Hasbro, Inc. · NASDAQ:HAS
Hasbro — Q1 2024 Earnings Presentation
31 slides from Hasbro's earnings presentation, Apr 24, 2024
Slide 1: Q1 2024 Earnings
Q1 2024 Earnings April 24, 2024
Slide 2: Use of Non-GAAP Financial Measures
USE OF NON-GAAP FINANCIAL MEASURES Supplemental Financial Data The financial tables accompanying this presentation 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,
Slide 3: Safe Harbor
Safe Harbor Certain statements in this presentation 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 s
Slide 4: Hasbro's Transformation
Hasbro’s Transformation Focus on Play Operate with Excellence Strengthen Balance Sheet Focus on bottom line Enhance Hasbro’s Gaming performance by prioritizing Invest to drive profitable growth leadership, both tabletop and digital fewer, bigger brands Double-down on fewer, Deliver Operational Excel
Slide 5: First Quarter 2024 Highlights
First Quarter 2024 Highlights Total Hasbro revenue decline of -24%; Revenues declined 9% absent the impact of the eOne film and television divestiture REPORTED ADJUSTED Wizards of the Coast and Digital Gaming segment grew 7% behind growth in $757.3M $757.3M MAGIC: THE GATHERING and ongoing strength
Slide 6: First Quarter 2024
First Quarter 2024 ies
Slide 7: Hasbro Inc. First Quarter 2024 Performance
Hasbro Inc. First Quarter 2024 Performance Wizards of Q1 2024 Reported Results Consumer Entertainment Corporate the Coast & Hasbro ($ millions, except earnings per share) Products & Other Digital Gaming Revenue $316 $413 $28 N/A $757 % vs PY +7% -21% -85% N/A -24% Operating Profit (Loss) $123 ($47)
Slide 8: Hasbro Inc. First Quarter 2024 Performance-As Adjusted
Hasbro Inc. First Quarter 2024 Performance-As Adjusted Wizards of Q1 2024 Adjusted Results Consumer Corporate the Coast & Entertainment Hasbro ($ millions, except earnings per share) Products & Other Digital Gaming Revenue $316 $413 $28 N/A $757 % vs PY +7% -21% -85% N/A -24% Operating (Loss) Profit
Slide 9: Q1 2024 Operating Margin Performance
Q1 2024 Operating Margin Performance As Reported Operating Profit Margin Drivers Adjusted Operating Profit Margin Drivers ($ millions) ($ millions) Q1 2023 Op Profit Margin Q1 2023 Op Profit Margin 1.8% $18 4.7% $47 (Adjusted) Volume & Mix* -1.2 pts ($11) Volume & Mix* -0.8 pts ($11) Royalties -0.7
Slide 10: Total Hasbro Owned Inventory Reduction
Total Hasbro Owned Inventory Reduction Down -32% vs. Q1 2019 • Total Q1 inventory -53% vs. PY -53% with CP -57% and Wizards -36% $800 $713 $700 • Represents approximately $644 66 days of supply, which is $600 consistent with 2023 year-end $492 $500 $444 • Inventory will build in Q2 to $429 support c
Slide 11: Consumer Products Performance
Consumer Products Performance CP Q1 2024 Revenue Drivers 0.4% -1% -0.3% -2% -18% -21% Exited Business Volume & Mix Selling Rate Licensing FX Total Revenue Decline Revenue decline driven by broader market softness in key categories, reduction in closeout volume and timing of Hasbro Pulse initiatives
Slide 12: Brand Portfolio Performance
Brand Portfolio Performance Q1 2024 Brand Category Highlights Net Revenue by Brand Portfolio Franchise Brands ($ millions) Q1 2024 Q1 2023 % Change First quarter growth in PEPPA PIG (+41%), HASBRO GAMING (+6%), MAGIC THE GATHERING (+4%) DUNGEONS & Franchise Brands $607 $613 -1% DRAGONS (+3%). Partne
Slide 13: Consumer Products Op Margin Performance
Consumer Products Op Margin Performance Q1 2023 Op Profit Margin (Adjusted) -6.8% ($35) • Improvement in underlying business model driven by fewer Volume & Mix* -9.6 pts ($36) closeouts and improved cost structure Gross Sales to Net Sales Rate +0.9 pts $6 • Impact of volume decline driving deleverag
Slide 14: Wizards of the Coast & Digital Gaming Performance
Wizards of the Coast & Digital Gaming Performance Wizards of the Coast Q1 2024 Revenue Drivers 7% 7% 3% -3% 0.1% Wizards Tabletop Digital Game Digital Games FX Total Revenue Growth Licensing Revenue growth driven by growth in MAGIC: THE GATHERING and Licensed Digital Gaming behind Baldur’s Gate 3 an
Slide 15: Wizards of the Coast Op Margin Performance
Wizards of the Coast Op Margin Performance • Growth in Magic and Digital Q1 2023 Op Profit Margin (Adjusted) 26.0% $77 Licensing creating positive operating margin impact Volume & Mix* +4.0 pts $19 • Higher royalty expense in Gross Sales to Net Sales Rate -0.9 pts ($4) Magic and D&D Royalties -1.2 p
Slide 16: Total Hasbro, Inc. Cash Flow and Metrics
Total Hasbro, Inc. Cash Flow and Metrics Q1 2024 Highlights • Operating cash improvement driven by Operating Cash Flow underlying earnings growth and reduced production expense • Capital spending relatively flat vs. LY • Adjusted Underlying Q1 Tax Rate of $178 22.8% vs. 44.3% PY • Interest Expense o
Slide 17: Maintaining 2024 Guidance
Maintaining 2024 Guidance 2024 HEADLINES: • CP Revenue outlook impacted by business exits and industry outlook Wizards of the Coast & Consumer Products Digital Gaming • WOTC Revenue decline in back-half driven by Magic Universes Beyond comparison -3 to -5% -7 to -12% • Pro-forma Entertainment Segmen
Slide 18: Operational Excellence Program
Operational Excellence Program Path to $750 of Gross Cost Savings • On track to deliver $750M of $750M gross savings by 2025 Approx. Net Savings • Expect approximately ~50% of gross savings to flow through to $300M bottom line $220M $210M $20M • Realized ~$50M of net cost 2022 2023 2024 2025 Cumulat
Slide 19: Supplemental Financial Information
Supplemental Financial Information
Slide 20: Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets (Unaudited) (Millions of Dollars) March 31, 2024 April 2, 2023 ASSETS Cash and Cash Equivalents $ 570.2 $ 386.2 Accounts Receivable, Net 632.5 685.2 Inventories 336.2 713.4 Prepaid Expenses and Other Current Assets 456.5 754.4 Total Current Assets 1,995.4 2,539.
Slide 21: Consolidated Statement of Operations
Consolidated Statement of Operations (Unaudited) (Millions of Dollars and Shares Except Per Share Data) Quarter Ended % Net % Net March 31, 2024 Revenues April 2, 2023 Revenues Net Revenues $ 757.3 100.0% $ 1,001.0 100.0% Costs and Expenses: Cost of Sales 204.2 27.0% 285.3 28.5% Program Cost Amortiz
Slide 22: Condensed Consolidated Statement of Cash Flows
Condensed Consolidated Statement of Cash Flows (Unaudited) (Millions of Dollars) Quarter Ended March 31, 2024 April 2, 2023 Cash Flows from Operating Activities: Net Earnings (Loss) $ 59.1 $ (21.7) Loss on Disposal of Business 9.1 — Other Non-Cash Adjustments 60.9 181.9 Changes in Operating Assets a
Slide 23: Hasbro Q1 Share in Focus Categories
Hasbro Q1 Share in Focus Categories Focus Categories – Q1 2024 Hasbro Hasbro Hasbro Focus Category Action Figures & Accessories Share Change Share Position TRANSFORMERS POS growth in the quarter Action Figures & Accessories -1.2 pts 20.0% 1 Arts & Crafts First quarter growth in PLAY-DOH POS Arts & C
Slide 24: Key Cash Flow and Balance Sheet Data
Key Cash Flow and Balance Sheet Data $ Millions, unaudited YTD 2024 YTD 2023 NOTES Cash $570 $386 Long-term Debt $2,967 $3,682 Depreciation $21 $24 FY 2024 depreciation target in line with FY 2023 Decline a result of the eOne film and television divestiture and the full amortization of Amortization
Slide 25: FY 2023 Entertainment Segment Financials
FY 2023 Entertainment Segment Financials $ Millions; Unaudited Financials Hasbro Entertainment Total Entertainment Divested Film & TV Assets (Remain Co) Segment Revenue $573M $86M $659M % vs. LY -30% -34% -31% Operating Profit (Loss) ($836M) ($1,075M) ($1,912M) Adjusted Operating Profit (Loss) ($40M
Slide 26: Segment Results-As Reported and As Adjusted-Q1 2024
Segment Results-As Reported and As Adjusted-Q1 2024 26
Slide 27: Segment Results-As Reported and As Adjusted-Q1 2024 Continued
Segment Results-As Reported and As Adjusted-Q1 2024 Continued (UNAUDITED) (MILLIONS OF DOLLARS) 27
Slide 28: Reconciliation of Non-GAAP Financial Measures
(UNAUDITED) (MILLIONS OF DOLLARS) Reconciliation of Non-GAAP Financial Measures 28
Slide 29: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 29
Slide 30: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures (i) In association with the Company's acquisition of eOne, the Company incurred stock compensation expenses of $1.9 ($1.7 after- tax) in the quarter ended April 2, 2023. The expense is included within Selling, Distribution and Administration. (ii) Repres
Slide 31: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Amounts may not sum due to rounding 31