Hasbro Earnings Call Nuggets: Underlying Tax Rate Outlook and POS Details

Hasbro (NYSE:HAS) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.

Underlying Tax Rate Outlook

Sean McGowan – Needham & Company.: Couple of questions, one’s a quickie. Deb, what would you say we should be expecting for the balance of the year as an underlying tax rate?

Deborah M. Thomas – SVP and CFO: We would expect our underlying tax rate, Sean, to be consistent with what we said at year-end, somewhere between 26% and 27%.

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Sean McGowan – Needham & Company.: I think one of the things that may have come out of last year’s presentation or the presentation rather at Toy Fair was just how big MAGIC is and how much it’s growing, but I don’t – personally, I don’t have a sense of how that product might be seasonally compared to rest of the business. So can you give us some sense of kind of your order of magnitude? I guess specifically, would sales overall has enough – excluding MAGIC, is it big enough to move the needle that much?

Brian D. Goldner – President and CEO: Hi Sean, good morning. If you look at MAGIC, actually it typically runs fairly flat quarter-on-quarter. It’s more of the least driven, meaning that new releases of characters that contribute to peoples’ cards, to their collection and to their (Indiscernible) playing with. So it tends to be more release-driven based on the content that’s put out in the market, so less seasonal, but it’s driven by the couple of different components as a major online digital component and a mobile component now, as well as the card-based component that’s sold at retail. Remember that four-fifths of that retail is in non-NPD type retail stores, so a lot of hobby shops and lots of hobby shop playing. We did talk about the fact that other parts of our games business was up during the quarter. There were several brands and games that were up in the quarter, and of course our girls business and Preschool and games were all up and girls and games were up significantly in the quarter. So, I think that it was certainly a contributor, but we have a lot of good initiatives working in the first quarter for us.

POS Details

Felicia Hendrix – Barclays Capital: Brian, quick question for you. You had mentioned in your prepared remarks that POS is up for games, but I was just wondering if you could talk about it more broadly across your entire product portfolio.

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Brian D. Goldner – President and CEO: Sure. We look at U.S. data what we see is that, POS was up significantly in girls, it was up significantly in games and up well in Preschool and for obvious reasons down in boys. If you look at the overall POS really in line with inventories was faired far better than our inventory reduction, our inventories were down mid-teens in the U.S. and our own inventory as you know was down 18% despite being up in Asia Pacific. So, we feel very good about what is an early quarter obviously less important quarter for the year.

Felicia Hendrix – Barclays Capital: Just to be clear, you said a point of sales was up better than your inventory reduction and that includes boys?

Brian D. Goldner – President and CEO: Yes.

Felicia Hendrix – Barclays Capital: And Deb on accounts receivable, would you say that the entire release was due to the comps having an extra collection day last year?

Deborah M. Thomas – SVP and CFO: That’s by far the biggest piece of the solution. We said that, if you look back at historical trends in the first quarter for – say the last five years they tends to be around that fixed end day period. We have been decreasing slightly as was the task but we are adding a little bit of extra days because of the longer term receivables as we grow in places like Brazil, where we had growth again this quarter broken that has a slightly longer. But the majority of it was from extra collection. So, if you look at that average that’s the best way to look at the DSO…

Brian D. Goldner – President and CEO: Yes. So, we had one extra week of collections last year.

Felicia Hendrix – Barclays Capital: Final question. Brian, just on FURBY, has that rolled out in all the international countries yet and if not can you just walk us through the schedule?

Brian D. Goldner – President and CEO: It’s rolling out right now in non-English-speaking countries, as you know last year in English-speaking in the second half of year, actually fourth quarter mostly and then throughout the year it’s going to rollout multiple languages, including lots of markets where we have set up emerging markets theme since the last FURBY launch. So, you’ll see certainly FURBY in Brazil and in Russia and Korea and rolling into China. So, again FURBY will go worldwide throughout the year.

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Felicia Hendrix – Barclays Capital: By the end of the year it will be all rolled out.

Brian D. Goldner – President and CEO: It will be everywhere and then we have a brand new FURBY and FURBY line coming and we’ve not said, much about that publicly, except this morning we did note that in English-speaking countries we’ll rollout our call it FURBY 2.0.

A Closer Look: Hasbro Earnings Cheat Sheet>>