JAKKS Pacific(US:JAKK)2026-03-02 21:40Sales Performance - Net sales for the Toys/Consumer Products segment decreased by $108.1 million, or 19.0%, to $461.9 million in 2025 from $570.0 million in 2024, primarily due to a 24.0% decline in North America sales [151]. - Net sales for the Costumes segment decreased by $12.3 million, or 10.2%, to $108.7 million in 2025 from $121.0 million in 2024, driven by lower order levels from US customers [152]. - In Q1 2025, net sales were $113.3 million, representing 19.8% of the full year, while Q4 2025 net sales reached $127.1 million, accounting for 22.3% of the full year [167]. Cost of Sales - Cost of sales for the Toys/Consumer Products segment was $304.3 million, or 65.9% of related net sales in 2025, down from $389.5 million, or 68.3% in 2024, representing a decrease of $85.2 million or 21.9% [153]. - Cost of sales for the Costumes segment was $81.3 million, or 74.8% of related net sales in 2025, compared to $88.5 million, or 73.1% in 2024, reflecting a decrease of $7.2 million or 8.1% [154]. Expenses - Selling, general and administrative expenses were $170.9 million in 2025, constituting 29.9% of net sales, compared to $173.3 million, or 25.1% in 2024, a decrease of $2.4 million or 1.4% [155]. Financial Losses and Income - The company recognized a loss on debt extinguishment of $0.4 million in 2025 related to the early termination of a $67.5 million revolving credit facility [156]. - Interest income increased to $1.0 million in 2025 from $0.8 million in 2024, primarily due to money market investments [157]. - Interest expense decreased to $0.5 million in 2025 from $1.1 million in 2024, both related to borrowings from revolving credit facilities [158]. - The income tax expense for 2025 was $4.9 million, with an effective tax rate of 33.1%, compared to $5.5 million and 13.9% in 2024 [159][160]. - The company reported a net loss of $2.4 million in Q1 2025, which was 2.1% of net sales, and a net income of $19.9 million in Q4 2025, which was 9.4% of net sales [167]. Working Capital and Cash Flow - As of December 31, 2025, working capital increased to $121.0 million from $119.3 million in 2024 [169]. - Operating activities generated net cash of $8.5 million in 2025, down from $38.9 million in 2024, primarily due to lower net income and higher working capital usage [170]. - Cash and cash equivalents, including restricted cash, decreased to $54.1 million as of December 31, 2025, from $70.1 million in 2024 [180]. Contractual Obligations - The company has future minimum royalty guarantees of $189.8 million, with $57.4 million due in the next twelve months [170]. - Total contractual cash obligations as of December 31, 2025, amounted to $265.4 million, including operating leases and minimum guaranteed license payments [173]. Credit Facilities - The new BMO Credit Agreement provides a revolving credit facility of up to $70.0 million, maturing on June 24, 2030 [175]. - As of December 31, 2025, availability under the revolving facility was $68.3 million, providing flexibility for working capital and acquisitions [179]. - The maximum amount borrowed under the revolving credit facility during the twelve-month period ended December 31, 2025, was $8 million, with an average outstanding amount of $0.9 million [190]. - Total borrowings outstanding under the revolving credit facility as of December 31, 2025, was nil [190]. Market Risks - The company is exposed to market risks related to changes in foreign currency exchange rates, particularly as sales are denominated in U.S. dollars while operating expenses in various countries are in local currencies [191]. - The company has not used derivative instruments or engaged in hedging activities to minimize market risk to date [188]. - The company does not believe that inflation has had a material impact on net sales and income from continuing operations over the last three fiscal years [186]. - The company’s liquidity is significantly dependent on vendors and their financial health, as well as accurate demand forecasting [182]. - Interest rate risk is present due to fluctuations in connection with the Revolving Facility, with applicable margins ranging from 1.50% to 2.00% for SOFR loans [189]. Shareholder Actions - The company has not sold any shares of common stock under the ATM Agreement or self-registration statement [185]. - The company expects to file a new registration statement in the first or second quarter of 2026, following the expiration of the previous registration statement in 2025 [184].