The Topps Company Inc., in its first report since going public, reported sales in the second quarter ended July 4 jumped 77.7 percent, to $212.2 million. The maker of sports and entertainment collectibles raised its outlook for the year.
Consolidated gross margin improved 350 basis points, to 43.3 percent in the second quarter of 2021 from 39.8 percent in the second quarter of 2020. The improvement mainly reflects a mixed shift of net sales to e-commerce in Physical Sports & Entertainment and the improved profitability of Sports & Entertainment, partially offset by higher freight costs for both Sports & Entertainment and Confections.
SG&A in the second quarter of 2021 was $39.1 million, or 18.4 percent of net sales, compared to $26.4 million, or 22.1 percent of net sales in the second quarter of 2020. The increase was primarily due to higher employee-related costs in the second fiscal quarter of 2021 compared to the second fiscal quarter of 2020, which had lower marketing and employee-related costs primarily due to cost reductions associated with the pandemic.
Net income for the second quarter of 2021 was $36.3 million, an increase of 176.4 percent compared to $13.1 million in the second quarter of 2020.
Adjusted EBITDA in the second quarter of 2021 increased 144.0 percent to $55.1 million with an Adjusted EBITDA margin of 26.0 percent compared to Adjusted EBITDA of $22.6 million with an Adjusted EBITDA margin of 18.9 percent in the second quarter of 2020.
By segment, Sports & Entertainment revenues climbed 86.5 percent to $151.5 million. Physical Sports & Entertainment net sales increased 87.7 percent, Digital Sports & Entertainment net sales grew 122.4 percent and Gift Cards net sales increased 28.1 percent.
Sports & Entertainment segment Adjusted EBITDA increased 137.8 percent to $53.6 million generating an Adjusted EBITDA margin of 35.4 percent compared to 27.8 percent
Confections sales were $60.7 million, up 58.8 percent. Confections segment net sales increased 58.8 percent to $60.7 million
Confections segment Adjusted EBITDA increased 71.1 percent to $11.9 million generating an Adjusted EBITDA margin of 19.6 percent compared to 18.2 percent
Michael Brandstaedter, CEO, The Topps company said, “Our second-quarter performance reflected the overall strength of our business. We delivered exceptional performance in our Sports & Entertainment segment, as well as a meaningful recovery in our Confections segment compared to last year’s COVID-related impact on this business. We believe we are well-positioned to capitalize on the many growth opportunities that exist for our business.”
Michael Eisner, chairman, The Topps company, commented, “I am pleased with our fantastic start to 2021. Our recent results exemplify the powerful emotional connection Topps has with a wide range of consumers and great execution by our teams. We are excited to see our businesses perform well and look forward to building on our recent accomplishments to drive continued growth over the long-term.”
Outlook
For 2021, the company now expects net sales to be in the range of $830 million to $850 million, up from previous guidance of $740 million to $760 million, representing an increase of 46 percent to 50 percent over 2020 net sales of $567 million. Adjusted EBITDA is now expected to be in the range of $155 million to $165 million, up from previous guidance of $130 million to $140 million, representing an increase of 68 percent to 79 percent over 2020 Pro Forma Adjusted EBITDA of $92 million. The overall more positive outlook assumes no additional global supply chain disruptions caused by the pandemic.
2020 Pro Forma Adjusted EBITDA and 2021 Adjusted EBITDA include estimated public company costs of $9 million and $6 million, respectively. The reduction in estimated public company costs to $6 million reflects the projected timing of completing the business combination with Mudrick Capital Acquisition Corporation II (“MUDS”).
Topps Company Inc.
