JAKKS Pacific, Inc. (NASDAQ:JAKK) Q3 2019 Earnings Conference Call - Final Transcript

Nov 07, 2019 • 09:00 am ET

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JAKKS Pacific, Inc. (NASDAQ:JAKK) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning, and welcome to the JAKKS Pacific Third Quarter 2019 Earnings Conference Call with management, who will review financial results for the quarter ended September 30, 2019. JAKKS issued its earnings press release earlier today. Presentation slides containing information covered in both today's earnings press release and call are available on our website in the Investors section. This presentation includes videos showing some of our key product.

On the call this morning are Stephen Berman, Chairman and Chief Executive Officer; and Brent Novak, Chief Financial Officer. Mr. Berman will provide an overview of the quarter and provide highlights of product lines and current business trends, then Mr. Novak will provide detailed comments regarding JAKKS Pacific's financial and operational results prior to opening up the call for questions. [Operator Instructions]

Before we begin, the Company would like to point out that any comments made about JAKKS Pacific's future performance, events or circumstances including the estimates of sales and/or adjusted EBITDA in 2019 as well as any other forward-looking statements concerning 2019 and beyond are subject to safe harbor protection under federal securities laws. These statements reflect the company's best judgment based on current market trends and conditions today and are subject to certain risks and uncertainties which could cause actual results to differ materially from those projected in forward-looking statements.

For details concerning these and other such risks and uncertainties, you should consult JAKKS' most recent 10-K and 10-Q filings with the SEC as well as the company's other reports subsequently filed with the SEC from time to time.

In addition, today's comments by management will refer to non-GAAP financial measures such as adjusted EBITDA. Unless stated otherwise, the most directly comparable GAAP financial metric has been reconciled to the associated non-GAAP financial measure within the company's earnings press release issued today or previously.

As a reminder, this conference is being recorded.

With that, I would now like to turn the call over to Stephen Berman.

Executive
Stephen G. Berman

Good morning, everyone, and thank you for joining us today. This morning, we are going to review our performance during the third quarter of 2019. I will start with some general comments about our third quarter performance including the products that drove our sales growth.

After my comments, Brent will discuss our financial performance after which I will come back on to discuss some drivers for the holiday season and make additional comments before opening the call up for questions. We were pleased that we're able to show net sales growth of 18% for the quarter ended September 30th, 2019, when compared to 2018 third quarter, which was the strongest year-over-year sales growth rate we have posted in nearly five years. The growth was driven by several strong brands and by online sales of our products.

The upcoming release of Disney's Frozen 2 drove sales of all of our Frozen products, including those tied to the original film. Our costume division Disguise saw year-over-year growth of 16% in the third quarter and through the first