JAKKS Pacific, Inc. (NASDAQ:JAKK) Q3 2025 Earnings Call Transcript

JAKKS Pacific, Inc. (NASDAQ:JAKK) Q3 2025 Earnings Call Transcript October 30, 2025

JAKKS Pacific, Inc. misses on earnings expectations. Reported EPS is $1.8 EPS, expectations were $2.6.

Operator: Good afternoon, everyone. And welcome to JAKKS Pacific Third Quarter 2025 Earnings Conference Call with Management, who will review financial results for the quarter ended September 30, 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 financial 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 future performance, events or circumstances, including the estimates of sales, margins, earnings and/or adjusted EBITDA in 2025 as well as any other forward-looking statements concerning 2025 and beyond are subject to safe harbor projection under federal securities law. 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 in time and 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 direct 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. With that, I would now like to turn the call over to Stephen Berman, the floor is yours.

Stephen Berman: Good afternoon, and thank you for joining us today. As we reflect on our year-to-date results and think about the year coming to an end, the tariff levels have varied significantly, starting at 10% and then ranging from approximately 30% to over 140% depending on source and origin, creating added uncertainty for retailers and manufacturers alike. This has continued to delay holiday purchase orders with many seasonal programs shifting from August to October. In response, we have taken a deliberate and conservative approach for the current fiscal year, prioritizing margins, applying careful pricing discipline, maintain tight cost controls and emphasize the most profitable product opportunities. Lean inventory management, target lower inventory levels and accelerate sell-through across markets to maintain balance sheet strength.

Future forecast product strategy, invest in a robust and innovative 2026, ’27 product pipeline designed to resonate with global consumers and support long-term brand growth across a broader category of assortments. Direct import FOB orders, the foundation of our business since inception. They are placed months in advance to ensure factory scheduling and retailer logistics. However, major U.S. retailers pushed back their Halloween and fall toy set dates by nearly 2 months, effectively removing two of the most important selling months from the calendar. This shift combined sharply with higher product costs, drove a significant reduction in Q3 sales orders, extending the softness we saw in Q2. The impact cascades across the full year. Without August and September sales, retailers lose the early read they traditionally rely on to chase winning products ahead of the holiday season.

Now reorders will happen when retailers and wholesalers step in, commit inventory and bet confidently on the right products at the right price. That has never been our approach to the business. We are not changing now. Although we always selectively support a limited number of high confidence SKUs for backup inventory, with product currently tariffed at 30% of cost upon import, we have chosen to be even more selective of how much of that we want to do. Our worldwide inventory was around $72 million at the end of Q3, inclusive of some tariff expense. Although that number is higher than the $64 million from this time last year, the driver is our international expansion as our high U.S.-held inventory is actually lower compared with this time last year.

We are not going to build domestic inventory in the U.S. this year on the premise that retailers will suddenly want the product they were unwilling to buy in Q3. Year-to-date, net sales in our overall business are down 21% versus last year, 24% in Toys/Consumer Products and 8% in Costumes. For the quarter, Toys and Consumer Products was down 41% to $156.1 million, our lowest Q3 in a very long time. Costumes were only down 4% to $55.1 million as we scramble to recover some of the lost sales from Q2 while also continuing to steadily grow this business internationally. We talked about this year being an exercise in patience, and I think that continues to be the case. We continue to partner closely with our China-based factory network, which I just returned from another trip to Asia to personally share growth initiatives we have in the works for 2026 and ’27 and gain alignment around our shared businesses.

Many of our largest factories are continuing their expansion in other Southeast Asian countries, and we will continue to work with them to ensure we have the maximum flexibility to adapt changing conditions and restrictions. We are moving forward with the presumption that products will be burdened with a 30% cost upcharge from the levels we would normally expect. This is reflective of whether the product is coming from the established, efficient China supply chain and tariffed at 30% or whether it’s coming from the more in-progress, higher cost, but currently approximately 20% in Southeast Asian territories. This is now enhancing our product development decisions for 2026 and beyond. It is obviously something we couldn’t plan for in 2025. In addition, we believe retailers will learn from the holiday selling season what level of price increases consumers are willing to bear, which should give them more confidence in placing orders that are consistent with the FOB product ordering time line.

Since this disruption started back in early February, we have been clear on our financial objective to avoid panic, preserve cash and navigate to safer clear waters. To that end, although our top line has dropped, we are pricing for tariffs, as we said we would, and our gross margin percentages has held reasonably well accordingly. At 32% in the quarter, it is down from last year, 33.8%, but we still feel is a strong result as inevitably, the addition of tariff costs erodes a percentage even if it’s 100% recouped by higher selling prices. Moving down the P&L, we have looked to reduce spending and delay or cancel projects and initiatives without clear near-term payback. Lower sales have also meant less work in our U.S. warehouse, providing additional savings.

Overall, SG&A in the quarter was down 6% and is flat on a year-to-date basis. The cumulative impact was an adjusted EBITDA of $36.5 million in the quarter, down from $74.4 million in the same quarter last year and reduced our trailing 12-month EBITDA to $29 million. I will now pass it over to John for some more details on the financials, and then I will come back to further discuss some things we are doing this holiday season and have in the works for 2026 and beyond. John?

John Kimble: Thank you, Stephen, and hi, everybody. Starting with an additional bit of cleanup on sales. Stephen explained some of the details about how FOB sales were particularly challenged this quarter. To add a bit more context around that, 93% of the year-over-year drop in sales came from FOB shipments. That number was actually over 100% in Q2. Uncertainty really isn’t the friend of buying larger quantities of product with a longer lead time. Separately, as regular listeners know, our international business was booming earlier in the year, reflective of a multiyear effort to elevate our performance outside the U.S. As we mentioned last quarter, we knew that it would slow down a bit in Q3, and in fact, it did. As those in our industry know, the dividing line between Q2 and Q3 from an FOB sale perspective is always a bit arbitrary, yet another reason why we are always talking about full year results.

So there’s nothing material happening that changes the story when it comes to international. This is more the reality that looking at quarterly results in a seasonal business will often give you lumpy results. Year-to-date, international as reported is roughly flat, minus 0.3%. If we liberated Canada from our North America reported numbers, we’d be up 4% year-to-date for the non-U.S. markets. Overall, we’re still very bullish about what’s happening with international. We are steadily dialing up the sophistication level of how we’re approaching a wide range of markets, following a walk-before-you-run approach. To make this a bit clearer, we see the U.K., Western Europe and Mexico at one level of maturity. Eastern Europe, Central and South America are beginning to take shape behind them.

And from there, you can contemplate the Middle East and revisiting our approach across Asia. But we feel all these markets have a line of sight to grow faster than the U.S. in the years ahead, particularly when it comes to our core business. You can hopefully see why we continue to talk about the meaningful international opportunity for us. From a forecasting perspective, the challenge is that the European business, in particular, is more domestic replenishment-centric as it scales up, which leaves us in the more traditional we’ll-know-when-we-get-there camp, planning for weekly replenishment as we approach the holidays, with added complexity around inventory management. Through the lens of the various product divisions, the macro situation is smothering most bursts of goodness that are trying to fight through and be heard.

Sell-in for Disney’s Moana 2 has been a favorable comparison year-to-date versus prior year. Saga’s Sonic continues to do tremendous business and has had great weekly sell-through all year and the DC-Sonic mashup we teased last quarter is flying off the shelf this month as well. We do not have any toy rights to significant second half of 2025 film releases, which always makes for a challenging comparison. Many of our newer owned brand or private label launches were derisked by the retailers and by extension, have suffered from delayed planogram sets. These are essentially downgraded to fall soft launches and ideally, we’ll get enough traction to reset in the new year. Touching briefly on POS and building on Stephen’s comments on timing. Frankly, some of the key accounts in Q3 were representing a product line that looked more like a greatest hits of things from spring that didn’t sell, more than a lineup that was particularly inspiring.

Everyone has been pushing forward stock on hand that was landed prior to tariffs and customers have been scrambling to adapt their 6- to 12-month rolling outlook as the rules have moved around. When it comes to pricing direct import product that shipped immediately after the 100-plus percent window closed, many customers had to deal with paying the tariff on top of their cost of product, which would include the profit margin for a company like us, and in the case of licensed goods, also include the licensor’s royalty share. This snowballs the hurdle rate that the retailer is then looking to mark up from, which is why you’ve seen some retail prices out in the marketplace that are 20%, 30% or 40% more than what you might have seen pre-tariff regime.

Most retailers are trying to protect the lowest retail price points while balancing the product line architecture and feeling out where consumer price sensitivity reaches a breaking point. We feel it’s a mixed bag as to how they’re doing on this front with room for improvement. We are continuing to work with all our U.S. accounts to make sure they understand the various Customs programs that exist to minimize their tariff exposure. Although these are tedious bureaucratic processes, we are supporting them to enable the lowest consumer prices and we can continue to support our retailers with the margins they expect from their direct import business. We are also engaging licensors to recalibrate royalty rates for newly relevant selling methods especially where the customer is still buying FOB, but we are paying the tariff on their behalf.

We need the licensors to recalibrate rates here to ensure we are not paying a royalty on the tariff value because if we are, we will have to further move up price which exacerbates the increase in consumer prices. That math is already unfortunately baked into any tariff-increased domestic prices and is another reason why we will continue to move customers away from domestic ordering whenever we can. With that being said, in the quarter, U.S. POS at our top three accounts tended to be relatively subpar from a dollar perspective and worse from a unit perspective. On a year-to-date basis, in aggregate, we’re down mid-single digits with retail inventory up mid-single digits. Keep in mind, however, when retail changes price on product, it revalues all the inventory in their system.

So I can’t really give you an apples-to-apples read on year-over-year retail inventory based on the information that flows back to us. With a similar bit of logic, from an industry data perspective, we feel while there continue to be pockets of exuberance around trading cards and construction toys originating from Denmark. But for the most part, any other comments about dollars being up is more pricing than unit-driven consumer demand. Turning back to our P&L. Gross margin was a respectable 32% in the quarter and is 32.8% year-to-date. Cash spent on tariffs this year totaled around $8 million through the end of the quarter. Some of that amount has flowed through the P&L and some is balance sheet inventory value. Belt-tightening SG&A resulted in a good quarter, but clearly, we have lost a lot of scale with this level of top line drop.

Things like interest income year-to-date have been outpacing interest expense associated with tapping our credit line, which we did some of this quarter. Adjusted diluted EPS for the quarter was $1.80, down from $4.79 this time last year. On a year-to-date basis, we’re at $1.79 compared to $4.50 for the first 9 months of last year. We finished the quarter with $27.8 million in cash, up from $22.3 million last year. Understandably, our AR is down substantially. We are nonetheless comfortable with our flight path here on the cash front. One final piece of housekeeping. This month, our S-3, also known as a shelf registration, was expiring as it is now 3 years old despite never having a reason to use it, in order to maintain as much flexibility as we can over the next 3 years, we renewed that registration, although we have no immediate plans for its use.

I’m also happy to share that the Board has approved the Q4 cash dividend of $0.25 per share, payable on December 29 to shareholders of record as of November 28. And now I’ll pass things back to Stephen.

Stephen Berman: Thank you, John. Since tomorrow is Halloween, we want to give you a more detailed update there. As a reminder, the Costume business essentially stopped when tariffs surged to over 100% in Q2. The team did an excellent job weeks later trying to patch up volume back once the 100% tariff period had passed. And some of that business was recovered with a bit of it shipping this quarter. But ultimately, this is not the Costume year we envisioned when we started the year, although we were pleased with our progress outside the U.S. At retail, we’ve seen larger accounts increasing retail prices significantly. Some opening price points are being held to pre-tariff levels, but we’ve seen a large portion of our line with retails increasing 15%, 20%, up to 40% in some accounts.

Unfortunately, this has negatively impacted unit sell-throughs. Syndicated market data seems to confirm that this is widespread with all the leading manufacturers showing double-digit declines in dollars during the first 5 weeks of the season compared to last year with worse numbers in terms of units. Although we are happy to maintain our market leadership position according to the same data, this is obviously troubling trend. We know this is a business that traditionally happens very late, so we hope that the accounts have a great week this week and of course, wish everyone a safe and fun Halloween weekend. Looking forward, it’s predictable and uninteresting for toy companies in October to reference that all-important holiday season. Nonetheless, we think it’s appropriate to point out there is a much wider range of possible outcomes for the next 2 months than recent years.

We could not know with any certainty what retailers would do from a pricing and promotional perspective or how consumers will respond. Retailers may be motivated to adjust their plans based off consumer behavior, and that loop will essentially continue every week through the end of the year. Longer term, I would like to highlight two separate areas that teams have been swarming over this year and particularly over the past 10 months. The first area is partnership work we do with our global licensors to grow our mutual businesses, which often involves myself and leadership of all of our different areas to make these things happen and make them happen quickly. Market by market, property by property, customer by customer, we are steadily asking ourselves and our retail partners what we are missing.

Where is the next opportunity for us to pursue. The Disney Darling baby doll line we mentioned last quarter is an example of this type of work. There’s no new entertainment driving that product line, but the collaboration by our two teams have brought a great product line to market to address an opportunity that we see. And so far, the initial sell-throughs and reaction has been terrific. We recently shared 2026 plans with retailers for how we see the product line expanding in the new year, and the feedback has been extremely positive. It’s difficult to get into the details of some of these projects for confidentiality and competitive reasons. But to paint a bit of a picture, there are markets in Europe where we’re challenging the local teams to stretch to more outlandish goals for key items and recharacterizing what role JAKKS can play for some of the largest European toy retailers, 12 months per year, not just the peak holiday season, again, market by market, account by account.

In the U.S., we are redoubling our efforts in private label space, pitching for significant programs that could be meaningful value creators for us and the relevant retailers. Our Target role-play business, in particular, has continued to be an exceptional performer for us and Target this year and we look forward to that business continuing in the years ahead. As a broader theme, we have been finalizing several extensions to our most substantial licensing agreements for the next several years. Inclusive of the new entertainment releases that licensors have slated during that time. We are often constrained about what we can say on that front and when we can say it. As an example, we are happy to begin our FOB shipping for some new movie tie-in product this quarter with on-shelf date in the middle of Q1, and we’ll be excited to tell you more details about it ideally on our year-end conference call.

On a different note, we began making a concentrated effort to build out our new business pillar for us from a licensor and intellectual property perspective. Outside of what you’ve seen us do historically, but certainly informed by it, we aren’t ready to get into the details, but we see this initiative as a meaningful market opportunity for us. We have been talking to a very wide range of companies to secure the necessary rights to get us started. This has been in the works for a very long time. We are not ready to get into the details yet, but we see this initiative as a meaningful market opportunity for us. We’ve been talking to a very wide range of companies worldwide to secure the necessary rights. We see it leveraging most of our existing strengths but also extending our product line into other hardline and softline areas which aren’t necessarily toys in the classic sense.

But nonetheless, we feel the appeal is extremely passionate to a major fan base of consumers alike. We think this effort can extend our presence into other aisles at retail, in addition to opening different doors from a customer perspective. So we’re extremely excited and plan to share more in the coming months ahead. We would envision a small amount of this product to ship in the second half of 2026 with a much broader line launching for spring 2027. And again, we hope we can start talking about that more in bits and pieces in the weeks ahead and months ahead as soon as agreements and plans are finalized. And with that, we’ll take a couple of questions. Operator?

Q&A Session

Operator: [Operator Instructions] Our first question comes from Eric Beder from Small Cap.

Eric Beder: I want to kind of — so there’s so many things going on here. I just want to step it back a little bit. When we step back and look at what, in theory, the new normal is, and I know we’re trying to figure that out right now in the midst of what is the biggest season for toys. What do you look at as the drivers, the key drivers for your business model that lets you move around this and lets you succeed to levels you’ve done in prior pieces? I know the FOB piece is going to probably be, to some extent, problematic here given what some of the other retailers are doing, but I fully respect what you’re doing with it. But how should we be thinking about longer term, pick whatever period you want and where you can kind of take it from where it…

Stephen Berman: Eric, Stephen Berman. Just so you know, I apologize in advance. I’ve had a brief cold, and my voice is a little bit here and there. But to answer the question, first and foremost, [indiscernible] and certainly is what’s required at retail. That’s what they’re looking for, and that’s kind of where we stand today. Up until today, when we just heard the recent fentanyl tariff being dropped by 10%, which — waiting for a Custom documentation, which would bring new tariffs in our world to approximately 20% from the China market. This is the new norm. So retailers are kind of just adjusting to it and adapting to it. To jump into what you just said about the FOB topic, now going back to the FOB business, when this just occurred, retailers will be scrambling to jump back in on an FOB basis because they know what the tariff is now currently and where we stand today.

So we’re happy with that news. The business itself, and again, I’m sorry, for my voice, now has more certainty because throughout this year, you’ve had retailers cancel orders because of the tariffs, retailers push their August set dates to October, and that’s done now. So going into next year, the new norm — it’s the new norm, and I think it will be back to what it is the following years past. So for JAKKS, we are so conservative in our approach and want to be reality to our shareholders, our retailers and licensors. That’s why from what we’ve gone out to retail in North America and Asia, we see sales higher because of the higher sales price, but lower in unit dollars — in unit volume, excuse me. And we don’t see that really changing through the year, and we hear other commentary.

So we’re taking a very solid approach about building cash, keeping overhead low and building ’26 and ’27 aggressively. There’s no reason for us to try to be heroes this year and push out inventory to try to make numbers. We want to make sure that the retailers have low inventory of our product, and we want to be low in inventory for JAKKS going into 2026, so we can have a strong year across the board. As I said, we have a lot of things that we haven’t announced that we will be forward-looking to announcement. For competitive reasons, we need to hold off and [ wait until ] these agreements and plans are put in place. But that being said, this is a year that has had such uncertainty. And as JAKKS, we played it very much close to the vest and make sure that we ran our business like we should for our shareholders to make sure that we have the years to come with solid growth.

Eric Beder: Okay. Switching gears, I guess, to the near term, you have the Super Mario Bros. movie coming out, how should we be thinking about that as an opportunity here, it’s coming out — I know it’s coming out end of Q1 or early Q2. How should we be thinking about that as a potential kind of first time that shows a little bit of normalization going on here.

Stephen Berman: We’re excited for it, the retailers are excited for it worldwide. Our factories across Southeast Asia have been prepared for it. There’s been — Nintendo itself has a great track record as a classic evergreen product line. And with the enhancement of the Super Mario movie that you mentioned, it will just bring much more excitement to an area that has not had much real excitement, a toyrific platform this year. There hasn’t been really any major toyrific excitement that’s happened this year. So going into ’26, it’s one of the first major exciting initiatives that’s going to be in theaters and for consumers and retailers. So we, our retailers, Nintendo and Universal are very excited about it.

Eric Beder: Okay. And I want to conserve your voice, so I’ll just throw one more in here. This DC collaboration, it’s unique. I’m sure it’s bringing toy excitement to people here even with all the things going on here. How — this kind of, I guess, mash-up, how should we be thinking about this as opportunities going forward to do more of these kind of pieces that work great as toys, but they’re also work great for the adult collector who does this kind of stuff.

Stephen Berman: Well, the Sonic team that sells Sonic itself has continued to outperform, I think, everyone’s expectations worldwide. And when they worked with DC due to the cross collaboration, it just enhanced the awareness of Sonic and as well as DC. So what it did is brought the older age group from the DC era into the younger age group of Sonic, which actually has a young fan, a kidult fan and a collector fan. So it’s bringing a much larger collaboration and just bringing new eyeballs and new excitement without having any theatrical release behind it, it just brought two great iconic IPs together. And what we see with how Saga worked with DC and vice versa, the collaboration has been extremely strong and looking very much forward to more collaborations like that.

Operator: Our next question comes from Thomas Forte of Maxim Group.

Thomas Forte: So Stephen, I have a novel approach. I have three questions. And then I’ll ask the question, answer the question, and then you can use as little voice as possible to see how I did with the answer. So first on — so the first one is, how should we think about normalization? Stated differently, can you briefly recap to help us compare and contrast your first quarter, second quarter and third quarter tariff-related impact? Now my answer would be, if I oversimplify, it seems to me that the first quarter was a little-to-no impact, then the second quarter was a meaningful impact, but the third quarter is where it had the most impact.

Stephen Berman: Okay. Great. Tom, thank you. First off, you’re correct. First quarter had nominal impact. It had a scare effect, but had no impact to what was shipped at retail at sell-throughs. Second quarter in Halloween was a debacle because we had material cancellations because of the impact going from Liberation Day to the 145% approximate tariff. We had more cancellations than I think in the history of our company in Halloween during that period. Then — so that had the cancellations, not major impact of tariffs at retail yet with price points. Going to third quarter, for Halloween, we retracted and scrambled and got more business. But at the same time, the tariff impact had a material impact on the sell-through and unit sales.

So as I mentioned in the pre-recorded script, the product prices have gone from 15% up to 40% at retail, which truly affected the sell-throughs, and you’re seeing it through the circular data that’s out in the market. That being said, we are still #1 leaders in that space, but all the people in our industry have been affected double digits. So we’re not the only ones out there, but we are still in the best position. Going to — now to where we stand today, the impact of tariffs have gone across the board to all retailers in U.S. to where you’ve seen some retailers have kept prices to try to bring customers in and have them as loss leaders. But if you go out and you do store checks, and we’ve had all of our salespeople go out, the price points have risen quite substantially across the board.

So we — what our approach is, is we don’t want to take risks having inventory at the year-end and hurting our 2026 year. And we don’t want to hurt ourselves having inventory in our warehouse waiting for orders to come. So we, collectively, as a management took an approach, let’s build international, where things are going well, let’s be conservative in America. We still have everything doing strong for us, but it’s just not exciting. So Sonic, Nintendo, Disney Princess, ily, private label all these areas of businesses, these all are doing very nice, but it’s just not an exciting year because of all the uncertainty. That being said, uncertainly going into 2026 will be a lot less. And I think based off what we gather in road shows with retailers, we, JAKKS, because of the diversification and all the newness that we have coming out, are excited for next year and beyond excited for ’27 as well.

We have a tremendous amount of new IP for Halloween on top of our current great IP. We have a lot of theatrical releases happening. We have a lot of new announcements and extensions that we’re working on. A lot of new private label initiatives. So we’ve gotten through the worst this year and are just looking forward to ’26 and are gearing up. I’ve been in Asia, I think, four times this year with our partners, working with them across Southeast Asia, primarily China as well as Indonesia, Vietnam and Cambodia. But that being said, China is still the main part of where we are going to manufacture for safety reasons, quality, quickness and partnerships. But the factories that we work with in China are also in these [ epic ] territories to where — if and when we need to move, we move with them because they are our partners.

So we are just really getting through this year, keeping cash is king, inventory low, G&A low and getting prepared for just a great 2026 compared to what 2025 has been.

Thomas Forte: Excellent. And I failed in getting you to conserve your voice, right? So the second one is, when thinking about your sales in ’25 versus ’24, how should we think about the impact of tariffs versus the impact of tough licensing comparisons? Is it 50-50, 75-25, meaning 75% tariffs, 25% tough comparisons.

Stephen Berman: I don’t know if we can answer that right now. It’s a very good question. I’d like to spend time digesting it. I think the tariff result, let’s call it, 20%, 30%, it is what it is, and that’s the new norm. And everyone will take a hit from the factories to ourselves, to the retailers and the consumers. I just can’t compare ’24, I have not thought about what it was. We had Moana and some other theatrical initiatives. But we have so many new initiatives happening at ’26, that it’s too hard for me to compare them right now. And if you just give us time, we can go off-line, in a day or so and get back to you.

Thomas Forte: Okay. So last one, current thoughts on strategic M&A, including your opportunities for accretive acquisitions, seems like you would have a lot of great opportunities given company’s potential desire to exit now that they’ve gone through both COVID and tariffs.

Stephen Berman: Great question. We’re seeing quite a few various opportunities that are coming to us. I’m sure there’s many other companies as well. But at this time, we just want to get through this year and see where these companies lie after the year-end because I think many of these companies that we’ve been reviewing, looking and discussing are having such a difficult time. I think things will be cheaper going into ’26 because of cash needs, licenses. The licensors are very uncomfortable with companies that are not healthy. So there’s a lot of opportunities, not just acquiring companies, but they’re acquiring areas of businesses, of licenses that the licensors don’t want to work with because of uncertainty. So there’s a lot of really good opportunities. But even with all that, we look at ’26 as a strong year for JAKKS and ’27. As where we stand today, we’ve gotten through the worst, and we’re looking for the best now.

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

Stephen Berman: Ladies and gentlemen, thank you for your time today. Looking forward to the year-end fourth quarter call to go through our 2026 year excitement and hope we’ll have much more good and positive moves to come. Thank you very much.

Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.