Hasbro(US:HAS)2025-11-05 21:09Financial Performance - Hasbro's net revenues for Q3 2025 increased by 8.3% to $1,387.5 million from $1,281.3 million in Q3 2024, driven primarily by a 41.6% growth in the Wizards of the Coast and Digital Gaming segment [131]. - The company reported an operating profit of $341.1 million for Q3 2025, representing 24.6% of net revenues, compared to $301.9 million or 23.6% in Q3 2024 [143]. - Total net revenues increased by 7.3% to $3,255.4 million for the first nine months of 2025, up from $3,033.9 million in 2024, with significant growth in the Wizards of the Coast and Digital Gaming segment [180]. - The Wizards of the Coast and Digital Gaming segment net revenues increased by 32.8% to $1,556.5 million for the first nine months of 2025, driven by strong demand for tabletop gaming products [181]. - The Consumer Products segment net revenues decreased by 8.9% to $1,637.6 million for the first nine months of 2025, primarily due to declining sales volumes for brands like NERF and PLAY-DOH [183]. Segment Performance - The Grow Brands portfolio saw a revenue increase of $167.0 million, or 19.9%, in Q3 2025, primarily due to strong performance from MAGIC: THE GATHERING, which grew by $163.2 million, or 55.1% [132][135]. - Operating profit for the Wizards of the Coast and Digital Gaming segment rose to $251.5 million, or 44.0% of segment net revenues, compared to $181.2 million, or 44.9%, in the prior year [152]. - The Consumer Products segment experienced a revenue decline of $63.2 million, or 7.3%, in Q3 2025, indicating challenges in this area [131]. - Entertainment segment net revenues increased by 8.1% to $18.6 million in Q3 2025, driven by streaming renewals and investments in the PEPPA PIG brand [155]. - The Reinvent Brands portfolio revenues decreased by 19.3% to $354.3 million in the first nine months of 2025, primarily due to lower sales of NERF products and decreased licensing revenues for MY LITTLE PONY [162]. Expenses and Costs - Selling, distribution, and administration expenses decreased to $287.3 million, or 20.7% of net revenues, in Q3 2025, down from $299.3 million, or 23.4% in Q3 2024, due to cost savings initiatives [142]. - Cost of sales for the first nine months of 2025 was $844.1 million, or 25.9% of net revenues, compared to $820.8 million, or 27.1% of net revenues, for the same period in 2024, reflecting improved supply chain efficiencies [163]. - Product development expenses rose to $255.6 million, or 7.9% of net revenues, for the first nine months of 2025, compared to $212.2 million, or 7.0% of net revenues, in 2024, due to higher investments in Grow Brands [166]. - Advertising expenses increased to $227.3 million, or 7.0% of net revenues, for the first nine months of 2025, from $213.8 million, or 7.0% of net revenues, in 2024, primarily to support growth in the Grow Brands category [167]. Cash Flow and Debt - Net cash provided by operating activities was $490.0 million in the first nine months of 2025, down from $587.6 million in the same period of 2024, a decrease of $97.6 million attributed to changes in net working capital and tariffs [200]. - Net cash utilized for investing activities was $191.8 million in the first nine months of 2025, significantly lower than $635.4 million in the same period of 2024, with long-term investments of $55.2 million made in 2025 [201]. - Net cash utilized by financing activities was $375.1 million in the first nine months of 2025, compared to a cash inflow of $190.8 million in 2024, primarily due to $294.2 million in dividends paid [202]. - The Company had $3.3 billion of long-term debt due from 2026 through 2044, with $65.0 million of outstanding debt repurchased during 2025 [196]. - The Company is exposed to approximately $20 million in tariffs during the first nine months of 2025, which may impact future financial results [192]. Strategic Initiatives - The company plans to relocate its Rhode Island operations to Boston, Massachusetts, expected to be completed in Q4 2026, to enhance innovation and attract talent [120]. - Hasbro's Playing to Win strategy includes five strategic building blocks aimed at expanding consumer reach and driving profitability through innovation and partnerships [118][121]. Market Risks and Economic Factors - The Company continues to monitor the impact of trade policy changes and tariffs on its operations, which could adversely affect financial results [123]. - The Company is monitoring inflation's impact on its operations and may need to implement price adjustments to mitigate future inflation effects [214]. - Future volatility in general price inflation could negatively affect consumer purchases and spending on entertainment [214]. - The impact of inflation on material costs, shipping, warehousing, and operational overhead could adversely affect the Company's financial results [214].