Hasbro have reported their first quarter financial results for 2024, with an operating profit of $116.2 million, however drilling down, the partner brands segment is down by 34% year-on-year with no mention of Marvel or Star Wars.
“The first quarter was a good start to the year for Hasbro; we are continuing to see the results of our transformation work,” said Chris Cocks, Hasbro Chief Executive Officer. “Performance from our licensing portfolio shows the strength of our brands and we continue to fuel innovation in games and toys as we expand our reach across play patterns to fans of all ages.”
“We made solid progress in our turnaround efforts in the first quarter,” said Gina Goetter, Hasbro, Chief Financial Officer. “We landed revenue where we expected and drove significant operating profit improvement led by our operational excellence program and improved business mix. We remain on track for our full-year commitments.”
First Quarter 2024 Highlights
• First quarter Hasbro, Inc. revenue declined 24% driven primarily by the eOne film and television divestiture; excluding the divestiture, revenue decline 9% with growth in the Wizards of the Coast and Digital Gaming segment (+7%) and Entertainment (+65%) more than offset by declines in Consumer Products (-21%).
• Operating profit of $116.2 million includes $32.4 million of intangible amortization associated with eOne, loss on disposal of business and costs associated with the Company’s transformation; Operating Margin of 15.3%
• Adjusted operating profit of $148.6 million (+$101.4 million vs. PY) and adjusted operating margin of 19.6% (+14.9 points vs. PY), driven by favorable business mix, supply chain productivity and reduced operating costs.
• Hasbro owned inventory down 53% versus prior year, including a 57% decline in Consumer Products inventory versus the first quarter 2023.
• Reported net earnings of $0.42 per diluted share; adjusted net earnings of $0.61 per diluted share benefiting from improved operations and favorability from a stock compensation adjustment and net interest expense reduction.
• Operating cash flow of $177.8 million vs. $88.8 million in the prior year driven by improved operating results and benefits from working capital.
• Paid $97.2 million in cash dividends to shareholders in the quarter.First Quarter 2024 Segment Details
• Consumer Products Segment
· Revenue decrease of 21% driven by broader industry trends, exited businesses and reduced closeout sales as a result of last year’s inventory clean-up.
· Operating margin of -11.4% and adjusted operating margin of -9.2%; cost savings and productivity gains offset by volume declines.
· FURBY continued to perform well in the quarter supported by the launch of FURBLETS in December 2023.• Wizards of the Coast and Digital Gaming Segment
· Revenue increase of 7% driven by increase in Licensed Digital Gaming revenue behind Baldur’s Gate 3 and Monopoly Go!.
· Tabletop revenue increased 5% behind growth in MAGIC: THE GATHERING shipment timing to support the Outlaws of Thunder Junction release and strong demand for the Universes Beyond Fallout Commander set.
· Operating profit increased 60% and operating profit margin of 38.8% due to higher digital licensing revenue mix of revenues and cost management.• Entertainment Segment
· Revenue decline of 85% impacted by the sale of eOne Film and TV in December 2023; Absent this impact, revenue grew 65% driven by the delivery of PEPPA PIG content.
· Operating profit of $5.8 million compared to operating loss of $8.7 million in the first quarter 2023.
· Adjusted operating profit of $18.2 million compared to adjusted operating loss of $2.5 million in 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 maintains annual guidance and continues to expect:
• Consumer Products Segment revenue down 7% to 12% with 4 points of the decline coming from businesses shifting to an out-license model; Operating margin 4% to 6%.
• Wizards of the Coast Segment revenue down 3% to 5%; Operating margin 38% to 40%.
• Pro-Forma Entertainment segment revenue down $15 million; Adjusted operating margin of approximately 60%.
• Total Hasbro, Inc Adjusted EBITDA of $925M to $1B.
• Gross savings target to $750M 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 leverage target.1The Company is not able to reconcile its forward-looking non-GAAP adjusted operating profit 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 first quarter, the Company paid $97.2 million in cash dividends to shareholders. As previously announced, the next dividend will be payable on May 15, 2024 to shareholders of record at the close of business on May 1, 2024. In 2024, to align with industry best practice, the Company expects future dividend declarations will be made closer to the record date.Conference Call Webcast
Hasbro will webcast its first quarter 2024 earnings conference call at 8:30 a.m. Eastern Time today. To listen to the live webcast and access the accompanying presentation slides, please go to https://investor.hasbro.com. The replay of the call will be available on Hasbro’s website approximately 2 hours following completion of the call.
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