JAKKS Pacific (JAKK) Q1 2026 Earnings Transcript

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DATE

Thursday, April 30, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer — Stephen G. Berman
• Chief Financial Officer — John L. Kimble

TAKEAWAYS

• Net Sales -- $107 million globally, down 6%, driven by a $15 million (16%) decrease in North America to $78 million; international sales grew 38% to $29 million.
• Toy/Consumer Product Net Sales -- Declined 7%, but costumes segment grew in what is typically a smaller quarter for that business.
• Gross Margin -- 33.4%, down from 34.4% due to tariff expense and lower closeout sales, but characterized as "very strong" by management.
• Gross Profit -- $36 million, a 9% decrease, with management noting continued product margin strength from new introductions.
• Adjusted EBITDA -- Loss of $371 thousand compared to a gain of $354 thousand in the prior year.
• Adjusted EPS -- Loss of $0.17 versus a $0.03 loss last year; based on 11.4 million diluted shares.
• SG&A Expenses -- Down 4% for the quarter, helping to offset some margin dollar shortfall.
• Tariff Expense -- $1 million to $2 million paid, sharply higher than less than $100 thousand a year ago; refund claims filed, but management does not expect near-term resolution.
• Cash Balance -- $64 million at period end, up from $59 million the prior year.
• Inventory -- $53 million, generally flat with the previous year.
• Dividend Announcement -- $0.25 per share authorized for Q2, with a record date of May 29, and payable June 29.
• International Performance -- EMEA recognized its best quarter since 2015, with record results in France and Spain for over 15 years.
• Anime/Manga/Digital Initiative -- Announced launch of a next-generation global platform for anime, manga, and digital creator products, with shipments beginning in 2026 and broad rollout in 2027; expected to carry higher price points and margins.
• Key Product Lines -- Super Mario Galaxy, Sonic DC crossover, Disney Princess, Style Collection, ELY, Frozen, and Axisports portfolios highlighted as drivers, with new collaborations and refreshed offerings noted.
• Distribution Expansion -- Five new distribution centers established in Europe to increase retail penetration and accommodate a growing number of smaller international accounts.

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RISKS

• CEO Stephen G. Berman noted, "We continue to see a degree of caution from U.S. accounts; I would characterize many of them as somewhat tentative about the year," indicating ongoing retailer apprehension and forecasting risk.
• Management identified higher oil prices, and related resin and transportation costs, as significant industry challenges under close watch.
• John L. Kimble said, "That projection does not anticipate downside scenarios reflective of higher shipping costs due to higher diesel costs," acknowledging potential cost risk not yet modeled.
• Adjusted EBITDA declined to a loss from a prior-year gain, and adjusted EPS loss increased, both reflecting margin pressure and a heightened cost environment.

SUMMARY

This quarter, JAKKS Pacific (NASDAQ:JAKK) reported a 6% revenue decline driven by softer North American performance, while international operations grew sharply, fueled by expansion in EMEA and strong results in France and Spain. Product gross margin remained healthy at 33.4% despite a rise in U.S. tariffs and lower closeout sales, with management actively pursuing tariff refunds. SG&A discipline contained expense increases, even as adjusted EBITDA and EPS turned negative. The company declared a $0.25 dividend for Q2, maintained a robust cash balance, and kept inventory steady. Management emphasized the strategic significance of its new anime/manga/digital platform—developed over two years with leading global partners—designed to deliver higher-margin growth starting in late 2026. JAKKS Pacific credited renewed strength in key evergreen brands and noted expanded distribution capabilities as supporting future growth ambitions.

• Management positioned the upcoming anime and digital creator initiative as "one of our company's most ambitious, strategically significant initiatives," citing extensive collaboration with leading Japanese IP holders and a global rollout plan targeting both retail and live event channels.
• Chairman Berman said, "the margin for JAKKS Pacific will be slightly higher" on the new anime platform due to elevated price points and targeted kid-adult demographics.
• Management reported significant promotional and shelf space gains for the Super Mario Galaxy product line, reflecting improved retailer readiness and consumer momentum following the movie release.
• Achievement of best EMEA quarterly performance since 2015 and record results in France and Spain underscore effectiveness of targeted international expansion and multi-country distribution buildout.
• Berman stated the company is seeing "opportunities on the acquisition front," actively evaluating accretive capital deployment options amid a healthy cash position and stable inventory.

INDUSTRY GLOSSARY

• FOB (Free On Board): A shipping arrangement where the buyer assumes ownership and risk at the shipping point, used here to refer to a substantial portion of JAKKS Pacific's North American sales model.
• SG&A (Selling, General, and Administrative Expenses): The sum of operating costs excluding cost of goods sold, including selling commissions, and general corporate overhead.
• Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, as adjusted for non-recurring or non-core items, used by the company to measure operating performance.
• VTuber: Virtual YouTuber, a digital creator persona operated by a real person but represented with anime-inspired digital avatars, referenced as part of digital creator licensing.
• Closeout Sales: Discounted sales of remaining or discontinued inventory, often at lower margins; a decline in closeout sales was cited as beneficial to margins.

Full Conference Call Transcript

Operator: Good afternoon, everyone. Welcome to the JAKKS Pacific, Inc. First Quarter Earnings Conference Call with Management, who will review financial results for the first quarter ended 03/31/2026. JAKKS Pacific, Inc. 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 G. Berman, chairman and chief executive officer, and John L. Kimble, chief financial officer. Stephen G. Berman will first provide an overview of the quarter and full fiscal year along with highlights of recent performance and current business trends. Then John L. Kimble will provide some detail around JAKKS Pacific, Inc.'s financials and operational results.

Stephen G. Berman will then return with additional comments and some closing remarks prior to opening up the call for questions. Your line will be placed on mute for the first portion of the call. If you would 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, Inc.'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 Pacific, Inc.'s 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 G. Berman.

Stephen G. 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 have 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, the dynamics that come with running a global company are challenges we have dealt with before; I am confident we will successfully navigate our way forward in 2026 and beyond. We continue to invest significant time, effort, and financial resources, with some exciting new initiatives coming together for 2027 and 2028 while also executing this 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 the 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 a 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 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 thousand versus a gain of $354 thousand recorded at the end of Q1 2025. I will now pass it over to John L.

Kimble for some comments, after which I will come back and discuss some product initiatives and areas of focus moving forward.

John L. Kimble: Thank you, Stephen, and hi, everybody. 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 are 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, and 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 is a level of precision that we do not aspire to. I can tell you we paid $1 million to $2 million in U.S. tariffs in the quarter; we paid less than $100 thousand in the year-ago quarter. That gives you a sense for the order of magnitude of the numbers here in the quarter as they relate to prior year.

This is also a fine place to mention that we have filed for tariffs 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; frankly, it is one of the least interesting things to talk about in the business today, so we are moving on. Back to the numbers, gross profit was $36 million in Q1; although down 9% from last year, that is still a very robust number for our business.

We are 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 twelve-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. 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.

Stephen G. Berman: Thank you, John. As first quarter is always the quietest quarter for us, I would 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 the theatric 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 onboard, allowing us to secure significant out-of-aisle and promotional space starting 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 thirty-fifth year anniversary; we continue to work with them very closely as their anchor toy partner worldwide.

One example of a new collaboration 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 him a natural choice for products in this area, and we have been excited to share this range with customers this month during our spring 2027 line reviews. We will 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, ELY, and Frozen lines, with sell-throughs in these segments continuing to be very strong. These are evergreen brands and play patterns for young children. We nonetheless are constantly introducing new items to the line to ensure we are earning our place in retail assortments every season. Our six-inch doll line has been refreshed this spring and is selling extremely well. We have also seen positive reactions 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 Axisports portfolio, where we see additional opportunities. We are happy to share with you that we recently have added the Almost, Darker, and Duster brands to our skateboard portfolio. In our Disguise business, we announced our launch of K-Pop Demon Hunter during the past quarter. We are 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 are also seeing a lot of energy behind Pokémon, which is celebrating its thirty-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 UK as we have transitioned in as a vendor for some accounts who were previously relying on in-house sourcing teams. And last, but certainly 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, Inc. is launching a large-scale next-generation anime, manga, and digital creator cultural platform—one of our company's most ambitious, strategically significant initiatives. Developed over more than two years, this multi-faceted investment positions JAKKS Pacific, Inc. 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 Pacific, Inc. 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, 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 are not simply entering a category; we are building a durable, repeatable platform designed to deliver sustained, multi-year value. Building on our legacy of successfully commercializing leading entertainment properties, JAKKS Pacific, Inc. will continue to roll out our partnerships and product lines through 2026, with the initial lots expected in 2027.

We are only a 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. We will now open the call for questions. Operator?

Operator: Thank you very much. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please standby while we compile the Q&A roster. Our first question comes from the line of Thomas Ferris Forte of Maxim Group. Thomas, your line is open.

Thomas Ferris Forte: Great. Thanks, Stephen and John. Thanks for taking my questions. I will limit myself to three and 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?

Stephen G. Berman: Good afternoon, Tom, and thank you. 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. We went 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 has 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. We put together a plan.

We hired across the board a very young, passionate group in the anime, manga, and digital marketing space, and we put together a plan of products from collectibles to kid-adult, which is very strong, 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. The launch itself is starting in 2027; we will get some of it shipped in 2026. It is a very broad launch to various initiatives at retail—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 has never been real authentic merchandise at the venue. 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 a Kendrick Lamar concert, where you have merchandise that goes straight to the consumer. All these initiatives are being launched together at one time at various segmentations and with various collective initiatives with each of the IP holders. Inclusive, you will see a broad array of product—the totality of all the strong anime, manga, and VTuber IP—in one segmentation at retail.

Instead of having one licensor do one IP and another do another, we have 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 are somewhat more focused on kid-adult, the price points will be slightly higher, and the margin for JAKKS Pacific, Inc. will be slightly higher.

Thomas Ferris Forte: Excellent. Second of three: recognizing a lot of your product releases coincide with movie premieres, for your other SKUs, how should we think about the timing of new product rollouts, and are you holding anything back given the current market challenges?

Stephen G. Berman: First, the market challenges—as we mentioned in our prepared remarks—we are used to these challenges. JAKKS Pacific, Inc. has been public 30 years; we have been around 31 years. You have to work through them—work with manufacturers, with container companies, with the retailers—and work very closely and very entrepreneurially to get through these different times. With these different times, there is also very strong opportunity. As we mentioned, the Super Mario movie itself has done phenomenally well. The product line is expansive; 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 are 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 we mentioned from Aniplex. In each of our segments, we have some great excitement, but at the same time, some of our basic evergreen business is doing extremely well. In our Disney area—our Disney Darlings, our Disney Style Collection, our Disney Princess—we have seen sell-through strong and profit dollars up, so that is exciting. Going into the year, we also have various other movies that are coming out that we have nice product behind, including Moana live action, Minions, and other IP.

That, on top of our evergreen business, is really what is keeping us going and strong. We are building throughout the year and going into 2027 and 2028. Our lineup, I could not be more proud of as CEO and cofounder—it is so strong in the majority of our categories, from our seasonal business with ABG—with which we have Elements and Roxy and Quiksilver—now just starting to take real traction getting out to the spring and summer retailers. It is a really exciting time, but at the same time, it is a cautious time because of oil prices and other unknowns. But those unknowns to us are just part and parcel of our business.

I am really excited to get through the year. This is a quiet first quarter; I even mentioned to John it is a very quiet period to talk about because there are so many things happening through the year. As the year goes by, we will be going out on the road speaking with retailers and investors. It is really an exciting time at JAKKS Pacific, Inc.

Thomas Ferris Forte: Excellent. And then last one: some people 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.

Stephen G. Berman: With our IP holders—our licensors—many of them are very strong and focused on what AI could do in production and the quickness to market for digital animation and various initiatives. I think it is going to be very much pick-and-choose by each of the large-scale entertainment companies, whether it is The Walt Disney Company, Netflix, or Amazon. We are there to help them out in what they do. One thing that we have seen—because things are coming quicker to market now due to shorter development cycles—is that JAKKS Pacific, Inc. is great at go-to-market and doing things very quickly.

I think that is where we will benefit in 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.

Thomas Ferris Forte: Great. Thanks, Stephen. Thanks, John.

Operator: Thank you very much. Our next question comes from the line of Eric Martin Beder of Small Cap Consumer Research. Eric, your line is open.

Eric Martin Beder: Good morning. Congratulations on the solid start to the quarter.

Stephen G. Berman: Thank you. Good morning.

Eric Martin Beder: Good morning—good afternoon, excuse me. When you look at it in terms of the consumer normalizing in the U.S., how should we think about how the flows are going to happen here? When will we know what is going to be the new market—or what is the market we are going to see—post all the disruptions we had last year in the U.S.?

Stephen G. Berman: I think at the end of the day, product is king. If you have the right product and the right price points, the consumer will be there, especially in our area of business where, whether it is a holiday or a birthday, people spend on children and toys. In this environment, price points are very much a focus during the first nine months of the year, and we ensure that we have the right price points. The majority of our products are in the $10 to $30 range.

During the fall and holiday period, you need to have the “wow” IP and “wow” items to get that bigger purchase, and I think we have 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 is exclusivity on products and categories—so they can enhance their margin dollars and also market those products directly to consumers—while at the same time not having price comparisons done by other retailers. That is a very big enhancement.

I do not know if I mentioned earlier, but we had our best EMEA quarter since 2015, and our best results in France and Spain in over 15 years. We see growth internationally as we are expanding with more IP that goes appropriately in specific territories and countries—both in EMEA and Latin America—and now are really focused on Asia Pacific for the next few years. 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 closely on a week-by-week basis.

Eric Martin Beder: You kind of hinted at this. How do you look upon this anime initiative in terms of international—are you getting worldwide rights for most of these players, and how can that help drive international even further?

Stephen G. Berman: The IP strategy is really selected by each territory and country. In anime, manga, and then VTubers and digital entertainers, each country is vastly different. For instance, in EMEA, France is number one for anime; it is known throughout the world as they have such a huge fan base. Then it goes to Italy, then the UK, and after France, actually, it is Latin America—Mexico is very big. You have to really pick and choose; you cannot think that each of these IPs will work in all territories.

We look at the fan base, we speak to the content holder and IP holder, and we work closely with them as they have decades of information on where their fans are and where they are growing. We follow what they say—they know their IP better than anyone—and then we take our team and really cultivate it per the market and what is appropriate price-point-wise, item-wise, and content-wise. Some of the items that we make for America may not be appropriate for Europe or for Latin America and vice versa. We are really focused in each of these areas and segmentations on the right product, the right territory, the right IP.

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

Stephen G. Berman: The goal is growth, but it will not keep up at that 30–40% rate always. It is growing per area. The reason why EMEA has grown significantly is we opened up five different distribution centers in various territories to allow us to hit much more and penetrate into the retail market. There are many smaller accounts throughout Europe than 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, and also garnering new IP that is appropriate for the marketplace.

It is a combination, and each of these countries will have different growth than others because certain IPs work great in the UK, while France is very strong in anime. The UK is strong, but not as strong, so you will see much faster growth in anime in France, and you will see stronger growth in our general toy business in the UK versus France, just because of size and shape. It is a really dissected approach by each country and the correct IP. You will see that enhance growth, but not all IP works across all of Europe.

Eric Martin Beder: Last question: you paid out a $1 dividend last year, and cash continues to rise. How do you leverage that, and how should we look upon that as you take competitive advantage and are able to expend capital when you want to?

Stephen G. Berman: We brought this up during our Board meeting—we just had one—and it is 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 is costing us capital—not material, but it does cost us capital. We will be doing much more marketing—more influencer marketing to the consumer in some of these areas. We have some very surprising new initiatives that we will announce later in the year that will cost capital, but nothing that is a huge expenditure; it is 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 look at what is appropriate. We are seeing opportunities on the acquisition front. We are getting more inbound calls from companies that are looking to sell. There is a really nice opportunity set 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.

Operator: Thank you very much. This concludes the question and answer session. I would now like to turn it back to Stephen G. Berman for closing remarks.

Stephen G. Berman: Thank you very much. I am sorry for the brief call and also my voice during the prepared remarks—I had a cold—but we are looking forward to speaking shortly and getting on the road and seeing some of the investors throughout the summer and going right into fall. Thank you very much.

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

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