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Mattel (MAT) Q2 Earnings & Revenues Top Estimates, Rise Y/Y

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Mattel, Inc. (MAT - Free Report) reported second-quarter 2021 results, with earnings and revenues surpassing the Zacks Consensus Estimate. Notably, the metrics beat the consensus mark for the fifth consecutive quarter. Moreover, the top and the bottom line improved on a year-over-year basis. Following robust results, the company’s shares gained 5.3% in after-hour trading session on Jul 27.

Ynon Kreiz, Mattel chairman and CEO, stated, “Our overall performance this quarter and comprehensive topline growth is adding momentum to our transformation strategy. We are now firmly in growth mode and establishing Mattel as an IP-driven, high-performing toy company.”

Earnings & Revenues Discussion

During the second quarter, the company reported adjusted earnings per share (EPS) of 3 cents against  the Zacks Consensus Estimate of a loss of 3 cents per share. In the prior-year quarter, the company had reported adjusted loss per share of 26 cents.

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 during the quarter came in at $1,026.4 million, surpassing the Zacks Consensus Estimate of $911 million by 12.7%. Moreover, the top line increased 40.2% year over year. On a constant-currency basis, sales increased 36% from the prior-year quarter’s levels.

In North America, gross billings rose 30% (as reported) and 29% (at constant currency) year over year. This can primarily be attributed to increase in sales in Vehicles (including Hot Wheels, CARS and Matchbox), Dolls (including Barbie, Spirit and Polly Pocket), Action Figures, Building Sets, Games and Other (including Jurassic World, Master of the Universe, WWE and MEGA) and Infant, Toddler and Preschool (including Fisher-Price and Thomas & Friends).

In the International region, gross billings rose 57% (as reported) and 47% (at constant currency) year over year. This was driven by growth in Dolls (including Barbie, Spirit and Polly Pocket), Vehicles (including Hot Wheels, Matchbox and CARS), Action Figures, Building Sets, Games, and Other (including Jurassic World, Masters of the Universe, MEGA and Games), and Infant, Toddler as well as Preschool (including Fisher-Price and Thomas & Friends).

Brand-Wise Worldwide Sales

Mattel, through its subsidiaries, sells a broad range of toys. These items are grouped under different brands — Barbie, Hot Wheels, Fisher-Price and Thomas & Friends and Other.

As reported, worldwide gross sales at Mattel Power Brands rose 41% year over year to $1,148.6 million. The metric also rose 37% year over year on a constant-currency (cc) basis. Moreover, the Barbie brand witnessed an improvement of 46% (on a reported basis) and 41% (at cc) year over year. Gross sales at the Hot Wheels brand surged 67% (on a reported basis) and 61% (at cc) year over year. Furthermore, gross sales at the Fisher-Price and Thomas & Friends brands were up 18% (on a reported basis) and 15% (at cc) year over year. Gross sales at Other increased 40% (on a reported basis) and 35% (at cc) year over year.

Operating Results

Adjusted gross margin expanded 370 basis points year over year to 47.5%, driven by fixed cost absorption benefit associated with high sales growth in the quarter and savings from the Optimizing for Growth program, partially offset by input cost inflation in cost of goods sold.

During the quarter, adjusted other selling and administrative expenses increased 16% year over year to $333 million. The increase was primarily driven by higher compensation expenses.

Balance Sheet

As of Jun 30, 2021, the company’s cash and equivalents were $384.7 million compared with $615.2 million as of Mar 31, 2021, and $762.2 million as on Dec 31, 2020. Total inventories as of the end of the second quarter were up 12.4% year over year to $818 million.

The company’s long-term debt was $2,839.1 million as of Jun 30, 2021, lower than $2,850.8 million as of Jun 30, 2020. Shareholder’s equity was $527.7 million.

Zacks Rank & Key Picks

Mattel, currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other better-ranked stocks in the same space include JAKKS Pacific, Inc. (JAKK - Free Report) , Electronic Arts Inc. (EA - Free Report) and Take-Two Interactive Software, Inc. (TTWO - Free Report) . JAKKS Pacific sports a Zacks Rank #1, while Electronic Arts and Take-Two Interactive carries a Zacks Rank #2.

JAKKS Pacific’s 2021 earnings are expected to surge 90.7%.

Electronic Arts has a trailing four-quarter earnings surprise of 355%, on average.

Take-Two Interactive has three-five-year EPS growth rate of 10%.