Hasbro, Inc.

Good morning and welcome to Hasbro second quarter 2024 earnings conference call. At this time, all parties will be in a listen-only mode. A question and answer session will follow the formal presentation. 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 University 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 gap adjustments. A reconciliation of gap to non gap 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 could 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, our most recent 10-Q, in today's press release, and in 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. Q2 is another good quarter. we saw strength in gaming and digital licensing and landed where we expected within consumer products, while increasing operating margin and maintaining healthy inventory. It's nice to come into calls like this and not only deliver what we said, but to start making it a habit. Across games, IP, and toys, Hasbro is emerging a more profitable, agile, and operationally excellent company, one dedicated to delighting fans of all ages through the magic of play. Our licensing and IP business continues to be a differentiator for us. In digital, we're seeing mega hits like Monopoly Go demonstrate staying power. We have over 35 entertainment projects in development, and our team continues to drive our IP within consumer products through partners spanning the globe in multiple categories. And as we look at the business of play, it's clear that digital is here to stay in a bigger factor than ever in how successful toy and game companies will grow and strengthen their brands. We're years ahead of our peers, having already spent hundreds of billions of dollars building out our own studio capacity and expanding our brands through digital partnerships. Games like Baldur's Gate 3 show us what the future looks like. And while we're still in the middle of the ballgame on our turnaround efforts in toys, we're seeing signs our innovation is working, particularly where we have a big head start versus the competition. Many companies in the toy and games industry are waking up to the power of fans and the importance of quote-unquote kidults. Hasbro has long appreciated this audience, driving over 60% of our revenue from consumers 13 and older, and will continue to lean in here as we think about innovation across our product portfolio. Looking at the business with the first half of the year in the books, our team delivered, and we're raising our full year guidance as a result. Gina will share more details shortly, and I'll first offer some business highlights across gaming, licensing, and toys. We had another solid quarter from Magic the Gathering on the back of this year's blockbuster set release, Modern Horizons 3. Facing a high bar with last year's Lord of the Rings Universes Beyond set, Modern Horizons 3 has had a strong start, becoming the fastest-selling set in Magic's history. While we expect a tougher comp in the back half for Magic following the strong first half, and as we lap a greater number of releases last year, we're seeing good early interest in our first ten-pole set, Bloomboro, releasing next week. And then in 2025, we anticipate a return to growth for Magic driven by two Universes Beyond sets for Final Fantasy and Marvel that fans are already eagerly anticipating. Within D&D, we're seeing solid pre-orders for the 2024 Core Rules book for the revised and expanded 5th edition. D&D also shows how we're increasing digitization across our portfolio. Digital revenue already accounts for over half of the mix due to the success of D&D Beyond. Next week at Gen Con, fans can expect to see more of our 3D role-playing sandbox experience built on Unreal Engine 5. bringing players' favorites franchises to life across PC, console, and mobile. We look forward to getting it in gamers' hands later this year. D&D Beyond already represents our largest direct-to-consumer platform with 18 million registered users. Along with Pulse, our destination for exclusive collectibles across fan-favorite brands like G.I. Joe and Star Wars, we see an opportunity to unlock more value across our Hasbro Direct business. Licensing was another standout in the quarter. Momentum and Monopoly Go from our partners at Scopely continued into Q2, accelerating our revenue recognition beyond the minimum guarantees and driving healthy upside to both revenue and operating profit. Since launch, the game has grossed over $3 billion in revenue, making Hasbro the top licensor of video games over the past year, according to Aldorra. The team continues to have an active pipeline of licensing opportunities across PC, console, mobile, and casino, leveraging our rich IP. In Q2, we announced a new arcade-style game for Power Rangers with our partners at Digital Eclipse. And just this month, we kicked off a Transformers Overwatch 2 crossover. As we continue to invest in our digital gaming efforts, both through partnerships and self-publishing through our own studios, I'm excited that John Heitz, former SVP and GM of the Warcraft franchise for Blizzard Entertainment, is joining Hasbro as president of Wizards of the Coast. John is a lifelong Magic and D&D fan and embodies Hasbro's mission to bring people together through play. Within consumer products licensing, we saw growth in the quarter, helped by our new partnership with Kaio Collectible Trading Cards, building on the resurgence of My Little Pony in China. And Littlest Pet Shop's international appeal continues to grow. Rank is the number two growth property in play sets, dolls, and collectibles across the G10, according to Sircano. We also launched several partner-led Hasbro-branded properties, including a new Peppa Pig theme park in Germany, as well as the Game Room and Planet Play School in New Jersey, combining for 60,000 square foot of games and STEM-based play experiences. Finally, turning to toys. As a reminder, we began the year expecting the first half for consumer products to look similar to last year's second half. Through Q2, we've landed where we thought we would. And I'm encouraged by several early reads, notably Beyblade. After a strong launch in Japan, we've begun rolling out Beyblade X globally. We've seen positive early demand with fans liking the streamlined brand assembly and new Accelerator Rail Stadium that creates epic collisions. And in this year of lighter entertainment content, Hasbro is well-positioned with the biggest movie for toys coming to theaters this September, Transformers 1, with our partners at Paramount. We have strong retail alignment and healthy early demand for our fan SKUs to celebrate the brand's 40th anniversary. You can expect renewed innovations in some of our core toy properties as we head back to school. Play-Doh has shown strength all year, and we've gained valuable insights from our digital marketing efforts in the spring that we'll be applying to the fall. We're expanding play styles with new launches, like the first ride-on pizza delivery scooter, and aging up with Play-Doh Marvel action figures in partnership with the Walt Disney Company. This fall, we'll also be ramping our latest N series for Nerf, which features a proprietary Nerf dart. Retailer support has been strong since last month's launch. Our people and culture are critical to the successes I've highlighted during this call. And so before I wrap up, I want to also welcome back Holly Barbacovi, an HR powerhouse who's bringing her pragmatic approach to HR back to Hasbro as our new Chief People Officer. To recap, it was a good quarter with solid performance and profitability led by our strength in games and licensing. Toys came in as expected, and we see a path to growth in Q4, driven by innovation and strong alignment with our retail partners. We still have most of the year left to go, and we'll be watching back to school closely, but our team's work is starting to make a real difference, and we feel confident in taking our guidance up for the full year. I'd like to now turn over the call to Gina to share more about our detailed results and updated outlook. Gina.