JAKKS Pacific Reports Third Quarter 2024 Financial Results
SANTA MONICA, Calif., Oct. 30, 2024 (GLOBE NEWSWIRE) -- JAKKS Pacific, Inc. (NASDAQ:JAKK) today reported financial results for the third quarter and nine months ended September 30, 2024.
Third Quarter 2024 Overview
Net sales were $321.6 million, a year-over-year increase of 4%
Toys/Consumer Products net sales were $264.3 million, a year-over-year increase of 7%
Toys/Consumer Products net sales year-to-date are $451.8 million, a year-over-year decrease of 2%
Costumes net sales were $57.3 million, a year-over-year decrease of 10%
Costumes net sales year-to-date are $108.5 million, a year-over-year decrease of 11%
Gross margin of 33.8%, down 70 basis points vs. Q3 2023
Gross profit of $108.8 million, up 2% compared to $107.0 million in Q3 2023
Year-to-date gross profit of $177.5 million, down 6% compared to $189.6 million in the comparable period in 2023
Operating income of $68.1 million (21.2% of net sales) in Q3 2024 vs. $62.4 million (20.1% of net sales) in Q3 2023
Net income attributable to common stockholders of $52.3 million or $4.64 per diluted share, compared to net income attributable to common stockholders of $47.8 million or $4.53 per diluted share in Q3 2023
Adjusted net income attributable to common stockholders (a non-GAAP measure) of $54.0 million or $4.79 per diluted share, compared to adjusted net income attributable to common stockholders of $50.1 million or $4.75 per diluted share in Q3 2023
Adjusted EBITDA (a non-GAAP measure) of $74.4 million vs. $67.1 million in Q3 2023
Trailing twelve month Adjusted EBITDA of $58.5 million (8.5% of trailing twelve months net sales) down from $74.5 million (10.4% of net sales) in the trailing twelve months ended September 2023.
Management Commentary"We're pleased to share the results of a very strong third quarter. For many years, our largest shipping quarter has been the third driven by our focus on the FOB selling model. This year is no exception, with the US business having its biggest shipping quarter in ten years. The yearly plan is on track to reach its goals. With some difficult first-half revenue comparisons behind us, total company sales increased 4% year-over-year in the quarter. Our gross margins remained strong at 33.8%, and our overhead-related cost growth slowed to deliver quarterly operating margin of 21.2%, a slight improvement over last year. Each of our Toys/Consumer Products divisions delivered sales growth in the quarter. Dolls, Role Play/Dress-Up was up 5.5% to $146.9 million, Action Play & Collectibles was up 5.4% to $98.8 million and Outdoor/Seasonal Toys was up 42.4% to $18.7 million.
"Our Costumes business, as anticipated, reflected softness due to customers recalibrating to lower Halloween consumer demand for costumes versus prior year. Globally, Costumes were down 10.1% in the quarter and 11.3% year-to-date.
We are encouraged by some of the early consumer reactions to our new Fall 2024 products. We are now confident about finishing out this year as planned while building on retail momentum to deliver a robust 2025."
Additional Third Quarter and Year-to-Date 2024 HighlightsThe Toys/Consumer Products segment sales were up 7% globally (6.4% North America; 11.5% International) and sales of Disguise costumes were down 10% compared to last year (-11.6% North America; 6.5% International).
Year-to-date adjusted net income attributable to common stockholders (a non-GAAP measure) was $50.0 million ($4.50 per diluted share), compared to $59.4 million ($5.66 per diluted share) in the first nine months of 2023.
Year-to-date adjusted EBITDA of $69.4 million (12.4% of net sales) declined from $86.6 million (14.8% of net sales) in the comparable 2023 period.
Balance Sheet HighlightsThe Company's cash and cash equivalents (including restricted cash) totaled $22.3 million as of September 30, 2024 compared to $96.4 million as of September 30, 2023, and $72.6 million as of December 31, 2023.
Inventory was $63.5 million, compared to $68.8 million as of September 30, 2023 and $52.6 million as of December 31, 2023.
Use of Non-GAAP Financial Information and Reconciliation of GAAP to Non-GAAP measures:In addition to the preliminary results reported in accordance with U.S. GAAP included in this release, the Company has provided certain non-GAAP financial information including Adjusted EBITDA and Adjusted Net Income (Loss) that exclude various items that are detailed in the financial tables and accompanying footnotes reconciling GAAP to non-GAAP results contained in this release. The non-GAAP financial measures included in the press release are reconciled to the corresponding GAAP financial measures below, as required under the rules of the Securities and Exchange Commission regarding the use of non-GAAP financial measures.
We define Adjusted EBITDA as income (loss) from operations before depreciation, amortization and adjusted for certain non-recurring and non-cash charges, such as reorganization expenses and restricted stock compensation expense. Net income (loss) is similarly adjusted and tax-effected to arrive at Adjusted Net Income (Loss). Adjusted EBITDA and Adjusted Net Income (Loss) are not recognized financial measures under GAAP, but we believe that they are useful in measuring our operating performance, enhance an overall understanding of the Company's past financial performance, and provides useful information to the investor by comparing our performance across reporting periods on a consistent basis. Investors should not consider these measures in isolation or as a substitute for net income, operating income, or any other measure for determining the Company's operating performance that is calculated in accordance with GAAP. In addition, because these measures are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures employed by other companies.
The non-GAAP financial measures included in the press release are reconciled to the corresponding GAAP financial measures below, as required under the rules of the Securities and Exchange Commission regarding the use of non-GAAP financial measures. See "Use of Non-GAAP Financial Information" for additional disclosures with respect to the use of non-GAAP financial information.
Conference Call Live WebcastJAKKS Pacific, Inc. invites analysts, investors and media to listen to the teleconference scheduled for 5:00 p.m. ET / 2:00 p.m. PT on October 30, 2024. A live webcast of the call will be available on the "Investor Relations" page of the Company's website at www.jakks.com/investors. To access the call by phone, please go to this link (3Q24 Registration link), and you will be provided with dial-in details. To avoid delays, we encourage participants to dial into the conference call fifteen minutes ahead of the scheduled start time. A replay of the webcast will also be available for a limited time at (www.jakks.com/investors).
About JAKKS Pacific, Inc.JAKKS Pacific, Inc. is a leading designer, manufacturer and marketer of toys and consumer products sold throughout the world, with its headquarters in Santa Monica, California. JAKKS Pacific's popular proprietary brands include: AirTitans®, Disguise®, Fly Wheels®, JAKKS Wild Games®, Moose Mountain®, Maui®, Perfectly Cute®, ReDo® Skateboard Co., Sky Ball®, SportsZone™, Xtreme Power Dozer®, WeeeDo®, and Wild Manes™ as well as a wide range of entertainment-inspired products featuring premier licensed properties. Through our products and our charitable donations, JAKKS is helping to make a positive impact on the lives of children. Visit us at www.jakks.com and follow us on Instagram Twitter (@jakkstoys) and Facebook
Forward Looking StatementsThis press release may contain "forward-looking statements" (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations, estimates and projections about JAKKS Pacific's business based partly on assumptions made by its management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such statements due to numerous factors, including, but not limited to, those described above, changes in demand for JAKKS Pacific's products, product mix, the timing of customer orders and deliveries, the impact of competitive products and pricing, or that the Recapitalization transaction or any future transactions will result in future growth or success of JAKKS. The "forward-looking statements" contained herein speak only as of the date on which they are made, and JAKKS undertakes no obligation to update any of them to reflect events or circumstances after the date of this release.
CONTACT:
JAKKS Pacific Investor Relations
(424) 268-9567 Lucas
JAKKS Pacific, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
September 30,
December 31,
2024
2023
2023
(In thousands)
Assets
Current assets:
Cash and cash equivalents
$
22,070
$
96,252
$
72,350
Restricted cash
214
195
204
Accounts receivable, net
290,424
206,751
123,797
Inventory
63,509
68,832
52,647
Prepaid expenses and other assets
8,082
6,721
6,374
Total current assets
384,299
378,751
255,372
Property and equipment
144,072
135,821
135,956
Less accumulated depreciation and amortization
128,947
121,193
121,357
Property and equipment, net
15,125
14,628
14,599
Operating lease right-of-use assets, net
19,242
25,743
23,592
Deferred income tax assets, net
68,187
57,856
68,143
Goodwill
35,102
35,083
35,083
Other long-term assets
1,923
2,220
2,162
Total assets
$
523,878
$
514,281
$
398,951
Liabilities, Preferred Stock and Stockholders' Equity
Current liabilities:
Accounts payable
$
98,928
$
94,409
$
42,177
Accounts payable - Meisheng (related party)
35,011
27,977
12,259
Accrued expenses
71,748
65,609
45,102
Reserve for sales returns and allowances
40,837
43,512
38,531
Income taxes payable
-
17,422
3,785
Short term operating lease liabilities
7,405
6,415
7,380
Total current liabilities
253,929
255,344
149,234
Long term operating lease liabilities
14,536
19,283
16,666
Accrued expenses - long term
1,824
3,750
3,746
Preferred stock derivative liability
-
28,586
29,947
Income taxes payable
3,523
2,994
3,245
Total liabilities
273,812
309,957
202,838
Preferred stock accrued dividends
-
5,608
5,992
Stockholders' equity:
Common stock, $.001 par value
11
10
10
Additional paid-in capital
295,400
277,546
278,642
Accumulated deficit
(30,579
)
(62,744
)
(73,612
)
Accumulated other comprehensive loss
(15,266
)
(16,808
)
(15,627
)
Total JAKKS Pacific, Inc. stockholders' equity
249,566
198,004
189,413
Non-controlling interests
500
712
708
Total stockholders' equity
250,066
198,716
190,121
Total liabilities, preferred stock and stockholders' equity
$
523,878
$
514,281
$
398,951
Supplemental Balance Sheet and Cash Flow Data (Unaudited)
September 30,
Key Balance Sheet Data:
2024
2023
Accounts receivable days sales outstanding (DSO)
83
61
Inventory turnover (DSI)
27
31
Nine Months Ended September 30,
Condensed Cash Flow Data:
2024
2023
Cash flows provided by (used in) operating activities
$
(15,181
)
$
89,421
Cash flows used in investing activities
(8,989
)
(7,427
)
Cash flows used in financing activities and other
(26,100
)
(71,037
)
Increase in cash, cash equivalents and restricted cash
$
(50,270
)
$
10,957
Capital expenditures
$
(7,344
)
$
(7,464
)
JAKKS Pacific, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
Δ (%)
2024
2023
Δ (%)
(In thousands, except per share data)
(In thousands, except per share data)
Net sales
$
321,606
$
309,744
4
%
$
560,301
$
584,161
(4
)
%
Less: Cost of sales
Cost of goods
158,770
149,052
7
289,190
293,512
(1
)
Royalty expense
50,011
51,141
(2
)
86,181
95,074
(9
)
Amortization of tools and molds
3,994
2,566
56
7,462
5,955
25
Cost of sales
212,775
202,759
5
382,833
394,541
(3
)
Gross profit
108,831
106,985
2
177,468
189,620
(6
)
Direct selling expenses
7,552
10,684
(29
)
21,904
22,405
(2
)
General and administrative expenses
33,101
33,821
(2
)
100,887
92,492
9
Depreciation and amortization
95
81
17
275
276
-
Selling, general and administrative expenses
40,748
44,586
(9
)
123,066
115,173
7
Income from operations
68,083
62,399
9
54,402
74,447
(27
)
Other income (expense):
Loss from joint ventures
-
-
-
-
(565
)
nm
Other income (expense), net
84
(52
)
nm
294
424
(31
)
Change in fair value of preferred stock derivative liability
-
(793
)
nm
-
(6,668
