JAKKS Pacific(JAKK)2024-03-15 15:09Sales Performance - Net sales for the Toys/Consumer Products segment decreased by $66.6 million, or 10.3%, to $580.7 million in 2023 from $647.3 million in 2022[154]. - Net sales for the Costumes segment decreased by $18.0 million, or 12.1%, to $130.9 million in 2023 from $148.9 million in 2022[155]. - Net sales for 2023 were $711,557,000, a decrease of 10.6% from $796,187,000 in 2022[212]. - Major customer Target accounted for 30.3% of net sales in 2023, increasing from 25.5% in 2022[275]. - The Toys/Consumer Products segment generated $580.7 million in sales for 2023, down from $647.3 million in 2022, a decline of 10.3%[273]. Cost of Sales - Cost of sales for the Toys/Consumer Products segment was $388.3 million, or 66.9% of related net sales in 2023, down from $465.4 million, or 71.9%, in 2022, representing a decrease of $77.1 million or 16.6%[156]. - Cost of sales for the Costumes segment was $99.9 million, or 76.3% of related net sales in 2023, compared to $119.5 million, or 80.3%, in 2022, representing a decrease of $19.6 million or 16.4%[157]. - For the year ended December 31, 2023, the cost of sales related to license agreement royalties was $117.6 million, with accrued royalties amounting to $23.6 million[204]. Expenses - Selling, general and administrative expenses increased to $164.2 million in 2023, constituting 23.1% of net sales, up from $150.0 million or 18.8% in 2022[158]. - The company incurred stock-based compensation expenses of $8.027 million in 2023, an increase from $5.082 million in 2022[219]. - Advertising expenses were approximately $13.2 million in 2023, down from $14.3 million in 2022[250]. - Shipping and handling costs increased to $8.6 million in 2023 from $7.7 million in 2022[238]. Income and Profitability - Net income attributable to JAKKS Pacific, Inc. was 5.4% in 2023, down from 11.5% in 2022[152]. - Net income attributable to JAKKS Pacific, Inc. was $38,406,000 in 2023, compared to $91,413,000 in 2022, indicating a decline of 57.9%[212]. - Net income for the year ended December 31, 2023, was $38.113 million, a decrease of 58% compared to $91.083 million in 2022[219]. - The company reported a comprehensive income of $39,968,000 for 2023, down from $86,553,000 in 2022[213]. - Earnings per share (basic) for 2023 was $3.70, a decrease from $9.33 in 2022[212]. - Net income attributable to common stockholders for 2023 was $36.9 million, a decrease of 59% from $90.0 million in 2022[261]. - Earnings per share available to common stockholders for 2023 was $3.70, down from $9.33 in 2022, reflecting a 60% decline[261]. Cash Flow and Working Capital - In 2023, net cash provided by operating activities was $66.4 million, a decrease from $86.1 million in 2022, primarily due to lower net income and higher working capital usage[173]. - The company had working capital of $106.1 million as of December 31, 2023, compared to $101.9 million as of December 31, 2022[172]. - Cash flows from operating activities for 2023 were $66.404 million, down from $86.099 million in 2022[219]. - Cash and cash equivalents decreased to $72,350,000 in 2023 from $85,297,000 in 2022, a decline of 15.1%[210]. - The balance of cash and cash equivalents held outside the United States was $21.5 million as of December 31, 2023, down from $39.4 million in 2022[228]. Assets and Liabilities - Total current assets decreased to $255,372,000 in 2023 from $275,211,000 in 2022, primarily due to a reduction in cash and inventory[210]. - Total liabilities decreased significantly to $202,838,000 in 2023 from $254,154,000 in 2022, a reduction of 20.2%[210]. - The Company’s total assets as of December 31, 2023, were $398.9 million, a slight decrease from $405.3 million in 2022[273]. - The total stockholders' equity increased to $190,121,000 in 2023 from $146,698,000 in 2022, reflecting a growth of 29.6%[210]. Taxation - The effective tax rate for 2023 was 15.2%, with a tax expense of $6.8 million, including a discrete tax benefit of $2.7 million[162]. - The income tax benefit for 2022 was $41.0 million, resulting in an effective tax rate of (81.9)%, with a discrete tax benefit of $49.8 million primarily from a valuation allowance release[163]. - The provision for income taxes for 2023 was an expense of $6.8 million, reflecting an effective tax rate of 15.2%[323]. - The effective tax rate for 2023 was 15.2%, a significant improvement from the effective tax rate of (81.9)% in 2022[327]. Debt and Financing - The company made a total of $30.2 million in prepayments towards the 2021 BSP Term Loan, including a $1.0 million loss on debt extinguishment recognized in the consolidated statements of operations[181]. - The Company entered into a $99.0 million first-lien secured term loan in June 2021, with net proceeds of $96.3 million after fees[297]. - The 2021 BSP Term Loan bears interest at LIBOR plus 6.50% - 7.00%, subject to a 1.00% LIBOR floor, and matures in June 2027[298]. - In January 2023, the Company amended its 2021 BSP Term Loan Agreement to transition the interest reference rate from LIBOR to SOFR, effective April 1, 2023[299]. - As of December 31, 2023, the total excess borrowing availability under the JPMorgan ABL Credit Agreement was $53.3 million[314]. - The weighted average interest rate on the JPMorgan ABL Credit Facility was 6.77% as of December 31, 2023, compared to 1.88% in 2022[309]. Joint Ventures and Other Agreements - The joint venture with Meisheng Culture & Creative Corp. was dissolved on May 10, 2023, with a non-controlling interest loss of $293,000 for the year ended December 31, 2023[277]. - The joint venture with Hong Kong Meisheng Cultural Company Limited was dissolved on December 1, 2023, with no income or loss reported for the years ended December 31, 2023, 2022, and 2021[278]. Market Risks - The company is exposed to market risks related to changes in foreign currency exchange rates, particularly due to operations in multiple countries[193]. - The company has not used derivative instruments or engaged in hedging activities to minimize market risk to date[193]. - The company anticipates that significant outbreaks of contagious diseases could materially impact its business operations and results[165].