Toy major Spin Master Ltd. is getting into rotational molding and outdoor sports products in its latest acquisition.
The Toronto firm has acquired Swimways Corp., a Virginia Beach, Va., company with a diverse lineup of toys, games and sporting goods for the swimming pool, beach and backyard. Swimways does rotomolding and other manufacturing in Tarboro, N.C., and has an office in Guangzhou, China. It employs 149 and recorded sales of about $90 million in 2015.
Spin Master makes a wide range of toys, games and owns various entertainment properties. It employs more than 1,000 globally and had sales of $879 million in 2015. Analysts have pegged it as the fourth or fifth largest toy company in North America. The company reports its sales in U.S. dollars, although it is based in Canada.
“We are well equipped to significantly grow Swimways' brands both domestically and internationally through our strong retail relationships and global sales network, while leveraging our internal innovation expertise and our network of inventors around the world to develop new products,” noted Spin Master President and Chief Operating Officer Ben Gadbois in an Aug. 2 news release.
The Tarboro rotomolding operation had estimated sales of $17 million, according to Plastics News data. It runs three rotomolding machines processing linear low density polyethylene and cross-linked PE into its proprietary line of toys and sporting goods.
Spin Master has grown rapidly since it was founded in Toronto in 1994 by Ronnen Harary and Anton Rabie soon after the childhood friends graduated from the University of Western Ontario's Richard Ivey School of Business. They started with $10,000 in seed money and their first toy was Earth Buddy, a head made of nylon pantyhose and filled with grass seed that would sprout when watered to look like hair.
Spin Master has grown through acquisition. Its highest-profile recent deal was the February purchase of the Etch A Sketch and Doodle Sketch brands and tools from Ohio Art Co. A few months earlier it bought Cardinal Industries, a leader in games and puzzles. Spin Master brands include Paw Patrol television programs, Zoomer, Aquadoodle and Mechano. The Mechano construction toys, known for metal girders and plastic components, has manufacturing in Calais, France. Spin Master has won numerous toy of the year awards across several toy categories. Executives have told analysts that the next major frontier for the company will be Asia.
Spin Master launched an initial public offering on the Toronto Stock Exchange in summer of 2015. The market capitalization of its floated shares is about $566 million although its total market capitalization is $2.6 billion when multiple-vote shares are taken into account.
Spin Master's sales in the first six months of 2016 were $179 million, 40.5 percent higher than a year earlier. The preschool and girls category was its biggest at $74.6 million, 26.6 percent above the 2015 period. Adjusted net income was $11.7 million, up 42.6 percent.
Spin Master has formed an Outdoor business segment with the Swimways acquisition. The company claims it is now a key player in the outdoor and sports toys category, one of the largest and fastest growing categories in the U.S. Swimways will be a stand-alone subsidiary managed from Virginia Beach. Swimways will help drive sales throughout the year to offset Spin Master's exposure to the traditional main toy season around the end of the calendar year.
“We are passionate about the category and look forward to inspiring an active lifestyle by infusing Spin Master's innovation and fun into the outdoors in order to satisfy many parents' preference for healthier lifestyles and more creative play,” stated Spin Master Co-CEO Anton Rabie.
“This will allow Swimways and its brands to grow and expand by harnessing Spin Master's global infrastructure,” said Swimways President David Arias.
Spin Master will pay about $85 million in cash financed from its existing credit facility. It agreed to pay another $8.5 million over four years based on Swimways' sales growth.
Swimways brand names include Kelsyus, Coop and Spring Float. It acquired the Tarboro operation in early 2014 when it bought Spongex LLC from Nomaco Inc. At that time Tarboro employed about 45. The site also makes Aquaria luxury aquatic leisure products based on the firm's Aqua Cell foam technology, a closed-cell plastic foam molding process. Floats, loungers and pool noodles are typical products in the lineup.