Mattel Inc ((MAT)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Mattel Inc. Shines in Earnings Call with Mixed Outlook
The recent earnings call for Mattel Inc. showcased a robust financial performance, marked by notable achievements in profitability and gross margin expansion. The company highlighted its strategic initiatives in entertainment and games, projecting a positive outlook. However, challenges persist in the Dolls and Infant, Toddler, and Preschool segments, coupled with uncertainties surrounding tariff impacts.
Profit Growth and Margin Expansion
Mattel reported impressive gains in profit growth and margin expansion, with adjusted gross margin improving by 340 basis points. The company saw a substantial increase in adjusted EBITDA by $110 million, representing a 12% uptick. Adjusted earnings per share also rose by 32%, and free cash flow was nearly $600 million, underscoring Mattel’s strong financial health.
Hot Wheels Success
Hot Wheels continued its winning streak, achieving its seventh consecutive record year with a 17% growth in Q4. The brand is expected to break records again in 2025, solidifying its position as a key driver of Mattel’s success.
UNO and Games Category Growth
The games category experienced double-digit growth, with UNO reaching its highest year on record. This growth reflects Mattel’s strength in the games sector and its ability to capture consumer interest in this area.
Entertainment Strategy Progress
Mattel announced significant progress in its entertainment strategy, with 16 films in development or production alongside major studio partners. The company also achieved success with TV shows on platforms like Netflix and Max, reinforcing its position in the entertainment industry.
Share Repurchase Program
The company repurchased $400 million of shares in 2024 and plans an additional $600 million repurchase in 2025. This move demonstrates Mattel’s confidence in its financial position and commitment to returning value to shareholders.
Dolls Category Decline
The Dolls category faced a decline, with gross billings down 8% for the full year. The Barbie brand saw a 12% decrease, attributed to comparisons with the prior year’s movie-related boost.
Infant, Toddler, and Preschool Segment Weakness
This segment experienced a 4% decline, impacted by Mattel’s exit from certain product lines in Baby Gear and Power Wheels. This strategic decision reflects the company’s focus on optimizing its portfolio.
Tariff Uncertainty
New U.S. tariffs on imports from China, Mexico, and Canada pose challenges for Mattel. The company has yet to fully detail its mitigating strategies, generating some uncertainty in this area.
Retail Inventory Concerns
Retail inventory levels were slightly elevated at the end of 2024, which could pose a potential headwind for Q1 2025. Mattel will need to address this issue to maintain its growth trajectory.
Forward-Looking Guidance
Looking ahead, Mattel’s CEO Ynon Kreiz forecasted net sales growth of 2% to 3% in constant currency for 2025, with adjusted EPS growth of 2% to 6%. The company plans to continue investing in its digital game self-publishing business and aims to achieve $83 million in savings towards its $200 million target by 2026.
In summary, Mattel’s earnings call highlighted strong financial performance and strategic achievements. Despite challenges in some segments, the company remains optimistic about its future growth prospects, driven by successful brands like Hot Wheels and UNO, and strategic initiatives in entertainment.
