JAKKS Pacific Cuts FY16 Forecast As Q3 Results Down - Quick Facts

(RTTNews) - JAKKS Pacific, Inc. (JAKK), a manufacturer of toys and consumer products, on Thursday trimmed its forecast for fiscal 2016 earnings and sales after reporting weak third-quarter results.

For the full year 2016, the company now expects net sales to grow by 1% to approximately $755.0 million, earnings to approximate $0.56 per share and adjusted EBITDA to grow by 4% to approximately $53.0 million. The outlook previously was net sales of approximately $800 million, earnings of approximately $0.78 per share and adjusted EBITDA of approximately $65.0 million.

On average, six analysts polled by Thomson Reuters expect earnings of $0.78 per share on sales of $800.59 million. Analysts' estimates typically exclude special items.

Reflected in the revised guidance is gross margin for the full year of 31.8%, down slightly from prior outlook of 32.0%.

In the year 2015, net sales were $745.7 million with earnings of $0.71 per share and adjusted EBITDA of $50.9 million.

JAKKS Pacific Chairman and CEO Stephen Berman said, "Looking ahead to 2017, we currently expect to see revenue growth coming from three areas. …. All three areas are part of our ongoing effort to add faster growth and higher margin sources of revenue to our sales mix. We have just finished our fall 2017 toy preview with customers from around the world, and we are also encouraged by the positive response to both our spring and fall product lines."

For the third quarter, net income attributable to JAKKS Pacific was $30.61 million or $0.82 per share, compared to $45.86 million or $1.12 per share in the same year-ago quarter.

The latest results included charges of $4.2 million, or $0.07 per share, related to the resolution of prior litigation and multi-year license audit. Last year's results included non-cash income of $5.6 million, or $0.09 per share, related to acquisition of Maui Toys.

Adjusted EBITDA for the third quarter was $42.8 million, down from $52.5 million in the year-ago quarter due to the sales decline.

Net sales were $302.79 million, compared to $337.03 million last year. Analysts expected sales of $338.35 million.

The decline was due to the suspension of shipments by JAKKS to a major U.S. customer, the negative impact of the Brexit vote and subsequent devaluation of the British pound, a timing lag in international sales caused by shifting to direct-to-retail distribution, and lower-than-expected sales of some movie-licensed products.

Separately, JAKKS Pacific announced the appointment of Michael Gross as an independent member of board of directors.