Earnings call transcript: Spin Master Q2 2025 misses earnings, stock drops

Spin Master Corp reported disappointing earnings for Q2 2025, with an earnings per share (EPS) of -$0.07, missing the forecasted $0.126 by a significant margin. Revenue also fell short, coming in at $371 million against a forecast of $426.74 million. Following the earnings release, Spin Master’s stock declined by 9.35% in pre-market trading, reflecting investor concerns over the company’s financial performance.

Key Takeaways

• Spin Master missed both EPS and revenue forecasts significantly.
• The stock dropped 9.35% in pre-market trading following the earnings announcement.
• Revenue from the digital games segment grew by 33%, showing potential for future growth.
• The company is focusing on reducing China-based production and optimizing its supply chain.

Company Performance

Spin Master Corp experienced a challenging Q2 2025, with total revenue declining by 2.7% compared to the previous year. Despite this, the company reported over $400 million in revenue and maintained a year-to-date growth rate above 4%. The digital games segment was a bright spot, with revenue growth of 33%, reaching $46.3 million. However, adjusted gross profit fell to $210 million, down $13.8 million year-over-year, and adjusted EBITDA decreased to $29 million from $54 million in the prior year.

Financial Highlights

• Revenue: $371 million, down from $426.74 million forecasted
• Earnings per share: -$0.07, missing the forecast of $0.126
• Adjusted gross profit: $210 million, down $13.8 million year-over-year
• Adjusted EBITDA: $29 million, compared to $54 million in the prior year

Earnings vs. Forecast

Spin Master reported an EPS of -$0.07, significantly lower than the expected $0.126, resulting in an EPS surprise of -155.56%. Revenue also fell short at $371 million, compared to the forecasted $426.74 million, marking a revenue surprise of -13.06%. This considerable miss highlights challenges the company faces amidst market uncertainties.

Market Reaction

Following the earnings announcement, Spin Master’s stock price dropped by 9.35% in pre-market trading, reflecting investor disappointment. The stock’s last close was at $24.93, and the decline positions it closer to its 52-week low of $20.3, indicating a cautious market sentiment.

Outlook & Guidance

Spin Master has not reinstated formal guidance due to ongoing tariff and market uncertainties. The company anticipates potential destocking of $70–90 million but remains focused on returning to profitable growth by 2026. Upcoming entertainment properties, such as the PAW Patrol movie, are expected to drive growth in the second half of the year.

Executive Commentary

"We are working towards returning to profitable growth and we have all the building blocks in place to get us back there," stated Jonathan Reuter, CFO. CEO Christina Miller emphasized, "We are positioned as an integrated children’s entertainment company," highlighting the company’s strategic focus on core platforms and innovation. InvestingPro data supports this outlook, with analysts forecasting positive earnings for the year and net income growth expectations. The company has also demonstrated commitment to shareholder returns, having raised its dividend for three consecutive years.

Discover the complete financial story with InvestingPro’s comprehensive research report, available along with 1,400+ other detailed company analyses.

Risks and Challenges

• Supply chain optimization: The company aims to reduce China-based production from 64% to 37%.
• Tariff impacts: Ongoing tariff mitigation strategies are crucial for cost management.
• Market uncertainties: The lack of formal guidance reflects uncertainties in the market environment.
• Competition: Maintaining or growing market share in key toy categories remains a challenge.
• Inventory management: Optimizing inventory levels is essential for operational efficiency.

Q&A

During the earnings call, analysts inquired about the impact of tariffs and the company’s mitigation strategies. Spin Master emphasized its focus on core platforms and innovation, as well as potential cross-creative center collaborations to drive future growth.

Full transcript - Spin Master Corp (TOY) Q2 2025:

Conference Operator: Good morning, ladies and gentlemen, and welcome to the Spin Master Corp Second Quarter twenty twenty five Results Conference Call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. If at the needed time during this call, require immediate assistance, please press 0 for the operator. This call is being recorded today, Thursday, 07/31/2025.

I would now like to turn the conference over to Sophia Bazookas. Please go ahead.

Sophia Bazookas, Investor Relations, Spin Master Corp: Thank you. Welcome to Spin Master’s financial results conference call for the 2025. I am joined this morning by Christina Miller, CEO and Jonathan Reuter, Spin Master’s CFO. For your convenience, the press release, MD and A and consolidated financial statements are available on the Investor Relations section of our website at spinmaster.com and on SEDAR plus Before we begin, note that remarks on this conference call may contain forward looking statements about Spin Master’s current and future plans, expectations, intentions, results, levels of activity, performance, goals, or achievements, and any other future events or developments. Forward looking statements are based on currently available information and assumptions that management believes are appropriate reasonable in the circumstances.

However, there can be no assurance that such assumptions will prove to be correct and many factors could cause actual results to differ materially from those expected or implied by the forward looking statements. As a result, you are cautioned not to place undue reliance on these forward looking statements. For additional information on these assumptions and risks, please consult the cautionary statements regarding forward looking information in our earnings release dated 07/31/2025. Except as may be required by law, Spin Master disclaims any intention to update or revise any forward looking statements, whether because of new information, future events or otherwise. 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 now like to turn the conference call over to Christina.

Christina Miller, CEO, Spin Master Corp: Good morning, everyone. I’m pleased to join my first official analyst call since joining as CEO earlier this month. I have the opportunity to lead an incredible company that creates play experiences that brings joy to kids and families around the world. Spin Master has a diverse portfolio of brands that we’ve built, acquired, partnered with. Brands like PAW Patrol, Melissa and Doug, Monster Jam, How to Train Your Dragon, Toca Boca provide us with a strong foundation from which to scale and reach more consumers, audiences and players globally.

Turning to our performance this quarter. As expected, we faced some headwinds. Total revenue declined by 2.7% as retailer buyer patterns within toys shifted response to evolving tariff rates in The U. S. Our decrease in toy revenue was partially offset by double digit growth in games, demonstrating the strength of our three creative center approach.

In the second quarter, tariffs caused retailers to temporarily pause orders and in some cases delay holiday set dates, negatively impacting selling. Despite these shifts, we saw strength in key toy categories both in revenue and at point of sale, enabling us to maintain or grow share for many of the categories in which we compete. Looking at our total addressable market, we grew POS by 7.4% in the quarter, ahead of the industry, which grew 3.7% for comparable categories. We retained our leadership position in infanttoddler and preschool categories thanks to a combination of owned and licensed IP with POS growing 3% compared to market which grew 2%. Per Sicana, the inclusion of Melissa and Doug, Ms.

Rachel, within our portfolio helped to strengthen our market position. Our licensed business grew 43.1% in the quarter, outpacing industry growth, per Surcana, thanks to a roster of popular licensed toy partnerships, including Monster Jam, How to Train Your Dragon, Ms. Rachel, and Gabby’s Dollhouse. Speaking of Monster Jam, this brand is fueling consistent growth with us. Within the vehicle category, POS from Monster Jam grew 13.1 in the quarter, enabling us to take share, maintaining its position as number two in the category.

Looking forward, we have a strong lineup of toys just hitting shelves now and into the fall for the holiday season. We have strong innovation across our portfolio, including key brands like Tech Deck, Melissa and Doug, PAW Patrol and Kinetic Sand. In addition to our owned IP, we have licensed toys for films including Jurassic World, How to Train Your Dragon, Superman, which have had successful box office openings, and Gabby Solhaus slated for September. Moving to our own entertainment studio. We’re progressing against our strategy to create content and engage our audience wherever they are.

While entertainment revenue declined in the quarter as expected, we expanded distribution of key properties including a second window deal with Nickelodeon in The U. S. For Beat of the Vet and Unicorn Academy, both of which debuted this month. Our last Unicorn Academy special dropped on Netflix on April 9 and beat our expectations for audience engagement, outpacing the competition. Unicorn Academy generated seventy plus hours viewed globally in the 2025.

All previously released chapters for the series together with the new special landed into the girls top five viewed content for each one. We’re continuing to invest in the health of PAW Patrol. Production of the movie for 2026 is well in hand, and we are delivering two specials this year, one in October and our first ever Christmas special, which will air on both Nickelodeon and CBS Primetime. Beyond our partnership with Paramount, in support of our goal of reaching kids wherever they watch, and for the first time ever, PAW Patrol debuted on Netflix in The U. S.

This July, following a successful run of Rubble and Crew on the streaming platform earlier this year. Digital games had a strong quarter with double digit growth and have an engaged player network with 58,000,000 active users. Over the past year we’ve taken steps to focus on the strength of our anchor platforms, Tokaboka, World and Picnic. As such, we’ve made the strategic to pivot our focus away from Tokaboka days to double down on accelerating Tokaboka world. Building social multiplayer experience within Tokaboka universe has provided us with valuable insights.

We are now leveraging those learnings and tech we’ve developed to future proof the Tokavoka franchise. These shifts are beginning to yield positive results, giving us confidence in our ability to scale in the future. More broadly, we’re making investments to expand live services capabilities, deepen performance marketing, and our strategic focus has been to diversify our revenue streams across our three creative centers. And we’ve only just begun to truly capitalize on our deep catalog of content, brands and gaming platforms. We have potential to deliver long term growth by fully harnessing cross creative center collaboration, staying grounded in consumer first mindset, and bringing joy through engaging characters, stories, digital world and physical toys will ensure we are a mainstay in the lives of kids and families everywhere.

With that, I turn it over to Jonathan.

Jonathan Reuter, CFO, Spin Master Corp: Thank you, Christina, and good morning, everyone. This quarter’s performance highlights the strength and resilience of our diversified portfolio across all three creative centers. We delivered revenue of over $400,000,000 in the quarter during this complicated and challenging macroeconomic environment, bringing our year to date growth rate above 4%. Importantly, we delivered solid performance within our total addressable market, gaining or holding market share across the majority of our toy revenue continue to build momentum in our digital games business. Adjusted gross profit was $210,000,000 down $13,800,000 year over year, reflecting lower toy revenue due to the temporary slowdown in U.

S. Retail early in the quarter, partially offset by growth in the digital games segment. Adjusted gross margins declined 190 basis points, also driven by the performance of the toy segment, which I will elaborate on shortly. Adjusted SG and A increased by $9,100,000 to $196,600,000 or 49.1 percent of revenue due to investments in marketing and higher selling expenses stemming from an increase in partner licensed brand sales. Offsetting these higher expenses were realized savings reflecting ongoing cost synergies related to the acquisition of Melissa and Doug and distribution driven operational efficiencies.

Taken together, lower gross profit and these targeted investments contributed to adjusted EBITDA of $29,000,000 as compared to $54,000,000 in the prior year. Now before providing an overview of our creative center performance, I’ll take a few moments to update you on the meaningful progress the team has made on optimizing our long term cost and operating structure as we navigate through this dynamic environment. Beginning with Melissa and Doug, we have achieved our target run rate cost synergies ahead of plan. The integration of Melissa and Doug continues to yield positive results with over 5,600,000 in cost synergies in Q2, which now represents $26,500,000 in annualized run rate cost synergies. In addition, significant progress was also made against our tariff mitigation plan shift.

We expect Q3 to represent approximately 36% of our full year GPS compared to 41% last year. Additionally, gross product sales were impacted by the timing of key planogram resets, which shifted into the second half of the year. We estimate this had an impact of approximately $25,000,000 in the quarter. Within our toy categories, we saw strong performance in preschool, infanttoddler and plush categories led by increases in Melissa and Doug and Miss Rachel, as well as solid growth in the Wheel of Action category supported by increases in DreamWorks Dragons and DC. Is offset by lower sales in activities, games and puzzles, and dolls interactive outdoor categories.

Gross profit for the toy segment declined year over year, reflecting lower revenue and a decrease in gross margins. The margin pressure was driven by various factors, including higher sales allowances, which increased to 13.2% from 11.9% last year, as we supported our retail partners through heightened promotional activity to drive share. Additionally, product mix had an impact on our gross margin, as we strategically moved inventory into off price and discount channels to meet retailer demand for onshore product availability. The decrease in toy gross profit combined with higher SG and A translated to toys adjusted EBITDA loss in the quarter of $700,000 versus adjusted EBITDA income of $20,900,000 in the prior year. In the digital games segment, we delivered strong growth with revenue 33% to $46,300,000 This marks our third consecutive quarter of year over year growth, driven by higher in game purchases in Tokaboka World and continued subscriber growth across our PitNIC platform.

We are beginning to see the benefits of the deliberate actions taken over the past year to sharpen our focus and concentrate resources on our two core platforms. In line with this strategy, we made the decision to pivot away from TOCA days and as a result recorded an impairment charge of $16,000,000 in the quarter. Over time, we plan to incorporate many of the TOCA play features into Toca Local World to strengthen the overall experience. Within Picnic our efforts have centered on subscriber growth and retention ending the quarter up from last year and sequentially to 479,000 subscribers. Adjusted operating income for digital games increased by $1,800,000 and margins declined slightly to 16.6% from 17% in the prior year, reflecting our successful ongoing investments in paid user acquisitions.

We’re encouraged by the momentum in digital games at Creative Center, which reinforces our confidence in achieving stable and modest increases to sequential quarterly revenue in 2025, supported by continued investments and a growing user base in the second half of the year. Turning to Entertainment, revenue decreased by $4,300,000 to $32,100,000 driven by lower distribution and licensing merchandise revenue. Entertainment adjusted income declined by CAD2.3 million to CAD17.7 million with adjusted operating margins staying relatively flat at 55.1%. So moving back to our consolidated results, during the quarter we generated CAD26.1 million in operating cash flows. This was primarily driven by our continued focus on optimizing inventory levels.

As is typical, given the seasonal nature of our working capital cycle, the second quarter resulted in negative free cash flow of CAD15 million dollars compared to negative $4,000,000 in the prior year. The year over year change was a result

Adam Shine, Analyst, National Bank Financial: of our

Jonathan Reuter, CFO, Spin Master Corp: planned investment in the entertainment segment as we continue to advance development of the third PAW movie and new content for Unicorn Academy. From a capital allocation perspective, we returned just under $19,000,000 of capital to shareholders by way of our quarterly dividend and the continued execution of our NCIB. This brings our return of capital on an LTM basis to $96,000,000 while reducing our net debt by $60,000,000 So in closing, we remain firmly focused on returning to a consistent profitable growth trajectory. As Christina explained, this will be accomplished through a deeper collaboration across our creative centers and maximizing the impact of our innovation, brand and capabilities in the children’s entertainment space. With enhanced discipline in our execution, we aim to deliver an attractive total shareholder return.

So with that, operator, that ends the formal part of the call. And please open the line for questions.

Conference Operator: Thank you very much. If you would like to ask a question, please signal by pressing star one on the telephone keypad. If you are using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, a reminder, press 1 to ask a question. We’ll take our first question from Andrew Lopez with TD Cowen.

You may now begin.

Andrew Lopez, Analyst, TD Cowen: Thank you. Good morning. This is Andrew on for Brian Morrison. Maybe we can start with the Q2 twenty twenty five results. A lot of moving parts in the quarter.

Your revenue performance was decent, but you had some additional costs on the toy segment. Wondering what is your view on the quarter and what should we read through in the back half of the year in terms of improving on these results?

Jonathan Reuter, CFO, Spin Master Corp: Yeah. Good morning, Andrew. Thank you. Thank you for the question. You know, let’s start with the quarter, and then let’s talk a little about the back half.

You know, from a quarter perspective, from a top line, I think the team did a did a really, strong job in light of kind of the larger macroeconomic environment. And you know across almost every metric that I’ve seen, we’ve done really well. And whether that’s you know growing faster than our peer set or whether that’s taking share across the majority of our revenue base and growing fast, taking more share than our competitive landscape. So I think from a revenue perspective, know, proud of what the team did. Obviously there was the backdrop of in April, a real slowdown in FOB orders.

If you recall back in April, there was significant amount of tariffs coming out of China, for China products into The US, and that’s certainly slowed down the order profile. You know, like a key metric that I’ve seen is there’s like three, four weeks where really orders just like really slow. Another element is we saw some planogram resets take place later in the year. So two of our larger retailers for about 25,000,000 pushed the reset into October versus earlier in the fall, and that obviously shifts our revenue from a Q2 to an H2 story. So actually, if you would just adjust for that $25,000,000, we had some pretty impressive growth, like 34% in the toy sector, in toy segment, versus the industry, I think that’s pretty impressive.

From a gross profit perspective, like we are leaning into taking share. I mean, you see it in our results. And so we were comfortable investing in selling in as well as selling through the product. And so there was obviously some, you know, pressure or decline in our gross margin as a result of that. That was a conscious choice as taking share is something that’s really important to Christine and I and the larger management team.

From a cost perspective, you know, our costs came in versus last year higher obviously from an SG and A perspective at a consolidated level. I think you kind of have to break that into a different, you know, a few different categories. We provided like more than $10,000,000 of cost reduction around our synergies, around our tariff mitigation plan, but we are investing in the business. And so we are investing and making sure we have the right product for the back half of the year in 2026. There was some increased marketing spend this quarter.

And so as a percentage of our net revenue, it’s certainly higher, which when I shift to the back half, I’ll talk a little to that. But a big portion or at least a decent portion of that was timing timing related in that we had a lower revenue base and we were supporting the POS in the quarter. We’ll get the benefits of that spend in the back half of the year. So like when you think about the quarter, like what I look at as top line, we took share, we made a conscious choice to sell in product and sell through product and it’s working and that’s you know serves us well into the future. And then from a cost perspective, there’s a significant portion of that that was timing related as we had a lower revenue base.

So then your second question is, you know, how does that bode for the back half of the year? The back half of the year, we have amazing products. We have the right price points, you know, more than 50% on the toy side of our products are gonna be below $20 in the most important holiday, you know, an important holiday season, which is the most important part of our year. Our theatrical releases are, you know, doing incredibly well. How to Train Your Dragon, Melissa and Doug had a great Q2 and so we’re gonna keep working that.

Monster Jam, Hatchimals, we have great products, great gains in market share in some of these categories, some of these product lines I just shared with you. So from a top line, you know, we’re focused on just continuing to gain share. That’s our number one goal in a market that has a lot of uncertainty. And you know that uncertainty ultimately can play out by a shift. So there’s a little bit of uncertainty in the market.

That’s you know, a summary of kind of Q2 and I’ll elaborate a little bit later on some questions on the back half of the year.

Andrew Lopez, Analyst, TD Cowen: Thank you. That’s great color. And then just maybe as a follow-up, recognizing that the tariff situation remains fluid, but with all the action taken to date in respect to tariffs, just wondering if you’re able to quantify maybe the direct and indirect expenses you anticipate you may be able to recover in 2026.

Jonathan Reuter, CFO, Spin Master Corp: Sure. Know when you think of tariffs, you got to think of two functions. There’s the actual tariff costs and then there’s the change in retailer behavior and obviously the how the consumer behaves. Just to elaborate a little bit on those, the retailer has made a change in how they’re buying. So you know that the majority of our business was and continues to be an FOB, but DOM is becoming much more important as retailers are, if you will, delaying their purchases and we’re relying more on onshore replenishment than they’ve historically done.

So that’s an element that will affect our volume, and that will lead to destocking, ultimately. Like one way to think about it is it will lead to destocking in the industry as they have that shift from FOB to DOM, as well as that they are being more conscious to their inventory levels. The second element is the consumer. You know, we took share in H1. Our H1 POS per Surcana in our TAM was essentially flat.

And so, you know, Q2 was very high. That’s when the Easter period was. Q1 was from a POS perspective lower, and so it’s essentially flat. But it was but that was higher than the industry. The industry was negative one.

So how the consumer reacts on the back half of the year, I think that’s still question marks, as there could just be less dollars available for them as they’re working through potentially higher prices across our large basket of goods, not just on the toy side. Then there’s the actual cost themselves. And so from a cost, you know, we can quantify, you know, the cost and then we have offsetting price. We’re essentially recovering like 80 to 85% of the actual cost with price in the near term. And then the longer term, it’s we’re

Jonathan Reuter, CFO, Spin Master Corp: gonna fix that through our mix. We’re gonna address it through the products that

Jonathan Reuter, CFO, Spin Master Corp: we bring out to the market and ensuring we have the continue to have the right mix. Now an overall like dollars, because that was your question, you know, think you can think about it this way. Like for the full year, if I over like, you know, put everything together, tariffs probably have an effect of about $90,000,000. And we have cost savings that we put in place and including the ListenDoc synergies, about $6,065,000,000.

Andrew Lopez, Analyst, TD Cowen: Yeah. That’s great. Okay. That’s all for me. I’ll jump back in the queue.

Appreciate the the color.

Conference Operator: Thank you. Our next question comes from Martin Landry with Stifel. You may now begin.

Martin Landry, Analyst, Stifel: Hi. Good morning, Christian and Jonathan. My first question, I’m trying to understand where Q3 and Q4 will land. It sounds like there’s a lot of timing related issues. Jonathan, you talked about some retailers shifting their purchases from FOB to domestic, delaying revenue recognition, planogram resets delays.

This sounds like it’s all delays and shift. So I’m wondering, know, I understand you don’t have any guidance. You haven’t restated your guidance,

Jonathan Reuter, CFO, Spin Master Corp: but,

Martin Landry, Analyst, Stifel: help us understand a little bit where you could land in terms of revenues for Q3. Like is there a potential for you guys to go back into a growth mode in terms of revenues on a year over year basis for Q3?

Jonathan Reuter, CFO, Spin Master Corp: Thank you, Martin. Let me take a step back. So, you know, we have three creative centers in our business. Obviously, I’ll come to talk to TWICE, the largest, but let me talk about the two others first just to help help give you a little bit more information. From a digital games perspective, you know, our focus, I think it’s about twelve months or the last twelve months, has been to really focus down on these two platforms.

You’ve seen Christy and I, we’re here for about ninety days and we’ve already made some decisions around ensuring that we were getting the right return of capital on investments that we made and that was the decision around took it. Know that drove it took a day’s decision. It’s working, right? We had double digit growth and we expect that double digit growth to continue in the back half of the year in digital. On the entertainment side, essentially we can that’s an easy business to model in year.

And essentially the year over year loss I mean it happened in H1. Can we can model that out and you know short of other factors taking place it’s pretty stable business. So then it comes down to the toy side And I think in my prepared remarks, we gave some kind of percentage of ultimately how that could look like from a GPS perspective. So let me talk to you about more of an H2 as opposed to trying to get really specific in Q3. The two factors at play that we have to be thinking about.

So we’re not giving guidance but doesn’t mean that we’re not running our business. And when we’re running our business around the inventory levels that we want to have, the promotional spends etc, there are some assumptions that we’re making. I think there’s two critical assumptions that we’re making. Assumption number one is that based on what retailers have said publicly and based on how they’ve shifted their buying patterns, we do expect destocking and ultimately for them to be holding less inventory as they finish the year. That is predominantly a US event, but there’s also some international at play there, and that’s more kind of micro to us than necessarily macro to the industry.

So that could be a significant number that these stocks in kind of the 70,000,000 to $90,000,000 range. From a POS perspective, again, H1 where we took share, we outperformed the market. And that’s for Surcana, publicly available information, it’s clear. We are outperforming. We’re we’re very proud of the performance we’ve done versus the market.

We are aware that the consumer could be more stressed in H2 and there could be some negative POS pressure. That being said, because our inventory is onshore, because we have the ability to quickly respond, and because we have phenomenal products, and because 50% of our products are below $20 we are ready to replenish and resell the pipeline as we sell through the product. And that’s what we’re focused on is selling the products through the retailers in the back half of the year.

Martin Landry, Analyst, Stifel: Okay. And maybe just a follow-up. You touched on destocking by retailers and you say that this could be a headwind of $70,000,000 to $90,000,000 As of the end of Q2, can you talk a little bit about your inventory levels both at your warehouses and at retailers? Are they elevated? Are they in line with historical levels?

Any color would be great.

Jonathan Reuter, CFO, Spin Master Corp: Sure. Well, you see in our in our financials, actually, they’re they’re lower than last year. I mean, one of the things that we did take advantage of in q two is looking at our inventory position onshore in The US and saying, hey, what products do we have that ultimately could fill shelf space and even gain additional shelf space and additional doors in the market. So from an inventory position, we’re, you know, we’re incredibly, you know, we’re well positioned coming out of Q2. It really served us well, quite frankly, our inventory position around Prime, because we had a very, very you know, we’re very pleased with our Prime performance.

We again took share in Prime and outperformed the market. So from a kind of underlying performance, we continue to take share, we continue to outperform the market, and from an inventory position, we’re you’ve seen our results well positioned and we’re planning to be well positioned in the back half of the year. And then lastly, from a retailer perspective, you know, are having lower inventory levels, which has obviously some near term transitory period for us. But as we head into 2026, that really only becomes upside.

Christina Miller, CEO, Spin Master Corp: And Martin, as you may remember when you were at one of our Investor Days, we talked about growing and expanding in the value channel. So we’ve done that as well in the last twelve months. We really penetrated that channel to add extra distribution across our product lines, and we’re seeing growth there as well.

Andrew Lopez, Analyst, TD Cowen: Thank you for the color. Best of luck.

Conference Operator: Thank you. Our next question comes from Adam Shine with National Bank Financial. You may now begin.

Adam Shine, Analyst, National Bank Financial: Okay, thanks a lot. Let’s hope this is the worst quarter you two ever have to report.

Christina Miller, CEO, Spin Master Corp: Adam, as well.

Adam Shine, Analyst, National Bank Financial: But all kidding aside, I mean, Jonathan, this is another example with the stock having dropped as much as 18%, just another example of maybe some better communication around the quarter, especially when there are certain moves and actions being taken by the company, because the surprise here in terms of the EBITDA pressure is more in terms of the added marketing spend. And again, a lot of this conversation goes back to timing, right? Timing of spend on costs and timing of some of the top line. So if I could just start with I know we’re not going get much guidance out of you, but I was surprised that you said 36% GPS contribution in Q3. And so it then begs the question, do you guys think you’re going to deliver growth for the year in GPS and total revenue?

Maybe I’ll start there.

Jonathan Reuter, CFO, Spin Master Corp: Lots to take in there, Adam. I appreciate the color. So this year is certainly a transitory year and I think you know by explaining that destocking and explaining that even though we are taking share and even though that we are outperforming the market that the TAM in which we’re playing, you would suggest that ultimately, no, there will not be growth this year if you So take those two comments I think that’s been pretty, you know, transparent. And, you know, you know, when hear your frustration and understand it, and I think that’s what Christine and I and the management team are working towards around, you know, ensuring that we have a very clear story, very transparent in terms of how we see the performance, which I think you’re seeing some pretty transparent words that we’re using. And then there’s also, you know, improving the execution and bringing us back to profitable growth.

I mean, in my prepared remarks, the words were there. We’re going to go back profitable growth. So we were very clear that this year that is not happening and it’s not happening because of factors that are you know wider macroeconomic events that we’re doing an I believe an exceptional job of navigating through. The areas that are not affected by tariffs are doing well. Europe is an example, digital games, and the tariffs ultimately are transitory.

I mean, we have to work through it. We still don’t know the official rate yet for manufacturing of our hubs. But once we have that and once there’s, you know, clarity, then we can start executing against our plan and ultimately returning back to that profitable growth that all of us want to and are striving to achieve. And it comes from investing in the innovation engine of this company. You know we have phenomenal brand.

Adam Shine, Analyst, National Bank Financial: Yep. I think, look, I think with a new CEO, new CFO this was destined to be a pseudo kitchen sink quarter, so to speak. But I hear you on the GPS. That’s helpful. If I can then just unpack the disclosure around $90,000,000 of tariffs, and then more specifically the cost savings of $66,000,000 So, a few months back, we had heard that the company was pursuing about $100,000,000,000 in OpEx savings combined with some CapEx deferrals to get to about $100,000,000 of cash flow savings.

So if we dig that into the $66,000,000 which sounded like it was specifically OpEx related, as you said, Jonathan, Like how much are you leading in on that Melissa and Doug stuff, which to me is in the past? Because I would have thought that pursuant to those prior disclosures that you would have had about $60,000,000,000 of OpEx alone through mitigation activities to deal with the tariffs. So maybe help if we’re still on track with those prior disclosures.

Jonathan Reuter, CFO, Spin Master Corp: Yeah. I mean, there’s an example of disclosure that lends itself to confusion, right, because cash savings. I mean, I don’t that can be interpreted. I was very clear on my prepared remarks, again, about this kind of clarity and, you know, OpEx and CapEx. And let me give you a little kinda give you a range.

I think 80 to 90,000,000. And let me be even more clear. You know, about two thirds of that is OpEx. About a third of that is CapEx. So that kinda gives you the tariff mitigation savings.

Then year over year, I mean, the team has done a phenomenal job of integrating Melissa and Doug way ahead of plan. Right? We’ve hit our run rate synergies this quarter. So year over year, we have about 12,000,000 of Melissa and Doug, and then the rest is the two thirds of the 80 to 90 range that I gave you. So, you know, that’s where the savings come from.

It’s a mixture of, you know, looking at what we’re doing and saying, are we getting the economic return? Are we getting a proper return on invested capital on these activities? If we are, let’s keep doing it. If we’re not, let’s discuss whether we can. And if we don’t think we can, let’s stop doing it.

And that’s, you know, that’s the activities the team is doing and you saw it within again ninety days, a decision around took a days. And so there’s more of that that obviously Christina and I are gonna go do as we look at our investment portfolio and ensuring that whatever dollars that we put into the business, we’re getting an attractive return.

Adam Shine, Analyst, National Bank Financial: Okay. Thank you for that. And I’ll queue up again. Thanks.

Conference Operator: Thank you. Our next question comes from Kiley Kouhoo with Jefferies. You may now begin.

Christina Miller, CEO, Spin Master Corp: Hey, good morning and thanks for taking my question. This is more so for Christina, but I

Sophia Bazookas, Investor Relations, Spin Master Corp: was just kind of curious if

Christina Miller, CEO, Spin Master Corp: you could expand on your pricing actions. How much price have you taken so far? Can we expect you to take more price, and when will that be hitting shelves? Thank you.

Jonathan Reuter, CFO, Spin Master Corp: I’ll I’ll jump in, and then, and then Christine can add some more color, maybe just on the, the back half of some of the great products that we have around H2. From a pricing perspective, I think what I shared is that were able to, you know, ensuring that our customers and our consumer, more importantly our consumers, have a great offering, that is our number one goal at really competitive prices. And so remember, you know, by looking at price but then also managing mix, more than 50% of our SKU base in H2 in the highest propensity to spend period will be below $20 We did take some selective pricing actions that will be reflected obviously in retail prices, and those happened early in Q3, and they represent probably about, if you remember when I explained tariffs, there’s the actual tariff cost and then there’s the volume aspect, and that was how we got out to that larger number. But a much smaller portion of that is just the tariffs, and we were capturing about 80%, 85% of the increased cost. So from a kind of position perspective, we’re well suited from additional prices.

We’re going to really focus and lean in on mix in 2026 as opposed to pricing. But we’re really well positioned. Maybe, Christina, do you want to talk a little bit

Christina Miller, CEO, Spin Master Corp: about the Well, I think you hit the major note, Jonathan, on that. We’re really looking at the pricing mix and having across our portfolio about 50% of our products be under that $20 price point. In addition to that, we have some really great products to be excited about coming to market across all our major brands: PAW Patrol, Gabby’s Dollhouse, Miss Rachel, Monster Jam, and then rebuilding Gund. There’s a lot of great stuff coming, so I think across Melissa and Doug as well. So we’re confident in our product pipeline and our innovation that we’re delivering to retail this fourth quarter or through the back half of the year in total.

And like I said, it’s mostly about making sure we have the right pricing mix across the category. And we feel like we’re going into the second half with that well in hand.

Jonathan Reuter, CFO, Spin Master Corp: And if I can look even further out, 2026, first of all, we won’t have that headwind of the destocking. In fact, depending how retailers behave, could actually be a tailwind. And we have, as you know, the Paw Patrol movies coming out, the Paw three, the Dinosaur Focus. We’re gonna see we’re really excited about kind of the early cuts that we’ve seen and ultimately what that’s gonna happen from a toy and a merchandising perspective. There’s some great new products coming out in Gund.

Hexbox, we’re really excited with the innovation that we’re seeing. Market Jam, I mean, the momentum is strong and when I see the innovation that’s coming out next year and further international expansion, we’re really excited. Obviously, Rachel, the momentum is really strong. So when we look past even H2, into next year, going back to I think Adam’s question, we are working towards returning to profitable growth and we have all the building blocks in place to to get us back there. And we’re you know, that’s where we’re where our focus is.

Christina Miller, CEO, Spin Master Corp: Great. No. Super helpful color. And then just one follow-up. I know you’re lapping some Melissa and Doug inventory, but I was just wondering if you could talk a little bit more about your inventory composition, specifically bridging that year over year gap, especially in a time when your toy peers are seeing elevated inventory growth and more of the industry shift to that domestic inventory.

Thanks.

Jonathan Reuter, CFO, Spin Master Corp: Yeah. Thanks for the question. I I I think this is, you know, I I think this is one of the going back to even Adam’s of just being able to tell our story a little cleaner. I mean, we took share. We made a strategic decision to invest in selling in and then once it’s in selling through.

That is above the market. That leads to lower inventory. And that’s why our inventory is down year over year as we made these kind of decisions. We open doors, we take more share, we take more space, and that positions us well for the following year. So from an inventory position, mean you’re seeing it like it all comes together.

You’re seeing our inventory fall in Q2 versus last year as we’ve been selling in product and selling through product. Now the good news is in H2, our marketing spend will be much more in line with last year, perhaps even lower. Now Q3, it was really low last year, so I’m just saying from an H2 perspective when you look, it’ll be much more consistent this year than last year. And I expect that to come in as a lower percentage. And our sales allowances this year coming in the back, you know, the second half of the year, we’ll continue to be you know, focused on selling in product and making sure they’re selling through.

But ultimately, we would expect that our sales allowance be roughly in line with last year’s numbers as well.

Christina Miller, CEO, Spin Master Corp: Awesome. Thank you so much.

Conference Operator: Thank you. Our next question comes from Ty Collin with CIBC. You may now begin.

Ty Collin, Analyst, CIBC: Hey. Good morning. Thanks for the question. So I noticed in the supplemental slides relating to tariff mitigation that the previous specific targets you gave around Vietnam sourcing have been removed. I’m just wondering if there’s been any shift in that sourcing strategy with some of the more recent tariff developments and if you could explain the reasoning behind that.

Jonathan Reuter, CFO, Spin Master Corp: Yeah.

Jonathan Reuter, CFO, Spin Master Corp: No, look, Vietnam,

Jonathan Reuter, CFO, Spin Master Corp: you know, going back to our mitigation plan, let’s let’s go through the four buckets. You know, bucket one, if you recall if you you will recall, was around diversification out of China. The the team has done again really strong work. Last year, on average, 64% of our US based cost of goods sold was coming from China, and this year we’re going to finish at 37. So it’s a significant draw.

Where is that going? A portion, a large portion is going to Vietnam, and so we’re setting up production, and it’s going incredibly smooth. In fact, some of the there’s some transitory costs that we’re seeing, but ultimately the underlying cost profile is as attractive or even more attractive than China. Now there are products that we can’t take just to Vietnam and have to remain in China just because of the sheer, the infrastructure around those technical products remain in that country versus Vietnam. But we are diversifying out our base.

We have, you know, important operations in India, important sourcing of India, Indonesia, even Europe. So it has a kind of a broad base. That was the first element of our tariff mitigation plan. The second element was optimizing the supply chain. You’ve seen it in Q2 where we took advantage of the inventory that we had within The US.

And secondly, we’ve also been able to mitigate the actual tariffs by changing the mechanics of how we sell. And those are kind of well documented around first sales, etcetera. So that’s a huge that’s another important lever. The third lever was the pricing actions, which I’ve elaborated on already. And then the fourth lever was the savings, which essentially is, know, the top end of the range is essentially the same number that was given before, but now I’ve been able to specify what’s OpEx and what’s CapEx.

So from a tariff mitigation plan, you know, again, the team is executing on what they said they would do.

Ty Collin, Analyst, CIBC: Okay, great. Thanks. That’s very clear. And then Jonathan, with respect to the NCIB, you’re about three quarters through it at this point. You’ve continued buying back stock through Q2 and into July.

I guess, what’s your thinking around buybacks for the balance of the year? And do you think you’re in a position to fully execute on the NCIB, assuming, of course, that your shares remain cheap and attractive?

Jonathan Reuter, CFO, Spin Master Corp: Well, we always think that they’re undervalued. Let me raise that up a little bit to kind of capital allocation if I can and obviously kind of address your specific question. You know our view, my view, and our collective view here around capital allocation is as follows. You know the first is that we are committed to investing in the business. We’re committed from an OpEx perspective and from a CapEx perspective.

I think Christina and are incredibly committed to ensuring that we’re getting the right return on those investment dollars. And you’ve already seen actions that we’ve taken and that’s kind of the lens in which we see the world. And so it begins with investing in the business and being very clear on what kind of returns we want to get when we invest in the business. You know the second element is returning capital to shareholders. If I look at the LTM, we’ve essentially given, you know brought back over a $100,000,000 to shareholders both through the quarterly dividend and through the NCIB, which is your question, I’ll address it.

As well as pay down debt by $60,000,000 So this is a, know, maybe one thing that’s misunderstood about this business is that we do generate a lot of cash, even after the investments that we make back in the business, and we return it to our to our shareholders. With regards I’ll finish, and then I’ll come back to Anthony. You know, lastly, M and A continues to be an important factor of how this business has grown. You know, this is a thirty year old business that essentially, you know, it’s over $2,000,000,000 of revenue. M and A has played a role in that.

We’re looking on the toy side to continue to supplement the product categories that we’re in, as well as enter new categories that have potentially higher growth. And then on the digital side, continue to build out the capabilities that we have across our two platforms. So specifically with regards to the NCIB, we believe in a capital allocation that is disciplined, that you can model, and that is repeatable, unpredictable. And so if we’re active in the if we issue an NCIB, it means that we’re going to execute against the NCIB. That’s the reputation we want to have.

Ty Collin, Analyst, CIBC: Okay, that’s great. And Jonathan, if I could just sneak in one more quick one. I appreciate that you guys obviously didn’t reintroduce the guidance this quarter given that you both only started within the last few months. But is that something that you’re aiming or planning to do during the Q3?

Jonathan Reuter, CFO, Spin Master Corp: Let’s cross that bridge when we get there. I mean, there’s three factors as to why we chose not to. It’s not that we’re not it’s not because we’re new. There’s three factors. You know, factor one is the actual tariffs, what’s happening.

Factor two is can can we get a good sense of how retailers are behaving or buying patterns? Excuse me. And then the third is how the consumer is gonna react. Like, on the first one, you know, we’re probably a week away from having some clarity. Right?

I think there’s one last big country, and that should be hopefully resolved in coming weeks. And then as start getting comfortable that we can understand the change in DOM and FOB and the implications, as well as how the consumer is reacting to the whether there is or isn’t inflationary in the wider kind of basket of their goods, that’s when we would make the decision as to come back. So I don’t want to call it a day, but those are the three factors that held back being able our decision not to give guidance, reinstate guidance this quarter.

Ty Collin, Analyst, CIBC: Got it. Thanks.

Conference Operator: Thank you. Our next question comes from Drew McReynolds with RBC Capital Markets. You may now begin.

Drew McReynolds, Analyst, RBC Capital Markets: Yeah, thanks very much. Yeah, John, and I still I think we’ll take this offline. Just need to better understand kind of all the OpEx tariff impacts and cost savings and stuff, but we can do that offline. I think bigger picture, just two questions and maybe to both of you, frankly, but obviously Christina, maybe with the emphasis on you, when you look at the overall toy business, outside of the things you can’t control with respect to tariffs and macro, is there anything that you see as kind of meaningfully broken or needs fixing relative to perhaps what the rest of us see? And then secondly, on strategy, Christina, I’d be curious just to get an update on where the strategy for the broader company is shifting on the margin.

I know in the prepared remarks, there is some commentary on that front, but maybe you could drill down a little bit more for us. Thank you.

Christina Miller, CEO, Spin Master Corp: Thank you, Drew. A couple of things. I would say that I don’t think that I believe anything is meaningfully broken. I think we came out earlier this year and said that as it relates to toys, that we’re going to go and compete in the places where we can be number one or number two. And I think you see us doing that and executing against that.

So I see it more as a bigger opportunity long term, one to continue executing there, but as well as looking around at other categories that we can open up and compete in as well. So I think that is core to the toy strategy, as well as looking at other we’re growing in infant, toddler, and preschool. What else can we be doing in those spaces? We have great brands that are wholly owned by Spin Master, as well as when you look at the success of the box office and how that’s translated to growth for us in top line, whether it was How to Train Your Dragon, Gabby’s Dollhouse is yet to come, Superman. So we’ve been in some of the really big box office movies, and next year we have one of our own coming in PAW Patrol.

So we really believe in that property and what that can continue to do. So I think when you look at our numbers this year, it’s a known off year out of the movie cycle. And next year, we will be back with another great movie with a great theme. And as Jonathan mentioned earlier, really getting a look at the first cuts in the first few weeks I’ve been here and couldn’t be more impressed. It’s not easy to make a third movie that’s possibly better than the first or second one.

But I really do think the team has done great work there. I also would like to say outside of the toy business that we’re expanding distribution. We’re getting in front of our audiences in a bigger way. And I think ultimately, when you back out and you look at how that drives our business, it’s really a critical part. This month we went, we found some, not found, we have some new distribution outlets.

So whether it’s PAW Patrol debuted on Netflix in The US the first couple of seasons there, whether you look at Vita the Vet or Unicorn Academy getting placed onto Nickelodeon in an additional second window, or you look in the greater European market on some other second windows that we’re getting for Vita the Vet. So I think the more we can go where our audience is, the more we can be consumer minded in our strategy, the more successful we will be in driving our business, whether it’s in any of the three core creative centers. As much as we spent a lot of time talking about toy this morning and understandably why, given the tariff situation, the macroeconomics around it, I don’t want to overlook the fact that we are positioned as an integrated children’s entertainment company. So by that, I mean we have strong muscles in three categories, and how they cross collaborate is one of the ways we will unlock value in the future. Jonathan alluded to or directly said, focus, focus, focus, and how we can go deeper on the things that are really working for us and how we can then look to create net new.

Now on this call, I’m sure we don’t want to talk about that so much because that provides longer term value and you’re looking so much further out. But I feel confident that what we have the capability to put in the pipeline for innovation in toys as well as content and digital content is second to none. And as I look further, that’s really where I see the opportunity is that we continue to strengthen the three creative centers. You see digital really growing this quarter and grew 33%. You know, looking at that kind of growth and knowing what’s in the pipeline in the second half, For Tokoboka World, we’re better positioned for more content throughout the entire second half than we had in the first half, looking at how we can continue to test pricing, how our live operations plays into it.

So when you look at live ops content pricing and promotion that we have coming, we believe we have a strong second half, the Tocoboka and LINE. Picnic, we’re getting top line growth as well. We have a portfolio of skills in those games, whether it’s math. Now we have a coloring game. We have language games.

Consistently looking at how we can gain engagement there and add to that portfolio and therefore grow it. So I understand the focus on toys. It’s absolutely necessary. But I ask as we back out and look at the business holistically, I think we’re making strides and using diversification to our benefit. I believe in the talent that’s inside this organization in both our capabilities on innovation.

And now it’s our job to start putting more of that into the pipeline so you can see how we’re gonna get sustainable growth in the future. And that’s really what I’m pushing towards.

Jonathan Reuter, CFO, Spin Master Corp: Yeah, that’s helpful. Christina, you

Drew McReynolds, Analyst, RBC Capital Markets: answered my third question on the digital games outlook in the back half year. So that’s good for me. Thank you very much.

Sophia Bazookas, Investor Relations, Spin Master Corp0: Thank you.

Conference Operator: Thank you. Our next question comes from Luke Hannon with Canaccord Genuity. You may now begin.

Sophia Bazookas, Investor Relations, Spin Master Corp1: Thanks. Good morning, everyone. I wanted to dig in a little deeper on this the retailers that are deferring orders into the back half of the year and specifically I’m trying to get better understanding of what you’re thinking as far as sales allowances because there are a lot of moving parts here, right? There’s this FOB versus domestic mix but then also it feels like the selling window is going to be a little bit shorter. We don’t know where exactly the consumer is going to land by the time the holiday spending season sort of rolls around.

In my mind that does increase the risk of potential markdowns and there being more charges when it comes to sales allowances specifically. So can you I realize that you’re not giving guidance as of yet, but can you just frame up for us specifically what your expectations are when it comes to sales allowances in the back half?

Jonathan Reuter, CFO, Spin Master Corp: Sure. Thanks, Luke. No. I mean, that’s exactly I think some of the words you used exactly kind of reiterate why it’s so difficult to be able to come out and be give formal guidance. But what do we know?

So what we know is I just continue to reinforce this we’re gaining share, and we’re taking share in H1. Christina walked through why we have a strong H2 in terms of our product categories, and so don’t see a reason why that won’t happen again. We are gonna support that though, and we will support it through both marketing dollars and through sales allowance. Marketing this quarter, because revenue is smaller and because there’s this timing, there’s a higher proportion of marketing as a proportion of that revenue, and we expect that to come back down to in line with last year, if not lower in H2 as our revenue base grows. And we take advantage of the spend that we had in Q2 that will help us in Q3 and onwards.

And then specifically around sales allowance, your specific question, sales allowances were higher in Q2 than last year. It goes again to the strategy that we’ve had around gaming share, making sure that if we put product in, it sells through, and making sure that we open up new doors, and, you know, Christina talked about that through the value channels being an example, and then making sure we’re supporting our retail partners so that it’s profitable for them as well. But when we look specifically in H2, I don’t really see right now based on how the consumer is behaving any real material increases in h two versus last year. In fact, maybe there could be some decreases because we have such a strong product category and because, again, 50% of our SKUs are below the $20 mark. It could even potentially be a little bit lower than last year from sales allowance perspective.

Sophia Bazookas, Investor Relations, Spin Master Corp1: Okay. Thanks. And then for my my follow-up, I just wanna make sure I I heard this correctly. I know in the past you gave the the target of of getting to 70% of your sourcing coming from outside of China by the end of the year. And I think I heard you correctly, Jonathan, that you’re on on track to have it be 3037% of your product coming from China by by year end.

Did I hear that correctly?

Jonathan Reuter, CFO, Spin Master Corp: Yeah. I I think there’s an exact you know, not to you know, they’re being clearer in number that you stated, I would say before is probably is right, but then what ends up happening is it sees it’s part of it seasonal based. And so we said, well, let’s take away from the seasonality and let’s just give you an average number. So the average number, we will finish at 37%. But I would say that’s in line with kind of the other way that it was shared with you last quarter.

But this is a better way of looking at it, average for the full year, because each quarter there’s seasonal aspects of what’s being bought from China or other countries. So in the spirit of being more transparent, giving clearer data, this is an example of what we’re doing. But it’s not I know the number is different, but it’s still the same logic. We’re just giving you an easier number to ensure number for the year and not benefit say from seasonality, that number that you had had that benefit in it.

Sophia Bazookas, Investor Relations, Spin Master Corp1: Okay. Sorry. So the 70% had the benefit of seasonality in it, you’re saying?

Jonathan Reuter, CFO, Spin Master Corp: Correct. And so now by saying an average for the year or 37, I think that’s a cleaner number for you to 37% coming from China to The US, that’s a cleaner number for you. And we gave you the comparison of last year which was six which was 64.

Sophia Bazookas, Investor Relations, Spin Master Corp1: Okay. Got it. That’s helpful. Okay. I’ll pass the line.

Thanks.

Conference Operator: Thank you. This next question appears to be our last question. This question will come from David McFadgen with Cormark Securities. You may now begin.

Sophia Bazookas, Investor Relations, Spin Master Corp0: Great. Thank you. Yeah. I just wanted to dive in just on the activities, games, and puzzle segment because I noticed it’s obviously down in the quarter, down six months. Just wondering, is there one point in particular that’s really driving that decline?

Or is it the five or six that you listed in the MD and A? I’m just wondering if there’s anything that really stands out. And when do you think that that segment might return to growth? Thanks.

Jonathan Reuter, CFO, Spin Master Corp: Yeah, so why don’t I take this quarter and then Christina maybe talk a little bit about some of the work that I know the team is doing around bringing back growth to our game, to that section as we look a little bit further out. In the quarter, I mean, there’s nothing specific that would call out more than what’s in the prepared remarks. We have a portfolio approach around our product categories. Again, the vast majority of our revenue base took share. So, comfortably more than 50%, more like two thirds of our revenue base took share.

So when you have a portfolio approach, there will be some categories that won’t be taking share. And so that was one of the categories. We recognize that there’s, know, going back to Christina’s comment around innovation, this is an area where we know we want to lean in and we do believe that, and we know that we can return to growth in this category. So, maybe Christina, if you have any comments about the category itself longer term?

Christina Miller, CEO, Spin Master Corp: Yeah, I think as Jonathan just said, that we know that there’s growth in this category, and returning to growth is important to us. I would go back to my earlier comment about focus. We have a pretty wide portfolio of products, and doing the proper sort of assessment about where we can grow, where we can’t, what we what we can lean into is the work that’s being done. I also would say that we’re coming off of a Rubix, which was a 50 year anniversary last year that definitely helped in that category versus this year. So it’s looking for opportunities like that and looking for some new games and innovation that we can use to drive that category.

So I would just say keep an eye on it moving forward. It’s definitely something we’re focused on.

Sophia Bazookas, Investor Relations, Spin Master Corp0: Okay. All right. Thank you.

Conference Operator: That is our last question. I’ll turn the conference back to Jonathan Reuter, CFO, for any additional remarks.

Jonathan Reuter, CFO, Spin Master Corp: Well, you, everyone, for joining us, and we look forward to speaking to again in our upcoming third quarter call in October. Thank you.

Conference Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.

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