- Third quarter 2020 revenues were $1.78 billion, down 4% on a
pro forma basis
- Revenue grew 9% in the U.S. and Canada segment and 7% in the
European region; revenue grew 50% in ecomm channels globally
- eOne TV and Film revenue decline reflects entertainment
delivery delays due to live-action production shutdowns and the
ongoing, gradual return to production
- Operating profit of $336.6 million or 18.9% of revenues; Net
earnings of $220.9 million or $1.61 per diluted share
- Adjusted operating profit of $367.2 million or 20.7% of
revenues, an expansion of 230 basis points year-over-year
- Adjusted net earnings of $258.9 million, or $1.88 per diluted
share
- Substantial liquidity and access to cash, including quarter
ending cash of $1.13 billion and year-to-date operating cash flow
of $494.3 million
Hasbro, Inc. (NASDAQ: HAS), a global play and entertainment
company, today reported financial results for the third quarter
2020.
Net revenues for the third quarter 2020 were $1.78 billion
versus $1.86 billion pro forma revenues in 2019, a decline of 4%.
Foreign exchange had a $1.0 million negative impact on third
quarter 2020 revenues. 2019 pro forma results reflect the
combination of the results of Hasbro and Entertainment One Ltd.
(eOne) for periods prior to Hasbro’s acquisition of eOne in the
first quarter of 2020.
Net earnings for the third quarter 2020 were $220.9 million, or
$1.61 per diluted share, versus pro forma net earnings of $216.5
million, or $1.57 per diluted share, in 2019. Third quarter 2020
net earnings included $19.6 million after tax of purchased
intangible amortization associated with the eOne acquisition, $13.7
million of incremental tax expense related to a change in the U.K.
tax code and $4.7 million after tax of acquisition and related
costs. Excluding these items, adjusted net earnings for the third
quarter 2020 were $258.9 million, or $1.88 per diluted share. Third
quarter 2019 pro forma net earnings included $19.1 million after
tax of purchased intangible amortization at eOne and $3.5 million
after tax associated with non-GAAP adjustments at eOne. Excluding
these items, adjusted pro forma net earnings for the third quarter
2019 were $239.1 million, or $1.74 per diluted share. See the
financial tables accompanying this press release for a
reconciliation of as reported to pro forma and adjusted results,
and a reconciliation of GAAP and non-GAAP financial measures.
"Hasbro's third quarter performance was the result of great work
from our global team and continued growing consumer demand for
Hasbro brands in most markets," said Brian Goldner, Hasbro’s
chairman and chief executive officer. "Our broad, innovative
product line, including leadership in gaming, excellence in global
ecomm and compelling marketing campaigns drove meaningfully better
performance in the third quarter. Building off this quarter's
growth in toys, games and digital we are positioned to deliver a
good holiday season. Live-action entertainment production is
returning, and we are set to improve deliveries in the fourth
quarter with some moving into 2021. While COVID-19 remains a factor
in our global operations, consumers remain engaged in activities
that create joy and personal connections and we are working
purposefully to deliver them the world's best play and
entertainment experiences, while remaining focused on the safety
and well-being of our global teams and communities."
"Our teams delivered a very good third quarter, showcasing the
breadth of Hasbro's portfolio, the benefits of our cost management
efforts and the strength of our balance sheet," said Deborah
Thomas, Hasbro’s chief financial officer. "Hasbro's partner
factories and warehouses are open and operating and production is
largely in line with demand. With a strong focus on cash
collections, DSOs are down year-over-year and sequentially, and we
ended the quarter with $1.13 billion in cash on the balance sheet.
Importantly, as we look to the future, we remain focused on
executing a good holiday, managing our expenses and investing to
support our business plans for future years."
Third Quarter 2020 Major Segment and
Brand Performance
Major Segments
Net Revenues
Operating Profit
(Loss)
($ Millions)
($ Millions)
Pro Forma
Pro Forma
Q3 2020
Q3 2019
% Change
Q3 2020
Q3 2019
% Change
U.S. and Canada
$977.1
$898.3
9%
$263.0
$193.7
36%
International
$517.0
$561.1
-8%
$63.9
$67.2
-5%
Entertainment, Licensing and
Digital
$89.0
$115.8
-23%
$32.8
$24.6
33%
eOne1
$193.5
$283.3
-32%
$(25.9)
$15.8
>-100%
Brand Portfolio
Net Revenues ($
Millions)
Pro Forma
Q3 2020
Q3 2019
% Change
Franchise Brands
$807.6
$779.7
4%
Partner Brands
$409.2
$427.0
-4%
Hasbro Gaming2
$239.2
$232.3
3%
Emerging Brands3
$155.0
$188.6
-18%
TV/Film/Entertainment4
$165.7
$230.9
-28%
1Both periods above are as reported, with 2019 including the pro
forma results from eOne. eOne incurred certain Non-GAAP adjustments
in both periods, which are discussed below. A reconciliation is
included the attached schedule under the heading “Reconciliation of
As Reported to Pro Forma Adjusted Operating Results.”
2Hasbro's total gaming category, including all gaming revenue,
most notably MAGIC: THE GATHERING and MONOPOLY, totaled $543.1
million for the third quarter 2020, up 21% from revenues of $449.4
million for the third quarter 2019.
3Emerging Brands portfolio includes revenues from eOne brands
PEPPA PIG, PJ MASKS and RICKY ZOOM as of first quarter 2020. For
comparability, third quarter 2019 includes the pro forma revenues
for those brands, which amounted to $52.4 million.
4TV/Film/Entertainment represents the remaining eOne revenues.
For comparability, third quarter 2019 includes the pro forma
revenues.
Revenue grew in Franchise Brands, led by MAGIC: THE GATHERING,
and Hasbro Gaming, with growth in numerous games properties. Hasbro
products for Lucasfilm's Star Wars and The Mandalorian also
delivered strong revenue growth in the quarter.
Global consumer point of sale increased mid-single digits,
including double-digit gains in the U.S., U.K.,
Germany/Austria/Switzerland, Australia and New Zealand. Point of
sale declined in Latin America.
- U.S. and Canada segment revenue and operating profit
grew due to gains in Franchise Brands, led by MAGIC: THE GATHERING,
as well as growth in Emerging Brands and Hasbro Gaming. Operating
profit grew primarily as a result of higher revenues and the
favorable mix of those revenues, including MAGIC: THE
GATHERING.
- International segment revenues and operating profit
declined, primarily driven by declines in Latin America. Revenues
grew in the European region. The International segment operating
profit declined as result of the lower revenues and efforts to
clear retail inventory in Latin America. This was partially offset
by favorable product mix and cost management.
- Entertainment, Licensing and Digital segment
revenues declined as compared to 2019 which included the
Transformers Bumblebee film revenue, partially offset by growth in
digital gaming. Operating profit increased due to favorable mix
from growth in licensed digital gaming, lower advertising related
to the launch of Magic: The Gathering Arena in 2019 and lower
development expenses due to the closure of Backflip Studios in late
2019.
- eOne segment pro forma revenues declined in the quarter
primarily due to lower TV and Film revenues as well as lower Family
Brands revenue. Within TV and Film, due to COVID-19 live-action
productions and theaters globally were shut down for most of the
quarter, and these are gradually reopening, depending on geography.
Demand for stories and content as well as viewership remain high.
The teams have a robust development slate of over 150 active
television and film projects including more than 30 Hasbro
properties. Within television, produced/acquired content half hours
decreased due to production shutdowns. Within film, box office
revenues declined as a result of theater closures. Within Family
Brands, engagement in animated content for PEPPA PIG and PJ MASKS
remains strong, but revenues declined on lower consumer licensee
revenues and lower advertising revenue from the YouTube platform.
In music, revenue was negatively impacted by the loss of live
events and associated artist promotions, as well as lower royalties
from licensed and publishing music rights. For the eOne segment,
third quarter 2020 operating profit included $24.7 million of
purchased intangible amortization associated with the fair value of
acquired intangible assets. Third quarter 2019 pro forma operating
profit included $24.6 million of purchased intangible amortization
and $4.6 million of prior restructuring and other costs. Adjusted
pro forma operating profit for the eOne segment decreased due to
the decline in revenues, partially offset by the related declines
in program amortization, advertising expense and royalty
expense.
Conference Call Webcast
Hasbro will webcast its third quarter 2020 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
https://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
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 all children and
all families through corporate social responsibility and
philanthropy. Hasbro ranked among the 2020 100 Best Corporate
Citizens by 3BL Media, has been named one of the World’s Most
Ethical Companies® by Ethisphere Institute for the past nine years,
and one of America’s Most JUST Companies by Forbes and JUST Capital
for the past four years. We routinely share important business and
brand updates on our Investor Relations website, Newsroom and
social channels (@Hasbro on Twitter and Instagram, and
@HasbroOfficial on Facebook.)
© 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 statements relating to: the impact of, and actions and
initiatives taken and planned to be taken to, try and manage the
negative impact of the global coronavirus outbreak on our business;
our expectations concerning the upcoming holiday season and our
future results; and our working capital and liquidity. 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. Factors that might cause such a
difference include, but are not limited to:
- our ability to successfully develop and execute plans to
mitigate the negative impact of the coronavirus on our
business;
- 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 global 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 of
our customers and increased emphasis on ecommerce;
- 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, licensees and other business partners;
- 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 and/or revenue efficiency enhancing initiatives
including initiatives to integrate eOne into our business;
- 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 2020 impact of eOne
acquisition and related costs, purchased intangible amortization,
other severance costs and income tax expense associated with U.K
tax reform. For 2019, Pro Forma Adjusted operating profit, Pro
Forma Adjusted net earnings and Pro Forma Adjusted earnings per
diluted share exclude the impact of charges associated with the
settlement of the Company’s U.S. pension plan, purchased intangible
amortization and certain charges incurred by eOne related to prior
restructuring programs and acquisition-related charges. Also
included in the financial tables are the non-GAAP financial
measures of EBITDA, Adjusted EBITDA and Pro Forma 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)
September 27, 2020
September 29, 2019
ASSETS
Cash and Cash Equivalents
$
1,132,405
$
1,060,432
Accounts Receivable, Net
1,438,360
1,416,879
Inventories
540,039
589,132
Prepaid Expenses and Other Current
Assets
648,158
346,687
Total Current Assets
3,758,962
3,413,130
Property, Plant and Equipment, Net
477,154
371,881
Goodwill
3,644,118
485,042
Other Intangible Assets, Net
1,546,810
658,350
Other Assets
1,276,133
626,221
Total Assets
$
10,703,177
$
5,554,624
LIABILITIES, NONCONTROLLING INTERESTS
AND SHAREHOLDERS' EQUITY
Short-term Borrowings
$
10,032
$
7,903
Current Portion of Long-term Debt
369,269
—
Accounts Payable and Accrued
Liabilities
1,936,248
1,458,832
Total Current Liabilities
2,315,549
1,466,735
Long-term Debt
4,777,807
1,696,204
Other Liabilities
778,514
550,778
Total Liabilities
7,871,870
3,713,717
Redeemable Noncontrolling Interests
22,876
—
Total Shareholders' Equity
2,808,431
1,840,907
Total Liabilities, Noncontrolling
Interests and Shareholders' Equity
$
10,703,177
$
5,554,624
HASBRO, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(Thousands of Dollars and Shares, Except
Per Share Data)
Quarter Ended
Nine Months Ended
September 27, 2020
% Net Revenues
September 29, 2019
% Net Revenues
September 27, 2020
% Net Revenues
September 29, 2019
% Net Revenues
Net Revenues
$
1,776,623
100.0
%
$
1,575,173
100.0
%
$
3,742,472
100.0
%
$
3,292,220
100.0
%
Costs and Expenses:
Cost of Sales
610,105
34.3
%
627,119
39.8
%
1,126,044
30.1
%
1,230,800
37.4
%
Program Cost Amortization
85,424
4.8
%
28,028
1.8
%
268,245
7.2
%
58,105
1.8
%
Royalties
176,938
10.0
%
128,008
8.1
%
387,097
10.3
%
258,957
7.9
%
Product Development
62,709
3.5
%
67,354
4.3
%
174,863
4.7
%
189,246
5.7
%
Advertising
137,408
7.7
%
140,256
8.9
%
311,415
8.3
%
309,659
9.4
%
Amortization of Intangibles
36,172
2.0
%
11,814
0.8
%
107,685
2.9
%
35,445
1.1
%
Selling, Distribution and
Administration
325,360
18.3
%
275,384
17.5
%
885,680
23.7
%
748,338
22.7
%
Acquisition and Related Costs
5,949
0.3
%
—
0.0
%
165,993
4.4
%
—
0.0
%
Operating Profit
336,558
18.9
%
297,210
18.9
%
315,450
8.4
%
461,670
14.0
%
Interest Expense
49,400
2.8
%
22,764
1.4
%
153,702
4.1
%
67,096
2.0
%
Other (Income) Expense, Net
(12,040
)
-0.7
%
14,700
0.9
%
(21,840
)
-0.6
%
99,125
3.0
%
Earnings before Income Taxes
299,198
16.8
%
259,746
16.5
%
183,588
4.9
%
295,449
9.0
%
Income Tax Expense
79,215
4.5
%
46,797
3.0
%
64,313
1.7
%
42,340
1.3
%
Net Earnings
219,983
12.4
%
212,949
13.5
%
119,275
3.2
%
253,109
7.7
%
Net (Loss) Earnings Attributable to
Noncontrolling Interests
(915
)
-0.1
%
—
0.0
%
1,929
0.1
%
—
0.0
%
Net Earnings Attributable to Hasbro,
Inc.
$
220,898
12.4
%
$
212,949
13.5
%
$
117,346
3.1
%
$
253,109
7.7
%
Per Common Share
Net Earnings
Basic
$
1.61
$
1.68
$
0.86
$
2.00
Diluted
$
1.61
$
1.67
$
0.85
$
1.99
Cash Dividends Declared
$
0.68
$
0.68
$
2.04
$
2.04
Weighted Average Number of Shares
Basic
137,258
126,453
137,214
126,356
Diluted
137,490
127,204
137,465
126,956
HASBRO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
(Thousands of Dollars)
Nine Months Ended
September 27, 2020
September 29, 2019
Cash Flows from Operating Activities:
Net Earnings
$
119,275
$
253,109
Non-Cash Pension Charge
—
110,777
Other Non-Cash Adjustments
561,826
204,726
Changes in Operating Assets and
Liabilities
(186,791
)
(179,044
)
Net Cash Provided by Operating
Activities
494,310
389,568
Cash Flows from Investing Activities:
Additions to Property, Plant and
Equipment
(92,059
)
(90,800
)
Acquisition, Net of Cash Acquired
(4,403,929
)
—
Other
24,297
4,340
Net Cash Utilized by Investing
Activities
(4,471,691
)
(86,460
)
Cash Flows from Financing Activities:
Proceeds from Long-term Debt
1,036,037
—
Repayments of Long-term Debt
(147,324
)
—
Net Repayments of Short-term
Borrowings
(319
)
(1,425
)
Purchases of Common Stock
—
(60,137
)
Stock-Based Compensation Transactions
1,830
29,737
Dividends Paid
(279,423
)
(250,760
)
Employee Taxes Paid for Shares
Withheld
(5,935
)
(13,061
)
Redemption of Equity Instruments
(47,399
)
—
Deferred Acquisition Payments
—
(100,000
)
Debt Issuance Costs
—
(21,534
)
Other
(6,949
)
—
Net Cash Provided (Utilized) by Financing
Activities
550,518
(417,180
)
Effect of Exchange Rate Changes on
Cash
(21,101
)
(7,867
)
Cash and Cash Equivalents at Beginning of
Year
4,580,369
1,182,371
Cash and Cash Equivalents at End of
Period
$
1,132,405
$
1,060,432
HASBRO, INC.
SUPPLEMENTAL FINANCIAL DATA
PRO FORMA SEGMENT RESULTS
(Unaudited)
(Thousands of Dollars)
For comparability, the quarter and nine
months ended September 29, 2019 include the pro forma results for
the eOne Segment. See "Reconciliation of 2019 As Reported to Pro
Forma Results" for the pro forma adjustments.
Quarter Ended
Nine Months Ended
September 27, 2020
Pro Forma September 29,
2019
% Change
September 27, 2020
Pro Forma September 29,
2019
% Change
Segment
Results
U.S. and Canada
Segment:
External Net Revenues
$
977,115
$
898,269
9
%
$
1,765,482
$
1,766,649
0
%
Operating Profit
262,977
193,686
36
%
359,028
313,795
14
%
Operating Margin
26.9
%
21.6
%
20.3
%
17.8
%
International
Segment (1):
External Net Revenues
517,007
561,137
-8
%
1,017,222
1,221,224
-17
%
Operating Profit
63,924
67,238
-5
%
12,333
51,410
-76
%
Operating Margin
12.4
%
12.0
%
1.2
%
4.2
%
Entertainment,
Licensing and Digital Segment:
External Net Revenues
89,027
115,766
-23
%
262,879
304,266
-14
%
Operating Profit
32,791
24,594
33
%
65,758
62,550
5
%
Operating Margin
36.8
%
21.2
%
25.0
%
20.6
%
eOne Segment
(2):
External Net Revenues
193,474
283,310
-32
%
696,889
980,613
-29
%
Operating (Loss) Profit
(25,914
)
15,812
>-100%
(64,962
)
91,367
>-100%
Operating Margin
-13.4
%
5.6
%
-9.3
%
9.3
%
(1)
International Segment Net Revenues by Major
Geographic Region
Europe
$
343,179
$
319,277
7
%
$
663,100
$
673,728
-2
%
Latin America
91,619
151,987
-40
%
158,028
305,106
-48
%
Asia Pacific
82,209
89,873
-9
%
196,094
242,390
-19
%
Total
$
517,007
$
561,137
$
1,017,222
$
1,221,224
Quarter Ended
Nine Months Ended
September 27, 2020
Pro Forma September 29,
2019
% Change
September 27, 2020
Pro Forma September 29,
2019
% Change
(2)
eOne Segment Net Revenues by
Category
Film and TV
$
138,514
$
199,949
-31
%
$
504,059
$
747,830
-33
%
Family Brands
26,252
53,828
-51
%
106,069
151,668
-30
%
Music and Other
28,708
29,533
-3
%
86,761
81,115
7
%
Total
$
193,474
$
283,310
$
696,889
$
980,613
Net Revenues by
Brand Portfolio
Franchise Brands
$
807,555
$
779,659
4
%
$
1,580,878
$
1,749,948
-10
%
Partner Brands
409,214
427,029
-4
%
729,772
812,466
-10
%
Hasbro Gaming (3)
239,222
232,287
3
%
516,337
463,272
11
%
Emerging Brands (4)
154,965
188,589
-18
%
325,101
411,371
-21
%
TV/Film/Entertainment (5)
165,667
230,919
-28
%
590,384
835,776
-29
%
Total
$
1,776,623
$
1,858,483
$
3,742,472
$
4,272,833
(3) Hasbro's total gaming category, including all gaming
revenue, most notably MAGIC: THE GATHERING and MONOPOLY, totaled
$543,107 and $1,202,604 for the quarter and nine months ended
September 27, 2020, respectively, up 21% and 11%, respectively,
from revenues of $449,393 and $1,086,151 for the quarter and nine
months ended September 29, 2019, respectively.
(4) Emerging Brands includes the preschool brands, PEPPA PIG, PJ
MASKS and RICKY ZOOM, acquired as part of the eOne Acquisition. For
comparability, the quarter and nine months ended September 29, 2019
includes the pro forma net revenues for those brands, which
amounted to $52,391 and $144,837, respectively.
(5) TV/Film/Entertainment includes all other brands not detailed
in (4) above acquired as part of the eOne Acquisition. For
comparability, the quarter and nine months ended September 29, 2019
includes the pro forma net revenues of $230,919 and $835,776,
respectively.
HASBRO, INC.
SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF AS REPORTED TO PRO
FORMA ADJUSTED OPERATING RESULTS
(Unaudited)
(Thousands of Dollars)
For comparability, the quarter and nine
months ended September 29, 2019 include the pro forma results for
the eOne Segment. See "Reconciliation of 2019 As Reported to Pro
Forma Results" for the pro forma and non-GAAP adjustments.
Non-GAAP
Adjustments Impacting Operating Profit
Quarter Ended
September 27, 2020
Pro Forma September 29,
2019
Pre-tax Adjustments
Post-tax Adjustments
Pre-tax Adjustments
Post-tax Adjustments
Acquisition and Related Costs (1)
$
5,949
$
4,726
$
—
$
—
Acquired Intangible Amortization (2)
24,716
19,637
24,597
19,063
Pro Forma eOne Adjustments
—
—
4,558
3,532
Total
$
30,665
$
24,363
$
29,155
$
22,595
Nine Months Ended
September 27, 2020
Pro Forma September 29,
2019
Pre-tax Adjustments
Post-tax Adjustments
Pre-tax Adjustments
Post-tax Adjustments
Acquisition and Related Costs (1)
$
165,993
$
140,691
$
—
$
—
Acquired Intangible Amortization (2)
72,336
57,471
73,791
57,188
Severance (3)
11,554
10,125
—
—
Pro Forma eOne Adjustments
—
—
32,599
25,264
Total
$
249,883
$
208,287
$
106,390
$
82,452
(1) In association with the Company's acquisition of eOne, the
Company incurred related expenses of $5,949 and $165,993,
respectively, in the quarter and nine months ended September 27,
2020, comprised of the following:
(i) Acquisition and integration costs of
$4,599 and $104,283 for the quarter and nine months ended September
27, 2020, respectively, including expense associated with the
acceleration of eOne stock-based compensation and advisor fees
settled at the closing of the acquisition, as well as integration
costs; and
(ii) Restructuring and related costs of
$1,350 and $61,710 for the quarter and nine months ended September
27, 2020, respectively, including severance and retention costs, as
well as impairment charges in the first quarter of 2020 for certain
definite-lived intangible and production assets.
(2) The Company incurred incremental intangible amortization
costs related to the intangible assets acquired in the eOne
Acquisition.
(3) In the second quarter of 2020, the Company incurred $11,554
of severance charges, associated with cost-savings initiatives
within the Company's commercial and Film and TV businesses. These
charges were included in Corporate and Eliminations.
Reconciliation of
Operating Profit (Loss) Results
Quarter Ended September 27,
2020
Pro Forma Quarter Ended
September 29, 2019
As Reported
Non-GAAP Adjustments
Adjusted
As Reported
Non-GAAP Adjustments
Adjusted
% Change
Adjusted Company
Results
External Net Revenues
$
1,776,623
$
—
$
1,776,623
$
1,858,483
$
—
$
1,858,483
-4
%
Operating Profit
336,558
30,665
367,223
313,022
29,155
342,177
7
%
Operating Margin
18.9
%
1.7
%
20.7
%
16.8
%
1.6
%
18.4
%
Adjusted Segment
Results
U.S. and Canada
Segment:
External Net Revenues
$
977,115
$
—
$
977,115
$
898,269
$
—
$
898,269
9
%
Operating Profit
262,977
—
262,977
193,686
—
193,686
36
%
Operating Margin
26.9
%
—
26.9
%
21.6
%
—
21.6
%
International
Segment:
External Net Revenues
517,007
—
517,007
561,137
—
561,137
-8
%
Operating Profit
63,924
—
63,924
67,238
—
67,238
-5
%
Operating Margin
12.4
%
—
12.4
%
12.0
%
—
12.0
%
Entertainment,
Licensing and Digital Segment:
External Net Revenues
89,027
—
89,027
115,766
—
115,766
-23
%
Operating Profit
32,791
—
32,791
24,594
—
24,594
33
%
Operating Margin
36.8
%
—
36.8
%
21.2
%
—
21.2
%
eOne
Segment:
External Net Revenues
193,474
—
193,474
283,310
—
283,310
-32
%
Operating (Loss) Profit
(25,914
)
24,716
(1,198
)
15,812
29,155
44,967
>-100%
Operating Margin
-13.4
%
12.8
%
-0.6
%
5.6
%
10.3
%
15.9
%
Corporate and Eliminations: The
Corporate and Eliminations segment included non-GAAP adjustments of
$5,949 for the quarter ended September 27, 2020, consisting of eOne
acquisition and related costs.
Nine Months Ended September
27, 2020
Pro Forma Nine Months Ended
September 29, 2019
As Reported
Non-GAAP Adjustments
Adjusted
As Reported
Non-GAAP Adjustments
Adjusted
% Change
Adjusted Company
Results
External Net Revenues
$
3,742,472
$
—
$
3,742,472
$
4,272,833
$
—
$
4,272,833
-12
%
Operating Profit
315,450
249,883
565,333
553,037
106,390
659,427
-14
%
Operating Margin
8.4
%
6.7
%
15.1
%
12.9
%
2.5
%
15.4
%
Adjusted Segment
Results
U.S. and Canada
Segment:
External Net Revenues
$
1,765,482
$
—
$
1,765,482
$
1,766,649
$
—
$
1,766,649
0
%
Operating Profit
359,028
—
359,028
313,795
—
313,795
14
%
Operating Margin
20.3
%
—
20.3
%
17.8
%
—
17.8
%
International
Segment:
External Net Revenues
1,017,222
—
1,017,222
1,221,224
—
1,221,224
-17
%
Operating Profit
12,333
—
12,333
51,410
—
51,410
-76
%
Operating Margin
1.2
%
—
1.2
%
4.2
%
—
4.2
%
Entertainment,
Licensing and Digital Segment:
External Net Revenues
262,879
—
262,879
304,266
—
304,266
-14
%
Operating Profit
65,758
20,831
86,589
62,550
—
62,550
38
%
Operating Margin
25.0
%
7.9
%
32.9
%
20.6
%
—
20.6
%
eOne
Segment:
External Net Revenues
696,889
—
696,889
980,613
—
980,613
-29
%
Operating (Loss) Profit
(64,962
)
150,065
85,103
91,367
106,390
197,757
-57
%
Operating Margin
-9.3
%
21.5
%
12.2
%
9.3
%
10.8
%
20.2
%
Corporate and Eliminations: The
Corporate and Eliminations segment included non-GAAP adjustments of
$78,987 for the nine months ended September 27, 2020, consisting of
eOne acquisition and related costs and other severance
expenses.
HASBRO, INC.
SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF 2019 AS REPORTED TO
PRO FORMA RESULTS
(Unaudited)
(Thousands of Dollars)
Pro forma results were prepared by
combining the results of Hasbro and eOne for the quarter and nine
months ended September 29, 2019, after giving effect to the eOne
Acquisition as if it had been consummated on December 31, 2018.
These pro forma results do not represent financial results that
would have been realized had the acquisition actually occurred on
December 31, 2018, nor are they intended to be a projection of
future results. The pro forma financial information is presented
for illustrative purposes only and does not reflect the costs of
any integration activities or cost savings or synergies that may be
achieved as a result of the acquisition.
Quarter Ended September 29,
2019
Hasbro As Reported
eOne (under U.S. GAAP)
Pro Forma Adjustments
(1)
Pro Forma Combined
Net Revenues
$
1,575,173
$
283,310
$
—
$
1,858,483
Operating Profit
$
297,210
$
22,294
$
(6,482
)
$
313,022
Non-GAAP Adjustments
—
22,673
6,482
29,155
Adjusted Operating Profit *
$
297,210
$
44,967
$
—
$
342,177
* Reconciliation to Pro Forma Adjusted
results is as follows:
Net Earnings
$
212,949
$
2,958
$
629
$
216,536
Interest Expense
22,764
10,302
19,105
52,171
Other Expense (Income), Net
14,700
2,687
(25,533
)
(8,146
)
Income Tax Expense
46,797
4,025
(683
)
50,139
Net Earnings Attributable to
Noncontrolling Interests
—
2,322
—
2,322
Operating Profit
297,210
22,294
(6,482
)
313,022
Non-GAAP Adjustments
eOne:
Restructuring and Related Charges
—
3,234
—
3,234
Acquisition Costs - eOne Deals
—
1,324
—
1,324
Hasbro Transaction Costs
—
3,244
(3,244
)
—
Acquired Intangible Amortization
—
14,871
9,726
24,597
—
22,673
6,482
29,155
Adjusted Operating Profit
$
297,210
$
44,967
$
—
$
342,177
(1) The pro forma results include certain pro forma adjustments
to net earnings that were directly attributable to the acquisition,
as if the acquisition had occurred on December 31, 2018, including
the following:
- deal costs of $3,244 incurred by eOne related to the eOne
acquisition, included in Selling, Distribution and
Administration;
- additional amortization expense of $9,726 that would have been
recognized as a result of the allocation of purchase consideration
to definite-lived intangible assets subject to amortization;
- estimated differences in interest expense of $19,105 as a
result of incurring new debt and extinguishing historical eOne
debt;
- reduction in Other Expense of $25,533 related to the mark to
market of foreign exchange forward and option contracts, which the
Company entered into in order to hedge a portion of the British
pound sterling purchase price for the eOne acquisition; and
- the income tax effect of the pro forma adjustments in the
amount of $683, calculated using a blended statutory income tax
rate of 22.5% for the eOne adjustments and 21% for the Hasbro
interest adjustments.
Nine Months Ended September
29, 2019
Hasbro As Reported
eOne (under U.S.
GAAP)
Pro Forma Adjustments
(2)
Pro Forma Combined
Net Revenues
$
3,292,220
$
980,613
$
—
$
4,272,833
Operating Profit
$
461,670
$
118,901
$
(27,534)
$
553,037
Non-GAAP Adjustments
—
78,856
27,534
106,390
Adjusted Operating Profit *
$
461,670
$
197,757
$
—
$
659,427
* Reconciliation to Pro Forma Adjusted
results is as follows:
Net Earnings
$
253,109
$
28,132
$
(30,798)
$
250,443
Interest Expense
67,096
35,073
57,316
159,485
Other Expense, Net
99,125
28,479
(45,345)
82,259
Income Tax Expense
42,340
22,303
(8,707)
55,936
Net Earnings Attributable to
Noncontrolling Interests
—
4,914
—
4,914
Operating Profit
461,670
118,901
(27,534)
553,037
Non-GAAP
Adjustments
eOne:
Restructuring and Related Charges
—
21,882
—
21,882
Acquisition Costs - eOne Deals
—
10,717
—
10,717
Hasbro Transaction Costs
—
3,244
(3,244)
—
Acquired Intangible Amortization
—
43,013
30,778
73,791
—
78,856
27,534
106,390
Adjusted Operating Profit
$
461,670
$
197,757
$
—
$
659,427
(2) The pro forma results include certain pro forma adjustments
to net earnings that were directly attributable to the acquisition,
as if the acquisition had occurred on December 31, 2018, including
the following:
- deal costs of $3,244 incurred by eOne related to the eOne
acquisition, included in Selling, Distribution and
Administration;
- additional amortization expense of $30,778 that would have been
recognized as a result of the allocation of purchase consideration
to definite-lived intangible assets subject to amortization;
- estimated differences in interest expense of $57,316 as a
result of incurring new debt and extinguishing historical eOne
debt;
- total reduction in Other Expense of $45,345, consisting of:
- $19,812 related to premiums paid by eOne in connection with the
early redemption of its senior secured notes and the related
write-off of unamortized deferred finance charges associated with
the senior secured notes, and
- $25,533 related to the mark to market of foreign exchange
forward and option contracts, which the Company entered into in
order to hedge a portion of the British pound sterling purchase
price for the eOne acquisition; and
- the income tax effect of the pro forma adjustments in the
amount of $8,707, calculated using a blended statutory income tax
rate of 22.5% for the eOne adjustments and 21% for the Hasbro
interest adjustments.
HASBRO, INC.
SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(Unaudited)
(Thousands of Dollars and Shares, Except
Per Share Data)
For comparability, the quarter and nine
months ended September 29, 2019 includes the pro forma results for
the eOne Segment. See "Reconciliation of 2019 As Reported to Pro
Forma Results" for the pro forma and non-GAAP adjustments.
Reconciliation of
Net Earnings and Earnings per Share
Quarter Ended
(all adjustments reported after-tax)
September 27, 2020
Diluted Per Share
Amount
Pro Forma September 29,
2019
Pro Forma Diluted Per Share
Amount (1)
Net Earnings Attributable to Hasbro,
Inc.
$
220,898
$
1.61
$
216,536
$
1.57
Acquisition and Related Costs
4,726
0.03
—
—
Acquired Intangible Amortization
19,637
0.14
19,063
0.14
UK Tax Reform (2)
13,680
0.10
—
—
Pro Forma eOne Adjustments
—
—
3,532
0.03
Net Earnings Attributable to Hasbro, Inc.,
as Adjusted
$
258,941
$
1.88
$
239,131
$
1.74
Nine Months Ended
(all adjustments reported after-tax)
September 27, 2020
Diluted Per Share
Amount
Pro Forma September 29,
2019
Pro Forma Diluted Per Share
Amount (1)
Net Earnings Attributable to Hasbro,
Inc.
$
117,346
$
0.85
$
250,443
$
1.82
Acquisition and Related Costs
140,691
1.02
—
—
Acquired Intangible Amortization
57,471
0.42
57,188
0.42
Severance
10,125
0.07
—
—
UK Tax Reform (2)
13,680
0.10
—
—
Pro Forma eOne Adjustments
—
—
25,264
0.18
Pension (3)
—
—
85,852
0.62
Net Earnings Attributable to Hasbro, Inc.,
as Adjusted
$
339,313
$
2.47
$
418,747
$
3.04
(1) 2019 Pro Forma Diluted Per Share Amount is calculated using
weighted average shares outstanding of 137,586 for the quarter and
nine months ended September 29, 2019, which includes the pro forma
impact of issuing shares associated with the financing of the eOne
Acquisition.
(2) In the third quarter of 2020, the Company recorded income
tax expense of $13,680 as a result of revaluation of Hasbro’s UK
tax attributes in accordance with the Finance Act of 2020 enacted
by the United Kingdom on July 22, 2020. Effective back to April 1,
2020, the new law maintains the corporate income tax rate at 19%
instead of the planned reduction to 17% that was previously enacted
in the UK Finance Act of 2016.
(3) In the second quarter of 2019, the Company recognized a
non-cash charge of $110,777 ($85,852 after-tax) related to the
settlement of its U.S. defined benefit pension plan.
Reconciliation of
EBITDA
Quarter Ended
Quarter Ended September 29,
2019
September 27, 2020
Hasbro As
Reported
eOne (under U.S.
GAAP)
Pro Forma Adjustments
(4)
Pro Forma Combined
Net Earnings Attributable to Hasbro,
Inc.
$
220,898
$
212,949
$
2,958
$
629
$
216,536
Interest Expense
49,400
22,764
10,302
19,105
52,171
Income Tax Expense
79,215
46,797
4,025
(683
)
50,139
Net (Loss) Earnings Attributable to
Noncontrolling Interests
(915
)
—
2,322
—
2,322
Depreciation
37,513
38,608
2,667
—
41,275
Amortization of Intangibles
36,172
11,814
14,871
9,726
36,411
EBITDA
$
422,283
$
332,932
$
37,145
$
28,777
$
398,854
Non-GAAP Adjustments
5,949
25,533
7,802
(28,777
)
4,558
Adjusted EBITDA
$
428,232
$
358,465
$
44,947
$
—
$
403,412
Nine Months Ended
Nine Months Ended September
29, 2019
September 27, 2020
Hasbro As
Reported
eOne (under U.S.
GAAP)
Pro Forma Adjustments
(5)
Pro Forma Combined
Net Earnings Attributable to Hasbro,
Inc.
$
117,346
$
253,109
$
28,132
$
(30,798
)
$
250,443
Interest Expense
153,702
67,096
35,073
57,316
159,485
Income Tax Expense
64,313
42,340
22,303
(8,707
)
55,936
Net Earnings Attributable to
Noncontrolling Interests
1,929
—
4,914
—
4,914
Depreciation
94,100
101,016
5,770
—
106,786
Amortization of Intangibles
107,685
35,445
43,013
30,778
109,236
EBITDA
$
539,075
$
499,006
$
139,205
$
48,589
$
686,800
Non-GAAP Adjustments
177,547
136,310
55,655
(48,589
)
143,376
Adjusted EBITDA
$
716,622
$
635,316
$
194,860
$
—
$
830,176
(4) Pro Forma Adjustments for the quarter ended September 29,
2019 includes the mark to market of acquisition-related foreign
exchange forward and option contracts of $25,533 and deal costs of
$3,244, which are excluded from pro forma results, and also shown
as Non-GAAP Adjustments within Hasbro and eOne. The net impact to
Pro Forma Adjusted EBITDA is zero.
(5) Pro Forma Adjustments for the nine months ended September
29, 2019 include debt refinancing costs of $19,812, the mark to
market of acquisition-related foreign exchange forward and option
contracts of $25,533, and deal costs of $3,244, which are excluded
from pro forma results, and also shown as Non-GAAP Adjustments
within Hasbro and eOne. The net impact to Pro Forma Adjusted EBITDA
is zero.
HASBRO, INC.
SUPPLEMENTAL FINANCIAL DATA
eOne - FY2019 RESULTS OF OPERATIONS
(REPORTED UNDER U.S. GAAP)
(Unaudited)
(Thousands of Dollars)
Quarter Ended
Year Ended
March 2019
June 2019
September 2019
December 2019
December 2019
Net Revenues (1)
$
466,212
$
231,091
$
283,310
$
235,160
$
1,215,773
Costs and Expenses:
Cost of Sales
14,141
17,053
11,497
24,878
67,569
Program Cost Amortization
160,857
64,527
92,662
90,414
408,460
Royalties
81,147
55,865
49,533
39,659
226,204
Advertising
21,173
32,870
30,593
37,241
121,877
Amortization of Intangibles
12,117
16,025
14,871
16,552
59,565
Selling, Distribution and
Administration
61,130
63,791
61,860
92,996
279,777
Operating Profit (Loss)
115,647
(19,040
)
22,294
(66,580
)
52,321
Interest Expense
12,563
12,208
10,302
10,772
45,845
Other Expense (Income), Net
4,556
21,236
2,687
(759
)
27,720
Earnings (Loss) before Income Taxes
98,528
(52,484
)
9,305
(76,593
)
(21,244
)
Income Tax Expense (Benefit)
21,632
(3,354
)
4,025
(26,815
)
(4,512
)
Net Earnings (Loss)
76,896
(49,130
)
5,280
(49,778
)
(16,732
)
Net Income Attributable to Noncontrolling
Interests
2,190
402
2,322
488
5,402
Net Earnings (Loss) Attributable to
eOne
$
74,706
$
(49,532
)
$
2,958
$
(50,266
)
$
(22,134
)
The eOne financial results above include certain charges that
would have been excluded to calculate Adjusted results, as
historically reported by eOne. Those charges are outlined below for
each quarter in fiscal year 2019.
Non-GAAP
Adjustments
Quarter Ended
Year Ended
March 2019
June 2019
September 2019
December 2019
December 2019
Restructuring and Related Charges
$
11,275
$
7,373
$
3,234
$
11,526
$
33,408
Acquisition Costs - eOne Deals
729
8,664
1,324
458
11,175
Hasbro Transaction Costs
—
—
3,244
3,245
6,489
Selling, Distribution and
Administration
12,004
16,037
7,802
15,229
51,072
Debt Refinancing Costs
—
19,812
—
19,812
Other Expense (Income), Net
—
19,812
—
—
19,812
Total
$
12,004
$
35,849
$
7,802
$
15,229
$
70,884
(1) eOne Net Revenues by category are as
follows:
Quarter Ended
Year Ended
March 2019
June 2019
September 2019
December 2019
December 2019
Film and TV
$
387,611
$
160,270
$
199,949
$
140,581
$
888,411
Family Brands
56,612
41,228
53,828
58,677
210,345
Music and Other
21,989
29,593
29,533
35,902
117,017
Total
$
466,212
$
231,091
$
283,310
$
235,160
$
1,215,773
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201026005435/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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