Jakks Pacific, Inc. · NASDAQ:JAKK
Jakks Pacific — Q4 2020 Earnings Presentation
24 slides from Jakks Pacific's earnings presentation, Feb 18, 2021
Slide 1: Q4 2020 Earnings Update
2019 Q4 2020Forecast Earnings Update February 18, 2021 th August 29 , 2019
Slide 2: Fourth Quarter 2020 Earnings Conference Call Presentation
Fourth Quarter 2020 Earnings Conference Call Presentation February 18, 2021, 5:00 PM Eastern Time Participant Dial in: 1 (833) 423-0496 International Dial in: 1 (918) 922-2390 Conference ID 4134788 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 2021, as well as any other forward-looking statements concerning 2021 and beyond are subject
Slide 5: CEO Overview
CEO OVERVIEW Three Steps Toward Sustained Performance Improvement (1) Reduce Product Costs and Operating Expenses – Achieve and Improve profitability on core revenue (2) Reduce Low-Margin Products – Evaluate total product profitability, not just gross margin (3) Fix the Balance Sheet – Reduce averag
Slide 6: CEO Overview (continued)
CEO OVERVIEW (continued) Pleased With Performance In Face of Challenges • Q4 gross margins percentage at highest level in nearly 10 years • Positive Q4 operating income for first time since 2013 • Full year operating income highest level since 2016 • Full year Adjusted EBITDA was $28.1 million up ne
Slide 7: CEO Overview (continued)
CEO OVERVIEW (continued) Sales down for both Q4 and Full-Year, but…. • Excluding Frozen, sales were up 16% in Q4 vs Q4 ’19 • Disguise up over 90% in Q4 – Down 26% for the year, but not surprising after weak Easter sales in Spring. • Excluding Frozen and Disguise, sales up 13% in Q4 Toy Industry Not
Slide 8: CEO Overview (continued)
CEO OVERVIEW (continued) Several Products Performed Well • Disney Princess up nearly 33% • Video game toy sales up nearly 65% for the year, up 74% in Q4; • Proven licenses did well in Seasonal • Outdoor and Sports was one of the best categories – Redo Skateboards up 600%+ for 2020, 300% in Q4 Shift
Slide 9: 2020 Q4 and FY Net Sales and Adjusted Net Income
2020 Q4 and FY Net Sales and Adjusted Net Income $ Millions Q4 Net Sales $175 $152.5 $150 $128.3 $125 $100 $75 $50 $25 $- 2019 2020 Q4 Adj Net Income $- $(5) $(3.6) $(7.8) $(10) 2019 2020 8
Slide 10: 2020 Fourth Quarter and Full Year EBITDA
2020 Fourth Quarter and Full Year EBITDA $ Millions Adj EBITDA as % of Net Sales Q4 Adj EBITDA Full Year Adj EBITDA $5 $30 $28.1 $3.9 $25 $4 $3.3 $20 $18.9 $3 $15 $2 $10 $1 $5 $- $- 2019 2020 2019 2020 Adjusted EBITDA 2.2% 3.0% 3.2% 5.5% Margin (%) 9
Slide 11: 2020 Fourth Quarter and Full Year Net Sales
2020 Fourth Quarter and Full Year Net Sales $ Millions Q4 Net Sales Full Year Net Sales 101.8 308.9 Girls Girls 73.0 275.2 23.8 80.1 Boys Boys 26.6 80.6 23.1 90.0 Seasonal Seasonal 21.5 71.4 3.8 119.6 Halloween Halloween 7.2 88.7 2019 2020 2019 2020 10
Slide 12: 2020 Fourth Quarter Segment Net Sales
2020 Fourth Quarter Segment Net Sales $ Millions Toy/CP Q4 Net Sales Halloween Q4 Net Sales $175 $10 148.7 $150 121.0 7.2 $125 $100 $5 $75 3.8 $50 $25 $- $- 2019 2020 2019 2020 11
Slide 13: 2020 Fourth Quarter Segment Net Sales (cont'd)
2020 Fourth Quarter Segment Net Sales (cont’d) $ Millions North America Q4 Net Sales International Q4 Net Sales $50 $125 113.6 99.0 $100 35.2 $75 $25 22.1 $50 $25 $- $- 2019 2020 2019 2020 12
Slide 14: 2020 Fourth Quarter and Full Year Gross Margin %
2020 Fourth Quarter and Full Year Gross Margin % Q4 Gross Margin Full Year Gross Margin 35% 35% 32.8% 30.4% 30% 30% 29.0% 26.6% 25% 25% 2019 2020 2019 2020 13
Slide 15: 2020 Q4 and FY Cash from Operations and FCF
2020 Q4 and FY Cash from Operations and FCF $ Millions Q4 Cash from Operating Full Year Cash from Operating $30 $27.6 $50 $43.6 $20 $40 $30 $10 $21.8 $20 $- $10 $(10) $(4.3) $- 2019 2020 2019 2020 Q4 Free Cash Flow Full Year Free Cash Flow $30 $25.5 $50 $20 $40 $35.3 $30 $10 $20 $- $12.4 $10 $(10) $
Slide 16: Condensed Consolidated Balance Sheets
iakks JAKKS Pacific, Inc. and Subsidiaries PACIFIC WR 4 Cor dCi Sheets (Unaudited) ee December 31, December 31, 2020 2019 (in thousands) ASSETS Current assets: Cash and cash equivalents s s 61,613 Restricted cash 4673 Accounts receivable, net 117,942 Inventory 54,259 Prepaid expenses and other asset
Slide 17: CEO Outlook
CEO OUTLOOK Finished 2020 In Great Shape • Core business strong • Inventories low • Operating costs much lower • Parents still focused on basic toys 16
Slide 18: CEO Outlook
CEO OUTLOOK Disney+ Could Be A Big Benefit • Nearly 95 million subs • Year-round access to content • Repeat viewing drives sales New Disney Content • Raya and the Last Dragon • Encanto Other Girls Toys • Perfectly Cute Baby • Perfectly Cute Home • Haribo • ...more to come 17
Slide 19: CEO Outlook
CEO OUTLOOK Boys – Category Could See a Rebound • Apex: Legends – broader distribution • Super Mario – broader product line • Sonic – broader product line • Black+Decker • Creepy Crawlers • Bladesaw Seasonal • Redo continues to grow • New - Trampolines • Other staples Disguise poised for rebound • L
Slide 20: CEO Outlook Conclusion
CEO OUTLOOK Conclusion • Continued focus on core, basics, driven by top licenses • Leverage leaner cost structure • Fix balance sheet Thanks to our incredible team 19
Slide 21: Thank You
THANK YOU cll
Slide 22: Supplemental Financial Information
Supplemental Financial Information
Slide 23: Condensed Consolidated Statements of Operations
takks PAGIFIC WA ® JAKKS Pacific, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) ——— Three Months Ended December 31, Year Ended December 31, 2020 2019 2020 2019 (In thousands, except per share data) (In thousands, except per share data) Net sales $s 128,267 $s 152,
Slide 24: EBITDA and Adjusted EBITDA
takks PACIFIC WR 4 jw ——— Three Months Ended December 31, Year Ended December 31, 2020 2019 2020 2019 (In thousands, except per share data) —_(In thousands, except per share data) EBITDA and Adjusted EBITDA Netloss $ (11,309) $ (20,181) $ (14,144) $ (55,379) Interest expense 4,906 5,381 21,562 15,93