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Hasbro (HAS) Misses on Q1 Earnings, Gaming Demand High
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Hasbro, Inc. (HAS - Free Report) reported first-quarter 2020 results, wherein both earnings and revenues missed the Zacks Consensus Estimate. Further, the company withdrew guidance provided at its Toy Fair presentation on Feb 21, 2020.
The company reported adjusted earnings of 57 cents per share, missing the Zacks Consensus Estimate by a penny. Moreover, the bottom line declined 25% from 76 cents per share reported in the year-ago quarter.
In the quarter under review, net revenues came in at $1,105.6 million, which lagged the consensus mark of $1,156 million. However, the top line improved 50.9% year over year. The upside can primarily be attributed to the acquisition of Entertainment One Ltd. (eOne) at the beginning of the first quarter. On a pro forma basis, net revenues declined 7.5% year over year.
The Franchise Brand reported revenues of $396.5 million, up 1% year over year.
Partner Brands’ revenues advanced 6% from the prior-year quarter to $182.3 million driven by robust performance of Disney's Frozen 2.
Revenues at Hasbro Gaming amounted to $140.1 million, reflecting an improvement of 30% from the prior-year period. Moreover, its total gaming category revenues increased 40% to $340.5 million. The company is witnessing robust demand in the gaming category.
Emerging Brands’ revenues decreased 19% year over year to $94.1 million.
Meanwhile, revenues from TV/Film/Entertainment declined 29% year over year to $292.5 million.
Segmental Revenues (On Pro Forma Basis)
Regionally, net revenues at the U.S. and Canada segment rose 20% to $428.6 million in the quarter. Moreover, operating margin increased to 16.7% from the prior-year quarter’s figure of 3.8%. The segment’s growth was driven by robust growth in gaming category, which includes MAGIC: THE GATHERING tabletop, MONOPOLY, DUNGEONS AND DRAGONS and many other Hasbro games such as THE GAME OF LIFE, JENGA, CONNECT 4 and OPERATION.
The International segment’s revenues amounted to $250.4 million, which declined 11% year over year. European region commenced the year on a strong note and revenues increased 6% in the quarter. However, store closures late in the quarter due to the coronavirus pandemic hurt the sales. The segment’s operating margin came in at negative 10.7% compared with a negative 10.8% reported in the year-ago quarter.
Meanwhile, revenues at the Entertainment, Licensing and Digital segment — which was named Entertainment and Licensing earlier — decreased 9% year over year to $84 million. The segment revenues were impacted by dismal digital gaming revenues. Moreover, the segment’s operating margin decreased to 6.2% from the prior-year quarter’s figure of 32.6%.
The newly formed eOne segment reported revenues of $342.5 million, down 27% year over year. Revenues were impacted by dismal TV and film revenues. Moreover, the segment’s operating margin decreased to a negative 9.7% from 22.1% in the prior-year quarter.
Operating Highlights
Hasbro's cost of sales, as a percentage of net revenues, declined to 23.8% from 35.5% in the prior-year quarter. Selling, distribution and administration expenses — as a percentage of net revenues — were 25.2%, compared with 30.8% in the prior-year quarter.
Balance Sheet
Cash and cash equivalents as of Mar 29, 2020 amounted to $1,237.9 million, up from $1,196.6 million on Mar 31, 2019. The company announced its $1.5 billion revolving credit facility is also available. At the end of the reported quarter, inventories totaled $444.4 million compared with $491.8 million in the comparable year-ago period. As of Mar 29, 2020, long-term debt increased to $5,156.3 million from $1,695.5 million from Mar 31, 2019. The company’s next major debt maturity is $300 million in May 2021.
The company is also committed to paying dividents. During the first quarter, the company paid divided worth $93.2 million. The company’s next dividend of 68 cents, will be payable on May 15, 2020 to shareholders of record at the close of business as of May 1.
China, which represents nearly 55% of the company’s manufacturing productions, is currently operating at planned capacity. In the first quarter, production in China was lower than planned. Hasbro announced it will be well poised to meet the holiday demand as production increases during the summer months. However, outside China, production varies depending on local government and safety considerations.
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Hasbro (HAS) Misses on Q1 Earnings, Gaming Demand High
Hasbro, Inc. (HAS - Free Report) reported first-quarter 2020 results, wherein both earnings and revenues missed the Zacks Consensus Estimate. Further, the company withdrew guidance provided at its Toy Fair presentation on Feb 21, 2020.
The company reported adjusted earnings of 57 cents per share, missing the Zacks Consensus Estimate by a penny. Moreover, the bottom line declined 25% from 76 cents per share reported in the year-ago quarter.
In the quarter under review, net revenues came in at $1,105.6 million, which lagged the consensus mark of $1,156 million. However, the top line improved 50.9% year over year. The upside can primarily be attributed to the acquisition of Entertainment One Ltd. (eOne) at the beginning of the first quarter. On a pro forma basis, net revenues declined 7.5% year over year.
Hasbro, Inc. Price, Consensus and EPS Surprise
Hasbro, Inc. price-consensus-eps-surprise-chart | Hasbro, Inc. Quote
Brand Performances (On PRO Forma Basis)
The Franchise Brand reported revenues of $396.5 million, up 1% year over year.
Partner Brands’ revenues advanced 6% from the prior-year quarter to $182.3 million driven by robust performance of Disney's Frozen 2.
Revenues at Hasbro Gaming amounted to $140.1 million, reflecting an improvement of 30% from the prior-year period. Moreover, its total gaming category revenues increased 40% to $340.5 million. The company is witnessing robust demand in the gaming category.
Emerging Brands’ revenues decreased 19% year over year to $94.1 million.
Meanwhile, revenues from TV/Film/Entertainment declined 29% year over year to $292.5 million.
Segmental Revenues (On Pro Forma Basis)
Regionally, net revenues at the U.S. and Canada segment rose 20% to $428.6 million in the quarter. Moreover, operating margin increased to 16.7% from the prior-year quarter’s figure of 3.8%. The segment’s growth was driven by robust growth in gaming category, which includes MAGIC: THE GATHERING tabletop, MONOPOLY, DUNGEONS AND DRAGONS and many other Hasbro games such as THE GAME OF LIFE, JENGA, CONNECT 4 and OPERATION.
The International segment’s revenues amounted to $250.4 million, which declined 11% year over year. European region commenced the year on a strong note and revenues increased 6% in the quarter. However, store closures late in the quarter due to the coronavirus pandemic hurt the sales. The segment’s operating margin came in at negative 10.7% compared with a negative 10.8% reported in the year-ago quarter.
Meanwhile, revenues at the Entertainment, Licensing and Digital segment — which was named Entertainment and Licensing earlier — decreased 9% year over year to $84 million. The segment revenues were impacted by dismal digital gaming revenues. Moreover, the segment’s operating margin decreased to 6.2% from the prior-year quarter’s figure of 32.6%.
The newly formed eOne segment reported revenues of $342.5 million, down 27% year over year. Revenues were impacted by dismal TV and film revenues. Moreover, the segment’s operating margin decreased to a negative 9.7% from 22.1% in the prior-year quarter.
Operating Highlights
Hasbro's cost of sales, as a percentage of net revenues, declined to 23.8% from 35.5% in the prior-year quarter. Selling, distribution and administration expenses — as a percentage of net revenues — were 25.2%, compared with 30.8% in the prior-year quarter.
Balance Sheet
Cash and cash equivalents as of Mar 29, 2020 amounted to $1,237.9 million, up from $1,196.6 million on Mar 31, 2019. The company announced its $1.5 billion revolving credit facility is also available. At the end of the reported quarter, inventories totaled $444.4 million compared with $491.8 million in the comparable year-ago period. As of Mar 29, 2020, long-term debt increased to $5,156.3 million from $1,695.5 million from Mar 31, 2019. The company’s next major debt maturity is $300 million in May 2021.
The company is also committed to paying dividents. During the first quarter, the company paid divided worth $93.2 million. The company’s next dividend of 68 cents, will be payable on May 15, 2020 to shareholders of record at the close of business as of May 1.
Hasbro, which shares space with Mattel, Inc. (MAT - Free Report) , JAKKS Pacific, Inc. (JAKK - Free Report) and Activision Blizzard, Inc. , has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Coronavirus Update
China, which represents nearly 55% of the company’s manufacturing productions, is currently operating at planned capacity. In the first quarter, production in China was lower than planned. Hasbro announced it will be well poised to meet the holiday demand as production increases during the summer months. However, outside China, production varies depending on local government and safety considerations.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>