Spin Master pivots past supply chain problems

by Brett Bundale THE CANADIAN PRESS

Canadian toymaker Spin Master Corp. has twisted its way past supply chain problems to deliver goods to retailers ahead of the holidays, the company’s most lucrative sales period of the year.

The children’s entertainment powerhouse posted record revenues in its third quarter, sending its profits soaring 56 percent and positioning Spin Master for a strong final quarter of the year.

“We are pleased with our strong performance, which puts us on very solid footing leading into the holiday season,” Max Rangel, Spin Master’s global president and chief executive officer, told analysts during a conference call Thursday.

The company reported a double-digit increase in toy gross product sales, growing 16 percent in three months ended Sept. 30, he said.

Stick handling

Rangel attributed the success to Spin Master’s handling of disruptions that continue to rock the global supply chain, a strategy he said will continue to pay off in the company’s final quarter of 2021.

“We pulled forward finished goods production to increase capacity and we invested in more tooling to dual source manufacturing of certain product lines,” he said.

“We leveraged our diversified third-party manufacturing footprint across China, Vietnam, India and Mexico to optimize availability and we worked with our logistics providers to secure access to additional ports and shipping lanes.”

He added: “We are working very closely with our supply chain teammates because we have to make sure that the products are on shelves.”

Mark Segal, Spin Master’s chief financial officer, said the “macro supply chain issues” include waves of COVID-19 in China and Vietnam, container availability, port delays on the West Coast, and trucking capacity in North America.

“We haven’t yet seen a significant improvement in those factors,” he told analysts. “We’ve been managing around them and our supply chain team and commercial teams have done an absolutely outstanding job navigating those choppy waters and that’s been one of the reasons why we’ve had such strong results.”

The company ushered in price increases for its fall toy line to help offset the rising cost of raw materials like plastic resins and electronic chips as well as higher ocean freight costs, Rangel said.

Revenues up

Meanwhile, Spin Master digital games and entertainment revenues continue to climb.

The company, which reports in U.S. dollars, said Wednesday it earned US$135.4 million or US$1.29 per diluted share in its third quarter, up from US$86.8 million or 83 cents per share a year earlier.

Adjusted profits were US$132.6 million or US$1.26 per share, compared with US$95.1 million or 91 cents per share in the same quarter of 2020.

Revenues were US$714.5 million, up 25 percent from US$571.6 million in the prior year.

The company was expected to report 88 cents per share in adjusted profits on US$609.2 million of revenues, according to financial data firm Refinitiv.

Spin Master shares were up more than 14 percent on Thursday, trading at $47.95, up $6.05 from the previous day’s close of $41.90.