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MI

MATTEL INC /DE/ (MAT)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered modest top-line growth and margin expansion: Net Sales $0.83B (+2% reported, +4% CC), Gross Margin 49.4% (+140 bps), Adjusted Gross Margin 49.6% (+130 bps); Adjusted EBITDA $57M (+7%) .
  • Results beat S&P Global consensus: Revenue $826.6M vs $791.5M estimate*, Adjusted EPS -$0.03 vs -$0.10 estimate*; prior Q4 2024 also beat on both metrics, while Q3 2024 was an EPS beat and slight revenue miss* .
  • Management paused full-year 2025 guidance due to macro/tariff uncertainty, but maintained the $600M share repurchase target and raised the 2025 cost-savings (OPG) target to $80M .
  • Call tone: confident on tariff mitigation (diversified supply chain, product mix optimization, targeted pricing), and near-term POS momentum; tariffs expected to impact cost starting in Q3, with actions “designed to fully offset” incremental cost impact .
  • Near-term stock narrative catalysts: guidance pause (macro/tariffs), clearer tariff mitigation roadmap including quantified exposure (~$270M) and price architecture, category strength in Hot Wheels and Action Figures, and ongoing buybacks .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expanded 140 bps (reported) to 49.4% and 130 bps (adjusted) to 49.6%, driven by lower inventory management costs and OPG savings .
  • Category strength: Vehicles gross billings +4% reported (+6% CC) led by Hot Wheels; Action Figures/Games/Other +12% reported (+14% CC); Dolls +1% reported (+2% CC) with Disney Princess & Wicked offsetting Barbie softness .
  • Clear tariff mitigation levers: accelerated diversification (China <40% of global production; U.S. imports from China <20%), product mix optimization, and strategic pricing (40–50% of U.S. products at ≤$20 price points) .

What Went Wrong

  • Reported operating loss widened to -$53M (vs -$35.5M YoY) as reported SG&A rose; though adjusted operating loss improved to -$16M .
  • Infant, Toddler & Preschool gross billings -6% reported (-5% CC) on Baby Gear & Power Wheels declines; Fisher-Price brand gross billings -3% YoY .
  • Guidance visibility reduced: company paused FY2025 guidance given volatile macro and evolving U.S. tariff landscape; potential gross billings timing volatility tied to direct imports starting Q2 .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue (Net Sales, $USD Millions)$1,843.9 $1,646.4 $826.6
Gross Margin % (Reported)53.1% 50.7% 49.4%
Adjusted Gross Margin %53.1% 50.8% 49.6%
Operating Income / (Loss) ($USD Millions)$488.3 $158.3 ($53.0)
Adjusted Operating Income / (Loss) ($USD Millions)$504.1 $161.3 ($15.8)
Adjusted EPS ($USD)$1.14 $0.35 ($0.03)
Adjusted EBITDA ($USD Millions)$584.4 $248.9 $57.2

Segment and category breakdown (Q1 2025 vs Q1 2024):

  • Worldwide Gross Billings by Category ($USD Millions)
CategoryQ1 2024Q1 2025
Dolls$294.5 $296.6
Infant, Toddler & Preschool$135.0 $126.4
Vehicles$297.7 $308.5
Action Figures, Building Sets, Games & Other$171.7 $192.7
Total Gross Billings$898.9 $924.2
  • Top 3 Power Brands Gross Billings ($USD Millions)
BrandQ1 2024Q1 2025
Barbie$177.5 $173.8
Hot Wheels$258.1 $268.8
Fisher-Price$93.4 $90.1
  • Segment Net Sales and Geographic Mix ($USD Millions)
MetricQ1 2024Q1 2025
North America Net Sales$477.8 $491.4
International Net Sales$331.7 $335.3
EMEA Net Sales$185.2 $197.1
Latin America Net Sales$79.7 $64.6
Asia Pacific Net Sales$66.8 $73.6

Key KPIs (Q1 2025 vs Q1 2024):

KPIQ1 2024Q1 2025
Cash from Operations ($USD Millions)$35.5 $24.8
Free Cash Flow ($USD Millions)$5.0 ($11.4)
Net Debt ($USD Millions)$1,200.9 $1,091.7
DSO (days)75 69
Advertising & Promotion ($USD Millions)$71.4 $70.2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales (Constant Currency)FY2025+2% to +3% Paused Lowered (Paused)
Adjusted Gross MarginFY2025Comparable to FY2024 Paused Lowered (Paused)
Adjusted Operating IncomeFY2025$740–$765M Paused Lowered (Paused)
Adjusted EPSFY2025$1.66–$1.72 Paused Lowered (Paused)
Free Cash FlowFY2025~ $600M Paused Lowered (Paused)
Share RepurchasesFY2025Target $600M Maintain $600M Maintained
OPG Cost Savings (2025)FY2025$60M $80M Raised
Tax Rate (Adjusted)FY202523–24% Paused Lowered (Paused)
Tariff cost impact timing2025Not specifiedNo impact Q1–Q2; impact starts Q3 New disclosure

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Supply chain & tariffsDiversified manufacturing (6+ countries); focus on efficiencies and OPG savings; cautious industry outlook China <40% of global production; U.S. imports from China <20%; accelerating SKU relocation; mitigation to fully offset tariff costs; tariff cost impact begins Q3 Increasing emphasis; quantified actions and timeline
Pricing architectureBroad price points; balance of value and quality; advertising shift to Q4 2024 Strategic pricing with 40–50% of U.S. products at ≤$20; price elasticity uncertain industry-wide More granular framework; consumer affordability focus
Retail inventory & POSYear-end retail inventory comparable; POS down low single digits in Q4 2024; planning for 2025 drivers POS up double digits quarter-to-date in April; expect gross billings timing volatility from DI shipments Near-term POS strength; shipment timing variability
Category performanceHot Wheels record trajectory; UNO record year; Dolls decline largely Barbie comp wrap Vehicles +4% reported; Action Figures/Games +12%; Dolls +1% (strength in Disney Princess & Wicked) Continued pivot to Vehicles and Games
Digital games & entertainmentTV streaming success; JV Mattel163 >$200M gross billings; self-publishing investment planned Mattel163 net income contribution up ~75% YoY; first self-published game targeted 2026 Building toward 2026 launch; JV momentum
Capital allocationShare repurchases accelerated ($400M in 2024; targeted $600M in 2025); leverage improving Repurchased $160M in Q1; maintain $600M 2025 buybacks Consistent execution
CFO transitionRetirement announced; succession search underway Paul Ruh appointed CFO effective May 19, 2025 Leadership continuity

Management Commentary

  • “This was a strong quarter for Mattel, with positive performance and continued operational excellence.” — Ynon Kreiz, CEO .
  • “We are taking mitigating actions designed to fully offset the potential incremental cost impact [of tariffs].” — Ynon Kreiz, CEO .
  • “Under the current scenarios we are considering we expect that 40% to 50% of our product will be priced at $20 or less.” — Ynon Kreiz, CEO .
  • “Adjusted operating loss improved by $7 million to a negative $16 million with the improvement driven by net sales growth and adjusted gross margin expansion.” — Anthony DiSilvestro, CFO .
  • “We do not expect second quarter costs to be impacted by tariffs due to timing of inventory flows… we would expect to see tariffs impact our costs starting in Q3.” — Anthony DiSilvestro, CFO .

Q&A Highlights

  • Tariff impact quantification and mitigation: incremental cost exposure ~$270M this year under current tariff framework, before mitigation; actions (supply chain diversification, product mix, pricing, OPG savings to $80M, promotional rebalance) designed to fully offset .
  • Pricing and elasticity: company expects 40–50% of U.S. products at ≤$20; elasticity difficult to model given industry-wide impact; will work closely with retailers .
  • Inventory and DI shipment timing: retail inventories appropriate; expect quarter-to-quarter gross billings movement tied to direct import mix starting Q2, Q1 not impacted by tariffs .
  • Manufacturing footprint: majority of Barbie and Hot Wheels produced outside China at owned plants; supply chain is a competitive advantage .
  • Guidance pause driven primarily by demand uncertainty (macro/tariffs) rather than cost side; company will update when visibility improves .

Estimates Context

PeriodRevenue Actual ($MM)Revenue Consensus Mean ($MM)*Adjusted EPS Actual ($)Primary EPS Consensus Mean ($)*
Q3 2024$1,843.9 $1,861.1*$1.14 $0.9467*
Q4 2024$1,646.4 $1,626.2*$0.35 $0.20123*
Q1 2025$826.6 $791.5*($0.03) ($0.10148)*
  • Q1 2025: Revenue beat (~$35M) and EPS beat (smaller loss than expected)* .
  • Prior two quarters: Q4 2024 beat on both; Q3 2024 EPS beat with slight revenue miss*.

Values with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Q1 print was clean: revenue and adjusted EPS beat S&P Global consensus* with margin expansion, driven by lower obsolescence/closeouts and OPG savings .
  • Guidance pause elevates macro/tariff uncertainty; however, mitigation plan is credible and quantified, with no cost impact until Q3 and actions designed to fully offset incremental costs .
  • Mix shift continues toward Vehicles and Action Figures/Games; Hot Wheels and Minecraft/Jurassic content should underpin H1/H2 demand .
  • Buyback remains a strong support to EPS and sentiment: $160M repurchased in Q1; $600M target reiterated for 2025 .
  • Near-term trading: expect volatility around tariff headlines and DI shipment timing; monitor Q2 POS vs sell-in delta and updates on pricing actions .
  • Medium-term thesis: diversified supply chain, content tie-ins, and digital games self-publishing (target 2026) expand IP monetization beyond toys .
  • Leadership continuity secured with CFO appointment of Paul Ruh, supporting operational execution amidst macro complexity .

Additional Relevant Press Releases (Q1 2025 context)

  • Mattel and Disney renew multi-year global licensing agreement (brand strength in Dolls) .
  • Barbie debuts LeBron James doll (cultural relevance driving adult fan engagement) .
  • Mattel Brick Shop: first product collection with Hot Wheels (expansion into building sets) .
  • Mattel appoints Paul Ruh as Chief Financial Officer (effective May 19, 2025) .
Note: Values with asterisk (*) retrieved from S&P Global.