Hasbro Reports Q4 and Full-Year Results 2015
Hasbro, Inc., reported financial results for the full-year and fourth quarter 2015. Net revenues for the full-year 2015 increased 4 percent to $4.45 billion compared to $4.28 billion in 2014. Excluding a negative $394.5 million impact from foreign exchange, 2015 revenues increased 13 percent.
As reported net earnings for the full-year 2015 increased 9 percent to $451.8 million, or $3.57 per diluted share, compared to $415.9 million, or $3.20 per diluted share, in 2014. Adjusted net earnings for the full-year 2015 were $445 million, or $3.51 per diluted share, excluding a pre-tax gain of $9.6 million from the sale of Hasbro’s manufacturing operations in East Longmeadow, Mass. and Waterford, Ireland. This compares to adjusted net earnings for the full-year 2014 of $408.7 million, or $3.15 per diluted share. 2014 adjusted net earnings exclude pre-tax charges of $28.3 million associated with restructuring of the company’s joint venture television network and $5.2 million associated with other restructuring activities, which were more than offset by a pre-tax benefit of $36 million from the sale of licensed rights for intellectual property and $6.6 million in favorable tax adjustments related to tax exam settlements.
“Hasbro’s global teams delivered another year of revenue, operating profit, and earnings growth supported by our diversified brand portfolio, story-led initiatives, and strong global execution,” said Brian Goldner, Hasbro’s chairman, president, and CEO. “On a constant currency basis, our growth accelerated in 2015 and we began 2016 with positive momentum and good visibility to growth drivers for this year and beyond. In 2015, we overcame an unprecedented impact from foreign exchange translation, both on the top and bottom line, while driving strong consumer demand and engagement as well as gaining share in markets around the world.”
Fourth Quarter 2015 Financial Results
Fourth quarter 2015 net revenues increased 13 percent to $1.47 billion compared to $1.30 billion in 2014. Excluding a negative $128.1 million impact from foreign exchange, fourth quarter 2015 revenues increased 23 percent.
As reported net earnings for the fourth quarter 2015 were $175.8 million, or $1.39 per diluted share, compared to $169.9 million, or $1.34 per diluted share in 2014. Adjusted net earnings for the fourth quarter 2014 were $154.9 million, or $1.22 per diluted share. Fourth quarter 2014 adjusted net earnings exclude pre-tax charges of $16.8 million associated with restructuring of the company’s joint venture television network and $5.2 million associated with other restructuring activities which were more than offset by a pre-tax benefit of $36 million from the sale of licensed rights for intellectual property and $6.9 million in favorable tax adjustments related to tax exam settlements.
Full-Year 2015 Major Segment Performance
Full-year 2015 U.S. and Canada segment net revenues increased 10 percent to $2.23 billion compared to $2.02 billion in 2014. Growth in the Boys, Games, and Preschool categories offset a decline in the Girls category. The U.S. and Canada segment reported operating profit growth of 29 percent to $430.7 million, or 19.4 percent of net revenues, compared to $334.7 million, or 16.5 percent of net revenues, in 2014.
International Segment net revenues were $1.97 billion compared to $2.02 billion in 2014. Growth in the Boys and Preschool categories were more than offset by declines in the Games and Girls categories. On a regional basis, the negative impact of foreign currency resulted in revenue declines in Europe and Latin America, offsetting a 2 percent increase in Asia Pacific. Emerging markets revenues declined 9 percent in the year. Excluding an unfavorable $379.4 million impact of foreign exchange, net revenues in the International Segment grew 16 percent, increasing 18 percent in Europe, 15 percent in Latin America, and 11 percent in Asia Pacific. Emerging markets increased approximately 15 percent absent the impact of foreign exchange. Foreign exchange also negatively impacted operating profit. As reported, International Segment operating profit of $255.4 million was down 6 percent to 13 percent of net revenues, compared to $270.5 million, or 13.4 percent of net revenues, in 2014. Excluding the negative impact of foreign exchange, the International segment operating profit was $302.1 million, or 12.8 percent of net revenues, an increase of 12 percent versus 2014.
Entertainment and Licensing segment net revenues increased 11 percent to $244.7 million compared to $219.5 million in 2014. The segment benefited from a multi-year digital streaming deal for Hasbro Studios television programming signed during the first quarter 2015 and growth in consumer product licensing revenues. The Entertainment and Licensing segment reported 27 percent operating profit growth to $76.9 million, or 31.4 percent of revenues, compared to $60.6 million, or 27.6 percent of revenues, in 2014.
Fourth Quarter and Full-Year 2015 Product Category Performance
Full-year 2015 Boys category revenues increased 20 percent to $1.78 billion. Franchise brand Nerf revenues increased along with Star Wars, Jurassic World, and Marvel. This growth more than offset the decline in Transfomers, which faced difficult comparisons versus 2014’s theatrical release of Transformers: Age of Extinction. The Boys category grew 30 percent absent the impact of foreign exchange.
Games category revenues increased 1 percent for the year to $1.28 billion. Franchise brands Magic: The Gathering and Monopoly as well as Pie Face and several other games brands contributed to growth for the year. The Games category grew 8 percent absent the impact of foreign exchange.
Girls category revenues declined 22 percent in 2015 to $798.2 million. As was the case throughout 2015, Furby represented the largest revenue decline. Core My Little Pony revenues increased, but were offset by declines in Equestria Girls. Revenue growth in Play-Doh DohVinci as well as the introduction of Disney’s Descendents partially offset category revenue declines. Modest initial shipments for Disney Princess and Disney’s Frozen commenced during the fourth quarter. The bulk of initial shipments are occurring in the first quarter 2016 with product now available in the U.S. and rolling out internationally. The Girls category declined 13 percent absent the impact of foreign exchange.
Preschool category revenues increased 17 percent to $596.8 million for the full-year 2015. Franchise brand Play-Doh contributed the greatest revenue growth, further supported by gains in Jurassic World, Star Wars, and the launch of Playskool Friends My Little Pony. The Preschool category grew 28 percent absent the impact of foreign exchange.
Dividend and Share Repurchase
In 2015, Hasbro returned $310.7 million to shareholders including $225.8 million in cash dividends. Hasbro’s board of directors has declared a quarterly cash dividend of $0.51 per common share. This represents an increase of $0.05 per share, or 11 percent, from the previous quarterly dividend of $0.46 per common share. The dividend will be payable on May 16, 2016, to shareholders of record at the close of business on May 2, 2016.
In 2015, Hasbro repurchased 1.25 million shares at a total cost of $84.9 million and an average price of $68.01 per share. At year-end, $479.3 million remained available in the current share repurchase authorization.
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