Good afternoon, everyone. Welcome to the JAKKS Pacific's Second Quarter 2024 Earnings Conference Call with management, who will review the financial results for the first quarter ended June 30, 2024. JAKKS issued its earnings press release earlier today. The earnings release and presentation slides for today's call are available on the company's website in the Investor 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 along with highlights of product lines and current business trends. Then John will provide some additional editorial around JAKKS Pacific's financial and operational results. Mr. Berman will then return with additional comments and some closing remarks prior to opening up the call for questions. Your lines will be placed on mute for the first portion of the call. [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 estimates of sales, margins and/or adjusted EBITDA in 2024, as well as any other forward-looking statements concerning 2024 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 risk and uncertainties which could cause actual results to differ materially from those projected in forward-looking statements. For details concerning these and other such risk 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 conference is being recorded. With that, I'd like to turn the call over to Mr. Stephen Berman.

Good afternoon and thank you for joining our call today. We are happy to share our current results after another constructive quarter. We continue to proactively engage retailers and licensors about new ideas to grow our mutual businesses, and we continue to work internally revisiting and refining the way we do business to ensure we are maximizing margins and sales as the increasing complexity of our global business merits. I feel confident that we are doing all the correct things today, and looking toward the future that will both help us achieve our plans for this year, as well as regenerate long-term value as we look ahead to 2025, and even 2026. Our business performed in line with our expectations for the quarter, and although consumer outlook remains a bit unpredictable, we are increasingly confident we will achieve our objectives for the year. As I touch upon later in the call, we have a number of exciting initiatives launching this fall. As we look at the second-half of 2024, this gives us confidence that 2025 has a lot of potentially positive narratives in its earliest stages. As such, we are diligently planning for that and seeding new opportunities. Our total business generated $148.6 million in the second quarter, down 11% from this time last year. That sales level is significantly higher than the $112.4 million we shipped in second quarter of 2021, which is the last year we had a similar content-light first-half. So, although our sales are down, we are not concerned that it's somehow a negative reflection on the health of our core and evergreen businesses. The doll and role-play division delivered $63.6 million in net sales, up 6.6% from $59.7 million despite comparing against the Disney's Little Mermaid release timing last year. The Action Play & Collectibles…

Thank you, Stephen, and hi, everybody. Q2 was a pleasantly uneventful quarter when it comes to talking about results even if there's been a lot of activity happening behind the scenes. Stephen said top and bottom line results were in line with our expectations, and we seem to be on track for another very productive year. We have a wide range of new product introductions coming to market over the next six months, and we're excited for consumers to engage with them. As we've covered sales extensively, I'll move into margin. Gross margin was up 130 basis points in the quarter primarily due to lower royalty expense. The reduction is essentially driven by the mix of products sold in the quarter, the contributions of the various IP, and then also some impact of selling method. With gross margin at 32.0%, that's as good of a Q2 we've posted since 2012. It's challenging to improve margins when sales are down, so we're happy with that result. Moving down the P&L, there's not a lot of updated news from last quarter. Lower sales do not help scale fixed costs, and we are investing against the back-half of the year and 2025 a bit more than we were at this time last year. We would like to see our first-half level of margin erosion decrease in the latter-half of the year, but we will also not try to optimize against a specific metric if we think an expenditure is the right thing to do. As we have said before, we plan the business considering full-year revenues and related full-year expenditures as opposed to trying to optimize for a quarterly outcome, while also managing the current year's transactions and deploying resources to enable business in the two subsequent calendar years. Seasonality is a fact…

Thank you, John. As we highlighted last quarter, certainly the two biggest pieces of new news for us in the second-half will be supporting the theatrical releases of Disney's Moana 2 in late November and Sega's Sonic the Hedgehog 3 in December. We have a broad retail support for both properties in the U.S. and internationally and look forward to a great audience reaction to both the films and our complimentary product lines. This will also bode extremely well going into 2025, as the movie should continue, and then we should get a boost from the streaming launch based on our past experiences. As I mentioned earlier, we have several additional product launches this fall, almost all of which represent very specific initiatives that with success can layer into our brick-by-brick product assortment by extension and add resilience to our evergreen business for the long term. Starting with the Simpsons, our product line will begin to appear on shelves this quarter at the largest U.S. accounts as well as some internationally. Our core toy line includes plush, multiple scales of figures, and a diorama set of the iconic living room with notable features from the show. We also have a variety of collectibles including premium figures, shelf talkers for Bart and Homer, a Moe's Prank Phone, and a large-scale Talking Krusty Doll that received an incredible amount of pre-sale interest. With a couple exclusive figures coming to Walmart later this year, our Simpsons toys represents a wide range of offerings to please fans of all ages and is a great launch to this new business this year. We also continue to move more aggressively forward with our new authentic brand businesses. This quarter, you will be able to find our Element, Quicksilver, and Roxy skateboards at Academy Sports. We have…

Thank you. [Operator Instructions] Our first question comes from Eric Beder with Small Cap Consumer Research. Your line is open.

Good afternoon.

Good afternoon.

Hey, Eric.

Thank you. Congrats on managing through here and getting through a much stronger other side it seems like. A few questions here, [indiscernible] I know you mentioned Academy and the expansion possibilities beyond Academy. How do you look at that brand's ability, going forward, to offset some of the, I guess you guys have previously called it, extreme seasonality that you see in the business? And what has been the continued response to it as you're moving forward and starting to offer some of those products?

Well, thank you, Eric. Actually the ABG initiative that we're undertaking, we're extremely excited about because we undertook this deal in February, and we wanted an extremely expeditious pace in achieving the development and manufacturing of these goods. And Academy, we went really strong and early, and they were very strong within this area of business, so we launched it with them immediately. And we have done our previews. And we are extremely excited now to get into the spring 2025 because, seasonality. We are focused on leveling out revenue base and the Authentic Brands business with the Element skateboards, Roxy and Quicksilver, in addition to the Juicy and Roxy inline skates and inflatables, and the umbrellas really puts us in a really strong area of business that's countercyclical to the normal, call it, traditional toy business. So, that on top of our enhanced other seasonal business of our foot-to-floor ride-ons, our outdoor play environment; it really sets us apart of building a really strong evergreen segment of business that's not hit-driven at all. It's really focused on solid brand names and solid recognition of brands. And the retailer from more North America and, call it, Western Europe are really excited about these brands because they're long-term, very well known brands from kids, tweens, teens, adults and others. These brands have been around, some of them 20, 30, 40 years. So we're really excited about it. And we just need to be able to manufacture more and get ready for spring to get these launched. And once we get them launched, we're looking to expand it broadly.

Okay. And turning to The Simpsons, I know you guys were at the San Diego Comic-Con, showing the product again to the people. What has been the response since we haven't seen a Simpsons product in, like, decades-plus.

Correct.

What's the excitement level here, and how do you look upon this visibility. I think -- and you kind of mentioned a little bit on, (a), to make something like a $20 diorama, and (b), the potential to do more for maybe like the adult collector who will spend a lot more for a collectable or for an action figure?

Firstly, The Simpsons is -- you're right, it hasn't been in the market, in totality, with a breadth of product for over 15 years. So, there is a need and want for it. It's been around, I think, 35 years as an animated series. And the excitement is -- it's in the top levels of all views on this programming. The excitement is really there. We're just trying to curtail the excitement internally because Comic-Con was terrific. The retail sell-through that we currently have to date, which just recently launched in the last week or two, is extremely strong. That being said, we just don't want to overexcite something because there is a collectible market in the Simpsons and we have collectible items specifically for that market. And then, there is a kid market for it. So, there's a blend of both, and we're managing both aspects of it. Early on, reads are extremely strong. We're really happy, retailers need it. We look at this that will build into an evergreen brand like we've done with the Sonic, like we've done with Nintendo. And we're looking at it very strong. It has such wide array appeal, again, to Collector and kids. So, the initial excitement is really strong. We're just looking at it internally without trying to get overly excited to manage this brand, both collectible and to kid. And so far, the receptiveness from retail and consumers is extremely strong.

I know you do most of your product FOB, but how have some of the discontinuities in supply chain affected some of your international sales? I know historically that's been a big focus for you. Are you still kind of on the track that you want to be with international even after kind of like a quarter like this? How should we think about that?

Yes. Primarily when we founded JAKKS, myself and my business partner who passed away about 15 years ago, we founded it as an FOB company. And during the big shipping crisis that happened in like '21, '22, we actually became more of an FOB company, about 70% plus. And we're going to continue that way. It's something that the retailers like, and we like it as well as the business. The capital expenditures of bringing inventory in is less than by doing it on a FOB basis. What occurred internationally, more so in Europe, was our new logistics centers that we opened up in Italy and we're opening one in Spain. We just had a difficult time of getting these containers in during -- there was some lack of containers that were able to get it during the quarter. Those have all been resolved, so it just was more of trying to do something on an expeditious process, a platform, and we just did get it done as quick as we thought. All those things have been resolved. They weren't material, but they were enough that we had to call it out. But overall, our business FOB bookings are extremely strong, where we stand this year versus last year. And we're going to continue on that FOB platform, but we also will be bringing in domestic on areas of businesses such as Simpsons, or whether it's authentic brands, or Moana 2, or Sonic, or Nintendo. We bring in inventory where needed, but we will never chase something and bring in too much inventory in case something doesn't work. We'll always be leaner on inventory than the norm in our industry.

Okay. Final question; last quarter, you paid off the preferred. I know you did it so close to the end of the quarter, you really didn't want to talk about capital allocation and potential now, maybe to return some capital to shareholders. It's been about three months. What's kind of the thought process? How is that evolving now that you are basically debt-free for the first time in a very long time?

For JAKKS, I'm very proud of the overall company's employees of being diligent and being able to pay off from the recap that we did around 2018. We paid off all of our debt and our preferred and couldn't be more happy, especially going into an unknown environment and going into a presidential race, to be clean of debt and know that we could run our business based off our free cash flow. That being said, we are being prudent. There's a lot of other opportunities that we need to look at for capital allocation. We've been having internal meetings with our board and we are looking for the future. There's many different ways of capital allocations, from dividends to buybacks to acquisitions, and we are now looking at certain opportunities. We see there's been several different bankruptcies in our industry that allows us to have other opportunities, whether buying assets from these unfortunate events or getting licenses that licensors don't want to work with companies that they're worried about financially. So, we're looking at the various opportunities that are in front of us today and kind of looking at what the future holds, going into 2025 and 2026. So, it's something on our priority list, but we don't have any confirmation of the direction that we're going to go, but it's something that we've been looking at internally. We just paid down the debt again. It hasn't been that long, so we can't do things just on an immediate basis without looking at liquidity analysis, future benefits to the company, retailer expansions, international expansions, a lot of different avenues that we're looking at, but again, it's something that's a priority to us and we will be reviewing through the share.

Okay. Again, good luck for the back-half of the year.

Okay. Thank you, Eric.

Thanks, Eric.

[Operator Instructions] I'm not showing any further questions. So, I would like to turn the call back to Steven for any closing remarks.

Great. Thank you, operator, and you have done a terrific job on the call. We are looking forward to our bunch of our follow-up calls today with investor and analysts today and tomorrow. And thank you everyone for the call, and we're excited to get into our third quarter and start our call again, and right after we are excited for the second-half of this year, and really excited for 2025. Thank you all.

Ladies and gentlemen, that concludes today's presentation. You may now disconnect, and have a wonderful day.