Spin Master Corp · TSX:TOY
Spin Master — Investor Presentation (December 2017)
29 slides from Spin Master's investor presentation, December 2017
Slide 1: Investor Presentation December 2017
Investor Presentation December 2017
Slide 2: Strong Management Team
STRONG MANAGEMENT TEAM — oe Executive Officers (From Left to Right) Ronnen Harary, Co-Chief Executive Officer Anton Rabie, Co-Chief Executive Officer Adam Beder, Executive Vice President of Global Licensing and Business Affairs Mark Segal, Executive Vice President and Chief Financial Officer Christo
Slide 3: Disclaimer
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
Slide 4: Investment Highlights
INVESTMENT HIGHLIGHTS Leading global children’s entertainment company with significant scale and reach Diversified portfolio of innovative toys, games, products, brands and entertainment properties A proven and growing global entertainment property pipeline Globally collaborative business model unde
Slide 5: Leading Children's Entertainment Company
LEADING CHILDREN’S ENTERTAINMENT COMPANY About Spin Master 2016 Gross Product Sales by Business Segment • Founded in 1994 • Spin Master creates, designs, manufactures and markets a diverse portfolio of innovative products, brands and entertainment properties • Recognized as market leader in innovati
Slide 6: Significant Scale and Global Reach
SIGNIFICANT SCALE AND GLOBAL REACH Spin Master’s global scale is a valuable asset throughout the entire development cycle 6
Slide 7: Global Toys and Games Market
GLOBAL TOYS AND GAMES MARKET Global Traditional Toys Global Traditional Toys and Games Market Sales(1) and Games Sales by Region(1) Key Regions(1) (US$ billions) (% of 2016(3) Global Toy Sales) (2013 to 2016(3) CAGR %) Middle East and Africa 13% Eastern Europe 11% $85.2 Latin America 9% $80.4 $72.3
Slide 8: Evolving Play Patterns
EVOLVING PLAY PATTERNS • Children’s play and entertainment platforms are converging Traditional Toys Global Content and Games Distribution • Focused on physical, entertainment and digital properties • Technology advancements are enabling the cost‐effective commercialization of next generation toys •
Slide 9: Our Four Key Growth Strategies
OUR FOUR KEY GROWTH STRATEGIES INNOVATE ACROSS THE PORTFOLIO OF DEVELOP EVERGREEN GLOBAL BRANDS AND BUSINESS SEGMENTS ENTERTAINMENT PROPERTIES • Leverage competitive strengths to build • Capitalize on success of current a robust pipeline in all business entertainment properties segments • Develop at
Slide 10: 36-Month Brand Innovation Pipeline
36-MONTH BRAND INNOVATION PIPELINE Processes • 36‐month forward looking revenue pipeline process • Clear accountability and management for each GBU • Monthly executive reviews • Improved global, cross‐functional forecasting process • Pacing models for checks and balances to forecasts • NPD/forecasti
Slide 11: Global R&D Network with Capabilities Driving Innovation
GLOBAL R&D NETWORK WITH CAPABILITIES DRIVING INNOVATION • Global R&D operations and network of 3rd party collaborators – 5 Strategically located internal R&D centres – Toronto, Los Angeles, Hong Kong, China, Tokyo – Collaborative model that leverages external inventors and designers • Deep internal
Slide 12: Approx. 3000 Ideas per Year from Inventors
INVENTORS Approx. 200 INVENTORS GLOBALLY • Our model leverages global Approx. 3000 IDEAS/year base of inventors • Wide funnel drives rigorous process and efficient capital allocation to right products 30‐50 • Collaborative inventor model COMMERCIALIZED/year supporting innovation • Outsources and var
Slide 13: Innovate Across the Portfolio: Owned IP
INNOVATE ACROSS THE PORTFOLIO OWNED IP Remote Control and Interactive Characters Boys Action and High‐Tech Construction Activities, Games & Puzzles and Fun Furniture Pre‐School and Girls Outdoor Continued innovation across the portfolio leading to sustainable growth 13
Slide 14: Innovate Across the Portfolio: Licensed IP
INNOVATE ACROSS THE PORTFOLIO LICENSED IP Remote Control and Interactive Characters Boys Action and High‐Tech Construction Activities, Games & Puzzles and Fun Furniture Pre‐School and Girls Strong licenses support growth for 2017 and beyond 14
Slide 15: Develop Evergreen Entertainment Properties
DEVELOP EVERGREEN ENTERTAINMENT PROPERTIES Proven and growing Strategies entertainment property pipeline • Leverage current properties • Ability to produce, develop • At least 1 new property per year and monetize properties • Continue to build broadcast through product sales and relationships licens
Slide 16: Increase Sales in Developed and Emerging International Markets
INCREASE SALES IN DEVELOPED AND EMERGING INTERNATIONAL MARKETS International Growth Strategies Geographic Sales • Selectively add sales and marketing personnel in current International sales and marketing Global Toy Industry(1) offices • Open new company‐owned sales and marketing offices in certain
Slide 17: Leverage Global Platform Through Strategic Acquisitions
LEVERAGE GLOBAL PLATFORM THROUGH STRATEGIC ACQUISTIONS Spin Master will continue to seek strategic, accretive, favorably priced acquisitions that improve our growth profile Acquisition Criteria Proven Track Record • Intellectual property / brands • 10 pre‐IPO acquisitions • Opportunity to innovate •
Slide 18: Recent Strategic Acquisitions
RECENT STRATEGIC ACQUISITIONS • Acquired October 2015 ‐ Leader in licensed and value channel games and puzzles in North America Growth in fast‐growing • Gives Spin Master #2 position in Games & Puzzles segment Games & Puzzles category • Opportunity to scale internationally using Spin Master's global
Slide 19: Spin Master Monetization Options
SPIN MASTER MONETIZATION OPTIONS Channel PHYSICAL GOODS CONTENT Toys & Games TV shows , Digital mobile apps, digital toys Can be proprietary or licensed IP Revenue Stream Selling to traditional Selling to 3rd party Licensing proprietary Licensing to Selling mobile & online retail distributor IP to 3
Slide 20: Financial Highlights
FINANCIAL HIGHLIGHTS Gross Product Sales (1) Gross Profit (1) (US$ millions) (US$ millions) $1,255 $597 $983 $812 $459 $661 $356 $577 $519 $317 $245 $248 2013 2014 2015 2016 Q3‐2016 Q3‐2017 2013 2014 2015 2016 Q3‐2016 Q3‐2017 YoY YoY n/a 40.7% 21.0% 27.7% n/a 27.4% n/a 46.3% 28.1% 30.0% n/a 27.9% Gr
Slide 21: Diversified Portfolio of Innovative Brands and Products
DIVERSIFIED PORTFOLIO OF INNOVATIVE BRANDS AND PRODUCTS Business Segment Gross Product Sales (US$ millions) All Other Products Bakugan / Zoobles # of Product Lines NPD 2010 2016 SUPERCATEGORIES 2010 $144 (16%) Remote Control and 1 Vehicles, Youth & 6 Interactive Characters 2016 $283 (22.5%) Electron
Slide 22: Strong Free Cash Flow and Financial Position
STRONG FREE CASH FLOW AND FINANCIAL POSITION (US$ millions) Q3‐2017 Q3‐2016 2016 2015 Cash Flow from Operating Activities Before $166.6 $132.2 $160.3 $105.7 Working Capital Changes Less: Cash Flow from Investing Activities ($32.2) ($103.5) ($172.3) ($93.6) Plus: Cash Used for Brand and Business $10.
Slide 23: Creating Shareholder Value
CREATING SHAREHOLDER VALUE Spin Master is focused on consistent, effective and balanced capital deployment • Internal Investments Innovation Geographic expansion Entertainment Talent • Strategic M&A • Returns to Shareholders Near‐term focus on capital growth Effective capital deployment will continu
Slide 24: Slide 24
Slide 25: Appendix
APPENDIX 25
Slide 26: A Global Phenomenon
A Global Phenomenon Development • Developed internally through rolling 36‐month brand innovation pipeline • Supported by inventors • Utilizes interactive robotics technology to “hatch” • Unique play pattern relies on child’s nurturing to hatch egg • Extensive pre‐marketing work with retailers • Inno
Slide 27: History of Success in Innovation
HISTORY OF SUCCESS IN INNOVATION Case Study: Air Hogs brand Case Study: Zoomer brand 1998 Today 2013 Today ZUPPIES HELIX X4 Zoomer Dog ZOOMER DINO VECTRON KITTY SKY STUNT JURASSIC SKY SHARK ZERO WORLD GRAVITY SHARP CHOMPLINGZ SHOOTER G2 Inventions presented Two British inventors Spin Master with a v
Slide 28: Repositioned for Sustained Growth
REPOSITIONED FOR SUSTAINED GROWTH Strategic Initiatives to Position CAGRs 10‐Yr 2‐Yr Spin Master for Growth Total Gross Product Sales 11% 24% • Founders refined roles and hired a Global President • Reduced headcount by 35% US$ Millions $1,255 • Formed Global Business Units (GBUs) to focus resources
Slide 29: Properties by Channel and Category
PROPERTIES BY CHANNEL AND CATEGORY Channels Intellectual Pre‐School Remote Activities, Boys Action Outdoor Main Property & Girls Control & Games, & High‐Tech Distribution Source Interactive Puzzles & Construction Channels Fun Furniture Physical Toy Proprietary IP ‐ Paw Patrol ‐ Air Hogs line ‐ Kinet