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Mattel Reports Fourth Quarter and Full Year 2023 Financial Results image

Mattel Reports Fourth Quarter and Full Year 2023 Financial Results

Fourth Quarter 2023 Highlights Versus Prior Year

  • Net Sales of $1,621 million, up 16% as reported, or 14% in constant currency
  • Gross Margin of 48.8%, an increase of 580 basis points; Adjusted Gross Margin of 48.8%, an increase of 570 basis points
  • Operating Income of $140 million, an increase of $61 million; Adjusted Operating Income of $147 million, an increase of $68 million
  • Net Income of $147 million, an increase of $131 million
  • Earnings per Share of $0.42 compared to $0.04 per share; Adjusted Earnings per Share of $0.29 compared to $0.18 per share
  • Adjusted EBITDA of $234 million, an increase of $76 million

Full Year 2023 Highlights Versus Prior Year

  • Net Sales of $5,441 million, flat as reported, or down 1% in constant currency
  • Gross Margin of 47.5%, an increase of 180 basis points; Adjusted Gross Margin of 47.5%, an increase of 160 basis points
  • Operating Income of $562 million, a decrease of $114 million; Adjusted Operating Income of $641 million, a decrease of $47 million
  • Net Income of $214 million, which includes a non-cash charge of $161 million relating to changes to certain deferred tax assets, compared to prior year Net Income of $394 million
  • Earnings per Share of $0.60 compared to $1.10 per share; Adjusted Earnings per Share of $1.23 compared to $1.25 per share
  • Adjusted EBITDA of $948 million, a decrease of $21 million
  • Cash Flows Provided by Operating Activities were $870 million, an improvement of $427 million; Free cash flow of $709 million, an increase of $453 million
  • Company announces 2024 guidance
  • Launching Optimizing for Profitable Growth program targeting cost savings of $200 million by 2026
  • Authorized $1 billion share repurchase program, following $203 million of repurchases in 2023

EL SEGUNDO, Calif. – Mattel, Inc. (NASDAQ: MAT) today reported fourth quarter and full year 2023 financial results.

Ynon Kreiz, Chairman and CEO of Mattel, said: “2023 was a milestone year for Mattel. We extended our leadership in our key toy categories and gained significant share overall, achieved extraordinary success with the Barbie movie, and further strengthened our financial position.”

Mr. Kreiz continued: “Execution on our toy strategy was strong and we made meaningful progress in entertainment across film, television, digital and publishing. We ended 2023 with the strongest balance sheet we have had in years, putting us in an excellent position to execute our strategy to grow Mattel’s IP-driven toy business and expand our entertainment offering. As we look to 2024, we believe we are very well positioned competitively and will continue to outpace the industry and gain market share.”

Anthony DiSilvestro, CFO of Mattel, added: “In the fourth quarter, we achieved double-digit growth in sales and earnings. For the year, we grew POS, generated significant cash flow, and exceeded our Optimizing for Growth cost savings program target. Looking ahead, we are launching a new cost savings program focused on profitable growth and expect to improve profitability and continue share repurchases in 2024.”

Financial Overview

For the fourth quarter, Net Sales were up 16% as reported, or 14% in constant currency, versus the prior year’s fourth quarter. Reported Operating Income was $140 million, an increase of $61 million, and Adjusted Operating Income was $147 million, an increase of $68 million. Reported Earnings Per Share were $0.42, compared to $0.04 per share, and Adjusted Earnings Per Share were $0.29, compared to $0.18 per share.

For the full year, Net Sales were flat as reported, or down 1% in constant currency, versus the prior year. Reported Operating Income was $562 million, a decrease of $114 million, and Adjusted Operating Income was $641 million, a decrease of $47 million. Reported Earnings Per Share were $0.60, which included a non-cash charge of $0.45 relating to changes to certain deferred tax assets, a decrease of $0.50 per share, and Adjusted Earnings Per Share were $1.23, a decrease of $0.02 per share.

Fourth Quarter 2023

Net Sales in the North America segment increased 32% as reported and in constant currency, versus the prior year’s fourth quarter.

Gross Billings in the North America segment increased 33% as reported and in constant currency, driven by growth in Dolls (including Barbie, Disney Princess and Disney Frozen, and Monster High), Vehicles (Hot Wheels®), Action Figures, Building Sets, Games, and Other (primarily Games and Building Sets), and Infant, Toddler, and Preschool (primarily Fisher- Price).

Net Sales in the International segment increased 3% as reported but decreased 2% in constant currency.

Gross Billings in the International segment increased 7% as reported, or 2% in constant currency, driven by growth in Dolls (including Barbie, Monster High, and Disney Princess and Disney Frozen,) 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 (primarily Fisher-Price).

Net Sales in the American Girl® segment decreased 6% as reported and in constant currency. Gross Billings in the American Girl segment decreased 5% as reported and in constant currency.

Reported Gross Margin increased to 48.8%, versus 43.0% in the prior year’s fourth quarter, and Adjusted Gross Margin increased to 48.8%, versus 43.1%. The increase in Gross Margin was primarily driven by cost deflation, lower inventory management costs, primarily lower inventory obsolescence and closeout sales, savings from the Optimizing for Growth program, favorable mix, primarily benefits related to the Barbie movie, and pricing, net of higher sales adjustments. Increases to Gross Margin were partially offset by increased royalties and other factors.

Reported Other Selling and Administrative Expenses increased $135 million, to $416 million, and Adjusted Other Selling and Administrative Expenses increased $127 million, to $409 million. Other Selling and Administrative Expenses increased primarily due to higher incentive compensation.

Full Year 2023

Net Sales in the North America segment increased 1% as reported and in constant currency, versus the prior year.

Gross Billings in the North America segment increased 1% as reported and in constant currency, driven by growth in Dolls (including Disney Princess and Disney Frozen, Barbie, and Monster High) 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 Fisher-Price).

Net Sales in the International segment were flat as reported, but decreased 3% in constant currency.

Gross Billings in the International segment increased 2% as reported but decreased 2% in constant currency. The increase in Gross Billings as reported 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 (primarily Fisher-Price).

The decline in Gross Billings in constant currency was due to declines in Action Figures, Building Sets, Games, and Other (primarily Action Figures), and Infant, Toddler, and Preschool (primarily Fisher-Price), partly offset by growth in Vehicles (primarily Hot Wheels) and Dolls (including Disney Princess and Disney Frozen and Monster High).

Net Sales in the American Girl segment decreased 9% as reported and in constant currency. Gross Billings in the American Girl segment decreased 8% as reported and in constant currency.

Reported Gross Margin increased to 47.5%, versus 45.7% in the prior year, and Adjusted Gross Margin increased to 47.5%, versus 45.9%. The increase in Gross Margin was primarily driven by savings from the Optimizing for Growth program, favorable mix, primarily benefits related to the Barbie movie, pricing, net of higher sales adjustments, and cost deflation, partially offset by unfavorable fixed cost absorption and other supply chain costs.

Reported Other Selling and Administrative Expenses increased $226 million, to $1,497 million, primarily due to higher incentive compensation, market-related pay increases, higher severance and restructuring expenses, and the gain on sale of assets recognized in 2022, partially offset by savings from the Optimizing for Growth program. Adjusted Other Selling and Administrative Expenses increased $147 million, to $1,417 million, primarily due to higher incentive compensation and market-related pay increases, partially offset by savings from the Optimizing for Growth program.

For the year ended December 31, 2023, Cash Flows Provided by Operating Activities were $870 million, an improvement of $427 million, versus the prior year, primarily due to lower working capital usage, partially offset by changes in net income, excluding the impact of non- cash items.

Cash Flows Used for Investing Activities were $142 million, a decrease of $2 million, primarily due to lower capital expenditures and higher net proceeds from foreign currency forward contracts in the full year 2023, partially offset by lower proceeds from the sale of assets.

Cash Flows Used for Financing Activities and Other were $227 million, a decrease of $41 million, which included current year share repurchases of $203 million, compared to $250 million of cash used for repayment of long-term borrowings in 2022.

Gross Billings by Categories

Fourth Quarter 2023

Worldwide Gross Billings for Dolls were $763 million, up 29% as reported, or 27% 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 $292 million, up 9% as reported, or 7% in constant currency. The increase in Gross Billings as reported was driven by growth in Fisher-Price.

Worldwide Gross Billings for Vehicles were $475 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 $311 million, up 3% as reported, or 1% in constant currency, primarily driven by growth in Games, partly offset by declines in Action Figures (related to 2022 theatrical releases).

Full Year 2023

Worldwide Gross Billings for Dolls were $2,394 million, up 15% as reported, or 13% in constant currency, versus the prior year. The increase in Gross Billings was driven by growth in Disney Princess and Disney Frozen, Monster High, and Barbie.

Worldwide Gross Billings for Infant, Toddler, and Preschool were $1,001 million, down 10% as reported, or 12% in constant currency. The decline in Gross Billings as reported was due to declines in Fisher-Price, primarily Imaginext and Baby Gear.

Worldwide Gross Billings for Vehicles were $1,641 million, up 13% as reported, or 11% in constant currency, primarily driven by growth in Hot Wheels.

Worldwide Gross Billings for Action Figures, Building Sets, Games, and Other were $1,066 million, down 24% as reported, or 25% in constant currency, primarily due to declines in Action Figures (related to 2022 theatrical releases).

2024 Guidance

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 EPS, Adjusted EBITDA, 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.

We are operating in a macro-economic environment that may impact consumer demand. The guidance considers what the company is aware of today, but remains subject to market volatility, unexpected disruptions, and other risks and uncertainties.

American Girl Segment

Beginning in the first quarter of 2024, Mattel’s American Girl business is being integrated into its North America commercial organization. As a result, American Girl will no longer be an operating segment.

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 fourth quarter and full year 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.

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.”

About Mattel
Mattel is a leading global toy company and owner of one of the strongest portfolios 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 & FriendsTM, 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.

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