JAKK - Earnings call transcript Q1 2021

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Operator

Good afternoon, everyone, welcome to the JAKKS Pacific First Quarter 2021 Earnings Conference Call with management, who will review financial results for the quarter ended March 31, 2021. 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 then and provide highlights along Mr. first product of current will overview quarter of with Berman business trends, operational Kimble Pacific's comments detailed results, and will Mr. regarding provide financial JAKKS with additional opening the the Berman will for then comments some prior up closing and questions. to remarks return XXXX, to adjusted the JAKKS safe well [Operator performance, Pacific are as like Company events Instructions] EBITDA estimates any statements that or beyond federal the begin, out Before including of harbor security future annual sales, comments in we circumstances, forward-looking XXXX, any would point made under as protection by laws. concerning to subject could These from based forward-looking and cause on results statements to conditions those judgment statements. certain today Company's are and reflect best current subject projected market which risks in the differ the actual materially trends to uncertainties, and

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

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

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

Stephen Berman

review plans the our year Good afternoon, for beyond. the in we of and for and rest and performance as you quarter us the of thank first joining XXXX our

big way start exceeded higher significant deliver as quarter product results We we hit strong in fifth our a or without the sales XXXX. only we that Not profitability. for to benefit results tempo We the to are strong quarter, able content. blockbuster consecutive margins of and our entertainment and growth, did very so internal improvement a were projections the pleased delivered with it's

result products on quarter operating manage of have was years our was our back and no reduce in cash many categories, recent broaden performance fluke, the to low-margin we taken and it and conservatively. cut in Our the cost strong manufacturing steps base, sales

we've As plan revenue out results; we've have product our is had lowest margin percent the working dramatic improve visible quarter. the our in as This that been in in first, the from gross in two SG&A since three-pronged be been laying in the expenses the a product sharp the the reduction XXXX. categories, operating XXXX profitability are quarter that sales QX and to improve costs the reminder, comes highest by to reducing to a dollars of we diligently operating last gross profitable was increase and allow us any we core first a basic quarter years, on and results of margin our our to in expenses since level reported

no Second, a lower working we products ex-factory breakeven as account frankly, closeout leaner more allowances, shows from a fewer focused significantly our the not to cost product, This or lower costs. our sales into These cut lowered up for just margin two its to and of reserves total steps have low take have level. margin been organization. portfolio and

original sales we quarter adjusted the strong. since best of quarter extremely was with still film of $X.X have million, quarter first negative XXXX products Frozen in first the EBITDA adjusted the EBITDA the the were Our had from

stronger deliver Company do product our been with time, profitable we for we line launch saying an be profits blockbuster big hits, and can the to even so some goal unexpected we when As position level have our is to category.

net $XX reducing the debt our sheet out debt ago. debt maturities, from ended approximately $XXX.X quarter focused million year on by been of we've balance a in up as $XX.X the the plan we and cash million and with our of part cost third down high The shoring stretching million

to to look the are year reporting progress our to our operating forward unfolds. leanly. as ways Other how also more much We maturities consider balance more and debt we sheet realign showed continue parts of

of PP&E lowest in extremely since retailers, it's the top our our three Our products continue at over up quarter end more year. at the online at XX% compared our At down first and toy to our of years. quarter were level and At retail to of three the of the and XX% approximately in XXXX both lowest products net were XX top was was March the than customers last QX inventories inventories in POS at products been sell retail, brick-and-mortar our sales at end our toy well.

and result earlier, Disney were of As boys trajectory and expected demand all seasonal of the movie with sales Dragon offset Frozen were up solid strong the our Raya positive our double giant girls, digits. strength one Princess sales Frozen driving of was Last sales the based girls, and were In said of one diverse or our our decline the on of not for performance was combined the products. portfolio, breadth and merchandise, hit initial II I helped

line continued with sell to skateboard extremely also great well ReDo velocity. Our

Our larger exactly Legends, this perspective, a year portfolio off perform last This striving have and were it we video tripling game-related launched To toys achieve. and already our growth nearly brands. from been our base, game-related video Video portfolio balance is expect which nicely. have into Hedgehog licensed an become game our solid Apex our build building a Sonic was total toys of to and late first continue than toys well put doubling sales Nintendo part properties the of of with more the quarter contributor we a on to of some based to bigger category. strong than continued any

even who notice us solid that long profitable. not we that we goal be our which followed to hit so a it trends will if more help the time that come without how business of achieved these lines profitable will again, We calling will product Our sales we are have we do been you know we're a various big out big occurs typically the a understand the has have and have and to when volatile we deferred Those hits, and they out likely future do performance the sales we if to excluded so patterns. solid think point illustrate underneath to more from would figures. certain helps have in lines the broader

We so were but and dramatic sales of our were brands based and portfolio were no have a well-balanced a problem toy of down, area parents that love. create categories they year. play dramatic toy kids would us that experiences that no that from for that they prevented portfolio declines Some products were increases growing there on so and simply next and

flat first quarter year-over-year, very was cost Our of is meaningful. the not business

this excited is we late confident Sunday on is in to are a eager a believe clean vaccinations XXXX, get a be going and We this increasingly with have good will to event to big year and extremely people Halloween the rising normal, Halloween were we costumes, in inventories year back year. retail and holiday

fact, quarter. far well production one The so is done among year in television traffic the returning up strongly that sales general, theaters and this on Parents lot said at rose and less rising sales online one to have films most reasons, been rate been normal much activities, improving, up for ramping consumers. on but industry growth that our and are which is we vacations toy haven't the main much. areas and too has industries. has cut cut customers higher in of they into XX% In are remains retail from the even sales times back last several children, toys toys spent better content the retail year, dinners other remain in on normal on streaming well their XX% are of and although they NPD that March The levels, held redirected things XXXX, extremely back returning to a U.S. haven't the spending a Retail with seeing is the toys. of U.S. gradually sports, up films as their out, but new than industry is strong. fact, on in things in toy

trends. some these We continue see to of

makes to digital gaming games well I more the because with As last toys demand to kids video year strong, increased mentioned, video these so over spending toys. sense did the have exposure games this very experiences been That time tied for home. at

more as did spend behavior over as and XXXX, content effort seeing a cases, dates, a streaming so fact new believe dates Our much simultaneously properties released both by more changing tripled and by Black Activity parents back by later consistent and have a increases now continued Within to these and dates return more release holders being their to were our seasonal are are normal tables released less the change improvements, theatrical moved business, Decker well, dolls do out are and line strong of sold is the particularly of continues. in play postponed we theatrical tools have driven content time categories releases, last in marketed release streaming. momentum possibly continually benefitting that remodeling What entertainment their not and collectible the well to on format shipments, have or seeing in which they consumer In the a the partly we're that projects from desire home way. be because doing as kids ReDo a in than we year, some in content and only our and patterns. of POS. areas to strong stronger, the driven retailers would skateboards, emulate sales saw double-digit play the

Home year. our well Cute products quarter shipments last year. and nearly Baby over the up first Cute Our are Target strongly our of doubled very Perfectly lines this at did of Princess Perfectly Sales Disney and

II Disney more introduction Raya Raya Dragon, Frozen Princess and the offset Last With and the in Frozen of decline products. the and than

was this evergreen patterns. as other top represented targeting At percent Pacific play of and clearly toy deliver sales. in the on online good, the We JAKKS as was global leading total sales was a basic in of our built well first foundation these toys saw on quarter on very throughout the for the pass toys XXXX see overall XXXX, we our sales. will come the all based XXXX promise big total categories, online to playing proven outside expect IP, of but of the last to couple our over it in call now back toy I and financial on John? XX% sales was which shift retailing this out. performance, I product to how of for review the at as online of of higher up quarter year trend were our toward with first of customers. the This line themes POS of our in a continued customers, products year. One industry will after John to XX% comments we continue the with

John Kimble

everyone. were Thank sales year. you, XXXX Net the up million, Stephen, last $XX.X XX% $XX.X for first good million quarter compared afternoon, to and

million the $XX.X growth, big Frozen. in to strong merchandise release Stephen lower preschool-targeted mentioned, toy girls toys, our other As anchored saw In were theatrical segment. driver and year. streaming board products of compared in and sales the XX% role dolls, Princess by in we primarily the slightly of net offset $XX.X plush Disney dress-up, and million the play results by our sales consumer March, sales The across the Raya great QX, prior consumer products, and and of businesses, in up

the of other electronics million positive Our to sales vehicles, in year. Perfectly division up toys $XX.X were and role-play our million, net Cute $X.X last also ranges compared figures, products, In boys column. action XX% contributed targeted

ball to product $XX.X quarter you with ride of growth first products nearly of pits, in add broader with up XX%, whole $XX.X year. of those together, pieces bulk in structures, and million were million grew role other XXXX The in Black foot-to-floor video our growth international and segment division. tables, quarter sales segment, skateboards game-related beyond. million U.S. the from sales flat our closures retail across of points XX% strongly This XX% delivered majority When our North also is the Decker our contributing. America, by play last were despite while with distribution compared toys, to in the $X mentioned, quarter. were the ranges. first up up $XX.X In in significant Net quarter X% in toys our globally, rapidly activity at and international outdoor play in of both Stephen first around the additional in Europe business $XX.X the consumer from first more million sales seasonal costume and of million and growth year-over-year Disguise, toys, -ons, net spring-summer As came expanding line inspired the division quarter, the the

costume QX X% reminder, to a As our around to X% year tends of business. full be

were costs in the really the first third than the mentioned increases of towards by from line stronger margin better, the efforts sharply margin expiration closeout the freight a over point balance down fewer a favorable rising gross end or of bringing the XX.X%, points rate. $XX.X to the P&L, some which of Stephen last pleased Moving than market improvement legacy basis QX also in about a in year in and with XXX XXX XX.X% and quarter of less the basis higher just these see is sales. but that line, to gross XXXX agreements product shift, royalty attributable we driven or ocean improvement to X% partly a comes terms, Despite was ago mixed year, was XXXX, margin a million

selling reflects We mix avoidance diligently of quarter. increases cost shows mitigate the of net million program carefully elimination Retention our is than costs the Stephen the XXXX. to, loaded XXXX our or Again, government's the $X.X aggregate, things managed like of will last to these the $X.X XX.X% federal In CARES million continue as footprint but first reduced be sales in projecting compared cost first a in Credit also significantly were our and there or alluded reductions XXXX. SG&A quarter of in significantly direct X.X% media sales had from Employee to in the optimize to net like our trade section, under million avoidance expense receivables. of We also we quarter more throughout travel, We're warehouse first and a in the for lasting to $X.X the efforts to lower work had In cost half year. G&A stemming cost spend XXXX quarter Act. of back-end more

working consider G&A, we amount. from sales, operating pleased continued testing, sales first structure. of we Company's ERC $XX We million cost the remain XXXX XXXX. within million including XX.X% generate said, was combine non-sustainable non-GAAP Although, our in $XX.X we it both will $X.X a compared adjusted of or net and remotely believe reducing for $XX million million from or calculation first a quarters, down EBITDA These quarter therefore, of amortization and results excluding lower product XXXX. the in that but and quarter of one-time of the expense net With to quarter to very with loss GAAP success benefit future in an that our a depreciation and operating in benefit loss XX.X% first development

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

quarterly losses inclusive with depending on those of capital mark-to-market market our are In number stock preferred factors, our first liability elements of share of $XX.X and the combined notes gains of certain rates XXXX, the impact quarter non-cash of debt was specifically, of price. million. valuations current reminder, a a a As our and loss convertible derivative senior structure, or

a of despite loss in QX or compared As in a our quarter GAAP a expense, operating million and the share $X.XX the of net $X.XX combination improved to lower we per or loss per million result, XXXX. reported nonetheless $XX.X share $XX performance of of interest

in $XX.X and to a million million as compensation per quarter of or first diluted non-cash $X.XX as per attributable impact compared XXXX share to our share reported common the of net in basic was expense, first the $X.XX and $X.X adjustments, stock Excluding loss or basic diluted Retention the XXXX. Employee of valuation adjusted quarter Credit of the stockholders loss well

improving X.X% million during used negative flow million of a activities cash first Our margin our and $X.X as highest negative this quarter. adjusted first million the XXXX our cash sales, by for the the of XXXX quarter year. to Net net to level QX XXXX.We million, EBITDA performance first of at $XX.X million to team's in our pleased XXXX, of XXXX. $XX.X in million, the EBITDA over results was quarter trailing for it an loss brings adjusted since $X.X relates QX operating XX-month $X cash XXXX. of level in net the dollar was in was quarter the quarter EBITDA past of since used improvement compared a million $XX.X highest metric first Free the This very to with of XXXX adjusted remain $XX.X a its compared

first March XX, to of PPP totaled forgiveness and in do September $XX of of equivalents, quarter the first XX, to days yet be of at XX, funds XXXX from days March up $XX.X decreased June XXXX. interest Inventory in XXXX XXXX knowing March end first forgiven, the The million days as the a to absence XX The the as payments in cash but million to days million compared were Company of debt restricted XXXX receivable XXXX loan $XX.X the any million has cash X-year presumes million, including with XXXX. of from beginning XXXX's for $XX.X XXXX. XX, XX $XX.X Company whether were period beginning XX, its as will XX first our intends XXX XXXX cash quarter. of was apply the to $X.X with quarter. XXXX million to quarter. so. accrue of DSOs As in Accounts compared DSIs for at of $XX.X million in March March XXXX, versus of quarter reported first

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

on XXXX year our a anticipate covenants and amendment filed down pay last of and to our our related million cash In in term loan $X based projections for addition, debt the liquidity XXXX. we in

two the From of beginning together, July to 'XX our million quarter, these $X.XX sheet. per shares at comprise share. $X.X the $X on the Taken convertible attributes short-term converted notes balance were of common the senior debt in million

face the of cumulated $XX.X value July of including notes As XX, interest. XXXX, March the convertible PIK is XXXX million,

As in back comments. reflects number the This XXXX. per for million from for $X.X note of the million first now June PIK owed value stock And convertible the in $XXX.X at aforementioned the and outstanding additional amortization letters first shares the diluted XXXX million, our million XX, million calculation the have call was as million of $X.X first recapitalized reverse July impact February of quarter quarter facility on split our I first as of credit and credit Basic both quarter loan convertible $XX.X quarter as X.XXX XXXX to XXXX of common no debt senior due balance over the a X.XXX term XXXX. that, XX. to conversions. $XXX.X outstanding aside our million for due the of of XXXX, Stephen were the PPP March in compared interest. March currently the Depreciation diluted million million XXXX, inclusive face as due notes a expenditures XXXX of $X.X from average was some of of Company's aforementioned under XXXX compared weighted XXXX, senior first hand quarter with the under $X.X first of quarter will $XX.X was up million We including XXXX. well to $X.X million in income of share based July and result, in loan of during Capital

Stephen Berman

exciting strengthen ongoing keep keep our and year I'd to of going costs John. this new balance product the launches, plan you, how efforts to to like further turn sales efforts and to sheet. to rest our Thank down momentum the with outline now we

Dress-Up anticipate ownable with which Collection, by to key line robust Disney a uniquely feel. year lineup licenses of Princess will girl play straight dress today's is tremendous capitalize continue look large accessories on dolls, and role driven strength with dolls Disney a matching we beautiful We for Disney with of several designed in the for stylized Building Princess, the Style to being and Disney a of Walt Company. of growth the third easy and girl our size momentum, items large Princess factors, Princess including on a Disney dresses. modern

the the We from in to expansion expect Princess benefit strength the distribution retail addition universe. of with ever marketplace continued increased the to growing Disney in demand

to and Frozen We scales to variety the the will of fans a that continue Arendelle with franchise support a products also line brings diverse magic formats. in of of

the Princess the of Last business, will Raya Dragon. continue core and performance on great we lines based Beyond the product driving Disney

town dynamic The boys accessory on line release girls certain based the a In successful feature who new mountains vibrant and new role interactive to a Mario on maximize video doll to Sonic theatrical to Apex we addition brand, fall. we our within will our resonate Super we of products by at initiatives Disney perform around lives theme centered success expect a toys dolls, division from toy extraordinarily launch a to lines, large are in home in brand gummy game-related to the play. this the global an dress-up a product Walt the continue girls line In of based Legends, launching well nestled designed hidden Perfectly the beautifully Studios, and fashion Brothers division, November Animation with and Other Encanto, product Cute our collectibles playsets, a dolls, inspired and expect line of Encanto will very and Colombia. Hedgehog. item candy including Haribo, of Target, XXXX include, in the upcoming magical extension family

re-release the broaden of the continued seasonal strong than Amazon. to our variety at line with a and the In Target been a continue owned planning Creepy licenses. are we In as will expansion ReDo the for has years. both with and sales for product addition, IP, skateboard of grow XX strong well as as line in previously, And division, mentioned line that launch toy classic growth a JAKKS' our of brand Crawlers, Decker we Black for product more

play and trampolines, half us expect also a licensed the and boost perform new to in steadily have continue This foot-to-floor of great based and combination unlicensed summer, Mickey sellers to ride-ons. Minnie Blue's of business on of include product, Frozen, the licenses, in Disguise a Mouse, hitting of including more Halloween amongst market and year. Halloween are and for success tents PAW pits, from expect line Carnival stable that back many the historically Clues, we XXXX. is a With are been We Fisher-Price, great class and we which this our much others. activity will best Mouse, distribution our ball well tables, Patrol, for evergreen segment, we perform Categories expect expecting environment very

that Halloween falls assumption on sales level sufficiently broad license lead of and under celebration, themed a the typical control anticipate the will Given the fall, portfolio base great Sunday generic we a be to more performance pandemic by by accessories. that costumes our will and both of and

Chucky, Mask, Legends, Blippi, PJ the Bendy Hocus Ink Last Apex the Spirit others. Ghostbusters, and Machine, in New amongst include the Pocus, and Raya XXXX licenses and Peppa Pig, Dragon

in portfolio, new expect show and XXXX, results our of across become the a we encouraging back to observations. seek has while Taking looking such for allowed a time at cost meeting and offer the same will discipline licenses let us me we to Company. couple what As the grow available, progress at pricing that step the

workforce trade year our as so expenses of few home, money the name spent XXXX XXXX, first with at and of much bit a shows, airfare, we areas. some capital First, may very and a basic a on. of In little like maintenance, hotel, goes as on company IT to cost just quarter reverse the the working tailwinds

these to but year, aren't the to We paycut and company Many eliminated rise of a coming been costs this improving will our preserve last remain structure. cost year other have whole took help Our cash. costs committed back.

growth. at having for level be working level Second, needs at inventories growth expecting and inventory over that of We're to low, build increased. will a back that XX-year need an to time we future some probably is capital

more need increase over new will level, In addition, we some but continue capital to year's us prudently intelligently. again, expenditures to normal last and spending is for the

Frozen as last have retail big that the comparisons we strong presence year. some In sell-in difficult some as industry Third, games, might a a not toy are manufacturers XXXX, XXXX, of toy year II's were ones released categories comparisons this as not in and faced strong in, has be of activities. such year. puzzles and but comparison strongest in exceptionally categories Those as the don't difficult the We XXXX in last because difficult were sell-through XXXX.

to XXXX be our expect We grow be profitable. sales able to we more significantly expect in and to

trailing million. nearly $XX XX-months adjusted EBITDA Our is

just of was proud of this are it We and considering negative a couple years ago.

extended closing, last well If we vendors team debt first are in to with we it there cash of way deliver I incredible in our customers, our support much our we can thank position product Finally, strong for how in results year, is year, the we our and hard investors their improved operating the work balance team down be can our and and over over see a licensors our are our borrowings a sheet, as we on built growth plans. that our value with In get all with a realign in hard at last our flow, coming will strengthening the believe payment as momentum work would cost reduce have together shares. quarter. to structured like good debt these to overall and great paid

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

Operator

of the from Steph comes question Jefferies. Wissink first Our Instructions] line with [Operator

Steph Wissink

Stephen, the to the comments, coming to is growth Halloween? with Halloween just of concluding your Halloween. Couple could, the profitable business, us the was year. more start year that how Can negative, being online last this versus you much questions, is underlying of if component the impacted excluding I contextualize just substantially sales growing year and help Halloween this back of

Stephen Berman

with because be -- specifically which nice for sales off saw -- growth go to off we very one is and There and our Halloween was of carnival. Halloween a and worst out of in carnival regards majority profitability, entire COVID and everyone. So in restricted international see increase, a in we the to categories environment one are building and of Halloween Halloweens both wasn't the to -- very of strong we presence based just and which expect Disguise, a because of will COVID XXXX enthusiastic in for based

off the really occurred during we Halloween cloud, success we than lift if Halloween now earlier we based Easter Easter. carnival and besides more think at projected a that, buying strong retailers the the So and that COVID we're in what retail of have have off been to based we'll have going

will see Halloween have also nice and very seasonal very, division, in see division we nice it, growth our boys. girls and -- we our very division So and but growth

areas. with the and a within extremely Black created is we in now thing Nintendo Sonic we X.X over it extremely strong. different and remaining that and strong us licenses have years, each of adding have we've Decker So, few our have and strong, evergreen business these strong, through that the for new very just and categories us gone we The is last positive and expands a -- positive is thing extremely for the

and we So business, year we the last trampolines have have license for skateboard. instance, didn't seasonal didn't

Disguise growth jump So grand singles looking very we have see a to on majority base and or year a -- These something we and new if board slam, across grand much business we areas platform that's basic have it it's this run two into do of the well. yet initiatives. home and turns in strong general and the we and and new growth categories and not in, as have family's growth doubles a a very business, are strong be will the we that very our see will our solid not so

Steph Wissink

of that I back be the want you games, video whether sense for or the penetration obvious portfolio? you video just know big video you're does afford that rise very licenses Switch, the just and in licenses, on of be you Nintendo games you, with now would tracks, size that the biggest last console In the games to one cycle we game the in and on which of follow opportunistic. of other in video play some opportunities licenses currently to over very aren't is any year new there early nimble, one it's other thing decades in are of a that about really is the seem or

Stephen Berman

of All the above.

movie of So and one and the their brand we only were was the growth companies were add Nintendo the took all actually But the the with just of add allowed different Nintendo a the these to Sonic, you they further, you Nintendo then Nintendo at we Sonic, Legends. strong able it Switch is characters get never fueling that build then a over them, that when really normally the -- rights, mascots expansion with growth relationship we pushes ever now work -- Apex and actually Sonic, with have which and we certain building time. general that and

and appropriate and where carnival, in we we Halloween toys, we where think it then it in it's appropriate. So do think it's we do

So culture hopefully that like that grade big that the carnival of lot and business collectable very announced the just we'd because game and category, are kids a part of Halloween the areas of and game music, a video a more growing, and stay growing we in pop whole we and so growing business. of Eilish consumer what and video is it's age shortly than be more toy that business to which higher don't our achieve other want rather genre, ones and business, like will a the Billie so is on. but are There -- looking get into business, to some it's

Minecraft video on, properties. same -- sales we time appropriate. the expanded genre, the a doing Nintendo it's the the and we complete in solid is with At Legends specifically that toys, really materially like it's the Apex and right right there Sword lot a not the game going a we ones are few of of but other are just SKUs and that's So that line Disguise Sonic for and some got

to success to of with need into deep go line So games. product whole we the don't a have video

Steph Wissink

you on the think coming help about point to how went comments want Stephen but can as for? are, inventory being at low high rationalize certainly low as be the as just you us that The XX-year on on do out not not you where exit as you made of XXXX, of side, capital that working continuum you

John Kimble

it's -- that's Yes, real-time sort question. a of

a and way different of those those year, a that two average. beyond, are sort that exiting for out know know say statements, a don't were 'XX, parameters financial fortunately way worked a operating on than we're was set look we focused about of looking productive at. us can -- very for that statement and as more post the well a We the frankly, which so in goal more looking think down XXXX lot unusual create pretty some the I that. up at are I in of income things, both we that know on on those sheet we we and us think balance I in very XXXX basic anything and

Operator

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

Gerrick Johnson

trade First quarter has see Nuremberg, not kind going York that much ballpark those the all savings? of the Hong you contributed of SG&A New do much how and how Toy Kong, and Fair from to to shows,

Stephen Berman

give we New you all have York sort It'd also the all those, for be Nuremberg, the and you that you approximate Fair, Kong, number. approximately if Toy actual -- approximately you employees get and just have excluding have it's involved it's to the of those itself, areas, U.K. probably included fair Hong you that's $XXX,XXX, samples the that different $XXX,XXX to so to around about have be of amount

Gerrick Johnson

to having companies? it to venues you company, being at thought disadvantage kind in a having think not relative fewer think sort or would I to large can a than do ability those presentations, products be. you your toy of show the related smaller smaller that lot maybe puts you that the that, of a do And toy Wow, person you're in

Stephen Berman

and at in time, that was to that at a have, white had and year. meetings No, large licensed having you not and for I'd trampolines, the disadvantage. physical up of immediate face were face skateboards business and able pick to last May a licensed during definitely retailers May our space not general, that It in hinders we say, one it's fact, our I to our meeting out went

the physical done a does real trade of more of good and don't in a spring for and that sales virtual meeting have out to there's we of shows that benefit, that think us, a bode worldwide So the very we've teams come that have that but amount but the COVID I have need have shows of had for past. hybrid kind fall, well. amount prefer need will trade the will the would that meetings we've I

Hong happy that figure that of to there we're getting lot Toy have out I the outside be but a of that eventually, New hybrid think out amount happening tedious kind running Olympic that be in Fair, filtered is over a of and September and need LA. traveling fall ourself, we in or Fair, York we're will Toy that Toy place, Toy one. we New of U.K. a Fair, a Fair will figured trade Toy shows because just the but think then That's a have and we out not benefit an do all don't know York will a and people I show Kong and Fair Nuremberg we the

happy Toy primarily FOB a toy be very company. because we're important will occur believe that, we're we that will and So Fair Kong that Hong prominent very fair,

Gerrick Johnson

the forward Yes, going own. of I lot including industries, the for on of you with model a efficiency my agree hybrid

being in you quarter, you a XX%, you yes, your top later in so over share three in share that lose would mentioned on, why POS you're the over so the -- up industry and talking seem did You quarter? guess, lose share me first to XX%, is up did accounts that but your I then about lost that why

Stephen Berman

don't the I growth that was Nintendo, what as in Disney mentioned, had so our in and believe tripled think strong. Black games, In in it areas, area, share Princess was puzzles on, as was mentioned, activities Decker lost and several and script was we've and I I areas, I we double-digit pre-recorded is strong.

of up, first board, the saw across our even couldn't growth part so in strong industry results and very was in us, for EBITDA. we Disguise isn't we happier growth the for was be revenue, the us, quarter, growth, So it extreme with from profitability if very the strong

think -- it. happy us, very couldn't for we've what So with and entirely done see I I we're and

Gerrick Johnson

think game, role for Disney and licensed now Some trampolines categories you and Princess ReDo mention all that counting toys, Black of and Those are kind and pandemic the you're video did that especially, role the done play, continuing outdoor, as I you on so skateboards. games owing categories growth such trends have play into pandemic, to we well on are and very, of Video saw right? much counting that very XXXX Decker, the XXXX? in how

Stephen Berman

and Nintendo we're think, I for achieved So first off benefits what we lot the at based -- still trends, it, in the the and occur now through a what seeing of had, we've of both people retail the right what is will it what see occurred U.S., half just Decker, what than additional Sonic had we've additional distribution Black getting same. we but and the more for are the in getting and --

that these looking we're looking $X specialty will million, and and the and the So at be increased skateboards, some have growth consumers through it's retailer and through you areas. additional distribution you million -- dollar growth to $XXX of making trades and distribution mass more but part our line, have that when one add distribution areas, purchasing of is it. Then growth larger or we're our in some you'll trades -- continued skateboard we're so footprint customers in trampolines the a material to go getting have for we not you the see from

occurring are -- correct things you'll that first categories see that these with continue. see of filter of where are of the the put great new Raya us. with just the come of see see our an license news, become real basic lot new category a those and for do growth, of that then age through and will lot that is a are a it's areas and There's we lot they and Encanto, licenses evergreen -- we we a we first for appropriate have new the new lot which under out business we but in becomes On expansion. we property that's one licenses, the So out quarter in we launches. to appropriate is need haven't of all grade a That just categories have that

and then Creepy new collection very a have the we growing. have confidential we you global in Disney worldwide go Daniel category, So which from a we our and be that's we Tiger is favorite on-trend our girl evergreen property Princess that we've which is fall, launching into product brand, Style have is have Haribo, basic will Crawlers Disney toy right line business, grown a back products,

and properties So see, we're we will hitting a new and on way. all with that excitement categories just cylinders of come our some lot for

Operator

now Thank you. I Stephen a follow-up would the any questions, further to Gerrick remarks. call back to have like for showing not do over We I'm Johnson. turn from closing

Gerrick Johnson

margin the the time you towards mean, about input going on you can costs kind remember or thinking for logistics in input are margin weren't going you'd costs, are much gross you pretty me, touched could and briefly be that you thing we one is that to I revisit locked that how to costs with spoke, creeping input Input pretty hold there of manufacturers could able you up about confident last I end. were that your be some be an issue, forward? inflation hurt

Stephen Berman

great question. a That's

selective to time. worked decades factories THQ from areas with input right and them costs, us with have even now So have some of our even these that working we with regards we've been our decades and longer manufacturers,

with doesn't and it work areas, increase metals we So go had or occur, at same a them. sew, resin increases as have with will and with so we've retailers increases, our cut lot it's seen we board in time, across selectively then manufacturers, and where Plush, certain Halloween areas, those these prices and In then the our on, other those like the increases. have will certain price work of whether they've where where we and

our our and and and prices be in the to work it hold board, -- work not necessary, manufacturers need us We across and it's just not increasing order appropriately increase we but increase margins retailers. will for to to margins with our

manufacturers. on actual we're and to -- the are just on we costs -- right table doing and we that increased been retail keep increase and example any margin see that we're are are not to the we'll those from the margins we've sure their JAKKS points, allow good a appropriate to So early the chairs, and but keep trying the working to make factories to price actually that, looking we margins, retailers have to the of their areas that retailers

Gerrick Johnson

pretty you still so hold confident Okay, you're can gross that margin?

Stephen Berman

Maintain or grow margin, yes, we are.

Operator

would no Thank closing over questions now the to back showing remarks. Stephen I queue, I'm the for in you. further like call turn to

Stephen Berman

of Everybody, and thank you call a of XXXX, and we're a within have to also initiatives we things very excited much lot year, looking wings. new lot this for our the about We're because quarter, the we're today. excited about

So appreciate you thank that very much. and

Operator

concludes and disconnect. now you your conference. for the gentlemen, may that participation, Thank you Ladies

JAKKS Pacific (JAKK) 29 Apr 212021 Q1 Earnings call transcript