Refunded and Repositioned: JAKKS Pacific Turns a Tariff Hit into a Stepping Stone
IEPA refunds boost cash and margins; international and anime betas set up 2027 growth.
JAKK · Earnings Call · 2026-07-23
When JAKKS Pacific reported its second quarter, the headline was not just a 17% bounce in sales to $139.2 million. The real gift was on the balance sheet: a long-awaited refund of tariffs paid under the invalidated IEEPA regulations. CFO John Kimble confirmed that “essentially all of those funds refunded to us as of the second quarter close” — John L. Kimble, CFO · 2026-07-23 and the company recognized “$6.8 million as nonoperating other income” — John L. Kimble, CFO · 2026-07-23. This tariff refund is a welcome reversal for a small-cap that was hit hard when tariffs spiked a year earlier, and it echoes a broader market theme — several other reporters this quarter have cited tariff refunds. But for JAKKS, it’s a unique catalyst: back-to-back quarters of cash accumulation.
The refunds arrive as the company leans into a genuine strategic pivot. CEO Steven Berman highlighted that “We are increasingly working with key existing accounts in Europe on exclusive launches” — Stephen G. Berman, CEO · 2026-07-23 — a shift that is already showing up in the numbers: international first-half shipments hit a record $53 million. The company has added three senior sales professionals and opened its first office in South America, a direct counter to the mature U.S. market. Berman’s ambition extends well beyond toys: he is betting heavily on anime and manga, a category that draws a kidult crowd. This is not a new pivot; in February, Berman said, “we are a primarily focused FOB company. But in order for us to expand and see the growth that we are achieving, both in Latin America and EMEA and now new focuses -- additional focus is Southeast Asia.” — Stephen Berman, CEO · 2026-02-19
The anime build-up has an important nuance. In April, Berman described the effort as “a very young, passionate group in the Anime, Manga and called Digital Marketers.” But on the latest call, he struck a more measured tone: “So we are very much on path, very strong with it” — Stephen G. Berman, CEO · 2026-07-23 while clarifying that no 2026 revenue is expected from anime — a pullback from earlier expectations that some product would ship this year. That means the opportunity is 2027 at the earliest.
On the product side, JAKKS is marrying blockbuster IP with pricing discipline. Giant Metal Sonic, a 20-inch feature figure, is positioned as a holiday must-have, while Disney Darlings and plush are expanding. The Metal Sonic launch rides the wave of the second Super Mario Bros. film, which has already outsold the first movie’s product. But not every division is firing: the outdoor seasonal business — ball pits, ride-ons, skateboards — was down 12% in the quarter and is now seen as a structural headwind. Berman is explicit: The company is reengineering packaging to shrink box sizes and fight for shelf space. Financially, the company is in better shape than a year ago. Gross margin is holding in the low 30s, and the company just posted its sixth consecutive quarterly dividend. Adjusted EBITDA for the quarter more than doubled to $5.1 million, and cash ended at $60.6 million versus $43.1 million last year. The balance sheet is admittedly not as pristine as management suggests if you look at the latest 10-Q, which shows effective net cash of -$12 million — likely due to seasonal working capital swings — but the trajectory is positive. The real test will be whether the anime and international initiatives can convert record first-half international shipping into a durable earnings engine.We are not waiting this out. We are managing this business with a multiyear lens and a clear plan on 2 levers.