Hasbro (HAS)

Debbie Hancock SVP, IR
Brian Goldner Chairman & CEO
Deb Thomas CFO
Steph Wissink Jefferies
Mike Ng Goldman Sachs
Tim Conder Wells Fargo
Drew Crum Stifel
Gerrick Johnson BMO Capital Markets
Arpiné Kocharyan UBS
Linda Bolton Weiser D.A. Davison
Fred Wightman Citi
Eric Handler MKM Partners
Raymond Stochel Consumer Edge
Priya Ohri-Gupta Barclays
Call transcript
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Good morning. Welcome to Hasbro's Third Quarter 2019 Earnings Conference Call. At this time, all parties will be in listen-only mode. [Operator Instructions]. Today's conference is being recorded.

you at objections, time. any you've may this disconnect If

go the like to President At Please I'd turn of call Relations. Vice this time, Senior to over Hancock, Ms. Investor ahead. Debbie

Debbie Hancock

everyone. you good Thank and morning

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

are posted presentation and slides call website. for release our earnings on today’s Our investor

The press include presentation and and non-GAAP information adjustments release regarding financial non-GAAP measures.

adjusted Our which is call today presentation. will discuss of and non-GAAP release these certain reconciliation adjustments. measures GAAP press to measures, A non-GAAP the in included exclude

are earnings referring share. that diluted to per note Please we we discuss per whenever earnings EPS, share or

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

after forth made our today annual other to reflect today's statements in date those on or form We this report the undertake occurring XX-K, of disclosures. public These include release and factors update to most forward-looking any set in XX-Q, call. our recent our press in no circumstances obligation events

I would Brian? now to Goldner. like introduce Brian

Brian Goldner

for Debbie. Good joining thank morning us you, everyone today. you Thank and

conflict to stakeholders. growth environment the profitable accomplish have is short-term goal team returning stated where is this our to year impact the in Hasbro throughout progress we year to an outlined having our The making the trade of

Blueprint globally in We are Toy quarter, Brand business during across gaming, and we innovation and operate a year. the dynamic around and very as our delivering creativity

September XX announced and brands our Wizards and for GATHERING THE profitable launch play acquire the Arena, developing entertainment beyond to for Entertainment analog of in investments actively our long-term Arena, are growth, plans while investing One. our MAGIC: including We success in and digital gaming

this long-term. being where have doing of in amid positioning meet for We is to changed our chain pushed are and time. We condensed very order periods short-term, choppy levels challenges potential are to chain these retailer business we tariffs, in supply demand view high in dynamic growth of patterns a and over our XXXX the response as environment and supply

Mexico. foreign were in revenues in Overall growth in absent stabilize quarter on year. this including track revenues with plan Asia our double-digit X% China grew Europe and up exchange. Revenues grow Latin remains America, the and profit and to

digits the rapidly. quarter, continues Global in Online declines to August for into grow in improving trends point-of-sale July in the declined mid-single and point-of-sale September showing October. and growth with

across and toy GXX to leading the markets, through year-to-date are We according NPD. August, the company game

We gains only Licensing in DRAGONS, of & and data, percentage and NPD generated growth posted revenue in our and where DUNGEONS the is segment. a MAGIC: by sales GATHERING revenue Digital Entertainment, we captured XX% THE small

impacted our negatively results. the In quarterly tariffs and implementation threat however, the of U.S.,

start inventory. For in improved slightly, point-of-sale U.S. weeks our retailers With launching quarter, is to recent initiatives the and continued of quarter has early third lower up holiday fourth and quarter. in point-of-sale declined to many the

changing U.S., the our the about began effect the ripple order As outlined in patterns whether business. you or tariffs not ultimately enacted. tariffs, have spoken administration would recall, since We've the we on they are discussing have

instances, tariffs our shipments, of, impacted in In and the and meet demand. our certain the ability quarter, of fully third implementation to the threat

was of scheduled our cancel and X prospect domestic August direct that as List orders XX and a those of total were many September ago. saw major shipments the shipments rewrite be than far had for Importantly, shift retailers different and July year during were The QX now come delayed, the and higher of and alone dates we orders December import enactment program multiple shipments. for yet lower tariffs the impact

However, import during re-plan we unable all August, from within our the and direct to orders and orders location in ultimately direct to were given domestic satisfy July the Asia of quarter. the rewrite the import orders of all orders to inventory

were late quarter. the unable ship by to We orders, came September, end many which also of all of the in the

XX% shipments of Our to supply respond our this year as to orders and last rapidly worked segment of this year. Canada increased quarter the domestic chain team U.S. XX% versus

important line very WARS prioritized to of Force STAR or the like which demand, and warehousing to starts shifted NERF and of were these We plans. promotion at all To an are launches for freight ahead ensure we incremental critically as meet in builds stocked with, strong X, off added Ultra, expense Triple shelves Friday, our Frozen initiatives. air

initiatives. catch the and, for We quarter strong the we fourth while seeing are weeks working of to new consumer demand up in first are these early,

and working to orders XX X face the of shipments, diligently cancellations of approaches domestic December are import to date improve most still for product direct shifts our our approach the and to domestic We more List as prospect lines.

domestic We've product that, approach like chain of much manufacturing our and light. distribution, asset to supply built is a

our through make costs a cost and We have historically and chain third-party shipments of and effective suppliers our used our own customers' to supply shipments most balance efficient. domestic manage

and transitioning U.S. In chain redesigning supply been at pace. we've this environment, current our

products, adjusting while XX the import for domestic of these protect cover direct December the the impact worked and while some X impacted margin. action The in were to will our enacted gross addition, third items hit our games get September we tariff's cancelled the also orders pricing supporting majority In List orders tariffs quarter. during and of to our

retailers we arriving XXth U.S. the in Hasbro the take third fulfilled by tariffs As second both and discussed by no they we import shipments curtail as after and want have to if or XX demand be quarter, previously, the product action on December planned the direct experienced and in imported will

holiday anticipate continued help this to in the impact our disruption mitigate programs quarter. fourth impact season, as on consumers we the as working is team but well potential The this on

out sourcing our Our our the sourcing XX% to for on strategic by of actively teams are XXXX. and moving of U.S. year-end are footprint China target track achieve

We others. are including and products building having and success in geographies identifying Vietnam, good India,

a as we U.S. are of U.S. the sourcing reminder, from XX% our also business Importantly,

online remain to rapidly fourth through same and declined in were and time, than retail inventories lower mix to and inventories time retailers mid-single-digits quarter. as their carry the the retail of needs the U.S. quarter the continue of grows retail At lower more we inventories will just European retailers evolves, XX% meet down anticipate business retailers, managing in the inventories.

advertising products direct and we our and POS, in all fourth seeing We innovative have are revenues support driving many third new in already and product likely yet, QX orders dynamic the quarter. associated will lines launching import canceled and recapture in the with not more momentum we

We fewer have six partnered shopping retailers that with has than demand last to year. grow a holiday days in season

retailers franchises, third Frozen the the and as Brand Fan date. these championed revenues Triple increased XX% Avengers the in perform WARS Partner well. product and in support continue STAR Marvel lines growth Spider-Man Xth quarter, behind of Hasbro's which to lines, global Fest During October merchandising for Force including well as Friday initiatives

with late our fashion expectations. doll X is an already set fashion many small of and November. which Frozen outselling a initiative dolls dolls, Disney's to this castle is complete on anticipated iconic huge highly Hasbro markets line in playsets, is supporting The debut including

STAR activations by to initiatives launch reveals WARS online Friday meaningful tied pre-order retailers. featured product Triple and Force planned

items also We editions limited foot fan retail of on some most weekend. our traffic created of popular to to drive opening

ramp support continue to out placement product and of featured of to of aisle as to line plan retailers Key holidays. closer we move the the

our storytelling with revenue. revenues no the revenues up and shipments feature of Point-of-sale in We Bumblebee on in declined see are were brands. film the this quarter power the although TRANSFORMERS year-to-date, increased U.S. in up year. film-related

is our seeing countries high great U.S. to start in off sales early RANGERS and we're the new POWER momentum. for series a ratings garnering several and

MY years PONY The XX month. aired this grew into Friendship with is franchise global Throughout a nearly Magic lifestyle billions earlier sales. retail LITTLE storytelling, of finale in series of

reimagine see for investing a brand revenue innovation. content to this with an comes the While declined animated feature are we and LITTLE line as In end, potential developing in are we has once PONY story the Paramount, XXXX. again MY to partnership and

our chart and families fans, upon with of the to we acquisition One world. expect the of for onboard opportunity the the the leverage next to great seize kids, will IP We talent around stories Entertainment close to Hasbro for

launch Storytelling of of of quarter Arena also the live heart another THE MAGIC: MAGIC: Eldraine September. team sits at the THE where delivered GATHERING including late GATHERING in of the Thrones and of growth the launch revenue

Arena’s sizable storefront, audience to promotional and marketing game potential connecting available gaming at we new As of a be part and players. are reach XXXX in beyond. expanding global The the Epic games launch, will with activity

in delivered new games a DUNGEONS be will but quarter fourth last the grew the XXXX investments timing, for have are comparison This DRAGONS gaming revenues this release new digital and entertainment in growth quarter. & year years. franchise we in investing which MAGIC, for shift the also future in includes for Given difficult again with and meaningful

the player and our Wizards at growing experiences team advancing Coast do to delivering of exceptional continues The work capabilities tremendous our base. and to audience

team next five development Larian. game recently Gate close games the DUNGEONS over partner with we a to in-house of for Baldur’s and X, the our the dozen This & Coast a to highly years. both in Wizards has with anticipated development Through partners, delivery includes six DRAGONS announced

Finally, delivering is innovation experiences. and the NERF team new

this around of is October. turned U.S. year, of yet launch not global in Strike Ultra has point-of-sale improving launch point-of-sale August Alpha and revenue the in and the While following

through gaining innovation recent we in but March, According line, was also the to NPD, holiday, the category more are is where $XX share. gaining or GX, through the share, segment our in NERF where month dollar we the strength with and under in August flat, of every since Strike, launch delivering are part the of is Alpha this Fortnite down

our rest year content. strong media more well of as key the social see will support initiatives behind Throughout this media as you

which Kingsmen opened in first Creatives, to In world's in promote essence NERF. of the Nerf located early the Singapore. Xperience partnership play, arena we October, The designed active is Action is with

Challenge. U.S. Live attraction at experience. in competitive brings action-packed event, Los is a with the Angeles of are partnering the play we debuting Kilburn all December In into new Live an entertainment and on L.A. starting touring the new NERF brand NERF early This fun

to are continuing in meaningful changing a we make progress retail environment. rapidly summary, In

entered initiatives We the bring forward look initiatives Hasbro audiences, to shifts. and to go gaming and the Our story-led as drive redesigning business as fourth gamers more to consumers. IP efforts team market and beyond global our the our XXXX owned to with quarter market we is and

now the turn Deb? call to I’ll Deb. over

Deb Thomas

good and everyone. you, Thank morning Brian

season. year trade inventory, manage to the We and the through global continues manage progresses, mitigate continue our and this are retailers As we impact a this dynamic anticipate retail to work as environment. throughout on consumers global to holiday teams XXXX working

and expenses, rate. revenues, in reflected in our is underlying disruption This tax

this within continued future slate delivering in gaming teams innovative However, programs initiatives. in demographics we gaming environment, and supporting with across including robust are categories, digital an and our are that marketing investment

we are points delivering MAGIC: for Arena on year THE Europe, goals We set of and the the of launching distribution. continuing to grow GATHERING stabilizing

in quarter financial the ended is our strong with we $X.X sheet. position Our and billion on balance cash

Revenues translation X%. at If currency a million. last in exchange a and of quarter a ago the fourth impact $XX.X we QX, are from impact, to negative when year slightly quarter foreign Absent rates year. include with similar fourth impact exchange stay levels foreign grew of of up this similar the end over the of expect negative compared revenues

the the ago. for from compared XX% resulted retailer patterns. for mix expenses within profit to XX.X% also chain This on an addition supply in in year The impact to a revenue brand of margin changing quarter, our impact shipping quarter operating had our the on

Franchise declined revenues U.S. Brand our and and Brand while Hasbro quarter, Emerging Within declined Partner in Gaming Canada revenues grew. and X.X%. segment segments, Brand the revenues

orders the earlier, some U.S. orders of quarter. on This Gaming, and the had discussed the a not decline for in import impacted in period. and the was retailer those re-written the by category during Hasbro the impact were Brian As represented direct most particular quarter, cancelation business of of

was decline largest early MAGIC offsetting with grew, the for and franchise launching than brands, brands in brands franchise thereafter. North the in new this positioned more brand growth. the NERF, In remaining and quarter we as fourth in in The MONOPOLY innovation decline globally America

domestically available X inventory shelf had our prioritized Partner for Brands chain. dates also STAR our through we WARS, Frozen supply we ensure to on order meet to and In

properties In perform products MARVEL well. two also brands, with those continue addition to to associated

focus retail retailers inventory on is As levels, inventory reducing down.

than with mix more selling to segment by XX.X% brand distribution compared as margin the QX the Due of RANGERS, to a well which and in and sales impact of costs the operating U.S., in additional of associated warehousing in the and this warehousing of XX.X% higher the offset ago. operating decreased POWER Favorable U.S. royalty cost was the was XX% and revenues profit and of year segment began intangible freight, costs, as profit expense, amortization year. Canada

International from constant segment revenues Absent and including grew in ago FX foreign the flat a negative declined and revenue Revenue to $XX.X of revenue exchange. grew flat America Latin million to ago, Asia-Pacific rates, segment Europe impact increased year were and was At foreign a exchange, America. in Latin X%. XX%. X%, Europe a in increased year revenue revenues impact Asia-Pacific

segment, while Gaming Brands categories Franchise the Emerging Hasbro Within Partner declined. increased, and revenues and Brand

cost and were offset International and operating intangible revenues segment X% increased to profit of sales lower amortization. $XX.X increased million. expense royalty Flat somewhat by

driven the third TRANSFORMERS: THE was by a Licensing revenues. Bumblebee Digital Entertainment, increased Arena and ago. segment growth million $XX MAGIC: to revenues compared GATHERING Revenue quarter year XX% and or

quarter third digital million last $XX.X The was a through million, the revenues, XX.X% profit. net programming. high operating typically of happens and multi-year Operating Hasbro XXXX. signed decreased of decline streaming profit agreement In to years, profit of pass year, versus factors. television few several $XX.X in in due has we net operating every This for to a to or or revenues XX.X%

associated this program Additionally, year, revenues production and receiving amortizing Bumblebee production segment as with expense are costs the had film. therefore higher the we

Arena MAGIC: to in continue we games. gaming Lastly, future THE invest initiatives, digital digital including GATHERING and

this in we have and quarters, discussed advertising support prior we of marketing As in increased expense launch.

new the digital we we expect continue of teams development in invest addition, future. launch to to games and the in In

the As quarter associated year last a and the thinking fourth release our revenue about MAGIC had card we quarter. Arena began when this quarter, first a of with major of we in in fourth for year which reminder quarter the meaningful in set recognizing year second last the fourth occurred

X%, quarter to for net profit of $XX.X operating XX.X% the or declined Overall, million revenues.

mix a driven quarter. Frozen Favorable entertainment the as greater sales product a revenue from XXX decreased of Cost WARS, as STAR revenues, such and of MARVEL brand percentage in points basis higher Entertainment, from upon resulting Licensing including X, direct and tariffs by orders into of higher somewhat sell bring revenues, to to cancellation mix inventory concerns. costs the of offset Digital import U.S. Arena, were domestically and

we be shipments STAR the on expense Royalty as revenues. on percentage anticipate expense Based and Frozen X.X% our could royalties now of during Partner which the amount. on this higher revenue with the Brand occur dollars increased in to revenues. WARS a of exceed for approximately and full-year, of remainder associated Dependent expectations of this X royalty level year,

in increased full-year to Intangible amortization be quarter, and existing we continue $XX approximately million. of expect amortization the to intangibles

increased costs are production with Bumblebee. and we amortizing the now amortization receiving TRANSFORMERS: as Program associated revenue

production of program timing the but of X% greater we expect revenues, cost levels expected to under revenues. amortization full-year total remain Given now than net historical be

content of expect Given $XX credits, $XX full-year receipts a now of the change in million. timing approximately to million expected on we spend tax

a U.S., a to shipments costs, to year Driving of basis as direct in import. percentage in on to expected slightly costs higher costs warehousing to from and revenue up domestic points into shipping ultimately be This increase inventory, primarily are ago. U.S. rerouting higher customers the required store domestically, taken well as and initially the XX U.S. was SD&A higher as dollars moving inventory. warehouses ship through warehousing over

invest we initiatives in brands. our higher costs teams of surrounding the Wizards Coast associated digital incurred with our as also building We gaming

expense increased initiatives. compensation largely savings by incentive-based savings from year achieved ago. XXXX Finally, a cost being is cost our These were offset costs than higher

costs of to warehousing revenue anticipate Given full-year adjusted percentage a full-year XXXX. we compared similar that the higher be distribution of are we could experiencing, and SD&A

growth have to take we profitable full-year to we to and steps XXXX we margin in the continue As we believe operating will profit ensure grow continue can over discussed, Brian time.

associated Below this net improved by million, expense negatively million. approximately $XX.X with this purchase in the acquisition income earnings eOne. GBP other losses price the loss decreased $X.X operating due $X.XX other or taxes, our for impacted quarter, income share. million $XX.X profit proposed loss, hedging After per primarily to of Absent

of Our year. an events, discrete last XX.X%, underlying was rate tax rate, underlying XX.X% to compared absent

in quarter released primarily related U.S. $X.XX business, the we the customers' recorded responses own interpretation tax and During third benefit, to we our tax shifting million will guidance the tariffs. XXXX, to U.S., middle that the mix that trend quarter. go during full-year rate our of of guided a the tax or believe potential high-end to range share, the and was to above of high-end on our to due Based per could to XX% $XX.X potentially our of reform XX.X% also our slightly

per was per share, third $X.XX excluding share was loss, earnings FX For $X.XX. the reported $X.XX. Adjusted earnings quarter, the hedging

over we the in cash XX months flow had past of at $X.X end the and cash the million totaled Operating $XXX.X quarter. billion

$XX.X stock. returned million shareholders, in including $XX.X During we $X.X the Year-to-date repurchased dividends million. and total quarter third million to $XX.X we common million in repurchases

eOne, As we repurchase suspending acquisition the a cash planned will in anticipate our Brian our we leverage result more speak moment; as reducing of focus arising a transaction. on to flows program our share in which of

remains EBITDA our to our and balance and EBITDA within ratios debt at targets. Both sheet X.X, to strong. respectively, remain Hasbro's interest X.X

sales Receivables increased days were days. X% and XX outstanding

increased X% of the U.S. the orders. Excluding direct shift retailers import of due foreign use away in exchange, to from part impact receivables

Latin in impact have U.S. we inventory of or decreased owned Hasbro decreased by inventory and X%, the most decrease inventory X%. offset and FX, $XX.X America. discussed. as was owned in Canada partially previously million, significantly This Europe Absent growth

notably in inventories in U.S. internationally, the declined and Retail Europe.

entertainment. investing through and in investments are revenue and our In addressing real changes profit trade we time, the gaming to digital strengthen brands a drivers and basis. an we in a and on rapidly these and business situation, expand time our adjusting are uncertain changing environment, our same retail At

the new our new introducing are and to working XXXX us to positioning portfolio, innovation going retailers grow and ways across We brands, with profitably forward. delivering all experience in

I Brian the an back update eOne on would turn now give acquisition. to call like the to to

Brian Goldner

Thank you, Deb.

Before you acquisition. of to we on One. the take overwhelmingly your questions, update eOne approved shareholders the Last week, our want acquisition Entertainment the progress I of of

We are delighted with support. their

have four the outstanding. and where required, Canada in the UK U.S. We approvals jurisdictions and it the with received regulatory Germany, two of is

We the quarter. during close transaction continue to to the fourth expect

opportunity equity finance capabilities cash leading to global of long-term at billion proceeds financing also billion to the The We financing. forward expect strategic debt eOne transaction to from onboard $X.XX entertainment and bring look and with a approximately close. $X the play continue our to the in and more prospects from sharing talent after is our as to the compelling brands, company we plans about to

to Deb your happy take and are now questions. I


you. be session. Thank time we this a will question-and-answer At conducting Instructions]. [Operator

And from your the Jefferies. with first you. with Please proceed our Wissink is question coming Steph of question. Thank line

Steph Wissink

everyone. the observed getting And today. constraints, U.S. getting things the through to it meaning wondering is that up illustration chain, Thank catch an greatest then wanted if is question. forced kind timing, Brian, to getting into warehouse morning weighted it is assume meet your the access extremely regarding which the capacity to more Good because backend through shipper hold the then as just to to frontend you going just you where some within you were why one be that air everyone's we sounds Or weighted, are quarter goods the gap on what us seems of I'm it to supply in logistics XPL side was domestic? of be Thanks. walk freight? inventory shipments just quarter, port, that's demand? in to should you also you. So I on your quarter follow-up or to shipment to the sell and comments expectations can the help container space us Can like fourth outstanding you and and enough on the for is appreciate your framework of

Brian Goldner

for Well, Thanks question. the thanks.

like grew that you're the quarter a by the the right, me one, summarize with in been couple revenue more disruption a regions ways our that in Let our without of and growth an consistent this could environment tariffs. and to because brands the caused impacted try by of conflict, trade of have year-to-date our results. was threatened There revenues overall number are was implementation in

asset balance import and relies domestic light orders. that do from of We coming this the then XPL shipments on model provider, direct our a use supplier customers our

you when and X, me the in of for potentiality for shift A say the September and that a ask. an order transfers let tariff product where ownership rolling would happened Then take let's so the announced retailer after quarter an of tariffs. order So is give place sales times multiple would direct you in occur U.S. in they domestic This cancel example they import, arriving it goods or August that ownership, they in as enactment the order, as the tariffs to Asia.

different As rewrite And domestic inventory domestic a then the we order need to the a the a fulfill result, order in the as U.S. that order to because required is the import in and ensure States. available Asia. original direct from order, then in we order a terms, we have United inventory to or to needed the they need of

and meet So U.S. we number of of percentage of during domestic quarter, demand and those orders nearly the the a all the quarter. XX as third percent in didn't increase point Canada given shifts

were total was far shift a shipments higher the of impact and the that shipments July were than year-ago. August and lower So September

could with real in looking beyond and shipments plans our too new some believe which also orders in demand our of been still incremental our meet that was with shipments. import including are deal quarter. to a the the did in warehousing some September, tariffs. between incur in have shipping the also domestic new we air We've but of late. and and team potential in the in enactment the fourth we margin. is we freight, We We many catching timing just around expense direct the and really all ways at up The impacted balance XX up time to instances come date December But working for XXXX

for we real early fourth our working initiatives really lots we've seeing in results domestic innovation new And We're new of tariffs. a of we're the we've NERF the gone related plan. But shipping time, coming way a of in were number in quarter and Ultra. been excited potential have enactment results But very the redesign QX of about to Frozen to we've WARS market and results brand a on And the the historically. other timing early the Disney's STAR on X to primarily raft initiatives. seen of

Steph Wissink

which own quarter, you're it in Brian, should a QX? But model the I'm assume improve franchise better fourth in in make prioritize we should your brands because makes to in or and get we your the trying brands decline much of sense. to just like as rate will what sure will that I'm the get you saying understanding rate sounds own QX worse

Brian Goldner

two List by brand tariff. were first, of the was games the directly tariffs part that were noted impacted brands impacted. our is most that imports -- our areas actually X Yes, games remember, the business direct as some Deb two of And

a quarter now games. offset on those tariff impact import those pricing direct were tariffs of So the and in impacted. the took we're to in environment We shipments those

our import associated The direct NERF remember brand. QX with that's most is brand is imports quarter for and the direct highest

that So was that was impacted. a clearly brand

has at on tough Having fourth the quarter, if that note brands, comparison the year. substantially did have MAGIC MAGIC. overall do that, our throughout a look said in you we grown we

in yet card plan have In major comps a years year-ago release. had we over MAGIC a next where some the And the grow quarter, fact, we underway. fourth to versus well is tough our five really

I initiatives think have So around lot brand Hasbro's brands. we overall, a of

innovation have We of into coming lot the a market. new

quarter lined and in our the We have between for STAR up big Marvel. the continuation strength a WARS, of Disney's very fourth partners Frozen,

but that it's quarter a the we probably have a a And royalties so bit we more bit well. in noted I'd balance, fourth say also of higher as


line your next with is Please Goldman question Sachs. Ng with question. The Mike proceed of from the

Mike Ng

for moving just a Hi, parts want talk royalty to about little I around thanks question. the the expenses. bit

and like I this the said year. partner program, shift think in WARS prioritizing STAR direct you Frozen brands you guys to were that import the

XXXX, mix So brands could decline as us expect of be And expect brands mix partner give think a as we to a year? expense about the in should this we partner sense you royalty of the normalize? what you Thanks. of

Deb Thomas

Frozen Yes, that give upcoming the I we morning, we're at think brands -- at Michael. do seeing XXXX of right guidance Fair year that, about to as our really we the now will we usually and The with while out launching mostly X we've exciting. look strength so good October see fan into Toy partner again, WARS for X, previously base initially that STAR with and coming out XXXX. about in Force just spoken Retail, coming as and the WARS continuing really Triple very We on STAR Friday,

coming next a have in tend So the some Snake other well And next well things, the so like, continuing year I where releases we benefit our own we Eyes, year as standpoint. as that have year. we year, we to late about the coming coming that in as into as the sit properties of major entertainment think movie and see to today, continue excited an here Marvel believe Properties we that being from as

of higher might you're our a it's the very seeing the perhaps sit bit today, I here own expense this as of than think well. impact coming year, But XXXX, those been excited historically. I year. When we much brands we're about in look late for as would So be to royalty it our


Conder Please of your Tim is Wells next proceed Fargo. with the line from The question. with question

Tim Conder

you. Thank

can And is you're until circumstances that, next best obviously and the doing timing you year. fully QX? But back here. kick of and I focus update degree direct QX, you or import I a won't scrambling that tariffs in Just see guess given Thank the QX Granted, seems like December the to to by to the and approval, QX anniversary you. dynamic. any that difficult Do here and circle UK things but the under in primary Canadian what closer how anticipating adjusting on on here number then the that deal question one. Brian? know you're

Brian Goldner

regulatory expect close And Sure. very having authorities have of QX eOne and the timing and we're have this behind two four us. year. the still deal in vote shareholder the support Look, we to to happy and that's of approved we

we this of the into we a have fourth going the look year. we forward, number As at quarter strong business initiatives feel coming like

addressing been between our have shipments. our domestic and We supply the chain and the balance DI

As already team retailers a ways, to that light with our is so ways our business techniques, go new product of new tend using programs and U.S. up but our be our we shipments, who the strength asset own get new bring with continue new using domestic balance retailers picking biggest we great model, to the working can finding balance. forward, on biggest also our the to drive into direct our then that on and importers

expect could early back great to to mitigate. would to XXXX, see the we we that and like abate environment would And dialogue see that and continue also we get occur. balance to I hope would administration recognize to in tariff with that the

continue and XX% strategic other and to source India. like continue below at footprint geographies lead great we year-end We Vietnam in our be of outside to China to sourcing XXXX will

and being dynamic The environment. strength it's underlying -- of underlying strength our But our apparent. is business the to of our And our presented customers again, so consumers. is a is brands

franchise brands brands been We as own obfuscated environment. have initiatives it's and well this and great by partner as tariff gaming


Crum is with next of with question. proceed Drew the The question Please line from Stifel. your

Drew Crum

year. morning, during everyone. Good expectations us for the are you remind what your ad thanks. spend Okay, Deb, can

rate net at initiatives around of I to the little of think has growth relative year. given some was and and bit our model, you the the been XX% guidance outlined the revenue slower as the beginning of guys a original

markets an importance looking THE you Arena is for for to MAGIC: an And King. the important its then, remind that and Thanks. update can So just Brian, there? GATHERING THE us MAGIC:

Deb Thomas

Sure. do continue said, if that just don't some Brian of MAGIC. of advertising just first, and mind, let the as just up expect you launch under and as or, much -- gearing we we XX% the we with advertising expense specific that in around of me questions. kind Drew range, that take line initial XX%, kind that Well, And under had to was, our guidance gearing around our of

and advertising continue in the in marketing that open heavily launch. you'll that around it to quarter us fourth launched and in So late the we're see now quarter very

Drew Crum

Okay, got it.

Brian Goldner

at growth we And years. the of we of from Coast Yes. pace the this year's puts has the accomplished objective. yet, we years, of last in five believe the Wizards the cadence Wizards our And us this overall And achieve size as business comparison five storytelling quarter. releases past tough could the if to look on we've strategy, over that year's card up you said then against the fourth over it's next the double

first-party person, have then to digital performing they're new games really analog XXXX, In are and going strongly. on working Both also to and talk you. we're progressing third-party very well. several with and And we're about games

unique in As also players. seeing we the we're We're growth TCG, played. growth in seeing look at games

card to As we gathering there's and new new XXXX, and set legal Beyond a Theros get standard a into new called is release of QX a that of favorite, returns fan a which Death. launch Theros

pace for on up back the we're that pace XXXX. -- card and excited first quarter So games about gets

MAGIC we start of quarter our growth seeing Arena, As at with the games significant X.X beta year-over-year in since with XXXX. ended Beta December every in the closed billion over game played, Open of look the we

Our Twitch. and it's in have The the Metacritic we've which the participants Open game really making XX industry. of see no We're the XX-year featured more in streaming for growth want is on launch Beta. in beta thank released Free three-and-a-half saw is top score a with And exciting that Arena history. than successful of best with MAGIC games our game Play XXX% the over reviewed streaming streamers streamed had to in digital most Games XXXX. par best on really the one been XX,XXX very some the million up the of the over to in in game weekend games again XX to And

So be making Games the also to Epic have and we're on audience. XXXX we really storefront expand we'll our our on well way, progress for

currently version We're in XXXX. game, you into and developing shortly game we'll that's market mobile with a for that OS our the on have making news Mac progress of test we're more MAGIC but also

feel very of portfolio MAGIC: good THE about games GATHERING. and Coast we're of for the we So, that brands the the again, for Wizards bringing


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

Gerrick Johnson

morning. good Hey,

was announced in I back think List So X-XXX May. it

in little The guard So we were on sounds impact a knew this little July. conversation call like last caught there's bit coming a in regards. off you our was here some bit

what this different So planning going and originally what's What's on July? in we since you're changed talked about how from now? right

Brian Goldner

Yes, occur. proclamations the continue the different third where around happened tariffs also back were the three during to get there different communications third the because would throughout quarter quarter. tariffs the And push

So to were about you're recognize imports. the continue up about our year third a in quarter, ago, of XX% gear direct that the talking teams sales

big between XPL domestic. business in a third the and balance that us in use quarter, supply U.S. we in it's for the So for that our

cancelled. the quarter in back, U.S. continued went were expectations through our chain, to get or inventory in maker orders our pushed September, down were biggest all versus and the that the the difference the the domestically of quarter. it was supply DI the And we to moving unable we with having Given being get orders on And canceling Asia, products difference for the to come that's what really

inventory, retailer matched now domestic in that meaning getting were actual chain. we that's inventory head obviously of really fact launches, supply and QX, can domestic then as domestically market, that meet we're the it we the Asia to we just a or order prioritized around results. to an have time available comes put was the good either seeing from short that And we earliest product in into But in we

Gerrick Johnson

that you Okay, not were some cancelled rewritten. mentioned makes okay, that orders sense. But or

cancelled? the So what were what orders not that rewritten those are was of products and

Brian Goldner

recall, a there and you a bit talked as it, List about Deb there's was Yes, X.

List part are our of that the games of off Some were X. board games more

those cancelled. again across those additional So for a the also get games. tariffs number around came margin quarter we orders we support to But to enacted, come a were those games, gross began to our fourth to supporting bit. orders take dimensions had And then DI the later pricing into of some were but much it

we said, we As products would, once our portfolio. certain that the in tariffs on were are enacted

was on as that that for a went process during well. QX So


is the with question Kocharyan next of Please coming line Arpiné with UBS. proceed The question. your from

Arpiné Kocharyan

much. you Thank very

right import plate to given inventory programs Hasbro rich their have the that size understand why QX. need hold entering down trying more is into and direct on to sheet retailers' quarter? balance QX, the Entertainment's as Also also I'm inventory So need we

Deb Thomas

our Hey things. fact talked it’s that of Deb. Arpiné, international business a business there FX. couple actually working in locations. I'll on haven't take hard we it's that. been have our and -- about We've actually inventory so we up the reducing It's quarter the And several European stabilized in was actually, is absent

down. the FX So is a big is inventory -- why factor of is

overall. what about in the think it So these able but reason ship domestically talking Latin primarily it be been But moved in America, little we the why order as our seeing we to a there. it's up is versus we're import need direct Asia, and domestically is growing in in to also European ship down we've down probably inventory as about, is in more here to U.S. now it, in business where business with because trends up that biggest our it's is bit we just what FX

Arpiné Kocharyan

divest are I Brian, there today? with Hasbro early it's the of opportunistically eOne that potentially over still if But on. look follow-up business quick time, at then could business the parts know And Okay. you

Brian Goldner

excited brands, business And our and another growth share And then actively the beginning each to one and board like about look We're capabilities biggest strongest the begin very I'd bringing in is about to and on say, earnest we'd the we'll personnel. drivers. the meeting about. are to on deal. all And and we best close what

companies number value to a even to shareholder And great feel our based across the the products the dimensions as in of we of multiple owned how will the games, look as prospects it's IP for marketplace and together our initiatives we well drive owned more But consumer Blueprint. have more the the we for and entertainment. can of exciting future coming of very and even Brand two have toys, that at year we'll continue drive IP like this to brand holidays support business location in our

we'll close the then give we'll a be So perspective. to deal broader and able you


Bolton Please Weiser the of from Linda proceed comes question with with Davison. D.A. line next question. your Our

Linda Bolton Weiser

comment you Hi, more to tariffs to to can to going they're so, and could actually higher price related been the consumers related that making to you any reduction terms comments the did are in think going that by I saying sensing in said that demand the Target you reaction different the retailers Walmart any of you price the have are in take consumers been data, pricing? kind because with to regard And volume pricing not already of has any talk on the increases increases demand if about whereas prices, accept openly face also tariffs.

the So Thanks. can about situation? whole talk whole-- you pricing the

Brian Goldner

a of games of Sure. board you games, X what is Bop-It. are and have non-traditional which tariffs games at face-to-face focus games of And kind Well, looked again like portfolio the done like some List on that enacted been our includes we've approach on now kind pricing. would products, I to

broad have that at price to of the they launching. spending at we're the demand we able looking So games our gets And a and games, we again, points. great elasticity, the lot in array participate critical We're of games. portfolio many of games portfolio consumer new ensure really price fully look looking and games our time our they're to want, that of across

trying would consumers. critical being we consumer hit price intention have be thoughtful our actively those gross our XX to X, into if far tariffs December how combination and the of so and pricing give we are List pricing pricing would were really margin protect to ensure the increases price taking our And, on portfolio a passed still have take approach to protect gross And to Thus are products to and great we and pricing pricing, take for use a go effect, the again, to about on take we'll but to we margin. along we List but again communicated points, communicating X get holiday. we product

and/or preclude We we're impact engaged weeks we that through optimal don't see tariffs that is the administration being hoping any can before happening. mitigate the from consumer giving season. dialogue Christmas the with two enacted And holiday

Linda Bolton Weiser

have if second Thanks. question. a I And then could

domestic your will it you but there will there for have about to orders, the in talked be be difficulty yet, fulfill product. the end we're be product over demand toys will because to not assuming popular You able Christmas, the or strong getting here

demand possible? something So or the the XXXX that product the consumers pushes early make Is such it the that's and the demand first part into constraint, early over into something supply that you fulfillment chain that just of part still of want over is year. quarter carry will

Brian Goldner

you've the on initiatives of QX. we think something as Well, I think hit launching some that are in really important about

Let's initiatives. just three, take three

they'll These Disney's three at NERF impact more absolutely even in and XXXX will have that Ultra. are WARS have we Frozen than look believe X, in STAR initiatives You XXXX.

get those about people We're We're So launch. around holidays of we're more since X demand to markets NERF had the out more will yet, launch around and get for are racing product marketplace. Right is very to product the begin get demand entertainment only And excited in wish we of more Ultra excited in to about October world very even now, satisfy Ultra. as initiatives. the seeing and each enjoy world. even U.S. the enjoy the that very is a coming and been we what's or through the happening millions to millions to strong

and demand that hot are incredibly in seeing of several are already We're our products well. selling

of Castle Frozen ahead again, seller. great selling our it's demand. hot a And is Our

a And so you're impact into right, XXXX. big there'll be

of coming initiatives. a MAGIC, TRANSFORMERS, as new we MONOPOLY, are of in number Year-to-date, and new initiatives lot have well and that brand XXXX have four initiatives a brands We up, other PLAY-DOH. entertainment as

well, takes So that brands third some we we selling quarter. quite and in the do are had have puts

and to those opportunity and nature tariff of also product this about. our that business. elements related view in XXXX do we certainly environment holiday We short-term view Many supplying grow were we've disruptive. talked But the to of XXXX issues as the just an XXXX -- or as

field to great initiatives, good redesigning great a into coming be marketplace. very and marketing, believe teams on our path have are position We we the we'll in the actively XXXX. who And


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

Fred Wightman

morning. good for guys, Greg. It’s Wightman Hey on actually Fred

the noise XXXX that seeing year? all that and change given just sort helpful really back be targets it'd How of target? the tariff we still Is to those think operating Or revenue that's is that you're today table? on market perspective. should something a from in potentially I a the next think getting about and everything timing

Brian Goldner

But Toys I We in business and and for Us. said initiatives to overall, particularly if could we've down like in think you were in that's track we to right we were disruption of some retail of acceleration FX, to We about getting tariff that towards new growth, September, many coming through that yet, created coming sales number you in look overall Obviously, environment that a if our Coast, mid-single-digit that saw trajectory. bit. talked things are X% the back few grown the that idea. growth on we XXXX. a in ways, certainly that have short-term broke look XXXX continue just R things seeing tariff absent track XXXX our year-to-date gaming remembering has having we Wizards the

kind we've to as the very it we of given get So and revenues X% we possible be net for XXXX track said, CAGR back XXXX some break takes a successful objective. created that will just on for with these trajectory to earnings is the we to right accomplish we short-term order can And back us of feel believe few need, be we there. that what we double-digit that growth issues, XXXX the in to things that beginning, that just from We in and long-term. from have that CAGR


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

Eric Handler

family year, Yes. its and business, bit you when if they wondered, Good reached expected talk the little of fundamentals I eOne, of could -- morning, the Brian, little out revenue the segment saying a to year-over-year bit. its, for its with about in see company year of thanks you fiscal and come growth the statement current strong eOne question. end year first XXXX. family has QX about margins the kids for talked statement and flat fiscal a is half have The the in and the weeks contracted revenue recent EBITDA fiscal last in that

of you business core look expected and perspective So is in -- business see always what's provide that wonder you first, the that books? could in the and was changed that if anything backend first business to you some with when of be Has a at what expected weighted. to took

Brian Goldner

toys a with is future in-house. even clearly, the and we Yes, getting reinvent, multiple we games about job take an teams there's eOne perennial do as better Masks the the aspects goes opportunity the storytelling. as in just to PJ that around on see brands world. of together a business family and star can licensing the we Tampa the we feel very more into feel business, Zoom of And good of they the again and do reimagine We continue launched forward. Ricky more it as the business

development very, prospect; a that's IPs again, very of they so intend new they And exciting to launch. that have original a number new in

-- And were not they periods the then they interim all when recently results, full-year also not spoke, so the they were same.

to So I close or communication year. think advance shareholders in was our to potential try of in QX get to that that this some out just correspondence

Eric Handler

least perspective. changed on term, on fundamental fully Okay, the with at basis I long-term near-term understand them? perspective, the nothing the overall, but least you view, so at the has long-term for near is nothing

Brian Goldner

eOne. with No, together we at coming all. about not enthusiastic very No, feel


Raymond next Edge. question. Stochel you. is Thank question with The Consumer proceed line of with your the from Please

Raymond Stochel

talk do taking on question. you're this the you're competition? about Ultra update the Great, thanks an NERF context you NERF and what of both there? timing you hopefully for in for just as strike far within the seeing the And for innovation my think trending then overall holiday of out timing, as Can where terms year-end

Brian Goldner

lot the overall, category. business. brought innovation also new yet has part Fortnite of form team to a coming quarter of in they the business fourth there's performer been forward factors Fortnite have has the Clearly and for into a now, the new will strong new NERF the lot and coming within so innovation brought they of the so business, new the NERF have across XX and innovation a blasters Yes, new

$XX U.S. U.S. NERF We've in up Strike. seeing seen growth our seen And with for launch the grow in our share overall, under we're the now of quarters. several time in with we've Ultra POS Alpha for first share the of

volume, track right grow the at again as on been but category scale, and we're inventing the reinventing we've this leader only innovation category business, the get in more we as believe we really So to once the NERF at not time. over grow

that there's of As scale countries number we XXXX, gets into new to are innovations a coming get clearly Ultra globally. more out

part have We bringing and location we're in to. platforms agents, spoke new States NERF based coming first experience between that experiential of And around the NERF. the something innovations United bear across world our I that other also then here to for

and the very happy where interruption again have the POS are to a Nation in long-term of in we we very quarter innovation, where Obviously, import NERF So because NERF feel prospects. that business some good of direct the product about NERF done. in of the new way we lot seeing growth bring the market. gets But the

Raymond Stochel

some Got then a around it, on details And guidance. be would follow-up thanks. incremental

contemplating So, royalties, be a sort what than of of higher sort or you of also what contemplating. Street SG&A was were And what flat than different at percent all maybe least contemplating sales. were could we as

in So SG&A for of thinking we are thought which line those by sales, both and revenues? full-year? higher those the prior royalties, we as And warehousing issue is such chain? partner brands, lower overall we supply guess just I the driven incremental prior having are one may and have an maybe brand on two items, Or things expected had been

Deb Thomas

our to partner with it on the think with I to way that we originally our mix we that what sure has expected of because brands out out there that is the guidance make put franchise And royalties, from the seeing we've are previously we're provided. frankly our our brands exceeding actually wanted new demand do right now. and guidance playing exceeding

you we that's royalties. update So this developing. know trend to we saw that's we And really why when wanted

think games piece million line investment that just previously we also that From of SG&A brands of Coast game making we higher that still and through a cost being of do cost that costs the is teams Wizards we're the we a savings anticipated, bit we'll we you've to going got and are within getting some about masked savings, our adding the that line. shipping expect big as by capitalized warehousing get standpoint, the admin development, in in that the $XX an the growing amortization are

keep in So warehousing year, you're about seeing had that as that's primarily the think that that to that hitting SG&A went the through line really -- this some line that will that’s shipping that us. it's we that's same last that And adjusted comps hitting there because year impacting unusual well. item that we charges

overall, we're investments investments. keep in brands, the did in that Coast to five of we years in them grow factors work goal think reduce we costs to we are has continue appropriate the the get just requires the getting our we'll line, the double we our can believe work need to we we So that been Brian make the investing to and quarter. future said, like these savings, and five next year, last savings next the Wizards but as hitting the cost in that us to cost But on because

our we So foot forward. those save looking gas off money and for continue we'll investments go we different as ways to at take pay to the investments on won't those


Barclays. Priya is The you. from question question. with with the of next line Thank proceed Please your Ohri-Gupta

Priya Ohri-Gupta

for much Thank question. you so the

addition about to would are dollars? a trying considering on to for how the of Sterling paper you. about, Euro follow-up, market consider funding maintain importance again, to just you Thank First in any thinking mix two incorporating funding you the like commercial as sort And borrowings just the access as I you're or eOne. to of also ask your mix, even then

Deb Thomas

good So morning, for question. thanks and asking

our to to investing to giving the in For to a it's be affording to commercial the in business we us question. the with addition very keep us that's us access and paper liquidity company, in our to investment important and we available long-term, intent think to an It's appropriate paper commercial grow stated markets us. to for us, maintain important great it's grade access

to that. the with quarter million on cash of we the us look months, did So debt balance $X we've That important we our times flow. EBITDA it than back said, at paying and to about generated billion to interest. cash being XX two targets, of leverage prioritize greater maintain sheet. our will and to get as we end to our two-and-a-half to But $XXX eight debt-to-EBITDA down last In is

do cash. So a we generate lot of

As our that looking pay saw portion hedged that and various have do transaction we currencies look as at various transaction to well. the at running could the we're quarter, the transaction, that to in and we of we for P&L pay actually will we it a we to pounds this borrowings the need knowing

Priya Ohri-Gupta

be at further affected, sort delineation ability you would how were Tier access between of no if liquidity to And all? say, could CP X your your falter needs X Tier versus borrowing that impair

Deb Thomas

at, and investment with -- get look we're also go at we us from forward ratings it's but pretty to our the invest while borrowing strong, in an can rating we that affords something continue and it company we afford is being Well, grade our we get it rates business. at ability, agencies, our the


We've the session. of And the Hancock the now Thank Debbie end question-and-answer reached over to for you. will I turn closing call remarks.

Debbie Hancock

everyone Thank approximately the call replay for today. hours. in Thank available you joining on two our you, Robin. The will website be

website will Thank on following Additionally, this management's you. posted our be remarks prepared call.


Thank conference. concludes today's you. This

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