Shares of Spin Master (TSE: TOY) rose ~10% on Tuesday morning after the children’s entertainment company reported strong preliminary Q4 and 2021 revenue.
The Canadian manufacturer of children’s toys and entertainment is behind the popular animated television series Paw Patrol and the digital game Toca Life World.
Growth in Toy, Entertainment, and Licensing and Digital Games Revenues
Revenue for Fiscal Year 2021 was $2,042.4 million, an increase of 30% from $1,570.6 million, driven by growth in toy revenue, entertainment revenue, and digital game licensing and revenue.
Gross product sales increased by 20.9% to $1,962.4 million from $1,623.7 million.
The Toronto-based company said its preliminary unaudited revenue for the three months ended December 31, 2021, was $620.5 million, up 26.5% from $490.6 million in the fourth quarter of 2020.
Fourth-quarter gross product sales were $627.5 million, an increase of 22.6% from $511.8 million.
CEO Commentary
Spin Master’s Global President and CEO Max Rangel said: “We delivered very strong revenue growth for the fourth quarter and full-year 2021, showcasing the power of our three creative centers comprising Toys, Entertainment, and Digital Games. Toys’ gross product sales grew over 20% in 2021, driven by the global success of our new and innovative brands and enthusiastic fandom for our licensed toy properties.
“Our commercial team deftly navigated a complex supply chain environment in the fourth quarter to ensure we delivered products throughout the holiday season in a timely fashion, providing the foundation to grow our share in key markets.”
Outlook
Revenue increased 30% for the Fiscal Year ended December 31, 2021, compared to 2020. Previous guidance from November 4, 2021, called for revenue to increase slightly more than 20% compared to 2020.
Spin Master continues to expect the adjusted EBITDA margin for 2021 to be at the high end of the mid-to-high teens range, in line with guidance released on November 4.
Spin Master is scheduled to report its financial results for the three months and audited fiscal year ended December 31, 2021, after the close of business on February 28, 2022.
Wall Street’s Take
On November 19, RBC Capital analyst Sabahat Khan kept a Buy rating on TOY and a price target of C$61. This implies 29% upside potential.
Overall, TOY scores a Moderate Buy consensus rating among analysts based on three Buys and three Holds.
The average Spin Master price target of C$53.80 implies 13.2% upside potential from current levels.
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