Games and Digital Drive Strong Adjusted Profit
and Margin Growth
Hasbro, Inc. (NASDAQ: HAS), a leading toy and game company,
today reported financial results for the third quarter 2023.
“Our third quarter results highlight the strength of Hasbro’s
diversified toy and game portfolio and the progress we have made on
our transformation,” said Chris Cocks, Hasbro chief executive
officer. “Wizards of the Coast and Digital Gaming delivered a
standout performance across strength in MAGIC: THE GATHERING and
DUNGEONS & DRAGONS, particularly the blockbuster August release
of Baldur's Gate III. We are taking action to address the tougher
macro environment across Toys and Entertainment and are positioning
the Company to return to profitable growth. Building on the
strategy we outlined a year ago, we're growing share behind our
Franchise Brands in core categories, driving savings and investment
capacity through operational excellence, and building new growth
for the Company across games, direct to consumer and licensing.
With the upcoming sale of the eOne Film and TV business, we are
refocusing our Company on what has traditionally made us great, the
business of play.
“We believe in the long-term growth potential of toys and are
leaning in. Our plan for Q4 is to drive share over the holiday,
exit the year with clean inventory, a much-improved corporate
overhead, and a clear runway for introducing new product innovation
and go to market support in the quarters ahead.”
“We are making good progress on our transformation and the work
we have done to date has positioned us well to grow our world-class
gaming portfolio and strengthen our Toy business,” said Gina
Goetter, Hasbro chief financial officer. “We continue to make
progress in lowering inventory levels and are on track to meet our
long-term gross cost savings goals earlier than expected.
“Although the impact of the broader Toy category declines has
changed our Consumer Products and total Hasbro outlook, we are
growing share in the categories where we compete and beginning to
see the benefits of our cost savings initiatives play through the
P&L. Resetting our cost base and removing complexity will help
ensure we are well positioned as we sharpen our innovation pipeline
for 2024 and 2025.”
Highlights
- Q3 Hasbro, Inc. revenue declined 10% with significant growth in
Wizards of the Coast and Digital Gaming segment (+40%) not able to
offset the declines in Consumer Products (-18%) and Entertainment
(-42%).
- Wizards of the Coast revenue growth driven by the success of
licensed digital games Baldur’s Gate III and Monopoly Go! which
drove $63 million of incremental revenue in Q3.
- Consumer Product revenue decline result of exited licenses and
softer category trends; share increased across four of the five
focus categories.
- Operating profit loss of $169.5 million; Adjusted operating
profit of $342.6 million; Adjusted operating profit margin of 22.8%
was +6.7 margin points ahead of last year due to the mix benefit
from the growth in licensed digital games and cost savings
outpacing inflation.
- Adjusted results exclude the pre-tax impact of loss on assets
held for sale of $473 million related to the planned sale of the
eOne Film and TV business.
- On track to deliver approximately $200 million of gross cost
savings in 2023 as part of Operational Excellence initiative.
- Reduced owned inventory 27%, including a 34% decline in
Consumer Products inventory.
- Updated 2023 guidance reflects impact of lower revenue outlook
for Consumer Products segment; no change to outlook for Wizards of
the Coast and Digital Gaming or Entertainment segments.
- Sale of eOne Film and TV business on track to close by year
end.
Third Quarter and Year-to-Date 2023
Financial Results
$ Millions, except earnings per
share
Q3 2023
Q3 2022
% Change
YTD 2023
YTD 2022
% Change
Net Revenues1
$
1,503.4
$
1,675.9
-10%
$
3,714.4
$
4,178.2
-11%
Operating Profit (Loss)
$
(169.5
)
$
194.3
>-100%
$
(340.2
)
$
533.4
>-100%
Adjusted Operating Profit2
$
342.6
$
270.5
27%
$
526.6
$
653.3
-19%
Net Earnings (Loss)
$
(171.1
)
$
129.2
>-100%
$
(428.2
)
$
332.4
>-100%
Net Earnings (Loss) per Diluted
Share
$
(1.23
)
$
0.93
>-100%
$
(3.09
)
$
2.39
>-100%
Adjusted Net Earnings2
$
227.8
$
196.2
16%
$
296.5
$
436.2
-32%
Adjusted Net Earnings per Diluted
Share2
$
1.64
$
1.42
16%
$
2.13
$
3.14
-32%
EBITDA2
$
(115.3
)
$
267.1
>-100%
$
(170.8
)
$
726.5
>-100%
Adjusted EBITDA2
$
401.5
$
345.5
16%
$
698.8
$
845.9
-17%
1Foreign exchange had a favorable $22.6 million and $3.3 million
impact on third quarter and year-to-date 2023 revenue,
respectively.
2See the financial tables accompanying this press release for a
reconciliation of GAAP and non-GAAP financial measures, namely,
adjusted operating profit, adjusted net earnings, adjusted net
earnings per share and adjusted EBITDA. Including, among other
items, $473.0 million ($369.0 million after-tax) for the quarter
and nine months ended October 1, 2023 related to the planned sale
of the eOne Film and TV business not directly supporting the
Company's Entertainment Strategy within the Entertainment segment.
The assets and liabilities of these businesses were revalued and
disclosed separately on the balance sheet.
Third Quarter and Year-to-Date 2023
Segment Performance
Q3 2023 Major Segments ($
Millions)
Net Revenues
Operating Profit
(Loss)
Adjusted
Operating Profit
(Loss)1
Q3 2023
Q3 2022
% Change
Q3 2023
Q3 2022
Q3 2023
Q3 2022
Consumer Products
$
956.9
$
1,160.8
-18
%
$
96.1
$
136.8
$
107.0
$
145.8
Wizards of the Coast and Digital
Gaming
$
423.6
$
303.5
40
%
$
203.4
$
102.2
$
203.4
$
102.2
Entertainment
$
122.9
$
211.6
-42
%
$
(468.5
)
$
(28.9
)
$
8.1
$
5.9
Corporate and Other
N/A
N/A
N/A
$
(0.5
)
$
(15.8
)
$
24.1
$
16.6
YTD 2023 Major Segments ($
Millions)
Net Revenues
Operating Profit
(Loss)
Adjusted
Operating Profit
(Loss)1
YTD 2023
YTD 2022
% Change
YTD 2023
YTD 2022
YTD 2023
YTD 2022
Consumer Products
$
2,132.5
$
2,567.8
-17
%
$
61.5
$
138.9
$
93.8
$
167.8
Wizards of the Coast and Digital
Gaming
$
1,094.4
$
986.1
11
%
$
422.5
$
434.2
$
422.5
$
434.2
Entertainment
$
487.5
$
624.3
-22
%
$
(801.4
)
$
(2.4
)
$
(15.2
)
$
49.9
Corporate and Other
N/A
N/A
N/A
$
(22.8
)
$
(37.3
)
$
25.5
$
1.4
1See the financial tables accompanying this press release for a
reconciliation of GAAP and non-GAAP financial measures, namely,
adjusted operating profit, adjusted net earnings, adjusted net
earnings per share and adjusted EBITDA. Including, among other
items, $473.0 million ($369.0 million after-tax) for the quarter
and nine months ended October 1, 2023 related to the planned sale
of the eOne Film and TV business not directly supporting the
Company's Entertainment Strategy within the Entertainment segment.
The assets and liabilities of these businesses were revalued and
disclosed separately on the balance sheet.
Third Quarter 2023 Segment Commentary & FY 2023
Outlook
Consumer Products Segment
- Revenue decrease of 18% driven by exited businesses, soft
industry trends and prioritization of inventory management across
both owned and retail inventory.
- Adjusted operating profit margin of 11.2% declined -1.4 margin
points versus last year driven by product mix and higher cost to
move inventory.
Wizards of the Coast and Digital Gaming Segment
- Revenue increase of 40% driven by >100% increase in Digital
and Licensed Gaming revenue behind Baldur's Gate III from Larian
Studios and to a lesser extent Monopoly Go! from Scopely.
- Tabletop revenue increased 18% behind growth in MAGIC: THE
GATHERING including Wilds of Eldraine and Commander Masters
releases and continued strong sales of Universes Beyond including
The Lord of the Rings: Tales of Middle-earth sets.
- Operating profit grew 99% and operating profit margin of 48.0%
was +14.3 margin points versus last year behind high-margin digital
gaming revenue and growth in MAGIC: THE GATHERING.
Entertainment Segment
- Revenue decline of 42% driven by lower Film and TV revenue due
to the writers' and actors' strikes impact on Film and TV revenue;
Family Brands revenue grew +53%.
- Operating loss includes $473.0 million (non-cash) related to
the planned sale of the eOne Film and TV business.
- Adjusted operating profit increased 37% and operating profit
margin increased +3.8 margin points to 6.6%. The profit growth and
margin improvement resulted from exiting businesses, lower program
amortization, and lower compensation expense.
Third Quarter and Year-to-Date 2023
Brand Portfolio
Brand Performance1 ($ Millions)
Net Revenues
Q3 2023
Q3 2022
% Change
YTD 2023
YTD 2022
% Change
Franchise Brands
$
1,011.0
$
939.8
8
%
$
2,412.8
$
2,416.2
0
%
Partner Brands
$
228.2
$
349.9
-35
%
$
533.8
$
775.8
-31
%
Portfolio Brands
$
170.3
$
209.0
-19
%
$
369.4
$
457.4
-19
%
Non-Hasbro Branded Film &
TV
$
93.9
$
177.2
-47
%
$
398.4
$
528.8
-25
%
1Effective in the first quarter of 2023, the Company realigned
its Brand Portfolios to Franchise Brands, Partner Brands, Portfolio
Brands and Non-Hasbro Branded Film & TV. Franchise Brands
include DUNGEONS & DRAGONS, Hasbro Gaming, MAGIC: THE
GATHERING, NERF, PEPPA PIG, PLAY-DOH and TRANSFORMERS. A schedule
of historical quarterly revenue is available at
https://investor.hasbro.com/ under Financials & Filings.
Franchise Brands
- Franchise Brands revenue increased 8% in the quarter driven by
digital and tabletop growth for DUNGEONS & DRAGONS, MAGIC: THE
GATHERING, Hasbro Gaming, and TRANSFORMERS products.
Partner Brands
- Total Partner Brand revenue was down -35% in the quarter due to
license exits, general industry softness, and lapping strong
entertainment slate last year.
Portfolio Brands
- Total Portfolio Brands revenue was down -19% in the quarter
driven by the ongoing reprioritization of investment to support
Franchise Brands, as well as transitioning select brands to a
licensing model.
- Relaunch of FURBY positively contributed to the quarter and is
among Top Toy Lists and awards for the holiday season.
Third Quarter and Year-to-Date 2023
MAGIC: THE GATHERING and Hasbro Total Gaming
Net Revenues
$ Millions
Q3 2023
Q3 2022
% Change
YTD 2023
YTD 2022
% Change
MAGIC: THE GATHERING
$287.4
$239.3
20%
$827.5
$802.0
3%
Hasbro Total Gaming1
$628.0
$508.6
23%
$1,505.7
$1,415.7
6%
1Hasbro’s Total Gaming Category includes all gaming revenue,
most notably MAGIC: THE GATHERING, Hasbro Gaming and DUNGEONS &
DRAGONS.
Capital Priorities and Dividend
During the third quarter and year-to-date, Hasbro paid $97
million and $291 million, respectively, in cash dividends to
shareholders. The next dividend of $0.70 per common share was
previously declared and will be payable on November 15, 2023 to
shareholders of record at the close of business on November 1,
2023.
The Company continues to target Debt to EBITDA ratio of 2.0 to
2.5 times. Pending the outcome of the sale of the eOne Film and TV
business, the Company anticipates prioritizing the sale proceeds
toward paying down debt. The Company remains committed to
maintaining its investment grade rating.
Operational Excellence Program
In support of Hasbro's Blueprint 2.0 strategy, Hasbro
implemented an Operational Excellence program to deliver $250-$300
million in annualized gross cost savings by year-end 2025.
Year-to-date 2023, the Company realized $154 million of gross
savings and is on track to achieve over $200 million of in-year
gross cost savings for the full-year 2023. Expected cash costs to
implement the program are approximately $200 million, of which $65
million was spent year-to-date 2023 and $82 million in total since
the program launch. A $6.4 million after-tax charge was recorded in
the third quarter 2023 associated with the execution of the
program.
Company Outlook
The outlook incorporates the impact of the broader Toy category
declines, which is impacting the Consumer Product Segment. The
guidance continues to assume eOne Film and TV is included for the
entire fiscal year and guidance will be updated once the eOne Film
and TV sale transaction is complete.
The Company now expects:
- Revenue decline of 13 - 15% driven by softer toy outlook in
Consumer Products.
- Reducing Consumer Product guidance to down mid- to high-teens
versus last year.
- No change to Wizards of the Coast and Digital Gaming Segment of
up high-single digits.
- No change to Entertainment segment to down 25 - 30%.
- Adjusted operating margin of 13.0% - 13.5%1.
- Adjusted EBITDA of $900 - $950 million1.
- Operating Cash Flow of $500 - $600 million.
1The Company is not able to reconcile its forward-looking
non-GAAP adjusted operating profit margin, adjusted earnings per
diluted share 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. Guidance does not reflect the
announced sale of select entertainment assets. The Company plans to
update its outlook upon completion of the transaction.
Conference Call Webcast
Hasbro will webcast its third quarter 2023 earnings conference
call at 8:00 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.
About Hasbro
Hasbro is a leading toy and game company whose mission is to
entertain and connect generations of fans through the wonder of
storytelling and exhilaration of play. Hasbro delivers engaging
brand experiences for global audiences through toys, consumer
products, gaming and entertainment, with a portfolio of iconic
brands including MAGIC: THE GATHERING, DUNGEONS & DRAGONS,
Hasbro Gaming, NERF, TRANSFORMERS, PLAY-DOH and PEPPA PIG, as well
as premier partner brands.
Hasbro is guided by our Purpose to create joy and community for
all people around the world, one game, one toy, one story at a
time. For more than a decade, Hasbro has been consistently
recognized for its corporate citizenship, including being named one
of the 100 Best Corporate Citizens by 3BL Media, one of the World’s
Most Ethical Companies by Ethisphere Institute and one of the 50
Most Community-Minded Companies in the U.S. by the Civic 50. For
more information, visit https://corporate.hasbro.com.
© 2023 Hasbro, Inc. All Rights Reserved.
Forward Looking Statement Safe Harbor
Certain statements in this press release contain
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements, which
may be identified by the use of forward-looking words or phrases,
include statements relating to: our business strategies and plans;
expectations relating to inventory; expectations relating to
products, gaming and entertainment; anticipated cost savings;
financial targets; anticipated financial performance for 2023; and
expectations relating to the announced sale of the non-core eOne
film and TV business, including the timing of completion and use of
proceeds. Our actual actions or results may differ materially from
those expected or anticipated in the forward-looking statements due
to both known and unknown risks and uncertainties.
Factors that might cause such a difference include, but are not
limited to:
- our ability to successfully execute on our Blueprint 2.0
strategy, including to focus on and scale select business
initiatives and brands to drive profitability and to achieve
anticipated cost savings;
- our ability to successfully compete in the play and
entertainment industry;
- our ability to successfully evolve and transform our business
and capabilities to address the global consumer landscape;
- our ability to design, develop, manufacture, and ship products
on a timely, cost-effective and profitable basis;
- risks relating to our ability to successfully complete the
announced sale of the eOne Film and Television business, including
uncertainty as to whether the transaction will be completed in a
timely manner or at all; the conditions precedent to completion of
the transaction will be satisfied; risks of unexpected costs,
liabilities or delays; the effect of ongoing actors’ strikes; and
the effect of the announcement, pendency or consummation of the
transaction on customers, employees, actors, writers, producers and
operating results;
- inflation and downturns in global and regional economic
conditions impacting one or more of the markets in which we sell
products, which can negatively impact our retail customers and
consumers, result in lower employment levels, consumer disposable
income, retailer inventories and spending, including lower spending
on purchases of our products;
- our dependence on third party relationships, including with
third party manufacturers, licensors of brands, studios, content
producers and entertainment distribution channels;
- the risk that any prolonged strike by, or lockout of, one or
more of the unions that provide personnel essential to the
production of films or television programs, such as the ongoing
strike by the actors' unions, could delay or halt our ongoing
development, production and distribution activities; halts or
delays, depending on the length of time, could cause a delay or
interruption in our release of new films and television programs,
which could impact our entertainment business;
- risks relating to the concentration of manufacturing for many
of our products in the People’s Republic of China and our ability
to successfully diversify sourcing of our products to reduce
reliance on sources of supply in China;
- risks related to economic and public health conditions or
regulatory changes in the markets in which we and our customers,
partners, licensees, suppliers and manufacturers operate, such as
inflation, rising interest rates, higher commodity prices, labor
costs or transportation costs, the coronavirus or other outbreaks
of illness or disease, the occurrence of which could create work
slowdowns, delays or shortages in production or shipment of
products, increases in costs or delays in revenue;
- risks associated with international operations, such as
conflict in territories in which we operate, currency conversion,
currency fluctuations, the imposition of tariffs, quotas, shipping
delays or difficulties, border adjustment taxes or other
protectionist measures, and other challenges in the territories in
which we operate;
- the success of our key partner brands, including the ability to
secure, maintain and extend agreements with our key partners or the
risk of delays, increased costs or difficulties associated with any
of our or our partners’ planned digital applications or media
initiatives;
- risks related to our leadership changes;
- our ability to attract and retain talented and diverse
employees;
- our ability to realize the benefits of cost-savings and
efficiency and/or revenue and operating profit enhancing
initiatives;
- risks relating to the impairment and/or write-offs of
businesses, products and content we acquire and/or produce;
- the risk that acquisitions, dispositions and other investments
we complete may not provide us with the benefits we expect, or the
realization of such benefits may be significantly delayed. We may
not achieve a successful or timely sale of non-core assets;
- our ability to protect our assets and intellectual property,
including as a result of infringement, theft, misappropriation,
cyber-attacks or other acts compromising the integrity of our
assets or intellectual property;
- fluctuations in our business due to seasonality;
- the risk of product recalls or product liability suits and
costs associated with product safety regulations;
- changes in tax laws or regulations, or the interpretation and
application of such laws and regulations, which may cause us to
alter tax reserves or make other changes which significantly impact
our reported financial results;
- the impact of litigation or arbitration decisions or settlement
actions;
- the concentration of our customers, potentially increasing the
negative impact to our business of difficulties experienced by any
of our customers or changes in their purchasing or selling
patterns;
- the bankruptcy or other lack of success of one or more of our
significant retailers, licensees and other partners; and
- other risks and uncertainties as may be detailed in our public
announcements and U.S. Securities and Exchange Commission (“SEC”)
filings.
The statements contained herein are based on our current beliefs
and expectations. We undertake no obligation to make any revisions
to the forward-looking statements contained in this press release
or to update them to reflect events or circumstances occurring
after the date of this press release.
Non-GAAP Financial Measures
The financial tables accompanying this press release include
non-GAAP financial measures as defined under SEC rules,
specifically Adjusted operating profit, Adjusted net earnings and
Adjusted net earnings per diluted share, which exclude, where
applicable, acquisition and related costs, acquired intangible
amortization, Operational Excellence and Blueprint 2.0
implementation charges; and certain non-cash asset impairment
charges. Also included in this press release are the non-GAAP
financial measures of EBITDA and Adjusted EBITDA. EBITDA represents
net earnings attributable to Hasbro, Inc. excluding interest
expense, income tax expense, net earnings (loss) attributable to
noncontrolling interests, depreciation and amortization of
intangibles. Adjusted EBITDA also excludes Operational Excellence
and Blueprint 2.0 implementation charges, certain non-cash asset
impairment charges and the impact of stock compensation (including
acquisition-related stock expense). As required by SEC rules, we
have provided reconciliations on the attached schedules of these
measures to the most directly comparable GAAP measure. Management
believes that Adjusted net earnings, Adjusted net earnings per
diluted share and Adjusted operating profit provide investors with
an understanding of the underlying performance of our business
absent unusual events. Management believes that EBITDA and Adjusted
EBITDA are appropriate measures for evaluating the operating
performance of our business because they reflect the resources
available for strategic opportunities including, among others, to
invest in the business, strengthen the balance sheet and make
strategic acquisitions. The impact of changes in foreign currency
exchange rates used to translate the consolidated statements of
operations is quantified by translating the current period revenues
at the prior period exchange rates and comparing this amount to the
prior period reported revenues. The Company believes that the
presentation of the impact of changes in exchange rates, which are
beyond the Company’s control, is helpful to an investor’s
understanding of the performance of the underlying business. These
non-GAAP measures should be considered in addition to, not as a
substitute for, or superior to, net earnings or other measures of
financial performance prepared in accordance with GAAP as more
fully discussed in our consolidated financial statements and
filings with the SEC. As used herein, "GAAP" refers to accounting
principles generally accepted in the United States of America.
HAS-E
HASBRO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(1)
(Unaudited)
(Millions of Dollars)
October 1, 2023
September 25, 2022
ASSETS
Cash and Cash Equivalents
$
185.5
$
551.6
Accounts Receivable, Net
1,102.0
1,188.8
Inventories
617.7
844.5
Prepaid Expenses and Other Current
Assets
286.2
658.8
Assets Held for Sale
1,048.7
16.8
Total Current Assets
3,240.1
3,260.5
Property, Plant and Equipment, Net
474.6
411.8
Goodwill
3,238.8
3,469.8
Other Intangible Assets, Net
655.1
1,079.7
Other Assets
731.6
1,404.3
Total Assets
$
8,340.2
$
9,626.1
LIABILITIES, NONCONTROLLING INTERESTS
AND SHAREHOLDERS' EQUITY
Short-Term Borrowings
$
—
$
122.3
Current Portion of Long-Term Debt
60.0
122.6
Accounts Payable and Accrued
Liabilities
1,356.8
2,097.0
Liabilities Held for Sale
607.4
15.0
Total Current Liabilities
2,024.2
2,356.9
Long-Term Debt
3,654.6
3,725.1
Other Liabilities
438.2
545.1
Total Liabilities
6,117.0
6,627.1
Total Shareholders' Equity
2,223.2
2,999.0
Total Liabilities, Noncontrolling
Interests and Shareholders' Equity
$
8,340.2
$
9,626.1
(1) Amounts may not sum due to
rounding
HASBRO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(1)
(Unaudited)
(Millions of Dollars and Shares Except Per
Share Data)
Quarter Ended
Nine Months Ended
October 1,
2023
% Net
Revenues
September 25,
2022
% Net
Revenues
October 1,
2023
% Net
Revenues
September 25,
2022
% Net
Revenues
Net Revenues
$
1,503.4
100.0
%
$
1,675.9
100.0
%
$
3,714.4
100.0
%
$
4,178.2
100.0
%
Costs and Expenses:
Cost of Sales
494.5
32.9
%
586.6
35.0
%
1,132.0
30.5
%
1,331.2
31.9
%
Program Cost Amortization
68.4
4.5
%
146.5
8.7
%
325.3
8.8
%
365.7
8.8
%
Royalties
106.9
7.1
%
135.1
8.1
%
295.8
8.0
%
335.3
8.0
%
Product Development
76.7
5.1
%
82.4
4.9
%
232.4
6.3
%
231.2
5.5
%
Advertising
81.9
5.4
%
115.2
6.9
%
249.8
6.7
%
277.0
6.6
%
Amortization of Intangibles
19.2
1.3
%
26.9
1.6
%
65.1
1.8
%
81.2
1.9
%
Selling, Distribution and
Administration
352.3
23.4
%
365.8
21.8
%
1,050.0
28.3
%
1,000.1
23.9
%
Impairment of Goodwill
—
0.0
%
—
0.0
%
231.2
6.2
%
—
0.0
%
Loss on Assets Held for Sale
473.0
31.5
%
23.1
1.4
%
473.0
12.7
%
23.1
0.6
%
Operating Profit (Loss)
(169.5
)
-11.3
%
194.3
11.6
%
(340.2
)
-9.2
%
533.4
12.8
%
Interest Expense
47.1
3.1
%
41.9
2.5
%
140.0
3.8
%
125.2
3.0
%
Other Expense (Income), Net
(1.6
)
-0.1
%
(13.2
)
-0.8
%
(16.3
)
-0.4
%
(17.5
)
-0.4
%
Earnings (Loss) before Income Taxes
(215.0
)
-14.3
%
165.6
9.9
%
(463.9
)
-12.5
%
425.7
10.2
%
Income Tax Expense (Benefit)
(44.6
)
-3.0
%
37.4
2.2
%
(36.9
)
-1.0
%
94.1
2.3
%
Net Earnings (Loss)
(170.4
)
-11.3
%
128.2
7.6
%
(427.0
)
-11.5
%
331.6
7.9
%
Net Earnings (Loss) Attributable to
Noncontrolling Interests
0.7
0.0
%
(1.0
)
-0.1
%
1.2
0.0
%
(0.8
)
0.0
%
Net Earnings (Loss) Attributable to
Hasbro, Inc.
$
(171.1
)
-11.4
%
$
129.2
7.7
%
$
(428.2
)
-11.5
%
$
332.4
8.0
%
Per Common Share
Net Earnings (Loss)
Basic
$
(1.23
)
$
0.93
$
(3.09
)
$
2.39
Diluted
$
(1.23
)
$
0.93
$
(3.09
)
$
2.39
Cash Dividends Declared
$
0.70
$
0.70
$
2.10
$
2.10
Weighted Average Number of Shares
Basic
138.8
138.3
138.7
138.9
Diluted
139.2
138.5
139.0
139.1
(1) Amounts may not sum due to
rounding
HASBRO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (1)
(Unaudited)
(Millions of Dollars)
Nine Months Ended
October 1, 2023
September 25, 2022
Cash Flows from Operating Activities:
Net Earnings (Loss)
$
(427.0
)
$
331.6
Impairment of Goodwill
231.2
—
Loss on Assets Held for Sale
473.0
23.1
Other Non-Cash Adjustments
545.6
544.0
Changes in Operating Assets and
Liabilities
(487.9
)
(636.5
)
Net Cash Provided by Operating
Activities
334.9
262.2
Cash Flows from Investing Activities:
Additions to Property, Plant and
Equipment
(160.4
)
(130.7
)
Investments and Acquisitions
—
(146.3
)
Other
(2.2
)
11.2
Net Cash Utilized by Investing
Activities
(162.6
)
(265.8
)
Cash Flows from Financing Activities:
Proceeds from Long-Term Debt
2.5
3.3
Repayments of Long-Term Debt
(107.0
)
(182.0
)
Net Proceeds from Short-Term
Borrowings
0.3
121.6
Purchases of Common Stock
—
(125.0
)
Stock-Based Compensation Transactions
—
74.2
Dividends Paid
(290.9
)
(288.6
)
Payments Related to Tax Withholding for
Share-Based Compensation
(15.7
)
(21.1
)
Other
(7.2
)
(25.4
)
Net Cash Utilized by Financing
Activities
(418.0
)
(443.0
)
Effect of Exchange Rate Changes on
Cash
(11.5
)
(16.2
)
Net Decrease in Cash Balances Classified
as Held for Sale
(70.4
)
(4.8
)
Net Decrease in Cash and Cash
Equivalents
(327.6
)
(467.6
)
Cash and Cash Equivalents at Beginning of
Year
513.1
1,019.2
Cash and Cash Equivalents at End of
Period
$
185.5
$
551.6
(1) Amounts may not sum due to
rounding
HASBRO, INC.
SUPPLEMENTAL FINANCIAL DATA
SEGMENT RESULTS - AS REPORTED AND AS
ADJUSTED (9)
(Unaudited)
(Millions of Dollars)
Operating Results
Quarter Ended October 1,
2023
Quarter Ended September 25,
2022
As Reported
Non-GAAP
Adjustments
Adjusted
As Reported
Non-GAAP
Adjustments
Adjusted
%
Change
Total Company
Results
External Net Revenues (1)
$
1,503.4
$
—
$
1,503.4
$
1,675.9
$
—
$
1,675.9
-10
%
Operating Profit (Loss)
(169.5
)
512.1
342.6
194.3
76.2
270.5
27
%
Operating Margin
-11.3
%
34.1
%
22.8
%
11.6
%
4.5
%
16.1
%
Segment
Results
Consumer Products:
External Net Revenues (2)
$
956.9
$
—
$
956.9
$
1,160.8
$
—
$
1,160.8
-18
%
Operating Profit
96.1
10.9
107.0
136.8
9.0
145.8
-27
%
Operating Margin
10.0
%
1.1
%
11.2
%
11.8
%
0.8
%
12.6
%
Wizards of the Coast
and Digital Gaming:
External Net Revenues (3)
$
423.6
$
—
$
423.6
$
303.5
$
—
$
303.5
40
%
Operating Profit
203.4
—
203.4
102.2
—
102.2
99
%
Operating Margin
48.0
%
—
48.0
%
33.7
%
—
33.7
%
Entertainment:
External Net Revenues (4)
$
122.9
$
—
$
122.9
$
211.6
$
—
$
211.6
-42
%
Operating Profit (Loss)
(468.5
)
476.6
8.1
(28.9
)
34.8
5.9
37
%
Operating Margin
>-100%
>100%
6.6
%
-13.7
%
16.4
%
2.8
%
Corporate and
Other:
Operating Profit (Loss)
$
(0.5
)
$
24.6
$
24.1
$
(15.8
)
$
32.4
$
16.6
-45
%
(1)
Effective in the first quarter of
2023, the Company realigned our brand portfolios to correspond with
the Blueprint 2.0 strategy. Net Revenues by Brand Portfolio below
have been restated to present the realigned structure.
Net Revenues
Quarter Ended
October 1, 2023
September 25, 2022
% Change
Net Revenues by
Brand Portfolio
Franchise Brands (a)
$
1,011.0
$
939.8
8
%
Partner Brands
228.2
349.9
-35
%
Portfolio Brands
170.3
209.0
-19
%
Non-Hasbro Branded Film & TV
93.9
177.2
-47
%
Total
$
1,503.4
$
1,675.9
(a) Franchise Brands include: DUNGEONS
& DRAGONS, Hasbro Gaming, MAGIC: THE GATHERING, NERF, PEPPA
PIG, PLAY-DOH and TRANSFORMERS.
Net Revenues
Quarter Ended
October 1, 2023
September 25, 2022
% Change
MAGIC: THE GATHERING
$
287.4
$
239.3
20
%
Hasbro Total Gaming (b)
628.0
508.6
23
%
(b) Hasbro Total Gaming includes all
gaming revenue, most notably DUNGEONS & DRAGONS, MAGIC: THE
GATHERING and Hasbro Gaming.
Net Revenues
Quarter Ended
October 1, 2023
September 25, 2022
% Change
(2)
Consumer Products Segment Net Revenues by
Major Geographic Region
North America
$
573.6
$
693.3
-17
%
Europe
208.7
271.6
-23
%
Asia Pacific
61.8
82.8
-25
%
Latin America
112.8
113.1
0
%
Total
$
956.9
$
1,160.8
Net Revenues
Quarter Ended
October 1, 2023
September 25, 2022
% Change
(3)
Wizards of the Coast and Digital Gaming Net
Revenues by Category
Tabletop Gaming
$
290.5
$
246.3
18
%
Digital and Licensed Gaming
133.1
57.2
>100%
Total
$
423.6
$
303.5
Net Revenues
Quarter Ended
October 1, 2023
September 25, 2022
% Change
(4)
Entertainment Segment Net Revenues by
Category
Film and TV
$
102.1
$
188.6
-46
%
Family Brands
20.8
13.6
53
%
Music and Other
—
9.4
-100
%
Total
$
122.9
$
211.6
Operating
Results
Nine Months Ended October 1,
2023
Nine Months Ended September
25, 2022
As Reported
Non-GAAP
Adjustments
Adjusted
As Reported
Non-GAAP
Adjustments
Adjusted
%
Change
Total Company
Results
External Net Revenues (5)
$
3,714.4
$
—
$
3,714.4
$
4,178.2
$
—
$
4,178.2
-11
%
Operating Profit (Loss)
(340.2
)
866.8
526.6
533.4
119.9
653.3
-19
%
Operating Margin
-9.2
%
23.3
%
14.2
%
12.8
%
2.9
%
15.6
%
Segment
Results
Consumer
Products:
External Net Revenues (6)
$
2,132.5
$
—
$
2,132.5
$
2,567.8
$
—
$
2,567.8
-17
%
Operating Profit
61.5
32.3
93.8
138.9
28.9
167.8
-44
%
Operating Margin
2.9
%
1.5
%
4.4
%
5.4
%
1.1
%
6.5
%
Wizards of the Coast
and Digital Gaming:
External Net Revenues (7)
$
1,094.4
$
—
$
1,094.4
$
986.1
$
—
$
986.1
11
%
Operating Profit
422.5
—
422.5
434.2
—
434.2
-3
%
Operating Margin
38.6
%
—
38.6
%
44.0
%
—
44.0
%
Entertainment:
External Net Revenues (8)
$
487.5
$
—
$
487.5
$
624.3
$
—
$
624.3
-22
%
Operating Profit (Loss)
(801.4
)
786.2
(15.2
)
(2.4
)
52.3
49.9
>-100%
Operating Margin
>-100%
>100%
-3.1
%
-0.4
%
8.4
%
8.0
%
Corporate and
Other:
Operating Profit (Loss)
$
(22.8
)
$
48.3
$
25.5
$
(37.3
)
$
38.7
$
1.4
>100%
(5) Effective in the first quarter of 2023, the Company
realigned our brand portfolios to correspond with the Blueprint 2.0
strategy. Net Revenues by Brand Portfolio below have been restated
to present the realigned structure.
Net Revenues
Nine Months Ended
October 1, 2023
September 25, 2022
% Change
Net Revenues by
Brand Portfolio
Franchise Brands (a)
$
2,412.8
$
2,416.2
0
%
Partner Brands
533.8
775.8
-31
%
Portfolio Brands
369.4
457.4
-19
%
Non-Hasbro Branded Film & TV
398.4
528.8
-25
%
Total
$
3,714.4
$
4,178.2
(a) Franchise Brands include: DUNGEONS
& DRAGONS, Hasbro Gaming, MAGIC: THE GATHERING, NERF, PEPPA
PIG, PLAY-DOH and TRANSFORMERS
Net Revenues
Nine Months Ended
October 1, 2023
September 25, 2022
% Change
MAGIC: THE GATHERING
$
827.5
$
802.0
3
%
Hasbro Total Gaming (b)
1,505.7
1,415.7
6
%
(b) Hasbro Total Gaming includes all
gaming revenue, most notably DUNGEONS & DRAGONS, MAGIC: THE
GATHERING and Hasbro Gaming.
Net Revenues
Nine Months Ended
October 1, 2023
September 25, 2022
% Change
(6)
Consumer Products Segment Net Revenues by
Major Geographic Region
North America
$
1,234.7
$
1,531.8
-19
%
Europe
472.2
610.4
-23
%
Asia Pacific
191.5
201.6
-5
%
Latin America
234.1
224.0
5
%
Total
$
2,132.5
$
2,567.8
Net Revenues
Nine Months Ended
October 1, 2023
September 25, 2022
% Change
(7)
Wizards of the Coast and Digital Gaming Net
Revenues by Category
Tabletop Gaming
$
806.9
$
800.3
1
%
Digital and Licensed Gaming
287.5
185.8
55
%
Total
$
1,094.4
$
986.1
Net Revenues
Nine Months Ended
October 1, 2023
September 25, 2022
% Change
(8)
Entertainment Segment Net Revenues by
Category
Film and TV
$
423.8
$
527.0
-20
%
Family Brands
63.7
59.6
7
%
Music and Other
—
37.7
-100
%
Total
$
487.5
$
624.3
(9) Amounts within this section may not sum due to rounding
HASBRO, INC.
SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(Unaudited)
(Millions of Dollars)
Reconciliation of
EBITDA and Adjusted EBITDA (1)
Quarter Ended
Nine Months Ended
October 1,
2023
September 25,
2022
October 1,
2023
September 25,
2022
Net Earnings (Loss) Attributable to
Hasbro, Inc.
$
(171.1
)
$
129.2
$
(428.2
)
$
332.4
Interest Expense
47.1
41.9
140.0
125.2
Income Tax Expense (Benefit)
(44.6
)
37.4
(36.9
)
94.1
Net Earnings (Loss) Attributable to
Noncontrolling Interests
0.7
(1.0
)
1.2
(0.8
)
Depreciation
33.4
32.7
88.0
94.4
Amortization of Intangibles
19.2
26.9
65.1
81.2
EBITDA
$
(115.3
)
$
267.1
$
(170.8
)
$
726.5
Non-GAAP Adjustments and Stock
Compensation (2)
516.8
78.4
869.6
119.4
Adjusted EBITDA
$
401.5
$
345.5
$
698.8
$
845.9
(2) Non-GAAP Adjustments and Stock
Compensation are comprised of the following:
Stock compensation
$
19.2
$
23.1
$
54.1
$
64.1
Operational Excellence charges
8.4
55.3
29.4
55.3
Blueprint 2.0 implementation charges
489.2
—
489.9
—
Impairment of goodwill and intangible
Assets
—
—
296.2
—
Total
$
516.8
$
78.4
$
869.6
$
119.4
(1) Amounts may not sum due to
rounding
HASBRO, INC.
SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(Unaudited)
(Millions of Dollars)
Reconciliation of Adjusted Operating
Profit (1)
Quarter Ended
Nine Months Ended
October 1,
2023
September 25,
2022
October 1,
2023
September 25,
2022
Operating Profit (Loss)
$
(169.5
)
$
194.3
$
(340.2
)
$
533.4
Consumer Products
96.1
136.8
61.5
138.9
Wizards of the Coast and Digital
Gaming
203.4
102.2
422.5
434.2
Entertainment
(468.5
)
(28.9
)
(801.4
)
(2.4
)
Corporate and Other
(0.5
)
(15.8
)
(22.8
)
(37.3
)
Non-GAAP Adjustments (2)
$
512.1
$
76.2
$
866.8
$
119.9
Consumer Products
10.9
9.0
32.3
28.9
Entertainment
476.6
34.8
786.2
52.3
Corporate and Other
24.6
32.4
48.3
38.7
Adjusted Operating Profit
$
342.6
$
270.5
$
526.6
$
653.3
Consumer Products
107.0
145.8
93.8
167.8
Wizards of the Coast and Digital
Gaming
203.4
102.2
422.5
434.2
Entertainment
8.1
5.9
(15.2
)
49.9
Corporate and Other
24.1
16.6
25.5
1.4
(2) Non-GAAP Adjustments include the
following:
Acquisition-related costs (i)
$
—
$
3.8
$
1.9
$
10.1
Acquired intangible amortization (ii)
14.5
17.1
49.4
54.5
Operational Excellence charges (iii)
Transformation office and consultant
fees
8.4
7.2
29.4
7.2
Loss on assets held for sale (b)
—
23.1
—
23.1
Impairment of assets (c)
—
3.7
—
3.7
Severance and other employee charges
(d)
—
21.3
—
21.3
Blueprint 2.0 implementation charges
(iv)
eOne TV and Film business sale process
charges (a)
16.2
—
16.9
—
Loss on assets held for sale (b)
473.0
473.0
Impairment of goodwill and intangible
assets (v)
—
—
296.2
—
Total
$
512.1
$
76.2
$
866.8
$
119.9
(i) In association with the Company's acquisition of eOne, the
Company incurred stock compensation expenses of $1.9 ($1.7
after-tax) for the nine months ended October 1, 2023, and $3.8
($3.3 after-tax) and $10.1 ($8.9 after-tax), respectively, in the
quarter and nine months ended September 25, 2022. The expense is
included within Selling, Distribution and Administration.
(ii) Represents intangible amortization costs related to the
intangible assets acquired in the eOne acquisition. The Company has
allocated certain of these intangible amortization costs between
the Consumer Products and Entertainment segments, to match the
revenue generated from such intangible assets. While amortization
of acquired intangibles is being excluded from the related GAAP
financial measure, the revenue of the acquired company is reflected
within the Company's operating results to which these assets
contribute.
(iii) These costs relate to the comprehensive review of the
Company's operations and development of a transformation plan to
support the organization in identifying, realizing and capturing
savings to create efficiencies and improve business processes and
operations. These charges consists of:
(a) Program related consultant and
transformation office fees of $8.4 ($6.4 after tax) and $29.4
($22.5 after-tax) for the quarter and nine months ended October 1,
2023, and $7.2 ($5.5 after-tax) in the quarter and nine months
ended September 25, 2022, are included within Selling, Distribution
and Administration within the Corporate and Other segment.
(b) Loss on assets held for sale of $23.1
($21.1 after-tax) for the quarter and nine months ended September
25, 2022 related to the exit of non-core businesses within the
Entertainment segment. The assets and liabilities of these
businesses were revalued and disclosed separately on the balance
sheet. The charge is comprised of a goodwill impairment loss of
$11.8 and other asset impairments of $11.3.
(c) Assets impairments of $3.7 ($3.7
after-tax) for the quarter and nine months ended September 25,
2022, related to projects discontinued as part of the strategic
review included in Program Cost Amortization within the
Entertainment segment.
(d) Severance and other employee charges of
$21.3 ($19.1 after-tax) for the quarter and nine months ended
September 25, 2022, associated with cost-savings initiatives across
the Company.
(iv) The Company announced the results of its strategic review,
Blueprint 2.0, a consumer-centric approach focusing on fewer,
bigger brands, expanded licensing, branded entertainment, and
high-margin growth in games, digital and direct. As the Company
implements the new strategy, charges recognized are $489.2 ($381.5
after tax) and $489.9 ($382.0 after-tax), respectively, for the
quarter and nine months ended October 1, 2023, respectively,
consisting of:
(a) eOne TV and Film business sale process
charges of $16.2 ($12.5 after tax) and $16.9 ($13.0 after-tax) for
the quarter and nine months ended October 1, 2023, respectively, as
a result of the sale process for the part of its eOne TV and film
business not directly supporting the Company's Branded
Entertainment Strategy. These charges are included in Selling,
Distribution and Administration.
(b) Loss on assets held for sale of $473.0
($369.0 after-tax) for the quarter and nine months ended October 1,
2023 related to the planned sale of the eOne Film and TV business
not directly supporting the Company's Entertainment Strategy within
the Entertainment segment. The assets and liabilities of these
businesses were revalued and disclosed separately on the balance
sheet.
(v) Non-cash Goodwill and Asset impairment charges of $296.2
($279.9 after tax) for the nine months ended October 1, 2023
incurred within the Entertainment segment, of which $231.2 related
to the goodwill impairment of Film & TV due to the expected
economic impact of industry factors and $65.0 related to an
impairment of the Company's definite-lived intangible, eOne
Trademark, which are included in Impairment of Goodwill and
Selling, Distribution and Administration, respectively.
(1) Amounts may not sum due to rounding
HASBRO, INC.
SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(Unaudited)
(Millions of Dollars and Shares, Except
Per Share Data)
Reconciliation of Net Earnings and
Earnings per Share (1)
Quarter Ended
(all adjustments reported after-tax)
October 1,
2023
Diluted Per
Share Amount
September 25,
2022
Diluted Per
Share Amount
Net Earnings (Loss) Attributable to
Hasbro, Inc.
$ (171.1)
$ (1.23)
$ 129.2
$ 0.93
Acquisition and related costs
—
—
3.3
0.02
Acquired intangible amortization
11.0
0.08
14.3
0.10
Operational Excellence charges
6.4
0.05
49.4
0.36
Blueprint 2.0 implementation charges
381.5
2.74
—
—
Net Earnings Attributable to Hasbro, Inc.,
as Adjusted
$ 227.8
$ 1.64
$ 196.2
$ 1.42
Nine Months Ended
(all adjustments reported after-tax)
October 1,
2023
Diluted Per
Share Amount
September 25,
2022
Diluted Per
Share Amount
Net Earnings (Loss) Attributable to
Hasbro, Inc.
$ (428.2)
$ (3.09)
$ 332.4
$ 2.39
Acquisition and related costs
1.7
0.01
8.9
0.06
Acquired intangible amortization
38.6
0.28
45.5
0.33
Operational Excellence charges
22.5
0.16
49.4
0.36
Blueprint 2.0 implementation charges
382.0
2.75
—
—
Impairment of goodwill and intangible
assets
279.9
2.01
—
—
Net Earnings Attributable to Hasbro, Inc.,
as Adjusted
$ 296.5
$ 2.13
$ 436.2
$ 3.14
(1) Amounts may not sum due to
rounding
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231025578799/en/
Investors: Debbie Hancock | Hasbro, Inc. | (401) 727-5464 |
debbie.hancock@hasbro.com Media: Roberta Thomson | Hasbro, Inc. |
(650) 285-9721 | bertie.thomson@hasbro.com
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