Hasbro (HAS), a branded play company, has reported swung to profit in the quarter ended Mar. 30, 2014. The company made a net profit of $32.09 million or $0.24 a share in the first-quarter against a loss of $6.67 million or $0.05 a share in the last year period. Analysts on average had predicted net income of $0.10 a share.
Revenue during the first-quarter went up marginally 2.37 percent to $679.45 million from $663.69 million in the last year period.
Gross margin expanded by 227 basis points over the previous year period to 61.95 percent.
Total expenses as a percentage of revenues decreased to 93.61 percent from 98.40 percent in the same period last year. That resulted in improvement of 479 basis points in operating margin to 6.39 percent.
The company disclosed operating income of $43.45 million, compared with an operating income of $10.63 million in the last year period.
Our first quarter results reflect continued strong performance across several key initiatives including Hasbro Franchise Brands, Emerging Markets and the Entertainment and Licensing segment,'' said Brian Goldner, Hasbro's president and chief executive officer. ''Growth in both revenues and operating profit for the first quarter despite a later Easter this year and ahead of our major theatrical launches speaks to the strength of the brand innovation we are delivering to consumers globally."
''While only the first quarter, our results reflect solid underlying profitability, a healthy balance sheet and good cash flow,'' said Deborah Thomas, Hasbro's chief financial officer. ''We remain committed to investing in our business to profitably grow Hasbro for the long term, while returning excess cash to our shareholders and maintaining a solid investment grade rating.''
Cash flow
Hasbro has generated cash of $242.04 million from operating activities during the quarter, down by 18.63 percent or $55.41 million when compared with the last year period. It has generated 35.62 cents of operating cash flow in every sales dollar for the quarter, down from 44.82 cents for the same period last year.
The company has spent $27.08 million in cash to meet investing activities during the quarter, as against cash outgo of $20.60 million in the year period. It has made net capital expenditure of $22.24 million during the quarter, which was lower by 8.11 percent or $1.96 million from a year ago.
The company's free cash flow accounted for 90.81 percent of operating cash flow for the quarter, compared with 91.86 percent in the last year period.
The company has spent $103.39 million in cash to meet financing activities during the quarter, as against cash outgo of $59.36 million in the last year period.
The company has borrowed net of $5.04 million through debt during the quarter. It has spent net of $56.03 million on common stock repurchases.
As on Mar. 30, 2014, Hasbro's cash balance stood at $792.25 million, down by 25.75 percent or $274.79 million from Mar. 31, 2013.
Working Capital
Hasbro witnessed reduction in the working capital over the year. It stood at $1048.38 million as at Mar. 30, 2014, down by $460.34 million or 30.51 percent from $1508.72 million on Mar. 31, 2013. The company's current ratio decreased to 1.96 as at Mar. 30, 2014 from 3.03 on Mar. 31, 2013.
Debt Position
Hasbro has witnessed a decrease in total debt over the last year. As at Mar. 30, 2014, the company's total debt stood at $1399.11 million, down 10.10 percent or $157.25 million from Mar. 31, 2013.
The company's total debt accounts for 34.72 percent of total assets on Mar. 30, 2014, compared with 38.33 percent on Mar. 31, 2013.
The company witnessed a decline in debt to equity ratio to 0.88 on Mar. 30, 2014 when compared with 1.06 on Mar. 31, 2013.
Interest coverage ratio, which determines how easily a company can pay interest expenses on outstanding debt, has improved to 1.94 from 0.46 in the same period last year.
Shares of Hasbro rose by $1.05 or 1.92 percent to close at $55.66 on Monday.