JAKKS Pacific, Inc. [NASDAQ: JAKK] today reported financial results for thefourth quarter ended December 31, 2022.
Fourth Quarter 2022
- Net sales were $131.9 million compared to $188.0 million last year; a 30% decrease
- Gross margin of 21.7%, negatively impacted by lower capitalization of warehouse costs, higher tooling amortization, obsolete inventory and royalty expense, offset by lower inbound freight expenses
- A valuation allowance release against a deferred tax asset generated a $52.6 million non-cash gain
- Net income attributable to common stockholders of $38.9 million, up from a net loss attributable to common stockholders of $3.5 million in Q4 2021
- Adjusted net loss attributable to common stockholders of $14.0 million, down from adjusted net income attributable to common stockholders of $1.3 million in Q4 2021
- Adjusted EBITDA of $(12.1) million, down from $5.0 million in Q4 2021.
Full-Year 2022
- Net sales were $796.2 million compared to $621.1 million last year; a 28% increase
- Gross margin of 26.5% compared to 29.5% last year
- Operating income of $61.0 million compared to $38.8 million last year; a 57% increase
- Net income attributable to common stockholders of $91.3 million, up from a net loss attributable to common stockholders of $7.3 million in 2021
- Adjusted EBITDA of $76.4 million up 55% versus $49.2 million in 2021
- Adjusted net income attributable to common stockholders of $43.4 million ($4.28 per diluted share), up from adjusted net income attributable to common stockholders of $23.6 million ($2.59 per diluted share) in 2021
- Cash flows provided by operating activities of $86.1 million, compared to cash flows used in operating activities of $5.9 million in 2021
- Cash flow sweep loan provision will reduce debt by $23.1 million in Q1 2023
Management Commentary
โ2022 exceeded our expectations with a second consecutive year of 20+% sales growth and, more importantly, strong retail sell-through for our customers,โ said Stephen Berman, JAKKS Pacificโs Chairman and CEO. โIn addition to a couple of strong successes, we saw solid results from the majority of our product lines. We shipped an exceptional amount of product in a compressed time-window resulting in higher-than-average costs in our domestic fulfilment operations in the back half of the year, suppressing our full-year margins. In Q4, and in the new year, we focused on resetting our inventory position and warehouse capacity and feel well-positioned for the new year. Our North American business grew 27% on a full-year basis, and our International business grew by 38%.
โWe have a great line-up of new introductions in 2023. Weโre launching and extending some of our own brands, in addition to introducing new product lines in association with film and TV releases throughout the year. Although we anticipate the business reverting to its more traditional second-half seasonality, our focus on prioritizing FOB sales continues, which results in shipments earlier in the year as compared with other companies. We are also working diligently to capture year-over-year margin improvement opportunities both on product and in the supply-chain.โ
Fourth Quarter and Full-Year Results
Net sales for the fourth quarter 2022 were $131.9 million, down 30% versus $188.0 million last year. The decrease was anticipated given customers ordering product earlier than the traditional seasonality, in addition to a late shipment in Q3 2021 creating an atypically high Q4 2021 sales level. Net sales in the Toys/Consumer Products segment were down 34% globally, 34% in North America and 35% in International. For the full year, North America Toys/Consumer Products was up 26% and International was up 28%. Net sales in the Costumes segment increased 61% compared to Q4 2021 and were up 38% for the full year. Our Top 10 markets all achieved sales growth year-over-year.
A release of a deferred tax asset valuation allowance created a non-cash gain of $52.6 million in the quarter. Net income attributable to common stockholders increased to $38.9 million, or $3.79 per diluted share, compared to a net loss attributable to common stockholders of $3.5 million, or $0.37 per diluted share for the fourth quarter of 2021. Adjusting out the gain on the valuation allowance and other customary adjustments led to an adjusted net loss attributable to common stockholders (a non-GAAP measure) of $14.0 million, or $1.44 per diluted share in the fourth quarter of 2022 versus adjusted net income attributable to common stockholders of $1.3 million or $0.14 per diluted share in the fourth quarter of 2021. On a full-year basis, net income attributable to common stockholders improved to $91.3 million versus a net loss attributable to common stockholders of $7.3 million in 2021. Full-year adjusted net income attributable to common stockholders was $43.4 million, or $4.28 per diluted share, compared to a 2021 adjusted net income attributable to common stockholders of $23.6 million, or $2.59 per diluted share. See note below on โUse of Non-GAAP Financial Information.โ
Adjusted EBITDA (a non-GAAP measure) for full-year 2022 grew to $76.4 million (9.6% of net sales), the highest full-year level of Adjusted EBITDA dollars and margin since 2010.
Cash and Cash Equivalents; Debt
The Companyโs cash and cash equivalents (including restricted cash) totaled $85.5 million as of December 31, 2022, compared to $45.3 million as of December 31, 2021. The cash flow sweep provision of the Companyโs Term Loan triggers a mandatory paydown of $23.1 million based on full-year results. That amount is now reclassified to short-term debt on the 12/31/2022 balance sheet, in addition to this yearโs scheduled principal amortization. Separately, in January 2023, the company used a portion of its cash-on-hand to make an optional pay-down of its long-term debt of $15 million, incurring $150K in pre-payment penalties. As we have made the sweep payment upon finalizing our financials, the current payoff balance of our Term Loan is $30.8 million. Cash and cash equivalents (including restricted cash) total $40.2 million as of March 3, 2023. The company currently has no draw on its asset-based loan.
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 earnings per share and Adjusted EBITDA which are non-GAAP metrics that exclude 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 Companyโs results. In addition, the Company believes that the presentation of these financial measures enhances an investorโs ability to make period-to-period comparisons of the Companyโs 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 โReconciliation of Non-GAAP Financial Information.โ โLiquidityโ is calculated as cash and cash equivalents, including restricted cash, plus availability under the Companyโs $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 March 9, 2023. A live webcast of the call will be available on the โInvestor Relationsโ page of the Companyโs 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 Pacificโs popular proprietary brands include Perfectly Cuteโข, Ami-Amisโข, ReDoโข Skateboard Co, AirTitansยฎ, Disguiseยฎ, JAKKS Wild Gamesโข, Moose Mountainยฎ, Mauiยฎ, SportsZoneโข, Fly Wheelsโข, Kids Only!ยฎ; a wide range of entertainment-inspired products featuring premier licensed properties; and Cโest Moiโข, a new generation of clean beauty. Through JAKKS Cares, the companyโs 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 โforward-looking statementsโ (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 any future transactions will result in future growth or success of JAKKS. The โforward-looking statementsโ 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) | ||||||||
| ย | ||||||||
| December 31, | ||||||||
2022 | 2021 | |||||||
| (In thousands) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 85,297 | ย | $ | 44,521 | ย | ||
| Restricted cash | ย | 193 | ย | ย | 811 | ย | ||
| Accounts receivable, net | ย | 102,771 | ย | ย | 147,394 | ย | ||
| Inventory | ย | 80,619 | ย | ย | 83,954 | ย | ||
| Prepaid expenses and other assets | ย | 6,331 | ย | ย | 10,877 | ย | ||
| Total current assets | ย | 275,211 | ย | ย | 287,557 | ย | ||
| ย | ||||||||
| Property and equipment | ย | 130,437 | ย | ย | 121,945 | ย | ||
| Less accumulated depreciation and amortization | ย | 115,575 | ย | ย | 108,796 | ย | ||
| Property and equipment, net | ย | 14,862 | ย | ย | 13,149 | ย | ||
| ย | ||||||||
| Operating lease right-of-use assets, net | ย | 19,913 | ย | ย | 16,950 | ย | ||
| Deferred income tax assets, net | ย | 51,762 | ย | ย | - | ย | ||
| Goodwill | ย | 35,083 | ย | ย | 35,083 | ย | ||
| Intangibles and other assets, net | ย | 2,469 | ย | ย | 4,308 | ย | ||
| Total assets | $ | 399,300 | ย | $ | 357,047 | ย | ||
| ย | ||||||||
| ย | ||||||||
| Liabilities, Preferred Stock and Stockholders' Equity | ||||||||
| ย | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 33,687 | ย | $ | 50,237 | ย | ||
| Accounts payable - Meisheng (related party) | ย | 9,820 | ย | ย | 15,894 | ย | ||
| Accrued expenses | ย | 37,999 | ย | ย | 47,071 | ย | ||
| Reserve for sales returns and allowances | ย | 51,877 | ย | ย | 46,285 | ย | ||
| Income taxes payable | ย | 3,648 | ย | ย | 1,004 | ย | ||
| Short term operating lease liabilities | ย | 10,746 | ย | ย | 10,477 | ย | ||
| Short term debt, net | ย | 25,529 | ย | ย | 2,104 | ย | ||
| Total current liabilities | ย | 173,306 | ย | ย | 173,072 | ย | ||
| ย | ||||||||
| Long term operating lease liabilities | ย | 9,863 | ย | ย | 8,039 | ย | ||
| Debt, non-current portion, net | ย | 41,622 | ย | ย | 93,415 | ย | ||
| Preferred stock derivative liability | ย | 21,918 | ย | ย | 21,282 | ย | ||
| Income taxes payable | ย | 114 | ย | ย | 215 | ย | ||
| Deferred income tax liabilities, net | ย | - | ย | ย | 51 | ย | ||
| Total liabilities | ย | 246,823 | ย | ย | 296,074 | ย | ||
| ย | ||||||||
| Preferred stock accrued dividends | ย | 4,490 | ย | ย | 3,074 | ย | ||
| ย | ||||||||
| Stockholders' equity: | ||||||||
| Common stock, $.001 par value | ย | 10 | ย | ย | 10 | ย | ||
| Additional paid-in capital | ย | 275,187 | ย | ย | 272,941 | ย | ||
| Accumulated deficit | ย | (110,729 | ) | ย | (203,431 | ) | ||
| Accumulated other comprehensive loss | ย | (17,482 | ) | ย | (12,952 | ) | ||
| Total JAKKS Pacific, Inc. stockholders' equity | ย | 146,986 | ย | ย | 56,568 | ย | ||
| Non-controlling interests | ย | 1,001 | ย | ย | 1,331 | ย | ||
| Total stockholders' equity | ย | 147,987 | ย | ย | 57,899 | ย | ||
| Total liabilities, preferred stock and stockholders' equity | $ | 399,300 | ย | $ | 357,047 | ย | ||
| ย | ||||||||
| ย | ||||||||
| Supplemental Balance Sheet and Cash Flow Data (Unaudited) | ||||||||
| ย | ||||||||
| December 31, | ||||||||
| Key Balance Sheet Data: | 2022 | 2021 | ||||||
| ย | ||||||||
| Accounts receivable days sales outstanding (DSO) | ย | 72 | ย | ย | 72 | ย | ||
| Inventory turnover (DSI) | ย | 72 | ย | ย | 56 | ย | ||
| ย | ||||||||
| ย | ||||||||
Twelve Months Ended December 31, | ||||||||
| Condensed Cash Flow Data: | 2022 | 2021 | ||||||
| (In thousands) | ||||||||
| Cash flows provided by (used in) operating activities | $ | 86,098 | ย | $ | (5,879 | ) | ||
| Cash flows used in investing activities | ย | (10,387 | ) | ย | (8,189 | ) | ||
| Cash flows used in financing activities and other | ย | (35,554 | ) | ย | (33,293 | ) | ||
| Increase/(decrease) in cash, cash equivalents and restricted cash | $ | 40,157 | ย | $ | (47,361 | ) | ||
| ย | ||||||||
| Capital expenditures | $ | (10,389 | ) | $ | (8,221 | ) | ||
| JAKKS Pacific, Inc. and Subsidiaries | ||||||||||||||||||||||
| Condensed Consolidated Statements of Operations (Unaudited) | ||||||||||||||||||||||
| ย | ||||||||||||||||||||||
Three Months Ended December 31, | ย | Twelve Months Ended December 31, | ย | |||||||||||||||||||
2022 | 2021 | ฮ (%) | 2022 | 2021 | ฮ (%) | |||||||||||||||||
(In thousands, except per share data) | ย | (In thousands, except per share data) | ย | |||||||||||||||||||
| ย | ||||||||||||||||||||||
| Net sales | $ | 131,886 | ย | $ | 187,964 | ย | (30 | )% | $ | 796,187 | ย | $ | 621,116 | ย | 28 | % | ||||||
| Less: Cost of sales | ||||||||||||||||||||||
| Cost of goods | ย | 81,355 | ย | ย | 111,497 | ย | (27 | ) | ย | 449,597 | ย | ย | 343,130 | ย | 31 | ย | ||||||
| Royalty expense | ย | 20,371 | ย | ย | 25,641 | ย | (21 | ) | ย | 126,633 | ย | ย | 87,187 | ย | 45 | ย | ||||||
| Amortization of tools and molds | ย | 1,592 | ย | ย | 784 | ย | 103 | ย | ย | 8,671 | ย | ย | 7,842 | ย | 11 | ย | ||||||
| Cost of sales | ย | 103,318 | ย | ย | 137,922 | ย | (25 | ) | ย | 584,901 | ย | ย | 438,159 | ย | 33 | ย | ||||||
| Gross profit | ย | 28,568 | ย | ย | 50,042 | ย | (43 | ) | ย | 211,286 | ย | ย | 182,957 | ย | 15 | ย | ||||||
| Direct selling expenses | ย | 13,153 | ย | ย | 19,252 | ย | (32 | ) | ย | 33,290 | ย | ย | 43,069 | ย | (23 | ) | ||||||
| General and administrative expenses | ย | 30,752 | ย | ย | 27,262 | ย | 13 | ย | ย | 114,819 | ย | ย | 98,712 | ย | 16 | ย | ||||||
| Depreciation and amortization | ย | 360 | ย | ย | 602 | ย | (40 | ) | ย | 1,907 | ย | ย | 2,409 | ย | (21 | ) | ||||||
| Selling, general and administrative expenses | ย | 44,265 | ย | ย | 47,116 | ย | (6 | ) | ย | 150,016 | ย | ย | 144,190 | ย | 4 | ย | ||||||
| Intangibles impairment | ย | - | ย | ย | - | ย | - | ย | ย | 300 | ย | ย | - | ย | nm | ย | ||||||
| Income (loss) from operations | ย | (15,697 | ) | ย | 2,926 | ย | nm | ย | ย | 60,970 | ย | ย | 38,767 | ย | 57 | ย | ||||||
| Other income (expense): | ||||||||||||||||||||||
| Other income (expense), net | ย | 277 | ย | ย | 190 | ย | 46 | ย | ย | 797 | ย | ย | 446 | ย | 79 | ย | ||||||
| Change in fair value of convertible senior notes | ย | - | ย | ย | 76 | ย | nm | ย | ย | - | ย | ย | (16,419 | ) | nm | ย | ||||||
| Change in fair value of preferred stock derivative liability | ย | 1,429 | ย | ย | (4,207 | ) | nm | ย | ย | (636 | ) | ย | (13,220 | ) | (95 | ) | ||||||
| Gain on loan forgiveness | ย | - | ย | ย | - | ย | - | ย | ย | - | ย | ย | 6,206 | ย | nm | ย | ||||||
| Loss on debt extinguishment | ย | - | ย | ย | - | ย | - | ย | ย | - | ย | ย | (7,351 | ) | nm | ย | ||||||
| Interest income | ย | 63 | ย | ย | 3 | ย | nm | ย | ย | 127 | ย | ย | 13 | ย | nm | ย | ||||||
| Interest expense | ย | (2,294 | ) | ย | (2,201 | ) | 4 | ย | ย | (11,183 | ) | ย | (14,104 | ) | (21 | ) | ||||||
| Income (loss) before provision for (benefit from) income taxes | ย | (16,222 | ) | ย | (3,213 | ) | 405 | ย | ย | 50,075 | ย | ย | (5,662 | ) | nm | ย | ||||||
| Provision for (benefit from) income taxes | ย | (55,620 | ) | ย | (60 | ) | nm | ย | ย | (42,297 | ) | ย | 226 | ย | nm | ย | ||||||
| Net income (loss) | ย | 39,398 | ย | ย | (3,153 | ) | nm | ย | ย | 92,372 | ย | ย | (5,888 | ) | nm | ย | ||||||
| Net income (loss) attributable to non-controlling interests | ย | 140 | ย | ย | 19 | ย | nm | ย | ย | (330 | ) | ย | 120 | ย | nm | ย | ||||||
| Net income (loss) attributable to JAKKS Pacific, Inc. | $ | 39,258 | ย | $ | (3,172 | ) | nm | % | $ | 92,702 | ย | $ | (6,008 | ) | nm | % | ||||||
| Net income (loss) attributable to common stockholders | $ | 38,896 | ย | $ | (3,513 | ) | nm | % | $ | 91,286 | ย | $ | (7,342 | ) | nm | % | ||||||
| Earnings (loss) per share - basic | $ | 4.00 | ย | $ | (0.37 | ) | $ | 9.46 | ย | $ | (0.98 | ) | ||||||||||
| Shares used in earnings (loss) per share - basic | ย | 9,732 | ย | ย | 9,511 | ย | ย | 9,651 | ย | ย | 7,498 | ย | ||||||||||
| Earnings (loss) per share - diluted | $ | 3.79 | ย | $ | (0.37 | ) | $ | 8.99 | ย | $ | (0.98 | ) | ||||||||||
| Shares used in earnings (loss) per share - diluted | ย | 10,263 | ย | ย | 9,511 | ย | ย | 10,155 | ย | ย | 7,498 | ย | ||||||||||
| ย | ||||||||||||||||||||||
Three Months Ended December 31, | ย | Twelve Months Ended December 31, | ย | |||||||||||||||||||
2022 | 2021 | ฮ bps | 2022 | 2021 | ฮ bps | |||||||||||||||||
ย | ย | Fav/(Unfav) | ย | ย | Fav/(Unfav) | |||||||||||||||||
| Net sales | ย | 100.0 | % | ย | 100.0 | % | - | ย | ย | 100.0 | % | ย | 100.0 | % | - | ย | ||||||
| Less: Cost of sales | ||||||||||||||||||||||
| Cost of goods | ย | 61.7 | ย | ย | 59.3 | ย | (240 | ) | ย | 56.5 | ย | ย | 55.2 | ย | (130 | ) | ||||||
| Royalty expense | ย | 15.4 | ย | ย | 13.6 | ย | (180 | ) | ย | 15.9 | ย | ย | 14.0 | ย | (190 | ) | ||||||
| Amortization of tools and molds | ย | 1.2 | ย | ย | 0.5 | ย | (70 | ) | ย | 1.1 | ย | ย | 1.3 | ย | 20 | ย | ||||||
| Cost of sales | ย | 78.3 | ย | ย | 73.4 | ย | (490 | ) | ย | 73.5 | ย | ย | 70.5 | ย | (300 | ) | ||||||
| Gross profit | ย | 21.7 | ย | ย | 26.6 | ย | (490 | ) | ย | 26.5 | ย | ย | 29.5 | ย | (300 | ) | ||||||
| Direct selling expenses | ย | 10.0 | ย | ย | 10.2 | ย | 20 | ย | ย | 4.2 | ย | ย | 6.9 | ย | 270 | ย | ||||||
| General and administrative expenses | ย | 23.3 | ย | ย | 14.5 | ย | (880 | ) | ย | 14.4 | ย | ย | 15.9 | ย | 150 | ย | ||||||
| Depreciation and amortization | ย | 0.3 | ย | ย | 0.3 | ย | - | ย | ย | 0.2 | ย | ย | 0.4 | ย | 20 | ย | ||||||
| Selling, general and administrative expenses | ย | 33.6 | ย | ย | 25.0 | ย | (860 | ) | ย | 18.8 | ย | ย | 23.2 | ย | 440 | ย | ||||||
| Intangibles impairment | ย | - | ย | ย | - | ย | - | ย | ย | - | ย | ย | - | ย | - | ย | ||||||
| Income (loss) from operations | ย | (11.9 | ) | ย | 1.6 | ย | (1,350 | ) | ย | 7.7 | ย | ย | 6.3 | ย | 140 | ย | ||||||
| Other income (expense): | ||||||||||||||||||||||
| Other income (expense), net | ย | 0.2 | ย | ย | 0.1 | ย | ย | 0.1 | ย | ย | - | ย | ||||||||||
| Change in fair value of convertible senior notes | ย | - | ย | ย | - | ย | ย | - | ย | ย | (2.6 | ) | ||||||||||
| Change in fair value of preferred stock derivative liability | ย | 1.1 | ย | ย | (2.2 | ) | ย | (0.1 | ) | ย | (2.1 | ) | ||||||||||
| Gain on loan forgiveness | ย | - | ย | ย | - | ย | ย | - | ย | ย | 1.0 | ย | ||||||||||
| Loss on debt extinguishment | ย | - | ย | ย | - | ย | ย | - | ย | ย | (1.2 | ) | ||||||||||
| Interest income | ย | - | ย | ย | - | ย | ย | - | ย | ย | - | ย | ||||||||||
| Interest expense | ย | (1.7 | ) | ย | (1.2 | ) | ย | (1.4 | ) | ย | (2.3 | ) | ||||||||||
| Income (loss) before provision for (benefit from) income taxes | ย | (12.3 | ) | ย | (1.7 | ) | ย | 6.3 | ย | ย | (0.9 | ) | ||||||||||
| Provision for (benefit from) income taxes | ย | (42.2 | ) | ย | - | ย | ย | (5.3 | ) | ย | - | ย | ||||||||||
| Net income (loss) | ย | 29.9 | ย | ย | (1.7 | ) | ย | 11.6 | ย | ย | (0.9 | ) | ||||||||||
| Net income (loss) attributable to non-controlling interests | ย | 0.1 | ย | ย | - | ย | ย | - | ย | ย | - | ย | ||||||||||
| Net income (loss) attributable to JAKKS Pacific, Inc. | ย | 29.8 | % | ย | (1.7 | )% | ย | 11.6 | % | ย | (0.9 | )% | ||||||||||
| Net income (loss) attributable to common stockholders | ย | 29.5 | % | ย | (1.9 | )% | ย | 11.5 | % | ย | (1.2 | )% | ||||||||||
JAKKS Pacific, Inc. and Subsidiaries Reconciliation of Non-GAAP Financial Information (Unaudited) | ||||||||||||||||||||||||
| ย | ||||||||||||||||||||||||
Reconciliation of GAAP to Non-GAAP measures: | ||||||||||||||||||||||||
| ย | ||||||||||||||||||||||||
This press release and accompanying schedules provide certain information regarding Adjusted EBITDA and Adjusted Net Income (Loss), which may be considered non-GAAP financial measures under the rules of the Securities and Exchange Commission. 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. We believe that the use of the non-GAAP financial measures enhances an overall understanding of the Companyโs past financial performance, and provides useful information to the investor by comparing our performance across reporting periods on a consistent basis. | ||||||||||||||||||||||||
| ย | ||||||||||||||||||||||||
| Investors should not consider these measures in isolation or as a substitute for net income, operating income, or any other measure for determining the Companyโs 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. | ||||||||||||||||||||||||
| ย | ||||||||||||||||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||||
2022 | 2021 | ฮ ($) | 2022 | 2021 | ฮ ($) | |||||||||||||||||||
| (In thousands) | (In thousands) | |||||||||||||||||||||||
| EBITDA and Adjusted EBITDA | ||||||||||||||||||||||||
| Net income (loss) | $ | 39,398 | ย | $ | (3,153 | ) | $ | 42,551 | ย | $ | 92,372 | ย | $ | (5,888 | ) | $ | 98,260 | ย | ||||||
| Interest expense | ย | 2,294 | ย | ย | 2,201 | ย | ย | 93 | ย | ย | 11,183 | ย | ย | 14,104 | ย | ย | (2,921 | ) | ||||||
| Interest income | ย | (63 | ) | ย | (3 | ) | ย | (60 | ) | ย | (127 | ) | ย | (13 | ) | ย | (114 | ) | ||||||
| Provision for (benefit from) income taxes | ย | (55,620 | ) | ย | (60 | ) | ย | (55,560 | ) | ย | (42,297 | ) | ย | 226 | ย | ย | (42,523 | ) | ||||||
| Depreciation and amortization | ย | 1,952 | ย | ย | 1,386 | ย | ย | 566 | ย | ย | 10,578 | ย | ย | 10,251 | ย | ย | 327 | ย | ||||||
| EBITDA | ย | (12,039 | ) | ย | 371 | ย | ย | (12,410 | ) | ย | 71,709 | ย | ย | 18,680 | ย | ย | 53,029 | ย | ||||||
| Adjustments: | ||||||||||||||||||||||||
| Other (income) expense, net | ย | (277 | ) | ย | (190 | ) | ย | (87 | ) | ย | (797 | ) | ย | (446 | ) | ย | (351 | ) | ||||||
| Restricted stock compensation expense | ย | 1,646 | ย | ย | 713 | ย | ย | 933 | ย | ย | 5,082 | ย | ย | 2,093 | ย | ย | 2,989 | ย | ||||||
| Change in fair value of preferred stock derivative liability | ย | (1,429 | ) | ย | 4,207 | ย | ย | (5,636 | ) | ย | 636 | ย | ย | 13,220 | ย | ย | (12,584 | ) | ||||||
| Change in fair value of convertible senior notes | ย | - | ย | ย | (76 | ) | ย | 76 | ย | ย | - | ย | ย | 16,419 | ย | ย | (16,419 | ) | ||||||
| Employee Retention Credit/gov't employment support | ย | - | ย | ย | - | ย | ย | - | ย | ย | (249 | ) | ย | (1,900 | ) | ย | 1,651 | ย | ||||||
| Gain on loan forgiveness | ย | - | ย | ย | - | ย | ย | - | ย | ย | - | ย | ย | (6,206 | ) | ย | 6,206 | ย | ||||||
| Loss on debt extinguishment | ย | - | ย | ย | - | ย | ย | - | ย | ย | - | ย | ย | 7,351 | ย | ย | (7,351 | ) | ||||||
| Adjusted EBITDA | $ | (12,099 | ) | $ | 5,025 | ย | $ | (17,124 | ) | $ | 76,381 | ย | $ | 49,211 | ย | $ | 27,170 | ย | ||||||
| Adjusted EBITDA/Net sales % | ย | (9.2 | )% | ย | 2.7 | % | ย | -1190 bps | ย | ย | 9.6 | % | ย | 7.9 | % | ย | 170 bps | ย | ||||||
| ย | ||||||||||||||||||||||||
| ย | ||||||||||||||||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||||
2022 | 2021 | ฮ ($) | 2022 | 2021 | ฮ ($) | |||||||||||||||||||
(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 | $ | 38,896 | ย | $ | (3,513 | ) | $ | 42,409 | ย | $ | 91,286 | ย | $ | (7,342 | ) | $ | 98,628 | ย | ||||||
| Restricted stock compensation expense | ย | 1,646 | ย | ย | 713 | ย | ย | 933 | ย | ย | 5,082 | ย | ย | 2,093 | ย | ย | 2,989 | ย | ||||||
| Change in fair value of preferred stock derivative liability | ย | (1,429 | ) | ย | 4,207 | ย | ย | (5,636 | ) | ย | 636 | ย | ย | 13,220 | ย | ย | (12,584 | ) | ||||||
| Change in fair value of convertible senior notes | ย | - | ย | ย | (76 | ) | ย | 76 | ย | ย | - | ย | ย | 16,419 | ย | ย | (16,419 | ) | ||||||
| Loss on debt extinguishment | ย | - | ย | ย | - | ย | ย | - | ย | ย | - | ย | ย | 7,351 | ย | ย | (7,351 | ) | ||||||
| Gain on loan forgiveness | ย | - | ย | ย | - | ย | ย | - | ย | ย | - | ย | ย | (6,206 | ) | ย | 6,206 | ย | ||||||
| Employee Retention Credit/gov't employment support | ย | - | ย | ย | - | ย | ย | - | ย | ย | (249 | ) | ย | (1,900 | ) | ย | 1,651 | ย | ||||||
| 2021 BSP Term Loan prepayment penalty | ย | - | ย | ย | - | ย | ย | - | ย | ย | 525 | ย | ย | - | ย | ย | 525 | ย | ||||||
| Valuation allowance release | ย | (52,644 | ) | ย | - | ย | ย | (52,644 | ) | ย | (52,644 | ) | ย | - | ย | ย | (52,644 | ) | ||||||
| Tax impact of additional charges | ย | (511 | ) | ย | - | ย | ย | (511 | ) | ย | (1,208 | ) | ย | - | ย | ย | (1,208 | ) | ||||||
| Adjusted net income (loss) attributable to common stockholders | $ | (14,042 | ) | $ | 1,331 | ย | $ | (15,373 | ) | $ | 43,428 | ย | $ | 23,635 | ย | $ | 19,793 | ย | ||||||
| Adjusted earnings (loss) per share - basic | $ | (1.44 | ) | $ | 0.14 | ย | $ | (1.58 | ) | $ | 4.50 | ย | $ | 3.15 | ย | $ | 1.35 | ย | ||||||
| Shares used in adjusted earnings (loss) per share - basic | ย | 9,732 | ย | ย | 9,511 | ย | ย | 221 | ย | ย | 9,651 | ย | ย | 7,498 | ย | ย | 2,153 | ย | ||||||
| Adjusted earnings (loss) per share - diluted | $ | (1.44 | ) | $ | 0.14 | ย | $ | (1.58 | ) | $ | 4.28 | ย | $ | 2.59 | ย | $ | 1.69 | ย | ||||||
| Shares used in adjusted earnings (loss) per share - diluted | ย | 9,732 | ย | ย | 9,762 | ย | ย | (30 | ) | ย | 10,155 | ย | ย | 9,365 | ย | ย | 790 | ย | ||||||
| JAKKS Pacific, Inc. and Subsidiaries | ||||||||||||||||
| Net Sales by Division and Geographic Region | ||||||||||||||||
| ย | ||||||||||||||||
| (In thousands) | QTD Q4 | (In thousands) | FY 2022 | |||||||||||||
| Divisions | 2022 | 2021 | 2020 | % Change 2022 v 2021 | % Change 2021 v 2020 | ย | Divisions | 2022 | 2021 | 2020 | % Change 2022 v 2021 | % Change 2021 v 2020 | ||||
| Toys/Consumer Products | $117,727 | $179,152 | $121,034 | -34.3% | 48.0% | Toys/Consumer Products | $647,317 | $513,517 | $427,122 | 26.1% | 20.2% | |||||
| Dolls, Role-Play/Dress Up | 68,937 | 116,877 | 72,970 | -41.0% | 60.2% | Dolls, Role-Play/Dress Up | 423,581 | 323,360 | 275,154 | 31.0% | 17.5% | |||||
| Action Play & Collectibles | 38,909 | 41,164 | 26,609 | -5.5% | 54.7% | Action Play & Collectibles | 173,529 | 114,778 | 80,560 | 51.2% | 42.5% | |||||
| Outdoor/Seasonal Toys | 9,881 | 21,111 | 21,455 | -53.2% | -1.6% | Outdoor/Seasonal Toys | 50,207 | 75,379 | 71,408 | -33.4% | 5.6% | |||||
| Costumes | 14,159 | 8,812 | 7,233 | 60.7% | 21.8% | Costumes | 148,870 | 107,599 | 88,750 | 38.4% | 21.2% | |||||
| Total | $131,886 | $187,964 | $128,267 | -29.8% | 46.5% | Total | $796,187 | $621,116 | $515,872 | 28.2% | 20.4% | |||||
| ย | ||||||||||||||||
| ย | ||||||||||||||||
| ย | ||||||||||||||||
| (In thousands) | QTD Q4 | (In thousands) | FY 2022 | |||||||||||||
| Regions | 2022 | 2021 | 2020 | % Change 2022 v 2021 | % Change 2021 v 2020 | ย | Regions | 2022 | 2021 | 2020 | % Change 2022 v 2021 | % Change 2021 v 2020 | ||||
| United States | $100,907 | $148,876 | $100,224 | -32.2% | 48.5% | United States | $644,295 | $512,193 | $421,222 | 25.8% | 21.6% | |||||
| Europe | 19,437 | 22,322 | 17,461 | -12.9% | 27.8% | Europe | 85,348 | 60,425 | 51,885 | 41.2% | 16.5% | |||||
| Canada | 4,795 | 5,596 | 3,931 | -14.3% | 42.4% | Canada | 26,515 | 17,999 | 18,486 | 47.3% | -2.6% | |||||
| Latin America | 2,626 | 4,483 | 1,148 | -41.4% | 290.5% | Latin America | 18,338 | 12,606 | 7,734 | 45.5% | 63.0% | |||||
| Asia | 1,698 | 3,018 | 2,309 | -43.7% | 30.7% | Asia | 10,431 | 9,232 | 8,285 | 13.0% | 11.4% | |||||
| Australia & New Zealand | 1,822 | 2,496 | 1,526 | -27.0% | 63.6% | Australia & New Zealand | 8,836 | 6,423 | 5,795 | 37.6% | 10.8% | |||||
| Middle East & Africa | 601 | 1,173 | 1,668 | -48.8% | -29.7% | Middle East & Africa | 2,424 | 2,238 | 2,465 | 8.3% | -9.2% | |||||
| Total | $131,886 | $187,964 | $128,267 | -29.8% | 46.5% | Total | $796,187 | $621,116 | $515,872 | 28.2% | 20.4% | |||||
| ย | ||||||||||||||||
| ย | ||||||||||||||||
| (In thousands) | QTD Q4 | (In thousands) | FY 2022 | |||||||||||||
| Regions | 2022 | 2021 | 2020 | % Change 2022 v 2021 | % Change 2021 v 2020 | ย | Regions | 2022 | 2021 | 2020 | % Change 2022 v 2021 | % Change 2021 v 2020 | ||||
| North America | $105,702 | $154,472 | $104,155 | -31.6% | 48.3% | North America | $670,810 | $530,192 | $439,708 | 26.5% | 20.6% | |||||
| International | 26,184 | 33,492 | 24,112 | -21.8% | 38.9% | International | 125,377 | 90,924 | 76,164 | 37.9% | 19.4% | |||||
| Total | $131,886 | $187,964 | $128,267 | -29.8% | 46.5% | Total | $796,187 | $621,116 | $515,872 | 28.2% | 20.4% | |||||
ย
View source version on businesswire.com: https://www.businesswire.com/news/home/20230309005694/en/
