JAKKS Pacific(US:JAKK)2024-08-06 20:43Financial Performance - Net sales for Q2 2024 were $148.6 million, a decrease of 11% from $166.9 million in Q2 2023[9] - Gross profit for Q2 2024 was $47.6 million, down from $51.2 million in Q2 2023, resulting in a gross margin of 32%[9] - Net income for Q2 2024 was $5.3 million, compared to $6.2 million in Q2 2023, reflecting a decrease of 14.8%[9] - The company reported a basic earnings per share of $0.49 for Q2 2024, down from $0.62 in Q2 2023[9] - Net income attributable to common stockholders for the three months ended June 30, 2024, was $5.266 million, a decrease from $6.455 million for the same period in 2023, representing a decline of 18.3%[52] - Basic earnings per share available to common stockholders for the three months ended June 30, 2024, was $0.49, down from $0.62 in the prior year, reflecting a decrease of 20.97%[52] - The company reported a net loss attributable to common stockholders of $7.909 million for the six months ended June 30, 2024, compared to a profit of $402,000 for the same period in 2023[52] - For the three months ended June 30, 2024, the net income was $5.266 million, a decrease of 14.8% compared to $6.182 million in the same period of 2023[70] - The comprehensive income for the three months ended June 30, 2024, was $5.150 million, down 29.5% from $7.311 million in the same period of 2023[70] Assets and Liabilities - Total current assets decreased to $235.7 million as of June 30, 2024, from $255.4 million at the end of 2023[5] - Total liabilities decreased to $182.4 million as of June 30, 2024, from $202.8 million at the end of 2023[6] - Accounts receivable increased to $140.0 million as of June 30, 2024, from $123.8 million at the end of 2023[5] - The accumulated deficit increased to $(82.9) million as of June 30, 2024, compared to $(73.6) million at the end of 2023[10] - Total stockholders' equity increased to $195.9 million as of June 30, 2024, from $190.1 million at the end of 2023[7] - The company’s long-lived assets in the United States were valued at $19.24 million as of June 30, 2024, down from $21.21 million as of December 31, 2023[25] - The Company’s net accounts receivable increased to $140.0 million as of June 30, 2024, from $123.8 million as of December 31, 2023, representing a growth of 13.3%[35] Cash Flow and Financing - Cash flows from operating activities for the six months ended June 30, 2024, resulted in a net cash used of $27.7 million, compared to a net cash provided of $20.8 million for the same period in 2023[12] - The company reported a total adjustment of $(18.7) million in operating activities for the six months ended June 30, 2024[12] - The company incurred share-based compensation expenses of $5.1 million for the six months ended June 30, 2024, up from $3.9 million for the same period in 2023[12] - The company repurchased common stock for employee tax withholding amounting to $5.1 million during the six months ended June 30, 2024[12] - The cash, cash equivalents, and restricted cash at the end of the period were $17.9 million, down from $32.4 million at the end of June 30, 2023[12] - Working capital decreased by $32.2 million to $73.9 million as of June 30, 2024, primarily due to a $20.0 million cash payment for the redemption of outstanding preferred stock[106] - Financing activities used net cash of $20.1 million for the six months ended June 30, 2024, significantly lower than $70.4 million in the prior year, primarily due to preferred stock redemption[109] Segment Performance - Net sales for the Toys/Consumer Products segment decreased to $104.57 million in Q2 2024 from $117.93 million in Q2 2023, representing a decline of 11.5%[22] - Net sales for the Costumes segment decreased to $44.05 million in Q2 2024 from $48.99 million in Q2 2023, a decline of 10.0%[22] - Operating income from the Toys/Consumer Products segment fell to $9.71 million in Q2 2024 from $15.69 million in Q2 2023, a decrease of 38.1%[22] - The company reported a loss of $2.07 million from the Costumes segment in Q2 2024, compared to an income of $0.76 million in Q2 2023[22] - Net sales for the Toys/Consumer Products segment decreased by $28.3 million, or 13.1%, to $187.5 million for the six months ended June 30, 2024, compared to $215.8 million in the prior year[100] - Cost of sales for the Toys/Consumer Products segment was $132.6 million, or 70.7% of related net sales, for the six months ended June 30, 2024, compared to $146.3 million, or 67.8%, in the prior year[100] Tax and Compliance - The Company’s income tax expense for the three months ended June 30, 2024, was $2.3 million, reflecting an effective tax rate of 30.2%, up from $1.5 million and 19.3% in the same period of 2023[50] - The Company reported an income tax benefit of $4.4 million for the six months ended June 30, 2024, with an effective tax (benefit) rate of 33.2%[51] - The effective tax rate increased to 30.2% for the three months ended June 30, 2024, up from 19.3% in the prior year, primarily due to non-deductible compensation and foreign inclusions[99] - As of June 30, 2024, the Company was in compliance with the financial covenants under the JPMorgan ABL Credit Agreement[49] Strategic Initiatives - The company plans to continue focusing on new product development and market expansion strategies in the upcoming quarters[9] - The company plans to adopt ASU 2023-07 in the fourth quarter of 2024, which will enhance reportable segment disclosures[18] - The company is currently evaluating the impact of ASU 2023-09 on its financial statements, effective for fiscal years beginning after December 15, 2024[19] Other Notable Events - The company redeemed all outstanding shares of Series A Senior Preferred Stock on March 11, 2024, for a total of $20 million in cash and 571,295 common shares valued at $15 million[58] - The company dissolved its joint venture with Meisheng Culture & Creative Corp. Ltd. on May 10, 2023, which previously accounted for 51% ownership[68] - There were no goodwill impairments reported for the six months ended June 30, 2024, as the fair values of the reporting units were determined to be above their carrying amounts[69] - The company has not entered into foreign currency hedging transactions, exposing it to exchange rate fluctuations[118]