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01/11 03:21
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals financial instability with an EPS miss, declining margins, and operating challenges. Despite strong Latin American sales and a new dividend, market volatility, supply chain issues, and customer dependency pose significant risks. The Q&A section highlighted management's vague responses to eCommerce opportunities, raising uncertainty. The negative sentiment is reinforced by declining EPS and margins, outweighing positive elements like the dividend initiation.
Earnings Per Share (EPS) Reported EPS is $-0.67, missing expectations of $-0.05, which is a $0.37 improvement year-over-year.
Gross Profit Gross profit dollars were $35.6 million, a 5% increase from $33.7 million last year, despite net sales only being up 3%.
Gross Margin Gross margin for the quarter was 30.8%, down 60 basis points from the prior year, but still above 30% for the second consecutive year.
Operating Margin Annual operating margin was 5.7%, a decline of 260 basis points from 8.3% in 2023.
Adjusted Earnings Per Share (EPS) Adjusted EPS for the full year was $3.79, down from $4.62 in the prior year.
Adjusted EBITDA Adjusted EBITDA for the quarter was a loss of $10.2 million, an improvement of $800,000 over the prior year, with full year EBITDA at $59.3 million, down from over $70 million in 2022 and 2023.
Cash Flow from Operations Cash flow provided by operations was $38.9 million for the year.
Selling Expenses Selling expenses were 5.8% of sales, up from 5.2% in the prior year.
General & Administrative (G&A) Expenses G&A percentage for the full year was 19.2%, 140 basis points worse than 2023.
Sales in Latin America Sales in Latin America reached $38 million for the full year, growing by over 19%.
New Product Launches: JAKKS is launching new collectible segments under the Disney portfolio, including 'Tote-ily Teenies' and 'Musical Minis', aimed at driving growth in 2025.
Product Performance: The Ultimate Talking Sonic was the number one new action figure during the holiday season, coinciding with the release of the Sonic 3 movie.
Expansion in Dress-Up Category: JAKKS is expanding its dress-up category with new Harry Potter robes launching at Walmart and continued support for Disney dress-up products.
Market Positioning: JAKKS has increased its U.S. market leadership position by a couple of points despite a smaller overall market.
International Growth: The Disguise business grew outside of North America for the fourth consecutive year, reaching an all-time high in 2024.
Sales Growth in Latin America: Sales in Latin America reached $38 million for the full year, growing by over 19%.
Operational Efficiencies: Over 75% of JAKKS's 2024 sales volume was sold on an FOB basis from China, improving logistics and margins.
Inventory Management: JAKKS is reducing its inventory distance to customers in Europe, improving fulfillment times and replenishment frequency.
Dividend Initiation: The Board approved a quarterly dividend of $0.25 per share, aiming to attract long-term shareholders and replenish cash reserves.
Focus on Long-Term Partnerships: JAKKS emphasizes nurturing long-term relationships with partners, as seen with the Sonic franchise, rather than chasing short-term trends.
Earnings Miss: JAKKS Pacific, Inc. reported an EPS of -$0.67, missing expectations of -$0.05, indicating potential financial instability.
Market Volatility: The toy and consumer products market is experiencing volatility, with smaller customers struggling to survive, which could impact JAKKS' sales.
Regulatory Risks: The company is mindful of recent developments in tariffs, which could increase product costs and affect margins.
Supply Chain Challenges: Over 75% of sales are on an FOB basis from China, making the company vulnerable to supply chain disruptions.
Inventory Management: Higher inventory obsolescence has been a recurring issue, impacting gross profit margins.
Economic Factors: The U.S. market for toys and costumes is smaller compared to previous years, affecting overall sales performance.
Customer Dependency: The company is reliant on major customers for market share, which poses a risk if these customers face financial difficulties.
Long-term Planning: While the company has a strong financial position, external forces can negatively impact results, highlighting the need for cautious long-term planning.
International Growth: The Disguise business grew outside of North America for the fourth consecutive year, reaching an all-time high in 2024.
FOB Sales Adoption: Over 75% of 2024 sales volume was sold on an FOB basis from China, enhancing value for consumers and margins for customers.
Dividend Initiation: The Board approved a quarterly dividend of $0.25 per share, aiming to attract long-term shareholders and replenish cash reserves.
Cost Structure Management: JAKKS is reviewing domestic pricing to mitigate impacts from tariffs and maintain affordability.
Product Development: New product lines and segments are being launched in 2025, including Disney collectibles and outdoor seasonal products.
Revenue Expectations: JAKKS aims for modest growth in both top line and bottom line in 2025.
Adjusted EPS: Adjusted EPS for 2024 was $3.79, down from $4.62 in the prior year.
Operating Margin: The annual operating margin was 5.7%, a decline from 8.3% in 2023.
EBITDA: Full year EBITDA was $59.3 million, down from over $70 million in 2022 and 2023.
Cash Flow: Cash flow provided by operations was $38.9 million for the year.
Quarterly Dividend: The Board has approved the initiation of a quarterly dividend of $0.25 per share, payable to shareholders of record as of March 3, 2025.
Dividend Intentions: The company intends to maintain this dividend on a quarterly basis, recalibrating when deemed prudent.
Shareholder Benefit: The dividend allows shareholders to directly benefit from recent performance while maintaining their investment for long-term.
The earnings call highlights several challenges: declining sales, margin pressures, and tariff impacts. Despite some positive aspects like new product launches and international expansion, the overall sentiment is negative due to significant revenue declines, uncertain U.S. market conditions, and increased costs. The Q&A section reveals management's cautious outlook and lack of clear guidance, contributing to a negative sentiment. The dividend announcement is a minor positive, but not enough to offset other concerns. The lack of market cap information limits the ability to assess the stock's potential volatility.
The earnings call reveals mixed results: strong international growth and stable gross margins, but declining EBITDA and EPS, and challenges due to tariffs. Positive aspects include cash position improvement and dividend declaration. However, cautious guidance, lack of specific future plans, and tariff impacts create uncertainty. The Q&A section highlights flexibility in manufacturing but lacks clear future strategies. With no new partnerships or guidance changes, the overall sentiment remains neutral, predicting a stock price movement within -2% to 2%.
The earnings call presents mixed signals. Basic financial performance shows improvement in sales and margins, but adjusted EPS remains negative. Product development and international growth are promising, yet tariff issues pose significant risks. Market strategy is cautiously optimistic, but supply chain challenges persist. Shareholder returns are positive with dividends and buybacks. Q&A reveals management's focus on international expansion and tariff mitigation, but vague responses about strategic opportunities raise concerns. Overall, the sentiment is neutral, balancing positive developments with ongoing uncertainties.
The earnings call reveals financial instability with an EPS miss, declining margins, and operating challenges. Despite strong Latin American sales and a new dividend, market volatility, supply chain issues, and customer dependency pose significant risks. The Q&A section highlighted management's vague responses to eCommerce opportunities, raising uncertainty. The negative sentiment is reinforced by declining EPS and margins, outweighing positive elements like the dividend initiation.
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