Yahoo Finanza Hasbro Inc (HAS) Q1 2024 Earnings Call Transcript Highlights: Navigating Challenges with ...
Revenue: $757 million, down 24% year-over-year.
Net Income: Adjusted net earnings of $85 million.
Earnings Per Share (EPS): Diluted EPS of $0.61.
Operating Margin: 19.6%, up approximately 15.0 points from the previous year.
Free Cash Flow: Operating cash flow of $178 million, an improvement of $89 million from last year.
Gross Margin: Consumer Products gross margins grew over 5 points despite volume deleverage.
Release Date: April 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you refine the guidance a bit in terms of what the numbers provided equate to on an EPS basis? Given the sizable beat relative to consensus expectations while maintaining guidance, where do you think Street expectations might be overestimating? A: Gina Goetter, Executive VP & CFO of Hasbro, explained that the company does not provide specific EPS guidance. She noted that analysts' models are close to internal calculations, with a $0.10 favorability from a stock compensation adjustment expected to carry forward into the year.
Q: It's been a while since you've discussed MAGIC Arena. Could you provide an update, particularly on how it compares to the tabletop segment? A: CEO Christian P. Cocks acknowledged that MAGIC Arena was down a bit in Q1, primarily due to not lapping a remastered set from the previous year. He emphasized ongoing investments in Arena and the company's strategy to align digital offerings with social-based play and collectibility trends.
Q: You achieved almost a 20% operating margin in Q1, which is typically a smaller quarter. Why wouldn't you be able to reach or exceed the 20% margin target this year? A: CFO Gina Goetter pointed out that about half of the $45 million profit in the corporate segment was due to a non-recurring stock compensation adjustment. She expects some margin fluctuations throughout the year but remains optimistic about maintaining strong margins, especially with ongoing supply chain productivity.
Q: Can you discuss the Consumer Products top line, particularly how Hasbro's point of sale (POS) trends compare to industry trends, and the expected dynamics for Q2? A: CEO Christian P. Cocks noted healthy POS trends starting in March and continuing into April, despite a lighter entertainment slate compared to the previous year. He highlighted improved marketing effectiveness as a potential counterbalance to these headwinds.
Q: Regarding Consumer Products, you mentioned improved underlying performance and benefits from operational excellence, but adjusted operating income was down with some margin compression. When should we expect to see positive bottom-line comps for this business? A: CFO Gina Goetter projected that margins would follow top-line trends, with improvements expected as the year progresses, particularly in Q4, aligning with stronger holiday sales and ongoing cost management efforts.
Q: Could you provide an update on the performance of the Fallout Commander set and its impact on Magic revenue and segment margin? Also, how do you view the upcoming Final Fantasy and Marvel sets compared to the Lord of the Rings set? A: CEO Christian P. Cocks described Fallout Commander as potentially the best-performing commander set ever, highlighting robust engagement and healthy sales. He anticipates significant impact from the upcoming Final Fantasy and Marvel sets, comparable to the success of the Lord of the Rings set.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
