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Hasbro Reports Revenue, Operating Profit and Net Earnings Growth for Second Quarter 2017

PAWTUCKET, R.I.--(BUSINESS WIRE)--Hasbro, Inc. (NASDAQ: HAS) today reported financial results for the second quarter 2017. Net revenues for the second quarter 2017 increased 11% to $972.5 million versus $878.9 million in 2016.

$HAS Q2 2017 Results: Reporting revenue, operating profit & net earnings growth for Q2 2017 http://investor.hasbro.com/releases.cfm

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Net earnings for the second quarter 2017 increased 30% to $67.7 million, or $0.53 per diluted share, compared to $52.1 million, or $0.41 per diluted share, in 2016. Reported net earnings include a $0.01 per diluted share benefit versus second quarter 2016 from the adoption of FASB ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting.

“The Hasbro team executed another very strong quarter across the Brand Blueprint. Story-led brands and innovative brand initiatives drove double-digit revenue growth and an increase in operating profit margin,” said Brian Goldner, Hasbro’s chairman and chief executive officer. “Franchise Brand, Hasbro Gaming and Partner Brand revenues grew year-over-year, and revenue increased across all geographic regions. We entered the important second half of the year with strong consumer momentum, a robust and diverse entertainment slate and compelling new brand initiatives.”

“Our balance sheet and cash flows remain strong. While we are seeing some softness in economic conditions in Brazil and the U.K., our brands continue to resonate with consumers,” said Deborah Thomas, Hasbro’s chief financial officer. “We are well positioned with innovative new product driven by strong entertainment as we enter the second half of the year.”

Second Quarter 2017 Major Segment Performance

Net Revenues ($ Millions) Operating Profit ($ Millions)
Q2 2017 Q2 2016 % Change Q2 2017 Q2 2016 % Change
U.S. and Canada $494.4 $425.9 +16% $81.6 $58.0 +41%
International $426.6 $401.1 +6% $16.9 $29.7 -43%
Entertainment and Licensing $51.5 $51.9 -1% $11.3 $13.8 -18%

Second quarter 2017 U.S. and Canada segment net revenues increased 16% to $494.4 million compared to $425.9 million in 2016. Revenues grew in Franchise Brands, Partner Brands and Hasbro Gaming, but declined in Emerging Brands. The U.S. and Canada segment reported operating profit increased 41% to $81.6 million, or 16.5% of net revenues, compared to $58.0 million, or 13.6% of net revenues, in 2016.

International segment net revenues increased 6% to $426.6 million compared to $401.1 million in 2016. Second quarter 2017 International segment revenues include a favorable $2.4 million impact of foreign exchange. Revenue growth in Franchise Brands and Hasbro Gaming offset declines in Partner Brands and Emerging Brands. On a regional basis, Europe revenues increased 4%, Latin America increased 3% and Asia Pacific increased 18%. Emerging markets revenues increased 7% in the quarter. International segment operating profit decreased 43% to $16.9 million, or 4.0% of net revenues, compared to $29.7 million, or 7.4% of net revenues, in 2016.

Entertainment and Licensing segment net revenues decreased 1% to $51.5 million compared to $51.9 million in 2016. Growth in digital gaming, led by Backflip Studios, was offset by declines in entertainment revenues. The Entertainment and Licensing segment operating profit decreased $2.5 million, or 18%, to $11.3 million, or 22.0% of net revenues, compared to $13.8 million, or 26.6% of net revenues, in 2016.

Second Quarter 2017 Brand Portfolio Performance

Net Revenues ($ Millions)
Q2 2017 Q2 2016 % Change

Six Months
2017

Six Months
2016

% Change
Franchise Brands $545.7 $452.3 +21% $976.5 $868.6 +12%
Partner Brands $230.0 $227.1 +1% $443.0 $485.3 -9%
Hasbro Gaming* $133.9 $126.4 +6% $269.6 $226.7 +19%
Emerging Brands $62.9 $73.2 -14% $133.1 $129.5 +3%

*Hasbro’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 $273.3 million for the second quarter 2017, up 20%, versus $227.7 million in the second quarter 2016 and up 15% to $526.6 million for the six months 2017 versus $458.8 million for the six months 2016. Hasbro believes its gaming portfolio is a competitive differentiator and views it in its entirety.

Second quarter 2017 Franchise Brand revenues increased 21% to $545.7 million driven by revenue growth in TRANSFORMERS, MAGIC: THE GATHERING, NERF and MONOPOLY.

Partner Brand revenues increased 1% to $230.0 million. BEYBLADE, DREAMWORKS’ TROLLS, MARVEL and DISNEY PRINCESS grew revenues in the quarter. STAR WARS is well positioned ahead of the September 1st on-shelf date for STAR WARS: THE LAST JEDI merchandise. Marvel has a robust entertainment slate this year and both MARVEL’S GUARDIANS OF THE GALAXY Vol. 2 and SPIDER-MAN: HOMECOMING contributed positively to the second quarter and have good momentum entering the second half of the year.

Hasbro Gaming revenues grew 6% to $133.9 million driven by Hasbro’s diverse gaming portfolio, including face-to-face gaming, off-the-board gaming and digital gaming. Success of several new games along with traditional properties, including DUNGEONS & DRAGONS and OPERATION, drove the gains in the quarter. Hasbro’s total gaming category grew 20% to $273.3 million and saw incremental revenue growth from MAGIC: THE GATHERING and MONOPOLY.

Emerging Brands revenue declined 14% to $62.9 million, primarily driven by declines in PLAYSKOOL, SUPER SOAKER and EASY-BAKE OVEN products. BABY ALIVE revenues were down slightly in the quarter, primarily due to Brazil, but revenues are up in the first half.

Dividend and Share Repurchase

The Company paid $71.3 million in cash dividends to shareholders during the second quarter 2017. The next quarterly cash dividend payment of $0.57 per common share is scheduled for August 15, 2017 to shareholders of record at the close of business on August 1, 2017.

During the second quarter, Hasbro repurchased 6,100 shares of common stock at a total cost of $0.6 million and an average price of $94.99 per share. At quarter-end, $309.4 million remained available in the current share repurchase authorization.

Conference Call Webcast

Hasbro will webcast its second quarter 2017 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.

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