filings.toolsItem 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
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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 Company's 2025 Form 10-K.
Overview
Hasbro, Inc. (“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, MONOPOLY, HASBRO GAMES, PLAY-DOH, TRANSFORMERS, DUNGEONS & DRAGONS, NERF, 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 2025, we launched our refreshed strategy "Playing to Win" to refocus the Company on inspiring a lifetime of play across more categories, more partners, and more ways to engage. Through play fueled brand engagement and partner scaled co-investment, including video games, artificial intelligence ("AI"), enabled entertainment, and licensing, we plan to expand our consumer reach as a games, IP, and toy company.
In the first quarter of 2026, we made exciting new steps on executing the Playing To Win strategy, including:
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The announcement of a multi-year licensing partnership starting in 2027 with Warner Bros. Discovery Global Consumer Products, making Hasbro the global primary toy licensee for the world of Harry Potter and the upcoming HBO Original HARRY POTTER series.
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The announcement of a licensing collaboration with Amazon MGM Studios to produce action figures, toys and roleplay for the studio’s upcoming live-action Voltron movie and with Legendary Entertainment tied to the live-action Street Fighter movie.
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The launch of LUMEE, a joint venture with Animaj, that will unite our digital advertising inventory and insights to power advertising sales and brand partnerships within the Entertainment segment.
We believe these strategic moves position us to accelerate innovation and drive long-term growth in line with our Playing to Win strategy which emphasizes play-driven engagement and collaboration with partners.
Tariffs
Significant changes in trade policy announced by the U.S. government could adversely impact 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 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, actual or potential impairments, write-downs or 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. During the first three months of 2026, the Company recognized approximately $8.3 million of tariff costs within Cost of sales.
On February 20, 2026, the U.S. Supreme Court issued a ruling against the International Emergency Economic Powers Act ("IEEPA") tariffs that we have been paying to the U.S. government since the enactment on April 2, 2025. This could impact our results in 2026 and we are continuing to evaluate the accounting impacts including our ability to apply for and obtain refunds on tariffs previously paid.
Unauthorized Network Access
In late March 2026, we identified unauthorized access to our network. Upon discovery, we promptly activated our security incident response protocols, implemented containment measures, including proactively taking certain systems offline, and launched an investigation with the assistance of third-party cybersecurity professionals. Based on analysis with the assistance of outside cybersecurity experts and information to date, we believe the unauthorized access has been contained and we are making progress in fully restoring our systems and operations.
This unauthorized access did not impact our financial results for the first quarter. Due to the Company’s implementation of containment measures, certain systems were proactively taken offline and were subsequently or are currently being brought online sequentially. We are continuing to work with cybersecurity and forensic experts to identify and review any files potentially impacted. We plan to take additional actions as appropriate based on our review and findings, including providing any notifications deemed appropriate.
We have continued to execute business continuity plans to enable us to take orders, ship product and conduct other key operations. Importantly, MAGIC: THE GATHERING shipments and its release cadence continued as planned in the second quarter, including the April 2026 release of Secrets of Strixhaven. For the Consumer Products segment, we have been shipping product, but we do anticipate some impact to second quarter revenues and operating profit due to expected order processing, shipping and invoicing delays. Given continued strength in point-of-sale, the expectation is that the majority of any delayed shipping in the second quarter will be made up in the back-half of 2026.
During the second quarter of 2026, we began incurring costs related to the unauthorized network access, including legal and remediation costs. We plan to seek reimbursement of certain costs, expenses and losses related thereto by submitting claims to our cybersecurity insurers. While the receipt, timing and amount of any such reimbursements are not known at this time, we are currently in the process of documenting our claims.
Summary of Results
The Company experienced an increase in revenue from $887.1 million for the three months ended March 30, 2025 to $1,000.2 million for the three months ended March 29, 2026. The increase in revenue 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.
The Company also had an increase in operating profit from $170.7 million for the three months ended March 30, 2025 to $270.3 million for the three months ended March 29, 2026. This increase in operating profit is primarily driven by the revenue growth discussed above, as well as benefits from cost savings initiatives that have occurred over the last 12 months.
See below for further discussion on the consolidated and segment results of operations for the three months ended March 29, 2026 and March 30, 2025.
RESULTS OF OPERATIONS
The following table presents the consolidated results of operations for the three months ended March 29, 2026 and March 30, 2025:
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| March 29, 2026 | March 30, 2025 | ||||||||||||||||||||||||||||||||||
| Amount | % of Net Revenues | Amount | % of Net Revenues | ||||||||||||||||||||||||||||||||
| Net revenues | $ | 1,000.2 | 100.0 | % | $ | 887.1 | 100.0 | % | |||||||||||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||||||||||||||
| Cost of sales | 236.1 | 23.6 | % | 204.5 | 23.1 | % | |||||||||||||||||||||||||||||
| Program cost amortization | 4.0 | 0.4 | % | 7.4 | 0.8 | % | |||||||||||||||||||||||||||||
| Royalties | 77.7 | 7.8 | % | 57.0 | 6.4 | % | |||||||||||||||||||||||||||||
| Product development | 78.0 | 7.8 | % | 80.5 | 9.1 | % | |||||||||||||||||||||||||||||
| Advertising | 60.4 | 6.0 | % | 55.4 | 6.2 | % | |||||||||||||||||||||||||||||
| Amortization of intangible assets | 14.6 | 1.5 | % | 17.0 | 1.9 | % | |||||||||||||||||||||||||||||
| Loss on disposal of business | — | — | % | 25.0 | 2.8 | % | |||||||||||||||||||||||||||||
| Selling, distribution and administration | 259.1 | 25.9 | % | 269.6 | 30.4 | % | |||||||||||||||||||||||||||||
| Total costs and expenses | 729.9 | 73.0 | % | 716.4 | 80.8 | % | |||||||||||||||||||||||||||||
| Operating profit | 270.3 | 27.0 | % | 170.7 | 19.2 | % | |||||||||||||||||||||||||||||
| Non-operating expense: | |||||||||||||||||||||||||||||||||||
| Interest expense | 41.8 | 4.2 | % | 41.6 | 4.7 | % | |||||||||||||||||||||||||||||
| Interest income | (10.1) | (1.0) | % | (8.9) | (1.0) | % | |||||||||||||||||||||||||||||
| Other (income) expense, net | (5.5) | (0.5) | % | 1.4 | 0.2 | % | |||||||||||||||||||||||||||||
| Total non-operating expense, net | 26.2 | 2.6 | % | 34.1 | 3.8 | % | |||||||||||||||||||||||||||||
| Earnings before income taxes | 244.1 | 24.4 | % | 136.6 | 15.4 | % | |||||||||||||||||||||||||||||
| Income tax expense | 44.6 | 4.5 | % | 37.1 | 4.2 | % | |||||||||||||||||||||||||||||
| Net earnings | 199.5 | 19.9 | % | 99.5 | 11.2 | % | |||||||||||||||||||||||||||||
| Net earnings attributable to noncontrolling interests | 1.1 | 0.1 | % | 0.9 | 0.1 | % | |||||||||||||||||||||||||||||
| Net earnings attributable to Hasbro, Inc. | $ | 198.4 | 19.8 | % | $ | 98.6 | 11.1 | % | |||||||||||||||||||||||||||
| Net earnings per common share: | |||||||||||||||||||||||||||||||||||
| Basic | $ | 1.41 | $ | 0.71 | |||||||||||||||||||||||||||||||
| Diluted | $ | 1.39 | $ | 0.70 |
Net revenues – Net revenues for the first quarter of 2026 increased 12.7% to $1,000.2 million from $887.1 million for the first quarter of 2025 driven by growth of $119.9 million, or 25.9%, in the Wizards of the Coast and Digital Gaming segment. This growth was partially offset by a $6.4 million, or 24.0%, decrease in the Entertainment segment as well as a $0.4 million, or 0.1%, decrease in the Consumer Products segment. See the Segment Results discussion below for further details.
As part of our Playing to Win strategy, we have aligned our brand portfolios as follows:
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Grow Brands: Brands representing the highest margin, highest growth opportunities in categories where we see significant share and/or underlying market growth.
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Optimize Brands: Brands representing opportunities to maintain or grow share while improving operating profit returns.
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Reinvent Brands: Brands representing opportunities to reinvent or restructure to drive innovation and improved operating profit returns.
The following table presents net revenues by brand portfolio category:
| Three Months Ended | |||||||||||||||||
| March 29, 2026 | March 30, 2025 | % Change | |||||||||||||||
| Grow Brands | $ | 787.5 | $ | 660.8 | 19.2 | % | |||||||||||
| Optimize Brands | 126.9 | 130.7 | (2.9) | % | |||||||||||||
| Reinvent Brands | 85.8 | 95.6 | (10.3) | % | |||||||||||||
| Net revenues | $ | 1,000.2 | $ | 887.1 | 12.7 | % |
During the first quarter of 2026, the classification of brands within these categories was reviewed and certain brands were reclassified based on changes in growth, profitability or other characteristics. As such, the respective historical revenues associated within these brands has been reclassified into the brands' new brand category.
GROW BRANDS: Net revenues in the Grow Brands portfolio increased $126.7 million, or 19.2%, in the first quarter of 2026, compared to the first quarter of 2025. The net revenue increase primarily reflects higher net revenues from MAGIC: THE GATHERING, which grew by $123.3 million, or 35.6%, driven by strong performance of the Lorwyn Eclipsed and the Teenage Mutant Ninja Turtles Universes Beyond set released in the first quarter of 2026.
OPTIMIZE BRANDS: Net revenues in the Optimize Brands portfolio decreased $3.8 million, or 2.9%, in the first quarter of 2026, compared to the first quarter of 2025, driven by lower net revenues from TRANSFORMERS and PLAY-DOH. The declines were partially offset with an increase in net revenue from GI JOE.
REINVENT BRANDS: Net revenues in the Reinvent Brands portfolio decreased $9.8 million, or 10.3%, in the first quarter of 2026 compared to the first quarter of 2025. The net revenue decrease is primarily driven by lower product sales for vault brands, partially offset by higher sales in BEY BLADE and NANOMALS.
OPERATING COSTS AND EXPENSES
Cost of sales – Cost of sales for the first quarter of 2026 was $236.1 million, or 23.6% of net revenues, compared to $204.5 million, or 23.1% of net revenues, for the first quarter of 2025. The increase in cost of sales was primarily the result of an increase in net revenues period over period, shift in product mix, as well as approximately $8.3 million of incremental cost related to the impacts of tariffs, primarily as it relates to products imported into the United States to be sold domestically.
Program cost amortization – Program cost amortization decreased to $4.0 million, or 0.4% of net revenues, for the first quarter of 2026 from $7.4 million, or 0.8% of net revenues, for the first quarter of 2025. 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 – Royalties for the first quarter of 2026 increased to $77.7 million, or 7.8% of net revenues, compared to $57.0 million, or 6.4% of net revenues, for the first quarter of 2025. The increase in Royalties during the first quarter of 2026 was directly driven by an increase in sales relating to MAGIC: THE GATHERING Universes Beyond sets, including Final Fantasy, Avatar: The Last Airbender, and Teenage Mutant Ninja Turtles, for which the Company is obligated to pay a royalty.
Product development – Product development expense for the first quarter of 2026 was $78.0 million, or 7.8% of net revenues, compared to $80.5 million, or 9.1% of net revenues, for the first quarter of 2025. The decrease in Product development expense during the first quarter of 2026 was primarily due to the Company's cost saving initiatives over the last 12 months, partially offset with higher incremental investment in the development of Grow Brands under the Company's Playing to Win strategy.
Advertising – Advertising expense for the first quarter of 2026 was $60.4 million, or 6.0% of net revenues, compared to $55.4 million, or 6.2% of net revenues, for the first quarter of 2025. The Advertising expense increase during the first quarter of 2026 was primarily driven by additional spend necessary to support top line growth opportunities within the Grow Brands category, specifically within the Wizards of the Coast and Digital Gaming segment.
Amortization of intangible assets – Amortization of intangible assets decreased to $14.6 million, or 1.5% of net revenues, for the first quarter of 2026, compared to $17.0 million, or 1.9% of net revenues, for the first quarter of 2025. The amortization expense was driven by the straight-line amortization of the Company's definite-lived intangible assets.
Loss on disposal of business – There was no Loss on disposal of business for the first quarter of 2026, compared to $25.0 million, or 2.8% of net revenues, for the first quarter of 2025. The Loss on disposal of business for 2025 represents the loss recognized associated with the divestiture of the Company's non-core film and TV business (the "eOne Film and TV business") within the Entertainment segment. Refer to Note 3, Sale of Entertainment One Film and TV Business, in our condensed notes to consolidated financial statements for additional information on the sale of the eOne Film and TV business.
Selling, distribution and administration – Selling, distribution and administration expenses decreased to $259.1 million, or 25.9% of net revenues for the first quarter of 2026, from $269.6 million, or 30.4% of net revenues, for the first quarter of 2025. The decrease in Selling, distribution and administration expenses during the first quarter of 2026 is primarily the result of benefits from cost savings initiatives that have occurred over the last 12 months.
Operating profit – Operating profit for the first quarter of 2026 was $270.3 million, or 27.0% of net revenues, compared to operating profit of $170.7 million, or 19.2% of net revenues, for the first quarter of 2025, driven by the factors discussed above.
NON-OPERATING EXPENSE
Interest expense – Interest expense remained flat for the first quarter of 2026 compared to first quarter of 2025, totaling $41.8 million and $41.6 million, respectively.
Interest income – Interest income was $10.1 million for the first quarter of 2026, compared to $8.9 million in the first quarter of 2025. Higher Interest income in 2026 primarily reflects the Company's cash balance and investments in treasury securities, which were substantially higher in 2026 as compared to 2025.
Other (income) expense, net – Other (income) expense, net resulted in income of $5.5 million for the first quarter of 2026, compared to expense of $1.4 million in the first quarter of 2025. The change in Other (income) expense, net during 2026 was driven primarily by variations in the movement of foreign currencies in the first quarter of 2026 when compared to the first quarter of 2025.
INCOME TAXES
Income tax expense totaled $44.6 million on a pre-tax income of $244.1 million in the first quarter of 2026 compared to an income tax expense of $37.1 million on pre-tax income of $136.6 million in the first quarter of 2025. Both periods were impacted by discrete tax events.
During the first quarter of 2026, the Company recorded a net discrete tax benefit of $8.8 million primarily associated with share-based compensation. During the first quarter of 2025, the Company recorded an unfavorable adjustment to the Loss on Sale of the Film and TV reporting unit of $25.0 million, which generated no tax benefit, and recognized a net discrete tax benefit of $0.3 million primarily associated with share-based compensation.
Absent discrete items, the tax rates for the first quarter of 2026 and 2025 were 21.9% and 23.1%, respectively. The decrease in the base rate to 21.9% for the first quarter of 2026 relative to the first quarter of 2025 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 for the Company's reportable segments:
| Three Months Ended | |||||||||||||||||
| March 29, 2026 | March 30, 2025 | % Change | |||||||||||||||
| Net revenues: | |||||||||||||||||
| Wizards of the Coast and Digital Gaming | $ | 582.0 | $ | 462.1 | 25.9 | % | |||||||||||
| Consumer Products | 397.9 | 398.3 | (0.1) | % | |||||||||||||
| Entertainment | 20.3 | 26.7 | (24.0) | % | |||||||||||||
| Total Net revenues | $ | 1,000.2 | $ | 887.1 | 12.7 | % | |||||||||||
| Operating profit (loss): | |||||||||||||||||
| Wizards of the Coast and Digital Gaming | $ | 297.7 | $ | 230.0 | 29.4 | % | |||||||||||
| Consumer Products | (47.5) | (43.9) | (8.2) | % | |||||||||||||
| Entertainment | 17.3 | (11.2) | 254.5 | % | |||||||||||||
| Corporate and Other | 2.8 | (4.2) | 166.7 | % | |||||||||||||
| Total Operating profit | $ | 270.3 | $ | 170.7 | 58.3 | % |
Wizards of the Coast and Digital Gaming Segment
The following table presents Wizards of the Coast and Digital Gaming segment net revenues by category:
| Three Months Ended | |||||||||||||||||
| March 29, 2026 | March 30, 2025 | % Change | |||||||||||||||
| Tabletop Gaming | $ | 460.7 | $ | 343.8 | 34.0 | % | |||||||||||
| Digital and Licensed Gaming | 121.3 | 118.3 | 2.5 | % | |||||||||||||
| Net revenues | $ | 582.0 | $ | 462.1 | 25.9 | % |
Wizards of the Coast and Digital Gaming segment net revenues increased 25.9% in the first quarter of 2026 to $582.0 million from $462.1 million in the first quarter of 2025. The net revenue increase in the Wizards of the Coast and Digital Gaming segment during the first quarter of 2026 was primarily attributable to increase in Tabletop Gaming revenue which increased 34.0% behind growth in MAGIC: THE GATHERING Universes Beyond sets, primarily due to strong demand for Lorwyn Eclipsed, Teenage Mutant Ninja Turtles, as well as other various backlist titles. This growth was accompanied by an increase in digital licensing revenue related to MONOPOLY GO!, which contributed $41.4 million of revenue during the quarter*.*
Wizards of the Coast and Digital Gaming segment operating profit was $297.7 million, or 51.2% of segment net revenues for the first quarter of 2026, compared to operating profit of $230.0 million, or 49.8% of segment net revenues, for the first quarter of 2025. Operating profit increased during the first quarter of 2026 due to increased net revenues, as discussed above. Operating margin also increased during the first quarter of 2026, primarily driven by increased net revenues and product mix in 2026 as compared to 2025.
Consumer Products Segment
The following table presents the Consumer Products segment net revenues by major geographic region:
| Three Months Ended | |||||||||||||||||
| March 29, 2026 | March 30, 2025 | % Change | |||||||||||||||
| North America | $ | 215.4 | $ | 231.4 | (6.9) | % | |||||||||||
| Europe | 99.6 | 85.0 | 17.2 | % | |||||||||||||
| Asia Pacific | 53.8 | 53.8 | — | % | |||||||||||||
| Latin America | 29.1 | 28.1 | 3.6 | % | |||||||||||||
| Net revenues | $ | 397.9 | $ | 398.3 | (0.1) | % |
The Consumer Products segment net revenues decreased slightly to $397.9 million for the first quarter of 2026 compared to $398.3 million for the first quarter of 2025, primarily driven by broader industry trends and timing of
retail orders. The net revenue decrease primarily reflects lower net revenues driven by decreased sales volumes for certain Grow Brands such as HASBRO GAMING and Marvel, partially offset by increases in Star Wars, which was driven by increased consumer demand stemming from upcoming theatrical releases. The net revenue decrease was also attributable to decreased sales volume for certain Optimize Brands such as PLAY-DOH and TRANSFORMERS.
Consumer Products segment operating loss for the first quarter of 2026 was $47.5 million, or 11.9% of segment net revenues, compared to a segment operating loss of $43.9 million, or 11.0% of segment net revenues, for the first quarter of 2025. The increase in operating loss in the first quarter of 2026 was driven primarily by increased costs associated with tariffs of approximately $8.3 million.
Entertainment Segment
The following table presents Entertainment segment net revenues by category:
| Three Months Ended | |||||||||||||||||
| March 29, 2026 | March 30, 2025 | % Change | |||||||||||||||
| Family Brands | $ | 18.6 | $ | 22.4 | (17.0) | % | |||||||||||
| Film and TV | 1.7 | 4.3 | (60.5) | % | |||||||||||||
| Net revenues | $ | 20.3 | $ | 26.7 | (24.0) | % |
Entertainment segment net revenues decreased 24.0% to $20.3 million for the first quarter of 2026, compared to $26.7 million for the first quarter of 2025. The net revenue decrease in the Entertainment segment during the first quarter of 2026 was driven primarily by the timing of entertainment streaming renewals, partially offset with continued momentum relating to investments in the PEPPA PIG brand.
Entertainment segment operating profit was $17.3 million, or 85.2% of segment net revenues for the first quarter of 2026, compared to an operating loss of $11.2 million, or 41.9% of segment net revenues for the first quarter of 2025. The increase in operating profit in the Entertainment segment operating results during the first quarter of 2026 was driven by the non-recurring $25.0 million Loss on disposal of business that was recorded in 2025.
Corporate and Other
Corporate and Other operating profit was $2.8 million for the first quarter of 2026 compared to an operating loss of $4.2 million for the first quarter of 2025. The increase in operating profit in the first quarter of 2026 as compared to the first quarter of 2025 primarily reflects the impacts of cost saving initiatives at the Company.
OTHER INFORMATION
Commitments and Contingencies
Refer to Item 7 of our 2025 Form 10-K for additional information regarding the Company’s cash obligations and commitments as of the end of fiscal year 2025. Additionally, refer to Note 15, 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 2025 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.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically generated a significant amount of cash from operations. The Company primarily funds its operations and liquidity needs through cash on hand and from cash flows from operations, and when needed, borrowings under its commercial paper program and available lines of credit.
The Company believes that the funds available to it, including cash expected to be generated from operations, funds available through its commercial paper program or its available lines of credit, are adequate to meet its working capital needs for the next twelve months. 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.
The impact of tariffs recognized by the Company in Cost of sales was approximately $8.3 million during the first three months of 2026. Significant changes in trade policy announced by the U.S. government could adversely impact 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 29, 2026, the Company's cash and cash equivalents totaled $857.1 million and the Company's Short-term investments totaled $498.2 million. The majority of the Company’s cash and cash equivalents held outside of the United States as of March 29, 2026 are denominated in the U.S. dollar.
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 March 29, 2026, the Company had no outstanding borrowings related to the commercial paper program.
On February 20, 2026, the Company entered into a Fourth Amended and Restated Revolving Credit Agreement which amended and restated the third amended and restated revolving credit agreement to extend the maturity date through February 20, 2031 and reduce the aggregate principal amount to $1.1 billion. The revolving credit facility also provides for a potential additional incremental commitment increase of up to $550.0 million subject to agreement of the lenders. 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 March 29, 2026. The Company had no borrowings outstanding under its revolving credit facility as of March 29, 2026. However, letters of credit outstanding under this facility as of March 29, 2026 were approximately $3.3 million. Amounts available and unused under the revolving credit facility at March 29, 2026 were approximately $1.1 billion, inclusive of borrowings under the Company’s commercial paper program. The Company also has other uncommitted lines from various banks, of which approximately $8.4 million was utilized as of March 29, 2026. Of the amount utilized under, or supported by, the uncommitted lines, the full $8.4 million represented letters of credit.
As of March 29, 2026, the Company had $3.6 billion of Long-term debt due at varying times from 2026 through 2044. Of the total principal amount of long-term debt, $497.0 million is current as of March 29, 2026 which represents the Company's 3.55% fixed-rate notes due November 2026.
In March 2026, the Company issued an aggregate of $400.0 million in senior unsecured debt securities that bear a fixed interest rate of 4.65% due 2031 (the "2031 Notes"). In connection with the issuance of the 2031 Notes, the 2031 Notes were issued with an original issuance discount of $0.6 million and the Company capitalized $3.7 million of debt issuance costs. The original issuance discount and debt issuance costs will be amortized over the term of the 2031 Notes. It is anticipated that proceeds from the 2031 Notes, along with existing cash available, will be utilized to repay the 2026 Notes. As of March 29, 2026, the Company had invested the proceeds from the 2031 Notes in Short-term investments.
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 2026, the Company has repurchased $69.8 million of 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. The Company’s obligation is to make payment in the invoice amount negotiated with participating suppliers, to the administering banks on the invoice due date. The Company’s suppliers are not required to participate in the supplier finance program. The early payment transactions between the Company’s supplier and the administering bank are subject to an agreement between those parties, and the Company does not participate in any financial aspect of the agreements between the Company’s suppliers and the administering banks. The Company has not pledged any assets to the administering bank under the supplier financing program. 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 $48.1 million, $51.2 million, and $45.7 million as of March 29, 2026, March 30, 2025 and December 28, 2025, 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.
Cash Flow
The following table summarizes the changes in the Consolidated Statements of Cash Flows:
| Three Months Ended | |||||||||||
| March 29, 2026 | March 30, 2025 | ||||||||||
| Net cash provided (utilized) by: | |||||||||||
| Operating activities | $ | 337.7 | $ | 138.1 | |||||||
| Investing activities | $ | (472.1) | $ | (52.4) | |||||||
| Financing activities | $ | 215.1 | $ | (162.4) |
Net cash provided by Operating activities in the first three months of 2026 was $337.7 million compared to $138.1 million in the first three months of 2025. The $199.6 million increase in net cash provided by Operating activities after adjusting for non-cash items, was primarily attributable to changes in net working capital, specifically the collection of Accounts receivable, which was a direct result of sales growth in 2025.
Net cash utilized by Investing activities was $472.1 million in the first three months of 2026 compared to net cash utilized for Investing activities of $52.4 million in the first three months of 2025. Additions to property, plant and equipment and software was $22.2 million and $27.7 million in the first three months of 2026, respectively, compared to $13.8 million and $29.4 million in the first three months of 2025, respectively. Additionally, purchases of Short-term investments of $423.0 million, which represent prefunding of future debt maturities with U.S. Treasury securities, occurred in the first three months of 2026, compared to net purchases of Short-term Investments of $10.0 million in the first three months of 2025. The level of purchases during 2026 was impacted by the intent to utilize the investments, together with available cash, to repay indebtedness of the Company that is due in November 2026.
Net cash provided by Financing activities was $215.1 million in the first three months of 2026 compared to net cash utilized by Financing activities of $162.4 million in the first three months of 2025. The primary source of cash inflows during first three months of 2026 was $399.4 million of proceeds from the issuance of the 2031 Notes, offset by dividends paid of $98.5 million, repayments of long-term debt of $68.4 million, and $41.5 million of payments related to tax withholdings for share compensation coinciding with equity award vesting activity. Share repurchases during the first three months of 2026 include $7.7 million or 82,559 shares of Common Stock under a share repurchase authorization approved by the Company's Board of Directors in February 2026. As of March 29, 2026, there is $992.3 million remaining on the authorization. Financing activities in the first three months of 2025 included 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 share compensation coinciding with equity award vesting activity.
CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES
We have prepared the consolidated financial statements in accordance with accounting principles generally accepted in the United States, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the periods reported. These estimates are based on our best judgment about current and future conditions, but actual results could differ from those estimates. Information with respect to accounting estimates that are the most critical to the understanding of our financial statements as they could have the most significant effect on our reported results and require subjective or complex judgments by management is contained in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended December 28, 2025. We believe that at March 29, 2026, there has been no material change to this information.
FINANCIAL RISK MANAGEMENT
The Company is exposed to market risks attributable to fluctuations in foreign currency exchange rates primarily as the result of sourcing products priced in U.S. dollars, Hong Kong dollars and Euros while marketing and selling those products in more than twenty currencies. Results of operations may be affected primarily by changes in the value of the U.S. dollar, Euro, British pound sterling, Canadian dollar, Brazilian real and Mexican peso and, to a lesser extent, other currencies in Latin America and Asia Pacific countries.
To manage this exposure, the Company has hedged a portion of its forecasted foreign currency transactions using foreign exchange forward contracts and foreign exchange option contracts. The Company is also exposed to foreign currency risk with respect to its net cash and cash equivalents or short-term borrowing positions in currencies other than the U.S. dollar. The Company believes, however, that the on-going risk on the net exposure should not be
material to its financial condition. In addition, the Company's revenues and costs have been and will likely continue to be affected by changes in foreign currency rates. A significant change in foreign exchange rates can materially impact the Company's revenues and earnings due to translation of foreign-denominated revenues and expenses. The Company does not hedge against translation impacts of foreign exchange. From time to time, affiliates of the Company may make or receive intercompany loans in currencies other than their functional currency. The Company manages this exposure at the time the loan is made by using foreign exchange contracts.
The Company reflects all derivative financial instruments at their fair value as an asset or liability on the Consolidated Balance Sheets. The Company does not speculate in foreign currency exchange contracts. Refer to Note 13, Derivative Financial Instruments, to the Company’s consolidated financial statements for further details on the Company's derivative financial instruments.
As of March 29, 2026, the Company had fixed-rate debt of $3.6 billion.
Inflation
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. However, future volatility of general price inflation could affect consumer spending. Additionally, the impact of inflation on costs and availability of materials, costs for shipping and warehousing and other operational overhead, could adversely affect the Company's financial results.
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