Fourth Quarter 2020
Highlights
- Net Sales of $1,626 million, up 10% as reported, and in
constant currency, versus prior year
- Reported Gross Margin of 51.4%, an improvement of 300 basis
points; Adjusted Gross Margin of 51.4%, an improvement of 250 basis
points
- Reported Operating Income of $192.7 million, an improvement
of $125.1 million; Adjusted Operating Income of $205.0 million, an
improvement of $95.7 million
- Reported Net Income of $130.5 million, an improvement of
$130.4 million
- Adjusted EBITDA of $283.8 million, up 53%
Full Year 2020
Highlights
- Net Sales of $4,584 million, up 2% as reported, including
the unfavorable foreign exchange impact of $54 million, and up 3%
in constant currency, versus prior year
- Reported Gross Margin of 48.9%, an improvement of 490 basis
points; Adjusted Gross Margin of 49.1%, an improvement of 420 basis
points
- Reported Operating Income of $380.9 million, an improvement
of $341.6 million; Adjusted Operating Income of $447.6 million, an
improvement of $291.5 million
- Reported Net Income of $126.6 million, an improvement of
$340.1 million
- Adjusted EBITDA of $719.0 million, up 59%
- Cash Flows Provided by Operating Activities of $289 million,
an improvement of $108 million
- Free Cash Flow of $167 million, an improvement of $102
million, achieving positive Free Cash Flow for the second
consecutive year
- Announcing new “Optimizing for Growth” program to drive
greater productivity to accelerate growth and to further reduce
costs, with expected savings of $250 million by 2023
- 2021 guidance to be provided on Company’s Q4 and full year
2020 conference call and live webcast
Mattel, Inc. (NASDAQ: MAT) today reported fourth quarter and
full year 2020 financial results.
Ynon Kreiz, Chairman and CEO of Mattel said: “This was a banner
quarter for the company with our best performance in years. In the
midst of a pandemic and very challenging market conditions, our
results exceeded expectations, with another major upswing in
topline and a significant increase in profitability, as we gained
global market share and continued to transform Mattel into an
IP-driven, high performing toy company. The fourth quarter and full
year demonstrated the resilience of the toy industry and the
priority that parents place on quality toys, trusted brands and
purposeful play.
Our momentum was driven by the quality and breadth of our
product offering, enduring strength of our brands, highly efficient
supply chain, world-class commercial capabilities and very
effective demand creation, in close collaboration with our retail
partners. The continuous improvement in our performance puts us in
a strong position from which we believe we can accelerate our
growth.
I could not be more proud of the entire Mattel global team for
having stepped up in an extremely tumultuous year to support our
consumers, customers, business partners and communities where we
live and work.”
Anthony DiSilvestro, CFO of Mattel said: “Mattel delivered
another outstanding quarter of double-digit growth with broad-based
gains across the portfolio and continued improvement in gross
margin, and we are pleased with our performance for the full year.
With a strong finish and positive start to 2021, we are providing
guidance for the new year reflecting continued improvement in both
our top and bottom line. Mattel also stands to benefit from our
newly announced ‘Optimizing for Growth’ program and we believe we
are well-positioned to continue this momentum.”
For the fourth quarter, Net Sales were up 10% as reported, and
in constant currency, versus the prior year’s fourth quarter.
Reported Operating Income was $192.7 million, an improvement of
$125.1 million, and Adjusted Operating Income was $205.0 million,
up $95.7 million. Reported Earnings Per Share was $0.37, an
improvement of $0.37 per share. Adjusted Earnings Per Share was
$0.40, an improvement of $0.29 per share.
For the year, Net Sales were up 2% as reported, including the
unfavorable foreign exchange impact of $54.0 million, and up 3% in
constant currency, versus the prior year. Reported Operating Income
was $380.9 million, an increase of $341.6 million, and Adjusted
Operating Income was $447.6 million, up $291.5 million. Reported
Earnings Per Share was $0.36, an improvement of $0.98 per share.
Adjusted Earnings Per Share was $0.54, an improvement of $0.84 per
share.
COVID-19 Business Update
Mattel’s top priority continues to be the health and safety of
its people, and at the same time, mitigating the disruption of the
COVID-19 pandemic to the business. Mattel remains mindful of the
COVID-19 volatility and other macro-economic uncertainties, which
could negatively impact performance, and continues to work closely
with its retail partners.
Financial Overview
Fourth Quarter 2020
Net Sales in the North America segment increased 13% as reported
and in constant currency, versus the prior year’s fourth
quarter.
Gross Billings in the North America segment increased 13% as
reported and in constant currency, primarily driven by growth in
Dolls (including Barbie®), Infant, Toddler, and Preschool
(including Fisher-Price® and Thomas & Friends™, partially
offset by Fisher-Price Friends), Action Figures, Building Sets,
Games, and Other (including Star Wars™: The Child plush and Games,
including UNO®, and MEGA®, partially offset by lower billings of
licensed action figures), and Vehicles (including Hot Wheels®).
Net Sales in the International segment increased 7% as reported,
and 8% in constant currency.
Gross Billings in the International segment increased 8% as
reported and in constant currency, driven by growth in Vehicles
(including Hot Wheels), Dolls (including Barbie, partially offset
by lower billings of licensed dolls), Action Figures, Building
Sets, Games, and Other (including Games, including UNO, and MEGA,
partially offset by lower billings of licensed action figures).
This was partially offset by a decline in Infant, Toddler, and
Preschool (including Fisher-Price Friends).
Net Sales in the American Girl® segment increased 12% as
reported and in constant currency. Gross Billings in the American
Girl segment increased 9% as reported and in constant currency,
primarily driven by higher direct-to-consumer billings, partially
offset by lower billings of proprietary retail channels, the impact
of permanent closure of certain retail stores, and lower billings
of external distribution channels.
Reported Gross Margin increased to 51.4%, versus 48.4% in the
prior year’s fourth quarter, and Adjusted Gross Margin increased to
51.4%, versus 48.9%. The increase in Reported Gross Margin was
primarily driven by cost savings programs and reduced royalty
expenses.
Reported Other Selling and Administrative Expenses decreased by
$53.7 million, or 13%, to $364.7 million. Adjusted Other Selling
and Administrative Expenses decreased by $30.6 million, or 8%, to
$353.2 million. The decrease in Reported and Adjusted Other Selling
and Administrative Expenses was primarily driven by the timing of
incentive and employee-related expenses and the incremental benefit
of cost savings from Mattel’s Structural Simplification
program.
Full Year 2020
Net Sales in the North America segment were up 7% as reported
and in constant currency, versus the prior year.
Gross Billings in the North America segment increased 6% as
reported and in constant currency, primarily driven by growth in
Dolls (including Barbie, partially offset by lower billings of
licensed dolls), Action Figures, Building Sets, Games, and Other
(including Star Wars: The Child plush, and Games, including UNO,
partially offset by lower billings of licensed action figures), and
Vehicles (including Hot Wheels, partially offset by lower billings
of licensed vehicles). This growth was partially offset by a
decline in Infant, Toddler, and Preschool (including Fisher-Price
Friends and Fisher-Price and Thomas & Friends).
Net Sales in the International segment decreased 4% as reported
and 1% in constant currency.
Gross Billings in the International segment decreased 3% as
reported, and 1% in constant currency, due to declines in Infant,
Toddler, and Preschool (including Fisher-Price and Thomas &
Friends and Fisher-Price Friends), Action Figures, Building Sets,
Games, and Other (including licensed action figures, partially
offset by Games, including UNO), and Vehicles (including licensed
vehicles). This decrease was partially offset by growth in Dolls
(including Barbie, partially offset by lower billings of licensed
dolls).
Net Sales in the American Girl segment increased by 1% as
reported and in constant currency. Gross Billings in the American
Girl segment decreased by 1% as reported, and in constant currency,
primarily due to lower billings of proprietary retail channels, the
impact of permanent closure of certain retail stores, and lower
billings of external distribution channels, substantially offset by
higher direct-to-consumer channel billings.
Reported Gross Margin increased to 48.9%, versus 44.0% in the
prior year, and Adjusted Gross Margin increased to 49.1%, versus
44.9%. The increase in Reported Gross Margin was primarily driven
by cost savings programs and reduced royalty expenses.
Reported Other Selling and Administrative Expenses decreased by
$44.1 million, or 3%, to $1,345.9 million. Adjusted Other Selling
and Administrative Expenses decreased by $28.6 million, or 2%, to
$1,284.8 million. The decrease in Reported and Adjusted Other
Selling and Administrative Expenses was primarily driven by savings
from Structural Simplification.
For the twelve months ended December 31, 2020, Cash Flows
provided by Operating Activities improved by $108 million to $289
million, primarily driven by current year net income, excluding the
impact of non-cash charges, partially offset by higher working
capital usage. Cash Flows Used for Investing Activities increased
by $21 million to $135 million, primarily due to payments for
foreign currency forward exchange contracts. Cash Flows Used for
Financing Activities and Other improved by $10 million to $21
million, primarily driven by the refinancing of long-term
borrowings in 2019.
Gross Billings by Categories
Fourth Quarter 2020
Worldwide Gross Billings for Dolls were $709.1 million, up 13%
as reported, and in constant currency, versus the prior year’s
fourth quarter, primarily driven by growth in Barbie and American
Girl, partially offset by lower billings of licensed dolls.
Worldwide Gross Billings for Infant, Toddler, and Preschool were
$405.5 million, up 6% as reported, and up 7% in constant currency,
driven by growth in Fisher-Price and Thomas & Friends,
partially offset by lower billings of Fisher-Price Friends.
Worldwide Gross Billings for Vehicles were $396.3 million, up
11% as reported, and up 12% in constant currency, driven by growth
in Hot Wheels.
Worldwide Gross Billings for Action Figures, Building Sets,
Games, and Other were $324.0 million, up 9% as reported and in
constant currency, driven by growth in Games, including UNO, Star
Wars: The Child plush, and MEGA, partially offset by lower billings
of licensed action figures.
Full Year 2020
Worldwide Gross Billings for Dolls were $1,886.4 million, up 9%
as reported, and up 11% in constant currency, versus the prior
year, driven by growth in Barbie.
Worldwide Gross Billings for Infant, Toddler, and Preschool were
$1,149.7 million, down 9% as reported, and down 8% in constant
currency, due to declines in Fisher-Price and Thomas & Friends
and Fisher-Price Friends.
Worldwide Gross Billings for Vehicles were $1,110.0 million, up
1% as reported, and up 3% in constant currency, driven by growth in
Hot Wheels, partially offset by lower billings of licensed
vehicles.
Worldwide Gross Billings for Action Figures, Building Sets, and
Games were $991.6 million, up 1% as reported, and up 2% in constant
currency, driven by growth in Star Wars: The Child plush, and
Games, including UNO, partially offset by lower billings of
licensed action figures.
“Optimizing for Growth” Program
Mattel is implementing a new “Optimizing for Growth” program to
optimize operations and drive greater productivity to accelerate
growth, and at the same time, further reduce its cost base. This
new program integrates the Capital Light program going forward with
several new productivity opportunities that leverage Mattel’s scale
and streamline key processes and is expected to deliver in
aggregate $250 million of incremental cost savings by 2023. Mattel
estimates the costs and investments to implement the program to be
between $100 million to $125 million, which will be updated as the
program advances.
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 fourth
quarter and full year 2020 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 Tuesday, February 16, 2021 and may be accessed by
dialing +1-404-537-3406. The passcode is 4894534.
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 and
uncertainty regarding the COVID-19 pandemic (and actions taken in
response to it by governments, businesses, and individuals) 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 September 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 Adjusted Gross Profit,
Adjusted Gross Margin, Adjusted Other Selling and Administrative
Expenses, Adjusted Operating Income (Loss), Adjusted Operating
Income (Loss) Margin, Adjusted Earnings (Loss) Per Share, earnings
before interest expense, taxes, depreciation and amortization
(“EBITDA”), Adjusted EBITDA, Leverage Ratio (Debt / 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.”
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, the
impact of the inclined sleeper product recalls, and the impact of
asset impairments, 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) and Adjusted Operating Income
(Loss) Margin
Adjusted Operating Income (Loss) and Adjusted Operating Income
(Loss) Margin represent reported Operating Income (Loss) and
reported Operating Income (Loss) Margin, respectively, adjusted to
exclude severance and restructuring expenses, the impact of the
inclined sleeper product recalls, and the impact of asset
impairments, which are not part of Mattel’s core business. Adjusted
Operating Income (Loss) Margin represents Mattel’s Adjusted
Operating Income (Loss), as a percentage of Net Sales. Adjusted
Operating Income (Loss) and Adjusted Operating Income (Loss) 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 (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, the impact of the inclined
sleeper product recalls, and the impact of asset impairments, 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,
the impact of the inclined sleeper product recalls, and the impact
of asset impairments, 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 indenture governing its 6.75% senior notes due 2025, the
indenture governing its 5.875% senior notes due 2027, and the
syndicated facility agreement governing its senior secured
revolving credit facilities. 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
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.
Leverage Ratio (Debt / Adjusted EBITDA)
The leverage ratio is calculated by dividing Debt by adjusted
EBITDA. 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.
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 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.
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
December 31,
For the Year Ended December
31,
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
$
1,625.8
$
1,473.7
10
%
10
%
$
4,583.7
$
4,504.6
2
%
3
%
Cost of sales
790.6
48.6
%
760.5
51.6
%
4
%
2,340.1
51.1
%
2,523.8
56.0
%
-7
%
Gross Profit
835.2
51.4
%
713.2
48.4
%
17
%
20
%
2,243.6
48.9
%
1,980.8
44.0
%
13
%
16
%
Advertising and promotion expenses
277.8
17.1
%
227.2
15.4
%
22
%
516.8
11.3
%
551.5
12.2
%
-6
%
Other selling and administrative expenses
364.7
22.4
%
418.4
28.4
%
-13
%
1,345.9
29.4
%
1,390.0
30.9
%
-3
%
Operating Income
192.7
11.9
%
67.6
4.6
%
185
%
221
%
380.9
8.3
%
39.2
0.9
%
871
%
912
%
Interest expense
49.3
3.0
%
60.2
4.1
%
-18
%
198.3
4.3
%
201.0
4.5
%
-1
%
Interest (income)
(0.4
)
0.0
%
(1.5
)
-0.1
%
-75
%
(3.9
)
-0.1
%
(6.2
)
-0.1
%
-36
%
Other non-operating (income) expense, net
(4.3
)
0.2
2.7
1.9
Income (Loss) Before Income Taxes
148.1
9.1
%
8.7
0.6
%
n/m
n/m
183.8
4.0
%
(157.5
)
-3.5
%
n/m
n/m
Provision for income taxes
21.8
9.0
68.6
55.2
Income (loss) from equity method investments
4.3
0.4
11.5
(0.8
)
Net Income (Loss)
$
130.5
8.0
%
$
0.2
0.0
%
n/m
$
126.6
2.8
%
$
(213.5
)
-4.7
%
n/m
Net Income (Loss) Per Common Share - Basic
$
0.38
$
0.00
$
0.36
$
(0.62
)
Weighted-average number of common shares
347.7
346.7
347.5
346.1
Net Income (Loss) per Common Share - Diluted
$
0.37
$
0.00
$
0.36
$
(0.62
)
Weighted-average number of common and potential common shares
351.0
348.3
349.1
346.1
1 Amounts may not foot due to rounding. n/m - Not Meaningful
MATTEL, INC. AND SUBSIDIARIES
EXHIBIT II
CONDENSED CONSOLIDATED BALANCE SHEETS1
December 31,
2020
2019
(In millions)
(Unaudited)
Assets Cash and equivalents
$
762.2
$
630.0
Accounts receivable, net
1,034.0
936.4
Inventories
514.7
495.5
Prepaid expenses and other current assets
172.1
186.1
Total current assets
2,482.9
2,248.0
Property, plant, and equipment, net
473.8
550.1
Right-of-use assets, net
291.6
303.2
Other noncurrent assets
2,272.8
2,223.9
Total Assets
$
5,521.1
$
5,325.2
Liabilities and Stockholders' Equity Short-term
borrowings
$
1.0
$
-
Accounts payable and accrued liabilities
1,327.3
1,228.9
Income taxes payable
27.1
48.0
Total current liabilities
1,355.4
1,276.9
Long-term debt
2,854.7
2,846.8
Noncurrent lease liabilities
249.4
270.9
Other noncurrent liabilities
465.4
439.0
Stockholders' equity
596.3
491.7
Total Liabilities and Stockholders' Equity
$
5,521.1
$
5,325.2
MATTEL, INC. AND SUBSIDIARIES
EXHIBIT II
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW DATA
(Unaudited)1
December 31,
2020
2019
Key Balance Sheet Data:
Accounts receivable, net days of sales outstanding (DSO)
57
57
For the Year Ended December
31,
(In millions)
2020
2019
Condensed Cash Flow Data: Cash
flows provided by operating activities
$
289
$
181
Cash flows used for investing activities
(135
)
(114
)
Cash flows used for financing activities and other
(21
)
(31
)
Increase in cash and equivalents
$
132
$
36
1 Amounts may not foot 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
December 31,
For the Year Ended December
31,
(In millions, except per share and
percentage information)
2020
2019
Change
2020
2019
Change
Gross Profit Gross Profit, As
Reported
$
835.2
$
713.2
$
2,243.6
$
1,980.8
Gross Margin
51.4
%
48.4
%
+ 300 bps
48.9
%
44.0
%
+ 490 bps Adjustments: Severance and Restructuring Expenses
0.8
6.7
5.7
18.6
Inclined Sleeper Product Recalls2
-
0.4
-
21.7
Gross Profit, As Adjusted
$
836.0
$
720.3
$
2,249.3
$
2,021.1
Adjusted Gross Margin
51.4
%
48.9
%
+ 250 bps
49.1
%
44.9
%
+ 420 bps
Other Selling and
Administrative Expenses Other Selling and Administrative
Expenses, As Reported
$
364.7
$
418.4
-13
%
$
1,345.9
$
1,390.0
-3
%
% of Net Sales
22.4
%
28.4
%
29.4
%
30.9
%
Adjustments: Severance and Restructuring Expenses
(4.5
)
(6.1
)
(34.9
)
(40.5
)
Inclined Sleeper Product Recalls2
(7.0
)
(2.6
)
(26.2
)
(10.3
)
Asset Impairments3
-
(25.9
)
-
(25.9
)
Other Selling and Administrative Expenses, As Adjusted
$
353.2
$
383.8
-8
%
$
1,284.8
$
1,313.4
-2
%
% of Net Sales
21.7
%
26.0
%
28.0
%
29.2
%
Operating Income
Operating Income, As Reported
$
192.7
$
67.6
185
%
$
380.9
$
39.2
871
%
Operating Income Margin
11.9
%
4.6
%
8.3
%
0.9
%
Adjustments: Severance and Restructuring Expenses
5.3
12.7
40.6
59.1
Inclined Sleeper Product Recalls2
7.0
3.1
26.2
32.0
Asset Impairments3
-
25.9
-
25.9
Operating Income, As Adjusted
$
205.0
$
109.3
88
%
$
447.6
$
156.2
187
%
Adjusted Operating Income Margin
12.6
%
7.4
%
9.8
%
3.5
%
Other Information
Inclined Sleeper Product Recalls2
$
7.0
$
3.5
$
26.2
$
37.8
1 Amounts may not foot due to rounding. 2 For the three months and
year ended December 31, 2020, Mattel recorded expenses related to
inclined sleeper product recall litigation of $7.0 million and
$26.2 million, respectively. Mattel recorded an estimated impact of
$3.5 million and $37.8 million related to inclined sleeper product
recalls for the three months and year ended December 31, 2019,
respectively. Of the $37.8 million recorded during the year ended
December 31, 2019, $5.8 million was a reduction to Net Sales for
estimated retailer returns. 3 For the three months and year ended
December 31, 2019, asset impairments represent write-offs of
American Girl retail store assets of $25.9 million, which were
recorded 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
December 31,
For the Year Ended December
31,
(In millions, except per share and
percentage information)
2020
2019
Change
2020
2019
Change
Earnings Per Share Net Income
(Loss) Per Common Share, As Reported
$
0.37
$
0.00
n/m
$
0.36
$
(0.62
)
n/m
Adjustments: Severance and Restructuring Expenses
0.02
0.04
0.12
0.17
Inclined Sleeper Product Recalls2
0.02
0.01
0.07
0.09
Asset Impairments3
-
0.07
-
0.07
Tax Effect of Adjustments4
-
(0.01
)
(0.01
)
(0.02
)
Net Income (Loss) Per Common Share, As Adjusted
$
0.40
$
0.11
264
%
$
0.54
$
(0.30
)
n/m
EBITDA and Adjusted
EBITDA Net Income (Loss), As Reported
$
130.5
$
0.2
n/m
$
126.6
$
(213.5
)
n/m
Adjustments: Interest Expense
49.3
60.2
198.3
201.0
Provision for Income Taxes
21.8
9.0
68.6
55.2
Depreciation
40.9
48.2
161.0
204.4
Amortization
9.5
10.0
38.9
40.1
EBITDA
$
252.1
$
127.5
$
593.5
$
287.3
Adjustments: Share-based Compensation
20.2
16.8
60.2
56.0
Severance and Restructuring Expenses
4.5
12.0
39.1
52.0
Inclined Sleeper Product Recalls2
7.0
3.1
26.2
32.0
Asset Impairments3
-
25.9
-
25.9
Adjusted EBITDA
$
283.8
$
185.2
53
%
$
719.0
$
453.1
59
%
Leverage Ratio (Debt / Adjusted
EBITDA) Long-term debt
$
2,854.7
$
2,846.8
Current portion of long-term debt
-
-
Short-term borrowings
1.0
-
Adjustments: Debt issuance costs and debt discount
45.3
53.2
Debt
$
2,901.0
$
2,900.0
Debt / Net Income (Loss) 22.9x (13.6)x Leverage Ratio (Debt /
Adjusted EBITDA) 4.0x 6.4x
Free
Cash Flow Net Cash Flows Provided by Operating
Activities
$
288.5
$
181.0
Capital Expenditures
(121.6
)
(116.4
)
Free Cash Flow
$
166.9
$
64.6
1 Amounts may not foot due to
rounding.
2 For the three months and year ended
December 31, 2020, Mattel recorded expenses related to inclined
sleeper product recall litigation of $7.0 million and $26.2
million, respectively. Mattel recorded an estimated impact of $3.5
million and $37.8 million related to inclined sleeper product
recalls for the three months and year ended December 31, 2019,
respectively. Of the $37.8 million recorded during the year ended
December 31, 2019, $5.8 million was a reduction to Net Sales for
estimated retailer returns.
3 For the three months and year ended
December 31, 2019, asset impairments represent write-offs of
American Girl retail store assets of $25.9 million, which were
recorded in other selling and administrative expenses.
4 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.
n/m - Not meaningful
MATTEL, INC. AND SUBSIDIARIES
EXHIBIT IV
WORLDWIDE GROSS BILLINGS1 (Unaudited)3
SUPPLEMENTAL KEY PERFORMANCE INDICATOR
For the Three Months Ended
December 31,
For the Year Ended December
31,
(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 Billings: Net
Sales
$
1,625.8
$
1,473.7
10
%
10
%
$
4,583.7
$
4,504.6
2
%
3
%
Sales Adjustments2
209.1
191.6
554.2
560.0
Gross Billings
$
1,834.9
$
1,665.3
10
%
10
%
$
5,137.8
$
5,064.6
1
%
3
%
Worldwide Gross Billings by
Categories: Dolls
$
709.1
$
630.1
13
%
13
%
$
1,886.4
$
1,724.0
9
%
11
%
Infant, Toddler and Preschool
405.5
381.1
6
7
1,149.7
1,257.6
-9
-8
Vehicles
396.3
356.9
11
12
1,110.0
1,101.3
1
3
Action Figures, Building Sets, Games, and Other
324.0
297.2
9
9
991.6
981.6
1
2
Gross Billings
$
1,834.9
$
1,665.3
10
%
10
%
$
5,137.8
$
5,064.6
1
%
3
%
Supplemental Gross Billings
Disclosure Worldwide
Gross Billings by Top 3 Power Brands: Barbie
$
471.1
$
396.9
19
%
18
%
$
1,350.1
$
1,159.8
16
%
18
%
Hot Wheels
346.3
306.8
13
14
954.2
925.9
3
5
Fisher-Price and Thomas & Friends
372.8
340.6
9
10
1,065.5
1,131.8
-6
-5
Other
644.6
620.9
4
4
1,768.0
1,847.2
-4
-3
Gross Billings
$
1,834.9
$
1,665.3
10
%
10
%
$
5,137.8
$
5,064.6
1
%
3
%
1 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. 2 Sales Adjustments are not allocated to
individual products. As such, Net Sales are not presented on a
categories or brand level. 3 Amounts may not foot due to rounding.
MATTEL, INC. AND SUBSIDIARIES
EXHIBIT V
GROSS BILLINGS1 BY SEGMENT (Unaudited)3
SUPPLEMENTAL KEY PERFORMANCE INDICATOR
For the Three Months Ended
December 31,
For the Year Ended December
31,
(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
Billings: Net Sales
$
779.4
$
689.6
13
%
13
%
$
2,424.6
$
2,275.8
7
%
7
%
Sales Adjustments2
49.5
45.5
163.2
156.5
Gross Billings
$
828.9
$
735.1
13
%
13
%
$
2,587.8
$
2,432.3
6
%
6
%
North America Gross Billings by
Categories: Dolls
$
247.0
$
211.9
17
%
16
%
$
770.6
$
636.2
21
%
21
%
Infant, Toddler and Preschool
237.1
205.1
16
16
701.4
730.3
-4
-4
Vehicles
173.0
166.5
4
4
529.2
510.8
4
4
Action Figures, Building Sets, Games, and Other
171.8
151.6
13
13
586.6
555.0
6
6
Gross Billings
$
828.9
$
735.1
13
%
13
%
$
2,587.8
$
2,432.3
6
%
6
%
Supplemental Gross Billings
Disclosure North America
Gross Billings by Top 3 Power Brands: Barbie
$
226.5
$
189.4
20
%
20
%
$
704.2
$
558.3
26
%
26
%
Hot Wheels
149.8
142.6
5
5
446.6
419.0
7
7
Fisher-Price and Thomas & Friends
211.7
178.7
18
18
634.9
650.7
-2
-2
Other
240.9
224.5
7
7
802.1
804.2
0
0
Gross Billings
$
828.9
$
735.1
13
%
13
%
$
2,587.8
$
2,432.3
6
%
6
%
1 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. 2 Sales Adjustments are not allocated to
individual products. As such, Net Sales are not presented on a
categories or brand level. 3 Amounts may not foot due to rounding.
MATTEL, INC. AND SUBSIDIARIES
EXHIBIT VI
GROSS BILLINGS1 BY SEGMENT
(Unaudited)3
SUPPLEMENTAL KEY PERFORMANCE
INDICATOR
For the Three Months Ended
December 31,
For the Year Ended December
31,
(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 Billings:
Net Sales
$
704.7
$
657.2
7
%
8
%
$
1,900.7
$
1,972.2
-4
%
-1
%
Sales Adjustments2
155.7
139.2
382.8
391.6
Gross Billings
$
860.4
$
796.4
8
%
8
%
$
2,283.5
$
2,363.8
-3
%
-1
%
International Gross Billings by Geographic
Area:
EMEA
Net Sales
$
397.1
$
353.1
12
%
10
%
$
1,129.7
$
1,056.4
7
%
6
%
Sales Adjustments2
98.2
80.7
247.4
236.6
Gross Billings
$
495.2
$
433.8
14
%
12
%
$
1,377.1
$
1,292.9
7
%
6
%
Latin America
Net Sales
$
187.2
$
197.5
-5
%
3
%
$
455.2
$
565.4
-19
%
-9
%
Sales Adjustments2
36.2
38.5
82.2
100.7
Gross Billings
$
223.4
$
236.0
-5
%
3
%
$
537.4
$
666.1
-19
%
-9
%
Asia Pacific
Net Sales
$
120.5
$
106.6
13
%
9
%
$
315.8
$
350.4
-10
%
-10
%
Sales Adjustments2
21.3
20.0
53.2
54.4
Gross Billings
$
141.8
$
126.6
12
%
8
%
$
369.0
$
404.7
-9
%
-9
%
International Gross Billings by
Categories:
Dolls
$
316.5
$
284.4
11
%
11
%
$
849.4
$
819.4
4
%
7
%
Infant, Toddler and Preschool
168.4
176.0
-4
-4
448.4
527.3
-15
-13
Vehicles
223.3
190.4
17
19
580.8
590.5
-2
2
Action Figures, Building Sets,
Games, and Other
152.2
145.6
5
4
405.0
426.5
-5
-3
Gross Billings
$
860.4
$
796.4
8
%
8
%
$
2,283.5
$
2,363.8
-3
%
-1
%
Supplemental Gross Billings Disclosure
International Gross Billings by Top 3 Power
Brands:
Barbie
$
244.6
$
207.6
18
%
17
%
$
645.9
$
601.4
7
%
10
%
Hot Wheels
196.5
164.3
20
22
507.6
506.9
0
4
Fisher-Price and Thomas &
Friends
161.1
162.0
0
0
430.6
481.0
-10
-8
Other
258.1
262.6
-2
-1
699.3
774.5
-10
-7
Gross Billings
$
860.4
$
796.4
8
%
8
%
$
2,283.5
$
2,363.8
-3
%
-1
%
1 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.
2 Sales Adjustments are not allocated to
individual products. As such, Net Sales are not presented on a
categories or brand level.
3 Amounts may not foot due to
rounding.
MATTEL, INC. AND SUBSIDIARIES
EXHIBIT VII
GROSS BILLINGS1 BY SEGMENT
(Unaudited)3
SUPPLEMENTAL KEY PERFORMANCE
INDICATOR
For the Three Months Ended
December 31,
For the Year Ended December
31,
(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 Billings:
Net Sales
$
141.6
$
126.9
12
%
12
%
$
258.4
$
256.6
1
%
1
%
Sales Adjustments2
4.0
6.9
8.1
11.9
Gross Billings
$
145.6
$
133.8
9
%
9
%
$
266.5
$
268.5
-1
%
-1
%
1 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.
2 Sales Adjustments are not allocated to
individual products.
3 Amounts may not foot due to
rounding.
MAT-FIN MAT-CORP
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210209006139/en/
News Media Catherine Frymark
catherine.frymark@mattel.com
Securities Analysts David Zbojniewicz
david.zbojniewicz@mattel.com
Mattel (NASDAQ:MAT)
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