April 29, 2025 Press Release

EX-10.1 2 jakkex10-1.htm EXHIBIT 10.1

Exhibit 10.1

 

 

JAKKS PACIFIC REPORTS FIRST QUARTER 2025 FINANCIAL RESULTS

Sales up 26% vs. prior year; Board approves 25 cent quarterly dividend

 

SANTA MONICA, California, April 29, 2025 – JAKKS Pacific, Inc. (NASDAQ: JAKK) today reported financial results for the first quarter ended March 31, 2025.

 

First Quarter 2025

 

Net sales were $113.3 million, a year-over-year increase of $23.2 million or 26%, driven in part by demand for product related to last quarter’s film releases
Gross margin of 34.4% vs. 23.4% in Q1 2024, driven by improved margin of new product launches along with significantly reduced inventory obsolescence expense and retailer markdowns
Gross profit of $39.0 million, up $17.9 million compared to $21.1 million in Q1 2024
Operating loss of $3.8 million, compared to an operating loss of $21.3 million in Q1 2024
Adjusted net loss attributable to common stockholders (a non-GAAP measure) of $0.4 million (or $0.03 per share), compared to an adjusted net loss attributable to common stockholders of $11.3 million (or $1.09 per share) in Q1 2024
Adjusted EBITDA (a non-GAAP measure) of $0.4 million vs. $(17.2) million in Q1 2024

 

Management Commentary

“We are happy to share our results after a strong start to the year at JAKKS. We’ve seen great consumer reaction year-to-date with solid consumer sales across major accounts and major markets.” said Stephen Berman, Chairman and CEO of JAKKS Pacific. ““It has certainly been a moment of reflection to see our industry’s long-standing tradition of building substantial global partnerships come under scrutiny. Yet rather than viewing this as a setback, we see it as an opportunity to showcase the agility, innovation, and resilience that define not only our industry — but especially JAKKS as a nimble, focused company.

We’re proud to have restored our fortress balance sheet — a critical milestone for our long-term success. We have maintained a strong liquidity position and a prudent capital structure that not only shields us in times of volatility but also positions us to move swiftly on growth opportunities. This disciplined approach gives us the confidence to invest in our future with a flexible financial foundation — even when the external environment is less predictable. In 2023, we eliminated all long-term debt and completed the repurchase of our preferred stock, giving us a clean and stable balance sheet. This not only enhances our ability to respond quickly to market shifts but also allows us to dedicate more energy and focus to driving our core business forward and pursuing new, high-potential opportunities.

 

We continue to create products that resonate with consumers globally, and we’re especially excited about what’s coming to market over the next twelve months. While the current environment in the United States has presented some unique challenges — particularly in the month of April — our foresight in building up strong infrastructure and capable teams in Europe and Latin America is already paying off. These regions are delivering real growth, and we see significant runway ahead.

 

We remain actively engaged in monitoring the evolving situation in the U.S. and are positioning ourselves to maximize performance in 2025, while keeping our medium- and long-term goals firmly in sight. We believe our seasoned team, global presence, and financial strength give us a clear advantage in navigating uncertainty — and ultimately emerging stronger.”

 

 

The Board of Directors has declared a quarterly dividend of $0.25 per share on the company’s common stock, payable June 27, 2025, to shareholders of record May 30, 2025.

 

First Quarter 2025 Results

Net sales for the first quarter of 2025 were $113.3 million, up 26% versus $90.1 million last year. The Toys/Consumer Products segment sales were up 30% globally to $107.4 million and sales of Costumes were down 19% to $5.8 million compared to last year. North America sales were $92.2 million, up from $73.8 million last year. International sales were $21.0 million, up from $16.3 million last year, led by a 100+% increase from Europe, which grew from $5.7 million to $11.8 million.

 

The Company’s cash and cash equivalents (including restricted cash) totaled $59.4 million as of March 31, 2025, compared to $35.5 million at the same time last year, and to $70.1 million as of December 31, 2024. Inventory was $53.2 million, compared to $46.3 million in total inventory as of March 31, 2024, and $52.8 million as of December 31, 2024.

 

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 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.

 

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 form 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 specifics products, product mix, the timing of customers orders and deliveries, the imposition, threat or uncertainty of tariffs, including reciprocal or retaliatory tariffs, the impact of competitive products and pricing, or that 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.

 

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 April 29, 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 (1Q25 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).

 

2

 

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), X (@jakkstoys) and Facebook (@jakkspacific.toys).
 

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 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.

 

CONTACT:
JAKKS Pacific Investor Relations

(424) 268-9567

Lucas Natalini; ***@***

 

3

 

JAKKS Pacific, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

 

   March 31,   December 31, 
   2025   2024   2024 
   (In thousands) 
Assets    
Current assets:            
Cash and cash equivalents  $59,188   $35,290   $69,936 
Restricted cash   207    202    201 
Accounts receivable, net   95,611    79,875    131,629 
Inventory   53,163    46,341    52,780 
Prepaid expenses and other assets   19,854    19,087    14,141 
Total current assets   228,023    180,795    268,687 
                
Property and equipment   142,493    138,066    142,623 
Less accumulated depreciation and amortization   124,592    122,694    126,981 
Property and equipment, net   17,901    15,372    15,642 
                
Operating lease right-of-use assets, net   52,721    22,965    53,254 
Deferred income tax assets, net   70,404    68,142    70,394 
Goodwill   35,085    34,997    35,111 
Other long-term assets   1,737    2,063    1,781 
Total assets  $405,871   $324,334   $444,869 
                
Liabilities, Preferred Stock and Stockholders’ Equity               
                
Current liabilities:               
Accounts payable  $44,489   $31,683   $42,560 
Accounts payable - Meisheng (related party)   -    8,689    13,461 
Accrued expenses   37,200    37,201    48,456 
Reserve for sales returns and allowances   26,229    27,859    35,817 
Income taxes payable   1,093    -    1,035 
Short term operating lease liabilities   9,806    8,237    8,091 
Total current liabilities   118,817    113,669    149,420 
                
Long term operating lease liabilities   47,110    15,961    48,433 
Accrued expenses - long term   2,909    3,183    2,563 
Income taxes payable   2,009    3,295    3,620 
Total liabilities   170,845    136,108    204,036 
                
Stockholders’ equity:               
Common stock, $.001 par value   11    11    11 
Additional paid-in capital   295,931    292,024    297,198 
Accumulated deficit   (44,860)   (88,117)   (39,692)
Accumulated other comprehensive loss   (16,556)   (16,192)   (17,184)
Total JAKKS Pacific, Inc. stockholders’ equity   234,526    187,726    240,333 
Non-controlling interests   500    500    500 
Total stockholders’ equity   235,026    188,226    240,833 
Total liabilities, preferred stock and stockholders’ equity  $405,871   $324,334   $444,869 

 

4

 

Supplemental Balance Sheet and Cash Flow Data (Unaudited)

 

   March 31, 
Key Balance Sheet Data:  2025   2024 
         
Accounts receivable days sales outstanding (DSO)   76    81 
Inventory turnover (DSI)   64    61 

 

   Three Months Ended
March 31,
 
Condensed Cash Flow Data:  2025   2024 
         
Cash flows used in operating activities  $(1,700)  $(12,863)
Cash flows used in investing activities   (3,065)   (3,634)
Cash flows used in financing activities and other   (5,977)   (20,565)
Increase in cash, cash equivalents and restricted cash  $(10,742)  $(37,062)
           
Capital expenditures  $(2,070)  $(2,228)

 

5

 

JAKKS Pacific, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations (Unaudited)

 

   Three Months Ended
March 31,
     
   2025   2024   Δ (%) 
   (In thousands, except per share data)     
             
Net sales  $113,253   $90,076    26%
Less: Cost of sales               
Cost of goods   54,626    53,821    1 
Royalty expense   18,168    13,776    32 
Amortization of tools and molds   1,446    1,427    1 
Cost of sales   74,240    69,024    8 
Gross profit   39,013    21,052    85 
Direct selling expenses   8,696    8,097    7 
General and administrative expenses   33,961    34,192    (1)
Depreciation and amortization   113    87    30 
Selling, general and administrative expenses   42,770    42,376    1 
Loss from operations   (3,757)   (21,324)   (82)
Other income (expense):               
Other income (expense), net   5    138    (96)
Interest income   362    376    (4)
Interest expense   (155)   (143)   8 
Loss before benefit from income taxes   (3,545)   (20,953)   (83)
Benefit from income taxes   (1,163)   (6,728)   (83)
Net loss   (2,382)   (14,225)   (83)
Net loss attributable to non-controlling interests   -    280     nm  
Net loss attributable to JAKKS Pacific, Inc.  $(2,382)  $(14,505)   (84)%
Net loss attributable to common stockholders  $(2,382)  $(13,175)   (82)%
Loss per share - basic & diluted  $(0.21)  $(1.27)     
Shares used in loss per share - basic & diluted   11,146    10,354      

 

6

 

   Three Months Ended
March 31,
     
   2025   2024   Δ bps 
           Fav/(Unfav) 
Net sales   100.0%   100.0%   - 
Less: Cost of sales               
Cost of goods   48.3    59.7    1,140 
Royalty expense   16.0    15.3    (70)
Amortization of tools and molds   1.3    1.6    30.0 
Cost of sales   65.6    76.6    1,100 
Gross profit   34.4    23.4    1,100 
Direct selling expenses   7.7    9.0    130 
General and administrative expenses   29.9    38.0    810 
Depreciation and amortization   0.1    0.1    - 
Selling, general and administrative expenses   37.7    47.1    940 
Loss from operations   (3.3)   (23.7)   2,040 
Other income (expense):               
Other income (expense), net   -    0.2      
Interest income   0.3    0.4      
Interest expense   (0.1)   (0.2)     
Loss before benefit from income taxes   (3.1)   (23.3)     
Benefit from income taxes   (1.0)   (7.5)     
Net loss   (2.1)   (15.8)     
Net loss attributable to non-controlling interests   -    0.3      
Net loss attributable to JAKKS Pacific, Inc.   (2.1)%   (16.1)%     
Net loss attributable to common stockholders   (2.1)%   (14.6)%     

 

7

 

JAKKS Pacific, Inc. and Subsidiaries

Reconciliation of Non-GAAP Financial Information (Unaudited)

 

   Three Months Ended
March 31,
     
   2025   2024   Δ ($) 
   (In thousands)     
EBITDA and Adjusted EBITDA            
Net loss  $(2,382)  $(14,225)  $11,843 
Interest expense   155    143    12 
Interest income   (362)   (376)   14 
Benefit from income taxes   (1,163)   (6,728)   5,565 
Depreciation and amortization   1,559    1,514    45 
EBITDA   (2,193)   (19,672)   17,479 
Adjustments:               
Other (income) expense, net   (5)   (138)   133 
Restricted stock compensation expense   2,552    2,575    (23)
Adjusted EBITDA  $354   $(17,235)  $17,589 
Adjusted EBITDA/Net sales %   0.3%   (19.1)%    1940 bps  

 

   Trailing Twelve Months Ended
March 31,
     
   2025   2024   Δ ($) 
   (In thousands)     
TTM EBITDA and TTM Adjusted EBITDA            
TTM net income  $46,043   $29,206   $16,837 
Interest expense   1,107    3,591    (2,484)
Interest income   (827)   (1,603)   776 
Provision for income taxes   11,097    1,488    9,609 
Depreciation and amortization   10,091    10,659    (568)
TTM EBITDA   67,511    43,341    24,170 
Adjustments:               
Loss from joint ventures (JAKKS Pacific, Inc. - 51%)   -    276    (276)
Loss from joint ventures (Meisheng - 49%)   -    289    (289)
Other (income) expense, net   (169)   (263)   94 
Restricted stock compensation expense   9,512    8,513    999 
Change in fair value of preferred stock derivative liability   -    8,176    (8,176)
Molds and tooling capitalization   -    (1,751)   1,751 
Loss on debt extinguishment   -    1,023    (1,023)
TTM Adjusted EBITDA  $76,854   $59,604   $17,250 
TTM Adjusted EBITDA/TTM Net sales %   10.8%   8.6%    220 bps 

 

   Three Months Ended
March 31,
     
   2025   2024   Δ ($) 
   (In thousands, except per share data)     
Adjusted net loss attributable to common stockholders            
Net loss attributable to common stockholders  $(2,382)  $(13,175)  $10,793 
Restricted stock compensation expense   2,552    2,575    (23)
Tax impact of additional charges   (524)   (657)   133 
Adjusted net loss attributable to common stockholders  $(354)  $(11,257)  $10,903 
Adjusted loss per share - basic & diluted  $(0.03)  $(1.09)  $1.06 
Shares used in adjusted earnings (loss) per share - basic & diluted   11,146    10,354    792 

  

8

 

JAKKS Pacific, Inc. and Subsidiaries

Net Sales by Division and Geographic Region

 

(In thousands)  Q1 
Divisions  2025   2024   2023   % Change
2025 v 2024
   % Change
2024 v 2023
 
Toys/Consumer Products  $107,438   $82,910   $97,893    29.6%   -15.3%
Dolls, Role-Play/Dress Up   55,463    40,574    47,843    36.7%   -15.2%
Action Play & Collectibles   42,881    33,008    37,846    29.9%   -12.8%
Outdoor/Seasonal Toys   9,094    9,328    12,204    -2.5%   -23.6%
Costumes  $5,815   $7,166   $9,591    -18.9%   -25.3%
Total  $113,253   $90,076   $107,484    25.7%   -16.2%

 

(In thousands)  Q1 
Regions  2025   2024   2023   % Change
2025 v 2024
   % Change
2024 v 2023
 
United States  $88,944   $70,430   $80,443    26.3%   -12.4%
Europe   11,810    5,735    10,162    105.9%   -43.6%
Latin America   7,459    7,996    9,204    -6.7%   -13.1%
Canada   3,279    3,370    4,054    -2.7%   -16.9%
Asia   751    965    1,380    -22.2%   -30.1%
Australia & New Zealand   613    1,346    1,608    -54.5%   -16.3%
Middle East & Africa   397    234    633    69.7%   -63.0%
TOTAL JAKKS  $113,253   $90,076   $107,484    25.7%   -16.2%

 

(In thousands)  Q1 
Regions  2025   2024   2023   % Change
2025 v 2024
   % Change
2024 v 2023
 
North America  $92,223   $73,800   $84,497    25.0%   -12.7%
International   21,030    16,276    22,987    29.2%   -29.2%
Total  $113,253   $90,076   $107,484    25.7%   -16.2%

 

9