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Hasbro Reports Fourth Quarter and Full-Year 2020 Financial Results

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Hasbro, Inc., a global play and entertainment company, reported financial results for the fourth quarter and full-year 2020. 2019 pro forma results reflect the combination of the results of Hasbro and Entertainment One Ltd. (eOne) for periods prior to Hasbro’s acquisition of eOne at the start of the first quarter of 2020.

In the fourth quarter of 2020, Net revenues increased 4% to $1.72 billion, including a favorable $12.2 million impact of foreign exchange. U.S. and Canada segment revenues were up 16%; eOne segment revenues were up 10%. Revenues were up 21% in Hasbro Gaming and 27% across the total gaming category, 20% in TV/Film/Entertainment and 7% in Franchise Brands.

For the full year of 2020, net revenues of $5.47 billion decreased 8%, including an unfavorable $16.2 million impact of foreign exchange. Revenue grew 4% in the U.S. and Canada segment. Revenue was up 15% in Hasbro Gaming and the total gaming category

“In 2020, we lived our purpose of making the world a better place for all children and all families. In what was a most challenging year, the global Hasbro team fully demonstrated its resilience, tenacity, creativity, flexibility, and empathy,” said Brian Goldner, Hasbro’s chairman and chief executive officer. “Our teams successfully drove demand for several product categories across our portfolio including our entire gaming portfolio from Wizards of the Coast brands to face-to-face gaming. They found ways to reach the global consumer despite retail closures throughout the year, delivering over $1 billion in ecomm revenues for the first time. We leveraged our global supply chain capabilities and our evolving geographic manufacturing supplier base to get products made and distributed. We integrated our acquisition of eOne and while live-action TV and film production was limited, we made substantial progress developing Hasbro IP for storytelling that we believe will lead to enhanced revenues and earnings power from Hasbro brands from multiple income streams. We developed toy and game lines for valuable preschool brands PEPPA PIG and PJ MASKS to launch later this year. We concentrated on managing expenses and cash, growing adjusted operating profit margin and finishing the year with $1.45 billion in cash on our balance sheet.

“Importantly, we focused on our numerous communities, including our most important Hasbro community of employees worldwide and their families,” continued Goldner. “This emphasis included engaging on critically important issues of racial equality and justice, and a company-wide re-commitment to diversity, inclusion, and engagement. We are on strong footing to grow in 2021 as we continue to navigate through COVID-19 and leverage our unparalleled portfolio of brands and capabilities in consumer products, gaming and entertainment.”

“Throughout 2020, the global Hasbro team did an excellent job executing in a challenging environment,” said Deborah Thomas, Hasbro’s chief financial officer. “In the fourth quarter, we grew revenues and adjusted operating profit, overcoming tough comparisons within the Partner Brand category and last year’s theatrical releases. Our focus on working capital and expense management delivered $976.3 million in operating cash flow for the year, and as part of our commitment to paying down our debt, we repaid $123 million of the debt that we raised to finance the eOne acquisition. We continue to see strong retail, consumer and audience support for our brands and content as we look to the coming year. Global point of sale increased last year, despite lockdowns and retail disruption, and 2021 is starting with strong year-over-year momentum.”

Fourth quarter 2020revenues grew 4% (3% on a constant currency basis) behind gains in the U.S. and Canada segment, as well as the eOne segment. This included growth in Franchise Brands MAGIC: THE GATHERING, MONOPOLY and NERF; Hasbro products for Lucasfilm’s Star Wars and The Mandalorian; and Hasbro Gaming across many games in the gaming portfolio, including DUNGEONS AND DRAGONS. Revenues for Hasbro’s products for Disney’s Frozen 2 declined when compared to product revenues related to 2019’s theatrical release. The return to production in TV and film drove improved deliveries and revenue growth for eOne.

  • U.S. and Canada segment revenue and operating profit grew due to gains in Franchise Brands, Hasbro Gaming and Emerging Brands. Operating profit grew primarily as a result of higher revenues and the favorable mix of those revenues, including MAGIC: THE GATHERING.
  • International segment revenues and operating profit declined, driven by declines in Latin America and Asia. Revenues grew in the European region. For the segment, Hasbro Gaming revenue grew as did MAGIC:THE GATHERING and Star Wars. The International segment operating profit declined as result of the lower revenues and efforts to clear retail inventory in Latin America. This was partially offset by favorable product mix in Europe and cost management throughout the segment.
  • Entertainment, Licensing and Digital segment revenues declined on lower consumer products revenues as well as lower entertainment revenues compared to 2019 which included the Transformers Bumblebee film revenue, partially offset by growth in digital gaming. Operating profit decreased due to lower revenues, partially offset by growth in licensed digital gaming and cost management.
  • eOne segment pro forma revenues increased for the quarter as live-action TV and film production resumed. 2020 operating profit included $34.7 million of acquisition and related charges, and $25.5 million of purchased intangible amortization associated with the fair value of acquired intangible assets. 2019 pro forma operating profit included $24.6 million of purchased intangible amortization, $11.5 million of prior restructuring and other costs and $0.5 million of acquisition and related costs. Excluding these items, adjusted pro forma operating profit for the eOne segment was $46.0 million, an increase of $80.8 million, on higher revenues and lower advertising expense.

For the full-year 2020, revenues declined 8% on an as reported and constant currency basis. This reflected growth in the U.S. and Canada segment, but declines in all other segments. Franchise Brands MAGIC: THE GATHERING and MONOPOLY grew as did revenue in Hasbro Gaming across many gaming brands, including DUNGEONS AND DRAGONS. Hasbro products for Lucasfilm’s Star Wars and The Mandalorian also contributed to growth for the yearWhile TV and film production was limited, the teams have a robust development slate of over 200 active scripted television and film projects including more than 30 Hasbro properties. Full-year results were impacted by COVID-19 related shutdowns globally at retail, in manufacturing and in live-action entertainment.

  • U.S. and Canada segment revenue and operating profit grew due to gains in Franchise Brands, led by MAGIC: THE GATHERING, and Hasbro Gaming. Operating profit increased on favorable product mix partially offset by higher freight costs for increased domestic shipments in the U.S. and higher product development and other costs at Wizards of the Coast to support future digital game launches.
  • International segment revenues and operating profit declined, primarily driven by declines in Latin America and Asia. European region revenues were flat. Hasbro Gaming revenues increased, as did MAGIC: THE GATHERING revenues. The International segment operating profit declined as result of the lower revenues partially offset by lower spending, most notably in advertising and marketing, as well as lower royalties.
  • Entertainment, Licensing and Digital segment revenues declined led by declines in entertainment as compared to 2019 which included the Transformers Bumblebee film revenue and declines in licensed consumer products revenues. 2020 operating profit included $20.8 million for acquisition and related costs. Adjusted operating profit increased to $113.8 million behind growth in higher margin licensed digital gaming and cost savings.
  • eOne segment pro forma revenues declined for the year primarily due to lower TV and Film revenues due to COVID-19 related shut downs during the year of live-action productions and theaters, as well as lower Family Brands revenue due to retail disruption. For the eOne segment, full-year 2020 operating profit included $112.4 million of acquisition and integration costs and $97.9 million of purchased intangible amortization associated with the fair value of acquired intangible assets. Full-year 2019 pro forma operating profit included $98.4 million of purchased intangible amortization, $33.4 million of prior restructuring and other costs and $11.2 million of acquisition and related costs. Adjusted pro forma operating profit for the eOne segment decreased to $131.1 million due to the decline in revenues, partially offset by lower advertising and royalty expense.