Hasbro Inc (HAS) Q3 2024 Earnings Call Highlights: Navigating Revenue Challenges with Strategic ...

GuruFocus News
5 min read

In This Article:

  • Total Revenue: $1.3 billion, down 15% year-over-year.

  • Adjusted Operating Profit: $329 million, with an operating margin of 25.7%, up 2.9 points from last year.

  • Adjusted Net Earnings: $244 million.

  • Diluted Earnings Per Share (EPS): $1.73, up $0.09 from the previous year.

  • Year-to-Date Revenue: Approximately $3 billion, down 18% year-over-year.

  • Year-to-Date Adjusted Operating Profit: $726 million, with a margin of 23.9%, up approximately 10 points year-over-year.

  • Year-to-Date Operating Cash Flow: $588 million, a $253 million improvement year-over-year.

  • Wizards Segment Revenue: Declined 5% in Q3.

  • Consumer Products Revenue: Declined 10% in Q3.

  • Inventory Levels: Down 40% year-over-year.

  • Cash and Short-term Investments: $1.2 billion at the end of the period.

  • Guidance for 2024 Revenue: Expected to be flat to down 1%.

  • Cost Savings Target: On track for $750 million of gross cost savings through 2025.

Release Date: October 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Hasbro Inc (NASDAQ:HAS) reported strong profit margins, with operating profit margin expanding for the third consecutive quarter.

  • Magic: The Gathering continues to lead the trading card genre, showing growth despite tough comparisons from last year's releases.

  • Licensing revenue, particularly from MONOPOLY Go, is generating approximately $10 million per month, showcasing the strength of Hasbro's IP licensing strategy.

  • The company's strategic shift towards games, digital, and IP licensing is paying off, with improved profitability and cash flow expected in 2024 and beyond.

  • Hasbro Inc (NASDAQ:HAS) has successfully reduced inventory levels, achieving the healthiest inventory position in seven years, which benefits gross margins.

Negative Points

  • Consumer products revenue came in lighter than anticipated, leading to a lowered full-year revenue guidance for this segment.

  • There was a significant decline in action figures, particularly Star Wars, impacting overall revenue.

  • The entertainment segment saw an 86% decline due to the E1 divestiture, affecting total revenue.

  • Despite improvements, the company is still facing challenges in stabilizing the consumer products business, with revenue expected to decline 12% to 14% for the year.

  • The fourth quarter is expected to see a pronounced year-over-year decline in revenue due to the timing of Magic: The Gathering releases and other factors.

Q & A Highlights

Q: Can you provide more details on the performance and future expectations for MONOPOLY Go, especially regarding user acquisition and revenue? A: Chris Cocks, CEO, explained that the implied guidance of $10 million per month in royalty revenue considers various factors such as gross revenue, rev share with stores, and user acquisition (UA) spend. They see healthy UA rates and strong engagement, which supports a steady revenue stream. Gina Goetter, CFO, added that the decay rate stabilized, and marketing spend was at the higher end of the 25%-35% range, aligning with their guidance of $105 million for the year.

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