Jakks Reports Q2 2015
Jakks Pacific, Inc., reported second quarter financial results. For the quarter ended June 30, 2015, the company reported net sales of $131.1 million, compared to $124.2 million reported in the comparable period in 2014. The reported net loss for the second quarter was $5.7 million, or $0.30 per diluted share. This compares to a net loss of $9.1 million, or $0.43 per diluted share, reported in the comparable period in 2014. Adjusted EBITDA for the second quarter of 2015 improved to $1.5 million, compared to Adjusted EBITDA of $1.2 million in 2014.
Second Quarter Highlights include:
• Net sales increased 5.6 percent
• Adjusted EBITDA increased 30 percent
• Operating margin improved 160 basis points
First Half 2015 Financial Overview
Net sales for the six months ending June 30, 2015, increased 19 percent to $245.3 million compared to $206.7 million in 2014. The reported net loss for the six-month period was $13.3 million, or $0.69 per diluted share. This compares to a net loss for the first six months of 2014 of $25.4 million, or $1.17 per diluted share. Adjusted EBITDA for the first six months of 2015 improved to $0.6 million, compared to negative EBITDA of $10.4 million for the first six months of 2014.
“The positive momentum we achieved in the first quarter carried into the second quarter,” said Stephen Berman, CEO, Jakks Pacific, Inc. “We grew the topline, while improving margins and EBITDA. We have focused our product development and growth opportunities to be more global in nature resulting in our International division having a record quarter, and our Disney product lines continue to perform well around the world.”
Driving success in the second quarter was the company’s line of Frozen-licensed dolls and costumes, which performed well at retail, as did the Disney Princess and Disney Fairies product lines. Other contributors included the World of Nintendo toys ranging from figures and plush to vehicles as well as Max Tow and XPV brands of vehicles. Funnoodle, the seasonal water float, also performed well in the quarter.
In the second half of the year, Jakks says it is set to unveil several new products across a number of categories in time for the upcoming fall and holiday season. A few highlights include Sing-A-Long Elsa, the follow up to last year’s successful product; 3DiT! Character Creator featuring Marvel, Teenage Mutant Ninja Turtles, and DC Superheroes characters; Big Figs, entertainment-licensed large-scale figures based on Minions and Star Wars; new World of Nintendo figures; the Hulk Smash radio-control figure inspired by the popular Marvel character; a new large-scale Max Tow Truck Turbo as well as the Jumpin’ Little Monkey in the Animal Babies line and the Street Dogs radio control pup.
Working Capital
As of June 30, 2015, Jakks’ working capital was $232 million, including cash and equivalents and marketable securities of $110.5 million, compared to working capital of $198.4 million including cash and equivalents and marketable securities of $162.9 million as of June 30, 2014.
2015 Guidance
The company reiterates its previously issued guidance for the full year of 2015, which estimated net sales in the range of $730 million to $740 million, earnings in the range of approximately $0.71 to $0.75 per diluted share and adjusted EBITDA in the range of approximately $56 million to $58 million.
Share Repurchase
In June 2015, the board of directors authorized Jakks 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. No shares were repurchased during the second quarter. Approximately 377,000 shares of common stock were repurchased through July 20, 2015, at an aggregate cost of $3.4 million.
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