Page 1

jakks PACIFIC JAKKS Pacific Reports Third Quarter 2021 Financial Results 10/27/21 Strong Halloween and Robust Holiday Season On - Track SANTA MONICA , Calif .-- ( BUSINESS WIRE ) -- Oct . 27 , 2021-- JAKKS Pacific , Inc. [ NASDAQ : JAKK ] today reported financial results for the third quarter ended September 30 , 2021 . Highlights • Third quarter 2021 net sales were $ 237.0 million compared to $ 242.3 million last year o Costumes segment is the strongest performer with $ 64.0 million in net sales , 16.4 % growth vs. Q3 2020 ; 21.2 % growth year - to - date vs. 2020 • Year - to - date total company net sales were $ 433.2 million , 11.8 % higher than prior year • Gross margin of 31.6 % , up from 30.8 % , an improvement of 82 basis points year - over - year despite higher ocean freight expense • Net inventory level at seasonally high $ 89.8 million , $ 40.1 million in transit to JAKKS warehouses Liquidity of $ 69.8 million with cash of $ 26.7 million and revolver availability of $ 43.1 million • • Q3 2021 net income attributable to common stockholders of $ 36.0 million , or $ 3.97 per diluted share • Adjusted net income attributable to common stockholders of $ 34.2 million , or $ 3.76 per diluted share , an improvement from $ 32.6 million , or $ 3.56 per diluted share in the comparable prior year period • Year - to - date Adjusted EBITDA of $ 44.2 million up 80 + % vs. $ 24.3 million in the comparable 2020 period • Conversion of the balance of Senior Convertible Notes reduces debt to $ 95.8 million , a 46 % reduction from the recapitalization two years ago Management Commentary " Our focus on improved product margins and cleaner retail sell - through helped mitigate higher ocean freight costs to improve our year - over - year gross margins for the 7th straight quarter , " said Stephen Berman , JAKKS Pacific's Chairman and CEO . " 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 . This focus has benefited us all year , inclusive of Q3 , leveraging the supply - chain strength and scale of the major global retailers to pull our product through to the retail shelf during this period of significant supply - chain disruption . We have accelerated our imports of inventory to support sales in the US and Internationally for the holiday season and resetting for the new year . Consistent with recent quarters , we continue to see tremendous consumer and customer reaction to our current product line - up , but supply - chain bottlenecks weighed on our results . " We are pleased to show progress on profitability despite the continuation of the pandemic and related challenges . As we hoped , consumers have embraced the Halloween season this year with a burst of pent - up demand . Sell - thru rates are exceeding 2019 levels . As we look ahead into Q4 we're excited to be introducing some key new items for the Holiday gift - giving season , including our NintendoⓇ Super Mario ™ Deluxe Bowser's Airship Playset and our Sonic the Hedgehog ™ Giant Eggman Robot Battle Set both of which have received strong retailer and consumer reaction . " As we look ahead to 2022 and beyond , we are excited about both where we are and where we're headed . We believe we have made tremendous progress since our recapitalization two years ago , and we are working on new initiatives for 2022 and beyond to deliver additional top - line growth and bottom - line margin improvement . " Net sales for the third quarter 2021 were $ 237.0 million down 2.2 % versus $ 242.3 million last year . The decline was not for lack of customer orders or retail sell - through . We attribute it to logistical delays in customers picking up FOB China orders and the extended timelines to deliver inventory into our US and European warehouses for domestic replenishment . Although net sales in the Toys / Consumer Products segment were down 7.7 % globally , net sales of the Costumes segment increased 16.4 % compared to Q3 2020 and are up 21.2 % for the first nine months of 2021 compared to the same period in 2020 . Despite the sales decline , net income attributable to common stockholders increased to $ 36.0 million , or $ 3.97 per diluted share , compared to $ 32.1 million , or $ 3.19 per diluted share for the third quarter of 2020. Net income in both years included significant charges and gains related to non - cash valuation adjustments . Excluding those elements and the 2021 gain from loan forgiveness , adjusted net income attributable to common stockholders ( a non - GAAP measure ) was $ 34.2 million , or $ 3.76 per diluted share in the third quarter of 2021 versus $ 32.6 million or $ 3.56 per diluted share in the third quarter of 2020. See note below on " Use of Non - GAAP Financial Information . " Cash and Cash Equivalents