Core Insights - The collaboration between Mattel, Inc. and 7-Eleven introduces the first-ever branded Hot Wheels die-cast car, a Silver Series™ Toyota Supra featuring 7-Eleven branding, aimed at car enthusiasts and collectors [1][2][7] - The exclusive collection includes two products: the Hot Wheels Silver Series Toyota Supra and custom fingerboards available in two designs, which can be purchased at participating 7-Eleven locations and online [2][7] - Additional merchandise includes limited-edition apparel and accessories that complement the die-cast car, designed for both collectibility and everyday wear [3][7] Company Overview - 7-Eleven, Inc. operates over 13,000 stores across the U.S. and Canada, known for its convenience retailing and iconic products like Slurpee® and Big Gulp® [6] - Mattel is a leading global toy and family entertainment company with a diverse portfolio of brands, including Hot Wheels®, and has been a trusted partner in childhood development since 1945 [9]

[PART I — FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) This section provides Mattel's unaudited consolidated financial statements and detailed notes for the periods ended June 30, 2025, and June 30, 2024, and December 31, 2024 [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents Mattel, Inc.'s unaudited consolidated financial statements, including balance sheets, statements of operations, comprehensive income (loss), cash flows, and stockholders' equity, along with detailed notes explaining the basis of presentation, significant accounts, debt, equity, and other financial disclosures for the periods ended June 30, 2025, and June 30, 2024, and December 31, 2024 [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) This statement presents Mattel's financial position, detailing assets, liabilities, and stockholders' equity as of June 30, 2025, June 30, 2024, and December 31, 2024 Consolidated Balance Sheet (June 30, 2025, in thousands) | ASSETS | Amount (in thousands) | | :--- | :--- | | **Current Assets** | | | Cash and equivalents | $870,452 | | Accounts receivable, net | $792,495 | | Inventories | $867,898 | | Prepaid expenses and other current assets | $268,196 | | **Total current assets** | **$2,799,041** | | **Noncurrent Assets** | | | Property, plant, and equipment, net | $527,264 | | Right-of-use assets, net | $313,769 | | Goodwill | $1,392,093 | | Deferred income tax assets | $307,068 | | Identifiable intangible assets, net | $354,226 | | Other noncurrent assets | $555,434 | | **Total Assets** | **$6,248,895** | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | **Current Liabilities** | | | Current portion of long-term debt | $598,873 | | Accounts payable | $419,478 | | Accrued liabilities | $703,493 | | Income taxes payable | $4,210 | | **Total current liabilities** | **$1,726,054** | | **Noncurrent Liabilities** | | | Long-term debt | $1,737,660 | | Noncurrent lease liabilities | $264,875 | | Other noncurrent liabilities | $348,447 | | **Total noncurrent liabilities** | **$2,350,982** | | **Stockholders' Equity** | | | Common stock $1.00 par value, 1.00 billion shares authorized; 441.4 million shares issued | $441,369 | | Additional paid-in capital | $1,756,671 | | Treasury stock at cost: 119.1 million shares | $(2,726,182) | | Retained earnings | $3,616,911 | | Accumulated other comprehensive loss | $(916,910) | | **Total stockholders' equity** | **$2,171,859** | | **Total Liabilities and Stockholders' Equity** | **$6,248,895** | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) This statement outlines Mattel's revenues, expenses, and net income (loss) for the three and six months ended June 30, 2025, and June 30, 2024 Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | For the Three Months Ended June 30, 2025 (in thousands) | For the Three Months Ended June 30, 2024 (in thousands) | For the Six Months Ended June 30, 2025 (in thousands) | For the Six Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $1,018,562 | $1,079,728 | $1,845,191 | $1,889,237 | | Cost of sales | $499,611 | $548,992 | $918,144 | $969,631 | | Gross Profit | $518,951 | $530,736 | $927,047 | $919,606 | | Advertising and promotion expenses | $79,124 | $73,719 | $149,322 | $145,160 | | Other selling and administrative expenses | $361,328 | $373,810 | $752,206 | $726,757 | | Operating Income | $78,499 | $83,207 | $25,519 | $47,689 | | Interest expense | $29,354 | $29,984 | $58,588 | $60,044 | | Interest (income) | $(12,365) | $(12,398) | $(28,317) | $(29,680) | | Other non-operating (income) expense, net | $(1,417) | $6,110 | $11,623 | $11,721 | | Income (loss) Before Income Taxes | $62,927 | $59,511 | $(16,375) | $5,604 | | Provision (benefit) from income taxes | $16,211 | $9,196 | $(14,355) | $(11,594) | | (Income) from equity method investments | $(6,636) | $(6,545) | $(15,053) | $(11,381) | | Net Income | $53,352 | $56,860 | $13,033 | $28,579 | | Net Income Per Common Share - Basic | $0.16 | $0.17 | $0.04 | $0.08 | | Weighted-average number of common shares | 323,529 | 342,200 | 325,505 | 344,555 | | Net Income Per Common Share - Diluted | $0.16 | $0.17 | $0.04 | $0.08 | | Weighted-average number of common and potential common shares | 325,532 | 344,409 | 328,504 | 347,359 | [Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) This statement details Mattel's net income and other comprehensive income (loss) components, including currency translation adjustments and derivative gains/losses Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric | For the Three Months Ended June 30, 2025 (in thousands) | For the Three Months Ended June 30, 2024 (in thousands) | For the Six Months Ended June 30, 2025 (in thousands) | For the Six Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Net Income | $53,352 | $56,860 | $13,033 | $28,579 | | **Other Comprehensive Income (Loss), Net of Tax** | | | | | | Currency translation adjustments | $61,940 | $(23,381) | $115,558 | $(41,327) | | Employee benefit plan adjustments | $1,285 | $249 | $2,570 | $2,447 | | Net unrealized (losses) gains on derivative instruments: | | | | | | Unrealized holding (losses) gains | $(44,639) | $9,828 | $(53,862) | $23,052 | | Reclassification adjustments included in net income | $11,091 | $(6,080) | $13,276 | $(14,321) | | Subtotal | $(33,548) | $3,748 | $(40,586) | $8,731 | | **Other Comprehensive Income (Loss), Net of Tax** | **$29,677** | **$(19,384)** | **$77,542** | **$(30,149)** | | **Comprehensive Income (Loss)** | **$83,029** | **$37,476** | **$90,575** | **$(1,570)** | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes Mattel's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025, and June 30, 2024 Consolidated Statements of Cash Flows (in thousands) | Cash Flows From Operating Activities: | For the Six Months Ended June 30, 2025 (in thousands) | For the Six Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | | Net income | $13,033 | $28,579 | | Adjustments to reconcile net income to net cash flows used for operating activities: | | | | Depreciation | $68,719 | $68,645 | | Amortization of intangible assets | $15,653 | $15,640 | | Share-based compensation | $38,624 | $37,763 | | Inventory obsolescence | $14,405 | $20,978 | | Deferred income taxes | $(10,771) | $(569) | | Income from equity method investments | $(15,053) | $(11,381) | | Content assets amortization | $36,251 | $40,714 | | Changes in assets and liabilities: | | | | Accounts receivable, net | $238,999 | $223,377 | | Inventories | $(327,702) | $(255,907) | | Prepaid expenses and other current assets | $(18,476) | $(60,024) | | Accounts payable, accrued liabilities, and income taxes payable | $(277,044) | $(295,704) | | Content assets spend | $(9,327) | $(14,446) | | Other, net | $(42,579) | $(15,070) | | **Net cash flows used for operating activities** | **$(275,268)** | **$(217,405)** | | **Cash Flows From Investing Activities:** | | | | Purchases of tools, dies, and molds | $(31,991) | $(33,409) | | Purchases of other property, plant, and equipment | $(44,028) | $(32,036) | | Proceeds from foreign currency forward exchange contracts, net | $8,870 | $442 | | Other, net | $12,568 | $(7,695) | | **Net cash flows used for investing activities** | **$(54,581)** | **$(72,698)** | | **Cash Flows From Financing Activities:** | | | | Share repurchases | $(210,000) | $(199,986) | | Tax withholdings for share-based compensation | $(14,509) | $(14,162) | | Proceeds from stock option exercises | $4,767 | $4,815 | | Other, net | $(2,652) | $(30,686) | | **Net cash flows used for financing activities** | **$(222,394)** | **$(240,019)** | | Effect of Currency Exchange Rate Changes on Cash and Equivalents | $34,787 | $(8,831) | | Change in Cash and Equivalents | $(517,456) | $(538,953) | | Cash and Equivalents at Beginning of Period | $1,387,908 | $1,261,363 | | **Cash and Equivalents at End of Period** | **$870,452** | **$722,410** | [Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) This statement presents changes in Mattel's stockholders' equity, including common stock, retained earnings, and comprehensive loss, for the six months ended June 30, 2025 Consolidated Statements of Stockholders' Equity (in thousands) | Metric | Common Stock (in thousands) | Additional Paid-In Capital (in thousands) | Treasury Stock (in thousands) | Retained Earnings (in thousands) | Accumulated Other Comprehensive Loss (in thousands) | Total Stockholders' Equity (in thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Balance, December 31, 2024** | **$441,369** | **$1,780,259** | **$(2,566,929)** | **$3,603,878** | **$(994,452)** | **$2,264,125** | | Net loss | — | — | — | $(40,319) | — | $(40,319) | | Other comprehensive income, net of tax | — | — | — | — | $47,865 | $47,865 | | Share repurchases | — | — | $(161,440) | — | — | $(161,440) | | Issuance of treasury stock for stock option exercises | — | $(1,151) | $2,819 | — | — | $1,668 | | Issuance of treasury stock for restricted stock units vesting | — | $(6,535) | $4,312 | — | — | $(2,223) | | Deferred compensation | — | $(73) | $73 | — | — | — | | Share-based compensation | — | $19,904 | — | — | — | $19,904 | | **Balance, March 31, 2025** | **$441,369** | **$1,792,404** | **$(2,721,165)** | **$3,563,559** | **$(946,587)** | **$2,129,580** | | Net income | — | — | — | $53,352 | — | $53,352 | | Other comprehensive income, net of tax | — | — | — | — | $29,677 | $29,677 | | Share repurchases | — | — | $(50,462) | — | — | $(50,462) | | Issuance of treasury stock for stock option exercises | — | $(3,292) | $6,391 | — | — | $3,099 | | Issuance of treasury stock for restricted stock units vesting | — | $(51,100) | $38,698 | — | — | $(12,402) | | Deferred compensation | — | $(61) | $356 | — | — | $295 | | Share-based compensation | — | $18,720 | — | — | — | $18,720 | | **Balance, June 30, 2025** | **$441,369** | **$1,756,671** | **$(2,726,182)** | **$3,616,911** | **$(916,910)** | **$2,171,859** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and breakdowns for various accounts and financial activities presented in the consolidated financial statements, including accounting policies, asset and liability compositions, debt, equity, and other significant financial disclosures [1. Basis of Presentation](index=10&type=section&id=1.%20Basis%20of%20Presentation) This note describes the accounting principles and interim reporting standards used for the consolidated financial statements, highlighting the seasonal nature of Mattel's business - The accompanying unaudited consolidated financial statements are prepared in accordance with GAAP applicable to interim financial information, including only normal recurring adjustments[23](index=23&type=chunk) - The December 31, 2024 balance sheet data is derived from audited financial statements, but interim notes do not include all annual GAAP disclosures[24](index=24&type=chunk) - Due to the seasonal nature of Mattel's business, interim results are not necessarily indicative of full-year expectations[24](index=24&type=chunk) [2. Accounts Receivable, Net](index=10&type=section&id=2.%20Accounts%20Receivable%2C%20Net) This note details Mattel's accounts receivable and the methodology for estimating allowances for credit losses based on various financial and economic factors - Mattel estimates current expected credit losses based on collection history, economic trends, business environment, customer financial condition, accounts receivable aging, and customer disputes[25](index=25&type=chunk) Allowances for Credit Losses | Date | Allowance for Credit Losses (in millions) | | :--- | :--- | | June 30, 2025 | $8.6 | | June 30, 2024 | $8.5 | | December 31, 2024 | $8.2 | [3. Inventories](index=10&type=section&id=3.%20Inventories) This note provides a breakdown of Mattel's inventory components, including raw materials, work in process, and finished goods, for specified periods Inventories Breakdown | Category | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | :--- | | Raw materials and work in process | $117,481 | $112,077 | $94,755 | | Finished goods | $750,417 | $664,786 | $406,977 | | **Total Inventories** | **$867,898** | **$776,863** | **$501,732** | [4. Property, Plant, and Equipment, Net](index=10&type=section&id=4.%20Property%2C%20Plant%2C%20and%20Equipment%2C%20Net) This note presents the composition of Mattel's property, plant, and equipment, net of accumulated depreciation, and discusses significant asset acquisitions Property, Plant, and Equipment, Net (in thousands) | Category | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | :--- | | Land | $42,672 | $19,785 | $42,584 | | Buildings | $370,947 | $314,063 | $350,920 | | Machinery and equipment | $629,548 | $622,727 | $605,311 | | Software | $234,716 | $233,550 | $234,699 | | Tools, dies, and molds | $480,164 | $494,555 | $476,551 | | Leasehold improvements | $109,375 | $122,107 | $107,139 | | Construction in progress | $63,564 | $38,410 | $62,130 | | **Total Gross PPE** | **$1,930,986** | **$1,845,197** | **$1,879,334** | | Less: accumulated depreciation | $(1,403,722) | $(1,400,318) | $(1,363,285) | | **Total PPE, Net** | **$527,264** | **$444,879** | **$516,049** | - In July 2024, Mattel purchased an office building in El Segundo, California for **$58.8 million** to replace a currently leased facility, supporting its global design and development activities for North America and International segments[28](index=28&type=chunk) [5. Goodwill and Identifiable Intangible Assets, Net](index=11&type=section&id=5.%20Goodwill%20and%20Identifiable%20Intangible%20Assets%2C%20Net) This note outlines Mattel's goodwill and identifiable intangible assets, including impairment testing policies and changes due to currency exchange rates - Mattel's reporting units are North America, International, and American Girl, with goodwill tested annually for impairment in the third quarter and whenever circumstances indicate its carrying amount may exceed fair value[29](index=29&type=chunk) Change in Goodwill by Reporting Unit (Six Months Ended June 30, 2025) | Reporting Unit | December 31, 2024 (in thousands) | Currency Exchange Rate Impact (in thousands) | June 30, 2025 (in thousands) | | :--- | :--- | :--- | :--- | | North America | $732,995 | $2,800 | $735,795 | | International | $441,155 | $7,572 | $448,727 | | American Girl | $207,571 | — | $207,571 | | **Total Goodwill** | **$1,381,721** | **$10,372** | **$1,392,093** | Identifiable Intangible Assets, Net (in thousands) | Category | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | :--- | | Identifiable intangibles | $814,436 | $800,371 | $798,655 | | Less: accumulated amortization | $(460,210) | $(423,703) | $(438,092) | | **Total Identifiable Intangible Assets, Net** | **$354,226** | **$376,668** | **$360,563** | [6. Accrued Liabilities](index=11&type=section&id=6.%20Accrued%20Liabilities) This note provides a detailed breakdown of Mattel's accrued liabilities, including lease liabilities, royalties, incentive compensation, and advertising expenses Accrued Liabilities Breakdown (in thousands) | Category | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | :--- | | Lease liabilities | $80,246 | $75,842 | $74,755 | | Royalties | $55,811 | $50,420 | $80,754 | | Incentive compensation | $52,259 | $60,094 | $157,669 | | Advertising and promotion | $43,236 | $53,643 | $120,290 | [7. Supplier Finance Program](index=12&type=section&id=7.%20Supplier%20Finance%20Program) This note describes Mattel's supplier finance program, which allows suppliers to finance payment obligations through a third-party financial institution - Mattel has a supplier finance program allowing participating suppliers to voluntarily finance payment obligations by selling receivables at a discount to a third-party financial institution[34](index=34&type=chunk) - Mattel's payment terms with suppliers are consistent regardless of participation, and Mattel has no economic interest in suppliers' decisions to participate[34](index=34&type=chunk) Outstanding Payment Obligations under Supplier Finance Program | Date | Outstanding Payment Obligations (in millions) | | :--- | :--- | | June 30, 2025 | $86.6 | | June 30, 2024 | $64.9 | | December 31, 2024 | $69.2 | [8. Seasonal Financing](index=12&type=section&id=8.%20Seasonal%20Financing) This note details Mattel's revolving credit facility, its terms, interest rates, and compliance with covenants, supporting seasonal liquidity needs - On July 15, 2024, Mattel entered into a new **$1.40 billion** senior unsecured revolving credit facility, maturing July 15, 2029, replacing a prior secured facility[35](index=35&type=chunk) - Borrowings under the Credit Facility bear interest at a floating rate, either Term SOFR or Base Rate, plus an applicable margin determined by Mattel's debt rating[36](index=36&type=chunk) - As of June 30, 2025, Mattel was in compliance with all covenants, with no outstanding borrowings and approximately **$9 million** in outstanding letters of credit under the Credit Facility[40](index=40&type=chunk) [9. Long-Term Debt](index=13&type=section&id=9.%20Long-Term%20Debt) This note provides a breakdown of Mattel's senior notes, debt issuance costs, and the impact of improved credit ratings on debt covenants Long-Term Debt Breakdown (in thousands) | Senior Notes | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | :--- | | 2010 Senior Notes due October 2040 | $250,000 | $250,000 | $250,000 | | 2011 Senior Notes due November 2041 | $300,000 | $300,000 | $300,000 | | 2019 Senior Notes due December 2027 | $600,000 | $600,000 | $600,000 | | 2021 Senior Notes due April 2026 | $600,000 | $600,000 | $600,000 | | 2021 Senior Notes due April 2029 | $600,000 | $600,000 | $600,000 | | Debt issuance costs and debt discount | $(13,467) | $(17,831) | $(15,649) | | **Total** | **$2,336,533** | **$2,332,169** | **$2,334,351** | | Less: current portion | $(598,873) | — | — | | **Total long-term debt** | **$1,737,660** | **$2,332,169** | **$2,334,351** | - Due to improved credit ratings from Fitch, S&P, and Moody's in 2024, certain debt covenants limiting Mattel's ability to incur additional debt, pay dividends, or make restricted payments are suspended[43](index=43&type=chunk) [10. Accumulated Other Comprehensive Income (Loss)](index=14&type=section&id=10.%20Accumulated%20Other%20Comprehensive%20Income%20%28Loss%29) This note details the components of accumulated other comprehensive income (loss), including derivative instruments, employee benefits, and currency translation adjustments Accumulated Other Comprehensive Income (Loss) (Net of Tax) | Component | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | :--- | | Derivative Instruments | $(26,279) | $5,268 | $14,307 | | Employee Benefit Plans | $(137,093) | $(140,469) | $(139,663) | | Currency Translation Adjustments | $(753,538) | $(799,916) | $(869,096) | | **Total Accumulated OCI (Loss)** | **$(916,910)** | **$(935,117)** | **$(994,452)** | - For the six months ended June 30, 2025, currency translation adjustments resulted in a net gain of **$115.6 million**, primarily due to the strengthening of the Russian ruble, British pound sterling, and Mexican peso against the U.S. dollar[47](index=47&type=chunk) - For the six months ended June 30, 2024, currency translation adjustments resulted in a net loss of **$41.3 million**, mainly due to the weakening of the Mexican peso and Brazilian real, partially offset by the strengthening of the Russian ruble[48](index=48&type=chunk) [11. Foreign Currency Transaction Exposure](index=17&type=section&id=11.%20Foreign%20Currency%20Transaction%20Exposure) This note quantifies Mattel's net currency transaction gains and losses impacting operating and non-operating income for various periods Currency Transaction Gains (Losses), Net (in thousands) | Period | Operating Income/Expense (in thousands) | Other Non-Operating Income/Expense, Net (in thousands) | Total (in thousands) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30, 2025 | $1,724 | $2,030 | $3,754 | | Three Months Ended June 30, 2024 | $(6,158) | $(5,698) | $(11,856) | | Six Months Ended June 30, 2025 | $2,654 | $(8,405) | $(5,751) | | Six Months Ended June 30, 2024 | $(6,040) | $(4,984) | $(11,024) | [12. Derivative Instruments](index=17&type=section&id=12.%20Derivative%20Instruments) This note describes Mattel's use of foreign currency forward exchange contracts for hedging and details the fair value of derivative assets and liabilities - Mattel uses foreign currency forward exchange contracts as cash flow hedges for inventory purchases and sales, and to hedge intercompany loans, with maturity dates up to 24 months[50](index=50&type=chunk) - Notional amounts of derivative instruments were approximately **$918 million** at June 30, 2025, an increase from **$642 million** at June 30, 2024, and **$628 million** at December 31, 2024[50](index=50&type=chunk) Derivative Assets (Fair Value, in thousands) | Balance Sheet Classification | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | :--- | | **Derivatives Designated as Hedging Instruments:** | | | | | Prepaid expenses and other current assets | $1,649 | $8,872 | $17,290 | | Other noncurrent assets | $289 | $1,121 | $2,775 | | **Total Designated** | **$1,938** | **$9,993** | **$20,065** | | **Derivatives Not Designated as Hedging Instruments:** | | | | | Prepaid expenses and other current assets | $1,347 | $513 | $1,966 | | **Total Not Designated** | **$1,347** | **$513** | **$1,966** | | **Grand Total Derivative Assets** | **$3,285** | **$10,506** | **$22,031** | Derivative Liabilities (Fair Value, in thousands) | Balance Sheet Classification | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | :--- | | **Derivatives Designated as Hedging Instruments:** | | | | | Accrued liabilities | $30,139 | $1,739 | $1,370 | | Other noncurrent liabilities | $8,574 | $127 | $65 | | **Total Designated** | **$38,713** | **$1,866** | **$1,435** | | **Derivatives Not Designated as Hedging Instruments:** | | | | | Accrued liabilities | $936 | $517 | $902 | | **Total Not Designated** | **$936** | **$517** | **$902** | | **Grand Total Derivative Liabilities** | **$39,649** | **$2,383** | **$2,337** | [13. Fair Value Measurements](index=20&type=section&id=13.%20Fair%20Value%20Measurements) This note explains Mattel's fair value hierarchy for financial instruments and compares the fair value of long-term debt to its carrying amount - Fair value hierarchy levels are defined as Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[57](index=57&type=chunk) - The fair values of cash and equivalents, accounts receivable and payable, accrued liabilities, and short-term borrowings approximate their carrying amounts due to their short-term nature[56](index=56&type=chunk) Fair Value of Long-Term Debt vs. Carrying Amount | Date | Estimated Fair Value of Long-Term Debt (in billions) | Carrying Amount of Long-Term Debt (in billions) | | :--- | :--- | :--- | | June 30, 2025 | $2.29 | $2.35 | | June 30, 2024 | $2.25 | $2.35 | | December 31, 2024 | $2.27 | $2.35 | [14. Earnings Per Share](index=21&type=section&id=14.%20Earnings%20Per%20Share) This note presents the calculation of basic and diluted net income per common share, including the impact of share-based awards Basic and Diluted Earnings Per Common Share (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income (in thousands) | $53,352 | $56,860 | $13,033 | $28,579 | | Weighted-average common shares (in thousands) | 323,529 | 342,200 | 325,505 | 344,555 | | **Basic Net Income Per Common Share** | **$0.16** | **$0.17** | **$0.04** | **$0.08** | | Dilutive share-based awards (in thousands) | 2,003 | 2,209 | 2,999 | 2,804 | | Weighted-average common and potential common shares (in thousands) | 325,532 | 344,409 | 328,504 | 347,359 | | **Diluted Net Income Per Common Share** | **$0.16** | **$0.17** | **$0.04** | **$0.08** | - Share-based awards totaling **6.3 million** and **6.5 million** for the three and six months ended June 30, 2025, respectively, were excluded from the calculation of diluted net income per common share because their effect would be antidilutive[59](index=59&type=chunk) [15. Employee Benefit Plans](index=21&type=section&id=15.%20Employee%20Benefit%20Plans) This note details the net periodic benefit cost for Mattel's defined benefit pension plans and outlines cash contributions made to these plans Net Periodic Benefit Cost for Defined Benefit Pension Plans (in thousands) | Component | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Service cost | $842 | $839 | $1,672 | $1,698 | | Interest cost | $5,110 | $5,030 | $10,189 | $10,083 | | Expected return on plan assets | $(4,385) | $(4,678) | $(8,754) | $(9,359) | | Amortization of prior service cost | $50 | $47 | $99 | $96 | | Recognized actuarial loss | $2,175 | $1,943 | $4,340 | $3,886 | | **Net periodic benefit cost** | **$3,792** | **$3,181** | **$7,546** | **$6,404** | - During the six months ended June 30, 2025, Mattel made cash contributions totaling approximately **$14 million** related to its defined benefit pension and postretirement benefit plans, with an additional **$7 million** expected for the remainder of 2025[62](index=62&type=chunk) [16. Share-Based Payments](index=22&type=section&id=16.%20Share-Based%20Payments) This note describes Mattel's various share-based payment awards and reports the associated compensation expense and unrecognized compensation - Mattel grants nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, RSUs, performance RSUs, dividend equivalent rights, and common stock shares to officers, employees, non-employee directors, and consultants[63](index=63&type=chunk) - Annual performance awards under the 2025-2027 LTIP are based on Mattel's relative Total Shareholder Return (TSR) over a three-year period, with payouts ranging from **0% to 200%** of the target award[64](index=64&type=chunk) Share-Based Compensation Expense (in thousands) | Expense Type | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Stock option compensation expense | $453 | $753 | $1,030 | $1,798 | | RSU compensation expense | $14,982 | $16,077 | $28,470 | $28,325 | | Performance award compensation expense | $3,285 | $3,004 | $9,124 | $7,640 | | **Total Compensation Expense** | **$18,720** | **$19,834** | **$38,624** | **$37,763** | - As of June 30, 2025, total unrecognized compensation expense related to unvested share-based payments was **$158.1 million**, expected to be recognized over a weighted-average period of **2.4 years**[66](index=66&type=chunk) [17. Other Selling and Administrative Expenses](index=23&type=section&id=17.%20Other%20Selling%20and%20Administrative%20Expenses) This note provides a breakdown of selected other selling and administrative expenses, including design, development, and intangible asset amortization Selected Other Selling and Administrative Expenses (in thousands) | Expense Type | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Design and development | $49,384 | $47,419 | $96,178 | $95,029 | | Identifiable intangible asset amortization | $7,884 | $7,817 | $15,653 | $15,640 | [18. Restructuring Charges](index=23&type=section&id=18.%20Restructuring%20Charges) This note details Mattel's 'Optimizing for Profitable Growth' program, outlining its cost savings targets, cumulative charges, and expected expenditures - On February 7, 2024, Mattel announced the 'Optimizing for Profitable Growth' (OPG) program, a multi-year cost savings initiative focused on global supply chain efficiency and manufacturing footprint[68](index=68&type=chunk) - The OPG program includes cost savings actions related to discontinuing production at a plant in China and other 2023 actions not recognized in the prior 'Optimizing for Growth' program[68](index=68&type=chunk) Severance and Other Restructuring Costs (OPG Program, in thousands) | Category | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Cost of sales | $2,070 | $412 | $3,691 | $2,625 | | Other selling and administrative expenses | $1,732 | $10,456 | $19,492 | $17,974 | | **Total** | **$3,802** | **$10,868** | **$23,183** | **$20,599** | - As of June 30, 2025, Mattel recorded cumulative OPG program charges of approximately **$98 million** (including **$3 million** non-cash), with total expected cash expenditures of **$115-$140 million** and non-cash charges up to **$5 million**[71](index=71&type=chunk) [19. Income Taxes](index=24&type=section&id=19.%20Income%20Taxes) This note presents the provision (benefit) from income taxes and discusses discrete income tax benefits and the impact of new tax legislation Provision (Benefit) from Income Taxes | Period | Provision (Benefit) from Income Taxes (in millions) | | :--- | :--- | | Three Months Ended June 30, 2025 | $16.2 (expense) | | Three Months Ended June 30, 2024 | $9.2 (expense) | | Six Months Ended June 30, 2025 | $(14.4) (benefit) | | Six Months Ended June 30, 2024 | $(11.6) (benefit) | - For the six months ended June 30, 2025, Mattel recognized a net discrete income tax benefit of **$10.4 million**, primarily related to a change in its indefinite reinvestment assertion for certain foreign subsidiary earnings[72](index=72&type=chunk) - Mattel is currently evaluating the impact of the recently enacted H.R.1- the One Big Beautiful Bill Act (OBBBA) on its consolidated financial statements, with effects to be recorded in the third quarter of 2025[75](index=75&type=chunk) [20. Contingencies](index=24&type=section&id=20.%20Contingencies) This note outlines Mattel's involvement in ongoing litigation, including product liability lawsuits and class action settlements, and associated accrued liabilities - Mattel is involved in ongoing litigation related to Yellowstone do Brasil Ltda., with a probable loss accrued that is not material as of June 30, 2025[79](index=79&type=chunk) - Class action lawsuits regarding the Fisher-Price Rock 'n Play Sleeper were settled in July 2024, with final court approval in February 2025, and the settlement amount was not material[80](index=80&type=chunk) - Fourteen product liability lawsuits are pending against Fisher-Price and Mattel concerning the Sleeper, alleging defects caused fatalities or injuries, with estimated liabilities accrued where appropriate, which are not material[81](index=81&type=chunk) - New putative class action lawsuits were filed between October 2024 and February 2025 concerning Fisher-Price Snuga Swings, alleging false marketing and suffocation risk; a contingent settlement was reached in May 2025, subject to court approval[85](index=85&type=chunk) [21. Segment Information](index=27&type=section&id=21.%20Segment%20Information) This note provides financial information by Mattel's reportable segments, North America and International, detailing net sales and operating income - Mattel's reportable segments are North America and International, with performance evaluated based on each segment's gross profit and operating income[88](index=88&type=chunk)[89](index=89&type=chunk) Consolidated Net Sales and Operating Income by Segment (Three Months Ended June 30, 2025) | Segment | Net Sales (in thousands) | Operating Income (Loss) (in thousands) | | :--- | :--- | :--- | | North America | $510,796 | $93,812 | | International | $507,766 | $114,930 | | Corporate and other | — | $(130,243) | | **Consolidated** | **$1,018,562** | **$78,499** | Consolidated Net Sales and Operating Income by Segment (Six Months Ended June 30, 2025) | Segment | Net Sales (in thousands) | Operating Income (Loss) (in thousands) | | :--- | :--- | :--- | | North America | $1,002,161 | $176,883 | | International | $843,030 | $138,249 | | Corporate and other | — | $(289,613) | | **Consolidated** | **$1,845,191** | **$25,519** | Net Sales by Geographic Area (Three Months Ended June 30, in thousands) | Geographic Area | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | | North America | $510,796 | $606,480 | | EMEA | $277,470 | $250,688 | | Latin America | $128,611 | $134,597 | | Asia Pacific | $101,685 | $87,963 | | **Total Net Sales** | **$1,018,562** | **$1,079,728** | [22. New Accounting Pronouncements](index=31&type=section&id=22.%20New%20Accounting%20Pronouncements) This note discusses recently issued accounting pronouncements and Mattel's ongoing evaluation of their potential impact on financial statements - FASB ASU 2023-09 (Income Taxes) requires enhanced annual income tax disclosures, effective for fiscal years beginning after December 15, 2024, with Mattel evaluating its impact[102](index=102&type=chunk) - FASB ASU 2024-03 (Expense Disaggregation Disclosures) requires enhanced expense disclosures, effective for fiscal years beginning after December 15, 2026, with Mattel evaluating its impact[103](index=103&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Mattel's financial performance and condition, discussing key operational results, financial trends, liquidity, and capital resources for the second quarter and first half of 2025 compared to 2024, including the impact of strategic initiatives and market conditions [Overview](index=32&type=section&id=Overview) This section introduces Mattel as a global toy and family entertainment company, highlighting its focus on IP-driven toy business and entertainment expansion - Mattel is a leading global toy and family entertainment company focused on growing its IP-driven toy business and expanding its entertainment offering[109](index=109&type=chunk)[112](index=112&type=chunk) - Mattel's brand portfolio includes Dolls (Barbie, American Girl), Infant, Toddler, and Preschool (Fisher-Price, Thomas & Friends), Vehicles (Hot Wheels, Matchbox), and Action Figures, Building Sets, Games, and Other (Masters of the Universe, UNO, Jurassic World)[109](index=109&type=chunk)[110](index=110&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) [Recent Developments](index=33&type=section&id=Recent%20Developments) This section summarizes Mattel's strategic progress in Q2 2025, including international growth, gross margin expansion, and monitoring of global trade policies - In Q2 2025, Mattel continued its multi-year strategy, achieving strong international growth and expanded gross margin, despite a **6% decrease in net sales** and U.S. business impact from global trade dynamics and tariff uncertainty[115](index=115&type=chunk)[116](index=116&type=chunk) - Gross margin expanded to **50.9%** in Q2 2025 (from **49.2%** in Q2 2024) due to OPG program savings, lower inventory management costs, and favorable mix[116](index=116&type=chunk) - Mattel is monitoring evolving U.S. global trade policy, including tariffs on imports from China, Vietnam, and Mexico, and evaluating the impact of the newly enacted OBBBA tax legislation[117](index=117&type=chunk)[118](index=118&type=chunk) [Results of Operations—Second Quarter](index=34&type=section&id=Results%20of%20Operations%E2%80%94Second%20Quarter) Mattel's second-quarter results showed a 6% decrease in net sales to $1.02 billion, primarily due to lower gross billings in Dolls and Infant, Toddler, and Preschool categories. Despite this, gross margin improved to 50.9% due to cost savings and favorable mix, while operating income slightly decreased [Consolidated Results (Q2)](index=34&type=section&id=Consolidated%20Results%20%28Q2%29) This section provides a consolidated financial overview for Q2 2025, detailing net sales, cost of sales, gross profit, and operating income Consolidated Results (Three Months Ended June 30, in millions, except percentages) | Metric | 2025 (in millions) | % of Net Sales (2025) | 2024 (in millions) | % of Net Sales (2024) | YoY Change (%) | Basis Points of Net Sales Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net sales | $1,018.6 | | $1,079.7 | | -6% | | | Cost of sales | $499.6 | 49.1% | $549.0 | 50.8% | -9% | (170) | | Gross profit | $519.0 | 50.9% | $530.7 | 49.2% | -2% | 170 | | Advertising and promotion expenses | $79.1 | 7.8% | $73.7 | 6.8% | 7% | 100 | | Other selling and administrative expenses | $361.3 | 35.5% | $373.8 | 34.6% | -3% | 90 | | Operating income | $78.5 | 7.7% | $83.2 | 7.7% | -6% | — | | Net income | $53.4 | 5.2% | $56.9 | 5.3% | -6% | (10) | [Sales (Q2)](index=34&type=section&id=Sales%20%28Q2%29) This section analyzes the drivers of Mattel's net sales decrease in Q2 2025, including changes in gross billings across product categories and brands - Net sales decreased by **$61.2 million (6%)** to **$1.02 billion** in Q2 2025, driven by a **$50.9 million** decrease in gross billings and a **$10.3 million** increase in sales adjustments[121](index=121&type=chunk) Gross Billings by Categories (Three Months Ended June 30, in millions) | Category | 2025 (in millions) | 2024 (in millions) | % Change Reported | | :--- | :--- | :--- | :--- | | Dolls | $335.2 | $414.0 | -19% | | Infant, Toddler, and Preschool | $143.4 | $190.3 | -25% | | Vehicles | $407.5 | $369.7 | 10% | | Action Figures, Building Sets, Games, and Other | $264.5 | $227.3 | 16% | | **Gross Billings** | **$1,150.5** | **$1,201.3** | **-4%** | Gross Billings by Top 3 Power Brands (Three Months Ended June 30, in millions) | Brand | 2025 (in millions) | 2024 (in millions) | % Change Reported | | :--- | :--- | :--- | :--- | | Barbie | $200.7 | $266.1 | -25% | | Hot Wheels | $357.3 | $327.4 | 9% | | Fisher-Price | $107.8 | $135.9 | -21% | - Sales adjustments increased to **$131.9 million** in Q2 2025 (**12.9% of net sales**) from **$121.6 million** (**11.3% of net sales**) in Q2 2024, primarily due to higher promotional activities and a shift in sales channel mix[125](index=125&type=chunk) [Cost of Sales (Q2)](index=36&type=section&id=Cost%20of%20Sales%20%28Q2%29) This section explains the decrease in Mattel's cost of sales for Q2 2025, attributing it to lower product costs and freight expenses - Cost of sales decreased by **$49.4 million (9%)** to **$499.6 million** in Q2 2025, mainly due to a **$49.2 million** decrease in product and other costs and a **$3.6 million** decrease in freight and logistics expenses[126](index=126&type=chunk) - Royalty expense increased by **$3.5 million (7%)** to **$51.2 million** in Q2 2025[126](index=126&type=chunk) [Gross Margin (Q2)](index=36&type=section&id=Gross%20Margin%20%28Q2%29) This section details the improvement in Mattel's gross margin for Q2 2025, driven by cost savings, lower inventory costs, and favorable mix - Gross margin increased to **50.9%** in Q2 2025 from **49.2%** in Q2 2024, an increase of **170 basis points**[127](index=127&type=chunk) - Key drivers for gross margin increase include incremental realized savings from the OPG program (**120 bps**), lower inventory management costs (**60 bps**), favorable mix (**60 bps**), and supply chain efficiencies (**40 bps**), partially offset by cost inflation (**110 bps**)[127](index=127&type=chunk) [Advertising and Promotion Expenses (Q2)](index=36&type=section&id=Advertising%20and%20Promotion%20Expenses%20%28Q2%29) This section discusses the increase in advertising and promotion expenses as a percentage of net sales in Q2 2025 due to timing shifts - Advertising and promotion expenses as a percentage of net sales increased to **7.8%** in Q2 2025 from **6.8%** in Q2 2024, primarily due to a shift in the timing of advertising and promotion programs[128](index=128&type=chunk) [Other Selling and Administrative Expenses (Q2)](index=36&type=section&id=Other%20Selling%20and%20Administrative%20Expenses%20%28Q2%29) This section explains the decrease in other selling and administrative expenses for Q2 2025, primarily due to OPG program savings and lower restructuring charges - Other selling and administrative expenses decreased by **$12.5 million** to **$361.3 million** in Q2 2025, primarily due to **$10.8 million** in realized savings from the OPG program and **$8.3 million** lower severance and restructuring charges[129](index=129&type=chunk) [Interest Expense (Q2)](index=36&type=section&id=Interest%20Expense%20%28Q2%29) This section notes that Mattel's interest expense remained relatively stable in Q2 2025 compared to the prior year - Interest expense was relatively flat at **$29.4 million** in Q2 2025 compared to **$30.0 million** in Q2 2024[130](index=130&type=chunk) [Interest Income (Q2)](index=36&type=section&id=Interest%20Income%20%28Q2%29) This section indicates that Mattel's interest income remained consistent in Q2 2025 compared to the prior year - Interest income remained flat at **$12.4 million** in Q2 2025 compared to Q2 2024[131](index=131&type=chunk) [Provision for Income Taxes (Q2)](index=36&type=section&id=Provision%20for%20Income%20Taxes%20%28Q2%29) This section explains the increase in income tax provision for Q2 2025, driven by changes in discrete income tax expense and higher income before taxes - Provision for income taxes increased to an expense of **$16.2 million** in Q2 2025 from **$9.2 million** in Q2 2024, driven by a change in discrete income tax expense and higher income before income taxes[132](index=132&type=chunk) - Mattel recognized a net discrete income tax expense of **$1.0 million** in Q2 2025, compared to a net discrete tax benefit of **$4.5 million** in Q2 2024[132](index=132&type=chunk) [Segment Results (Q2)](index=37&type=section&id=Segment%20Results%20%28Q2%29) In Q2 2025, the North America segment experienced a 16% decrease in net sales and a 31% decrease in operating income, primarily due to lower gross billings in Dolls and Infant, Toddler, and Preschool. Conversely, the International segment saw a 7% increase in net sales and a 49% increase in operating income, driven by strong performance in Action Figures, Building Sets, Games, and Other, and Vehicles products, coupled with improved gross margin [North America Segment (Q2)](index=37&type=section&id=North%20America%20Segment%20%28Q2%29) This section details the financial performance of Mattel's North America segment in Q2 2025, including net sales, gross billings by category, and operating income - North America net sales decreased by **$95.7 million (16%)** to **$510.8 million** in Q2 2025, primarily due to a **$99.3 million** decrease in gross billings[134](index=134&type=chunk) - North America segment operating income decreased by **$43.1 million (31%)** to **$93.8 million** in Q2 2025, mainly due to lower gross profit[134](index=134&type=chunk)[142](index=142&type=chunk) North America Gross Billings by Categories (Three Months Ended June 30, in millions) | Category | 2025 (in millions) | 2024 (in millions) | % Change Reported | | :--- | :--- | :--- | :--- | | Dolls | $168.6 | $231.1 | -27% | | Infant, Toddler, and Preschool | $69.9 | $111.6 | -37% | | Vehicles | $174.8 | $166.8 | 5% | | Action Figures, Building Sets, Games, and Other | $134.3 | $137.3 | -2% | | **Gross Billings** | **$547.5** | **$646.9** | **-15%** | - North America gross margin increased to **48.0%** in Q2 2025 from **47.3%** in Q2 2024, driven by OPG program savings (**130 bps**) and lower inventory management costs (**40 bps**), partially offset by cost inflation (**80 bps**)[141](index=141&type=chunk) [International Segment (Q2)](index=39&type=section&id=International%20Segment%20%28Q2%29) This section details the financial performance of Mattel's International segment in Q2 2025, including net sales, gross billings by category, and operating income - International net sales increased by **$34.5 million (7%)** to **$507.8 million** in Q2 2025, driven by a **$48.5 million** increase in gross billings, partially offset by an increase in sales adjustments[143](index=143&type=chunk) - International segment operating income increased by **$37.6 million (49%)** to **$114.9 million** in Q2 2025, primarily due to higher gross profit[143](index=143&type=chunk)[150](index=150&type=chunk) International Gross Billings by Categories (Three Months Ended June 30, in millions) | Category | 2025 (in millions) | 2024 (in millions) | % Change Reported | | :--- | :--- | :--- | :--- | | Dolls | $166.6 | $182.9 | -9% | | Infant, Toddler, and Preschool | $73.5 | $78.7 | -7% | | Vehicles | $232.7 | $202.9 | 15% | | Action Figures, Building Sets, Games, and Other | $130.2 | $90.0 | 45% | | **Gross Billings** | **$602.9** | **$554.5** | **9%** | - International gross margin increased to **51.7%** in Q2 2025 from **47.6%** in Q2 2024, driven by favorable foreign currency exchange rates (**190 bps**), favorable mix (**150 bps**), OPG program savings (**110 bps**), and lower inventory management costs (**90 bps**), partially offset by cost inflation (**130 bps**)[149](index=149&type=chunk) [Results of Operations—First Half](index=40&type=section&id=Results%20of%20Operations%E2%80%94First%20Half) For the first half of 2025, Mattel's net sales decreased by 2% to $1.85 billion, primarily due to lower gross billings in Dolls and Infant, Toddler, and Preschool categories. Despite this, gross margin improved to 50.2% due to cost savings. Operating income significantly decreased by 46%, and the company reported a net loss before income taxes [Consolidated Results (H1)](index=40&type=section&id=Consolidated%20Results%20%28H1%29) This section provides a consolidated financial overview for the first half of 2025, detailing net sales, cost of sales, gross profit, and operating income Consolidated Results (Six Months Ended June 30, in millions, except percentages) | Metric | 2025 (in millions) | % of Net Sales (2025) | 2024 (in millions) | % of Net Sales (2024) | YoY Change (%) | Basis Points of Net Sales Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net sales | $1,845.2 | | $1,889.2 | | -2% | | | Cost of sales | $918.1 | 49.8% | $969.6 | 51.3% | -5% | (150) | | Gross profit | $927.0 | 50.2% | $919.6 | 48.7% | 1% | 150 | | Advertising and promotion expenses | $149.3 | 8.1% | $145.2 | 7.7% | 3% | 40 | | Other selling and administrative expenses | $752.2 | 40.8% | $726.8 | 38.5% | 4% | 230 | | Operating income | $25.5 | 1.4% | $47.7 | 2.5% | -46% | (110) | | (Loss) income before income taxes | $(16.4) | -0.9% | $5.6 | 0.3% | N/M | N/M | | Net income | $13.0 | 0.7% | $28.6 | 1.5% | -54% | (80) | [Sales (H1)](index=40&type=section&id=Sales%20%28H1%29) This section analyzes the drivers of Mattel's net sales decrease in H1 2025, including changes in gross billings across product categories and brands - Net sales decreased by **$44.0 million (2%)** to **$1.85 billion** in H1 2025, due to a **$25.6 million** decrease in gross billings and an **$18.4 million** increase in sales adjustments[151](index=151&type=chunk) Gross Billings by Categories (Six Months Ended June 30, in millions) | Category | 2025 (in millions) | 2024 (in millions) | % Change Reported | Currency Exchange Rate Impact | | :--- | :--- | :--- | :--- | :--- | | Dolls | $631.8 | $708.5 | -11% | -1% | | Infant, Toddler, and Preschool | $269.8 | $325.3 | -17% | -1% | | Vehicles | $715.9 | $667.4 | 7% | -1% | | Action Figures, Building Sets, Games, and Other | $457.1 | $399.0 | 15% | —% | | **Gross Billings** | **$2,074.6** | **$2,100.3** | **-1%** | **-1%** | Gross Billings by Top 3 Power Brands (Six Months Ended June 30, in millions) | Brand | 2025 (in millions) | 2024 (in millions) | % Change Reported | Currency Exchange Rate Impact | | :--- | :--- | :--- | :--- | :--- | | Barbie | $374.4 | $443.5 | -16% | -1% | | Hot Wheels | $626.1 | $585.5 | 7% | -1% | | Fisher-Price | $198.0 | $229.3 | -14% | -1% | | Other | $876.1 | $841.9 | 4% | —% | | **Gross Billings** | **$2,074.6** | **$2,100.3** | **-1%** | **-1%** | - Sales adjustments increased to **$229.4 million** in H1 2025 (**12.4% of net sales**) from **$211.0 million** (**11.2% of net sales**) in H1 2024, primarily due to higher promotional activities[155](index=155&type=chunk) [Cost of Sales (H1)](index=42&type=section&id=Cost%20of%20Sales%20%28H1%29) This section explains the decrease in Mattel's cost of sales for H1 2025, attributing it to lower product costs and freight expenses - Cost of sales decreased by **$51.5 million (5%)** to **$918.1 million** in H1 2025, mainly due to a **$58.0 million** decrease in product and other costs and a **$3.4 million** decrease in freight and logistics expenses[156](index=156&type=chunk) - Royalty expense increased by **$9.9 million (12%)** to **$93.7 million** in H1 2025[156](index=156&type=chunk) [Gross Margin (H1)](index=42&type=section&id=Gross%20Margin%20%28H1%29) This section details the improvement in Mattel's gross margin for H1 2025, driven by cost savings, lower inventory costs, and favorable mix - Gross margin increased to **50.2%** in H1 2025 from **48.7%** in H1 2024, an increase of **150 basis points**[157](index=157&type=chunk) - Key drivers for gross margin increase include incremental realized savings from the OPG program (**120 bps**), lower inventory management costs (**90 bps**), and favorable mix and other factors (**40 bps**), partially offset by cost inflation (**100 bps**)[157](index=157&type=chunk) [Advertising and Promotion Expenses (H1)](index=42&type=section&id=Advertising%20and%20Promotion%20Expenses%20%28H1%29) This section notes that Mattel's advertising and promotion expenses as a percentage of net sales remained consistent in H1 2025 - Advertising and promotion expenses as a percentage of net sales were relatively consistent at **8.1%** in H1 2025 compared to **7.7%** in H1 2024[158](index=158&type=chunk) [Other Selling and Administrative Expenses (H1)](index=42&type=section&id=Other%20Selling%20and%20Administrative%20Expenses%20%28H1%29) This section explains the increase in other selling and administrative expenses for H1 2025, driven by recall-related costs and employee compensation - Other selling and administrative expenses increased by **$25.4 million** to **$752.2 million** in H1 2025, primarily due to higher expenses related to inclined sleeper product recalls (**$13.7 million**), employee compensation (**$7.7 million**), severance and restructuring charges (**$6.8 million**), and outside services (**$12.4 million**), partially offset by OPG program savings (**$20.3 million**)[159](index=159&type=chunk) [Interest Expense (H1)](index=42&type=section&id=Interest%20Expense%20%28H1%29) This section notes that Mattel's interest expense remained relatively stable in H1 2025 compared to the prior year - Interest expense was relatively flat at **$58.6 million** in H1 2025 compared to **$60.0 million** in H1 2024[160](index=160&type=chunk) [Interest Income (H1)](index=42&type=section&id=Interest%20Income%20%28H1%29) This section indicates that Mattel's interest income remained consistent in H1 2025 compared to the prior year - Interest income was relatively flat at **$28.3 million** in H1 2025 compared to **$29.7 million** in H1 2024[161](index=161&type=chunk) [Benefit from Income Taxes (H1)](index=42&type=section&id=Benefit%20from%20Income%20Taxes%20%28H1%29) This section explains the increase in income tax benefit for H1 2025, driven by a higher loss before income taxes - Benefit from income taxes increased to **$14.4 million** in H1 2025 from **$11.6 million** in H1 2024, due to a higher loss before income taxes, partially offset by lower discrete income tax benefits[162](index=162&type=chunk) - Mattel recognized a net discrete income tax benefit of **$10.4 million** in H1 2025, primarily from a change in indefinite reinvestment assertion for foreign subsidiary earnings, compared to **$12.9 million** in H1 2024[162](index=162&type=chunk) [Segment Results (H1)](index=43&type=section&id=Segment%20Results%20%28H1%29) For the first half of 2025, the North America segment experienced an 8% decrease in net sales and a 16% decrease in operating income, primarily due to lower gross billings in Dolls and Infant, Toddler, and Preschool. The International segment, however, saw a 5% increase in net sales and a significant 60% increase in operating income, driven by strong growth in Action Figures, Building Sets, Games, and Other, and Vehicles products, along with improved gross margin [North America Segment (H1)](index=43&type=section&id=North%20America%20Segment%20%28H1%29) This section details the financial performance of Mattel's North America segment in H1 2025, including net sales, gross billings by category, and operating income - North America net sales decreased by **$82.1 million (8%)** to **$1.00 billion** in H1 2025, primarily due to a **$79.8 million** decrease in gross billings[164](index=164&type=chunk) - North America segment operating income decreased by **$33.0 million (16%)** to **$176.9 million** in H1 2025, mainly due to lower gross profit and higher advertising and promotion expenses[172](index=172&type=chunk) North America Gross Billings by Categories (Six Months Ended June 30, in millions) | Category | 2025 (in millions) | 2024 (in millions) | % Change Reported | | :--- | :--- | :--- | :--- | | Dolls | $340.9 | $395.9 | -14% | | Infant, Toddler, and Preschool | $150.0 | $192.1 | -22% | | Vehicles | $324.3 | $317.0 | 2% | | Action Figures, Building Sets, Games, and Other | $258.2 | $248.3 | 4% | | **Gross Billings** | **$1,073.5** | **$1,153.3** | **-7%** | - North America gross margin increased to **47.9%** in H1 2025 from **46.8%** in H1 2024, driven by OPG program savings (**120 bps**) and lower inventory management costs (**80 bps**), partially offset by cost inflation (**80 bps**)[171](index=171&type=chunk) [International Segment (H1)](index=44&type=section&id=International%20Segment%20%28H1%29) This section details the financial performance of Mattel's International segment in H1 2025, including net sales, gross billings by category, and operating income - International net sales increased by **$38.1 million (5%)** to **$843.0 million** in H1 2025, despite a **2 percentage point** unfavorable currency impact, driven by a **$54.1 million** increase in gross billings[173](index=173&type=chunk) - International segment operating income increased by **$51.7 million (60%)** to **$138.2 million** in H1 2025, primarily due to higher gross profit[180](index=180&type=chunk) International Gross Billings by Categories (Six Months Ended June 30, in millions) | Category | 2025 (in millions) | 2024 (in millions) | % Change Reported | Currency Exchange Rate Impact | | :--- | :--- | :--- | :--- | :--- | | Dolls | $290.8 | $312.7 | -7% | -1% | | Infant, Toddler, and Preschool | $119.9 | $133.2 | -10% | -2% | | Vehicles | $391.6 | $350.4 | 12% | -2% | | Action Figures, Building Sets, Games, and Other | $198.9 | $150.6 | 32% | -1% | | **Gross Billings** | **$1,001.1** | **$947.0** | **6%** | **-2%** | - International gross margin increased to **50.1%** in H1 2025 from **46.3%** in H1 2024, driven by favorable foreign currency (**240 bps**), OPG program savings (**110 bps**), lower inventory management costs (**100 bps**), and favorable mix (**60 bps**), partially offset by cost inflation (**130 bps**)[179](index=179&type=chunk) [Cost Savings Program](index=45&type=section&id=Cost%20Savings%20Program) Mattel's 'Optimizing for Profitable Growth' (OPG) program, launched in February 2024, aims for $200 million in annual gross cost savings by 2026, primarily from global supply chain efficiencies and manufacturing footprint optimization. As of June 30, 2025, cumulative charges were $98 million, and $126 million in cost savings have been realized [Optimizing for Profitable Growth](index=45&type=section&id=Optimizing%20for%20Profitable%20Growth) This section outlines the objectives, expected savings, and cumulative charges of Mattel's OPG cost savings program - The OPG program targets **$200 million** in annual gross cost savings by 2026, with approximately **60%** benefiting cost of sales and **40%** benefiting other selling and administrative expenses[181](index=181&type=chunk) - Total expected cash expenditures for the OPG program are between **$115 million** and **$140 million**, with total non-cash charges expected to be up to **$5 million**[181](index=181&type=chunk) OPG Program Severance and Other Restructuring Costs (in millions) | Category | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :--- | :--- | :--- | | Cost of sales | $3.7 | $2.6 | | Other selling and administrative expenses | $19.5 | $18.0 | | **Total** | **$23.2** | **$20.6** | - As of June 30, 2025, Mattel recorded cumulative OPG program charges of approximately **$98 million** and realized cumulative cost savings of approximately **$126 million**[183](index=183&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) Mattel's liquidity is primarily supported by cash, operating cash flows, and its $1.40 billion Credit Facility. The company manages market risks, including foreign currency and interest rates, and monitors customer and vendor credit. Cash flows from operating activities decreased in H1 2025, while cash used for investing and financing activities also decreased. Total debt remained stable, and stockholders' equity saw a slight decrease [Current Market Conditions](index=46&type=section&id=Current%20Market%20Conditions) This section discusses Mattel's liquidity sources, including cash balances and credit facilities, and the impact of foreign currency fluctuations - Mattel's primary sources of liquidity are its domestic and foreign cash and equivalents balances, cash flows from operating activities, its **$1.40 billion** Credit Facility, and access to capital markets[184](index=184&type=chunk) - As of June 30, 2025, **$635.3 million** of Mattel's **$870.5 million** in cash and equivalents was held by foreign subsidiaries, including **$73.6 million** held in Russia, where movement out of the country is currently limited[184](index=184&type=chunk) - Mattel estimates that a **one percent change** in the U.S. dollar would have impacted Mattel's second quarter 2025 net sales by approximately **0.4%** and would have less than a **$0.01** impact to Mattel's net income per share[214](index=214&type=chunk) [Cash Flow Activities](index=47&type=section&id=Cash%20Flow%20Activities) This section summarizes Mattel's cash flows from operating, investing, and financing activities for the first half of 2025 and 2024 - Cash flows used for operating activities increased to **$275.3 million** in H1 2025 from **$217.4 million** in H1 2024, primarily due to decreased net income and an **$18.4 million** increase in cash used for working capital[192](index=192&type=chunk) - Cash flows used for investing activities decreased to **$54.6 million** in H1 2025 from **$72.7 million** in H1 2024, mainly due to increased proceeds from Mattel-owned life insurance policies and foreign currency forward exchange contracts[193](index=193&type=chunk) - Cash flows used for financing activities decreased to **$222.4 million** in H1 2025 from **$240.0 million** in H1 2024, primarily due to a decrease in cash used for other financing activities, partially offset by higher share repurchases[194](index=194&type=chunk) [Seasonal Financing](index=47&type=section&id=Seasonal%20Financing) This section refers to Note 8 for details on Mattel's seasonal financing arrangements - Details on seasonal financing are incorporated by reference from Note 8 to the Consolidated Financial Statements[195](index=195&type=chunk) [Financial Position](index=47&type=section&id=Financial%20Position) This section analyzes changes in Mattel's key financial position items, including cash, inventories, and accounts payable, for the period - Cash and equivalents decreased by **$517.5 million** to **$870.5 million** at June 30, 2025, from **$1.39 billion** at December 31, 2024, primarily due to cash flows used for operating activities, share repurchases, and capital expenditures[196](index=196&type=chunk) - Inventories increased by **$366.2 million** to **$867.9 million** at June 30, 2025, from **$501.7 million** at December 31, 2024, primarily due to seasonal inventory build[198](index=198&type=chunk) - Accounts payable and accrued liabilities decreased by **$154.7 million** to **$1.12 billion** at June 30, 2025, from **$1.28 billion** at December 31, 2024, due to seasonal declines in expenditure levels[200](index=200&type=chunk) [Capitalization](index=48&type=section&id=Capitalization) This section provides a summary of Mattel's capitalization, including cash, total debt, and stockholders' equity, and discusses debt repayment plans Summary of Capitalization (in millions, except percentages) | Metric | June 30, 2025 (in millions) | June 30, 2024 (in millions) | December 31, 2024 (in millions) | | :--- | :--- | :--- | :--- | | Cash and equivalents | $870.5 | $722.4 | $1,387.9 | | Total debt | $2,336.5 | $2,332.2 | $2,334.4 | | Stockholders' equity | $2,171.9 | $1,973.1 | $2,264.1 | | **Total capitalization** | **$4,508.4** | **$4,305.3** | **$4,598.5** | - Total debt was **$2.34 billion** at June 30, 2025, remaining stable compared to prior periods, and Mattel intends to repay or refinance its **$600.0 million** 2021 Senior Notes due April 2026[201](index=201&type=chunk) - Stockholders' equity decreased by **$92.3 million** to **$2.17 billion** at June 30, 2025, from **$2.26 billion** at December 31, 2024, primarily due to share repurchases, partially offset by other comprehensive income and share-based compensation[202](index=202&type=chunk) [Litigation](index=48&type=section&id=Litigation) This section refers to Note 20 for detailed information on Mattel's ongoing legal proceedings and contingencies - Details on litigation are incorporated by reference from Note 20 to the Consolidated Financial Statements[203](index=203&type=chunk) [Application of Critical Accounting Policies and Estimates](index=48&type=section&id=Application%20of%20Critical%20Accounting%20Policies%20and%20Estimates) This section states that Mattel's critic

Group 1 - Mattel has lowered its annual performance expectations after previously withdrawing them two months ago, citing weak sales of Barbie dolls in North America and global trade uncertainties affecting demand [1][3] - The company reported a significant decline in second-quarter revenue, with net sales dropping 6% to $1.02 billion, which was below analysts' expectations of a 2.7% decline to $1.05 billion [3] - North American sales fell by 16%, primarily due to a reduction in new Barbie product launches and delayed inventory decisions by retailers [3] Group 2 - CEO Ynon Kreiz indicated that changes in retailers' ordering patterns had a substantial impact on Mattel's U.S. business in the second quarter, but he expects the company to recover most of the sales losses in the second half of the year [3] - Mattel now anticipates a net sales growth of 1% to 3% for 2025, down from the previous target of 2% to 3% set in February [3] - The adjusted earnings per share are projected to be between $1.54 and $1.66, lower than the previous forecast of $1.66 to $1.72 [3]

Core Insights - Mattel, Inc. reported second-quarter 2025 results with earnings exceeding expectations while revenues fell short of estimates, showing a year-over-year decline in net sales but stable earnings per share compared to the prior year [1][4][10] Financial Performance - Adjusted earnings per share (EPS) for Q2 was 19 cents, surpassing the Zacks Consensus Estimate of 16 cents and matching the prior-year quarter's figure [4][10] - Net sales reached $1.02 billion, missing the consensus estimate of $1.06 billion by 3.8%, representing a 6% decline year over year [4][10] Segment Performance - North America segment net sales decreased by 16% year over year, attributed to declines in Dolls and Infant, Toddler, and Preschool categories [5] - International segment net sales increased by 7% year over year, driven by growth in the EMEA and Asia Pacific regions [5][6] Category Performance - Worldwide gross billings for Mattel Power Brands fell by 4% year over year to $1.15 billion, with Barbie gross billings declining by 25% [7] - Hot Wheels gross billings increased by 9%, while Fisher-Price saw a decline of 21% year over year [8] Operational Metrics - Adjusted gross margin improved to 51.2%, up 200 basis points year over year, primarily due to cost savings and a favorable product mix [9][10] - Adjusted EBITDA for the quarter was $169.9 million, slightly down from $170.8 million in the prior-year quarter [11] Balance Sheet Overview - As of June 30, 2025, cash and cash equivalents were $870.5 million, up from $722.4 million a year earlier, while total inventories increased to $867.9 million [12] - Long-term debt decreased to $1.73 billion from $2.33 billion year over year, with shareholders' equity at $2.17 billion [12]

Core Insights - Mattel's dolls category revenue declined by 19% year-over-year, totaling $335 million in the second quarter [1][2] - The overall net revenue for Mattel decreased by 6% compared to the previous year, amounting to $1.02 billion, with a net income of $53 million, down $4 million from last year [8] - Despite the decline in doll sales, other product categories, such as vehicles led by Hot Wheels, experienced a 10% increase in sales, reaching $407 million [2] Sales Performance - The decline in doll sales was attributed to fewer new Barbie product launches and lower retailer promotional support [2] - The company anticipates an improvement in doll sales in the second half of the year due to new product innovations and partnerships [3][8] Pricing Strategy - In response to tariffs, Mattel announced a price increase for its toys, including Barbies, which took effect in the latest quarter [9] - Approximately 40% to 50% of Mattel's products in the US will continue to be priced below $20, even after the price adjustments [10] Stock Performance - Following the earnings report, Mattel's stock price fell nearly 5% in after-hours trading, although it has risen about 17% over the past year [9]

Core Insights - Mattel experienced a 16% year-over-year decline in sales in North America, which was partially offset by a 7% increase in international sales, leading to an overall net sales decline of 6% year-over-year in the second quarter [2][3] Group 1: Sales Performance - The U.S. sales were significantly impacted by retailers adjusting their order patterns due to uncertainties surrounding tariffs [4] - The company is focusing on optimizing for profitable growth and seeking supply chain efficiencies, along with making pricing adjustments in the U.S. [5] Group 2: Strategic Initiatives - Mattel is working on capturing the full value of its intellectual property, including launching the first UNO Social Club and scaling its film production pipeline [6] - The company has partnered with OpenAI to integrate artificial intelligence into its iconic toys, aiming to enhance brand engagement and innovation [7] Group 3: Future Outlook - Mattel anticipates a return to growth in net sales but has lowered its guidance for fiscal year 2025, now expecting a rise of 1% to 3% compared to the previous guidance of 2% to 3% [7] - The company is embracing technology and collaborating with partners to position itself for long-term success [8]

Core Viewpoint - Mattel reported quarterly earnings of $0.19 per share, exceeding the Zacks Consensus Estimate of $0.16 per share, and matching the earnings from the previous year, indicating a positive earnings surprise of +18.75% [1] Financial Performance - The company achieved revenues of $1.02 billion for the quarter ended June 2025, which fell short of the Zacks Consensus Estimate by 3.79% and represented a decline from $1.08 billion in the same quarter last year [2] - Over the last four quarters, Mattel has surpassed consensus EPS estimates four times and topped consensus revenue estimates two times [2] Stock Performance - Mattel shares have increased approximately 12.2% since the beginning of the year, outperforming the S&P 500's gain of 7.3% [3] Future Outlook - The company's earnings outlook will be crucial for determining the stock's immediate price movement, with current consensus EPS estimates at $1.16 on $1.88 billion in revenues for the upcoming quarter and $1.64 on $5.46 billion in revenues for the current fiscal year [4][7] - The estimate revisions trend for Mattel was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Toys - Games - Hobbies industry, to which Mattel belongs, is currently ranked in the bottom 7% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Financial Data and Key Metrics Changes - Net sales decreased by 6% as reported and in constant currency to $1.02 billion [7][20] - Adjusted gross margin increased by 200 basis points to 51.2% [8][25] - Adjusted earnings per share remained the same as last year at $0.19 [8][28] - Total gross billings decreased by 4% in constant currency [21] Business Line Data and Key Metrics Changes - Dolls category declined by 19% due to fewer new Barbie product launches and lower retailer promotional support [22] - Vehicles category increased by 10%, with Hot Wheels showing a 9% growth [22] - Infant, toddler, and preschool category decreased by 25%, primarily due to a decline in Fisher Price [23] - Challenger categories, including action figures, increased by 16% driven by strong results from Jurassic and Minecraft [24] Market Data and Key Metrics Changes - Gross billings in North America declined by 15%, while international gross billings increased by 9% [24][25] - EMEA region grew by 8%, Latin America by 5%, and Asia Pacific by 16% [25] Company Strategy and Development Direction - The company is focusing on operational excellence and expanding its entertainment strategy through collaborations and new product innovations [12][13] - A strategic collaboration with OpenAI aims to leverage new technologies for brand expansion [12] - The company plans to release one to two films per year starting in 2026, with projects in post-production [13][14] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing trade uncertainty impacting the U.S. business but expressed confidence in brand appeal and long-term competitive positioning [8][31] - Consumer demand for toys remains strong, with expectations for continued growth in the toy industry [9][51] - The company has resumed guidance for 2025, projecting net sales growth of 1% to 3% in constant currency [32] Other Important Information - The company repurchased $50 million of shares in the quarter, targeting $600 million for the full year [28][33] - Cash used for operations increased to $275 million compared to $217 million in the prior year [28] Q&A Session Summary Question: Major factors affecting guidance range - Management discussed the impact of lowered top-line guidance and tariff effects on the bottom line, while implementing actions to mitigate headwinds [36][39] Question: Pricing strategy in response to tariffs - Management stated that pricing actions have been implemented to keep consumer prices low, with no additional price increases expected this year [43][46] Question: Impact of retail ordering patterns - Management indicated that shifts in ordering patterns and direct shipping delays affected sales recognition, but most sales are expected to be captured in the second half of the year [71][74] Question: Consumer price sensitivity - Management does not see increased price sensitivity among consumers compared to last year, emphasizing a broad range of products at various price points [64][65] Question: Future performance of Fisher Price - Management expects improved performance for Fisher Price in the second half of the year due to new innovations and product launches [66][67] Question: Tariff impact on gross margin - Management estimated total tariff exposure for the year to be less than $100 million, with mitigating actions in place to offset impacts [78][79] Question: Channel inventory levels - Management confirmed that inventory levels are appropriate and aligned with retail needs, with no significant disruptions expected [82][83]

Financial Data and Key Metrics Changes - Net sales declined by 6% as reported and in constant currency to $1.02 billion [6][19] - Adjusted gross margin increased by 200 basis points to 51.2% [7][24] - Adjusted earnings per share remained the same as last year at $0.19 [7][26] - Total gross billings decreased by 4% in constant currency [20] Business Line Data and Key Metrics Changes - Dolls category declined by 19% due to fewer new Barbie product launches and lower retailer promotional support [21] - Vehicles category increased by 10%, with Hot Wheels achieving a 9% growth [21] - Infant, toddler, and preschool category decreased by 25%, primarily due to a decline in Fisher Price [22] - Challenger categories increased by 16%, driven by strong results in action figures [22] Market Data and Key Metrics Changes - Gross billings declined by 15% in North America, while international gross billings increased by 9% [23][24] - EMEA region grew by 8%, Latin America by 5%, and Asia Pacific by 16% [24] Company Strategy and Development Direction - Company is focused on creating innovative products and experiences to inspire and entertain [11] - Strategic collaboration with OpenAI to leverage new technologies for brand expansion [12] - Formation of Mattel Studios to enhance entertainment strategy, aiming to release 1-2 films per year starting in 2026 [12][13] - Continued emphasis on diversifying supply chain and optimizing product sourcing to mitigate tariff impacts [42][88] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing trade uncertainty impacting U.S. business but expressed confidence in brand appeal and operational excellence [6][7] - Consumer demand for toys remains strong, with expectations for continued growth in the toy industry [8][46] - Revised guidance for 2025 includes net sales growth of 1% to 3% in constant currency [31] Other Important Information - Company repurchased $50 million of shares in the quarter, targeting $600 million for the full year [26][30] - Cash balance increased to $870 million, with total debt remaining at $2.34 billion [27][28] - Cost savings program has realized $126 million since its launch in 2024, with a target of $200 million by 2026 [29][30] Q&A Session Summary Question: What were the major factors affecting guidance? - Management discussed the impact of lowered top-line guidance and tariff effects on the bottom line, alongside actions taken to mitigate these headwinds [34][36] Question: How are pricing strategies being adjusted in response to tariffs? - Management stated that pricing actions have been implemented in collaboration with retail partners, aiming to keep prices low for consumers [39][41] Question: What is the outlook for consumer demand in the second half of the year? - Management indicated strong consumer demand across all regions, with expectations for continued growth despite potential uncertainties [44][46] Question: How are inventory levels currently positioned? - Management confirmed that inventory levels are appropriate and aligned with retail needs, with no significant disruptions expected [75][76] Question: What is the expected impact of tariffs on gross margins? - Management estimated total tariff exposure for the year to be less than $100 million, with mitigating actions in place to offset impacts [71][72]

Financial Performance - Mattel reported second-quarter net sales of $1.019 billion, down 6% year-over-year, missing the consensus estimate of $1.068 billion [1] - The company reported earnings per share of 19 cents, beating the consensus estimate of 17 cents per share [1] Operational Insights - CEO Ynon Kreiz highlighted operational excellence in the current macroeconomic environment and the execution of the strategy to grow Mattel's IP-driven toy business and expand entertainment offerings [2] - The company experienced "meaningful gross margin expansion" and international growth during the quarter [2] Category Performance - Growth was noted in Action Figures and Hot Wheels, while Barbie saw declines, attributed to tariff discussions and affordability issues during the holiday season [3][7] - Specific category performance included Dolls at $335 million (-19% year-over-year), Infant, Toddler and Preschool at $143 million (-25% year-over-year), Vehicles at $407 million (+10% year-over-year), and Action Figures, Building Sets, Games, and Other at $264 million (+16% year-over-year) [7] Future Guidance - Mattel lowered its full-year earnings per share guidance to a range of $1.54 to $1.66, down from $1.66 to $1.72 [4] - The company adjusted its full-year sales forecast to a growth range of 1% to 3% year-over-year, down from 2% to 3%, with new sales guidance set at $5.434 billion to $5.541 billion [5] - The guidance is subject to market volatility and potential regulatory actions impacting global trade [5] Stock Performance - Following the earnings report, Mattel's stock declined by 4.46% to $19.30 in after-hours trading, within a 52-week trading range of $13.95 to $22.06 [5]