Spin Master Corp.

Good morning, ladies and gentlemen, and welcome to Spin Master's Financial Results Conference Call for the fourth quarter and full year 2024 conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press the star zero for the operator. This call is being recorded on Tuesday, February 25, 2025. I would now like to turn the conference over to Sophia Bisukis. Please go ahead.

Thank you and good morning. Welcome to Spin Master's Financial Results Conference call for the fourth quarter and full year 2024. I'm joined this morning by Max Rangel, Spin Master's Global President and CEO, and Mark Siegel, Spin Master's Chief Financial Officer. For your convenience, the press release, MD&A, and consolidated financial statements are available on the investor relations section of our website at spinmaster.com and on Cedar Plus. Before we begin, please note that remarks on this conference call may contain forward-looking statements about Spin Master's current and future plans, expectations, intentions, results, level of activity, performance, goals or achievements, and any other future events or developments. Forward-looking statements are based on information currently available to management and on estimates and assumptions made based on factors that management believes are appropriate and reasonable in the circumstances. However, there can be no assurance that certain estimates or assumptions will prove to be correct. Many factors could cause actual results to differ materially from those expected or implied by the forward-looking statements. As a result, Spin Master cannot guarantee any forward-looking statements will materialize and you are cautioned to not place undue reliance on these forward-looking statements. Except as may be required by law, Spin Master is no obligation to update or revise any forward-looking statements whether because of new information, future events, or otherwise. For additional information, these assumptions and risks, please consult our cautionary statements regarding forward-looking information in our earnings release dated February 24, 2025. And please note that Spin Master reports in U.S. dollars and all other amounts today are expressed in U.S. currency unless otherwise noted. I would like to turn the call over to Max.

Thank you, and good morning, and thank all of you for joining us. Thanks to the collective efforts of our global team across our three creative centers, we delivered several new milestones for the company in 2024, including achieving total revenue of $2.3 billion, an increase of 18.8%, including incremental revenue of $375 million from Elise and Doug. Fourth quarter revenue was just under $650 million, an increase of 29%, including $136 million from Elise and Doug. We were pleased with MND's top line performance for 2024, which was in line with expectations. Our investment in MND deepens our already strong presence in the key preschool toy category, extends our reach in childhood education and play, and supports our vision to reimagine everyday play. Integration of MND is progressing well, and we remain focused on revenue growth and cost synergies. Let's turn to our toy POS performance. We started off the fourth quarter with very strong results at retail in the US, growing more than three times faster than the industry in October, including double-digit growth for Melissa and Doug. However, we saw lower-than-expected consumption in the weeks following Black Friday, which reduced sell-through and replenishment. This past year, we introduced several new lines and expanded our core and license offerings. Some of these highlights included the launch of Toys for Unicorn Academy, which became the top new gaming property in Europe in 2024 per Sharkana, and the expansion of our Bitsy digital pet with the Magicals and Disney license editions. Bitsy was the number two brand in youth electronics globally for both the fourth quarter in 2024 and was also the number one growth brand for the super category per Sharkana. In 2025, we are further building this exciting play experience with innovative ways to engage and new licenses, including Jurassic World and Wizarding World. Licensed products represented 29% of our total portfolio revenue, thanks to Ms. Rachel, Monster Jam, Wizarding World, Gabby's Dollhouse, among others. Monster Jam made significant gains in 2024, growing POS by 13.2% globally per cercana. Monster Jam was the number one license in the vehicles super category for both the fourth quarter and 2024. Q4 was our first quarter with the Miss Rachel toy line on the shelf, and the line quickly gained strong traction, becoming the number one new license in toys within the infant toddler preschool super category in the US. The spring line is off to a great start, supported by curated content from Miss Rachel as part of our ongoing partnership. The combination of Spin Master and M&D has established us as the number one manufacturer for preschool toys per cercana. Paw Patrol POS declined both in Q4 and 2024, but Paw Patrol remained the number one preschool toy property globally for both periods. Our Paw Patrol rescue wheels figure and vehicle assortment was the number one new item in the infantile or preschool category in both Q4 and 2024 in the U.S. For 2025, we've introduced a Pauline design to offer the same play value at lower price points to match the trend towards lower retail price points in the segment. Value will be an important driver for consumers in 2025 as they continue to experience pressure on discretionary spending. We're continuing our strategic pursuit of the value channel to increase our share of these retailers. Our value channel storyline is now available in thousands of doors across US, Canada, and Europe and our SKU count will nearly double in 2025. Turning to entertainment, revenue decreases planned by $13.9 million for Q4 and $31 million for 2024 due to a slower pace of content deliveries this year compared to 2023. Paw Patrol continues to resonate with audiences globally and has maintaining status as one of the top preschool series in the world. Later this month, we will announce more details regarding our third Paw Patrol movie, which will launch in theaters in July, 2026, and which is starting to build momentum. In partnership with Nickelodeon and Paramount, we will also be announcing new seasons for both Paw Patrol and Rubble and Crew. Unicorn Academy is winning globally with fans, taking the number one spot for girls aged six to eight per Netflix September, 2024 report. We just announced two specials, which will drop on Netflix in 2025, and we will be expanding linear distribution of the series this year. We are continuing to expand our feature film slate with the Bakugan live-action film in development. Brad Payton is signed on to direct, write, and produce. A global multi-platform franchise, Bakugan has captured the imagination of millions of kids since it launched in 2007. We have co-produced nearly 300 Bakugan TV episodes, and our toy line has generated well over a billion in sales worldwide since it first launched. we are going to leverage the deep multi-generational fan base by bringing the franchise to the big screen. Turning to digital games, revenue for the fourth quarter increased by 13.5% due to high in-game purchases for Toca Poca World and a growth in subscription for Picnic and Paw Patrol Academy. We have continued to transition standalone app subscribers into Picnic, which is helping drive up our recurring revenue base. Fourth quarter improvement in Toca Boca World from a tough quarter three was anchored in the release of two new features and new content, which increased engagement with our players. I'm pleased to share that these measures are having a positive impact on performance. Fans loved the new features, and they were well-timed for the holiday period, during which we typically see kids spending more time on their devices. We ended Q4 with $61.2 million. monthly active users up from 50.5 end of Q3 and 62 million end of 2023. In Q4, we saw a steady continuation in the growth of subscriber base, and we ended 2024 with approximately 455,000 subscribers, up 14% over 2023. We have continued to transition standalone app subscribers into Picnic, which is helping drive our recurring revenue base. Unfortunately, the improvement we saw in Q4 was not enough to offset the declines we experienced earlier in the year, resulting in revenue decline by just over $9 million for the 2024 period. We are confident that with a continued rollout of new features, content, and collaborations, Toca Boca World will continue its upward momentum in 2025. Both Toca Boca World and POA Academy were just named as winners of the Kids Screen Awards, Best Alternative Kids Digital Game, and best learning app respectively i want to comment on the investment that we made in digital games development pipeline the market is competitive and introducing new titles at scale is challenging while we develop a high caliber match 3 game with rubik's match the cost to acquire new users in this older demographic segment relative to revenue did not generate our expected returns we made the difficult decision to wind down the north light studio and will be halting rubik's match development This will allow us to focus and maximize the significant growth opportunities we see both with Toca Boca and Picnic. Contextually for 2025, there are numerous points of volatility we are watching. The two primary ones are the health of the global consumer and potential U.S. tariffs on China-sourced toys. We are looking at our supply chain options carefully as well as considering pricing in order to mitigate the impact. However, our team remains focused on growth We are very excited about the lineup we are introducing within TOI. There will be several global theatrical releases driving growth and for which we have licensed products including Superman, How to Train Your Dragon, Jurassic World, and Gabby's Dollhouse. 2025 will be a foundational year for us to increase Melissa and Doug's penetration in key international markets. We will continue to expand our early childhood reach with Ms. Rachel. Beyond TOI, our entertainment creative center has a robust slate for 25 with Paw Patrol and Roblin Crew and is engaging new audiences with Unicorn Academy and Vita the Vet. We have strong digital games lineup for 25 with new content and features on Toca Boca World and the integration of Paw Academy and other content into Picnic, providing kids and parents with further excitement and value and access to digital learning. These combined with the improvements in retention and conversion features will drive subscriber growth. We are highly focused on executing our long-term growth strategy, and we continue to make significant progress by leveraging our deep expertise in play, well-established global network, and innovation capability to unlock growth and inspire future generations. We're confident in the strength of our diversified portfolio and our ability to drive long-term growth and create shareholder value. Now, I will turn the call over to Mark.