Board of Directors Declares Quarterly
Dividend of $0.68 per share
Completes Acquisition of eOne in Q1
2020
Full-Year 2019
- Net revenues of $4.72 billion increased 3%;
Revenues increased 5% excluding an unfavorable $78.5 million impact
of foreign exchange;
- Operating profit increased to $652.1 million or 13.8% of
revenues; Adjusted operating profit of $669.8 million, or 14.2% of
revenue, excluding $17.8 million of costs associated with the
Entertainment One (eOne) acquisition;
- Reported net earnings were $520.5 million or $4.05 per
diluted share; Adjusted net earnings were $524.7 million, or $4.08
per diluted share, excluding after-tax net charges of $4.2 million,
or $0.03 per diluted share;
- Hasbro ended 2019 with year-end cash and cash equivalents of
$4.58 billion, including $3.4 billion of eOne acquisition
financing, cash received from foreign exchange hedges and other
activities; Generated $653.1 million in operating cash flow;
Returned $398.0 million to shareholders in 2019 including $336.6
million in dividends.
Fourth Quarter 2019
- Net revenues increased 3% to $1.43 billion, including an
unfavorable $13.0 million impact of foreign
exchange;
- Operating profit increased to $190.4 million or 13.3% of
revenues; Adjusted operating profit of $208.2 million, or 14.6% of
revenues, excluding $17.8 million of costs associated with
the eOne acquisition;
- Reported net earnings for the fourth quarter 2019 were
$267.3 million or $2.01 per diluted share; Adjusted net earnings of
$164.8 million, or $1.24 per diluted share, excluding after-tax net
gains of $102.5 million, or $0.77 per diluted share.
Hasbro, Inc. today reported financial results for the full-year
and fourth quarter 2019.
“The global Hasbro team delivered a good year and achieved key
objectives we set for 2019. We profitably grew revenues across
regions absent foreign exchange supported by the successful
execution of our channel strategy; we delivered growth in MAGIC:
THE GATHERING driven by the successful launch of Arena and we
executed at a high level during the holiday season," said Brian
Goldner, Hasbro’s chairman and chief executive officer. "Our
acquisition of Entertainment One accelerates our Brand Blueprint
strategy and significantly expands our expertise and capabilities
as a global play and entertainment company. Our teams are actively
engaged to unlock value across our organization - in gaming, in
toys, in consumer products and in entertainment."
“Our teams worked extremely hard and executed at a high level
this holiday, driving fourth quarter and full-year revenue and
profit growth while also diversifying our supply chain and
preparing to close a major acquisition,” said Deborah Thomas,
Hasbro’s chief financial officer. "We are strongly positioned to
continue investing in long-term drivers of the business, including
brand innovation, gaming and entertainment, as we also focus on
returning to our stated gross Debt to EBITDA target of 2.0 to 2.5X
over the next 3 to 4 years."
Full-Year 2019 Financial
Results
Net revenues for the full-year 2019 increased 3% to $4.72
billion versus $4.58 billion in 2018. Net revenues increased 5%
excluding an unfavorable $78.5 million impact of foreign
exchange.
Net earnings for the full-year 2019 were $520.5 million, or
$4.05 per diluted share, compared to $220.4 million, or $1.74 per
diluted share, in 2018. The incremental interest expense and
additional shares issued to finance the eOne acquisition impacted
full-year 2019 by $0.08 per diluted share. Adjusted 2019 net
earnings were $524.7 million, or $4.08 per diluted share, excluding
aggregate after-tax net charges of $4.2 million. These after-tax
charges consisted of a pension settlement charge of $86.0 million,
or $0.67 per diluted share, partially offset by a net gain of $81.8
million, or $0.64 per diluted share, relating to foreign currency
gains as a result of hedging part of the British Pound purchase
price of eOne and other eOne acquisition costs.
Adjusted 2018 net earnings were $488.8 million, or $3.85 per
diluted share, excluding after-tax charges of $268.4 million, or
$2.11 per diluted share.
A reconciliation of GAAP to Non-GAAP full-year results can be
found in the attached schedule "Reconciliation of Net Earnings and
Earnings Per Share."
Fourth Quarter 2019 Financial
Results
Fourth quarter 2019 net revenues increased 3% to $1.43 billion
compared to $1.39 billion in the fourth quarter 2018. Fourth
quarter 2019 net revenues included an unfavorable $13.0 million
impact from foreign exchange. Fourth quarter revenue was bolstered
by strong demand for Hasbro's products for Disney's Frozen 2 and
Star Wars.
Net earnings for the fourth quarter 2019 were $267.3 million, or
$2.01 per diluted share, compared to $8.8 million, or $0.07 per
diluted share, in the fourth quarter 2018. The incremental interest
expense and additional shares issued to finance the eOne
acquisition impacted fourth quarter 2019 by $0.09 per diluted
share. Adjusted net earnings for the fourth quarter 2019 were
$164.8 million, or $1.24 per diluted share, excluding a net benefit
of $102.5 million, or $0.77 per diluted share, primarily relating
to foreign currency gains as a result of hedging part of the
British Pound purchase price of eOne and other eOne acquisition
costs.
Adjusted net earnings for the fourth quarter 2018 were $169.6
million, or $1.33 per diluted share, excluding net after-tax
charges of $160.8 million, or $1.26 per diluted share.
A reconciliation of GAAP to Non-GAAP fourth quarter financial
results can be found in the attached schedule "Reconciliation of
Net Earnings and Earnings Per Share."
eOne Acquisition
In the first quarter of fiscal 2020, Hasbro completed the
acquisition of eOne. Hasbro's financial results for fourth quarter
and full-year 2019 do not include the results of eOne, but were
impacted by eOne acquisition financing, foreign exchange hedges and
other activities. These include:
- $2.4 billion, net of discounts and fees, related to the
issuance of long-term debt
- $975.2 million, net of fees, related to the equity issuance of
10.6 million shares of common stock
- $10.7 million in interest expense associated with the long-term
debt issuance
- $6.2 million of interest income associated with the higher cash
balance
- $139.7 million foreign exchange hedge gains for fourth quarter
2019 and $114.1 million for full-year 2019
- $20.6 million of financing transaction fees for the fourth
quarter and full-year 2019, primarily related to the Company’s
bridge financing facility which terminated unused in the fourth
quarter 2019
- $17.8 million of eOne acquisition-related costs for the fourth
quarter and full-year 2019
- $1.4 million of tax benefits for the fourth quarter 2019 and
$6.1 million for the full-year 2019 related to the financing and
acquisition related costs
Full-Year 2019 Major Segment
Performance1
Net Revenues ($
Millions)
Operating Profit ($
Millions)
FY 2019
FY 2018
% Change
FY 2019
FY 2018
% Change
U.S. and Canada2
$
2,449.3
$
2,375.7
3
%
$415.4
$370.2
12
%
International
$
1,836.4
$
1,847.6
-1
%
$107.3
$39.5
>100%
Entertainment, Licensing and
Digital2
$
434.5
$
356.3
22
%
$99.7
$29.1
>100%
1Full-year 2018 segment operating profit is as reported.
Adjusted segment operating profit excludes Non-GAAP adjustments. A
reconciliation is in the attached schedule “Reconciliation of
Operating Profit Results.”
2The Entertainment and Licensing segment is now the
Entertainment, Licensing and Digital segment. For the year ended
December 30, 2018, Wizards of the Coast digital gaming revenues of
$57.8 million, and operating profit of $11.8 million, were
reclassified from the U.S. and Canada Segment to the Entertainment,
Licensing and Digital segment.
Full-year 2019 U.S. and Canada segment net revenues increased 3%
to $2.45 billion compared to $2.38 billion in 2018. Partner Brands
and Emerging Brands revenue increased while Franchise Brands and
Hasbro Gaming declined. The segment reported operating profit of
$415.4 million versus $370.2 million in 2018, and versus $416.0
million in 2018 on an adjusted basis. Operating profit margin
declined on an adjusted basis due to increased revenues from lower
margin partner brand products, as well as higher supply chain
expenses to support higher domestic just-in-time inventory
requirements.
International segment net revenues for the full-year 2019 were
$1.84 billion compared to $1.85 billion in 2018. Excluding a
negative $76.5 million impact of foreign exchange, International
segment revenues increased 4%.
FY 2019 International Segment
Revenue by Region
% Change as Reported
% Change Absent FX
Europe
—%
+4%
Latin America
-4%
—%
Asia Pacific
+3%
+7%
Total International
-1%
+4%
Within the International segment, Partner Brands revenue grew
while Franchise Brands, Hasbro Gaming and Emerging Brands declined.
The International segment reported 2019 operating profit of $107.3
million compared to $39.5 million in 2018, and versus $47.1 million
in 2018 on an adjusted basis. Profit growth was driven by favorable
product mix, lower allowances from reduced retail inventory levels,
a decline in advertising and savings realized from the 2018
organizational changes, partially offset by higher royalty
expense.
Full-year 2019 Entertainment, Licensing and Digital segment net
revenues increased 22% to $434.5 million compared to $356.3 million
in 2018. Revenue growth was broad based and fueled by the first
full year of Magic: The Gathering Arena, Hasbro's share of revenues
from the Transformers: Bumblebee film earned to date, consumer
products revenue growth and higher digital gaming licensing
revenues. This was partly offset by lower digital streaming
revenues versus 2018's multi-year digital streaming deal for Hasbro
television programming. Operating profit increased to $99.7 million
versus $29.1 million in 2018. Excluding a pre-tax $86.3 million
non-cash fourth quarter 2018 goodwill impairment charge related to
Backflip Studios, adjusted 2018 operating profit was $115.4
million. The decline in adjusted operating profit reflected
investments in digital gaming initiatives, including Magic: The
Gathering Arena and future digital games, lower digital streaming
revenues and higher program production amortization.
Full-Year 2019 Brand Portfolio
Performance
Net Revenues ($
Millions)
FY 2019
FY 2018
% Change
Franchise Brands
$
2,411.8
$2,445.9
-1
%
Partner Brands
$
1,221.0
$987.3
24
%
Hasbro Gaming1
$
709.8
$787.7
-10
%
Emerging Brands
$
377.6
$358.8
5
%
1Hasbro’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 $1.53 billion for
the full-year 2019, up 6% versus $1.44 billion for the full-year
2018. Hasbro believes its gaming portfolio is a competitive
differentiator and views it in its entirety.
Franchise Brands revenue decreased 1% to $2.41 billion. MAGIC:
THE GATHERING, MONOPOLY and PLAY-DOH revenues increased for the
year, while NERF, MY LITTLE PONY, BABY ALIVE and TRANSFORMERS
declined. Franchise Brands revenue declined in the U.S. and Canada
and International segments, but grew in the Entertainment,
Licensing and Digital segment behind growth in Magic: The Gathering
Arena and Transformers: Bumblebee revenues.
Partner Brands revenue increased 24% to $1.22 billion. Revenues
for Hasbro's line of Disney's Frozen 2 product along with increases
in Hasbro's products for Marvel's Avengers and Spider-Man
franchises drove much of the growth. Star Wars revenue growth was
strong in the fourth quarter and drove full-year growth for the
brand. Partner Brand revenues increased in the U.S. and Canada and
International segments.
Hasbro Gaming revenue decreased 10% to $709.8 million. Revenue
gains from DUNGEONS & DRAGONS and several classic games titles
were more than offset by declines in other games, including PIE
FACE and SPEAK OUT. Hasbro Gaming revenues decreased in all three
operating segments. As noted above, Hasbro’s total gaming category
increased 6% to $1.53 billion.
Emerging Brands revenue increased 5% to $377.6 million driven by
shipments of POWER RANGERS and PLAYSKOOL, including MR. POTATO
HEAD, offset by declines in LITTLEST PET SHOP and Quick Strike
collectible offerings. Emerging Brands revenue grew in the U.S. and
Canada segment and Entertainment, Licensing and Digital segment,
but declined in the International segment. Absent the negative
impact of foreign exchange, Emerging Brands revenues grew in the
International segment.
Dividends and Share
Repurchases
The Company paid $336.6 million in cash dividends to
shareholders during 2019. The next quarterly cash dividend payment
of $0.68 per common share is scheduled for May 15, 2020 to
shareholders of record at the close of business on May 1, 2020.
During 2019, Hasbro repurchased 702,125 shares of common stock
at a total cost of $61.4 million and an average price of $87.41. At
year-end, $366.6 million remained available in the current share
repurchase authorization. In recognition of the financing for the
eOne acquisition, the Company suspended its share repurchase
program while it prioritizes achieving its gross Debt to EBITDA
target of 2.00 to 2.50X.
Conference Call Webcast
Hasbro will webcast its fourth quarter and full-year 2019
earnings conference call at 8:00 a.m. Eastern Time today. To listen
to the live webcast and access the accompanying presentation
slides, please go to https://investor.hasbro.com. The replay of the
call will be available on Hasbro’s website 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
and Entertainment Experiences. From toys, games and consumer
products to television, movies, digital gaming, live action, music,
and virtual reality experiences, Hasbro connects to global
audiences by bringing to life great innovations, stories and brands
across established and inventive platforms. Hasbro’s iconic brands
include NERF, MAGIC: THE GATHERING, MY LITTLE PONY, TRANSFORMERS,
PLAY-DOH, MONOPOLY, BABY ALIVE, POWER RANGERS, PEPPA PIG and PJ
MASKS as well as premier partner brands. Through its global
entertainment studio eOne, Hasbro is building its brands globally
through great storytelling and content on all screens. Hasbro is
committed to making the world a better place for children and their
families through corporate social responsibility and philanthropy.
Hasbro ranked No. 13 on the 2019 100 Best Corporate Citizens list
by CR Magazine and has been named one of the World’s Most Ethical
Companies® by Ethisphere Institute for the past eight years. Learn
more at www.hasbro.com, and follow us on Twitter (@Hasbro) and
Instagram (@Hasbro).
© 2020 Hasbro, Inc. All Rights Reserved.
Safe Harbor Certain statements in this release contain
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements, which
may be identified by the use of forward-looking words or phrases,
include expectations concerning our potential performance in the
future and our ability to achieve our financial and business goals,
future expenses and the anticipated benefits from the acquisition
of EntertainmentOne ("eOne"). Our 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:
- our ability to design, develop, produce, manufacture, source
and ship products on a timely and cost-effective and profitable
basis;
- rapidly changing consumer interests in the types of products
and entertainment we offer;
- the challenge of developing and offering products and
storytelling experiences that are sought after by children,
families and audiences given increasing technology and
entertainment offerings available;
- our ability to develop and distribute engaging storytelling
across media to drive brand awareness;
- our dependence on third party relationships, including with
third party manufacturers, licensors of brands, studios, content
producers and entertainment distribution channels;
- our ability to successfully compete in the play and
entertainment industry, including with manufacturers, marketers,
and sellers of toys and games, digital gaming products and digital
media, as well as with film studios, television production
companies and independent distributors and content producers;
- our ability to successfully evolve and transform our business
and capabilities to address a changing global consumer landscape
and retail environment, including changing inventories policies and
practices of our customers;
- our ability to develop new and expanded areas of our business,
such as through eOne, Wizards of the Coast, and our other
entertainment, digital gaming and esports initiatives;
- risks associated with international operations, such as
currency conversion, currency fluctuations, the imposition of
tariffs, quotas, border adjustment taxes or other protectionist
measures, and other challenges in the territories in which we
operate;
- our ability to successfully implement actions to lessen the
impact of potential and enacted tariffs imposed on our products,
including any changes to our supply chain, inventory management,
sales policies or pricing of our products;
- downturns in global and regional economic conditions impacting
one or more of the markets in which we sell products, which can
negatively impact our retail customers and consumers, result in
lower employment levels, consumer disposable income, retailer
inventories and spending, including lower spending on purchases of
our products;
- other economic and public health conditions or regulatory
changes in the markets in which we and our customers, suppliers and
manufacturers operate, such as higher commodity prices, labor costs
or transportation costs, or outbreaks of disease, such as the
coronavirus, the occurrence of which could create work slowdowns,
delays or shortages in production or shipment of products,
increases in costs or delays in revenue;
- the success of our key partner brands, including the ability to
secure, maintain and extend agreements with our key partners or the
risk of delays, increased costs or difficulties associated with any
of our or our partners’ planned digital applications or media
initiatives;
- fluctuations in our business due to seasonality;
- the concentration of our customers, potentially increasing the
negative impact to our business of difficulties experienced by any
of our customers or changes in their purchasing or selling
patterns;
- the bankruptcy or other lack of success of one of our
significant retailers, such as the bankruptcy of Toys“R”Us in the
United States and Canada;
- risks relating to the use of third party manufacturers for the
manufacturing of our products, including the concentration of
manufacturing for many of our products in the People’s Republic of
China and our ability to successfully diversify sourcing of our
products to reduce reliance on sources of supply in China;
- our ability to attract and retain talented employees;
- our ability to realize the benefits of cost-savings and
efficiency enhancing initiatives;
- our ability to protect our assets and intellectual property,
including as a result of infringement, theft, misappropriation,
cyber-attacks or other acts compromising the integrity of our
assets or intellectual property;
- risks relating to the impairment and/or write-offs of acquired
products and films and television programs we acquire and
produce;
- risks relating to investments and acquisitions, such as our
acquisition of eOne, which risks include: integration difficulties;
inability to retain key personnel; diversion of management time and
resources; failure to achieve anticipated benefits or synergies of
acquisitions or investments; and risks relating to the additional
indebtedness incurred in connection with a transaction;
- the risk of product recalls or product liability suits and
costs associated with product safety regulations;
- changes in tax laws or regulations, or the interpretation and
application of such laws and regulations, which may cause us to
alter tax reserves or make other changes which significantly impact
our reported financial results;
- the impact of litigation or arbitration decisions or settlement
actions; and
- other risks and uncertainties as may be detailed from time to
time in our public announcements and U.S. Securities and Exchange
Commission (“SEC”) filings.
The statements contained herein are based on our current beliefs
and expectations. We undertake 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.
Non-GAAP Financial Measures The financial tables
accompanying this press release include non-GAAP financial measures
as defined under SEC rules, specifically Adjusted operating profit,
Adjusted net earnings and Adjusted earnings per diluted share,
which exclude, where applicable, the impact of eOne
acquisition-related charges and foreign currency gains relating to
hedging the British Pound purchase price of eOne, the impact of
charges associated with the settlement of our U.S. pension plan,
Toys“R”Us liquidation, severance costs, asset impairments and U.S.
tax reform. Also included in the financial tables are the non-GAAP
financial measures of EBITDA and Adjusted EBITDA. EBITDA represents
net earnings attributable to Hasbro, Inc. excluding interest
expense, income taxes, depreciation and amortization. Adjusted
EBITDA also excludes the impact of the charges/gains noted above.
As required by SEC rules, we have provided reconciliations on the
attached schedules of these measures to the most directly
comparable GAAP measure. Management believes that Adjusted net
earnings, Adjusted earnings per diluted share and Adjusted
operating profit provides investors with an understanding of the
underlying performance of our business absent unusual events.
Management believes that EBITDA and Adjusted EBITDA are appropriate
measures for evaluating the operating performance of our business
because they reflect the resources available for strategic
opportunities including, among others, to invest in the business,
strengthen the balance sheet and make strategic acquisitions. These
non-GAAP measures 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 our consolidated 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)
December 29, 2019
December 30, 2018
ASSETS
Cash and Cash Equivalents (1)
$
4,580,369
$
1,182,371
Accounts Receivable, Net
1,410,597
1,188,052
Inventories
446,105
443,383
Other Current Assets
310,450
268,698
Total Current Assets
6,747,521
3,082,504
Property, Plant and Equipment, Net (2)
382,248
256,473
Other Assets
1,725,859
1,924,011
Total Assets
$
8,855,628
$
5,262,988
LIABILITIES AND SHAREHOLDERS'
EQUITY
Short-term Borrowings
$
503
$
9,740
Payables and Accrued Liabilities (2)
1,256,579
1,264,584
Total Current Liabilities
1,257,082
1,274,324
Long-Term Debt (1)
4,046,457
1,695,092
Other Liabilities (2)
556,559
539,086
Total Liabilities
5,860,098
3,508,502
Total Shareholders' Equity (1)
2,995,530
1,754,486
Total Liabilities and Shareholders'
Equity
$
8,855,628
$
5,262,988
(1) Cash and Cash Equivalents, Long-Term Debt and Total
Shareholders' Equity balances as of December 29, 2019 were impacted
by the eOne acquisition financing, which included proceeds from the
issuance of long-term debt of $2,354,957 and proceeds from the
issuance of common stock of $975,185.
(2) In January 2019, the Company adopted Financial Accounting
Standards Update 2016-02, Leases, which requires the recognition of
lease assets and lease liabilities. As a result, the Company has
recorded operating lease right-of-use assets of $126,680 included
in Property, Plant and Equipment, Net as of December 29, 2019, as
well as operating lease liabilities of $144,055, of which $30,673
are included in Payables and Accrued Liabilities and $113,382 are
included in Other Liabilities, as of December 29, 2019.
HASBRO, INC. CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited)
Quarter Ended
Year Ended
(Thousands of Dollars and Shares Except
Per Share Data)
December 29, 2019
% Net Revenues
December 30, 2018
% Net Revenues
December 29, 2019
% Net Revenues
December 30, 2018
% Net Revenues
Net Revenues
$
1,428,007
100.0
%
$
1,389,161
100.0
%
$
4,720,227
100.0
%
$
4,579,646
100.0
%
Costs and Expenses:
Cost of Sales
577,049
40.4
%
601,588
43.3
%
1,807,849
38.3
%
1,850,678
40.4
%
Royalties
155,592
10.9
%
110,698
8.0
%
414,549
8.8
%
351,660
7.7
%
Product Development
72,910
5.1
%
63,115
4.5
%
262,156
5.6
%
246,165
5.4
%
Advertising
104,017
7.3
%
149,921
10.8
%
413,676
8.8
%
439,922
9.6
%
Amortization of Intangibles
11,814
0.8
%
8,830
0.6
%
47,259
1.0
%
28,703
0.6
%
Program Production Cost Amortization
27,480
1.9
%
10,487
0.8
%
85,585
1.8
%
43,906
1.0
%
Selling, Distribution and
Administration
288,765
20.2
%
433,975
31.2
%
1,037,103
22.0
%
1,287,560
28.1
%
Operating Profit
190,380
13.3
%
10,547
0.8
%
652,050
13.8
%
331,052
7.2
%
Interest Expense
34,782
2.4
%
22,435
1.6
%
101,878
2.2
%
90,826
2.0
%
Other Income, Net
(143,163)
-10.0
%
(6,760)
-0.5
%
(44,038)
-0.9
%
(30,176)
-0.7
%
Earnings (Loss) before Income Taxes
298,761
20.9
%
(5,128)
-0.4
%
594,210
12.6
%
270,402
5.9
%
Income Tax Expense (Benefit)
31,416
2.2
%
(13,894)
-1.0
%
73,756
1.6
%
49,968
1.1
%
Net Earnings
$
267,345
18.7
%
$
8,766
0.6
%
$
520,454
11.0
%
$
220,434
4.8
%
Per Common Share
Net Earnings
Basic
$
2.02
$
0.07
$
4.07
$
1.75
Diluted
$
2.01
$
0.07
$
4.05
$
1.74
Cash Dividends Declared
$
0.68
$
0.63
$
2.72
$
2.52
Weighted Average Number of Shares
Basic
132,516
126,582
127,896
126,132
Diluted
133,128
127,237
128,499
126,890
HASBRO, INC. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited) (Thousands of Dollars)
Year Ended
December 29, 2019
December 30, 2018
Cash Flows from Operating Activities:
Net Earnings
$
520,454
$
220,434
Non-Cash Pension Charge
110,962
—
Other Non-Cash Adjustments
225,276
327,339
Changes in Operating Assets and
Liabilities
(203,631)
98,224
Net Cash Provided by Operating
Activities
653,061
645,997
Cash Flows from Investing Activities:
Additions to Property, Plant and
Equipment
(133,636)
(140,426)
Investments and Acquisitions, Net of Cash
Acquired
(8,761)
(155,451)
Proceeds from Foreign Currency Hedges
79,990
—
Other
1,452
9,400
Net Cash Utilized by Investing
Activities
(60,955)
(286,477)
Cash Flows from Financing Activities:
Net Proceeds from Borrowings with Maturity
Greater than Three Months
2,354,957
—
Net Repayments of Short-term
Borrowings
(8,828)
(142,357)
Purchases of Common Stock
(61,387)
(250,054)
Stock-Based Compensation Transactions
31,786
29,999
Dividends Paid
(336,604)
(309,258)
Employee Taxes Paid for Shares
Withheld
(13,123)
(58,344)
Deferred Acquisition Payments
(100,000)
—
Proceeds from Equity Issuance
975,185
—
Payments of Financing Costs
(26,653)
—
Other
(4,760)
(7,087)
Net Cash Provided (Utilized) by Financing
Activities
2,810,573
(737,101)
Effect of Exchange Rate Changes on
Cash
(4,681)
(21,282)
Cash and Cash Equivalents at Beginning of
Year
1,182,371
1,581,234
Cash and Cash Equivalents at End of
Year
$
4,580,369
$
1,182,371
HASBRO, INC. SUPPLEMENTAL
FINANCIAL DATA (Unaudited) (Thousands of Dollars)
Quarter Ended
Year Ended
December 29, 2019
December 30, 2018
% Change
December 29, 2019
December 30, 2018
% Change
Major Segment
Results (1)
U.S. and Canada
Segment:
External Net Revenues
$
682,361
$
661,117
3
%
$
2,449,280
$
2,375,653
3
%
Operating Profit
101,641
100,658
1
%
415,436
370,197
12
%
Operating Margin
14.9
%
15.2
%
17.0
%
15.6
%
International
Segment:
External Net Revenues
615,136
618,492
-1
%
1,836,360
1,847,585
-1
%
Operating Profit
55,894
29,111
92
%
107,304
39,470
> 100%
Operating Margin
9.1
%
4.7
%
5.8
%
2.1
%
Entertainment,
Licensing and Digital Segment:
External Net Revenues
130,201
109,552
19
%
434,467
356,299
22
%
Operating Profit
37,136
(46,889)
> 100%
99,686
29,127
> 100%
Operating Margin
28.5
%
-42.8
%
22.9
%
8.2
%
International
Segment Net Revenues by Major Geographic Region
Europe
$
369,489
$
360,411
3
%
$
1,043,217
$
1,046,901
0
%
Latin America
130,634
146,001
-11
%
435,740
454,066
-4
%
Asia Pacific
115,013
112,080
3
%
357,403
346,618
3
%
Total
$
615,136
$
618,492
$
1,836,360
$
1,847,585
Net Revenues by
Brand Portfolio
Franchise Brands
$
661,899
$
729,916
-9
%
$
2,411,847
$
2,445,902
-1
%
Partner Brands
408,516
272,859
50
%
1,220,982
987,283
24
%
Hasbro Gaming
246,478
267,358
-8
%
709,750
787,692
-10
%
Emerging Brands
111,114
119,028
-7
%
377,648
358,769
5
%
Total
$
1,428,007
$
1,389,161
$
4,720,227
$
4,579,646
Hasbro's total gaming category, including all gaming revenue,
most notably MAGIC: THE GATHERING and MONOPOLY, totaled $442,132
and $1,528,283 for the quarter and year ended December 29, 2019,
respectively, down 7.7% and up 5.9%, respectively, from revenues of
$479,005 and $1,443,164 for the quarter and year ended December 30,
2018, respectively.
(1) For the quarter and year ended December 30, 2018, revenues
of $24,488 and $57,759, respectively, and operating profit of
$1,991 and $11,816, respectively, were reclassified from the U.S.
and Canada segment to the Entertainment, Licensing and Digital
segment.
HASBRO, INC. SUPPLEMENTAL FINANCIAL
DATA RECONCILIATION OF AS REPORTED TO ADJUSTED OPERATING RESULTS
(Unaudited) (Thousands of Dollars)
Non-GAAP
Adjustments Impacting Operating Profit
Quarter Ended
December 29, 2019
December 30, 2018
Pre-tax Adjustments
Post-tax Adjustments
Pre-tax Adjustments
Post-tax Adjustments
eOne Acquisition Costs (1)
$
17,778
$
16,365
$
—
$
—
Incremental Costs Impact of Toys"R"Us
(2)
—
—
(10,068)
(8,543)
Severance (3)
—
—
72,000
62,249
Asset Impairments (4)
—
—
117,556
96,928
$
17,778
$
16,365
$
179,488
$
150,634
Year Ended
December 29, 2019
December 30, 2018
Pre-tax Adjustments
Post-tax Adjustments
Pre-tax Adjustments
Post-tax Adjustments
eOne Acquisition Costs (1)
$
17,778
$
16,365
$
—
$
—
Incremental Costs Impact of Toys"R"Us
(2)
—
—
60,360
52,829
Severance (3)
—
—
89,349
77,948
Asset Impairments (4)
—
—
117,556
96,928
$
17,778
$
16,365
$
267,265
$
227,705
(1) In the fourth quarter of 2019, the Company incurred certain
acquisition and transaction costs associated with the eOne
Acquisition. The costs incurred included certain legal and
consulting fees associated with the transaction.
(2) In the first quarter of 2018, Toys"R"Us announced a
liquidation of its U.S. operations, as well as other retail impacts
around the globe. As a result, the Company recognized incremental
bad debt expense on outstanding Toys"R"Us receivables, royalty
expense, inventory obsolescence as well as other related costs. In
the fourth quarter of 2018, the Company made adjustments to the
charges previously recorded based on its final settlement with
Toys"R"Us.
(3) In the first quarter of 2018, the Company incurred $17.3
million of severance charges, primarily outside the U.S., related
to actions associated with a new go-to-market strategy designed to
be more omni-channel and e-commerce focused. Additionally, in the
fourth quarter of 2018, the Company recorded an additional $72.0
million of severance charges. These charges were included in
Corporate and Eliminations.
(4) In the fourth quarter of 2018, the Company conducted its
annual impairment test. The results of such test resulted in a
write-off of goodwill from its Backflip business of $86.3 million,
as well as impairments of certain definite-lived intangible assets
totaling $31.3 million.
Reconciliation of Operating Profit
Results
Quarter Ended December 29,
2019
Quarter Ended December 30,
2018
As Reported
Non-GAAP Adjustments
Adjusted
As Reported
Non-GAAP Adjustments
Adjusted
Adjusted Company
Results
External Net Revenues
$
1,428,007
$
—
$
1,428,007
$
1,389,161
$
—
$
1,389,161
Operating Profit
190,380
17,778
208,158
10,547
179,488
190,035
Operating Margin
13.3
%
1.2
%
14.6
%
0.8
%
12.9
%
13.7
%
Adjusted Segment
Results
U.S. and Canada
Segment:
External Net Revenues
$
682,361
$
—
$
682,361
$
661,117
$
—
$
661,117
Operating Profit
101,641
—
101,641
100,658
(6,518)
94,140
Operating Margin
14.9
%
—
14.9
%
15.2
%
-1.0
%
14.2
%
International
Segment:
External Net Revenues
615,136
—
615,136
618,492
—
618,492
Operating Profit
55,894
—
55,894
29,111
(3,550)
25,561
Operating Margin
9.1
%
—
9.1
%
4.7
%
-0.6
%
4.1
%
Entertainment,
Licensing and Digital Segment:
External Net Revenues
130,201
—
130,201
109,552
—
109,552
Operating Profit
37,136
—
37,136
(46,889)
86,253
39,364
Operating Margin
28.5
%
—
28.5
%
-42.8
%
78.7
%
35.9
%
Corporate and Eliminations:
The Corporate and Eliminations segment
included non-GAAP adjustments of $17.8 million for the quarter
ended December 29, 2019, consisting of transaction costs related to
the eOne acquisition. The Corporate and Eliminations segment
included non-GAAP adjustments of $103.3 million for the quarter
ended December 30, 2018, consisting of $72.0 million of severance
and $31.3 million of asset impairments.
Reconciliation of Operating Profit
Results (continued)
Year Ended December 29,
2019
Year Ended December 30,
2018
As Reported
Non-GAAP Adjustments
Adjusted
As Reported
Non-GAAP Adjustments
Adjusted
Adjusted Company Results
External Net Revenues
$
4,720,227
$
—
$
4,720,227
$
4,579,646
$
—
$
4,579,646
Operating Profit
652,050
17,778
669,828
331,052
267,265
598,317
Operating Margin
13.8
%
0.4
%
14.2
%
7.2
%
5.8
%
13.1
%
Adjusted Segment Results
U.S. and Canada
Segment:
External Net Revenues
$
2,449,280
$
—
$
2,449,280
$
2,375,653
$
—
$
2,375,653
Operating Profit
415,436
—
415,436
370,197
45,759
415,956
Operating Margin
17.0
%
—
17.0
%
15.6
%
1.9
%
17.5
%
International
Segment:
External Net Revenues
1,836,360
—
1,836,360
1,847,585
—
1,847,585
Operating Profit
107,304
—
107,304
39,470
7,601
47,071
Operating Margin
5.8
%
—
5.8
%
2.1
%
0.4
%
2.5
%
Entertainment,
Licensing and Digital Segment:
External Net Revenues
434,467
—
434,467
356,299
—
356,299
Operating Profit
99,686
—
99,686
29,127
86,253
115,380
Operating Margin
22.9
%
—
22.9
%
8.2
%
24.2
%
32.4
%
Corporate and Eliminations:
The Corporate and Eliminations segment
included non-GAAP adjustments of $17.8 million for the year ended
December 29, 2019, consisting of transaction costs related to the
eOne acquisition. The Corporate and Eliminations segment included
non-GAAP adjustments of $127.7 million for the year ended December
30, 2018, consisting of $89.3 million of severance; $31.3 million
of asset impairments; and $7.0 million of royalty expense related
to Toys"R"Us losses.
HASBRO, INC. SUPPLEMENTAL
FINANCIAL DATA RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (Unaudited) (Thousands of Dollars and Shares,
Except Per Share Data)
Reconciliation of
Net Earnings and Earnings per Share
Quarter Ended
(all adjustments reported after-tax)
December 29, 2019
Diluted Per Share
Amount
December 30, 2018
Diluted Per Share
Amount
Net Earnings, as Reported
$
267,345
$
2.01
$
8,766
$
0.07
Incremental costs impact of Toys"R"Us
—
—
(8,543)
(0.07)
Severance
—
—
62,249
0.49
Asset Impairments
—
—
96,928
0.76
Impact of Tax Reform (1)
—
—
10,196
0.08
Pension (2)
143
—
—
—
eOne Acquisition-Related Net Gain (3)
(102,658)
(0.77)
—
—
Net Earnings, as Adjusted
$
164,830
$
1.24
$
169,596
$
1.33
Year Ended
(all adjustments reported after-tax)
December 29, 2019
Diluted Per Share
Amount
December 30, 2018
Diluted Per Share
Amount
Net Earnings, as Reported
$
520,454
$
4.05
$
220,434
$
1.74
Incremental costs impact of Toys"R"Us
—
—
52,829
0.42
Severance
—
—
77,948
0.61
Asset Impairments
—
—
96,928
0.76
Impact of Tax Reform (1)
—
—
40,650
0.32
Pension (2)
85,995
0.67
—
—
eOne Acquisition-Related Net Gain (3)
(81,772)
(0.64)
—
—
Net Earnings, as Adjusted
$
524,677
$
4.08
$
488,789
$
3.85
(1) The Company made adjustments to provisional U.S. Tax Reform
amounts recorded in the fourth quarter of 2017 based on additional
regulations issued in the first quarter of 2018.
(2) In the second quarter of 2019, the Company recognized a
$110.8 million non-cash charge ($85.9 million after-tax) related to
the settlement of its U.S. defined benefit pension plan. In the
fourth quarter of 2019, the Company recognized an additional $0.2
million non-cash charge ($0.1 million after-tax) related to the
settlement.
(3) In association with the Company's agreement to acquire eOne
in an all-cash transaction, the Company incurred certain
transaction-related costs, as well as hedge gains on the British
pound sterling purchase price in 2019. This resulted in eOne net
gains in the fourth quarter of 2019 of $101.2 million ($102.7
million after-tax), and for full-year 2019 of $75.7 million ($81.8
million after-tax), comprised of the following:
- Hedge gains of $139.7 million in the fourth quarter of 2019 and
$114.1 million for full-year 2019 related to the foreign exchange
forward and option contracts to hedge a portion of the British
pound sterling purchase price for the eOne Acquisition;
- Financing transaction fees of $20.6 million in the fourth
quarter and full-year 2019, primarily related to the Company’s
bridge financing facility which terminated unused in the fourth
quarter of 2019;
- eOne Acquisition related costs of $17.8 million in the fourth
quarter and full-year 2019; and
- Tax benefits of $1.4 million in the fourth quarter of 2019 and
$6.1 million for full-year 2019 related to the charges outlined in
ii. and iii. above. The hedge gains have no associated tax
impacts.
Reconciliation of EBITDA
Quarter Ended
Year Ended
December 29, 2019
December 30, 2018
December 29, 2019
December 30, 2018
Net Earnings
$
267,345
$
8,766
$
520,454
$
220,434
Interest Expense
34,782
22,435
101,878
90,826
Income Taxes (including Tax Reform)
31,416
(13,894)
73,756
49,968
Depreciation
32,512
34,340
133,528
139,255
Amortization of Intangibles
11,814
8,830
47,259
28,703
EBITDA
$
377,869
$
60,477
$
876,875
$
529,186
Non-GAAP Adjustments (4)
(102,134)
179,488
34,176
267,265
Adjusted EBITDA
$
275,735
$
239,965
$
911,051
$
796,451
(4) Non-GAAP Adjustments to EBITDA for the fourth quarter of
2019 include the following pre-tax adjustments: $0.2 million
related to the settlement of the Company's U.S. defined benefit
pension plan, and $(102.3) million related to the eOne Acquisition.
Non-GAAP Adjustments to EBITDA for full year 2019 include the
following pre-tax adjustments: $111.0 million related to the
settlement of the Company's U.S. defined benefit pension plan, and
$(76.8) million related to the eOne Acquisition. Refer to the notes
to the Reconciliation of Net Earnings and Earnings per Share table
above for additional details.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200211005498/en/
Investor Contact: Debbie Hancock Hasbro, Inc. (401) 727-5401
debbie.hancock@hasbro.com
Press Contact: Julie Duffy Hasbro, Inc. (401) 727-5931
julie.duffy@hasbro.com
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