Hasbro Reports Growth in Revenues, Operating Profit, Net Earnings and EBITDA
- Net revenues increased 1% to $1.34 billion
- Revenues up 4% absent an unfavorable $32.7 million impact of foreign exchange
- Consumer Products segment revenues up 7%; up 9% absent the impact of foreign exchange
- Wizards of the Coast and Digital Gaming segment revenues up 3%; up 5% absent the impact of foreign exchange
- Entertainment segment revenues declined 18% driven by the sale of the music business in the beginning of the third quarter 2021; down 16% absent the impact of foreign exchange; and down 4% excluding the Music business
- Operating profit of $219.1 million, or 16.4% of revenues
- Adjusted operating profit up 14% to $241.0 million, or 18.0% of revenues, up 200 basis points
- Net earnings of $142.0 million, or $1.02 per diluted share, up more than 100%
- Adjusted net earnings up 10% to $160.6 million, or $1.15 per diluted share
- EBITDA of $285.4 million
- Adjusted EBITDA up 6% to $308.3 million
- Completed D&D Beyond acquisition and returned $221.4 million to shareholders through dividend and share repurchase
- Paid $146.3 million for D&D Beyond, a strategic, complementary acquisition that accelerates direct-to-fans capability for Dungeons & Dragons in physical and digital play
- Paid $97.4 million in dividends to shareholders during the quarter
- Repurchased $124.0 million of Hasbro common stock
Pawtucket, RI — Hasbro, Inc. reported financial results for the second quarter 2022, including growth in revenues, operating profit, net earnings and EBITDA.
“The Hasbro team delivered strong second quarter results, driving mid-single digit revenue growth absent foreign exchange and 200 basis points of adjusted operating margin expansion,” said Chris Cocks, Hasbro chief executive officer. “Wizards of the Coast turned in its biggest quarter ever, led by 15% growth in tabletop gaming and 11% growth in MAGIC: THE GATHERING across platforms. We also significantly enhanced our digital play and direct-to-fan capabilities with the acquisition of D&D Beyond which will serve as an important growth driver for Hasbro’s industry leading fantasy gaming portfolio.
“We are making significant progress in our strategic plan review and are identifying and realizing cost savings across the business,” continued Cocks. “Our teams are driving focus and scale in gaming, multi-generational brands and direct to consumer. Backed by Hasbro’s unmatched portfolio of brands and brand-building capabilities, we have confidence in the strength of our initiatives for the second half and we are positioned to deliver profitable growth and long-term shareholder returns.”
“In the first half of the year, we took significant steps to secure inventory to help ensure product availability for upcoming product launches, major entertainment releases and the holiday season,” said Deborah Thomas, Hasbro chief financial officer. “Foreign exchange is impacting our top line revenue growth, but our teams are executing well to meet demand and drive profit. We successfully closed an acquisition supporting a key growing brand, returned cash to shareholders through dividends and share repurchases and anticipate higher operating cash generation in the second half of the year as our major new innovations and entertainment-driven initiatives come to market.”
Second Quarter 2022 Financial Results
$ Millions, except earnings per share | Q2 2022 | Q2 2021 | % Change | |||||||
Net Revenues1 | $ | 1,339.2 | $ | 1,322.2 | 1 | % | ||||
Operating Profit | $ | 219.1 | $ | 76.6 | >100% | |||||
Adjusted Operating Profit2 | $ | 241.0 | $ | 211.6 | 14 | % | ||||
Net Earnings | $ | 142.0 | $ | (22.9 | ) | >100% | ||||
Net Earnings per Diluted Share | $ | 1.02 | $ | (0.17 | ) | >100% | ||||
Adjusted Net Earnings2 | $ | 160.6 | $ | 145.4 | 10 | % | ||||
Adjusted Net Earnings per Diluted Share2 | $ | 1.15 | $ | 1.05 | 10 | % | ||||
EBITDA2 | $ | 285.4 | $ | 159.5 | 79 | % | ||||
Adjusted EBITDA2 | $ | 308.3 | $ | 289.6 | 6 | % | ||||
1Foreign exchange had a negative $32.7 million impact, or 3%, on second quarter 2022 revenue | ||||||||||
2See the financial tables accompanying this press release for a reconciliation of GAAP and non-GAAP financial measures. |
Second Quarter 2022 Major Segment Performance
Q2 2022 Major Segments ($ Millions) |
Net Revenues | Operating Profit (Loss) |
Adjusted Operating Profit1 |
||||||||||||||||||||
Q2 2022 | Q2 2021 | % Change | Q2 2022 | Q2 2021 | Q2 2022 | Q2 2021 | |||||||||||||||||
Consumer Products | $ | 734.2 | $ | 689.2 | 7 | % | $ | (6.5 | ) | $ | 17.8 | $ | 3.1 | $ | 17.8 | ||||||||
Wizards of the Coast and Digital Gaming | $ | 419.8 | $ | 406.3 | 3 | % | $ | 225.6 | $ | 192.9 | $ | 225.6 | $ | 192.9 | |||||||||
Entertainment | $ | 185.2 | $ | 226.7 | -18 | % | $ | 14.3 | $ | (113.7 | ) | $ | 23.0 | $ | 9.9 |
Q2 2022 Major Segments ($ Millions) |
EBITDA | Adjusted EBITDA1 | |||||||||||
Q2 2022 | Q2 2021 | Q2 2022 | Q2 2021 | ||||||||||
Consumer Products | $ | 41.8 | $ | 46.6 | $ | 50.2 | $ | 54.7 | |||||
Wizards of the Coast and Digital Gaming | $ | 225.9 | $ | 206.9 | $ | 231.0 | $ | 210.0 | |||||
Entertainment | $ | 24.2 | $ | (87.2 | ) | $ | 30.4 | $ | 19.5 | ||||
1Reconciliations are included in the attached schedules under the heading “Reconciliation of Adjusted Operating Profit” and “Reconciliation of EBITDA and Adjusted EBITDA.” |
Consumer Products segment revenues increased 7%. Revenue increased 9% excluding a negative $19.1 million impact of foreign exchange, $14.9 million of which was in Europe.
- North America and Latin America posted positive revenue growth, offsetting declines in Europe, which was up slightly absent foreign exchange, and a 3% decline in Asia Pacific, which was up 1% absent foreign exchange.
- The segment’s decline in adjusted operating profit primarily reflects higher product and freight costs partially offset by price increases implemented during the second quarter.
- To help ensure higher in-stock levels at retail, during the first half of 2022 inventory was purchased earlier than the traditional time frame. Inventory is of high quality and supply is well positioned to meet demand.
- For the full-year, we expect revenue growth in the segment in the low-single digits, on a constant currency basis. Operating profit margin is expected to be in line to slightly up from last year’s 10.1% level.
Wizards of the Coast and Digital Gaming segment revenues increased 3%. Revenues increased 5% excluding a negative $8.2 million impact of foreign exchange.
- Tabletop revenues grew 15% led by MAGIC: THE GATHERING.
- Digital and licensed gaming declined 36% based on release timing and reflecting the difficult comparison with the launch of Dark Alliance and Magic: The Gathering Arena mobile last year.
- Operating profit of $225.6 million was 53.7% of revenue and reflects continued significant investments in Wizards of the Coast brands, as well as higher paper and freight costs. These costs were more than offset by lower launch-related product development, advertising and depreciation costs associated with Dark Alliance released in early third quarter 2021. We continue to invest in digital gaming initiatives and talent to support long-term growth in the segment.
- For the full-year, on a constant currency basis, we expect high single-digit to low double-digit revenue growth with operating profit margin down slightly from 42.5% in full-year 2021 as we continue investing in growing these valuable brands.
Entertainment segment revenue decreased 18%, or a decline of 16% excluding a negative $5.4 million impact of foreign exchange.
- Excluding $33.4 million of revenue from the music business which was sold at the beginning of the third quarter last year, entertainment segment revenue declined 4%.
- Film & TV revenue declined 10%, primarily related to the delivery timing of scripted TV series, including Cruel Summer season 1 delivered in the second quarter 2021. Deliveries of The Rookie Season 4 partially offset this decline, as did growth in film revenues and unscripted TV revenues in the quarter.
- Third quarter deliveries are expected to include Cruel Summer Season 2, the first delivery of episodes for The Rookie: Feds, and episodes of The Rookie Season 5.
- TV deliveries of Fear The Walking Dead and Yellowjackets are both expected to be more significant deliveries in fourth quarter 2022 versus third quarter last year.
- For third quarter 2022, we plan to deliver 32 half-hours of scripted TV versus 28 last third quarter.
- Third quarter 2021 included film deliveries of Finch and Come From Away direct to streaming services, with the majority of revenue recorded in the quarter. Film deliveries planned for third quarter 2022 are slated for theatrical release, which will result in revenues being recognized over a longer period.
- Family Brands revenue declined $3.3 million from the negative impact of foreign exchange as well as the timing of deliveries and lower YouTube revenues.
- Second half 2022 deliveries are expected to include Peppa Pig and PJ Masks to SVOD platforms in China as well as deliveries of My Little Pony: Make Your Mark and Power Rangers Dino Fury content to Netflix.
- Third quarter 2021 included the delivery of the My Little Pony: A New Generation feature film to Netflix. There is no comparable film expected to be delivered in the third quarter 2022.
- Film & TV and Family Brands revenue up 2% year-to-date, respectively.
- Music and Other revenue declined 61% in the quarter following the sale of the music business last year, which was partially offset by revenue growth from the return to live events at Round Room.
- Adjusted operating profit increased more than 100%. Newly acquired titles delivered better profit than the prior year, amortization declined on lower deliveries year-over-year and expenses were down. This was partially offset by the sale of the music business last year.
- Excluding the 2021 results from the music business, for the full-year, on a constant currency basis, we continue to expect underlying revenue growth in the mid-single digits and adjusted operating profit margin to outpace revenue growth and deliver margin expansion.
Second Quarter 2022 Brand Portfolio Performance
Brand Performance ($ Millions) | Net Revenues | ||||||||
Q2 2022 | Q2 2021 | % Change | |||||||
Franchise Brands1 | $ | 743.9 | $ | 677.2 | 10 | % | |||
Partner Brands | $ | 219.4 | $ | 212.0 | 3 | % | |||
Hasbro Gaming2 | $ | 125.8 | $ | 147.1 | -14 | % | |||
Emerging Brands | $ | 92.0 | $ | 89.7 | 3 | % | |||
TV/Film/Entertainment3 | $ | 158.1 | $ | 196.2 | -19 | % | |||
1Effective in the first quarter of 2022, the Company moved PEPPA PIG into Franchise Brands from Emerging Brands. For comparability, second quarter 2021 net revenues have been restated to reflect the elevation of PEPPA PIG from Emerging Brands into Franchise Brands resulting in a change of $27.3 million. | |||||||||
2Hasbro’s total gaming category, including all gaming revenue, most notably MAGIC: THE GATHERING and MONOPOLY, totaled $528.3 million for the second quarter 2022, up 2% versus the second quarter 2021. | |||||||||
3Second quarter 2021 TV/Film/Entertainment includes $33.4 million of music revenue which was sold at the beginning of the third quarter 2021. |
Brand Blueprint Leadership
Hasbro is executing significant campaigns around the Brand Blueprint, investing in growth initiatives, refocusing on the highest potential brands and positioning the Company for continued profitable growth. The second half of 2022 features significant new launches for NERF with the NERF Pro GelFire and Elite2.0 Motoblitz and for Gaming, including Wordle: The Party Game and MAGIC: THE GATHERING releases Dominaria United, Unfinity and Universes Beyond: Warhammer 40,000; All new STARTING LINEUP on Hasbro Pulse and across the Fanatics network of online sites, including Fanatics.com and official league stores; Hasbro Selfie Series exclusively on the Hasbro Pulse Mobile App; Hasbro products for Marvel Studios’ Black Panther: Wakanda Forever and the Star Wars™ series Obi-Wan Kenobi™ streaming on Disney+; Preschool expansion with PEPPA PIG, PJ MASKS and Marvel’s Spidey and His Amazing Friends; as well as significant retail activations including two Amazon Prime Days.
For the second quarter 2022, revenues grew in Franchise Brands, Partner Brands and Emerging Brands. Hasbro Gaming and TV/Film/Entertainment revenues declined in the quarter. Top brand performances included MAGIC: THE GATHERING, PEPPA PIG, PLAY-DOH and MY LITTLE PONY. Hasbro products for the Marvel portfolio were strong performers.
Industry-leading Gaming Portfolio
- Hasbro’s total gaming portfolio revenue, including Franchise Brands MAGIC: THE GATHERING and MONOPOLY, grew 2% to $528.3 million.
- MAGIC: THE GATHERING revenue grew 11%, including double-digit growth in tabletop gaming.
- For the first time in history, every major set this year has crossed $100 million in sales.
- Growth was partially offset by a decline in digital versus the launch of Magic: The Gathering Arena mobile last year.
- Strengthened DUNGEONS & DRAGONS with the acquisition of D&D Beyond from Fandom in May.
- Wizards of the Coast posted its highest revenue quarter in history.
- Hasbro Gaming revenues, which exclude Franchise Brand gaming brands, declined 14% year-over-year.
- Growth in several gaming brands including YAHTZEE, led by digital gaming, and AVALON HILL’s HeroQuest did not offset a decline in DUNGEONS & DRAGONS related to the 2021 release of Dark Alliance.
- New Avalon Hill launches coming in the fall, including Risk: Shadow Forces, Betrayal at House of the Hill Edition 3 and HeroQuest Frozen Horror Quest Pack expansion.
End-to-End Brand Executions
Hasbro has a plan for continued growth in 2022, including low-single digit revenue growth on a constant currency basis; mid-single digit growth in operating profit to achieve adjusted operating profit margin of 16%; and operating cash flow at the low end of the range of $700 to $800 million.
Dividend and Share Repurchase Plan
During the second quarter, Hasbro paid $97.4 million in cash dividends to shareholders. The next dividend of $0.70 per common share was previously declared and will be payable on August 15, 2022 to shareholders of record at the close of business on August 1, 2022.
Given the progress made toward reducing debt, the Company repurchased 1.4 million shares of Hasbro common stock at a total price of $124.0 million during the quarter. $242.6 million remains available in the Company’s share repurchase program. The Company remains on track to achieve its target gross debt to adjusted EBITDA of 2.0 to 2.5X in the second half of 2023 or sooner, depending on business performance and other factors.
(Tables Attached)
HASBRO, INC. | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(Unaudited) | ||||||
(Millions of Dollars) | ||||||
June 26, 2022 | June 27, 2021 | |||||
ASSETS | ||||||
Cash and Cash Equivalents | $ | 628.2 | $ | 1,228.2 | ||
Accounts Receivable, Net | 870.5 | 865.9 | ||||
Inventories | 867.5 | 499.6 | ||||
Prepaid Expenses and Other Current Assets | 719.2 | 543.2 | ||||
Assets Held for Sale | — | 479.5 | ||||
Total Current Assets | 3,085.4 | 3,616.4 | ||||
Property, Plant and Equipment, Net | 409.9 | 466.2 | ||||
Goodwill | 3,483.2 | 3,420.8 | ||||
Other Intangible Assets, Net | 1,156.9 | 1,248.3 | ||||
Other Assets | 1,367.6 | 1,350.5 | ||||
Total Assets | $ | 9,503.0 | $ | 10,102.2 | ||
LIABILITIES, NONCONTROLLING INTERESTS AND SHAREHOLDERS’ EQUITY | ||||||
Short-Term Borrowings | $ | 98.0 | $ | 0.8 | ||
Current Portion of Long-Term Debt | 137.0 | 189.6 | ||||
Accounts Payable and Accrued Liabilities | 1,923.2 | 1,778.9 | ||||
Liabilities Held for Sale | — | 76.3 | ||||
Total Current Liabilities | 2,158.2 | 2,045.6 | ||||
Long-Term Debt | 3,739.0 | 4,388.7 | ||||
Other Liabilities | 570.0 | 753.0 | ||||
Total Liabilities | 6,467.2 | 7,187.3 | ||||
Redeemable Noncontrolling Interests | 23.0 | 24.5 | ||||
Total Shareholders’ Equity | 3,012.8 | 2,890.4 | ||||
Total Liabilities, Noncontrolling Interests and Shareholders’ Equity | $ | 9,503.0 | $ | 10,102.2 |
HASBRO, INC. | ||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
(Millions of Dollars and Shares Except Per Share Data) | ||||||||||||||||||||||||||||
Quarter Ended | Six Months Ended | |||||||||||||||||||||||||||
June 26, 2022 | % Net Revenues |
June 27, 2021 | % Net Revenues |
June 26, 2022 | % Net Revenues |
June 27, 2021 | % Net Revenues |
|||||||||||||||||||||
Net Revenues | $ | 1,339.2 | 100.0 | % | $ | 1,322.2 | 100.0 | % | $ | 2,502.3 | 100.0 | % | $ | 2,437.0 | 100.0 | % | ||||||||||||
Costs and Expenses: | ||||||||||||||||||||||||||||
Cost of Sales | 411.5 | 30.7 | % | 345.0 | 26.1 | % | 744.6 | 29.8 | % | 634.9 | 26.1 | % | ||||||||||||||||
Program Cost Amortization | 80.7 | 6.0 | % | 110.7 | 8.4 | % | 219.2 | 8.8 | % | 208.2 | 8.5 | % | ||||||||||||||||
Royalties | 110.1 | 8.2 | % | 111.5 | 8.4 | % | 200.2 | 8.0 | % | 220.4 | 9.0 | % | ||||||||||||||||
Product Development | 79.2 | 5.9 | % | 87.2 | 6.6 | % | 148.8 | 5.9 | % | 149.0 | 6.1 | % | ||||||||||||||||
Advertising | 84.2 | 6.3 | % | 105.4 | 8.0 | % | 161.8 | 6.5 | % | 193.3 | 7.9 | % | ||||||||||||||||
Amortization of Intangibles | 27.2 | 2.0 | % | 29.7 | 2.2 | % | 54.3 | 2.2 | % | 62.6 | 2.6 | % | ||||||||||||||||
Selling, Distribution and Administration | 327.2 | 24.4 | % | 354.3 | 26.8 | % | 634.3 | 25.3 | % | 642.9 | 26.4 | % | ||||||||||||||||
Loss on Assets Held for Sale | — | 0.0 | % | 101.8 | 7.7 | % | — | 0.0 | % | 101.8 | 4.2 | % | ||||||||||||||||
Operating Profit | 219.1 | 16.4 | % | 76.6 | 5.8 | % | 339.1 | 13.6 | % | 223.9 | 9.2 | % | ||||||||||||||||
Interest Expense | 41.7 | 3.1 | % | 46.1 | 3.5 | % | 83.3 | 3.3 | % | 94.0 | 3.9 | % | ||||||||||||||||
Other Expense (Income), Net | (2.5 | ) | -0.2 | % | (10.6 | ) | -0.8 | % | (4.3 | ) | -0.2 | % | (40.7 | ) | -1.7 | % | ||||||||||||
Earnings before Income Taxes | 179.9 | 13.4 | % | 41.1 | 3.1 | % | 260.1 | 10.4 | % | 170.6 | 7.0 | % | ||||||||||||||||
Income Tax Expense | 39.4 | 2.9 | % | 63.0 | 4.8 | % | 56.7 | 2.3 | % | 75.0 | 3.1 | % | ||||||||||||||||
Net Earnings | 140.5 | 10.5 | % | (21.9 | ) | -1.7 | % | 203.4 | 8.1 | % | 95.6 | 3.9 | % | |||||||||||||||
Net Earnings Attributable to Noncontrolling Interests | (1.5 | ) | -0.1 | % | 1.0 | 0.1 | % | 0.2 | 0.0 | % | 2.3 | 0.1 | % | |||||||||||||||
Net Earnings Attributable to Hasbro, Inc. | $ | 142.0 | 10.6 | % | $ | (22.9 | ) | -1.7 | % | $ | 203.2 | 8.1 | % | $ | 93.3 | 3.8 | % | |||||||||||
Per Common Share | ||||||||||||||||||||||||||||
Net Earnings | ||||||||||||||||||||||||||||
Basic | $ | 1.02 | $ | (0.17 | ) | $ | 1.46 | $ | 0.68 | |||||||||||||||||||
Diluted | $ | 1.02 | $ | (0.17 | ) | $ | 1.46 | $ | 0.68 | |||||||||||||||||||
Cash Dividends Declared | $ | 0.70 | $ | 0.68 | $ | 1.40 | $ | 1.36 | ||||||||||||||||||||
Weighted Average Number of Shares | ||||||||||||||||||||||||||||
Basic | 139.0 | 137.8 | 139.2 | 137.8 | ||||||||||||||||||||||||
Diluted | 139.2 | 137.8 | 139.4 | 138.2 |
HASBRO, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited) | ||||||||
(Millions of Dollars) | ||||||||
Six Months Ended | ||||||||
June 26, 2022 | June 27, 2021 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net Earnings | $ | 203.4 | $ | 95.6 | ||||
Other Non-Cash Adjustments | 337.3 | 521.1 | ||||||
Changes in Operating Assets and Liabilities | (392.9 | ) | (39.6 | ) | ||||
Net Cash Provided by Operating Activities | 147.8 | 577.1 | ||||||
Cash Flows from Investing Activities: | ||||||||
Additions to Property, Plant and Equipment | (75.8 | ) | (63.1 | ) | ||||
Investments and Acquisitions | (146.3 | ) | — | |||||
Other | 9.5 | (3.2 | ) | |||||
Net Cash Utilized by Investing Activities | (212.6 | ) | (66.3 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from Long-Term Debt | 2.1 | 114.7 | ||||||
Repayments of Long-Term Debt | (152.5 | ) | (635.0 | ) | ||||
Net Proceeds from Short-Term Borrowings | 97.2 | (6.3 | ) | |||||
Purchases of Common Stock | (124.0 | ) | — | |||||
Stock-Based Compensation Transactions | 74.2 | 9.4 | ||||||
Dividends Paid | (191.9 | ) | (187.5 | ) | ||||
Payments Related to Tax Withholding for Share-Based Compensation | (19.6 | ) | (9.5 | ) | ||||
Other | (5.4 | ) | (4.2 | ) | ||||
Net Cash Utilized by Financing Activities | (319.9 | ) | (718.4 | ) | ||||
Effect of Exchange Rate Changes on Cash | (6.3 | ) | 4.3 | |||||
Net Decrease in Cash Balances Classified as Held for Sale | — | (18.2 | ) | |||||
Cash and Cash Equivalents at Beginning of Year | 1,019.2 | 1,449.7 | ||||||
Cash and Cash Equivalents at End of Period | $ | 628.2 | $ | 1,228.2 |
HASBRO, INC. | |||||||||||||||||||||||||||
SUPPLEMENTAL FINANCIAL DATA | |||||||||||||||||||||||||||
SEGMENT RESULTS – AS REPORTED AND AS ADJUSTED | |||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||
(Millions of Dollars) | |||||||||||||||||||||||||||
Operating Results | |||||||||||||||||||||||||||
Quarter Ended June 26, 2022 | Quarter Ended June 27, 2021 | ||||||||||||||||||||||||||
As Reported | Non-GAAP Adjustments |
Adjusted | As Reported | Non-GAAP Adjustments |
Adjusted | % Change |
|||||||||||||||||||||
Total Company Results | |||||||||||||||||||||||||||
External Net Revenues (1) | $ | 1,339.2 | $ | — | $ | 1,339.2 | $ | 1,322.2 | $ | — | $ | 1,322.2 | 1 | % | |||||||||||||
Operating Profit | 219.1 | 21.9 | 241.0 | 76.6 | 135.0 | 211.6 | 14 | % | |||||||||||||||||||
Operating Margin | 16.4 | % | 1.6 | % | 18.0 | % | 5.8 | % | 10.2 | % | 16.0 | % | |||||||||||||||
EBITDA | 285.4 | 22.9 | 308.3 | 159.5 | 130.1 | 289.6 | 6 | % | |||||||||||||||||||
Segment Results | |||||||||||||||||||||||||||
Consumer Products: | |||||||||||||||||||||||||||
External Net Revenues (2) | $ | 734.2 | $ | — | $ | 734.2 | $ | 689.2 | $ | — | $ | 689.2 | 7 | % | |||||||||||||
Operating Profit | (6.5 | ) | 9.6 | 3.1 | 17.8 | — | 17.8 | -83 | % | ||||||||||||||||||
Operating Margin | -0.9 | % | 1.3 | % | 0.4 | % | 2.6 | % | — | 2.6 | % | ||||||||||||||||
EBITDA | 41.8 | 8.4 | 50.2 | 46.6 | 8.1 | 54.7 | -8 | % | |||||||||||||||||||
Wizards of the Coast and Digital Gaming: | |||||||||||||||||||||||||||
External Net Revenues (3) | $ | 419.8 | $ | — | $ | 419.8 | $ | 406.3 | $ | — | $ | 406.3 | 3 | % | |||||||||||||
Operating Profit | 225.6 | — | 225.6 | 192.9 | — | 192.9 | 17 | % | |||||||||||||||||||
Operating Margin | 53.7 | % | — | 53.7 | % | 47.5 | % | — | 47.5 | % | |||||||||||||||||
EBITDA | 225.9 | 5.1 | 231.0 | 206.9 | 3.1 | 210.0 | 10 | % | |||||||||||||||||||
Entertainment: | |||||||||||||||||||||||||||
External Net Revenues (4) | $ | 185.2 | $ | — | $ | 185.2 | $ | 226.7 | $ | — | $ | 226.7 | -18 | % | |||||||||||||
Operating Profit | 14.3 | 8.7 | 23.0 | (113.7 | ) | 123.6 | 9.9 | >100% | |||||||||||||||||||
Operating Margin | 7.7 | % | 4.7 | % | 12.4 | % | -50.2 | % | 54.5 | % | 4.4 | % | |||||||||||||||
EBITDA | 24.2 | 6.2 | 30.4 | (87.2 | ) | 106.7 | 19.5 | 56 | % | ||||||||||||||||||
Corporate and Other: | |||||||||||||||||||||||||||
Operating (Loss) Profit | $ | (14.3 | ) | $ | 3.6 | $ | (10.7 | ) | $ | (20.4 | ) | $ | 11.4 | $ | (9.0 | ) | -19 | % | |||||||||
EBITDA | (6.5 | ) | 3.2 | (3.3 | ) | (6.8 | ) | 12.2 | 5.4 | >-100% |
Quarter Ended | |||||||||
June 26, 2022 | June 27, 2021 | % Change | |||||||
(1) Net Revenues by Brand Portfolio | |||||||||
Franchise Brands (i) | $ | 743.9 | $ | 677.2 | 10 | % | |||
Partner Brands | 219.4 | 212.0 | 3 | % | |||||
Hasbro Gaming (ii) | 125.8 | 147.1 | -14 | % | |||||
Emerging Brands (i) | 92.0 | 89.7 | 3 | % | |||||
TV/Film/Entertainment | 158.1 | 196.2 | -19 | % | |||||
Total | $ | 1,339.2 | $ | 1,322.2 | |||||
(i) Effective in the first quarter of 2022, the Company moved PEPPA PIG into Franchise Brands from Emerging Brands. For comparability, the quarter ended June 27, 2021 net revenues have been restated to reflect the elevation of PEPPA PIG from Emerging Brands into Franchise Brands resulting in a change of $27.3. | |||||||||
(ii) Hasbro’s total gaming category, including all gaming revenue, most notably MAGIC: THE GATHERING and MONOPOLY, totaled $528.3 for the quarter ended June 26, 2022, up 1.7% from revenues of $519.4 for the quarter ended June 27, 2021. | |||||||||
Quarter Ended | |||||||||
June 26, 2022 | June 27, 2021 | % Change | |||||||
(2) Consumer Products Segment Net Revenues by Major Geographic Region | |||||||||
North America | $ | 433.3 | $ | 391.4 | 11 | % | |||
Europe | 162.1 | 176.5 | -8 | % | |||||
Asia Pacific | 66.6 | 68.4 | -3 | % | |||||
Latin America | 72.2 | 52.9 | 36 | % | |||||
Total | $ | 734.2 | $ | 689.2 | |||||
Quarter Ended | |||||||||
June 26, 2022 | June 27, 2021 | ||||||||
(3) Wizards of the Coast and Digital Gaming Net Revenues by Category | |||||||||
Tabletop Gaming | $ | 361.8 | $ | 315.4 | 15 | % | |||
Digital and Licensed Gaming | 58.0 | 90.9 | -36 | % | |||||
Total | $ | 419.8 | $ | 406.3 | |||||
Quarter Ended | |||||||||
June 26, 2022 | June 27, 2021 | % Change | |||||||
(4) Entertainment Segment Net Revenues by Category | |||||||||
Film and TV | $ | 148.2 | $ | 164.3 | -10 | % | |||
Family Brands | 22.8 | 26.1 | -13 | % | |||||
Music and Other | 14.2 | 36.3 | -61 | % | |||||
Total | $ | 185.2 | $ | 226.7 |
Operating Results | |||||||||||||||||||||||||||
Six Months Ended June 26, 2022 | Six Months Ended June 27, 2021 | ||||||||||||||||||||||||||
As Reported | Non-GAAP Adjustments |
Adjusted | As Reported | Non-GAAP Adjustments |
Adjusted | % Change |
|||||||||||||||||||||
Total Company Results | |||||||||||||||||||||||||||
External Net Revenues (5) | $ | 2,502.3 | $ | — | $ | 2,502.3 | $ | 2,437.0 | $ | — | $ | 2,437.0 | 3 | % | |||||||||||||
Operating Profit | 339.1 | 43.7 | 382.8 | 223.9 | 161.8 | 385.7 | -1 | % | |||||||||||||||||||
Operating Margin | 13.6 | % | 1.7 | % | 15.3 | % | 9.2 | % | 6.6 | % | 15.8 | % | |||||||||||||||
EBITDA | 459.4 | 41.0 | 500.4 | 394.8 | 146.8 | 541.6 | -8 | % | |||||||||||||||||||
Segment Results | |||||||||||||||||||||||||||
Consumer Products: | |||||||||||||||||||||||||||
External Net Revenues (6) | $ | 1,407.0 | $ | — | $ | 1,407.0 | $ | 1,343.1 | $ | — | $ | 1,343.1 | 5 | % | |||||||||||||
Operating Profit | 2.1 | 19.9 | 22.0 | 50.1 | — | 50.1 | -56 | % | |||||||||||||||||||
Operating Margin | 0.1 | % | 1.4 | % | 1.6 | % | 3.7 | % | — | 3.7 | % | ||||||||||||||||
EBITDA | 83.1 | 15.9 | 99.0 | 106.0 | 14.6 | 120.6 | -18 | % | |||||||||||||||||||
Wizards of the Coast and Digital Gaming: | |||||||||||||||||||||||||||
External Net Revenues (7) | $ | 682.6 | $ | — | $ | 682.6 | $ | 648.5 | $ | — | $ | 648.5 | 5 | % | |||||||||||||
Operating Profit | 332.0 | — | 332.0 | 302.9 | — | 302.9 | 10 | % | |||||||||||||||||||
Operating Margin | 48.6 | % | — | 48.6 | % | 46.7 | % | — | 46.7 | % | |||||||||||||||||
EBITDA | 333.5 | 9.7 | 343.2 | 319.2 | 5.7 | 324.9 | 6 | % | |||||||||||||||||||
Entertainment: | |||||||||||||||||||||||||||
External Net Revenues (8) | $ | 412.7 | $ | — | $ | 412.7 | $ | 445.4 | $ | — | $ | 445.4 | -7 | % | |||||||||||||
Operating (Loss) Profit | 26.5 | 17.5 | 44.0 | (96.7 | ) | 148.5 | 51.8 | -15 | % | ||||||||||||||||||
Operating Margin | 6.4 | % | 4.2 | % | 10.7 | % | -21.7 | % | 33.3 | % | 11.6 | % | |||||||||||||||
EBITDA | 50.1 | 11.7 | 61.8 | (19.0 | ) | 110.8 | 91.8 | -33 | % | ||||||||||||||||||
Corporate and Other: | |||||||||||||||||||||||||||
Operating (Loss) Profit | $ | (21.5 | ) | $ | 6.3 | $ | (15.2 | ) | $ | (32.4 | ) | $ | 13.3 | $ | (19.1 | ) | 20 | % | |||||||||
EBITDA | (7.3 | ) | 3.7 | (3.6 | ) | (11.4 | ) | 15.7 | 4.3 | >-100% | |||||||||||||||||
Six Months Ended | |||||||||
June 26, 2022 | June 27, 2021 | % Change | |||||||
(5) Net Revenues by Brand Portfolio | |||||||||
Franchise Brands (i) | $ | 1,287.0 | $ | 1,200.3 | 7 | % | |||
Partner Brands | 425.9 | 400.0 | 6 | % | |||||
Hasbro Gaming (ii) | 269.4 | 283.4 | -5 | % | |||||
Emerging Brands (i) | 168.4 | 162.8 | 3 | % | |||||
TV/Film/Entertainment | 351.6 | 390.5 | -10 | % | |||||
Total | $ | 2,502.3 | $ | 2,437.0 | |||||
(i) Effective in the first quarter of 2022, the Company moved PEPPA PIG into Franchise Brands from Emerging Brands. For comparability, the six months ended June 27, 2021 net revenues have been restated to reflect the elevation of PEPPA PIG from Emerging Brands into Franchise Brands resulting in a change of $58.9. | |||||||||
(ii) Hasbro’s total gaming category, including all gaming revenue, most notably MAGIC: THE GATHERING and MONOPOLY, totaled $907.1 for the year ended June 26, 2022, up 2.5% from revenues of $884.7 for the year ended June 27, 2021. | |||||||||
Six Months Ended | |||||||||
June 26, 2022 | June 27, 2021 | % Change | |||||||
(6) Consumer Products Segment Net Revenues by Major Geographic Region | |||||||||
North America | $ | 838.5 | $ | 754.1 | 11 | % | |||
Europe | 338.8 | 365.0 | -7 | % | |||||
Asia Pacific | 118.8 | 133.2 | -11 | % | |||||
Latin America | 110.9 | 90.8 | 22 | % | |||||
Total | $ | 1,407.0 | $ | 1,343.1 | |||||
Six Months Ended | |||||||||
June 26, 2022 | June 27, 2021 | ||||||||
(7) Wizards of the Coast and Digital Gaming Net Revenues by Category | |||||||||
Tabletop Gaming | $ | 554.0 | $ | 490.7 | 13 | % | |||
Digital and Licensed Gaming | 128.6 | 157.8 | -19 | % | |||||
Total | $ | 682.6 | $ | 648.5 | |||||
Six Months Ended | |||||||||
June 26, 2022 | June 27, 2021 | % Change | |||||||
(8) Entertainment Segment Net Revenues by Category | |||||||||
Film and TV | $ | 338.4 | $ | 330.7 | 2 | % | |||
Family Brands | 46.0 | 44.9 | 2 | % | |||||
Music and Other | 28.3 | 69.8 | -59 | % | |||||
Total | $ | 412.7 | $ | 445.4 |
HASBRO, INC. | ||||||||||||||||
SUPPLEMENTAL FINANCIAL DATA | ||||||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(Millions of Dollars) | ||||||||||||||||
Reconciliation of Adjusted Operating Profit | ||||||||||||||||
Quarter Ended | Six Months Ended | |||||||||||||||
June 26, 2022 | June 27, 2021 | June 26, 2022 | June 27, 2021 | |||||||||||||
Operating Profit (Loss) | $ | 219.1 | $ | 76.6 | $ | 339.1 | $ | 223.9 | ||||||||
Consumer Products | (6.5 | ) | 17.8 | 2.1 | 50.1 | |||||||||||
Wizards of the Coast and Digital Gaming | 225.6 | 192.9 | 332.0 | 302.9 | ||||||||||||
Entertainment | 14.3 | (113.7 | ) | 26.5 | (96.7 | ) | ||||||||||
Corporate and Other | (14.3 | ) | (20.4 | ) | (21.5 | ) | (32.4 | ) | ||||||||
Non-GAAP Adjustments (1) | $ | 21.9 | $ | 135.0 | $ | 43.7 | $ | 161.8 | ||||||||
Consumer Products (ii) | 9.6 | — | 19.9 | — | ||||||||||||
Entertainment (ii) | 8.7 | 123.6 | 17.5 | 148.5 | ||||||||||||
Corporate and Other | 3.6 | 11.4 | 6.3 | 13.3 | ||||||||||||
Adjusted Operating Profit (Loss) | $ | 241.0 | $ | 211.6 | $ | 382.8 | $ | 385.7 | ||||||||
Consumer Products | 3.1 | 17.8 | 22.0 | 50.1 | ||||||||||||
Wizards of the Coast and Digital Gaming | 225.6 | 192.9 | 332.0 | 302.9 | ||||||||||||
Entertainment | 23.0 | 9.9 | 44.0 | 51.8 | ||||||||||||
Corporate and Other | (10.7 | ) | (9.0 | ) | (15.2 | ) | (19.1 | ) | ||||||||
(1) Non-GAAP Adjustments include the following: | ||||||||||||||||
Acquisition-related costs (i) | $ | 3.6 | $ | 1.9 | $ | 6.3 | $ | 3.8 | ||||||||
Acquired intangible amortization (ii) | 18.3 | 21.8 | 37.4 | 46.7 | ||||||||||||
Loss on assets held for sale and related costs (iii) | — | 111.3 | — | 111.3 | ||||||||||||
Total | $ | 21.9 | $ | 135.0 | $ | 43.7 | $ | 161.8 | ||||||||
(i) In association with the Company’s acquisition of eOne, the Company incurred stock compensation expenses of $3.6 ($3.2 after-tax) and $6.3 ($5.6 after-tax) in the quarter and year ended June 26, 2022, respectively, and $1.9 ($1.6 after-tax) and $3.8 ($3.3 after-tax) in the quarter and year ended June 27, 2021, respectively. The expense is included within Selling, Distribution and Administration. | ||||||||||||||||
(ii) Represents intangible amortization costs related to the intangible assets acquired in the eOne acquisition. Beginning in 2022, the Company has allocated certain of these intangible amortization costs between the Consumer Products and Entertainment segments, to match the revenue generated from such intangible assets. In 2021, the intangible amortization costs were recorded within the Entertainment segment. | ||||||||||||||||
(iii) On April 25, 2021, the Company entered into a definitive agreement to sell the eOne music business for an aggregate sales price of $385.0, subject to certain closing adjustments related to working capital and net debt. As such, the assets and liabilities of eOne music were revalued in the second quarter of 2021 and disclosed separately on the balance sheet. The charge of $111.3 is comprised of a goodwill impairment loss of $101.8 (included within Loss on Assets Held for Sale) and transaction costs of $9.5 (included within Selling, Distribution and Administration). The after-tax combined charge is $109.1. |
HASBRO, INC. | ||||||||||||||||
SUPPLEMENTAL FINANCIAL DATA | ||||||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(Millions of Dollars) | ||||||||||||||||
Reconciliation of EBITDA and Adjusted EBITDA | ||||||||||||||||
Quarter Ended | Six Months Ended | |||||||||||||||
June 26, 2022 | June 27, 2021 | June 26, 2022 | June 27, 2021 | |||||||||||||
Net Earnings Attributable to Hasbro, Inc. | $ | 142.0 | $ | (22.9 | ) | $ | 203.2 | $ | 93.3 | |||||||
Interest Expense | 41.7 | 46.1 | 83.3 | 94.0 | ||||||||||||
Income Tax Expense | 39.4 | 63.0 | 56.7 | 75.0 | ||||||||||||
Net Earnings Attributable to Noncontrolling Interests | (1.5 | ) | 1.0 | 0.2 | 2.3 | |||||||||||
Depreciation | 36.6 | 42.6 | 61.7 | 67.6 | ||||||||||||
Amortization of Intangibles | 27.2 | 29.7 | 54.3 | 62.6 | ||||||||||||
EBITDA | $ | 285.4 | $ | 159.5 | $ | 459.4 | $ | 394.8 | ||||||||
Non-GAAP Adjustments and Stock Compensation (1) | 22.9 | 130.1 | 41.0 | 146.8 | ||||||||||||
Adjusted EBITDA | $ | 308.3 | $ | 289.6 | $ | 500.4 | $ | 541.6 | ||||||||
(1) Non-GAAP Adjustments and Stock Compensation are comprised of the following: | ||||||||||||||||
Stock compensation | $ | 22.9 | $ | 18.8 | $ | 41.0 | $ | 35.5 | ||||||||
Loss on assets held for sale and related costs | — | 111.3 | — | 111.3 | ||||||||||||
Total | $ | 22.9 | $ | 130.1 | $ | 41.0 | $ | 146.8 | ||||||||
Adjusted EBITDA by Segment: | ||||||||||||||||
Consumer Products | $ | 50.2 | $ | 54.7 | $ | 99.0 | $ | 120.6 | ||||||||
Wizards of the Coast and Digital Gaming | 231.0 | 210.0 | 343.2 | 324.9 | ||||||||||||
Entertainment | 30.4 | 19.5 | 61.8 | 91.8 | ||||||||||||
Corporate and Other | (3.3 | ) | 5.4 | (3.6 | ) | 4.3 | ||||||||||
Total Adjusted EBITDA | $ | 308.3 | $ | 289.6 | $ | 500.4 | $ | 541.6 | ||||||||
Consumer Products: | ||||||||||||||||
Operating Profit | $ | (6.5 | ) | $ | 17.8 | $ | 2.1 | $ | 50.1 | |||||||
Other (Expense) Income | 5.6 | 1.5 | 6.4 | 7.7 | ||||||||||||
Depreciation | 25.5 | 19.5 | 39.4 | 32.6 | ||||||||||||
Amortization of Intangibles | 17.2 | 7.8 | 35.2 | 15.6 | ||||||||||||
EBITDA | $ | 41.8 | $ | 46.6 | $ | 83.1 | $ | 106.0 | ||||||||
Non-GAAP Adjustments and Stock Compensation | 8.4 | 8.1 | 15.9 | 14.6 | ||||||||||||
Adjusted EBITDA | $ | 50.2 | $ | 54.7 | $ | 99.0 | $ | 120.6 | ||||||||
Wizards of the Coast and Digital Gaming: | ||||||||||||||||
Operating Profit | $ | 225.6 | $ | 192.9 | $ | 332.0 | $ | 302.9 | ||||||||
Other (Expense) Income | (2.6 | ) | (0.6 | ) | (3.3 | ) | (0.9 | ) | ||||||||
Depreciation | 1.9 | 14.6 | 3.8 | 17.2 | ||||||||||||
Amortization of Intangibles | 1.0 | — | 1.0 | — | ||||||||||||
EBITDA | $ | 225.9 | $ | 206.9 | $ | 333.5 | $ | 319.2 | ||||||||
Non-GAAP Adjustments and Stock Compensation | 5.1 | 3.1 | 9.7 | 5.7 | ||||||||||||
Adjusted EBITDA | $ | 231.0 | $ | 210.0 | $ | 343.2 | $ | 324.9 | ||||||||
Entertainment: | ||||||||||||||||
Operating Profit | $ | 14.3 | $ | (113.7 | ) | $ | 26.5 | $ | (96.7 | ) | ||||||
Other (Expense) Income | (1.3 | ) | 2.3 | 0.6 | 25.6 | |||||||||||
Depreciation | 2.3 | 2.2 | 5.1 | 5.0 | ||||||||||||
Amortization of Intangibles | 8.9 | 22.0 | 17.9 | 47.1 | ||||||||||||
EBITDA | $ | 24.2 | $ | (87.2 | ) | $ | 50.1 | $ | (19.0 | ) | ||||||
Non-GAAP Adjustments and Stock Compensation | 6.2 | 106.7 | 11.7 | 110.8 | ||||||||||||
Adjusted EBITDA | $ | 30.4 | $ | 19.5 | $ | 61.8 | $ | 91.8 | ||||||||
HASBRO, INC. | ||||||||||||||
SUPPLEMENTAL FINANCIAL DATA | ||||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||||||||
(Unaudited) | ||||||||||||||
(Millions of Dollars and Shares, Except Per Share Data) | ||||||||||||||
Reconciliation of Net Earnings and Earnings per Share | ||||||||||||||
Quarter Ended | ||||||||||||||
(all adjustments reported after-tax) | June 26, 2022 | Diluted Per Share Amount |
June 27, 2021 | Diluted Per Share Amount |
||||||||||
Net Earnings Attributable to Hasbro, Inc. | $ | 142.0 | $ | 1.02 | $ | (22.9 | ) | $ | (0.17 | ) | ||||
Acquisition and Related Costs | 3.3 | 0.02 | 1.6 | 0.01 | ||||||||||
Acquired Intangible Amortization | 15.3 | 0.11 | 18.2 | 0.13 | ||||||||||
Loss on assets held for sale and related costs | — | — | 109.1 | 0.79 | ||||||||||
UK Tax Reform (1) | — | — | 39.4 | 0.29 | ||||||||||
Net Earnings Attributable to Hasbro, Inc., as Adjusted | $ | 160.6 | $ | 1.15 | $ | 145.4 | $ | 1.05 | ||||||
Six Months Ended | ||||||||||||||
(all adjustments reported after-tax) | June 26, 2022 | Diluted Per Share Amount |
June 27, 2021 | Diluted Per Share Amount |
||||||||||
Net Earnings Attributable to Hasbro, Inc. | $ | 203.2 | $ | 1.46 | $ | 93.3 | $ | 0.68 | ||||||
Acquisition and Related Costs | 5.6 | 0.04 | 3.3 | 0.02 | ||||||||||
Acquired Intangible Amortization | 31.2 | 0.22 | 38.7 | 0.28 | ||||||||||
Loss on assets held for sale and related costs | — | — | 109.1 | 0.79 | ||||||||||
UK Tax Reform (1) | — | — | 39.4 | 0.29 | ||||||||||
Net Earnings Attributable to Hasbro, Inc., as Adjusted | $ | 240.0 | $ | 1.72 | $ | 283.8 | $ | 2.05 | ||||||
(1) In the second quarter of 2021, the Company recorded income tax expense of $39.4 as a result of the revaluation of the Company’s UK deferred taxes in accordance with Finance Act 2021 enacted by the United Kingdom on June 10, 2021. Effective April 1, 2023, the new law increases the corporate income tax rate to 25% from 19%. |