Hasbro, Inc. (HAS) Bundle
Understanding Hasbro, Inc. (HAS) Revenue Streams
Understanding Hasbro, Inc.’s Revenue Streams
Hasbro, Inc. reported a significant decline in net revenues for the third quarter of 2024, with total net revenues of $1,281.3 million, down 15% from $1,503.4 million in the third quarter of 2023. This decrease was driven primarily by declines across several segments.
Breakdown of Primary Revenue Sources
The following table presents net revenues by brand portfolio category for the three months ended September 29, 2024, and October 1, 2023:
| Brand Portfolio Category | September 29, 2024 | October 1, 2023 | % Change |
|---|---|---|---|
| Franchise Brands | $941.6 million | $1,011.0 million | (7%) |
| Partner Brands | $190.1 million | $228.2 million | (17%) |
| Portfolio Brands | $149.6 million | $170.6 million | (12%) |
| Non-Hasbro Branded Film & TV | $0 million | $93.6 million | (100%) |
| Total | $1,281.3 million | $1,503.4 million | (15%) |
Year-over-Year Revenue Growth Rate
For the first nine months of 2024, net revenues decreased 18% to $3,033.9 million from $3,714.4 million in the same period in 2023. The decline is attributed to:
- A $423.5 million (or 87%) decline in the Entertainment segment.
- A $334.9 million (or 16%) decline in the Consumer Products segment.
- An increase of $77.9 million (or 7%) in the Wizards of the Coast and Digital Gaming segment.
Contribution of Different Business Segments to Overall Revenue
The following table illustrates net revenues by segment for the nine months ended September 29, 2024, and October 1, 2023:
| Segment | September 29, 2024 | October 1, 2023 | % Change |
|---|---|---|---|
| Consumer Products | $1,797.6 million | $2,132.5 million | (16%) |
| Wizards of the Coast and Digital Gaming | $1,172.3 million | $1,094.4 million | 7% |
| Entertainment | $64.0 million | $487.5 million | (87%) |
| Total Net Revenues | $3,033.9 million | $3,714.4 million | (18%) |
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- The Entertainment segment saw a dramatic drop due to the sale of the eOne Film and TV business, resulting in a 100% decline in Non-Hasbro Branded Film & TV revenues, from $93.6 million to $0 million.
- Franchise Brands revenue decreased 7%, largely due to lower sales of NERF and DUNGEONS & DRAGONS products.
- Partner Brands experienced a 17% decline, primarily impacted by lower sales from STAR WARS and MARVEL products, which lacked new entertainment releases to support sales.
A Deep Dive into Hasbro, Inc. (HAS) Profitability
Profitability Metrics
Analyzing the profitability metrics of Hasbro, Inc. is essential for understanding its financial health as of 2024. Below are the key profitability metrics including gross profit margin, operating profit margin, and net profit margin.
Gross Profit Margin
The gross profit margin for the first nine months of 2024 was 72.9%, down from 69.5% in the same period of 2023. This change reflects a decrease in net revenues primarily driven by lower sales volumes in the Consumer Products segment.
Operating Profit Margin
Operating profit for the first nine months of 2024 was $630.2 million, resulting in an operating profit margin of 20.8%. This represents a significant improvement compared to an operating loss of ($340.2 million) in the same period of 2023.
Net Profit Margin
For the first nine months of 2024, the net profit margin was 13.8%, with net earnings attributable to Hasbro, Inc. at $419.9 million. In contrast, the net profit margin for the same period in 2023 was (11.5%), reflecting losses of ($428.2 million).
Trends in Profitability Over Time
The trends in profitability metrics from 2023 to 2024 indicate a recovery from previous losses, particularly in operating and net profit margins. The following table summarizes these trends:
| Metric | 2023 (9 Months) | 2024 (9 Months) | % Change |
|---|---|---|---|
| Gross Profit Margin | 69.5% | 72.9% | +3.4% |
| Operating Profit | ($340.2 million) | $630.2 million | +285% |
| Net Profit Margin | (11.5%) | 13.8% | +25.3% |
Comparison of Profitability Ratios with Industry Averages
When compared to the toy and game industry averages, Hasbro’s profitability metrics show promising signs:
- Industry Average Gross Profit Margin: 65%
- Industry Average Operating Profit Margin: 15%
- Industry Average Net Profit Margin: 10%
Hasbro's gross profit margin of 72.9% and operating profit margin of 20.8% exceed industry averages significantly, highlighting its operational efficiency.
Analysis of Operational Efficiency
Operational efficiency has improved due to several cost management initiatives. The cost of sales for the first nine months of 2024 was 27.1% of net revenues, a decrease from 30.5% in 2023. This reduction is attributed to:
- Supply chain productivity improvements
- Cost savings initiatives
- Lower royalty expenses
Furthermore, the selling, distribution, and administration expenses were 23.4% of net revenues, consistent with the previous year, indicating effective cost control.
Conclusion
Overall, Hasbro, Inc. demonstrates a strong recovery in profitability metrics in 2024, showcasing improvements in gross, operating, and net profit margins, alongside effective operational efficiency measures.
Debt vs. Equity: How Hasbro, Inc. (HAS) Finances Its Growth
Debt vs. Equity: How Hasbro, Inc. Finances Its Growth
Overview of the Company's Debt Levels
As of September 29, 2024, Hasbro, Inc. reported total long-term debt of $3.98 billion. The current portion of long-term debt was $500 million, which includes 3% fixed-rate notes due in November 2024. Short-term borrowings amounted to $141.9 million.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for Hasbro, Inc. as of September 29, 2024, was approximately 3.04, calculated using total liabilities of $4.59 billion against total shareholders' equity of $1.31 billion. This ratio is significantly higher than the toy and game industry's average of about 1.5, indicating a more leveraged capital structure relative to peers.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In May 2024, Hasbro issued $500 million of senior unsecured debt securities with a fixed interest rate of 6.05%, maturing in 2034. The proceeds from this issuance are intended to help refinance existing debts. The company maintains a revolving credit facility with Bank of America, providing commitments of up to $1.25 billion. As of September 29, 2024, there were no borrowings under this facility, and approximately $1.2 billion remained available.
How the Company Balances Between Debt Financing and Equity Funding
Hasbro has been actively managing its capital structure through a blend of debt and equity financing. The total shareholders' equity reported at the end of September 2024 was $1.31 billion, reflecting a decrease from $2.22 billion in the previous year. This decline is primarily due to net losses attributed to the company's operations. To maintain liquidity, Hasbro has emphasized cash management, with cash and cash equivalents totaling $696.1 million as of September 29, 2024.
| Debt Type | Principal Amount | Interest Rate | Maturity Date |
|---|---|---|---|
| 3.90% Notes | $900 million | 3.90% | 2029 |
| 3.55% Notes | $675 million | 3.55% | 2026 |
| 3.00% Notes | $500 million | 3.00% | 2024 |
| 6.35% Notes | $500 million | 6.35% | 2040 |
| 3.50% Notes | $500 million | 3.50% | 2027 |
| 6.05% Notes | $500 million | 6.05% | 2034 |
| 5.10% Notes | $300 million | 5.10% | 2044 |
| 6.60% Debentures | $109.9 million | 6.60% | 2028 |
Assessing Hasbro, Inc. (HAS) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
The current ratio as of September 29, 2024, is 1.75, indicating that for every dollar of liability, the company has $1.75 in current assets. The quick ratio stands at 1.14, which signifies that the company can cover its immediate liabilities without relying on inventory.
| Ratio | Value |
|---|---|
| Current Ratio | 1.75 |
| Quick Ratio | 1.14 |
Analysis of Working Capital Trends
As of September 29, 2024, the working capital is calculated as current assets minus current liabilities, resulting in a positive working capital of $534.3 million. This reflects an increase compared to the previous year, which was $431.6 million.
| Period | Working Capital (in Millions) |
|---|---|
| September 29, 2024 | 534.3 |
| October 1, 2023 | 431.6 |
Cash Flow Statements Overview
For the nine months ended September 29, 2024, the cash flows from operating activities amounted to $587.6 million, an increase from $334.9 million in the same period of the previous year. Cash flow from investing activities was a net outflow of ($635.4 million), primarily due to significant investments in property and short-term investments. Financing activities generated $190.8 million in cash, contrasting with a net outflow of ($418.0 million) in the prior year.
| Cash Flow Type | 2024 (in Millions) | 2023 (in Millions) |
|---|---|---|
| Operating Activities | 587.6 | 334.9 |
| Investing Activities | (635.4) | (162.6) |
| Financing Activities | 190.8 | (418.0) |
Potential Liquidity Concerns or Strengths
The company has $696.1 million in cash and cash equivalents, along with $489.3 million in short-term investments, which provides a strong liquidity buffer. The revolving credit facility of $1.25 billion remains untapped, offering additional liquidity if needed. However, the company also carries long-term debt of $4.0 billion, with $500 million due within the next year, which could impact future liquidity if not managed effectively.
| Liquidity Metrics | Value |
|---|---|
| Cash and Cash Equivalents | 696.1 million |
| Short-term Investments | 489.3 million |
| Revolving Credit Facility | 1.25 billion |
| Long-term Debt | 4.0 billion |
| Current Portion of Long-term Debt | 500 million |
Is Hasbro, Inc. (HAS) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis for the company focuses on key financial ratios and stock performance metrics to determine if the stock is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
The trailing twelve months (TTM) P/E ratio is currently 9.92. This ratio indicates how much investors are willing to pay per dollar of earnings. The average P/E ratio for the industry is approximately 15, suggesting that the stock may be undervalued relative to its peers.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.38, compared to the industry average of 2.10. This lower ratio may suggest that the stock is undervalued, as it reflects the market's lower valuation of the company's net assets.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is recorded at 7.50, which is lower than the industry average of 10. This indicates that the company is potentially undervalued based on its earnings before interest, taxes, depreciation, and amortization.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated between a low of $48.30 and a high of $88.50. The current stock price is approximately $70.00, reflecting a 20% increase over the past year.
| Metric | Value | Industry Average |
|---|---|---|
| P/E Ratio | 9.92 | 15.00 |
| P/B Ratio | 1.38 | 2.10 |
| EV/EBITDA Ratio | 7.50 | 10.00 |
| 52-Week Low | $48.30 | |
| 52-Week High | $88.50 | |
| Current Stock Price | $70.00 |
Dividend Yield and Payout Ratios
The current dividend yield stands at 2.00%, with a payout ratio of 40%. This indicates a healthy return for investors while retaining sufficient earnings for reinvestment.
Analyst Consensus
Analysts currently have a consensus rating of Hold on the stock. Approximately 40% of analysts recommend a Buy, 50% recommend a Hold, and 10% recommend a Sell.
Key Risks Facing Hasbro, Inc. (HAS)
Key Risks Facing Hasbro, Inc.
The financial health of Hasbro, Inc. is influenced by a variety of internal and external risk factors that investors need to consider. These risks include industry competition, regulatory changes, market conditions, and operational challenges.
Industry Competition
Hasbro operates in a highly competitive toy and entertainment industry. The company faces intense competition from both traditional toy manufacturers and digital gaming companies. In particular, net revenues from the Partner Brands portfolio decreased by $131.4 million, or 25%, in the first nine months of 2024 compared to the same period in 2023, highlighting the impact of competition from brands such as STAR WARS and MARVEL.
Regulatory Changes
Changes in regulations related to product safety, environmental standards, and international trade can significantly affect operations. Compliance with various regulations can lead to increased costs and operational delays. Furthermore, the sale of the eOne Film and TV business has necessitated adjustments in how the company complies with industry regulations, which could pose additional risks.
Market Conditions
Market conditions, including shifts in consumer preferences and economic downturns, can adversely affect sales. For instance, net revenues for the Consumer Products segment decreased by 16% to $1,797.6 million for the first nine months of 2024 compared to $2,132.5 million in the same period of 2023. This decline was driven by broader industry trends and shifts in product mix.
Operational Risks
Operational risks include supply chain disruptions, which can lead to increased costs and reduced availability of products. The cost of sales for the first nine months of 2024 was $820.8 million, or 27.1% of net revenues, compared to $1,132.0 million, or 30.5% of net revenues, in the same period of 2023.
Financial Risks
Financial risks such as interest rate fluctuations and debt management are critical. As of September 29, 2024, total liabilities were reported at $5,920.2 million, which includes $3,462.6 million in long-term debt. The company also experienced a non-operating expense of $76.0 million for the first nine months of 2024, impacting overall profitability.
Strategic Risks
Strategic risks stem from the company's reliance on entertainment releases to drive product sales. The lack of recent major releases contributed to a 15% decline in total net revenues for the third quarter of 2024, amounting to $1,281.3 million compared to $1,503.4 million in the third quarter of 2023.
Mitigation Strategies
The company is implementing various strategies to mitigate these risks, including diversifying its product offerings and enhancing digital engagement through successful brands like DUNGEONS & DRAGONS and MONOPOLY GO!, which saw increased revenues.
| Risk Factor | Description | Impact |
|---|---|---|
| Industry Competition | Intense competition from traditional and digital gaming companies | Decrease in Partner Brands revenues by $131.4 million (25%) |
| Regulatory Changes | Changes in safety and environmental regulations | Increased compliance costs and operational delays |
| Market Conditions | Shifts in consumer preferences and economic downturns | Consumer Products revenues down 16% to $1,797.6 million |
| Operational Risks | Supply chain disruptions | Cost of sales at $820.8 million (27.1% of revenues) |
| Financial Risks | Interest rate fluctuations and debt management | Total liabilities at $5,920.2 million, with $3,462.6 million in long-term debt |
| Strategic Risks | Reliance on entertainment releases | 15% decline in total net revenues to $1,281.3 million |
Future Growth Prospects for Hasbro, Inc. (HAS)
Future Growth Prospects for Hasbro, Inc.
Analysis of Key Growth Drivers
In 2024, the company experienced notable shifts in revenue across its segments. The net revenues for the first nine months of 2024 decreased 18% to $3,033.9 million compared to $3,714.4 million for the same period in 2023. This decline was primarily due to an 87% decrease in the Entertainment segment, alongside a 16% drop in the Consumer Products segment. However, the Wizards of the Coast and Digital Gaming segment saw an increase of 7%, contributing $77.9 million to the overall revenue.
Future Revenue Growth Projections and Earnings Estimates
Revenue for the third quarter of 2024 declined 15% to $1,281.3 million from $1,503.4 million in Q3 2023. This decline reflects a 10% drop in the Consumer Products segment and an 86% decline in the Entertainment segment. Despite these challenges, projections indicate potential growth in specific areas, with expected revenue from the Wizards of the Coast and Digital Gaming segment likely to continue its upward trend.
Strategic Initiatives or Partnerships that May Drive Future Growth
The company's strategic focus on product innovation and brand revitalization is evident in their recent initiatives. The reintroduction of brands like FURBY and the success of new products like MONOPOLY GO! are expected to enhance market presence. Additionally, licensing agreements, particularly in the digital gaming space, have been pivotal in driving revenue.
Competitive Advantages that Position the Company for Growth
Hasbro's strong brand portfolio remains a significant competitive advantage. The Franchise Brands, including popular lines such as NERF and TRANSFORMERS, generated $2,334.7 million in the first nine months of 2024, despite a 3% decrease from the prior year. The company's ability to leverage its intellectual property across various media and consumer products provides a unique edge in the market.
| Segment | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | % Change |
|---|---|---|---|
| Franchise Brands | $941.6 | $1,011.0 | (7%) |
| Partner Brands | $190.1 | $228.2 | (17%) |
| Portfolio Brands | $149.6 | $170.6 | (12%) |
| Non-Hasbro Branded Film & TV | $0 | $93.6 | (100%) |
| Total Revenue | $1,281.3 | $1,503.4 | (15%) |
Overall, while the company faces significant challenges in various segments, strategic initiatives and a strong brand portfolio position it for future growth opportunities in 2024 and beyond.
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Article updated on 8 Nov 2024
Resources:
- Hasbro, Inc. (HAS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Hasbro, Inc. (HAS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Hasbro, Inc. (HAS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.