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The call presented a mixed picture: meaningful strategic and operational positives (notably strong international growth, healthy gross margin, stable cash and inventory, multiple successful product tie-ins, and a major new anime/manga initiative with higher-margin potential) were offset by near-term pressures (6% revenue decline, a 16% drop in North America, a quarterly adjusted EBITDA loss, higher tariff costs and a worse adjusted EPS). Management emphasized cautious optimism, disciplined cost control, and multi-year investments to position the company for growth in 2027 and beyond.
Management's guidance was cautiously constructive: Q1 net sales were $107.0M (−6% YoY) with Toy & Consumer Products down 7%; North America totaled $78M (−$15M, −16%) while International was $29M (+38%), and >70% of North American shipments were FOB (about 25% of the NA decline was reduced low‑margin closeouts). Q1 gross profit was $36M (−9%), gross margin held at 33.4% (down 100 bps from 34.4%), adjusted EBITDA was a loss of $0.371M versus a $0.354M gain a year ago (trailing‑12‑month adjusted EBITDA $34.6M, −2%), adjusted EPS was a loss of $0.17 (vs. −$0.03), diluted shares ~11.4M, cash $64M (up from $59M), inventory ~$53M (flat). Management expects SG&A to grow at least in line with sales for the year, aims to keep G&A growth no greater than revenue growth while funding 2027 launches (including a major anime platform), warned of tariff and oil/shipping cost risks (paid $1–2M in U.S. tariffs this quarter vs. < $0.1M last year and has filed for refunds), and the Board approved a $0.25 Q2 dividend (record May 29, payable June 29); overall they said the near‑term outlook is better than 12 months ago and they remain on track for 2026 goals while investing for 2027–28.
International net sales of $29.0 million in Q1, up 38% year-over-year, driving geographic diversification and representing approximately 27% of total net sales (increase versus prior year). Management noted EMEA delivered its best quarter since 2015 with particularly strong performance in France and Spain.
Gross margin remained strong at 33.4% in Q1 (only down 100 basis points from 34.4% a year ago) with gross profit of $36 million (down 9% YoY) — described as a robust number for the business.
Cash balance increased to $64 million (from $59 million a year ago). Inventory remained essentially flat at $53 million year-over-year, indicating controlled inventory levels despite a dynamic environment.
SG&A expenses declined 4% in the quarter and management is targeting G&A spending to grow no more than revenue on a full-year basis while funding new product and 2027 initiatives.
Multiple product and licensing successes: Super Mario Galaxy theatrical tie-in generated significant retail promotional space and strong sell-throughs; Sonic-DC crossover expanded to all accounts; Disney Princess, Style Collection, ily and Frozen lines showing strong sell-throughs; refreshed 6-inch doll line selling extremely well; expansion of Action Sports and costume wins (KPop Demon Hunters, Pokémon 30th anniversary).
Announced a large-scale, multi-year Anime, Manga and Digital Creator platform developed over 2+ years with premier partners (e.g., Aniplex, VIZ, KODANSHA, Cover Corp, Crunchyroll). Initial launch planned for 2027 (some product in 2026). Management expects slightly higher price points and incremental margin enhancement for these products and a multi-channel distribution approach (DTC, specialty, venue).
FOB model remains strong — over 70% of Q1 North American business shipped FOB — allowing longer planning horizons and retailer exclusivity/customization opportunities.
Board approved a Q2 dividend payment of $0.25 per common share (record May 29, payable June 29). Management is prioritizing cash deployment for accretive uses (tooling, marketing, M&A opportunities) while retaining capital discipline.
Good afternoon, everyone. Welcome to the JAKKS Pacific First Quarter Earnings Conference Call with management, who will review financial results for the first quarter ended March 31, 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 Stephen Berman, Chairman and Chief Executive Officer; and John Kimble, Chief Financial Officer. Stephen will first provide an overview of the quarter and full fiscal year, along with highlights of recent performance and current business trends, and then John will provide some financial comments around JAKKS Pacific’s financials and operational results. Mr. Berman will then return with additional comments and some closing remarks prior to opening up the call for questions.
[Operator Instructions] Before we begin, 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, margins, earnings and/or adjusted EBITDA in 2026 as well as any other forward-looking statements concerning 2026 and beyond are subject to safe harbor protection under federal security 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 unce...