Good afternoon everyone. Welcome to the JAKKS Pacific Third Quarter 2022 Earnings Conference Call with management, who will review financial results for the quarter ended September 30th, 2022. 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 Investors section. On the call this afternoon are Stephen Berman, Chairman and Chief Executive Officer; and John Kimble, Chief Financial Officer. Mr.

Berman will first provide an overview of the quarter, along with highlights of product lines and current business trends, then Mr. Kimble will provide detailed comments regarding JAKKS Pacific's financial and operational results. Mr. Berman will then return with additional comments and some closing remarks prior to opening of 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, and/or adjusted EBITDA in 2022, as well as any other forward-looking statements concerning 2022 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 the 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 report 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 measures within the company's earnings press release issued today or previously. As a reminder, this conference call is being recorded. With that, I would now like to turn the call over to Stephen Berman..

Good afternoon and thank you for joining us today. It's been another strong quarter, great shipping numbers, and great sell-through at retail. Q3 for us was a solid continuation of our story this year, centered on the team's hard work to chase opportunistic 2022 demand, while minimizing supply chain drag on our business.

We shipped 323 million at the overall company level in the quarter, a 36% increase over the same quarter in the prior year. That brings our year-to-date net sales level to $664.3 million, which is 7% more than we shipped in all of 2021. We have never done that in the history of our company.

It's really an accomplishment on a number of levels, both in terms of having that level of demand and the confidence from our customers, but also from our perspective of our vendor base, and internal teams working to figure out how to deliver that amount of product in that amount of time.

Calendar year 2022 is on track to be our second consecutive year of topline growth around 20%. How we deliver these numbers is consistent with our story from last quarter. We worked with our customers worldwide to focus on FOB sales to push our volume through a broader and deeper range of supply chains.

We've also partnered with them on addressing their specific needs around promotion opportunities and customized products. We've invested in extra to indicate additional capacity for the ranges that are significantly exceeding our expectations. And increasingly, we have focused on maximizing our international opportunities.

We've onboard new team members, while taking advantage of the excitement that's been building within our business to secure more shelf space with more customers outside of the U.S. Although the outlook for the economy and consumer demand remains a bit uneasy, we are happy to say we continue to see very robust demand across our product ranges.

In the third quarter, the retail point of sale dollars at our top three accounts was up in the high teens versus the prior year. We are tracking at greater than 20% in retail sales growth year-to-date through September.

Consumers began to think more about the holiday shopping season, we are seeing some good numbers in October as well across all of our major product lines. A special shout out to our Target Toy Shopping Cart with our perfectly cute range.

It's a tremendous item that the team worked on with Target, a bull's eye top toy pick, it has been flying off the shelf as soon as it appeared in this quarter. Our Q3 Toy consumer product segment growth was 56% with North America up 50% and international up 85% growth.

All of our regions and nearly all of our top 10 markets were up double-digits during the quarter, and they're all up double-digits year-to-date. As you know, Q3 is when we get most excited about our market leading costume business. According to the NPD Group, we are the U.S.

market leader for the most recent five weeks, with over 20% market share as we were last year. Through the end of September from dollar perspective, we had 33 of the top 50 Selling items per the same report. With 135 million shipped through September, we're having our biggest year with the Sky since JAKKS acquired Sky back in 2008.

Our lower sales in the quarter of $53.4 million were down 17%. That's an anticipated side effects of customers buying products early to ensure that they could set planograms on time and not missing selling days as was the case last year. Our year-to-date sales were up 36% versus prior year through September.

I hope everyone knows by now our partnership with Snap makes your Halloween shopping even easier this year as their Lens Explorer, which launched earlier this month lets you virtually try on and ultimately buy a broad assortment of disguise costumes.

We're really excited to have worked with Snap to bring this to market, something that's been in the works for the past year. As some of you might know, Snap and JAKKS our neighbors are here in Santa Monica and without jumping off point, we figured out this unique collaboration opportunity.

As of this week, they had tracked over 2 million lens views and with brand owners using their social strength to point towards new and fun ways to shop, we're excited to see where it goes and how it makes the costume shopping experience better.

Our outdoor seasonal visits will also finish out the year with a consistent trend of difficult comps, in part due to everyone's backing off higher cube items this year. In August, and September, sales to introduce the 2023 product ranges, we received good reactions to some of our innovation we have in this space.

So, we're hopeful this business can start to pivot in the new year, especially as container prices have backed off last year's five-digit costs. Last year at this time, we're starting to highlight one of the worst port bottlenecks we've seen in years.

We started incurring extra costs associated with importation of product, as well as having to deal with longer supply chain, as it took much longer than normal to bring product from factory to warehouse to be available for sale.

We've been talking since that time-to-time about all the countermeasures we've been taking to mitigate those costs and avoid similar or worse experienced this year. I believe today, people are aware that container costs have substantially decreased in the second half of this year.

Other companies also reacted harshly to the events of last year and change their seasonality and supply chain. And some industries are several months into meaningful slowdown in demand of their product, further freed up ship and port capacity.

As the supply chain now swings back to being shorter, we have to recalibrate our planning and product ordering cadence as our on hand inventory gets a bit higher when ordered products show up faster than expected.

Dealing with these unexpected guests does incur some additional expenses, which we're absorbing and expected to continue through the balance of the year. From an order of magnitude perspective, as we sit here in late October, we feel we're in a much better place as it relates to supply chain issues than a year ago.

But just because container rates are down, I want be clear that there's still work to be done before we can remotely say it's business as usual on this front.

Supply chains and logistics aside, I'm happy to report that as an organization, we are maintaining our discipline around margins and cost containment, even though we're steadily moving forward towards a more pre-COVID operating model. Certainly our higher sales volume has allowed us to scale our fixed costs this year.

Although these costs areas that can pop up unexpectedly, and still be material in a company our size, we are very pleased with our overall margin profile year-to-date. We're already getting into details of working through margin scenarios, and cost expectations as we look ahead to next year.

Last but not least, we have talked about our desire to run a steady, predictable evergreen business, which nonetheless, can still have a bit of a pop from unexpected opportunistic breakout successes.

As we have communicated earlier this year, we have one or two of those in the portfolio this year, which has enabled us to make an optional pay down of our long-term debt in Q3 in the amount of $17.5 [ph] million.

Although this pay down incurred a prepayment penalty, when we assess our current liquidity forecasts and rising costs of LIBOR-based debt, we felt that this is the best move for the company and our shareholders. The pay-off amount of our debt now stands at $69.5 million, a 29% reduction from where we were when we started the year.

I'll stop here, let John get into the deeper into the financials and then we'll get back and talk more about Q4 and beyond.

John?.

Thank you, Stephen and hello everyone. As regular listeners know, there's a greater level of granular detail included in our release today, but I'm going to be selective in what I like have right here towards what I think merits the focused attention. Obviously, another great quarter in * sales performance across the board.

As we reminded you last quarter in 2021, we had about $30 million in Q3 FOB sales slipped into October. But even taking that into account, great year-over-year sales performance here as Stephen highlighted. We always talk about how we manage with a full year worldview regardless of the quarterly check-ins.

We're on track to finish the year with great sales growth, which is obviously great, especially when we see it flowing through to the bottom-line and improving our balance sheet. In unpacking gross margin, we're down just over 310 basis points in the quarter year-over-year, with a number of factors in play.

Higher costs associated with importation and delivery of domestic product, particularly earlier in the year ultimately exceeded any price increases that we've slipped through. Royalty expenses are bit higher, but was in line with our expectations consistent with last quarter. And we're picking up a bit of scale on tooling amortization.

Although this is an area where our capital spending is up overall compared to prior years. Year-to-date CapEx was $8.6 million compared to $6.4 million and $6.2 million in the 2021 and 2020 equivalent time periods.

We're continuing to get very good scale out of our SG&A here with operating margin reaching 16.7% in the quarter, up 120 basis points from prior year's Q3. Year-to-date operating margin is 11.6% compared to 8.3% in 2021. Year-to-date operating profit of $76.7 million is more than double the year-to-date 2021 number of $35.8 million.

Consistent with our bottom-line improvements, strong results compounded with seasonality changes have created a lot of volatility and our expectations for the income tax provision.

We now anticipate exhausting any net operating loss carryforwards we have available to us this year on the federal and state levels, which will result in higher tax expense compared to previous years. Our Q3 tax provision of $11.6 million brings our year-to-date provision to $13.3 million or 20% of year-to-date pre-tax net income.

Earlier this year, we began a number of analyses to ensure we're taking advantage of all readily available deductions to mitigate our tax expense. As Stephen also mentioned we decided to make an optional $17.5 million pay down of our term loan in Q3.

Note that in addition to a pay down fee of $525,000, these pay downs also result in non-cash write-downs of our loan origination expenses, which have totaled an additional $737,000 being extended year-to-date. As of Q4, the interest rate on our term loan is 10.2%.

Along with doing a lot of business earlier in the year and our efforts to wrangle inventory down to a level reflecting a shorter supply chain, our year-to-date cash flow from operations is $76 million, the best we've seen since 2004. Our cash balance at the end of the quarter was $76.6 million.

Our total debt was down to $67.7 million net of debt discounts and issuance costs and we have an overall other credit line. Elsewhere on the balance sheet, our improving credit rating factors into marketing the market of our preferred stock liability.

Despite higher market rates, our lower risk premium, among other assumptions led to a higher valuation of a liability, generating a non-cash loss of $7.4 million. We back that market adjustment out of our non-GAAP calculations of adjusted EBITDA and adjusted EPS.

Along with other customary changes, we have adjusted our EPS calculation this quarter for the prepayment penalty. And given our change in tax position, we have also recalibrated the offsetting tax benefit that would exist without the excluded expenses.

Net of those impacts are adjusted diluted EPS for the quarter is $3.80, an improvement of $0.04 from Q3 2021. The increase in our year-over-year tax provision is an unfavorable $1.10 per share as a noteworthy year-over-year change. Year-to-date adjusted diluted EPS is $5.68 Compared to $3.15. For the first nine months of 2021.

Quarterly EPS is calculated based on a diluted share count of 10,259,789 shares. Year-to-date, EPS is calculated based on a diluted share count of 10,111,475 shares.

In aggregate, our adjusted EBITDA for the quarter is $59.4 million versus $41.7 million last year, a 42% improvement our year-to-date adjusted EBITDA is now at $8.5 million or 13.3% of net sales, which was $44.2 million and 10.2% of net sales at this time in 2021.

Finally, some of you may have noticed that we have refiled the S3, more commonly referred to as a Shelf registration, which we originally filed earlier in the quarter. A few things happen since our original filing to prompt this exercise.

One is that after we saw a strong reaction to our share price subsequent to Q2 results, we realized our ability to raise funds under that filing was significantly lower than what a refile shelf could offer.

As we spoke with a lot of different people after the original filing, we felt both the universal shell structure as well as establishing an ATM program would give us a broad degree of flexibility we were looking to achieve when we made our original filing.

With those thoughts in mind, we remained in the same philosophical place that we were during the last call, nothing has really changed about how we're thinking about the original filing, even though the structure might look a bit different.

We think fast access to lower cost liquidity is an important option to have, especially for a company of our size and seasonality.

We, along with the Board, will continue to assess the outlook for the business and think about the full range of tools and scenarios we have to drive value for the company, inclusive of the options, which the newly filed shelf might avail to us. And now, back to Stephen, for some additional remarks..

Thank you, John. Q4 is always the most exciting time of the year for our business and that's certainly true this year as well.

I encourage everyone to get out and walk retail over the next couple of months to see what a tremendous job the teams have done securing placement for JAKKS' products heading into the holiday season, in aisle, in caps, pallet programs, check lane, we're everywhere.

It's really exciting, and we're hopeful it's going to be a great holiday gift giving season in our part of the store. With that being said, I'd like to take a few minutes to go a bit deeper to talk about some of the drivers behind our recent successes.

I hope it can help illustrate some of the things which differentiates JAKKS from other companies in our space, certainly among the publicly-traded ones.

As we become more focused on evergreen segments of business built around timeless play patterns that has diversified us away from signing a bunch of new toy licenses each year based on yet to be launched IP, with the hope that one or two would break out.

That change in direction has meant even more work for the internal teams, as they really have to push the value proposition of what we offer to secure listings and get retailers to go with us given the wide range of options they have. That can make for a slow road to growth on a product line by product line basis.

But the payoff is when it starts to work, and it could really take off from there. Without getting into specifics for competitive reasons, in 2022, we've been benefiting broadly from increased point of distribution, which in turn have been achieved in excellent retail sell-throughs more often than not.

When people talk about point of distribution, they often talk about expanding the customer list, or going direct in more international markets, as we have in fact talked about before.

We continue to benefit in both those areas, but I also thought it was important to highlight that we've also been benefiting from some of our largest customers, allocating to us increased retail shelf space, and an increased number of doors.

We're selling a broader product lineup into our customer base, and they're increasing the number of places consumers can find and engage with our ranges. It's that type of momentum that will help us sustain a portion of our recent growth heading into 2023 despite putting up such great results this year and last.

We've also had success this year working fast to secure a high volume of opportunities, and working slightly less fast, but still quicker than most to achieve lower volume, but nonetheless, relevant growth dollars. Let me explain.

Back in Q1, when demand for a couple of our businesses began to skyrocket, the team's work methodically to engage customers and identify opportunities for additional placement and unique offerings. We are shipping 12 items in the second half of the year that were not planned to ship until January.

That's in addition to ramping up more production for ranges like Disney Encanto, we already had planned for the spring and summer and autumn and winter seasons. Being able to respond to customer and consumer requests with the highest degree of focus and attention is something that's very important to me.

Personally, I think it's a core element of what JAKKS is all about. On the other hand of the spectrum, every quarter, we seem to be talking about the changing marketplace for content, consumption, and the rise of streaming. And we've certainly seen how it can give a theatrical release a powerful push forward.

In the case of Disney Encanto, for example, introducing a new story full of new characters across multiple mediums offers a chance to create a deeper connection with audiences. We can start to see this dynamic working for older properties as well. Every year new kids are being introduced to classic content for the first time.

Sometimes it's a parent tuning them in, but we now have streaming algorithms suggesting related titles. In either case, the access to broader range of great entertainment keeps increasing. But there's no in-store experience today that can support related products for all those films and TV shows.

But as traditional brick-and-mortar retailers continue to invest in their e-commerce businesses, we've been seen examples of new opportunities emerging. Sometimes it's making sure there are unique online offerings to differentiate shopping experience, not unlike traditional retail.

But it's also proven to be a bit of a commercial solution to adamantly lower volume, but broader demand that ultimately delight to consumers who could find products that they might not get elsewhere.

We are clearly seen when consumers can't find what they want looking for on shelf, they're increasingly comfortable with finding that product online, Our disguised visits is a great example of this phenomenon. So, larger brick-and-mortar accounts curate their own offerings based on their knowledge of their respective consumer base.

But we see top selling properties often differ significantly when looking at e-commerce results. Our ability to cost effectively service these more niche businesses is a challenge, but something we're incredibly be mindful of as content and retail landscape continues to evolve.

The evergreen nature of many of our top tier brands that we bring to market aligns very well with this trend. Given our lower price points and the impulse nature of many of our toy purchases, our U.S. online visit is still low double-digit as a portion of our overall business, but we do see this as a steady growing opportunity for us.

Finally, I would like to point out the important role that being an FOB first company has played this year in delivering our results. Worldwide retailers having confidence in our business allows them to buy deeper at earlier via FOB, simplifying our operating model while providing a great value to retailers and consumers.

In recent years, we've talked about being 60/40 FOB domestic. As we look to finish up 2022, we're trending closer to 65/35 FOB domestic with dollar growth in both segments of business, but a robust lean in on FOB for both U.S. sales and international business.

We will continue to target driving more volume through FOB, especially as domestic fulfillment continues to represent a range of challenges and increasing costs. Expanded distribution.

quick reaction times, taking maximum advantage of the online shopping experience, and optimizing our products offering by shipping method have all been key enablers for this year's results to-date and we see these as opportunities to improve our business further as you plan for the new year ahead.

And although Halloween is another seasonal business, that tenses shop right up until the last minute, we feel pretty good about the rate of sale at retail after all of our customers really aggressively chase business this year.

Our broader portfolio is really resonating and we're excited looking forward to 2023 to continue the great progress this business has made in recent years.

Approaching our business from another angle, as you know, by partnering with the best content creators out there, we're extremely fortunate to be able to contribute to the excitement around their new releases and to put physical products into the hands of their fans around the world.

As we look ahead to 2023, we just want to call it a few opportunities that teams have been working on that we've been sharing during the customer previews during this past quarter. The action figure team has been working to support a couple of new entertainment initiatives in 2023.

To name just one, following up on the excitement of Sonic the movie earlier this year, Sega and Netflix are launching a new series called Sonic Prime during the winter season 2022.

We have a full lineup of figures placed at plush, ready to go to support the show in the New Year, which should continue the brand excitement we've been seeing since the first film back in 2020. 2023 is also another huge year for Walt Disney Studios theatrical releases.

Releasing in May 2023, the live action musical film The Little Mermaid premieres on the big screen. JAKKS will bring this film to the toy aisle with inspired dresses, large doll, role-play toys and more.

Moving into the fall, Disney will be releasing an all new animated feature Wish that explores how the iconic wishing star upon so many Disney animation characters have wished came to be. Wish releases November 23rd and JAKKS will have a wide array of toys.

We are also participating in a Disney 100-year of Wonder with a range of products including for a limited time a collection of Disney Simpson figures. These are highly collectible molded figures that come in three unique sizes for staking fun.

JAKKS will be launching figures over 100 unique characters reflected the past 100 years of consumers' favorite Disney stories and caricatures. And our disguise business will have some new entertainment driven NG as well. We're supporting Hasbro's Dungeons and Dragons movie in the U.S., as well as the latest Transformer film.

We'll also have other cops of licenses to tell you about in the coming quarters. So, as you can see, we continue to have a lot going on here at JAKKS. 2022 has had more positive surprises than negatives. Although to be clear, we have had our share of challenges and hiccups like everyone else.

The other nice thing about success is how it tends to open up the doors and create new opportunities, which not be available when things are trending poorly. Good news seems too often lead to more good news and we have other initiatives underway for 2023 that I'm also really excited about, but too soon to start talking about them in this forum.

To wrap things up, it's been a tremendous year so far and we're doing everything we can to thoughtfully manage the last two months to set us up for a solid 2023 and beyond. Thanks again to our customers, licensors, vendors, investors, and our incredible team around the world for such a tremendous job in 2022. With that we will now take questions.

Operator?.

[Operator Instructions] Our first question comes from Matthew Catton with Jefferies. Your line is now open..

How's it going? Matt here from Jefferies. Congrats on the great quarter and performance and execution year-to-date.

So, just thinking about some of the business growth vectors stuff that you've had throughout the year, would it be possible to help us think about core versus maybe some of the booths that you've gotten from Sonic and Encanto? And how we should maybe like parse out thinking about the growth that you've experienced this year?.

Great. Thank you, Matt. So, first off the basic core business of JAKKS are seasonal are boys or girls' area businesses, our girls license area of businesses, disguise, all of that really tremendous growth. The only segment that we had, say less excitement about was our bulk items at our table and chairs and our kids only moose, mountain businesses.

We knew that going into the year based off of the cube and all the price considerations for shipping that that was a very difficult area for us to do business with and retailer.

So, we shipped those businesses to keep the shelf space, so we could go into 2023 with better initiatives and with cost of container rates dropping materially, from $12,000 to $15,000 in the early part of the year to $3,000 to $2,000, where they're coming in now and even lower, that will look to grow, but all the other areas of businesses are Disney core business, our style collection, our role-play of everyday princesses have all had great growth.

Our Ily area of business have had great growth. And then our disguise, we've had tremendous growth, which has had a tremendous amount of new additions. We entered the international market, our gaming brands of business from the Nintendo to the Sonic to Pokémon to Minecraft to Halo, just to mention a few have on an exceptionally well.

And we have new segmentations like the Funko masks that put us into different areas of businesses. So, those have been doing well. Encanto still has been doing tremendous throughout the world. We see some great excitement that. Sonic -- Classic Sonic, the movie, Sonic 2 has had tremendous legs and continues to grow.

And we're looking excited into the first half of next year with the Netflix, Sonic new categories of animation at Netflix. In addition, we have the Ily line, our girls perfectly cute.

So, we have some really tremendous operators that did well Encanto, styled collection, and Sonic, but our everyday business of Black and Decker, our apex legends, our boys Nintendo.

Just across the board, we've seen great distribution, we're getting further distribution both in North America and international territories, both in brick-and-mortar and online.

So, it's been across the board of the diligence we've worked on over the last three years to really build that singles and doubles business, the brick-and-mortar -- the brick-by-brick methodology to having some really exciting things with Encanto and other content.

And going into next year, there's really some exciting content coming plus some new evergreen initiatives that we have. So, we've done this over the last three, four years. And it's now coming to fruition based off of last year success and this year success and we see this continuing through next year..

Awesome, thank you. And then I guess the second question I would have, you spoke about the importance of shipping FOB and the shift from 60/40 to 65/35 this year.

When we think about the cadence next year, do you expect like a similar reliance on FOB shipping? Or should we think about the seasonality of the quarters potentially shifting more back to a traditional sort of pre-COVID style?.

So, as everyone would know that we started the company almost 20 years ago in January as an FOB business, and will continue to do that heavily as one of the best areas of our business. It's less use of capital to be able to do so. It benefits us and our retailers to purchase the goods overseas.

It helps everyone their blended tax rate, it actually allows the loads that the retailers put on their goods to be able to utilize their loads of cost of capital, their container costs versus ours. So, we will continue to push more FOB.

But that being said, we've pivoted this year based off of the container prices that occurred last year in early part to push more FOB. And we'll just monitor it as a company feel it's beneficial to ourselves as well as our retailers and our consumers to do what's right.

So, if it's better for us to push more FOB, we'll look to do so or if it's better for us to bring in -- change it around a little bit more domestic, we'll do so.

But we are much more an FOB company than a domestic and allows us to manage the inventory levels at retail and in our own distribution centers around the world better to be an FOB business, but whatever benefits our company and the consumer and retailer, we'll adjusted to that as needed..

Thank you very much. And then just one last one for me.

When thinking about inventory, it looks like your guys' inventory management has been very strong year-to-date, but it's still elevated year-over-year, how do you guys think about where you want to be positioned at the end of the year? And how should we be thinking about that position at the end of Q4? Thank you..

Thank you, Matt and that's a great question. So, what we've done is -- we've obviously had a terrific quarter. And we now are utilizing our inventories that we have domestically around the world, to fulfill what's needed and what's projected for the remaining half of the -- remaining three months of this year.

So, that inventory that we have, and we built early on to make sure that we had the right inventory, correct product lines for the first half of the year, because Chinese New Year is in January. So, we have the Ariel Disney movie launch. We have the new different areas of some other movies that will be launching in March in April.

So, we have the appropriate goods were needed. So, we will look to have our inventories slightly lower by the end of the year. But we do need an ample amount of inventory, because the first part of the year will be domestic versus FOB on some of the goods based off of Chinese New Year and our planning purposes with retailers.

Operator, next question?.

Our next question comes from Tristan Thomas-Martin with BMO. Your line is now open..

Good afternoon, guys..

Hey Tristan..

Hey Tristan..

Three questions. So, your full year guidance be around 20% growth implies fourth quarter sales are down quite a bit.

Is that what you would have expected if I would ask you this question three month ago?.

Yes, we've been managing based off of the environment and the economy and the nervousness that's been happening around retail around the world, we planned internally with our teams, John and all the rest of the company of focusing on having the appropriate sales early on knowing that there's going to be inventory issues at retail based off what the retail environment has been discussing.

If you look at the financial announcements based off of -- virtually almost all retailers about their inventory levels being high. So, we want to plan to have that the fourth quarter. We're going to have a successful great year for JAKKS.

but at the same time, we want to manage our business and not be successful and try to achieve the highest numbers out there and then have inventory going into next year.

So, we're managing the inventory levels, managing the sell-throughs at retail, and managing what we believe is we have -- to have terrific year both on topline growth, profitability, and EBITDA.

So, we are managing appropriately to make sure that we have the right inventory and the right amount of sales for the year, which then will allow us to have a hopeful clean entry into 2023 for JAKKS.

We're not worried about everyone else's inventory and that allows us then to have the right products that consumers need with the right product in stock..

And then could you maybe just quantify your inventory levels of retail? And then go maybe a little more in depth and kind of some of the plans for moving it?.

I mean we really don't necessarily usually get into that.

I mean, it's a little bit of a hard number to really triangulate, because to the extent that retailers are talking about what they might currently have in their DCs, it doesn't necessarily capture whatever they've purchased as part of the fob part of the business, which is like a big thing for us as you know.

I mean, we've obviously shipped a lot of product this year. At the same time, we've obviously killed through a lot of product too. So, I don't know no beyond that, maybe not so insightful comment that there's a whole lot to be said about that at this point..

Okay, I got it.

Any trends worth calling out the POS over the quarter strength, it's different price points are really just throwing product standouts?.

I'd say right now currently, first, we've had the Halloween, price points vary from $19.99 to $29.99, the sweet spot of Halloween. We do have other price points in the $99 and a little higher than that, but the sweet spot for the Halloween business has been right around that $19 to $29.

For toys right now, we're still in the midst of -- people have been buying somewhat early for Christmas. But while that happens, we mentioned this I think it was in second quarter or first quarter that over 50% of our items are in that the lower than $29.

That's been something that we started from when we initiated the JAKKS -- incorporated JAKKS in June 1995. So, that is primarily the sales right now.

At the same time, the higher ticket items that we have -- the different play houses for Nintendo and Encanto and the Disney items, just to name a few, all will actually pick up in the next two months right now to sell higher ticket items. But those higher ticket items in that our industry normally don't sell early -- as early as we're in right now.

But we'll have -- we have a good portion of our business that have exclusives with some retailers. So, there's a variety of different higher ticket items that really are on sale now -- not on sale discount, but on sale now that will sell through the year at a higher rate.

And then it will trickle down to spring again when the lower price points prevail..

But I think just to build upon that a little bit, to get a little bit more granular. We don't really see anything popping yet that you would kind of have an aha moment about.

I mean, we do see great momentum across a range of the bigger segments from a point of sale perspective, not necessarily just being Encanto, and the Sonics, but -- the different elements of our princess business, our Perfectly Cute business, some of the other kind of more traditional evergreen parts of our business.

Stuff is still selling through real well for us on a year-over-year basis. But we're not really seeing any particular trends yet as a relates to the toy side that the higher price stuff is moving faster and not moving faster or on the low end either. I think for Toy holiday, it's a little bit too soon to tell.

But we are happy to see that a range of our different segments are still performing really well..

Okay, got it. Thank you..

Thank you Tristan..

At this time--.

Sorry, operator?.

I apologize..

So that was the last for the Q&A. We have scheduled calls from this point forward. So, we appreciate everyone taking the time to be on our call today. Wishing everyone a healthy and happy Thanksgiving and happy holiday and look forward to continuing conversations and looking forward to the next year's call. Thank you very much..

This concludes today's conference. You may now disconnect..