JAKKS Pacific, Inc. (JAKK) Bundle
Understanding JAKKS Pacific, Inc. (JAKK) Revenue Streams
Understanding JAKKS Pacific, Inc.’s Revenue Streams
As of 2024, JAKKS Pacific, Inc. has reported various revenue streams that contribute to its overall financial performance. Below is a detailed breakdown of these revenue sources along with year-over-year growth rates and segment contributions.
Breakdown of Primary Revenue Sources
The primary revenue sources for JAKKS Pacific include:
- Toys/Consumer Products
- Costumes
For the third quarter of 2024, the net sales per division were as follows:
| Division | Q3 2024 Net Sales (in thousands) | Q3 2023 Net Sales (in thousands) | Year-over-Year Change (%) |
|---|---|---|---|
| Toys/Consumer Products | $264,306 | $246,004 | 7.4% |
| Costumes | $57,300 | $63,740 | -10.1% |
| Total Net Sales | $321,606 | $309,744 | 3.8% |
Year-over-Year Revenue Growth Rate
The year-to-date net sales as of September 30, 2024, are reported as:
| Period | 2024 Net Sales (in thousands) | 2023 Net Sales (in thousands) | Year-over-Year Change (%) |
|---|---|---|---|
| Year-to-Date | $560,301 | $584,161 | -4.1% |
Contribution of Different Business Segments to Overall Revenue
The contribution from different business segments is summarized as follows:
| Segment | 2024 Year-to-Date Net Sales (in thousands) | 2023 Year-to-Date Net Sales (in thousands) | Contribution Change (%) |
|---|---|---|---|
| Toys/Consumer Products | $451,786 | $461,831 | -2.2% |
| Costumes | $108,515 | $122,330 | -11.3% |
Analysis of Significant Changes in Revenue Streams
In 2024, the Toys/Consumer Products segment experienced a growth in net sales, particularly in categories such as Dolls and Role Play/Dress-Up, which saw an increase of 5.5% to $146.9 million, and Action Play & Collectibles, which increased by 5.4% to $98.8 million. However, the Costumes segment reflected a decline due to decreased consumer demand, resulting in a year-to-date decrease of 11.3%.
The overall gross profit for the year-to-date period was reported at $177.5 million, down 6% from $189.6 million in 2023. The gross margin also decreased to 33.8%, a drop of 70 basis points compared to the previous year.
A Deep Dive into JAKKS Pacific, Inc. (JAKK) Profitability
A Deep Dive into JAKKS Pacific, Inc.'s Profitability
Gross Profit, Operating Profit, and Net Profit Margins
| Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Net Sales | $321.6 million | $309.7 million | $560.3 million | $584.2 million |
| Cost of Sales | $212.8 million | $202.8 million | $382.8 million | $394.5 million |
| Gross Profit | $108.8 million | $107.0 million | $177.5 million | $189.6 million |
| Gross Margin | 33.8% | 34.5% | 31.7% | 32.5% |
| Operating Income | $68.1 million | $62.4 million | $54.4 million | $74.4 million |
| Net Income | $52.3 million | $47.8 million | $43.3 million | $48.0 million |
| Net Profit Margin | 16.3% | 15.5% | 7.7% | 8.4% |
Trends in Profitability Over Time
In Q3 2024, the company reported a gross profit of $108.8 million, reflecting a 2% increase from $107.0 million in Q3 2023. However, year-to-date gross profit decreased by 6% compared to the prior year. Operating income improved to $68.1 million, up from $62.4 million in Q3 2023, indicating a positive trend in operational profitability.
Comparison of Profitability Ratios with Industry Averages
| Ratio | JAKKS Pacific | Industry Average |
|---|---|---|
| Gross Margin | 33.8% | 35.0% |
| Operating Margin | 21.2% | 18.5% |
| Net Profit Margin | 16.3% | 10.0% |
Analysis of Operational Efficiency
The company has shown a strong operating margin of 21.2% in Q3 2024, compared to 20.1% in Q3 2023, driven by effective cost management strategies. Direct selling expenses decreased by 29% year-over-year, highlighting improvements in operational efficiency.
Despite a year-to-date decrease in gross profit and margins, the firm continues to manage general and administrative expenses effectively, which increased only by 9% year-over-year. The adjusted EBITDA for Q3 2024 was reported at $74.4 million, up from $67.1 million in Q3 2023, indicating improved operational efficiency.
Debt vs. Equity: How JAKKS Pacific, Inc. (JAKK) Finances Its Growth
Debt vs. Equity: How JAKKS Pacific, Inc. Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, JAKKS Pacific, Inc. reported total liabilities of $273.8 million. This includes current liabilities of $253.9 million and long-term liabilities of $19.9 million. The company's current assets stood at $384.3 million, indicating a significant liquidity buffer against its short-term obligations.
Debt-to-Equity Ratio
The debt-to-equity ratio for JAKKS Pacific, Inc. is approximately 1.10 as of September 30, 2024. In comparison, the industry average debt-to-equity ratio for toy manufacturers is around 0.80, indicating that JAKKS relies more heavily on debt financing than its peers in the industry.
Recent Debt Issuances and Credit Ratings
In recent months, JAKKS Pacific, Inc. has engaged in refinancing activities to manage its debt load. The company reported interest expenses of $1.6 million for the trailing twelve months. The company currently holds a credit rating of B+ from S&P, reflecting a stable outlook despite the elevated debt levels.
Equity Funding
JAKKS Pacific, Inc. has utilized equity financing to bolster its capital structure, with total stockholders' equity reported at $250.1 million as of September 30, 2024. This includes additional paid-in capital of $295.4 million. The company has also seen a reduction in its accumulated deficit, now at ($30.6 million).
| Financial Metric | Amount (in millions) |
|---|---|
| Total Liabilities | $273.8 |
| Current Liabilities | $253.9 |
| Long-term Liabilities | $19.9 |
| Debt-to-Equity Ratio | 1.10 |
| Credit Rating | B+ |
| Total Stockholders' Equity | $250.1 |
| Additional Paid-in Capital | $295.4 |
| Accumulated Deficit | ($30.6) |
Balancing Debt and Equity Financing
JAKKS Pacific, Inc. effectively balances its debt and equity financing strategies to support its growth initiatives. The company's strategy includes optimizing its capital structure to minimize the cost of capital while maintaining operational flexibility. The ongoing focus on cost management and improving operational efficiencies is expected to enhance profitability and cash flow, further supporting its debt servicing capabilities.
Assessing JAKKS Pacific, Inc. (JAKK) Liquidity
Assessing JAKKS Pacific, Inc.'s Liquidity
Current and Quick Ratios
The current ratio for JAKKS Pacific, Inc. as of September 30, 2024, is calculated as follows:
Current Assets: $384.3 million
Current Liabilities: $253.9 million
Thus, the current ratio is:
Current Ratio = Current Assets / Current Liabilities = 384.3 / 253.9 = 1.51
The quick ratio, which excludes inventory from current assets, is:
Quick Assets = Current Assets - Inventory = 384.3 - 63.5 = 320.8 million
Quick Ratio = Quick Assets / Current Liabilities = 320.8 / 253.9 = 1.26
Analysis of Working Capital Trends
Working capital is defined as current assets minus current liabilities:
Working Capital = Current Assets - Current Liabilities = 384.3 - 253.9 = $130.4 million
This represents a healthy working capital position, providing a buffer for operational needs.
Cash Flow Statements Overview
The cash flow statement for the nine months ended September 30, 2024, shows:
- Operating Activities: Cash flows used amounted to ($15.2 million)
- Investing Activities: Cash flows used amounted to ($9.0 million)
- Financing Activities: Cash flows used amounted to ($26.1 million)
- Total Cash Flow Change: ($50.3 million)
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company's cash and cash equivalents totaled $22.3 million, a significant decrease from $96.4 million a year earlier. This decline indicates potential liquidity concerns if the trend continues.
Additionally, accounts receivable days sales outstanding (DSO) increased to 83 days, compared to 61 days in the previous year, suggesting longer collection periods and potential cash flow issues.
| Metric | September 30, 2024 | September 30, 2023 |
|---|---|---|
| Current Assets | $384.3 million | $378.8 million |
| Current Liabilities | $253.9 million | $255.3 million |
| Working Capital | $130.4 million | $123.5 million |
| Operating Cash Flow | ($15.2 million) | $89.4 million |
| Investing Cash Flow | ($9.0 million) | ($7.4 million) |
| Financing Cash Flow | ($26.1 million) | ($71.0 million) |
| Cash and Cash Equivalents | $22.3 million | $96.4 million |
| Accounts Receivable DSO | 83 days | 61 days |
Is JAKKS Pacific, Inc. (JAKK) Overvalued or Undervalued?
Valuation Analysis
To determine if the company is overvalued or undervalued, we will analyze key financial ratios, stock price trends, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The trailing twelve months (TTM) earnings per share (EPS) is $4.64, leading to a P/E ratio of approximately 8.9 based on a current stock price of $41.24.
Price-to-Book (P/B) Ratio
The book value per share is $22.28, resulting in a P/B ratio of approximately 1.85.
Enterprise Value-to-EBITDA (EV/EBITDA)
The enterprise value is calculated to be $450 million with an EBITDA of $58.5 million, giving an EV/EBITDA ratio of 7.69.
Stock Price Trends
Over the past 12 months, the stock price has fluctuated between a low of $25.00 and a high of $50.00. Currently, the stock is trading at $41.24.
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, resulting in a dividend yield of 0%.
Analyst Consensus
As of the latest reports, the analyst consensus on the stock is a hold, with a target price averaging $44.00.
| Financial Metric | Value |
|---|---|
| P/E Ratio | 8.9 |
| P/B Ratio | 1.85 |
| EV/EBITDA | 7.69 |
| TTM EPS | $4.64 |
| Book Value per Share | $22.28 |
| Current Stock Price | $41.24 |
| 52-Week Low | $25.00 |
| 52-Week High | $50.00 |
| Analyst Target Price | $44.00 |
| Dividend Yield | 0% |
In summary, the valuation ratios and stock trends provide insight into the company's financial health and market positioning for potential investors.
Key Risks Facing JAKKS Pacific, Inc. (JAKK)
Key Risks Facing JAKKS Pacific, Inc. (JAKK)
The financial health of JAKKS Pacific, Inc. is subject to various internal and external risks that could significantly impact the company's operations and profitability. This section explores these risks in detail.
Industry Competition
The toy and consumer products industry is highly competitive, with numerous players vying for market share. In 2024, the company reported a year-to-date net sales decrease of 2%, totaling $451.8 million compared to $461.8 million in 2023. Such competition can lead to pricing pressures and reduced margins, especially as consumers have more choices than ever.
Market Conditions
Fluctuations in consumer demand significantly affect the company's financial performance. For instance, the costumes segment experienced a 10% decline in net sales, amounting to $57.3 million in Q3 2024. This decline is indicative of changing consumer preferences, particularly in seasonal categories.
Regulatory Changes
Changes in regulations regarding safety standards and product compliance can pose operational risks. Compliance with such regulations often leads to increased costs and can impact product availability. The company has to continuously monitor regulatory landscapes in its operating regions to mitigate these risks.
Operational Risks
Operational challenges, including supply chain disruptions, can adversely affect product availability and costs. As of September 30, 2024, the company’s inventory was valued at $63.5 million, down from $68.8 million a year earlier. This reduction may reflect efforts to manage excess inventory amid fluctuating demand, but it also highlights the risk of stockouts during peak sales periods.
Financial Risks
Financial health is also at risk due to rising interest rates and potential increases in borrowing costs. The company reported interest expenses of $539,000 in Q3 2024, a significant decrease from $1.4 million in Q3 2023. While this reduction is favorable, ongoing economic uncertainties could lead to fluctuations in interest rates, impacting future financing costs.
Strategic Risks
The company's strategic decisions, including new product launches and market expansions, carry inherent risks. The trailing twelve months Adjusted EBITDA declined to $58.5 million, representing 8.5% of net sales, down from $74.5 million or 10.4% of net sales in the previous year. This decline suggests challenges in achieving projected growth targets and maintaining profitability amid strategic shifts.
Mitigation Strategies
To address these risks, the company has implemented various mitigation strategies:
- Enhancing supply chain resilience through diversified sourcing to minimize disruptions.
- Investing in market research to better understand consumer trends and adjust product offerings accordingly.
- Maintaining a robust compliance framework to adapt to regulatory changes promptly.
| Risk Factor | Current Status | Impact on Financials |
|---|---|---|
| Industry Competition | Net sales decrease of 2% | Pressure on margins |
| Market Conditions | 10% decline in costumes segment | Reduced revenue potential |
| Regulatory Changes | Ongoing compliance requirements | Increased operational costs |
| Operational Risks | Inventory at $63.5 million | Risk of stockouts |
| Financial Risks | Interest expenses down to $539,000 | Fluctuating future costs |
| Strategic Risks | Adjusted EBITDA down to $58.5 million | Challenges in growth targets |
Future Growth Prospects for JAKKS Pacific, Inc. (JAKK)
Future Growth Prospects for JAKKS Pacific, Inc.
Analysis of Key Growth Drivers
The company has identified several key growth drivers for the upcoming years:
- Product Innovations: New product lines are expected to enhance the overall portfolio, particularly in the Toys/Consumer Products segment, which saw a year-over-year increase of 7% in Q3 2024, reaching $264.3 million in net sales.
- Market Expansions: The international sales growth was notable, with a 11.5% increase in international sales compared to the previous year. This indicates a strong potential for further market penetration outside the U.S.
- Acquisitions: Strategic acquisitions are being considered to bolster market presence and diversify offerings. The company aims to leverage synergies from any future acquisitions to enhance its product lineup and operational efficiency.
Future Revenue Growth Projections and Earnings Estimates
Analysts project a modest growth trajectory for the company, with revenue expected to stabilize in the coming quarters. For 2024, net sales are projected to be approximately $560.3 million, reflecting a 4% decrease year-over-year. Adjusted EBITDA is estimated at $74.4 million for Q3 2024, up from $67.1 million in Q3 2023.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company is actively pursuing partnerships with major retailers to enhance distribution channels. This includes collaborations aimed at increasing shelf space for new product launches as well as seasonal promotions. Additionally, the focus on direct-to-consumer sales channels is expected to yield higher margins and improve customer engagement.
Competitive Advantages That Position the Company for Growth
JAKKS Pacific, Inc. benefits from several competitive advantages:
- Brand Recognition: Established brands within the Toys/Consumer Products sector continue to resonate with consumers, driving consistent sales performance.
- Diverse Product Portfolio: The company offers a wide range of product categories, including dolls, role-play items, and outdoor toys, which cater to various consumer segments and preferences.
- Operational Efficiency: Recent improvements in cost management have led to a gross margin of 33.8% in Q3 2024, slightly down from the previous year but indicative of effective cost control strategies.
Sales Performance by Division
| Division | Q3 2024 Net Sales (in thousands) | Q3 2023 Net Sales (in thousands) | Year-over-Year Change (%) |
|---|---|---|---|
| Toys/Consumer Products | $264,306 | $246,004 | 7.4% |
| Costumes | $57,300 | $63,740 | -10.1% |
| Total Net Sales | $321,606 | $309,744 | 3.8% |
Overall, the company's strategic focus on innovation, market expansion, and partnerships is expected to foster growth in a competitive landscape while navigating challenges in certain product segments.
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Article updated on 8 Nov 2024
Resources:
- JAKKS Pacific, Inc. (JAKK) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of JAKKS Pacific, Inc. (JAKK)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View JAKKS Pacific, Inc. (JAKK)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.