Mattel (MAT) 26 Oct 222022 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by. My name is Brent and I will be your conference operator today. At this time, I would like to welcome everyone to the Mattel Incorporated Fourth [ph] Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. very you Thank Instructions] much. [Operator I At turn to -- like call this over time, the to welcome would Mr. David Zbojniewicz, Head of investor relations. ahead. Sir, go please

Thank afternoon, good you, operator everyone. and

Chairman Richard Joining Chief Anthony DiSilvestro, Officer. Chief Kreiz, are Financial me and Mattel's Chief today Operating Officer Executive Mattel's Dickson, Officer; Mattel's President and Ynon and

we this As XXXX quarter you afternoon, know, financial third Mattel's reported results.

and Ynon we We will a Anthony after commentary which will on help discussion some providing take supplement Ynon, begin a today's provided today, to Richard presentation. and call To questions. we our Anthony with you for provide the slide time our results, with have

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changes figures present call be to billings in otherwise. stated gross stated our constant as billings, gross performance Indicator. a we this Please may note billings addition, In in A currency unless presentation. refer referenced key on that billings we gross in will

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looking the any the SEC make expressly obligation Mattel other accompanying so, we call into release does do other well filings and presentation statements. by to required as and this not disclaims public statements except Our as earnings time-to-time, and with in from forward law. as update

like a Ynon. turn the over Now, I'd call to to

call. third XXXX quarter our you earnings for joining Thank

we a exchange EBITDA. and constant in macroeconomic currency The the significant challenging third diversified in resilience our adjusted of environment, achieved Despite quarter reflect foreign headwinds, our their portfolio and success executing net strategy. results growth in and sales inflation,

operating down were to X% and XX% $X.XX, income flat the or third it XX% adjusted Year-to-date, Looking increased financial X%, in was increased currency, the the sales Adjusted ninth was $X.XX, in year-to-date, XX%. net constant compared Year-to-date, currency. million, was growth. EPS quarter sales X%. or up highlights and net consecutive year, up earnings up EBITDA or up of quarter, constant at quarter prior was EBITDA down share making year-to-date adjusted income XX%. per $XXX was $XX Adjusted adjusted million adjusted XX%. operating third

the Hot one one one Group, their the the toy Wheels The in Preschool. year-to-date, for Third quarter & was number our number each property U.S. categories, Infant were Fisher-Price overall Toddler dolls, leader and categories. And company number the power brands, vehicles, globally and NPD Barbie, in Mattel in third and and our respective

segment gross X%, grew XX%. our grew offset total vehicles, decline in billings declined quarter, prior with dance flat, POS grew flat double third the sets in building and in currency, Mattel Infant international constant digits, essentially double digits at in all the partially action gross Toddler geographically, international quarter America. company billings offset company regions Total a decline while year, America. mid-single was growth the North by Preschool grew in to Year-to-date, And single Looking a and was and all digit by third & North digits. figures compared

Our successfully XXXX price have been implemented. increases

the savings, demand. cost still actions maintaining for cost significant EBITDA pricing not While more in it a part volatility increase latter of growth we meaningful year. and see guidance into heading offset XXXX net challenging is environment Yet, consumer more impact to currency X% benefited seen and early, a of the which constant Adjusted We're XX%. the than have inflation. full do sales on macroeconomic year we from

adjusted billion revising $X.X X% the in year. to fourth quarter, $X.XX compared promotional growth representing will secured of to guidance gross to billion, on omnichannel shortly. the to planned Anthony and we retailer X% expect versus XXXX. cover our EBITDA we In As and pressure updated space for prior XXXX we're higher slightly down more higher and shelf guidance more have advertising detail have activity support margin,

much and time list stronger representation toy levels in-stock holiday greater and year. have than this inventory also We last

shipping. fourth outpace to the to We and quarter accelerate expect POS in

year renewal including of rollout will Beyond and well. up This entertainment Monster toy Universal’s outlook and return as franchises business grow our our offering. of Barbie expand performance a Mattel are of full strong its our High in-line relationship by shaping of the year cross global major Princess Mattel's with We our XXXX recently well an innovation partner building gain all in Mattel markets. position highly this targeting Trolls, for for sets category as strategy exciting the curated a during Frozen movie, IP-driven market, signing be experience, driven with full year Creations extended to major the addition collector of expansion. strengthened Pokemon our and Disney XXXX provide continues fourth and and of choice the broadening new premiere by license theatrical the companies. guidance is to our the the first international for call. We and year-to-date entertainment XXXX the as plan as release. The company to quarter portfolio, global multi-year products with momentum a DTC

to musical make million High launch kids accredited of earlier this business television IP value progress continue Monster during on linear toy full family action week. X and total and Plus of networks. movie reached live viewers capturing month, number over the was on and verticals movie the The on premiered Nickelodeon its one We movie also The the our outside Paramount aisle. in highly

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on Livetopia presence the our Roblox include to in and world. Pocket expanded Polly also virtual We Barbie

our among quarter for recognized The achieve HotWheels environment. successfully our growing are offering of expand another sales space with the constant by later on collaboration results being and brand in NFTs, world's a Beauties to strategy year innovators Boss toy NFTs platform. consecutive of believe our Seramount XXX wellbeing. entertainment track all we and included currency. digital America. this XX,XXX employers the Mattel women's workplaces debut complex ninth there All-in-all, that was in in a announced games navigating good by season, Universe, this Healthiest we is year employee the Mattel for to for We Company, growth year-over-year Best the Mattel XXX standalone a are its In on important best we by of art the to forward look show on of the one workplaces Masters a holiday quarter addition the In net culture, to working. for grow company. to business kind recently Fast was and the for growth empowerment and Year-to-date Companies IP-driven Mattel, best Forbes, for and Barbie workplace Creations. is achievements with

engagement toy industry relevance. believe resilient to macroeconomic product impact for entering There that thereafter. with all categories, our has may economic is strong. full demonstrated consumer in fundamentals Mattel's opportunities. is brands during its challenges and While year the increased whitespace are we're difficult thriving are seeing cultural the related historically forecast higher we and and and spending, balanced that times, consumer and portfolio volatility to no new grow continue is drive innovation resilience We to well

with new we major are companies are the partnerships entertainment winning growing key and Our licenses.

our accretive verticals The progress aisle, opportunities highly and balance in products. making experiences, digital sheet to toy of consumer become growth with and IP full capturing value are the in lever. about content, outside healthy more on We is another the business

grow leadership organization market value. are create in financial long-term to share excellence. executing performance Our detail. shareholder We believe and with business, world team cover now, increase global the class positioned Anthony And well and we're will further the more

Thanks, Ynon and good afternoon.

up quarter the X% a challenging macroeconomic prior sales year, increased margin environment. As results good excluding basis gross midst impact the by the the has of Adjusted benefit of the to and flat XX generated for We currency said, operating billion pricing $X.XXX negative mostly period, of X% savings a translation. costs than points Ynon in achieved gross net actions income an to decline to offset expense, percentage. prior Adjusted cost $X.XX, Adjusted million, declining by adjusted advertising in offset $X.XX more of $XXX increased the increase compared X%. was was margin of primarily EPS a inflation. and in due we

prior the $XXX adjusted percentage in the with costs paydown million, or Excluding tax interest increased increased comparable rate onetime associated expense Adjusted prior year, EBITDA million. was XX%. to the to X% the year, while debt the to $XX two points

inventories excluding performance, the impact which sales had grew income Adjusted strong, metrics year-to-date $XXX the with benefited currency from up grew retailers' and were XX% XX% by increasing in been million increased increasing and or adjusted first very Our double Net translation. XX% operating EBITDA digits. key negative of half XX%.

currency. in Turning constant to gross billings

with growth increased quarter in gross properties. outpaced two the X% regions. also Little a to plush grew purchases. grew growth XX%. infant declines year-to-date categories perspective, gear, growth, third by by the digits and POS in by in in Preschool X% billings mid-single year America Barbie Latin flat in record billings low-single North three of Infant another grew newborn growth POS category up growth gross up in Wheels, gross games. offset and in gains XX%, driven or exceptionally markets. double after EMEA double-digit following by increasing and growth year-to-date, Year-to-date to partly licensed digit Toddler strong gross declined digits X%. had by up grew vehicles down all grew billings quarter we achieving was action in with strong The and Polly was was billings, was the retailers category declined XX%. achieved that's People. gross X%, first buildings figures billings on gross From in billings Challenger X%, with an was & billings categories in mid-single highest billings geographic third Challenger industry. record. due and four partly were was with categories up which by quarter. the up gross increasing years declines digits. by key High by down in Year-to-date, and a baby X%, category Gross year-to-date Consistent driven and offset Year-to-date a in reported quarter and POS which XX%. X% and decline of third by and aggregate, Imaginext increased America offset quarter. X%. half Pocket was driven XX% Monster full XX%. achieved Dolls Hot Barbie XX% accelerated

costs growth as Adjusted pricing impacted growth both we by Japan, our Asia-Pacific POS into closely is double strong savings partners increased meet Inventory digits, by to by the margin in and Australia. inflation. of domains closures. points in be XX%, head Australia in cost anticipated good gains grew China, increased by and significant season. primarily driven quality declines with gross working up partly weeks of end basis exceeded holiday inventory we and retail supply primarily offset XX to acceleration which XX.X% the were POS. as retail to driven are continues in COVID-related Quarter in levels dollars and

are Here increase gross components in of the the margin.

side, primarily cost other growth by were basis the partly savings midyear On of negative contributed from properties. added basis points the a licensed of and offset These XX points inflation, basis XX points points. XXX factors of high associated royalties, basis benefit the basis impact added points actions positive our with and XXX for pricing, gains negative growth XXX the optimizing

free allowances. expense expense, advertising business operations Cash million Adjusted lower adjusted inflation XX% year as P&L, in million was Taking up debt the was cash due to were cash primarily XX% $X.XXX to $XXX prior excluding the and prior period. $XXX savings. the to Adjusted expenses growth liabilities in primarily as expenditures, down prior tax is in of strongly cash year. working by current improvement our the the in to and $X.XXX of mostly million, items, compared which use compared the higher from growth impact $X.XXX decline mostly period. in due $XXX reflecting expenses was declined million, of period or EBITDA $X.XXX $XXX debt $XXX operating compared million, drive negative by $XXX million. offset a $XXX $XXX was higher reflecting incentive in XX%. million of prior million seasonality Total net for trailing cash over debt was higher for year working offset to to compared flow in The deferred to trailing an $XXX prior $XXX inventory. included by of last to requirements Moving the higher to the the comparable prior $XXX million at million, flow balance conversion free the was usage incremental and of $XXX increase in million, billion the by million, period. increased increased capital increased a valuation our X% the Year-to-date by the salary offset Adjusted Total sheet, declined look XXX capital year. working Free XX cash usage, balance advertising in $XXX or the due generated year. the earnings. higher capital X% year prior brands of to million and Increased compared in period compensation we for the compared billion billion, basis, income offset mostly X% are to capital Free adjusted million declines year increased or cash margin. to year, generation of by million last optimizing months. due gross we to million was EBITDA was expenditures prior an $XX flow, support use income, balance to million, to the XX-month of a SG&A the year-to-date $XXX increased $XXX net cash to The release Capital compared to year-to-date to XX-month net On billion. cash negative non-cash the by compared flow demand. in

that upcoming inventory we million of to cash billion Accounts reflects due currency million primarily of improve. million in maturity adjusted the Leverage last $X.XXX position to by was billion intend to when production $XXX receivable seasonal offset to declined improved increase to partly has currency X.XX% to to the was the quarter by repay improvement EBITDA the Looking continue or XX%. ahead, in debt times Inventory This up impact to million quarter quarter $X.XXX $XXX fourth The end the driven was $XX ratio use we relative of translation. $XXX third reductions. XX%, available negative translation. combination and as of debt increase inflation, $XXX or accelerated the expect at and year. to trend X.X of adjusted year, million an higher meaningfully compared is compared prior by growth X.X times we the impact the foreign EBITDA The the and of last to quantities in notes. cost

our We make an continue achieving of toward goal progress grade to investment rating.

cost generate million savings the were to quarter, benefited of which significant $XX growth for in continue sold. million We program cost $XX of savings. Optimizing goods

Looking program total million $XX million XXXX million savings continue in XXXX by to XXXX. expect achieve since to program launching ahead, savings $XX of to we the and incremental $XXX in the of

digits. growth Friends, is We by expected now we maintaining Infant led mentioned, Barbie Wheels categories and Dolls and Vehicles the figures. American to slightly for by respectively driven decline Hot well and led XX%. by Thomas single as Ynon to guidance Challenger category and with As expect & currency sales be decline to are our in and as action Fisher-Price in Toddler low Girl aggregate full of X% categories, to our XXXX year Preschool constant net This

the be We is about and July American that in movement compared the trajectory impact points anticipate reflects a have currency is reflecting modestly We negative adverse rates. higher financial now to $X.X below of margin and long-term is gross XX% to of foreign year. the the billion the currency the currency XXXX three a guidance approximately and Barbie from translation of impact net percentage X% slightly representing to and Girl. change $X.XXX be below of EBITDA translation. the the up from of expectation prior the XX.X% The growth now will reflects four in to billion, of impact base prior of confident to expected recent levels gross and now inventory sales, $X.XX of on our to through growth billion, This guidance expected range Adjusted margin prior our XXXX. from balance guidance Adjusted managing in X%. lower are

We share. relatively advertising EPS of our flat. $X.XX, to $X.XX $X.XX now base remain of for per as XXXX to a continue sales, adjusted to is to percent to SG&A of range to expected expect net and decline From a increase

$XXX Dolls million increase an We increase expenditures the XXXX Consistent expect as prior Vehicles of XXXX. and we to $XXX manufacturing a to an prior have significant capacity guidance, year in compared rate continue owned strategically which to in are to adjusted competitive range of XX% our cost to tax to million, advantage. invest we forecast be from in with XX% facilities XX% capital in

continuing executed said, on bottom year. and with expect subject We and year-to-date as our That respect quarter volatility, XXXX to in for our and higher annual but reevaluating good growth. remains the to macroeconomic XXXX inflation in guidance and macroeconomic consumer with volatility top previously may XXXX we XXXX guidance outlook, the very and our are uncertainties. bottom and In with goals, line we are are operating impact will company that revised Mattel any With expectations in growth what stated the well further trajectory next as closing, is quarter, unexpected fourth market, disruption considers a market we environment of the increased today a confident aware line are growth other The volatility, results and pleased given demand. challenging risks our top our including call. earnings double-digit provide

are priorities, to believe continue ratio, investment-grade Q&A. it we We the I operator improving our are progress Thanks are allocation positioned turn today, time ratings. We and for consistent trajectory. with towards over our well our to capital making achieving will for leverage your and credit now growth

[Operator comes of Instructions] the Your Stifel. line first Crum with Drew question from

Your line open. is

afternoon. Good guys. Hey, thanks. Okay,

in So as then if in last that the XQ, have I you half. half I it the can first on second outpace And you're XQ, growth. you the outpace school? achieve flattish. POS, POS I you half a relates correctly, to would call, it that shipment still heard follow-up. second will that think indicated POS mind, With suggesting

And I'll to closely our I we and is ahead, mean POS are obviously, retail acceleration. This we drivers working demand outpace four that number of and the mean, anticipated start. to mean Anthony. out I reasons expect Yeah. we're accelerate I quarter look shipping. of there's there. partners a as to meet with

fourth have quarter, advertising We increased promotional activity with more support the in our retailers.

We greater have and Toy representation more list. space shelf in

a to expectation in believe that So is of accelerate. POS our reasons lot will

pleased I'd also we to and with expect quarter-to-date in shipping. are POS closer are holiday the expectations, purchasing returning we outpace POS add is that line noting worth so patterns see accelerating season, performance. And also to shoppers and our to with traditional that

it. Got

a And as Okay, guys. okay. Thanks, then follow-up. just

on retailers XQ. billings explain else to performance during preamble, North mentioned ordering during performance there Thank the the domestic acceleration American and by the anything you. You international Was in your XQ? in between gross divergence

years. trading there third But in I traditionally Yeah. and respective in consecutive number the There categories in one look our quarter And and in were also categories. we performed in each category, Year-to-date, U.S. the year-to-date, our I where specifically we're the in their XX% U.S. certain were one wouldn't number company in it been cards. under-indexed leader for brands power -- plush isolation. the one wouldn't that the isolation. one in up We're U.S., are we disproportionately take well, number at overall. quarter. the XX We've number

continue North in believe the success are well growth America our about positioned confident very to we're and So trajectory. we

guys. Thanks, it. Got Okay.

MKM from line with of the Eric comes Your Handler Partners. question next

line open. is Your

more the right sort question. Wondering And North could little now. you about in state of thank retail, Good bit if a America the you talk particularly of for afternoon.

on mean look can increased seeing You're also give you on you at held then orders the various as mass online market reducing inventory days of some versus I have a all? on, they at perspective back platforms, dollar us volatility. Are stores follow-up. at retailers stores? are the Just platforms? cutting amount maybe particularly what's Does merchant And going that being versus

It secret no toy resilience historically demand. X.X% macroeconomic is there's economic challenging could So grown has to according during It's there the grow consumer with year. your environment CAGR has for that industry at But expected And that through challenges, grow affect to and the volatile XXXX. they and times. to full its a the year-to-date. monitor, to expect all of industry that, demonstrated continue

to industry strong last research, relative own spend internal the year. to or to we season seeing same holiday are we the consumers According the demonstrate Christmas expect continue more fundamentals. to this So our or coming

we consumers brands we as with quarter, expect ever. winning advertising where important than toys better and on. the and purposeful mentioned, have products Anthony season. And shelf is quality we're now what quality resonating big that space, in-stock seeing more we have representation are believe up This focused and inventory. the And holiday end the brands, We will more is promotion we toy list excel. -- more in This on do

in year believe bottom for positioned So well line. are next the XXXX, season top-line and we both grow to and we coming continue

been of of ratings you investment-grade waiting upgrade, sort things of I of What some Okay. immediate may us sort Can an on? credit of imagine credit the little And give be for for once where follow-up what rating you it's are waiting frustrating get could a stands? And that a because the do on update you that then sort Anthony. the that? upgrade. do

Yeah.

prior at the our to you adjusted QX think our we recall, progress first really priorities. the and if ratio. good continue our comment sheet improving balance make And capital times times in X.X in leverage from EBITDA, to to We down X.X and I that's debt is allocation year. make finished

and leverage investment-grade look will stronger as important to first to The to that look, And the of was an we M&A in X.X get a And as we have was organic at share repurchases. other sheet, the down is flexibility growth, for maintain and times, balance one invest milestone our and rating, with to range consider target priorities that. it such done and Mattel. X second we've an

to the continue make rating we sheet and continue reducing and continue with with progress, dialogue improving that to we and So our agencies against leverage. balance deliver

to And Eric, comments. just add to Anthony's

said we very bringing been and target sheet much We're good we range on continue another improve becoming note, focused it. to As do see and growth We've structure within capital it our lever. our on the a balance place. very to

the talked end We about year. another repaying notes million before of also $XXX the

So position continue to strengthen growth. of balance our and turning our sheet to another lever

thanks. And appreciated. Much

you. Thank

of question D.A. line comes next with Davidson. Linda Bolton-Weiser the Your from

open. is line Your

of you that still bit most price something items, the think weakness were has point kind there that in said which Barbie? had like is it case? impacted. the the before the of like terms spread Or little that was else I Dreamhouse-type Barbie, in higher more a Is

Richard. it's Linda,

part the might first I question. on of catch You second the it sum did out part, which But cut the up.

perspective long-term total. Look, it a in confident So I'll the number we're growth global answer property. from very in doll Barbie one trajectory. she's Barbie's Clearly,

is were record. execute again compare continue excellent highest Year-to-date, to playbook. year 'XX, line on gross billings as it you X% the an achievement gross recall, is up Barbie selling in with We when we currency, constant which, in -- our to which

has Incredibly which be in mentioned shared and to however, continues and with Netflix see to theatrical pipeline. last number multiple It's modest past with innovation way, for Barbie and on we last So higher like looking think, third the summer. a the the got brand. This obviously as decline did in Dreamhouse, of initiatives more such quarter. the overall great, with of experiences. Barbie includes also, the as We've in new forefront important content as size women We well style the We're brand the platforms. this which trend years, is barbie quarter expected, property specifically the to next Core doubled forward years global highly successful Barbie We've toy 'XX. a got I inspiring the expansion you release for the anticipated price Trend. one as over two note, fashion The Jane brand, of the a strong ranging movie to of speaks point continued biggest across By conversation. the items strength recently Goodall. on five which cultural drove slate from

Dolls minute. for then a Okay. with And sticking

Monster sell-in, channel, your was the like And quarter your in quarter? of of what terms in sell-in? then would High for in that terms of what what fourth half, terms be the in done of roughly done planned shipments In the third percentage like second the was the into percentage

Yeah, we're Monster but the that share performance the can had I happy to what tell Linda, you date High. we incredibly percentages, on of that and with the we've can't is relaunch encouraged

on its you a during kids the reached the movie, live-action movie and October animated launch. XX we've We've networks. was we've month. know, Plus viewers one also episodes As launched launch family greenlit premiered just strong on We on to it total which week Paramount of It sequel. X the with High television of actually, this which number musical series, Friday, also is Nickelodeon Nickelodeon. performance, And Monster going on linear this got following million XX over

with Halloween. the been the off has nurturing literally on will for We've which developing brand incredibly releases. with in I minutes. content been We've that's Mattel spectacular really selling community, which product the loyal. start. our multiple also coincide time We've mentioned, which been done Creations, has and a drops out to And hitting shelves, in got just it's kid-targeted new as course, Of collector

So internationally in this in We're of forward we're also America North very the to rollout year Monster happy. continued looking and High XXXX.

I target one guys a just And roughly can year? own Do more? sneak inventory in the you have your balance the end of at for

Yeah.

year-end we year continue $XXX the as up be XXX expect sequentially. million improve improvements think inventories to inventory XX%, we will up our that level look we're quarter believe our the QX I through we third at of trend above million or and levels. modestly and making and balance and to the year and finished XX%, that prior was

much. very you Thank

you, thank Linda. Thank Well, you.

Megan next comes line from of question JPMorgan. Your Alexander with the

positive implied for Hi, standpoint? question maybe spending follow-up versus multiple a lot a a XQ makes you consumers patterns, line but the you on XQ does more Can expecting shifting volatility with it's now? in and you've guide their sense accelerated mean earlier. it's said highlighted traditional just taking And acceleration quick quarter-to-date question. back of Maybe to expectations, good that so afternoon. POS what's a Thanks are also you I increased our from clarify in that Or it here? from Drew's are think times. further

what reconcile like to sounds an here. consumer with maybe on trying just POS accelerates from So outlook more caution expectation that the spending

And a about space season. we circulars What I that in and closer there's that's buy toy is POS little shelf remember, to they the reasons to POS and so also as shipping. we advertising, activity, detail. Look, to that based think say context returning and going did that early talk we fourth And many any on where of patterns, mentioned in expect believe POS about out are Yeah. quarter-to-date the holiday in lists to outpace buying shoppers performance there. accelerate the that, is accelerate to the promotional traditional to mentioned, Ynon quarter

we're POS again, confident statement So the the quarter. in very about accelerating in fourth

maybe helpful. a That's 'XX. And on question then Okay.

are be and that's some pull line Like are still expecting and previously spend savings Can are levers line can takes 'XX bottom on little about top improve? costs there have in had there. and talked in puts cost -- And just you up sequentially sales you growth. anticipate weaker gross SG&A other the to You should we the time a of you margin a do margins? on seeing if gross side, then gross tailwind of talking about bit you a And maybe that to bit if 'XX expected? line up? in than top And margin the comes the

Yeah.

the we QX, we're Again, said as provide we ocean we've overall, going did of into rates. guidance materials, go make But wage impact fairly with to to continuing P&L, some terms couple market me our in But fourth a for but significant on XXXX. in we XXX a pressure let saw So comments in basis freight, seeing XXXX. as have expect in of quarter And moderate before, are on to inflation improvement inflation, you call. prices from it respect points.

it's our movies. But to at Barbie it's next look Universal year, got the Frozen, margin. and shaping gross global overall think Trolls I we premature and Princess the got We've High. talk about as additionally, well. We've up of rollout Disney Monster

positive the drivers middle again, a inflation in a of to lot -- the line. again, the be on And lot of moderating top P&L. So

much. very you Thank Great.

do grow And to said, and as line just to expect we also, year. to bottom that, top the next add we

Anthony. Thanks,

the Your UBS. Arpine comes Kocharyan line next from question with of

Your open. line is

lot It's we are a box very time. have same tricky. drive Hi, question. skepticism I thank next can really for levels? Barbie this animation. early It's for you taking about event You what's for and a whether back grow around growing -- never point. record know do There from obviously as brand action, you. sort this year. in a that? I Could XXXX the a the you see your had second? at it's that to at office of the what Barbie for around be not which brand my XXXX, is store such go guess think big thoughts of But Thanks bit can

Arpine. Yeah, the you for Thank question.

years we've franchise incredibly in strong We've initiatives, proof. years got achievement. and last five we're list five said, the We've probably I quite but We've is a release summer. next I Barbie anticipated last As of in mean, of slates. Barbie got particular highest over Netflix the confident for, size whole theatrical movie, Doubling an the a in innovation. got got reasons,

of are long-term the team. we And confident forward. number considering, time. incredibly we of things all as It's one move in consistently look, all the us confidence had got Barbie. gives We've performance growth the So reigning we've extraordinary an doll been trajectory again, that the

got Return of Universal premier great an reason now as can have Monster unique of brands to course, category our got our of Trolls a the Princess incredible allows As the franchises. got Disney again brands High, doll. out Frozen together. collectively and that structure thrive we're got our as a is management, result, We've the you which Barbie addition well which, category portfolio, complements our We've overall movie. excitement. confident know, rolling for We've being. all as of We've with And

holds So of the look, dolls all in all, about property particular, in we future couldn't doll excited be doll in as and all and, the space global time. the leading fashion Barbie what more

I about questions of north could a was you been the of sizing my are have in near-term day What most or brands, margin. million kind thinking $XXX your a sort of margin high little years of bit on very after in hoping launch initial more that years? what on back XXXX And Thanks. be because of versus of March and to next talk answered. three that targets High goal as two a Great. Monster kind opportunity and this sort certainly significant could

incredible Well, look, the brand. strategic again, a within We've approach relaunch very taken properties. of Monster treasure High is trove the property an Mattel's of to

partnered a did going well. Collector and hitting musical of product dropping Nickelodeon We of throughout mentioned I started to Drops, innovative we've a with the episodes, well, then Viacom course, and XXth. which know, to fanfare that's television We've as coordinated incredibly got and Friday, sell-outs. the with to got Creations extraordinary be month premiered our And which the robust and create pipeline compelling earlier movie, marketplace. have this Mattel which, been on live-action the XX we really going on you As have year

we're America a portfolio significant our to in As just rolls in and going certainly started. XX the business North out doll well, throughout for size And property not while overall the itself, ranking. mentioned, fashion top is it XXXX got incrementality be We've as as has the it world. opportunity, a will

much. very you Thank

question comes of Andrew Uerkwitz from next line Jefferies. with the Your

Your line open. is

smallest Hey, are guy. for -- ask these inflation pieces Thank please? inflation kind the quantify if I'll far could what's bit of new as the you in couple in of thank a you I as But questions. a letting of pieces, simplistic. headwind pieces, different that that apologize And the you. too biggest that little

do that. can I Sure,

points is inflation So as our QX, the basis most basis rates impact increase three points year. there's And the in XXX was impact ocean freight drivers. this you significant we that year-to-date. XXX of the incurred is in And saw negative primary

in proportion and factor. about that's lesser and again, in So primary equal balance being increase the then, and extent, supply And materials, an increase key the and in our chain cost zinc resins a to labor the markets. primarily

things to kind you like just these of kind one, is around certain now That's quantify -- entertainment, sales. if the customer target, a it strategies kind of it just have? And X what of then impact it. these or share other one just or can a the you. whether properties initiatives of multiple is some Got more hits entertainment us awareness Are entertainment you about you represents on around with of Or think in improvement side. able when brand some of I guys the helpful. these Thank lot it of -- internally awareness, like

value before to what the what our see do as on capture said accretive we we full side. Yeah. the The Andrew. to we've is that opportunity of -- toy Thanks, IP the

growth and meaningfully profitable we develop are So as units opportunities these contribute achieve business sales our overall. and we create, to areas view and that can where business will

to the Of course, is be will of accretive toy opportunity there businesses effect will in halo be build and a on that but sales, successful themselves.

announced success, broken products said it And various the it and and we've consumer meaningful. you development where haven't It's more on a we as be includes XX television, and robust in includes late we believe that know, we content, content, we've down experiences. film What about We film. in coming. in with one components. these this more that project have When digital the could talk production, that areas,

including new the and a but have eight this specials a real strong goes on. are on the series the projects. business blocks, on list of we side of be activity. that building lot traction. days, side, And putting year, early XX leadership that team assembling television air, Still the very There's seeing we On and on will and

Thank much. guys appreciate I it. Got it. so you,

Thank you.

Wolfe the Research. from Fred with of line comes Wightman question next Your

open. is line Your

into dig gross to margin wanted the guidance. just I guys. Hey,

Is like, call guys any what higher two point promo that update there can within I you think XX it, of quarter, basis that margin? split the sounds sort out also out fourth some then like in what but gross you FX. spend called looks the, for those way

Yeah, can address that. I

just for XX% the margin, I XX% guidance approximately gross prior compared to to XX%. saw of our guidance So updated

down not year. the just it's ticking again, The inventory managing current factor of primary and balance impact So is because in FX financial really impact period. margin to a EPS is the the and of bit, through EBITDA more the the the affecting

So through. gross financial EBITDA dollars impact margin percent, primary change is translation and here again, affect it affect gross that of managing But does inventory. flowing the doesn't margin impact that although

and of looking sort frame moving the And I guys can if POS of a a of that But years? factor? big you just over weeks it promos? what Like is swing then is be for you think thing in matter sense. we been early the Is of against for XXXX. X big targets sort they've going Makes then. to remove of just been think the have 'XX that what them the you And a next decision two almost really waiting of those targets you're sell-through introduced backdrop about Is know call, sort the sort it there out for? updated few just and that to times guys are back since

Yeah.

That's is I difficult a the higher volatility itself biggest very market, challenging pressure. consumers manifesting so environment, under think macroeconomic forecast. are makes much we seeing the issue it in to it in

also XXXX outlook. know, you we as So revised we -- our

XXXX a around the increased It's and coupled volatility. So reevaluate step little causing us just expectations. the moved back has right, bit, those base with to

continuing we'll top and XQ. but line confident to and provide call. then line year get growth. out, bottom get That with, how the being XXXX earnings fourth only are to we quarter and we next see top we'll that We'll this when our delivering guidance we come trajectory grow So continuing in through bottom not said, year for again,

you. Thank Perfect.

things and some And we up is repeat to that add shaping well. Fred, XXXX of the just said,

movie, Monster driver which franchises, High, going is global we very We Disney We to other the Barbie halo key such drivers to Frozen to expect aggregate. be have animated, and while big added be that is some addition we for the Barbie to Princess still mentioned important that event, rollout. that's Trolls our a then. talked big And distinct not we're in highlight, a will about significant of as which The properties that to doing what Return drive brand. portfolio. The a

additions have So to do organically, we we our top distinct have of this what some -- next unique on additions, we business year.

you. Thank

Your final question Markets. Capital comes BMO Johnson of from the Gerrick line with

open. is line Your

about you. as sales sales that percent levels? lower you Where actually that. Thank manage allowances to Can gross higher pressure margin year-over-year. inventory the noticed I on talk And are doing talk managing levels? your Just just incremental are about of Great. gross coming were What a you the inventory inventory higher from higher levels?

be manager in you're are third doesn't a So like look inventories the quarter. how? managed it to need that and those What

the for Gerrick, question. Thanks,

discounts challenges and now is levels as I we current manage what chain meaningfully that At impact that the the marketplace we situation comprehensively we Let XX% and And same at will balance relative talking increased million. and risk. on increase, are today increased on also $XXX and to guidance. levels levels through improve. by accelerated earlier, that fact reflecting And because demand in inventory negative to the arises. to said position continue good were And is that's end talk and the inventory the the improved situation the And margins, inventory risk. of up year, reduce volatility, has of the But reduce a up factored we've levels expected about have prior XX%. a of as to quality. meet this retailers production million our season trend supply about growth recognizing strategy, into and calls, are and to inventory expect last increased we or as of our The $XXX to our inventory ahead holiday we to That's how time, improve assess this service These address we on quarter me we it QX elevated. did expect QX when promotions. and

Thank Perfect. you.

You're welcome.

call further I at will this questions no Chairman and to Kreiz. are over Mr. turn now CEO, back There the time. the

operator. of strong, a we quarter was We multiyear questions you, In your about for are trajectory. our the midst environment. good you, And very our believe in macroeconomic thank challenging growth everyone, Thank this a are summary, today. and fundamentals confident

and And strategy track it the forward an and your the we season another again, working, IP-driven, and going to I'm are is turn to look appreciate on we back to as in growth company. holiday for Mattel. As the We you, year prepared believe Thank Dave. are we high-performing achieve said operating now company. toy interest remarks, to our in over

you, of link Presentations of everyone, will for participating about found A for available the our corporate in pm today's replay this thank call call Events X:XX you, webcast Thank via can at you corporate.mattel.com. Investors webcast today. the And of be joining beginning be call. Eastern The Time section website, Ynon. today. in Thank the and section

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