TFW2005 Coverage Of Hasbro 2012 Q3 Earnings Call – Fate Of Transformers: Prime Series


Here we are with TFW2005 Coverage of Hasbro 2012 3rd Quarter Earnings Conference Call.

Unfortunately, no major future plans were told about our beloved franchise, unlike last time. The reason for this may have been NYCC 2012 where Hasbro revealed much of their 2013 plans. Profits are down 4% last quarter and Hasbro wishes to return the “U.S. & Canada segment” to historical operating profit margins in the coming year. You can read all about this thanks to the Press Release our 2005 Boards member Hot Shot sharing with us.

However, there are things not written in black and white… things that may not look that big nor create a heavy impact. However, these little things matter to us; The Fans. What was said at the call might potentially impact the current Transformers Animation Series; Transformers: Prime. What is it? Find out, after the jump. At one point during the Conference Call it was casually told that Production Costs will get cut for Hasbro Hub related TV Shows. Later during the Q&A session a reporter asked Hasbro’s CEO Brian Goldner what was meant by that. The answer suggests a possible reason why we are getting only 13 Episodes for Season 3 of Transformers: Prime.

Question: Final Question… If you could just elaborate. You touched a bit on a prepared remark that I’m interested. You said you are reducing your production spend over the past several quarters… said due to efficiencies. Can you just elaborate more on that?
Answer: “Actually what we are saying is amortization has come down because ultimate revenue expectations have gone up. It’s one big driver on that. As we look at our ultimate revenue expectations for out programming because our performance we have on the television and digital distribution performance and revenue we are now expected to get from that programming; cross merchandising and program sales the amortization comes down.”

Question: You’ve been reducing your program production cash..
Answer: “Yeah, yeah the cash spend you really have to do when you have a successful TV Series… In fact Hasbro Studios TV Shows has outperformed other TV Shows on the Hub by 74% rating with 4 of the Top 10 shows on the network right now. So as you look at great performance of TV Shows, you are able to produce fewer episodes in subsequent series than you need for earlier series. You know, kids love watching episodes over and over again but you have to add an element of newness but you don’t need to spend to produce entire new series again. You can add 13 episodes or a 26 episodes to a pool of 52 already produced Episodes. So therefore you are able to… with a success TV Series… produce fewer in a year. Overall, Hasbro Studios has greenlit over 800 half-hours of programming. We also still have several hundreds of half-hour programming that we are producing for the network and also looking at whether there are successful tv series we obviously then spend less per new series because we are able to produce newer shows.”

… and there you have it folks. This suggests a possible reason why Transformers: Prime Season 3 is only 13 or 16 Episodes.

What do you think of this decision? Are you with it or against it? Do you think that having 52 episodes already for the show might also be a factor? Let us know what you think, on the thread associated with this news post.

We’ll see you next time on our next coverage, Keep it up with TFW2005 for the latest Transformers News.

Discussion / Comments (Jump to this Thread on the Boards)

  1. wildfly's Avatar wildfly says

    Rarrrrrrrrhgh! You're doing wrong.

    ...and now to actually read the report.

  2. Soundwinder's Avatar Soundwinder says

    Well, expected decline, that's reassuring, at least.

    I wonder whether the decline was greater or less than their anticipated decline.

  3. Aernaroth's Avatar Aernaroth says

    It's also important to remember that 3rd quarter earnings are usually pretty low compared to Q2 and Q4, so it's better to compare year to year than quarter to quarter.

    Looking at things from this perspective, they're doing a bit better than last year overall, though they've been much stronger in US/Canada than worldwide (though North America still makes up the majority of their sales). You can also see, not accounting for margin-based-decisions, an approximation of the correlations between their revenues and their profits. A one percent increase in revenues over last year at this time represents a nearly 20% increase in profit, meaning their operating profit was probably only 4-5% of their sales. That's a pretty low margin, I would say.

    It seems like the big challenge, at least in the US, is that retailers aren't ordering as much, period, and are operating on a leaner inventory structure. This makes sense, I guess, if consumption isn't where they'd want it to be, as it allows retailers to react more quickly to changes in demand, and to decrease overhead, but it puts producers at a disadvantage not only in terms of bulk sales, but in their ability to leverage economy of scale in their production methods.

    Games and preschool toys are an anchor around the neck of revenue (seemingly as usual), whereas Boys' division is a driving force, especially due to the recent Avengers movie and other Marvel lines.

    Bot shots appeared to do well enough to worth mentioning, but the expected decline in TF sales likely relates back to this not being a movie year, and last year being one.

  4. doomboy536's Avatar doomboy536 says

    I've been doing some reading of reports recently, let's see what I can dig up...

    Net earnings for the third quarter 2012 were $164.9 million compared to $171.0 million in 2011
    So net earnings are down.

    "We are delivering on the objectives we set for the year," said Brian Goldner, President and Chief Executive Officer. "The U.S. and Canada segment operating profits are improving to historical levels
    "In the all important fourth quarter, we plan to drive these and other initiatives with a significant increase in marketing support in an environment of significantly lower U.S. retail inventory. As a result, for the full year 2012, we continue to believe, absent the impact of foreign exchange, we will again grow revenues and earnings per share."
    U.S. and Canada segment net revenues were $774.5 million, an increase of 1%, compared to $764.6 million in 2011.
    Including the impact of foreign exchange, International segment net revenues were $524.1 million, down 7%, compared to $563.3 million in 2011.
    Entertainment and Licensing segment net revenues were $43.1 million compared to $46.3 million in 2011
    In the Boys category, net revenues decreased 12% to $471.1 million. MARVEL products continued to post strong year-over-year gains globally, which were more than offset by expected declines in TRANSFORMERS and BEYBLADE products.
    Net revenues in the Games category were flat in the quarter at $365.7 million. TWISTER, MAGIC: THE GATHERING, BATTLESHIP and Boys Action Gaming products, including TRANSFORMERS BOT SHOTS, continued to perform well.
    Huh, Bot Shots is classed a Game rather than a Boys toy. Oh well.

    For the third quarter 2012, the Girls category net revenues increased 17% to $302.3 million. Several new initiatives, including FURBY and ONE DIRECTION product launched during the quarter while MY LITTLE PONY product, backed by global television, continued to deliver strong year-over-year growth as did EASY-BAKE.
    Okay bronies, start your bragging now

    Net revenues in the Preschool category declined 5% to $206.0 million.

    Total net revenue 3rd Quarter 2011 - $1,375,811 millions
    Total net revenue 3rd Quarter 2012 - $1,345,137 millions

    US + Canada did well, international and the Hub not so much. Boys toys did badly, Girls and Games did well.

  5. MetalicGrunt's Avatar MetalicGrunt says

    Its funny how Hasbro included BOT SHOTS in the games category. Wonder what the numbers would have looked like if BOt Shots were included with Boys toys

  6. UltimusPrime has no avatar! UltimusPrime says

    They would make more money if they would just release cases with the figures people actually want.

    Maybe a case that has 2 Airachnid , 2 Rumble , 3 Vehicons , and 1 Kup

  7. QmTablit's Avatar QmTablit says

    Meh. Summer. Kids are outside playing (or should be, anyway). Doesn't mean too much.

    Besides, Christmas season is coming up.

  8. shroobmaster's Avatar shroobmaster says

    I would've bought some toys if the darn toys actualy showed up in the darn toy stores y'know. :/

    But hey the declines were expected weren't they? After all decrease always happens steadly during non-movie years.

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