JAKKS Pacific(JAKK)2025-03-06 21:02Sales Performance - Net sales for the Toys/Consumer Products segment decreased by $10.7 million, or 1.8%, to $570.0 million in 2024 from $580.7 million in 2023[156]. - Net sales for the Costumes segment decreased by $9.9 million, or 7.6%, to $121.0 million in 2024 from $130.9 million in 2023, primarily due to US customers recalibrating their order levels[157]. - Net sales for 2024 totaled $690.042 million, with the third quarter contributing the highest at $321.606 million, representing 46.5% of total sales[174]. - Net sales for 2024 were $691,042 thousand, a decrease of 2.1% from $711,557 thousand in 2023[217]. - Major customers accounted for 64.4% of total net sales in 2024, with Target® contributing $204,396 (29.6%) and Walmart® $166,943 (24.2%)[282]. - The United States generated $545,013 in net sales in 2024, representing a decline of 2.3% from $557,865 in 2023[281]. Profitability - The gross profit margin for the company decreased to 30.8% in 2024 from 31.4% in 2023[154]. - Gross profit for 2024 was $313.021 million, with a gross margin of 45.4% compared to 44.5% in 2023[174]. - Gross profit for 2024 was $213,021, down from $223,353 in 2023, reflecting a gross margin of approximately 30.8%[279]. - Net income attributable to JAKKS Pacific, Inc. was 4.9% of net sales in 2024, down from 5.4% in 2023[154]. - Net income attributable to JAKKS Pacific, Inc. for 2024 was $33,920 thousand, compared to $38,406 thousand in 2023, representing a decline of 11.5%[217]. - Comprehensive income attributable to JAKKS Pacific, Inc. for 2024 was $32,363 thousand, compared to $40,261 thousand in 2023, a decrease of 19.7%[220]. - The company recorded a net loss of $14.225 million in Q1 2024, representing a net loss margin of 15.8%[174]. - Net income for the year ended December 31, 2024, was $34.2 million, a decrease of 10.1% from $38.1 million in 2023 and a significant drop from $91.1 million in 2022[225]. Expenses - Selling, general and administrative expenses increased to $173.3 million in 2024, constituting 25.1% of net sales, up from $164.2 million, or 23.1% in 2023[160]. - Cost of sales for the Toys/Consumer Products segment increased to $389.5 million, or 68.3% of related net sales in 2024, compared to $388.3 million, or 66.9% in 2023[158]. - Cost of sales for the Costumes segment decreased to $88.5 million, or 73.1% of related net sales in 2024, down from $99.9 million, or 76.3% in 2023[159]. - Interest income decreased to $0.8 million in 2024 from $1.3 million in the prior year, primarily due to money market investments[163]. - Interest expense decreased to $1.1 million in 2024 from $6.5 million in 2023, primarily due to lower borrowing costs[164]. - The company reported a royalty expense of $106,804 thousand in 2024, down from $117,607 thousand in 2023, a reduction of 9.7%[217]. - Stock-based compensation expense increased to $9.5 million in 2024 from $8.0 million in 2023[225]. - Advertising expenses for the year ended December 31, 2024, were approximately $13.8 million, compared to $13.2 million in 2023[257]. Cash Flow and Working Capital - Operating activities generated net cash of $38.9 million in 2024, down from $66.4 million in 2023, attributed to lower net income and higher working capital usage[177]. - The company has a working capital of $119.3 million as of December 31, 2024, an increase from $106.1 million in 2023[176]. - Cash and cash equivalents decreased to $69,936 thousand in 2024 from $72,350 thousand in 2023, a decline of 3.9%[215]. - Cash, cash equivalents, and restricted cash at the end of 2024 were $70.1 million, a decrease from $72.6 million in 2023[225]. - Total cash provided by operating activities for 2024 was $38.9 million, down from $66.4 million in 2023[225]. Debt and Obligations - The company recorded a loss on debt extinguishment of $1.0 million in June 2023 related to the 2021 BSP Term Loan[161]. - The company fully paid off its 2021 BSP Term Loan on June 5, 2023, with a total prepayment of $30.2 million, including a loss on debt extinguishment of $1.0 million[184]. - Total contractual cash obligations as of December 31, 2024, are $151.9 million, including operating leases and minimum guaranteed license payments[180]. - The Company had a first-lien secured term loan of $99.0 million, with net proceeds of $96.3 million after fees, and it was fully paid off on June 5, 2023[294][302]. - As of December 31, 2024, the Company had no outstanding borrowings under the JPMorgan ABL Facility, with total excess borrowing availability of $61.2 million[311]. Taxation - Income tax expense for 2024 was $5.5 million, with an effective tax rate of 13.9%, compared to $6.8 million and 15.2% in 2023[165][166]. - The effective tax rate for 2024, excluding discrete tax benefits, was 17.4%, compared to 21.3% in 2023[165][166]. - The provision for income taxes for 2024 was an expense of $5.5 million, with an effective tax rate of 13.9%[317]. - The effective tax rate for 2023 was 15.2%, with a provision for income taxes of $6.8 million[319]. - The Company had net deferred tax assets of $70.4 million as of December 31, 2024, compared to $68.1 million in 2023[319]. Assets and Liabilities - Total assets increased to $444,869 thousand in 2024 from $398,951 thousand in 2023, marking a growth of 11.5%[215]. - Total liabilities rose slightly to $204,036 thousand in 2024 from $202,838 thousand in 2023, an increase of 0.6%[215]. - The Company’s accumulated deficit improved to $(39,692) thousand in 2024 from $(73,612) thousand in 2023, indicating a reduction in losses[215]. - The Company’s total liabilities decreased to $57.7 million in 2024 from $63.0 million in 2023[223]. - As of December 31, 2024, accrued expenses totaled $48.5 million, an increase from $45.1 million in 2023, with royalties accounting for $25.9 million[292]. Market Risks - The company is exposed to market risks related to changes in foreign currency exchange rates and interest rates, particularly due to its operations in China[198]. - The company has not engaged in derivative instruments or hedging activities to minimize its market risk[198]. - The Company’s primary currency translation exposures are related to investments in subsidiaries with functional currencies such as the Hong Kong Dollar and Euro[261]. Segment Information - The Company’s segments include Toys/Consumer Products and Costumes, with performance measured at the operating income level[273][276]. - The Toys/Consumer Products segment encompasses a diverse range of products including action figures, dolls, and electronic products[274]. - The Costumes segment, marketed under the Disguise brand, focuses on everyday and special occasion costumes[275].