Mattel, Inc. MAT reported impressive third-quarter 2024 results, wherein the adjusted earnings and net sales topped the Zacks Consensus Estimate. The top line surpassed the consensus estimate after missing it for three consecutive quarters.
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On a year-over-year basis, net sales declined while adjusted earnings grew.
The company’s quarterly results benefited notably from its Optimizing for Profitable Growth program along with the focus on its multi-year strategy to expand its IP-driven toy business and entertainment offering. Although the top line was adversely impacted by reduced sales from both the reportable segments, the bottom line showed resilience through operational efficiencies.
That said, for the upcoming quarter, the company expects its net sales to grow on the back of a good holiday season and a toyetic theatrical slate. Furthermore, Mattel also aims to strengthen its position moving forward for long-term growth and shareholder value creation.
Mattel’s Earnings & Sales Discussion
Mattel reported adjusted earnings per share (EPS) of $1.14, which beat the Zacks Consensus Estimate of 94 cents by 21.3%. It reported adjusted EPS of $1.08 in the prior-year quarter.
Net sales amounted to $1.844 billion, marginally topping the consensus estimate of $1.837 billion by 0.4%. The top line dropped 4% on a reported basis and 3% in constant currency (cc) year over year.
Mattel, Inc. Price, Consensus and EPS Surprise
Mattel, Inc. Price, Consensus and EPS Surprise
Mattel, Inc. price-consensus-eps-surprise-chart | Mattel, Inc. Quote
Net sales in the North America segment declined 3% year over year on a reported basis and at cc. The International segment’s net sales decreased 5% (as reported) and 3% (at cc) year over year.
In the North America segment, gross billings fell 3% (as reported and at cc) year over year. The downside was primarily due to lower sales in Dolls (primarily Barbie), and Infant, Toddler, and Preschool (primarily Baby Gear & Power Wheels). This was partially offset by growth in Vehicles (primarily Hot Wheels) and Action Figures, Building Sets, Games and Other (primarily Games).
Gross billings in the International segment declined 4% (on a reported basis) and 2% (at cc) year over year. The downtick was primarily due to a decline in Dolls (primarily Barbie); Infant, Toddler and Preschool (primarily Baby Gear & Power Wheels and Preschool Entertainment) and Action Figures, Building Sets, Games and Other. This was partially offset by growth in Vehicles (primarily Hot Wheels).
MAT’s Category-Wise Worldwide Sales
Mattel, through its subsidiaries, sells a broad range of toys. These items are grouped under different categories: Dolls; Infant, Toddler and Preschool; Vehicles and Action Figures, Building Sets, Games and Other.
Worldwide gross billings by Mattel Power Brands declined 3% year over year on a reported basis and at cc to $2.05 billion. The gross billings for Dolls witnessed a fall of 14% year over year on a reported basis and at cc due to declines in Barbie.
Gross billings for Infant, Toddler and Preschool declined 3% (on a reported basis) and 2% (at cc) year over year due to declines in Baby Gear & Power Wheels.
Gross billings for Vehicles were up 12% (on a reported basis) and 13% year over year (at cc), primarily driven by growth in Hot Wheels. Gross billings for Action Figures, Building Sets, Games and Other were also up 2% (on a reported basis) and 3% year over year (at cc) due to growth in Games, partly offset by declines in Other and Building Sets.
MAT’s Operating Results
During the third quarter, Mattel’s adjusted gross margin was 53.1%, up 210 basis points year over year. The upside was primarily driven by supply-chain efficiencies, savings from the Optimizing for Profitable Growth program, foreign exchange favorability and cost deflation.
Adjusted EBITDA increased 1% year over year to $584.4 million.
Adjusted other selling and administrative expenses increased $23 million year over year to $370 million. The uptick was mainly caused due to higher employee compensation, partly offset by savings from the Optimizing for Profitable Growth program.
Balance Sheet of Mattel
As of Sept. 30, 2024, MAT’s cash and cash equivalents were $723.5 million compared with $1.26 billion at 2023-end. Total inventories at the end of the quarter were $737.2 million compared with $790.5 million in the year-ago quarter and $571.6 million at 2023-end.
Long-term debt (as of Sept. 30) was $2.33 billion, on par with the reported value at 2023-end. Shareholders’ equity was $2.31 billion at the end of the quarter.
MAT’s Revised 2024 Outlook
Management now expects net sales to be comparable to slightly down from the prior year’s value of $5.44 billion at cc.
Mattel increased its adjusted gross margin expectations to approximately 50% compared with the prior expected range of 48.5-49% (47.5% reported in 2023). Adjusted EBITDA is still projected to be in the range of $975 million-$1.025 billion.
Capital expenditures are now expected to be in the range of $200-$225 million, up from the previously expected range of $175-$200 million. This compares with $160 million in 2023.
Mattel anticipates adjusted EPS to be between $1.35 and $1.45 compared with $1.23 in 2023. Adjusted tax rate is now considered to be between 21-22% compared with 23-24% expected earlier.
MAT currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank ( Strong Buy) stocks here.
Hilton Worldwide Holdings Inc. HLT reported third-quarter 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. Both the metrics increased on a year-over-year basis.
The company's performance was backed by notable improvements in revenue per available room (RevPAR), attributed to higher occupancy rates and average daily rates (ADR). Furthermore, in the quarter, Hilton opened 531 new hotels. It achieved net room growth of 33,600. As of Sept. 30, 2024, Hilton's development pipeline comprised nearly 3,525 hotels, with almost 492,400 rooms across 120 countries and territories, including 28 countries and regions where it currently has no running hotels. For 2024, the company expects net unit growth to be in the range of 7-7.5%.
Carnival Corporation & plc CCL reported impressive third-quarter fiscal 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines increased on a year-over-year basis. The upside was primarily backed by sustained demand strength and increased booking volumes. During the quarter, the company reported strong booking momentum for 2025, with volumes remaining robust at higher prices compared with the prior year.
The company raised its full-year 2024 adjusted EBITDA guidance due to strong demand and cost-saving opportunities. Management expects net yields, at constant currency, to increase around 10.4% compared with 2023 levels, exceeding the prior guidance provided in June due to strong demand.
Vail Resorts, Inc. MTN reported mixed fourth-quarter fiscal 2024 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. Revenues declined on a year-over-year basis and the adjusted loss widened from the prior-year quarter’s level.
During the quarter, its reported EBITDA declined year over year due to the underperformance of the Australian winter business. Snowfall at Australian resorts fell 28% from the prior year’s level and was 44% below the 10-year average, leading to an 18% drop in skier visitation. Although the North American summer mountain business did not meet expectations, it achieved 15% revenue growth with fewer weather and construction-related disruptions.
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