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

I'm Arpine Kocharyan, and I cover the toy sector within Leisure [ division ] at UBS. Thank you all for joining us today for our fireside chat with Hasbro Chairman and CEO, Brian Goldner; and CFO, Deb Thomas. Brian has been leading Hasbro since 2008, and he has been behind the execution of branded play strategy, which culminated in the acquisition of Entertainment One in 2019. We are going to talk about Hasbro's strategy for growth, what integration of eOne means for Hasbro longer term and current state of the toy industry. Brian and Deb, hopefully, she's joining as well. Thank you for joining us this morning.

Okay. Good morning. Happy to be here.

So before we start our discussion, we have a brief video we were hoping to show, after which we'll begin our Q&A. Operator? [Presentation]

That was great.

So I have a few questions to start off. And then we'll try to weave questions as we get them from the audience. Brian, I wanted to start with Hasbro's strategy of putting storytelling first and then building a brand blueprint around it to drive demand. This is something that really started more than 10 years ago on the company. How has this strategy evolved? And what are the key drivers of growth for Hasbro in the next phase of transformation, if you will, for the company given eOne acquisition?

Yes. As we -- first, let me remind everybody, we'll make some forward-looking statements today, and I would encourage you to go to our IR website for our disclosures around that. But -- so good morning. And for years, we have been developing our capabilities and strategy based on understanding proprietary consumer insights, putting our brands at the center of everything we do and ensuring that we understand consumers and gamers and now audiences. And we're really following the trends and patterns that they are creating, the behaviors that they're exhibiting and the way in which they want to engage with brands. And so we built the capabilities of our brand blueprint to ensure that we can give them all the experiences, the immersive experiences that they're desirous of and to build that over time. As we go forward and we look at where we are today, we've just set up and outlined 3 major operating segments that work in concert to drive our business go-forward. There's Wizards of the Coast and digital gaming. There's our Consumer Products business, which is our traditional toys and games and consumer product licensing; and then Entertainment One that's driving our entertainment around IP and, most notably, now around Hasbro IP. So those 3 areas in concert are giving us the opportunity to engage with global consumers, audiences and gamers and to ensure that we're able to give them the great play experiences they want, connected to other important immersive experience that resonate with them and their families to build our business. And we believe this puts us on a great path for growth both in this year as well as in the medium and long term.

That's great. And I want to go back to that revenue segmentation a bit. What you put out really highlighted both the scale as well as the impressive profitability within your gaming portfolio. Could you tell us whether you continue to see gaming as a strategic differentiator for Hasbro longer term? And where do you see that business going over the next 4 to 5 years?

Sure. Well, gaming clearly is a strategic differentiator. It's a unique position for us. Our portfolio of games are really the -- all of the games that everybody really knows and enjoys playing with. So obviously, one of the big areas of drivers in our fantasy gaming, lifestyle gaming business, which is Wizards of the Coast. That business, we put on a path to double in size between 2018 and 2023, and we expect its growth rate will continue this year, commensurate with getting us to doubling of that business by 2023 to a double-digit growth this year. But this business has been growing and obviously is highly profitable. We'll continue to add not only analog games but digital games to the portfolio. And this year, we have a few notable digital games that will be part of that. Entertainment One, which obviously, in our first year together, had some challenges from a live-action television and film production perspective given where COVID was and the closures of that -- of those production locations. We're back on track. If you saw our fourth quarter numbers in TV and film, it grew 20%. And we expect that eOne can get back to their 2019 revenue levels this year with growth going forward in -- over multiple years at a double-digit level, increasingly focused on Hasbro IP as part of its portfolio. And then our Consumer Products business, as I said, both toy and game as well as the licensed Consumer Products business, we expect we can grow mid- to high single digits and ahead of the industry because of our brands, the depth of our portfolio, the capabilities we've built and our ability to really now embrace, tap into and drive e-comm and omnichannel. So those 3 areas of our business in concert should get us to revenues this year of double digits, the opportunity over time in the next few years to get our operating margins beyond our historically high levels at 16-plus percent. And this year, to be able to maintain operating profit margin with this growth, recognizing that we are spending money and investing to ensure that gaming stays as a leadership area for us and that we have a number of digital games that we'll be launching for Wizards while the cost of those gains come into the P&L, the cost of the marketing comes into the P&L in the short term. And so therefore, over the long term, we drive the revenues off of these investments and expenses that we'll see in the short term this year. So gaming is clearly a very substantial part of our effort. We have our face-to-face gaming business as well as Wizards. And collectively, we believe gaming is unique and differentiated in the marketplace.

Great. That's very helpful. Going back to eOne for a second and what stood out to you as a strategic value driver when you made that acquisition. Could you just talk about why that combination was attractive to you to begin with? And how has that thinking changed given proliferation of streaming and that demand for content but also just significant disruption that studios saw around the world during the pandemic?

Our thought always, as we contemplated coming together and acquiring eOne, was that we could see where audiences were going and that we believe we'd get to an inflection point, where audience from their living rooms could watch in concert or en masse sufficiently to drive to a tipping point that would enable us to eventize those stream content -- those stream pieces of content and enable us to work with our global retailers to ensure we could merchandise against those great opportunities. We've seen that over the last year with great brands like The Mandalorian, where with great success with incredible audience coming on Disney +, We've been able to drive the Star Wars business up 70% year-over-year with an array of product that isn't just the Baby Yoda product or a child product but rather there with collectors, with kids and light sabers and vehicle play. Similarly, our Transformers brand benefited from the fact that we had an animated series that we placed in partnership with Netflix on their platform that was all about more of that fan audience. So this is called War for Cybertron. And we believe there was a real opportunity to talk to that older fan of Transformers. And, in fact, of course, it's really worked for us. There's a tremendous number of people watching those episodes. And in watching the episodes, they're engaging with these characters and stories that we're then executing at retail. So again, around children, fans and families, we see a real opportunity given the depths of our brand portfolio and the opportunity for eOne to increasingly work on Hasbro IP that not only has the benefit of profitable entertainment in the way that they have modeled their entertainment production and their risk mitigation but also gives rise to all of these other categories of sales and profitability as we go around the blueprint.

That is helpful. And I do want to kind of ask you about sort of eOne and the marriage of Hasbro brand portfolio with what is essentially a content provider. I guess where do you see the biggest opportunities for revenue synergies over the next 2 to 3 years as you look at this sort of your brand portfolio and the eOne capabilities?

Yes. So there's several areas. It's a great question. First, there's this immediate and such a substantial opportunity in the preschool and kids space because eOne has a great Family Brands business. They have incredible storytelling in preschool between Peppa Pig and PJ Masks. But when we were looking at the acquisition, they also had several new brands in development that they go out in a unique way, find partnerships to underwrite the production of the content and start with storytelling. So we have a new brand that's launching next year called Kia. It's really a partnership and underwritten by Disney+ and linear Disney channels, where it will appear and then our opportunity to merchandise that. So Family Brands is clearly an opportunity where Hasbro is going to go from a competitor but at a lower level in the preschool business to being a top player in preschool, both in terms of content creation and delivery but also in terms of merchandising and Consumer Products. On the other side, given the breadth of our portfolio in TV and film, we're actively underway with a Dungeons & Dragons live-action film. That film will not really come out until 2022. But in doing that, we believe the theatrical business really will be back in business globally as we get everyone vaccinated and we get beyond COVID. Then we expect there should be live-action television associated with Dungeons & Dragons. We have a new series that's in development from a great creative steward for Power Rangers, which will be young adult-oriented. So that sits complementary to our younger kids' Power Rangers series that's been airing for many, many years and now will be reinvented by the eOne team for these future exploitation and certainly a feature film there. When you think about My Little Pony, historically, we had produced episodic content. While eOne has come in and reimagined the brand, there's a whole new cast of characters that we're going to present for the first time, our first 3D CGI film that will come out this fall 2021. And we made the decision in this environment that our best opportunity is in partnership with Netflix and their 200 million subscribers. And so you will see the My Little Pony film come out on Netflix and then have some windows of marketing that will go beyond the Netflix platform so that we ensure we have this great substantial audience. Our global retailers love the approach. And then that will be followed over numerous years with episodic television content that's already been put into development and would be in partnership with Netflix as well. So we're building these substantial areas of exploitation in partnership with theatrical distribution in certain instances; OTT platforms in others, where the brand resides in its best possible manner to give us the ubiquity of the story and the character to connect to gaming, to Consumer Products and other experiences that consumers and audiences are desiring.

It's very helpful. I wanted to go back to the synergy that you have announced under eOne. You have $130 million of synergy target from the acquisition, and it seems like Hasbro is well on that target to meet or exceed that goal. What are the key milestones that you are looking at, starting with the vertical integration of some of eOne's preschool brands as soon as, I believe, this holiday season? What are those key milestones that you are tracking?

Yes. So we had said that by 2022, we could achieve that run rate of $130 million in synergies. And as you said, we're well on our way. Last year, we achieved about $30 million. This year, we should, by the end of the year, get to about half of the $130 million. And it's a combination of really 2 major elements. One is the in-sourcing of toys and games in our core categories for Peppa and PJ. And then, of course, there are other expenses that we're able to save and cost synergies we're able to create just as a result of 2 companies coming together. About 2/3 of the synergies in this year and go-forward are just related to the fact that we are in-sourcing and taking command of the core categories in toys and games, getting the benefit economically and financially of the franchise economics and also obviously then licensing out, continuing robust Consumer Products program and licensing out Consumer Products across multiple other categories. And yes, by 2022, we expect year-end 2022, we can achieve that $130 million. And we've really been able to identify where that comes from and to achieve the goals that we had set for ourselves and communicated.

Great. Great. eOne saw a somewhat outsized disruption from COVID when we think about sort of 2020 due to studio closures. But it seems like eOne recovery back to 2019 levels as soon as 2021, it actually surprised many to the positive because it's sort of coming in a little bit better than what people expected. But 2021 could hardly be a normalized year given that you're sort of catching up a little bit. I guess my question is what is more stabilized growth for the media business under eOne?

Yes. If you look historically at what eOne was able to create prior to the acquisition, they were a company that was growing double digits on a CAGR basis. We expect that we'll be able to grow that business certainly at double digits. And you're right, I mean, in 2021 -- and I'd remind people that early in the year, particularly the first quarter 2021 as compared to a year ago, they were still receiving theatrical revenues a year ago. And clearly, theatrical had been closed down this past year. So the first quarter will be its most challenged quarter in terms of comparables to the prior year. But as we go forward and really get into the heart of 2021 and complete the year, we do expect that we can get back to those 2019 levels and expect that we can get compounded double-digit growth over time.

Great. Great. Brian, there is a fair amount of debate among investors regarding sort of a stronger entertainment slate and what that means. There is a view that we might not get back to theatrical experiences as we knew them prior to the pandemic as soon as this year. I guess in this environment of significant uncertainty, how are you prepared to optimize a richer film slate? How do you think about those revenue opportunities both in terms of box office as well as sort of streaming and what that means for Hasbro?

Yes. Well, listen, it's not only our IP. We have 2 films that come out this year, one in partnership with Paramount, Snake Eyes; and then we spoke to the My Little Pony film that comes out this fall that we'll distribute. But we're also obviously working in a significant partnership with the Walt Disney Company. They have a really amazing lineup of entertainment this year. And they have really worked strategically to identify those properties that will launch on Disney+ in a streamed environment, other properties that will -- or films that will launch theatrically. And we continue to work in a significant way with them and then with our global retailers to ensure that we're going to be able to maximize our opportunity. And you're right. The market will continue to reopen, and theatrical people will begin to return. What we've seen is that in territories where the mitigation of COVID had happened a bit earlier like Japan and China in the box offices back and incredibly robust. People want to get back to theaters. I mean I think that people want to get back and do a lot of things that are out in entertainment activities and location-based entertainment and film, certainly. And so we work our way through this year. We have a go-forward -- or good visibility to the go-forward strategy around many of these entertainment initiatives. We have seen that streamed content can result in great merchandising success. So we know the format is right for exploitation as we look at it across Consumer Products and gaming. And that's just a matter of working through these next number of months. It also relates to eOne and its production. Over these current months, we have to use COVID protocols. We want to keep our crew and our cast safe. And those protocols cost us money. Some of those monies are shared by the broadcasters or other streamers that have acquired programming from us, but there's costs that we bear. And so over the next number of months, we will have those costs. And then, again, as we look at profitability for eOne, it improves as we get beyond this environment where people have been vaccinated and we no longer have to apply these significant COVID protocols. So in multiple ways, we just need to move through in a thoughtful way following the science the next few quarters, and then we should see and put COVID in the rearview mirror. For the most part, clearly always vigilant, and we're always looking at the global marketplace. But we believe that 2021, as we exit the year, will be a very good year for us. And we will get into 2022 with a real view to entertainment coming on multiple platforms as well.

Great. Great. Switching gears a bit to the current state of the toy industry before I look at my lineup of questions that I'm getting from the audience. How do you see demand shaping up this year? First, what you are hearing from your retail partners in terms of the health of the consumer and how they think about the category this year after such a strong POS here in 2020. Clearly last year, it was such a strategic category for retailers in so many ways, both online and limited brick-and-mortar. So how do they view the category now? What are you hearing from them for this year?

Well, we're not only hearing from our retailers. We're hearing from our consumers loud and clear that our categories are in high demand. And we've talked about the fact that year-to-date, our toy and game businesses are in very high demand. The POS results in the U.S. are very positive and had been up in the 20% range. Clearly, games are running at a very high level. Our PLAY-DOH and creative play businesses are in high demand. NERF has been in high demand and other product categories as well. In Europe, we're seeing very good demand with good POS and in territories like the Pacific, Australia, New Zealand, similarly. Other areas -- geography, like Latin America, there's a reopening going on. We said we would stabilize this business to grow. We're sort of seeing that. And in Asia, that reopening of the marketplace is certainly beginning. And so I'd say, overall, categories are in good demand. We believe that this can continue because one of the things that did occur during the COVID environment was that millions of fans and families and kids were either introduced or reintroduced to the fun of categories like games and gaming to creative play and PLAY-DOH to NERF and outdoor play that are -- is really a change up in play patterns. And so again, we're -- and then, of course, we add to that the action figure business with the return of entertainment in multiple formats. And so I think that what we're really seeing is, whether it's our doll business, action figures or these other categories, a real opportunity. And our retailers are strongly supporting our categories.

Great. And I wanted to ask you about Euromonitor, which just came out revising their CAGR estimate globally for the toy category from something like 4.9% CAGR to 5.2% over the next 5 years. I guess what is your view on the longer-term growth algorithm for the industry?

We do believe that the industry can and should grow. And those numbers seem solid to us. And yet, we believe we can grow either in line or ahead of the industry given our capabilities, our portfolio, our global depth and reach, our retail relationships, the Consumer Product programs that we can put around our toys and games businesses. And so I'd say that the industry should continue to show growth, and we can grow in that business at a very good and solid, robust level. And again, we're very excited about the fact that millions of new audience, families, kids have rediscovered or discovered the joy in front of face-to-face gaming or creative play or preschool or so many other categories that we have a -- where we have a leadership position in innovation and creativity.

Great. Great. I wanted to ask you a question about industry's ability to take pricing next. [Operator Instructions] To go back to pricing, pricing held up pretty well in 2020. How do you expect that to play out this year in terms of unit growth and pricing power? And any margin implications that could have for the industry?

Yes. What we're seeing is that unit growth has been good, and our pricing has held up or, frankly, increased a bit. We have been very focused on inventory. Our inventories are in very good shape. Lots of new products coming to market and obviously are in high demand. If you look at the new NERF lineup, for example, so many new blasters in multiple categories are now available to the consumer. We've gone -- we're going beyond the U.S., where we were able to launch some of these initiatives last fall, and we're rolling out around the world. And when you have new innovation with high performance in a category that has strong demand with the -- our inventories in a good position, it leads to a very solid pricing power to at least -- again, to enable us to sell our products at a value that we think it's -- that they're worth and the consumer is agreeing.

Great. And this is perhaps a question for Deb. I think she's on audio with us. How much of the raw material and freight cost increases can be passed on really to the consumer through pricing actions? This is something that we heard across the industry, that the industry is seeing sort of increased freight costs, and not just the toy industry, really in the broader consumer. What have the initial conversations sort of with national buyers yielded so far in terms of their ability to kind of take in additional pricing given that you're seeing higher freight costs and some higher raw material costs?

Deb, are you on?

Sorry about that. I couldn't get -- I'm sorry, I couldn't get off mute quickly enough.

Okay.

No worries.

Yes. I think from an opportunity for the freight costs, we do see them a bit higher in the first part of this year. And as we look at pricing, we don't think it's going to have a significant enough impact at this point if we spread it out to impact our pricing. However, we continue to look at those raw material inputs and those costs as they come through to see what is the right price to pass on to maintain our margins.

Okay. Great. And Brian, this is a question that I often get from investors. 2020 did not see a normal pattern of gift-giving. There were no Halloween parties or birthday parties or Christmas parties. But parents, nevertheless, sought out toys as a in-home entertainment at an unprecedented level. How much potential return to normalcy in terms of gift-giving for comps in 20 -- what could that imply for comps in 2021 given that we know that to COVID, 70%, 80% of toy buying historically has been associated with -- has been really events driven. You buy a toy because of an event.

Yes. There are a lot of dynamics that are -- that will return. Obviously, gift-giving is one. And clearly, the comparables to last year are going to be interesting because as we get into the second quarter, for example, it was a quarter where demand was very high, but actually, our ability to ship was challenged because of the closures of supply chain and retail. So you're going to see tough comparables on POS, but yet the opportunity to increase shipments are really more substantial. So they're going to be strange comparisons, but the fact is the underlying business we're seeing incredible demand in several different categories. Clearly, people have been reintroduced or introduced to fun and engaging play patterns. Gift-giving has been and continues to be one of the foundational elements to the category. Certainly, children received gifts last year in one way but I think will receive gifts in a multitude of ways in 2021.

Great. How -- my next question is regarding online versus brick-and-mortar. How do you expect that mix to play out this year given the significant increase that we saw this past year? Really, we saw what we were expecting to see over the next 5 years within a year. We saw you go from 20%, 25% to almost 30% and above. Does this still have room to grow? Or 2020 accelerated that mix shift in a way that we will see a bit less of growth going forward? What's your view?

Yes. No, we'll continue to see an acceleration. Deb, do you want to talk to our global retail and e-comm and omni?

Certainly. Well, last year, as you said in our P&A, we did see that growth. We saw that explosive growth up to 30% of our business in e-comm. And e-comm and omni and curbside pickup and the consumer has really changed how they shop. And we don't think that that's going to change. We think it's going to just continue to grow. As we see that part of our business grow, we've made investments in logistics and fulfillment capabilities. We've changed our supply chain, how we keep product on hand. And we do expect to continue to grow. And as it grows, we don't expect it to have a significant impact -- a negative impact on the profit of our business. We are -- we think that it's cost-neutral of how we sell. It's just a matter of making sure that we have made the investments that we could fulfill that supply chain as it continues to grow.

Great. That was very helpful, Deb. And I'm getting a question actually via e-mail. Could you talk about some of the key entertainment properties that could drive toy growth this year, both in terms of streaming as well as sort of the theatrical calendar being strong year-over-year?

Sure. Well, there's a great lineup from the Walt Disney Company, one of our most important Partner Brands relationships. Just this past week and weekend was Raya and the Last Dragon. We saw that the content really has driven engagement. We're seeing that at retail. As we go forward for the year, there's a number of initiatives coming from Marvel both on a streamed format on Disney+ as well as feature films. They'll continue to be and are adding new Star Wars content that will launch in the back half of the year. And we've seen great success with The Mandalorian. And then our own brands. So we talked about the fact that there's a My Little Pony, our first 3D CGI animated feature, that will come in the fall. And that will be on Netflix with their 200 million subscribers and really well marketed and opportunities to build that global audience there. And from Paramount in partnership with us, we'll have Snake Eyes, which is one of the key characters in that ninja genre from the G.I. Joe brand. And that film comes in the fall as well. So there's a great lineup that comes across. Ghostbusters is another brand that will relaunch and have a film this year. But our big -- the big portfolio and the big relationship is with the Walt Disney company. And they have incredible content coming on both Disney+ as well as for theatrical.

Great. Great. I'm getting questions on gaming business, and it's interesting because I had a question on my list on MAGIC as well. Gaming business has, as I said earlier, has been clearly a sort of a competitive advantage for you. And MAGIC has seen such incredible momentum over the past sort of 2 to 3 years, and you have a goal of doubling that business 2023. Could you take a moment, I guess, to go over the opportunity for both MAGIC as well as digital gaming? What are the key milestones that you will be watching?

Well, we have been investing to grow Wizards of the Coast and MAGIC: THE GATHERING and Dungeons & Dragons. This year, we have a number of new games launching. We're also taking MAGIC Arena. That's been very successful as our MAGIC -- effectively MAGIC online format. And we'll move to mobile. So there's early access now available on Android, and then it will also be in iOS. And we expect to see that, as I said this year, and that should enable us to add millions of new gamers just because the mobile format is just so enjoyed by so many gamers beyond what the gamers would do on a PC-based game. So there's a real opportunity there. We are going to launch Dark Alliance, which is a D&D game that will come out this year. We have a more casual playing game for MAGIC: THE GATHERING called Spellslingers. And then we have third-party games. So we'll continue to have both first- and third-party games that will come out. And again, it's just a robust environment with development that not only enables us to launch games this year, but we have a road map that will launch games over the next 5 to 7 years. And that's all in the plan as we look at continuing to grow Wizards doubling in size by 2023 and then beyond that time table.

Fantastic. I think like we have a question from the audience. What is the plan for Transformers and G.I. Joe entertainment business in the foreseeable future? Also the current Hasbro-Paramount 5-year agreement is coming to an end in 2022, what could we expect by that time period?

Yes. So the -- with Paramount, we are in coproduction. We talked about Dungeons & Dragons movie. So we're coproducing that with Paramount, and eOne is leading that. We have cast that film, and it's in preproduction. So we're very excited about that to kick off really a long era of storytelling around Dungeons & Dragons that will be not just for film but live-action television. And then eOne and Hasbro will have the opportunity to look at other theatrical launches. And we'll continue to look at our partnership with Paramount and other opportunities. We have movies in development with other studios like MAGIC: THE GATHERING at Fox, and we'll just continue to move that forward.

Great. You talked about Dungeons & Dragons before and how storytelling with that brand is so rich with multiple avenues to monetize over time. What stands out to you in terms of both the game releases under D&D as well as the size of the franchise and the opportunity over time? Because I think people are not perhaps as familiar with D&D as they are with sort of MAGIC: THE GATHERING. Do you see this as the next big thing within gaming?

Yes. Deb, do you want to talk about that, what we're doing?

Yes. Well, we do see that deep, rich fantasy game franchise and the development that we've been working on over the past 5 years to grow MAGIC and to grow D&D as well as some of the new games that we have in development. We see that's a great opportunity because players go deep, and they go rich in this. And they want to experience the brand in many different formats. So as we develop these games, we see people traveling with them as well. And it is all part of MAGIC skill set, right, or Wizard skill set in developing these deep, rich fantasy games.

Great. Great. And then as I ask this question, I'm actually getting a question via e-mail as well regarding gaming. Given lesser start-up cost and normalized marketing for Arena and perhaps less spend in digital over the next 2 years as we sort of come out of 2021, how will Wizard of Oz operating margin profile change into 2022 and 2023?

Do you want to take that, Deb?

Yes. I'm happy to take that, Brian. So as we look at Wizards, and you've got a few years of history. We do believe that 2020 was an extremely profitable year. We didn't have the depreciation. We didn't have the marketing for the launch costs, the things that the question mentioned, which is very true. But last year was an exceptionally profitable year. However, it's a very profitable business. So we see as these games develop and grow over time, that these -- that the profitability of this -- if this business will continue to grow over time as well. With more names launching, more things out, there are more players, we do see not just revenue growth but profitability growth as well.

Right. Great. Brian, I wanted to ask you about your Partner Brands. That's still a very important part of your top line and your partnership with Disney. And Disney really doubling down on some of the key franchises such as Star Wars and Marvel, and we keep getting this question. Over the next several years, Disney came out with a pretty key focus on Star Wars and what they intend to invest in that franchise. What is your take on how Partner Brands fit strategically in your portfolio today and how you look at that opportunity of kind of Disney sort of doubling down on something like Star Wars, essentially?

Yes. We see tremendous opportunity across the entire Walt Disney company portfolio as a brand. We have enjoyed those relationships for years. We have the rights to continue to exploit those brands and categories for years to come. And we really treat their brands like our brands. As a brand owner, as an IP owner, we understand why creativity and innovation matters so much, bringing bespoke new innovations to categories that help to expand the play, to make the play as engaging as possible. And we see every opportunity to continue to grow those businesses in concert with the rest of our business. We have incredible teams dedicated to those brands and a lot of excitement around the plans for Marvel and for Star Wars and for Princess and Frozen as we go forward.

Great. Great. And I have time only for one more question, and I'm going to combine a question from the audience with my own. And that question is really on capital allocation. We saw an impressive cash generation from Hasbro last year and rather some working capital benefits that might not repeat this year. Still, the underlying cash generation of this business is very strong. Could you walk us through your capital allocation plans and strategy and how you prioritize sort of reinvesting back into the business versus deleveraging from eOne acquisition?

Deb, you want to do that?

Sure. So we talked a lot about the investments that we've made. We made the investment in eOne to grow our company over the long term in our brands. We're making investments in Wizards of the Coast to grow our gaming because we see that as high profitable growth for our business. So from a capital allocation standpoint, you're right, in our P&A, last year, we had some great extra benefits from working capital. But we generate a lot of cash flow -- operating cash flow on average, $600 million to $750 million over the near term. Over the medium term, returning to that $1 billion level that we saw in 2020. We do see that in the future. So first and foremost, we will continue to make those investments to grow revenue. We'll continue to return our excess cash to our shareholders through our dividend, not through share repurchase, as we continue to be very focused on paying down our debt. We like being an investment-grade company. That remains our goal. We want to stay an investment-grade company and get back to that 2 to 2.5x debt to EBITDA. So as we deleverage, we'll focus on investing in the business and returning cash to shareholders through dividend, paying down our debt.

Fantastic. With that, our time is up, I believe. Brian, thank you and Debbie, all of you for making this possible. And thanks, everyone, for joining us today.

Thank you.

Thank you.