Tuesday, toy maker RC2 Corp. (RCRC) said its third quarter profit increased reported higher net income on lower operating costs. Looking ahead, the company raised its guidance for the fourth-quarter, with earnings expected in line with the current Street estimates.
The Oak Brook, Illinois-based company's third-quarter net income increased to $13.6 million or $0.66 per share from $11.1 million or $0.64 per share a year ago. Excluding recall-related and non-recurring items, third-quarter net income was $11.5 million or $0.66 per share.
On average, eight analysts polled by Thomson Reuters estimated earnings of $0.58 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter decreased 4.8% to $126.5 million from $132.9 million in the third quarter of 2008. Analysts expected revenues of $130.96 million for the quarter.
The company's net sales was adversely affected to the tune of 3% by unfavorable fluctuations in foreign currency exchange rates.
The company's gross margin decreased slightly to 46.4% from 46.7% in the prior-year third quarter.
Operating income for the quarter rose to $21.8 million from $20.9 million in the comparable quarter last year.
Operating costs were over $4 million lower than in the prior year primarily due to operating cost reduction plan and lower variable costs. Selling, general, and administrative expenses decreased to $36.9 million from $41.0 million in the previous-year quarter, primarily due to the impact of operating cost reduction plan, lower variable costs, and foreign currency rate fluctuations.
Expenses linked to recall-related items was $112 thousand, compared to $1.46 million a year ago. The company had nil costs related to terminated acquisition, compared to $1.42 million last year.
For the nine-month period, the company reported net income of $18.7 million or $1.01 per share, compared to $6.7 million or $0.38 per share last year. Net sales decreased 4.9% to $299.8 million from $315.3 million, with 5% reduction due to unfavorable fluctuations in foreign currency exchange rates.
Looking forward, the company now expects full year 2009 net income in the range of $25 to $27 million or $1.30 to $1.40 per share. On a consensus, analysts currently expect net income of $1.35 per share, with estimates ranging from $1.24 to $1.50 per share for the year.
RC2 said it expects sales declines to continue across most product lines with the exception of Thomas & Friends Wooden Railway, which achieved positive sales comparisons both in the quarterly and year to date periods.
The company also expects sales of its new Super WHY! product line to continue to increase. The company plans to launch new preschool properties, including Chuggington and Dinosaur Train, in 2010.
RCRC closed Tuesday's regular trading at $14.60, down $0.24 or 1.62%, on a volume of 98 thousand shares on the Nasdaq.
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