- Second quarter 2019 revenues increased 9% to $984.5 million;
Absent a negative $20.7 million impact of foreign exchange, second
quarter 2019 revenues grew 11%
- Revenues increased 14% in the U.S. and Canada segment and
28% in the Entertainment, Licensing and Digital segment;
International segment revenues declined 1%, but increased 5% absent
a negative $20.1 million impact of foreign exchange
- Franchise Brands revenue increased 14%; Emerging Brands up
28%; Partner Brands increased 3%; Hasbro Gaming declined
8%
- Operating profit increased 47% to $128.3 million or 13.0% of
revenues
- Including an $85.9 million non-cash after-tax charge for the
successful settlement of the Company’s U.S. pension plan liability,
net earnings decreased to $13.4 million or $0.11 per diluted share;
Excluding the pension charge, adjusted net earnings increased 65%
to $99.3 million, or $0.78 per diluted share
- Quarter ending cash of $1.2 billion
Hasbro, Inc. (NASDAQ: HAS) today reported financial
results for the second quarter 2019. Net revenues for the second
quarter 2019 increased 9% to $984.5 million versus $904.5 million
in 2018. Absent a negative $20.7 million impact of foreign
exchange, second quarter 2019 revenues grew 11%.
In the second quarter of 2019, the Company successfully settled
its U.S. pension plan liability. Upon settlement of the plan, the
Company reclassified the related pension losses recorded to
accumulated other comprehensive loss, to the consolidated statement
of operations. As a result, the Company recognized a pre-tax charge
of $110.8 million within other (income) expense, net. Including
this non-cash charge, which after tax totals $85.9 million, or
$0.68 per diluted share, net earnings for the second quarter 2019
decreased to $13.4 million, or $0.11 per diluted share, versus
$60.3 million, or $0.48 per diluted share, for the second quarter
of 2018. Excluding the after-tax pension charge, adjusted net
earnings increased 65% to $99.3 million, or $0.78 per diluted
share.
“We delivered a high-quality second quarter, with positive
consumer trends at retail and profitable growth led by several
geographies and brand categories,” said Brian Goldner, Hasbro’s
chairman and chief executive officer. “Our investments are
differentiating Hasbro’s portfolio and delivering profitable
revenue streams, including continued MAGIC: THE GATHERING revenue
growth in tabletop and digital. We grew revenues in the U.S. and
Europe, and we believe we are well-positioned to deliver against
our target of profitable growth for the full-year 2019.”
“The global Hasbro team executed a strong quarter with revenue
and profit gains while managing a dynamic trade and inventory
environment,” said Deborah Thomas, Hasbro’s chief financial
officer. “As part of this process, we incurred some additional
costs and took more inventory into the U.S. than typical. Despite
these steps, margins improved, Hasbro’s overall inventory position
declined, and we generated healthy operating cash flow. We are
generating cost savings from our plan and are on track to deliver
approximately $50 million in net savings this year. Importantly, we
are well positioned for the holiday season with major brand
initiatives across categories, including The Walt Disney Animation
Studios' Frozen 2 and Lucas Films' Star Wars: The Rise of Skywalker
which do not launch until the fourth quarter.”
Second Quarter 2019 Major Segment
Performance
Net Revenues ($
Millions)
Operating Profit ($
Millions)
Q2 2019
Q2 2018
% Change
Q2 2019
Q2 2018
% Change
U.S. and Canada1
$510.5
$448.4
+14%
$106.6
$73.1
+46%
International
$377.4
$380.4
-1%
$14.6
$0.2
> 100%
Entertainment, Licensing and
Digital1
$96.5
$75.5
+28%
$7.9
$21.8
-64%
1The Entertainment and Licensing segment is now the
Entertainment, Licensing and Digital segment. For the quarter ended
July 1, 2018, Wizards of the Coast digital gaming revenues of $10.9
million, and operating profit of $3.1 million, were reclassified
from the U.S. and Canada segment to the Entertainment, Licensing
and Digital segment.
Second quarter 2019 U.S. and Canada segment net revenues
increased 14% to $510.5 million compared to $448.4 million in 2018.
Revenue growth in Franchise Brands, Partner Brands and Emerging
Brands was partially offset by a decline in Hasbro Gaming. Driving
the growth in the segment was an increase in MAGIC: THE GATHERING
tabletop revenues from strong game releases in the second quarter
of 2019, in addition to growth in our U.S. toy and game business.
The segment reported operating profit growth of 46% to $106.6
million versus $73.1 million in 2018. The increase in the segment’s
operating profit was driven by higher revenues partially offset by
higher intangible asset amortization costs.
International segment net revenues for the second quarter 2019
decreased 1% to $377.4 million compared to $380.4 million in 2018.
Excluding a negative $20.1 million impact of foreign exchange,
International segment revenues increased 5%.
Q2 2019 International Segment
Revenue by Region
% Change as Reported
% Change Absent FX
Europe
+1%
+6%
Latin America
-6%
-1%
Asia Pacific
+2%
+7%
International
-1%
+5%
Within the International segment, Franchise and Emerging Brand
categories grew revenues; Partner Brands revenue was flat but grew
absent foreign exchange; and Hasbro Gaming revenue declined. The
International segment reported an operating profit of $14.6 million
compared to $0.2 million in 2018 as a result of favorable mix and
cost management.
Entertainment, Licensing and Digital segment net revenues
increased 28% to $96.5 million compared to $75.5 million in 2018.
Revenue growth was driven by digital gaming, primarily Magic: The
Gathering Arena. Operating profit decreased to $7.9 million, or
8.2% of net revenues, versus $21.8 million, or 28.8% of net
revenues in 2018. The decline in operating profit was due primarily
to higher program production expense, as well as continued
investments in digital gaming initiatives, including Magic: The
Gathering Arena and future digital games. The Company estimates
full-year program production amortization to be approximately 1.0
to 1.5% of total net revenues.
Second Quarter 2019 Brand Portfolio
Performance
Net Revenues ($
Millions)
Q2 2019
Q2 2018
% Change
Franchise Brands
$576.7
$506.5
+14%
Partner Brands
$213.4
$208.0
+3%
Hasbro Gaming2
$123.4
$134.3
-8%
Emerging Brands
$71.0
$55.6
+28%
2Hasbro’s total gaming category, including all gaming revenue,
most notably MAGIC: THE GATHERING and MONOPOLY, which are included
in Franchise Brands in the table above, totaled $393.4 million for
the second quarter 2019, up 26%, versus $312.8 million for the
second quarter 2018. Hasbro believes its gaming portfolio is a
competitive differentiator and views it in its entirety.
Franchise Brands revenue increased 14% to $576.7 million. MAGIC:
THE GATHERING, MONOPOLY and PLAY-DOH revenues increased in the
quarter. Franchise Brands revenue grew in all three operating
segments.
Partner Brands revenue increased 3% to $213.4 million. Revenue
growth was due primarily to increases in Marvel's Avengers and
Spider-Man franchises, including Hasbro product supporting
Avengers: End Game and Spider-Man: Far From Home. Partner Brand
revenues increased in the U.S. and Canada and were flat in the
International segment.
Hasbro Gaming revenue decreased 8% to $123.4 million. Revenue
gains from DUNGEONS & DRAGONS, YAHTZEE and CONNECT 4 were more
than offset by declines in other games, including PIE FACE and DUEL
MASTERS. Hasbro Gaming revenues decreased in the U.S. and Canada
and International segments, but increased in the Entertainment,
Licensing and Digital segment. Hasbro’s total gaming category
increased 26% to $393.4 million.
Emerging Brands revenue increased 28% to $71.0 million driven by
shipments of POWER RANGERS, and revenue gains in FURREAL FRIENDS
and PLAYSKOOL, including MR. POTATO HEAD. Emerging Brands revenue
grew in all three operating segments.
Dividend and Share
Repurchase
The Company paid $85.6 million in cash dividends to shareholders
during the second quarter 2019. The next quarterly cash dividend
payment of $0.68 per common share is scheduled for August 15, 2019
to shareholders of record at the close of business on August 1,
2019.
During the second quarter, Hasbro repurchased 96,122 shares of
common stock at a total cost of $9.5 million and an average price
of $98.31 per share. Through the first six months of 2019, the
Company repurchased 675,296 shares of common stock at a total cost
of $58.6 million and an average price of $86.81. At quarter-end,
$369.3 million remained available in the current share repurchase
authorization.
Conference Call Webcast
Hasbro will webcast its second quarter 2019 earnings conference
call at 8:00 a.m. Eastern Time today. To listen to the live webcast
and access the accompanying presentation slides, please go to
https://investor.hasbro.com. The replay of the call will be
available on Hasbro’s web site approximately 2 hours following
completion of the call.
About Hasbro
Hasbro (NASDAQ: HAS) is a global play and entertainment company
committed to Creating the World's Best Play Experiences. From toys
and games to television, movies, digital gaming and consumer
products, Hasbro offers a variety of ways for audiences to
experience its iconic brands, including NERF, MY LITTLE PONY,
TRANSFORMERS, PLAY-DOH, MONOPOLY, BABY ALIVE, MAGIC: THE GATHERING
and POWER RANGERS, as well as premier partner brands. Through its
entertainment labels, Allspark Pictures and Allspark Animation, the
Company is building its brands globally through great storytelling
and content on all screens. Hasbro is committed to making the world
a better place for children and their families through corporate
social responsibility and philanthropy. Hasbro ranked No. 13 on the
2019 100 Best Corporate Citizens list by CR Magazine, and has been
named one of the World’s Most Ethical Companies® by Ethisphere
Institute for the past eight years. Learn more at www.hasbro.com,
and follow us on Twitter (@Hasbro) and Instagram (@Hasbro).
© 2019 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 include expectations
concerning the Company’s potential performance in the future and
the Company’s ability to achieve its financial and business goals,
such as the belief the Company will return to profitable growth in
2019, the net amount of cost savings anticipated in 2019, and
estimates for full-year program production amortization expense,
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 achieve and maintain
interest in and purchase of those products by retail customers and
consumers in quantities and at prices that will be sufficient to
recover the Company’s costs and earn a profit; (ii) downturns in
economic conditions impacting one or more of the markets in which
the Company sells products, including, without limitation, changes
in exchange rates or other macroeconomic conditions currently
impacting customers and consumers for the Company’s products in the
United Kingdom, Brazil, and Russia, which can negatively impact the
Company’s retail customers and consumers, and which can result in
lower employment levels, consumer disposable income, retailer
inventories 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) consumer interest in
entertainment properties for which the Company is developing and
marketing products or content, and the ability to drive sales of
products associated with such entertainment properties; (v) the
Company’s ability to successfully evolve and transform its business
to address a changing global consumer landscape and retail
environment, one in which online shopping and digital first
marketing are increasingly critical, traditional retailers face
challenges from disintermediation and our success depends on
developing additional retail channels and paths to our consumers,
and difficulties or delays the Company may experience in
successfully implementing and developing new capabilities and
making the changes to its business that are required to be
successful under these changing marketplace conditions; (vi) our
ability to successfully develop, launch and grow new areas of our
business, such as Magic: The Gathering Arena and esports
initiatives from our Wizards of the Coast business; (vii) 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; (viii) 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; (ix) 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; (x) the ability of
the Company to successfully develop, produce and distribute movies
under its relationship with Paramount Pictures Corporation, and
consumer interest in those movies and related merchandise; (xi)
consumer interest in programming created by Hasbro Studios, and
other factors impacting the financial performance of Hasbro Studios
and the Discovery Family Channel; (xii) existing retail
inventories, which can depress purchases of new products by
retailers and/or other aspects of the inventory policies of the
Company’s retail customers, including retailers’ potential
decisions to lower their inventories, even if it results in lost
sales, as well as the concentration of the Company's revenues in
the second half and fourth quarter of the year, which coupled with
reliance by retailers on quick response inventory management
techniques increases the risk of underproduction of popular items,
overproduction of less popular items and failure to achieve
compressed shipping schedules; (xiii) the success of our key
partner brands, including the Company’s ability to maintain and
extend solid relationships with its 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;
(xiv) work disruptions, which may impact the Company's ability to
manufacture or deliver product in a timely and cost-effective
manner; (xv) the bankruptcy or other lack of success of one of the
Company's significant retailers, such as the bankruptcy of
Toys“R”Us in the United States and Canada in the fourth quarter of
2017 and the subsequent liquidation of the Toys“R”Us business in
the United States, as well as the economic difficulty of Toys“R”Us
in other markets, or the bankruptcy or lack of success of a smaller
retail customer of the Company, such as Sears Holdings Corporation,
any of which could negatively impact the Company's revenues or bad
debt exposure and create challenges to the Company and its
financial performance as the Company attempts to recapture this
lost business through other customers or channels and faces
suppressed sales of new products caused by the liquidation of
existing retail inventories into the market; (xvi) ability to
realize the benefits of cost-savings and efficiency enhancing
initiatives; (xvii) 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; (xviii) 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, including without
limitation, the potential application of tariffs to some or all of
the products the Company purchases from vendors in China, and
imports into the United States, which would significantly increase
the price of the Company’s products and substantially harm sales if
applied to any significant amount of the Company’s products; (xix)
the ability of the Company to successfully diversify sourcing of
its products to reduce reliance on sources of supply in China; (xx)
the application of tariffs to some or all of the Company’s products
being imported into other markets, which would significantly
increase the price of the Company’s products and substantially harm
sales if applied to any significant amount of the Company’s
products; (xxi) the ability of the Company to successfully
implement actions to lessen the impact of the application of
tariffs imposed on our products, including any changes to our
supply chain, sales policies or pricing of our products; (xxii)
failure to achieve anticipated benefits of acquisitions or
investments; (xxiii) the Company’s ability to protect its assets
and intellectual property, including as a result of infringement,
theft, misappropriation, cyber-attacks or other acts compromising
the integrity of the Company’s assets or intellectual property;
(xxiv) the risk of product recalls or product liability suits and
costs associated with product safety regulations; (xxv) 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;
(xxvi) changes in tax laws or regulations, or the interpretation
and application of such laws and regulations, which may cause the
Company to alter tax reserves or make other changes which
significantly impact its reported financial results; (xxvii) the
impact of litigation or arbitration decisions or settlement
actions; and (xxviii) 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
statements contained herein are based on the Company’s current
beliefs and expectations. 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.
The financial tables accompanying this press release include
non-GAAP financial measures as defined under SEC rules,
specifically Adjusted operating profit, Adjusted net earnings and
Adjusted earnings per diluted share, which exclude, where
applicable, the impact of charges associated with the settlement of
the Company’s pension plan, Toys“R”Us liquidation, severance costs
and U.S. tax reform. Also included in the financial tables are the
non-GAAP financial measures of EBITDA and Adjusted EBITDA. EBITDA
represents net earnings attributable to Hasbro, Inc. excluding
interest expense, income taxes, depreciation and amortization.
Adjusted EBITDA also excludes the impact of the charges 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 the Company’s business absent unusual
events. Management believes that EBITDA and Adjusted EBITDA are
appropriate measures for evaluating the operating performance of
the Company 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 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) June 30, 2019 July
1, 2018
ASSETS Cash and Cash Equivalents
$
1,151,042
$
1,159,072
Accounts Receivable, Net
805,288
739,268
Inventories
564,769
610,248
Other Current Assets
308,996
319,045
Total Current Assets
2,830,095
2,827,633
Property, Plant and Equipment, Net (1)
387,372
265,904
Other Assets
1,821,143
2,020,319
Total Assets
$
5,038,610
$
5,113,856
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term Borrowings
$
12,787
$
20,121
Payables and Accrued Liabilities (1)
1,059,909
1,032,323
Total Current Liabilities
1,072,696
1,052,444
Long-term Debt
1,695,833
1,694,350
Other Liabilities (1)
554,212
600,312
Total Liabilities
3,322,741
3,347,106
Total Shareholders' Equity
1,715,869
1,766,750
Total Liabilities and Shareholders' Equity
$
5,038,610
$
5,113,856
(1) In January 2019, the Company adopted Financial Accounting
Standards Update 2016-02, Leases, which requires the recognition of
lease assets and lease liabilities. As a result, the Company has
recorded operating lease right-of-use assets of $135,189 included
in Property, Plant and Equipment, Net at June 30, 2019, as well as
operating lease liabilities of $152,486 at June 30, 2019, of which
$29,298 are recorded in Payables and Accrued Liabilities and
$123,188 are included in Other Liabilities.
HASBRO, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) Quarter Ended Six Months Ended
(Thousands of Dollars and Shares Except Per Share Data) June 30,
2019 % NetRevenues July 1, 2018 % NetRevenues June 30, 2019 %
NetRevenues July 1, 2018 % NetRevenues Net Revenues
$
984,537
100.0
%
$
904,458
100.0
%
$
1,717,047
100.0
%
$
1,620,799
100.0
%
Costs and Expenses: Cost of Sales
343,694
34.9
%
338,306
37.4
%
603,681
35.2
%
593,493
36.6
%
Royalties
71,061
7.2
%
66,045
7.3
%
130,949
7.6
%
135,697
8.4
%
Product Development
65,632
6.7
%
59,859
6.6
%
121,892
7.1
%
117,243
7.2
%
Advertising
92,799
9.4
%
87,601
9.7
%
169,403
9.9
%
155,617
9.6
%
Amortization of Intangibles
11,815
1.2
%
4,554
0.5
%
23,631
1.4
%
11,032
0.7
%
Program Production Cost Amortization
23,502
2.4
%
7,297
0.8
%
30,077
1.8
%
19,331
1.2
%
Selling, Distribution and Administration
247,701
25.2
%
253,208
28.0
%
472,954
27.5
%
581,217
35.9
%
Operating Profit
128,333
13.0
%
87,588
9.7
%
164,460
9.6
%
7,169
0.4
%
Interest Expense
22,018
2.2
%
22,803
2.5
%
44,332
2.6
%
45,612
2.8
%
Other (Income) Expense, Net
100,207
10.2
%
(3,339
)
-0.4
%
84,425
4.9
%
(18,179
)
-1.1
%
Earnings (Loss) before Income Taxes
6,108
0.6
%
68,124
7.5
%
35,703
2.1
%
(20,264
)
-1.3
%
Income Tax Expense (Benefit)
(7,325
)
-0.7
%
7,825
0.9
%
(4,457
)
-0.3
%
31,929
2.0
%
Net Earnings (Loss)
$
13,433
1.4
%
$
60,299
6.7
%
$
40,160
2.3
%
$
(52,193
)
-3.2
%
Per Common Share Net Earnings (Loss) Basic
$
0.11
$
0.48
$
0.32
$
(0.42
)
Diluted
$
0.11
$
0.48
$
0.32
$
(0.42
)
Cash Dividends Declared
$
0.68
$
0.63
$
1.36
$
1.26
Weighted Average Number of Shares Basic
126,329
125,711
126,308
125,392
Diluted
126,847
126,335
126,831
125,392
HASBRO, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited) (Thousands of Dollars)
Six Months Ended
June 30, 2019 July 1, 2018 Cash Flows from Operating Activities:
Net Earnings (Loss)
$
40,160
$
(52,193
)
Non-Cash Pension Charge
110,777
-
Other Non-Cash Adjustments
108,533
89,919
Changes in Operating Assets and Liabilities
76,806
203,075
Net Cash Provided by Operating Activities
336,276
240,801
Cash Flows from Investing Activities: Additions to Property,
Plant and Equipment
(58,195
)
(71,755
)
Investments and Acquisitions, Net of Cash Acquired
-
(155,451
)
Other
(2,281
)
3,384
Net Cash Utilized by Investing Activities
(60,476
)
(223,822
)
Cash Flows from Financing Activities: Net Proceeds from
(Repayments of) Short-term Borrowings
3,095
(133,582
)
Purchases of Common Stock
(58,633
)
(103,493
)
Stock-Based Compensation Transactions
25,779
20,108
Dividends Paid
(164,908
)
(149,528
)
Employee Taxes Paid for Shares Withheld
(11,889
)
(54,730
)
Deferred Acquisition Payments
(100,000
)
-
Net Cash Utilized by Financing Activities
(306,556
)
(421,225
)
Effect of Exchange Rate Changes on Cash
(573
)
(17,916
)
Cash and Cash Equivalents at Beginning of Year
1,182,371
1,581,234
Cash and Cash Equivalents at End of Period
$
1,151,042
$
1,159,072
HASBRO, INC. SUPPLEMENTAL FINANCIAL DATA
(Unaudited) (Thousands of Dollars)
Quarter Ended
Six Months Ended
June 30, 2019
July 1, 2018
% Change
June 30, 2019
July 1, 2018
% Change
Major Segment Results (1)
U.S. and Canada Segment: External Net
Revenues
$
510,529
$
448,444
14
%
$
868,380
$
802,357
8
%
Operating Profit
106,577
73,098
46
%
120,109
46,478
>100
%
Operating Margin
20.9
%
16.3
%
13.8
%
5.8
%
International Segment: External
Net Revenues
377,438
380,444
-1
%
660,087
668,389
-1
%
Operating Profit (Loss)
14,583
173
>100
%
(15,828
)
(55,915
)
72
%
Operating Margin
3.9
%
0.0
%
-2.4
%
-8.4
%
Entertainment, Licensing and Digital
Segment: External Net Revenues
96,506
75,539
28
%
188,500
149,944
26
%
Operating Profit
7,936
21,760
-64
%
37,956
38,903
-2
%
Operating Margin
8.2
%
28.8
%
20.1
%
25.9
%
International Segment Net Revenues
by Major Geographic Region Europe
$
201,072
$
199,575
1
%
$
354,451
$
355,137
0
%
Latin America
90,342
96,401
-6
%
153,119
162,362
-6
%
Asia Pacific
86,024
84,468
2
%
152,517
150,890
1
%
Total
$
377,438
$
380,444
$
660,087
$
668,389
Net Revenues by Brand
Portfolio Franchise Brands
$
576,715
$
506,535
14
%
$
970,289
$
868,241
12
%
Partner Brands
213,448
208,005
3
%
385,437
408,597
-6
%
Hasbro Gaming
123,420
134,275
-8
%
230,985
239,502
-4
%
Emerging Brands
70,954
55,643
28
%
130,336
104,459
25
%
Total Net Revenues
$
984,537
$
904,458
$
1,717,047
$
1,620,799
Hasbro's total gaming category, including all gaming revenue,
most notably MAGIC: THE GATHERING and MONOPOLY, totaled $393,367
and $636,758 for the three and six months ended June 30, 2019,
respectively, up 26% and up 23%, respectively, from revenues of
$312,773 and $516,315 for the three and six months ended July 1,
2018, respectively.
(1) For the three and six months ended July 1, 2018, revenues of
$10,888 and $21,272, respectively, and operating profit of $3,134
and $6,370, respectively, were reclassified from the U.S. and
Canada segment to the Entertainment, Licensing and Digital
segment.
HASBRO, INC. SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF AS REPORTED TO ADJUSTED OPERATING RESULTS
(Unaudited) (Thousands of Dollars)
Non-GAAP Adjustments Impacting Operating
Profit For the quarters ended June 30, 2019 and July 1,
2018, there were no non-GAAP adjustments made to operating profit.
Six Months Ended June 30, 2019 July 1, 2018
Pre-taxadjustments Post-taxadjustments Pre-taxadjustments
Post-taxadjustments Incremental costs impact of Toys"R"Us (1)
$
-
$
-
$
70,428
$
61,372
Severance (2)
-
-
17,349
15,699
$
-
$
-
$
87,777
$
77,071
(1) In the first quarter of 2018, Toys"R"Us announced a
liquidation of its U.S. operations, as well as other retail impacts
around the globe. As a result, the Company recognized incremental
bad debt expense on outstanding Toys"R"Us receivables, royalty
expense, inventory obsolescence as well as other related costs. (2)
In the first quarter of 2018, the Company incurred $17.3 million of
severance charges, primarily outside the U.S., related to actions
associated with a new go-to-market strategy designed to be more
omni-channel and e-commerce focused. These charges were included in
Corporate and Eliminations.
Reconciliation of Operating Profit (Loss)
Results Six Months Ended July 1, 2018 As Reported
Non-GAAPAdjustments Adjusted
Adjusted
Company Results External Net Revenues
$
1,620,799
$
-
$
1,620,799
Operating Profit
7,169
87,777
94,946
Operating Margin
0.4
%
5.4
%
5.9
%
Adjusted Segment Results
U.S. and Canada Segment: External Net
Revenues
$
802,357
$
-
$
802,357
Operating Profit
46,478
52,277
98,755
Operating Margin
5.8
%
6.5
%
12.3
%
International Segment: External
Net Revenues
668,389
-
668,389
Operating Profit (Loss)
(55,915
)
11,151
(44,764
)
Operating Margin
-8.4
%
1.7
%
-6.7
%
Entertainment, Licensing and Digital
Segment: External Net Revenues
149,944
-
149,944
Operating Profit
38,903
-
38,903
Operating Margin
25.9
%
-
25.9
%
Corporate and Eliminations: The
Corporate and Eliminations segment included non-GAAP adjustments of
$24.3 million for the six months ended July 1, 2018, consisting of
$17.3 million of severance; and $7.0 million of royalty expense
related to Toys"R"Us losses. For the quarter and six months
ended June 30, 2019 and the quarter ended July 1, 2018, there were
no non-GAAP adjustments made to operating profit.
HASBRO,
INC. SUPPLEMENTAL FINANCIAL DATA RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES (Unaudited) (Thousands of
Dollars and Shares, Except Per Share Data)
Reconciliation of Net Earnings and Earnings per
Share Quarter Ended (all adjustments reported after-tax)
June 30, 2019 Diluted Per ShareAmount July 1, 2018 Diluted Per
ShareAmount (1) Net Earnings, as Reported
$
13,433
$
0.11
$
60,299
$
0.48
Pension (3)
85,852
0.68
-
-
Net Earnings, as Adjusted
$
99,285
$
0.78
$
60,299
$
0.48
Six Months Ended (all adjustments reported after-tax) June
30, 2019 Diluted Per ShareAmount July 1, 2018 Diluted Per
ShareAmount (1) Net Earnings, as Reported
$
40,160
$
0.32
$
(52,193
)
$
(0.42
)
Incremental costs impact of Toys"R"Us
-
-
61,372
0.49
Severance
-
-
15,699
0.12
Impact of Tax Reform (2)
-
-
47,790
0.38
Pension (3)
85,852
0.68
-
-
Net Earnings, as Adjusted
$
126,012
$
0.99
$
72,668
$
0.58
(1) Diluted Per Share Amount for the impact of Toys"R"Us,
severance and Tax Reform and net earnings, as adjusted, for the six
months ended July 1, 2018 are calculated using dilutive shares of
126,215 for the quarter. (2) The Company made adjustments to
provisional U.S. Tax Reform amounts recorded in the fourth quarter
of 2017 based on additional regulations issued in the first quarter
of 2018. (3) In the second quarter of 2019, the Company recognized
a $110.8 million non-cash charge ($85.9 million after-tax) related
to the settlement of its U.S. defined benefit pension plan.
Reconciliation of EBITDA
Quarter Ended
Six Months Ended
June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018 Net Earnings
(Loss)
$
13,433
$
60,299
$
40,160
$
(52,193
)
Interest Expense
22,018
22,803
44,332
45,612
Income Taxes (including Tax Reform)
(7,325
)
7,825
(4,457
)
31,929
Depreciation
35,380
36,071
62,408
62,292
Amortization of Intangibles
11,815
4,554
23,631
11,032
EBITDA
$
75,321
$
131,552
$
166,074
$
98,672
Non-GAAP Adjustments (see above)
(110,777
)
-
(110,777
)
(87,777
)
Adjusted EBITDA
$
186,098
$
131,552
$
276,851
$
186,449
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190723005458/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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