Mattel (MAT) Q1 2025 earnings summary

Executive summary

• Net sales grew 2% year-over-year to $827 million (4% in constant currency), with broad-based category strength and margin expansion; adjusted EBITDA increased 7% to $57 million.

• Adjusted gross margin expanded by 130 bps to 49.6%, driven by lower inventory management costs and cost savings initiatives.

• Operational excellence, cost optimization, and a robust balance sheet with $1.24 billion in cash and $160 million in Q1 share repurchases.

• Net loss widened to $40.3 million, or $(0.12) per share, due to higher restructuring, litigation, and compensation costs.

• Significant focus on mitigating tariff impacts through supply chain diversification, product mix optimization, and pricing actions.

Financial highlights

• Net sales: $827 million, up 2% as reported and 4% in constant currency year-over-year.

• Adjusted gross margin increased 130 bps to 49.6%; reported gross margin at 49.4%.

• Adjusted operating loss improved by $7 million to -$16 million; reported operating loss increased to $53 million.

• Adjusted loss per share improved by $0.02 to -$0.03; reported EPS was $(0.12).

• Free cash flow (TTM): $582 million, down from $964 million prior year due to prior inventory reduction.

Outlook and guidance

• Full-year 2025 guidance paused due to macroeconomic and U.S. tariff uncertainty, especially regarding consumer demand.

• Confident in mitigating actions to fully offset $270 million incremental tariff cost exposure in 2025.

• 2025 cost savings target under the Optimizing for Profitable Growth program raised to $80 million.

• Maintaining $600 million share repurchase target for 2025.

• Management expects liquidity and credit facilities to be sufficient for operational needs.