HASBRO, INC. - Quarter Report: 2024 March (Form 10-Q)

HASBRO, INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(Unaudited)

(1)

The quarters ended March 31, 2024 and April 2, 2023 were 13-week and 14-week periods, respectively.

The results of operations for the quarter ended March 31, 2024 are not necessarily indicative of results to be expected for the full year 2024, nor were those of the comparable 2023 period representative of those actually experienced for the full year 2023.

These consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and disclosures normally included in the consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The Company filed with the SEC audited consolidated financial statements for the fiscal year ended December 31, 2023 in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 ("2023 Form 10-K"), which includes all such information and disclosures and, accordingly, should be read in conjunction with the financial information included herein.

Other Adjustments

During the quarter ended March 31, 2024, the Company corrected a prior year error and recorded an $ million benefit related to the reversal of stock compensation expense for the Company's performance stock awards that should have been recorded during fiscal year 2023. The $ million benefit recorded during the quarter ended March 31, 2024 is not considered to be material to the full year 2023 or 2024 consolidated financial statements.

Significant Accounting Policies

The Company's significant accounting policies are summarized in note 1 to the consolidated financial statements included in the Company's 2023 Form 10-K.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(2)

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

$ Recognized in current year Amounts reclassified to accounts receivable()()Foreign currency impact Ending Balance$ $ LiabilitiesBalance at beginning of the year$ $ Recognized in current year Amounts in beginning balance reclassified to revenue()()Current year amounts reclassified to revenue()()Foreign currency impact()()Ending Balance$ $

Unsatisfied performance obligations

Unsatisfied performance obligations relate primarily to in-production television content to be delivered in the future under existing agreements with partnering content providers such as broadcasters, distributors, television networks and subscription video on demand services. As of March 31, 2024, unrecognized revenue attributable to unsatisfied performance obligations expected to be recognized in the future was $ million. Of this amount, we expect to recognize $ million in the remainder of 2024 and $ million in 2025. These amounts include only fixed consideration.

Accounts Receivable and Allowance for Credit Losses

The Company’s balance for accounts receivable on the Consolidated Balance Sheets as of March 31, 2024 and April 2, 2023 are primarily from contracts with customers.

$ Charged to costs and expenses, net Foreign currency impact() Ending balance$ $

brand categories: Franchise Brands, Partner Brands and Portfolio Brands. We believe these collectively depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

Effective in the first quarter of 2024, subsequent to the sale of the eOne Film and TV business (as defined in Note 3), 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 quarter ended April 2, 2023, has been reclassified to reflect the movement, resulting in a change of $ million.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

$ Europe Asia Pacific Latin America Net revenues$ $

$ Digital and Licensed Gaming Net revenues$ $

The following table represents consolidated Entertainment segment net revenues by category for the quarters ended March 31, 2024 and April 2, 2023:


	March 31, 2024	April 2, 2023
Film and TV	$	$
Family Brands
Net revenues	$	$

The following table presents consolidated net revenues by brand portfolio for the quarters ended March 31, 2024 and April 2, 2023:


Net revenues	March 31, 2024	April 2, 2023
Franchise Brands	$	$
Partner Brands
Portfolio Brands
Non-Hasbro Branded Film & TV (1)
Total	$	$

(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.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(3)

million in cash, subject to the satisfaction of customary net working capital closing conditions and holdbacks for certain retained liabilities, plus the assumption by Lionsgate of production financing loans.

The Company recorded a pre-tax non-cash charge of $ million within Loss on disposal of business on the Consolidated Statements of Operations for the year ended December 31, 2023. The Company also recorded pre-tax cash transaction expenses of $ million within Selling, distribution and administration expense on the Consolidated Statements of Operations for the year ended December 31, 2023. See note 3 of the Company's 2023 Annual Report for further detail of the Company's sale of the eOne Film and TV business.

(4)

$()Average shares outstanding Effect of dilutive securities:Options and other share-based awards Equivalent Shares Net earnings (loss) attributable to Hasbro, Inc. per common shareBasic$ $()Diluted$ $()

For the quarters ended March 31, 2024 and April 2, 2023, options and restricted stock units totaling million and million, respectively, were excluded from the calculation of diluted earnings per share because to include them would have been anti-dilutive. Of the fiscal 2023 amount, million would have been included in the calculation of diluted shares had the Company not had a net loss for the quarter ended April 2, 2023. Assuming that these awards and options were included, under the treasury stock method, they would have resulted in an additional million being included in the diluted earnings per share calculation for the quarter ended April 2, 2023.

(5)

$$$Foreign exchange translation()()()()Balance as of March 31, 2024$$$$

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

$$$Foreign exchange translation

Balance as of April 2, 2023 (1)

$$$$

(1) During the second and fourth quarters of 2023, the Company recorded $ million and $ million of non-cash goodwill impairments charges, respectively, within the Entertainment segment. See further detail in the 2023 Annual Report.

(6)

$ Reclassifications to earnings, tax effect:Tax (benefit) expense on cash flow hedging activities() Total tax effect on other comprehensive earnings (loss)$()$

)$()$()$()$()Current period other comprehensive earnings (loss) ()()Balance at March 31, 2024$()$()$()$()$()2023Balance at December 25, 2022$()$()$()$()$()

(1) Investments in productions and investments in acquired content totaling $ million were removed from the Company's balance sheet as of December 31, 2023, in connection with the sale of the eOne Film and TV business completed on December 27, 2023. See note 3 for additional information.

million of program cost amortization related to released programming during the quarter ended March 31, 2024, consisting of the following:

March 31,
2024

April 2,
2023

Investment in production

Investment in content

Total program cost amortization

(10)

% for the quarter ended March 31, 2024 and ()% for the quarter ended April 2, 2023. The following items caused the year-to-date ETR in 2024 to be significantly different from the prior year first quarter ETR:

•During the quarter ended March 31, 2024, the Company recorded a net discrete tax expense of $ million, primarily associated with stock-based compensation.

•During the quarter ended April 2, 2023, the Company recorded a net discrete tax expense of $ million, primarily associated with stock-based compensation coupled with a pre-tax loss for the quarter.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(11)

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

$ $ $ Derivatives Total assets$ $ $ $ Liabilities:Derivatives $ $ $ $ Option agreement Total liabilities$ $ $ $ April 2, 2023Assets:

Available-for-sale securities (1)

$ $ $ $ Derivatives Total assets$ $ $ $ Liabilities:Derivatives$ $ $ $ Option agreement Total liabilities$ $ $ $ December 31, 2023Assets:

Available-for-sale securities (1)

$ $ $ $ Derivatives Total assets$ $ $ $ Liabilities:Derivatives$ $ $ $ Option agreement Total Liabilities$ $ $ $

The Company's derivatives primarily consist of foreign currency forward and option contracts. The Company uses current forward rates of the respective foreign currencies to measure the fair value of these contracts. There were no changes in these valuation techniques during the quarter ended March 31, 2024. There were no material changes to fair value measurements of the Company's financial instruments which use significant unobservable inputs (Level 3) for both the quarters ended March 31, 2024 and April 2, 2023.

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(12)

$ $ $()$ $()Sales () ()Production financing and other () ()Total$ $()$ $()$ $()

The Company has a master agreement with each of its counterparties that allows for the netting of outstanding forward contracts.

$ $ Unrealized losses()()()Net unrealized gains$ $ $ Other AssetsUnrealized gains$ $ $ Net unrealized gains$ $ $ Accrued liabilitiesUnrealized gains$ $ $ Unrealized losses()()()Net unrealized losses$()$()$()

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

$ Net revenues() Other()()Net realized (losses) gains$()$

Undesignated Hedges

The Company also enters into foreign currency forward contracts to minimize the impact of changes in the fair value of intercompany loans due to foreign currency changes. The Company does not use hedge accounting for these contracts as changes in the fair values of these contracts are substantially offset by changes in the fair value of the intercompany loans. As of March 31, 2024, April 2, 2023 and December 31, 2023, the total notional amounts of the Company's undesignated derivative instruments were $ million, $ million and $ million, respectively.

$ $ Unrealized losses()() Net unrealized gains$ $ $ Accrued liabilitiesUnrealized gains$ $ $ Unrealized losses()()()Net unrealized losses$()$()$()

The Company recorded net gains of $ million and $ million on these instruments to Other (income) expense, net for the quarters ended March 31, 2024 and April 2, 2023, respectively, relating to the change in fair value of such derivatives, substantially offsetting gains and losses from the change in fair value of intercompany loans to which the contracts relate.

For additional information related to the Company's derivative financial instruments (see notes 6 and 11).

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(13)

million in severance and other employee expenses related to these programs included within Other accrued liabilities in the Consolidated Balance Sheets, after making payments of $ million in the first quarter of 2024. Substantially all of the remaining cash payments related to these programs are expected to be made by the end of 2024.

During 2022 and 2023, Hasbro implemented its Operational Excellence program ("the Program"), an ongoing enterprise-wide initiative intended to improve our business through programs that include targeted cost-savings, supply chain transformation and certain other restructuring actions designed to drive growth and enhance shareholder value. The Company's organizational structure changes have resulted and will further result in workforce reductions as well as the reallocation of people and resources, which will include voluntary early retirement for certain groups of employees and additional involuntary reduction in employees ("Additional Actions"). The Company currently anticipates that the Additional Actions will be substantially complete over the next to months.

Charges related to the Program were recorded in Selling, distribution and administration within Corporate and Other. Going forward, the Company may implement further cost-saving initiatives under the Program that could result in additional restructuring charges including severance and other employee charges.

$ Charges Payments()()Ending Balance$ $

(14)

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

(15)

Condensed Notes to Consolidated Financial Statements

(Millions of Dollars and Shares Except Per Share Data)

$ Wizards of the Coast and Digital Gaming Entertainment Corporate and Other Total net revenues:$ $ Intercompany revenues: (b)Consumer Products$ $ Wizards of the Coast and Digital Gaming Entertainment Corporate and Other()()Total intercompany revenues:$ $ Operating profit (loss):Consumer Products $()$()Wizards of the Coast and Digital Gaming Entertainment (a) ()Corporate and Other (a) (c) ()Total Operating profit Interest expense Interest income()()Other non-operating expense (income) ()Earnings (loss) before income taxes$ $()

(a) Certain long-term assets, including property, plant and equipment, goodwill and other intangibles, which benefit multiple operating segments, are included in both Entertainment and Corporate and Other. Allocations of certain Corporate and Other expenses, related to these assets are made to the individual operating segments at the beginning of the year based on budgeted amounts. Any differences between actual and budgeted amounts are reflected in Corporate and Other because allocations are translated from the U.S. Dollar to local currency at budgeted rates when recorded. Corporate and Other also includes the elimination of inter-company balance sheet amounts.

(b) Amounts represent revenues from transactions with other operating segments that are included in the operating profit (loss) of the segment.

(c) Corporate and Other Operating profit (loss) includes Operational Excellence related transformation office and consulting fees of $ million and $ million, for the quarters ended March 31, 2024 and April 2, 2023, respectively, which are recorded within Selling, distribution and administration costs within the Consolidated Statements of Operations. Third party consultants were engaged to assist the Company in performing a comprehensive review of operations and developing a transformation plan designed to support the organization in identifying, realizing, and capturing savings through the identification of organizational initiatives intended to create efficiencies and improve business processes and operations. The consultants assisted in providing benchmark data and are currently assisting with the design of an improved operating model and supply chain function. The Company expects this consulting assistance to conclude within 2024 in line with the planning stages of the final components of the transformation plan.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

(Dollar and share amounts in tables presented in millions, unless otherwise noted)

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 2023 Annual Report.

Overview

Hasbro, Inc. ("Hasbro") is a game, toy, and intellectual property company whose mission is to entertain and connect generations of fans through 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.

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 experienced stronger than expected market headwinds within our Consumer Products business, resulting in our 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.

During the first quarter of 2024, the Company experienced expected declines in revenue from $1,001.0 million in the first quarter of 2023 to $757.3 million in the first quarter of 2024 driven primarily by the sale of eOne Film and TV business and by broader industry trends, exited businesses, and reduced closeout sales in the Consumer Products business. The Company made strong progress towards its ongoing turnaround efforts while achieving a strong operating profit of $116.2 million in the first quarter of 2024 as compared to $17.9 million in first quarter of 2023. 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 quarters ended March 31, 2024 and April 2, 2023.


	March 31, 2024				April 2, 2023
	Amount		% of Net Sales		Amount		% of Net Sales
Net revenues	$	757.3	100.0	%	$	1,001.0	100.0	%
Costs and expenses:
Cost of sales	204.2		27.0	%	285.3		28.5	%
Program cost amortization	8.1		1.1	%	122.5		12.2	%
Royalties	50.9		6.7	%	69.0		6.9	%
Product development	65.5		8.6	%	83.3		8.3	%
Advertising	51.5		6.8	%	82.8		8.3	%
Amortization of intangibles	17.0		2.2	%	23.1		2.3	%
Selling, distribution and administration	234.8		31.0	%	317.1		31.7	%
Loss on disposal of business	9.1		1.2	%	—		—	%
Total costs and expenses	641.1		84.7	%	983.1		98.2	%
Operating profit	116.2		15.3	%	17.9		1.8	%
Non-operating expense (income):
Interest expense	38.5		5.1	%	46.3		4.6	%
Interest income	(8.3)		(1.1)	%	(6.0)		(0.6)	%
Other expense (income), net	5.0		0.7	%	(1.4)		(0.1)	%
Total non-operating expense, net	35.2		4.6	%	38.9		3.9	%
Earnings (loss) before income taxes	81.0		10.7	%	(21.0)		(2.1)	%
Income tax expense	21.9		2.9	%	0.7		0.1	%
Net earnings (loss)	59.1		7.8	%	(21.7)		(2.2)	%
Net earnings attributable to noncontrolling interests	0.9		0.1	%	0.4		—	%
Net earnings (loss) attributable to Hasbro, Inc.	$	58.2	7.7	%	$	(22.1)	(2.2)	%

Net earnings (loss) per common share:
Basic	$	0.42			$	(0.16)
Diluted	$	0.42			$	(0.16)

Net revenues - Net revenues for the first quarter of 2024 declined 24% to $757.3 million from $1,001.0 million for the first quarter of 2023 primarily driven by a $157.4 million, or 85%, decline in the Entertainment segment and a $107.4 million, or 21%, decline in the Consumer Products segment, partially offset by a $21.1 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 quarters ended March 31, 2024 and April 2, 2023:


	Quarter Ended
	March 31, 2024		April 2, 2023		% Change
Franchise Brands	$	606.5	$	613.4	-1	%
Partner Brands	87.7		132.7		-34	%
Portfolio Brands	63.1		92.1		-31	%
Non-Hasbro Branded Film & TV (1)	—		162.8		-100	%
Total	$	757.3	$	1,001.0	-24	%

(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 $6.9 million, or 1%, in the first quarter of 2024, compared to the first quarter of 2023. The net revenue decrease primarily reflects lower net revenues from NERF products and TRANSFORMERS products. Net revenues from TRANSFORMERS products in the first quarter 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 MAGIC: THE GATHERING products, primarily due to the timing of set releases in the third quarter of 2023 and along with higher revenues from PEPPA PIG.

PARTNER BRANDS: Net revenues from the Partner Brands portfolio decreased $45.0 million, or 34% in the first quarter of 2024, compared to the first 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 first 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 robust slate of entertainment releases in prior years without a more recent release entertainment release to support revenue in the first quarter of 2024. Additionally, revenue in the first 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 31% in the first quarter of 2024 compared to the first quarter of 2023. Lower net revenues from MY LITTLE PONY, POWER RANGERS, 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.

NON-HASBRO BRANDED FILM & TV: Net revenues from Non-Hasbro Branded Film & TV decreased $162.8 million in the first quarter of 2024 compared to the first 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 quarter ended April 2, 2023, has been reclassified to reflect the movement, resulting in a change of $0.1 million.

OPERATING COSTS AND EXPENSES

Cost of sales - Cost of sales for the first quarter of 2024 was $204.2 million, or 27.0% of net revenues, compared to $285.3 million, or 28.5% of net revenues, for the first quarter of 2023. The Cost of sales decrease in dollars was driven primarily by lower sales volumes as well as cost savings from the Company's Operational Excellence Program.

Program cost amortization - Program cost amortization decreased to $8.1 million, or 1.1% of net revenues, for the first quarter of 2024 from $122.5 million, or 12.2% of net revenues, for the first 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 first 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 first quarter of 2024 decreased to $50.9 million, or 6.7% of net revenues, compared to $69.0 million, or 6.9% of net revenues, for the first quarter of 2023. 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 in dollars and as a percent of net revenues during the first quarter of 2024 directly reflects the impact of the sale of the eOne Film and TV business.

Product development - Product development expense for the first quarter of 2024 was $65.5 million, or 8.6% of net revenues, compared to $83.3 million, or 8.3% of net revenues, for the first quarter of 2023. The decrease in Product development expense during the first quarter of 2024 was driven by the Company's Operational Excellence Program along with phasing of product releases.

Advertising - Advertising expense for the first quarter of 2024 was $51.5 million, or 6.8% of net revenues, compared to $82.8 million, or 8.3% of net revenues, for the first quarter of 2023. The Advertising expense decrease during the first quarter of 2024 was primarily driven by the sale of the eOne Film and TV business, a decline in advertising expense, 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 $17.0 million, or 2.2% of net revenues, for the first quarter of 2024, compared to $23.1 million, or 2.3% of net revenues, for the first 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 $234.8 million, or 31.0% of net revenues for the first quarter of 2024, from $317.1 million, or 31.7% of net revenues, for the first quarter of 2023. The decrease in Selling, distribution and administration expenses during the first quarter of 2024 primarily reflects lower administrative expenses due to cost savings from the Company's Operational Excellence Program, along with a non-recurring stock-compensation adjustment of $18.1 million.

Operating Profit - The operating profit for the first quarter of 2024 was $116.2 million, or 15.3% of net revenues, compared to operating profit of $17.9 million, or 1.8% of net revenues, for the first quarter of 2023 driven by the factors discussed above.

NON-OPERATING EXPENSE (INCOME)

Interest expense - Interest expense for the first quarter of 2024 totaled $38.5 million compared to $46.3 million in the first quarter of 2023. The decrease in Interest expense for the first quarter of 2024 primarily reflects lower outstanding borrowings in the first quarter of 2024 as compared to first 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.

Interest income - Interest income was $8.3 million for the first quarter of 2024, compared to $6.0 million in the first quarter of 2023. Higher Interest income in 2024 primarily reflects higher average interest rates in 2024 compared to 2023.

Other expense (income), net - Other expense, net was $5.0 million for the first quarter of 2024, compared to Other income, net of $1.4 million in the first quarter of 2023. The change in Other expense (income), net during 2024 was driven primarily by an increase in foreign currency exchange losses the first quarter of 2024 as compared to the first quarter of 2023.

INCOME TAXES

Income tax expense totaled $21.9 million on pre-tax income of $81.0 million in the first quarter of 2024 compared to income tax expense of $0.7 million on pre-tax loss of $21.0 million in the first quarter 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 quarter of 2024, the Company recorded unfavorable discrete tax adjustments of $1.8 million compared to a net expense of $3.3 million in the first quarter of 2023. The unfavorable discrete tax adjustments for both periods are primarily associated with stock-based compensation. Absent discrete items, the tax rates for the first quarters of 2024 and 2023 were 22.4% and 12.2%, respectively. The increase in the base rate to 22.4% for the first quarter of 2024 is primarily due to the mix of jurisdictions where the Company earned its profits coupled with a pre-tax loss in the first quarter of 2023.

SEGMENT RESULTS

The following table presents net external revenues and operating profit (loss) for the Company's reportable segments for the quarters ended March 31, 2024 and April 2, 2023:


	Quarter Ended
	March 31, 2024		April 2, 2023		% Change
Net revenues
Consumer Products	$	413.0	$	520.4	-21	%
Wizards of the Coast and Digital Gaming	316.3		295.2		7	%
Entertainment	28.0		185.4		-85	%
Total Net revenues	$	757.3	$	1,001.0	-24	%

Operating Profit (Loss)
Consumer Products	$	(46.9)	$	(46.0)	2	%
Wizards of the Coast and Digital Gaming	122.8		76.8		60	%
Entertainment	5.8		(8.7)		-167	%
Corporate and Other	34.5		(4.2)		-921	%
Total Operating Profit	$	116.2	$	17.9	549	%

Consumer Products Segment

The following table presents the Consumer Products segment net revenues by major geographic region for the quarters ended March 31, 2024 and April 2, 2023:


	March 31, 2024		April 2, 2023
North America	$	239.1	$	279.1
Europe	87.5		131.6
Asia Pacific	48.8		63.3
Latin America	37.6		46.4
Net revenues	$	413.0	$	520.4

The Consumer Products segment net revenues declined 21% to $413.0 million for the first quarter of 2024 compared to $520.4 million for the first quarter of 2023 primarily driven by broader industry trends, exited businesses, including out-licensing certain brands, 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 products and TRANSFORMERS products. Net revenues from TRANSFORMERS products in the first quarter of 2023 were supported by the June 2023 theatrical release of Transformers: Rise of the Beasts.

Consumer Products segment operating loss for the first quarter of 2024 was $46.9 million or 11.4% of segment net revenues, compared to a segment operating loss of $46.0 million or 8.8% of segment net revenues, for the first quarter of 2023. The decrease in operating profit in the first quarter of 2024 was driven by lower net revenue, partially offset by savings realized from the Company's Operational Excellence program, lower royalty expenses reflecting the mix of products sold, lower advertising and promotion expense 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 quarters ended March 31, 2024 and April 2, 2023:


	March 31, 2024		April 2, 2023
Tabletop Gaming	$	228.2	$	217.9
Digital and Licensed Gaming	88.1		77.3
Net revenues	$	316.3	$	295.2

Wizards of the Coast and Digital Gaming segment net revenues increased 7% in the first quarter of 2024 to $316.3 million from $295.2 million in the first quarter of 2023. The net revenue increase in the Wizards of the Coast and Digital Gaming segment during the first 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, and the continued success of MONOPOLY GO!. Tabletop Gaming revenue increased 5% behind growth in MAGIC: THE GATHERING shipment timing to support the Outlaws of Thunder Junction release and strong demand for the Universes Beyond Fallout Commander set.

Wizards of the Coast and Digital Gaming segment operating profit was $122.8 million, or 38.8% of segment net revenues for the first quarter of 2024, compared to operating profit of $76.8 million, or 26.0% of segment net revenues, for the first quarter of 2023. The operating profit increase during the first quarter of 2024 was driven by increased net revenues, contributions from higher digital licensing revenue mix, and cost savings initiatives.

Entertainment Segment

The following table presents Entertainment segment net revenues by category for the quarters ended March 31, 2024 and April 2, 2023:


	March 31, 2024		April 2, 2023
Film and TV	$	—	$	168.4
Family Brands	28.0		17.0
Net revenues	$	28.0	$	185.4

31.1*

Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.2*

Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

32.1*

Certification of the Chief Executive Officer Pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934.

32.2*

Certification of the Chief Financial Officer Pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934.

101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document.101.SCHXBRL Taxonomy Extension Schema Document101.CALXBRL Taxonomy Extension Calculation Linkbase Document101.LABXBRL Taxonomy Extension Labels Linkbase Document101.PRE XBRL Taxonomy Extension Presentation Linkbase Document101.DEF XBRL Taxonomy Extension Definition Linkbase Document

* Furnished herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			HASBRO, INC.
			(Registrant)

Date: May 1, 2024			By: /s/ Gina Goetter
			Gina Goetter
			Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)

HASBRO, INC. - Quarter Report: 2024 March (Form 10-Q)

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