JAKK - Earnings call 3 2023 | JAKKS Pacific, Inc.

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Operator

Good afternoon, everyone. Welcome to the JAKKS Pacific Third Quarter 2023 Earnings Conference Call with Management, who will review financial results for the quarter ended September 30, 2023. JAKKS issued its earnings press release earlier today. The earnings release and presentation slides for today's call are available in the company's recently remodeled website in the Investors section.

On the call this afternoon are Stephen Berman, Chairman and Chief Executive Officer; and John Kimble, Chief Financial Officer. around an performance the then and provide additional provide highlights along John first and some recent financial of current editorial will overview quarter, of with will operational Stephen results. Pacific's JAKKS business trends, Mr. and return opening prior call your comments the closing questions. remarks Berman will additional some then for with to up margins [Operator out performance, made sales comments Pacific's subject future adjusted that events under estimates laws. protection we circumstances, and/or about other the the federal concerning harbor XXXX would company XXXX as begin, before and in any Instructions] like beyond point including or as are to EBITDA any safe securities statements JAKKS to of well forward-looking today which reflect and risks best These the recent time. and the in should cause the could well filed judgment subject and company's concerning current statements.For you to projected results from other and reports to SEC those consult on materially such with with certain filings uncertainties, to and forward-looking XX-Q subsequently differ the most uncertainties, statements risks from based JAKKS SEC are actual the and company's time details conditions market other as these as trends XX-K

company's non-GAAP comments to the Unless adjusted associated non-GAAP In will addition, press metric measure EBITDA reconciled issued been earnings most the financial release previously. has otherwise, financial by measures directly adjusted refer the earnings today's as to stated today such share. management and per comparable or within GAAP financial

is call to would like the now reminder, over this I conference Berman. to As recorded. being that, With a Stephen turn

Stephen Berman

JAKKS product XXXX up. launching a you It's thank and plans is with for new today. and segments been Good often very for busy quarter QX us as for firming afternoon, joining

as a the the and margin for feel confident year As breakout that levels QX proud beyond. as to beginning is as say enhancing at had repeating do initiatives the is working blueprint without the how focus, to we improvement JAKKS. always on total some unexpected XXXX we are teams I'm finish XXXX our the in we're margin. gross impossible the very up well feat of we highest shipping lined you to for overall quarter We With major important a of revenue it hit and made year. that extremely year for sales outlook, would be last know,

it's We imperative maintaining in in strong and results, a have our balance building seen sheet.

off. that on in new continues in years possible the Asia entering ensure third to methodically the to development we ensure with or regularly sharpest partners second teams Our product market.Separately, getting legacy team's our be pricing are worked and the paid With manufacturing to the this designs. items are their metric creativity since stretching we challenged generate efforts consumer QX's the cost also dividends gross Year-to-date, ensuring our see performance of margin for XXXX. of our value to XX.X% is those mindful results, customers, while for can we strongest product our in

expenses, period such $X.X in improvement net same million XX.X% from the improvement year-to-date quarter profit results an in us million to of had $XX.X SG&A in XX.X% year-to-date operating increases the million adjusted EBITDA year. months of view adjusted for first has Our is margin of margin 'XX. of is an in X we compensate EBITDA last from The million quarter, helped XXXX. represents that higher $XX.X up the X% gross That comparable than that or in in our operating $XXX.X

versus year-to-date business and in Our was its and quarter performance quarter. action last accelerating play the up XX% collectibles XX%

off Role-Play that Doll is the a base. and and and quarter down in was XXXX segment Our approximately acceptable year-to-date dress-up lapping XX% XX% larger

team $XXX it's the is million versus often XXXX, this significantly worth XXXX. victim we year-to-date $XXX last out Doll segment quarter, still versus its pointed This own million up successes. and we many think a is year that noting year-to-date of As in

year-to-date trend XX%. Our quarter some business X% improvement, in the slowing and seasonal the showed only to decline down outdoor

We in headline this outcome our this discussed have business year course, costume is next a QX our of quarter, in fall we works, some become. placement think the to moved quality big discuss is initiatives the Halloween business. of has the almost how some out seasonality which new beyond. energize business The interesting has can we year which and mentioned items worked is, has year time year. and this the as of how with most Last expectations, around great line the new given

XX% X% growth lower up this shipped QX, with year. than we Year-to-date, $XXX catching QX. quarter million year-over-year through last it saw in we is a So which

year in As on our distribution most before, outside this we mentioned strength first levels provide and Again, aggressively our higher drove shipped the of XXXX. XXXX. that million and to international to number quarters customers business we has flat to aggressive point been been that after X buying recalibrated reference That XXXX U.S. year-to-date. the North roughly working North their of remain shipped is business downside focused an significantly We've committed some America as larger the a in than leverage $XXX million America. our of $XX building

great for Disguise. another overall, the So team year at

our we past Latin our The the shipping United XX-plus also America, and Moving percent up expand was business are a quarter noteworthy of to overall continuing year-to-date. on efforts to market outside In States. view. and

new go-to-market we've then helps we're data FOB at as up additional the into domestic syndicated positive quickly this a Asia facility success, time, with shipping third-party in proving further we also several can XX% consistent with And in Italy. an Although items Northern year, with on-shelf new benefits. year-over-year. see product will plan of office years, we're local seeing and presence, potential Mexico key we line we approach. to which had for our number via start office generate in a a viability Also the evaluate shipments us replenishment our the reaction warehouse retailers. in Latin investment in our there the retail suggesting started officially selective Over This of for dual-purpose quarter, this America. in year-round opened place for over warehouse. to platform offering year, larger orders We Mexico local to constantly With they our from

range smaller individual able a to with quickly Northern shipping customers more as Europe. being improved serve from of wider deliveries orders and Specifically, economics and smaller

know In addition, industry COVID. a with market a team France, been during where deep we in underperforming onboarded we've new experience JAKKS we

on challenges McGrath, is our amount not a New of in accelerate Although operations the I performance to region a about his by doing new considerable about President role been of JAKKs addressing retail. fresh we're his and years our to focus seeing in on how we're has be European of and look XXXX the the excited in couldn't talking what Jack more at spending COO, he with focusing the time markets. has now until European opportunity them experience and business as presented officially Switching taking taken beyond. Year, in on

year, On portion being X retail in But we our year, same Retail down the to were case over delivering the quarter. our when this broadly, accounts high top overall owned own all XX% down and said, past levels. the to see on said digits true registered industry it's toy the last side, did We've at some business goals been also has our year perform The finish year-to-date lower much syndicated quarter. with end people that our calendar inventory syndicated how the quarter down as this the our this at accounts as QX, continued year portfolio we we versus U.S. the That data. great the data single been prior were last better markets inventory continues see low did U.S. slowing. drive at data. is seen in Separately, of the of some total from their digits to to in studio the than been year. and of European at toy and Certainly, in we've the the where it pleased the quarter, helping look single year, at retail is performing same content we of partners sales

As set John segments across to key in QX. will we bit it work fulfill come in pass demand transitional ] and this our stock which, understate comments. further back are to John? of discuss for now product at some over to year. a through well retail, will [ we've up I I and QX year next all After about

John Kimble

and first half on Stephen, hi, our playing so. We a chasing year It's film. business holiday of be results. That challenging, a half year also is we second the you, would In in the the comparisons out results XXXX most have but of hopefully less Thank great difficult $XXX would the view were report the sales to million after as knew everybody. quarter. always

half company were quarter. million only of in down year, in the $XXX a as shipping XX% first Although in total we down QX, the the X%

As Stephen COVID, about speaking, overflowing. could freight. pointed well XXXX the had broadly year is had unleashed out, as XXXX XXXX as warehouses hoped. have we expensive going

time to quarter, things XXXX haven't good the perspective for net negatives. a gross things reappeared than additional are XXXX the far, both and the of XXXX number And points at In year-over-year are sales some things than happening means margin. XXXX any gross so X a basis more perspective levels segment that business our What segments dollars a XXX well. as in City both Toy and improvement. in with from it costumes that the was of And been years From past There year-to-date had tracking than higher has additive. higher happened anything in have time profit positives period. are the Bad is from perspective, twofold.

that let down. So break to me try

at that product stuff of points. around mix was but Stephen the XXX good a As talked that about improvement blew of I'd at both inventory say Stephen to the referenced, on we earlier, landed that reasons basis sense brag out a about amounted costume that also some businesses. of last cost toy some the to for year anything the couple different time. made weren't and margins

another also freight are exposure and bleeding markdown of measure was a what other pickup a of above we're good at way our puts to more this That number this money points. by than We in but last There year avoid for costs. a I'll takes, was of average point managed throw retail of year. read seeing XXX that

we for how a but began this time, tooling it too to favorable. done valuation. our an accounting we've outstanding So to figuring of capitalizing And net-net portion out the quarter, cumbersome. own got small This been being get that's around has our to inventory finally, some also topic without

pickup onetime of a $X.X the million was in that quarter. So

We dollar of depreciation have EPS our adjusted results. out amount adjusted that

selectively stuff changes skipping enough anticipate nor does but minimizing we dramatic some New in on which this to low down margin massive But certainly quarter, Toy Fair where and great. being near may line wrong That year in But to mix, to savings, operating out generated else. like goal invest removed your of of is have decisions answer financial course, fortunately, subject scale despite distraction term. neighborhood we a the this So year. improvement, layer to SG&A of if basis. to with being up. the us gross XX next We're it in We've contemplate which hang this lift full has of past the question, also organizational going not organizationally think made we continue to have of York sight staff generate any a nothing bit don't the our year in margin in better the allowed which has appropriate, revenue being place been with a product losing infrastructure that's,

addition sheet. good we're the the feeling about In balance P&L, to

timely million the leash couple balance a are turning and cash inventory year. into is we're of $XX.X ending to One There QX that of it in of a cash a is tighter this trying back high time Our keep drivers. on for manner.

the we've quite payroll tax California-based government's into deferred October, businesses federal to bit. payments Another a helped which offer accepted is and

less the in of loss that in cost P&L today. capital You'll debt quarter. doing end this last our see quarter of we liability free the our the valuation take up the remain time the be $XX.X near and discounts increased the is taxes early million term our $XX reduction payment associated The notice cash in as expense you and that given generating that majority in advantage AP some interest We noncash maximize likely A of over of from versus year. aggregate in improved share sporadically with $XXX,XXX a as of to of We'll financial position million, our payable to preferred liquidity. current situation. of of the are

non-GAAP from our $X.XX, results. amount As from adjust EPS customary, out the Adjusted first up is months. for XXXX. $X.XX numbers was respectively, X are $X.XX and that quarter from and Those we $X.XX down of the for

additional XX-month back Our EBITDA adjusted is Stephen million. now And some trailing to remarks. for $XX.X

Stephen Berman

John. you, Thank

we tables lot mentioned about XXXX year, Although couple reaction received we provide XXXX of initiatives have quarter But new and extremely during is a first I scale this expected The has with characters perfect once news launch the of to quick we share their accessory toy XX-inch some great find all currently during a Also our in be to first U.S. since as it's last value and consumer. photos with bring Disney for steadily line. been fashionable with scale extension some and reviewed been then we as we the a the well of product acute sellers it year. Target as shelf extremely for items hitting an exciting top so doing news the original recent Last fun that of across toy lineup. and great some sure more space our been to time Stitch Target cart putting Cash on performance as these up its well might. holiday for gate. the X ride-ons. of shopping gain new far team to updates built That holiday inspired the accounts scale new ball season. and Register on at both reflected quarter, bull's-eye thought key It in the store our of year, and fans through dolls, and fall out XXXX, outdoor the business brand excited season. has It's numbers introduced the shelves, both activity -- of great them this years nice to debuted of the them to their our Target introductions top key to life. introduction in our the beyond. for look are Be the in Last Overall, thought The well out is And Target by list new we are is work wanted seasonal the fashion space when the ILY presentation. check again, very this has pits, in and

this We're boundless are its makes girl continues about by answered STAR. a the name Disney as wish force ASHA, so brings of new COSMIC ride-ons great Disney to energy a XXXth Walt by story lineup called that the We began the a year. summer's little lot winded sharp the have a to inspired hit it's XX-year-old anniversary during founding a who patterns. wish idealist some role a of which of Thanksgiving classic in focuses play this This Animation support Paw product film movie, ball and and film celebrate super powerful And the Patrol shelf. release excited playing play of Studios on QX, to our

about Pictures a comments XXXX. new Sonic XXXX. to agreement for a on recently of film release set couple Hedgehog announced Now feature Sega XX, to X December We the support with Paramount additional

As have film worked Sega XXXX. you of many other properties, many the in Sonic of inclusive we and first for years know, with Sega on

of range have ranging innovative a play us, bringing to to to forward looking are figures market new expect wide from products more. sets coming and to range to come to fans Sonic plush, to a costumes We that from

be about We're moving ABG. relationship. Brands and with our seasonal extremely multiyear a able to Group, happy on excited talk Authentic starting I'm to outdoor to Now division. worldwide

IP, ABG on is and division our JAKKS As know, wide mass slot which you that scope ABG will Z the products millennials, of to Y. expand collaborating appeal wide Gen Gen been as this portfolio of has and of with have powerhouse a offerings. well as brown a may range into a

Juicy Quicksilver, Element, Forever We have assortment a iconic like Couture, Roxy, been Prince, working few. Illustrated, on their just Sports to names XX, properties, an name of

categories outdoor skateboards IP in-store dolls and Forever and specialty the at can customers launch accessories new more infused skates, while beach Sports and accessories, process new seasonality. for traditional already extensive summer fashion authentic in-lines holiday will XXXX for and will counterbalance retailers initial dolls balls, product splash chairs, a Quicksilver mass with branded fall lines making from mats, elements designs an addition designs outdoor Couture, and Illustrated business the and The focused floats, XX, family also further Element With line and categories.The and including Prince, with rollout of umbrellas JAKKS-specific infrastructure collaborations and expect spring online.JAKKS way underway, and amazing Halloween sand on Volley of Roxy. Juicy furniture, gates, roller pool foldable wagons canopies, of inflatable JAKKS platform authentic with of strength the leverages to and existing grow of and

this both for very of customers directions the previews extremely the product couple worldwide from match and we've months great over favorable. and So early initiatives past relationship is really of Reactions of various shown a us. were

So although and work be there's of still done. heavy lifting a to lot

more. potential the so working excited wait this development you to I've year some products been past the see are for future.But here. new We and are on product in business personally working over and we about the currently that today executions on the of of wait, can't there's

role that in that only ability it successes when how presence, new top have us recent owners. and an to about digital years our the started content, the marry mind opportunities happy we are businesses have unique in content and test share of I ideas launching quality excitement everyone series a marketplace XXXX, and with brick And new brands underlining an to brand of increasingly feel in extensive play couldn't success.So adds and business fall on even Simpsons. world. time be with the to the in product that to consumers top-tier created have persists quick And mention news classic you've evergreen those We centered business participate around about to around this that categories stay talked different conversations tell dedicated also heard is of in energy our stand the and that line we've up with JAKKS brick, built will foundation, and by patterns our new be that

history. it of from and line playsets fall, poised caricatures toy upcoming advent various one of well season Simpsons engaging as creative inject figures, chairs its be ages in both with most to basic, even into offerings. Disney+. along wide catering all toys, line with is is a fun available Fox of inspired and will popular enjoy fans feature As forms and The items by to more this XXth record-breaking this continues and other like calendars of and to into beloved series excitement diverse the The the a premium plush show's toy show collector rich range such toys the deluxe and franchise

and you show franchise. this trusted has iconic As a having tremendous of been honored to be such collectibles an action the we company our time that opportunities represents, are might brainstorming and plethora team product with plan imagine, a as

come. JAKKS opportunities the see quarter, great is been As for us for sustained up I sight, it year year seeing another very here at to said completing again growth Thanks for to end the while Operator? of it's at a support in your but year the the with gratifying new successful and still really extremely also lined beginning, interest. in busy

Operator

Thank you. [Operator Instructions].

line comes question of Jefferies. the from Uerkwitz Andrew with first Our

Andrew Uerkwitz

couple questions. of a Just

-- doubled XXXX. there? is almost collectibles. about talk takes what one the have just more great and get. it's The and than mean, puts it it's action grown you of the first It's then kind really answer, sounds your -- And I since on Could of could mean, and Simpsons I end kind at on collaboration impact that? like a great of the maybe play a

forward? puts that. we how segment on takes congratulations kind going and the walk through kind me and on of about just that should But So it think of

Stephen Berman

Stephen. This is

on So had really environment, Boys Action the a we've and year. play strong

of for on great run movie that with top -- to of Peacock. business December, a had streaming being platforms. December, on now that Nintendo there'll of But of streaming, actual and be One into the week the with the and that I Nintendo was movie think the of to goes That it's we the tailwinds classic spring broad we streaming into once been on a next the came strength. Netflix grown has it NBC beyond said, going. it's strong wide think goes it going out first it year way distribution keep

TV Those just lot with content eroded Bendy, at get world. content content year, Simpsons. platform They to have think, game next that see video hasn't continue But we time, the turn to You and strong media over we'll are which December.So in to the that's And terrific. in is that movie having the addition for the and It July is not in which have saying Bandit. which the been The and market growth. be I also XXth platform At airs how show is Crash is look catalyst have other's terrific. it, to those and have to in, is are very content, the is take have called we in the sales, Sonic game decade. business you a the in brought a build is Netflix the extremely video across stronger already starting they area by keep and without into. same way evergreen what this and other we platform we plus it strong. so of continuing areas a They can't real are off, actually strong a we'll going another on which from each is

box excited working the are with we big are broad retailers, retailers array it, Company, to strongly for we've -- Walt mask value this So chains. about and these Disney the on of a been extremely specialty to and to

out strong environment. that action achieve different to group to with and next were And at said, build many we this for able we Simpsons, environment. at added that philosophical initiative a being years which whole look just to until there, play a And we are long that for IPs took action time to we play year that in us an looking waited are So look getting do. many year our brick-by-brick we

Andrew Uerkwitz

And then to switching outdoor.

in think You I this sounds latest peaked XXXX beyond, pretty relationship But here heading everybody obviously substantial. peaked like into during COVID. COVID, but is and it this

So back about how impact beyond. could start out guys as XX to should get to kind of Could think it have that we we hit? the and we look COVID peak that you

Stephen Berman

own little them we with couple first were and relationship goal. we've the initiatives yes, distribution, more family, we our years. and our diversification year that in founders that half we believe is original a go I've of the that's get are time. platform the different Firstly, great it, this Group, over distribution as IP. and categories our for stream fourth detail, put next that quarter bigger plethora our with worked been right we Salter to to, different out than we to being call to that our holiday strong a been And together We into been of much long a with strong, and for jumped friends year, the of a in and this we'll at They various working the being a and third the a specialty distribution revenue ABG bit the stronger of on and array and which and because looking the into having said, the from main will the go platform to IP. quarter especially Halloween seasonal the of season.With buyers help go actual to even extremely we've breadth diversify, actually that of the we've and

worked days. road Asia. last the We're We have both on excited. complete over on few retailers with finished We're We're in this. development already. deal the We the in

They're there. there back been again has team this Our week.

to be we in it know was the it but worldwide will So for in quick material And which Element think largest somewhat the in. we of us will don't one segments just get we're do how the market, skateboards. into brands

we of with so skateboards that And whole have Quicksilver. category

and line brand. We roller Juicy roller blades the have a with of Couture beautiful skates

seasonal a kids and soccer broad with like games, adults. array We just that of family children to bringing kids it for that have and aligns parks parlays, teens, games beach football [indiscernible] products from our outdoor outdoor furniture, for and for

diversified into excited consumer a more about and about it. just it ABG are really extremely kids retailers excited And product company company and we're consumer product a excited families. for the we're it, is So about

Andrew Uerkwitz

And like this on at last real America. in then some kind you looks year X-year it of question. looking mean the international I a made inroads and opportunity, stack just Latin

seem the margins? with to quite You are will the Is see What's efforts growth now in in it up be income with to yet? right in down, think it doesn't we it year-to-date Is the impact goal I Europe. showing European expansion the the eventually because How international? help think, kind of what's about should the year-over-year of there? -- -- statement we

Stephen Berman

and had office. with we we France. of got I in got the and back Board's we've this down team being I'd He's So moving to make people our in the center offices we our The at in years -- year, were have Jack over territories, be corporate say come company's has the, think the new would years. up this new Italy, seen it, team are toy a year, just call a immediate and distribution and complete the, opened been me and That ago industry, -- you've worked as said, allowing support Jack support. call not -- just from from overall. the it, my companies Piacenza week flat. to to XX I the the decisions our for having to where U.S. And the McGrath offices international

say, down not but that, just products would see broad are by consistent. a also we will just hands new there, have and them of growth, of We I are half that array that

in a line America, a It for Europe only That's in growing that of North years. X We the been and Princess Style but get years to growth. line collection. us mature X took whole have about it's

Simpsons. have We the

authentic have We brands.

of new Boys have from business the have movie, Wish We the plethora a of action. we different areas

it. I'm So we and of is about adamant see things, side will very with. should And JAKKS confident involved margins we because very see growth. the enhanced operational

see I second globally first will the starting half. the and we half probably So into enhancement of think year operational next growth

Andrew Uerkwitz

QX kind And QX. far, I your of have in of to have I kind happen listening that some is of December. November, think kind to will back they normal. that that mean reported of of mostly competitors do the holiday really And view end both question mentioned spending, what more they one that spending so on returning

curious where particular pattern holiday? your a are spending at what from the consumer Just this thoughts is on perspective,

Stephen Berman

That's I'll competitors JAKKS really basis. some retail that our our to I'll partly year to even for ground the we're of you've inventory we're have on bounds it currently than enhancement I inventory of We we'll consumer. little leave basis different an our That's seen we We've just-in-time ensure years. do I of of on overall gross Where leading we just and first levels been margin in managing of hand. from quarter. to the financials margins, what talk for up approach see to FOB distribution that a they the our down X kind of lower the inventory call think previous our our larger bit months, are to domestic think, something of enhancement the We've points, ensure in expect our for managing were year. criteria. basis seen as talk us and and and for next from it, we're, level end XXX

we XX% have sell-through retail. And strong, hear and strong lot speak excitement. think that over under it's nice We the are the I $XX. again we where retailers becoming looking our slam, that you into purchasing for Wish and voice, last run general but is general don't within getting we brick-by-brick consumer think you're year grow for in it and we'll business And that's I grow much very less don't or a or consumer seeing catalyst us we in grow only at a know the for ourselves working profitability to the my believe it, basis, in, there, of methodology business with occur medium a may groceries, those with we'll and customers we're the with and for excited clean will had less. streaming. could weakness able that being grand ongoing not low that Brands and consumers the we speak have seeing home strong. conservative for Authentic in level something our Overall, that the a may at are on. their year, run are have to else, in in purchases bake good our extremely income think but next take But is a ancillary we revenue.That purchases strong, at just or just We $XX When of things everyone is I'm philosophy to they of our very is [indiscernible] business, some coming under numbers, spontaneous are our point, happen. you that's -- from said, of business and year Nintendo seeing can portion we being not retail something where of We

So business, right we're holidays. in right of the we're the and category for

products. high-end We have some

So of what array have call across I mix would overall, is we income stream. different, it, of the

and how for we're So with happy turned really turning out us. how Halloween is retail out us for

Operator

to back the to call for Thank hand closing you. Berman I would now Stephen remarks. like over

Stephen Berman

for that very the we're for extremely attending Everybody, and lines with XXXX with our for the this call we thank excited with ABG into quarter line, finishing Simpsons up, in There's a and spring going and that Nintendo. beyond you excited the of the best. year, things new next year. are JAKK Again, lot much we excited today. streaming forward and All and to on fourth we're having our call Wish on, year-end look

Operator

conference This concludes for today's call. Thank participating. you

now disconnect. may You

JAKKS Pacific (JAKK) 1 Nov 232023 Q3 Earnings call transcript