Jakks Pacific Reports Q3 2015; Berman Named Chairman of the Board
Jakks Pacific, Inc., reported financial results for the third quarter 2015. Net sales for the quarter ending September 30, 2015, were $337 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.
Third Quarter Highlights:
- Gross margin improved 390 basis points
- Operating margin improved 70 basis points
- Diluted EPS increased 8.7 percent
Financial Overview
Net sales for the nine months ending September 30, 2015, were $582.3 million compared to $556 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, in addition to responsibilities as CEO, Stephen Berman will also serve as chairman of the board.
“We’re very pleased with our performance in the third quarter,” said Berman in a statement. “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. 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. 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.”
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
Jakks 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 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. Approximately 774,000 shares of common stock were repurchased through the end of the third quarter at an aggregate cost of $7 million.