Jakks Pacific, Inc. · NASDAQ:JAKK
Jakks Pacific — Q3 2020 Earnings Presentation
21 slides from Jakks Pacific's earnings presentation, Nov 2, 2020
Slide 1: Q3 2020 Earnings Update
2019 Q3 2020Forecast Earnings Update November 2, 2020 th August 29 , 2019
Slide 2: Third Quarter 2020 Earnings Conference Call Presentation
Third Quarter 2020 Earnings Conference Call Presentation November 2, 2020, 5:00 PM Eastern Time Participant Dial in: 1(833) 423-0496 International Dial in: 1(918) 922-2390 Conference ID 8283204 1
Slide 3: Executive Team on the Call
EXECUTIVE TEAM ON THE CALL STEPHEN BERMAN Chairman & Chief Executive Officer JOHN KIMBLE Executive Vice President & Chief Financial Officer 2
Slide 4: Safe Harbor Statement
SAFE HARBOR STATEMENT The Company would like to point out that any comments made about JAKKS Pacific's future performance, events or circumstances, including the estimates of sales and/or Adjusted EBITDA in 2020, as well as any other forward-looking statements concerning 2020 and beyond are subject
Slide 5: CEO Overview
CEO OVERVIEW Performed Better than Internal Expectations Despite Challenges • Year-to-date EBITDA up over 50%; • Grew gross margins to highest level in over three years; • POS at top accounts up 28% Sept. inventory down mid-teens • Year-to-date Operating profit positive for first time since 2016 • A
Slide 6: CEO Overview (continued)
CEO OVERVIEW (continued) Several Products Performed Well • Disney sales up 18% excluding Frozen; • Nintendo sales up 60%; • Sonic up 5x • Xtreme Power Dump Truck off to good start • Perfectly Cute Baby/Home up double digits • Cute Girls Hairstyles off to strong start Encouraging Retail POS and Inven
Slide 7: Q3 2020 Results
Q3 2020 RESULTS (in US $000s except per share data) Q3 Favorable/(Unfavorable) 2019 2020 ∆$ ∆% Net Sales 280,130 242,290 (37,840) (13.5%) Gross Profit % 28.9% 30.8% 193 bps Profit (Loss) from Operations 35,662 37,513 1,851 5.2% Profit (Loss) from Operations % 12.7% 15.5% 275 bps Earnings (Loss) Per
Slide 8: CFO Sales Review
CFO SALES REVIEW Balancing Evergreens and Licenses Girls Products down 11% vs. Q3 2019 Up 24% Excluding Frozen Lines that performed well: • Perfectly Cute Baby/Home • Disney Princess • Kitten Catfe Boys’ Products up 9% vs. Q3 2019 Lines that performed well: • Nintendo Super Mario • Sonic retail sell
Slide 9: CFO Sales Review cont'd
CFO SALES REVIEW cont’d Seasonal Products down 12% vs. Q3 2019 • MorfBoard down, replaced by ReDo • Kids Only – cut low margin programs Lines that performed well in Q3: • Activity tables • Foot-to-floor • ReDo Skateboards Disguise down 27% vs. Q3 2019 • Retailers cautious on Halloween • JAKKS reduci
Slide 10: Q3 Net Sales Mix
Q3 Net Sales Mix (In US $ millions) ∆% ∆% Mix Category $280.1 $242.3 (14%) $280.1 $242.3 (14%) 55.0 (27%) Halloween 55.0 (27%) Halloween 75.8 75.8 29.3 (25%) 24.4 (12%) Seasonal 27.6 International 39.3 33.6 Boys 30.8 9% $204.3 $187.3 North 158.0 165.1 America 145.9 129.3 (11%) (4%) Girls 2019 2020 2
Slide 11: Q3 2020 Results
Q3 2020 RESULTS (in US $000s except per share data) Q3 Favorable/(Unfavorable) 2019 % of Sales 2020 % of Sales ∆$ ∆% Net Sales 280,130 100.0% 242,290 100.0% (37,840) (13.5%) Cost of Sales 199,271 71.1% 167,674 69.2% (31,597) (15.9%) Gross Profit 80,859 28.9% 74,616 30.8% (6,243) (7.7%) Direct Sellin
Slide 12: Q3 2020 Cash Flow
Q3 2020 CASH FLOW (in US $ millions) Q3 Favorable/(Unfavorable) 2019 2020 ∆$ ∆% Cash Flow From Operations 35.0 27.8 (7.1) (20%) Free Cash Flow 32.6 26.0 (6.5) (20%)
Slide 13: Balance Sheet Summary
BALANCE SHEET SUMMARY (in US $ millions) Dec 31, Sept 30, Inc/(Dec) 2019 2020 ∆$ Cash, Cash Equivalents and Restricted Cash 66.3 79.8 13.5 Accounts Receivable, net 117.9 166.8 48.8 Inventory 54.3 54.6 0.3 Prepaid Expenses & Other Assets 21.9 22.1 0.2 AP, Accrued Expenses & Other Current Liabilities
Slide 14: Working Capital
WORKING CAPITAL (in US $000s) Dec 31, Sept 30, Inc/(Dec) 2019 2020 ∆$/∆% Net Sales 280,130 242,290 (37,840) Working Capital w/ Cash 107,461 105,856 (1,605) % Net Sales 38% 44% 5% Working Capital w/o Cash 41,175 26,036 (15,139) % Net Sales 15% 11% -4%
Slide 15: CEO Outlook
CEO OUTLOOK Review of Evergreens • Moose Mountain play environments: ball pits and pop-up tents • Toys tend to be resilient in tough economic times • ReDo Skateboards • New segments coming Disguise poised for rebound Boys • Nintendo, Sonic the Hedgehog figures and toys • Apex Legends figures and Pla
Slide 16: CEO Outlook: Toy Industry
CEO OUTLOOK Toy Industry – Best of Times, Worst of Times • Princess Style Collection • Games, Puzzles, Activities benefited • Categories tied to social activities got hurt • Outdoor products and video game themed products thrived • Seasonal products did not do as well • “Essential” retailers benefit
Slide 17: 2020 Holiday Drivers
2020 HOLIDAY DRIVERS Girls: • Disney Style Collection - kitchen and vanity • Frozen 2 • Kitten Catfe • Cute Girls Hairstyles Boys • Nintendo / Super Mario • Sega, Sonic • Xtreme Power Dump Truck • Fly Wheels 13
Slide 18: 2020 Holiday Drivers
2020 HOLIDAY DRIVERS Seasonal: • Full year of Indoor Tents, Inflatables & Ride-Ons • Redo skateboards • Eyeclops Disguise • Retail inventories clean 14
Slide 19: Ongoing Profit Enhancement Initiatives
Ongoing Profit Enhancement Initiatives • Thorough review of every aspect of the business in extreme detail • Continued growth of direct sales to retailers outside US • Expect 2021 to see strength in categories that were weak in 2020 • Continued focus on keeping costs down and preserving cash. 12
Slide 20: Conclusion
CONCLUSION • We know challenges lie ahead, but we are facing them • Preparing business for safe return to normal operations • Managing costs, conserving cash and focusing on evergreens • Positioned to emerge stronger than before 15
Slide 21: Thank You
THANK YOU cll