The Topps Company Announces First Quarter 2021 Results

The Topps Company, Inc. (“Topps” or “the Company”), a global leader in sports and entertainment collectibles and confections, today announced financial results for the first quarter ended April 3, 2021.

First Quarter 2021 Financial HighlightsComparison of the Thirteen Weeks Ended April 3, 2021 to the Fourteen Weeks Ended April 4, 2020

• Net sales increased by $59.3 million, or 55.3%, to $166.6 million
• Gross margin improved 200 basis points to 39.4%
• Net income grew $23.0 million to $23.4 million
• Adjusted EBITDA* grew $23.0 million to $35.9 million
• Adjusted EBITDA margin* increased 950 basis points to 21.5%

First Quarter 2021 Segment HighlightsComparison of the Thirteen Weeks Ended April 3, 2021 to the Fourteen Weeks Ended April 4, 2020

• Sports & Entertainment segment net sales increased 105.3% to $103.2 million
  • Physical Sports & Entertainment net sales increased 101.7%
  • Digital Sports & Entertainment net sales increased 111.1%
  • Gift Cards net sales increased 131.4%
• Sports & Entertainment segment Adjusted EBITDA increased 373.2% to $32.0 million generating an Adjusted EBITDA margin of 31.0% compared to 13.4%
• Confections segment net sales increased 11.3% to $63.5 million
• Confections segment Adjusted EBITDA was $10.7 million generating an Adjusted EBITDA margin of 16.9% compared to 19.9%

*Non-GAAP measure; complete definitions of Topps’ non-GAAP measures are provided herein under “Non-GAAP Measures Disclosures.”

Michael Brandstaedter, Chief Executive Officer of 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.”

OutlookFor 2021, the Company now expects net sales to be in the range of $740 million to $760 million, representing an increase of 31% to 34% 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% to 52% 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 ResultsNet sales increased by $59.3 million, or 55.3%, 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 as well as an increase in Confections sales.

	13 weeks ended		14 weeks ended
	April 3, 2021		April 4, 2020			$ Change	% Change
(in thousands)
Net sales	$	166,618	$	107,282	$	59,336	55.3%
Sports & Entertainment		103,159		50,250		52,909	105.3%
Confections		63,459		57,032		6,427	11.3%

Consolidated gross margin improved 200 basis points, to 39.4% in the first quarter of 2021 from 37.4% 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%, to $30.7 million or 18.4% of net sales from $32.5 million or 30.3% 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 US 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% to $35.9 million with an Adjusted EBITDA* margin of 21.5% compared to Adjusted EBITDA* of $12.9 million with an Adjusted EBITDA* margin of 12.0% in the first quarter of 2020.  

*Non-GAAP measure; complete definitions of Topps’ non-GAAP measures are provided herein under “Non-GAAP Measures Disclosures.”

Business Combination On May 12, 2021, Mudrick Capital Acquisition Corporation II (“MUDS”) (NASDAQ: MUDS), a publicly-traded special purpose acquisition company, filed its preliminary proxy statement with the Securities and Exchange Commission (the “SEC”) 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.” On June 22, 2021, MUDS filed an amendment to its preliminary proxy statement which includes Topps complete First Quarter 2021 financial results.

About The Topps CompanyFounded in 1938, The Topps Company, Inc. is a global consumer products company that entertains and delights consumers through a diverse, engaging, multi-platform product portfolio that includes physical and digital collectibles, trading cards, trading card games, sticker and album collections, memorabilia, curated experiential events, gift cards and novelty confections. Topps Physical Sports & Entertainment products include Major League Baseball, Major League Soccer, UEFA Champions League, Bundesliga, National Hockey League, Formula 1, Star Wars, WWE, Wacky Packages®, Garbage Pail Kids®, Mars Attacks® and more. Topps Digital Sports & Entertainment has connected with people around the world who have downloaded our apps including Topps® BUNT®, TOPPS® KICK®, Star Wars™: Card Trader by Topps®, Topps® WWE SLAM™, Topps® NHL SKATE™, Marvel Collect! by Topps® and Disney Collect! by Topps®. Topps Digital Services is a leading processor, distributor and program manager of prepaid gift cards and provider of cloud-based financial services and white label e-gift solutions for widely recognized digital businesses that include Airbnb, Deliveroo, DoorDash, Hulu, Instacart, Netflix, Nike, Twitch and Uber. Topps Confections, Bazooka Candy Brands, produces, markets and distributes confections brands including Ring Pop®, Push Pop®, Baby Bottle Pop®, Juicy Drop®, Finders Keepers®, and Bazooka® bubble gum. For additional information visit topps.com, play.toppsapps.com, toppsdigitalservices.com, Candymania.com, investors.thetoppscompany.com.

About The Tornante CompanyThe Tornante Company, LLC is a privately held investment firm founded and owned by former Walt Disney Company CEO Michael Eisner. Tornante invests in, acquires, and operates media and entertainment companies. The company owns Topps and Portsmouth Football Club, of the English Football League, and has created critically acclaimed series such as Undone for Amazon Studios, BoJack Horseman and Tuca and Bertie for Netflix, and NOS4A2, an AMC Original Series.

About Mudrick Capital Acquisition Corporation IIMUDS is a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. The company is led by Chief Executive Officer and Chairman of the Board of Directors, Jason Mudrick, Chief Financial Officer, Glenn Springer, Vice President, Victor Danh and Vice President, David Kirsch. Its sponsor is an affiliate of Mudrick Capital Management, L.P., which currently manages approximately $3.5 billion with a specialty in event-driven and special situation investing in public and private companies in North America. Additional information regarding MUDS may be found at: www.MudrickCapitalAcquisitionCorp.com.

Cautionary Language Regarding Forward-Looking StatementsThis press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “forecast,” “intend,” “seek,” “target,” “anticipate,” “believe,” “expect,” “estimate,” “plan,” “outlook,” and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Such forward-looking statements may include estimated financial information, including with respect to revenues, earnings, performance, strategies, prospects and other aspects of the businesses of MUDS, Topps or the combined company after completion of the proposed business combination, and are based on current expectations that are subject to known and unknown risks and uncertainties, which could cause actual results or outcomes to differ materially from expectations expressed or implied by such forward-looking statements. These factors include, but are not limited to: (1) the occurrence of any event, change or other circumstances that could result in the proposed business combination not being completed at all or on the expected timeline, including as a result of the termination of the definitive documentation with respect to the proposed business combination or the failure to obtain approval of MUDS’ stockholders or other conditions to closing in the definitive documentation with respect to the proposed business combination; (2) the outcome of any legal proceedings that may be instituted against MUDS or Topps or any of their respective directors or officers, following the announcement of the proposed business combination; (3) the ability to meet applicable NASDAQ listing standards; (4) the risk that the proposed business combination disrupts current plans and operations of Topps’ business as a result of the announcement and consummation of the proposed business combination; (5) the inability to complete the private placement; (6) changes in domestic and foreign business, market, financial, political and legal conditions; (7) the ability to recognize the anticipated benefits of the proposed business combination, which may be affected by, among other things, competition, the ability of the combined company to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees; (8) costs related to the proposed business combination; (9) changes in applicable laws or regulations; (10) the impact of the global COVID-19 pandemic on any of the foregoing risks; and (11) other risks and uncertainties indicated from time to time in the proxy statement relating to the proposed business combination, including those under “Risk Factors” therein, and other documents filed or to be filed with the SEC by MUDS. Investors are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. MUDS and Topps undertake no commitment to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements in this press release speak as of the date of its filing. Although MUDS may from time to time voluntarily update its prior forward-looking statements, it disclaims any commitment to do so whether as a result of new information, future events, changes in assumptions or otherwise except as required by applicable securities laws.

Non-GAAP Financial Measures This press release includes certain non-GAAP financial measures, including Adjusted EBITDA and Adjusted EBITDA margin, that are not prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Please see the reconciliation of non-GAAP financial measures to the most closely comparable GAAP measures at the end of this press release. The non-GAAP measures should not be considered in isolation from, or as an alternative to, financial measures determined in accordance with GAAP. Topps does not provide a non-GAAP reconciliation for its forward-looking Adjusted EBITDA, as such reconciliation would rely on market factors and certain other conditions and assumptions that are outside of the company’s control. Topps believes that this non-GAAP measure provides meaningful information to assist investors and stockholders in understanding Topps’ financial results and assessing its prospects for future performance, and reflects an additional way of viewing aspects of Topps’ operations that, when viewed with its GAAP financial measures, provides a more complete understanding of Topps’ business. To the extent that forward-looking non-GAAP financial measures are provided, they are presented on a non-GAAP basis without reconciliations of such forward-looking non-GAAP measures due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. Topps believes these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Topps’ financial condition and results of operations. Topps believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating projected operating results and trends. Topps' method of determining these non-GAAP measures may be different from other companies' methods and, therefore, may not be comparable to those used by other companies and Topps does not recommend the sole use of these non-GAAP measures to assess its financial performance. Topps encourages investors to review its financial statements included in the proxy statement filed by MUDS in their entirety and not to rely on any single financial measure. The following definitions are provided:

Adjusted EBITDA is defined as earnings before interest, income taxes and depreciation and amortization, and further adjusted to exclude the impact of certain items that are non-cash, unrelated to Topps’ core revenue-generating operations or that affect the comparability of Topps’ results from period to period. These further adjustments for the periods presented in this press release include sponsor fees, transaction and refinancing costs, losses on sales of subsidiaries, foreign currency transaction costs and other non-cash, non-recurring or non-core costs. Topps uses Adjusted EBITDA to evaluate the underlying performance of its revenue-generating operations and facilitate comparisons of Topps’ recurring operating performance between periods and to the reported operating performance of other companies. Topps believes Adjusted EBITDA is also useful in evaluating its operating performance, as it is similar to measures reported by Topps’ competitors and is regularly used by security analysts and investors in analyzing companies’ operating performance and prospects. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by net sales. A reconciliation between the GAAP and non-GAAP measures is provided at the end of this press release.

No Offer or SolicitationThis press release shall not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the proposed business combination. This press release shall also not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any states or jurisdictions in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of section 10 of the Securities Act, or an exemption therefrom.

Additional Information About the Proposed Business Combination and Where to Find ItIn connection with the proposed business combination involving MUDS and Topps, MUDS filed a preliminary proxy statement with the SEC on May 12, 2021 relating to the proposed business combination, which has since been amended. This press release does not contain all the information that should be considered concerning the proposed business combination and is not intended to form the basis of any investment decision or any other decision in respect of the proposed business combination. MUDS’ stockholders and other interested persons are advised to read, the preliminary proxy statement, any amendments thereto, and, when available, the definitive proxy statement and any other documents filed, in connection with MUDS’ solicitation of proxies for its special meeting of stockholders to be held to approve the proposed business combination and other matters, as these materials will contain important information about MUDS, Topps and the proposed business combination. When available, the definitive proxy statement and other relevant materials for the proposed business combination will be mailed to stockholders of MUDS as of the record date to be established for voting on the proposed business combination. Stockholders of MUDS will also be able to obtain copies of the proxy statement and other documents filed with the SEC, without charge, once available, at the SEC’s website at www.sec.gov. In addition, the documents filed by MUDS may be obtained free of charge from MUDS by directing a request to: Mudrick Capital Acquisition Corporation II, 527 Madison Avenue, Sixth Floor, New York, New York 10022.

Participants in the SolicitationMUDS, Topps and certain of their respective directors, executive officers and other members of management and employees may, under SEC rules, be deemed to be participants in the solicitations of proxies from MUDS’ stockholders in connection with the proposed business combination. Information regarding the persons who may, under SEC rules, be deemed participants in the solicitation of MUDS’ stockholders in connection with the proposed business combination will be set forth in MUDS’ proxy statement when it is filed with the SEC. You can find more information about MUDS’ directors and executive officers in MUDS’ Amendment No. 2 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which was filed with the SEC on May 10, 2021. Additional information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be included in MUDS’ preliminary and definitive proxy statement when it becomes available. Stockholders, potential investors and other interested persons should read the proxy statement carefully when it becomes available before making any voting or investment decisions. When available, these documents can be obtained free of charge from the sources indicated above.

Investor ContactTom Filandro and Brendon Frey, ICR, [e-mail]

Media Contact Keil Decker, ICR, [e-mail]

TOPPS INTERMEDIATE HOLDCO, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(Amounts in thousands, except share data)

		April 3,2021(unaudited)			January 2,2021(audited)
ASSETS
Current assets:
Cash and cash equivalents	$	139,684		$	153,084
Accounts receivable, net		122,280			177,061
Inventories, net		64,813			60,796
Prepaid expenses and other current assets		35,671			40,027
Total current assets, net		362,448			430,968
Property, plant and equipment, net		6,904			7,039
Intangible assets, net		53,144			53,655
Goodwill		75,204			75,204
Other assets		1,076			1,076
Total assets	$	498,776		$	567,942
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	129,570		$	211,838
Accrued expenses and other current liabilities		86,636			94,814
Current portion of long-term debt		2,000			2,000
Total current liabilities		218,206			308,652
Long-term debt		192,645			192,585
Deferred income tax liabilities, net		5,116			5,804
Other liabilities		11,800			12,323
Total liabilities		427,767			519,364
Commitments and Contingencies
Stockholders’ equity:
Common stock, $0.01 par value; 1,000 shares authorized; 100 shares issuedand outstanding as of April 3, 2021 and January 2, 2021	$	—		$	—
Additional paid-in capital		194,788			194,766
Accumulated deficit		(104,999	)		(128,371	)
Accumulated other comprehensive loss		(18,780	)		(17,817	)
Total stockholders’ equity		71,009			48,578
Total liabilities and stockholders’ equity	$	498,776		$	567,942

TOPPS INTERMEDIATE HOLDCO, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(Amounts in thousands)(unaudited)

		Thirteen weeksended April 3,			Fourteen weeksended April 4,
		2021			2020
Net sales	$	166,618		$	107,282
Cost of sales		100,996			67,164
Gross profit		65,622			40,118
Selling, general and administrative expenses		30,739			32,517
Income from operations		34,883			7,601
Interest expenses, net of interest income		3,944			2,930
Other non-operating loss, net		701			2,240
Income before income taxes		30,238			2,431
Provision for income taxes		6,866			2,010
Net income	$	23,372		$	421
Per share data:
Net income per share – basic and diluted	$	234		$	4
Net income	$	23,372		$	421
Other comprehensive (loss)/ income:
Unrecognized pension and postretirement cost, net of income taxes		(43	)		(16	)
Foreign currency translation adjustment		(920	)		2,846
Total other comprehensive (loss)/income		(963	)		2,830
Comprehensive income	$	22,409		$	3,251

TOPPS INTERMEDIATE HOLDCO, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in thousands) (unaudited)

		Thirteen weeksended April 3,2021			Fourteen weeksended April 4,2020
Cash flows — operating activities:
Net income	$	23,372		$	421
Adjustments to reconcile net income to net cash used in operating   activities:
Depreciation and amortization of property, plant and equipment and   intangible assets		969			1,084
Amortization of deferred financing fees		395			200
Amortization of discount on debt		217			76
Unrealized loss on derivative instruments, net		919			2,019
Share-based compensation		22			45
Deferred income taxes		(675	)		(5	)
Net effect of changes in operating assets and liabilities:
Accounts receivable		54,895			45,639
Inventories		(4,141	)		(5,252	)
Prepaid expenses and other current assets		3,915			(1,117	)
Accounts payable, accrued expenses and other current liabilities		(90,814	)		(51,088	)
Other assets and liabilities		(511	)		(857	)
Other		(70	)		(13	)
Cash used in operating activities		(11,507	)		(8,848	)
Cash flows — investing activities:
Acquisitions of property, plant and equipment		(317	)		(254	)
Other		—			138
Cash used in investing activities		(317	)		(116	)
Cash flows — financing activities:
Repayment of long-term debt		(500	)		(625	)
Repayment of revolver borrowings		—			(2,000	)
Proceeds from revolver borrowings		—			25,000
Deferred financing fees		(52	)		—
Cash (used in)/ provided by financing activities		(552	)		22,375

TOPPS INTERMEDIATE HOLDCO, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in thousands)(unaudited)

		Thirteenweeks endedApril 3, 2021			Fourteenweeks endedApril 4, 2020
Effect of exchange rate changes on cash and cash equivalents	$	(1,024	)	$	2,962
(Decrease)/increase in cash and cash equivalents		(13,400	)		16,373
Cash and cash equivalents - beginning of period		153,084			43,006
Cash and cash equivalents - end of period	$	139,684		$	59,379
Supplemental disclosures of cash flow information:
Interest paid	$	3,255		$	4,705
Income taxes paid, net of refunds received		91			697

TOPPS INTERMEDIATE HOLDCO, INC. AND SUBSIDIARIESRECONCILIATION OF CONSOLIDATED ADJUSTED EBITDA TO NET INCOME(Amounts in thousands)(unaudited)        

		Thirteen weeksended April 3,2021				Fourteen weeksended April 4,2020
		(in thousands)				(in thousands)
Adjusted EBITDA by Segment
Confections	$	10,738			$	11,351
Sports & Entertainment		31,981				6,758
Unallocated corporate expenses		(6,829	)			(5,198	)
Consolidated Adjusted EBITDA	$	35,890			$	12,911
Net sales		166,618				107,282
Adjusted EBITDA margin		21.5	%			12.0	%
Consolidated Adjusted EBITDA	$	35,890			$	12,911
Reconciling items:
Interest expense, net	$	3,944			$	2,930
Income tax expense, net		6,866				2,010
Depreciation and amortization		969				1,084
Transaction costs		36				4
Sponsor management fees and expenses		459				776
Non-cash and non-core (gains)/ losses, net		(490	)			3,131
Miscellaneous non-core costs		33				315
Other non-operating loss, net		701				2,240
Net income	$	23,372			$	421

The reconciliation presented above reconciles the non-GAAP financial measure Adjusted EBITDA to the GAAP financial measure net income for the thirteen weeks ended April 3, 2021 and the fourteen weeks ended April 4, 2020. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by net sales.