Yahoo Finance Hasbro (HAS) Q1 Earnings Miss Estimates, Revenues Surpass
Hasbro, Inc. HAS reported mixed first-quarter fiscal 2023 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. The metrics declined on a year-over-year basis.
Chris Cocks, Hasbro chief executive officer, stated, "We've made significant progress in implementing our Blueprint 2.0 strategy, including heightening our focus on high-growth, high-profit categories; improving our cost structure; and adding talented executives to our leadership team. The sale process for the eOne TV and film assets is ongoing and we expect to provide an update during the second quarter."
Earnings & Revenues
In the fiscal first quarter, the company reported adjusted earnings per share (EPS) of 1 cent, missing the Zacks Consensus Estimate of 4 cents. In the prior-year quarter, it reported an adjusted EPS of 57 cents.
Hasbro, Inc. Price, Consensus and EPS Surprise
Hasbro, Inc. price-consensus-eps-surprise-chart | Hasbro, Inc. Quote
Net revenues of $1,001 million beat the Zacks Consensus Estimate of $876 million. However, the top line declined 13.9% year over year. Dismal performances of Franchise Brands, Partner Brands and Portfolio Brands affected the top line.
Brand Performances
In the fiscal first quarter, Franchise Brands reported revenues of $613.4 million, down 6% year over year. Partner Brands’ revenues declined 36% year over year to $132.7 million.
Revenues at Portfolio Brands amounted to $92 million, down 18% from the prior-year quarter’s level. The total gaming category revenues rose 2% year over year to $386.5 million.
Revenues from non-Hasbro Branded Film & TV dropped 16% year over year to $162.9 million, mainly due to the absence of comparable film releases in the reported quarter.
Segmental Revenues
Hasbro has three reportable operating segments — Consumer Products, Wizards of the Coast and Digital Gaming and Entertainment.
In the fiscal first quarter, net revenues from Consumer Products declined 23% year over year to $520.4 million. The adjusted operating margin was (6.8)% against 2.8% reported in the prior-year quarter. Adjusted EBITDA was ($4.6) million against $48.8 million reported in the prior-year quarter.
The Wizards of the Coast and Digital Gaming segment’s revenues totaled $295.2 million, up 12% from $262.8 million reported in the year-ago quarter. The upside was backed by strong contributions from MAGIC: THE GATHERING and Dungeons and Dragons: Honor Among Thieves. The adjusted operating margin was 26% compared with 40.5% in the year-ago quarter. Adjusted EBITDA was $86.4 million compared with $112.2 million reported in the prior-year quarter.
Entertainment’s revenues declined 19% year over year to $185.4 million. The adjusted operating margin was (1.3%) against 9.2% reported in the prior-year quarter. Adjusted EBITDA was $8.1 million compared with $31.4 million reported in the prior-year quarter.
Operating Highlights
In the fiscal first quarter, Hasbro's cost of sales and selling, distribution and administration expenses (as percentages of net revenues) came in at 28.5% and 31.7% compared with 28.6% and 26.4% reported in the prior-year quarter, respectively.
HAS reported an adjusted EBITDA of $98.7 million compared with $192.1 million reported in the prior-year quarter.
Balance Sheet
Cash and cash equivalents as of Apr 2, 2023, were $386.2 million compared with $513.1 million as of Dec 25, 2022. At the reported-quarter end, inventories totaled $713.4 million compared with $644.3 million in the year-ago period.
As of Apr 2, 2023, long-term debt was $3,682.4 million compared with $3,711.2 million as of Dec 25, 2022.
The company’s board of directors announced a dividend of 70 cents per common share, payable May 15, to shareholders of record at the close of business as of May 1, 2023. In first-quarter fiscal 2023, the company paid out cash dividends worth $96.7 million.
2023 Outlook
For fiscal 2023, the company expects revenues to decline in the low-single digits. The adjusted operating profit margin is expected to expand 50-70 basis points (bps). The company anticipates adjusted earnings per share of $4.45-$4.55.
Adjusted EBITDA is expected to be flat year over year. Operating cash flow is projected to be $600-$700 million.
Segment wise, the company anticipates revenues in Consumer Products to decline year over year (at cc) in the mid-single digits, with an adjusted operating profit margin improvement of 150-200 bps from the adjusted 7.6% reported in 2022.
In the Wizards of the Coast and Digital Gaming segment, the company expects second quarter revenues to decline on a year over year basis. For fiscal 2023, the company expects revenues to grow in the mid-single digits. The operating profit margin is expected in the high-30% range.
The company projects Entertainment revenues to increase in the low-single digits. The adjusted operating margin is expected to increase marginally from 8.6% reported in 2022.
Zacks Rank & Stocks to Consider
Hasbro currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are Hilton Grand Vacations Inc. HGV, Crocs, Inc. CROX and PlayAGS, Inc. AGS.
Hilton Grand Vacations currently sports a Zacks Rank #1 (Strong Buy). HGV has a trailing four-quarter earnings surprise of 12.1%, on average. Shares of HGV have declined 8.1% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for HGV’s 2023 sales and EPS indicates a rise of 7.3% and 3.4%, respectively, from the year-ago period’s levels.
Crocs carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 21.8%, on average. Shares of Crocs have increased 122% in the past year.
The Zacks Consensus Estimate for CROX’s 2023 sales and EPS indicates a rise of 13.1% and 2.8%, respectively, from the year-ago period’s levels.
PlayAGS carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 133.3%, on average. The stock has declined 22.8% in the past year.
The Zacks Consensus Estimate for AGS 2024 sales and EPS indicates a rise of 3% and 1,873.3%, respectively, from the year-ago period’s estimated levels.
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