JAKKS Pacific(JAKK) - 2025 Q2 - Quarterly Results

Press Release Overview 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 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] - First-half Toy/Consumer Products sales were flat compared to the prior year[1] - The report covers financial results for the second quarter and first-half ended June 30, 2025[1][2][3] Management Commentary 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] - The company is capitalizing on decades of experience and relationships to navigate challenges[4] - Refinancing of the credit facility to a larger, cash-flow-funded structure further increases financial resilience and preparedness[5] Key Financial Highlights This section presents key financial metrics for Q2 and H1 2025, including sales, margins, and profitability Second Quarter 2025 Highlights 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 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 This section details net sales by segment and region, balance sheet items, and cash flow data Second Quarter 2025 Performance 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 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 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] Non-GAAP Financial Information and Forward-Looking Statements This section clarifies non-GAAP financial measures and the forward-looking statements disclaimer Use of Non-GAAP Financial Information 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][10] - 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] - Investors should not consider non-GAAP measures in isolation or as a substitute for GAAP measures like net income or operating income[10] Forward-Looking Statements Disclaimer 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] - 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] - JAKKS undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of the release[12] Company and Investor Information This section provides investor conference call details, a company overview, and contact information Conference Call Details 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] - 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. 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] - The company's popular proprietary brands include AirTitans®, Disguise®, Perfectly Cute®, and ReDo® Skateboard Co., along with entertainment-inspired licensed products[14] - JAKKS Pacific is headquartered in Santa Monica, California[14] Contact Information Investor relations contact details are provided for inquiries - For investor relations, contact Lucas Natalini at (424) 268-9567 or investors@jakks.net[15] Condensed Consolidated Financial Statements This section presents the condensed consolidated balance sheets, statements of operations, and cash flow data Condensed Consolidated Balance Sheets 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 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 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) 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) 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 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) 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 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 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]