Hasbro announced its financial results for the first quarter 2019. Net revenues for the first quarter 2019 increased 2 percent to $732.5 million compared to $716.3 million in 2018. Absent a negative $24.3 million impact of foreign exchange, first quarter 2019 revenues grew 6 percent.
Net earnings for the first quarter were $26.7 million, or $0.21 per diluted share, versus a net loss for the first quarter 2018 of $112.5 million, or $0.90 per diluted share. The 2018 reported net loss includes after-tax expenses of $61.4 million, primarily bad debt, attributed to Toys “R” Us; $15.7 million of severance costs associated with the company’s commercial organization transformation; and a net charge of $47.8 million related to U.S. tax reform. Excluding Non-GAAP Adjustments,Q1 2018 adjusted net earnings were $12.4 million ($0.10 per diluted share).
“The global Hasbro team is executing very well and delivered a good start to the year,” said Brian Goldner, Hasbro’s chairman and CEO. “Our long-term investments in new platforms provided a meaningful contribution from our digital and e-sports initiative, Magic: The Gathering Arena, as well as growth inMagic: The Gathering tabletop revenues. In addition, Monopoly, Play-Doh, and Transformers were among the brands posting revenue gains this quarter. We are beginning to see improvement in our commercial markets, notably in the U.S. and Europe, and operating profit was driven by high margin revenue growth and our cost savings activities. With most of the year ahead of us, we remain on track to deliver profitable growth for the full-year 2019.”
“In addition to executing on the top-line, our team remains focused on implementing the cost savings initiatives we announced last year,” said Deborah Thomas, Hasbro’s chief financial officer. “We continue to expect full-year net cost savings of $50-$55 million, as we announced in February. Our balance sheet is strong and we continue investing in areas intended to drive long-term profitable growth.”
Key Takeaways of the Report:
- Entertainment, Licensing and Digital segment net revenues increased 24 percent to $92.0 million compared to $74.4 million in 2018. Magic: The Gathering Arena and consumer products licensing revenue drove growth. Operating profit increased 75 percent to $30.0 million, or 32.6 percent of net revenues, versus $17.1 million, or 23 percent of net revenues in 2018. Operating profit gains were driven by higher revenues and lower program production amortization, partially offset by investments in advertising and product development for Magic: The Gathering digital gaming initiatives.
- Hasbro’s total gaming category, including all gaming revenue, most notably MTG and Monopoly, totaled $243.4 million for the first quarter 2019, up 20 percent, versus $203.5 million for the first quarter 2018. Hasbro Gaming revenue increased 2 percent to $107.6 million. Duel Masters, Connect 4, and Twister were among the games contributing to revenue growth for the category. Hasbro Gaming revenues increased in the U.S. and Canada and International segments, but declined in the Entertainment, Licensing and Digital segment.
- Franchise Brands revenue increased 9 percent to $393.6 million. MTG, Monopoly, Play-Doh, and Transformers revenues increased in the quarter. Franchise Brands revenue grew in the U.S. and Canada and Entertainment, Licensing and Digital segments, and were flat in the International segment.
- Partner Brand revenues declined 14 percent to $172.0 million. Revenue growth continued in Beyblade and initial shipments of UglyDolls. These revenue gains were more than offset by declines in several other brands, based on the timing of new entertainment initiatives coming into the market this year. Partner Brand revenues declined in the U.S. and Canada and International segments.
- Emerging Brands revenue increased 22 percent to $59.4 million behind revenue for quick strike collectibles, revenue growth in Supersoaker and Furreal Friends and initial shipments of Power Rangers in North America. Emerging Brands revenue grew in the U.S. and Canada and international segments, but declined in the Entertainment, Licensing and Digital segment.
For the full earning report, click here.