Spin Master Corp. reported financial results for the first quarter ended March 31, 2017.
Highlights include a $227.7 million in revenue, a 40.8 percent increase from the same period last year. Excluding revenue from Swimways, acquired in Q3 last year, Q1 revenue grew 19.8 percent. In constant currency, revenue increased by 42.6 percent.
Gross product sales increased 31.8 percent to $229.1 million, compared to $173.8 million, driven by sales of Paw Patrol, Hatchimals, and Swimways items, which offset declines in Air Hogs and Kinetic Sand. Gross product sales increased 32.9 percent in North America, 39.2 percent in Europe, and 13.6 percent in the rest of the world. Other revenue—which reflects merchandising royalty and TV distribution income from products marketed by third parties using Spin Master’s IPs and app revenue from Toca Boca and Sago Mini—more than tripled to $20.5 million from $6 million compared to the same period last year.
Gross profit increased 32.7 percent to $113.3 million, compared to $85.4 million last year. Gross margin declined due to shifts in our product mix, including the impact of acquisitions, the fair market value inventory amortization adjustments related to Swimways and foreign exchange, partially offset by increased Other Revenue.
Net income was $10.1 million, compared with $9.9 million last year. Adjusted EBITDA was $30.8 million in Q1 2017 compared with 24.0 million in Q1 2016, and adjusted EBITDA margins decreased to 13.5 percent compared to 14.8 percent last year, primarily due to lower gross margins.
On April 28, Spin Master acquired certain assets of Marbles, for cash consideration of approximately $6 million, of which $4.7 million was paid in Q1 2017 and included in receivables. The cash consideration was funded from existing cash resources. Marbles will be included in Spin Master’s Activities, Games & Puzzles, and Fun Furniture business segments.