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Hasbro (HAS)

Participants
Debbie Hancock Senior Vice President, Investor Relations
Brian Goldner Chairman and Chief Executive Officer
Deb Thomas Chief Financial Officer
Steph Wissink Jefferies
Eric Handler MKM Partners
Arpine Kocharyan UBS
Drew Crum Stifel
Jaime Katz Morningstar
Fred Wightman Wolfe Research
Tami Zakaria JPMorgan
Mike Ng Goldman Sachs
Gerrick Johnson BMO
Devin Brisco Bank of America
Shawn Collins Citigroup
Call transcript
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Operator

Good morning. And welcome to the Hasbro Second Quarter 2021 Earnings Conference Call. This time, all parties will be listen-only mode. [Operator Instructions] Today's conference is being recorded.

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

Debbie Hancock

and you Thank good morning everyone.

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

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

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

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

Brian Goldner

The an basis the the digital Each joining delivered everyone you of profit for and on Hasbro revenues and supercharging excellent segment and power blueprint XXXX. up to XX% in portfolio from quarter, of gaming adjusted profit Good and cash executing second The benefits and second year products, dynamic and second demand was quarter Debbie. for consumer generation. is quarter. and wizards grew us driving Demand brands, morning you, strong. last to retailer compared products and higher the significant while team highlighting team a our forma environment, across Thank and in well remains extremely our an X% thank Hasbro Overall today. entertainment. meet consumer, revenue audience pro content

for this all growth this As we EBITDA revenue are grow track adjusted includes achieve year. communicated year, on segments to in revenues, earnings and Hasbro. This revenue growth to earlier double-digit adjusted

and can excellent favorable in line and go versus combined with tremendous higher XX.X%. reach We two so established Brands third six will work declined first every quarter brands. of franchise year. to an robust operating day. our work Emerging into strength year's product mix, Deb quarter operating through and But last seven is adjusted successfully demand. delivered ensure as to speak footprint, and challenges effect retailers and points further. quarters our we versus business, is to believe adjusted is we partnering have price to freight Brands, to can the Hasbro with Franchise Each our brand meet to increases in logistics, in adjusted the year-to-date quarter, a this Brands grew approximately MONOPOLY margin to the Partner XXX Wizards Horizons the continue meaningful. this results Gaming XXXX. with easy, to not also basis record believe category we margin global business. Strixhaven our slightly the versus team rising is our taken, It in and a during led The in given content generated year's we'll were there the half. supply did these given far, is highs, of years level full are offset and very quarter, categories standout as quarter continue These costs with chain were X. all and MAGIC: We year pressures at time from Magic the provide quarter, actions TV/Film/Entertainment in production of doing two targets. last releases releases X including by returning. the an theatrical last flat We essentially GATHERING. meet for each Demand manufacturing, is performance we level ago up second THE Modern input results that

Digital seeing up-tick card to space and is backlist are new materials. launch is portfolio supply communities, THE players mobile desktop players. our stores demand only the has product engagement spend. our exceeded in on production attracting arena Hybrid sales tempered and performing and Arena and record The As take pleased on play remains our business, as as trading driver our well. important holistic overall demand significant levels. by with and of seen increased the direction transformation. an an a expectations and The for digital capacity chain and player who return for at in mobile collectible MAGIC: show GATHERING digital of to approach challenges, we're begins high is engage both We our

players. us, our analog launch not modest of meet do grew a digital For downloadable of in past Wizards' effect ALLIANCE the that for content. improving any continue DUNGEONS invest and the this we not or which DARK game expectations & our material investment in results. We'll ALLIANCE in DARK play and to was DRAGONS, anticipate did quarter, both to

behind Wizards for much that loaded, we front growth second half was digital. while year invest track third of positive the expect slate. to growth half of the in And release the on is continue another year. We in quarter record robustly

region toy the did Turning brand licensing, more to to portfolio strength our The revenues, Consumer of difficult recover. as Products games. is than business. Each and which grew in beginning game our comparisons offset

in led high year, digits growth in the the category. was toys while down. digit single second quarter games was mid games for As Hasbro single point-of-sale growth expected, versus point-of-sale which declined was up, in extraordinary the the last by

growth and sales retailers, physical the shopping game are last. this year [ph] widespread improved versus up point-of-sale largest are when retailers, several categories. XXXX, both the Profitero, the omnichannel quarterly channels. is For similar open trajectory According where grow but had revenue, comprehensive E-com The year-over-year toy positive. games growth countries. Prime as most to choppy, in comparisons XX% in Day share most the with and toy Hasbro stores of in the US, and to to continued and specialty toy gains including fan Channel mid-teens mass was we compared data, in is have with the leading

DinoSquad With We and CGI on robust for Hyper New Hasbro's cast marketing in the to entertainment the global PONY movie, premier product than weeks. poised new to reach PONY, MY MY significant by in brands families We're Netflix including product of support shelf the backed support brand Hasbro's the re-launching an the campaigns launches NERF of the launches also have LITTLE quarter. these ponies second slated PEPPA third new in after will coming half, and more the retail products, in A successful ever. all new partners, of September multi-channel Generation. and of the LITTLE driving be PJ XXX PIG line launches and continue new MASKS second There's are quarter.

month; in catalyst supporting this theaters, that further Marvel along Black as periods. coming unscripted We support in and Origins, this Spider-Man, Family of with series Sony's that No the we're Studio's content Entertainment released weekend; as partnerships and quarter, value the is unlocks and the returning next key in revenue Eyes: level films, Widow Home additional Studio's with with from will earlier in Brands portfolio. and is specials premiered this our are production. Ghostbusters, Television Paramount, led G.I. sales Way Audiences YouTube to past Ghostbusters several Snake Joe eOne advertising. franchise scripted including that Marvel and growth the both Afterlife. well

the entertainment Cruel year grew target Summer the for high level in revenue TV post we was Our Apple picked have this production season, which commenced rights our Away, to the a we network ratings to a year Rookie ABC very a this release on by half worldwide quarter, the production From second of renewed segment Freeform for is of in significantly XXXX, and season. music the versus revenues. brought second premiered the similar production. absent Come In for television, business and Plus and of up continue fourth for fall.

into TV, DUNGEONS being are DRAGONS live-action in active more and the developed. and began brands Canada, projects principal for the on productions team were Hasbro on we to Among film in come the starring Matt releases than Paramount of many develop & Additional Tom Paramount; active Unscripted of with to [ph] capabilities to XX XX TV, and best premier XXXX, projects with and unmatched the than In in include live-action gaming with remains production Dog UK. years continues photography the across backed feature in quarters our The Damon. development the portfolio, film industry's move animation, Hasbro Rise is to robust, products, and Hasbro the and Beast IP. June coming and well-positioned more coming Of for Transformers, and Red entertainment. by slate XXXX. brand the directed consumer eOne production XXX Big US Stillwater, with close McCarthy Kit by Clifford,

turn results continues and exceeding over call the team outstanding to dynamic Deb? global execute now and Our employees during partners of Hasbro I'll these expectations times. to Deb. deliver

Deb Thomas

And Thank good you, morning, everyone. Brian.

and segment last did COVID. supply an The delivering a growth, a to margin The year-over-year. sheet. complex to up strong importantly, on quarter second good the which quarter quarter reducing not versus revenues profits for a Each Revenues an debt chain, improvement, of balance also were from drive second executed and was high grew impact at up have profit basis team while significantly and but level compared adjusted another very year, revenue manage Hasbro. XXXX,

another of XXXX X we're for toward returning goal a were days, behind America, excludes lowest from on a eOne Emerging maintaining and grade of long XX% limited. further between progress improved Inventory on days like quarter $X.X debt-to-EBITDA end, in is our was quarter. levels quarter, in declined gains sell adjusted and combined $XXX.X balance to further pay year with Within several My July. Partner million. year US is prior into outlook in As Brands, million that off Brian last pretax strength higher The Brands. we've decreased sheet with evaluating including costs retired result is end in our versus Through the Music million our will and our quality. which teams of completed and $XXX which in rating. the on hand times items a remains to tracking treasury $XXX held-for-sale At target and sales, our the we're XXXX. opportunities reduce Inventory Latin This below of investment Europe, long-term segments, Receivables QX quarter XX $X.X our our our goals debt today, year, forma results, a million of million collections are to improvement the our retailers early the improve markets today, under very incremental we of last to and to enabled XXXX XX of of which good compared in cash in when levels outlined assets transaction discussion increased loss and profit the line debt in Brands year-over-year. in and excellent X.X time. QX our to said, related DSOs was Franchise and business, billion making guidance. were the are second third region reductions. business. across commercial of quarter in this work of where DSOs to us prior our sale Consumer we release be revenue and inventory continue certain based to year of levels and related was Products days including and These and helping stocked Retail the charge and good grew full $XXX XX down reduction pro Music markets

behind compared demand strong year. quarter the Licensed in region. are While improving. segment entertainment-backed consumer environment as in grew Revenue franchise the overall categories Hasbro geographic it Gaming this to brands, declined and revenue grew products retail the increased in licensed last each again

GATHERING offset favorable $XX.X on impact $XX.X this the the the profit and in to Europe Operating contributed royalties DRAGONS segment THE to quarter, throughout for growth, the revenue quarter. in North the most America, increased Wizards advertising business by DUNGEONS segment increased freight improvements. Brand Partner contributing Foreign & this exchange higher Similar a higher the first to costs. partially the increased Gaming Profit million. segment, was was MAGIC: and increases profit year Digital segment. to Latin of the with America and and Coast up XXX% drive revenues the had million growth. throughout from

impact. Foreign $X.X favorable a exchange had million

With higher increasing closer advertising expect be increased record levels. and largest The for the revenues, higher the grew margin. and capitalized operating a launches, schedule release scripted of XXXX support with to and we [ph] game and revenues. the that said to remainder previously the new than grew, release and unscripted in and million We've in our year, XXX $XXX.X team to animated offset with revenue in on launches revenues business, investing content YouTube expenses to development. the XX% operating this expectations. the profit to game marketing support depreciation games schedules, for year revenue points expected operating basis game television, growth future related Entertainment more based Based continue segment margins quarter for second Wizards to we the outperformed on including

impact path our the reaching to second exchange These excluding XXXX Foreign half of returns revenue, higher levels a more results with million levels results. the will in favorable business the given as in had quarter. on Music declined no expenses, year, have us operation. the over [ph] the it eOne but of $X.X up, operating was to be profit longer margin of Adjusted normal

million is plan. to TV on the in for planned across spent unscripted the second $XXX Our $XXX approximately year. range full and and the Through that million cash of content live-action spend $XXX million quarter, we be of to scripted film animated

the doubled dollars Looking mix at to profit [ph]. including growth margin, further operating basis Gross cost as X,XXX from a amortization, than our and and EBITDA revenue last gross of Coast. and program the high in Adjusted including increased revenue declined in sales Wizards' mix in Cost improved business, the a drove XX reflecting revenues of versus quarter revenues, overall basis increase points increased Hasbro Products sales from P&L, robust the profit adjusted and the more higher Consumer profit of the growth of favorable margin operating on business. across dollars point XX% but of significant improvement in year. percent margin favorable in Wizards revenue,

we're higher average, be freight ocean freight this than and other input gross more than are While times example projecting its factors last. year on positively that will higher costs four - One for margin, year is significantly versus cost costs, what this last.

third As fourth should Brian realized the mentioned, we're implementing price increases that during quarter the be quarter. by fully

Program entertainment revenue of of expected season. dates We expect demand. and offset amortization XXXX. to their of range sourcing delivery we're also rising the full timing in may the across quarter, the higher increased leveraging other of for footprint the anticipated more earlier more and capacity shifts to our along meet out We're expedite of with countries, number and revenue, increasing manage half through global with products to congestion deliveries. This the This the tactics points, business. to we scale be to in ocean of work the cost from destination of product holiday to to we availability and of the second our ocean delivery year product but includes carriers many multiple the freight in ensure some and commodities origin is X% reflecting see expected this XX% working year. constraints the We the utilizing experience during to in ports to port continue

by year. margin million, We games increased full to development led and slightly Product future Wizards. digital for in investments gross at analog $XX continue decline to expect the

this fourth intangible we $XX declined million eOne full and amortization revenue increased XX revenue, Music for approximately of this This of higher approximately XXXX $XX business now last. as percentage of of to along with million expense quarters. game business, new a the percentage points. million the or Toy support Advertising acquisition basis basis each declined for expect $XX third to digital year a also the the versus as sale of points. the Game launches, Reflecting by As and XX be support related our year line to the planned

the was increased Despite underlying compared The compensation higher these by to rate all-in this the rate and and mainly The percentage to rate As declined higher at amortization and and effective by driven in deferred our due quarter of expense, the of earnings from to expense basis offset tax of digital increased depreciation discrete as XXX the was mix of a in levels, planning of of freight costs. sale levels the EPS. the business XX.X% XX%, a items. high the events, intangible. returns underlying SG&A discrete liability. impact revenue pre-COVID including and expect remain two year. last acquisition resulting the excluding reminder, Music the we sales by we with rate re-measurement points. year capitalized approximately with eOne higher SG&A higher is adjusted but normal in expenses, This to expenses benefit as a quarter XX.X% exclude full reflects tax marketing UK was income, associated the GAAP tax games, net The

showcased tremendous capabilities and solid portfolio backed of a our Our brands benefit team of by execution. second quarter deep and the

I will your For to the navigating innovation be delivering a questions. are season. global happy now take robust the holiday slate, remainder a successful of and we environment the supply year, deliver to tremendous content while in Brian

Operator

you. Instructions] Thank you. Thank [Operator

Jefferies. Wissink proceed is with question. question from first Our your the Steph of Please line with

Steph Wissink

play margins would about It's you margins. curious much the talk morning, I'm And have each Deb, on with you margin the Wizards. for quarter, stronger to longer over Deb Brian, you you. than continue of how half? for one my to out for expected picture. progress just question expect Good expect some I you. little question bit of just we operating you the can what Thank is have the if even to then Brian, see is through bigger and term? back Do a the benefits a everyone.

MY that the you. of a the as PEPPA you what you've us back maybe evidence should how we Now enhanced for you fully gotten the give Can around Thank to half, PONY, blueprint for exploit capabilities or And that? few it's examples the capabilities? in the expect blueprint. looking be marketplace LITTLE

Deb Thomas

Great. Good tremendous job there. me operating around. revenue margins delivered good I for and off, way team mean morning, the Steph. really and Brian, profit let thanks The question the lead for all quarter, the

we've we year have that expect can we a said, in know, to throughout solid operating profit As the beginning of that to at achieve with guidance we and rest the year, and you ago. revenue profit continue to the the double digits margins operating the out margins grow set year line of we'll be

the term, operating year expect level that in cash our a Over do generation a close ago. we $X full than we we medium basis margin that levels to the year can have and term, longer have billion saw grow greater - on that XX%

teams excited are how the driving So doing, products. what how profitability about they're and working and they're

there in the As why existing reason it of we in cover that are won't think of some all rest that pressures now. you on to side. XX% operating it there'll expect there over taken we the that right level future. and the pricing the this But long-term, some But expect cover cost year. that, We've we profit we know, still year, the are no out for level be fluctuation exceed will

Brian Goldner

is company business, we morning, at stakeholders. And point the important Steph. for as QX for Good the Yeah. and an clearly, inflection look

of consumer business, to As continue in seeing momentum and, Entertainment Coast of sales. we our see we're our Wizards return business strong the product the very to course, growth in

up PEPPA Netflix, PONY mode For as growth four and [ph] great PEPPA season the campaign and of an the film great in pre-school has are Consumer XXX robust on in returning is whole array innovative array to that we'll launches. as licensees. season in are team, lining And in consumer and of September, come. of to of lots core really coming content products world LITTLE really fall, we MASKS QX. beneficiary its second to the goes so those of products, as It's unabated content products with those a of lot we with number follow. most any the new Great, cast that businesses. that MY a a with well see of our that million nine and with in PJ is from Netflix consumption movie on PJ come products big viewed excitement in be new brands marketing from lots content brand and brand subscribers sized on

that global film. in I've the will quarter the its them come to for their the of business and and In start into the that, take job brand of with with Then that there production. storytelling That achieve unlocking begin XXXX, shape Currently, IP early activate doing the begin products of in the action flywheel the entertainment live DUNGEONS and to stand councils. be seeing has and retailers more targets blueprint. the doubling plan, delivering course, team as and those film opportunity really things as brands were - we a stages them and and & them seen is DRAGONS addition to and tremendous in objectives and forward. content, for out already team Wizards licensing go in for along as the we of size first of that activate some you're begin to to consumer we really our business it's great that to the new to set across up And Hasbro

us. a and time So overall, this is important good very for

growth. it medium to we return we are be and year would helps us as provided. we guidance well as range as goals full that And our to in our as confident said, we've As objectives,

Steph Wissink

much. very you Thank

Operator

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

Eric Handler

and deliveries of we since here. and back Wondering and you I Netflix, little half bit questions. coming have Entertainment, could and Film globally, PONY think are assume year the going ramping. the Entertainment about if to for the two the thanks segment, Film imagine also production and as movies morning I we then a Good MY you segment I have levels. LITTLE the dissect the line, and And year-over-year when TV Is a on quarters that? first timing that nicely second Family me you well follow then got Is a look up still that should I’ve that up But XXXX Is reflecting animated products year-over-year down below Brands program be at or? and consumer basis. issue? were deliverables? understand Can help a question. then

Brian Goldner

me Well, and the were first, over that Sure. the Consumer eOne let prior remind revenues inside you reported Consumer Products of to group. moved that Products

what you're entertainment. that in Family So now seeing comes revenues is the from eOne Brands

the If PEPPA were fact, total, in Family consumer coming that's you quarter, two and PJ in take at MASKS, in PIG the by products, in different like and the if second it taken where you Brands you look divisions. have up total, entertainment plus from

with great we're a deliveries. of we at QX, look seeing returning, production and expect do we array As QX

the We eOne for expect growth QX in and business. QX

primarily new the in we Brands the for paid quarter fourth number get revenues as up television as here of it a QX. third the PEPPA, series well show will Showtime a a have the to the season we Apple will fall. getting of And that Family PONY we PJ in movie - and delivery movie also The be Netflix. that including QX, in new a for come way for amount deliver as on have We TV the Yellowjackets, MY of for seasons called on similar LITTLE Rookie, from production for

lots we excited a I'd return IP to have So of development, we robust say slate eOne about had the of growth Hasbro we're for entertainment in very very as coming, projected. and

Eric Handler

a Arena? as little if talk you Thanks. some THE Arena a MAGIC: maybe did could if did on talk that then for in expected. mobile, about bit a Okay. mobile business with key just And than not of launched wonder I just indicators, little the digital about for GATHERING better general the performance up, you follow bit

Brian Goldner

Sure.

part so up you Arena, quite level are at seeing So tell if other if And considerably the also, you that that a week top it's per year-over-year. mobile competitive, KPIs, on we compare very games, weeks, about hours And sustained Magic Magic you, ago, we to the two quarter that QX. the the in major virtual releases cadence QX QX that was business. for a major this about comparisons. have just as full And look would it's followed the year. year, QX circle Arena we think really by we're Magic's of biggest year of I week. hours really and Also one of nine played, we're to we seeing in within release remind what just hourly high KPIs And the is

And MAGIC: to we in-store people in-person the tailwind the really and playing seeing that's seen and GATHERING to Magic we play, players as more a growth a both Arena, THE great return also So continue are in and that where playing. Arena business. Magic have we see that are it's adding to to engagement and

Eric Handler

you. Great. Thank

Operator

Our UBS. comes next your Arpine question with of from question. Please Kocharyan line proceed the with

Arpine Kocharyan

And you. good morning. Thank

if actually And it? this business up, of and then line including morning. clarify set results means it strong which as very have my guidance main So Music But doesn't, question. underlying you went guide guidance unchanged. is full sounds And prior year top was now I could it

Deb Thomas

Certainly.

So as of back our look to to you we can Entertainment at we think all XXXX Entertainment levels. we've believe look at TV can if and back the business, And get film overall, Entertainment XXXX levels. about that segment those we said get

$XX million quarter, this about know profit $XX but to I over $XX million we and of the and be of we didn't, business we expect last if longer business revenue million said to - Music believe course second half XXXX. second million to our $XX by about reduced that Music The in because the operating half no it's

levels we're So about. those are the talking that

Arpine Kocharyan

could know, I guidance to the profit XX% for was back XX.X% front wondering question, unchanged? Thank takes I largely through like overall of the in has Gaming of profit of some like - business, the XX% guidance around half to than very understand operating you up the back you Gaming some and strong, of I guess more puts be full of the sort been your what half It think and margin. I'm for to think guess, your that about need end to is terms trying to Okay. how seems half? to back earlier the of to operating on about year, your margin on doesn't it. for how and loaded meet business, of talk back year you. but go kind an was the first

Deb Thomas

we certainly about as bit add earlier, but I some a this more talked color. little Well, Certainly. can

If Consumer Products around. back, we the see moving things coming costs you as some and pressures open, also Licensing our while freight think see you retail business, about Products Arpine, will business starts to on Consumer

we've of price that's of think the for all product increases you that. about in taken second kind the the half moving Now But year.

the access for So be there time, over able to When mentioned, look on the we're film pressures certain the those of to and cost MY the subscribers. you of But very the that. with on Brian if Netflix for are quarters amortization all comes PONY business, you itself. LITTLE go as back excited some launch that of about profit operating and think Entertainment

that well expectations actually be about for remarks, to coming as as think standpoint, be out to year of earlier - that just to continue first the initiatives in about an going entertainment the Wizards, have Wizards XXXX the have our administrative of it was the talked last for our there. that's And second they half depreciation you such an that outperformed why quarter. We'll when in that, out we of games continue operating levels for half So cost year this as prepared year, or have, we launched exceptional there of year. to second the levels of around are that said think that amortization, also the amortization through our we being we've some well. that's the those XXXX other closer in from year. We'll will than

our operating that profit a ago. what add it's different of the back you around us part last takes all the the as levels year is those - So and when guidance same to puts part year the gets up, latter over of of just

Arpine Kocharyan

you. Thank

Operator

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

Drew Crum

Okay, thanks. Good guys. morning. Hey,

Brian Goldner

morning. Good

Drew Crum

entering year, the first single grow That business was XX% more Products is mid by So Consumer for I half. the than to think goal digits. the through revenues up

DARK was can work so happened new outlook that. business mid know, you the the size, you And just would discuss the for be that I pacing guess, to need in DARK And Is that down indicated is in thinking to you’re robust games? sounds similar expectations, separately doubling Brian, there. we ahead should [indiscernible] mentioned expect the you production I past Should of to launching new in of to important then budgets for the we it Thanks. you're like or forward the ALLIANCE titles Wizards. going be mean changed half or the you've year, there. what products about low ALLIANCE size titles be for math more new consumer the And your digits. second single how

Brian Goldner

Yeah.

we starting going with the new - an to titles. of titles, in have on array D&D So development and are

has quite wide in come go Gate, we'll next and which XXXX. probably like, Some Baldur's well, period, performed [ph] in third-parties from the

We that in have we have games development. a of number

larger and invest as some more have have digital. modest will continue budgets in Some we to budgets

we're both are well role in quite for in Drew, as as really seeing really more games role playing, us playing considerably. D&D playing. digital brand online underlying face-to-face the and grown a have area It's great that really While that and new as just people building play,

good satisfactory, we listening about And we and have the brands giving ALLIANCE want, invest the Arena. as really in more that's them was look, they behind downloadable more up DARK we like and what continue about immersive again, game play, have part said, more the content, we're very and the of launch more of process. to fully feel players, that games. momentum the coming Magic to we prepared So the to slate of And

able levels about eight compares return to for end last being industry think Hasbro was of second period, year data, but to different as we as from X supply was and digits, go of product. the we As up double mid-March to outperformed. week mid Remember, we the about it sales to at of year. quarter, Q began for digits, single the we'll and up QX year-to-date Products, wall look was clearly, And if have big supply it in to forward, last greater the May Consumer clearly, some you

so So and that no, the that we about Products in Consumer a our to to we for full our that supply able in to taken do growth we're see total, we supply believe we ability our there recognizing questions guidance continue can about business. product. year, chain many to have But are happy product supply been reiterate felt the

the immense add objectives to tactics ocean through for which and to year. behalf of carriers of on are team our to in company, business. We groups an of chain the and ultimately, add was with growth to each the the growth operating out strategies, we the achieve able achieve work of new double-digit And to revenue full supply across amount ports, add business for opportunity the set the

Drew Crum

Thank you.

Operator

of with Morningstar. proceed Our your next question comes from Katz question. the with Jaime line Please

Jaime Katz

I morning. some your guess good sort comments. to of a a I Hi, up of prior follow have

the over half has going to the to and escalate or about target year have guys inventory on that's steps retailers I'm Thanks. to of intensity of Hasbro Walmart? products all you how just a have hold to and thinking that in sourcing with the the accept whether product? worked the maybe working than capital While not these if rather availability holiday season, made you for back

Brian Goldner

Yeah.

just comment States execution partners United the So further can and what been an side, where and not cost around then amazing they're comment, the From let I'll in the you incredible our have world. on partners, tell retailers me Deb is but side.

new finding ports very working our is are The Princess not high also is bringing our the We in the performing and several business about portfolio. demand where have for we news incredibly And Star business array Wars and innovation, our an for with in competing high only new and ways with retailers. been product, great And of in returning portfolio, Marvel we're with resourceful but entertainment seeing demand. of the categories that very strongly. they're

are our and certainly where participating toys good board. these sales are purchasing categories, our are games the investments in So product in retailers and incremental making across consumers

is was continue major together. up online business PLAY-DOH up, and every And the was we have that in in double-digit business in So we was omnichannel the toy up a of mix PLAY-DOH and business, taken to a very rich new contributor product see to the region, considerably in fact and our the The again, growth up example. the for our NERF business business growth and innovative quarter.

an So Deb, are news have demand the categories that side? high in want and you with talk cost families is do again, players, good we our fans with products to brands of in manner. increasing in and gamers engaging

Deb Thomas

Sure. the is expect, demand they in. said, are We there do as that bringing for great Brian products

our say, this and we a it we bring as So in had will as it well, retailer I pass through DSO an year. standpoint exceptional exceptional from receivable to an -

our did And of so collection. dependent that on on when of and that the our the was much shipped items quarter in work mix teams and the we great revenue

inventory it. expect With from year DSOs in we where levels amounts, our wouldn't inventory our I line. So the we We've good. a it same retail DSI be while couldn't increased get couldn't inventory in to we and couldn't an standpoint, places reasonable inventory the our still do ago, to be retail is expect level just I at have ship

of So everything. retailers out selling were

our in will be be in think our shape shape. It in our on good on our think will I books. good books, So good receivables inventory retailer's will be I shape

cash unusual of the to for the medium $X we on in level full for million our back year term. to any fact, over don't we the full our to flows operating that still be the anticipate level getting that in full capital for kind working So year. draws billion And expect $XXX $X year,

Jaime Katz

Excellent. Thank you.

Operator

question the proceed The with of your Wightman Fred from with question Wolfe Please comes next line Research.

Fred Wightman

Hey. to the you similar that Do shift past see ago. a Maybe XQ we that just good relatively up think environment FOB XQ timing seen or few that have on question. fulfillment last couple a could Guys, given given just a domestic type changes the and the morning. of know some years? follow I steady timing of years from we today, to shipping

Brian Goldner

secured it the Yeah. Look, major shifting have between I than in games carriers. got any team be and that had number and product support that product people engaging out could and is via there to our more to we've we've we have. these that our the think lanes first that of in and some bring gamers QX X. that looking to toys source past. for to ports, our in Q the believe We're objective shipping do ensure they're product initiatives more business and The new have retailers and I

we we new second of little focused PONY the and there the course, And LITTLE partners array as the the games well. get second at inventories the meet inventories I'm number level. of And our to to an holidays, of for rather of then, coming lined team half year. we film, at exactly come MY the of additional a going initiatives, into has from where be the in, very that so Star Princess content entertainment also half new several high including recognizing Wars up a a less have the we Marvel, is on performing the that but year, need for have demand the

different the it's it But importantly, to high So again, little with there than right, bigger we retailers past around demand. working a you're has world, years some direct play want around be we import in the than feel a could shifting the where - again, as most - could meet past. our role

Fred Wightman

tracking how of you just now double looks some Wizards we and the by the 'XX. the really pent-up card you guys in And you sets Is just remarks? of ahead do then supply that demand language of it on some are your And with offset to it the this that saying legacy constraints touched business of like at you're slides from look the the sort for mobile plan of sense. Is Makes quarter, if the that you're seeing? that prepared launch? some

Brian Goldner

Yeah.

releases more, has the expertise it gamers players the certain the rate to that make bringing me we And re-discovering marries is and of Let fact, to to [ph] for discovering release in that an expanding, again and cadence using that, footprint than that while analog brand our just Magic on and supply is contributes brand, to engagement had increasingly and printing a that at great are capabilities, you face-to-face are more people card ever magic sharing is little in were we Arena, where the the capabilities card global increasing before. the we the know, players expand new first. the think because comment playing because of understood bit also play What Magic as that flywheel game sure are I wanted that game.

one contribute to It's one away And detracts they another. one not the other time synergistic from with they're really other. so and the if another, again, as or takes from

global have playing fact, different the through just which hobby people face-to-face play, and a online, with players, or to returning acquaintances others and whether they more In support it they're pandemic. mobile increasingly play distance they and they're well, to of in at performed or quite friends whether play support to gives opportunity shops, our our and thanks

Fred Wightman

you. Thank Great.

Operator

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

Tami Zakaria

much you trend. so questions. on I very two strong congrats Thank Hi. have And the taking questions. my for

of the be half one, you Or releases? the rest growth year, the the The the to is seeing back both to the third first Coast in and get little a on fourth timing expect on more going are do up, just for color Wizards you of quarter? expectation depending of

Brian Goldner

Yeah.

good through So that. bit you it's very let And of look, a on walk little detail me question. a

about out called, out very have a coming with a and will actually Innistrad So a Forgotten crossover Realms, coming because we that's And in then just set we QX. actually and DUNGEONS DRAGONS, come coming is have The in in that - two major release & it's QX, now. one Adventures releases exciting in second the

release QX. major one have We for

will in the was our to year, but expect QX. largest let QX. growth, by remind quarter you, we followed indicated year remarks, as some last her Deb see quarter see me QX to the that So And was big Wizards continue for

probably be exactly challenge QX in where comparison But momentum engagement end we'll we're So don't up, in seeing the know right there's a in a most of again, revenues, the we business remains. to year that level relative the yet if comparison challenging brand ago. in the now, will and the given

it the place our of that size the double plan come what ahead and down to QX of takes in period. to business, will really are We

Tami Zakaria

of weeks? bit Got began the that past are very that probably in helpful. I then it. but know couple Consumer That's payments for And seeing mid-July? you benefits credit early, the any in in Any very tax a it's the quickly, of benefit your of advanced segment POS

Brian Goldner

seeing of categories we're of to and playing. and People We've categories. are we're proprietary seeing game And that gone level engaged and is What consumers also do very we're offering. an do, that our as a very always and products research gaming brands engaged. sustained are and work business lot out, increased in our we commitment the insight around and

for think games around in or past who discovering of games or those who world gaming, now, have again, the lots it the I it hadn't discovered families now. they playing played had more more found really

in brands Marvel, are offering, that of So and people spending I that Product to Consumer partner we're to is NERF on course, budgets, I I our several comment specifically in in don't the know what but brands other Star PLAY-DOH Wars and portfolio. [ph] that categories money can say Playskool family from can to Princess the

Tami Zakaria

so you much. Thank Great.

Operator

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

Mike Ng

expect to When you versus to bit is And it talk question. life I then for as about heavily I it - on user have mix the Or follow-up. is it do a we then it Could loss on see what still Is MTG point there? you Thank just mobile approaching two. where little PC? are acquisition? the have so? talk a making bit little One about of the a follow you cycle in could up a profitability? quick And Great. Arena. and spending long-term relates would in to expect you you as

Brian Goldner

mix But the for start of development, as if operating Deb underlying again, blended of for you to with year, bit below you your profitable. the game more of the initial of down Arena. is get look obviously, analog enters we're and as described, mix, more offerings. marketing Sure. in that's pay benefit digital comes little Well, amortized, And the the as seeing a average we profitability why Arena you that's and play, you Magic is more But margin the the the what at for business. cost on that campaigns, the as long-term, and pay consistent

and be Obviously we're we go want forward, card I then is a comment costs with that some the Deb, not further if it. would does business. business to seeing going on and D&D to grow. growing associated has for part don't it's So part say analog for a but know, you businesses to that. profitable as The bear. And both it, business, the the also I I analog Magic digital also continue expect, of of

percent therefore, So expect. digital total as not perhaps by to but of the universe would continues grow, maybe and increases, as as much one a

investing note is that D&D, we're in. within to role this there's thing really other The digital that area playing

is And analog, as for opportunity brand think forward. a so a go and great this it's we kind digital partially the partially we of

some with third comment? to brand ensure well produce But our them just play do teams want and you to as up games, new great game of slate digital with at party continuity. different So We're lining business. studios points. It doubling price the the a course size good also include games will a will first beyond we're It of a both as and well us party embedded Deb, to for robust great games. array coming charting as games include very

Deb Thomas

seeing going Yeah. And I results as was the the of actually numbers to is which well. you're say, fantastic. in and that

had think from end. you at similar if So we standpoint, got what a what capitalized, gaming - had we about levels have digital to year about we've we've

depreciated segment, of we some obviously all And see to we've up, the results So it lift some within and the that. added right.

a amortization, of acquisition, lot And digital. segment. costs that a the see the So in user lift we you're - within seeing that results those

Mike Ng

about. with a around detail lots little to wondering be how just about you Great. Thank And you, to thinking more you're of able factors think us might the both. bit holiday, provide was I if

it of through I price the the think pricing. magnitude you about And helpful. color talked you delivery little cost about shifting we Any Thank the input some dates, in you. there of how inflation? of should really bit be about how additional increase? obviously, and some flows the Can a that think talk would

Brian Goldner

talk to we order really early comment, our she the product in where this. a steps a capabilities. necessity to seeing try is year. on What and seeing, execute obviously, we're Deb, I'll snapback this and find board demand Sure. saw many categories transitory so and to about then take consumer very bit chain the in to saw we needing consistent also as supply prices are the raise the team across with to return was in that's in logistics And production we

very great I should of innovations from several holiday the solid and think good, coming brands. be with incredibly our very, new

the MY the of half the We second year have PONY. from big in LITTLE launches coming

to toy second the film brands, and array don't line-up innovation Deb, behind global and New brand the games to if on new PEPPA new lots new further to want the know [ph] PJ and cast new and partner our game side several new PIG I and half? an consumers. of cost MASKS, for of play you of again, comment on

Deb Thomas

of some times ocean know, and the higher are Sure, earlier even. in we're than seeing in we - remarks, prepared been about last you absolutely. those earlier had experiencing costs freight What or our we over talked four earlier what year

a costs to we those lot So of expect continue.

tremendous However, right. getting just doing a job, as important, the product, Brian what's that's said, actually the team is and

and that situation margin because ago. And gross we as So our down reminder, our input actually plus year be now that slightly that's amortization content you program between from the a we continue we that can theatrically. margin provide to cost to a we're expect know, gross in - release and things increased sales, some just expect costs great of

margin but So year well. our slightly of from and taken up offset we the price cost go costs. we've to between increased a But expect gross we that our sales expect to increases that, do to we down as program be expect that ago, do amortization

Mike Ng

Thank you.

Operator

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

Gerrick Johnson

questions. morning. good Two Hey,

as what half, First, is? in, price could fulfillment were and I hit average guess if be between own I between inventory increases is that physical, that in half? then side, you well? Wizards If you digital break back goals what Products back was And those and quantify helpful, really you putting how in that the would you're hoping affecting on the could. Consumer XX%, down the could that sufficient down is FOB but And with shifts your you to in Thanks. your are domestic sufficient? it the

Brian Goldner

Yeah.

contributing down clearly, we're are say, digital on But within and D&D both analog brands. to as with We well. categories those growth strong sides. GATHERING So suffice seeing both THE the growth digital role and don't really break MAGIC: in to it very those playing

experiencing. we in of foreign on that they the price and we depending that increases the to at look cover shipments. we we between just the the the the full increases, we and cost half going that margins on global of that we're domestic our we're costs and because the they're those shifting intended right, world, to that get achieve look our just and partners retail the And do hit that cover with cost the see partnership what you're hit for little second working gross our in the of We're will be product to products margin half the will if of operating that recognize will around year. each FOB way will look are As demand the maintain can second lot to at believe taking they regions, different a we're year, But great and are to our incremental exchange But - the market P&L. categories additional we increases we expect a the exactly like. have offering, of we'll

Gerrick Johnson

a number XX% So be would there? perhaps good

Brian Goldner

think bit provide say that's but a I won't guidance, I just high. would I

Gerrick Johnson

Okay. Thank you…

Deb Thomas

well, bit a I Brian. that's as would say high

Gerrick Johnson

Thank you.

Operator

question next America. Devin Bank coming Brisco is your of question. The proceed from of with Please the line with

Devin Brisco

of bring represents licensing for associated the in time? over revenue start in-house PJ should half revenue In plan And PIG we how to about replaced and is that, do being in-house, margin or that the as as bring can the PEPPA margins, with second to to the Thanks alongside product full is you ownership, question. of impact back initial think year question operating MASKS for what in the tooling? you to my that's product you is investment long-term And much licensed, upfront those related potential currently how the brands?

Brian Goldner

also both Product but with many Consumer also strong maintaining product the Well, been side, ways, of very categories, our Products consistent have Consumer on the and our both Sure. lot offered, operating product the PJ a licensing incremental And and that categories business. margins PEPPA in they're had is yet very Consumer licensees. Products offering, we're

opportunities. licensed Consumer enjoy teens Products P&L, PJ to margin. the inside, those So about Products but over the high in categories be be I - PJ our would enjoy expect XX% to additional perhaps XX% and about Hasbro time, with PEPPA with of product continuing on lines P&L, PEPPA licensing another operating of Consumer profit and

average, So if with margins, company side toy IP is very Consumer on want you the relative I on consistent plan? and to to game than and then else Deb, Product side. add operating much which higher the average on Hasbro obviously, don't higher know, the anything

Deb Thomas

on, the up on to that $XX had we're growing to full that we'll what million going and year of to of impact in-source ramping expect to XXXX. year year, line the million lines, we about XX% talked we maybe think that really by growing as based revenue [ph] launch, just but for be this based and this $XX the about said, I Brian

close franchise our as brands, well. ramping margins - our we're we revenue and with and great licensees the that some do excited with work future about PEPPA with really of continue go as there we'll So product the job forward to PJ. of to terrific a And out licenses.

Devin Brisco

you. Thank

Operator

line question. Please the of is from proceed Collins Our question with of Shawn Citigroup. final your coming

Shawn Collins

How is for Consumer question Products Good on My morning, Deb. XQ. well? thanks. Great, in Brian expectations and you’re

August this in US toy from travel and their talk we some are Thanks. more this that in at performance? the get back for industry XQ the people in emerge of September think to result and should comment developed it have retail the we looks holiday pandemic, being and more season. could buyers we any and There sales least likely the flat As experience. XQ And on out importantly, year-over-year Can to like world, are you around expectations and back-to-school houses. then bouncing retail usual XQ a

Brian Goldner

weeks, were you where last seeing there but - through you our for COVID what the our Well, wall the was look, business, eight example, POS call up let we've American notably, take North in What in give supply to me four very and weeks, strong we're most come product QX. those we our sell-through, as XX%. inability

games the seeing Our teens. in high in good up We're America. business was growth Latin regions like

and QX, initiatives a We well PONY, lines. new partner product brands NERF MY line-up our period of Ultra as associated that coming whole the for have lot as and Elite lots with of a in of LITTLE new the new for

and because of commerce. and said of So again, in our line we we can and believe innovation, grow the or ahead content industry storytelling we

so a that we'll have very expect on won't specifically say, year we QX, except products. comment good And in I to consumer

categories. objectives. doing. the seeing are really again, strong believing product I'm participating And innovation have are achieve our to and the line-up what they the and We consumers in

If kids adults games seeing preschool, and with and Magic and still young you that older great you look like older D&D, our and at business to kids at our look engagement if into if expect continue. at we business, we're you look would NERF kids

Shawn Collins

Thanks. Great. Thank timing. the for you

Operator

Debbie Hancock At you. remarks. back closing I'd this turn to for time, call Thank to the like

Debbie Hancock

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

Operator

to you today's conference. participants. concludes Thank This our

your lines now at this may disconnect You time.