CORRECTING and REPLACING JAKKS Pacific Reports Third Quarter 2015 Financial Results
SANTA MONICA, Calif.–(BUSINESS WIRE)–Under the section titled “Nine Month Financial Overview,” the fourth
paragraph, second sentence of release should read: These key drivers in
the portfolio have been featured on several hot toy lists including
Walmart’s Chosen by Kids, Target’s Top Toys, Kmart’s Fab 15, Toys R Us,
TTPM’s Most Wanted and the Toy Insider Hot 20 (instead of These key
drivers in the portfolio have been featured on several hot toy lists
including Walmart’s Chosen by Kids, Target’s Top Toys, Kmart’s Fab 15,
Toys R Us, Time to Play Magazine’s Most Wanted and the Toy Insider Hot
20).
The corrected release reads:
JAKKS PACIFIC REPORTS THIRD QUARTER 2015 FINANCIAL RESULTS
JAKKS Pacific, Inc. [NASDAQ: JAKK] today reported financial results for
the third quarter 2015. Net sales for the quarter ending September 30,
2015 were $337.0 million, compared to $349.4 million reported in the
comparable period in 2014. Reported net income for the third quarter was
$45.8 million, or $1.12 per diluted share. This compares to net income
of $44.1 million, or $1.03 per diluted share, reported in the comparable
period in 2014. Adjusted EBITDA for the third quarter was $52.5 million,
compared to Adjusted EBITDA of $52.8 million in 2014. See note below on
“Use of Non-GAAP Financial Information.”
Third Quarter Highlights
- Gross margin improved 390 basis points
- Operating margin improved 70 basis points
- Diluted EPS increased 8.7 percent
Nine Month Financial Overview
Net sales for the nine months ending September 30, 2015 were $582.3
million compared to $556.0 million in 2014. The reported net income for
the nine month period was $32.6 million, or $0.89 per diluted share.
This compares to net income for the nine months of 2014 of $18.7
million, or $0.61 per diluted share. Adjusted EBITDA for the nine months
of 2015 improved to $53.1 million, compared to $42.4 million for the
nine months of 2014.
Also announced today, in addition to responsibilities as Chief Executive
Officer, Stephen Berman will also serve as Chairman of the Board.
Berman stated, “We’re very pleased with our performance in the third
quarter. Our current momentum continues with margins steadily improving,
product innovation across a strong portfolio of brands delivering higher
profitability, and more efficient operations. We remain focused on
executing our full year plans across all brands this holiday season.”
Domestically, we are pleased with the strong consumer demand for Star
Wars Big-Figs™ line of products and other several key drivers such as
Sing-A-Long Elsa, XPV® Remote Control Hulk Smash™ and Max Tow Truck
Turbo™ which have already received numerous awards from retailers,
industry experts and media. These key drivers in the portfolio have been
featured on several hot toy lists including Walmart’s Chosen by Kids,
Target’s Top Toys, Kmart’s Fab 15, Toys R Us, TTPM’s Most Wanted and the
Toy Insider Hot 20. JAKKS Pacific’s line of Frozen and Star Wars
products drove much of the success in the International business.
“Looking ahead to 2016, we have a strong pipeline of products, and new
licenses, creating a strong entertainment slate for us next year, and in
the coming next few years. Building within the categories which we are
leaders, coupled with expanded innovation, and hot new and current
evergreen licenses, we feel confident in the coming years ahead. We have
just finished our Fall 2016 Toy Preview with customers from around the
world, and we are also encouraged by the positive response now to both
our Spring and Fall product lines,” said Berman.
Working Capital
As of September 30, 2015, the Company’s working capital was $271.6
million, including cash and equivalents and marketable securities of
$81.2 million, compared to working capital of $250.4 million including
cash and equivalents and marketable securities of $88.8 million as of
September 30, 2014.
2015 Guidance
The Company reiterates its previously issued guidance for full year
2015, which estimated net sales in the range of $730 million to $740
million, earnings in the range of $0.71 to $0.75 per diluted share and
Adjusted EBITDA in the range of $56 million to $58 million.
Share Repurchase
In June 2015, The Board of Directors authorized the Company to
repurchase up to $30 million worth of shares of the Company’s
outstanding common stock and/or convertible notes through open market
repurchases or in privately negotiated transactions from time to time
through March 31, 2016. Approximately 774,000 shares of common stock
were repurchased through the end of the third quarter at an aggregate
cost of $7.0 million.
Use of Non-GAAP Financial Information
In addition to the preliminary results reported in accordance with U.S.
GAAP included in this release, the Company has provided certain non-
GAAP financial information including Adjusted EBITDA which is a non-GAAP
metric that excludes various items that are detailed in the financial
tables and accompanying footnotes reconciling GAAP to non- GAAP results
contained in this release. Management believes that the presentation of
these non-GAAP financial measures provides useful information to
investors because the information may allow investors to better evaluate
ongoing business performance and certain components of the Company’s
results. In addition, the Company believes that the presentation of
these financial measures enhances an investor’s ability to make
period-to-period comparisons of the Company’s operating results. This
information should be considered in addition to the results presented in
accordance with GAAP, and should not be considered a substitute for the
GAAP results. The Company has reconciled the non- GAAP financial
information included in this release to the nearest GAAP measures. See
the attached “Reconciliation of Non-GAAP Financial Information.”
Conference Call Live Webcast
JAKKS Pacific will webcast its third quarter earnings call at 9 a.m.
Eastern Time/6 a.m. Pacific Time today. To listen to the live webcast
and access the accompanying presentation slides, go to www.jakks.com/investors
and click on the earnings website link under Presentations at least 10
minutes prior to register, download and install any necessary audio
software. A replay of the call will be available on JAKK’s website
approximately one hour following completion of the call through November
25, 2015 ending at 11:59 p.m. Eastern Time/8:59 p.m. Pacific Time. The
playback can be accessed by calling (888) 843-7419 or (630) 652-3042 for
international callers, passcode “4101 1483” for both playback numbers.
About JAKKS Pacific, Inc.
JAKKS Pacific, Inc. (NASDAQ: JAKK) is a leading designer and marketer of
toys and consumer products with a wide range of products that feature
popular brands and children’s toy licenses. JAKKS’ diverse portfolio
includes Action Figures, Electronics, Dolls, Dress-Up, Role Play,
Halloween Costumes, Kids Furniture, Vehicles, Plush, Art Activity Kits,
Seasonal Products, Infant/Pre-School, Construction Toys, Ride-On
Vehicles, Wagons, Inflatable Environments and Tents, Impulse Toys and
Pet Products sold under various proprietary brands including JAKKS
Pacific®, Road Champs®, Funnoodle®, JAKKS Pets™, Plug It In & Play TV
Games™, Kids Only!®, Tollytots®, Disguise®, Moose Mountain® and Maui®.
JAKKS is an award-winning licensee of several hundred nationally and
internationally known trademarks including Nickelodeon®, Warner Bros.®,
DC Comics and Saban’s Power Rangers®. DreamPlay Toys, LLC is a joint
venture between JAKKS Pacific, Inc. and NantWorks LLC to develop, market
and sell toys and related consumer products incorporating NantWorks’
proprietary iD recognition technology. www.jakks.com.
© 2015 JAKKS Pacific, Inc. All rights reserved.
Forward Looking Statements
This press release may contain “forward-looking statements” (within the
meaning of the Private Securities Litigation Reform Act of 1995) that
are based on current expectations, estimates and projections about JAKKS
Pacific’s business based partly on assumptions made by its management.
These statements are not guarantees of future performance and involve
risks, uncertainties and assumptions that are difficult to predict.
Therefore, actual outcomes and results may differ materially from what
is expressed or forecasted in such statements due to numerous factors,
including, but not limited to, those described above, changes in demand
for JAKKS’ products, product mix, the timing of customer orders and
deliveries, the impact of competitive products and pricing, and
difficulties with integrating acquired businesses. The “forward-looking
statements” contained herein speak only as of the date on which they are
made, and JAKKS undertakes no obligation to update any of them to
reflect events or circumstances after the date of this release.
| JAKKS Pacific, Inc. and Subsidiaries | ||||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||||
|
September 30, |
December 31, | |||||||||||
| 2015 |
2014 |
|||||||||||
|
(In thousands) |
||||||||||||
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 81,211 | $ | 71,525 | ||||||||
| Marketable securities | – | 220 | ||||||||||
| Accounts receivable, net | 292,861 |
234,516 |
||||||||||
| Inventory, net | 81,404 | 78,827 | ||||||||||
| Income taxes receivable | 24,008 | 24,008 | ||||||||||
| Deferred income taxes | 3,358 | 3,358 | ||||||||||
| Prepaid expenses and other current assets | 30,683 |
25,139 |
||||||||||
| Total current assets | 513,525 | 437,593 | ||||||||||
| Property and equipment | 120,901 | 107,080 | ||||||||||
| Less accumulated depreciation and amortization | 102,297 | 95,984 | ||||||||||
| Property and equipment, net | 18,604 | 11,096 | ||||||||||
| Goodwill | 44,344 | 44,492 | ||||||||||
| Trademarks & other assets, net | 56,084 | 61,601 | ||||||||||
| Investment in DreamPlay LLC | 7,000 | 7,000 | ||||||||||
| Total assets | $ | 639,557 | $ | 561,782 | ||||||||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable and accrued expenses | $ | 165,534 | $ | 143,087 | ||||||||
| Reserve for sales returns and allowances | 26,616 | 24,477 | ||||||||||
| Income taxes payable | 24,797 | 23,784 | ||||||||||
| Short term debt | 25,000 | – | ||||||||||
| Total current liabilities | 241,947 | 191,348 | ||||||||||
| Long term debt | 215,000 | 215,000 | ||||||||||
| Other liabilities | 4,232 | 1,874 | ||||||||||
| Income taxes payable | 2,198 | 2,496 | ||||||||||
| Deferred tax liability | 5,980 | 5,980 | ||||||||||
| Total liabilities | 469,357 | 416,698 | ||||||||||
| Stockholders’ equity: | ||||||||||||
| Common stock, $.001 par value | 23 | 23 | ||||||||||
| Additional paid-in capital | 203,503 | 202,051 | ||||||||||
| Treasury stock | (30,988 | ) | (24,000 | ) | ||||||||
| Retained earnings (accumulated deficit) | 5,939 | (26,645 | ) | |||||||||
| Accumulated other comprehensive loss | (8,739 | ) | (6,835 | ) | ||||||||
| Total JAKKS Pacific, Inc. stockholders’ equity | 169,738 | 144,594 | ||||||||||
| Non-controlling interests | 462 | 490 | ||||||||||
| Total stockholders’ equity | 170,200 | 145,084 | ||||||||||
| Total liabilities and stockholders’ equity | $ | 639,557 | $ | 561,782 | ||||||||
| Working Capital | $ | 271,578 | $ | 246,245 | ||||||||
|
JAKKS Pacific, Inc. and Subsidiaries |
||||||||||||||||||
| Third Quarter Earnings Announcement, 2015 | ||||||||||||||||||
|
Condensed Statements of Operations (Unaudited) |
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|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||
|
2015 |
2014 |
2015 |
2014 |
|||||||||||||||
|
(In thousands, expect per share data) |
(In thousands, expect per share data) | |||||||||||||||||
| Net sales | $ | 337,027 | $ | 349,362 | $ | 582,334 | $ | 556,044 | ||||||||||
| Less cost of sales | ||||||||||||||||||
| Cost of goods | 181,191 | 199,696 | 317,030 | 318,189 | ||||||||||||||
| Royalty expense | 46,752 | 49,704 | 79,066 | 73,535 | ||||||||||||||
| Amortization of tools and molds | 4,755 | 5,225 | 7,244 | 8,210 | ||||||||||||||
| Cost of sales | 232,698 | 254,625 | 403,340 | 399,934 | ||||||||||||||
| Gross profit | 104,329 | 94,737 | 178,994 | 156,110 | ||||||||||||||
| Direct selling expenses | 22,725 | 18,359 | 38,826 | 35,422 | ||||||||||||||
| Selling, general and administrative expenses | 34,352 | 29,158 | 95,771 | 87,540 | ||||||||||||||
| Reorganization charges | – | – | – | 1,154 | ||||||||||||||
| Depreciation and amortization | 2,624 | 3,408 | 6,976 | 7,925 | ||||||||||||||
| Income from operations | 44,628 | 43,812 | 37,421 | 24,069 | ||||||||||||||
| Other income (expense): | ||||||||||||||||||
| Equity in net income of joint venture | 60 | – | 1,744 | 314 | ||||||||||||||
| Other income | 5,642 | 5,932 | 5,642 | 5,932 | ||||||||||||||
| Interest income | 16 | 32 | 51 | 89 | ||||||||||||||
| Interest expense | (3,107 | ) | (3,969 | ) | (9,187 | ) | (9,158 | ) | ||||||||||
| Income before provision for income taxes | 47,239 | 45,807 | 35,671 | 21,246 | ||||||||||||||
| Provision for income taxes | 1,375 | 1,738 | 3,115 | 2,535 | ||||||||||||||
| Net income | 45,864 | 44,069 | 32,556 | 18,711 | ||||||||||||||
| Net income (loss) attributable to non-controlling interests | 19 | – | (28 | ) | – | |||||||||||||
| Net income attributable to Jakks Pacific, Inc. | $ | 45,845 | $ | 44,069 | $ | 32,584 | $ | 18,711 | ||||||||||
| Earnings per share – basic | $ | 2.47 | $ | 2.33 | $ | 1.72 | $ | 0.90 | ||||||||||
| Shares used in earnings per share – basic | 18,559 | 18,897 | 18,929 | 20,721 | ||||||||||||||
| Earnings per share – diluted | $ | 1.12 | $ | 1.03 | $ | 0.89 | $ | 0.61 | ||||||||||
| Shares used in earnings per share – diluted | 42,562 | 45,152 | 42,737 | 39,951 | ||||||||||||||
|
JAKKS Pacific, Inc. and Subsidiaries |
|||||||||||||||
| Reconciliation of Adjusted EBITDA | |||||||||||||||
| For the Three and Nine Months Ended September 30, 2015 and 2014 | |||||||||||||||
| Reconciliation of GAAP to Non-GAAP measures: | |||||||||||||||
|
This press release and accompanying schedules provide certain information regarding Adjusted EBITDA, which may be considered non-GAAP financial measures under the rules of the Securities and Exchange Commission. The non- GAAP financial measures included in the press release are reconciled to the corresponding GAAP financial measures below, as required under the rules of the Securities and Exchange Commission regarding the use of non-GAAP financial measures. We define Adjusted EBITDA as income (loss) from operations before depreciation, amortization and adjusted for certain non-recurring charges incurred, primarily related to reorganization expenses and certain non-cash charges for restricted stock compensation expense. Adjusted EBITDA is not a recognized financial measure under GAAP, but we believe that it is useful in measuring our operating performance. We believe that the use of the non-GAAP financial measure Adjusted EBITDA enhances an overall understanding of the Company’s past financial performance, and provides useful information to the investor by comparing our performance across reporting periods on a consistent basis and the use of Adjusted EBITDA by other comparable companies as a measure of performance. |
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|
Investors should not consider these measures in isolation or as a substitute for net income, operating income, or any other measure for determining the Company’s operating performance that is calculated in accordance with GAAP. In addition, because these measures are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures employed by other companies. |
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|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
|
2015 |
2014 |
2015 |
2014 |
||||||||||||
| (In thousands) | (In thousands) | ||||||||||||||
| Income from operations | $ | 44,628 | $ | 43,812 | $ | 37,421 | $ | 24,069 | |||||||
| Depreciation and amortization | 7,379 | 8,633 | 14,220 | 16,135 | |||||||||||
| Reorganization charges | – | – | – | 1,154 | |||||||||||
| Restricted stock compensation expense | 507 | 358 | 1,451 | 997 | |||||||||||
| Adjusted EBITDA | $ | 52,514 | $ | 52,803 | $ | 53,092 | $ | 42,355 | |||||||
Contacts
JAKKS Pacific, Inc.
Sara Rosales Montalvo, 424.268.9363
or
Joel
Bennett, 310.455.6210
