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Joining us right now is Mattel chairman and CEO, Ynon Kreiz. Ynon, always great to get some time with you. So, stock is reacting, I think a little bit better than people would have thought, uh, given some of the things you had to say on that earnings call last night. Top line looked good in the quarter, but a lot of focus on your guidance and the fact that you pulled it. I know you don't take that decision lightly. Why did you have to pull it here?

Well, great to see you, Brian. Uh, let me start by talking about the quarter which was a strong start of the year with top line growth, gross margin expansion, and continued operational excellence. We are also off to a strong start in the second quarter, with consumer demand up double digits. Our brand portfolio, flexible supply chain, and balance sheet are clear advantages during this uncertain time, and we are maintaining our target of $600 million of share repurchases this year. As it relates to guidance, given the volatile environment and evolving U.S. tariff situation, it is hard to predict consumer spending and our sales in the U.S. um, in the remainder of the year and the holiday season. So we are pausing guidance until we have sufficient visibility. That said, we are confident about the mitigating actions we are taking which are designed to fully offset the potential incremental cost impact of tariffs.

Ynon, just three months ago, Mattel was a company seemingly firing on all cylinders. You were looking for earnings this year of $1.66 to $1.72. Is it fair to say that these tariffs, 145% tariffs, and, you know, you make close to a little bit less than 40% of your products in China, that these tariffs would wipe out all of your profits for this year?

What we, what we did say is that when it comes to tariffs, uh, the mitigating actions that we're taking are designed to fully offset the cost impact and this includes accelerating diversification of our supply chain and further reducing reliance on China sourced product, optimizing for, optimizing product sourcing and product mix, and where necessary, taking pricing actions. In terms of the, uh, tariff impact, what we said on the call is that the, uh, potential impact, uh, assuming current tariffs, the incremental cost exposure this year will be $270 million, but this does not include any mitigating actions or offsets, and as I said, we are confident in our mitigation actions, which are designed to fully offset the incremental cost impact.

Ynon, how much will toy prices go up this year because of tariffs from a Mattel perspective?

When it comes to pricing, uh, we work very closely with our retail partners. We always have the consumer in mind and make sure that we offer great product with the right balance of quality and value at affordable price points. We take a strategic approach and under the tariff scenario that we see today, we assume, or we expect that between 40 to 50% of our product in the U.S. will be priced at $20 or less. I'll give you just a couple of examples. Hot Wheels basic car, the number one toy item in the world, we sell for just over a dollar, and an Uno pack, the number one selling card game in the world, we sell for about $6. So, our diversified and flexible supply chain is a clear advantage for Mattel that will help us keep prices affordable for consumers in this period of uncertainty.

Ynon, new report out of the Toy Association, they're saying about 50% of small and mid-sized toy businesses could go out of business within weeks, if not months, because of these tariffs. Would love to get your thoughts on that.

Yeah, look, there's no question that tariffs are creating a real disruption in the industry, and as you said, 80% of toy production globally is from China, and many companies are very exposed. Some companies make 100% of their production in China. So, companies have stopped production and shipping to the U.S. as a result of tariffs on China. We do support the Toy Association advocacy for zero tariffs on toys to ensure that safe and affordable product remains accessible for everyone, given that toys are such an essential part of children's lives. For Mattel, it is a very different situation, given our scale, brand portfolio and diversified and flexible supply chain, and that we index at less than half of industry average of product coming from China. In terms of U.S. imports, less than 20% of our global production comes from China, and we plan to reduce that below 15% in 2026 and below 10% by 2027 with additional contingency plans to accelerate that if required. So, we don't, so we expect not only to manage through this volatile period, but to strengthen our competitive position and our standing as a trusted partner for retailers and consumers.

Ynon, I have to tell you this and I don't say this lightly. Um, you know I talk to other toy manufacturers, and this tariff situation has been a punch to the gut for them. It fundamentally changes how the toy business runs. Are we looking here at potential toy makers just shipping products, a doll with no hair, a doll with no arm, a doll missing fingers here because now these products can't be made at a profit in China. What's the endgame here?

Look, at Mattel we are committed to the uninterrupted supply of quality products at a wide range of affordable price points to children and families around the world. This is what we do. We are very good at managing complexities and we are ready for the challenge.

And lastly, Ynon, I know you saw, I'm sure you saw the president's comments saying that maybe in this land of tariffs, children would have to go with maybe two dolls instead of 30. If you were sitting next to the president, what would you tell him about a comment like that?

Well, we all know the importance of toys in children's lives and how much toys make a real difference in a child's development. At Mattel, we create innovative products and experiences that inspire fans, entertain audiences, and develop children through play. And we are very committed to this mission, always having the consumer in mind.