Q1 2021 Mattel Inc Earnings Call

[music].

Yeah.

Thank you for standing by and welcome to Mattel's first quarter, 2020, One and earnings conference call. At this time all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session.

I ask a question during the session you will need to press star one and your telephone. Please be advised that today's conference maybe recorded share do you require any further <expletive>istance. Please press star zero and I would now like to hand, the conference over to your host Vice President Investor Relations, David Sport and David <unk>. Sir. Please go ahead.

Thank you operator, and good afternoon, everyone.

Joining me today are in on cries, Mattel's, Chairman and Chief Executive Officer, Richard Dickson, Mattel's, President and Chief operating Officer, and Anthony Disilvestro, Mattel's Chief Financial Officer.

As you know this afternoon, we reported Mattel's 2021 first quarter financial results.

We will begin today's call with and on Ann Anthony providing commentary on our results after which we will provide some time for a non Richard and Anthony to take your questions.

To help supplement our discussion today, we have provided you with a slide presentation.

Our discussion slide presentation and earnings release reference non-GAAP financial measures, including adjusted gross profit and adjusted gross margin adjusted other selling and administrative expenses adjusted operating income loss and adjusted operating income loss margin adjusted earnings loss per share.

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Earnings before interest taxes, depreciation and amortization or EBITDA.

Adjusted EBITDA free cash flow free cash flow conversion.

Leverage ratio and constant currency.

In addition, we present changes and gross billings and a key performance indicator. Please.

Please note that we may refer to gross billings as billings in our presentation and that gross billings figures referenced on this call will be stated in constant currency unless stated otherwise. In addition, please note that our accompanying slide presentation can be viewed in sync with today's call. When you access it through the investors section of our core.

<unk> website, corporate dot Mattel dot com.

The information required by regulation G regarding non-GAAP financial measures as well as information regarding our key performance indicator is included in our earnings release and slide presentation and both documents are also available and the investors section of our corporate website.

Before we begin I'd like to remind you that certain statements made during the call may include forward looking statements related to the future performance of our business brands categories and product lines.

These statements are based on currently available information and <expletive>umptions and they are subject to a number of significant risks and uncertainties that could cause our actual results to differ from those projected and the forward looking statements, including risks and uncertainties <expletive>ociated with the COVID-19 pandemic.

We describe some of these uncertainties in the risk factors section of our 2020 annual report on form 10-K, our earnings release and the presentation accompanying this call and other filings we make with the SEC from time to time as well as in our other public statements.

Mattel does not update forward looking statements and expressly disclaims any obligation to do so except as required by law.

And now I'd like to turn the call over to Eni.

Thank you for joining Mattel's first quarter 2021 earnings call I Hope that you and your families are staying healthy and safe.

This was another record quarter for Mattel with truly exceptional results as we continue to improve profitability and accelerate top line growth.

We are off to a very strong start to 2021 here.

Here are some key highlights for the first quarter compared to prior year.

Net sales were up 47% as reported and 46% and constant currency the highest quarterly growth rate, we have on records and over 25 years and the highest first quarter sales and absolute dollars since 2015.

Adjusted gross margin improved by 350 basis points and reached 47% the 11th consecutive quarter of improvement on a year over year basis.

Reported operating income was $31 million and increase of $181 million and the first positive first quarter since 2014.

Adjusted operating income was $28 million and increase of $161 million and adjusted EBITDA was $89 million up $155 million.

This quarter was particularly strong and that we achieved double digit growth and gross billings in each of our four regions with remarkable performance and North America and EMEA.

Double digit growth across all product categories, and strong double digit increases and our three power brands Barbie Hot wheels, and Fisher price and Thomas and friends as well as American girl.

Okay.

In the first quarter with significantly outpaced the industry.

And with total company Pos up more than 38% benefiting from very strong consumer demand for our products.

According to NPD for the third quarter in a row Mattel gained share globally, driven by strong performance across all regions.

We also saw growth across all sales channels, with especially strong performance and e-commerce as we continue to accelerate our progress and the strategic channel.

In the first quarter E Commerce, Pos grew 58% year over year, representing 28% of our total Pos in the quarter.

While our exceptional growth this quarter was partially driven by favorable year over year Covid related comparisons we believe the strength of Mattel as a result is attributable to the strength of our brands quality and breadth of our product.

World Cl<expletive> supply chain global commercial capabilities, and very effective demand creation and close collaboration with our retail partners.

The strength of our performance is also evident when comparing our 2021 results to 2019 before COVID-19 with net sales being higher by 27% in the first quarter of 2021 versus the first quarter of 2019.

Our market share gains for the third consecutive quarter.

And so demonstrate that we are not just riding the waves, but growing well ahead of the industry and driving the momentum.

We expect to continue to gain market share through the rest of the year.

This consistent performance and momentum reflects the success of the turnaround.

We are very confident about our business trajectory and remain focused on executing our strategy to transform mattel into an IP driven high performing toy company.

Looking at the first quarter gross billings and constant currency by category versus prior year.

Doll category grew by 68% driven by continued strength and Barbie the launch of spirit.

And high double digit growth and poly pocket and American girl.

Dr. Pos was very strong and language shipments.

The body of power brand delivered phenomenal growth of 86% with Pos up 66% and all product segments growing.

Per NPD.

Bob has strengthened its position as the number one global balanced property in the first quarter.

American Girl is impressive turnaround continued its momentum and was up 22% the second consecutive quarter of positive year over year growth.

Vehicles category was up 15% driven by the strong performance of hot wheels and Matchbox.

And the category remained strong and also growing double digits and outpacing shipments.

Hot wheels was up 16% with growth across all product segments for this power brand.

Per NPD Hot wheels continued to be the number one vehicles property globally in the first quarter.

Yeah.

Infant toddler and preschool category was up 29% driven by Fisher price and Thomas and friends power brand.

Our infant toddler preschool category performed in line with the industry.

Fisher price core grew by 36%.

And with Pos up 24% driven by infant and newborn.

Per NPD.

Fisher price continues to be the number one infant toddler preschool manufacturer globally in the first quarter.

Thomas and friends was up 5%.

With P O S up 8% continuing to show improvements.

Action figures building sets games and other are challenged and our categories together grew 66%.

Driven by double digit gains across the portfolio.

Games achieved its ninth consecutive quarter of year over year growth up 25%.

Driven by owner, which continued to perform very well as it celebrates its 50th anniversary.

Per NPD.

<unk> is the number one card game globally.

Building sets were up 46%.

Driven by strong Pos and expanded distribution of Mega along with growth and pokemon and Halo.

Action figures increased 101%.

Driven by Jur<expletive>ic World WWE and Masters of the universe.

Cash continued to grow driven by Mattel's products tied to Star Wars.

Our exceptional first quarter results far exceeded expectations and clearly show that we are making significant consistent progress on our newly evolved strategic roadmap.

In the short term, we are improving profitability by optimizing our operations and accelerating topline growth by growing our power brands and expanding our brand portfolio.

And the mid to long term, we continue to make progress on capturing the full value of our IP through a franchise management and online retail and e-commerce.

The optimizing for growth program is on track and we are very confident in our ability to deliver the targeted savings of $250 million by 2023.

Importantly, this program is also designed to improve operations and drive greater productivity to accelerate topline growth.

We are seeing a strong start to the second quarter, including Easter week, and we're planning for another good holiday season.

The Mattel playbook is working very well and our products continue to resonate with consumers at levels, we have not seen in many years.

This is all fueled by design led innovation brand purpose cultural relevance and execution excellence.

Given the first quarter performance and the momentum of our business. We are now raising our 2000 and 'twenty one guidance for net sales growth and constant currency to be and a range of between 6% to 8% and.

And adjusted EBITDA to be between 808 hundred $25 million, despite an increase and the expected level of cost inflation.

Anthony will provide more details on our updated guidance.

Beyond 2021, we are confident in our ability to achieve our goals of mid single digit net sales growth and constant currency in 2022 and in 2023.

And and adjusted operating income margin in the mid teens by 2023.

As it relates to our mid to long term strategy, we continued to make progress towards capturing the full value of our IP.

Earlier this week, we announced the development of a rock and Socgen robots live action motion picture with Universal Pictures, and Vin diesel production company, one race films with Vin diesel to star and the field.

This marks our 12th field and development.

We also recently announced plans to develop Barbie fashion Battle, a reality show where designers compete for the chance to create a fashion collection for Barbie.

Our latest animated Bob TV movie Barbie and Chelsea the last birthday.

Had a very strong debut this past week and in the U S and Canada on Netflix.

And as the number five and number six movie respectively. Among all movies on the platform not just for children.

We are excited to have another animated Barbie movie premiering this fall on Netflix.

Our content pipeline remains robust and we are excited about the momentum at Mattel films and Mattel television.

We also continued to build out our direct to consumer business led by strong performance and American girl, which saw online day to see growth of 73%.

Mattel creations are highly curated day to see platform is also receiving very positive consumer reaction as well as our Barbie and hot wheels collector platforms.

Today being Earth day gives us another opportunity to emphasize that sustainability is a key priority for Mattel and.

And creating sustainable products and packaging is an important part of our commitment to the planet.

Just last week, we announced matchboxes product roadmap to make its dicast cars play sets and packaging with a 100% recycle recyclable or biom<expletive> plastic by 2030.

This is in line with Mattel is goal to achieve 100% use of these sustainable materials across all of our products and packaging by 2030.

Expect to hear more about our sustainability commitments through our upcoming corporate citizenship report to be published soon.

In closing.

This was another record quarter for the company and which we achieved incredibly strong results, reflecting the success of the turnaround as we continue to drive transformational improvements and acceleration in our business.

Following the third consecutive quarter of growing market share we.

We are strengthening our position as a consistent later in the toy industry.

Even as markets gradually reopen we remain focused on protecting the health and safety of our employees.

I am proud of the outstanding performance of the entire Mattel global team and.

And the significant progress, we're making on our strategy to transform into an IP driven high performing toy company.

The business is showing strong momentum and we believe we're very well positioned to improve profitability and accelerate top line growth in 2021 and beyond.

As always we are committed to growing long term shareholder value.

Anthony.

Over to you.

Thanks, and I'm actually.

And you just heard we had another outstanding quarter with results far exceeding expectations.

Net sales were $874 million and a quarter compared to $594 million and the prior year and increase of 47% adjust.

Adjusted gross margin increased by 350 basis points from 43, 5% to 47%, reflecting the scale benefit of the exceptionally strong topline performance, which more than offset the impact of inflation and the quarter.

Adjusted operating income was a positive $28 million compared to a loss of $133 million and the prior year.

$161 million year over year increase was primarily driven by our topline growth.

Adjusted EPS was negative 10 cents and improvement of 46%.

And our adjusted EBITDA increased by $155 million to a positive $89 million.

As I said outstanding results and a strong start to the year.

During the quarter. We also successfully completed a $1 2 billion debt refinancing, which will significantly reduce interest expense going forward and contribute to free cash flow.

We made good progress on our optimizing for growth program we.

We remain on track to achieve our three year target and have increased our expected savings and 2021.

Looking at growth billings by region.

For the third consecutive quarter, we achieved growth and each of our four regions and constant currency.

Despite COVID-19 disruption and local restrictions that impacted some locations.

At the end of the first quarter about 4% of all retail outlets that sell our products representing about 6% of our revenues were closed.

And North America, and Asia Pacific nearly all retail outlets were open at the end of the first quarter.

Anemia about 7% of all retail outlets were closed representing approximately 12% of our revenues.

And Latin America about 22% of all retail outlets were closed representing approximately 80% of our revenues and the region.

Overall for the quarter.

Gross billings outpaced Pos growth.

And some inventory restocking by retailers.

Despite the restocking retail inventories finished the quarter below year ago levels.

POS growth was driven by a combination of overall industry growth and market share gains for Mattel.

North America was up 67% driven by double digit growth across all categories, while Pos increased by over 40%.

EMEA was up 32% with Pos increasing by over 20% driven.

Driven by growth and all major markets.

Latin America increased 16% in line with Pos driven by Mexico, Brazil and Chile.

Asia Pacific increased 16% also in line with Pls.

Driven by China and Australia.

Adjusted gross margin was another area, where we did very well increasing by 350 basis points to 47%.

Here's a breakdown of the key drivers.

Fixed cost absorption at a favorable benefit of 290 basis points.

This is a scale benefit <expletive>ociated with the exceptionally high growth and sales and the first quarter.

And this benefit will have a much smaller positive impact to gross margin percentage for the full year.

Cost savings contributed 240 basis points to growth margin expansion in the quarter optimizing for growth delivered $20 million of savings within cost of goods sold.

Cost inflation had a negative impact of two one and 40 basis points driven by increases in materials and logistics.

All other factors had a positive net impact of 60 basis points, bringing the first quarter adjusted gross margin of 47%.

Moving down the P&L advertising expenses were $74 million down, 3% or $2 million.

Adjusted SG&A expenses declined by 2% or $6 million to $309 million driven primarily by the benefit of cost saving actions taken in 2020, and the optimizing for growth program, partly offset by higher compensation expense.

We had another quarter with significant improvement and profitability.

Adjusted operating income improved by $161 million to a positive $28 million the.

The increase was driven by the exceptionally high growth and sales and cost savings.

We offset by cost inflation.

Reflecting these significant gains and operating income our adjusted EBITDA was $89 million compared to a loss of $65 million and the prior year and improvement of $155 million.

We are also very pleased with cash flow performance.

Cash from operations improved by $133 million to a use of just $41 million.

Driven primarily by gains and net income.

Free cash flow improved by $138 million to a seasonal use of $72 million.

Given the high seasonality of our business, we <expletive>ess our cash flow performance over the trailing 12 months on that basis cash.

Cash from operations increased by $222 million to $422 million.

The increase was primarily driven by higher net income up $470 million, partially offset by higher working capital usage.

Staying on trailing 12 months free.

Free cash flow was $305 million compared to $72 million, a year ago, and and improvement of $233 million.

Our intention is to use excess free cash flow to continue reducing debt and the near term.

On a trailing 12 month basis, we converted 35% of our adjusted EBITDA into free cash flow.

Up from 18% and the year ago period.

While we more than doubled our adjusted EBITDA.

Free cash flow increased more than fourfold.

We believe we are well positioned to continue to improve on these important metrics in 2021 and beyond.

The refinancing transaction, which we successfully executed during the quarter will generate significant interest expense savings.

With the benefit of multiple notch credit rating upgrades from all three rating agencies, we issued $1 $2 billion of new debt at attractive rates split into two tranches.

$600 million of five year bonds with a coupon rate of three and three 8% and.

And $600 million of.

Eight year bond with a coupon rate of 3% and three quarters percentage.

Proceeds from the financing.

Together with about $100 million of available cash.

Were used to redeem through a call option 1 billion, two 1% and $25 million principal amount of our six and three quarter percent bonds due 2025.

As a result of this transaction, we will reduce annual interest expense by approximately $40 million with a partial year benefit of $31 million and 2021.

On an annual basis. This translates to approximately <unk> 11 per share.

Given our valuation allowance, we do not expect to incur any incremental taxes <expletive>ociated with these savings and the near term.

Turning to the balance sheet.

We ended the first quarter with a cash balance of $615 million and essentially no short term borrowings.

This compares very favorably to a year ago, when we had a cash balance of $499 million and $150 million of short term borrowings.

The significant improvement and net cash was driven by positive free cash flow generation over the trailing 12 months, partly offset by the utilization of approximately $100 million of cash and the refinancing transaction.

In line with the significant increase in first quarter sales accounts receivable increased by $152 million.

$681 million, which will benefit cash flow later this year.

We continue to effectively manage accounts receivable and finished the quarter with days sales outstanding of 70 days.

10 days below the same time a year ago.

We ended the first quarter with and inventory balance of $610 million.

Which is $49 million above the prior year as we build inventory to support our growth.

And we continue to make progress on reducing leverage.

Our debt to adjusted EBITDA ratio improved meaningfully declining to three three times as of March 31, 2021, compared to seven five times a year ago.

The optimizing for growth program is off to a good start and has already realized $27 million of savings and the first quarter.

As we've previously discussed the program is designed to further improve operations and drive greater productivity to accelerate growth and at the same time continue to reduce our cost base.

We are increasing expected 2021 savings from $75 million.

To a range of $80 million to $90 million and are confident we will achieve our total targeted savings of $250 million by 2023.

As Ian mentioned, we are revising 2000, and 'twenty, one guidance, reflecting the stronger than anticipated first quarter performance and updated outlook for cost inflation.

This is subject to COVID-19 impact market volatility and other macroeconomic risks and uncertainties.

We now forecast net sales to increase by 6% to 8% and constant currency with the expectation for continuing growth and the balance of the year and quarterly phasing that will be impacted by year over year comparisons.

Our guidance for growth is driven by dolls, and vehicles and action figures categories as well as improving performance and the infant and toddler and preschool and building sets category. We also expect our power brands Barbie and hot wheels to growth.

We also forecast higher than previously anticipated and inflation and cost of goods sold due to further increases and the cost of resin and ocean freight.

While these two items together represent less than 15% of cost of goods sold we are expecting greater than 35% inflation for both.

In aggregate cost inflation is expected to have a negative margin impact of approximately 300 basis points. This year.

As being partly offset by cost savings.

We therefore expect adjusted growth margin to decline by 100 to 150 basis points to a range of 47, 6% to 48, 1%.

Despite the higher cost inflation, we are increasing guidance for adjusted EBITDA by $25 million to a range of $800 million to $825 million.

<unk> and the expected benefit of improved net sales growth and additional optimizing for growth savings.

Forecasted capital expenditures remain at a level between $125 million and $150 million, including investment as part of the optimizing for growth program.

As the non said looking beyond 2021, we are confident and our ability to achieve our goals of mid single digit net sales growth and constant currency and 2022 and in 2023 and and adjusted operating income margin and the mid teens by 2023.

And clothing, Mattel delivered another outstanding quarter, and we are very pleased with our start to the year.

Free cash flow improved significantly along with our free cash flow conversion rate.

Leverage ratio continues to come down and the debt refinancing provides additional flexibility as.

As we continued to make further progress towards our strategy to improve profitability and accelerating topline growth.

We believe we are well positioned to maintain our momentum.

I will now hand, it over to the operator for the Q&A.

Okay.

As a reminder to ask a question you will need to press star one on your telephone.

And Thats Star, one and your touch tone telephone to ask a question to withdraw your question press the pound key please standby, while we compile the Q&A roster.

Our first question comes from the line of <unk> Kocharyan of UBS. Your line is open.

Thanks very much. Thank you for taking my question.

This is a very strong quarter.

My question and first what drove that.

And you are very good demand out there, but there is there something structurally happening also that drove very strong numbers and then your outperformance in Q1 would have implied full year going up by almost four percentage points and it's going up a little bit less and that does that mean youre being a little bit conservative or does the upper.

And of that rain range reflect that upside or what's going on and sort of implied guidance from Q2 to Q4.

Thanks <unk>.

Yes, this was an exceptionally strong quarter.

We believe we are and the strongest position we have.

Ben and many years.

While the exceptional growth and the quarter was partially driven by favorable year over year and Covid related comparisons we will have the we think the strength of our own performance.

And is driven by the strength of our brands the quality and breadth of our product the world cl<expletive>.

The capabilities that we have and supply chain and.

And commercial capabilities and very effective demand creation and close collaboration with our partners with our retail partners.

The fact that we grew share for the third consecutive quarter.

This demonstrates that we are not just riding the wave, but are leading the industry and driving the momentum.

We expect to continue to gain market share through the rest of the year.

And in fact, the strength of our performance and it is also evident when you compare our 2021 results 2019 before COVID-19 with net sales being higher by 27%.

And as between the first quarter of 'twenty, one versus the first quarter of 19.

We're seeing as we sit here today, we're seeing a strong start to the second quarter, including Easter week, and we are planning for another good holiday season.

We believe we're very well positioned to gain momentum for the full year and are very confident about our business trajectory and the way forward.

Yes, just to add to that it is early in the year with the majority of our sales still left to go as the non setup and a strong Q1 ahead of our expectation and as a result, we're increasing our topline guidance to that 6% to 8% range, which reflects our expectation for continued growth and topline and share.

For the balance of the year.

Bob with the quarterly phasing that will certainly be impacted by the year over year comparisons.

Right right no that makes sense and on you.

And.

And you mentioned that a strong Easter.

And we are almost at the tail end of April from what Youre, saying, it and it seems like strong Talos continued thank you.

We are fully comping sort of COVID-19 boost here is that surprising to you how strong the industry is despite sort of comp.

<unk>.

Enormous growth that we started seeing really at the end of March into April.

And we're big proponents of the toy industry as you can imagine and.

Industry and has proven its resilience and showing.

Very good momentum.

Very good momentum there and category.

Sure that is resilient and challenging economic times and parents continue to prioritize spending discretionary income and children. So this is a good place to be and within that.

We are growing ahead of the industry and for three quarters in a row. So as we emphasize this is not just.

We are going to we're not riding the wave we are learning the momentum.

And beyond 'twenty one.

We believe we continue to believe and the long term prospects of the industry.

Given the strong fundamentals and that we are well very well positioned to accelerate our own growth and continue to increase market share and you followed our story for over the last few years and you are seeing a consistent methodical improvement and our numbers both profitability and top line.

Our playbook brand playbook is working very well and.

And our momentum we are seeing is very broad based as we said in the prepared remarks, we saw double digit growth in every region and each of the seven categories, where we operate and strong double digit growth in our three power brands as well as American Grill. So it's very broad based comprehensive performance and.

Gives us even more confidence about.

And the road ahead.

Great Great. Thank you very good results. Thanks.

Okay.

Thank you. Our next question comes from Tami Zakaria of Jpmorgan. Your question. Please.

So much for taking my questions and congrats on the excellent results.

And my first question is your your second quarter compares from last year.

Our pharma easier than it was and the first quarter.

So how should we think about the second quarter sales growth.

Based on the trends that Youre seeing.

And if Amazon Prime day shift June versus October last year.

And just as a reminder, we are lapping double digit decline and the first half last year, followed by double digit gains.

Again, so as I said, our quarterly comparisons are going to be impacted given our prior year performance.

Also our guidance of 6% to 8% growth in constant currency.

Does that imply growth for the balance of the year.

Not going to break it down by by quarter, but as <unk> said, we're off to a good start and the second quarter.

Got it got it that's super helpful. And then one quick follow up.

Can you tell us how much was the industry growth and the first quarter.

This is and NPD number.

Which we can share with you here, but we can confirm that we did grow.

Our market share.

We grew market share and.

Each of the four regions.

Bob and continue to grow market share.

And this is just a whole story and and of itself, which I am sure you might want to talk about later.

Hot wheels continued to be the number one vehicle properties globally.

And the share price.

Was the number one infant toddler preschool manufacturer globally.

And even if you look at our.

Our performance by region.

And the U S. We grew 30% faster than the industry and.

And in EMEA, we grew almost two times faster than the entire industry. So.

You're seeing market share gains.

Across the board both by category by.

And by product and by region.

Got it got it great. That's all I had thank you so much.

Thank you Tommy.

Thank you and our next question comes from Shawn Collins of Citigroup. Please go ahead.

John Anthony and Richard Hope Youre, well good afternoon.

Hi, Sean.

Okay.

And is on cost inflation, Anthony you gave us some good detail on cost inflation and its impact on margin.

You also laid out some good detail on the last earnings call.

And you've been very clear.

Due to resin and overseas shipping cost can you tell us if these pressures increased in the second quarter versus the first quarter and also are you seeing more pressure from the resin.

Rice's or from the shipping cost and if you could just provide a bit of color around that that might be helpful. Thank you.

Sure.

The pressure and essentially.

Essentially equally weighted between resins and ocean freight we're seeing cost inflation accelerating on both of those and that's the reason we have lowered our expectations for gross margin on the last call. We talked about a 200 basis point negative impact from cost inflation, we're raising that to 300.

And in terms of the impact on gross margin, but more than half of that is going to be offset by the expected savings on our optimizing for growth program and other gross margin benefits like scale and mix, but again, we're left with that decline of 100 to 150.

Basis points and as we said there are these two items, although they are less than 50, 15% of our total Cogs, there and planning by more than 35%, so a pretty significant impact on the growth margin line.

Let me hand, Robert.

That was my reference to basis points not millions.

The year to go period, and we'll see more of a negative impact and the 240 basis points and Q1.

Okay understood. That's helpful. Thank you for the commentary.

Thank you Sean.

Thank you. Our next question comes from Steph Wissink of.

Jefferies. Your line is open.

Thank you good afternoon, everyone I have a clarification question first on <unk> question on the guidance I.

I think Anthony responses that you expect to grow through the remainder of the year are you, suggesting we look at Q2, three and four together relative to Q2, three and four last year and that will grow or that you expect to grow each quarter and the remainder of the year. That's my first question.

Nine month period Q2, three four combined.

Got it very helpful and then my second.

Second question is just related to stimulus and I look at your North America numbers day deviated a bit from the rest of the world and substantial outperformance on a relative basis any thoughts around the combination of the January and March early April stimulus on the industry and your brands specifically do you feel like you were a net.

Beneficiary of incremental capital to spend and I think and you mentioned spending on kids being prioritized.

We do believe that checks had the stimulus checks had some.

And the impact on consumer spending.

But.

But it's hard to.

Two attributes and exact number on that or the proportion.

And the U S. We are now beginning to comp last year and stimulus efforts and we'll continue to see how things evolve.

But just to fine tune and something that you said and we actually grew relative to market more and EMEA, where we grew almost double the rate.

And faster than the industry and relative to the U S. We grew.

30% faster than the industry.

But in any event, we are entering the second quarter with momentum as we said we are planning for another good holiday season, we expect to gain momentum over the nine month period for and.

And growth for the full year the guidance we provided.

Okay.

Very helpful. Thank you.

Thank you.

Thank you. Our next question comes from Gerrick Johnson of BMO capital markets. Your line is open.

Okay. Thank you hi.

I had a good good question and I just wanted to follow up on that a little bit.

The first quarter is often a quarter.

Two cities and <unk> got the holiday.

And what we call Grandma money.

The quarter, then towards the and accordingly have Easter.

Benefited from both this year you had a tremendous amount of gift card redemptions at least the commentary out there I was wondering if you knew how much gift card redemptions helped you this year, how many more how much more of your POS was so giftcards.

And then.

Easterby Mary.

Maybe 10 days early.

<unk> last year and about three weeks early versus 2019.

Based on the history and how much and early Easter traditionally helps you out thank you.

Yes.

Look we are seeing a strong start to the second quarter, including Easter and don't believe there was a pull forward from Q2 to Q1 that was and any way material relative to our very very.

Strong top line result, I don't know the specific answer to the gift card question, though.

But with <unk> it is difficult to calculate exactly the impact, but again, we don't think it had a material impact.

And.

Okay.

Okay.

If im getting something and maybe I can ask one to Richard please.

Richard.

Retailers seeing very conservative and stocking boys action last year.

And with the general uncertainty around theatrical events, how are they approaching that category. This year.

Yes.

Thanks Garik.

It's a light entertainment slate.

And obviously in Q1, but we've outpaced the industry.

We've been focusing on our key licenses such as Jur<expletive>ic World of course, which has had phenomenal success with Universal WWE has continued to gain strength.

And craft with Microsoft.

Our focus is to take both owned and licensed IP from event driven brands.

And really make them truly evergreen through product innovation and cultural relevance and as you know focus around purposeful play we remain really bullish about the action figure category. We've embraced this challenge and mentality and the category and we've been looking to gain and have proven to gain share and the category and we anticipate.

<unk> as you know great growth as.

As we look at our new entry with Masters and the universe content coming.

Summer on Netflix and our product offerings are winning really and the marketplace with consumers. So look we're very bullish on the action figure category, we're making incredible progress with our brands and we're really excited about the year ahead.

Okay. Thank you Richard.

Thank you. Our next question comes from Mike Inc of Goldman Sachs. Please go ahead.

Great. Thank you very much for the question I just wanted to ask about.

<unk> growth outside of the power brands I was just wondering if you could elaborate a little bit more and on the.

Action figure strength.

Up 101% year over year were there any particular licenses or brands that performed well and then just as a follow up to some of the earlier questions about.

Quarterly revenue phasing throughout the year.

Yes.

With the with the comp getting easier and QQ versus <unk> should we expect similar top line growth and <unk> as we saw and this quarter. Thank you.

And Michael I'll take the first part of the question.

As I mentioned to Gary we're incredibly optimistic and bullish on the action figure category.

The whole category according to NPD and the U S was up 43% and the first quarter.

<unk> was actually up 56%. So we've outpaced the category, resulting in some market share growth, which has been fantastic WWE Jur<expletive>ic and these were the number seven and number eight properties and the category respectively.

WWE elite figures with a number two item and we're most excited that masters and the universe origins and this was the fifth item in and the first quarter. So we're very excited about the progress that we're making both on our evergreen brands and.

And new brands to come.

Back on the quarterly sales.

And again, we're comping, a down first half and a double digit second half from <unk>.

And last year and as we said, we raised and our guidance to the 6% to 8%, which does imply growth.

For the balance of the year in aggregate.

We're not going to split that by the quarters, but Athena and said we're off to a strong start.

In the second quarter.

And expect to grow our balance of year both.

And $9 and and share.

Great. Thanks, Anthony and thanks, Richard Thanks, Robert.

Thank you. Thank you thank you Mark.

Thank you. Our next question comes from Linda Bolton Weiser of D. A Davidson your question. Please.

Yes, hi, thanks.

I just had two questions first is just on Barbie I think you said that the.

And the Barbie Euro.

Your sales growth was quite a bit higher than Pos growth.

And there was a bigger GAAP there than your other brand. So why was the GAAP bigger for Barbie and should we be concerned about that and how are the retail inventories for Barbie and then my second question has to do with we had a little bit of stock excitement with fund co when they talked a little bit about <unk>.

<unk> and it occurred to me that you guys actually have some of your own IP that you could sort of take advantage of and that area as well is that something that <unk> been looking into as well. Thanks.

Hi, Linda its Richard I'll take I'll take the first part of the question gladly by the way.

It is true Barbie shipping did outpace and the first quarter. However, our Q1 ending retail inventory is roughly flat year over year.

Indicating that we're incredibly well positioned to continue the momentum into Q2 and to the back half.

This is our doll category overall had a fantastic quarter gross billings up where 68% Pos growing 59%. The category of course was driven by Barbie is phenomenal performance.

Love to repeat that gross billings were up 86% and as you indicate Pos up 66% and this is healthy growth across all of our product segments. We have strengthened our position as the number one global Dow property.

We continue to gain market share in all four regions and the first quarter.

According to NPD and.

And ultimately our playbook is working Barbie is cultural relevance truly has never been stronger we've been leaning into diversity inclusivity and social impact and we've seen this reflected and the success of fashion nieces, which also had double digit increases design led momentum as part of the playbook with innovative product like <unk>.

The reveal Barbie extra also drove incremental growth and the first quarter. So.

All in all we are incredibly confident and the brand's continued momentum for 2021, we've got some incredible activations planned throughout the year all new animated movie launches on Netflix. We also have and new Dream House, which has been a blockbuster success for us and we're extending characters like Chelsea, Ken and 60 <unk> anniversary.

And of course, as always continued surprise pop culture and milestone moments all and all we were very excited about 2021 and the future prospects for the brand.

Hi.

Thank you for the question.

As the owner of one of the strongest catalogs of children and family Entertainment franchises and the emphasis is on.

And the ownership.

We do have opportunities to commercialize our brands and new and exciting ways, we don't need to license the rights we own the rights and we are looking at.

On top of opportunities, including <unk> and <unk>.

This is definitely an area, where we see opportunity, especially when you think about the debt.

And the built in fan base, the collector segment for cl<expletive>ic Evergreen brands that we own.

And we expect to see opportunities there.

Great. Thank you very much.

Thanks, Linda Thank you.

Yes.

Thank you. Our next question comes from Greg Manish, Kim Ann Wolfe Research Your line is open.

Hey, guys, it's actually Fred Wightman on for Greg totally get the points on the cost headwinds from resins and transportation, but can you talk about how you're thinking about pricing power.

Essentially offset that as we move through the year.

Sure I can address that may make a couple of comments first I would say it is our expectation that the combination of pricing and optimize and optimizing for growth savings will more than exceed the impact of cost inflation over time, and expanding our gross margin and contributing to our mid teens adjusted.

The operating income margin goal.

We're not going to talk about specific pricing actions or timing, but we are evaluating price adjustments for the recent increases in input costs.

And I would also would want to point out that despite the cost inflation and were not seeing seeing an impact it's having on gross margin, we're continuing to improve profitability and margin now our adjusted EBITDA guidance of 800 to 825 represents growth of 11% to 15% and that's all.

It was double our net sales guidance of 6% to 8% and constant currency, so continuing to make progress on profitability. Despite the inflation challenges.

Makes sense and then if we look at how we also didn't see quite the same sequential acceleration that we saw and the other power brands. It was still up double digits, but not quite as strong as the others is that just a matter of having slightly tougher comparison in the prior year period or is there something else.

To highlight there.

Well, it's Richard no nothing to highlight except our excitement around the performance of hot wheels.

Certainly delivering double digit growth on a brand with such maturity.

<unk> to make us very proud and clearly the leader brand and the vehicle category I mean, we were up 15% and the first quarter and.

POS was actually up.

29%, we've seen broad based growth across all product segments on hot wheels are hot we will track and play sets.

Doing extraordinarily well hot wheels, Mario Kart also Pos triple digits on that item and Hotwheels monster trucks.

<unk> to also perform exceptionally well with Pos up 36%, we've got some great traction as well and the collector community.

Recently, we just for the first time ever increased our membership on the Redline club, which is a DTC model.

Had incredible response.

And we continue to be bullish on the on the year left for 2021 with hot wheels and beyond.

And I just wanted to clarify something I just wanted to clarify something I said earlier, we were discussing the Q1 and Q2 comps of last year and I just want to clarify that the comp in Q2 is similar to the comp in Q1 relative to the prior year.

Great. Thanks, guys and thanks guys.

Thank you thank.

Thank you.

Thank you and our next question comes from.

William Reuter of Bank of America. Your line is open.

Hi, This is Mary on for Bill. Thanks for taking our question. So given that most of your product comes from Asia or are you changing the timing of receipt of fall product to avoid any potential disruption from the ocean freight shortages.

Not.

Specifically.

And our manufacturing and distribution distribution network has been fully operational during the first quarter and situations certainly like the Suez Canal has had a minor temporary impact as well as the challenges related to the la port congestion, which which we've been dealing with.

Since the fourth quarter of last year.

And our supply chain continues to effectively manage through these disruptions and there has been no material impact to our business in terms of getting product, where we needed to be.

Got it that's very helpful. And then you previously noted that you may be able to achieve investment grade ratings and leverages and the ranges tier two and a half times give a better sense of when you're able to get to this range and would you consider any shareholder friendly activities before you debt.

Look I'd say, we're making tremendous.

Progress ahead of our refinancing transaction and all three rating agencies made multiple notch upgrade we're solidly in the double B category right now so again significant progress there. If you look on our cash flow performance trailing 12 months $305 million of positive free cash.

Flow four times the prior year, we ended the quarter with debt to adjusted EBITDA on a trailing 12 months at three three times down from seven five times a year ago. So tremendous progress our intention remains to use excess free cash flow to re debt reduce debt and the near term.

And work our way back towards investment grade rating can't say exactly when we will get there, but we're continuing to make progress and our expectation is that with continued growth and adjusted EBITDA and the utilization of free cash flow to reduce debt. We will continue to make progress going forward.

Got it thanks very much.

Okay.

Thank you. Our next question comes from Jamie Katz of Morningstar. Your line is open.

Thanks, and good afternoon, and I'll be quick since we're coming up on the hour.

I'm curious what you guys have embedded as your industry outlook for the year and then I'll.

Alternatively, I guess, if you don't want to answer that particular question do you expect to.

Continue to gain market share over the remainder of the year. Thanks.

Hi, Jami so the industry is off to a strong start and again demonstrated its resilience and we believe will continue to be a strategic category for retailers and as we've said before we expect that the search categories that benefited most from the early days of the pandemic.

It will be more challenged these are outdoors games and building.

We believe the categories, where we are a global leader downs vehicles and infant toddler preschool will continue to perform well.

And it's hard to predict how the industry as a whole will perform for the full year, but we expect net sales for Mattel as you know to grow and 6% to 8% and constant currency and debt, we will increase our overall market share.

And beyond 'twenty, one, we believe and the long term growth prospects of the industry and that we will continue to increase our own market share.

Lots of opportunities ahead for Mattel.

Good day. Thank you. Thank you.

Thank you.

Thank you at this time I would like to turn the call back over to <unk> for closing remarks, Sir.

Thank you operator.

We have discussed today, our record first quarter.

Kicked off and exceptional and start for the year driven by very strong consumer demand.

We are in the strongest position that we have been and many years.

We're navigating the unchartered territory of a global pandemic the entire Mattel team is staying focused on the consistent execution of our transformation strategy.

Following our third straight quarter with double digit growth and increased market share our results demonstrate the success of the turnaround and the significant progress we're making on our transformation to become an IP driven high performing toy company.

We thank you for your time and interest and Mattel I will now turn the call back to Dave to provide the replay details.

Thank you and on and thank you everyone for joining the call today.

A replay of this call will be available via webcast and audio beginning at 830 PM Eastern time today the.

The webcast link can be found on our investor page or for an audio replay. Please dial 1404537 and 3406.

The p<expletive> code is 85857 to eight thank you for participating in today's call.

Yes.

This concludes today's conference call and thank you for participating you may now disconnect.

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Thank you for standing by and welcome to Mattel's first quarter 2021 earnings Conference call. At this time all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session.

To ask a question during the session you will need to press star one and your telephone.

Please be advised that today's conference maybe recorded share do you require any further <expletive>istance. Please press star zero.

I would now like to hand, the conference over to your host Vice President of Investor Relations, David Sport and gave itch. Sir. Please go ahead.

Thank you operator, and good afternoon, everyone joining.

Joining me today are in on price Mattel's, Chairman and Chief Executive Officer, Richard Dickson, Mattel's, President and Chief operating Officer, and Anthony Disilvestro, Mattel's Chief Financial Officer.

As you know this afternoon, we reported Mattel's 2020, one first quarter financial results.

We will begin today's call with an on and Anthony providing commentary on our results after which we will provide some time free non Richard and Anthony to take your questions.

To help supplement our discussion today, we have provided you with a slide presentation.

Our discussion slide presentation and earnings release reference non-GAAP financial measures, including adjusted gross profit and adjusted gross margin adjusted other selling and administrative expenses.

Adjusted operating income loss and adjusted operating income loss margin adjusted earnings loss per share earnings before interest taxes, depreciation and amortization or EBITDA adjusted.

Adjusted EBITDA free cash flow free cash flow conversion.

Our leverage ratio and constant currency.

In addition, we present changes and gross billings and a key performance indicator. Please.

Please note that we may refer to gross billings as billings and our presentation and that gross billings figures referenced on this call will be stated in constant currency unless stated otherwise. In addition, please note that our accompanying slide presentation can be viewed in sync with today's call. When you access it through the investors section of our court.

<unk> website, corporate Mattel Dot com.

The information required by regulation G regarding non-GAAP financial measures as well as information regarding our key performance indicator is included in our earnings release and slide presentation and both documents are also available and the investors section of our corporate website.

Before we begin I'd like to remind you that certain statements made during the call may include forward looking statements related to the future performance of our business brands categories and product lines.

These statements are based on currently available information and <expletive>umptions and they're subject to a number of significant risks and uncertainties that could cause our actual results to differ from those projected and the forward looking statements, including risks and uncertainties <expletive>ociated with the COVID-19 pandemic.

We describe some of these uncertainties and the risk factors section of our 2020 annual report on form 10-K, our earnings release and the presentation accompanying this call and other filings we make with the SEC from time to time as well as in our other public statements Mattel does not update forward looking statements and.

<unk> expressly disclaims any obligation to do so except as required by law.

Now I'd like to turn the call over two and on.

Thank you for joining Mattel's first quarter 2021 earnings call I Hope that you and your families are staying healthy and safe.

This was another record quarter for Mattel with truly exceptional results as we've continued to improve profitability and accelerate top line growth.

And we're off to a very strong start to 2021 here.

Here are some key highlights for the first quarter compared to prior year.

Net sales were up 47% as reported and 46% and constant currency the highest quarterly growth rate, we have on record and over 25 years and the highest first quarter sales and absolute dollars since 2015.

Adjusted gross margin improved by 350 basis points and reached 47% the 11th consecutive quarter of improvement on a year over year basis.

Reported operating income was $31 million and increase of $181 million and the first positive first quarter since 2014.

Adjusted operating income was $28 million and increase of $161 million and adjusted EBITDA was $89 million up.

Hundred $55 million.

This quarter was particularly strong and that we achieved double digit growth and gross billings in each of our four regions with remarkable performance in North America and EMEA.

Double digit growth across all product categories, and strong double digit increases and our three power brands Barbie Hot wheels, and Fisher price and Thomas and friends as well as American girl.

Okay.

And the first quarter, we significantly outpaced the industry with total company Pos up more than 30%.

Benefiting from very strong consumer demand for our products.

According to NPD for the third quarter and a row Mattel gained share globally, driven by strong performance across all regions.

Yeah.

We also saw growth across all sales channels, with especially strong performance and E Commerce as we continue to accelerate our progress and this strategic channel.

And the first quarter E Commerce, Pos grew 58% year over year, representing 28% of our total Pos in the quarter.

While our exceptional growth this quarter was partially driven by favorable year over year Covid related comparisons. We believe the strength of my parents and results is attributable to the strength of our brands quality and breadth of our product.

World Cl<expletive> supply chain global commercial capabilities, and very effective demand creation and close collaboration with our retail partners.

The strength of our performance is also evident when comparing our 2021 results to 2019 before COVID-19 with net sales being higher by 27% in the first quarter of 2021 versus the first quarter of 2019.

Our market share gains for the third consecutive quarter.

Also demonstrate that we are not just riding the wave, but growing well ahead of the industry and driving the momentum.

We expect to continue to gain market share through the rest of the year.

This consistent performance and momentum reflects the success of the turnaround.

We are very confident about our business trajectory and remain focused on executing our strategy to transform mattel into an IP driven high performing toy company.

Looking at the first quarter gross billings and constant currency by category versus prior year.

Yeah.

Doll category grew by 68% driven by continued strength and Bobby the launch of spirits and high double digit growth and poly pocket and American girl.

Dr. POS was very strong in line with shipments.

The Bobby a power brand delivered phenomenal growth of 86% with Pos up 66% and all product segments growing.

Per NPD.

Bob has strengthened its position as the number one global <unk> property in the first quarter.

American Girl is impressive turnaround continued its momentum and was up 22% debt.

Second consecutive quarter of positive year over year growth.

Vehicles category was up 15% driven by the strong performance of hot wheels and Matchbox.

And the category remained strong and also growing double digits and outpacing shipments.

Housewares was up 16% with growth across all product segments for this Bob brand.

Per NPD hardware sales continued to be the number one and vehicles property globally in the first quarter.

Okay.

Infant toddler and preschool category was up 29% drew.

Driven by Fisher price and Thomas and friends Spa brand.

And our infant toddler preschool category performed in line with the industry.

Fisher price core grew by 36% with Pos up 24% driven by infant and newborn.

Per NPD Fisher.

Fisher price continues to be the number one infant toddler preschool manufacturer globally in the first quarter.

Thomas and friends was up 5%.

With Pos up 8% continuing to show improvement.

Action figures building sets games and other our challenger categories together grew 66%.

<unk> driven by double digit gains across the portfolio.

Games achieved its ninth consecutive quarter of year over year growth up 25%.

Driven by <unk>, which continued to perform very well as it celebrates its 50th anniversary.

Per NPD.

Moving now is the number one card game globally.

Building sets were up 46% drew.

Driven by strong Pos and expanded distribution of Mega along with growth and pokemon and Halo.

Action figures increased 101%.

Driven by Jur<expletive>ic World WWE and Masters of the universe.

Cash continued to grow driven by Mattel's products tied to Star Wars.

Our exceptional first quarter results far exceeded expectations and clearly show that we are making significant consistent progress on our newly evolved strategic roadmap.

And the short term, we are improving profitability by optimizing our operations and accelerating topline growth by growing our power brands and expanding our brand portfolio.

And the mid to long term, we continue to make progress on capturing the full value of our IP through a franchise management and online retail and e-commerce.

The optimizing for growth program is on track and we are very confident and our ability to deliver the targeted savings of $250 million by 2023.

Importantly, this program is also designed to improve operations and drive greater productivity to accelerate top line growth.

We are seeing a strong start to the second quarter, including Easter week, and we're planning for another good holiday season.

The Mattel playbook is working very well and our products continue to resonate with consumers at levels, we have not seen in many years.

This is all fueled by design led innovation brand purpose cultural relevance and execution excellence.

Given the first quarter performance and the momentum of our business. We are now raising our 2000 and 'twenty one guidance for net sales growth and constant currency to be and a range of between 6% to 8% and.

And adjusted EBITDA to be between 808 hundred $25 million, despite an increase and the expected level of cost inflation.

Anthony will provide more details on our updated guidance.

Beyond 2021, we are confident in our ability to achieve our goals of mid single digit net sales growth and constant currency in 2022 and in 2023.

And adjusted operating income margin in the mid teens by 2023.

As it relates to our mid to long term strategy, we continued to make progress towards capturing the full value of our IP.

Earlier this week, we announced the development of a welcome Socgen robots live action motion picture with Universal Pictures, and Vin diesel production company, one race films with Vin diesel to star and the field.

This marks our 12th filled and development.

We also recently announced plans to develop Barbie fashion and Battle, a reality show with designers and compete for the chance to create a fashion collection for Barbie.

Our latest animated Bob with TV movie, Bobby and Chelsea the loss berth day had a very strong debut this past week and in the U S and Canada on Netflix.

And as the number five and number six smoothie, respectively. Among all movies on the platform not just for children.

We are excited to have another animated Barbie movie premiering this fall on Netflix.

Our current pipeline remains robust and we are excited about the momentum at Mattel films and Mattel television.

We also continued to build out our direct to consumer business led by strong performance and American girl, which saw online day to see growth of 73%.

Mattel creations are highly curated D to C platform is also receiving very positive consumer reaction as well as our Barbie and hot wheels collector platforms.

Today being Earth day gives us another opportunity to emphasize that sustainability is a key priority for Mattel and.

And creating sustainable products and packaging is an important part of our commitment to the planet.

Just last week, we announced matchboxes product roadmap to make its die cast cars play sets and packaging with a 100% recycled recyclable or biom<expletive> plastic by 2030.

This is in line with Mattel is goal to achieve 100% use of these sustainable materials across all of our products and packaging by 2030.

Expect to hear more about our sustainability commitments through our upcoming corporate citizenship report to be published soon.

In closing.

This was another record quarter for the company and which we achieved incredibly strong results, reflecting the success of the turnaround as we continue to drive transformational and improvements and acceleration in our business.

Following the third consecutive quarter of growing market share we.

We are strengthening our position as a consistent later in the toy industry.

Even as markets gradually reopen we remain focused on protecting the health and safety of our employees.

I am proud of the outstanding performance of the entire Mattel global team.

And the significant progress, we're making on our strategy to transform into an IP driven high performing toy company.

The business is showing strong momentum and we believe we are very well positioned to improve profitability and accelerate top line growth in 2021 and beyond.

As always we are committed to growing long term shareholder value.

Anthony.

Over to you.

Thanks and on as.

You just heard we had another outstanding quarter with result, foreign exceeding expectations.

Net sales were $874 million and the quarter compared to $594 million and the prior year and increase of 47% adjust.

Adjusted gross margin increased by 350 basis points from 43, 5% to 47%, reflecting the scale benefit of the exceptionally strong topline performance, which more than offset the impact of inflation and the quarter.

Adjusted operating income was a positive $28 million compared to a loss of $133 million and the prior year.

$161 million year over year increase was primarily driven by our topline growth.

Adjusted EPS was negative <unk> 10.

And improvement of 46%.

And our adjusted EBITDA increased by $155 million to a positive $89 million.

As I said outstanding results and a strong start to the year.

During the quarter. We also successfully completed a $1 2 billion debt refinancing, which will significantly reduce interest expense going forward and contribute to free cash flow.

We made good progress on our optimizing for growth program.

We remain on track to achieve our three year target and have increased our expected savings and 2021.

Looking at growth billings by region.

For the third consecutive quarter, we achieved growth and each of our four regions and constant currency.

Despite COVID-19 disruption and local restrictions that impacted some locations.

At the end of the first quarter about 4% of all retail outlets that sell our products representing about 6% of our revenues were closed and.

And North America, and Asia Pacific nearly all retail outlets were open at the end of the first quarter.

And EMEA about 7% of all retail outlets were closed representing approximately 12% of our revenues.

And Latin America about 22% of all retail outlets were closed representing approximately 80% of our revenues in the region.

Overall for the quarter.

Gross billings outpaced Pos growth.

Collecting some inventory restocking by retailers and despite.

Despite the restocking retail inventories finished the quarter below year ago levels.

POS growth was driven by a combination of overall industry growth and market share gains for Mattel.

North America was up 67% driven by double digit growth across all categories, while Pos increased by over 40%.

EMEA was up 32% with Pos increasing by over 20% driven.

Driven by growth and all major markets.

Latin America increased 16% in line with Pos driven by Mexico, Brazil and Chile.

Asia Pacific increased 16%.

Also in line with Pls.

Driven by China and Australia.

Adjusted gross margin was another area, where we did very well increasing by 350 basis points to 47%.

Here's a breakdown of the key drivers.

Fixed cost absorption had a favorable benefit of 290 basis points.

This is a scale benefit <expletive>ociated with the exceptionally high growth and sales and the first quarter.

And this benefit will have a much smaller positive impact to gross margin percentage for the full year.

Cost savings contributed 240 basis points to growth margin expansion.

And the quarter optimizing from growth delivered $20 million of savings within cost of goods sold.

Cost inflation had a negative impact of 240 basis points driven by increases in materials and logistics.

All other factors had a positive net impact of 60 basis points.

Bringing the first quarter adjusted gross margin to 47%.

Moving down the P&L advertising expenses were $74 million.

Down, 3% or $2 million.

Adjusted SG&A expenses declined by 2% or $6 million to $309 million driven primarily by the benefit of cost saving actions taken in 2020, and the optimizing for growth program, partly offset by higher compensation expense.

We had another quarter with significant improvement and profitability.

Adjusted operating income improved by $161 million to a positive $28 million the.

The increase was driven by the exceptionally high growth and sales and cost savings.

We offset by cost inflation.

Reflecting these significant gains and operating income our adjusted EBITDA was $89 million.

Compared to a loss of $65 million and the prior year and improvement of $155 million.

We are also very pleased with cash flow performance.

Cash from operations improved by $133 million to a use of just $41 million drew.

Driven primarily by gains and net income.

Free cash flow improved by $138 million to a seasonal use of $72 million.

Given the high seasonality of our business, we <expletive>ess our cash flow performance over the trailing 12 months.

On that basis cash from operations increased by $222 million to $422 million.

The increase was primarily driven by higher net income up $470 million, partially offset by higher working capital usage.

Staying on trailing 12 months free.

Free cash flow was $305 million compared.

Compared to $72 million, a year ago, and and improvement of $233 million.

Our intention is to use excess free cash flow to continue reducing debt and the near term.

On a trailing 12 month basis, we converted 35% of our adjusted EBITDA into free cash flow up from 18% and the year ago period.

While we more than doubled our adjusted EBITDA.

Free cash flow increased more than fourfold.

We believe we are well positioned to continue to improve on these important metrics in 2021 and beyond.

The refinancing transaction, which we successfully executed during the quarter will generate significant interest expense savings.

With the benefit of multiple notch credit rating upgrades from all three rating agencies, we issued $1 $2 billion of new debt at attractive rates split into two tranches.

$600 million of five year bonds with a coupon rate of three and three 8% and $600 million.

Of eight year bond with a coupon rate of 3% and three quarters percentage.

Proceeds from the financing.

Together with about $100 million of available cash were used to redeem through a call option 1 billion, two 1% and $25 million principal amount of our six and three quarter percent bonds due 2025.

As a result of this transaction, we will reduce annual interest expense by approximately $40 million with a partial year benefit of $31 million and 2021.

On an annual basis. This translates to approximately <unk> 11 per share.

Given our valuation allowance, we do not expect to incur any incremental taxes <expletive>ociated with these savings and the near term.

Turning to the balance sheet.

We ended the first quarter with a cash balance of $615 million and essentially no short term borrowings.

This compares very favorably to a year ago, when we had a cash balance of $499 million and $150 million of short term borrowings.

The significant improvement and net cash was driven by positive free cash flow generation over the trailing 12 months, partly offset by the utilization of approximately $100 million of cash and the refinancing transaction.

In line with the significant increase in first quarter sales accounts receivable increased by $152 million.

$681 million, which will benefit cash flow later this year.

We continue to effectively manage accounts receivable and finished the quarter with days sales outstanding of 70 days.

10 days below the same time a year ago.

We ended the first quarter with and inventory balance of $610 million.

Which is $49 million above the prior year as we build inventory to support our growth.

And we continue to make progress on reducing leverage.

Our debt to adjusted EBITDA ratio improved meaningfully declining to three three times as of March 31, 2021, compared to seven five times a year ago.

The optimizing for growth program is off to a good start and has already realized $27 million of savings and the first quarter and.

As we've previously discussed the program is designed to further improve operations and drive greater productivity to accelerate growth.

And at the same time continue to reduce our cost base.

We are increasing expected 2021 savings from $75 million.

To a range of $80 million to $90 million and are confident we will achieve our total targeted savings of $250 million by 2023.

As Ivan mentioned, we are revising 2021 guidance, reflecting the stronger than anticipated first quarter performance and updated outlook for cost inflation.

This is subject to COVID-19 impact market volatility and other macroeconomic risks and uncertainties.

We now forecast net sales to increase by 6% to 8% and constant currency with the expectation for continuing growth and the balance of the year and quarterly phasing that will be impacted by year over year comparisons.

Our guidance for growth is driven by dolls vehicles, and action figures category as well as improving performance and the infant and toddler and preschool and building sets categories. We also expect our power brands Barbie and hot wheels to growth.

We also forecast higher than previously anticipated and inflation and cost of goods sold due to further increases and the cost of resin and ocean freight.

While these two items together represent less than 15% of cost of goods sold we are expecting greater than 35% inflation for both.

In aggregate cost inflation is expected to have a negative margin impact of approximately 300 basis points. This year.

As being partly offset by cost savings.

We therefore expect adjusted growth margin to decline by 100 to 150 basis points to a range of 47, 6% to 48, 1%.

Despite the higher cost inflation, we are increasing guidance for adjusted EBITDA by $25 million to a range of $800 million to $825 million.

<unk> and the expected benefit of improved net sales growth and additional optimizing for growth savings.

Forecasted capital expenditures remain at a level between $125 million and $150 million, including investments as part of the optimizing for growth program.

As the non said looking beyond 2021, we are confident and our ability to achieve our goals of mid single digit net sales growth and constant currency and 2022 and in 2023 and and adjusted operating income margin and the mid teens by 2023.

And clothing, Mattel delivered another outstanding quarter, and we are very pleased with our start to the year.

Free cash flow improved significantly along with our free cash flow conversion rate.

Leverage ratio continues to come down and the debt refinancing provides additional flexibility as.

As we continued to make further progress towards our strategy to improve profitability and accelerate top line growth.

We believe we are well positioned to maintain our momentum.

I will now hand, it over to the operator for the Q&A.

Okay.

As a reminder to ask a question you will need to press star one on your telephone.

And Thats Star, one and your touch tone telephone to ask a question to withdraw your question press the pound key please standby, while we compile the Q&A roster.

Our first question comes from the line of <unk> Kocharyan of UBS. Your line is open.

Thanks very much. Thank you for taking my question.

Is a very strong quarter.

My question and first what drove that.

And you are very good demand out there, but there is there something structurally happening also that drove very strong numbers and then your outperformance in Q1 would have implied full year going up by almost four percentage points and it's going up a little bit less and that does that mean youre being a little bit conservative or does the upper.

And of that rain range reflect that upside or what's going on and sort of implied guidance from Q2 to Q4.

Thanks <unk>.

Yes, this was an exceptionally strong quarter.

And if we are and the strongest position we have.

Ben and many years.

While the exceptional growth and the quarter was partially driven by favorable year over year and COVID-19 related comparisons we will have the we think the strength of our own performance.

And is driven by the strength of our brands and the quality and breadth of our product and the world cl<expletive> and.

The capabilities that we have and supply chain and.

And commercial capabilities and very effective demand creation and close collaboration with our partners with our retail partners.

The fact that we grew share for the third consecutive quarter.

This demonstrates that we are not just riding the wave, but are leading the industry and driving the momentum.

We expect to continue to gain market share through the rest of the year and.

And in fact, the strength of our performance and is also evident when you compare our 2021 results 2019 before COVID-19 with net sales being higher by 27%.

And as between the first quarter of 'twenty, one versus the first quarter of 19.

We're seeing as we sit here today, we are seeing a strong start to the second quarter, including Easter week, and we are planning for another good holiday season.

We believe we're very well positioned to gain momentum for the full year and are very confident about our business trajectory and the way forward.

Yes, just to add to that it is early in the year with the majority of our sales still left to go as the non feta and a strong Q1 ahead of our expectation and as a result, we're increasing our topline guidance to that 6% to 8% range, which reflects our expectation for continued growth and topline and share.

For the balance of the year.

Bob with the quarterly phasing that will certainly be impacted by the year over year comparisons.

And.

Right right no that makes sense and on <unk>.

<unk>.

And you mentioned that a strong Easter.

And we are almost at the tail end of April from what Youre, saying.

And like strong Pls has continued.

You are fully comping sort of COVID-19 boost here is that surprising to you how strong the industry is despite sort of.

Pumping.

Enormous growth that we started seeing really at the end of March into April.

And we're big proponents of the toy industry as you can imagine.

Industry and has proven its resilience and showing.

Very good momentum.

Very good momentum the category.

Sure that is resilient and challenging economic times and parents continue to prioritize spending discretionary income and chairman. So this is a good place to be and within that.

We are growing ahead of the industry and for three quarters in a row. So as we emphasize this is not just.

We are kind of we're not riding the wave we are learning the momentum and beyond 'twenty one.

We believe we continue to believe and the long term prospects of the industry.

Given the strong fundamentals and that we are well very well positioned to accelerate our own growth and continue to increase market share and you followed our story for over the last few years and you are seeing a consistent methodical improvement and our numbers both profitability and top line.

Our playbook brand playbook is working very well and.

And the.

Momentum we are seeing is very broad based as we said in the prepared remarks, we saw double digit growth in every region and each of the seven categories, where we operate and strong double digit growth and our three power brands as well as American Bill. So it's very broad based comprehensive performance and.

It gives us even more confidence about.

The road ahead.

Great Great. Thank you very good results. Thanks.

Okay.

Thank you. Our next question comes from Tami Zakaria of Jpmorgan. Your question. Please.

So much for taking my questions and congrats on the excellent results.

My first question is your your second quarter compares from last year.

Our pharma easier than it was and the first quarter.

So how should we think about the second quarter sales growth.

Based on the trends that Youre seeing.

And if Amazon Prime day shift June versus October last year.

And just as a reminder, we are lapping double digit decline and the <unk>.

First half last year, followed by double digit gains so.

As I said, our quarterly comparisons are going to be impacted given our prior year performance.

Also our guidance of 6% to 8% growth in constant currency does imply growth for the balance of the year.

Not going to break it down by quarter, but as <unk> said, we're off to a good start and the second quarter.

Got it got it that's super helpful. And then one quick follow up.

Can you tell us how much was the industry growth and the first quarter.

This is and NPD number.

Which we can share with you here, but we can confirm that we did grow.

Our market share.

We grew market share and.

And each of the four regions.

Bob and continue to grow market share.

And this is just a whole story and and of itself, which I am sure you might want to talk about later.

Hot wheels continued to be the number one vehicle properties globally.

The share price.

Was the number one infant toddler preschool manufacturer globally.

And even if you look at.

<unk> by region.

And the U S. We grew 30% faster than the industry and in EMEA, We grew almost two times faster than the entire industry.

So you're.

You're seeing market share gains.

Across the board, both by category by product and by region.

Got it got it great Thats all I had thank you so much.

Thank you Tommy.

Thank you. Our next question comes from Shawn Collins of Citigroup. Please go ahead.

John and Anthony and Richard Hope Youre, well good afternoon.

Hi, Sean.

Hey.

And is on cost inflation, Anthony you gave us some good detail on cost inflation and its impact on margin.

You also laid out some good detail on the last earnings call.

And you've been very clear.

Student resident and then overseas shipping cost can you tell us if these pressures increased and the second quarter versus the first quarter and also are you seeing more pressure from the resin.

Prices or from the shipping cost and if you could just provide a bit of color around that that might be helpful. Thank you.

Sure.

The pressure is essentially equally weighted between resins and ocean freight we're seeing cost inflation accelerating on both of those and Thats. The reason, we have lowered our expectations for gross margin on the last call. We talked about 200 basis point negative impact from cost inflation, where res.

And that to $300 million in terms of the impact on gross margin, but more than half of that is going to be offset by the expected savings on our optimizing for growth program and other gross margin benefits like scale and.

And mix, but again, we are left with that decline of 100 to 150 basis points and as we said you know these two items, although they are less than 50, 15% of our total Cogs, there and planning by more than 35%, so a pretty significant impact.

On the growth margin line.

Let me hand.

And I referenced two basis points not millions.

The year to go period, and we'll see more of a negative impact and the 240 basis points in Q1.

Okay understood. That's helpful. Thank you for the commentary.

Thank you Sean.

Thank you. Our next question comes from Steph Wissink.

Jefferies. Your line is open.

Thank you good afternoon, everyone I have a clarification question first on <unk> question on the guidance I think Anthony responses that you expect to growth through the remainder of the year are you, suggesting we look at Q2, three and four together relative to Q2, three and four last year and that will grow or that you expect to grow each quarter.

And the remainder of the year. That's my first question.

Nine month period, Q2, and $3 four combined.

Got it very helpful and then my second.

Second question is just related to stimulus and I look at your North America numbers day deviated a bit from the rest of the world and substantial outperformance on a relative basis any thoughts around the combination of the January and March early April stimulus on the industry and your brands specifically do you feel like you were a net.

Beneficiary of incremental capital to spend and I think and you mentioned spending on kids being prioritized.

We do believe that checks had the stimulus checks had some.

And the impact on consumer spending.

But.

But it's hard to.

Two attributes and exact number on that or the proportion.

And the U S. We are now beginning to comp last year and stimulus efforts and we'll continue to see how things evolve.

But just to fine tune and something that you said and we actually grew relative to market more and EMEA, where we grew almost double the rate.

And faster than the industry relative to the U S. We grew.

30% faster than the industry.

But in any event, we are entering the second quarter with momentum as we said we are planning for another good holiday season, we expect to gain momentum and.

Over the nine month period for us.

And growth for the full year the guidance we provided.

Very helpful. Thank you.

Thank you.

<unk>.

Thank you. Our next question comes from Gerrick Johnson of BMO capital markets. Your line is open.

Okay. Thank you.

And that's had a good good question and I just wanted to follow up on that a little bit.

The first quarter is often.

Quarter.

Total of two cities and <unk> got the holiday.

And what we call Grandma money at the beginning.

As of the quarter, then towards the and accordingly have Easter.

Benefited from both this year you had a tremendous amount of gift card redemptions at least the commentary out there I was wondering if you knew how much gift card redemptions helped you. This year, how many more how much more of your Pos was sold and gift cards.

And then.

Easter being made.

Maybe 10 days early.

And just as last year and about three weeks early versus 2019.

Based on history, and how much and early Easter traditionally helps you out thank you.

Yes look we are seeing a strong start to the second quarter, including Easter and don't believe there was a pull forward from Q2 to Q1 that was and any way material relative to our very very.

Strong top line result, I don't know the specific answer to the gift card question, though.

Okay.

But with <unk> it is difficult to calculate exactly the impact, but again, we don't think it had a material impact.

Okay.

Okay.

If im getting something and maybe I can ask one to Richard please.

Richard.

Retailers seemed very conservative and stocking boys action last year.

And with the general uncertainty around theatrical events, how are they approaching that category. This year.

Yes.

Thanks Garik.

It's a light entertainment slate.

And obviously in Q1, but we've outpaced the industry we've.

We've been focusing on our key licenses such as Jurassic World of course, which has had phenomenal success with Universal WWE has continued to gain strength minecraft with Microsoft our focus is to take both owned and licensed IP from event driven brands.

And really make them truly evergreen through product innovation and cultural relevance and as you know focus around purposeful play we remain really bullish about the action figure category. We've embraced this challenge and mentality and the category and we've been looking to gain and have proven to gain share and the category and we anticipate.

<unk> as you know great growth as.

As we look at our new entry with Masters and the universe content coming.

Summer on Netflix and our product offerings are winning really and the marketplace with consumers. So look we're very bullish on the action figure category, we're making incredible progress with our brands and we're really excited about the year ahead.

Okay. Thank you Richard.

Thank you. Our next question comes from Mike Inc of Goldman Sachs. Please go ahead.

Great. Thank you very much for the question I just wanted to ask about.

<unk> growth outside of the power brands and I was just wondering if you could elaborate a little bit more on the.

Action figure strength.

Up 101% year over year were there any particular licenses or brands that performed well and then just as a follow up to some of the earlier questions about.

Quarterly revenue phasing throughout the year.

With the with the comp getting easier and <unk> versus <unk> should we expect similar top line growth and <unk> as we saw and this quarter. Thank you.

And Michael.

I'll take the first part of the question.

As I mentioned to Gary we're incredibly optimistic and bullish on the action figure category.

The whole category according to NPD and the U S was up 43% and the first quarter.

<unk> was actually up 56%. So we've outpaced the category, resulting in some market share growth, which has been fantastic WWE Jurassic and these were the number seven and number eight properties and the category respectively.

WWE elite figures with a number two item and we're most excited that masters of the universe origins and this was the fifth item in and the first quarter. So we're very excited about the progress that we're making both on our evergreen brands and.

And new brands to come.

Back on the quarterly sales.

And again, we're comping down first half and double digit second half from <unk>.

And last year, and and as we said, we raised and our guidance to the 6% to 8%, which does imply growth for the balance of the year in aggregate.

We're not going to split that by the quarters, but Athena and said we're off to a strong start.

In the second quarter and expect to grow our balance of year both.

Dollars and and share.

Great. Thanks, Anthony and thanks, Richard Thanks, Robert.

Thank you. Thank you thank you Mark.

Thank you. Our next question comes from Linda Bolton Weiser of D. A Davidson your question. Please.

Okay.

Yes, hi.

Actually I just had two questions first is just on Barbie I think you said that.

And the Barbie Euro.

And your sales growth was quite a bit higher than Pos growth.

And there was a bigger GAAP there than your other brand. So why was the GAAP bigger for Barbie and should we be concerned about that and how are the retail inventories for Barbie and then my second question has to do with we had a little bit of stock excitement with fund co when they talked a little bit about <unk>.

<unk> and it occurred to me that you guys actually have some of your own IP that you could sort of take advantage of and that area as well is that something that you've been looking into as well. Thanks.

Hi, Linda its Richard I'll take I'll take the first part of the question gladly by the way.

It is true Barbie shipping did outpace and the first quarter. However, our Q1 ending retail inventory is roughly flat year over year.

Indicating that we're incredibly well positioned to continue the momentum into Q2 and to the back half.

This is our doll category overall had a fantastic quarter gross billings up where 68% Pos growing 59%. The category of course was driven by Bob is phenomenal performance and weak.

Love to repeat that gross billings were up 86% as you indicate Pos up 66% and this is healthy growth across all of our product segments. We have strengthened our position as the number one global Dow property.

We continue to gain market share in all four regions and the first quarter.

According to NPD and.

And ultimately our playbook is working Barbie is cultural relevance truly has never been stronger we've been leaning into diversity inclusivity and social impact and we've seen this reflected and the success of fashion nieces, which also had double digit increases design led momentum as part of the playbook with innovative product like <unk>.

The reveal Barbie extra also drove incremental growth and the first quarter. So.

All in all we are incredibly confident and.

And the brand's continued momentum for 2021, we've got some incredible activations planned throughout the year all new animated movie launches on Netflix. We also have and new Dream House, which has been a blockbuster success for us and we're extending characters like Chelsea, Ken and 60, <unk> anniversary and of course as always continued surprise.

And pop culture and milestone moments.

And all we were very excited about 2021, and the future prospects for the brand.

And.

Hi.

Thank you for the question.

And as the owner of one of the strongest catalogs of children and family and determine franchises and the emphasis is.

And the ownership.

We do have opportunities to commercialize our brands and new and exciting ways, we don't need to license the rights we own the rights and we are looking at.

All type of opportunities, including and if these.

This is definitely an area, where we see opportunity, especially when you think about the debt.

And the built in fan base, the collector segment for classic Evergreen brands that we own.

And we expect to see opportunities there.

Great. Thank you very much.

Thanks, Linda Thank you.

Okay.

Thank you. Our next question comes from Greg Manish Camion Wolfe Research your line is open.

Hey, guys, it's actually Fred Wightman on for Greg totally get the points on the cost headwinds from resins and transportation, but can you talk about how you're thinking about pricing power.

Essentially offset that as we move through the year.

Sure.

Sure I can address that may make a couple of comments first I would say it is our expectation that the combination of pricing and optimize and optimizing for growth savings will more than exceed the impact of cost inflation over time, and expanding our gross margin and contributing to our mid teens adjusted operating in.

Margin goal.

And we're not going to talk about specific pricing actions or timing, but we are evaluating price adjustments for the recent increases in input costs and.

And I would also would want to point out that despite the cost inflation and were not seeing seeing and the impact it's having on gross margin, we're continuing to improve profitability and margin. Our adjusted EBITDA guidance of 800 to 825 represents growth of 11% to 15% and that's almost.

Double our net sales guidance of 6% to 8% and constant currency, so continuing to make progress on profitability. Despite the inflation challenges.

Makes sense and then if we look at heart. We also didn't see quite the same sequential acceleration that we saw and the other power brands. It was still up double digits, but not quite as strong as the others is that just a matter of having slightly tougher comparison in the prior year period or is there something else.

To highlight there.

Well, it's Richard no nothing to highlight except our excitement around the performance of hot wheels.

And certainly delivering double digit growth on a brand with such maturity.

Continues to make us very proud and clearly the leader brand and the vehicle category I mean, we were up 15% and the first quarter and.

POS was actually up.

29%, we've seen broad based growth across all product segments on hot wheels are hot we will track and play sets.

Doing extraordinarily well hot wheels, Mario Kart also Pos triple digits on that item and Hotwheels monster trucks.

And use to also perform exceptionally well with Pos up 36%, we've got some great traction as well and the collector community.

<unk>, we just for the first time ever increased our membership on the Redline club, which is a DTC model we have.

Had incredible response.

And we continue to be bullish on the on the year left for 2021 with hot wheels and beyond.

But I just wanted to clarify something I just wanted to clarify something I said earlier, we were discussing the Q1 and Q2 comp of last year and I just wanted to clarify that the comp in Q2 is similar to the comp in Q1 relative to the prior year.

Great. Thanks, guys and thanks guys.

Thank you thank.

Thank you.

Thank you and our next question comes from.

William Reuter of Bank of America. Your line is open.

Hi, This is Mary on for Bill Thanks for taking our questions. So given that most of your product comes from Asia or are you changing the timing of receipt of fall product to avoid any potential disruption from the ocean freight shortages.

Not specifically.

Our manufacturing and distribution distribution network has been fully operational during the first quarter and situations certainly like the Suez Canal.

<unk> had a minor temporary impact as well as the challenges related to the la port congestion.

We've been dealing with those since the fourth quarter of last year, I'd say, our supply chain continues to effectively manage through these disruptions and there has been no material impact to our business in terms of getting product, where we needed to be.

Got it that's very helpful. And then you've previously noted that you may be able to achieve investment grade ratings and leverages and the range of two to two and a half times.

A better sense of when you're able to get to this range and would you consider any shareholder friendly activities before you debt.

Look I'd say, we're making tremendous.

Progress ahead of our refinancing transaction and all three rating agencies made multiple notch upgrade we're solidly in the double B category right now and so again significant progress there.

Our cash flow performance trailing 12 months 305 million a positive free cash flow four times. The prior year, we ended the quarter with debt to adjusted EBITDA on a trailing 12 months at three three times down from seven five times a year ago, So tremendous progress.

Our intention remains to use excess free cash flow to re debt reduce debt and the near term.

And work our way back towards investment grade ratings can't say exactly when we will get there, but we're continuing to make progress and our expectation is that with continued growth and adjusted EBITDA and the utilization of free cash flow to reduce debt. We will continue to make progress going forward.

Got it thanks very much.

Okay.

Thank you. Our next question comes from Jamie Katz of Morningstar. Your line is open.

Thanks, and good afternoon, and I'll be quick since we're coming up on the hour.

And curious what you guys have embedded as your industry outlook for the year and then alternatively.

Alternatively, I guess, if you don't want to answer that particular question do you expect to.

Continue to gain market share over the remainder of the year. Thanks.

Hi, Jami so the industry is off to a strong start and again demonstrated its resilience and we believe will continue to be a strategic category for retailers and as we've said before we expect that the search categories and benefited most from the early days of the pandemic.

It will be more challenged these are outdoors games and building.

We believe the categories, where we are a global leader dolls vehicles and infant toddler preschool will continue to perform well.

And it's hard to predict how the industry as a whole will perform for the full year, but we expect net sales for Mattel as you know to grow at 6% to 8% and constant currency and that we will increase our overall market share.

And beyond 'twenty, one, we believe and the long term growth prospects of the industry and that we will continue to increase our own market share.

And lots of opportunities ahead for Mattel.

Okay. Thank you. Thank you.

Thank you.

Thank you at this time I would like to turn the call back over to <unk> for closing remarks, Sir.

Thank you.

Marina.

We have discussed today, our record first quarter.

And kicked off and exceptional start for the year driven by very strong consumer demand.

And the strongest position that we have been and many years when navigating the unchartered territory of a global pandemic. The entire Mattel team is staying focused on the consistent execution of our transformation strategy.

Following our third straight quarter with double digit growth and increased market share our results demonstrate the success of the turnaround and the significant progress we're making on our transformation to become an IP driven high performing toy company.

We thank you for your time and interest and Mattel I will now turn the call back to Dave to provide the replay details. Thank you.

Thank you and on and thank you everyone for joining the call today.

Replay of this call will be available via webcast and audio beginning at 830 PM Eastern time today.

The webcast link can be found on our investor page or for an audio replay. Please dial 1404 537 3406 pass code is 85857 to eight thank you for participating in today's call.

Yes.

This concludes today's conference call and thank you for participating you may now disconnect.