UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________________________ FORM 10-Q ___________________________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-05647 ___ ...

Financial Data and Key Metrics Changes - Net sales for Q2 2024 were $1.080 billion, a decline of 1% as reported, but comparable in constant currency [10][17] - Adjusted gross margin increased by 430 basis points to 49.2% [10][21] - Adjusted EBITDA improved by $23 million to $171 million, and adjusted earnings per share increased by $0.09 to $0.19 [10][23] - Free cash flow for the trailing 12-month period was $826 million, compared to $361 million in the prior year [11][24] Business Line Data and Key Metrics Changes - Dolls gross billings declined by 5%, while POS was flat; however, Mattel gained share in the dolls category [18] - Vehicles grew by 2%, driven primarily by Hot Wheels, which increased by 5% [19] - Infant, toddler, and preschool declined by 3%, but Fisher-Price grew by 11% [19] - Challenger categories increased by 1%, led by double-digit growth in games [19] Market Data and Key Metrics Changes - Gross billings declined by 2% in North America, EMEA, and Latin America, while Asia-Pacific increased by 7% [20] - Retail inventory levels were down high single-digits compared to the prior year, indicating a well-positioned inventory for the second half [20][80] Company Strategy and Development Direction - The company is focused on growing its IP-driven toy business and expanding its entertainment offerings, with a strong emphasis on profitability and cash generation [11][29] - New product innovation, increased retail support, and marketing efforts are expected to drive growth in the second half of the year [15][78] - The company is also looking to self-publish mobile games, leveraging its strong brand recognition to reduce user acquisition costs [53][54] Management's Comments on Operating Environment and Future Outlook - The toy industry is expected to decline modestly in 2024, but trends are anticipated to improve beyond that [14][33] - Management expressed confidence in achieving full-year guidance, citing strong fundamentals in the toy business and positive consumer sentiment [15][29] - The company is well-positioned for a good holiday season with new product launches and increased retailer support [15][33] Other Important Information - The company has repurchased $200 million of shares in the first half of 2024 and plans to continue share repurchases [11][24] - The balance sheet has improved significantly, with cash balances increasing to $722 million [25][26] - The company is on track to achieve or exceed targeted savings of $60 million in 2024 as part of its cost-saving initiatives [27][85] Q&A Session Summary Question: Update on consumer health from retail partners - Management noted that the toy industry performed better than anticipated in the first half and expects growth in the second half, driven by new product innovation and increased retail support [33] Question: Impact of freight volatility on financials - Management stated that they are well-positioned with supply chain capabilities and have accounted for anticipated impacts in their guidance [35] Question: Performance of other categories contributing to gross billings - Management highlighted significant growth in games and ongoing scaling of the Pokémon business, while action figures faced challenges [38] Question: Gross margin expectations for the back half of the year - Management expects some cost inflation but believes continued cost savings will offset this, maintaining guidance for gross margin improvement [50] Question: Disparity in stock valuation compared to competitors - Management acknowledged that the stock is undervalued and emphasized the company's strong performance metrics and future potential [57][58] Question: Selling and administrative expenses increase - Management explained that the increase was due to market-related pay increases and investments in IT and talent, with expectations for SG&A to be down in the second half [60] Question: Consumer product licensing business post-Barbie movie - Management indicated that while there will be a decline year-on-year due to the Barbie movie wrap, the licensing business continues to grow [68] Question: Retailer support and shelf space - Management discussed strong relationships with retailers and expectations for increased shelf space and promotional activities in the second half [72] Question: Trends in inventory levels - Management confirmed that both retailer and owned inventory levels are healthy and well-positioned for the upcoming holiday season [80]

Second Quarter 2024 Earnings (Unaudited Results) July 23, 2024 Cautionary Note Regarding Forward-Looking Statements / Presentation Information Mattel cautions the viewer that this presentation contains a number of forward-looking statements, which are statements that relate to the future and are, by their nature, uncertain. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include statements regarding Mattel's guidance and goals for ...

NEWS RELEASE Exhibit 99.1 MATTEL REPORTS SECOND QUARTER 2024 FINANCIAL RESULTS Second Quarter 2024 Highlights Versus Prior Year • Net Sales of $1,080 million, down 1% as reported, and comparable in constant currency • Gross Margin of 49.2%, an increase of 410 basis points; Adjusted Gross Margin of 49.2%, an increase of 430 basis points • Operating Income of $83 million, an improvement of $20 million; Adjusted Operating Income of $96 million, an improvement of $21 million • Net Income of $57 million, an impr ...

Financial Performance - Mattel's net sales for Q1 2024 were $809.5 million, a decrease of 1% from $814.6 million in Q1 2023[83]. - Gross billings in Q1 2024 were $898.9 million, down 1% from $911.3 million in Q1 2023, with a favorable currency exchange rate impact of 1%[85]. - Net sales for the North America segment increased by $7.3 million, or 2%, to $477.8 million in Q1 2024[92]. - Net sales for the International segment decreased by $12.4 million, or 4%, to $331.7 million in Q1 2024[97]. - Gross billings for the North America segment increased by $3.6 million, or 1%, to $506.4 million in Q1 2024[95]. - Gross billings for the International segment decreased by $16.1 million, or 4%, to $392.5 million in Q1 2024 compared to $408.6 million in Q1 2023, with a favorable impact from currency exchange rates of 2%[98]. Cost and Margin Analysis - Gross margin improved to 48.0% in Q1 2024, up from 40.0% in Q1 2023, driven by lower inventory management costs and cost savings[79]. - Cost of sales decreased by $68.2 million, or 14%, to $420.6 million in Q1 2024 from $488.8 million in Q1 2023[86]. - Cost of sales decreased by $17.6 million, or 9%, to $184.1 million in Q1 2024, contributing to an increase in gross margin to 44.5% from 41.4% in Q1 2023[99]. - Other selling and administrative expenses decreased by $11.8 million to $352.9 million, or 43.6% of net sales, in Q1 2024[89]. Cash Flow and Financial Position - Operating cash flows for the trailing twelve months were $1.11 billion, contributing to a cash balance of $1.13 billion at the end of Q1 2024, compared to $461.7 million in Q1 2023[79]. - Cash flows provided by operating activities were $35.5 million in Q1 2024, a significant improvement from cash flows used of $206.4 million in Q1 2023, driven by $165.3 million in working capital improvements[108]. - Mattel's cash and equivalents decreased by $131.1 million to $1.13 billion at March 31, 2024, primarily due to $100 million in share repurchases[110]. - Total debt remained stable at $2.33 billion as of March 31, 2024, consistent with the figures from December 31, 2023, and March 31, 2023[113]. - Stockholders' equity decreased by $123.9 million to $2.03 billion at March 31, 2024, primarily due to share repurchases of $100.0 million and a net loss of $28.3 million for the first three months of 2024[114]. Shareholder Actions - The Board of Directors authorized a new $1.00 billion share repurchase program, with $100.0 million executed in Q1 2024[79]. Sales Performance by Category - Dolls gross billings decreased by 4% in Q1 2024, primarily due to lower sales of Disney Princess and Disney Frozen products[85]. - Infant, Toddler, and Preschool gross billings fell by 10%, with 7% attributed to lower sales of Baby Gear and Power Wheels products[85]. - Vehicles gross billings increased by 5%, driven by higher sales of Hot Wheels products[85]. - Dolls gross billings decreased by 7%, primarily due to lower sales of Disney Princess and Disney Frozen products, while Infant, Toddler, and Preschool gross billings decreased by 13%[98]. Cost Savings Initiatives - The "Optimizing for Profitable Growth" program aims for annual gross cost savings of $200.0 million from 2024 to 2026[79]. - The Optimizing for Profitable Growth (OPG) program aims for targeted annual gross cost savings of $200 million by 2026, with approximately 70% expected to benefit cost of sales[100]. - The OPG program has recorded cumulative severance and restructuring charges of approximately $35 million as of March 31, 2024, with realized cumulative cost savings of approximately $17 million[102]. Other Financial Metrics - Interest income increased by $10.8 million to $17.3 million in Q1 2024 from $6.5 million in Q1 2023[90]. - Sales adjustments decreased to $89.4 million in Q1 2024, representing 11.0% of net sales, down from 11.9% in Q1 2023[85]. - Sales adjustments decreased to $28.6 million in Q1 2024 from $32.3 million in Q1 2023, representing 6.0% of net sales[95]. - Sales adjustments decreased to $60.8 million in Q1 2024 from $64.5 million in Q1 2023, with sales adjustments as a percentage of net sales remaining relatively flat at 18.3%[99]. - Accounts receivable decreased by $408.6 million to $673.3 million at March 31, 2024, primarily due to seasonal declines[110]. - Inventories increased by $97.7 million to $669.3 million at March 31, 2024, primarily due to seasonal inventory build[111]. - Accounts payable and accrued liabilities decreased by $224.4 million to $1.08 billion as of March 31, 2024, from $1.31 billion at December 31, 2023, due to seasonal declines in expenditure levels[112]. Currency Impact - Currency exchange rate fluctuations impacted Mattel's results, with a one percent change in the U.S. dollar estimated to affect net sales by approximately 0.3% and have less than a $0.01 impact on net income per share[122].

Financial Data and Key Metrics - Net sales declined 1% as reported and in constant currency [11] - Adjusted gross margin increased 830 basis points to 48 3% [11] - Adjusted EBITDA improved by $67 million from a negative $14 million to a positive $54 million [11] - Free cash flow improved by $254 million [11] - Cash balance at the end of the quarter was $1 1 billion after repurchasing $100 million of shares [12] - Adjusted EPS improved by $0 19 to a loss of $0 05 compared to a loss of $0 24 in the prior year [18] - Cash from operations improved by $242 million to a source of $35 million compared to a use of $206 million in the prior year [25] - Trailing 12-month free cash flow was $964 million, an increase of $777 million compared to the prior year [26] Business Line Performance - Gross billings increased in North America, Latin America, and Asia Pacific, with a decline in EMEA [12] - Dolls declined 5% with POS increasing high-single-digits, primarily due to Disney Princess and Disney Frozen [19] - Barbie gross billings were comparable to the prior year with POS declining low-single digits [19] - Vehicles and Hot Wheels increased 4% with POS increasing mid-single digits [19] - Infant, Toddler, and Preschool category declined 11% with POS down high-single-digits, primarily due to Baby Gear and Power Wheels [21] - Games performance was strong, with Uno being the number one card game property [15] Market Performance - North America gross billings increased 1% with POS increasing low-single digits [22] - EMEA declined 13% due to retail inventory reductions and weakening of the Turkish lira [22] - Latin America increased 1% with POS declining low-single digits [22] - Asia-Pacific increased 15%, driven by gains in Australia, New Zealand, and South Asia [22] Strategy and Industry Competition - The company is executing its strategy to grow its IP-driven toy business and expand its entertainment offering [13] - The company expects to benefit from innovation across the toy portfolio, market share gains, and progress on entertainment projects [13] - The company is targeting $200 million of annualized cost savings between 2024 and 2026 through its optimizing for profitable growth program [13] - The company expects the toy industry to decline in 2024 but at a lesser rate than 2023 and aims to outpace the industry and gain market share [12] Management Commentary on Operating Environment and Future Outlook - The company is in the strongest financial position it has been in years and is on track to achieve its full-year guidance [17] - The company expects to grow sales and earnings in 2025 [17] - The company is operating in a macroeconomic environment that may impact consumer demand [29] Other Important Information - The company is leveraging AI for cost-saving opportunities and product development [60][62] - The company is reducing its manufacturing footprint in China, with 50% of products currently made in China, down from the industry average of 80-85% [101] Q&A Session Summary Question: POS trends and expectations for the year - POS for the total company was up low-single digits in Q1 with improving trends, including some benefit from the Easter holiday [33] - The company expects shipping trends in 2024 to align with historical trends, with about a third of gross billings in the first half and two-thirds in the second half [33] Question: Hot Wheels growth drivers - Hot Wheels growth is driven by product innovation, expansion into adult collectors, and new content on Netflix [35] - The company expects Hot Wheels to continue growing in 2024 [55] Question: Disney Princess dynamics - The decline in Disney Princess sales was primarily due to inventory correction following last year's launch [40] Question: Share repurchases and M&A - The company plans to continue share repurchases in 2024 under its $1 billion multi-year share repurchase program [43] - The company is considering targeted investments in its entertainment verticals to accelerate its strategy [45] Question: Gross margin drivers and expectations - The significant gross margin expansion in Q1 was driven by lower inventory management costs, cost deflation, and savings from the optimizing for profitable growth program [48] - The company expects gross margin to be in the range of 48 5% to 49% for the full year [49] Question: Barbie outlook for 2024 - Barbie is expected to be marginally down for the year but will continue to grow beyond 2024 [52] Question: Retail inventory and cadence of the year - The company expects tailwinds from lapping last year's retail inventory declines, with benefits more pronounced in Q2 [57][91] Question: AI and cost-saving initiatives - The company is leveraging AI for cost-saving opportunities and product development, with $17 million of savings generated in Q1 [60][62] Question: Digital gaming and Mattel163 - The company is focusing on extending its physical play to the virtual world through digital games and experiences [64] - The company is looking to do more self-publishing of mobile games based on its IP [65] Question: Retail sentiment and consumer demand - Retailers are leaning into the toy category due to its experiential nature and affordability [84] - The company expects the industry to decline in 2024 but at a lesser rate than 2023 [85] Question: M&A strategy - The company is being thoughtful and prudent in its M&A strategy, focusing on long-term value creation and risk management [87] Question: American Girl and Imaginext - American Girl grew in Q1 and is now part of the North American commercial business [97] - Imaginext is now part of the Preschool Entertainment category [98] Question: Manufacturing footprint in China - The company is reducing its manufacturing footprint in China, with 50% of products currently made in China, down from the industry average of 80-85% [101] Question: Demand across price points - The company is not seeing any specific trends in demand across price points [103] Question: Adventure park economics - The company is taking a capital-light approach to its adventure parks, licensing its brand and participating in the economics of the park [105]

First Quarter 2024 Earnings (Unaudited Results) April 23, 2024 Cautionary Note Regarding Forward-Looking Statements / Presentation Information Mattel cautions the viewer that this presentation contains a number of forward-looking statements, which are statements that relate to the future and are, by their nature, uncertain. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include statements regarding Mattel’s guidance and goals for ...

Financial Performance - Net Sales for Q1 2024 were $810 million, down 1% year-over-year, with a reported Operating Loss of $36 million, an improvement of $80 million [5]. - Adjusted EBITDA for the quarter was $54 million, an improvement of $67 million compared to the previous year [9]. - Net Sales for Q1 2024 were $809.5 million, a decrease of 1% compared to $814.6 million in Q1 2023 [34]. - Operating Loss improved to $(35.5) million, a 69% reduction from $(115.0) million in Q1 2023 [34]. - Net Loss for Q1 2024 was $(28.3) million, significantly lower than $(106.5) million in Q1 2023, marking a 73% improvement [34]. - Free Cash Flow for Q1 2024 was $35 million, a recovery from $(206) million in Q1 2023 [36]. - Adjusted EBITDA for Q1 2024 reached $53.5 million, a significant recovery from a negative $13.9 million in Q1 2023 [38]. - Free cash flow for Q1 2024 was $5.0 million, a substantial improvement compared to a negative $249.4 million in Q1 2023 [38]. - Net loss per common share, as reported, improved to $(0.08) in Q1 2024 from $(0.30) in Q1 2023, reflecting a 73% reduction in losses [38]. - Adjusted EBITDA for the trailing twelve months ended March 31, 2024, was $1,015.2 million, a 27% increase from $802.5 million in the previous year [40]. - Net cash flows provided by operating activities for the trailing twelve months ended March 31, 2024, were $1,111.7 million, a 192% increase from $380.3 million in the previous year [40]. Sales Performance - North America segment Net Sales increased by 2% as reported, driven by growth in Vehicles and Action Figures [6]. - International segment Net Sales decreased by 4% as reported, primarily due to declines in Dolls and Infant, Toddler, and Preschool categories [7]. - Worldwide net sales for Q1 2024 were $809.5 million, a decrease of 1% compared to $814.6 million in Q1 2023 [43]. - Gross billings for Q1 2024 totaled $898.9 million, down 1% from $911.3 million in Q1 2023 [43]. - North America net sales increased by 2% to $477.8 million in Q1 2024, compared to $470.5 million in Q1 2023 [44]. - International net sales decreased by 4% to $331.7 million in Q1 2024, down from $344.1 million in Q1 2023 [45]. - EMEA region net sales fell by 12% to $185.2 million in Q1 2024, compared to $209.4 million in Q1 2023 [45]. - Latin America net sales grew by 5% to $79.7 million in Q1 2024, compared to $75.5 million in Q1 2023 [45]. - Asia Pacific net sales increased by 13% to $66.8 million in Q1 2024, up from $59.2 million in Q1 2023 [45]. Cost Management - Gross Margin increased to 48.0%, up 800 basis points from the prior year, driven by lower inventory management costs and cost deflation [8]. - The Optimizing for Profitable Growth program aims for $60 million in cost savings in 2024 and a total of $200 million by 2026 [4]. - The adjusted gross margin for Q1 2024 was 48.3%, up 830 basis points from 40.0% in Q1 2023 [37]. Shareholder Actions - The company repurchased $100 million of shares during the quarter, reflecting strong bottom-line results [9]. Economic Environment - The company is operating in a macro-economic environment that may impact consumer demand, with guidance subject to market volatility and other risks [16]. Tax and Currency - The Adjusted Tax Rate provides useful supplemental information for investors to gauge the impact of tax expense on earnings results [29]. - Constant currency results are analyzed to provide additional perspective on underlying trends in operating performance, excluding currency exchange rate impacts [30]. - The tax rate, as reported, increased to 39% in Q1 2024 from 20% in Q1 2023, reflecting a 19 percentage point rise [39]. Asset Management - Total Assets as of March 31, 2024, were $6,065.4 million, an increase from $5,831.7 million at the end of 2023 [35]. - Total Current Assets rose to $2,735.5 million, compared to $2,366.3 million at the end of 2023 [35]. - Long-Term Debt remained stable at $2,331.1 million, slightly up from $2,326.7 million at the end of 2023 [35]. - Total debt remained stable at $2,350.0 million as of March 31, 2024, unchanged from the previous year [40].

Part I [Item 1. Business](index=5&type=section&id=Item%201.%20Business) Mattel is a global toy and family entertainment company focused on IP-driven growth across three segments: North America, International, and American Girl - Mattel's strategy is to grow its IP-driven toy business and expand its entertainment offerings into areas like content, consumer products, and digital experiences[6](index=6&type=chunk) - The company's operating segments are North America, International, and American Girl[8](index=8&type=chunk) Key Product Categories and Brands | Category | Key Brands | | :--- | :--- | | Dolls | Barbie, American Girl, Disney Princess & Frozen, Monster High, Polly Pocket | | Infant, Toddler, and Preschool | Fisher-Price (Little People, Imaginext), Thomas & Friends | | Vehicles | Hot Wheels, Matchbox, Cars (Disney Pixar) | | Action Figures, Building Sets, Games, and Other | Masters of the Universe, MEGA, UNO, Jurassic World, Minecraft, WWE, Star Wars | - In 2023, Mattel's three largest customers (Walmart, Target, and Amazon) accounted for approximately **44% of worldwide consolidated net sales**[17](index=17&type=chunk) - As of December 31, 2023, Mattel had approximately **33,000 employees**, with **86% located outside the United States**[25](index=25&type=chunk) [Item 1A. Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) Mattel faces risks from changing consumer preferences, intense competition, seasonality, customer concentration, economic downturns, and internal control weaknesses - Business risks include failure to satisfy consumer preferences, high competition, seasonality, and significant customer concentration, with Walmart, Target, and Amazon accounting for **44% of 2023 sales**[33](index=33&type=chunk)[35](index=35&type=chunk)[45](index=45&type=chunk) - Market condition risks include deterioration of global economic conditions, inflation impacting consumer spending, and significant increases in commodity, transportation, or labor costs[53](index=53&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - A material weakness was identified in internal control over financial reporting related to IT general controls, specifically user access, segregation of duties, and change monitoring, potentially impairing accurate financial reporting[77](index=77&type=chunk)[188](index=188&type=chunk) - The company faces legal and regulatory risks from cybersecurity threats, evolving data privacy laws (e.g., GDPR, CCPA), and potential product liability claims and recalls[78](index=78&type=chunk)[81](index=81&type=chunk)[89](index=89&type=chunk) - As of December 31, 2023, Mattel had **$2.33 billion of indebtedness**, which could affect its ability to raise capital and react to industry changes[94](index=94&type=chunk) [Item 1B. Unresolved Staff Comments](index=26&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that there are no unresolved staff comments - None[103](index=103&type=chunk) [Item 1C. Cybersecurity](index=26&type=section&id=Item%201C.%20Cybersecurity) Mattel manages cybersecurity risks through internal teams and third-party experts, overseen by its CISO and Audit Committee, with no material incidents reported - Mattel has a cybersecurity risk management program that includes internal teams and third-party experts, with oversight from the CISO and the Board's Audit Committee[103](index=103&type=chunk)[104](index=104&type=chunk) - The company has not experienced any cybersecurity threats or incidents to date that have materially affected its business, strategy, or financial condition[103](index=103&type=chunk) [Item 2. Properties](index=27&type=section&id=Item%202.%20Properties) Mattel owns its corporate headquarters and principal manufacturing facilities globally, supplementing with leased spaces for its worldwide operations - Mattel owns its corporate headquarters in El Segundo, CA, and its principal manufacturing facilities are located in Indonesia, Malaysia, Mexico, and Thailand[105](index=105&type=chunk) - The company leases office, warehouse, and retail space in over **30 countries** to support its global operations[105](index=105&type=chunk) [Item 3. Legal Proceedings](index=27&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 13 to the Consolidated Financial Statements - Information regarding legal proceedings is detailed in Note 13 to the Consolidated Financial Statements[106](index=106&type=chunk) [Item 4. Mine Safety Disclosures](index=27&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Mattel - Not applicable[106](index=106&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=28&type=section&id=Item%205.%20Market%20for%20the%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Mattel's common stock trades on Nasdaq, with **$203.0 million** in share repurchases in 2023 and a new **$1.00 billion** program authorized in 2024 - Mattel's common stock is traded on The Nasdaq Global Select Market under the symbol "MAT"[108](index=108&type=chunk) Q4 2023 Share Repurchases | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | October 1 - 31 | 1,710,604 | $18.82 | | November 1 - 30 | 3,173,304 | $19.23 | | December 1 - 31 | 3,835 | $18.88 | | **Total Q4** | **4,887,743** | **$19.08** | - In 2023, Mattel repurchased **10.4 million shares** for **$203.0 million**; a new **$1.00 billion** share repurchase program was authorized in February 2024[109](index=109&type=chunk)[110](index=110&type=chunk) Cumulative Total Return (2018-2023, $100 Initial Investment) | Year | Mattel, Inc. | S&P 500 | S&P 500 Consumer Discretionary | | :--- | :--- | :--- | :--- | | 2018 | $100.00 | $100.00 | $100.00 | | 2019 | $135.64 | $126.17 | $126.53 | | 2020 | $174.67 | $143.39 | $165.74 | | 2021 | $215.82 | $178.85 | $211.63 | | 2022 | $178.58 | $155.42 | $167.12 | | 2023 | $188.99 | $180.90 | $207.71 | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Mattel's 2023 net sales were flat at **$5.44 billion**, with improved gross margin but decreased operating and net income due to higher SG&A and a one-time tax expense, while cash increased significantly FY 2023 vs. FY 2022 Consolidated Results | Metric | 2023 (in millions) | 2022 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $5,441.2 | $5,434.7 | 0% | | Gross Profit | $2,583.7 | $2,481.4 | +4% | | Gross Margin | 47.5% | 45.7% | +180 bps | | Operating Income | $561.7 | $675.5 | -17% | | Net Income | $214.4 | $393.9 | -46% | FY 2023 Gross Billings by Category (vs. 2022) | Category | 2023 Gross Billings (in millions) | % Change vs 2022 | | :--- | :--- | :--- | | Dolls | $2,394.2 | +15% | | Infant, Toddler, and Preschool | $1,000.8 | -10% | | Vehicles | $1,641.0 | +13% | | Action Figures, Building Sets, Games, and Other | $1,065.8 | -24% | | **Total Gross Billings** | **$6,101.8** | **+1%** | - The 'Optimizing for Growth' program concluded, achieving approximately **$343 million in annualized gross cost savings**; a new 'Optimizing for Profitable Growth' program targets an additional **$200 million in gross cost savings** between 2024 and 2026[118](index=118&type=chunk)[142](index=142&type=chunk)[145](index=145&type=chunk) - Cash and equivalents increased to **$1.26 billion** at year-end 2023 from **$761.2 million** in 2022, driven by operating cash flow of **$869.8 million**[118](index=118&type=chunk)[153](index=153&type=chunk)[158](index=158&type=chunk) - The company identified a material weakness in its internal control over financial reporting related to IT general controls, which is a critical accounting consideration[77](index=77&type=chunk)[188](index=188&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Mattel's primary market risk is foreign currency fluctuations, partially hedged by forward contracts, with operational changes noted for Turkey and Argentina - Mattel's primary market risk is foreign currency exchange rate fluctuations, particularly with the Chinese yuan and Euro[181](index=181&type=chunk) - The company uses foreign currency forward exchange contracts to hedge inventory transactions; without these hedges, earnings before income taxes would have decreased by approximately **$30 million** in 2023[181](index=181&type=chunk)[184](index=184&type=chunk) - In Q4 2022, Mattel recognized a **$45.4 million loss** from cumulative currency translation adjustments due to the substantially completed liquidation of its Argentina subsidiary[186](index=186&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=50&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Mattel's audited consolidated financial statements, noting a material weakness in IT general controls, confirmed by the independent auditor's adverse opinion on internal controls but unqualified opinion on financial statements - Management concluded that as of December 31, 2023, internal control over financial reporting was not effective due to a material weakness in IT general controls related to user access and change monitoring[187](index=187&type=chunk)[188](index=188&type=chunk) - The independent auditor, PricewaterhouseCoopers LLP, issued an adverse opinion on the effectiveness of internal control over financial reporting due to the identified material weakness, but an unqualified (fairly presented) opinion on the consolidated financial statements[193](index=193&type=chunk) Consolidated Balance Sheet Summary (in thousands) | | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | **$3,122,347** | **$2,729,035** | | **Total Assets** | **$6,435,822** | **$6,177,661** | | **Total Current Liabilities** | **$1,342,480** | **$1,187,748** | | **Long-Term Debt** | **$2,329,986** | **$2,325,644** | | **Total Liabilities** | **$4,286,609** | **$4,121,392** | | **Total Stockholders' Equity** | **$2,149,213** | **$2,056,269** | Consolidated Statement of Operations Summary (in thousands) | | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net Sales | $5,441,219 | $5,434,687 | | Gross Profit | $2,583,716 | $2,481,352 | | Operating Income | $561,659 | $675,515 | | Net Income | $214,352 | $393,913 | | Diluted EPS | $0.60 | $1.10 | [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=97&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[339](index=339&type=chunk) [Item 9A. Controls and Procedures](index=97&type=section&id=Item%209A.%20Controls%20and%20Procedures) Due to a material weakness in IT general controls, Mattel's disclosure controls were deemed ineffective as of December 31, 2023, with remediation efforts underway - The CEO and CFO concluded that disclosure controls and procedures were not effective as of December 31, 2023, due to the material weakness in internal control over financial reporting[341](index=341&type=chunk) - Management has a remediation plan underway to address the material weakness, but it is not yet complete[343](index=343&type=chunk) [Item 9B. Other Information](index=97&type=section&id=Item%209B.%20Other%20Information) The company reports no other information - None[344](index=344&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=97&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to Mattel - Not applicable[344](index=344&type=chunk) Part III [Item 10. Directors, Executive Officers, and Corporate Governance](index=98&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%2C%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance, including the Code of Conduct, is incorporated by reference from the 2024 Proxy Statement - Required information is incorporated by reference from the Mattel 2024 Proxy Statement[345](index=345&type=chunk) [Item 11. Executive Compensation](index=98&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the "Compensation at Mattel" section of the 2024 Proxy Statement - Required information is incorporated by reference from the Mattel 2024 Proxy Statement[346](index=346&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=98&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership is incorporated by reference from the "Stock Ownership and Reporting" section of the 2024 Proxy Statement - Required information is incorporated by reference from the Mattel 2024 Proxy Statement[347](index=347&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=98&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the "Corporate Governance at Mattel" section of the 2024 Proxy Statement - Required information is incorporated by reference from the Mattel 2024 Proxy Statement[348](index=348&type=chunk) [Item 14. Principal Accountant Fees and Services](index=98&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the "Audit Matters" section of the 2024 Proxy Statement - Required information is incorporated by reference from the Mattel 2024 Proxy Statement[349](index=349&type=chunk) Part IV [Item 15. Exhibits and Financial Statement Schedules](index=99&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed as part of the Form 10-K report, including bylaws, debt agreements, and compensation plans - This section lists all financial statements, schedules, and exhibits filed with the 10-K, including debt agreements, compensation plans, and officer certifications[351](index=351&type=chunk)[353](index=353&type=chunk)[354](index=354&type=chunk) [Item 16. Form 10-K Summary](index=104&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company provides no summary under this item - None[360](index=360&type=chunk)

Mattel, Inc. (NASDAQ:MAT) Q4 2023 Earnings Conference Call February 7, 2024 5:00 PM ET Company Participants David Zbojniewicz - Head of IR Ynon Kreiz - Chairman and CEO Anthony DiSilvestro - CFO Conference Call Participants James Hardiman - Citi Eric Handler - ROTH MKM Linda Bolton Weiser - D.A. Davidson Arpine Kocharyan - UBS Jim Chartier - Monness, Crespi, Hardt Stephen Laszczyk - Goldman Sachs Christopher Horvers - JPMorgan Megan Alexander - Morgan Stanley Drew Crum - Stifel Operator Ladies and gentlemen ...