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Mattel (MAT) Beats on Q3 Earnings, Trims 2022 View, Stock Down
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Mattel, Inc. (MAT - Free Report) delivered third-quarter 2022 results, wherein its earnings and revenues surpassed their respective Zacks Consensus Estimate. The metrics beat the consensus mark for the tenth consecutive quarter but declined on a year-over-year basis.
Despite reporting better-than-expected results, the company’s shares declined 5.5% in the after-hours trading session on Oct 25. Investors’ sentiment was hurt as the company trimmed its 2022 earnings per share guidance.
After the results, Ynon Kreiz, Mattel’s chairman and CEO, stated, “Our results reflect the resilience of our diversified portfolio and the success in executing our strategy, despite the challenging macro-economic environment. We look forward to the all-important holiday season, and believe we are on track to achieve another growth year for the company.”
Earnings & Revenues Discussion
During the third quarter, the company reported adjusted earnings per share (EPS) of 82 cents compared with the Zacks Consensus Estimate of 73 cents. In the prior-year quarter, the company reported adjusted earnings of 84 cents.
Net sales during the quarter amounted to $1,755.8 million, surpassing the Zacks Consensus Estimate of $1,748 million. The top line declined 0.4% year over year. However, on a constant-currency (cc) basis, sales improved 3% from the prior-year quarter.
In North America, gross billings declined 4% (as reported and at constant currency) year over year. The decline was primarily due to the dismal performance of Infant, Toddler, and Preschool (including Fisher-Price and Thomas & Friends), Action Figures, Building Sets, Games, Other (primarily Games and Other) and Dolls (including Barbie). Net sales in the North America segment declined 3% year over year on a reported and cc basis.
In the International segment, gross billings rose 4% (reported) and 13% (cc) year over year. The uptick was driven by growth in Vehicles (including Hot Wheels), Action Figures, Building Sets, Games, and Other (including Lightyear and Jurassic World). However, it was partially offset by Dolls (including Spirit and Barbie) and Infant, Toddler, and Preschool (including Fisher-Price and Thomas & Friends). Net Sales in the International segment increased 5% on a reported basis and 13% at cc year over year.
Mattel, through its subsidiaries, sells a broad range of toys. These items are grouped under different brands — Barbie, Hot Wheels, Fisher-Price, Thomas & Friends and Other.
Worldwide gross billings by Mattel Power Brands decreased 1% year over year to $1,948 million. However, the metric improved 3% year over year at cc. The Barbie brand witnessed a decline of 6% (on a reported basis) and 3% (at cc) year over year.
Gross billings at the Hot Wheels brand rose 13% (on a reported basis) and 17% (at cc) year over year. Gross billings at the Fisher-Price and Thomas & Friends brands were down 9% (on a reported basis) and 7% (at cc) year over year. Gross billings at Other increased 2% (on a reported basis) and 6% (at cc) year over year.
Operating Results
Adjusted gross margin expanded 50 basis points year over year to 48.3% due to pricing and savings from the Optimizing for Growth program, marginally overshadowed by input cost inflation as well as increased royalty expense.
During the quarter under discussion, adjusted other selling and administrative expenses decreased $1 million year over year to $323 million. The decrease can primarily be attributed to a decline in incentive compensation and savings from the Optimizing for Growth program.
Balance Sheet
As of Sep 30, 2022, the company’s cash and equivalents were $349 million compared with $148.5 million as of Sep 30, 2021. Total inventories as of the end of the third quarter were up 26.8% year over year to $1,083.8 million.
The company’s long-term debt was $2,324.5 million as of Sep 30, 2022, lower than $2,569.8 million as of Sep 30, 2021. Shareholders’ equity was $1,967.5 million.
Outlook
For 2022, the company continues to anticipate net sales to grow in the range of 8-10% at cc. Adjusted gross margin for 2022 is expected at nearly 47% compared with the prior estimate of 47-48%. Adjusted EBITDA for 2022 is expected to be in the range of $1,050-$1,100 million, down from the earlier estimate of $1,100-$1,125 million.
Capital expenditures for 2022 are expected to be $175-$200 million. The company anticipates 2022 adjusted EPS of $1.32-$1.42, down from the prior estimate of $1.42-$1.48. The estimated range is below the current Zacks Consensus Estimate of $1.45.
Crocs sports a Zacks Rank #1 (Strong Buy). CROX has a long-term earnings growth rate of 15%. Shares of the company have declined 43.3% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CROX’s 2022 sales and EPS indicates a rise of 49.7% and 20.7%, respectively, from the year-ago period.
Hyatt currently sports a Zacks Rank #1. H has a trailing four-quarter earnings surprise of 798.8%, on average. The stock has inched up 4.4% in the past year.
The Zacks Consensus Estimate for H’s current financial year sales and EPS indicates a surge of 89.1% and 113%, respectively, from the year-ago period’s reported levels.
Live Nation currently sports a Zacks Rank #1. LYV has a trailing four-quarter earnings surprise of 70.7%, on average. The stock has declined 19.2% in the past year.
The Zacks Consensus Estimate for LYV’s current financial year sales and EPS indicates growth of 130.8% and 117.2%, respectively, from the year-ago period’s reported levels.
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Mattel (MAT) Beats on Q3 Earnings, Trims 2022 View, Stock Down
Mattel, Inc. (MAT - Free Report) delivered third-quarter 2022 results, wherein its earnings and revenues surpassed their respective Zacks Consensus Estimate. The metrics beat the consensus mark for the tenth consecutive quarter but declined on a year-over-year basis.
Despite reporting better-than-expected results, the company’s shares declined 5.5% in the after-hours trading session on Oct 25. Investors’ sentiment was hurt as the company trimmed its 2022 earnings per share guidance.
After the results, Ynon Kreiz, Mattel’s chairman and CEO, stated, “Our results reflect the resilience of our diversified portfolio and the success in executing our strategy, despite the challenging macro-economic environment. We look forward to the all-important holiday season, and believe we are on track to achieve another growth year for the company.”
Earnings & Revenues Discussion
During the third quarter, the company reported adjusted earnings per share (EPS) of 82 cents compared with the Zacks Consensus Estimate of 73 cents. In the prior-year quarter, the company reported adjusted earnings of 84 cents.
Net sales during the quarter amounted to $1,755.8 million, surpassing the Zacks Consensus Estimate of $1,748 million. The top line declined 0.4% year over year. However, on a constant-currency (cc) basis, sales improved 3% from the prior-year quarter.
In North America, gross billings declined 4% (as reported and at constant currency) year over year. The decline was primarily due to the dismal performance of Infant, Toddler, and Preschool (including Fisher-Price and Thomas & Friends), Action Figures, Building Sets, Games, Other (primarily Games and Other) and Dolls (including Barbie). Net sales in the North America segment declined 3% year over year on a reported and cc basis.
In the International segment, gross billings rose 4% (reported) and 13% (cc) year over year. The uptick was driven by growth in Vehicles (including Hot Wheels), Action Figures, Building Sets, Games, and Other (including Lightyear and Jurassic World). However, it was partially offset by Dolls (including Spirit and Barbie) and Infant, Toddler, and Preschool (including Fisher-Price and Thomas & Friends). Net Sales in the International segment increased 5% on a reported basis and 13% at cc year over year.
Mattel, Inc. Price, Consensus and EPS Surprise
Mattel, Inc. price-consensus-eps-surprise-chart | Mattel, Inc. Quote
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, Thomas & Friends and Other.
Worldwide gross billings by Mattel Power Brands decreased 1% year over year to $1,948 million. However, the metric improved 3% year over year at cc. The Barbie brand witnessed a decline of 6% (on a reported basis) and 3% (at cc) year over year.
Gross billings at the Hot Wheels brand rose 13% (on a reported basis) and 17% (at cc) year over year. Gross billings at the Fisher-Price and Thomas & Friends brands were down 9% (on a reported basis) and 7% (at cc) year over year. Gross billings at Other increased 2% (on a reported basis) and 6% (at cc) year over year.
Operating Results
Adjusted gross margin expanded 50 basis points year over year to 48.3% due to pricing and savings from the Optimizing for Growth program, marginally overshadowed by input cost inflation as well as increased royalty expense.
During the quarter under discussion, adjusted other selling and administrative expenses decreased $1 million year over year to $323 million. The decrease can primarily be attributed to a decline in incentive compensation and savings from the Optimizing for Growth program.
Balance Sheet
As of Sep 30, 2022, the company’s cash and equivalents were $349 million compared with $148.5 million as of Sep 30, 2021. Total inventories as of the end of the third quarter were up 26.8% year over year to $1,083.8 million.
The company’s long-term debt was $2,324.5 million as of Sep 30, 2022, lower than $2,569.8 million as of Sep 30, 2021. Shareholders’ equity was $1,967.5 million.
Outlook
For 2022, the company continues to anticipate net sales to grow in the range of 8-10% at cc. Adjusted gross margin for 2022 is expected at nearly 47% compared with the prior estimate of 47-48%. Adjusted EBITDA for 2022 is expected to be in the range of $1,050-$1,100 million, down from the earlier estimate of $1,100-$1,125 million.
Capital expenditures for 2022 are expected to be $175-$200 million. The company anticipates 2022 adjusted EPS of $1.32-$1.42, down from the prior estimate of $1.42-$1.48. The estimated range is below the current Zacks Consensus Estimate of $1.45.
Zacks Rank & Key Picks
Mattel currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are Crocs, Inc. (CROX - Free Report) , Hyatt Hotels Corporation (H - Free Report) and Live Nation Entertainment, Inc. (LYV - Free Report) .
Crocs sports a Zacks Rank #1 (Strong Buy). CROX has a long-term earnings growth rate of 15%. Shares of the company have declined 43.3% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CROX’s 2022 sales and EPS indicates a rise of 49.7% and 20.7%, respectively, from the year-ago period.
Hyatt currently sports a Zacks Rank #1. H has a trailing four-quarter earnings surprise of 798.8%, on average. The stock has inched up 4.4% in the past year.
The Zacks Consensus Estimate for H’s current financial year sales and EPS indicates a surge of 89.1% and 113%, respectively, from the year-ago period’s reported levels.
Live Nation currently sports a Zacks Rank #1. LYV has a trailing four-quarter earnings surprise of 70.7%, on average. The stock has declined 19.2% in the past year.
The Zacks Consensus Estimate for LYV’s current financial year sales and EPS indicates growth of 130.8% and 117.2%, respectively, from the year-ago period’s reported levels.