Mattel, Inc. · NASDAQ:MAT
Mattel — Q4 2022 Earnings Presentation
36 slides from Mattel's earnings presentation, Feb 8, 2023
Slide 1: Fourth Quarter 2022 Earnings
Fourth Quarter 2022 Earnings (Unaudited Results) February 8, 2023
Slide 2: Cautionary Note Regarding Forward-Looking Statements / Presentation Information
Cautionary Note Regarding Forward-Looking Statements / Presentation Information Mattel cautions the viewer that this presentation 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 ide
Slide 3: Mattel, Inc. Who We Are
Mattel, Inc. Who We Are 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 engage consumers through our portfolio of iconic brands, as well as other popular intellectual properties that we own or licens
Slide 4: Q4 and FY 2022 Chairman and CEO Perspective
Q4 and FY 2022 Chairman and CEO Perspective Results below our expectations as the macro-economic environment was more challenging than anticipated POS1 grew in the quarter, including double digit growth in December, but it came later than expected and was not enough to offset lower than anticipated
Slide 5: Q4 and FY 2022 Chairman and CEO Perspective (continued)
Q4 and FY 2022 Chairman and CEO Perspective (continued) Mattel outpaced industry and gained market share in the fourth quarter, per NPD1 Fourth quarter: - Net Sales declined 22%, or 19% in constant currency - Adjusted EPS2 declined by $0.35 to $0.18 - Adjusted EBITDA declined by $163 million to $158
Slide 6: Industry Overview
Industry Overview The toy industry continued to show its resilience +22% Following two years of double-digit growth and a record year in 2021, the toy industry finished flat compared to the prior year and up 22% compared to 2019, prior to the pandemic, per NPD1 We believe the toy industry is a growt
Slide 7: Gross Billings and POS
Gross Billings and POS 1 2 Q4 POS significantly outpaced Gross Billings; Positive POS for full year Fourth quarter: - Dolls, ITPS, and our Challenger categories Gross Billings down significantly as retailers reduced replenishment orders - Vehicles Gross Billings up strongly - POS was positive for Do
Slide 8: Mattel's Strategy
Mattel’s Strategy Grow IP-Driven Toy Business and Expand Entertainment Offering TOYS ENTERTAINMENT ACCELERATE INCREASE CAPTURE TOPLINE PROFITABILITY FULL VALUE OF IP EXPAND SCALE GROW ADVANCE OPTIMIZE CONTENT, CONSUMER PORTFOLIO FRANCHISE E-COMMERCE OPERATIONS PRODUCTS AND DIGITAL BRANDS AND DTC EXP
Slide 9: Mattel Guidance
Mattel Guidance Continue to see a period of volatility and macro-economic challenges impacting the consumer Expect full year Net Sales in constant currency1 to be comparable to 2022 and for Adjusted EBITDA1 to be in the range of $900-to-$950 million Aim to outpace the toy industry and gain market sh
Slide 10: Financial Review
Q4 and FY 2022 Earnings Financial Review ©2023 Mattel, Inc. All Rights Reserved. 10
Slide 11: Q4 and FY 2022 P&L Highlights
Q4 and FY 2022 P&L Highlights Fourth quarter performance was below expectations Q4 YOY FY YOY (in millions, Q4 2022 FY 2022 except EPS, percentages and bps)1 Change Change Net Sales $1,402 -22% - $5,435 Constant Currency -19% +3% Adjusted Gross Margin1 43.1% -620 bps 45.9% -230 bps Adjusted Operatin
Slide 12: Q4 and FY 2022 Gross Billings by Category
Q4 and FY 2022 Gross Billings by Category 1 POS2 increased mid-single digits in Q4 and low-single digits for the full year Q4 YOY Growth Rate (%) FY YOY Growth Rate (%) As Constant As Constant Reported Currency Reported Currency -27% -24% -9% -6% 6% 10% 16% 20% -33% -31% -8% -6% -26% -22% 7% 10% Tot
Slide 13: Q4 and FY 2022 Gross Billings by Region
Q4 and FY 2022 Gross Billings by Region 1 Full year Gross Billings and POS2 growth across all regions Q4 YOY Growth Rate (%) FY YOY Growth Rate (%) As Constant As Constant Reported Currency Reported Currency -25% -25% 1% 1% -25% -16% -5% 5% -7% -8% 14% 14% -14% -5% -6% 1% Mattel outpaced the industr
Slide 14: Q4 2022 Adjusted Gross Margin Comparison
Q4 2022 Adjusted Gross Margin1 Comparison Margin significantly impacted by inventory management and inflation -620bps 49.3% 3.5% 1.7% 43.1% 3.3% 2.2% 1.8% 1.4% Price increases and cost savings mitigated margin pressures (1) Amounts may not foot due to rounding. Please see Appendix – Reconciliation o
Slide 15: Q4 2022 Advertising and Adjusted SG&A
Q4 2022 Advertising and Adjusted SG&A 1 Advertising and Adjusted SG&A expenses declined -$23 -$73 Effectively managing cost structure (1) Please see Appendix – Reconciliation of Non-GAAP Financial Measures and Glossary of Non-GAAP Financial Measures & Key Performance Indicator ©2023 Mattel, Inc. All
Slide 16: Q4 2022 Adjusted Operating Income and Adjusted EBITDA
Q4 2022 Adjusted Operating Income and Adjusted EBITDA 1 1 Decline primarily due to lower sales and margin, partly offset by lower Advertising and Adjusted SG&A1 -$163 -$185 Full Year Adjusted EBITDA of $968 million (1) Please see Appendix – Reconciliation of Non-GAAP Financial Measures and Glossary
Slide 17: FY 2022 Cash Flow
FY 2022 Cash Flow Cash from Operations declined primarily due to higher working capital usage, partly offset by changes in net income, excluding the impact of non-cash items (in millions)1 FY 2022 FY 2021 Net Income $394 $903 Valuation Allowances - ($541) Depreciation & Amortization $182 $184 Share-
Slide 18: Q4 2022 Balance Sheet Highlights
Q4 2022 Balance Sheet Highlights Redeemed the $250 million 3.15% notes due March 2023; reduced total debt (in millions) Q4 2022 Q4 2021 Cash $761 $731 Total Debt $2,326 $2,571 Accounts Receivable $860 $1,073 Inventory $894 $777 Leverage Ratio (Total Debt / Adj. EBITDA)1 2.4x 2.6x Continued to improv
Slide 19: Optimizing For Growth
Optimizing For Growth Full year savings of $106 million, exceeding prior forecast Cumulative Savings $300 $300 A&P 2023 ~10% Program to date savings of $204 million $106 SG&A 2023 expected savings now $96 million ~30% 2022 $97 Total estimated cash expenditures of COGS $135 - $165 million by 2023 202
Slide 20: 2023 Guidance
2023 Guidance Retail inventory reductions expected to have a negative impact of 3-4% on topline (in millions, FY2023 FY2022 except EPS and percentages) Guidance Actual Net Sales Comparable $5,435 (Constant Currency1) Adjusted Gross Margin1 ~ 47% 45.9% Adjusted EPS1 $1.10 - $1.20 $1.25 Adjusted EBITD
Slide 21: Q4 and FY 2022 Closing
Q4 and FY 2022 Closing “Our fourth quarter results were below our expectations, as the macro-economic environment was more challenging than anticipated. While less than expected, POS grew in the quarter and the full year, and we achieved growth in net sales in constant currency for the fourth consec
Slide 22: One of the strongest catalogs of children's and family entertainment franchises
Q4 and FY 2022 Earnings Call One of the strongest catalogs of children’s and family entertainment franchises in the world ©2023 Mattel, Inc. All Rights Reserved. 22
Slide 23: Appendix
Appendix 23
Slide 24: Consolidated Statements of Operations
Consolidated Statements of Operations ©2023 Mattel, Inc. All Rights Reserved. 24
Slide 25: Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets ©2023 Mattel, Inc. All Rights Reserved. 25
Slide 26: Supplemental Balance Sheet and Cash Flow Data
Supplemental Balance Sheet and Cash Flow Data ©2023 Mattel, Inc. All Rights Reserved. 26
Slide 27: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures ©2023 Mattel, Inc. All Rights Reserved. 27
Slide 28: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures ©2023 Mattel, Inc. All Rights Reserved. 28
Slide 29: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures ©2023 Mattel, Inc. All Rights Reserved. 29
Slide 30: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures ©2023 Mattel, Inc. All Rights Reserved. 30
Slide 31: Worldwide Net Sales and Gross Billings
Worldwide Net Sales and Gross Billings ©2023 Mattel, Inc. All Rights Reserved. 31
Slide 32: Net Sales and Gross Billings by Segment
Net Sales and Gross Billings by Segment ©2023 Mattel, Inc. All Rights Reserved. 32
Slide 33: Net Sales and Gross Billings by Segment
Net Sales and Gross Billings by Segment ©2023 Mattel, Inc. All Rights Reserved. 33
Slide 34: Net Sales and Gross Billings by Segment
Net Sales and Gross Billings by Segment ©2023 Mattel, Inc. All Rights Reserved. 34
Slide 35: Glossary of Non-GAAP Financial Measures & Key Performance Indicator
Glossary of Non-GAAP Financial Measures & Key Performance Indicator 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 mean
Slide 36: Glossary of Non-GAAP Financial Measures & Key Performance Indicator
Glossary of Non-GAAP Financial Measures & Key Performance Indicator NON-GAAP FINANCIAL MEASURES 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