Mattel, Inc (NASDAQ: MAT) has reported fourth quarter and full year 2023 financial results. Ynon Kreiz, Chairman and CEO of Mattel, said: “2023 was a milestone year for Mattel. We extended our leadership in our key toy categories and gained significant share overall, achieved extraordinary success with the Barbie movie, and further strengthened our financial position.”
Mr. Kreiz continued: “Execution on our toy strategy was strong and we made meaningful progress in entertainment across film, television, digital and publishing. We ended 2023 with the strongest balance sheet we have had in years, putting us in an excellent position to execute our strategy to grow Mattel’s IP-driven toy business and expand our entertainment offering. As we look to 2024, we believe we are very well positioned competitively and will continue to outpace the industry and gain market share.”
Anthony DiSilvestro, CFO of Mattel, added: “In the fourth quarter, we achieved double-digit growth in sales and earnings. For the year, we grew POS, generated significant cash flow, and exceeded our Optimizing for Growth cost savings program target. Looking ahead, we are launching a new cost savings program focused on profitable growth and expect to improve profitability and continue share repurchases in 2024.”
Financial Overview
For the 2023 fourth quarter, Net Sales for Mattel were up 16% as reported, or 14% in constant currency, versus the prior year’s fourth quarter. Reported Operating Income was $140 million, an increase of $61 million, and Adjusted Operating Income was $147 million, an increase of $68 million. Reported Earnings Per Share were $0.42, compared to $0.04 per share, and Adjusted Earnings Per Share were $0.29, compared to $0.18 per share.
For the full year, Net Sales were flat as reported, or down 1% in constant currency, versus the prior year. Reported Operating Income was $562 million, a decrease of $114 million, and Adjusted Operating Income was $641 million, a decrease of $47 million. Reported Earnings Per Share were $0.60, which included a non-cash charge of $0.45 relating to changes to certain deferred tax assets, a decrease of $0.50 per share, and Adjusted Earnings Per Share were $1.23, a decrease of $0.02 per share.
Mattel Fourth Quarter 2023
Net Sales in the North America segment increased 32% as reported and in constant currency, versus the prior year’s fourth quarter.
Gross Billings in the North America segment increased 33% as reported and in constant currency, driven by growth in Dolls (including Barbie, Disney Princess and Disney Frozen, and Monster High), Vehicles (Hot Wheels), Action Figures, Building Sets, Games, and Other (primarily Games and Building Sets), and Infant, Toddler, and Preschool (primarily FisherPrice).
Net Sales in the International segment increased 3% as reported but decreased 2% in constant currency.
Gross Billings in the International segment increased 7% as reported, or 2% in constant currency, driven by growth in Dolls (including Barbie, Monster High, and Disney Princess and Disney Frozen,) and Vehicles (primarily Hot Wheels), partly offset by declines in Action Figures, Building Sets, Games, and Other (primarily Action Figures), and Infant, Toddler, and Preschool (primarily Fisher-Price).
Net Sales in the American Girl segment decreased 6% as reported and in constant currency. Gross Billings in the American Girl segment decreased 5% as reported and in constant currency.
Reported Gross Margin increased to 48.8%, versus 43.0% in the prior year’s fourth quarter, and Adjusted Gross Margin increased to 48.8%, versus 43.1%. The increase in Gross Margin was primarily driven by cost deflation, lower inventory management costs, primarily lower inventory obsolescence and closeout sales, savings from the Optimizing for Growth program, favorable mix, primarily benefits related to the Barbie movie, and pricing, net of higher sales adjustments. Increases to Gross Margin were partially offset by increased royalties and other factors.
Reported Other Selling and Administrative Expenses increased $135 million, to $416 million, and Adjusted Other Selling and Administrative Expenses increased $127 million, to $409 million. Other Selling and Administrative Expenses increased primarily due to higher incentive compensation.
Full Year 2023
Net Sales in the North America segment increased 1% as reported and in constant currency, versus the prior year.
Gross Billings in the North America segment increased 1% as reported and in constant currency, driven by growth in Dolls (including Disney Princess and Disney Frozen, Barbie, and Monster High) and Vehicles (Hot Wheels), partly offset by declines in Action Figures, Building Sets, Games, and Other (primarily Action Figures), and Infant, Toddler, and Preschool (primarily Fisher-Price).
Net Sales in the International segment were flat as reported, but decreased 3% in constant currency.
Gross Billings in the International segment increased 2% as reported but decreased 2% in constant currency. The increase in Gross Billings as reported was driven by growth in Dolls (including Disney Princess and Disney Frozen and Monster High) and Vehicles (primarily Hot Wheels), partly offset by declines in Action Figures, Building Sets, Games, and Other (primarily Action Figures), and Infant, Toddler, and Preschool (primarily Fisher-Price).
The decline in Gross Billings in constant currency was due to declines in Action Figures, Building Sets, Games, and Other (primarily Action Figures), and Infant, Toddler, and Preschool (primarily Fisher-Price), partly offset by growth in Vehicles (primarily Hot Wheels) and Dolls (including Disney Princess and Disney Frozen and Monster High).
Net Sales in the American Girl segment decreased 9% as reported and in constant currency. Gross Billings in the American Girl segment decreased 8% as reported and in constant currency.
Reported Gross Margin increased to 47.5%, versus 45.7% in the prior year, and Adjusted Gross Margin increased to 47.5%, versus 45.9%. The increase in Gross Margin was primarily driven by savings from the Optimizing for Growth program, favorable mix, primarily benefits related to the Barbie movie, pricing, net of higher sales adjustments, and cost deflation, partially offset by unfavorable fixed cost absorption and other supply chain costs.
Reported Other Selling and Administrative Expenses increased $226 million, to $1,497 million, primarily due to higher incentive compensation, market-related pay increases, higher severance and restructuring expenses, and the gain on sale of assets recognized in 2022, partially offset by savings from the Optimizing for Growth program.
Adjusted Other Selling and Administrative Expenses increased $147 million, to $1,417 million, primarily due to higher incentive compensation and market-related pay increases, partially offset by savings from the Optimizing for Growth program. For the year ended December 31, 2023, Cash Flows Provided by Operating Activities were $870 million, an improvement of $427 million, versus the prior year, primarily due to lower working capital usage, partially offset by changes in net income, excluding the impact of non-cash items.
Cash Flows Used for Investing Activities were $142 million, a decrease of $2 million, primarily due to lower capital expenditures and higher net proceeds from foreign currency forward contracts in the full year 2023, partially offset by lower proceeds from the sale of assets.
Cash Flows Used for Financing Activities and Other were $227 million, a decrease of $41 million, which included current year share repurchases of $203 million, compared to $250 million of cash used for repayment of long-term borrowings in 2022.
To see the full breakdown, visit Mattel.