- First quarter 2017 revenues grew 2%
to $849.7 million including revenue growth of 2% in the U.S. and
Canada segment and 24% in the Entertainment and Licensing segment;
International segment revenues were flat;
- Growth in Franchise Brands, Hasbro
Gaming and Emerging Brands offset the expected decline in Partner
Brands;
- Net earnings increased 41% to $68.6
million or $0.54 per diluted share; Reported net earnings include a
$0.11 per diluted share benefit versus first quarter 2016 from the
adoption of FASB ASU No. 2016-09;
- Company returned $81.5 million to
shareholders in the quarter; $63.4 million in dividends and $18.1
million in share repurchases.
Hasbro, Inc. (NASDAQ: HAS) today reported financial
results for the first quarter 2017. Net revenues for the first
quarter 2017 increased 2% to $849.7 million versus $831.2 million
in 2016.
Net earnings for the first quarter 2017 increased 41% to $68.6
million, or $0.54 per diluted share, compared to $48.8 million, or
$0.38 per diluted share, in 2016. Reported net earnings include a
$0.11 per diluted share benefit versus first quarter 2016 from the
adoption of FASB ASU No. 2016-09, Improvements to Employee
Share-Based Payment Accounting. The first quarter 2017 was a
14-week period versus the first quarter 2016 which was a 13-week
period. Given the timing of the week, the extra week adds an
additional week of expense, but does not contribute a comparable
level of revenue.
“Our first quarter results are in line with our previously
communicated expectations and we are well positioned to execute
against 2017’s rich content slate and diverse new initiatives,”
said Brian Goldner, Hasbro’s chairman and chief executive officer.
“Revenue grew in the quarter and we drove strong consumer takeaway
at retail, both compared to a robust first quarter last year and
with a shift of Easter into this year’s second quarter. Over the
coming quarters, we are supporting significant new initiatives
including major theatrical films for both Franchise and Partner
Brands.”
“Hasbro remains in a strong financial position, with positive
trends to start the year and a healthy balance sheet,” said Deborah
Thomas, Hasbro’s chief financial officer. “As anticipated,
operating profit in the quarter was negatively impacted by an extra
week of expenses without the comparable revenue increase. This
decline was more than offset by a favorable foreign exchange impact
in non-operating income and the tax benefit from the new accounting
standard. Based on our first quarter’s performance, our full-year
expectations remain in line with our previously stated
objectives.”
First Quarter
2017 Major Segment Performance
Net Revenues ($ Millions)
Operating Profit ($ Millions) Q1 2017
Q1 2016 % Change Q1 2017
Q1 2016 % Change U.S. and Canada
$451.6 $443.6 +2% $64.8 $78.3
-17%
International $345.3 $345.0 --
$0.5 $2.9 -81%
Entertainment and
Licensing $52.7 $42.5 +24% $11.3
$5.4 +108%
First quarter 2017 U.S. and Canada segment net revenues
increased 2% to $451.6 million compared to $443.6 million in 2016.
Revenue growth in Hasbro Gaming and Emerging Brands offset a
decline in Franchise Brands and Partner Brands. The U.S. and Canada
segment reported operating profit of $64.8 million, or 14.3% of net
revenues, compared to $78.3 million, or 17.7% of net revenues, in
2016.
International segment net revenues of $345.3 million were
essentially flat with $345.0 million in 2016. First quarter 2017
International segment revenues include a favorable $3.0 million
impact of foreign exchange. Revenue growth in Franchise Brands,
Hasbro Gaming and Emerging Brands was offset by a decline in
Partner Brands. On a regional basis, Europe revenues declined 4%,
Latin America increased 16% and Asia Pacific declined 1%. Emerging
markets revenues increased 20% in the quarter. International
segment operating profit was $0.5 million compared to $2.9 million
in 2016.
Entertainment and Licensing segment net revenues increased 24%
to $52.7 million compared to $42.5 million in 2016. Digital gaming
drove the quarterly revenue increase, including higher revenues at
Backflip Studios. The Entertainment and Licensing segment operating
profit increased 108% to $11.3 million, or 21.5% of net revenues,
compared to $5.4 million, or 12.8% of net revenues, in 2016.
First Quarter
2017 Brand Portfolio Performance
Net Revenues ($ Millions) Q1
2017 Q1 2016 % Change Franchise
Brands $423.6 $416.4 +2%
Partner
Brands $213.0 $258.2 -18%
Hasbro
Gaming* $142.9 $100.2 +43%
Emerging
Brands $70.2 $56.4 +25%
*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 $253.3 million for
the first quarter 2017, up 10%, versus $231.1 million in the first
quarter 2016. Hasbro believes its gaming portfolio is a competitive
differentiator and views it in its entirety.
First quarter 2017 Franchise Brand revenues increased 2% to
$423.6 million driven by revenue growth in NERF, TRANSFORMERS and
MONOPOLY.
Partner Brand revenues declined 18% to $213.0 million. Revenue
growth from BEYBLADE and DREAMWORKS’ TROLLS was more than offset by
expected declines in STAR WARS and MARVEL ahead of major theatrical
releases later this year.
Hasbro Gaming posted 43% revenue growth to $142.9 million driven
by Hasbro’s diverse gaming portfolio. The strong revenue increase
was led by several new games, including SPEAK OUT, TOILET TROUBLE
and FANTASTIC GYMNASTICS, digital gaming, and several other gaming
brands, including DUNGEONS & DRAGONS, BOP-IT and PIE-FACE.
Hasbro’s total gaming category grew 10% to $253.3 million.
Emerging Brands revenue grew 25% to $70.2 million. Revenue
increases from BABY ALIVE and FURREAL FRIENDS products were the
primary contributors to growth in the quarter.
Dividend and Share
Repurchase
The Company paid $63.4 million in cash dividends to shareholders
during the first quarter 2017. The next quarterly cash dividend
payment of $0.57 per common share is scheduled for May 15, 2017 to
shareholders of record at the close of business on May 1, 2017.
During the first quarter, Hasbro repurchased 218,000 shares of
common stock at a total cost of $18.1 million and an average price
of $82.82 per share. At quarter-end, $309.9 million remained
available in the current share repurchase authorization.
Conference Call Webcast
Hasbro will webcast its first 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)
April 2, 2017 March 27, 2016
ASSETS Cash and Cash
Equivalents $ 1,463,081 $ 1,095,880 Accounts Receivable, Net
676,945 670,663 Inventories 416,232 461,734 Other Current Assets
243,475 295,806 Total Current Assets 2,799,733
2,524,083 Property, Plant and Equipment, Net 270,023 241,253 Other
Assets 1,576,114 1,599,359 Total Assets $ 4,645,870 $
4,364,695
LIABILITIES, REDEEMABLE NONCONTROLLING
INTERESTS AND SHAREHOLDERS' EQUITY Short-term Borrowings
$ 65,294 $ 89,000 Current Portion of Long-term Debt 349,814 -
Payables and Accrued Liabilities 786,706 679,373
Total Current Liabilities 1,201,814 768,373 Long-term Debt
1,198,896 1,547,434 Other Liabilities 393,516 402,346
Total Liabilities 2,794,226 2,718,153 Redeemable Noncontrolling
Interests - 39,152 Total Shareholders' Equity 1,851,644
1,607,390 Total Liabilities, Redeemable Noncontrolling
Interests and Shareholders' Equity $ 4,645,870 $ 4,364,695
HASBRO, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited) Quarter Ended (Thousands
of Dollars and Shares Except Per Share Data)
April 2,2017
% NetRevenues
March 27,2016
% NetRevenues
Net Revenues $ 849,663 100.0 % $ 831,180 100.0 % Costs and
Expenses: Cost of Sales 306,082 36.0 % 290,240 34.9 % Royalties
64,380 7.6 % 69,969 8.4 % Product Development 62,586 7.4 % 57,164
6.9 % Advertising 80,936 9.5 % 79,859 9.6 % Amortization of
Intangibles 7,881 0.9 % 8,691 1.0 % Program Production Cost
Amortization 5,570 0.7 % 6,186 0.7 % Selling, Distribution and
Administration 243,885 28.7 % 233,155
28.1 % Operating Profit 78,343 9.2 % 85,916 10.3 % Interest Expense
24,456 2.9 % 24,044 2.9 % Other (Income) Expense, Net
(16,950 ) -2.0 % 2,659 0.3 % Earnings before Income
Taxes 70,837 8.3 % 59,213 7.1 % Income Taxes 2,238
0.3 % 12,242 1.5 % Net Earnings 68,599 8.1 % 46,971
5.7 % Net Loss Attributable to Noncontrolling Interests -
0.0 % (1,780 ) -0.2 % Net Earnings Attributable to
Hasbro, Inc. $ 68,599 8.1 % $ 48,751 5.9 % Per
Common Share Net Earnings Attributable to Hasbro, Inc. Basic $ 0.55
$ 0.39 Diluted $ 0.54 $ 0.38
Cash Dividends Declared $ 0.57 $ 0.51 Weighted
Average Number of Shares Basic 125,182 125,266
Diluted 127,229 126,948
HASBRO, INC. CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited) (Thousands of Dollars)
Quarter Ended April 2, 2017 March 27, 2016 Cash Flows
from Operating Activities: Net Earnings $ 68,599 $ 46,971 Non-cash
Adjustments 65,425 61,442 Changes in Operating Assets and
Liabilities 277,904 204,866 Net Cash
Provided by Operating Activities 411,928
313,279 Cash Flows from Investing Activities:
Additions to Property, Plant and Equipment (30,243 ) (31,218 )
Other (781 ) 3,626 Net Cash Utilized by
Investing Activities (31,024 ) (27,592 ) Cash
Flows from Financing Activities: Net Repayments of Short-term
Borrowings (107,336 ) (75,526 ) Purchases of Common Stock (19,312 )
(33,710 ) Stock-based Compensation Transactions 9,743 8,153
Dividends Paid (63,404 ) (57,406 ) Employee Taxes Paid for Shares
Withheld (31,391 ) (13,600 ) Other - 762
Net Cash Utilized by Financing Activities (211,700 )
(171,327 ) Effect of Exchange Rate Changes on Cash
11,592 4,770 Cash and Cash Equivalents at Beginning of Year
1,282,285 976,750 Cash and Cash
Equivalents at End of Period $ 1,463,081 $ 1,095,880
HASBRO, INC. SUPPLEMENTAL FINANCIAL
DATA (Unaudited) (Thousands of Dollars) Quarter
Ended April 2, 2017 March 27, 2016 % Change
Major Segment
Results
U.S. and Canada
Segment:
External Net Revenues $ 451,577 $ 443,648 2 % Operating Profit
64,754 78,335 -17 % Operating Margin 14.3 % 17.7 %
International
Segment:
External Net Revenues 345,281 345,037 0 % Operating Profit 544
2,853 -81 % Operating Margin 0.2 % 0.8 %
Entertainment and
Licensing Segment:
External Net Revenues 52,729 42,495 24 % Operating Profit 11,346
5,442 108 % Operating Margin 21.5 % 12.8 %
International
Segment Net Revenues by Major Geographic Region
Europe $ 216,120 $ 224,123 -4 % Latin America 64,756 55,596 16 %
Asia Pacific 64,405 65,318 -1 % Total $
345,281 $ 345,037
Net Revenues by
Brand Portfolio
Franchise Brands $ 423,603 $ 416,374 2 % Partner Brands 212,962
258,225 -18 % Hasbro Gaming 142,913 100,228 43 % Emerging Brands
70,185 56,353 25 % Total Net Revenues $
849,663 $ 831,180 Hasbro's total gaming
category, including all gaming revenue, most notably MAGIC: THE
GATHERING and MONOPOLY, totaled $253,289 for the first quarter of
2017, up 10%, from revenues of $231,147 for the first quarter of
2016.
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
Reconciliation of
EBITDA
Net Earnings Attributable to Hasbro, Inc. $ 68,599 $ 48,751 Net
Loss Attributable to Noncontrolling Interests - (1,780 ) Interest
Expense 24,456 24,044 Income Taxes 2,238 12,242 Depreciation 27,702
25,126 Amortization of Intangibles 7,881 8,691
EBITDA $ 130,876 $ 117,074
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170424005664/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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