JAKKS outlines 2027 slate with Sonic the Hedgehog 4 in March as Toys 'R' Us opens 120 stores

• "Q3 shipping generated $254 million in net sales, a 20% increase" and "Year-to-date, our sales are up 13% ahead of last year," Stephen Berman said (Co-Founder, Chairman, CEO, President & Secretary Stephen Berman), adding that "the FOB business model is alive and well, representing over 75% of sales for the first 9 months of the year" and "we're also seeing buying patterns return to pre-tariff quarterly seasonality."
• "Although we're not supporting any new entertainment releases in the toy business this holiday season," Berman said (Co-Founder, Chairman, CEO, President & Secretary Berman), while noting growth drivers including "North America, which was up 28% in the quarter" and category performance where "Dolls, Role Play/Dress-Up" grew "29%" and "Action Play & Collectibles" grew "19%" in the quarter.
• "Having just returned from parts of Asia last week," Berman said (Co-Founder, Chairman, CEO, President & Secretary Berman), "factories are facing from higher resin prices" and "higher diesel prices impacting the supply chain," adding, "We are prioritizing shipments and continuing to scrutinize our inventory management to mitigate these higher costs of doing business."
• "Gross margins held up well in the quarter at 32.1%," John Kimble said (Executive VP & CFO John Kimble), and "Adjusted EBITDA in the quarter was $44.4 million" while "Adjusted EPS for the quarter was $2.68," alongside balance sheet updates including "$45 million in restricted and unrestricted cash" and "inventory balance" of "$64 million."
• "The Board has approved the quarterly cash dividend of $0.25 per share," Kimble said (Executive VP & CFO Kimble), adding it will be "payable to shareholders of record as of November 27" and "paid on December 28."
• "Our Disney Princess and Disney Frozen business continues to have a strong year" and "They are exceeding our expectations more than anything else in our portfolio in 2026," Berman said (Co-Founder, Chairman, CEO, President & Secretary Berman), and he highlighted the Walmart-exclusive collector push: "The next collection just dropped... titled Doll Haus of Dread" and "Launching exclusively at Walmart and walmart.com."

Outlook

• "As we look ahead to 2027 and beyond, we couldn't be prouder or more excited about the lineup," Berman said (Co-Founder, Chairman, CEO, President & Secretary Berman), citing a content slate that "includes Sonic the Hedgehog 4 in March, the new Simpsons movie in September and Frozen 3 in November."
• "JAKKS Pacific is also launching a long-term strategic initiative focused on immersive IP across anime, manga, VTubers and digital entertainers," Berman said (Co-Founder, Chairman, CEO, President & Secretary Berman), adding, "The IP partners and titles debuting next year are simply the best-in-class" and "Feedback from both partners in retail and customers has been highly enthusiastic and extremely encouraging."
• No explicit numeric revenue or EPS guidance was provided in this transcript; management framed expectations qualitatively, including Berman’s statement, "we are heading into the end of the year with solid momentum" and "I continue to feel extremely confident in our business today, where we are headed."

Financial Results

• "Q3 shipping generated $254 million in net sales," Berman said (Co-Founder, Chairman, CEO, President & Secretary Berman), while Kimble reported profitability metrics including "Gross margins" of "32.1%" and "Adjusted EBITDA" of "$44.4 million," plus "Adjusted EPS" of "$2.68."
• "Some Q4 sales work their way into Q3 this year," Kimble said (Executive VP & CFO Kimble), adding, "as an FOB-centric business, that will happen" and "It just means we'll get paid that much faster."
• Working-capital and shareholder return items were highlighted with Kimble’s balance sheet comments: "we finished the quarter at $45 million in restricted and unrestricted cash" and "Our inventory balance... was $64 million," alongside the dividend reaffirmation: "the quarterly cash dividend of $0.25 per share."

Q&A

• Eric Beder, Small Cap Consumer Research, LLC: asked about "international opportunities" and regional expansion; Co-Founder, Chairman, CEO, President & Secretary Berman responded, "The main opportunities are obviously in EMEA and then it grows in Latin America and Southeast Asia" and described operational buildout including "warehouses and distribution centers" in "Italy, Spain, Germany, U.K., Rotterdam" to support "quick deliveries" and expanded licensed "rights... in a lot of these new territories."
• Eric Beder, Small Cap Consumer Research, LLC: asked how international compares to domestic in FOB, margins, and quarter smoothing; Co-Founder, Chairman, CEO, President & Secretary Berman said international is "about 90% FOB or 85% FOB" and noted they are "building domestic capabilities" as "backup inventory" for Europe lead times; Executive VP & CFO Kimble answered on profitability framework: "on the margin front... it's comparable to the U.S." and described going "much deeper" beyond a few mass accounts into "multiple channels" while "making nice margins."
• Eric Beder, Small Cap Consumer Research, LLC: asked whether the "strong balance sheet" is enabling new licenses/expansion as tariff noise abates; Co-Founder, Chairman, CEO, President & Secretary Berman said, "we're acquiring licenses" and "we are getting... hopefully, the best-in-class," while emphasizing positioning: "we are still a kid-centric business" even as it participates in "kidult and adult collectible business" including anime.
• Thomas Forte, Maxim Group LLC, Research Division: asked if not supporting new Q4 entertainment is timing or selectivity; Co-Founder, Chairman, CEO, President & Secretary Berman replied, "It's just more of timing" and pointed to growth without new releases: "The private label business has grown immensely" and "Disney Princess and Frozen... has seen tremendous growth."
• Thomas Forte, Maxim Group LLC, Research Division: asked about returning to back-half 2024 dynamics; Executive VP & CFO Kimble tied the difference to tentpoles, saying in 2024 there were "meaningful entertainment tentpoles" including "Moana 2" and "a Sonic 3 movie," while adding current-quarter strength was "pretty nice evergreen growth."
• Thomas Forte, Maxim Group LLC, Research Division: asked "are we done with tariffs refunds?"; Co-Founder, Chairman, CEO, President & Secretary Berman answered, "Yes."
• Thomas Forte, Maxim Group LLC, Research Division: asked about Toys "R" Us; Co-Founder, Chairman, CEO, President & Secretary Berman said it is "being licensed out" and "I think it's 120 stores that are being opened this year," adding, "we're selling them" and hoping stores become "full time year-round" versus "pop-ups."

Sentiment Analysis

• Analysts were slightly positive, opening with congratulations while concentrating questions on sustainability drivers (international expansion mechanics, margin structure, tariff refunds ending, and retail channel opportunities such as Toys "R" Us).
• Management tone was positive in prepared remarks and confident on strategy, with Berman stating, "we are now working with customers to ensure solid sell-through" and later, "I continue to feel extremely confident in our business today," while also acknowledging cost pressure from "higher resin prices" and "higher diesel prices."
• Versus the prior quarter, management maintained confidence but shifted emphasis from tariff-refund accounting detail (Q2) to execution/seasonality normalization and 2027 product and IP initiatives (Q3), while analysts again pressed on timing of content catalysts and structural variables like tariffs.

Quarter-over-Quarter Comparison

• Q3 placed heavier emphasis on accelerating in-year performance and a 2027 slate, with Berman saying, "we have several exciting announcements coming soon" and naming 2027 tentpoles; Q2 emphasized recovery from tariff-driven disruption and rebuilding price points, with Berman stating retail prices "have unwound over recent months" and "We feel lower retails are contributing to improved velocity."
• Tariff refunds moved from a major financial topic in Q2 to a closure point in Q3; in Q2, Kimble said "we've had essentially all of those funds refunded to us" and "We don't anticipate any more refunds going forward," and in Q3 Berman answered Forte’s question with a definitive "Yes" on being done.
• International expansion was a continuing theme, but Q3 included more operational specifics (warehouses/distribution centers and staffing), while Q2 framed international as a strategic priority with Berman saying, "I cannot emphasize enough the traction we are getting... outside of the U.S."

Risks and Concerns

• Cost inflation and supply chain pressure were explicit, with Berman citing "higher resin prices" and "higher diesel prices" and stating, "We are prioritizing shipments" and "scrutinize our inventory management" to mitigate higher costs.
• Policy uncertainty remained in view, with Kimble saying, "Although the U.S. tariff discussion seems to be trending in a favorable direction, definitive guidance on that front is still pending."
• Seasonality/quarter timing was reiterated as an operational reality, with Kimble noting, "Some Q4 sales work their way into Q3 this year" in an "FOB-centric business."

Final Takeaway

Management described Q3 as a higher-volume quarter with profitability improvements and ongoing cash returns via a $0.25 dividend, while positioning 2027 around major entertainment tentpoles (including Sonic the Hedgehog 4) and expansion initiatives spanning international distribution buildout, a Walmart-exclusive collector strategy under “Doll Haus,” and a longer-term move into immersive IP across anime, manga, VTubers, and digital entertainers, alongside continued monitoring of product and freight cost pressure and remaining tariff-policy uncertainty.

Read the full Earnings Call Transcript

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