PAWTUCKET – Hasbro Inc. reported a $69.6 million loss for the first quarter of 2020, according to the company Wednesday.
The loss was primarily attributable to the company’s acquisition of Entertainment One Ltd. The deal was valued at roughly $3.8 billion at the time of closing in January.
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One year prior, the company reported a $26.7 million profit.
Loss per diluted share for the quarter was 51 cents, compared with an earnings of 21 cents per diluted share one year prior.
Acquisition-related expenses totaled $149.7 million in the first quarter.
Revenue increased 50.9% year over year to $1.1 billion. Pro forma revenues – the combined results of both Hasbro and eOne, declined 7.8% year over year. Hasbro said that it expects synergies related to the acquisition of eOne of $130 million by the end of 2022.
Hasbro noted that its largest customers in the first quarter were Walmart, Amazon and Target.
Performance by segment for the quarter:
- Hasbro’s franchise brands segment revenue increased 1% year over year to $396.5 million. Partner brands revenue increased 6% year over year to $182.3 million.
- Hasbro gaming revenue rose 30% year over year to $140.1 million.
- The company’s emerging brands revenue declined 19% year over year to $94.1 million. The segment includes part of eOne’s acquired properties, such as Peppa Pig, PJ Masks and Ricky Zoom.
- The company’s TV/film/entertainment segment declined 29% year over year to $292.5 million, the segment represents the remainder of the eOne acquisition’s properties. The comparison is based on eOne revenues one year prior.
COVID-19 related business updates:
The company said that 55% of the company’s manufacturing is handled by third-party factories in China, which had operated at lower-than-expected capacity due to the COVID-19 pandemic. The factories have since resumed planned operating capacity and Hasbro anticipates to be well positioned for the holiday demand, barring new shutdowns due to the disease.
Factories outside of China operated at levels close to normal in the first quarter the company said. Currently closed factories include some in Massachusetts, Texas and Ireland, as well as locations in India. The company expects closed facilities to open in the summer.
“We’ve undertaken extensive scenario planning across the business and geographies as we plan for a reopening of the economies globally,” said Hasbro Chairman and CEO Brian Goldner. “At the same time, we made significant progress on the integration of eOne and while near term much of the team’s production work has been delayed due to COVID-19, we are actively working together to unlock value from our brands and the eOne enterprise. Hasbro is creating play and entertainment experiences which are vital and desired by consumers and audiences this year and for the years to come.”
However, the company said it anticipated a more-difficult second quarter.
“Toward the end of the quarter, physical store closures and countrywide restrictions became more prevalent and entertainment productions shut down,” said Hasbro Chief Financial Officer Deborah Thomas. “As a result of COVID-19, we expect the second quarter to be more challenging than the first quarter of the year with revenues and earnings down versus pro forma 2019. We are taking prudent steps to lower expenses and preserve capital while positioning to meet the seasonal peak-demand periods of the business in the second half of the year, including the holiday season. While the ultimate impact of COVID-19 will vary depending on how long it takes to reopen markets around the world, we are currently seeing healthy demand for our products and content.”
The company also said that reopening of offices due to COVID-19 will be informed by local governments, as well as health and safety guidelines. It noted that its China offices reopened in March.
Chris Bergenheim is the PBN web editor. You may reach him at Bergenheim@PBN.com.
