Hasbro(US:HAS)2025-02-20 15:13Financial Data and Key Metrics Changes - In Q4 2024, total Hasbro revenue was $1.1 billion, down 3% excluding the eOne divestiture, and down 15% including eOne [41] - For the full year, total Hasbro revenue was $4.1 billion, down 7% excluding eOne, and down 17% including eOne [44] - Adjusted operating profit for Q4 was $113 million, with an adjusted operating margin of 10.2%, a 14-point improvement year-on-year [43] - Full year adjusted net earnings were $563 million, leading to a $4.01 earnings per diluted share [47] Business Line Data and Key Metrics Changes - Wizards of the Coast revenue grew 4% for the full year, with a record profit margin of 41.8%, a six-point improvement over last year [44][45] - Consumer Products revenue declined 12% for the full year, but brands like Beyblade, Furby, and My Little Pony saw growth [45] - The Entertainment segment revenue declined by 88% due to the sale of eOne, but excluding this impact, revenue declined 4% [46] Market Data and Key Metrics Changes - The toy industry is expected to be flat over the next three years, with growth peaks driven by strength in broader entertainment [50] - Hasbro's licensing business has grown by 60% over the last three years, making it the third largest entertainment licensor globally [22] Company Strategy and Development Direction - Hasbro's new strategic plan, "Playing to Win," focuses on play and partnerships, aiming for a return to growth and profitability [19][31] - The strategy includes five key building blocks: aging up play experiences, leadership in digital play, expansion in fashion and collectibles, partnerships, and profitable franchises [26][30] - The company plans to increase its cost-saving target from $750 million to $1 billion by 2027 [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the core business's momentum, particularly in Wizards and digital games, while acknowledging challenges in certain segments like NERF and Star Wars [41][45] - The company anticipates modest revenue growth in 2025, with continued margin expansion and a mid-single-digit revenue CAGR projected through 2027 [31][62] Other Important Information - Hasbro reduced debt by $83 million in Q4, bringing the gross leverage ratio to 3.2 times adjusted EBITDA [48] - The company plans to diversify its manufacturing footprint to reduce reliance on China, aiming to decrease the percentage of US toy volume from China to under 40% over the next two years [61] Q&A Session Summary Question: Consumer Products top line guidance and market share performance - Management expects the toy industry to be flattish in 2025, with trading cards and building blocks driving growth [70] - Closeout volume was down, impacting top line and share results, but management anticipates share gains in many categories despite challenges with Star Wars and NERF [75] Question: Clarification on medium-term guidance and self-publishing video games - Margin expansion is cumulative, with a goal of growing 50 to 100 basis points each year [79] - Video game launches will contribute to revenue and profit, but will also impact margins due to capitalized expenses [80] Question: MAGIC business and upcoming launches - Final Fantasy is expected to be a best-selling MAGIC set, with strong pre-order demand [91] - Spider-Man is anticipated to perform well, although it will be a smaller release compared to Final Fantasy [93] Question: Medium-term guidance and growth drivers - Growth is expected from MAGIC, a stronger entertainment slate, and the video game launch of Exodus [100] Question: Tariffs and guidance assumptions - The guidance primarily considers the impact of tariffs from China, with minimal sourcing from Canada and Mexico [114] Question: Profitability and debt paydown implications - EBITDA projections align with the company's targets, but tax rates and interest expenses may impact earnings per share in 2025 and 2026 [128]