Disney Darlings Disney Darlings SANTA MONICA, Calif., Sept. 16, 2025 (GLOBE NEWSWIRE) -- JAKKS Pacific, Inc. (NASDAQ: JAKK), a leading designer and marketer of toys, in collaboration with Disney, has unveiled a charming new baby doll brand, Disney Darlings, for children ages 2-5 years old. Born from love and inspired by Disney’s timeless tales, Disney Darlings celebrate classic characters and bring joy to every child. The adorable new baby doll line is available in stores and online this fall at Walmar ...

PART I – FINANCIAL INFORMATION This section details the company's financial performance and position for the reported periods [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining the company's accounting policies, segment performance, and financial position for the periods ended June 30, 2025, and December 31, 2024 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement presents the company's assets, liabilities, and equity at specific points in time Balance Sheet Data | Metric | Dec 31, 2024 (in thousands) | Jun 30, 2025 (in thousands) | Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :----- | | Total Assets | $444,869 | $438,718 | (1.4%) | | Total Liabilities | $204,036 | $201,981 | (1.0%) | | Total Stockholders' Equity | $240,833 | $236,737 | (1.7%) | | Cash and cash equivalents | $69,936 | $38,195 | (45.4%) | | Inventory | $52,780 | $71,811 | 36.0% | | Accounts payable - Meisheng | $13,461 | $0 | (100%) | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) This statement details the company's revenues, expenses, and net income or loss over specific periods Statements of Operations Data | Metric (in thousands) | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | Change (YoY) | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | Change (YoY) | | :-------------------- | :-------------------------- | :-------------------------- | :----------- | :-------------------------- | :-------------------------- | :----------- | | Net Sales | $119,094 | $148,619 | (19.9%) | $232,347 | $238,695 | (2.7%) | | Gross Profit | $39,023 | $47,585 | (18.0%) | $78,036 | $68,637 | 13.7% | | Income (loss) from operations | $(2,783) | $7,643 | (136.4%) | $(6,540) | $(13,681) | 52.2% | | Net income (loss) | $(2,319) | $5,266 | (144.0%) | $(4,701) | $(8,959) | 47.5% | | EPS - Basic | $(0.21) | $0.49 | (142.9%) | $(0.42) | $(0.75) | 44.0% | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This statement outlines changes in the company's equity accounts, including retained earnings and share capital Stockholders' Equity Data | Metric (in thousands) | Dec 31, 2024 | Jun 30, 2025 | Change | | :-------------------- | :----------- | :----------- | :----- | | Total Stockholders' Equity | $240,833 | $236,737 | (1.7%) | | Accumulated Deficit | $(39,692) | $(49,965) | (25.9%) | | Share-based compensation expense (6 months) | N/A | $5,740 | N/A | | Cash dividend declared (6 months) | N/A | $(5,572) | N/A | - The company declared and paid two quarterly cash dividends of **$0.25 per share** during the six months ended June 30, 2025, totaling **$5.57 million**, whereas no dividends were declared or paid in 2024[12](index=12&type=chunk)[80](index=80&type=chunk) - In March 2024, the company redeemed all outstanding Series A Senior Preferred Stock for **$20.0 million cash** and **$15.0 million** in common shares[14](index=14&type=chunk)[86](index=86&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement reports the cash generated and used by the company across operating, investing, and financing activities Cash Flow Data | Metric (in thousands) | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | Change (YoY) | | :-------------------- | :-------------------------- | :-------------------------- | :----------- | | Net cash used in operating activities | $(15,931) | $(27,666) | 42.4% | | Net cash used in investing activities | $(6,015) | $(6,174) | 2.6% | | Net cash used in financing activities | $(9,400) | $(20,131) | 53.3% | | Net decrease in cash, cash equivalents and restricted cash | $(31,346) | $(53,971) | 41.9% | | Cash, cash equivalents and restricted cash, end of period | $43,056 | $17,902 | 140.5% | - Cash paid for income taxes significantly decreased from **$13.09 million** in 2024 to **$2.20 million** in 2025 for the six-month period[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides additional information and explanations for the figures presented in the financial statements [Note 1 — Basis of Presentation](index=9&type=section&id=Note%201%20%E2%80%94%20Basis%20of%20Presentation) This note describes the accounting principles, policies, and new pronouncements adopted by the company - The company adopted ASU 2020-06 (Accounting for Convertible Instruments and Contracts in an Entity's Own Equity) on January 1, 2024, with no material impact[26](index=26&type=chunk) - ASU 2023-07 (Segment Reporting) was adopted as of December 31, 2024, leading to incremental segment disclosures[27](index=27&type=chunk) - The company is evaluating the impact of ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures), effective for fiscal years beginning after December 15, 2024, and December 15, 2026, respectively[28](index=28&type=chunk)[29](index=29&type=chunk) [Note 2 — Business Segments, Geographic Data and Sales by Major Customers](index=10&type=section&id=Note%202%20%E2%80%94%20Business%20Segments,%20Geographic%20Data%20and%20Sales%20by%20Major%20Customers) This note provides detailed financial information broken down by the company's operating segments, geographic regions, and key customers - The company's two business segments are Toys/Consumer Products (TCP) and Costumes[32](index=32&type=chunk) Segment Performance (3 Months Ended Jun 30) | Segment (3 Months Ended Jun 30, in thousands) | 2025 Net Sales | 2024 Net Sales | Change (YoY) | 2025 Income (loss) from operations | 2024 Income (loss) from operations | Change (YoY) | | :-------------------------------------------- | :------------- | :------------- | :----------- | :--------------------------------- | :--------------------------------- | :----------- | | Toys/Consumer Products | $80,379 | $104,570 | (23.1%) | $(1,668) | $9,710 | (117.2%) | | Costumes | $38,715 | $44,049 | (12.0%) | $(1,115) | $(2,067) | 46.1% | | Total | $119,094 | $148,619 | (19.9%) | $(2,783) | $7,643 | (136.4%) | Segment Performance (6 Months Ended Jun 30) | Segment (6 Months Ended Jun 30, in thousands) | 2025 Net Sales | 2024 Net Sales | Change (YoY) | 2025 Loss from operations | 2024 Loss from operations | Change (YoY) | | :-------------------------------------------- | :------------- | :------------- | :----------- | :------------------------ | :------------------------ | :----------- | | Toys/Consumer Products | $187,817 | $187,480 | 0.2% | $(748) | $(7,500) | 90.0% | | Costumes | $44,530 | $51,215 | (13.1%) | $(5,792) | $(6,181) | 6.3% | | Total | $232,347 | $238,695 | (2.7%) | $(6,540) | $(13,681) | 52.2% | Sales by Major Customer (6 Months Ended Jun 30) | Major Customer (6 Months Ended Jun 30) | 2025 Amount (in thousands) | 2025 % of Net Sales | 2024 Amount (in thousands) | 2024 % of Net Sales | | :------------------------------------- | :------------------------- | :------------------ | :------------------------- | :------------------ | | Target | $66,382 | 28.6% | $68,079 | 28.5% | | Walmart | $60,074 | 25.8% | $56,039 | 23.5% | | Total | $126,456 | 54.4% | $124,118 | 52.0% | [Note 3 — Inventory](index=14&type=section&id=Note%203%20%E2%80%94%20Inventory) This note details the composition of inventory and the related obsolescence reserve Inventory Details | Metric (in thousands) | Jun 30, 2025 | Dec 31, 2024 | Change | | :-------------------- | :----------- | :----------- | :----- | | Finished goods inventory | $71,811 | $52,780 | 36.0% | | Inventory obsolescence reserve | $3,300 | $10,900 | (69.7%) | [Note 4 — Revenue Recognition and Reserve for Sales Returns and Allowances](index=14&type=section&id=Note%204%20%E2%80%94%20Revenue%20Recognition%20and%20Reserve%20for%20Sales%20Returns%20and%20Allowances) This note explains the company's revenue recognition policies and the accounting for sales returns and allowances - Revenue is recognized at the point of sale when control of goods is transferred to customers[52](index=52&type=chunk) - The reserve for sales returns and allowances decreased by **18.7%** from **$35.8 million** at December 31, 2024, to **$29.1 million** at June 30, 2025[57](index=57&type=chunk) Sales Commissions and Shipping Costs | Expense (in thousands) | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :--------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Sales commissions | $500 | $300 | $900 | $600 | | Shipping and handling costs | $1,700 | $1,400 | $3,900 | $3,000 | [Note 5 — Credit Facilities](index=16&type=section&id=Note%205%20%E2%80%94%20Credit%20Facilities) This note describes the company's credit arrangements, including new facilities and debt extinguishments - The company terminated its **$67.5 million** JPMorgan ABL Facility on June 24, 2025, with no outstanding borrowings[61](index=61&type=chunk) - A **$0.4 million** loss on debt extinguishment was recorded due to the write-off of unamortized debt issuance costs from the JPMorgan ABL Facility[61](index=61&type=chunk) - A new **$70.0 million** senior secured revolving credit facility with BMO Bank N.A. was established on June 24, 2025, maturing on June 24, 2030, with no outstanding borrowings and **$70.0 million** excess borrowing availability as of June 30, 2025[63](index=63&type=chunk)[66](index=66&type=chunk) [Note 6 — Income Taxes](index=17&type=section&id=Note%206%20%E2%80%94%20Income%20Taxes) This note provides details on the company's income tax expense, benefit, and effective tax rates Income Tax Data | Metric | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Income tax benefit (expense) | $(606) (in thousands) | $2,281 (in thousands) | $(1,769) (in thousands) | $(4,447) (in thousands) | | Effective tax rate | 20.7% | 30.2% | 27.3% | 33.2% | - The decrease in the effective tax rate for the three months ended June 30, 2025, was primarily due to a change in the forecasted annual effective tax rate driven by the jurisdictional mix of earnings[71](index=71&type=chunk) [Note 7 — Earnings (Loss) Per Share](index=17&type=section&id=Note%207%20%E2%80%94%20Earnings%20(Loss)%20Per%20Share) This note presents the basic and diluted earnings or loss per share calculations Earnings Per Share Data | Metric | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | EPS - Basic | $(0.21) | $0.49 | $(0.42) | $(0.75) | | EPS - Diluted | $(0.21) | $0.47 | $(0.42) | $(0.75) | | Weighted average common shares outstanding - basic (in thousands) | 11,146 | 10,801 | 11,146 | 10,577 | - Potentially dilutive restricted stock units were excluded from diluted loss per share computation for both periods as they were anti-dilutive[75](index=75&type=chunk) [Note 8 — Common Stock and Preferred Stock](index=17&type=section&id=Note%208%20%E2%80%94%20Common%20Stock%20and%20Preferred%20Stock) This note details transactions related to common and preferred stock, including repurchases and dividends - The company repurchased **$3.8 million** of common stock for employee tax withholding in 2025, compared to **$5.1 million** in 2024[78](index=78&type=chunk)[79](index=79&type=chunk) - A quarterly cash dividend of **$0.25 per share** was declared on April 28, 2025, and paid on June 27, 2025, with no dividend declared or paid in 2024[80](index=80&type=chunk) - All outstanding Series A Senior Preferred Stock was redeemed on March 11, 2024, for **$20.0 million cash** and **571,295 common shares** (valued at **$15.0 million**)[86](index=86&type=chunk)[97](index=97&type=chunk) [Note 9 — Goodwill](index=20&type=section&id=Note%209%20%E2%80%94%20Goodwill) This note discusses the company's goodwill and the results of impairment tests - No goodwill impairment was determined for the six months ended June 30, 2025, or June 30, 2024[103](index=103&type=chunk) - An interim quantitative impairment test was conducted as of May 31, 2025, due to macroeconomic developments (rising import costs), confirming that the fair value of reporting units exceeded their carrying amounts[102](index=102&type=chunk) [Note 10 — Comprehensive Income (Loss)](index=20&type=section&id=Note%2010%20%E2%80%94%20Comprehensive%20Income%20(Loss)) This note presents the components of comprehensive income or loss, including foreign currency translation adjustments Comprehensive Income Data | Metric (in thousands) | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (loss) | $(2,319) | $5,266 | $(4,701) | $(8,959) | | Foreign currency translation adjustment | $3,637 | $(116) | $4,265 | $(681) | | Comprehensive income (loss) | $1,318 | $5,150 | $(436) | $(9,640) | [Note 11 — Litigation and Contingencies](index=20&type=section&id=Note%2011%20%E2%80%94%20Litigation%20and%20Contingencies) This note outlines the company's legal proceedings and contingent liabilities - The company accrues for losses from legal proceedings when probable and reasonably estimable[105](index=105&type=chunk) - The company provides indemnifications to various parties, including licensors, customers, officers, and directors, with no significant costs for D&O indemnifications in the last five years[106](index=106&type=chunk)[107](index=107&type=chunk) [Note 12 — Share-Based Payments](index=22&type=section&id=Note%2012%20%E2%80%94%20Share-Based%20Payments) This note details the company's share-based compensation expense and unrecognized costs Share-Based Compensation Expense | Metric (in thousands) | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Share-based compensation expense | $3,188 | $2,545 | $5,740 | $5,094 | - As of June 30, 2025, total unrecognized compensation cost for non-vested restricted stock units was **$15.9 million**, with a weighted-average recognition period of **1.9 years**[111](index=111&type=chunk) [Note 13 — Fair Value Measurements](index=22&type=section&id=Note%2013%20%E2%80%94%20Fair%20Value%20Measurements) This note describes the fair value hierarchy and measurements for financial instruments - Money market funds and investments in employee deferred compensation trusts are measured at fair value using Level 1 inputs[116](index=116&type=chunk) - The preferred stock derivative liability, previously a Level 3 liability, was extinguished on March 11, 2024[117](index=117&type=chunk)[118](index=118&type=chunk) [Note 14 — Related Party Transactions](index=25&type=section&id=Note%2014%20%E2%80%94%20Related%20Party%20Transactions) This note discloses transactions and balances with related parties - Meisheng Cultural Company Limited ceased to be a related party as of December 6, 2024[119](index=119&type=chunk) - Amounts due to Meisheng for inventory decreased from **$13.5 million** at December 31, 2024, to **zero** at June 30, 2025[9](index=9&type=chunk)[120](index=120&type=chunk) [Note 15 — Prepaid Expenses and Other Assets](index=25&type=section&id=Note%2015%20%E2%80%94%20Prepaid%20Expenses%20and%20Other%20Assets) This note provides a breakdown of prepaid expenses and other current assets Prepaid Expenses and Other Assets Details | Metric (in thousands) | Jun 30, 2025 | Dec 31, 2024 | Change | | :-------------------- | :----------- | :----------- | :----- | | Prepaid expenses and other assets | $22,575 | $14,141 | 59.6% | | Income tax receivable | $10,246 | $8,798 | 16.5% | | Prepaid expenses | $5,780 | $2,306 | 150.7% | | Royalty advances | $2,902 | $941 | 208.4% | [Note 16 — Subsequent events](index=25&type=section&id=Note%2016%20%E2%80%94%20Subsequent%20events) This note reports significant events that occurred after the balance sheet date - Changes to the US Tax code were signed into law on July 4, 2025, and will be accounted for in Q3 2025[122](index=122&type=chunk) - A quarterly cash dividend of **$0.25 per common share** was declared on July 22, 2025, payable on September 30, 2025[122](index=122&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations for the three and six months ended June 30, 2025, compared to the prior year, covering net sales, cost of sales, selling, general and administrative expenses, income taxes, seasonality, and liquidity, highlighting key drivers of performance changes [Disclosure Regarding Forward-Looking Statements](index=26&type=section&id=Disclosure%20Regarding%20Forward-Looking%20Statements) This section cautions readers about forward-looking statements and potential risks - The report contains forward-looking statements, and actual results may differ materially from expectations due to various factors[124](index=124&type=chunk) - The company does not commit to publicly update or revise any forward-looking statements[124](index=124&type=chunk) [Critical Accounting Estimates](index=26&type=section&id=Critical%20Accounting%20Estimates) This section highlights the company's significant accounting policies and estimates - Critical accounting policies and estimates did not materially change during the first six months of 2025[125](index=125&type=chunk) [New Accounting Pronouncements](index=26&type=section&id=New%20Accounting%20Pronouncements) This section refers to details on recently adopted or issued accounting standards - Refer to Note 1 for details on new accounting pronouncements[126](index=126&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance over the reporting periods [Comparison of the Three Months Ended June 30, 2025 and 2024](index=27&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030,%202025%20and%202024) This section compares the company's financial results for the three-month periods [Net Sales](index=27&type=section&id=Net%20Sales%20(3%20Months)) This section analyzes net sales performance for the three months ended June 30 Net Sales by Segment (3 Months) | Segment (in thousands) | 2025 Net Sales | 2024 Net Sales | Change (YoY) | | :--------------------- | :------------- | :------------- | :----------- | | Toys/Consumer Products | $80,379 | $104,570 | (23.1%) | | Costumes | $38,715 | $44,049 | (12.0%) | | Total Net Sales | $119,094 | $148,619 | (19.9%) | - Toys/Consumer Products sales decreased due to lower North American demand from higher importation costs, despite a **41.1% increase** in international net sales[129](index=129&type=chunk) [Cost of Sales](index=27&type=section&id=Cost%20of%20Sales%20(3%20Months)) This section analyzes the cost of goods sold for the three months ended June 30 Cost of Sales by Segment (3 Months) | Segment (in thousands) | 2025 Cost of Sales | 2024 Cost of Sales | Change (YoY) | 2025 % of Net Sales | 2024 % of Net Sales | | :--------------------- | :----------------- | :----------------- | :----------- | :------------------ | :------------------ | | Toys/Consumer Products | $53,293 | $67,519 | (21.0%) | 66.3% | 64.5% | | Costumes | $26,778 | $33,515 | (20.0%) | 69.3% | 76.1% | | Total Cost of Sales | $80,071 | $101,034 | (20.7%) | 67.2% | 68.0% | - Gross profit margin improved to **32.8%** in Q2 2025 from **32.0%** in Q2 2024, driven by a favorable product mix in TCP and better pricing/lower reserves in Costumes[127](index=127&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) [Selling, General and Administrative Expenses](index=27&type=section&id=Selling,%20General%20and%20Administrative%20Expenses%20(3%20Months)) This section analyzes SG&A expenses for the three months ended June 30 SG&A Expenses (3 Months) | Metric (in thousands) | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | Change (YoY) | 2025 % of Net Sales | 2024 % of Net Sales | | :-------------------- | :-------------------------- | :-------------------------- | :----------- | :------------------ | :------------------ | | SG&A Expenses | $41,806 | $39,942 | 4.7% | 35.1% | 26.9% | - The increase in SG&A expenses was attributed to slightly higher selling expenses, salaries and benefits, and professional services[133](index=133&type=chunk) [Benefit From Income Taxes](index=27&type=section&id=Benefit%20From%20Income%20Taxes%20(3%20Months)) This section analyzes the income tax benefit or expense for the three months ended June 30 Income Tax Benefit (3 Months) | Metric (in thousands) | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | | :-------------------- | :-------------------------- | :-------------------------- | | Income tax benefit (expense) | $(606) | $2,281 | | Effective tax rate | 20.7% | 30.2% | - The decrease in tax expense was primarily due to a change in the forecasted annual effective tax rate, influenced by the jurisdictional mix of earnings[134](index=134&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and 2024](index=28&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) This section compares the company's financial results for the six-month periods [Net Sales](index=28&type=section&id=Net%20Sales%20(6%20Months)) This section analyzes net sales performance for the six months ended June 30 Net Sales by Segment (6 Months) | Segment (in thousands) | 2025 Net Sales | 2024 Net Sales | Change (YoY) | | :--------------------- | :------------- | :------------- | :----------- | | Toys/Consumer Products | $187,817 | $187,480 | 0.2% | | Costumes | $44,530 | $51,215 | (13.1%) | | Total Net Sales | $232,347 | $238,695 | (2.7%) | - Toys/Consumer Products sales were positively impacted by higher sales related to the Sonic 3 Movie product[135](index=135&type=chunk) [Cost of Sales](index=28&type=section&id=Cost%20of%20Sales%20(6%20Months)) This section analyzes the cost of goods sold for the six months ended June 30 Cost of Sales by Segment (6 Months) | Segment (in thousands) | 2025 Cost of Sales | 2024 Cost of Sales | Change (YoY) | 2025 % of Net Sales | 2024 % of Net Sales | | :--------------------- | :----------------- | :----------------- | :----------- | :------------------ | :------------------ | | Toys/Consumer Products | $122,532 | $132,574 | (7.6%) | 65.2% | 70.7% | | Costumes | $31,779 | $37,484 | (15.2%) | 71.5% | 73.2% | | Total Cost of Sales | $154,311 | $170,058 | (9.3%) | 66.4% | 71.2% | - Gross profit margin significantly improved to **33.6%** in H1 2025 from **28.8%** in H1 2024, driven by a favorable product mix (movie-related) and lower inventory reserves in TCP, and improved factory costing in Costumes[127](index=127&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) [Selling, General and Administrative Expenses](index=28&type=section&id=Selling,%20General%20and%20Administrative%20Expenses%20(6%20Months)) This section analyzes SG&A expenses for the six months ended June 30 SG&A Expenses (6 Months) | Metric (in thousands) | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | Change (YoY) | 2025 % of Net Sales | 2024 % of Net Sales | | :-------------------- | :-------------------------- | :-------------------------- | :----------- | :------------------ | :------------------ | | SG&A Expenses | $84,576 | $82,318 | 2.8% | 36.4% | 34.5% | - The increase in SG&A expenses was primarily due to slightly higher selling expenses and salaries and benefits[139](index=139&type=chunk) [Benefit From Income Taxes](index=28&type=section&id=Benefit%20From%20Income%20Taxes%20(6%20Months)) This section analyzes the income tax benefit or expense for the six months ended June 30 Income Tax Benefit (6 Months) | Metric (in thousands) | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :-------------------- | :-------------------------- | :-------------------------- | | Income tax benefit | $(1,769) | $(4,447) | | Effective tax rate | 27.3% | 33.2% | - The decrease in tax benefit for the six months was primarily due to a decrease in benefits from discrete items[140](index=140&type=chunk) [Seasonality and Backlog](index=29&type=section&id=Seasonality%20and%20Backlog) This section discusses the seasonal nature of the company's business and the limited utility of backlog as a sales indicator - The retail toy industry is seasonal, with highest sales in Q2 and Q3, and highest working capital needs in Q2 and Q3[141](index=141&type=chunk) - Orders are generally cancelable, making accurate sales forecasting difficult, and backlog is not an accurate indicator of future sales[142](index=142&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) This section analyzes the company's ability to generate and manage cash flows, including working capital, operating activities, and financing arrangements Working Capital | Metric (in millions) | Jun 30, 2025 | Dec 31, 2024 | Change | | :------------------- | :----------- | :----------- | :----- | | Working Capital | $109.1 | $119.3 | (8.6%) | - Net cash used in operating activities decreased to **$15.9 million** for the six months ended June 30, 2025, from **$27.7 million** in the prior year, primarily due to lower net loss and less cash taxes paid[144](index=144&type=chunk) - The company has future aggregate minimum royalty guarantees of **$63.4 million**, with **$48.5 million** due over the next twelve months[144](index=144&type=chunk) - A new **$70.0 million** senior secured revolving credit facility with BMO Bank N.A. was entered into on June 24, 2025, replacing the prior facility and providing **$70.0 million** in available liquidity as of June 30, 2025[148](index=148&type=chunk)[149](index=149&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, specifically interest rate risk related to its revolving credit facility and foreign currency risk from international operations [Interest Rate Risk](index=31&type=section&id=Interest%20Rate%20Risk) This section discusses the company's exposure to fluctuations in interest rates - The Revolving Facility's interest rates are variable, based on Adjusted Term SOFR or Base Rate plus a margin, exposing the company to interest rate risk[156](index=156&type=chunk) [Foreign Currency Risk](index=31&type=section&id=Foreign%20Currency%20Risk) This section discusses the company's exposure to fluctuations in foreign exchange rates - The company has foreign currency exposure due to operations in multiple countries where local expenses are in local currencies, while sales are primarily in USD[157](index=157&type=chunk) - The company does not currently engage in foreign currency hedging transactions, believing near-term changes will not materially affect financial results[157](index=157&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes in internal control over financial reporting during the period - The CEO and CFO certified the effectiveness of disclosure controls and procedures as of June 30, 2025[158](index=158&type=chunk) - No material changes in internal control over financial reporting occurred during the period[158](index=158&type=chunk) PART II – OTHER INFORMATION This section covers legal, risk, equity, and other miscellaneous disclosures [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) This section outlines the company's involvement in routine legal proceedings and its policy for accruing losses, also addressing indemnification commitments to various parties - The company is a party to routine legal proceedings and accrues for probable and estimable losses[160](index=160&type=chunk) - Indemnifications are provided to various parties, including officers and directors, with no significant related costs in the last five years[161](index=161&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) This section refers readers to the company's Annual Report on Form 10-K for a comprehensive discussion of risk factors, noting that no material changes have occurred since that filing - No material changes to the previously disclosed risk factors in the 2024 Annual Report on Form 10-K have occurred[162](index=162&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on any unregistered equity sales and the application of their proceeds - No unregistered sales of equity securities or use of proceeds occurred[6](index=6&type=chunk) [Item 3. Defaults Upon Senior Securities](index=26&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section reports on any defaults related to the company's senior securities - No defaults upon senior securities occurred[6](index=6&type=chunk) [Item 4. Mine Safety Disclosures](index=26&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section addresses any required disclosures regarding mine safety - No mine safety disclosures are applicable[6](index=6&type=chunk) [Item 5. Other Information](index=26&type=section&id=Item%205.%20Other%20Information) This section includes any other material information not covered elsewhere - No other information to report[6](index=6&type=chunk) [Item 6. Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including credit agreements, security agreements, and various certifications from the company's executive officers - Key exhibits include the new Credit Agreement and Pledge and Security Agreement with BMO Bank N.A., dated June 24, 2025[163](index=163&type=chunk) - Certifications from the CEO and CFO (Rule 13a-14(a)/15d-14(a) and Section 1350) are included as exhibits[163](index=163&type=chunk) [Signatures](index=33&type=section&id=Signatures) This section contains the signature of the duly authorized officer, John Kimble, Executive Vice President and Chief Financial Officer, certifying the report on behalf of JAKKS Pacific, Inc - The report was signed by John Kimble, Executive Vice President and Chief Financial Officer, on August 1, 2025[166](index=166&type=chunk)

Core Insights - The international operations of Jakks Pacific (JAKK) are crucial for assessing its financial resilience and growth prospects, especially given the company's expansive global footprint [1][2] Revenue Performance - The total revenue for Jakks in the quarter ended June 2025 was $119.09 million, reflecting a year-over-year decline of 19.9% [4] - Asia contributed $1.45 million, or 1.22% of total revenue, with a surprising increase of 20.67% compared to expectations of $1.2 million [5] - The Middle East and Africa generated $0.24 million, accounting for 0.20% of total revenue, which was a surprise decrease of 36.84% from the expected $0.38 million [6] - Australia and New Zealand contributed $0.89 million, or 0.74% of total revenue, with a surprise decrease of 32.37% from the anticipated $1.31 million [7] - Latin America generated $6.05 million, making up 5.08% of total revenue, which was a surprise decrease of 5.96% from the expected $6.43 million [8] - Canada contributed $8.83 million, or 7.41% of total revenue, with a significant surprise increase of 113.19% compared to the expected $4.14 million [9] - Europe accounted for $14.66 million, or 12.31% of total revenue, with a slight surprise decrease of 1.5% from the consensus estimate of $14.88 million [10] Future Projections - For the current fiscal quarter, total revenue is projected to reach $315.72 million, a decline of 1.8% from the same quarter last year [11] - The anticipated revenue breakdown includes: Asia at $2.7 million (0.9%), Middle East and Africa at $1.14 million (0.4%), Australia and New Zealand at $2.74 million (0.9%), Latin America at $17.89 million (5.7%), Canada at $9.05 million (2.9%), and Europe at $38.73 million (12.3%) [12] - For the full year, total revenue is expected to be $691.25 million, reflecting no growth from the previous year [13] Strategic Considerations - The reliance on international markets presents both opportunities and challenges for Jakks, making it essential to monitor international revenue trends for future projections [14] - Analysts are closely observing these trends, especially in light of increasing global interconnections and geopolitical uncertainties [15]

Company Overview - JAKKS Pacific, Inc. reported concerning Q2 results, indicating significant tariff turbulence due to sourcing from China [1] - The company previously experienced strong operational momentum with content-led sales growth, but this momentum is now challenged [1] Industry Context - The toy industry is facing challenges related to tariffs and sourcing issues, particularly from China, impacting companies like JAKKS Pacific [1]

Core Insights - JAKKS Pacific, Inc. unveiled a new product lineup at San Diego Comic-Con, featuring iconic franchises such as Super Mario, The Simpsons, DC x Sonic the Hedgehog, Bendy, and Dog Man [1][5]. Product Highlights - The Super Mario Big Bad Bowser figure, standing 12 inches tall, features sound effects and a "fire breathing" light effect, set to be available exclusively at Costco for $59.99 this October [2][8]. - Princess Peach, also 12 inches tall, includes interactive features and will be available in December for $39.99 [10]. - The Treehouse of Horror Countdown Advent Calendar from The Simpsons will feature 31 mystery characters and accessories, priced at $39.99 [13]. - New figurines and plush from the DC x Sonic the Hedgehog crossover were revealed, including various multipacks and plush figures, with prices ranging from $9.99 to $29.99 [23][25][19]. Additional Product Information - The Sonic the Hedgehog™ Shadow 18-inch Ice Cream Bar Plush is available for pre-order at GameStop for $44.99 [3][28]. - Metroid Prime items were introduced with refreshed packaging, including various 2.5-inch and 6-inch figures [4]. - Bendy: Lone Wolf Crane Game Mini Plush set will retail for $24.99, featuring seven mini plushes from the new video game [28]. - The Dog Man 2.5-inch Squirrel Tank set, including articulated figures, will be available for $29.99 [30].

[Press Release Overview](index=1&type=section&id=Press%20Release%20Overview) JAKKS Pacific announced Q2 and H1 2025 financial results, with US sales down, Rest of World sales up, and first-half Toy/Consumer Products sales flat [Headline and Reporting Period](index=1&type=section&id=1.1%20Headline%20and%20Reporting%20Period) JAKKS Pacific announced Q2 and H1 2025 financial results, highlighting mixed sales performance with US decline and international growth - US Sales were down in the Second Quarter 2025, while Rest of World sales were up[1](index=1&type=chunk) - First-half Toy/Consumer Products sales were flat compared to the prior year[1](index=1&type=chunk) - The report covers financial results for the second quarter and first-half ended June 30, 2025[1](index=1&type=chunk)[2](index=2&type=chunk)[3](index=3&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Chairman and CEO Stephen Berman acknowledged the challenging year but expressed confidence in the company's first-half performance, attributing it to effective business management and leveraging decades of experience - Management believes first-half results demonstrate effective business management despite persistent uncertainty[4](index=4&type=chunk) - The company is capitalizing on decades of experience and relationships to navigate challenges[4](index=4&type=chunk) - Refinancing of the credit facility to a larger, cash-flow-funded structure further increases financial resilience and preparedness[5](index=5&type=chunk) [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) This section presents key financial metrics for Q2 and H1 2025, including sales, margins, and profitability [Second Quarter 2025 Highlights](index=1&type=section&id=3.1%20Second%20Quarter%202025%20Highlights) For Q2 2025, net sales decreased by 20% year-over-year, primarily due to reduced direct-import sales in the US, although Rest of World sales increased significantly Second Quarter 2025 Financial Highlights | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | Change (Millions USD) | Change (%) | | :------------------------------------ | :---------- | :---------- | :----------- | :--------- | | Net sales | $119.1 | $148.6 | $(29.5) | (20)% | | US net sales | $87.0 | N/A | N/A | (31)% | | Rest of World net sales | $32.1 | N/A | N/A | 41% | | Gross margin | 32.8% | 32.0% | N/A | +0.8 pp | | Gross profit | $39.0 | $47.6 | $(8.6) | (18)% | | Operating income (loss) | $(2.8) | $7.6 | $(10.4) | nm | | Adjusted net income (attributable to common stockholders) | $0.4 | $7.3 | $(6.9) | (94.5)% | | Adjusted EPS | $0.03 | $0.65 | $(0.62) | (95.4)% | | Adjusted EBITDA | $2.3 | $12.3 | $(10.0) | (81.3)% | [First-Half 2025 Highlights](index=1&type=section&id=3.2%20First-Half%202025%20Highlights) For the first half of 2025, net sales saw a modest 3% decrease, with Toy/Consumer Products sales remaining flat and Costumes sales declining First-Half 2025 Financial Highlights | Metric | H1 2025 (Millions USD) | H1 2024 (Millions USD) | Change (Millions USD) | Change (%) | | :------------------------------------ | :---------- | :---------- | :----------- | :--------- | | Net sales | $232.3 | $238.7 | $(6.4) | (3)% | | Toys/Consumer Products net sales | $187.8 | $187.5 | $0.3 | Flat | | Costumes net sales | $44.5 | $51.2 | $(6.7) | (13)% | | Gross margin | 33.6% | 28.8% | N/A | +4.8 pp | | Gross profit | $78.0 | $68.6 | $9.4 | 14% | | Operating loss | $(6.5) | $(13.7) | $7.2 | (52.6)% | | Adjusted net income (attributable to common stockholders) | $0.036 | $(4.0) | $4.036 | nm | | Adjusted EPS | $0.00 | $(0.38) | $0.38 | nm | | Adjusted EBITDA | $2.7 | $(4.9) | $7.6 | nm | [Detailed Financial Results](index=2&type=section&id=Detailed%20Financial%20Results) This section details net sales by segment and region, balance sheet items, and cash flow data [Second Quarter 2025 Performance](index=2&type=section&id=4.1%20Second%20Quarter%202025%20Performance) Net sales for Q2 2025 decreased by 20% year-over-year, with declines in both Toys/Consumer Products and Costumes segments, while Rest of World sales grew significantly Q2 2025 Net Sales by Segment and Region | Category | Q2 2025 Sales (Millions USD) | Q2 2024 Sales (Millions USD) | YoY Change (%) | | :---------------------- | :-------------- | :-------------- | :------------- | | Total Net Sales | $119.1 | $148.6 | (20)% | | Toys/Consumer Products | $80.4 | N/A | (23)% | | Costumes | $38.7 | N/A | (12)% | | United States Sales | $87.0 | $125.8 | (31)% | | Rest of World Sales | $32.1 | $22.8 | 41% | [First-Half 2025 Performance](index=2&type=section&id=4.2%20First-Half%202025%20Performance) Net sales for the first half of 2025 decreased by 3% year-over-year, with flat Toys/Consumer Products sales and a 13% decline in Costumes sales, offset by 33% growth in Rest of World sales H1 2025 Net Sales by Segment and Region | Category | H1 2025 Sales (Millions USD) | H1 2024 Sales (Millions USD) | YoY Change (%) | | :---------------------- | :-------------- | :-------------- | :------------- | | Total Net Sales | $232.3 | $238.7 | (3)% | | Toys/Consumer Products | $187.8 | $187.5 | Flat | | Costumes | $44.5 | $51.2 | (13)% | | United States Sales | $175.9 | $196.3 | (10)% | | Rest of World Sales | $56.4 | $42.4 | 33% | [Balance Sheet and Dividend Information](index=2&type=section&id=4.3%20Balance%20Sheet%20and%20Dividend%20Information) As of June 30, 2025, cash and cash equivalents significantly increased year-over-year, while inventory also rose, and a quarterly dividend of $0.25 per share was declared Key Balance Sheet Items (as of June 30, 2025) | Item | June 30, 2025 (Millions USD) | June 30, 2024 (Millions USD) | Dec 31, 2024 (Millions USD) | | :-------------------------- | :-------------- | :-------------- | :------------- | | Cash and cash equivalents (incl. restricted cash) | $43.1 | $17.9 | $70.1 | | Inventory | $71.8 | $51.3 | $52.8 | - A quarterly dividend of **$0.25 per share** on common stock was declared, payable September 30, 2025[8](index=8&type=chunk) [Non-GAAP Financial Information and Forward-Looking Statements](index=2&type=section&id=Non-GAAP%20Financial%20Information%20and%20Forward-Looking%20Statements) This section clarifies non-GAAP financial measures and the forward-looking statements disclaimer [Use of Non-GAAP Financial Information](index=2&type=section&id=5.1%20Use%20of%20Non-GAAP%20Financial%20Information) The company uses non-GAAP financial measures like Adjusted EBITDA and Adjusted Net Income (Loss) to provide additional insights into operating performance, excluding certain non-recurring and non-cash charges - Non-GAAP financial information, including Adjusted EBITDA and Adjusted Net Income (Loss), excludes various non-recurring and non-cash charges such as reorganization expenses and restricted stock compensation expense[9](index=9&type=chunk)[10](index=10&type=chunk) - These non-GAAP measures are considered useful for measuring operating performance and enhancing understanding of past financial performance by comparing across reporting periods on a consistent basis[10](index=10&type=chunk) - Investors should not consider non-GAAP measures in isolation or as a substitute for GAAP measures like net income or operating income[10](index=10&type=chunk) [Forward-Looking Statements Disclaimer](index=2&type=section&id=5.2%20Forward-Looking%20Statements%20Disclaimer) The press release contains forward-looking statements based on current expectations, which involve risks and uncertainties, and actual results may differ materially due to various factors - The press release may contain forward-looking statements based on current expectations, estimates, and projections[12](index=12&type=chunk) - Actual outcomes and results may differ materially due to numerous factors, including changes in demand for products, product mix, timing of orders, tariffs, and competitive products and pricing[12](index=12&type=chunk) - JAKKS undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of the release[12](index=12&type=chunk) [Company and Investor Information](index=3&type=section&id=Company%20and%20Investor%20Information) This section provides investor conference call details, a company overview, and contact information [Conference Call Details](index=3&type=section&id=6.1%20Conference%20Call%20Details) JAKKS Pacific will host a teleconference on July 24, 2025, at 5:00 p.m. ET / 2:00 p.m. PT, with a live webcast and replay available on the company's investor relations website - A teleconference is scheduled for **July 24, 2025**, at **5:00 p.m. ET / 2:00 p.m. PT**[13](index=13&type=chunk) - A live webcast and replay of the call will be available on the 'Investor Relations' page of the Company's website at www.jakks.com/investors[13](index=13&type=chunk) [About JAKKS Pacific, Inc.](index=3&type=section&id=6.2%20About%20JAKKS%20Pacific%2C%20Inc.) JAKKS Pacific, Inc. is a leading global designer, manufacturer, and marketer of toys and consumer products, headquartered in Santa Monica, California, offering popular proprietary brands and entertainment-inspired licensed products - JAKKS Pacific, Inc. is a leading designer, manufacturer, and marketer of toys and consumer products sold throughout the world[14](index=14&type=chunk) - The company's popular proprietary brands include AirTitans®, Disguise®, Perfectly Cute®, and ReDo® Skateboard Co., along with entertainment-inspired licensed products[14](index=14&type=chunk) - JAKKS Pacific is headquartered in Santa Monica, California[14](index=14&type=chunk) [Contact Information](index=3&type=section&id=6.3%20Contact%20Information) Investor relations contact details are provided for inquiries - For investor relations, contact **Lucas Natalini** at **(424) 268-9567** or **investors@jakks.net**[15](index=15&type=chunk) [Condensed Consolidated Financial Statements](index=4&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the condensed consolidated balance sheets, statements of operations, and cash flow data [Condensed Consolidated Balance Sheets](index=4&type=section&id=7.1%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows total assets of **$438.7 million** as of June 30, 2025, a notable increase from June 30, 2024, with significant increases in cash and cash equivalents and inventory Condensed Consolidated Balance Sheets (Selected Items, in thousands USD) | Item | June 30, 2025 (Thousands USD) | June 30, 2024 (Thousands USD) | December 31, 2024 (Thousands USD) | | :-------------------------------- | :-------------- | :-------------- | :---------------- | | Cash and cash equivalents | $38,195 | $17,700 | $69,936 | | Restricted cash | $4,861 | $202 | $201 | | Inventory | $71,811 | $51,327 | $52,780 | | Total current assets | $261,931 | $235,692 | $268,687 | | Total assets | $438,718 | $378,251 | $444,869 | | Total current liabilities | $152,833 | $161,757 | $149,420 | | Total liabilities | $201,981 | $182,356 | $204,036 | | Total stockholders' equity | $236,737 | $195,895 | $240,833 | [Supplemental Balance Sheet and Cash Flow Data](index=5&type=section&id=7.2%20Supplemental%20Balance%20Sheet%20and%20Cash%20Flow%20Data) Days Sales Outstanding (DSO) increased to **95 days**, and Inventory Turnover (DSI) significantly rose to **82 days**, with cash flows used in operating, investing, and financing activities contributing to a net decrease in cash for H1 2025 Key Balance Sheet Ratios | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :-------------- | :-------------- | | Accounts receivable days sales outstanding (DSO) | 95 | 86 | | Inventory turnover (DSI) | 82 | 46 | Condensed Cash Flow Data (Six Months Ended June 30, in thousands USD) | Activity | H1 2025 (Thousands USD) | H1 2024 (Thousands USD) | | :------------------------------------ | :---------- | :---------- | | Cash flows used in operating activities | $(15,585) | $(27,666) | | Cash flows used in investing activities | $(6,361) | $(6,174) | | Cash flows used in financing activities and other | $(5,135) | $(20,812) | | Increase in cash, cash equivalents and restricted cash | $(27,081) | $(54,652) | | Capital expenditures | $(4,816) | $(4,627) | [Condensed Consolidated Statements of Operations](index=6&type=section&id=7.3%20Condensed%20Consolidated%20Statements%20of%20Operations) This section provides detailed income statement data for the three and six months ended June 30, 2025, both in absolute dollar values and as a percentage of net sales [Statements of Operations (Absolute Values)](index=6&type=section&id=7.3.1%20Statements%20of%20Operations%20(Absolute%20Values)) For Q2 2025, net sales decreased by 20%, leading to an 18% drop in gross profit and an operating loss of **$2.8 million**, while H1 2025 saw a 3% net sales decrease but a 14% gross profit increase and narrowed operating loss Q2 and H1 2025 Statements of Operations (Selected Items, in thousands USD) | Metric | Q2 2025 (Thousands USD) | Q2 2024 (Thousands USD) | Q2 Δ (%) | H1 2025 (Thousands USD) | H1 2024 (Thousands USD) | H1 Δ (%) | | :------------------------------------ | :---------- | :---------- | :------- | :---------- | :---------- | :------- | | Net sales | $119,094 | $148,619 | (20)% | $232,347 | $238,695 | (3)% | | Cost of sales | $80,071 | $101,034 | (21)% | $154,311 | $170,058 | (9)% | | Gross profit | $39,023 | $47,585 | (18)% | $78,036 | $68,637 | 14% | | Selling, general and administrative expenses | $41,806 | $39,942 | 5% | $84,576 | $82,318 | 3% | | Income (loss) from operations | $(2,783) | $7,643 | nm | $(6,540) | $(13,681) | (52)% | | Net income (loss) attributable to JAKKS Pacific, Inc. | $(2,319) | $5,266 | nm | $(4,701) | $(9,239) | (49)% | | Earnings (loss) per share - basic | $(0.21) | $0.49 | N/A | $(0.42) | $(0.75) | N/A | [Statements of Operations (Percentage of Net Sales)](index=7&type=section&id=7.3.2%20Statements%20of%20Operations%20(Percentage%20of%20Net%20Sales)) For Q2 2025, gross profit as a percentage of net sales improved to **32.8%**, but increased SG&A expenses led to an operating loss of **2.3%** of net sales, while H1 2025 saw gross profit margin improve substantially to **33.6%** and operating loss margin narrow to **2.8%** Q2 and H1 2025 Statements of Operations (Percentage of Net Sales) | Metric | Q2 2025 (%) | Q2 2024 (%) | Q2 Δ (bps) | H1 2025 (%) | H1 2024 (%) | H1 Δ (bps) | | :------------------------------------ | :---------- | :---------- | :--------- | :---------- | :---------- | :--------- | | Net sales | 100.0% | 100.0% | - | 100.0% | 100.0% | - | | Cost of sales | 67.2% | 68.0% | 80 Fav | 66.4% | 71.2% | 480 Fav | | Gross profit | 32.8% | 32.0% | 80 Fav | 33.6% | 28.8% | 480 Fav | | Selling, general and administrative expenses | 35.1% | 26.9% | (820) Unfav | 36.4% | 34.5% | (190) Unfav | | Income (loss) from operations | (2.3)% | 5.1% | (740) Unfav | (2.8)% | (5.7)% | 290 Fav | | Net income (loss) attributable to JAKKS Pacific, Inc. | (1.9)% | 3.5% | N/A | (2.0)% | (3.9)% | N/A | [Reconciliation of Non-GAAP Financial Information](index=8&type=section&id=7.4%20Reconciliation%20of%20Non-GAAP%20Financial%20Information) This section provides detailed reconciliations of GAAP net income (loss) to non-GAAP measures such as EBITDA, Adjusted EBITDA, and Adjusted Net Income (Loss) for the three and six months ended June 30, 2025, as well as for the trailing twelve months [EBITDA and Adjusted EBITDA (Q2 & H1)](index=8&type=section&id=7.4.1%20EBITDA%20and%20Adjusted%20EBITDA%20(Q2%20%26%20H1)) For Q2 2025, Adjusted EBITDA significantly decreased to **$2.3 million** from **$12.3 million** in Q2 2024, while H1 2025 Adjusted EBITDA improved to **$2.7 million** from a negative **$4.9 million** in H1 2024 Q2 and H1 2025 EBITDA and Adjusted EBITDA (in thousands USD) | Metric | Q2 2025 (Thousands USD) | Q2 2024 (Thousands USD) | Q2 Δ (Thousands USD) | H1 2025 (Thousands USD) | H1 2024 (Thousands USD) | H1 Δ (Thousands USD) | | :-------------------- | :---------- | :---------- | :------- | :---------- | :---------- | :------- | | Net income (loss) | $(2,319) | $5,266 | $(7,585) | $(4,701) | $(8,959) | $4,258 | | EBITDA | $(1,275) | $9,849 | $(11,124) | $(3,468) | $(9,823) | $6,355 | | Adjusted EBITDA | $2,305 | $12,296 | $(9,991) | $2,659 | $(4,939) | $7,598 | | Adjusted EBITDA/Net sales % | 1.9% | 8.3% | (640) bps | 1.1% | (2.1)% | 320 bps | [Trailing Twelve Months (TTM) Adjusted EBITDA and Adjusted Net Income](index=9&type=section&id=7.4.2%20Trailing%20Twelve%20Months%20(TTM)%20Adjusted%20EBITDA%20and%20Adjusted%20Net%20Income) This section details TTM Adjusted EBITDA and Q2/H1 2025 Adjusted Net Income, highlighting performance trends TTM Adjusted EBITDA (in thousands USD) | Metric | TTM June 30, 2025 (Thousands USD) | TTM June 30, 2024 (Thousands USD) | TTM Δ (Thousands USD) | | :-------------------------- | :------------------ | :------------------ | :-------- | | TTM net income | $38,458 | $28,290 | $10,168 | | TTM EBITDA | $56,387 | $41,921 | $14,466 | | TTM Adjusted EBITDA | $66,863 | $51,203 | $15,660 | | TTM Adjusted EBITDA/TTM Net sales % | 9.8% | 7.6% | 220 bps | Adjusted Net Income (Loss) Attributable to Common Stockholders (in thousands USD, except per share data) | Metric | Q2 2025 (Thousands USD) | Q2 2024 (Thousands USD) | Q2 Δ (Thousands USD) | H1 2025 (Thousands USD) | H1 2024 (Thousands USD) | H1 Δ (Thousands USD) | | :------------------------------------ | :---------- | :---------- | :------- | :---------- | :---------- | :------- | | Adjusted net income (loss) attributable to common stockholders | $390 | $7,255 | $(6,865) | $36 | $(4,002) | $4,038 | | Adjusted earnings (loss) per share - basic | $0.03 | $0.67 | $(0.64) | $0.00 | $(0.38) | $0.38 | [Net Sales by Division and Geographic Region](index=10&type=section&id=7.5%20Net%20Sales%20by%20Division%20and%20Geographic%20Region) This section provides a detailed breakdown of net sales by product division and geographic region for Q2 and H1 2025, with comparative data for previous periods Net Sales by Division (in thousands USD) | Division | Q2 2025 (Thousands USD) | Q2 2024 (Thousands USD) | Q2 Δ (%) | H1 2025 (Thousands USD) | H1 2024 (Thousands USD) | H1 Δ (%) | | :---------------------- | :---------- | :---------- | :------- | :---------- | :---------- | :------- | | Toys/Consumer Products | $80,379 | $104,570 | (23.1)% | $187,817 | $187,480 | 0.2% | | Dolls, Role Play/Dress-Up | $46,164 | $63,608 | (27.4)% | $101,627 | $104,182 | (2.5)% | | Action Play & Collectibles | $29,902 | $36,555 | (18.2)% | $72,783 | $69,563 | 4.6% | | Outdoor/Seasonal Toys | $4,313 | $4,407 | (2.1)% | $13,407 | $13,735 | (2.4)% | | Costumes | $38,715 | $44,049 | (12.1)% | $44,530 | $51,215 | (13.1)% | | Total | $119,094 | $148,619 | (19.9)% | $232,347 | $238,695 | (2.7)% | Net Sales by Geographic Region (in thousands USD) | Region | Q2 2025 (Thousands USD) | Q2 2024 (Thousands USD) | Q2 Δ (%) | H1 2025 (Thousands USD) | H1 2024 (Thousands USD) | H1 Δ (%) | | :---------------------- | :---------- | :---------- | :------- | :---------- | :---------- | :------- | | United States | $86,990 | $125,837 | (30.9)% | $175,934 | $196,267 | (10.4)% | | Europe | $14,657 | $10,264 | 42.8% | $26,467 | $15,999 | 65.4% | | Latin America | $6,047 | $3,239 | 86.7% | $13,506 | $11,235 | 20.2% | | Canada | $8,826 | $6,288 | 40.4% | $12,105 | $9,658 | 25.3% | | Asia | $1,448 | $1,268 | 14.2% | $2,199 | $2,233 | (1.5)% | | Australia & New Zealand | $886 | $1,607 | (44.9)% | $1,499 | $2,953 | (49.2)% | | Middle East & Africa | $240 | $116 | 106.9% | $637 | $350 | 82.0% | | Total | $119,094 | $148,619 | (19.9)% | $232,347 | $238,695 | (2.7)% | - Rest of World (International) sales showed strong growth in both Q2 (**41.1%**) and H1 (**35.2%**), partially offsetting declines in North America[27](index=27&type=chunk)

Core Viewpoint - Jakks Pacific reported quarterly earnings of $0.03 per share, significantly beating the Zacks Consensus Estimate of a loss of $0.38 per share, although this is a decline from earnings of $0.65 per share a year ago, indicating a notable earnings surprise of +107.89% [1] Financial Performance - The company posted revenues of $119.09 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 7.8% and down from $148.62 million in the same quarter last year [2] - Over the last four quarters, Jakks has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [2] Stock Performance - Jakks shares have declined approximately 26.2% since the beginning of the year, contrasting with the S&P 500's gain of 8.1% [3] - The current Zacks Rank for Jakks is 5 (Strong Sell), indicating expectations of underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $3.52 on revenues of $315.72 million, and for the current fiscal year, it is $2.34 on revenues of $691.25 million [7] - The trend of estimate revisions for Jakks was unfavorable prior to the earnings release, which may impact future stock movements [5][6] Industry Context - The Toys - Games - Hobbies industry, to which Jakks belongs, is currently ranked in the bottom 6% of over 250 Zacks industries, suggesting a challenging environment for the company [8]

Financial Data and Key Metrics Changes - Sales in Q2 2025 were down 20% compared to the prior year, with first half sales down 3% overall [6][11] - U.S. sales decreased by 10% year-over-year, while all other markets experienced a 33% increase [6][12] - Adjusted EBITDA for the quarter was $2.3 million, down from $12.3 million in the same quarter last year, but up from a loss of $4.9 million in the first half of last year [21] - Adjusted diluted EPS was $0.03 per share in the quarter, unfavorable compared to $0.65 per share last year [21] Business Line Data and Key Metrics Changes - Worldwide toy and consumer business was down 23% in the quarter, while the costume business was down 12% [11][12] - International growth was led by Europe, which grew by 65% in the first half of the year [12][25] - The company is focusing on maintaining a lean inventory, with a decrease of 8% year-over-year in the U.S. while international inventory is higher [45][62] Market Data and Key Metrics Changes - The company has seen limited increases in consumer prices in the U.S., but there are concerns about reduced unit sales due to these price hikes [10][11] - Major U.S. customers are delaying traditional second half planogram resets, impacting the productivity of new product introductions [26] Company Strategy and Development Direction - The company is taking a proactive approach to its manufacturing strategy, diversifying supply chains to mitigate risks associated with tariffs [7][8] - There is a focus on cash generation and prudent inventory management, especially in the U.S. market [45][72] - The company is exploring acquisition opportunities and remains cautiously optimistic about future growth despite current economic uncertainties [24][72] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the unpredictability of the U.S. market due to ongoing tariff changes and is adapting strategies accordingly [5][6] - There is a cautious outlook for the second half of the year, with a focus on profitability and cash generation rather than aggressive sales targets [50][51] - The company is optimistic about the upcoming holiday season, particularly with new product launches and strong consumer interest in established franchises [27][31] Other Important Information - The Board has approved a $0.25 per share dividend for the third quarter [21] - The company completed refinancing its credit facility, providing a predictable source of funds at attractive borrowing rates [20] Q&A Session Summary Question: Short-term levers to mitigate tariff impacts - The company is implementing a duplicate tool initiative to allow flexibility in manufacturing locations to reduce tariff impacts [38] Question: Adjustments to the supply chain - The company is focusing on manufacturing certain products outside of China, particularly in Vietnam, while maintaining quality and efficiency [40][41] Question: Comments on full year 2025 outlook - The company is taking a cautious approach, focusing on sell-through rates and profitability rather than aggressive inventory builds [49][50] Question: Potential for empty shelves during the holiday period - Management believes retailers will focus on proven products and lower price points, with a wait-and-see approach during the Halloween period [54]

Second Quarter 2025 Earnings Presentation July 24, 2025 5:00 PM Eastern / 2:00 PM Pacific Registration: 2Q25 Registration link Webcast: 2Q25 Webcast link 1 EXECUTIVE TEAM ON THE CALL STEPHEN BERMAN Chairman & Chief Executive Officer JOHN KIMBLE Executive Vice President & Chief Financial Officer 2 SAFE HARBOR STATEMENT The Company would like to point out that any comments made about JAKKS Pacific's future performance, events or circumstances, including the estimates of sales and/or Adjusted EBITDA in 2025, a ...

Core Viewpoint - JAKKS Pacific, Inc. reported a significant decline in net sales for the second quarter of 2025, primarily driven by a 31% drop in U.S. sales, while international sales showed growth, particularly in the Rest of World segment, which increased by 41% compared to the previous year [6][11]. Financial Performance - Net sales for Q2 2025 were $119.1 million, a decrease of 20% from $148.6 million in Q2 2024 [6][11]. - The Toys/Consumer Products segment saw a global sales decline of 23% to $80.4 million, while Costumes sales decreased by 12% to $38.7 million [6][11]. - For the first half of 2025, net sales totaled $232.3 million, down 3% from $238.7 million in the same period last year [7][11]. Geographic Sales Breakdown - U.S. sales for Q2 2025 were $87.0 million, down 31% from $125.8 million in Q2 2024 [6][11]. - Sales in the Rest of World segment reached $32.1 million, up 41% from $22.8 million in Q2 2024 [6][11]. - For the first half of 2025, U.S. sales were $175.9 million, down 10% from $196.3 million, while Rest of World sales increased by 33% to $56.4 million from $42.4 million [7][11]. Profitability Metrics - Gross profit for Q2 2025 was $39.0 million, down from $47.6 million in Q2 2024, with a gross margin of 32.8%, slightly improved from 32.0% in the prior year [11]. - The company reported an operating loss of $2.8 million for Q2 2025, compared to an operating income of $7.6 million in Q2 2024 [11]. - Adjusted net income attributable to common stockholders was $0.4 million (or $0.03 per share) in Q2 2025, down from $7.3 million (or $0.65 per share) in Q2 2024 [11]. Cash and Inventory Position - As of June 30, 2025, the company's cash and cash equivalents totaled $43.1 million, up from $17.9 million a year earlier, but down from $70.1 million at the end of 2024 [8]. - Inventory levels increased to $71.8 million from $51.3 million a year ago [8]. Management Commentary - The CEO expressed confidence in the company's ability to navigate challenges and emphasized the importance of leveraging experience and relationships to adapt to market conditions [5]. - The refinancing of the credit facility was highlighted as a move to enhance financial resilience and prepare for future opportunities [5].