The paragraph introduces the Hasbro, Inc. First Quarter 2025 Earnings Conference Call, beginning in a listen-only mode and recorded. Kristen Levy from Investor Relations introduces CEO Chris Cocks and CFO/COO Gina Goetter, who will comment on the company's performance before taking questions. The earnings release and presentation slides, including non-GAAP financial measures, are available on the investor website. The call will discuss adjusted measures, with a reconciliation provided in the press release. It also includes a disclaimer about forward-looking statements, noting factors that could lead to different actual results, as detailed in various Hasbro reports and disclosures.

The paragraph highlights Hasbro, Inc.'s financial performance and strategic positioning in Q1. The company saw a 17% revenue increase, driven by strong performance in its Magic business and licensing, while consumer products were slightly down due to timing. Adjusted operating profit rose by 50% owing to a favorable mix and cost discipline. Hasbro is favorably positioned to handle global trade challenges, with a focus on domestic and digital sourcing that keeps costs low. They are minimizing tariff impacts through proactive production shifts and accelerating a $1 billion cost savings plan.

Hasbro, Inc. is focusing on strategic pricing and strengthening retail partnerships to capture market share while maintaining consumer-friendly price points, specifically at $9.99 and $19.99. The company emphasizes long-term partnerships, highlighted by an extended licensing agreement with Disney for Marvel and Star Wars, and aims for more collaborations with leading brands. Despite facing challenges from current tariffs, which could increase consumer prices and reduce profits, Hasbro maintains its guidance due to robust games and licensing segments. The company recognizes potential logistics complexities and aims to navigate these while sustaining its market position.

The article covers a company's global production and its role as a key contributor to jobs, creativity, and innovation. It endorses zero tariffs on toys and games worldwide to promote free trade, highlighting the industry's importance to American jobs and child development globally. The company attributes its strong performance to its dedicated team and partners, who have been crucial in navigating challenges. Gina Goetter reports a successful start to 2025, with significant growth in revenue, profit, and operating margin due to their strategic focus on transformation, cost discipline, and profitable growth. Revenue grew by 17% in Q1, driven by strong sales in Magic and MonopolyGo, with adjusted operating profit and earnings per share also seeing notable increases.

In the latest quarter, Wizards of the Coast, a segment of Hasbro, Inc., saw significant growth, with revenue increasing by 46% to $462 million, driven mainly by Magic Tabletop and digital licensing. The Magic brand experienced a 45% revenue increase due to demand for new releases and ongoing engagement with older content. The licensed digital gaming portfolio also grew by 56%, thanks to Monopoly Go and a new Star Wars collaboration. Wizards' operating margin improved to 49.8%. The consumer products segment saw a slight revenue decline of 4%, but improved its adjusted operating loss and margin. The entertainment segment's revenue decreased by 5% to $27 million, though operating profit remained stable. Overall, Hasbro achieved a total adjusted EBITDA of $274 million, reflecting a 59% increase with enhanced margins and $22 million in cost savings. The company generated $138 million in operating cash, invested $52 million strategically, and distributed $98 million in dividends to shareholders.

The company has paid down $50 million in long-term debt and aims to meet a gross leverage target of 2.5 times by 2026. Despite positive Q1 results, uncertainties such as increased tariffs on imports from China and potential reciprocal tariffs from other countries introduce volatility. To address this, the company is prioritizing products with higher velocity and margin, optimizing logistics and manufacturing strategies, and diversifying sourcing beyond China, which currently accounts for 50% of its US volume. China will remain a key manufacturing hub, but efforts to reduce dependency are underway. The company collaborates with customers on inventory and pricing strategies to remain agile and focused on margins amidst changing conditions. For 2025, despite various potential external challenges, the company maintains its full guidance, leveraging its flexible strategy and strong games business as options.

The paragraph discusses the company's approach to modeling the impact of tariffs on the toy category, including scenarios for China tariffs ranging from 50% to 145% and 10% for the rest of the world. The estimated gross impact ranges from $100 million to $300 million in 2025, with plans to offset this through sourcing optimization, retail coordination, and pricing strategies. After mitigation efforts, the net profit impact is projected to be between $60 million and $180 million, influenced by trade policies and consumer behavior. Additionally, the company has raised its full-year revenue outlook for the wizard segment, expecting growth in the mid to high teens with a low 40s operating margin, due to strong demand for new releases like Final Fantasy and Spider Man. However, higher royalty expenses are anticipated starting in Q2.

The company is focused on maintaining its financial outlook despite external challenges. This includes leveraging the success of its high-margin franchises like Wizards to offset costs in consumer products. Although there is uncertainty due to evolving tariffs, the company is not adjusting its full-year guidance and is actively managing controllable factors. They are increasing their cost savings target to $175-$225 million while maintaining investment in core growth areas such as Magic and Digital Games. The company's priorities include balance sheet health, liquidity, and debt reduction, with an unchanged Q2 dividend. They remain committed to long-term leverage targets and capital returns as they navigate the remainder of 2025.

The paragraph features a Q&A session from a conference call regarding a company's Q1 performance and future outlook. Company representatives express confidence in their diverse model's durability and capital deployment discipline despite external risks. During the Q&A, Christian Carlino, speaking on behalf of Christopher Horvers from KPMorgan, inquires about the potential impact of a 145% tariff on Chinese products, particularly on toy spending. Chris Cocks answers by clarifying that Fred Wightman initiated the call and notes that they have considered various scenarios, adopting a cautious outlook concerning the current tariff situation.

The paragraph discusses the impact of economic factors on the toy industry, comparing it to the 2008-2009 recession when the toy category declined slightly but remained resilient due to its nature as a gift-oriented luxury. There's an expectation that this resilience will continue into 2025 despite inflation and recessionary pressures. The paragraph also touches on how potential changes in tariffs could alter this outlook. Christian Carlino inquires about retailer relations, noting reports of order cancellations from China, but it seems this isn't the case for Hasbro. Gina Goetter explains that discussions with retailers are dynamic, as both parties face similar challenges.

The paragraph discusses how different companies are managing their inventory and order patterns, highlighting active discussions about inventory management for upcoming quarters, especially ahead of the holiday season. Chris Cocks emphasizes not overreacting in response to challenges, a stance appreciated by retail partners. Hasbro, Inc. benefits from a significant portion of its sales being sourced domestically or through domestic digital and licensing partners, providing a buffer compared to companies that rely heavily on imports from Asia. The discussions with retailers aim to keep consumer prices consistent, especially for popular gift items, despite tariff pressures. Additionally, there is a noted shift from direct imports to domestic sourcing.

The paragraph discusses a company's strategic approach to managing order fulfillment and potential challenges due to prolonged tariffs. The company is focusing on both defensive and offensive strategies, such as leveraging relationships with retailers to explore new opportunities and manage inventory and supply chain health. Chris Cocks clarifies that the impact of prolonged tariffs could create structural cost uncertainties that might persist into the next year, potentially affecting costs and operations. Megan Clapp from Morgan Stanley seeks clarification on how these tariffs might influence future expenses and operations.

The paragraph discusses a company's strategy to manage tariff exposure and diversify its supply chain due to current duties and manufacturing challenges. It explains that the company plans to shift production of hundreds of SKUs from China to other countries by the end of the year, ultimately expanding its sourcing network from eight to nine or ten countries. This transition aims to reduce reliance on China, though it may initially incur higher costs, such as increased production expenses in the US and logistical differences in Turkey. Despite the complexities and potential midterm costs, the company aims to eventually manage these changes on a cost-neutral basis. Gina Goetter notes that the financial impacts of these changes are expected to be more pronounced in the latter part of the fiscal year.

The paragraph discusses the positive outlook for Wizards' financial performance, highlighting strong results in the first quarter and optimism for the following quarters. Chris Cocks and Gina mention that the "Final Fantasy" set is already the best-selling set of all time on its release day, with expectations for continued success throughout the year. The discussion also notes a 20% increase in store count over 18 months and the effectiveness of the "Universe is Beyond" strategy in expanding the player base by re-engaging former players and attracting new ones. Additionally, Magic: The Gathering is described as economically resilient, with historical growth during economic downturns, indicating its passionate consumer base is not closely linked to broader economic performance.

In the paragraph, Gina Goetter discusses the financial expectations for Wizards, noting strong growth anticipated in Q1 and Q4. However, Q2 revenue is expected to decline due to unfavorable comparisons, such as differences in the performance of Baldur's Gate and Monopoly Go compared to last year, and a previous beneficial licensing settlement. While Magic is projected to grow healthily, the quarter will face increased royalty expenses due to the launch of Universe is Beyond. Overall, the year's growth model emphasizes strong Q1 and Q4, with some instability in Q2 and Q3. Megan Clapp finds the information helpful, and James Hardiman from Citi appreciates the detailed analysis of the financial expectations, especially noting the importance of understanding changes shown in a "bridge slide."

The paragraph features a discussion between James Hardiman and Chris Cocks, with additional input from Gina Goetter, regarding a company's adjusted EBITDA guidance. James queries whether the guidance factors in severe economic conditions akin to those of the Global Financial Crisis (GFC) and COVID-related inflation, and suggests that any improvement from these projections could result in higher guidance. Chris clarifies his choice of words, preferring "cautious" over "conservative," and Gina confirms that the current guidance indeed incorporates a higher tariff rate and a retail sales decline based on past downturns. She notes that if conditions improve, the guidance could increase, but the company is also focusing on accelerating cost savings initiatives, which could be adjusted depending on economic conditions. Gina also highlights the significant strength and momentum of the Wizards brand, which could positively influence outcomes beyond the current guidance, even without the elevated tariff rate.

The paragraph discusses the company's strategy in response to global trade tensions, particularly tariffs outside of China. Despite potential challenges, the company remains optimistic and plans to stick to its current strategy, assuming stable reciprocal tariffs. They are not overreacting and believe logical trade policies will eventually emerge. Their outlook involves leveraging market opportunities, particularly in Europe and Japan, where they see significant excitement around their new product lines like Peppa Pig, Marvel, and Magic. They acknowledge being under-indexed in Europe but view this as a chance for growth.

The paragraph discusses potential market opportunities and strategic priorities for a company's SKUs and marketing efforts, particularly in the APAC region. The company is exploring ODMs in Vietnam, India, and China to create more affordable SKUs and tap into markets like Latin America and Southeast Asia. They are focusing on their "everyone plays" initiative as part of their "play to win" strategy. The firm expects a base outlook of "145 and 10" but is not factoring in possible market upsides related to SKU and marketing shifts. The goal is to avoid analysis paralysis and focus on known factors, considering all strategic moves as beneficial with no regrets. A further question is asked regarding tariff sensitivity and the potential reduction of consumer product exposure to China below 50%, with a prior target of 40% exposure by 2026.

The paragraph discusses the company's strategic plans regarding its manufacturing operations and financial projections. It highlights the ongoing importance of China as a manufacturing hub, noting that 45% of the company's products are sourced there, despite a significant portion of revenue coming from the US. The company aims to reduce its reliance on Chinese manufacturing to below 40% by 2026 and is accelerating efforts to achieve this. While the company is finalizing plans with suppliers, specific financial figures and the impact of mitigating strategies, such as cost savings and pricing adjustments, are not provided. The focus remains on reducing gross financial exposure from a potential high of $300 million to a net impact of $180 million, with three main strategies to achieve this goal not detailed in the excerpt.

The paragraph discusses three key strategies for mitigating challenges faced by the company. First, it focuses on managing the supply chain by shifting products, managing inventory, and diversifying to mitigate risks. Second, it involves rationalizing the product portfolio by reducing SKUs and evaluating the viability of higher-priced items affected by high tariffs. Finally, it addresses customer and commercial strategies, concentrating on pricing and managing retailer allowances to optimize financial outcomes. Together, these strategies contribute to a projected $120 million difference between gross and net. Additionally, a follow-up question asks about conducting price elasticity studies to understand the impact of price changes on demand, which is acknowledged as challenging in the current environment.

In the paragraph, Chris Cocks discusses the importance of pricing, innovation, and strong brand partnerships in the toy industry. He highlights the significance of having toys that appeal to children and are based on passion-driven purchases. He mentions the extension of their long-standing partnership with Disney, focusing on popular brands like Marvel and Star Wars, which have strong fan bases and significant entertainment events coming up. Cocks expresses confidence in their future, hinting at more partnerships that will enhance their brand lineup. Eric Handler asks about the company's recent performance with their Magic product line, and Cocks attributes the success to a remastered set, strong backlist performance, and early orders for a new release, Tartier Dragon Storm.

The paragraph discusses two main topics. First, it highlights the performance and expansion of the Magic business, focusing on increasing the player base and engaging them with more products, which is strengthening the community. Second, it addresses the challenges of shifting manufacturing operations away from China, indicating that while some infrastructure is already in place in other countries, the full transition is expected by 2026. The process depends on the capabilities of other countries, with some requiring new developments. The timeline for reducing reliance on Chinese manufacturing has been accelerated compared to previous estimates.

In the provided paragraph, a company discusses its strategy for manufacturing Nerf products, highlighting their advantage of having a large production footprint in India. This allows them to shift the SKU mix for the U.S. market to focus more on India-based SKUs, which might be older but reliable, giving them a pricing edge over competitors who primarily manufacture in China. The company notes that Chinese manufacturing is more entrenched in products involving electronics, high-end decoration, and foam (except for darts). The conversation then shifts to a financial discussion, where Alex Perry of Bank of America questions Gina Goetter about the company's segment guidance. He observes that while the Consumer Products (CP) segment outlook remains unchanged, the company anticipates greater industry declines. In contrast, the outlook for the Wizards segment has improved. Perry seeks clarification on the balance between lower implied operating margins in CP and higher contributions from the Wizards segment, which Gina acknowledges.

The company is adjusting its revenue and operating margin outlooks upward but maintaining its current outlook for CP due to uncertainty in potential outcomes. If costs reach the higher end of their $60 million to $180 million range, there will be a significant revenue loss, with operating margins decreasing to mid-single digits, as these costs can't be fully absorbed. However, if costs stay at the lower end, the company will be closer to its original forecasts. They expect more clarity by July but acknowledge their current guidance is broad. The positive impacts from factors like the Wizards initiative and cost savings help mitigate these challenges. In response to a question about pricing, Chris Cocks mentions that pricing strategies will be selectively determined in discussions with retail partners, considering areas of momentum like Magic and areas with high tariff exposure, such as the toy portfolio.

The paragraph discusses strategies for pricing and product launches, emphasizing new innovations in their lineup like the Peppa Pig line and a collaboration with Mattel on Play-Doh Barbie. The focus is on minimizing price increases due to tariffs on imports from China while trying to drive market share. Despite this challenge, the company aims to maintain customer satisfaction by carefully managing price adjustments. Additionally, there is a conversation about the timing of decisions with retailers for holiday orders, with flexibility being key amidst tariff uncertainties.

In April, discussions with retailers are described as fluid, with the focus on holiday planning and order patterns. For Q2, a material shift in domestic versus international orders is expected due to retailers managing inventory. Despite this, there is no significant change in holiday expectations from retailers. Revenue modeling shows that the latter half of the year will still account for about 60-65% of the revenue base, with more inventory movement to retailers in Q3 and Q4. A down quarter is expected in Q2 due to order pattern changes, with a rebound in Q3 and Q4. Stephen Laszczyk comments on the situation, and Chris Cocks discusses the success of Monopoly Go, highlighting the game's strong player engagement and its solid brand foundation as reasons for its momentum.

The paragraph discusses the company's recent performance and future outlook, highlighting successful events and partnerships, including a new collaboration with Star Wars. It mentions confidence in achieving a revenue target of about $10 million per month for the remainder of the year. During a Q&A section, the speakers address questions on inventory levels and market performance, explaining that their inventory was lean and met planned expectations. Revenue growth was driven by licensing, and the toy segment performed as anticipated. In response to concerns about pricing and consumer behavior, they note the toy industry performed well in the first quarter but offer no significant insights into consumer trends.

The paragraph is a discussion from a conference call where various speakers talk about market trends and exposure related to their toy products. Jaime Katz notes that Easter sales went as expected, and consumer behavior in buying toys remains normal, with toys typically being occasion-based purchases. Kylie Cohu from Jefferies asks about exposure related to the "wizard" segment, specifically regarding manufacturing locations. Gina Goetter explains that this exposure is minimal, with some manufacturing in Japan and Europe, but most in the U.S. Chris Cocks adds that only a few products, like Dungeons & Dragons box sets, are imported from China, affecting tariff duties more than Japanese manufacturing. Kylie also inquires about point-of-sale trends and any bright spots, with an emphasis on performance during Easter.

In this paragraph, Chris Cocks discusses the performance of various licensed brands, noting that My Little Pony and MonopolyGo performed well, with Transformers and Beyblade also seeing positive results. Additionally, Marvel had a strong quarter. Kylie Cohu responds positively to the information, and the conference call concludes as the operator thanks participants.

This summary was generated with AI and may contain some inaccuracies.