Hasbro Beats Earnings and Revs in 1Q - Analyst Blog
22 Abril 2013 - 6:15AM
Zacks
Hasbro Inc.’s (HAS) first-quarter 2013 adjusted
earnings per share of 5 cents beat the Zacks Consensus Estimate by
66.7% and increased 25.0% year over year. Top-line growth combined
with adjusted operating margin expansion led to the year-over-year
growth in earnings.
However, on a reported basis, including restructuring charges and
favorable tax adjustments, the company posted loss per share of 5
cents, wider than the year-earlier loss of 2 cents per share.
Hasbro’s net revenues of $663.7 million grew 2.2% from the year-ago
quarter and beat the Zacks Consensus Estimate of $641.0 million.
Revenues include a negative $3.3 million impact from currency
translation. The Games, Girls and Preschool product categories were
the major contributors to the top-line growth.
Behind the Headline Numbers
Hasbro’s product segments comprise Girls, Games, Boys and Preschool
categories. Revenues at the Games
category grew 26% to $230.9 million. Magic: The Gathering, Boys
Action Gaming, Angry Birds Star Wars and Transformers games
performed well in the reported quarter.
The Girls category surged 23.0% to $114.8
million year over year. Products such as The Furby, My Little Pony
and One Direction supported revenue growth.
The Preschool category saw an 8% increase
in revenues to $75.2 million driven by Play-Doh and Playskool
Heroes brands.
Despite decent performance of Marvel, Nerf and G.I. Joe products,
the Boys category fell 20% to $242.8
million due to sluggish performance of several other brands.
Segment-wise, net revenues from the U.S. and
Canada segments grew 4% year over year to $342.1
million, reflecting growth in the Girls and Games categories.
Though revenue increase was moderate, the segment’s operating
profit skyrocketed 162.0% to $37.7 million driven by improved
product mix.
Net revenues at the International segment
were flat at $289.8 million. Revenues in the International segment
reflect a tailwind from Latin America (up 17%) and Asia-Pacific
(21%) but a headwind from Europe (down 7.0%). Net revenues in the
International segment grew 1% excluding a negative $3.0 million
impact of foreign exchange.
The segment’s operating loss was $4.5 million, narrower than the
year-ago loss of $5.1 million.
Entertainment and Licensing segment
revenues grew 5.0% year over year to $30.8 million. The sale of
television programming in all formats in the U.S. and abroad drove
segment revenues. However, the segment’s operating profit declined
32% to $5.3 million on a year-over-year basis.
As a percentage of net revenues, Hasbro’s royalty expenses fell 60
basis points (bps), and cost of sales dipped 20 bps.
Selling-distribution expenses declined 160 bps, advertising grew 10
bps whereas product development costs were flat,. All these
culminated to an adjusted operating margin expansion of 190 bps to
6.0%.
Cost Savings
In the fourth quarter of 2012, Hasbro adopted a program to save up
to $100 million annually by 2015. Gross savings for 2013 are
expected to be $45 million — $48 million, leading to an expected
net savings of $13 million to $15 million, excluding potential
pension charges.
Our Take
After six consecutive quarters of top-line miss, Hasbro’s revenues
beat the Zacks Consensus Estimate this time and grew year over year
as well. We continue to have a favorable view of the company’s
persistent efforts to curtail costs and improve earnings amid a
sluggish operating environment. The company is in a restructuring
mode, which involves several brand building and cost saving
initiatives.
However, we would prefer to remain on the sidelines at the current
level and wait until there is further clarity on the aforesaid
initiatives. Further, the Boys products segment, which was once a
powerhouse brand of the company, continues to remain sluggish in
the recent times. Hasbro currently carries a Zacks Rank #3
(Hold).
As a point of reference, one of the major toy companies,
Mattel Inc. (MAT) which reported last week, beat
both earnings and revenues estimates in its first quarter. Some
other toy companies which will report their earnings in the next
month include LeapFrog Enterprises Inc. (LF) and
Activision Blizzard Inc. (ATVI). LeapFrog is
slated to report on May 2 while Activision Blizzard will likely
report on May 6.
ACTIVISION BLZD (ATVI): Free Stock Analysis Report
HASBRO INC (HAS): Free Stock Analysis Report
LEAPFROG ENTRPS (LF): Free Stock Analysis Report
MATTEL INC (MAT): Free Stock Analysis Report
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