Spin Master Reports Q2 2025 Financial Results

Executive Summary

• Spin Master reported Q2 2025 financial results showing a 2.7% decline in consolidated revenue to $400.7 million, driven by a decrease in Toy revenue due to retailer ordering shifts caused by global tariffs.
• The company posted a Net Loss of $46.5 million ($0.46 per share) compared to a Net Loss of $24.5 million in the prior year period, with Adjusted Net Loss of $7.4 million.
• Digital Games revenue grew significantly by 33.4% to $46.3 million, offsetting some declines in Toys, while the Toys segment saw a 5.5% revenue drop and an Adjusted EBITDA decline to a loss of $0.7 million.

Key Details

• Consolidated Revenue: $400.7 million in Q2 2025, a decrease of 2.7% from $412.0 million in Q2 2024.
• Net Income/Loss: Net Loss of $46.5 million ($0.46 diluted EPS) vs. Net Loss of $24.5 million ($0.24 diluted EPS) in Q2 2024.
• Adjusted Metrics:
  • Adjusted Net Loss: $7.4 million ($0.07 diluted EPS) vs. Adjusted Net Income of $9.6 million ($0.09 diluted EPS).
  • Adjusted EBITDA: $28.7 million (Margin 7.2%) vs. $53.6 million (Margin 13.0%).
  • Adjusted Operating Loss: $0.9 million vs. Adjusted Operating Income of $23.6 million.
• Segment Performance:
  • Toys: Revenue $322.3 million (-5.5%); Operating Loss $(39.7) million; Adjusted EBITDA $(0.7) million. Toy Gross Product Sales decreased 3.6% to $371.0 million. Sales Allowances increased to 13.2% of Gross Product Sales.
  • Entertainment: Revenue $32.1 million (-11.8%); Operating Income $15.7 million; Adjusted EBITDA $24.3 million.
  • Digital Games: Revenue $46.3 million (+33.4%); Operating Loss $(15.5) million (impacted by $17.1 million impairment of digital game/app development assets); Adjusted Operating Income $7.7 million.
• Cost Synergies: Realized $5.6 million in Q2 2025 net cost synergies related to the Melissa & Doug acquisition, achieving annualized run-rate synergies of $26.5 million (target range $25M-$30M).
• Cash Flow:
  • Cash provided by operating activities: $26.1 million.
  • Free Cash Flow: $(15.2) million.
• Capital Return:
  • Repurchased and cancelled 636,632 shares for $10.5 million in Q2 2025 via NCIB.
  • Subsequent to June 30, 2025, declared a quarterly dividend of C$0.12 per share, payable October 10, 2025.
• Liquidity & Debt:
  • Available liquidity of $473.2 million ($128.0 million cash + $345.3 million under credit facilities).
  • Revolving credit facility amended to mature June 27, 2030; Acquisition Facility amended to mature June 27, 2027.
  • Outstanding borrowings: $160.0 million under Facility and $225.0 million under Acquisition Facility.

Notable Quotes

• "Our second quarter results underscore our commitment to building a diversified, resilient portfolio across Toys, Entertainment, and Digital Games," said Christina Miller, Spin Master's Chief Executive Officer. "While we experienced revenue pressure due to a shift in retailer ordering patterns driven by global tariffs, strong double-digit growth in our Digital Games segment helped to offset some of that impact in the quarter."
• "We are pleased with our top-line performance, particularly in light of the challenging macroeconomic environment," said Jonathan Roiter, Spin Master's Chief Financial Officer. "We maintained and gained market share across the majority of our Toy revenue base, while also continuing to grow Digital Games... Profitability was impacted by a lower revenue base and ongoing strategic investments."