Hasbro's Q3 Earnings Surpass Estimates, Revenues Fall Y/Y

Core Viewpoint - Hasbro, Inc. reported mixed results for the third quarter of fiscal 2024, with earnings exceeding expectations while revenues fell short, leading to a 3.6% decline in stock price during pre-market trading on October 24 [1]. Earnings & Revenues - Adjusted earnings per share (EPS) for the third quarter were $1.73, surpassing the Zacks Consensus Estimate of $1.31, and up from $1.64 in the same quarter last year [2]. - Net revenues were $1.28 billion, missing the consensus estimate of $1.29 billion, and representing a 14.8% decline from $1.5 billion in the prior year [2]. Brand Performances - Franchise Brands generated revenues of $941.6 million, down 7% year over year, with expectations set at $1.03 billion [3]. - Partner Brands saw revenues drop 17% year over year to $190.1 million, against an expected $151.6 million [3]. - Portfolio Brands reported revenues of $149.6 million, a 12% decrease from the previous year, while estimates were at $127.9 million [3]. - Total gaming category revenues fell 6% year over year to $593.2 million [3]. Segmental Revenues - Consumer Products segment revenues decreased 10% year over year to $860.1 million, attributed to discontinued brands and lower volume, with an adjusted operating margin of 15.1% [4]. - Revenues from the Wizards of the Coast and Digital Gaming segment totaled $404 million, down 4.6% from $423.6 million in the prior year, with an adjusted operating margin of 44.9% [4]. - The Entertainment segment's revenues plummeted 86% year over year to $17.2 million, with an adjusted operating margin of 76.7% [4]. Operating Highlights - Cost of sales as a percentage of net revenues was 29.6%, down from 32.9% in the previous year [5]. - Selling, distribution, and administration expenses were $299.3 million, compared to $352.3 million in the prior year [5]. - Adjusted EBITDA for the quarter was $406.4 million, slightly up from $401.5 million a year ago [5]. Balance Sheet - As of September 29, 2024, cash and cash equivalents stood at $696.1 million, a significant increase from $185.5 million as of October 1, 2023 [6]. - Inventories totaled $375.4 million, down from $617.7 million a year ago [6]. - Long-term debt decreased to $3.46 billion from $3.65 billion as of October 1, 2023 [6]. Updated 2024 Outlook - For 2024, Hasbro projects Consumer Products revenues to decline by 12-14%, revised from an earlier estimate of 7-11%, with an expected operating margin of 4-6% [7]. - Revenues for the Wizards of the Coast segment are projected to be flat to down 1%, with an operating margin around 42% [7]. - The Pro-Forma Entertainment segment is expected to see a revenue decline of $15 million from the previous year, with an anticipated adjusted operating margin of approximately 60% [7]. - Total adjusted EBITDA for the full year is expected to range between $975 million and $1.025 billion [7].