Hasbro reported its third quarter 2024 earnings results in the morning of 24 October, prior to the opening of NYSE.

Revenue declined 15% year-over-year to $1.28 billion. Net earnings were $223.2 million, or $1.59 per share, compared to a loss of $171.1 million, or $1.23 per share, last year. Adjusted EPS was $1.73.

Revenues decreased across all segments, with consumer products declining 10%, Wizards of the Coast and Digital Gaming falling 5%, and Entertainment dropping 86% year on year.

For the full year of 2024, Hasbro expects the consumer products segment revenue to be down 12-14% and Wizards segment revenue to be flat to down 1%.

Chris Cocks, Hasbro CEO, said: “Outperformance within our gaming and licensing businesses in the third quarter highlights the strength in two of our highest profit areas. Our key initiatives around digital, licensing and reinvigorating our product innovation are bearing fruit.”

Gina Goetter, Hasbro chief financial officer, said: “We continue to execute our turnaround efforts and are poised to finish the year with improved profitability, cash flow and operational rigour.”

Further details emerged in Hasbro’s Q3 conference call, with Chris Cocks putting the results into context.
Chris said: “Q3 continued to demonstrate the bottom-line benefits of the structural and strategic changes we are making at Hasbro. Two of our strongest profit areas, games and licensing, outperformed, expanding operating profit margin for the third consecutive quarter. The dynamics we’re observing across Magic and D&D in both analogue and digital reinforce our confidence in the long-term health of the brands.

Our competitive advantage as an IP licensor is also gaining steam as we see the staying power of Monopoly Go! the resurgence of fan favourite brands like My Little Pony and strong POS growth in our out-licensed toy portfolio.

“Consumer Products revenue came in lighter than we anticipated, offset by strength in Wizards, but the pace of the decline moderated significantly versus the first half. We should see that trend continue into Q4. We’re already seeing some encouraging datapoints across toys and board games that prove our innovation is getting sharper and retail alignment is healthy. While we are lowering our full year revenue guidance for the segment, we are seeing a solid return to profitability for this business. An improving bottom line coupled with strong fundamentals across the balance of our portfolio augur much improved profitability and cash flow for Hasbro both in 2024 and beyond.

“This resilience in our business model has been years in the making, strategically shifting our mix towards games, digital, and IP licensing – the future of play.”

Third Quarter 2024 Highlights

• Third quarter Hasbro, Inc. revenue declined 15%; excluding the eOne divestiture, revenue declined 9%.
• Operating profit of $302 million and operating margin of 23.6% includes $27 million of costs for intangible amortisation associated with eOne and costs associated with the company’s transformation.
• Adjusted operating profit of $329 million (-$14 million v previous year) and adjusted operating margin of 25.7% (+2.9 points v previous year), driven by favourable 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.
• Paid $98 million in cash dividends to shareholders in the quarter.

Year to Date 2024 Highlights

• Year to date Hasbro 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% includes $96 million of costs for intangible amortisation associated with eOne, loss on disposal of business and costs associated with the company’s transformation.
• Adjusted operating profit of $726 million (+$200 million v previous year) and adjusted operating margin of 23.9% (+9.8 points v previous year), driven by favourable 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 favourability from working capital.

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