Marvel released its first quarter results today, and despite a loss of around $12.7 million, the news was actually pretty good for retailers that depend on a consistent product flow from one of the largest suppliers of comics and toys to pop culture stores. Earnings before interest, taxes, depreciation, and amortization (EBITDA) were $6.2 million, as compared to a negligible $34,000 for the same period last year. But EBITDA was still less than the interest expense for Marvel for the quarter of $7.9 million. Marvel had around $15 million in cash as of March 31, as compared to around $23 million at the end of 2000. With that cash and its credit line of up to $40 million, Marvel has stated that it has enough cash to meet its ongoing obligations.
Sales overall were down 1% year-over-year. The news was mixed in Marvel's three divisions. Toy Biz was down about 13%, although Marvel-based action figures and accessories were up. Licensing more than doubled, 'due primarily to an increase in the number of international and 'non-traditional' licensing agreements signed during the quarter....' Marvel CEO Peter Cuneo attributed the company's growing success at licensing to the increased media exposure that movies and television were bringing to the company's properties. Publishing was another bright spot, with sales up 3% and EBITDA up 8%, which Marvel said outperformed the industry. The improvements in publishing results were attributed to 'increased comic book sales to the direct market coupled with cost reductions in printing and freelance creative expenses.'
The company's improvement in bottom line performance was largely due to reduced selling, general, and administrative expenses, which were cut by over 40%. That's presumably what Cuneo was talking about when he said, 'Our first quarter results reflected the initial benefits of the previously implemented restructuring and repositioning of our Toy Biz division....'
Publishing increased its importance to Marvel, growing to 24% of sales from 20% for all of 2000 (see 'Marvel Direct Sales Account for over 90% '). Since the growth in publishing was attributable to direct sales, it's safe to assume that distribution of comics through Diamond is approaching 20% of Marvel's sales. The relative profitability of publishing amplifies these numbers. Publishing accounted for around 35% of Marvel's EBITDA, around the same as licensing. Toy Biz was the underperforming division, accounting for only around 28% of EBITDA despite representing 63% of sales. Let's continue to root for the success of the Toy Biz restructuring, ensuring a continuing supply of Toy Biz and Marvel product to pop culture stores.