Fourth Quarter 2021 Highlights Versus
Prior Year
- Net Sales of $1,795 million, up 10% as reported, and 11% in
constant currency
- Reported Operating Income of $257 million, an increase of $69
million; Adjusted Operating Income of $264 million, an increase of
$64 million
- Reported Net Income of $226 million, an increase of $97
million, which includes a non-cash benefit of $49 million resulting
from the release of valuation allowances on certain deferred tax
assets
- Adjusted EBITDA of $321 million, an increase of $48
million
Full Year 2021 Highlights Versus Prior
Year
- Net Sales of $5,458 million, up 19% as reported, and 18% in
constant currency
- Reported Gross Margin of 48.1%, a decrease of 80 basis points;
Adjusted Gross Margin of 48.2%, a decrease of 80 basis points
- Reported Operating Income of $730 million, an increase of $355
million; Adjusted Operating Income of $763 million, an increase of
$322 million
- Reported Net Income of $903 million, an increase of $779
million, which includes a non-cash benefit of $541 million
resulting from the release of valuation allowances on certain
deferred tax assets
- Reported EPS of $2.53, an increase of $2.18 per share, which
includes a benefit of $1.51 resulting from the release of valuation
allowances on certain deferred tax assets
- Adjusted EBITDA of $1,007 million, an increase of $301
million
- Cash Flows Provided by Operating Activities of $485 million, an
increase of $200 million; Free Cash Flow of $334 million, an
increase of $167 million
- Company announces 2022 guidance and 2023 goals
Mattel, Inc. (NASDAQ: MAT) today reported fourth quarter and
full year financial results.
Ynon Kreiz, Chairman and CEO of Mattel, said: “Mattel’s results
for the quarter and full year came in well ahead of expectations,
capping another exceptional performance for the company. We have
made significant progress on our transformation strategy over the
last few years, and our turnaround is now complete. We are in
growth mode and believe we are well-positioned to continue our
momentum, with 2022 guidance exceeding prior goals and an even
stronger outlook for 2023.”
Mr. Kreiz continued: “In 2021, our products resonated with
consumers at levels we have not seen in years and, per The NPD
Group, we continued to gain market share. We also strengthened our
position as a partner of choice for the major entertainment
companies and, in addition to our own IP, have a formidable line-up
of evergreen properties to drive future growth. The Mattel team
stayed committed to our purpose to empower the next generation to
explore the wonder of childhood and reach their full potential, and
to our mission to create innovative products and experiences that
inspire, entertain, and develop children through play.”
Anthony DiSilvestro, CFO of Mattel, said: “2021 was another year
of strong financial performance. We generated significant free cash
flow, reduced debt, and further improved our balance sheet. We
remain focused on executing our strategy and creating long-term
shareholder value.”
For the fourth quarter, Net Sales were up 10% as reported, and
11% in constant currency, versus the prior year’s fourth quarter.
Reported Operating Income was $257 million, an increase of $69
million, and Adjusted Operating Income was $264 million, an
increase of $64 million. Reported Earnings Per Share were $0.63, an
increase of $0.26 per share, which includes a benefit of $0.14
resulting from the release of valuation allowances on certain
deferred tax assets, and Adjusted Earnings Per Share were $0.53, an
increase of $0.13 per share.
For the year, Net Sales were up 19% as reported, and 18% in
constant currency, versus the prior year. Reported Operating Income
was $730 million, an increase of $355 million, and Adjusted
Operating Income was $763 million, an increase of $322 million.
Reported Earnings Per Share were $2.53, an increase of $2.18 per
share, which includes a benefit of $1.51 resulting from the release
of valuation allowances on certain deferred tax assets, and
Adjusted Earnings Per Share were $1.30, an increase of $0.76 per
share.
Financial Overview
Fourth Quarter 2021
Net Sales in the North America segment increased 14% 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, driven by growth in Dolls
(including Barbie®, Polly Pocket®, and Spirit™), Action Figures,
Building Sets, Games, and Other (including Masters of the
Universe®, Jurassic World™, and Plush), Vehicles (including CARS™),
and Infant, Toddler, and Preschool (including Power Wheels®).
Net Sales in the International segment increased 9% as reported,
and 12% in constant currency.
Gross Billings in the International segment increased 7% as
reported, and 9% in constant currency, driven by growth in Action
Figures, Building Sets, Games, and Other (including Jurassic World,
Masters of the Universe, Plush, Games, and MEGA®) and Dolls
(including Barbie, Spirit, Enchantimals®, and Polly Pocket),
partially offset by decreases in Vehicles (including Hot Wheels®
and CARS) and Infant, Toddler, and Preschool (including
Fisher-Price® and Thomas & Friends™).
Net Sales in the American Girl® segment decreased 6% as reported
and in constant currency.
Gross Billings in the American Girl segment decreased 6% as
reported and in constant currency, primarily due to a successful
Historical Girl launch that benefited the prior year, partially
offset by growth across other segments.
Reported Gross Margin decreased to 49.3%, versus 51.4% in the
prior year’s fourth quarter. Adjusted Gross Margin decreased to
49.3%, versus 51.5% in the prior year’s fourth quarter. The
decrease in Reported and Adjusted Gross Margin was primarily due to
input cost inflation, partially offset by pricing, favorable fixed
cost absorption, and savings from the Optimizing for Growth
program.
Reported Other Selling and Administrative Expenses were flat
versus the prior year at $361 million. Adjusted Other Selling and
Administrative Expenses increased by $5 million to $355 million.
The increase in Adjusted Other Selling and Administrative Expenses
was primarily due to investments in the business while effectively
managing the company’s cost structure.
Full Year 2021
Net Sales in the North America segment increased 22% as reported
and in constant currency, versus the prior year.
Gross Billings in the North America segment increased 22% as
reported, and 21% in constant currency, driven by growth in Dolls
(including Barbie, Spirit, and Polly Pocket), Action Figures,
Building Sets, Games, and Other (including Jurassic World, Masters
of the Universe, WWE™, Plush, and MEGA), Vehicles (including Hot
Wheels and CARS), and Infant, Toddler, and Preschool (including
Fisher-Price and Thomas & Friends and Power Wheels).
Net Sales in the International segment increased 17% as
reported, and 15% in constant currency.
Gross Billings in the International segment increased 16% as
reported, and 14% in constant currency, driven by growth in Dolls
(including Barbie, Spirit, and Polly Pocket), Action Figures,
Building Sets, Games, and Other (including Jurassic World, Masters
of the Universe, Plush, Games, and MEGA), Vehicles (including Hot
Wheels and Matchbox®), and Infant, Toddler, and Preschool
(including Fisher-Price and Thomas & Friends).
Net Sales in the American Girl segment increased 5% as reported
and in constant currency.
Gross Billings in the American Girl segment increased 4% as
reported and in constant currency, driven by growth in owned retail
channels as COVID-19-related restrictions subsided.
Reported Gross Margin decreased to 48.1%, versus 48.9% in the
prior year. Adjusted Gross Margin decreased to 48.2%, versus 49.0%
in the prior year. The decrease was primarily due to input cost
inflation and unfavorable foreign exchange, partially offset by
favorable fixed cost absorption, savings from the Optimizing for
Growth program, and pricing.
Reported Other Selling and Administrative Expenses increased by
$9 million, or 1%, to $1,351 million. Adjusted Other Selling and
Administrative Expenses increased by $39 million, or 3%, to $1,321
million. The increase in Reported and Adjusted Other Selling and
Administrative Expenses was primarily due to higher compensation,
investments in the business, and foreign exchange, partially offset
by benefits from the Optimizing for Growth program.
For the year ended December 31, 2021, Cash Flows Provided by
Operating Activities were $485 million, an increase of $200
million, versus the prior year, primarily driven by higher net
income, adjusted for the non-cash release of valuation allowance on
deferred tax assets, partially offset by higher working capital
usage. Cash Flows Used for Investing Activities improved by $27
million to $105 million, primarily driven by proceeds from the
disposal of assets and a business, and proceeds from foreign
currency forward contracts, partially offset by higher capital
expenditures. Cash Flows Used for Financing Activities and Other
were $411 million, as compared to $21 million in the prior year,
with the increase primarily due to cash used for repayment and
refinancing of senior notes.
Gross Billings by Categories
Fourth Quarter 2021
Worldwide Gross Billings for Dolls were $804 million, up 13% as
reported, and 14% in constant currency, versus the prior year’s
fourth quarter, driven by growth in Barbie, Spirit, Polly Pocket,
and Enchantimals, partially offset by a decrease in Cave Club®.
Worldwide Gross Billings for Infant, Toddler, and Preschool were
$401 million, down 1% as reported and in constant currency,
primarily due to a decrease in Fisher-Price and Thomas &
Friends, partially offset by growth in Power Wheels.
Worldwide Gross Billings for Vehicles were $381 million, down 4%
as reported, and 3% in constant currency, primarily due to a
decrease in Hot Wheels, partially offset by growth in Matchbox.
Worldwide Gross Billings for Action Figures, Building Sets,
Games, and Other were $405 million, up 25% as reported, and 26% in
constant currency, primarily driven by growth in Action Figures
(including Jurassic World and Masters of the Universe), Plush, and
Games.
Full Year 2021
Worldwide Gross Billings for Dolls were $2,299 million, up 22%
as reported, and 21% in constant currency, versus the prior year,
primarily driven by growth in Barbie, Spirit, and Polly Pocket.
Worldwide Gross Billings for Infant, Toddler, and Preschool were
$1,221 million, up 6% as reported, and 5% in constant currency,
primarily driven by growth in Fisher-Price and Thomas & Friends
and Power Wheels.
Worldwide Gross Billings for Vehicles were $1,253 million, up
13% as reported, and 12% in constant currency, primarily driven by
growth in Hot Wheels and Matchbox.
Worldwide Gross Billings for Action Figures, Building Sets,
Games, and Other were $1,309 million, up 32% as reported, and 31%
in constant currency, primarily driven by growth in Action Figures
(including Jurassic World, Masters of the Universe, and WWE),
Plush, and Building Sets (including MEGA).
2022 Guidance and 2023 Goals
Mattel’s 2022 guidance is as follows:
(in millions, except EPS and percentages)
FY2021 FY2022 Expected Net Sales
$5,458
+8%-10%
(Constant Currency)
Adjusted Gross Margin
48.2%
~47% Adjusted EBITDA
$1,007
$1,100-$1,125 Adjusted EPS
$1.30
$1.42-$1.48 Capital Expenditures
$151
$175-$200
Mattel’s updated 2023 goals are as follows:
Previous FY2023 New FY2023 Net Sales
+ Mid-Single Digit %
(Constant Currency)
+ High-Single Digit %
(Constant Currency)
Adjusted Operating Income Margin Mid-Teens
~16%-17%
of Net Sales
Adjusted EPS
-
> $1.90
A reconciliation of Mattel’s non-GAAP financial measures on a
forward-looking basis, including Net Sales on a constant currency
basis, Adjusted Gross Margin, Adjusted Operating Income Margin,
Adjusted EBITDA, and Adjusted EPS is not available without
unreasonable effort. Mattel is unable to predict with sufficient
certainty items that would be excluded from the corresponding GAAP
measure, including the effect of foreign currency exchange rate
fluctuations, unusual gains and losses or charges, and severance
and restructuring charges, due to the unpredictable nature of such
items, which may have a significant impact on Mattel’s GAAP
measures.
Mattel’s guidance and goals take into account anticipated supply
chain disruption that the company is aware of today but remains
subject to any unexpected supply chain disruption, market
volatility, and other macro-economic risks and uncertainties,
including those associated with COVID-19, which could negatively
impact performance.
Conference Call and Live Webcast
At 5:00 p.m. (Eastern Standard Time) today, Mattel will host a
conference call with investors and financial analysts to discuss
its full year and fourth 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 Standard time the
evening of the call until Wednesday, February 16, 2022 and may be
accessed by dialing +1-404-537-3406. The passcode is 3299196.
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,” “believes,” and “targeted,”
among others, generally identify forward-looking statements. These
forward-looking statements are based on currently available
operating, financial, economic, and other information and
assumptions, and are subject to a number of significant risks and
uncertainties. A variety of factors, many of which are beyond
Mattel’s control, could cause actual future results to differ
materially from those projected in the forward-looking statements,
and are currently, and in the future may 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 Mattel’s business operations, financial results and
financial position and on the global economy, including its impact
on Mattel’s sales; (ii) Mattel’s ability to design, develop,
produce, manufacture, source, ship, and distribute products on a
timely and cost-effective basis; (iii) sufficient interest in and
demand for the products and entertainment we offer by retail
customers and consumers to profitably recover Mattel’s costs; (iv)
downturns in economic conditions affecting Mattel’s markets which
can negatively impact retail customers and consumers, and which can
result in lower employment levels and lower consumer disposable
income and spending, including lower spending on purchases of
Mattel’s products; (v) 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; (vi) potential difficulties or delays Mattel may
experience in implementing cost savings and efficiency enhancing
initiatives; (vii) 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; (viii) currency
fluctuations, including movements in foreign exchange rates and
inflation, which can lower Mattel’s net revenues and earnings, and
significantly impact Mattel’s costs; (ix) the concentration of
Mattel’s customers, potentially increasing the negative impact to
Mattel of difficulties experienced by any of Mattel’s customers,
such as bankruptcies or liquidations or a general lack of success,
or changes in their purchasing or selling patterns; (x) the
inventory policies of Mattel’s retail customers, as well as the
concentration of Mattel’s revenues in the second half of the year,
which coupled with reliance by retailers on quick response
inventory management techniques increases the risk of
underproduction, overproduction , and shipping delays; (xi) legal,
reputational, and financial risks related to security breaches or
cyberattacks; (xii) work disruptions, including as a result of
supply chain disruption and plant shutdowns, which may impact
Mattel’s ability to manufacture or deliver product in a timely and
cost-effective manner; (xiii) the impact of competition on
revenues, margins, and other aspects of Mattel’s business,
including the ability to offer products which consumers choose to
buy instead of competitive products, the ability to secure,
maintain, and renew popular licenses from licensors of
entertainment properties, and the ability to attract and retain
talented employees and adapt to evolving workplace models; (xiv)
the risk of product recalls or product liability suits and costs
associated with product safety regulations; (xv) changes in laws or
regulations in the United States and/or in other major markets,
such as China, in which Mattel operates, including, without
limitation, with respect to taxes, tariffs, trade policies, or
product safety, which may increase Mattel’s product costs and other
costs of doing business, and reduce Mattel’s earnings; (xvi)
failure to realize the planned benefits from any investments or
acquisitions made by Mattel; (xvii) the impact of other market
conditions or third party actions or approvals, including that
result in any significant failure, inadequacy, or interruption from
vendors or outsourcers, which could reduce demand for Mattel’s
products, delay or increase the cost of implementation of Mattel’s
programs, or alter Mattel’s actions and reduce actual results;
(xviii) changes in financing markets or the inability of Mattel to
obtain financing on attractive terms; (xix) the impact of
litigation, arbitration, or regulatory decisions or settlement
actions; (xx) Mattel’s ability to navigate regulatory frameworks in
connection with new areas of investment, product development, or
other business activities, such as non-fungible tokens and
cryptocurrency; (xxi) uncertainty from the expected discontinuance
of LIBOR and transition to any other interest rate benchmark; and
(xxii) other risks and uncertainties as may be described in
Mattel’s filings with the Securities and Exchange Commission,
including the “Risk Factors” section of Mattel’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2020 and
subsequent periodic filings, as well as in Mattel’s other public
statements. Mattel does not update forward-looking statements and
expressly disclaims any obligation to do so, except as required by
law.
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 may 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, Free Cash Flow, Free Cash
Flow Conversion (Free Cash Flow / Adjusted EBITDA), Leverage Ratio
(Debt / Adjusted EBITDA), 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. Adjusted
Gross Margin represents Mattel’s Adjusted Gross Profit, as a
percentage of Net Sales. Adjusted Gross Profit and Adjusted Gross
Margin are presented to provide additional perspective on
underlying trends in Mattel’s core Gross Profit and Gross Margin,
which Mattel believes is useful supplemental information for
investors to be able to gauge and compare Mattel’s current business
performance from one period to another.
Adjusted Other Selling and Administrative Expenses
Adjusted Other Selling and Administrative Expenses represents
Mattel’s reported Other Selling and Administrative Expenses,
adjusted to exclude severance and restructuring expenses, the
impact of the inclined sleeper product recalls, and the impact of
sale of assets, which are not part of Mattel’s core business.
Adjusted Other Selling and Administrative Expenses is presented to
provide additional perspective on underlying trends in Mattel’s
core other selling and administrative expenses, which Mattel
believes is useful supplemental information for investors to be
able to gauge and compare Mattel’s current business performance
from one period to another.
Adjusted Operating Income (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 sale of assets,
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, the impact of sale of assets/business,
loss on debt extinguishment, and releases of valuation allowances,
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 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
sale of assets/business, which are not part of Mattel’s core
business. Mattel believes EBITDA and Adjusted EBITDA are useful
supplemental information for investors to gauge and compare
Mattel’s business performance to other companies in its industry
with similar capital structures. The presentation of Adjusted
EBITDA differs from how Mattel calculates EBITDA for purposes of
covenant compliance under the indentures governing its high yield
senior notes and the 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 and Free Cash Flow Conversion
Free Cash Flow represents Mattel’s net cash flows from operating
activities less capital expenditures. Free Cash Flow Conversion
represents Mattel’s free cash flow divided by Adjusted EBITDA.
Mattel believes Free Cash Flow and Free Cash Flow Conversion are
useful supplemental information for investors to gauge Mattel’s
liquidity and performance and to compare Mattel’s business
performance to other companies in our industry. Free Cash Flow does
not represent cash available to Mattel for discretionary
expenditures.
Leverage Ratio (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®, Masters of the Universe®, 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 and digital
experiences, music, and live events. Founded in 1945, we operate in
35 locations and our products are available in more than 150
countries in collaboration with the world’s leading retail and
ecommerce companies. Mattel is proud to be a trusted partner in
empowering children to explore the wonder of childhood and reach
their full potential. Visit us online at mattel.com.
MAT-FIN MAT-CORP
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,
2021
20202
% Change as
Reported
% Change in
Constant
Currency
20212
20202
% 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
$
1,794.9
$
1,625.8
10
%
11
%
$
5,457.7
$
4,588.4
19
%
18
%
Cost of sales
910.6
50.7
%
789.5
48.6
%
15
%
2,831.1
51.9
%
2,345.3
51.1
%
21
%
Gross Profit
884.3
49.3
%
836.2
51.4
%
6
%
6
%
2,626.7
48.1
%
2,243.1
48.9
%
17
%
18
%
Advertising and promotion expenses
265.6
14.8
%
286.8
17.6
%
-7
%
545.7
10.0
%
525.8
11.5
%
4
%
Other selling and administrative expenses
361.2
20.1
%
361.3
22.2
%
0
%
1,351.4
24.8
%
1,342.6
29.3
%
1
%
Operating Income
257.5
14.3
%
188.1
11.6
%
37
%
31
%
729.6
13.4
%
374.7
8.2
%
95
%
98
%
Interest expense
33.2
1.9
%
49.3
3.0
%
-33
%
253.9
4.7
%
198.3
4.3
%
28
%
Interest (income)
(1.3
)
-0.1
%
(0.4
)
0
%
253
%
(3.5
)
-0.1
%
(3.9
)
-0.1
%
-11
%
Other non-operating expense (income), net
5.0
(4.3
)
8.4
2.7
Income Before Income Taxes
220.6
12.3
%
143.5
8.8
%
54
%
50
%
470.8
8.6
%
177.7
3.9
%
165
%
171
%
(Benefit) Provision for income taxes
(4.6
)
18.7
(420.4
)
65.5
Income from equity method investments
0.7
4.3
11.8
11.5
Net Income
$
225.8
12.6
%
$
129.1
7.9
%
75
%
$
903.0
16.5
%
$
123.6
2.7
%
631
%
Net Income Per Common Share - Basic
$
0.64
$
0.37
$
2.58
$
0.36
Weighted-average number of common shares
351.1
347.7
350.0
347.5
Net Income per Common Share - Diluted
$
0.63
$
0.37
$
2.53
$
0.35
Weighted-average number of common and potential common shares
358.1
351.0
357.3
349.1
1 Amounts may not sum due to rounding.
2 Reflects the impact of immaterial revisions to the financial
statements. n/m - Not Meaningful
MATTEL, INC. AND
SUBSIDIARIES EXHIBIT II CONDENSED CONSOLIDATED
BALANCE SHEETS1 December 31,
20212
20202
(In millions)
(Unaudited) Assets Cash and equivalents
$
731.4
$
762.2
Accounts receivable, net
1,072.7
1,034.0
Inventories
777.2
528.5
Prepaid expenses and other current assets
293.3
172.1
Total current assets
2,874.5
2,496.7
Property, plant, and equipment, net
456.0
473.8
Right-of-use assets, net
325.5
291.6
Goodwill
1,390.2
1,393.8
Other noncurrent assets
1,347.7
879.0
Total Assets
$
6,393.9
$
5,534.9
Liabilities and Stockholders' Equity Short-term
borrowings
$
-
$
1.0
Accounts payable and accrued liabilities
1,570.7
1,327.3
Income taxes payable
27.5
27.1
Total current liabilities
1,598.3
1,355.4
Long-term debt
2,571.0
2,854.7
Noncurrent lease liabilities
283.6
249.4
Other noncurrent liabilities
372.2
465.4
Stockholders' equity
1,568.8
610.1
Total Liabilities and Stockholders' Equity
$
6,393.9
$
5,534.9
MATTEL, INC. AND SUBSIDIARIES SUPPLEMENTAL
BALANCE SHEET AND CASH FLOW DATA (Unaudited)1
December 31,
2021
20202
Key Balance Sheet Data:
Accounts receivable, net days of sales outstanding (DSO)
54
57
For the Year Ended December 31, (In millions)
20212
20202
Condensed Cash Flow Data: Cash
flows provided by operating activities
$
485
$
286
Cash flows used for investing activities
(105
)
(132
)
Cash flows used for financing activities and other
(411
)
(21
)
(Decrease) increase in cash and equivalents
$
(31
)
$
132
1 Amounts may not sum due to rounding. 2 Reflects the impact of
immaterial revisions to the financial statements.
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)
2021
20202
Change
20212
20202
Change Gross Profit
Gross Profit, As Reported
$
884.3
$
836.2
$
2,626.7
$
2,243.1
Gross Margin
49.3
%
51.4
%
-210 bps
48.1
%
48.9
%
-80 bps Adjustments: Severance and Restructuring Expenses
1.0
0.8
2.9
5.7
Gross Profit, As Adjusted
$
885.2
$
837.1
$
2,629.5
$
2,248.8
Adjusted Gross Margin
49.3
%
51.5
%
-220 bps
48.2
%
49.0
%
-80 bps
Other Selling and
Administrative Expenses Other Selling and Administrative
Expenses, As Reported
$
361.2
$
361.3
0%
$
1,351.4
$
1,342.6
1%
% of Net Sales
20.1
%
22.2
%
24.8
%
29.3
%
Adjustments: Severance and Restructuring Expenses
(5.9
)
(4.5
)
(31.5
)
(34.9
)
Inclined Sleeper Product Recalls3
(0.2
)
(7.0
)
(15.1
)
(26.2
)
Sale of Assets4
-
-
15.8
-
Other Selling and Administrative Expenses, As Adjusted
$
355.2
$
349.9
2%
$
1,320.6
$
1,281.5
3%
% of Net Sales
19.8
%
21.5
%
24.2
%
27.9
%
Operating Income
Operating Income, As Reported
$
257.5
$
188.1
37%
$
729.6
$
374.7
95%
Operating Income Margin
14.3
%
11.6
%
13.4
%
8.2
%
Adjustments: Severance and Restructuring Expenses
6.8
5.3
34.4
40.6
Inclined Sleeper Product Recalls3
0.2
7.0
15.1
26.2
Sale of Assets4
-
-
(15.8
)
-
Operating Income, As Adjusted
$
264.5
$
200.4
32%
$
763.3
$
441.5
73%
Adjusted Operating Income Margin
14.7
%
12.3
%
14.0
%
9.6
%
1 Amounts may not sum due to rounding. 2 Reflects the impact of
immaterial revisions to the financial statements. 3 For the three
months and year ended December 31, 2021 and 2020, represents
expenses related to inclined sleeper product recall litigation. 4
For the year ended December 31, 2021, Mattel recorded a gain on
sale of assets of $15.8 million in Other Selling and Administrative
Expenses, and a gain on sale of business of $3.9 million in Other
Non-Operating Expense, net.
MATTEL, INC. AND SUBSIDIARIES
EXHIBIT III SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited)1 RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL
MEASURES For the Three Months Ended December 31,
For the Year Ended December 31, (In
millions, except per share and percentage information)
2021
20202
Change
20212
20202
Change Earnings Per
Share Net Income Per Common Share, As Reported
$
0.63
$
0.37
70
%
$
2.53
$
0.35
623
%
Adjustments: Severance and Restructuring Expenses
0.02
0.02
0.10
0.12
Inclined Sleeper Product Recalls3
-
0.02
0.04
0.07
Sale of Assets/Business4
-
-
(0.06
)
-
Loss on Debt Extinguishment
-
-
0.28
-
Valuation Allowance Releases5
(0.14
)
-
(1.51
)
-
Tax Effect of Adjustments6
0.02
-
(0.08
)
(0.01
)
Net Income Per Common Share, As Adjusted
$
0.53
$
0.40
33
%
$
1.30
$
0.54
141
%
EBITDA and Adjusted
EBITDA Net Income, As Reported
$
225.8
$
129.1
75
%
$
903.0
$
123.6
631
%
Adjustments: Interest Expense
33.2
49.3
253.9
198.3
(Benefit) Provision for Income Taxes
(4.6
)
18.7
(420.4
)
65.5
Depreciation
37.4
34.5
146.3
154.5
Amortization
9.5
9.5
38.0
38.9
EBITDA
301.4
241.0
920.9
580.9
Adjustments: Share-based Compensation
13.6
20.2
60.1
60.2
Severance and Restructuring Expenses
5.8
4.5
30.7
39.1
Inclined Sleeper Product Recalls3
0.2
7.0
15.1
26.2
Sale of Assets/Business4
-
-
(19.7
)
-
Adjusted EBITDA
$
320.9
$
272.8
18
%
$
1,007.0
$
706.4
43
%
Free Cash Flow Net Cash
Flows Provided by Operating Activities
$
485.5
$
285.7
Capital Expenditures
(151.4
)
(118.8
)
Free Cash Flow
$
334.1
$
166.9
1 Amounts may not sum due to rounding. 2 Reflects the impact of
immaterial revisions to the financial statements. 3 For the three
months and year ended December 31, 2021 and 2020, represents
expenses related to inclined sleeper product recall litigation. 4
For the year ended December 31, 2021, Mattel recorded a gain on
sale of assets of $15.8 million in Other Selling and Administrative
Expenses, and a gain on sale of business of $3.9 million in Other
Non-Operating Expense, net. 5 For the three months and year ended
December 31, 2021, the amount includes a net benefit of
approximately $49 million and $541 million, respectively, related
to the release of valuation allowances against deferred tax assets
of the U.S. and certain International affiliates. 6 The aggregate
tax effect of the adjustments is calculated by tax effecting the
adjustments by the current effective tax rate, and dividing by the
reported weighted average number of common and potential common
shares. n/m - Not meaningful
MATTEL, INC. AND SUBSIDIARIES
EXHIBIT III
SUPPLEMENTAL FINANCIAL INFORMATION (Unaudited)1
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
(In millions, except per share and
percentage information) For the Year Ended December
31, Leverage Ratio (Debt / Adjusted
EBITDA)
20212
20202
Change Debt Long-Term Debt
$
2,571.0
$
2,854.7
Current Portion of Long-Term Debt
-
-
Short-Term Borrowings
-
1.0
Adjustments: Debt Issuance Costs and Debt Discount
29.0
45.3
Debt
$
2,600.0
$
2,901.0
EBITDA and Adjusted EBITDA Net Income,
As Reported
$
903.0
$
123.6
631
%
Adjustments: Interest Expense
253.9
198.3
(Benefit) Provision for Income Taxes
(420.4
)
65.5
Depreciation
146.3
154.5
Amortization
38.0
38.9
EBITDA
920.9
580.9
Adjustments: Share-based Compensation
60.1
60.2
Severance and Restructuring Expenses
30.7
39.1
Inclined Sleeper Product Recalls3
15.1
26.2
Sale of Assets/Business4
(19.7
)
-
Adjusted EBITDA
$
1,007.0
$
706.4
43
%
Debt / Net Income
2.9
x
23.5
x
Leverage Ratio (Debt / Adjusted EBITDA)
2.6
x
4.1
x
Free Cash Flow Net Cash
Flows Provided by Operating Activities
$
485.5
$
285.7
70
%
Capital Expenditures
(151.4
)
(118.8
)
Free Cash Flow
$
334.1
$
166.9
100
%
Net Cash Flows Provided by Operating Activities / Net Income
54
%
231
%
Free Cash Flow Conversion (Free Cash Flow/Adjusted EBITDA)
33
%
24
%
1 Amounts may not sum due to rounding. 2 Reflects the impact of
immaterial revisions to the financial statements. 3 For the year
ended December 31, 2021 and 2020, represents expenses related to
inclined sleeper product recall litigation. 4 For the year ended
December 31, 2021, Mattel recorded a gain on sale of assets of
$15.8 million in Other Selling and Administrative Expenses, and a
gain on sale of business of $3.9 million in Other Non-Operating
Expense, net. n/m - Not meaningful
MATTEL, INC. AND
SUBSIDIARIES EXHIBIT IV WORLDWIDE GROSS
BILLINGS1 (Unaudited)4 SUPPLEMENTAL KEY PERFORMANCE
INDICATOR For the Three Months Ended December 31,
For the Year Ended December 31, (In
millions, except percentage information)
2021
2020
% Change
as Reported
% Change in
Constant
Currency
2021
20202
% Change
as Reported
% Change in
Constant
Currency
Worldwide Gross Billings: Net
Sales
$
1,794.9
$
1,625.8
10
%
11
%
$
5,457.7
$
4,588.4
19
%
18
%
Sales Adjustments3
196.5
209.1
623.9
554.2
Gross Billings
$
1,991.4
$
1,834.9
9
%
9
%
$
6,081.6
$
5,142.6
18
%
17
%
Worldwide Gross Billings by
Categories: Dolls
$
803.6
$
709.1
13
%
14
%
$
2,299.1
$
1,886.4
22
%
21
%
Infant, Toddler, and Preschool
401.4
405.5
-1
-1
1,220.9
1,154.5
6
5
Vehicles
381.2
396.3
-4
-3
1,252.8
1,110.0
13
12
Action Figures, Building Sets, Games, and Other
405.1
324.0
25
26
1,308.9
991.6
32
31
Gross Billings
$
1,991.4
$
1,834.9
9
%
9
%
$
6,081.6
$
5,142.6
18
%
17
%
Supplemental Gross Billings
Disclosure Worldwide
Gross Billings by Top 3 Power Brands: Barbie
$
556.6
$
471.1
18
%
19
%
$
1,679.3
$
1,350.1
24
%
24
%
Hot Wheels
326.4
346.3
-6
-5
1,068.3
954.2
12
11
Fisher-Price and Thomas & Friends
365.2
372.8
-2
-2
1,128.2
1,065.5
6
5
Other
743.2
644.6
15
16
2,205.8
1,772.8
24
23
Gross Billings
$
1,991.4
$
1,834.9
9
%
9
%
$
6,081.6
$
5,142.6
18
%
17
%
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 Reflects the impact of immaterial revisions to
the financial statements. 3 Sales Adjustments are not allocated to
individual products. As such, Net Sales are not presented on a
categories or brand level. 4 Amounts may not sum due to rounding.
MATTEL, INC. AND SUBSIDIARIES EXHIBIT V
GROSS BILLINGS1
BY SEGMENT (Unaudited)4 SUPPLEMENTAL KEY PERFORMANCE
INDICATOR
For the Three Months Ended December 31,
For the Year Ended December 31, (In millions, except percentage information)
2021
2020
% Change
as Reported
% Change in
Constant
Currency
2021
20202
% Change
as Reported
% Change in
Constant
Currency
North America Segment Gross
Billings:
Net Sales
$
890.8
$
779.4
14
%
14
%
$
2,968.3
$
2,426.5
22
%
22
%
Sales Adjustments3
44.4
49.5
186.6
163.2
Gross Billings
$
935.2
$
828.9
13
%
13
%
$
3,154.9
$
2,589.7
22
%
21
%
North America Gross Billings by
Categories:
Dolls
$
312.8
$
247.0
27
%
26
%
$
1,011.1
$
770.6
31
%
31
%
Infant, Toddler, and Preschool
238.5
237.1
1
0
758.8
703.3
8
8
Vehicles
175.2
173.0
1
1
633.0
529.2
20
19
Action Figures, Building Sets, Games, and Other
208.7
171.8
22
21
752.0
586.6
28
28
Gross Billings
$
935.2
$
828.9
13
%
13
%
$
3,154.9
$
2,589.7
22
%
21
%
Supplemental Gross Billings
Disclosure
North America Gross Billings
by Top 3 Power Brands:
Barbie
$
286.4
$
226.5
26
%
26
%
$
903.5
$
704.2
28
%
28
%
Hot Wheels
146.0
149.8
-3
-3
529.5
446.6
19
18
Fisher-Price and Thomas & Friends
209.4
211.7
-1
-1
685.5
634.9
8
8
Other
293.4
240.9
22
22
1,036.4
804.0
29
29
Gross Billings
$
935.2
$
828.9
13
%
13
%
$
3,154.9
$
2,589.7
22
%
21
%
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 Reflects the impact of immaterial revisions to
the financial statements. 3 Sales Adjustments are not allocated to
individual products. As such, Net Sales are not presented on a
categories or brand level. 4 Amounts may not sum due to rounding.
MATTEL, INC. AND SUBSIDIARIES EXHIBIT
VI
GROSS BILLINGS1 BY SEGMENT (Unaudited)4
SUPPLEMENTAL KEY PERFORMANCE INDICATOR
For the Three Months Ended
December 31,
For the Year Ended December
31,
(In millions, except percentage
information)
2021
2020
% Change
as Reported
% Change in
Constant
Currency
2021
20202
% Change
as Reported
% Change in
Constant
Currency
International Segment Gross
Billings:
Net Sales
$
771.7
$
704.7
9
%
12
%
$
2,219.2
$
1,903.5
17
%
15
%
Sales Adjustments3
148.0
155.7
429.6
382.8
Gross Billings
$
919.7
$
860.4
7
%
9
%
$
2,648.8
$
2,286.4
16
%
14
%
International Gross Billings by Geographic
Area:
EMEA
Net Sales
$
469.6
$
397.1
18
%
21
%
$
1,375.5
$
1,132.5
21
%
21
%
Sales Adjustments3
100.7
98.2
290.0
247.4
Gross Billings
$
570.3
$
495.2
15
%
18
%
$
1,665.5
$
1,380.0
21
%
20
%
Latin America
Net Sales
$
190.1
$
187.2
2
%
3
%
$
519.6
$
455.2
14
%
12
%
Sales Adjustments3
27.9
36.2
84.1
82.2
Gross Billings
$
217.9
$
223.4
-2
%
-1
%
$
603.7
$
537.4
12
%
10
%
Asia
Pacific Net
Sales
$
112.0
$
120.5
-7
%
-6
%
$
324.1
$
315.8
3
%
-1
%
Sales Adjustments3
19.5
21.3
55.5
53.2
Gross Billings
$
131.4
$
141.8
-7
%
-7
%
$
379.6
$
369.0
3
%
-1
%
International Gross Billings by
Categories:
Dolls
$
354.3
$
316.5
12
%
14
%
$
1,010.1
$
849.4
19
%
18
%
Infant, Toddler, and Preschool
162.9
168.4
-3
-2
462.1
451.2
2
1
Vehicles
206.0
223.3
-8
-6
619.8
580.8
7
5
Action Figures, Building Sets, Games, and Other
196.4
152.2
29
32
556.8
405.0
38
35
Gross Billings
$
919.7
$
860.4
7
%
9
%
$
2,648.8
$
2,286.4
16
%
14
%
Supplemental Gross Billings
Disclosure
International Gross Billings
by Top 3 Power Brands:
Barbie
$
270.2
$
244.6
10
%
13
%
$
775.8
$
645.9
20
%
19
%
Hot Wheels
180.5
196.5
-8
-7
538.8
507.6
6
5
Fisher-Price and Thomas & Friends
155.8
161.1
-3
-2
442.7
430.6
3
1
Other
313.2
258.1
21
23
891.4
702.2
27
25
Gross Billings
$
919.7
$
860.4
7
%
9
%
$
2,648.8
$
2,286.4
16
%
14
%
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 Reflects the impact of immaterial revisions to
the financial statements. 3 Sales Adjustments are not allocated to
individual products. As such, Net Sales are not presented on a
categories or brand level. 4 Amounts may not sum 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)
2021
2020
% Change
as Reported
% Change in
Constant
Currency
2021
2020
% Change
as Reported
% Change in
Constant
Currency
American Girl Segment Gross
Billings:
Net Sales
$
132.5
$
141.6
-6
%
-6
%
$
270.3
$
258.4
5
%
5
%
Sales Adjustments2
4.1
4.0
7.6
8.1
Gross Billings
$
136.5
$
145.6
-6
%
-6
%
$
277.9
$
266.5
4
%
4
%
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 sum due to rounding.
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version on businesswire.com: https://www.businesswire.com/news/home/20220209005367/en/
News Media Catherine Frymark
catherine.frymark@mattel.com
Securities Analysts David Zbojniewicz
david.zbojniewicz@mattel.com
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