The Topps Company reported significant earnings gains in the first quarter ended April 3 as sales climbed 55.3 percent.
First Quarter 2021 Segment Highlights
comparison of the thirteen weeks ended April 3, 2021 to the fourteen weeks ended April 4, 2020
- Sports & Entertainment segment net sales increased 105.3 percent to $103.2 million;
- Physical Sports & Entertainment net sales increased 101.7 percent;
- Digital Sports & Entertainment net sales increased 111.1 percent;
- Gift Cards net sales increased 131.4 percent;
- Sports & Entertainment segment Adjusted EBITDA increased 373.2 percent to $32.0 million generating an Adjusted EBITDA margin of 31.0 percent compared to 13.4 percent;
- Confections segment net sales increased 11.3 percent to $63.5 million; and
- Confections segment Adjusted EBITDA was $10.7 million generating an Adjusted EBITDA margin of 16.9 percent compared to 19.9 percent
Michael Brandstaedter, CEO, The Topps company stated, “Fiscal 2021 is off to a great start. We generated notable outperformance in our Sports & Entertainment segment combined with very solid top-line expansion in our Confections segment. With our strong first-quarter results, I am pleased to report that we have meaningfully raised our full-year 2021 net sales and Adjusted EBITDA* targets.”
For 2021, the company now expects net sales to be in the range of $740 million to $760 million, representing an increase of 31 percent to 34 percent over 2020 net sales of $567 million. Adjusted EBITDA, is now expected to be in the range of $130 million to $140 million, representing an increase of 41 percent to 52 percent over 2020 Pro Forma Adjusted EBITDA of $92 million. 2020 Pro Forma Adjusted EBITDA and 2021 Adjusted EBITDA include estimated public company costs of $9 million.
First Quarter 2021 Financial Results
Net sales increased by $59.3 million, or 55.3 percent, to $166.6 million for the first quarter of 2021, from $107.3 million in the first quarter of 2020, reflecting substantially higher Sports & Entertainment sales and an increase in Confections sales.
Consolidated gross margin improved 200 basis points, to 39.4 percent in the first quarter of 2021 from 37.4 percent in the first quarter of 2020. The improvement mainly reflected a mix shift of net sales to e-commerce in Physical Sports & Entertainment and the improved profitability of Sports & Entertainment, partially offset by higher freight costs and a mix shift to higher-cost products in Confections.
SG&A decreased by $1.8 million in the first quarter of 2021, or 5.5 percent, to $30.7 million or 18.4 percent of net sales from $32.5 million or 30.3 percent of net sales in the first quarter of 2020. The decrease primarily reflects a favorable impact of foreign exchange on the remeasurement of intercompany balances due to a stronger British Pound Sterling versus the U.S. Dollar exchange rate, partially offset by higher employee-related costs in the first fiscal quarter of 2021 compared to the first fiscal quarter of 2020.
Net income for the first quarter of 2021 was $23.4 million compared to $0.4 million in the first quarter of 2020.
Adjusted EBITDA in the first quarter of 2021 increased 178.0 percent to $35.9 million with an Adjusted EBITDA margin of 21.5 percent compared to Adjusted EBITDA of $12.9 million with an Adjusted EBITDA margin of 12.0 percent in the first quarter of 2020.
On May 12, 2021, Mudrick Capital Acquisition Corporation II, a publicly traded special purpose acquisition company, filed its preliminary proxy statement with the Securities and Exchange Commission in connection with its proposed business combination with The Topps Company. Upon closing of the transaction, the combined company will be named Topps Companies, Inc. and will be listed on NASDAQ under the new ticker symbol “TOPP.”
Photo courtesy The Topps Company