Q4 2024 JAKKS Pacific Inc Earnings Call
Yeah.
Speaker Change: Good afternoon, everyone and welcome to the JAKKS Pacific fourth quarter, and full year 2024 earnings conference call with managers.
Speaker Change: Who will review financial results for the quarter ended December 31st 2020 for JAKKS issued its earnings press release earlier today.
Speaker Change: Earnings release, and the Lady just extra slides for today's call are available on the company's website in the investors section.
Speaker Change: On the call. This afternoon are Stephen Berman, Chairman, and Chief Executive Officer, and John Gamble, Chief Financial Officer.
Speaker Change: Steven will first provide an overview of the quarter and full fiscal year, along with highlights of Reese's performance. The current business trends and John will provide some additional comments about JAKKS Pacific's financial and operational results. Mr. Berman daily well return with additional candidates and Sam's club.
Speaker Change: Remarks prior to opening the call for questions.
Speaker Change: Your lines will be placed on mute for the first portion of the call if you'd like.
Speaker Change: He would like to be placed in the queue for questions. Please press star one on your telephone keypad.
Speaker Change: 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 our adjusted EBITDA in 2025.
Speaker Change: Well as any other forward looking statements concerning 2025 and beyond are subject to safe Harbor protection under.
Speaker Change: Federal security laws.
These statements reflect the company's best judgment based on current market trends and conditions today.
Speaker Change: And are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected in the forward looking statements.
Speaker Change: 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.
Speaker Change: Sequentially filed with the SEC from time to time.
Speaker Change: In addition, today's comments by management will refer to non-GAAP financial measures such as adjusted EBITDA and adjusted earnings per share.
Speaker Change: 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 today or previously.
Minder. This call is being recorded with that I would like to turn the call all participants.
Speaker Change: Please go ahead.
Speaker Change: Good afternoon, and thank you for joining us today.
Speaker Change: We are pleased with how the holiday season ended for us, but also excited to be digging into the new year in line with our expectations. We shipped a comparable volume of Twain consumer products in Q4 to the past two years, giving us 4.8% growth in the second half compared to 2023.
Speaker Change: Momentum, we hope to be able to continue in the first half of 2025 and beyond.
Speaker Change: For the full year, our toy consumer products business was down one 8% slightly better than our expectations as the vet portion of our portfolio was back half weighted.
Speaker Change: Each of the three toy consumer product divisions were down in the 1% to 2% range for the full year, our costume business was down seven 5% for the full year driven by softness in the U S market.
Similar to 2023 syndicated data suggests that the U S market was smaller this year compared to prior years.
Speaker Change: And there's some comfort that the data suggests that we increased our U S market leadership position by a couple of points, but ultimately we'll measure true success looking at the top and the bottom line dollar growth.
Speaker Change: We're working with our major customers, who are looking to capture more market share given the continued financial difficulties of party city, but the industry continues to have a lot of volatility with smaller customers struggling to survive.
Speaker Change: We continue to seek our synergies and enhancement to how we go to market.
Speaker Change: By tightening the integration between our toy and costume teams outside the U S. We are seeing continued growth internationally the.
Speaker Change: The disguise business grew outside of North America for the fourth consecutive year to reach an all time new high in 2024.
Speaker Change: Although the U K is also working through difficult market conditions, we're engaging license stores to identify new sales opportunities for us by delivering other licenses that we have not had this will be developing story over the next 12 to 18 months.
Speaker Change: We continued to encourage our customer base to adopt F O b sales in 2024.
Speaker Change: The tears reached a new recent high of over 75% of our 2024 sales volume being sold.
Speaker Change: I'll be basis from China. This approach of selling larger quantities at sharper prices to customers with much larger logistics organizations is a win for all involved delivering the best value to the consumers, while providing margin for our customers and royalty revenue for our licensors.
Speaker Change: Our Q4, Pos at our top three U S toy consumer products account was a positive at two of the three despite having difficult revenue comparisons with the prior year.
Speaker Change: In addition year end retail inventories at those same accounts were down high single digits percentages versus the prior year and lower for the second year in a row.
Speaker Change: In our second year of increased investment in our European operations led by our former CFO, who I am pleased to share has extended his agreement through the end of 2027, just to maintain focus on our sustainable expansion initiatives there.
Speaker Change: By the end of Q2 this year, we anticipate holding inventory and four different facilities in the EU, where 18 months ago, we were trying to cover the entire continent with one.
Speaker Change: Our reduced distance to customers will significantly improve our fulfillment times and allow for more frequent replenishment during the year over time, we hope to build these relationships to the size and scale, where F O b orders or make more economic sense for them.
Speaker Change: The end of 2024, we had shipped over 300 more customers than in 2023, and the Europe Middle East and African regions.
Speaker Change: <unk> also had another strong showing at the nerve or toy fair. We continue to feel this is the most important show for us globally, given the wide breadth of customers. We can reach in one location, who are otherwise unable to visit our showrooms at southern California.
Speaker Change: To hit some additional financial highlights for the quarter and year from a geography view North America was down 3% for the quarter and year with both toy and consumer products and costumes business has been down as discussed before.
Speaker Change: Our international business inclusive of costumes was down 1% for the full year.
Speaker Change: We continue to see growth in Latin America, which reached $38 million in sales for the full year growing by over 19%.
Speaker Change: The past quarter close the book on our first five full years after a painful late 2019 balance sheet restructuring.
Speaker Change: We are in a much much stronger financial position today.
Speaker Change: We have an extremely rich deep and strong category of expertise a broader diversification of product lines and a powerful lineup of licenses five years later.
Speaker Change: We've assembled a stronger team around the world that I believe we've ever had on another extremely positive note. We have no long term debt or preferred shareholders distracted us from operations, we have a very nice clean strong evergreen business that is well positioned for profitable growth worldwide.
Speaker Change: It is true that the business like ours and for companies. Our size. There are always forces outside of our control that can negatively impact our results in the past five years have provided several remind us of that reality, but overall, we in Jack's feel we're in a great place today in both absolute terms and comparison with Benny within.
Speaker Change: In our industry.
Speaker Change: It's with that context and strength that we are very happy to share today.
Speaker Change: This week, our board has approved the initiation of a quarterly dividend of 25 cents per share payable to shareholders of record as of March 3rd 2025.
Speaker Change: It is our testing to maintain this dividend going forward on a quarterly basis recalibrating when we deem it prudent.
This will allow our shareholders to directly benefit from our recent performance while maintaining their investment for what we hope will be long term.
Speaker Change: It will also allow us to replenish our cash reserves to add increased resilience to our balance sheet to ensure we are well prepared whoever might be ahead of us whether that's for unseen challenges or unanticipated opportunities.
Speaker Change: On a related note we are mindful and aware of recent development in the areas of tariffs.
Speaker Change: Referenced above over 75% of our business is sold on Fob basis to our customers either right at the factory or at a port in China.
Speaker Change: Using rough numbers another 5% of our sales are generated by shipping product from our eastern European warehouse network for those markets with increased in product costs related to tariffs. We are reviewing our domestic pricing to mitigate any impact to our margin structure.
Speaker Change: <unk>, we're always focused on delivering products at opening price points and we have shared in the past most of our total volume retails for $30 or less with nearly 90% signed at less than $50. This focus on affordability is always an asset during times of cost structure surges, whether thats les.
Speaker Change: Rates oil and resin or in this case tariffs as.
Speaker Change: As we've always do we will continue to work with our customers to deliver the best price value. We can to our end consumers I will now pass it over to John for some comments after which I'll come back and share a bit more how we see 2025 shaping up John.
John Gamble: Steven and hi, everybody, it's been a pretty good wrap up to the year here always some room for improvement, but more things going right they're not.
John Gamble: Sales were pretty much where we thought they would be in total although how we got there might not have been exactly what we were originally thinking and the retail sell throughs are pretty solid as well.
John Gamble: Gross margin for the quarter was 70 basis points favorable versus prior year led by a 190 basis point improvement in royalty expense.
John Gamble: The quarter reflects higher cost of product versus prior year, mostly attributable to higher inventory obsolescence, which has been a nagging theme of 2024.
Also in the quarter gross profit dollars up $35 6 million were 5% better than $33 $7 million last year, Despite net sales only being up 3%.
John Gamble: Overall, we ended up with full year gross margin percentage of 38% our second year in a row greater than 30%.
John Gamble: It is 60 basis points down from the prior year, but given some of the year's unique challenges will take it.
John Gamble: Selling expenses were up in the quarter driven mostly by media spend as we suggested it would be last quarter.
John Gamble: We finished the year at 5.8% of sales up from 5.2% in the prior year. Some of our sales commissions have been migrating down into G&A as we have brought some sales reps in house and you'll note some movement on our balance sheet in the fourth quarter, representing a lease renewal at our U S warehouse that will push more cost into selling as well as creating a bit of it.
Drag up in gross margin, but ideally selling expense can still stay below 6% in the new year with the various puts and takes inclusive of our reshuffling our distribution footprint in Europe.
John Gamble: G&A was favorable year over year for another quarter again for the reasons. We discussed last time that pulled down our full year G&A percentage to 19.2% 140 basis points worse than 'twenty, 'twenty, three but better than how we started the year.
John Gamble: Tenda suspect our streak of pulling down quarterly overhead year over year has come to an end, but seeking opportunities to bring down G&A remains something of a passion here if not an outright lifestyle as most costs continue to creep up a bit annually.
John Gamble: That all sums up to an annual operating margin of five 7%, a 260 basis point decline from the 8.3% we posted in 2023.
John Gamble: That's a pretty lousy result to my mind, but highlights how scale is your friend in this business ideally we are setting the table for some really strong results over the next 24 to 36 months with success those results should flow through to the bottom line.
John Gamble: As a result, we are trying not to despair about the short term at the expense of reducing our chance of success and taking the business to new heights in the medium term.
John Gamble: Adjusted earnings per share were a loss of 67 cents in the quarter 37 cents better than prior year.
John Gamble: On a full year basis, adjusted EPS was $3 79.
John Gamble: <unk> from $4 62 in the prior year.
John Gamble: That's also our second year in a row with an adjusted EPS of greater than $3 a share.
John Gamble: The 'twenty 'twenty four year end diluted share count was roughly $11 2 million.
John Gamble: Adjusted EBITDA for the quarter was a loss of $10 $2 million roughly an 800000 dollar improvement over the prior year that resulted in a full year EBITDA of $59 $3 million. Another very strong year for us even if it's down from the exuberant greater than $70 million years of 2020, two and 2020 three.
John Gamble: To that end cash flow provided by operations was $38 $9 million on the year.
Speaker Change: As Stephen highlighted earlier, we're happy to initiate the dividend program, we hope to attract a broader year round long term minded shareholder base that values. The predictability of results. We feel we have reestablished in recent years.
Speaker Change: In addition, especially as we believe we will continue to be in a higher for longer interest rate environment replenishing, our cash balances in the short to medium term is also a priority to ensure maximum resilience.
Speaker Change: We are an asset light company by design, so the cash to inventory to receivables loop and its associated momentum is what our business is all about more cash keeps that wheel spinning plain and simple we are ever mindful of the risks associated with unexpected adverse events as we have experienced over the company's history, both internally and externally.
But that cautionary comment aside it's nonetheless, great to finally be announcing the dividend program.
Speaker Change: And now back to Stephen for some more comments about the year ahead. Thank you John there is some nice momentum in several of our business lines as we start the new year, we feel something that sets jacks apart from other companies in our space is the value we place on evergreen brands.
Speaker Change: Categories and play patterns.
Speaker Change: Worldwide view with a long term mentality and what we can often times be a short term fat obsessed industry.
Speaker Change: As an example.
Speaker Change: We shipped Sonic the Hedgehog product in 2019 with a modest rollout.
Speaker Change: But one that made sense for our business and our partners at Sega.
When the first movie was released in the early days of Covid to great reviews.
Speaker Change: We were there with the product on shelf and it was one of the only content led chase opportunities we saw that year.
Speaker Change: Since then we have to continue to partner with say got to get the word out globally, but a great property that says and by extension to showcase our great product lines that fans continue to embrace with each new wave most licensees, but not have the patience to nurture a build a business like this over a five year period, but.
Speaker Change: At its core that's what Jack is all about we are in for the long term with our partners rather than hitting a peak in the entertainment year hard and then why do you think is down to chase what might be the next big thing.
Speaker Change: During fourth quarter, we saw strong consumer demand for our Sonic toys that coincided with the release of Sega Sonics X generations video game in October and Paramount Sonic three movie that debuted in December.
Speaker Change: The film has become the highest grossing live action videogame inspired film of all time as a sonic franchise just continues to build.
Speaker Change: In addition, our ultimate talking Sonic was the number one new accurate figure released during the holiday season, According to circuits retail tracking service.
Speaker Change: We look forward to more fans discovering that item and the rest of the line in 2025 as a film will ultimately move to streaming which should find an even broader audience.
Speaker Change: Another developing story is the theatrical release of dog bed, the new hit movie by Dreamworks Animation NBC Universal that released in late January although it's very early days here at the box office results have been very solid and we're seeing traction at retail even though this is generally not a high traffic time of the year the tour.
Speaker Change: Section.
Speaker Change: We are hoping customers see what we see in this opportunity at circle back around for more opportunistic fall listings.
Speaker Change: Another momentum area is in our Disney business. We are very pleased with more attitude theatrical release and look forward to the in home at Disney Press releases. This spring new items, such as work at Taco two will generate excitement and drive sales with consumers as they watch their favorite character story over and over.
Speaker Change: The example of continuing to fall with Jack's releases, three new movie inspired items, bringing key moments and music to the drought.
Speaker Change: While we do not have a new theatrical release from Disney This year. The team is launching several new segments and brands focus on driving growth within the Disney portfolio in 2025.
Speaker Change: And spring, we're launching two new collectible segments, bringing innovation to the portfolio and retail consumers alike.
Speaker Change: Tote elite teenagers is a new line of extension from the Disney Elite Forever brand girls all around the World can show off their love for their favorite Disney character with one of these tote elite charm, totes and teeny fashion Easters inside <unk>.
Speaker Change: These mini dolls with real rooted hair, our dress and fashion forward designs inspired by their favorite Disney character or story and come with a comb and matching toe.
Speaker Change: Musical beneath the brand new line celebrating the amazing portfolio of Disney music. Many figures come displayed on top of that many music box.
Speaker Change: Give them a push and listen to your favorite Disney song from the character Blind Assortments of Ted are now available at retail around the Globe. In addition, our shifts there's lots of well received in the fall is continuing a slow and steady build through this year. This is a business, which primarily appeals to long term fans of the show, but we're looking to take.
Speaker Change: <unk> the cross generational appeal the show's finding on Disney plus this line is exciting and we're looking forward to what it has for 2025.
Speaker Change: We have new this is at target this spring new ways of figures that multiple scales and a new diorama location and at Walmart will soon begin shipping the exclusive plush King Homer that started to take pre sales back in October.
Moving to outdoor seasonal division, we are expanding our offerings to support our authentic brands business. This is an area, where we are trying different things across new product lines. Following a test and learn approach.
Speaker Change: We are excited on launching new products in a range of subcategories at brick and mortar retail and online in the first half of the year and we'll share more details in the quarters to come.
Speaker Change: Our private label business is also set up with some interesting opportunities this year.
Speaker Change: This is another slow and steady build threats working with accounts tailored to the right product right to beat their respective customer needs.
Speaker Change: Our deep experience and large bank of existing tools built up over time allows us to be faster to market and very responsive potential opportunities.
Speaker Change: Midland did have a long standing customer move away from one of our private label brand starting this year, which as we anticipated added to a bit of topline softness to our Q4 results but.
But even with that development. We are pleased with how this part of our portfolio is building.
Speaker Change: After a successful launch and sell through of a shopping cart last year with Aldi. We're also partnering on a cash register with them, which is hitting shelves. This month.
Speaker Change: We have some other fund launches this year, which we will share when the customers are ready to announce them.
Speaker Change: Another first half development is our steady expansion in our dress category.
Speaker Change: Our Disney dress up business has been a market leader for over 15 years.
Speaker Change: It provides a year round dress up solution for kids, who want to immerse themselves into the character world with its Disney Princess where alpha or Ana from frozen or marijuana or others.
Speaker Change: This past fall, we offered just our products and support to NBC Universal's Wicked movie with Glenda being the highest performer as you might expect plans are also in place to support the second movie this fall.
Speaker Change: Separately, we're here.
Speaker Change: We announced the launch of Harry Potter robes at Walmart, arriving on shelf next month the.
Speaker Change: Potter based fans remain extremely strong with kids coming into the franchise every year. So we're excited about this opportunity.
Speaker Change: To reiterate business is like this are not massive out of the gate, but there are initiatives that build over time to add breadth and depth to our evergreen portfolio.
Speaker Change: From dress up to costumes, our disguise business has a lot of different things happening as we start the year.
Speaker Change: We are starting the year with pokemon costume shipping in Europe, which is a nice built on our success in the U S.
Speaker Change: We also already seen theatrical releases more on top of mind with consumers as the calendar works through the writer's strike lag last year.
Speaker Change: <unk> 2024 films like Moana, too Wicked and Sonic three be more top of mind. This Halloween season, there are new releases in our portfolio like dog ban lethal and sits live action and the Microsoft movie as well as a promotional buildup behind the second wicket film.
Speaker Change: We continue to pick up incremental rights, where it makes sense. We have added core paw patrol rights, where historically, we have supported the movies and we have mentioned earlier, we are prioritizing European growth across all markets working in partnership with our Licensors and leading customers.
Speaker Change: In addition to all of the above over three years ago, we implemented a multi tier development process to ensure we are adequately addressing the global market.
Speaker Change: We developed lines for specifically targeting different class of retailers and trade and with respect to consumers in mind. This development philosophy addresses the mass market retail.
Speaker Change: Specialty channel and the value dollar trade beginning with this goal in mind and ensures we have a wide range of products designed with the appropriate price points and the customer margin requirements for each potential customer worldwide.
Speaker Change: As you can see there is a lot going on without even touching upon what some of our studio partners are thinking about in 2026 and 27.
Speaker Change: And a company like ours, we are accustomed to navigating through unknown.
Speaker Change: We're acting quickly to both challenges and opportunities.
Speaker Change: Based on everything we know today. It is certainly our goal to grow both our topline and bottom line. This year, however, modestly and we feel we have a plan that will get us there.
We find ourselves in a great position today as a company both to the context of where we have been not too long ago, but more importantly, with an eye towards where we think we're headed.
We appreciate everyone's support and look forward to collaborating with our key stakeholders for another successful year for all involved.
Speaker Change: And with that we will take a couple of questions operator. Thank you.
Speaker Change: Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone. We also ask that you. Please wait for your name and company to be announce before proceeding with your question one moment.
Speaker Change: And the first question that we have today is coming from the line of Eric better off.
Speaker Change: Small cap consumer research your line is open.
Speaker Change: Okay.
Speaker Change: Good afternoon, congratulations on a nice bounce back here.
Speaker Change: Thank you Tom.
Speaker Change: So.
Speaker Change: Awesome congratulations on the dividend does that because you still have some flexibility if you so desire to potentially.
Speaker Change: Pick up other properties here, even with the dividend and the desire to maintain cash in terms of the chain.
Speaker Change: Changes here and the potential economy.
Speaker Change: First of all good question. Thank you. So yes, we did we had a very deep long talks about the dividend and capital allocation initiatives over the past eight months once we pay down the preferred which we did I think it was in May last year. So that being said, we looked at the liquidity basis going forward looking at tariffs.
Speaker Change: They're very different application that could happen to us that's known and hopefully announce and knowing that we are extremely comfortable with the dividend initiative that we put in place we have ample cash that we're generating free cash flow and cash on hand, which allows us to do other opportunistic initiatives whether it means.
Speaker Change: Acquired new IP on top of the existing IP, whether it looks at potential acquisitions in the future. What we did is we didn't want to handicap the company by doing many things all at once so we started off a very I think strong powerful.
Speaker Change: Initiative with the dividend at hand on an annualized basis, assuming it goes annual if the dollar per share, which I think is very strong from where we were in the last four to five years. So everything been said we've thought about this in great detail and we are extremely comfortable with the dividend and with where we stand with the capital on hand to acquire new IP or opportunistic.
Speaker Change: Our initiatives that are out there in the marketplace.
Speaker Change: Great.
Conceptually could you remind us here so.
Speaker Change: Movie.
Speaker Change: Storage, what is kind of the coat tails for the holiday movies I know, it's not because you do have a be that a lot of the impact the upside effects movies does not.
They occur in Q4 could you kind of take us through how that flows.
Speaker Change: If we take past histories of when movies have been large for it goes back into incredibles to frozen and frozen one frozen two condo what usually occurs as the movie comes out which moana came out.
Speaker Change: The Thanksgiving period in 2000.
Speaker Change: <unk> 24, and you have a great excitement during that period and then you have a usually a long tail that goes with it not knowing what the excitement or how how you foresee that taylor's but when the streaming comes on which will come out during the first or second quarter bears the momentum that occurs with that especially when there's music involved.
Speaker Change: That usually carries forward, which it did on the various frozen movies more water, one and can't do them all.
Speaker Change: All of those music initiatives really helped continue the strength of the actual initiative of the movie Secondly, when you have like a movie which was a sonic three which came out December 20th.
Speaker Change: We only had a.
Speaker Change: A minimal amount of time before the children and parents alike and family saw the movie during the holiday. So you get a strong momentum on that when the streaming comes out too and that moves forward. During the second quarter. So you should get a long tails and it helps enhance the visibility of the content and then in.
Speaker Change: To which we had dog man, which came out in January at the end of January 30th that's an initial launch that.
Speaker Change: It still has momentum and going very strong and has the appeal with their books that have gone over decades of books that continue that strength of the IP with the movie itself is a nice combination all that being said we are still doing business with and condo. That's still strong we've just relaunched a beautiful lie.
Speaker Change: Frozen items cut our enhanced very much similar to our Princess style collection, so even though frozen came out an original as 2013.
Speaker Change: I believe that the announcers and new movie in 2027, we still have legs.
Speaker Change: Of that IP gone well so the momentum continues.
Speaker Change: Usually what's up and has strong IP when you have a history, which we do have a history with sonic that we do have a history would moana.
Speaker Change: Okay and last question inventories of inventory.
Speaker Change: Fantastic job of controlling the inventories.
Speaker Change: Part of that I assume is that the F O b.
Speaker Change: Rising is it possible to get the F O b, even higher than it is now and how should we be thinking about your desire to potentially take inventory risks given.
Speaker Change: The whole tariff situation and other pieces. Thank you.
Speaker Change: Yeah. So.
Speaker Change: Excuse me my voice with.
Speaker Change: Our inventory, we've been managing inventory really methodically over the last several years, we've got it in the past, but with the new controls and having John Campbell as our CFO for the past few years, we've really got a much better handle on that inventory.
Speaker Change: We are at a very high level, yes, I think it's approximately 75% on an F&B basis I don't think anyone in our industry is close to that and then you add the domestic <unk>.
Speaker Change: International Apart, which is then.
Speaker Change: Eddie.
Speaker Change: The 80% with some of the domestic excuse me therefore be internationally, sorry, with my voice that being said, we will be bringing in some inventory.
Speaker Change: But not a chase inventories inventory, that's methodical to what we need that's evergreen we're not bringing in inventory to bake bank got something being extremely strong and taking that risk. We will chase inventory as as we always have but to us inventory is cash and cash to us is king cash is allowing us to do.
Speaker Change: The dividend look at new opportunities. So we are managing it really really tightly but at the same time good.
Speaker Change: Dealing with some of the tariff issues, we will be bringing and domestic items are appropriate that are well positioned for evergreen growth better that's inventory that we're not worried about if it doesn't sell the spot.
Speaker Change: So all of the following month, so it's really a means to where this company sits biweekly and goes to the inventory positions worldwide. We've introduced the new distribution centers throughout the EMEA, which allows us to spirits distribution in shorter time periods to get to the retailers. So all that being said we need.
Speaker Change: Less inventory than what we normally do but we always will be looking at the opportunistic inventory holds.
Speaker Change: Further certain properties that also to deal with tariffs.
Great Congratulations and good luck in 'twenty five.
Speaker Change: Thank you Eric Thanks, Eric.
Speaker Change: One moment for the next question please.
Speaker Change: And the next question will be coming from the line of Thomas Forte birthday of Maxim Group. Your line is open.
Thomas Forte: Great. Thanks, So first off Steven and John and I Hope you and your colleagues are okay. When it comes to the California wildfires.
Thomas Forte: And then I have a number of great question. Thank you.
Speaker Change: Welcome I'm just gonna go one at a time.
Speaker Change: But I have I have a lot of questions and I'll, let you know Steven when I get to the last one so the first one I had is based on my own anecdotal observations. It seems like more physical retailers are devoting incremental floor space to toys and I've seen Jackson a lot of them as long time industry participants I'd. Appreciate your thoughts if you are seeing.
Speaker Change: Same thing what the implications are.
Speaker Change: Yes, we are seeing.
Speaker Change: For JAKKS much more placement and homes for our evergreen product and the reason for that is if you take the <unk>.
Speaker Change: Divisional initiatives that we've done our products are really much of a sense.
Speaker Change: An evergreen for parents, we have all different areas and segments.
Speaker Change: Retail from seasonal to Halloween to role play to dolls to dress up so we really have such a broad array of products and with really strong evergreen IP.
Speaker Change: When people take on our items are the categories that they're not main risk to them towards or not worried that it could not.
Speaker Change: <unk> sell through so I, just got back from Panama last week, and we were with them.
Speaker Change: Major retailers out there and one of the main ones is called Stevens, which is one of those gorgeous.
Speaker Change: Toy areas that I've seen in a long time around the world and our placement there is significant for our size of a company compared to our competitors. So we are seeing it not just in North America, but we're seeing it through EMEA and southeast Asia, and Latam, especially that town where grown it very aggressively.
Speaker Change: And it's some of it's just the way that we set forth about three or four years ago with that three tier development process that I discussed during the earnings call of having mass retail product secondary retail product for the secondary accounts like the T. J Maxx, Ross Burlington, the big box stores to Costco and Sam's.
Speaker Change: The value trade. So we've developed three different lines of product in our categories, which allows us to have much more shelf space at various retailers compared to our competitors.
Speaker Change: Okay. So you answered my second question in that.
Speaker Change: Sort out their case, there's anything else you want to add.
Speaker Change: No.
Thomas Forte: How should we think about your wholesale sales to low price point value focused retailers such as five below. So you just indicated you've been able to penetrate that category with a third line I.
Speaker Change: I guess was there anything else you want to add there Ryan My next one.
Thomas Forte: I would say we are expanding.
Thomas Forte: Areas of businesses that trade that class of trade at the same time there is other retailers around the world that have it's interesting different from North America. They have the mass section that you go to that has all the toys at the.
Thomas Forte: The normal price points, and then a lot of these retailers that have value areas that are events. So some of these mass retailers are doing both.
Thomas Forte: Normal twice exits that you see and then a value section based on kind of the environment and the way that they see people spending so.
Thomas Forte: I think we're getting much more diverse and much more distribution than in the past based off the value opportunities that we have from license and that license.
Thomas Forte: Initiatives that we've undertook taken excuse me.
Thomas Forte: Great All right. So then my next one it seems like the number of major sales in the E. Commerce space has increased over time for.
Thomas Forte: For example, Amazon Prime there used to be a single event that usually held in June now it seems like the company holds multiple prime days, but it's the quote type sales during the year what are the implications to you for more big sales events in E Commerce.
Thomas Forte: What extent if at all as an opportunity.
Thomas Forte: Are there any incremental competition, how should we think about it.
Thomas Forte: So theres always opportunity anytime that Amazon or Alibaba Singles' day, all of those new initiatives Argos.
Thomas Forte: Promotional initiatives always helps.
Thomas Forte: <unk> itself and our complete industry, because it's a benefit because it actually enhances people to spend and our sales team and our leader of sales is very much focused throughout the year are planning when they have these big events to do some special initiatives to where it allows the online retailer to not have anyone to be able to price.
Compare their items because they are promoting it during a special time, so that area has grown over the years and we are capitalizing on all of those initiatives not just in.
Thomas Forte: North America, but worldwide.
Thomas Forte: Great Alright, so two more.
Thomas Forte: U S dollar strengthened against a number of currencies can you remind me about your percent of sales outside the U S and your percent of costs outside the U S and if you had your currency exposure at all.
Yeah, I'll jump in on that one and give Stephen a break.
Thomas Forte: We don't really have as much FX exposure as most other people in the space because our business is U S dollar denominated.
Thomas Forte: So as we've touched on the call.
Thomas Forte: That means 75, 8% of our.
Thomas Forte: Volume is.
Thomas Forte: Yes.
Thomas Forte: Maybe even a little bit more than that come to think of it is going to be U S. Dollar denominated on the sales side and then on the costing side all of our costing is negotiated either in USD or Hong Kong dollars and so although the Hong Kong dollar will move around a little bit it won't move that much and so.
Thomas Forte: So.
Thomas Forte: We're actually reasonably well insulated on that front, even if the dollar store.
Thomas Forte: <unk> significantly during the year.
Speaker Change: Great very helpful. Jon as the last one and thanks for taking all my questions. So it looks like U S box office was about flat in 'twenty four at $8 7 billion. Even so there are still more than $20 million.
Speaker Change: Greater than $100 million of growth, including a number of properties and capitalized on Wicked Moana, Tucson, and catch our three apologizes I'm forgetting some.
Speaker Change: Can you give me your current thoughts on what box after box office performance of your license or potentially license IP means today as it relates to your strategy.
Speaker Change: That's a good question. It's a hard question to answer because there is a plethora of different.
Speaker Change: Content movies coming out and we have so many different areas and categories in which we have some of the rights fully some of the rights partially.
Speaker Change: So for us the.
We're looking at at the box office is an enhancement to our year, but we have so many other initiatives currently that had been announced some of which have not been announced that this year the box office.
Speaker Change: Are called the streaming part of the box office will enhance more sales for us and I believe the actual box office itself.
Speaker Change: And that's what we planned for and we've looked at that and that's why we've gotten further distribution on a lot of the other initiatives that we've done to our private label that were very hard core involved with.
Speaker Change: A lot of new initiatives at our different categories and our sporting goods area. The AVG line of products that have no real need to have any type of a blockbuster that have that enhanced so our broad mix and diversification really.
Speaker Change: Does it put a need on the box office success at least for this year as well then we go into 2026 and <unk> got some really big blockbuster movies, such as the Super Mario with that comes out in 2007, you got large movie the Sega and historic announced their movie and they are frozen. So there's a lot of momentum but in years that there is.
Speaker Change: Not really strong.
Speaker Change: The IP that we really need to focus on we brought in our offerings much more than normal and the receptiveness at retail has been very strong.
Speaker Change: Excellent thanks for taking my questions.
Speaker Change: Thank you very much thanks, Tom.
Speaker Change: Thank you and that concludes today's Q&A session I would like to go ahead and turn the call back over to Stephen for closing remarks. Please go ahead.
Speaker Change: Ladies and gentlemen, thank you for your time today, and we look forward to speaking to you. After our first quarter is completed and done we're excited for the year and excited for the years to come and happy we're able to do the dividend for the shareholders that we have and for the shareholders in the future. Thank you very much.
Speaker Change: This concludes today's conference call. Thank you so much for participating you may now disconnect.
Speaker Change: Yeah.
Speaker Change: [music].