Hasbro Conference Call Highlights

Hasbro, Inc. (NASDAQ: HAS) reported its third quarter earnings on Monday. Shares of the company are up 5 percent.
Below are some highlights from its conference call:

Operational Highlights:

• Third quarter revenues increased 7%.
• We grew across all major operating segments of Hasbro, including a return to growth in the U.S. and Canada segment and continued growth in the International and our Entertainment and Licensing segments.
• Profitability increased as adjusted operating profit in the quarter increased 9% and our operating profit margin was 19.4% of revenues.
• Our focus on Hasbro franchise brands and key partner brands fueled these results.
• Franchise brand revenues increased 36% in the third quarter.
• All seven franchise brands grew double digits in the quarter.
• Additionally, point of sale at our top five U.S. retailers for Hasbro franchise brands was up more than 30% in the quarter and year-to-date.
• U.S. and Canada and international segments, and point-of-sale was strong, growing double digits in several markets.
• Transformers: Age of Extinction delivered over $1 billion of the global box office.
• Through the first nine months of the year, Transformers revenue are greater in international markets than in the U.S. and Canada segment.
• Building on our relationship with the Walt Disney Company for Marvel and Star Wars, during the third quarter we established a new strategic merchandising relationship with Disney consumer products.
• We have two movies we are currently developing under our new film label, all-star pictures. These films are My Little Pony and Jem and the Holograms.

Financial Highlights:

• We had a good third quarter as we grew revenues in all regions and across our franchise brands.
• Hasbro's operating profit and operating profit margin increased.
• We continue to invest in our business for long-term growth; added a key new license beginning in 2016 while remaining focused on improving profitability and returning cash to our shareholders through stock buyback program and dividend.
• Before I review the quarter, I went to remind you of several items that impacted both this year's and last year's third quarters.
• In the third quarter of this year, we restructured our investment in the HUB network joint venture reducing our ownership to 40% of the network.
• In connection with this restructuring, we recorded a pre-tax charge of $11.6 million or $0.06 per diluted share in the third quarter 2014.
• Looking at our segments, third-quarter revenues in the U.S. and Canada segment increased 4%.
• Revenues in both the boy's and games categories grew in the quarter, partially offset by declines in the girl's and preschool categories.
• In the international segment, third-quarter revenues increased 11% with 7% growth in Europe, 24% growth in Latin America, and 11% growth in Asia-Pacific.
• Foreign exchange had a $-9.7 million impact on revenue for the segment in the quarter.
• Internationally, the boy's, girl's, and preschool categories all grew and more than offset decline in the games category.
• Operating profit increased 10% in the international segment on higher revenues, which were slightly offset by higher expenses related to supporting our expanding international and emerging market business.
• Entertainment and licensing segment revenues grew 10.
• As entertainment-backed revenues grew, royalty expense also increased. In the third quarter, royalties increased to 6.6% of revenues.
• Product development was 4% of revenues, a decrease of 2% year-over-year.
• We also recorded our 50% share in the HUB network in this line. In the third quarter, this improved to a profit of $1.9 million versus a loss of $91,000 last year.
• At quarter end, cash totaled $452.2 million reflecting our higher levels of share repurchases.
• In the third quarter, we returned $179.2 million to shareholders, $54.7 million in cash dividends, and $124.5 million in share repurchases.