PAWTUCKET - Hasbro, Inc. (NASDAQ:HAS) shares jumped 6% as the company reported a robust earnings beat for the second quarter of 2024, with adjusted EPS of $1.22, significantly surpassing the analyst estimate of $0.78.
The company's revenue also exceeded expectations, coming in at $995.3 million against the consensus estimate of $941.38 million.
The toy and entertainment company experienced an 18% decline in revenue compared to the same period last year, primarily due to the divestiture of its eOne segment. Excluding this divestiture, revenue saw a smaller decline of 6%.
The Wizards of the Coast and Digital Gaming segment saw a 20% increase, which helped offset declines in the Consumer Products and Entertainment segments, down 20% and 90% respectively, or 30% for Entertainment when excluding eOne.
CEO Chris Cocks attributed the solid performance to the company's operational excellence and ability to delight fans. "Hasbro is emerging as a more profitable, agile, and operationally excellent company," said Cocks.
The company also highlighted substantial margin improvement, with an adjusted operating profit of $249 million, marking a $112 million increase from the previous year.
Investors responded positively to the strong earnings beat and the company's announcement that it is raising its full-year guidance. The stock movement reflects investor confidence in Hasbro's updated outlook and its ability to execute in the second half of the year.
CFO Gina Goetter noted the meaningful progress in the Consumer Products turnaround and emphasized the company's focus on delivering on its updated full-year commitments. Hasbro's inventory management also showed significant improvement, with owned inventory down 51% from the previous year.
In addition to the earnings beat, Hasbro raised its full-year expectations, now projecting Consumer Products Segment revenue to be down between 7% to 11%, with an adjusted operating margin between 4% to 6%. The Wizards of the Coast Segment is expected to see a slight revenue decrease of 1% to 3%, with an operating margin of approximately 42%.
The Pro-Forma Entertainment segment anticipates a revenue decrease of $15 million, with an adjusted operating margin of around 60%. Overall, the company targets an Adjusted EBITDA of $975 million to $1.025 billion.
Hasbro's capital allocation priorities for 2024 include investing in its core business, returning cash to shareholders through dividends, and continuing to pay down debt to reach its leverage target.
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