Hasbro, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023, a 53-week year; fiscal 2022 was 52 weeks. This is an annual filing, not a standalone fourth-quarter report. Amounts are in U.S. dollars.
Business context and strategy
Hasbro sells toys and games and earns revenue from digital gaming, entertainment and licensing. Its strategy emphasizes fewer, larger and more profitable franchises, growth in digital gaming and licensing, supply-chain improvement, and cost reduction. Key brands include MAGIC: THE GATHERING, Hasbro Gaming, PLAY-DOH, NERF, TRANSFORMERS, DUNGEONS & DRAGONS and PEPPA PIG.
On December 27, 2023, Hasbro sold its non-core eOne film and television business to Lionsgate for $375 million in cash, subject to adjustments, plus assumption of production financing loans. Hasbro retained entertainment capabilities focused on its own and family brands.
Financial performance
| Metric | FY2023 | FY2022 |
|---|---|---|
| Net revenue | $5,003.3 million | $5,856.7 million |
| Operating profit (loss) | $(1,538.8) million | $407.7 million |
| Operating margin | (30.8)% | 7.0% |
| Net earnings (loss) attributable to Hasbro | $(1,489.3) million | $203.5 million |
| Diluted earnings (loss) per share | $(10.73) | $1.46 |
| Cash from operating activities | $725.6 million | $372.9 million |
| Cash and cash equivalents at year-end | $545.4 million | $513.1 million |
Revenue declined 15%, including a favorable $20.6 million foreign-exchange impact. Consumer Products revenue fell 19% to $2,886.4 million; Wizards of the Coast and Digital Gaming rose 10% to $1,457.6 million; Entertainment fell 31% to $659.3 million. MAGIC: THE GATHERING revenue was $1,085.8 million, and total gaming revenue was $2,074.4 million, up 4%.
The net loss primarily reflects $1,307.2 million in non-cash goodwill and intangible-asset impairment charges, including a $960 million Family Brands goodwill impairment and $231.2 million related to the Film and TV reporting unit. Hasbro also recorded a $539 million loss on disposal of the eOne Film and TV business and $35.1 million of sale-process costs. The filing reports a $221.3 million income tax benefit; the goodwill impairments received no tax benefit.
Liquidity, debt and capital allocation
- Operating cash flow increased to $725.6 million; investing activities provided $117.6 million, including $329.6 million of net proceeds from the eOne sale. Financing activities used $818.1 million. Capital expenditures were $209.3 million; operating cash flow less capital expenditures was approximately $516 million.
- Year-end current assets were $2,323.6 million and current liabilities were $2,056.4 million, a current ratio of approximately 1.13. Inventory declined 51% to $332.0 million, reflecting inventory reduction efforts and write-downs. Accounts receivable was $1,029.3 million; days sales outstanding increased to 73 from 61.
- Long-term debt principal was $3,484.9 million, including $500 million due in November 2024. Hasbro repaid the remaining $250 million balance on its variable-rate term loan using eOne sale proceeds. It intends to refinance all or part of the 2024 notes.
- Hasbro had no year-end commercial paper or committed revolver borrowings and reported approximately $1.2 billion available under its $1.25 billion revolving facility. It was in compliance with debt covenants.
- Dividends paid were $388 million, or $2.80 per share. The Board declared a $0.70-per-share dividend payable in May 2024. There were no share repurchases in 2023.
Material changes, outlook and risks
- Franchise Brands revenue declined 3%; Partner Brands fell 35%, partly reflecting expired Disney Frozen and Disney Princess licenses and fewer comparable entertainment releases; Portfolio Brands fell 17%. Consumer Products faced weaker discretionary demand, excess inventory, obsolescence charges and closeout sales.
- Wizards and Digital Gaming revenue growth benefited from Baldur’s Gate 3, MAGIC: THE GATHERING releases and licensing royalties from Monopoly Go!. Segment operating profit nevertheless declined 2% to $525.7 million, with margin down to 36.1% from 40.6%.
- Entertainment results were affected by writers’ and actors’ strikes, delayed or reduced content deliveries, weaker forecasts and the strategic shift to an asset-light, partner-led model. The eOne sale reduces future entertainment revenue, costs and cash-flow volatility.
- Operational Excellence actions include the planned elimination of approximately 1,000 positions announced in January 2023 and approximately 900 additional positions announced in December. Additional actions are expected to be substantially completed over 18 to 24 months; restructuring and transformation expenses continue, and expected savings are not assured.
- Management said available cash, expected operating cash flow and borrowing capacity should meet 2024 working-capital needs, including the $500 million debt maturity. The filing provides no clear numeric 2024 revenue or earnings guidance.
- Key risks include uncertain consumer demand and product acceptance, customer concentration (Walmart and Amazon each represented 11% of revenue), competitive and licensed-brand exposure, execution of cost and supply-chain changes, reliance on third-party manufacturers and digital partners, foreign exchange, inflation, debt service and refinancing, and cybersecurity or product-safety events. The business is seasonal: 56% of 2023 revenue was earned in the second half.
Most important facts for investors to verify
- Whether core-brand demand, Consumer Products margins and inventory quality recover after the 2023 sales declines and write-downs.
- The assumptions supporting the $960 million Family Brands impairment; this was the auditor’s critical audit matter and depends on forecasts, discount rates and market multiples.
- Whether restructuring and supply-chain initiatives deliver savings on schedule without disrupting operations or reducing revenue.
- How Hasbro funds or refinances the $500 million November 2024 maturity while sustaining dividends and planned investment.
- The sustainable contribution from MAGIC: THE GATHERING, digital licensing and major partner brands, including renewal and minimum-royalty commitments.
- The 2023 loss included substantial impairments and disposal charges; investors should distinguish these items from recurring operating performance and examine the related segment disclosures.
KPMG issued unqualified opinions on the financial statements and internal control over financial reporting; management also reported effective disclosure controls and financial-reporting controls as of year-end.