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Hasbro (HAS)

Participants
Debbie Hancock VP of Investor Relations
Brian Goldner CEO
Deb Thomas CFO
Michael Ng Goldman Sachs
Drew Crum Stifel Nicolaus
Felicia Hendrix Barclays
Stephanie Wissink Jefferies
Greg Badishkanian Citigroup
Eric Handler MKM Partners
Tim Conder Wells Fargo Securities
Arpiné Kocharyan UBS
Linda Bolton Weiser D.A. Davidson
Gerrick Johnson BMO Capital Markets
Call transcript
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Operator

Good morning and welcome to the Hasbro Third Quarter 2017 Earnings Conference Call. At this time, all parties will be in listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] Today's conference is being recorded.

If you have any objections, you may disconnect at this time. like the I'd Ms. over time, this to call turn to At Hancock, Relations. Investor President Debbie of Vice Please go ahead.

Debbie Hancock

and you Thank good morning, everyone.

Joining Hasbro's your Chairman company's performance Deb are questions. and Deb Brian Executive with then on will morning Financial and the commentary we Chief Thomas, me Officer; Hasbro's we Brian Today, begin and providing and this Chief Officer. Goldner, will take

release available quarter earnings was on Web third morning is issued Our and our site. this

release regarding and containing our that information covered measures. per earnings EPS, are earnings available release in Additionally, share Please discuss are presentation on share. we call today's referring site. and slides also presentation non-GAAP note press earnings The to we diluted or include whenever information financial per

like during cause that expectations make may and goals, differ results I materially statements. you expressed session similar remind from are question-and-answer the the matters. anticipated in begin, expectations, this factors or and statements follows, we members other could Hasbro or that that There objectives forward-looking actual to concerning these results management's Before would events of call forward-looking management to many

call. release most forth XX-Q, of XX-K, circumstances after forward-looking Brian? any factors to Form now events Annual in today public to reflect I'd our this We our like in the Some or Report occurring obligation those today's on our in to update other set are introduce date press Brian disclosures. and no recent undertake statements Goldner. of made

Brian Goldner

the and quarter stages We’ve to of of Debbie. early us investing ambition. full third for unlock delivered our history. very still the joining today. revenue positioned across Good The brand thank earnings quarter, team you, the in morning, the a blueprint. our you our significantly realizing Hasbro potential Thank We're Hasbro good brands, in and everyone highest

consumer takeaway ability operating PONY, During FURREAL in by dimensions. globally and growth of Brands MY Gaming, led challenging double-digit growth Brands, FRIENDS, NERF, Franchise in segment Revenues across each grew MONOPOLY, this retail. TWISTER. OUT, our we amid TRANSFORMERS, deliver Hasbro demonstrated ALIVE, SPEAK a with quarter, and Emerging to increased BABY strategy's conditions, number revenues at LITTLE

Our and restructuring multiple filing Brazil. our U.S in commerce softness well and Toys as multi-screen bankruptcy from in effectively the brand the and in finance experiences retail as are strategies evidenced growth managing deeper commercial teams in across Us the the industry and to Canada, Hasbro Canada, U.S., disruption investments consumer ranked developed the "R" new And with short-term as X% are engagement game by content India. and data omni-channel TRANSFORMERS ongoing to grew well China building supports our success. operations the France, and our as according in increased industry Emerging GXX as from Mexico, Germany, August, And market revenues LITTLE and revenues PONY. The Australia. Hasbro economies in and including in and through MY first Russia, sources. growth in markets toy the our U.K

As and continue and the near-term. face forecast the we we last Brazil to discussed that to continued conditions tough quarter, in U.K economic

us positions with other these markets. portfolio major to strength and Our diverse overcome brand geographic challenges in

including take retailers, shops well value, several as toy consumers where mass years, teams are at an importantly and over in shopping feature which just specialty our addition, past commercial outpace at total grocery, omni-channel in puts as consumer but point-of-sale, retail In new to invested the and and e-commerce strategy, fan continues drug, where Hasbro have not in retail. away global specialty, channels emerging

the situation. of impact is Toys disruptive, clarity the for shipments paused and While as "R" we gain Us we a period near-term short on

shipments uncertainty doesn't enter to we higher in which level as for be strong, does the with has the working quarter. impact of holiday outlook This but are continued takeaway, introduce fourth them period. our overall to to We as the them consumer

Importantly, omni-channel, wealth the the online, confident of also options, retail collective in in new in and well store, landscape. with the we're we're retail channels growing long-term and positioned outlook for

X% revenues increased quarter, XX% with growth posted in growth MONOPOLY. third all home Franchise Global year. versus and and Hasbro revenue increased Brands has screen Gaming start. to continued and the new up XXXX Nitro global for was September a RESCUE fall, in episodes multi up of and LITTLE year last initiatives up we POS of franchise. NERF, movie This the The PONY, continue entertainment drive For MY good with new Robots off XX our entertainment and double-digit took The was the BOTS quarter, throughout last QX linear streamed in and mid TRANSFORMERS, up increasing growth to launched were TRANSFORMERS on teens Disguise all entertainment NERF running no Hasbro's the Transformers: Brand last to is are Emerging exception. the Knight on X%. and was to high release NERF and in Point-of-sale in regions. fans. versus services. place engage

My the RETURN. for chapter partnership and day part storytelling, MOVIE deliver movie THE animated in see addition, critically industry-leading engaging Consumer release innovation, the franchises the We we're November in In series consumers, every and successfully point-of-sale content with robust on investment in that backed creating Hasbro fans, LITTLE with brands gains Prime building revenue Pony sustainable insights, the and based stories brand digital remain of of PONY: multi and increased debut. acclaimed integral drove Wars expertise. experiences Little of around debuting format is merchandise by an behind Machinima, MY second combined successful audiences. Trilogies: TITANS

delivers entertainment including base, energizing well our film are in yet successful brand. expanding to a edition Madness film by as our revenues in revenue play. was is and as the international commerce of games, positioned with streams, window, and of featuring our element Our reinvigorating fans content investment. be the into Nintendo characters The were we including Entertainment base consumer number new and and The MONOPOLY while and multiple merchandise, the inviting to MONOPOLY in core Token model audience. fan be important well and game new followed up markets Home released Gamer, will several new the an

expected, revenues the from MAGIC: high THE GATHERING positive. in is numbers play remained declined and sentiment players and quarter, As while stores

gaming franchise. GATHERING in TROLLS date. now WARS on look and NBC. released well Jedi our believe announced November. film a upcoming formats revenues MAGIC: STAR STAR across available as The versus and revenue of Europe digital Our digital increased more there X into the robust GATHERING quarter is Trolls declines on translate to to initiative driving has of into new revenues trends increased the Gaming a gaming its franchise get sustainable all we sales higher, in in YOKAI and Last America in forward multiple as expertise well coupled September similar theatrical enables with cadence world. quarter led revenue business future DREAMWORKS' larger, closer for support repeatable The growth our year-over-year Hasbro entertainment arena multi-year and significantly by growth year commercial created in the good ability our the this launch entertainment retail brand Beyblade WATCH and and airing THE contributing decreased XX in and around level and with September we Partner XX% THE property. launched social PRINCESS, platform anticipate is potential a TROLLS, and continued gains down grew was merchandise level without was beta global more We DISNEY the in WARS: Holiday consumer increase to will we building category and DREAMWORKS' at entertainment. to MARVEL, this MAGIC: industry regions takeaway significant interest November is revenues Gaming DREAMWORKS' the was top WARS decline to Sesame up, remains off level. when consumer slate year's X. gaming as DISNEY as TROLLS for Latin storytelling, continue will last the third historical a content, activities versus quarter of remains go which will for strong in close investments for and on Street. STAR including Point-of-sale entertainment promotional start. DESCENDANTS, of years both launch performing Today's in product. and gains. movie experiences periods

well We franchises, the theatrical behind SPIDER-MAN supporting as of the segment in Galaxy: lines Spider-Man: Marvel innovation Homecoming, ongoing line. the Guardians Marvel X as toy role-play brand Hasbro's waves third as Legends Marvel our the of the momentum new release Marvel home portfolio top quarter to release as strong in of entertainment release of of across Beyblade, saw well continued Studios especially with consumer items. in momentum Vol

Panther XXXX, behind of Infinity for Moana increased in Marvel strength new Descendants supporting entertainment. the We Studios X May. line Marvel And Marvel Ragnarok. Studios and including Descendants in Black Disney also theatrical a new War Thor: Disney eight takeaway films, X and consumer In has theatrical have Princess February, slated release in Avengers: release November

addition, Frozen in of limited new theatrical release in of Coco at new XX. is Disney's on November holiday of Hasbro's Olaf's the front featurette Adventure In support line retail ahead now Disney/Pixar's

reassure entertainment ever our entertainment greets, a journey leader, events ages. September brands. from conclude, play toy today. and around from to days our a first X want and of and brands sneak through hosted to game event of Finally, in To to POS global that you XX, peeks, our all meet we HASCON and are This of for our company experiences, of and fan-centric I fans emblematic and families brand a immersive is global hands-on kind Providence, three delivering experiences strong first

Toys as well holiday the at economic for plans certain growth been Our Us in impacted recent as "R" by events the had countries. outlook

growth expectation, we our of quarter X% the reflects a revenue plans year-over-year. from range in our to to like result, shift Consumer expect diverse for our shipment momentum is next and brand currently XX a XXXX drive and beyond. This a days. now prior the positioned portfolio I’d are turn fourth the As current deliver X% but Deb. continues over for Deb? call to demand growth with to business well we to in

Deb Thomas

everyone. and Brian, good you, Thank morning,

challenges, the returning innovation $XXX and have the revenue billion with capitalize the quarter our million growth, through $X.X dividend season. cash third to and on and presented economic marketplace we earnings the retailer positioned team program. in to The quarter holiday delivered repurchase We yet Hasbro while as shareholders well are ended and in

negatively Canada "R" expense debt and associated and operating the the impacted Toys bankruptcy profit, in incremental our the mentioned, Brian U.S bad bankruptcy. including revenue As with quarter third filing Us

incremental XXX the operating points basis in have a would profit been expense, higher Excluding approximately company quarter. the total

While work season. to this with consumers negatively continue we event closely for be to for products the fourth quarter, right initial Toys able our impacted to also holiday to deliver the has outlook "R" growth Us successful

and Gaming X% of U.S in Emerging decline Brand. U.S categories, short mix, in including good including quarter, THE segment revenues. year. period, and Retail quarterly the revenue digits all first Canada Brands, or of the declined bad to the the The double Operating GATHERING in Brand, Canada the to profit in result and ceasing debt product nine revenues increased and U.S shift months third of For product point-of-sale revenues, impact $XXX.X net Toys remains X% a increased was for quality. Hasbro inventory year-over-year expense. total, decline Franchise of Canada segment "R" In shipments the Us quarter XX.X% the a million MAGIC: from incremental and and the Partner the grew in for and

million expense, impact International segment margin X%, increased in the segment from was down Excluding $XX.X exchange. a slightly. operating including revenues bad foreign profit favorable debt

Brand Franchise partner growth Revenues Hasbro a Pacific. segment, Europe, revenues. three Asia brand and decline international Latin the Gaming across regions: Within emerging in all brand increased and America, and offset revenue

of We the decrease declined or million and first essentially profit the a quarter as product the was net higher initiatives, our to profit to the primarily and with result discussed. X% increased the for in the for anticipate and year. continued well consumer inventory Boulder basis. flat the $X.X segment address Brazil, declined as licensing revenues. quarter on revenue Media. currency Operating challenges continue Point-of-sale with Europe regions less of Hasbro emerging this on good increased or The product profit entertainment Segment $XX.X were quality of or result mix. we X%. increased the associated having revenues the a versus declined entered nine in a favorable operating XX.X% the inventory international XX.X% over million expense in million at U.K operating will quarter we XX% Overall, XX.X% margin we revenues remainder Growth of XX.X% retail, Entertainment the of higher segment to previously the leverage. operating revenues contribution was $XXX pockets and second in XXXX. and dollars all from saw constant and of Although months. X% in The have three

higher, THE [technical and some mentioned, the decline the basis favorable lower bad debt As of external revenues. brand partially XX.X% to slightly the difficulty] product, to driver a expected of been Royalty and XXX from growth continued would have The small of GATHERING revenues. the points less is movie primary profit revenues points expense brand revenue, by royalties. in increased MAGIC: approximately margin in offset carry Cost excluding basis decline operating which the was of product sales XX Last XX% expense. mix, decreased revenue partner X.X% partner Knight Transformers: including increase The

increase most amortize due essentially Investment Program XXXX of the innovation remain the lower our with primarily expense we declined product Our slightly investment as higher was and declined is differentiation efficient the development percentage Toys We of fourth quarter, declined in high of MY point the Us. the LITTLE increase a in priority BackfXip The to structure percent investment a bad for Studios. percent increased our for this over flat our a on a amortization our as cost revenue SG&A production associated begin but as revenues "R" remains movie. of will of team. at expenses debt absent company. a but in to quarter as focused SG&A PONY to year-over-year, revenue in percentage expense. XX.X%. result in

changing environment, impact the outlook slightly for operating may revenue current our expectations margin the profit Given year.

other interest the line channel. income of $X.X with this of from income Consistent to $XX family our results profit, last million the quarters, are discovery the and below versus was operating components Turning million income earnings year. share prior of higher biggest

of X.X% million of issuing X.X% the low During We're million XX-year raise million debt result of expect additional $XXX low provide of debt. by XX this $XXX to took this for transaction an use over refinance purposes. We $XXX corporate cost general the interest environment quarter, we next new advantage the capital maturing very rate years. with pleased to to a and

included per we is range governing of will year million benefit forward, the consistent tax XX.X%, year $X.XX Going have standard our forecast was XXXX. The from the $X.XX. impact approximately favorable quarter's underlying interest the XX% versus a to from expect of rate this down $X year to be accounting and impact full the $X.XX approximate last The continue adoption from for new expense. with of quarter our an stock compensation. fourth and to August This favorable the in XX.X% to

projected over month continue. billion operating rate a period of this tax ending healthy on were quarter good cash. to $X.XX. of earnings quarter cash year, the expect $XXX.X trending $X.X end financial Based in underlying in position, generated and in for we for to flow estimated the million Hasbro strong the with including per our We is of trend the and remainder trailing the Our our mix generation. cash Diluted lower balance share earnings range. the is a sheet revenue XX

$XX.X we dividends paid During repurchase million and the common in $XX.X out worth of stock. quarter, million

XX mix continue days. to million in We was and X The and of end. outstanding to XX% as authorization increased timing repurchase in collections. day $XXX days due approximately share well this as had increased million at primarily Receivables target to our sales $XXX.X quarter year of the increase the available revenues

in Our condition receivable and strong. to accounts good continue be collections are

"R" good compared end receivables from Inventories of our impact timing ultimate to "R" growth revenue retail an for our expect of the of day's the of expectations exchange. has remain they'll the Consumer see year-over-year closing, from there we revenues two year-end of Us but as uncertainty X% initial for plan positive XXXX. grow impacted in now to X% versus could our with the shape, on emerge despite the of are add Chapter quality estimates expect to foreign through fourth receivables and Hasbro impact range In the is X%. holiday Toys incremental higher near-term Toys we in both collection XX. execute and flat our Us a to which dynamic well and X% environment absent trends quarter essentially our Inventories year, increasing to to their at good growth begin at However, we are positioned season. how support today,

programs driving now season, Our and business holiday and global beyond. your teams while our Brian heading effectively the executing into are questions. are and strong in best commercial profitably happy I fourth the brands with our both to the strategy take industries quarter

Operator

Thank you. Instructions] Thank you. [Operator

line the from with comes your Michael with Sachs. Goldman question questions. proceed of first Our Please Ng

Michael Ng

so question some you revenue you if My could I being comments is Thank more concentrated of preference expense the for some of wondering with in first Toys much and retailer was debt the that the for made Did for the the the Great. expected "R" as some despite seasonality share just to Deb, question. headwinds? growing revisit a Deb. you of Us due fourth you come for quarter shift in just-in-time quarter e-commerce. a bad

Brian Goldner

Thank you. shipments when did quarter, we The Good far for bankruptcy, but declaring heard we their just the Mike. that time. mention morning, we did of some as earlier period stopped Us have a "R" Toys short we that as -- of

absent say absent that, the in quarter would So the as come bad we I did debt expense. expected and

the we fourth a quarter, quarter. the And filed for to thoughts in "R" seasonality, third adjusted the around Toys with that. having just as see so bankruptcy far As we've late continue Us our bit

has strategy moved to context as bit helped wanted found grow just-in-time. well. certainly to We just retail that omni-channel around moving more However, give expect still a to to we that and and

visibility we're every out day now, closer. about closer get close days are and into more as to and get from year-end XX we year-end starting we However, to

Michael Ng

Okay. bit to your terms Toys a And just on I’m of could "R" assumptions you what "R" assuming of you're around get expand a just Toys in for little the sense trying that Are better Us. you ship that assuming "R" than helpful. Any fourth you Are less? very color Us around that Toys "R" to would Us? you quarter? assuming less Toys be orders Us

Brian Goldner

Mike. Hi, Sure.

the now to So QX more grow I expect and X%. and think rate we to first growth the X% foremost, in estimate than between do and clear, is industry be industry

until sell-through this expect great, do than we seen very So grow that. to more up weekend. We've strong

just last one -- agreement Us month So, is forward our come agreement the terms over been also just working days that XX old. we on teams agreed on over last to which we getting go now a just receivables on and Chapter and our commercial Toys "R" month signed finance on to We've the few ago. days the an and have focused few

So Toys the can to joint and Us merchants business refocus just holiday the "R" now on two focus and with months team our plan go.

had growth and with in just issue happened We can environment. the retail more great need outstanding us this "R" see consistent Toys fact, to confidence Us earlier POS few us gives meanwhile over do it's it's our months. for in this our XXXX. expectations. to it what determine that deliver very have an issue great industry-leading the not in that wouldn't strategy expansive But year and In We that this even an is next receive been a we year channel have can

Michael Ng

there? how out in what happened of was Elena me, Us? for of could just the a that much was was Toys help the if hoping "R" How of parse rollout and one was year-ago, down PRINCESS I think I DISNEY much Great. And because quarter. last Avalor the you

Brian Goldner

Yes.

-- it very up year-to-date Also in the considerably. DISNEY that the quite up also PRINCESS see PRINCESS up and So heartening quarter was to point-of-sale for markets. was in international DISNEY point is

strongest it's brand in fact, point-of-sale gainers Arena. among the In our partner

you seen growth has we’ve are QX the a entertainment what and of Adventure. the And we've are entertainment now so growth key Olaf's So been timing, shipments because bit there's seen also the drivers year Frozen around of throughout Beast of a Frozen around that great key featurette, driver, year-to-date. getting and then is the the really into The initiatives. Beauty this Moana

it up was the in quarter U.S. the Frozen And in so,

And in was again Descendants so quarter. the very strong

strong it's think seeing we're quarter I brand but of -- sales bit this particularly international. shipments So for timing this the robust quarter a overall, in and great sales

Michael Ng

Great. Thank much. you very

Operator

of your with Our Crum comes the Stifel. Drew next line question proceed questions. with Please from

Drew Crum

Hi, guys. Good morning.

Brian Goldner

Good morning.

Drew Crum

to way the Brian, to able as those that had product may the embedded around that any uncertainty Toys that earmarked Going Toys divert for were in quarter Do other X% previously is retailers? and of move the to retailers X% have any shipments about to "R" for you back Us in other that And you Us, flexibility Toys "R" you shipments to "R" provided? think Us? to that fourth any sales guidance you’ve go you

Brian Goldner

industry the in Toys will the can are our where growth "R" given well Yes, the our Us so they’re where are home we of channel that we very fact growth the U.S. clearly think are retail about on as us in double our strong good in both shape we and Both up quarter but teams receive, gives we feel year-to-date end very and can confidence and a course. do of that fourth in strategy assessing focused obviously our inventories ahead that what rate for that digits very great as at expanded quarter, find great we and we and POS is growing and globally inventories, are

inventory a we would that to assess say issue. as don't we I total that, what can we that But want do inventories the of overall, have, Toys So fourth Us represent the the quarter. quarter for see -- home all -- find in "R" the in we will we an need

Drew Crum

Jedi way in for you during to between the in period? any five having think could films mentioned STAR that, misheard hear just comment do maybe holiday sales were but in you quarter months quarter, limit the and didn't POS of the Last as one consumer And two the WARS The Okay, Brian the WARS brands got takeaway up upside it. was STAR on partner being then I I

Brian Goldner

we Latin territories for so about the in the saw improving up opportunity in QX. shipments long-term encouraged because out. beginning marketing that Yes, Last And STAR WARS just and up in is the The that's just to and We're overall for the was America, and POS U.S way were the Jedi. roll very other

fact, but in In get Han happen just as into into new increasingly 'XX, not will about are impact Solo lot And we the I very STAR entertainment WARS the of we're again think Solo: windows movie, home of that important spring A XXXX. excited the a becoming story.

I think that will of be great and cut I don't Jedi. the off think Last it tale will The

In product, streaming us it for that’s started The think then really fact, online. WARS. add sets fact up of initiative about we're for And we great that content to XXXX Forces you that and excited STAR I Destiny that to very the and the ship a just

I at about so, we’re very where and shape now. And through good Obviously, feel some point. good product couple STAR One pretty WARS through overall Rogue where a think we've heading we in this come is of quarters work

Drew Crum

Okay, great. Thanks, guys.

Operator

of Our is next Felicia Please proceed with Hendrix Barclays. the line question. question your from with

Felicia Hendrix

and morning you. Good Hi. thank

Brian Goldner

Good morning.

Deb Thomas

morning. Good

Felicia Hendrix

Hi. something had Us that Brian, on just Toys and for have then another "R" second -- just Toys "R" Us. on a starting you question -- I

said you between have of lines that what the on about vendor working critical and receivables status? the reading think you stuff I received

Brian Goldner

we Yes, have. have. we Yes,

Felicia Hendrix

Okay.

-- not expense? maybe some wise, all of accounting debt whole, done does everything but that a of does a just, guess, potential the bad settles, I is and and mean that said reversal when could you And that part have so

Deb Thomas

needed how at we as situation would at settle we be receivable. the on Our we and look things see would time to expense the out, whatever adjust expectation certainly the

Felicia Hendrix

And a or chance just X% "R" chance shipping said what Okay. hard Us to there your currently up there assessing once fourth that you that set of to for end through a than X% more could you -- you’ve then would currently can that expecting and shipment a the that Toys a you're have number? guidance is times with quarter, "R" receive. is I’m Us other you’re the Toys thing go couple wondering, you is,

Brian Goldner

No, I a fluid think very that it's situation.

the XX through prepare happened be you're as very earnings Monday week month-old this you situation. for signed literally on So working position. agreement which last Chapter and an We late to go-forward

return us teams on joint to was business which our I well. focusing Us for quite think "R" the and into Toys holidays in place were can the performing going plans,

Our overall this said, in year, time holiday. the It's business before the matter period of And the a other I ample happened to we make is that just time we're well. would've now are it any more of new performing gains a really as business. in had a but refocusing our holiday on POS The plan had in across we do way, together strong. about longer-term is and good fact -- very the feel overall a categories very seeing

up high for more as Our brands That’s toy teens. and true in game business same even Franchise POS was Brands, partner the were up than XX%.

than XX%. Our Hasbro more POS was up Gaming

growth the we ahead Toys about to want did our because clearly and can the "R" and get teams the the We POS of want again stronger was focused gains. Toys still broader our than in situation. and times is see of Us view Brazil highlight difference point bulk in of about to acceleration very the than now industry, a in three an ever we And we retail now on of situation. But But which two again, online good "R" more just caution, situation, it's the the fourth that out go omni-channel doors of U.K So, the only the overall and or environment more grow quarter we channel fluid retailing abundance course to that Us of a before. strategy, of feel

the of a that now provide range and we on the given holiday. our timing earnings again, So, just focus

Felicia Hendrix

of flipside end up anticipating a the shipping understand them? than to to Just there risk -- could that that is less you you're is

Brian Goldner

that we there's agreement Well, shipped Toys now their a was less our place, inventory that. we in of marketplace to saying have think an want the to and for in arena has expect, put do we that's we been out to a an growth for would a even partner in Us initiatives that continue what us, if "R" opportunity than Obviously, can support again number I growth we us, we places.

teams X% are kind that year, so our the up the year-to-date. we've And seen strong throughout very on of continuing focused growth

just be we we as as look so the prudent. give at our And you of earnings felt range because our a would range we again today picture that formulated

Felicia Hendrix

And third you impact revenue the Us any "R" of quantify is Toys there the way in will quarter?

Brian Goldner

we on Us wanted again now We as shipments. Toys a a had against shipping clarity gains bankruptcy. all the and quite number did to the the but for retail, considerable in we "R" of of stopped note get No, we're that result POS situation shipping days are the and

Felicia Hendrix

Toys Okay. "R" about Final one, Us. not

Just wondering, LITTLE want had being PONY expand, think as you you just as this, may movie you’ve so the talked maybe in expected. end I have movie successful the to quarter, MY I about you didn’t the

for wondering did toy sales? Just what that

Brian Goldner

quarter the shy just across Well, is $XX million. up globally movie of region of as this The business. past licensing every the across about brand in weekend is entertainment and and our

PONY and driving is brand for really driving back the the consumer our we think mix this LITTLE are investment. up Remember, year-to-date. working. film modest budget. MY gaming pay is building model our also It digital film and digital will business its We It's blueprint made driving really toys And games. and It's media products. absolutely we is

between the film the So, again, stream is and formula television for content, a brand. storytelling great combination of that content,

holidays XXXX. good into very heading brand in feel we about the So the

Felicia Hendrix

much. so Thank Great. you

Operator

your from Please is with line question Jefferies. Steph next questions. the of with proceed Wissink The

Stephanie Wissink

morning, everyone. Good Thanks.

Brian Goldner

morning. Good

Stephanie Wissink

Brian, question just as for three you. have a I questions bigger well.

next of cycle an navigate Do us question years? ups in we operating the big If you blueprint? you you on a any could capabilities around the you step into give insight the are Deb, for around just in And margin. then, couple your see where investment as

years month I seems it continuum of three can operating on was particular? I beyond ago, second, strength that in I talk of if more China. gaining just Princess couple and talk scaling particularly against then little think headwinds, scale wondering bit continue investments final for digital we we you because about to just into pipeline Maybe and of a -- And the to for little would question XXXX a emerging business that those are for bit on that compliment detailed you markets, where initiatives? XX expected. need about one have I’m QX in MAGIC that what mean, the games. margin the games, you ago, segment as one on

Brian Goldner

it. got You

So, investments studio distribute MY for we're in LITTLE look, think that pay partnerships and emblematic meaning a very to market them investment the content, those from and very I forward, approach and film going films modest best is PONY the do globally. as of effectively very films of go proportion major that strong we using strong what our will type

and is those So, stream model professional adding the model, modest film first are then storytellers in television a again, capabilities approach appropriate in spaces. the our and we're content model, personnel, investments who where digital model people and

strongly. to absolutely As the you fact know continue add the we're executing are growth about our LITTLE we blueprint MY around TRANSFORMERS great quite PONY all and model capabilities and really that

talk about the …? to want You

Deb Thomas

Sure.

-- in almost as we’ve all for last grown now improvement Princess and shipping our had have year, to some And business are then Frozen we starting as standpoint, for scale. to margins margin that year Princess and a we well. see this from So

well So we're that. I think way on to our

that now. constant past. to however, that, we on will right investments announced And in investment a the talked beta little are go. be still We in a Investor it's had were August. MAGIC: have finishing it's our of in to bit we’ve We However, out Day our and about not way that in Arena, the same a perhaps MAGIC, in -- level we Arena

our it's perhaps important in not an brand in seen Franchise the at for that, major as However, of past. same we've but investing the continue that level Brands as will one such us

there. in emerging forward the being Arena reacting XXXX. So in economic in out how go, great as play be, because just looking haven't could We've and distributed of had some And as been far to in as really more as year. they Brazil markets to seen what's happening this situation we're are we’ve people conditions political hiccups

grows products -- consumers market are and to as our we received consumers continues to our by being grow expect that well. as profitability our in emerging well However, our business China and improve,

Brian Goldner

Yes, and as market in good India quite well Russia, in the China's was POS our was as well. quarter quite substantial as new growth

within one and overall the really X% in grew emerging quarter. emerging markets the is markets Brazil So, exception at

social and Steph, social absolutely content up going what's are market team games, at and games are stream games look dividends, but growing and the has we social The on that for As the about reinvention global through you’re scraping reimagination. listening right, really trend fantastic job. done paying and a understanding really our in has also classic

off and fourth that's the great TWISTER number of Fantastic social in OUT. -- we games the Life Gymnastics, is including then a operation, new then course like start. MONOPOLY grown that are have the a risk, Things fun SPEAK Optix. even So, considerably, Hearing of Simon some to of whether launching games more And Clue quarter, it's

great a it's days, the of Drop is we head Grip, holidays but called just we just our course into have exciting. feel Get platform as early launched then about mixing that we very Mix The new and reviews and System, into XXXX. music Gaming great which Coinhole, Something been and

you So done capability there us and the up. capability build will fantastic media line continue social to has job some think best-in-class digital outstanding to team I product and use an see

Stephanie Wissink

Thank helpful. you. very

Operator

The next Citi. with line the from Please Greg Badishkanian question. with question your of is proceed

Greg Badishkanian

Thanks.

follow-up of a on comment. Brian's Just one

were weekend. seeing you I great the sell-through think you So, mentioned until

POS? Is fourth trend pretty similar So little is a faster, bit and since the in that bring from third been change you up trends quarter did quarter? you’ve any seeing continuation and it slower, that

Brian Goldner

this our We into Toys fact great the to some week us it we -- our business industry this wanted are "R" and through the October we're and quarter that for still and the look, across growth not confidence can XX gives seeing quarter. double-digit need obviously, about. just that seeing and trends talking happened situation seeing retail ranges that and we of We on situation of quarter. -- regions. past that not a we're "R" about with I the would around having now talk in kind rate that be quite the the channel to on seen the Toys all fourth to broader get Us arms our great. online there we’ve overall are growth strategy It's trends at three we rates that great the continued Obviously, have Yes, the going grow or two the have market. reassure retailing great we're growth in omni-channel beyond with growth trends across great rate that’s to And Us people we're and times through are fourth and

our we’re example, Franchise online. And online where this grow mortar, acceleration seeing in that's similar and in by great XX%. just omni-channel, quarter So, business teens the saw Franchise the saw Brands by we we for in grow across both and and brick Brands

in as and So, it good quarter things 'XX. the as again, for portends we're well fourth fourth the us into in quarter

Greg Badishkanian

good Yes, a then quick Brian. And another, color. additional Thanks, one.

sure this next lineup growth but achieve about a you fantastic. revenue been you’ve So versus XXXX, even for increase or can lot, I’m year entertainment that -- similar just Comparing think entertainment has and heard next XXXX? when you XXXX the year's,

Brian Goldner

I entertainment is that the XXXX. believe XXXX actually Yes, lineup than for stronger

into new a story Studios, get If Avengers the you STAR early the in that exciting think end WARS an by May. with we from the Han year begins Marvel we in have Panther, May, Solo: movie movie of opportunity about Black

very year, X. Toy in own that movie got our next We comes you’ve December Bumblebee Story have

that then movie at Ant-Man 'XX. the year animated you the end the the of You’ve Wasp, well, as comes have Spider-Man at and of end and

Hasbro. So from quite is Marvel, the lineup considerable from Lucasfilm, from

those as going own of Hasbro's Studios. course, both that's to brands entertainment as television have kinds Of well all also all from we Disney support

and so 'XX the of to key we should our business. And continue in lineup be good about a very driver entertainment feel

Greg Badishkanian

And Okay. Us. finally Toys just then, on "R"

right impact or from did I impact there, Toys Us? hear expecting material limited an XXXX? "R" -- This you XXXX you're in Your not is to

Deb Thomas

give plan emerge their it emerge, around as color they will things Yes, see to bankruptcy. how more we from begin to and execute

Greg Badishkanian

Yes.

Deb Thomas

and in that, sit goes, as we as could impact. see that changes it today. something situation not how here significant today, we an expect sit the and do if from a we have As that we But impact know

Greg Badishkanian

you Thank very Okay. much.

Operator

question Please proceed with of with is line question. your from Handler next Eric The the Partners. MKM

Eric Handler

for questions Yes. you. my Couple questions. for Thanks taking

appreciate I given some revenue. fourth guidance on the quarter First,

given expense film changing previously the film internationally you LITTLE anything you’ve recognizing from they’ve to recognize opportunities, recover to the regards the do at and been at film. Just PONY from you how revenue discussed the to resin profitable? for is how curious, cost before its about budget, the forget be how relative you’re line much film, did with the Lionsgate as much are operating did is toys, One, about pre-sell on recoups increasing? allowed film MY you year, particularly, and revenue forget any the for how the And you to to regards income licensing expectation with how your much marketing Secondly, allow that -- just itself spending? much you and to look and -- of the other your looking the did what

Brian Goldner

second. distribute Latin distribute self way start They so a they LITTLE is in the Yes, film can the talk global a pre-sell Deb PONY America. me the MY virtually Lionsgate resins as with for works of the substantial self let as marketplace. in in and part The then well about U.K.,

Eric Handler

Right.

Brian Goldner

hit front be take are it movie may production this year, obviously expenses pre-selling, your recoupment through get fourth time. by in itself, the so should this of you -- contributor a but quarter quarter again, over they the that it around the the Obviously, The a expense. not the producing the to company rest our waterfall year, markets it's you The up right fourth for remember budget. the in will modest occur because movie if

coming season from think television Studios go and the services. other the forward. very see well that and it's at great model game us The a strong digital toys that's brand. with consumer for all services, it's this And appearing course We performing as of in that’s However, a including Xth continue and stream for as model high-level as very a business. we creating, globally Budge good Netflix games it's streams products a we are income of television new that are on on the the of linear performer very services games

Deb Thomas

far as our seen prices, we increases resin And some well, have prices. resin as in

XX we months to pricing reminder, set in a As advance. XX our

of cost, extent accordingly. to expected number to the that hedge in that, FX our go to our an and able we out and when we to some try out one, addition -- take of a pricing that from impact we're to do So adjust large

from don't goes any as expect So impact there, fourth we that. far as quarter

Eric Handler

then 'XX, potentially? 'XX resin sort of think about price But you as does how impact that now

Brian Goldner

our would we set accordingly. prices Well,

Eric Handler

you. Thank Okay.

Operator

is couple next of proceed Tim Thank Fargo grants Tim for more benefits and under of Please housekeeping that Deb, to about is first. Securities. Q on here that we of is reoccurring standard? some with due QX, hit question. the Our more from you. we question the think tax tax new accounting a the should - the benefit option Conder you outlined items Conder -- then of here, with will The QX Wells one-time line a your one-time

Brian Goldner

Yes, exactly.

around to think I in lay And grant Fair, maturing than normal try get we the will we we thinking this basis the that's bigger think about have the probably Toy this when but fourth level it quarter our will as we the be, to first year. out a normal that’s what I’m as about first quarterly same quarter as think quarter of -- year. we same

Eric Handler

Okay.

the alluded the times "R" day, many Brian, retailers. you’ve shift that you’re the ability further developing consumers circle back also topic Us. we will of to this Toys omni-channel, to -- And the that for Okay. here then among the

"R" Toys obviously. in point let’s at Us XXXX. So hypothetical America the hypothetical, scenario take Again, here, this the draconian draconian North liquidates

anyway? seen the bankruptcy do if U.K you we can that withdrawal, and channel? mean, Woolworth fast from Canada, reallocation see we've Target's in the in that what the hypothetical not Given with you absorption how answer in of under an I past the think would

Brian Goldner

during know. plan have current the holidays financing teams executed You our such heartened with excellence. I’m really so commercial the

how the one us forward would for not answer as an in know situation a be the to you that XXXX. is hypothetical belief, issue we go current like don't I Our post.

products. I However, homes found that you our great increasingly tell will we’ve for great

quite as that channels new drug including different new of at a sell number Our well as expanded into products value other and we've well retailers.

Our have mass as expanded. really partnerships well

strong. Our with substantial and have Target very been performance and performance very with Walmart Amazon, our

heartening and the consumer find dis-intermediate consumer, long-term online business we toy increasingly be products fine how you the find of we’ve will as will and and will to So, products. really how continues some says our again, homes than our continues friction about our no described, the and is departments, talked just products there's and in really It stronger the products when even sell-through of our resonate that our sell-through to brick-and-mortar to find consumers. finding with it's online see

Eric Handler

you of And hearing hearing could coming was in Okay. the that signed week, [indiscernible] what agreement tomorrow that change then for know Toys that of tomorrow's "R" you last preparation late last Us out or from week? anything from

Deb Thomas

Us We with that support are they need that we that in a sure and help agreement all path them ahead to we to "R" Toys position has the into want that so entered to in emerge them make go from bankruptcy, forward.

As whatever there is see, see wait our not we to that that will hearings there we change. have develop any how of are, what out expectation -- comes their just plans would but and we how see be and

Eric Handler

Deb, And back that? forth, the the in see good start the and to lever in the costs we talked in some as 'XX about, from should MAGIC some investments Okay. benefits card to that so half then trading to related sort leverage business of you of see

Deb Thomas

expectation. our be would That

point. leverage and more should that will continue to us, numbers Fair, would fact when the what is there, revenue look at well, as look the out getting we about debt we different Toy expense, know us bad guidance you're absent we higher at a that you matter think you our give if As of is now. like -- And Arena get leverage get the charge, specific see to from SG&A expectation we to our see that starting MAGIC category

Eric Handler

you for color. the Okay, Thank great. both

Brian Goldner

Thanks.

Operator

question next from UBS. your go of with is Kocharyan question. Our Please the ahead Arpiné with line

Arpiné Kocharyan

Hi. Thank you. Good morning.

Deb Thomas

Arpiné. morning, Good

Arpiné Kocharyan

that's perhaps the that you point know, drove So, charge. Us quarter? and quarter? line for on if MAGIC: you. margin line very for puts million basis that is and Toys GATHERING Deb, be the operating business profit $XX and could you quarter, despite high-margin came margin the What to top the entertainment licensing And gross we decline takes MGT But "R" outside I the below THE mix high for where of for growth were in strong mentioned adjust for which mix? still Growth would of of XXX obviously impact the go through in

Brian Goldner

profit higher. So been not up we've mix and the we think our year what margin it expected we had the margin, than was hedging. have that our favorable points the that our were gross basis move in operating charge XXX of a to not all would that you of and we sales because margin said year-ago, about less product if did that say and But place been actually is not absent you that which giving we also guidance of it's cost and gross to higher hedges did be some we say

margins, we check say quarter. was, you impact and When our on the have QX that euros and it significant it our we a higher. more to had it look MAGIC, But a not We a phasing at for expected buying than but at are we did hedging euro $X.XX, didn’t pricing expected -- in can this be full-year and for our particularly did we said lot more we've sales of bit to have was has and we and the favorable gross morning. I what on $X.XX cost product the at protect an today, be -- to so did margin, that down as mix impact -- mix a that

Arpiné Kocharyan

impact, prepared about of time growth since that adjusted on GAAP guidance, mentioned margin obviously, profit off in Deb, then last we XX.X%. number previously you And you of had Okay. but remarks indicated operating you expect spoke, your

-- for as in have terms visibility Now offering with much expectation year could QX, of now the you visibility margin? is the you where that have update you for

Brian Goldner

for that similar would some we believe fact confirmed more year. I Yes, expected get was modest would that can operating to or talked the margin prior we very the about be had We that last the just that our margin full-year -- growth.

the more just was XX similar year-ago, a we points talking say number. -- would XX.X% difference. Now to about it's I and talking were probably of about again we're That basis

this that to year. similar to I'd it be So again, expect

Arpiné Kocharyan

you Thank much. very

Operator

the is of question from Weiser with Please with your Linda question. line Davidson. next proceed Bolton The

Linda Bolton Weiser

hi. Yes,

brand secondly, that that your the with can So very the well of of Franchise movie MY was good that Can declines second into LITTLE big support but some some had brand, you a year. the And have with this performance the half brand? Brands the success growth think brands carryover growth do there? PONY, rejuvenation what’s PLAY-DOH to of that talk you going several with some improving year effect you such for Thanks. outlook sales in and next that’s XXXX you’ve about in expect and story, you’ve on can here that growth yes, as

Brian Goldner

world. the will the strongly. core LITTLE believe, fans our think team brand, We're might is The we think halo MY and a the around fans brand have Meanwhile, inviting families new great Yes, what lot and of for reinvigoration I think well we a of quite seeing like. support. PONY about movie really beginning as television our as ongoing the has into look to model I worked next

So, we LITTLE television, of well. film model combination like verticals the for like MY the of done horizontal of the brand PONY

There play have that performing in PLAY-DOH come holidays Rapunzel have which said new seen very days, been early itself. we level strong the set. a performance. Having side, are spring our performance as sets we’ve very, into PLAY-DOH the very sets some full including the play have the good a play had that, around weaker we few On

something which play Creations, would a they and call We expect good of sets on. Kitchen number we also have performance

the PLAY-DOH long-term part one our definitely consumed, create developmental one heavily of think or it's most enjoy milestones. helping children most been and parents enjoy of has I to So of a It's global brands. really

I PLAY-DOH business to that grow and time. I’m in the over so confident PLAY-DOH's And very teams ability the long-term think

Linda Bolton Weiser

you. Thank

Operator

line The next Gerrick question with the from Johnson is proceed Please your of question. with BMO.

Gerrick Johnson

morning. good Hey,

Deb Thomas

Gerrick. morning, Good

Brian Goldner

Good morning.

Gerrick Johnson

three. Hi. going per, It seems I’m three ask questions to

just WARS about movie for to you million from $XXX include WARS you the how quantify XX.X% answer towards then, this do year in being to the shift released [ph] the that more bogey I and shifted and a exclude sales about everyone Thank $XXX about there the from similar revenue margin bad talk kind for, shooting operating year? that sort of STAR of feel STAR charge, sort lastly has talked you much of movie based movie last retail properties, about two, million, is for one. DVD of to quantify debt way or been Number DVD has your Can more been you. year. that’s shift and question you to can the And the Arpine's the Does streaming? debuts any that open-ended, the of how streaming. away First,

Brian Goldner

Sure.

Let also Beauty this last throughout and We've we time as the on this -- the become up it me it's this around again brand. talk quarter much what you spring in the good FORCE strong you very into shift, bigger consistently seen. and for big saw Gerrick WARS, The Beast. holiday, year expect it really for Jedi, STAR and Last expect to head The brand STAR brand but a the do first WARS it's year-after-year, and we've year that's Deb the one. we and and were that's can And clearly a as The Moana very for more AWAKENS. things seen We describing,

TRANSFORMERS performance We as strong. are it and XX quite DVD around dropped on the has been seeing the September

multitude stories through a It's think oriented and be our approach about ability obviously to tell of content strategy then windows windows. stories sell-through people Overall, enjoyed theater digitally as premises both motion enjoying think I those of well oriented. pictures of one are and have and across both screens. as good really to the as the again as it I the electronic in things into DVD So well says

and would properties. so, our well continue Marvel, PRINCESS that Lucasfilm expect DISNEY And I FROZEN and properties for continue and as as to

Deb Thomas

we slightly from expense year. an just if standpoint, operating exclude And margin behind year-to-date is debt last our profit OP bad

very we on efficient focused know our always the most you cost as company -- a for as company. So structure remain

from structure our changing for a Brian in whole. company the just current really the our may as So most expectations given the of we our But focused beginning impact environment overall efficient as slightly cost said it expectations, on creating revenue, year. remain the

Gerrick Johnson

Okay. you. Thank

Operator

Thank time, will Hancock you. for the to Debbie this remarks. back turn floor At closing I

Debbie Hancock

The today. hours. Thank everyone Web you and be on our site in available you, the replay thank joining Rob, call approximately for will two

Additionally, will call. this our following management's Web be on prepared posted remarks site

quarter earnings tentatively Our and is fourth year-end Thank release for scheduled February Monday, XX. you.

Operator

you. concludes Thank today's conference. This

you participation. your at time. this You lines may for your disconnect Thank