Third Quarter 2024 Highlights Versus
Prior Year
- Net Sales of $1,844 million, down 4% as reported, and 3% in
constant currency
- Gross Margin of 53.1%, an increase of 210 basis points;
Adjusted Gross Margin of 53.1%, an increase of 210 basis
points
- Operating Income of $488 million, an increase of $14 million;
Adjusted Operating Income of $504 million, a decrease of $2
million
- Net Income of $372 million, an improvement of $226 million
- Earnings per Share of $1.09 compared to $0.41 per share;
Adjusted Earnings per Share of $1.14 compared to $1.08 per
share
- Adjusted EBITDA of $584 million, an improvement of $5
million
- Repurchased $68 million of shares, bringing nine-month total to
$268 million
- Company updates 2024 guidance
Mattel, Inc. (NASDAQ: MAT) today reported third quarter 2024
financial results.
Ynon Kreiz, Chairman and CEO of Mattel, said: “We continue to
execute on our multi-year strategy to grow our IP-driven toy
business and expand our entertainment offering. In line with our
priorities this year, we continue to improve profitability, expand
Gross Margin, and generate significant cash flow. We expect topline
growth in the fourth quarter driven by a good holiday season,
market share gains and a toyetic theatrical slate and are well
positioned for long-term growth and shareholder value
creation.”
Anthony DiSilvestro, CFO of Mattel, added: “The highlight of the
quarter was achieving meaningful expansion in Gross Margin and
growth in Adjusted EPS, despite a challenging comparison. We
generated significant cash flow on a trailing twelve-month basis,
further strengthened our balance sheet, and repurchased additional
shares. While we now anticipate our Net Sales to be comparable to
slightly down for the full year, we are on track to achieve our
full year Adjusted EBITDA and Adjusted EPS guidance, driven by
strong Gross Margin performance.”
Financial Overview
For the third quarter, Net Sales were down 4% as reported, or 3%
in constant currency, versus the prior year’s third quarter.
Reported Operating Income was $488 million, an improvement of $14
million, and Adjusted Operating Income was $504 million, a decrease
of $2 million. Reported Earnings Per Share were $1.09, an
improvement of $0.68 per share, and Adjusted Earnings Per Share
were $1.14, an improvement of $0.06 per share.
For the first nine months of the year, Net Sales declined 2% as
reported and in constant currency, versus the prior year’s first
nine months. Reported Operating Income was $536 million, an
improvement of $114 million, and Adjusted Operating Income was $577
million, an improvement of $83 million. Reported Earnings Per Share
were $1.16, an improvement of $0.97, and Adjusted Earnings Per
Share were $1.26, an improvement of $0.32.
Net Sales in the North America segment decreased 3% as reported
and in constant currency.
Gross Billings in the North America segment decreased 3% as
reported and in constant currency, due to declines in Dolls
(primarily Barbie), and Infant, Toddler, and Preschool (primarily
Baby Gear & Power Wheels), partly offset by growth in Vehicles
(primarily Hot Wheels), and Action Figures, Building Sets, Games,
and Other (primarily Games).
Net Sales in the International segment decreased 5% as reported,
or 3% in constant currency.
Gross Billings in the International segment decreased 4% as
reported, or 2% in constant currency, due to declines in Dolls
(primarily Barbie), Infant, Toddler, and Preschool (primarily Baby
Gear & Power Wheels and Preschool Entertainment), and Action
Figures, Building Sets, Games, and Other, partly offset by growth
in Vehicles (primarily Hot Wheels).
Reported Gross Margin increased to 53.1%, versus 51.0% in the
prior year’s third quarter, and Adjusted Gross Margin increased to
53.1%, versus 51.0%. The increase in Gross Margin was primarily
driven by supply chain efficiencies, savings from the Optimizing
for Profitable Growth program, foreign exchange favorability, and
cost deflation, partly offset by benefits related to the Barbie
movie in the year-ago period.
Reported Other Selling and Administrative Expenses increased $6
million to $386 million, primarily due to higher employee
compensation, partly offset by savings from Optimizing for
Profitable Growth program. Adjusted Other Selling and
Administrative Expenses increased $23 million to $370 million,
primarily due to the same factors.
For the nine months ended September 30, 2024, Cash Flows Used
for Operating Activities were $62 million, an improvement of $18
million, primarily driven by higher net earnings, partly offset by
higher working capital requirements. Cash Flows Used for Investing
Activities were $152 million, an increase of $58 million, primarily
due to higher capital expenditures, including the acquisition of a
new global design center to replace our current leased facility,
and lower proceeds from foreign currency forward contracts. Cash
Flows Used for Financing Activities and Other were $325 million, an
increase of $193 million, primarily due to $158 million of higher
share repurchases in the first nine months of 2024.
Gross Billings by Categories
For the third quarter, Worldwide Gross Billings for Dolls were
$757 million, down 14% as reported and in constant currency, versus
the prior year’s third quarter, primarily due to declines in
Barbie.
Worldwide Gross Billings for Infant, Toddler, and Preschool were
$350 million, down 3% as reported, or 2% in constant currency,
primarily due to declines in Baby Gear & Power Wheels.
Worldwide Gross Billings for Vehicles were $580 million, up 12%
as reported, or 13% in constant currency, primarily driven by
growth in Hot Wheels.
Worldwide Gross Billings for Action Figures, Building Sets,
Games, and Other were $364 million, up 2% as reported, or 3% in
constant currency, primarily driven by growth in Games, partly
offset by declines in Other and Building Sets.
2024 Guidance
Mattel’s updated full year 2024 guidance is:
(in millions,except EPS and percentages) Updated FY2024
Guidance Prior FY2024 Guidance FY2023 Net
Sales Comparable toSlightly Down(Constant Currency)
Comparable(Constant Currency)
$5,441
Adjusted Gross Margin ~ 50% 48.5 - 49%
47.5%
Adjusted EPS $1.35 - $1.45 $1.35 - $1.45
$1.23
Adjusted EBITDA $975 - $1,025 $975 - $1,025
$948
Adjusted Tax Rate
21 - 22%
23 - 24%
23%
Capital Expenditures $200 - $225 $175 - $200
$160
Free Cash Flow ~ $500 ~ $500
$709
A reconciliation of Mattel’s non-GAAP financial measures on a
forward-looking basis, including Net Sales on a constant currency
basis, Adjusted Gross Margin, Adjusted EPS, Adjusted EBITDA,
Adjusted Tax Rate, and Free Cash Flow is not available without
unreasonable effort. Mattel is unable to predict with sufficient
certainty items that would be excluded from the corresponding GAAP
measures, including the effect of foreign currency exchange rate
fluctuations, unusual gains and losses or charges, and severance
and restructuring charges, due to the unpredictable nature of such
items, which may have a significant impact on Mattel’s GAAP
measures.
The company will provide full year 2025 guidance on its fourth
quarter 2024 call.
We are operating in a macro-economic environment that may impact
consumer demand. The guidance considers what the company is aware
of today, but remains subject to market volatility, unexpected
disruptions, and other risks and uncertainties.
Conference Call and Live Webcast
At 5:00 p.m. (Eastern Standard Time) today, Mattel will host a
conference call with investors and financial analysts to discuss
its latest financial results. The conference call will be webcast
on Mattel's Investor Relations website,
https://investors.mattel.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 12
months and may be accessed beginning approximately three hours
after the completion of the live call.
Cautionary Note Regarding Forward-Looking Statements
Mattel cautions the reader that this press release contains a
number of forward-looking statements, which are statements that
relate to the future and are, by their nature, uncertain.
Forward-looking statements can be identified by the fact that they
do not relate strictly to historical or current facts and include
statements regarding Mattel’s guidance and goals for future periods
and other future events. The use of words such as “anticipates,”
“expects,” “intends,” “plans,” “projects,” “look forward,”
“confident that,” “believes,” and “targeted,” among others,
generally identify forward-looking statements. These
forward-looking statements are based on currently available
operating, financial, economic, and other information and
assumptions, and are subject to a number of significant risks and
uncertainties. A variety of factors, many of which are beyond
Mattel’s 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, ship, and distribute products on a
timely and cost-effective basis; (ii) sufficient interest in and
demand for the products and entertainment Mattel offers by retail
customers and consumers to profitably recover Mattel’s costs; (iii)
downturns in economic conditions affecting Mattel’s markets which
can negatively impact retail customers and consumers, and which can
result in lower employment levels and lower consumer disposable
income and spending, including lower spending on purchases of
Mattel’s products; (iv) 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; (v) potential difficulties or delays Mattel may
experience in implementing cost savings and efficiency enhancing
initiatives; (vi) 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; (vii) the effect of
inflation on Mattel’s business, including cost inflation in supply
chain inputs and increased labor costs, as well as pricing actions
taken in an effort to mitigate the effects of inflation; (viii)
currency fluctuations, including movements in foreign exchange
rates, which can lower Mattel’s net revenues and earnings, and
significantly impact Mattel’s costs; (ix) the concentration of
Mattel’s customers, potentially increasing the negative impact to
Mattel of difficulties experienced by any of Mattel’s customers,
such as bankruptcies or liquidations or a general lack of success,
or changes in their purchasing or selling patterns; (x) the
inventory policies of Mattel’s retail customers, 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, overproduction , and shipping delays; (xi) legal,
reputational, and financial risks related to security breaches or
cyberattacks; (xii) work disruptions, including as a result of
supply chain disruption such as plant or port closures, which may
impact Mattel’s ability to manufacture or deliver product in a
timely and cost-effective manner; (xiii) the impact of competition
on revenues, margins, and other aspects of Mattel’s business,
including the ability to offer products that consumers choose to
buy instead of competitive products, the ability to secure,
maintain, and renew popular licenses from licensors of
entertainment properties, and the ability to attract and retain
talented employees and adapt to evolving workplace models; (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, product
safety, or sustainability, which may increase Mattel’s product
costs and other costs of doing business, and reduce Mattel’s
earnings and liquidity; (xvi) business disruptions or other
unforeseen impacts due to economic instability, political
instability, civil unrest, armed hostilities (including the impact
of the war in Ukraine and geopolitical developments in the Middle
East), natural and man-made disasters, pandemics or other public
health crises, or other catastrophic events; (xvii) failure to
realize the planned benefits from any investments or acquisitions
made by Mattel; (xviii) the impact of other market conditions or
third party actions or approvals, including those that result in
any significant failure, inadequacy, or interruption from vendors
or outsourcers, which could reduce demand for Mattel’s products,
delay or increase the cost of implementation of Mattel’s programs,
or alter Mattel’s actions and reduce actual results; (xix) changes
in financing markets or the inability of Mattel to obtain financing
on attractive terms; (xx) the impact of litigation, arbitration, or
regulatory decisions or settlement actions; (xxi) Mattel’s ability
to navigate regulatory frameworks in connection with new areas of
investment, product development, or other business activities, such
as artificial intelligence, non-fungible tokens, and
cryptocurrency; (xxii) an inability to remediate the material
weakness in Mattel's internal control over financial reporting, or
additional material weaknesses or other deficiencies in the future
or the failure to maintain an effective system of internal control;
and (xxiii) other risks and uncertainties as may be described in
Mattel’s 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, 2023 and
subsequent periodic filings, 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.
Presentation Information / Non-GAAP Financial
Measures
The financial results included herein represent the most current
information available to management and are preliminary until
Mattel’s Form 10-Q is filed with the SEC. Actual results may differ
from these preliminary results.
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 Adjusted Gross Profit,
Adjusted Gross Margin, Adjusted Other Selling and Administrative
Expenses, Adjusted Operating Income, Adjusted Operating Income
Margin, Adjusted Earnings Per Share, earnings before interest
expense, taxes, depreciation and amortization (“EBITDA”), Adjusted
EBITDA, Free Cash Flow, Free Cash Flow Conversion (Free Cash Flow /
Adjusted EBITDA), Leverage Ratio (Total Debt / Adjusted EBITDA),
Net Debt, Adjusted Tax Rate, and constant currency. Mattel uses
these measures to analyze its continuing operations and to monitor,
assess, and identify meaningful trends in its operating and
financial performance, and each is discussed 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 Mattel’s
results. These measures are not, and should not be viewed as,
substitutes for GAAP financial measures and may not be comparable
to similarly titled measures used by other companies.
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://investors.mattel.com/, under the subheading “Financial
Information – Quarterly Earnings.”
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 severance and restructuring expenses. 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 severance and restructuring expenses, the
impact of the inclined sleeper product recalls, and the impact of
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 and Adjusted Operating Income
Margin
Adjusted Operating Income and Adjusted Operating Income Margin
represent reported Operating Income and reported Operating Income
Margin, respectively, adjusted to exclude severance and
restructuring expenses, the impact of the inclined sleeper product
recalls, and the impact of sale of assets, which are not part of
Mattel’s core business. Adjusted Operating Income Margin represents
Mattel’s Adjusted Operating Income, as a percentage of Net Sales.
Adjusted Operating Income and Adjusted Operating Income Margin are
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 Per Share
Adjusted Earnings Per Share represents Mattel’s reported Diluted
Earnings Per Common Share, adjusted to exclude severance and
restructuring expenses, the impact of the inclined sleeper product
recalls, the impact of sale of assets, the impact of changes to
certain deferred tax assets and related valuation allowances, which
are not part of Mattel’s core business. The aggregate tax effect of
the adjustments was determined using the effective tax rates on a
jurisdictional basis of the respective adjustments and dividing by
the reported weighted-average number of common shares. Adjusted
Earnings 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 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, adjusted to exclude the
impact of interest expense, taxes, depreciation, and amortization.
Adjusted EBITDA represents EBITDA adjusted to exclude share-based
compensation, severance and restructuring expenses, the impact of
the inclined sleeper product recalls, the impact of sale of assets,
and loss on liquidation of a subsidiary, 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 its
industry with similar capital structures. The presentation of
Adjusted EBITDA differs from how Mattel calculates EBITDA for
purposes of covenant compliance under the indentures governing its
high yield senior notes and the revolving credit agreement
governing its revolving credit facility. Because of these
limitations, EBITDA and Adjusted EBITDA should not be considered as
measures of discretionary cash available to invest in the growth of
Mattel’s business. As a result, Mattel relies primarily on its GAAP
results and uses EBITDA and Adjusted EBITDA only
supplementally.
Free Cash Flow and Free Cash Flow Conversion
Free Cash Flow represents Mattel’s net cash flows from/used for
operating activities less capital expenditures. Free Cash Flow
Conversion represents Mattel’s free cash flow divided by Adjusted
EBITDA. Mattel believes Free Cash Flow and Free Cash Flow
Conversion are useful supplemental information for investors to
gauge Mattel’s liquidity and performance and to compare Mattel’s
business performance to other companies in our industry. Free Cash
Flow does not represent cash available to Mattel for discretionary
expenditures.
Leverage Ratio (Total Debt / Adjusted EBITDA)
The leverage ratio is calculated by dividing Total Debt by
Adjusted EBITDA. Total Debt represents the aggregate of Mattel’s
current portion of long-term debt, short-term borrowings, and
long-term debt, excluding the impact of debt issuance costs and
debt discount. Mattel believes the leverage ratio is useful
supplemental information for investors to gauge trends in Mattel’s
business and to compare Mattel’s business performance to other
companies in its industry.
Net Debt
Net Debt represents the aggregate of Mattel’s current portion of
long-term debt, short-term borrowings, and long-term debt, less
cash and cash equivalents. Mattel believes Net Debt is useful
supplemental information for investors to monitor Mattel’s
liquidity and evaluate its balance sheet.
Adjusted Tax Rate
The Adjusted Tax Rate is calculated by dividing Adjusted
Provision for Income Taxes by Adjusted Income Before Income Taxes.
Adjusted Income Before Income Taxes represents reported Income
Before Income Taxes, adjusted to exclude severance and
restructuring expenses, the impact of inclined sleeper product
recalls, and the impact of sale of assets. The Adjusted Provision
for Income Taxes represents reported Provision for Income Taxes,
adjusted to exclude the impact of changes to certain deferred tax
assets and related valuation allowances and the aggregate tax
effect of adjustments. Mattel believes the adjusted tax rate
provides useful supplemental information for investors to gauge and
compare the impact of tax expense on Mattel's earnings results from
one period to another.
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.
Key Performance Indicator
Gross Billings
Gross Billings represent amounts invoiced to customers. It does
not include the impact of sales adjustments, such as trade
discounts and other allowances. Mattel presents changes in gross
billings as a metric for comparing its aggregate, categorical,
brand, and geographic results to highlight significant trends in
Mattel’s business. Changes in Gross Billings are discussed because,
while Mattel records the details of sales adjustments in its
financial accounting systems at the time of sale, such sales
adjustments are generally not associated with categories, brands,
and individual products.
About Mattel
Mattel is a leading global toy and family entertainment company
and owner of one of the most iconic brand portfolios in the world.
We engage consumers and fans through our franchise brands,
including Barbie®, Hot Wheels®, Fisher-Price®, American Girl®,
Thomas & Friends™, UNO®, Masters of the Universe®, Matchbox®,
Monster High®, MEGA® and Polly Pocket®, as well as other popular
properties that we own or license in partnership with global
entertainment companies. Our offerings include toys, content,
consumer products, digital and live experiences. Our products are
sold in collaboration with the world’s leading retail and ecommerce
companies. Since its founding in 1945, Mattel is proud to be a
trusted partner in empowering generations to explore the wonder of
childhood and reach their full potential. Visit us at
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, (In
millions, except per share and percentage information)
2024
2023
% ChangeasReported % Changein ConstantCurrency
2024
2023
% ChangeasReported % Changein ConstantCurrency $
Amt % NetSales $ Amt % NetSales $
Amt % NetSales $ Amt % NetSales Net
Sales
$
1,843.9
$
1,918.8
-4
%
-3
%
$
3,733.1
$
3,820.5
-2
%
-2
%
Cost of Sales
864.9
46.9
%
940.9
49.0
%
-8
%
1,834.5
49.1
%
2,027.0
53.1
%
-9
%
Gross Profit
979.0
53.1
%
977.9
51.0
%
—
%
—
%
1,898.6
50.9
%
1,793.5
46.9
%
6
%
6
%
Advertising and Promotion Expenses
105.0
5.7
%
124.3
6.5
%
-16
%
250.1
6.7
%
290.3
7.6
%
-14
%
Other Selling and Administrative Expenses
385.7
20.9
%
379.8
19.8
%
2
%
1,112.5
29.8
%
1,081.6
28.3
%
3
%
Operating Income
488.3
26.5
%
473.9
24.7
%
3
%
2
%
536.0
14.4
%
421.6
11.0
%
27
%
31
%
Interest Expense
29.4
1.6
%
30.7
1.6
%
-4
%
89.4
2.4
%
92.5
2.4
%
-3
%
Interest (Income)
(9.8
)
-0.5
%
(4.6
)
-0.2
%
114
%
(39.5
)
-1.1
%
(15.4
)
-0.4
%
156
%
Other Non-Operating (Income) Expense, Net
(2.9
)
(2.4
)
8.8
(6.0
)
Income Before Income Taxes
471.7
25.6
%
450.1
23.5
%
5
%
4
%
477.3
12.8
%
350.5
9.2
%
36
%
43
%
Provision for Income Taxes
106.4
309.3
94.8
296.8
(Income) from Equity Method Investments
(7.0
)
(5.6
)
(18.4
)
(13.3
)
Net Income
$
372.4
20.2
%
$
146.3
7.6
%
154
%
$
401.0
10.7
%
$
67.0
1.8
%
498
%
Net Income Per Common Share - Basic
$
1.10
$
0.41
$
1.17
$
0.19
Weighted-Average Number of Common Shares
339.1
354.1
342.7
354.6
Net Income Per Common Share - Diluted
$
1.09
$
0.41
$
1.16
$
0.19
Weighted-Average Number of Common and Potential Common Shares
341.2
357.5
345.4
358.0
1 Amounts may not sum due to rounding.
MATTEL, INC. AND
SUBSIDIARIES EXHIBIT II CONDENSED CONSOLIDATED
BALANCE SHEETS1 September 30, December 31,
2024
2023
2023
(In millions)
(Unaudited) Assets Cash and Equivalents
$
723.5
$
455.7
$
1,261.4
Accounts Receivable, Net
1,477.4
1,571.0
1,081.8
Inventories
737.2
790.5
571.6
Prepaid Expenses and Other Current Assets
242.3
224.8
207.5
Total Current Assets
3,180.4
3,042.1
3,122.3
Property, Plant, and Equipment, Net
513.8
457.2
465.5
Right-of-Use Assets, Net
277.6
286.0
313.2
Goodwill
1,389.0
1,380.0
1,384.5
Other Noncurrent Assets
1,153.0
1,079.2
1,150.2
Total Assets
$
6,513.7
$
6,244.6
$
6,435.8
Liabilities and Stockholders’ Equity Accounts Payable
and Accrued Liabilities
$
1,242.4
$
1,253.2
$
1,308.6
Income Taxes Payable
56.2
51.4
33.9
Total Current Liabilities
1,298.6
1,304.6
1,342.5
Long-Term Debt
2,333.3
2,328.9
2,330.0
Noncurrent Lease Liabilities
229.2
234.7
259.5
Other Noncurrent Liabilities
339.7
340.9
354.6
Stockholders’ Equity
2,312.9
2,035.5
2,149.2
Total Liabilities and Stockholders’ Equity
$
6,513.7
$
6,244.6
$
6,435.8
1 Amounts may not sum due to rounding.
MATTEL,
INC. AND SUBSIDIARIES EXHIBIT II SUPPLEMENTAL
BALANCE SHEET AND CASH FLOW DATA (Unaudited)1
September 30,
2024
2023
Key Balance Sheet Data:
Accounts Receivable, Net Days of Sales Outstanding (DSO)
72
74
For the Nine Months Ended September 30,
(In millions)
2024
2023
Condensed Cash Flow Data: Cash
Flows (Used for) Operating Activities
$
(62
)
$
(80
)
Cash Flows (Used for) Investing Activities
(152
)
(94
)
Cash Flows (Used for) Financing Activities and Other
(325
)
(132
)
Decrease in Cash and Equivalents
$
(538
)
$
(306
)
1 Amounts may not sum due to rounding.
MATTEL, INC. AND
SUBSIDIARIES EXHIBIT III 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 percentage
information)
2024
2023
Change
2024
2023
Change
Gross Profit Gross Profit, As
Reported
$
979.0
$
977.9
$
1,898.6
$
1,793.5
Gross Margin
53.1
%
51.0
%
210 bps
50.9
%
46.9
%
400 bps Adjustments: Severance and Restructuring Expenses
0.4
(0.1
)
3.0
(1.3
)
Gross Profit, As Adjusted
$
979.4
$
977.9
$
1,901.6
$
1,792.3
Adjusted Gross Margin
53.1
%
51.0
%
210 bps
50.9
%
46.9
%
400 bps
Other Selling and
Administrative Expenses Other Selling and Administrative
Expenses, As Reported
$
385.7
$
379.8
2
%
$
1,112.5
$
1,081.6
3
%
% of Net Sales
20.9
%
19.8
%
110 bps
29.8
%
28.3
%
150 bps Adjustments: Severance and Restructuring Expenses2
(27.1
)
(29.3
)
(43.8
)
(63.0
)
Inclined Sleeper Product Recalls
11.7
(1.3
)
5.8
(9.0
)
Sale of Assets3
—
(1.8
)
—
(1.8
)
Other Selling and Administrative Expenses, As Adjusted
$
370.3
$
347.5
7
%
$
1,074.5
$
1,007.8
7
%
% of Net Sales
20.1
%
18.1
%
200 bps
28.8
%
26.4
%
240 bps
Operating Income
Operating Income, As Reported
$
488.3
$
473.9
3
%
$
536.0
$
421.6
27
%
Operating Income Margin
26.5
%
24.7
%
180 bps
14.4
%
11.0
%
340 bps Adjustments: Severance and Restructuring Expenses2
27.5
29.2
46.8
61.7
Inclined Sleeper Product Recalls
(11.7
)
1.3
(5.8
)
9.0
Sale of Assets3
—
1.8
—
1.8
Operating Income, As Adjusted
$
504.1
$
506.1
—
%
$
577.0
$
494.1
17
%
Adjusted Operating Income Margin
27.3
%
26.4
%
90 bps
15.5
%
12.9
%
260 bps 1 Amounts may not sum due to rounding. 2 Mattel’s
severance and restructuring expenses include costs associated with
activities to further optimize its manufacturing footprint of $25.6
million and $26.7 million for the three and nine months ended
September 30, 2024, respectively, and $25.3 million for both the
three and nine months ended September 30, 2023. 3 For the three and
nine months ended September 30, 2023, Mattel recorded a loss on
sale of assets of $1.8 million in other selling and administrative
expenses.
MATTEL, INC. AND SUBSIDIARIES EXHIBIT III
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)
2024
2023
Change
2024
2023
Change Earnings Per
Share Net Income Per Common Share, As Reported
$
1.09
$
0.41
166
%
$
1.16
$
0.19
511
%
Adjustments: Severance and Restructuring Expenses2
0.08
0.08
0.14
0.17
Inclined Sleeper Product Recalls
(0.03
)
—
(0.02
)
0.03
Sale of Assets3
—
—
—
—
Valuation Allowance on Foreign Deferred Tax Assets4
0.01
0.59
0.01
0.59
Tax Effect of Adjustments5
(0.01
)
(0.02
)
(0.03
)
(0.04
)
Net Income Per Common Share, As Adjusted
$
1.14
$
1.08
6
%
$
1.26
$
0.94
34
%
EBITDA and Adjusted
EBITDA Net Income, As Reported
$
372.4
$
146.3
154
%
$
401.0
$
67.0
498
%
Adjustments: Interest Expense
29.4
30.7
89.4
92.5
Provision for Income Taxes
106.4
309.3
94.8
296.8
Depreciation
33.0
36.0
101.7
104.0
Amortization
7.9
9.6
23.5
28.6
EBITDA
549.0
532.0
710.3
588.9
Adjustments: Share-Based Compensation
19.7
15.5
57.4
52.4
Severance and Restructuring Expenses2
27.5
29.2
46.8
61.7
Inclined Sleeper Product Recalls
(11.7
)
1.3
(5.8
)
9.0
Sale of Assets3
—
1.8
—
1.8
Adjusted EBITDA
$
584.4
$
579.7
1
%
$
808.8
$
713.8
13
%
Free Cash Flow Net Cash
Flows (Used for) Operating Activities
$
(61.6
)
$
(79.6
)
Capital Expenditures
(156.9
)
(117.5
)
Free Cash Flow
$
(218.5
)
$
(197.2
)
1 Amounts may not sum due to rounding. 2 Mattel’s severance
and restructuring expenses include costs associated with activities
to further optimize its manufacturing footprint of $25.6 million
and $26.7 million for the three and nine months ended September 30,
2024, respectively, and $25.3 million for both the three and nine
months ended September 30, 2023. 3 For the three and nine months
ended September 30, 2023, Mattel recorded a loss on sale of assets
of $1.8 million in other selling and administrative expenses. 4 For
the three and nine months ended September 30, 2023, Mattel recorded
an expense of $212.4 million related to the establishment of a
valuation allowance on foreign deferred tax assets related to an
intra-group transfer of certain IP rights. 5 The aggregate tax
effect of adjustments was determined using the effective tax rates
on a jurisdictional basis of the respective adjustments, and
dividing by the reported weighted average number of common and
potential common shares.
MATTEL, INC. AND SUBSIDIARIES
EXHIBIT III
SUPPLEMENTAL FINANCIAL INFORMATION (Unaudited)1
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
For the Three Months Ended September 30,
(In millions, except percentage and pts
information)
2024
2023
Change Tax Rate Income
Before Income Taxes, As Reported
$
471.7
$
450.1
Adjustments: Severance and Restructuring Expenses2
27.5
29.2
Inclined Sleeper Product Recalls
(11.7
)
1.3
Sale of Assets3
—
1.8
Income Before Income Taxes, As Adjusted
$
487.4
$
482.3
Provision for Income Taxes, As Reported
$
106.4
$
309.3
Adjustments: Valuation Allowance on Foreign Deferred Tax Assets4
(3.2
)
(212.4
)
Tax Effect of Adjustments5
3.7
6.6
Provision for Income Taxes, As Adjusted
$
106.9
$
103.5
Tax Rate, As Reported
23
%
69
%
-46 pts Tax Rate, As Adjusted
22
%
21
%
1 pt
September 30,
2024
2023
Net Debt Long-Term Debt
$
2,333.3
$
2,328.9
Adjustments: Cash and Equivalents
(723.5
)
(455.7
)
Net Debt
$
1,609.7
$
1,873.2
1 Amounts may not sum due to rounding. 2 Mattel’s severance
and restructuring expenses include costs associated with activities
to further optimize its manufacturing footprint of $25.6 million
for the three months ended September 30, 2024, and $25.3 million
for the three months ended September 30, 2023. 3 For the three
months ended September 30, 2023, Mattel recorded a loss on sale of
assets of $1.8 million in other selling and administrative
expenses. 4 For the three and nine months ended September 30, 2023,
Mattel recorded an expense of $212.4 million related to the
establishment of a valuation allowance on foreign deferred tax
assets related to an intra-group transfer of certain IP rights. 5
Tax effect of adjustments was determined using the effective tax
rates on a jurisdictional basis of the respective adjustments.
MATTEL, INC. AND SUBSIDIARIES
EXHIBIT III
SUPPLEMENTAL FINANCIAL INFORMATION (Unaudited)1
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
For the Trailing Twelve Months Ended September 30,
(In millions, except percentage and pts
information)
2024
2023
Change Leverage Ratio (Total
Debt/Adjusted EBITDA) Total
Debt Long-Term Debt
$
2,333.3
$
2,328.9
Adjustments: Debt Issuance Costs and Debt Discount
16.7
21.1
Total Debt
$
2,350.0
$
2,350.0
EBITDA and Adjusted EBITDA Net Income,
As Reported
$
548.3
$
83.2
559
%
Adjustments: Interest Expense
120.7
125.6
Provision for Income Taxes
67.5
302.1
Depreciation
137.1
140.2
Amortization
32.8
38.1
EBITDA
906.4
689.1
Adjustments: Share-Based Compensation
88.4
65.6
Severance and Restructuring Expenses
44.8
70.6
Inclined Sleeper Product Recalls
3.2
7.5
Sale of Assets
—
(6.6
)
Loss on Liquidation of Argentina Subsidiary2
—
45.4
Adjusted EBITDA
$
1,042.7
$
871.6
20
%
Total Debt / Net Income 4.3x 28.3x Leverage Ratio (Total
Debt / Adjusted EBITDA) 2.3x 2.7x
Free Cash Flow Net Cash Flows Provided by
Operating Activities
$
887.8
$
638.0
39
%
Capital Expenditures
(199.7
)
(176.7
)
Free Cash Flow
$
688.2
$
461.3
49
%
Net Cash Flows Provided by Operating Activities / Net Income
162
%
767
%
-605 pts Free Cash Flow Conversion (Free Cash Flow/Adjusted EBITDA)
66
%
53
%
13 pts 1 Amounts may not sum due to rounding. 2 During the
trailing twelve months ended September 30, 2023, the liquidation of
Mattel’s subsidiary in Argentina was substantially completed, and
Mattel recognized its cumulative translation adjustments of $45.4
million as a loss in other non-operating expense, net.
MATTEL,
INC. AND SUBSIDIARIES EXHIBIT III SUPPLEMENTAL
FINANCIAL INFORMATION (Unaudited)1 RECONCILIATION OF GAAP
AND NON-GAAP FINANCIAL MEASURES For the Year EndedDecember
31, (In millions, except
percentage and per share information)
2023
Gross Profit Gross Profit, As
Reported
$
2,583.7
Gross Margin
47.5
%
Adjustments: Severance and Restructuring Expenses
(1.2
)
Gross Profit, As Adjusted
$
2,582.6
Adjusted Gross Margin
47.5
%
Earnings Per Share Net
Income Per Common Share, As Reported
$
0.60
Adjustments: Severance and Restructuring Expenses
0.17
Inclined Sleeper Product Recalls
0.05
Changes to Deferred Tax Assets2
0.45
Tax Effect of Adjustments3
(0.04
)
Net Income Per Common Share, As Adjusted
$
1.23
EBITDA and Adjusted
EBITDA Net Income, As Reported
$
214.4
Adjustments: Interest Expense
123.8
Provision for Income Taxes
269.5
Depreciation
139.5
Amortization
37.9
EBITDA
785.0
Adjustments: Share-Based Compensation
83.3
Severance and Restructuring Expenses
59.7
Inclined Sleeper Product Recalls
18.1
Sale of Assets
1.8
Adjusted EBITDA
$
947.8
1 Amounts may not sum due to rounding. 2 For the year ended
December 31, 2023, Mattel recorded an expense of $212.4 million
related to the release of foreign deferred tax assets and a benefit
of $51.0 million upon the establishment of deferred tax assets
related to an intra-group transfer of certain IP rights. 3 The
aggregate tax effect of adjustments was determined using the
effective tax rates on a jurisdictional basis of the respective
adjustments and dividing by the reported weighted average number of
common and potential common shares.
MATTEL, INC. AND
SUBSIDIARIES EXHIBIT III SUPPLEMENTAL
FINANCIAL INFORMATION (Unaudited)1 RECONCILIATION OF GAAP
AND NON-GAAP FINANCIAL MEASURES For the Year
EndedDecember 31, (In millions, except
percentage information)
2023
Tax Rate Income Before Income
Taxes, As Reported
$
465.4
Adjustments: Severance and Restructuring Expenses
59.7
Inclined Sleeper Product Recalls
18.1
Sale of Assets
1.8
Income Before Income Taxes, As Adjusted
$
544.9
Provision for Income Taxes, As Reported
$
269.5
Adjustments: Changes to Deferred Tax Assets2
(161.4
)
Tax Effect of Adjustments3
15.3
Provision for Income Taxes, As Adjusted
$
123.4
Tax Rate, As Reported
58
%
Tax Rate, As Adjusted
23
%
Free Cash Flow Net Cash
Flows Provided by Operating Activities
$
869.8
Capital Expenditures
(160.3
)
Free Cash Flow
$
709.5
1 Amounts may not sum due to rounding. 2 For the year
ended December 31, 2023, Mattel recorded an expense of $212.4
million related to the release of foreign deferred tax assets and a
benefit of $51.0 million upon the establishment of deferred tax
assets related to an intra-group transfer of certain IP rights. 3
Tax effect of adjustments was determined using the effective tax
rates on a jurisdictional basis of the respective adjustments.
MATTEL, INC. AND SUBSIDIARIES EXHIBIT IV
WORLDWIDE NET SALES AND GROSS BILLINGS1 (Unaudited)2
For the Three Months Ended September 30, For the Nine
Months Ended September 30,
2024
2023
% ChangeasReported % ChangeinConstantCurrency
2024
2023
% ChangeasReported % ChangeinConstantCurrency (In
millions, except percentage information) Worldwide Net Sales: Net Sales
$
1,843.9
$
1,918.8
-4
%
-3
%
$
3,733.1
$
3,820.5
-2
%
-2
%
Worldwide Gross Billings by
Categories: Dolls
$
757.1
$
884.5
-14
%
-14
%
$
1,465.6
$
1,631.1
-10
%
-10
%
Infant, Toddler, and Preschool
349.8
361.1
-3
-2
675.1
708.6
-5
-4
Vehicles
580.0
518.5
12
13
1,247.4
1,165.9
7
7
Action Figures, Building Sets, Games, and Other
364.3
357.7
2
3
763.2
755.0
1
1
Gross Billings
$
2,051.1
$
2,121.8
-3
%
-3
%
$
4,151.4
$
4,260.6
-3
%
-2
%
Supplemental Gross Billings
Disclosure Worldwide
Gross Billings by Top 3 Power Brands: Barbie
$
500.6
$
605.1
-17
%
-17
%
$
944.1
$
1,064.7
-11
%
-11
%
Hot Wheels
508.2
454.8
12
13
1,093.7
1,014.9
8
8
Fisher-Price3
265.4
264.3
-
2
494.7
480.6
3
3
Other
777.0
797.6
-3
-2
1,618.9
1,700.4
-5
-5
Gross Billings
$
2,051.1
$
2,121.8
-3
%
-3
%
$
4,151.4
$
4,260.6
-3
%
-2
%
1 Gross billings represent amounts invoiced to customers and
do not include the impact of sales adjustments, such as trade
discounts and other allowances. Mattel presents changes in gross
billings as a metric for comparing its aggregate, categorical,
brand, and geographic results to highlight significant trends in
Mattel’s business. 2 Amounts may not sum due to rounding. 3
Beginning in the first quarter of 2024, the Fisher-Price power
brand was revised to exclude Baby Gear and Imaginext products.
Prior period amounts have been reclassified to conform to the
current presentation.
MATTEL, INC. AND SUBSIDIARIES
EXHIBIT V NET SALES AND GROSS BILLINGS1 BY SEGMENT
(Unaudited)2,3 For the Three Months Ended September
30, For the Nine Months Ended September 30,
2024
2023
% ChangeasReported % ChangeinConstantCurrency
2024
2023
% ChangeasReported % ChangeinConstantCurrency (In
millions, except percentage information) North America Net Sales: Net Sales
$
1,108.3
$
1,147.0
-3
%
-3
%
$
2,192.6
$
2,241.9
-2
%
-2
%
North America Gross Billings by
Categories: Dolls
$
442.3
$
512.7
-14
%
-14
%
$
838.2
$
919.1
-9
%
-9
%
Infant, Toddler, and Preschool
228.0
230.6
-1
-1
420.1
437.7
-4
-4
Vehicles
288.5
263.4
10
10
605.5
579.1
5
5
Action Figures, Building Sets, Games, and Other
225.5
214.1
5
5
473.8
453.4
5
5
Gross Billings
$
1,184.3
$
1,220.9
-3
%
-3
%
$
2,337.6
$
2,389.3
-2
%
-2
%
Supplemental Gross Billings
Disclosure North America
Gross Billings by Top 3 Power Brands: Barbie
$
285.1
$
349.9
-19
%
-18
%
$
517.5
$
587.6
-12
%
-12
%
Hot Wheels
249.7
225.7
11
11
521.1
492.3
6
6
Fisher-Price4
168.5
166.5
1
1
300.6
285.9
5
5
Other
481.0
478.7
-
1
998.4
1,023.5
-2
-2
Gross Billings
$
1,184.3
$
1,220.9
-3
%
-3
%
$
2,337.6
$
2,389.3
-2
%
-2
%
1 Gross billings represent amounts invoiced to customers and
do not include the impact of sales adjustments, such as trade
discounts and other allowances. Mattel presents changes in gross
billings as a metric for comparing its aggregate, categorical,
brand, and geographic results to highlight significant trends in
Mattel’s business. 2 Amounts may not sum due to rounding. 3 In the
first quarter of 2024, Mattel's American Girl business was
integrated into its North America commercial organization and is
reported within the North America operating segment. Prior period
amounts have been reclassified to conform to the current period
presentation. 4 Beginning in the first quarter of 2024, the
Fisher-Price power brand was revised to exclude Baby Gear and
Imaginext products. Prior period amounts have been reclassified to
conform to the current presentation.
MATTEL, INC. AND
SUBSIDIARIES EXHIBIT VI NET SALES AND GROSS
BILLINGS1 BY SEGMENT (Unaudited)2 For the Three
Months Ended September 30, For the Nine Months Ended
September 30,
2024
2023
% ChangeasReported % ChangeinConstantCurrency
2024
2023
% ChangeasReported % ChangeinConstantCurrency (In
millions, except percentage information) International Net Sales by Geographic Area:
EMEA
$
401.9
$
423.9
-5
%
-7
%
$
837.9
$
875.0
-4
%
-6
%
Latin America
240.6
262.1
-8
1
454.8
475.6
-4
-
Asia Pacific
93.1
85.8
8
8
247.9
228.0
9
10
Net Sales
$
735.6
$
771.8
-5
%
-3
%
$
1,540.6
$
1,578.6
-2
%
-2
%
International Gross Billings by
Geographic Area: EMEA
$
478.6
$
499.2
-4
%
-6
%
$
998.3
$
1,054.9
-5
%
-7
%
Latin America
281.9
304.4
-7
2
531.3
552.9
-4
1
Asia Pacific
106.3
97.3
9
8
284.2
263.5
8
10
Gross Billings
$
866.8
$
900.9
-4
%
-2
%
$
1,813.8
$
1,871.3
-3
%
-2
%
International Gross Billings by
Categories: Dolls
$
314.8
$
371.7
-15
%
-14
%
$
627.5
$
712.0
-12
%
-11
%
Infant, Toddler, and Preschool
121.8
130.5
-7
-4
255.0
270.9
-6
-5
Vehicles
291.5
255.0
14
17
641.9
586.8
9
10
Action Figures, Building Sets, Games, and Other
138.8
143.6
-3
-2
289.4
301.7
-4
-3
Gross Billings
$
866.8
$
900.9
-4
%
-2
%
$
1,813.8
$
1,871.3
-3
%
-2
%
Supplemental Gross Billings
Disclosure International
Gross Billings by Top 3 Power Brands: Barbie
$
215.5
$
255.2
-16
%
-14
%
$
426.6
$
477.1
-11
%
-10
%
Hot Wheels
258.4
229.1
13
15
572.6
522.6
10
11
Fisher-Price3
96.9
97.7
-1
2
194.1
194.7
-
1
Other
296.1
318.9
-7
-6
620.5
676.9
-8
-8
Gross Billings
$
866.8
$
900.9
-4
%
-2
%
$
1,813.8
$
1,871.3
-3
%
-2
%
1 Gross billings represent amounts invoiced to customers and
do not include the impact of sales adjustments, such as trade
discounts and other allowances. Mattel presents changes in gross
billings as a metric for comparing its aggregate, categorical,
brand, and geographic results to highlight significant trends in
Mattel’s business. 2 Amounts may not sum due to rounding. 3
Beginning in the first quarter of 2024, the Fisher-Price power
brand was revised to exclude Baby Gear and Imaginext products.
Prior period amounts have been reclassified to conform to the
current presentation.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241023862804/en/
Securities Analysts Jenn Kettnich
jenn.kettnich@mattel.com News Media Catherine Frymark
catherine.frymark@mattel.com
Mattel (NASDAQ:MAT)
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Mattel (NASDAQ:MAT)
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