Financial Data and Key Metrics Changes - Year-to-date net sales decreased by 21% compared to the previous year, with a 24% decline in toy consumer products and an 8% decline in costumes [7] - For Q3, sales in toys and consumer products dropped 41% to $156.1 million, marking the lowest Q3 in a long time, while costumes saw a smaller decline of 4% to $55.1 million [7][9] - Adjusted EBITDA for the quarter was $36.5 million, down from $74.4 million in the same quarter last year, leading to a trailing 12-month EBITDA of $29 million [10][20] - Gross margin for the quarter was 32%, down from 33.8% the previous year, reflecting the impact of tariff costs [9][19] Business Line Data and Key Metrics Changes - FOB sales were particularly challenged, with 93% of the year-over-year drop in sales attributed to FOB shipments [11] - International business remained roughly flat year-to-date, with a slight decline of 0.3%, but would be up 4% if Canada were excluded from North America reported numbers [12] - The company noted that many of its newer own-brand or private label launches were downgraded to fall soft launches due to delayed planogram sets [15] Market Data and Key Metrics Changes - Retail inventory was up mid-single digits year-to-date, while U.S. POS at the top three accounts was relatively subpar from both dollar and unit perspectives [18] - The company observed that leading manufacturers showed double-digit declines in dollars during the first five weeks of the season compared to last year [23] Company Strategy and Development Direction - The company is focusing on a robust and innovative product pipeline for 2026-2027, emphasizing margin preservation and careful pricing discipline [4][5] - Management is prioritizing international expansion and maintaining low inventory levels in the U.S. to prepare for a stronger 2026 [6][39] - The company is actively engaging with licensors to recalibrate royalty rates to avoid paying royalties on tariff values, which could further increase consumer prices [18] Management's Comments on Operating Environment and Future Outlook - Management highlighted the uncertainty in the retail environment due to fluctuating tariff levels, which has delayed holiday purchase orders [4] - The company is optimistic about the upcoming Super Mario Brothers movie as a potential catalyst for sales normalization [40] - Management expressed confidence in the long-term growth prospects, particularly in international markets, and is preparing for a strong 2026 [50][51] Other Important Information - The company renewed its S-3 shelf registration to maintain flexibility over the next three years, despite having no immediate plans for its use [21] - A cash dividend of $0.25 per share was approved for Q4, payable on December 29 [21] Q&A Session Summary Question: Key drivers for the business model moving forward - Management emphasized the need for certainty at retail and noted that recent tariff adjustments have provided more clarity for retailers [35][36] Question: Impact of the Super Mario Brothers movie - Management expressed excitement about the movie's potential to drive sales and noted that retailers are prepared for its release [40] Question: Normalization of sales and tariff impacts - Management confirmed that the first quarter had nominal impact, the second quarter saw significant cancellations, and the third quarter was heavily affected by tariffs [48][49] Question: Strategic M&A opportunities - Management acknowledged various opportunities for acquisitions but indicated a preference to assess the market post-2025 before making moves [56]