JAKKS Pacific(US:JAKK)2025-10-31 10:34Sales Performance - Net sales for the Toys/Consumer Products segment decreased by $108.2 million, or 40.9%, to $156.1 million for the three months ended September 30, 2025, compared to $264.3 million in the prior year[131] - Net sales for the Costumes segment decreased by $2.2 million, or 3.8%, to $55.1 million for the three months ended September 30, 2025, compared to $57.3 million in the prior year[132] - For the nine months ended September 30, 2025, net sales for the Toys/Consumer Products segment decreased by $107.9 million, or 23.9%, to $343.9 million compared to $451.8 million in the prior year[137] Profitability - Gross profit for the Toys/Consumer Products segment was $51.6 million, representing 33.1% of net sales for the three months ended September 30, 2025, down from 34.9% in the prior year[130] - Net income for the three months ended September 30, 2025, was $9.4 million, or 9.4% of net sales, compared to $16.3 million, or 16.3% of net sales in the prior year[129] Expenses - Selling, general and administrative expenses were $38.3 million for the three months ended September 30, 2025, constituting 18.1% of net sales, up from 12.6% in the prior year[135] Tax and Financial Metrics - The effective tax rate increased to 33.1% for the three months ended September 30, 2025, compared to 22.8% in the prior year, primarily due to a change in the jurisdictional mix of earnings[136] Working Capital and Liquidity - Working capital increased by $14.6 million to $133.8 million as of September 30, 2025, compared to $119.3 million as of December 31, 2024[145] - Cash used in operating activities was $24.8 million for the nine months ended September 30, 2025, compared to $15.2 million in the prior year period, primarily due to lower net income[146] - Cash and cash equivalents, including restricted cash, were $27.8 million as of September 30, 2025, down from $70.1 million as of December 31, 2024[153] - The company’s liquidity is significantly dependent on cash flows from operations and borrowings under the revolving facility[154] Debt and Credit Facilities - The company entered into a new $70.0 million senior secured revolving credit facility with a maturity date of June 24, 2030, replacing the prior facility and providing improved pricing and liquidity flexibility[150] - As of September 30, 2025, availability under the revolving facility was $68.3 million, allowing the company to fund working capital, capital expenditures, acquisitions, and general corporate purposes[151] - Borrowings under the revolving facility bear interest at either Adjusted Term SOFR plus a margin of 1.50% to 2.00% or Base Rate plus a margin of 0.50% to 1.00%, exposing the company to interest rate risk[157] Off-Balance Sheet Arrangements - Off-balance sheet arrangements include letters of credit totaling $3.3 million, secured with cash as collateral[156] Dividends - The company declared a one-time dividend of $5.9 million from Canada to the U.S. during Q1 2024, incurring a 5% withholding tax[153] Foreign Currency and Risk - The company has subsidiaries in multiple countries, with sales generally made in U.S. dollars, but local expenses creating foreign currency risk[158] - The company’s cash flows from operations are influenced by product appeal, competitive conditions, and dependency on large customers, which could materially impact cash generation[155] Financial Covenants - Financial covenants require a minimum interest coverage ratio of 3.00 to 1.00 and a maximum total net leverage ratio of 2.00 to 1.00, with compliance as of June 30, 2025[150]