管理層發言
Good afternoon, everyone. Welcome to the JAKKS Pacific Second Quarter Earnings Conference Call with management, who will review financial results for the quarter ended 06/30/2026. JAKKS issued its earnings press release earlier today. The earnings release and presentation slides related to today's call are available on the company's website in the Investors section. On the call this afternoon are Steven Berman, Chairman and Chief Executive Officer, and John L. Kimble, Chief Financial Officer. Steven will first provide an overview of the quarter and year to date along with highlights of recent performance and current business trends. Then John will provide some additional comments around JAKKS' specific financial and operational results. Mr. Berman will then return with comments about the balance of the year and beyond prior to opening up the call for questions. The line will be placed on mute for the first portion of the call. If you would like to be placed in the queue to ask a question, please press 11 on your telephone keypad. Before we begin, the company would like to point out that any comments made about JAKKS Pacific's future performance, events, or circumstances, including estimates of sales, margins, earnings, and adjusted EBITDA in 2026 and beyond, as well as any other forward-looking statements concerning 2026 and beyond, are subject to safe harbor protection under federal securities laws. These statements reflect the company's best judgment based on current market trends and conditions today and are subject to certain risks and uncertainties which could cause actual results to differ materially from those projected in forward-looking statements. For details concerning these and other such risks and uncertainties, you should consult JAKKS' most recent Form 10-K and Form 10-Q filings with the SEC as well as the company's other reports subsequently filed with the SEC from time to time. In addition, today's comments by management will refer to non-GAAP financial measures such as adjusted EBITDA and adjusted earnings per share. Unless stated otherwise, the most directly comparable GAAP financial metrics have been reconciled to the associated non-GAAP financial measure within the company's earnings press release issued today or previously. As a reminder, this call is being recorded. With that, I would like to turn the call over to Steven Berman.
Good afternoon, and thank you for joining us today. Our Q2 financial results were modestly better than our expectations and an improvement over the same quarter a year ago. Globally, our net sales finished at $139.2 million in Q2, a 17% increase compared to prior year when the sudden implementation of massive tariffs dramatically reduced customer orders. Year to date, our sales are 6% ahead of prior year at $245.9 million, our best first half since 2023. North America led the improved results, growing 20% year over year in Q2 and 3% for the first half. Our international business reflected smaller year over year growth of 3% led by Europe but is up 20% for the first half of the year. Overall, this is the highest level of international first half shipping in JAKKS' history, over 10 years, at $53 million. Keeping the focus on the first half, our toys and consumer product business was up 5%. Those results were driven by the action play and collectibles division, which was up as we supported the extremely successful second Super Mario Brothers film released in April. Led by an array of 5-inch figures developed specifically for the film, our product line also featured playsets, dioramas, and plush and was very well received with solid sell-throughs. Building on that, we have another wave of new product introductions shipping now for fall planogram sets and promotional spaces, some of which are already on shelf. As retailers knew we had a solid opportunity with this film, through the first three quarters of shipping, we have sold in more movie-branded products than we did for the first film, which is great, especially given the consumer reaction. Fans can also look forward to a lot more focus on Donkey Kong in the second half with a feature playset shipping along with a new figure multipack. Our dolls, role play, and dress up business was up 12% in Q2 despite a lack of new entertainment support compared to the prior year. Of note, we have been steadily expanding our Frozen product line over the past 18 months, offering new role play patterns and refreshing key products. Although Frozen has been a cornerstone of our business dating back to the original film release, the business is up for the first half of this year versus prior year. In the fall, we have a strong retailer exclusive placed that will add more energy to this aisle as we build toward the Frozen 3 theatrical event in fall of 2027. Retail pricing of our Disney Princess and style collection assortments were heavily impacted by tariffs for much of last year, and those price shocks have unwound over recent months. We see some customers bringing retail prices down closer to where they were pre-tariff, although, admittedly, not across the entire product line. In general, it is true for the lower price points. We feel lower retails are contributing to improved velocity as consumers discover some of the strong innovative items we launched last fall as well as this spring. We are also seeing expanded listings resulting in positive point of sale results. The baby bath doll line launched in fall continues to sell extremely well, and our refreshed 6-inch princess doll line with a sub-$10 price point has been a strong performer as well. Retail POS for toy and consumer products at the top two U.S. accounts was positive in the first half, accelerating to double-digit levels in Q2. Our Disguise business also performed well, up 8% in the quarter and 9% in the first half. The popularity of Toy Story 5 and the Super Mario Brothers films are positive contributors to our business this year, as well as our launch of K-pop Demon Hunters costumes. Our outdoor seasonal business, which includes everything from activity tables and chairs to ball pits to ride-ons to skateboards and hula hoops among other products, remained a slight drag on results this quarter. We see this as a structural headwind rather than a transitory one. Retailers continue to reallocate in-store space away from large-box items; these bulky formats are poorly suited to the low-cost home delivery model that increasingly shapes retail economics. We are not waiting this out. We are managing this business with a multiyear lens and a clear plan on two levers: partnering with retailers to defend and recapture shelf space and lost sales, and reengineering packaging and product design to shrink box sizes and improve delivery economics. We are already advancing on both fronts. While these investments will take time to fully show up in the numbers, we are extremely confident they position this business for sustainable, profitable growth as the category continues to shift. We like where we are headed, but for the quarter, we were down 12% and down 17% year-to-date to $11.1 million in sales. Gross margins held up very well in the quarter at 32.3%, slightly lower than last year's at 32.8%. Tight management of sales, marketing, and overhead costs led to a slight operating loss of $142 thousand in the quarter compared to a $2.8 million loss in Q2 of last year. Adjusted EBITDA in the quarter was $5.4 million compared to $2.3 million in Q2 last year. That increases our 12-month trailing adjusted EBITDA to $37.8 million. I will now pass it over to John for some comments after which I will come back and discuss some product initiatives and areas of focus moving forward. John.
Thank you, Steven, and hello, everybody. This has been a solid quarter wrapping up a solid first half of the year. Steven has pointed out that everything has been going pretty much in line with our expectations; it is a plus when that actually happens. Our FOB-centric business model is alive and well. Our first-half shipments were over 75% FOB, reaching as high of a level as we have seen this decade. From a seasonality point of view, we have planned this year as a bit more front-weighted than normal given the strength of Super Mario, since we do not have any new toy introductions in the second half supporting holiday theatrical releases. And so far, that outlook is holding up. As I look at our financial results, I am focused on seeing gross margin dollars increase 3% in the first half to a little over $80 million. That is a pretty good outcome and reflects solid execution against what we saw as the opportunity, a bit better than the last two years and a couple million dollars short of where we were in 2023. Ultimately, as a company, I want to see us optimizing for margin dollars and not just margin percentages. As we do the extra work to identify incremental business outside of the traditional U.S. mass market, I believe that is going to require more financial creativity in how we assess new opportunities, which is something we are in progress on working through. Establishing more annuity-like evergreen revenue streams while continuing to thoughtfully manage overhead should create another flow of long-term bottom line profitability, which I feel we are only starting to wrap our heads around. As the majority of our overhead costs are fixed, I think we have an opportunity in this area given our momentum over the past couple of years, but it will admittedly take some time to build and prove out. To that end, we managed a bit of leverage in both selling and G&A in the first half, offsetting gross margin percentage being down slightly. That led to a slight operating loss in the quarter, and a $5.7 million operating loss in the first half, improved over the $6.5 million loss last year in the same time period. Working our way down the P&L, that leads us to the topic of IEPA tariff refunds. As mentioned last quarter, we applied for refunds for tariffs we paid under the regulations which the Supreme Court ultimately struck down. We are pleased to share that we have had essentially all of those funds refunded to us as of the second quarter close. We do not anticipate any more refunds going forward. In the quarter, we took the opportunity to revalue on-hand inventory that was still burdened by those tariffs to essentially undo the excess carrying costs that the tariffs generated upon import, thereby reducing the value on the balance sheet. The remainder of funds received we have recognized on the P&L this quarter as non-operating other income of $6.8 million. These refunds have raised our projection for pretax net income for the year, so our Q2 tax estimate has been adjusted accordingly. We have opted to back this gain out of our published non-GAAP projections of adjusted EBITDA and adjusted earnings per share. With that said, adjusted EPS for the quarter was $0.25 and $0.09 for the first half of the year. That compares favorably to $0.03 of earnings in Q2 last year and being breakeven year-to-date EPS at the same time last year. From a balance sheet perspective, we finished the quarter at $60.6 million in restricted and unrestricted cash compared to $43.1 million at the same time last year. That increase is largely driven by stronger operating results and the aforementioned tariff refund. As of July 17, the comparable cash on hand number was $47.1 million to give you an extra bit of context to remind you of the seasonality in our working capital. Our inventory level at the end of the quarter was $58.3 million, down from $71.8 million at this time last year, and up a bit from $52.9 million last quarter. Finally, the Board has approved our sixth consecutive quarterly cash dividend of $0.25 per share. The dividend will be payable to shareholders of record as of August 28, and will be payable on September 28. And now back to Steven for some more discussion of what is ahead.
Thank you, John. Midyear is always an exciting time in the business as we get close to all the energy and excitement around Halloween and the fourth quarter holiday season, while also seeing the full lineup for the following year and solidifying and receiving positive feedback from customers around the world. As much as we have mentioned before, I cannot emphasize enough the traction we are getting elevating our level of focus and performance outside of the U.S. We are increasingly working with key existing accounts in Europe on exclusive launches while listening to our customer needs and curating new offerings to open new accounts on the strength of our broad brand portfolios. We are additionally working with more distributors to specifically reach additional accounts in more fragmented markets. Our evergreen brands and categories with global appeal create a platform where products designed toward lower price points can reach a very wide audience when we can form the right partnership between our vendors in Asia, the licensors, and the right distribution partner to reach smaller accounts around the world. We have recently added three senior sales professionals to our global organization to further drive our business to higher levels, in addition to opening our first office in South America with an eye toward longer-term growth there. Turning back to the near term, I want to highlight some of the exciting areas as we move into the second half of the year. Our Disney Darlings line continues to expand both in the U.S. and in Europe with broader listings, which are in great sell-through success so far this year. The Snuggly Stars Wishables segment has recently launched in the U.S. in store and online at selected accounts with rapid sell-throughs. You will see a much broader Disney Darlings assortment on shelf later this year supported by a 360 marketing campaign across regions. Our baby dolls continue to be the happiest baby dolls you will find in the marketplace — there is no crying at JAKKS and there is no crying in the Disney Darlings line of products. In Disney Princess, our ages-and-stages strategy is introducing new core large dolls and matching dresses. Our two featured items will be Grow and Style Rapunzel doll and our interactive Dance With Me Belle. The Belle doll will be featured out of aisle at key U.S. accounts as our must-have princess toy this holiday season. With Disney ILY, we are introducing a new range with lower price points to further expand the product portfolio. We are also investing with a focus on the serious Disney fan who has proven to be the most enthusiastic ILY consumer. We see an opportunity by increasing our reach to more of them, especially given the current breadth and depth of this line. Moving to our Sonic business, this fall we are launching Giant Metal Sonic — the biggest, most sophisticated feature large-scale action figure we have ever released as part of our Sonic the Hedgehog product line. Inspired by Metal Sonic from the Sonic Superstars video game, at over 20 inches tall it recreates the ultimate boss battle and faces off with a 2.5-inch Sonic figure, which is also included. With the menacing light-up eyes, sounds, and slashing arm action, it comes in 35th anniversary packaging and we believe it will top many holiday wish lists. These large-scale toys have always been well received by the Sonic fan base, and we secured strong retail support and placement this fall. Also this fall, inspired by the DC-Sonic crossover series, we have more new product arriving for the fall that we plan to announce soon. As I mentioned, fans should look forward to the new Super Mario inspired film product to follow with a mix of core items and strong retail exclusives. They will also see our continued support and innovation within our evergreen Nintendo business, including a number of items themed to the Super Mario Wonder game. This past quarter, we also launched as a retail exclusive a new collector doll line of DC Comics characters featuring Poison Ivy, Catwoman, and fan favorite Harley Quinn. We saw a nice presale engagement, and these dolls continue to sell through well. In the fall, we will be mixing in a range of other classic Warner Bros. characters that fans love and have not been able to get in these product executions. In our Disguise costume business, beyond the properties already mentioned, our product line this year features other new entertainment releases, including Disney's Descendants 5, PAW Patrol: The Dino Movie, and Minions and Monsters, just to name a few. We remain on track to deliver a strong year of results in 2026, both financially and potentially exceeding our initial plans, but more importantly making substantial progress in building this business for growth in 2027, 2028, and beyond. In 2027, we have two top-tier theatrical releases from Sonic the Hedgehog and Disney Frozen franchises lined up for Q1 and Q4, respectively. Beyond that, there are a number of additional initiatives — some entertainment-led, some working with our key customers on private label opportunities, and some opportunities that are classic new toy lines with innovation driven by the creativity of our design and marketing teams. In addition, we and the trade are extremely excited to launch our anime, manga, and VTube digital entertainer initiatives for 2027 and beyond. We are opening up brand new distribution channels while working differently with our well-established current distribution partners to bring a lot of different offerings to the market. We will discuss these in more detail later in the year and throughout 2027. And now we will take a couple of questions. Operator?
分析師問答
Thank you. At this time, we will conduct a question-and-answer session. To ask a question, please press 11 and wait for your name to be announced. To withdraw your question, please press 11 again. Please stand by. We will compile the Q&A roster. Our first question comes from the line of Eric Beder of Small Cap Consumer Research. Your line is now open.
Great. Congratulations.
Thank you, Eric.
Let me ask a question about the domestic market here. We went through the tariff shock and we are coming back out of it. How do you see the market change, and what are the opportunities from that that you can take advantage of?
Well, firstly, thank you very much. The things that we have seen versus last year is that the market adapted to the price changes that occurred throughout the industry, with prices being raised where appropriate due to tariffs and also the volatility of the cost of petroleum with regards to resins as well as container costs. For us, we have identified and achieved what we needed to going into this year, which is reducing costs in various products to bring back the price points to the correct levels that drive more volume. Those are the price points usually during the spring and summer under $30 retail. We have done that and adapted very quickly. In addition, we have dove very deep into the value trade and the specialty trades — the TJ Maxx's, the Ross's, and so on — as well as staying strong with our major customers like Target, Walmart, and Amazon, and expanding into the 5 Below's, the dollar trade, and so on. So we became very diversified both on an FOB basis and on a domestic basis. We are also seeing that the appetite at retail is quite strong during the spring versus last spring. So the appetite is there for the right product at the right price points.
Okay. So, basically, you have matched and taken advantage and kept prices where you need them to be and still maintain kind of the margins that we are seeing right now?
Yes. And, yes, we have.
Now you mentioned that the change in international is a great opportunity. Some of these markets are not as concentrated as we are in the U.S. What does that mean for the level of FOB you see internationally and the potential for margins going forward on that?
Well, the great thing about international is it is growing on a great path — in EMEA, Latin America, South America, and Southeast Asia. Our product categories and lines are much more appropriate today than they were five years ago for the international market. Two, we have the majority of the licensing rights that work in the territories; we have the right ones that are correct for our company. That being said, certain properties work well in the U.K., Germany, and France that do not work as well in Italy or Spain, so we are very quick to market with the right product at the right country and at the right level. The same goes for Latin America, South America, and Southeast Asia. In addition, we have the FOB structure that we started since inception, which is very much a footprint internationally. Primarily, the majority of our sales internationally are on an FOB basis, which helps us then enhance our own margins internally while also giving a lower landed price to the customer, who can enhance their margin and also have a lower price for the consumer, which gives them a great price point. All of those combinations — great product, great licenses, and strong momentum in all of our categories — are allowing us to grow pretty rapidly. Going forward for the next two to three years, we see strong growth, diversification across various countries, and some really strong initiatives.
Okay, and final question. What are you seeing in terms of potentially either new licenses or M&A? You keep getting more cash. How should we be thinking about that kind of potential, near and longer term? Thank you.
Thanks for that question. One thing is we have a strong, healthy balance sheet, which gives us a lot of strength going forward in looking at different opportunities. We have a lot of licenses we have not been able to announce yet because some of them are still under contract, but our licensed portfolio is diversifying very strongly in each of our categories of business, the five different segments that we focus on. We are focused — we are a toy company, a kids consumer products company. While a lot of companies are focused on kidult, which we are also involved in, particularly with anime segmentation and certain other areas, we remain focused on true kids products for birth to roughly 6-7 years old. That focus will not change. That is key as some companies move out of that core toy business. We are diving deeper into kid products while also participating in kidult markets. If there is an opportunity in the acquisition area in the segment that would benefit the company and our shareholders, we have been looking and we have been speaking to bankers; we have the cash and the availability with banking to access additional capital if needed. So that is on our platform. Going into 2027 and 2028, which we feel very strong and confident about, we will be sitting with the board of directors looking at different capital allocation initiatives. But, having gone through a strong first half of the year, we are focused on shoring up our business, taking market share, and then looking to grow in the future.
Great. Good luck for the rest of the year.
Thank you.
One moment for our next question. Our next question comes from the line of Thomas Forte of Maxim Group. Your line is now open.
Yep. Steven, John, congrats on a great quarter. I have three questions. I apologize; they are kind of on the boring side — points of clarification. First, can you just clarify that there was no benefit to your gross margin in the quarter from the tariff refunds? Second, Steven, is the pace of your anime-related efforts the same as you expected last quarter? And third, is the same true for international in France and Latin America — are there very strong initiatives in anime there as well?
Yes. We are extremely focused and aggressively putting the initiatives together in the segments I mentioned — anime, manga, VTube, and digital entertainers. The way that we are launching this is a grassroots marketing approach with specific retailers focused in this genre at first, and then a wide distribution initiative in the fall of 2027 with many of the main retailers we work with today on top of the actual anime and Asian pop culture distribution retail channels.
And then the same thing goes for international in France and Latin America — there are very strong initiatives in anime.
We are very much on path, very strong with it, and very excited about it, but it is a very methodical initiative and launch. Long-term expectations are still as strong as they were before.
Great. So just a quick follow-up there — there is nothing expected for 2026 revenue from the anime-related efforts?
Correct.
And then lastly, the media landscape, even by media landscape standards, seems a little more cloudy. Pixar had layoffs even though Toy Story 5 is on pace for a billion, and the Paramount-Warner Bros. deal seems to be in a holding pattern. Is this creating any additional opportunities or presenting any additional challenges for you?
Not challenges. All in all, these are common business practices where companies look for efficiencies. The Paramount-Warner Bros. deal is still business as normal with all the license and entertainment holders. Nothing has changed in the direction of where we are as a company. We see a lot of opportunity right now because of the traction we have in the various segments that we are in. As I mentioned, we are focused on the kids' area of business while also participating in kidult markets where appropriate. Our cosplay, Disguise, and Halloween divisions are strong, and our private-label initiative with major retailers is picking up very strongly. We have diversified our company into a very healthy platform going forward.
Thank you, Steven. Thank you, John.
Thank you. This concludes the question-and-answer session. I would now like to turn it back to Steven Berman, CEO, for final remarks.
Ladies and gentlemen, thank you for your time today. We look forward to speaking to investors after these calls today and tomorrow and are looking forward to our third quarter conference call and getting on the road. Thank you, everybody.
Thank you for participating in today's conference. This concludes the program. You may now disconnect.