Spin Master posted solid results for its second quarter, showing a rebound on its own Paw Patrol, and strong performance from brands such as Monster Jam and Bakugan. The Toronto-based toy and entertainment company reports that gross product sales increased 1.2% in North America, a whopping 42.8% in Europe, and declined 1.7% in the rest of the world. Gross profit increased 7.2% to $164.3 million, and overall gross revenue rose to $321 million, a 3% increase from $311.5 million a year ago.

“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,” says Ronnen Harary, Spin Master’s chairman and co-CEO. “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.”

Spin Master's Candylocks

Spin Master’s Candylocks

BIG WINNERS, BIG REBOUNDS:

  • Boys action and high-tech construction achieved a massive 202% increase this quarter. DreamWorks’ Dragons and the reintroduction of Bakugan have led to notable increases, in addition to strong sales on Monster Jam toys. Last year, Spin Master didn’t have Monster Jam — a license that at the time was winding down at Mattel. Star Wars, Flush Force, and Boxer are notable declines for the quarter.
  • Preschool and girls rebounded this quarter, scoring a 10.3% increase thanks to increases in sales of Paw Patrol, Twisty Petz, and the recently introduced Candylocks. One weak spot is Party Popteenies, which never seemed to catch on as it was expected to.
Grave Digger - Monster Jam RC

Spin Master’s forthcoming MEGA Grave Digger Monster Jam RC

AREAS OF CONCERN:

  • As it was in the first quarter, sales in interactive characters and remote control continue to reflect the plight of a category that remains in an industry-wide free fall. The second quarter saw a 34.9% decrease, with soft sales in Hatchimals and Zoomer cited for the decline. That said, there are bright spots, declines partially being offset by the introduction of Monster Jam R/C and Juno My Baby Elephant — both of which are expected to be strong sellers for the holiday season.
  • Activities, games and puzzles, and plush saw a 7.1% decrease. The company cites lower sales in the full games and puzzles portfolio, which includes the Cardinal brand; and soft sales on Bunchems. The GUND, Cool Maker, and Kinetic Sand lines saw increases, offsetting the overall category decline.

“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,” adds 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 and 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.”

HOLDING FIRM ON FOUR KEY GROWTH STRATEGIES:

Looking ahead toward the back half of the year, Spin Master reiterates that its four key growth strategies remain unchanged.

  • Innovating across the portfolio;
  • Developing evergreen global entertainment properties;
  • Increasing international sales in developed and emerging markets; and
  • Leveraging the company’s global platform through strategic acquisitions.

A call with investors is scheduled for Aug 1, at 9:30 a.m. ET.