Hasbro: Reports Third Quarter 2024 Financial Results

Hasbro, Inc. (NASDAQ: HAS), a leading toy and game company, today reported financial results for the third quarter of 2024.
“Outperformance within our gaming and licensing businesses in the third quarter highlights the strength in two of our highest profit areas,” said Chris Cocks, Hasbro's Chief Executive Officer. “Our key initiatives around digital, licensing and reinvigorating our product innovation are bearing fruit.”
“We continue to execute our turnaround efforts and are poised to finish the year with improved profitability, cash flow and operational rigour,” said Gina Goetter, Hasbro’s Chief Financial Officer.
Third Quarter 2024 Highlights
  • Third quarter Hasbro, Inc. revenue declined 15%; excluding the eOne divestiture, revenue declined 9%. Wizards of the Coast and Digital Gaming segment declined 5% due to the lap of Baldur's Gate 3 and Consumer Products declined 10% behind softer volume.
  • Operating profit of $302 million and operating margin of 23.6% includes $27 million of costs for intangible amortization associated with eOne and costs associated with the Company's transformation.
  • Adjusted operating profit of $329 million (-$14 million vs. PY) and adjusted operating margin of 25.7% (+2.9 points vs. PY), driven by favorable business mix, supply chain productivity, and lower operating costs.
  • Delivered approximately $87 million of net cost savings and approximately $177 million year to date; on track for full-year net savings commitment.
  • Hasbro-owned inventory is down 39% versus the prior year, including a 40% decline in Consumer Products inventory versus the third quarter of 2023.
  • Reported net earnings of $1.59 per diluted share; adjusted net earnings of $1.73 per diluted share benefiting from favorable business mix and improved profitability.
  • Paid $98 million in cash dividends to shareholders in the quarter.
Third Quarter 2024 Segment Details
  • Wizards of the Coast and Digital Gaming Segment
    • Revenue decreased 5% as growth in MAGIC: THE GATHERING was offset by expected declines in Licensed and Digital Gaming due to the launch of Baldur's Gate 3 in the third quarter of 2023.
    • MAGIC: THE GATHERING revenue increased 3% behind growth in tabletop and ARENA.
    • Monopoly Go! Contributed $30M of revenue, in line with guidance.
    • Operating profit declined 11% and operating margin of 44.9%, down 3.1 points due to lower digital licensing revenue.
  • Consumer Products Segment
    • Revenue decrease of 10% driven by exited brands, reduced closeouts and softer than anticipated volume; declines partially offset by new product innovation and strength in consumer products licensing.
    • Operating margin of 14.1% and adjusted operating margin of 15.1% (+3.9 points vs. PY) behind the favourable mix, supply chain cost productivity and reduced operating expenses offsetting the volume deleverage.
    • Growth in Beyblade, TRANSFORMERS and FURBY and licensed consumer products for MY LITTLE PONY.
  • Entertainment Segment
    • Revenue decline of 86% impacted by the eOne divestiture; absent this impact, revenue declined 17% driven by the timing of the delivery of deals.
    • Operating profit of $10 million compared to an operating loss of $469 million in the third quarter of 2023.
    • Adjusted operating profit of $13 million compared to adjusted operating profit of $8 million in the third quarter of 2023.
Year to Date 2024 Highlights
  • Year to date Hasbro's revenue declined 18% driven primarily by the eOne divestiture; excluding this impact, revenue declined 8%. Growth of 7% in the Wizards of the Coast and Digital Gaming segment was offset by declines in Consumer Products (-16%) and Entertainment (-87%, or +1% excluding the eOne divestiture).
  • Operating profit of $630 million and operating margin of 20.8% include $96 million of costs for intangible amortization associated with eOne, loss on disposal of business and costs associated with the Company's transformation.
  • Adjusted operating profit of $726 million (+$200 million vs. PY) and adjusted operating margin of 23.9% (+9.8 points vs. PY), driven by favorable business mix, lower royalty expense, supply chain productivity and lower operating costs.
  • Reported net earnings of $3.00 per diluted share; adjusted net earnings of $3.56 per diluted share benefiting from improved operations and business mix.
  • Operating cash flow of $588 million vs. $335 million in the prior year driven by the profitability improvement and favorability from working capital.
Year to Date 2024 Segment Details
  • Wizards of the Coast and Digital Gaming Segment
    • Revenue increase of 7% driven by growth in MAGIC: THE GATHERING and strength in Licensed and Digital Gaming.
    • Tabletop revenue increased 3% behind growth in MAGIC: THE GATHERING.
    • Monopoly Go! Contributed $74 million year to date.
    • Operating profit increased by 30% and operating margin of 47.0% due to a higher digital licensing revenue mix of revenues and lower expenses, including royalties.
  • Consumer Products Segment
    • Revenue decrease of 16% driven by exited brands, reduced closeouts, and softer than anticipated volume offsetting growth in licensed consumer products.
    • Operating margin of 3.6% and adjusted operating margin of 5.1% driven by favourable licensing mix, cost savings and productivity gains.
  • Entertainment Segment
    • Revenue decline of 87% impacted by the sale of eOne divestiture; absent this impact, revenue increased by 1% driven by the timing of the delivery of deals.
    • Operating profit of $15 million compared to an operating loss of $801 million year to date 2023.
    • Adjusted operating profit of $49 million compared to an adjusted operating loss of $15 million year to date 2023.
See the financial tables accompanying the press release for a reconciliation of GAAP to non-GAAP financial measures.
2024 Company Outlook1
For the full year, the Company now expects:
  • Consumer Products Segment revenue down 12% to 14%; Adjusted operating margin 4% to 6%.
  • Wizards of the Coast and Digital Gaming Segment revenue is flat to down 1%; Operating margin of approximately 42%.
  • Pro-Forma Entertainment segment revenue is down $15 million; Adjusted operating margin of approximately 60%.
  • Total Hasbro Adjusted EBITDA of $975 million to $1.025 billion.
  • Gross savings target of $750 million by year-end 2025.
2024 Capital Allocation priorities:
  • Invest in core business.
  • Return cash to shareholders through the dividend.
  • Continue to pay down debt and progress towards the leverage target.
1 The Company is not able to reconcile its forward-looking non-GAAP adjusted operating margin and adjusted EBITDA measures because the Company cannot predict with certainty the timing and amounts of discrete items such as charges associated with its cost-savings program, which could impact GAAP results.
Dividend Announcement
During the third quarter, the Company paid $98 million in cash dividends to shareholders. The Board of Directors has declared a quarterly cash dividend of $0.70 per common share payable on December 4, 2024, to shareholders of record at the close of business on November 20, 2024.
For the full document click the link below:
Hasbro, Inc
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