Hasbro Financial Earnings Reports (ongoing)

[griffin]

The annual financial report for Hasbro for 2020 is out and it shows the expected negative impact covid had last year... but surprisingly, they appear to have had a better 4th quarter than the previous year, so something significant turned around to rebound better than the negative impact of covid earlier in the year.
The international figures aren't good though, showing a big downturn in sales and profit for both the 4th quarter and the full year, with one reason being noted as being the exchange rate against the US$ (a weaker US dollar means they get less money in America from the "commission" Hasbro America makes from every non-American sale), and this could see an increase in our prices soon, so that the money being sent back to Hasbro in America goes back up into positive territory.

I think the total balance sheet is concerning though, after the purchase of eOne early last year, Hasbro's available cash has gone from being half a billion dollars in the black at the end of 2019, to 3.2 billion dollars in the red at the end of 2020. I guess eOne counts as an asset of similar value, so as long as that acquisition is productive, it is an asset that could be sold off if Hasbro's cash-flow and available cash suddenly gets worse.

This slide is an excellent one for those interested in knowing how much it actually costs to produce Hasbro toys (in general), with the "cost" to them being just 31.5% of the revenue (the wholesale price to their retailers). A 69% profit margin is quite extraordinary, which is a lot more than I was expecting, as retailers margins are usually around 40%.
The breakdown of that 31.5% cost to Hasbro of their (mostly toy) products is 14.5% for the physical materials for the toys and packaging, and 17% for the costs behind the production and shipping.

[Trent]

The annual financial report for Hasbro for 2020 is out and it shows the expected negative impact covid had last year... but surprisingly, they appear to have had a better 4th quarter than the previous year, so something significant turned around to rebound better than the negative impact of covid earlier in the year.
The international figures aren't good though, showing a big downturn in sales and profit for both the 4th quarter and the full year, with one reason being noted as being the exchange rate against the US$ (a weaker US dollar means they get less money in America from the "commission" Hasbro America makes from every non-American sale), and this could see an increase in our prices soon, so that the money being sent back to Hasbro in America goes back up into positive territory.

I think the total balance sheet is concerning though, after the purchase of eOne early last year, Hasbro's available cash has gone from being half a billion dollars in the black at the end of 2019, to 3.2 billion dollars in the red at the end of 2020. I guess eOne counts as an asset of similar value, so as long as that acquisition is productive, it is an asset that could be sold off if Hasbro's cash-flow and available cash suddenly gets worse.

This slide is an excellent one for those interested in knowing how much it actually costs to produce Hasbro toys (in general), with the "cost" to them being just 31.5% of the revenue (the wholesale price to their retailers). A 69% profit margin is quite extraordinary, which is a lot more than I was expecting, as retailers margins are usually around 40%.
The breakdown of that 31.5% cost to Hasbro of their (mostly toy) products is 14.5% for the physical materials for the toys and packaging, and 17% for the costs behind the production and shipping.

That slide doesn’t show corporate overheads (marketing, HR, shareholder return, etc). It purely relates to the toys production. Thinking about it, it probably does edge closer to 50% gross margin once everything is taken into account which is more in line with what I’d expect.

[JJJ]

The international figures aren't good though, showing a big downturn in sales and profit for both the 4th quarter and the full year, with one reason being noted as being the exchange rate against the US$ (a weaker US dollar means they get less money in America from the "commission" Hasbro America makes from every non-American sale), and this could see an increase in our prices soon, so that the money being sent back to Hasbro in America goes back up into positive territory.

Hang on. How does that work? With a weaker USD, or at least a stronger AUD, every dollar we spend means more money to them. For example, the price of a WFC deluxe has remained constant for the past 18 months, but in that time the AUD has risen in value by about 15%. Which should mean that the value of revenues from us, if sales remain static, has risen by ~15%. Even if sales have dropped, the increasing value of our currency should help pad that out.

[griffin]

That slide doesn’t show corporate overheads (marketing, HR, shareholder return, etc). It purely relates to the toys production. Thinking about it, it probably does edge closer to 50% gross margin once everything is taken into account which is more in line with what I’d expect.

The "cost of sales" is just what it cost to acquire the stock (either from someone else, or in-house). Those other elements is what the difference between the cost of "acquiring" the stock and selling it to the retailers covers, just like it does in the 40% that retailers mark up their stock between the acquiring of their stock to selling it to customers. Which still goes to my point of surprise, that the "margin" to cover all of those other elements by Retailers and by Distributors like Hasbro, is significantly different, despite having the mostly the same non-stock cost elements.

The only question I would have is if the "labor" cost includes the R&D of the product, or just the manufacturing of the product. My guess it includes both, as we know how little people are paid in these factories, which is why big corporations like using them instead of having domestic production with domestic employment.

[griffin]

One of the features at each year's New York Toyfair is their annual Investor presentation, and it will sometimes reveal some new Transformers details (or leak a new toy in one of their Brand slides), but with the cancellation of Toyfair this year, we were hoping something interesting would be included to make up for the absence of the live Toyfair presentations.
Apparently it doesn't reveal anything new for toys, and usually tfw will include screenshot slides of the presentation, but they've just embedded the video (which might not be accessible for too long).

[griffin]

Some info revealed at an annual media convention in America recently, relating to the upcoming movies and WOTC producing video games (including one for Transformers)...

Hasbro and eOne participated at J.P. Morgan 49th Annual Global Technology, Media, and Communications Conference to give a brief highlight on several projects both companies are working on.
Regarding upcoming Transformers entertainment content, eOne CEO Darren Throop stated the following:

“Another one that’s going into production very soon is Transformer 7. The script is in great shape, casting, that’s all in pre-production. Another one that we are working on is a Transformers animated [movie].”

He did not forget to mention Power Rangers as well:

“Power Rangers is being worked on now with a creative steward and a big streaming partner. We haven’t brought that to an announcement stage yet.”

Additionally, Hasbro mentioned that the company is working on their own video games based on their toy properties. During Hasbro’s Investor Day, the toy giant mentioned that Wizards of the Coast is working on video games such as Transformers and G.I. Joe. Today, Hasbro’s Chief Financial Officer Deb Thomas elaborated more on the matter. She emphasized that we won’t see the games at least for another 2 or 3 years.

“We have been investing over the last 5 years and we’ve invested over $200 million in developing games and as you think about going forward, we’ve not taken our foot off the gas [pedal] in this pandemic period and developing games that you’re not going to see until 2 to 3 years out. We’ll continue to develop those.”
“We are really excited about the investments that we’re making around Dungeons & Dragons, Magic: The Gathering, and other games that are based on brands in the Hasbro portfolio by this really terrific team at Wizards of the Coast.”

Mr. Goldner did not forget to mention that Transformers 7 will arrive in summer 2022 and the animated Transformers movie will hit theaters in the years that follow. Therefore, it is likely that we won’t see the Josh Cooley-directed Transformers animated feature film until after 2022.

[griffin]

A followup of what Wizards of the Coast will be taking on in the future, in terms of more digital content...

Hasbro‘s Wizards Of The Coast division (previously a subsidiary) has opened up a new digital games division called New Raleigh-Durham Studio to develop AAA titles (for PC and Consoles) based on Hasbro properties.

This new division is lead by game industry veterans from big companies such as WB Games (Hitman series, Batman: Arkham series, etc.).

As first announced during Hasbro’s 2021 Investor Event, this new studio is currently aiming to produce games for Transformers, G.I. Joe, Micronauts, and Ouija.

As the first project, this North Carolina-based company will tackle G.I. Joe as a 3rd Person Action-Adventure game. The studio is now hiring for various positions such as Art Director, Lead Animator, Lead Game Designer, and Technical Director.

During a recent interview with Stifel Investment Bank, Wizards Of The Coast CEO Chris Cocks stated that Hasbro is aspiring to have a fully-fledged in-house digital games division to cater to a demanding video game market.

[Lint]

I like this development. Much better than the recent, let's slap a transformers badge on this digital content for $$$ we've been getting lately.

[DELTAprime]

I personally wish more companies would take the Games Workshop approach to games. If you are a Warhammer fan you are spoiled for choice in games because they will give anyone with a decent idea a shot at making a game. Sure some of them fail to be good games, but there's always another Warhammer game coming right around the corner.

I would love to be spoilt for choice with Transformers games.

[griffin]

For anyone interested in the 3rd quarter earnings for 2021 for Hasbro. They seem to be doing well considering the current climate, and are working to deal with expected global supply delays.
They haven't yet appointed a new CEO to replace Brian Goldner.