- Third quarter Net Sales of $1,632 million, up 10% as
reported, and up 11% in constant currency, versus prior
year.
- Gross Sales of $1,818 million, up 10% as reported, and up
11% in constant currency.
- Dolls category Gross Sales up 22% as reported, and up 24% in
constant currency; Barbie Gross Sales up 29% as reported, and up
30% in constant currency.
- Reported Gross Margin of 51.0%, an improvement of 470 basis
points; Adjusted Gross Margin of 51.0%, an improvement of 410 basis
points.
- Reported Operating Income of $384.2 million, up 156%;
Adjusted Operating Income of $401.3 million, up 131%.
- Reported Net Income of $316.0 million, up 348%.
- Adjusted EBITDA of $469.8 million, up 90%.
- E-commerce POS grew by approximately 50%.
- 2020 guidance to be provided on Company’s Q3 2020 conference
call and live webcast.
Mattel, Inc. (NASDAQ: MAT) today reported third quarter 2020
financial results.
Ynon Kreiz, Chairman and CEO of Mattel said: “This was a very
strong quarter for Mattel. We saw a major upswing in topline and a
significant increase in profitability as we continued to make
meaningful progress towards becoming an IP-driven, high-performing
toy company. The toy industry, as a whole, grew significantly and
continues to demonstrate its resilience in challenging economic
times. Mattel’s growth outpaced the industry as we gained share in
key markets around the world and achieved growth in each of our
four regions.”
Mr. Kreiz continued: “Based on the POS momentum we are seeing,
the low retail inventories and the early start of the holiday
shopping season, we expect Net Sales and Gross Sales to grow in the
fourth quarter. Looking to the full year, with continued
operational savings and margin expansion, we expect to see strong
Net Income and EBITDA growth and remain focused on creating
long-term shareholder value.”
Anthony DiSilvestro, CFO of Mattel said: “We had an outstanding
quarter with results exceeding our expectations. In spite of the
pandemic, we have continued to make meaningful progress towards our
strategy to restore profitability and regain topline growth. We are
very pleased with the continuing improvements in Gross Margin, a
key driver of our overall financial performance, as we continue to
benefit from our cost savings programs. We believe we are
well-positioned to maintain this momentum.”
For the third quarter, Net Sales were up 10% as reported, and up
11% in constant currency, versus the prior year’s third quarter.
Gross Sales were up 10% as reported, and up 11% in constant
currency. Reported Operating Income was $384.2 million, up 156%,
and Adjusted Operating Income was $401.3 million, up 131%. Reported
Earnings Per Share was $0.91, an improvement of $0.71 per share, or
355%, compared to earnings per share of $0.20 in the prior year.
Adjusted Earnings Per Share was $0.95, an improvement of $0.69 per
share, or 265%, compared to adjusted earnings per share of $0.26 in
the prior year.
For the first nine months of the year, Net Sales were down 2% as
reported, and down 1% in constant currency, versus the prior year’s
first nine months. Gross Sales were down 3% as reported, and down
1% in constant currency. Reported Operating Income was $188.2
million, an increase of $216.5 million, versus the prior year’s
first nine months' Reported Operating Loss of $28.3 million, and
Adjusted Operating Income was $242.7 million, up 417%. Reported
Loss Per Share was $0.01, an improvement of $0.61 per share,
compared to a loss per share of $0.62 in the prior year. Adjusted
Earnings Per Share was $0.14, an improvement of $0.55 per share,
compared to an adjusted loss per share of $0.41 in the prior
year.
COVID-19 Business Update
Mattel’s top priority has been to protect the health and safety
of our people and at the same time mitigate the disruption of the
COVID-19 pandemic to the business. Mattel is working closely with
its retail partners on the challenge of meeting consumer demand
heading into the holiday season and is mindful of the COVID-19
volatility and other macro-economic uncertainties, which could
negatively impact performance. Mattel’s supply chain is fully
operational as we chase the extraordinary growth in consumer demand
for our products. Mattel expects to continue benefitting from cost
savings related to the Structural Simplification and Capital Light
programs and from additional actions taken in 2020 in response to
COVID-19. Liquidity is expected to be sufficient to manage
effectively through further disruption and to continue to execute
Mattel’s strategy.
Financial Overview
For the third quarter, Net Sales in the North America segment
increased 13% as reported and in constant currency, versus the
prior year’s third quarter.
Gross Sales in the North America segment increased 13% as
reported and in constant currency, primarily driven by growth in
Dolls (including Barbie®), Action Figures, Building Sets, Games,
and Other (including Star Wars™: The Child plush, card games,
including UNO®, Jurassic World®, and Pictionary®, partially offset
by Toy Story 4), and Vehicles (including Hot Wheels® and CARS®).
This was partially offset by declines in Infant, Toddler, and
Preschool (including Fisher-Price Friends and Fisher-Price® and
Thomas & Friends™).
Net Sales in the International segment increased 8% as reported,
and 11% in constant currency.
Gross Sales in the International segment increased 7% as
reported, and 10% in constant currency, driven by growth in Dolls
(including Barbie), Action Figures, Building Sets, Games, and Other
(including Scrabble®, card games, including UNO, and Jurassic
World, partially offset by Toy Story 4), and Vehicles (including
Hot Wheels). This was partially offset by a decline in Infant,
Toddler, and Preschool (including Fisher-Price Friends).
Net Sales in the American Girl segment decreased 1% as reported
and in constant currency. Gross Sales in the American Girl segment
decreased 2% as reported and in constant currency. Net and Gross
Sales declined primarily due to lower sales in proprietary retail
channels, mostly offset by higher direct-to-consumer sales.
Reported Gross Margin increased to 51.0%, versus 46.3% in the
prior year’s third quarter, and Adjusted Gross Margin increased to
51.0%, versus 46.9%. The increase in Reported and Adjusted Gross
Margin was primarily driven by cost savings, reduced royalties, and
favorable category mix.
Reported Other Selling and Administrative Expenses decreased by
$20.3 million, or 6%, to $345.7 million. Adjusted Other Selling and
Administrative Expenses decreased by $22.5 million, or 6%, to
$328.9 million. The decrease in Reported and Adjusted Other Selling
and Administrative Expenses was primarily driven by the incremental
benefit of Structural Simplification cost savings.
For the nine months ended September 30, 2020, Cash Flows Used
for Operating Activities was $434 million, compared to $514 million
in the prior year, an improvement of $80 million. This was
primarily driven by a lower Net Loss, excluding the impact of
non-cash charges, partially offset by higher working capital usage.
Cash Flows Used for Investing Activities increased by $37 million
to $115 million, primarily due to payments for foreign currency
forward exchange contracts and higher capital spending. Cash Flows
Provided by Financing Activities and Other increased by $155
million to $371 million, primarily driven by net proceeds from
short-term borrowings of $400 million in the first nine months of
2020.
Sales by Categories
For the third quarter, Worldwide Gross Sales for Dolls were
$690.5 million, up 22% as reported, and up 24% in constant
currency, versus the prior year’s third quarter, primarily driven
by growth in Barbie.
Worldwide Gross Sales for Infant, Toddler, and Preschool were
$404.1 million, down 6% as reported, and down 5% in constant
currency, primarily due to declines in Fisher-Price Friends and
Fisher-Price and Thomas & Friends.
Worldwide Gross Sales for Vehicles were $369.4 million, up 6% as
reported, and up 8% in constant currency, primarily driven by
growth in Hot Wheels.
Worldwide Gross Sales for Action Figures, Building Sets, Games,
and Other were $354.5 million, up 14% as reported and in constant
currency, primarily driven by growth in Star Wars: The Child plush,
card games, including UNO, Jurassic World, and Pictionary,
partially offset by declines in Toy Story 4, post its movie launch
year.
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 third
quarter 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 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 Thursday,
October 29, 2020 and may be accessed by dialing +1-404-537-3406.
The passcode is 3348954.
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. Forward-looking statements can be identified by
the fact that they do not relate strictly to historical or current
facts. 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
assumptions, 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, and are
currently, or in the future could be, amplified by the COVID-19
pandemic. Specific factors that might cause such a difference
include, but are not limited to: (i) potential impacts of the
COVID-19 pandemic on our business operations, financial results and
financial position and on the global economy, including its impact
on our sales; (ii) 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; (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, 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)
currency fluctuations, including movements in foreign exchange
rates, which can lower Mattel’s net revenues and earnings, and
significantly impact Mattel’s costs; (viii) the concentration of
Mattel’s customers, potentially increasing the negative impact to
Mattel of difficulties experienced by any of Mattel’s customers, or
changes in their purchasing or selling patterns; (ix) 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; (x) 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; (xi) legal, reputational, and
financial risks related to security breaches or cyberattacks; (xii)
the increased costs of developing more sophisticated digital and
smart technology products, and the corresponding supply chain and
design challenges associated with such products; (xiii) work
disruptions, which may impact Mattel’s ability to manufacture or
deliver product in a timely and cost-effective manner; (xiv) the
bankruptcy and liquidation 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; (xv) 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;
(xvi) the risk of product recalls or product liability suits and
costs associated with product safety regulations; (xvii) 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;
(xviii) failure to realize the planned benefits from any
investments or acquisitions made by Mattel; (xix) 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; (xx) changes
in financing markets or the inability of Mattel to obtain financing
on attractive terms; (xxi) the impact of litigation, arbitration,
or regulatory decisions or settlement actions; (xxii) uncertainty
from the expected discontinuance of LIBOR and transition to any
other interest rate benchmark; and (xxiii) 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, 2019, as amended, and Quarterly
Report on Form 10-Q for the quarter ended June 30, 2020, 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, Free
Cash Flow, 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 – Earnings Releases.”
Gross Sales
Gross Sales represent sales to customers at invoice, 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 measure 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 categories, brands, and individual products, making
net sales less meaningful. Because sales adjustments are not
allocated to individual products, net sales are only presented on a
consolidated and segment basis and not on a categories or brand
level.
Since sales adjustments are determined by customer rather than
at the categories or 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 categories and brands (e.g., Dolls,
Barbie) and also enhances their ability to compare sales trends
over time. Refer to Mattel's critical accounting policies and
estimates included in the 2019 Annual Report on Form 10-K for
further detail regarding sales adjustments.
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 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 severance and restructuring expenses and the
impact of the inclined sleeper product recalls, 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 Income (Loss), adjusted to exclude severance and
restructuring expenses 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
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
share-based compensation, severance and restructuring expenses, 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, the indenture governing our 5.875%
senior notes due 2027, 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.
Free Cash Flow
Free Cash Flow represents Mattel’s net cash flows from operating
activities less capital expenditures. Mattel believes Free Cash
Flow is 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.
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 toy company and owner of one of the
strongest catalogs of children’s and family entertainment
franchises in the world. We create innovative products and
experiences that inspire, entertain and develop children through
play. We engage consumers through our portfolio of iconic brands,
including Barbie®, Hot Wheels®, Fisher-Price®, American Girl®,
Thomas & Friends™, UNO® and MEGA®, as well as other popular
intellectual properties 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 35
locations and our products are available in more than 150 countries
in collaboration with the world’s leading retail and e-commerce
companies. Since its founding in 1945, Mattel is proud to be a
trusted partner in empowering children to explore the wonder of
childhood and reach their full potential.
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,
2020
2019
% Change
as
Reported
% Change
in Constant
Currency
2020
2019
% Change
as
Reported
% Change
in Constant
Currency
(In millions, except per share and
percentage information)
$ Amt
% Net
Sales
$ Amt
% Net
Sales
$ Amt
% Net
Sales
$ Amt
% Net
Sales
Net Sales
$
1,631.7
$
1,481.6
10
%
11
%
$
2,957.9
$
3,030.9
-2
%
-1
%
Cost of sales
799.3
49.0
%
795.1
53.7
%
1
%
1,549.5
52.4
%
1,763.3
58.2
%
-12
%
Gross Profit
832.4
51.0
%
686.4
46.3
%
21
%
23
%
1,408.4
47.6
%
1,267.6
41.8
%
11
%
13
%
Advertising and promotion expenses
102.5
6.3
%
170.4
11.5
%
-40
%
239.0
8.1
%
324.3
10.7
%
-26
%
Other selling and administrative expenses
345.7
21.2
%
366.0
24.7
%
-6
%
981.2
33.2
%
971.6
32.1
%
1
%
Operating Income (Loss)
384.2
23.5
%
150.1
10.1
%
156
%
165
%
188.2
6.4
%
(28.3
)
-0.9
%
n/m
n/m
Interest expense
50.4
3.1
%
47.7
3.2
%
6
%
149.0
5.0
%
140.9
4.6
%
6
%
Interest (income)
(0.5
)
0.0
%
(0.8
)
-0.1
%
-45
%
(3.6
)
-0.1
%
(4.6
)
-0.2
%
-23
%
Other non-operating (income) expense, net
(3.9
)
1.3
(0.1
)
2.9
Income (Loss) Before Income Taxes
338.1
20.7
%
102.0
6.9
%
232
%
245
%
42.9
1.5
%
(167.5
)
-5.5
%
n/m
n/m
Provision for income taxes
22.1
31.4
46.8
46.2
Net Income (Loss)
$
316.0
19.4
%
$
70.6
4.8
%
348
%
$
(3.9
)
-0.1
%
$
(213.7
)
-7.1
%
-98
%
Net Income (Loss) Per Common Share - Basic
$
0.91
$
0.20
$
(0.01
)
$
(0.62
)
Weighted-average number of common shares
347.6
346.7
347.2
346.2
Net Income (Loss) Per Common Share - Diluted
$
0.91
$
0.20
$
(0.01
)
$
(0.62
)
Weighted-average number of common and potential common shares
348.7
348.5
347.2
346.2
1 Amounts may not foot due to
rounding.
n/m - Not Meaningful
MATTEL, INC. AND SUBSIDIARIES EXHIBIT II
CONDENSED CONSOLIDATED BALANCE SHEETS1
September 30,
December 31,
2020
2019
2019
(In millions)
(Unaudited)
Assets Cash and equivalents
$
452.2
$
218.3
$
630.0
Accounts receivable, net
1,326.1
1,291.3
936.4
Inventories
663.6
701.6
495.5
Prepaid expenses and other current assets
157.9
225.9
186.1
Total current assets
2,599.9
2,437.0
2,248.0
Property, plant, and equipment, net
497.4
572.3
550.1
Right-of-use assets, net
291.1
306.2
303.2
Other noncurrent assets
2,215.7
2,212.1
2,223.9
Total Assets
$
5,604.1
$
5,527.6
$
5,325.2
Liabilities and Stockholders' Equity Short-term
borrowings
$
400.0
$
230.0
$
-
Accounts payable and accrued liabilities
1,237.2
1,234.7
1,228.9
Income taxes payable
21.3
48.8
48.0
Total current liabilities
1,658.4
1,513.4
1,276.9
Long-term debt
2,852.8
2,856.8
2,846.8
Noncurrent lease liabilities
252.0
273.9
270.9
Other noncurrent liabilities
436.5
419.7
439.0
Stockholders' equity
404.5
463.8
491.7
Total Liabilities and Stockholders' Equity
$
5,604.1
$
5,527.6
$
5,325.2
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW DATA
(Unaudited)1
September 30,
2020
2019
Key Balance Sheet Data:
Accounts receivable, net days of sales outstanding (DSO)
73
78
Nine Months Ended September
30,
(In millions)
2020
2019
Condensed Cash Flow Data: Cash
flows used for operating activities
$
(434
)
$
(514
)
Cash flows used for investing activities
(115
)
(78
)
Cash flows provided by financing activities and other
371
216
Decrease in cash and equivalents
$
(178
)
$
(376
)
1 Amounts may not foot due to rounding.
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)
2020
2019
% Change as Reported
% Change in Constant
Currency
2020
2019
% Change as Reported
% Change in Constant
Currency
Worldwide Gross Sales: Net
Sales
$
1,631.7
$
1,481.6
10
%
11
%
$
2,957.9
$
3,030.9
-2
%
-1
%
Sales Adjustments2
186.7
175.4
345.0
368.4
Gross Sales
$
1,818.4
$
1,656.9
10
%
11
%
$
3,302.9
$
3,399.3
-3
%
-1
%
Worldwide Gross Sales by
Categories:
Dolls
$
690.5
$
567.6
22
%
24
%
$
1,177.4
$
1,093.9
8
%
10
%
Infant, Toddler and Preschool
404.1
431.0
-6
-5
744.2
876.6
-15
-14
Vehicles
369.4
346.9
6
8
713.7
744.4
-4
-2
Action Figures, Building Sets, Games, and Other
354.5
311.4
14
14
667.6
684.4
-2
-1
Gross Sales
$
1,818.4
$
1,656.9
10
%
11
%
$
3,302.9
$
3,399.3
-3
%
-1
%
Supplemental Gross Sales
Disclosure
Worldwide Gross Sales by Top 3 Power
Brands:
Barbie
$
532.2
$
412.8
29
%
30
%
$
879.0
$
762.8
15
%
17
%
Hot Wheels
312.8
293.3
7
9
607.9
619.0
-2
1
Fisher-Price and Thomas & Friends
387.6
396.3
-2
-1
692.7
791.1
-12
-11
Other
585.7
554.4
6
7
1,123.4
1,226.3
-8
-7
Gross Sales
$
1,818.4
$
1,656.9
10
%
11
%
$
3,302.9
$
3,399.3
-3
%
-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.
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)
2020
2019
% Change as Reported
% Change in Constant
Currency
2020
2019
% Change as Reported
% Change in Constant
Currency
North America Segment Gross
Sales: Net Sales
$
924.7
$
821.9
13
%
13
%
$
1,645.2
$
1,586.2
4
%
4
%
Sales Adjustments2
66.9
58.6
113.8
111.0
Gross Sales
$
991.6
$
880.4
13
%
13
%
$
1,758.9
$
1,697.2
4
%
4
%
North America Gross Sales by
Categories:
Dolls
$
328.6
$
250.6
31
%
31
%
$
523.6
$
424.2
23
%
23
%
Infant, Toddler and Preschool
255.3
274.6
-7
-7
464.3
525.3
-12
-12
Vehicles
189.6
170.8
11
11
356.2
344.3
3
3
Action Figures, Building Sets, Games, and Other
218.1
184.4
18
18
414.8
403.4
3
3
Gross Sales
$
991.6
$
880.4
13
%
13
%
$
1,758.9
$
1,697.2
4
%
4
%
Supplemental Gross Sales
Disclosure
North America Gross Sales by Top 3 Power
Brands:
Barbie
$
297.6
$
221.2
35
%
35
%
$
477.7
$
369.0
29
%
30
%
Hot Wheels
156.5
140.8
11
11
296.8
276.4
7
7
Fisher-Price and Thomas & Friends
241.6
250.9
-4
-4
423.2
472.1
-10
-10
Other
295.9
267.5
11
11
561.2
579.7
-3
-3
Gross Sales
$
991.6
$
880.4
13
%
13
%
$
1,758.9
$
1,697.2
4
%
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.
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)
2020
2019
% Change as Reported
% Change in Constant
Currency
2020
2019
% Change as Reported
% Change in Constant
Currency
International Segment Gross
Sales: Net Sales
$
655.5
$
607.9
8
%
11
%
$
1,196.0
$
1,315.0
-9
%
-5
%
Sales Adjustments2
117.5
113.8
227.2
252.4
Gross Sales
$
773.1
$
721.7
7
%
10
%
$
1,423.1
$
1,567.4
-9
%
-5
%
International Gross Sales by
Geographic Area: EMEA Net Sales
$
407.3
$
337.6
21
%
19
%
$
732.6
$
703.2
4
%
5
%
Sales Adjustments2
75.2
71.0
149.3
155.9
Gross Sales
$
482.6
$
408.7
18
%
16
%
$
881.9
$
859.1
3
%
3
%
Latin America Net Sales
$
159.0
$
182.3
-13
%
2
%
$
268.0
$
368.0
-27
%
-15
%
Sales Adjustments2
27.7
31.2
46.0
62.1
Gross Sales
$
186.6
$
213.5
-13
%
3
%
$
314.0
$
430.1
-27
%
-15
%
Asia Pacific Net Sales
$
89.2
$
88.0
1
%
0
%
$
195.4
$
243.8
-20
%
-19
%
Sales Adjustments2
14.6
11.5
31.9
34.4
Gross Sales
$
103.8
$
99.5
4
%
3
%
$
227.2
$
278.2
-18
%
-17
%
International Gross Sales by
Categories: Dolls
$
308.2
$
262.2
18
%
22
%
$
532.9
$
535.0
0
%
4
%
Infant, Toddler and Preschool
148.7
156.4
-5
-3
279.9
351.3
-20
-17
Vehicles
179.8
176.2
2
6
357.5
400.1
-11
-6
Action Figures, Building Sets, Games, and Other
136.4
127.0
7
9
252.7
281.0
-10
-7
Gross Sales
$
773.1
$
721.7
7
%
10
%
$
1,423.1
$
1,567.4
-9
%
-5
%
Supplemental Gross Sales
Disclosure International
Gross Sales by Top 3 Power Brands: Barbie
$
234.6
$
191.6
22
%
26
%
$
401.3
$
393.9
2
%
6
%
Hot Wheels
156.3
152.5
3
7
311.1
342.6
-9
-4
Fisher-Price and Thomas & Friends
146.1
145.4
0
3
269.5
319.1
-16
-12
Other
236.1
232.1
2
4
441.2
511.9
-14
-10
Gross Sales
$
773.1
$
721.7
7
%
10
%
$
1,423.1
$
1,567.4
-9
%
-5
%
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.
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)
2020
2019
% Change as Reported
% Change in Constant
Currency
2020
2019
% Change as Reported
% Change in Constant
Currency
American Girl Segment Gross
Sales: Net Sales
$
51.4
$
51.8
-1
%
-1
%
$
116.8
$
129.7
-10
%
-10
%
Sales Adjustments2
2.3
3.0
4.1
5.0
Gross Sales
$
53.7
$
54.8
-2
%
-2
%
$
120.9
$
134.7
-10
%
-10
%
1 Amounts may not foot due to rounding. 2 Sales Adjustments
are not allocated to individual products.
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)
2020
2019
2020
2019
Gross Profit Gross Profit, As
Reported
$
832.4
$
686.4
$
1,408.4
$
1,267.6
Gross Margin
51.0
%
46.3
%
47.6
%
41.8
%
Adjustments: Severance and Restructuring Expenses
0.3
8.4
4.8
11.9
Inclined Sleeper Product Recalls2
-
0.7
-
21.3
Gross Profit, As Adjusted
$
832.7
$
695.6
$
1,413.2
$
1,300.8
Adjusted Gross Margin
51.0
%
46.9
%
47.8
%
42.9
%
Other Selling and Administrative
Expenses Other Selling and Administrative Expenses, As
Reported
$
345.7
$
366.0
$
981.2
$
971.6
% of Net Sales
21.2
%
24.7
%
33.2
%
32.1
%
Adjustments: Severance and Restructuring Expenses
(6.7
)
(11.3
)
(30.5
)
(34.4
)
Inclined Sleeper Product Recalls2
(10.1
)
(3.2
)
(19.2
)
(7.6
)
Other Selling and Administrative Expenses, As Adjusted
$
328.9
$
351.4
$
931.6
$
929.6
% of Net Sales
20.2
%
23.7
%
31.5
%
30.7
%
Operating Income (Loss)
Operating Income (Loss), As Reported
$
384.2
$
150.1
$
188.2
$
(28.3
)
Adjustments: Severance and Restructuring Expenses
7.0
19.7
35.3
46.4
Inclined Sleeper Product Recalls2
10.1
3.9
19.2
28.9
Operating Income, As Adjusted
$
401.3
$
173.7
$
242.7
$
46.9
Other Information
Inclined Sleeper Product Recalls2
$
10.1
$
3.9
$
19.2
$
34.3
1 Amounts may not foot due to
rounding.
2 For the three and nine months ended
September 30, 2020, Mattel recorded expenses related to inclined
sleeper product recall litigation of $10.1 million and $19.2
million, respectively. 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.
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)
2020
2019
2020
2019
Earnings Per Share Net Income
(Loss) Per Common Share, As Reported
$
0.91
$
0.20
$
(0.01
)
$
(0.62
)
Adjustments: Severance and Restructuring Expenses
0.02
0.06
0.10
0.13
Inclined Sleeper Product Recalls2
0.03
0.01
0.06
0.08
Tax Effect of Adjustments3
-
(0.01
)
(0.01
)
(0.01
)
Net Income (Loss) Per Common Share, As Adjusted
$
0.95
$
0.26
$
0.14
$
(0.41
)
EBITDA and Adjusted
EBITDA Net Income (Loss), As Reported
$
316.0
$
70.6
$
(3.9
)
$
(213.7
)
Adjustments: Interest Expense
50.4
47.7
149.0
140.9
Provision for Income Taxes
22.1
31.4
46.8
46.2
Depreciation
38.1
52.7
120.1
156.3
Amortization
9.8
9.8
29.5
30.2
EBITDA
436.4
212.1
341.4
159.8
Adjustments: Share-based Compensation
16.5
14.8
39.9
39.1
Severance and Restructuring Expenses
6.8
16.8
34.6
40.0
Inclined Sleeper Product Recalls2
10.1
3.9
19.2
28.9
Adjusted EBITDA
$
469.8
$
247.7
$
435.1
$
267.8
Free Cash Flow Net Cash
Flows Used For Operating Activities
(434.0
)
(513.7
)
Capital Expenditures
(90.4
)
(75.6
)
Free Cash Flow
$
(524.4
)
$
(589.3
)
1 Amounts may not foot due to
rounding.
2 For the three and nine months ended
September 30, 2020, Mattel recorded expenses related to inclined
sleeper product recall litigation of $10.1 million and $19.2
million, respectively. 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.
3 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.
MAT-FIN MAT-CORP
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201022006121/en/
News Media Danit Marquardt danit.marquardt@mattel.com
310-252-8904
Securities Analysts David Zbojniewicz
david.zbojniewicz@mattel.com 310-252-2703
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