JAKKS Pacific, Inc. [NASDAQ: JAKK] has reported financial results for the fourth quarter, ended December 31, 2021.
Fourth Quarter 2021:
-Net sales were $188.0 million compared to $128.3 million last year; a 47% increaseGross margin of 26.6%, negatively impacted by a 950+ basis-point increase in ocean and inbound freight expenses
-Gross profit of $50.0 million; the highest Q4 level since 2016
-U.S. toy retail POS at top three accounts up 10% vs. Q4 ‘20, retail inventory level up 8% vs. Q4 ‘20
-Net loss attributable to common stockholders of $3.5 million, down from a loss of $11.7 million in Q4 ‘20
-Adjusted net income attributable to common stockholders of $1.3 million, up from an adjusted net loss of $3.6 million in Q4 ‘20
-Adjusted EBITDA of $5.0 million, up from $3.9 million in Q4 ’20.
-Net sales were $621.1 million compared to $515.9 million last year; a 20% increase
-Gross margin of 29.5%; highest since 2016
-Operating income of $38.8 million – highest level in 10+ years
-Net loss attributable to common stockholders of $7.3 million, down from a net loss of $15.5 million in 2020
-Adjusted EBITDA of $49.2 million up 75% vs. $28.1 million in 2020
-Adjusted net income attributable to common stockholders of $23.6 million ($2.59 per diluted share), up from an adjusted net loss attributable to common stockholders of $6.3 million ($1.72 per diluted share) in 2020
-Strong liquidity of $102.0 million with cash and cash equivalents (including restricted cash) of $45.3 million and revolver availability of $56.7 million
“We close 2021 with tremendous pride in our team’s performance, delivering great products and great results in a challenging operating environment,” said Stephen Berman, JAKKS Pacific’s Chairman and CEO. “We continued to see exceptional top-line growth across a broad array of brands and categories along with continued margin expansion, despite an unprecedented increase in supply-chain costs. Ocean freight, port fees and trucking expenses all had a dramatic effect on our quarterly results. These developments forced us to implement a price increase for the back half of 2022 to offset some of these higher costs. We continue to work through these challenges to meet our customers’ orders and ensure that shelves are full. In addition, our support of the FOB business model allows those customers with better freight terms to capitalize on the current demand for our product. Consistent with Q3, we accelerated our import of inventory to support resetting for the new year, as disruptions in Asia continue.”
“We are excited to maintain the momentum we saw in our major brands during the holiday season, as well as looking forward to new entertainment support planned for some of our brands this year. Although the major toy fairs in NY and Germany were once again cancelled, we remain in constant dialogue with our customers about maximizing 2022 opportunities and within a couple months what we will bringing to market in Spring 2023.”
Fourth Quarter and Full-Year Results
Net sales for the fourth quarter 2021 were $188.0 million, up 47% versus $128.3 million last year. The increase reflects a combination of Q3 sales that pushed to Q4 due to supply-chain issues as well as supporting great sell-through during the holiday season. Net sales in the Toys/Consumer Products segment were up 48% globally, 49% in North America and 42% in International. For the full-year, North America Toys/Consumer Products was up 21% and International was up 18%. Net sales in the Costumes segment increased 22% compared to Q4 2020 and were up 21% for the full year.
Net loss attributable to common stockholders decreased to $3.5 million, or $0.37 per basic and diluted share, compared to a net loss attributable to common stockholders of $11.7 million, or $2.55 per basic and diluted share for the fourth quarter of 2020. The net loss in both years included significant charges related to non-cash valuation adjustments. Excluding those elements, adjusted net income attributable to common stockholders (a non-GAAP measure) was $1.3 million, or $0.14 per basic and diluted share in the fourth quarter of 2021 versus a loss of $3.6 million, or $0.80 per basic and diluted share in the fourth quarter of 2020. On a full-year basis, net loss attributable to common stockholders improved to $7.3 million vs. $15.5 million in 2020. Full-year adjusted net income attributable to common stockholders was $23.6 million, or $2.59 per diluted share, compared to a 2020 adjusted net loss of $6.3 million, or $1.72 per diluted share. See note below on “Use of Non-GAAP Financial Information.”
Adjusted EBITDA (a non-GAAP measure) for full-year 2021 grew for the fourth consecutive year to $49.2 million, the highest full-year level of Adjusted EBITDA since 2015 and at 7.9% of net sales, the highest EBITDA margin in 10+ years.
Cash and Cash Equivalents
The Company’s cash and cash equivalents (including restricted cash) totaled $45.3 million as of December 31, 2021, compared to $92.7 million as of December 31, 2020.
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.” “Liquidity” is calculated as cash and cash equivalents, including restricted cash, plus availability under the Company’s $67.5 million revolving credit facility.
Conference Call Live Webcast
JAKKS Pacific will webcast its fourth quarter earnings call at 5:00 p.m. Eastern Time/2:00 p.m. Pacific Time, Friday, February 18th. To listen to the live webcast and access the accompanying presentation slides, go to www.jakks.com/investors and click on the earnings website link under the Presentations tab at least 10 minutes prior to register, download and install any necessary audio software.
A replay of the call will be available on JAKKS’ website approximately two hours following completion of the call through February 24, 2022, ending at 10:00 p.m. Eastern Time/7:00 p.m. Pacific Time. The playback can be accessed by calling (855) 859-2056 or (404) 537-3406 for international callers, with passcode “4789542” for both playback numbers.