Spin Master Corp. will seek to expand its outbound licensing business this year, building on the strong sales of Hatchimals and seeking to land agreements for other properties including Etch-A-Sketch, company executives told analysts.

Spin Master’s royalty and merchandising business was part of the company’s “other revenue” that increased 58.3% to $12.3 million in Q4 ended Dec. 31. For the year, that revenue rose 149.5% to $47.9 million. The segment also includes ap revenue from Toca Boca and Sago Mini, and program distribution.

In addition to Hatchimals, Spin Master expects continued strong sales of Paw Patrol-related products. Paw Patrol products accounted for 25-30% of the company’s 2016 revenue of $1.15 billion, but are expected to pull back to around 25% this year, company executives said.

Spin Master’s “other” revenue is projected to register mid- to high single-digit percent gains. “We will be looking at some licensing out” of properties this year and will see growth, just not on the order of 2016,” CFO Mark Segal said.

The company launched outbound licensing for Hatchimals earlier this year with a publishing deal with Penguin Random House, and also is seeking licensing agreements for Etch-A-Sketch as it introduces new products, the first since acquiring the brand from Ohio Arts in 2015.

Spin Master also will release a collection of toys late this year tied to its “Rusty Rivets” TV series, which was renewed for a second season on Nick Jr.. The company also will release new ZhuZhu Pets products this fall and has a new Bakugan series and toys in production, Co-CEO Anton Rabie said.

Meanwhile, Spin Master swung to a $2.7 million Q4 profit from a $13.3 million loss a year earlier as revenue jumped 30.9% to $338.4 million.

Contact:

Mark Segal, Chief Financial Officer, 416-364-6002 x2333, MarkS@SpinMaster.com