On July 25, 2024, Hasbro Inc (HAS, Financial) released its 8-K filing for the second quarter of 2024. Hasbro, a branded play company known for its iconic brands such as Transformers, Nerf, and Magic: The Gathering, reported a mixed performance with notable achievements and challenges.
Performance Overview
Hasbro Inc (HAS, Financial) reported a decline in revenue by 18% year-over-year, primarily due to the divestiture of eOne. Excluding this divestiture, revenue declined by 6%. The company saw a 20% growth in the Wizards of the Coast and Digital Gaming segment, which was offset by a 20% decline in Consumer Products and a 90% decline in Entertainment revenue (30% decline excluding the eOne divestiture).
Operating profit for the quarter was $212 million, with an operating margin of 21.3%. Adjusted operating profit stood at $249 million, reflecting a significant improvement from the previous year, driven by favorable business mix, supply chain productivity, and reduced operating costs.
Financial Achievements
Hasbro Inc (HAS, Financial) reported net earnings of $0.99 per diluted share, surpassing the analyst estimate of $0.75. Adjusted net earnings were $1.22 per diluted share. The company also achieved $40 million in net cost savings for the quarter and approximately $90 million year-to-date, putting it on track for its full-year net savings commitment.
Inventory levels were significantly reduced, with Hasbro-owned inventory down 51% year-over-year, including a 55% decline in Consumer Products inventory.
Segment Performance
Consumer Products Segment: Revenue decreased by 20%, driven by shifts in entertainment timing, planned business exits, and reduced closeouts. The segment reported an operating margin of -1.8% and an adjusted operating margin of -0.1%.
Wizards of the Coast and Digital Gaming Segment: Revenue increased by 20%, driven by the launch of MAGIC's Modern Horizons 3 set and strong performance in Licensed and Digital Gaming revenue. The segment's operating profit increased by 74%, with an operating margin of 54.7%.
Entertainment Segment: Revenue declined by 90% due to the sale of eOne Film and TV. Excluding this impact, revenue declined by 30%. The segment reported an operating loss of $1 million, compared to an operating loss of $324 million in the same quarter last year. Adjusted operating profit was $18 million.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Revenues | $995.3 million | $1,210.0 million |
| Operating Profit | $212.1 million | $(188.6) million |
| Net Earnings | $138.5 million | $(235.0) million |
| EPS (Diluted) | $0.99 | $(1.69) |
Balance Sheet and Cash Flow
Hasbro Inc (HAS, Financial) reported total assets of $6.86 billion as of June 30, 2024, compared to $8.61 billion as of July 2, 2023. The company’s cash and cash equivalents increased to $626.8 million from $216.6 million in the same period last year. Operating cash flow for the first half of 2024 was $365.1 million, up from $119.2 million in the prior year.
Analysis and Outlook
Hasbro Inc (HAS, Financial) demonstrated resilience in its Wizards of the Coast and Digital Gaming segment, which continues to be a strong growth driver. However, the company faces challenges in its Consumer Products and Entertainment segments, primarily due to the eOne divestiture and shifts in entertainment timing.
The company’s focus on cost savings and inventory reduction has yielded positive results, contributing to improved margins and profitability. With the raised full-year guidance, Hasbro Inc (HAS, Financial) aims to continue its turnaround efforts and capitalize on its strong brand portfolio.
For more detailed insights and financial tables, visit the full 8-K filing.
Explore the complete 8-K earnings release (here) from Hasbro Inc for further details.
