Good morning, everyone. Welcome to the JAKKS Pacific Fourth Quarter and Full Year 2019 Earnings Conference Call with management, who will review financial results for the quarter ended December 31, 2019 and the full year ended December 31, 2019. JAKKS issued its earnings press release earlier today. Our earnings release and presentation slides for today's call are available on our website in the Investors section. On the call this morning 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 up 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 and-or adjusted EBITDA in 2020, as well as any other forward-looking statements concerning 2020 and beyond, are subject to Safe Harbor protection under federal security 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 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 the non-GAAP financial measures such as adjusted EBITDA. 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 would like to turn the call over to Stephen Berman.

Thank you, and good morning everyone and thank you for joining us today. For more than 20 years, JAKKS sought to create a revenue base that consist of mostly evergreen product categories that are enhanced by continual refreshing of relevant licenses, while at the same time pursuing opportunities with promotional products, I am proud to say that our results in 2019 show successful execution of this strategy and I'd like to start today's conversation with an overview of the great progress JAKKS Pacific made in 2019 and the strategic focus, innovative creativity, unfettered determination that led to accomplishing our stated goals and growing both sales and margin. After John's comments on our financial performance, I will return with some brief comments about our major product categories, and what we are doing in 2020. During the quarter, we exceeded our internal expectations for top line and adjusted EBITDA, finishing both the fourth quarter and the full year with positive adjusted EBITDA. We grew total sales by 15% over the fourth quarter of last year, and our full year sales were up by 5%. Sales within our International segment were strong in fourth quarter and up more than 40% year-over-year. We did exceptionally well with Frozen 2 which contributed strongly to our total growth and helped us grow our gross sales by over 35%. We continue to have a solid base of evergreen products in categories where we are the industry leader, which helped us grow the seasonal category by over 50% over fourth quarter last year, and we have seen nice increase in our sales to online retailers. In addition to the increase in sales, we also tightly manage our operating expenses, cut in our overhead significantly compared to fourth quarter of last year. As a result, we were able to…

Thank you, Stephen, and good morning everyone. Net sales for 2019 fourth quarter were $152.5 million up 15% compared to $132.3 million last year. Reported net loss attributable to common stockholders for the fourth quarter was $20.6 million or $0.70 per diluted share compared to a net loss of $3.2 million or $0.14 in the fourth quarter of last year. The net loss in Q4 2019 includes a number of noncash charges of $10.7 million such as intangibles impairment and tooling disposal and the change in fair value of the derivative liability associated with our preferred stock. Adjusted EBITDA for the 2019 fourth quarter was $3.3 million compared to a negative $1.6 million in the fourth quarter of 2018. Adjusted net loss attributable to common stockholders for the fourth quarter was $0.26 per diluted share, an improvement of $0.11 over the same period last year. For the full year of 2019, net sales were $598.6 million up 5% compared to $567.8 million in the prior year. Reported net loss attributable to common stockholders for 2019 fiscal year was $56 million or $2.16 per diluted share compared to a net loss of $42.4 million or $1.83 in 2018. Included in the 2019 full year losses of $13.2 million loss on extinguishment of debt associated with the recapitalization we completed in Q3 of 2019 and $10.7 million associated with the aforementioned charges and change in fair value recognized in Q4 of 2019. Adjusted EBITDA for the full year of 2019 was $18.9 million compared to $2.3 million for the full year 2018. Adjusted net loss attributable to common stockholders for the full year of 2019 was $0.73 per diluted share an improvement of $0.52 over 2018. Our girls targeted businesses was the biggest driver of growth in both Q4 and for the…

Thank you, John. As I said earlier in each of our major product categories we have a mixture of evergreen products, continually refreshed licenses and opportunistic promotional products. Our base of evergreen products reliably produces strong year-over-year consistent revenues and we augment this with innovative and creative promotional products and lines based on our current licenses. In our Girls division for 2020 among our new products we have Kitten Catfe, a line of preschool products based on kittens and which is our own IP and Cute Girls Hairstyles which is a hairstyling line based on a popular social media channel. A broad line of our Disney Princess Style Collection, Frozen 2 with the new spring line of lower-priced products and a broader new fall line with new products and their interactive Singing Elsa Doll. In addition, our Minnie Mouse lines also have broader distribution for this year and Daniel The Tiger, and Giganotosaurus also continuing for preschoolers with broader distribution. In addition we hope there will be other licenses that we should be able to talk about soon. In our Boys division we continue to see growth in Nintendo and will have broader global distribution of this line during 2020 and beyond. Our Saga product lines notably Sonic the Hedgehog has seen nice sell-through and should get a nice boost from the successful release of the movie last weekend. We will also be launching a line of toys based on the popular book series Last Kids on Earth. In addition we are expecting strong sales from our relaunch of Fly Wheels which was one of the most successful proprietary products JAKKS has ever had. In our seasonal division, we will benefit from having a full year of sales of our line of license indoor play tents, and our innovative Redo…

[Operator Instructions] We have a question from Stephanie Wissink from Jefferies.

This is Ashley Helgans on for Steph, thanks for taking our questions. So to start on the coronavirus. Where are your factory partners in terms of having personnel back and capacity online today? And then where do you expect them to be in the next two to four weeks?

So based throughout China there is so many variations with provinces and different segments of manufacturing. So for instance our - major cut and sew supplier which is located in Hangzhou in the outskirts of Hangzhou is starting to get up and running almost at full capacity because - they only have had two affected people in that province. So they are able to get much more labor, but it truly depends on the actual manufacturing capabilities and the segments in which are located from Shenzhen to Guangdong to Hangzhou. So it really depends on the actual area. So at this point in time, there's a flow of labors coming into specific manufacturers and then there are no flows of labor going to other manufacturers. But right now with where we stand. I'm on the phone each evening on a WeChat call with each manufacturer that are our major components. And it's a really by day process. They're hoping to have more labors come in and cross borders by next week but it really just depends where they are located and actually the amount of labor that they need during this off-season period. So it's really by manufacturer or by factory is how it works.

Okay great, thank you. And then if I could just squeeze in one more. Payables in the quarter were up 15% in line with sales. But when we look at the returns and allowances on the balance sheet they were up 30%. How should we think about this gap?

Yes, Ashley it's John. I'll take a stab at that one. That is in line I think with our last quarter's results as well and it's something we are kind of keeping an eye on in terms of getting. Top of mind I have couple of different thoughts as to why that's happening, but we'll probably have to take it offline to give you something which is a little bit more fact-based rather than gut-based.

Okay. We can take it offline. Thanks so much for the color and look forward to seeing you guys next week.

I mean I think to answer your question. We don't see it as a temporary sort of blip in terms of how the balance sheet is trending. We think that's probably more in line with our current mix and where the business is heading next year.

We have a question from Gerrick Johnson from BMO Capital Markets.

Hi Stephen, what was the $11 million impairment in tooling write-down what did that relate to?

It’s John again. The $11 million isn’t tooling per se it was a mix of three different things. Tooling that we ended up writing down faster than we normally would depreciate was a little bit less than $1 million of that. Most of that was attributable to some incredibles tool stuff which we thought was essentially at end of life faster than we would have normally expected it to be. And some tooling that was put in place chasing Tsum Tsum back in early 2018. The big piece of that was $9-plus million of intangible impairment off the P&L relating to the acquisition of Maui that was done back in 2012. As the company kind of reviews the product line in a greater level of detail and looks for - are we investing our resources in the right places and maximizing margin. As I think you might know the company exited the fund little business last year along with - at the same time evaluating how that business is doing and what the prospects of it were. And although along with having some leadership changes in that business over the past several months and kind of looking at it carefully in terms of where it is and where we think it's going. During the quarter it made sense to revisit that intangible value and to essentially go and write it down. So that was the majority of that Q4 write-down. I believe there is also a piece to associated with the derivative element of our preferred stock which is something we have to mark-to-market every quarter.

And Stephen you talked a lot about consistent revenue and building out stable evergreen businesses. So I guess the obvious question here is how much of your growth in the quarter came from Frozen and Frozen 2 in particular. And then do you still think that Frozen 2 will be as big in 2020 for you as it was in 2019?

Okay so firstly, we don't breakout actually - the actual property revenue. But Frozen obviously Frozen 2 was the strong property for us. And this year or last year at the same time our Princess sales held extremely strong throughout the Frozen [indiscernible]. So previously in 2013/2014 Princess slowed down while Frozen picked up. We had a good benefit of Princess doing extremely well not just the basic Princess, but our new style collection. So going forward we have a broad array of our Princess line that's expanding and we are ahead of Frozen in the sense of product development. The first time around we didn't have a spring line because we didn't know the success. This time around we have a very nice spring line which is at lower price points which is really set up across - the board at U.S. and international customers. And then we have which was our number one SKU was a Sing-A-Long Elsa Doll which we had in 2014 that we are launching for fall 2020. So in addition to Frozen being strong last year we see it strong this year. We will have a - the sky is Frozen 2 line much more broader than we did in 2019 as the movie came in October and no one really new about Frozen 2 in October 31st last year.

So it sounds like you're very confident in Frozen 2 in 2020. But do you think it will be contribute as much to P&L in 2020 as 2019?

I would say it won't contribute as much or it possibly can. What we're excited for is the DVD launch I think I believe it's at the end of this month and the streaming launch. But that being said our Princess sales are growing. So the actual area of business itself is extremely stable and growth. And in addition we actually have a very strong tent-pole [ph] movie launch property which is called Raya which is Disney's November animated film which was pretty much Moana happened years ago. Frozen and we're looking forward to the launch of Raya which will be in November and we have a broad array of products very similar to what we did in Frozen or Frozen 2.

And then one more from me. So DSOs I think they were down 14 days yet international was up over 40% compared to the U.S. at what over 13%. So with the shift to international shouldn't DSOs have expanded so, what explains the better collection this year?

Yes that's a good question. Yes to be honest I don't think we have an answer for you off the cuff on that. We are mindful that as we expand the international business, the DSO metric usually doesn't necessarily work in our favor. But we were happy to sort of see where we were at the end of the quarter.

Okay.

And we're moving on to New Year.

All right, all right. I want to keep going retail POS and inventory?

Right now retail PO, I'm sorry.

Inventory and channel, yes retail POS?

Inventory and channel - is actually extremely I'd say low for the normal period of time versus last year. By good fortune we ended the year pretty clean at retail. We didn't have any major issues across the board both U.S. and internationally. And there has been other companies have had some major issues. So we're looking going into this 2020 pretty lean at retail inventories.

Okay good and POS in the quarter?

I don't have that off the top of my head, I'm sorry. We could do that offline.

Thank you.

Well that is it for the conference call today. We appreciate everybody being on the call and we're looking forward to having our first quarter conference call in April and talking more about 2020 and beyond. Thank you very much.

Thank you. Ladies and gentlemen this concludes today's conference. Thank you for participating. You may now disconnect.