• Net Sales: Declined 4% as reported and 3% in constant currency to $1.84 billion.

• Adjusted Gross Margin: Increased 210 basis points to 53.1%.

• Adjusted EBITDA: Improved 1% to $584 million.

• Adjusted EPS: Grew 6% to $1.14.

• Free Cash Flow: Improved nearly 50% to $688 million in the trailing 12 months.

• Share Repurchases: $268 million repurchased through the first nine months of the year.

• Vehicles Gross Billings: Increased 13%, driven by Hot Wheels.

• Dolls Gross Billings: Declined 14%, with Barbie down 17%.

• Infant, Toddler, and Preschool Gross Billings: Declined 2%.

• Challenger Categories Growth: Increased 3%, with UNO achieving record performance.

• Adjusted Operating Income: Comparable at $504 million.

• Cash Balance: $724 million, an increase of $268 million versus the prior year.

• Total Debt: $2.35 billion, with no scheduled maturities until 2026.

• Inventory Levels: $737 million, down $53 million from the prior year.

• Leverage Ratio: Improved to 2.3 times debt to adjusted EBITDA.

• Cost Savings: $23 million achieved in the quarter, with a total of $60 million year-to-date.

• 2024 Guidance: Net sales in constant currency expected to be comparable to slightly down; adjusted EBITDA between $975 million to $1.025 billion; adjusted EPS to grow by double digits to $1.35 to $1.45.

• Warning! GuruFocus has detected 5 Warning Sign with PB.

Release Date: October 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Mattel Inc (NASDAQ:MAT) achieved significant margin gains, with adjusted gross margin increasing by 210 basis points to 53.1%, driven by supply chain improvements and cost savings.

• Free cash flow improved nearly 50% to $688 million over the trailing 12 months, reflecting strong cash generation capabilities.

• The company repurchased $268 million of shares in the first nine months of the year, demonstrating a commitment to returning value to shareholders.

• Hot Wheels had an outstanding quarter, growing 13% and is on track for its seventh consecutive record year, supported by a new multi-year licensing partnership with Formula 1.

• Mattel Inc (NASDAQ:MAT) continues to expand its entertainment offerings, with several new film and television projects in development, including a Masters of the Universe live-action movie and a new Hot Wheels animated series.

Negative Points

• Net sales declined 4% as reported and 3% in constant currency, primarily due to tough comparisons with the prior year, which benefited from the success of the Barbie movie.

• Dolls gross billings declined 14%, with Barbie gross billings down 17%, reflecting the impact of the prior year's movie-related benefits.

• Retail inventory levels ended the quarter down high single digits, indicating potential challenges in aligning production with demand.

• The company's total market share declined slightly year to date, despite gains in specific categories like dolls, vehicles, and games.

• Adjusted SG&A expenses increased by 7%, driven by higher compensation expenses, which could pressure future profitability if not managed effectively.