Mattel Reports Second Quarter 2022 Financial Results
Scond Quarter 2022 Highlights Versus Prior Year
- Net Sales of $1,236 million, up 20% as reported, and 24% in constant currency
- Reported Gross Margin of 44.4%, a decrease of 310 basis points; Adjusted Gross Margin of 44.9%, a decrease of 260 basis points
- Reported Operating Income of $125 million, up 155%, an increase of $76 million; Adjusted Operating Income of $121 million, up 82%, an increase of $55 million
- Reported Net Income of $66 million, an improvement of $72 million
- Reported EPS of $0.18, an improvement of $0.20 per share; Adjusted EPS of $0.18, an improvement of $0.15 per share
- Adjusted EBITDA of $185 million, up 42%, an increase of $55 million
- Company reiterates 2022 guidance for Net Sales, Adjusted EPS and Adjusted EBITDA, and updates to include the expected impact of currency translation on Net Sales, and improvement in Adjusted Gross Margin
- Company reiterates 2023 goals
El Segundo, CA — Mattel, Inc. reported second quarter financial results.
Ynon Kreiz, Chairman and CEO of Mattel, said: “Mattel achieved another quarter of exceptional results, with double-digit growth in revenue and Adjusted EBITDA despite significant inflation. This was the eighth consecutive quarter of increased topline performance, reflecting the strength and breadth of our portfolio, and the success in executing our strategy to grow Mattel’s IP-driven toy business and expand our entertainment offering.”
Mr. Kreiz continued: “The first half of the year was an outstanding period of growth for the company. We are benefiting from strong retail partnerships and look forward to meeting the projected increase in consumer demand for our product, as we enter the second half of the year and the all-important holiday season. As the owner of one of the strongest portfolios of children’s and family entertainment franchises in the world, we are excited by the opportunities to capture the full value of our IP.”
Anthony DiSilvestro, CFO of Mattel, said: “We are very pleased with our second quarter and first half results. We continued to reduce leverage and progress towards our goal of achieving an investment-grade credit rating. We are reiterating our 2022 guidance for Net Sales, Adjusted EPS, and Adjusted EBITDA, as well as our 2023 goals.”
Financial Overview
For the second quarter, Net Sales were up 20% as reported, and 24% in constant currency, versus the prior year’s second quarter. Reported Operating Income was $125 million, an increase of $76 million, and Adjusted Operating Income was $121 million, an increase of $55 million. Reported Earnings Per Share were $0.18, an improvement of $0.20 per share, and Adjusted Earnings Per Share were $0.18, an improvement of $0.15 per share.
For the first six months of the year, Net Sales were up 20% as reported, and 23% in constant currency, versus the prior year’s first six months. Reported Operating Income was $205 million, an increase of $122 million, and Adjusted Operating Income was $212 million, an increase of $114 million. Reported Earnings Per Share was $0.24, an improvement of $0.58, and Adjusted Earnings Per Share was $0.26, an improvement of $0.32 per share.
Net Sales in the North America segment increased 30% as reported and in constant currency, versus the prior year’s second quarter.
Gross Billings in the North America segment increased 30% as reported and in constant currency, driven primarily by growth in Action Figures, Building Sets, Games, and Other (including Jurassic World™ and Lightyear), Vehicles (including Hot Wheels®), Infant, Toddler, and Preschool (including Fisher-Price® and Thomas & Friends™), and Dolls (including Polly Pocket® and Barbie®).
Net Sales in the International segment increased 12% as reported, and 20% in constant currency.
Gross Billings in the International segment increased 12% as reported, and 20% in constant currency. The increase in Gross Billings as reported was driven primarily by growth in Action Figures, Building Sets, Games, and Other (including Jurassic World and Lightyear), Vehicles (including Hot Wheels), and Infant, Toddler, and Preschool (including Fisher-Price® and Thomas & Friends™), partially offset by Dolls (including Spirit™ and Cave Club®). The increase in Gross Billings in constant currency was driven primarily by growth in Action Figures, Building Sets, Games, and Other (including Jurassic World and Lightyear), Vehicles (including Hot Wheels), Infant, Toddler, and Preschool (including Fisher-Price® and Thomas & Friends™), and Dolls (including Barbie).
Net Sales in the American Girl® segment decreased 19% as reported and in constant currency.
Gross Billings in the American Girl segment decreased 19% as reported and in constant currency, compared to a very strong prior year period.
Reported Gross Margin decreased to 44.4%, versus 47.5% in the prior year’s second quarter, and Adjusted Gross Margin decreased to 44.9%, versus 47.5%. The decrease in Reported and Adjusted Gross Margin was primarily due to input cost inflation, other supply chain costs, and increased royalty expense, partially offset by pricing, favorable fixed cost absorption, and savings from the Optimizing for Growth program.
Reported Other Selling and Administrative Expenses decreased by $17 million, to $334 million. Adjusted Other Selling and Administrative Expenses increased by $10 million, to $343 million. The decrease in Reported Other Selling and Administrative Expenses was driven primarily by gain on the sale of assets. The increase in Adjusted Other Selling and Administrative Expenses was primarily due to capability investments and market-related pay increases, partly offset by lower incentive compensation and savings from the Optimizing for Growth program.
For the six months ended June 30, 2022, Cash Flows Used for Operating Activities were $425 million, an increase of $184 million, versus the prior year’s first six months, primarily due to higher working capital usage, partially offset by higher net income, excluding the impact of non-cash charges. Cash Flows Used for Investing Activities were $54 million, an increase of $26 million, primarily due to the impact of higher proceeds from the disposal of assets and a business in the prior year. Cash Flows Provided by Financing Activities and Other were $22 million, as compared to a use of $109 million in the prior year’s first six months, with the change primarily due to the cash used for repayment and refinancing of long-term borrowings in first half of 2021.
Gross Billings by Categories
Worldwide Gross Billings for Dolls were $401 million, up 2% as reported, and 5% in constant currency, versus the prior year’s second quarter, primarily driven by growth in Barbie and Polly Pocket, partially offset by declines in American Girl.
Worldwide Gross Billings for Infant, Toddler, and Preschool were $275 million, up 20% as reported, and 23% in constant currency, primarily driven by growth in Fisher-Price and Thomas & Friends.
Worldwide Gross Billings for Vehicles were $328 million, up 23% as reported, and 28% in constant currency, primarily driven by growth in Hot Wheels.
Worldwide Gross Billings for Action Figures, Building Sets, Games, and Other were $372 million, up 44% as reported, and 48% in constant currency, primarily driven by growth in Action Figures (including Jurassic World and Lightyear).
2022 Guidance and 2023 Goals
Mattel’s 2022 guidance is:
| (in millions, except EPS and percentages) |
FY2022 Expected | FY2021 | ||
| Net Sales | +8 – 10% (Constant Currency) |
$5,458 | ||
| Net Sales Currency Translation | (2 – 3%) | |||
| Adjusted Gross Margin | 47 – 48% | 48.2% | ||
| Adjusted EBITDA | $1,100 – $1,125 | $1,007 | ||
| Adjusted EPS | $1.42 – $1.48 | $1.30 | ||
| Adjusted Tax Rate | 26 – 28% | 25% | ||
| Capital Expenditures | $175 – $200 | $151 | ||
Mattel’s 2023 goals remain as follows:
| FY2023 | ||
| Net Sales | + High-Single Digit % (Constant Currency) |
|
| Adjusted Operating Income Margin | ~16 – 17% of Net Sales |
|
| Adjusted EPS | > $1.90 |
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 Operating Income Margin, Adjusted EBITDA, and Adjusted EPS 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.
Mattel’s guidance and goals take into account anticipated supply chain disruption that the company is aware of today but remains subject to any unexpected supply chain disruption, fluctuations in foreign exchange rates, inflation, changes in global economic conditions and consumer spending, labor market fluctuations, and other macro-economic risks and uncertainties.
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.
| MATTEL, INC. AND SUBSIDIARIES | EXHIBIT I | ||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)1 | |||||||||||||||||||||||||||||||||||||||
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | % Change as Reported |
% Change in Constant Currency |
2022 | 2021 | % 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 | $ | 1,235.7 | $ | 1,026.4 | 20 | % | 24 | % | $ | 2,277.0 | $ | 1,900.6 | 20 | % | 23 | % | |||||||||||||||||||||||
| Cost of sales | 686.8 | 55.6 | % | 538.4 | 52.5 | % | 28 | % | 1,245.2 | 54.7 | % | 1,000.7 | 52.7 | % | 24 | % | |||||||||||||||||||||||
| Gross Profit | 548.9 | 44.4 | % | 488.0 | 47.5 | % | 12 | % | 17 | % | 1,031.8 | 45.3 | % | 899.8 | 47.3 | % | 15 | % | 16 | % | |||||||||||||||||||
| Advertising and promotion expenses | 90.2 | 7.3 | % | 88.3 | 8.6 | % | 2 | % | 163.9 | 7.2 | % | 162.4 | 8.5 | % | 1 | % | |||||||||||||||||||||||
| Other selling and administrative expenses | 333.6 | 27.0 | % | 350.5 | 34.2 | % | -5 | % | 662.7 | 29.1 | % | 654.4 | 34.4 | % | 1 | % | |||||||||||||||||||||||
| Operating Income | 125.1 | 10.1 | % | 49.1 | 4.8 | % | 155 | % | 178 | % | 205.1 | 9.0 | % | 83.0 | 4.4 | % | 147 | % | 131 | % | |||||||||||||||||||
| Interest expense | 32.8 | 2.7 | % | 38.1 | 3.7 | % | -14 | % | 65.9 | 2.9 | % | 168.6 | 8.9 | % | -61 | % | |||||||||||||||||||||||
| Interest (income) | (2.0 | ) | -0.2 | % | (0.6 | ) | -0.1 | % | 236 | % | (3.2 | ) | -0.1 | % | (1.4 | ) | -0.1 | % | 125 | % | |||||||||||||||||||
| Other non-operating expense, net | 7.1 | 0.5 | 16.3 | (0.6 | ) | ||||||||||||||||||||||||||||||||||
| Income (Loss) Before Income Taxes | 87.1 | 7.0 | % | 11.0 | 1.1 | % | 688 | % | 719 | % | 126.2 | 5.5 | % | (83.7 | ) | -4.4 | % | n/m | n/m | ||||||||||||||||||||
| Provision for income taxes | 26.6 | 20.6 | 50.5 | 40.9 | |||||||||||||||||||||||||||||||||||
| (Income) from equity method investments | (5.9 | ) | (4.1 | ) | (12.2 | ) | (6.7 | ) | |||||||||||||||||||||||||||||||
| Net Income (Loss) | $ | 66.4 | 5.4 | % | $ | (5.5 | ) | -0.5 | % | n/m | $ | 87.9 | 3.9 | % | $ | (117.9 | ) | -6.2 | % | n/m | |||||||||||||||||||
| Net Income (Loss) Per Common Share – Basic | $ | 0.19 | $ | (0.02 | ) | $ | 0.25 | $ | (0.34 | ) | |||||||||||||||||||||||||||||
| Weighted-average number of common shares | 353.5 | 349.4 | 352.8 | 349.2 | |||||||||||||||||||||||||||||||||||
| Net Income (Loss) per Common Share – Diluted | $ | 0.18 | $ | (0.02 | ) | $ | 0.24 | $ | (0.34 | ) | |||||||||||||||||||||||||||||
| Weighted-average number of common and potential common shares | 359.8 | 349.4 | 358.9 | 349.2 | |||||||||||||||||||||||||||||||||||
| 1 Amounts may not sum due to rounding. |
| n/m – Not meaningful |
| MATTEL, INC. AND SUBSIDIARIES | EXHIBIT II | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS1 | |||||||||
| June 30, | December 31, | ||||||||
| 2022 | 2021 | 2021 | |||||||
| (In millions) | (Unaudited) | ||||||||
| Assets | |||||||||
| Cash and equivalents | $ | 274.5 | $ | 384.7 | $ | 731.4 | |||
| Accounts receivable, net | 989.2 | 784.1 | 1,072.7 | ||||||
| Inventories | 1,177.6 | 818.0 | 777.2 | ||||||
| Prepaid expenses and other current assets | 273.2 | 187.0 | 293.3 | ||||||
| Total current assets | 2,714.4 | 2,173.8 | 2,874.5 | ||||||
| Property, plant, and equipment, net | 442.1 | 459.8 | 456.0 | ||||||
| Right-of-use assets, net | 326.2 | 343.8 | 325.5 | ||||||
| Goodwill | 1,379.2 | 1,392.8 | 1,390.2 | ||||||
| Other noncurrent assets | 1,305.8 | 870.8 | 1,347.7 | ||||||
| Total Assets | $ | 6,167.7 | $ | 5,241.1 | $ | 6,393.9 | |||
| Liabilities and Stockholders’ Equity | |||||||||
| Short-term borrowings | $ | 3.0 | $ | 0.2 | $ | – | |||
| Current portion of long-term debt | 250.0 | – | – | ||||||
| Accounts payable and accrued liabilities | 1,216.0 | 1,086.3 | 1,570.7 | ||||||
| Income taxes payable | 19.2 | 35.8 | 27.5 | ||||||
| Total current liabilities | 1,488.2 | 1,122.4 | 1,598.3 | ||||||
| Long-term debt | 2,323.3 | 2,839.1 | 2,571.0 | ||||||
| Noncurrent lease liabilities | 282.3 | 306.1 | 283.6 | ||||||
| Other noncurrent liabilities | 345.9 | 445.7 | 372.2 | ||||||
| Stockholders’ equity | 1,728.0 | 527.7 | 1,568.8 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 6,167.7 | $ | 5,241.1 | $ | 6,393.9 | |||
| MATTEL, INC. AND SUBSIDIARIES | ||||||||
| SUPPLEMENTAL BALANCE SHEET AND CASH FLOW DATA (Unaudited)1 | ||||||||
| June 30, | ||||||||
| 2022 | 2021 | |||||||
| Key Balance Sheet Data: | ||||||||
| Accounts receivable, net days of sales outstanding (DSO) | 72 | 69 | ||||||
| For the Six Months Ended June 30, | ||||||||
| (In millions) | 2022 | 2021 | ||||||
| Condensed Cash Flow Data: | ||||||||
| Cash flows used for operating activities | $ | (425 | ) | $ | (241 | ) | ||
| Cash flows used for investing activities | (54 | ) | (27 | ) | ||||
| Cash flows provided by (used for) by financing activities and other | 22 | (109 | ) | |||||
| Decrease in cash and equivalents | $ | (457 | ) | $ | (377 | ) | ||
| 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 June 30, | For the Six Months Ended June 30, | |||||||||||||||||||||
| (In millions, except percentage information) | 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||||||||||||
| Gross Profit | ||||||||||||||||||||||
| Gross Profit, As Reported | $ | 548.9 | $ | 488.0 | $ | 1,031.8 | $ | 899.8 | ||||||||||||||
| Gross Margin | 44.4 | % | 47.5 | % | -310 bps | 45.3 | % | 47.3 | % | -200 bps | ||||||||||||
| Adjustments: | ||||||||||||||||||||||
| Severance and Restructuring Expenses | 5.8 | (0.2 | ) | 8.4 | 1.8 | |||||||||||||||||
| Gross Profit, As Adjusted | $ | 554.7 | $ | 487.9 | $ | 1,040.2 | $ | 901.6 | ||||||||||||||
| Adjusted Gross Margin | 44.9 | % | 47.5 | % | -260 bps | 45.7 | % | 47.4 | % | -170 bps | ||||||||||||
| Other Selling and Administrative Expenses | ||||||||||||||||||||||
| Other Selling and Administrative Expenses, As Reported | $ | 333.6 | $ | 350.5 | -5 | % | $ | 662.7 | $ | 654.4 | 1 | % | ||||||||||
| % of Net Sales | 27.0 | % | 34.2 | % | -720 bps | 29.1 | % | 34.4 | % | -530 bps | ||||||||||||
| Adjustments: | ||||||||||||||||||||||
| Severance and Restructuring Expenses | (5.8 | ) | (10.7 | ) | (12.6 | ) | (16.5 | ) | ||||||||||||||
| Inclined Sleeper Product Recalls2 | – | (6.8 | ) | (0.6 | ) | (12.1 | ) | |||||||||||||||
| Sale of Assets3 | 15.2 | – | 15.2 | 15.8 | ||||||||||||||||||
| Other Selling and Administrative Expenses, As Adjusted | $ | 343.1 | $ | 332.9 | 3 | % | $ | 664.7 | $ | 641.6 | 4 | % | ||||||||||
| % of Net Sales | 27.8 | % | 32.4 | % | -460 bps | 29.2 | % | 33.8 | % | -460 bps | ||||||||||||
| Operating Income | ||||||||||||||||||||||
| Operating Income, As Reported | $ | 125.1 | $ | 49.1 | 155 | % | $ | 205.1 | $ | 83.0 | 147 | % | ||||||||||
| Operating Income Margin | 10.1 | % | 4.8 | % | 530 bps | 9.0 | % | 4.4 | % | 460 bps | ||||||||||||
| Adjustments: | ||||||||||||||||||||||
| Severance and Restructuring Expenses | 11.5 | 10.6 | 21.0 | 18.2 | ||||||||||||||||||
| Inclined Sleeper Product Recalls2 | – | 6.8 | 0.6 | 12.1 | ||||||||||||||||||
| Sale of Assets3 | (15.2 | ) | – | (15.2 | ) | (15.8 | ) | |||||||||||||||
| Operating Income, As Adjusted | $ | 121.4 | $ | 66.6 | 82 | % | $ | 211.6 | $ | 97.6 | 117 | % | ||||||||||
| Adjusted Operating Income Margin | 9.8 | % | 6.5 | % | 330 bps | 9.3 | % | 5.1 | % | 420 bps | ||||||||||||
| 1 Amounts may not sum due to rounding. | ||||
| 2 For the three and six months ended June 30, 2022 and 2021, represents expenses related to inclined sleeper product recall litigation. | ||||
| 3 For the three and six months ended June 30, 2022, Mattel recorded a gain on sale of assets of $15.2 million in other selling and administrative expenses. For the six months ended June 30, 2021, Mattel recorded a gain on sale of assets of $15.8 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 June 30, | For the Six Months Ended June 30, | |||||||||||||||||||||
| (In millions, except per share and percentage information) | 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||||||||||||
| Earnings Per Share | ||||||||||||||||||||||
| Net Income (Loss) Per Common Share, As Reported | $ | 0.18 | $ | (0.02 | ) | n/m | $ | 0.24 | $ | (0.34 | ) | n/m | ||||||||||
| Adjustments: | ||||||||||||||||||||||
| Severance and Restructuring Expenses | 0.03 | 0.03 | 0.06 | 0.05 | ||||||||||||||||||
| Inclined Sleeper Product Recalls2 | – | 0.02 | – | 0.03 | ||||||||||||||||||
| Sale of Assets/Business3 | (0.04 | ) | – | (0.04 | ) | (0.06 | ) | |||||||||||||||
| Loss on Debt Extinguishment | – | – | – | 0.24 | ||||||||||||||||||
| Net Income (Loss) Per Common Share, As Adjusted | $ | 0.18 | $ | 0.03 | 500 | % | $ | 0.26 | $ | (0.06 | ) | n/m | ||||||||||
| EBITDA and Adjusted EBITDA | ||||||||||||||||||||||
| Net Income (Loss), As Reported | $ | 66.4 | $ | (5.5 | ) | n/m | $ | 87.9 | $ | (117.9 | ) | n/m | ||||||||||
| Adjustments: | ||||||||||||||||||||||
| Interest Expense | 32.8 | 38.1 | 65.9 | 168.6 | ||||||||||||||||||
| Provision for Income Taxes | 26.6 | 20.6 | 50.5 | 40.9 | ||||||||||||||||||
| Depreciation | 35.8 | 36.2 | 71.7 | 72.7 | ||||||||||||||||||
| Amortization | 9.7 | 9.5 | 19.0 | 19.1 | ||||||||||||||||||
| EBITDA | 171.3 | 99.0 | 294.9 | 183.4 | ||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||
| Share-Based Compensation | 18.6 | 15.2 | 37.9 | 30.3 | ||||||||||||||||||
| Severance and Restructuring Expenses | 10.5 | 9.6 | 18.9 | 16.6 | ||||||||||||||||||
| Inclined Sleeper Product Recalls2 | – | 6.8 | 0.6 | 12.1 | ||||||||||||||||||
| Sale of Assets/Business3 | (15.2 | ) | – | (15.2 | ) | (19.7 | ) | |||||||||||||||
| Adjusted EBITDA | $ | 185.2 | $ | 130.6 | 42 | % | $ | 337.2 | $ | 222.7 | 51 | % | ||||||||||
| Free Cash Flow | ||||||||||||||||||||||
| Net Cash Flows Used for Operating Activities | $ | (425.0 | ) | $ | (241.4 | ) | ||||||||||||||||
| Capital Expenditures | (78.5 | ) | (74.7 | ) | ||||||||||||||||||
| Free Cash Flow | $ | (503.5 | ) | $ | (316.0 | ) | ||||||||||||||||
| 1 Amounts may not sum due to rounding. | ||
| 2 For the three and six months ended June 30, 2022 and 2021, represents expenses related to inclined sleeper product recall litigation. | ||
| 3 For the three and six months ended June 30, 2022, Mattel recorded a gain on sale of assets of $15.2 million in other selling and administrative expenses. For the six months ended June 30, 2021, Mattel recorded a gain on sale of assets of $15.8 million in other selling and administrative expenses, and a gain on sale of business of $3.9 million in other non-operating expense, net. | ||
| n/m – Not meaningful |
| MATTEL, INC. AND SUBSIDIARIES | EXHIBIT III | |||||||||
| SUPPLEMENTAL FINANCIAL INFORMATION (Unaudited)1 | ||||||||||
| RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES | ||||||||||
| For the Three Months Ended June 30, | ||||||||||
| (in millions, except percentage information) | 2022 | 2021 | ||||||||
| Tax Rate | ||||||||||
| Income Before Income Taxes, As Reported | $ | 87.1 | $ | 11.0 | ||||||
| Adjustments: | ||||||||||
| Severance and Restructuring Expenses | 11.5 | 10.6 | ||||||||
| Inclined Sleeper Product Recalls2 | – | 6.8 | ||||||||
| Sale of Assets3 | (15.2 | ) | – | |||||||
| Income Before Income Taxes, As Adjusted | $ | 83.4 | $ | 28.5 | ||||||
| Provision for Income Taxes, As Reported | $ | 26.6 | $ | 20.6 | ||||||
| Adjustments | ||||||||||
| Tax Effect of Adjustments | (1.0 | ) | 1.0 | |||||||
| Provision for Income Taxes, As Adjusted | $ | 25.6 | $ | 21.6 | ||||||
| Tax Rate, As Reported | 31 | % | 187 | % | ||||||
| Tax Rate, As Adjusted | 31 | % | 76 | % | ||||||
| 1 Amounts may not sum due to rounding. | ||||||||||||||
| 2 For the three months ended June 30, 2022 and 2021, represents expenses related to inclined sleeper product recall litigation. | ||||||||||||||
| 3 For the three months ended June 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 | |||||||||||
| (In millions, except percentage and pts information) | For the Trailing Twelve Months Ended June 30, | ||||||||||
| Leverage Ratio (Debt / Adjusted EBITDA) | 2022 | 2021 | Change | ||||||||
| Debt | |||||||||||
| Long-Term Debt | $ | 2,323.3 | $ | 2,839.1 | |||||||
| Current Portion of Long-Term Debt | 250.0 | – | |||||||||
| Short-Term Borrowings | 3.0 | 0.2 | |||||||||
| Adjustments: | |||||||||||
| Debt Issuance Costs and Debt Discount | 26.7 | 35.9 | |||||||||
| Debt | $ | 2,603.0 | $ | 2,875.2 | |||||||
| EBITDA and Adjusted EBITDA | |||||||||||
| Net Income, As Reported | $ | 1,108.8 | $ | 322.5 | 244 | % | |||||
| Adjustments: | |||||||||||
| Interest Expense | 151.2 | 268.4 | |||||||||
| (Benefit) Provision for Income Taxes | (410.8 | ) | 81.8 | ||||||||
| Depreciation | 145.2 | 145.3 | |||||||||
| Amortization | 38.0 | 38.3 | |||||||||
| EBITDA | 1,032.4 | 856.2 | |||||||||
| Adjustments: | |||||||||||
| Share-Based Compensation | 67.7 | 67.0 | |||||||||
| Severance and Restructuring Expenses | 33.0 | 28.0 | |||||||||
| Inclined Sleeper Product Recalls | 3.5 | 29.2 | |||||||||
| Sale of Assets/Business | (15.2 | ) | (19.7 | ) | |||||||
| Adjusted EBITDA | $ | 1,121.4 | $ | 960.6 | 17 | % | |||||
| Debt / Net Income | 2.3x | 8.9x | |||||||||
| Leverage Ratio (Debt / Adjusted EBITDA) | 2.3x | 3.0x | |||||||||
| Free Cash Flow | |||||||||||
| Net Cash Flows Provided by Operating Activities | $ | 301.9 | $ | 513.6 | -41 | % | |||||
| Capital Expenditures | (155.2 | ) | (139.5 | ) | |||||||
| Free Cash Flow | $ | 146.7 | $ | 374.1 | -61 | % | |||||
| Net Cash Flows Provided by Operating Activities / Net Income | 27 | % | 159 | % | (132) pts | ||||||
| Free Cash Flow Conversion (Free Cash Flow/Adjusted EBITDA) | 13 | % | 39 | % | (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 | ||||||
| (In millions, except percentage and per share information) | For the Year Ended December 31, | |||||
| Gross Profit | 2021 | |||||
| Gross Profit, As Reported | $ | 2,626.7 | ||||
| Gross Margin | 48.1 | % | ||||
| Adjustments: | ||||||
| Severance and Restructuring Expenses | 2.9 | |||||
| Gross Profit, As Adjusted | $ | 2,629.5 | ||||
| Adjusted Gross Margin | 48.2 | % | ||||
| Earnings Per Share | ||||||
| Net Income Per Common Share, As Reported | $ | 2.53 | ||||
| Adjustments: | ||||||
| Severance and Restructuring Expenses | 0.10 | |||||
| Inclined Sleeper Product Recalls2 | 0.04 | |||||
| Sale of Assets/Business3 | (0.06 | ) | ||||
| Loss on Debt Extinguishment | 0.28 | |||||
| Valuation Allowance Releases4 | (1.51 | ) | ||||
| Tax Effect of Adjustments5 | (0.08 | ) | ||||
| Net Income Per Common Share, As Adjusted | $ | 1.30 | ||||
| EBITDA and Adjusted EBITDA | ||||||
| Net Income, As Reported | $ | 903.0 | ||||
| Adjustments: | ||||||
| Interest Expense | 253.9 | |||||
| (Benefit) for Income Taxes | (420.4 | ) | ||||
| Depreciation | 146.3 | |||||
| Amortization | 38.0 | |||||
| EBITDA | 920.9 | |||||
| Adjustments: | ||||||
| Share-Based Compensation | 60.1 | |||||
| Severance and Restructuring Expenses | 30.7 | |||||
| Inclined Sleeper Product Recalls2 | 15.1 | |||||
| Sale of Assets/Business3 | (19.7 | ) | ||||
| Adjusted EBITDA | $ | 1,007.0 | ||||
| 1 Amounts may not sum due to rounding. | ||||
| 2 For the year ended December 31, 2021, represents expenses related to inclined sleeper product recall litigation. | ||||
| 3 For the year ended December 31, 2021, Mattel recorded a gain on sale of assets of $15.8 million in other selling and administrative expenses, and a gain on sale of business of $3.9 million in other non-operating expense, net. | ||||
| 4 For the year ended December 31, 2021, the amount includes a net benefit of approximately $541 million, related to the release of valuation allowances against deferred tax assets of the U.S. and certain International affiliates. | ||||
| 5 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. |
| MATTEL, INC. AND SUBSIDIARIES | EXHIBIT III | |||||
| SUPPLEMENTAL FINANCIAL INFORMATION (Unaudited)1 | ||||||
| RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES | ||||||
| (In millions, except percentage information) | For the Year Ended December 31, | |||||
| Tax Rate | 2021 | |||||
| Income before Income Taxes, As Reported | ||||||
| Adjustments: | $ | 470.8 | ||||
| Severance and Restructuring Expenses | ||||||
| Inclined Sleeper Product Recalls2 | 34.4 | |||||
| Sale of Assets/Business3 | 15.1 | |||||
| Loss on Debt Extinguishment | (19.7 | ) | ||||
| Income before Income Taxes, As Adjusted | 101.7 | |||||
| $ | 602.2 | |||||
| (Benefit) for Income Taxes, As Reported | ||||||
| Adjustments: | $ | (420.4 | ) | |||
| Valuation Allowance Releases4 | ||||||
| Tax Effect of Adjustments | 540.8 | |||||
| Provision for Income Taxes, As Adjusted | 27.9 | |||||
| $ | 148.4 | |||||
| Tax Rate, As Reported | ||||||
| Tax Rate, As Adjusted | -89 | % | ||||
| 25 | % | |||||
| 1 Amounts may not sum due to rounding. | ||||
| 2 For the year ended December 31, 2021, represents expenses related to inclined sleeper product recall litigation. | ||||
| 3 For the year ended December 31, 2021, Mattel recorded a gain on sale of assets of $15.8 million in other selling and administrative expenses, and a gain on sale of business of $3.9 million in other non-operating expense, net. | ||||
| 4 For the year ended December 31, 2021, the amount includes a net benefit of approximately $541 million, related to the release of valuation allowances against deferred tax assets of the U.S. and certain International affiliates. |
| MATTEL, INC. AND SUBSIDIARIES | EXHIBIT IV | |||||||||||||||||||||||
| WORLDWIDE GROSS BILLINGS1 (Unaudited)3 | ||||||||||||||||||||||||
| SUPPLEMENTAL KEY PERFORMANCE INDICATOR | ||||||||||||||||||||||||
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||||||||||
| (In millions, except percentage information) | 2022 | 2021 | % Change as Reported |
% Change in Constant Currency |
2022 | 2021 | % Change as Reported |
% Change in Constant Currency |
||||||||||||||||
| Worldwide Gross Billings: | ||||||||||||||||||||||||
| Net Sales | $ | 1,235.7 | $ | 1,026.4 | 20 | % | 24 | % | $ | 2,277.0 | $ | 1,900.6 | 20 | % | 23 | % | ||||||||
| Sales Adjustments2 | 140.6 | 122.2 | 263.7 | 227.0 | ||||||||||||||||||||
| Gross Billings | $ | 1,376.3 | $ | 1,148.6 | 20 | % | 24 | % | $ | 2,540.7 | $ | 2,127.6 | 19 | % | 23 | % | ||||||||
| Worldwide Gross Billings by Categories: | ||||||||||||||||||||||||
| Dolls | $ | 401.3 | $ | 394.7 | 2 | % | 5 | % | $ | 797.5 | $ | 776.0 | 3 | % | 6 | % | ||||||||
| Infant, Toddler and Preschool | 274.6 | 229.4 | 20 | 23 | 480.2 | 412.5 | 16 | 19 | ||||||||||||||||
| Vehicles | 328.3 | 266.3 | 23 | 28 | 610.4 | 481.7 | 27 | 32 | ||||||||||||||||
| Action Figures, Building Sets, Games, and Other | 372.0 | 258.2 | 44 | 48 | 652.7 | 457.3 | 43 | 47 | ||||||||||||||||
| Gross Billings | $ | 1,376.3 | $ | 1,148.6 | 20 | % | 24 | % | $ | 2,540.7 | $ | 2,127.6 | 19 | % | 23 | % | ||||||||
| Supplemental Gross Billings Disclosure | ||||||||||||||||||||||||
| Worldwide Gross Billings by Top 3 Power Brands: | ||||||||||||||||||||||||
| Barbie | $ | 300.8 | $ | 291.3 | 3 | % | 7 | % | $ | 598.8 | $ | 567.5 | 6 | % | 9 | % | ||||||||
| Hot Wheels | 286.5 | 227.4 | 26 | 31 | 527.9 | 412.0 | 28 | 33 | ||||||||||||||||
| Fisher-Price and Thomas & Friends | 250.5 | 207.8 | 21 | 24 | 439.8 | 379.3 | 16 | 19 | ||||||||||||||||
| Other | 538.4 | 422.2 | 28 | 31 | 974.1 | 768.7 | 27 | 30 | ||||||||||||||||
| Gross Billings | $ | 1,376.3 | $ | 1,148.6 | 20 | % | 24 | % | $ | 2,540.7 | $ | 2,127.6 | 19 | % | 23 | % | ||||||||
| 1 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. | ||||||||||||||||
| 2 Sales Adjustments are not allocated to individual products. As such, Net Sales are not presented on a categories or brand level. | ||||||||||||||||
| 3 Amounts may not sum due to rounding. |
| MATTEL, INC. AND SUBSIDIARIES | EXHIBIT V | |||||||||||||||||||||||
| GROSS BILLINGS1 BY SEGMENT (Unaudited)3 | ||||||||||||||||||||||||
| SUPPLEMENTAL KEY PERFORMANCE INDICATOR | ||||||||||||||||||||||||
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||||||||||
| (In millions, except percentage information) | 2022 | 2021 | % Change as Reported |
% Change in Constant Currency |
2022 | 2021 | % Change as Reported |
% Change in Constant Currency |
||||||||||||||||
| North America Segment Gross Billings: | ||||||||||||||||||||||||
| Net Sales | $ | 726.5 | $ | 560.8 | 30 | % | 30 | % | $ | 1,328.6 | $ | 1,040.5 | 28 | % | 28 | % | ||||||||
| Sales Adjustments2 | 48.3 | 37.0 | 88.0 | 69.1 | ||||||||||||||||||||
| Gross Billings | $ | 774.9 | $ | 597.9 | 30 | % | 30 | % | $ | 1,416.6 | $ | 1,109.6 | 28 | % | 28 | % | ||||||||
| North America Gross Billings by Categories: | ||||||||||||||||||||||||
| Dolls | $ | 190.7 | $ | 172.6 | 10 | % | 11 | % | $ | 372.9 | $ | 348.8 | 7 | % | 7 | % | ||||||||
| Infant, Toddler and Preschool | 178.3 | 139.9 | 27 | 28 | 309.8 | 248.4 | 25 | 25 | ||||||||||||||||
| Vehicles | 177.6 | 131.3 | 35 | 35 | 324.4 | 241.2 | 35 | 35 | ||||||||||||||||
| Action Figures, Building Sets, Games, and Other | 228.3 | 154.1 | 48 | 48 | 409.6 | 271.3 | 51 | 51 | ||||||||||||||||
| Gross Billings | $ | 774.9 | $ | 597.9 | 30 | % | 30 | % | $ | 1,416.6 | $ | 1,109.6 | 28 | % | 28 | % | ||||||||
| Supplemental Gross Billings Disclosure | ||||||||||||||||||||||||
| North America Gross Billings by Top 3 Power Brands: | ||||||||||||||||||||||||
| Barbie | $ | 156.7 | $ | 151.4 | 3 | % | 4 | % | $ | 320.7 | $ | 308.3 | 4 | % | 4 | % | ||||||||
| Hot Wheels | 152.6 | 109.7 | 39 | 39 | 274.3 | 202.4 | 36 | 36 | ||||||||||||||||
| Fisher-Price and Thomas & Friends | 162.2 | 122.9 | 32 | 32 | 283.4 | 223.7 | 27 | 27 | ||||||||||||||||
| Other | 303.4 | 213.9 | 42 | 42 | 538.2 | 375.2 | 43 | 44 | ||||||||||||||||
| Gross Billings | $ | 774.9 | $ | 597.9 | 30 | % | 30 | % | $ | 1,416.6 | $ | 1,109.6 | 28 | % | 28 | % | ||||||||
| 1 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. | |
| 2 Sales Adjustments are not allocated to individual products. As such, Net Sales are not presented on a categories or brand level. | |
| 3 Amounts may not sum due to rounding. |
| MATTEL, INC. AND SUBSIDIARIES | EXHIBIT VI | |||||||||||||||||||||||
| GROSS BILLINGS1 BY SEGMENT (Unaudited)3 | ||||||||||||||||||||||||
| SUPPLEMENTAL KEY PERFORMANCE INDICATOR | ||||||||||||||||||||||||
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||||||||||
| (In millions, except percentage information) | 2022 | 2021 | % Change as Reported |
% Change in Constant Currency |
2022 | 2021 | % Change as Reported |
% Change in Constant Currency |
||||||||||||||||
| International Segment Gross Billings: | ||||||||||||||||||||||||
| Net Sales | $ | 476.4 | $ | 424.9 | 12 | % | 20 | % | $ | 880.2 | $ | 774.3 | 14 | % | 22 | % | ||||||||
| Sales Adjustments2 | 91.6 | 84.3 | 174.1 | 155.9 | ||||||||||||||||||||
| Gross Billings | $ | 568.0 | $ | 509.2 | 12 | % | 20 | % | $ | 1,054.3 | $ | 930.2 | 13 | % | 22 | % | ||||||||
| International Gross Billings by Geographic Area: | ||||||||||||||||||||||||
| EMEA | ||||||||||||||||||||||||
| Net Sales | $ | 270.9 | $ | 246.8 | 10 | % | 21 | % | $ | 548.7 | $ | 485.0 | 13 | % | 25 | % | ||||||||
| Sales Adjustments2 | 57.3 | 52.7 | 119.9 | 105.5 | ||||||||||||||||||||
| Gross Billings | $ | 328.2 | $ | 299.5 | 10 | % | 21 | % | $ | 668.6 | $ | 590.5 | 13 | % | 25 | % | ||||||||
| Latin America | ||||||||||||||||||||||||
| Net Sales | $ | 124.8 | $ | 92.5 | 35 | % | 36 | % | $ | 196.7 | $ | 148.8 | 32 | % | 33 | % | ||||||||
| Sales Adjustments2 | 19.8 | 16.0 | 31.0 | 25.4 | ||||||||||||||||||||
| Gross Billings | $ | 144.5 | $ | 108.5 | 33 | % | 34 | % | $ | 227.8 | $ | 174.2 | 31 | % | 32 | % | ||||||||
| Asia Pacific | ||||||||||||||||||||||||
| Net Sales | $ | 80.7 | $ | 85.6 | -6 | % | 0 | % | $ | 134.9 | $ | 140.5 | -4 | % | 1 | % | ||||||||
| Sales Adjustments2 | 14.6 | 15.6 | 23.1 | 25.0 | ||||||||||||||||||||
| Gross Billings | $ | 95.3 | $ | 101.3 | -6 | % | 0 | % | $ | 158.0 | $ | 165.5 | -5 | % | 0 | % | ||||||||
| International Gross Billings by Categories: | ||||||||||||||||||||||||
| Dolls | $ | 177.3 | $ | 180.7 | -2 | % | 6 | % | $ | 354.9 | $ | 339.4 | 5 | % | 13 | % | ||||||||
| Infant, Toddler and Preschool | 96.3 | 89.5 | 8 | 15 | 170.3 | 164.1 | 4 | 11 | ||||||||||||||||
| Vehicles | 150.7 | 135.0 | 12 | 20 | 286.0 | 240.5 | 19 | 28 | ||||||||||||||||
| Action Figures, Building Sets, Games, and Other | 143.7 | 104.1 | 38 | 48 | 243.1 | 186.1 | 31 | 40 | ||||||||||||||||
| Gross Billings | $ | 568.0 | $ | 509.2 | 12 | % | 20 | % | $ | 1,054.3 | $ | 930.2 | 13 | % | 22 | % | ||||||||
| Supplemental Gross Billings Disclosure | ||||||||||||||||||||||||
| International Gross Billings by Top 3 Power Brands: | ||||||||||||||||||||||||
| Barbie | $ | 144.2 | $ | 139.9 | 3 | % | 11 | % | $ | 278.1 | $ | 259.2 | 7 | % | 16 | % | ||||||||
| Hot Wheels | 133.9 | 117.7 | 14 | 22 | 253.6 | 209.6 | 21 | 30 | ||||||||||||||||
| Fisher-Price and Thomas & Friends | 88.3 | 84.9 | 4 | 11 | 156.4 | 155.6 | 0 | 7 | ||||||||||||||||
| Other | 201.6 | 166.8 | 21 | 30 | 366.2 | 305.8 | 20 | 28 | ||||||||||||||||
| Gross Billings | $ | 568.0 | $ | 509.2 | 12 | % | 20 | % | $ | 1,054.3 | $ | 930.2 | 13 | % | 22 | % | ||||||||
| 1 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. | |
| 2 Sales Adjustments are not allocated to individual products. As such, Net Sales are not presented on a categories or brand level. | |
| 3 Amounts may not sum due to rounding. |
| MATTEL, INC. AND SUBSIDIARIES | EXHIBIT VII | |||||||||||||||||||||||
| GROSS BILLINGS1 BY SEGMENT (Unaudited)3 | ||||||||||||||||||||||||
| SUPPLEMENTAL KEY PERFORMANCE INDICATOR | ||||||||||||||||||||||||
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||||||||||
| (In millions, except percentage information) | 2022 | 2021 | % Change as Reported |
% Change in Constant Currency |
2022 | 2021 | % Change as Reported |
% Change in Constant Currency |
||||||||||||||||
| American Girl Segment Gross Billings: | ||||||||||||||||||||||||
| Net Sales | $ | 32.8 | $ | 40.6 | -19 | % | -19 | % | $ | 68.1 | $ | 85.8 | -21 | % | -21 | % | ||||||||
| Sales Adjustments2 | 0.6 | 0.8 | 1.6 | 2.0 | ||||||||||||||||||||
| Gross Billings | $ | 33.4 | $ | 41.5 | -19 | % | -19 | % | $ | 69.7 | $ | 87.8 | -21 | % | -21 | % | ||||||||
| 1 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. | |
| 2 Sales Adjustments are not allocated to individual products. | |
| 3 Amounts may not sum due to rounding. |
