JAKKS Pacific, Inc.

JAKKS Pacific reported Q2 net sales of $139.2 million, up 17% year over year, with year-to-date sales of $245.9 million, up 6%. Gross margin was 32.3% versus 32.8% a year ago. Operating loss improved to $142 thousand from a $2.8 million loss in Q2 last year, while adjusted EBITDA was $5.4 million versus $2.3 million last year. Adjusted EPS was $0.25 for the quarter and $0.09 for the first half. Management said first-half gross margin dollars increased 3% to a little over $80 million, and first-half operating loss improved to $5.7 million from $6.5 million last year. The company received essentially all IEPA tariff refunds by quarter end, recognized $6.8 million of non-operating other income, and said it does not anticipate any more refunds. No explicit next-quarter or full-year financial guidance figures were provided, but management said it remains on track for a strong 2026 and potentially above initial plans, with confidence in 2027-2028 growth.

Steven Berman said the quarter was modestly better than expected and highlighted broad operational traction, especially in North America and internationally. He emphasized better pricing discipline after tariff-related disruptions, stronger point-of-sale trends, and a diversified mix of licensing and retail channels, including value and specialty retail. His tone was constructive and confident, with repeated references to momentum heading into Halloween, holiday, and 2027 franchise launches.

John Kimble focused on execution, margin dollars, and balance sheet strength. He said first-half gross margin dollars rose 3% to a little over $80 million, operating loss improved to $5.7 million, and the balance sheet ended Q2 with $60.6 million in cash versus $43.1 million a year ago. He noted inventory was $58.3 million, the company had essentially all tariff refunds in hand, and the board approved a sixth consecutive quarterly cash dividend of $0.25 per share. He also stressed the business remains heavily FOB, with more than 75% of first-half shipments FOB, and said the company is thinking about long-term profitability, overhead leverage, and capital allocation.

Analysts asked whether the domestic market had structurally changed after tariff-driven price shocks, and management said the company adapted by lowering costs and restoring price points, especially under $30 retail, while expanding into value and specialty channels. On international, management said FOB economics remain a major advantage and that growth is broad-based across EMEA, Latin America, South America, and Southeast Asia. Analysts also pressed on capital allocation and M&A; Berman said the company has a strong balance sheet, is speaking with bankers, and will discuss capital allocation with the board, but the current priority is shoring up the core business and taking share. A follow-up clarified that anime-related initiatives are not expected to contribute revenue in 2026.