Hasbro, Inc.

Good morning and welcome to the Hasbro second quarter 2025 earnings conference call. At this time, all parties will be in listen-only mode. If anyone should require operator assistance during the conference, please press star zero from 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 Fred Whiteman, Vice President, 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, we'll begin with Chris and Gina providing commentary on the company's performance, and then we'll take your questions. The 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're 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 to reflect events or circumstances occurring after the date of this call. I'd now like to introduce Chris Cox. Chris?

Good morning, and thank you for joining us today. Before we begin today's call, I want to take a moment to honor the life and legacy of Alan Hassenfeld, our former chairman and CEO, and a dear friend and mentor. Alan was a driving force behind Hasbro for decades. He led with heart, conviction, and an unwavering belief in the transformative power of play. But more than that, Alan believed in people. He made it his mission to lead with empathy, to give generously, and to use Hasbro as a platform for doing good in the world. Alan reminded us that the true measure of our success isn't just financial performance. It's the positive impact we make on people's lives, especially the joy we bring every day to children around the world. Alan, You will be missed, but your vision and mission will never be forgotten. Now let's turn to QQ results. We're now halfway through 2025 and already seeing momentum on our Plane to Win strategic plan announced in February. I'm pleased to report that Hasbro is performing ahead of expectations, driven by exceptional results from our Wizards of the Coast business, continued performance in our licensing and digital segments, and a steady long-term approach to navigating a complicated and evolving macro environment. While the broader consumer landscape remains dynamic, our play-focused, partner-scaled strategy is paying off, leaning into premium, high-margin segments like wizards, licensing, and digital. And we're seeing it translate to bottom-line outperformance. Let's break it down. Wizards of the Coast had a standout quarter, Magic the Gathering continues to deliver, growing 23% year over year in the second quarter, and up 32% year to date. This isn't just a one-off moment. It's a clear indication of the power of Magic's community, our release cadence, and the resonance of our Universe is Beyond strategy. Magic's engine of growth is durable, it's diversified, and it's accelerating. We're seeing strength across every KPI of the brand. Tarkir Dragon Storm is on pace to become the top-selling magic premiere set of all time. Final Fantasy, the latest release in our Universes Beyond portfolio, is already the highest-grossing magic set ever. And Secret Lair, our direct-to-consumer collectible business, just delivered the strongest sales quarter in its history. It's not just about our new releases either. Our backlist Magic sets have already set an all-time annual sales record, and we're only six months into the year. That's a testament to the depth and durability of Magic's value to players, collectors, and fans alike. A play system of over 22,000 cards that retain full compatibility. Community engagement is also hitting new highs. Last month's MagicCon Las Vegas drew record attendance, with over 19,000 badges sold. eclipsing our previous high from Chicago just earlier this year. And the Wizards Play Network continues to expand, now totaling nearly 9,000 locations globally. Organized play is on fire. We saw a nearly 40% year-over-year increase in unique players during the first half of 2025, a clear signal that our play programs are bringing new energy and deeper connection to local communities. Final Fantasy set a record for new player growth. delivering more new players in its first two weeks than any prior set posted over an entire season. For the balance of this year, fans are eagerly anticipating our upcoming slate of releases, including Edge of Eternities, Marvel's Spider-Man, and Avatar The Last Airbender, both new additions to our ever-expanding Universes Beyond portfolio. We're committed to scaling Magic through thoughtful innovation, smart operational execution, and a continued focus on player-first experiences. We see a bright future for the brand, both in the second half of 2025 and beyond. Simply put, Magic's stronger than ever, and we're just getting started. Sticking with Wizards, we're now in a place where we can start talking more confidently about our digital pipeline, a major investment area for both Wizards and Hasbro as we scale our ability to deliver play in new ways across more platforms with more partners. Exodus, our flagship AAA sci-fi RPG from Archetype Entertainment, is progressing well and is currently targeting launch in the second half of calendar 2026. This game represents a bold step forward into premium digital storytelling and will be sharing a major update with players later this year. This quarter, we announced an exclusive publishing agreement with Giant Skull, led by industry veteran Stig Asmussen. Stig has an exceptional track record, and not coincidentally, is the force behind some of my favorite games, God of War III and Star Wars Jedi Fallen Order, to name two. And he's now leading the development of a brand new single-player Dungeons & Dragons action-adventure game. This is a premium title built from the ground up in Unreal Engine 5, and we believe it will set a new bar for narrative and immersion in the D&D universe. This agreement reflects our playing-to-win strategy in action, investing in top-tier talent, deepening digital engagement, and expanding our presence in premium genres. Whether it's Exodus, D&D, or tapping into the amazing portfolio of collector and age-up-oriented brands across Hasbro, we're building a diverse, high-quality slate that strengthens our connections with fans and unlocks new growth for Hasbro's digital game portfolio. Starting at this year's Game Awards in December, you will be hearing a lot more from us. Turning to consumer products, as anticipated, sales were down in the quarter, particularly in North America, where our retail partners made a shift in ordering from direct imports to domestic, given the uncertainty around tariffs over the last few months. We expect to make up much of this delayed ordering in Q3 and into Q4 as sales ramp into the holidays. EMEA and APAC are performing well, and we anticipate each of these regions will end the year in growth mode. While tariffs represent a headwind for the business, the current duties are better than the range we discussed in our last earnings call. We are compensating for these costs through a combination of cost reductions, rebalancing our marketing spend, diversifying our supplier mix, and implementing some targeted pricing actions. Coupled with a strong slate of new toys, including Play-Doh Barbie, our new line of Peppa Pig toys, celebrating the birth of Peppa's little sister, Evie, retooled and reimagined board game favorites like Candyland and Operation, and Marvel Legends series products tied to the upcoming Fantastic Four release, we expect top-line performance for consumer products to improve sequentially as we move through the balance of the year. Lastly, our licensing business, which is embedded into our CP and Wizard segments, continues to outperform. Monopoly Go continues an impressive run of user and revenue milestones, proving to be an enduring hit from our partners at Scopely. We've just inked a new multi-party deal in casino gaming with Aristocrat Technologies, Bally's, Evolution, and Galaxy Gaming. They joined SciPlay to form a five-company partnership to expand our brands in a lucrative and high-growth market for digital on-premise gaming. And the balance of our LBE consumer products and digital gaming licensing business is both growing and providing an important source of high profit diversification. All of this adds up to a business that is showing strong signs of underlying momentum and meaningful progress against our playing to win objectives. While I won't steal much of Gina's thunder, based on the strength we are seeing across our diversified portfolio, especially from Magic, We are raising both top and bottom line guidance for 2025 and reaffirming our midterm outlook. 2025 will be the year Hasbro returns to growth, and we will do so backed by record operating margins. I want to thank our teams across the world for making this possible. Our supply chain organization has done yeoman's work, diversifying our supply chain while keeping costs low. Our sales teams are partnering with our retailers to navigate an unpredictable environment with agility and a long-term mindset. And our product, marketing, and design teams are delivering some of the best new products and campaigns Hasbro has dreamed up in years. Alan would be proud. Now I'll turn over the call to Gina Getter, our CFO and COO. Gina?