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MI

MATTEL INC /DE/ (MAT)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered modest top-line growth and strong margin expansion: revenue $1.646B (+2% YoY), gross margin 50.7% (+190 bps YoY), adjusted EPS $0.35 (+21% YoY) as cost savings, supply chain efficiencies, and lower inventory management costs offset Barbie movie tailwinds rolling off .
  • Management introduced FY2025 guidance with net sales +2–3% (constant currency), adjusted EPS $1.66–$1.72, and free cash flow ≈$600M; guidance explicitly includes anticipated tariff impacts with mitigation via diversified supply chain and potential pricing actions .
  • Strategic catalysts: targeting $600M share repurchases in 2025 (vs $400M in 2024), continued cost-reduction program ($200M by 2026; $83M achieved in 2024), and momentum in vehicles (Hot Wheels aiming for another record year) and games (UNO at record) .
  • Near-term watch items: slightly elevated retail inventories and later Easter shift create Q1 headwinds; gross margin to be held “comparable” in 2025 despite cost inflation and tariff headwinds, supported by mitigation actions, scale, and additional cost savings .

What Went Well and What Went Wrong

What Went Well

  • Vehicles and challenger categories led Q4: Vehicles +14% billings (Hot Wheels +17%), Action Figures & Games +5–6% billings; UNO achieved its highest year on record .
  • Margin expansion: Q4 adjusted gross margin 50.8% (+200 bps YoY); drivers included program savings (+90 bps), lower inventory management costs (+90 bps), supply chain efficiencies (+90 bps), FX/other (+60 bps) .
  • Strategic capital allocation: $400M buybacks in 2024 and targeted $600M in 2025; leverage ratio improved to 2.2x (Adj. EBITDA basis) with cash $1.388B at year-end .
    • Quote: “We look forward to growing both top and bottom line and continuing to successfully execute our multi-year strategy.” – CEO Ynon Kreiz .
    • Quote: “We are well positioned to continue to create long-term shareholder value.” – CFO Anthony DiSilvestro .

What Went Wrong

  • Dolls softness weighed on mix: Q4 Dolls billings -4% YoY (Barbie -14% QoQ in power brand disclosure), headwinds from wrapping prior-year Barbie movie benefits .
  • Infant, Toddler & Preschool declined: Q4 billings -5% YoY, reflecting planned exits in Baby Gear & Power Wheels; Fisher-Price up low single digits but offset by broader category decline .
  • Q1 2025 expected headwinds: later Easter and slightly elevated retail inventories to pressure shipments in Q1; management flagged a below full-year growth run-rate start to the year .

Financial Results

Headline P&L vs prior year and prior quarter

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Billions)$1.621 $1.844 $1.646
Diluted EPS ($)$0.42 $1.09 $0.42
Gross Margin (%)48.8% 53.1% 50.7%
Operating Income ($USD Millions)$140.1 $488.3 $158.3
Operating Income Margin (%)8.6% 26.5% 9.6%
Adjusted EPS ($)$0.29 $1.14 $0.35
Adjusted Operating Income ($USD Millions)$147.1 $504.1 $161.3
Adjusted EBITDA ($USD Millions)$234.0 $584.4 $248.9

Sequential trend (Q2 → Q3 → Q4 2024)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Billions)$1.080 $1.844 $1.646
Diluted EPS ($)$0.17 $1.09 $0.42
Gross Margin (%)49.2% 53.1% 50.7%
Adjusted EPS ($)$0.19 $1.14 $0.35

Segment and category breakdown (Gross Billings)

Category (Worldwide) ($USD Millions)Q4 2023Q4 2024
Dolls$763.1 $734.9
Infant, Toddler & Preschool$292.2 $276.2
Vehicles$475.1 $543.8
Action Figures, Building Sets, Games & Other$310.8 $327.1
Total Gross Billings$1,841.2 $1,881.9
Top 3 Power Brands Gross Billings ($USD Millions)Q4 2023Q4 2024
Barbie$473.1 $406.0
Hot Wheels$417.5 $481.4
Fisher-Price$200.8 $206.1
Net Sales by Segment ($USD Millions)Q4 2023Q4 2024
North America$968.5 $975.5
International$652.2 $670.9
Total$1,620.7 $1,646.4

KPIs and Balance Sheet

KPIFY 2023FY 2024
Cash & Equivalents ($USD Millions)$1,261.4 $1,387.9
Net Debt ($USD Millions)$1,068.6 $946.4
Leverage Ratio (Total Debt / Adjusted EBITDA)2.5x 2.2x
DSO (Days)60 55
Free Cash Flow ($USD Millions)$709.5 $597.9

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales (Constant Currency)FY2025N/A+2% to +3% New
Adjusted Gross MarginFY2025N/AComparable to FY2024 50.9% New/maintain vs FY2024
Adjusted Operating IncomeFY2025N/A (prior metric was EBITDA)$740–$765M New; shift to AOI from EBITDA
Adjusted Tax RateFY2025N/A23%–24% Raised vs FY2024 21%
Adjusted EPSFY2025N/A$1.66–$1.72 Slightly higher vs FY2024 $1.62
Free Cash FlowFY2025N/A≈$600M In line with FY2024 $598M
Share RepurchasesFY2025$400M executed in 2024 Target $600M Increased
Tariffs AssumptionFY2025N/AIncluded; mitigation actions planned Explicit inclusion

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
Supply chain diversification & efficienciesQ2: Margin expansion from supply chain and cost deflation; ongoing optimization program . Q3: Supply chain efficiencies +190 bps to GM; inventory reduced; diversified manufacturing base .Reiterated as competitive advantage; 7-country sourcing; China <40% of production in 2025; U.S. sales exposure to China ≈20% of global production .Improving/structural advantage
Tariffs & macroQ3: Monitoring regulatory dynamics; diversified footprint .FY2025 guidance includes tariff impacts; mitigation via supply chain and potential pricing; timing lags acknowledged .Managed headwind
Vehicles (Hot Wheels)Q2: Vehicles up; Hot Wheels growth . Q3: Vehicles +13%; Hot Wheels on track for 7th record year; F1 partnership .Vehicles +16%; Hot Wheels +17% in Q4; targeting another record year; adding Ferrari/F1 tie-ins .Strong, accelerating
Games (UNO)Q2: Games slightly up . Q3: UNO double-digit growth; largest quarter on record .Challenger categories +6%; UNO momentum continues .Positive momentum
Dolls (Barbie)Q2/Q3: Barbie declines as movie laps .Dolls -4%; plan for improving Barbie trends in 2025 via demand creation and innovation .Stabilizing plans
Regional trendsQ2: International net sales +2% . Q3: Asia Pacific +8%; Latin America +2%; EMEA -6% .Q4: North America net sales +1%; International +3% (+6% cc); EMEA +10% billings; Asia Pacific +10% .Mixed-to-positive
Advertising & demand creationQ2: Ad spend shifted later . Q3: Shift to Q4; lower Q3 ad .Q4 ad +10% to $257M; continued optimization in demand creation .Strategic shift executed
Inventory & sell-throughQ3: Retail inventory down high single digits .Year-end retail inventory slightly elevated; modest Q1 headwind .Near-term headwind

Management Commentary

  • Strategy and execution: “2024 was a year of strong operational excellence…grow profitability, expand gross margin, and generate strong free cash flow…well ahead of expectations.” – CEO Ynon Kreiz .
  • Capital returns and cost program: “Repurchased $400 million of shares in 2024…tracking ahead of schedule to achieve our $200 million cost savings target by the end of 2026…targeting $600 million of share repurchases [in 2025].” – CFO Anthony DiSilvestro .
  • Category performance: “Vehicles…Hot Wheels…seventh consecutive record year…UNO achieving its highest year on record…Fisher-Price returned to growth.” – CEO Ynon Kreiz .
  • Tariffs and supply chain: “We source products from 7 different countries…China will represent less than 40% of global production…tariff exposure in the U.S. related to China should be about 20% of global production…guidance includes anticipated impact of new tariffs and mitigating actions.” – CFO Anthony DiSilvestro .

Q&A Highlights

  • Q1 setup: Later Easter and slightly elevated retail inventory create shipment headwinds; management expects growth balance of year to achieve full-year guidance .
  • Tariff mitigation: Playbook includes leveraging diversified supply chain and potential price increases; specifics withheld, but guidance embeds ranges for tariffs, cost inflation, and mix .
  • Gross margin drivers 2025: Headwinds from cost inflation and tariffs; tailwinds from mitigation actions, fixed cost absorption, and $60M additional cost savings; overall gross margin expected to be comparable YoY .
  • Hot Wheels momentum: Targeting another record year; partnerships (F1, Ferrari) broaden product and fan engagement; multi-price-point strategy from $1.25 singles to $700 collector sets .
  • Buybacks in EPS guidance: $600M 2025 repurchases embedded in EPS outlook; cumulative 2-year authorization utilized fully .
  • Capex: 2025 capex comparable to 2024; increased SG&A reflects investments in digital games self-publishing .

Estimates Context

  • S&P Global consensus estimates were unavailable at the time of analysis due to data access limits; as a result, explicit comparisons to Wall Street consensus for Q4 2024 revenue/EPS and FY2025 guidance are not shown (SPGI rate-limit error).
  • Implication: Without published consensus comparisons, investors should focus on YoY/Seq trends, margin expansion drivers, and embedded tariff assumptions in FY2025 guidance .

Key Takeaways for Investors

  • Margin durability: Structural supply chain efficiencies and program savings supported ~200 bps Q4 adjusted GM expansion; management guiding to hold GM in 2025 despite inflation/tariffs .
  • Shareholder returns: Aggressive buyback cadence ($400M FY2024; $600M targeted FY2025) is EPS-accretive and a key support for the stock, alongside improved leverage ratio and net debt reduction .
  • Category mix: Vehicles and Games strength offset Dolls/Infant softness; monitoring Barbie stabilization plans and broader toyetic slate (Minecraft, Jurassic World, Snow White, Wicked) for 2025 uplift .
  • Near-term setup: Expect Q1 noise from timing/inventory; look to H2 cadence and content tie-ins to drive top-line; watch execution on pricing/mitigation against tariffs .
  • Strategic optionality: Digital games self-publishing investments and entertainment pipeline (16 films in development/production) expand beyond toy aisle over time; scale execution can meaningfully impact the financial profile .
  • Monitoring list: Barbie trend inflection, UNO/Hot Wheels momentum sustainability, SG&A discipline vs digital investments, FX and inflation trajectory, and retailer inventory normalization .

Notes

  • All figures cited above are from Mattel’s Q4 2024 earnings materials and SEC 8-K filing; adjusted metrics reflect non-GAAP reconciliations provided by the company .