Hasbro (HAS) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue declined 15% year-over-year to $1.28B, mainly due to the eOne divestiture and industry headwinds, but gaming and licensing outperformed, driving margin expansion for the third consecutive quarter.

• Adjusted operating profit was $329M, with a margin of 25.7% (up 2.9 points year-over-year), reflecting cost savings, business mix, and improved profitability.

• Net earnings improved to $223M (reported) and $244M (adjusted), with adjusted EPS of $1.73, up from a loss last year.

• Strategic focus on core brands, cost reductions, and divestiture of non-core assets have improved profitability and cash flow, with inventory levels at multiyear lows.

• Magic: The Gathering and D&D posted strong growth, with Magic leading the trading card genre and D&D's updated Player's Handbook becoming the fastest-selling product in its history.

Financial highlights

• Q3 net revenue was $1.28B, down 15% year-over-year; excluding eOne divestiture, revenue was down 9%.

• Adjusted operating profit was $329M (25.7% margin); Q3 net earnings were $223M (reported), $244M (adjusted), with diluted EPS of $1.73.

• Year-to-date revenue was $3.03B, down 18% year-over-year (down 8% excluding eOne); adjusted operating profit was $726M (23.9% margin), and adjusted net earnings were $498M (EPS $3.56).

• Operating cash flow improved to $588M year-to-date, up from $335M last year.

• Q3 gross margin improved to 70.4%, up from 67.1% last year.

Outlook and guidance

• Wizards revenue now expected to be flat to down 1% for 2024, improved from prior guidance, driven by Magic outperformance; Consumer Products revenue expected to be down 12%-14%.

• Adjusted EBITDA guidance maintained at $975M–$1.025B; capital spending outlook at ~$225M.

• Monopoly GO! expected to contribute $105M in revenue for the year; Baldur's Gate 3 to contribute $35M, mostly in the first three quarters.

• Wizards operating margin expected at ~42%, with a Q4 step down due to planned revenue deleverage; Consumer Products margin guidance at 4%-6%.

• On track for $750M gross cost savings by 2025, with $200-$250M net savings in 2024.