Jakks Pacific, Inc. has reported financial results for the third quarter ended September 30, 2019.
Net sales for the third quarter were $280.1 million, up 18% compared to $236.7 million reported in the comparable period in 2018. Sales in the 2019 third quarter were boosted by strong initial sales of Disney Frozen 2 products.
Gross margin was 28.9%, up from 27.2% in Q3 of last year. Net income attributable to Jakks Pacific was $16.4 million, or $0.51 per diluted share. This compares to $15.7 million, or $0.38 per diluted share, reported in the third quarter of 2018. Adjusted EBITDA was $44.1 million, an increase of 64% over the $27.0 million reported in the third quarter of 2018.
Jakks Pacific Chairman and CEO Stephen Berman stated, “We are pleased to report solid results across several financial metrics in the third quarter, as strong sales of Disney Frozen 2, Disguise and Nintendo more than offset the declines of some older products. Our net sales grew 18% in the quarter, the strongest quarterly growth in year-over-year sales we have seen in nearly five years, led by online sales of our products, which were up 32% compared to last year. More importantly, we were able to improve gross margins and tightly managed expenses, resulting in a 64% year-over-year increase in adjusted EBITDA.
“We expect to close out the year on a strong note, and carry momentum into 2020. We remain committed to containing costs and managing our balance sheet prudently. We expect good performances over the holiday season from Frozen 2, Nintendo, Disney Princess and X-Power Dozer.”
Jakks Pacific also announced that Chief Financial Officer Brent T. Novak will leave the company in December 2019 to pursue other opportunities. The company is currently conducting a search for its next CFO. Mr. Berman said, “Brent has been a valued member of the Jakks team since joining the company in April 2018. We wish him well in his future endeavors.”
Mr. Novak said, “I appreciated the opportunity to work with Stephen and the Jakks team, and assisting in the completion of the recapitalization transaction in August 2019.”
The company’s cash and cash equivalents (including restricted cash) totaled $75.9 million as of September 30, 2019 compared to $57.1 million as of September 30, 2018 and $37.0 million as of June 30, 2019.
The company’s goal for 2019 is to grow sales by approximately 5% on a year-over-year basis with improved levels of adjusted EBITDA compared to 2018.