JAKKS PACIFIC INC — Call Transcript 2026

Afternoon, everyone. Welcome to the JAKKS Pacific fourth quarter and full year 2025 earnings conference call with management, who will review financial results for the quarter ended December 31st, 2025. 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 Investor 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. Then John will provide some additional comments around JAKKS Pacific's financial and operational results. Mr. Berman will then return with additional comments and some closing remarks prior to opening up the call for questions. Your line will be placed on mute for the first portion of the call. If you would like to be placed in the queue to ask a question, please press star one one on your telephone keypad. 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 securities 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 uncertainties, you should consult JAKKS' most recent 10-K and 10-Q filings with the SEC, as well as the company's other reports subsequently filed with the SEC from time to time. In addition, today's comments by management will refer to non-GAAP financial measures such as Adjusted EBITDA and Adjusted Earnings Per Share. Unless stated otherwise, the most directly comparable GAAP financial metric has been reconciled to the associated non-GAAP financial measure within the company's earnings press release issued today or previously. As a reminder, this call is being recorded. With that, I would now like to turn the call over to Stephen Berman. Good afternoon, and thank you for joining us. As 2025 draws to a close, we are proud of what the organization has accomplished and what we ultimately viewed as a defining year in our company's history. While tariff policy created visible pressure on near-term financial performance, we remained disciplined and focused on long-term value creation. Beneath the surface volatility, we made meaningful progress across the areas that matter most, deepening and broadening our relationships with the key factories, licensors, and retail partners through a truly global lens, while also expanding our strategic relationship portfolio in preparation for a significant new initiative launching in 2027. Importantly, we maintained transparency with our shareholders regarding market dynamics and the challenges we faced, and we delivered on our commitments, refusing to pursue short-term top-line growth at the expense of bottom-line margin integrity. At the same time, we completed our first full year as a cash dividend payer, returning $1 per share back to shareholders while preserving our debt-free balance sheet. We exit 2025 stronger, more resilient, and better positioned than we entered it, and we are energized by the opportunities ahead in 2026 and beyond. Globally, our toy and consumer product net sales were roughly flat in fourth quarter at $118 million, down 0.2% from the prior year and down 0.7% from 2023. Costumes were down, although in one of its smaller quarters of the year, but enough to bring the total company sales down 2.8% from prior year to $127.1 million, or roughly flat to our 2023 fourth quarter sales of $127.4 million. Our fourth quarter U.S. business in total was down 7.8% to $86.2 million. Our domestic sales were down, which we attribute to higher tariff burden. Retail prices resulted in slower second half sell-throughs and by extension, lower fourth quarter replenishment. Fourth quarter FOB sales to the U.S. were positive versus prior year to somewhat offset the downside. In the rest of the world, our fourth quarter sales were up 9.9% to $41 million. Europe was roughly flat in the quarter, and Latin America was up significantly, making up the lost ground from Q3. On a full year basis, our total rest of world business was $154.1 million, up 5.5% from prior year and slightly ahead of 2023, led by a 14% increase in Europe to $81.4 million. For the full year, our toy and consumer product business was down 19%, as our evergreen action play dolls and role play business, in particular, suffered from tariff impacts on customer order patterns and higher consumer prices. All three of our toy and consumer products division were down, ranging 9%-23% on a full year basis. Our costume business was down 10% for the full year, with a slight increase in international offsetting the U.S. results. Syndicated data suggests both retail dollars and units were down compared to the prior year, while average prices increased for both children's and adult costumes. Although Halloween is always a holiday with a surge of the last-minute shoppers, we felt that the surge was even later this year to the benefit of brick-and-mortar customers more than online. We did maintain, and in fact, extended our market leadership position for the season. This past month, we proudly debuted our first fully integrated JAKKS and Disguise showroom at the Nuremberg Toy Fair, marking a significant milestone in how we present our global portfolio to the marketplace. The response from customers and partners was overwhelmingly positive, as they experienced firsthand the full breadth, depth, and quality of our offerings, powered by best-in-class licensing relationships from around the world. This successful debut reinforces our confidence in the strength of our strategy and our ability to win across multiple categories and regions. We see a substantial runway for integrated growth across Europe, with particularly strong momentum as we expand further into Eastern Europe and the Middle East. With a unified go-to-market approach, deep retail partnerships, and a world-class product pipeline, we're well-positioned to build sustained leadership and capture meaningful share of these high-growth markets throughout the season and beyond. 2025 has certainly been a disappointing year when we think of what could have been, but I remain pleased by how we adapted, evaluated, and reacted without overreacting to a volatile operating environment. We executed in a year, and perhaps more importantly, at the same time, remained focused on creating new growth opportunities for the company. We protected our core business by not chasing top line at the expense of margin, while prudently controlling discretionary spending. We finished the full fiscal year with a gross margin of 32.4%, our highest full-year level in over 15 years. Our gross margin dollars were up in fourth quarter, year-over-year, through a combination of better costing from our factories and improved inventory management. On a full year basis, our SG&A expenses were down 1%. This is a business where upfront investments are made over 12 to 18 months with the goal of future sales volumes and scaling, driving larger profits. Although volumes were not as originally planned for the year, we nonetheless managed to reduce our fourth quarter adjusted EBITDA loss to $3.8 million, versus $10.2 million in the same quarter last year. That increased our trailing 12-month EBITDA to $35.4 million for the full year of 2025, down from $59.3 million in the prior year, when we generated $120 million more in sales. I will now pass it over to John for some comments, after which I will come back and share a bit more about where we're focused moving forward. John? Thank you, Stephen, and hello, everyone. A decent quarter here to wrap up a mostly indecent year from a financial perspective. As Stephen mentioned, sales stabilized a bit with the tariff shocks of Q2 and Q3 behind us. Q4 benefited from FOB shipments of our product for the Super Mario Galaxy film, which led our action play and collectibles business to a 19% year-over-year increase, with growth from both North America and international. Beyond that, I'd say that most of Q4 sales results ended up being the squeeze from whatever happened or didn't happen in Q3 and didn't really suggest any meaningful change in trend or customer behavior. Gross margin dollars grew by 11% versus prior year, driven by a slightly better margin percentage. This result is a good outcome and generally consistent with prior quarters in 2025. Full year gross margin ended at 32.4%, better than last year's 30.8% and a bit more consistent with 2023's 31.4%. Product costs were held in check through persistent and consistent collaboration with our long-term factory network, along with tighter management of inventory, reducing our obsolescence expense. Royalty expenses crept up a bit. Significant sales reductions have driven some minimum unearned royalty payments, along with some mix impact. We paid roughly $12 million in U.S. tariffs in 2025, which we feel we recovered through increased pricing. Higher price, accompanied by a 1:1 cost addition, has the math impact of a lower margin percentage, but that amount was not really material on an enterprise level. Tariffs were far more impactful in reducing sales. We estimate that our U.S. FOB customers paid nearly $50 million in tariffs on JAKKS and Disguise product in 2025. We feel that $50 million would have otherwise been allocated towards more actual product and by extension, generate more JAKKS revenue in any other year. That amount would be in addition to the additional reduction in units sold compared with our original plans, as customers understandably de-risk their year. That gives you a bit of insight into the financial implications of last year's actions on our company, although it may not be readily apparent simply looking at the financial statements. Moving on to more controllable parts of the P&L, Q4 benefited from our actions taken earlier in the year to keep SG&A spending on a tighter leash. Selling expense ended the year down 8% and G&A roughly flat. With the strength and flexibility of our balance sheet, we did this without handicapping any of the product development or new initiatives we have been working on for 2026 and 2027. Our operating loss and adjusted EBITDA for the quarter were both improvements versus prior year, but not enough to overcome the financial carnage of Q2 and Q3. Full year operating margin dropped to 2.5%, down from 5.7% last year. Adjusted EBITDA margin was 6.2%, down from 8.6%. It is a significant focus as we start the new year to revisit our processes to continue gross margin expansion while containing SG&A. We know we have the potential to do better from a margin perspective without relying on top line improvement. The ambition would be to do both, which would, by extension, generate meaningful value. A moral, if not economic, victory of note, to offset our margin challenges, calendar year 2025 was the first year our interest income exceeded our interest expense for a very long time. Remembering that in 2020, we paid $21.6 million in interest expense with a full year adjusted EBITDA of $28.1 million, helps to put 2025 in context a bit. These results all tally to an adjusted quarterly loss of $0.18 per share, an improvement from a $0.67 loss in Q4 2024, but nonetheless, still dragging down our full year adjusted EPS to $1.62, down from $3.79 for full year 2024. The diluted share count is based on roughly 11.5 million shares. Turning to the balance sheet, we finished the year with $54 million in cash, down from $70 million last year, obviously impacted by the drop in sales. Our inventory was up slightly at a bit less than $60 million, up from $53 million last year. That change is driven by our expanded distribution footprint in Europe and Mexico. Our U.S.-held inventory was actually down 18% year-over-year, to the lowest level we've finished a year in over 10 years. Inventory management remains a focus and opportunity for us. Broadly speaking, we feel we read the second half of the year in the U.S. about as well as we could have hoped in terms of forecasting consumer and customer behavior. The hottest products continued to move fast, as hot products do, with the bar essentially raised for everything else with more lukewarm results. We don't feel we missed sales in Q4, and we feel good about our U.S. inventory on hand. We also obviously feel good that imported product from China is now taxed at 20%, compared to the 30% we were paying for a lot of the year, and we didn't have to import any more of that higher cost than we did. The company remains committed to the path of being a meaningful and consistent dividend payer. Despite a somewhat soft year financially, we did manage to generate over $8 million in cash flow from operations, while also funding $11.2 million in common dividend payments. As mentioned in our release, the board approved a Q1 payment of $0.25 per common share, payable at the end of Q1. The record date is February 27th, and the payable date will be March 30th. I think the pressures of the past year have pushed us to find new areas for incremental improvement, and that will be a lot of our focus this year to see what we can figure out. In a company of our size, we have the ability to make decisions faster and by extension, capture opportunities sooner, so that's what I hope we can do. Now back to Stephen for some more comments about the year ahead. Thank you, John. The biggest story for us at the start of this year is certainly the theatrical release of the Super Mario Galaxy Movie from Illumination. We are extremely excited for this new product launch, which will be available for purchase late February. The best-selling five-inch scale figures are back in line, along with new scale of minifigures, new play sets, plush and more. The film releases April 1st, and our line gives fans of all ages the chance to recreate their favorite film moments in the movie. This is a follow-up to the Super Mario Bros. Movie, which went on to generate the largest theatrical box office of 2023. So you can imagine we're beyond thrilled to be back in the mix again here supporting this launch. Our Sonic DC crossover product launch received a great response in fourth quarter, with exclusive retailer launches in both the U.S. and in Europe. Distribution of that line is going wide in the new year, with new items like the DC Sonic Batmobile being added at key retailers. Sega is celebrating the 35th anniversary of Sonic all year with various activations. We are participating by launching special packaging commemorating this event, along with some exclusive items. We have other exciting news and plans around Sonic in 2026, but we're not ready to share those today, but stay tuned. Moving over to our Disney doll business, we'll leave the holiday season and toy fair season with solid momentum behind Disney Darlings, our latest homegrown Disney IP, and the strong tradition of Style Collection and Disney's Ily. For those of you unfamiliar with Disney Darlings, our launch in the nurturing doll category, similar to our Ily line, these are not simply caricatures in figural form, but an approach we've developed in a partnership with Disney to bring new and innovative ways for our consumers to engage with the Disney brand. The intent is to spark the emotional response consumers feel when engaging with Disney, the joy and happiness when engaging experiences, a bit of the Disney magic. These are truly beautiful dolls delivered with premium quality, and what's even more magical is that unlike other baby dolls, they are 100% joyful and happy, and there's no tears and no crying. Our soft launch of this line sold through well in fall, leading us to expand listings in the U.S. this year, as well as a lot of interest and commitments internationally coming out of this past month's toy fair. We've seen enough positive feedback to feel that we have a winner here that can steadily build this year and into the next, into being another solid foundational piece of business for us. Congratulations to the team on this one. We're also supporting the live-action theatrical release of Moana in early July this year. Moana has been a steady part of our business for over the past 10 years, going back to the original animated release in 2026. We're happy to be able to bring back some of the most popular toys we've created over the years as a new audience engages with this story this summer. Our focus items include Moana's Necklace, Maui's Fishhook, all the more aspirational, with the Rock reprising his role in the film, our Heihei, the screaming chicken, and our super popular Moana large dolls. We also have a couple of additional exciting developments coming on our Disney doll front later this year. In the other part of our doll division, we continually steadily build our private label business with major retailers in the U.S. and expanding into Europe. It's an extremely broad array of dolls, role-play toys, and related subcategories that allow the retailers to make additional margin, while the consumers get a high-quality, on-trend design product at a much lower price. In this area, we have several new launches that we will discuss in the following quarters that will be launched during the fall holiday season. In 2025, the company saw momentum across its action sports portfolio, with Element emerging as a powerful growth engine in the second half of the year, expanded distribution and deepened retail partnerships, most notably with Walmart, Amazon, and Academy Sports and Outdoors. Significantly increased brand visibility, strengthened shelf presence, and drove meaningful gains in sell-through during a critical holiday period. These results reflect the company's disciplined execution, strategic product innovation, and an unwavering focus on aligning with leading retail partners to deliver compelling value within the active and early play category. Looking ahead, we are highly encouraged by rising retail confidence and growing consumer engagement across action sports as the industry builds toward the 2028 Summer Olympic Games. Skateboard sales trends are once again approaching elevated levels seen in 2020 and 2021, signaling the renewed demand and sustained category momentum. This strengthening trajectory across skateboards and the adjacent action sports segments positions the company to further accelerate investment in innovation, expand strategic partnerships, and drive durable, long-term brand growth and shareholder value. With our Disguise business, we're supporting a wide range of new theatrical releases. We're excited to support Toy Story 5, which debuts in late June, as each installment of this franchise has been great for the costume business. Also from Disney will be the Moana release and the latest Descendants installment, Descendants: Wicked Wonderland. The second half of this year also has new movies coming from Minions as well as Paw Patrol. We'll have some exciting new additions to the lineup coming from some new licensor relationships we've been busy establishing, so keep an eye out for these announcements coming soon. Finally, Halloween is once again on the weekend in 2026, Saturday, to be specific, so ideally, that drives more energy and activity beyond traditional trick-or-treating. Those give you some highlights we're seeing coming into the market in the first half of the year. We remain very focused on some additional launches that we will have more in 2027 impact, even if we can drop in some initial exclusives before the end of this year. Although a lot has changed in the past 12 months, we feel we are stronger in position today with more paths to grow than a year ago. Currently, we see this year as a low-to-mid-single-digit top-line growth year, with a continued focus on expanding margins, while we set up to maximize the potential of several potentially impactful new launches in 2027. There's still a lot of work to do, but I'm pleased with our progress to date and being able to share more publicly about some of the exciting things we've been working on. With that, we'll take a couple questions. Operator? Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Eric Beder of Small Cap Consumer Research LLC. Good afternoon. Hello, Eric. Wow! A lot going on here. Let's talk a little bit about the whole FOB model. When you look, obviously, that got disrupted last year with the tariffs and other pieces and ramping it back up. When you look at that model and your retailers are seeing for 2026 and beyond, is it back to the way the model was? And what kind of tweaks are you doing? If not, and it's not, what kind of tweaks are there being done in the model in terms of how the retailers and yourselves are handling the FOB model? Well, first, thank you, Eric. We're continuing to focus on an FOB first business that's been since inception. You know, last year, we stayed very focused on it as well, but we had to adapt based on where we manufactured, whether it was in China, Indonesia, so on and so forth, in Southeast Asia. So we had a slight decrease in FOB, but not materially. Back in 2026 and 2027, we will be moving forward again on an FOB first basis. At the same time, a lot of the major retailers in the U.S. have a first cost of sale program that we work with them to have the impact of the tariff be less of an impact to them and ourselves at the same time. So we're working through some of the major customers and secondary customers on a first sale basis. We've learned a lot through this tariff, call it congestion and confusion throughout last year, but we have a pretty good handle on it with our retail partners, who we've worked extremely closely with. Our sales teams that are really, entwined with our major retailers, have worked very hand-in-hand with the buyers as well as the financial sides of our retailers, to make sure that we stay focused on an FOB basis. 'Cause it behooves both the retailer, for them to make more margin, it behooves JAKKS as a sense of cost of capital, and it allows, hopefully, the consumer to have a little bit lower price than bringing in on a domestic basis. How should we be thinking about the international opportunity with FOB? I know that you mentioned the inventory rose a little bit, primarily because of the international players, and some of them aren't, I guess, physically or fiscally big enough to do this. What's kind of the thought process there? Again, as a company in whole, not just in, call it, North America, but worldwide, 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, we do need to have distribution centers across strategic areas in order for us to achieve the customer base that is less, the size of the major retailers that you see. In Europe, there's a lot of smaller customers that make up a lot of the business. So we have a mix on an FOB basis first, and then follow up with domestic inventory in order for us to achieve growth, as required in those territories. Many of the customers are not large enough to do an FOB and order a container or, or so on and so forth, so we adapt to that and work with them by each of the segments in which we're in, whether it's the Disney segment, the boy segment, seasonal, and so on. So where appropriate, we work correctly with the retailer on the size of the product, pricing of the product, and the bulk of the item in order to have the best shipping cost for them and price points for them. So we have warehouses in five different parts of the EMEA. We have it in Latin America, and we've now, as you see, at the end of this year, we've brought in inventory to help us grow those areas with an FOB first basis, as well as with backup inventory on a domestic basis. Okay. Obviously, this year was tough for the entire toy industry. You guys managed to maintain your cash, no debt basis, lots of cash. How have you, like, been able to lever that? It sounds like you have based on what, 0.7%. How have you able to lever that in terms of adding new licenses, expanding the relationships, and kind of moving up the ladder in terms of kind of being the licensee of choice going forward? One thing, being healthy and clean and having a strong balance sheet, the licensors appreciate it very much. You know, they're always eyeing companies that have financial issues, and they don't want to take the risk of someone ruining their opportunities within their owned IP. So we, with that, have been very focused, not giving away top-line revenue, and to erode our profit. We took what was right approach with retail, retail inventory, and our own inventory, to not push for higher sales and have that erode margin. We focused on margin with healthy sales, and as you can see, I think we were up 380 basis points for the year, for the quarter, as for... I'll go back to give you the exact numbers. But we focused on the margin enhancement, and retailers and licensors like that. At the same time, we've done an expansive amount of traveling worldwide, working on new initiatives, and we have some really exciting initiatives coming forward, and we'll be excited to talk about as soon as some of these deals get all accomplished. But during this period of time, we have focused on building 2026 and 2027 aggressively, and licensors have all fallen in line with us and are very supportive. Okay. I know you don't do financial guidance, but just conceptually, Q1 last year was an extremely strong quarter. It was also a quarter, I believe, where you had a significant amount of product that was shipped early because people wanted to get in front of tariffs. How should we be thinking, given that the flows in the quarters are so up and down last year, just conceptually, in terms of how this year is going to flow? Yeah, I'll jump in on that a little bit. You know, to your point, Q1 was a really robust quarter for us this year, or this past year. And on one hand, we have some momentum shipping product for Super Mario Galaxy, as we pointed out in the call. But at the same time, too, you know, long time listeners know, Q1 is always our smallest quarter. And so, you know, I've made the comment in the past, you know, Q1 for us, or maybe for everyone in the industry, is like a Q1 of a basketball game. Don't get three fouls at the end of the first quarter, and you'll kind of be okay. So, you know, really, we're probably thinking more first half, second half, and as to where the line gets drawn at the end of Q1, to be honest, we're not really overly, fixating on it. Okay. Good luck for a more normalized 26. Thanks. Thank you. Thanks. We'll take that. Thank you. Stop here, but this is just- Our next question comes from Gerrick Johnson of Seaport Research Partners. Your line is open. Hi, good afternoon. Welcome back. Maybe two things. Hey, Gerrick. Hey, thank you very much. Good to be back. So one on POS, what was that in a quarter? How did it trend and evolve through the quarter? And then, inventory at retail, what does yours look like? But also, more broadly, the industry, is there any pockets of inventory that could clutter and, you know, affect the industry that way? Yeah. So I'll take the first part of that, and Stephen can circle back on the inventory piece. You know, from a POS point of view, you can read into the fact that we weren't bragging about it, is that we weren't thrilled with it, you know? But as we mentioned on the call, the super hot, like, new launch items, you know, blew through in a way that, you know, we were happy to see and, you know, gave us confidence in broadly what we're doing. But I think broadly speaking, with where we saw higher retailer prices, you know, that slowed down POS for those segments. So, you know, notwithstanding all the other kind of hair on the topic of POS in terms of what is the underlying margin for that POS, you know, I think that's kind of what we'd have on that. You know, from a retail inventory point of view, Stephen's a little bit closer to that. I'll let him. So I'll go through some of the two major retailers in the U.S.. We're down at one of them, down 21% year-over-year and down about 4% on another. So our inventory at retail is very tight for us, which is good. We didn't, again, as I said earlier when Eric asked a question, we did not want to chase top line and worry about the inventory levels after the holiday season. So we really focused on shipping what was appropriate and focusing on profitability. And to answer what I did, we I mentioned earlier, I just wanna make sure I clarify. We were 380 basis points higher in margin for fourth quarter than the year prior. So I wanna make sure I got that out there. Yeah. No, that's impressive. And so how would you describe the promotional activity and perhaps sales allowances in the fourth quarter? For us, they were quite normal or a little bit less than normal. For, I think, a lot of the major, our competitors put a lot of heavy in discounting and promotional. But to me, you know, looking at what we've seen throughout the year, it was a very cautionary year because of the tariffs and not knowing what the consumer kind of appetite was. So again, we're pretty close to what we do. We sit with the factories, we sit with the retailers. So we did hear there was a lot of promotion activity that was done heavily in November, December, but for us, there wasn't much. Okay. Okay, very good. Thank you, Stephen. Thank you, Gerrick. Welcome back, seriously. Thanks. Thank you. This concludes our question and answer session. I'd like to turn it back to Stephen Berman for closing remarks. Ladies and gentlemen, thank you for today and finalizing and finishing 2025, and we are extremely excited for 2026 and 2027 and look forward to our next call. Thank you again. This concludes today's conference call. Thank you for participating, and you may now disconnect.

Speaker 4: Afternoon, everyone. Welcome to the JAKKS Pacific fourth quarter and full year 2025 earnings conference call with management, who will review financial results for the quarter ended December 31st, 2025. 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 Investor 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. Then John will provide some additional comments around JAKKS Pacific's financial and operational results. Mr. Berman will then return with additional comments and some closing remarks prior to opening up the call for questions. Your line will be placed on mute for the first portion of the call. Afternoon, everyone. afternoon everyone Welcome to the JAKKS Pacific fourth quarter and full year 2025 earnings conference call with management, who will review financial results for the quarter ended December 31st, 2025. welcome to the jakks pacific fourth quarter and full year 2025 earnings conference call with management who will review financial results for the quarter ended december 31st 2025 JAKKS issued its earnings press release earlier today. 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 Investor section. the earnings release and presentation slides related to today's call are available on the company's website in the investor section On the call this afternoon are Stephen Berman, Chairman and Chief Executive Officer, and John Kimble, Chief Financial Officer. 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. stephen will first provide an overview of the quarter and full fiscal year along with highlights of recent performance and current business trends Then John will provide some additional comments around JAKKS Pacific's financial and operational results. then john will provide some additional comments around jakks pacific's financial and operational results Mr. Berman will then return with additional comments and some closing remarks prior to opening up the call for questions. mr berman will then return with additional comments and some closing remarks prior to opening up the call for questions Your line will be placed on mute for the first portion of the call. your line will be placed on mute for the first portion of the call If you would like to be placed in the queue to ask a question, please press star one one on your telephone keypad. 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 securities 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. If you would like to be placed in the queue to ask a question, please press star one one on your telephone keypad. if you would like to be placed in the queue to ask a question please press star one one on your telephone keypad 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 securities laws. 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 securities 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. 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 uncertainties, you should consult JAKKS' most recent 10-K and 10-Q filings with the SEC, as well as the company's other reports subsequently filed with the SEC from time to time. In addition, today's comments by management will refer to non-GAAP financial measures such as Adjusted EBITDA and Adjusted Earnings Per Share. Unless stated otherwise, the most directly comparable GAAP financial metric has been reconciled to the associated non-GAAP financial measure within the company's earnings press release issued today or previously. As a reminder, this call is being recorded. With that, I would now like to turn the call over to Stephen Berman. For details concerning these and other such risks and uncertainties, you should consult JAKKS' most recent 10-K and 10-Q filings with the SEC, as well as the company's other reports subsequently filed with the SEC from time to time. for details concerning these and other such risks and uncertainties you should consult jakks' most recent 10-k and 10-q filings with the sec as well as the company's other reports subsequently filed with the sec from time to time In addition, today's comments by management will refer to non-GAAP financial measures such as Adjusted EBITDA and Adjusted Earnings Per Share. in addition today's comments by management will refer to non-gaap financial measures such as adjusted ebitda and adjusted earnings per share Unless stated otherwise, the most directly comparable GAAP financial metric has been reconciled to the associated non-GAAP financial measure within the company's earnings press release issued today or previously. unless stated otherwise the most directly comparable gaap financial metric has been reconciled to the associated non-gaap financial measure within the company's earnings press release issued today or previously As a reminder, this call is being recorded. as a reminder this call is being recorded With that, I would now like to turn the call over to Stephen Berman. with that i would now like to turn the call over to stephen berman

Speaker 5: Good afternoon, and thank you for joining us. As 2025 draws to a close, we are proud of what the organization has accomplished and what we ultimately viewed as a defining year in our company's history. While tariff policy created visible pressure on near-term financial performance, we remained disciplined and focused on long-term value creation. Beneath the surface volatility, we made meaningful progress across the areas that matter most, deepening and broadening our relationships with the key factories, licensors, and retail partners through a truly global lens, while also expanding our strategic relationship portfolio in preparation for a significant new initiative launching in 2027. Importantly, we maintained transparency with our shareholders regarding market dynamics and the challenges we faced, and we delivered on our commitments, refusing to pursue short-term top-line growth at the expense of bottom-line margin integrity. Good afternoon, and thank you for joining us. good afternoon and thank you for joining us As 2025 draws to a close, we are proud of what the organization has accomplished and what we ultimately viewed as a defining year in our company's history. as 2025 draws to a close we are proud of what the organization has accomplished and what we ultimately viewed as a defining year in our company's history While tariff policy created visible pressure on near-term financial performance, we remained disciplined and focused on long-term value creation. while tariff policy created visible pressure on near-term financial performance we remained disciplined and focused on long-term value creation Beneath the surface volatility, we made meaningful progress across the areas that matter most, deepening and broadening our relationships with the key factories, licensors, and retail partners through a truly global lens, while also expanding our strategic relationship portfolio in preparation for a significant new initiative launching in 2027. beneath the surface volatility we made meaningful progress across the areas that matter most deepening and broadening our relationships with the key factories licensors and retail partners through a truly global lens while also expanding our strategic relationship portfolio in preparation for a significant new initiative launching in 2027 Importantly, we maintained transparency with our shareholders regarding market dynamics and the challenges we faced, and we delivered on our commitments, refusing to pursue short-term top-line growth at the expense of bottom-line margin integrity. importantly we maintained transparency with our shareholders regarding market dynamics and the challenges we faced and we delivered on our commitments refusing to pursue short-term top-line growth at the expense of bottom-line margin integrity At the same time, we completed our first full year as a cash dividend payer, returning $1 per share back to shareholders while preserving our debt-free balance sheet. We exit 2025 stronger, more resilient, and better positioned than we entered it, and we are energized by the opportunities ahead in 2026 and beyond. Globally, our toy and consumer product net sales were roughly flat in fourth quarter at $118 million, down 0.2% from the prior year and down 0.7% from 2023. At the same time, we completed our first full year as a cash dividend payer, returning $1 per share back to shareholders while preserving our debt-free balance sheet. at the same time we completed our first full year as a cash dividend payer returning $1 per share back to shareholders while preserving our debt-free balance sheet We exit 2025 stronger, more resilient, and better positioned than we entered it, and we are energized by the opportunities ahead in 2026 and beyond. we exit 2025 stronger more resilient and better positioned than we entered it and we are energized by the opportunities ahead in 2026 and beyond Globally, our toy and consumer product net sales were roughly flat in fourth quarter at $118 million, down 0.2% from the prior year and down 0.7% from 2023. globally our toy and consumer product net sales were roughly flat in fourth quarter at $118 million down 0.2% from the prior year and down 0.7% from 2023 Costumes were down, although in one of its smaller quarters of the year, but enough to bring the total company sales down 2.8% from prior year to $127.1 million, or roughly flat to our 2023 fourth quarter sales of $127.4 million. Our fourth quarter U.S. business in total was down 7.8% to $86.2 million. Our domestic sales were down, which we attribute to higher tariff burden. Retail prices resulted in slower second half sell-throughs and by extension, lower fourth quarter replenishment. Fourth quarter FOB sales to the U.S. were positive versus prior year to somewhat offset the downside. In the rest of the world, our fourth quarter sales were up 9.9% to $41 million. Costumes were down, although in one of its smaller quarters of the year, but enough to bring the total company sales down 2.8% from prior year to $127.1 million, or roughly flat to our 2023 fourth quarter sales of $127.4 million. costumes were down although in one of its smaller quarters of the year but enough to bring the total company sales down 2.8% from prior year to $127.1 million or roughly flat to our 2023 fourth quarter sales of $127.4 million Our fourth quarter U.S. business in total was down 7.8% to $86.2 million. our fourth quarter u.s business in total was down 7.8% to $86.2 million Our domestic sales were down, which we attribute to higher tariff burden. our domestic sales were down which we attribute to higher tariff burden Retail prices resulted in slower second half sell-throughs and by extension, lower fourth quarter replenishment. retail prices resulted in slower second half sell-throughs and by extension lower fourth quarter replenishment Fourth quarter FOB sales to the U.S. were positive versus prior year to somewhat offset the downside. fourth quarter fob sales to the u.s were positive versus prior year to somewhat offset the downside In the rest of the world, our fourth quarter sales were up 9.9% to $41 million. in the rest of the world our fourth quarter sales were up 9.9% to $41 million Europe was roughly flat in the quarter, and Latin America was up significantly, making up the lost ground from Q3. On a full year basis, our total rest of world business was $154.1 million, up 5.5% from prior year and slightly ahead of 2023, led by a 14% increase in Europe to $81.4 million. For the full year, our toy and consumer product business was down 19%, as our evergreen action play dolls and role play business, in particular, suffered from tariff impacts on customer order patterns and higher consumer prices. All three of our toy and consumer products division were down, ranging 9%-23% on a full year basis. Our costume business was down 10% for the full year, with a slight increase in international offsetting the U.S. results. Europe was roughly flat in the quarter, and Latin America was up significantly, making up the lost ground from Q3. europe was roughly flat in the quarter and latin america was up significantly making up the lost ground from q3 On a full year basis, our total rest of world business was $154.1 million, up 5.5% from prior year and slightly ahead of 2023, led by a 14% increase in Europe to $81.4 million. on a full year basis our total rest of world business was $154.1 million up 5.5% from prior year and slightly ahead of 2023 led by a 14% increase in europe to $81.4 million For the full year, our toy and consumer product business was down 19%, as our evergreen action play dolls and role play business, in particular, suffered from tariff impacts on customer order patterns and higher consumer prices. for the full year our toy and consumer product business was down 19% as our evergreen action play dolls and role play business in particular suffered from tariff impacts on customer order patterns and higher consumer prices All three of our toy and consumer products division were down, ranging 9%-23% on a full year basis. all three of our toy and consumer products division were down ranging 9%-23% on a full year basis Our costume business was down 10% for the full year, with a slight increase in international offsetting the U.S. results. our costume business was down 10% for the full year with a slight increase in international offsetting the u.s results Syndicated data suggests both retail dollars and units were down compared to the prior year, while average prices increased for both children's and adult costumes. Although Halloween is always a holiday with a surge of the last-minute shoppers, we felt that the surge was even later this year to the benefit of brick-and-mortar customers more than online. We did maintain, and in fact, extended our market leadership position for the season. This past month, we proudly debuted our first fully integrated JAKKS and Disguise showroom at the Nuremberg Toy Fair, marking a significant milestone in how we present our global portfolio to the marketplace. The response from customers and partners was overwhelmingly positive, as they experienced firsthand the full breadth, depth, and quality of our offerings, powered by best-in-class licensing relationships from around the world. Syndicated data suggests both retail dollars and units were down compared to the prior year, while average prices increased for both children's and adult costumes. syndicated data suggests both retail dollars and units were down compared to the prior year while average prices increased for both children's and adult costumes Although Halloween is always a holiday with a surge of the last-minute shoppers, we felt that the surge was even later this year to the benefit of brick-and-mortar customers more than online. although halloween is always a holiday with a surge of the last-minute shoppers we felt that the surge was even later this year to the benefit of brick-and-mortar customers more than online We did maintain, and in fact, extended our market leadership position for the season. we did maintain and in fact extended our market leadership position for the season This past month, we proudly debuted our first fully integrated JAKKS and Disguise showroom at the Nuremberg Toy Fair, marking a significant milestone in how we present our global portfolio to the marketplace. this past month we proudly debuted our first fully integrated jakks and disguise showroom at the nuremberg toy fair marking a significant milestone in how we present our global portfolio to the marketplace The response from customers and partners was overwhelmingly positive, as they experienced firsthand the full breadth, depth, and quality of our offerings, powered by best-in-class licensing relationships from around the world. the response from customers and partners was overwhelmingly positive as they experienced firsthand the full breadth depth and quality of our offerings powered by best-in-class licensing relationships from around the world This successful debut reinforces our confidence in the strength of our strategy and our ability to win across multiple categories and regions. We see a substantial runway for integrated growth across Europe, with particularly strong momentum as we expand further into Eastern Europe and the Middle East. With a unified go-to-market approach, deep retail partnerships, and a world-class product pipeline, we're well-positioned to build sustained leadership and capture meaningful share of these high-growth markets throughout the season and beyond. 2025 has certainly been a disappointing year when we think of what could have been, but I remain pleased by how we adapted, evaluated, and reacted without overreacting to a volatile operating environment. We executed in a year, and perhaps more importantly, at the same time, remained focused on creating new growth opportunities for the company. This successful debut reinforces our confidence in the strength of our strategy and our ability to win across multiple categories and regions. this successful debut reinforces our confidence in the strength of our strategy and our ability to win across multiple categories and regions We see a substantial runway for integrated growth across Europe, with particularly strong momentum as we expand further into Eastern Europe and the Middle East. we see a substantial runway for integrated growth across europe with particularly strong momentum as we expand further into eastern europe and the middle east With a unified go-to-market approach, deep retail partnerships, and a world-class product pipeline, we're well-positioned to build sustained leadership and capture meaningful share of these high-growth markets throughout the season and beyond. 2025 has certainly been a disappointing year when we think of what could have been, but I remain pleased by how we adapted, evaluated, and reacted without overreacting to a volatile operating environment. with a unified go-to-market approach deep retail partnerships and a world-class product pipeline we're well-positioned to build sustained leadership and capture meaningful share of these high-growth markets throughout the season and beyond 2025 has certainly been a disappointing year when we think of what could have been but i remain pleased by how we adapted evaluated and reacted without overreacting to a volatile operating environment We executed in a year, and perhaps more importantly, at the same time, remained focused on creating new growth opportunities for the company. we executed in a year and perhaps more importantly at the same time remained focused on creating new growth opportunities for the company We protected our core business by not chasing top line at the expense of margin, while prudently controlling discretionary spending. We finished the full fiscal year with a gross margin of 32.4%, our highest full-year level in over 15 years. Our gross margin dollars were up in fourth quarter, year-over-year, through a combination of better costing from our factories and improved inventory management. On a full year basis, our SG&A expenses were down 1%. This is a business where upfront investments are made over 12 to 18 months with the goal of future sales volumes and scaling, driving larger profits. Although volumes were not as originally planned for the year, we nonetheless managed to reduce our fourth quarter adjusted EBITDA loss to $3.8 million, versus $10.2 million in the same quarter last year. We protected our core business by not chasing top line at the expense of margin, while prudently controlling discretionary spending. we protected our core business by not chasing top line at the expense of margin while prudently controlling discretionary spending We finished the full fiscal year with a gross margin of 32.4%, our highest full-year level in over 15 years. we finished the full fiscal year with a gross margin of 32.4% our highest full-year level in over 15 years Our gross margin dollars were up in fourth quarter, year-over-year, through a combination of better costing from our factories and improved inventory management. our gross margin dollars were up in fourth quarter year-over-year through a combination of better costing from our factories and improved inventory management On a full year basis, our SG&A expenses were down 1%. on a full year basis our sg&a expenses were down 1% This is a business where upfront investments are made over 12 to 18 months with the goal of future sales volumes and scaling, driving larger profits. this is a business where upfront investments are made over 12 to 18 months with the goal of future sales volumes and scaling driving larger profits Although volumes were not as originally planned for the year, we nonetheless managed to reduce our fourth quarter adjusted EBITDA loss to $3.8 million, versus $10.2 million in the same quarter last year. although volumes were not as originally planned for the year we nonetheless managed to reduce our fourth quarter adjusted ebitda loss to $3.8 million versus $10.2 million in the same quarter last year That increased our trailing 12-month EBITDA to $35.4 million for the full year of 2025, down from $59.3 million in the prior year, when we generated $120 million more in sales. I will now pass it over to John for some comments, after which I will come back and share a bit more about where we're focused moving forward. John? That increased our trailing 12-month EBITDA to $35.4 million for the full year of 2025, down from $59.3 million in the prior year, when we generated $120 million more in sales. that increased our trailing 12-month ebitda to $35.4 million for the full year of 2025 down from $59.3 million in the prior year when we generated $120 million more in sales I will now pass it over to John for some comments, after which I will come back and share a bit more about where we're focused moving forward. i will now pass it over to john for some comments after which i will come back and share a bit more about where we're focused moving forward John? john

Speaker 3: Thank you, Stephen, and hello, everyone. A decent quarter here to wrap up a mostly indecent year from a financial perspective. As Stephen mentioned, sales stabilized a bit with the tariff shocks of Q2 and Q3 behind us. Q4 benefited from FOB shipments of our product for the Super Mario Galaxy film, which led our action play and collectibles business to a 19% year-over-year increase, with growth from both North America and international. Beyond that, I'd say that most of Q4 sales results ended up being the squeeze from whatever happened or didn't happen in Q3 and didn't really suggest any meaningful change in trend or customer behavior. Gross margin dollars grew by 11% versus prior year, driven by a slightly better margin percentage. This result is a good outcome and generally consistent with prior quarters in 2025. Thank you, Stephen, and hello, everyone. thank you stephen and hello everyone A decent quarter here to wrap up a mostly indecent year from a financial perspective. a decent quarter here to wrap up a mostly indecent year from a financial perspective As Stephen mentioned, sales stabilized a bit with the tariff shocks of Q2 and Q3 behind us. as stephen mentioned sales stabilized a bit with the tariff shocks of q2 and q3 behind us Q4 benefited from FOB shipments of our product for the Super Mario Galaxy film, which led our action play and collectibles business to a 19% year-over-year increase, with growth from both North America and international. q4 benefited from fob shipments of our product for the super mario galaxy film which led our action play and collectibles business to a 19% year-over-year increase with growth from both north america and international Beyond that, I'd say that most of Q4 sales results ended up being the squeeze from whatever happened or didn't happen in Q3 and didn't really suggest any meaningful change in trend or customer behavior. beyond that i'd say that most of q4 sales results ended up being the squeeze from whatever happened or didn't happen in q3 and didn't really suggest any meaningful change in trend or customer behavior Gross margin dollars grew by 11% versus prior year, driven by a slightly better margin percentage. gross margin dollars grew by 11% versus prior year driven by a slightly better margin percentage This result is a good outcome and generally consistent with prior quarters in 2025. this result is a good outcome and generally consistent with prior quarters in 2025 Full year gross margin ended at 32.4%, better than last year's 30.8% and a bit more consistent with 2023's 31.4%. Product costs were held in check through persistent and consistent collaboration with our long-term factory network, along with tighter management of inventory, reducing our obsolescence expense. Royalty expenses crept up a bit. Significant sales reductions have driven some minimum unearned royalty payments, along with some mix impact. We paid roughly $12 million in U.S. tariffs in 2025, which we feel we recovered through increased pricing. Higher price, accompanied by a 1:1 cost addition, has the math impact of a lower margin percentage, but that amount was not really material on an enterprise level. Tariffs were far more impactful in reducing sales. Full year gross margin ended at 32.4%, better than last year's 30.8% and a bit more consistent with 2023's 31.4%. full year gross margin ended at 32.4% better than last year's 30.8% and a bit more consistent with 2023's 31.4% Product costs were held in check through persistent and consistent collaboration with our long-term factory network, along with tighter management of inventory, reducing our obsolescence expense. product costs were held in check through persistent and consistent collaboration with our long-term factory network along with tighter management of inventory reducing our obsolescence expense Royalty expenses crept up a bit. royalty expenses crept up a bit Significant sales reductions have driven some minimum unearned royalty payments, along with some mix impact. significant sales reductions have driven some minimum unearned royalty payments along with some mix impact We paid roughly $12 million in U.S. tariffs in 2025, which we feel we recovered through increased pricing. we paid roughly $12 million in u.s tariffs in 2025 which we feel we recovered through increased pricing Higher price, accompanied by a 1:1 cost addition, has the math impact of a lower margin percentage, but that amount was not really material on an enterprise level. higher price accompanied by a 1:1 cost addition has the math impact of a lower margin percentage but that amount was not really material on an enterprise level Tariffs were far more impactful in reducing sales. tariffs were far more impactful in reducing sales We estimate that our U.S. FOB customers paid nearly $50 million in tariffs on JAKKS and Disguise product in 2025. We feel that $50 million would have otherwise been allocated towards more actual product and by extension, generate more JAKKS revenue in any other year. That amount would be in addition to the additional reduction in units sold compared with our original plans, as customers understandably de-risk their year. That gives you a bit of insight into the financial implications of last year's actions on our company, although it may not be readily apparent simply looking at the financial statements. Moving on to more controllable parts of the P&L, Q4 benefited from our actions taken earlier in the year to keep SG&A spending on a tighter leash. We estimate that our U.S. we estimate that our u.s FOB customers paid nearly $50 million in tariffs on JAKKS and Disguise product in 2025. fob customers paid nearly $50 million in tariffs on jakks and disguise product in 2025 We feel that $50 million would have otherwise been allocated towards more actual product and by extension, generate more JAKKS revenue in any other year. we feel that $50 million would have otherwise been allocated towards more actual product and by extension generate more jakks revenue in any other year That amount would be in addition to the additional reduction in units sold compared with our original plans, as customers understandably de-risk their year. that amount would be in addition to the additional reduction in units sold compared with our original plans as customers understandably de-risk their year That gives you a bit of insight into the financial implications of last year's actions on our company, although it may not be readily apparent simply looking at the financial statements. that gives you a bit of insight into the financial implications of last year's actions on our company although it may not be readily apparent simply looking at the financial statements Moving on to more controllable parts of the P&L, Q4 benefited from our actions taken earlier in the year to keep SG&A spending on a tighter leash. moving on to more controllable parts of the p&l q4 benefited from our actions taken earlier in the year to keep sg&a spending on a tighter leash Selling expense ended the year down 8% and G&A roughly flat. With the strength and flexibility of our balance sheet, we did this without handicapping any of the product development or new initiatives we have been working on for 2026 and 2027. Our operating loss and adjusted EBITDA for the quarter were both improvements versus prior year, but not enough to overcome the financial carnage of Q2 and Q3. Full year operating margin dropped to 2.5%, down from 5.7% last year. Adjusted EBITDA margin was 6.2%, down from 8.6%. It is a significant focus as we start the new year to revisit our processes to continue gross margin expansion while containing SG&A. We know we have the potential to do better from a margin perspective without relying on top line improvement. Selling expense ended the year down 8% and G&A roughly flat. selling expense ended the year down 8% and g&a roughly flat With the strength and flexibility of our balance sheet, we did this without handicapping any of the product development or new initiatives we have been working on for 2026 and 2027. with the strength and flexibility of our balance sheet we did this without handicapping any of the product development or new initiatives we have been working on for 2026 and 2027 Our operating loss and adjusted EBITDA for the quarter were both improvements versus prior year, but not enough to overcome the financial carnage of Q2 and Q3. our operating loss and adjusted ebitda for the quarter were both improvements versus prior year but not enough to overcome the financial carnage of q2 and q3 Full year operating margin dropped to 2.5%, down from 5.7% last year. full year operating margin dropped to 2.5% down from 5.7% last year Adjusted EBITDA margin was 6.2%, down from 8.6%. adjusted ebitda margin was 6.2% down from 8.6% It is a significant focus as we start the new year to revisit our processes to continue gross margin expansion while containing SG&A. it is a significant focus as we start the new year to revisit our processes to continue gross margin expansion while containing sg&a We know we have the potential to do better from a margin perspective without relying on top line improvement. we know we have the potential to do better from a margin perspective without relying on top line improvement The ambition would be to do both, which would, by extension, generate meaningful value. A moral, if not economic, victory of note, to offset our margin challenges, calendar year 2025 was the first year our interest income exceeded our interest expense for a very long time. Remembering that in 2020, we paid $21.6 million in interest expense with a full year adjusted EBITDA of $28.1 million, helps to put 2025 in context a bit. These results all tally to an adjusted quarterly loss of $0.18 per share, an improvement from a $0.67 loss in Q4 2024, but nonetheless, still dragging down our full year adjusted EPS to $1.62, down from $3.79 for full year 2024. The diluted share count is based on roughly 11.5 million shares. The ambition would be to do both, which would, by extension, generate meaningful value. the ambition would be to do both which would by extension generate meaningful value A moral, if not economic, victory of note, to offset our margin challenges, calendar year 2025 was the first year our interest income exceeded our interest expense for a very long time. a moral if not economic victory of note to offset our margin challenges calendar year 2025 was the first year our interest income exceeded our interest expense for a very long time Remembering that in 2020, we paid $21.6 million in interest expense with a full year adjusted EBITDA of $28.1 million, helps to put 2025 in context a bit. remembering that in 2020 we paid $21.6 million in interest expense with a full year adjusted ebitda of $28.1 million helps to put 2025 in context a bit These results all tally to an adjusted quarterly loss of $0.18 per share, an improvement from a $0.67 loss in Q4 2024, but nonetheless, still dragging down our full year adjusted EPS to $1.62, down from $3.79 for full year 2024. these results all tally to an adjusted quarterly loss of $0.18 per share an improvement from a $0.67 loss in q4 2024 but nonetheless still dragging down our full year adjusted eps to $1.62 down from $3.79 for full year 2024 The diluted share count is based on roughly 11.5 million shares. the diluted share count is based on roughly 11.5 million shares Turning to the balance sheet, we finished the year with $54 million in cash, down from $70 million last year, obviously impacted by the drop in sales. Our inventory was up slightly at a bit less than $60 million, up from $53 million last year. That change is driven by our expanded distribution footprint in Europe and Mexico. Our U.S.-held inventory was actually down 18% year-over-year, to the lowest level we've finished a year in over 10 years. Inventory management remains a focus and opportunity for us. Broadly speaking, we feel we read the second half of the year in the U.S. about as well as we could have hoped in terms of forecasting consumer and customer behavior. The hottest products continued to move fast, as hot products do, with the bar essentially raised for everything else with more lukewarm results. Turning to the balance sheet, we finished the year with $54 million in cash, down from $70 million last year, obviously impacted by the drop in sales. turning to the balance sheet we finished the year with $54 million in cash down from $70 million last year obviously impacted by the drop in sales Our inventory was up slightly at a bit less than $60 million, up from $53 million last year. our inventory was up slightly at a bit less than $60 million up from $53 million last year That change is driven by our expanded distribution footprint in Europe and Mexico. that change is driven by our expanded distribution footprint in europe and mexico Our U.S.-held inventory was actually down 18% year-over-year, to the lowest level we've finished a year in over 10 years. our u.s.-held inventory was actually down 18% year-over-year to the lowest level we've finished a year in over 10 years Inventory management remains a focus and opportunity for us. inventory management remains a focus and opportunity for us Broadly speaking, we feel we read the second half of the year in the U.S. about as well as we could have hoped in terms of forecasting consumer and customer behavior. broadly speaking we feel we read the second half of the year in the u.s about as well as we could have hoped in terms of forecasting consumer and customer behavior The hottest products continued to move fast, as hot products do, with the bar essentially raised for everything else with more lukewarm results. the hottest products continued to move fast as hot products do with the bar essentially raised for everything else with more lukewarm results We don't feel we missed sales in Q4, and we feel good about our U.S. inventory on hand. We also obviously feel good that imported product from China is now taxed at 20%, compared to the 30% we were paying for a lot of the year, and we didn't have to import any more of that higher cost than we did. The company remains committed to the path of being a meaningful and consistent dividend payer. Despite a somewhat soft year financially, we did manage to generate over $8 million in cash flow from operations, while also funding $11.2 million in common dividend payments. As mentioned in our release, the board approved a Q1 payment of $0.25 per common share, payable at the end of Q1. The record date is February 27th, and the payable date will be March 30th. We don't feel we missed sales in Q4, and we feel good about our U.S. inventory on hand. we don't feel we missed sales in q4 and we feel good about our u.s inventory on hand We also obviously feel good that imported product from China is now taxed at 20%, compared to the 30% we were paying for a lot of the year, and we didn't have to import any more of that higher cost than we did. we also obviously feel good that imported product from china is now taxed at 20% compared to the 30% we were paying for a lot of the year and we didn't have to import any more of that higher cost than we did The company remains committed to the path of being a meaningful and consistent dividend payer. the company remains committed to the path of being a meaningful and consistent dividend payer Despite a somewhat soft year financially, we did manage to generate over $8 million in cash flow from operations, while also funding $11.2 million in common dividend payments. despite a somewhat soft year financially we did manage to generate over $8 million in cash flow from operations while also funding $11.2 million in common dividend payments As mentioned in our release, the board approved a Q1 payment of $0.25 per common share, payable at the end of Q1. as mentioned in our release the board approved a q1 payment of $0.25 per common share payable at the end of q1 The record date is February 27th, and the payable date will be March 30th. the record date is february 27th and the payable date will be march 30th I think the pressures of the past year have pushed us to find new areas for incremental improvement, and that will be a lot of our focus this year to see what we can figure out. In a company of our size, we have the ability to make decisions faster and by extension, capture opportunities sooner, so that's what I hope we can do. Now back to Stephen for some more comments about the year ahead. I think the pressures of the past year have pushed us to find new areas for incremental improvement, and that will be a lot of our focus this year to see what we can figure out. i think the pressures of the past year have pushed us to find new areas for incremental improvement and that will be a lot of our focus this year to see what we can figure out In a company of our size, we have the ability to make decisions faster and by extension, capture opportunities sooner, so that's what I hope we can do. in a company of our size we have the ability to make decisions faster and by extension capture opportunities sooner so that's what i hope we can do Now back to Stephen for some more comments about the year ahead. now back to stephen for some more comments about the year ahead

Speaker 5: Thank you, John. The biggest story for us at the start of this year is certainly the theatrical release of the Super Mario Galaxy Movie from Illumination. We are extremely excited for this new product launch, which will be available for purchase late February. The best-selling five-inch scale figures are back in line, along with new scale of minifigures, new play sets, plush and more. The film releases April 1st, and our line gives fans of all ages the chance to recreate their favorite film moments in the movie. This is a follow-up to the Super Mario Bros. Movie, which went on to generate the largest theatrical box office of 2023. So you can imagine we're beyond thrilled to be back in the mix again here supporting this launch. Thank you, John. thank you john The biggest story for us at the start of this year is certainly the theatrical release of the Super Mario Galaxy Movie from Illumination. the biggest story for us at the start of this year is certainly the theatrical release of the super mario galaxy movie from illumination We are extremely excited for this new product launch, which will be available for purchase late February. we are extremely excited for this new product launch which will be available for purchase late february The best-selling five-inch scale figures are back in line, along with new scale of minifigures, new play sets, plush and more. the best-selling five-inch scale figures are back in line along with new scale of minifigures new play sets plush and more The film releases April 1st, and our line gives fans of all ages the chance to recreate their favorite film moments in the movie. the film releases april 1st and our line gives fans of all ages the chance to recreate their favorite film moments in the movie This is a follow-up to the Super Mario Bros. this is a follow-up to the super mario bros Movie, which went on to generate the largest theatrical box office of 2023. movie which went on to generate the largest theatrical box office of 2023 So you can imagine we're beyond thrilled to be back in the mix again here supporting this launch. so you can imagine we're beyond thrilled to be back in the mix again here supporting this launch Our Sonic DC crossover product launch received a great response in fourth quarter, with exclusive retailer launches in both the U.S. and in Europe. Distribution of that line is going wide in the new year, with new items like the DC Sonic Batmobile being added at key retailers. Sega is celebrating the 35th anniversary of Sonic all year with various activations. We are participating by launching special packaging commemorating this event, along with some exclusive items. We have other exciting news and plans around Sonic in 2026, but we're not ready to share those today, but stay tuned. Moving over to our Disney doll business, we'll leave the holiday season and toy fair season with solid momentum behind Disney Darlings, our latest homegrown Disney IP, and the strong tradition of Style Collection and Disney's Ily. Our Sonic DC crossover product launch received a great response in fourth quarter, with exclusive retailer launches in both the U.S. and in Europe. our sonic dc crossover product launch received a great response in fourth quarter with exclusive retailer launches in both the u.s and in europe Distribution of that line is going wide in the new year, with new items like the DC Sonic Batmobile being added at key retailers. distribution of that line is going wide in the new year with new items like the dc sonic batmobile being added at key retailers Sega is celebrating the 35th anniversary of Sonic all year with various activations. sega is celebrating the 35th anniversary of sonic all year with various activations We are participating by launching special packaging commemorating this event, along with some exclusive items. we are participating by launching special packaging commemorating this event along with some exclusive items We have other exciting news and plans around Sonic in 2026, but we're not ready to share those today, but stay tuned. we have other exciting news and plans around sonic in 2026 but we're not ready to share those today but stay tuned Moving over to our Disney doll business, we'll leave the holiday season and toy fair season with solid momentum behind Disney Darlings, our latest homegrown Disney IP, and the strong tradition of Style Collection and Disney's Ily. moving over to our disney doll business we'll leave the holiday season and toy fair season with solid momentum behind disney darlings our latest homegrown disney ip and the strong tradition of style collection and disney's ily For those of you unfamiliar with Disney Darlings, our launch in the nurturing doll category, similar to our Ily line, these are not simply caricatures in figural form, but an approach we've developed in a partnership with Disney to bring new and innovative ways for our consumers to engage with the Disney brand. The intent is to spark the emotional response consumers feel when engaging with Disney, the joy and happiness when engaging experiences, a bit of the Disney magic. These are truly beautiful dolls delivered with premium quality, and what's even more magical is that unlike other baby dolls, they are 100% joyful and happy, and there's no tears and no crying. For those of you unfamiliar with Disney Darlings, our launch in the nurturing doll category, similar to our Ily line, these are not simply caricatures in figural form, but an approach we've developed in a partnership with Disney to bring new and innovative ways for our consumers to engage with the Disney brand. for those of you unfamiliar with disney darlings our launch in the nurturing doll category similar to our ily line these are not simply caricatures in figural form but an approach we've developed in a partnership with disney to bring new and innovative ways for our consumers to engage with the disney brand The intent is to spark the emotional response consumers feel when engaging with Disney, the joy and happiness when engaging experiences, a bit of the Disney magic. the intent is to spark the emotional response consumers feel when engaging with disney the joy and happiness when engaging experiences a bit of the disney magic These are truly beautiful dolls delivered with premium quality, and what's even more magical is that unlike other baby dolls, they are 100% joyful and happy, and there's no tears and no crying. these are truly beautiful dolls delivered with premium quality and what's even more magical is that unlike other baby dolls they are 100% joyful and happy and there's no tears and no crying Our soft launch of this line sold through well in fall, leading us to expand listings in the U.S. this year, as well as a lot of interest and commitments internationally coming out of this past month's toy fair. We've seen enough positive feedback to feel that we have a winner here that can steadily build this year and into the next, into being another solid foundational piece of business for us. Congratulations to the team on this one. We're also supporting the live-action theatrical release of Moana in early July this year. Moana has been a steady part of our business for over the past 10 years, going back to the original animated release in 2026. We're happy to be able to bring back some of the most popular toys we've created over the years as a new audience engages with this story this summer. Our soft launch of this line sold through well in fall, leading us to expand listings in the U.S. this year, as well as a lot of interest and commitments internationally coming out of this past month's toy fair. our soft launch of this line sold through well in fall leading us to expand listings in the u.s this year as well as a lot of interest and commitments internationally coming out of this past month's toy fair We've seen enough positive feedback to feel that we have a winner here that can steadily build this year and into the next, into being another solid foundational piece of business for us. we've seen enough positive feedback to feel that we have a winner here that can steadily build this year and into the next into being another solid foundational piece of business for us Congratulations to the team on this one. congratulations to the team on this one We're also supporting the live-action theatrical release of Moana in early July this year. we're also supporting the live-action theatrical release of moana in early july this year Moana has been a steady part of our business for over the past 10 years, going back to the original animated release in 2026. moana has been a steady part of our business for over the past 10 years going back to the original animated release in 2026 We're happy to be able to bring back some of the most popular toys we've created over the years as a new audience engages with this story this summer. we're happy to be able to bring back some of the most popular toys we've created over the years as a new audience engages with this story this summer Our focus items include Moana's Necklace, Maui's Fishhook, all the more aspirational, with the Rock reprising his role in the film, our Heihei, the screaming chicken, and our super popular Moana large dolls. We also have a couple of additional exciting developments coming on our Disney doll front later this year. In the other part of our doll division, we continually steadily build our private label business with major retailers in the U.S. and expanding into Europe. It's an extremely broad array of dolls, role-play toys, and related subcategories that allow the retailers to make additional margin, while the consumers get a high-quality, on-trend design product at a much lower price. In this area, we have several new launches that we will discuss in the following quarters that will be launched during the fall holiday season. Our focus items include Moana's Necklace, Maui's Fishhook, all the more aspirational, with the Rock reprising his role in the film, our Heihei, the screaming chicken, and our super popular Moana large dolls. our focus items include moana's necklace maui's fishhook all the more aspirational with the rock reprising his role in the film our heihei the screaming chicken and our super popular moana large dolls We also have a couple of additional exciting developments coming on our Disney doll front later this year. we also have a couple of additional exciting developments coming on our disney doll front later this year In the other part of our doll division, we continually steadily build our private label business with major retailers in the U.S. and expanding into Europe. in the other part of our doll division we continually steadily build our private label business with major retailers in the u.s and expanding into europe It's an extremely broad array of dolls, role-play toys, and related subcategories that allow the retailers to make additional margin, while the consumers get a high-quality, on-trend design product at a much lower price. it's an extremely broad array of dolls role-play toys and related subcategories that allow the retailers to make additional margin while the consumers get a high-quality on-trend design product at a much lower price In this area, we have several new launches that we will discuss in the following quarters that will be launched during the fall holiday season. in this area we have several new launches that we will discuss in the following quarters that will be launched during the fall holiday season In 2025, the company saw momentum across its action sports portfolio, with Element emerging as a powerful growth engine in the second half of the year, expanded distribution and deepened retail partnerships, most notably with Walmart, Amazon, and Academy Sports and Outdoors. Significantly increased brand visibility, strengthened shelf presence, and drove meaningful gains in sell-through during a critical holiday period. These results reflect the company's disciplined execution, strategic product innovation, and an unwavering focus on aligning with leading retail partners to deliver compelling value within the active and early play category. Looking ahead, we are highly encouraged by rising retail confidence and growing consumer engagement across action sports as the industry builds toward the 2028 Summer Olympic Games. Skateboard sales trends are once again approaching elevated levels seen in 2020 and 2021, signaling the renewed demand and sustained category momentum. In 2025, the company saw momentum across its action sports portfolio, with Element emerging as a powerful growth engine in the second half of the year, expanded distribution and deepened retail partnerships, most notably with Walmart, Amazon, and Academy Sports and Outdoors. in 2025 the company saw momentum across its action sports portfolio with element emerging as a powerful growth engine in the second half of the year expanded distribution and deepened retail partnerships most notably with walmart amazon and academy sports and outdoors Significantly increased brand visibility, strengthened shelf presence, and drove meaningful gains in sell-through during a critical holiday period. significantly increased brand visibility strengthened shelf presence and drove meaningful gains in sell-through during a critical holiday period These results reflect the company's disciplined execution, strategic product innovation, and an unwavering focus on aligning with leading retail partners to deliver compelling value within the active and early play category. these results reflect the company's disciplined execution strategic product innovation and an unwavering focus on aligning with leading retail partners to deliver compelling value within the active and early play category Looking ahead, we are highly encouraged by rising retail confidence and growing consumer engagement across action sports as the industry builds toward the 2028 Summer Olympic Games. looking ahead we are highly encouraged by rising retail confidence and growing consumer engagement across action sports as the industry builds toward the 2028 summer olympic games Skateboard sales trends are once again approaching elevated levels seen in 2020 and 2021, signaling the renewed demand and sustained category momentum. skateboard sales trends are once again approaching elevated levels seen in 2020 and 2021 signaling the renewed demand and sustained category momentum This strengthening trajectory across skateboards and the adjacent action sports segments positions the company to further accelerate investment in innovation, expand strategic partnerships, and drive durable, long-term brand growth and shareholder value. With our Disguise business, we're supporting a wide range of new theatrical releases. We're excited to support Toy Story 5, which debuts in late June, as each installment of this franchise has been great for the costume business. Also from Disney will be the Moana release and the latest Descendants installment, Descendants: Wicked Wonderland. The second half of this year also has new movies coming from Minions as well as Paw Patrol. We'll have some exciting new additions to the lineup coming from some new licensor relationships we've been busy establishing, so keep an eye out for these announcements coming soon. This strengthening trajectory across skateboards and the adjacent action sports segments positions the company to further accelerate investment in innovation, expand strategic partnerships, and drive durable, long-term brand growth and shareholder value. this strengthening trajectory across skateboards and the adjacent action sports segments positions the company to further accelerate investment in innovation expand strategic partnerships and drive durable long-term brand growth and shareholder value With our Disguise business, we're supporting a wide range of new theatrical releases. with our disguise business we're supporting a wide range of new theatrical releases We're excited to support Toy Story 5, which debuts in late June, as each installment of this franchise has been great for the costume business. we're excited to support toy story 5 which debuts in late june as each installment of this franchise has been great for the costume business Also from Disney will be the Moana release and the latest Descendants installment, Descendants: Wicked Wonderland. also from disney will be the moana release and the latest descendants installment, descendants wicked wonderland The second half of this year also has new movies coming from Minions as well as Paw Patrol. the second half of this year also has new movies coming from minions as well as paw patrol We'll have some exciting new additions to the lineup coming from some new licensor relationships we've been busy establishing, so keep an eye out for these announcements coming soon. we'll have some exciting new additions to the lineup coming from some new licensor relationships we've been busy establishing so keep an eye out for these announcements coming soon Finally, Halloween is once again on the weekend in 2026, Saturday, to be specific, so ideally, that drives more energy and activity beyond traditional trick-or-treating. Those give you some highlights we're seeing coming into the market in the first half of the year. We remain very focused on some additional launches that we will have more in 2027 impact, even if we can drop in some initial exclusives before the end of this year. Although a lot has changed in the past 12 months, we feel we are stronger in position today with more paths to grow than a year ago. Currently, we see this year as a low-to-mid-single-digit top-line growth year, with a continued focus on expanding margins, while we set up to maximize the potential of several potentially impactful new launches in 2027. Finally, Halloween is once again on the weekend in 2026, Saturday, to be specific, so ideally, that drives more energy and activity beyond traditional trick-or-treating. finally halloween is once again on the weekend in 2026 saturday to be specific so ideally that drives more energy and activity beyond traditional trick-or-treating Those give you some highlights we're seeing coming into the market in the first half of the year. those give you some highlights we're seeing coming into the market in the first half of the year We remain very focused on some additional launches that we will have more in 2027 impact, even if we can drop in some initial exclusives before the end of this year. we remain very focused on some additional launches that we will have more in 2027 impact even if we can drop in some initial exclusives before the end of this year Although a lot has changed in the past 12 months, we feel we are stronger in position today with more paths to grow than a year ago. although a lot has changed in the past 12 months we feel we are stronger in position today with more paths to grow than a year ago Currently, we see this year as a low- to- mid-single-digit top-line growth year, with a continued focus on expanding margins, while we set up to maximize the potential of several potentially impactful new launches in 2027. currently we see this year as a low- to- mid-single-digit top-line growth year with a continued focus on expanding margins while we set up to maximize the potential of several potentially impactful new launches in 2027 There's still a lot of work to do, but I'm pleased with our progress to date and being able to share more publicly about some of the exciting things we've been working on. With that, we'll take a couple questions. Operator? There's still a lot of work to do, but I'm pleased with our progress to date and being able to share more publicly about some of the exciting things we've been working on. there's still a lot of work to do but i'm pleased with our progress to date and being able to share more publicly about some of the exciting things we've been working on With that, we'll take a couple questions. with that we'll take a couple questions Operator? operator

Speaker 4: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Eric Beder of Small Cap Consumer Research LLC. Thank you. thank you As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. as a reminder to ask a question please press star one one on your telephone and wait for your name to be announced To withdraw your question, please press star one one again. to withdraw your question please press star one one again Please stand by while we compile the Q&A roster. please stand by while we compile the q&a roster Our first question comes from Eric Beder of Small Cap Consumer Research LLC. our first question comes from eric beder of small cap consumer research llc

Speaker 1: Good afternoon. Good afternoon. good afternoon

Speaker 5: Hello, Eric. Hello, Eric. hello eric

Speaker 1: Wow! A lot going on here. Let's talk a little bit about the whole FOB model. When you look, obviously, that got disrupted last year with the tariffs and other pieces and ramping it back up. When you look at that model and your retailers are seeing for 2026 and beyond, is it back to the way the model was? And what kind of tweaks are you doing? If not, and it's not, what kind of tweaks are there being done in the model in terms of how the retailers and yourselves are handling the FOB model? Wow! wow A lot going on here. a lot going on here Let's talk a little bit about the whole FOB model. let's talk a little bit about the whole fob model When you look, obviously, that got disrupted last year with the tariffs and other pieces and ramping it back up. when you look obviously that got disrupted last year with the tariffs and other pieces and ramping it back up When you look at that model and your retailers are seeing for 2026 and beyond, is it back to the way the model was? when you look at that model and your retailers are seeing for 2026 and beyond is it back to the way the model was And what kind of tweaks are you doing? and what kind of tweaks are you doing If not, and it's not, what kind of tweaks are there being done in the model in terms of how the retailers and yourselves are handling the FOB model? if not and it's not what kind of tweaks are there being done in the model in terms of how the retailers and yourselves are handling the fob model

Speaker 5: Well, first, thank you, Eric. We're continuing to focus on an FOB first business that's been since inception. You know, last year, we stayed very focused on it as well, but we had to adapt based on where we manufactured, whether it was in China, Indonesia, so on and so forth, in Southeast Asia. So we had a slight decrease in FOB, but not materially. Back in 2026 and 2027, we will be moving forward again on an FOB first basis. At the same time, a lot of the major retailers in the U.S. have a first cost of sale program that we work with them to have the impact of the tariff be less of an impact to them and ourselves at the same time. Well, first, thank you, Eric. well first thank you eric We're continuing to focus on an FOB first business that's been since inception. we're continuing to focus on an fob first business that's been since inception You know, last year, we stayed very focused on it as well, but we had to adapt based on where we manufactured, whether it was in China, Indonesia, so on and so forth, in Southeast Asia. you know last year we stayed very focused on it as well but we had to adapt based on where we manufactured whether it was in china indonesia so on and so forth in southeast asia So we had a slight decrease in FOB, but not materially. so we had a slight decrease in fob but not materially Back in 2026 and 2027, we will be moving forward again on an FOB first basis. back in 2026 and 2027 we will be moving forward again on an fob first basis At the same time, a lot of the major retailers in the U.S. have a first cost of sale program that we work with them to have the impact of the tariff be less of an impact to them and ourselves at the same time. at the same time a lot of the major retailers in the u.s have a first cost of sale program that we work with them to have the impact of the tariff be less of an impact to them and ourselves at the same time So we're working through some of the major customers and secondary customers on a first sale basis. We've learned a lot through this tariff, call it congestion and confusion throughout last year, but we have a pretty good handle on it with our retail partners, who we've worked extremely closely with. Our sales teams that are really, entwined with our major retailers, have worked very hand-in-hand with the buyers as well as the financial sides of our retailers, to make sure that we stay focused on an FOB basis. 'Cause it behooves both the retailer, for them to make more margin, it behooves JAKKS as a sense of cost of capital, and it allows, hopefully, the consumer to have a little bit lower price than bringing in on a domestic basis. So we're working through some of the major customers and secondary customers on a first sale basis. so we're working through some of the major customers and secondary customers on a first sale basis We've learned a lot through this tariff, call it congestion and confusion throughout last year, but we have a pretty good handle on it with our retail partners, who we've worked extremely closely with. we've learned a lot through this tariff call it congestion and confusion throughout last year but we have a pretty good handle on it with our retail partners who we've worked extremely closely with Our sales teams that are really, entwined with our major retailers, have worked very hand-in-hand with the buyers as well as the financial sides of our retailers, to make sure that we stay focused on an FOB basis. 'Cause it behooves both the retailer, for them to make more margin, it behooves JAKKS as a sense of cost of capital, and it allows, hopefully, the consumer to have a little bit lower price than bringing in on a domestic basis. our sales teams that are really entwined with our major retailers have worked very hand-in-hand with the buyers as well as the financial sides of our retailers to make sure that we stay focused on an fob basis 'cause it behooves both the retailer for them to make more margin it behooves jakks as a sense of cost of capital and it allows hopefully the consumer to have a little bit lower price than bringing in on a domestic basis

Speaker 1: How should we be thinking about the international opportunity with FOB? I know that you mentioned the inventory rose a little bit, primarily because of the international players, and some of them aren't, I guess, physically or fiscally big enough to do this. What's kind of the thought process there? How should we be thinking about the international opportunity with FOB? how should we be thinking about the international opportunity with fob I know that you mentioned the inventory rose a little bit, primarily because of the international players, and some of them aren't, I guess, physically or fiscally big enough to do this. i know that you mentioned the inventory rose a little bit primarily because of the international players and some of them aren't i guess physically or fiscally big enough to do this What's kind of the thought process there? what's kind of the thought process there

Speaker 5: Again, as a company in whole, not just in, call it, North America, but worldwide, 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, we do need to have distribution centers across strategic areas in order for us to achieve the customer base that is less, the size of the major retailers that you see. In Europe, there's a lot of smaller customers that make up a lot of the business. So we have a mix on an FOB basis first, and then follow up with domestic inventory in order for us to achieve growth, as required in those territories. Again, as a company in whole, not just in, call it, North America, but worldwide, we are a primarily focused FOB company. again as a company in whole not just in call it north america but worldwide 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, we do need to have distribution centers across strategic areas in order for us to achieve the customer base that is less, the size of the major retailers that you see. 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 we do need to have distribution centers across strategic areas in order for us to achieve the customer base that is less the size of the major retailers that you see In Europe, there's a lot of smaller customers that make up a lot of the business. in europe there's a lot of smaller customers that make up a lot of the business So we have a mix on an FOB basis first, and then follow up with domestic inventory in order for us to achieve growth, as required in those territories. so we have a mix on an fob basis first and then follow up with domestic inventory in order for us to achieve growth as required in those territories Many of the customers are not large enough to do an FOB and order a container or, or so on and so forth, so we adapt to that and work with them by each of the segments in which we're in, whether it's the Disney segment, the boy segment, seasonal, and so on. So where appropriate, we work correctly with the retailer on the size of the product, pricing of the product, and the bulk of the item in order to have the best shipping cost for them and price points for them. So we have warehouses in five different parts of the EMEA. Many of the customers are not large enough to do an FOB and order a container or, or so on and so forth, so we adapt to that and work with them by each of the segments in which we're in, whether it's the Disney segment, the boy segment, seasonal, and so on. many of the customers are not large enough to do an fob and order a container or or so on and so forth so we adapt to that and work with them by each of the segments in which we're in whether it's the disney segment the boy segment seasonal and so on So where appropriate, we work correctly with the retailer on the size of the product, pricing of the product, and the bulk of the item in order to have the best shipping cost for them and price points for them. so where appropriate we work correctly with the retailer on the size of the product pricing of the product and the bulk of the item in order to have the best shipping cost for them and price points for them So we have warehouses in five different parts of the EMEA. so we have warehouses in five different parts of the emea We have it in Latin America, and we've now, as you see, at the end of this year, we've brought in inventory to help us grow those areas with an FOB first basis, as well as with backup inventory on a domestic basis. We have it in Latin America, and we've now, as you see, at the end of this year, we've brought in inventory to help us grow those areas with an FOB first basis, as well as with backup inventory on a domestic basis. we have it in latin america and we've now as you see at the end of this year we've brought in inventory to help us grow those areas with an fob first basis as well as with backup inventory on a domestic basis

Speaker 1: Okay. Obviously, this year was tough for the entire toy industry. You guys managed to maintain your cash, no debt basis, lots of cash. How have you, like, been able to lever that? It sounds like you have based on what, 0.7%. How have you able to lever that in terms of adding new licenses, expanding the relationships, and kind of moving up the ladder in terms of kind of being the licensee of choice going forward? Okay. okay Obviously, this year was tough for the entire toy industry. obviously this year was tough for the entire toy industry You guys managed to maintain your cash, no debt basis, lots of cash. you guys managed to maintain your cash no debt basis lots of cash How have you, like, been able to lever that? how have you like been able to lever that It sounds like you have based on what, 0.7%. it sounds like you have based on what 0.7% How have you able to lever that in terms of adding new licenses, expanding the relationships, and kind of moving up the ladder in terms of kind of being the licensee of choice going forward? how have you able to lever that in terms of adding new licenses expanding the relationships and kind of moving up the ladder in terms of kind of being the licensee of choice going forward

Speaker 5: One thing, being healthy and clean and having a strong balance sheet, the licensors appreciate it very much. You know, they're always eyeing companies that have financial issues, and they don't want to take the risk of someone ruining their opportunities within their owned IP. So we, with that, have been very focused, not giving away top-line revenue, and to erode our profit. We took what was right approach with retail, retail inventory, and our own inventory, to not push for higher sales and have that erode margin. We focused on margin with healthy sales, and as you can see, I think we were up 380 basis points for the year, for the quarter, as for... I'll go back to give you the exact numbers. But we focused on the margin enhancement, and retailers and licensors like that. One thing, being healthy and clean and having a strong balance sheet, the licensors appreciate it very much. one thing being healthy and clean and having a strong balance sheet the licensors appreciate it very much You know, they're always eyeing companies that have financial issues, and they don't want to take the risk of someone ruining their opportunities within their owned IP. you know they're always eyeing companies that have financial issues and they don't want to take the risk of someone ruining their opportunities within their owned ip So we, with that, have been very focused, not giving away top-line revenue, and to erode our profit. so we with that have been very focused not giving away top-line revenue and to erode our profit We took what was right approach with retail, retail inventory, and our own inventory, to not push for higher sales and have that erode margin. we took what was right approach with retail retail inventory and our own inventory to not push for higher sales and have that erode margin We focused on margin with healthy sales, and as you can see, I think we were up 380 basis points for the year, for the quarter, as for... we focused on margin with healthy sales and as you can see i think we were up 380 basis points for the year for the quarter as for I'll go back to give you the exact numbers. i'll go back to give you the exact numbers But we focused on the margin enhancement, and retailers and licensors like that. but we focused on the margin enhancement and retailers and licensors like that At the same time, we've done an expansive amount of traveling worldwide, working on new initiatives, and we have some really exciting initiatives coming forward, and we'll be excited to talk about as soon as some of these deals get all accomplished. But during this period of time, we have focused on building 2026 and 2027 aggressively, and licensors have all fallen in line with us and are very supportive. At the same time, we've done an expansive amount of traveling worldwide, working on new initiatives, and we have some really exciting initiatives coming forward, and we'll be excited to talk about as soon as some of these deals get all accomplished. at the same time we've done an expansive amount of traveling worldwide working on new initiatives and we have some really exciting initiatives coming forward and we'll be excited to talk about as soon as some of these deals get all accomplished But during this period of time, we have focused on building 2026 and 2027 aggressively, and licensors have all fallen in line with us and are very supportive. but during this period of time we have focused on building 2026 and 2027 aggressively and licensors have all fallen in line with us and are very supportive

Speaker 1: Okay. I know you don't do financial guidance, but just conceptually, Q1 last year was an extremely strong quarter. It was also a quarter, I believe, where you had a significant amount of product that was shipped early because people wanted to get in front of tariffs. How should we be thinking, given that the flows in the quarters are so up and down last year, just conceptually, in terms of how this year is going to flow? Okay. okay I know you don't do financial guidance, but just conceptually, Q1 last year was an extremely strong quarter. i know you don't do financial guidance but just conceptually q1 last year was an extremely strong quarter It was also a quarter, I believe, where you had a significant amount of product that was shipped early because people wanted to get in front of tariffs. it was also a quarter i believe where you had a significant amount of product that was shipped early because people wanted to get in front of tariffs How should we be thinking, given that the flows in the quarters are so up and down last year, just conceptually, in terms of how this year is going to flow? how should we be thinking given that the flows in the quarters are so up and down last year just conceptually in terms of how this year is going to flow

Speaker 3: Yeah, I'll jump in on that a little bit. You know, to your point, Q1 was a really robust quarter for us this year, or this past year. And on one hand, we have some momentum shipping product for Super Mario Galaxy, as we pointed out in the call. But at the same time, too, you know, long time listeners know, Q1 is always our smallest quarter. And so, you know, I've made the comment in the past, you know, Q1 for us, or maybe for everyone in the industry, is like a Q1 of a basketball game. Don't get three fouls at the end of the first quarter, and you'll kind of be okay. Yeah, I'll jump in on that a little bit. yeah i'll jump in on that a little bit You know, to your point, Q1 was a really robust quarter for us this year, or this past year. you know to your point q1 was a really robust quarter for us this year or this past year And on one hand, we have some momentum shipping product for Super Mario Galaxy, as we pointed out in the call. and on one hand we have some momentum shipping product for super mario galaxy as we pointed out in the call But at the same time, too, you know, long time listeners know, Q1 is always our smallest quarter. but at the same time too you know long time listeners know q1 is always our smallest quarter And so, you know, I've made the comment in the past, you know, Q1 for us, or maybe for everyone in the industry, is like a Q1 of a basketball game. and so you know i've made the comment in the past you know q1 for us or maybe for everyone in the industry is like a q1 of a basketball game Don't get three fouls at the end of the first quarter, and you'll kind of be okay. don't get three fouls at the end of the first quarter and you'll kind of be okay So, you know, really, we're probably thinking more first half, second half, and as to where the line gets drawn at the end of Q1, to be honest, we're not really overly, fixating on it. So, you know, really, we're probably thinking more first half, second half, and as to where the line gets drawn at the end of Q1, to be honest, we're not really overly, fixating on it. so you know really we're probably thinking more first half second half and as to where the line gets drawn at the end of q1 to be honest we're not really overly fixating on it

Speaker 1: Okay. Good luck for a more normalized 26. Thanks. Okay. okay Good luck for a more normalized 26. good luck for a more normalized 26 Thanks. thanks

Speaker 3: Thank you. Thank you. thank you

Speaker 5: Thanks. We'll take that. Thanks. thanks We'll take that. we'll take that

Speaker 4: Thank you. Thank you. thank you

Speaker 3: Stop here, but this is just- Stop here, but this is just- stop here but this is just-

Speaker 4: Our next question comes from Gerrick Johnson of Seaport Research Partners. Your line is open. Our next question comes from Gerrick Johnson of Seaport Research Partners. our next question comes from gerrick johnson of seaport research partners Your line is open. your line is open

Speaker 2: Hi, good afternoon. Hi, good afternoon. hi good afternoon

Speaker 5: Welcome back. Welcome back. welcome back

Speaker 2: Maybe two things. Maybe two things. maybe two things

Speaker 5: Hey, Gerrick. Hey, Gerrick. hey gerrick

Speaker 2: Hey, thank you very much. Good to be back. So one on POS, what was that in a quarter? How did it trend and evolve through the quarter? And then, inventory at retail, what does yours look like? But also, more broadly, the industry, is there any pockets of inventory that could clutter and, you know, affect the industry that way? Hey, thank you very much. hey thank you very much Good to be back. good to be back So one on POS, what was that in a quarter? so one on pos what was that in a quarter How did it trend and evolve through the quarter? how did it trend and evolve through the quarter And then, inventory at retail, what does yours look like? and then inventory at retail what does yours look like But also, more broadly, the industry, is there any pockets of inventory that could clutter and, you know, affect the industry that way? but also more broadly the industry is there any pockets of inventory that could clutter and you know affect the industry that way

Speaker 3: Yeah. So I'll take the first part of that, and Stephen can circle back on the inventory piece. You know, from a POS point of view, you can read into the fact that we weren't bragging about it, is that we weren't thrilled with it, you know? But as we mentioned on the call, the super hot, like, new launch items, you know, blew through in a way that, you know, we were happy to see and, you know, gave us confidence in broadly what we're doing. But I think broadly speaking, with where we saw higher retailer prices, you know, that slowed down POS for those segments. So, you know, notwithstanding all the other kind of hair on the topic of POS in terms of what is the underlying margin for that POS, you know, I think that's kind of what we'd have on that. Yeah. yeah So I'll take the first part of that, and Stephen can circle back on the inventory piece. so i'll take the first part of that and stephen can circle back on the inventory piece You know, from a POS point of view, you can read into the fact that we weren't bragging about it, is that we weren't thrilled with it, you know? you know from a pos point of view you can read into the fact that we weren't bragging about it is that we weren't thrilled with it you know But as we mentioned on the call, the super hot, like, new launch items, you know, blew through in a way that, you know, we were happy to see and, you know, gave us confidence in broadly what we're doing. but as we mentioned on the call the super hot like new launch items you know blew through in a way that you know we were happy to see and you know gave us confidence in broadly what we're doing But I think broadly speaking, with where we saw higher retailer prices, you know, that slowed down POS for those segments. but i think broadly speaking with where we saw higher retailer prices you know that slowed down pos for those segments So, you know, notwithstanding all the other kind of hair on the topic of POS in terms of what is the underlying margin for that POS, you know, I think that's kind of what we'd have on that. so you know notwithstanding all the other kind of hair on the topic of pos in terms of what is the underlying margin for that pos you know i think that's kind of what we'd have on that You know, from a retail inventory point of view, Stephen's a little bit closer to that. I'll let him. You know, from a retail inventory point of view, Stephen's a little bit closer to that. I'll let him. you know from a retail inventory point of view stephen's a little bit closer to that i'll let him

Speaker 5: So I'll go through some of the two major retailers in the U.S.. We're down at one of them, down 21% year-over-year and down about 4% on another. So our inventory at retail is very tight for us, which is good. We didn't, again, as I said earlier when Eric asked a question, we did not want to chase top line and worry about the inventory levels after the holiday season. So we really focused on shipping what was appropriate and focusing on profitability. And to answer what I did, we I mentioned earlier, I just wanna make sure I clarify. We were 380 basis points higher in margin for fourth quarter than the year prior. So I wanna make sure I got that out there. So I'll go through some of the two major retailers in the U.S.. so i'll go through some of the two major retailers in the u.s We're down at one of them, down 21% year-over-year and down about 4% on another. we're down at one of them down 21% year-over-year and down about 4% on another So our inventory at retail is very tight for us, which is good. so our inventory at retail is very tight for us which is good We didn't, again, as I said earlier when Eric asked a question, we did not want to chase top line and worry about the inventory levels after the holiday season. we didn't again as i said earlier when eric asked a question we did not want to chase top line and worry about the inventory levels after the holiday season So we really focused on shipping what was appropriate and focusing on profitability. so we really focused on shipping what was appropriate and focusing on profitability And to answer what I did, we I mentioned earlier, I just wanna make sure I clarify. and to answer what i did we i mentioned earlier i just wanna make sure i clarify We were 380 basis points higher in margin for fourth quarter than the year prior. we were 380 basis points higher in margin for fourth quarter than the year prior So I wanna make sure I got that out there. so i wanna make sure i got that out there

Speaker 2: Yeah. No, that's impressive. And so how would you describe the promotional activity and perhaps sales allowances in the fourth quarter? Yeah. yeah No, that's impressive. no that's impressive And so how would you describe the promotional activity and perhaps sales allowances in the fourth quarter? and so how would you describe the promotional activity and perhaps sales allowances in the fourth quarter

Speaker 5: For us, they were quite normal or a little bit less than normal. For, I think, a lot of the major, our competitors put a lot of heavy in discounting and promotional. But to me, you know, looking at what we've seen throughout the year, it was a very cautionary year because of the tariffs and not knowing what the consumer kind of appetite was. So again, we're pretty close to what we do. We sit with the factories, we sit with the retailers. So we did hear there was a lot of promotion activity that was done heavily in November, December, but for us, there wasn't much. For us, they were quite normal or a little bit less than normal. for us they were quite normal or a little bit less than normal For, I think, a lot of the major, our competitors put a lot of heavy in discounting and promotional. for i think a lot of the major our competitors put a lot of heavy in discounting and promotional But to me, you know, looking at what we've seen throughout the year, it was a very cautionary year because of the tariffs and not knowing what the consumer kind of appetite was. but to me you know looking at what we've seen throughout the year it was a very cautionary year because of the tariffs and not knowing what the consumer kind of appetite was So again, we're pretty close to what we do. so again we're pretty close to what we do We sit with the factories, we sit with the retailers. we sit with the factories we sit with the retailers So we did hear there was a lot of promotion activity that was done heavily in November, December, but for us, there wasn't much. so we did hear there was a lot of promotion activity that was done heavily in november december but for us there wasn't much

Speaker 2: Okay. Okay, very good. Thank you, Stephen. Okay. okay Okay, very good. okay very good Thank you, Stephen. thank you stephen

Speaker 5: Thank you, Gerrick. Welcome back, seriously. Thank you, Gerrick. thank you gerrick Welcome back, seriously. welcome back seriously

Speaker 2: Thanks. Thanks. thanks

Speaker 4: Thank you. This concludes our question and answer session. I'd like to turn it back to Stephen Berman for closing remarks. Thank you. thank you This concludes our question and answer session. this concludes our question and answer session I'd like to turn it back to Stephen Berman for closing remarks. i'd like to turn it back to stephen berman for closing remarks

Speaker 5: Ladies and gentlemen, thank you for today and finalizing and finishing 2025, and we are extremely excited for 2026 and 2027 and look forward to our next call. Thank you again. Ladies and gentlemen, thank you for today and finalizing and finishing 2025, and we are extremely excited for 2026 and 2027 and look forward to our next call. ladies and gentlemen thank you for today and finalizing and finishing 2025 and we are extremely excited for 2026 and 2027 and look forward to our next call Thank you again. thank you again

Speaker 4: This concludes today's conference call. Thank you for participating, and you may now disconnect. This concludes today's conference call. this concludes today's conference call Thank you for participating, and you may now disconnect. thank you for participating and you may now disconnect