- Third quarter 2017 revenues
increased 7% to $1.79 billion, including 7% revenue growth in the
U.S. and Canada segment; 7% in the International segment, including
a favorable $27.9 million in foreign exchange; and 4% in the
Entertainment and Licensing segment;
- Revenue growth in Franchise Brands,
Hasbro Gaming and Emerging Brands;
- Operating profit essentially flat at
$360.9 million, or 20.1% of net revenues;
- Net earnings increased 3% to $265.6
million, or $2.09 per diluted share; Reported net earnings include
a $0.04 per diluted share benefit versus third quarter 2016 from
the adoption of FASB ASU No. 2016-09;
- Company returned $164.3 million to
shareholders during the quarter: $71.4 million in dividends and
$92.9 million in share repurchase;
- Quarter-end cash and cash
equivalents of $1.2 billion.
Hasbro, Inc. (NASDAQ: HAS) today reported financial
results for the third quarter 2017. Net revenues for the third
quarter 2017 increased 7% to $1.79 billion versus $1.68 billion in
2016. Third quarter 2017 revenues include a favorable $29.6 million
impact from foreign exchange.
Net earnings for the third quarter 2017 increased 3% to $265.6
million, or $2.09 per diluted share, compared to $257.8 million, or
$2.03 per diluted share, in 2016. Reported net earnings
include a $0.04 per diluted share benefit versus third quarter 2016
from the adoption of FASB ASU No. 2016-09, Improvements to Employee
Share-Based Payment Accounting.
“The global Hasbro team delivered another good quarter. Our
Brand Blueprint strategy is successfully driving the business
despite a challenging economic environment in the U.K. and Brazil,
as well as a short-term retailer disruption,” said Brian Goldner,
Hasbro’s chairman and chief executive officer. “As a result of the
Toys“R”Us bankruptcy filing in the U.S. and Canada, there was a
negative impact on our quarterly revenues and operating profit.
However, our multi-platform content strategy, combined with an
industry leading investment in innovation and an omni-channel
commercial approach, is driving strong consumer takeaway heading
into the holiday season as consumers engage with Hasbro brands
across a multitude of experiences.”
“The quarter presented several obstacles, but the team delivered
with higher revenue and earnings, as well as executing nearly $93
million of share repurchases,” said Deborah Thomas, Hasbro’s chief
financial officer. “We are well positioned for the holiday,
including good quality inventory at Hasbro and at retail, backed by
strong consumer momentum. We continue to work closely with
Toys“R”Us as we head into the holiday period. Given our new view to
the holiday based on Toys“R”Us and the economic outlook in certain
markets, our updated expectation is fourth quarter revenues will
increase in a range of 4% to 7% versus the fourth quarter
2016.”
Third Quarter 2017 Major Segment
Performance
Net Revenues ($ Millions) Operating
Profit ($ Millions) Q3 2017
Q3 2016 % Change Q3
2017 Q3 2016 % Change
U.S. and Canada $993.8 $932.8
+7% $217.3 $228.0
-5%
International $739.2
$690.7 +7% $132.0 $133.1
-1%
Entertainment and Licensing
$58.4 $56.1 +4% $16.9
$14.1 +20%
Third quarter 2017 U.S. and Canada segment net revenues
increased 7% to $993.8 million compared to $932.8 million in 2016.
The segment was negatively impacted by the Toys“R”Us bankruptcy in
the U.S. and Canada. In combination with a shift in product
mix, this contributed to the 5% decline in the U.S. and Canada
segment quarterly operating profit to $217.3 million, or 21.9% of
net revenues, compared to $228.0 million, or 24.4% of net revenues,
in 2016.
International segment net revenues increased 7% to $739.2
million compared to $690.7 million in 2016. Third quarter 2017
International segment revenues include a favorable $27.9 million
impact of foreign exchange. On a regional basis, Europe revenues
increased 3%, Latin America increased 13% and Asia Pacific
increased 17%. Emerging markets revenues increased 8% in the
quarter. International segment operating profit decreased $1.1
million to $132.0 million, or 17.9% of net revenues, compared to
$133.1 million, or 19.3% of net revenues, in 2016.
Entertainment and Licensing segment net revenues grew 4% to
$58.4 million compared to $56.1 million in 2016, behind higher
consumer products and entertainment revenues. The Entertainment and
Licensing segment operating profit increased 20%, to $16.9 million,
or 28.9% of net revenues, compared to $14.1 million, or 25.1% of
net revenues, in 2016.
Third Quarter 2017 Brand Portfolio
Performance
Net Revenues ($
Millions) Q3 2017 Q3
2016 % Change
Nine Months2017
Nine Months2016
%Change
Franchise Brands $827.3 $773.4
+7% $1,803.8 $1,642.1
+10%
Partner Brands $485.7
$493.7 -2% $928.7
$979.1 -5%
Hasbro Gaming*
$280.1 $229.9 +22% $549.7
$456.5 +20%
Emerging Brands
$198.4 $182.8 +9%
$331.4 $312.3 +6%
*Hasbro’s total gaming category, including all gaming revenue,
most notably MAGIC: THE GATHERING and MONOPOLY, which are included
in Franchise Brands in the table above, totaled $424.8 million for
the third quarter 2017, up 4%, versus $409.5 million in the third
quarter 2016 and up 10% to $951.4 million for the nine months 2017
versus $868.4 million for the nine months 2016. Hasbro believes its
gaming portfolio is a competitive differentiator and views it in
its entirety.
Third quarter 2017 Franchise Brand revenues increased 7% to
$827.3 million driven by revenue growth in NERF, TRANSFORMERS, MY
LITTLE PONY and MONOPOLY. Franchise Brand revenue grew in all three
major operating segments.
Partner Brand revenues decreased 2% to $485.7 million. BEYBLADE,
STAR WARS, DISNEY DESCENDANTS and SESAME STREET posted revenue
gains in the quarter. This was more than offset by declines in
certain brands, including YO-KAI WATCH as well as DREAMWORKS’
TROLLS which was down versus last year’s launch of movie product.
Partner Brand revenues increased in the U.S. and Canada segment and
declined in the International segment.
Hasbro Gaming revenues grew 22% to $280.1 million driven by
Hasbro’s diverse gaming portfolio, including face-to-face and
digital gaming. New social games drove significant growth,
including SPEAK OUT and FANTASTIC GYMNASTICS along with revenue
growth in several other games brands. Hasbro Gaming revenue grew in
the U.S. and Canada and International segments. Hasbro’s total
gaming category grew 4% to $424.8 million, including revenue growth
from MONOPOLY and an expected decline in MAGIC: THE GATHERING.
Emerging Brands revenue increased 9% to $198.3 million, driven
primarily by growth in BABY ALIVE and FURREAL FRIENDS. Emerging
Brand revenue grew in the U.S. and Canada and Entertainment and
Licensing segments.
Dividend and Share
Repurchase
The Company paid $71.4 million in cash dividends to shareholders
during the third quarter 2017. The next quarterly cash dividend
payment of $0.57 per common share is scheduled for November 15,
2017 to shareholders of record at the close of business on November
1, 2017.
During the third quarter, Hasbro repurchased 947,300 shares of
common stock at a total cost of $92.9 million and an average price
of $98.06 per share. Hasbro repurchased $111.5 million worth of
common stock during the first three quarters of 2017. At
quarter-end, $216.5 million remained available in the current share
repurchase authorization.
Conference Call Webcast
Hasbro will webcast its third quarter 2017 earnings conference
call at 8:30 a.m. Eastern Time today. To listen to the live webcast
and access the accompanying presentation slides, please go to
http://investor.hasbro.com. The replay of the call will be
available on Hasbro’s web site approximately 2 hours following
completion of the call.
About Hasbro: Hasbro (NASDAQ: HAS) is a global play
and entertainment company committed to Creating the World's
Best Play Experiences. From toys and games to television,
movies, digital gaming and consumer products, Hasbro offers a
variety of ways for audiences to experience its iconic brands,
including NERF, MY LITTLE PONY, TRANSFORMERS, PLAY-DOH, MONOPOLY,
LITTLEST PET SHOP and MAGIC: THE GATHERING. The
Company's Hasbro Studios and its film label, Allspark
Pictures, are building its brands globally through great
storytelling and content on all screens. Through its commitment to
corporate social responsibility and
philanthropy, Hasbro is helping to make the world a
better place for children and their families. Learn more
at www.hasbro.com, and follow us on Twitter
(@Hasbro & @HasbroNews) and Instagram (@Hasbro).
© 2017 Hasbro, Inc. All Rights Reserved.
Certain statements in this release contain "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements include expectations
concerning the Company’s potential performance in the future and
the Company’s ability to achieve its other financial and business
goals and may be identified by the use of forward-looking words or
phrases. The Company's actual actions or results may differ
materially from those expected or anticipated in the
forward-looking statements due to both known and unknown risks and
uncertainties. Specific factors that might cause such a difference
include, but are not limited to: (i) the Company's ability to
design, develop, produce, manufacture, source and ship products on
a timely and cost-effective basis, as well as interest in and
purchase of those products by retail customers and consumers in
quantities and at prices that will be sufficient to profitably
recover the Company’s costs; (ii) downturns in economic conditions
affecting the Company’s markets which can negatively impact the
Company’s retail customers and consumers, and which can result in
lower employment levels, lower consumer disposable income and
spending, including lower spending on purchases of the Company’s
products; (iii) other factors which can lower discretionary
consumer spending, such as higher costs for fuel and food, drops in
the value of homes or other consumer assets, and high levels of
consumer debt; (iv) potential difficulties or delays the Company
may experience in implementing cost savings and efficiency
enhancing initiatives; (v) other economic and public health
conditions or regulatory changes in the markets in which the
Company and its customers and suppliers operate which could create
delays or increase the Company’s costs, such as higher commodity
prices, labor costs or transportation costs, or outbreaks of
disease; (vi) currency fluctuations, including movements in foreign
exchange rates, which can lower the Company’s net revenues and
earnings, and significantly impact the Company’s costs; (vii) the
concentration of the Company's customers, potentially increasing
the negative impact to the Company of difficulties experienced by
any of the Company’s customers or changes in their purchasing or
selling patterns; (viii) consumer interest in and acceptance of the
Discovery Family Channel, and programming created by Hasbro
Studios, and other factors impacting the financial performance of
the network and Hasbro Studios; (ix) the inventory policies of the
Company’s retail customers, including retailers’ potential
decisions to lower their inventories, even if it results in lost
sales, as well as the concentration of the Company's revenues in
the second half and fourth quarter of the year, which coupled with
reliance by retailers on quick response inventory management
techniques increases the risk of underproduction of popular items,
overproduction of less popular items and failure to achieve
compressed shipping schedules; (x) delays, increased costs or
difficulties associated with any of our or our partners’ planned
digital applications or media initiatives; (xi) work disruptions,
which may impact the Company's ability to manufacture or deliver
product in a timely and cost-effective manner; (xii) the bankruptcy
or other lack of success of one of the Company's significant
retailers which could negatively impact the Company's revenues or
bad debt exposure; (xiii) the impact of competition on revenues,
margins and other aspects of the Company's business, including the
ability to offer Company products which consumers choose to buy
instead of competitive products, the ability to secure, maintain
and renew popular licenses and the ability to attract and retain
talented employees; (xiv) concentration of manufacturing for many
of the Company’s products in the People’s Republic of China and the
associated impact to the Company of social, economic or public
health conditions and other factors affecting China, the movement
of products into and out of China, the cost of producing products
in China and exporting them to other countries; (xv) the risk of
product recalls or product liability suits and costs associated
with product safety regulations; (xvi) the impact of other market
conditions, third party actions or approvals and competition which
could reduce demand for the Company’s products or delay or increase
the cost of implementation of the Company's programs or alter the
Company's actions and reduce actual results; (xvii) the impact of
litigation or arbitration decisions or settlement actions; and
(xviii) other risks and uncertainties as may be detailed from time
to time in the Company's public announcements and Securities and
Exchange Commission (“SEC”) filings. The Company undertakes no
obligation to make any revisions to the forward-looking statements
contained in this release or to update them to reflect events or
circumstances occurring after the date of this release.
This press release includes a non-GAAP financial measure as
defined under SEC rules, specifically EBITDA. EBITDA represents net
earnings attributable to Hasbro, Inc. excluding net loss
attributable to noncontrolling interests, interest expense, income
taxes, depreciation and amortization. As required by SEC rules, we
have provided reconciliation on the attached schedule of this
measure to the most directly comparable GAAP measure. Management
believes that EBITDA is one of the appropriate measures for
evaluating the operating performance of the Company because it
reflects the resources available for strategic opportunities
including, among others, to invest in the business, strengthen the
balance sheet, and make strategic acquisitions. This non-GAAP
measure should be considered in addition to, not as a substitute
for, or superior to, net earnings or other measures of financial
performance prepared in accordance with GAAP as more fully
discussed in the Company's financial statements and filings with
the SEC. As used herein, "GAAP" refers to accounting principles
generally accepted in the United States of America.
HAS-E
HASBRO, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Thousands of Dollars) October 1, 2017
September 25,2016
ASSETS Cash and Cash Equivalents $ 1,244,778 $ 830,372
Accounts Receivable, Net 1,655,752 1,452,931 Inventories 629,120
607,701 Other Current Assets 232,590 255,983 Total
Current Assets 3,762,240 3,146,987 Property, Plant and Equipment,
Net 263,862 247,231 Other Assets 1,518,546 1,560,929
Total Assets $ 5,544,648 $ 4,955,147
LIABILITIES,
REDEEMABLE NONCONTROLLING INTERESTS AND SHAREHOLDERS'
EQUITY Short-term Borrowings $ 189,012 $ 178,666 Current
Portion of Long-term Debt - 349,611 Payables and Accrued
Liabilities 1,295,745 1,087,442 Total Current
Liabilities 1,484,757 1,615,719 Long-term Debt 1,693,261 1,198,461
Other Liabilities 410,378 364,378 Total Liabilities
3,588,396 3,178,558 Redeemable Noncontrolling Interests - 34,829
Total Shareholders' Equity 1,956,252 1,741,760 Total
Liabilities, Redeemable Noncontrolling Interests and Shareholders'
Equity $ 5,544,648 $ 4,955,147
HASBRO, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited) Quarter Ended Nine
Months Ended (Thousands of Dollars and Shares Except Per
Share Data)
Oct. 1,2017
% NetRevenues
Sept. 25,2016
% NetRevenues
Oct. 1,2017
% NetRevenues
Sept. 25,2016
% NetRevenues
Net Revenues $ 1,791,502 100.0 % $ 1,679,757 100.0 % $ 3,613,671
100.0 % $ 3,389,882 100.0 % Costs and Expenses: Cost of Sales
730,656 40.8 % 658,986 39.2 % 1,404,971 38.9 % 1,270,902 37.5 %
Royalties 139,222 7.8 % 134,294 8.0 % 282,754 7.8 % 273,671 8.1 %
Product Development 67,386 3.8 % 70,083 4.2 % 192,765 5.3 % 190,918
5.6 % Advertising 168,926 9.4 % 154,132 9.2 % 342,236 9.5 % 320,948
9.5 % Amortization of Intangibles 6,492 0.4 % 8,691 0.5 % 22,254
0.6 % 26,073 0.8 % Program Production Cost Amortization 5,394 0.3 %
6,282 0.4 % 16,152 0.4 % 17,501 0.5 % Selling, Distribution and
Administration 312,482 17.4 % 285,188
17.0 % 813,268 22.5 % 756,978 22.3 %
Operating Profit 360,944 20.1 % 362,101 21.6 % 539,271 14.9 %
532,891 15.7 % Interest Expense 25,072 1.4 % 24,305 1.4 % 73,752
2.0 % 72,263 2.1 % Other Income, Net (13,969 ) -0.8 %
(8,528 ) -0.5 % (42,045 ) -1.2 % (11,929 ) -0.4 %
Earnings before Income Taxes 349,841 19.5 % 346,324 20.6 % 507,564
14.0 % 472,557 13.9 % Income Taxes 84,258 4.7 %
90,162 5.4 % 105,659 2.9 %
120,005 3.5 % Net Earnings 265,583 14.8 % 256,162 15.2 %
401,905 11.1 % 352,552 10.4 % Net Loss Attributable to
Noncontrolling Interests - 0.0 % (1,636 ) -0.1
% - 0.0 % (6,103 ) -0.2 % Net Earnings
Attributable to Hasbro, Inc. $ 265,583 14.8 % $ 257,798
15.3 % $ 401,905 11.1 % $ 358,655 10.6 %
Per Common Share Net Earnings Attributable to Hasbro, Inc.
Basic $ 2.12 $ 2.05 $ 3.21 $ 2.86
Diluted $ 2.09 $ 2.03 $ 3.16 $ 2.82
Cash Dividends Declared $ 0.57 $ 0.51 $ 1.71
$ 1.53 Weighted Average Number of Shares Basic
125,170 125,500 125,204
125,414 Diluted 127,150 127,178
127,248 127,056
HASBRO, INC. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited) (Thousands of
Dollars) Nine Months Ended Oct. 1, 2017 Sept. 25, 2016 Cash
Flows from Operating Activities: Net Earnings $ 401,905 $ 352,552
Non-cash Adjustments 185,413 182,142 Changes in Operating Assets
and Liabilities (385,522 ) (339,287 ) Net Cash
Provided by Operating Activities 201,796
195,407 Cash Flows from Investing Activities:
Additions to Property, Plant and Equipment (102,512 ) (103,639 )
Acquisitions and Investments, Net of Cash Acquired - (12,436 )
Other 5,516 25,576 Net Cash Utilized by
Investing Activities (96,996 ) (90,499 ) Cash
Flows from Financing Activities: Proceeds from Borrowings with
Maturity Greater Than 3 Months 493,878 - Repayments of Borrowings
with Maturity Greater Than 3 Months (350,000 ) - Net Proceeds from
(Repayments of) Short-term Borrowings 15,663 14,160 Purchases of
Common Stock (112,241 ) (104,273 ) Stock-based Compensation
Transactions 29,432 37,515 Dividends Paid (206,012 ) (185,265 )
Employee Taxes Paid for Shares Withheld (31,973 ) (21,914 ) Other
- 762 Net Cash Utilized by Financing
Activities (161,253 ) (259,015 ) Effect of
Exchange Rate Changes on Cash 18,946 7,729 Cash and Cash
Equivalents at Beginning of Year 1,282,285
976,750 Cash and Cash Equivalents at End of Period $
1,244,778 $ 830,372
Certain reclassifications have been made
to the prior year cash flow statement to conform to thecurrent year
presentation.
HASBRO, INC. SUPPLEMENTAL FINANCIAL
DATA (Unaudited) (Thousands of Dollars) Quarter Ended
Nine Months Ended
Oct. 1,2017
Sept. 25,2016
%Change
Oct. 1,2017
Sept. 25,2016
%Change
Major Segment
Results
U.S. and Canada
Segment:
External Net Revenues $ 993,833 $ 932,844 7 % $ 1,939,837 $
1,802,391 8 % Operating Profit 217,278 228,034 -5 % 363,589 364,322
0 % Operating Margin 21.9 % 24.4 % 18.7 % 20.2 %
International
Segment:
External Net Revenues 739,229 690,745 7 % 1,511,074 1,436,911 5 %
Operating Profit 132,007 133,075 -1 % 149,435 165,582 -10 %
Operating Margin 17.9 % 19.3 % 9.9 % 11.5 %
Entertainment and
Licensing Segment:
External Net Revenues 58,440 56,130 4 % 162,663 150,521 8 %
Operating Profit 16,910 14,095 20 % 39,580 33,367 19 % Operating
Margin 28.9 % 25.1 % 24.3 % 22.2 %
International
Segment Net Revenues by Major Geographic Region
Europe $ 467,740 $ 452,834 3 % $ 921,467 $ 905,081 2 % Latin
America 174,446 154,985 13 % 339,071 307,949 10 % Asia Pacific
97,043 82,926 17 % 250,536
223,881 12 % Total $ 739,229 $ 690,745
$ 1,511,074 $ 1,436,911
Net Revenues by
Brand Portfolio
Franchise Brands $ 827,282 $ 773,415 7 % $ 1,803,744 $ 1,642,057 10
% Partner Brands 485,747 493,738 -2 % 928,724 979,051 -5 % Hasbro
Gaming 280,097 229,850 22 % 549,736 456,516 20 % Emerging Brands
198,376 182,754 9 % 331,467
312,258 6 % Total Net Revenues $ 1,791,502
$ 1,679,757 $ 3,613,671 $ 3,389,882
Hasbro's total gaming category, including
all gaming revenue, most notably MAGIC: THE GATHERING and
MONOPOLY,totaled $424,836 and $951,386 for the three and nine
months ended October 1, 2017, respectively, up 4% and 10%,
respectively, fromrevenues of $409,528 and $868,373 for the three
and nine months ended September 25, 2016, respectively.
Reconciliation of
EBITDA
Net Earnings Attributable to Hasbro, Inc. $ 265,583 $ 257,798 $
401,905 $ 358,655 Net Loss Attributable to Noncontrolling Interests
- (1,636 ) - (6,103 ) Interest Expense 25,072 24,305 73,752 72,263
Income Taxes 84,258 90,162 105,659 120,005 Depreciation 42,062
32,236 107,853 89,327 Amortization of Intangibles 6,492
8,691 22,254 26,073
EBITDA $ 423,467 $ 411,556 $ 711,423 $
660,220
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171023005630/en/
Investor Contact:Hasbro, Inc.Debbie Hancock,
401-727-5401debbie.hancock@hasbro.comorPress Contact:Hasbro,
Inc.Julie Duffy, 401-727-5931julie.duffy@hasbro.com
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