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.

Berman will first provide an overview of the quarter, along with highlights of product lines and current business trends and a discussion of impact of COVID-19. Then Mr. Kimble will provide detailed comments regarding JAKKS Pacific's financial and operational results. Mr.

Berman will then return with additional comments and some closing remarks prior to opening up the call for questions. [Operator Instructions].

Before we begin, the company would like to point out that any comments made about JAKKS Pacific's future performance, events or circumstances, including the estimates of sales, annual adjusted EBITDA in 2021 as well as any forward-looking statements concerning 2021 and beyond are subject to safe harbor protection under federal security laws.

These statements reflect the company's best judgment based on current market trends and conditions today and are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected in forward-looking statements.

For details concerning these and other such risks and uncertainties, you should consult JAKKS' most recent 10-K and 10-Q filings with the SEC, as well as the company's other reports subsequently filed with the SEC from time to time. In addition, today's comments by management will refer to non-GAAP financial measures, such as adjusted EBITDA.

Unless stated otherwise, the most directly comparable GAAP financial metric has been reconciled to the associated non-GAAP financial measures with the company's earnings press release issued today or previously. As a reminder, this conference is being recorded. With that, I would now like to turn the call over to Stephen Berman. You may begin..

Good afternoon, and thank you for joining us as we review our performance in 2020 and our plans for 2021. John will go over the financial results in more detail. But let me start by saying we are very pleased with how the company performed in the fourth quarter and for the whole year in 2020, especially consider the many challenges we faced.

For the last two years we have been working diligently to improve our profitability, even as we have faced significant revenue challenges. We've embarked on a 3-pronged plan to improve results. First was to reduce our product cost and operating expenses to allow us to be more profitable on the revenue that comes from our core product categories.

Second, we've been working to drop lower-margin products and take into account the total cost of a product, not just its product cost. These 2 steps have lowered our breakeven level and positioned us well for even stronger profits when we do launch successful promotional products.

Third was to focus on the balance sheet by reducing our high-cost debt and stretching out the maturities of our debt. We have already accomplished some of this in 2019 and 2020, and we'll be working on further improvements in 2021.

I'm extremely pleased with how well our efforts to improve profitability have paid off, and we can see the results of these efforts in many ways. Our fourth quarter gross margin rate was the highest quarterly gross margin rate in nearly a decade. We posted a fourth quarter operating profit for the first time since 2013.

Our full year operating income was the highest level since 2016. Our full year adjusted EBITDA was $28.1 million, the highest level since 2016, and up nearly 50% from last year. At our top 3 retailers, POS of our products was up double digits for the year, and that is inclusive of the big declines in Frozen.

Our inventories ended the year down 29% and stood at the lowest level since 2009. At our top customers, retail inventories were down 25%, and we ended the year with $93 million in cash and the lowest net debt position since 2013.

We are pleased to have been able to improve our profitability and our balance sheet at a time when we are facing some revenue headwinds as well as the worst global pandemic in over 100 years. Although our total sales were down for both the fourth quarter and for the year, the decline was the result of a couple of product areas.

Excluding Frozen, which we expected to decline in 2020, our sales were up 16 percent in the fourth quarter versus the prior year, in line with the overall growth of the U.S. toy industry.

Our Disguise sales were up 91% in fourth quarter, but down 26% for the year, which was understandable and expected given the impact that COVID had on the Halloween celebrations. Excluding both Frozen and Disguise, our sales were up 13% in the fourth quarter.

At this time last year, we were heading into 2020 fair, and we were trying to get a sense of how COVID-19 was going to impact on our world. Our initial concerns were keeping our supply chains open. Then our focus became working with retailers to help those who were able to stay open to keep products in stock that consumers were going to want.

The toy industry was one of the few that did not get devastated by the pandemic. In fact, NPD recently reported that U.S. sales of toys rose 16% in 2020. Children suddenly not only had to spend much more time indoors, but most of their after-school activities were canceled, such as sports, dance classes, music lessons and other activities.

This caused a dramatic increase in demand for some toys, while conversely reducing demand for others. At the same time, the money parents might have spent on these activities or on vacations, dinners out at restaurants or even commuting to work could be diverted into spending on their cadence.

Categories such as games, activity toys & puzzles did quite well, whereas collectibles and other product kids get interested in because they hear about them from their friends at school did not do as well. Movies were postponed, cutting demand for toys tied to those movies.

Overall, it was a good year for the toy industry, with retail sales surging as the pandemic spread. For us and for the rest of the toy industry, 2020 demonstrated the strength of core basic toys, nostalgic brands and classic play patterns.

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

For JAKKS, for example, this lucid sales of our classic brands such as Disney Princess, leading to an increase of over 30% globally for the year and over 45% in the fourth quarter. But NPD reported that U.S. toy sales for 2020 were up 16%.

They noted that the unit sales were actually flat year-over-year and that the 16% increase was driven entirely by a shift to higher-priced toys. We saw this shift to higher-price toys too. For example, within the Disney Princess brand, JAKKS core role play segment, Style Collection, sold very well.

And while the entire line contributed to our overall growth, toys that offered extensive play value, including the gourmet smart kitchen, a $150 retail item, the light and sound vanity, a top-rated by Kids Award Winner and play suitcase top the line. These are not inexpensive toys, yet they sold well because they offer hours of fun play experiences.

The heart of our Disney offerings have always been the core of large doll and dress up categories for JAKKS. These 2 lines were up 32% and 63% respectively. As retailers continue to focus on SKU efficiencies in an effort to maximize pickup in-store initiatives resulted in more turns and enhanced productivity.

As a whole, our Disney Princess dolls, accessories and play sets were up nearly 33% compared to a year ago. Other examples of strong sales within a proven play pattern and globally recognizable brands include Nintendo's Super Mario Brothers, Sonic the Hedgehog and Apex Legends.

In a year that saw big increases in sales of video games and accessories, it makes sense that toys tied to video games would do well. Nintendo and Sonic together were up nearly 74% year-over-year in the fourth quarter and were up over 65% for the year.

Within our seasonal business, we saw double and even triple-digit increases for both the fourth quarter and full year in brands such as Mickey Mouse, Minnie Mouse, Paw Patrol and Fisher-Price. Again, parents gravitated to the brands they know and love for products based on classic play patterns.

According to NPD, one of the best-performing categories in the whole industry was outdoor and sports toys, which includes skates, skateboards and scooters. This category was up over 30% in the U.S. Sales of our ReDo Skateboard were up over 300% in the fourth quarter and over 600% for the year.

One of the other big themes in 2020 for the toy industry as well as all of retailing was the acceleration of the shift to online sales. At our top customers, online sales of our products were up over 40% in 2020 and represented 25% of our total POS at these customers, up from 19% in 2019.

The essence of what JAKKS Pacific has always been strong at is making good basic toys based on leading global IP, targeting proven play patterns. Despite 2020's revenue headwinds and rapidly shifting consumer behavior, we've improved our profit potential dramatically, and we are poised for considerably better results in 2021 and beyond.

I will now pass the call to John to review our financial performance, after which we will come back with comments on how we see 2021 playing out.

John?.

Thank you, Stephen, and good afternoon, everyone. Net sales for the 2020 fourth quarter were $128.3 million, down 16%, compared to $152.5 million last year.

Reported net loss attributable to common stockholders for the fourth quarter was $11.7 million or $2.55 per basic and diluted share compared to $20.6 million or $6.95 per basic and diluted share in the fourth quarter of last year.

The fourth quarter of 2019 included adjustments related to the impairment of intangibles, changes in fair value of convertible senior notes and preferred stock derivative liability, restructuring, bad debt recovery and other charges totaling $12.8 million net of taxes.

In the fourth quarter of 2020, such adjustments totaled $8 million, primarily due to changes in fair value of convertible senior notes and preferred stock derivative liability.

Excluding the impact of such adjustments as well as stock compensation expense, our adjusted net loss attributable to common stockholders in the fourth quarter of 2020 was $3.6 million or $0.80 per basic and diluted share compared to $7.8 million or $2.62 per basic and diluted share in the fourth quarter of 2019.

For the full year 2020, adjusted net loss attributable to common stockholders was $6.3 million or $1.72 per basic and diluted share compared to $18.9 million or $7.27 per basic and diluted share in 2019. Adjusted EBITDA for the 2020 fourth quarter was $3.9 million compared to $3.3 million in the fourth quarter of 2019.

Our full year 2020 adjusted EBITDA was $28.1 million compared to $18.9 million in 2019. The 5.5% adjusted EBITDA margin is the company's highest full year result since 2016 when it reported a 5.9% adjusted EBITDA margin on an additional $191 million in top line sales.

Compared to last year, our girls targeted business declined in the quarter, inclusive of dolls, role play, dress-up and preschool toys and consumer products, net sales were $73 million in Q4, down 28% compared to $101.8 million in the prior year.

The big driver of the decline was the strong sales of Frozen merchandise as well as the Frozen 2 film was released theatrically in November of last year. Excluding Frozen products, sales of girls products were up nearly 25% compared to prior year. Among the strongest performers are toys in our Disney Princess and Perfectly Cute home and baby ranges.

For the full year, net sales in our girls-targeted business declined 11% to $275.2 million. Excluding Frozen products, sales of our girls products rose 2% for the full year 2020.

Sales of action figures, vehicles, role play and electronics products in our boys division for the 2020 fourth quarter were $26.6 million, up 12% compared to $23.8 million last year. Positive contributions from our video game related toys continue to be our Nintendo Super Mario Brothers and Sega's Sonic the Hedgehog lines.

Our Apex Legends launch performed well and will have expanded retail placement in 2021. For the full year, sales of toys in our boys category were essentially flat with last year. On an annualized basis, gains in Nintendo and Sonic were offset by the overhang from sales of Godzilla, Harry Potter, the TP blaster and the Incredibles.

We look forward to capitalizing on expanded placement for Nintendo and Sonic in the New Year, both in the U.S. and internationally.

Sales of seasonal products, including licensed ball pits, outdoor toys and play structures were $21.5 million in the 2020 fourth quarter, down 7% from $23.1 million in the fourth quarter of 2019, primarily due to declines of MorfBoard and the impact of Frozen 2. For the full year 2020, sales in our seasonal division were down 21% to $71.4 million.

The decline was driven by MorfBoard and our dropping of the Funnoodle line, but we did see solid growth from ReDo Skateboards and core licenses such as Minnie Mouse and Mickey Mouse.

Other products like our kids-only activity tables have also sold extremely well in 2020 and into the New Year, given the large numbers of kids at home seeking activities.

Our seasonal business is largely sold domestically, which has made responding to spikes in consumer demand a bit more challenging, but we feel we're catching up a bit heading into 2021, which is great news. Sales in our Halloween segment, Disguise, increased 91% to $7.2 million in the fourth quarter of 2020 compared to $3.8 million last year.

The increase was the result of stronger-than-expected retail sales around Halloween as consumers' shopping plans for the holiday were understandably impacted by the uncertainty related to COVID. As a reminder, Q4 is a much lower volume quarter for Disguise than Q2 or Q3.

For the full year, sales in our Disguise segment were down 26% to $88.8 million, driven by retailers reducing their orders after experiencing the negative impact that COVID had on their seasonal Easter business. The good news is that retail sales were ultimately strong, leaving inventories relatively clean compared to historical averages.

Looking at sales by business segment, fourth quarter sales in our Toys/Consumer Products segment, which includes all markets around the world, were down 19% to $121 million compared to $148.7 million in the fourth quarter of last year. The decrease was driven by the same factors noted above in the product discussion.

North America Toy/CP was down 13% for the quarter, while EMEA, Latin America and Asia were each down over 37%. We already covered our Halloween segment in the earlier comments on Disguise. Looking at the rest of the P&L. Reported gross margin in the 2020 fourth quarter was 32.8% compared to 30.4% in the 2019 fourth quarter.

This brings our full year gross margin to 29.0%, a 240 basis point improvement versus prior year and the highest full year level since 2016. In Q4, royalty expense was significantly lower, driven partly by a mix shift towards products with lower royalty rates, but also the expiration of some legacy agreements with less than favorable terms.

Our product margins continue to steadily improve, and our product obsolescence expense was also lower in Q4 as well as full year compared to prior year. We're very pleased to have been able to move a lot of product out of existing inventory in Q4, while not adversely impacting our margins.

Towards the end of 2020, we did notice that freight costs started rising sharply as the holiday season approached. In addition, we believe there were COVID-related worker shortages at docks and among truckers, which also raised costs.

We were able to see an increase in our gross margin despite these rising costs, and we will be working diligently to mitigate these cost increases in 2021.

Significantly lower expense for SG&A, driven by product development, compensation, T&E and bad debt expense in the 2020 fourth quarter totaled $40.9 million or 31.9% of net sales compared to $57.2 million or 37.5% of net sales in the fourth quarter of 2019.

On an annual basis, 2020 SG&A is 26.5% of net sales compared to 29.6% in 2019, despite net sales being $82.8 million lower compared to prior year. We remain very pleased with the company's continued success in working both remotely and within a lower cost structure.

These results combined to generate a full year operating profit of $12.9 million or 2.5% of net sales, the highest full year operating income margin since 2015, when net sales were $745 million or nearly $230 million higher than 2020.

Our net interest expense in Q4 of this year was $4.9 million compared to $5.4 million last year, reflecting a lower overall level of debt. For the full year 2020, net interest expense was $21.5 million, with a weighted average effective interest rate of 9.6% compared to $15.9 million in 2019 and an average interest rate of 7.3%.

Net cash provided by operating activities was $27.6 million for the fourth quarter of 2020 compared to net cash used of $4.3 million in the fourth quarter of 2019.

For the full year 2020, net cash provided by operating activities was $43.6 million compared to $21.8 million in 2019, primarily due to a reduction in inventory and royalties advanced in addition to the reduced loss. Free cash flow was positive $25.5 million in the 2020 fourth quarter compared to a negative $6.1 million in the 2019 fourth quarter.

For the full year, free cash flow was $35.3 million compared to $12.4 million in 2019. As of December 31, 2020, our cash and cash equivalents, including restricted cash, totaled $92.7 million compared to $66.3 million at the end of 2019. Accounts receivable as of December 31, 2020, were $102.3 million, down from $117.9 million as of December 31, 2019.

DSOs for the 2020 fourth quarter increased to 73 days from 71 days reported in the 2019 fourth quarter. Inventory as of December 31, 2020, was $38.6 million versus $54.3 million at December 31, 2019. DSIs in the 2020 fourth quarter were 52 days compared to 62 days in the 2019 fourth quarter.

By the end of the covered period, the company had exhausted the $6.2 million in funds received under the Paycheck Protection Program. The company is awaiting the opportunity to file for forgiveness of this loan.

In the absence of knowing whether any funds will be forgiven, the company presumes a 2-year loan period with interest beginning to accrue in June 2020 with payments beginning in September 2021. As a result, we now reflect $0.9 million in short-term and $5.3 million in long-term debt on our balance sheet related to this loan.

As a result, as of December 31, 2020, the company's debt at base value included the aforementioned $6.2 million PPP loan due June 2022, $23.8 million of recapitalized convertible senior notes due July 2023 and $124.5 million owed under our term loan due February 2023, both inclusive of PIK interest.

We currently have no outstanding balance under our credit facility, aside from $10.8 million in letters of credit as of December 31. During the fourth quarter, $7 million of the July 2020 third convertible senior notes were converted to common shares at $5.65 per share. Subsequent to December 31, no conversions were done.

As of January 31, 2021, the face value of the July 2023 convertible notes is $23.8 million, including accumulated PIK interest. Capital expenditures during the fourth quarter of 2020 were $2.1 million compared to $1.8 million in the fourth quarter of 2019. For the full year 2020, capital expenditures were $8.3 million compared to $9.4 million in 2019.

Depreciation and amortization for the fourth quarter of 2020 was $1.9 million compared to $3.2 million in the fourth quarter of 2019. For the full year 2020, depreciation and amortization was $10.9 million compared to $17.6 million in 2019.

The basic and diluted income per share calculation for the fourth quarter of 2020 was based on a weighted average of 4.575 million common diluted shares outstanding, up from 2.962 million in the fourth quarter of 2019.

This number reflects the impact of our reverse stock split in July 2020 as well as the aforementioned convertible senior note conversions. And with that, I will now hand the call back over to Stephen for some additional remarks..

Thank you, John. I'd like to turn to 2021 now and outline how we plan to keep the momentum going with exciting new products that will drive sales, continuing the efforts to keep costs down and how we can further strengthen our balance sheet. We came through 2020 with our core business intact and strong.

Our retail inventories at very low levels, our operating costs significantly reduced and very lean working capital. We are set up very well for growth in 2021, and we believe that this year we'll continue to see parents and kids looking for core, basic products, popular entertainment licenses with proven play patterns.

For decades, we have been introducing new and innovative products in multiple categories based on iconic characters from Disney, Pixar, Marvel and Star Wars. Disney announced last week that its Disney+ streaming service has accumulated nearly 95 million subscribers since launching in November 2019.

In addition, Disney is constantly adding new content to its library and to the offering on Disney+. What this means for JAKKS is that all of these subscribers have year-round access to a great quantity of premium Disney content whenever they want it.

And we have known for years that what drives demand for licensed toys isn't just when kids see a movie in a theater, it's when they can bring it into their home and watch it over and over again. In our girls business, we believe taking advantage of Disney's momentum and building on our own success.

We anticipate 2021 to be the third straight year of top line growth on the core Disney Princess brand. This growth is being driven by several key factors, including the Disney Princess Style Collection, a line of core roleplay items designed for today's modern girl.

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

Items of this line include magic in the motion Rapunzel and Sing Along Elsa. We will continue to introduce new products in the Frozen franchise with new items such as Arrindell Snow Queen. Outside of our core Disney Princess broad line of products, 2021 also brings new theatric releases, extending our Disney portfolio.

Raya and the Last Dragon releases simultaneously in theaters and on Disney+ with Premier Access on March 5. JAKKS' products are already on shelves and include core play patterns of large dolls, dress up and role play accessories as well as a feature figurine, 6 inch petite settee and a large-scale light and sound feature Sisu Dragon coming this fall.

This fall, JAKKS is extremely excited to launch products inspired by the Walt Disney Animation Studios' November release, in Kanto, which tells that tale of an extraordinary family, the Madrigals, who live hidden in the mountains of Colombia, in a magical house, in a vibrant town, in a wondrous charm place called Encanto.

The film features all new songs by Emmy, Grammy and Tony award-winning composer of Hamilton and Moana, Lin-Manuel Miranda. The JAKKS line will offer an array of play patterns that our consumers know and love from fashion dolls and large dollars to dress up and role play Toys.

The centerpiece of the line is a collection of small dolls that deliver a magically integrated world of play celebration to family and the magical house in which they live. Other growth products we have for 2021 include extensions to our perfectly cute doll line at Target, where we expect growth this year.

We will also be launching a new line of collectibles and toys based on the Haribo candy brand, one of the world's most popular line of gummy candies. In addition, we will be releasing other fun and innovative new girl lines, which we will announce later this year.

In our boys division, we will be leveraging the momentum we have in our video game related products, including Apex Legend figures, Super Mario Brothers figures, playsets, plush, RC and more and the Sonic the Hedgehog figures, playsets, RC and other products.

In addition, we expect our sales of Black & Decker play tools to continue to be strong in 2021. Other new exciting products include one that we've been working on for years, the rerelease of Creepy Crawlers, which is our own IP and has been a classic toy brand going back more than 45 years.

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

For 2021, JAKKS is jumping into the trampoline business with a new line of licensed and unlicensed trampolines launching this summer.

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

Finally, we have good momentum in our Disguise segment. Retail inventories were left clean by better-than-expected retail sales around Halloween. We are bringing to market an expanded product line in 2021 with new disguise offerings from NBC Universal, Sony and Nickelodeon, amongst others.

In 2021, Halloween lands on a Sunday, which usually gives the industry a lift compared to when Halloween is on a weekday. Of course, a rebound in Halloween sales assumes that the pandemic is sufficiently under control to allow for more of a normal level of celebration.

In closing, I would like to thank our incredible team around the world for all their hard work in the challenging environment we have today. We continue to take the steps needed to position the company for profitability growth, and we couldn't do it without the dedicated team we have around the world. With that, we will now take questions. Thank you..

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

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

So I'm wondering if you can just help remind us, Stephen, what percentage of the business is Disney in a normalized environment? And help us think through also the split between domestic and international in terms of how you go to market, and what the rollout of Disney+ internationally might mean to the international growth opportunity for that partnership.

And then secondly, I think you mentioned in your script the top 3 retailers were up double digits in POS. I'm wondering if you could just talk a little bit more about what you might have seen across different channels of retail. And then the online, I think you mentioned was up 40% in Q4.

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

All right. Thank you, Steph. So if I go right into Disney+, firstly, Disney overall between all the different segments and divisions in which we have from Disguise to seasonal, to boys, to girls and so on is approximately anywhere from 43% to 50% given the year. And the split internationally, we'll work on in just a minute.

For us, with the Disney+ initiative, it couldn't become at a better time. Through this pandemic we've seen a lot more people eat up content more so at home than ever before. And it's become a new pattern of watching more at home.

And even though theaters are an amazing fun entertainment for families and for children, I think it's much more conducive for people to do things at home. And the repetitive watching as it was years ago with VHS to DVDs and Blu-rays, kids would continually watch the same episodes, but they would have to put in the DVD and so on.

Now they just go to Disney+, and they could watch new episodes, old episodes, and they just have an abundant amount of content that they can continue to watch in various forms.

And for us, that just bodes well, whether it's our current everyday business that we have with Disney or whether it's a theatrical loss like Raya, which is coming out in March, which will be both theatrical and Disney+ premium, I think.

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

So when a movie comes out, you get that immediate burst of sell-throughs and so on, and then you wait for the streaming version, the DVD version, which is usually 3, 4 months later, we have that now 365. So when it comes out, it's on Disney+ or streaming.

The kids are able to have that content more and more at their hands and allows them to have - just really be invigorated with the toy products in which we make because they have the play pattern of the theatrical or just whether it's the normal television version of their content. So for us, it's a dream, and we're excited for this year.

And going forward, the Disney company, the Walt Disney company itself is really - we're lucky to be partners with them as they just - they are kings of content. So for that, we're excited about going forward. Internationally, it really depends on the launch in areas in which the content arrives. So it really is by country.

And some content doesn't necessarily work as well in certain countries versus others. So it really is a country-by-country basis of how we perform with Disney+. But wherever Disney+ is, we believe we'll be performing better with our Disney content in those countries.

For the top 3, I'll have John just jump over of the online sales because he has that in front of them..

Yes, sure. Hi, Steph. For the online, and you asked about POS 2, they're obviously somewhat - they're obviously related. To parse that out and just make sure we're being clear about stuff, from a year-over-year perspective, when we talk about double digits, we're talking specifically about the toy piece of that.

Our Disguise business is down for the year as we've been talking about all year. And so, similarly, our Halloween POS was down a little bit year-over-year. So if you blended the two out from a total company point of view, POS at the top 3 accounts as high single digits, with the Toy/CP being double digits.

Then on the dot-com part, it's starting to be a little bit harder to keep track of, is the big accounts who are both brick-and-mortar and online start to combine some of that inventory in buying. It makes it a little bit harder, at least for us to segregate it. Maybe other people can do it, but we're not - we're still working our way there.

Whether or not it's the traditional players or online-only players, we saw that part of the business, the online sales piece growing 40% year-over-year. Whether or not that was the Halloween piece or the toy piece. So clearly that becoming a bigger portion of the mix.

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

That's helpful. And then a follow-up for you, John, on cost. They've done so much work on the middle of the P&L. I think you mentioned - or Stephen mentioned the product costing - cost of product overall, just thinking about the weight of the number of lines that you carry, but also on the interior in the operating expense structure.

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

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

And then it's just a question of how big can we get that margin given overall we've got a certain degree of scale given what our top line is, right? If our top line had another 0 at the end, that scale looks a little bit different than where we are. But I think the journey kind of continues, in some respects.

It's like flipping over every rock and then revisiting things. And you can go up and down the P&L to that effect. Certainly, to the extent we want to be able to put more money back in for things like demand creation. So it all doesn't drop to the bottom line. There are a lot of costs that were cut in 2020 that we'll have to creep back up in '21.

Someone will probably want to get on an airplane at some point. So incrementally, that's more, as you know, we also kind of stepped up for short-term pay cut in 2020, which we don't plan the anniversary this year, some deferred spending against IT, kind of those usual things.

Trade show spending this year obviously isn't lined up to be what it used to be. But at the same time, what I at least feel good about, I think, we all do is there's still several areas that we continue to look at that we think we can kind of shave off some pennies here and there, so to speak.

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

Okay.

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

Yes, I think that's right. I think that's right as you think about the back part of the year, trying to figure out at what point in time do we start to turn a corner towards something that feels a little bit more familiar. I think that's a part of it. I certainly think you can think about last year in terms of, we did a significant restructuring in Q2.

So we still have some pickup this year as we kind of lap that period in time in the front part of the year. But Steph, also let me add to this just one more thing. We do believe and we do see growth, both profitability and in revenue this year going in through 2021. So we do see it on both sides..

[Operator Instructions]. Our next question comes from the line of Gerrick Johnson with BMO Capital Markets..

I was wondering how you're planning Raya and the Last Dragon given that it's a hybrid launch.

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

Okay. So for Raya, that's a good - it's a very good question. For Raya, it was - previously it was going to be launched during - it was around November 21 or 22.

Similarly, when Moana occurred and Frozen during those tentpole movies and now because of the pandemic and theatrical releases have changed dramatically, it's being launched both theatrical and on Disney+ in March. So we're originally going to have goods on shelf during November. We've pulled that back to have the launch during spring.

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

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

So now that it's all combining with one, we believe that the actual push and the retail, call it, the retail plans for fall are stronger than we normally would have had based off of streaming. So it really is boding well for the retailers and JAKKS and Disney the way that this rollout.

This would be a really good test of how products prevail with - sets a blockbuster movie coming out in March. I think it's March 5, it comes out of March 12. I think it's March 5..

So yes. So that's interesting.

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

Yes. Again, it's spring versus it being launched - remember, it's a different time period. So I do - so as it's....

Well, spring..

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

Yes. Interesting. Okay. And then I've asked everyone this question, and hopefully I'll get finally a straight answer. What do you think the U.S. and the global toy industry will do in 2020? Do you think it will grow in the U.S.

versus - sorry, 2021, do you think it will grow versus 2020? And can you give me a ballpark range? Because no one's been able to give me that kind of number yet..

Okay. So this is, again, an opinion from myself and going out to retail and understanding what retailers are saying worldwide, not just North America. But if we just talk specifically North America, I believe it's going to be mixed. I do believe there's going to be pockets of really strong growth, seasonal activity areas. There's still big growth.

We're still in the pandemic. We still have spring and summer where I do believe outdoor activities and things will be much more sought after. So I do believe segments in that area.

I think the board games segment you'll see - you won't see growth based off of the tremendous amount of purchases that were done early in the year and even in the second half. Girls area, I see growth.

But I don't see - if you put it all together, we'll see growth in Halloween, which is not really considered toy, but we will see growth based off of the cutbacks that occurred worldwide last year with the pandemic. And we do know just based off right now in the states, things are panning out a lot better around the U.S. and around the world.

So we believe that there will be a Halloween, so we'll see growth there. But I don't say the industry is going to grow as a whole. I say there's pockets that will grow, and there's going to be pockets that definitely won't grow. So I don't know on a percentage basis, Gerrick, I wish I could give it to you. I'd have to kind of spend a little time.

But I don't see - when you see like the 16% growth, I know JAKKS is growing. I know all our categories. We believe that we are extremely strong and benefit in. But I cannot see the total industry growing as a whole. I do believe segments. And I'm not sure the shrinking of the other segments, if that offsets growth..

Okay. Okay. I'll ask one more, then I'll cede the floor back to Steph.

How are you feeling about inputs, Mattel called out inputs as a pressure on margin going forward? What are you seeing in input costs?.

So we go through this yearly whether there's input costs - oil prices, resins, everything, it goes up and down. That's - it's part of the toy business since THQ days. So having that input cost coming, you kind of offset it by getting more efficient in logistics, getting more efficient - we're an FOB business versus much broader than a domestic.

So the input costs are going to affect some, but we've known this for a while. So for us, we've worked on it throughout the year with cost reducing a lot of our legacy items. So we're picking up our gross margin from that avenue.

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

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

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

So I'm also wondering if as you partner with Disney, if they're giving you any lead insights into rising trends that they're seeing in terms of consumption, just given what we've seen happen at retail with respect to the takeaway around some of the key content-oriented triggers.

Is there anything that Disney is providing you as a partner that gives you a sense of where you might need to lean into inventory on something that is starting to up-trend within Disney+?.

Yes. I think within Disney+ and just in general, we - with all the separate divisions that we have, there's a tremendous amount of communication going on with the Disney company, the Walt Disney company in totality of what's occurring and by what level, what age grade and the content.

But on the details of it, one of which we would not be able to disclose, the details, because it's analytics from the Disney side. But everything - what they're doing, obviously, is winning subscribers. And if you look at the subscriber base, grows so quickly, that just means more eyeballs are getting that content.

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

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

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

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

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