Margin Outlook and Corporate Profit
Q: Why can't you reach 20% margin this year? Any non-recurring profits?
A: While our margin performance is strong, about half of the $45 million profit in the corporate segment came from a stock compensation adjustment that will not repeat. This adjustment contributed approximately 2.5% to our margin, which won't carry forward. Factors like supply chain performance are positive, but we need to see how the year unfolds before committing to the 20% margin target ahead of 2027.

Digital Growth and MONOPOLY GO!
Q: Given strong MONOPOLY GO!, why not raise digital guidance?
A: It's too early in the year to adjust our guidance, but trends are favorable. If current revenue and advertising spend continue, we could see upside and likely exceed the minimum guarantee within Q2. We're monitoring performance and may update guidance as we progress through the quarter.

Consumer Products POS Trends and Q2 Outlook
Q: How is Hasbro's POS and outlook for Q2 Consumer Products?
A: In Q1, our POS showed healthy trends, especially in March, continuing into April. However, we're cautious about Q2 due to a lighter entertainment slate compared to last year, which included releases like the D&D movie and Transformers: Rise of the Beasts. Reduction in closeout volumes is a positive for margins but negatively impacts revenue.

Positive Bottom Line Comps for Consumer Products
Q: Will Consumer Products see positive bottom line comps?
A: Yes, we expect margins to improve along with the top line. We'll be down similarly in Q2, but anticipate a rebound in Q3 and return to growth in Q4. Margins are growing, and the absence of last year's inventory overhang will further expand margins in Q4.

Performance of Magic: The Gathering and Future Sets
Q: How is Fallout Commander performing, and outlook on future Magic sets?
A: Fallout Commander is probably our best-performing Commander set ever. Engagement in MAGIC has reached pre-pandemic levels. We're optimistic about upcoming sets like Outlaws of Thunder Junction and view future sets like Final Fantasy and Marvel as significant, potentially matching the success of Lord of the Rings. Marvel is a huge IP, and Final Fantasy sales in Japan may dwarf what we did with Lord of the Rings.

EPS Guidance and Street Expectations
Q: Can you refine guidance to indicate EPS expectations?
A: We don't provide specific EPS guidance. Models align closely with our internal calculations. Keep in mind we had about $0.10 of favorability from a stock compensation adjustment that will carry forward, but we're not giving specific EPS guidance at this point.

Margins for the Rest of the Year
Q: What's the expected margin cadence for the year?
A: Our focus on games, IP, and toys is driving margin improvements. Supply chain productivity is offsetting inflation, and operating expense reductions continue. While Q3 margins may dip slightly year-over-year due to last year's successes like Baldur's Gate 3 and MONOPOLY GO!, our cost structure improvements will support margins throughout the year.

Full-Year Industry Expectations
Q: Have your expectations changed for full-year industry trends?
A: Q1 was positive, with momentum continuing into Q2. It's early, and the toy industry has been unpredictable recently. We're monitoring the situation, especially due to a pause in entertainment content that drives toy sales, but remain cautiously optimistic.

Update on Magic Arena
Q: What's the update on Magic Arena's performance?
A: Magic Arena was down slightly in Q1, mainly due to not lapping last year's reset for Shadows over Innistrad. Excluding that, it aligned with the overall property, which was up about 4% in tabletop. We're investing in Arena and planning a platform refresh over the coming years to broaden its appeal.

Corporate Line Item and Operational Excellence
Q: What's the composition of the $45 million corporate profit, and will it continue?
A: Half of the $45 million profit came from a non-recurring stock compensation adjustment. The other half is due to operational excellence programs like purchase and people cost savings. This favorability will be allocated back to segments over the year; it's a timing element. Last year, corporate operating profit was roughly $20 million annually.

Impact of MONOPOLY GO! on Financials
Q: Could MONOPOLY GO! contribute $50–$70 million or more?
A: We're not prepared to provide specific sizing, but if current trends continue, it will be favorable, and we may exceed the minimum guarantee within Q2.

Freight Market Impact
Q: How is the freight market affecting margins given Middle East disruptions?
A: The impact has been immaterial, less than a couple hundred thousand dollars. Freight rates are decreasing, benefiting our P&L. Our team is effectively managing logistics to maintain costs.

Marketing Strategy Success
Q: What are you doing differently in marketing that's working?
A: We're focusing on measurable, primarily digital spend, investing near the point of sale. This has significantly improved our return on advertising spend. Continued success will drive top-line growth with positive flow-through to the bottom line due to our cost efficiencies.

Exposure to China
Q: What's your current exposure to China?
A: Approximately 40% of our production volume is sourced from China, but only 5–10% of total profit is associated with China. Many of our profit pools are nearshore, which is advantageous given global freight uncertainties.

Licensing Strategy and Brand Ownership
Q: Does licensing success change your need to own brands?
A: No, it's validating our choice to license certain brands that don't meet our revenue and margin thresholds. We've likely completed brand outsourcing, focusing now on leveraging our brands for category expansion through partnerships.

Timing Shifts in Magic Revenue
Q: Were there timing shifts supporting Magic's quarter, and what's the outlook?
A: A bit of Outlaws of Thunder Junction shifted from Q2 to Q1, which helped. We don't anticipate significant quarter-over-quarter shifts for the rest of the year, but Q4 may have a lighter release schedule.

Consumer Products Margin Improvement
Q: Can you discuss Consumer Products margin trajectory into 2025?
A: We're on track to achieve our 4–6% margin guidance for Consumer Products this year. We're aiming for double-digit margins by 2025 through cost structure improvements, supply chain refinements, and design-to-value initiatives, which will have more impact in 2024 and 2025.

Impact of Easter Timing on Results
Q: How did Easter timing affect the quarter and outlook?
A: Easter provided a modest lift of about 1–2 points in the quarter. Positive POS trends are continuing into April, so the impact on Q2 is expected to be minimal.

Freight and Labor Cost Inflation
Q: Why are you seeing cost inflation when others report deflation?
A: We're experiencing about 2 points of inflation, mainly in labor and materials like resin. Freight rates are stabilizing, and we're focusing on supply chain productivity to offset costs, leading to gross margin improvements.

Licensing Strategy Continuation
Q: Will you continue licensing out brands like POWER RANGERS?
A: We've likely completed our brand outsourcing. Our strategy is now to leverage our brands for category expansion through partnerships, not necessarily to own all brands in-house.