Jakks Pacific Inc (JAKK) SEC Filing 10-Q Quarterly report for the period ending Sunday, March 31, 2019

Exhibit 99.1

JAKKS Pacific Reports First Quarter 2019 Financial Results

SANTA MONICA, Calif.--(BUSINESS WIRE)--May 9, 2019--JAKKS Pacific, Inc. [NASDAQ: JAKK] today reported financial results for the first quarter ended March 31, 2019.

First Quarter 2019 Overview vs. Same Period Last Year

• Net sales for the first quarter were $70.8 million compared to $93.0 million reported in the comparable period in 2018. Sales in the 2019 first quarter were negatively impacted, as expected, by the Toys “R” Us liquidation in March of 2018 and the success of Incredibles 2 last year, as well as the late Easter in 2019.
• Gross margin was 20.2%, compared to 24.7% in the first quarter of 2018.
• Net loss attributable to JAKKS Pacific was $29.2 million, or $1.24 per diluted share. This compares to a net loss attributable to JAKKS Pacific of $36.2 million, or $1.57 per diluted share, reported in the comparable period in 2018.
• Adjusted EBITDA was negative $17.1 million, compared to Adjusted EBITDA of negative $14.6 million in the 2018 first quarter. See note below on “Use of Non-GAAP Financial Information.”

Management Commentary

“As expected, our results for the first quarter showed the impact of the loss of Toys “R” Us as a significant customer, and the impact of a later Easter holiday,” said Stephen Berman, CEO of JAKKS Pacific. “In addition, the timing of certain key new product launches tied to major theatrical film releases has, as expected, significantly shifted our revenue to the second half of the year. Several licensed properties that drove our sales in the first half of last year saw declines, notably The Incredibles 2, Moana, and Tsum Tsum, in addition to declines in Squish Dee Lish, our own property. Still, we are pleased with the success we have seen so far with such licenses as Godzilla, Harry Potter, Fancy Nancy and Aladdin, and our evergreen lines in Moose Mountain and Kids Only.

“We are looking forward to stronger sales in the second half of the year, which should benefit from a strong slate of entertainment content, notably Frozen 2, as well as Toy Story 4, the 30^th Anniversary of the release of Disney’s The Little Mermaid, and Disney’s Gigantosaurus animated TV series. In addition, we expect strong contributions from products based on some of our own IP, including TP Blaster: Sheet Storm, Slap Ninja, Pinata Fiesta and Power Dozer. Consistent with our strategy, we continue to see our sales through online channels increase as a percent of total sales, which we expect will help us in a shifting retail landscape.”

Cash and Cash Equivalents

The Company’s cash and cash equivalents (including restricted cash) totaled $47.4 million as of March 31, 2019 compared to $58.2 million as of December 31, 2018 and $46.8 million as of March 31, 2018.

2019 Outlook

Our 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.

Expression of Interest from Hong Kong Meisheng Cultural Company Limited

As previously announced in the Current Report on Form 8-K dated February 26, 2019, we engaged in extensive negotiations with Hong Kong Meisheng Cultural Company Limited ("Meisheng") regarding its proposed $50 million equity infusion into the Company, resulting in Meisheng owning 51% of the Company's outstanding shares, which was also the subject of extensive negotiations with an ad hoc group of holders (the "Ad Hoc Group") of the 4.875% convertible senior notes due 2020 (the "Notes") issued by the Company and Oasis Investments II Master Fund Ltd. ("Oasis") with respect to the Meisheng proposal and extension of maturities of the Company’s convertible senior notes. The Company is currently awaiting the receipt by Meisheng of certain approvals to advance such transactions, including approvals from Chinese regulatory bodies, and as a result, no executed and binding agreements related to those transactions have been reached with Meisheng, any member of the Ad Hoc Group, any other holders of the Notes or Oasis. The foregoing is only a summary of the latest discussions and is not intended to be a complete description of all of the terms and conditions thereof, including the potential significant additional dilution that could occur as a result of these transactions. No assurance can be given that the ongoing discussions will result in consummation of a transaction with Meisheng, the holders of the Notes or Oasis, or that even if a transaction is consummated that its final terms will resemble the terms described in the Current Report on Form 8-K dated February 26, 2019.