Mattel (MAT) Q4 2023 earnings summary

Executive summary

• Q4 net sales rose 16% reported and 14% in constant currency; adjusted gross margin expanded 570 bps to 48.8% and adjusted EBITDA increased 48% to $234 million.

• FY net sales were $5.441 billion, comparable to 2022; adjusted EPS was $1.23 versus $1.25, and adjusted EBITDA was $948 million, down 2%.

• FY free cash flow rose $453 million to $709 million, and year-end cash exceeded $1.2 billion.

Financial highlights

• Q4 net sales were $1.621 billion; adjusted operating income was $147 million, adjusted EPS was $0.29, and adjusted EBITDA was $234 million.

• Q4 GAAP net income was $147.3 million versus $16.1 million; adjusted EPS increased 61% year over year.

• FY adjusted operating income was $641 million; GAAP net income was $214.4 million versus $393.9 million, including a non-cash $161 million deferred-tax-asset charge.

• Operating cash flow was $870 million, up $427 million; free cash flow was $709 million, up $453 million, primarily reflecting lower working-capital usage.

Outlook and guidance

• FY2024 net sales are expected to be comparable to 2023 in constant currency; adjusted gross margin guidance is 48.5%–49%.

• FY2024 adjusted EPS is expected at $1.35–$1.45, adjusted EBITDA at $975 million–$1.025 billion, and adjusted tax rate at 23%–24%.

• FY2024 free cash flow is expected to be $500 million, with capital expenditures of $175 million–$200 million; full-year POS is expected to be comparable to 2023.

• Sales and earnings are expected to grow in 2025; 2024 advertising and SG&A are expected to remain relatively stable as a share of net sales.