Hasbro Reports Revenue, Operating Profit and Net Earnings Growth for First Quarter 2016

  • First quarter 2016 revenues grew 16% to $831.2 million; Absent a
    negative $28.6 million impact of foreign exchange, first quarter 2016
    revenues grew 20%;
  • First quarter 2016 revenues grew 28% in the U.S. and Canada segment
    and 13% in the International segment; Absent the negative impact of
    foreign exchange, International segment revenues increased 22%;
  • Growth in the Boys (+24%), Girls (+41%) and Preschool (+11%)
    categories; Franchise Brand revenues up 1% as reported and 4% absent
    foreign exchange; STAR WARS, DISNEY PRINCESS and DISNEY’S FROZEN
    product revenues further contributed to growth;
  • Operating profit increased 59% and net earnings increased 83% to
    $48.8 million or $0.38 per diluted share;
  • Company returned $93.2 million to shareholders in the quarter;
    $57.4 million in dividends and $35.8 million in share repurchases.

PAWTUCKET, R.I.–(BUSINESS WIRE)–Hasbro,
Inc.
(NASDAQ: HAS) today reported financial results for the
first quarter 2016. Net revenues for the first quarter 2016 increased
16% to $831.2 million versus $713.5 million in 2015. Excluding a
negative $28.6 million impact from foreign exchange, first quarter
revenues increased 20%.

Net earnings for the first quarter 2016 increased 83% to $48.8 million,
or $0.38 per diluted share, compared to $26.7 million, or $0.21 per
diluted share, in 2015.

“The momentum with which we ended last year has continued throughout the
first quarter 2016, delivering revenue and earnings growth,” said Brian
Goldner, Hasbro’s Chairman, President and Chief Executive Officer. “Our
focus on executing our Brand Blueprint continues to drive strong retail
and consumer demand for our brands, while enhancing overall
profitability of Hasbro. Hasbro Franchise Brand revenue increased behind
continued double-digit growth in NERF and PLAY-DOH, overcoming expected
difficult quarterly comparisons in TRANSFORMERS as well as a digital
streaming deal in the Entertainment and Licensing segment recorded last
first quarter. Demand for STAR WARS: THE FORCE AWAKENS products
continued to be high and we benefited from the addition of DISNEY
PRINCESS and FROZEN fashion and small dolls. We are very encouraged with
global demand and our outlook for 2016.”

“The first quarter was a very good quarter for Hasbro,” said Deborah
Thomas, Hasbro’s Chief Financial Officer. “The strength of our results
reflected the continued momentum in our business and strong execution
from our global teams. We grew revenues, operating profit and earnings
despite the continued negative impact from foreign exchange and
challenging economic environments in some international markets. We
returned $93.2 million in cash to shareholders and ended the quarter
with a very strong balance sheet positioned to support our 2016 growth
outlook. While most of the year remains ahead of us, it was a good start
to the year.”

First Quarter 2016 Major Segment Performance

             
      Net Revenues ($ Millions)     Operating Profit ($ Millions)
    Q1 2016     Q1 2015     % Change     Q1 2016     Q1 2015     % Change
U.S. and Canada     $ 443.6     $ 345.7     +28%     $ 78.3     $ 41.4     +89%
International     $ 345.0     $ 305.7     +13%     $ 2.9     $ 1.9     +50%
Entertainment and Licensing     $ 42.5     $ 60.6     -30%     $ 5.4     $ 16.4     -67%
                   

First quarter 2016 U.S. and Canada segment net revenues increased 28% to
$443.6 million compared to $345.7 million in 2015. Growth in the Boys,
Girls and Preschool categories more than offset a decline in the Games
category. The U.S. and Canada segment reported operating profit growth
of 89% to $78.3 million, or 17.7% of net revenues, compared to $41.4
million, or 12.0% of net revenues, in 2015.

International Segment net revenues increased 13% to $345.0 million
compared to $305.7 million in 2015. All four product categories posted
revenue growth: Boys, Games, Girls and Preschool. On a regional basis,
Europe grew 14%, Latin America declined 3%, and Asia Pacific was up 25%.
Emerging markets revenues declined 7% in the quarter. Excluding an
unfavorable $26.7 million impact of foreign exchange, net revenues in
the International Segment grew 22%, increasing 19% in Europe, 19% in
Latin America and 33% in Asia Pacific. Emerging markets increased
approximately 6% absent the impact of foreign exchange. As reported,
International Segment operating profit of $2.9 million was up 50%,
compared to $1.9 million in 2015.

Entertainment and Licensing segment net revenues decreased 30% to $42.5
million compared to $60.6 million in 2015. Last year’s first quarter
benefited from a multi-year digital streaming deal for Hasbro Studios
television programming, which was not repeated in 2016. The
Entertainment and Licensing segment operating profit declined 67% to
$5.4 million compared to $16.4 million in 2015.

First Quarter 2016 Product Category Performance

       
      Net Revenues ($ Millions)
    Q1 2016     Q1 2015     % Change
Boys     $ 336.9     $ 272.6     +24%
Games     $ 231.1     $ 235.6     -2%
Girls     $ 165.4     $ 117.1     +41%
Preschool     $ 97.8     $ 88.1     +11%
       

First Quarter 2016 Boys category revenues increased 24% to $336.9
million. Revenue growth in the quarter was driven by gains in Franchise
Brand NERF, along with Partner Brand STAR WARS as well as the addition
of YOKAI WATCH. The Boys category grew 28% absent the impact of foreign
exchange.

Games category revenues declined 2% for the quarter to $231.1 million.
PIE FACE continued to be a strong contributor to growth, along with
growth in YAHTZEE and DUEL MASTERS. Growth in these brands was more than
offset by declines in other gaming brands for the quarter. The Games
category was flat absent the impact of foreign exchange.

Girls category revenues increased 41% to $165.4 million. The first
quarter marked the on shelf date for Hasbro’s line of DISNEY PRINCESS
and FROZEN fashion and small dolls. The addition of these brands along
with DISNEY’S DESCENDANTS and growth in BABY ALIVE delivered strong
quarterly revenue growth for the category. The Girls category increased
48% absent the impact of foreign exchange.

Preschool category revenues increased 11% to $97.8 million for the first
quarter 2016. Revenue growth in Franchise Brand PLAY-DOH drove the
revenue increase for the quarter. The Preschool category grew 17% absent
the impact of foreign exchange.

Dividend and Share Repurchase

The Company paid $57.4 million in cash dividends to shareholders during
the first quarter 2016. The next quarterly cash dividend payment of
$0.51 per common share is scheduled for May 16, 2016 to shareholders of
record at the close of business on May 2, 2016.

During the first quarter, Hasbro repurchased 475,000 shares of common
stock at a total cost of $35.8 million and an average price of $75.41
per share. At quarter-end, $443.5 million remained available in the
current share repurchase authorization.

Conference Call Webcast

Hasbro will webcast its first 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.

About Hasbro: Hasbro (NASDAQ: HAS) is a global company committed to
Creating the World’s Best Play Experiences, by leveraging its beloved
brands, including LITTLEST PET SHOP, MAGIC: THE GATHERING, MONOPOLY, MY
LITTLE PONY, NERF, PLAY-DOH and TRANSFORMERS, and premier partner
brands. From toys and games, television programming, motion pictures,
digital gaming and consumer product licensing, Hasbro fulfills the
fundamental need for play and connection with children and families
around the world. The Company’s Hasbro Studios and its film label,
ALLSPARK PICTURES, create entertainment brand-driven storytelling across
mediums, including television, film, digital and more. Through the
Company’s commitment to corporate social responsibility, including
philanthropy, Hasbro is helping to build a safe and sustainable world
and to positively impact the lives of millions of children and 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 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.

The press release also includes the Company’s Consolidated,
International segment and product category net revenues excluding the
impact of changes in exchange rates. 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)

March 27, 2016 March 29, 2015
ASSETS
Cash and Cash Equivalents $ 1,095,880 $ 1,081,397
Accounts Receivable, Net 670,663 563,301
Inventories 461,734 340,654
Other Current Assets   295,806   346,726
Total Current Assets 2,524,083 2,332,078
Property, Plant and Equipment, Net 241,253 243,589
Other Assets   1,599,359   1,671,449
Total Assets $ 4,364,695 $ 4,247,116
 
 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS
AND SHAREHOLDERS’ EQUITY
Short-term Borrowings $ 89,000 $ 231,914
Payables and Accrued Liabilities   679,373   585,155
Total Current Liabilities 768,373 817,069
Long-term Debt 1,547,434 1,546,169
Other Liabilities   402,346   396,137
Total Liabilities 2,718,153 2,759,375
Redeemable Noncontrolling Interests 39,152 42,234
Total Shareholders’ Equity   1,607,390   1,445,507
Total Liabilities, Redeemable Noncontrolling Interests
and Shareholders’ Equity $ 4,364,695 $ 4,247,116
 
           
HASBRO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
    Quarter Ended
 
(Thousands of Dollars and Shares Except Per Share Data)

March 27,
2016

% Net
Revenues

March 29,
2015

 

% Net
Revenues

Net Revenues $ 831,180 100.0 % $ 713,500 100.0 %
Costs and Expenses:
Cost of Sales 290,240 34.9 % 247,735 34.7 %
Royalties 69,969 8.4 % 59,089 8.3 %
Product Development 57,164 6.9 % 51,897 7.3 %
Advertising 79,859 9.6 % 67,742 9.5 %
Amortization of Intangibles 8,691 1.0 % 12,951 1.8 %
Program Production Cost Amortization 6,186 0.7 % 11,096 1.6 %
Selling, Distribution and Administration   233,155   28.1 %   208,785   29.3 %
Operating Profit 85,916 10.3 % 54,205 7.6 %
Interest Expense 24,044 2.9 % 24,585 3.4 %
Other (Income) Expense, Net   2,659   0.3 %   (4,695 ) -0.7 %
Earnings before Income Taxes 59,213 7.1 % 34,315 4.8 %
Income Taxes   12,242   1.5 %   8,494   1.2 %
Net Earnings 46,971 5.7 % 25,821 3.6 %
Net Loss Attributable to Noncontrolling Interests   (1,780 ) -0.2 %   (846 ) -0.1 %
Net Earnings Attributable to Hasbro, Inc. $ 48,751   5.9 % $ 26,667   3.7 %
 
Per Common Share
Net Earnings Attributable to Hasbro, Inc.
Basic $ 0.39   $ 0.21  
Diluted $ 0.38   $ 0.21  
 
Cash Dividends Declared $ 0.51   $ 0.46  
 
Weighted Average Number of Shares
Basic   125,266     124,853  
Diluted   126,948     126,342  
 
       
HASBRO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
(Thousands of Dollars)
Quarter Ended
March 27, 2016 March 29, 2015
Cash Flows from Operating Activities:
Net Earnings $ 46,971 $ 25,821
Non-cash Adjustments 61,442 51,669
Changes in Operating Assets and Liabilities   185,210     237,791  
Net Cash Provided by Operating Activities   293,623     315,281  
 
Cash Flows from Investing Activities:
Additions to Property, Plant and Equipment (31,218 ) (31,151 )
Other   3,626     (1,960 )
Net Cash Utilized by Investing Activities   (27,592 )   (33,111 )
 
Cash Flows from Financing Activities:
Net Repayments of Short-term Borrowings (75,526 ) (20,325 )
Purchases of Common Stock (33,710 ) (26,507 )
Stock-based Compensation Transactions 14,209 17,463
Dividends Paid (57,406 ) (53,470 )
Other   762     350  
Net Cash Utilized by Financing Activities   (151,671 )   (82,489 )
 
Effect of Exchange Rate Changes on Cash 4,770 (11,451 )
 
Cash and Cash Equivalents at Beginning of Year   976,750     893,167  
 
Cash and Cash Equivalents at End of Period $ 1,095,880   $ 1,081,397  
 
           
HASBRO, INC.
SUPPLEMENTAL FINANCIAL DATA
(Unaudited)
(Thousands of Dollars) Quarter Ended
  March 27, 2016 March 29, 2015 % Change

Major Segment Results

U.S. and Canada Segment:

External Net Revenues $ 443,648 $ 345,690 28 %
Operating Profit 78,335 41,423 89 %
Operating Margin 17.7 % 12.0 %
 

International Segment:

External Net Revenues 345,037 305,713 13 %
Operating Profit 2,853 1,903 50 %
Operating Margin 0.8 % 0.6 %
 

Entertainment and Licensing Segment:

External Net Revenues 42,495 60,631 -30 %
Operating Profit 5,442 16,402 -67 %
Operating Margin 12.8 % 27.1 %
 
 

International Segment Net Revenues by
Major Geographic Region

Europe $ 224,123 $ 195,871 14 %
Latin America 55,596 57,608 -3 %
Asia Pacific   65,318     52,234   25 %
Total $ 345,037   $ 305,713  
 

Net Revenues by Product Category

Boys $ 336,855 $ 272,598 24 %
Games 231,142 235,649 -2 %
Girls 165,353 117,127 41 %
Preschool   97,830     88,126   11 %
Total Net Revenues $ 831,180   $ 713,500  
 

Reconciliation of EBITDA

Net Earnings Attributable to Hasbro, Inc. $ 48,751 $ 26,667
Net Loss Attributable to Noncontrolling Interests (1,780 ) (846 )
Interest Expense 24,044 24,585
Income Taxes 12,242 8,494
Depreciation 25,126 21,404
Amortization of Intangibles   8,691     12,951  
EBITDA $ 117,074   $ 93,255  

Contacts

Investor Contact:
Hasbro, Inc.
Debbie Hancock, 401-727-5401
debbie.hancock@hasbro.com
or
Hasbro,
Inc.
Press Contact:
Julie Duffy, 401-727-5931
julie.duffy@hasbro.com