Hasbro, Inc. Q2 FY26 Earnings Analysis

- Wizards of the Coast (Magic): - Mid-single-digit revenue growth expected for full year 2026. - Strong first half of the year, with Q2 and Q3 robust; moderated growth in Q4 due to tough comps. - Continued momentum from premier sets like Lorwyn Eclipsed and Secrets of Strixhaven. - Growth driven by both first-party IP and successful Universes Beyond collaborations. - Expanding Magic audience through multi-franchise strategy and digital initiatives (e.g., Marvel on Magic Arena). - D&D on a positive trajectory with new content and series. - Consumer Products: - Low single-digit revenue growth expected in 2026. - Growth momentum continues with strong POS and share gains in gamified, entertainment-driven categories. - Some revenue shifting from Q2 to Q3 due to cyber event impacts but overall yearly growth on track. - Entertainment: - Slight positive revenue growth anticipated for 2026. Overall, Hasbro maintains a confident outlook with ongoing investments and strong release lineups supporting growth.

- Hasbro maintains full-year guidance for 2026 with consolidated revenue growth expected at 3%-5% (constant currency basis). - Adjusted operating margins are projected at 24%-25%, with adjusted EBITDA between $1.4B and $1.45B. - Wizards of the Coast expected to deliver mid-single-digit revenue growth with operating margins in the low 40% range. - Growth momentum for Wizards is strong in the first half, with some moderation expected in Q4 due to tough comparisons. - Consumer Products projected to grow low single digits with operating margins between 6%-8%, strengthening in the back half driven by volume leverage and productivity gains. - Adjusted earnings per diluted share in Q1 grew 41% year-over-year to $1.47, reflecting strong operating leverage. - Operating profit up 29% YoY to $287M in Q1, margin expansion driven by favorable mix and cost savings. - Cybersecurity-related costs and delays are factored into guidance but not expected to significantly impact adjusted EBITDA.

- Hasbro allocated $50 million to strategic investments in Q1 2026. - Continued investment focus on: - Wizards of the Coast, especially digital gaming and licensing. - Highest return growth opportunities led by Wizards. - No specific details on future capital expenditures were given beyond current investments. - Strong cash flow from operations ($338 million in Q1) supports ongoing investments. - Capital allocation priorities include investing in growth opportunities, paying down debt, and returning cash to shareholders through dividends and share repurchases.

- Hasbro issued $400 million of new notes. - Proceeds used to fully repay November 2026 maturities. - Remaining balance applied to repurchase higher rate, longer-dated debt. - No mention of new equity fundraising during the call. - Continued focus on paying down debt and maintaining a healthy balance sheet. - Ongoing capital allocation priorities include investing in high-return growth areas, debt repayment, and returning cash to shareholders via dividends and share repurchases.

- Retailers have healthy inventories with liberal open-to-buy orders due to strong product growth and POS momentum. - Strong demand in Consumer Products with lean retailer inventories supports segment growth for the year. - Cybersecurity incident caused delays: approximately $40 million to $60 million of Consumer Products revenue shifted from Q2 to Q3. - Order management systems affected by cyber event, with full restoration expected by June. - Short-term restocking delays possible; reprints now take 3 to 4 months versus previous 6 weeks. - Wizards Play Network expanded with more than 11,000 stores hosting Magic events, indicating strong ongoing demand. - Positive POS and demand for new releases like Marvel Super Heroes, Star Wars, Toy Story 5, and others bolster order pipeline. - Overall, line of sight into recovery and strong order book supported by new entertainment slate and ongoing fan engagement.