Hasbro, Inc.

Good morning and welcome to the Hasbro first quarter 2024 earnings conference call. At this time, all parties will be in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Today's conference is being recorded. If you have any objections, you may disconnect at this time. At this time, I'd like to turn the call over to Karan Kapoor, Senior Vice President of Investor Relations. Please go ahead.

Thank you and good morning everyone. Joining me today are Chris Cox, Hasbro's Chief Executive Officer, and Gina Getter, Hasbro's Chief Financial Officer. Today we will begin with Chris and Gina providing commentary on the company's performance. Then we will take your questions. Our earnings release and presentation slides for today's call are posted on our investor website. The press release and presentation include information regarding non-GAAP adjustments and non-GAAP financial measures. Our call today will discuss certain adjusted measures which exclude these non-GAAP adjustments. A reconciliation of GAAP to non-GAAP measures is included in the press release and presentation. Please note that whenever we discuss earnings per share or EPS, we are referring to earnings per diluted share. Before we begin, I would like to remind you that during this call and the question and answer session that follows, members of Hasbro management may make forward-looking statements concerning management's expectations goals, objectives, and similar matters. There are many factors that cause actual results or events to differ materially from the anticipated results or other expectations expressed in these forward-looking statements. These factors include those set forth in our annual report on Form 10-K or most recent 10-Q in today's press release and in our other public disclosures. We undertake no obligation to update any forward-looking statements made today to reflect events or circumstances occurring after the date of this call. I would now like to introduce Chris Cox. Chris?

Thanks, Kern, and good morning. For the past several quarters, you've heard us reaffirm Hasbro's strategy to refocus on play with our fewer, bigger, better principles. In our Q1 results, we're seeing Hasbro's strategy come to life. We are applying a franchise-first mindset, We're realizing our brand's potential through licensing with success across digital and consumer products. And we're continuing to invest in innovation across toys and games, appealing to consumers of all ages across play patterns. We began 2024 with a healthier balance sheet, a leaner cost structure, and an improved inventory position. In Q1, we saw tangible progress on our turnaround. Our revenue landed as expected, and our margins outperformed. While most of the year remains ahead of us, I'm glad to see the business is on a solid track. It gives me confidence Hasbro is pointed towards sustainable, long-term growth, backed by industry-leading innovation across games, toys, and partner-led entertainment and licensing. Digging into the quarter, there were several highlights. Let's start with licensing. Monopoly Go from our partners at Scopely has crossed over $2 billion in lifetime revenue and 150 million downloads, breaking records as the fastest growing mobile game ever. Baldur's Gate 3 from our partners at Larian Studios continued its momentum from last year with even more recognition. It's now the only game to ever win all five prestigious Game of the Year awards. While the success of Baldur's Gate 3 is in a league of its own, we see a long-term opportunity to leverage the richness of D&D across more games. In Q1, we signed new licensing agreements with Resolution Games, best known for the VR game Demio, as well as Gameloft, makers of Disney Dreamlight Valley, both to build within the D&D universe. And to celebrate D&D's 50th anniversary, we executed new partnerships with LEGO, Converse, and black milk apparel. Dungeons and Dragons Red Dragon's Tale is a 3,700-piece fan favorite that combines the building fun of Lego and the rich world building of D&D. I can't wait to build my own. Our success in licensing extends to our toy brands. We saw positive early results in T1 from Littlest Pet Shop, now manufactured and distributed by Basic Fun. And just this week, we announced a strategic relationship with Playmates, to produce and distribute Power Rangers toys starting in 2025. These are high-profit partnerships that leverage great partners with iconic brands from our extensive IP vault. Our new asset-light entertainment model is already paying dividends. We look forward to bringing the star-studded animated film Transformers 1 to theaters this September with our partners at Paramount. In Q1, we announced deals with Lionsgate and Margot Robbie's production company, Lucky Chap, to produce a live-action Monopoly movie, as well as with The CW to create game shows around Trivial Pursuit and Scrabble. And of course, I can't wait to see what Sony has in store for us with the just-announced film and TV projects for Clue. The movie was a favorite of mine from the 1980s. And our success in asset-light, partner-based entertainment extends well beyond the screens. We now have 115 Hasbro-branded, partner-led properties bringing in over 55 million visitors last year alone. We see those figures increasing significantly over the next couple of years as our partners bring our brands to life through thrilling experiences and attractions and billions of dollars of third-party capital investment with quality executions like Hasbro City in Mexico, which was just awarded the best family entertainment center in the world by the International Association of Amusement Parks and Attractions. Reinvigorating our innovation and driving operational rigor underpins our turnaround. In games, we continue to make changes within our board games portfolio, opening the door for share games and growth categories like party, strategy, and card games. In Q1, we launched Life in Rittera, a tile-laying strategy game from acclaimed designer Eric Lang, and Fork Milk Kidnap, a fun new adult party game. We also are doubling down in where we are the clear leader. In February, we launched the second edition of Monopoly Prism NBA board game at the NBA All-Star Weekend, and it helped make Monopoly the number two growth property in the games category in the U.S. for the quarter. We expect to see more crossover opportunities for the brand and sports in the future. Magic the Gathering saw healthy growth in Q1, driven by timing of sales for our latest release, Outlaws of Thunder Junction, and strong demand for Fallout Commander. Q2 is an important quarter for Magic, with the releases of both Outlaws and Modern Horizons 3, what we expect to be our biggest set of the year. While we expect Magic to be down for the year after a record 2023, we maintain our long-term bullishness on the brand, based on the continued robust fan engagement and a killer lineup of new Universes Beyond collaborations, including upcoming sets in 2025 for Final Fantasy and Marvel. And stay tuned for more exciting innovation from our D&D team later this year as we continue to scale D&D Beyond and expand the richness of tabletop gameplay to digital. We expect to connect to an even wider audience while delighting our existing fans as D&D celebrates its 50th anniversary. Finally, Let's turn to toys, where our turnaround efforts are well underway. We began Q1 with inventories at multi-year lows, down over 50% from the prior year. As a result of our cleanup efforts, we saw a significant reduction in closeout volume in Q1. Thanks to our operational discipline and careful SKU management, we're in a good position with our large retail partners as we work towards new product innovation, including Beyblade, Nerf, and a refreshed lineup for Baby Alive. We also are seeing solid progress in revamping our approach to marketing, significantly shifting our mix to digital, driving stronger than ever partnerships with our e-commerce and multi-channel partners, like our just-completed birthday shop execution with Walmart, and are seeing improved return on advertising spend as a result. We continue to see momentum with Furby, one of last year's top new toys, including our latest bestseller, Furblitz. According to Cercana, these fuzzy little friends were the top-selling item in the special feature plush category in the U.S. And earlier this week, we announced glow-in-the-dark Furby Galaxy coming this summer. We've also seen encouraging POS trends from Transformers as we celebrate the brand's 40th anniversary. While we're lapping last year's successful film, Transformers Rise of the Beasts in Q2, we look forward to sales rebounding in the back half as we gear up for Transformers 1. Last but not least, our retail and licensing partnerships are among our most important. Last month in New York City, Hasbro and Amazon collaborated with the Walt Disney Company to create a Star Wars experience at their first ever March to May the 4th event. Through an immersive retail experience in the main floor of the Empire State Building, fans were able to take photos with costumed characters, including Darth Vader, and check out Hasbro's latest Black Series helmets and KyberCore lightsabers collectibles. Before I wrap up, I want to highlight the recent changes to our board of directors, bringing in new members with extensive games and retail operations experience. I'd like to welcome Darren, Frank, and Owen to the board. I also want to thank Tracy, Linda, and Michael, who will be retiring from the board following our shareholder meeting next month. I'm grateful for their support and guidance over the past few years. And lastly, I want to honor Alan Hassenfeld, who will be stepping away from his role as Emeritus Chairman. Alan has been and always will be a prominent architect of Hasbro's legacy, and he will continue to be engaged with Hasbro in guiding the company's philanthropic efforts, providing development and relief for children around the world. To recap, it was a good quarter. We landed revenue where we expected with wins across digital licensing, board games, and continued momentum for Furby. We continue to sharpen our execution, staying within our guardrails and inventory, and delivering meaningful cost productivity across the P&L. While it's still early, our turnaround efforts and consumer products are going well, and we look forward to monitoring our progress over the next couple of quarters. I'd now like to turn over the call to Gina to share more about our detailed results and guidance for the year. Gina?