Third Quarter 2023 Highlights Versus
Prior Year
- Net Sales of $1,919 million, up 9% as reported, or 7% in
constant currency
- Gross Margin of 51.0%, an increase of 280 basis points;
Adjusted Gross Margin of 51.0%, an increase of 270 basis
points
- Operating Income of $474 million, an increase of $82 million;
Adjusted Operating Income of $506 million, an increase of $108
million
- Net Income of $146 million, which includes a non-cash charge of
$212 million relating to the establishment of a valuation allowance
on foreign deferred tax assets, compared to prior year Net Income
of $290 million
- Earnings per Share of $0.41 compared to prior year Earnings per
Share of $0.80; Adjusted Earnings per Share of $1.08 compared to
prior year Adjusted Earnings per Share of $0.82
- Adjusted EBITDA of $580 million, an increase of $106
million
- Repurchased $60 million of shares, bringing year-to-date total
to $110 million
- Company raises 2023 guidance for Adjusted Gross Margin,
Adjusted EBITDA, and Adjusted EPS
Mattel, Inc. (NASDAQ: MAT) today reported third quarter 2023
financial results.
Ynon Kreiz, Chairman and CEO of Mattel, said: “Mattel’s strong
third quarter performance reflects the successful execution of our
strategy to grow Mattel’s IP-driven toy business and expand our
entertainment offering. Consumer demand for our product increased
in the quarter, and we continued to outpace the industry. Our
results benefited from the success of the Barbie movie, which
became a global cultural phenomenon, and marked a key milestone for
Mattel.”
Mr. Kreiz continued: “We are very well positioned competitively
and expect to gain market share in the fourth quarter and full
year. I would like to thank the entire Mattel organization for
their achievements, hard work, and commitment to create shareholder
value.”
Anthony DiSilvestro, CFO of Mattel, added: “Our performance in
the third quarter was comprehensive with topline growth, market
share gains, adjusted gross margin expansion, and significant free
cash flow improvement. Given our year-to-date performance and
expectations for a strong holiday season, we are updating our
guidance for 2023 to reflect anticipated upside to our margin and
bottom-line results.”
Financial Overview
For the third quarter, Net Sales were up 9% as reported, or 7%
in constant currency, versus the prior year’s third quarter.
Reported Operating Income was $474 million, an increase of $82
million, and Adjusted Operating Income was $506 million, an
increase of $108 million. Reported Earnings Per Share were $0.41,
which includes a non-cash charge of $0.59 relating to the
establishment of a valuation allowance on foreign deferred tax
assets, compared to prior year Reported Earnings Per Share of
$0.80, and Adjusted Earnings Per Share were $1.08, compared to
prior year Adjusted Earnings Per Share of $0.82.
For the first nine months of the year, Net Sales declined 5% as
reported, and 6% in constant currency, versus the prior year’s
first nine months. Reported Operating Income was $422 million, a
decline of $175 million, and Adjusted Operating Income was $494
million, a decrease of $115 million. Reported Earnings Per Share
was $0.19, which includes a non-cash charge of $0.59 relating to
the establishment of a valuation allowance on foreign deferred tax
assets, a decline of $0.86, and Adjusted Earnings Per Share was
$0.94, a decline of $0.14.
Net Sales in the North America segment increased 10% as reported
and in constant currency, versus the prior year’s third
quarter.
Gross Billings in the North America segment increased 10% as
reported and in constant currency, driven by growth in Dolls
(including Barbie and Disney Princess and Disney Frozen) and
Vehicles (Hot Wheels®), partly offset by declines in Action
Figures, Building Sets, Games, and Other (primarily Action
Figures), and Infant, Toddler, and Preschool (primarily Thomas
& Friends).
Net Sales in the International segment increased 10% as
reported, 3% in constant currency.
Gross Billings in the International segment increased 9% as
reported, or 2% in constant currency. The increase in Gross
Billings as reported was driven by growth in Dolls (including
Disney Princess and Disney Frozen, Monster High, and Barbie) and
Vehicles (primarily Hot Wheels), partly offset by declines in
Action Figures, Building Sets, Games, and Other (primarily Action
Figures).
The increase in Gross Billings in constant currency was driven
by growth in Dolls (including Disney Princess and Disney Frozen,
and Monster High) and Vehicles (primarily Hot Wheels), partly
offset by declines in Action Figures, Building Sets, Games, and
Other (primarily Action Figures) and Infant, Toddler, and Preschool
(including Fisher-Price).
Net Sales in the American Girl® segment decreased 13% as
reported and in constant currency. Gross Billings in the American
Girl segment decreased 13% as reported and in constant
currency.
Reported Gross Margin increased to 51.0%, versus 48.2% in the
prior year’s third quarter, and Adjusted Gross Margin increased to
51.0%, versus 48.3% in the prior year. The increase in Reported
Gross Margin was primarily driven by favorable mix, primarily
benefits related to the Barbie movie, pricing, savings from the
Optimizing for Growth program, and cost deflation, partially offset
by unfavorable fixed cost absorption and other supply chain
costs.
Reported Other Selling and Administrative Expenses increased $52
million, to $380 million, primarily due to higher severance and
restructuring expenses, incentive compensation, and pay increases,
partially offset by savings from the Optimizing for Growth program.
Adjusted Other Selling and Administrative Expenses increased $25
million, to $347 million, primarily due to higher incentive
compensation and salary and market-related pay increases, partially
offset by savings from the Optimizing for Growth program.
For the nine months ended September 30, 2023, Cash Flows Used
for Operating Activities were $80 million, an improvement of $195
million, versus the prior year’s first nine months, primarily due
to lower working capital usage, partially offset by changes in net
earnings, excluding the impact of non-cash items. Cash Flows Used
for Investing Activities were $94 million, a decrease of $4
million, primarily due to higher net proceeds from foreign currency
forward contracts in the first nine months of 2023, partially
offset by lower proceeds from the sale of assets. Cash Flows Used
for Financing Activities and Other were $132 million, as compared
to $10 million in the prior year, with the increase primarily due
to share repurchases during the first nine months of 2023.
Gross Billings by Categories
For the third quarter, worldwide Gross Billings for Dolls were
$884 million, up 27% as reported, or 24% in constant currency,
versus the prior year. The increase in Gross Billings was driven by
growth in Barbie, Disney Princess and Disney Frozen, and Monster
High.
Worldwide Gross Billings for Infant, Toddler, and Preschool were
$361 million, down 2% as reported, or 5% in constant currency. The
decrease in Gross Billings as reported was due to declines in
Thomas & Friends.
Worldwide Gross Billings for Vehicles were $518 million, up 18%
as reported, or 15% in constant currency, primarily driven by
growth in Hot Wheels.
Worldwide Gross Billings for Action Figures, Building Sets,
Games, and Other were $358 million, down 19% as reported, or 21% in
constant currency, primarily due to declines in Action Figures
(related to 2022 theatrical releases).
2023 Guidance
Mattel’s updated full year 2023 guidance is:
(in millions,except EPS and percentages) Updated
FY2023Guidance Prior FY2023Guidance FY2022 Net
Sales
Comparable (Constant
Currency)
Comparable (Constant
Currency)
$5,435
Adjusted Gross Margin
47 - 48%
~ 47%
45.9%
Adjusted EPS
$1.15 - $1.25
$1.10 - $1.20
$1.25
Adjusted EBITDA
$925 - $975
$900 - $950
$968
Adjusted Tax Rate
25 - 26%
25 - 26%
24%
Capital Expenditures
$175 - $200
$175 - $200
$187
Free Cash Flow
> $400
> $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 third quarter financial results. The conference call will be
webcast on Mattel’s Investor Relations website,
https://investors.mattel.com. To listen to the live call, log on to
the website at least 10 minutes early to register, download, and
install any necessary audio software. An archive of the webcast
will be available on Mattel’s Investor Relations website for 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 and
geopolitical developments in the Middle East), 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 Income, Adjusted
Operating 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, 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 and Adjusted Operating Income
Margin
Adjusted Operating Income and Adjusted Operating Income Margin
represent reported Operating Income and reported Operating Income
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 Margin represents
Mattel’s Adjusted Operating Income, as a percentage of Net Sales.
Adjusted Operating Income and Adjusted Operating 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, and the impact of a
valuation allowance on foreign deferred tax assets, 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, and the impact of sale of
assets, 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
Provision for Income Taxes by Adjusted Income Before Income Taxes.
Adjusted Income Before Income Taxes represents reported Income
Before Income Taxes, adjusted to exclude severance and
restructuring expenses, the impact of inclined sleeper product
recalls, and the impact of sale of assets. The Adjusted Provision
for Income Taxes represents reported Provision for Income Taxes,
adjusted to exclude the impact of a valuation allowance on foreign
deferred tax assets and 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 September 30, For the Nine
Months Ended September 30, (In
millions, except per share and percentage information)
2023
2022
% Changeas Reported % Changein ConstantCurrency
2023
2022
% Changeas Reported % Changein ConstantCurrency $
Amt % NetSales $ Amt % NetSales $
Amt % NetSales $ Amt % NetSales Net
Sales
$
1,918.8
$
1,755.8
9%
7%
$
3,820.5
$
4,032.8
-5%
-6%
Cost of Sales
940.9
49.0%
908.9
51.8%
4%
2,027.0
53.1%
2,154.1
53.4%
-6%
Gross Profit
977.9
51.0%
846.9
48.2%
15%
13%
1,793.5
46.9%
1,878.7
46.6%
-5%
-7%
Advertising and Promotion Expenses
124.3
6.5%
127.6
7.3%
-3%
290.3
7.6%
291.5
7.2%
—%
Other Selling and Administrative Expenses
379.8
19.8%
327.9
18.7%
16%
1,081.6
28.3%
990.6
24.6%
9%
Operating Income
473.9
24.7%
391.4
22.3%
21%
17%
421.6
11.0%
596.5
14.8%
-29%
-35%
Interest Expense
30.7
1.6%
33.9
1.9%
-9%
92.5
2.4%
99.7
2.5%
-7%
Interest (Income)
(4.6)
-0.2%
(1.9)
-0.1%
140%
(15.4)
-0.4%
(5.1)
-0.1%
204%
Other Non-Operating (Income) Expense, Net
(2.4)
(4.3)
(6.0)
12.0
Income Before Income Taxes
450.1
23.5%
363.7
20.7%
24%
21%
350.5
9.2%
489.9
12.1%
-28%
-34%
Provision for Income Taxes
309.3
80.0
296.8
130.5
(Income) from Equity Method Investments
(5.6)
(6.2)
(13.3)
(18.4)
Net Income
$
146.3
7.6%
$
289.9
16.5%
-50%
$
67.0
1.8%
$
377.8
9.4%
-82%
Net Income Per Common Share - Basic
$
0.41
$
0.82
$
0.19
$
1.07
Weighted-Average Number of Common Shares
354.1
354.5
354.6
353.4
Net Income Per Common Share - Diluted
$
0.41
$
0.80
$
0.19
$
1.05
Weighted-Average Number of Common and Potential Common Shares
357.5
360.2
358.0
359.7
1 Amounts may not sum due to rounding.
MATTEL, INC. AND
SUBSIDIARIES EXHIBIT II CONDENSED CONSOLIDATED
BALANCE SHEETS1 September 30, December 31,
2023
2022
2022
(In millions)
(Unaudited) Assets Cash and Equivalents
$
455.7
$
349.0
$
761.2
Accounts Receivable, Net
1,571.0
1,381.5
860.2
Inventories
790.5
1,083.8
894.1
Prepaid Expenses and Other Current Assets
224.8
268.9
213.5
Total Current Assets
3,042.1
3,083.2
2,729.0
Property, Plant, and Equipment, Net
457.2
444.4
469.1
Right-of-Use Assets, Net
286.0
323.5
318.7
Goodwill
1,380.0
1,371.0
1,378.6
Other Noncurrent Assets
1,079.2
1,246.1
1,282.3
Total Assets
$
6,244.6
$
6,468.2
$
6,177.7
Liabilities and Stockholders’ Equity Current Portion
of Long-Term Debt
$
—
$
250.0
$
—
Accounts Payable and Accrued Liabilities
1,253.2
1,275.7
1,150.2
Income Taxes Payable
51.4
50.4
37.6
Total Current Liabilities
1,304.6
1,576.1
1,187.7
Long-Term Debt
2,328.9
2,324.5
2,325.6
Noncurrent Lease Liabilities
234.7
279.5
271.4
Other Noncurrent Liabilities
340.9
320.6
336.6
Stockholders’ Equity
2,035.5
1,967.5
2,056.3
Total Liabilities and Stockholders’ Equity
$
6,244.6
$
6,468.2
$
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
September 30,
2023
2022
Key Balance Sheet Data:
Accounts Receivable, Net Days of Sales Outstanding (DSO)
74
71
For the Nine Months Ended September 30,
(In millions)
2023
2022
Condensed Cash Flow Data: Cash
Flows (Used for) Operating Activities
$
(80
)
$
(275
)
Cash Flows (Used for) Investing Activities
(94
)
(97
)
Cash Flows (Used for) Financing Activities and Other
(132
)
(10
)
Decrease in Cash and Equivalents
$
(306
)
$
(382
)
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 September 30, For the Nine Months Ended September
30, (In millions, except percentage
information)
2023
2022
Change
2023
2022
Change Gross Profit
Gross Profit, As Reported
$
977.9
$
846.9
$
1,793.5
$
1,878.7
Gross Margin
51.0%
48.2%
280 bps
46.9%
46.6%
30 bps Adjustments: Severance and Restructuring Expenses
(0.1)
1.4
(1.3)
9.8
Gross Profit, As Adjusted
$
977.9
$
848.2
$
1,792.3
$
1,888.5
Adjusted Gross Margin
51.0%
48.3%
270 bps
46.9%
46.8%
10 bps
Other Selling and
Administrative Expenses Other Selling and Administrative
Expenses, As Reported
$
379.8
$
327.9
16%
$
1,081.6
$
990.6
9%
% of Net Sales
19.8%
18.7%
110 bps
28.3%
24.6%
370 bps Adjustments: Severance and Restructuring Expenses2
(29.3)
(4.5)
(63.0)
(17.1)
Inclined Sleeper Product Recalls
(1.3)
(0.7)
(9.0)
(1.2)
Sale of Assets3
(1.8)
—
(1.8)
15.2
Other Selling and Administrative Expenses, As Adjusted
$
347.5
$
322.7
8%
$
1,007.8
$
987.5
2%
% of Net Sales
18.1%
18.4%
-30 bps
26.4%
24.5%
190 bps
Operating Income
Operating Income, As Reported
$
473.9
$
391.4
21%
$
421.6
$
596.5
-29%
Operating Income Margin
24.7%
22.3%
240 bps
11.0%
14.8%
-380 bps Adjustments: Severance and Restructuring Expenses2
29.2
5.9
61.7
26.9
Inclined Sleeper Product Recalls
1.3
0.7
9.0
1.2
Sale of Assets3
1.8
—
1.8
(15.2)
Operating Income, As Adjusted
$
506.1
$
397.9
27%
$
494.1
$
609.5
-19%
Adjusted Operating Income Margin
26.4%
22.7%
370 bps
12.9%
15.1%
-220 bps 1 Amounts may not sum due to rounding. 2 For the
three and nine months ended September 30, 2023, Mattel recorded
severance and restructuring expenses, which include $25.3 million
of incremental severance expense associated with restructuring
activities to further optimize Mattel’s manufacturing footprint. 3
For the three and nine months ended September 30, 2023, Mattel
recorded a loss on sale of assets of $1.8 million in other selling
and administrative expenses. For the nine months ended September
30, 2022, Mattel recorded a gain on sale of assets of $15.2 million
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 September 30, For the
Nine Months Ended September 30, (In
millions, except per share and percentage information)
2023
2022
Change
2023
2022
Change Earnings Per
Share Net Income Per Common Share, As Reported
$
0.41
$
0.80
-49%
$
0.19
$
1.05
-82%
Adjustments: Severance and Restructuring Expenses2
0.08
0.02
0.17
0.07
Inclined Sleeper Product Recalls
—
—
0.03
—
Sale of Assets3
—
—
—
(0.04)
Valuation Allowance on Foreign Deferred Tax Assets4
0.59
—
0.59
—
Tax Effect of Adjustments5
(0.02)
(0.01)
(0.04)
(0.01)
Net Income Per Common Share, As Adjusted
$
1.08
$
0.82
32%
$
0.94
$
1.08
-13%
EBITDA and Adjusted
EBITDA Net Income, As Reported
$
146.3
$
289.9
-50%
$
67.0
$
377.8
-82%
Adjustments: Interest Expense
30.7
33.9
92.5
99.7
Provision for Income Taxes
309.3
80.0
296.8
130.5
Depreciation
36.0
36.8
104.0
108.4
Amortization
9.6
9.3
28.6
28.3
EBITDA
532.0
449.8
588.9
744.8
Adjustments: Share-Based Compensation
15.5
18.1
52.4
55.9
Severance and Restructuring Expenses2
29.2
4.9
61.7
23.7
Inclined Sleeper Product Recalls
1.3
0.7
9.0
1.2
Sale of Assets3
1.8
—
1.8
(15.2)
Adjusted EBITDA
$
579.7
$
473.4
22%
$
713.8
$
810.6
-12%
Free Cash Flow Net Cash
Flows Used for Operating Activities
$
(79.6)
$
(274.8)
Capital Expenditures
(117.5)
(127.3)
Free Cash Flow
$
(197.2)
$
(402.1)
1 Amounts may not sum due to rounding. 2 For the
three and nine months ended September 30, 2023, Mattel recorded
severance and restructuring expenses, which include $25.3 million
of incremental severance expense associated with restructuring
activities to further optimize Mattel’s manufacturing footprint. 3
For the three and nine months ended September 30, 2023, Mattel
recorded a loss on sale of assets of $1.8 million in other selling
and administrative expenses. For the nine months ended September
30, 2022, Mattel recorded a gain on sale of assets of $15.2 million
in other selling and administrative expenses. 4 For the three and
nine months ended September 30, 2023, the amount includes $212.4
million related to a valuation allowance on foreign deferred tax
assets. 5 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.
MATTEL, INC. AND SUBSIDIARIES EXHIBIT III
SUPPLEMENTAL FINANCIAL INFORMATION (Unaudited)1
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
For the Three Months Ended September 30,
(In millions, except percentage and pts
information)
2023
2022
Change Tax Rate Income
Before Income Taxes, As Reported
$
450.1
$
363.7
Adjustments: Severance and Restructuring Expenses2
29.2
5.9
Inclined Sleeper Product Recalls
1.3
0.7
Sale of Assets3
1.8
—
Income Before Income Taxes, As Adjusted
$
482.3
$
370.3
Provision for Income Taxes, As Reported
$
309.3
$
80.0
Adjustments: Valuation Allowance on Foreign Deferred Tax Assets4
(212.4)
—
Tax Effect of Adjustments5
6.6
1.8
Provision for Income Taxes, As Adjusted
$
103.5
$
81.8
Tax Rate, As Reported
69%
22%
47 pts Tax Rate, As Adjusted
21%
22%
-1 pt
September 30,
2023
2022
Net Debt Long-Term Debt
$
2,328.9
$
2,324.5
Current Portion of Long-Term Debt
—
250.0
Adjustments: Cash and Equivalents
(455.7)
(349.0)
Net Debt
$
1,873.2
$
2,225.5
1 Amounts may not sum due to rounding. 2 For the three
months ended September 30, 2023, Mattel recorded severance and
restructuring expenses, which include $25.3 million of incremental
severance expense associated with restructuring activities to
further optimize Mattel’s manufacturing footprint. 3 For the three
months ended September 30, 2023, Mattel recorded a loss on sale of
assets of $1.8 million in other selling and administrative
expenses. 4 For the three months ended September 30, 2023, the
amount includes $212.4 million related to a valuation allowance on
foreign deferred tax assets. 5 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 September 30, (In
millions, except percentage and pts information)
2023
2022
Change Leverage Ratio (Total
Debt/Adjusted EBITDA) Total
Debt Long-Term Debt
$
2,328.9
$
2,324.5
Current Portion of Long-Term Debt
—
250.0
Adjustments: Debt Issuance Costs and Debt Discount
21.1
25.5
Total Debt
$
2,350.0
$
2,600.0
EBITDA and Adjusted EBITDA Net Income,
As Reported
$
83.2
$
603.6
-86%
Adjustments: Interest Expense
125.6
133.0
Provision for Income Taxes
302.1
126.0
Depreciation
140.2
145.9
Amortization
38.1
37.8
EBITDA
689.1
1,046.2
Adjustments: Share-Based Compensation
65.6
69.5
Severance and Restructuring Expenses
70.6
29.5
Inclined Sleeper Product Recalls
7.5
1.4
Sale of Assets
(6.6)
(15.2)
Loss on Liquidation of Argentina Subsidiary
45.4
—
Adjusted EBITDA
$
871.6
$
1,131.5
-23%
Total Debt / Net Income 28.3x 4.3x Leverage Ratio (Total
Debt / Adjusted EBITDA) 2.7x 2.3x
Free Cash Flow Net Cash Flows Provided by
Operating Activities
$
638.0
$
466.6
37%
Capital Expenditures
(176.7)
(163.5)
Free Cash Flow
$
461.3
$
303.1
52%
Net Cash Flows Provided by Operating Activities / Net Income
767%
77%
690 pts Free Cash Flow Conversion (Free Cash Flow/Adjusted EBITDA)
53%
27%
26 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 EndedDecember 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 Assets2
(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 Assets2
(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 EndedDecember 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 Assets2
(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 September 30, For the Nine Months Ended September
30,
2023
2022
% Changeas Reported % Changein ConstantCurrency
2023
2022
% Changeas Reported % Changein ConstantCurrency
(In millions, except percentage information) Worldwide Net Sales: Net Sales
$
1,918.8
$
1,755.8
9
%
7
%
$
3,820.5
$
4,032.8
-5
%
-6
%
Worldwide Gross Billings by
Categories: Dolls
$
884.5
$
697.2
27
%
24
%
$
1,631.1
$
1,494.6
9
%
8
%
Infant, Toddler, and Preschool
361.1
370.1
-2
-5
708.6
850.3
-17
-18
Vehicles
518.5
437.9
18
15
1,165.9
1,048.3
11
10
Action Figures, Building Sets, Games, and Other
357.7
442.9
-19
-21
755.0
1,095.5
-31
-32
Gross Billings
$
2,121.8
$
1,948.0
9
%
6
%
$
4,260.6
$
4,488.7
-5
%
-6
%
Supplemental Gross Billings
Disclosure Worldwide
Gross Billings by Top 3 Power Brands: Barbie
$
605.1
$
519.6
16
%
14
%
$
1,064.7
$
1,118.4
-5
%
-6
%
Hot Wheels
454.8
371.6
22
19
1,014.9
899.5
13
11
Fisher-Price
317.0
319.0
-1
-3
607.3
719.1
-16
-17
Other
744.9
737.9
1
-2
1,573.7
1,751.6
-10
-11
Gross Billings
$
2,121.8
$
1,948.0
9
%
6
%
$
4,260.6
$
4,488.7
-5
%
-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.
MATTEL, INC. AND SUBSIDIARIES EXHIBIT V NET
SALES AND GROSS BILLINGS1 BY SEGMENT (Unaudited)2 For
the Three Months Ended September 30, For the Nine Months
Ended September 30,
2023
2022
% Changeas Reported % Changein ConstantCurrency
2023
2022
% Changeas Reported % Changein ConstantCurrency
(In millions, except percentage information) North America Net Sales: Net Sales
$
1,104.4
$
1,002.1
10
%
10
%
$
2,138.2
$
2,330.8
-8
%
-8
%
North America Gross Billings by
Categories: Dolls
$
468.5
$
342.9
37
%
37
%
$
812.3
$
715.8
13
%
14
%
Infant, Toddler, and Preschool
230.6
239.8
-4
-4
437.7
549.6
-20
-20
Vehicles
263.4
226.3
16
17
579.1
550.7
5
5
Action Figures, Building Sets, Games, and Other
214.1
258.7
-17
-17
453.4
668.3
-32
-32
Gross Billings
$
1,176.6
$
1,067.8
10
%
10
%
$
2,282.5
$
2,484.4
-8
%
-8
%
Supplemental Gross Billings
Disclosure North America
Gross Billings by Top 3 Power Brands: Barbie
$
349.9
$
278.5
26
%
26
%
$
587.6
$
599.2
-2
%
-2
%
Hot Wheels
225.7
184.1
23
23
492.3
458.4
7
8
Fisher-Price
204.8
206.4
-1
-1
380.9
469.2
-19
-19
Other
396.2
398.8
-1
-1
821.8
957.6
-14
-14
Gross Billings
$
1,176.6
$
1,067.8
10
%
10
%
$
2,282.5
$
2,484.4
-8
%
-8
%
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 September 30, For the Nine
Months Ended September 30,
2023
2022
% Changeas Reported % Changein ConstantCurrency
2023
2022
% Changeas Reported % Changein ConstantCurrency
(In millions, except percentage information) International Net Sales by Geographic Area:
EMEA
$
423.9
$
410.2
3
%
-2
%
$
875.0
$
958.8
-9
%
-10
%
Latin America
262.1
221.8
18
5
475.6
418.5
14
3
Asia Pacific
85.8
72.6
18
22
228.0
207.5
10
15
Net Sales
$
771.8
$
704.6
10
%
3
%
$
1,578.6
$
1,584.9
—
%
-3
%
International Gross Billings by
Geographic Area: EMEA
$
499.2
$
486.7
3
%
-2
%
$
1,054.9
$
1,155.3
-9
%
-10
%
Latin America
304.4
257.4
18
5
552.9
485.2
14
4
Asia Pacific
97.3
85.4
14
18
263.5
243.4
8
13
Gross Billings
$
900.9
$
829.5
9
%
2
%
$
1,871.3
$
1,883.9
-1
%
-3
%
International Gross Billings by
Categories: Dolls
$
371.7
$
303.5
22
%
15
%
$
712.0
$
658.3
8
%
5
%
Infant, Toddler, and Preschool
130.5
130.3
─
-8
270.9
300.6
-10
-13
Vehicles
255.0
211.6
21
13
586.8
497.6
18
15
Action Figures, Building Sets, Games, and Other
143.6
184.2
-22
-27
301.7
427.3
-29
-32
Gross Billings
$
900.9
$
829.5
9
%
2
%
$
1,871.3
$
1,883.9
-1
%
-3
%
Supplemental Gross Billings
Disclosure International
Gross Billings by Top 3 Power Brands: Barbie
$
255.2
$
241.1
6
%
—
%
$
477.1
$
519.3
-8
%
-10
%
Hot Wheels
229.1
187.5
22
15
522.6
441.1
18
15
Fisher-Price
112.2
112.6
─
-8
226.4
249.9
-9
-13
Other
304.4
288.3
6
-1
645.1
673.6
-4
-7
Gross Billings
$
900.9
$
829.5
9
%
2
%
$
1,871.3
$
1,883.9
-1
%
-3
%
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 September 30, For the
Nine Months Ended September 30,
2023
2022
% Changeas Reported % Changein ConstantCurrency
2023
2022
% Changeas Reported % Changein ConstantCurrency
(In millions, except percentage information) American Girl Net Sales: Net Sales
$
42.6
$
49.0
-13%
-13%
$
103.7
$
117.1
-11%
-11%
American Girl Gross
Billings: Gross Billings
$
44.3
$
50.7
-13%
-13%
$
106.8
$
120.5
-11%
-11%
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20231025241289/en/
News Media Catherine Frymark
catherine.frymark@mattel.com
Securities Analysts David Zbojniewicz
david.zbojniewicz@mattel.com
Mattel (NASDAQ:MAT)
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