Games and toys manufacturer Hasbro, Inc. (HAS) reported Monday a 77% year-over-year surge in profit for the fourth quarter, boosted by strong performance across all its operational segments and product categories.
The company's earnings per share and quarterly revenues topped analysts' expectations. Meanwhile, the company posted its ninth consecutive annual earnings per share growth. The company also noted that it would be able to grow revenues and earnings per share for the full-year 2010.
Hasbro has weathered the economic issues quite well thus far, by seeking out new revenue avenues like Hollywood, video gaming and casinos, to breathe life into its core toy brands. The company's pipeline for the next several years is pumping with licensees and theatrical releases. On the flip side, the company's top line may experience some volatility due to the tie-ins with movie releases.
In a statement, president and chief executive officer, Brian Goldner said, "We are extremely pleased with our fourth quarter and full-year results that demonstrate Hasbro's strategy is working. The Hasbro teams around the globe performed at a high level in 2009, delivering innovation and strong marketing programs to our consumers and retailers."
Fourth Quarter Results
The Pawtucket, Rhode Island-based maker of Transformers and G.I. Joe toys reported net earnings of $165.56 million or $1.09 per share for the fourth quarter, about 76% higher than $93.58 million or $0.62 per share in the prior-year quarter.
On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $0.81 per share. Analysts' estimates typically exclude special items.
For the fourth quarter, the company projected dilution in the range of $0.04 to $0.05 per share, due to the investment in the joint venture with Discovery Communications and Hasbro's virtual studio. Meanwhile, it also estimates the dilution in the range of $0.25 to $0.30 per share for fiscal 2010.
Net revenues for the quarter increased 12% to $1.38 billion from $1.23 billion in the same quarter last year, and topped twelve Wall Street analysts' consensus estimate of $1.34 billion. Excluding the positive foreign exchange impact of $55.4 million, quarterly revenues grew only 7%.
Among Hasbro's peers, El Segundo, California-based toys maker Mattel, Inc. (MAT) reported late last month that profit for the fourth quarter surged 86% from last year, boosted by holiday sales of its popular brands such as Barbie and Hot Wheels besides lower costs. Net income was $328.4 million or $0.89 per share, compared to $176.4 million or $0.49 per share in the year-ago quarter. Quarterly net sales improved 1% to $1.96 billion from the previous year's sales of $1.94 billion, aided by a favorable impact from changes in currency exchange rates of 4 percentage points.
Segmental Details
U.S. and Canada regions reported net revenue of $760.67 million, up 10% from the year-ago quarter's $689.53 million. Operating profit for the segment climbed 119% to $153.62 million from last year.
Net revenues for the international segment increased 11% to $549.95 million from $496.83 million in the prior-year quarter. Segment operating profit increased 33% to $96.03 million from a year ago.
Entertainment and licensing segment, including television, movies, lifestyle and digital licensing and on-line entertainment operations, net revenue rose 48% to $62.07 million from the year-ago quarter's $42.0 million. Operating profit for the segment grew 20% to $29.19 million from last year.
Among the product families, games and puzzles sales were $534.84 million, up 18% from $452.37 million in the year-ago quarter. Boys products sales grew 16% to $424.41 million from $365.0 million last year. Girls products posted a sales increase of 4% to $272.69 million from $261.60 million in the prior-year quarter, while preschool products sales remained flat with last year at $137 million.
Other Metrics
Operating profit for the fourth quarter surged to $243.60 million from $151.61 million in the prior-year quarter, and gross profit was $813.08 million, higher than $691.54 million in the year-ago quarter.
Selling, general and administrative expenses for the quarter increased to $251.13 million from $223.44 million in the prior-year quarter. Interest expenses grew to $16.78 million from $11.04 million in the previous year, while other expense were $0.43 million, sharply down from $11.99 million in the year-ago quarter.
Meanwhile, advertising expenses declined to $133.64 million from $140.17 million last year. Income taxes for the quarter rose to $60.83 million from $35.0 million in the prior-year quarter.
On Thursday, Hasbro announced a 25% increase in quarterly cash dividend to $0.25 per common share, payable on May 17, to shareholders of record at the close of business on May 3, 2010.
During the year, the company spent $91.0 million to repurchase 3.2 million shares of common stock. As of quarter-end, there was $161.4 million remaining in the current share repurchase authorization.
Full-Year Highlights
For fiscal 2009, Hasbro reported net earnings of $374.93 million or $2.48 per share, about 22% higher than $306.77 million or $2.00 per share posted in fiscal 2007. Analysts expected the company to report earnings of $2.20 per share for fiscal 2009.
Net revenues for the full year edged up 1% to $4.07 billion from $4.02 billion reported for the full-year 2008. The Street was looking for full-year 2009 revenues of 4.04 billion. Net revenues increased 3% excluding the negative $65.2 million impact of foreign exchange.
Looking ahead...
"As we continue to execute our strategy to re-imagine, re-invent and re-ignite our global core brands, we believe we should be able to grow revenues and earnings per share for the full year 2010, including the dilution from our television investments and absent a deterioration in consumer spending, global economic conditions or the value of foreign currencies," Goldner added.
Stock Quote
HAS closed Friday's regular trading session at $30.80, down $0.40 on a volume of 2.78 million shares, higher than the three-month average volume of 1.77 million shares. In the past 52-week period, the stock has been trading in a range of $21.14 to $32.75.
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