Consumer Discretionary
Leisure
$7.94B
6K
Hasbro, Inc., together with its subsidiaries, operates as a toy and game company in the United States, Europe, Canada, Mexico, Latin America, Australia, China, and Hong Kong. The company operates through Consumer Products; Wizards of the Coast and Digital Gaming; Entertainment; and Corporate and Other segments. The Consumer Products segment engages in the sourcing, marketing, and sale of toy and game products. This segment also promotes its brands through the out-licensing of trademarks, characters, and other brand and intellectual property rights to third parties through the sale of branded consumer products, such as toys and apparel. Its toys and games include action figures, arts and crafts and creative play products, dolls, play sets, preschool toys, plush products, sports action blasters and accessories, vehicles and toy-related specialty products, games, and other consumer products; and licensed products, such as apparel, publishing products, home goods and electronics, and toy products. The Wizards of the Coast and Digital Gaming segment engages in the promotion of its brands through the development of trading cards, role-playing, and digital game experiences based on Hasbro and Wizards of the Coast games. The Entertainment segment engages in the development, production, and sale of entertainment content, including film, television, children’s programming, digital content, and live entertainment. The company sells its products to retailers, distributors, wholesalers, discount stores, specialty hobby stores, drug stores, mail order houses, catalog stores, department stores, and other traditional retailers, as well as e-commerce retailers; and directly to customers through its e-commerce websites under the MAGIC: THE GATHERING, Hasbro Gaming, PLAY-DOH, NERF, TRANSFORMERS, DUNGEONS & DRAGONS, PEPPA PIG, and other brand names. Hasbro, Inc. was founded in 1923 and is headquartered in Pawtucket, Rhode Island.
Key insights and themes extracted from this filing
Net revenues decreased to $995.3 million from $1,210.0 million in the prior year. This decline is largely attributed to the sale of the Entertainment One film and television business, as well as broader industry trends and exited businesses.
Operating profit reached $212.1 million compared to an operating loss of $188.6 million in the prior year. This improvement is driven by cost savings from the Operational Excellence Program and the absence of goodwill impairment charges recorded in the prior year.
Net earnings attributable to Hasbro, Inc. were $138.5 million, compared to a net loss of $235.0 million in the prior year. This improvement is due to the increase in operating profit and the absence of prior year impairment charges.
Wizards of the Coast and Digital Gaming segment net revenues increased 20.3% to $452.0 million. This growth helped to partially offset declines in the Consumer Products and Entertainment segments.
The company is focusing its strategic investments on its most valuable and profitable franchises across games, toys, licensing and entertainment. This focused strategy also led to the decision to sell certain non-core parts of our business, including the Entertainment One film and television business.
The sale of the Entertainment One film and television business significantly impacted revenue and profitability comparisons. The company sold eOne Film and TV for a sales price of $375.0 million in cash.
The Operational Excellence program is intended to improve the business through targeted cost-savings, supply chain transformation and certain other restructuring actions designed to drive growth and enhance shareholder value.
The company has strengthened its leadership team with industry veterans and turnaround experts and has focused its strategic investments on its most valuable and profitable franchises across games, toys, licensing and entertainment.
The company made the difficult decision to take additional headcount reductions and accelerate the process of certain organizational structure changes in an effort to strengthen our foundation and position Hasbro for growth.
The Company is subject to claims related to product and other commercial matters. In determining costs to accrue related to these items, the Company carefully analyzes cases and considers the likelihood of adverse judgments or outcomes, as well as the potential range of possible loss.
Future volatility of general price inflation could affect consumer purchases of our products and spending on entertainment. Additionally, the impact of inflation on costs and availability of materials, costs for shipping and warehousing and other operational overhead, could adversely affect the Company's financial results.
The Company is exposed to market risks attributable to fluctuations in foreign currency exchange rates primarily as the result of sourcing products priced in U.S. dollars, Hong Kong dollars and Euros while marketing and selling those products in more than twenty currencies.
The Wizards of the Coast and Digital Gaming segment net revenues increased 20.3% in the second quarter of 2024 to $452.0 million from $375.6 million in the second quarter of 2023.
The Consumer Products segment net revenues decreased 20% to $524.5 million for the second quarter of 2024 compared to $655.2 million for the second quarter of 2023 primarily driven by broader industry trends, exited businesses, including out-licensing certain brands, shifts in product mix, and reduced closeout sales as a result of last year's inventory clean up initiatives.
Within the Partner Brands portfolio, there are a number of brands which are reliant on related entertainment, including television and movie releases. As such, net revenues from Partner Brands fluctuate depending on entertainment popularity, release dates and related product line offerings.
Cost of sales for the second quarter of 2024 was $237.7 million, or 23.9% of net revenues, compared to $352.2 million, or 29.1% of net revenues, for the second quarter of 2023. The Cost of sales decrease in dollars was driven primarily by lower sales volumes, cost savings from the Company's Operational Excellence Program, and a non-recurring $26.7 million benefit related to a historical over-accrual of vendor commitment liabilities.
Selling, distribution and administration expenses decreased to $318.5 million, or 32.0% of net revenues for the second quarter of 2024, from $380.6 million, or 31.5% of net revenues, for the second quarter of 2023. The decrease in Selling, distribution and administration expenses during the second quarter of 2024 primarily reflects lower administrative expenses due to cost savings from the Company's Operational Excellence Program and a prior year intangible asset impairment charge of $65.0 million related to the Company's eOne trademark intangible asset, partially offset by a non-recurring $31.1 million expense related to historical environmental exposures.
During 2024, the Company expects to continue to fund its working capital needs primarily through available cash, cash flows from operations and if needed, by issuing commercial paper or borrowing under its revolving credit agreement.
The net revenue increase in the Wizards of the Coast and Digital Gaming segment during the second quarter of 2024 was primarily attributable to revenue contributions from higher digital licensing of Baldur's Gate 3.
The Wizards of the Coast and Digital Gaming business engages in the promotion of the Company's brands through the development of trading card, role-playing and digital game experiences based on Hasbro and Wizards of the Coast games.
Additionally, we license certain of our brands to other third-party digital game developers who transform Hasbro brand-based characters and other intellectual properties, into digital gaming experiences.
In May 2024, the Company issued an aggregate of $500.0 million of senior unsecured debt securities that bear a fixed interest of 6.05% due 2034 (the '2034 Notes').
It is anticipated that proceeds from the 2034 Notes, along with existing cash available, will be utilized to repay the 2024 Notes.
There were no repurchases of the Company's Common Stock during the six months ended June 30, 2024. At June 30, 2024, Hasbro had $241.6 million remaining available under its share repurchase authorization.
The Company monitors for any estimated environmental contingencies related to its current physical locations and former owned or leased facilities in which it is responsible for environmental matters.
a $31.1 million environmental liability related to a previously owned manufacturing facility (environmental liability assumed as part of a historical acquisition), in which the Company is solely responsible for the mitigation and remediation activities.
For the past decade, we have been consistently recognized for our corporate citizenship, including being named one of the 100 Best Corporate Citizens by 3BL Media.
The impact of inflation on the Company's business operations was significant during the first six months of 2024 and throughout 2023. The Company monitors the impact of inflation to its business operations on an ongoing basis and may need to implement actions such as price adjustments to mitigate the impact of changes to the rate of inflation in future periods.
However, future volatility of general price inflation could affect consumer purchases of our products and spending on entertainment.
Additionally, the impact of inflation on costs and availability of materials, costs for shipping and warehousing and other operational overhead, could adversely affect the Company's financial results.