Hasbro Reports Revenue and Operating Profit Growth for the Third Quarter 2014
-Third quarter 2014 revenues increased 7% to $1.47 billion; Revenue grew in all major operating segments - the U.S. and Canada, International and Entertainment and Licensing segments; Emerging Markets revenues increased 29%
-Franchise Brand revenues grew 36%; All seven Franchise Brands increased revenues in the third quarter; Boys, Girls and Games category revenues increased;
-Adjusted operating profit increased 9%; Adjusted net earnings increased 9% to $187.8 million or $1.46 per diluted share; As reported, operating profit increased 44% and net earnings increased 43% to $180.5 million or $1.40 per diluted share;
-Repurchased 2.4 million shares of common stock at a total cost of $124.5 million and an average price of $52.56 per share.
PAWTUCKET, R.I.--(BUSINESS WIRE)-- Hasbro, Inc. (NASDAQ: HAS) today reported financial results for the third quarter 2014. Net revenues for the third quarter 2014 increased 7% to $1.47 billion compared to $1.37 billion in 2013. Foreign exchange had an unfavorable $10.8 million impact on third quarter revenues.
As reported net earnings for the third quarter 2014 were $180.5 million, or $1.40 per diluted share, compared to $126.6 million, or $0.96 per diluted share, in 2013. Adjusted net earnings for the third quarter 2014 were $187.8 million, or $1.46 per diluted share, excluding a pre-tax charge of $11.6 million, or $0.06 per diluted share, related to the restructuring of the Company's investment in the Hub Network joint venture.
In 2013, as reported net earnings for the third quarter included a pre-tax $75.5 million, or $0.50 per diluted share, charge related to an adverse arbitration award; pre-tax $4.1 million, or $0.03 per diluted share, of restructuring and partial pension settlement charges; and a $23.6 million, or $0.18 per diluted share, favorable tax adjustment. Excluding these items, adjusted net earnings for the third quarter 2013 were $172.5 million, or $1.31 per diluted share.
"Our third quarter results continued to reflect the momentum we are building in our franchise brands and key partner brands, the positive results of our investments globally and the benefits of leading with compelling content and storytelling," said Brian Goldner, Hasbro's President and Chief Executive Officer. "In the third quarter, we grew revenues across all operating segments, delivered improved profitability and took strategic steps to grow our brand portfolio and content delivery over the longer term, including forming a new strategic merchandising relationship with Disney Consumer Products for the globally popular Disney Princess and Frozen properties."
"Our third quarter results are indicative of Hasbro's strong financial and competitive position," said Deborah Thomas, Hasbro's Chief Financial Officer. "In this environment of growth and financial strength, we remain focused on improving profitability, returning cash to our shareholders and investing back into our business, through investments in innovation, systems and portfolio expansion across our blueprint."
Third Quarter 2014 Major Segment Performance
Net Revenues ($ Millions) Operating Profit ($ Millions)
Q3 2014 Q3 2013 % Change Q3 2014 Q3 2013 % Change
U.S. and Canada $764.3 $735.6 +4% $169.9 $147.0 +16%
International $649.3 $582.7 +11% $116.5 $105.7 +10%
Entertainment and Licensing $53.4 $48.6 +10% $0.5 $7.6 -94%
Note: Third Quarter 2014 charges related to the restructuring of the Company's investment in the Hub Network joint venture and third quarter 2013 restructuring and related pension settlement charges and arbitration award charges are in Corporate and Eliminations. See attached table: Restructuring of Equity Method Investment and Restructuring, Pension Settlement and Arbitration Award Charges.
U.S. and Canada segment net revenues increased 4% to $764.3 million compared to $735.6 million in 2013. The segment's results reflect growth in the Boys and the Games categories, partially offset by a decline in the Girls and Preschool categories. The U.S. and Canada segment reported operating profit growth of 16% to $169.9 million versus $147.0 million in 2013.
International segment net revenues increased 11% to $649.3 million compared to $582.7 million in 2013. Revenues grew 13% excluding a negative $9.7 million impact from foreign exchange. Revenues in the International segment reflect 7% growth in Europe, 24% growth in Latin America and 11% growth in the Asia Pacific region, as well as growth in the Boys, Girls and Preschool categories, partially offset by a decline in the Games category. In total, Emerging Markets revenues increased 29%. The International segment reported operating profit of $116.5 million, up 10% versus $105.7 million in 2013.
Entertainment and Licensing segment net revenues increased 10% to $53.4 million compared to $48.6 million in 2013. The segment benefited from growth in lifestyle licensing. The Entertainment and Licensing segment reported operating profit of $0.5 million compared to $7.6 million in 2013, primarily due to the impact of the acceleration of certain programming amortization costs.
Third Quarter and Nine Month 2014 Product Category Performance
Net Revenues ($ Millions)
Q3 2014 Q3 2013 % Change Nine Months 2014 Nine Months 2013 % Change
Boys $478.5 $392.0 +22% $1,062.1 $888.5 +20%
Games $395.2 $387.4 +2% $841.4 $873.8 -4%
Girls $407.7 $388.7 +5% $710.2 $652.9 +9%
Preschool $188.5 $202.2 -7% $364.8 $385.2 -5%
Boys category revenues increased 22% to $478.5 million in the third quarter 2014, behind growth in NERF, TRANSFORMERS, MARVEL and STAR WARS products.
Games category revenues increased 2% in the third quarter to $395.2 million. Franchise Brands MAGIC: THE GATHERING and MONOPOLY grew in the third quarter, as did SIMON SWIPE and OPERATION. These gains were partially offset by declines in several brands, including Telepods featuring the ANGRY BIRDS™ STAR WARS® II game, JENGA, BOP-IT and DUELMASTERS.
The Girls category grew 5% in the third quarter 2014 to $407.7 million. Growth in MY LITTLE PONY, MY LITTLE PONY EQUESTRIA GIRLS, NERF REBELLE, FURREAL FRIENDS, LITTLEST PET SHOP and the introduction of PLAY-DOH DOHVINCI helped fuel continued growth in the category. Declines in FURBY partially offset these revenue gains.
Preschool category revenues decreased 7% to $188.5 million in the third quarter 2014. PLAY-DOH and TRANSFORMERS RESCUE BOTS revenues continued to grow but were more than offset by declines in other Preschool initiatives, including core PLAYSKOOL and SESAME STREET products.
Dividend and Share Repurchase
The Company paid $54.7 million in cash dividends to shareholders during the third quarter 2014 and $162.8 million in the first nine months of 2014. The next quarterly cash dividend payment of $0.43 per common share is payable on November 17, 2014 to shareholders of record at the close of business on November 3, 2014.
During the third quarter, Hasbro repurchased a total of 2.4 million shares of common stock at a total cost of $124.5 million and an average price of $52.56 per share. Through the first nine months of 2014, the Company repurchased 6.4 million shares of common stock at a total cost of $341.3 million and an average price of $53.57 per share. At quarter-end, $183.6 million remained available in the current share repurchase authorization.
Hub Network Joint Venture
On September 25, Hasbro and Discovery Communications announced Hub Network would become Discovery Family Channel effective October 13, 2014. The network will broaden its programming focus to serve families in primetime and continue to showcase Hasbro Studios award-winning children's content in daytime.
As a result of restructuring the Company's investment in the Hub Network joint venture, the Company recorded a pre-tax charge of $11.6 million, or $0.06 per diluted share, in the third quarter 2014. This net charge is primarily related to the costs associated with recording the fair value of a put/call option exercisable at the end of 2021 that the Company and Discovery entered into related to this transaction.
Conference Call Webcast
Hasbro will webcast its third quarter 2014 earnings conference call at 8:30 a.m. Eastern Time today. To listen to the live webcast and access the accompanying presentation slides, please go to http://investor.hasbro.com. The replay of the call will be available on Hasbro's web site approximately 2 hours following completion of the call.
About Hasbro, Inc.
Hasbro, Inc. (NASDAQ: HAS) is a branded play company dedicated to fulfilling the fundamental need for play for children and families through the creative expression of the Company's world class brand portfolio, including TRANSFORMERS, MONOPOLY, PLAY-DOH, MY LITTLE PONY, MAGIC: THE GATHERING, NERF and LITTLEST PET SHOP. From toys and games, to television programming, motion pictures, digital gaming and a comprehensive licensing program, Hasbro strives to delight its global customers with innovative play and entertainment experiences, in a variety of forms and formats, anytime and anywhere. The Company's Hasbro Studios is responsible for entertainment brand-driven storytelling around Hasbro brands across television, film, commercial productions and short-form. Through the Company's deep commitment to corporate social responsibility, including philanthropy, Hasbro is helping to build a safe and sustainable world for future generations and to positively impact the lives of millions of children and families every year. It has been recognized for its efforts by being named one of the "World's Most Ethical Companies" and is ranked as one of Corporate Responsibility Magazine's "100 Best Corporate Citizens." Learn more at http://www.hasbro.com.
© 2014 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 and fourth quarter of the year, which coupled with reliance by retailers on quick response inventory management techniques increases the risk of underproduction of popular items, overproduction of less popular items and failure to achieve compressed shipping schedules; (x) delays, increased costs or difficulties associated with any of our or our partners' planned digital applications or media initiatives; (xi) work disruptions, which may impact the Company's ability to manufacture or deliver product in a timely and cost-effective manner; (xii) the bankruptcy or other lack of success of one of the Company's significant retailers which could negatively impact the Company's revenues or bad debt exposure; (xiii) the impact of competition on revenues, margins and other aspects of the Company's business, including the ability to offer Company products which consumers choose to buy instead of competitive products, the ability to secure, maintain and renew popular licenses and the ability to attract and retain talented employees; (xiv) concentration of manufacturing for many of the Company's products in the People's Republic of China and the associated impact to the Company of social, economic or public health conditions and other factors affecting China, the movement of products into and out of China, the cost of producing products in China and exporting them to other countries; (xv) the risk of product recalls or product liability suits and costs associated with product safety regulations; (xvi) the impact of other market conditions, third party actions or approvals and competition which could reduce demand for the Company's products or delay or increase the cost of implementation of the Company's programs or alter the Company's actions and reduce actual results; (xvii) the impact of litigation or arbitration decisions or settlement actions; and (xviii) other risks and uncertainties as may be detailed from time to time in the Company's public announcements and Securities and Exchange Commission ("SEC") filings. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this release or to update them to reflect events or circumstances occurring after the date of this release.
This press release includes a non-GAAP financial measure as defined under SEC rules, specifically EBITDA. EBITDA represents net earnings attributable to Hasbro, Inc. excluding net loss attributable to noncontrolling interests, interest expense, income taxes, depreciation and amortization. As required by SEC rules, we have provided reconciliation on the attached schedule of this measure to the most directly comparable GAAP measure. Management believes that EBITDA is one of the appropriate measures for evaluating the operating performance of the Company because it reflects the resources available for strategic opportunities including, among others, to invest in the business, strengthen the balance sheet, and make strategic acquisitions. However, this measure should be considered in addition to, not as a substitute for, or superior to, net earnings or other measures of financial performance prepared in accordance with GAAP as more fully discussed in the Company's financial statements and filings with the SEC. As used herein, "GAAP" refers to accounting principles generally accepted in the United States of America.
The press release also includes the Company's costs and expenses, operating profit, net earnings and diluted earnings per share excluding the impact of the restructuring of the Company's investment in the HUB Network joint venture in 2014 and the impact of an adverse arbitration award, restructuring and related pension charges, and certain favorable tax adjustments in 2013. Management believes that presenting this data excluding these charges and tax adjustments assists investors in understanding the performance of the Company's underlying business and the results of operations.
TRANSFORMERS: ROBOTS IN DISGUISE ONE-STEP CHANGERS Assortment
(Ages: 5 & up /Approx. Retail Price: $9.99/Available: Spring 2015)
More than meets the eye in the blink of an eye! Each TRANSFORMERS: ROBOTS IN DISGUISE ONE-STEP CHANGERS figure features a character from the all new animated series, Transformers: Robots in Disguise, coming to Cartoon Network in 2015, and converts from robot to vehicle and back in one awesome step! Each sold separately.
TRANSFORMERS: ROBOTS IN DISGUISE LEGION Assortment
(Ages: 6 & up /Approx. Retail Price: $5.99/Available: Spring 2015)
Each TRANSFORMERS: ROBOTS IN DISGUISE LEGION figure features a character from the all new animated series, Transformers: Robots in Disguise, coming to Cartoon Network in 2015 in a small-scale, highly collectable figure that converts from robot to vehicle in 10 steps or less! Each sold separately.
TRANSFORMERS: ROBOTS IN DISGUISE WARRIORS Assortment
(Ages: 6 & up /Approx. Retail Price: $14.99/Available: Spring 2015)
Each TRANSFORMERS: ROBOTS IN DISGUISE WARRIORS figure features a character from the all new animated series, Transformers: Robots in Disguise, coming to Cartoon Network in 2015. Warrior figures feature updated puzzle play for fans that want the classic TRANSFORMERS experience. These highly detailed figures are great for collectors and kids as they convert from robot to vehicle in 10 steps or less. High articulation means more action play, as kids can pose their figures and play out their favorite battles from the new animated series. Each sold separately.
TRANSFORMERS: ROBOTS IN DISGUISE THREE-STEP CHANGERS Assortment
(Ages: 5 & up /Approx. Retail Price: $19.99/Available: Spring 2015)
Each TRANSFORMERS: ROBOTS IN DISGUISE THREE-STEP CHANGERS figure features a character from the all new animated series, Transformers: Robots in Disguise, coming to Cartoon Network in 2015 in a fun, larger size with an amazingly fluid conversion. Kids can convert each figure in three steps and get right into the action! Each sold separately.
TRANSFORMERS: ROBOTS IN DISGUISE TITAN HEROES Action Figure Assortment
(Ages: 4 & up /Approx. Retail Price: $12.99/Available: Spring 2015)
Kids and collectors alike will have big fun with these 12-inch scale action figures based on the new animated series coming to Cartoon Network in 2015. Each non-converting figure features five points of articulation and packs a lot of play at a great price! Each sold separately.
TRANSFORMERS: ROBOTS IN DISGUISE 6-INCH TITAN GUARDIANS Action Figure Assortment
(Ages: 4 & up /Approx. Retail Price: $5.99/Available: Spring 2015)
These figures bring awesome action-figure fun to the TRANSFORMERS brand. These non-converting figures are the perfect entry point into the TRANSFORMERS universe for young fans. Each 6-inch TRANSFORMERS: ROBOTS IN DISGUISE TITAN GUARDIANS figure features a character from the hot new animated series coming to Cartoon Network in 2015. Each sold separately.
Hasbro and Shapeways want you to profit from your fan-made artwork based on Hasbro toys.
The announcement is an expansion of the two companies’ new partnership; last month they launched a joint venture to allow select independent artists to post and sell their My Little Pony creations on their new collaboration site superfanart.com. The companies would split the revenue from art sales based on the kitschy, popular colorful horses.
"It was clear to me when we were only doing original work that the next big step is derivative work,” says Shapeways’ cofounder and CEO Peter Weijmarshausen, explaining the movement into a new area for the company. He also explains that the project came together relatively quickly, moving forward in just the last few months after some initial discussions with Hasbro at Maker Faire earlier this year. “Hasbro has the attitude to enable rather than disable,” he says.
KRE-O TRANSFORMERS - 2014 PRODUCT INFORMATION
With the release of the new film TRANSFORMERS: AGE OF EXTINCTION in 2014 and the launch of new KRE-O TRANSFORMERS merchandise from Hasbro celebrating the film, the TRANSFORMERS brand is ready for its biggest year ever! This year’s KRE-O TRANSFORMERS line will feature re-imagined AUTOBOTS and DECEPTICON characters, plus brand-new DINOBOTS straight from the film!
Many of Hasbro’s 2014 KRE-O TRANSFORMERS: AGE OF EXTINCTION offerings include the all-new DINOFORCE action feature, which allows the DINOBOTS to grip, stomp or chomp the sinister DECEPTICON foes.
The 2014 KRE-O TRANSFORMERS line from Hasbro features the following products, which will be available exclusively at Toys“R”Us stores nationwide and online at Toysrus.com:
KRE-O TRANSFORMERS: AGE OF EXTINCTION KREON MICRO CHANGERS Blind Bag Assortment
(Ages: 6 & up/Available: May 2014)
Each KRE-O TRANSFORMERS KREON MICRO CHANGERS Blind Bag features one TRANSFORMERS KREON figure that can either be built in its robot form or alternate battle mode. There are 24 unique KREON figures in total, including four DINOBOTS. Each sold separately.
KRE-O TRANSFORMERS: AGE OF EXTINCTION CUSTOM KREONS Assortment
(Ages 6 & up/Available: May 2014)
Collect your favorite TRANSFORMERS characters in KREON form, then customize them your way! Each KRE-O TRANSFORMERS CUSTOM KREON set comes with one iconic TRANSFORMERS KREON character from the new movie TRANSFORMERS: AGE OF EXTINCTION with more than 30 additional parts, including pieces with premium metallic deco! Collect all twelve! Each sold separately.
KRE-O TRANSFORMERS: AGE OF EXTINCTION DINOBOT CHARGE Set
(Ages 6 & up/Available: May 2014)
From the film TRANSFORMERS: AGE OF EXTINCTION, build a TRICERATOPS DINOBOT for your KREONS to ride! Thanks to the built-in DINOFORCE action feature, the TRICERATOPS’ magnetic horns can pick up the DECEPTICON VEHICON! Comes with DECEPTICON VEHICON and AUTOBOT DRIFT KREONS. Contains 66 pieces.
KRE-O TRANSFORMERS: AGE OF EXTINCTION KREON MICRO CHANGERS COMBINERS Assortment
(Ages: 6 & up/Available: May 2014)
The KREON figure experience is taken to the next level as KRE-O TRANSFORMERS KREON MICRO CHANGERS COMBINERS takes cues from classic ‘combiner’ figures and inspiration from the new movie TRANSFORMERS: AGE OF EXTINCTION! Each KRE-O TRANSFORMERS MICRO CHANGERS COMBINER set contains four TRANSFORMERS KREON figures that can be built in their robot form, alternate battle mode, or combined together to form one larger robot. There are approximately 90 pieces in each of the sets available. Each set sold separately.
KRE-O TRANSFORMERS: AGE OF EXTINCTION SCORN STREET CHASE Set
(Ages 6 & up/Available: May 2014)
From the film TRANSFORMERS: AGE OF EXTINCTION, use KRE-O bricks to build a DINOBOT for your KREONS to ride! Thanks to the built-in DINOFORCE action feature, the DINOBOT’S magnetic mouth can pick up the DECEPTICON KREONS! Comes with two DECEPTICON VEHICON KREONS and an AUTOBOT CROSSHAIRS KREON. Contains 106 pieces.
KRE-O TRANSFORMERS: AGE OF EXTINCTION CELL BLOCK BREAKOUT Set
(Ages 6 & up/Available: May 2014)
From the film TRANSFORMERS: AGE OF EXTINCTION, use KRE-O bricks to build a two-headed PTERODACTYL DINOBOT for your KREONS to ride, along with a break-away jail cell and a surface-to-air missile launcher! Thanks to the built-in DINOFORCE action feature, the DINOBOT’S magnetic claws can pick up the DECEPTICON KREONS, jail cell and the OPTIMUS PRIME KREON! Comes with a DECEPTICON VEHICON KREON and OPTIMUS PRIME and BUMBLEBEE KREONS. Contains 135 pieces.
KRE-O TRANSFORMERS: AGE OF EXTINCTION GRIMLOCK STREET ATTACK Set
(Ages 6 & up/Available: May 2014)
From the film TRANSFORMERS: AGE OF EXTINCTION, use KRE-O bricks to build GRIMLOCK, the T-Rex DINOBOT for your KREONS to ride, along with a break-away archway for GRIMLOCK to destroy! Thanks to the built-in DINOFORCE action feature, GRIMLOCK can pick up the DECEPTICON VEHICONS in his mouth! GRIMLOCK also has a capture claw in his tail! Comes with two DECEPTICON VEHICON KREONS and a GOLD KNIGHT OPTIMUS PRIME KREON. Contains 196 pieces.
KRE-O TRANSFORMERS: AGE OF EXTINCTION LOCKDOWN AIR RAID Set
(Ages 6 & up/Available: May 2014)
From the film TRANSFORMERS: AGE OF EXTINCTION, build DECEPTICON LOCKDOWN’S DROP SHIP with movable wings and a RAPTOR DINOBOT for your KREONS to ride! Thanks to the built-in DINOFORCE action feature, a claw in the DROP SHIP can pick up the AUTOBOT KREONS and open the DINOBOT’S mouth! Comes with LOCKDOWN, HOUND and SIDESWIPE KREONS. Contains 203 pieces.
KRE-O TRANSFORMERS: AGE OF EXTINCTION OPTIMUS PRIME DINO HAULER Set
(Ages 6 & up/Available: May 2014)
From the film TRANSFORMERS: AGE OF EXTINCTION, use KRE-O bricks to build an OPTIMUS PRIME vehicle and a DINOBOT for your KREONS to ride! Thanks to the built-in DINOFORCE action feature, the DINOBOT’S tail can pick up the DECEPTICON KREONS or send your DECEPTICON KREONS flying! Comes with two DECEPTICON VEHICON KREONS, an AUTOBOT RATCHET KREON and a AUTOBOT DRIVER MINI-KREON. Contains 275 pieces.
KRE-O TRANSFORMERS: AGE OF EXTINCTION GALVATRON FACTORY BATTLE Set
(Ages 6 & up/Available: May 2014)
From the film TRANSFORMERS: AGE OF EXTINCTION, use KRE-O bricks to build the GALVATRON FACTORY and GALVATRON, as well as a DINOBOT and a collapsing catwalk! Thanks to the built-in DINOFORCE action feature, the MAGNETIC CAPTURE CLAW can stop your AUTOBOT KREONS in their tracks! Comes with KREON figures of BUMBLEBEE, OPTIMUS PRIME, GALVATRON and a DECEPTICON VEHICON, and two KSI WORKERS and one SWAT HUMAN MINI-KREON. Contains 388 pieces.
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