Mattel, Inc. (MAT) Bundle
Understanding Mattel, Inc. (MAT) Revenue Streams
Understanding Mattel, Inc.’s Revenue Streams
Mattel, Inc. generates revenue through various product categories, with significant contributions from dolls, vehicles, and action figures. Here’s a detailed breakdown of the primary revenue sources for the company in 2024.
Breakdown of Primary Revenue Sources
| Category | Gross Billings (Q3 2024) | Gross Billings (Q3 2023) | % Change |
|---|---|---|---|
| Dolls | $757.1 million | $884.5 million | -14% |
| Infant, Toddler, and Preschool | $349.8 million | $361.1 million | -3% |
| Vehicles | $580.0 million | $518.5 million | 12% |
| Action Figures, Building Sets, Games, and Other | $364.3 million | $357.7 million | 2% |
| Total Gross Billings | $2,051.1 million | $2,121.8 million | -3% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate has shown fluctuations, primarily influenced by market trends and consumer preferences. The following data illustrates the net sales performance for the first nine months of 2024 compared to the same period in 2023:
| Period | Net Sales (2024) | Net Sales (2023) | % Change |
|---|---|---|---|
| First Nine Months | $3.73 billion | $3.82 billion | -2% |
Contribution of Different Business Segments to Overall Revenue
For the first nine months of 2024, the contribution of various business segments to the overall revenue is summarized below:
| Segment | Net Sales (2024) | Net Sales (2023) | % Change |
|---|---|---|---|
| North America | $2.19 billion | $2.24 billion | -2% |
| International | $1.54 billion | $1.58 billion | -2% |
Analysis of Significant Changes in Revenue Streams
In 2024, significant changes in revenue streams were observed, particularly in the dolls category, which saw a decrease of 14% in gross billings compared to the prior year, primarily due to lower billings of the Barbie line, which had a strong performance in 2023 due to the movie release. Conversely, the vehicles category experienced a 12% increase in gross billings, driven by strong sales of Hot Wheels products.
Overall, the total gross billings for the first nine months of 2024 decreased by 3%, reflecting the challenges in the toy market and shifts in consumer preferences.
A Deep Dive into Mattel, Inc. (MAT) Profitability
A Deep Dive into Mattel, Inc.'s Profitability
Gross Profit Margin: For the third quarter of 2024, Mattel reported a gross profit of $979.0 million, representing a gross profit margin of 53.1%, up from 51.0% in the third quarter of 2023.
Operating Profit: The operating income for the third quarter of 2024 was $488.3 million, translating to an operating margin of 26.5% compared to 24.7% in the same period last year.
Net Profit Margin: Net income for the third quarter of 2024 was $372.4 million, yielding a net profit margin of 20.2%, a significant increase from 7.6% in the third quarter of 2023.
Trends in Profitability Over Time
For the first nine months of 2024, net sales totaled $3.73 billion, a decrease of 2% from $3.82 billion in the first nine months of 2023. The gross profit for this period was $1.90 billion, with a gross margin of 50.9%, an increase from 46.9% in the previous year.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Gross Profit Margin | 53.1% | 51.0% | +210 bps |
| Operating Margin | 26.5% | 24.7% | +180 bps |
| Net Profit Margin | 20.2% | 7.6% | +1540 bps |
Comparison of Profitability Ratios with Industry Averages
As of 2024, the industry average gross margin for toy companies stands at approximately 43%, indicating that Mattel's gross margin of 53.1% is significantly above this benchmark. The operating margin for the industry is around 15%, further highlighting Mattel's strong position with an operating margin of 26.5%.
Analysis of Operational Efficiency
Mattel's ongoing efforts in cost management are reflected in the decrease of cost of sales to $864.9 million for Q3 2024, down from $940.9 million in Q3 2023, resulting in an improvement in operational efficiency. The company has implemented the Optimizing for Profitable Growth program, which contributed to the gross margin expansion.
Furthermore, advertising and promotion expenses decreased to $105.0 million in Q3 2024, compared to $124.3 million in Q3 2023, a reduction of 16%.
| Period | Cost of Sales | Advertising Expenses | Gross Profit |
|---|---|---|---|
| Q3 2024 | $864.9 million | $105.0 million | $979.0 million |
| Q3 2023 | $940.9 million | $124.3 million | $977.9 million |
Debt vs. Equity: How Mattel, Inc. (MAT) Finances Its Growth
Debt vs. Equity: How Mattel, Inc. Finances Its Growth
As of September 30, 2024, the total debt for the company stands at $2.33 billion, consistent with the levels reported on December 31, 2023, and September 30, 2023. The breakdown includes both long-term and short-term debt, with the fair value of long-term debt estimated at $2.31 billion.
The company's debt-to-equity ratio is calculated at 1.01, based on stockholders' equity of $2.31 billion as of the same date. This ratio indicates a balanced approach to financing, as industry standards typically range from 1.0 to 1.5 for similar companies in the consumer goods sector.
In July 2024, the company entered into a new $1.40 billion revolving credit facility, maturing in July 2029, replacing its previous facility. The company maintains a solid credit profile, allowing it to secure financing at competitive rates, which is essential for its operational flexibility.
To balance between debt financing and equity funding, the company has executed share repurchases amounting to $268.3 million during the first nine months of 2024, as part of a broader $1.00 billion share repurchase program authorized in February 2024. This strategy reflects management's commitment to returning value to shareholders while managing its capital structure effectively.
| Debt Type | Amount (in billions) | Notes |
|---|---|---|
| Long-term Debt | $2.31 | Fair value as of September 30, 2024 |
| Total Debt | $2.33 | Consistent across multiple reporting periods |
| Debt-to-Equity Ratio | 1.01 | Indicates balanced financing strategy |
| Revolving Credit Facility | $1.40 | Matures July 2029 |
| Share Repurchases (2024) | $0.268 | Part of $1.00 billion program |
Overall, the company demonstrates a proactive approach in managing its debt levels while also engaging in equity funding strategies to finance growth and reward shareholders.
Assessing Mattel, Inc. (MAT) Liquidity
Assessing Liquidity and Solvency
Current Ratio: As of September 30, 2024, the current ratio is 1.44, calculated from current assets of $2.46 billion and current liabilities of $1.71 billion.
Quick Ratio: The quick ratio stands at 0.80, indicating that the company has $1.07 billion in quick assets against $1.34 billion in current liabilities.
Working Capital Trends
Working capital improved to $747.1 million at September 30, 2024, compared to $651.5 million at December 31, 2023. This increase reflects better management of inventory and receivables.
| Date | Current Assets (in millions) | Current Liabilities (in millions) | Working Capital (in millions) |
|---|---|---|---|
| September 30, 2024 | $2,460 | $1,710 | $747.1 |
| December 31, 2023 | $2,303 | $1,651 | $651.5 |
Cash Flow Statements Overview
Operating Cash Flow: For the first nine months of 2024, operating cash flows totaled -$61.6 million, compared to -$79.6 million for the same period in 2023.
Investing Cash Flow: Cash flows used for investing activities were $151.7 million in the first nine months of 2024, up from $93.9 million in the same period of 2023.
Financing Cash Flow: Financing activities consumed $314.2 million in cash during the first nine months of 2024, compared to $119.5 million in 2023.
| Cash Flow Type | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Cash Flow | -61.6 | -79.6 |
| Investing Cash Flow | -151.7 | -93.9 |
| Financing Cash Flow | -314.2 | -119.5 |
Liquidity Concerns and Strengths
The company’s cash balance was $723.5 million at September 30, 2024, up from $455.7 million a year earlier. This increase is attributed to improved cash flows from operations totaling $887.8 million over the trailing twelve months.
However, a significant portion of cash, approximately $499.4 million, is held by foreign subsidiaries, which may limit liquidity due to restrictions on repatriation.
Additionally, the company has access to a $1.40 billion revolving credit facility, enhancing its liquidity position, which matures in July 2029.
| Liquidity Metrics | Amount (in millions) |
|---|---|
| Cash and Equivalents | $723.5 |
| Cash Flow from Operations (TTM) | $887.8 |
| Revolving Credit Facility | $1,400.0 |
Is Mattel, Inc. (MAT) Overvalued or Undervalued?
Valuation Analysis
When evaluating the financial health of a publicly traded company, understanding its valuation metrics is crucial. The key ratios utilized in this analysis include the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
The P/E ratio is calculated by dividing the current share price by the earnings per share (EPS). As of the latest financial data, the EPS for the third quarter of 2024 stands at $1.09. Given a stock price of approximately $19.00, the P/E ratio can be calculated as follows:
P/E Ratio = Stock Price / EPS = $19.00 / $1.09 ≈ 17.43
Price-to-Book (P/B) Ratio
The P/B ratio is derived from dividing the market value per share by the book value per share. As of September 30, 2024, total stockholders' equity is reported at $2.31 billion, with approximately 342 million shares outstanding. The book value per share is:
Book Value Per Share = Total Equity / Shares Outstanding = $2.31 billion / 342 million ≈ $6.75
Thus, the P/B ratio is:
P/B Ratio = Stock Price / Book Value Per Share = $19.00 / $6.75 ≈ 2.81
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
To calculate the EV/EBITDA ratio, we first need the enterprise value, which is calculated as:
- Enterprise Value = Market Capitalization + Total Debt - Cash and Cash Equivalents
Assuming a total debt of $2.33 billion and cash and cash equivalents of $723.5 million, and with a market capitalization calculated as:
Market Capitalization = Stock Price × Shares Outstanding = $19.00 × 342 million ≈ $6.50 billion
The enterprise value is:
EV = $6.50 billion + $2.33 billion - $723.5 million ≈ $8.11 billion
Next, the EBITDA for the last twelve months stands at approximately $536 million.
Thus, the EV/EBITDA ratio is:
EV/EBITDA = Enterprise Value / EBITDA = $8.11 billion / $536 million ≈ 15.13
Stock Price Trends
Over the past twelve months, the stock has experienced fluctuations, starting at around $22.00 and declining to its current price of approximately $19.00, reflecting a decrease of about 13.64%.
Dividend Yield and Payout Ratio
As of 2024, the company has initiated a dividend, currently yielding 1.05% based on the latest dividend of $0.20 per share. The payout ratio is approximately 18.35%, calculated from the annual dividend relative to the EPS.
Analyst Consensus on Stock Valuation
According to recent analyst reports, the consensus rating for the stock is Hold, suggesting that while the stock is not currently deemed underpriced, it is not considered overvalued either.
| Metric | Value |
|---|---|
| P/E Ratio | 17.43 |
| P/B Ratio | 2.81 |
| EV/EBITDA Ratio | 15.13 |
| Stock Price | $19.00 |
| 12-Month Price Change | -13.64% |
| Dividend Yield | 1.05% |
| Payout Ratio | 18.35% |
| Analyst Consensus | Hold |
Key Risks Facing Mattel, Inc. (MAT)
Key Risks Facing Mattel, Inc.
The financial health of a company is influenced by various internal and external risks. This section outlines the significant risks faced by the company as of 2024.
Industry Competition
The toy industry is highly competitive, with numerous players vying for market share. In the third quarter of 2024, net sales decreased by $74.9 million, or 4%, compared to the same period in 2023, primarily due to competitive pressures and changing consumer preferences.
Regulatory Changes
Changes in regulations, particularly those related to safety standards for children's toys, can impose additional costs and operational adjustments. The recent implementation of the OECD's minimum tax rate of 15% on multinational enterprises may affect future tax liabilities and operational costs.
Market Conditions
Market conditions, including consumer demand fluctuations and macroeconomic factors, can significantly impact financial performance. For instance, the company experienced a decrease in gross billings of $109.2 million, or 3%, in the first nine months of 2024 compared to the same period in 2023.
Operational Risks
Operational risks include supply chain disruptions and increased costs. The company reported a gross margin of 50.9% in the first nine months of 2024, an improvement from 46.9% in 2023. However, any future disruptions could adversely affect these margins.
Financial Risks
Financial risks encompass credit risks related to customers' ability to meet payment obligations. Accounts receivable increased by $395.5 million to $1.48 billion as of September 30, 2024. The company actively monitors customer financial conditions to mitigate these risks.
Strategic Risks
Strategic risks arise from the company’s decisions regarding product offerings and market positioning. The company’s major brands saw varying performance; for example, gross billings for Barbie decreased by 11% in the first nine months of 2024 compared to the previous year.
Mitigation Strategies
To address these risks, the company has initiated the Optimizing for Profitable Growth (OPG) program, targeting annual gross cost savings of $200 million by 2026. This program aims to enhance operational efficiencies and reduce costs across various segments.
| Risk Factor | Description | Impact |
|---|---|---|
| Industry Competition | High competition leading to decreased sales | Net sales down $74.9 million or 4% |
| Regulatory Changes | New regulations affecting operational costs | Potential increase in tax liabilities due to 15% minimum tax |
| Market Conditions | Fluctuations in consumer demand | Gross billings decreased by $109.2 million or 3% |
| Operational Risks | Supply chain disruptions | Gross margin improved to 50.9% |
| Financial Risks | Credit risks from customer payment issues | Accounts receivable increased by $395.5 million |
| Strategic Risks | Performance variability among brands | Barbie gross billings down 11% |
| Mitigation Strategy | OPG program for cost savings | Targeting annual savings of $200 million |
Future Growth Prospects for Mattel, Inc. (MAT)
Future Growth Prospects for Mattel, Inc.
Mattel, Inc. is poised for several growth opportunities driven by product innovations, market expansions, and strategic initiatives. Below are key insights into the company's potential for growth.
Key Growth Drivers
- Product Innovations: The company continues to leverage its strong intellectual property (IP) portfolio, focusing on new product lines and enhancements to existing brands. For instance, the recent success of the Barbie movie has resulted in increased interest in Barbie products, although gross billings for Barbie decreased by 17% in Q3 2024 compared to Q3 2023, amounting to $500.6 million.
- Market Expansions: Mattel is expanding its reach in international markets. The International segment reported net sales of $735.6 million in Q3 2024, a 5% decline from Q3 2023. However, the company is focusing on revitalizing its presence in emerging markets.
- Acquisitions: Strategic acquisitions are part of Mattel's growth strategy. The acquisition of new properties to enhance its product offerings is expected to drive future revenues.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, Mattel reported net sales of $3.73 billion, a decrease of 2% compared to the same period in 2023. Analysts project a rebound in revenue growth as new product launches and marketing campaigns take effect. Earnings per share (EPS) increased to $1.09 in Q3 2024 from $0.41 in Q3 2023, indicating a positive outlook for profitability.
Strategic Initiatives and Partnerships
- Collaborations with Entertainment Franchises: Partnerships with major entertainment franchises, such as Disney and NBCUniversal, continue to drive product demand. The integration of properties like Jurassic World and Star Wars into the product lineup enhances appeal.
- New Global Design Center: Mattel is investing in a new global design center, which is expected to foster innovation and streamline product development.
Competitive Advantages
Mattel's competitive advantages include a strong brand portfolio and a well-established market presence. The company has a diversified product range across several categories, including Dolls, Vehicles, and Action Figures. For the first nine months of 2024, gross billings from the Vehicles category increased by 7%, totaling $1.25 billion. This diversification helps mitigate risks associated with reliance on a single category.
| Category | Gross Billings (Q3 2024) | Gross Billings (Q3 2023) | % Change |
|---|---|---|---|
| Dolls | $757.1 million | $884.5 million | -14% |
| Infant, Toddler, and Preschool | $349.8 million | $361.1 million | -3% |
| Vehicles | $580.0 million | $518.5 million | +12% |
| Action Figures, Building Sets, Games, and Other | $364.3 million | $357.7 million | +2% |
The company’s ability to adapt to consumer trends and invest in future growth initiatives positions it favorably in the competitive toy industry landscape.
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Article updated on 8 Nov 2024
Resources:
- Mattel, Inc. (MAT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Mattel, Inc. (MAT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Mattel, Inc. (MAT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.