Spin Master Q2 Earnings Call Highlights

Spin Master (TSE:TOY) said its second-quarter results exceeded its expectations as growth in its toy business and tariff refunds supported profitability, while the company reiterated its full-year 2026 outlook.

Chief Executive Officer Christina Miller said the company’s performance reflected strong sales of core brands including PAW Patrol, Monster Jam and GUND, along with growth from 4D Crystal Links, Primal Hatch and Cool Maker. Spin Master also introduced products including Magic Jellykins, Bitzee, aquarium, Pikimo and Rubik’s Rush during the quarter.

Consolidated revenue rose 9%, or $36 million, in the second quarter. Chief Financial Officer Jonathan Roiter said toy revenue increased 12%, aided by approximately $40 million of orders that were pulled forward from the third quarter as retailers prepared for the release of PAW Patrol: The Dino Movie.

Roiter said the first-half revenue trend provides a better indicator of performance than the individual quarterly comparisons, given volatility in retail ordering patterns. Toy revenue increased 1% in the first half.

Profitability Boosted by Gross Profit Gains and Tariff Refunds

Adjusted EBITDA increased 80%, or $23 million, during the quarter, driven by a $24 million increase in gross profit excluding depreciation, amortization and tariff refunds. Marketing expense was $12 million lower than the prior year, largely because of timing, though the company expects a similar increase in Marketing spending in the third quarter.

Adjusted operating income totaled $19 million, up $20 million from a year earlier. IFRS operating income was $46 million, compared with a $52 million loss in the prior-year period.

Roiter said the IFRS improvement reflected higher adjusted operating income, the absence of a prior-year impairment charge, lower non-recurring cash costs, currency movements and $38 million in IEEPA tariff refunds received late in the quarter. The refunds were recorded as an offset to cost of sales but excluded from adjusted earnings measures because of their one-time nature.

The company expects higher toy costs in the second half, including an estimated $15 million impact associated with oil prices, assuming oil reaches $100 per barrel. Spin Master had previously considered offsetting much of that cost through price increases, but Roiter said the company decided to use tariff refunds to absorb the added costs instead.

“Looking at where we stand, looking at where the consumer stands, looking at our products, looking at our peer set, we ultimately elected not to move forward with price,” Roiter said.

PAW Patrol Movie Drives Second-Half Focus

Spin Master’s primary 2026 priorities include capturing the PAW Patrol movie opportunity across its toy, entertainment and digital-games businesses; returning Melissa Doug to growth; and expanding engagement with Toca Boca.

PAW Patrol: The Dino Movie is scheduled to reach theaters on Aug. 14. Miller said the movie’s second trailer generated 110 million views in its first week, exceeding the performance of the trailers for the first two PAW Patrol films. She said the movie was tracking at or above the prior installments with its target audience.

The PAW Patrol movie toy line launched online through Amazon, Target and Walmart in July and is expected to reach Walmart stores in early August. Miller said early results were positive and that Spin Master had reduced in-store inventory during the first half to create room for the movie-related assortment.

The company also plans to launch a new PAW Patrol digital game around the movie’s release. The standalone game will be free to play with in-app purchases.

Management cautioned that the $40 million second-quarter order pull-forward will weigh on third-quarter comparisons. Spin Master is targeting broadly stable consolidated revenue in the third quarter, with the PAW Patrol movie expected to support entertainment and toy results.

Melissa Doug and Toca Boca Initiatives

Melissa Doug revenue declined during the quarter, as expected, against a difficult comparison. The brand’s revenue had increased nearly 40% in the second quarter of 2025, when Spin Master sold through substantial domestic inventory and supported retailers with promotional activity.

Despite the revenue decline, Melissa Doug gross profit was stable year over year because of expanded gross margin. Miller said the brand is seeking to regain market share through products including the Cheery Lane preschool collection and new licensed merchandise. She added that Cheery Lane was showing early signs of strong performance.

Melissa Doug also announced a limited-edition toy collection with ice cream brand Van Leeuwen and plans to launch a line of books through Penguin Random House this fall. The company said it has expanded shelf space with key retailers.

At Toca Boca World, monthly active users declined in the second quarter, though improved conversion rates and higher average revenue per paying user largely offset the impact. The number of paying users increased from the first quarter, according to Miller.

Spin Master plans to launch a direct-to-consumer web store for Toca Boca World during the quarter. Miller said the store could allow the company to retain more net revenue from direct purchases and potentially improve conversion, retention and customer lifetime value. Toca Boca is also introducing a lifestyle collection at more than 350 MINISO stores in the U.S.

Guidance Reiterated

Spin Master reiterated its 2026 guidance for stable to low-single-digit revenue growth and mid- to upper-single-digit adjusted EBITDA growth. The company said its business remains heavily weighted toward the second half, which represented 64% of full-year revenue and all profits in 2025.

For the third quarter, the company expects gross margin to be about two percentage points lower due to higher toy costs, greater entertainment amortization tied to the movie release and the absence of certain high-margin digital-game partnership revenue recorded last year. Operating expenses below gross profit are expected to be generally stable, apart from digital marketing spending that was deferred from the second quarter.

Roiter said Spin Master ended the quarter with net leverage of approximately 0.8 times including leases, or 0.3 times excluding leases. Since acquiring Melissa Doug, the company has reduced gross debt by more than $350 million while returning nearly $200 million to shareholders, he said.

About Spin Master (TSE:TOY)

Spin Master Corp. (TSX:TOY) is a leading global children's entertainment company, creating exceptional play experiences across its three creative centres: Toys, Entertainment and Digital Games. With worldwide toy distribution, Spin Master is best known for award-winning brands including PAW Patrol ®, Melissa Doug ®, Bakugan ® and Rubik's ® Cube, and is the global toy licensee for other iconic properties. Through its in-house entertainment studio, the company creates and produces captivating multiplatform content including powerhouse preschool franchise PAW Patrol, along with other original shows, short-form series and feature films.

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