On October 25, 2023, Mattel Inc (MAT, Financial) released its financial results for the third quarter of 2023. The company reported a 9% increase in Net Sales, reaching $1,919 million. Gross Margin also saw a significant increase, rising to 51.0%, an increase of 280 basis points. Adjusted Gross Margin followed suit, increasing by 270 basis points to 51.0%.
Performance Highlights
Operating Income for the quarter was reported at $474 million, marking an $82 million increase from the previous year. Adjusted Operating Income also saw a significant increase, rising by $108 million to reach $506 million. Net Income for the quarter was $146 million, which includes a non-cash charge of $212 million relating to the establishment of a valuation allowance on foreign deferred tax assets. This is compared to the prior year's Net Income of $290 million.
Ynon Kreiz, Chairman and CEO of Mattel, commented on the company's performance, stating,
Mattel’s strong third quarter performance reflects the successful execution of our strategy to grow Mattel’s IP-driven toy business and expand our entertainment offering. Consumer demand for our product increased in the quarter, and we continued to outpace the industry. Our results benefited from the success of the Barbie movie, which became a global cultural phenomenon, and marked a key milestone for Mattel."
Financial Overview
For the third quarter, Net Sales were up 9% as reported, or 7% in constant currency, versus the prior year’s third quarter. Reported Operating Income was $474 million, an increase of $82 million, and Adjusted Operating Income was $506 million, an increase of $108 million. Reported Earnings Per Share were $0.41, which includes a non-cash charge of $0.59 relating to the establishment of a valuation allowance on foreign deferred tax assets, compared to prior year Reported Earnings Per Share of $0.80, and Adjusted Earnings Per Share were $1.08, compared to prior year Adjusted Earnings Per Share of $0.82.
2023 Guidance
Mattel’s updated full year 2023 guidance includes an Adjusted Gross Margin of 47 - 48%, Adjusted EPS of $1.15 - $1.25, and Adjusted EBITDA of $925 - $975 million. The company is operating in a challenging macro-economic environment with higher volatility, including inflation, that may impact consumer demand. Mattel’s guidance takes into account what the company is aware of today but remains subject to further volatility and any unexpected disruption, including fluctuations in foreign exchange rates, inflation, changes in global economic conditions and consumer demand, labor market fluctuations, and other macro-economic risks and uncertainties.
Explore the complete 8-K earnings release (here) from Mattel Inc for further details.
