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JAKKS Pacific (JAKK) Q3 Earnings Beat Estimates, Revenues Lag

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JAKKS Pacific, Inc. JAKK reported mixed third-quarter 2021 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. While the top line missed the consensus mark after beating the same in the preceding five quarters, the bottom line beat the estimates for the fifth consecutive quarter. Following the results, the company’s shares declined 4.7% in the after-hour trading session.

Stephen Berman, CEO of JAKKS Pacific said, “Retail sales of our products remained strong in the third quarter. Our top three US customers in the aggregate reported an increase in year-to-date toy POS sell-through just above 9% through the first nine months, with a slight acceleration in Q3. JAKKS was started as an FOB business and we continue to do over 50% of our sales that way today.”

Q3 Earnings and Revenues

The company reported adjusted earnings of $3.76 per share, beating the Zacks Consensus Estimate $3.41. The metric improved from the prior-year earnings of $3.56 per share.

Revenues of $237 million missed the consensus mark of $262 million. The top line declined 2.2% year over year. This decline was primarily due to logistical postponements in customers picking up FOB China orders, and the lengthy timelines to deliver inventory to the company’s U.S. and European warehouses for domestic renewal.

Net sales at the company’s Toys/Consumer Products segment decreased 7.7% globally on a year-over-year basis, while sales of the Costumes segment increased 16.4% year over year.

JAKKS Pacific, Inc. Price, Consensus and EPS Surprise

JAKKS Pacific, Inc. Price, Consensus and EPS Surprise
JAKKS Pacific, Inc. Price, Consensus and EPS Surprise

JAKKS Pacific, Inc. price-consensus-eps-surprise-chart | JAKKS Pacific, Inc. Quote

Operating Highlights

In the reported quarter, gross margin was 31.6%, up 82 basis points (bps) from the prior-year level. Gross margin improved for the seventh straight quarter. Margins benefited from effective cost control and improved inventory management. Adjusted EBITDA was $41.7 million, compared with $42.7 million in the prior-year quarter.

Balance Sheet

As of Sep 30, 2021, cash and cash equivalents (including restricted cash) were $25.9 million compared with $75.2 million as of Sep 30, 2020. Debt, non-current portion, net as of Sep 30, 2021, was $93.9 million compared with $151.4 million at the end of Sep 30, 2020.

Zacks Rank

JAKKS Pacific — which shares space with Activision Blizzard, Inc. ATVI, Electronic Arts Inc. EA and Hasbro, Inc. HAS in the Zacks Toys - Games - Hobbies industry — currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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