Mattel, Inc. · NASDAQ:MAT
Mattel — Q3 2023 Earnings Presentation
38 slides from Mattel's earnings presentation, Oct 25, 2023
Slide 1: Third Quarter 2023 Earnings
Third Quarter 2023 Earnings (Unaudited Results) October 25, 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: Q3 2023 Chairman and CEO Perspective
Q3 2023 Chairman and CEO Perspective Strong third quarter performance Meaningful sales growth and margin expansion, with very strong free cash flow1 • Net Sales increased 9%, or 7% in constant currency1 • Adjusted Gross Margin1 improved 270 bps to 51.0% • Adjusted EBITDA1 increased 22% to $580 milli
Slide 5: Q3 2023 Chairman and CEO Perspective (continued)
Q3 2023 Chairman and CEO Perspective (continued) Outperforming the industry Following 22% growth in 2019-2022, the global toy industry was down year-to-date and in Q31 We expect the industry to decline mid-single digits for the full year in 2023 As it relates to Mattel, the company is very well posi
Slide 6: 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 7: Mattel's Strategy – Grow IP-driven Toy Business
Mattel’s Strategy – Grow IP-driven Toy Business Accelerating topline and increasing profitability Dolls continued to grow; benefiting from increase in Barbie, Disney Princess and Disney Frozen, and Monster High Vehicles performed exceptionally well, driven by Hot Wheels In ITPS, Fisher-Price decline
Slide 8: Mattel's Strategy – Expand Entertainment Offering
Mattel’s Strategy – Expand Entertainment Offering Break-out quarter for Mattel’s entertainment business Barbie movie became a global cultural phenomenon, breaking numerous box office records, including highest-grossing film of 2023 Premiered new episodes of Monster High and a live-action movie seque
Slide 9: Workplace Culture and Corporate Citizenship
Workplace Culture and Corporate Citizenship Recognized for achievements Forbes World’s Best Employers for third year in a row Seramount’s 100 Best Companies for second year in a row Latest Mattel Citizenship Report published, highlighting progress across three ESG pillars: Sustainable Design and Dev
Slide 10: Financial Review
Q3 2023 Earnings Financial Review ©2023 Mattel, Inc. All Rights Reserved. 10
Slide 11: Q3 2023 P&L Highlights
Q3 2023 P&L Highlights Strong third quarter YOY (in millions, Q3 2023 except EPS and percentages) Change Net Sales $1,919 +9% Constant Currency1 +7% Adjusted Gross Margin1 51.0% +270 bps Adjusted Operating Income1 $506 +$108 Adjusted EPS1 $1.08 +$0.26 Adjusted EBITDA1 $580 +$106 Free Cash Flow1 TTM
Slide 12: Q3 2023 Gross Billings by Category
Q3 2023 Gross Billings by Category 1 Dolls and Vehicles Gross Billings grew double-digits YOY Growth Rate (%) Worldwide Gross Billings As Constant (as reported; $ in millions) Reported Currency 1 Dolls 884 27% 24% Vehicles 518 18% 15% Infant, Toddler, and Preschool 361 -2% -5% Action Figures, Buildi
Slide 13: Q3 2023 Gross Billings by Region
Q3 2023 Gross Billings by Region 1 Strong broad-based regional performance YOY Growth Rate (%) Gross Billings As Constant (as reported; $ in millions) Reported Currency1 North America2 1,177 10% 10% EMEA 499 3% -2% Latin America 304 18% 5% Asia Pacific 97 14% 18% Mattel is well positioned heading in
Slide 14: Q3 2023 Adjusted Gross Margin Comparison
Q3 2023 Adjusted Gross Margin1 Comparison Favorable mix, pricing, cost savings, and cost deflation benefited margin +270bps 0.7% 1.3% 1.4% 51.0% 1.7% 2.4% 48.3% Increasing full-year outlook for Adjusted Gross Margin (1) Amounts may not add due to rounding. Please see Appendix – Reconciliation of Non
Slide 15: Q3 2023 Advertising and Adjusted SG&A
Q3 2023 Advertising and Adjusted SG&A 1 Advertising down slightly, Adjusted SG&A up due to higher compensation Advertising Adj. SG&A (in millions) (in millions) +$25 $347 -$3 $323 $128 $124 n/m n/m Q3'22 Q3'23 Q3'22 Q3'23 Planning for increased advertising in Q4; incentive expected to impact Adjuste
Slide 16: Q3 2023 Adjusted Operating Results
Q3 2023 Adjusted Operating Results Profit increase driven primarily by Net Sales growth and margin expansion Adj. Operating Income1 Adj. EBITDA1 Adj. EPS1 (in millions) (in millions) (in dollars) +$106 +$0.26 +$108 +22% +32% +27% $580 $1.08 $506 $473 $0.82 $398 Q3'22 Q3'23 Q3'22 Q3'23 Q3'22 Q3'23 Ad
Slide 17: YTD 2023 Cash Flow
YTD 2023 Cash Flow Benefiting from improved working capital performance (in millions)1 Q3 2023 Q3 2022 Net Income $67 $378 Valuation Allowance on Def. Taxes $212 - Depreciation & Amortization $133 $137 Share-Based Compensation $52 $56 Other Non-Cash Charges $57 $91 Changes in Working Capital & Other
Slide 18: Q3 2023 Balance Sheet Highlights
Q3 2023 Balance Sheet Highlights Significant progress in reducing owned inventory, down $293 Million (in millions) Q3 2023 Q3 2022 Cash $456 $349 Debt $2,329 $2,574 Accounts Receivable $1,571 $1,382 Inventory $791 $1,084 Leverage Ratio (Total Debt / Adj. EBITDA)1 2.7x 2.3x Leverage ratio expected to
Slide 19: Optimizing For Growth
Optimizing For Growth Q3 2023 savings of $40 million Cumulative Savings $300+ $300+ A&P 2023 ~10% $106 Program to date savings of $297 million SG&A ~30% Total estimated cash expenditures of 2022 $97 $155 - $185 million COGS 2021 ~60% Savings 2021 2022 2023 Allocation in millions On track to exceed $
Slide 20: 2023 Guidance
2023 Guidance Updating full year guidance Updated Prior FY2023 FY2022 (in millions, FY2023 Guidance Actual except EPS and percentages) Guidance Net Sales Comparable Comparable $5,435 (Constant Currency1) (Constant Currency) Adjusted Gross Margin1 47% - 48% ~ 47% 45.9% Adjusted EPS1 $1.15 - $1.25 $1.
Slide 21: Q3 2023 Closing
Q3 2023 Closing “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
Slide 22: One of the strongest catalogs of children's and family entertainment franchises in the world
Q3 2023 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: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures ©2023 Mattel, Inc. All Rights Reserved. 31
Slide 32: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures ©2023 Mattel, Inc. All Rights Reserved. 32
Slide 33: Worldwide Net Sales and Gross Billings
Worldwide Net Sales and Gross Billings ©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: Net Sales and Gross Billings by Segment
Net Sales and Gross Billings by Segment ©2023 Mattel, Inc. All Rights Reserved. 35
Slide 36: Net Sales and Gross Billings by Segment
Net Sales and Gross Billings by Segment ©2023 Mattel, Inc. All Rights Reserved. 36
Slide 37: 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 38: 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