Good afternoon, everyone. Welcome to the JAKKS Pacific Fourth Quarter and Full Year 2025 Earnings Conference Call with management, who will review financial results for the quarter ended December 31, 2025. JAKKS issued its earnings press release earlier today. The earnings release and presentation slides related to today's call are available on the company's website in the Investors section. On the call this afternoon are Stephen Berman, Chairman and Chief Executive Officer; and John Kimble, Chief Financial Officer. Stephen will first provide an overview of the quarter and full fiscal year, along with highlights of recent performance and current business trends. Then John will provide some additional comments around JAKKS Pacific's financial and operational results. Mr. Berman will then return with additional comments and some closing remarks prior to opening up the call for questions. Before we begin, the company would like to point out that any comments made about JAKKS Pacific's future performance, events or circumstances, including the estimates of sales, margins, earnings and/or adjusted EBITDA in 2026 as well as any other forward-looking statements concerning 2026 and beyond are subject to safe harbor protection under federal securities laws. These statements reflect the company's best judgment based on current market trends and conditions today and are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected in forward-looking statements. For details concerning these and other such risks and uncertainties, you should consult JAKKS' most recent 10-K and 10-Q filings with the SEC as well as the company's other reports subsequently filed with the SEC from time to time. In addition, today's comments by management will refer to non-GAAP financial measures such as adjusted EBITDA and adjusted earnings per share. Unless stated otherwise, the most directly comparable GAAP financial metrics has been reconciled to the associated non-GAAP financial measure within the company's earnings press release issued today or previously. As a reminder, this call is being recorded. With that, I would now like to turn the call over to Stephen Berman.

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

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

Thank you, John. The biggest story for us at the start of this year is certainly the theatrical release of the Super Mario Galaxy movie from Illumination. We are extremely excited for this new product launch, which will be available for purchase late February. The best-selling scale figures are back in line along with new scale of many figures, new Playsets, Plush and more. The film releases April 1, and our line gives fans of all ages the chance to recreate their favorite film moments in the movie. This is a follow-up to the Super Mario Brothers movie, which went on to generate the largest theatrical box office of 2023. So you can imagine we're beyond thrilled to be back in the mix again here supporting this launch. Our Sonic DC crossover product launch received a great response in the fourth quarter with exclusive retailer launches in both the U.S. and in Europe. Distribution of that line is going wide in the new year with new items like the DC Sonic Batmobile being added at key retailers. Sega is celebrating the 35th anniversary of Sonic all year with various activations. We are participating by launching special packaging, commemorating this event along with some exclusive items. We have other exciting news and plans around Sonic in 2026, but we're not ready to share those today, but stay tuned. Moving over to our Disney Doll business, we'll leave the Holiday season and Toy First season with solid momentum behind Disney Darlings, our latest homegrown Disney IP and the strong position of Style Collection and Disney's ily. For those of you unfamiliar with Disney Darlings, our launch in the nurturing doll category, similar to our ily line, these are not simply caricatures in figural form, but an approach we've developed in a partnership with Disney to bring new and innovative ways for our consumers to engage with the Disney brand. The intent is to spark the emotional response consumers feel when engaging with Disney, the joy and happiness when engaging experiences a bit of the Disney magic. These are truly beautiful dolls delivered with premium quality. And what's even more magical is that unlike other baby dolls, they are 100% joyful and happy, and there's no tears and no crying. Our soft launch of this line sold through well in fall, leading us to expand listings in the U.S. this year as well as a lot of interest and commitments internationally coming out of this past month's Toy Fair. We've seen enough positive feedback to feel that we have a winner here that can steadily build this year and into the next and to being another solid foundational piece of business for us. Congratulations to the team on this one. We're also supporting the live-action theatrical release of Moana in early July this year. Moana has been a steady part of our business for over the past 10 years going back to the original animated release in 2016. We're happy to be able to bring back some of the most popular toys we've created over the years as a new audience engages with the story this summer. Our focus items include Moana's Necklace, Maui's Fish Hook, all the more aspirational with The Rock reprising his role in the film, our Hei Hei the screaming chicken and our super popular Moana large dolls. We also have a couple of additional exciting developments coming on our Disney Doll front later this year. In the other part of our Doll division, we continually steadily build our private label business with major retailers in the U.S. and expanding into Europe. It's an extremely broad array of dolls, Role Play toys, and related subcategories that allow the retailers to make additional margin while the consumers get a high-quality, on-trend design product at a much lower price. In this area, we have several new launches that we will discuss in the following quarters that will be launched during the fall holiday season. In 2025, the company saw momentum across its Action Sports portfolio with Element emerging as a powerful growth engine in the second half of the year, expanded distribution and deepened retail partnerships most notably with Walmart, Amazon, and Academy Sports and outdoors, significantly increased brand visibility, strengthened shelf presence, and drove meaningful gains in sell-through during the critical holiday period. These results reflect the company's disciplined execution, strategic product innovation, and unwavering focus on aligning with leading retail partners to deliver compelling value within the Active and Early Play category. Looking ahead, we are highly encouraged by rising retail confidence and growing consumer engagement across Action Sports as the industry builds towards the 2028 Summer Olympic Games. Skateboard sales trends are once again approaching elevated levels seen in 2020 and '21, fueling the renewed demand and sustained category momentum. This strengthening trajectory across skateboards and the adjacent Action Sports segments positions the company to further accelerate investment in innovation, expand strategic partnerships, and drive durable long-term brand growth and shareholder value. With our Disguise business, we supported a wide range of new theatrical releases, we're excited to support Toy Story 5, which debuts in late June, as each installment of this franchise has been great for the costume business. Also from Disney will be the Moana release and the latest Ascendant's installment, Wicked Wonderland. The second half of this year also has new movies coming from Minions as well as PAW Patrol. We will have some exciting new additions to the lineup coming from some new licensor relationships we've been busy establishing. So keep an eye out for these announcements coming soon. Finally, Halloween is once again on the weekend in 2026, Saturday, to be specific. So ideally that drives more energy and activity beyond traditional trick-or-treating. Those give you some highlights we're seeing coming into the market in the first half of the year. We remain very focused on some additional launches that we will have more impact in 2027. Even if we can drop in some initial exclusives before the end of this year. Although a lot has changed in the past 12 months, we feel we are stronger in position today with more paths to grow than a year ago. Currently, we see this year as a low to mid-single-digit top line growth year with a continued focus on expanding margins while we set up to maximize the potential of several potentially impactful new launches in 2027. There's still a lot of work to do, but I'm pleased with our progress to date and been able to share more publicly about some of the exciting things we've been working on. And with that, we'll take a couple of questions.

And our first question comes from Eric Beder of Small Cap Consumer Research LLC.

There's a lot happening here. Let's discuss the entire FOB model. As you know, that model was disrupted last year due to tariffs and other factors, and we're working on ramping it back up. When assessing that model, are your retailers expecting it to return to its previous state for 2026 and beyond? What adjustments are you making? If the model is not returning to its previous form, what changes are being implemented regarding how both your retailers and your company are managing the FOB model?

Firstly, thank you, Eric. We're continuing to focus on an FOB first business that's been since inception. Last year, we stayed very focused on it as well, but we had to adapt based on where we manufactured, whether it was in China, Indonesia, so on and so forth in Southeast Asia. So we had a slight decrease in FOB, but not materially. Back into 2026 and '27, we will be moving forward again on an FOB first basis. At the same time, a lot of the major retailers in the U.S. have a first cost of sale program that we work with them to have the impact of the tariff be less of an impact to them and ourselves at the same time. So we're working through some of the major customers and secondary customers on a first sale basis. So we've learned a lot through this tariff congestion and confusion throughout last year, but we have a pretty good handle on it with our retail partners who we've worked extremely closely with. And our sales teams that are really entwined with our major retailers have worked very hand-in-hand with the buyers as well as the financial side of our retailers. To make sure that we stay focused on an FOB basis because it benefits both the retail for them to make more margin, benefits JAKKS as a sense of cost of capital, and it hopefully allows the consumer to have a little bit lower price and bringing it in on a domestic basis.

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

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

This year was challenging for the entire toy industry. You have been able to maintain a solid cash position with no debt. How have you leveraged that? It seems like you have made progress based on your plans for 2027. How have you managed to add new licenses, expand relationships, and establish yourself as the preferred licensee moving forward?

One important aspect is maintaining a healthy and clean operation along with a strong balance sheet, which is greatly appreciated by our licensors. Some companies face financial difficulties, and licensors are hesitant to risk their opportunities with someone who might jeopardize their intellectual property. As a result, we have been very careful not to compromise our top-line revenue in ways that would reduce our profit. We adopted the right strategy concerning retail operations and inventory management to avoid pushing for higher sales at the expense of our margins. Our focus has been on margin improvement alongside healthy sales, and as you may have noticed, we improved by 380 basis points for the year and the quarter. We prioritized enhancing our margins, which has been positively received by retailers and licensors alike. Simultaneously, we have engaged in extensive travel worldwide, exploring new initiatives with some exciting developments on the horizon that we look forward to sharing once deals are finalized. During this time, we have also concentrated on aggressively building for 2026 and 2027, with our licensors fully aligned and supportive of our efforts.

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

Yes, I'll add to that. To your point, the first quarter was quite strong for us this past year. We have some momentum with the release of Super Mario Galaxy, as we mentioned earlier. However, as our long-time listeners are aware, Q1 is typically our smallest quarter. I’ve noted before that Q1 for us, or perhaps for everyone in the industry, is akin to the first quarter of a basketball game; if you don’t rack up too many fouls by the end of the first quarter, you should be fine. So, we are really considering the first half and the second half. Regarding how we measure up at the end of Q1, honestly, we’re not overly concerned about it.

And our next question comes from Gerrick Johnson of Seaport Research Partners.

So one on POS. What was that in the quarter? How did it trend and evolve through the quarter? And then inventory at retail, what does yours look like? But also more broadly, the industry, is there any pockets of inventory that could clutter and affect the industry that way?

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

I want to discuss two major retailers in the U.S. We experienced a 21% decline year-over-year at one retailer and a 4% decline at another. Our retail inventory is very tight, which is a positive sign. As I mentioned earlier, we chose not to chase top-line revenue while being concerned about inventory levels after the holiday season. Instead, our focus was on shipping what was appropriate and ensuring profitability. I also want to clarify that our margin for the fourth quarter was 380 basis points higher than the previous year.

Yes. No, that's impressive. And so how would you describe the promotional activity and perhaps sales allowances in the fourth quarter?

For us, the promotional activity was fairly normal, or slightly below average, particularly compared to many of our competitors who engaged heavily in discounting and promotions. Overall, it was a cautious year due to tariffs and uncertainty regarding consumer demand. We worked closely with factories and retailers and observed significant promotional activity in November and December, but we did not participate much in it.

This concludes our question-and-answer session. I'd like to turn it back to Stephen Berman for closing remarks.

Ladies and gentlemen, thank you for today and finalizing and finishing 2025, and we are extremely excited for '26 and '27 and look forward to our next call. Thank you again.

This concludes today's conference call. Thank you for participating, and you may now disconnect.