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Mattel (MAT) Q3 Earnings & Revenues Beat Estimates, Stock Up

·4 min read
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Mattel, Inc. MAT reported stellar third-quarter 2021 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Both the metrics beat the consensus mark for the sixth consecutive quarter. Following the robust results, the company’s shares gained 6.3% in the after-hour trading session on Oct 21.

The company’s results benefited from robust demand for its products. It successfully navigated the supply chain disturbances.

Ynon Kreiz, Mattel chairman and CEO, said, “We expect to grow for the balance of the year and have a strong holiday season. Our strength is foundational and broad-based, and we are on a clear path to improve profitability and accelerate top line growth. The Mattel team continues to execute on our strategy, and we are operating as an IP-driven, high-performing toy company.”

Earnings & Revenues Discussion

During the third quarter, the company reported adjusted earnings per share (EPS) of 84 cents, which beat the Zacks Consensus Estimate of 72 cents per share. In the prior-year quarter, the company had reported an adjusted earnings per share of 94 cents.

Net sales during the quarter amounted to $1,762.3 million, surpassing the Zacks Consensus Estimate of $1,687 million by 4.5%. The top line improved 8% year over year. On a constant-currency basis, sales increased 7% from the prior-year quarter’s levels.

In North America, gross billings rose 12% (as reported) and 11% (at constant currency) year over year. This can primarily be attributed to increase in sales in Action Figures, Building Sets, Games, and Other (including Jurassic World, Masters of the Universe, WWE, Plush, and MEGA), Vehicles (including Hot Wheels), Dolls (including Barbie, Spirit, and Polly Pocket), and Infant, Toddler, and Preschool (including Fisher-Price and Thomas & Friends). Net sales in the North America segment climbed 12% on reported as well as constant currency basis.

In the International region, gross billings rose 3% (as reported) and 1% (at constant currency) year over year. This was driven by growth in Action Figures, Building Sets, Games, and Other (including Masters of the Universe, Jurassic World, Plush, MEGA, and Games) as well as Dolls (including Barbie and Spirit), partially offset by decrease in Infant, Toddler, and Preschool (including Fisher-Price and Thomas & Friends) and Vehicles (including Hot Wheels and CARS). Net Sales in the International segment increased 2% as reported but were flat in constant
currency.

Mattel, Inc. Price, Consensus and EPS Surprise
Mattel, Inc. Price, Consensus and EPS Surprise

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 and Thomas & Friends and Other.

As reported, worldwide gross billings by Mattel Power Brands climbed 8% year over year to $1,962.7 million. The metric advanced 7% year over year on a constant-currency (cc) basis. The Barbie brand witnessed an improvement of 4% (on a reported basis) and 3% (at cc) year over year. Gross billings at the Hot Wheels brand increased 5% (on a reported basis) and 4% (at cc) year over year. Gross billings at the Fisher-Price and Thomas & Friends brands were down 1% (on a reported basis) and 2% (at cc) year over year. Gross billings at Other increased 18% (on a reported basis) and 16% (at cc) year over year.

Operating Results

Adjusted gross margin contracted 280 basis points year over year to 47.8%, owing to input cost inflation, which was marginally offset by pricing. During the quarter under review, adjusted other selling and administrative expenses decreased 2% year over year to $324 million. The decrease was primarily due to cost savings program.

Balance Sheet

As of Sep 30, 2021, the company’s cash and equivalents were $148.5 million compared with $452.2 million as of Sep 30, 2020. Total inventories as of the end of the third quarter were up 25.8% year over year to $854.5 million.

The company’s long-term debt was $2,569.8 million as of Sep 30, 2021, lower than $2,852.8 million as of Sep 30, 2020. Shareholder’s equity was $1,331.2 million.

Zacks Rank & a Key Pick

Mattel, which shares space with Hasbro, Inc. HAS and JAKKS Pacific, Inc. JAKK, currently carries a Zacks Rank #4 (Sell).

A better-ranked stock in the same space includes Electronic Arts Inc. EA, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Electronic Arts’ fiscal 2022 earnings are expected to witness growth of 16.2%.

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Hasbro, Inc. (HAS) : Free Stock Analysis Report

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