Q3 2022 JAKKS Pacific Inc Earnings Call
Yeah.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Good afternoon, everyone welcome to the JAKKS Pacific third quarter 2022 earnings conference call with management.
I'll review financial results for the quarter ended September 30th 2022.
JAKKS issued its earnings press release earlier today.
Our earnings release and presentation slides for today's call are available on the company's website in the investors section.
On the call. This afternoon are Stephen Berman, Chairman, and Chief Executive Officer, and John Kimble, Chief Financial Officer.
Mr. Berman will first provide an overview of the quarter, along with highlights of product lines and current business trends.
Mr. Kimble will provide detailed comments regarding 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 on your telephone keypad.
Before we begin the company would like to point out that any comments made about JAKKS pacific's future performance.
Vince or circumstances, including the estimates of sales <unk>.
<unk> adjusted EBITDA in 2022, as well as any other forward looking statements concerning 2022 and beyond are subject to safe Harbor protection under Federal Securities laws.
These statements reflect the company's best judgment based on the 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.
For details concerning these and other such risks and uncertainties you should consult JAKKS. Most recent 10-K and 10-Q filings with the FCC as well as the company's other reports subsequently filed with the SEC from time to time in <unk>.
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 measures within the company's earnings press release issued to date or previously.
As a reminder, this conference 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 today, it's been another strong quarter, great shipping members a great sell through at retail Q3 for US was a solid continuation of our story. This year centered on the team's hard work to chase opportunistic 2022 demand.
While minimizing supply chain dragging our business, we shipped $323 million at the overall company level in the quarter, a 36% increase over the same quarter in the prior year.
That brings our year to date net sales level to $664 3 million, which is 7% more than we shipped in all of 2021.
We have never done that in the history of our company, it's really an accomplishment on a number of levels. Both in terms of having that level of demand and the confidence from our customers, but also from a perspective of our vendor base and internal team is working to figure out how to deliver that amount of product and that amount of time.
Calendar year 2022 is on track to be our second consecutive year of topline growth around 20%.
How we deliver these numbers.
With our story from last quarter, we worked with our customers worldwide to focus on <unk> sales to push our volume through a broader and deeper range of supply chains. We've also partnered with them on addressing their specific needs around promotional opportunities and customized products.
We've invested in extra to integrate additional capacity for the ranges that are significantly exceeding our expectations.
And increasingly we are focused on maximizing our international opportunities.
We've on boarded new team members, while taking advantage of the excitement that's been building within our business to secure more shelf space with more customers outside of the U S. Although the outlook for the economy and consumer demand remains a bit uneasy. We are happy to say, we continue to see very robust demand across our product range.
Yes.
In the third quarter, the retail point of sale dollars at our top three accounts was up in the high teens versus the prior year, we are tracking at greater than 20% and retail sales growth year to date through September .
And consumers began to think more about the holiday shopping season, we are seeing some good numbers in October as well across all of our major product lines.
Special Shout out to our target toy shopping cart within our perfectly cute range. It's a tremendous item that the team worked on with target a bauxite top toy Pik and has been flying off the shelf at soon appeared in this quarter.
Our Q3 toy consumer products segment growth was 56% with North America up 50% and international up 85% growth.
All of our regions and nearly all of our top 10 markets.
Up double digits during the quarter and Theyre, all up double digits year to date.
As you know Q3 is when we get most excited about our market leading costume business. According to the NPD group.
Are the U S market leader for the most recent five weeks with over 20% market share as we were last year.
Through the end of September from a dollar perspective, we had 33 of the top 50 selling items per the same report.
With $135 million shipped through September we're having our biggest year with disguise jacks acquired disguise back in 2008.
Although our sales in the quarter of $53 4 million were down 17%, that's an anticipated side effects of customers buying product early to ensure that they can set planet Graham's on time and not missing selling days as was the case last year our year to date sales are up 36 <unk>.
Versus prior year through September <unk>.
Everyone knows by now our partnership with Snap makes your Halloween shopping even easier this year as our lens explorer.
Which launched earlier this month lets you virtually try on and ultimately buy a broad assortment of disguise costumes.
We are really excited to have worked with snap to bring this to market.
That's been in the works for the past year at some of you might know snap and Jax our neighbors here in Santa Monica and would that jumping off point, we figured out this unique collaboration opportunity as of this week they attract over 2 million lens views and with brand owners using their social strength to point towards new.
And find ways to shop, we're excited to see where it goes and how it makes the costume shopping experience better our outdoor seasonal visits will also finished out the year with a consistent trend of difficult comps in part due to everyone's back it off higher cube items. This year in August and September sales meetings to introduce the two.
23 product ranges, we received good reactions to some of our innovation we have in this space. So we are hopeful this business can start to pivot in the new year, especially as container prices have backed off last year's five digit costs last year. At this time, we are starting to highlight one of the worst port bottlenecks we've seen.
Years, we started incurring extra costs associated with the importation of product as well as having to deal with longer supply chain as it took much longer than normal to bring product from factory to warehouse to be available for sale we.
We've been talking since that time to time about all the countermeasures, we've been taken to mitigate those costs and avoid similar or worse experienced this year.
I believe today people are aware that container costs have substantially decreased in the second half of this year. Other companies also reacted harshly to the events of last year and changed our seasonality and supply chain and some industries are several months into meaningful slowdown in demand of their product further freeing up ship.
And port capacity.
As the supply chain now swings back to being shorter we have to recalibrate, our planning and product ordering cadence as our on hand inventory gets a bit higher when ordered product show up faster than expected with these unexpected guests does incur some additional expenses, which were absorbing and expected to continue.
Through the balance of the year from an order of magnitude perspective, as we sit here in late October we feel we're in a much better place as it relates to supply chain issues that a year ago, but just because container rates are down I want to declare that there is still work to be done before we can remotely say it's.
Business as usual on this front.
Supply chain and logistics aside I'm happy to report that as an organization, we are maintaining our discipline around margins and cost containment, even though we are steadily moving forward towards a more pre COVID-19 operating model.
Certainly our higher sales volume has allowed us to scale our fixed cost. This year. Although these cost areas that can pop up unexpectedly and still be material in the company. Our size. We are very pleased with our overall margin profile of the year to date.
We're already getting into details of working through margin scenarios and cost expectations. As we look ahead to next year.
Last but not least we have talked about our desire to run a steady predictable evergreen business. What's done the less can still have a bit of a pop from unexpected opportunistic breakout successes.
As we have communicated earlier this year, we have one or two of those in the portfolio. This year, which has enabled us to make it optional paydown of our long term debt in Q3, and the amount of $17 5 million, although this paydown incurred a prepayment penalty.
When we assessed our current liquidity forecast and rising cost of LIBOR based debt. We felt that this is the best move for the company and our shareholders that payoff about of our debt now stands at $69 5 million, a 29% reduction from where we were when we started the year.
Stop here and let John get into the deeper into the financials and then we'll get back and talk more about Q4.
And beyond.
John .
Thank you Steven and Hello, everyone.
Good morning.
As regular listeners know theres, a greater level of granular detail included in our release today, but I'm going to be selective in what I'd highlight here towards where I think merits to focus attention.
Obviously, another great quarter in sales performance across the board as we reminded you last quarter and 2021, we had about $30 million in.
In Q3, F&B sales slipped into October , but even taking that into account great year over year sales performance here as Stephen highlighted.
We're always talking about how we manage with a full year worldview, regardless of the quarterly checkouts.
We're on track to finish the year with great sales growth, which is obviously, great, especially when we see it flowing through to the bottom line and improving our balance sheet.
And unpack and gross margin were down just over 310 basis points in the quarter year over year.
A number of factors in play.
Higher costs associated with importation and delivery of domestic products, particularly earlier in the year ultimately exceeded any price increases that we flow through.
Royalty expenses, a bit higher but was in line with our expectations consistent with last quarter.
We are picking up a bit of scale tooling amortization.
This is an area, where our capital spending is up overall compared to prior years.
Year to date, Capex was $8 6 million compared to $6 4 million.
And $6 2 million in.
In the 'twenty, one and 2021 time periods.
We're continuing to get very good scale out of our SG&A or operating margin, reaching 16, 7% in the quarter of 120 basis points from prior year's Q3.
Year to date operating margin is 11, 6% compared to eight 3% in 2021 year.
Year to date operating profit of $76 7 million.
There is more than double the year to date 2021 number of $35 8 million.
Consistent with our bottom line improvement strong results compounded with seasonality changes have created a lot of volatility in our expectations for the income tax provision.
We now anticipate exhausting any net operating loss carryforwards, we have available to us this year on the federal and state levels, which will result in higher tax expense compared to previous years.
Q3 tax provision of $11 6 million.
Our year to date provision to $13 $3 million or 20% of year to date pre tax net income.
Earlier this year, we began a number of analyses to ensure we are taking advantage of all readily available deductions to mitigate our tax expense.
As Steve also mentioned, we decided to make an optional $17 $5 million paydown of our term loan in Q3.
Note that in addition to a paydown fee of $525000. These paydowns also resulted in noncash write downs of our loan origination expenses, which have totaled an additional $737000 being expense year to date.
As of Q4, the interest rate on our term loan is 10, 2%.
Along with doing a lot of business earlier in the year and our efforts to wrangle inventory down to a level, reflecting a shorter supply chain our year to date cash flow from operations was $76 million.
Best we've seen since 2000 and for our.
Our cash balance at the end of the quarter was $76 6 million.
Total debt was down to $67 $7 million net of debt discounts and issuance costs and we have no draw on our credit line.
Elsewhere on the balance sheet, our improving credit rating factors into their marketing to market of our preferred stock liability.
Slightly higher market rates are lower risk premium among other assumptions led to a higher valuation of the liability generating a noncash loss of $7 4 million.
Back that market adjustment out of our non-GAAP calculations of adjusted EBITDA and adjusted EPS.
Along with other customary changes we have adjusted our EPS calculation this quarter from the prepayment penalty.
And given our change in tax position. We are also recalibrated the offsetting tax benefit that would exist without the excludes expenses.
None of those impacts our adjusted diluted EPS for the quarter is $3 80.
An improvement of <unk> <unk> for Q3 2021.
The increase in our year over year tax provision is an unfavorable $1 10 per share as a noteworthy year over year change.
Year to date adjusted diluted EPS.
$5 68.
Compared to $3 15 for the <unk>.
First nine months of 2021 quarter.
Quarterly EPS is calculated based on a diluted share count of $10 million 259799 shares year to date EPS is calculated based on a diluted share count of $10 million 111000.
475 shares.
In aggregate, our adjusted EBITDA for the quarter was $59 4 million.
Versus $41 $7 million.
Last year of <unk>.
42% improvement.
Our year to date adjusted EBITDA is now $88 5 million or 13, 3% of net sales.
Which was $44 2 million and 10, 2% of net sales at this time in 2021.
Finally, some of you may have noted we have re filed the S. Three.
More commonly referred to as a shelf registration, which we originally filed earlier in the quarter.
A few things happened since our original filing to prompt this exercise.
One is that after we saw strong reaction to our share price subsequent to Q2's results, we realized our ability to raise funds under that filing was significantly lower than what our re file shelf could offer.
As we spoke with a lot of different people out to the original filing we felt both the universal shelf structure as well as establishing an ATM program will give us a broad degree of flexibility and we were looking to achieve when we made our original filing.
With those thoughts in mind, we remained in the same philosophical place than we were during the last call Nothing's really changed about how we're thinking about the original filing even though the structure might look different.
We think fast access to lower cost liquidity as an important option to have.
Especially for a company of our size and seasonality.
We along with the board will continue to assess the outlook for the business and think about the full range of tools and scenarios, we have to drive value for the company.
<unk> of the auctions, which the newly filed shelf available to us.
And now back to Steven.
For some additional remarks.
Thank you John Q4 is always the most exciting times of the year for our business and Thats certainly true this year as well I encourage everyone to get out and walk retail over the next couple of months to see what a tremendous job. The teams that have done securing placement for JAKKS products heading into the holiday season.
And I'll end caps pallet programs check lane, where everywhere, it's really exciting and we're hopeful it's going to be a great holiday gift, giving season and are part of the store.
With that being said I'd like to take a few minutes to go a bit deeper to talk about some of the drivers behind our recent successes I hope we can help illustrate some of the things, which differentiates <unk> from other companies in our space certainly among the publicly traded ones <unk>.
As we become more focused on evergreen segments of business built around timeless play patterns that has diversified us away from signing a bunch of new toy licenses each year based on yet to be launched IP with the hope that one or two would breakout.
That change in direction has been even more work for the internal teams as they really have to push the value proposition of what we offer to secured listings and get retailers to go with us given the wide range of options they have.
That can make for a slow road to growth on a product line by product line basis.
But the payoff is when it starts to work and they could really take off from there.
Without getting into specifics for competitive reasons in 2022, we've been benefiting broadly from increased point of distribution, which in turn have been achieving excellent retail sell throughs more often than not when people talk about point of distribution. They often talk about expanding the customer list are going to.
Correct and more international markets.
As we have in fact talked about before we continue to benefit in both of those areas, but I also thought it was important to highlight that we've also been benefiting from some of our largest customers allocating to us increased retail shelf space and an increased number of doors, we are selling a broader product lineup into our customer base.
And they are increasing the number of places consumers can find and engage with our ranges.
That type of momentum that will help us sustain a portion of our recent growth heading into 2023, despite putting up such great results this year and last week.
We've also had success this year working fast to secure a high volume opportunities and working with slightly less fast, but still quicker than most to achieve lower volume, but nonetheless relevant growth dollars, let me explain.
Back in Q1 with demand for a couple of our businesses began to skyrocket. The team's worked methodically to engage customers and identify opportunities for additional placement and unique offerings.
We are shipping 12 items in the second half of the year that were not planned to ship until January .
In addition to ramp it up more production for ranges like Disney and comp, though we already had planned for the spring and summer and autumn and winter season, being able to respond to customer and consumer request with the highest degree of focus and attention is something thats very important to me personally I think it is a core element of what Jack is all about.
On the other hand of the spectrum every quarter, we seem to be talking about the changing market place for content consumption and the rise of streaming and we certainly seeing how it can give a theatrical release a powerful push forward in the case of Disney and condo.
For example, introducing a new store a full of new characters across multiple mediums offers a chance to create a deeper connection with audiences.
We can start to see this dynamic working for older properties as well.
Every year, New kids are being introduced the classic content for the first time, sometimes it's a parent tuning them in but we now have streaming algorithm suggesting related titles.
In either case, the access to a broader range of great entertainment keeps increasing but there is no and store experience today that can support related products for all of those films and television shows, but as a traditional brick and mortar retailers continue to invest in their E. Commerce businesses, we've been seen examples of new opportunities emerging.
Sometimes it is making sure they are unique online offerings to differentiate shopping experience not unlike traditional retail, but it's also proven to be a bit of a commercial solution to adamantly lower volume, but broader demand that ultimately delight consumers, who could find products that they might not get elsewhere.
We are clearly seen when consumers can't find what they want looking for on shelf. They are increasingly comfortable with finding that product online.
Our disguise business is a great example of this phenomenon to larger brick and mortar accounts curate their own offerings based on their knowledge of their respected consumer base.
But we see top selling properties often differ significantly when looking at ecommerce results our ability to cost effectively service. These more niche businesses is a challenge, but something we're incredibly mindful of as content in a retail landscape continues to evolve.
The evergreen nature of many of our top tier brands that we bring to market aligns very well with this trend.
Given our lower price points and the impulse nature of many of our toy purchases. Our U S online business is still low double digits as a portion of our overall business, but we do see this as a steady growing opportunity for us.
Finally, I would like to point out the important role that being an F. O. B first company has plagued this year in delivering our results.
Worldwide retailers, having confidence in our business allows them to buy deeper at earlier via <unk> simplifying our operating model, while providing a great value to retailers and consumers in recent years, we've talked about being $60 $40 Fob domestic as we look to finish up 2022.
We're trending closer to 65, 35% <unk> domestic with dollar growth in both segments of business, but a robust lean in on Fob for both U S sales in international business, we will continue to target driving more volume through F&B, especially as <unk> fulfillment continues represent.
A range of challenges and increasing costs.
Expanded distribution quick reaction times, taking maximum advantage of the online shopping experience and optimizing our product offering by shipping method have all been key enablers for this year's results to date and we see these as opportunities to improve our business further as you plan for the new year ahead.
And although Halloween is another seasonal business that tends to shop right up until the last minute, we feel pretty good about the rate of sale at retail after all of our customers really aggressively chase business. This year, our broader portfolio is really resonating and we're excited looking forward to 2023 to continue the great.
Progress this business has made in recent years.
Approaching our business from another angle as you know by partnering with the best content creators out there we're extremely fortunate to be able to contribute to the excitement around their new releases and to put physical product into the hands of their fans around the world.
As you look ahead to 2023, we just wanted to call. It a few opportunities. The teams have been working on that we've been sharing during the customer previews during this past quarter.
The action figure team has been working to support a couple of new entertainment initiatives in 2023 to name just one following up on the excitement of Sonic the movie earlier this year, Sega and Netflix are launching a new series called Sonic Prime during the winter season in 2022, we have a full.
Full lineup of figures play sets plush ready to go to support the show in the new year, which should continue the brand excitement we've been seen since the first film back in 2020.
2023 is also another huge year for Walt Disney Studios theatrical releases, releasing and May 23, the live action musical film the little Mermaid premieres on the big screen.
Jackson will bring this film to the toy aisle with aspire addresses large dolls role play toys and more.
Moving into the fall Disney will be releasing at all new animated feature wish that explores how the iconic wishing star upon so many Disney animation characters have wished came to be.
<unk> releases November 23rd and JAKKS will have a wide array of toys.
We are also participating in the Disney 100 year Wonder with a range of products, including for a limited time, a collection of Disney assume some figures. These are highly collectible molded figures that come in three unique sizes for stacking fun.
Absolutely launching figures over 100 unique characters, reflecting the past 100 years of consumers' favorite Disney stories and characters.
And our disguise business will have some new entertainment driven Mg as well, we're supporting Hasbro's Dungeons and Dragons movie in the U S as well as the latest transformer film.
Other cost of licenses to tell you about in the coming quarters.
So as you can see we continue to have a lot going on here at Jack.
2022 has had more positive surprises the negatives although to be clear, we have had our share of challenges and hiccups like everyone else.
The other nice thing about success is how it tends to open up the doors and create new opportunities, which might not be available when things are trending poorly. Good news seems to often lead to more good news and we have other initiatives underway for 2023 that I'm also really excited about but its too soon to start talking about them in this forum.
To wrap things up it's been a tremendous year, so far and we're doing everything we can to thoughtfully manage the last two months to set us up for a solid 2023 and beyond thanks again to our customers license stores vendors investors and our incredible team around the world for such a <unk>.
This job in 2022 with that we will now take questions operator.
As a reminder to ask a question you will need to press star one on your account.
Please standby, while we compile the Q&A roster.
Okay.
Our first question comes from Matthew <unk> with Jefferies. Your line is now and then.
Has it gone not here from Jefferies.
That's on the great quarter, and performance and actually execution year to date.
So just thinking about some of the business growth vectors that you've had throughout the year.
Be possible to help us think about.
Core versus maybe some of the boost that you got in from <unk>.
Got it and then condo and how we should maybe parse out thinking about the growth that you've experienced this year.
Great. Thank you, Matt So first off the basic core business of Jacks that are seasonal our boys our girls area of businesses our growth license area businesses disguise all of that really tremendous growth. The only segment that we had.
Save less excited about was our bulk items to our table and chairs that our kids only Moose mountain businesses, but we knew that going into the year based off of the cube and all the price considerations for shipping that that was a very.
Difficult area of fresh new business within retailers. So we ship those businesses to keep the shelf space.
If you go into 2023 with better initiatives and with cost of container rates dropping materially from 12 to $15000 in the early part of the year to 3000 to $2000, where their covenant now and even lower that we'll look to grow but all the other areas of businesses are Disney core business, our style collection our role play.
Everyday purchases of all had great growth our early area of business have had great growth and then our disguise we've had tremendous growth, which has had a tremendous about of.
New additions, we entered the international market of our gaming brands of business from the tender to the Sonic to Pokemon Minecraft to Halo just to mention a few have all gone exceptionally well and we have new segmentation like the <unk> math that would put us into different areas of businesses. So those have been doing well and cocktail still is.
Doing tremendous throughout the world, we're seeing some great except with that Sonic classic Sonic the movie Sonic too has had tremendous legs and continues to grow and we're looking excited into the first half of next year with the Netflix Sonic.
New.
Categories of.
Animation at Netflix. In addition, we have the only line our girls perfectly cute. So we have some really tremendous opportunities that did well being cut though style collection and sonic, but our everyday business, the black and Decker, our apex legends our boys Nintendo just across the board we've seen.
Great distribution, we're getting further distribution, both in North America, and international territories, both in brick and mortar and online. So it's been across the board of the diligence we've worked out over the last three years to really build that singles and doubles business.
The brick and mortar to the brick by brick methodology to having some really exciting things within Colorado and other content in going into next year. There is really some exciting content coming plus some new evergreen initiatives that we have so we've done this over the last three or four years and it's now coming to fruition based off of lack.
Year's success and this year's success and we see this continuing through next year.
Awesome. Thank you and then I guess the second question I would have.
You spoke about the importance of shipping that Bob.
The shift from 60 40 to $65 35. This year when we think about the cadence next year.
Do you expect like a similar reliance on applebee's ship or should we think about the seasonality of the quarters potentially shifting more back to a traditional sort of pre COVID-19 style.
As everyone would know that we started the company almost 28 years ago in January as an Fob business and we'll continue to do that heavily as one of the best areas of our business that is less use of capital to be able to do so.
Fits us and our retailers to purchase the goods overseas. It helps their blended tax rate. It actually allows the loads at the retailers put on their goods to be able to utilize their loads of cost of capital that container costs.
Versus ours. So we will continue to push more <unk>, but that being said we pivoted. This year based off of the container prices that occurred last year and early part to push more F&B and we'll just monitor it as a company and feel its beneficial to ourselves as well as our retailers and our consumers to do what's right. So if it's better for us to push more.
Sure Bob.
We will look to do so or if it's better for us to bring in.
<unk> at around a little bit more domestic will do so but we are much wider fob company than a domestic that allows us to manage the inventory levels at retail and in our own distribution centers around the world better to be an fob business, but whatever benefits.
And the consumer and retailer will adjust to that as needed.
Thank you very much and then just one last one for me.
When thinking about inventory and it looks like you guys inventory management has been very strong year to date, but it's still elevated.
Year over year, how do you guys think about where you want to be positioned at the end of the year.
How should we be thinking about.
That position.
At the end of Q4.
Thank you, Matt and that's a great question. So what we've done is we.
We've obviously had a terrific quarter and we now are utilizing our inventories that we have divested.
Around the world to fulfill what's needed and what's projected for the remaining happen remaining three months of this year. So that inventory that we have and we've built early on.
To make sure that we have the right inventory correct product lines.
For the first half of the year, because Chinese new year in January So we have the Ariel Disney movie launch we have.
New different areas or some other movies that we'll be launching.
In March and April so we have the appropriate goods where needed, but we will look to have our inventories slightly lower by the end of the year, but we do need a ample amount of inventory because the first part of the year will be domestic versus F&B on some of the goods based off of Chinese new year, and our planning purposes with retailers.
Operator next question.
Please standby for our next question.
Our next question comes from Tristan Thomas Martin with BMO. Your line is now open.
Good afternoon guys.
Interesting interesting.
Great questions.
Your full year guidance to be around 20% growth implies fourth quarter sales were down quite a bit.
Is that what you would've expected.
Asking this question three months ago.
Yes, we have been managing based off of the environment and the economy and the nervousness, that's been happening around we'd take retail around the world.
<unk>.
Land internally with our teams.
John and all the rest of the company of focusing on having the appropriate sales early on knowing that there is going to be inventory issues at retail based off what the retail environment has been discussing if you look at the financial announcements based off of virtually almost all.
Retailers about their inventory levels being high so we want to plan to have that the fourth quarter.
To have a successful great year for JAKKS, but at the same time, we want to manage our business and not be successful and try to achieve the highest numbers out there and then have inventory going into next year. So we're managing the inventory levels managing the sell throughs at retail and managing what we believe to have a terrific year, both on top line growth.
<unk> ability and EBITDA. So we are managing appropriately to make sure that we have the right inventory in the right amount of sales for the year, which then will allow us to have a hopeful clean entry into 2023 projects. We're not worried about everyone else's inventory of that allows US then to have the right products that consumers need.
With the right product in stock.
Okay.
And then could you maybe just quantify your inventory levels at retail.
Maybe a little more in depth and kind of some of the plans for moving it.
I mean, we really don't necessarily usually get into that.
A little bit of a hard.
To really triangulate because to the extent that retailers are talking about what they might currently have in their dcs it doesn't necessarily capture whatever they've purchased as part of the F&B part of the business, which is like.
Like a big thing for US as you know I mean, we've obviously shifted a lot of product. This year at the same time, we've obviously sold through a lot of product too.
So.
<unk>.
<unk>.
Sure.
I don't know beyond that maybe not so insightful comment that there is a whole lot to be said about that at this point.
Okay.
No.
Questions.
Trends worth calling out the Pos over the quarter strength.
Price points are really strong products standup.
I'd say right now currently first we've had the Halloween so the price points vary from 1999 to 2009, the sweet spot of Halloween, but we do have weather at.
Their price points, and the 99% and a little higher than that but the sweet spot for us.
<unk> business has been right around the 19% to 29 for toys right now we're still in the midst of people who've been buying somewhat early for Christmas, but while that happens.
We mentioned this I think it was in second quarter or first quarter that over 50% of our items are in that lower than $29 and that's been something that we started from when we initiated the Jackson corporate Jackson June 95, So that is primarily the cells right now at the same time, the higher ticket items that we have.
Different playhouses for Nintendo in a condo in and the Disney items just to name a few all will actually pick up in the next two months right now to sell higher ticket items, but those higher ticket items that are industry normally don't sell early as early as we're in right now, but we will have we have a good portion of our business that have exclusives with some retailer.
<unk>.
So theres a variety of different higher ticket items that really are on sale now.
<unk> not on sale discount on sale now that will sell through the year at a higher rate and then it will trickle down to us spring again, when the lower price points prevail.
I think there is to build upon that a little bit to get a little bit more granular, we don't really see anything popping yet that you would kind of have an aha moment.
About I mean, we do see great momentum across a range of the bigger segments from our point of sale perspective, not necessarily just being condo in the sonics, but.
Are the different elements of our Princess business are perfectly cute business.
Some of the other kind of more traditional evergreen parts of our business stuff is still selling through real well for us on a year over year basis, but we're not really seeing any particular trends yet as it relates to the <unk>.
<unk> side at the higher price stuff is moving faster and not moving faster or on the low end either I think for toy holiday, it's a little bit too soon to tell.
But we are happy to see that.
A range of different segments are still performing really well.
Okay got it thank you.
Thank you Justin.
Also.
Sorry, operator I apologize.
So that was the last one of the Q&A. We have scheduled calls from this point forward. So we appreciate everyone taking the time to be on our call today wishing everyone, a healthy and happy Thanksgiving and happy holiday and look forward to continued conversations and looking forward to the next year's call. Thank you very much.
This concludes today's conference.
You may now disconnect.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
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