Hasbro (HAS) Q2 Earnings Surpass Estimates, Revenues Lag

·6-min read

Hasbro, Inc. HAS reported mixed second-quarter fiscal 2022 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line increased on a year-over-year basis.

Deborah Thomas, Hasbro chief financial officer, stated, "In the first half of the year, we took significant steps to secure inventory to help ensure product availability for upcoming product launches, major entertainment releases and the holiday season. Foreign exchange is impacting our top line revenue growth, but our teams are executing well to meet demand and drive profit.”

Earnings & Revenues

During the fiscal second quarter, the company reported adjusted earnings per share (EPS) of $1.15, beating the Zacks Consensus Estimate of 88 cents. In the prior-year quarter, the company reported an adjusted EPS of $1.05.

Hasbro, Inc. Price, Consensus and EPS Surprise

 

Hasbro, Inc. Price, Consensus and EPS Surprise
Hasbro, Inc. Price, Consensus and EPS Surprise

Hasbro, Inc. price-consensus-eps-surprise-chart | Hasbro, Inc. Quote

 

In the quarter under review, net revenues of $1,339.2 million missed the consensus mark of $1,377 million. However, the top line moved up 1% on a year-over-year basis. The upside was backed by solid brand performances, including Magic: The Gathering, My Little Pony, Peppa Pig, PLAY-DOH and Hasbro products for the Marvel portfolio.

Brand Performances

During the fiscal second quarter, the Franchise Brand reported revenues of $743.9 million, up 10% year over year. During the quarter, Partner Brands’ revenues increased 3% year over year to $219.4 million.

Revenues at Hasbro Gaming amounted to $125.8 million, down 14% from the prior-year quarter’s levels. The total gaming category revenues rose 1.7% year over year to $528.3 million. The uptick was primarily led by growth in digital gaming, including YAHTZEE and games like Avalon Hill's HeroQuest.

Emerging Brands’ revenues during the fiscal second quarter increased 3% year over year to $92 million.

Revenues from TV/Film/Entertainment dropped 19% year over year to $158.1 million. The downside was mainly driven by the delivery timing of scripted TV series, partially offset by growth in film and unscripted TV revenues.

Segmental Revenues

Hasbro has three reportable operating segments: Consumer Products, Wizards of the Coast and Digital Gaming and Entertainment.

In the fiscal second quarter, net revenues in the Consumer Products segments increased 7% year over year to $734.2 million. Adjusted operating margin came in at 0.4% compared with 2.6% reported in the prior-year quarter. During the quarter, the segment’s adjusted EBITDA came in at $50.2 million compared with $54.7 million reported in the prior-year quarter.

During the quarter under review, the Wizards of the Coast and Digital Gaming segment’s revenues totaled $419.8 million, up 3% from $406.3 million reported in the year-ago quarter. The segment benefited from the robust performance of Magic: The Gathering and tabletop gaming. The segment’s adjusted operating margin came in at 53.7% compared with 47.5% reported in the year-ago quarter. During the quarter, the segment’s adjusted EBITDA came in at $231 million compared with $210 million reported in the prior-year quarter.

Revenues in the Entertainment segment declined 18% year over year to $185.2 million. The segment’s adjusted operating margin came in at 12.4% compared with 4.4% reported in the prior-year quarter. During the quarter, the segment’s adjusted EBITDA came in at $30.4 million, compared with $19.5 million reported in the prior-year quarter.

Operating Highlights

During the fiscal second quarter, Hasbro's cost of sales (as a percentage of net revenues) came in at 30.7% compared with 26.1% in the prior-year quarter. Selling, distribution and administration expenses — as a percentage of net revenues — came in at 24.4% compared with 26.8% reported in the prior-year quarter.

During the quarter, the company reported an adjusted EBITDA of $308.3 million compared with $289.6 million reported in the prior-year quarter.

Balance Sheet

Cash and cash equivalents as of Jun 26, 2022, were $628.2 million compared with $1,228.2 million on Jun 27, 2021. At the end of the reported quarter, inventories totaled $867.5 million compared with $499.6 million in the year-ago period. As of Jun 26, 2022, long-term debt came in at $3,739 million compared with $4,388.7 million as of Jun 27, 2021.

The company’s board of directors announced a dividend of 70 cents per common share. The dividend is payable on Aug 15, 2022, to shareholders of record at the close of business as of Aug 1.

During the second quarter of fiscal 2022, the company paid out cash dividends worth $97.4 million.

2022 Outlook

For fiscal 2022, the company anticipates revenue to grow at a low-single-digit rate and operating profit growth at a mid-single-digit rate. For fiscal 2022, the company expects to achieve an adjusted operating profit margin of 16%. Operating cash flow is anticipated in the range of $700-$800 million.

Zacks Rank & Key Picks

Hasbro currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the Consumer Discretionary sector are G-III Apparel Group, Ltd. GIII, Caleres, Inc. CAL and MGM Resorts International MGM.

G-III Apparel sports a Zacks Rank #1. GIII has a trailing four-quarter earnings surprise of 97.5%, on average. The stock has declined 27.7% in the past year.

The Zacks Consensus Estimate for GIII’s current financial year sales and EPS indicates growth of 12.9% and 10.4%, respectively, from the year-ago period’s reported levels.

Caleres sports a Zacks Rank #1. CAL has a trailing four-quarter earnings surprise of 62.9%, on average. Shares of the company have increased 20.3% in the past year.

The Zacks Consensus Estimate for CAL’s current financial year sales and EPS suggests growth of 4.8% and 0.7%, respectively, from the year-ago period’s levels.

MGM Resorts sports a Zacks Rank #1. MGM has a trailing four-quarter earnings surprise of 212.5%, on average. Shares of the company have declined 19.4% in the past year.

The Zacks Consensus Estimate for MGM’s current financial year sales and EPS suggests growth of 28.1% and 240.3%, respectively, from the year-ago period’s reported levels.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Hasbro, Inc. (HAS) : Free Stock Analysis Report
 
MGM Resorts International (MGM) : Free Stock Analysis Report
 
GIII Apparel Group, LTD. (GIII) : Free Stock Analysis Report
 
Caleres, Inc. (CAL) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research