Q4 2024 Earnings Summary
- Mattel expects to outpace the industry and gain market share in 2025, driven by continued momentum in key brands like Hot Wheels, projected to have another record year, and UNO, which just had its highest year ever, along with new product launches tied to major theatrical releases like Disney's Snow White, the second Wicked movie, Jurassic World, and Minecraft.
- Mattel is planning $600 million in share repurchases in 2025, which, together with the $400 million repurchased in 2024, would fully utilize the $1 billion authorization in just two years, representing close to 20% of market cap, enhancing shareholder value and EPS.
- Mattel's supply chain is a strong competitive advantage, with products sourced from seven countries, reducing reliance on China to less than 40% of global production in 2025 (compared to industry average of 80%), significantly reducing tariff exposure and enabling the company to better manage complexities, mitigate tariff impacts, maintain gross margins, and strengthen profitability.
- Elevated retail inventory levels and low point-of-sale (POS) declines may pose headwinds for Mattel's top-line growth in the near term. As Anthony DiSilvestro stated, "We ended the year with retail inventories comparable to the prior year. So a little bit of headwind as we go into Q1." Additionally, POS declined low single digits exiting Q4.
- The impact of new U.S. tariffs on imports from China, Mexico, and Canada could pressure margins due to a lag in implementing price increases to offset additional costs. Anthony acknowledged, "There's a little bit of delay to both actions... we have to run inventory through the balance sheet, there's a lag there." This could affect gross margins, especially in the early part of the year.
- Mattel's sales growth projections may be challenged due to a cautious industry outlook, with the company expecting the toy industry to be "comparable to slightly up" in 2025. This suggests potential risk if the industry underperforms.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +1.6% (from $1,620.7m to $1,646.4m) | Modest revenue growth driven by incremental gains across product categories despite competitive market pressures; this slight increase reflects the challenge of overcoming past high-performance periods. |
Operating Income | +13% (from $140.1m to $158.3m) | Significant operating efficiency improvements and disciplined cost management helped boost profitability, despite only modest revenue gains; lower COGS (down 2.4%) and improvements in cost control played key roles. |
Net Income | +31% (from $147.3m to $192.0m) | A sharp rise in net income was achieved through enhanced gross margins and likely lower tax impacts, reflecting not only operational improvements but also the benefit of a stronger earnings profile compared to the previous period. |
SG&A Expenses | +82% (from $415.7m to $756.4m) | A marked increase in SG&A expenses reflects strategic investments in growth areas—such as digital gaming and IT capabilities—and higher employee compensation/incentives; despite this, the overall margin improved due to cost deflation in other areas. |
COGS | -2.4% (from $830.5m to $810.9m) | A reduction in COGS indicates effective supply chain optimizations and cost deflation in product and logistics expenses, contributing to an improved operating margin even in the face of only slight revenue uplift. |
Geographic Revenue | Modest improvements overall | Both North America and International segments have shown modest increases—with NA at $975.5m and International at $671.0m—suggesting steady global performance, although differing regional dynamics continue to be a critical factor. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Adjusted EBITDA | FY 2024 | no prior guidance | $975M to $1.025B | no prior guidance |
Adjusted EPS | FY 2024 | no prior guidance | $1.35 to $1.45 | no prior guidance |
Adjusted Tax Rate | FY 2024 | no prior guidance | 21% to 22% | no prior guidance |
Capital Expenditures | FY 2024 | no prior guidance | $200M to $225M | no prior guidance |
Free Cash Flow | FY 2024 | no prior guidance | $500M | no prior guidance |
Net Sales | FY 2024 | no prior guidance | comparable to slightly down | no prior guidance |
Adjusted Gross Margin | FY 2024 | no prior guidance | 50% | no prior guidance |
Advertising | FY 2024 | no prior guidance | relatively stable as a % of net sales | no prior guidance |
Adjusted SG&A | FY 2024 | no prior guidance | increase slightly as a % of net sales vs 2023 | no prior guidance |
Net Sales | FY 2025 | no prior guidance | 2% to 3% in constant currency | no prior guidance |
Foreign Currency Impact | FY 2025 | no prior guidance | negative 2 percentage points on net sales | no prior guidance |
Adjusted Gross Margin | FY 2025 | no prior guidance | comparable to 2024’s 50.9% | no prior guidance |
Adjusted Operating Income | FY 2025 | no prior guidance | $740M to $765M | no prior guidance |
Adjusted EPS | FY 2025 | no prior guidance | $1.66 to $1.72 | no prior guidance |
Adjusted Tax Rate | FY 2025 | no prior guidance | 23% to 24% | no prior guidance |
Free Cash Flow | FY 2025 | no prior guidance | $600M | no prior guidance |
Cost Savings | FY 2025 | no prior guidance | $60M | no prior guidance |
Share Repurchases | FY 2025 | no prior guidance | $600M in 2025 | no prior guidance |
Capital Expenditures | FY 2025 | no prior guidance | comparable to 2024 levels | no prior guidance |
Tariff Impact | FY 2025 | no prior guidance | Includes impact of new U.S. tariffs | no prior guidance |
Seasonality | FY 2025 | no prior guidance | Typical 35% (H1) / 65% (H2) split | no prior guidance |
First Quarter Expectations | Q1 2025 | no prior guidance | Performance below full-year run rate | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Adjusted EPS (using GAAP EPS as proxy) | FY 2024 | $1.35 to $1.45 | 1.59 (sum of Q1 -0.08, Q2 0.16, Q3 1.09, Q4 0.42) | Surpassed |
Net Sales (Q4 YoY) | Q4 2024 | Growth anticipated in the fourth quarter | 1,646.4 million vs. 1,620.7 million in Q4 2023 (1.6% YoY growth) | Met |
Capital Expenditures | FY 2024 | $200 million to $225 million | ~$120 million (sum of Q1 -30,472, Q2 -34,973, Q3 -91,490, Q4 277,214, all in thousands USD) | Missed |
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Tariff Impacts and Mitigation
Q: How will you mitigate tariff impacts in 2025?
A: Our 2025 guidance includes anticipated tariff impacts. We are leveraging our diversified supply chain from seven countries, reducing China production to less than 40%. Mitigating actions include potential pricing and utilizing our supply chain strengths. We will work closely with retail partners to find the right balance. -
Gross Margin Outlook
Q: What are the drivers of your gross margin in 2025?
A: Gross margin increased 340 basis points to 50.9% in 2024. In 2025, headwinds include cost inflation and tariffs. Tailwinds are mitigating tariff actions, fixed cost absorption, and $60 million in cost savings from our profitable growth program. We expect gross margin to be comparable year-over-year. -
First Quarter Sales Outlook
Q: How much will first-quarter sales decline?
A: Due to a later Easter and slightly elevated inventories, Q1 sales will be below our full-year growth run rate. We expect modest impacts and plan to achieve growth for the balance of the year, maintaining our guidance. The typical first-half, second-half split of 35%/65% will remain unchanged. -
Buyback Program
Q: Are share buybacks included in your EPS guidance?
A: Yes, our 2025 guidance includes the benefit of a targeted $600 million share repurchase. By then, we will have repurchased close to 20% of our market cap and fully utilized the $1 billion authorization in just two years. -
Supply Chain Advantage
Q: Can tariffs enhance your competitive position?
A: Our diversified supply chain is a competitive advantage. With production in seven countries, we can adapt to tariff impacts better than competitors. Supply chain was a strength during COVID and continues to be so now. We work hard to continue improving and serving our partners. -
Top-Line Growth Drivers
Q: What drives confidence in 2–3% sales growth in 2025?
A: We expect momentum in Vehicles, especially Hot Wheels, targeting another record year, and UNO. In Dolls, launching products tied to Snow White and the Wicked movies, and improving Barbie trends. New products in Fisher-Price, Jurassic World, and Minecraft action figures are also planned. We have a lot of innovation and activations coming. -
Industry Outlook
Q: Has your industry growth outlook changed?
A: We believe the toy industry has strong fundamentals. We expect the industry to be comparable to slightly up in 2025. Theatrical movies returning to normal cadence provide buoyancy, and we are well positioned to gain market share. -
Entertainment Expansion
Q: How significant is entertainment to your financials?
A: Entertainment at scale can have a meaningful impact on our financial profile. We are investing in self-publishing mobile games within a capital-light construct, leveraging our strong brand portfolio. We are now executing this strategy at scale. -
Extent of Pricing Actions
Q: What pricing actions are planned for 2025?
A: We haven't given specifics on pricing actions. Potential price increases are among the mitigating actions related to tariffs. We will work closely with retail partners to find the right balance, keeping consumers in mind. -
Hot Wheels Outlook
Q: How are Hot Wheels performing versus Barbie?
A: Hot Wheels surpassed Barbie in volume for the first time. We are targeting another record year, with new partnerships like F1 and Ferrari, and developing a movie with J.J. Abrams at Warner Brothers. We offer a full range of products from $1.25 cars to $700 collector sets. -
Mattel Brick Shop
Q: What's the opportunity with Mattel Brick Shop?
A: This is an exciting new initiative leveraging Mattel's design and supply chain capabilities. We will announce the exact product in May; it will be under the Mattel umbrella brand, not Mega. We expect an exciting product execution. -
Operating Expenses Outlook
Q: What are your operating expenses expectations for 2025?
A: We are not giving specific guidance, but operating expense levels will not be materially different from the current year. -
Capital Expenditures
Q: What is your CapEx guidance for 2025?
A: CapEx for 2025 will be comparable to 2024 levels. Investments in self-publishing are recorded in SG&A, not CapEx. -
FOB Shifts Due to Tariffs
Q: Do you expect shifts in FOB due to tariffs?
A: It's too early to say. We work closely with our retail partners, and we'll figure this out together. -
Timing of Movie Product Impact
Q: Will Snow White and Minecraft offset later Easter in Q1?
A: No, they are not substantial enough to offset the later Easter timing.
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