First Quarter 2023 Highlights Versus
Prior Year
- Net Sales of $815 million, down 22% as reported, or 21% in
constant currency
- Gross Margin of 40.0%, a decrease of 640 basis points; Adjusted
Gross Margin of 40.0%, a decrease of 660 basis points
- Operating Loss of $115 million, a decrease of $195 million;
Adjusted Operating Loss of $87 million, a decrease of $177
million
- Net Loss of $106 million compared to prior year Net Income of
$21 million
- Net Loss per Share of $0.30 compared to prior year Net Income
per Share of $0.06; Adjusted Net Loss per Share of $0.24 compared
to prior year Net Income per Share of $0.08
- Adjusted EBITDA of negative $14 million, a decrease of $166
million
- Repurchased $34 million of shares
- Company reiterates 2023 guidance
Mattel, Inc. (NASDAQ: MAT) today reported first quarter 2023
financial results.
Ynon Kreiz, Chairman and CEO of Mattel, said: “While retail
inventory management impacted the first quarter’s results, the
underlying business performed well. Mattel achieved growth and
gained market share, per Circana. The fundamentals of our business
are strong. We expect to outpace the industry, gain market share,
and achieve our full year guidance. We are well positioned to
continue executing our multi-year strategy and create long-term
shareholder value.”
Anthony DiSilvestro, CFO of Mattel, added: “We expect consumer
demand to be positive for the full year and for revenue comparisons
to improve, as shipping patterns revert to historical trends in the
second half. We continue to generate meaningful free cash flow and
expect to exceed $400 million in 2023. Consistent with our capital
allocation priorities, we have resumed share repurchases, which
also reflects confidence in our strategy.”
Financial Overview
For the first quarter, Net Sales were down 22% as reported, or
21% in constant currency, versus the prior year. Reported Operating
Loss was $115 million, a decrease of $195 million, and Adjusted
Operating Loss was $87 million, a decrease of $177 million.
Reported Net Loss Per Share was $0.30, compared to prior year
Reported Net Income Per Share of $0.06, and Adjusted Net Loss Per
Share was $0.24, compared to prior year Adjusted Net Income Per
Share of $0.08.
Net Sales in the North America segment decreased 27% as reported
and in constant currency.
Gross Billings in the North America segment decreased 27% as
reported and in constant currency, due to declines in Action
Figures, Building Sets, Games, and Other (including Action
Figures), Dolls (including Barbie®), Infant, Toddler, and Preschool
(including Fisher-Price®), and Vehicles (including Hot
Wheels®).
Net Sales in the International segment decreased 15% as
reported, or 13% in constant currency.
Gross Billings in the International segment decreased 16% as
reported, or 14% in constant currency, due to declines in Dolls
(including Barbie), Action Figures, Building Sets, Games, and Other
(including Action Figures and Games), and Infant, Toddler, and
Preschool (including Fisher-Price), partially offset by growth in
Vehicles (including Hot Wheels).
Net Sales in the American Girl® segment decreased 5% as reported
and in constant currency. Gross Billings in the American Girl
segment decreased 6% as reported and in constant currency.
Reported Gross Margin decreased to 40.0%, versus 46.4% in the
prior year, and Adjusted Gross Margin decreased to 40.0%, versus
46.6%. The decrease in Reported and Adjusted Gross Margin was
primarily driven by inventory management efforts, including higher
close-out sales and inventory obsolescence expense, cost inflation,
unfavorable fixed cost absorption, and mix and other factors,
partially offset by pricing and savings from the Optimizing for
Growth program.
Reported Other Selling and Administrative Expenses increased $36
million, to $365 million, primarily driven by market-related pay
increases and higher severance and restructuring expenses,
partially offset by savings from the Optimizing for Growth program.
Adjusted Other Selling and Administrative Expenses increased $15
million, to $336 million, primarily driven by market-related pay
increases, partially offset by savings from the Optimizing for
Growth program.
For the three months ended March 31, 2023, Cash Flows Used for
Operating Activities were $206 million, an increase of $63 million,
versus the prior year’s first quarter, primarily due to changes in
net earnings, excluding the impact of non-cash items, partially
offset by lower working capital usage. Cash Flows Used for
Investing Activities were $43 million, a decrease of $12 million,
primarily due to prior year payment of foreign currency forward
contracts, partially offset by higher capital expenditures. Cash
Flows Used for Financing Activities and Other were $51 million, as
compared to cash inflows of $4 million in the prior year, primarily
due to share repurchases and lower proceeds from the exercise of
stock options.
Gross Billings by Categories
For the first quarter, worldwide Gross Billings for Dolls were
$306 million, down 23% as reported, or 22% in constant currency,
versus the prior year, primarily due to declines in Barbie and
Enchantimals, partially offset by the launch of Disney Princess and
Disney Frozen and Monster High.
Worldwide Gross Billings for Infant, Toddler, and Preschool were
$150 million, down 27% as reported, or 26% in constant currency,
primarily due to declines in Fisher-Price.
Worldwide Gross Billings for Vehicles were $284 million, up 1%
as reported and in constant currency, primarily driven by growth in
Hot Wheels.
Worldwide Gross Billings for Action Figures, Building Sets,
Games, and Other were $171 million, down 39% as reported, or 38% in
constant currency, primarily due to declines in Action Figures and
Games.
2023 Guidance
Mattel’s full year 2023 guidance remains:
(in millions,
except EPS and
percentages)
FY2023 Guidance
FY2022
Net Sales
Comparable (Constant
Currency)
$5,435
Adjusted Gross Margin
~ 47%
45.9%
Adjusted EPS
$1.10 - $1.20
$1.25
Adjusted EBITDA
$900 - $950
$968
Adjusted Tax Rate
25 - 26%
24%
Capital Expenditures
$175 - $200
$187
Free Cash Flow
> $400
$256
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 EBITDA, Adjusted EPS, and
Adjusted Tax Rate is not available without unreasonable effort.
Mattel is unable to predict with sufficient certainty items that
would be excluded from the corresponding GAAP measures, including
the effect of foreign currency exchange rate fluctuations, unusual
gains and losses or charges, and severance and restructuring
charges, due to the unpredictable nature of such items, which may
have a significant impact on Mattel’s GAAP measures.
The company is operating in a challenging macro-economic
environment with higher volatility, including inflation, that may
impact consumer demand. Mattel’s guidance takes into account what
the company is aware of today but remains subject to further
volatility and any unexpected disruption, including fluctuations in
foreign exchange rates, inflation, changes in global economic
conditions and consumer demand, labor market fluctuations, and
other macro-economic risks and uncertainties.
Conference Call and Live Webcast
At 5:00 p.m. (Eastern Standard Time) today, Mattel will host a
conference call with investors and financial analysts to discuss
its first 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 12
months and may be accessed beginning approximately three hours
after the completion of the live call.
Cautionary Note Regarding Forward-Looking Statements
Mattel cautions the reader that this press release contains a
number of forward-looking statements, which are statements that
relate to the future and are, by their nature, uncertain.
Forward-looking statements can be identified by the fact that they
do not relate strictly to historical or current facts and include
statements regarding Mattel’s guidance and goals for future periods
and other future events. The use of words such as “anticipates,”
“expects,” “intends,” “plans,” “projects,” “look forward,”
“confident that,” “believes,” and “targeted,” among others,
generally identify forward-looking statements. These
forward-looking statements are based on currently available
operating, financial, economic, and other information and
assumptions, and are subject to a number of significant risks and
uncertainties. A variety of factors, many of which are beyond
Mattel’s control, could cause actual future results to differ
materially from those projected in the forward-looking statements.
Specific factors that might cause such a difference include, but
are not limited to: (i) Mattel’s ability to design, develop,
produce, manufacture, source, ship, and distribute products on a
timely and cost-effective basis; (ii) sufficient interest in and
demand for the products and entertainment Mattel offers by retail
customers and consumers to profitably recover Mattel’s costs; (iii)
downturns in economic conditions affecting Mattel’s markets which
can negatively impact retail customers and consumers, and which can
result in lower employment levels and lower consumer disposable
income and spending, including lower spending on purchases of
Mattel’s products; (iv) other factors which can lower discretionary
consumer spending, such as higher costs for fuel and food, drops in
the value of homes or other consumer assets, and high levels of
consumer debt; (v) potential difficulties or delays Mattel may
experience in implementing cost savings and efficiency enhancing
initiatives; (vi) other economic and public health conditions or
regulatory changes in the markets in which Mattel and its customers
and suppliers operate, which could create delays or increase
Mattel’s costs, such as higher commodity prices, labor costs or
transportation costs, or outbreaks of disease; (vii) the effect of
inflation on Mattel’s business, including cost inflation in supply
chain inputs and increased labor costs, as well as pricing actions
taken in an effort to mitigate the effects of inflation; (viii)
currency fluctuations, including movements in foreign exchange
rates, which can lower Mattel’s net revenues and earnings, and
significantly impact Mattel’s costs; (ix) the concentration of
Mattel’s customers, potentially increasing the negative impact to
Mattel of difficulties experienced by any of Mattel’s customers,
such as bankruptcies or liquidations or a general lack of success,
or changes in their purchasing or selling patterns; (x) the
inventory policies of Mattel’s retail customers, as well as the
concentration of Mattel’s revenues in the second half of the year,
which coupled with reliance by retailers on quick response
inventory management techniques, increases the risk of
underproduction, overproduction , and shipping delays; (xi) legal,
reputational, and financial risks related to security breaches or
cyberattacks; (xii) work disruptions, including as a result of
supply chain disruption such as plant or port closures, which may
impact Mattel’s ability to manufacture or deliver product in a
timely and cost-effective manner; (xiii) the impact of competition
on revenues, margins, and other aspects of Mattel’s business,
including the ability to offer products that consumers choose to
buy instead of competitive products, the ability to secure,
maintain, and renew popular licenses from licensors of
entertainment properties, and the ability to attract and retain
talented employees and adapt to evolving workplace models; (xiv)
the risk of product recalls or product liability suits and costs
associated with product safety regulations; (xv) changes in laws or
regulations in the United States and/or in other major markets,
such as China, in which Mattel operates, including, without
limitation, with respect to taxes, tariffs, trade policies, or
product safety, which may increase Mattel’s product costs and other
costs of doing business, and reduce Mattel’s earnings and
liquidity; (xvi) business disruptions or other unforeseen impacts
due to economic instability, political instability, civil unrest,
armed hostilities (including the impact of the war in Ukraine),
natural and manmade disasters, pandemics or other public health
crises, such as the COVID-19 pandemic, or other catastrophic
events; (xvii) failure to realize the planned benefits from any
investments or acquisitions made by Mattel; (xviii) the impact of
other market conditions or third party actions or approvals,
including those that result in any significant failure, inadequacy,
or interruption from vendors or outsourcers, which could reduce
demand for Mattel’s products, delay or increase the cost of
implementation of Mattel’s programs, or alter Mattel’s actions and
reduce actual results; (xix) changes in financing markets or the
inability of Mattel to obtain financing on attractive terms; (xx)
the impact of litigation, arbitration, or regulatory decisions or
settlement actions; (xxi) Mattel’s ability to navigate regulatory
frameworks in connection with new areas of investment, product
development, or other business activities, such as non-fungible
tokens and cryptocurrency; 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, 2022 and subsequent periodic filings, as well as in
Mattel’s other public statements. Mattel does not update
forward-looking statements and expressly disclaims any obligation
to do so, except as required by law.
Presentation Information / Non-GAAP Financial
Measures
The financial results included herein represent the most current
information available to management and are preliminary until
Mattel’s Form 10-Q is filed with the SEC. Actual results may differ
from these preliminary results.
To supplement our financial results presented in accordance with
generally accepted accounting principles in the United States
(“GAAP”), Mattel presents certain non-GAAP financial measures
within the meaning of Regulation G promulgated by the Securities
and Exchange Commission. The non-GAAP financial measures that
Mattel uses in this earnings release includes Adjusted Gross
Profit, Adjusted Gross Margin, Adjusted Other Selling and
Administrative Expenses, Adjusted Operating (Loss) Income, Adjusted
Operating (Loss) Income Margin, Adjusted Earnings Per Share,
earnings before interest expense, taxes, depreciation and
amortization (“EBITDA”), Adjusted EBITDA, Free Cash Flow, Free Cash
Flow Conversion (Free Cash Flow / Adjusted EBITDA), Leverage Ratio
(Total Debt / Adjusted EBITDA), Net Debt, Adjusted Tax Rate, and
constant currency. Mattel uses these measures to analyze its
continuing operations and to monitor, assess, and identify
meaningful trends in its operating and financial performance, and
each is discussed below. Mattel believes that the disclosure of
non-GAAP financial measures provides useful supplemental
information to investors to be able to better evaluate ongoing
business performance and certain components of Mattel’s results.
These measures are not, and should not be viewed as, substitutes
for GAAP financial measures and may not be comparable to similarly
titled measures used by other companies. Reconciliations of the
non-GAAP financial measures to the most directly comparable GAAP
financial measures are attached to this earnings release as
exhibits and to our earnings slide presentation as an appendix.
This earnings release and our earnings slide presentation are
available on Mattel’s Investor Relations website,
https://investors.mattel.com/, under the subheading “Financial
Information – Quarterly Earnings.”
Adjusted Gross Profit and Adjusted Gross Margin
Adjusted Gross Profit and Adjusted Gross Margin represent
reported Gross Profit and reported Gross Margin, respectively,
adjusted to exclude severance and restructuring expenses. Adjusted
Gross Margin represents Mattel’s Adjusted Gross Profit, as a
percentage of Net Sales. Adjusted Gross Profit and Adjusted Gross
Margin are presented to provide additional perspective on
underlying trends in Mattel’s core Gross Profit and Gross Margin,
which Mattel believes is useful supplemental information for
investors to be able to gauge and compare Mattel’s current business
performance from one period to another.
Adjusted Other Selling and Administrative Expenses
Adjusted Other Selling and Administrative Expenses represents
Mattel’s reported Other Selling and Administrative Expenses,
adjusted to exclude severance and restructuring expenses and the
impact of the inclined sleeper product recalls, which are not part
of Mattel’s core business. Adjusted Other Selling and
Administrative Expenses is presented to provide additional
perspective on underlying trends in Mattel’s core other selling and
administrative expenses, which Mattel believes is useful
supplemental information for investors to be able to gauge and
compare Mattel’s current business performance from one period to
another.
Adjusted Operating (Loss) Income and Adjusted Operating
(Loss)Income Margin
Adjusted Operating (Loss) Income and Adjusted Operating (Loss)
Income Margin represent reported Operating (Loss) Income and
reported Operating (Loss) Income Margin, respectively, adjusted to
exclude severance and restructuring expenses and the impact of the
inclined sleeper product recalls, which are not part of Mattel’s
core business. Adjusted Operating (Loss) Income Margin represents
Mattel’s Adjusted Operating (Loss) Income, as a percentage of Net
Sales. Adjusted Operating (Loss) Income and Adjusted Operating
(Loss) Income Margin are presented to provide additional
perspective on underlying trends in Mattel’s core operating
results, which Mattel believes is useful supplemental information
for investors to be able to gauge and compare Mattel’s current
business performance from one period to another.
Adjusted Earnings Per Share
Adjusted Earnings Per Share represents Mattel’s reported Diluted
Earnings Per Common Share, adjusted to exclude severance and
restructuring expenses, the impact of the inclined sleeper product
recalls, the impact of sale of assets/business, and loss on
liquidation of Argentina subsidiary, which are not part of Mattel’s
core business. The aggregate tax effect of the adjustments was
determined using the effective tax rates on a jurisdictional basis
of the respective adjustments, and dividing by the reported
weighted-average number of common shares. Adjusted Earnings Per
Share is presented to provide additional perspective on underlying
trends in Mattel’s core business. Mattel believes it is useful
supplemental information for investors to gauge and compare
Mattel’s current earnings results from one period to another.
Adjusted Earnings Per Share is a performance measure and should not
be used as a measure of liquidity.
EBITDA and Adjusted EBITDA
EBITDA represents Mattel’s Net Income, adjusted to exclude the
impact of interest expense, taxes, depreciation, and amortization.
Adjusted EBITDA represents EBITDA adjusted to exclude share-based
compensation, severance and restructuring expenses, the impact of
the inclined sleeper product recalls, the impact of sale of
assets/business, and loss on liquidation of Argentina subsidiary,
which are not part of Mattel’s core business. Mattel believes
EBITDA and Adjusted EBITDA are useful supplemental information for
investors to gauge and compare Mattel’s business performance to
other companies in its industry with similar capital structures.
The presentation of Adjusted EBITDA differs from how Mattel
calculates EBITDA for purposes of covenant compliance under the
indentures governing its high yield senior notes and the 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 (Total Debt / Adjusted EBITDA)
The leverage ratio is calculated by dividing Total Debt by
Adjusted EBITDA. Total Debt represents the aggregate of Mattel’s
current portion of long-term debt, short-term borrowings, and
long-term debt, excluding the impact of debt issuance costs and
debt discount. Mattel believes the leverage ratio is useful
supplemental information for investors to gauge trends in Mattel’s
business and to compare Mattel’s business performance to other
companies in its industry.
Net Debt
Net Debt represents the aggregate of Mattel’s current portion of
long-term debt, short-term borrowings, and long-term debt, less
cash and cash equivalents. Mattel believes Net Debt is useful
supplemental information for investors to monitor Mattel’s
liquidity and evaluate its balance sheet.
Adjusted Tax Rate
The Adjusted Tax Rate is calculated by dividing Adjusted
(Benefit) Provision for Income Taxes by Adjusted (Loss) Income
Before Income Taxes. Adjusted (Loss) Income Before Income Taxes
represents reported (Loss) Income Before Income Taxes, adjusted to
exclude severance and restructuring expenses, the impact of
inclined sleeper product recalls, the impact of sale of
assets/business, and loss on liquidation of Argentina subsidiary.
The Adjusted (Benefit) Provision for Income Taxes represents
reported (Benefit) Provision for Income Taxes, adjusted to exclude
the aggregate tax effect of adjustments. Mattel believes the
adjusted tax rate provides useful supplemental information for
investors to gauge and compare the impact of tax expense on
Mattel's earnings results from one period to another.
Constant Currency
Percentage changes in results expressed in constant currency are
presented excluding the impact from changes in currency exchange
rates. To present this information, Mattel calculates constant
currency information by translating current period and prior period
results for entities reporting in currencies other than the US
dollar using consistent exchange rates. The constant currency
exchange rates are determined by Mattel at the beginning of each
year and are applied consistently during the year. They are
generally different from the actual exchange rates in effect during
the current or prior period due to volatility in actual foreign
exchange rates. Mattel considers whether any changes to the
constant currency rates are appropriate at the beginning of each
year. The exchange rates used for these constant currency
calculations are generally based on prior year actual exchange
rates. The difference between the current period and prior period
results using the consistent exchange rates reflects the changes in
the underlying performance results, excluding the impact from
changes in currency exchange rates. Mattel analyzes constant
currency results to provide additional perspective on changes in
underlying trends in Mattel’s operating performance. Mattel
believes that the disclosure of the percentage change in constant
currency is useful supplemental information for investors to be
able to gauge Mattel’s current business performance and the
longer-term strength of its overall business since foreign currency
changes could potentially mask underlying sales trends. The
disclosure of the percentage change in constant currency enhances
investor’s ability to compare financial results from one period to
another.
Key Performance Indicator
Gross Billings
Gross Billings represent amounts invoiced to customers. It does
not include the impact of sales adjustments, such as trade
discounts and other allowances. Mattel presents changes in gross
billings as a metric for comparing its aggregate, categorical,
brand, and geographic results to highlight significant trends in
Mattel’s business. Changes in Gross Billings are discussed because,
while Mattel records the details of 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 March 31, (In millions, except per share and percentage
information)
2023
2022
% ChangeasReported % ChangeinConstantCurrency $
Amt % NetSales $ Amt % NetSales Net
Sales
$
814.6
$
1,041.3
-22
%
-21
%
Cost of Sales
488.8
60.0
%
558.4
53.6
%
-12
%
Gross Profit
325.8
40.0
%
482.9
46.4
%
-33
%
-32
%
Advertising and Promotion Expenses
76.0
9.3
%
73.8
7.1
%
3
%
Other Selling and Administrative Expenses
364.8
44.8
%
329.1
31.6
%
11
%
Operating (Loss) Income
(115.0
)
-14.1
%
80.1
7.7
%
n/m
n/m
Interest Expense
31.1
3.8
%
33.0
3.2
%
-6
%
Interest (Income)
(6.5
)
-0.8
%
(1.2
)
-0.1
%
442
%
Other Non-Operating (Income) Expense, Net
(1.4
)
9.1
(Loss) Income Before Income Taxes
(138.2
)
-17.0
%
39.1
3.8
%
n/m
n/m
(Benefit) Provision for Income Taxes
(27.0
)
23.9
(Income) from Equity Method Investments
(4.7
)
(6.3
)
Net (Loss) Income
$
(106.5
)
-13.1
%
$
21.5
2.1
%
n/m
Net (Loss) Income Per Common Share - Basic
$
(0.30
)
$
0.06
Weighted-Average Number of Common Shares
354.9
352.2
Net (Loss) Income Per Common Share - Diluted
$
(0.30
)
$
0.06
Weighted-Average Number of Common and Potential Common Shares
354.9
359.0
1 Amounts may not sum due to rounding. n/m - Not meaningful
MATTEL, INC. AND SUBSIDIARIES EXHIBIT II
CONDENSED CONSOLIDATED BALANCE SHEETS1 March
31, December 31,
2023
2022
2022
(In millions)
(Unaudited) Assets Cash and Equivalents
$
461.7
$
536.6
$
761.2
Accounts Receivable, Net
673.8
862.2
860.2
Inventories
961.0
969.2
894.1
Prepaid Expenses and Other Current Assets
269.7
267.7
213.5
Total Current Assets
2,366.3
2,635.7
2,729.0
Property, Plant, and Equipment, Net
471.2
452.0
469.1
Right-of-Use Assets, Net
304.5
339.7
318.7
Goodwill
1,381.0
1,387.1
1,378.6
Other Noncurrent Assets
1,308.7
1,332.9
1,282.3
Total Assets
$
5,831.7
$
6,147.4
$
6,177.7
Liabilities and Stockholders’ Equity Current Portion
of Long-Term Debt
$
—
$
250.0
$
—
Accounts Payable and Accrued Liabilities
955.5
1,278.0
1,150.2
Income Taxes Payable
13.5
16.7
37.6
Total Current Liabilities
969.0
1,544.7
1,187.7
Long-Term Debt
2,326.7
2,322.1
2,325.6
Noncurrent Lease Liabilities
257.4
296.4
271.4
Other Noncurrent Liabilities
341.0
366.1
336.6
Stockholders’ Equity
1,937.7
1,618.1
2,056.3
Total Liabilities and Stockholders’ Equity
$
5,831.7
$
6,147.4
$
6,177.7
1 Amounts may not sum due to rounding.
MATTEL, INC. AND
SUBSIDIARIES EXHIBIT II SUPPLEMENTAL BALANCE
SHEET AND CASH FLOW DATA (Unaudited)1 March 31,
2023
2022
Key Balance Sheet Data:
Accounts Receivable, Net Days of Sales Outstanding (DSO)
74
75
For the Three Months Ended March 31,
(In
millions)
2023
2022
Condensed Cash Flow Data: Cash
Flows (Used for) Operating Activities
$
(206
)
$
(144
)
Cash Flows (Used for) Investing Activities
(43
)
(55
)
Cash Flows (Used for) Provided by Financing Activities and Other
(51
)
4
Decrease in Cash and Equivalents
$
(300
)
$
(195
)
1 Amounts may not sum due to rounding.
MATTEL, INC. AND
SUBSIDIARIES EXHIBIT III SUPPLEMENTAL
FINANCIAL INFORMATION (Unaudited)1 RECONCILIATION OF GAAP
AND NON-GAAP FINANCIAL MEASURES For the Three Months
Ended March 31,
2023
2022
Change
(In millions, except percentage
information) Gross
Profit Gross Profit, As Reported
$
325.8
$
482.9
Gross Margin
40.0
%
46.4
%
-640 bps Adjustments: Severance and Restructuring Expenses
—
2.7
Gross Profit, As Adjusted
$
325.8
$
485.6
Adjusted Gross Margin
40.0
%
46.6
%
-660 bps
Other Selling and
Administrative Expenses Other Selling and Administrative
Expenses, As Reported
$
364.8
$
329.1
11%
% of Net Sales
44.8
%
31.6
%
1,320 bps Adjustments: Severance and Restructuring Expenses
(23.9
)
(6.8
)
Inclined Sleeper Product Recalls
(4.3
)
(0.6
)
Other Selling and Administrative Expenses, As Adjusted
$
336.5
$
321.7
5%
% of Net Sales
41.3
%
30.9
%
1,040 bps
Operating (Loss)
Income Operating (Loss) Income, As Reported
$
(115.0
)
$
80.1
n/m
Operating (Loss) Income Margin
-14.1
%
7.7
%
n/m
Adjustments: Severance and Restructuring Expenses
23.9
9.5
Inclined Sleeper Product Recalls
4.3
0.6
Operating (Loss) Income, As Adjusted
$
(86.7
)
$
90.1
n/m
Adjusted Operating (Loss) Income Margin
-10.6
%
8.7
%
n/m
1 Amounts may not sum due to rounding. n/m - Not meaningful
MATTEL, INC. AND SUBSIDIARIES EXHIBIT III
SUPPLEMENTAL FINANCIAL INFORMATION (Unaudited)1
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
For the Three Months Ended March 31, (In millions, except per share and percentage
information)
2023
2022
Change Earnings Per
Share Net (Loss) Income Per Common Share, As Reported
$
(0.30
)
$
0.06
n/m
Adjustments: Severance and Restructuring Expenses
0.07
0.03
Inclined Sleeper Product Recalls
0.01
—
Tax Effect of Adjustments2
(0.02
)
(0.01
)
Net (Loss) Income Per Common Share, As Adjusted
$
(0.24
)
$
0.08
n/m
EBITDA and Adjusted
EBITDA Net (Loss) Income, As Reported
$
(106.5
)
$
21.5
n/m
Adjustments: Interest Expense
31.1
33.0
(Benefit) Provision for Income Taxes
(27.0
)
23.9
Depreciation
33.7
35.9
Amortization
9.5
9.3
EBITDA
(59.1
)
123.6
Adjustments: Share-Based Compensation
16.9
19.3
Severance and Restructuring Expenses
23.9
8.4
Inclined Sleeper Product Recalls
4.3
0.6
Adjusted EBITDA
$
(13.9
)
$
152.0
n/m
Free Cash Flow Net Cash
Flows Used for Operating Activities
$
(206.4
)
$
(143.8
)
Capital Expenditures
(43.0
)
(36.0
)
Free Cash Flow
$
(249.4
)
$
(179.8
)
1 Amounts may not sum due to rounding. 2 The aggregate tax effect
of adjustments was determined using the effective tax rates on a
jurisdictional basis of the respective adjustments, and dividing by
the reported weighted average number of common and potential common
shares. n/m - Not meaningful
MATTEL, INC. AND SUBSIDIARIES
EXHIBIT III SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited)1 RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL
MEASURES For the Three Months Ended March 31,
(In millions, except percentage and pts
information)
2023
2022
Change Tax Rate (Loss)
Income Before Income Taxes, As Reported
$
(138.2
)
$
39.1
Adjustments: Severance and Restructuring Expenses
23.9
9.5
Inclined Sleeper Product Recalls
4.3
0.6
(Loss) Income Before Income Taxes, As Adjusted
$
(109.9
)
$
49.2
(Benefit) Provision for Income Taxes, As Reported
$
(27.0
)
$
23.9
Adjustments: Tax Effect of Adjustments2
6.6
2.6
(Benefit) Provision for Income Taxes, As Adjusted
$
(20.4
)
$
26.5
Tax Rate, As Reported
20
%
61
%
-41 pts Tax Rate, As Adjusted
19
%
54
%
-35 pts
March 31,
2023
2022
Net Debt Long-Term Debt
$
2,326.7
$
2,322.1
Current Portion of Long-Term Debt
—
250.0
Adjustments Cash and Equivalents
(461.7
)
(536.6
)
Net Debt
$
1,865.0
$
2,035.5
1 Amounts may not sum due to rounding. 2 Tax effect of adjustments
was determined using the effective tax rates on a jurisdictional
basis of the respective adjustments.
MATTEL, INC. AND
SUBSIDIARIES
EXHIBIT III
SUPPLEMENTAL FINANCIAL INFORMATION (Unaudited)1
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
For the Trailing Twelve Months Ended March 31,
(In millions, except percentage and pts
information)
2023
2022
Change Leverage Ratio (Total
Debt/Adjusted EBITDA) Total
Debt Long-Term Debt
$
2,326.7
$
2,322.1
Current Portion of Long-Term Debt
—
250.0
Adjustments: Debt Issuance Costs and Debt Discount
23.3
27.9
Total Debt
$
2,350.0
$
2,600.0
EBITDA and Adjusted EBITDA Net Income,
As Reported
$
266.0
$
1,036.8
-74%
Adjustments: Interest Expense
130.9
156.5
Provision (Benefit) for Income Taxes
84.9
(416.8
)
Depreciation
142.4
145.6
Amortization
38.0
37.8
EBITDA
662.3
960.0
Adjustments: Share-Based Compensation
66.7
64.3
Severance and Restructuring Expenses
48.2
32.1
Inclined Sleeper Product Recalls
3.5
10.4
Sale of Assets/Business
(23.5
)
—
Loss on Liquidation of Argentina Subsidiary
45.4
—
Adjusted EBITDA
$
802.5
$
1,066.8
-25%
Total Debt / Net Income
8.8x
2.5x
Leverage Ratio (Total Debt / Adjusted EBITDA)
2.9x
2.4x
Free Cash Flow Net Cash
Flows Provided by Operating Activities
$
380.3
$
377.4
1%
Capital Expenditures
(193.5
)
(151.6
)
Free Cash Flow
$
186.8
$
225.8
-17%
Net Cash Flows Provided by Operating Activities / Net Income
143
%
36
%
107 pts Free Cash Flow Conversion (Free Cash Flow/Adjusted EBITDA)
23
%
21
%
2 pts 1 Amounts may not sum due to rounding.
MATTEL, INC. AND
SUBSIDIARIES EXHIBIT III SUPPLEMENTAL
FINANCIAL INFORMATION (Unaudited)1 RECONCILIATION OF GAAP
AND NON-GAAP FINANCIAL MEASURES For the Year Ended December
31, (In millions, except percentage
and per share information)
2022
Gross Profit Gross Profit, As
Reported
$
2,481.4
Gross Margin
45.7
%
Adjustments: Severance and Restructuring Expenses
10.7
Gross Profit, As Adjusted
$
2,492.0
Adjusted Gross Margin
45.9
%
Earnings Per Share Net
Income Per Common Share, As Reported
$
1.10
Adjustments: Severance and Restructuring Expenses
0.10
Sale of Assets/Business2
(0.07
)
Loss on Liquidation of Argentina Subsidiary3
0.13
Net Income Per Common Share, As Adjusted
$
1.25
EBITDA and Adjusted
EBITDA Net Income, As Reported
$
393.9
Adjustments: Interest Expense
132.8
Provision for Income Taxes
135.9
Depreciation
144.6
Amortization
37.9
EBITDA
$
845.0
Adjustments: Share-Based Compensation
69.1
Severance and Restructuring Expenses
32.7
Inclined Sleeper Product Recalls
(0.3
)
Sale of Assets/Business2
(23.5
)
Loss on Liquidation of Argentina Subsidiary3
45.4
Adjusted EBITDA
$
968.4
1 Amounts may not sum due to rounding. 2 For the year ended
December 31, 2022, Mattel recorded a gain on sale of assets of
$23.5 million in other selling and administrative expenses. 3
During the year ended December 31, 2022, the liquidation of
Mattel’s subsidiary in Argentina was substantially completed, and
Mattel recognized its cumulative translation adjustments of $45.4
million as a loss in other non-operating expense, net.
MATTEL,
INC. AND SUBSIDIARIES EXHIBIT III SUPPLEMENTAL
FINANCIAL INFORMATION (Unaudited)1 RECONCILIATION OF GAAP
AND NON-GAAP FINANCIAL MEASURES For the Year
Ended December 31, (In millions,
except percentage information)
2022
Tax Rate Income Before Income
Taxes, As Reported
$
504.3
Adjustments: Severance and Restructuring Expenses
36.8
Inclined Sleeper Product Recalls
(0.3
)
Sale of Assets/Business2
(23.5
)
Loss on Liquidation of Argentina Subsidiary3
45.4
Income Before Income Taxes, As Adjusted
$
562.8
Provision for Income Taxes, As Reported
$
135.9
Adjustments: Tax Effect of Adjustments4
1.3
Provision for Income Taxes, As Adjusted
$
137.2
Tax Rate, As Reported
27
%
Tax Rate, As Adjusted
24
%
1 Amounts may not sum due to rounding. 2 For the year ended
December 31, 2022, Mattel recorded a gain on sale of assets of
$23.5 million in other selling and administrative expenses. 3
During the year ended December 31, 2022, the liquidation of
Mattel’s subsidiary in Argentina was substantially completed, and
Mattel recognized its cumulative translation adjustments of $45.4
million as a loss in other non-operating expense, net. 4 Tax effect
of adjustments was determined using the effective tax rates on a
jurisdictional basis of the respective adjustments.
MATTEL, INC.
AND SUBSIDIARIES EXHIBIT IV WORLDWIDE NET
SALES AND GROSS BILLINGS1 (Unaudited)2 For the Three
Months Ended March 31,
2023
2022
% Change as Reported
% Change in Constant
Currency
(In millions, except percentage information) Worldwide Net Sales: Net Sales
$
814.6
$
1,041.3
-22
%
-21
%
Worldwide Gross Billings by
Categories: Dolls
$
306.1
$
396.1
-23
%
-22
%
Infant, Toddler, and Preschool
150.2
205.5
-27
-26
Vehicles
283.6
282.1
1
1
Action Figures, Building Sets, Games, and Other
171.5
280.7
-39
-38
Gross Billings
$
911.3
$
1,164.4
-22
%
-21
%
Supplemental Gross Billings
Disclosure Worldwide
Gross Billings by Top 3 Power Brands: Barbie
$
176.9
$
298.0
-41
%
-40
%
Hot Wheels
244.9
241.4
1
2
Fisher-Price
125.7
171.3
-27
-26
Other
363.9
453.8
-20
-19
Gross Billings
$
911.3
$
1,164.4
-22
%
-21
%
1 Gross billings represent amounts invoiced to customers and do not
include the impact of sales adjustments, such as trade discounts
and other allowances. Mattel presents changes in gross billings as
a metric for comparing its aggregate, categorical, brand, and
geographic results to highlight significant trends in Mattel’s
business. 2 Amounts may not sum due to rounding.
MATTEL, INC.
AND SUBSIDIARIES EXHIBIT V NET SALES AND GROSS
BILLINGS1 BY SEGMENT (Unaudited)2 For the Three
Months Ended March 31,
2023
2022
% Change as Reported
% Change in Constant
Currency
(In millions, except percentage information) North America Net Sales: Net Sales
$
437.0
$
602.1
-27
%
-27
%
North America Gross Billings by
Categories: Dolls
$
132.9
$
182.2
-27
%
-27
%
Infant, Toddler, and Preschool
87.2
131.5
-34
-34
Vehicles
142.2
146.8
-3
-3
Action Figures, Building Sets, Games, and Other
106.3
181.3
-41
-41
Gross Billings
$
468.5
$
641.8
-27
%
-27
%
Supplemental Gross Billings
Disclosure North America
Gross Billings by Top 3 Power Brands: Barbie
$
89.5
$
164.0
-45
%
-45
%
Hot Wheels
119.7
121.7
-2
-1
Fisher-Price
75.4
112.5
-33
-33
Other
184.0
243.6
-24
-24
Gross Billings
$
468.5
$
641.8
-27
%
-27
%
1 Gross billings represent amounts invoiced to customers and do not
include the impact of sales adjustments, such as trade discounts
and other allowances. Mattel presents changes in gross billings as
a metric for comparing its aggregate, categorical, brand, and
geographic results to highlight significant trends in Mattel’s
business. 2 Amounts may not sum due to rounding.
MATTEL, INC.
AND SUBSIDIARIES EXHIBIT VI NET SALES AND
GROSS BILLINGS1 BY SEGMENT (Unaudited)2 For the Three
Months Ended March 31,
2023
2022
% Change as Reported
% Change in Constant
Currency
(In millions, except percentage information) International Net Sales by Geographic Area:
EMEA
$
209.4
$
277.7
-25
%
-22
%
Latin America
75.5
72.0
5
1
Asia Pacific
59.2
54.1
9
16
Net Sales
$
344.1
$
403.8
-15
%
-13
%
International Gross Billings by
Geographic Area: EMEA
$
251.9
$
340.4
-26
%
-24
%
Latin America
87.7
83.2
5
1
Asia Pacific
69.0
62.7
10
17
Gross Billings
$
408.6
$
486.3
-16
%
-14
%
International Gross Billings by
Categories: Dolls
$
138.9
$
177.6
-22
%
-20
%
Infant, Toddler, and Preschool
63.0
74.0
-15
-12
Vehicles
141.5
135.3
5
6
Action Figures, Building Sets, Games, and Other
65.2
99.4
-34
-33
Gross Billings
$
408.6
$
486.3
-16
%
-14
%
Supplemental Gross Billings
Disclosure International
Gross Billings by Top 3 Power Brands: Barbie
$
87.3
$
134.0
-35
%
-32
%
Hot Wheels
125.2
119.7
5
6
Fisher-Price
50.3
58.7
-14
-12
Other
145.7
173.9
-16
-15
Gross Billings
$
408.6
$
486.3
-16
%
-14
%
1 Gross billings represent amounts invoiced to customers and do not
include the impact of sales adjustments, such as trade discounts
and other allowances. Mattel presents changes in gross billings as
a metric for comparing its aggregate, categorical, brand, and
geographic results to highlight significant trends in Mattel’s
business. 2 Amounts may not sum due to rounding.
MATTEL, INC.
AND SUBSIDIARIES EXHIBIT VII NET SALES AND
GROSS BILLINGS1 BY SEGMENT (Unaudited)2 For the Three
Months Ended March 31,
2023
2022
% Change as Reported
% Change in Constant
Currency
(In millions, except percentage information) American Girl Net Sales: Net Sales
$
33.5
$
35.3
-5
%
-5
%
American Girl Gross
Billings: Gross Billings
$
34.2
$
36.3
-6
%
-6
%
1 Gross billings represent amounts invoiced to customers and do not
include the impact of sales adjustments, such as trade discounts
and other allowances. Mattel presents changes in gross billings as
a metric for comparing its aggregate, categorical, brand, and
geographic results to highlight significant trends in Mattel’s
business. 2 Amounts may not sum due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230426005065/en/
News Media Catherine Frymark
catherine.frymark@mattel.com
Securities Analysts David Zbojniewicz
david.zbojniewicz@mattel.com
Mattel (NASDAQ:MAT)
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