Hasbro (HAS, Financial) is a global company with toy brands including Littlest Pet Shop, Magic: The Gathering, Monopoly, My Little Pony, Nerf, Play-Doh, Transformers and premier partner brands. From toys and games to television programming, motion pictures, digital gaming and a comprehensive lifestyle licensing program, Hasbro fulfils the fundamental need for play and connection for children and families around the world.Â
The company’s Hasbro Studios creates entertainment brand-driven storytelling across mediums, including television, film and more.Â
The company recently reported strong second quarter results with growth in operating profits, revenues and net earnings. It boasts of a strong balance sheet including high quality inventory and $924 million in cash.
Second quarter results
U.S. and Canada net revenues increased by 11% and were $425.9 million, up from $385.2 million in the prior year quarter. The segment reported operating profit growth of 23% and was $58.0 million, or 13.6% of net revenues.
International segment net revenues increased by 11% and were $401.1 million, up from $362.8 million in the prior year quarter. On a regional basis, Europe grew 23%, Latin America declined 1% and Asia Pacific was down 4%. Emerging markets revenues increased 5% in the quarter. As reported, International segment operating profit was $29.7 million or 7.4% of net revenues during the quarter.
Entertainment and Licensing segment net revenues increased by 9% and were $51.9 million. Operating profit increased by 86% and was $13.8 million, or 26.6% of net revenues.
Second quarter 2016 Boys category revenues increased by 4% and were $355.1 million. Games category revenues for the quarter increased by 8% and were $227.7 million. Girls category revenues increased by 35% and were $172.3 million during the quarter. Preschool category revenues increased by 5% and were $123.9 million during the second quarter.
Capital allocation
The company paid $63.9 million in cash dividends to shareholders during the second quarter. It paid 51 cents per common share on Aug. 15.
During the second quarter, Hasbro repurchased 270,611 shares of common stock at a total cost of $21.9 million and an average price of $81.00 per share. Through the first two quarters, the company repurchased 745,611 shares of common stock at a total cost of $57.8 million and an average price of $77.44 per share. At quarter-end, $421.5 million remained available in the current share repurchase authorization.Â
Focus:
- Building brands.
- Telling great stories and creating the best play experiences in toys, games, digital gaming and consumer products.
- The company’s initiatives for the second half of the year include innovative offerings for Hasbro Franchise Brands and Partner Brands.
- It is strategically investing to drive long-term growth and the execution of its strategy.
- Improving operational efficiencies and profitability.
Expansion
The company has opened new offices in Dubai, South Africa and Thailand. It is also making its presence felt in high-priority markets like Brazil, Russia and China. This strategy is not only delivering revenue gains, but also driving higher levels of profitability. The company’s brands are connected with more consumers across the globe. It is also effectively expanding its base through brand activation beyond toys and games. Hasbro’s consumer products presence outside the toy and game aisle is growing and now represents more than $2 billion at retail.
Conclusion
The company has been able to deliver another high quality quarter. The innovative offerings are driving strong consumer and retailer demand for the brands globally. The company is building capabilities to execute its strategies well. It continues to invest in emerging markets that hold opportunities for the company.
The demand for its brands is quite strong and has positioned Hasbro for long term success. The company’s financial performance is enough to help Hasbro grow over the long term while continuing its long-standing commitment of returning cash to shareholders. I think adding this company is going to create shareholder returns.
Disclosure: I do not hold any position in the company.
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