Spin Master Corp.

For 2025, Toy gross product sales declined 8%, driven by an approximate 12% reduction in retailer inventory levels. In Q4, Toy GPS declined 5%, with domestic replenishment sales surging 50% in December; Entertainment revenue rose 3%; and Digital Games revenue increased 16%, with Digital adjusted operating income up 24%. Jonathan Roiter said the company generated $308 million in operating cash flow in 2025, reduced consolidated cash conversion cycle by 7 days, and cut own inventory levels by about 20%. CapEx was approximately $185 million in 2025, and Spin Master returned about $80 million to shareholders. For 2026, management guided to stable to low-single-digit revenue growth and mid- to upper-single-digit adjusted EBITDA growth, with Q1 expected to see a significant Toy decline and double-digit consolidated revenue decline, and negligible EBITDA; full-year D&A is expected to be approximately $160 million, CapEx about $150 million, and lease payments just under $40 million annually.

Christina Miller framed 2025 as a difficult year for U.S. toy sales due to tariffs and macro uncertainty, but said the team made changes that position the company for a return to profitable growth in 2026. Her emphasis was on focused execution: strengthening core brands, improving Digital Games products, expanding PAW Patrol across entertainment, and stabilizing Melissa & Doug. Tone-wise, she was constructive and confident, repeatedly pointing to positive retailer feedback, product innovation, and the opportunity to expand into new categories like trading card games.

Jonathan Roiter highlighted that 2025 Toy weakness was mainly driven by retailer inventory reductions and tariff-driven shifts in ordering patterns rather than a collapse in underlying demand. He said the company reduced its own inventory by about 20%, improved days inventory outstanding, and cut the cash conversion cycle by 7 days, while generating $308 million of operating cash flow. He also noted approximately $185 million of CapEx in 2025, about $24 million of IT spend and about $33 million tied to the Lylli office/showroom, with about $80 million returned to shareholders. For 2026, he guided to about $160 million of D&A, CapEx of approximately $150 million, lease payments just under $40 million, finance costs similar to 2025, and an EBITDA margin improvement consistent with the company’s 50 to 100 basis point target.

Analysts pressed on sales allowances, tariffs, retailer fulfillment patterns, channel inventory, and whether the PAW Patrol movie’s $20 million distribution revenue should be excluded from EBITDA comparisons. Management said sales allowances should be similar to 2025 and that tariff changes so far have not materially altered net dollars paid or retailer behavior. They also said domestic fulfillment remains elevated and that the channel is down 12% while company inventory is down 20%. On PAW Patrol, Roiter clarified that the $20 million is a Q3 revenue item tied to the theatrical release arrangement and that amortization is associated with it, similar to past practice. Questions on Melissa & Doug, internal IP development, and Digital Games margins drew answers centered on regaining shelf space, pricing/value, ongoing content investment, and the differing economics of Toca, Piknik, and partnership revenue.