Q2 2025 JAKKS Pacific Inc Earnings Call
Good afternoon, everyone. Welcome to the Jakks Pacific second quarter 2025 earnings conference. Call with management, who will review Financial results for the quarter ended. June 30th 2025 Jax issued its
Earnings press release earlier today, the earnings release and presentation, slides related to today's call are available on the companies recently, remodeled website, and the investor section.
Speaker Change: On the call. This afternoon, our Steven Berman chairman and chief executive officer and John Kimble Chief Financial Officer.
Speaker Change: Then John, will provide some additional comments around. Jack's, Pacific's financial and operational results.
Speaker Change: Mr. Berman will then return with additional comments and some closing remarks prior to open up the call for questions.
Your line will be placed on mute for the first portion of the call.
Speaker Change: If you would like to be placed in the queue to ask a question, please press star 1 1 on your telephone keypad,
Speaker Change: Before we begin, the company will 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 ibida in 2025, as well as any other forward-looking statements concerning 2025 and Beyond are subject to Safe Harbor protection, under Federal Securities laws.
Speaker Change: these statements reflect the company's best judgment based on current market, trends, and conditions today, and our subject to certain risk and uncertainties, which would cause actual results to differ materially from those projected and forward-looking statements,
Speaker Change: For details concerning these and other such risks and uncertainties. You should consult Jack's most recent 10K and 10 Q filings with the SEC.
As well as the company's other reports, subsequently 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 Ava and adjusted earnings per share.
Unless stated otherwise the most directly comparable, gaap Financial metric has been reconciled to the associate 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.
Steven Berman: With that, I would now like to turn the call over to Steven Berman.
Good afternoon and thank you for joining us today.
Steven Berman: When you look at the big picture, we are pleased with our results this quarter both in terms of our second quarter actuals. But also what we've done in the past 90 days to adapt to unpredictable US market,
Steven Berman: our sales in the quarter were negatively impacted by a dramatic increase in the cost of doing business in the United States, which ends up being a misscom commercial opportunity for all involved.
Steven Berman: Based on the disruption from the fluctuation and a certainly around tariffs.
Steven Berman: Are those sales in the quarter were down 20% from the prior year? We leave the first half of the Year down. 3%. Overall, as a total company.
The first half sales in the US were down, 10% compared to the prior year and all other markets were up 33% in total.
Steven Berman: We've been working collaboratively with our vendors and customers to make the best of a bad situation and identify Creative Solutions, to increase our ability to mitigate some of these costs.
Steven Berman: Amid ongoing and often unpredictable tariff changes, we have taken a proactive and balanced approach to our manufacturing strategy.
Steven Berman: While trying to remains our primary manufacturing Hub, due to its scale, efficiency, and well-established infrastructure, we have built verified and reliable Supply chains over the years, across many markets, to mitigate risk and ensure product continuity in these regions.
Steven Berman: In addition, we have implemented a duplicate tool initiative and various regions, giving us the flexibility, and operational low Readiness to shift production, where it makes the most practical and economic sense.
Steven Berman: we continue to explore and execute us domestic manufacturing opportunities, where feasible
Steven Berman: Recognizing both the Strategic value and realistic limitations of us-based production, this Diversified, and pragmatic approach enables us to remain agile, cost-effective and resilient in the face of evolving global trade Dynamics.
Steven Berman: Based on what we know today, all of these Solutions ultimately result in a higher cost of doing business due to the loss of scale,
Steven Berman: logistical efficiency and Manufacturing proficiency.
Steven Berman: That higher cost is creating hesitancy with many US customers that we see persisting until everyone is aligned as to what the new cost of doing business will be
Steven Berman: But we suspect there's a lot more to come at on that front.
Steven Berman: Currently our point of sale results at the top 3 us accounts are strong especially when adjusted for the private label program. We mentioned earlier exiting at the end of last year.
Steven Berman: With that view, we are up double digits at all, 3 accounts in the first half of the Year, led by the success of our product supporting the Sonic, the Hedgehog 3 movie, which is now streaming across multiple platforms.
Steven Berman: In areas where we've seen customer increased prices more often than not has been meaningful, reductions in units sold. Although admittedly a handful of items have maintained their unit productivity despite higher retails.
Steven Berman: At this time, however, we feel it's far too soon to speculate when or where the situation at retail, reaches some degree of predictable stability.
Steven Berman: Given that context, we are doing everything to remain flexible and adaptable. We have the great Fortune of having a fantastic product line of healing to a wide range of kids. And parents across a very broad assortment of entertainment franchises and play patterns.
Steven Berman: As mentioned, our sales were down 20% in the quarter versus prior year and unfortunately down more substantially from our expectations at the beginning of the year.
Steven Berman: Our worldwide toy and consumer business was down. 23% in the quarter and is roughly flat.
Steven Berman: Year to date.
Steven Berman: And our costume business was down, 12% in the quarter and down 13% year to date.
Steven Berman: For the first half, our International growth was led by Europe, which grew by 65% in the first half of the year.
Steven Berman: This reflects a major initiative to increase International sales while recognizing that the US sales will remain somewhat unpredictable until the Tariff landscape stabilizes and firms.
Steven Berman: Territory. Specific manufacturing percentages are clearly established.
Steven Berman: I will now pass it over to John for some more details on the financials and then I will come back to elaborate a bit more about the second half.
Steven Berman: John.
John: Thank you, Stephen, and hi everybody.
John: All sorts of things are happening this quarter. So let's jump in.
John: We felt at the beginning of the year that we were set up for a good first half, looking at our product lineup and comparing it to where we were in 2024, and that has proven itself out in many ways.
John: But unfortunately, that's about the end of easy. Predictability in the near term.
John: The sudden increases in the cost of bringing product into the US prompted, most us customers to re-evaluate their orders as has been widely, discussed with immediate negative impact, being on the fob or direct import portion of the business.
John: Our efforts to refocus energies on other markets are working so far as Steven highlighted earlier.
John: the fact that we're seeing all our businesses selling in favorably is a good validation of the current breadth, and quality of our product assortment
John: It was an excellent quarter for product. Margins, largely anticipated by mix but also reflective of some immediate efforts to monetize. On-hand, inventory and scrape pennies, where we could
John: but broadly, the level of new higher margin product compared favorably to the product portfolio during the same period last year as we anticipated, it would
How all these elements balance out for the second half? Very much remains to be seen.
John: That our comparisons with the previous year will get more difficult is a certainty.
John: Customer and by extension consumer Behavior. Remain a bit more of an unknown.
John: Customer's decisions about building inventory how they price to the end consumer and what sort of rate of sale follows are the components to determine the ultimate margins earned by all involved and our essential to creating a degree of fact-based certainty around expectations.
John: We remain very focused on the interdependency of these issues. As we've said before, we are optimizing for margin dollars and not sales revenue market share or other metrics that run the risk of distracting from bottom line results. Andor burning up cash.
John: Ultimately these Dynamics remain pretty challenging to forecast.
John: Royalty rates were slightly higher in the quarter as we saw in q1, that's largely driven by higher rate. Content-led product and a modest reduction in our royalty-free private label business.
John: But net, net similar to q1. We sustained strong gross margins in the second quarter at 32.8%.
John: There's not a lot of insightful things to be said about sgna through this quarter overall costs containment has been. Okay, if you look at the first half, we're up about 2 million dollars in worldwide spending in the first half, from a p&l perspective given that we're rolling through a rent, increase in the US warehouse this year, coming off a relatively long lease. That's a good outcome.
John: Product development.
Moving to the balance sheet, cash inclusive of restricted cash at the end of the quarter was 43 million up significantly from the 18 Bill dollars at this time. Last year.
As you'll recall, the first half of 2024 included, a 20 million cash payment as part of our preferred share Redemption. So we're tracking well on this front.
John: Cash as of last Friday, was down to 27 million. As we make payments customary for this time of the year, inclusive to our friends, the license oars
John: Inventories up a bit at about 72 million, that's inclusive of 17 million which is in transit somewhere.
John: To the extent that you're thinking, it's reflective of the higher cost of importing product. That's not really a driver of that number, as of June 30th, it's more about our International growth.
Separately, we were happy to complete, the refinancing of our credit facility. This quarter with a new agreement, with BMO Bank NA.
John: This new 5-year, 70 million, cash flow. Revolver provides us with a predictable source of funds throughout the year at very attractive, borrowing rates.
John: Moving from an asset based lending agreement to a cash flow Finance facility. Is another endorsement for the quality of our business and where we see ourselves headed over the next few years.
John: The slight Improvement in Gross margins, help drive a bottom line, adjusted Eva of 2.3 million in the quarter and 2.7 million for the first half of the year.
John: 2.3 million is down from 12.3%. But for the first half, our 2.7 million is favorable to the loss of 4.9 million in the first half of last year.
John: Adjusted diluted EPS was 3 cents per share in the quarter unfavorable to a gain of 65 cents per share last year.
John: On a year to date basis. We are flat with essentially Break Even results on a digested basis. Compared to a loss of 38 cents per share at this time last year.
As mentioned in our release, the board has again, approved a 25 cent per share dividend for the third quarter, for shareholders of record as of August 29th.
John: To be paid on September 30th.
And now, I'll pass things back to Stephen.
Stephen: Thank you, John. At this point in the year, we usually be putting the finishing touches on promotional programs for the upcoming holiday season. We're also racing to polish the fall 2026, product line, prior, to customer previews, in the next month or 2.
Stephen: Although both of these activities are still happening where nonetheless still dealing with the current economic uncertainty on a daily basis. As a persist, an overhang when it comes to understanding the shifting, economics of our business,
Stephen: We at Jax view patients as a v virtue in this climate.
We continue to aggressively Chase, new product opportunities and the right licenses for our portfolios.
we remain cautiously curious as more and more acquisition opportunities are surfacing, given the current turbulence
We are increasingly selected in the terms of our inventory planning maintaining our commitment to being an fob focused, working capital efficient company. First
Stephen: We're also pleased with our continued study of progress in non-us markets.
Stephen: Our Canadian and Mexican customers. Now have an even clearer and sense of Dubai. Fob product.
Stephen: Our non Us sales were up 33% in the first half of the year although we don't think that is a sustainable rate of expansion. We are working to the same momentum and become a bigger part of for our customer in the holiday planning season.
Stephen: The weaker US dollar delivers, more margin to many of our fob customers as they buy from our US dollar denominated fob price list.
In the US, we see some of our major customers delaying. Their traditional second half planogram resets from August to early October.
Stephen: This is essentially as a result in too few months on shelf for our new fall product introductions.
Stephen: Which by extension is driving lower productivity from the fall product line than what we would have originally anticipated.
We also see Halloween setting later this year, given the delays of Q2,
Speaker Change: despite the short-term shelf window, there are reasons to be excited about us retail in the second half. However, at least at Jax
Speaker Change: We are launching a new baby doll. Nurturing brand called Disney Darlings, which will soon be available online and is planned to be on shelf in Q4.
An international rollout is happening planned for 2026.
Speaker Change: Our Disney Elite business continues to thrive and steadily expands its product breadth.
Speaker Change: Tiny segment this year, which will lead to further expansion there in 2026 as well.
Speaker Change: And all of our major US, customers are planning Q3 and Q4 programs to support our Evergreen Disney, princess Frozen, and Moana businesses.
Speaker Change: In our action play area working with our friends at Sega. We have some new toys that tie in with the new console game. Sonic racing cross worlds, which is launching this fall. And we are specially excited to be supporting the DC Comics. Sonic crossover comic book series,
Speaker Change: Our action figures, let you recreate this unique story line with Sonic as the flash silver as the Green Lantern. Amy has Wonder Woman and Shadow as Batman. This product looks very, very cool.
Speaker Change: And we have additional more great items coming from action play. But we're holding back the news for Comic-Con this weekend in San Diego. You'll have to wait a few more days to find out about those.
Speaker Change: In a different aisle, 1 of the things. I'm happy about this year is our continued success. Expanding our private label offerings
Speaker Change: We're always a bit sensitive about what we can share in this area for competitive reasons. And these programs tend to start small with a lot of testing and learning. But our success in recent years has opened a number of doors and we'll start to see more launches this fall.
Speaker Change: unfortunately there have been approached with more caution given the current environment, but as we look ahead to what we know is coming and further expansion plans in 2026,
Speaker Change: I and Jax remain, both pleased and optimistic about our opportunities in this area.
Speaker Change: Finally, our costume business is 1, that in many ways had suffered the most from recent events.
a large portion of the decline in the quarter happened here, as we had some of our large cancellations, in Q2 with terrorists were 145%,
Speaker Change: this is the business where customers review product lines late in the calendar year and make and ultimately finalize their commitments early in the year.
that is the time that it allows for manufacturing to be scheduled and product to be shipped and sold in Q2 and Q3
Speaker Change: Although there were a period of time this quarter where this business essentially was put on pause, the team has done a remarkable job creating and reacting to changes and salvaging what ended up being a very solid year for the business. Although unfortunately not what we hoped it would have been otherwise
On a brighter note, we know that a strong film slate is a benefit for this business. We've recently seen strong box office results for a range of kid, targeted movies, which is always something. We're excited to see for our Film Studio partners.
Speaker Change: Next year is shaping up to be a great 1 from the perspective of our costume business.
Speaker Change: We have the rights to Toy Story, 5, Disney Moana live action film, and the new Disney Descendants film, which is always a great performance.
So we're hoping our costume business can come back stronger. If we get some clarity about the product costing
Finally, before taking some questions, I want to briefly acknowledge how sorry I and we at Jax were to learn of Alan hassenfeld passing.
Speaker Change: I've known Alan for over 3 decades. Personally going back to the early 90s and I've always looked forward to our past occasionally crossing the last of which was just a few months ago.
Neither his importance to the toy industry nor his extraordinary level of thoughtfulness and demeanor can be overstated. He will be sorely, missed, Alan we miss you.
Speaker Change: And with that, we will take a couple questions. Operator.
Speaker Change: Thank you again to ask a question. Please press star 1, 1 on your telephone.
Speaker Change: Our first question.
Tom Forte: Comes from the line of Tom Forte of Maxim.
Please go ahead Tom.
Tom Forte: Great. So uh, Stephen and John. Congrats on navigating a very challenging environment. Um, it sounds like it's even more challenging than he described. Last quarter. Um, I have 5 questions and I apologize. Usually I'm bad and clean up that lead off.
Tom Forte: So I'll go 1 at a time.
thank you so much, okay, do you have
Tom Forte: Do you have any short-term levers, you can pull to mitigate the impact of tariffs? For example, last quarter, you decided to hold inventory in Asia, rather than ship it at even higher tariff rates.
We decided to duplicate tool which would be a little bit more of a capex expenditure, but be able to pick and choose where we want to manufacture, uh, our Goods to enable us to have a, a lower tariff impact, uh, to ourselves the customer, and to the consumer that being said, each time we made a move which we moved into the Vietnam to ship, a majority of manufacturer of our Halloween business, the Tariff increase during that period of time, which would not benefit us. And we ended up having to take that impact of that tariff. For those sales in additionally that happened very similar to Mexico recently that we were moving some of our large plastic um manufactured goods as well as our skateboards there but the Tariff went back up to 30. So as I've said at the start and I will continue to say that China is our Hub of manufacturing. I think when it's all said and done um outside of whatever we can manufacture in the US which we're trying to do but it's cost prohibitive on many of our lovers that we're trying to achieve. But at that time at that
Tom Forte: That being said, we will do our best to do as much as we can here in the US. But these tariff fluctuations and decisions that are ongoing. We've decided to just move forward with a tariff in mind knowing that that's going to be the way that business is going forward and bring back our business to the right initiative knowing that there will be a ample tariff that will affect our industry, and we just have to work around it, going forward.
Tom Forte: Excellent. All right. So then so Stephen and you're prepared remarks and actually your answer to that last question you touched upon this, but maybe you can expound a little more. So I wanted to ask you about the adjustments to your supply chain.
Speaker Change: Are you suggesting that you're going to have the ability to manufacture the same items inside outside of China, or your intent is to manufacture certain products outside of China. I, I'll give the example of costumes just because you break out the sales of costumes, but as soon as the idea duplicate or some things specifically meant outside of China,
Speaker Change: So a good example on the disguise business, we the first thing, the majority of these manufacturers that are in the other countries, IE Cambodia Vietnam and so on, our Chinese manufacturers that have set up and put their initiatives in these territories years ago. So it's not something new to Jax. It's where we feel the most efficient way and best way to have quality products. Manufactured, we have that with our in our Vietnam, manufacturing of Halloween costumes. So we're able to go either or in China or Vietnam, but what what's coming out? Its fruition is in China. It's a 30% tariff in Vietnam, it's approximately 20%, I believe, but the cost of goods in Vietnam are slightly higher, and the cost of goods in China are slightly lower, so that extra 10% that we're saving in a sense of going to Vietnam is not really a savings. It really equals out and we're just being very fluid with this.
Speaker Change: Situation and moving forward. So we are being its call for us. We're using the 8020 world word. Uh, understanding is that you're taking 20% of your product that do 80% of the business. We're, we're really picking the top skewed items that do the majority of business. Not every SKU will be done in all these different territories.
Speaker Change: Okay, and then you touched on this again, the prepared remarks, but can you remind me of your upcoming uh license releases over the next 12 to 18 months?
Uh, that being said for you, I'd like, I'd like to but we have a lot of things that are in the midst or in the hopper that we're working on and even though we have some great exciting things, I don't think it's an exciting. Uh, as a, a stakeholder shareholder to hear about the things during this really disruptive period. Our goal for Jax is right now, is to generate as much cash as we can be extremely prudent with inventory. Uh, especially in the US that you see, we're lower and inventory after the second half, uh, about 8% year-over-year and higher in international. As you see the international growth uh achieving higher um ranges and domestically, we're just going to be very, very cognizant that we're running the business. Like it's our own money and not wasting on inventory and the what ifs we'd rather take a conservative approach and make sure that the sellers occur this year that are needed when you listen to the competitors and the market they're waiting for the second half of the year. I don't think anyone knows what that's going to be and we'd rather take a prudent stance of where we're going to be.
Speaker Change: Going to happen during the holiday period.
Speaker Change: Okay, last 2. So I know you don't guide but can you give high level comments on how you think about the third quarter of 25 as it relates to full year 25. Given the historically or third quarter is your biggest by far?
Tom Forte: I'm sorry. I didn't hear it Tom.
Speaker Change: We broke up. Yeah.
Speaker Change: Can you I know you don't give guidance but can you provide high level comments on how to think about your third quarter of 2025 as it relates to your full year? 2025, given the historically. The third quarter is your biggest by far from a seasonal standpoint.
I'll jump in. And then if John would like to jump in as well, we are going to be taking outside of the international territories just a cautious look. And look at shelters as as in our uh pre-recorded um part of the script we discussed about sell throughs are still extremely strong at our top 3. But we are seeing some areas where the prices have increased slow down and unit sales and we're set we're seeing some areas not affected and you know no 1 I think understands what the impact will be um the prices have gone up across the board. We're seeing it at at the retail. So I I think for right now for again John will jump in just taking a very cautious. Look, our goal is profitability, generate cash, a lot of cash. Look for opportunities in this market and if things get settled in that tariff World, we're ready to jump on anything and jump in any white space at retailers need. But
What we won't do, is build inventory to try to achieve a sales goal that we don't know if it's achievable based off all these unknowns.
Speaker Change: Yeah, and I, you know, I think Stephen said most of that there, you know, the the thing to keep in mind with us to the extent that Q3 is our biggest quarter every year. It's our biggest quarter every year because of our fob business and for the fob business to really be flying at Full Tilt, it's going to require all the customers to have a 100% confidence that they know what's going on in the marketplace.
Speaker Change: So you can extrapolate back from there. I think as you listen to different retailers talk about how they're thinking about the consumer and the back half.
Speaker Change: and and, and
You know.
Speaker Change: Transfer that over in terms of what that means for, they're making commitments today to pick up fob product months and months from now.
Speaker Change: So I I think that gives you a little bit of a sense as to what you're asking about.
Speaker Change: Okay, last 1 and I hate to end on such a potentially negative note but um for for the toy category, how how should investors think about the potential for empty shelves? In the holiday period, given the challenges and selling toys in the current environment?
Speaker Change: I I do think again an opinion. This is not a, a, a, a with Statistics. I do think that retailers will jump heavily into toys, uh, in the later, part of the year and really, just look for picking the toys that are selling through. Well, and not taking any risks on really big TV advertised items. I think being caught
Speaker Change: Cautious during this period and selling the called, the razor razor blade products are things that everyone works with them play with, and also have the right price points at a lower price. Point is where people will succeed. Um, again, this is just an opinion and we're, I think we'll have a better understanding when we see Halloween come along, and the sell through is on Halloween because we know the buy-ins on Halloween, we know where it was paused during the second quarter. We know where the cancellations are. We've seen everyone scramble uh, aggressively to get right back on and more Halloween product, knowing that the tariffs, aren't the 1 45. So, I think it's going to be kind of a wait and see during the Halloween period and that sell through. And then, you know, Jax is 1 company that could react very quickly. And in addition, remember about 70% of our business is on an fob basis. So things are planned much more than advanced than when you would on a domestic basis.
Thank you, Stephen. Thank you, John.
Speaker Change: Thank you. Tom. Thanks, Tom.
Speaker Change: Thank you.
Speaker Change: Our next question.
Speaker Change: Comes from the line of Eric better of small cap consumer research. Please go ahead Eric
Eric Better: Good afternoon.
Eric. Hey um, I want to talk about
The fob situation. So where are you know? I know obviously in the quarter, a large period where fob didn't occur how quickly did it ramped up at the end of Q2 and you talked about the potential to move more, fob internationally, you know, kind of where does the Baseline there? And I know that there are a lot of smaller players. So I'm not as easy to do, uh, as you do in the US with kind of, the Big 3 players, how should we be thinking about that opportunity also?
Steven Berman: Materials is international. We're, we're both heavily heavily fob, as well as domestic International. And in order for us to achieve upside that you've seen, I think it was about 40 plus percent growth, for the first half of the year, um, with that, we are bringing in domestic Goods on the top key items. Uh, internationally and that's where you see the inventory, higher year-over-year, lower in the US uh by again 8% higher internationally, but the sell throughs and our new distribution centers, uh, that we implemented over the last year, have really achieved uh the growth that we needed because a lot more of the growth internationally is coming from the smaller customers than from larger customers by each of the territories. So we have managed this. Well, as we told you, we have our Co that moved there a couple years ago and uh he's doing a terrific job at the same time, keeping inventory lean as again, cash is King. And I think with our new bank line and as well as building cash in this environment, there will be some other
Steven Berman: Opportunities that, you know, instead of, uh, waiting to to jump on, we could probably pounce on quickly and I think we're seeing a lot more activity, uh, with companies wanting to either move away from their business, or put their hands up to the tariffs and all the uncertainties that are happening. So we're kind of excited about that again. Could you touch on the first question?
Steven Berman: um the first question was, how quickly could you did you re ramp the fob in in, excuse me, in Hong Kong after the period with the tires, where a lot of the orders were pulled
So we, we had some of the inventory that we were going to hold that we kept in a Bonded Warehouse or the free trade zone in order for us to wait for the Tariff to, uh, diminish somewhat. We were able to do that. And then with our Factory, it says we've mentioned earlier how close we are as a company to them, we were able to reach out to them both in China and Vietnam and so on and be able to implement immediate manufacturing, with the way that the manufacturing plants work in Vietnam, it's different hours and what you can work in China. So you're able to have various shifts in Vietnam versus 1 shift in China. So we just manage it as we did, you know, from inception with Jack's very Hands-On and works very quickly with our factories. The factories want the manufacturing as much as Jax wants the sales. So everyone is working hand in hand to get through this period of time to help 1 another. Remember if we have slower sales the factory has slower sales. They need to then redirect their resources and employees and do layoffs as everyone. You've seen, many of you have done it in the US, so we're working.
Steven Berman: You can hand in hand to help them and they're helping us.
Steven Berman: um,
Steven Berman: let me give you a theoretical question. So we keep the Tariff levels at the kind of where we are right now. 30%, how long does it take you? And your
Partners in both manufacturing and Retail. So kind of normal. How long do you think it takes to normalize this so that the consumer the impact is in it? The impact is spread over and you kind of maximize the ability to make, um, higher margins and higher Returns on that. So I think that's just a terrific question because we are moving forward with knowing the tariffs where we see it today, whether they go down, that would be lovely for everyone involved, but we need to run our business moving forward without having uncertainty the retailers want to have uncertainty as much as they can. And the manufacturers, the factories want and, uh, uncertainty, they want uncertainty. So, at the, what we're doing now is planting ahead, 26 27, with the Tariff working out cost reductions where we can in the areas that we have our business. Some of our Legacy items will have some of the cost reductions. And then our new items will have the margin that we always see fit in order to achieve the right goals for our stockholders and shareholders.
Steven Berman: Boulders alike and the the customer the retailers are going to work with us as they see, we all take a little bit of a hit with some of the tariffs. Price increases will take a hit to the consumer, but this may be the new norm and we're not going to sit and dwell on it and wait and wait and wait. We are we are acting and reacting quite fast to this. We have teams in Hong Kong right now as we speak. Um, and we are just moving forward with the Tariff and minor. That's the way that's the new Norm if it lowers, terrific, if not. That's the way Jax will be
Speaker Change: Great final question. You've done a tremendous job with the financials in terms of the debt in terms of cash. When you look at it I would assume that you are probably seeing a lot of people now look to your financial strength and say, hey
These guys should do our license, so we should sell this brand here. You know. I know that you're every day is a new experience, kind of here. But you know, how do you see that? As a potential longer term opportunity to continue to pick up a either, great licensed brands or potentially pick up your own Brands. Thank you.
Speaker Change: Getting quite nervous based on the forecast being lowered by the industry, that holds licenses. And again our license or the large entertainment companies, and so on, they need to generate revenue and profitability for their company, and their share shareholders. And they see it with Jax, we don't just need IP from them, we work with them jointly. And as a great joint, uh, relationship. We worked with them on the, a product line called, Elie, which I love you, uh, forever. And, uh, it is, um, it is a wonderful line of product. Uh, it's doing terrific. It's now built overseas doesn't have huge, huge amount of, um, of the actual IP involved at the caricatures. It has the clothing of the caricatures. We did a line of, uh, called style collection, which is the Disney princess style collection, which is, uh, role-play for kids, and it's doing extremely well, both in the US and in Europe. So we have that and we have a lot of other licensed stores coming to us saying, hey, we're seeing
Some of our other companies having Financial issues. Do you think you could jump into this category for next year? But what we're doing is we're going to be very cautious of what we pick and choose based on the new environment with higher prices of tariffs. So there's a lot of opportunities, it seems like a little bit too much right now. Again as I mentioned, the best thing is we have we have no debt generating, great cash. We have the dividend and we have the ample time to look and see what's going to go on the next direction. We should go for Jack to enhance the the business.
Speaker Change: Itself.
Great, good luck on the holiday season and obviously not going to be boring.
Eric Better: Definitely not. Thank you. Thanks Eric. Thank you.
Thank you. I would now like to turn the conference back to Stephen Berman, for closing remarks, sir, ladies and ladies and gentlemen, thank you for the call today. We appreciate it. Um, we're very direct and open about where we think Jax is going to end our industry and we're excited to get through this year and move into next.
Thank you very much.
This concludes today's conference call, thank you for participating. You may now disconnect