Core Insights - JAKKS Pacific experienced a decline in U.S. business by 7.8% in Q4 2025, attributed to higher tariffs and slower sell-through due to increased retail prices [1][6] - The company reported a total revenue of $127.1 million in Q4, down 2.8% year-over-year, with toy and consumer product net sales remaining roughly flat at $118 million [2][6] - The CEO described 2025 as a "defining year" with visible pressure on financial performance due to tariff policies, while emphasizing margin discipline and cost control [3][4] Financial Performance - Gross margin improved to 32.4%, the highest in over 15 years, while adjusted EBITDA loss narrowed to $3.8 million in Q4 [6][11] - Full-year adjusted EPS fell to $1.62 from $3.79, and operating margin dropped to 2.5% [6][17] - The company paid approximately $12 million in U.S. tariffs, impacting sales and customer ordering patterns [6][10] Sales and Market Trends - On a full-year basis, the toy and consumer product business fell 19%, with declines across all divisions ranging from 9% to 23% [7] - Fourth-quarter sales outside the U.S. rose 9.9% to $41 million, with significant growth in Latin America [1] - The company noted stabilization in Q4 after previous tariff shocks, benefiting from FOB shipments related to the Super Mario Galaxy film [8] Balance Sheet and Cash Flow - JAKKS ended 2025 with $54 million in cash and approximately $60 million in inventory, expecting low-to-mid-single-digit growth in 2026 [5][13] - The company generated over $8 million in cash flow from operations and paid $11.2 million in dividends [15] Product and Licensing Strategy - Key focus for early 2026 includes the launch of products tied to the Super Mario Galaxy movie, with additional plans for Sonic and Disney dolls [16][19] - The company is preparing for multiple theatrical releases in 2026, including Toy Story 5 and Moana, which are expected to drive sales [21][22]