JAKKS Pacific Reports Full Year 2015 Financial Results
2015 Financial Results in Line with Company Sales and EPS Guidance
2016 Guidance Reflects Expected Strong Financial Growth
SANTA MONICA, Calif.–(BUSINESS WIRE)–JAKKS Pacific, Inc. [NASDAQ: JAKK] today reported financial results for
the full year ending December 31, 2015.
Net sales for full year ended December 31, 2015 were $745.7 million
compared to $810.1 million in 2014. The year-to-year revenue difference
is consistent with the Company’s guidance which reflects the stellar
performance in 2014 of one of the Company’s key product lines. Reported
net income for the 12-month period was $23.2 million, or $0.71 per
diluted share. This compares to net income for full year 2014 of $21.5
million, or $0.70 per diluted share. Adjusted EBITDA for full year 2015
was $50.9 million, compared to $52.9 million for full year 2014. See
note below on “Use of Non-GAAP Financial Information.”
Net sales for the fourth quarter were $163.4 million, compared to $254.0
million reported in the comparable period in 2014. The reported net loss
for the fourth quarter was $9.4 million, or $0.50 per diluted share.
This compares to net income of $2.8 million, or $0.11 per diluted share,
reported in the comparable period in 2014. Adjusted EBITDA for the
fourth quarter was negative $2.1 million, compared to Adjusted EBITDA of
$10.6 million in 2014.
Stephen Berman, Chairman and Chief Executive Officer stated, “I’m
pleased with the Company’s overall 2015 performance, especially our
continued growth in the International division. The strength of our
Disney Princess, Star Wars and Seasonal businesses, combined with our
expansion in the international markets helped achieve our 2015 guidance.
With the momentum we see across the entire portfolio, I’m very confident
about our anticipated performance in 2016 and beyond.”
“Our alliance with strategic licensing partners has provided us with a
strong entertainment-licensed slate for 2016 including Batman v.
Superman: Dawn of Justice, Teenage Mutant Ninja Turtles:
Out of the Shadows, Captain America: Civil War, and Finding
Dory. To support these terrific franchises, we are creating BIG-FIGS
in a variety of scales ranging from 18-inch to 48-inch, radio controlled
vehicles, and Seasonal products inspired by these movies. We will
continue to ship new waves of Star Wars BIG-FIGS throughout 2016, as
well as bring the World of Nintendo characters to life in new and
exciting ways,” Mr. Berman said.
Adding to its Disney Princess business and Frozen business, JAKKS now
has the rights to large dolls, role-play and dress-up for Moana,
a new Disney/Pixar animated movie slated to be released in theaters
later in 2016. JAKKS will also introduce new movie-inspired “Alice in
Wonderland: Through the Looking Glass” toys, as well as Disguise
costumes. The line of Tsum Tsum stackable, collectible figures featuring
hundreds of stylized Disney characters, which had a limited launch late
in 2015, will be in broad distribution in 2016.
JAKKS also has several proprietary intellectual properties rounding out
its product portfolio including Max Tow™ and Friends which continues to
grow and climb with a new buddy, Cliff Climber, to be introduced later
this fall. Gift ‘Ems, a new brand for girls, will be launching later
this Fall along with a dedicated mobile game app. In addition, the
Company also re-launched its Real Construction® brand with all-new
products, an app and digital campaign.
“We have fully integrated Maui Toys, Moose Mountain and Kids Only! into
a more cohesive business unit that is poised to create a more robust
Seasonal division comprised of leading evergreen brands in their
respective categories. In 2016, we are excited about our Disguise
division’s global launch of the first official LEGO licensed costumes
for Halloween and everyday role-play, and the addition of the Shopkins
license for Halloween costumes,” said Mr. Berman.
“This year we are focused on continuing to build our leadership position
within several important categories by continuing to launch innovative
new products. Our entire portfolio received incredible customer support
at Hong Kong, Nuremberg and New York toys fairs,” he added.
Working Capital
As of December 31, 2015, the Company’s working capital was $252.2
million, including cash and equivalents and marketable securities of
$102.5 million, compared to working capital of $246.2 million including
cash and equivalents and marketable securities of $71.7 million as of
December 31, 2014.
2016 Guidance
For 2016, Jakks is currently forecasting net sales to increase
approximately 7.0%; diluted earnings per share to increase approximately
10.0%; and Adjusted EBITDA to increase approximately 28.0%. This
guidance reflects anticipated gross margin expansion and operating
leverage offset in part by higher marketing costs resulting in overall
operating margin growth in 2016. On an annual basis the Company’s
effective tax rate will remain at approximately 15%. Reflected in this
forecast is net sales for the first quarter of 2016 is anticipated to be
in the range of $95.0 million to $100.0 million with a net loss in the
range of $0.90 to $1.00 per diluted share due in part to increased
marketing expenses in 2016 including the shift caused by Easter falling
in the first quarter of 2016 as opposed to the second quarter in 2015.
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 1,547,000 shares of common stock
were repurchased through the end of the fourth quarter at an aggregate
cost of $13.2 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 fourth quarter and full year 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 March
23, 2016 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 “4182 7545” for both playback numbers.
About JAKKS Pacific, Inc.
JAKKS Pacific, Inc. (NASDAQ: JAKK) is a leading designer, manufacturer
and marketer of toys and consumer products sold throughout the world,
with its headquarters in Santa Monica, California. JAKKS Pacific’s
popular proprietary brands include BIG-FIGS™, XPV®, Real Construction®,
Max Tow™ and Friends, Disguise®, Moose Mountain®, Funnoodle®, Maui®,
Kids Only!®, as well a wide range of entertainment-inspired products
featuring premier licensed properties. DreamPlay Toys, LLC is a joint
venture between JAKKS and NantWorks LLC to develop, market and sell toys
and related consumer products incorporating NantWorks’ proprietary iD™
recognition technology. Through JAKKS Cares, the company’s commitment to
philanthropy, JAKKS is helping to make a positive impact on the lives of
children. Visit us at www.jakks.com and
follow us on Instagram (@jakkstoys),
Twitter (@jakkstoys)
and Facebook (JAKKS
Pacific).
© 2016 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 | ||||||||||
| December 31, | December 31, | |||||||||
| 2015 | 2014 | |||||||||
| (In thousands) | ||||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 102,528 | $ | 71,525 | ||||||
| Marketable securities | – | 220 | ||||||||
| Accounts receivable, net | 163,387 | 234,516 | ||||||||
| Inventory, net | 60,544 | 78,827 | ||||||||
| Income taxes receivable | 24,008 | 24,008 | ||||||||
| Deferred income taxes | – | 3,358 | ||||||||
| Prepaid expenses and other | 31,901 | 25,139 | ||||||||
| Total current assets | 382,368 | 437,593 | ||||||||
| Property and equipment | 112,088 | 107,080 | ||||||||
| Less accumulated depreciation and amortization | 93,653 | 95,984 | ||||||||
| Property and equipment, net | 18,435 | 11,096 | ||||||||
| Deferred tax asset | 446 | – | ||||||||
| Goodwill | 44,199 | 44,492 | ||||||||
| Trademarks & other assets, net | 53,452 | 61,601 | ||||||||
| Investment in DreamPlay, LLC | 7,000 | 7,000 | ||||||||
| Total assets | $ | 505,900 | $ | 561,782 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable and accrued expenses | $ | 89,067 | $ | 143,087 | ||||||
| Reserve for sales returns and allowances | 17,267 | 24,477 | ||||||||
| Income taxes payable | 21,067 | 23,784 | ||||||||
| Deferred income taxes | 2,739 | – | ||||||||
| Total current liabilities | 130,140 | 191,348 | ||||||||
| Long term debt | 215,000 | 215,000 | ||||||||
| Other liabilities | 5,155 | 1,874 | ||||||||
| Income taxes payable | 2,199 | 2,496 | ||||||||
| Deferred tax liability | – | 5,980 | ||||||||
| Total liabilities | 352,494 | 416,698 | ||||||||
| Stockholders’ equity: | ||||||||||
| Common stock, $.001 par value | 21 | 23 | ||||||||
| Additional paid-in capital | 194,743 | 202,051 | ||||||||
| Treasury stock | (28,322 | ) | (24,000 | ) | ||||||
| Accumulated deficit | (3,391 | ) | (26,645 | ) | ||||||
| Accumulated other comprehensive loss | (10,051 | ) | (6,835 | ) | ||||||
| Total JAKKS Pacific, Inc. stockholders’ equity | 153,000 | 144,594 | ||||||||
| Non-controlling interests | 406 | 490 | ||||||||
| Total stockholders’ equity | 153,406 | 145,084 | ||||||||
| Total liabilities and stockholders’ equity | $ | 505,900 | $ | 561,782 | ||||||
| Working Capital | $ | 252,228 | $ | 246,245 | ||||||
| JAKKS Pacific, Inc. and Subsidiaries | ||||||||||||||||||||
| Fourth Quarter Earnings Announcement, 2015 | ||||||||||||||||||||
| Condensed Statements of Operations (Unaudited) | ||||||||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||
|
2015 |
2014 |
2015 |
2014 |
|||||||||||||||||
| (In thousands, expect per share data) | (In thousands, expect per share data) | |||||||||||||||||||
| Net sales | $ | 163,407 | $ | 254,016 | $ | 745,741 | $ | 810,060 | ||||||||||||
| Less cost of sales | ||||||||||||||||||||
| Cost of goods | 87,102 | 137,567 | 404,132 | 455,756 | ||||||||||||||||
| Royalty expense | 24,418 | 35,871 | 103,484 | 109,406 | ||||||||||||||||
| Amortization of tools and molds | 2,312 | 881 | 9,556 | 9,091 | ||||||||||||||||
| Cost of sales | 113,832 | 174,319 | 517,172 | 574,253 | ||||||||||||||||
| Gross profit | 49,575 | 79,697 | 228,569 | 235,807 | ||||||||||||||||
| Direct selling expenses | 20,264 | 31,103 | 59,090 | 66,525 | ||||||||||||||||
| Selling, general and administrative expenses | 33,874 | 39,381 | 129,645 | 126,921 | ||||||||||||||||
| Reorganization charges | – | – | – | 1,154 | ||||||||||||||||
| Depreciation and amortization | 2,328 | 1,955 | 9,304 | 9,880 | ||||||||||||||||
| Income (loss) from operations | (6,891 | ) | 7,258 | 30,530 | 31,327 | |||||||||||||||
| Other income (expense): | ||||||||||||||||||||
| Income from joint ventures | 1,017 | – | 2,761 | 314 | ||||||||||||||||
| Other income | – | – | 5,642 | 5,932 | ||||||||||||||||
| Interest income | 11 | 23 | 62 | 112 | ||||||||||||||||
| Interest expense | (3,215 | ) | (3,303 | ) | (12,402 | ) | (12,461 | ) | ||||||||||||
| Income (loss) before provision for income taxes | (9,078 | ) | 3,978 | 26,593 | 25,224 | |||||||||||||||
| Provision for income taxes | 308 | 1,180 | 3,423 | 3,715 | ||||||||||||||||
| Net income (loss) | (9,386 | ) | 2,798 | 23,170 | 21,509 | |||||||||||||||
| Net loss attributable to non-controlling interests | (56 | ) | – | (84 | ) | – | ||||||||||||||
| Net income (loss) attributable to Jakks Pacific, Inc. | $ | (9,330 | ) | $ | 2,798 | $ | 23,254 | $ | 21,509 | |||||||||||
| Earnings per share – basic | $ | (0.50 | ) | $ | 0.14 | $ | 1.20 | $ | 1.03 | |||||||||||
| Shares used in earnings per share – basic | 18,781 | 19,570 | 19,435 | 20,948 | ||||||||||||||||
| Earnings per share – diluted | $ | (0.50 | ) | $ | 0.11 | $ | 0.71 | $ | 0.70 | |||||||||||
| Shares used in earnings per share – diluted | 18,781 | 44,060 | 43,321 | 41,516 | ||||||||||||||||
| JAKKS Pacific, Inc. and Subsidiaries | |||||||||||||||||
| Reconciliation of Adjusted EBITDA | |||||||||||||||||
| For the Three and Twelve Months Ended December 31, 2015 and 2014 | |||||||||||||||||
|
Reconciliation of GAAP to Non-GAAP measures: |
|||||||||||||||||
|
This press release and accompanying schedules provide certain |
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|
Investors should not consider these measures in isolation or as |
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| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||
|
2015 |
2014 |
2015 |
2014 |
||||||||||||||
| (In thousands) | (In thousands) | ||||||||||||||||
| Income (loss) from operations | $ | (6,891 | ) | $ | 7,258 | $ | 30,530 | $ | 31,327 | ||||||||
| Depreciation and amortization | 4,640 | 2,836 | 18,860 | 18,971 | |||||||||||||
| Reorganization charges | – | – | – | 1,154 | |||||||||||||
| Restricted stock compensation expense | 108 | 476 | 1,559 | 1,473 | |||||||||||||
| Adjusted EBITDA | $ | (2,143 | ) | $ | 10,570 | $ | 50,949 | $ | 52,925 | ||||||||
Contacts
JAKKS Pacific, Inc.
Sara Rosales Montalvo, 424-268-9363
or
Joel
Bennett, 310-455-6210
