An uptick in fourth-quarter sales at Mega Brands Inc. helped the toy maker to trim losses drastically during the period and lead the company to a profit for the 2009 fiscal year following several years of losses.
Mega Brands, which has struggled under a heavy debt load and dwindling market share in recent years, said improving sales trends and a new multimillion-dollar recapitalization plan are contributing to a rosier outlook for the coming months.
The company, which keeps its books in U.S. dollars, reported a net loss of $22.1-million (U.S.) or 60 cents per share for the quarter ended Dec. 31. The company narrowed losses drastically from year-earlier levels when it posted a loss of $323.3-million or $8.83 per share.
The improved financial performance was led by a 6-per-cent increase in quarterly sales, which totalled $107.3-million compared with $101-million recorded a year ago.
The financial picture for the full 2009 fiscal year brightened considerably as the company returned to profitability, it said.
Mega Brands reported net earnings of $10.7-million or 29 cents per share, reversing year-earlier losses of $458.7-million or $12.53 per share.
The move into the black came despite a decline in full-year sales, which sagged to $338.9-million from $447.7-million recorded in 2008.
The company also announced the closing of a recapitalization transaction meant to alleviate a heavy debt load and breathe new life into the toy maker.
The plan, which would see the company receive about $218.1-million, gained overwhelming support from both shareholders and secured debt holders earlier this month.
The transaction allowed the company to trim its long-term debt by $290-million to $139-million, it said.
Chief executive officer Marc Bertrand said the new liquidity provided by the recapitalization plan, coupled with stronger sales trends, suggest the company has turned a corner.
"We are pleased with the improving trends in our business, with higher sales, lower expenses and improved gross margin in the fourth quarter compared to the same period in 2008," Mr. Bertrand said in a statement.
"With the completion of the recapitalization transaction, the company now has the liquidity and capital resources to pursue its business plan and we are fully focused on strengthening our brands, improving financial performance and building value."