Spin Master Corp. to Report Fourth Quarter and
Full Year 2019 Financial Results on March 4,
2020
TORONTO, Jan. 21, 2020 /CNW/ - Spin Master Corp. ("Spin
Master" or the "Company") (TSX:TOY; www.spinmaster.com) a leading
global children's entertainment company, today updated its outlook
for both Gross Product Sales1 and Adjusted EBITDA
Margin1 for the full year ended December 31, 2019. The Company will host a
conference call at 8:30 a.m. EST
today to discuss this update. The Company will report its fourth
quarter and full year 2019 financial results after markets close
on Wednesday, March 4, 2020.
The Company expects to report a decrease of approximately 1% in
Gross Product Sales1 for 2019 compared to 2018 and
compared to a US toy industry decline of between -2% and -4%,
according to various industry reports. Excluding the impact
of foreign exchange, the Company expects Gross Product
Sales1 for 2019 to be approximately flat relative to
2018. Previous guidance on November 3,
2019 was for the Company to grow organic Gross Product
Sales1 in the low single digit range relative to
2018. The decrease, relative to expectations from previous
guidance, was primarily driven by a decline in Gross Product
Sales1 in the US caused by industry-wide softness of toy
sales during the shortened 2019 US holiday shopping season and
operational performance challenges related to the consolidation of
our new East Coast DC. Excluding sales of Hatchimals products,
which declined over US$230 million
year over year, Gross Product Sales1 for 2019 rose
approximately 16% over 2018.
"Our overall performance in the fourth quarter and for 2019 as a
whole, was disappointing relative to our outlook in early November.
Despite the solid performance of several of our brands and
franchises, we were unable to fully offset the year over year
decline in Hatchimals sales. Furthermore, we did not execute as we
have in previous years, at the level we needed to in order to meet
our profitability targets," said Ronnen
Harary, Spin Master's Co-Chief Executive Officer. "We
continue to remain focused on the execution of our long-term
strategy. As we look forward to 2020 and beyond, the strength,
diversity and depth of our innovative brands, entertainment
franchises and mobile digital portfolio, along with our track
record of successful innovation, gives us confidence in delivering
our long-term organic Gross Product Sales growth target of mid to
high single-digits."
Consequently, the Company now expects Adjusted EBITDA
Margin1 for 2019 to be approximately 14%. Previous
guidance provided on November 3, 2019
was for Adjusted EBITDA Margin1 to be slightly
below Adjusted EBITDA Margin1 achieved in 2018. Factors
that reduced Adjusted EBITDA Margin1 include lower
annual Gross Product Sales1, higher annual warehousing
and distribution costs, higher promotional spending in the fourth
quarter and deleveraging of fixed operating costs.
"We continue to make progress against our long-term strategic
priorities, despite our disappointing 2019 results," said
Ben Gadbois, Spin Master's Global
President & COO. "As we described previously, both Spin Master
and the industry faced a number of challenges throughout 2019.
Although we started the fourth quarter with positive momentum based
on the progress we had made in October with both orders and
shipments off to a strong start, order levels, shipments and our
operational performance for the remainder of the year were
considerably below our expectations. We took the necessary steps to
address these challenges, which required both elevated levels of
promotional spending and significantly higher than normal freight,
warehousing and distribution costs particularly in the US.
Through 2020 we will be focused on improving operational
efficiency, adjusting our operational model to improve execution
going forward and rectify the challenges we faced in 2019. We
believe we are well positioned for 2020 and we look forward to
discussing our 2020 outlook when we release our fourth quarter and
2019 results."
Conference call
Ronnen Harary, Co-Chief Executive
Officer and Mark Segal, Executive Vice President and Chief
Financial Officer will host a conference call to discuss its
updated 2019 Full Year Outlook on Tuesday, January 21,
2020 at 8:30 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.
Fourth Quarter and Full Year 2019 Financial Results
Spin Master will report its fourth quarter and full year 2019
financial results after markets close on Wednesday, March 4, 2020. Ronnen Harary, Co-Chief Executive Officer,
Ben Gadbois, Global President &
Chief Operating Officer and Mark
Segal, chief Financial Officer, will host a conference call
for the investment community on Thursday,
March 5, 2020 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 Corp.
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, UnitedKingdom, Russia, Slovakia, Poland, Germany, Sweden, Netherlands, China, HongKong, Japan, Vietnam and Australia.
1. Non-IFRS Financial Measure. See "Non-IFRS Financial
Measures" below.
Non-IFRS Financial Measures
References are made in this Press Release to "Adjusted EBITDA
Margin" and "Gross Product 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.
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.
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
the methodology of reconciliation of Gross Product Sales to
Revenue, please see the table "Q3 2019 Gross Product Sales by
Business Segment" in the Q3 2019 Management Discussion and
Analysis
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.
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: expectations for Gross Product Sales for 2019 compared to 2018;
anticipated Adjusted EBITDA Margin for 2019; future financial
result and performance and growth expectations; and the Company's
long-term organic gross product sales growth target.
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 that 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 Canadian law.
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SOURCE Spin Master Corp.