Hasbro, Inc. (HAS) Cash Flow Statement

The 2025Q2 net loss of -$855.8M was a non-cash event, as operating cash flow remained positive at $71.3M, confirming that the impairment was below the line and did not reflect cash generation. Since then, OCF/NI has consistently exceeded 1.2, with 2026Q1 at 1.69 and 2026Q2 at 1.66, indicating that reported profits are backed by real cash inflows. The gap between net income and operating cash flow in 2025Q2 was driven by non-cash charges, not operational deterioration, which supports the view that the underlying business generates strong cash conversion.

The FCF trajectory shows a clear inflection after the 2025Q2 trough, with sequential improvement from $124.3M in 2025Q1 to $389.5M in 2025Q4, before settling at $247.7M in 2026Q2. FCF margins have consistently exceeded 20% in the last three quarters, well above the peer average of 11.4% for Mattel, indicating that Hasbro's pivot toward digital and gaming is translating into superior cash generation. The 2026Q2 FCF of $247.7M is more than 1.5 times net income of $160.9M, suggesting that reported earnings understate the cash-generating power of the business.

The CapEx/Revenue ratio has remained in the 2-6% range over the past ten quarters, with 2026Q1 hitting a low of 2.2%, reflecting the asset-light nature of the digital gaming segment. The increase in absolute CapEx in 2026Q2 to $73.0M, the highest in the period, suggests management is investing in growth initiatives, likely in digital platforms and IP development, rather than traditional manufacturing capacity. This capital allocation pattern aligns with the strategic shift away from physical toy production, which typically requires higher capital intensity, and supports the view that maintenance capex is modest relative to the revenue base.

The working capital line has been a significant source of cash in some quarters (2024Q4: +$103.0M, 2026Q1: +$83.0M) and a use in others (2025Q3: -$137.2M, 2025Q2: -$124.3M), reflecting the seasonality of toy sales and the timing of collectible card set releases. The negative working capital changes in 2025Q2 and 2025Q3 likely reflect inventory build-up ahead of the holiday season, while the positive changes in 2026Q1 suggest efficient collection of receivables and inventory liquidation. Investors should monitor whether the recent positive working capital contributions are sustainable or merely a timing artifact, as the company's ability to manage inventory obsolescence in the Consumer Products segment remains a key risk.

The consistent dividend payout of roughly $98M per quarter, totaling nearly $1B annually, represents a significant cash outflow that is well covered by operating cash flow, which averaged over $200M per quarter in the last two years. Buybacks have been negligible, with only 2026Q2 showing any activity ($33.8M), suggesting management is prioritizing debt reduction and reinvestment over share repurchases. The lack of acquisition activity in the period, with only a -$12.0M in 2024Q3, indicates a disciplined approach to capital deployment following the eOne divestiture, which may support balance sheet repair.

The cumulative gap of $1.92B between operating cash flow and net income over the period is primarily attributable to the $855.8M loss in 2025Q2, which was driven by non-cash charges, likely related to the eOne divestiture. Excluding that quarter, cumulative net income would be approximately $1.28B, still below cumulative operating cash flow of $2.27B, indicating that depreciation, amortization, and other non-cash items are consistently boosting cash flow relative to earnings. This divergence suggests that Hasbro's cash-generating ability is stronger than its reported profitability, which may be underappreciated by the market given the negative net margin in the TTM period.