JAKK - Earnings call transcript Q4 2020

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Operator

Good afternoon, everyone. Welcome to the JAKKS Pacific Fourth Quarter Earnings Conference Call with management, who will review financial results for the quarter ended.

For the quarter ended December 31, 2020, JAKKS issued its earnings press release earlier today. The earnings release and presentation slides for today's call are available on the company's website in the Investors section. On this call this afternoon are Stephen Berman, Chairman and Chief Executive Officer; and John Kimble, Chief Financial Officer. Mr. an lines the and and of of provide highlights along a first impact product of current COVID-XX. will overview quarter, of with discussion Berman business trends Mr. Then and comments JAKKS detailed provide will Pacific's Kimble financial operational regarding results. Mr. will closing prior some for to comments call remarks the then return up Berman additional questions. and with opening Instructions]. [Operator

XXXX safe made including begin, future in could harbor current the market security performance, Pacific's the actual to well materially differ the cause risks are Before projected adjusted JAKKS of as These would on company's we annual point out conditions and forward-looking statements XXXX or certain circumstances, any today and about results like forward-looking to company protection reflect under that those statements. federal trends estimates sales, subject subject from based any which statements comments beyond best and as events to in uncertainties, judgment EBITDA concerning are to laws. and

and and company's time other filings filed details as time. the with as other XX-Q For the SEC well with such the and should these uncertainties, consult reports most XX-K risks to concerning SEC, recent JAKKS' from you subsequently

company's comments EBITDA. press comparable has financial to will management such as earnings release to the most previously. measures, reconciled been issued or measures adjusted today's refer the GAAP financial addition, Unless In with the by otherwise, metric today stated non-GAAP directly financial non-GAAP associated

With conference recorded. call like is that, this to turn reminder, being over would a Berman. I the As to Stephen now

begin. may You

Stephen Berman

results very company for with plans consider go the we and review in and us especially start But we for thank performance our the challenges quarter in over in for performed pleased the you are let detail. John our fourth saying and me XXXX. afternoon, year the many we more whole by will XXXX, how in joining the financial Good XXXX as faced.

we have improve diligently We've challenges. faced plan last embarked as profitability, have significant X-pronged been on our years even we For results. working a revenue two to the improve to

and to reduce to core our comes profitable to us from expenses operating on product allow First categories. more was product cost the revenue our that be

working product, cost its for These we Second, promotional level lowered well just drop do our and when product the a X of been to and take lower-margin positioned total successful not steps account profits cost. into even we've have products launch products. breakeven stronger us

Third was our stretching sheet the on to focus of and reducing balance the our debt. debt maturities by high-cost out

XXXX. working with our paid some results improve this the XXXX improvements further accomplished in extremely in efforts already see on we'll many have ways. of I'm how in pleased can and we be profitability We XXXX, these well off, have and and of to efforts

margin We fourth gross in operating first gross for a rate the since time the margin profit was a posted quarter fourth rate highest Our decade. nearly quarterly XXXX. quarter

Our level XXXX. full operating year income since was the highest

is year was was $XX.X for that inclusive highest full big retailers, Frozen. our X of last EBITDA year. from our XXXX, of up POS top adjusted and level year, the up in Our XX% since products declines digits nearly double At the million, and the

debt down $XX down were year Our the XX%, the XXXX. and at net and customers, ended XX% inventories since ended year At position retail in XXXX. our the level and with top inventories lowest lowest the cash we since stood million

XXX at to revenue able years. when We improve are sheet facing profitability as the time and as pandemic our headwinds in our a balance worst over are global we pleased to have been some well

of product were areas. quarter sales Although the a for year, the for both our the and result of total down the was fourth decline couple

growth sales percent of the prior with versus were industry. in year, line to expected in Excluding the Frozen, overall XXXX, toy in we quarter decline our fourth the XX up the U.S. which

quarter, fourth COVID in XX% understandable up the were on celebrations. impact and had the XX% but that Halloween which sales for expected the down Disguise was given year, Our

sales were fair, were to and and COVID-XX sense trying in to how we we on Disguise, were the impact fourth XXXX last Frozen both up get world. Excluding quarter. XX% our a time into At was of heading this going our year,

keep Our get that chains consumers were retailers stock by industry toy stay one open. the keeping devastated initial of able help working to Then became open that our those want. our concerns The to going were the did few supply focus not with to pandemic. were who in was to products

toys spending activity In them most more of or games, only quite much had puzzles reported get could fact, not the their rose from on not for whereas kids such those sports, indoors, it was XXXX. Overall, suddenly activities that cadence. canceled, U.S. to such sales were recently after-school dance NPD as but for as their because of time about with toy Children in spend classes, to movies. demand and toys activities. lessons industry, XX% work were in product restaurants dinners good out hear as the a did others. at Movies sales surging for in their demand pandemic they spent tied activities school commuting time, toys, a do well, Categories into even some well. the toys be other for these parents friends caused might & vacations, at other reducing spread. retail or interested year as collectibles demand conversely This music postponed, the have increase cutting did diverted At money to dramatic on on same while and

toys, and us rest the patterns. core play brands the and demonstrated the XXXX for For toy of classic basic industry, of strength nostalgic

the where indicate hard play know they sales choose those about patterns to parents that As choices and make brands money, and their love. and to forced spend pandemic kids

a were toys. higher-priced unit this Disney to lucid example, We actually and that too. for flat over for driven this quarter. increase in U.S. JAKKS, globally year-over-year For the over NPD of the of sales that XX% for But the entirely increase our such XX% XX%. to sales They saw reported as were higher-price and brands that XX% sales an toys shift the classic up XXXX shift by Princess, to leading fourth noted toy was year

offer example, within role contributed very light offered including line core lines For Collection, These Kids well. value, up These were gourmet sound by our segment, kitchen, entire toys offerings doll up categories a experiences. of and inexpensive suitcase play and Disney extensive play XX% And respectively. our Princess fun top sold large have play sold smart yet overall the the Style retail play toys, and that vanity, not the and the brand, to they The of core because heart line. Disney while XX% growth, top-rated dress Award well of been Winner JAKKS they hours a the always X for JAKKS. item, $XXX the are

As SKU in productivity. effort retailers enhanced efficiencies pickup on focus continue maximize initiatives in-store an and turns to resulted more to in

together toys whole, industry to seasonal nearly over brands patterns. brands in accessories Fisher-Price. double classic the and XX% business, quarter increases NPD, Sales were and fourth would the games of categories play saw the XXX% were do increases play our Again, Mario of makes in ago. Sonic well. fourth and year Patrol in were XX% for that and both the quarter up sets fourth Sonic Minnie as and the U.S. up was and of gravitated for sports love up Nintendo's outdoor include within and that Brothers, of even ReDo compared and the to triple-digit sense examples Apex in best-performing includes and Skateboard over quarter Disney was According sales they skateboards one it in toys, products Mouse, for over in to a Mickey the over Other skates, games parents nearly year-over-year the and tied on Within our a and were we and accessories, category our XX% such the up full dolls, globally proven This video up a Paw scooters. video saw play year. to Nintendo big brands year a XXX% Princess and In whole XX% year the year. for which know Mouse, recognizable Super pattern As strong sales Legends. Hedgehog based

XXXX toy of were these of shift sales customers, products At results of good all basic dramatically, headwinds profit for at essence the revenue of big and XX% considerably performance, of our financial for always up from pass online been the customers, XXXX up patterns. making beyond. the well call POS over on global and in represented XX% proven now our in will playing in XXXX total comments top shifting will we've leading our play to of toys based strong behavior, potential One is as we other XX% our poised sales. Despite The our Pacific better IP, improved themes how which JAKKS was rapidly XXXX. with has come out. at and the XXXX's John acceleration and what to as see John? consumer the industry review are targeting online we we to I back retailing XXXX on after in

John Kimble

last to per afternoon, and everyone. Reported $XX.X Stephen, the loss for totaled taxes. to fourth sales last notes compared common the of stock you, fair of $XXX.X derivative fourth of were senior the liability, quarter and of year. in other year. In the million preferred diluted XXXX Net diluted totaling or million due $X value convertible million impairment basic quarter attributable related million, derivative notes recovery basic for XX%, to net Thank fourth was share fourth debt to and good primarily preferred $X.XX net $XXX.X convertible to and quarter XXXX stockholders in quarter down changes adjustments liability. intangibles, XXXX, $X.XX fair and of of per and included quarter bad $XX.X million, such or $XX.X compared million share adjustments the stock The changes senior of value in fourth restructuring, charges

in basic $X.XX the compared million expense, adjusted XXXX. in Excluding well to or was as as to stockholders basic $X.X and $X.X fourth the share diluted quarter attributable share or fourth net diluted such quarter adjustments of the loss impact million and common stock XXXX per compensation per our of $X.XX of

$XX.X for $X.X fourth For basic of quarter in million full year XXXX. XXXX, million and diluted common diluted $X.X per EBITDA million or net $X.XX share to was and basic $X.X stockholders to the compared quarter to fourth or in Adjusted the million was attributable XXXX share the compared XXXX. per adjusted $X.XX loss

the down to million adjusted business in XXXX declined The result adjusted theatrically QX, $XXX XX% in million Our full inclusive in of to dolls, as was of adjusted X.X% was products, Frozen consumer driver toys it in EBITDA $XX.X role the big $XXX.X is Frozen year XXXX sales. play, to a additional last merchandise margin $XX.X EBITDA dress-up year, X.X% sales million when compared The preschool the film EBITDA in on in targeted an year compared year. as of was quarter, year. and girls top line sales reported $XX released last million and prior X full well of were strong Compared November margin company's highest net XXXX. our the decline since the the million

sales Disney home Princess and were strongest year. nearly Frozen products the Excluding to ranges. toys of up performers Perfectly compared Cute prior baby Among our products, are and girls XX% in

the sales $XXX.X business our to million. declined year, full For girls-targeted net XX% in

the Excluding action Positive the Frozen compared to to division Hedgehog products XXXX contributions toys electronics vehicles, Sega's XX% $XX.X products, figures, full Nintendo our million Brothers million, for up from Super fourth and year. Mario our quarter our and X% related continue lines. girls rose video boys of last play Sales for year the sales our XXXX. Sonic $XX.X in be game role of products were

retail and expanded performed have launch well Legends XXXX. Apex placement Our will in

the offset with in our structures annualized For X% from were play an million U.S. the of XXXX, down of Incredibles. the look overhang Nintendo including TP expanded sales Frozen blaster Godzilla, from placement Sales New Sonic seasonal toys $XX.X due X. essentially the for in million of the XXXX gains On forward and Nintendo declines of pits, by year, in full Sonic Harry $XX.X products, and the sales and were We and the fourth quarter, to capitalizing Potter, basis, last primarily of the flat ball to and fourth outdoor year. toys Year, licensed in the were both boys category in and MorfBoard quarter on impact in of internationally.

at $XX.X to tables and Skateboards full was our the have see the kids we numbers the our large from Mickey sales kids-only products Mouse year million. division seeking XX% dropping XXXX such For activities. extremely and sold Minnie activity Year, MorfBoard into in ReDo in also of Funnoodle seasonal of Mouse. and as like XXXX, our the down line, core licenses driven home decline The Other but New solid and were given by well growth did

of made heading into great sold business news. in the year. to more a quarter understandably largely increase million seasonal related fourth holiday XXXX Halloween increased spikes segment, COVID. uncertainty the plans $X.X challenging, Our our we're catching consumers' is shopping million bit demand result feel domestically, a bit last we consumer retail the but responding which in XXXX, in The was stronger-than-expected to to compared has of the Sales which were XX% is sales Halloween around as for impacted up by to $X.X Disguise,

lower much quarter for a QX QX. Disguise or than volume is QX reminder, a As

retailers segment the orders Disguise that is good to had COVID averages. reducing by compared that XX% the For business. $XX.X impact driven were ultimately seasonal negative strong, were The leaving sales down Easter news full our million, on inventories experiencing retail historical sales clean their to relatively after in year, their

Latin We factors Looking in which at same markets each North Halloween in the on to compared includes million already XX% quarter earlier sales $XXX while down $XXX.X for last product quarter, in America by fourth covered fourth driven America was decrease down all noted down EMEA, segment the above XX%. the over were the the by Products comments Asia and of discussion. our Disguise. sales Toy/CP quarter the were year. business The million in world, XX% around segment, our segment, to was Toys/Consumer

a a year also royalty of rest point at improvement compared gross year full favorable XXXX partly margin with but and our the level quarter. than XX.X%, Looking lower, prior the XX.X% quarter products towards Reported gross lower terms. of XXXX. agreements the was to versus fourth rates, brings XX.X% XXXX mix in expense in XXX In the the was P&L. by shift highest the fourth This margin basis full year significantly less some QX, legacy royalty driven with expiration since to

steadily and prior year obsolescence move pleased continue very been to not improve, expense our adversely well to product in out margins to impacting our product compared lower have full existing QX, as to also lot product year. while Our QX inventory of able We're as a in of margins. was

sharply approached. did notice of freight that started as season the end the holiday we costs rising Towards XXXX,

sales to among XX.X% SG&A, operating to to than lower able and COVID-related million full in of shortages to XX.X% the totaled will In worker remain or cost net addition, fourth we $XXX net debt a year compensation, net to sales X.X% SG&A XXXX. $XX.X believe lower working XXXX, our compared net also there an which pleased raised sales fourth $XX.X these these to within success were sales, expense XXXX. operating generate We combined both margin structure. million increase or were company's the income profit compared highest nearly expense bad million or and see of costs. XXXX margin quarter higher working $XXX in Significantly prior development, in lower $XX.X T&E were of and product in we and These when compared since million of full remotely the at very an net We sales is docks quarter increases being cost On year. a with million XXXX, in diligently or annual XX.X% results year XXXX. despite continued basis, mitigate for despite million truckers, gross costs, of rising XX.X% the $XX.X sales XXXX net in driven by of be

to expense level last a $X.X reflecting Our million QX was $X.X debt. in of this year million overall year, lower net compared of interest

weighted year net fourth X.X% $X.X an XXXX quarter rate expense million, was of full million the quarter operating of and provided net $XX.X $XX.X compared the cash interest interest used million of to with For was in XXXX, to a the for effective average million XXXX X.X%. Net activities fourth of compared average rate XXXX. by $XX.X cash of interest in

compared the was the million million XXXX was to compared XXXX, cash reduced in to cash net $XX.X in by a in flow Free advanced quarter inventory full fourth reduction and provided XXXX positive fourth the $XX.X million the addition primarily million For in a year $XX.X royalties in to to quarter. activities negative operating XXXX, due loss. $X.X

For the full to cash million free in year, flow XXXX. $XX.X compared was $XX.X million

XXXX to fourth increased exhausted the XX DSOs X-year $XX.X XXXX end million beginning XXXX. fourth As Protection XXXX. file company is forgiven, of million million and days million compared at quarter By forgiveness days fourth to days covered XX $X.X XXXX down XX Inventory with XXXX, funds interest XX, restricted of cash the equivalents, be June million including company for in of under period December the the $XX.X XXXX for December in this had December received as $XX.X $XXX.X from quarter. cash, end beginning the XX, the to The a the the DSIs whether quarter funds in company XX, XXXX. $XX.X totaled payments quarter. awaiting the of were Program. period, Paycheck fourth XXXX, in of $XXX.X receivable Accounts XX, XX in with were any the accrue opportunity the of as as in will loan. the September XXXX, from In knowing loan the million, presumes absence XX, compared XXXX of of million our at to XXXX. to reported versus December December days was cash

reflect result, and a long-term related our $X.X on in million to $X.X debt we sheet now million loan. short-term in As this balance

aforementioned both of due We debt XX. $XXX.X recapitalized due XXXX, XXXX due company's million the June at term of and $XX.X February senior of owed million XXXX, no XX, aside December facility, notes million July balance December of included as as base the outstanding loan XXXX, convertible result, PPP $XX.X under a $X.X of As our PIK million currently inclusive letters loan from our have under credit interest. in credit value

fourth XXXX XX, shares to common of senior at third During converted $X July the Subsequent conversions the done. per convertible million December notes no were were quarter, share. $X.XX to

of July interest. $XX.X quarter of face accumulated $X.X the during notes million, compared expenditures million of Capital fourth quarter the fourth XXXX value XXXX, were XXXX $X.X convertible of million January the XXXX. PIK including XX, As in the to is

capital XXXX, $X.X year full of million the the fourth was and to compared For XXXX. were Depreciation $X.X for million in the quarter amortization XXXX in to XXXX. million million expenditures of $X.X fourth $X.X quarter compared

For year July million to weighted in income This of additional and in share per the as common average fourth was number our XXXX. aforementioned as The some XXXX the from Stephen remarks. for full I to quarter based hand on amortization depreciation call over of XXXX the the reflects stock calculation note the well fourth reverse outstanding, in million a $XX.X diluted million X.XXX basic XXXX, for $XX.X diluted shares conversions. X.XXX up was And of with and of impact quarter now compared the split convertible that, senior back XXXX. million will

Stephen Berman

John. to intact came Thank core and to through our continuing costs drive balance and now with efforts strengthen our that sales, strong. you, outline and keep XXXX to how further momentum sheet. plan XXXX We with exciting new keep to going can the products the I'd we down turn how business like we will

very significantly retail Our lean working and capital. reduced levels, low operating costs inventories our very at

basic and for popular play are licenses up see products, XXXX, this proven parents we'll in continue entertainment looking patterns. with to that very believe and set well core, year for we We kids growth

from has XXXX. Disney+ products subscribers For last on multiple based its and innovative Pixar, announced been that Star since iconic decades, Disney in service November week have nearly Wars. launching million streaming characters accumulated we Marvel Disney, XX categories and new introducing in

into when offering of year-round addition, to driven constantly adding to that these In today's Princess over business, of believe for this content and have on factors, it's several want We it success. And being they key a the Disney straight toys be home when line licensed content years new In taking for on Style girls JAKKS girl. to Disney we access a is whenever it drives for What Disney growth it. momentum for own over core Disney have line isn't all modern again. anticipate core subscribers and Disney's our building is to and brand. what watch our bring movie we including the Disney+. its top growth Princess XXXX in the This items quantity and library roleplay they year kids means their just theater, is great of by demand see can a advantage that of Collection, the of on a premium designed known third

we be easy-to-dress to and expanded both line this motion growth include size first move Our Up core matching expect driven business doll and retail dress launched we Elsa. our into an magic recently of increase Disney by Princess Along Dress and And line distribution of Items up doll large as full Sing large consumption. Rapunzel the in as dresses. well girl in as the year

November to brings in Last role portfolio. Frozen in as as XXXX a dolls, figurine, release, continue tells include the franchise Raya of up and core a inch dress March of songs core extremely that wondrous tale family, all on will The fall, Disney+ of Hamilton a Emmy, hidden large Access know charm new settee Disney live of an the composer of Grammy from fashion and in Disney which a patterns world patterns this feature The are our family features accessories the the of where JAKKS cute as celebration integrated our excited in on Kanto, the will mountains petite in a Dragon an we dolls consumers to in well shelves film Premier broad a our magical play perfectly Walt coming magically products year. fall. play the JAKKS and Miranda. light JAKKS' extraordinary is and and Outside Sisu Dragon and X large large-scale the to This to by Encanto. Tony love inspired in theatric to play already on place growth with doll and Toys. products is deliver items offer of Queen. extensions that and and products new dollars in magical and theaters award-winning play new extending Arrindell releases centerpiece Lin-Manuel who live. Disney Princess Animation products, We which products play house, town, role have a dress line releases, The include by of Moana, Snow line sound launch Studios' feature vibrant at dolls of also Target, X. and and of line with new collection Other up for introduce we such simultaneously small Colombia, called Madrigals, line house they array XXXX our that expect growth this

one on based new also Haribo gummy toys candy popular and will collectibles brand, candies. of of world's the line be launching a the of line We most

the In Apex more our Legend addition, other lines, we products, related the be releasing will we Super other our we later RC playsets, Sonic year. In have and be including momentum which we will products. in playsets, girl will video game figures, innovative new figures, and Mario boys the division, RC and announce figures, Brothers leveraging Hedgehog this plush, fun and

one on is years. has we've rerelease to continue new the working and IP In addition, we in products brand Other going play more strong been own our include years, for exciting been Creepy XXXX. sales Black be classic of toy expect to Crawlers, our that tools which Decker back a XX of than &

full fun RC with are item, iconic brand-new, we and Blade high-performance which the perform Skateboard Saw In and an Amazon. features line ReDo vehicle, at to is design. seasonal, and Target packed XPV a growth addition, our innovative launching In of continues well

various that acquired year. enhance have line this this and broaden will We licenses

trampoline into summer. new business with a trampolines JAKKS launching unlicensed and XXXX, For line is jumping licensed of the this

of selling Minnie our and this Blue's the ball Paw Mouse, ride-ons Mickey among movie categories new maintain are steady Our licenses, activity we based tents play and Patrol among Fisher-Price, tables, core foot-to-floor Paw Frozen, best-in-class pits, and including licenses and products, Mouse, evergreen on others, Patrol, momentum Clues. most will with

Finally, Disguise Halloween. by sales we momentum in have clean Retail good segment. were left retail inventories better-than-expected our around

to market disguise product on an the to and We new when others. Halloween usually Nickelodeon, on are gives Universal, Sunday, bringing compared expanded lands Halloween industry from which offerings a in a amongst In with line a NBC lift Sony is XXXX XXXX, weekday.

rebound Halloween that Of of I is closing, the team pandemic of course, world challenging celebration. control work normal a assumes our to around thank under today. like environment all the hard sufficiently allow would a we in incredible in more for In to level sales the for have their

take the profitability questions. We steps that, you. will and world. company for we needed continue the around have to do we the now to take Thank the position growth, couldn't it without dedicated With we team

Operator

Instructions]. [Operator

the with comes first question of from Wissink line Jefferies. Our Steph

Steph Wissink

couple first your a by John, you. for are And of for I the comments you some Stephen, of follow-up. on Disney+. I'm as then questions intrigued one have Disney,

environment? in your have different X domestic what channels you I POS. you how opportunity of business talk just mean international little might international can go through normalized XX% across between of help QX. in seen mentioned split just about more up you I in in then think the was retail. could up a the digits wondering think a market, and to of then what growth internationally percentage help if retailers top script bit if And that you the and you the might terms wondering the the for partnership. Stephen, online, I'm And And us think double Disney+ mentioned were I'm secondly, you also what remind Disney rollout So is to in of us,

If you can well. total the is percentage remind that as us as a of just what

Stephen Berman

Thank right. All Steph. you,

a in the the between year. Disney girls and to in XX% work the from divisions I overall to seasonal, is go all which split And on just internationally, XX% boys, if to we have minute. approximately firstly, we'll into anywhere from Disguise different given So right Disney+, segments to and so on

in us, think For it things have and new watching on. more a people it's at the for same home. better VHS become continually an at but watch we've lot at much Through would watching the was to do pattern couldn't Blu-rays, ever to DVDs people And more with would up the home it a it's time. Disney+ this as I seen years of episodes, amazing content become put and families so repetitive fun for they pandemic to with conducive more more before. at for home. And entertainment though the DVD so are even kids ago theaters children, initiative, eat a than And and

bodes both it's Raya, to like everyday go Disney content continue they watch abundant in I And that with episodes, have whether for in Disney+, coming that and old an could they we or and to that our which well, just they us, can theatrical business watch loss is just they just out of March, be various have and forms. new it's which premium, Now episodes, amount theatrical current whether will a think. Disney+

a just carrying we theatrical, As gives don't Encanto believe well just movie Disney+ comes, normally when forward as in have theatrical. I that but out when scheduled for comes it's it the

XXX. streaming usually of later, out, comes burst version, sell-throughs on, movie we is DVD that version, X immediate now a when so that then the you have months for and you So wait and the which get X,

their theatrical pattern that are they to invigorated products really more them their be of it's content version out, in The it's normal streaming. allows just have - have So able hands to have the or content. with and comes when make the toy of television whether because Disney+ which we more or the and on it the just play at kids

So Disney company Disney going it's be partners and this Walt the as kings for we're forward, is them dream, excited for they - are of company, us, we're year. a content. they the And lucky itself - really with just to

on forward. that, launch in for arrives. excited in Internationally, the it the we're So about really content going areas which depends

really is country. it by So

well in countries And some content versus doesn't necessarily work certain as others.

countries. But our Disney+ So Disney+. we'll in is, content of it how perform wherever better with country-by-country basis with be is we Disney a really those performing believe we

just sales jump in he John of the over have I'll X, top the because of has For that them. front online

John Kimble

Steph. Hi, sure. Yes,

they're about obviously and make about the and we're talking of we parse being a about - that. perspective, out POS piece specifically the that from double clear digits, stuff, asked toy year-over-year you sure talk X, online, For obviously To we're they're related. somewhat when about just

as business is down all year the Disguise for Our about talking we've been year.

And so, similarly, a bit down Halloween year-over-year. our POS was little

the it. year-over-year. can start online makes It Whether harder from us piece double at to high we're Then with that sales the out starting the it's for single there. two accounts harder, part, it's to as a be players players, and not or Halloween point dot-com accounts combine of, we're track bit keep do traditional are growing the blended it the both piece. big little Whether least inventory to business, that being little segregate but a toy you of XX% is the Maybe our part was brick-and-mortar the view, or a the way of who digits, top piece not buying. online to the some the or digits. other at if or total bit online-only company that in saw X Toy/CP - POS on So people we not still it, of working

could the bigger we becoming a will look players And especially only, see of add see of becoming are the online backwards portion continue, bigger - them as trend the that that. who pace clearly mix, the keep guys them portion we we that that and So mix. I as becoming also brick-and-mortar a presumably with for

Steph Wissink

a follow-up That's cost. the work on done you, middle much then John, P&L. so helpful. of for They've the on And

mentioned overall, - product of just structure. that product lines of I weight the about Stephen of the costing thinking number the you interior the think cost the expense in or also mentioned - operating but you carry, on

what's you helpful off that beyond structure? that margin it's maybe above revenue grow margins way the think in think So what's covers to to Or as and takeouts terms enhancement of the base, cost another incremental this some we in to line it, see the opportunity of expense threshold should about through start incremental you've your top done?

John Kimble

that think scale. to really P&L, get was operating on I our about focused always certainly portion basis. am the margins when kind I profitable you that's G&A were out pleased full trying called I year talk of a we when the of where Well, on

X you we've just that top then things. a And to we end, big is, kind can our It's where margin If the given right to some every for that's in of things of scale in how little get want are. continues, demand degree to I But it's turn. another journey to be looks effect. Certainly, think of that line we think flipping the more extent overall go and top of the can corner creation. over like certain and scale a the I the rock at put then money you line back revisiting question right? bit what down we got a had our than like want And respects. able kind that given to up different P&L

to line. costs doesn't are all XXXX bottom to that we'll were drop up it cut have in There that So of the creep a 'XX. back in lot

will point. an get at to airplane want probably some Someone on

about, can at is we time, IT, it look So incrementally, all off still what stepped there, so to usual we used there's I kind deferred continue for we pennies do also to think, least shave which be to be. areas of feel pay spending speak. kind the year know, anniversary things. But at you against this we year, and that we to as of we what here that's lined plan at this that some isn't don't several up I good think same in some of spending XXXX, more, Trade those short-term up cut the show obviously kind

ideas we're - as it's topic think hardly the I so out goes. And of yet

Steph Wissink

Do Okay. affiliated achieved cuts some call give to some your in that level but expenses, little the you've with stability of a the, of reopening it, would of want bit us you a be business? let's back on model maybe

John Kimble

Yes, right. I that's think

right out trying figure of something to little we year, to do you as towards the think part about back feels turn the corner a think more I start a that's bit time familiar. at what that in point

last I we year in about of, certainly that's QX. a in part think it. did think terms of a can restructuring you I significant think

let of and XXXX. have year also period one as this see time both the we we kind through in just pickup still revenue of that going and we year. me do year the in in profitability more But in this believe this some Steph, So to thing. add front part lap growth, We do

on see sides. So do it we both

Operator

[Operator Instructions].

Markets. of from line with Our BMO Johnson the Gerrick Capital comes next question

Gerrick Johnson

Raya wondering there? couple How and that is plan years launch. pure it's of you're planning then? given funding and was that I'm was Last just I about and plan think say, the you model or? Dragon And how how a ago, - was more do it how Well, you opportunity curious let's it you kind it. hybrid the if a Is hybrid about it now? it would conservatively, it would you're theatrical, about you how think it of

Stephen Berman

Okay.

a - very So for good Raya, that's good a question. it's

changed those was have Raya, the Moana XX it XX. releases November or it's it being tentpole pandemic on Frozen and theatrical in launched occurred dramatically, around both Disney+ was movies theatrical because to be when and March. and going previously - was it of Similarly, - For during launched now and during

on during spring. originally the have back during we're November. launch shelf We've goods to So to have going pulled that

launch. So a now it's not holiday

it changes Raya seen been that on normally, content. have because But actually the and have launch a They've The period. spring the aware the because retailers on of call a we content Christmas while. for not dynamic Thanksgiving is So during, it's absolutely stronger spring gorgeous. it, demand launch the

a actually for spring which and it, it planning during what we're quarter. planning we're we're would the the it's for the theatrical to planning Disney+ a and later the way nice of amount because second first, it so let build grow is in it If streaming, with planning launch And on throughout year the lower versus year. was be we would be on

combining it's are have that the had all the stronger push one, retail, of that off streaming. it, for plans we call now with based actual and So normally retail than we would believe fall the

that in - March. products good of test the JAKKS Disney retailers it boding a This and with sets would out well how So this coming and really blockbuster really prevail be a is for way rollout. the movie

I think X, March March out it's comes of it XX.

I X. think it's March

Gerrick Johnson

So yes.

So interesting. that's

think So a it out the bigger overall, rolling do way it's could as hybrid? be you

Stephen Berman

a Yes. Again, it different period. remember, spring being - versus time launched it's it's

So I do - it's... so as

Gerrick Johnson

spring. Well,

Stephen Berman

Yes.

we're even what it a be will now off typical based I without to release past do retail on in commitments see for the years. with used So believe, we fall what out, coming spring, versus the the and platform plans it are, their way stronger the movie

Gerrick Johnson

Interesting. Yes.

will give of U.S. yet. you me Okay. this U.S. toy will you then the and XXXX, that What grow and do straight Because in a the number global think sorry, And industry And to answer. able question, give kind a finally you think hopefully - in versus it asked do me range? I've everyone no it the grow versus Do do one's think XXXX? I'll been will you can get XXXX? ballpark

Stephen Berman

Okay.

So retailers I North mixed. worldwide, I North what do is, growth. we it's and not will have seasonal just if understanding retail be big But going really still growth, talk There's activity are America, this America. still be We an and after. to be to going again, opinion believe I outdoor We're going saying from myself specifically summer just and spring and out strong sought much things believe of do pockets the still where in pandemic. there's activities more areas. believe to

So I that in area. do segments believe

around if I even don't off and we'll see growth. I the think together, year in that pandemic. of know growth tremendous occurred U.S. all I the worldwide based in But early second amount it Halloween, in half. that a really - states, area, the games segment based but do the cutbacks we growth the around now is the were year see you based board of and put And done things the out see off see growth better in see world. you'll which the you panning right - the not Girls considered will are of see with toy, we purchases just last lot off won't

don't I to there. whole. a definitely But to there grow. going say industry grow, we'll as be there's growth so Halloween, there's is I the that that that see a grow won't believe will will say pockets we pockets be going and So

not total the know all benefit that to do So you sure growing. believe of like whole. I that our know industry Gerrick, growing are basis, and spend - segments. We I'd don't I is see the the segments, give in. on JAKKS And kind have you. shrinking time. But it offsets other growth, growth. categories. when I see could I strong to extremely little I if I'm percentage see know we as a cannot don't a I XX% wish believe the a I But of I

Gerrick Johnson

Okay.

are cede Okay. floor feeling going I'll you to about called input as What costs? I'll you margin the forward? out one more, are Steph. How Mattel pressure back then seeing ask on inputs, inputs a in

Stephen Berman

since THQ whether through days. it it's we So of yearly resins, part prices, up toy goes oil input - there's this everything, That's - go and business costs the down.

offset more domestic. versus of in more it So you efficient than a getting - input that logistics, efficient having cost an getting coming, FOB business much broader kind we're by

a affect going but while. we've input to some, for So known costs the are this

the us, So with we've of our legacy cost throughout on year reducing items. lot it a worked for

world, So input we've mitigated everyday there's only container it. manufacturing the gross but of it, from see been But so costs, our avenue. the the we I on, we business. been The that margin part but affecting, part issues and dealt that that and we're with up it freight see picking our that's really it's call

Operator

We follow-up from Jefferies. with question have Wissink a Steph

Steph Wissink

is had Stephen. about a more data. clearly source just question Disney+. I for Thinking platform I one mean that robust follow-up of you,

as you something where of sense a some up-trend of that Disney seen consumption, within Disney, to partner So anything trends seeing triggers. to takeaway content-oriented the with providing at a you there into terms given gives any I'm partner with is just rising lead insights you might lean happen the need on into of they're key wondering giving we've respect that what you in Is as to you that inventory retail they're if Disney+? also is around starting that if

Stephen Berman

Yes.

divisions company and with that be the from the getting details quickly, we what side. because totality what have, the on general, I the of of think and what's on the obviously, all Disney+ going company, in age you by details, it, just we But so communication content. separate of But - what subscribers. grade subscriber not in the more to there's level, content. disclose, the analytics the just that Disney we doing, one are Disney within eyeballs with and look winning of grows at occurring it's able Walt - base, would amount tremendous they're is which Disney if everything And that a means

I Disney+. because So they're now what And daily they're Disney+. lot content have right as the with doing getting much believe a it's we'll in fast more more year bullet later analytics launching train the a they're comes with as via it it

it a and to of of grade. done have will later analytics of staff. the lot analytics been by But have kind you're the be they lot a given and questions have out that asking, and category the age So year we'll in our content better

Operator

call turn like for I'm over further remarks. showing questions Stephen would Berman the to no I time. closing to now at this back

Stephen Berman

and you we this Thank after that's this. call, I follow-up appreciate everyone's time. during review. very Firstly much. our we everybody to quarter have calls speaking everyone on look And hope well, And to several is first forward

Operator

gentlemen, you and Thank Ladies your this for concludes conference call. today's participation.

disconnect. may now You

JAKKS Pacific (JAKK) 19 Feb 212020 Q4 Earnings call transcript