JAKKS Pacific, Inc. reported its financial results for the three and nine months ended September 30, 2024, showing mixed performance compared to the same periods in 2023. For the third quarter, net sales increased to $321.6 million from $309.7 million, while for the nine-month period, net sales decreased to $560.3 million from $584.2 million. The growth in the third quarter was primarily driven by a 7.4% increase in the Toys/Consumer Products segment, which generated $264.3 million, while the Costumes segment saw a decline of 10% to $57.3 million.

Gross profit for the third quarter rose to $108.8 million, up from $107.0 million, reflecting a gross margin of 33.8%, slightly down from 34.5% in the prior year. However, for the nine months, gross profit decreased to $177.5 million from $189.6 million, resulting in a gross margin decline from 32.5% to 31.7%. Income from operations for the third quarter improved to $68.1 million, compared to $62.4 million, while for the nine months, it fell to $54.4 million from $74.4 million.

Net income for the third quarter increased to $52.3 million from $48.1 million, translating to earnings per share of $4.78, a slight increase from $4.77. Conversely, net income for the nine months decreased to $43.3 million from $49.0 million, with earnings per share dropping from $4.85 to $4.14.

The company experienced significant changes in cash flow, with net cash used in operating activities for the nine months ending September 30, 2024, at $(15.2) million, a stark contrast to $87.7 million provided in the previous year. This decline was attributed to a decrease in net income, increased cash taxes, and other working capital changes. As of September 30, 2024, cash and cash equivalents, including restricted cash, totaled $22.3 million, down from $72.6 million at the end of 2023.

Strategically, JAKKS Pacific redeemed all outstanding shares of Series A Senior Preferred Stock for $20 million in cash and common shares valued at $15 million, settling a preferred stock derivative liability of $29.9 million. The company also reported an increase in its inventory obsolescence reserve to $8.8 million from $7.7 million at the end of 2023.

Overall, JAKKS Pacific's financial results reflect a complex landscape of growth in certain product lines, challenges in profitability, and strategic financial maneuvers aimed at strengthening its capital structure.