JAKKS Pacific (NASDAQ: JAKK) reported Q4 EPS of ($0.26), $0.14 worse than the analyst estimate of ($0.12). Revenue for the quarter came in at $152.5 million versus the consensus estimate of $150.47 million.

Fourth Quarter 2019 Overview vs. Same Period Last Year:

• Net sales were $152.5 million, up 15% compared to $132.3 million reported in the comparable period in 2018, boosted by strong sales of Disney Frozen 2 products.
• Gross margin was 30.4%, compared to 30.6% in Q4 of last year.
• Net loss attributable to common stockholders was $20.6 million, or $0.70 per basic and diluted share, including non-cash charges of $10.7 million for intangibles impairment and tooling disposal, and the change in fair value of the derivative liability attributable to our preferred stock. This compares to a net loss attributable to common stockholders of $3.2 million, or $0.14 per basic and diluted share, in the fourth quarter of 2018.
• Adjusted EBITDA (a non-GAAP measure) was $3.3 million, compared to negative $1.6 million in the fourth quarter of 2018. See note below on “Use of Non-GAAP Financial Information.”
• Adjusted net loss attributable to common stockholders (a non-GAAP measure) was $0.26 per basic and diluted share, an improvement of $0.11. See note below on “Use of Non-GAAP Financial Information.”

Management Commentary

JAKKS Chairman and CEO Stephen Berman stated, “We are pleased to report solid improvement in our sales and adjusted EBITDA for the fourth quarter and for the full-year of 2019. Despite significant industry-wide softness in retail toy sales through most of 2019, including the holiday season, we were able to grow our sales, as strong sales of Disney Frozen 2, Disguise® and Nintendo® more than offset the declines of some older products. Our net sales grew 15% in the quarter, continuing the momentum we saw in the third quarter. For the full year, our sales were up 5%, led by the strong performance of several product lines. More importantly, we were able to meaningfully reduce our normal operating expenses, resulting in a significant improvement in adjusted EBITDA for the year.

“We closed out the year on a strong note and have carried momentum into 2020. We remain committed to containing costs and managing our balance sheet prudently. We expect good performance in 2020 driven by expansion within our evergreen categories and new product initiatives, coupled with new licenses as well as current licenses that we see growing in popularity, and additional owned IP launching throughout the year. We expect licenses such as Disney Princess, Frozen 2, Nintendo and others to benefit our 2020 results.”

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