Mattel Shares Drop After FY22 Earnings Guidance Cut, Mixed Q3 Results

  • Mattel Inc MAT reported a third-quarter FY22 sales decline of 0.4% year-on-year to $1.76 billion, missing the consensus of $1.79 billion.
  • North America segment sales declined 3% Y/Y, and International sales grew 5%.
  • Worldwide Gross Billings for Dolls decreased 3% Y/Y, Infant, Toddler, and Preschool fell 9%, Vehicles jumped 12%, and Action Figures, Building Sets, Games, and Others slipped 1%, as reported.
  • Gross profit rose 0.5% Y/Y to $846.9 million, and the gross margin expanded 40 basis points Y/Y to 48.2%.
  • The operating margin expanded 20 basis points to 22.3%, and operating income for the quarter rose 1% to $391.4 million.
  • Adjusted EBITDA rose 2% to $473 million.
  • Adjusted EPS of $0.82 beat the analyst consensus of $0.74.
  • Mattel held $349 million in cash and equivalents as of September 30, 2022.
  • Also ReadMattel Agrees To Pay $3.5M To Settle SEC Charges Over Financial Misstatements
  • Inventories at the end of the quarter amounted to $1.1 billion versus $854.5 million last year.
  • Outlook: Mattel reaffirmed its FY22 sales growth outlook of 8% – 10% in constant currency.
  • It lowered the adjusted EPS outlook to $1.32 - $1.42 from the previous outlook of $1.42 - $1.48. (consensus $1.49).
  • It also cut adjusted EBITDA guidance to $1.05 billion - $1.1 billion from $1.1 billion - $1.125 billion.
  • With respect to Mattel's previously stated 2023 goals, given the increased volatility in the market as well as the revised 2022 outlook, the company is re-evaluating its expectations and will provide annual guidance for 2023 on its 2022 fourth quarter and full year earnings call. The company expects to achieve top and bottom-line growth in 2023.
  • Price Action: MAT shares are trading lower by 5.97% at $18.59 in premarket on the last check Wednesday.
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