Spin Master Corp T.TOY

Alternate Symbol(s): SNMSF

Consumer Cyclical Specialty Retail

Spin Master Corp. is a Canada-based children’s entertainment company. It is engaged in creating play experiences through its three creative centers: Toys, Entertainment and Digital Games. It has a distribution in over 100 countries. Its brands include PAW Patrol, Bakugan, Kinetic Sand, Air Hogs, Melissa & Doug, Hatchimals, Rubik's Cube and GUND. Its products include preschool, infant & toddler and plush; activities, games & puzzles and dolls & interactive; wheels & action, and outdoor. It creates and produces multiplatform content, through its in-house studio and partnerships with outside creators, including the preschool franchise PAW Patrol and numerous other original shows, short-form series and feature films. It has a presence in digital games, anchored by the Toca Boca and Sago Mini brands, offering open-ended and creative games and educational play in digital environments. Through Spin Master Ventures, it makes minority investments globally in emerging companies and start-ups.

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Spin Master Corp

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Post by retiredcfon Mar 01, 2022 8:42am

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Post# 34470424

TD

This is a flash report so there's a good possibility that they will raise their current target of $58.00. Also put goon on ignore where he belongs. GLTA

Spin Master Corp.

(TOY-T) C$46.42

Q4/21 Results; Solid Outlook; Balance Sheet Awash with Cash Event

Last night, Spin Master ("Spin") reported Q4/21 adjusted EBITDA/EPS that were ahead of our forecasts/consensus, despite pre-releasing key metrics in mid- February. Initial 2022 guidance is slightly ahead of consensus.

Impact: POSITIVE

See Exhibit 1 - Results Summary/Guidance
Q4/21 Summary: Revenue growth across each segment was in line with our estimate, with the beat attributable to a better-than-forecast adjusted EBITDA margin. Admittedly, we were conservative with our distribution/marketing cost forecasts. The strong Q4/21 performance resulted in an annual adjusted EBITDA margin of 20.3%, exceeding the company's guidance of "high-teens".
Guidance: We see three focal points to the release. First, Spin initiated high-level guidance for 2022. The revenue growth outlook is consistent with its historical target of mid- to high-single digits, excluding the Paw Patrol movie distribution revenue in 2021. The adjusted EBITDA margin is forecast to be flat y/y, excluding the ~100bps annual benefit from the movie distribution revenue. To simplify — this translates into a forecast 2022 adjusted EBITDA range of ~$410mm-$425mm, relative to consensus of $405mm.
Financial Position: The Q4/21 FCF was very strong. Although much of the outperformance pertains to working capital, net cash (pre-IFRS 16) at year-end was $563mm, which compares with our forecast of ~$400mm. We view the ability to create shareholder value through its deployment as the second focal point.
Forthcoming Disclosure: Spin is planning to disclose profitability by business segment commencing Q1/22. We surmise this pertains to the outsized growth we envision for its high-margin/multiple digital segment, that with greater disclosure may narrow the valuation gap relative to its peers. We anticipate that future M&A activity may be weighted toward this segment, and we view its growth outlook as the third area of focus for investors.

Outlook/Conclusion: We view the release as positive, largely due to the 2022 growth outlook being ahead of our forecasts/consensus, in addition to its enviable problem of being awash with cash. We maintain that the combination of organic growth, growth through acquisition, and margin improvement should enable Spin to grow in excess of the industry (top and bottom line) looking forward, and in turn narrow the valuation discount to its peers.