JAKK JAKKS Pacific Inc

Exhibit 99.1

 

JAKKS PACIFIC REPORTS THIRD QUARTER 2024 FINANCIAL RESULTS

Q3 Net Sales Increased 4% vs. prior year; Q3 Operating Income up 9% vs. prior year

 

SANTA MONICA, Calif., October 30, 2024 – 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%

o

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%

o

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

o

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

o

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 Highlights

The 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 Highlights

The 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 Webcast

JAKKS 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 (@jakkspacific.toys), Twitter (@jakkstoys) and Facebook (@jakkspacific.toys).

 

 

Forward Looking Statements

This 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 Natalini investors@jakks.net

 

 

 

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	)			nm
Loss on debt extinguishment			-				-				-				-				(1,023	)			nm
Interest income			69				384				(82	)			533				587				(9	)
Interest expense			(539	)			(1,436	)			(62	)			(938	)			(5,741	)			(84	)
Income before provision for income taxes			67,697				60,502				12				54,291				61,461				(12	)
Provision for income taxes			15,425				12,381				25				10,978				12,476				(12	)
Net income			52,272				48,121				9				43,313				48,985				(12	)
Net income (loss) attributable to non-controlling interests			-				(11	)			nm				280				(289	)			nm
Net income attributable to JAKKS Pacific, Inc.		$	52,272			$	48,132				9	%		$	43,033			$	49,274				(13	)%
Net income attributable to common stockholders		$	52,272			$	47,754				9	%		$	44,363			$	48,156				(8	)%
Earnings per share - basic		$	4.78			$	4.77							$	4.14			$	4.85
Shares used in earnings per share - basic			10,942				10,021								10,704				9,922
Earnings per share - diluted		$	4.64			$	4.53							$	3.99			$	4.58
Shares used in earnings per share - diluted			11,275				10,542								11,106				10,503

 

 

		Three Months Ended September 30,												Nine Months Ended September 30,
		2024				2023				Δ bps				2024				2023				Δ bps
										Fav/(Unfav)												Fav/(Unfav)
Net sales			100.0	%			100.0	%			-				100.0	%			100.0	%			-
Less: Cost of sales
Cost of goods			49.4				48.2				(120	)			51.6				50.2				(140	)
Royalty expense			15.6				16.5				90				15.4				16.3				90
Amortization of tools and molds			1.2				0.8				(40.0	)			1.3				1.0				(30	)
Cost of sales			66.2				65.5				(70	)			68.3				67.5				(80	)
Gross profit			33.8				34.5				(70	)			31.7				32.5				(80	)
Direct selling expenses			2.3				3.5				120				3.9				3.8				(10	)
General and administrative expenses			10.3				10.9				60				18.1				15.9				(220	)
Depreciation and amortization			-				-				-				-				0.1				10
Selling, general and administrative expenses			12.6				14.4				180				22.0				19.8				(220	)
Income from operations			21.2				20.1				110				9.7				12.7				(300	)
Other income (expense):
Loss from joint ventures			-				-								-				(0.1	)
Other income (expense), net			-				-								0.1				0.1
Change in fair value of preferred stock derivative liability			-				(0.3	)							-				(1.1	)
Loss on debt extinguishment			-				-								-				(0.2	)
Interest income			-				0.1								0.1				0.1
Interest expense			(0.2	)			(0.4	)							(0.2	)			(1.0	)
Income before provision for income taxes			21.0				19.5								9.7				10.5
Provision for income taxes			4.7				4.0								2.0				2.1
Net income			16.3				15.5								7.7				8.4
Net income (loss) attributable to non-controlling interests			-				-								-				-
Net income attributable to JAKKS Pacific, Inc.			16.3	%			15.5	%							7.7	%			8.4	%
Net income attributable to common stockholders			16.3	%			15.4	%							7.9	%			8.2	%

 

 

JAKKS Pacific, Inc. and Subsidiaries

Reconciliation of Non-GAAP Financial Information (Unaudited)

 

		Three Months Ended September 30,												Nine Months Ended September 30,
		2024				2023				Δ ($)				2024				2023				Δ ($)
		(In thousands)												(In thousands)
EBITDA and Adjusted EBITDA
Net income		$	52,272			$	48,121			$	4,151			$	43,313			$	48,985			$	(5,672	)
Interest expense			539				1,436				(897	)			938				5,741				(4,803	)
Interest income			(69	)			(384	)			315				(533	)			(587	)			54
Provision for income taxes			15,425				12,381				3,044				10,978				12,476				(1,498	)
Depreciation and amortization			4,089				4,398				(309	)			7,737				7,982				(245	)
EBITDA			72,256				65,952				6,304				62,433				74,597				(12,164	)
Adjustments:
Loss from joint ventures (JAKKS Pacific, Inc. - 51%)			-				-				-				-				276				(276	)
Loss from joint ventures (Meisheng - 49%)			-				-				-				-				289				(289	)
Other (income) expense, net			(84	)			52				(136	)			(294	)			(424	)			130
Restricted stock compensation expense			2,186				2,025				161				7,280				5,970				1,310
Change in fair value of preferred stock derivative liability			-				793				(793	)			-				6,668				(6,668	)
Loss on debt extinguishment			-				-				-				-				1,023				(1,023	)
Adjusted EBITDA		$	74,358			$	67,071			$	7,287			$	69,419			$	86,648			$	(17,229	)
Adjusted EBITDA/Net sales %			23.1	%			21.7	%		140 bps					12.4	%			14.8	%		-240 bps

 

 

		Trailing Twelve Months Ended September 30,
		2024				2023				Δ ($)
		(In thousands)
TTM EBITDA and TTM Adjusted EBITDA
TTM net income		$	32,441			$	87,094			$	(54,653	)
Interest expense			1,648				8,035				(6,387	)
Interest income			(1,290	)			(650	)			(640	)
Provision for (benefit from) income taxes			5,335				(41,855	)			47,190
Depreciation and amortization			10,091				9,934				157
TTM EBITDA			48,225				62,558				(14,333	)
Adjustments:
Loss from joint ventures (JAKKS Pacific, Inc. - 51%)			-				276				(276	)
Loss from joint ventures (Meisheng - 49%)			-				289				(289	)
Other (income) expense, net			(433	)			(701	)			268
Restricted stock compensation expense			9,337				7,616				1,721
Change in fair value of preferred stock derivative liability			1,361				5,239				(3,878	)
Molds and tooling capitalization			-				(1,751	)			1,751
Loss on debt extinguishment			-				1,023				(1,023	)
TTM Adjusted EBITDA		$	58,490			$	74,549			$	(16,059	)	(22	)%
TTM Adjusted EBITDA/TTM Net sales %			8.5	%			10.4	%		-190 bps

 

		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)
Adjusted net income attributable to common stockholders
Net income attributable to common stockholders		$	52,272			$	47,754			$	4,518			$	44,363			$	48,156			$	(3,793	)
Restricted stock compensation expense			2,186				2,025				161				7,280				5,970				1,310
Change in fair value of preferred stock derivative liability			-				793				(793	)			-				6,668				(6,668	)
Loss on debt extinguishment			-				-				-				-				1,023				(1,023	)
Loss from joint ventures (JAKKS Pacific, Inc. - 51%)			-				-				-				-				276				(276	)
2021 BSP Term Loan prepayment penalty			-				-				-				-				150				(150	)
Molds and Tooling capitalization			-				(1,751	)			1,751				-				(1,751	)			1,751
Tax impact of additional charges			(494	)			1,268				(1,762	)			(1,681	)			(1,079	)			(602	)
Adjusted net income attributable to common stockholders		$	53,964			$	50,089			$	3,875			$	49,962			$	59,413			$	(9,451	)
Adjusted earnings per share - basic & diluted		$	4.93			$	5.00			$	(0.07	)		$	4.67			$	5.99			$	(1.32	)
Shares used in adjusted earnings per share - basic			10,942				10,021				921				10,704				9,922				782
Adjusted earnings per share - diluted		$	4.79			$	4.75			$	0.04			$	4.50			$	5.66			$	(1.16	)
Shares used in adjusted earnings per share - diluted			11,275				10,542				733				11,106				10,503				603

 

 

JAKKS Pacific, Inc. and Subsidiaries

Net Sales by Division and Geographic Region

 

(In thousands)	QTD Q3																(In thousands)	YTD Q3
Divisions	2024			2023			2022			% Change 2024 v 2023			% Change 2023 v 2022				Divisions	2024			2023			2022			% Change 2024 v 2023			% Change 2023 v 2022
Toys/Consumer Products	$	264,306		$	246,004		$	269,607			7.4	%		-8.8	%		Toys/Consumer Products	$	451,786		$	461,831		$	529,590			-2.2	%		-12.8	%
Dolls, Role-Play/Dress Up		146,893			139,177			190,452			5.5	%		-26.9	%		Dolls, Role-Play/Dress Up		251,075			246,689			354,644			1.8	%		-30.4	%
Action Play & Collectibles		98,750			93,717			65,752			5.4	%		42.5	%		Action Play & Collectibles		168,313			184,134			134,620			-8.6	%		36.8	%
Outdoor/Seasonal Toys		18,663			13,110			13,403			42.4	%		-2.2	%		Outdoor/Seasonal Toys		32,398			31,008			40,326			4.5	%		-23.1	%
Costumes	$	57,300		$	63,740		$	53,391			-10.1	%		19.4	%		Costumes	$	108,515		$	122,330		$	134,711			-11.3	%		-9.2	%
Total	$	321,606		$	309,744		$	322,998			3.8	%		-4.1	%		Total	$	560,301		$	584,161		$	664,301			-4.1	%		-12.1	%
(In thousands)	QTD Q3																(In thousands)	YTD Q3
Regions	2024			2023			2022			% Change 2024 v 2023			% Change 2023 v 2022				Regions	2024			2023			2022			% Change 2024 v 2023			% Change 2023 v 2022
United States	$	255,278		$	244,931		$	253,854			4.2	%		-3.5	%		United States	$	451,545		$	461,561		$	543,388			-2.2	%		-15.1	%
Europe		30,034			31,676			38,075			-5.2	%		-16.8	%		Europe		46,033			58,476			65,911			-21.3	%		-11.3	%
Latin America		22,632			15,319			9,504			47.7	%		61.2	%		Latin America		33,867			27,590			15,712			22.8	%		75.6	%
Canada		7,068			11,453			12,804			-38.3	%		-10.6	%		Canada		16,726			22,306			21,720			-25.0	%		2.7	%
Asia		2,345			3,192			4,294			-26.5	%		-25.7	%		Asia		4,578			6,403			8,733			-28.5	%		-26.7	%
Australia & New Zealand		3,339			2,692			3,941			24.0	%		-31.7	%		Australia & New Zealand		6,292			6,056			7,014			3.9	%		-13.7	%
Middle East & Africa		910			481			526			89.2	%		-8.6	%		Middle East & Africa		1,260			1,769			1,823			-28.8	%		-3.0	%
Total	$	321,606		$	309,744		$	322,998			3.8	%		-4.1	%		Total	$	560,301		$	584,161		$	664,301			-4.1	%		-12.1	%
(In thousands)	QTD Q3																(In thousands)	YTD Q3
Regions	2024			2023			2022			% Change 2024 v 2023			% Change 2023 v 2022				Regions	2024			2023			2022			% Change 2024 v 2023			% Change 2023 v 2022
North America	$	262,346		$	256,384		$	266,658			2.3	%		-3.9	%		North America	$	468,271		$	483,867		$	565,108			-3.2	%		-14.4	%
International		59,260			53,360			56,340			11.1	%		-5.3	%		International		92,030			100,294			99,193			-8.2	%		1.1	%
Total	$	321,606		$	309,744		$	322,998			3.8	%		-4.1	%		Total	$	560,301		$	584,161		$	664,301			-4.1	%		-12.1	%

 

v3.24.3

Document And Entity Information	Oct. 30, 2024
Document Information Line Items
Entity Registrant Name	JAKKS PACIFIC, INC.
Trading Symbol	JAKK
Document Type	8-K
Amendment Flag	false
Entity Central Index Key	0001009829
Document Period End Date	Oct. 30, 2024
Entity Emerging Growth Company	false
Entity Incorporation, State or Country Code	DE
Entity File Number	0-28104
Entity Tax Identification Number	95-4527222
Entity Address, Address Line One	2951 28th Street
Entity Address, City or Town	Santa Monica
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90405
City Area Code	(424)
Local Phone Number	268-9444
Title of 12(b) Security	Common Stock, $.001 par value
Security Exchange Name	NASDAQ
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false

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