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Hasbro (HAS)

Participants
Debbie Hancock SVP, IR
Brian Goldner Chairman & CEO
Deb Thomas CFO
Ashley Helgans Jefferies
Arpiné Kocharyan UBS
Drew Crum Stifel
Felicia Hendrix Barclays
Jamie Katz Morningstar
Tami Zakaria JPMorgan
Eric Handler MKM Partners
Tim Conder Wells Fargo
Michael Ng Goldman Sachs
Linda Bolton Weiser D.A. Davidson
Ray Stochel Consumer Edge Research
Bryan Goldberg Bank of America
Call transcript
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Operator

Good morning. And welcome to Hasbro's Fourth Quarter and Full Year 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 and posted presentation press and slides measures. call website. include for release our earnings The on today’s release information Our investor regarding non-GAAP presentation and non-GAAP adjustments financial

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

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

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

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

Goldner. I would Brian? Brian introduce to now like

Brian Goldner

profitably pivotal achieved global for was everyone dynamic well Debbie. us Good you year our grow today. Hasbro. in performing the morning and a you, for Thank revenues, retail We joining plan in increased start to grew thank forward markets XXXX and X% the many to carried with environment. XX%. and of momentum good absent profit XXXX. FX trade ended brands across has the Hasbro which year We operating adjusted and revenues

company and growth after digitally re-designing more in year e-com. global revenue and play executed commercial organization pure agile, The our as XXXX. point-of-sale the modern strategy in a double-digit throughout go-to-market driven and We delivered teams

the for growing in the Our for execution advanced and strategy levels product growth ending good retail with as and and grocery these and as for channels. inventory partners fan channel our omni-channel drug. of strategy design including value drove online the We double-digit channel channel, retail year and specifically quality well gains

the season. important and that navigated revenue the arose trade the implementing during margin disruptions challenges and in global holiday environment, to programs goals We meet

at of gaming XXXX on from We double results Wizards delivered by to over revenues positive led compelling XXXX. date to our the the work have Coast, experiences, Wizards years teams our us five of the to Coast of plan

for the GATHERING strong revenues increased THE year behind XX% growth and double-digit than MAGIC: year THE more first play a top table MAGIC: Arena. GATHERING in in

February XXst. revenues the gaming growth both new sharing to and grew new D&D DUNGEONS engaging storytelling profitable year We drive to meaningfully margin MAGIC for digital sixth on straight brands and our developing for with & high we are games forward plans XXXX DRAGONS investing look longer-term. in while

brand themes operating events expanding entertainment revenue live in profit original grew relevant reach advanced revenues had that new business with our tie-ins. double-digit portfolio engagement. license MONOPOLY region double-digits margin. growth drive products with consumer broadened and We each and our our We and growing licensing expanded and consumer

multi already efforts are actively brands across global, and making working licensing leverage is category great progress. team to The eOne’s

more We upcoming about Meeting. will Investor our at share plans our

Spider-Man X brand for the Star across Marvel's creativity the compelling and brands. grew year. and gains to quarter. We for fourth full franchises leverage drive entertainment X, and Avengers Partner to the XX% in revenues Frozen year Wars and the portfolio created and XX% Descendants contributed Disney's

products, executing gaming. gaming, story entertainment the RANGERS first product, offer POWER our XXXX across be added full expressions year and in will portfolio, will and consumer Hasbro-owned and new globally across digital we blueprint experience. We to brand our our

Bumblebee second XXth fan global closed eOne Transformers And highest and of its on and to Entertainment. by brands tremendous in non-movie and film, had of Home we portfolio year TV the the music. its acquisition history, December and expertise adding product capabilities oriented across fuelled great our growth

addition eOne’s In globally Hasbro more to to cross to and poised business, platform developing IP fans consumers we storytelling. eOne's and further profitable bring are while Hasbro audiences,

working teams we stronger I'm encouraged new share by will month, about of early this Hasbro. days our the more together, later our and

markets. our the For reinventing Global the to on commercial plan, our approach full year, delivered Hasbro team

grew and X% or region growth increased XX% products. entertainment revenues, consumer in and behind licensing to Each The Absent gaming, digital of revenues million segment entertainment FX. major $XXX digital

did the high-single ended retailers effect. growth. not year team performance of at which including Amid worked the tariff strong our implementation, ultimately U.S. risk, fourth from disruption quarter into for the revenue with digit to tariff list orders ahead go with uncertainty U.S. The preserve the closely

ensure going as and absent supply the continuity, full which will retailers, of our the positive the of We Point-of-sale our inventory meet in supply quarter, and requirements Toys"R"Us. investment year just-in-time as for and forward. to during priority our logistics to revenue well increased the was year, for commercial chain remain chain efforts a increasing

these our quarter a providers We meet evolving in changing needs Our level to as base. in third-party executed Hasbro high of teams, both fourth the view XXXX. improvements retailer sustainable and our at the

than Full revenues operating executed Europe, absent stabilize and and X% profit. room year FX goal more our for grew increased future In improvement. we times with to profit improve X revenues

largest carry the region. environment to succeed expanding. enhanced growing online an the Amazon where is digital customer in and We and channels our across and selling fastest our are capabilities retailers new less inventory, region in

including retail softer While is not region in which several market. contributed without challenges, its countries, continued European toy the disruption a and game to

but as POF quarter, the in was fourth declines Russia a the moderated Germany, down increase for region during year. revenue market. modest Absent down Iberia, grew despite well Toys"R"Us and We the U.K. in as a the Point-of-sale full for

such offset disruptive or and unrest XXXX, PLAY-DOH in here, gains up Latin Ultra countries new which occurred Mexico, slightly behind will as region. revenues FX happen in launches America several Absent in offerings. in the NERF were brand Several later

revenue increased led the China, Pacific X% economy an where fan growth growth Asia FX is by India driver. in Korea and important Japan, Absent

new and successes by were compelling stories. brand led platforms innovation, Our

addition new to PLAY-DOH already highlighted, U.S. will and I've In and those kitchen in distributed driven globally revenues in be up, rollout popular XXXX. items five marketed were which the play creation our of by the compounds

line window for to created the beginning X of innovative the Company, team home into across and with highly In product points a price entertainment today. capture a tremendous the Disney Walt robust strength continues Disney's had line new points. Hasbro's year The consumers partnership with momentum Frozen holiday across imagination the with price our

across from markets end Star According release history were the to the the Disney Wars Rise in the the product theatrical where categories Star on brand's quarter Hasbro's in of sales Plus. Wars, highest year and NPD, rights. fourth benefited we the Skywalker airing of GX XXXX The have Mandalorian

Wars top fans Series across shipped markets the Mandalorian in around new global major one leveraged and of sales story Hasbro quarter Yoda young are which year. fourth called drive new the figure The the Through pre-order characters, Star sellers Black in to Baby the several of child, products engaging was the with this increasingly world. affectionately and phenomenon

entertainment integration entertainment Spider-Man for an another had Hasbro's digital slate. the an momentum extremely product new to robust year product, leveraged Finally, Avengers outstanding Marvel growth year the revenue and of BEYBLADE the and franchises with behind for start good including year.

globally the For and share improved U.S. to the fourth the in throughout revenue very a NERF were in helped the in category and us Ultra year, quarter. gain NERF, successful in in XXXX according Performance fortnight declines modest a line POS with promising start blaster’s the NPD.

break launching across year. in We product the growth believe for will this We launch and frame Ultra opportunity have globally, and brand experiences. this product additional

revenues THE of the Our total by not MONOPOLY. sales. grew contribution our the classic category DRAGONS portfolio, from new and Hasbro growth declines and several to did MAGIC: PIE OUT and game and in year, SPEAK launches game difficult year the DUNGEONS FACE gaming titles X% & prior comparisons fuelled offset in including GATHERING games Higher for

marketing impactful nimbly, across space business. retail drive acted campaigns to and gain retail team to the for mid-year marketing we'll reorienting continue the our and The product holiday, and at incremental original

portfolio, that of on year the revenue setup closing, year in full and strength the including on diversity gains In grow plan plan, last we profitably quarter. delivered fourth we to our and and for the operating profit

have set we business without are and a team if As continued we we the that target excited In Hasbro's broke entertainment eOne, to look XXXX, about growth, made like changed brand margin. of tremendous business factors, right much opportunities said deliver are and pre things look the XXXX a certain revenue profitable but is the XXXX, terms profit XXXX early continue improvement. to and revenue executing, progress profit to for to few key period operating which eOne. We've and Hasbro's expect there over to in deliver

increasing million negative include returned Toys“R”Us from and year gaming, array impact foreign when approximate innovative in a stories. to stand will an compelling toys include exit brands These the you growth. an exchange, of to retail the industry alone product that yet are million not of and U.S. and excellent What in has and this inventories out the lines, market consumer across $XXX with close products game toy $XXX decline

Hasbro took performance, growth of a year, create future. backdrop, to over XXXX’s drivers major the future as and we With investments in the past the good steps

products, around achieve consumer toys and progress the are at to We in-gaming we Coast have entertainment, we Wizards with revenue our making bolstered built combination. of across by which games, efforts including outlined the our in and eOne streams and profitable synergies led great the of acquisition

we’ll for evolve XXst, executing strategy. February speak the Hasbro, detail about at Blueprint On in more opportunity

unlocking investing per coming the the to and May. has years, our next the maintaining from dividend. The remain board acquisition share eOne be we over paid quarterly committed business $X.XX dividend our of our and in As focus to we of declared growth de-levering in for value

to Deb to over of strength like would speak to Deb? now and the call performance Hasbro. turn to financial the I

Deb Thomas

Thank through the morning eOne growth. for we and beginning undertook good XXXX you, and acquisition. goal Brian the year of closed We fiscal XXXX a trade managed challenging profitable on good and our of a was environment, delivered everyone. Hasbro. at financed important and We

major teams to growth, a and full acquisition. worked Our year quarter and we holiday, drive level completing extremely supply a our ensure and executed fourth to chain diversifying this high at while also revenue hard profit

margin $X.XX excluding X%. profit XX.X% to per expenses XXXX year and Operating adjusted EPS increased share. exchange revenues full foreign eOne acquisition adjusted for related increased was

returned We we cash support generated balance the flow proceeds operating $XXX acquisition eOne of is during quarter, our year-end equity $XXX.X offerings, and shareholders. In $X.X net fourth the raised included cash $X.X to in billion during which billion. debt million from in the and our year, million in of

Excluding these financing with line is activities, our year-end balance in cash XXXX.

borrowed credit we financing to close, During fiscal our deal quarter out round XXXX $XXX to well as outstanding billion term our first $X.X of and eOne notes facility. shares their of and billion a revolving X paid as the million with loan eOne’s for redeem approximately

We eOne an reported and adjusted are operating now so pleased of on and Hasbro's that team. our revenue as Overall, constant grew increased. rates at and actual basis, profit part is

segments, X% Looking and the U.S. with at partner segment and emerging revenue brands. in for grew Canada growth our year,

in just Underlying costs of amortization with royalty increasingly shipping profit and Rangers and essentially managing was higher associated intangible growth, domestic partner from inventory an flat costs time Power network. as warehousing carrying strong brand more retail absorbed higher higher we in and support

Absent International growth segment were inventories. inventories emerging year-end unfavorable at revenues U.S. FX an behind and impact. the up in and Retail brand X% slightly grew partner

and Partner grew brand emerging brands revenue FX were up. Absent

retail significant and operating inventories good declined, were at for costs than in in reductions levels, more inventory levels. they much down profit revenues as doubled internationally. shape improved Allowances XXXX segment grew. Operating retail came remain Following the

consumer by with and Entertainment digital Arena revenues Bumblebee increased gaming, licensing from GATHERING products digital the and and segment film in revenues MAGIC: led THE XX% licensing. growth in

and profit declined & digital MAGIC: future margin in DRAGONS MAGIC profit and we Arena in as gaming THE invest digital initiatives, operating Adjusted DUNGEONS including GATHERING games.

of XX.X% program Bumblebee had to the of In film. investments, margin addition, segment the streaming higher revenues and remains associated Despite meaningfully television near-term with accretive amortization lower corporate average. margin our the recorded we impact

in as improved revenue drove points inventory of in and improvement had Overall percentage which close year. the decline based Europe, delivered a basis allowances sales retail outs. meaningful for on We forecasted a of and cost XXX lower

a and mix and STAR entertainment, as from greater FROZEN benefited driven product digital and X, we inventory was higher offset to THE addition, toy This revenues, such MARVEL of from MAGIC: partially entertainment In licensing GATHERING. higher game into revenues, and by cost the higher mix U.S. WARS bring favorable

brand revenues, revenues in of quarter, year on higher to STAR X.X% strong FROZEN As we shipments fourth discussed and including last expense WARS for grew royalty partner the quarter. the X

investments. million part to $XX decrease higher quarter, for including was year revenues, in advertising entertainment $XX which of the which in million back a fourth require declined the Advertising due lower

increased When viewed points year. royalty expenses basis and advertising our prior from to together, in XXXX XX

also We advertising social including, reaching consumers platforms greater effective driving efficiency are our more more through in media. cost, lower

Program declined X.X% revenues, production eOne expenses. at to in of amortization excluding SG&A increased full as amortization transaction revenue expected timing reflecting coming the Bumblebee. of revenues Transformers and XX.X% year

of benefit additional saving foreign The expense compensation offset exchange in by warehousing cost favorable higher and digital our increased cost. were investments initiatives partly and gaming,

good and fourth the in prioritizing job expenses Our team quarter. managing did a

with income acquisition. estimate also eOne associated fund the $XXX Below plan earlier reflected issued interest operating items termination bonds associated expense for to our $XXX are XXXX pension settlement interest approximately other the million this to eOne expense $XX.X the charge be several U.S. profit, from we XXXX, There in the of year. million with includes Reflecting acquisition. financing million.

full include financing of included full purchase year British associated a primarily hedging These million price. with the also bridge fees quarter a pre-tax. transaction $XXX pound fourth associated $XXX facility. year equalled of The a million with million the gain this gain quarter, and the fourth $XX.X In

facility With the has terminated. the bridge financing complete, been

the income Excluding for billion adjusted ahead cash acquisition associated of the approximately related XXXX $XX.X which income interest with million other fourth and these balances for $XX.X eOne totaled quarter, of $X closing. includes items, higher million

to reaction range. events, tariff, last Based rate guided was we tax forecasted compared an depending underlying year. customers high had rate, to Our the our at absent tax of be our previously XX.X% end on the underlying discrete XX%

List However, direct the ultimately quarter not were teams to the China tariffs import worked with retailers during XB preserve and implemented. orders from

more sales As points direct the associated percentage effective than and with our import result, expectations X The eOne the rate. a jurisdictions the tax to mix orders changed That items favorable were favorable as foreign total. practices of GAAP with in levels as the trend, income declined and of impact resulted buying well certain exceeding tax only includes expected in rate XX.X% closer of historic termination along a pension certain the tax transaction.

balance to Moving sheet. the

to later entertainment the came the due year. our direct quarter Given and timing in fourth in releases of later collections import uncertainty, the tariff shipments orders

XX days As outstanding to a result, increased receivables XX% XX days. sales and days increased

of on are $X nearly by FX the collected was of million The the balance January, less and end balance. impact of year than of $XXX we Receivables receivables the million. good quality in

we of landscape, Our past needs teams major navigated the XX the and months extremely met disruptive brand changing retail acquisition. a major dealt the as executed environment completed a well, with campaigns, trade

eOne XXXX is combined together six about our to Our and work forward sharing becoming Toy we more at into beyond organization you to with view weeks one. We're with and our regarding look Fair.

like I'd closing, the on In to coronavirus. comment

factory and our delayed with disruption chain in are Our employees returning to travel to China limited There as and is supply thoughts work. the commercial those impacted have workers is and operations in by been outbreak.

it's small, on it of the it magnitude potential our it to a outbreak. date quantify impact time time, as how at to there will on larger be business. to this impact takes is control, our a depend could business challenging long contain but takes The period significant to If to the

full to closely are manufacturing the missed import levels up and on any week, production can missed production direct activity. shipments We partners and catch determine during situation past the we're our quickly rescheduling the monitoring based out China and how resume

flow to a we're in period working factory us, goods. is This production protect for the revenue of lower and

cross-functional part in our weeks of with impact team the any launch to dates priority we'll contingency lost and demand in year. and to productivity recapture identified near the Hasbro. work to as the working coming identify throughout the a have months plans, to We items mitigate and We've meet term

your Now, questions. Brian and I, are take happy to

Operator

Thank Please you. Wissink of be question with conducting Instructions]. you. Thank is session. At time, Jefferies. with Stephanie this question. our a [Operator line will your we ahead And question-and-answer the from go first

Ashley Helgans

Helgans questions. taking Hi, Steph. Ashley for good This Thanks for on is our morning.

you Gaming growth terms measures features? in and games we or put the that XXXX key digital you expect confidence in give what of you're Digital sustainability, speak impressive seeing new Can So up in growth. to can

Brian Goldner

for growth Sure. & see growth GATHERING really two for growth very Well, fronts. strong And good it and morning. did DRAGONS. MAGIC: in increased for MAGIC, we DUNGEONS And the THE was

the revenue and because described game we release growth our for our also First, lot up. unique was was that events. for it in players. unique tabletop grew all substantially And tabletop the brings as and a And of players down fourth saw timing. release game, cadence the of of And players the into quarter, in and had the new we growth we course, saw so

We've of offerings across engagement seen of lot new a there. an array

GATHERING e-sports the throughout Arena MAGIC: we Arena new players spend great XX played viewer it as For be year-to-year. was seen of THE in the -- reviewed a brand We've players over thus That continue game XX of brand was for seven, seeing for hours week. top a XX,XXX average brand. since X.X metrics games far. and in aspect the beta, games seeing the streamers year, on the year. ranked X to saw MAGIC to Arena continues for one We're MAGIC top also the growth billion and growth growth Metacritic. players it top XX% a incredible hours We're open Twitch streaming about XX% week-to-week. over also on number

GATHERING ago, Arena In launch THE we Epic Store. began of Game on January, few weeks the just the MAGIC: a

to other our We'll some migration XXXX also partnership and PC continue marketing as just our And with drive So the excited We're about more in mobile. to the go Tencent. our will outline ramping about will plans players Chris talk MAGIC that gives us access more new up we million initiatives to that to we're bring XXst. XXX very on gamers forward.

In for sixth growth. we of our D&D, did addition, year see straight

which at on Analyst are begins nearly the new let seeing about But I'm Day, digital for XX% of XXXX, We hours walk that Twitch through going YouTube our again, viewed substantial initiatives content XXXX. in up year-on-year. XXX plans million is D&D brand. us we're which In a to coming and for are again half Chris our for gaming seeing first of lot of the

Ashley Helgans

Thanks on the quarter. for all the and color, congrats

Operator

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

Arpiné Kocharyan

much. very you Thank Hi.

I'm too but be might going try. ask, to this So early to

if Now closer sort you and around given of puts eOne you at that Even thoughts announced, you this look cannot have give exact in of for now initial takes brands the numbers, you. Thank acquisition we you how books, retail was announced the or number about you've synergy versus acquisition. million the looking do feel that anything out have a at broadly when taken environment? do about the guide today XXX when portfolio you're

Deb Thomas

we weeks what Arpiné. we're operating in together for morning the for that, can Thanks color impacts, two we're so into look still we question. budgets. eOne can. estimated six Good seen. the like synergy give process in businesses only Today finalizing from our of we've has say on with far We'll the the combined changed more I what on and as what XXst best nothing But

do only But brands about you six You as together? weeks said, to I Brian, want talk our know we're through.

Brian Goldner

entertainment to business three products Sure. company. Certainly, focus Hasbro platforms, entertainment games. then continue business Hasbro driving major consumer we'll IP more to across toys Together that It's profitable storytelling, and together and great talk now gaming they're about. in including and come we'll and and as and eOne our storytelling have areas a

see the storytelling. to industry across drivers engagement and storytelling associated game growth well as with being as of all toy top both and the We continue gaming

streaming So can an more role. we to course We about going increasingly that. play is see also talk that of important

teams add to eOne we also MY to great like there, PJ between So a The and brands ZOOM expect together PIG, MASKS immediately LITTLE our and PEPPA to partner done reimagine portfolio. RICKY and We're we team's PONY. growth. additional Hasbro job beginning

in [indiscernible], up season feature As final you it LITTLE XXXX and the MY would the earnest in MY the Hasbro talent ninth on the as initiatives won't via mantle PONY well LITTLE as come taking television series IP XXXX, as eOne. see months season, that our for our know that TV teams teams talk in over and but the incredible certainly brand; we beyond next and PONY was several for to include great such plans expertise about for market today now opportunities animated and our and weeks the you all current more at those film new will

Arpiné Kocharyan

Thank you.

Operator

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

Drew Crum

a of comments Thanks. how brand talk it Should to about XXXX? Is NERF Brian, the about in are Thanks. year? NERF. largest growth performed made for guys. the brand year? during thinking Good relative Can company's morning you still the expectation how couple you we you assume your this it about and

Brian Goldner

made in progress NERF substantial XXXX.

the In we new the the U.S. fact, where had including Fortnite line in good momentum our as really for brand. Ultra saw NERF innovation we very the in of marketplace, all as well

have very innovation In the fourth direct that access as online, will where market momentum brand category consumers blasters in we that get up fact now for POS low globally. to down the global business, favourite blasters. were for we single their new to the We go quarter, we in so grew overall, digits as we sales pick the in our describe only and to the up out expect access share were

company launches as the also one we our We online Ultra included well the Fortnite in as product. and our innovative brand the holidays that have is sellers several new brand as top XXXX top of enjoyed still our for over brand coming saw some both well. The

and XXXX. that more a the other is bring brand, pivotal we'll fully momentum actually perform term has So we and well, prospects a And year for world, around we've continued few territories bear [Indiscernible] believe XXXX to again, U.S. as and innovation in the to NERF bring the the bring long that seen in in about very we enthusiastic brand, believes growth in the all

Operator

you. Thank

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

Felicia Hendrix

morning. good Hi,

XXXX the year So just take XXXX compared may to your comments get the to to about wanted Brian, to it interpreting your comments get given I I'm headwinds to XXXX. that metrics. back a further

So gave could POS follow of in prepared some the just remarks the if And that. your fourth is then quarter. see that up details wanted to on comment you my on you for

gave lines some but the think all. of business you not I

So I you if And was Thanks. them wondering then us ZOOM POS how has launch? doing give could and line. also been I'm revenue by overall since RICKY wondering review just

Brian Goldner

Sure.

that, margin we You to few that to our for Having course know, digital. first to industry, revenues of relevant foremost, we had the now PJ about as and the continue like that historically XXXX somewhat our and talked around underlying add plans of products our in licensing longer comparisons time beyond XXXX. in MASKS forward grow and entertainment and so business to immediately business, noted toy of do continue include expect Hasbro RICKY our a eOne grow what PEPPA was expectation that said to we and step make operating headwinds. sort underlying over and look like we now We PIG, to no consumer progress for we we've continue the so XXXX had as profitably gaming brands and are ZOOM

Hasbro as we company say one ahead we're And into with now that so as eOne. operate I'd XXXX and moving

the XXXX we we as you we've believe over outlined the as the out years As time substantial through the part over growth of several acquisition. horizon, for look clearly, next opportunity

America We a year. some some talked again, around business, last the our because momentum was call wanted North partner the on about -- say, the year-to-date in POS substantial year at growth and at we we seen and as really U.S. for we clearly low business. growth around saw toy substantial really growth look good the see around look also globally full obviously as our we digits, literally the then business we down bit single we have I'd some full POS, The brands. see for to year-to-date

is Europe up well. and up year-to-date Our as POS in POS XX% is our

as again, we're moderated fourth quarter for in Europe So declines quarter, in those seeing we first the gains the XXXX. beginning

and performance was of from around it movie that -- that good of the from the year holidays a lower several quarter that the faced XXXX THE would Transformers Transformers GATHERING the prior the cadence brands over year, late very We build momentum like given recognizing headwinds. about and holiday. And prior MAGIC: and saw the been of fact year-on-year brands a there was again, than saw it cadence we MAGIC, had a the the release talked that be how fourth brand release we period. our

Felicia Hendrix

And RICKY ZOOM?

Brian Goldner

you a shortly, had well China the of off to I of them seen coming think season coming of ZOOM’s at for millions hundreds streams great out team start. is of Fair. in RICKY It's about Ricky as Yoku or going but the Toy that rolling I'll the around second world, and let talk describe to you

Felicia Hendrix

you. Thank Great.

Operator

proceed line the Morningstar. your And of the is Katz Please from with with question. Jamie question next

Jaime Katz

morning. Hi. Good

XXXX any commented over chain you I know out bit to play supply let of think us the that how bit level a expected renewal, which so expenses I were if is you does believe helpful? year, Thanks. then, don't that And Disney any the a on on think Can being you guys have contract that this up elevated. is comments be would remainder on out? comments I there that,

Deb Thomas

Sure.

So standpoint saying, warehouses. import requiring still the in with domestic supply some and saw more America it's add particularly mention shipping changes as direct additional domestic we're that, we shipping North we cost from chain versus we to did a higher

we slightly strong if full actually did it's the our contracts U.S. contract, on quarter, so airfreight about impact third are freight as ocean expensive. where being looking That reality, the quite a a good and on cost. a see year don't is are as You said, bit it. bit the our coming higher its we product to less go-forward bringing talked the here a But is that

chain our matter through pricing a it out overall set for of it's that we we that at product. when the However, look moving we do gets supply think But mitigate here. our course, of it when that and

Brian Goldner

very successful and had XXXX partnership terms and XXXX. of a into very together Now, Disney, that year in continues in we've strong

and was amazing. foremost, Disney with Now first Frozen X on partnership

comes we We is leading the our are Frozen comes entertainment the strong teams. far window also Mulan March PRINCESS The our last Dragon in products home fall. is the in on Hasbro on property. We're Raya, company -- continue to Thus to have from see XXXX. going the results we driving that that business, with and new innovative expect now in

in gives seeing to us. we expansion the among a to Europe library was with Frozen. also Castle us from XXXX, see work Plus, the they to great holidays, earned Disney together, for Disney Disney In life product opportunity castle the continue those and bring Disney Plus their now across are fact sellers, films of top the course available We're characters impact of the only major that PRINCESS benefits which more the [ph] in of to

year For Marvel, around as as tremendous Avengers, we a had Spiderman. well with

with fan on We XXth product. the focus also the product, Marvel the XXth economy year

Skywalker, Plus partnership. We're in So great Rise that will for as both Star Season Star again, incredibly the very for Triple results the fall. strong Force from its of Wars, X this And excited Mandalorian. as Friday Mandalorian Disney Wars come of to well a we support saw around the

substantial as for And around the seventh way and and give such spring. We're support will I'll have season all a continue the Disney Plus Company. brand. that in also is work the which support the we with we backdrop Disney how you drive comes Clone which seeing great the Walt in to Wars, again, to

a them we We nothing take the will continue continue properties to partner and for we of believe while we granted, these with in across choice future. to be engagement

Jaime Katz

Thank you.

Operator

from your with is Please the Tami with line Zakaria The JPMorgan. proceed next question question. of

Tami Zakaria

and about taking the line you quarter? for have I that puts And the Thanks saw talk on then in the fourth takes gross follow-up. question. margin you my Could Hi. a

Deb Thomas

Sure.

from actually So impact see standpoint, about a really partners the fourth from in of margins related the that we of Disney. talked our at we talked from gross entertainment did the property that high Brian the movie about great just the movies came great the quarter benefit --

say, to offset properties royalties that. them, tend against a bit offset they've because the gross carry shouldn't further those to So P&L to or margin, down I go higher a

in the you of So quarter. impact see the fourth that

pricing the of You product closeouts also as of as on well see the better year, overall. throughout our performance impact

saying you're reduced gross margin we benefit of the into supply getting are little within of bit team fourth the our quarter the all costs done a So country. work talked bit things and product from the line chain actually about earlier, we into mix our the some all bring that the and to -- that has

Tami Zakaria

helpful. it. entertainment XX% year. were the Got then, impressive for revenues That's licensing up and And digital and your

arena? So, provide could from mix on the THE versus this Bumblebee MAGIC: growth color of GATHERING you some coming

Brian Goldner

the across saw and of the parts each discrete digital business. licensing entertainment, We of

Our consumer licensing business is products up.

top was monopoly business With a had game digital Our digital is a number We performing a new it with up with Marmalade launched as on and gaming from well Buddies! game that which incredibly number XX as launching YAHTZEE including launched. Apple our in charted store. games of partners one app Studios the December

game Joe that from called we And Cobra Our Scopely in and a POWER were have performed of game QX, go a well in War G.I. support digital as RANGERS quarter XXXX launch brand in games to G.I. launches first as QX. Joe continue SCRABBLE the in well.

fantastic XXXX. THE the as expect year. business, decline So digital business grew, multiple continued we fourth gaming our grew had a and the by grew quarter the year in grew of our of and throughout platforms expansion in progress but all Arena grew, across legacy bit entertainment offset Arena in MAGIC: brand XXXX. business digital I a online Arena Wizards the GATHERING outlined overall for

Tami Zakaria

you thank it. so much. Got

Operator

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

Eric Handler

Yes. for things. very Thank question. the you Two much

about that talk purposes associated little eluded this analyst for you've bit sort for about you know, meeting, inflection some bit this can during being got talk about this? the for seasonality bit a year? a going but And past you're details talk and I this First, a a RANGERS. could products some in the RANGERS the for to wonder I modeling little now of if also, purposes, you of you with POWER into then modeling if the go eOne. about you've POWER little wondering about could

Deb Thomas

Sure.

I looking seasonality. So on we with combined Eric, and finalizing our actually mentioned, at eOne really as are working just the budget

really their didn't its things year revenue benefits had so and Seasonality historical in dependent our But brands much offset is seasonality. our a revenue their to is the some and that we big business streaming Brian of dependent our. of which entertainment around licensing side of on of much the of similar and is year family very delivery film actually delivery. last we're are seeing the and licensing. and entertainment very business mentioned So in television us But one to last seasonality on similar

move February So as we'll that we more give color the date. XXst bit a on into

Brian Goldner

on And have for In quarter that who look at on the XXXX. Season XX. we in execute our kids rollout Morphers benefit North year in of excited number great we'll Beast it continue and then of add are live we RANGERS year. And rollout Morphers very array slot globally. as ratings for a of business X We're the bulk in really time strong a brand experiences, in POWER we to one the products, didn't we began gaming, the QX one as XXXX, recognized because was full launches in experiences games also second until our consumer two the America our to year Beast was of we and the brand an in globally. for and toys Nickelodeon, about

the So in executing teams prospects blueprint. growth of the And excited we the the very about brand. believe across are

Deb Thomas

Thank you.

Operator

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

Tim Conder

more program happen just Thank be that just you color color One, follow-ups that on or a could you. Deb, the on color more if give quarter? seem the And there, to you of what adjusted more substantially. from little from cost have again, just sustainability couple basis, the down on little And here. a of the us an in that a bit little held SD&A

And relative, collective if you well. Wars Star put into that's that you going and that's just would Wars and of Star then, maybe XXXX, those Mandalorian, we working? the But look core as maybe to how it how Mandalorian, trajectory obviously, relates all is if the Wars, the you Star the two together,

Deb Thomas

Sure.

Tim, So right. you are

our the initiative also a You're SD&A savings FX. offsetting through what cost somewhat you seeing that -- of coming get of line. little bit and But that of benefit benefit

that within the negative investment bit gaming So, on on that, top -- impact digital lines line. The translation are like we're we're business. is seeing positive our while, the in FX making SD&A. But impacts

the So you're while that a piece of development capitalized we've that seeing comes line. product the through portion we're the what depreciating for SD&A of is coming and line, in

a in cost sustainable. are might sustainability, far more eOne as XXXX. our do as But out going as to we get We savings So, gather. to its we bit difficult believe be pull have

to investments like to really the for we'll what is on we about, So will revenue lot we've in XXst. But XXs. of talked we outline to digital those as driving look also That's gaming, because try XXXX highlight think a those make future. the going the in are continue

coming talk the So to we Chris on while see going that through talked area Brian all XXst. we're and great some that about seeing great continue as a now, hear other of expense and MAGIC DRAGONS, & and the growth. of you're to about things DUNGEONS

line We invest continue to that's important a to believe really in.

as those that's year expense a is this well. other bit The compensation of thing of cost some savings offsetting

Brian Goldner

Yes.

is from both of Disney to excited coming the impressive later that have from kids. park Plus Wars level think that's also in We into has theme Skywalker Temple to major engagement also Wars, We both Mandalorian So and of the the seeing at Clone very for And game then continue see adds we're Jedi really course, Edge, Wars fan. brand brand the to are are X the of coming that the and all Galaxy's think as how as engagement Mandalorian, called for brand the spring. that Rise of that are the on a engagement Star its well see in the around to coming show Disneyland. comes this all There's its Challenge, also for launches great -- fall. we Disney we'll World engage which But to kids and see the live-action their Season two they Star results. kids the

XXXX. and Series Certainly, seen seeing the obviously as to about also that are We're fan-oriented to And the excited Lightsabers we of continue Frozen. engagement to made will but as for expressly kids. brand our Black around product, just perform designed think for We windows we've growth and Wars, entertainment believe Star very well that engagement. continues for add great of the in course, and home role play well we're

via continue outlined, families in that and both and that but engage that this Plus I perform in and stream be to Disney as way. as will think will Disney's fans film, a evolve also television that property is television in a in property,

that develop next including we other also streaming with film. people engages back, And one is with that think in television that brands and properties for I it's as this category. the merchandising the and we step industry for our consumer of we attributes timed think for that perfectly sort our entertainment and efforts watchword the of for products our

Operator

Thank You.

question. is the with proceed Our Please Sachs. from line Michael next Ng Goldman your question with of

Michael Ng

Brian. that the Thank relative earlier partner the It XQ in how a How look mentioned there? And marketing you. expense brands for about color you of revenue Thanks in efficiency, talk just bit if a said you've could the Great. more was Deb for and you bit Deb, expense in about question. that some did we've the differently, could the year's the was the a for quarter advertising Brian, to advertising closer I I if MAGIC in return brands arena. to year few lowest one high things; to seen mix bit have know for more quarter? talk I just for levels wondering we should normalizes? then, and And the for next little and engagement little could XXXX years. instance? expect little mix just partner give trends just level you level in but several one

Deb Thomas

Sure.

both So unusual effect good about. an major the coming Frozen had We entertainment two advertising Wars. in and X morning, talk From Star the late fourth Mike. of in did these in we quarter standpoint, properties

promotion wonderful Walt all combined the We sure, So, along the the very with high lower was we quarter was bit, we're a and advertising making in promoting Disney we're spend products that still the particular. see that done around Company. have in it engaged by while did and that advertising was

the that were items look is points you two you the at quarter, of it at product a we basis was moved the royalties look up with when actually, combined. that combined reflection But in which XX when

media are our and advertising where we we and more advertising consumer seeing move media more consuming social We savings our is actually so the and see component. line particularly actually as in to

been the color So, we to Investor that move a bit cost as Day. they our around in And little our XXst lower have the more past. into expect than give XXXX we in and bit a be we'll

Brian Goldner

up the the comes pointing such that around GATHERING releases was to THE and you on than the substantial all XX% MAGIC: with game unique incredibly tabletop from all levels it of number up and of for operates of engagements storytelling and strong a the way events metrics. in the as that brand was a Mike, more players underestimate year card for know you And the power can't the fact and

gearing Arena to up also but MAGIC growth outline give executed going the have MAGIC fourth the We in for quarter. strength Epic before. XXXX. through MAGIC all let now including to which digital the as Arena there, access to Chris recognize. more MAGIC the several in We quarter business we're just MAGIC up grew the occurred the we move and Store really more going than I'm bring and Game to saw marketing Our in every Arena plans be exciting Epic year and mobile gave people that's fold to with partnership will to in each on and throughout gamers year. were ever incredibly Arena ramping

PC in partnership to around well brand to our and at the we Tencent, on as we have that an been game a new new expect thus XXXX markets look impact as the It's world. and ramp with far geographies based

game walk casual will MAGIC, for in year through this in launch MAGIC a In addition I'll Chris you to new see let that, you arena and the that.

You'll game outline to we'll also on you great for development And XXst February see see that. digital D&D.

Michael Ng

both. you Great. Thank

Operator

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

Linda Bolton Weiser

Hi. you. Thank

commentary any quarter? inventory is going your retail so in that had the mentioned at in that up end Thanks. the Or cause you year-over-year into concern concern? are that enough POS You it the slightly that year. strong the a not trends first of the Does was it's U.S.

Brian Goldner

inventory The slightly. the just up in U.S. levels Yes. are Sure.

home for beginning more for QX. both Star But with entertainment Lots We've outlined momentum today. And the helpful brand. at as window good windows of several the kids, so, increase today incredibly the in great level seeing We're of few in feel Wars are the excess certainly just the and entertainment trends coming new yes, inventory around seen. home engagement brands. on a of properties. of about -- seeing Frozen is POS we're engage our the that we've and And we initiatives in call certainly we Lots do retail. for Frozen coming takeaway those fans, families

to great XXXX. exciting. start a it's It's So very

Linda Bolton Weiser

rank just Great. you competitors and little how percentage I can XXXX? penetration And you it XXXX Thanks. think was remind maybe has penetration and in of compared on could how e-commerce your if just your you e-commerce? us give And a what revenue color versus then, your e-commerce, to you in us they progressed. how ask in And about

Brian Goldner

Yes.

gaining for see omni-channel products NERF, was FurReal gains. well as are our number omni particularly status in of classic that over games both with our e-commerce regain We that which our business We Cubby, in space. share XXXX e-commerce excess those e-com seen FurReal very enabled holidays brand well. the performing on well from from top see one its to performed the and Frozen included as with products sellers incredibly And Hasbro Games, competitors. Our seen in as players well in up underlying We've as incredible pure POS substantially play growth And far we've areas. in channel. e-commerce, as retailers have

percent And we in our total. percentage overall have e-commerce seen a sales point and as increase a of several

than final year sales XXXX. We're progress be underlying now And as underlying to good. low just continue But expect of e-commerce several would at sales to continue XXs. that a and are total again, the percent sales stronger in so fold E-com expect to looking some retail numbers there. be should we sales that I to date retail

we omni give through consumers and either channel, they e-commerce, as of making products. for brands through again choice to innovative our the So access our products are direct several Hasbro's

Linda Bolton Weiser

delever one divested pieces early there be some you then, it's and to On just days, more I but a regard bit carved eOne, some potentially know little eOne And think there's I Great. that of final out Are help would quickly? balance sheet there the could your as that businesses question. non-strategic. any

Brian Goldner

several the -- initiatives the the into off on right Well, getting engagement market. and their and teams really focused of our with now initiatives on we're

over that initiatives in as pre-school are of in very hopefully the will couple have achieving guidance the new going also In of some they and come years. addition board on creations next they original the as side focused on on out market We're synergies to Hasbro that revenue kids some well beyond synergy the market they taking have IP, to and cost that on and our you. provided the we've today

the come synergies of stand revenue that our one cost and we now focus in up that years. whether up take may impact together to team the achieving business of of number question opportunities the elements beginning there see course you'll And But right core over we'll not our due as as business momentum is great be synergies that next that strategic. are the for

Linda Bolton Weiser

Great. Thank you very much.

Operator

you. Thank

with Stochel Ray Consumer Edge line question. Please of is with Our proceed the next question from your Research.

Ray Stochel

are any about marketing, influencer the for policy any for changes it's Are economy implementing as taking you the market? Thanks changes, or Great. -- how unboxings, fan children or my of you whether you YouTube's changes result you content questions. a seeing think have collectibles

Brian Goldner

abide where and out. they but as the for governing with to course, ensure rules YouTube, We're we safety of and understand come we fully by to of of content Obviously, all for bodies engaged Internet. CERO want on kids view YouTube regulatory will other changes the relevant not only the those

probably and an next few over ongoing so, And we'll conversation give I'd say that's the you a color months. more

Ray Stochel

How on might think streaming and about the do films. measuring Got then able in And to about how launches? linear participate? content Thanks. be big you upcoming it. are you traditional launching between and And feature demand you some any difference then, launches for planning terms -- media for how streaming of more launching and platform thinking

Brian Goldner

eOne with things storytelling that we traditional to and platforms it industry platforms our as really IP industry drivers engagement portends drive storytelling and to of engagement growth across at experiences. our What with brands. with top very phase across what's well this engagement success around that been beginning having, see has properties is Company number subscribers happy We're the millions. to seen next like they're the fans families that's into the Plus. of of Well, toy We the believe of the tens are develop like Mandalorian. we've the associated great just seen the all other fantastic look for is the Disney success game for that in Disney and the as And that and of multiple with the efforts world Hasbro the as gaming and Walt engagement

were fact fans, business Mandalorian NERF a of there, as Fortnite. as that child captured the imagination impact really products in selling and about the think Fortnite beyond alone from the been of from so the Mandalorian families, able the to kids, line just or for Just And the strongly those the has Black the develop even Series our we've products holidays. opportunity some over innovative

character great oriented opportunity world, and to we're compelling. been And our that's It content to connect in lead. our the company belief with an that's also It's story. we'll want commerce engage how all all able why to continue along, engage says incredibly is to and that online how people we've really with and people omnichannel e-commerce

Ray Stochel

Great. Thanks again.

Operator

of Thank your of next with question from you. America. with line Please questions. Bank the The Goldberg Bryan proceed is

Bryan Goldberg

would with of do terms home be your that experiences Wars? two ones. Star I'm significant a of sales, helpful. a window if could could you Thanks. very based you curious Frozen quick past how stimulating the Disney, like intellectual walk brand are I've leverage to little events, property just entertainment us these more what partner on through got for In releases or

the is had update chain making disruption seeing with? as of Thanks. your question you be supply brands second comments able And out Coronavirus, as to potential from would my to wondering item contingency just related those items you for. if called some that you then flagged priority it the was you I on And what plans to are associated

Brian Goldner

incredible walk back DVDs can question. question. the where We who back as it Deb enjoyment into of want kids, way services, second DVDs and content which the impact one the over view and over the historically It the heyday I again. people kind We're first from the The saw return answer step entertainment as as came the engaged days take If you through through entertainment. of home. a the business. engaged launch second the of through really windows, were home I'll family, seeing home bit, electronic saw the to to for through in streaming the DVD now of sell and that well in

that stream with to watch are also friends have see success, to home and the pinnacle along family at over its of and and or for we're share home. through content fans services theatre, not kids to in families but it may across business. and for families. content that opportunity content may siblings, that is our at to engaging enjoy back also content So and can watching us, homes again, benefits trip at entertainment The fact to the with The made younger the seeing certainly who more people over

We're So importance. to I over to I services as with stories important in an we audience role, excited and expect increase will now Home era Entertainment it. engage consumer about That that next time engagement. very these increasingly entering a streaming an people's play with brands continue think to important multiple and we're of across desire connect role And will continue great platforms.

Deb Thomas

if the at our employees and how in And New back quickly third-party thoughts now travel factories families right Chinese really New when people to production impacted we office factory their party obviously the in to know ramp visit the in they travel and Great. need And unknown it you it had, Coronavirus, our have back. manufacturing given biggest as look to continue Thanks, third with We've the travel -- includes the we by the Year, think you closures. and is amount manufacturers Year's Brian. also people Chinese about up China. can outbreak, are in get of our

We So places still travel are know limited. closed. is

from employees home. Our are working

So we have protocols in place with that.

product two our as still of how overall, So, different we our diversify global sourcing is from coming manufacturing thirds about made to the our about efforts, into we've think locations China. all

at as a The is impact we Right it's looking during is China quarter impact very but shop a in bit So revenue quarter our are it couldn't the for said, closely. first lower That us. now, small. people being commercial the small, small. is typically there's holidays,

call an So and optimistic add isn't contained, on back the can't no that start production one on through. impact is first out we'll brand up travel and could to we people be continue as able the it outbreak it we again. that. to that catch There we our to full lasts, the color quarter, remain longer up but over the -- would be the that look full year particular and impact for year, There we'll

We done well. be and moved are as to quickly quickly, here prioritizing what needs

Bryan Goldberg

Thank much. you very

Operator

Thank you. the we'll closing time, this Debbie Hancock to floor At for turn remarks. back

Debbie Hancock

Thank approximately And thank website hours. our available remarks following Management's will Rob. posted call two replay joining you, for be be in you everyone this our call. on the The today. website prepared on will

annual Fair February look many and Toy Thank on mentioned, of forward you hosting Friday, As XXst, you. to our event we there. we seeing we're investor

Operator

today's concludes conference. This

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