Mattel(US:MAT) ZACKSยท2024-10-24 18:10Core Insights - Mattel, Inc. reported strong third-quarter 2024 results, with adjusted earnings and net sales exceeding the Zacks Consensus Estimate, marking a recovery after three consecutive quarters of misses [1][3] - Year-over-year, net sales declined while adjusted earnings increased, driven by the company's Optimizing for Profitable Growth program and a focus on expanding its IP-driven toy business and entertainment offerings [1][2] Financial Performance - Adjusted earnings per share (EPS) reached $1.14, surpassing the Zacks Consensus Estimate of 94 cents by 21.3%, compared to $1.08 in the prior-year quarter [3] - Net sales totaled $1.844 billion, slightly exceeding the consensus estimate of $1.837 billion by 0.4%, but reflecting a 4% decline year-over-year [3] - North America segment net sales fell 3% year-over-year, while the International segment saw a 5% decrease [3][4] Category Performance - Worldwide gross billings by Mattel Power Brands decreased 3% year-over-year to $2.05 billion, with Dolls experiencing a significant 14% decline due to lower sales of Barbie [5] - Gross billings for Vehicles increased by 12%, primarily driven by growth in Hot Wheels, while Action Figures, Building Sets, Games, and Other saw a 2% increase [5] Operational Efficiency - Adjusted gross margin improved to 53.1%, up 210 basis points year-over-year, attributed to supply-chain efficiencies and cost savings from the Optimizing for Profitable Growth program [7] - Adjusted EBITDA rose 1% year-over-year to $584.4 million, while adjusted selling and administrative expenses increased by $23 million to $370 million [7] Balance Sheet Overview - As of September 30, 2024, cash and cash equivalents were $723.5 million, down from $1.26 billion at the end of 2023, while total inventories decreased to $737.2 million from $790.5 million year-over-year [8] - Long-term debt remained stable at $2.33 billion, with shareholders' equity reported at $2.31 billion [8] Future Outlook - For the upcoming quarter, Mattel anticipates net sales growth driven by a strong holiday season and a toyetic theatrical slate [2] - The company revised its 2024 outlook, expecting net sales to be comparable to slightly down from the prior year's $5.44 billion, with adjusted gross margin expectations increased to approximately 50% [9]