Image source: The Motley Fool.

DATE

Thursday, July 23, 2026 at 5:00 p.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer - Steven Berman
• Chief Financial Officer - John L. Kimble

TAKEAWAYS

• Net Sales -- $139.2 million in the second quarter, an increase of 17% year over year, reflecting a recovery from previous tariff-related order reductions.
• Year-to-Date Sales -- $245.9 million through the first half of the year, representing 6% growth and the company's highest first-half total since 2023.
• North America Sales -- rose 20% in the quarter and 3% for the first half, leading overall regional performance.
• International Sales -- reached $53 million for the first half, a 20% increase and the highest first-half shipping volume for the company in over 10 years.
• Dolls, Role Play, and Dress Up Sales -- increased 12% in the second quarter, supported by the steady expansion of the Frozen product line despite a lack of new entertainment support.
• Disguise Business Sales -- grew 8% in the quarter and 9% for the first half, driven by the popularity of the Super Mario Brothers and Toy Story 5 films.
• Outdoor Seasonal Sales -- declined 12% in the quarter and 17% year to date to $11.1 million, as retailers reallocated shelf space away from bulky items.
• Adjusted EBITDA -- was $5.4 million for the quarter, up from $2.3 million in the prior-year period, bringing trailing 12-month adjusted EBITDA to $37.8 million.
• Adjusted EPS -- reached $0.25 for the second quarter, compared to $0.03 in the same period last year.
• Gross Margin -- was 32.3% in the quarter, a slight decrease from 32.8% last year, as the company focused on growing total margin dollars.
• Gross Margin Dollars -- totaled over $80 million in the first half of the year, representing a 3% increase over the previous year.
• Operating Loss -- improved to $142,000 in the second quarter from a $2.8 million loss in the prior-year period.
• Cash Position -- finished the quarter at $60.6 million in restricted and unrestricted cash, compared to $43.1 million in the prior year, bolstered by stronger operating results and tariff refunds.
• Inventory Levels -- were $58.3 million at quarter end, down from $71.8 million a year ago but up from $52.9 million in the previous quarter.
• FOB Shipments -- accounted for over 75% of first-half shipments, marking the highest level seen this decade for the company's business model.
• Tariff Refunds -- provided $6.8 million in nonoperating other income after the company successfully applied for refunds following a Supreme Court ruling.
• Cash Dividend -- was approved at $0.25 per share for the sixth consecutive quarter, payable on Sept. 28 to shareholders of record as of Aug. 28.
• Point of Sale Results -- accelerated to double-digit levels in the second quarter at the top two U.S. retail accounts.
• Action Play and Collectibles -- grew as the company sold more movie-branded products for the second Super Mario Brothers film than for the first film during the initial three quarters of shipping.

Need a quote from a Motley Fool analyst? Email [email protected]

RISKS

• Berman stated, "Retailers continue to reallocate in store space away from large box items these bulky formats are poorly suited to the low cost home delivery model that increasingly shaping retail economics," indicating that the outdoor seasonal business faces a structural headwind rather than a transitory one.

SUMMARY

Management reported that the business is transitioning toward a model with higher FOB shipments and expanded international distribution, particularly in Europe and Latin America. The company is addressing structural changes in the outdoor seasonal category by re-engineering packaging and products for improved delivery economics. Strategic initiatives for 2027 include the launch of anime and manga product lines alongside major theatrical releases for the Sonic the Hedgehog and Disney Frozen franchises. Management stated that the company is maintaining a focus on core toy segments for children while expanding its reach into the adult consumer market through specific licensing partnerships and digital entertainer initiatives.

• CFO Kimble noted the company's shift in financial strategy, stating, "Ultimately, as a company, I wanna see us optimizing for margin dollars and not margin percentages."
• Management highlighted a new international expansion strategy, including the addition of three senior sales professionals and the opening of the company's first office in South America for long-term growth.
• The company reported that price shocks from previous years have begun to unwind, with retail pricing for certain Disney Princess and style collection assortments returning toward pretariff levels.
• Berman characterized the sentiment of the infant product segment by stating, "The snuggly stars Wishables segment has recently launched... our baby dolls continue to be the happiest baby dolls you will find in the marketplace, There is no crying at JAKKS and there is no crying in the Disney Darling line of products."
• New anime, manga, and VTube digital entertainer initiatives are scheduled for a wide distribution launch in the fall of 2027, with no revenue expected from these efforts in 2026.
• Management identified a target market opportunity in the kidult segment through licenses like The Simpsons, Nintendo, and Sonic the Hedgehog, alongside upcoming Asian pop culture distribution channels.
• The fall product lineup includes Giant Metal Sonic, a 20-inch tall large-scale action figure designed to be a featured holiday item.

INDUSTRY GLOSSARY

• FOB: Free on Board; a shipping term indicating that the buyer takes responsibility for the goods once they are loaded onto the transport vessel.
• Planogram: A visual diagram or drawing that provides detail on where every specific product should be placed on a retail shelf.
• VTube: A virtual YouTuber who uses a computer-generated avatar, often in an anime style, for content creation and live streaming.
• Kidult: An adult consumer who purchases products, such as toys and collectibles, that are traditionally intended for children.
• POS: Point of Sale; the time and place where a retail transaction is completed.

Full Conference Call Transcript

Operator: Good afternoon, everyone. Welcome to the JAKKS Pacific Second Quarter Earnings Conference Call with Management who will review financial results for the quarter ended 06/30/2026. JAKKS issued its earnings press release earlier today. Earnings release and presentation slides related to today's call are available on the company's Web in the Investors section. On the call this afternoon are Steven Berman, chairman and chief executive officer, and John L. Kimble, chief financial officer. Steven will first provide an overview of the quarter and year to date along with highlights of recent performance and current business trends. Then John will provide some additional comments around JAKKS' specific financial and operational results. Mr.

Berman will then return with comments about the balance of the year and beyond prior to opening up the call for questions. The line will be placed on mute for the first portion of the call. If you like to be placed in the queue to ask a question, please press 11 on your telephone keypad. Before we begin, the company would like to point out that any comments made about JAKKS Pacific future performance events or circumstances, including the estimate of sales, margins, earnings, and or adjusted EBITDA in 2026 and beyond, as well as any other forward looking statements concerning 2026 and beyond are subject to safe harbor protection under federal security laws.

These statements reflect the company's best judgment based on current market trends and conditions today and are subject to certain risks and uncertainties which could cause actual results to differ materially from those projected in forward looking statements. For details concerning these and other such risks and uncertainties, you should consult JAKKS' most recent 10 k and 10 q filings with the SEC as well as the company's others report subsequently filed with the SEC from time to time. In addition, today's comments by management will refer to non GAAP financial measures such as adjusted EBITDA, and adjusted earnings per share.

Unless stated otherwise, the most directly comparable GAAP financial metrics have been reconciled to the associated non GAAP financial measure within the company's earnings press release issued today or previously. As a reminder, this call is being recorded. With that, I would like to turn the call over to Steven Berman.

Stephen G. Berman: Good afternoon, and thank you for joining us today. Our Q2 financial results were modestly better than our expectations and an improvement over the same quarter a year ago. Globally, our net sales finished at $139.2 million in Q2 a 17% increase compared to prior year when the sudden implementation of massive tariffs dramatically reduced customer orders. Year to date, our sales are 6% ahead of prior year at $245.9 million, our best first half since 2023. North America led the improved results, growing 20% year over year in Q2 and 3% for the first half.

Our international business reflected smaller year over year growth of 3% led by Europe but is up 20% for the first half of the year. Overall, this is the highest level of international first half shipping in JAKKS' history, over 10 years, at $53 million. Keeping the focus on the first half, our toys and consumer product business was up 5%. Those results were driven by the action play and collectibles division, which was up as we supported the extremely successful second Super Mario Brothers film released in April. Led by an array of 5-inch figures developed specifically for the film, Our product line also featured playsets, dioramas, and plush and was very well received with solid sell throughs.

Building on that, we have another wave of new product introductions shipping now for fall planogram sets and promotional spaces. Some of which are already on shelf. As retailers knew we had a solid opportunity with this film Through the first 3 quarters of shipping, we have sold in more movie branded products than what we did for the first film. Which is great, especially given the consumer reaction. Fans can also look forward to a lot more focus on Donkey Kong in the second half with a feature playset shipping along with a new figure multipack.

Our dolls, role play, and dress up business was up 12% in Q2 despite a lack of new entertainment support compared to the prior year. Of note, we have been steadily expanding our frozen product line over the past 18 months. Offering new role play patterns refreshing key products. Although Frozen has been a cornerstone of our business dating back to the original film release, the business is up for the first half of this year versus prior year. In the fall, we have a strong retailer exclusive placed that will add more energy to this aisle as we build towards the frozen 3 theatrical event in fall of 2027.

Retail pricing of our Disney princess and style collection assortments were heavily impacted by tariffs most of last year. And those price shocks have unwound over recent months We see some customers bringing retail prices down closer to where they were pre tariff, although, admittedly, not across the entire product line. In general, it is true for the lower price points. We feel lower retails are contributing to improved velocity as consumers discover some of the strong innovative items we launched last fall as well as this spring. We are also seeing expanded listings resulting in positive point of sale results.

The baby bath doll line launched in fall continues to sell extremely well, and our refreshed 6-inch princess doll line with a sub-$10 price point has been a strong performer as well. Retail toy and consumer products POS at the top 2 US accounts was positive in the first half, accelerating to double digit levels in Q2. Our Disguise business also performed well up 8% in the quarter, and 9% in the first half. The popularity of Toy Story 5, and the Super Mario Brothers films are positive contributors to our business this year, well as our launch of K pop Demon Hunters costumes.

Our outdoor seasonal business includes everything from activity tables and chairs to ball pits to ride ons, to skateboards and hula hoops among other products remained a slight drag on results this quarter. We see this as a structural headwind rather than a transitory 1. Retailers continue to reallocate in store space away from large box items these bulky formats are poorly suited to the low cost home delivery model that increasingly shaping retail economics. We are not waiting this out. We are managing this business with a multiyear lens and a clear plan on 2 levers.

Partnering with retailers to defend and recapture shelf space and lost sales, and reengineering packaging and product design to shrink box sizes and improve delivery economics. We are already advancing on both fronts. While these investments will take time to fully show up in the numbers, we are extremely confident they position this business for sustainable, profitable growth as the category continues to shift. We like where we are headed, but for the quarter, we were down 12% and down 17% year-to-date to $11.1 million in sales. Gross margins held up very well in the quarter at 32.3%, slightly lower than last year's at 32.8%.

Tight management of sales, marketing, overhead costs led to a slight operating loss of $142 thousand in the quarter compared to a $2.8 million loss in Q2 of last year. Adjusted EBITDA in the quarter was $5.4 million compared to $2.3 million in Q2 last year. That increases our 12 month trailing adjusted EBITDA to $37.8 million. I will now pass it over to John for some comments after which I will come back and discuss some product initiatives and areas of focus moving forward. John.

John L. Kimble: Thank you, Steven, and hello, everybody. This has been a solid quarter wrapping up a solid first half of the year. Steven has pointed out, everything has been going pretty much in line with our expectations. it is a plus when that actually happens. Our FOB centric business model is alive and well, Our first half shipments were over 75% FOB, reaching as high of a level as we have seen this decade. From a seasonality point of view, we have planned this year as a bit more front-weighted than normal given the strength of Super Mario. Since we do not have any new toy introductions in the second half supporting holiday theatrical releases.

And so far, that outlook is holding up. As I look at our financial results, I am focused on seeing gross margin dollars increase 3% in the first half to a little over $80 million. that is a pretty good outcome and reflects solid execution against what we saw as the opportunity. A bit better than the last 2 years and a couple of million dollars short of where we were in 2023. Ultimately, as a company, I wanna see us optimizing for margin dollars and not margin percentages.

As we do the extra work to identify incremental business outside of the traditional US mass market, I believe that is going to require more financial creativity in how we assess new opportunities. Which is something we are in progress on working through. But establishing more annuity like evergreen revenue streams while continuing to thoughtfully manage overhead should create another flow of long term bottom line profitability, which I feel we are only starting to wrap our heads around. As the majority of our overhead costs are fixed, I think we have an opportunity in this area given our momentum over the past couple of years. But it will admittedly take some time to build and prove out.

To that end, we managed a bit of leverage in both selling and G and A in the first half, offsetting gross margin percentage being down slightly. That led to a slight operating loss in the quarter, and a $5.7 million operating loss in the first half improved over the $6.5 million loss last year. In the same time period. Working our way down the P&L, that leads us to the topic of IEPA tariff refunds. As mentioned last quarter, we applied for refunds for tariffs we paid under the regulations which the Supreme Court ultimately struck down.

We are pleased to share that we have had essentially all of those funds refunded to us as of the second quarter close. We do not anticipate any more refunds going forward. In the quarter, we took the opportunity to revalue on hand inventory that was still burdened by those tariffs to essentially undo the excess carrying costs that the tariffs generated upon import. Thereby reducing the value on the balance sheet. The remainder of funds received we have recognized on the P&L this quarter as non operating other income of $6.8 million These refunds have raised our projection for pretax net income for the year so our Q2 tax estimate has been adjusted accordingly.

We have opted to back this gain out of our published non GAAP projections of adjusted EBITDA and adjusted earnings per share. With that said, adjusted EPS for the quarter was $0.25 and $0.09 for the first half of the year. That compares favorably to $0.03 of earnings in Q2 last year and being breakeven year to date EPS at the same time last year. From a balance sheet perspective, we finished the quarter at $60.6 million in restricted and unrestricted cash compared to $43.1 million at the same time last year. That increase is largely driven by stronger operating results and the aforementioned tariff refund.

As of July 17, the comparable cash on hand number was $47.1 million to give you an extra bit of context to remind you of the seasonality in our working capital. Our inventory level at the end of the quarter was $58.3 million, down from $71.8 million at the this time last year, and up a bit from $52.9 million last quarter. Finally, the Board has approved our sixth consecutive quarterly cash dividend of $0.25 per share. The dividend will be payable to shareholders of record as of August 28, and will be payable on September 28. And now back to Steven for some more discussion of what is ahead.

Stephen G. Berman: Thank you, John. Midyear is always an exciting time in the business as we get close to all the energy, and excitement around Halloween, and the fourth quarter holiday season. While also seeing the full lineup for the following year. Solidifying and receiving positive feedback from customers around the world. And as much as we have mentioned before, I cannot emphasize enough the traction we are getting elevating our level of focus and performance outside of The US. We are increasingly working with key existing accounts in Europe on exclusive launches while listening to our customer needs and curating new offerings to open new accounts on the strength of our broad brand portfolios.

We are additionally working with more distributors to specifically reach additional accounts in more fragmented markets. Our evergreen brands and categories with global appeal create a platform where products designed toward lower price points can reach a very wide audience when we could form the right partnership between our vendors in Asia, the licensors, and the right distribution partner to reach smaller accounts around the world. We have recently added 3 senior sales professionals to our global organization to further drive our business to higher levels. In addition to opening our first office in South America, an eye towards longer term growth there.

Turning back to the near term, I want to highlight some of the exciting areas as we move into the second half of the year. Our Disney Darling line continues to expand both in The US and in Europe with broader listings, which are in great sell throughs success so far this year. The snuggly stars Wishables segment has recently launched in The US in store and online and selected accounts with rapid sell throughs. You will see a much broader Disney Darlings assortment on shelf later this year supported by 360 marketing campaign across regions.

Our baby dolls continue to be the happiest baby dolls you will find in the marketplace, There is no crying at JAKKS and there is no crying in the Disney Darling line of products. In Disney Princess, our ages and stages strategy is introducing new core large dolls and matching dresses. Our 2 featured items will be grow and style Rapunzel doll and our interactive dance with me bell. The bell doll will be featured out of aisle at key US accounts as our must have princess toy this holiday season. With Disney Ily, we are introducing a new range with lower price points to further expand the product portfolio.

We are also investing with a focus on the serious Disney fan who has proven to be the most enthusiastic Illy consumer. We see an opportunity by increasing our reach to more of them, especially given the current breadth and depth of this line. Moving to our Sonic business. This fall, we are launching Giant Metal Sonic. The biggest most sophisticated feature large scale action figure we have ever released as part of our Sonic the Hedgehog product line. Inspired by the Metal Sonic from the Sonic Superstars video game, At over 20 inches tall, it recreates ultimate boss battle Metal Sonic faces off with a 2.5-inch sonic figure, which is also included.

With the menacing light up eyes, sounds, and slashing arm action, it comes in the 30 fifth anniversary packaging and we believe will top many holiday wish lists. These large scale toys have always been well received by the Sonic fan base, and we secured strong retail support and placement this fall. Also this fall inspired by the DC-Sonic crossover series, we have more new product arriving for the fall that we plan to announce soon. As I mentioned, fans should look forward to the new Super Mario inspired film product follow with a mix of core items and strong retail exclusives.

They will also see our continued support and innovation within our evergreen Nintendo business, including a number of items themed to Super Mario Wonder game. This past quarter, we also launched as a retail exclusive a new collector doll line of DC Comics characters. Featuring Poison Ivy, Catwoman, and fan favorite Harley Quinn. We saw a nice presale engagement, and these dolls continue to sell through well. In the fall, we will be mixing in a range of other classic Warner Bros. characters that fans love and have not been able to get in these product executions. In our Disguise costume business, beyond the properties already mentioned, our product line this year features other new entertainment releases.

Including Disney's Descendants 5, PAW Patrol: The Dino Movie, and Minions and Monsters, just to name a few. We remain on track to deliver a strong year of results in 2026, both financially and achieving potentially exceeding our initial plans. But more importantly, making substantial progress in building this business for growth in 2027, 2028, and beyond. In 2027, we have 2 top tier theatrical releases from Sonic the Hedgehog and Disney Frozen franchises lined up for Q1 and Q4, respectively.

But beyond that, there are a number of additional initiatives, some entertainment led, some working with our key customers on private label opportunities, and some opportunities just classic new toy lines with innovation driven by creativity of our design and marketing teams. In addition, we and the trade are extremely excited to launch our anime, manga, and VTube digital entertainer initiatives for 2027 and beyond. We are opening up brand new distribution channels while working differently with our well established current distribution partners to bring a lot of different offerings to the market, that we will discuss in more detail later in the year and throughout 2027. And now we will take a couple questions. Operator?

Operator: Thank you. At this time, we will conduct a question and answer session. To wait for your name to be announced. To withdraw your question, please press 11 again. Please stand by. We will compile the q and a roster. And our first question comes from the line of Eric Beder of Small Cap Consumer Research. Your line is now open.

Eric Beder: Great. Congratulations.

Stephen G. Berman: Thank you, Eric.

Eric Beder: Let me ask a question about the domestic market here. So we went through this shock. We are coming back out of it. How do you see the market change And I guess, what are the opportunities from that you can take advantage of?

Stephen G. Berman: Well, firstly, thank you very much. The things that we have seen versus last year is that the market adapted to the price changes that occurred throughout the industry with prices being raised where appropriate due to tariffs and also the volatility of the cost of petroleum with regards to resins as well as container costs. So I believe, at least for us, we have mandated and have achieved what we needed to going into this year. Which is reducing costs in various products to achieve bringing back the price points to the correct price points. That we see more volume in. Those are the price points during usually the spring and summer under $30 retail.

We have done that, adapted to it very quickly. In addition, we have dove very deep in with the value trade and the specialty trades. it is as the TJ Maxx's, the Ross's, and so on. Long as our strong major customers like Target, Walmart, and Amazon you know, going into the 5 Below's, the Dollar Trade, and so on. So we became very diversified through this. Both on a FOB basis and slightly on a domestic basis. So we are also seeing the appetite at retail that the POS is quite strong during the spring versus last spring. So the appetite's there for the right product at the right price points.

Eric Beder: Okay. So, basically, you can-- you can-- you have kind of matched with you kinda taken your advantage and kept prices where you would need to be and still maintain kind of the margins that we are seeing right now.

Stephen G. Berman: Yes. And plus. Yes. Okay.

Eric Beder: Now you mentioned about the change in international is a great opportunity. Some of these markets are not as concentrated as we are in The US. What does that mean for kind of the level of FOB you see internationally? And the potential for margins going forward on that?

Stephen G. Berman: Well, the great thing about international is it is growing on a great path. In EMEA, Latin America, South America, and Southeast Asia. So we are growing with 1, our product categories and lines are really more appropriate today than they were 5 years ago for the international market. that is 1. 2, we have the majority of the licensing rights that work in the territories. We have the right ones that are correct for our company. That being said, there is certain properties that work well in UK, Germany, and France that do not work well in Italy or Spain.

So we really are very quick to market with the right product at the right country at the right level. The same goes for Latin America, South America, and Southeast Asia. In addition, we have the FOB structure that we started since inception is very much a footprint internationally. So primarily, the majority of our sales internationally are on an FOB basis, which helps us then enhance our own margins internally giving a also a lower price to the customer which they could enhance their margin as a customer and also then have a lower price for the consumer, which gives them a great price point to have.

So all of those combinations on top of great product, great licenses, and strong momentum in all of our different categories. it is allowing us to grow pretty rapidly and going forward for the next 2, 3 years. We see strong growth, diversification, various countries and just some really strong initiatives that we see going forward.

Eric Beder: Okay and final question. What are you seeing in terms of, potentially either for new licenses, m and a, You keep on getting more cash. How should we be thinking about that kind of potential, I guess, near and longer term? Thank you.

Stephen G. Berman: Thanks for that question. 1 thing is, we are a strong, healthy balance sheet, which gives us a lot of strength going forward and looking at different opportunities. But the first part of the question, we have a lot of licenses in which we have not been able to announce yet because some of them are under contract. But our licensed portfolio is diversifying very strongly in each of our categories of business, the 5 different segments that we focus on. We are focused. We are a toy company. We are a kids consumer product company.

So while a lot of companies are focused on the kidult, which we are heavily focused on in the anime segmentation that we are moving into, and we are into that in certain other areas. We are truly a toy kids consumer product company, and we do not forget about kids. At the young age that will never change from that age group from birth to 6-7 years old. So that is the key focus that a lot of companies are moving out of, and that is a key focus that we are diving deeper in with the understanding of kidults is a great market, and we have been in it. Since we did double digits ago.

And you know, Nintendo and Sonic and The Simpsons. there is kidults involved, but the anime segment manga, VTubers, and digital entertainers are truly kidults and above. So we are in all the areas of business. I do think it is it is interesting when I hear people focusing on more in the kidult area and not the true toy business where we are focused on. We are focused on that acquiring licenses, If there is an opportunity in the acquisition area, in the segment that would benefit the company and our shareholders, We have been looking.

We are speaking to bankers and so on and so if an opportunity arose, we have the cash and the availability with banking To be able to get additional capital if needed. So that is on our platform. And going into this year, we are looking at going into the 2027 and 2028, which we feel very strong and confident about. We will be sitting with the board of directors looking at different capital allocation initiatives But, going through the first half of the year, having a strong performance, and then looking at what happened in last year back and so on and so forth.

We are just really focused on shoring up our business taking market share, and then looking to grow in the future.

Eric Beder: Great. Good luck for the rest of the year.

Stephen G. Berman: Thank you. Thank you.

Operator: 1 moment for our next question. Our next question comes from the line of Thomas Forte of Maxim Group. Your line is now open.

Thomas Forte: Yep. Steven, John, congrats on great quarter. I have 3 questions.

Stephen G. Berman: Thank you, Tom.

Thomas Forte: I apologize. They are kind of on the boring side. So they are points of clarification.

John L. Kimble: So the first point of clarification John, can you just clarify that there was no benefit to your gross margin in the quarter from the tariff refunds. Correct.

Thomas Forte: Thank you. Second, Steven, the pace of your anime related efforts is it the same as you expected last quarter?

Stephen G. Berman: Yes. Yes. We are extremely focused and extremely aggressively putting the initiatives together in these various segments that I brought up anime, the manga, the VTube, and enter digital entertainers. And the way that we are launching this is a really grassroots marketing with the specific retailers that are focused in this genre at first, and then a wide distribution initiative in the fall of 2027 with major of the main retailers that we know that we work with today on top of the actual anime call it Asian pop culture, distribution retail channels.

Thomas Forte: And then the same thing goes for international in France and Latin America. there is very strong initiatives in anime.

Stephen G. Berman: So we are very much on path, very strong with it. And very excited about it, but it is a very methodical initiative and launch. And long term expectations are still as strong as we were before.

Thomas Forte: Great. So, Steven, so just a quick follow-up there. So there is nothing expected for 2026 revenue. From anime related efforts.

Stephen G. Berman: Correct. Okay.

Thomas Forte: And then lastly, the media landscape even by the media landscape standards, seems to be a little more cloudy. Pixar had layoffs even though Toy Story 5 is on pace for a billion. You know, the Paramount Warner Brothers deal seems to be in a holding pattern. Is this creating any additional opportunities or presenting any additional challenges for you?

Stephen G. Berman: Not challenges. I mean, all in all, in the business environment, you see what the Walt Disney's company doing with Pixar and so on and so forth. Those are just common business practices that you go into and look for, you know, efficiencies and so on. The Paramount Warner Brothers deal it is still business as normal with all the, call it, the license and entertainment holders. Nothing's changed in the direction of where we are at as a company. We see a lot of opportunity right now just because of the traction that we have in the various segments that we are in.

And as I mentioned, a few minutes ago, as we are focused in the kids' area of business, a lot of companies are focused on kidult, we see a huge opportunity in growth in our normal segments. Addition to the kidult areas that we talked about. Our cosplaying, our disguise division, our Halloween division. I just see things very strong moving forward. And really looking forward to this year and going into 2027. We are very comfortable with the initiatives we are undertaking, our private label initiative that we have done with some major retailers is picking up very strongly. So we just diversified our company in a very healthy platform going forward.

Thomas Forte: You, Steven. Thank you, John.

Stephen G. Berman: Thank you. Thanks, Tom.

Operator: Thank you. This concludes the question and answer session. I would now like to turn it back to Steven Berman, CEO, for final remarks.

Stephen G. Berman: Ladies and gentlemen, thank you for your time today, and we look forward to speaking to investors after these calls today and tomorrow and looking forward to our third quarter conference call. Getting on the road. Thank you, everybody.

Operator: Thank you for participation in today's conference. This concludes the program. You may now disconnect.