Tag: financial

Inside the Numbers: Hasbro’s Q3 Earnings

Whatever way you look at the box office receipts from My Little Pony:  The Movie, one metric in which Hasbro does measure the success of the movie is in toy sales. On that end, it is doing its job. MLP broke its quarterly losing streak in the 3rd quarter as it was listed as one of the franchise brands leading Hasbro’s growth in the quarter alongside Nerf, Transformers, and Monopoly. Franchise Brands increased 7% as a whole while Gaming (which also included Monopoly) rose 22%. Emerging Brands were up 9% led by gains in Furreal Friends and Baby Alive. Partner Brands declined by 2% as gains in Star Wars, Sesame Street, Beyblade, and Disney Descendants were offset by declines in Yokai Watch and Dreamworks’ Trolls.

Hasbro as a whole grew revenues by 7% while operating profit was relatively flat and was negatively impacted by the recent bankruptcy filing of Toys R Us. Hasbro is reported to receive 9% of its revenue from sales at Toys R U and is exposed to $60 million of the toy retailer’s $5 billion debt in terms of unsecured claims for payment.

“My Little Pony revenue increased behind the release of MY LITTLE PONY: THE MOVIE and successfully drove point-of-sale gains around the movie debut,” said Hasbro CEO Brian Goldner as transcribed by Seeking Alpha. “Our content to commerce model delivers multiple revenue streams, including entertainment and merchandise and we are well positioned in our investment.

“The film was successful in reinvigorating and energizing our core consumer base and our fan base, while inviting new fans into the brand. The film is yet to be released in a number of international markets and will be followed by the Home Entertainment window, an important element of expanding the audience.”

Goldner also shared that the movie was made on “modest budget” and that Lionsgate pre-sells the film in “substantial part of the global marketplace” and self-distribute in the UK and most of Latin America.

“The rest of the markets they are pre-selling, so you get that recoupment right up front around your production expense,” Goldner continued. “The movie itself, if you take it through the waterfall should be a contributor to the company over time. Obviously, it may not occur in the — by the fourth quarter this year, because obviously our expenses for producing the movie will hit in the fourth quarter this year, but again, remember it’s a modest budget. However, all the streams of income that it’s creating, including consumer products are toys and games business. The digital game that’s performing at a very high-level from Budge Studios and new games that are coming we think it’s a great model for the brand. And of course we continue with the 7th season of the television that’s appearing globally on linear television services as well as in stream services, it’s a very strong performer on Netflix and other services. We see this as a very good model for us go forward.”

Goldner still has belief in the model for MLP going into 2018 and thinks “the team is beginning to think about what our next movie might look like” and that brand will continue to halo strongly. Goldner also stated in the earnings call that revenues for MLP year-to-date are also now on the plus side.

Because of the Toys R Us bankruptcy, Hasbro expects more modest growth in the fourth quarter. However, they also expect MLP to be a big player in the months ahead as MLP heads to video in the near future and the show enters its eighth season in 2018. We are not certain as to interpret Mr. Goldner’s comments about what the ’next movie’ he mentioned will be a new MLP Movie, though fans wouldn’t mind that in the slightest. He feels that there was enough to reinvigorate the core consumer base and fan base, so we’ll see what happens over the next couple of quarters.

StatManDan

Inside the Numbers: Hasbro’s Q2 Earnings

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On Monday, Hasbro released their second quarter earnings for 2015. Hasbro beat street estimated by reporting $797.7 million dollars in revenue for the quarter whereas analysts expected somewhere closer to $775M. That former number is actually off 4% from this time last year, but would’ve been up 5% absent a negative $71.5M foreign currency exchange impact in the quarter. An example of this was that the Canadian Dollar was $0.82 USD back on April 20th. As of July 20th, it is down to $0.77 USD. The Euro was worth about $1.20 USD on New Year’s Day. It is now $1.08 USD as of July 20th. Hasbro was very much buoyed by sales from toys tying into Jurassic World, Marvel, and the upcoming Star Wars movie.

It was that FX impact that negatively impacted certain segments. The seven franchise brands (Littlest Pet Shop, Magic: The Gathering, Monopoly, My Little Pony, Nerf, Play-Doh, and Transformers) as a whole were down for the second quarter, though up for the first half. Again excluding the FX impact, five of the seven brands—including LPS and MLP—were up in the period. As expected Transformers (no movie) and Magic: The Gathering (release shift) declined in the quarter.

The Girls’ department fell 22% in the quarter again with Furby the main culprit. The Boys’ department went up 1% on the aforementioned properties and Nerf. Games declined 6%. And Preschool, led by Play-Doh, jumped 14%.

It was Play-Doh, Nerf, Monopoly, and LPS that were up individually despite the FX impact for both the second quarter and first half of the year. Magic: The Gathering was up overall for the first half as well. Transformers’ decline in both half and quarter was anticipated.

With MLP, there’s a bit of a mixed bag. According to Hasbro CEO Brain Goldner, sales declined for the second quarter and first half compared to this time last year (ending a long streak of quarterly gains going back to before 2012), but absent the FX impact, MLP actually gained grew in these periods. Goldner also stated that point-of-sale increased ‘meaningfully in nearly every country they track’ and that the “Cutie Mark Magic” theme is off to a great start and is optimistic about the Equestria Girls movie “Friendship Games” coming out in September. Both MLP and LPS grew in the US and Canada for the quarter.

During the earnings release, there was a question regarding the upcoming Jem and the Hollograms movie to Mr. Goldner, and part of the response included some tidbits about the upcoming MLP movie set for a 2017 release.

The question from Drew E. Crum of Stifel, Nicolaus & Co. was regarding any updates on Jem regarding release date, product initiatives, and the pipeline of content for Allspark Productions (Hasbro’s movie wing).

Below is Mr. Goldner’s response as transcribed by Seeking Alpha:

“The date is October 23 for [Jem],” said Goldner. “We’ve already gotten some very positive feedback from audiences. As you know, early you get feedback and make sure you’re on the right track. We’re feeling very excited about the movie and we’ll have a range of licensed product and some collector-oriented toys during the launch of the film, a great program from Sephora and several other licensees. But it’s really our first step in reintroducing JEM AND THE HOLOGRAMS to audiences around the world and we’ll build momentum around product, particularly toy product, as we move beyond the film, so not for this year but into the next couple of years.

“And as you look at Allspark, the next major production is the MY LITTLE PONY animated film, which will come out in 2017. We’ll announce a distributor shortly for that film. And again, we are able to make that movie for more of a nominal cost than a traditional animated film given all of our experience and expertise in animated television production, although this certainly will be on scale with all the other animated films you’ve seen in terms of quality and the look and the feel of the movie. The music as well as the cast is quite good but I won’t steal the team’s thunder. They’ll announce some of that shortly. And that will be the next project from Allspark.”

Hasbro’s stock price on Monday rose $4.90 to $83.15/share, which nearly quadruple’s rival Mattel’s stock price which now stands at $24.31/share. Hasbro’s market cap now stands at over $10.35 billion compared to Mattel’s $8.12B. Last Thursday, Mattel posted favorable earnings, though sales of Barbie fell by 19%.

INSIGHT:  Hasbro has every reason to be bullish about the future with the new Star Wars movie coming up and getting the Disney Princess line in 2016 to compliment the Marvel partnership. LPS continues to quietly show growth in sales, while the company remains optimistic on MLP for the future and expect big things in the Fall with both “Friendship Games” and likely the second half of Season Five. It’s just that foreign exchange rates were quite unfavorable for the quarter and first half of the year.

StatManDan