Earnings call transcript Q1 2023

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Operator

Good morning and welcome to Hasbro’s First Quarter 2023 Earnings Conference Call. [Operator Instructions] Today’s conference is being recorded.

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

Debbie Hancock

good and Thank morning you everyone.

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

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

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

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

process. Today’s guidance marketing business, assumes current we retain the the non-core TV entertainment film notwithstanding and

the a sale, update update date after made guarantee is to no events to statements or will of such results an we call. there this today circumstances in this guidance. While no forward-looking if We outcome, our of any obligation undertake occurring reflect process

now like would to I Chris? Chris Cocks. introduce

Chris Cocks

serve we three our focusing Hasbro innovation; as years and morning. that great bigger operational and and on priorities: Hasbro, will fuel strategy building reinvestment. forward. improving grow good for our and drive going unveiled and past Debbie for our initiatives; the XXX excellence has recenters It’s a and X to line fewer us bottom what brands which months insight on strategic to share consumer ago, plan health Thanks, foundation highlighting made

Play Put rightsizing we organization drive driving refocusing QX is as entertainment With And in and in fundamental our mind, games, our investments top success. our of simply, anniversary, do. is improvements our Play. and to deliver XXXth what about teams toys to our renewed let’s review XXXX we leadership results. celebrate long-term strategy our

impressive THE the revenue and digital Wizards As lower of in year-over-year, year-over-year, expectations, quarter ahead by Coast growth of anticipated, in was but another $X of gaming driven continued billion, growth was for positive GATHERING. the Revenue for MAGIC: a strong QX quarter performance both with Hasbro’s Magic, MAGIC: in with Magic player standout its performer, first QX. was XX%, growth particularly and sentiment and right engagement all pointing player growth, D&D. player are The a in the THE new billion-dollar given growing fundamentals brand GATHERING XX% direction. strong of

QX. the our of MAGIC which the for upcoming expect one late to QX preorders Beyond, of continue momentum with the seeing positive Rings: our for will launch most We successful Universes Lord Tales set, ever Middle-Earth in The also of

up our we QX calendar, QX, release in down for and for be revenue full but solidly Given expect year. to MAGIC the in

of Transformers: QX. several Gaming Beast particularly saw for XX% late in as growth despite Hasbro down gains quarter of Rise and and And excitement for of in QX Consumer amounts was PIG drove Point unprofitable but PEPPA improved revenue the quarter Action, film. the we PLAY-DOH, from the feature year-over-year. Products sale June licenses. the exiting release POS declined in transformers businesses

of including Indiana half sales Studios’ Season Mandalorian, Asoka, Across Young Destiny, Wars: Galaxy the Transformers, Adventures, helping the Films Guardians Star year, of in the Lucas have our Beyond of a Spider-Man: Wars: brands. Sony’s we Dial lineup blockbuster the X Spider-Verse. of Jedi partners’ X content The Star support Marvel and from back of the Jones to and

retailer good QX. inventory ended on we owned with progress are and in for quarter the reducing and inventories on track QX improvements in Importantly, healthy our

revenues Kamoji in new XX%, the release spot Honor Heroes at number Jr. launched Thieves. shifts debuted to driven were new brand, film global new content. and Paramount, Among on Kia the brands the and new feature Dungeons released, and and with year-over-year the one content took family of Disney off Hasbro segment our Disney+, expecting XX% preschool office our Based XX% partners timing by and film D&D Among in we and response, impressive Entertainment score brand Hasbro’s the to week release enjoy franchise Tomatoes. score we on theatrical fan ever, and and audience Rotten an audience introduces via new strong that of Among newest with critic to theaters, long Thieves on its has a tens life become streaming our film post globally Honor are millions best reviewed sales. and consumers of Dragons: viewing

excellence operational continues Our apace. program

QX, cost In quarters. achieved million savings over cost grow the expect we the plans, our of execute to we we savings. $XX As coming

continue million help business, reinvest gross improvement. management the using offset profit programs, achieve our of us expect full rate XX of points of adjusted We operating run in savings we impacts year, basis margin this to are to to and XX money year $XXX inventory target cost from

to expertise. our joins Entertainment. will a corporate disciplines. our and packaged transformations, May leadership of CFO games us as Marketing Chief Bunge, President operations the Kilpin, in Jason well. firepower veteran year year us Thompson, veteran, growth our Officer new which a and as Hasbro new CMO, an and significant Bertie and and extended for of leadership global Gina joins new joined long blueprints Meta, with drive of And recasting experiences our leaders Riot Chief cutting-edge Games, of Officer made history markets former marketing goods with hailing and joins Gina Communications These the as leader across our us Licensing leadership brands. consumer and bringing Notion from talented partner drive as entertainment Communications to games Communications profitable former team, entertainment us Executive toy, our global has and strategy. at joins games CPG, data-driven Tim Officer, We our XX-plus Harley-Davidson at franchise bringing progress build plus across and toys, our technology, and marquee new initiatives. XX social financial in Goetter, serve Chief technology, Toy, new team CFO Creative our and our communications media companies brands, strategy

and agreement our quarter. like Uno to total deals Direct-to-consumer Our with and expand along just categories previously Pulse, XX% and for Partnerships into portfolio Wheels, new increase Transformers. Mattel, MONOPOLY own Transformers new leadership including crossovers on brands, licensing, Hot deliver. growth Hasbro’s initiatives direct-to-consumer introduce growth And opportunities. increased with first-ever fan-focused platform. our on and led Hasbro and grew revenues by leverage we in D&D, our e-commerce games XX%, announced X% continue the at a games our with our toys Barbie LEGO for and this, licensing announced category our

the our maintaining a decline expansion full revenue profit For guidance single-digit are and XX margin operating previous we year, of adjusted low basis to of points. XX

Coast traditional to timings retailers favoring expect impacts patterns sets return to new and ordering for QX shipment of We and QX sales. to MAGIC the headwinds Wizards release present as continue

share an We’re of still priorities. cautiously are in QX, building and bottom flat optimistic maintain to have but Hasbro a health with the and outlook we made where games toy down line progress focus, market

the and the strong. assets, be an to QX. pleased continue sale our is progress of while QX fan leadership The expect In in is building EX delivered and proving to On TV see update film continue and Hasbro-branded ahead team, we provide non operational of plan company progress in the steady to we our the resilient. start, MAGIC our summary, and by is just improving fundamentals. focusing economy

robust, growth initiatives track. are Our entertainment on calendar our is and

like the Deb call share Financial Chief I’d more turn to details. over now our to to Deb? Thomas, Officer,

Deb Thomas

Chris, and you, everyone. good Thank morning,

expectations ahead and guidance. quarter full strong first meet Coast, us MAGIC: well. demand, of said, perform GATHERING position our were continued Wizards Chris year to results by to As led our the THE of

teams is these releases, our for products expenses. helping retail through major savings excellence and offset are setting and working consumer program delivering inventory entertainment and operational Our

begin is additional $XX is the an in to quarters million This future of our in see on and and more revenue in QX, as realized we In impacts small first year, remain In track the $XXX early in As and grows quarter we profit our historically actualize you of most a remains disproportionate know, ahead. of to but our savings our revenue. as quarter base cost improvement million we the cost year run business for savings QX, fixed XXXX. deliver to rate savings.

year, million this extra of quarter equaled little fiscal revenue. addition, the And expense on incremental is and XX-week holds $XX this that In week. first a

versus XX% half revenue expect our decline. Given XXXX first down XX% we now previously first to of be approximately in quarter, forecasted the our

margin long-term Wizards dividends by million the of decline For operating in flow low we CapEx cash investments to $XX year We basis by capital shareholders. cash. ended $XX of million expect repayment, continue to of operating with $XX in $XX million of million. a return revenue We XX XX offset a of of and to gaming our the million future quarter $XXX profit in debt the with of started million including non-operating through improvement. cash points the for was balance outflows, year, in led Coast releases QX full single-digit $XXX adjusted a

in flow $XXX the to cash million year We forecast operating million for range. the $XXX

the timing QX. the flow March cash needs, shortly to releases is liquidity Wizards’ to down. our The and primarily business, inventory year-end, we Lord the release of and quarter CapEx inventories Hasbro year Coast end Rings: Beyond invest start at operate sufficient our two of due items: the before end, dividend. inventories our the of this growth higher with Middle-Earth We for from mid-April be the Tales At have expect the Universes fund Wizards and Machine meet given of of to By being first up year, of

consumer product second comes increase from inventories. The our

figures through from made Beast. in progress year-end. working set entertainment inventories to from inventory launches, action the retail our of Rise are purchased year-end, reducing Transformers: upcoming at for we’re they and own retail We including good QX, While we down

expect the drop it savings in Once the the those of The normalized begin the costs, to savings expect we we to offsetting first half sales work QX second chain the cost in will through of to are we and these the should sales cost better year. This compared to to begin resulting return the our year work slightly continue began cost excess. bottom half margins to will levels, We XXXX. through line. take and inventory allowances of work supply

assets The and the cash related non-core progressing. inflow in sale while year. to TV expect to the in happen the and provide a likely on be is an And of closing half able transaction is update film quarter, the we of second second this to

assets entertainment lowering our interest paying our the expense of proceeds ongoing sale the toward down improving prioritize levels, reducing will our We and overall debt debt, ratio. debt-to-EBITDA

We to our target remain to rating. debt-to-EBITDA and Xx of X.Xx, continue to we committed investment-grade

ahead business. results our first strong GATHERING consumer slightly adjusted revenue our demand of quarter, for at Looking came MAGIC: better the plan, THE shipments our in in and with products

exchange Cost revenues. declined and a $XX.X of decreased basis on with had points line year-over-year. impact revenue million sales XX Foreign negative in

As behind of I mix product in being sales operational Wizards licensing, of mentioned, offset allowances a Coast cost by Favorable the the incremental revenue. excellence improvements for percentage CP closeouts digital to as and well of is growth gaming revenue, as in expense and as cost contributed savings.

the brand expense on declined amortization and, royalty million extent, be Rise title $XX from expect is as EX a deliveries entertainment we and Beast the increased declined points profit quarter, as Beyond, in second of lesser on XX we operating mix. This in an the versus expense as XX% a set. Royalty MAGIC, the certain ship partner Lord of will basis Program of The Transformers: year, revenue. but of products percent Universes In additional we of lower QX exited and approximately support lower as revenues of licenses impacted to Rings expense revenue. revenues lower

in For the full year, XXXX. decline X.X% from expense we to expect royalty

half back Advertising Entertainment due of & the increased development to for Dragons: Among and last Dungeons expense team and was spend of investment SG&A within Wizards increased tabletop the Adjusted digital our reductions cost company joined in from development who and in marketing of Coast support of a mid-QX Wizards the segment, at play organized offset as Coast year. and Thieves on increased supporting Honor Lower releases. the savings Product as workforce Wizards costs freight conventions percentage were by MAGIC. and upcoming events D&D tournaments but higher investment both such personnel, flat essentially including for revenue. and for our

approximately the of As in a expect development. to the XXXX more reminder, $XX $XX we compensation million SG&A throughout be in product in estimate achieve balance normalized million and versus we year, with to levels which incentive XXXX,

mostly earnings with from of and is stock-based income. items the at impact discrete quarter mix outsized in adjusted will combined small normalize compensation, not for the tax quarter, XX.X% to year. to items our higher the lower income rate of Due indicative The the discrete related with

year we full to and our continue adjusted rate the XXXX, to be XX%. XX% between For underlying expect

XX% releases. Looking Coast D&D is segments, the addition Digital The XX% at by and increased gaming led fans MAGIC currency. revenue in creating behind on our X%, team Wizards focused revenue increased MAGIC: popular and of gaming gaming were digital Tabletop of revenues embrace. beyond. THE GATHERING up constant D& D experiences the

play. and expense organized XX% supporting Wizards to to continue personnel we As profit invest return higher declined in the due costs, product development of advertising the Coast, product costs, costs operating of

segment year investment growth which our Universes the future and of We continue full expansion expect for profit XX% high products. Beyond margin for range, to the in operating reflects

a Europe, and foreign The to impact revenue America loss licensing. allowances segment This Latin in was $X.X decreased Products growth revenue Consumer and led lower $X.X in XX%, of includes of revenues is was lower Asia net exchange, higher North America negative operating in performance million result and Pacific, which excluding adjusted closeouts the partially by million of offset Europe. and inventory. sell-through by segment’s

of to We operational items offset expect in costs savings company’s in were these the second higher program from quarter. realized reflected These primarily by cost excellence partially continue the sales.

scripted currency. revenues Brands of Yellowjackets; revenue repeat year. TV several just loss fewer revenue & lower ABC XXXX. businesses releases Recruit, operating lower result partially including unscripted Family season; and in well the of Among this higher deals a Music the including the decreased declined was renewed expense. behind TV increased which constant sixth declined as in XXXX decline Honor year-over-year, Dungeons advertising to segment content exited Film The for Feds; by XXXX remainder that series, XX% and new these timing deliveries versus due revenues QX Rookie The not as with in Rookie, Entertainment we for new TV late sales XXXX. in and other revenue. royalty licensing executed offset multiyear Thieves, did the revenues lower Adjusted as Dragons: and

of a lot said upfront, of quarter was small a I the As year QX ahead good but with us.

macro remain consumer planned half back about return and of predicated have strong plan innovation we shipment weighted the timing and We more point-of-sale more the releases, environment, is but our that the on traditional year-over-year. and half to outlook improve view. retailers, campaigns Our support to second a summer theatrical the improves all Magic share cautious the schedule, about we and retail advertising release to this will and engaging a

and people good XX to is as this have It’s all call Hasbro and legacy. through partnership hard entire outstanding been Tim last of and know for tough. support that its earnings and for we’ve I to brands, Chris, with Hasbro amazing imagine the of our Thank take the will here good your team Hasbro’s I you been care for my CFO. opportunity on the over and had work and years. and your Gina years, I’ve the

one time, last Chris. turn Now back I’ll it to

Chris Cocks

Deb. Thanks,

giving this started I’d Hasbro. of for Before we to it, called we an minute the Wizards Deb. there years needed my thanking of navigate ago as Wizards to the me always Wizards me the leadership company first the and the team at From Q&A, like Rookie, was for broader leader business. than years subsidiary that at XX company bigger and no I turn over Thomas was day fresh-faced job, support supporter a her of turbocharge She got the there to Deb Coast. and on it under-the-radar spend of X helping

the in across true helped of work the story the one partner My turn The office Deb. people industry. years. the honor true the it’s the broader have best the Deb power become the to evening; been companies to is lights an and one morning; last same the in the about of of in toys and off servant brands. definition in and story believer the first in She company is has one the a you a with, thousands over from partner and Deb, entertainment biggest has our of and who games learn Hasbro invaluable an people leader: and been

and of our thank company you. debt Our at owe a shareholders me, behalf you Hasbro, and gratitude. especially On everyone

Now questions. we will your take

Operator

from question Andrew Jefferies. Our Instructions] Please first [Operator proceed. with you. is Uerkwitz Thank

Andrew Uerkwitz

Hey, thank the the you. coming, targeting? us is the MAGIC. who The than help of it around with looks seen. you segmentation Rings Thank just like different of I strategy little you like And you so question guess we’ve what are Lord set a on understand kind much. audience Could set a that

Chris Cocks

the chance Andrew. earlier great And of did researched well this We it Yes. a all brand. to and on Thanks, the report, reviewing that MAGIC. good way, job hey, a by had week, was read but

talked of as prototype adjacent great Universes all strategy about had this, D&D, So Forgotten the called a on for a one Beyond, we’ve our this it’s overall for was ago, did in that with of with Lord of we the with Warhammer we which summer success best-selling Rings, couple ever commander Realms. bringing fandoms. our set We’ve We’ve fall. kind that in of about for sets Universes the Adventures had years did Beyond

who fourth also Rings, THE Lord might who the those – for J.R.R. base really GATHERING. We’re loves the reprint. Tolkien, a it’s Rings, of love to MAGIC: appealing already Lord rabid that our on of like fan And game about loves who

of often. are and of Lord bunch like kind see fans whole experience engagement a important the as that They an a great he there already THE very Rings, opportunity we and we who to fantasy, that for collector’s it that don’t uber think them secondary big a special fans. of MAGIC: set for component a is I is GATHERING do

Andrew Uerkwitz

Got follow-up. And an Thank update update it. Could then think, Could my the you just game expectations, you. an through you. income give on one you just launching, on QX. in us And update? You will broadly have That’s then the Thank that I helpful. of video strategy. an Gate Baldur’s just us give statement? how kind monetize

Chris Cocks

Yes.

in independent is Baldur’s the Larian being at arguably by X probably is game role-playing Gate publishers our of one best the one world. Larian. So – partners of done the

And what early Baldur’s Steam into date, access on do. game can really with X they about X.X, most about million so They in the of adopters, To years history like preview period. early kind just in Steam’s over X released it’s Gate we’re access excited X ago. that successful well

have to quality very Baldur’s be going X. the high pretty we So Gate expectations high. is for think We very,

at game PC. you they broadly very release going It or year definitely to year, reviews look are the on role-playing If of least the Steam, consoles to game on a and going it’s contender, at excellent. a the of is be and

So to it’s pretty we think release. be going big a

terms like we that partnership a in it’s have we that. product of participate Larian kind us. that, the on how with license for of In We

we royalty-based So probably more we will meaningfully start when that then kind QX the on and based to like see timing some QX of QX. in the later, recognize of And the contribution of year. next license in revenue, in September just from

Andrew Uerkwitz

Got Thank you so the much. it. Appreciate updates.

Chris Cocks

worries. No

Operator

MKM. proceed. question Please from ROTH Eric with is Handler next Our

Eric Handler

missed. luck Deb, I’ll just Good say, all you’ll and for be in question. just the future your morning, good endeavors, thanks

or are Products, regards you that just from? as color looking with consensus positive better pull give you reported to than where if forward seeing a quarter? was more came to could orders? about $XXX little maybe over question, Was upside Or – for the maybe I another were was wonder just Consumer a results first So retail for. what this XQ million

Chris Cocks

No.

I across Coast some the underlying momentum Certainly, expectations. ahead think came in we’re in the business of the board. seeing of Wizards

out And store, well. the Consumer The but POS set Our our on And It’s it Wizards want on on include think numbers, latest be Lord of discounting, still we than XX% by QX. of were in half some particularly in exited On to year-over-year. And down based Products, Princess our we down likely late that our release which of a based give and we planned. bullish or were were we I internal QX. Frozen, in less Rings in very this has on doesn’t to to Phyrexia very, down than what continue in did when perspective particularly QX. our are just you better in be, kind making businesses, I some cut of bit and where steady ahead own think progress. came not Disney we take at math roughly X%, We about We it, about X% is market.

planned. happen that, for like what that think been QX slate where are going in particularly we’ve with but partners, add ahead add is what TRANSFORMERS products, disciplined and We new doing content with We a add But QX, we satisfied with well it execution and that our of we we not our think was I at retailers. and to from QX, Disney. augurs our ourselves both we pretty what’s killer

Eric Handler

maybe helpful. marketing then exposed A strategy launch really about to You going a more how Can talk talk a game That’s bit had and follow-up, of here global now to And that’s markets can D&D movie. & we you to a DUNGEON haven’t about Okay. international little before. have been the to your out? markets the bring play lot of DRAGONS? as

Chris Cocks

by are best the to Yes. is by critical far mean movie. in movie enthused fan very I Hasbro’s the the history. response It the we reviewed response and

North that’s America. And known not highly but Europe it’s or Asia, and so in is and in highly engaged going very And in perform strong theatrical and streaming. markets. going a those to very It’s sales to have it’s we brand think particularly a well important post us, well long because for D&D penetrated in life,

the And will a then think a game. enthusiasm, call way a lowering and initiatives able are a the lineup aggressive experience so barriers in have fan of and And a games we we for being the are video that play particularly which kind we perfect then a DRAGONS new what top, of the kind brand. table lot reviewed is great opportunity by is that to have making has content video we very DUNGEONS we of expand out, games with we to like digitally, this I Gate yet And then at movie for licenses on coming that time beyond, investments over and Baldur’s & content perfect starting the core entry upon that production and is entry into point have as continuing Studios. X haven’t but as we digital announced virtual like we that game of like well in Wizards the owned a other year, with that

think broadly flywheel really experiences next of one-two And that is the brand makes brand’s to kind punch on add low the to couple over so entry entertainment, going of have And growth years. digital really that drives the then of which be I barrier that accessible. of kind the

Eric Handler

Thank you.

Operator

is question proceed. Stifel. Crum Drew with next Please Our from

Drew Crum

a years. and was the Deb, pleasure luck. morning of real It guys. Good Hey you working best Thanks. Okay. with over

start, your million there an original And that $XXX follow-up. have So, business figure part headwinds How outsourcing and of from the you Is share flagged exchange. $XXX then foreign maybe outlook, tracking can updated brands to to is I of million? sales there? you a had

Chris Cocks

Yes.

the manifest, case. we QX million in $XXX million that’s predicted $XX So, that that and would about of

We are Russia. operating not in

half are brands that Hasbro in particularly $XXX and at properties. impacts the execution in what will Gaming, I We Disney franchise We in or We as see anticipate and to portfolio, about we some TRANSFORMERS. so improved are across Sesame our see are our better-than-anticipated Street, in saw some first Trolls PEPPA manifest momentum momentum secondary of out-license to particularly our the of And MAGIC PIG overall are and PLAY-DOH We Princess marketing or our teams, across that and see NERF. well. we D&D. of million strength core think doing retail, starting POS around core in is, decent we some then seeing gaming XX% not year. really And or some starting

Drew Crum

it. Got

Chris. follow-up. Thanks then my just And Okay. maybe

term, Your achieve relative last investment to is year? expansion forecast feels reasonable the little the years, in that EBIT like for the segment which ‘XX, longer high-XXs margin you an beyond margin would lower Wizards anticipate over a more bit a to range few of or ‘XX,

Chris Cocks

the is I targeting what we sure. would say mid-term, in are for high-XXs

We are out investing capacity. pretty our building digital significantly in

of capitalized, it. that Some all of is but not

be party. players, a costs bit to a that’s new to a we when will start so in of particular which like spend both the games, as will second think we but great the a And outlook be bring of to the And Universes as as you those terms margins. opportunity in we tend the of kind to like because little impact going little for it’s MAGIC of Beyond, realization capitalized with I things a to then start royalties bit see of those our impact, launch costs, margin kind expand like in mid-term as those well development intensive more involve you

a new an the and for we range. typically revenue that user in Now $XXX X feel wise years stick over per that’s like we have years time said, attract average $X,XXX When around MAGIC player, a really to they X that investment. to they

to engaged, up fan segment, So, little bit highly we think margin it’s helps a giving nice a upfront attract long-term. our of us profitable over trade-off highly shareholders the and win that helps

Drew Crum

Yes.

Thanks. Very Okay. helpful.

Chris Cocks

Thanks.

Operator

Our America. is with Haas question Please Jason next proceed. Bank from of

Jason Haas

my questions. endeavors. retirement, also for I luck Thanks on to like taking Deb your your on say future as of best Good and And well congratulations Hi. would morning. to

the improvement of about to what expecting year? was are Are the I down consumer you just products. for through questions, can my get the of drivers terms remainder the curious the in to you of talk rest mid-single year In POS digit And guidance?

Chris Cocks

Yes.

was was working which of QX, year. with think the And QX think I and we the our that our improving QX. to positioning, steady our POS, improving down make of a continue end will inventory retail is we terms on payment down in about So, XX%, QX in inventory about nuts is bolts about It good outlook. progress in Through and retailers, our really execution.

had to do When has figures. a nature of QX we with action that down increased innovation. pretty figures, host will streaming actually things support of support inventory and have as well. releases production for owned from Wizards we of lot that and going just think but disciplined Wizards and are it’s hit bit, that a is with get is a also, inventory action QX, And Outside movies kind with add product or entertainment I to our whether content, around kind of from a of we QX, then Our new owned of and marketing great well. content the more QX up load-in Disney. to and blockbuster couple our we us through execution most of into

preschool Our well is pretty I of really, launched, Adventures But Jedi pretty it’s QX, to all Star and of new our a of where the doing well can games, Gel lot we doing age expand and NERF with preschool inside what NERF QX Junior our Young our portfolio. and partnership particularly segments do Wars NERF. inside with of for in innovation. am there. segment that’s excited

POS that board, but several innovation across of excitement a we see momentum. new lot yet, retailer haven’t pieces add that to as we should the well As for, the announced of

Jason Haas

a to off expectation you kind up last you for versus start. XQ that know that that it I That’s just good we what to walk you expecting which think great. range, Was the Can year? to was releases just And be up be initial thought for MAGIC know Kamigawa can last year, the of And I But through difficult said for was down, I because frame just compare? loaded causes the then then against? – have XQ. I you help what’s the seems XQ have are

Chris Cocks

Double year. QX. in QX less of of was then the in around year. second I the the timing sell-through going the Masters to we of the in releases and it’s Kamigawa quarter think last was releases, believe last the Really, of strong and in beginning it’s sell-through Well, quarter the be because particularly is QX, of quite actually

this comes So, last March earlier like our a release of machines than comparable year’s bit release. the year little

year-over-year. later about for QX is little bit a had shipped, month And major we release affects then So, QX. of our QX which a

year ship QX, all fair to that release in So, almost shipped at we this will of whereas QX were solely of be end last bit of QX QX. a the release year, able our

engagement are are sell-through about we about set quarter terms a fan QX the potential and of excited in of actually a perspective, for to set and sell-in the a releases, a while the the we year-over-year. down So, half

Jason Haas

Thank you. Helpful.

Operator

Our Instructions] proceed. is Fred [Operator next Please question Wightman Wolfe with Research. from

Fred Wightman

then just follow-up be thought to on wanted that end inventory you could like made you remarks comment continue the into half. And Chris, of prepared it sounded cleaned the I the expected of in that to I by performance. up guys. It a just sort the retail first Hey XQ.

than you So, And would exiting quarter? when be think will thought do a of is have normalized? sooner little you bit sort it that last

Chris Cocks

the Well, normal the get pretty That’s to there of I just QX, levels but into will would nature some by the end additional kind beast. say we of of be will QX. cleanup

be expect we say Wizards well outside with In pretty inventory that entering done both QX, terms in made continue. as to on job of pretty XX% be we to state, retailers aged and of operated. our owned the of our Figures for of QX, and would owned we clean QX and and and about Action should end QX kind XX% by clean will inventories, as by the a I our of progress in the of end

are what to for us. was which for comparable exited levels continues Our our overall be we with year low the down year exiting XXXX more XXXX or goal at, XX% to historically inventories

Fred Wightman

Makes sense.

sort about that sort far the think the half changes for us? back year-over-year mix the see the first MAGIC like think versus progressing you of half out for we the versus the of think the timing half the XQ, versus inventories if patterns? about of do XQ you how see you as year as And you year some us sort of that gave about the can do guide of you releases, how So, that that touched retail shaking historical just in help we back on of and just

Chris Cocks

Deb, follow-up? take do you to want the

Deb Thomas

Sure.

the back it get we range, to historically and always this been year. of like So, in expect year high the half the has to that XX% back

MAGIC be as as expect year. for we about, talked we QX biggest far this the mix, quarter As the to

comes of talked releases. Lord timing. And the very strong more the sell-through. certainly you shipped about the late We QX. have will in in sell-through We got Chris see Rings QX, but

back We timing. a rate the expect back expect normalized mix, releases. we the we the overall, do we about and in just half timing think MAGIC, about to get do the you year. when the It’s But back. of that for quarter consumer that. So, talked to bigger it come But of function expect looking a to just at

Fred Wightman

Okay. Thank you.

Operator

question-and-answer comments. for would reached turn our conference to back Debbie over I the closing to have end the session. We of like

Debbie Hancock

also will Conference to Thank everyone following Thank and Hasbro May management’s management on today. website would replay prepared May for joining let be be JPMorgan website Wolfe be Conference I you approximately The Research call. call and see you in on you, will the remarks XX to two hours, know Sherry there. XX on in and will XXnd. available like you on Hope the participating TMT you. this posted Leisure our that our thank and our

Operator

Thank does you. This today’s conference. conclude

your wonderful time may have at and disconnect lines a You day. this

Hasbro (HAS) 27 Apr 232023 Q1 Earnings call transcript