Executive Summary

Q2 2024 revenue fell 11% year over year to $148.6M, while gross margin improved 130 bps to 32.0%; diluted EPS was $0.47 and adjusted EPS was $0.65 .
Dolls/Role-Play grew 6.6% YoY to $63.6M, offset by a 30.5% decline in Action Play & Collectibles and a 10.1% decline in Costumes .
Management attributed margin improvement primarily to lower royalty expense/product mix and highlighted inventory discipline (Q2 inventory ~$51M, lowest for this time of year since 2010) .
No formal numeric guidance was provided; near-term catalysts include Moana 2 and Sonic the Hedgehog 3 launches with broad retail support, plus The Simpsons and ABG lifestyle rollouts (skateboards/roller skates) .

What Went Well and What Went Wrong

What Went Well

Gross margin expanded to 32.0% (+130 bps YoY), driven primarily by lower royalty expense and product mix; CFO: “With gross margin at 32.0%, that's as good of a Q2 we've posted since 2012” .
Dolls/Role-Play/Dress-Up grew 6.6% YoY to $63.6M despite tough comps against last year’s Little Mermaid release .
Inventory discipline: Q2 total inventory ~$51M, “lowest it has been at this time of the year since 2010,” supporting working-capital efficiency alongside strong FOB mix .

What Went Wrong

Top-line decline: Net sales decreased 11% YoY to $148.6M, with North America -7.6% and International -31.1% (logistics-driven order slip plus weaker content slate vs. prior year) .
Segment pressure: Action Play & Collectibles fell 30.5% YoY (difficult comp to Super Mario Bros. Movie), and Costumes declined 10.1% YoY with management expecting a slightly softer year globally .
Operating leverage: Operating income fell to $7.6M (5.1% margin) from $16.4M (9.9% margin) last year; SG&A increased as the company invested ahead of H2 and 2025 initiatives .

Financial Results

Consolidated Results vs Prior Periods

Metric	Q2 2023	Q1 2024	Q2 2024
Net Sales ($USD Millions)	$166.9	$90.1	$148.6
Diluted EPS ($)	$0.58	$(1.27)	$0.47
Adjusted EPS ($)	$1.26	$(1.09)	$0.65
Gross Margin (%)	30.7%	23.4%	32.0%
Operating Income ($USD Millions)	$16.4	$(21.3)	$7.6
Operating Margin (%)	9.9%	(23.7%)	5.1%
Adjusted EBITDA ($USD Millions)	$20.7	$(17.2)	$12.3

Segment Net Sales (Q2 2024 vs Q2 2023)

Segment	Q2 2023 ($M)	Q2 2024 ($M)	YoY Change
Dolls, Role-Play/Dress-Up	$59.7	$63.6	+6.6%
Action Play & Collectibles	$52.6	$36.6	-30.5%
Outdoor/Seasonal Toys	$5.7	$4.4	-22.6%
Costumes	$49.0	$44.0	-10.1%
Toys/Consumer Products Total	$117.9	$104.6	-11.3%
Total Company	$166.9	$148.6	-11.0%

Geographic Net Sales (Q2 2024 vs Q2 2023)

Region	Q2 2023 ($M)	Q2 2024 ($M)	YoY Change
United States	$136.2	$125.8	-7.6%
Europe	$16.6	$10.3	-38.3%
Latin America	$3.1	$3.2	+5.6%
Canada	$6.8	$6.3	-7.5%
Asia	$1.8	$1.3	-30.7%
Australia & New Zealand	$1.8	$1.6	-8.5%
Middle East & Africa	$0.7	$0.1	-82.3%
North America Total	$143.0	$132.1	-7.6%
International Total	$23.9	$16.5	-31.1%

KPIs and Balance Sheet Highlights

KPI / Metric	Q2 2023	Q2 2024
DSO (days)	72	86
Inventory Turnover (DSI)	51	46
Inventory ($USD Millions)	$65.1	$51.3
Cash & Equivalents ($USD Millions)	$32.4	$17.7
Accounts Receivable ($USD Millions)	$132.5	$140.0
Short-term Debt ($USD Millions)	$0.0	$5.0
TTM Adjusted EBITDA ($USD Millions)	$66.9	$51.2

Actuals vs Wall Street Estimates

Metric	Q2 2024 Actual	Q2 2024 Consensus
Revenue ($USD Millions)	$148.6	Unavailable (S&P Global consensus not retrievable at time of request)
Diluted EPS ($)	$0.47	Unavailable (S&P Global consensus not retrievable at time of request)

Note: Wall Street consensus via S&P Global was unavailable at the time of this analysis due to data access limits; comparisons will be updated when available.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Company revenue/EPS/margins	FY 2024	None formal	No formal numeric guidance; management expressed confidence in achieving objectives and highlighted H2 catalysts (Moana 2, Sonic 3), The Simpsons, ABG seasonal launches	Maintained qualitative outlook
Costumes segment	FY 2024	Slightly softer vs 2023 (qualitative)	Reiterated expectation of slightly softer global performance	Maintained
Capital allocation	Ongoing	N/A	Evaluating dividends, buybacks, M&A; debt-free post preferred retirement; liquidity managed via ABL draw expected to be repaid by end of Q3	New qualitative detail

No explicit ranges for revenue, margins, opex, OI&E, or tax rate were provided in Q2 2024 materials.

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2023 and Q1 2024)	Current Period (Q2 2024)	Trend
Gross margin drivers	Improved landed costs; full-year COGS 50.9% of sales, margin dollars at multi-year highs	+130 bps YoY to 32.0%; primarily lower royalty expense/mix	Stable to improving
Supply chain/logistics	Shipping disruptions to Europe monitored; FOB-heavy model lowers sensitivity	International orders slipped due to logistics; new DCs in Italy/Spain; FOB model emphasized	Short-term headwind, structural mitigation
Content/macro backdrop	Weaker first-half slate; evergreen focus; Sonic/Moana later in year	Content-light H1; H2 catalysts: Moana 2, Sonic 3; retail POS tracking down low single-digit	Near-term cautious, H2 uplift
Segment mix	Action Play & Collectibles strong in 2023; Dolls normalizing	Dolls +6.6% YoY; Action Play & Collectibles -30.5% on tough Mario comp	Mixed; rotation to Dolls
International expansion	Europe/LatAm buildout; new leadership and footprint	International down 31% QoQ; logistics issues; still focused on expansion	Execution in progress
New IP / Product initiatives	ABG partnership; The Simpsons; Disney campaigns	ABG boards at Academy in Aug 2024; Simpsons launch underway; Wild Manes owned IP; Frozen role-play; Tsum Tsum extensions	Building pipeline
Capital allocation	Preferred retired; exploring options	Debt-free; considering dividends/buybacks/M&A; ABL draw to be repaid	Optionality increased

Management Commentary

CFO on margin quality: “Gross margin was up 130 basis points in the quarter, primarily due to lower royalty expense… With gross margin at 32.0%, that's as good of a Q2 we've posted since 2012” .
CEO on H2 catalysts: “Exciting new launches supporting Moana 2… and Sonic the Hedgehog™ 3… the cornerstones of the broad retail support we have secured” .
CFO on inventory discipline: “Our Q2 total inventory level of $51 million is the lowest it has been at this time of the year since 2010” .
CEO on product pipeline: “We are in the middle of the exciting initial launch of… ‘The Simpsons,’ the launch of our Authentic Brands Group business as well as several other new IP and category extensions” .

Q&A Highlights

ABG (Authentic Brands Group) seasonal strategy: Management emphasized countercyclical, evergreen lifestyle categories (Element, Roxy, Quiksilver, Juicy) to smooth seasonality; initial launch at Academy Sports in Aug 2024, broader rollout into 2025 .
The Simpsons launch: Early retail sell-through “extremely strong,” with a managed approach to serve both collector and kid markets, targeted to become evergreen .
Supply chain/FOB: FOB remains >70%; European logistics centers caused some delays but have been resolved; continued lean inventory stance to avoid overstock risk .
Capital allocation: Debt-free; evaluating dividends, buybacks, acquisitions, and license opportunities; liquidity managed prudently post preferred retirement .

Estimates Context

S&P Global Wall Street consensus for Q2 2024 (EPS and revenue) was unavailable at the time of this analysis due to data access limits. We will update comparisons once consensus data is retrievable. In the interim, focus on the margin progression, segment mix, and H2 content catalysts for directional expectations .

Key Takeaways for Investors

Margin resilience despite lighter content: 32.0% gross margin (+130 bps YoY) on lower royalty expense/mix supports earnings quality into H2 .
Mix shift and comps matter: Dolls/Role-Play up 6.6% YoY while Action Play & Collectibles faced tough Mario comps (-30.5%); expect H2 Sonic/Moana to rebalance .
International timing issues should ease: Q2 logistics pushed some orders out; European DCs and FOB model mitigate structural risks .
Inventory discipline and working capital: Q2 inventory ~$51M (lowest since 2010), with ABL draw expected to be repaid by end of Q3 on collections; supports cash conversion .
Near-term catalysts: Moana 2 and Sonic 3 shipments with broad retail support, plus The Simpsons and ABG lifestyle offerings, position H2 for improved sell-through and momentum .
Costumes caution persists: Management reiterated slightly softer global performance, so upside likely driven by toys and lifestyle segments .
Capital allocation optionality: Debt-free and evaluating shareholder returns and bolt-ons; monitor updates over H2 as liquidity strengthens .

JAKKS PACIFIC INC (JAKK)·Q2 2024 Earnings Summary