JAKKS PACIFIC INC Q1 FY2026 earnings call

• Product drivers: Positive reaction to Super Mario Galaxy movie, Sonic DC crossover product expanded, Disney Princess lines selling well, six-inch doll line refreshed, action sports portfolio expanded, disguise business launched K-pop Demon Hunters, European costume business growing, new anime, manga, and digital creator cultural platform initiative with broad product portfolio and global distribution infrastructure.
• Operational: Q1 financial results roughly in line with expectations, near-term outlook better than 12 months ago, U.S. accounts cautious, industry monitors oil prices, invested in new initiatives for 2027 and 2028.

Globally, net sales in Q1 were $170 million, down 6% from prior year. Toy and consumer product net sales down 7%, with North America down 15 million (16%) due to lower low-margin closeout sales. International business grew to $29 million (38% increase). Gross margin 33.4%, down 100 basis points from Q1 2025. SG&A expenses down 4%, resulting in quarterly adjusted EBITDA loss of $371,000 vs gain of $354,000 in Q1 2025. Q1 gross profit $36 million, down 9% from last year. Cash at end of quarter $64 million, inventory $53 million. Dividend of 25 cents per common share approved for Q2.

• Confident of being on track to achieve goals for 2026, setting up for better 2027 and beyond. - Anime platform initial launch expected in 2027, will roll out partnerships and product lines through 2026.

• Actual results could differ materially from forward-looking statements due to certain risks and uncertainties, need to consult SEC filings for details.

Q: High level comments on anime product line success, margin.

A: Initiative over two years, broad product launch in 2027, some in 2026, margin slightly higher.

Q: Timing of new product rollouts and holding back due to market challenges.

A: Market challenges are worked through, product rollouts coincide with movie premieres and have evergreen business, excited for year ahead.

Q: Thoughts on AI and licensing.

A: Licensors pick and choose AI use, Jax good at quick go-to-market.

Q: Anime manga in international, worldwide rights.

A: IP selective by territory, fan base, content holder considered.

Q: International growth goal.

A: Growth per area, dissective approach per territory.

Q: Leveraging cash, capital allocation.

A: Investing in anime initiatives, looking at acquisition opportunities, using cash accretively