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

Good morning, everybody. My name is Chris Horvers. I'm the broadlines and hardlines retail and leisure analyst at JPMorgan. And it's my great pleasure today to have Hasbro's CFO and COO, Gina Goetter. So thank you for coming again this year. We really appreciate it.

Thank you for having us.

So this is a 35-minute session. We'll have about 15 minutes of Q&A at the end. So please don't be bashful and ask questions. There are mics in the room. So they'll come around with mics and because this is being webcast as well. So Gina, as you mentioned earlier, it's your 2-year anniversary.

2-year anniversary. We survived.

And you and me made it. Nothing's happened in those 2 years.

Nothing. It's been really a dull -- lot of dull moments.

Maybe start with what the organization was when you arrived and how much change has been made organizationally and how the strategy has changed over that time frame?

Yes, sure. Yes. Fun joke to start. One of my close friends is the CFO of Malibu Boats. We both came up at General Mills together, and we were talking before Monday's announcement, so we're muddling through all this tariff stuff like what did the CFOs worry about before COVID, tariffs, because it's been a very tumultuous 5 years. So in terms of Hasbro, we are in the middle of a multiyear transformation. We're, call it, 2.5 years in. We probably have another 2.5 years to go before we would say that we're all the way through it. The first couple of years of me being enrolled was really focused on getting back to our core, simplifying, reducing complexity. When you think of the portfolio a couple of years ago, it had this big business that was eOne that we divested in and so moved away from the entertainment business where it was more of -- we were investing a lot into that infrastructure and into the capital. So we divested that business. We spent a lot of time then getting our portfolio right as it comes to like what SKUs, what products. We talked internally about fewer, bigger, better brands. You saw us outsourcing some of our brands to different manufacturers. We culled down our SKU count by almost 80% at this point. And we really took -- spent a lot of time getting our inventory and the balance sheet clean. So the first 2 years was a lot of that heavy lifting to just get the foundation in a good spot. In February, we launched our Playing to Win strategy, which firmly puts Hasbro's strengths at the center of play, our strengths of play and partnership. That is all what playing to win is about. We -- within the play to win framework, we have 5 strategic pillars that are focused on profitably growing the business and expanding our reach. And that expansion of reach is defined very broadly in terms of who demographically we're targeting to what channels we're going to be selling product into, what markets that we're going to participate in. But Playing to Win is all around and play, partnership and partner profitability. Also in our Playing to Win strategy, we have introduced a new framework for how we think about our businesses. So we've moved into -- we've got growth businesses, we have optimized businesses and then we have reinvented business. And within growth, as you -- as the name would imply, that -- those businesses are going to receive the lion's share of investment, the lion's share of human capital, the marketing spend, the innovation kind of support. Those businesses are roughly 75% of our revenue today and the bulk of the profit for the company. Our largest and most profitable business, Magic is a great example of a brand that lives within that growth vector. Within optimize and reinvent, those businesses are ones where in optimize, we see growth potential, but we just need to get some fundamentals right on the business model. and reinvent is it's not working and we need to really rethink everything, soup to nuts. And we always use -- our most favorite example there is the Nerf business, 1 that is -- has seen is kind of coming off of its peaks of COVID time and really needs a lot of work on the business model innovation model all the way through. So our big accomplishments of getting that foundation set and launching Playing to Win has made for a busy 2 years.

And so as you think about -- I think 1 of the things that have struck us is how much human change has occurred at the organization. So can you talk about that? And then also just process and technology change, a lot of turnarounds, companies start with a lot of tech and people debt. Do you think you've processed through all that debt? And how far along are we fixing all that things?

Fixing it, yes. The -- I would say we're midway through. So if we go back to where we are in our journey. But from a people standpoint, to your point, I think there's 2 on our executive team. Everybody else on our executive team is less than 2 years in. Many joined around my same time. We've added some new team members over the past year. Chris and our General Counsel are kind of the 2 long-standing members who have been with Hasbro a bit longer. So a lot of change at the executive team level. As we then kind of work our way down the organization and look at our SVPs or our VPs, our leadership level, roughly 70% of that population is either new to the company or new to role. And we're -- in terms of where we are in that journey, we're now working through really all of the other layers and the guts of the organization. But as part of the org changes, we rejiggered how and where accountability sits. One of the big things we announced at the beginning of I guess it was mid to end last year is that Tim Kilpin is the runner of our toy business, now has the whole toy business, the entire business model, including commercial. Previously, it was reporting under a separate leader. So we really have shifted the mindset from it being a geographic commercial-led organization to a product-led organization. So all of the accountability for the P&L and the running of the business is sitting with our product leaders. Tim Kilpin sits over the CP business or the Toys games licensing business. And then John Hight, we brought him in at the end of last year to run now the Wizards business. So that has been a lot of the org rejiggering that we've done, and we're still working through the various pieces. In terms of the infrastructure and like the tech, the tech side, we have made a lot of good progress, but there is still much more to go. I mean, the first couple of years were let's get everything set and the foundation contained. Now we're into invest mode across the core infrastructure pieces. So think HR systems, finance and accounting systems, to some extent, supply chain, but we're now kind of focused on that part of the journey. We are 2 months in -- probably not even 2 months in, to our AI implementation at Hasbro and not AI, there's AI for creative and that is also very important to Hasbro but AI and how it helps us run the business differently is truly going to be an unlock for how we do work. I mean we're seeing it in just some of the basic tasks that we're doing all the way to the more complicated analytical ways that we do our work. So that is going to be the next disrupter that we're going to really lean into as we set up Hasbro for the future.

My favorite anecdote is, I believe when you came in, there was not an FP&A function at the org.

Yes. There's a lot of accounting. There was a lot of -- well, I was told when I joined the organization, yes, we have FP&A. So like, great, that's 1 less capability I need to build, and it didn't take long to figure out, oh, they were calling FP&A accounting. And we love accountants. I love accountants. I'm not one, but we need accountants. We just needed also to instill that financial operations discipline. So for me, personally, 1 of the capabilities that I've built within my org is that financial operations discipline. I mean obviously, my background is CPG, financial ops is bread and butter within CPG. And so bringing a lot of that talent in or that type of talent is has really helped to reframe partner differently with the business. We're able to really get out ahead of information and decisions to keep the business moving. That was just something didn't exist before.

Sort of insane. As we maybe dig into the different segments and different opportunities, maybe can you set the table with what the pre-tariff, long-term algorithm is from the top line down to the bottom line that you laid out earlier?

Yes. For the midterm targets that we put out in February, we said that our goal is to grow revenue at that mid-single-digit rate in our margins, we were roughly looking for 0.5 point to 1 point of margin expansion annually. And obviously, we have not put out new midterm targets, so that continues to be what we are working towards and against. Clearly, the tariff world every day is a new adventure of where this is going to lead. So we believe we still have a path and are on track to what we put out in February.

Great. So first, on the Wizards side of the business, you have some -- Chris is really this Universes Beyond strategy as you're just in the early stages that you have Lord of the Rings, you had a small -- some small titles last year. And this year, you have Final Fantasy. You have Spider-Man. Can you talk about how you see this business long term in terms of the potential growth? How are you balancing 1P versus 3P content? And then how does that translate down to the margin level?

Yes. There's a lot in that question. So clearly, like in the kind of guts the real heart of our Playing to Win strategy, it is about pivoting to where the growth levers are. And games, broadly speaking, games is going to be a growth lever. So Hasbro Gaming, which is Board games that sits in the CP segment. We are also investing there. We expect that to grow. But then all of Wizards is really going to become the growth engine, whether that's Magic, where our biggest and most profitable business is all the way to, to your point, the AAA kind of self-published video games. So if you take them in its pieces and talk about Magic. Magic in the first quarter, we grew 46%. And this is a business where in every investor interaction, every conference, every earnings call, we deal with some sort of flavor of but can you really get Magic to keep growing? And is it just a fad? And what we are seeing in this business is the stickiness, not only of the player itself, but the ecosystem that is surrounding Magic. And with Universes Beyond, Lord of the Rings was our first entry point into that Universes Beyond kind of series launch. Our original hypothesis was, okay, this is a way for us to expand the player base. That's always been Magic's big kind of focus areas, how do you bring more players into the game. And shortly after Lord of the Rings launch and we're looking at all the data, we kind of stepped back and said, "Hey, we didn't -- we don't know if that really did that. It definitely engaged the player base, and it brought in lapsed users, but we weren't sure that it was bringing in new users. Now here we're sitting 1.5 years later and we can very much see in the data that we're looking at, that user base or that player base, it has expanded. So the growth of Magic is being fueled by not only the loyalists and the fans that have been with it forever, but it's also being fueled by players that are new or who have been brought in over the past 1.5 years. We saw our Wizards Play Network. Most of Magic, we've distributed mass channels, but most of Magic is distributed through the Wizards play network, these hobby shops, we saw 20% growth in distribution this past year. So we're continuing to see just demand for our products -- for the product there. We are also -- when you think about the launches themselves, Magic is this balance between our owned IP as well as in the Universes Beyond. And then we do things that are called the backlist, our backlist products and these are previous releases, the demand for our backlist product. We really started to see that momentum pick up at the end of last year, and it has continued into this year. So these are sets that we've launched in some time, years ago that are continuing to sell and then we have Secret Layer, which is a direct-to-consumer launch, very specialized offers really target a different type of player, that Secret Layer business. has also been on a tear. So no matter which way you come at Magic in the ecosystem, all of the KPIs are pointing to health from the casual player up to the competitive player. And that is a business we were joking in the last 1-on-1 that I just had, like, okay, 46% growth in Q1 that might be tough to beat next year. But definitely, Magic is set up for a good few years of growth. On the gaming side of it, we have had over the past couple of years, success in our digital licensing business. So obviously, MONOPOLY GO! I think last year, when we were at this conference, probably the lion's share of the questions were around MONOPOLY GO! This year, it's going to be tariffs. Last year was MONOPOLY GO! So the MONOPOLY GO and our partnership with Scopely, Baldur's Gate 3 in our partnership with Larian, that is going to continue to be an important part of our gaming strategy. We also, in February, announced a partnership with Saber Interactive, where it is a co-development. So we're coming to the table, they're coming to the table. We're co-investing in the development of a new game. And then we have the complete opposite end of the spectrum where we are 100% building, supporting, publishing, investing in our own video games, across each of those vectors it's a different investment and it's a different return profile. And so we believe that the diversity of how we're approaching gaming is a smart way to lean into some areas of opportunity without putting too much risk on the table. Again, anchoring back to Playing to Win, gaming, growth, video games is core to that, and we feel like we've got the IP to play in that space.

So maybe before we get to tariff. There's been a lot of speculation and concern and back and forth on the health of the U.S. consumer, how would you describe the consumers' health? What have you seen in terms of volatility in POS over this year? And where do you fall out in the -- in this prospect of consumer is healthy, but slowing, consumer is healthy, but there was pull forward versus some sort of post-holiday lull situation?

I mean my very short answer is we haven't seen any material change in the consumer. Our holiday played out a bit better than we expected. Q1 played out better than we expected. And Easter was -- it was good. It was strong. But the impact of tariffs isn't any worry yet. it's not hitting my -- it's hardly hitting my balance sheet right now. It's certainly not hitting my P&L. And so there hasn't been this price inflation that would be weighing on consumers. So the -- this is the biggest unknown and the biggest question is how the consumer is going to show up during the holiday. When you think about Hasbro, 2/3 of our CP revenue happens in the last 2 quarters of the year, right, that makes sense of where the holidays are situated. As we look back at other big kind of black swan moments of the GFC or COVID, interestingly, Hasbro grew during both of those periods. The toy industry didn't and the broader retail sales didn't, but Hasbro did. So there's there is a scenario where the consumer is going to buy Christmas presents, they're going to buy birthday presents. So there is a -- today, we haven't seen a change in behavior and we're -- there's a myriad of options of how this as we go into the back half of the year. But we're optimistic, particularly given the news on Monday that pricing, pricing was always going to be our last lever that we worked so hard over the past 2 years to get our pricing in the sweet spot. It was always going to be our last lever. The announcement on Monday makes that a bit more realistic that we're going to be able to contain price points to a place where it doesn't, you don't see it show up in the consumer as much as we would have anticipated if it was at 145%.

So it's a broad, great segue into the tariff question. So what is different with -- there's a lot underneath that. I appreciate. What's different with the 145% with the 30%? And then more specifically.

Do I have to tell you about math. 145% is greater than 30%. Okay. Yes. Yes.

And so like to what degree would you anticipate pricing going through on average on the CP side of your assortment? And -- and to what degree would you expect a negative elasticity event?

Yes. Good question. So I'll go -- so obviously, Monday's news was a pleasant surprise, and it is less for sure. And it has changed. The agility has been the name of the game. And again, the last 1-on-1, they said, is anything set in stone. I'm like nothing can be set in stone in this environment. It's all about making the best decision based on the most recent facts. So Monday for us at Hasbro was the, okay, now how do we think about all of the elements of the action plan that we have been putting in place as it relates to 145% pricing included. So a lot of the pricing moves that we had intended, we've paused. There are some that will still go through because it just makes sense to put them through, but many of the ones have been paused. We have also, through the -- even when it was at 145%, we had roughly, call it, 45%, 50% of our portfolio was at the $20 or less and we were working to make sure that coming out on the other side of tariff, if it were to stay at 145%, still 45% to 50% of our portfolio would have been $20 or less. So there's what -- Monday's announcement allows us for us to go back to those products where we were taking pricing and be very thoughtful about where it still makes sense and where it doesn't anymore.

So trying to put numbers to that. So would you -- was the prior view of something that was made in China, you weren't -- would have taken double-digit pricing and now it's mid-single digits?

It wasn't a 1 size fits all. Again, we were taking a little bit of a different approach compared to what you read about. We were being very surgical. Again, we had worked so hard to get our pricing to the right zone. We didn't want to unwind it and just be like, okay, everyone gets the 145% on. We were leveraging all of the different levers in our P&L to offset the tariff where pricing made sense and we thought it was tenable, we were planning to take it. And again, it wasn't like 1 product got -- everyone got the same rate. There were some products that maybe got a little and then there were some products that were getting more. There were some products that we just chose, no we're not going to actually produce anymore because it doesn't make sense with that cost infrastructure to produce it and ship it into the U.S. Interestingly, some of the new complexity we added was the portfolio -- some of the portfolio was only going to be for the international market. So like we hadn't really ever taken that approach before, where you're tailoring the product line by market, but it was something that we were prepared to do at a 145% scenario.

You had laid out gross in that potential tariff headwinds. The 145% was, I think, $300 million and then $180 million, so where does the 30% fall in that?

Less than that. That's what I mean. The other end of the range, right, was 50%, and it was $100 million. So think, call it, $50 million to $70 million is what that number becomes just math. I'm not giving you any shocking secret, it just becomes a math exercise. Then it becomes about all the levers that you're working underneath to figure out the net impact. And again, as we -- a 30% world, it's very different from a 145% on how we're treating decisions like pricing, how we're treating allowances, how we're working with our retailers on promotions, et cetera. All of that remains fluid and is changing.

Math question. So it's -- you had a linear relationship between the 50% to the 145%. Why is that nonlinear? Why isn't the impact, the net impact less as you go down the tariff scale?

Oh, it will -- it will ultimately be less, absolutely. The levers -- remember with the waterfall bridge that I laid out during earnings, we can calculate the math part of the question. We can calculate Wizards and that Wizards is sticky. And then we had that bucket that was cost savings that we said that's the 1 that can move up and down a little bit to go into the equation. So that's why it's not a perfectly linear because embedded in that bucket were some of the actions that we were taking on the supply chain. At a 145%, how we were thinking about diversifying our production looks different than it does now. I will say 1 of the big move from a manufacturing standpoint and how we're thinking about reshoring or onshoring. Today, we make a lot of our board games in the U.S. Most of our Magic production is in the U.S. and we are actively exploring what are the other pieces of the portfolio that make more sense to come here. So all of those supply chain moves that were embedded in that last bar start to -- in the new input on Monday changes some of that decision-making.

Yes. So I would love to open it up to the audience for some questions.

So when you're not here having fun with us and on your senatorial review. What is the management team back at headquarters kind of talking about in the future of the business for 3 to 5 years out? A lot of the stuff we're talking here is like a little more immediate. I remember there was a period of time where you invested in eOne, thinking that the trajectory of the business would be down an entertainment path. Are there avenues you're starting to have healthy debates and discussions around now about the future?

Oh my goodness, absolutely. The launch of Playing to Win. I mean, we internally obviously launched it before we -- or as an executive team, we were working through it, obviously, much longer than the rest of you have been absorbing it. So yes, we have been very focused on the next, call it, 3 years and how do we capitalize on the growth opportunity is and the potential of our IP against those growth, opportunities. So the beauty of how our business is structured, the lion's share of this immediate kind of tariff situation is sitting on 1 side of the business. Most of the growth opportunities are sitting within Wizards. So the debates and the discussions that we're having in the executive team is how do you get that 1 side that's dealing with the tariff pressure contained self-sufficient so that we can keep investing and growing and putting our capital towards all of these growth levers. But I will tell you, we have not slowed a single decision on the Wizards side of the business. So we have continued to invest at pace on video games. John Hight has come into the organization and has really taken a very thoughtful view of not only the current pipeline within all of gaming, but what are the opportunities that he sees that we can step into over the next few years. And video games and anything on gaming is a longer -- it's not an immediate thing it comes true in the next year. So we have continued to try to keep those 2 worlds and the decisions associated with those 2 worlds separate. But it is not lost at all. Chris, myself, the executive team that we need to keep creating the capacity for Wizards to grow.

You had said at the beginning that part of the last couple of years was a cleanup effort on the balance sheet. Just curious what did you do there? And are you where you want to be? And kind of could you just qualitatively characterize what the philosophy is on the balance sheet as you go forward?

Yes. balance sheet health is at the top of our priority list. So the past couple of years, really focused on 2 areas. One is inventory. So stepping into the role, coming off of COVID, I know that we were not alone in inventory balances being too high. So I think it was my first year, right, my second -- I think it was my second or third earnings release, which was super fun. We announced that we were writing off the inventory and just cleansing it. So we have spent a fair amount of time making sure that our inventory, not only our own inventory, but our retail inventory is healthy and it stayed healthy. I mean we are at levels even pre-COVID in terms of inventory health. So we're starting kind of this role of the holiday in a really, really good spot. That allowed us from a cash flow and net working capital standpoint, gave us a lot of flexibility. The second area of focus on the balance sheet has been all about debt. With the eOne acquisition, the company levered up quite a bit to pay for eOne. With the divestiture, we were able to get rid of all of the variable debt, and we have then been slowly leveraging the cash that we were able to free up from inventory to buy back or pay down the debt stack that we have in front of us. So those are the 2 areas of primary focus on the balance sheet. In terms of where do we want to be, inventory is in a good spot. And I would say kind of with both of my hats on as CFO and COO, I am being really cautious about not getting ourselves back into the same position that we had coming out of COVID. So we're taking all of the learning, the good and the bad learning on COVID is how we're thinking about the inventory, so we don't find ourselves in that same position. And we still want to be making progress towards bringing down the debt and we talked about it a bit on our earnings call that, that is a priority for the company. Even though our leverage targets, we're getting closer to where we want to be right around that, call it, 2.5x, we're still sitting on too much debt. So we're going to continue leveraging our cash to bring that down.

Two-part question. Can you give us a sense of your compensation structure? How is -- what are some of the key metrics? And maybe touch upon some of the SVPs, how they're compensated. And is there versus the prior management? And secondly, I'm not very familiar with your story, so apologies for a basic question. But these days, kids are spending a lot of time online. And so how should we look at your stock in that lens? Kids are not really playing maybe at least my kids are not playing as many board games that I want them to play. How do you view that world...

Got to get them hooked on MONOPOLY GO! It's a Board game and just another. So okay, 2 very different questions. So on comp structure, so I'll do SVPs and above and then there's the executive team. So -- and really, the whole company, the whole company is incented on revenue, operating profit and then -- yes, operating profit and then the ultimately the whole company. So each segment. So if you're toys, you're incented on the toy revenue and the toy operating profit and then they have an element of their comp that is total Hasbro, same thing for Wizards. [indiscernible] that's Hasbro. Anyone that sits in corporate, it's super simple. It's -- we're incented on revenue and operating profit. For the executive team, we have a mix of both RSUs and PSUs and that is tied to shareholder return. So we're linking very strongly in with what matters most to investors. In terms of the second part of your question, the second different question of how do -- where kids are going, you're hitting on the exact theme that is Playing to Win. Again, when you focus on play and you focus on partnerships, it opens up we're going everywhere that play is. When we talk about gaming, we're going everywhere where gaming is, not just in board games. I think 1 of the unique strengths that Hasbro has is our IP can move across all of these different vectors. So I teased you about MONOPOLY GO!, but right, there is a very -- there is a correlation right now happening between the board game MONOPOLY GO! and the digital game, that is MONOPOLY GO! It is creating awareness, both and they're creating awareness for each other. And so we continue to see that as a big opportunity for us. But we are actually leaning into where kids and, frankly, adults are playing, which is more in the digital space. And we think a lot of our investments in growth area is hitting exactly in that trend that you're saying. I thought you were handing it off again.

Probably more likely throw it at somebody. So the world of your distribution has evolved over years. There was a year, a time back when Toys "R" Us actually existed and probably at a -- almost like a partnership in place. That era is gone, you now have probably Target, Kmart -- sorry, a Walmart and a few others who are probably now. But how is that world changing for you? And what does that require you to do better at in distribution? And are you having to take more control on a direct-to-consumer effort as well, too?

Yes. I mean, yes, there's a couple of things in there. Direct-to-consumer continues to remain a big opportunity for us. We're still, I would say, in the early stages of that. It's about on the toy side, it's roughly a $100 million business for us, mainly servicing the fan channel and some unique bespoke items that you only get there. So that is an opportunity. But you're right, the Toys "R" Us model, like if you go back and both Chris and I have spent a fair amount of time learning from the last 5 to 10 years of this business because, Chris, he came up through Wizards. He doesn't have the background in toys as well. So we had to do a fair bit of what happened. There is a lot of catalysts. Everyone wants to use COVID as the catalyst. Toys "R" Us, it was also as big of a catalyst because to your point, the model for Hasbro, and I'm probably surmising many toy companies was Toys "R" Us soaked up a lot of inventory and inventory hides a lot of sins. And so we didn't have to be super precise on our demand planning. We didn't have to be super precise on supply planning because at the end of the day, if we had too much, we'd figure out how to sell it, and Toys "R" Us was a fantastic partner in that. As that comes out and COVID hit, things got all messy. But where we've been spending a lot of our time over the past 2 years is putting that rigor into our operations. So we started with supply planning and all of the work that we did to clean up inventory and putting all the right processes, systems, governance leaders in place to make sure our supply planning organization function was operating within the right guardrails. This year, our entire focus has been on demand planning, which you can imagine how fun it is to be a demand planner right now in the toy space. But we -- it's the same type of thinking of process to people to technology, all the way through putting in different guardrails there. So we've had to really change how we're thinking about the model. The targets that we have for inventory, we have brought those way down. So again, back in Toys "R" Us days, it was okay if you were carrying 140 to 150 days of inventory. Here that is not something that we want to do. So we've really worked hard to keep ourselves -- to put the rigor in and keep ourselves within those guardrails.

[indiscernible] in terms of where you're thinking of growing the employee base or if there is any change...

I'm sorry, can you -- the first part of that..

Could you speak to the location strategy for employees?

Sure. So we have kind of a dual -- I mean, our official headquarters is in Pawtucket, Rhode Island. We also -- our Wizards business is run out of Seattle. And then our development team is located and our design and development team is located in Hong Kong. Those are like the big 3, I would say, hubs for employees. We also have then international, as you think about the commercial business, the marketing business, we have a European presence. We have obviously an APAC presence, Lat Am presence. So we're setting up the company to be hubbed around those main locations.

A quick question on your cash flows. So I'm just looking at some data, shows like last 12 months, you earned about $800 million in cash flow from ops, a couple of hundred million in CapEx and then $400 million in dividends. You have about $200 million left. How do you think about share buybacks and given like your stock rate over the last 5 years hasn't really done too well.

Yes. Yes. Good question. Yes, the prioritization that we've had on capital allocation, I mean, you kind of rattled it off, right, the job 1 is to invest in the growth of the business. Job 2 had been the dividend and job 3 had been the debt buydown. We've kind of played around with that order of 3 and 2, like which 1 is more important. In the environment that exists today, clearly, getting our balance sheet and buying down that debt remains a priority for us. As part of Playing to Win, we said that in '26 is probably when we would have the capacity to start thinking about share buybacks. We want to get that debt stack down a bit. I've got a big note that's coming due in November of '26. I'd like to whittle that down as much as possible, particularly given the environment. But then that -- with the launch of our first video game, which is EXODUS, that provides a nice catalyst to cash, which opens up some different opportunities on share buybacks. But we've kind of thought '26. That would be the year for us to start thinking through that.

[indiscernible].

Well, we -- so we have said roughly we spent $250 million is what we said for this year. Generally -- yes, plus or minus, generally speaking, yes, it will be within there. And clearly, as we manage cash, it remains fluid, like we're continually looking at what comes in, what goes out. Yes. Yes.

Thank you, everybody.

Thanks, everyone.