITDA", "Adjusted
EBITDA", "Adjusted EBITDA Margin", "Adjusted Net Income", "Free
Cash Flow", "Gross Product Sales", "Constant Currency", "Sales
Allowances" and "Total Net Sales" which are non-IFRS financial
measures. Non-IFRS financial measures do not have any standardized
meaning prescribed by IFRS and are therefore unlikely to be
comparable to similar measures presented by other issuers.
EBITDA is calculated as net earnings before finance costs,
income tax expense and depreciation and amortization.
Adjusted EBITDA is calculated as EBITDA excluding normalization
adjustments, non-recurring items that do not necessarily reflect
the Company's underlying financial performance. Normalization
adjustments include restructuring costs, foreign exchange gains or
losses, equity-settled share based compensation expenses and bad
debt expense. Adjusted EBITDA is used by management as a measure of
the Company's profitability.
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.
Adjusted Net Income is calculated as net income excluding
normalization adjustments, as defined above, and the corresponding
impact these items have on income tax expense. Management uses
Adjusted Net Income to measure the underlying financial performance
of the business on a consistent basis over time.
Constant Currency represents Revenue and Gross Product Sales
results that are presented excluding the impact from changes in
foreign currency exchange rates. The current period and prior
period results for entities reporting in currencies other than the
US dollar are translated using consistent exchange rates, rather
than using the actual exchange rate in effect during the respective
periods. The difference between the current period and prior period
results using the consistent exchange rates reflects the changes in
the underlying performance results, excluding the impact from
fluctuations in foreign currency exchange rates.
Free Cash Flow is calculated as cash flows provided by operating
activities before changes in net working capital and after cash
flows used in investing activities before cash used in license,
brand and business acquisitions. Management uses the Free Cash Flow
metric to analyze the cash flow being generated by the Company's
business.
Gross Product Sales represent sales of the Company's products to
customers, excluding the impact of Sales Allowances. As Sales
Allowances are generally not associated with individual products,
the Company uses changes in Gross Product Sales to provide
meaningful comparisons across product category and geographical
segment results to highlight trends in Spin Master's business. For
a reconciliation of Gross Product Sales to Revenue, please see the
table "Q3 2019 Gross Product Sales by Business Segment" in this
Press Release.
Sales Allowances represent marketing and sales credits requested
by customers relating to factors such as cooperative advertising,
contractual discounts, negotiated discounts, customer audits,
volume rebates, defective products and costs incurred by customers
to sell the Company's products and are recorded as a reduction to
Gross Product Sales. Management uses Sales Allowances to identify
and compare the cost of doing business with individual retailers,
different geographic markets and amongst various distribution
channels.
Total Net Sales represents Gross Product Sales less Sales
Allowances. Management uses Total Net Sales to evaluate the
Company's total net revenue generating capacity compared to
internal targets and as a measure of Company performance.
Management believes the non-IFRS measures defined above are
important supplemental measures of operating performance and
highlight trends in the core business that may not otherwise be
apparent when relying solely on IFRS financial measures. Management
believes that these measures allow for assessment of the Company's
operating performance and financial condition on a basis that is
more consistent and comparable between reporting periods. The
Company believes that lenders, securities analysts, investors and
other interested parties frequently use these non-IFRS financial
measures in the evaluation of issuers.
|
|
Three Months Ended
September 30
|
(All amounts in
USD 000's, except percentages)
|
2019
|
20188
|
$
Change
|
%
Change
|
Reconciliation of
Non-IFRS Financial Measures
|
|
|
|
|
Net
income
|
92,137
|
107,891
|
(15,754)
|
(14.6)
|
%
|
|
Income tax
expense
|
32,990
|
38,211
|
(5,221)
|
(13.7)
|
%
|
|
Finance
costs
|
3,182
|
2,732
|
450
|
16.5
|
%
|
|
Depreciation and
amortization
|
22,238
|
17,676
|
4,562
|
25.8
|
%
|
EBITDA
(1)
|
150,547
|
166,510
|
(15,963)
|
(9.6)
|
%
|
Normalization
adjustments:
|
|
|
|
|
|
Restructuring expense
(2)
|
236
|
404
|
(168)
|
(41.6)
|
%
|
|
Foreign exchange
(gain) loss (3)
|
(4,020)
|
5,372
|
(9,392)
|
(174.8)
|
%
|
|
Share based
compensation (4)
|
3,412
|
3,612
|
(200)
|
(5.5)
|
%
|
|
Acquisition related
incentive compensation (5)
|
—
|
250
|
(250)
|
n.m.
|
|
Amortization of fair
market value adjustments (6)
|
—
|
3,692
|
(3,692)
|
n.m.
|
Adjusted EBITDA
(1) (8)
|
150,175
|
179,840
|
(29,665)
|
(16.5)
|
%
|
|
Income tax
expense
|
32,990
|
38,211
|
(5,221)
|
(13.7)
|
%
|
|
Finance
costs
|
3,182
|
2,732
|
450
|
16.5
|
%
|
|
Depreciation and
amortization
|
22,238
|
17,676
|
4,562
|
25.8
|
%
|
|
Tax effect of
normalization adjustments (7)
|
(1,473)
|
3,487
|
(4,960)
|
(142.2)
|
%
|
Adjusted Net
Income (1)
|
93,238
|
117,734
|
(24,496)
|
(20.8)
|
%
|
|
|
|
|
|
|
Cash provided by
operations
|
106,326
|
106,928
|
(602)
|
(0.6)
|
%
|
Changes in net
working capital
|
42,152
|
53,898
|
(11,746)
|
(21.8)
|
%
|
Cash provided by
operations before net working capital changes
|
148,478
|
160,826
|
(12,348)
|
(7.7)
|
%
|
Cash used in
investing activities
|
(29,234)
|
(11,048)
|
(18,186)
|
164.6
|
%
|
Add: cash used for
license, brand and business acquisitions
|
9,353
|
—
|
9,353
|
n.m.
|
Free Cash Flow
(1)
|
128,597
|
149,778
|
(21,181)
|
(14.1)
|
%
|
|
|
|
|
|
|
1) Non-IFRS financial
measure. See "Non-IFRS Financial Measures".
|
2) Restructuring
expense primarily relates to personnel related expenses.
|
3) Includes foreign
exchange gains/losses generated by the translation of monetary
assets/liabilities denominated in a currency other than the
functional currency of the applicable entity and gains/losses
related to the Company's hedging programs.
|
4) Related to
non-cash expenses associated with subordinate voting shares granted
to equity participants at the time of the IPO and share option
expense. As of August 1, 2018, share based compensation includes
non-cash expenses related to the Company's LTIP.
|
5) Remuneration
expense associated with contingent consideration for the SwimWays
acquisition.
|
6) Amortization of
fair market value adjustments to inventory relating to the
acquisition of Gund in the second quarter of 2018.
|
7) Tax effect of
normalization adjustments (Footnotes 2-6). Normalization
adjustments are tax effected at the effective tax rate of the given
year-to-date period.
|
8) The comparative
information presented for 2018 has not been restated for the
adoption of IFRS 16. The impact of IFRS 16 on Adjusted EBITDA would
be an increase of $3,372 for 2018.
|
|
|
Nine Months Ended
September 30
|
(All amounts in
USD 000's, except percentages)
|
2019
|
201810
|
$
Change
|
%
Change
|
Reconciliation of
Non-IFRS Financial Measures
|
|
|
|
|
Net
income
|
81,482
|
143,501
|
(62,019)
|
(43.2)
|
%
|
|
Income tax
expense
|
28,204
|
50,814
|
(22,610)
|
(44.5)
|
%
|
|
Finance
costs
|
8,462
|
6,546
|
1,916
|
29.3
|
%
|
|
Depreciation and
amortization
|
68,429
|
48,759
|
19,670
|
40.3
|
%
|
EBITDA
(1)
|
186,577
|
249,620
|
(63,043)
|
(25.3)
|
%
|
Normalization
adjustments:
|
|
|
|
|
|
Restructuring expense
(2)
|
8,105
|
2,234
|
5,871
|
262.8
|
%
|
|
Foreign exchange loss
(3)
|
5,919
|
4,044
|
1,875
|
46.4
|
%
|
|
Share based
compensation (4)
|
11,706
|
7,747
|
3,959
|
51.1
|
%
|
|
Legal settlement
(5)
|
—
|
(15,500)
|
15,500
|
n.m.
|
|
Bad debt expense
(6)
|
—
|
15,152
|
(15,152)
|
n.m.
|
|
Acquisition related
incentive compensation (7)
|
—
|
1,491
|
(1,491)
|
n.m.
|
|
Amortization of fair
market value adjustments (8)
|
—
|
3,692
|
(3,692)
|
n.m.
|
Adjusted EBITDA
(1) (10)
|
212,307
|
268,480
|
(56,173)
|
(20.9)
|
%
|
|
Income tax
expense
|
28,204
|
50,814
|
(22,610)
|
(44.5)
|
%
|
|
Finance
costs
|
8,462
|
6,546
|
1,916
|
29.3
|
%
|
|
Depreciation and
amortization
|
68,429
|
48,759
|
19,670
|
40.3
|
%
|
|
Tax effect of
normalization adjustments (9)
|
6,617
|
4,932
|
1,685
|
34.2
|
%
|
Adjusted Net
Income (1)
|
100,595
|
157,429
|
(56,834)
|
(36.1)
|
%
|
|
|
|
|
|
|
Cash provided by
operations
|
87,546
|
121,649
|
(34,103)
|
(28.0)
|
%
|
Changes in net
working capital
|
83,335
|
83,679
|
(344)
|
(0.4)
|
%
|
Cash provided by
operations before net working capital changes
|
170,881
|
205,328
|
(34,447)
|
(16.8)
|
%
|
Cash used in
investing activities
|
(72,971)
|
(141,402)
|
68,431
|
(48.4)
|
%
|
Add: cash used for
license, brand and business acquisitions
|
9,353
|
77,029
|
(67,676)
|
(87.9)
|
%
|
Free Cash Flow
(1)
|
107,263
|
140,955
|
(33,692)
|
(23.9)
|
%
|
|
|
|
|
|
|
1) Non-IFRS financial
measure. See "Non-IFRS Financial Measures".
|
2) Restructuring
expense primarily relates to personnel related expenses and costs
associated with facility closures.
|
3) Includes foreign
exchange gains/losses generated by the translation of monetary
assets/liabilities denominated in a currency other than the
functional currency of the applicable entity and gains/losses
related to the Company's hedging programs.
|
4) Related to
non-cash expenses associated with subordinate voting shares granted
to equity participants at the time of the IPO and share option
expense. As of August 1, 2018, share based compensation includes
non-cash expenses related to the Company's LTIP.
|
5) Non-recurring
legal settlement in the Company's favour in the second quarter of
2018.
|
6) Non-recurring bad
debt expense related to the bankruptcy declaration and liquidation
proceedings of TRU during the first quarter of 2018.
|
7) Remuneration
expense associated with contingent consideration for the SwimWays
acquisition.
|
8) Amortization of
fair market value adjustments to inventory relating to the
acquisition of Gund in the second quarter of 2018.
9) Tax effect of
normalization adjustments (Footnotes 2-8). Normalization
adjustments are tax effected at the effective tax rate of the given
year-to-date period.
|
10) The comparative
information presented for 2018 has not been restated for the
adoption of IFRS 16. The impact of IFRS 16 on Adjusted EBITDA would
be an increase of $7,978 for 2018.
|
Forward-Looking Statements
Certain statements, other than statements of historical fact,
contained in this MD&A 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 MD&A. 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 MD&A include, without limitation,
statements with respect to: the Company's outlook for 2019 (see
"Outlook"); future growth expectations; the Company's expansion
into content for traditional television, as well as more short-form
and long-form content across a variety of distribution channels;
the Company's increased focus on e-commerce and direct-to-consumer
initiatives; the Company's long-term goal of more than 40% of sales
outside of the North America
segment; financial position, cash flows and financial performance;
drivers for such growth; the impact of acquisitions on future
financial performance; the successful execution of its strategies
for growth; and the seasonality of financial results and
performance.
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 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 broader licenses from third
parties for major entertainment properties consistent with past
practices; 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 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; 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 and
retailers; the Company will continue to attract qualified personnel
to support its development requirements; and the Company's key
personnel will continue to be involved in the Company products and
entertainment properties will be launched as scheduled 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,
the factors discussed in the Company's disclosure materials,
including the Annual 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.sedar.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. 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.
|
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|
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|
|
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1. The financial
highlights in this release are presented in US$ millions, whereas
the financial information in the MD&A is presented in US$
thousands. This may result in immaterial rounding differences and
differences in the calculated percentages reflected between the two
documents.
|
2. Non-IFRS
Financial Measure. See "Non-IFRS Financial Measures"
below.
|
3. Spin Master
adopted International Financial Reporting Standard 16 Leases ("IFRS
16"), effective January 1, 2019. The Company implemented
the standard using the modified retrospective approach. As a
result, the Company's third quarter of 2019 results reflect lease
accounting under IFRS 16. Prior year results have not been
restated. See section "Changes in Accounting Policies" of the
Company's MD&A for the three and nine months ended September
30, 2019 for more information on the implementation of IFRS
16.
|
View original
content:http://www.prnewswire.com/news-releases/spin-master-reports-q3-2019-financial-results-300952146.html
SOURCE Spin Master Corp.