JAKKS Pacific, Inc (NASDAQ: JAKK) has reported financial results for the fourth quarter ended December 31, 2023.
JAKKS Fourth Quarter 2023
- Net sales were $127.4 million, a year-over-year decrease of 3%
- Gross margin of 26.5%, up 480 basis points vs. Q4 2022, led by improved landed product cost and reduced inventory obsolescence expense
- Gross profit of $33.7 million, up 18% compared to $28.6 million in Q4 2022
- Net loss attributable to common stockholders of $11.3 million (or $1.12 per diluted share), compared to net income attributable to common stockholders of $37.6 million or ($3.66 per diluted share) in Q4 2022
- Adjusted net loss attributable to common stockholders (a non-GAAP measure) of $10.5 million (or $1.04 per diluted share), compared to adjusted net loss attributable to common stockholders of $13.9 million (or $1.42 per diluted share) in Q4 2022
- Adjusted EBITDA (a non-GAAP measure) of $(10.9) million vs. $(12.1) million in Q4 2022
JAKKS Full-Year 2023
- Net sales were $711.6 million compared to $796.2 million last year, an 11% decrease
- Gross margin of 31.4% compared to 26.5% last year
- Gross profit of $223.4 million, up 6% compared to $211.3 million last year, and the highest dollar level since 2015
- Operating income of $59.1 million compared to $61.0 million last year; a 3% decrease
- Net income attributable to common stockholders of $36.9 million, down from a net income attributable to common stockholders of $90.0 million in 2022
- Adjusted net income attributable to common stockholders of $48.9 million ($4.62 per diluted share), up from adjusted net income attributable to common stockholders of $43.6 million ($4.29 per diluted share) in 2022
- Adjusted EBITDA of $75.7 million, down 1% versus $76.4 million in 2022
- Cash flows provided by operating activities of $66.4 million, down from $86.1 million in 2022
- Cash used in financing activities of $70.4 million, eliminating all long-term debt in the first half of 2023
- End of year cash and cash equivalents of $72.6 million, down from $85.5 million in 2022
Management Commentary
“For the third consecutive year we have met or exceeded our key financial full-year targets” said Stephen Berman, CEO of JAKKS Pacific. “The year began with the challenge of revenue comparisons with a 2022 hit-driven blockbuster product line, but we also saw opportunities for gross margin improvements with a normalized supply chain. Gross and operating margins improved year-over-year despite a $80+ million decline in Net Sales, generating over $66 million in operating cash flow for the year.
“The holiday toy season came late this year, but we were pleased with the results. Two of our Top three US Toys/Consumer Products customers achieved positive year-over-year retail sales results in Q4 despite challenging comparisons from the prior year. Our aggregate end-of-year inventory at retail at those three accounts is also down by a high single digit percentage compared to last year. Although customers are tentatively moving into the new year, we believe our core businesses remain on solid footing.
Fourth Quarter and Full-Year 2023 Results
Net sales for the fourth quarter of 2023 were $127.4 million, down 3% versus $131.9 million last year. The Toys/Consumer Products segment sales were up 1% globally (flat in North America; 7% International) and sales of Costumes were down 40% compared to last year (-54% North America; -20% International).
Full-year Toys/Consumer Products sales were down 10% compared to 2022. The Costumes segment was down 12% vs. 2022, as customers continue to recalibrate to post-COVID levels. Our 2023 Costumes performance was nonetheless 22% higher than 2021.
Balance Sheet Highlights
The Company’s cash and cash equivalents (including restricted cash) totaled $72.6 million as of December 31, 2023, compared to $85.5 million as of December 31, 2022.
Total debt was zero, compared to $67.2 million as of December 31, 2022. Total debt as of December 31, 2022, included the amount outstanding under the Company’s term loan, net of unamortized discounts and issuance costs.
Inventory was $52.6 million, compared to $80.6 million as of December 31, 2022, a reduction of 35%.