Q3 2021 Management's Discussion & Analysis

November 3, 2021

SPIN MASTER CORP.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL RESULTS

INTRODUCTION

The following Management's Discussion and Analysis ("MD&A") for Spin Master Corp. ("Spin Master" or the "Company") provides information concerning the Company's financial condition, financial performance and cash flows for the three and nine months ended September 30, 2021 ("third quarter", "the quarter", "Q3"). This MD&A should be read in conjunction with the Company's unaudited condensed consolidated interim financial statements for the three and nine months ended September 30, 2021 ("interim financial statements"), its audited annual consolidated financial statements and accompanying notes ("financial statements") and its annual MD&A for the year ended December 31, 2020 ("Annual MD&A"). Additional information relating to the Company, including the Company's annual information form for the year ended December 31, 2020, can be found under the Company's profile on the System of Electronic Document Analysis and Retrieval (SEDAR), which is administered by the Canadian Securities Administrators ("CSA") at www.sedar.com.

Some of the statements in this MD&A contain forward-looking information that are based on assumptions and involve risks and uncertainties. See "Forward-Looking Statements". Actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those described in "Risks Relating to Spin Master's Business" in the Annual MD&A and elsewhere in the Annual MD&A and this MD&A.

BASIS OF PRESENTATION

The financial information included in the MD&A are derived from the financial information included in the Company's interim financial statements and accompany notes that were prepared in accordance with International Accounting Standard 34, Interim Reporting and consistent with International Financial Reporting Standards ("IFRS"). However, certain financial measures contained in this MD&A are non-IFRS measures and are discussed further in the "Non-IFRS Financial Measures" section. 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.

BUSINESS OVERVIEW

Spin Master is a leading global children's entertainment company creating exceptional play experiences through a diverse portfolio of innovative toys, entertainment franchises and digital games. Spin Master is best known for award-winning brands PAW Patrol, Bakugan, Kinetic Sand, Air Hogs, Hatchimals, Rubik's Cube and GUND and is the toy licensee for other popular properties. Spin Master's entertainment team creates and produces compelling multiplatform content, stories and endearing characters through its in-house studio and partnerships with outside creators, including the preschool success PAW Patrol and 9 other original shows along with multiple short-form series, which are distributed in more than 190 countries. The Company has an established digital games presence, anchored by the Toca Boca and Sago Mini brands. With approximately 2,000 employees in 28 sales and marketing offices globally, Spin Master distributes products in more than 100 countries.

Spin Master's principal strategies to drive the Company's continued growth include:

• Innovate using our global internal and external research and development network;
• Increase international sales in developed and emerging markets;
• Develop evergreen global entertainment franchises;
• Establish a leading position in digital games; and
• Leverage the Company's global platform through strategic acquisitions.

1

Spin Master's organic growth strategy is centered around the Company's 36-month brand innovation pipeline. This pipeline is fed by internal innovation and multiple touch points with inventors, licensors, consumers and potential acquisitions, traditional and innovative entertainment contact and digital games. These touch points strengthen consumers' attachments to Spin Master's brands and franchises and are the engine of long-term growth.

Spin Master continues to expand into content for traditional television, video-on-demand, subscription video-on- demand, in addition to other short-form and long-form content, including movies, across a variety of distribution channels.

Spin Master's business comprises three geographic segments: North America, comprised of the United States ("U.S.") and Canada; Europe, comprised of the United Kingdom, France, Italy, the Netherlands, Germany, Austria, Switzerland, Belgium, Luxembourg, Slovakia, Hungary, Romania, Czech Republic, Poland, Turkey, Russia and Greece; and the Rest of World, primarily comprised of Hong Kong, China, Vietnam, India, Australia, New Zealand, Japan and Mexico and all other areas of the world serviced by Spin Master's third party distribution network. The Company remains focused on its long-term goal of more than 45% of sales outside of the North America segment.

Spin Master's diversified portfolio of toys, games and products is organized into four product categories:

(1) Activities, Games & Puzzles and Plush; (2) Boys; (3) Outdoor and (4) Preschool and Girls.

Seasonality factors cause the Company's operating results to fluctuate significantly from quarter to quarter. Revenue from sale of goods is more concentrated in the third and fourth quarters of a fiscal year with a significant portion of its net income earned and cash flows generated during the same period.

COVID-19 PANDEMIC

In March 2020, the World Health Organization declared the outbreak of COVID-19 as a global pandemic. The crisis related to COVID-19 is unprecedented and has had an impact on the Company's employees, customers and suppliers in 2020 and 2021.

Supply Chain

The Company closely monitors the changing global environment to enable immediate actions to be taken to ensure customer order fulfillment is achieved across the various markets. The shipment of goods from ports in Asia to North America and Europe continues to be affected by shipping container availability issues and port disruptions.

Demand

Consumer demand for toys is strong in most major markets. Brick and mortar retail consumer traffic continues to be affected in some markets with government-imposed restrictions and consumer purchasing behaviour. Online and e-commerce channels are active in most countries.

Liquidity

As at September 30, 2021, the Company had unutilized liquidity of $878.0 million, comprised of $360.5 million in cash and $517.5 million under its credit facilities. The Company believes it has sufficient liquidity to meet its operational requirements.

2

SELECTED FINANCIAL INFORMATION

The following provides selected key performance metrics of the Company for the three and nine months ended September 30, 2021, which should be read in conjunction with the financial statements of the Company.

Key Performance Metrics	Three Months Ended Sep 30	Nine Months Ended Sep 30
(US$ millions, except per share information)	2021	2020	2021	2020
Sales and Earnings
Gross Product Sales1	681.2	587.4	1,334.9	1,111.9
Net Sales1	607.8	523.3	1,189.8	981.3
Entertainment and Licensing revenue	52.9	20.5	107.3	53.8
Digital games revenue	53.8	27.8	124.8	44.9
Total revenue	714.5	571.6	1,421.9	1,080.0
Net income	135.4	86.8	172.1	45.2
Adjusted Net Income1	132.6	95.1	182.6	38.8
EBITDA1	221.2	130.5	322.0	97.9
Adjusted EBITDA1	217.3	139.9	335.8	129.1
Adjusted EBITDA Margin1	30.4 %	24.5 %	23.6 %	12.0 %
Earnings Per Share ("EPS")
Basic EPS	1.32	0.85	1.68	0.44
Diluted EPS	1.29	0.83	1.64	0.43
Adjusted Basic EPS1	1.30	0.93	1.77	0.38
Adjusted Diluted EPS1	1.26	0.91	1.74	0.37
			Sep 30,	Dec 31,
			2021	2020
Balance Sheet
Cash			360.5	320.6
Total assets			1,685.4	1,342.1
Total non-current liabilities			106.1	93.8
	Three Months Ended Sep 30	Nine Months Ended Sep 30
	2021	2020	2021	2020
Cash Flow Data
Cash provided by operating activities	85.8	117.2	189.0	172.6
Cash used in investing activities	(22.7)	(20.2)	(133.6)	(65.6)
Cash (used in) provided by financing activities	(5.6)	(303.6)	(14.8)	(12.3)
Free Cash Flow1	65.8	96.0	128.3	108.4

Notes:

1) See "Non-IFRS Financial Measures".

For the three months ended September 30, 2021, revenue increased by 25.0% to $714.5 million from $571.6 million in 2020. In Constant Currency terms1 revenue increased by 24.2%. For the nine months ended September 30, 2021, revenue increased by 31.7% to $1,421.9 million from $1,080.0 million in 2020. In Constant Currency terms1, revenue increased by 30.0%. The increase in revenue for the three and nine months ended September 30, 2021 was primarily driven by higher Gross Product Sales1, digital games revenue, entertainment and licensing revenue, offset in part by an increase in Sales Allowances from higher product sales volume and market mix.

Net income for the three months ended September 30, 2021 was $135.4 million, an increase of $48.6 million from $86.8 million in 2020. For the nine months ended September 30, 2021, net income was $172.1 million, an increase of $126.9 million from $45.2 million in 2020. Adjusted Net Income1 for the three months ended September 30, 2021 was $132.6 million, an increase of $37.5 million from $95.1 million. Adjusted Net Income1 for the nine months ended September 30, 2021 was $182.6 million, an increase of $143.8 million from $38.8 million.

3

For the three months ended September 30, 2021, Adjusted EBITDA1 increased to $217.3 million or 30.4% of revenue, compared to $139.9 million or 24.5% in 2020. For the nine months ended September 30, 2021, Adjusted EBITDA1 increased to $335.8 million or 23.6% of revenue, compared to $129.1 million or 12.0% in 2020. In both comparative periods, the improvement in Adjusted EBITDA1 was primarily driven by higher gross profit, digital games and entertainment revenue and lower distribution expenses, offset in part by higher administrative, marketing and selling expenses.

For the three months ended September 30, 2021, Free Cash Flow1 was $65.8 million compared to $96.0 million in 2020, a decrease of $30.2 million. Free Cash Flow1 decreased primarily due to lower cash flows generated by operating activities and higher cash flows used in investing activities. For the nine months ended September 30, 2021, Free Cash Flow1 was $128.3 million compared to $108.4 million in 2020, an increase of $19.9 million. Free Cash Flow1 increased primarily due to higher cash flows generated by operating activities.

FINANCIAL PERFORMANCE

For the three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020:

Consolidated Results

The following tables provide a summary of Spin Master's consolidated results for the three and nine months ended September 30, 2021 and 2020:

		Three Months Ended Sep 30
(US$ millions)	2021	2020	$ Change	% Change
Total revenue	714.5	571.6	142.9	25.0 %
Cost of sales	348.5	293.7	54.8	18.7 %
Gross profit	366.0	277.9	88.1	31.7 %
Selling, marketing, distribution and product	107.1	92.2	14.9	16.2 %
development
Administrative expenses	80.0	67.0	13.0	19.4 %
Depreciation and amortization expenses	8.0	9.5	(1.5)	(15.8)%
Other expense	2.2	-	2.2	n.m.
Foreign exchange (gain) loss	(10.8)	5.1	(15.9)	(311.8)%
Finance costs	2.3	2.6	(0.3)	(11.5)%
Income before income tax expense	177.2	101.5	75.7	74.6 %
Income tax expense	41.8	14.7	27.1	184.4 %
Net income	135.4	86.8	48.6	56.0 %

Highlights for the three months ended September 30, 2021 as compared to the same period in 2020: (US$ millions, except per share information)

• Total revenue of $714.5 million increased by 25.0% from $571.6 million. In Constant Currency1 terms, total revenue increased by 24.2%. Contributing to this increase was higher Digital Games revenue of $53.8 million, which increased by $26.0 million or 93.5% from $27.8 million.
• Gross profit as a percentage of total revenue increased to 51.2% from 48.6%.
• Selling, marketing, distribution and product development expenses increased to $107.1 million or 15.0% of total revenue from $92.2 million or 16.1%.
• Administrative expenses increased to $80.0 million or 11.2% of total revenue from $67.0 million or 11.7%.
• Net income was $135.4 million or EPS of $1.29 (diluted) compared to $86.8 million or EPS of $0.83 (diluted).
• Adjusted Net Income1 was $132.6 million or Adjusted Diluted EPS1 of $1.26 compared to $95.1 million or Adjusted Diluted EPS1 of $0.91.
• Adjusted EBITDA1 increased to $217.3 million or 30.4% of revenue from $139.9 million or 24.5%.
• Cash provided by operating activities was $85.8 million compared to $117.2 million, primarily driven by an increase in net working capital, offset in part by higher EBITDA1.

4

• Free Cash Flow1 was $65.8 million compared to $96.0 million, driven by lower cash flows provided by operating activities and higher cash flows used in investing activities.
• After the quarter, the Company announced the creation of Spin Master Ventures ("SMV"). To launch the initiative, SMV made minority investments in Hoot Reading Inc. and Nørdlight Games AB totaling $2.4 million during the third quarter of 2021 (refer to Investments and Acquisitions section).

		Nine Months Ended Sep 30
(US$ millions)	2021	2020	$ Change	% Change
Total revenue	1,421.9	1,080.0	341.9	31.7 %
Cost of sales	688.6	593.1	95.5	16.1 %
Gross profit	733.3	486.9	246.4	50.6 %
Selling, marketing, distribution and product	248.6	232.7	15.9	6.8 %
development
Administrative expenses	226.5	187.9	38.6	20.5 %
Depreciation and amortization expenses	25.6	27.7	(2.1)	(7.6)%
Other expense (income)	1.7	(1.0)	2.7	(270.0)%
Foreign exchange (gain) loss	(2.2)	17.1	(19.3)	(112.9)%
Finance costs	7.1	8.7	(1.6)	(18.4)%
Income before income tax expense (recovery)	226.0	13.8	212.2	1,537.7 %
Income tax expense (recovery)	53.9	(31.4)	85.3	(271.7)%
Net income	172.1	45.2	126.9	280.8 %

Highlights for the nine months ended September 30, 2021 as compared to the same period in 2020: (US$ millions, except per share information)

• Total revenue of $1,421.9 million increased by 31.7% from $1,080.0 million. In Constant Currency1 terms, total revenue increased by 30.0%. Contributing to this increase was higher digital games revenue of $124.8 million, which increased by $79.9 million or 178.0% from $44.9 million.
• Gross profit as a percentage of total revenue increased to 51.6% from 45.1%.
• Selling, marketing, distribution and product development expenses increased to $248.6 million or 17.5% of total revenue from $232.7 million or 21.5%.
• Administrative expenses increased by $38.6 million to $226.5 million from $187.9 million. As a percentage of total revenue, administrative expenses declined to 15.9% from 17.4%.
• Net income was $172.1 million or EPS of $1.64 (diluted) compared to $45.2 million or EPS of $0.43 (diluted).
• Adjusted Net Income1 was $182.6 million or Adjusted Diluted EPS1 of $1.74 compared to $38.8 million or Adjusted Diluted EPS1 of $0.37.
• Adjusted EBITDA1 increased to $335.8 million or 23.6% of revenue, compared to $129.1 million or 12.0%.
• Cash provided by operating activities was $189.0 million compared to $172.6 million, primarily driven by higher EBITDA1.
• Free Cash Flow1 was $128.3 million compared to $108.4 million, driven by higher cash flows provided by operating activities.

5