Play-Doh, Twister Maker Hasbro Thrives: Q2 Profits Soar Despite Entertainment Slump

Hasbro Inc. HAS shares are surging after the toy maker reported better-than-expected second-quarter FY24 earnings and revised the outlook.

The company reported a second-quarter FY24 sales decline of 18% year-on-year to $995.30 million, beating the analyst consensus estimate of $943.56 million.

The revenue decline was driven primarily by the eOne film divestiture; excluding the divestiture, revenue declined by 6%.

Segment Revenue: Consumer Products declined 20%, Wizards of the Coast and Digital Gaming increased 20%. Entertainment segment revenues plunged 90%, impacted by the sale of eOne Film and TV in December 2023; absent this impact, revenue declined 30%.

Selling, distribution, and administration costs fell 16.3%. The operating margin expanded Y/Y from (15.6)% to 21.3%, and operating income for the quarter was $212 million compared to $188.6 million loss last year.

Adjusted EBITDA for the quarter jumped 57.8% to $313.5 million. Adjusted EPS of $1.22 beat the analyst consensus of $0.78.

The company held $626.8 million in cash and equivalents as of June end. The operating cash flow for six months totaled $365.1 million.

Hasbro owned inventory down 51% versus prior year, including a 55% decline in Consumer Products inventory versus the second quarter 2023.

“We delivered a solid performance in games and digital licensing and substantial margin improvement this quarter,” said CEO Chris Cocks.

“Hasbro is emerging as a more profitable, agile, and operationally excellent company delighting fans of all ages through the magic of play.”

The company’s quarterly cash dividend of $0.70 per common share, payable on September 4, to shareholders of record at the close of business on August 21.

Outlook: Hasbro revised its FY24 Consumer Products Segment revenue outlook from down 7% – 12% to down 7% – 11%.

The company raised FY24 adjusted EBITDA guidance from $925 million – $1 billion to $975 million – $1.025 billion. Hasbro targets gross savings of $750 million by 2025-end.

Price Action: HAS shares are trading higher by 6% at $63.00 in premarket at the last check Thursday.

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