Mattel Posts Slight Q4 Profit, Sales Decline 3%

mattel licensing intenational

EL SEGUNDO, CA –  Mattel sales fell 3% in Q4,  as growth of Barbie dolls, Hot Wheels cars and “Toy Story 4” toys were offset by ongoing declines for Fisher-Price and American Girl products.

The company has been relying on the growth in Barbie and Hot Wheels to offset an extended slump in other parts of its portfolio, including lower sales of Jurassic World-related products. This trend  continued into the latest holiday season, where there was a shorter shopping season as the industry adjusted to a second year without Toys R Us.  Mattel ended the year with flat revenue after five straight years of declines and it increased its market share in the toy industry, where overall sales fell 4% last year,  NPD reported.

Mattel posted a $200,000 profit in Q4 compared with a profit of $9.6 million a year earlier. Revenue was $1.47 billion, compared with $1.52 billion a year ago. Analysts were expecting revenue of about $1.5 billion. Sales fell 3% in North America but were flat in the International division. Mattel’s 11-cent profit in Q4, beat analyst forecasts for nine cents.

Ynon Kreiz, Chairman and CEO, Mattel said: “2019 was an important inflection point in our turnaround. We stabilized our topline after five consecutive years of revenue decline, continued to significantly improve profitability, and achieved positive operating cash flow and positive free cash flow for the first time in three years. We are very encouraged by the consistent progress the company is making and expect to continue to build on this momentum. We remain focused on the execution of our multi-year turnaround strategy to transform Mattel into an IP-driven, high-performing toy company and create long term shareholder value.”

Joseph Euteneuer, CFO, Mattel said: “In 2019, our methodical execution of our strategy to restore profitability generated significant improvements across key metrics, including margins, operating income, EBITDA, and cash flows. We are extremely pleased with our results to date and are very proud of the efforts made by the Mattel team.”

For the year, Net Sales were flat as reported including the negative foreign exchange impact of $75 million, and up 1% in constant currency, versus the prior year. Gross Sales were flat as reported including the negative foreign exchange impact of $92 million, and up 2% in constant currency. Reported Operating Income was $39.2 million, an improvement of $273.6 million, and Adjusted Operating Income was $156.2 million, an improvement of $269.3 million. Reported Loss Per Share was $0.62, an improvement of $0.93, and Adjusted Loss Per Share was $0.30, an improvement of $0.85.

For the fourth quarter, Net Sales were down 3% as reported including the negative foreign exchange impact of $9 million, and down 3% in constant currency, versus the prior year’s fourth quarter. Gross Sales were down 3% as reported including the negative foreign exchange impact of $12 million, and down 2% in constant currency. Reported Operating Income was $67.6 million, a decline of $38.0 million, and Adjusted Operating Income was $109.3 million, a decline of $2.2 million. Reported Earnings Per Share was $0.00, a decline of $0.03, and Adjusted Earnings Per Share was $0.11, an improvement of $0.08.

Financial Overview

Full Year 2019

Net Sales in the North America segment were flat as reported and in constant currency, versus the prior year.

Gross Sales in the North America segment were flat as reported, and up 1% in constant currency, primarily driven by growth in Vehicles (including Hot Wheels® partially offset by lower sales of Jurassic World® and CARS® vehicles), Dolls (including Barbie® partially offset by lower sales of Enchantimals™) and Action Figures, Building Sets and Games (including Toy Story 4 and MEGA™ partially offset by lower sales of Jurassic World). This growth was partially offset by a decline in Infant, Toddler and Preschool (including Fisher-Price Friends, and Power Wheels®).

Net Sales in the International segment increased 3% as reported, and 7% in constant currency.

Gross Sales in the International segment increased 2% as reported and 6% in constant currency, driven by growth in Dolls (including Barbie and Polly Pocket®), Vehicles (including Hot Wheels partially offset by lower sales of CARS and Jurassic World vehicles), and Action Figures, Building Sets and Games (including Toy Story 4 partially offset by lower sales of Jurassic World). This growth was partially offset by a decline in Infant, Toddler and Preschool (including Fisher-Price and Thomas & Friends®, and Fisher-Price Friends).

Net Sales in the American Girl® segment decreased by 21% as reported, and in constant currency. Gross Sales in the American Girl segment decreased by 21% as reported, and in constant currency, primarily driven by lower sales in retail stores.

Reported Gross Margin increased to 44.0%, versus 39.8% in the prior year, and Adjusted Gross Margin increased to 44.9%, versus 40.1%. The increase in Reported and Adjusted Gross Margin was primarily driven by savings from our Structural Simplification program.

Reported Other Selling and Administrative Expenses decreased by $118.7 million, or 8%, to $1,390.0 million. Adjusted Other Selling and Administrative Expenses decreased by $85.6 million, or 6%, to $1,313.4 million. The decrease in Reported and Adjusted Other Selling and Administrative Expenses was primarily driven by savings from our Structural Simplification program.

For the twelve months ended December 31, 2019, Cash Flows provided by Operating Activities improved by $208 million to $181 million, primarily driven by a lower net loss, excluding the impact of non-cash charges. Cash Flows Used for Investing Activities decreased by $47 million to $114 million, primarily driven by lower capital spending. Cash Flows Used for Financing Activities and Other decreased by $266 million to $31 million, primarily driven by net repayments of long-term borrowings of $278 million in 2018.

Fourth Quarter 2019

Net Sales in the North America segment decreased 3% as reported and in constant currency, versus the prior year’s fourth quarter.

Gross Sales in the North America segment decreased 1% as reported, and in constant currency, primarily driven by a decline in Dolls (including Barbie and owned brands) and Infant, Toddler and Preschool (including Fisher-Price Friends, and Fisher-Price and Thomas & Friends). This was partially offset by growth in Vehicles (including Hot Wheels partially offset by lower sales of CARS and Jurassic World vehicles), and Action Figures, Building Sets and Games (including Toy Story 4 and UNO® partially offset by lower sales of Jurassic World).

Net Sales in the International segment were flat as reported, and up 1% in constant currency.

Gross Sales in the International segment decreased 1% as reported and were flat in constant currency, driven by a decline in Infant, Toddler and Preschool (including Fisher-Price Friends, and Fisher-Price and Thomas & Friends) and Vehicles (including CARS and Jurassic World vehicles partially offset by growth in Hot Wheels). The decrease was partially offset by growth in Dolls (including Barbie partially offset by owned brands), and Action Figures, Building Sets and Games (including Toy Story 4 partially offset by lower sales of Jurassic World).

Net Sales in the American Girl segment decreased by 20% as reported, and in constant currency. Gross Sales in the American Girl segment decreased by 19% as reported, and in constant currency, primarily driven by lower sales in retail stores.

Reported Gross Margin increased to 48.4%, versus 46.6% in the prior year’s fourth quarter, and Adjusted Gross Margin increased to 48.9%, versus 46.6%. The increase in Reported and Adjusted Gross Margin was primarily driven by savings from our Structural Simplification program.

Reported Other Selling and Administrative Expenses increased by $20.2 million, or 5%, to $418.4 million. Adjusted Other Selling and Administrative Expenses decreased by $8.5 million, or 2%, to $383.8 million. The increase in Reported Other Selling and Administrative Expenses was primarily driven by asset impairment expenses partially offset by savings from our Structural Simplification program. The decrease in Adjusted Other Selling and Administrative Expenses was primarily driven by savings from our Structural Simplification program.

Sales by Categories

Full Year 2019

For the year, Worldwide Gross Sales for Dolls were $1,724.0 million, flat as reported, and up 2% in constant currency, versus the prior year, driven by growth in Barbie partially offset by a decline in American Girl.

Worldwide Gross Sales for Infant, Toddler and Preschool were $1,257.6 million, down 11% as reported, and down 10% in constant currency, driven by declines in Fisher-Price Friends, and Fisher-Price and Thomas & Friends.

Worldwide Gross Sales for Vehicles were $1,101.3 million, up 3% as reported, and up 6% in constant currency, driven by growth in Hot Wheels partially offset by a decline in CARS and Jurassic World vehicles.

Worldwide Gross Sales for Action Figures, Building Sets and Games were $981.6 million, up 14% as reported, and up 15% in constant currency, driven by Toy Story 4 partially offset by a decline in Jurassic World.

Fourth Quarter 2019

For the fourth quarter, Worldwide Gross Sales for Dolls were $630.1 million, down 6% as reported, and down 5% in constant currency, versus the prior year’s fourth quarter, primarily driven by a decline in American Girl partially offset by growth in Barbie.

Worldwide Gross Sales for Infant, Toddler and Preschool were $381.1 million, down 9% as reported and in constant currency, driven by declines in Fisher-Price Friends, and Fisher-Price and Thomas & Friends.

Worldwide Gross Sales for Vehicles were $356.9 million, up 1% as reported in constant currency, primarily driven by growth in Hot Wheels partially offset by a decline in CARS vehicles.

Worldwide Gross Sales for Action Figures, Building Sets and Games were $297.2 million, up 9% as reported and up 10% in constant currency, primarily driven by Toy Story 4, UNO and MEGA partially offset by a decline in Jurassic World.

Conference Call and Live Webcast

At 5:00 p.m. (Eastern Time) today, Mattel will host a conference call with investors and financial analysts to discuss its 2019 full year and fourth quarter financial results. The conference call will be webcast on Mattel’s Investor Relations website, https://mattel.gcs-web.com/. To listen to the live call, log on to the website at least 10 minutes early to register, download and install any necessary audio software. An archive of the webcast will be available on Mattel’s Investor Relations website for 90 days and may be accessed beginning approximately two hours after the completion of the live call. A telephonic replay of the call will be available beginning at 8:30 p.m. Eastern time the evening of the call until Thursday, February 20, 2020 and may be accessed by dialing +1-404-537-3406. The passcode is 5764607.

Non-GAAP Financial Measures

To supplement our financial results presented in accordance with generally accepted accounting principles in the United States (“GAAP”), Mattel presents certain non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. The non-GAAP financial measures that Mattel uses in this earnings release include Gross Sales, Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Other Selling and Administrative Expenses, Adjusted Operating Income (Loss), Adjusted Earnings (Loss) Per Share, earnings before interest expense, taxes, depreciation and amortization (“EBITDA”), Adjusted EBITDA, Free Cash Flow, and constant currency. Mattel uses these metrics to analyze its continuing operations and to monitor, assess and identify meaningful trends in its operating and financial performance, and each is discussed in detail 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 the Company’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://mattel.gcs-web.com/, under the subheading “Financial Information – Earnings Releases.”

Gross Sales

Gross Sales represent sales to customers, excluding the impact of Sales Adjustments. Net Sales, as reported, include the impact of Sales Adjustments, such as trade discounts and other allowances. Mattel presents changes in Gross Sales as a metric for comparing its aggregate, categorical, brand and geographic results to highlight significant trends in Mattel’s business. Changes in Gross Sales 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 brands and individual products, making Net Sales less meaningful. Since Sales Adjustments are determined by customer rather than at the brand level, Mattel believes that the disclosure of Gross Sales by categories and brand is useful supplemental information for investors to be able to assess the performance of its underlying brands (e.g., Barbie) and also enhances their ability to compare sales trends over time.

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 asset impairments, severance and restructuring expenses and the impact of the inclined sleeper product recalls. 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 asset impairments, non-recurring executive compensation, severance and restructuring expenses, the impact of the inclined sleeper product recalls, and sale of assets, which are not part of Mattel’s core business. Adjusted Other Selling and Administrative Expenses is presented to provide additional perspective on underlying trends in Mattel’s core other selling and administrative expenses, which Mattel believes is useful supplemental information for investors to be able to gauge and compare Mattel’s current business performance from one period to another.

Adjusted Operating Income (Loss)

Adjusted Operating Income (Loss) represents Mattel’s reported Operating Income (Loss), adjusted to exclude the impact of asset impairments, non-recurring executive compensation, severance and restructuring expenses, sale of assets, and the impact of the inclined sleeper product recalls, which are not part of Mattel’s core business. Adjusted Operating Income (Loss) is presented to provide additional perspective on underlying trends in Mattel’s core operating results, which Mattel believes is useful supplemental information for investors to be able to gauge and compare Mattel’s current business performance from one period to another.

Adjusted Earnings (Loss) Per Share

Adjusted Earnings (Loss) Per Share represents Mattel’s Reported Diluted Earnings (Loss) Per Common Share, adjusted to exclude the impact of asset impairments, severance and restructuring expenses, and the impact of the inclined sleeper product recalls, which are not part of Mattel’s core business. The aggregate tax effect of the adjustments is calculated by tax effecting the adjustments by the current effective tax rate, adjusting for certain discrete tax items, and dividing by the reported weighted average number of common shares. Adjusted Earnings (Loss) Per Share is presented to provide additional perspective on underlying trends in Mattel’s core business. Mattel believes it is useful supplemental information for investors to gauge and compare Mattel’s current earnings results from one period to another. Adjusted Earnings (Loss) Per Share is a performance measure and should not be used as a measure of liquidity.

EBITDA and Adjusted EBITDA

EBITDA represents Mattel’s Net Income (Loss), adjusted to exclude the impact of interest expense, taxes, depreciation and amortization. Adjusted EBITDA represents EBITDA adjusted to exclude the impact of asset impairments, share-based compensation, severance and restructuring expenses, sale of assets, and the impact of the inclined sleeper product recalls, 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 our industry with similar capital structures. The presentation of Adjusted EBITDA differs from how we will calculate EBITDA for purposes of covenant compliance under the indenture governing our 6.75% senior notes due 2025, the indenture governing our 5.875% senior notes due 2027, and the syndicated facility agreement governing our senior secured revolving credit facilities. Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business. As a result, we rely primarily on our GAAP results and use EBITDA and Adjusted EBITDA only supplementally.

Free Cash Flow

Free cash flow represents Mattel’s net cash flows from operating activities less capital expenditures. Mattel believes free cash flow is 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 expenditure.

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.

About Mattel

Mattel is a leading global children’s entertainment company that specializes in design and production of quality toys and consumer products. We create innovative products and experiences that inspire, entertain and develop children through play. We engage consumers through our portfolio of iconic franchises, including Barbie®, Hot Wheels®, American Girl®, Fisher-Price®, Thomas & Friends® and MEGA®, as well as other popular brands that we own or license in partnership with global entertainment companies. Our offerings include film and television content, gaming, music and live events. We operate in 40 locations and sell products in more than 150 countries in collaboration with the world’s leading retail and technology companies. Since its founding in 1945, Mattel is proud to be a trusted partner in exploring the wonder of childhood and empowering kids to reach their full potential.

MATTEL, INC. AND SUBSIDIARIES EXHIBIT I

 

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)1 

 

For the Three Months Ended December 31, For the Year Ended December 31,
2019 2018
% Change
as
Reported

% Change in Constant
Currency
2019 2018
% Change
as
Reported

% Change in Constant
Currency
(In millions, except per share and
percentage information)
$ Amt % Net
Sales
$ Amt % Net
Sales
$ Amt % Net
Sales
$ Amt % Net
Sales
Net Sales $ 1,473.7 $ 1,524.3 -3  % -3  % $ 4,504.6 $ 4,514.8  % 1  %
Cost of sales 760.5 51.6  % 814.7 53.4  % -7  % 2,523.8 56.0  % 2,716.1 60.2  % -7  %
Gross Profit 713.2 48.4  % 709.6 46.6  % 1  % 1  % 1,980.8 44.0  % 1,798.7 39.8  % 10  % 12  %
Advertising and promotion expenses 227.2 15.4  % 205.8 13.5  % 10  % 551.5 12.2  % 524.3 11.6  % 5  %
Other selling and administrative expenses 418.4 28.4  % 398.2 26.1  % 5  % 1,390.0 30.9  % 1,508.7 33.4  % -8  %
Operating Income (Loss) 67.6 4.6  % 105.6 6.9  % -36  % -33  % 39.2 0.9  % (234.3 ) -5.2  % n/m n/m
Interest expense 60.2 4.1  % 49.2 3.2  % 22  % 201.0 4.5  % 181.9 4.0  % 11  %
Interest (income) (1.5 ) -0.1  % (0.8 ) -0.1  % 85  % (6.2 ) -0.1  % (6.5 ) -0.1  % -5  %
Other non-operating (income) expense, net (0.2 ) 3.0 2.6 7.3
Income (Loss) Before Income Taxes 9.2 0.6  % 54.3 3.6  % -83  % -81  % (158.3 ) -3.5  % (417.1 ) -9.2  % -62  % -65  %
Provision for income taxes 9.0 44.7 55.2 116.2
Net Income (Loss) $ 0.2  % $ 9.6 0.6  % -98  % $ (213.5 ) -4.7  % $ (533.3 ) -11.8  % -60  %
Net Income (Loss) Per Common Share – Basic $0.00 $ 0.03 $ (0.62 ) $ (1.55 )
Weighted average number of common shares 346.7 345.7 346.1 345.0
Net Income (Loss) Per Common Share – Diluted $0.00 $ 0.03 $ (0.62 ) $ (1.55 )
Weighted average number of common and potential common shares 348.3 345.8 346.1 345.0

 

1 Amounts may not foot due to rounding.

n/m – Not Meaningful

 

MATTEL, INC. AND SUBSIDIARIES EXHIBIT II

 

CONDENSED CONSOLIDATED BALANCE SHEETS1

December 31,
2019 2018
(In millions) (Unaudited)
Assets
Cash and equivalents $ 630.0 $ 594.5
Accounts receivable, net 936.4 970.1
Inventories 495.5 542.9
Prepaid expenses and other current assets 186.1 239.7
Total current assets 2,248.0 2,347.2
Property, plant, and equipment, net 550.1 657.6
Right-of-use assets, net2 303.2
Other noncurrent assets 2,223.9 2,233.4
Total Assets $ 5,325.2 $ 5,238.2
Liabilities and Stockholders’ Equity
Short-term borrowings $ $ 4.2
Accounts payable and accrued liabilities2 1,228.9 1,232.2
Income taxes payable 48.0 13.5
Total current liabilities 1,276.9 1,249.9
Long-term debt 2,846.8 2,851.7
Noncurrent lease liabilities2 270.9
Other noncurrent liabilities 439.0 469.7
Total stockholders’ equity 491.7 666.9
Total Liabilities and Stockholders’ Equity $ 5,325.2 $ 5,238.2

SUPPLEMENTAL BALANCE SHEET AND CASH FLOW DATA (Unaudited)1 

December 31,
2019 2018
Key Balance Sheet Data:
Accounts receivable, net days of sales outstanding (DSO) 57 57
For the Year Ended December 31,
(In millions) 2019 2018
Condensed Cash Flow Data:
Cash flows provided by (used for) operating activities $ 181 $ (27 )
Cash flows used for investing activities (114 ) (161 )
Cash flows used for financing activities and other (31 ) (297 )
Increase (decrease) in cash and equivalents $ 36 $ (485 )

 

1 Amounts may not foot due to rounding.

 

2 Mattel adopted ASU 2016-02, Leases (Topic 842), on January 1, 2019 using the modified retrospective transition method. Upon adoption, Mattel recorded a right-of-use asset and lease liability on its balance sheet. Prior periods were not retrospectively adjusted.

 

MATTEL, INC. AND SUBSIDIARIES EXHIBIT III

 

WORLDWIDE GROSS SALES INFORMATION (Unaudited)1 

RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES

 

For the Three Months Ended December 31, For the Year Ended December 31,
2019 2018 % Change
as 
Reported
% Change  in
Constant
Currency
2019 2018 % Change
as 
Reported
% Change  in
Constant
Currency
(In millions, except percentage information)
Worldwide Gross Sales:
Net Sales $ 1,473.7 $ 1,524.3 -3  % -3  % $ 4,504.6 $ 4,514.8  % 1  %
Sales Adjustments2 191.6 190.5 560.0 560.7
Gross Sales $ 1,665.3 $ 1,714.8 -3  % -2  % $ 5,064.6 $ 5,075.5  % 2  %
Worldwide Gross Sales by Categories:3
Dolls $ 630.1 $ 668.5 -6  % -5  % $ 1,724.0 $ 1,730.9  % 2  %
Infant, Toddler and Preschool 381.1 419.7 -9 -9 1,257.6 1,417.8 -11 -10
Vehicles 356.9 355.0 1 1 1,101.3 1,065.5 3 6
Action Figures, Building Sets and Games 297.2 271.5 9 10 981.6 861.3 14 15
Gross Sales $ 1,665.3 $ 1,714.8 -3  % -2  % $ 5,064.6 $ 5,075.5  % 2  %
Supplemental Gross Sales Disclosures
Worldwide Gross Sales by Top 3 Power Brands:
Barbie $ 396.9 $ 390.8 2  % 3  % $ 1,159.8 $ 1,089.0 7  % 9  %
Hot Wheels 306.8 286.8 7 8 925.9 834.1 11 14
Fisher-Price and Thomas & Friends 340.6 352.2 -3 -3 1,131.8 1,185.7 -5 -3
Other 620.9 684.9 -9 -9 1,847.2 1,966.8 -6 -5
Gross Sales $ 1,665.3 $ 1,714.8 -3  % -2  % $ 5,064.6 $ 5,075.5  % 2  %

 

1 Amounts may not foot due to rounding.

 

2 Sales Adjustments are not allocated to individual products. As such, Net Sales are not presented on a categories or brand level.

 

3 Mattel modified its reporting structure for revenues in the first quarter of 2019 to disclose revenues by categories. Refer to Note 23, Segment Information, in the Form 10-Q for additional information.

 

MATTEL, INC. AND SUBSIDIARIES EXHIBIT IV

 

GROSS SALES BY SEGMENT (Unaudited)1 

RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES

 

For the Three Months Ended December 31, For the Year Ended December 31,
2019 2018 % Change
as 
Reported
% Change in
Constant
Currency
2019 2018 % Change
as 
Reported
% Change in
Constant
Currency
(In millions, except percentage information)
North America Segment Gross Sales:
Net Sales $ 689.6 $ 708.3 -3  % -3  % $ 2,275.8 $ 2,272.8  %  %
Sales Adjustments2 45.5 36.2 156.5 149.3
Gross Sales $ 735.1 $ 744.5 -1  % -1  % $ 2,432.3 $ 2,422.1  % 1  %
North America Gross Sales by Categories:3
Dolls $ 211.9 $ 229.7 -8  % -8  % $ 636.2 $ 624.7 2  % 2  %
Infant, Toddler and Preschool 205.1 222.0 -8 -8 730.3 808.2 -10 -10
Vehicles 166.5 154.0 8 8 510.8 488.6 5 5
Action Figures, Building Sets and Games 151.6 138.8 9 9 555.0 500.6 11 11
Gross Sales $ 735.1 $ 744.5 -1  % -1  % $ 2,432.3 $ 2,422.1  % 1  %
Supplemental Gross Sales Disclosures
North America Gross Sales by Top 3 Power Brands:
Barbie $ 189.4 $ 197.3 -4  % -4  % $ 558.3 $ 535.7 4  % 4  %
Hot Wheels 142.6 125.2 14 14 419.0 380.2 10 10
Fisher-Price and Thomas & Friends 178.7 182.4 -2 -2 650.7 665.9 -2 -2
Other 224.5 239.7 -6 -6 804.2 840.3 -4 -4
Gross Sales $ 735.1 $ 744.5 -1  % -1  % $ 2,432.3 $ 2,422.1  % 1  %

 

1 Amounts may not foot due to rounding.

 

2 Sales Adjustments are not allocated to individual products. As such, Net Sales are not presented on a categories or brand level.

 

3 Mattel modified its reporting structure for revenues in the first quarter of 2019 to disclose revenues by categories. Refer to Note 23, Segment Information, in the Form 10-Q for additional information.

 

 

 

 

MATTEL, INC. AND SUBSIDIARIES EXHIBIT V

 

GROSS SALES BY SEGMENT (Unaudited)1 

RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES

 

For the Three Months Ended December 31, For the Year Ended December 31,
2019 2018 % Change
as 
Reported
% Change in
Constant
Currency
2019 2018 % Change
as 
Reported
% Change in
Constant
Currency
(In millions, except percentage information)
Total International Segment Gross Sales:
Net Sales $ 657.2 $ 658.1  % 1  % $ 1,972.2 $ 1,915.2 3  % 7  %
Sales Adjustments2 139.2 146.8 391.6 397.1
Gross Sales $ 796.4 $ 805.0 -1  %  % $ 2,363.8 $ 2,312.2 2  % 6  %
International Segment Gross Sales:
EMEA3
Net Sales $ 353.1 $ 346.4 2  % 4  % $ 1,056.4 $ 1,018.7 4  % 9  %
Sales Adjustments2 80.7 86.8 236.6 233.7
Gross Sales $ 433.8 $ 433.3  % 2  % $ 1,292.9 $ 1,252.4 3  % 8  %
Latin America
Net Sales $ 197.5 $ 206.7 -4  % -3  % $ 565.4 $ 554.1 2  % 5  %
Sales Adjustments2 38.5 35.5 100.7 99.9
Gross Sales $ 236.0 $ 242.2 -3  % -1  % $ 666.1 $ 654.0 2  % 5  %
Asia Pacific3
Net Sales $ 106.6 $ 105.0 2  % 3  % $ 350.4 $ 342.4 2  % 5  %
Sales Adjustments2 20.0 24.5 54.4 63.5
Gross Sales $ 126.6 $ 129.5 -2  % -1  % $ 404.7 $ 405.8  % 3  %
International Gross Sales by Categories:4
Dolls $ 284.4 $ 273.7 4  % 6  % $ 819.4 $ 765.6 7  % 12  %
Infant, Toddler and Preschool 176.0 197.8 -11 -10 527.3 609.6 -13 -10
Vehicles 190.4 201.0 -5 -4 590.5 576.9 2 7
Action Figures, Building Sets and Games 145.6 132.5 10 11 426.5 360.2 18 22
Gross Sales $ 796.4 $ 805.0 -1  %  % $ 2,363.8 $ 2,312.2 2  % 6  %
Supplemental Gross Sales Disclosures
International Gross Sales by Top 3 Power Brands:
Barbie $ 207.6 $ 193.6 7  % 10  % $ 601.4 $ 553.2 9  % 14  %
Hot Wheels 164.3 161.6 2 3 506.9 453.9 12 17
Fisher-Price and Thomas & Friends 162.0 169.8 -5 -4 481.0 519.8 -7 -4
Other 262.6 280.0 -6 -5 774.5 785.4 -1 2
Gross Sales $ 796.4 $ 805.0 -1  %  % $ 2,363.8 $ 2,312.2 2  % 6  %

 

1 Amounts may not foot due to rounding.

 

2 Sales Adjustments are not allocated to individual products. As such, Net Sales are not presented on a categories or brand level.

 

3 Mattel reorganized its regional sales reporting structure in the first quarter of 2019. As a result, the new regions are Europe, the Middle East, and Africa (“EMEA”), Latin America, and Asia Pacific. The Middle East, Africa, Russia, and Turkey were previously included in the Asia Pacific region (previously Global Emerging Markets) and are now included in EMEA (previously Europe). Prior period amounts have been reclassified to conform to the current period presentation.

Mattel modified its reporting structure for revenues in the first quarter of 2019 to disclose revenues by categories. Refer to Note 23, Segment Information, in the Form 10-Q for additional information.

 

MATTEL, INC. AND SUBSIDIARIES EXHIBIT VI

 

 

GROSS SALES BY SEGMENT (Unaudited)1 

RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES

 

For the Three Months Ended December 31, For the Year Ended December 31,
2019 2018 % Change as  Reported % Change in
Constant
Currency
2019 2018 % Change
as 
Reported
% Change in
Constant
Currency
(In millions, except percentage information)
American Girl Segment Gross Sales:
Net Sales $ 126.9 $ 157.8 -20  % -20  % $ 256.6 $ 326.8 -21  % -21  %
Sales Adjustments 6.9 7.5 11.9 14.4
Gross Sales $ 133.8 $ 165.3 -19  % -19  % $ 268.5 $ 341.2 -21  % -21  %

 

Amounts may not foot due to rounding.

 

MATTEL, INC. AND SUBSIDIARIES EXHIBIT VII

 

SUPPLEMENTAL FINANCIAL INFORMATION (Unaudited)1 

RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES

 

 

 

For the Three Months Ended December 31, For the Year Ended

December 31,

(In millions, except per share and percentage information) 20192 20182 20192 20182
Gross Profit
Gross Profit, As Reported $ 713.2 $ 709.6 $ 1,980.8 $ 1,798.7
Gross Margin 48.4 % 46.6 % 44.0 % 39.8 %
  Adjustments:
Asset Impairments 5.8
Severance and Restructuring Expenses3 6.7 18.6 5.7
Inclined Sleeper Product Recalls4 0.4 21.7
Gross Profit, As Adjusted $ 720.3 $ 709.6 $ 2,021.1 $ 1,810.2
Adjusted Gross Margin 48.9 % 46.6 % 44.9 % 40.1 %
Other Selling and Administrative Expenses
Other Selling and Administrative Expenses, As Reported $ 418.4 $ 398.2 $ 1,390.0 $ 1,508.7
% of Net Sales 28.4 % 26.1 % 30.9 % 33.4 %
Adjustments:
Asset Impairments8 (25.9 ) (25.9 ) (6.1 )
Non-recurring Executive Compensation (1.0 )
Severance and Restructuring Expenses3 (6.1 ) (5.9 ) (40.5 ) (104.1 )
Inclined Sleeper Product Recalls4 (2.6 ) (10.3 )
Sale of Assets 1.4
Other Selling and Administrative Expenses, As Adjusted $ 383.8 $ 392.3 $ 1,313.4 $ 1,398.9
% of Net Sales 26.0 % 25.7 % 29.2 % 31.0 %
Operating Income (Loss)
Operating Income (Loss), As Reported $ 67.6 $ 105.6 $ 39.2 $ (234.3 )
Adjustments:
Asset Impairments8 25.9 25.9 11.9
Non-recurring Executive Compensation 1.0
Severance and Restructuring Expenses3 12.7 5.9 59.1 109.8
Inclined Sleeper Product Recalls4 3.1 32.0
Sale of Assets (1.4 )
Operating Income (Loss), As Adjusted $ 109.3 $ 111.5 $ 156.2 $ (113.0 )
Other Information
Toys “R” Us Net Sales Reversal5 $ $ $ $ 29.5
Toys “R” Us Bad Debt Expense, Net5 $ (4.7 ) $ (5.1 ) $ (6.1 ) $ 32.2
Inclined Sleeper Product Recalls4 $ 3.5 $ $ 37.8 $

 

1 Amounts may not foot due to rounding.

 

2 Toys “R” Us Net Sales Reversal and Toys “R” Us Bad Debt Expense, Net are not presented as non-GAAP adjustments for the three months and year ended December 31, 2019 and 2018.

 

3 For the three months ended December 31, 2019, severance and restructuring expenses include $9.8 million related to the Capital Light program of which $6.7 million was recorded to Cost of Sales and $3.1 million was recorded to Other Selling and Administrative Expenses.

For the year ended December 31, 2019, severance and restructuring expenses include $37.6 million related to the Capital Light program of which $18.6 million was recorded to Cost of Sales and $19.0 million was recorded to Other Selling and Administrative Expenses.

4 Mattel recorded an estimated impact of $3.5 million and $37.8 million related to inclined sleeper product recalls for the three months and year ended December 31, 2019, respectively. Of the $37.8 million recorded during the year ended December 31, 2019, $5.8 million was a reduction to Net Sales for estimated retailer returns.

5 As a result of the Toys “R” Us liquidation, Mattel reversed Net Sales for the estimated uncollectible portion of its outstanding receivables originating from first quarter 2018 sales. As such, Gross Profit, As Reported includes the Cost of Sales for the inventory sold to Toys “R” Us but excludes the corresponding Net Sales. Additionally, during 2018, Mattel recorded Bad Debt Expense, Net for the estimated uncollectible portion of its outstanding receivables, net of recoveries and other reductions.

8 For the three months and year ended December 31, 2019, asset impairments represent write-offs of American Girl retail store assets of $25.9 million, which were recorded in other selling and administrative expenses.

 

MATTEL, INC. AND SUBSIDIARIES EXHIBIT VII

 

SUPPLEMENTAL FINANCIAL INFORMATION (Unaudited)1 

RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES

 

 

 

For the Three Months Ended December 31, For the Year Ended

December 31,

(In millions, except per share and percentage information) 20192 20182 20192 20182
Earnings Per Share
Net Income (Loss) Per Common Share, As Reported $0.00 $ 0.03 $ (0.62 ) $ (1.55 )
Adjustments:
Asset Impairments8 0.07 0.07 0.03
Severance and Restructuring Expenses3 0.04 0.02 0.17 0.32
Inclined Sleeper Product Recalls4 0.01 0.09
Tax Effect of Adjustments6 (0.01 ) (0.02 ) (0.01 )
Tax Items7 (0.02 ) 0.05
Net Income (Loss) Per Common Share, As Adjusted $ 0.11 $ 0.03 $ (0.30 ) $ (1.15 )
EBITDA and Adjusted EBITDA
Net Income (Loss), As Reported $ 0.2 $ 9.6 $ (213.5 ) $ (533.3 )
Adjustments:
Interest Expense 60.2 49.2 201.0 181.9
Provision for Income Taxes 9.0 44.7 55.2 116.2
Depreciation 48.2 53.2 204.4 232.8
Amortization 10.0 9.2 40.1 39.1
EBITDA 127.5 165.9 287.3 36.8
Adjustments:
Asset Impairments8 25.9 25.9 11.9
Share-based Compensation 16.8 12.7 56.0 48.9
Severance and Restructuring Expenses3 12.0 5.9 52.0 104.1
Inclined Sleeper Product Recalls4 3.1 32.0
Sale of Assets (1.4 )
Adjusted EBITDA $ 185.2 $ 184.5 $ 453.1 $ 200.2
Free Cash Flow
Net Cash Flows Provided By (Used For) Operating Activities $ 181.0 $ (27.3 )
Capital Expenditures $ (116.4 ) $ (152.4 )
Free Cash Flow $ 64.6 $ (179.7 )

 

1 Amounts may not foot due to rounding.

2 Toys “R” Us Net Sales Reversal and Toys “R” Us Bad Debt Expense, Net are not presented as non-GAAP adjustments for the three months and year ended December 31, 2019 and 2018.

 

3 For the three months ended December 31, 2019, severance and restructuring expenses include $9.8 million related to the Capital Light program of which $6.7 million was recorded to Cost of Sales and $3.1 million was recorded to Other Selling and Administrative Expenses.

For the year ended December 31, 2019, severance and restructuring expenses include $37.6 million related to the Capital Light program of which $18.6 million was recorded to Cost of Sales and $19.0 million was recorded to Other Selling and Administrative Expenses.

4 Mattel recorded an estimated impact of $3.5 million and $37.8 million related to inclined sleeper product recalls for the three months and year ended December 31, 2019, respectively. Of the $37.8 million recorded during the year ended December 31, 2019, $5.8 million was a reduction to Net Sales for estimated retailer returns.

 

6 The aggregate tax effect of the adjustments is calculated by tax effecting the adjustments by the current effective tax rate, and dividing by the reported weighted average number of common and potential common shares. Adjustments for the U.S. and certain International affiliates were not tax effected because of the valuation allowance on deferred tax assets.

For the three months and year ended December 31, 2018, the amount includes a benefit of approximately $6 million and expense of approximately $18 million, respectively, related to the provisional tax for deemed repatriation of accumulated foreign earnings and changes to the indefinite reinvestment assertion made as a result of U.S. Tax Reform.

8 For the three months and year ended December 31, 2019, asset impairments represent write-offs of American Girl retail store assets of $25.9 million, which were recorded in other selling and administrative expenses

Become a Member Today

Learn More

  • Copyright © 2020 Licensing International
  • Translation provided by Google Translate, please pardon any shortcomings