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JAKKS Pacific Reports Fourth Quarter and Full-Year 2024 Financial Results

1. Q4 net sales increased 3%, with Costumes sales surging 46%. 2. Operating loss improved to $14.7M, with adjusted loss easing. 3. Full-year net sales fell 3% and operating income declined 33%. 4. Board approved a 25¢ quarterly dividend with a focus on international growth. 5. Debt-free status and FOB expansion highlight structural strengths.

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FAQ

Why Neutral?

The mixed results – modest Q4 gains and dividend initiation offset by full‐year declines – suggest a balanced view. Similar earnings reports in the toy industry have often led to cautious market responses.

How important is it?

While dividend and debt-free status are positive, the overall mixed financials and full-year declines indicate moderate impact on stock price, with benefits likely unfolding over time.

Why Long Term?

Strategic moves like eliminating debt, launching dividends, and international expansion will influence performance over time rather than causing an immediate surge.

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MATHAS
SANTA MONICA, Calif., Feb. 20, 2025 (GLOBE NEWSWIRE) -- JAKKS Pacific, Inc. (Nasdaq: JAKK) today reported financial results for the fourth quarter and fiscal year ended December 31, 2024. Fourth Quarter 2024 Net sales were $130.7 million, a year-over-year increase of 3% Toys/Consumer Products net sales were $118.2 million, a year-over-year decrease of 1%Costumes net sales were $12.5 million, a year-over-year increase of 46% Gross margin of 27.2%, up 70 basis points vs. Q4 2023Gross profit of $35.6 million, up 5% compared to $33.7 million in Q4 2023Operating loss of $14.7 million in Q4 2024, an improvement of $0.6 million vs. a loss of $15.3 million in Q4 2023Net loss attributable to common stockholders of $9.1 million or $0.83 per diluted share, compared to net loss attributable to common stockholders of $11.3 million or $1.12 per diluted share in Q4 2023Adjusted net loss attributable to common stockholders (a non-GAAP measure) of $7.4 million or $0.67 per diluted share, compared to adjusted net loss attributable to common stockholders of $10.5 million or $1.04 per diluted share in Q4 2023Adjusted EBITDA (a non-GAAP measure) of $(10.2) million vs. $(10.9) million in Q4 2023, an improvement of $0.8 million Full-Year 2024 Net sales were $691.0 million compared to $711.6 million last year, a 3% decrease Toys/Consumer Products net sales were $570.0 million, a year-over-year decrease of 2%Costumes net sales were $121.0 million, a year-over-year decrease of 8% Gross margin of 30.8% compared to 31.4% last yearGross profit of $213.0 million, down 5% compared to $223.4 million last yearOperating income of $39.7 million compared to $59.1 million last year; a 33% decreaseNet income attributable to common stockholders of $35.3 million, down from a net income attributable to common stockholders of $36.9 million in 2023Adjusted net income attributable to common stockholders of $42.6 million ($3.79 per diluted share), down from adjusted net income attributable to common stockholders of $48.9 million ($4.62 per diluted share) in 2023Adjusted EBITDA of $59.3 million, down from $75.7 million in 2023Cash flows provided by operating activities of $38.9 million, down from $66.4 million in 2023Cash used in financing activities of $28.5 million, eliminating all preferred shareholders in the first half of 2024End of year cash and cash equivalents of $70.1 million, down from $72.6 million in 2023 Management Commentary“As we leave 2024, we are pleased with both the financial results we have achieved and the foundation we have established. We are a debt-free company with a strong portfolio of exceptional evergreen product categories and licenses led by a world-class team as we embark on the next chapter for JAKKS Pacific. Our company marked the 30th anniversary of its founding last month. Five years ago, we were trying to find our footing coming out of a painful restructuring exercise and processing the looming implications of what would become the COVID pandemic. The first quarter of this year represents the first time in fifteen years that we have started a year unencumbered by long-term debt or other obligations restricting our ability to share our successes directly with our common stock shareholders. As we consider our progress with initiatives like international expansion, partnering with the best global licensors and retailers and expanding and diversifying our product lines, we are excited for the future and what we see as a clear path forward for continued success. As a reflection of this optimism, our Board this week approved the initiation of a quarterly cash dividend of 25 cents per share payable on March 31, 2025, to shareholders of record as of March 3, 2025. On a full-year basis, this would equate to a dollar per share. It is our intention to maintain this dividend going forward on a quarterly basis, recalibrating when we deem it prudent. Our fourth quarter results were roughly in line with our expectations. The business is measured in the context of full-year results with significant seasonality drivers of Halloween and Christmas. We always encourage customers to embrace our FOB selling model to leverage their larger and more efficient logistic operations. This approach translates to the majority of our sales taking place in the second and third quarters and not the underlying consumer behavior in those quarters. We were pleased to see our FOB business reach a global level of over 75% of our worldwide sales in 2024, a level we haven’t achieved in many years. Continuing the trend from Q3, Q4 reflected modest sales growth of 3% versus the prior year as our second half performance has benefited from the timing of the entertainment releases we have supported this year vs. 2023. Although our Costumes business finished the year down 8%, it grew Internationally to its highest level yet despite unfavorable industry conditions in Europe. Our gross margins improved in the quarter vs. last year and finished the full year at 30.8%. We also continued to see improved overhead cost containment versus the prior year, while we reallocated more resources towards Q4 media spend in an effort to capture more consumer attention and drive sell-through. At retail, anchored by two strong film releases, we saw aggregate Toy/CP point-of-sale (POS) data up mid-single digits at our three largest US accounts vs. Q4 2023. That improved our full-year results to being down mid-single digits at those same accounts – and we exited the year with lower inventory levels at those accounts for the second year in a row.” Other Financial HighlightsSales in North America were down 3% in the quarter and 3% on a full-year basis compared to the previous year. Sales outside of North America were up 25% in the quarter, led by Europe. On a full-year basis, the business outside of North America was down 1%. The Company’s cash and cash equivalents (including restricted cash) totaled $70.1 million as of December 31, 2024, compared to $72.6 million as of December 31, 2023, despite utilizing $20 million in cash in March as part of the transaction eliminating the company’s preferred stock. Inventory was $52.8 million as of December 31, 2024, compared to $52.6 million as of December 31, 2023. Use of Non-GAAP Financial Information and Reconciliation of GAAP to Non-GAAP measures:In addition to the preliminary results reported in accordance with U.S. GAAP included in this release, the Company has provided certain non-GAAP financial information including Adjusted EBITDA and Adjusted Net Income (Loss) that exclude various items that are detailed in the financial tables and accompanying footnotes reconciling GAAP to non-GAAP results contained in this release. The non-GAAP financial measures included in the press release are reconciled to the corresponding GAAP financial measures below, as required under the rules of the Securities and Exchange Commission regarding the use of non-GAAP financial measures. We define Adjusted EBITDA as income (loss) from operations before depreciation, amortization and adjusted for certain non-recurring and non-cash charges, such as reorganization expenses and restricted stock compensation expense. Net income (loss) is similarly adjusted and tax-effected to arrive at Adjusted Net Income (Loss). Adjusted EBITDA and Adjusted Net Income (Loss) are not recognized financial measures under GAAP, but we believe that they are useful in measuring our operating performance, enhance an overall understanding of the Company’s past financial performance, and provides useful information to the investor by comparing our performance across reporting periods on a consistent basis. Investors should not consider these measures in isolation or as a substitute for net income, operating income, or any other measure for determining the Company’s operating performance that is calculated in accordance with GAAP. In addition, because these measures are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures employed by other companies. The non-GAAP financial measures included in the press release are reconciled to the corresponding GAAP financial measures below, as required under the rules of the Securities and Exchange Commission regarding the use of non-GAAP financial measures. See “Use of Non-GAAP Financial Information” for additional disclosures with respect to the use of non-GAAP financial information. Conference Call Live WebcastJAKKS Pacific, Inc. invites analysts, investors and media to listen to the teleconference scheduled for 5:00 p.m. ET / 2:00 p.m. PT on February 20, 2025. A live webcast of the call will be available on the “Investor Relations” page of the Company’s website at www.jakks.com/investors. To access the call by phone, please go to this link (4Q24 Registration link), and you will be provided with dial-in details. To avoid delays, we encourage participants to dial into the conference call fifteen minutes ahead of the scheduled start time. A replay of the webcast will also be available for a limited time at (www.jakks.com/investors). About JAKKS Pacific, Inc.JAKKS Pacific, Inc. is a leading designer, manufacturer and marketer of toys and consumer products sold throughout the world, with its headquarters in Santa Monica, California. JAKKS Pacific’s popular proprietary brands include: AirTitans®, Disguise®, Fly Wheels®, JAKKS Wild Games®, Moose Mountain®, Maui®, Perfectly Cute®, ReDo® Skateboard Co., Sky Ball®, SportsZone™, Xtreme Power Dozer®, WeeeDo®, and Wild Manes™ as well as a wide range of entertainment-inspired products featuring premier licensed properties. Through our products and our charitable donations, JAKKS is helping to make a positive impact on the lives of children. Visit us at www.jakks.com and follow us on Instagram (@jakkspacific.toys), Twitter (@jakkstoys) and Facebook (@jakkspacific.toys). Forward Looking StatementsThis press release may contain “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations, estimates and projections about JAKKS Pacific's business based partly on assumptions made by its management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such statements due to numerous factors, including, but not limited to, those described above, changes in demand for JAKKS Pacific's products, product mix, the timing of customer orders and deliveries, the impact of competitive products and pricing, or that the Recapitalization transaction or any future transactions will result in future growth or success of JAKKS. The “forward-looking statements” contained herein speak only as of the date on which they are made, and JAKKS undertakes no obligation to update any of them to reflect events or circumstances after the date of this release.  JAKKS Pacific, Inc. and SubsidiariesCondensed Consolidated Balance Sheets (Unaudited)              December 31,       2024    2023       (In thousands) Assets  Current assets:       Cash and cash equivalents $69,936   $72,350   Restricted cash  201    204   Accounts receivable, net  131,629    123,797   Inventory  52,780    52,647   Prepaid expenses and other assets  14,141    6,374    Total current assets  268,687    255,372            Property and equipment  142,623    135,956  Less accumulated depreciation and amortization  126,981    121,357   Property and equipment, net  15,642    14,599            Operating lease right-of-use assets, net  53,254    23,592  Deferred income tax assets, net  70,394    68,143  Goodwill  35,111    35,083  Other long-term assets  1,781    2,162    Total assets $444,869   $398,951                      Liabilities, Preferred Stock and Stockholders' Equity             Current liabilities:       Accounts payable $42,560   $42,177   Accounts payable - Meisheng (related party)  13,461    12,259   Accrued expenses  48,456    45,102   Reserve for sales returns and allowances  35,817    38,531   Income taxes payable  1,035    3,785   Short-term operating lease liabilities  8,091    7,380    Total current liabilities  149,420    149,234            Long-term operating lease liabilities  48,433    16,666  Accrued expenses - long-term  2,563    3,746  Preferred stock derivative liability  -    29,947  Income taxes payable  3,620    3,245    Total liabilities  204,036    202,838            Preferred stock accrued dividends  -    5,992            Stockholders' equity:       Common stock, $.001 par value  11    10   Additional paid-in capital  297,198    278,642   Accumulated deficit  (39,692)   (73,612)  Accumulated other comprehensive loss  (17,184)   (15,627)   Total JAKKS Pacific, Inc. stockholders' equity  240,333    189,413   Non-controlling interests  500    708    Total stockholders' equity  240,833    190,121    Total liabilities, preferred stock and stockholders' equity $444,869   $398,951                      Supplemental Balance Sheet and Cash Flow Data (Unaudited)                 December 31, Key Balance Sheet Data:  2024    2023            Accounts receivable days sales outstanding (DSO)  93    89  Inventory turnover (DSI)  51    52                 Twelve Months Ended December 31, Condensed Cash Flow Data:  2024    2023            Cash flows provided by operating activities $38,947   $66,404  Cash flows used in investing activities  (12,889)   (8,907) Cash flows used in financing activities and other  (28,475)   (70,433) Decrease in cash, cash equivalents and restricted cash $(2,417)  $(12,936)           Capital expenditures $(11,246)  $(8,906)                   JAKKS Pacific, Inc. and Subsidiaries    Condensed Consolidated Statements of Operations (Unaudited)     Three Months Ended December 31,    Twelve Months Ended December 31,                   2024    2023  Δ (%)   2024    2023  Δ (%)     (In thousands, except per share data)    (In thousands, except per share data)                       Net sales$130,741   $127,396  3 % $691,042   $711,557  (3)% Less: Cost of sales                 Cost of goods 72,373    68,866  5    361,563    362,378  (0)   Royalty expense 20,623    22,533  (8)   106,804    117,607  (9)   Amortization of tools and molds 2,192    2,264  (3)   9,654    8,219  17    Cost of sales 95,188    93,663  2    478,021    488,204  (2)    Gross profit 35,553    33,733  5    213,021    223,353  (5)  Direct selling expenses 18,201    14,582  25    40,105    36,987  8   General and administrative expenses 31,953    34,401  (7)   132,840    126,893  5   Depreciation and amortization 117    90  30    392    366  7    Selling, general and administrative expenses 50,271    49,073  2    173,337    164,246  6     Income (loss) from operations (14,718)   (15,340) (4)   39,684    59,107  (33)  Other income (expense):                 Loss from joint ventures -    -  -    -    (565) nm    Other income (expense), net 8    139  (94)   302    563  (46)   Change in fair value of preferred stock derivative liability -    (1,361) nm    -    (8,029) nm    Loss on debt extinguishment -    -  -    -    (1,023) nm    Interest income 308    757  (59)   841    1,344  (37)   Interest expense (157)   (710) (78)   (1,095)   (6,451) (83)  Income (loss) before provision for (benefit from) income taxes (14,559)   (16,515) (12)   39,732    44,946  (12)  Provision for (benefit from) income taxes (5,446)   (5,643) (3)   5,532    6,833  (19)  Net income (loss) (9,113)   (10,872) (16)   34,200    38,113  (10)  Net income (loss) attributable to non-controlling interests -    (4) nm    280    (293) nm   Net income (loss) attributable to JAKKS Pacific, Inc.$(9,113)  $(10,868) (16)% $33,920   $38,406  (12)% Net income (loss) attributable to common stockholders$(9,113)  $(11,252) (19)% $35,250   $36,904  (4)%  Earnings (loss) per share - basic$(0.83)  $(1.12)    $3.27   $3.70      Shares used in earnings (loss) per share - basic 11,008    10,084      10,781    9,962      Earnings (loss) per share - diluted$(0.83)  $(1.12)    $3.14   $3.48      Shares used in earnings (loss) per share - diluted 11,008    10,084      11,226    10,590                           Three Months Ended December 31,    Twelve Months Ended December 31,                   2024    2023  Δ bps   2024    2023  Δ bps          Fav/(Unfav)      Fav/(Unfav) Net sales 100.0 %  100.0 %-    100.0 %  100.0 %-   Less: Cost of sales                 Cost of goods 55.3    54.0  (130)   52.3    50.9  (140)   Royalty expense 15.8    17.7  190    15.5    16.5  100    Amortization of tools and molds 1.7    1.8  10    1.4    1.2  (20)   Cost of sales 72.8    73.5  70    69.2    68.6  (60)    Gross profit 27.2    26.5  70    30.8    31.4  (60)  Direct selling expenses 13.9    11.4  (250)   5.8    5.2  (60)  General and administrative expenses 24.5    27.0  250    19.2    17.8  (140)  Depreciation and amortization 0.1    0.1  -    0.1    0.1  -    Selling, general and administrative expenses 38.5    38.5  0    25.1    23.1  (200)    Income (loss) from operations (11.3)   (12.0) 70    5.7    8.3  (260)  Other income (expense):                 Loss from joint ventures -    -      -    (0.1)     Other income (expense), net -    0.1      0.1    0.1      Change in fair value of preferred stock derivative liability -    (1.1)     -    (1.1)     Loss on debt extinguishment -    -      -    (0.1)     Interest income 0.2    0.6      0.1    0.2      Interest expense (0.1)   (0.6)     (0.2)   (0.9)    Income (loss) before provision for (benefit from) income taxes (11.2)   (13.0)     5.7    6.4     Provision for (benefit from) income taxes (4.2)   (4.5)     0.8    1.0     Net income (loss) (7.0)   (8.5)     4.9    5.4     Net income (loss) attributable to non-controlling interests -    -      -    -     Net income (loss) attributable to JAKKS Pacific, Inc. (7.0)%  (8.5)%    4.9 %  5.4 %   Net income (loss) attributable to common stockholders (7.0)%  (8.8)%    5.1 %  5.2 %                        JAKKS Pacific, Inc. and SubsidiariesReconciliation of Non-GAAP Financial Information (Unaudited)                      Three Months Ended December 31,     Twelve Months Ended December 31,        2024   2023  Δ ($)    2024   2023  Δ ($)   (In thousands)     (In thousands)   EBITDA and Adjusted EBITDA               Net income (loss) $(9,113) $(10,872) $1,759    $34,200  $38,113  $(3,913) Interest expense  157   710   (553)    1,095   6,451   (5,356) Interest income  (308)  (757)  449     (841)  (1,344)  503  Provision for (benefit from) income taxes  (5,446)  (5,643)  197     5,532   6,833   (1,301) Depreciation and amortization  2,309   2,354   (45)    10,046   10,336   (290) EBITDA  (12,401)  (14,208)  1,807     50,032   60,389   (10,357) Adjustments:               Loss from joint ventures (JAKKS Pacific, Inc. - 51%)  -   -   -     -   276   (276) Loss from joint ventures (Meisheng - 49%)  -   -   -     -   289   (289) Other (income) expense, net  (8)  (139)  131     (302)  (563)  261  Restricted stock compensation expense  2,255   2,057   198     9,535   8,027   1,508  Change in fair value of preferred stock derivative liability  -   1,361   (1,361)    -   8,029   (8,029) Molds and tooling capitalization  -   -   -     -   (1,751)  1,751  Loss on debt extinguishment  -   -   -     -   1,023   (1,023) Adjusted EBITDA $(10,154) $(10,929) $775    $59,265  $75,719  $(16,454) Adjusted EBITDA/Net sales %  (7.8)% (8.6)%80 bps    8.6 % 10.6 %-200 bps                                   Trailing Twelve Months Ended December 31,                           2024   2023  Δ ($)           (In thousands)           TTM EBITDA and TTM Adjusted EBITDA               TTM net income $34,200  $38,113  $(3,913)         Interest expense  1,095   6,451   (5,356)         Interest income  (841)  (1,344)  503          Provision for (benefit from) income taxes  5,532   6,833   (1,301)         Depreciation and amortization  10,046   10,336   (290)         TTM EBITDA  50,032   60,389   (10,357)         Adjustments:               Loss from joint ventures (JAKKS Pacific, Inc. - 51%)  -   276   (276)         Loss from joint ventures (Meisheng - 49%)  -   289   (289)         Other (income) expense, net  (302)  (563)  261          Restricted stock compensation expense  9,535   8,027   1,508          Change in fair value of preferred stock derivative liability  -   8,029   (8,029)         Molds and tooling capitalization  -   (1,751)  1,751          Loss on debt extinguishment  -   1,023   (1,023)         TTM Adjusted EBITDA $59,265  $75,719  $(16,454) (22)%      TTM Adjusted EBITDA/TTM Net sales %  8.6 % 10.6 %-200 bps                                           Three Months Ended December 31,     Twelve Months Ended December 31,      2024   2023  Δ ($)    2024   2023  Δ ($)   (In thousands, except per share data)     (In thousands, except per share data)   Adjusted net income (loss) attributable to common stockholders               Net income (loss) attributable to common stockholders $(9,113) $(11,252) $2,139    $35,250  $36,904  $(1,654) Restricted stock compensation expense  2,255   2,057   198     9,535   8,027   1,508  Change in fair value of preferred stock derivative liability  -   1,361   (1,361)    -   8,029   (8,029) Loss on debt extinguishment  -   -   -     -   1,023   (1,023) Loss from joint ventures (JAKKS Pacific, Inc. - 51%)  -   -   -     -   276   (276) 2021 BSP Term Loan prepayment penalty  -   -   -     -   150   (150) Molds and Tooling capitalization  -   -   -     -   (1,751)  1,751  Valuation allowance release/adjustments  -   (2,577)  2,577     -   (2,577)  2,577  Tax impact of additional charges  (544)  (96)  (448)    (2,225)  (1,175)  (1,050) Adjusted net income (loss) attributable to common stockholders $(7,402) $(10,507) $3,105    $42,560  $48,906  $(6,346) Adjusted earnings (loss) per share - basic $(0.67) $(1.04) $0.37    $3.95  $4.91  $(0.97) Shares used in adjusted earnings (loss) per share - basic  11,008   10,084   924     10,781   9,962   819  Adjusted earnings (loss) per share - diluted $(0.67) $(1.04) $0.37    $3.79  $4.62  $(0.83) Shares used in adjusted earnings (loss) per share - diluted  11,008   10,084   924     11,226   10,590   636                    JAKKS Pacific, Inc. and SubsidiariesNet Sales by Division and Geographic Region                          (In thousands)QTD Q4 (In thousands)YTD Q4DIVISIONS202420232022% Change 2024 v 2023 % Change 2023 v 2022 DIVISIONS202420232022% Change 2024 v 2023 % Change 2023 v 2022Toys/Consumer Products$118,233$118,855$117,727-0.5%1.0% Toys/Consumer Products$570,018$580,686$647,317-1.8%-10.3%Dolls, Role-Play/Dress-Up62,60373,27268,937-14.6%6.3% Dolls, Role-Play/Dress-Up313,679319,962423,581-2.0%-24.5%Action Play & Collectibles47,20935,31238,90933.7%-9.2% Action Play & Collectibles215,521219,446173,529-1.8%26.5%Outdoor/Seasonal Toys8,42110,2729,881-18.0%4.0% Outdoor/Seasonal Toys40,81841,27950,207-1.1%-17.8%Costumes$12,508$8,541$14,15946.4%-39.7% Costumes$121,024$130,870$148,870-7.5%-12.1%TOTAL JAKKS$130,741$127,396$131,8862.6%-3.4% TOTAL JAKKS$691,042$711,557$796,187-2.9%-10.6%                                       (In thousands)QTD Q4 (In thousands)YTD Q4Regions202420232022% Change 2024 v 2023 % Change 2023 v 2022 Regions202420232022% Change 2024 v 2023 % Change 2023 v 2022United States$93,468$96,304$100,907-2.9%-4.6% United States$545,013$557,865$644,295-2.3%-13.4%Europe25,35917,98819,43741.0%-7.5% Europe71,39276,46485,348-6.6%-10.4%Latin America4,2924,4342,626-3.2%68.8% Latin America38,15932,02418,33819.2%74.6%Canada4,2574,6864,795-9.2%-2.3% Canada20,98326,99226,515-22.3%1.8%Asia1,5232,1401,698-28.8%26.0% Asia6,1018,54310,431-28.6%-18.1%Australia & New Zealand1,1161,4861,822-24.9%-18.4% Australia & New Zealand7,4097,5428,836-1.8%-14.6%Middle East & Africa726358601102.8%-40.4% Middle East & Africa1,9852,1272,424-6.7%-12.3%TOTAL JAKKS$130,741$127,396$131,8862.6%-3.4% TOTAL JAKKS$691,042$711,557$796,187-2.9%-10.6%                          (In thousands)QTD Q4 (In thousands)YTD Q4Regions202420232022% Change 2024 v 2023 % Change 2023 v 2022 Regions202420232022% Change 2024 v 2023 % Change 2023 v 2022North America$97,725$100,990$105,702-3.2%-4.5% North America$565,996$584,857$670,810-3.2%-12.8%International33,01626,40626,18425.0%0.8% International125,046126,700125,377-1.3%1.1%Total$130,741$127,396$131,8862.6%-3.4% Total$691,042$711,557$796,187-2.9%-10.6%             

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