Hasbro, Inc.

Good morning and welcome to the Hasbro First Quarter 2025 Earnings Conference Call. At this time, all parties will be in a listen-only mode. Today's conference call 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 Kristen Levy, Hasbro 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 and Chief Operating Officer. Today's call will begin with Chris and Gina providing commentary on the company's performance, and then we'll plan to 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 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 our other public disclosures. We undertake no obligation to update any forward-looking statements made today or to reflect events or circumstances occurring after the date of this call. I'd now like to introduce Chris Cox. Chris?

Thanks, Fred, and good morning. T1 delivered another clear proof point of our playing to win strategy at work. Play focused, partner scaled, and performing. Revenue rose 17%, led by a surging magic business, and continued strength in licensing. Wizards was up 46%. Consumer products was down 4%, driven by quarterly phasing due to a later Easter, but still ahead of plan. Both segments beat expectations. Adjusted operating profit jumped 50%, a result of favorable mix and the cost discipline embedded in our transformation program. Our games portfolio, an industry-leading licensing business, remains standout performers. High growth, high margin, and structurally resilient due to lower exposure to international sourcing. On tariffs, we acknowledge the challenge posed by the current global trade environment. While no company is insulated, Hasbro is well positioned. Our U.S. games business benefits from largely digital or domestic sourcing, maintaining low COGS and healthy margins. We make many of our board games just up the road in East Longmeadow, Massachusetts. not far away from where Milton Bradley printed his first board games in the 1860s. Wizards has low tariff exposure with sub $10 million in expected duty for the year. Most of our domestic supply is produced in North Carolina and Texas with the balance from Kyoto, Japan. Our licensing business is primarily digital or minimum guarantee based with manageable partner exposure. While our toys segment faces higher exposure, we're responding proactively. Our asset light sourcing model means we can rapidly shift production to help mitigate tariff impacts. We're accelerating our $1 billion cost savings plan to offset tariff pressures internally. While targeted pricing actions remain likely, we are prioritizing key price points and strengthening retail partnerships. We will work to capture market share and shelf space through our growth and optimize brands at critical consumer-friendly price points. particularly 999 and 1999. We want the hundreds of millions of families and fans we serve each year to keep experiencing unbeatable value at the shelf, whether it's an all-new home playset for Peppa Pig and her growing family, a play booster for Magic's Final Fantasy Universes Beyond collaboration, or a hot new action figure for Marvel's upcoming Fantastic Four movie. We're also thinking long-term as we play to win, especially with partners. a superpower of Hasbro's. This week, we announced the extension of our multi-decade licensing agreement with Disney Consumer Products for Marvel and Star Wars, with enhanced category rights in preschool, Play-Doh, action, and role-play. Combined with the Marvel agreement for Magic the Gathering, our collaboration with one of the world's most valuable brand portfolios has never been stronger. Expect more announcements of new partnerships with leading brands across toys, games, and video games aimed at all demographics, further solidifying our position for long-term success. Looking ahead, while we remain hopeful for a more predictable and favorable U.S. trade policy environment, we must acknowledge the costs imposed by current tariffs. Even with Hasbro's relative strength and flexibility, logistics are becoming more complex and changes in receivables and shipping dynamics present a challenge. Ultimately, tariffs translate into higher consumer prices, potential job losses as we adjust to absorb increased costs, and reduced profits for our shareholders. Our guidance is unchanged, supported by our robust games and licensing businesses, and our strategic flexibility, but prolonged tariff conditions create structural costs and heighten market unpredictability. Hasbro produces a substantial amount of product in the U.S. and around the world, has served as an engine of local jobs, creativity, and innovation for over 100 years, and licenses to hundreds of American companies employing tens of thousands of American workers across toys, games, entertainment, experiences, and more. As such, we fully endorse the Toy Association's advocacy for zero tariffs on toys and games globally. either on US exports or on imports. Other toy associations around the world are quickly joining the advocacy efforts. We believe there should be free and fair trade for toys, an industry critical not only to hundreds of thousands of American jobs, but also to the joy and developmental well-being of millions of children, families, and fans across the US and worldwide. Before handing it over, let me extend my sincere thanks to our team and partners. Our strong performance amid challenging conditions can be directly attributed to your dedication, agility, and shared ambition. In an unpredictable environment, our greatest assets remain our people and our valued partners. They are what truly enable us to play to win. Now, over to Gina.