Hasbro Reports Financial Results for the Second Quarter 2015
- Second quarter 2015 revenues of $797.7 million; Absent a negative $71.5 million impact of foreign exchange, second quarter 2015 revenues grew 5%;
- U.S. and Canada segment revenues up 1%; International segment revenues increased 9% absent foreign exchange; Entertainment and Licensing segment revenues flat year-over-year;
- Preschool and Boys category revenues increased in the quarter; Absent the negative impact of foreign exchange, five of seven Franchise Brands grew in the quarter;
- Net earnings of $41.8 million or $0.33 per diluted share;
- $858 million of cash at quarter end; Returned $79.0 million to shareholders through dividend and share repurchase
Net earnings for the second quarter 2015 were $41.8 million, or $0.33 per diluted share, compared to $33.5 million, or $0.26 per diluted share, in 2014. 2014 net earnings included an unfavorable tax adjustment of $13.8 million, or $0.10 per diluted share.
"Our second quarter results continue a strong start to the year with good underlying momentum in our Franchise and Partner brands across geographies," said Brian Goldner, Hasbro's Chairman, President and Chief Executive Officer. "The execution of our brand blueprint strategy, including our recent decision to sell our final manufacturing locations and the continued development of new relationships in content development, furthers the transformation of Hasbro into an organization focused on global brand building. We are well positioned for the remainder of 2015, but importantly we continue to develop our capabilities for the long-term execution of our strategy toward unlocking the full potential value of our brands."
"Our second quarter results came with numerous challenges, including a significant negative foreign exchange impact and difficult year-over-year comparisons in several brands," said Deborah Thomas, Hasbro's Chief Financial Officer. "Even with these challenges, we delivered a strong second quarter and a good first half of 2015. We continue to make important investments across our business to promote brand initiatives and to further improve the global efficiency of Hasbro. Some of these investments will be more prominent in the second half of 2015 than they were in the first six months of the year."
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U.S. and Canada Segment net revenues increased 1% to $385.2 million compared to $383.0 million in 2014. The Segment's results reflect growth in the Boys and Preschool categories. The U.S. and Canada Segment reported operating profit of $47.1 million, essentially flat with $46.9 million in 2014.
International Segment net revenues were $362.8 million compared to $396.8 million in 2014. Growth in the Preschool category was more than offset by declines in the Boys, Games and Girls categories. On a regional basis, growth in Latin America was offset by declines in Europe and Asia Pacific. Emerging markets revenues declined 11% in the quarter. Excluding an unfavorable $69.5 million impact of foreign exchange, of which approximately two-thirds of the impact was in Europe and the remainder in Latin America, net revenues in the International Segment grew 9% and approximately 9% in emerging markets. The International Segment reported operating profit of $25.4 million compared to $29.2 million in 2014, which was also negatively impacted by foreign exchange.
Entertainment and Licensing Segment net revenues were $47.6 million compared $47.7 million in 2014. Segment performance was driven by entertainment-backed licensing revenues. The Entertainment and Licensing Segment reported a decline in operating profit to $7.4 million compared to $14.6 million in 2014. This decline was primarily due to digital gaming expenses, including the final quarter of amortization expense from certain digital gaming rights.
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Second quarter 2015 net revenues in the Boys category increased 1% to $340.4 million. This growth was driven by year-over-year revenue gains in Hasbro Franchise Brand NERF, as well as shipments in support of JURASSIC WORLD and growth in MARVEL and STAR WARS products. These increases more than offset the anticipated decline in TRANSFORMERS, which faced difficult comparisons versus the 2014 shipments in support of the theatrical release of TRANSFORMERS: AGE OF EXTINCTION.
Games category revenues declined 6% in the quarter to $211.6 million. MAGIC: THE GATHERING declined in the quarter as the major set release occurred in the first quarter 2015 versus the second quarter 2014. Over the first six months of the year, MAGIC: THE GATHERING revenues increased. Additional revenue declines in DUEL MASTERS and ANGRY BIRDS products were partially offset by gains in Franchise Brand MONOPOLY as well as in several other games brands including TROUBLE, CLUE and TWISTER.
The Girls category revenues declined 22% in the second quarter 2015 to $127.5 million. FURBY was the leading driver of this decline, along with smaller declines in Franchise Brands MY LITTLE PONY and NERF REBELLE in the quarter. Growth in PLAY-DOH DOHVINCI and shipments of DISNEY DESCENDANTS partially offset these declines.
Preschool category revenues increased 14% in the second quarter 2015 to $118.1 million. Growth in Franchise Brand PLAY-DOH and shipments of JURASSIC WORLD more than offset revenue declines in core PLAYSKOOL products.
Dividend and Share Repurchase
The Company paid $57.4 million in cash dividends to shareholders during the second quarter 2015. The next quarterly cash dividend payment of $0.46 per common share is scheduled for August 17, 2015 to shareholders of record at the close of business on August 3, 2015.
During the second quarter, Hasbro repurchased approximately 311,465 shares of common stock at a total cost of $21.6 million and an average price of $69.41 per share. Through the first two quarters, the Company repurchased 747,312 shares of common stock at a total cost of $46.8 million and an average price of $62.64 per share. At quarter-end, $517.3 million remained available in the current share repurchase authorization.
