First Quarter Highlights
- Worldwide net sales up 5% in
constant currency1, and reported worldwide net sales
down 2%, reflecting the impact from changes in currency exchange
rates
- North American Region2
gross sales up 9% in constant currency and International Region
gross sales up 2% in constant currency; and reported North American
Region gross sales up 8% and International Region gross sales down
14%
- Adjusted operating loss1
of $14.6 million compared to adjusted operating
income1 of $27.7 million in the first quarter of
2014, and reported operating loss of $54.5 million compared to
reported operating income of $6.2 million in the first quarter of
2014
- Adjusted loss per share1
of $0.08 vs. prior year adjusted earnings per share1
of $0.03, and reported loss per share of $0.17 vs. prior year
reported loss per share of $0.03
Capital Deployment
- Board declared 2015 second quarter
cash dividend of $0.38 per share, which is flat compared to the
second quarter of 2014
For the first quarter of 2015, Mattel, Inc. (NASDAQ: MAT) today
reported constant currency revenue growth of 5%, adjusted operating
loss of $14.6 million, and adjusted loss per share of $0.08.
“In the first quarter, we took a number of steps to implement a
rapid turnaround at Mattel,” said Christopher Sinclair, Mattel
Chairman and CEO. “We are already benefitting from better
decision-making, alignment and enhanced accountability. And we’ve
begun to refocus our culture on creativity, innovation and
improving our speed to market. While we still have a lot of work to
do, we’re starting to see progress with our core brands like Barbie
and Fisher-Price, and I am confident we are making the changes
necessary to perform better in the future.”
Financial Overview
For the quarter, net sales were up 5% in constant currency
compared to last year. On a regional basis, first quarter gross
sales increased 9% in constant currency, and 8% as reported, in the
North American Region, which consists of the United States, Canada
and American Girl. For the International Region, gross sales
increased 2% in constant currency, and decreased 14% as reported.
Gross margin decreased 210 basis points of net sales, partially due
to the acquisition of MEGA® Brands. Adjusted other selling and
administrative expenses increased 90 basis points of net sales, and
300 basis points as reported. Adjusted operating loss for the
quarter was $14.6 million, compared to prior year’s adjusted
operating income of $27.7 million.
The Company’s debt-to-total capital ratio as of March 31, 2015
was 44.1%.
Cash flows used for operating activities were approximately $53
million, compared to approximately $61 million of cash flows from
operating activities in 2014. Cash flows used for investing
activities were approximately $92 million, an increase of
approximately $62 million, compared to approximately $30 million in
2014. Cash flows used for financing activities and other were
approximately $144 million, compared to approximately $173 million
in 2014.
Capital Deployment
The Board of Directors declared a second quarter cash dividend
of $0.38 per share, which is flat compared to the second quarter of
2014. The dividend will be payable on June 12, 2015 to stockholders
of record on May 22, 2015.
Sales by Brand
Mattel Girls and Boys Brands
For the first quarter, worldwide gross sales for Mattel Girls
& Boys Brands were $605.2 million, up 1% in constant currency
versus the prior year. Worldwide gross sales for the Barbie brand
were down 5% in constant currency. In the quarter, retail sales for
Barbie were up on a global basis driven by a strong performance in
the United States, partially offset by a decline in international
markets. Worldwide gross sales for Other Girls brands were down 1%
in constant currency. Worldwide gross sales for the Wheels
category, which includes the Hot Wheels and Matchbox® brands, were
up 10% in constant currency. Worldwide gross sales for the
Entertainment business, which includes Radica® and Games, were up
4% in constant currency.
Fisher-Price Brands
First quarter worldwide gross sales for Fisher-Price Brands,
which includes the Fisher-Price Core, Fisher-Price Friends and
Power Wheels® brands, were $264.0 million, up 3% in constant
currency versus the prior year.
American Girl Brands
First quarter gross sales for American Girl Brands, which offers
American Girl-branded products directly to consumers, were $106.1
million, flat versus the prior year in constant currency.
Construction and Arts & Crafts Brands
First quarter gross sales for Construction and Arts & Crafts
Brands, which includes the MEGA BLOKS® and RoseArt® brands, were
$38.3 million. Mattel acquired MEGA Brands Inc. on April 30,
2014.
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 2015
first quarter financial results. The conference call will be
webcast on the “Investors” section of the Company's corporate
website: http://corporate.mattel.com/.
To listen to the live call, log in to the website at least 15
minutes early to register, download and install any necessary audio
software. An archive of the webcast will be available on the
company's website for 90 days and may be accessed beginning two
hours after the completion of the live call. A telephonic replay of
the call will be available beginning at 8:00 p.m. Eastern time the
day of the call until Thursday, April 23, 2015, and may be accessed
by dialing +1-404-537-3406. The passcode is 9012257.
Forward-Looking Statements
This press release contains forward-looking statements on a
variety of matters. 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. Some of
these factors are described in the Company'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, 2014 and Mattel's Quarterly Reports
on Form 10-Q for fiscal year 2014, as well as in Mattel's other
public statements. Mattel does not update forward-looking
statements and expressly disclaims any obligation to do so.
Non-GAAP Financial Measures
To supplement the financial results presented in accordance with
generally accepted accounting principles in the United States
(“GAAP”), Mattel discloses certain non-GAAP financial measures
within the meaning of Regulation G promulgated by the Securities
and Exchange Commission. The non-GAAP financial measures presented
in this release include gross sales, adjusted other selling and
administrative expenses, adjusted operating (loss) income, adjusted
(loss) earnings per share, 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 are discussed in more detail below.
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 can be found in the attached exhibits and also will be
available at the time of our conference call and webcast
(information above) in the “Investors” section of our corporate
website, http://corporate.mattel.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, brand, and geographic results to highlight
significant trends in Mattel’s business. Changes in gross sales are
discussed because, while Mattel records the detail of such sales
adjustments in its financial accounting systems at the time of
sale, such sales adjustments are generally not associated with
individual products, making net sales less meaningful.
Adjusted other selling and administrative expenses
Adjusted other selling and administrative expenses represents
Mattel’s reported other selling and administrative expenses,
adjusted to exclude the impact of restructuring and
restructuring-related expenses and costs associated with the
acquisition and integration of an acquired 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.
Adjusted operating (loss) income
Adjusted operating income represents Mattel’s reported operating
income, adjusted to exclude the impact of restructuring and
restructuring-related expenses and costs associated with the
acquisition and integration of an acquired business. Adjusted
operating income is presented to provide additional perspective on
underlying trends in Mattel’s core operating results.
Adjusted (loss) earnings per share
Adjusted earnings per share represents Mattel’s reported diluted
earnings per common share, adjusted to exclude the impact of
restructuring and restructuring-related expenses, costs associated
with the acquisition and integration of an acquired business, and
certain tax benefits. Each adjustment is tax effected, if
necessary, and divided by the reported weighted average number of
common and potential common shares to determine the per-share
impact of the adjustment. Adjusted earnings per share is presented
to provide additional perspective on underlying trends in Mattel’s
core earnings.
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, current period and prior period
results for entities reporting in currencies other than US dollar
are translated to US dollars using consistent exchange rates,
rather than using the actual exchange rate in effect during the
respective periods. 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
underlying trends in Mattel’s operating performance.
About Mattel
The Mattel family of companies (Nasdaq: MAT) is the worldwide
leader in the design, manufacture and marketing of toys and family
products. Mattel’s portfolio of best-selling brands includes
Barbie®, the most popular fashion doll ever produced, Hot Wheels®,
Monster High®, American Girl®, Thomas & Friends® and
Fisher-Price® brands, including Little People® and Power Wheels®,
MEGA® Brands, including MEGA BLOKS® and RoseArt®, as well as a wide
array of entertainment-inspired toy lines. In 2014, Mattel ranked
No. 5 on Corporate Responsibility Magazine's "100 Best Corporate
Citizens" list. With worldwide headquarters in El Segundo, Calif.,
Mattel’s companies employ 31,000 people in 40 countries and
territories and sell products in more than 150 nations. At Mattel,
we are Creating the Future of Play. Visit us at www.mattel.com,
www.facebook.com/mattel or www.twitter.com/mattel.
1 Please refer to the Non-GAAP Financial Measures for the
definitions of non-GAAP financial measures including constant
currency, adjusted operating (loss) income, adjusted (loss)
earnings per share, gross sales, and adjusted other selling and
administrative expenses.2 Consists of the United States, Canada and
American Girl.
MAT-FIN
MAT-CORP
MATTEL, INC. AND SUBSIDIARIES
EXHIBIT I
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) For the Three Months Ended March 31,
(In millions,
except per share and percentage information)
2015 2014 Yr / Yr $ Amt
% Net Sales
$ Amt
% Net Sales % Change Net Sales $ 922.7 $ 946.2
-2 % Cost of sales 472.3 51.2 % 464.7
49.1 % 2 %
Gross Profit 450.4 48.8 % 481.5 50.9 % -6
% Advertising and promotion expenses 102.4 11.1 % 90.8 9.6 % 13 %
Other selling and administrative expenses 402.5 43.6 % 384.5 40.6 %
5 %
Operating (Loss) Income (54.5 ) -5.9 % 6.2
0.7 % -976 % Interest expense 20.4 2.2 % 17.2 1.8 % 18 % Interest
(income) (1.7 ) -0.2 % (1.3 ) -0.1 % 30 % Other non-operating
income, net - (0.3 )
Loss Before
Income Taxes (73.2 ) -7.9 % (9.4 ) -1.0 % 676 % (Benefit)
provision for income taxes (15.0 ) 1.8
Net Loss $ (58.2 ) -6.3 % $ (11.2 ) -1.2 % 419 %
Net Loss Per Common Share - Basic $ (0.17 ) $ (0.03 )
Weighted average number of common shares 338.6
340.2
Net Loss Per Common Share - Diluted $
(0.17 ) $ (0.03 )
Weighted average number of common and
potential common shares
338.6 340.2
MATTEL, INC. AND SUBSIDIARIES EXHIBIT
II CONDENSED CONSOLIDATED
BALANCE SHEETS March 31, December 31,
2015 2014 2014 (a)
(In
millions)
(Unaudited) Assets Cash and
equivalents $ 682.9 $ 897.3 $ 971.7 Accounts receivable, net 699.7
762.6 1,094.5 Inventories 640.3 650.8 561.8 Prepaid expenses and
other current assets 572.3 507.9
558.9 Total current assets 2,595.2 2,818.6 3,186.9
Property, plant, and equipment, net 715.6 658.8 737.9 Other
noncurrent assets 2,796.2 2,394.6
2,797.2
Total Assets $ 6,107.0 $
5,872.0 $ 6,722.0
Liabilities and
Stockholders' Equity Accounts payable and accrued liabilities
784.4 661.0 1,070.1 Income taxes payable 10.5
13.9 18.8 Total current liabilities 794.9
674.9 1,088.9 Long-term debt 2,100.0 1,600.0 2,100.0 Other
noncurrent liabilities 545.5 499.6 584.0 Stockholders' equity
2,666.6 3,097.5 2,949.1
Total Liabilities and Stockholders' Equity $ 6,107.0
$ 5,872.0 $ 6,722.0
SUPPLEMENTAL
BALANCE SHEET AND CASH FLOW DATA (Unaudited) March
31,
(In millions,
except days and percentage information)
2015 2014
Key Balance Sheet
Data:
Accounts receivable, net days of sales outstanding (DSO) 68 73
Total debt outstanding $ 2,100.0 $ 1,600.0 Total debt-to-total
capital ratio 44.1 % 34.1 %
Three Months Ended March
31,
(In
millions)
2015 (b) 2014
Condensed Cash
Flow Data:
Cash flows (used for) from operating activities $ (53 ) $ 61
Cash flows (used for) investing activities (92 ) (30 ) Cash
flows (used for) financing activities and other (144 )
(173 ) Decrease in cash and equivalents $ (289 ) $
(142 ) (a) Certain balances related to the
acquisition of MEGA Brands have been retrospectively adjusted to
reflect their final acquisition-date fair values. (b) Amounts shown
are preliminary estimates. Actual amounts will be reported in
Mattel's Quarterly Report on Form 10-Q for the quarter ended March
31, 2015.
MATTEL, INC. AND SUBSIDIARIES
EXHIBIT III WORLDWIDE GROSS SALES INFORMATION
(Unaudited) RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL
MEASURES For the Three Months Ended March 31,
(In millions,
except percentage information)
2015 2014
Worldwide Gross
Sales by Brand:
Mattel Girls & Boys Brands $ 605.2 $ 656.9
% Change
-8 % -5 % Pos./(Neg.) Impact of Currency (in % pts) -9 -1
% Change in Constant Currency 1 % -4 % Fisher-Price
Brands 264.0 271.4
% Change
-3 % -6 % Pos./(Neg.) Impact of Currency (in % pts) -6 -1
% Change in Constant Currency 3 % -5 % American Girl
Brands 106.1 105.9
% Change
0 % 5 % Construction and Arts & Crafts Brands 38.3
-
Other 6.6
7.0
Gross Sales $ 1,020.2 $ 1,041.2
Worldwide Gross
Sales - Mattel Girls & Boys Brands:
Barbie $ 146.0 $ 169.9
% Change
-14 % -14 % Pos./(Neg.) Impact of Currency (in % pts) -9 -1
% Change in Constant Currency -5 % -13 % Other Girls
189.6
212.9
% Change
-11 % 4 % Pos./(Neg.) Impact of Currency (in % pts) -10 -2
% Change in Constant Currency -1 % 6 % Wheels
132.1
130.7
% Change
1 % -2 % Pos./(Neg.) Impact of Currency (in % pts) -9 -1
% Change in Constant Currency 10 % -1 % Entertainment
137.5
143.4
% Change
-4 % -8 % Pos./(Neg.) Impact of Currency (in % pts) -8
-
% Change in Constant Currency 4 % -8 % Gross
Sales $ 605.2 $ 656.9
Worldwide Gross
Sales by Region:
North American1 $ 598.1 $ 552.0
% Change
8 % -2 % Pos./(Neg.) Impact of Currency (in % pts) -1 -1
% Change in Constant Currency 9 % -1 % International
422.1
489.2
% Change
-14 % -7 % Pos./(Neg.) Impact of Currency (in % pts) -16 -1
% Change in Constant Currency 2 % -6 % Gross
Sales $ 1,020.2 $ 1,041.2
% Change
-2 % -4 % Pos./(Neg.) Impact of Currency (in % pts) -8 -1
% Change in Constant Currency 6 % -3 %
Reconciliation of
Non-GAAP to GAAP Financial Measure:
Gross Sales $ 1,020.2 $ 1,041.2 Sales Adjustments
(97.5
)
(95.0
) Net Sales $ 922.7 $ 946.2
% Change
-2 % -5 % Pos./(Neg.) Impact of Currency (in % pts) -7 -1
% Change in Constant Currency 5 % -4 %
1 Consists of U.S., Canada, and American
Girl.
MATTEL, INC. AND
SUBSIDIARIES EXHIBIT IV
SUPPLEMENTAL FINANCIAL INFORMATION (Unaudited)
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
For the Three Months Ended March 31,
(In millions,
except per share and percentage information)
2015 2014
Other Selling and
Administrative Expenses
Other Selling and Administrative Expenses, As Reported $ 402.5 $
384.5
% of Net Sales
43.6 % 40.6 % Adjustments: MEGA Brands Integration &
Acquisition Costs (7.7 ) - MEGA Brands Intangible Asset
Amortization Expense (4.2 ) - Severance Expense (28.0 )
(21.5 ) Other Selling and Administrative Expenses, As
Adjusted $ 362.6 $ 363.0
% of Net Sales
39.3 % 38.4 %
Operating (Loss)
Income
Operating (Loss) Income, As Reported $ (54.5 ) $ 6.2 Adjustments:
MEGA Brands Integration & Acquisition Costs 7.7
-
MEGA Brands Intangible Asset Amortization Expense 4.2
-
Severance Expense 28.0 21.5 Operating
(Loss) Income, As Adjusted $
(14.6
) $ 27.7
Earnings Per
Share
Net Loss Per Common Share, As Reported $ (0.17 ) $ (0.03 )
Adjustments: MEGA Brands Integration & Acquisition Costs 0.02
-
MEGA Brands Intangible Asset Amortization Expense 0.01 - Severance
Expense 0.06 0.05 Discrete Tax Items - 0.01
Net (Loss) Income Per Common Share, As Adjusted $ (0.08 ) $
0.03
Mattel, Inc.News MediaAlex
Clark310-252-6397alex.clark@mattel.comorSecurities
AnalystsMartin Gilkes310-252-2703martin.gilkes@mattel.com
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