Barbie and Friends Beat Estimates

Mattel Inc. (MAT, Financial) reported better than expected fourth quarter and full year 2021 results on Wednesday. The toy manufacturer also told Wall Street it sees 2022 profits surpassing estimates as children’s love for Barbie and other iconic toys will prove more durable than supply chain issues.

Investors cheered the news, with Mattel's stock ending the trading day at $22.75, a gain of 3.83%, or 84 cents per share. In after hours trading, shares rose to $25.25.

With parents and kids staying at home more often over the last year, it is little wonder that toy sales skyrocketed, even as Mattel and its competitors hiked prices to keep pace with soaring costs. Business was fueled by growth in categories like Dolls (including Barbie, Polly Pocket and Spirit), Action Figures, Building Sets, Games and Other (including Masters of the Universe, Jurassic World and Plush), Vehicles (including CARS) and Infant, Toddler and Preschool (including Power Wheels).

For the fourth quarter, net sales were up 10% versus the prior-year quarter. Reported operating income was $257 million, an increase of $69 million, and adjusted operating income was $264 million, a gain of $64 million. GAAP earnings per share were $0.63, an increase of $0.26, and adjusted earnings per share were $0.53, an increase of $0.13.

For all of 2021, net sales rose 19%. Operating income was $730 million, an increase of $355 million, and adjusted operating income was $763 million, an increase of $322 million. GAAP earnings per share were $2.53, an increase of $2.18 per share, which includes a benefit of $1.51 resulting from the release of valuation allowances on certain deferred tax assets. Meanwhile, adjusted earnings per share were $1.30, an increase of $0.76 per share.

Ynon Kreiz, Mattel’s Chairman and CEO, said in a statement that his company’s results for the quarter and full year came in well ahead of expectations, capping another exceptional performance for the company. “We have made significant progress on our transformation strategy over the last few years, and our turnaround is now complete. We are in growth mode and believe we are well-positioned to continue our momentum, with 2022 guidance exceeding prior goals and an even stronger outlook for 2023.”

Throughout 2021, Kreiz explained, Mattel products resonated with consumers at levels he and his management team “have not seen in years and, per The NPD Group, we continued to gain market share.” Management also strengthened the company’s position as a partner of choice for the major entertainment companies and, in addition to its own intellectual property, it has a formidable line-up of evergreen properties to drive future growth.

Only last week, on Feb. 2, Mattel’s iconic Barbie brand was named the 2021 top global toy property of the year for the second consecutive year, and its Hot Wheels Singles 1/64 Assortment was named the 2021 global top-selling toy of the year per The NPD Group, a leading global information company.

Anthony DiSilvestro, chief financial officer of Mattel, commented that 2021 was another year of strong financial performance. “We generated significant free cash flow, reduced debt, and further improved our balance sheet. We remain focused on executing our strategy and creating long-term shareholder value.”