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Item 2. Management’s Discussion and Analysis

2025-05-06 compared with 2024-10-31 · 165 added, 324 removed, 115 unchanged (81% of the section changed)

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The following discussion and analysis should be read together with the accompanying unaudited consolidated financial statements and the notes thereto included in this Quarterly Report and the audited consolidated financial statements and the notes thereto in the 2024 Annual Report.

("Hasbro") is a game, toy, and intellectual property company whose mission is to entertain and connect generations of fans through the exhilaration of play and the wonder of storytelling.

We are Creating Magic Through Play by delivering engaging brand experiences for global audiences across gaming, consumer products and entertainment, with a portfolio of iconic brands including MAGIC:

THE GATHERING, Hasbro Gaming, PLAY-DOH, NERF, TRANSFORMERS, DUNGEONS & DRAGONS, and PEPPA PIG, as well as premier partner brands.

Hasbro is guided by our purpose to create joy and community for all people around the world, one game, one toy, one story at a time.

For the past decade, we have been consistently recognized for our corporate citizenship, including being named one of the 100 Best Corporate Citizens by 3BL Media.

(“Hasbro”) is a leading game, intellectual property ("IP"), and toy company whose mission is to create joy and community through the magic of play.

With over 100 years of expertise, we deliver play experiences to kids, families, and fans around the world, through physical and digital games, video games, toys, licensed consumer products, location-based entertainment, film, TV and more.

Through our franchise-first approach, we unlock value from both new and legacy IP, including MAGIC:

THE GATHERING, DUNGEONS & DRAGONS, MONOPOLY, HASBRO GAMES, NERF, TRANSFORMERS, PLAY-DOH and PEPPA PIG, as well as premier partner brands.

Powered by our portfolio of iconic brands and a diversified network of partners and subsidiary studios, we bring fans together wherever they are, from tabletop to screen.

For more than a decade, Hasbro has been consistently recognized for its corporate citizenship, including being named one of the 100 Best Corporate Citizens by 3BL Media, a 2025 JUST Capital Industry Leader, one of the 50 Most Community-Minded Companies in the U.S.

by the Civic 50, and a Brand that Matters by Fast Company.

Recent Developments

In fiscal year 2023, we embarked upon an ambitious, multi-year transformation guided by our revamped strategy to focus on fewer, bigger and better brands.

Since that announcement, we have been able to create efficiencies in our supply chain, improve our inventory position, lower our costs, and reinvest back into the business.

In addition, we have strengthened our leadership team with industry veterans and turnaround experts and have focused our strategic investments on our most valuable and profitable franchises across games, toys, licensing and entertainment.

This focused strategy also led to the decision to sell certain non-core parts of our business, including the Entertainment One film and television business ("eOne Film and TV") in December 2023, while retaining brand-based created content and the capability to develop and produce entertainment including animation, digital shorts, scripted TV and theatrical films related to core Hasbro IP, as well as our Family Brands business.

In addition, during 2023, we made the difficult decision to take additional headcount reductions and accelerate the process of certain organizational structure changes in an effort to strengthen our foundation and position Hasbro for growth.

Summary of Quarter and Year to Date Results

During 2024, the Company experienced declines in revenue from $1,503.4 million and $3,714.4 million for the three and nine months ended October 1, 2023, respectively, to $1,281.3 million and $3,033.9 million for the three and nine months ended September 29, 2024, respectively.

The decline in revenue for the three months ended September 29, 2024 from three months ended October 1, 2023 is driven primarily by the sale of eOne Film and TV business and by broader industry trends, exited businesses, shifts in product mix, a lighter entertainment slate in the current year, reduced closeout sales in the Consumer Products business, and the decrease in our Wizards of the Coast and Digital Gaming revenues, mainly from the higher digital licensing of Baldur's Gate 3 that was launched within the three months ended October 1, 2023 with no comparable releases in 2024.

The decline in revenue for the nine months ended September 29, 2024 from nine months ended October 1, 2023is driven primarily by the sale of eOne Film and TV business and by broader industry trends, exited businesses, shifts in product mix, a lighter entertainment slate in the current year, and reduced closeout sales in the Consumer Products business, partially offset by increases in our Wizards of the Coast and Digital Gaming revenues driven by higher digital licensing revenue primarily due to MONOPOLY GO!

as well as contributions from MAGIC:

THE GATHERING.

The Company has made strong progress towards its ongoing turnaround efforts while achieving an operating profit of $301.9 million and $630.2 million during the three and nine months ended September 29, 2024, respectively, as compared to an operating loss of $169.5 million and $340.2 million for the three and nine months ended October 1, 2023, respectively.

Over the last several years, Hasbro has continued our transformation for our business and we began to see tangible results from our initiatives.

Specifically, we focused our efforts on strategic investments in our most valuable and profitable franchises across games, licensing, toys and entertainment.

We also made significant progress in our cost-savings initiatives and further strengthened our leadership team with industry veterans and turnaround experts.

In the first quarter of 2025, we launched our refreshed strategy "Playing to Win" to refocus the Company on play and partnership.

Through play fueled brand engagement and partner scaled co-investment, we plan to expand our consumer reach as a games, IP, and toy company.

We have set goals and objectives to be one of the most profitable and diverse toy and game companies globally, powered by multi-segment and multi-generational franchises.

Playing to Win includes five strategic building blocks:

• Profitable Franchises:

Focus on improving the fundamentals of profitable, play-focused brands, through innovation, partnership, operational excellence, managed cost-discipline and retail execution.

Expand our consumer base and drive play and collectible experiences for fans of all ages, recognizing that consumers aged 13 and above are gaining purchase share.

• Everyone Plays :

Engage across the play spectrum to where we under-index and capture new consumers across demographics and markets.

• Digital and Direct:

Embrace new ways to engage with our consumers through video games, digital technology and direct-to-consumer interactions.

• Partner Scale:

Capitalize on our partners’ investments and scale to enhance our brands through strategic relationships and licensing arrangements.

As part of our Playing to Win strategy, we have realigned our brand portfolios to correspond our refreshed strategy:

• Grow Brands:

Brands representing the highest margin, highest growth opportunities in categories where we see significant share and/or underlying market growth.

• Optimize Brands :

Brands representing opportunities to maintain or grow share while improving operating profit returns.

• Reinvent Brands :

Brands representing opportunities to reinvent or restructure to drive innovation and improved operating profit returns.

Brands periodically are reclassified, based on changes in growth, profitability or other characteristics, and when those changes occur, the respective portfolio historical revenue is included within the new classification.

The impact of tariffs on the Company's business operations was not significant during the first three months of 2025 and throughout 2024;

however significant changes in trade policy announced by the U.S.

government during the

second quarter of 2025 could result in material adverse impacts to our forward-looking financial results.

The Company monitors the impact of tariffs to its business operations on an ongoing basis and may need to implement actions such as imposing price adjustments or making changes in our supply chain sourcing strategies in order to mitigate the impact of tariffs in future periods.

The impacts of tariffs may lead to reduced economic activity, increased costs, reduced demand and changes in purchasing behaviors for some or all of our products, potential unrealizability of some of our existing assets, or other economic outcomes that could have a material adverse impact on our sales volumes, prices, and our financial results.

Although the final impact of tariffs is uncertain, from the Company’s scenario planning, assuming tariffs on imports from China to the United States ranging from 50% to 145%, and tariffs on imports from the rest of the world at 10%, we currently estimate between $100 million and $300 million of negative gross impact to operating profit in 2025, before any mitigation measures.

Factoring in all mitigating levers, we currently estimate a negative net profit impact to the Company between $60 million and $180 million for 2025.

The range of outcomes is dependent on final trade policy, customer order patterns, and impacts on consumer purchasing from tariffs and related economic conditions.

The impact may be greater than set forth above.

The Company also currently anticipates that tariffs will result in purchasing shifting later in the year, with a negative impact to second quarter revenues.

Summary of Results

During 2025, the Company experienced an increase in revenue from $757.3 million for the three months ended March 31, 2024 to $887.1 million for the three months ended March 30, 2025.

The increase in revenue for the three months ended March 30, 2025 from the three months ended March 31, 2024 is driven primarily by growth in our Wizards of the Coast and Digital Gaming segment, inclusive of increased demand for both tabletop and licensed digital gaming, partially offset by a decrease in our Consumer Products segment related to volume declines.

The Company has made strong progress towards its ongoing transformation efforts while achieving an operating profit of $170.7 million during the three months ended March 30, 2025 as compared to $116.2 million for the three months ended March 31, 2024, respectively.

See the below discussion for the consolidated and segment results of operations.

RESULTS OF OPERATIONS

The following table presents the consolidated results of operations for the three months ended September 29, 2024 and October 1, 2023:

The following table presents the consolidated results of operations for the three months ended March 30, 2025 and March 31, 2024:

Three Months Ended

September 29, 2024 October 1, 2023

March 30, 2025 March 31, 2024

Amount % of Net Revenues Amount % of Net Revenues

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Cost of sales 204.5 23.1 % 204.2 27.0 %

Program production cost amortization 7.9 0.6 % 68.4 4.5 %

Program cost amortization 7.4 0.8 % 8.1 1.1 %

Royalties 57.0 6.4 % 50.9 6.7 %

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Advertising 55.4 6.2 % 51.5 6.8 %

Amortization of intangibles 17.1 1.3 % 19.2 1.3 %

Amortization of intangible assets 17.0 1.9 % 17.0 2.2 %

Loss on disposal of business 25.0 2.8 % 9.1 1.2 %

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Total costs and expenses 716.4 80.8 % 641.1 84.7 %

Operating profit (loss) 301.9 23.6 % (169.5) (11.3) %

Non-operating (income) expense:

Operating profit 170.7 19.2 % 116.2 15.3 %

Non-operating expense (income):

Interest expense 41.6 4.7 % 38.5 5.1 %

Interest income (8.9) (1.0) % (8.3) (1.1) %

Other income, net (19.9) (1.6) % 2.2 0.1 %

Other expense, net 1.4 0.2 % 5.0 0.7 %

Total non-operating expense, net 34.1 3.8 % 35.2 4.6 %

Earnings (loss) before income taxes 290.3 22.7 % (215.0) (14.3) %

Income tax expense (benefit) 67.0 5.2 % (44.6) (3.0) %

Net earnings (loss) 223.3 17.4 % (170.4) (11.3) %

Earnings before income taxes 136.6 15.4 % 81.0 10.7 %

Income tax expense 37.1 4.2 % 21.9 2.9 %

Net earnings 99.5 11.2 % 59.1 7.8 %

Net earnings attributable to noncontrolling interests 0.9 0.1 % 0.9 0.1 %

Net earnings (loss) attributable to Hasbro, Inc.

Net earnings attributable to Hasbro, Inc.

$ 98.6 11.1 % $ 58.2 7.7 %

Net earnings (loss) per common share:

Net earnings per common share:

Basic $ 0.71 $ 0.42

Diluted $ 0.70 $ 0.42

Net revenues - Net revenues for the third quarter of 2024 declined 15% to $1,281.3 million from $1,503.4 million for the third quarter of 2023 primarily driven by a $105.7 million, or 86%, decline in the Entertainment driven by the sale of the eOne Film and TV business, a $96.8 million, or 10%, decline in the Consumer Products segment, and a $19.6 million, or 5%, decrease in the Wizards of the Coast and Digital Gaming segment.

Net revenues - Net revenues for the first quarter of 2025 increased 17% to $887.1 million from $757.3 million for the first quarter of 2024 primarily driven by a $145.8 million, or 46%, increase in the Wizards of the Coast and Digital Gaming segment, offset by a $14.7 million, or 4%, decline in the Consumer Products segment, and a $1.3 million, or 5%, decline in the Entertainment segment.

See the Segment Results discussion below for further details.

The following table presents net revenues by brand portfolio category for the three months ended September 29, 2024 and October 1, 2023:

The following table presents net revenues by brand portfolio category:

Three Months Ended

September 29,

2024 October 1,

Franchise Brands $ 941.6 $ 1,011.0 (7) %

Partner Brands 190.1 228.2 (17) %

Portfolio Brands 149.6 170.6 (12) %

Non-Hasbro Branded Film & TV (1)

— 93.6 (100) %

Total $ 1,281.3 $ 1,503.4 (15) %

(1) Net revenues from the Company's Non-Hasbro-branded Film and TV portfolio were associated with the Company's non-core eOne Film and TV business sold to Lionsgate during the fourth quarter of 2023.

FRANCHISE BRANDS:

Net revenues in the Franchise Brands portfolio decreased $69.4 million in the third quarter of 2024, compared to the third quarter of 2023.

The net revenue decrease primarily reflects lower net revenues from NERF and DUNGEONS & DRAGONS products, partially offset by higher net revenues from MONOPOLY GO!

, along with MAGIC:

THE GATHERING products.

PARTNER BRANDS:

Net revenues from the Partner Brands portfolio decreased $38.1 million, or 17%, in the third quarter of 2024, compared to the third quarter of 2023.

Within the Partner Brands portfolio, there are a number of brands which are reliant on related entertainment, including television and movie releases.

As such, net revenues from Partner Brands fluctuate depending on entertainment popularity, release dates and related product line offerings.

Historically these entertainment-based brands experience higher revenues during years in which new content is released in theaters, for broadcast, and on streaming platforms.

During the third quarter of 2024, Partner Brands net revenue decreases were driven by lower net revenues from the Company's products for STAR WARS and MARVEL which benefited from a broader slate of entertainment releases in prior years without a more recent entertainment release to support revenue in the third quarter of 2024.

This was partially offset by higher net revenues from BEY BLADE following the Company's reintroduction of the brand.

Additionally, revenue in the third quarter of 2023 was higher due to the Company's products for INDIANA JONES supported by the June 2023 theatrical release of Indiana Jones and the Dial of Destiny .

PORTFOLIO BRANDS:

Portfolio Brands net revenues decreased $21.0 million, or 12%, in the third quarter of 2024 compared to the third quarter of 2023.

Lower net revenues from POWER RANGERS, BABY ALIVE, GI JOE and PJ MASKS products were partially offset by revenue contributions from MY LITTLE PONY trading card products.

NON-HASBRO BRANDED FILM & TV :

Net revenues from Non-Hasbro Branded Film & TV decreased $93.6 million in the third quarter of 2024 compared to the third quarter of 2023.

Net revenues from the Company's Non-Hasbro-branded Film and TV portfolio were associated with the eOne Film and TV business sold during the fourth quarter of 2023.

Effective in the first quarter of 2024, the Company moved the remaining Non-Hasbro Branded Film & TV brands into Portfolio Brands to align with the Company's Brand Strategy.

For comparability, net revenues for three months ended October 1, 2023, has been reclassified to reflect the movement, resulting in a change of $0.3 million.

2025 March 31,

Grow Brands $ 653.4 $ 521.7 25 %

Optimize Brands 132.1 141.8 (7) %

Reinvent Brands 101.6 93.8 8 %

Net revenues $ 887.1 $ 757.3 17 %

Net revenues in the Grow Brands portfolio increased $131.7 million, or 25%, in the first quarter of 2025, compared to the first quarter of 2024.

The net revenue increase primarily reflects higher net revenues from MAGIC:

THE GATHERING, MONOPOLY, and MARVEL product sales and digital game licensing related to MONOPOLY GO!

, which were partially offset by lower net revenues from GI JOE products.

OPTIMIZE BRANDS:

Net revenues in the Optimize Brands portfolio decreased $9.7 million, or 7%, in the first quarter of 2025, compared to the first quarter of 2024.

The net revenue decrease is primarily driven by lower net revenues from PEPPA PIG products, partially offset by an increase in revenue from TRANSFORMERS products, which was driven by increased consumer demand stemming from the September 2024 theatrical release of Transformers One with our partners at Paramount.

REINVENT BRANDS:

Net revenues in the Reinvent Brands portfolio increased $7.8 million, or 8%, in the first quarter of 2025 compared to the first quarter of 2024.

Higher net revenues from BEY BLADE products, following the Company's successful reintroduction of the brand, as well as higher consumer product licensing revenues relating to MY LITTLE PONY, which were partially offset by decreases in revenue from NERF.

OPERATING COSTS AND EXPENSES

Cost of sales - Cost of sales for the third quarter of 2024 was $378.9 million, or 29.6% of net revenues, compared to $494.5 million, or 32.9% of net revenues, for the third quarter of 2023.

The Cost of sales decrease in dollars and as a percent of net revenues was driven primarily by lower sales volumes, supply chain productivity, and cost savings initiatives.

Program cost amortization - Program cost amortization decreased to $7.9 million, or 0.6% of net revenues, for the third quarter of 2024 from $68.4 million, or 4.5% of net revenues, for the third quarter of 2023.

Program costs are capitalized as incurred and amortized primarily using the individual-film-forecast method which matches costs to the related recognized revenue.

The decrease in dollars and as a percent of net revenues during the third quarter of 2024 was driven by the impact of the sale of the eOne Film and TV business during the fourth quarter of 2023 as prior year Program costs were primarily associated with the eOne Film and TV business.

Royalties - Royalty expense for the third quarter of 2024 decreased to $98.0 million, or 7.6% of net revenues, compared to $106.9 million, or 7.1% of net revenues, for the third quarter of 2023.

Cost of sales - Cost of sales for the first quarter of 2025 was $204.5 million, or 23.1% of net revenues, compared to $204.2 million, or 27.0% of net revenues, for the first quarter of 2024.

The decrease in cost of sales as a percent of net revenues was primarily the result of a shift in product mix, driven by an increase in both digital and consumer product licensing revenue during the quarter.

Program cost amortization - Program cost amortization decreased slightly to $7.4 million, or 0.8% of net revenues, for the first quarter of 2025 from $8.1 million, or 1.1% of net revenues, for the first quarter of 2024.

Program costs are capitalized as incurred and amortized primarily using the individual-film-forecast method which matches costs to the related recognized revenue and is based upon the current slate of entertainment projects.

Royalties - Royalty expense for the first quarter of 2025 increased to $57.0 million, or 6.4% of net revenues, compared to $50.9 million, or 6.7% of net revenues, for the first quarter of 2024.

Fluctuations in Royalty expense are generally related to the volume of content releases and deliveries and entertainment-driven products sold.

The decrease in Royalty expense during the third quarter of 2024 directly reflects the impact of the sale of the eOne Film and TV business.

Product development - Product development expense for the third quarter of 2024 was $76.3 million, or 6.0% of net revenues, compared to $76.7 million, or 5.1% of net revenues, for the third quarter of 2023.

The decrease in Product development expense during the third quarter of 2024 was primarily due to the Company's cost savings initiatives, along with phasing of product releases.

Advertising - Advertising expense for the third quarter of 2024 was $101.9 million, or 8.0% of net revenues, compared to $81.9 million, or 5.4% of net revenues, for the third quarter of 2023.

The Advertising expense increase during the third quarter of 2024 was primarily driven by the sale initiatives in Consumer Products segment.

Amortization of intangibles - Amortization of intangible assets decreased to $17.1 million, or 1.3% of net revenues, for the third quarter of 2024, compared to $19.2 million, or 1.3% of net revenues, for the third quarter of 2023.

The decrease in 2024 reflects lower definite lived intangible assets due to the sale of the eOne Film and TV business and impairments taken in 2023.

See further detail of impairments taken in 2023 in Note 6 of the 2023 Annual Report.

Selling, distribution and administration - Selling, distribution and administration expenses decreased to $299.3 million, or 23.4% of net revenues for the third quarter of 2024, from $352.3 million, or 23.4% of net revenues, for the third quarter of 2023.

The decrease in Selling, distribution and administration expenses during the third quarter of 2024 primarily reflects lower administrative expenses due to cost savings initiatives.

Operating Profit (Loss) - The operating profit for the third quarter of 2024 was $301.9 million, or 23.6% of net revenues, compared to an operating loss of $169.5 million, or 11.3% of net revenues, for the third quarter of 2023 driven by the factors discussed above.

The increase in Royalty expense during the first quarter of 2025 was directly driven by an increase in sales for partner brands such as MARVEL, for which the Company is obligated to pay a royalty.

Product development - Product development expense for the first quarter of 2025 was $80.5 million, or 9.1% of net revenues, compared to $65.5 million, or 8.6% of net revenues, for the first quarter of 2024.

The increase in Product development expense during the first quarter of 2025 was primarily due to higher incremental investment in the development of Grow Brands under the Company's new "Playing to Win" strategy.

Advertising - Advertising expense for the first quarter of 2025 was $55.4 million, or 6.2% of net revenues, compared to $51.5 million, or 6.8% of net revenues, for the first quarter of 2024.

The Advertising expense increase during the first quarter of 2025 was primarily driven by the timing of sales initiatives in Consumer Products segment.

Amortization of intangible assets - Amortization of intangible assets remained flat at $17.0 million, or 1.9% of net revenues, for the first quarter of 2025, compared to $17.0 million, or 2.2% of net revenues, for the first quarter of 2024.

The amortization expense was driven by the straight-line amortization of the Company's remaining definite-lived intangible assets.

Loss on disposal of business - Loss on disposal of business for the first quarter of 2025 was $25.0 million, or 2.8% of net revenues, compared to $9.1 million, or 1.2% of net revenues, for the first quarter of 2024.

The increase in Loss on disposal of business was driven by the settlement of a holdback provision relating to the divestiture of the eOne Film and TV business.

Selling, distribution and administration - Selling, distribution and administration expenses increased to $269.6 million, or 30.4% of net revenues for the first quarter of 2025, from $234.8 million, or 31.0% of net revenues, for the first quarter of 2024.

The increase in Selling, distribution and administration expenses during the first quarter of 2025 is primarily the result of a non-recurring stock-compensation benefit of $18.1 million recorded during the first quarter of 2024, as well as an increase in the Company's bad debt provision, partially offset by benefits from cost savings initiatives.

Operating Profit - Operating profit for the first quarter of 2025 was $170.7 million, or 19.2% of net revenues, compared to an operating profit of $116.2 million, or 15.3% of net revenues, for the first quarter of 2024 driven by the factors discussed above.

NON-OPERATING EXPENSE (INCOME)

Interest expense - Interest expense for the third quarter of 2024 totaled $46.2 million compared to $47.1 million in the third quarter of 2023.

The decrease in Interest expense for the third quarter of 2024 primarily reflects lower average outstanding borrowings in the third quarter of 2024 as compared to third quarter of 2023 due to the assumption of the production financing borrowings by Lionsgate as part of the eOne Film and TV business and due to the retirement of the Company's variable-rate Five-Year term loan using proceeds from the sale of the eOne Film and TV business, both occurring during the fourth quarter of 2023, partially offset by the issuance of the 2034 Notes (see Liquidity and Capital Resources discussion below for further information including description of the 2034 Notes).

Interest income - Interest income was $14.7 million for the third quarter of 2024, compared to $3.8 million in the third quarter of 2023.

Higher Interest income in 2024 primarily reflects higher average interest rates in 2024 compared to 2023, along with the Company's investment in short-term treasury bills in connection with the issuance of the 2034 Notes (see Liquidity and Capital Resources discussion below for further information including description of the 2034 Notes).

Other income, net - Other income, net was $19.9 million for the third quarter of 2024, compared to Other income, net of $2.2 million in the third quarter of 2023.

The change in Other income, net during 2024 was driven primarily by an increase in foreign currency exchange gains the third quarter of 2024 as compared to the third quarter of 2023.

Income tax expense totaled $67.0 million on pre-tax income of $290.3 million in the third quarter of 2024 compared to income tax benefit of $44.6 million on pre-tax loss of $215.0 million in the third quarter of 2023.

Interest expense - Interest expense for the first quarter of 2025 totaled $41.6 million compared to $38.5 million in the first quarter of 2024.

The increase in Interest expense primarily reflects a higher average interest rate on the outstanding borrowings existing as of the end of the first quarter of 2025 as compared to those outstanding as of the first quarter of 2024.

Interest income - Interest income was $8.9 million for the first quarter of 2025, compared to $8.3 million in the first quarter of 2024.

Higher Interest income in 2025 primarily reflects higher cash balances in 2025 compared to 2024, partially offset by lower average interest rates.

Other expense, net - Other expense, net was $1.4 million for the first quarter of 2025, compared to Other expense, net of $5.0 million in the first quarter of 2024.

The change in Other expense, net during 2025 was driven primarily by variations in the movement of foreign currencies in the first quarter of 2025 when compared to the first quarter of 2024.

Income tax expense totaled $37.1 million on pre-tax income of $136.6 million in the first quarter of 2025 compared to income tax expense of $21.9 million on pre-tax income of $81.0 million in the first quarter of 2024.

Both periods were impacted by discrete tax events including the accrual of potential interest and penalties on uncertain tax positions.

During the third quarter of 2024, the Company recorded net discrete tax expense of $1.1 million compared to a net discrete tax benefit of $104.4 million in the third quarter of 2023.

The net unfavorable discrete tax expense for the third quarter of 2024 are primarily associated with interest accruals on uncertain tax positions.

The net favorable discrete tax benefit for the third quarter of 2023 is primarily associated with a tax benefit on the loss on assets held for sale of $473.0 million, offset by stock compensation and activity related to uncertain tax benefits, primarily interest accruals.

Absent discrete items, the tax rates for the third quarter of 2024 and 2023 were 22.7% and 23.2%, respectively.

The decrease in the base rate of 22.7% for the third quarter of 2024, relative to the third quarter of 2023, is primarily due to the mix of jurisdictions where the Company earned its profits combined with the timing of income recognition during 2023.

During the first quarter of 2025, the Company recorded a net discrete tax benefit of $0.3 million compared to a net discrete tax expense of $1.8 million in the first quarter of 2024.

The net discrete tax benefit for the first quarter of 2025 is primarily associated with stock-based compensation offset by activity related to uncertain tax benefits.

The net discrete tax expense for the first quarter of 2024 is primarily associated with stock-based compensation.

Absent discrete items, the tax rates for the first quarter of 2025 and 2024 were 23.1% and 22.4%, respectively.

The increase in the base rate of 23.1% for the first quarter of 2025, relative to the first quarter of 2024, is primarily due to the mix of jurisdictions where the Company earned its profits.

SEGMENT RESULTS

The following table presents net external revenues and operating profit (loss) for the Company's reportable segments for the three months ended September 29, 2024 and October 1, 2023:

The following table presents net external revenues and operating profit (loss) for the Company's reportable segments:

Three Months Ended

September 29,

2024 October 1,

2025 March 31,

Net revenues:

Consumer Products $ 860.1 $ 956.9 (10) %

Wizards of the Coast and Digital Gaming $ 462.1 $ 316.3 46 %

Consumer Products 398.3 413.0 (4) %

Entertainment 26.7 28.0 (5) %

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Operating profit (loss):

Consumer Products $ 121.0 $ 96.1 26 %

Wizards of the Coast and Digital Gaming $ 230.0 $ 122.8 87 %

Consumer Products (43.9) (46.9) (6) %

Entertainment (11.2) 5.8 (293) %

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Total Operating profit (loss) $ 170.7 $ 116.2 47 %

Consumer Products Segment

The following table presents the Consumer Products segment net revenues by major geographic region for the three months ended September 29, 2024 and October 1, 2023:

Three Months Ended

September 29,

2024 October 1,

North America $ 526.8 $ 573.6 (8) %

Europe 162.3 208.7 (22) %

Asia Pacific 81.9 61.8 33 %

Latin America 89.1 112.8 (21) %

Net revenues $ 860.1 $ 956.9 (10) %

The Consumer Products segment net revenues decreased 10% to $860.1 million for the third quarter of 2024 compared to $956.9 million for the third quarter of 2023 primarily driven by broader industry trends, exited businesses, including out-licensing certain brands, shifts in product mix, and reduced closeout sales as a result of last year's inventory clean up initiatives.

The net revenue decrease primarily reflects lower net revenues from NERF, MARVEL and STAR WARS products.

STAR WARS and MARVEL products benefited from a slate of entertainment releases in prior years without a more recent release entertainment release to support revenue in the third quarter of 2024.

These declines in revenue were partially offset by revenue growth from BEY BLADE and TRANSFORMERS products and licensing revenue from MY LITTLE PONY.

Consumer Products segment operating profit for the third quarter of 2024 was $121.0 million or 14.1% of segment net revenues, compared to a segment operating profit of $96.1 million or 10.0% of segment net revenues, for the third quarter of 2023.

The increase in operating profit in the third quarter of 2024 was driven by favorable product mix, and savings realized from the Company's cost savings initiatives, lower royalty expenses reflecting the mix of products sold, and lower freight costs, associated with the lower sales volumes.

Wizards of the Coast and Digital Gaming Segment

The following table presents Wizards of the Coast and Digital Gaming segment net revenues by category for the three months ended September 29, 2024 and October 1, 2023:

The following table presents Wizards of the Coast and Digital Gaming segment net revenues by category:

Three Months Ended

September 29,

2024 October 1,

2025 March 31,

Tabletop Gaming $ 343.8 $ 228.2 51 %

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Net revenues $ 462.1 $ 316.3 46 %

Wizards of the Coast and Digital Gaming segment net revenues decreased 4.6% in the third quarter of 2024 to $404.0 million from $423.6 million in the third quarter of 2023.

The net revenue decrease in the Wizards of the Coast and Digital Gaming segment during the third quarter of 2024 was primarily attributable to revenue contributions from higher digital licensing of Baldur's Gate 3 , the DUNGEONS & DRAGONS-based role-playing video game released during the third quarter 2023 with no comparable release during the third quarter 2024.

The net revenue decrease from Baldur's Gate 3 was partially offset by net revenue increase from MONOPOLY GO!

and Tabletop Gaming revenue which increased 2.2% behind growth in MAGIC:

THE GATHERING primarily due to strong demand for Bloomburrow , Duskmourn , and Festival in a Box.

Wizards of the Coast and Digital Gaming segment operating profit was $181.2 million, or 44.9% of segment net revenues for the third quarter of 2024, compared to operating profit of $203.4 million, or 48.0% of segment net revenues, for the third quarter of 2023.

The operating profit decrease during the third quarter of 2024 was driven by decreased net revenues and lower digital licensing revenue mix, partially offset from the benefit of, cost savings initiatives.

Entertainment Segment

The following table presents Entertainment segment net revenues by category for the three months ended September 29, 2024 and October 1, 2023:

Three Months Ended

September 29,

2024 October 1,

Film and TV $ 1.6 $ 102.1 (98) %

Family Brands 15.6 20.8 (25) %

Net revenues $ 17.2 $ 122.9 (86) %

Entertainment segment net revenues decreased 86% to $17.2 million for the third quarter of 2024, compared to $122.9 million for the third quarter of 2023.

The net revenue decrease in the Entertainment segment during the third quarter of 2024 was driven by lower net revenues as a result of the sale of the eOne Film and TV business during the fourth quarter of 2023.

Entertainment segment operating profit was $9.8 million, or 57.0% of segment net revenues for the third quarter of 2024, compared to an operating loss of $468.5 million, or 381% of segment net revenues for the third quarter of 2023.

The increase in Entertainment segment operating results during the third quarter of 2024 was driven by recording of a loss on assets held for sale of $473.0 million in the third quarter that related to the sale of the eOne Film and TV business.

Corporate and Other

Corporate and Other operating loss was $10.1 million for the third quarter of 2024 compared to an operating loss of $0.5 million for the third quarter of 2023.

The increase in operating loss in the third quarter of 2024 as compared to the third quarter of 2023 primarily reflects costs for certain retained liabilities associated with the eOne Film and TV business.

RESULTS OF OPERATIONS

The following table presents the consolidated results of operations for the nine months ended September 29, 2024 and October 1, 2023:

Nine Months Ended

September 29, 2024 October 1, 2023

Amount % of Net Revenues Amount % of Net Revenues

Net revenues $ 3,033.9 100.0 % $ 3,714.4 100.0 %

Costs and expenses:

Cost of sales 820.8 27.1 % 1,132.0 30.5 %

Program production cost amortization 24.5 0.8 % 325.3 8.8 %

Royalties 204.2 6.7 % 295.8 8.0 %

Product development 212.2 7.0 % 232.4 6.3 %

Advertising 213.8 7.0 % 249.8 6.7 %

Amortization of intangibles 51.2 1.7 % 65.1 1.8 %

Impairment of goodwill — — % 231.2 6.2 %

Loss on disposal of business 24.4 0.8 % 473.0 12.7 %

Selling, distribution and administration 852.6 28.1 % 1,050.0 28.3 %

Total costs and expenses 2,403.7 79.2 % 4,054.6 109.2 %

Operating profit (loss) 630.2 20.8 % (340.2) (9.2) %

Non-operating (income) expense:

Interest expense 127.7 4.2 % 140.0 3.8 %

Interest income (36.0) (1.2) % (15.6) (0.4) %

Other (income) expense, net (15.7) (0.5) % (0.7) — %

Total non-operating expense, net 76.0 2.5 % 123.7 3.3 %

Earnings (loss) before income taxes 554.2 18.3 % (463.9) (12.5) %

Income tax expense (benefit) 133.3 4.4 % (36.9) (1.0) %

Net earnings (loss) 420.9 13.9 % (427.0) (11.5) %

Net earnings attributable to noncontrolling interests 1.0 — % 1.2 — %

Net earnings (loss) attributable to Hasbro, Inc.

$ 419.9 13.8 % $ (428.2) (11.5) %

Net earnings (loss) per common share:

Basic $ 3.01 $ (3.09)

Diluted $ 3.00 $ (3.09)

Net revenues - Net revenues for the first nine months of 2024 decreased 18% to $3,033.9 million from $3,714.4 million for the first nine months of 2023 primarily driven by a $423.5 million, or 87%, decline in the Entertainment segment and a $334.9 million, or 16%, decline in the Consumer Products segment, partially offset by a $77.9 million, or 7%, increase in the Wizards of the Coast and Digital Gaming segment.

See the Segment Results discussion below for further details.

The following table presents net revenues by brand portfolio category for the nine months ended September 29, 2024 and October 1, 2023:

Nine Months Ended

September 29,

2024 October 1,

Franchise Brands $ 2,334.7 $ 2,412.8 (3) %

Partner Brands 402.4 533.8 (25) %

Portfolio Brands 296.8 370.6 (20) %

Non-Hasbro Branded Film & TV (1)

— 397.2 (100) %

Total $ 3,033.9 $ 3,714.4 (18) %

(1) Net revenues from the Company's Non-Hasbro-branded Film and TV portfolio were associated with the Company's non-core eOne Film and TV business sold to Lionsgate during the fourth quarter of 2023.

FRANCHISE BRANDS:

Net revenues in the Franchise Brands portfolio decreased $78.1 million, or 3%, in the first nine months of 2024, compared to the first nine months of 2023.

The net revenue decrease primarily reflects lower net revenues from NERF and TRANSFORMERS products.

Net revenues from TRANSFORMERS products in the first nine months of 2023 were supported by the June 2023 theatrical release of TRANSFORMERS:

Rise of the Beasts.

The lower net revenues from NERF and TRANSFORMERS products were partially offset by higher net revenues from MONOPOLY GO!

, along with MAGIC:

THE GATHERING products.

PARTNER BRANDS:

Net revenues from the Partner Brands portfolio decreased $131.4 million, or 25%, in the first nine months of 2024, compared to the first nine months of 2023.

During the first nine months of 2024, Partner Brands net revenue decreases were driven by lower net revenues from the Company's products for STAR WARS and MARVEL which benefited from a broader slate of entertainment releases in prior years without a more recent release entertainment release to support revenue in the first nine months of 2024.

Additionally, revenue in the first nine months of 2023 was higher due to the Company's products for INDIANA JONES supported by the June 2023 theatrical release of Indiana Jones and the Dial of Destiny .

PORTFOLIO BRANDS:

Portfolio Brands net revenues decreased $73.8 million, or 20%, in the first nine months of 2024 compared to the first nine months of 2023.

Lower net revenues from POWER RANGERS, BABY ALIVE, and PJ MASKS products were partially offset by revenue contributions from FURBY products following the Company's reintroduction of the brand and refreshed product line during the second quarter of 2023 and licensing revenue for MY LITTLE PONY trading cards.

NON-HASBRO BRANDED FILM & TV :

Net revenues from Non-Hasbro Branded Film & TV decreased $397.2 million in the first nine months of 2024 compared to the first nine months of 2023.

Net revenues from the Company's Non-Hasbro-branded Film and TV portfolio were associated with the eOne Film and TV business sold during the fourth quarter of 2023.

Effective in the first quarter of 2024, the Company moved the remaining Non-Hasbro Branded Film & TV brands into Portfolio Brands to align with the Company's Brand Strategy.

For comparability, net revenues for nine months ended October 1, 2023, has been reclassified to reflect the movement, resulting in a change of $1.2 million.

OPERATING COSTS AND EXPENSES

Cost of sales - Cost of sales for the first nine months of 2024 was $820.8 million, or 27.1% of net revenues, compared to $1,132.0 million, or 30.5% of net revenues, for the first nine months of 2023.

The Cost of sales decrease in dollars and as a percent of net revenues was driven primarily by lower sales volumes, supply chain productivity, and cost savings initiatives, and a non-recurring $26.7 million benefit related to a historical over-accrual of vendor commitment liabilities as discussed in Note 1 to the consolidated financial statements.

Program cost amortization - Program cost amortization decreased to $24.5 million, or 0.8% of net revenues, for the first nine months of 2024 from $325.3 million, or 8.8% of net revenues, for the first nine months of 2023.

The decrease in dollars and as a percent of net revenues during the first nine months of 2024 was driven by the impact of the sale of the eOne Film and TV business during the fourth quarter of 2023 as prior year Program costs were primarily associated with the eOne Film and TV business.

Royalties - Royalty expense for the first nine months of 2024 decreased to $204.2 million, or 6.7% of net revenues, compared to $295.8 million, or 8.0% of net revenues, for the first nine months of 2023.

The decrease in Royalty expense in dollars and as a percent of net revenues during the first nine months of 2024 directly reflects the impact of the sale of the eOne Film and TV business.

Product development - Product development expense for the first nine months of 2024 was $212.2 million, or 7.0% of net revenues, compared to $232.4 million, or 6.3% of net revenues, for the first nine months of 2023.

The decrease in Product development expense during the first nine months of 2024 was driven by cost savings initiatives from cost savings initiatives, along with phasing of product releases.

Advertising - Advertising expense for the first nine months of 2024 was $213.8 million, or 7.0% of net revenues, compared to $249.8 million, or 6.7% of net revenues, for the first nine months of 2023.

The Advertising expense decrease during the first nine months of 2024 was primarily driven by the sale of the eOne Film and TV business, along with declines in the advertising expense in the Consumer Products segment due to lower net revenues.

Amortization of intangibles - Amortization of intangible assets decreased to $51.2 million, or 1.7% of net revenues, for the first nine months of 2024, compared to $65.1 million, or 1.8% of net revenues, for the first nine months of 2023.

The decrease in 2024 reflects lower definite lived intangible assets due to the sale of the eOne Film and TV business and impairments taken in 2023.

See further detail of impairments taken in 2023 in Note 6 of the 2023 Annual Report.

Impairment of goodwill - There were no goodwill impairment charges during the first nine months of 2024.

During the first nine months of 2023, the Company recorded $231.2 million of goodwill impairment charges associated with goodwill assigned to the Company's Film and TV reporting unit.

See further details in the 2023 Annual Report.

Selling, distribution and administration - Selling, distribution and administration expenses decreased to $852.6 million, or 28.1% of net revenues for the first nine months of 2024, from $1,050.0 million, or 28.3% of net revenues, for the first nine months of 2023.

The decrease in Selling, distribution and administration expenses in dollars and as a percent of net revenues during the first nine months of 2024 primarily reflects lower administrative expenses due to cost savings from cost savings initiatives, a prior year intangible asset impairment charge of $65.0 million related to the Company's eOne trademark intangible asset, along with a non-recurring stock-compensation adjustment of $18.1 million recorded during the first quarter of 2024, partially offset by a non-recurring $31.1 million expense related to historical environmental exposures as discussed in Note 1 to the consolidated financial statements.

Operating Profit (Loss) - The operating profit for the first nine months of 2024 was $630.2 million, or 20.8% of net revenues, compared to an operating loss of $(340.2) million, or 9.2% of net revenues, for the first nine months of 2023 driven by the factors discussed above.

NON-OPERATING EXPENSE (INCOME)

Interest expense - Interest expense for the first nine months of 2024 totaled $127.7 million compared to $140.0 million in the first nine months of 2023.

The decrease in Interest expense for the first nine months of 2024 primarily reflects lower average outstanding borrowings in the first nine months of 2024 as compared to first nine months of 2023 due to the assumption of the production financing borrowings by Lionsgate as part of the eOne Film and TV business and due to the retirement of the Company's variable-rate Five-Year term loan using proceeds from the sale of the eOne Film and TV business, both occurring during the fourth quarter of 2023, partially offset by the issuance of the 2034 Notes (see Liquidity and Capital Resources discussion below for further information including description of the 2034 Notes).

Interest income - Interest income was $36.0 million for the first nine months of 2024, compared to $15.6 million in the first nine months of 2023.

Other income, net - Other income, net was $15.7 million for the first nine months of 2024, compared to Other income, net of $0.7 million in the first nine months of 2023.

The change in Other income, net during 2024 was driven primarily by an increase in foreign currency exchange gains the first nine months of 2024 as compared to the first nine months of 2023.

Income tax expense totaled $133.3 million on pre-tax income of $554.2 million in the first nine months of 2024 compared to an income tax benefit of $36.9 million on pre-tax loss of $463.9 million in the first nine months of 2023.

Both periods were impacted by discrete tax events including the accrual of potential interest and penalties on uncertain tax positions.

During the first nine months of 2024, the Company incurred a $24.4 million unfavorable adjustment to the 2023 Loss on Sale of the Film & TV reporting unit with no corresponding tax benefit.

The first nine months of 2023 includes an impairment of goodwill related to the Film & TV reporting unit of $231.2 million with no tax benefit.

During the first nine months of 2024, exclusive of the Loss on Sale adjustment, the Company recorded net discrete tax expense of $1.8 million compared to a net benefit, exclusive of the goodwill impairment, of $113.3 million in the first nine months of 2023.

The unfavorable net discrete tax expense for the first nine months of 2024 is primarily associated with stock-based compensation offset by the release of various uncertain tax positions.

The net discrete tax benefits recorded in the first nine months of 2023 is primarily associated with a tax benefit on the impairment of trade names in the Entertainment segment in the second quarter and the loss on assets held for sale of $473.0 million, recorded in the third quarter.

Absent discrete items, the tax rates for the first nine months of 2024 and 2023 were 22.7% and 25.0%, respectively.

The decrease in the base rate of 22.7% for the first nine months of 2024, relative to the first nine months of 2023, is primarily due to the mix of jurisdictions where the Company earned its profits coupled with a pre-tax loss in the first nine months of 2023.

SEGMENT RESULTS

The following table presents net external revenues and operating profit (loss) for the Company's reportable segments for the nine months ended September 29, 2024 and October 1, 2023:

Nine Months Ended

September 29,

2024 October 1,

Net revenues:

Consumer Products $ 1,797.6 $ 2,132.5 (16) %

Wizards of the Coast and Digital Gaming 1,172.3 1,094.4 7 %

Entertainment 64.0 487.5 (87) %

Total net revenues $ 3,033.9 $ 3,714.4 (18) %

Operating profit (loss):

Consumer Products $ 64.8 $ 61.5 5 %

Wizards of the Coast and Digital Gaming 551.1 422.5 30 %

Entertainment 14.6 (801.4) (102) %

Corporate and Other (0.3) (22.8) (99) %

Total Operating profit (loss) $ 630.2 $ (340.2) (285) %

Wizards of the Coast and Digital Gaming segment net revenues increased 46.1% in the first quarter of 2025 to $462.1 million from $316.3 million in the first quarter of 2024.

The net revenue increase in the Wizards of the Coast and Digital Gaming segment during the first quarter of 2025 was primarily attributable to revenue contributions from higher digital licensing related to MONOPOLY GO!

, as well as an increase in Tabletop Gaming revenue which increased 50.7% behind growth in MAGIC:

THE GATHERING, primarily due to strong demand for Aetherdrift and Tarkir Dragonstorm , as well as other various Backlist sets.

Wizards of the Coast and Digital Gaming segment operating profit was $230.0 million, or 49.8% of segment net revenues for the first quarter of 2025, compared to operating profit of $122.8 million, or 38.8% of segment net revenues, for the first quarter of 2024.

Operating profit increased during the first quarter of 2025 driven by increased net revenues and continued growth in digital licensing.

Consumer Products Segment

The following table presents the Consumer Products segment net revenues by major geographic region for the nine months ended September 29, 2024 and October 1, 2023:

Nine Months Ended

September 29,

2024 October 1,

The following table presents the Consumer Products segment net revenues by major geographic region:

Three Months Ended

2025 March 31,

North America $ 231.4 $ 239.1 (3) %

3 unchanged sentences

Net revenues $ 398.3 $ 413.0 (4) %

The Consumer Products segment net revenues decreased 16% to $1,797.6 million for the first nine months of 2024 compared to $2,132.5 million for the first nine months of 2023 primarily driven by broader industry trends, exited businesses, including out-licensing certain brands, shifts in product mix, and reduced closeout sales as a result of last year's inventory clean up initiatives.

The net revenue decrease primarily reflects lower net revenues from NERF, TRANSFORMERS, STAR WARS and MARVEL products.

Net revenues from TRANSFORMERS products in the first nine months of 2023 were supported by the June 2023 theatrical release of TRANSFORMERS:

Rise of the Beasts.

The net revenue decrease was also driven by lower net revenues from the Company's products for STAR WARS and MARVEL which benefited from a slate of entertainment releases in prior years without a more recent release entertainment release to support revenue in the first nine months of 2024.

These revenue decreases were partially offset by revenue contributions from FURBY products following the Company's reintroduction of the brand and refreshed product line during the second quarter of 2023 and licensing revenue for MY LITTLE PONY trading cards.

Consumer Products segment operating profit for the first nine months of 2024 was $64.8 million or 3.6% of segment net revenues, compared to a segment operating profit of $61.5 million or 2.9% of segment net revenues, for the first nine months of 2023.

The increase in operating profit in the first nine months of 2024 was driven by favorable licensing product mix, supply chain productivity, and cost savings realized from cost savings initiatives, partially offset by the lower sale volumes contributions.

Wizards of the Coast and Digital Gaming Segment

The following table presents Wizards of the Coast and Digital Gaming segment net revenues by category for the nine months ended September 29, 2024 and October 1, 2023:

Nine Months Ended

September 29,

2024 October 1,

Tabletop Gaming $ 832.6 $ 806.9 3 %

Digital and Licensed Gaming 339.7 287.5 18 %

Net revenues $ 1,172.3 $ 1,094.4 7 %

Wizards of the Coast and Digital Gaming segment net revenues increased 7% in the first nine months of 2024 to $1,172.3 million from $1,094.4 million in the first nine months of 2023.

The net revenue increase in the Wizards of the Coast and Digital Gaming segment during the first nine months of 2024 was primarily attributable to revenue contributions from higher digital licensing of Baldur's Gate 3 , the DUNGEONS & DRAGONS-based role-playing video game released during the third quarter 2023, and MONOPOLY GO!

Tabletop Gaming revenue increased 3% behind growth in MAGIC:

THE GATHERING primarily due to strong demand for Bloomburrow , Duskmourn, and Modern Horizons 3.

Wizards of the Coast and Digital Gaming segment operating profit was $551.1 million, or 47.0% of segment net revenues for the first nine months of 2024, compared to operating profit of $422.5 million, or 38.6% of segment net revenues, for the first nine months of 2023.

The operating profit increase during the first nine months of 2024 was driven by increased net revenues, contributions from higher digital licensing revenue mix, lower royalty expense, and cost savings initiatives.

The Consumer Products segment net revenues decreased 4% to $398.3 million for the first quarter of 2025 compared to $413.0 million for the first quarter of 2024 primarily driven by broader industry trends and shifts in product mix.

The net revenue decrease primarily reflects lower net revenues from NERF, GI JOE and PLAY-DOH products.

These declines in revenue were partially offset by revenue growth from BEY BLADE, MARVEL, and TRANSFORMERS products, as well as an increase in consumer product licensing revenue from MY LITTLE PONY.

Consumer Products segment operating loss for the first quarter of 2025 was $43.9 million or 11.0% of segment net revenues, compared to a segment operating loss of $46.9 million or 11.4% of segment net revenues, for the first quarter of 2024.

The decrease in operating loss in the first quarter of 2025 was driven by savings realized from the Company's cost savings and transformation initiatives, offset by a decrease in net revenues, higher royalty expenses, reflecting the mix of products sold, and higher advertising costs.

Entertainment Segment

The following table presents Entertainment segment net revenues by category for the nine months ended September 29, 2024 and October 1, 2023:

Nine Months Ended

September 29,

2024 October 1,

The following table presents Entertainment segment net revenues by category:

Three Months Ended

2025 March 31,

Film and TV $ 4.3 $ — >100%

1 unchanged sentence

Net revenues $ 26.7 $ 28.0 (5) %

Entertainment segment net revenues decreased 87% to $64.0 million for the first nine months of 2024, compared to $487.5 million for the first nine months of 2023.

The net revenue decrease in the Entertainment segment during the first nine months of 2024 was driven by lower net revenues as a result of the sale of the eOne Film and TV business during the fourth quarter of 2023.

Entertainment segment operating profit was $14.6 million, or 23% of segment net revenues for the first nine months of 2024, compared to an operating loss of $801.4 million, or 164% of segment net revenues for the first nine months of 2023.

The increase in Entertainment segment operating results during the first nine months of 2024 was driven by a goodwill impairment charge of $231.2 million and intangible asset impairment charges of $65.0 million recorded during the first nine months of 2023, associated with the impairment review of the Company's Film and TV reporting unit.

In the third quarter of 2023, the Entertainment segment recognized a loss on assets held for sale of $473.0 million that related to the sale of the non-core eOne Film and TV Business.

Entertainment segment net revenues decreased 5% to $26.7 million for the first quarter of 2025, compared to $28.0 million for the first quarter of 2024.

The net revenue decrease in the Entertainment segment during the first quarter of 2025 was driven primarily by the timing of entertainment streaming renewals.

Entertainment segment operating loss was $11.2 million, or 41.9% of segment net revenues for the first quarter of 2025, compared to an operating profit of $5.8 million, or 21% of segment net revenues for the first quarter of 2024.

The decrease in operating profit in Entertainment segment operating results during the first quarter of 2025 was driven by a non-recurring Loss on disposal of business of $25.0 million recorded during the quarter.

Corporate and Other

Corporate and Other operating loss was $0.3 million for the first nine months of 2024 compared to an operating loss of $22.8 million for the first nine months of 2023.

The decrease in operating loss in the first nine months of 2024 as compared to the first nine months of 2023 reflects cost savings realized from cost savings initiatives and a benefit from an non-recurring adjustment for stock compensation expense reversal recorded in the first quarter of 2024, partially offset by the net impact of the two prior period non-recurring adjustments recorded during the second quarter of 2024.

R efer to Note 1 to the consolidated financial statements for further information on these non-recurring adjustments.

Corporate and Other operating loss was $4.2 million for the first quarter of 2025 compared to an operating profit of $34.5 million for the first quarter of 2024.

The decrease in operating profit in the first quarter of 2025 as compared to the first quarter of 2024 primarily reflects a non-recurring benefit from the reversal of stock compensation expense recorded in the first quarter of 2024.

Refer to Note 1, Basis of Presentation, to the consolidated financial statements for further information on the stock compensation adjustment.

OTHER INFORMATION

2 unchanged sentences

Refer to Item 7 of our 2024 Annual Report for additional information regarding the Company’s cash obligations and commitments as of the end of fiscal year 2024 .

Additionally, refer to Note 14 to the consolidated financial statements for a discussion of the Company’s commitments and contingencies.

Additionally, refer to Note 14, Commitments and Contingencies, to the consolidated financial statements for a discussion of the Company’s commitments and contingencies.

Contractual obligations and commercial commitments, as detailed in the Company's 2024 Form 10-K, did not materially change outside of certain payments made in the normal course of business and as otherwise set forth in this report.

4 unchanged sentences

The Company may also issue debt or equity securities from time to time, to provide additional sources of liquidity when pursuing opportunities to enhance our long-term competitive position, while maintaining a strong balance sheet.

As of September 29, 2024, the Company's cash and cash equivalents totaled $696.1 million, and the Company's short-term investments totaled $489.3 million.

The majority of the Company’s cash and cash equivalents held outside of the United States as of September 29, 2024, are denominated in the U.S.

The impact of tariffs on the Company's business operations was not significant during the first three months of 2025 and throughout 2024;

however significant changes in trade policy announced by the U.S.

government during the second quarter of 2025 could result in material adverse impacts to our forward-looking financial results, including the timing and extent of cash flows based upon timing in customer buying patterns and changes in our supply chain sourcing strategies.

As of March 30, 2025, the Company's cash and cash equivalents totaled $621.1 million.

The majority of the Company’s cash and cash equivalents held outside of the United States as of March 30, 2025 are denominated in the U.S.

Under the Company’s commercial paper program, at the request of the Company and subject to market conditions, the Company may issue notes from time to time up to an aggregate principal amount outstanding at any given time of $1.0 billion.

The Company intends to use the commercial paper program as its primary short-term borrowing facility.

As of September 29, 2024, the Company had no outstanding borrowings related to the commercial paper program.

As of March 30, 2025, the Company had no outstanding borrowings related to the commercial paper program.

The Company’s revolving credit facility with Bank of America, provides the Company with commitments having a maximum aggregate principal amount of $1.25 billion.

1 unchanged sentence

The Company's revolving credit facility contains certain financial covenants setting forth leverage and coverage requirements, and certain other limitations typical of an investment grade facility, including with respect to liens, mergers and incurrence of indebtedness.

The Company was in compliance with all covenants as of September 29, 2024.

The Company had no borrowings outstanding under its revolving credit facility as of September 29, 2024.

However, letters of credit outstanding under this facility as of September 29, 2024 were approximately $4.0 million.

Amounts available and unused under the revolving credit facility at September 29, 2024 were approximately $1.2 billion, inclusive of borrowings under the Company’s commercial paper program.

The Company also has other uncommitted lines from various banks, of which approximately $7.8 million was utilized as of September 29, 2024.

The Company was in compliance with all covenants as of March 30, 2025.

The Company had no borrowings outstanding under its revolving credit facility as of March 30, 2025.

However, letters of credit outstanding under this facility as of March 30, 2025 were approximately $3.7 million.

Amounts available and unused under the revolving credit facility at March 30, 2025 were approximately $1.25 billion, inclusive of borrowings under the Company’s commercial paper program.

The Company also has other uncommitted lines

from various banks, of which approximately $7.8 million was utilized as of March 30, 2025.

Of the amount utilized under, or supported by, the uncommitted lines, the full $7.8 million represented letters of credit.

The Company has principal amounts of long-term debt as of September 29, 2024 of $4.0 billion, due at varying times from 2024 through 2044.

Of the total principal amount of long-term debt, $500.0 million is current as of September 29, 2024 which represents the Company's 3% fixed-rate notes due November 2024 (the "2024 Notes").

See Note 8 to the Company’s consolidated financial statements for additional information on long-term debt and long-term debt interest repayment, respectively.

In May 2024, the Company issued an aggregate of $500.0 million of senior unsecured debt securities that bears a fixed interest of 6.05% due 2034 (the "2034 Notes").

In connection with the issuance of the 2034 Notes, the 2034 Notes were issued with an original issuance discount of $1.4 million and capitalized $5.3 million of debt issuance costs.

The original issuance discount and debt issuance costs will be amortized over the term of the 2034 Notes.

It is anticipated that proceeds from the 2034 Notes, along with existing cash available, will be utilized to repay the 2024 Notes.

As of September 29, 2024, the Company had invested the proceeds from the 2034 Notes in short-term investments.

As of March 30, 2025, the Company had $3,331.5 million of Long-term debt due at varying times from 2026 through 2044.

From time to time, the Company or its affiliates may seek to retire or purchase outstanding debt through cash purchases, in open-market purchases, privately negotiated transactions or otherwise.

Such repurchases, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

During 2025, the Company repurchased $50.4 million of its outstanding debt.

The Company has a supplier finance program which provides participating suppliers the option of receiving payment in advance of an invoice due date, to be paid by certain administering banks, on the basis of invoices that the Company has confirmed as valid and approved.

4 unchanged sentences

The Company or the administering bank may terminate the agreement upon at least 30 days’ written notice.

The amount of obligations confirmed under the supplier finance program that remain unpaid by the Company were $118.7 million, $105.7 million, and $43.3 million as of September 29, 2024, October 1, 2023 and December 31, 2023, respectively.

The amount of obligations confirmed under the supplier finance program that remain unpaid by the Company were $51.2 million, $47.7 million, and $66.2 million as of March 30, 2025, March 31, 2024 and December 29, 2024, respectively.

These obligations are presented within Accounts payable in the Company's Consolidated Balance Sheets.

The activity related to this program is reflected within the operating activities section of the Consolidated Statements of Cash Flows.

The following table summarizes the changes in the Consolidated Statement of Cash Flows, expressed in millions of dollars, for the nine months ended September 29, 2024 and October 1, 2023.

Nine Months Ended

September 29,

2024 October 1,

The following table summarizes the changes in the Consolidated Statement of Cash Flows:

Three Months Ended

2025 March 31,

Net cash provided by (utilized for):

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Financing activities (162.4) (108.9)

Net cash provided by Operating activities in the first nine months of 2024 was $587.6 million compared to $334.9 million in the first nine months of 2023.

The $252.7 million increase in net cash provided by Operating activities after adjusting for non-cash items, was primarily attributable to improved net income in the first nine months of 2024 compared to first nine months of 2023, and working capital benefits, primarily as a result of the sale of the eOne Film and TV business.

Net cash utilized for Investing activities was $635.4 million in the first nine months of 2024 compared to net cash utilized for Investing activities of $162.6 million in the first nine months of 2023.

Additions to property, plant and equipment were $146.2 million in the first nine months of 2024 compared to $160.4 million in the first nine months of 2023 and purchase of Short-term Investments of $571.0 million in the first nine months of 2024 primarily from the proceeds of the 2034 Notes compared to the prior year with no similar activity.

Net cash provided by Financing activities was $190.8 million in the first nine months of 2024 compared to net cash utilized of $418.0 million in the first nine months of 2023.

Financing activities in the first nine months of 2024 primarily include $500.0 million of proceeds from issuance of the 2034 Notes, dividends paid of $292.2 million and $13.0 million of payments related to tax withholdings for stock compensation coinciding with equity award vesting activity.

Financing activities in the first nine months of 2023 include $290.9 million of dividends paid, $60.0 million of principal amortization payments toward the Company's Five-Year Tranche loan, which was retired during the fourth quarter of 2023 using the proceeds received from the sale of eOne Film and TV, as well as drawdowns of $117.9 million and repayments of $162.0 million related to production financing loans, all of which were assumed by Lionsgate effective upon the closing of the sale of the eOne Film and TV business in the fourth quarter of 2023, and $15.7 million of payments related to tax withholdings for stock compensation coinciding with equity award vesting activity.

Net cash provided by Operating activities in the first three months of 2025 was $138.1 million compared to $177.8 million in the first three months of 2024.

The $39.7 million decrease in net cash provided by Operating activities after adjusting for non-cash items, was primarily attributable to changes in net working capital primarily the timing of accounts receivable in the first three months of 2024, partially offset by improved net income in the first three months of 2025 compared to first three months of 2024.

Net cash utilized for Investing activities was $52.4 million in the first three months of 2025 compared to net cash utilized for Investing activities of $48.1 million in the first three months of 2024.

Additions to property, plant and equipment and software were $13.8 million and $29.4 million, respectively, in the first three months of 2025 compared to $22.1 million and $23.7 million, respectively, in the first three months of 2024.

Additionally, a purchase of Long-term Investments of $10.0 million occurred in the first three months of 2025 with no similar activity in the first three months of 2024.

Net cash utilized by Financing activities was $162.4 million in the first three months of 2025 compared to net cash utilized of $108.9 million in the first three months of 2024.

Financing activities in the first three months of 2025 primarily include dividends paid of $97.9 million, repayments of long-term debt of $49.2 million, and $17.7 million of payments related to tax withholdings for stock compensation coinciding with equity award vesting activity.

Financing activities in the first three months of 2024 included $97.2 million of dividends paid and $10.2 million of payments related to tax withholdings for stock compensation coinciding with equity award vesting activity.

CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES

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The Company does not speculate in foreign currency exchange contracts.

See Note 12 to the Company’s consolidated financial statements for further details on the Company's derivatives.

As of September 29, 2024, the Company had fixed-rate debt of $4.0 billion.

See Note 12, Derivative Financial Instruments, to the Company’s consolidated financial statements for further details on the Company's derivatives.

As of March 30, 2025, the Company had fixed-rate debt of $3.4 billion.

The Company may from time to time assess interest rate swaps related to its outstanding debt.

The Company did not have any outstanding swaps as of September 29, 2024, October 1, 2023, or December 31, 2023.

The impact of inflation on the Company's business operations was significant during the first nine months of 2024 and throughout 2023.

The Company did not have any outstanding swaps as of March 30, 2025, March 31, 2024, or December 29, 2024.

The impact of inflation on the Company's business operations was significant during the first three months of 2025 and throughout 2024.

The Company monitors the impact of inflation to its business operations on an ongoing basis and may need to implement actions such as price adjustments to mitigate the impact of changes to the rate of inflation in future periods.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis