UK markets close in 3 hours 57 minutes
  • FTSE 100

    7,529.27
    +55.25 (+0.74%)
     
  • FTSE 250

    19,284.85
    -7.50 (-0.04%)
     
  • AIM

    847.97
    -2.95 (-0.35%)
     
  • GBP/EUR

    1.1575
    +0.0011 (+0.09%)
     
  • GBP/USD

    1.2005
    +0.0039 (+0.33%)
     
  • BTC-GBP

    13,744.39
    +156.96 (+1.16%)
     
  • CMC Crypto 200

    389.99
    +9.70 (+2.55%)
     
  • S&P 500

    3,963.94
    -62.18 (-1.54%)
     
  • DOW

    33,849.46
    -497.57 (-1.45%)
     
  • CRUDE OIL

    79.15
    +1.91 (+2.47%)
     
  • GOLD FUTURES

    1,754.00
    +13.70 (+0.79%)
     
  • NIKKEI 225

    28,027.84
    -134.99 (-0.48%)
     
  • HANG SENG

    18,204.68
    +906.74 (+5.24%)
     
  • DAX

    14,407.84
    +24.48 (+0.17%)
     
  • CAC 40

    6,684.24
    +19.04 (+0.29%)
     

JAKKS Pacific Reports Second Quarter 2022 Financial Results

Highest Q2 Net Sales and Operating Income in Company History

SANTA MONICA, Calif., July 27, 2022--(BUSINESS WIRE)--JAKKS Pacific, Inc. (NASDAQ: JAKK) today reported financial results for the second quarter ended June 30, 2022.

Second Quarter 2022 Overview

  • Net sales were $220.4 million, a year-over-year increase of 96.2%

    • Toys/Consumer Products were $148.9 million, a year-over-year increase of 82.6%

    • Costumes were $71.6 million, a year-over-year increase of 132.2%

  • Gross margin of 27.6%, down 77 basis points vs. Q2 2021

  • Operating income of $23.7 million (10.7% of net sales) vs. $1.8 million (1.6% of net sales) in Q2 2021

  • Net income attributable to common stockholders of $26.2 million or $2.61 per diluted share, compared to a net loss attributable to common stockholders of $15.4 million or $2.48 per share in Q2 2021

  • Adjusted net income attributable to common stockholders (a non-GAAP measure) of $21.1 million or $2.10 per diluted share, compared to an adjusted net loss attributable to common stockholders of $2.3 million or $0.38 per share in Q2 2021

  • Adjusted EBITDA (a non-GAAP measure) of $27.1 million, vs. $5.0 million in Q2 2021

Management Commentary

"Our past quarter’s results are extremely gratifying," said Stephen Berman, CEO of JAKKS Pacific. "The teams collaborated and executed at the highest level – chasing exceptional demand for our product, and relentlessly engaging with our manufacturers, customers and vendors to set everyone up for a great back-part of the year. We’re excited to continue to delight our consumers with a tremendous offering across our toy, consumer product and Halloween ranges, both on-shelf and on-line, and in the US and internationally.

"During the quarter we continued to see solid consumer demand across most of our major toy businesses, especially with Disney’s Encanto™ and Sega’s Sonic the Hedgehog®. Our Costume business shipped over $71 million, the highest Q2 shipment level since Disguise joined JAKKS in 2008. Despite the continuation of supply-chain cost pressures, we nonetheless recorded our first profitable second quarter in 10 years. We have also accelerated our importation of product to support the second half of the year and mitigate our traffic at the ports during the peak season.

"We’re pleased to share that we utilized some of the proceeds of our recent results to make an optional $10 million pay-down against our long-term debt, mitigating some of the impact rising interest rates have on our cash interest expense."

Second Quarter 2022 Results

Net sales for the second quarter of 2022 were $220.4 million up 96% versus $112.4 million last year. The Toys/Consumer Products segment sales were up 83% globally (92% North America; 38% International) and sales of Disguise costumes were up 132% compared to last year (>100% North America; >250% International).

Year-to-date Toys/Consumer Products sales were up 61% compared to 2021. Year-to-date the Costumes segment was up 134% compared to 2021.

Total shipments for the first-half of the year exceeded $300 million for the first time in the company’s history.

Trailing twelve months net income of $55.5 million, compared to a net loss of $18.0 million in the twelve months ended June 30, 2021. Trailing twelve months adjusted EBITDA of $75.7 million (9.9% of net sales) up 54% from $49.1 million (8.7% of net sales) in the trailing twelve months ended June 30, 2021.

Balance Sheet Highlights

The Company’s cash and cash equivalents (including restricted cash) totaled $62.3 million as of June 30, 2022 compared to $38.3 million as of June 30, 2021, and $45.3 million as of December 31, 2021.

Total debt was $84.9 million, compared to $129.3 million as of June 30, 2021, and $95.5 million as of December 31, 2021. Total debt includes the amount outstanding under the Company's term loan, net of unamortized discounts.

Working capital (not including cash) totaled $54.4 million, up from $7.5 million a year ago. Inventory was a meaningful driver of the increase, totaling $123.7 million, of which $36.3 million was in-transit to our distribution centers, compared to $60.6 million in total inventory as of June 30, 2021.

Use of Non-GAAP Financial Information

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 which is a non-GAAP metric that excludes various items that are detailed in the financial tables and accompanying footnotes reconciling GAAP to non-GAAP results contained in this release. Management believes that the presentation of these non-GAAP financial measures provides useful information to investors because the information may allow investors to better evaluate ongoing business performance and certain components of the Company’s results. In addition, the Company believes that the presentation of these financial measures enhances an investor’s ability to make period-to-period comparisons of the Company’s operating results. This information should be considered in addition to the results presented in accordance with GAAP, and should not be considered a substitute for the GAAP results. The Company has reconciled the non-GAAP financial information included in this release to the nearest GAAP measures. See the attached "Reconciliation of Non-GAAP Financial Information." "Total liquidity" is calculated as cash and cash equivalents, plus availability under the Company’s $67.5 million revolving credit facility.

Conference Call Live Webcast

JAKKS 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 July 27, 2022. 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 (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: Creepy Crawlers®, Eyeclops®, Fly Wheel®, Perfectly Cute®, ReDo Skateboard Co.®, WeeeDo™, Xtreme Power®, Disguise®, Maui®, Moose Mountain®, Kids Only!®; a wide range of entertainment-inspired products featuring premier licensed properties; and C’est Moi®, a New Generation of Clean Beauty®. Through JAKKS Cares, the company’s commitment to philanthropy, JAKKS is helping to make a positive impact on the lives of children. Visit us at www.jakks.com and follow us on Instagram (@jakkstoys), Twitter (@jakkstoys) and Facebook (JAKKS Pacific).

Forward Looking Statements

This 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 Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

June 30,

December 31,

2022

2021

2021

(In thousands)

Assets

Current assets:

Cash and cash equivalents

$

62,283

$

37,511

$

44,521

Restricted cash

-

830

811

Accounts receivable, net

164,020

107,898

147,394

Inventory

123,666

60,580

83,954

Prepaid expenses and other assets

14,519

32,495

10,877

Total current assets

364,488

239,314

287,557

Property and equipment

128,844

118,804

121,945

Less accumulated depreciation and amortization

112,601

104,147

108,796

Property and equipment, net

16,243

14,657

13,149

Operating lease right-of-use assets, net

24,584

20,688

16,950

Goodwill

35,083

35,083

35,083

Intangibles and other assets, net

3,239

5,389

4,308

Total assets

$

443,637

$

315,131

$

357,047

Liabilities, Preferred Stock and Stockholders' Equity

Current liabilities:

Accounts payable

$

86,660

$

49,206

$

50,237

Accounts payable - Meisheng (related party)

42,254

19,603

15,894

Accrued expenses

58,189

37,573

47,071

Reserve for sales returns and allowances

45,625

42,282

46,285

Income taxes payable

2,333

703

1,004

Short term operating lease liabilities

10,239

10,481

10,477

Short term debt, net

2,475

33,596

2,104

Total current liabilities

247,775

193,444

173,072

Long term operating lease liabilities

15,406

12,276

8,039

Debt, non-current portion, net

82,453

95,735

93,415

Preferred stock derivative liability

15,898

16,976

21,282

Income taxes payable

215

215

215

Deferred income taxes, net

51

123

51

Total liabilities

361,798

318,769

296,074

Preferred stock accrued dividends

3,771

2,397

3,074

Stockholders' equity:

Common stock, $.001 par value

10

7

10

Additional paid-in capital

273,625

241,405

272,941

Accumulated deficit

(180,680

)

(236,593

)

(203,431

)

Accumulated other comprehensive loss

(15,765

)

(12,124

)

(12,952

)

Total JAKKS Pacific, Inc. stockholders' equity

77,190

(7,305

)

56,568

Non-controlling interests

878

1,270

1,331

Total stockholders' equity

78,068

(6,035

)

57,899

Total liabilities, preferred stock and stockholders' equity

$

443,637

$

315,131

$

357,047

Supplemental Balance Sheet and Cash Flow Data (Unaudited)

June 30,

Key Balance Sheet Data:

2022

2021

Accounts receivable, net days of sales outstanding (DSO)

68

87

Inventory turnover (DSI)

71

69

Six Months Ended June 30,

Condensed Cash Flow Data:

2022

2021

(In thousands)

Cash flows provided by (used in) operating activities

$

36,549

$

(18,531

)

Cash flows used in investing activities

(5,274

)

(3,693

)

Cash flows used in financing activities and other

(14,324

)

(32,128

)

Increase/(decrease) in cash, cash equivalents and restricted cash

$

16,951

$

(54,352

)

Capital expenditures

$

(5,276

)

$

(3,725

)

JAKKS Pacific, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations (Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

Δ (%)

2022

2021

Δ (%)

(In thousands, except per share data)

(In thousands, except per share data)

Net sales

$

220,422

$

112,352

96

%

$

341,303

$

196,195

74

%

Less: Cost of sales

Cost of goods

121,850

61,489

98

193,908

105,538

84

Royalty expense

35,704

16,784

113

53,394

29,295

82

Amortization of tools and molds

1,978

2,182

(9

)

3,194

3,371

(5

)

Cost of sales

159,532

80,455

98

250,496

138,204

81

Gross profit

...