Provides Business Update Related to COVID-19
PAWTUCKET, R.I.--(BUSINESS WIRE)-- Hasbro, Inc. (NASDAQ: HAS), a global play and entertainment company, today reported financial results for the first quarter 2020 and provided a business update on COVID-19 related matters. Hasbro completed its acquisition of Entertainment One Ltd. (eOne) at the beginning of the first quarter. 2020 results are those of the combined company, and 2019 results referenced herein reflect the pro forma combined results. See the financial tables accompanying this press release for a reconciliation of as reported to pro forma and adjusted results.
Net revenues for the first quarter 2020 were $1.11 billion versus $1.20 billion pro forma revenues in 2019. Foreign exchange had an $11.7 million negative impact on first quarter 2020 revenues.
Net loss for the first quarter 2020 was $69.6 million, or $0.51 per diluted share, versus pro forma net earnings of $76.4 million, or $0.56 per diluted share in 2019. First quarter 2020 net loss included $127.5 million after tax of acquisition-related expenses and $19.9 million after tax of purchased intangible amortization associated with the eOne acquisition. Excluding these items, adjusted net earnings for the first quarter 2020 were $77.7 million, or $0.57 per diluted share. First quarter 2019 pro forma net earnings included $19.1 million after tax of purchased intangible amortization at eOne and $9.3 million associated with non-GAAP adjustments at eOne. Excluding these items, adjusted pro forma net earnings for the first quarter 2019 were $104.8 million, or $0.76 per diluted share.
"The first quarter highlights what truly differentiates Hasbro: A global team that meets challenges creatively and nimbly; a diverse brand portfolio and retailer base, including best in class ecomm and omni-channel execution; a strong financial foundation and balance sheet; and a commitment to our purpose of making the world a better place for children and their families," said Brian Goldner, Hasbro’s chairman and chief executive officer. "During the quarter, families and friends connected through Hasbro's robust portfolio of face-to-face games, created with PLAY-DOH and engaged in content and imaginative play with our brands and entertainment properties. Our teams worked tirelessly to ensure product could get to consumers while managing the health and safety of our employees and partners globally who are navigating a global supply chain and retail landscape impacted by COVID-19. Point of sale at retail was strong during the first quarter and continues to be up in April.
"We've undertaken extensive scenario planning across the business and geographies as we plan for a re-opening of the economies globally," continued Goldner. "At the same time, we made significant progress on the integration of eOne and while near term much of the team's production work has been delayed due to COVID-19, we are actively working together to unlock value from our brands and the eOne enterprise. Hasbro is creating play and entertainment experiences which are vital and desired by consumers and audiences this year and for the years to come."
"Hasbro is operating from a solid financial position with substantial liquidity available in both cash on hand and a revolving credit facility," said Deborah Thomas, Hasbro’s chief financial officer. "Upon closing the eOne acquisition, we drew down on a $1 billion term loan and left our cash on the balance sheet intact. This cash position increased to $1.2 billion at quarter end, and is further supported by access to a $1.5 billion revolving credit facility. The global team did a tremendous job navigating the challenges of the first quarter. Toward the end of the quarter, physical store closures and country-wide restrictions became more prevalent and entertainment productions shut down. As a result of COVID-19, we expect the second quarter to be more challenging than the first quarter of the year with revenues and earnings down versus pro forma 2019. We are taking prudent steps to lower expenses and preserve capital while positioning to meet the seasonal peak demand periods of the business in the second half of the year, including the holiday season. While the ultimate impact of COVID-19 will vary depending on how long it takes to reopen markets around the world, we are currently seeing healthy demand for our products and content."
COVID-19 Business Update
Supply Chain
Demand
Liquidity
Community
Withdrawing 2020 Guidance Due to the uncertainty related to COVID-19 including its impact on the Company's supply chain, global retailer operations, timing and production of entertainment and the global macroeconomic environment, the Company is withdrawing its 2020 Outlook issued at its Toy Fair presentation on February 21, 2020.
eOne Update The combination of Hasbro’s extensive brand portfolio, product innovation and licensing capabilities with eOne’s story-led brand skills and proven content development and monetization expertise, creates a business that can deliver long-term value and growth to shareholders. The integration is progressing well and the Company remains on track to deliver planned synergies of $130 million by the end of 2022.
Family Brands – Resilience in Animated Content Offsets Lower Consumer Product Demand
Television, Film & Music – Strong Demand for Content and an Active Development Pipeline
First Quarter 2020 Major Segment and Brand Performance
Major Segments | Net Revenues | Operating (Loss) Profit | ||||
($ Millions) | ($ Millions) | |||||
| Pro Forma |
|
| Pro Forma |
| |
Q1 2020 | Q1 2019 | % Change | Q1 2020 | Q1 2019 | % Change | |
U.S. and Canada | $428.6 | $357.9 | 20% | $71.8 | $13.5 | >100% |
International | $250.4 | $282.6 | -11% | $(26.7) | $(30.4) | 12% |
Entertainment, Licensing and Digital1 | $84.0 | $92.0 | -9% | $5.2 | $30.0 | -83% |
eOne1 | $342.5 | $466.2 | -27% | $(33.1) | $103.2 | -132% |
Brand Portfolio | Net Revenues ($ Millions) | ||
| Pro Forma |
| |
Q1 2020 | Q1 2019 | % Change | |
Franchise Brands | $396.5 | $393.6 | 1% |
Partner Brands | $182.3 | $172.0 | 6% |
Hasbro Gaming2 | $140.1 | $107.6 | 30% |
Emerging Brands3 | $94.1 | $116.1 | -19% |
TV/Film/Entertainment4 | $292.5 | $409.5 | -29% |
1Both periods above are as reported, with 2019 including the pro forma results from eOne. Adjusted segment operating profit excludes Non-GAAP adjustments. A reconciliation is in the attached schedule “Reconciliation of As Reported to Pro Forma Adjusted Operating Results.” Non-GAAP adjustments recorded in the Corporate and Eliminations segment include $51.2 million of pre-tax eOne acquisition-related costs.
2Hasbro’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 $340.5 million for the first quarter 2020, up 40% versus $243.4 million for the first quarter 2019. Hasbro believes its gaming portfolio is a competitive differentiator and views it in its entirety.
3Emerging Brands portfolio includes eOne brands PEPPA PIG, PJ MASKS and RICKY ZOOM as of first quarter 2020. For comparability, Q1 2019 includes the pro forma revenues for those brands, which amounted to $56.8 million.
4TV/Film/Entertainment represents the remaining eOne revenues. For comparability, Q1 2019 includes the pro forma revenues.
Conference Call Webcast Hasbro will webcast its first quarter 2020 earnings conference call at 8:00 a.m. Eastern Time today. To listen to the live webcast and access the accompanying presentation slides, please go to https://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 play and entertainment company committed to Creating the World's Best Play and Entertainment Experiences. From toys, games and consumer products to television, movies, digital gaming, live action, music, and virtual reality experiences, Hasbro connects to global audiences by bringing to life great innovations, stories and brands across established and inventive platforms. Hasbro’s iconic brands include NERF, MAGIC: THE GATHERING, MY LITTLE PONY, TRANSFORMERS, PLAY-DOH, MONOPOLY, BABY ALIVE, POWER RANGERS, PEPPA PIG and PJ MASKS, as well as premier partner brands. Through its global entertainment studio eOne, Hasbro is building its brands globally through great storytelling and content on all screens. Hasbro is committed to making the world a better place for children and their families through corporate social responsibility and philanthropy. Hasbro ranked No. 13 on the 2019 100 Best Corporate Citizens list by CR Magazine and has been named one of the World’s Most Ethical Companies® by Ethisphere Institute for the past nine years. We routinely share important business and brand updates on our Investor Relations website, Newsroom and social channels (@Hasbro on Twitter and Instagram).
© 2020 Hasbro, Inc. All Rights Reserved.
Safe Harbor Certain statements in this release contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, which may be identified by the use of forward-looking words or phrases, include statements relating to: the impact of, and actions and initiatives taken and planned to be taken to, try and manage the negative impact of the global coronavirus outbreak on our business, including on the negative impact on supply of products and production of entertainment content, demand for our products and entertainment, our liquidity and our community; the expected adequacy of supply and operation of our manufacturing facilities; and the ability to achieve our financial and business goals; the integration of eOne; expected synergies by 2022 in connection with our acquisition of eOne; and our working capital and liquidity. Our 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. For example, the global coronavirus outbreak has resulted, and may continue to result, in significant disruptions in the markets in which we and our employees, consumers, customers, partners, suppliers and manufacturers operate. We have experienced, and expect to continue to experience, disruptions in supply of products and production of entertainment content, negative impact on sales due to changes in consumer purchasing behavior and availability of product to consumers, including due to retail store closures and limitations on the capacity of e-commerce; delays or postponements of productions and releases of entertainment content both internally and by our partners; and challenges of working remotely. Our efforts to develop and execute plans to help mitigate the negative impact of the coronavirus to our business will not prevent our business from being adversely affected, and the longer the outbreak continues the more negative the impact will be on our business, revenues, earnings and liquidity, and the more limited our ability will be to try and make up for delayed or lost product development, production and sales. Other factors that might cause such a difference include, but are not limited to:
The statements contained herein are based on our current beliefs and expectations. We undertake 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.
Non-GAAP Financial Measures The financial tables accompanying this press release include non-GAAP financial measures as defined under SEC rules, specifically Adjusted operating profit, Adjusted net earnings and Adjusted earnings per diluted share, which exclude, where applicable, the impact of eOne acquisition-related expenses and purchased intangible amortization. For Q1 2019, Pro Forma Adjusted operating profit, Pro Forma Adjusted net earnings and Pro Forma Adjusted earnings per diluted share exclude certain charges incurred by eOne related to prior restructuring programs and acquisition-related charges. Also included in the financial tables are the non-GAAP financial measures of EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA. EBITDA represents net earnings attributable to Hasbro, Inc. excluding interest expense, income taxes, depreciation and amortization. Adjusted EBITDA also excludes the impact of the charges/gains noted above. As required by SEC rules, we have provided reconciliations on the attached schedules of these measures to the most directly comparable GAAP measure. Management believes that Adjusted net earnings, Adjusted earnings per diluted share and Adjusted operating profit provides investors with an understanding of the underlying performance of our business absent unusual events. Management believes that EBITDA and Adjusted EBITDA are appropriate measures for evaluating the operating performance of our business because they reflect the resources available for strategic opportunities including, among others, to invest in the business, strengthen the balance sheet and make strategic acquisitions. These non-GAAP 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 our consolidated 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 29, 2020 |
| March 31, 2019 | |||||
ASSETS |
|
|
| |||||
Cash and Cash Equivalents | $ | 1,237,884 |
|
| $ | 1,196,634 |
| |
Accounts Receivable, Net | 963,823 |
|
| 638,417 |
| |||
Inventories | 444,406 |
|
| 491,751 |
| |||
Prepaid Expenses and Other Current Assets | 672,390 |
|
| 305,056 |
| |||
Total Current Assets | 3,318,503 |
|
| 2,631,858 |
| |||
Property, Plant and Equipment, Net | 455,945 |
|
| 395,624 |
| |||
Goodwill | 3,572,650 |
|
| 485,528 |
| |||
Other Intangible Assets, Net | 1,615,778 |
|
| 682,063 |
| |||
Other Assets | 1,461,483 |
|
| 739,700 |
| |||
Total Assets | $ | 10,424,359 |
|
| $ | 4,934,773 |
| |
|
|
|
| |||||
|
|
|
| |||||
LIABILITIES, NONCONTROLLING INTERESTS AND SHAREHOLDERS' EQUITY | ||||||||
Short-term Borrowings | $ | 9,405 |
|
| $ | 13,409 |
| |
Current Portion of Long-term Debt | 64,441 |
|
| — |
| |||
Payables and Accrued Liabilities | 1,657,443 |
|
| 935,316 |
| |||
Total Current Liabilities | 1,731,289 |
|
| 948,725 |
| |||
Long-term Debt | 5,156,290 |
|
| 1,695,462 |
| |||
Other Liabilities | 738,965 |
|
| 636,055 |
| |||
Total Liabilities | 7,626,544 |
|
| 3,280,242 |
| |||
Noncontrolling Interests | 61,324 |
|
| — |
| |||
Total Shareholders' Equity | 2,736,491 |
|
| 1,654,531 |
| |||
Total Liabilities, Noncontrolling Interests and Shareholders' Equity | $ | 10,424,359 |
|
| $ | 4,934,773 |
|
HASBRO, INC. |
|
| ||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(Unaudited) |
|
|
|
|
|
|
|
| ||||||||
(Thousands of Dollars and Shares, Except Per Share Data) |
|
|
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
| ||||||||
|
| Quarter Ended | ||||||||||||||
|
| March 29, 2020 |
| % Net Revenues |
| March 31, 2019 |
| % Net Revenues | ||||||||
Net Revenues |
| $ | 1,105,570 |
|
|
| 100.0 | % |
| $ | 732,510 |
|
|
| 100.0 | % |
Costs and Expenses: |
|
|
|
|
|
|
|
| ||||||||
Cost of Sales |
| 262,694 |
|
|
| 23.8 | % |
| 259,987 |
|
|
| 35.5 | % | ||
Program Production Cost Amortization |
| 132,146 |
|
|
| 12.0 | % |
| 6,575 |
|
|
| 0.9 | % | ||
Royalties |
| 112,822 |
|
|
| 10.2 | % |
| 59,888 |
|
|
| 8.2 | % | ||
Product Development |
| 53,829 |
|
|
| 4.9 | % |
| 56,260 |
|
|
| 7.7 | % | ||
Advertising |
| 101,641 |
|
|
| 9.2 | % |
| 76,604 |
|
|
| 10.5 | % | ||
Amortization of Intangibles |
| 36,811 |
|
|
| 3.3 | % |
| 11,816 |
|
|
| 1.6 | % | ||
Selling, Distribution and Administration |
| 279,128 |
|
|
| 25.2 | % |
| 225,253 |
|
|
| 30.8 | % | ||
Acquisition-Related Expenses |
| 149,782 |
|
|
| 13.5 | % |
| — |
|
| 0.0 | % | |||
Operating (Loss) Profit |
| (23,283 | ) |
|
| -2.1 | % |
| 36,127 |
|
|
| 4.9 | % | ||
Interest Expense |
| 54,725 |
|
|
| 4.9 | % |
| 22,314 |
|
|
| 3.0 | % | ||
Other Income, Net |
| (6,126 | ) |
|
| -0.6 | % |
| (15,782 | ) |
|
| -2.2 | % | ||
(Loss) Earnings before Income Taxes |
| (71,882 | ) |
|
| -6.5 | % |
| 29,595 |
|
|
| 4.0 | % | ||
Income Tax (Benefit) Expense |
| (4,072 | ) |
|
| -0.4 | % |
| 2,868 |
|
|
| 0.4 | % | ||
Net (Loss) Earnings |
| (67,810 | ) |
|
| -6.1 | % |
| 26,727 |
|
|
| 3.6 | % | ||
Net Earnings Attributable to Noncontrolling Interests |
| 1,827 |
|
|
| 0.2 | % |
| — |
|
| 0.0 | % | |||
Net (Loss) Earnings Attributable to Hasbro, Inc. |
| $ | (69,637 | ) |
|
| -6.3 | % |
| $ | 26,727 |
|
|
| 3.6 | % |
|
|
|
|
|
|
|
|
| ||||||||
Per Common Share |
|
|
|
|
|
|
|
| ||||||||
Net (Loss) Earnings |
|
|
|
|
|
|
|
| ||||||||
Basic |
| $ | (0.51 | ) |
|
|
|
| $ | 0.21 |
|
|
|
| ||
Diluted |
| $ | (0.51 | ) |
|
|
|
| $ | 0.21 |
|
|
|
| ||
|
|
|
|
|
|
|
|
| ||||||||
Cash Dividends Declared |
| $ | 0.68 |
|
|
|
|
| $ | 0.68 |
|
|
|
| ||
|
|
|
|
|
|
|
|
| ||||||||
Weighted Average Number of Shares |
|
|
|
|
|
|
|
| ||||||||
Basic |
| 137,147 |
|
|
|
|
| 126,287 |
|
|
|
| ||||
Diluted |
| 137,147 |
|
|
|
|
| 126,816 |
|
|
|
|
HASBRO, INC. |
|
|
| ||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
(Unaudited) |
|
|
| ||||||
(Thousands of Dollars) |
|
|
| ||||||
|
|
|
| ||||||
| Quarter Ended | ||||||||
| March 29, 2020 |
| March 31, 2019 | ||||||
Cash Flows from Operating Activities: |
|
|
| ||||||
Net (Loss) Earnings | $ | (67,810 | ) |
|
| $ | 26,727 |
|
|
Other Non-Cash Adjustments | 208,565 |
|
|
| 58,996 |
|
| ||
Changes in Operating Assets and Liabilities | 150,872 |
|
|
| 178,771 |
|
| ||
Net Cash Provided by Operating Activities | 291,627 |
|
|
| 264,494 |
|
| ||
|
|
|
| ||||||
Cash Flows from Investing Activities: |
|
|
| ||||||
Additions to Property, Plant and Equipment | (30,833 | ) |
|
| (25,201 | ) |
| ||
Acquisition, Net of Cash Acquired | (4,403,929 | ) |
|
| — |
| |||
Other | 4,271 |
|
|
| (1,800 | ) |
| ||
Net Cash Utilized by Investing Activities | (4,430,491 | ) |
|
| (27,001 | ) |
| ||
|
|
|
| ||||||
Cash Flows from Financing Activities: |
|
|
| ||||||
Proceeds from Long-term Debt | 1,017,689 |
|
|
| — |
| |||
Repayments of Long-term Debt | (50,186 | ) |
|
| — |
| |||
Net (Repayments of) Proceeds from Short-term Borrowings | (1,424 | ) |
|
| 3,419 |
|
| ||
Purchases of Common Stock | — |
|
| (47,479 | ) |
| |||
Stock-Based Compensation Transactions | 1,830 |
|
|
| 2,335 |
|
| ||
Dividends Paid | (93,162 | ) |
|
| (79,274 | ) |
| ||
Employee Taxes Paid for Shares Withheld | (5,307 | ) |
|
| (11,880 | ) |
| ||
Redemption of Equity Instruments | (47,399 | ) |
|
| — |
| |||
Deferred Acquisition Payments | — |
|
| (87,500 | ) |
| |||
Other | (2,572 | ) |
|
| — |
| |||
Net Cash Provided (Utilized) by Financing Activities | 819,469 |
|
|
| (220,379 | ) |
| ||
|
|
|
| ||||||
Effect of Exchange Rate Changes on Cash | (23,090 | ) |
|
| (2,851 | ) |
| ||
|
|
|
| ||||||
Cash and Cash Equivalents at Beginning of Year | 4,580,369 |
|
|
| 1,182,371 |
|
| ||
|
|
|
| ||||||
Cash and Cash Equivalents at End of Period | $ | 1,237,884 |
|
|
| $ | 1,196,634 |
|
|
HASBRO, INC. |
|
|
|
|
| |||||
SUPPLEMENTAL FINANCIAL DATA |
|
| ||||||||
PRO FORMA SEGMENT RESULTS |
|
| ||||||||
(Unaudited) |
|
|
|
|
| |||||
(Thousands of Dollars) |
|
|
|
|
| |||||
|
|
|
|
|
| |||||
For comparability, the first quarter of 2019 includes the pro forma results for the eOne Segment. See "Reconciliation of 2019 As Reported to Pro Forma Results" for the pro forma adjustments. | ||||||||||
|
|
|
|
|
| |||||
| Quarter Ended |
|
| |||||||
| March 29, 2020 |
| Pro Forma March 31, 2019 |
| % Change | |||||
Segment Results |
|
|
|
|
| |||||
|
|
|
|
|
| |||||
U.S. and Canada Segment: |
|
|
|
|
| |||||
External Net Revenues | $ | 428,647 |
|
| $ | 357,851 |
|
| 20 | % |
Operating Profit | 71,780 |
|
| 13,532 |
|
| >100 | % | ||
Operating Margin | 16.7 | % |
| 3.8 | % |
|
| |||
|
|
|
|
|
| |||||
International Segment: |
|
|
|
|
| |||||
External Net Revenues | 250,403 |
|
| 282,649 |
|
| -11 | % | ||
Operating Loss | (26,691 | ) |
| (30,411 | ) |
| 12 | % | ||
Operating Margin | -10.7 | % |
| -10.8 | % |
|
| |||
|
|
|
|
|
| |||||
Entertainment, Licensing and Digital Segment: |
|
|
|
| ||||||
External Net Revenues | 84,027 |
|
| 91,994 |
|
| -9 | % | ||
Operating Profit | 5,174 |
|
| 30,020 |
|
| -83 | % | ||
Operating Margin | 6.2 | % |
| 32.6 | % |
|
| |||
|
|
|
|
|
| |||||
eOne Segment: |
|
|
|
|
| |||||
External Net Revenues | 342,493 |
|
| 466,212 |
|
| -27 | % | ||
Operating (Loss) Profit | (33,081 | ) |
| 103,167 |
|
| -132 | % | ||
Operating Margin | -9.7 | % |
| 22.1 | % |
|
| |||
|
|
|
|
|
| |||||
International Segment Net Revenues by Major Geographic Region | ||||||||||
Europe | 162,249 |
|
| 153,379 |
|
| 6 | % | ||
Latin America | 33,921 |
|
| 62,777 |
|
| -46 | % | ||
Asia Pacific | 54,233 |
|
| 66,493 |
|
| -18 | % | ||
Total | $ | 250,403 |
|
| $ | 282,649 |
|
|
| |
|
|
|
|
|
| |||||
Net Revenues by Brand Portfolio | ||||||||||
Franchise Brands | $ | 396,497 |
|
| $ | 393,574 |
|
| 1 | % |
Partner Brands | 182,331 |
|
| 171,989 |
|
| 6 | % | ||
Hasbro Gaming | 140,084 |
|
| 107,565 |
|
| 30 | % | ||
Emerging Brands (1) | 94,145 |
|
| 116,135 |
|
| -19 | % | ||
TV/Film/Entertainment (2) | 292,513 |
|
| 409,459 |
|
| -29 | % | ||
Total | $ | 1,105,570 |
|
| $ | 1,198,722 |
|
|
|
Hasbro's total gaming category, including all gaming revenue, most notably MAGIC: THE GATHERING and MONOPOLY, totaled $340,480 for the quarter ended March 29, 2020, up 39.9% from revenues of $243,390 for the quarter ended March 31, 2019.
(1) Emerging Brands includes the preschool brands, PEPPA PIG, PJ MASKS and RICKY ZOOM, acquired as part of the eOne Acquisition. For comparability, the first quarter of 2019 includes the pro forma net revenues for those brands, which amounted to $56,753.
(2) TV/Film/Entertainment includes all other brands not detailed in (1) above acquired as part of the eOne Acquisition. For comparability, the first quarter of 2019 includes the pro forma net revenues of $409,459.
HASBRO, INC. |
|
|
|
|
|
|
| ||||||||
SUPPLEMENTAL FINANCIAL DATA | |||||||||||||||
RECONCILIATION OF AS REPORTED TO PRO FORMA ADJUSTED OPERATING RESULTS | |||||||||||||||
(Unaudited) |
|
|
|
|
|
|
| ||||||||
(Thousands of Dollars) |
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
| ||||||||
For comparability, the first quarter of 2019 includes the pro forma results for the eOne Segment. See "Reconciliation of 2019 As Reported to Pro Forma Results" for the pro forma and non-GAAP adjustments. | |||||||||||||||
|
|
|
|
|
|
|
| ||||||||
Non-GAAP Adjustments Impacting Operating (Loss) Profit |
|
|
|
| |||||||||||
|
|
|
|
|
|
|
| ||||||||
| Quarter Ended | ||||||||||||||
| March 29, 2020 |
| Pro Forma March 31, 2019 | ||||||||||||
| Pre-tax Adjustments |
| Post-tax Adjustments |
| Pre-tax Adjustments |
| Post-tax Adjustments | ||||||||
Acquisition-Related Expenses (1) | $ | 149,782 |
|
| $ | 127,450 |
|
| $ | — |
|
| $ | — |
|
Acquired Intangible Amortization (2) | 25,028 |
|
| 19,885 |
|
| 24,597 |
|
| 19,063 |
| ||||
Pro Forma eOne Adjustments | — |
|
| — |
|
| 12,004 |
|
| 9,303 |
| ||||
| $ | 174,810 |
|
| $ | 147,335 |
|
| $ | 36,601 |
|
| $ | 28,366 |
|
(1) In association with the Company's acquisition of eOne, the Company incurred related expenses of $149.8 million ($127.5 million after-tax) in the first quarter of 2020, comprised of the following:
(i) Acquisition and integration costs of $95.7 million, including expense associated with the acceleration of eOne stock-based compensation and advisor fees settled at the closing of the acquisition, as well as integration costs; and
(ii) Restructuring and related costs of $54.1 million, including severance and retention costs, as well as impairment charges for certain definite-lived intangible and production assets.
(2) The Company incurred incremental intangible amortization costs related to the intangible assets acquired in the eOne Acquisition.
Reconciliation of Operating (Loss) Profit Results |
|
|
|
|
|
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
| Quarter Ended March 29, 2020 |
| Pro Forma Quarter Ended March 31, 2019 |
|
| ||||||||||||||||||||||
| As Reported |
| Non-GAAP Adjustments |
| Adjusted |
| As Reported |
| Non-GAAP Adjustments |
| Adjusted |
| % Change | ||||||||||||||
Adjusted Company Results |
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
External Net Revenues | $ | 1,105,570 |
|
| $ | — |
|
| $ | 1,105,570 |
|
|
| $ | 1,198,722 |
|
| $ | — |
|
| $ | 1,198,722 |
|
| -8 | % |
Operating (Loss) Profit | (23,283 | ) |
| 174,810 |
|
| 151,527 |
|
|
| 139,294 |
|
| 36,601 |
|
| 175,895 |
|
| -14 | % | ||||||
Operating Margin | -2.1 | % |
| 15.8 | % |
| 13.7 |
| % |
| 11.6 | % |
| 3.1 | % |
| 14.7 | % |
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Adjusted Segment Results |
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
U.S. and Canada Segment: |
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
External Net Revenues | $ | 428,647 |
|
| $ | — |
|
| $ | 428,647 |
|
|
| $ | 357,851 |
|
| $ | — |
|
| $ | 357,851 |
|
| 20 | % |
Operating Profit | 71,780 |
|
| — |
|
| 71,780 |
|
|
| 13,532 |
|
| — |
|
| 13,532 |
|
| >100% | |||||||
Operating Margin | 16.7 | % |
| — |
|
| 16.7 |
| % |
| 3.8 | % |
| — |
|
| 3.8 | % |
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
International Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
External Net Revenues | 250,403 |
|
| — |
|
| 250,403 |
|
|
| 282,649 |
|
| — |
|
| 282,649 |
|
| -11 | % | ||||||
Operating Loss | (26,691 | ) |
| — |
|
| (26,691 | ) |
|
| (30,411 | ) |
| — |
|
| (30,411 | ) |
| 12 | % | ||||||
Operating Margin | -10.7 | % |
| — |
|
| -10.7 |
| % |
| -10.8 | % |
| — |
|
| -10.8 | % |
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Entertainment, Licensing and Digital Segment: |
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
External Net Revenues | 84,027 |
|
| — |
|
| 84,027 |
|
|
| 91,994 |
|
| — |
|
| 91,994 |
|
| -9 | % | ||||||
Operating Profit | 5,174 |
|
| 20,831 |
|
| 26,005 |
|
|
| 30,020 |
|
| — |
|
| 30,020 |
|
| -13 | % | ||||||
Operating Margin | 6.2 | % |
| 24.8 | % |
| 30.9 |
| % |
| 32.6 | % |
| — |
|
| 32.6 | % |
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
eOne Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
External Net Revenues | 342,493 |
|
| — |
|
| 342,493 |
|
|
| 466,212 |
|
| — |
|
| 466,212 |
|
| -27 | % | ||||||
Operating (Loss) Profit | (33,081 | ) |
| 102,757 |
|
| 69,676 |
|
|
| 103,167 |
|
| 36,601 |
|
| 139,768 |
|
| -50 | % | ||||||
Operating Margin | -9.7 | % |
| 30.0 | % |
| 20.3 |
| % |
| 22.1 | % |
| 7.9 | % |
| 30.0 | % |
|
|
Corporate and Eliminations: The Corporate and Eliminations segment included non-GAAP adjustments of $51,222 for the quarter ended March 29, 2020, consisting of eOne acquisition-related expenses.
HASBRO, INC. |
|
|
|
|
|
| ||||||||||||
SUPPLEMENTAL FINANCIAL DATA |
|
|
|
| ||||||||||||||
RECONCILIATION OF 2019 AS REPORTED TO PRO FORMA RESULTS | ||||||||||||||||||
(Unaudited) |
|
|
|
|
|
|
| |||||||||||
(Thousands of Dollars) |
|
|
|
|
|
| ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Pro forma results were prepared by combining the results of Hasbro and eOne for the quarter ended March 31, 2019, after giving effect to the eOne Acquisition as if it had been consummated on December 31, 2018.
These pro forma results do not represent financial results that would have been realized had the acquisition actually occurred on December 31, 2018, nor are they intended to be a projection of future results. The pro forma financial information is presented for illustrative purposes only and does not reflect the costs of any integration activities or cost savings or synergies that may be achieved as a result of the acquisition. | ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
| Quarter Ended March 31, 2019 | |||||||||||||||||
| Hasbro As Reported |
| eOne (under U.S. GAAP) |
| Pro Forma Adjustments (1) |
| Pro Forma Combined | |||||||||||
Net Revenues | $ | 732,510 |
|
|
| $ | 466,212 |
|
| $ | — |
|
| $ | 1,198,722 |
|
| |
|
|
|
|
|
|
|
| |||||||||||
Operating Profit | $ | 36,127 |
|
|
| $ | 115,647 |
|
| $ | (12,480 | ) |
|
| $ | 139,294 |
|
|
Non-GAAP Adjustments | — |
|
| 24,121 |
|
| 12,480 |
|
|
| 36,601 |
|
| |||||
Adjusted Operating Profit * | $ | 36,127 |
|
|
| $ | 139,768 |
|
| $ | — |
|
| $ | 175,895 |
|
| |
|
|
|
|
|
|
|
| |||||||||||
* Reconciliation to Pro Forma Adjusted results is as follows: |
|
|
|
| ||||||||||||||
Net Earnings (Loss) | $ | 26,727 |
|
|
| $ | 74,167 |
|
| $ | (24,489 | ) |
|
| $ | 76,405 |
|
|
Interest Expense | 22,314 |
|
|
| 12,563 |
|
| 19,105 |
|
|
| 53,982 |
|
| ||||
Other (Income) Expense, Net | (15,782 | ) |
|
| 4,556 |
|
| (526 | ) |
|
| (11,752 | ) |
| ||||
Income Tax (Benefit) Expense | 2,868 |
|
|
| 21,632 |
|
| (6,570 | ) |
|
| 17,930 |
|
| ||||
Net Earnings Attributable to Noncontrolling Interests | — |
|
| 2,729 |
|
| — |
|
| 2,729 |
|
| ||||||
Operating Profit (Loss) | 36,127 |
|
|
| 115,647 |
|
| (12,480 | ) |
|
| 139,294 |
|
| ||||
|
|
|
|
|
|
|
| |||||||||||
Non-GAAP Adjustments |
|
|
|
|
|
|
| |||||||||||
eOne: |
|
|
|
|
|
|
| |||||||||||
Restructuring and Related Charges | — |
|
| 11,275 |
|
| — |
|
| 11,275 |
|
| ||||||
Acquisition Costs - eOne Deals | — |
|
| 729 |
|
| — |
|
| 729 |
|
| ||||||
Acquired Intangible Amortization | — |
|
| 12,117 |
|
| 12,480 |
|
|
| 24,597 |
|
| |||||
| — |
|
| 24,121 |
|
| 12,480 |
|
|
| 36,601 |
|
| |||||
|
|
|
|
|
|
|
| |||||||||||
Adjusted Operating Profit | $ | 36,127 |
|
|
| $ | 139,768 |
|
| $ | — |
|
| $ | 175,895 |
|
| |
|
|
|
|
|
|
|
|
(1) The pro forma results include certain pro forma adjustments to net earnings that were directly attributable to the acquisition, as if the acquisition had occurred on December 31, 2018, including the following:
HASBRO, INC. |
|
|
|
|
|
| |||||||||
SUPPLEMENTAL FINANCIAL DATA |
|
|
|
| |||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
|
|
|
| |||||||||||
(Unaudited) |
|
|
|
|
|
|
| ||||||||
(Thousands of Dollars and Shares, Except Per Share Data) |
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
| ||||||||
For comparability, the first quarter of 2019 includes the pro forma results for the eOne Segment. See "Reconciliation of 2019 As Reported to Pro Forma Results" for the pro forma and non-GAAP adjustments. | |||||||||||||||
|
|
|
|
|
|
|
| ||||||||
Reconciliation of Net Earnings and Earnings per Share | |||||||||||||||
| Quarter Ended | ||||||||||||||
(all adjustments reported after-tax) | March 29, 2020 |
| Diluted Per Share Amount |
| Pro Forma March 31, 2019 |
| Pro Forma Diluted Per Share Amount (1) | ||||||||
Net (Loss) Earnings Attributable to Hasbro, Inc., as Reported | $ | (69,637) |
|
| $ | (0.51) |
|
| $ | 76,405 |
|
| $ | 0.56 |
|
Acquisition-Related Expenses | 127,450 |
|
| 0.93 |
|
| — |
|
| — |
| ||||
Acquired Intangible Amortization | 19,885 |
|
| 0.14 |
|
| 19,063 |
|
| 0.14 |
| ||||
Pro Forma eOne Adjustments | — |
|
| — |
|
| 9,303 |
|
| 0.07 |
| ||||
Net Earnings Attributable to Hasbro, Inc., as Adjusted | $ | 77,698 |
|
| $ | 0.57 |
|
| $ | 104,771 |
|
| $ | 0.76 |
|
(1) 2019 Pro Forma Diluted Per Share Amount is calculated using weighted average shares outstanding of 137,586, which includes the pro forma impact of issuing shares associated with the financing of the eOne Acquisition.
Reconciliation of EBITDA |
|
|
|
|
|
|
|
|
| ||||||||||
| Quarter Ended |
| Quarter Ended March 31, 2019 | ||||||||||||||||
| March 29, 2020 |
| Hasbro As Reported |
| eOne (under U.S. GAAP) |
| Pro Forma Adjustments |
| Pro Forma Combined | ||||||||||
Net (Loss) Earnings Attributable to Hasbro, Inc. | $ | (69,637) |
|
| $ | 26,727 |
|
| $ | 74,167 |
|
| $ | (24,489) |
|
| $ | 76,405 | |
Interest Expense | 54,725 |
|
| 22,314 |
|
| 12,563 |
|
| 19,105 |
|
| 53,982 | ||||||
Income Tax (Benefit) Expense | (4,072) |
|
| 2,868 |
|
| 21,632 |
|
| (6,570) |
|
| 17,930 | ||||||
Net Earnings Attributable to Noncontrolling Interests | 1,827 |
|
| — |
|
| 2,729 |
|
| — |
|
| 2,729 | ||||||
Depreciation | 23,666 |
|
| 27,028 |
|
| 1,856 |
|
| — |
|
| 28,884 | ||||||
Amortization of Intangibles | 36,811 |
|
| 11,816 |
|
| 12,117 |
|
| 12,480 |
|
| 36,413 | ||||||
EBITDA | $ | 43,320 |
|
| $ | 90,753 |
|
| $ | 125,064 |
|
| $ | 526 |
|
| $ | 216,343 | |
Non-GAAP Adjustments (see above) | 149,782 | — | 12,004 |
| — | 12,004 | |||||||||||||
Adjusted EBITDA | $ | 193,102 |
|
| $ | 90,753 |
|
| $ | 137,068 |
|
| $ | 526 |
|
| $ | 228,347 |
HASBRO, INC. |
|
|
|
|
|
|
|
|
| |||||||||||||||
SUPPLEMENTAL FINANCIAL DATA |
|
|
|
|
|
|
| |||||||||||||||||
eOne - FY2019 RESULTS OF OPERATIONS (REPORTED UNDER U.S. GAAP) | ||||||||||||||||||||||||
(Unaudited) |
|
|
|
|
|
|
|
|
|
| ||||||||||||||
(Thousands of Dollars) |
|
|
|
|
|
|
|
|
| |||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
| Quarter Ended |
|
| Year Ended | ||||||||||||||||||||
| March 2019 |
| June 2019 |
| September 2019 |
| December 2019 |
|
| December 2019 | ||||||||||||||
Net Revenues | $ | 466,212 |
|
| $ | 231,091 |
|
|
| $ | 283,310 |
|
|
| $ | 235,160 |
|
|
|
| $ | 1,215,773 |
|
|
Costs and Expenses: |
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Cost of Sales | 14,141 |
|
| 17,053 |
|
|
| 11,497 |
|
|
| 24,878 |
|
|
|
| 67,569 |
|
| |||||
Program Production Cost Amortization | 160,857 |
|
| 64,527 |
|
|
| 92,662 |
|
|
| 90,414 |
|
|
|
| 408,460 |
|
| |||||
Royalties | 81,147 |
|
| 55,865 |
|
|
| 49,533 |
|
|
| 39,659 |
|
|
|
| 226,204 |
|
| |||||
Advertising | 21,173 |
|
| 32,870 |
|
|
| 30,593 |
|
|
| 37,241 |
|
|
|
| 121,877 |
|
| |||||
Amortization of Intangibles | 12,117 |
|
| 16,025 |
|
|
| 14,871 |
|
|
| 16,552 |
|
|
|
| 59,565 |
|
| |||||
Selling, Distribution and Administration | 61,130 |
|
| 63,791 |
|
|
| 61,860 |
|
|
| 92,996 |
|
|
|
| 279,777 |
|
| |||||
Operating Profit (Loss) | 115,647 |
|
| (19,040 | ) |
|
| 22,294 |
|
|
| (66,580 | ) |
|
|
| 52,321 |
|
| |||||
Interest Expense | 12,563 |
|
| 12,208 |
|
|
| 10,302 |
|
|
| 10,772 |
|
|
|
| 45,845 |
|
| |||||
Other Expense (Income), Net | 4,556 |
|
| 21,236 |
|
|
| 2,687 |
|
|
| (759 | ) |
|
|
| 27,720 |
|
| |||||
Earnings (Loss) before Income Taxes | 98,528 |
|
| (52,484 | ) |
|
| 9,305 |
|
|
| (76,593 | ) |
|
|
| (21,244 | ) |
| |||||
Income Tax Expense (Benefit) | 21,632 |
|
| (3,354 | ) |
|
| 4,025 |
|
|
| (26,815 | ) |
|
|
| (4,512 | ) |
| |||||
Net Earnings (Loss) | 76,896 |
|
| (49,130 | ) |
|
| 5,280 |
|
|
| (49,778 | ) |
|
|
| (16,732 | ) |
| |||||
Net Income Attributable to Noncontrolling Interests | 2,729 |
|
| 6,465 |
|
|
| 10,673 |
|
|
| 10,677 |
|
|
|
| 30,544 |
|
| |||||
Net Earnings (Loss) Attributable to eOne | $ | 74,167 |
|
| $ | (55,595 | ) |
|
| $ | (5,393 | ) |
|
| $ | (60,455 | ) |
|
|
| $ | (47,276 | ) |
|
The eOne financial results above include certain charges that would have been excluded to calculate Adjusted results, as historically reported by eOne. Those charges are outlined below for each quarter in fiscal year 2019.
Non-GAAP Adjustments |
|
|
|
|
|
|
|
|
|
| ||||||||||
| Quarter Ended |
|
| Year Ended | ||||||||||||||||
| March 2019 |
| June 2019 |
| September 2019 |
| December 2019 |
|
| December 2019 | ||||||||||
Restructuring and Related Charges | $ | 11,275 |
|
| $ | 7,373 |
|
| $ | 3,234 |
|
| $ | 11,526 |
|
|
| $ | 33,408 |
|
Acquisition Costs - eOne Deals | 729 |
|
| 8,664 |
|
| 1,324 |
|
| 458 |
|
|
| 11,175 |
| |||||
Hasbro Transaction Costs | — |
|
| — |
|
| 3,244 |
|
| 3,245 |
|
|
| 6,489 |
| |||||
Selling, Distribution and Administration | 12,004 |
|
| 16,037 |
|
| 7,802 |
|
| 15,229 |
|
|
| 51,072 |
| |||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Debt Refinancing Costs | — |
|
| 19,812 |
|
| — |
|
|
|
|
| 19,812 |
| ||||||
Other Expense (Income), Net | — |
|
| 19,812 |
|
| — |
|
| — |
|
|
| 19,812 |
| |||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Total | $ | 12,004 |
|
| $ | 35,849 |
|
| $ | 7,802 |
|
| $ | 15,229 |
|
|
| $ | 70,884 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20200429005311/en/
Investor Contact: Debbie Hancock | Hasbro, Inc. | (401) 727-5401 | debbie.hancock@hasbro.com Press Contact: Julie Duffy | Hasbro, Inc. | (401) 727-5931 | julie.duffy@hasbro.com
Source: Hasbro, Inc.