Paw Patrol, Hatchimals Driving Spin Master’s Licensing

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Spin Master Corp.’s licensing, merchandising and app revenue more than tripled to $20.5 million in the first quarter ended March 31, driven by Paw Patrol and app sales by its development studios Toca Boca and Sago Mini, company officials told analysts.

Paw Patrol, which will launch its fifth season on Nickelodeon late this year, accounted for 30% of Spin Master’s $227 million in revenue in the quarter. Its sales of pre-school and girls products, which includes Paw Patrol, rose 6.6% to $84.7 million

Paw Patrol is expected to represent 25% of Spin Master’s annual revenue this year and CEO Ronnen Harary told analysts that the brand’s growth was “a little exceptional” in Q1.

At the same, Spin Master has signed licensing agreements with 25 companies for its Hatchimals brand, with the bulk of the product expected to hit retail starting mid-year, company officials have said. The licensed product is expected to hit Toys R Us and Walmart in July.

Meanwhile, Nickelodeon will begin airing a second season of Spin Master’s “Rusty Rivets” in November with a pre-school construction set expected to launch at retail late this year. Chief Financial Officer Mark Segal declined comment on whether Spin Master will have licensing programs for Rusty Rivets or the relaunch of Bakugan this fall. Spin Master also is weighing a licensing program for Toca Boca, which had signed licensees for the Toca Boca Life series of mobile apps before being acquired by Spin Master last year, company officials said. Any licensing with Toca will likely be character-based and less the lifestyle approach taken previously, Chief Creative Officer Ben Varadi told analysts.

Spin Master’s Q1 net income rose slightly to $10 million as revenue surged 40.8% to $227.7 million, benefitting from the acquisition of Swimways. Minus Swimways, Spin Masters Q1 revenue would have increased 19.8%. Spin Master’s revenue from remote control and interactive characters – a large part of which is tied to Hatchimals – increased 115% to $46.5 million. Sales of boys’ action and high-tech construction products fell $42.8% to $13.2 million; the year-ago quarter featured product tied to the Angry Birds and Secret Life of Pets movies.

Contact:

Spin Master Corp., Mark Segal, Chief Financial Officer, 416- 364-6002 x2333, marks@spinmaster.com