Ladies and gentlemen, thank you for standing by, and welcome to the Spin Master Q1 2021 earnings conference call. I would now like to hand the conference over to your speaker today, Ms. Sophia. Thank you. Please go ahead, ma'am. Thank you, Operator. Good morning, everybody, and welcome to Spin Master's financial results conference call for the Q1 ended March 31st, 2021. I am joined this morning by Ronnen Harary, Spin Master's Co-Founder and Director, Max Rangel, Spin Master's Global President and CEO, and Mark Segal, Spin Master's Chief Financial Officer. For your convenience, the press release, MD&A, and financial statements for the Q1 2021 are available on the investor relations section of our website at spinmaster.com. Before we begin, please 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, or any other future events or developments. Forward-looking statements are based on information currently available to management and on estimates and assumptions made based on factors that management believes are appropriate and reasonable in the circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct. Many factors could cause actual results to differ materially from those expressed or implied by the forward-looking statements. As a result, Spin Master cannot guarantee that any forward-looking statements will materialize, and you are cautioned not to place undue reliance on these forward-looking statements. Except as may be required by law, Spin Master has no obligation to update or revise any forward-looking statements, whether because of new information, future events, or otherwise. For additional information on these assumptions and risks, please consult the cautionary statements regarding forward-looking information contained in the earnings release dated May 5th, 2021. Please note that Spin Master reports in U.S. dollars and all dollar amounts to be expressed today are in U.S. currency. I would now like to turn the conference call over to Ronnen. Thank you, Sophia. Good morning and thanks for joining us today. I want to begin by recognizing the amazing work our team across the globe has accomplished. Together, they rallied to drive the strong results we achieved this quarter. We're managing through the complexities of the pandemic, and I am continually amazed and impressed by the effort and dedication of our employees. Spin Master is in a very different position relative to where we were at the same time last year. In May last year, Mark and I had to deliver the most challenging Q1 results in our history. I want to compliment the team on getting the turnaround done in such a quick and efficient manner. Our toy business grew nearly 22% in the quarter, and our lineup for this fall is broad, innovative, and deep. Our performance this quarter is a clear demonstration that our operational remediation efforts are delivering results, and our commitment to creating exceptional play experiences and engaging children's entertainment through our three creative centers is working. There is still more to be done, but we are now back on track to resume our growth trajectory with new operational rigor and a simplified supply chain to meet the challenging demands of the retail environment. Not only did we transform our toy supply chain, but we reorganized ourselves with our three creative centers in a way that provides clarity, structure, and a strong platform for future organic and acquisition-driven growth. This structure is another step in our journey to transform Spin Master from a traditional toy company into the leading global children's entertainment company. We have many exciting opportunities in the toy, entertainment, and digital games universe with which to grow. I'm excited as I've ever been about our prospects. I'll address our leadership transition shortly. Before I do, I want to talk about both digital games and entertainment. One of the standout areas of performance for Spin Master over the last nine months has been our very strong performance of our digital games creative center. In Q4, we saw revenue grow fourfold year-over-year. The growth continued in Q1, with revenue up 394% compared to last year. Kids continue to engage with digital games as an outlet for creativity, exploration, and social connection. With kids spending more time at home and parents being more flexible with screen time, we grew our digital games revenue primarily due to the growth of Toca Life World platform. Toca Life World is a game that regularly evolves with new content and play sets, as well as creator tools that allow kids to express themselves and personalize their experience. Kids are playing games, videoing themselves, streaming the videos onto platforms such as TikTok, Twitch, and YouTube for others to watch. Toca Boca has seen explosive growth in consumer engagement, and we believe this is a major factor behind Toca Life World's growth. According to GamesIndustry.biz, during the period Q2 to Q4 2020, Toca Life World was the number two downloaded mobile game in the U.S., behind Among Us, but ahead of Roblox. The Toca Boca hashtag has now generated over 6 billion views on TikTok, and Toca Life World now has well over 30 million monthly active users. In total, the Toca Boca ecosystem currently has over 50 million monthly active users, compared to 25 million last year. In addition, we saw strong growth in our Sago Mini subscription business, where we had over 285,000 subscribers across Sago Mini World, Sago Mini School, and Sago Mini Box, compared to 150,000 last year. This large monthly active user and subscriber base is a tremendous asset for us to develop a direct relationship with the consumer, and to which we can market and sell new digital games as we expand our digital games offerings. We're now working hard on our first-ever multiplayer 3D game, Toca Days. Plans go live in Q4 2021, which expands Toca's market to a wider and slightly older audience with deeper and more complex experiences. Kids will be able to play and socialize together from multiple locations at the same time. Toca Boca Days leverages the trend of kids using digital games as far more than entertainment alone, but as a key part of their social lives. We're continuing to make progress on the opening of Nørdlight, our new studio in Stockholm, that will focus on developing digital games, leveraging our own IP. This studio should be operational by end of this year. We are actively looking for digital games acquisitions to complement and expand our current offering and further grow our presence in this space. Turning to entertainment, at the heart of this creative center is our commitment to exceptional storytelling and engaging enduring characters that resonate with kids around the world. I'm constantly impressed by our team's ability to create original and compelling content for screens of all types, from short-form content on YouTube to long-form series for streaming platforms and traditional broadcast, all the way to theatrical film releases. We're taking a multifaceted approach to content creation to engage with kids. The team also has a rich slate of new TV shows and feature films in development and are staying true to our commitment of introducing one to two entertainment properties a year. We are on the brink of one of our most exciting milestones in our history with the much-anticipated launch of our first feature film produced in-house. PAW Patrol: The Movie will be unleashed in theaters on August 20th, distributed by Paramount. The Pups are complemented by a star-studded voice cast and dynamic music. This past Monday, it was announced that Adam Levine will be writing and performing an original song for the movie. Watch for the trailer dropping on May 17th. Earlier this month, we completed our leadership transition plan. Max, who joined us as our global president in January, has now expanded his role to Global President and CEO. You will hear from him shortly. I've shared with you before the many strengths and experiences Max brings to Spin Master, from his ability to mobilize teams and harness the potential of individuals to his leadership of complex global businesses. We're already witnessing the impact Max is having across Spin Master's business and have full confidence in his ability to lead and deliver on the business priorities for 2021 and beyond. We are highly energized by our vision for the future, focused around becoming the leading global children's entertainment company. What makes our growth story so compelling is our vision is underpinned by a solid operating and financial platform, our deep creative talents, a robust content and product pipeline driving our franchise and brands, and an exceptional leadership team. We believe that the three creative centers can work together to create holistic play experiences for kids wherever they are and to deliver significant long-term value to shareholders. Thank you for your continued support. Let me hand over to Max. Max? Thank you, Ronnen. Let me begin by saying that I'm very pleased to be joining all of you on the call today. I am very much looking forward to getting to know you better and to help build Spin Master into the leading global children's entertainment company. During the past few months, I've spent time with the team learning and understanding the industry. I wanted to share with you a few of the things that I am most excited about as I look forward. The first is PAW Patrol and the upcoming movie scheduled to debut in theaters in late August. Telling stories and creating engaging and enduring characters that resonate with kids around the world is important to us, regardless of what screens kids are watching. In conjunction with the movie, we are also very excited for the toy lineup, which will be available in August. Kids will be able to recreate their favorite movie rescues to the Chase Transforming City Cruiser, the Total City Rescue Play Set, and the Ultimate City Tower, the biggest tower we have made to match the biggest adventure the pups have ever gone on. Secondly, I am excited about the strength of our international platform. It's helping us grow, and it's helping us win licenses. In relation to our global distribution capabilities, we are growing our international footprint with further expansion into Europe, establishing direct operations in Spain and beginning to sell directly to leading retailers in Spain starting January one, 2022. The opening of the Spain office will mark the 29th global office for Spin Master, and we will continue to convert third-party distributor markets to direct sales where it makes sense strategically. Finally, I'm excited about our innovative toy lineup for this fall. Many of you had the opportunity to see our line in March at our Investor Analyst Day. In addition to PAW Patrol, I am proud of the team for driving strong innovation on Purse Pets, P.Lushes Pets, the Batman line, including the transforming play set, as well as the Sonic Fin Football. We will strategically deploy increased marketing spend in line with our inventory recovery to support the fall lineup, particularly in the U.S. We have transformed our approach to marketing, starting with step changing our consumer centricity to enable an insights-driven approach as our franchises and brands engage with our fans. We are building extensive in-house digital capabilities that will help us optimize our plans in real time, guiding kids and shoppers through their omni-channel journey. For our fall marketing plans, we will spend less on linear TV and more where eyeballs are moving to, including digital over-the-top media like SVOD, YouTube, social, influencer, and e-commerce. Our marketing spend will be prioritized to deliver sell-through goals, grow momentum on brands, capture share across e-commerce and retail, penetrate high-growth segments, and drive international growth. We want to create a seamless shopping experience using digital tools and data to gain better insights on shoppers and guide them through their path to purchase. In addition, two of the areas that I'm spending time on are refining our strategies to optimize portfolio and brand growth, and building on our innovative marketing platform to enable our retailers' omni-commerce strategies. Let me now turn to our Q1 POS performance, and Mark will provide more details on our Q1 shipments. For most of the past 18 months, our POS was significantly higher than our shipments. In Q1, this trend reversed. Our shipments exceeded POS. According to NPD, our global POS in Q1 was up 9%, and in the U.S., POS grew 7%. The industry grew faster than us against both of these measures. For those categories where Spin Master had over $10 million in annual sales in 2020, our POS was up 11% compared to 30% for the industry. Internationally, Spin Master continues to grow. We grew 9% in 11 of the largest countries as measured by NPD. We saw strong growth in Australia, Benelux, France, and Germany, all which perform ahead of the industry. We are a top 10 supplier in nine of these 11 countries. Let's turn specifically to PAW Patrol. Globally, PAW Patrol POS grew 29% in Q1. According to The NPD Group, PAW Patrol is now the ninth largest toy property globally across the G11 and was the number one property in infant, toddler, preschool toys. POS growth was especially strong across most countries in Europe, driven by strong engagement and broad content distribution. In the U.S. in Q1, PAW Patrol POS was up 27% and improved sequentially through the quarter. By March, PAW Patrol POS was growing close to 60%, well ahead of the overall toy industry. Growth was driven by both core items and spring media-supported items. The growth of core items was mainly due to lower price point impulse buys, which recovered from the declining sales due to the pandemic as foot traffic to stores improved. Looking at POS for other key brands, Bakugan grew 5% globally in Q1 and was the number one property in battling toys in France, the U.K., and Italy. With increase in reopening of the economy, Bakugan was up 1% in the U.S. in the quarter, according to our data, 68% over the last five weeks. POS in the games and puzzle category in Q1 was down 7%. We saw demand for our games and puzzles start to normalize as stores reopened, we started to lap the COVID spike in demand last year. Global Kinetic Sand POS performed well, growing 27%. Global POS for all DC Comics products, including Batman, grew 113% due to the strong performance of both core items and spring media-supported items, as well as from increased global distribution. Monster Jam Q1 POS was up 33% globally and 26% in the U.S., as both the core and RC lines performed well. Let me give you some important context for our POS performance relative to the industry. Our Q1 gap to the industry and the gap between our shipments and our POS is driven predominantly by U.S. inventory constraints. As we recover from the significant supply chain issues in 2020, driven by what happened in 2019 and focused on restoring profitability, our approach constrained upside potential in Q1. We worked extremely hard to get our inventory clean at the end of 2020, and we started 2021 with low domestic inventory levels in our U.S. warehouses. We also ended 2020 very clean at retail in the U.S., driven by strong sell-through. If you recall, in Q4, we said we were out of stock on several key items in early December and lost about $20 million in potential sales. Consumer demand was strong through Q1. Our properties that performed well in Q4 continued to well in Q1. Inventory in the U.S. is down 20% at retail. In the U.S., there were over 40 SKUs on supply allocation at the start of Q1, and they had solid performance and above expectation results in Q4. We estimate that we could incur a further $15 million-$20 million of lost sales in Q1 from low stock levels at retail. In addition, we played catch up in Q1 due to strong demand combined with global logistics issues. Asia transit lanes to the West Coast of the U.S. and Europe were delayed two to three weeks through Q1. We are now focusing hard on eliminating out-of-stock positions. Our operations team is doing what we can to ensure that we minimize any industry shipping and logistics disruptions. We expect that we will continue to be filling the pipeline in Q2, which will drive higher than normal replenishment and expect to get inventory at retail normalized and caught up by approximately end of June. Spin Master thrives when stores are open. For example, according to The NPD Group, with the U.K.'s reopening the week of April 17th, we recorded the best performance of the top five manufacturers with 65% POS growth. Overall, we expect to see share gain based on the strength of our innovation, adjustments to inventories, and marketing. We are confident that as the pandemic eases, momentum will further accelerate for our brands. In summary, what happened was due to retailers being short on inventory and demand being high. They are now chasing inventory versus burning it off. We always said POS relative to shipments is forward-looking to what shipments will ultimately be. To conclude, we are confident in the success of our strategic direction, execution of our growth strategies, and are proud of our global teams with their commitment to delivering our success. Our brands, partnerships, franchises, and digital game offerings are resonating strongly with consumers. I am looking forward to the remainder of 2021 and beyond. With that, let me now turn it over to Mark. Mark? Thank you, Max, and welcome to your first earnings call with Spin Master. This quarter, we delivered strong and encouraging improvements in our financial results. Robust revenue and gross product sales growth, a significant increase in gross margin, and management of operating costs all combined to produce an over $55 million improvement in our year-over-year adjusted net income, and just under $70 million in our year-over-year adjusted EBITDA. Our gross product sales in the quarter rose 21.6%, with a favorable foreign exchange impact of $4.1 million. On a constant currency basis, gross product sales were up 19.9%. Total revenue soared by 39.3%- $316.6 million, up from $227.3 million. Our diversification efforts are bearing fruit. Approximately 80% of total revenue in Q1 resulted from gross product sales and 20% from digital games and entertainment revenues. The gross product sales increase was driven by almost all geographic markets and double-digit sales growth in preschool and girls, boys, and outdoor product categories. In the rest of the world, gross product sales were up 44.6%. Gross product sales in Europe were up 21.2%, slightly more than the increase in North America of 18%. International gross product sales represented 42% of the total in Q1 compared to 40%. Our preschool and girls segment grew by 33% in Q1, driven primarily by strong sales of PAW Patrol, which more than offset the declines in Twisty Petz, Candylocks, and several other lines. Gross product sales in the activities, games and puzzles, and plush category rose 9.2%, driven by sales of Kinetic Sand, Orbeez, Rubik's, and Influencer, and increases in games and puzzles. In boys, gross product sales were up 12%, driven by higher sales of Monster Jam, Bakugan, and Tech Deck. As Max described earlier, with COVID restrictions easing in the U.S. this year, we have seen a strong uplift in Bakugan. Gross product sales in our outdoor segment rose 48%, reflecting the introduction of exciting innovation in our SwimWays Spring Float line and the return to outdoor activities in the U.S. from the warmer weather and the vaccine rollout. From a channel perspective, the shift to e-commerce continued. This quarter, our global e-commerce POS grew 30% in the U.S. Turning back to the P&L, sales allowances in the quarter were 13.3% of gross product sales, down from 15.2%. Our operational improvements in 2020 drove a significant reduction in non-compliance charges and penalties over last year, and our improved inventory management reduced markdowns. This was offset to some extent by continued growth in Europe, which has a higher overall sales allowance rate than the global average. A material contributor to our revenue growth was the increase in other revenue, which grew $39.1 million or 179% to $61 million. Both primary components of other revenue, entertainment and licensing and digital games, were strongly up. Entertainment and licensing grew 79%, driven by growth in TV distribution revenue as well as L&M income. Digital games revenue was up 394%, driven by continued growth in Toca Life World. Gross profit for the quarter was $157.4 million or 49.7% of total revenue compared to $90.8 million or 39.9%. This 980 basis point increase in gross margin was the result of the growth in digital games and entertainment and licensing, as well as the year-over-year cost reductions from our operational improvement initiatives. These include lower scrap and obsolescence, reduced closeout sales, lower freight, reduced reconfiguration costs, and lower sales allowances. Recalling Q1 2020, we incurred approximately $14 million in costs related to inefficiencies from our Q4 2019 operational issues. Selling, general and administrative expenses decreased as a percentage of total revenue to 43.9%, down from 64.5% last year. The 20 percentage point reduction was primarily driven by lower distribution costs, which declined by $11.7 million to 5.3% of total revenue compared to 12.5%. This sharp decline in distribution costs was the direct result of all the initiatives we implemented to remediate the supply chain issues in 2019. Marketing costs were flat in dollars compared to last year, but down 344 basis points to 8.3% of revenue. We expect our full year 2021 marketing spend to increase to approximately 10.5% of revenue, about 50 basis points higher than our spend in 2018 and 2019. We will increase marketing strategically to support sell-through, share growth, brand momentum, and channel country mix goals. In Q1, we recorded net income of $3.2 million or $0.03 per diluted share compared to a net loss of $26.7 million or a loss of $0.26 per diluted share. Adjusted net income in the Q1 was $8.4 million or $0.08 per diluted share, an improvement of $55.2 million when compared with an adjusted net loss of $46.8 million or a loss of $0.46 per share. Adjusted EBITDA was $36.7 million in the quarter compared to - $32.3 million, an improvement of nearly $70 million. Adjusted EBITDA margin was 11.6%, up from - 14.2%. From a tax perspective, we had an income tax expense of $1 million in the quarter compared to an income tax recovery of just over $48 million last year, resulting from a one-time internal transfer of intangible property. Free cash flow in Q1 was -$6.5 million compared to -$27.8 million, driven by higher cash flow from operations, partially offset by cash flows used in investing activities, which reflects the acquisition in January of Rubik's. We formally closed the acquisition of Rubik's on January 4th, and the integration has gone very smoothly. Inventory ended the quarter at $104 million, compared to $102 million at the end of 2020, and was down by $52 million, or 33%, compared to $156 million in Q1 last year. Our results this quarter reflect the completion and benefits of the year-long restructuring of our North American supply chain, which was aimed at driving structural cost savings and improvements to get our margins back to where they belong. Reflecting on the last 12 months, we have optimized our warehouse network in North America by simplifying the structure, reducing the total number of DCs, and the number of shipping points to customers, reducing our customer non-compliance charges, and eliminating cost drivers such as prepaid freight, unloading delays, demurrage charges, and into warehouse transfers. We have improved our processes to reduce storage requirements and reduced our SKU count by eliminating those not profitable enough. We have driven improvements in IT systems, especially connectivity with customers and warehouses, and focused on improved data accuracy. Our global operating platform is stronger than it has ever been. We are raising our outlook for 2021 to reflect our performance in the Q1 and continued optimism for 2021 based on orders on hand and retailer promotional and line support. We now expect our gross product sales growth to be high single digits compared to our prior outlook of low to mid single digits in March. In terms of phasing, we expect the splits between H1 and H2 gross product sales as a% of full-year gross product sales to be approximately 35%-37% H1 and 63%-65% H2. This shift towards H1 reflects the demand we are seeing from filling the inventory pipeline at retail and shipments we expect to make late in Q2 for the launch of the PAW Patrol: The Movie. The cadence of other revenue from both digital games and entertainment and licensing is not exposed to the same degree of seasonality as gross product sales from toys and is split roughly equally between H1 and H2. We now expect total revenue, which includes gross product sales as well as digital games and entertainment revenue, to increase low double digits compared to our prior outlook of mid to high single digits. This is mostly driven by growth in our digital games business. With regard to the PAW Patrol: The Movie, in early Q3, we expect to reflect approximately $12 million in our results related to distribution revenue from Paramount and approximately $11 million of amortization of the capitalized intangible asset. There will be additional amortization related to the remaining capitalized intangible asset that flows through in later quarters. Licensing and merchandising revenue from the movie will flow into Q3 and Q4 and into 2022. Depending on the movie's ultimate box office success, additional revenue related to our share of the movie's box office receipts after Paramount has recouped their distribution and promotion and advertising costs, may be received late in 2021, but more likely in 2022. We are seeing increases in input costs, primarily from plastic resin and ocean freight. We are also seeing delays, shortages, and cost increases in the chips we use in some of our product lines. We have implemented stringent cost containment and productivity programs to offset these cost increases. Where necessary, we are implementing price increases to help us offset these inflationary pressures. We expect to remain margin neutral in this regard, but it is something we are watching very closely. We will, however, benefit from improved gross margins from the remediation of our operational issues, as well as digital games revenue growth and productivity programs related to COGS. Taking all these factors together from a profitability perspective, we expect 2021 adjusted EBITDA margins to be in the mid to high teens range, but towards the higher end of the range. In addition, we expect full year depreciation and amortization to be slightly higher than 2020. Capital expenditures and our effective tax rate are expected to be consistent with previous guidance. After the end of the quarter, we completed an acquisition of certain assets of a toy product invention and development company in the U.S. In conjunction with this acquisition, the principals and employees of that company became employees of Spin Master. This team will complement our toy innovation and development capabilities. To conclude, as we look to the balance of 2021, I am delighted with the broad progress we have made across our three creative centers. We are committed to our long-term financial framework for value creation, underpinned by a formula for innovation and global growth across toys, entertainment, and digital games. That concludes the formal part of our call. We will now be pleased to take questions. Operator, please open the line. Your first question comes from the line of Stephanie Wissink with Jefferies. Thank you. Good morning, everyone. Ronnen, I'm going to start with you so I don't overlook you this time. My question is regarding PAW Patrol and PAW Patrol: The Movie, just could you help us think through the scope of licensing partnerships, the globalization of that franchise now, maybe relative to where it's been in the last few years, and what you're expecting in terms of the lift to the products business from the movie and the halo effect of the movie? Ronnen, you're on mute. Oh, thanks, Mark. Hey, Stephanie. How are you? Great. We've had for the last seven, eight years over 200 licensees and incredible partners in a full range of categories, from apparel to bedding, et cetera. All those partners are super excited and engaged to come out with a new breadth of products and offerings based on the movie. There's full engagement from all our partners that have been our partners for the last seven or eight years. The excitement at retail is very high and, Max can talk a little bit to the promotions that are happening at retail and the support that we're getting around the world. It's very consistent with our strategy, which is you have core PAW Patrol, which we refresh every year. You have the themes that we bring every single year that expand the universe, and now it's expanding the universe with a feature film that has its own theme within the film. When you take a look at it and you see the toy line, when you see the big, huge tower that's in the city, and you see the brand new refreshed vehicles and the way the pups look and all the features in the vehicles, it gives a lot of material for the licensees of which to work and to present PAW Patrol in a new, fresh way for the kids. I think all the licensees are seeing globally all the retailers embrace the film. People are very excited about it. That's great. If I could just, Mark, a question on the cost structure. You've done a lot of work around the operations and the network of operating areas, and I'm just curious if you can share with us a little bit of where you are. I think you're near completion, but what should we look for in terms of the leverage potential on the sales base that you're forecasting for the year? Hi, Stephanie. Thanks. Yes, I would characterize the actual turnaround that we undertook at the beginning of last year to be largely complete in terms of the remediation of the immediate pain points that we suffered, which caused the turnaround in the first place. We're not where we want to be in terms of our margin structure. We still think there's room for improvement, particularly in our gross margin line. If you look for the quarter, we landed up at 49.7%, which is a significant increase over where we were in Q1 last year. The rate of improvement is obviously not going to be sustainable at those levels, but we do see opportunities to continue to increase our gross margins. We're going to focus on reducing sales allowances further, our COGS improvement programs, increasing our digital games revenue in the mix, which is high gross margin. Those are all the things that we're going to continue to focus on to get it into the fifties and to get it as high as possible. That will drop down to adjusted EBITDA margins as well. As volume grows, we'll continue to focus on our cost structure to drive operating leverage. Even though we've done a significant amount of work on our distribution structure, we still see opportunities for further refinement there. We're going to continue to refine our costs as much as we can to keep both our gross margins and adjusted EBITDA margins going up. Thanks, Mark. A final question, Max, for you is just on your performance versus the industry. You walked us through how the business performed in 2020, how it's performed year-to-date. How would you characterize your guidance for this year and your expectations relative to what you expect the industry to deliver? Do you expect to be taking back share in 2021? Thank you. Stephanie, thanks for the question. We are absolutely geared for a stronger back half in terms of POS performance for our brands. We have segments that we actually have now strengthened. We have a lot of new marketing tools that we're going to basically leverage. We have great grading store support by our retailers and very great omnicommerce plans as well that we actually have put together. I expect that we will claw back on our share for Spin Master brands in the back half of this year, and that's what we're working towards. Thank you all. Very much appreciated. Your next question comes from the line of Martin Landry with Stifel GMP. Hi, good morning. My first question is on PAW Patrol as well. Just wondering if you can help us get more visibility on the number of SKUs you plan to launch surrounding your movie this year, and how does that compare versus previous years in terms of number of SKUs for PAW Patrol? I'll take that one. We have basically a slate of SKUs to support the movie, and Ronnan has actually attested to that already. If I were to tell you that basically we have had over the last number of years and quarters, close to mid-30s in the number of SKUs, and we actually track our velocities for those. As we actually look at the movie, we'll bring another four or five very strong SKUs to complement that. We've described three or four of those, and we believe that the support that we're putting behind that, as well as some of the core items, will actually help bring PAW Patrol's POS to even new heights. We feel very strongly about that. Okay. Is it fair to say that you also, on top of new SKUs, you also expect higher velocity of your existing SKUs? Well, I think we will. That's a fact. As actually we look to replenish inventories, and we actually look to actually support not just the new items, but the core line of PAW Patrol, we are very confident that the whole line will float up. We're actually looking forward to helping consumers and shoppers find those items in their search. We're super excited about the marketing that we're going to do. It's not just us, right? We have a great marketing plan also supported by Nickelodeon and Paramount. We're super keen to get into it. Okay, thank you. Wondering if you can share any details on timing of announcement of a new property that you're developing internally. I believe you expect to release one property a year. Last year was Mighty Express. Just wondering if you're still on track to launch a new one this year as well. Yeah. Thanks, Martin. Yeah, probably in our call later in the year, we'll be able to give you guys more color on properties that are launching. I can tell you that we have two properties that are actually green-lit and in production right now as we speak, but we just haven't come out to the public and announced them yet, so stay tuned. Okay. My last question is on your acquisition. I think you've acquired some assets for $22 million post quarter end. Are these revenue-producing assets, or it's just a team of people? Can you just give us a bit more color on what that is that you acquired? Yeah. The announced purchase price is $22 million. That's going to get paid out over five years. The initial payment, which you'll see in Q2, was at $7.5 million. It's mainly a team of people. It's a really strong capability, some IP, but it's a very strong team of people that are very much in the industry, focused on developing toys and inventing toys. This is a very strong complement to our innovation pipeline. As you know, innovation is part of our DNA, and this is just another way of building up our global innovation pipeline. We're very excited about what ideas that they will bring to us. Okay, perfect. Thank you. Your next question comes from the line of Adam Shine with National Bank. Thanks a lot. Welcome, Max, and congratulations, Ronan, on the turnaround. Mark talked about logistics issues being resolved from a year ago, and then obviously you continued to do simplification efforts for added savings. Maybe for you, Ronan, and/or for you, Max, any material areas of reinvestment in the business or pockets of material spend to be done to further stimulate perhaps post-2021 growth? Adam, first of all, thanks for the compliment. We've had quite a year. I'm gonna pass that to Max. Max, why don't you take that? Adam, thanks for the well wishes. We're extremely excited about supporting our brands more this year. That's one area of investment, and we're super excited about also supporting our future-facing capability with some very important digitalization capabilities we're bringing to the company. Those are two of the more important investments we'll make. One is immediate, one is really more medium longer term. If I look at what we're doing in marketing, we'll be able to reach about 192 more eyeballs this next fall with about 135 million more impressions. We're going to basically be investing more dollars where eyeballs are going, particularly in kids digital, and we're going to do that at a lower cost. All these digital changes we're making on investments will reach audiences where they're most receptive. I think we're going to leverage marketing innovation to win new fans as well. We're super keen on that, and that's where we're spending quite a bit of time and bringing more money to the table. As for digitalization, we're trying to basically get ourselves in a place where we're actually tracking our performance and operations digitally so we can react in real time. You can expect an operational advancement from the great work that the team has done over the last 18 months. We're just simply taking that forward, and those are two areas that I want to emphasize. No, thanks for that. Maybe just for Mark, obviously, acknowledging the very strong start to Q1 and some of the comments made earlier in regards to how some of the PAW Patrol dynamic will ensue into Q2, perhaps maybe a bit of a timing dynamic that pulls a little bit from Q3 into Q2. Nevertheless, usually you guys are delivering guidance updates around the Q2 dynamics. As we think about some of the optimism that Max is talking about for the product lineup in the H2, are there any other particular elements regarding the second half of the year where you're still sort of not entirely sure in terms of line of sight, whether it's necessarily freight or other inventory or other issues to consider? Yeah. Adam, you're right. In terms of our outlook cadence, our guidance cadence, we always start in March, we update in May, we update again in August as our visibility improves through the year, and we'll continue to do that. We are optimistic about the balance of the year in H2, driven by our retailer promotional support and strength of our line and the orders that we have. Obviously there are unknowns that are still relevant now, cost inflation being one, COVID being another. As always, there's the replenishment cycle late in Q4 that we can't predict, even in November. When we release Q3, there's always that element of the unknown as it relates to the final six weeks replenishment cycle of the year. I would characterize our guidance as reasonably optimistic, but also prudent given that we're in May and that there are other things that are coming down the line that we just don't know about. That's the way I would characterize it. Great. I appreciate it. Thanks a lot. Your next question comes from the line of Jaime Katz with Morningstar. Hi. Good morning. Thanks for taking my questions. I'm wondering how much of the inflation you guys are seeing will be mitigated by price increases rather than cost savings over the rest of the year. I don't think that's something that has been mentioned. Yeah. We're seeing inflation in three primary areas, plastic resin, ocean freight, and in the chips that many of you have heard about in the news recently. Not the exact same chips, obviously, that the automakers are using, but more simple versions of that. Our primary goal is to offset any inflationary pressures through cost containment programs and initiatives. To the extent that we cannot do that, we will then go out and seek price increases in order to remain margin neutral, and that's exactly what we're doing right now. I don't want to publicly express the relative proportion of cost containment versus price increases, but I will tell you that our first goal is to contain our costs, and then if we cannot, because of the scale of the inflation, we will then seek price increases, and we're out there now implementing that strategy. Okay. I believe you said earlier in the prepared remarks that the inventory at retail would be trued up by the end of June. I'm wondering what assumption that implies for industry growth over the back half of the year in your outlook. Just to be clear, and I'll pass it back to Max in a second, just to be clear, that was what our assumption was in terms of our retail, because of the issues that Max described. That wasn't a comment on the industry per se. That was in relation to Spin Master. Max, why don't you comment on that as well? Yeah. It's a very good question. As we talk to retail partners and we've seen, obviously, and I'm going to comment first in the U.S., the impact of obviously all the stimulus and the continued strength of the toy industry. Everyone's really also excited, and I'm talking about retailers in general, about the back half and the toy season once again continuing to be very strong this coming fall. We're planning against that. So far, we have not seen a drop off, and we see continued support by consumers getting into the category, truly to delight children and families. We feel very strongly about the second half of the year as well. Okay. Thank you. Lastly, I think the way that it was articulated that there was room for EBITDA improvement going forward would imply that you guys are looking towards above 20% EBITDA margins over the long term. Is that the right way to be thinking about that metric? We guided this year to mid to high teens. We narrowed our guidance to the higher end of that range, as you know. As it relates to both gross margins and EBITDA margins, we have a diversified platform now with digital games and entertainment and licensing, as well as toys. We think we can continue to grow our EBITDA margins. Our goal, if you go back to our historical commentary, has always been to be above 18%. I don't want to quote a specific number of where that can go, but we obviously want to get back there firstly, as the first goal, and then to continue to grow it from that point onwards. Thank you. Very helpful. Thanks. Your next question comes from the line of Luke Hannan, Canaccord Genuity. Yeah, thanks. Good morning. I wanted to expand a little bit just on the digital segment here. I'm curious to know, are the players who engage with you on your Toca Boca, your Toca Life, your Sago Mini platforms, are they already playing other games like Minecraft and Roblox, for example? Are they new to gaming in general? If that's the case, how do you view those offerings fitting in with those other, we'll call it bigger multiplayer games? Yeah. Thanks, Luke. Great question. They're definitely playing other games. They're definitely on Roblox and playing Minecraft. I think that where Toca Boca differentiates itself from those two offerings is it's all about creativity. We've started to build what we call creator tools, which give the ability to decorate their homes and decorate their environments, and then also express themselves as characters in the games. It's a lot about creativity. It's a lot about storytelling. A lot of the players are expressing themselves through what they build, how they design themselves, and then what they'll do is they'll actually video the games and then upload them to TikTok and tell a story with their characters and with the home environment that they built, whether it's the new mansion or the Neon Rainbow or the fancy restaurant, et cetera. It's much more of a, I would say, a storytelling, creative home builder playset universe that's constantly and ever-expanding. That gives it its differentiation and a different tone and tenor versus some of the other games. There's definitely a crossover, but I think it's very complimentary because if you like that type of play and you like to express yourself in that way, it gives you a place to go and do that. When you talk about Sago Mini, Sago Mini is very different because it's truly for preschoolers. It's more two to five. I think it kind of stands on its own. It really is what we're building to be the number one digital preschool brand on the planet, and that's what we're going towards, and it's slow and it's steady, and there's Sago Mini School, which has got an educational component to it. It's education-lite. You've got Sago Mini World, which is just fun and easy, and there's so many different worlds, and again, ever-expanding. Again, it's a subscription-based service, so you look at things like Roblox or Minecraft. Actually, Minecraft has some subscriptions, but Roblox is not a subscription-based service. It's got a different monetization and longer, I would say, just a different monetization mechanism than the other ones. Again, the distinguishing feature is the focus on the preschoolers. Got it. That's helpful. When you think about the exposure that both of those sort of platforms or properties, the exposure that those would have gained today, has it been mostly, you talked about the hashtags on TikTok, you talked about YouTube as well. Yep Twitch. Has that all been organic exposure, or are you also engaging in sponsored streams, for example? Is that factored into that elevated marketing spend? We're very fortunate. We do a little bit of marketing, but the majority of it is user-generated content. Got it. Last one for me. Switching gears to, I guess, your broader e-commerce penetration. I believe you commented on the last call that it was close to 30%, maybe it was a little bit higher than that in Europe. Curious to know what the cadence of that was throughout Q1 and sort of where it stands today. It continued to perform close to that same level. It varied throughout the quarter, right? As basically the U.S. began to ease restrictions, we saw a bit of a pullback in the U.S., but in Europe, that continued to be very strongly. In the U.S., it really remained high as well. I just want to make sure I'm clear about that. We saw more participation, and quite frankly, we're very encouraged. We've performed very well across the space. Continue to believe that as we get into the back half, our e-commerce plans are very strong, not just for pure play, but omnicommerce. It continues to be a critical component of our plan. Okay, thanks for the color. Your next question comes from the line of Brian Morrison with TD Securities. Good morning. A couple follow-up questions, guys. With respect to the acquisition, Mark or Max, just trying to understand why you felt the need to bring innovation and talent in-house. Is it the economics? Is it the ability to capitalize or isolate talent? Do you have a prior relationship with this team? Hey, Brian. I'll jump in. First of all, how are you? I'm good, thanks. This was such a unique opportunity to bring in collectively, I would say, you're talking about hundreds of years' worth of toy development talent on this team. The team has the ability to produce very high complex toys. They were actually one of our partners on the Hatchimals. Just their technical competence is just the best in the industry. This was just really a once in a lifetime opportunity. It was a once in a lifetime opportunity to bring it into the fold. Right time for those individuals to make this transition, the right time for us, and it's just going to really complement and bolster up our innovative and technical capabilities and give us the ability to actually bring out more technical products to the marketplace and also the speed to market is going to be accelerated. We're already noticing in a short amount of time, we have products that were, I would call them, stuck in the pipeline that now are unstuck as a result of this acquisition. They will come to market probably in 2022 versus coming out in 2023. We're already seeing the benefits. In the toy industry, the knowledge and how teams function together, it's a very fine balance. The ability for us to bolster up our innovation, which we are known for, and see that cascade out to all the various different GPUs, whether or not it's in preschool or whether or not it's in boys or whether or not it's in games, and infuse our brands with that innovation, it's just right on strategy for us. We didn't want to miss the opportunity. Okay. I appreciate that, Ronnen. Maybe while I've got you, I think you mentioned that you expect the timing of Nørdlight to open up this year. When can we expect to see your own IP characters such as PAW Patrol on digital platforms for consumption? It's a great question. We've already brought in two amazing individuals, which we can share with you later on in other calls. The ops will be fully operational by the end of the year, and I would probably say, because this stuff takes time, I'd probably say in 2023, Brian. Okay, thanks for that. Then one last question. This is for Mark. Mark, can you just walk us through sort of economics 101 for the forthcoming film? You did give some metrics with respect, and I'm just talking from a qualitative perspective. You talked about the financial contribution and expenses for it coming in in Q3. Can you just walk us through how that works and what we should expect in terms of 2022 in terms of how the profitability share works as well? Sure, Brian. Everything that's happened up to this point on the movie has been really capitalized on our balance sheet. All of it actually stays on our balance sheet until the movie gets delivered, which will likely be very early in Q3, in anticipation of the launch at the end, late August. At that point, as I said to you, we recognize $12 million of distribution revenue from Paramount, and then we also amortize the costs associated with that, which is really their share of the costs. We'll still have a remaining piece of intangible property on our balance sheet, which we'll amortize pretty much over Q3 and Q4, maybe some into 2022, in line with the revenue streams that come out of the movie. Those revenue streams are going to be primarily toys. As you know, we'll start shipping the toy line in late Q2. We'll ship it in Q3. We'll ship it in Q4. We'll also generate licensing and merchandising, all the bedding, shoes, apparel, all the LNM that Ronan talked about earlier will start flowing through in Q3 and Q4 and into 2022. The final element of this is the box office, which is our potential share of box office receipts should the movie really become successful. Keep in mind that Paramount has the right to recoup their distribution costs and their P&A costs, which is essentially their marketing costs of the movie before we share in it. If the movie does really well globally, then the waterfall will cascade, hopefully towards us, and we'll get some share of that box office receipts revenue. It will likely be in 2022 that that will flow, but it will possibly be in late 2021 as well. That's basically how the movie works. That's very helpful. Thank you all for your answers. Your next question comes from the line of Sabahat Khan with RBC Capital Markets. Great. Thanks, and good morning. Just one question on the margin discussion that was happening earlier. I guess you called out operating leverage and some favorable mix helping in future years. Is there anything else we should keep an eye on or is there any cost reduction initiatives you're going to undertake? Just trying to think of the big picture drivers over the next few years. Yeah. I called out most of them, Saba, but keep in mind that our operations team in Toronto and in Asia is still very focused on improving COGS as much as possible. We have a number of productivity programs that are in operation in Asia and in Vietnam and India and Mexico, which relate to strategic sourcing, which relate to volume rebates, which relate to value engineering. All of those things will continue to go on, that will continue to improve gross margins, as well as increased LNM, digital games, reduction in sales allowances, value-based pricing, all of those areas that I touched on earlier. Okay. Then just on the sales allowances, I guess, the historical range has been 10%-12% with some variation around that. I guess, what's a good range we can think about over the long run? Does it really just depend on the type of products you sell in any given year? Sorry, was that question in relation to sales allowances? Yes. Okay. Yeah, the historical range, Saba, that we've been at has been 10%-12%. I would say to you, for your model, you should be thinking towards the higher end of that range, 12% in that zone. It's not because sales allowances are going up per se, it's just because as Europe continues to grow from a geographical mix perspective, they have a higher sales allowance structure. They also have higher pricing. If you just look at the sales allowance line as Europe grows, and it's growing fast, sales allowances will tend to kick up a little bit. I would say around 12% is a good number. Okay. Then the commentary earlier on marketing indicated that it was going to be quite a bit broad-based. Can you maybe help us think about other specific franchises that you wanted to invest behind? Or was it just a wholesale review of the marketing spend, and you felt that there was more one way to make an impact there? Just some additional color. Sabahat, great question. I think the way we think about our brands, basically, we have franchises, we have core brands, and obviously everything else. We are basically gearing our marketing incremental spend to first and foremost support our franchises and core brands. When you think about that, you have to be thinking about, obviously, Kinetic Sand. You have to be thinking about Rubik's. You have to be thinking about GUND and those brands that we actually call core franchises, besides PAW Patrol, definitely Mighty Express. We are first and foremost making sure those brands are supported and that's the way we're going to do our expenditures in the second half. Okay. Just one last one for me. I think a few years ago, there was a shock to the retail system with the exit of Toys R Us, and now we're in a new world with e-commerce being front and center. I guess, as we come out of the pandemic, just a broad question, given that you are a bit more North American exposed than some of your peers, do you feel that retail is in a good place and e-commerce maybe stepped up to fill in that void? Or do you still see there's an opportunity for maybe a specialty retailer that the industry could still benefit from? Let me start, and then I'll get Mark or Ronnen to complement, given their experience. I actually feel very strongly that we are seeing most every part of the whole channel work to strengthen their plans as the industry comes back and stays afloat. I feel very strongly about our e-commerce plans and continuing to be a very important part of the mix. Actually, brick and mortar retailers are benefiting tremendously where we see reopening and COVID restriction easing and traffic flow back to stores. I believe that will continue to play a role, and I think our consumers will be very excited to go back to stores to basically see the toys. With regards to specialty, some specialty players, and we've seen some in Europe particularly, are incredibly well-poised to come back and play a strong role. They've complemented their efforts with obviously, click and collect and some things, curbside pickup programs. They themselves are moving and pivoting to that. I believe you're going to see them playing a very strong role as the season unfolds coming up in the fall. Ronnen, is there anything you want to add to that? No, I totally agree. Okay. The only thing I would add to that, Saba, is just we are seeing some of the specialty in the U.S., particularly GUND, starting to come back and stabilize now, and also in countries like Italy and Germany in Europe and France as well, which have strong specialty markets. Obviously, a lot of them suffered in 2020, but there is some stability returning now, and we are seeing a pickup back there. Okay. Thanks, Ronnen. I think we have time, Operator, for one last question, please. Your final question comes from the line of Sid Dilawari with Cormark Securities. Hey, guys. Good morning. Thanks for taking my question. Maybe Mark can take this one. Just on the digital games front, I think you disclosed in your prepared remarks that the number of Sago Mini subscribers at the end of the quarter were around 285K. Based on my understanding, I think the ARPU on these subscribers is around $8 a month on the high end. That's around, I think, $7 million a quarter in revenue, and digital games revenue during the quarter was around $34 million. Should we assume that the rest is driven by Toca Boca and in-app purchases within Sago Mini or Toca Boca? Just wondering if you could just provide a bit more clarity on that line item. Thank you. We don't actually break down the individual components of the digital games revenue yet. I mean, that is something that we are considering doing as we go forward and also breaking out gross margins and profitability for digital games and entertainment. Over time, we will enhance our disclosure to you guys to try and make it easier for you to understand the business. I would say that your ARPU number was a little bit high. Okay. Sago's revenues are not at that level. Most of the revenue right now is coming from Toca and Toca Life World. Certainly Sago is contributing, but not necessarily at the level that you described. Right. Sorry, just one follow-up on that. Since Toca Boca is not subscription driven, do you expect this revenue to be stickier in the back half of the year, given that with the whole reopening and maybe kids will be spending less screen time? Just wondering your outlook on that. Well, the seasonality of the digital games business is far less than toys. It's typically around half and half. There is some seasonality essentially driven around the launches of new products that Ronnen Harary described, and also around Christmas and early January around gift cards and the redemptions of gift cards. It's really not a seasonal business. Obviously the stickiness is driven by the innovation and the engagement levels with the game itself. Ronnen Harary, do you want to add anything to that? I think the one thing you have to think about with Toca Boca and Toca Life World is it's an ever-expanding universe, and every single month we add a feature into the game that kids can actually get for free or they can actually buy. There's constant engagement with the consumer, with freshness and newness all throughout the year. I think that's the really important thing that everybody needs to focus on is that it's an expanding universe. It's not like when we grew up as kids, you got the cartridge and that was the game. This is an expanding universe that's constantly expanded. If you play the game today, it's going to feel and look different in 12 months' time from now. It actually feels different every single month. I think that it's a long-term, slow building system. If you look at things like Roblox took 10 years for it to really get its footing. Once you get your footing, you get critical mass, you get scale, you get 30 million monthly active users, you get the users posting their stuff up to TikTok telling their stories, and so you create this flywheel effect. There's both the flywheel effect and there's all the features that are put into the game on a monthly basis that we feel drive engagement with the consumer. That's really what we're focused on, and just in, how would you say, delighting and exciting the consumers every single month. Okay, thanks. That's great, thanks for squeezing me in. My pleasure. Okay, Operator, I think we can conclude the call at this point. Thank you very much, everybody, for joining us today. We look forward to speaking to you again in August with our Q2 results. Thank you very much. This concludes today's conference call. You may now disconnect.