Growth in Revenue, Net Income and Adjusted
EBITDA
TORONTO, July 31, 2019
/CNW/ - 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 second quarter ended June 30, 2019. The Company's full
Management's Discussion and Analysis ("MD&A") for the three and
six month ended June 30, 2019 is available on SEDAR
(www.sedar.com) and posted on the Company's web site at
www.spinmaster.com/financial-info.php.
"Our second quarter results demonstrated the strength, diversity
and depth of our innovative product portfolio with positive
momentum for many of our key brands, including Bakugan, PAW Patrol,
DreamWorks Dragons and Monster Jam," said Ronnen Harary, Spin Master's Chairman and
Co-Chief Executive Officer. "Looking forward, we remain
confident in our proven track record of innovation and in our
global platform. We continue to demonstrate our ability to produce
compelling entertainment content, magical toy experiences and to be
a great partner for licensors."
Q2 2019 Financial Highlights as compared to the same period
in 20181, 3
- Revenue of US$321.0 million
increased 3.0% from US$311.5 million.
In Constant Currency2 terms, revenue increased by
4.2%.
- Gross Product Sales2 increased 6.9% to US$316.8 million from US$296.2 million, with an unfavourable foreign
exchange impact of US$3.1 million or
1.1%. Contributing to the increase was the shift in the Easter
holiday, which occurred in the second quarter of 2019 compared to
the first quarter in 2018.
- Gross Product Sales2 increased 42.8% and 1.2% in
Europe and North America, respectively and declined 1.7%
in Rest of World. International Gross Product Sales2 on
a combined basis were 35.6% of total Gross Product
Sales2, increasing from 32.0%.
- Other Revenue decreased by 8.2% to US$30.4 million, driven by lower 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$8.4 million to US$26.2
million. As a percentage of Gross Product Sales2,
Sales Allowances2 were 8.3% compared to 6.0%.
- Gross profit increased 7.2% to US$164.3
million, representing 51.2% of revenue, compared to
US$153.2 million or 49.2% of revenue.
The increase in gross margin was primarily due to product mix and
sales of certain discontinued products in 2018, partially
offset by higher Sales Allowances, increased freight-related
expenses and a decrease in Other Revenue.
- Selling, general and administrative expenses ("SG&A")
increased by US$14.8 million or
11.3%. The increase in SG&A reflects US$6.6 million of higher restructuring costs and
US$1.8 million of higher costs
related to share-based compensation. Excluding these items,
SG&A increased US$6.4 million,
driven by investments in distribution centres to support global
growth and selling expenses attributed to higher sales of licensed
products, partially offset by lower marketing and administrative
expenses.
- Net Income was US$10.2 million or
US$0.10 per share, compared to
US$26.9 million or US$0.26 per share.
- Adjusted Net Income2 was US$19.8 million or US$0.19 per share, compared to US$17.7 million or US$0.17 per share.
- Adjusted EBITDA2 was US$55.1
million compared to US$45.4
million. Adjusted EBITDA Margin2 increased to
17.2% compared to 14.6%.
- Free Cash Flow2 was US$18.5
million compared to US$19.5
million.
|
Q2 2019 Gross
Product Sales2 by Business Segment
(US$ millions)1
|
|
Q2
2019
|
Q2
2018
|
$
Change
|
%
Change
|
Activities, Games
& Puzzles and Plush
|
$80.2
|
$86.2
|
(6.0)
|
|
(7.1)
|
%
|
Remote Control and
Interactive Characters
|
$44.5
|
$68.3
|
(23.8)
|
|
(34.9)
|
%
|
Boys Action and
High-Tech Construction
|
$64.0
|
$21.2
|
42.8
|
|
202.3
|
%
|
Pre-School and
Girls
|
$96.4
|
$87.4
|
9.0
|
|
10.3
|
%
|
Outdoor
|
$31.7
|
$33.1
|
(1.4)
|
|
(4.2)
|
%
|
Gross Product
Sales2
|
$316.8
|
$296.2
|
20.6
|
|
6.9
|
%
|
Sales
Allowances2
|
$26.2
|
$17.8
|
8.4
|
|
47.3
|
%
|
Total Net
Sales2
|
$290.6
|
$278.4
|
12.2
|
|
4.4
|
%
|
Other
Revenue
|
$30.4
|
$33.1
|
(2.7)
|
|
(8.2)
|
%
|
Revenue
|
$321.0
|
$311.5
|
9.5
|
|
3.0
|
%
|
Q2 2019 Business Segment Gross Product Sales2 as
compared to the same period in 20181,3
Gross Product Sales2 increased by US$20.6 million or 6.9%, to US$316.8 million with an unfavourable foreign
exchange impact of US$3.1 million or
1.1%. Contributing to the increase was the shift in the Easter
holiday, which occurred in the second quarter of 2019 compared to
the first quarter in 2018.
Gross Product Sales2 in Activities, Games
& Puzzles and Plush decreased by US$6.0 million or 7.1% to US$80.2 million. The decrease was driven
primarily by lower sales in the Games & Puzzles portfolio which
includes Cardinal and lower sales of Bunchems,
partially offset by increases in Cool Maker, Gund and
Kinetic Sand.
Gross Product Sales2 in Remote Control and
Interactive Characters decreased by US$23.8
million or 34.9% to US$44.5
million, due to lower sales of Hatchimals and
Zoomer, partially offset by sales of Monster Jam
RC and Juno My Baby Elephant.
Gross Product Sales2 in Boys Action and High‑Tech
Construction increased by US$42.8
million or 202.3% to US$64.0
million. The increase was primarily driven by sales of
DreamWorks Dragons, Bakugan and Monster Jam
products, partially offset by decreases in Star Wars
licensed merchandise, Flush Force and Boxer.
Gross Product Sales2 in Pre‑School and Girls
increased by US$9.0 million or 10.3%
to US$96.4 million. The increase was
driven primarily by higher sales of PAW Patrol and Twisty
Petz and sales of Candylocks, partially offset by
decreases in Party Popteenies.
Gross Product Sales2 in Outdoor comprised of sales of
products under the SwimWays, Kelsyus, Coop and
Aerobie brands, decreased by US$1.4
million or 4.2% to US$31.7
million.
Six Months Ended June 30, 2019
Financial Highlights as compared to the same period in 2018
- Revenue of US$560.0 million
decreased 6.2% from US$597.2 million.
In Constant Currency2 terms, revenue decreased by
4.6%.
- Gross Product Sales2 decreased 4.6% to US$557.2 million, compared to US$584.2 million with an unfavourable foreign
exchange impact of US$8.8 million or
1.5%. Contributing to the decrease was the absence of Toys "R" Us
in Q1 2019 compared to Q1 2018.
- Gross Product Sales2 increased 15.2% in Europe and decreased 3.6% in Rest of World and
10.5% in North America.
International Gross Product Sales2 on a combined basis
represented 38.0% of total Gross Product Sales2,
increasing from 34.0%.
- Other Revenue decreased by US$3.6
million or 5.8% to US$59.3
million, driven by lower 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$6.6 million to US$56.6
million, driven primarily by the timing of promotional
spending. As a percentage of Gross Product Sales2, Sales
Allowances2 increased to 10.1% compared to 8.6%.
- Gross profit decreased by 10.0% to US$272.0 million, representing 48.6% of revenue
compared to US$302.0 million or 50.6%
of revenue. The decrease was primarily due to increased
freight-related expenses, higher Sales Allowances2 and a
decrease in Other Revenue, partially offset by product mix and
sales of certain discontinued products in 2018.
- Selling, general and administrative expenses ("SG&A")
increased US$6.6 million or 2.5%. The
increase in SG&A was driven by higher distribution costs due to
investments in global distribution centres and restructuring costs,
both of which position Spin Master for future growth, as well as
selling expenses attributed to higher sales of licensed products
and higher administrative expenses. This increase was offset by
lower marketing and share based compensation expenses and the Toys
R Us bad debt expense incurred in Q1 2018.
- Net Loss was US$10.7 million, or
loss per share US$0.10, compared to
Net Income of US$35.6 million, or
US$0.35 per share.
- Adjusted Net Income2 was US$7.4 million, or US$0.07 per diluted share, compared to
US$39.7 million, or US$0.39 per share.
- Adjusted EBITDA2 was US$62.1
million, compared to US$88.6
million. Adjusted EBITDA Margin2 was 11.1%
compared to 14.8%.
- Free Cash Flow2 decreased to negative US$21.3 million compared to negative US$8.8 million.
|
Six months ended
June 30, 2019 Gross Product Sales2 by Business Segment
(US$ millions)1
|
|
2019
|
2018
|
$
Change
|
%
Change
|
Activities, Games
& Puzzles and Plush
|
$143.1
|
$143.8
|
-$0.7
|
(0.5)
|
%
|
Remote Control and
Interactive Characters
|
$75.6
|
$159.5
|
-$83.9
|
(52.6)
|
%
|
Boys Action and
High-Tech Construction
|
$113.4
|
$37.9
|
$75.5
|
199.3
|
%
|
Pre-School and
Girls
|
$159.8
|
$170.0
|
-$10.2
|
(6.0)
|
%
|
Outdoor
|
$65.3
|
$73.0
|
-$7.7
|
(10.6)
|
%
|
Gross Product
Sales2
|
$557.2
|
$584.2
|
-$27.0
|
(4.6)
|
%
|
Sales
Allowances2
|
$56.6
|
$50.0
|
$6.6
|
13.2
|
%
|
Total Net
Sales2
|
$500.6
|
$534.2
|
-$33.6
|
(6.3)
|
%
|
Other
Revenue
|
$59.4
|
$63.0
|
-$3.6
|
(5.8)
|
%
|
Revenue
|
$560.0
|
$597.2
|
-$37.2
|
(6.2)
|
%
|
June 30, 2019 Year to Date
("YTD") Business Segment Gross Product Sales2 as
compared to the same period in 20181
Gross Product Sales2 decreased by US$27.0 million or 4.6% to US$557.2 million, with an unfavourable foreign
exchange impact of US$8.8 million or
1.5%. Contributing to the decrease was the absence of Toys R Us in
the first quarter of 2019 compared to the first quarter of
2018.
Gross Product Sales2 in Activities, Games &
Puzzles and Plush decreased by US$0.7
million or 0.5% to US$143.1
million, primarily driven by lower sales in the Games &
Puzzles portfolio, which includes Cardinal and lower sales
of Bunchems, partially offset by increases in Gund,
Cool Maker and Kinetic Sand.
Gross Product Sales2 in Remote Control and
Interactive Characters decreased by US$83.9
million or 52.6% to US$75.6
million, primarily due to declines in Hatchimals,
Zoomer and Luvabella, partially offset by sales of
Monster Jam RC and Juno My Baby Elephant.
Gross Product Sales2 in Boys Action and High‑Tech
Construction increased by US$75.5
million or 199.3% to US$113.4
million, primarily due to sales of DreamWorks
Dragons, Bakugan and Monster Jam products,
partially offset by decreases in Flush Force, Star
Wars licensed merchandise, Boxer and Tech
Deck.
Gross Product Sales2 in Pre‑School and Girls
decreased by US$10.2 million or 6.0%
to US$159.8 million, driven by
declines in PAW Patrol and Party Popteenies,
partially offset by increases in Twisty Petz and sales of
Candylocks.
Gross Product Sales2 in Outdoor, comprised of sales
of products under the SwimWays, Kelsyus, Coop
and Aerobie brands, decreased by US$7.7 million or 10.6% to US$65.3 million.
"Despite the significant decline in Hatchimals sales on a year
over year basis, we grew both our Gross Product Sales and Adjusted
EBITDA in the second quarter. Our relentless focus on innovation
and strong execution against our four growth strategies drove solid
performance," said Ben Gadbois, Spin
Master's Global President and Chief Operating Officer. "We
continued to invest in building a global distribution platform that
positions us for future growth and we executed our strategy to
consolidate Swimways, Cardinal, Gund and our LA Games & Puzzles
business in Long Island City, New
York. Entering the second half of 2019, we believe we have
solid global POS momentum and sustained demand for our core
franchises together with a solid balance sheet that allows us to
capitalize on strategic acquisition opportunities."
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, our Outlook remains
unchanged as the Company continues to expect:
- to grow organic Gross Product Sales2 in the low
single digit range relative to 2018; and
- to deliver Adjusted EBITDA Margin2 for 2019 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 Thursday, August 1,
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 (Loss) 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 (loss) 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 (loss) 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/used in
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 "Q2 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
June 30
|
(All amounts in
USD 000's, except percentages)
|
2019
|
20188
|
$
Change
|
%
Change
|
Reconciliation of
Non-IFRS Financial Measures
|
|
|
|
|
Net
income
|
10,247
|
26,911
|
(16,664)
|
(61.9)
|
%
|
|
Income tax
expense
|
2,780
|
9,475
|
(6,695)
|
(70.7)
|
%
|
|
Finance
costs
|
2,613
|
2,214
|
399
|
18.0
|
%
|
|
Depreciation and
amortization
|
24,769
|
19,645
|
5,124
|
26.1
|
%
|
EBITDA
(1)
|
40,409
|
58,245
|
(17,836)
|
(30.6)
|
%
|
Normalization
adjustments:
|
|
|
|
|
|
Restructuring expense
(2)
|
7,196
|
615
|
6,581
|
1,070.1
|
%
|
|
Foreign exchange loss
(gain) (3)
|
3,560
|
(1,331)
|
4,891
|
(367.5)
|
%
|
|
Share based
compensation (4)
|
3,937
|
2,108
|
1,829
|
86.8
|
%
|
|
Legal settlement
(5)
|
—
|
(15,500)
|
15,500
|
n.m
|
|
Acquisition related
incentive compensation (6)
|
—
|
1,241
|
(1,241)
|
n.m
|
Adjusted EBITDA
(1) (8)
|
55,102
|
45,378
|
9,724
|
21.4
|
%
|
|
Income tax
expense
|
2,780
|
9,475
|
(6,695)
|
(70.7)
|
%
|
|
Finance
costs
|
2,613
|
2,214
|
399
|
18.0
|
%
|
|
Depreciation and
amortization
|
24,769
|
19,645
|
5,124
|
26.1
|
%
|
|
Tax effect of
normalization adjustments (7)
|
5,121
|
(3,632)
|
8,753
|
(241.0)
|
%
|
Adjusted Net
Income (1)
|
19,819
|
17,676
|
2,143
|
12.1
|
%
|
|
|
|
|
|
|
Cash (used in)
provided by operations
|
(12,604)
|
3,622
|
(16,226)
|
(448.0)
|
%
|
Plus:
|
|
|
|
|
Changes in net
working capital
|
53,261
|
43,117
|
10,144
|
23.5
|
%
|
Cash provided by
operations before net working capital changes
|
40,657
|
46,739
|
(6,082)
|
(13.0)
|
%
|
Less:
|
|
|
|
|
Cash used in
investing activities
|
(22,167)
|
(103,257)
|
81,090
|
(78.5)
|
%
|
Plus:
|
|
|
|
|
Cash used for
license, brand and business acquisitions
|
—
|
76,029
|
(76,029)
|
(100.0)
|
%
|
Free Cash Flow
(1)
|
18,490
|
19,511
|
(1,021)
|
(5.2)
|
%
|
|
|
|
|
|
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 losses (gains) generated by the translation 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
|
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) Remuneration
expense associated with contingent consideration for the SwimWays
acquisition
|
7) Tax effect of
normalization adjustments (Footnotes 2-6). Normalization
adjustments are tax
effected at the effective tax rate of the given 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 $2,243
for 2018
|
|
|
|
Six Months Ended
June 30
|
(All amounts in
USD 000's, except percentages)
|
2019
|
20189
|
$
Change
|
%
Change
|
Reconciliation of
Non-IFRS Financial Measures
|
|
|
|
|
Net (loss)
income
|
(10,655)
|
35,610
|
(46,265)
|
(129.9)
|
%
|
|
Income tax (recovery)
expense
|
(4,786)
|
12,603
|
(17,389)
|
(138.0)
|
%
|
|
Finance
costs
|
5,280
|
3,814
|
1,466
|
38.4
|
%
|
|
Depreciation and
amortization
|
46,191
|
31,083
|
15,108
|
48.6
|
%
|
EBITDA
(1)
|
36,030
|
83,110
|
(47,080)
|
(56.6)
|
%
|
Normalization
adjustments:
|
|
|
|
|
|
Restructuring expense
(2)
|
7,869
|
1,830
|
6,039
|
330.0
|
%
|
|
Foreign exchange loss
(gain) (3)
|
9,939
|
(1,328)
|
11,267
|
(848.4)
|
%
|
|
Share based
compensation (4)
|
8,294
|
4,135
|
4,159
|
100.6
|
%
|
|
Legal settlement
(5)
|
—
|
(15,500)
|
15,500
|
n.m
|
|
Bad debt expense
(6)
|
—
|
15,152
|
(15,152)
|
n.m
|
|
Acquisition related
incentive compensation (7)
|
—
|
1,241
|
(1,241)
|
n.m
|
Adjusted EBITDA
(1) (9)
|
62,132
|
88,640
|
(26,508)
|
(29.9)
|
%
|
|
Income tax (recovery)
expense
|
(4,786)
|
12,603
|
(17,389)
|
(138.0)
|
%
|
|
Finance
costs
|
5,280
|
3,814
|
1,466
|
38.4
|
%
|
|
Depreciation and
amortization
|
46,191
|
31,083
|
15,108
|
48.6
|
%
|
|
Tax effect of
normalization adjustments (8)
|
8,090
|
1,445
|
6,645
|
459.9
|
%
|
Adjusted Net
Income (1)
|
7,357
|
39,695
|
(32,338)
|
(81.5)
|
%
|
|
|
|
|
|
Cash (used in)
provided by operations
|
(18,780)
|
14,721
|
(33,501)
|
(227.6)
|
%
|
Changes in net
working capital
|
41,183
|
29,781
|
11,402
|
38.3
|
%
|
Cash provided by
operations before net working capital changes
|
22,403
|
44,502
|
(22,099)
|
(49.7)
|
%
|
Cash used in
investing activities
|
(43,737)
|
(130,354)
|
86,617
|
(66.4)
|
%
|
Cash used for
license, brand and business acquisitions
|
—
|
77,029
|
(77,029)
|
n.m
|
|
Free Cash Flow
(1)
|
(21,334)
|
(8,823)
|
(12,511)
|
141.8
|
%
|
|
|
|
|
|
|
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 losses (gains) generated by the translation 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
|
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) Tax effect of
normalization adjustments (Footnotes 2-7). Normalization
adjustments are tax effected at the
effective tax rate of the given period
|
9) 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 $4,606
for 2018
|
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 Company's outlook for 2019; future growth expectations;
financial position, cash flows and financial performance; drivers
for such growth; impact of acquisitions on future financial
performance; the successful execution of its strategies for growth;
the intention to launch an NCIB, and if accepted, the number of
subordinate voting shares the Company may be permitted to purchase
thereunder, and the timing and manner of such purchases; 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 availability of cash
resources for repurchases of outstanding subordinate voting shares
under an NCIB; the existence of alternative uses for the Company's
cash resources which may be superior to effecting repurchases under
an NCIB; compliance by third parties with their contractual
obligations; and compliance with applicable laws and regulations
pertaining to NCIBs; 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.
________________________
|
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 second 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 six months ended June 30, 2019
for more information on the implementation of IFRS 16
|
View original
content:http://www.prnewswire.com/news-releases/spin-master-reports-solid-q2-2019-financial-results-300894411.html
SOURCE Spin Master Corp.