Mattel(US:MAT)2025-10-29 20:35Financial Performance - Mattel's net sales in Q3 2025 decreased by 6% to $1.74 billion, down from $1.84 billion in Q3 2024, attributed to a decrease in gross billings and an increase in sales adjustments [120][124]. - Gross billings for Q3 2025 were $1.97 billion, a decrease of 4% from $2.05 billion in Q3 2024, with a favorable currency exchange rate impact of 1% [125]. - Net income for Q3 2025 was $278.4 million, a decrease of 25% from $372.4 million in Q3 2024 [123]. - Net sales for the first nine months of 2025 were $3.58 billion, a decrease of $152.0 million, or 4%, compared to $3.73 billion in the same period of 2024 [154]. - Gross billings decreased to $4.04 billion, down $110.0 million, or 3%, from $4.15 billion in the first nine months of 2024, primarily due to lower billings in Dolls and Infant, Toddler, and Preschool categories [155]. Sales Adjustments - Sales adjustments increased to $230.8 million in Q3 2025, up from $207.2 million in Q3 2024, representing 13.3% of net sales compared to 11.2% in the prior year [128]. - Sales adjustments increased to $81.8 million in Q3 2025 from $76.0 million in Q3 2024, representing 8.4% of net sales [141]. - Sales adjustments rose to $460.3 million, up from $418.3 million, representing 12.9% of net sales in 2025 compared to 11.2% in 2024 [158]. - Sales adjustments increased to $153.1 million in the first nine months of 2025, representing 7.7% of net sales, up from 6.6% in the same period of 2024 [171]. Category Performance - The Dolls category saw a gross billings decline of 11%, primarily due to lower sales of Barbie products [126]. - Infant, Toddler, and Preschool gross billings decreased by 25%, with Fisher-Price products contributing to a 14% decline [126]. - Vehicles gross billings increased by 8%, driven by higher sales of Hot Wheels products [127]. - Action Figures, Building Sets, Games, and Other gross billings rose by 11%, largely due to increased sales of Jurassic World and Minecraft products [127]. - Dolls gross billings decreased by 11%, while Infant, Toddler, and Preschool gross billings fell by 21%, with 12% attributed to lower Fisher-Price product sales [156]. - Vehicles gross billings decreased by 1%, primarily due to lower billings of Hot Wheels products [170]. - Action Figures, Building Sets, Games, and Other gross billings increased by 4%, with a 17% increase attributed to higher billings of Action Figures products [170]. Cost and Margin Analysis - Gross margin for Q3 2025 was 50.0%, down from 53.1% in Q3 2024, impacted by foreign currency exchange rates, inflation, and higher sales adjustments [120]. - Gross margin decreased to 50.0% in Q3 2025 from 53.1% in Q3 2024, primarily due to unfavorable foreign currency exchange and cost inflation [130]. - Cost of sales decreased by 9% to $487.5 million in Q3 2025, primarily due to a decrease in product and other costs [142]. - Gross margin decreased to 50.1% from 50.9%, impacted by cost inflation and higher sales adjustments [160]. - Gross margin for the International segment decreased to 50.4% in Q3 2025 from 51.7% in Q3 2024, impacted by cost inflation and higher sales adjustments [151]. - Gross margin decreased to 49.0% in the first nine months of 2025 from 49.3% in the same period of 2024 [173]. Regional Performance - North America segment net sales decreased by 12% to $978.1 million in Q3 2025, primarily due to a decrease in gross billings [137]. - International segment net sales increased by 3% to $757.9 million in Q3 2025, driven by an increase in gross billings [145]. - Gross billings for the North America segment decreased by 11% to $1.06 billion in Q3 2025, with significant declines in Dolls and Infant, Toddler, and Preschool categories [138]. - International segment net sales increased by 4% to $1.60 billion in the first nine months of 2025, with segment operating income rising by 14% to $346.9 million [175]. - Gross billings for the International segment increased by 5% to $1.91 billion, driven by higher billings of Vehicles and Action Figures products [176]. Cash Flow and Financial Position - Mattel ended Q3 2025 with cash and equivalents of $691.9 million, down from $723.5 million at the end of Q3 2024 [120]. - Cash flows used for operating activities were $203.3 million in the first nine months of 2025, compared to $61.6 million in the same period of 2024 [195]. - Cash flows used for investing activities decreased to $97.5 million in the first nine months of 2025 from $151.7 million in the same period of 2024 [196]. - Cash flows used for financing activities increased to $426.3 million in the first nine months of 2025, up from $314.2 million in the same period of 2024, primarily due to $144.2 million of increased share repurchases [197]. - Cash and equivalents decreased by $696.0 million to $691.9 million at September 30, 2025, from $1.39 billion at December 31, 2024, mainly due to share repurchases of $412.5 million and cash flows used for operating activities of $203.3 million [199]. - Accounts receivable increased by $387.1 million to $1.39 billion at September 30, 2025, from $1.00 billion at December 31, 2024, primarily due to seasonality [200]. - Inventories rose by $324.9 million to $826.6 million at September 30, 2025, from $501.7 million at December 31, 2024, driven by seasonal inventory build [201]. - Total debt was $2.34 billion at September 30, 2025, consistent with $2.33 billion at both December 31, 2024, and September 30, 2024 [204]. - Stockholders' equity remained flat at $2.26 billion at September 30, 2025, compared to December 31, 2024, with share repurchases of $416.3 million offset by net income of $291.4 million [205]. Other Financial Metrics - Advertising and promotion expenses as a percentage of net sales increased to 6.8% in Q3 2025 from 5.7% in Q3 2024, attributed to a shift in timing of advertising programs [131]. - Other selling and administrative expenses were $370.3 million, or 21.3% of net sales, in Q3 2025, a decrease from $385.7 million, or 20.9% in Q3 2024 [132]. - Other selling and administrative expenses rose to $1.12 billion, or 31.3% of net sales, primarily due to product recalls and higher outside service costs [162]. - The OPG program aims for $200 million in targeted annual gross cost savings by 2026, with 60% benefiting cost of sales [184]. - The currency exchange rate impact reflects fluctuations that could mask underlying sales trends, with a one percent change in the U.S. dollar estimated to impact net sales by approximately 0.3% [217]. - Accounts payable and accrued liabilities increased by $44.9 million to $1.32 billion at September 30, 2025, from $1.28 billion at December 31, 2024, primarily due to an increase in accounts payable [203]. - Prepaid expenses and other current assets increased by $12.8 million to $246.9 million at September 30, 2025, from $234.1 million at December 31, 2024 [202]. - The company intends to repay or refinance $600.0 million of 2021 Senior Notes due in April 2026 prior to the scheduled maturity date [204].