Announces Sale of eOne Film and TV Business to
Lionsgate
Hasbro, Inc. (NASDAQ: HAS), a leading toy and game company,
today reported financial results for the second quarter 2023.
"The Hasbro team delivered a solid second quarter, with revenue
ahead of our expectations, significant reduction of inventory, and
meaningful progress toward our transformation and cost savings
programs," said Chris Cocks, Hasbro chief executive officer. "New
products are delighting our fans around the world, including the
return of FURBY and the release of MAGIC: THE GATHERING's Universes
Beyond set, The Lord of the Rings: Tales of Middle-earth, which is
already the second largest set in MAGIC's history. TRANSFORMERS
entertainment and innovation is driving strong growth in the
brand.
"Importantly, we announced an agreement to sell our eOne Film
and TV business to Lionsgate, where it will be in good hands, and
expect to close the transaction by year end," continued Cocks.
"Storytelling is part of our mission, and Hasbro will keep
producing compelling entertainment that helps bring our beloved
brands to life. The sale allows us to focus on our core toy and
game expertise, partner with the industry's best, and strengthen
our balance sheet as we invest to drive long-term growth and return
cash to shareholders."
"Through the first six months, our results have been at or above
our plan," said Gina Goetter, Hasbro chief financial officer.
"Looking at our full year, our Consumer Products segment remains on
track and our Wizards of the Coast and Digital Gaming segment is
performing better than expected. Positive proof points are emerging
across a variety of our transformation initiatives as we lower
costs, improve productivity, and reset Hasbro for profitable
growth. Selling our eOne Film and TV business will give us greater
focus and financial flexibility moving forward, including paying
down a minimum of $400 million in floating rate debt."
Highlights
- Q2 Hasbro, Inc. revenue declined 10%, ahead of expectations,
driven by stronger than planned point of sale trends within
Consumer Products.
- Announced sale of eOne Film & TV business enabling focus on
core toy and game brands; expected to close in the back-half of
2023.
- Meaningful progress on transformation; delivered $84 million of
cost savings under the Operational Excellence Program in the first
half of 2023.
- Reduced owned inventory level by 16% versus prior year driven
by Consumer Products; global Retail inventory down 16%.
- Reaffirming outlook on Consumer Products segment and increasing
revenue growth guidance for Wizards of the Coast and Digital Gaming
segment.
- Updating guidance on Entertainment segment to reflect the
reality of the writers' and actors' strikes impact on production
deliveries.
- Launched compelling innovation across toys and games: MAGIC:
THE GATHERING Universes Beyond The Lord of the Rings: Tales of
Middle-earth; MONOPOLY NBA Prizm and Super Mario Brothers
editions.
Second Quarter and First Half 2023
Financial Results
$ Millions, except earnings per
share
Q2 2023
Q2 2022
% Change
1H 2023
1H 2022
% Change
Net Revenues1
$
1,210.0
$
1,339.2
-10%
$
2,211.0
$
2,502.3
-12%
Operating Profit (Loss)
$
(188.6)
$
219.1
>-100%
$
(170.7)
$
339.1
>-100%
Adjusted Operating Profit2
$
136.8
$
241.0
-43%
$
184.0
$
382.8
-52%
Net Earnings (Loss)
$
(235.0)
$
142.0
>-100%
$
(257.1)
$
203.2
>-100%
Net Earnings (Loss) per Diluted
Share
$
(1.69)
$
1.02
>-100%
$
(1.85)
$
1.46
>-100%
Adjusted Net Earnings2
$
67.7
$
160.6
-58%
$
68.7
$
240.0
-71%
Adjusted Net Earnings per Diluted
Share2
$
0.49
$
1.15
-57%
$
0.49
$
1.72
-72%
EBITDA2
$
(127.9)
$
285.4
>-100%
$
(55.5)
$
459.4
>-100%
Adjusted EBITDA2
$
198.6
$
308.3
-36%
$
297.3
$
500.4
-41%
1Foreign exchange had a negative $3.5
million and $19.3 million impact on second quarter and first half
2023 revenue, respectively. 2See the financial tables accompanying
this press release for a reconciliation of GAAP and non-GAAP
financial measures, namely, adjusted operating profit, adjusted net
earnings, adjusted net earnings per share and adjusted EBITDA.
Including, among other items, $296.2 million ($279.9 million after
tax) non-cash Goodwill and Asset impairment charges within the
Entertainment segment.
Second Quarter and First Half 2023
Segment Performance
Q2 2023 Major Segments ($
Millions)
Net Revenues
Operating Profit
(Loss)
Adjusted Operating Profit
(Loss)1
Q2 2023
Q2 2022
% Change
Q2 2023
Q2 2022
Q2 2023
Q2 2022
Consumer Products
$
655.2
$
734.2
-11%
$
11.4
$
(6.5)
$
22.2
$
3.1
Wizards of the Coast and Digital
Gaming
$
375.6
$
419.8
-11%
$
142.3
$
225.6
$
142.3
$
225.6
Entertainment
$
179.2
$
185.2
-3%
$
(324.2)
$
14.3
$
(20.8)
$
23.0
Corporate and Other
N/A
N/A
N/A
$
(18.1)
$
(14.3)
$
(6.9)
$
(10.7)
1H 2023 Major Segments ($
Millions)
Net Revenues
Operating Profit
(Loss)
Adjusted Operating Profit
(Loss) 1
1H 2023
1H 2022
% Change
1H 2023
1H 2022
1H 2023
1H 2022
Consumer Products
$
1,175.6
$
1,407.0
-16%
$
(34.6)
$
2.1
$
(13.2)
$
22.0
Wizards of the Coast and Digital
Gaming
$
670.8
$
682.6
-2%
$
219.1
$
332.0
$
219.1
$
332.0
Entertainment
$
364.6
$
412.7
-12%
$
(332.9)
$
26.5
$
(23.3)
$
44.0
Corporate and Other
N/A
N/A
N/A
$
(22.3)
$
(21.5)
$
1.4
$
(15.2)
1See the financial tables accompanying
this press release for a reconciliation of GAAP and non-GAAP
financial measures, namely, adjusted operating profit, adjusted net
earnings, adjusted net earnings per share and adjusted EBITDA.
Including, among other items, $296.2 million ($279.9 million after
tax) non-cash Goodwill and Asset impairment charges within the
Entertainment segment.
Second Quarter 2023 Segment Commentary & FY 2023
Outlook
Consumer Products Segment
- Revenue decrease of 11% driven by business exits and a
continued focus on inventory reduction; partially offset by growth
of 18% in Consumer Products Licensing behind concerted efforts to
leverage IP across new partnerships.
- Adjusted operating profit margin of 3.4% grew 3 margin points
versus last year driven by cost savings, improved mix from
licensing revenue growth and lower royalties.
Wizards of the Coast and Digital Gaming Segment
- Revenue decrease of 11% driven by tabletop revenue which, as
expected, was impacted by one fewer MAGIC: THE GATHERING set
release in Q2 compared to 2022.
- Digital and licensed gaming revenue increase of 33%, bolstered
by the addition of D&D Beyond and growth in Magic: The
Gathering Arena.
- Operating profit decline of 37% due to lower revenue, higher
royalty expense associated with Universes Beyond and increased
investments.
Entertainment Segment
- Revenue decline of 3% driven by exited businesses partially
offset by growth across scripted TV and Family Brands.
- Operating loss includes $296 million non-cash Goodwill and
Asset impairment charges for second quarter and six months; $231
million is related to the goodwill impairment of Film & TV due
to the expected economic impact of industry factors and $65 million
related to an intangible impairment of the eOne Trademark.
- Adjusted operating loss for the second quarter includes a $25.0
million Dungeons & Dragons: Honor Among Thieves production
asset impairment charge.
Second Quarter and First Half 2023
Brand Portfolio
Brand Performance1 ($ Millions)
Net Revenues
Q2 2023
Q2 2022
% Change
1H 2023
1H 2022
% Change
Franchise Brands
$
788.4
$
826.0
-5%
$
1,401.8
$
1,476.4
-5%
Partner Brands
$
172.9
$
219.4
-21%
$
305.6
$
425.9
-28%
Portfolio Brands
$
107.1
$
135.8
-21%
$
199.1
$
248.4
-20%
Non-Hasbro Branded Film &
TV
$
141.6
$
158.0
-10%
$
304.5
$
351.6
-13%
1Effective in the first quarter of 2023,
the Company realigned its Brand Portfolios to Franchise Brands,
Partner Brands, Portfolio Brands and Non-Hasbro Branded Film &
TV. Franchise Brands include DUNGEONS & DRAGONS, Hasbro Gaming,
MAGIC: THE GATHERING, NERF, PEPPA PIG, PLAY-DOH and TRANSFORMERS. A
schedule of historical quarterly revenue is available at
https://investor.hasbro.com/ under Financials & Filings.
Franchise Brands
- Franchise Brands revenue was down 5% in the quarter driven by
macro trends and inventory reductions.
- Delivered significant Q2 revenue growth in TRANSFORMERS and
DUNGEONS & DRAGONS.
- PEPPA PIG grew as a result of growth in entertainment and
digital gaming.
- Hasbro Gaming was flat and the other Franchise Brands
declined.
Partner Brands
- Total Partner Brand revenue was down 21% in the quarter due to
license exits.
- Sales of Hasbro products for Spider-Man by Marvel are up with
an over 100% increase in point-of-sale year-over-year since the
release of Spider-Man: Across the Spider-Verse and further
supported by the preschool series, evergreen marketing and new
product releases.
Portfolio Brands
- The decline in Portfolio Brands is driven by the
reprioritization of investment to support Franchise Brands, as well
as discontinuances across the retail footprint.
Second Quarter and First Half 2023
MAGIC: THE GATHERING and Hasbro Total Gaming
Net Revenues
$ Millions
Q2 2023
Q2 2022
% Change
1H 2023
1H 2022
% Change
MAGIC: THE GATHERING
$
311.0
$
365.5
-15%
$
540.1
$
562.7
-4%
Hasbro Total Gaming1
$
491.2
$
528.3
-7%
$
877.7
$
907.1
-3%
1Hasbro’s Total Gaming Category includes all gaming revenue,
most notably MAGIC: THE GATHERING, Hasbro Gaming and DUNGEONS &
DRAGONS.
MAGIC: THE GATHERING
- Revenue decrease of 15% due to the timing of set releases with
one fewer release compared to prior year.
- The newest Universes Beyond set, The Lord of the Rings: Tales
of Middle-earth, was the second biggest launch sell-in ever and is
tracking to be the biggest selling MAGIC set of all time.
- Fans continue to return to organized play as MagicCon Barcelona
just finished and the MAGIC World Championships return to Las Vegas
from September 22 to 24.
Capital Priorities and Dividend
During the second quarter and year-to-date, Hasbro paid $97
million and $194 million, respectively, in cash dividends to
shareholders. The next dividend of $0.70 per common share was
previously declared and will be payable on August 15, 2023 to
shareholders of record at the close of business on August 1,
2023.
The Company continues to target Debt to EBITDA ratio of 2.0 to
2.5 times. For 2023, progress is expected against this target.
Pending the outcome of the sale of the eOne Film and TV business,
the Company anticipates prioritizing the sale proceeds toward
paying down debt. The Company remains committed to maintaining its
investment grade rating.
Operational Excellence
In support of Hasbro's Blueprint 2.0 strategy, Hasbro
implemented an Operational Excellence program to deliver $250-300
million in annualized run-rate cost savings by year-end 2025. In
the first half 2023, the Company realized $84 million of savings
and is on track to achieve $150 million of in-year cost savings for
the full-year 2023
Company Outlook
The outlook across the Consumer Products Segment is unchanged
and Wizards of the Coast and Digital Gaming Segment revenue outlook
is higher than prior guidance. Entertainment Segment guidance is
updated to reflect the reality of the writers' and actors' strikes
on the eOne Film and TV business. The updated guidance assumes eOne
Film and TV is included for the entire fiscal year and guidance
will be updated once the eOne Film and TV sale transaction is
complete.
The Company now expects:
- Revenue decline of 3-6% driven by the Entertainment Segment.
- No change to Consumer Product guidance of down mid-single
digits.
- Increasing guidance on Wizards of the Coast Segment to up
high-single digits.
- Reducing outlook on Entertainment to down 25 to 30%.
- Adjusted operating margin up 20 to 50 basis points versus last
year's adjusted operating margin1
- Consumer Products segment and Wizards and Digital Gaming
segment margin outlook unchanged from prior guidance.
- Entertainment segment margin is now expected to decline as a
result of the D&D film impairment and the ongoing industry
strikes.
The Company continues to expect:
- Adjusted EBITDA approximately flat with 2022 adjusted
EBITDA.
- Operating Cash Flow of $600 to $700 million.
1The Company is not able to reconcile its forward-looking
non-GAAP adjusted operating profit margin, adjusted earnings per
diluted share and adjusted EBITDA measures because the Company
cannot predict with certainty the timing and amounts of discrete
items such as charges associated with its cost-savings program,
which could impact GAAP results. Guidance does not reflect the
announced sale of select entertainment assets. The Company plans to
update its outlook upon completion of the transaction.
Conference Call Webcast
Hasbro will webcast its second quarter 2023 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 website approximately 2 hours following
completion of the call.
About Hasbro
Hasbro is a leading toy and game company whose mission is to
entertain and connect generations of fans through the wonder of
storytelling and exhilaration of play. Hasbro delivers engaging
brand experiences for global audiences through toys, consumer
products, gaming and entertainment, with a portfolio of iconic
brands including MAGIC: THE GATHERING, DUNGEONS & DRAGONS,
Hasbro Gaming, NERF, TRANSFORMERS, PLAY-DOH and PEPPA PIG, as well
as premier partner brands.
Hasbro is guided by our Purpose to create joy and community for
all people around the world, one game, one toy, one story at a
time. For more than a decade, Hasbro has been consistently
recognized for its corporate citizenship, including being named one
of the 100 Best Corporate Citizens by 3BL Media, one of the World’s
Most Ethical Companies by Ethisphere Institute and one of the 50
Most Community-Minded Companies in the U.S. by the Civic 50. For
more information, visit https://corporate.hasbro.com.
© 2023 Hasbro, Inc. All Rights Reserved.
Forward Looking Statement Safe Harbor
Certain statements in this press 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: our business strategies and plans;
expectations relating to products, gaming and entertainment
launches; anticipated cost savings; financial targets; anticipated
financial performance for 2023; and expectations relating to the
announced sale of the eOne Film and TV business, including the
timing of completion and use of proceeds. 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 execute on our Blueprint 2.0
strategy, including to focus on and scale select business
initiatives and brands to drive profitability and to achieve
anticipated cost savings;
- our ability to design, develop, manufacture, and ship products
on a timely, cost-effective and profitable basis;
- our ability to successfully compete in the play and
entertainment industry;
- our ability to successfully evolve and transform our business
and capabilities to address the global consumer landscape;
- risks relating to our ability to successfully complete the
announced sale of the eOne Film and Television business, including
uncertainty as to whether the transaction will be completed in a
timely manner or at all; the conditions precedent to completion of
the transaction will be satisfied, including the ability to secure
applicable regulatory approvals in a timely manner or at all or on
expected terms; risks of unexpected costs, liabilities or delays;
the effect of ongoing writers’ and actors’ strikes; and the effect
of the announcement, pendency or consummation of the transaction on
customers, employees, actors, writers, producers and operating
results;
- inflation and 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;
- our dependence on third party relationships, including with
third party manufacturers, licensors of brands, studios, content
producers and entertainment distribution channels;
- the risk that any prolonged strike by, or lockout of, one or
more of the unions that provide personnel essential to the
production of films or television programs, such as the ongoing
strike by the writers’ and actors' unions in May 2023 and July
2023, could delay or halt our ongoing development, production and
distribution activities; halts or delays, depending on the length
of time, could cause a delay or interruption in our release of new
films and television programs, which could impact our entertainment
business;
- risks relating to 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;
- risks related to economic and public health conditions or
regulatory changes in the markets in which we and our customers,
partners, licensees, suppliers and manufacturers operate, such as
inflation, rising interest rates, higher commodity prices, labor
costs or transportation costs, the coronavirus or other outbreaks
of illness or disease, the occurrence of which could create work
slowdowns, delays or shortages in production or shipment of
products, increases in costs or delays in revenue;
- risks associated with international operations, such as
currency conversion, currency fluctuations, the imposition of
tariffs, quotas, shipping delays or difficulties, border adjustment
taxes or other protectionist measures, and other challenges in the
territories in which we operate;
- 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;
- risks related to our leadership changes;
- our ability to attract and retain talented and diverse
employees;
- our ability to realize the benefits of cost-savings and
efficiency and/or revenue and operating profit enhancing
initiatives;
- risks relating to the impairment and/or write-offs of
businesses, products and content we acquire and/or produce;
- the risk that acquisitions, dispositions and other investments
we complete may not provide us with the benefits we expect, or the
realization of such benefits may be significantly delayed. We may
not achieve a successful or timely sale of non-core assets;
- 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;
- fluctuations in our business due to seasonality;
- 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;
- 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 or more of our
significant retailers, licensees and other partners; and
- other risks and uncertainties as may be detailed 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 press release
or to update them to reflect events or circumstances occurring
after the date of this press 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 net earnings per diluted share, which exclude, where
applicable, acquisition and related costs, acquired intangible
amortization, Operational Excellence and Blueprint 2.0
implementation charges; and certain non-cash asset impairment
charges. Also included in this press release are the non-GAAP
financial measures of EBITDA and Adjusted EBITDA. EBITDA represents
net earnings attributable to Hasbro, Inc. excluding interest
expense, income tax expense, net earnings (loss) attributable to
noncontrolling interests, depreciation and amortization of
intangibles. Adjusted EBITDA also excludes Operational Excellence
and Blueprint 2.0 implementation charges, certain non-cash asset
impairment charges and the impact of stock compensation (including
acquisition-related stock expense). 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 net earnings per
diluted share and Adjusted operating profit provide 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. The impact of changes in foreign currency
exchange rates used to translate the consolidated statements of
operations is quantified by translating the current period revenues
at the prior period exchange rates and comparing this amount to the
prior period reported revenues. The Company believes that the
presentation of the impact of changes in exchange rates, which are
beyond the Company’s control, is helpful to an investor’s
understanding of the performance of the underlying business. 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
(1)
(Unaudited)
(Millions of Dollars)
July 2, 2023
June 26, 2022
ASSETS
Cash and Cash Equivalents
$
216.6
$
628.2
Accounts Receivable, Net
877.0
870.5
Inventories
731.3
867.5
Prepaid Expenses and Other Current
Assets
684.1
719.2
Total Current Assets
2,509.0
3,085.4
Property, Plant and Equipment, Net
515.4
409.9
Goodwill
3,239.2
3,483.2
Other Intangible Assets, Net
724.8
1,156.9
Other Assets
1,621.3
1,367.6
Total Assets
$
8,609.7
$
9,503.0
LIABILITIES, NONCONTROLLING INTERESTS
AND SHAREHOLDERS' EQUITY
Short-Term Borrowings
$
148.2
$
98.0
Current Portion of Long-Term Debt
69.4
137.0
Accounts Payable and Accrued
Liabilities
1,732.8
1,923.2
Total Current Liabilities
1,950.4
2,158.2
Long-Term Debt
3,668.5
3,739.0
Other Liabilities
520.6
570.0
Total Liabilities
6,139.5
6,467.2
Redeemable Noncontrolling Interests
—
23.0
Total Shareholders' Equity
2,470.2
3,012.8
Total Liabilities, Noncontrolling
Interests and Shareholders' Equity
$
8,609.7
$
9,503.0
(1) Amounts may not sum due to
rounding
HASBRO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(1)
(Unaudited)
(Millions of Dollars and Shares Except Per
Share Data)
Quarter Ended
Six Months Ended
July 2, 2023
% Net
Revenues
June 26, 2022
% Net
Revenues
July 2, 2023
% Net
Revenues
June 26, 2022
% Net
Revenues
Net Revenues
$
1,210.0
100.0
%
$
1,339.2
100.0
%
$
2,211.0
100.0
%
$
2,502.3
100.0
%
Costs and Expenses:
Cost of Sales
352.2
29.1
%
411.5
30.7
%
637.5
28.8
%
744.6
29.8
%
Program Cost Amortization
134.4
11.1
%
80.7
6.0
%
256.9
11.6
%
219.2
8.8
%
Royalties
119.9
9.9
%
110.1
8.2
%
188.9
8.5
%
200.2
8.0
%
Product Development
72.4
6.0
%
79.2
5.9
%
155.7
7.0
%
148.8
5.9
%
Advertising
85.1
7.0
%
84.2
6.3
%
167.9
7.6
%
161.8
6.5
%
Amortization of Intangibles
22.8
1.9
%
27.2
2.0
%
45.9
2.1
%
54.3
2.2
%
Selling, Distribution and
Administration
380.6
31.5
%
327.2
24.4
%
697.7
31.6
%
634.3
25.3
%
Impairment of Goodwill
231.2
19.1
%
—
0.0
%
231.2
10.5
%
—
0.0
%
Operating Profit (Loss)
(188.6
)
-15.6
%
219.1
16.4
%
(170.7
)
-7.7
%
339.1
13.6
%
Interest Expense
46.6
3.9
%
41.7
3.1
%
92.9
4.2
%
83.3
3.3
%
Other Expense (Income), Net
(7.3
)
-0.6
%
(2.5
)
-0.2
%
(14.7
)
-0.7
%
(4.3
)
-0.2
%
Earnings (Loss) before Income Taxes
(227.9
)
-18.8
%
179.9
13.4
%
(248.9
)
-11.3
%
260.1
10.4
%
Income Tax Expense
7.0
0.6
%
39.4
2.9
%
7.7
0.3
%
56.7
2.3
%
Net Earnings (Loss)
(234.9
)
-19.4
%
140.5
10.5
%
(256.6
)
-11.6
%
203.4
8.1
%
Net Earnings (Loss) Attributable to
Noncontrolling Interests
0.1
0.0
%
(1.5
)
-0.1
%
0.5
0.0
%
0.2
0.0
%
Net Earnings (Loss) Attributable to
Hasbro, Inc.
$
(235.0
)
-19.4
%
$
142.0
10.6
%
$
(257.1
)
-11.6
%
$
203.2
8.1
%
Per Common Share
Net Earnings (Loss)
Basic
$
(1.69
)
$
1.02
$
(1.85
)
$
1.46
Diluted
$
(1.69
)
$
1.02
$
(1.85
)
$
1.46
Cash Dividends Declared
$
0.70
$
0.70
$
1.40
$
1.40
Weighted Average Number of Shares
Basic
138.8
139.0
138.7
139.2
Diluted
139.0
139.2
138.8
139.4
(1) Amounts may not sum due to
rounding
HASBRO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (1)
(Unaudited)
(Millions of Dollars)
Six Months Ended
July 2, 2023
June 26, 2022
Cash Flows from Operating Activities:
Net Earnings (Loss)
$
(256.6
)
$
203.4
Impairment of Goodwill
231.2
—
Other Non-Cash Adjustments
432.1
337.3
Changes in Operating Assets and
Liabilities
(287.5
)
(392.9
)
Net Cash Provided by Operating
Activities
119.2
147.8
Cash Flows from Investing Activities:
Additions to Property, Plant and
Equipment
(112.1
)
(75.8
)
Investments and Acquisitions
—
(146.3
)
Other
(3.7
)
9.5
Net Cash Utilized by Investing
Activities
(115.8
)
(212.6
)
Cash Flows from Financing Activities:
Proceeds from Long-Term Debt
1.6
2.1
Repayments of Long-Term Debt
(90.7
)
(152.5
)
Net Proceeds from Short-Term
Borrowings
6.6
97.2
Purchases of Common Stock
—
(124.0
)
Stock-Based Compensation Transactions
—
74.2
Dividends Paid
(193.8
)
(191.9
)
Payments Related to Tax Withholding for
Share-Based Compensation
(14.5
)
(19.6
)
Other
(5.4
)
(5.4
)
Net Cash Utilized by Financing
Activities
(296.2
)
(319.9
)
Effect of Exchange Rate Changes on
Cash
(3.7
)
(6.3
)
Net Decrease in Cash and Cash
Equivalents
(296.5
)
(391.0
)
Cash and Cash Equivalents at Beginning of
Year
513.1
1,019.2
Cash and Cash Equivalents at End of
Period
$
216.6
$
628.2
(1) Amounts may not sum due to
rounding
HASBRO, INC.
SUPPLEMENTAL FINANCIAL DATA
SEGMENT RESULTS - AS REPORTED AND AS
ADJUSTED (9)
(Unaudited)
(Millions of Dollars)
Operating
Results
Quarter Ended July 2,
2023
Quarter Ended June 26,
2022
As Reported
Non-GAAP
Adjustments
Adjusted
As Reported
Non-GAAP
Adjustments
Adjusted
%
Change
Total Company
Results
External Net Revenues (1)
$
1,210.0
$
—
$
1,210.0
$
1,339.2
$
—
$
1,339.2
-10
%
Operating Profit (Loss)
(188.6
)
325.4
136.8
219.1
21.9
241.0
-43
%
Operating Margin
-15.6
%
26.9
%
11.3
%
16.4
%
1.6
%
18.0
%
Segment
Results
Consumer
Products:
External Net Revenues (2)
$
655.2
$
—
$
655.2
$
734.2
$
—
$
734.2
-11
%
Operating Profit (Loss)
11.4
10.8
22.2
(6.5
)
9.6
3.1
>100
%
Operating Margin
1.7
%
1.6
%
3.4
%
(0.9
)%
1.3
%
0.4
%
Wizards of the Coast
and Digital Gaming:
External Net Revenues (3)
$
375.6
$
—
$
375.6
$
419.8
$
—
$
419.8
-11
%
Operating Profit
142.3
—
142.3
225.6
—
225.6
-37
%
Operating Margin
37.9
%
—
37.9
%
53.7
%
—
53.7
%
Entertainment:
External Net Revenues (4)
$
179.2
$
—
$
179.2
$
185.2
$
—
$
185.2
-3
%
Operating Profit (Loss)
(324.2
)
303.4
(20.8
)
14.3
8.7
23.0
>-100
%
Operating Margin
>-100
%
>100
%
-11.6
%
7.7
%
4.7
%
12.4
%
Corporate and
Other:
Operating Profit (Loss)
$
(18.1
)
$
11.2
$
(6.9
)
$
(14.3
)
$
3.6
$
(10.7
)
36
%
(1) Effective in the first quarter of
2023, the Company realigned our brand portfolios to correspond with
the Blueprint 2.0 strategy. Net Revenues by Brand Portfolio below
have been restated to present net revenues and operating profit
under the realigned structure.
Net Revenues
Quarter Ended
July 2, 2023
June 26, 2022
% Change
Net Revenues by
Brand Portfolio
Franchise Brands (a)
$
788.4
$
826.0
-5
%
Partner Brands
172.9
219.4
-21
%
Portfolio Brands
107.1
135.8
-21
%
Non-Hasbro Branded Film & TV
141.6
158.0
-10
%
Total
$
1,210.0
$
1,339.2
(a) Franchise Brands include: DUNGEONS
& DRAGONS, Hasbro Gaming, MAGIC: THE GATHERING, NERF, PEPPA
PIG, PLAY-DOH and TRANSFORMERS.
Net Revenues
Quarter Ended
July 2, 2023
June 26, 2022
% Change
MAGIC: THE GATHERING
$
311.0
$
365.5
-15
%
Hasbro Total Gaming (b)
491.2
528.3
-7
%
(b) Hasbro Total Gaming includes all
gaming revenue, most notably DUNGEONS & DRAGONS, MAGIC: THE
GATHERING and Hasbro Gaming.
Net Revenues
Quarter Ended
July 2, 2023
June 26, 2022
% Change
(2) Consumer
Products Segment Net Revenues by Major Geographic
Region
North America
$
382.0
$
433.3
-12
%
Europe
131.9
162.1
-19
%
Asia Pacific
66.4
66.6
0
%
Latin America
74.9
72.2
4
%
Total
$
655.2
$
734.2
Quarter Ended
July 2, 2023
June 26, 2022
% Change
(3) Wizards of
the Coast and Digital Gaming Net Revenues by
Category
Tabletop Gaming
$
298.5
$
361.8
-17
%
Digital and Licensed Gaming
77.1
58.0
33
%
Total
$
375.6
$
419.8
Quarter Ended
July 2, 2023
June 26, 2022
% Change
(4) Entertainment
Segment Net Revenues by Category
Film and TV
$
153.3
$
148.2
3
%
Family Brands
25.9
22.8
14
%
Music and Other
—
14.2
-100
%
Total
$
179.2
$
185.2
Operating
Results
Six Months Ended July 2,
2023
Six Months Ended June 26,
2022
As Reported
Non-GAAP
Adjustments
Adjusted
As Reported
Non-GAAP
Adjustments
Adjusted
% Change
Total Company
Results
External Net Revenues (5)
$
2,211.0
$
—
$
2,211.0
$
2,502.3
$
—
$
2,502.3
-12
%
Operating Profit (Loss)
(170.7
)
354.7
184.0
339.1
43.7
382.8
-52
%
Operating Margin
(7.7
)%
16.0
%
8.3
%
13.6
%
1.7
%
15.3
%
Segment
Results
Consumer
Products:
External Net Revenues (6)
$
1,175.6
$
—
$
1,175.6
$
1,407.0
$
—
$
1,407.0
-16
%
Operating Profit (Loss)
(34.6
)
21.4
(13.2
)
2.1
19.9
22.0
>-100
%
Operating Margin
(2.9
)%
1.8
%
(1.1
)%
0.1
%
1.4
%
1.6
%
Wizards of the Coast
and Digital Gaming:
External Net Revenues (7)
$
670.8
$
—
$
670.8
$
682.6
$
—
$
682.6
-2
%
Operating Profit
219.1
—
219.1
332.0
—
332.0
-34
%
Operating Margin
32.7
%
—
32.7
%
48.6
%
—
48.6
%
Entertainment:
External Net Revenues (8)
$
364.6
$
—
$
364.6
$
412.7
$
—
$
412.7
-12
%
Operating Profit (Loss)
(332.9
)
309.6
(23.3
)
26.5
17.5
44.0
>-100
%
Operating Margin
-91.3
%
84.9
%
(6.4
)%
6.4
%
4.2
%
10.7
%
Corporate and
Other:
Operating Profit (Loss)
$
(22.3
)
$
23.7
$
1.4
$
(21.5
)
$
6.3
$
(15.2
)
>100
%
(5) Effective in the first quarter of
2023, the Company realigned our brand portfolios to correspond with
the Blueprint 2.0 strategy. Net Revenues by Brand Portfolio below
have been restated to present net revenues and operating profit
under the realigned structure.
Net Revenues
Six Months Ended
July 2, 2023
June 26, 2022
% Change
Net Revenues by Brand Portfolio
Franchise Brands (a)
$
1,401.8
$
1,476.4
-5
%
Partner Brands
305.6
425.9
-28
%
Portfolio Brands
199.1
248.4
-20
%
Non-Hasbro Branded Film & TV
304.5
351.6
-13
%
Total
$
2,211.0
$
2,502.3
(a) Franchise Brands include: DUNGEONS
& DRAGONS, Hasbro Gaming, MAGIC: THE GATHERING, NERF, PEPPA
PIG, PLAY-DOH and TRANSFORMERS
Net Revenues
Six Months Ended
July 2, 2023
June 26, 2022
% Change
MAGIC: THE GATHERING
$
540.1
$
562.7
-4
%
Hasbro Total Gaming (b)
877.7
907.1
-3
%
(b) Hasbro Total Gaming includes all
gaming revenue, most notably DUNGEONS & DRAGONS, MAGIC: THE
GATHERING and Hasbro Gaming.
Six Months Ended
July 2, 2023
June 26, 2022
% Change
(6) Consumer
Products Segment Net Revenues by Major Geographic
Region
North America
$
661.1
$
838.5
-21
%
Europe
263.5
338.8
-22
%
Asia Pacific
129.7
118.8
9
%
Latin America
121.3
110.9
9
%
Total
$
1,175.6
$
1,407.0
Six Months Ended
July 2, 2023
June 26, 2022
% Change
(7) Wizards of
the Coast and Digital Gaming Net Revenues by
Category
Tabletop Gaming
$
516.4
$
554.0
-7
%
Digital and Licensed Gaming
154.4
128.6
20
%
Total
$
670.8
$
682.6
Six Months Ended
July 2, 2023
June 26, 2022
% Change
(8) Entertainment
Segment Net Revenues by Category
Film and TV
$
321.7
$
338.4
-5
%
Family Brands
42.9
46.0
-7
%
Music and Other
—
28.3
-100
%
Total
$
364.6
$
412.7
(9) Amounts within this section may not
sum due to rounding
HASBRO, INC.
SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(Unaudited)
(Millions of Dollars)
Reconciliation of
EBITDA and Adjusted EBITDA (1)
Quarter Ended
Six Months Ended
July 2, 2023
June 26, 2022
July 2, 2023
June 26, 2022
Net Earnings (Loss) Attributable to
Hasbro, Inc.
$
(235.0
)
$
142.0
$
(257.1
)
$
203.2
Interest Expense
46.6
41.7
92.9
83.3
Income Tax Expense
7.0
39.4
7.7
56.7
Net Earnings (Loss) Attributable to
Noncontrolling Interests
0.1
(1.5
)
0.5
0.2
Depreciation
30.6
36.6
54.6
61.7
Amortization of Intangibles
22.8
27.2
45.9
54.3
EBITDA
$
(127.9
)
$
285.4
$
(55.5
)
$
459.4
Non-GAAP Adjustments and Stock
Compensation (2)
326.5
22.9
352.8
41.0
Adjusted EBITDA
$
198.6
$
308.3
$
297.3
$
500.4
(2) Non-GAAP Adjustments and Stock
Compensation are comprised of the following:
Stock compensation
$
19.2
$
22.9
$
34.9
$
41.0
Operational Excellence charges
10.4
—
21.0
—
Blueprint 2.0 implementation charges
0.7
—
0.7
—
Impairment of Goodwill and Intangible
Assets
296.2
—
296.2
—
Total
$
326.5
$
22.9
$
352.8
$
41.0
(1) Amounts may not sum due to
rounding
HASBRO, INC.
SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(Unaudited)
(Millions of Dollars)
Reconciliation of
Adjusted Operating Profit (1)
Quarter Ended
Six Months Ended
July 2, 2023
June 26, 2022
July 2, 2023
June 26, 2022
Operating Profit (Loss)
$
(188.6
)
$
219.1
$
(170.7
)
$
339.1
Consumer Products
11.4
(6.5
)
(34.6
)
2.1
Wizards of the Coast and Digital
Gaming
142.3
225.6
219.1
332.0
Entertainment
(324.2
)
14.3
(332.9
)
26.5
Corporate and Other
(18.1
)
(14.3
)
(22.3
)
(21.5
)
Non-GAAP Adjustments (2)
$
325.4
$
21.9
$
354.7
$
43.7
Consumer Products
10.8
9.6
21.4
19.9
Entertainment
303.4
8.7
309.6
17.5
Corporate and Other
11.2
3.6
23.7
6.3
Adjusted Operating Profit
(Loss)
$
136.8
$
241.0
$
184.0
$
382.8
Consumer Products
22.2
3.1
(13.2
)
22.0
Wizards of the Coast and Digital
Gaming
142.3
225.6
219.1
332.0
Entertainment
(20.8
)
23.0
(23.3
)
44.0
Corporate and Other
(6.9
)
(10.7
)
1.4
(15.2
)
(2) Non-GAAP Adjustments include the
following:
Acquisition-related costs (i)
$
—
$
3.6
$
1.9
$
6.3
Acquired intangible amortization (ii)
18.1
18.3
34.9
37.4
Operational Excellence charges (iii)
Transformation office and consultant
fees
10.4
—
21.0
—
Blueprint 2.0 implementation charges
(iv)
eOne TV and Film business sale process
charges (a)
0.7
—
0.7
—
Impairment of Goodwill and Intangible
Assets (v)
296.2
—
296.2
—
Total
$
325.4
$
21.9
$
354.7
$
43.7
(i) In association with the Company's acquisition of eOne, the
Company incurred stock compensation expenses of $1.9 ($1.7
after-tax) in the six months ended July 2, 2023, and $3.6 ($3.2
after-tax) and $6.3 ($5.6 after-tax) in the quarter and six months
ended June 26, 2022. The expense is included within Selling,
Distribution and Administration.
(ii) Represents intangible amortization costs related to the
intangible assets acquired in the eOne acquisition. The Company has
allocated certain of these intangible amortization costs between
the Consumer Products and Entertainment segments, to match the
revenue generated from such intangible assets. While amortization
of acquired intangibles is being excluded from the related GAAP
financial measure, the revenue of the acquired company is reflected
within the Company's operating results to which these assets
contribute.
(iii) Program related consultant and transformation office fees
of $10.4 ($8.0 after tax) and $21.0 ( ($16.1 after-tax) for the
quarter and six months ended July 2, 2023, are included within
Selling, Distribution and Administration within the Corporate and
Other segment. These costs relate to the comprehensive review of
the Company's operations and development of a transformation plan
to support the organization in identifying, realizing and capturing
savings to create efficiencies and improve business processes and
operations.
(iv) The Company announced the results of its strategic review,
Blueprint 2.0, a consumer-centric approach focusing on fewer,
bigger brands, expanded licensing, branded entertainment, and
high-margin growth in games, digital and direct. Charges recognized
in Selling, Distribution and Administration, as the Company
implements the new strategy are $0.7 ($0.5 after tax) for the
quarter and six months ended July 2, 2023, consisting of:
(a) eOne TV and Film business sale process
charges of $0.7 ($0.5 after-tax) for the quarter and six months
ended July 2, 2023, as a result of the sale process for the part of
its eOne TV and film business not directly supporting the Company's
Branded Entertainment Strategy.
(v) Non-cash Goodwill and Asset impairment charges of $296.2
($279.9 after tax) for quarter and six months ended July 2, 2023
incurred within the Entertainment segment, of which $231.2 related
to the goodwill impairment of Film & TV due to the expected
economic impact of industry factors and $65.0 related to an
impairment of the Company's definite-lived intangible, eOne
Trademark, which is included in Selling, Distribution and
Administration.
(1) Amounts may not sum due to
rounding
HASBRO, INC.
SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(Unaudited)
(Millions of Dollars and Shares, Except
Per Share Data)
Reconciliation of
Net Earnings and Earnings per Share (1)
Quarter Ended
(all adjustments reported after-tax)
July 2, 2023
Diluted Per
Share Amount
June 26, 2022
Diluted Per
Share Amount
Net Earnings (Loss) Attributable to
Hasbro, Inc.
$
(235.0
)
$
(1.69
)
$
142.0
$
1.02
Acquisition and related costs
—
—
3.3
0.02
Acquired intangible amortization
14.3
0.10
15.3
0.11
Operational Excellence charges
8.0
0.06
—
—
Blueprint 2.0 implementation charges
0.5
—
—
—
Impairment of Goodwill and Intangible
Assets
279.9
2.01
—
—
Net Earnings Attributable to Hasbro, Inc.,
as Adjusted
$
67.7
$
0.49
$
160.6
$
1.15
Six Months Ended
(all adjustments reported after-tax)
July 2, 2023
Diluted Per
Share Amount
June 26, 2022
Diluted Per
Share Amount
Net Earnings (Loss) Attributable to
Hasbro, Inc.
$
(257.1
)
$
(1.85
)
$
203.2
$
1.46
Acquisition and related costs
1.7
0.01
5.6
0.04
Acquired intangible amortization
27.6
0.20
31.2
0.22
Operational Excellence charges
16.1
0.12
—
—
Blueprint 2.0 implementation charges
0.5
—
—
—
Impairment of Goodwill and Intangible
Assets
279.9
2.02
—
—
Net Earnings Attributable to Hasbro, Inc.,
as Adjusted
$
68.7
$
0.49
$
240.0
$
1.72
(1) Amounts may not sum due to
rounding
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230802266519/en/
Investors: Debbie Hancock | Hasbro, Inc. | (401) 727-5464 |
debbie.hancock@hasbro.com
Media: Roberta Thomson | Hasbro, Inc. | (650) 285-9721 |
bertie.thomson@hasbro.com
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