Hasbro (HAS) 23 Apr 192019 Q1 Earnings call transcript

Good morning, and welcome to the Hasbro First Quarter 2019 Conference Call. [Operator Instructions]. Today's conference is being recorded.

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

everyone. you, and morning, good Thank

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

non-GAAP financial release Our our investor on call are and include earnings presentation posted release non-GAAP and presentation slides adjustments information regarding The measures. today's press and for website.

today non-GAAP call adjusted press which included earnings Our share note discuss will measures, per EPS, reconciliation the earnings Please or exclude certain to A per adjustments. we that diluted of these discuss referring whenever release in measures share. non-GAAP and presentation. GAAP we to is are

quarter, several realigned the and Entertainment, and of the Licensing, and began first revenue with The the Magic: other Digital and including segment. segments we Gathering our reporting associated our Arena games Coast Wizards gaming digital renamed During the brand,

a were The As and reclassification operating and the segment. first of Licensing, $XX.X XXXX XXXX, year be U.S. million $X.X gaming of profit of Entertainment, quarter digital is from Canada million expected segment revenues the Digital and $XX to for revenue to approximately full reclassified result, the million.

expectations obligation I differ forward-looking and other results objectives, factors or to press events of I most management and date goals, results may forth set on Hasbro Brian? to of There call. introduce annual reflect the you Before update materially expressed report that statements question-and-answer Those statements this today no circumstances members follows, in forward-looking management's disclosures. could our from to Form anticipated during now after matters. events today's would expectations, that remind XX-K, in begin, like Goldner. include to actual are the make we that would this recent made to our occurring these statements. and undertake like public or the call or cause other session our any We and factors similar concerning in XX-Q Brian many forward-looking release those

Debbie. and a thank the increased a morning, to global joining year. for delivered quarter X%. X% impact good Hasbro grew The everyone, negative Good Thank team start and of you, Revenues you million us $XX.X foreign exchange and absent today.

last New quarter. with initiatives innovation comparisons year's and tough overcame first

in in as The Our opportunities Magic: well provided from meaningful digital as Gathering Gathering long-term growth a Magic: contribution growth our and e-sports Arena revenues. The investments tabletop initiative,

several TRANSFORMERS, other Franchise and PLAY-DOH, Additional including gains brands Brands, from MONOPOLY. came

commercial impact to are see the foreign in grew We X%, revenues and improvement In of absent our beginning U.S. the markets, Europe. exchange. notably in Europe,

as is year, will with For the last the comparisons year of of year. expect late as line XX U.S. as the Toys and profit week challenged remain the improvement region in revenue well the we Point-of-sale Us first for first liquidation the continue in in to during quarter moved the quarter into plan. this through full stabilization half "R" first

the into quarter expectations. later was shifting approximately for Toys in year Easter from quarter quarter. and first Us, second our the with point-of-sale global addition, XX% In line this down Absent the "R" was

benefit expenses, cost of profit delivered to as levels, quarter in RANGERS for of did initiatives Hasbro's well NERF and good share. Hasbro's good of Endgame, as markets in and the operating began Retail see new launches positive We certain shopping Marvel began and posting excellent U.S. Fortnite savings America. are the came EPS our initiatives POWER retailers entertainment as line several for Throughout the increasing the and Easter launch an North Easter-to-Easter comparisons team quarter, quality managing in the consumers including and April, shelf, global in and improved $X.XX job As initiatives. per brands in we and on Easter line new point-of-sale prepared including Avengers: inventories

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for strong in according the Wars and we recent to the leveraged toy has programs The example we with to channels live-action Edge first Our on Star premiering The Black Amazon December Rise on how social exclusive digital-first Skywalker Skywalker the Electronic us new and preorders Helmet. and comes WARS coming kept with of STAR multiple of part Series X-Wing X Force innovation Pilot where Palpatine and Star shelf company Emperor Market Wars October from #X from Star The as will to supporting on Triple animation be Friday. is on Series Share. on series, content for kids game XX, Adventures figure The products XX, investment Wars: in extensively to on theaters November and of of our commerce we Disney+ Black Mandalorian, Luke Canada and Hasbro Celebration our drove storytelling Galaxy deliver U.S. as A platforms,

these in quarter, the Partner entertainment for builds year. was robust While throughout Brands this brands down our revenue

kids and HQ XXXX excited Disney+, July. entertainment highly-anticipated includes to lineup across and later Disney platforms We're Spider-Man: Marvel's key Far WARS, Endgame theatrical YouTube. and addition very Pictures' In MARVEL support this Marvel's Avengers: on in initiatives of STAR XD, about week from Home in upcoming Columbia also like fans the

the based Ralph an PRINCESS, we upcoming DISNEY For on product film. as Internet new retail all look line have from the Breaks as new supporting Aladdin well May the at

expansive November new is continued the within programming along immersive important, new content, BEYBLADE generation kids of Bumblebee, Hasbro's growth. kids of TRANSFORMERS leveraging the core TRANSFORMERS revenue and film. and currently Brand episodic to across X deliver is our building available line Partner to to and Also X preschool Storytelling quarter to brands. addition, driving introducing our will and successfully revenue well another shelf the for Equally fan-oriented fans highly-anticipated October a for for point-of-sale entertainment, growth world. essential it home be the on In in innovation is portfolio, with Frozen the reengaging platforms point-of-sale perform around brand. and

the remainder to be As a of lot of we there's XXXX, to ahead look done. work

are growth engaged profitable on year. our deliver focused teams for and Our plan to this

turn to to the over Deb? like I'd Deb. call Now

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X.X% revenues royalty expense versus X.X% year. However, declined to of last

in As launch amortization reflects increased associated Program with revenues “R” expense increase digital as year the adjusted expense. as The LITTLE throughout last a was accelerated amortizing to during the last and $XX.X versus the last we Intangible incurred the Advertising movie reflecting decline lower X.X%. declined royalties which rate RANGERS gaming million revenues X.X% year. the of reminder, full we television expense including behind Toys and Brand We included Us POWER Partner of versus to initiatives production this film the amortization XX.X% acquisition. forecasted amortized substantial MY year. year the this expense quarter. year first PONY, in increased quarter in line marketing to and forecasted for e-sports less year, the

bad We range. continue million Toys SG&A. full advertising recorded expect to related “R�� in in debt Last the year, of expense to year we XX% Us $XX.X expense

by reflecting start-up costs SG&A a the of expense, good new from and compensation foreign $XX in Wizards expense, favorable Coast the impact approximately cost warehouse time, our benefit our cost of have declined this and same business. Excluding early management million stock lower we the savings, At exchange. for invested teams U.S.

low a transactions primarily profit, larger interest Turning currency to increased other on to our results for higher income due gain income. slightly and operating foreign

of Our guidance and is range last and of jurisdictions XX%. the tax underlying tax was rate XX.X% full we The quarter earned profits XX.X% a tax our items, where impact rate for the Including XX.X% X.X%. year. the versus of reflects underlying of to reform the rate mix effective year in discrete first quarter's was

events provided over be to today, We past we impact X XXXX. what in the one-time not expect our as that we to do have of years effective tax they on rate. Based recognized were benefits the considerable significant have lower know events discrete as substantially

share was the For per earnings quarter, $X.XX. first

billion dividend Our balance we ended in sheet share in is repurchases. strong, the $X.X million quarter $XX.X We and payments $XX.X with million in returned and cash.

we brands at quarter. in Saban and out of Properties, Easter the from million were $XX.X with XX at agreement, POWER day acquisition The new and the initiatives quarter, inventory impact ago, year essentially in outstanding during X% paid Receivables sales hand both second first inventory markets Hasbro X% RANGERS million our good. decreased paid day absent certain as flat quarter. of quarter will is and the in Retail during exchange. retailers escrow $XX.X and were remains several launching days of the our ahead the up Inventories increased our foreign XX quality and be days, X on last and second in During year. the increased outlined to

year, January the we lease X adopted new standard. of accounting this Finally, effective

lease managing flows consolidated growth driving assets consolidated closing, and our as for operating statement costs. The sheet we recorded and on the or liabilities The with we're XX, did operating start result, quarter. a fantastic March of balance operations our this standard of lease revenue on consolidated did cash of impact XXXX. to the job of adoption statement not an right-of-use As In have year. team the pleased a

market the We coming will the the support year new both remain coming quarters. and course initiatives to on focused entertainment throughout the over brand we as of

call will questions. open now up We the for

our first Stephanie with Jefferies. question Instructions]. comes [Operator from Wissink And

we for outlook vested Nice Fair, your start the better would in Is at bit a can coming being a progression, had were of cadence half your how together team bit or the momentum us on when as help you Toys a Brian, bit more the so to the about advantage in quarter you, to start take think of the you then maybe some we what the And business? year. what the If expected, so just about really opportunities? of you for can are A the the the lateral? really should you that was how should muted motivated versus delivered, this we quarterly the areas question think plans, with bit than great. quarter more first that think you talk a about the you be little

Spider-Man third Panther our the Avengers of head a in well movie year again Sure. about, later entertainment to week of the We're we and belief and as throughout for getting Europe, our across about throughout supporting brands enter coming year We've we full the you and seen did $XX always begin done our small I quarter. We Arena our by of are and Us Toys growth, "R" We see of as We've we'd a to the number revenues, The and of in year so a that, performed team up also We're Franchise quarter. have seeing during growth what It's well and expect tabletop had we're back that this quarter, beyond. the shift the entertainment the is spoken we'll going in already last new Having as Brands well we'll first of year, as had profitable think incredibly seen the as so to would said as bit in Easter bodes seeing. encourage in of year, players dimensions. Partner we course, a more both progress a number year that quarter the encouraged also Brands, both over-the-counter about signs and movie, we quarter, a the second first progresses but for has saw into early being good second revenue shipments than that of in a seeing This to some initiatives really the million that very quarter. for us. the players, Gathering quarter growing performing for in-store the number year. Emerging good have in Magic: new last quarter. and headwinds and Gaming early the to more well new we're the brands Brands year expected, we accelerate well acceleration and see the Black again to in very the brand in and job

we POS of down see Easter-to-Easter we we years digits, digits. acceleration look did to and was POS. at that POS mid-single is overall As in the through seeing we're the an year-to-date low-single POS in and POS both up take date, so

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described business of cadence is the as in earlier our it the think we we So, year.

we very off we're growth, very to very team world. around a good and has committed returning done a job the to profitable to think start. good are The We

throw I Deb, one could in more.

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question with line next the Arpine Kocharian is UBS. of from Our

licensing Licensing kind how and maybe kind was down Would Entertainment be what through able Product lumpy can run of we Consumer strong. and of about quite cadence? So and to take revenue break stream how contribution should quick for was think to quarter this a be a the you revenue quarter-to-quarter chance

progress we that certain coming of into important and we normally paid television the Consumer that be intend in go off see to Wizards come Consumer some the the arena. can lumpiness continue grow. of talked cadence Bumblebee quarters income as that of after certain about just delineation we quarter get Coast comes around Products be as initiatives licensing, last did will to few streaming time expect The of about revenues rest brands new Products see not follows before count episodes execute We've in digital for initiatives areas as collect the number streaming good and the typically. as over we that's brands deliver film this the in the we by and other the royalties a entertainment company revenues obviously we as quarter. great would royalty brands. then, had And We've that and entertainment. forward, would notably over talked We've we company. entertainment and And in The income

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which of have the QX Magic: you've before end timing said the out any I in or is by sort that? The beta mode, updates of Gathering the first QX, update And terms of there potentially that? do I then in half, you of transitioning today to think Great. end means, guess, of on of any

in thus We update the and to the perform real and happy the how and enjoying storytelling us Invitational as PAX Arena fans comes tournament, this at think do incredibly well players Arena. Spark were see both cards they've And also the It of was and see is as as far. the in really our so we well see the storytelling palpable. new response no There's very is the more great momentum the the in to Mythic year around No. engage synchronized lineup helping East that to War QX I the in as on between the to well platforms X tabletop game. game as

so, around years and both Magic: really forward come and quarters tabletop. come to Gathering, I’m looking to to The Arena And

And one quick clarification, then Brian.

You that POS. low-single-digit Us? excluding in Us mentioned Was increase Toys or Toys "R" "R" including

Us. "R" Toys Excluding

Stifel. The Crum with line Drew next comes the of from question

in you're year. improvement including performance seem for reflected markets see sales indicated quarter be in first commentary the your your to some in usually you commercial and Brian, that's doesn't suggested for starting Europe but to the So results,

further. So maybe the quarter? Europe And profitable you could during was discuss that

the as performance X% continue in did way. an know markets months, a The a thus also quite the it to I progress good. sizably. first there talk fact X% will of reengaging Spain, it's in and and quarter, about down Okay. Europe were year the more and is grow the seen above data, seen Germany the and seeing We've is FX first stabilization is Europe year is that according in have a reported. Obviously, quarter of improvement the down to and as seen of markets NPD, number a in we've the down consumers lot we far, has like impact Also new is with limited reason profit throughout France, Russia perform substantial only but quarter. initiatives ago, couple but revenues even in we're U.K.

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from the question is Ng Sachs. next Michael with Goldman of The line

TRANSFORMERS the one on is first My strength. just

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

you. for questions Two

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D.A. coming Linda The is next Davidson. with question the from of line Bolton-Weiser

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the Our BMO Johnson from final Gerrick Capital comes question Markets. with today line of

first to doors. more product retailers So layouts? quarter and Did to or space your original bring compress holiday continue did increased the that head during back more they their

have movie. those into Yes, Easter we March performed second the it the initiatives we space gets first at Avengers a We've The Avengers are and well set the had quite as said major recognized of also of end the around in our get space incremental where retailer quarter. they've We isle a increasing an lot at boys' top example quarter second seen retailers we beyond also early this in action saw quarter. for was world. closer the to

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under last Okay. going think you the “R” into retailers we were to knowing second Then year, they ordered last facing these year Us liquidation quarter Toys compare do when competition?

of things. I number think a

some followed initiatives liquidation have had the given thought than Avengers the changing seeing at that good we it's we by really there. more in initiatives in NERF quarter Spider-Man. ALIVE point, think year Fortnite ago, I strategy new a new the had coming also year second We're and far or momentum that lineup us it BABY we this whether

it do all to market I So Us. trying the our can had back with this understand Toys year of think absent for year and versus and to in impact storytelling demonstrating on grow we us ago focus to that going “R” innovation the insights

you from the to as quantify one return investment? Bumblebee, Then attempt it contribution Okay. now, looks can on or profit this perhaps the

a performing window. Yes. entertainment is level Overall, Home in the we're higher estimates. home our entertainment at original than

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quarter? Could Okay. to later throw rest been have the obvious second that the the to the going to more follow-up and in for perhaps pulled that quarter anything into there surprise Felicia's I'll on. And I'm downside The save then question. was could one

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And small it was a number...

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back full is earlier year, but remains what did expenses in we think to till again, I'll some later same. go see the shifting of guidance I year I said the

to I back will closing now Hancock hand the remarks. call Debbie for

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

following Additionally, for release call. management's our prepared on will posted you. second this earnings Tuesday, scheduled is tentatively remarks Thank website July be Hasbro's XX. quarter

Thank conference. you. This concludes today's

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