Hasbro, Inc. (HAS) Earnings Call Transcript & Summary

Hello and welcome to Hasbro's 2020 Annual Meeting of Shareholders. Please note that today's meeting is being recorded. It is now my pleasure to turn today's meeting over to Brian Goldner, Chairman and CEO of Hasbro, Inc.

Thank you and good morning. My name is Brian Goldner. I'm the Chairman and Chief Executive Officer of Hasbro. I would like to welcome you to Hasbro's 2020 Annual Meeting of Shareholders. Before we begin, I'd like to take this opportunity to express our sincere hope that you are healthy and safe during this unprecedented time. As we recently announced, due to the coronavirus outbreak, we canceled our in-person meeting for everyone's safety and are holding our meeting solely through webcast. During the virtual meeting, shareholders may vote and ask questions as if they were at our meeting in person. We hope to resume our in-person meeting next year. As usual, the meeting will be divided into 2 parts. First, we will cover the formal business. After that, the formal meeting will adjourn, and I will provide a report to shareholders and take your questions. Before we begin the formal business, I would like to thank all our directors who are all online today as well as members of our executive team for their continued support and dedication during this challenging time. Now let's attend to the formal portion of the Annual Meeting. On the meeting center screen, you will find the agenda and rules of conduct for the meeting. For shareholders who previously voted, your votes are reflected in the results reported by the inspector of elections today. Registered holders and beneficial shareholders that have received a control number to attend the meeting are allowed to vote and ask questions during the meeting. If you have not voted or wish to change your vote, you may do so now by clicking on the link provided online. The online polls will close after I announce that the formalities are concluded. At this time, you may also submit questions by clicking on the message icon of the meeting center screen. Tarrant Sibley, our Executive Vice President, Chief Legal Officer and Corporate Secretary, and I will conduct the meeting today. Tarrant, have notices been sent to our shareholders with respect to the Annual Meeting?

Brian, notice of the Annual Meeting was distributed to all shareholders beginning on April 1, 2020.

Do you have a list of the shareholders of record as of the March 18, 2020, record date?

Posted on the meeting center screen, we have available for inspection a list of the company's shareholders as of the record date.

Is a quorum present at this meeting?

There are present or represented by proxy at this meeting the holders of at least 89% of the shares of common stock outstanding as of the record date. As such, a quorum is present.

Thank you. We will now take up the formal business of this meeting.

Mr. Chairman, there are 4 items of business that may be properly acted upon at the meeting. The first item is the election of directors. Hasbro shareholders are voting to elect 13 directors to the Board, each to serve for a 1-year term ending at the 2021 Annual Meeting. The nominees recommended for election are Kenneth A. Bronfin, Michael R. Burns, Hope F. Cochran, Crispin H. Davis, John A. Frascotti, Lisa Gersh, Brian D. Goldner, Alan G. Hassenfeld, Tracy A. Leinbach, Edward M. Philip, Richard S. Stoddart, Mary Beth West and Linda K. Zecher. The second item is to conduct an advisory vote to approve the compensation of Hasbro's named executive officers as described in the proxy statement. The third item is to approve amendments to the company's 2003 Restated Stock Incentive Performance Plan as described in the proxy statement. And the final item is to consider and vote on the ratification of KPMG LLP as the company's independent public accounting firm for fiscal 2020. The company's Audit Committee has selected KPMG and the company's Board of Directors has ratified this selection.

Thank you, Tarrant. Have any questions related to the proposals been submitted?

Let me take a moment to check with Debbie Hancock, our Head of Investor Relations, to see if there are any questions relating to the proposals. Debbie has indicated that there are no questions.

Thank you, Tarrant. The online voting is now closed. Can you please report the results of the voting?

Yes. The inspector of elections reports that at least 92% of the shares represented at this meeting were voted in favor of the election of each of the 13 director nominees. Accordingly, each of the nominees has been elected. The inspector of elections reports that at least 94.6% of the shares represented and entitled to vote at this meeting were voted in favor of approval of the compensation of the named executive officers. And as such, the proposal has been approved. The inspector of elections reports that at least 82.5% of the shares represented and entitled to vote at this meeting were voted in favor of approval of the amendments to the 2003 Restated Stock Incentive Performance Plan. And as such, the proposal has been approved. And finally, the inspector of elections reports at least 95.7% of the shares represented at this meeting and entitled to vote were voted in favor of KPMG's ratification. Accordingly, the ratification is approved.

Since we have now completed the formal business of the meeting, I declare the formal portion of the meeting adjourned. Now we would like to proceed with a presentation to shareholders, and then we will answer your questions. Let me first remind you of our safe harbor and the fact that we will make some forward-looking statements and our actual results may differ materially from those forward-looking statements. If you have any questions, I'd encourage you to look at the risk factors discussed in our SEC filings. In 2019, we delivered on our objective to return to profitable growth. To accomplish this, we turned around Europe. Wizards of the Coast delivered significant growth. We innovated across our brand portfolio. And in partnership with The Walt Disney Company, we led the holidays with amazing lines for our partner brands. During the year, we also announced the acquisition of eOne, which we closed in early fiscal 2020. The addition of eOne accelerates our blueprint strategy by expanding our brand portfolio with eOne's beloved global preschool brands, notably Peppa Pig and PJ Masks; by adding proven TV and film expertise, including live-action productions; and by creating additional opportunities for long-term profitable growth. We are pleased to welcome the incredibly talented eOne team to our company. Building on the strengths of Hasbro and eOne together, we've evolved our brand blueprint. We are poised to expand in areas where we've been investing as well as in entirely new revenue and profit opportunities for Hasbro in 3 key areas: consumer products, including toys and games; gaming driven by the investments and work from the team at Wizards of the Coast; and storytelling led by TV and film. Our outlook for 2020 was positive entering into the year, but the impact of COVID-19 made it very difficult to actually predict the year. We spoke in great detail on this subject 2 weeks ago during our earnings call. Every day, I am inspired by the inventiveness and creativity of the global Hasbro team. We focus Hasbro on 4 critical areas. First, demand. Consumers want our products and experiences. They are looking for connection and engagement during this time. We are leveraging our extensive product portfolio and diverse retail network to connect global consumers with the product and experiences they want. We are offering compelling storytelling that continues to create strong viewership globally. Second, supply. The Hasbro team is working to utilize our diverse manufacturing and supply chain network to ensure product is available for our customers and consumers. Third, liquidity. We have substantial liquidity and we are taking prudent steps to ensure Hasbro remains in a strong financial position by aligning expenses to today's environment and preserving cash while paying our dividend, meeting our debt commitments and making essential investments for the long term. And finally, community. This is a top priority. We're making decisions to protect our employees and stakeholders but also help where we can through this challenging time. In some ways, this crisis represents a unique opportunity for us to bring our purpose of making the world a better place for children and their families to life with actions that have meaningful impact on our fellow human beings. We've donated toys and games to organizations providing care for essential and frontline medical workers. We've made financial and product donations to organizations like Save the Children and No Kid Hungry who are serving vulnerable populations. And our regional and local teams and the Wizards of the Coast and eOne teams have been actively supporting needs in their communities. Most recently, we announced that we're working with Cartamundi to produce and donate much needed face shields to frontline health care workers, in local hospitals. This commitment to our purpose underlies our CSR efforts, and we continue to be extremely proud of the achievements we are making across our 4 CSR pillars of product safety, environmental sustainability, human rights and ethical sourcing and diversity and inclusion. You can learn much more about this on our CSR website. In 2019, Hasbro ranked #13 on the 100 Best Corporate Citizens list by CR Magazine and has been named one of the World's Most Ethical Companies by Ethisphere Institute for the past 9 years. In addition, we provided more than $12 million in financial contributions and donations of more than 1 million toys and games last year to organizations around the world. Hasbro has a long history of returning excess cash to shareholders. Over the past 10 years, we have returned $4.7 billion through dividends and share repurchases. Our historical dividend payout as a percent of earnings has been among the strongest in our peer universe. We invest first in our business and our people, but we continue to believe in the value of returning excess cash to our shareholders. And today, the Board declared our next quarterly dividend of $0.68 per share. As we move toward the important holiday season, we believe we are well positioned to deliver a good holiday season with great innovation across our portfolio, including new PLAY-DOH compounds, the global rollout of new NERF innovation, new gaming introductions and with eOne brands, Peppa Pig and PJ Masks, as well as in many other categories. As an organization, Hasbro continues to execute toward our North Star of creating and operating a leading play and entertainment company that drives value for our stakeholders. I am now happy to take any questions. Tarrant, are there any questions?

Thank you, Brian. Let me just take a moment to check with Debbie to see if we've received any questions. Debbie is indicating we have not received any questions, Brian.

Thank you to everyone who joined us today. Please stay safe, and we look forward to speaking in the future. This concludes the meeting. You may now disconnect.