Highest Quarterly Revenue and Earnings in
Hasbro History
- Third quarter 2016 revenues grew 14%
over 2015 to $1.68 billion, including a negative $2.8 million
impact of foreign exchange;
- Third quarter 2016 revenues grew in
all major operating segments: The U.S. and Canada segment increased
16%; International segment increased 13%, including a negative $3.0
million impact of foreign exchange; The Entertainment and Licensing
segment increased 8%;
- Growth in Boys, Games and Girls
categories; Franchise Brand revenues up 2% with growth in MAGIC:
THE GATHERING, NERF, TRANSFORMERS and PLAY-DOH; Partner Brand
revenues grew 19% driven by DISNEY PRINCESS and DISNEY’S FROZEN,
DREAMWORKS’ TROLLS and YO-KAI WATCH;
- Operating profit increased 19% and
net earnings increased 24% to $257.8 million or $2.03 per diluted
share;
- Company returned $112.4 million to
shareholders in the quarter; $64.0 million in dividends and $48.4
million in share repurchases.
Hasbro, Inc. (NASDAQ: HAS) today reported financial
results for the third quarter 2016. Net revenues for the third
quarter 2016 increased 14% to $1.68 billion versus $1.47 billion in
2015. Third quarter 2016 revenues include a negative $2.8 million
impact from foreign exchange.
Net earnings for the third quarter 2016 increased 24% to $257.8
million, or $2.03 per diluted share, compared to $207.6 million, or
$1.64 per diluted share, in 2015. Adjusted net earnings for the
third quarter 2015 were $200.5 million, or $1.58 per diluted share.
These exclude a pre-tax gain of $9.9 million, or $0.06 per diluted
share, from the third quarter 2015 sale of the Company’s
manufacturing operations in East Longmeadow, MA and Waterford,
Ireland.
“Innovative play experiences, engaging storytelling and global
execution of Hasbro’s Brand Blueprint continues to drive consumer
and retailer demand for our brand portfolio,” said Brian Goldner,
Hasbro’s Chairman, President and Chief Executive Officer. “2016 has
been a strong year, including our third quarter – which marked the
greatest revenue and earnings quarter in Hasbro’s history. We are
well positioned for what we believe will be a good holiday
season.”
“Throughout 2016 the Hasbro team has delivered strong financial
performance, in terms of revenues and earnings growth, supported by
a solid balance sheet enabling our business growth,” said Deborah
Thomas, Hasbro’s Chief Financial Officer. “The strength of our
business enabled us to continue investing in growing Hasbro for the
long term, while returning $112 million to shareholders in the
quarter.”
Third Quarter 2016 Major Segment
Performance
Net Revenues ($ Millions)
Operating Profit ($ Millions)
Q3 2016 Q3 2015
% Change Q3 2016
Q3 2015 % Change U.S. and Canada
$932.8 $803.8 +16%
$228.0 $187.1 +22%
International $690.7
$612.6 +13% $133.1
$114.2 +17%
Entertainment and Licensing
$56.1 $52.1 +8%
$14.1
$16.2
-13%
Third quarter 2016 U.S. and Canada segment net revenues
increased 16% to $932.8 million compared to $803.8 million in 2015.
Revenue growth in the Girls and Games category more than offset
declines in the Boys and Preschool categories. The U.S. and Canada
segment reported 22% operating profit growth to $228.0 million, or
24.4% of net revenues, compared to $187.1 million, or 23.3% of net
revenues, in 2015.
International segment net revenues increased 13% to $690.7
million compared to $612.6 million in 2015. Revenues grew in the
Boys, Girls and Preschool categories, and was flat in the Games
category. On a regional basis, Europe grew 16%, Latin America
increased 9%, and Asia Pacific was up 1%. Emerging markets revenues
increased 16% in the quarter. Excluding an unfavorable $3.0 million
impact of foreign exchange (FX), International segment revenues
grew 13%, increasing 17% in Europe ($0.5 million negative FX
impact), 12% in Latin America ($3.2 million negative FX impact) and
1% in Asia Pacific ($0.7 million favorable FX impact). Emerging
markets increased approximately 15% absent the impact of foreign
exchange. As reported, International segment operating profit grew
17% to $133.1 million, or 19.3% of net revenues, compared to $114.2
million, or 18.6% of net revenues, in 2015.
Entertainment and Licensing segment net revenues increased 8% to
$56.1 million compared to $52.1 million in 2015, driven by growth
in Consumer Products and Digital Gaming. The Entertainment and
Licensing segment operating profit decreased 13% to $14.1 million,
or 25.1% of net revenues, compared to $16.2 million, or 31.2% of
net revenues, in 2015.
Third Quarter 2016 Product Category
Performance
Net Revenues ($ Millions)
Q3 2016 Q3 2015
% Change
Nine Months2016
Nine Months2015
% Change Boys
$605.5 $593.1 +2%
$1,297.4 $1,206.1 +8%
Games
$409.5 $363.5 +13%
$868.4 $810.7 +7%
Girls $462.0 $294.8
+57% $799.7 $539.4
+48%
Preschool $202.8
$219.6 -8% $424.5
$425.9 --
Boys category revenues for the third quarter increased 2% to
$605.5 million. Revenue growth in the quarter was driven by gains
in Franchise Brand NERF and TRANSFORMERS, as well as shipments of
YO-KAI WATCH.
Games category revenues for the third quarter increased 13% to
$409.5 million, behind growth in multiple gaming formats including
face-to-face gaming, off-the-board gaming and digital gaming.
Franchise Brand MAGIC: THE GATHERING revenues increased in the
quarter, along with growth in PIE FACE, DUEL MASTERS and a number
of other brands.
Girls category revenues for the third quarter increased 57% to
$462.0 million. The category benefited from shipments of Hasbro’s
line of DISNEY PRINCESS and DISNEY’S FROZEN fashion and small dolls
and DREAMWORKS’ TROLLS as well as growth in BABY ALIVE and FURBY
products.
Preschool category revenues for the third quarter declined 8% to
$202.8 million. Revenue growth in Franchise Brand PLAY-DOH was more
than offset by declines in PLAYSKOOL HEROES and core PLAYSKOOL
items.
Dividend and Share
Repurchase
The Company paid $64.0 million in cash dividends to shareholders
during the third quarter 2016. The next quarterly cash dividend
payment of $0.51 per common share is scheduled for November 15,
2016 to shareholders of record at the close of business on November
1, 2016.
During the third quarter, Hasbro repurchased 598,800 shares of
common stock at a total cost of $48.4 million and an average price
of $80.87 per share. Through the first three quarters, the Company
repurchased 1,344,411 shares of common stock at a total cost of
$106.2 million and an average price of $78.97 per share. At
quarter-end, $373.1 million remained available in the current share
repurchase authorization.
Conference Call Webcast
Hasbro will webcast its third quarter 2016 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.
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, as well as premier partner brands. 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). ©
2016 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,
including with respect to anticipated future benefits from
investments in the Company’s business and strategic efforts to grow
the Company’s brand portfolio and content delivery over the
longer-term, 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 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 non-GAAP financial measures as
defined under SEC rules. Other companies may calculate these
measures differently. These non-GAAP financial measures include
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.
The press release also includes certain of the Company’s 2015
cost and expenses, income tax expense, net earnings and diluted
earnings per share excluding the impact of the sale of the
Company’s manufacturing operations in East Longmeadow, MA and
Waterford, Ireland. Management believes that the presentation
excluding the impact of the sale better reflects the results of the
underlying operations of the Company. In addition, the press
release includes the increases in the Company’s International
segment and certain region net revenues excluding the impact of
changes in exchange rates. The impact of changes in exchange rates
is calculated by translating the 2016 local currency revenues at
2015 actual rates and comparing this amount to the 2016 reported
revenues. Management believes that the presentation excluding the
impact of exchange rate changes provides information that is
helpful to an investor’s understanding of the underlying business
performance absent exchange rate fluctuations which are beyond the
Company’s control. These 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 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) Sept. 25, 2016
Sept. 27, 2015
ASSETS Cash and Cash Equivalents $ 830,372 $
551,292 Accounts Receivable, Net 1,452,931 1,390,274 Inventories
607,701 447,090 Other Current Assets
249,394 320,895 Total Current Assets 3,140,398 2,709,551
Property, Plant and Equipment, Net 247,231 219,656 Other Assets
1,560,929 1,637,940 Total Assets $ 4,948,558 $
4,567,147
LIABILITIES, REDEEMABLE NONCONTROLLING
INTERESTS AND SHAREHOLDERS' EQUITY Short-term Borrowings
$ 178,666 $ 113,970 Current Portion of Long-term Debt 349,611 -
Payables and Accrued Liabilities 1,080,853 925,599
Total Current Liabilities 1,609,130 1,039,569 Long-term Debt
1,198,461 1,546,796 Other Liabilities 364,378 396,772
Total Liabilities 3,171,969 2,983,137 Redeemable Noncontrolling
Interests 34,829 41,173 Total Shareholders' Equity 1,741,760
1,542,837 Total Liabilities, Redeemable Noncontrolling
Interests and Shareholders' Equity $ 4,948,558 $ 4,567,147
HASBRO, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited)
Quarter Ended Nine Months Ended (Thousands of Dollars and
Shares Except Per Share Data)
Sept. 25,2016
% NetRevenues
Sept. 27,2015
% NetRevenues
Sept. 25,2016
% NetRevenues
Sept. 27,2015
% NetRevenues
Net Revenues $ 1,679,757 100.0 % $ 1,470,997 100.0 % $ 3,389,882
100.0 % $ 2,982,155 100.0 % Costs and Expenses: Cost of Sales
658,986
39.2
% 579,149 39.4 % 1,270,902 37.5 % 1,122,283 37.6 % Royalties
134,294 8.0 % 113,950 7.7 % 273,671 8.1 % 230,108 7.7 % Product
Development 70,083 4.2 % 64,793 4.4 % 190,918 5.6 % 174,299 5.8 %
Advertising 154,132 9.2 % 142,029 9.7 % 320,948 9.5 % 288,136 9.7 %
Amortization of Intangibles 8,691 0.5 % 9,031 0.6 % 26,073 0.8 %
35,330 1.2 % Program Production Cost Amortization 6,282 0.4 %
11,496 0.8 % 17,501 0.5 % 29,812 1.0 % Selling, Distribution and
Administration 285,188 17.0 % 247,022
16.8 % 756,978 22.3 % 668,955 22.4 %
Operating Profit 362,101 21.6 % 303,527 20.6 % 532,891 15.7 %
433,232 14.5 % Interest Expense 24,305 1.4 % 24,045 1.6 % 72,263
2.1 % 72,816 2.4 % Other (Income) Expense, Net (8,528 ) -0.5
% (5,135 ) -0.3 % (11,929 ) -0.4 % (12,162 )
-0.4 % Earnings before Income Taxes 346,324 20.6 % 284,617 19.3 %
472,557 13.9 % 372,578 12.5 % Income Taxes 90,162 5.4
% 78,242 5.3 % 120,005 3.5 %
100,100 3.4 % Net Earnings 256,162 15.2 % 206,375 14.0 %
352,552 10.4 % 272,478 9.1 % Net Loss Attributable to
Noncontrolling Interests (1,636 ) -0.1 % (1,224 )
-0.1 % (6,103 ) -0.2 % (3,597 ) -0.1 % Net Earnings
Attributable to Hasbro, Inc. $ 257,798 15.3 % $ 207,599
14.1 % $ 358,655 10.6 % $ 276,075 9.3 %
Per Common Share Net Earnings Attributable to Hasbro, Inc. Basic $
2.05 $ 1.66 $ 2.86 $ 2.21 Diluted $
2.03 $ 1.64 $ 2.82 $ 2.18 Cash
Dividends Declared $ 0.51 $ 0.46 $ 1.53 $ 1.38
Weighted Average Number of Shares Basic
125,500 125,100 125,414
125,016 Diluted 127,178 126,917
127,056 126,689
HASBRO, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited) (Thousands of
Dollars) Nine Months Ended Sept. 25, 2016 Sept. 27, 2015
Cash Flows from Operating Activities: Net Earnings $ 352,552 $
272,478 Non-cash Adjustments 197,665 174,372 Changes in Operating
Assets and Liabilities (396,436 ) (377,292 ) Net Cash
Provided by Operating Activities 153,781
69,558 Cash Flows from Investing Activities:
Additions to Property, Plant and Equipment (103,639 ) (97,873 )
Investments and Dispositions (12,436 ) 15,632 Other 25,576
23,447 Net Cash Utilized by Investing
Activities (90,499 ) (58,794 ) Cash Flows from
Financing Activities: Net Proceeds from (Repayments of) Short-term
Borrowings 14,160 (138,101 ) Purchases of Common Stock (104,273 )
(74,110 ) Stock-based Compensation Transactions 57,227 43,733
Dividends Paid (185,265 ) (168,393 ) Other 762
928 Net Cash Utilized by Financing Activities
(217,389 ) (335,943 ) Effect of Exchange Rate Changes
on Cash 7,729 (16,696 ) Cash and Cash Equivalents at
Beginning of Year 976,750 893,167
Cash and Cash Equivalents at End of Period $ 830,372
$ 551,292
HASBRO, INC.
SUPPLEMENTAL FINANCIAL
DATA (Unaudited) (Thousands of Dollars)
Quarter Ended
Nine Months Ended
Sept. 25,2016
Sept. 27,2015
%Change
Sept. 25,2016
Sept. 27,2015
%Change
Major Segment
Results
U.S. and Canada
Segment:
External Net Revenues $ 932,844 $ 803,824 16 % $ 1,802,391 $
1,534,697 17 % Operating Profit 228,034 187,052 22 % 364,322
275,622 32 % Operating Margin 24.4 % 23.3 % 20.2 % 18.0 %
International
Segment:
External Net Revenues 690,745 612,645 13 % 1,436,911 1,281,118 12 %
Operating Profit 133,075 114,206 17 % 165,582 141,470 17 %
Operating Margin 19.3 % 18.6 % 11.5 % 11.0 %
Entertainment and
Licensing Segment:
External Net Revenues 56,130 52,139 8 % 150,521 160,410 -6 %
Operating Profit 14,095 16,245 -13 % 33,367 40,090 -17 % Operating
Margin 25.1 % 31.2 % 22.2 % 25.0 %
International
Segment Net Revenues by Major Geographic Region
Europe $ 452,834 $ 389,024 16 % $ 905,081 $ 770,555 17 % Latin
America 154,985 141,901 9 % 307,949 297,877 3 % Asia Pacific
82,926 81,720 1 % 223,881
212,686 5 % Total $ 690,745 $ 612,645 $
1,436,911 $ 1,281,118
Net Revenues by
Product Category
Boys $ 605,452 $ 593,094 2 % $ 1,297,358 $ 1,206,118 8 % Games
409,528 363,470 13 % 868,373 810,748 7 % Girls 462,021 294,785 57 %
799,700 539,401 48 % Preschool 202,756 219,648
-8 % 424,451 425,888 0 % Total
Net Revenues $ 1,679,757 $ 1,470,997 $ 3,389,882
$ 2,982,155
HASBRO, INC.
SUPPLEMENTAL FINANCIAL DATA RECONCILIATION
OF NON-GAAP FINANCIAL MEASURES (Unaudited) (Thousands of
Dollars)
Net Earnings and
Earnings per Share Excluding Gain on Sale of Manufacturing
Operations
Quarter Ended
Sept. 25, 2016
Diluted PerShare Amount
Sept. 27, 2015
Diluted PerShare Amount
Net Earnings Attributable to Hasbro, Inc., as Reported $ 257,798 $
2.03 $ 207,599 $ 1.64 Gain on Sale of Manufacturing Operations
- - (7,050 ) (0.06 ) Net
Earnings Attributable to Hasbro, Inc., as Adjusted $ 257,798
$ 2.03 $ 200,549 $ 1.58 Nine Months
Ended Sept. 25, 2016
Diluted PerShare Amount
Sept. 27, 2015
Diluted PerShare Amount
Net Earnings Attributable to Hasbro, Inc., as Reported $ 358,655 $
2.82 $ 276,075 $ 2.18 Gain on Sale of Manufacturing Operations
- - (7,050 ) (0.06 ) Net
Earnings Attributable to Hasbro, Inc., as Adjusted $ 358,655
$ 2.82 $ 269,025 $ 2.12 The line
items impacted by the gain on sale and the impact on the line
excluding the gain as a percentage of revenues is as follows:
As Reported
% NetRevenues
Less Gain onSale
onManufacturingOperations
Excluding Gainon Sale
ofManufacturingOperations
% NetRevenues
Quarter ended
September 27, 2015
Selling, Distribution and Administration $ 247,022 16.8 % $ 3,061 $
250,083 17.0 % Other (Income) Expense, Net (5,135 ) -0.3 % 6,832
1,697 0.1 % Tax expense 78,242 5.3 % 2,843 75,399 5.1 %
Nine months ended
September 27, 2015
Selling, Distribution and Administration $ 668,955 22.4 % $ 3,061 $
672,016 22.5 % Other (Income) Expense, Net (12,162 ) -0.4 % 6,832
(5,330 ) -0.2 % Tax expense 100,100 3.4 % 2,843 97,257 3.3 %
Quarter Ended Nine Months Ended
Reconciliation of
EBITDA
Sept. 25, 2016 Sept. 27, 2015 Sept. 25, 2016 Sept. 27, 2015 Net
Earnings Attributable to Hasbro, Inc. $ 257,798 $ 207,599 $ 358,655
$ 276,075 Net Loss Attributable to Noncontrolling Interests (1,636
) (1,224 ) (6,103 ) (3,597 ) Interest Expense 24,305 24,045 72,263
72,816 Income Taxes 90,162 78,242 120,005 100,100 Depreciation
32,236 35,644 89,327 86,393 Amortization of Intangibles
8,691 9,031 26,073 35,330
EBITDA $ 411,556 $ 353,337 $ 660,220 $
567,117
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161017005545/en/
Hasbro, Inc.Investor ContactDebbie Hancock,
401-727-5401debbie.hancock@hasbro.comorPress ContactJulie Duffy,
401-727-5931julie.duffy@hasbro.com
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