Hasbro (HAS) 3 Aug 232023 Q2 Earnings call transcript

Good morning and welcome to Hasbro’s Second Quarter 2023 Earnings Conference Call. At this time all parties will be in 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 Levy, Relations. Manager, Kristen Investor Senior ahead. go Please

Thank you morning and good everyone.

Officer. begin Joining me commentary take Gina Financial your and Chief on Executive we today are Then Chris Goetter, Cocks, the company’s questions. Hasbro’s we Gina Chris and with Hasbro’s performance. Officer; Today, providing will will Chief

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

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

to management’s that management would most press materially and goals, to this follows, our Before annual during and statements. forward-looking XX-Q session public results other or concerning expressed I Hasbro similar members There could the many of we statements expectations, begin, remind forward-looking you factors question-and-answer that expectations that those events are cause objectives anticipated actual XX-K, matters. make results like today’s in disclosures. from may these or factors Form our on forth in in in include report release set our and These the recent other differ call

Entertainment and to with Business, and TV subject Film non-core approvals. condition notwithstanding we the transaction retain sell to Lionsgate into regulatory we this just closing agreement assumes entered guidance business. Today’s customary is the That

we plan to Following our closing update transaction, of guidance. that

of reflect after any today update to occurring made this no date call. circumstances or to We undertake the events statements obligation forward-looking

Cocks, like to introduce I Chris. would now Chris

Film financing entered cash announce the am million, TV assumption production and of morning. loans. $XXX consisting of and sell into eOne business of good our Hasbro has and $XXX Thanks, I pleased Lionsgate to approximately definitive agreement to for a Kristen to Today that million

talented Naked Yellowjackets unscripted eOne’s of Film will X,XXX for include Afraid which shows of for Hasbro-based include employees, Rookie, nearly a productions Squished. content a eOne owned titles, & and This and team Play-Doh franchises, active and like producing the business, The purchase will non-Hasbro like operations, library TV rights Canadian IP

complete of We the floating of for to the the end and to a corporate transaction $XXX of debt will by minimum XXXX. year the by expect purposes. proceeds Hasbro of end the rate other retire million general use

produce of finance ongoing publishing, toys, We’ll entertainment products, sale rich Hasbro of life of Entertainment fuel to location leadership will gaming, based of entertainment. our brands. Hasbro’s be licensed blueprint, Entertainment’s under Family is vault designed to mission eOne develop based the new the original Head on consumer Hasbro closes, to ideas and Hasbro-owned all new the entertainment after Olivier the areas for marquis Brands. current the bring including efforts Dumont, and

franchises, PLAY-DOH, We with team will development business distribution and Hasbro-based GI board game retain creative THE D&D, our portfolio. the including projects ongoing and best experts development, development in Hollywood, the JOE platforms plus of of the and studios affairs shepherd working in a XX and TRANSFORMERS focused MAGIC: GATHERING to

both D&D our As expect with part at with for model Transformers Paramount. previously on relying the licensing an select we of action partners live action animated live future television and the to our One move co-productions sale, to and film entertainment, asset-lite partnerships like announced series,

excellence performance. fewer, transformation create line to bottom important profitable driving improving bigger, articulated eOne growth our our of our sale we in execution brands; turn to fuel is Last in at milestone around The our building more year sustainable and consumer plan and focus, and another a Hasbro, innovation; Hasbro. operational

& Games: valuable level, has the helped of most create power in us play. timeless what portfolio the on At Hasbro the one Toys of highest about recentering plan of it’s a brands

I’m second which delivered the $XXX of Hasbro the Among results film. including better pleased QX $XX took million planned $X.X for revenue than to includes substantial in Honor a we operating goals. of operating made quarter, million, profit these for charge we against Thieves billion D&D: progress report feature and adjusted

The Hasbro X% grown market. Circana, among and the and of half, or streaming, through of box D&D, of PEPPA quarter sale. PIG, point THE factoring the According in businesses global POS Games of has when GATHERING didn’t June. Through first but performed movie well is films was the GX best year-to-date toy game all at market the PLAY-DOH, reviewed office and the declined expectations. ahead meet MAGIC: was TRANSFORMERS, exited to ahead have and XXXX in market,

We three Figures behind our of & growth Games, with categories, five behind gained Action among PLAY-DOH; Arts share TRANSFORMERS; and focus the MONOPOLY. in in GX Crafts in

Hasbro point direct Our increased fan-focused in business, sale by XX% the Pulse, of quarter.

biggest TRANSFORMERS one Beasts box year the XX% in the what Lord our Transformers: of Rings: year. is of release nearly on top launched and the Middle-earth. POS registered million through THE GATHERING generated release. Tales Rise new its of half be will D&D we the of history an X users since of in the Beyond MAGIC: improvement D&D office with has driven of believe the performers the first

since and games one from release of Our of Store grow Scopely, continues been our on its Play. licensing years, Go, App partners five Monopoly the debut business XX countries on in number which countries the at last in Apple Google the mobile to has in one the downloads including biggest XX

and inventory, growth direct, million and operational money $XX and inventory & segment by initiatives owned have And Our clearance of been driven inventory to Games analytics our year-to-date, over teams our of our XX% are digital. in efforts sales operated cost savings by we using reducing inventory excellence data efforts fund year-over-year Toys both XX%. our busy speaking like and have retail key and reduction

far Games to for more share but whole, back success so uncertainty Gina year Hasbro game of her for and in high a and toy a our Thieves, and for Among for headwinds better the Honor of the as raising Coast half. lowering segment guidance to underperformance strikes to D&D: us Wizards are we Entertainment. level we for writers’ remarks, Consumer the maintaining our exist segment. and actors’ start Digital the are at Products planned up sets While our Due and will our in the category guidance than and continue in a guidance

the MAGIC strong from set have is and Baldur’s excitement on favorable record PC our powered release D&D Larian. of results. upcoming by track second Gate QX with timing should for a III release for at a console partners buoying half,

AR Game our TWISTER hot Lucas including selling to blaster a Adventures, allocations have with Wars: FURBY in hours. Toy under just begun game, shelves, innovations new only preschool Star film’s initial innovation & is efforts PUNCH new line our of out XX the hit with already Jedi and hot management our AIR, we Most seller levels of Young progresses, new inventory fourth improvement game QX, the an the inventory the down go DOUBLE NERF margin we crossovers new like into quarter. as and improved meaningful as see opportunity bulk particularly MONOPOLY. in much Barbie with phasing year And for for

quarter first second segments. positive indicators a core Net, in for half solid with operating half our we our exit our and

to key brands, Our improved, cost to and growing share and mid sustained necessary long structure our operating over margin the we term. and supply the greatly improvements inventories see are are chain in growth making are we

to choices size making right entertainment our are also footprint. the We necessary

approach will by innovation. important disciplined who and unpredictable be bringing ever That’s more product the with excited already a new reasons operations a Strong step execution brands innovation more in team, in quality potential of than one and environment. are to palpable our more up of a I’m the leadership our

move to up and right on model. our change initiatives cost curve, improvement our a savings continuous continue to We evolving the and to relentless

to pre-pandemic competition. competitive levels is and back costs down chain advantage, near versus positioned Our with supply becoming a favorably

seeing with key are We retailers. momentum

development approach plan for Our digital we through analytics, tighter business inspires tight approach is Paired to and and we and are that data our well entertainment our to with economic term. reinventing strides engine, to are medium rapid long-term long connects focused and innovation. the positioned and partners both a to portfolio product making

over turn Officer. Goetter, to call Chief Financial the Gina I’d like our now to Gina?

Thanks good and everyone. morning Chris

As transformation several expectations emerging ahead Chris laid delivered in we points of coming our proof across solid out, quarter revenue with initiatives. of a and

eOne We business, strategy TV Games. simplifies on of the Toys and the Film also our our and a & step that focus sale announced

was the Segment As exit the we look markets non-core XX% fewer within Coast. The to versus planned to for of dollars year, revenue the licenses we to XXXX. down primarily down revenue lapped exit of of last due see Wizards as and Segment the we continue billion quarter, X%, $X.X Entertainment businesses was total inventory, Hasbro Consumer of Products of in the normalization certain releases and had

year. prior the X% Family divestitures Brands and these up Film Excluding were versus businesses TV &

was of profit XX% Operating Adjusted $XXX last million versus down year.

as Profit was higher the as to we coming negatively levels. expectations. costs the in decline, revenue Dragons: Dungeons inventory Thieves, a Honor size addition we right below continue office incurred In & close-out of impairment healthier back result to an Among results to inventory box taken by on impacted also

costs results a due down. acquisition. share XXXX ongoing has Through The on continue, outlook The and exclude per of XX% results eOne the the the have impact the of the $XXX our our exclude actors’ earnings impact Operational taxes below Adjusted with and adjusted incremental and related strikes however, impairment. and unfavorable program attributed quarter, the factors includes to entertainment Excellence amortization the as expense. $X.XX minimal Film TV was interest results; had to writers’ & strikes also million year, last noted adjusted impacts come second to for associated

XX% timing by versus as Year-to-date as segment the in down to $X.XX film of timing higher XX% $X.X Profit above. having XXXX. $XXX D&D year is billion with and one at associated impact across inventory, Products year we of result adjusted fewer revenue of is noted the entertainment. costs absorb in Wizards was EPS was release million the to Consumer below year-to-date last by front down planned driven driven and segment as from revenue Operating year continue half Looking versus Adjusted well prior this last as a impairment. results, the the clearing slightly incur year, launch shifts of compared down factors declines

Brands, XX% from performance, and delivered & DUNGEONS represent revenue biggest DRAGONS Franchise our profitable Looking in brands by most movie QX X% we growth our over uplift significant year-to-date. the and just revenue. are quarter releases. at driven our the in were These and brands brand Within and TRANSFORMERS the Franchise Brands down of our

in PIG Additionally, growth as the a grew entertainment of PEPPA digital gaming. and result

new last Brand Our loss the Partner the end of we at a revenue XX% for exited and products quarter. for Sales and the of the of licenses series POS of further the is result since the More product Hasbro an than over XX% by in SpiderMan year. by increase releases. Spider-Verse, XXX% is down of with Across Marvel are the supported release up Spiderman: preschool

Partner fans retail Brands play role across are the declines to Across to the vital our footprint. reprioritization kids, continue support as investment the well world. the as and retailers a Brands, franchise driven by of the for our portfolio brands, in discontinuances Portfolio around

portfolio a is FURBY, However, off re-launched one brands, of to start. our promising

Looking inventory the of volume decline at of was levels basis operating biggest costs. portfolio prioritize operating first the the year, the The year. XXX the the up business, last single CP and XX.X% and margin in adjusted cleaning close-out reducing mix quarter Through second is impact below business. higher-than-normal in half margin, across of we points resulting quarter

impact. mix less we in Wizards unfavorable Also, one MAGIC the within as release absorption an had which Segment, fixed cost planned, created

as Additionally, loss. royalty X.X shifted Wizards, margin to expense, IP point higher we leverage in we resulting a licensed within incurred

fund cost of are of accelerating targets. million inflation program savings reduction supply chain strategic back business within within more of year-to-date cost and is $XX levels operating of efforts gross to inventory The additional the allowed cost required we and $XX million initiatives accumulated than gross combined cost an $XX to and savings our spend, savings have support on us Momentum deliver million gross our our savings offsetting to into higher reinvest fuel long-term expense. key and have marketing

base point of to cost $XX track we finally, the impact items, D&D basis to savings program XXX in-year includes which $XXX we film. of remain our round on the savings Cumulatively, XXXX, we deliver drivers, in savings million. since impairment the delivered in out on we margin had million other And have $XXX gross a and our million, negative goal and began the reduced

XX% we reduced As versus reduction mentioned, inventory in year, driven the XX% levels. by lowering significant We primarily owned made in inventory Chris Products progress a total segment Consumer inventory. prior

inventory end more see by of the also perspective, the of and are a their to down the of expect us. inventory the behind We and year. first reductions From reductions through inventory part XX% retail lion’s stabilizing QX normalized levels to share the was

the Looking Gaming the tabletop which Wizards segment and MAGIC decline given XX%. includes timing. of partially release at down revenue quarter, more D&D, Coast both Segment the revenue, XX% was XX% was declined offset tabletop Gaming, by step The in including support we within closely acquired gaming performance Overall last Digital investment growth Segment driven in by and growth a in up Digital margins in higher of addition in Beyond, growth and expense to D&D development. May, Arena. expectations line with and product royalty declined future brand and which

Products and CP driven in the on focus XX% down total by Moving inventory. was segment, POS to trends the revenue Consumer in quarter, clearing the declines

five decline Looking at points driven drivers planned licensed by for of quarter, the exists. was the key the

additional mix, point IP by through broad trends Toy Game Licensed products costs was with work came inventories. higher their categories. from And close-out as across retailers on driven decline Four and achieved volume inventory points approach the we category pricing focused Consumer more given of three of growth focus of Another we by driven & decline finally, from as points leveraging our a taking we levels. re-energize and one

partially well X%, In Film growth, due year. as in Among TV from last Entertainment as business TV revenue was to late scripted Thieves. Honor growth behind film exits primarily segment the by quarter, Dungeons declined and Dragons: X% & This the offset

Dungeons for Among In the revenue &Dragons: driven PIG. operating sales, by Thieves million impairment increased quarter The the Honor PEPPA adjusted second production includes including addition, Family XX%, $XX.X charge. asset Brands loss content for

XX% and Today the eOne we’re Film the that operating adjusted announced to last over our of the XX% we business approximately of represented business of of the Lionsgate. TV sale and year. total Overall, profit Entertainment selling revenue the Segment just

$XXX cash on by Hasbro, Wrapping driven million $XX debt via behind by and in coming year-to-date, releases long-term returned operating is investments million $XXX digital spent future up of Inc., of to of lower $XX dollars delivered capital million Wizards gaming we receivables Coast shareholders XXXX. dividends. Through led last of of the out $XXX capital repaid million our with we’ve expenditures, for which million we and year, June

a of income. to geographical higher booked we losses by in quarter the compares a withholding in taxes, the driven of higher In is tax last QX underlying our XX.X% rate, The and which year. rate XX.X% business plus shift entertainment mix

due Additionally, we had $X.X rates. to million of additional higher interest interest expense

than across to our Consumer the and outlook expectations. Turning guidance, the on Coast Segment XXXX track Products of remains the Wizards original Segment is better

X%. reflect this, the Inc. we to writers’ the complete. updating our For on & will down expect to reality strikes and X% the included & of guidance actors’ for are once fiscal Entertainment Film Segments, updated business. This is entire the assumes and Based total year TV guidance TV Film we we close on now Hasbro is update the eOne revenue

down consistent mid-single with our will the we As outlook. the to at guidance Segments, which look digits, that be initial primary business assume continues three CP this is

the stabilizing in of high expect execution, and year mid-single revenue half our that to of guidance single with stronger modest this, We growth will of original to digits. We coupled planning growth. continue revenue for Coast result compared POS back back-half now in the are deliver will trends Wizards digit the

and and the of which in the we to writers’ role Monopoly of are finally, back the release actors’ And continued of digital slated half game, supported in incorporates be playing deliveries Entertainment, the of now and XX%, releases for We of III. year. MAGIC Gate revenue expecting Go licensing for success also should by upcoming the are impact confident declines the back-half the Baldur’s production and strikes the XX% AAA

than the of expect inventory to versus by that Coast in-year given basis be now continues as clear the expected The Wizards CP program, cost points the $XXX guidance. Entertainment the changes the is last margin well outlook year. XX to margin. adjusted assumes in Margin reduces driven to XX the year’s our D&D to in up unfavorable million as half operational better the operating Operating back as reflects previous strikes, as impairment. same for are guidance This The of margin excellence Adjusted cost and of our guidance savings, well or

to continue the year. to segment, continue forecast, cash expect Despite XXXX we $XXX to generate Entertainment adjusted based current the be prior And flat to headwind on operating to million our EBITDA relatively expect from of to we flow. $XXX million

dividends. and From invest a down cash pay capital debt via standpoint, the to return business, shareholders our allocation to priorities are behind excess

We generated TV expect of and towards achieving our cash by down advance sale minimum overall debt progress leverage $XXX X.Xx to Film which debt, will accelerate eOne of from to target. the a our of reduction the use the our pay long-term million the &

an terms the below-the-line In TV unchanged, created adjusted to despite based EBITDA volatility tax impact the we on year. expense negative created business an guidance of share second share, per impacting our earnings on impact $X.XX TV outlook, & additional including and Film interest anticipate items, the $X.XX on has has additional remaining $X.XX Film earnings updated approximate per and & negative Through full quarter rate.

Given well guidance once the earnings we year as share we have the will total Inc. revisit for this, closed per as Hasbro, divestiture, metric transaction. withdrawing the the and reintroducing are

and and their year are to momentum. contribution Our cost behind expectations savings original grow EPS versus continuing Wizards versus remaining Segments last growth strong

I I opportunities am amazing months the Hasbro and this excited about am in three company. more ahead for at every day

momentum, Film of are of of latest the the making us we milestone. to eOne a and sale have year, progress deliver the We gaining being announcement with work &TV the lot of but ahead today’s

I’ll And to up. back Chris over that, turn it wrap with to

Thanks Gina.

for driving the better a home a down contained that for we the in year, company adept and takes is segment are value. found a guidance at our While and have overall puts

the and making category-leading health months our us headwinds, more partners our more will six tangible and is enable to while and next sheet shareholders, and predictable improve we of progress, a business fund core more fans focused, dividend, ages. This will to continue emerge business. balance present will for entertainment-related our drive all value profitable Our

take questions. to pause now We’ll

Thank Instructions] with you. proceed And question. Uerkwitz question [Operator you. from of with first Thank Andrew is Jeffries. Please your our line the

Better Gina. Good by driven Baldur’s you in there. it have Gate Its Hey, changes puts through the just walk increase you. Monopoly joining and Is WotC, great. to some the luck or if you around launches onboard. Magic? that there? of could on takes guidance Thank great Go, could now and you today go expectations that through The largely

Yes, sure thing and thanks Andrew.

You say know level, Baldur’s at good more details. included. get and to around Gate I'll it's to a bullishness I'd portfolio, Magic Go with and high our Monopoly over digital turn it progress through Gina licensing

WotC launch the with Good know Thanks have do that overall the morning, of welcome. our for has the I pick-up the back for a we've performance color came the part think the Rings. of expectation. seeing June, in We're so revenue I out as digital good year, year Andrew. to Lord launches really our that the add. in that scheduled feeling and I of for about. We're first we’re of QX. some on been segment in additional the didn't progress good excited the be will here And about bulk in the that gain got that really said, Chris half

X end years did more be our the before Magic. know an releasing, of about standard that was of will It set cross last set. expectation it'll of The it do evergreen We for of not have And that time Yes, it's the Horizons should $XXX year. Rings in-year it to it that. you two I number that is think Modern set within is million seven calendar that and took the tail. a that of a should one the from longer all note months set Lord

color. Got great I it. That's super it. helpful and appreciate

on kind the on thoughts within an you of segments. that now. the Coast, gone of your digital thinking could eOne’s We us sits Just the focusing going there. and about give start strategy can video kind of update forward games Wizard

internal have some You studio.

going where one everything to us So give out what primary update year there, kind out, stands could know you the an just years you on three and driver be of maybe? is

which I'd fantastic investing for know you between making working our a very own Yes, and a Larian high say with then some us and milestone and fortunate at internal games, basis with publishing think level patiently license knock-it-out-of-the-park high partners studio like a it's to balanced have been on are and who development profit Scopely we've is partners, development. we strategy capability

game that a at X, of look like block you equivalent a a movie as when the blockbuster I know, – release. Gate Baldur's You view

Baldur's X has to the accretive know targeted perspective, we engage highly and contender. D&D to highly millions You will of of be a put the be think game fans in Gate the just year brand. potential It to

perspective, to we Baldur's five ten likely we to will film And made all just put for kind of more Gate than of last on money make in on years have licensing X financial our the combined.

So for it's not us, great financial It's brand moving of think only I and heavy forward. a the win. great win it's a company focus a

this release in we're a company. purposely leading & Toy Game stated We that

focused squarely the that. emphasis the and on on I are would part say gaming We is of that,

Got it. it. really That's I Thanks appreciate Chris. helpful.

worries. No

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

help want XX But be to I you down us bridge wondering then is down you about be if to up it margin the you Good thank for actually basis Hi. could actually what morning up question. want at down. and what guidance midpoint. was and points is

bridging lower lower. revenue segment margin that? entertainment know higher margin have from you I but is revenue then unchanged up, guess. you impairment outlook better incremental and Wizard charges gaming or I margin headwind for Is would anything mentioned point out And actually that else there in You actually

is This morning. Gina. good Arpiné No,

you've and segment within to XX itself. and and TV And XX a is XX the the happening I were itself year entertainment We saying bullish is down. D&D guide we're the about within little all got XX. really now more margin took bit to Film the – broader that we bips what that starting our or it think at impairment

profile our momentum expected healthy our margin at in some what toys to business, bridges we it seeing can in When is than and initiatives see provided. little a our bit that margin that cost core games we actually you the nice our we that business, better and We're look savings business, be.

starts see accelerate look the through starting that You the back we to can half as P&L to of to really the pull that and year.

the margin, we about D&D call what So doing down keeping in all about the and impairment core with that happened quite Entertainment, our businesses well. are all are

you very in but break you then Could That's thank just giving mentioned $X.XX operating Film Gina. partially I basic you bit you and little and aren't interest then $X.XX that And and $X.XX if know that EPS level, more you're headwind rate, to helpful, correct, headwind. EPS you of level, calculating $X.XX up thinking maybe and cost then run could whether guidance than close savings a more. point, on offset could additional down that's math giving at this the high by this if is TV of go to with you no over of road. obviously that down Maybe high point profit expense, sale out $X.XX cents kind

will try math to answer best Sure. that question. I my

to entertainment headwind was communicated we was we that that's anticipate half the year XXX guidance a another the back we $X.XX. dates, so the by segment. going be $X.XX and six the given through first XXX is to And two we've months, originally what what had in Our that had of

$X.XX, were in in by give our TV, to down the in, all come segment. guidance, if continuing guidance, would per earnings all all So Film entertainment share the we and

of our but the expense, There's all that, & our and is takes Toy Again, down per business, call performing business, and kind core the and some so puts share, digital within that of tax part actually Game, against entertainment. expectation. interest earnings of that nets in ahead in

Super you. helpful. Thank

Yes.

your of next the Katz Pleased Our Morningstar. line question with from proceed questions. with Jaime is

then, I eOne, Will Hey, good the you will can production are the XXXX math that it with these there but to guys the are Thanks. be hoping costs sold. sold size what not we go as program that sale how of cost through of assets think left closer is the business? goods after be on guiding that of overall any I'm really morning. back of just sale, frame levels, of entertainment know that impacted wouldn't of P&L? reason has And segment XX% you sort and the

to segment business that Sure. Morning, deck entertainment Jaime. put to and dimensionalize there In a piece we try that provided, then the total divested. the being we the is the in of slide chart

So about new kind entertainment XX% of the the moving its approaching be of going the it in embedded the in view is segment and terms how and revenue XX% with forward. us of sale with balance staying will is of of of we're it

can production that spending will not In that to forward. will spending, be see million I'd costs, about were to have we that production you moving or will we be we – to money we're back think terms million, of where the how amount $XXX they XXXX will up, that $XXX precisely yes, – of sideways assume, not in if go we’re business be spending in to down eOne or from But that. not

continue invest in to with versus animated like series. new co-productions we because which One, is And come film that like Paramount will Transformers we're for TV a doing out next also We'll year. XXXX, D&D things be with simply some doing a production then up we're

so fully production that owner something funding, cost-plus a that. get that the Now we on that is being plus is IP Paramount like fee an for like from a licensing model margin

is portion purchase purchase, retaining we're of brands the Family Brands a also portion then with eOne value big And of big like the the which PEPPA PIG.

years. lower states, than And several it's on the far run so as But the for that's last we've to well. rate incremental as Gina XXXX been

prepared would momentum further with And Right. Thanks. key there color then said that that I think helpful. be was so on some remark there retailers, was any

inventories have nice Yes. to by We reduced. clean name, it's certainly, and won't name but inventories them

like three top at going you pretty feel I good or our we're about If four look retailers, them. where with

to Some in really a share kind build, consume them. to an with the others continues we're stance And e-commerce are management, share great working on still forward opportunity so taking and of leaning and But aggressive on-shelf inventory gallop have and of are pretty and in availability. them seeing category.

We great just Amazon Day. had a Prime

had major the top retailers for We around discussions have good toys with really holiday. our

cautiously I'm optimistic our So, about to XXXX. and XXXX starting announced. terms talk that them you're key Hasbro we're to retailers what going in to gain see of already And share

who's new quite has folks like our going the I up bit, into what toy have some terms particularly with team, sleeve our we've team, Kilpin, if of the think muscle we And that tightened innovation. new up momentum management of we'll innovation and Tim year, our new a product in see leader

Thank you. Very helpful.

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

Good for Pulse, that. believe could some about for you if the morning. that size Hasbro and talk it a that of I about wonder the was you talk bit question. and up business And thanks said growth POS XX%. I little put plans

good sure. Nice morning, Yes, to talk. Eric. And

So fan Pulse, consumers, our how we shop, to of back our Hasbro us as on Investor efforts want. at Day, important It's learn our see what great in are they direct-to-consumer kind segment. October initial for see about focused they dedicated like way that talked to a is And us. from very

that economy Beyond do what that's at we D&D about Lair Both we then and do digital and the super of the kind do Hasbro like with Coast, what more D&D the Secret terms fan kind well. segment Pulse performed Wizards fan, we with of is for what of in goods,

business. we Disney, Marvel. and our a a of Auto that items with, Robosen Hasbro items. recently Wars of through a sell of a partnership There's Optimus an Transformers like there. that great and Auto the released lot last high-end There's super to There's lot year, owned for opportunity a Star Transforming that high-end we lot announced, goes us great It's Transforming Prime just Grimlock and

the would I $XXX million of right know, $XXX the the million in business scope You now to kind range.

I there. that in that. critical we think build opportunity years. couple start evolve And Call perspective maybe TAM also capabilities significant you'll our TAM upside see a segment, it us double, for potentially over think see could we next as mass what that or the we to for do on a I X.Xx and

great appropriately. hopefully and have model and of that that and then fan We'll mix a circles start sure third-party evolve of we Respecting fact in the retail going the focus we products of lot start concentric over out that making with kind we'll relationships time.

Great, coming go year. as holiday how the month you sentiment right that's for you last and orders you about a do also, think and wonder in retailor And helpful. talk start feeling of a about the they think as if half as season – now are just could retailers

think I the retailer. on depends Well, it

really couple retailers are leaning and a shared a have building in opportunity. see We who

understand bit discretionary taking a whole and we that as aggressively guidance on going who it's I a sure forward making our And, why an our have think a are inventory. raising retailers consumer view a We and position. not consumer their moving of retailer those and towards too we're where managing cautious to just little are guidance under over ultimately products,

the I focused. quarter very traditional definitely be more XXXX, It's to to think of be QX a of a end kind QX is going XXXX. going

to be going is I think important. Friday Black

in be beat I think to have into is our on And I up an is couple week, bullishness And quarter we Christmas we the the is XX. basically extra of days ended going have the because for December to we a Christmas. drum we think also, then prior year have then I last year, lead think array an extra shopping that important. and fiscal fiscal year our

of potential million week have full So a we shopping, extra $XX which POS. about is incremental to $XX probably of million

Thank Great. you.

proceed Research. your Please of Wolf the question Our from next questions. is line Whiteman with with Fred

business. wanted just a the was recognize to the if piece this totally offset felt of double Wizards. the traction about just a big and Wizards think D&D like come the it to enough lot box last And to other areas impairment to of there some film that is does Day think momentum and the those we I change, but I if that? softer guys, in targets And and at fall, we Investor Hey risk or plan back back office, put to

helps in digital to like take hobbies Fred. would the underlying all entertainment's which of traditionally the probably gaming D&D do those that brand channel, to kicker. kind broader role-playing games. TAM, And participate brand. that I have our is take morning, to digital. To hardcore Good say, thesis audiences' what's exposure allows a a of No, who to what who about million to in us and was tabletop business our I mean. It mid-core enable D&D me, we XXX game, people and million $XX play that kind about is frequent people world, role-playing of

to from And we theater-of-the-mind to that how gaming us can new the span X initiatives of Larian. try even from transform digital more of to tabletop and to like kind us, just video is several traditional role-playing so, I think games you're an experience partners Gate Baldur's richer see first going

it years. next sort think have what Makes sense. on for you quarters. chain few could wondering the then ultimately chain of consumer And for just products supply be, side, few that past maybe frame see margin and versus today I'm it really the if where supply means you you like the the then emphasized feels that you where could over the guys

morning, chain. within supply the making quarters. that good previous I in Good company about Sure. has we're Fred. I know that progress really would say talked the

This benefits you through the especially logistics. can see within starting flow to quarter,

So from through and retailers planning see kind patterns, a with order play team we're working network, can savings. around around in the our our the of how to of focus logistics inventory, management inventory that order our lot you start has and the cost all really for been with

the that move environment half so year. of to to help We expect accelerate overall moderate, well. as The to we continue logistics will continuing the back is as into that us

a compared only than been has two efforts do it have much to overall we space, the lot not calm is underway that years. So previous but the more of environment in

all working forward I manufacturers. and so our XXXX with opportunity to our moving for there, all little well with more be think getting as of XXXX. the as than a in bit in partners another provide of our focus operation closer will will us, That

Makes sense. a Thanks lot.

Jason proceed your questions. question is of Bank of with America. next from the Haas Please Our with line

on of were taking business. were some given up regarding Hey, to my hoping headwinds I for follow the you that the for good was products questions. consumer in thanks facing morning, and some the of year the earlier numbers

of the said million the had excess retail So beginning of there year or at inventory. that think you expectation I recall $XXX the was I

so was that of I how if but we much missed curious, far So this apologies I through worked year? it, have

number a to quantify Yes, but inventory $XXX down the retailer so have is I don't million, our specific XX% year-over-year.

I think we probably XX% year productive pretty retailer inventory level. down. not inventory would down, feel that of at will say the but the like I retailer year, our balance through is the end a our

like still year elevated little typically down And versus or bit be, would the for more what both around XX% are us are bit to versus Wizards get that the Our for consumer own we and traditional And we'll Coast. that's range and about inventory, at so. more we within a we to end XXXX at ended of level, quite consistent that'll level. a something products of we but think what XXXX, I a

Got it. That's helpful.

had think I was was but it headwinds. was figure, to that, it Another said million of tied there – you $XXX that

see in the was you'd about that inventory. the I that exited from XX% licenses, about, was think half. And expectation and also then of headwind it first FX,

if So you that materialized has as so far had I curious was expected.

Yes.

those are the the year, down as those for you our into half lessened digits. half because digits out percentage we It POS. retailers when to of the high was down makes were licenses back just little impact exited the we're look first we of low the licenses sell-in story prepare as and half exit to our taking were that inventory their a as them kind ready our the – POS sense of year. front And of way. were licenses, master getting a to single we in heavier take And the other enter. But for positions of we in single get you at If down year,

I color with that Jason, the half. come $XXX add the balance halfway on the of through say some actual in to number, would about And to we're that million, back just

you. great. That's Thank

you. Thank

next Our line with Stephen question Sachs. question. your of the with is proceed Laszczyk from Goldman Please

about behind Hey, since leveraging if maybe getting allocation Maybe now of I'd go returns any particular, settled on investment first sale this curious the talk the with your incremental for in, a I on few especially opportunities capital eOne for was framework – great. capital eOne you your In you could you. next wondering years. thinking you. the Thank more forward, us. little over being through Thank Gina, the if with be bit call front or earnings see

eOne to getting of the helps Stephen. absolutely terms Sure. Yeah, in us Morning, of target. sale leverage down our

of majority sale getting the rate pay and proceeds that from start our healthier the debt position. sheet use the will to a down in floating balance we So

is and the think to into we business. As about as invest first we allocation, priority our back move capital forward, foremost

shareholders. getting Our second balance priority piece down, ratio that that continue is then up and to sheet and the to cleaning to then is giving keep third money leverage back our

of primary We've been year. out part dividends dividends. Our paid vehicle through has the first the

We the back dividends expect year. in continue out to the paying half of

our the give and debt, likely allocation. into first mix now, near money invest, repurchases term will turn corner down back back But we beyond, we ‘XX add of via the As most here, the pay I share dividends. capital in think to and three for levers are

sure in film much how before, Chris, us I wondering helpful. then Any you was you've it but since around you've money years? you made Baldur’s five could I'm or mentioned if if And be it. approximate given metric not last remind the for over Got XX sizing this licensing Gate, would

to Stephen. We back my get that have would you, to I of not don't the It's head. top have tremendous. off

Understood. Thank you.

the time, for remarks. this session, At end and back you. Thank we've the turn to of question-and-answer Kristen closing I'll call the over reached Levy

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

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

on see September and Goldman Sachs be Hasbro the Management Communacopia Conference Technology you X. will to participating there. Hope in

This concludes today's conference.

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