Good afternoon, everyone. Welcome to the JAKKS Pacific First Quarter Earnings Conference Call with management, who will review financial results for the first quarter ended March 31, 2026. 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, and then John will provide some financial comments around JAKKS Pacific’s financials and operational results. Mr. Berman will then return with additional comments and some closing remarks prior to opening up the call for questions. Operator Instructions: 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 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 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 metric 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. And with that, I would now like to turn the call over to Stephen Berman.

Good afternoon, and thank you for joining us today. Our Q1 financial results were roughly in line with our expectations and comparable to our strong Q1 2025 results. And our near-term outlook is better than it was 12 months ago. We continue to see a degree of caution from U.S. accounts. I would characterize many of them as somewhat tentative about the year, many becoming more accustomed to the volatility we've been experiencing. They are, among other things, trying to forecast consumer health. Our industry continues to closely monitor higher oil prices given the implications for resins and transportation costs. As I said before, these are dynamics that come with running a global company. We have dealt with these sort of challenges before, and I'm confident we will successfully navigate our way forward in 2026 and beyond. We continue to invest significant time, effort and financial resources on some exciting new initiatives coming together for 2027 and 2028 while also executing in the year on our plan and pursuing late incremental opportunities. Globally, our net sales finished at $107 million in Q1, comparable to our first quarter results over the past several years, but down 6% from prior year. Toy and Consumer Product net sales were down 7% with costumes up in one of its smaller quarters. The decline was caused by lower results in North America at $78 million. It was down $15 million or 16%, with both our domestic and FOB business decreasing for the quarter. Roughly one quarter of that decline was due to a reduction in low-margin closeout sales related to our lower level of U.S. imports last year. Demand for our FOB model remains extremely strong with over 70% of our Q1 North American business shipped FOB. As mentioned above, we see the U.S. retailers remaining somewhat cautious trying to recalibrate cost pressures, pricing resilience and ultimately, consumer behavior. Our international business grew nicely in the quarter, reaching $29 million, a 38% increase versus the prior year. We saw healthy growth in both our domestic business as well as our FOB orders. Latin America declined slightly in the quarter, but grew margin dollars. Although slightly down from last year, we finished the quarter with a very strong gross margin of 33.4%, reflective of our robust product margins from new product introductions and reduced closeout sales in the quarter. SG&A expenses were down 4% in the quarter, offsetting some of the drop in margin dollars, but not enough to avoid a quarterly adjusted EBITDA loss of $371,000 versus a gain of $354,000 recorded at the end of Q1 2025. 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?

Thank you, Stephen, and hello, everyone. The first quarter did not distinguish itself dramatically to the positive or the negative, which is all that one can really ask for in the first quarter in the toy industry. Some of our drop in revenues is attributable to a new dress-up initiative last year not carrying forward in addition to some softness in our private label business. We're happy to see our gross margin percentage holding up at 33.4%, even if it is down 100 basis points from the exuberant 34.4% from this time last year. Deconstructing gross margin prompts the issue of tariffs. For your accounting teaser of the day, U.S. domestic products sold in the quarter would have reflected tariff expense related to when the product entered the country when those sales in the year ago quarter did not have that issue. As to whether Q1 2026 product was imported in Q1 or in previous quarters, there's a level of precision that we don't aspire to. I can tell you we paid $1 million to $2 million in U.S. tariffs in the quarter, where we paid less than $100,000 in the year ago quarter. That gives you a sense for order of magnitude of the numbers here in the quarter and as they relate to prior year. This is also a fine place to mention that we have filed for tariff refunds that we feel are eligible for reclaiming as a result of the relevant Supreme Court decision. We do not intend to go deeper on that topic until we have a much higher degree of confidence that refunds are forthcoming and have figured out any related implications. It would be nice to get some of this money back, but frankly, it's one of the least interesting things to talk about in the business today, so we're moving on. Back to the numbers, $36 million in Q1 gross profit, although down 9% from last year, that is still a very robust number for our business. So we're happy to have that on the scoreboard as we exit the quarter. Our selling expenses were flat from a margin perspective in the quarter, primarily due to favorable timing. On a full year basis, we would expect this area to grow at minimum in tandem with sales, particularly as we restricted spending against some marketing initiatives last year given revenue shortfalls. That projection does not anticipate downside scenarios reflective of higher shipping costs due to higher diesel costs. G&A delevered slightly, but also benefited from some timing elements. We are aiming to hold G&A spending to no more than revenue growth on a full year basis while also making the necessary expenditures to support new 2027 launches. Slightly softer results reduced our trailing 12-month adjusted EBITDA down by 2% to $34.6 million. On an adjusted per share basis, the quarterly loss of $0.17 is lower than the loss of $0.03 per share from this time last year. The diluted share count is based on roughly 11.4 million shares. Turning to the balance sheet. We finished the quarter with $64 million in cash, up a bit from $59 million last year. Inventory was flattish at $53 million, essentially unchanged from last year. As mentioned in our release, the Board approved a Q2 payment of $0.25 per common share payable at the end of Q1. The record date for the dividend is May 29, and the payable date will be June 29. And back to Stephen for some more comments about the year ahead.

Thank you, John. As first quarter is always the quietest quarter for us, I'd like to update you on what we see as some of our big drivers from a product and revenue perspective on the year. We are certainly thrilled with the positive reaction to the theatrical release of the Super Mario Galaxy movie has received. The success of the first film took some retailers by surprise. But this time, all accounts are ready and on board, allowing us to secure significant out-of-aisle and promotional space starting in early March. The film has created a lot of excitement in Europe as well with Smyths being a big supporter. The excitement continues with the Mario product line, and we look forward to the streaming announcement and launch later this year. The Sonic-DC crossover product has been expanded to all accounts this spring after being an account exclusive at launch. A new comic book in the series is dropping this quarter to keep the energy around this initiative fresh and top of mind. As we mentioned last quarter, SEGA is recreating a lot of excitement around Sonic's 35th year anniversary, and we continue to work with them very closely as their anchor toy partner worldwide. One example of a new collaboration we are doing with SEGA is adding Sonic into our outdoor seasonal business as we reposition that segment into our active and early play segment, which is really a better description of what that team focuses on and the products we market there. The speed and energy central to Sonic's DNA makes them a natural choice for products in this area, and we've been excited to share this range with customers this month during our spring 2027 line reviews. We'll have more details about some of the key items launching in this segment in the months to come. We are seeing nice support for our Disney Princess, Style Collection, ily and Frozen lines with sell-throughs in these segments continue to be very strong. These are evergreen brands and play patterns for young children. We nonetheless are constantly introducing new items to the line and ensure we are earning our place in retail assortments every season. Our 6-inch doll line has been refreshed this spring and is selling extremely well. We've also seen positive reaction to some of our new role play introductions in the Style Collection line. We have strong coverage here at both the below $10 and below $20 retail prices, which are great values and also work especially well given the time of year. We continue to steadily expand our Action Sports portfolio where we see additional opportunities. We are happy to share with you that we recently have added the Almost, Darkstar and Duster brands to our Skateboard portfolio. In our Disguise business, we announced our launch of KPop Demon Hunters during the past quarter. We're happy to be able to deliver authentic costumes for that enthusiastic fan base. The success of the Mario Galaxy film is generating more demand for these costumes. We're also seeing a lot of energy behind Pokémon, which is celebrating its 30-year anniversary this year with significant marketing programs. Our European business for costumes continues to grow steadily. We are shipping several new customers in the U.K. as we have transitioned in as a vendor for some accounts who were previously relying on their in-house sourcing teams. And last, but not least, since our last call, we have announced our new initiative to capitalize on what we see as a significant opportunity in the world of anime. As we expressed earlier this quarter, JAKKS Pacific is launching a large-scale next-generation Anime, Manga and Digital Creator cultural platform, one of our company's most ambitious and strategically significant initiatives. Developed over more than two years, this multifaceted investment positions JAKKS at the forefront of one of the fastest-growing segments in global entertainment. Anchored by premier anime partners and top-tier collaborators, the platform creates a strong foundation for sustained global growth, enhanced monetization and long-term shareholder value. Through this initiative, JAKKS will design, manufacture and market a broad portfolio of premium collectibles, figures, plush, tech accessories, costumes and role-play products while expanding into high-growth live event and influencer-driven merchandise opportunities. Supporting this effort is a next-generation global distribution infrastructure spanning direct-to-consumer, specialty and experiential retail and promotional channels designed to accelerate speed to market and deepen consumer reach worldwide. The objective is clear: to lead this category at scale. This platform expands our global footprint, accelerates revenue opportunities and strengthens our connection with highly engaged fans that are shaping the future of pop culture. We're not simply entering a category. We are building a durable, repeatable platform designed to deliver sustained multiyear value, building on its legacy of successfully commercializing leading entertainment properties. JAKKS will continue to roll out our partnerships and product lines through 2026 with the initial launch expected in 2027. We are only one third of the way through the year. And although it continues to be very dynamic, we feel confident we are still on track to achieve our goals for this year, inclusive of setting up for an even better and stronger 2027 and beyond. And with that, we will take a couple of questions. Operator?

Operator Instructions: Our first question comes from the line of Thomas Forte of Maxim Group.

I'll limit myself to three, and I'll go one at a time. So Stephen, the anime product line sounds amazing. Can you give just high-level comments on what success could look like, including the relative gross margin and contribution margin for that product versus your other efforts?

Thank you. So firstly, this initiative that we undertook has been well over two years working with many of these companies that are in Japan and the way that the companies oversee their IP is very stringent and very strict. So we went to them to various large enterprises, Aniplex, which is Demon Slayer, VIZ Media, Naruto; KODANSHA, which is Attack on Titan, and several others from Cover Corp and Crunchyroll. It's been a long process of making sure that when you create products in this genre, it has a very strong fan base that you have to really focus on and cannot veer from. So we had put together a plan; we hired across the board a very young, passionate group in the Anime, Manga and Digital Marketing areas. And we put together a plan of products from collectibles to kid-adult items, which is very strong compared to some of the other properties, to tech accessories, areas that the fan base really likes. In fact, for the VTubers and digital marketers, we created light sticks for them to use at concerts, but all with the authenticity of the actual IP and directed towards the fan. So the launch itself is starting in 2027. We will get some of it shipped in 2026. It's a very broad launch to various initiatives on a retail basis. So think of Miniso, GameStop, independent retailers as well as venue sales. A lot of these concerts, movies and initiatives are done in venues, and there's never been real authentic merchandise at the venue. So we have structured and are working with several different partners to do the venue sales as what you would see at concerts like a Taylor Swift concert or Kendrick Lamar where you have the merchandise that goes straight to the consumer. So all these initiatives are being really launched together at one time in various segmentations and with various collective initiatives with each of the IP holders. Inclusive, you will see a broad array of product in totality of all the strong Anime, Manga and VTube IP in one segmentation at retail instead of having one licensor do one IP and another one do another. We've collectively worked with these IP holders to make sure that they were present and focused together so the consumer knows where to buy them. On the part of margin enhancement, because they're somewhat more focused on kid-adult, the price points will be slightly higher and the margin in our area for JAKKS Pacific will be slightly higher.

Excellent. All right. So then second of three, I recognize a lot of your product releases are coinciding with movie premieres, but I was wondering for your other SKUs, how should we think about the timing of new product rollouts and if you're holding anything back given the current market challenges?

First, the market challenges, as we mentioned in our prepared remarks, we're used to these challenges. It happens. JAKKS has been public 30 years. We've been around 31 years. So you have to work through them, work with manufacturers, with the container companies, work with the retailers and work very closely and very entrepreneurially to get through these different times. But with these different times, there's also a very strong opportunity. So as we mentioned in our call, the Super Mario movie itself has done phenomenally well. The product line is expansive. The sell-throughs are great. We will have the forthcoming streaming release, whenever Nintendo and Universal announce it. So that will have its legs and continue with big tailwinds behind it. Then there's a lot of different initiatives that happen in our Disguise business. You have the Super Mario movie, Toy Story 5, Descendants 5, PAW Patrol movie, Minions movie and Demon Slayer, which is the anime that we mentioned, which is from Aniplex. So in each of our segments, we have some great excitement. But at the same time, some of our basic evergreen business is what's doing extremely well. In our Disney area, our Disney Darlings, our Disney Style Collection, our Disney Princess has seen sell-through strong and profit dollars up. So that's exciting. Then you go into going into the year, we also have various other movies that are coming out that we have a nice product behind, which is Moana live-action, some Minions and other IP that's coming out. But that on top of our evergreen business is really what's keeping us going and strong. And when we start building throughout the year and going into 2027 and 2028, our lineup, I couldn't be more proud as CEO and Co-Founder. It is so strong in the majority of all of our categories from our seasonal business with ABG, where we have Element and Roxy and Quiksilver, which is now just starting to take some real traction getting out to the spring and summer retailers. It's a really exciting time. But at the same time, it's a cautious time because of oil prices and things that are unknowns. But those unknowns, to us, are just part and parcel of our business, and we're really excited. I'm really excited to get through the year. This is a quiet first quarter; it's a very quiet period to talk about because there are so many things that are happening through the year. But as the year goes by, we will be going on the road, speaking with retailers and investors. It's really an exciting time at JAKKS.

Excellent. All right. And then last one. So another high-level question. So there are some people who believe that AI will lead to an explosion in video content, which could materially increase your opportunity set for licensing. I would appreciate your thoughts on that.

With our IP holders, many of them are obviously very strong and very focused on what AI could do in production and the quickness to market for digital animation and various initiatives. So I think it's going to be very much pick and choose by each of the large-scale entertainment companies whether it's The Walt Disney Company, Netflix, Amazon. We're there to help them out in what they do. And the one thing that we've seen because these things are coming quick to market now is that the time it takes to develop is much less than in the past. The one thing that JAKKS is great at is to go to market and do things very quickly. And I think that's where we're going to be with working with these companies to get things into the market quicker than a normal company can just based on our scale and what our DNA is.

Our next question comes from the line of Eric Beder of Small Cap Consumer Research.

Congratulations on the solid start to the quarter. When you look at it in terms of the consumer, in terms of normalizing in the U.S., how should we think about how the flows are going to happen here? And when do we know what is going to be the new market or what is the market we're going to see post all the disruptions we had last year in the U.S.?

I think at the end of the day, product is king. So if we have the right product and you have the right price points, the consumer will be there, especially in our area of business where whether it's a holiday or a birthday, parents and grandparents are likely to spend on toys. But in this environment, I think price points are very much a focus during the first nine months of the year and ensuring that we have the right price points; the majority of our products are in the $10 to $30 range. Then during the fall period, during the holiday period, you need to have that Wow IP, the Wow item, the Wow product to get that bigger purchase. And I think we have all that across the majority of our divisions. Remember, primarily, we are an FOB company. So we plan very far ahead differently than a domestic company. We have things in line with all of our major retailers worldwide to enhance whether it's exclusivity on products and categories so they could actually enhance their margin dollars and also market those products directly to consumers at the same time, not having price comparisons done by other retailers. So that's a very big enhancement. I don't know if I mentioned earlier, but we had our best EMEA quarter since 2015 and our best ups in France and Spain in over 15 years. So we're talking U.S. and I'm talking worldwide. We see growth internationally as we're expanding with more IP that goes appropriately in specific territories and countries, both in EMEA, Latin America and now really focused on Asia Pacific for the next few years. So that's great. And in the U.S., you just have to make sure you have the right product for the consumer at the right price point, and we monitor that very, very closely on a week-by-week basis.

You kind of hinted at this. How do you look upon this anime management thing in terms of international? Are you getting worldwide rights for most of these players? And how can that help drive international even further?

So the IP is really selective by each territory and country. In anime, and speaking broadly for Anime, Manga and VTubers and digital entertainers, each country is vastly different. For instance, in EMEA, France is #1 for anime. It's known throughout the world as they have such a huge fan base in France. Then it goes to Italy and then the U.K., and after France, actually, it's Latin America. Mexico is very big. So you have to really pick and choose. You can't just think that each of these IPs are going to work in all these territories. So we look at the fan base. We speak to the content holder, the IP holder, and we work closely with them as they have decades of information about where their fans are and where they're growing. We follow what they say because they know their IP better than anyone, and then we take our team and really cultivate it per the market and what's appropriate price point-wise, item-wise and content-wise because some of the items that we make for America may not be appropriate for Europe or for Latin America and vice versa. So we really are focused in each of these areas and segmentations: the right product, the right territory, the right IP.

Great. And when you look at international, it keeps on growing as a percentage of the business. I believe Q1, it was about 30%. Longer term, what should we be thinking of as the goal for international versus U.S. penetration?

Well, the goal is growth, but that growth won't be uniform across all regions. The reason why EMEA has grown significantly is we opened up five different distribution centers in various territories to allow us to penetrate the retail market more effectively. It's much smaller accounts throughout Europe than it is in America, so you need this distribution platform. Our domestic business has grown internationally because we have to have backup inventory for all these smaller customers. We are looking for growth and market share, also garnishing new IP that's appropriate for the marketplace. It's a combination. Each country will have different growth than the others because certain IPs work great in some countries and not in others. For example, you'll see much faster growth in anime in France, and you'll see a much stronger growth in our general toy business in the U.K. versus France just because of the size and shape of those markets. So it's a dissected approach by country and territory and the correct IP. You'll see that enhance growth, but not uniformly throughout Europe unless the IP works across Europe.

Okay. And last question. You paid out a dollar dividend last year and cash continues to rise. How do you leverage that? How should we look upon that as you being able to deploy capital when you want to?

So with capital allocation, we bring this up during our Board meeting. In fact, we just had one and it's something that we review. Based on the environment, cash is king right now. We are investing capital more than normal with regards to the anime initiatives, the tooling and all these new initiatives. It's costing us capital—not material on an extraordinary scale, but it does require capital. And with that, we're going to be doing much more marketing, more influencer marketing to the consumer in some of these areas. We have some surprising new initiatives that we'll announce later in the year that will cost capital, but nothing to where it's a huge expenditure. It's more than we normally spend in tooling, marketing and overhead for these areas and new initiatives. That being said, we will look at what we generate in cash through the year and evaluate what's appropriate. We are seeing opportunities on the acquisition front. We're getting more inbound calls from companies that are looking to sell. So there's a nice opportunity out there. We just want to make sure when we utilize our cash, we utilize it on an accretive basis and not just to use the cash to use it.

This concludes the question-and-answer session. I would now like to turn it back to Stephen Berman for closing remarks.

Thank you very much. I'm sorry for the brief call and also my voice during the prepared remarks; I had a cold. But we're looking forward to speaking shortly and getting on the road and seeing some of the investors throughout the summer and going right into fall. So thank you very much.

Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.