JAKKS reports the second consecutive year of 20+% sales growth and long-term debt reduction of 55% year over year.
JAKKS Pacific, Inc. yesterday reported financial results for the fourth quarter ended December 31, 2022.
Fourth Quarter 2022
- Net sales were $131.9 million compared to $188.0 million last year; a 30% decreaseGross 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 expensesA 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 2021Cash flow sweep loan provision will reduce debt by $23.1 million in Q1 2023
Management Commentary
“2022 exceeded our expectations with a second consecutive year of 20+% sales growth and, more importantly, strong retail sell-through for our customers” said Stephen Berman, JAKKS Pacific’s Chairman and CEO. “In 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%.
“We have a great line-up of new introductions in 2023. We’re 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.”
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.
