New York Toy Fair February 16, 2016

Transcription

1 New York Toy Fair February 16, 2016

2 DISCLAIMER FORWARD-LOOKING INFORMATION Certain statements, other than statements of historical fact, contained in this presentation constitute "forward-looking information" within the meaning of certain securities laws, including the Securities Act(Ontario), and are based on expectations, estimates and projections as of the date on which the statements are made in this presentation. The words "plans", "expects", "projected", "estimated", "forecasts", "anticipates", "indicative", "intend", "guidance", "outlook", "potential", "prospects", "seek", "strategy", "targets" or "believes", or variations of such words and phrases or statements that certain future conditions, actions, events or results "will", "may", "could", "would", "should", "might" or "can", or negative versions thereof, "be taken", "occur", "continue" or "be achieved", and other similar expressions, identify statements containing forward-looking information. Statements of forward-looking information in this presentation include, without limitation, statements with respect to: the launching of new products, brands and entertainment properties; the Company's operating momentum, financial position, cash flows and financial performance; the Company's future growth, drivers for such growth, and the successful execution of its strategies for growth; and the seasonality of Gross Product Sales and forecasted organic Gross Product Sales and Adjusted EBITDA Margins. Forward-looking statements are necessarily based upon management's perceptions of historical trends, current conditions and expected future developments, as well as a number of specific factors and assumptions that, while considered reasonable by management as of the date on which the statements are made in this presentation, are inherently subject to significant business, economic and competitive uncertainties and contingencies which could result in the forward-looking statements ultimately being incorrect. In addition to any factors and assumptions set forth above in this presentation, the material factors and assumptions used to develop the forward-looking information include, but are not limited to: the ability of the Company to maintain its distribution capabilities; the Company's ability to continue to build and maintain strong, collaborative relationships; the Company's status as a preferred collaborator; the culture and business structure of the Company will support its growth; the ability to expand the Company's portfolio of owned branded intellectual property and successfully license it to third parties; the expanded use of advanced technology and robotics in the Company's products; the increased access of entertainment content on mobile platforms; fragmentation of the market creates acquisition opportunities; maintenance of the Company's relationships with its employees; and the continued involvement of the Company's founders and that the risk factors noted below, collectively, do not have a material impact on the Company. By its nature, forward-looking information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. Known and unknown risk factors, many of which are beyond the control of the Company, could cause actual results to differ materially from the forward-looking information in this presentation. Such risks and uncertainties include, without limitation, the factors discussed under "Risk Factors" in the Company's public filings. These risk factors are not intended to represent a complete list of the factors that could affect the Company and investors are cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forwardlooking statements. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements are provided for the purpose of providing information about management's expectations and plans relating to the future. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, or to explain any material difference between subsequent actual events and such forward-looking statements, except to the extent required by applicable law. NON-IFRS MEASURES In addition to using financial measures prescribed by IFRS, references are made in this presentation to Adjusted EBITDA, Adjusted Net Income, EBITDA, Free Cash Flow, Gross Product Sales, Sales Allowances and Total Gross Sales, which are non-ifrs financial measures. Non-IFRS financial measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. For further details on these non-ifrs financial measures, see Non-IFRS Financial Measures in the Company s public filings. CERTAIN OTHER MATTERS Any graphs, tables or other information demonstrating the historical performance of the Company or any other entity contained in this presentation are intended only to illustrate past performance of such entities and are not necessarily indicative of future performance of the Company or such entities. All financial disclosure in this presentation is in U.S. dollars, unless otherwise noted. Capitalized terms and abbreviations not otherwise defined herein have the meaning assigned to them in the Company s public filings. 2

3 LEADING CHILDREN S ENTERTAINMENT COMPANY Spin Master creates, designs, manufactures and markets a diversified portfolio of innovative products, brands and entertainment properties 2014 Gross Product Sales by Business Segment Business is grouped into four segments Approximately US$812 million in Gross Product Sales in year Gross Product Sales CAGR of 12% Adjusted EBITDA of US$112 million in global offices and sales in over 60 countries Recognized as market leader in innovation Pre-School and Girls 20% Activities, Games & Puzzles and Fun Furniture 23% Boys Action and High- Tech Construction 24% Remote Control and Interactive Characters 33% 3

4 GROSS PRODUCT SALES BY BUSINESS SEGMENT (US$ millions at Sept. 30, 2015) Remote Control and Interactive Characters $144 $162 $138 $158 $269 $ YTD 2015 # of Product Lines Boys Action and High-Tech Construction Activities, Games & Puzzles and Fun Furniture $485 $258 $218 $192 $108 $134 $144 $107 $ YTD 2015 $170 $192 $163 $140 $191 $ YTD $237 Pre-School and Girls $120 $143 $72 $71 $43 $39 $144 $ YTD 2015 Diversified and evolving portfolio leading to sustainable and predictable growth All Other Products Bakugan / Zoobles 4

5 POSITIONED FOR SIGNIFICANT DIVERSIFIED GROWTH Strategies for sustainable growth 5

6 INNOVATE ACROSS THE PORTFOLIO, EXPANDING CURRENT BUSINESS SEGMENTS Innovation Licensing Advanced Technology Entertainment Remote Control and Interactive Characters Opportunities for development Boys Action and High-Tech Construction Opportunities for development Activities, Games & Puzzles and Fun Furniture Pre-School and Girls strategies currently employed; under development Leveraging competitive strengths to drive innovation and create a diversified and robust pipeline 6

7 INNOVATION Remote Control and Interactive Characters Boys Action and High-Tech Construction Activities, Games & Puzzles and Fun Furniture Pre-School and Girls Continued innovation across portfolio leading to sustainable and predictable growth 7

8 LICENSING Remote Control and Interactive Characters Boys Action and High-Tech Construction Activities, Games & Puzzles and Fun Furniture Pre-School and Girls Strong licenses for 2016 support growth 8

9 ADVANCED TECHNOLOGY Continued Focus on Cutting Edge Advanced Technology 9

10 DEVELOP EVERGREEN GLOBAL ENTERTAINMENT PROPERTIES LIBRARY Strategies Season 2 Season 3 Season Season 1 (1) Fall Launch Leverage current properties 1-2 new properties per year Re-launch Bakugan Continue to leverage broadcast relationships Broadcaster: Global Reach: Nickelodeon Treehouse 160 countries Broadcaster: Global Reach: Nickelodeon Treehouse - Generate new revenue streams Robust pipeline of owned entertainment content provides attractive opportunities for revenue and earnings growth (1) In production; not broadcasted yet 10

11 GLOBAL TOYS AND GAMES MARKET Global Traditional Toys and Games Market Sales (1) (US$ billions) Global Traditional Toys and Games Sales by Region (1) (% of 2014 Global Toy Sales) Key Regions (1) (2012 to 2014 CAGR %) Asia Pacific 7% $72.7 $75.6 $78.4 $81.0 $85.1 Asia Pacific 24% Latin America 10% US$85.1B Latin America 7% Western Europe 2% North America 2% U.S. Key Categories (2) (2011 to 2014 CAGR %) Western Europe 25% North America 28% 28% of Spin Master s 2014 Gross Product Sales are outside of North America Youth electronics (robotics) Building sets (high-tech construction) 21% 13% Arts & Crafts 10% Large and growing industry 72% of global sales outside North America Many regions / segments growing faster than industry (1) Source: Euromonitor International; data provided in current (nominal) terms to include inflation, US$ 2014 exchange rates (2) Source: NPD 11

12 INCREASE SALES IN DEVELOPED AND EMERGING INTERNATIONAL MARKETS International Growth Strategies Selectively add sales and marketing personnel in current international sales and marketing offices Global Toy Industry (1) 2014 International Sales Open new company-owned sales and marketing offices in certain strategic markets Focus on increasing business with current distributors North America, $24B (28%) Int l, $61B (72%) Int l, $223M (28%) (2) North America, $589M (72%) Build 3 rd party distributor networks in markets where Spin Master does not have an established presence Ability to increase international sales to 35-40% by leveraging global platform (1) Source: 2014 Global Traditional Toys and Games Sales, Euromonitor (2) Spin Master s 2014 Gross Product Sales outside of North America 12

13 LEVERAGE GLOBAL PLATFORM THROUGH STRATEGIC ACQUISTIONS Proven Track Record (Select Assets) Recent Acquisitions Leading developer of games & puzzles Founded in 1948; acquired October, 2015 Over US$50 million in 2014 revenue Editrice Giochi Italy One of oldest game companies in Italy with games as Risiko, Italy's most popular strategic game, and Scarabeo, a leading word game Iconic Arts and Crafts Brand Over 50 years old; acquired February, 2016 Acquisition Criteria Intellectual properties / brands Opportunity to innovate Leverage global infrastructure New categories International markets Ability to grow and expand margins Well positioned with financial flexibility and deep industry relationships; proven ability to integrate acquisitions and drive value 13

14 CONCLUSION Strong foundation rooted in innovation Exciting pipeline of toys and entertainment offerings Underleveraged global footprint accommodates substantial growth 14

15 New York Toy Fair February 16, 2016