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Business Segments, Geographic Data, and Sales by Major Customers
 12 Months Ended
Dec. 31, 2024
Segment Reporting [Abstract]  
Segment Reporting Disclosure [Text Block]

Note 3—Business Segments, Geographic Data and Sales by Major Customers

 

The Company is a worldwide producer and marketer of children’s toys and other consumer products, principally engaged in the design, development, production, marketing and distribution of its diverse portfolio of products. The Company’s segments are (i) Toys/Consumer Products and (ii) Costumes.

 

The Toys/Consumer Products (“TCP”) segment includes action figures, vehicles, play sets, plush products, dolls, electronic products, construction toys, infant and pre-school toys, child-sized and hand-held role play toys and everyday costume play, foot-to-floor ride-on vehicles, wagons, novelty toys, seasonal and outdoor products, kids’ indoor and outdoor furniture, and related products.

 

The Costumes segment, under its Disguise branding, designs, develops, markets and sells a wide range of every-day and special occasion dress-up costumes and related accessories in support of Halloween, Carnival, Children’s Day, Book Day/Week, and every-day/any-day costume play.

 

The Company’s Chief Executive Officer and Chief Financial Officer have been identified jointly as the chief operating decision maker (“CODM”). The CODM manages and allocates resources on a segment basis. The determination of the two segments is consistent with the financial information regularly reviewed by the CODM for purposes of evaluating performance. Results are regularly reviewed in comparison with current budget, prior forecast, prior year and recent years’ performance in that quarter.

 

Segment performance is measured at the operating income (loss) level. All sales are made to external customers and general corporate expenses have been attributed to the segments based upon relative sales volumes. Segment assets are primarily comprised of accounts receivable and inventories, net of applicable reserves and allowances, goodwill and other assets. Certain assets which are not tracked by operating segment and/or that benefit multiple operating segments have been allocated on the same basis.

 Results are not necessarily those which would be achieved if each segment was an unaffiliated business enterprise. Information by segment and a reconciliation to reported amounts as of December 31, 2024 and 2023 and for the three years in the period ended December 31, 2024 are as follows (in thousands):

 

   Year Ended December 31, 
   2024   2023   2022 
   TCP   Costumes   Total   TCP   Costumes   Total   TCP   Costumes   Total 
Net Sales  $570,018   $121,024   $691,042   $580,686    S130,871   $711,557   $647,317   $148,870   $796,187 
Cost of Sales (A)   389,534    88,487    478,021    388,260    99,944    488,204    465,405    119,496    584,901 
Gross Profit   180,484    32,537    213,021    192,426    30,927    223,353    181,912    29,374    211,286 
                                              
Direct selling expenses   33,255    6,850    40,105    33,604    3,383    36,987    28,790    4,500    33,290 
Product development and testing expenses   8,059    2,838    10,897    6,740    2,564    9,304    7,432    2,356    9,788 
Divisional general and administrative expenses (A), (B)   28,539    12,341    40,880    23,746    13,495    37,241    21,493    11,429    32,922 
Allocated headquarter general & administrative expenses (A), (C)   67,810    13,645    81,455    67,409    13,305    80,714    61,499    12,817    74,316 
Income (loss) from operations   42,821    (3,137)   39,684    60,927    (1,820)   59,107    62,698    (1,728)   60,970 
Income (loss) from joint venture                            (565)             - 
Other income (expense), net             302              563              797 
Change in fair value of preferred stock derivative liability                            (8,029)             (636)
Loss on debt extinguishment                            (1,023)             - 
Interest income             841              1,344              127 
Interest expense             (1,095)             (6,451)             (11,183)
Income before provision for (benefit from) income taxes            $39,732             $44,946             $50,075 

 

(A) Includes depreciation and amortization  $9,925   $121   $10,046   $8,409   $176   $8,585   $10,182   $396   $10,578 

 

(B)Consist mainly of payroll and related expenses, rent, depreciation and other general and administrative expenses.
(C)Consist mainly of payroll related expenses, rent, depreciation and other general and administrative expenses.

 

   December 31, 
   2024   2023 
Assets        
Toys/Consumer Products  $429,254   $383,812 
Costumes   15,615    15,139 
   $444,869   $398,951 

Net revenues are categorized based upon location of the customer, while long-lived assets are categorized based upon the location of the Company’s assets. The following tables present information about the Company by geographic area as of December 31, 2024 and 2023 and for each of the three years in the period ended December 31, 2024 (in thousands):

 

   Year Ended December 31, 
   2024   2023   2022 
Net Sales by Customer Area            
United States  $545,013   $557,865   $644,295 
Europe   71,392    76,464    85,348 
Latin America   38,159    32,024    18,338 
Canada   20,983    26,992    26,515 
Australia and New Zealand   7,409    7,542    8,836 
Asia   6,101    8,543    10,431 
Middle East and Africa   1,985    2,127    2,424 
   $691,042   $711,557   $796,187 

 

   December 31, 
   2024   2023 
Long-lived Assets        
United States  $53,020   $21,206 
China   13,553    13,794 
United Kingdom   808    892 
Italy   754    811 
Hong Kong   582    1,410 
Canada   107    23 
France   41    — 
Mexico   31    55 
   $68,896   $38,191 

 

Major Customers

 

Net sales to major customers globally were as follows (in thousands, except for percentages):

 

   2024   2023   2022 
       Percentage of       Percentage of       Percentage of 
   Amount   Net Sales   Amount   Net Sales   Amount   Net Sales 
Target®  $204,396    29.6%  $215,211    30.3%  $203,200    25.5%
Walmart®   166,943    24.2    148,354    20.8    226,318    28.4 
Amazon®   73,149    10.6    74,878    10.5    66,393    8.3 
   $444,488    64.4%  $438,443    61.6%  $495,911    62.2%

 

No other customer accounted for more than 10% of the Company’s total net sales.

 

The concentration of the Company’s business with a relatively small number of customers may expose the Company to material adverse effects if one or more of its large customers were to experience financial difficulty. The Company performs ongoing credit evaluations of its top customers and maintains an allowance for potential credit losses.