JAKKS Pacific Inc (JAKK) 2016 Q1 法說會逐字稿

Good morning, and welcome to JAKKS Pacific's first-quarter 2016 earnings conference call with management, who will review financial results for the quarter ending March 31, 2016. JAKKS issued its earnings release earlier this morning. Presentation slides containing information covered in both today's earnings release and call are available on our website in the Investor section.

On the call this morning are Stephen Berman, Chairman and Chief Executive Officer; as well as Joel Bennett, Executive Vice President and Chief Financial Officer. Mr. Bennett will first provide detailed comments regarding JAKKS Pacific's financial and operational results. Mr. Berman will then provide his overview of the quarter, as well as provide highlights of product lines and business trends prior to opening the call for questions.

Your line will be placed on mute for the first portion of the call. (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 earnings-per-share for 2016, as well as any forward-looking statements concerning 2016 and beyond, are subject to the 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 Pacific's most 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.

With that, I would now like to turn the call over to Joel Bennett.

Good morning, everyone, and thank you for joining us today. In line with expectations, net sales for the first quarter of 2016 were $95.8 million compared to $114.2 million reported in 2015. This decrease reflects the stellar performance in 2015 of one of our key product lines in the international markets. The net loss for the first quarter was $17.4 million or $1.01 per diluted share compared to a net loss for 2015 of $7.6 million or $0.40 per diluted share.

2016 earnings include the loss of $0.05 per share due to fewer common shares outstanding during the quarter as a result of the Company's ongoing stock buyback program. On a static share count, the earnings would have been a loss of $0.96 per diluted share in the middle of our Q1 guidance range.

Adjusted EBITDA for the first quarter was negative $9.2 million compared to negative $900,000 in 2015. The guidance and actual results reflect higher marketing expenses in 2016, including the timing of expenses associated with an earlier Easter, which contributed to the decline in earnings.

Worldwide sales of products in our traditional Toys and Electronics segment were $41.7 million for the first quarter of 2016 compared to $65 million in 2015. Sales in this segment in Q1 were led by Disney Princess and Frozen Toddler dolls, though down year-over-year; BIG-FIGS, featuring Star Wars and Batman versus Superman; and our new Warcraft figures.

Worldwide sales from our Role Play, Novelty and Seasonal Toys segment increased to $54.1 million in the first quarter of 2016 from $49.2 million in 2015. Increases in our Disguise Halloween Costumes and also our Kids Furniture and Activity Tables drove the increase this quarter.

Included in the category numbers are international sales of approximately $23.9 million for the first quarter of 2016 compared to $42.4 million in 2015. The Disney Frozen and Princess dolls, while continuing to make strong contributions, were lower in 2016 as anticipated.

Gross margin for the first quarter of 2016 and 2015 were 32.5% and 31% of net sales, respectively. The 150 basis point increase in gross margin in 2016 is due to lower product costs and lower royalties, as we continue our margin expansion initiatives. SG&A expenses for Q1 2016 were $45 million or 47% of net sales as compared to $39.6 million or 34.7% of net sales in 2015. The increase in SG&A dollars in 2016 was due to higher marketing expenses, as previously mentioned, and resulted in an increase as a percentage of net sales due to the lower net sales in 2016.

Depreciation and amortization was approximately $4 million in the first quarter of 2016 compared to $2.8 million in 2015. Capital expenditures were $3 million for the first quarter of 2016 compared to $3.1 million for the first quarter of 2015. For the full-year, we expect capital expenditures of approximately $12 million.

Consistent with the seasonality of our business, on lower sequential quarterly sales and higher Accounts Receivable at year-end, operations provided cash of $32.6 million for the first quarter of 2016 compared with $38.8 million in 2015, resulting in free cash flow of $29.6 million and $35.7 million, respectively. And at quarter-end, the Company's working capital was $226.9 million, including cash and cash equivalents of $118.9 million compared to working capital of $234.2 million as of March 31, 2015.

Accounts Receivable at quarter-end were $85.5 million, down from the $104.3 million in 2015, due to lower sales in 2016 and due to the timing of sales during the quarter. DSOs in 2016 were 80 days, a decrease of two days from the 82 days in 2015. Inventory as of March 31, 2016 was $53.5 million, down 33% from $79.5 million in the first quarter of 2015, due to ongoing working capital management and forecasting efforts, resulting in DSIs of 92 days, down from 114 days as of March 31, 2015.

Under the current authorization to repurchase up to $30 million worth of the Company's common stock and/or convertible notes, approximately 2.9 million shares of common stock have been repurchased at a cost of $23 million, an average of $8.04 per share, and $2 million principal amount of our 2020 convertible notes at a cost of $1.9 million have been repurchased through the end of the first quarter. Since March 31, 2016, we've acquired $590,000 of principle amount of our 2018 convertible notes at 98.5, which leaves $4.4 million available for repurchases.

Lastly, as for guidance, we are reaffirming our previous forecast of net sales for the full-year 2016 to increase 7% to approximately $800 million; earnings to increase 10% to approximately $0.78 per diluted share, subject to share count changes; and adjusted EBITDA to increase 28% to approximately $65 million. This guidance reflects anticipated growth in gross margin and operating margin, and an effective tax rate of 15%.

Using EBITDA as a proxy for cash flow from operations, and excluding changes in working capital due to the substantial variability that occurs based on the timing of sales and production within and between quarters, free cash flow for 2016, based on forecasted EBITDA of $65 million and an aggregate of $26 million for CapEx, cash interest and cash taxes, is estimated to be approximately $39 million.

And with that, I will turn the call over to Stephen Berman.

Thank you, Joel, and good morning to everyone, and thank you for joining us today. As Joel outlined in the numbers, our performance in the first quarter met our expectations going into 2016. With Easter falling in the first quarter this year, the timing of our media spend shifted earlier, and we increased our overall marketing spend to further engage with our target audience in new and meaningful ways.

Due to the seasonality of our business, the first quarter, as expected, is our lowest revenue volume quarter of the year, and we continue to be up against challenging comps year-over-year with the frozen GAAP, which is reflected in our guidance. Our margins continued to improve as we work towards increasing profitability on the planned sales increase for the remaining three quarters ahead.

I want to take a moment to talk about JAKKS's key strengths and what we are doing to create shareholder value. We have robust product development capabilities which create a stellar portfolio of brands, comprised of our own intellectual properties and entertainment license brands, which resonate with kids around the world. Additionally, we also have well-known brands in our Outdoor Toys, Kids Furniture, and Costume divisions, providing a healthy year-round business.

A majority of our licenses have been extended, and new licensing deals are on the horizon, which will further expand our global efforts. We remain extremely focused on developing our international footprint, opening new offices that give us the ability to localize our efforts while maintaining a global approach.

The strength of JAKKS's distribution network and partnership with major licensors has created opportunities as a global distributor for creative products and technologies. We are increasing our distribution portfolio by working with companies to distribute their products in more than 65 countries worldwide using our network of offices and sales executives.

We are nimble and able to seize new opportunities on existing and new lines quicker than most anyone in the industry with incredible speed to market. And our solid base of revenue provides increasing cash flow, helping us maintain our strong financial position.

Now, for first-quarter highlights, plus what we have in the pipeline. We continue to see positive areas of growth in our international business, primarily in Mexico and Germany. Both markets delivered double-digit growth, driven by new offices we opened the past year. We now have the ability to offer direct retail pricing and domestic purchase options, and we are on track to open up an office in Italy later this year.

Our business in China continues to steadily grow year-over-year now that our Shanghai office is delivering a domestic program. In the first year of our office that has been open, our business has doubled with Toys "R" Us in China, primarily driven by the Disney Princess and Star Wars businesses.

We are creating dedicated TV commercials for our Disney Princess doll line as well as placing over 5,000 Star Wars merchandising displays at retail. Both of these initiatives are made exclusively for international accounts. The strengths of these two brands, combined with spring introductions of Sum Sum in Q2, will continue the momentum.

JAKKS has strategic partnerships with the biggest and best licensors in the industry. Today I will focus on various license product lines ranging from collector dolls to figures and kids furnitures to remote-controlled vehicles in support of the most anticipated summer blockbusters. The Batman versus Superman Don of Justice movie is breaking box office records as well as a strong seller in the JAKKS BIG-FIGS line. Both the movie-based figures and the Evergreen DC universe of 20-inch figures are showing strong sellthroughs at retail.

Star Wars BIG-FIGS also continue to sell through nicely. The late December movie release led to counter seasonal sales strength in Q1 for us, and we are hopeful that the DVD release this month will provide another lift for the BIG-FIGS at retail. We continue to ship Star Wars BIG-FIGS in a variety of scales ranging from 18-inch to 48-inch with new waves of characters, including the much-anticipated Rei figure in 20-inch scale this June, and the BB-8 in 31-inch scale in August.

Our plans are already underway for Rogue One, a Star Wars story, which is scheduled for release on December 16th this year. This quarter, a new 48-inch Teenage Mutant Ninja Turtle, Mikey BIG-FIG, will join the 48-inch Leo BIG-FIG already in stores. Mikey will hit shelves in time for the release of the new Teenage Mutant Ninja Turtle Out of the Shadows movie in June.

Additionally, we will also launch XPV Remote Control Skateboarding Mikey exclusively at Walmart later this month. The innovative RC Mikey does amazing skateboard tricks and self-rights when turned over. He performs incredible moves such as wheelies, 360's, one-footed spins and more. This amazing RC will also be launched in international territories later this quarter.

Another key item in the XPV line that just hit retail shelves is the XPV Marvel Avengers RC Rollover Rumble. It is inspired by the Captain America Civil War movie opening in May. Kids can choose their favorite superhero and control this RC vehicle as either Captain America or Iron Man for twice the fun.

As the worldwide master toy licensee of Warcraft movie-based line features multiple scales of collectible figures representing both the Horde and the Alliance, including JAKKS BIG-FIGS large-scale figures. It is now available at Toys "R" Us. The line will be in full mass distribution in May prior to the movie's opening in June.

JAKKS has specific global licensing agreements with the WWE to manufacture, distribute, and market a line of consumer products based on WWE superstars and divas, and it hits television shows Monday night with Monday Night Raw and SmackDown. The line includes everyday dress-up, role-play, and seasonal costumes in the US, which are at Target now and will be in full distribution this fall. Additionally, we are the master toy licensee for WWE in Asia, which will bring in new sales opportunities from that market in the second-half of this year.

JAKKS continues to enhance the license world of Nintendo product line with all new figures and plush items available this spring. We are rolling out multiple waves of items ranging from 2.5 inch figures to plush toys with sound effects straight from the game. The mix assortment keeps consumers engaged and coming back to retail to find new characters.

This fall, we will be introducing additional figures and plush, as well as a tape racer and the Mini Mario Kart and antigravity RC vehicle. Last year, our Disney business began to expand beyond our core business of Princess and Frozen. Sum Sum is our biggest news for 2016. Our sales continue to build as the collectability gains momentum with new characters and new waves.

We have already launched waves 1 and 2, and we are gearing up to launch the Marvel Sum Sum segment this summer. Our consumer activation, such as Sum Sum Takeover Tuesday's, are resonating with collectors and fans, while increasing our digital footprint with influencers in the social space. The product line has also received rave reviews from retailers and press.

Our Disney Princess low-price impulse items such as shoes, tiaras, jewelry, and more, continue to be key volume drivers in Q1. Our featured dolls and dress-up business also performed well in the quarter. Our sing-along Elsa doll and the Do You Want to Build a Snowman jewelry box, continues to be two of the top POS performers across our Disney branded portfolio.

Sing-along Elsa doll performed ahead of plans this spring. And to maximize the item's potential this fall, we have solidified an aggressive promotional program by offering it exclusively to Walmart. The jewelry box also performed well above our plans and will continue to be a key driver going into the fall.

New content for two all-new empowering female characters, Elena of Avalor and Moana, will further support this business segment later this year. The Little Kingdom makeup segment delivered impressive results now that it's available in full distribution, and was supported with a successful TV spot. With a consistent flow of goods in the pipeline, as well as TV plans for this fall, we anticipate this segment will continue to do well.

We will launch Sofia the First at EMEA and in Latin America with broad offerings of dolls, playsets, role-play, and dress-up in the fall, and we will share more on this product launch next quarter. Our Alice Through the Looking Glass collector dolls are making their way to all major retailers this quarter, coinciding with a live-action movie release in May. So far, we have received a good response from retailers. The beautiful detail in these collector dolls, combined with good price value, should resonate with fans.

In addition to the dolls, we also have a line of Halloween costumes from our Disguise division coming soon. While it's off-season for Halloween, our Disguise division continues to ship reorders for independent eCommerce sites. And in second quarter, we are excited to ship new key drivers, such as the first official Lego license costumes, Shopkins license costumes, and the Secret Life of Pets license costumes based on the Universal movie slated for this coming summer.

Our seasonal division is steady business with new licenses and product innovation driving our dominance in the category. The Maui and Kids Only! Furniture and Activity Table segments were up double-digit in the first quarter. Licenses such as Mickey and Minnie Mouse and PAW Patrol are currently performing well at retail. And this quarter, we shipped Teenage Mutant Ninja Turtles Big Wheels Ride-On and Activity Tables, as well as Finding Dora, Kiddie Pools, ball pits, activity tables and chairs, in time for the theatrical movie release date.

As you can see, we have a stable of strong brands with global reach and a solid global distribution network. We remain committed to maximizing the value of our portfolio with customers and consumers around the world. We are already working hard on our Spring 2017 product lines, which we are showing now to customers worldwide, and are confident in the remainder of this year and in 2017 and beyond.

That concludes the prepared portion of the call, and we'll open up the call to questions. Thank you very much.

(Operator Instructions) Steph Wissink, Piper Jaffray.

Thanks, gentlemen, for all of the detail. A lot of detail in your prepared remarks, and I hope I was keeping up with everything. But the one thing I didn't hear you talk about was the specific product in the specific international market that may have led to a bit of a slight difference in the revenue line. Can you talk a little bit more about that?

And then, Joel, specifically on the remaining buyback, how should we think about the Board's potential to authorize incremental capital for that plan for the balance of the year?

Good morning, Steph. Thank you. The drop in the international market was really just two different product lines that we couldn't anniversary, which were two different Frozen high-end items; one which was Sing-along Elsa and the dress-up, the actual dress. So those two items were so strong in the prior-year quarter, they just didn't anniversary in the first quarter, which was expected.

And that's why we came out with the numbers in the range in which we did. So those are just two product lines that really just slowed down. But the overall Frozen business is still extremely strong.

And then to answer the other question I'll answer on the buyback, we got an extension, received an extension from Wells Fargo, which Wells acquired the GE Capital division. And we had an extension for our buyback for another three months so that we could continue to finish the buyback, whether it's the common shares and/or the converts.

And upon that being completed, we will then again have another meeting internally with the specific committee, which is a Capital Allocation Committee, to review the capital needs, whether acquisitions, whether it's licensing initiatives, distribution deals, and/or future buybacks.

Thanks, Stephen. And then just two follow-ups with respect to kind of the portfolio health. It seems like there's a lot of initiatives across a lot of things. And I'm curious if you can just force-rank for us how you're thinking about the next 12 to 24 months in terms of the segments, the role-play, and then kind of the core classic toy products?

And then separately, just as we look at the P&L again, nice strong margin in the quarter. Should we continue to think about the business benefiting from lower costs over time, as you do more of the strategic engineering around some of your inputs?

Okay. So, to go -- our basic evergreen business, which we have been building over, I guess, 20 years with the acquisitions -- I think 22 or 23 acquisitions that are all now combined in the strategic divisions -- which gives us a real healthy revenue stream through the year, are really being built up now. One, as mentioned, the seasonal division, which has three different components, which is the foot to floor Ride-Ons, ball pits, outdoor furniture, and seasonal products such as Maui, those areas are now being built with innovative product, new licenses, and expansion into distribution, both in the US and internationally.

And the same goes for Disguise. Disguise has a healthy portfolio. And again, we announced earlier, the first official Lego costumes; Alice Through The Looking Glass, which did extremely well. Years ago, the previous Alice Shopkins, Powerpuff Girls, and other licenses that we have not announced.

And Disguise itself is going to other seasonal categories. As it's a seasonal makeup, we are looking to do different things during Christmas, Easter, and summer with Disguise. So all of the divisions that we have are really expanding amongst the core group.

A good example is Disney. Our division of Disney, we've gone into kids make-up and other role-play activities. We are aggressively rebuilding our core role-play business. We are also strategically pushing into the small doll and collectible market by expanding Sum Sum and launching other brands as well.

So, the international component is now building extremely well, because our license agreements have expanded internationally in a lot of different areas. We have opened up offices in Germany and Mexico and soon to be Italy. And our own IP works extremely well on international divisions.

That being said, we then pick up new areas of business such as Moana, which is a tentpole movie for Disney in November; Elena of Avalor, which is a TV show launching, which we are excited for, which will go into 2017; Sum Sum, the success of it has truly been a dream. We are launching in the UK starting in June.

And because of our distribution platform, we are now becoming a distributor for other companies that don't have the capital and actually the strength to be able to sell and market product, which will be -- we will be announcing going forward, of some really spectacular product lines with licenses. And then, the digital initiatives are really pushing our products that we've put together with GIFT 'EMS, Action Shot, Real Construction and the Disney Magic Timer.

So, there's a lot to go through. I'm missing quite a few, which is the Master Rights of Worlds of Warcraft or Warcraft the Movie; master toy rights for Sofia internationally. There is -- I've never seen a portfolio -- again, I co-founded JAKKS -- in the last 22 years, I don't think I've ever seen a broader portfolio of product amongst broader categories. So we're not really aligned to just one license in one area.

So we're really proud of the initiatives that we have this year, and we just started our Spring Toy Fair for 2017. And the receptiveness has been nothing but really stellar.

And the other question, Steph, I'm sorry?

It was just on the margin structure. Nice gross margin improvement in the quarter. I'm just curious if that is something we should be thinking about over the next couple of years, a continuation of your product cost engineering efforts?

Yes, with the product cost engineering, we've worked on our legacy products, which is really tough to do. We can't increase retail prices, so we worked on reducing our legacy items by creatively working on packaging and products to bring down the actual cost of goods, so to increase our margin.

So, we always will have a cost initiative to increase our margin. So our goal is to increase it for the next two or three years, but it will be a steady growth. It won't be a rapid one because of the amount of SKUs which we have.

Thank you. Best of luck, guys.

Thank you.

Drew Crum, Stifel.

Stephen, when you guys lap the tough Frozen comparison, when should we start to see that dissipate in the numbers? And also interested if you are seeing any change at retail amid the doll license transition? Is that impacting your business in any way?

The -- I would say the Disney overall Princess business, which actually includes now Elsa and Anna, so it's now a comprised business of -- they call it Princess with Frozen combined. We've -- the -- from the euphoricness to the stableness, we've seen it now stabilize. And actually we have created a dramatic new amount of product in the Frozen area as well as in the Disney Princess area.

So it continues to be strong and we will continue to see some further growth. So I think it's stabilized over the last, say, six months. And all the, call it, the tertiary or peripheral components of a license that really becomes strong, those have dissipated. And really the core areas of the Frozen business is doing very well.

So, we have some key drivers going into fall. But two new TV drivers in the Frozen area. So we still are excited. It's a great business for not just JAKKS, other companies. And the doll line, which I think you are mentioning, of which Hasbro has launched, is doing extremely well that they launched.

And it only benefits us, as there's just two different categories in which they sell. They are in the fashion doll business and we are in, call it, the more of the toddler doll and role-play area. So what we are seeing now is they are focusing extremely well on Frozen. So you are seeing much more of a dominant presence of Frozen, the product lines. So it only enhances our sales of our products.

Okay. That's helpful. Thank you. And then shifting gears to Star Wars, I think one of your competitors had suggested that their business could be on par with last year's performance. As you think about the cadence for 2016, what are you assuming in your guidance? Will The Force Awakens be a tough comp for you guys in the second-half? Or can that be overcome with the launch of your Rogue One product?

I believe the overall Star War business, which is not just the movie; we have the classic, is still steadily strong. And we are always cautiously optimistic when movies come out. We feel very good with the Star Wars sellthrough. And Rogue One, which is December 16, we are excited about. And not just both in North America, but we have almost global rights in many different parts of our Star Wars business.

So the growth in China, EMEA, Germany, with our new office in Mexico, I think the comps will be comparable and could be better, but we are just cautious because it was such a good year last year in Star Wars. We are just cautiously optimistic that it should be extremely strong.

Okay. And then just last question from me, Joel, the direct selling expense or marketing spend obviously up in the quarter, given the timing of Easter. Should we expect that to normalize in the second quarter? So in other words, a more modest increase in the first-half of this year versus the first-half last year? Just trying to get a sense as to what marketing spend is going to look like in the first-half year-on-year, and then if you extend that for the entire year, what we should assume?

Yes, so, correct. The first-half will be comparable in that respect. The bigger increase occurs in the back half when we are really pushing sellthrough in the holiday season. So that part of it is very much seasonal.

And interestingly enough, Easter switches next year to the middle of April. So we'll give more color on that in later calls. But it is something that we have to address each year.

Thanks, guys.

Linda Bolton Weiser, B. Riley.

So, you had mentioned that one of the things that helped the gross margin in the quarter was lower royalty expense. Is that something that is a comparison that will be true for the whole year? Or does it somehow change in the back-half of the year, when you are shipping in things for holiday? Is that lower royalty still expected for the whole year sort of thing? Thank you.

Linda, it's primarily due to product mix. And during first-quarter, we have seasonal product, some of which does not have licenses, in our Maui area or in certain areas of our business. So, it really will determine the product mix throughout the year. So in first quarter, we had Fun Noodle and more Maui. So as part of the lower royalty due to those reasons, and also our legacy pricing that we've been working on, that helped increase the margin.

Okay, thanks. That's helpful. And then in terms of also on the gross margin, there's been a couple of instances where we see a quarter where you had some gross margin impact for minimum license guarantee shortfalls. Is that something that you kind of look at, at the end of the year, and kind of true-up or something at the end of the year in the fourth quarter?

Or is that something that is reviewed each quarter, and it's something that you have to -- that may or may not affect the gross margin on a quarter-by-quarter basis? Or is it a year-end type thing? Thank you.

Yes. We look at it each quarter. We assess our development plans and may have write-off licenses here and there. But ultimately, things do get trued-up at the end of the year, but it's an ongoing thing and it impacts the gross margin each quarter.

Okay. And then just in terms of your sales performance, I mean, you hit your EBITDA right on the nose in terms of your guidance and what you came out with for the quarter, but your sales were a little bit more toward the low end of the guidance range. And if you had to say why you didn't get more to the middle or the high end of the range in the quarter, what were the factors that maybe prevented you from doing a little better on the sales line in the quarter? Thanks.

It was primarily just due to two items. That was in international markets that were difficult to comp. But again, forecasting I think we did a great job within a very tight range. So, it was nominal in the amount that we missed on. But it was really just two items that we couldn't duplicate. And that was pretty much it for the difference. And it was a nominal amount.

Okay, thanks very much.

Thank you, Linda.

Ed Woo, Ascendiant Capital.

I had a question about the Sum Sum license. Can you clarify what exactly the license you have for that and what geographies?

We have the -- a very broad line of collectible products which are collectible figures to -- I'm trying to say -- to make it from blind packs to a whole broad array of a collectible line which deals with waves and distributions, three packs, nine packs, blind packs. We also have a broad array of stationary that is really focused beautifully well in the Sum Sum, call it, characters.

In addition, we are launching, this quarter, the first launch of the marble Sum Sum characters. But it's a real broad-focused collectible line that has extremely intense waves, extremely intense metrics of how a collectible line works. So, we shift wave 1 and 2. Currently, we will probably be up to, by the end of the year, wave 6. And we are also launching in the UK in June and the second half of the year, and then immediately after that, Latin America, and going forward in different territories.

But it's a broad array of collectibles. And it's hard to describe, because the collectible line is a collectible line with accessories and figures.

Is it a global license?

It's a North American license currently. And we are launching an international territory starting in June, and it goes into specific ones, as I mentioned, in the UK and Latin America. And then we will forward throughout this year and next year with Sum Sum. It's a long-term collectible line. And I will tell you it is -- the sellthroughs are truly staggering.

That sounds good. And does it include, I guess, a distribution at mass as well as specialty retailers?

Yes. It's full distribution. And what the unique part of doing a collectible line, you do full distribution. And at a certain level, you stop with each series. So, as soon as that series is sold in, we stop it and go to the next series. So it creates that crave for the collectability.

That sounds good. Yes, definitely hearing chatter about how popular it is. So, congratulations on that line.

Thanks. And our team internally at JAKKS has done a great job with it.

That's great. And then you mentioned earlier on the call about how you guys were possibly adding to your portfolio of license properties. Obviously, you are not going to disclose what you are working on. But in terms of magnitude of scale, should we anticipate more fill-in type licenses? Or do you anticipate possibly some game-changers in there?

So the best way to do it, it goes by division. And so, for Halloween, we have, again, the first official Lego line of products for both Halloween as well as everyday role-play. Secret Life of Pets would be at Halloween, Shopkins, Power Puff Girls. And then you go into seasonal. We have Blaze, which is the ball pits; Pepe the Pig; Shimmer and Shine; and PAW Patrol, that go into our kind of seasonal business of Moose Mountain and Kids Only!.

So the licenses go into specific categories and it can become broader. Sum Sum is a license and a category that is really a figure and collectible basis. And we have quite a few new licenses that we are launching throughout the year in different areas, and some soon to announce. But they really break out either by category as a lot of these licenses go throughout all of our categories, and some are just in specific categories, like Disguise.

Great. Well, thank you and best of luck.

Thanks, Ed.

(Operator Instructions) Mike Hughes, SGF Capital.

Thank you for taking my questions. I think last quarter you provided some quarterly guidance, and I understand that was associated with the Easter shift that you wanted to call out. But are you comfortable with the second-quarter numbers out there, which I think the revenue is about $135 million and EBITDA of about $2.5 million to $3 million? Is that a range you are comfortable with?

First thing. We normally always announce in our annual guidance first-quarter, just because it's the lowest quarter, and it really depends on where Easter lies and marketing spends come into play. More marketing was attributed in the first quarter because of Easter being in the first quarter versus next year, there will be a change in the marketing spend being more April because of the Easter time.

On our full-year guidance, we are extremely comfortable with. On, I would say, the second quarter guidance, if that's the -- I have not looked at what the consensus average is, but I expect that we are comfortable with that number. But I have not looked at all the average guidance that is out there, and we do not give quarterly guidance outside of first quarter. But I expect with that, at that number, we are comfortable.

Thank you. And we have no further questions.

Again, everybody, thank you for joining the call this early in the morning. And we are excited to get on to our next quarter call as soon as second-quarter is done, and the rest of the year. And appreciate your time. Thank you very much.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating and you may now disconnect.