- Third quarter Net Sales of $1,481.6 million, up 3% as
reported, and up 4% in constant currency, versus prior
year.
- Gross Sales of $1,656.9 million, up 3% as reported and up 4%
in constant currency.
- Dolls category Gross Sales up 5% as reported, and up 7% in
constant currency; Barbie® Gross Sales up 10% as reported,
and up 12% in constant currency.
- Infant, Toddler and Preschool category Gross Sales down 11%
as reported, and down 10% in constant currency; Fisher-Price®
and Thomas & Friends® Gross Sales down 3% as
reported, and down 2% in constant currency.
- Vehicles category Gross Sales up 13% as reported, and up 15%
in constant currency; Hot Wheels® Gross Sales up 25% as
reported, and up 27% in constant currency.
- Action Figures, Building Sets and Games categories combined
Gross Sales up 12% as reported, and up 13% in constant
currency.
- Structural Simplification run-rate savings of $826 million,
exceeding target of $650 million exiting 2019; expect to exceed
$854 million of run-rate savings by the end of 2019.
- Reported Gross Margin of 46.3%, an improvement of 370 basis
points; Adjusted Gross Margin of 46.9%, an improvement of 390 basis
points.
- Reported Operating Income of $150.1 million, an improvement
of $28.2 million or 23%; Adjusted Operating Income of $173.7
million, an improvement of $20.7 million or 14%.
- Reported Earnings Per Share of $0.20, an improvement of
$0.18; Adjusted Earnings Per Share of $0.26, an improvement of
$0.08.
- For the nine months ended September 30, Cash Flows Used for
Operating Activities improved $218 million.
Mattel, Inc. (NASDAQ: MAT) today reported third quarter 2019
financial results.
Ynon Kreiz, Chairman and CEO, Mattel said: “Our third quarter
performance demonstrates the continued momentum of our multi-year
turnaround and consistent progress in transforming Mattel into an
IP-driven, high-performing toy company. We are executing very well
on our strategy to restore profitability, delivering the fifth
consecutive quarter where we achieved improvements in Reported
Operating Income, EBITDA, gross margin and EPS. We are starting to
see positive revenue trends with growth for the second quarter in a
row as reported, and for the third straight quarter in constant
currency. And we continue to make meaningful progress in laying the
groundwork to capture the full value of our IP. We are encouraged
by this momentum, as we remain focused on execution and the
creation of long-term shareholder value.”
Joseph Euteneuer, CFO, Mattel said: “Our results demonstrate
meaningful progress across all of our financial metrics. The
improvement was driven by revenue growth and Structural
Simplification savings. The company’s great performance in the
third quarter and year-to-date, along with our ongoing consistent
execution, will allow us to continue to drive value on a going
forward basis.”
For the third quarter, Net Sales were up 3% as reported, and up
4% in constant currency, versus the prior year’s third quarter.
Gross Sales were up 3% as reported, and up 4% in constant currency.
Reported Operating Income was $150.1 million, an improvement of
$28.2 million, and Adjusted Operating Income was $173.7 million, an
improvement of $20.7 million. Reported Earnings Per Share was
$0.20, an improvement of $0.18, and Adjusted Earnings Per Share was
$0.26, an improvement of $0.08.
For the first nine months of the year, Net Sales were up 1% as
reported, and up 4% in constant currency, versus the prior year’s
first nine months. Gross Sales were up 1% as reported, and up 4% in
constant currency. Reported Operating Loss was $28.3 million, an
improvement of $311.6 million, and Adjusted Operating Income was
$46.9 million, an improvement of $271.5 million. Reported Loss Per
Share was $0.62, an improvement of $0.95, and Adjusted Loss Per
Share was $0.41, an improvement of $0.77.
Financial Overview
For the third quarter, Net Sales in the North America segment
were flat as reported and in constant currency, versus the prior
year’s third quarter.
Gross Sales in the North America segment decreased 1% as
reported, and in constant currency, primarily driven by a decline
in Infant, Toddler and Preschool (including Fisher-Price Friends
and Power Wheels®). This was partially offset by growth in Vehicles
(including Hot Wheels partially offset by lower sales of Jurassic
World® and CARS® vehicles), and Dolls (including Barbie).
Net Sales in the International segment increased 10% as
reported, and 14% in constant currency, versus the prior year’s
third quarter.
Gross Sales in the International segment increased 10% as
reported and 13% in constant currency, driven by growth in Dolls
(including Barbie, Polly Pocket® and the launch of BTS partially
offset by owned brands), Vehicles (including Hot Wheels partially
offset by lower sales of Jurassic World and CARS vehicles) and
Action Figures, Building Sets and Games (including Toy Story 4).
This growth was partially offset by a decline in Infant, Toddler
and Preschool (including Fisher-Price Friends and Thomas &
Friends).
Net Sales in the American Girl® segment decreased by 15% as
reported, and in constant currency, versus the prior year’s third
quarter. Gross Sales in the American Girl segment decreased by 14%
as reported, and in constant currency, primarily driven by lower
sales in retail stores.
Reported Gross Margin increased to 46.3%, versus 42.6% in the
prior year’s third quarter, and Adjusted Gross Margin increased to
46.9%, versus 43.0%.
The increase in Reported and Adjusted Gross Margin was primarily
driven by savings from our Structural Simplification program.
Reported Other Selling and Administrative Expenses increased by
$40.1 million, or 12%, to $366.0 million, versus the prior year’s
third quarter. Adjusted Other Selling and Administrative Expenses
increased by $51.0 million, or 17%, to $351.4 million. The increase
in Reported and Adjusted Other Selling and Administrative Expenses
were driven by a higher incentive compensation accrual due to
improved year-to-date business performance and Toys “R” Us bad debt
recoveries in the third quarter 2018. These increases were
partially offset by savings from our Structural Simplification
program.
For the nine months ended September 30, 2019, Cash Flows Used
for Operating Activities decreased by $218 million to $514 million,
versus the prior year first nine months, primarily driven by a
lower net loss, excluding the impact of non-cash charges. Cash
Flows Used for Investing Activities decreased by $36 million to $78
million, versus prior year, primarily driven by lower capital
spending. Cash Flows Provided by Financing Activities and Other
increased by $240 million to $216 million, versus prior year,
primarily driven by net repayments of long-term borrowings of $274
million in the first nine months of 2018, partially offset by lower
net proceeds from short-term borrowings of $49 million.
Sales by Categories
For the third quarter, Worldwide Gross Sales for Dolls were
$567.6 million, up 5% as reported, and up 7% in constant currency,
versus the prior year’s third quarter, driven by growth in Barbie
partially offset by a decline in American Girl.
Worldwide Gross Sales for Infant, Toddler and Preschool were
$431.0 million, down 11% as reported, and down 10% in constant
currency, versus the prior year’s third quarter, driven by declines
in Fisher-Price Friends and Power Wheels.
Worldwide Gross Sales for Vehicles were $346.9 million, up 13%
as reported, and up 15% in constant currency, versus the prior
year’s third quarter, driven by growth in Hot Wheels partially
offset by a decline in CARS and Jurassic World vehicles.
Worldwide Gross Sales for Action Figures, Building Sets and
Games were $311.4 million, up 12% as reported, and up 13% in
constant currency, versus the prior year’s third quarter, driven by
Toy Story 4 and MEGA partially offset by Jurassic World.
Conference Call and Live Webcast
At 5:00 p.m. (Eastern Time) today, Mattel will host a conference
call with investors and financial analysts to discuss its 2019
third quarter financial results. The conference call will be
webcast on Mattel's Investor Relations website,
https://mattel.gcs-web.com/. To listen to the live call, log on to
the website at least 10 minutes early to register, download and
install any necessary audio software. An archive of the webcast
will be available on Mattel's Investor Relations website for 90
days and may be accessed beginning approximately two hours after
the completion of the live call. A telephonic replay of the call
will be available beginning at 8:30 p.m. Eastern time the evening
of the call until Tuesday, November 5, 2019 and may be accessed by
dialing +1-404-537-3406. The passcode is 7239237.
Forward-Looking Statements
This press release contains a number of forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. The use of words such as “anticipates,”
“expects,” “intends,” “plans,” “confident that” and “believes,”
among others, generally identify forward-looking statements. These
forward-looking statements are based on currently available
operating, financial, economic and other information, and are
subject to a number of significant risks and uncertainties. A
variety of factors, many of which are beyond our control, could
cause actual future results to differ materially from those
projected in the forward-looking statements. Specific factors that
might cause such a difference include, but are not limited to: (i)
Mattel’s ability to design, develop, produce, manufacture, source
and ship products on a timely and cost-effective basis, as well as
interest in and purchase of those products by retail customers and
consumers in quantities and at prices that will be sufficient to
profitably recover Mattel’s costs; (ii) downturns in economic
conditions affecting Mattel’s markets which can negatively impact
retail customers and consumers, and which can result in lower
employment levels, lower consumer disposable income and spending,
including lower spending on purchases of Mattel’s products; (iii)
other factors which can lower discretionary consumer spending, such
as higher costs for fuel and food, drops in the value of homes or
other consumer assets, and high levels of consumer debt; (iv)
potential difficulties or delays Mattel may experience in
implementing cost savings and efficiency enhancing initiatives; (v)
other economic and public health conditions or regulatory changes
in the markets in which Mattel and its customers and suppliers
operate, which could create delays or increase Mattel’s costs, such
as higher commodity prices, labor costs or transportation costs, or
outbreaks of disease; (vi) currency fluctuations, including
movements in foreign exchange rates, which can lower Mattel’s net
revenues and earnings, and significantly impact Mattel’s costs;
(vii) the concentration of Mattel’s customers, potentially
increasing the negative impact to Mattel of difficulties
experienced by any of Mattel’s customers, including the bankruptcy
and liquidation of Toys “R” Us, Inc., or changes in their
purchasing or selling patterns; (viii) the future willingness of
licensors of entertainment properties for which Mattel currently
has licenses or would seek to have licenses in the future to
license those products to Mattel; (ix) the inventory policies of
Mattel’s retail customers, including retailers’ potential decisions
to lower their inventories, even if it results in lost sales, as
well as the concentration of Mattel’s revenues in the second half
of the year, which coupled with reliance by retailers on quick
response inventory management techniques increases the risk of
underproduction of popular items, overproduction of less popular
items and failure to achieve compressed shipping schedules; (x) the
increased costs of developing more sophisticated digital and smart
technology products, and the corresponding supply chain and design
challenges associated with such products; (xi) work disruptions,
which may impact Mattel’s ability to manufacture or deliver product
in a timely and cost-effective manner; (xii) the bankruptcy and
liquidation of Toys “R” Us, Inc. or other of Mattel’s significant
retailers, or the general lack of success of one of Mattel’s
significant retailers which could negatively impact Mattel’s
revenues or bad debt exposure; (xiii) the impact of competition on
revenues, margins and other aspects of Mattel’s business, including
the ability to offer products which consumers choose to buy instead
of competitive products, the ability to secure, maintain and renew
popular licenses and the ability to attract and retain talented
employees; (xiv) the risk of product recalls or product liability
suits and costs associated with product safety regulations; (xv)
changes in laws or regulations in the United States and/or in other
major markets, such as China, in which Mattel operates, including,
without limitation, with respect to taxes, tariffs, trade policies
or product safety, which may increase Mattel’s product costs and
other costs of doing business, and reduce Mattel’s earnings; (xvi)
failure to realize the planned benefits from any investments or
acquisitions made by Mattel; (xvii) the impact of other market
conditions, third party actions or approvals and competition which
could reduce demand for Mattel’s products or delay or increase the
cost of implementation of Mattel’s programs or alter Mattel’s
actions and reduce actual results; (xviii) changes in financing
markets or the inability of Mattel to obtain financing on
attractive terms; (xix) the impact of litigation or arbitration
decisions or settlement actions; (xx) uncertainty from the expected
discontinuance of LIBOR and transition to any other interest rate
benchmark; and (xxi) other risks and uncertainties as may be
described in Mattel’s periodic filings with the Securities and
Exchange Commission, including the “Risk Factors” section of
Mattel’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2018, as well as in Mattel’s other public statements.
Mattel does not update forward-looking statements and expressly
disclaims any obligation to do so except as required by law.
Non-GAAP Financial Measures
To supplement our financial results presented in accordance with
generally accepted accounting principles in the United States
(“GAAP”), Mattel presents certain non-GAAP financial measures
within the meaning of Regulation G promulgated by the Securities
and Exchange Commission. The non-GAAP financial measures that
Mattel uses in this earnings release include Gross Sales, Adjusted
Gross Profit, Adjusted Gross Margin, Adjusted Other Selling and
Administrative Expenses, Adjusted Operating Income (Loss), Adjusted
Earnings (Loss) Per Share, earnings before interest expense, taxes,
depreciation and amortization (“EBITDA”), Adjusted EBITDA, and
constant currency. Mattel uses these metrics to analyze its
continuing operations and to monitor, assess and identify
meaningful trends in its operating and financial performance, and
each is discussed in detail below. Mattel believes that the
disclosure of non-GAAP financial measures provides useful
supplemental information to investors to be able to better evaluate
ongoing business performance and certain components of the
Company’s results. These measures are not, and should not be viewed
as, substitutes for GAAP financial measures. Reconciliations of the
non-GAAP financial measures to the most directly comparable GAAP
financial measures are attached to this earnings release as
exhibits and to our earnings slide presentation as an appendix.
This earnings release and our earnings slide presentation are
available on Mattel's Investor Relations website,
https://mattel.gcs-web.com/, under the subheading “Financial
Information – Earnings Releases.”
Gross Sales
Gross Sales represent sales to customers, excluding the impact
of Sales Adjustments. Net Sales, as reported, include the impact of
Sales Adjustments, such as trade discounts and other allowances.
Mattel presents changes in Gross Sales as a metric for comparing
its aggregate, categorical, brand and geographic results to
highlight significant trends in Mattel’s business. Changes in Gross
Sales are discussed because, while Mattel records the details of
such Sales Adjustments in its financial accounting systems at the
time of sale, such Sales Adjustments are generally not associated
with brands and individual products, making Net Sales less
meaningful. Since Sales Adjustments are determined by customer
rather than at the brand level, Mattel believes that the disclosure
of Gross Sales by categories and brand is useful supplemental
information for investors to be able to assess the performance of
its underlying brands (e.g., Barbie) and also enhances their
ability to compare sales trends over time.
Adjusted Gross Profit and Adjusted Gross Margin
Adjusted Gross Profit and Adjusted Gross Margin represent
reported Gross Profit and Reported Gross Margin, respectively,
adjusted to exclude asset impairments, severance and restructuring
expenses and the impact of the inclined sleeper product recalls.
Adjusted Gross Margin represents Mattel’s Adjusted Gross Profit, as
a percentage of Net Sales. Adjusted Gross Profit and Adjusted Gross
Margin are presented to provide additional perspective on
underlying trends in Mattel’s core Gross Profit and Gross Margin,
which Mattel believes is useful supplemental information for
investors to be able to gauge and compare Mattel’s current business
performance from one period to another.
Adjusted Other Selling and Administrative Expenses
Adjusted Other Selling and Administrative Expenses represents
Mattel’s Reported Other Selling and Administrative Expenses,
adjusted to exclude asset impairments, non-recurring executive
compensation, severance and restructuring expenses, the impact of
the inclined sleeper product recalls, and sale of assets, which are
not part of Mattel’s core business. Adjusted Other Selling and
Administrative Expenses is presented to provide additional
perspective on underlying trends in Mattel’s core other selling and
administrative expenses, which Mattel believes is useful
supplemental information for investors to be able to gauge and
compare Mattel’s current business performance from one period to
another.
Adjusted Operating Income (Loss)
Adjusted Operating Income (Loss) represents Mattel’s reported
Operating Loss, adjusted to exclude the impact of asset
impairments, non-recurring executive compensation, severance and
restructuring expenses, sale of assets, and the impact of the
inclined sleeper product recalls, which are not part of Mattel’s
core business. Adjusted Operating Income (Loss) is presented to
provide additional perspective on underlying trends in Mattel’s
core operating results, which Mattel believes is useful
supplemental information for investors to be able to gauge and
compare Mattel’s current business performance from one period to
another.
Adjusted Earnings (Loss) Per Share
Adjusted Earnings (Loss) Per Share represents Mattel’s Reported
Diluted Earnings (Loss) Per Common Share, adjusted to exclude the
impact of asset impairments, severance and restructuring expenses,
and the impact of the inclined sleeper product recalls, which are
not part of Mattel’s core business. The aggregate tax effect of the
adjustments is calculated by tax effecting the adjustments by the
current effective tax rate, adjusting for certain discrete tax
items, and dividing by the reported weighted average number of
common shares. Adjusted Earnings (Loss) Per Share is presented to
provide additional perspective on underlying trends in Mattel’s
core business. Mattel believes it is useful supplemental
information for investors to gauge and compare Mattel’s current
earnings results from one period to another. Adjusted Earnings
(Loss) Per Share is a performance measure and should not be used as
a measure of liquidity.
EBITDA and Adjusted EBITDA
EBITDA represents Mattel’s Net Income (Loss), adjusted to
exclude the impact of interest expense, taxes, depreciation and
amortization. Adjusted EBITDA represents EBITDA adjusted to exclude
the impact of asset impairments, share-based compensation,
severance and restructuring expenses, sale of assets, and the
impact of the inclined sleeper product recalls, which are not part
of Mattel’s core business. Mattel believes EBITDA and Adjusted
EBITDA are useful supplemental information for investors to gauge
and compare Mattel’s business performance to other companies in our
industry with similar capital structures. The presentation of
Adjusted EBITDA differs from how we will calculate EBITDA for
purposes of covenant compliance under the indenture governing our
6.75% senior notes due 2025 and the syndicated facility agreement
governing our senior secured revolving credit facilities. Because
of these limitations, EBITDA and Adjusted EBITDA should not be
considered as measures of discretionary cash available to us to
invest in the growth of our business. As a result, we rely
primarily on our GAAP results and use EBITDA and Adjusted EBITDA
only supplementally.
Constant currency
Percentage changes in results expressed in constant currency are
presented excluding the impact from changes in currency exchange
rates. To present this information, Mattel calculates constant
currency information by translating current period and prior period
results for entities reporting in currencies other than the US
dollar using consistent exchange rates. The constant currency
exchange rates are determined by Mattel at the beginning of each
year and are applied consistently during the year. They are
generally different from the actual exchange rates in effect during
the current or prior period due to volatility in actual foreign
exchange rates. Mattel considers whether any changes to the
constant currency rates are appropriate at the beginning of each
year. The exchange rates used for these constant currency
calculations are generally based on prior year actual exchange
rates. The difference between the current period and prior period
results using the consistent exchange rates reflects the changes in
the underlying performance results, excluding the impact from
changes in currency exchange rates. Mattel analyzes constant
currency results to provide additional perspective on changes in
underlying trends in Mattel’s operating performance. Mattel
believes that the disclosure of the percentage change in constant
currency is useful supplemental information for investors to be
able to gauge Mattel’s current business performance and the
longer-term strength of its overall business since foreign currency
changes could potentially mask underlying sales trends. The
disclosure of the percentage change in constant currency enhances
investor’s ability to compare financial results from one period to
another.
About Mattel
Mattel is a leading global children’s entertainment company that
specializes in design and production of quality toys and consumer
products. We create innovative products and experiences that
inspire, entertain and develop children through play. We engage
consumers through our portfolio of iconic franchises, including
Barbie®, Hot Wheels®, American Girl®, Fisher-Price®, Thomas &
Friends® and MEGA®, as well as other popular brands that we own or
license in partnership with global entertainment companies. Our
offerings include film and television content, gaming, music and
live events. We operate in 40 locations and sell products in more
than 150 countries in collaboration with the world’s leading retail
and technology companies. Since its founding in 1945, Mattel is
proud to be a trusted partner in exploring the wonder of childhood
and empowering kids to reach their full potential. Visit us online
at www.mattel.com.
MAT-FIN MAT-CORP
MATTEL, INC. AND SUBSIDIARIES EXHIBIT I
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)1
For the Three Months Ended September 30, For the
Nine Months Ended September 30, Yr / Yr Yr / Yr
Yr / Yr Yr / Yr % Change % Change %
Change % Change (In millions,
except per share and
2019
2018
as in Constant
20192
20182
as in Constant percentage
information) $ Amt % Net Sales $
Amt % Net Sales Reported Currency $
Amt % Net Sales $ Amt % Net Sales
Reported Currency Net Sales
$
1,481.6
$
1,437.5
3%
4%
$
3,030.9
$
2,990.5
1%
4%
Cost of sales
795.1
53.7%
824.4
57.4%
-4%
1,763.3
58.2%
1,901.4
63.6%
-7%
Gross Profit
686.4
46.3%
613.1
42.6%
12%
13%
1,267.6
41.8%
1,089.1
36.4%
16%
19%
Advertising and promotion expenses
170.4
11.5%
165.3
11.5%
3%
324.3
10.7%
318.5
10.7%
2%
Other selling and administrative expenses
366.0
24.7%
325.9
22.7%
12%
971.6
32.1%
1,110.5
37.1%
-13%
Operating Income (Loss)
150.1
10.1%
121.9
8.5%
23%
26%
(28.3)
-0.9%
(339.9)
-11.4%
-92%
96%
Interest expense
47.7
3.2%
48.2
3.4%
-1%
140.9
4.6%
132.7
4.4%
6%
Interest (income)
(0.8)
-0.1%
(0.8)
-0.1%
4%
(4.6)
-0.2%
(5.6)
-0.2%
-18%
Other non-operating expense, net
1.3
1.9
2.9
4.4
Income (Loss) Before Income Taxes
102.0
6.9%
72.6
5.1%
40%
42%
(167.5)
-5.5%
(471.4)
-15.8%
-64%
67%
Provision for income taxes
31.4
66.3
46.2
71.6
Net Income (Loss)
$
70.6
4.8%
$
6.3
0.4%
n/m
$
(213.7)
-7.1%
$
(542.9)
-18.2%
-61%
Net Income (Loss) Per Common Share - Basic
$
0.20
$
0.02
$
(0.62)
$
(1.57)
Weighted average number of common shares
346.7
345.3
346.2
344.8
Net Income (Loss) Per Common Share - Diluted
$
0.20
$
0.02
$
(0.62)
$
(1.57)
Weighted average number of common and potential common
shares
348.5
345.7
346.2
344.8
1 Amounts may not foot due to rounding. 2 Reflects the
impact of immaterial revisions to the financial statements. n/m -
Not Meaningful
MATTEL, INC. AND SUBSIDIARIES EXHIBIT
II CONDENSED CONSOLIDATED BALANCE SHEETS1
September 30, December 31,
20193
20183
20183
(In millions)
(Unaudited) Assets Cash and equivalents
$
218.3
$
209.2
$
594.5
Accounts receivable, net
1,291.3
1,312.9
970.1
Inventories
701.6
726.0
542.9
Prepaid expenses and other current assets
225.9
287.0
239.7
Total current assets
2,437.0
2,535.1
2,347.2
Property, plant, and equipment, net
572.3
677.0
657.6
Right-of-use assets, net2
306.2
-
-
Other noncurrent assets
2,212.1
2,269.7
2,233.4
Total Assets
$
5,527.6
$
5,481.8
$
5,238.2
Liabilities and Stockholders' Equity Short-term
borrowings
$
230.0
$
275.0
$
4.2
Accounts payable and accrued liabilities2
1,244.8
1,220.6
1,242.3
Income taxes payable
48.8
5.8
13.5
Total current liabilities
1,523.5
1,501.4
1,260.0
Long-term debt
2,856.8
2,849.9
2,851.7
Noncurrent lease liabilities2
273.9
-
-
Other noncurrent liabilities
419.7
471.5
469.7
Stockholders' equity
453.7
659.0
656.8
Total Liabilities and Stockholders' Equity
$
5,527.6
$
5,481.8
$
5,238.2
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW
DATA (Unaudited)1 September 30,
2019
20183
Key Balance Sheet Data:
Accounts receivable, net days of sales outstanding (DSO)
78
82
Nine Months Ended September 30, (In millions)
20193
20183
Condensed Cash Flow
Data: Cash flows used for operating activities
$
(514)
$
(731)
Cash flows used for investing activities
(78)
(115)
Cash flows provided by (used for) financing activities and
other
216
(24)
Decrease in cash and equivalents
$
(376)
$
(870)
1
Amounts may not foot due to rounding.
2
Mattel adopted ASU 2016-02, Leases (Topic 842), on January 1, 2019
using the modified retrospective transition method. Upon adoption,
Mattel recorded a right-of-use asset and lease liability on its
balance sheet. Prior periods were not retrospectively adjusted.
3
Reflects the impact of immaterial revisions to the financial
statements.
MATTEL, INC. AND SUBSIDIARIES EXHIBIT III
WORLDWIDE GROSS SALES INFORMATION (Unaudited)1
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
For the Three Months Ended September 30, For the
Nine Months Ended September 30, (In millions, except percentage information)
2019
2018
% Change as Reported
% Change in Constant Currency
2019
20184
% Change as Reported
% Change in Constant Currency
Worldwide Gross Sales: Net
Sales
$ 1,481.6
$ 1,437.5
3
%
4
%
$ 3,030.9
$ 2,990.5
1
%
4
%
Sales Adjustments2
175.4
169.2
368.4
370.2
Gross Sales
$ 1,656.9
$ 1,606.6
3
%
4
%
$ 3,399.3
$ 3,360.8
1
%
4
%
Worldwide Gross Sales by
Categories:3 Dolls
$ 567.6
$ 538.4
5
%
7
%
$ 1,093.9
$ 1,062.4
3
%
6
%
Infant, Toddler and Preschool
431.0
483.4
-11
-10
876.6
998.1
-12
-10
Vehicles
346.9
306.5
13
15
744.4
710.5
5
8
Action Figures, Building Sets and Games
311.4
278.4
12
13
684.4
589.9
16
18
Gross Sales
$ 1,656.9
$ 1,606.6
3
%
4
%
$ 3,399.3
$ 3,360.8
1
%
4
%
Supplemental Gross Sales
Disclosures Worldwide
Gross Sales by Top 3 Power Brands: Barbie
$ 412.8
$ 374.7
10
%
12
%
$ 762.8
$ 698.1
9
%
12
%
Hot Wheels
293.3
235.0
25
27
619.0
547.2
13
17
Fisher-Price and Thomas & Friends
396.3
409.5
-3
-2
791.1
833.5
-5
-3
Other
554.4
587.4
-6
-4
1,226.3
1,281.9
-4
-2
Gross Sales
$ 1,656.9
$ 1,606.6
3
%
4
%
$ 3,399.3
$ 3,360.8
1
%
4
%
1
Amounts may not foot due to rounding.
2
Sales Adjustments are not allocated to individual products. As
such, Net Sales are not presented on a categories or brand level.
3
Mattel modified its reporting structure for revenues in the first
quarter of 2019 to disclose revenues by categories. Refer to Note
23, Segment Information, in the Form 10-Q for additional
information.
4
Reflects the impact of immaterial revisions to the financial
statements.
MATTEL, INC. AND SUBSIDIARIES EXHIBIT IV
GROSS SALES BY SEGMENT (Unaudited)1 RECONCILIATION
OF GAAP AND NON-GAAP FINANCIAL MEASURES For the Three
Months Ended September 30, For the Nine Months Ended
September 30, (In millions,
except percentage information)
2019
2018
% Changeas Reported % Change inConstantCurrency
2019
2018
% Changeas Reported % Change inConstantCurrency
North America Segment Gross Sales: Net Sales
$ 821.9
$ 825.6
0
%
0
%
$ 1,586.2
$ 1,564.5
1
%
2
%
Sales Adjustments2
58.6
60.7
111.0
113.1
Gross Sales
$ 880.4
$ 886.3
-1
%
-1
%
$ 1,697.2
$ 1,677.6
1
%
1
%
North America Gross Sales by
Categories:3 Dolls
$ 250.6
$ 241.5
4
%
4
%
$ 424.2
$ 394.9
7
%
8
%
Infant, Toddler and Preschool
274.6
306.2
-10
-10
525.3
586.2
-10
-10
Vehicles
170.8
159.2
7
7
344.3
334.6
3
3
Action Figures, Building Sets and Games
184.4
179.4
3
3
403.4
361.8
11
12
Gross Sales
$ 880.4
$ 886.3
-1
%
-1
%
$ 1,697.2
$ 1,677.6
1
%
1
%
Supplemental Gross Sales
Disclosures North
America Gross Sales by Top 3 Power Brands: Barbie
$ 221.2
$ 208.8
6
%
6
%
$ 369.0
$ 338.4
9
%
9
%
Hot Wheels
140.8
120.7
17
17
276.4
255.0
8
9
Fisher-Price and Thomas & Friends
250.9
255.2
-2
-2
472.1
483.5
-2
-2
Other
267.5
301.6
-11
-11
579.7
600.6
-3
-3
Gross Sales
$ 880.4
$ 886.3
-1
%
-1
%
$ 1,697.2
$ 1,677.6
1
%
1
%
1 Amounts may not foot due to rounding. 2 Sales Adjustments
are not allocated to individual products. As such, Net Sales are
not presented on a categories or brand level. 3 Mattel modified its
reporting structure for revenues in the first quarter of 2019 to
disclose revenues by categories. Refer to Note 23, Segment
Information, in the Form 10-Q for additional information.
MATTEL, INC. AND SUBSIDIARIES EXHIBIT V
GROSS SALES BY SEGMENT (Unaudited)1 RECONCILIATION OF
GAAP AND NON-GAAP FINANCIAL MEASURES For the Three
Months Ended September 30, For the Nine Months Ended
September 30, (In millions,
except percentage information)
2019
2018
% Change as Reported
% Change in Constant Currency
2019
20185
% Change as Reported
% Change in Constant Currency
Total International Segment Gross
Sales: Net Sales
$ 607.9
$ 551.1
10
%
14
%
$ 1,315.0
$ 1,257.0
5
%
10
%
Sales Adjustments2
113.8
105.4
252.4
250.2
Gross Sales
$ 721.7
$ 656.5
10
%
13
%
$ 1,567.4
$ 1,507.3
4
%
10
%
International Segment Gross
Sales: EMEA3 Net Sales
$ 337.6
$ 306.4
10
%
14
%
$ 703.2
$ 672.3
5
%
11
%
Sales Adjustments2
71.0
63.6
155.9
146.9
Gross Sales
$ 408.7
$ 370.1
10
%
15
%
$ 859.1
$ 819.2
5
%
12
%
Latin America Net Sales
$ 182.3
$ 167.2
9
%
11
%
$ 368.0
$ 347.4
6
%
10
%
Sales Adjustments2
31.2
31.5
62.1
64.4
Gross Sales
$ 213.5
$ 198.8
7
%
10
%
$ 430.1
$ 411.8
4
%
9
%
Asia Pacific3 Net Sales
$ 88.0
$ 77.4
14
%
15
%
$ 243.8
$ 237.4
3
%
7
%
Sales Adjustments2
11.5
10.2
34.4
39.0
Gross Sales
$ 99.5
$ 87.6
14
%
15
%
$ 278.2
$ 276.3
1
%
5
%
International Gross Sales by
Categories:4 Dolls
$ 262.2
$ 233.1
12
%
16
%
$ 535.0
$ 491.9
9
%
15
%
Infant, Toddler and Preschool
156.4
177.3
-12
-9
351.3
411.8
-15
-10
Vehicles
176.2
147.3
20
23
400.1
375.9
6
13
Action Figures, Building Sets and Games
127.0
98.8
28
32
281.0
227.7
23
29
Gross Sales
$ 721.7
$ 656.5
10
%
13
%
$ 1,567.4
$ 1,507.3
4
%
10
%
Supplemental Gross Sales
Disclosures International Gross Sales by Top 3 Power
Brands: Barbie
$ 191.6
$ 165.9
16
%
19
%
$ 393.9
$ 359.7
10
%
16
%
Hot Wheels
152.5
114.2
33
37
342.6
292.2
17
24
Fisher-Price and Thomas & Friends
145.4
154.3
-6
-3
319.1
349.9
-9
-4
Other
232.1
222.0
5
8
511.9
505.4
1
6
Gross Sales
$ 721.7
$ 656.5
10
%
13
%
$ 1,567.4
$ 1,507.3
4
%
10
%
1 Amounts may not foot due to rounding. 2 Sales Adjustments are not
allocated to individual products. As such, Net Sales are not
presented on a categories or brand level. 3 Mattel reorganized its
regional sales reporting structure in the first quarter of 2019. As
a result, the new regions are Europe, the Middle East, and Africa
(“EMEA”), Latin America, and Asia Pacific. The Middle East, Africa,
Russia, and Turkey were previously included in the Asia Pacific
region (previously Global Emerging Markets) and are now included in
EMEA (previously Europe). Prior period amounts have been
reclassified to conform to the current period presentation. 4
Mattel modified its reporting structure for revenues in the first
quarter of 2019 to disclose revenues by categories. Refer to Note
23, Segment Information, in the Form 10-Q for additional
information. 5 Reflects the impact of immaterial revisions to the
financial statements.
MATTEL, INC. AND SUBSIDIARIES
EXHIBIT VI GROSS SALES BY SEGMENT (Unaudited)1
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
For the Three Months Ended September 30, For the
Nine Months Ended September 30, (In millions, except percentage information)
2019
2018
% Change as Reported
% Change in Constant Currency
2019
2018
% Change as Reported
% Change in Constant Currency
American Girl Segment Gross
Sales: Net Sales
$ 51.8
$ 60.8
-15
%
-15
%
$ 129.7
$ 169.0
-23
%
-23
%
Sales Adjustments
3.0
3.0
5.0
6.9
Gross Sales
$ 54.8
$ 63.9
-14
%
-14
%
$ 134.7
$ 175.9
-23
%
-23
%
1 Amounts may not foot due to rounding.
MATTEL,
INC. AND SUBSIDIARIES EXHIBIT VII SUPPLEMENTAL
FINANCIAL INFORMATION (Unaudited)1 RECONCILIATION OF GAAP
AND NON-GAAP FINANCIAL MEASURES For the Three Months
Ended September 30, For the Nine Months Ended September
30, (In millions, except per share and
percentage information)
20192
20182
20192,6
20182,6
Gross Profit Gross
Profit, As Reported
$
686.4
$
613.1
$
1,267.6
$
1,089.1
Gross Margin
46.3%
42.6%
41.8%
36.4%
Adjustments: Asset Impairments
-
-
-
5.8
Severance and Restructuring Expenses3
8.4
5.7
11.9
5.7
Inclined Sleeper Product Recalls4
0.7
-
21.3
-
Gross Profit, As Adjusted
$
695.6
$
618.8
$
1,300.8
$
1,100.5
Adjusted Gross Margin
46.9%
43.0%
42.9%
36.8%
Other Selling and Administrative
Expenses Other Selling and Administrative Expenses, As
Reported
$
366.0
$
325.9
$
971.6
$
1,110.5
% of Net Sales
24.7%
22.7%
32.1%
37.1%
Adjustments: Asset Impairments
-
-
-
(6.1)
Non-recurring Executive Compensation
-
-
-
(1.0)
Severance and Restructuring Expenses3
(11.3)
(25.5)
(34.4)
(98.2)
Inclined Sleeper Product Recalls4
(3.2)
-
(7.6)
-
Sale of Assets
-
-
-
1.4
Other Selling and Administrative Expenses, As Adjusted
$
351.4
$
300.4
$
929.6
$
1,006.6
% of Net Sales
23.7%
20.9%
30.7%
33.7%
Operating Income (Loss)
Operating Income (Loss), As Reported
$
150.1
$
121.9
$
(28.3)
$
(339.9)
Adjustments: Asset Impairments
-
-
-
11.9
Non-recurring Executive Compensation
-
-
-
1.0
Severance and Restructuring Expenses3
19.7
31.2
46.4
103.9
Inclined Sleeper Product Recalls4
3.9
-
28.9
-
Sale of Assets
-
-
-
(1.4)
Operating Income (Loss), As Adjusted
$
173.7
$
153.0
$
46.9
$
(224.6)
Other Information Toys
“R” Us Net Sales Reversal5
$
-
$
-
$
-
$
29.5
Toys “R” Us Bad Debt Expense, Net5
$
(1.4)
$
(13.0)
$
(1.4)
$
37.3
Inclined Sleeper Product Recalls4
$
3.9
$
-
$
34.3
$
-
1 Amounts may not foot due to rounding. 2 Toys “R” Us Net
Sales Reversal and Toys “R” Us Bad Debt Expense, Net are not
presented as non-GAAP adjustments for the three and nine months
ended September 30, 2019 and 2018. 3 For the three months ended
September 30, 2019, severance and restructuring expenses include
$16.3 million related to Capital Light initiatives of which $8.4
million was recorded to Cost of Sales and $7.9 million was recorded
to Other Selling and Administrative Expenses. For the nine months
ended September 30, 2019, severance and restructuring expenses
include $27.8 million related to Capital Light initiatives of which
$11.9 million was recorded to Cost of Sales and $15.9 million was
recorded to Other Selling and Administrative Expenses. 4 Mattel
recorded an estimated impact of $3.9 million and $34.3 million
related to inclined sleeper product recalls for the three and nine
months ended September 30, 2019, respectively. Of the $34.3 million
recorded during the nine months ended September 30, 2019, $5.4
million was a reduction to Net Sales for estimated retailer
returns. 5 As a result of the Toys “R” Us liquidation, Mattel
reversed Net Sales for the estimated uncollectible portion of its
outstanding receivables originating from first quarter 2018 sales.
As such, Gross Profit, As Reported includes the Cost of Sales for
the inventory sold to Toys “R” Us but excludes the corresponding
Net Sales. Additionally, during 2018, Mattel recorded Bad Debt
Expense, Net for the estimated uncollectible portion of its
outstanding receivables, net of recoveries and other reductions. 6
Reflects the impact of immaterial revisions to the financial
statements.
For the Three Months Ended September 30, For
the Nine Months Ended September 30, (In millions, except per share and percentage
information)
20192
20182
20192,8
20182,8
Earnings Per Share Net
Income (Loss) Per Common Share, As Reported
$
0.20
$
0.02
$
(0.62)
$
(1.57)
Adjustments: Asset Impairments
-
-
-
0.03
Severance and Restructuring Expenses3
0.06
0.09
0.13
0.30
Inclined Sleeper Product Recalls4
0.01
-
0.08
-
Tax Effect of Adjustments6
(0.01)
-
(0.01)
(0.01)
Tax Items7
-
0.07
-
0.07
Net Income (Loss) Per Common Share, As Adjusted
$
0.26
$
0.18
$
(0.41)
$
(1.18)
EBITDA and Adjusted
EBITDA Net Income (Loss), As Reported
$
70.6
$
6.3
$
(213.7)
$
(542.9)
Adjustments: Interest Expense
47.7
48.2
140.9
132.7
Provision for Income Taxes
31.4
66.3
46.2
71.6
Depreciation
52.7
62.2
156.3
179.6
Amortization
9.8
10.2
30.2
29.9
EBITDA
212.1
193.1
159.8
(129.1)
Adjustments: Asset Impairments
-
-
-
11.9
Shared-based Compensation
14.8
13.8
39.1
36.2
Severance and Restructuring Expenses3
16.8
25.5
40.0
98.2
Inclined Sleeper Product Recalls4
3.9
-
28.9
-
Sale of Assets
-
-
-
(1.4)
Adjusted EBITDA
$
247.7
$
232.4
$
267.8
$
15.7
1 Amounts may not foot due to rounding. 2 Toys “R” Us Net
Sales Reversal and Toys “R” Us Bad Debt Expense, Net are not
presented as non-GAAP adjustments for the three and nine months
ended September 30, 2019 and 2018. 3 For the three months ended
September 30, 2019, severance and restructuring expenses include
$16.3 million related to Capital Light initiatives of which $8.4
million was recorded to Cost of Sales and $7.9 million was recorded
to Other Selling and Administrative Expenses. For the nine months
ended September 30, 2019, severance and restructuring expenses
include $27.8 million related to Capital Light initiatives of which
$11.9 million was recorded to Cost of Sales and $15.9 million was
recorded to Other Selling and Administrative Expenses. 4 Mattel
recorded an estimated impact of $3.9 million and $34.3 million
related to inclined sleeper product recalls for the three and nine
months ended September 30, 2019, respectively. Of the $34.3 million
recorded during the nine months ended September 30, 2019, $5.4
million was a reduction to Net Sales for estimated retailer
returns. 6 The aggregate tax effect of the adjustments is
calculated by tax effecting the adjustments by the current
effective tax rate, and dividing by the reported weighted average
number of common and potential common shares. Adjustments for the
U.S. and certain International affiliates were not tax effected
because of the valuation allowance on deferred tax assets. 7 For
the three and nine months ended September 30, 2018, the amount
includes expense of approximately $24 million related to the
provisional tax for deemed repatriation of accumulated foreign
earnings and changes to the indefinite reinvestment assertion made
as a result of U.S. Tax Reform. 8 Reflects the impact of immaterial
revisions to the financial statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191029006030/en/
News Media Dena Cook dena.cook@mattel.com
310-252-4247
Securities Analysts David Zbojniewicz
david.zbojniewicz@mattel.com 310-252-2703
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