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Mattel (MAT) Q2 Earnings Top, Revenues Lag Estimates, Stock Up
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Mattel, Inc. (MAT - Free Report) reported mixed second-quarter 2024 results, with earnings surpassing the Zacks Consensus Estimate and revenues missing the same. The top line missed the consensus estimate for the third straight quarter.
The company experienced robust bottom-line performance, propelled mainly by significant gross margin expansion and growth in adjusted EBITDA. MAT is well positioned for the second half with new product innovation and increased retail support. The company is in a strong financial position to execute its strategy to expand its IP-driven toy business and expand entertainment offerings.
Following the announcement, MAT’s shares inched up 0.8% in the after-hour trading session on Jul 23.
Earnings & Revenue Discussion
In the quarter under review, Mattel reported adjusted earnings per share of 19 cents, beating the Zacks Consensus Estimate of 16 cents. In the prior-year quarter, it reported adjusted earnings per share of 10 cents.
Net sales during the quarter amounted to $1079.7 million, missing the consensus estimate of $1091 million by 1%. The top line dropped 1% on a reported basis and remained flat at constant currency (cc) year over year.
Net sales in the North America segment declined 3% year over year on a reported basis and at cc. The International segment’s net sales increased 2% (as reported) and 3% (at cc) year over year, respectively.
In the North America segment, gross billings fell 3% (as reported and at cc) year over year. The downside was primarily due to lower sales in Infant, Toddler and Preschool (primarily Preschool Entertainment and Baby Gear & Power Wheels). This was partially offset by growth in Fisher-Price, Dolls (primarily Barbie) and Vehicles (primarily Matchbox and Hot Wheels) and growth in Action Figures, Building Sets, Games and Other (primarily Games).
Gross billings in the International segment declined 1% (on a reported basis) and remained flat (at cc) year over year. The downtick was primarily due to a decline in Dolls (mainly Barbie and Disney Princess and Frozen) and Action Figures, Building Sets, Games and Other (mainly Action Figures). This was partially offset by growth in Games, Vehicles (mainly Hot Wheels) and Infant, Toddler and Preschool (mainly Fisher-Price).
Mattel, through its subsidiaries, sells a broad range of toys. These items are grouped under different brands: Barbie, Hot Wheels, Fisher-Price and Other.
Worldwide gross billings by Mattel Power Brands declined 2% (on a reported basis) and (at cc) year over year to $1201.3 million. The Barbie brand witnessed a fall of 6% (on a reported basis) and 5% (at cc) year over year.
Gross billings at the Hot Wheels brand rose 4% (on a reported basis) and 5% (at cc) year over year. Gross billings at Fisher-Price were up 10% (on a reported basis) and 11% (at cc) year over year. Gross billings at Other declined 7% (on a reported basis) and 6% (at cc) year over year.
Operating Results
During the second quarter of 2024, Mattel’s adjusted gross margin was 49.2%, up 430 basis points year over year. The upside was caused by a decline in inventory management costs, cost deflation, savings from the Optimizing for Profitable Growth program and lower sales adjustments.
Adjusted EBITDA increased $15% year-over-year to $170.8 million.
During the quarter under discussion, adjusted other selling and administrative expenses increased $37 million year over year to $361.2 million. The uptick was mainly caused by market-related pay increases and investments.
Balance Sheet
As of Jun 30, 2024, cash and cash equivalents were $722.4 million compared with $1,261.4 million as of 2023 end. Total inventories at the end of the second quarter were $776.9 million compared with $971.6 million in the year-ago quarter.
Long-term debt (as of Jun 30, 2024) was $2.33 billion, on par with the reported value in 2023 end. Shareholders’ equity was $1.97 billion as of Jun 30, 2024.
2024 Outlook
For 2024, management continues to expect net sales to be comparable with the prior year at cc.
Mattel continues to expect adjusted gross margin in the range of 48.5-49%. Adjusted EBITDA is projected in the range of $975-$1,025 million.
Capital expenditures are expected in the range of $175-$200 million compared with $160 million in 2023. Mattel anticipates 2024 adjusted earnings per share (EPS) to be between $1.35 and $1.45, compared with $1.23 in 2023. The Zacks Consensus Estimate for 2024 EPS is pegged at $1.40.
The consensus estimate for AGS’s 2024 sales and EPS suggests growth of 7.7% and 5,200%, respectively, from the year-ago levels.
OneSpaWorld Holdings Limited (OSW - Free Report) currently carries a Zacks Rank #2 (Buy). OSW has a trailing four-quarter earnings surprise of 4.7%, on average. The stock has surged 45.8% in the past year.
The Zacks Consensus Estimate for OSW’s 2024 sales and EPS indicates an increase of 10.4% and 28.6%, respectively, from year-ago levels.
Royal Caribbean Cruises Ltd. (RCL - Free Report) currently carries a Zacks Rank #2. RCL has a trailing four-quarter earnings surprise of 18.3%, on average. The stock has rallied 67.9% in the past year.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS calls for growth of 17% and 64.5%, respectively, from year-ago levels.
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Mattel (MAT) Q2 Earnings Top, Revenues Lag Estimates, Stock Up
Mattel, Inc. (MAT - Free Report) reported mixed second-quarter 2024 results, with earnings surpassing the Zacks Consensus Estimate and revenues missing the same. The top line missed the consensus estimate for the third straight quarter.
The company experienced robust bottom-line performance, propelled mainly by significant gross margin expansion and growth in adjusted EBITDA. MAT is well positioned for the second half with new product innovation and increased retail support. The company is in a strong financial position to execute its strategy to expand its IP-driven toy business and expand entertainment offerings.
Following the announcement, MAT’s shares inched up 0.8% in the after-hour trading session on Jul 23.
Earnings & Revenue Discussion
In the quarter under review, Mattel reported adjusted earnings per share of 19 cents, beating the Zacks Consensus Estimate of 16 cents. In the prior-year quarter, it reported adjusted earnings per share of 10 cents.
Net sales during the quarter amounted to $1079.7 million, missing the consensus estimate of $1091 million by 1%. The top line dropped 1% on a reported basis and remained flat at constant currency (cc) year over year.
Net sales in the North America segment declined 3% year over year on a reported basis and at cc. The International segment’s net sales increased 2% (as reported) and 3% (at cc) year over year, respectively.
In the North America segment, gross billings fell 3% (as reported and at cc) year over year. The downside was primarily due to lower sales in Infant, Toddler and Preschool (primarily Preschool Entertainment and Baby Gear & Power Wheels). This was partially offset by growth in Fisher-Price, Dolls (primarily Barbie) and Vehicles (primarily Matchbox and Hot Wheels) and growth in Action Figures, Building Sets, Games and Other (primarily Games).
Gross billings in the International segment declined 1% (on a reported basis) and remained flat (at cc) year over year. The downtick was primarily due to a decline in Dolls (mainly Barbie and Disney Princess and Frozen) and Action Figures, Building Sets, Games and Other (mainly Action Figures). This was partially offset by growth in Games, Vehicles (mainly Hot Wheels) and Infant, Toddler and Preschool (mainly Fisher-Price).
Mattel, Inc. Price, Consensus and EPS Surprise
Mattel, Inc. price-consensus-eps-surprise-chart | Mattel, Inc. Quote
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 Other.
Worldwide gross billings by Mattel Power Brands declined 2% (on a reported basis) and (at cc) year over year to $1201.3 million. The Barbie brand witnessed a fall of 6% (on a reported basis) and 5% (at cc) year over year.
Gross billings at the Hot Wheels brand rose 4% (on a reported basis) and 5% (at cc) year over year. Gross billings at Fisher-Price were up 10% (on a reported basis) and 11% (at cc) year over year. Gross billings at Other declined 7% (on a reported basis) and 6% (at cc) year over year.
Operating Results
During the second quarter of 2024, Mattel’s adjusted gross margin was 49.2%, up 430 basis points year over year. The upside was caused by a decline in inventory management costs, cost deflation, savings from the Optimizing for Profitable Growth program and lower sales adjustments.
Adjusted EBITDA increased $15% year-over-year to $170.8 million.
During the quarter under discussion, adjusted other selling and administrative expenses increased $37 million year over year to $361.2 million. The uptick was mainly caused by market-related pay increases and investments.
Balance Sheet
As of Jun 30, 2024, cash and cash equivalents were $722.4 million compared with $1,261.4 million as of 2023 end. Total inventories at the end of the second quarter were $776.9 million compared with $971.6 million in the year-ago quarter.
Long-term debt (as of Jun 30, 2024) was $2.33 billion, on par with the reported value in 2023 end. Shareholders’ equity was $1.97 billion as of Jun 30, 2024.
2024 Outlook
For 2024, management continues to expect net sales to be comparable with the prior year at cc.
Mattel continues to expect adjusted gross margin in the range of 48.5-49%. Adjusted EBITDA is projected in the range of $975-$1,025 million.
Capital expenditures are expected in the range of $175-$200 million compared with $160 million in 2023. Mattel anticipates 2024 adjusted earnings per share (EPS) to be between $1.35 and $1.45, compared with $1.23 in 2023. The Zacks Consensus Estimate for 2024 EPS is pegged at $1.40.
Zacks Rank and Stocks to Consider
MAT currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are as follows:
PlayAGS, Inc. (AGS - Free Report) sports a Zacks Rank #1 (Strong Buy). AGS has a trailing four-quarter earnings surprise of 33.3%, on average. The stock has appreciated 76.5% in the past year. You can see the complete list of today’s Zacks Rank #1 stocks here.
The consensus estimate for AGS’s 2024 sales and EPS suggests growth of 7.7% and 5,200%, respectively, from the year-ago levels.
OneSpaWorld Holdings Limited (OSW - Free Report) currently carries a Zacks Rank #2 (Buy). OSW has a trailing four-quarter earnings surprise of 4.7%, on average. The stock has surged 45.8% in the past year.
The Zacks Consensus Estimate for OSW’s 2024 sales and EPS indicates an increase of 10.4% and 28.6%, respectively, from year-ago levels.
Royal Caribbean Cruises Ltd. (RCL - Free Report) currently carries a Zacks Rank #2. RCL has a trailing four-quarter earnings surprise of 18.3%, on average. The stock has rallied 67.9% in the past year.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS calls for growth of 17% and 64.5%, respectively, from year-ago levels.