Spin Master Reports Q1 2023 Financial Results.

TORONTO: Spin Master Corp. ("Spin Master" or the "Company") (TSX: TOY) (www.spinmaster.com), a leading global children's entertainment company, today announced its financial results for the three months ended March 31, 2023. The Company's full Management's Discussion and Analysis ("MD&A") for the three months ended March 31, 2023 is available under the Company's profile on SEDAR (www.sedar.com) and posted on the Company's web site at www.spinmaster.com. All financial information is presented in United States dollars ("$", "dollars" and "US$") and has been rounded to the nearest hundred thousand, except per share amounts and where otherwise indicated.

"Our first quarter performance was ahead of expectations and reflects encouraging entertainment and digital games performance. We saw continued pressure from excess toy inventory at retail and retailer caution, alongside the return of historical seasonality for Toy Gross Product Sales," said Max Rangel, Spin Master's Global President & CEO. "As we continue to navigate the fluid environment, we remain confident in our strategy to reimagine everyday play, leveraging the power of our three creative centres to capture market share, deliver profitable growth and create long-term shareholder value. In 2023, we will bring breakthrough innovation to the toy aisle, alongside impressive launches within our core and licensed brand portfolios. Our investment in the creation of multi-platform content will be fully realized with the release of our most diverse entertainment slate to date, including the highly anticipated second PAW Patrol theatrical release and two new original series, which are expected to drive new licensing and merchandising opportunities. Finally, we will continue to expand our digital games ecosystem with several new digital games and gaming experiences designed to broaden our audience base, attracting kids of all ages and spawning new fans and player communities. Given our financial framework for value creation, the power of our three creative centres and our strong financial position, we are well-positioned to execute against our strategy, investing in innovation, geographic expansion and acquisitions to drive long-term profitable growth and maximize shareholder value."

"As expected, Toy Gross Product Sales in the first quarter of 2023 declined in comparison to 2022, amidst inventory clearance activities at retail arising from the carryover of inventory from Q4 2022 and challenging comps from movie-related launches in Q1 2022," said Mark Segal, Spin Master's Chief Financial Officer. "We expect retail inventory headwinds to be over by the end of the second quarter. An anticipated shift back to more normal toy seasonal revenue patterns supports our expectation of strong year-over-year revenue growth in the second half of 2023. Our financial discipline and effective cost management, and solid entertainment and digital games performance, enabled us to generate strong Adjusted EBITDA of over $30 million for the quarter. Over the last five years our three creative centres have generated close to a billion dollars in Free Cash Flow, enabling us to execute on multiple strategic M&A transactions, innovative IP-driven growth, geographic expansion and investment in content and digital games, as well as enhancing total shareholder returns through the introduction of a dividend and a share repurchase program."

Consolidated Financial Highlights for Q1 2023 as compared to the same period in 2022

Revenue was $271.4 million, a decrease of 36.0% from $424.2 million. Constant Currency Revenue1 was $275.6 million, a decrease of 35.0%, from $424.2 million.

Revenue declined by 46.9% in Toys and 7.0% in Digital Games, partially offset by a 69.4% increase in Entertainment.

Operating Loss was $6.1 million compared to Operating Income of $61.7 million.

Operating Margin1 was (2.2)% compared to 14.5%.

Adjusted Operating Income1 was $12.7 million compared to $77.3 million.

Adjusted Operating Margin1 was 4.7% compared to 18.2%.

Adjusted EBITDA1 was $30.6 million compared to $95.7 million.

Adjusted EBITDA Margin1 was 11.3% compared to 22.6%.

Cash used in operating activities was $4.3 million compared to $62.9 million.

Free Cash Flow1 was $(34.4) million compared to $(79.4) million.

The Company repurchased and cancelled 241,500 subordinate voting shares during the quarter, through the Company's normal course issuer bid ("NCIB") program...