Q4 2021 Mattel Inc Earnings Call
Speaker 1: Ladies and gentlemen, thank you for standing by and welcome to the material fourth quarter 2021 earnings conference call.
Ladies and gentlemen, thank you for standing by and welcome to the materials fourth quarter 2021 earnings Conference call.
Speaker 1: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during this session, you will need to press star 1 on your telephone. Please be advised that today's conference is...
At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press Star then one on your telephone please.
Please be advised that today's conference is being recorded.
Speaker 1: If you require any further assistance, please press star then zero. I would now like to turn the conference over to your speaker for today, Dave Sponjevich. You may begin.
If you require any further assistance. Please press star then zero.
I would now like to turn the conference over to your speaker for today Dave.
<unk> you may begin.
Okay.
Thank you operator, and good afternoon, everyone.
Speaker 2: Joining me today are Inan Krijs, Vittel's Chairman and Chief Executive Officer.
Joining me today are <unk>, Mattel's, Chairman and Chief Executive Officer.
Speaker 2: Richard Dixon, Mattel's President and Chief Operating Officer, and Anthony DeSulvestro, Mattel's Chief Financial Officer.
Richard Dickson, Mattel's, President and Chief operating Officer and.
And Anthony Disilvestro, Mattel's Chief Financial Officer.
Speaker 2: As you know, this afternoon we reported Mattel's 2021 full year and fourth quarter financial results.
As you know this afternoon, we reported Mattel's 2021, full year and fourth quarter financial results.
Speaker 2: We will begin today's call with Inanna and Anthony providing commentary on our results.
We will begin today's call with the non and Anthony providing commentary on our results.
Speaker 2: After which, we will provide some time for Enan, Richard, and Anthony to take your questions.
After which we will provide some time for a non Richard Anthony to take your questions.
Speaker 2: To help supplement our discussion today, we have provided you with a slide presentation.
To help supplement our discussion today, we have provided you with a slide presentation.
Our discussion slide presentation and earnings release May reference non-GAAP financial measures, including adjusted gross profit and adjusted gross margin adjust.
Speaker 2: Our discussion, slide presentation, and earnings release may reference non-GAAP financial measures including adjusted gross profit and adjusted gross margin, adjusted other selling investing, and advanced in investmentX advise I do not report on this, and I Aggress to see if this mammal soaked and the
Adjusted other selling and administrative expenses.
Speaker 2: Adjusted operating income or loss and adjusted operating income or loss margin
Adjusted operating income or loss and adjusted operating income or loss margin.
Speaker 2: adjusted earnings per share, from which we exclude the impact of a non-cash tax benefit associated with releasing valuation allowances on deferred tax.
Adjusted earnings per share from which we exclude the impact of a noncash tax benefit associated with releasing valuation allowances on deferred taxes.
Speaker 2: earnings before interest, taxes, depreciation, and amortization, or EBITDA.
Earnings before interest taxes, depreciation and amortization or EBITDA.
Adjusted EBITDA.
Speaker 2: free cash flow, free cash flow conversion, leverage ratio, and cost of current.
Free cash flow free cash flow conversion leverage ratio and constant currency.
Speaker 2: In addition, we present changes in gross billings, a key performance indicator.
In addition, we present changes in gross billings, a key performance indicator.
Speaker 2: 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.
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.
Our accompanying slide presentation can be viewed in sync with today's call. When you access it through the investors section of our corporate 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.
Speaker 2: Our accompanying slide presentation can be viewed in sync with today's call when you access it through the investor section of our corporate website corporate.mittel.com
Speaker 2: 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 in the investors section of our corporate website. In the second quarter of 2021, we elected to revise prior periods for certain immaterial out-of-period adjustments that do not require us to amend previous filings.
Earnings release, and slide presentation, and both documents are also available in the investors section of our corporate web site in the second quarter of 2021, we elected to revise prior periods for certain immaterial out of period adjustments that do not require us to amend previous filings.
These adjustments are reflected in our fourth quarter earnings release, and slide presentation and will be reflected in our 2021 annual report on Form 10-K .
Speaker 2: These adjustments are reflected in our fourth quarter earnings release and slide presentation and will be reflected in our 2021 annual report on Form 10K.
Speaker 2: These adjustments will also be subsequently updated on the financial history section of our investor relations website at a later date.
These adjustments will also be subsequently updated on the financial history section of our Investor Relations website at a later date.
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.
Speaker 2: 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 line.
These statements are based on currently available information and assumptions and they're subject to a number of significant risks and uncertainties that could cause our actual results to differ from those projected in the forward looking statements, including risks and uncertainties associated with the COVID-19 pandemic.
Speaker 2: These statements are based on currently available information and assumptions. And they are subject to a number of significant risks and uncertainties that could cause our actual results to differ from those projected in the forward-looking state.
Speaker 2: including risk and uncertainties associated 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 , and on our Q3 2021 quarterly report on Form 10-Q .
Speaker 2: We describe some of these uncertainties in the Risk Factor section of our 2020 Annual Report on Form 10-K and on our Q3 2021 quarterly report on Form 10-Q , 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 other public statements. Mattel does not update forward-looking statements and expressly disclaims any obligation to do so except as required by law.
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 other public statements Mattel.
<unk> does not update forward looking statements and expressly disclaims any obligation to do so except as required by law.
Now I'd like to turn the call over to Ina.
Thank you for joining mattel's fourth quarter and full year 2021 earnings call.
Speaker 3: Thank you for joining Mattel's fourth quarter and full year 2021 earnings call. I hope you and your families are staying safe and healthy.
I Hope you and your families are staying healthy and safe.
Speaker 3: The tells results for the quarter and year came in well ahead of expectations, capping another exceptional performance by the company.
<unk> results for the quarter and here came in well ahead of expectations capping another exceptional performance by the company.
Speaker 3: 2021 was a pivotal year for Mateo.
2021 was a pivotal year for Mattel.
Speaker 3: We achieved very strong results and continued to improve profitability, accelerate top-line growth, and made important progress toward capturing the full value of our IP.
We achieved very strong results and continued to improve profitability accelerate top line growth and made important progress toward capturing the full value of our IP.
Our team managed through major global supply chain disruption in trying to fulfill the extraordinary increase in consumer demand.
Speaker 3: Our team managed through major global supply chain disruption in trying to fulfill the extraordinary increase in consumer demand to ensure there were plenty of toys for families this holiday.
To ensure there were plenty of toys for families. This holiday season.
Speaker 3: Key highlights for the fourth quarter compared to prior year. And net sales were up 10% as reported, and 11% in constant currency. The sixth consecutive quarter of year-over-year growth.
Key highlights for the fourth quarter compared to prior year net.
Net sales were up 10% as reported and 11% in constant currency.
Six consecutive quarter of year over year growth.
Speaker 3: Adjusted EBITDA was $321 million, up $48 million, and adjusted EPS, improved by 13 cents to 50.
Adjusted EBITDA was $321 million up $48 million.
And adjusted EPS improved by <unk> 13 cents to 53.
Key highlights for the full year as compared to 2020.
Speaker 3: He highlights for the full year as compared to 2020.
Speaker 3: And net sales were up 19% as reported, and 18% in constant currency, the highest annual growth rate.
And net sales were up 19% as reported and 18% in constant currency the highest annual growth rate in decades.
Speaker 3: The adjusted EBITDA was $1 billion and $7 million, an increase of 43%.
Adjusted EBITDA was $1 billion and $7 million, an increase of 43%.
Speaker 3: Adjusted EPS increased 141% to $1.30.
Adjusted EPS increased 141%.
$2 30.
Adjusted operating income margin improved from nine 6% to 14%.
Speaker 3: Adjusted operating income margin improved from 9.6% to 14%.
With doubled our free cash flow.
Speaker 3: We doubled our free cash flow and improved our leverage ratio to 2.6.
<unk> improved our leverage ratio to two six.
Our strong full year performance was broad based.
Speaker 3: Our strong, fully-efficient performance was broad bass.
Speaker 3: We grow in constant currency in six of seven categories.
We grew in constant currency in six of seven categories.
Speaker 3: in each of our three power brands, as well as American Girl, and in three or four weeks.
In each of our three power brands as well as American girl and in three of four regions.
Speaker 3: It was also an outstanding year for Matteo in terms of market share.
It was also an outstanding year for Mattel in terms of market share.
Speaker 3: Pair NTD, Mattel Outpace the industry, and Gainshare globally for the second consecutive year.
Per NPD, Mattel outpaced the industry and gain share globally for the second consecutive year.
Speaker 3: Mattel also gained share in every measured market.
Martel also gained share in every measure with market this year.
Speaker 3: In the fourth quarter, Mattel was the number one manufacturer globally with three of the top seven properties.
In the fourth quarter Mattel was the number one manufacturer globally.
With three of the top seven properties.
Speaker 3: This was the sixth consecutive quarter of ShareGain.
This was the sixth consecutive quarter of share gain.
Speaker 3: POS was up, low single digits in the quarter and finished up low double digits for the year.
POS was up low single digits in the quarter and finished up low double digits for the year.
Speaker 3: retail return to a more balanced omnichannel environment with e-commerce stabilized.
Retail returned to a more balanced omni channel environment with ecommerce stabilize it.
E Commerce, Pos was up 2% in the quarter and up 6% for the full year, representing 31% of all Pos.
Speaker 3: E-commerce POS was up 2% in the quarter, and up 6% for the full year, representing 31% of all POS.
Speaker 3: Our products resonated with consumers at levels we have not seen in years.
Our products resonated with consumers at levels, we have not seen in years.
Speaker 3: We have also been very successful in making Mattel a partner of choice for the major entertainment companies and see this as another
We have also been very successful in making Mattel a partner of choice for the major entertainment companies and see this as another growth lever.
Speaker 3: In addition to our own IP, we now have a formidable lineup of evergreen properties from Microsoft, Necologian, Nintendo, Universal, Warner Brothers, WWE, as well as this.
In addition to our own IP, we now have a formidable lineup of evergreen properties from Microsoft Nickelodeon Nintendo Universal Warner Brothers, WWE as well as Disney.
Speaker 3: The recently announced multi-year global licensing agreement for the Disney Princess and Frozen franchises.
The recently announced multiyear global licensing agreement for the Disney Princess and frozen franchises builds on the existing licensing relationship between Mattel and Disney.
Speaker 3: builds on the existing licensing relationship between Mattel and this.
Speaker 3: Mattel will have the global licensing rights to develop lines of toys, including fashion dolls, small dolls and figures for all Disney princesses and frozen franchises, as well as the upcoming live action film The Little Mermaid.
Matteo will have the global licensing the rights to develop lines of toys and clothing fashion dolls, small dolls and figures for all Disney Princess and frozen and franchises as well as the upcoming live action film.
The Meramec.
The collection is expected to launch at retailers around the globe at the beginning of 2023.
Speaker 3: The collection is expected to launch at retailers around the globe at the beginning of 2023.
Speaker 3: The return of Disney Princess and Frozen to our portfolio is a fitting recognition of our strength and capabilities and adds yet another growth driver to our portfolio.
The return of Disney Princess and frozen two our portfolio is a fitting recognition of our strength and capabilities and adds yet another growth driver to our portfolio.
The strong quarterly and full year results across all key metrics are attributed to the quality of our products strength of our brand portfolio capabilities of our team and successful execution of our multiyear strategy to transform Mattel to an IP driven.
Speaker 3: The strong quarterly and fully results across all key metrics are attributed to the
Speaker 3: Strengths about brand portfolio, capabilities of our team, and successful execution of our multi-year strategy to transform a tail to an IP-driven, high-performing toy company. Our turnaround is complete.
High performing toy company.
Our turnaround is complete.
We are now in growth mode.
Looking at gross billings in constant currency by category versus the prior year.
Speaker 3: Looking at gross buildings in constant currency by category versus the prior year.
Speaker 3: Dogs, gross buildings grew 14% in the quarter, led by gains in key power brand, Barbie, as well as spirit, polypocket, and enchantemals.
Gross billings grew 14% in the quarter.
Led by gains in key power brands Barbie.
As well as spirit pilot pocket and channels.
POS was up low single digits.
Mattel continued to gain global market share within dogs, increasing one three points in the fourth quarter per NPD.
Speaker 3: Mattel continued to gain global market share within dollars, increasing 1.3 points in the fourth quarter per NPD.
For the full year <unk> gross billings grew a significant 21%.
Speaker 3: For the full year, dogs' gross billings grew a significant 21%. Barbie was up 19% in the quarter.
Bob It was up 19% in the quarter.
POS was up low single digits.
2021 was a remarkable year for Barbie.
Speaker 3: 2021 was a remarkable year for Barbie. Gross buildings increased by 24% and reached the-
Gross billings increased by 24%.
And reached the highest level we have on record.
Speaker 3: Barbie was the number one overall toy property globally.
Barbie was the number one overall toy property globally in both the fourth quarter and full year for the second consecutive year per NPD.
Speaker 3: both the fourth quarter and full year for the second consecutive year per NPD.
Speaker 3: American girl gross billings declined 6% in the quarter compared to the prior year, which benefited from the very successful historical carcass.
American Girl gross billings declined 6% in the quarter compared to the prior year, which benefited from the very successful historical character launch.
Speaker 3: This was partially offset by growth across most other segments. The American growth...
This was partially offset by growth across most other segments.
The American girl turnaround strategy is working.
Speaker 3: With this cherished brand growing 4% for the full year.
With this cherished brand growing 4% for the full year.
Speaker 3: We continue to see positive results across chematrix and our expanded D2C strategy.
We continue to see positive results across key metrics and our expanded D to C strategy.
Speaker 3: Vehicles declined representing the quarter with temporary manufacturing closures impacting hot wheels stock availability.
Vehicles declined 3% in the quarter with temporary manufacturing closures impacting hotwheels stock availability.
Speaker 3: Currently, all of our factories are open with minimal disruption to operations. Katebor.
Currently all of our factories are open with minimal disruption to operations.
Category Pos was up low single digits.
For the full year vehicles gross billings grew 12% to achieve the highest full year on record.
Speaker 3: For the full year, vehicles, gross buildings grew 12% to achieve the highest full year on record.
Hardware gross billings declined 5% in the quarter with Pos up low single digits.
Speaker 3: Hot Wheels, Gross Billings, Declan's 5% in the quarter, with POS up, Losing the Digi.
Speaker 3: For the full year, Hot Wheels grew 11% to achieve its fourth consecutive record year and surpassed $1 billion in gross billings for the first time.
For the full year <unk> grew 11%.
To achieve its fourth consecutive record year and surpassed $1 billion in gross billings for the first time hot.
Speaker 3: Hot Wheels remained the number one vehicle's property globally in both the fourth quarter and full year.
<unk> remained the number one vehicles property globally.
In both the fourth quarter and full year.
Speaker 3: And the Hot Wheels singles assortment was the number one toy globally in 2021 fair and PD.
And the hot wheels symbols assortment was the number one toy globally in 2021 per NPD.
Infant toddler and preschool gross billings declined 1% in the quarter in line with pass.
Speaker 3: Infant toddler and preschool gross billings declined 1% in the quarter in line with POS.
Speaker 3: The decline was due to supply chain disruption that impacted Fisher Price Corps and retail closures in Asia Pacific.
The decline was due to supply chain disruption that impacted Fisher price core.
Retail closures in Asia Pacific.
Speaker 3: For the full year, infant, toddler, and preschool gross billings grew 5%.
For the full year infant toddler and preschool gross billings grew 5%.
Speaker 3: Fisher price core gross billings decline 2% in the quarter in line with POS.
Fisher price core gross billings declined 2% in the quarter in line with Pos.
For the year Fisher price grow gross billings, 5% as the brand's turnaround continues to produce positive results.
Speaker 3: For the year, Fisher Price grew gross buildings 5% as the brand turned around continues to produce positive results.
Speaker 3: We are planning for growth in Fisher Price and Thomas in 2022.
We are planning for growth in Fisher price and Thomas in 2022.
Speaker 3: Fisher Price was again the number one infant toddler and preschool property in the US and globally for the fourth consecutive year per NPD.
Fisher price was again, the number one infant toddler and preschool property in the U S and globally for the fourth consecutive year per NPD.
Speaker 3: Also, Peren PD, Fisher Price was the number three global property in the fourth quarter across the industry.
Also per NPD.
Fisher price was the number three global property in the fourth quarter across the industry.
Speaker 3: and improve to be the number two global property in December finishing the year as a top five global property overall.
And improve to be the number two global property in December finishing the year as a top five global property overall.
Thomas gross billings grew 7% in the quarter and 4% for the year.
Speaker 3: Thomas Gross Billings grew 7% in the quarter and 4% for the year.
Speaker 3: Strong POS in the holiday quarter solidifying its fan around.
With strong Pos in the holiday quarter solidifying its turnaround.
Speaker 3: Our challenger category's gross billings together increased 26% in the quarter.
Our challenger categories gross billings together in.
Increased 26% in the quarter.
Speaker 3: led by exceptional growth in action figures and gains in other. POS.
Led by exceptional growth in action figures and gains in other.
POS was up low double digits.
Speaker 3: For the full year, the Challenger categories collectively grew 31%.
For the full year the challenge of categories collectively grew 31%.
Action figures gross billings were up 53% in the fourth quarter, driven by Jurassic World and Masters of the universe.
Speaker 3: Action figures, gross billings, were up 53% in the fourth quarter, driven by Jurassic World and masters of the universe.
Speaker 3: Building sets was essentially flat, while games grew 7%.
Building sets was essentially flat while games grew 7%.
Mattel was the number two global manufacturer within both action figures and building sets.
Speaker 3: Mattel was the number two global manufacturer within both action figures and building sets.
Speaker 3: in both the fourth quarter and full year for NPD.
In both the fourth quarter and full year.
NPD.
Speaker 3: and Uno continue to be the number one card game globally. Also, friends.
And <unk> continued to be the number one card game globally also per NPD.
Speaker 3: Other, including plush, performed exceptionally well and gross buildings finish up 68%.
Other including plush performed exceptionally well and gross billings finished up 68%.
2021 was another great year for the toy industry, increasing by 9% per NPD.
Speaker 3: 2021 was another great year for the toy industry, increasing by 9% per NPD, in spite of major global supply chain disruption and significant retail closures.
Spy of major global supply chain disruption and significant retail closures.
The industry is expected to continue to grow as children parents and caregivers.
Speaker 3: The industry is expected to continue to grow as children, parents, and caregivers have made toys and play a bigger part of their life.
Toys and play a bigger part of their lives.
At Martel working in close collaboration with our retail partners, we outpaced the industry for the second year in a row and expect to continue to gain market share.
Speaker 3: At Mattel, working in close collaboration with our retail partners, we outpace the industry for the second year in a row and expect to continue to gain market share.
Speaker 3: in recognition of the quality and breadth of our product offering across all categories.
In recognition of the quality and breadth of our product offering across all categories.
Speaker 3: We received a record high, industry leading 17 award nominations for the Toy Association's 2022 Toy of the Year award.
We received a record high industry, leading 17 award nominations for the toy associations 2022 toy of the year Awards.
Speaker 3: Looking back at what has been achieved over the last few years.
Looking back at what has been achieved over the last few years.
Mattel delivered on its strategy to improve profitability and accelerate top line growth.
Speaker 3: Mattel delivered on its strategy to improve profitability and accelerate top-line growth, while also making progress toward capturing the full value of our rights.
While also making progress toward capturing the full value of our IP.
Speaker 3: Two of our biggest Mattel films projects moving to production this year.
Two of our biggest Mattel films projects moving to production this year.
Speaker 3: Barbie is in pre-production with principal photography starting next month. And Masters of the Universe, our live action motion picture and development with Netflix is expected to start production this summer.
Barbie is in pre production with principal photography, starting next month.
And masters of the Universe, our live action motion picture in development with Netflix is expected to start production. This summer.
Speaker 3: We look forward to sharing more on our entertainment offering and the progression of our strategy overall during our analyst presentation on February 18th.
We look forward to sharing more on our entertainment offering and the progression of our strategy overall.
During our analyst presentation on February 18.
<unk> full year results exceeded expectations and reinforced the company's growth trajectory with ongoing momentum and strength across the portfolio.
Speaker 3: Mattel's fully results exceeded expectations and reinforced the company's growth trajectory with ongoing momentum and strength across the portfolio.
As strong as 2021 was given our outperformance.
Speaker 3: As strong as 2021 was, given our out-of-former
Speaker 3: 2022 is expected to be stronger.
'twenty two is expected to be stronger.
With that our.
Speaker 3: Our 2022 guidance exceeds our prior goals, and we now expect net sales to grow 8% to 10% in constant current.
Our 2022 guidance exceeds our prior goals and we now expect net sales to grow 8% to 10% in constant currency.
Speaker 3: adjusted EBITDA to be between 1.1 and 1.125 billion dollars and adjusted EPS is expected to increase to a range of $1.42 to $1.48.
Adjusted EBITDA to be between one one and 112 5 billion and adjusted EPS is expected to increase to a range of $1 42 to $1 48.
As strong as 2022 is expected to be the outlook for 2023 is even stronger.
Speaker 3: Strong as 2022 is expected to be. The outlook for 2023 is even stronger.
Speaker 3: We are increasing our 2023 goals for top-line growth in itself in constant currency to high single digits, from mid single
We are increasing our 2023 goal for top line growth in net sales in constant currency.
So high single digits from mid single digits previously.
Speaker 3: We are updating our adjusted operating income margin goal in 2023 to approximately 16 to 17% of net sales. And we are adding a new goal for 2023 to exceed an adjusted EPS of $1.90. Anthony.
We are updating our adjusted operating income margin goal in 2023 to approximately 16% to 17% of net sales and we are adding a new goal for 2023 to exceed an adjusted EPS of $1 90.
Anthony will provide more detail shortly.
In closing.
Speaker 3: in closing. Mattel's 2021 Results cap another year of exceptional performance.
<unk> 2021 results capped another year of exceptional performance.
The organization once again performed remarkably well and overcame multiple challenges over the past year.
Speaker 3: The organization once again performed remarkably well and overcame multiple challenges over the past year. We stayed committed.
We stayed committed to <unk> purpose to empower the next generation to explore the wonder of childhood and reach the full potential.
Speaker 3: to empower the next generation, to explore the wonder of childhood, and reach the full potential.
Speaker 3: and to our mission to create innovative products and experiences that inspire and retain and develop children through play.
And to our mission to create innovative products and experiences that inspire entertain and develop children through play.
The company has made significant progress over the last few years on our transformation strategy.
Speaker 3: The company has made significant progress over the last few years on our transformation strategy. Out 10 around
Our turnaround is complete.
We believe we are well positioned to continue our strong momentum and are excited to be guiding to even higher growth in 2020 tool and higher goals in 2023.
Speaker 3: We believe we are well positioned to continue our strong momentum and are excited to be guiding to even higher growth in 2022 and higher goals in 2023.
I would like to thank the entire organization for their hard work and efforts in growing long term sustainable shareholder value.
Speaker 3: I would like to thank the entire organization for the hard work and efforts in growing long term sustainable shareholder value.
Speaker 3: I will now hand it over to Anthony to cover the financials in more detail.
I will now hand, it over to Anthony to cover the financials in more detail.
Speaker 4: Thanks, Anon. We finished 2021 with another outstanding quarter. In the fourth quarter, we generated net sales of 1,795 million, an increase of 10% as reported, and 11% in constant current.
Thanks, and on we finished 2021 with another outstanding quarter.
In the fourth quarter, we generated net sales of $1 $795 million, an increase of 10% as reported and 11% in constant currency.
As expected adjusted gross margin declined by 220 basis points to 49, 3%.
Speaker 4: As expected, adjusted gross margin declined by 220 basis points to 49.3% to primarily the cost inflation, which was partly offset by cost savings, fixed cost absorption.
Due primarily to cost inflation, which was partly offset by cost savings.
Fixed cost absorption and pricing actions.
Speaker 4: Adjusted operating income was $264 million, a $64 million increase versus 2020 driven primarily by top line growth.
Adjusted operating income was $264 million, a $64 million increase versus 2020, driven primarily by top line growth.
Adjusted EPS was <unk> 53 cents in the quarter, increasing 33% versus the prior year.
Speaker 4: adjusted EPS was 53 cents in the quarter, increasing 33% versus the prior year.
And adjusted EBITDA grew by 18% to $321 million.
Speaker 4: And the Justin Ibiza grew by 18% to $321 million.
Speaker 4: Our full year performance clearly demonstrates the improvement in profitability and acceleration of top line growth.
Our full year performance clearly demonstrates the improvement in profitability and acceleration of topline growth.
For the full year net sales increased by 19% as reported and 18% in constant currency.
Speaker 4: For the full year, net sales increased by 19% as reported, and 18% in constant current.
Speaker 4: driven by growth across categories and geography.
Driven by growth across categories and geographies.
Speaker 4: Adjusted gross margin declined 80 basis points to 48.2%. Do primarily to significant cost inflation mostly offset by the scale benefit from higher sales, pricing actions and cost savings.
Adjusted gross margin declined 80 basis points to 48, 2% due primarily to significant cost inflation, mostly offset by the scale of benefit from higher sales pricing actions and cost savings.
Adjusted operating income increased by 73% to $763 million as our adjusted operating income margin expanded by 440 basis points to 14%.
Speaker 4: Adjusted operating income increased by 73% to $763 million as our adjusted operating income margin expanded by 440 basis points to 14%.
Speaker 4: Adjusted EPS with $1.30, increasing 141% from the prior year of 54%.
Adjusted EPS was $1 <unk>.
Increasing 141% from the prior year of 54.
Speaker 4: And lastly, adjusted EBITDA crossing the $1 billion mark increased by $301 million or 43% to $1 billion and $7 million and well ahead of expectations.
And lastly, adjusted EBITDA crossing the $1 billion, Mark increased by $301 million or 43% to $1 billion and $7 million and well ahead of expectations.
Turning to gross billings in constant currency for the company and by region.
Speaker 4: Turning to gross buildings and constant currency for the company and by region.
Mattel gross billings increased by 9% in the quarter.
Speaker 4: Mattel Gross Billings increased by 9% in the quarter.
Speaker 4: On a full-year basis, growth-filling thing increased by 17%, driven by broad-based growth across the portfolio.
On a full year basis gross billings increased by 17% driven by broad based growth across the portfolio.
Year end retail inventory was up in dollars, but down in weeks of supply, which we believe positions us well for the first quarter.
Speaker 4: Your Anne retail inventory was up in dollars, but down in weeks to supply, which we believe positions us well for the first quarter.
North America was up 13% for the quarter, driven primarily by gains in dolls and action figures with Pos increasing low single digits.
Speaker 4: North America was up 13% for the quarter driven primarily by gains and dollars and action figures with POS increasing low single digits.
For the year gross billings were up 21% with Pos up double digits.
Speaker 4: For the year, Gross Building for up 21% with POS off double digits.
Speaker 4: For the full year, we gained share in North America and retained our leadership position as the number one manufacturer in the US for the 28th consecutive year for NPD.
For the full year, we gained share in North America and retained our leadership position as the number one manufacturer in the U S for the 28th consecutive year per NPD.
EMEA has been our fastest growing region.
Speaker 4: For the quarter, gross billings increased 18% with POS up mid single digits.
For the quarter gross billings increased 18% with Pos up mid single digits.
Speaker 4: And for the full year, Gross Billings gained 20% with POS up low double digits.
And for the full year gross billings gained 20% with Pos up low double digits.
For the full year, we gained share anemia in every market per NPD.
Speaker 4: For the full year, we gain share anemia in every market for NPT.
Speaker 4: Latin America gross feelings declined by 1% in the quarter, while POS increased by high single digits.
Latin America gross billings declined by 1% in the quarter, while Pos increased by high single digits.
Speaker 4: For the full year, Gross Billings gained 10% consistent with POS.
For the full year gross billings gained 10% consistent with Pos.
We outpaced the industry gained share and extended our number one leadership position in Latin America for the full year.
Speaker 4: We outpaced the industry, gained share, and extended our number one leadership position in Latin America for the full year per MPD.
MPD.
Speaker 4: Asia Pacific gross billings declined 7% in the quarter in line with POS. As the business was impacted by COVID related retail closures in key markets and supply changes rubs.
Asia Pacific gross billings declined 7% in the quarter in line with Pos as the business was impacted by Covid related retail closures in key markets and supply chain disruption.
For the full year gross billings declined just 1% in line with Pos.
Speaker 4: For the full year, growth billing decline just 1% in line with POS.
Speaker 4: Mattel outperform the industry and gain share in Australia for the full year per MPD.
Mattel outperformed the industry and gained share in Australia for the full year per NPD.
Speaker 4: At the end of the year, nearly all retail outlets were open in all regions.
At the end of the year nearly all retail outlets were open in all regions, except for Asia Pacific, which had approximately 6% of stores closed.
Speaker 4: step for Asia Pacific, which had approximately 6% of stores closed.
Speaker 4: On a total company basis, this represented approximately 1% of global sales.
On a total company basis.
This represented approximately 1% of global sales.
Adjusted gross margin declined 220 basis points in the quarter to 49, 3%.
Speaker 4: Adjusted gross margin declined 220 basis points in the quarter to 49.3%.
Speaker 4: This was due primarily to significant cost inflation, which had a negative impact of 600 basis points, as we continued to experience increases in materials and ocean freight costs.
This was due primarily to significant cost inflation, which had a negative impact of 600 basis points as we continued to experience increases in materials and ocean freight costs.
Going the other way pricing actions, including those taken in the second half contributed 150 basis points to gross margin.
Speaker 4: Going the other way, pricing actions, including those taken in the second half, contributed 150 basis points to gross margin.
In addition, with double digit top line growth gross margin benefited by 150 basis points from fixed cost absorption.
Speaker 4: In addition, with double digit top line growth, rose margin benefited by 150 basis points from fixed cost absorption.
Speaker 4: and optimizing for growth contributed $13 million of incremental savings in cost of goods sold in the quarter, a benefit of AD basis.
And optimizing for growth contributed $13 million of incremental savings in cost of goods sold in the quarter.
Benefit of 80 basis points.
Moving down the P&L.
Speaker 4: Moving down the P&L, advertising expenses for the quarter declined 7% to 266 million, reflecting some timingships between Q3 and Q4.
Advertising expenses for the quarter declined 7% to $266 million, reflecting some timing shifts between Q3 and Q4.
Speaker 4: For the full year, advertising increased by 4% as we continue to drive demand creation to support POS.
For the full year advertising increased by 4% as we continue to drive demand creation to support Pos.
Adjusted SG&A expenses were $355 million in the quarter, an increase of 2%.
Speaker 4: Adjusted S-GNA expenses were $355 million in the quarter, an increase of 2% as we continued to invest in the business while effectively managing our cost structure.
We continued to invest in the business, while effectively managing our cost structure.
We finished the year with another quarter of strong bottom line performance.
Speaker 4: We finished a year with another quarter of strong bottom line performance.
Speaker 4: adjusted operating income increased to $264 million from $200 million in the prior year, an increase of $64 million or 32%.
Adjusted operating income increased to $264 million from $200 million in the prior year, an increase of $64 million or.
32%.
Speaker 4: The increase was driven by higher sales volume, the benefit of pricing and cost savings on state low price prices were 2.5kkk, or worse from where you
The increase was driven by higher sales volume the.
The benefit of pricing and cost savings, partly offset our cost inflation.
Adjusted EBITDA increased by $48 million in the quarter or 18% to $321 million.
Speaker 4: Adjusted EBITDA increased by $48 million in the quarter, or 18% to $321 million.
Speaker 4: Casual generations significantly improved for the whole year.
Cash flow generation significantly improved for the full year.
Cash from operations increased by 200 million to $485 million.
Speaker 4: Cash from operations increased by $200 million to $485 million.
Speaker 4: The improvement was primarily driven by games and net income, adjusted for the non-cash deferred tax valuation allowance, partly offset by
The improvement was primarily driven by gains in net income.
Adjusted for the noncash deferred tax valuation allowance.
Partly offset by higher working capital.
Free cash flow doubled from $167 million in 2000 $20 million to $334 million in 2021 and was primarily used to reduce debt.
Speaker 4: Free cash flow doubled from $167 million in 2020 to $334 million in 2021 and was primarily used to reduce debt.
Capital expenditures increased to $151 million $33 million above last year as we invest in <unk> capacity to support the high level of growth.
Speaker 4: Capital expenditures increase to $151 million, 33 million above last year, as we invest in doll capacity to support the high level of growth. Free cash.
Free cash flow conversion continued to increase.
Speaker 4: As a percentage of adjusted EBITDA, free cash flow was 33% in 2021, compared to 24% in 2020.
As a percentage of adjusted EBITDA free cash flow was 33% in 2021 compared to 24% in 2020.
Speaker 4: We believe we are well positioned to continue improving our conversion percentage going forward.
We believe we are well positioned to continue improving our conversion percentage going forward.
Speaker 4: Over time, we believe our free cash flow conversion ratio can exceed 50%.
Over time, we believe our free cash flow conversion ratio can exceed 50%.
Taking a look at the balance sheet.
Speaker 4: Cash balance at year end was $731 million compared to $762 million in the prior year.
Cash balance at year end was $731 million compared.
Compared to $762 million in the prior year.
Long term debt declined by $284 million to $2 billion $571 million.
Speaker 4: long-term debt declined by $2.84 million to $2.571 million.
The debt reduction was funded by our free cash flow generation.
Speaker 4: The debt reduction was funded by our free cash flow generation.
Speaker 4: count receivable increase by $39 million to $1 billion and 73 million, reflecting our four quarter sales growth, while days sales outstanding improved by three days to 54 or compared to the prior year.
Accounts receivable increased by $39 million to $1 billion and $73 million, reflecting our fourth quarter sales growth.
While days sales outstanding improved by three days to 54 compared to the prior year.
Inventory at year end was $777 million.
Speaker 4: Inventory at your end with $777 million compared to 528 million in the prior year.
Compared to $528 million in the prior year.
Speaker 4: The increase is due to cost inflation and higher inventories to support future growth.
The increase is due to cost inflation and higher inventories to support future growth.
Speaker 4: In the first quarter of 2022, the inflation currently valued in our inventory will have a significant negative impact to gross margin. Still in the fourth quarter of
In the first quarter of 2022, the inflation currently valued in our inventory, we will have a significant negative impact to gross margin.
Leverage ratio continues to improve.
Speaker 4: Driven by the growth and adjusted evita and cashflow driven debt reduction.
Driven by the growth in adjusted EBITDA and cash flow driven debt reductions.
Speaker 4: We finished 2021 with a debt to adjusted EBITDA ratio of 2.6 times compared to 4.1 times in the prior year.
We finished 2021 with a debt to adjusted EBITDA ratio of two six times compared to four one times in the prior year.
Speaker 4: The Optimizing for Growth Program is generating significant cost-fifth.
The optimizing for growth program is generating significant cost savings.
Speaker 4: Savings from the program were $29 million in the fourth quarter and $97 million for the full year exceeding expectations.
Savings from the program were $29 million in the fourth quarter and $97 million for the full year exceeding expectations.
Speaker 4: 2021 savings benefited cost a good sold by $69 million, S-GNA by $20 million, and reduced non-working advertising by $9 million.
2021 savings benefited cost of goods sold by $69 million SG&A by $20 million and reduced nonworking advertising by $9 million.
Looking ahead, we expect the program to deliver savings of $80 million to $90 million in 2022.
Speaker 4: Looking ahead, we expect a program to deliver savings of $80 to $90 million in 2022 and are on track to achieve our total targeted savings of $250 million by 2023.
And are on track to achieve our total targeted savings of $250 million by 2023.
Speaker 4: Building on very strong 2021 performance and continuing momentum are 2022 guidance reflects the expectation for another strong growth year for Mattel.
Building on very strong 2021 performance and continuing momentum our 2022 guidance reflects the expectation for another strong growth year for Mattel.
As <unk> said, we expect to grow net sales in 2022 by 8% to 10% in constant currency.
Speaker 4: As he nonsense we expect to grow net sales in 2022 by 8% to 10% in constant Functional men salaries ofires & laptoprequality as well as ridiculous successful
Speaker 4: That sales guidance reflects expected growth in our leader category. Dolls, vehicles, and infant taller priests.
Net sales guidance reflects expected growth in our leader categories dolls vehicles and infant toddler preschool.
Speaker 4: Within these categories, our power brands, Barbie, Hot Wheels, and Fisher Price and Thomas, as well as American Girl, are all expected to grow.
Within these categories, our power brands Barbie Hot wheels, and Fisher price and Thomas.
As well as American barrel are all expected to grow.
Speaker 4: Our challenge categories as a whole are also expected.
Our challenger categories as a whole are also expected to grow.
Speaker 4: This is driven primarily by action figures, benefiting from entertainment, licensing agreements with theatrical tie-ins, including Jurassic World Dominion with Universal, and Lightyear with Disney and Pixar.
This is driven primarily by action figures benefiting from entertainment licensing agreements with theatrical tie ins, including Jurassic World Dominion with Universal and light year with Disney and Pixar.
Speaker 4: And by our building sets category, benefiting from new product innovation and expanded distribution.
And by our building sets category benefiting from new product innovation and expanded distribution.
Full year adjusted gross margin is expected to decline from 48, 2% in 2021 to approximately 47% in 2022.
Speaker 4: Full year, adjusted gross margin is expected to decline from 48.2% in 2021 to approximately 47% in 2022.
We continued to be impacted by high levels of cost inflation, primarily in raw materials and ocean freight.
Speaker 4: We continue to be impacted by high levels of cost inflation, primarily in raw materials and ocean freight.
Inflation, which had an approximately 400 basis point negative impact to gross margin in 2021 is expected to be even more significant in 2022.
Speaker 4: inflation, which had an approximately 400 basis point negative impact to growth margin in 2021 is expected to be even more significant in 2022.
Speaker 4: As I mentioned earlier, much of this is already on the balance sheet and will have a more significant negative impact on our first half results.
As I mentioned earlier much of this is already on the balance sheet and we will have a more significant negative impact on our first half result.
Speaker 4: The negative gross margin impact of inflation will be partly offset by the benefits from pricing actions, the six cost scale benefit from top line growth.
The negative gross margin impact of inflation will be partly offset by the benefits from pricing actions.
The fixed cost scale benefit from top line growth.
Speaker 4: and anticipated savings from the optimizing for growth programs.
And anticipated savings from the optimizing for growth program.
2022, adjusted EBITDA is expected to increase to a range of 11112 5 billion.
Speaker 4: 2022, a justic EBITDA is expected to increase to a range of 1.1 to 1.125 billion, representing growth of 9 to 12%.
Representing growth of 9% to 12%.
Speaker 4: In spite of the gross margin decline, forecasted growth in adjusted Yvita exceeds net sales growth as we continue to improve profitability.
In spite of the gross margin decline forecasted growth in adjusted EBITDA exceeds net sales growth as we continue to improve profitability.
Speaker 4: As a percent of net sales, FGNA is expected to continue to decline while advertising remains relatively stable.
As a percent of net sales SG&A is expected to continue to decline while advertising remains relatively stable.
With our improvements in profitability.
Speaker 4: With our improvements in profitability, cash flow, and reduced leverage, we will provide guidance for adjusted EPS in 2022, as we begin to transition from adjusted E-PADOT.
Cash flow and reduce leverage we will provide guidance for adjusted EPS in 2022, as we begin to transition from adjusted EBITDA.
Speaker 4: From our 2021 base of $1.30, adjusted EPS is expected to increase to a range of $1.42 to $1.48 per share.
From our 2021 base of $1 30.
Adjusted EPS is expected to increase to a range of $1 42 to $1 48 per share.
Speaker 4: Adjusted EPS to benefiting from lower interest expense as we reduce debt in the near term, poorly upset by an expected increase in the adjusted tax rate compared to 2021.
Adjusted EPS benefiting from lower interest expense as we reduce debt in the near term, partly offset by an expected increase in the adjusted tax rate compared to 2021.
Speaker 4: With the debt paydown and refinancing actions we took in 2021, our fourth quarter interest expense represents a more normalized run rate going forward, subject to any future debt reductions or refinance.
With the debt pay down and refinancing actions, we took in 2021.
Our fourth quarter interest expense represents a more normalized run rate going forward subject to any future debt reductions or refinancings.
Speaker 4: Capital expenditures are forecast to be in the range of $175 to $200 million, an increase from prior year as we strategically invest to increase manufacturing capacity in our owned dolls and vehicle facilities to support anticipated growth and where we have a significant competitive cost advantage.
Capital expenditures are forecast to be in the range of $1 $75 million to $201 million an increase from prior year as we strategically invest to increase manufacturing capacity and our owned dolls and vehicles facilities to support anticipated growth and where we have a significant competitive <unk>.
Cost advantage.
With our marketplace momentum, we expect to start the year with strong top line performance, while margins will be negatively impacted by cost inflation.
Speaker 4: With our marketplace momentum, we expect to start to year with strong top line performance, while margins will be negatively impacted by cost inflation.
Our guidance takes into account the anticipated supply chain disruption that we are aware of today, but the subject to any unexpected supply chain disruption market volatility and other macroeconomic risks and uncertainties.
Speaker 4: Our guidance takes into account the anticipated supply chain disruption that we are aware of today for the subject to any unexpected supply chain disruption, market volatility, and other macroeconomic risk and uncertain.
Speaker 4: As he said, looking ahead to 2023, we are increasing our goal for 2023 net sales growth to high single digits in constant currency compared to the prior goal of mid-singles.
As Ivan said looking ahead to 2023, we are increasing our goal for 2023 net sales growth to high single digits in constant currency compared to the prior goal of mid single digits. Following two consecutive years of double digit inflation rates and costs.
Speaker 4: Following two consecutive years of double digit inflation rates in cost of good sold, we expect inflation to moderate in 2023.
Goods sold we expect inflation to moderate in 2023.
Speaker 4: On profitability, we have updated our 2020's goals and now expect to achieve an adjusted operating income margin of approximately 16 to 17% of net sales. We have made significant progress toward this goal in achieving 14% already in 2021.
On profitability, we have updated our 2023 goal and now expect to achieve an adjusted operating income margin of approximately 16% to 17% of net sales. We have made significant progress towards this goal and achieving 14% already in 2021.
In addition to the 2022 guidance for adjusted EPS, We were adding a new 2023 goal to exceed adjusted EPS of $1 90.
Speaker 4: In addition to the 2022 guidance for adjusted EPS, we're adding a new 2023 goal to exceed adjusted EPS of $1.90.
Speaker 4: This will be driven by top line growth, margin expansion, and use.
This will be driven by topline growth margin expansion.
And use of free cash flow.
Speaker 4: With the improvement in balance sheet metrics, we are rapidly approaching investment grade metrics, and we'll now share with you our near-term capital allocation priority.
With the improvement and balance sheet metrics, we are rapidly approaching investment grade metrics and we will now share with you our near term capital allocation priority.
Speaker 4: Our priorities are based on our expectation to continue to significantly improve cash flow going forward. The number one priority is
Our priorities are based on our expectation to continue to significantly improve cash flow going forward.
The number one priority is to drive organic growth.
Speaker 4: This will include strengthening core capability, such as direct to consumer, digital marketing, e-commerce, and expanding digital experiences, such as NFTs.
This will include strengthening core capability, such as direct to consumer digital marketing e-commerce and expanding digital experiences.
Ftes.
Speaker 4: We will also accelerate demand creation to drive category and geographic growth, as well as channel X.
We will also accelerate demand creation to drive category and geographic growth as well as channel expansion.
And we will make targeted strategic capital investments to increase our manufacturing capacity, where we have a significant competitive cost advantage.
Speaker 4: And we will make targeted strategic capital investment to increase our manufacturing capacity where we have a significant competitive cost advantage.
Our second capital allocation priority is to further reduce financial leverage in order to achieve and retain an investment grade rating.
Speaker 4: Our second capital allocation priority is to further reduce financial leverage in order to achieve and retain an investment grade rating.
Our target is a leverage ratio in the range of two to two five times debt to adjusted EBITDA, which we expect to achieve in 2020 to achieving an investment grade rating will provide us greater financial flexibility.
Speaker 4: Our target is a leverage ratio in the range of two to two and a half times debt to adjust a diva dot, which we expect to achieve in 2022. Achieving an investment-grade rating will provide us greater financial flexibility, access to additional liquidity, and reduce our cost of capital.
Access to additional liquidity and reduced our cost of capital.
Speaker 4: One example is being able to transition from our current asset-based credit facility to an unsecured credit facility supporting a commercial paper program, a flexible structure with more liquidity and lower cost.
One example is being able to transition from our current asset base credit facility to an unsecured credit facility supporting a commercial paper program.
<unk> structure with more liquidity and lower costs are.
Speaker 4: Our third priority with the benefit of a stronger balance sheet is to pursue M&A and other corporate development opportunities, which we believe will advance our strategy, improve our growth profile, and create economic value for shareholders.
Our third priority with the benefit of a stronger balance sheet.
Is to pursue M&A and other corporate development opportunities, which we believe will advance our strategy improve our growth profile and create economic value for shareholders.
Fourth we will repurchase shares as an effective and flexible capital deployment tool to manage our capital structure.
Speaker 4: Fourth, we will repurchase shares as an effective and flexible capital deployment tool to manage our capital structure.
Speaker 4: Under our current authorization, we have approximately $200 million of capacity.
Under our current authorization, we have approximately $200 million of capacity.
2021 has been another year of strong financial performance.
Speaker 4: 2021 has been another year of strong financial performance.
Speaker 4: We have made significant progress over the last four years. And as you know, I noted, our turnaround is now complete.
We have made significant progress over the last four years and as <unk> noted our turnaround is now complete.
Our guidance for 2022 and goals for 2023 reflect our momentum and confidence in our future performance.
Speaker 4: Our guidance for 2022 and goals for 2023 reflect our momentum and confidence in our future performance.
Speaker 4: We remain focused on executing our strategy and creating long-term shareholder value. Thanks.
We remain focused on executing our strategy and creating long term shareholder value.
Thanks for your time today.
Speaker 4: I will now hand it over to the operator for the Q&A.
I will now hand, it over to the operator for the Q&A.
Okay.
Thank you everyone will be started in just another minute here.
Yes.
Speaker 1: Ladies and gentlemen, to ask the question, you will need to press start in one on your telephone. To explore your question, press the pound key. Again, that's start one to ask the question. Please stand by while we compile the Q&A roster.
Ladies and gentlemen to ask a question you will need to press Star then one on your telephone.
So withdraw your question press the pound key again Thats star one to ask a question. Please standby, while we compile the Q&A roster.
Speaker 1: Our first question comes from the line of Fred Whiteman with Wolf Research. Your line is open.
Our first question comes from the line of Fred Wightman with Wolfe.
Your line is open.
Speaker 4: Hey guys, thanks for the question. I was hoping you could maybe just unpack, you know, what looks like a pretty big beat in the fourth quarter versus where you guys were guiding previously. Was the biggest surprise just maybe that shipments came in better than you were expecting, was consumer demand better, the pricing hit sooner than you expected, maybe just where you saw the most upside to expectations, X, X, X, X, and 3Q.
Hey, guys. Thanks for the question I was hoping you could maybe just unpack what looks like a pretty big beat in the fourth quarter versus where you guys. Regarding previously was the biggest surprise just maybe the shipments came in better than you were expecting was consumer demand better the pricing hit sooner than you.
Expected.
Just where you saw the most upside to expectations exiting <unk>.
Yes.
Speaker 5: Sure, I can start with that. I think the primary driver of the deed is our topical.
Sure I can I can start with that I think the primary driver of the beat is our top line performance and I think the notable thing about it is it.
Speaker 5: I think the notable thing about it is it was very broad-based across categories, across regions.
It was very broad based across categories across regions.
Speaker 5: gain share in the fourth quarter. That's our sixth consecutive quarter. And we were the number one manufacturer in the quarter as well. So just a really strong finish and ahead of our ex.
We gained share in the fourth quarter, that's our sixth consecutive quarter and we were the number one manufacturer in the quarter as well. So just a really strong finish and ahead of our expectations.
Speaker 3: And Fred, I would add that when we say broad base, this is in six of the seven categories, what we operate.
And Fred I would add that.
When we say a broad base. This is in six of the seven categories, where we operate in each of our power brands Barbie Hot wheels, Fisher price and American girl and.
Speaker 3: in each of our power brands, Barbie, Hot Wheels, Fisher Price, and American Girl, and also in three of the four regions where we operate. So very comprehensive, there was no one brand or category lifting, everything else, it was comprehensive, and just not just for the quarter, but the same for the full year. So strong, comprehensive performance across the world.
Also in three of the four regions, where we operate so.
Very comprehensive there was no one brand or category lifting everything else it was comprehensive.
Just not just for the quarter, but the same for the full year.
Strong comprehensive performance across the board.
Speaker 4: great and then is we think about barbie into next year that business was up twenty four percent this year i think anthony mentioned that that is uh... the all categories expected to grow in twenty two as well but how should we be thinking about barbie specifically is some of these new
Great and then as we think about Barbie into next year that business was up 24%. This year I think Anthony you mentioned that that is.
All categories expected to grow in 'twenty, two as well, but how should we be thinking about Barbie specifically as some of these new doll brands emerge right. We have monster coming back we have princess entering the portfolio and 23 should we be looking at this more from like a holistic doll portfolio perspective should we keep looking at Barbie is sort of a standalone.
Speaker 4: Doll brands emerge right we have months are coming back we have princess entering the portfolio in 23 Should we be looking at this more from like a holistic doll portfolio perspective should we keep looking at Barbie is sort of a standalone How would you suggest we evaluate the trajectory of that business going forward?
How would you suggest we evaluate the trajectory of that business going forward.
Okay.
Speaker 6: at credit's Richard um... you know first off bobby had you know what can only be described as a remarkable year i mean the growth buildings of nineteen percent
Hey, Brad it's Richard.
First off <unk> had.
What can only be described as a remarkable year.
The gross billings up 19% in the quarter.
Speaker 6: 24% for the year, you know, incredible momentum as it relates to the brand. I mean, this was the highest full year for Barview that we have on record.
24% for the year.
Incredible momentum as it relates to the brand I mean this was the highest full year for <unk> that we have on record.
Speaker 6: The stats are truly amazing. Number one overall, toy property globally. This is for both the fourth quarter and the full year, and this is also for the second consecutive year. And we were the number one US Doll property in each week in 2021 per NPV.
Thats a truly amazing number one overall toy property globally.
For both the fourth quarter and the full year and this is also for the second consecutive year and we were the number one U S style property and each week in 2021 per NPD.
Speaker 6: Clearly, you know, Barbie is a leader, not only in the industry, as a toy brand, but also clearly leading the doll business overall. The brand strength across multiple segments continue, primarily driven by the Mattel Playbook. Innovation, incredible innovation, fuel and growth. We've got particular momentum in our segments, color reveal and Barbie extra, and we're forecasting another year of growth for the brand.
Clearly <unk> is a leader not only in the industry as a toy brand, but also clearly leading the Dol business overall.
Brand strength across multiple segments continue.
Similarly, driven by the Mattel playbook.
Innovation incredible innovation fueling growth, we've got particular momentum in our segments color reveal in Barbie extra and we're forecasting another year of growth for the brand.
Speaker 6: Unbelievable marketing programs driven by our purpose, innovative toys that are connected to our system.
Believable marketing programs driven by our purpose innovative toys that are connected to our system.
Speaker 6: we're going to continue to expand brand experiences across multiple platforms. And we'll be sharing a lot more detail not only about the Barbie brand, but our doll portfolio overall.
Going to continue to expand brand experiences across multiple platforms and will be sharing a lot more detail not only about the Barbie brand, but our doll portfolio overall.
Speaker 6: as a leader in the industry, certainly Barbie is a key indicator, but we manage our business as a portfolio by category. And so building our brands to complement each other and work with each other to earn consumers interest and ultimately complement each other using our playbook together.
As a leader in the industry certainly Barbie is a key indicator, but we manage our business as a portfolio by category and so building our brands to complement each other.
And work with each other to earn consumers' interest and ultimately complement each other using our playbook together.
Speaker 6: Over the last several years, as you know, we've taken significant steps to transform the organization. Leadership in the dog category proves day in and day out that we are the best in class. And we will continue to do that and look forward to sharing a lot more details with you at our investor day upcoming on the 18th.
Over the last several years as you know we've taken significant steps to transform the organization leadership in the doll category proves day in and day out that we are the best in class.
And we will continue to do that and look forward to sharing a lot more details with you at our investor day upcoming on the ATM.
Great. Thanks, guys.
Thank you.
Speaker 1: Our next question comes from the line of Artin, Kertrayam with UBS. Yalana's open.
Our next question comes from the line of Artem <unk> with UBS. Your line is open.
Speaker 7: Hi everyone, this is Arpinae Congress on the Stellar Quarter.
Hi, everyone. This is our peanut.
<unk> done a stellar quarter.
Yeah.
Thank you thank you Rob.
Speaker 7: So guidance ranges that are definitely sort of above our expectations. I'm just trying to understand.
So guidance ranges that are definitely above our expectations I'm just trying to understand.
Speaker 7: Where is this resounding visibility coming from, further into 2023? Is it because of some of the pipeline of entertainment and content that you have, or I guess could you maybe share your views on what you think the industry does this year in retail, given some of the commentary from your competitor earlier this week on the industry, perhaps being Saturdays and down for the year, and then I have a quick follow up.
The resounding visibility coming from further into 2023 is it because of some of the pipeline of entertainment and content that you have or I guess could you maybe share your views on what you think the industry does this year in retail.
Given some of the commentary from your competitor earlier this week on the industry perhaps.
Sideways on us down for the year and then I have a quick follow up.
Speaker 3: Let me start and talk about the industry because it's an important context. So, you know, we expect the industry to continue to grow.
Let me start then talk about the industry.
Because it is an important context.
We expect the industry to continue to grow the toy industry is a growth industry and it's been growing for the last 10 consecutive years.
Speaker 3: The industry is a growth industry. It's been growing for the last 10 consecutive years. It demonstrated resilience during the pandemic. It's been very important in a strategic category for retailers. It's experiential. It drives traffic. Very high engagement.
Demonstrated resilience during the pandemic.
It's Ben.
Very important and a strategic category for retailers, it's experiential it drives traffic very high engagement.
Speaker 3: The items are not expensive and parents forever would spend money on children, especially when it comes to quality products.
The items are not expensive and parents forever will spend money on children, especially when it comes to quality product and trusted brand as you know the industry grew per NPD, 11% in 2029% in 'twenty one and this is in spite of the major supply chain disruptions and written closure and important to us.
Speaker 3: and trusted brand. As you know, the industry grew up in Pd 11% in 2020, 9% in 21, and this is in spite of the major supply chain disruptions and retail closure. And, you know, important to say that your monitor is expecting the industry to grow at 5.4% keg or to 2025 and reach $100 billion in 23.
Said that your reminder, is expecting the industry to grow at five 4% CAGR through 2025 and reach $100 billion in 'twenty three.
Speaker 3: With this environment, we expect to continue to grow ahead of the industry and gain share and continue to perform well across different categories and strong brands.
Within this environment.
We.
Expect to continue to grow ahead of the industry and gained share.
And continued to perform well across.
Different categories and strong brands.
Speaker 3: Anthony will give you a bit more color on the actual drivers, but it's important to frame the environment where we expect growth and then compound that growth with our own performance.
Anthony will give you a bit more color on the actual drivers, but it's important to frame the environment, where we expect growth.
Then compound that growth with our own performance.
Speaker 5: Yeah, our net sales guidance and goals for 2023 reflect our expectation that will continue to outpace the industry. You know, specifically in 2022, 8 to 10 percent net sales growth, you know, given right strength across our portfolio. No, continue growth in our leader categories, growth in our power brand.
Our net sales guidance and goals for 2023.
Reflect our expectation that we'll continue to outpace the industry specifically in 2022, 8% to 10% net sales growth given great strength across our portfolio no continued growth and they're a leader category growth in our power brands growth in our challenger categories driven.
Speaker 5: Growth in our challenger categories driven by action figures, benefiting from theatrical tie-ins, Jurassic World in light year, and also in building sets driven by innovation and expanded distribution.
By accident figures benefited from theatrical tie ins Jurassic role in light year and also in building sets driven by innovation and expanded distribution, we expect to get off to a strong start and expect strong top line growth in the first quarter of 2022, and then looking to 2023 as you saw.
Speaker 5: We expect to get off to a strong start and expect strong top-lying growth in the first quarter of 2022. And then looking to 2023, as you saw, we increased our goal to grow net sales now high single digits in constant currency. Again, continued growth in our leader categories and power brands.
We increased our goal to grow net sales now high single digits in constant currency again continued growth in our leader category. The megabit and power brands. We also have a pipeline of catalog IP coming for example, monster high and Matchbox and also the strength of our entertainment partnerships with Disney Princess and frozen.
Speaker 5: We also have pipeline of catalog IP coming, for example, Monster High in Matchbox.
Speaker 5: and also the strength of our entertainment partnership with Disney Princess and Frozen coming online Ben as well.
Online then as well.
Speaker 7: That's very helpful. Thank you. And then just a quick second question. What you said under a capital allocation with sort of interesting in terms of M&A, I guess what direction are you thinking? What do you think is a great area for you where you can also make sort of one plus one equal three? I also so buybacks in the slide deck and no mention of dividend, which is historically being the direction this board has moved.
That's very helpful. Thank you and then just a quick second question. What you said on the capital allocation was sort of interesting in terms of M&A I guess, what direction are you thinking what do you think is there.
Grey area for you where you can also make one plus one equal three I also some buybacks in the slide deck of no mention of dividend, which has historically been the direction. This board has Luke.
Speaker 7: based on where the stock is that does make sense to me, but just anything more you could comment on the, on M&A. Thank you.
Based on where the stock is that does make sense to me, but just anything more you could comment on M&A. Thank you.
Speaker 3: It is obviously pretty much you to talk specifically, but I mean, the approach is, and the opportunity is to pursue M&A areas that are creative, to drive growth for the company, corporate development opportunities that we believe can advance what we do, improve our growth profile and overall create economic value for shareholders.
Yes. It is obviously premature to talk specifically.
But.
The approach is and the opportunity is to pursue M&A areas that accretive.
To drive growth for the company.
Corporate development opportunities that we believe can add.
Advance, what we do improve our growth profile and overall create.
Economic value for shareholders.
Speaker 3: Our balance sheet is about to become another growth driver.
Our balance sheet is about to become another growth driver.
Speaker 3: The capacity that we have now, the strength, at 2.6 leverage, we're obviously very close to achieving investment grade credit metrics, and that will give us a lot more optionality and the ability to leverage our balance sheet for additional growth opportunities.
The.
The capacity that we have now the strength at two six.
Average, we're obviously very close to achieving investment grade credit metrics and that will give us a lot more optionality and the ability to leverage our balance sheet for additional growth opportunities.
Speaker 5: And just to add, you're correct, our near-term priorities do not include reinstating a dividend. We believe our approach to capital allocation provides us greater financial flexibility to manage our capital structure to be able to invest in growth and to create value for our shareholders. Thank you, and congrats.
To add ARPA.
Correct. Our near term priority is do not include reinstating a dividend we believe our approach to capital allocation provides us greater financial flexibility to manage our capital structure to be able to invest in growth and to create value for our shareholders.
Thank you and congrats again on the strong quarter.
Thank you operator.
Speaker 1: Thank you. Our next question comes from the line of Steph Wistick, with Jeffrey Silan, is open.
Thank you. Our next question comes from the line of Steph Wissink with Jefferies. Your line is open.
Speaker 8: Hi, thank you. Good afternoon, everyone. I'm just going to ask the question that I'm getting the most after the close today is just to try to sync up the POS upload single with the sales of 10% and I think the inventory Anthony that you mentioned was almost 50% on the balance sheet at the end of the year. Just to help us think through the triangulation of those measures and kind of have the trade inventory is with your comments that you expect to start the year quite strong and to hit that 8 to 10% top line growth.
Hi, Thank you good afternoon, everyone I'm just going to ask the question that I'm getting the most after the close today is just to try to think that the Pos up low single with the sales up 10% and I think the inventory Anthony that you mentioned was up almost 50% on the balance sheet at the end of the year just help us think through.
The triangulation of those measures and kind of have the trade inventory is with your comments that you expect to start the year quite strong in to hit that 8% to 10% top line growth.
Speaker 5: Yeah, let me start with the inventory situation. I'll start with retailer inventories. Because I think there's retailer inventories and then there's our own inventories. In terms of retailer inventories, your end retail inventory was up in dollars. That includes in transit.
Yes, let me start with the inventory situation and I'll start with retailer inventories. So I think theres retailer inventories and then there is our own inventory in terms of retailer inventories.
Retail inventory was up in dollars net includes in transit.
Speaker 5: but they were down in the weeks of supply. So we believe that positions are very well for the early part of 2022. And that retailer inventory is healthy. And again, positions as well to deliver another strong growth year. And as I said a moment ago, we expect to get off to a strong start in 2022.
But they were down in the weeks of supply. So we believe that positions us very well for the early part of 2022 and that retailer inventory is healthy and again positions us well to deliver another strong growth year and as I said, a moment ago, we expect to get off to a strong start in 2022 now in terms of.
Speaker 5: Now in terms of our own inventory, you know, we're up, right? We ended last year at 528 million, and that increased to 777 million this year, and there's a couple of reasons for that. One is the significant level of cost inflation that we've experienced is on the balance sheet.
Our owned inventory.
Right. We ended last year at $528 million and that increased to $777 million. This year and Theres. A couple of reasons for that one is the significant level of cost inflation that we've experienced this on the on the balance sheet and we also increased inventory to support our future growth.
Speaker 5: And we're also increased inventory to support our future growth.
Speaker 5: Again, we believe our own inventory is very healthy. We're guiding to a strong top line growth in 2022, expect to get off to a strong start in the first quarter. And then with respect to the inventory piece, again, it's in the inventory, which is why we said it'll have a significant negative impact on our first half gross margin performance.
Again, we believe our owned inventory is very healthy.
We're guiding to a strong topline growth in 2022, I expect to get off to a strong start in the first quarter and then with respect to the inventory piece again, it's in the inventory, which is why we said it will have a significant negative impact on our first half gross margin performance.
Speaker 8: Okay, then just as a follow up thinking about POS, if you can just help us reconcile usually when we see shipments exceeding POS in the fourth quarter, there's usually a digestion cycle in the trade for several months, but you're expecting to kind of ship ahead of POS again, so talk a little bit about just giving us a level of comfort that there's not excess inventory moving through.
Okay, then just as a follow up thinking about Pos if you can just help us reconcile usually when we see shipments exceeding Pos in the fourth quarter, there's usually a digestion cycle.
In the trade for several months.
But you are expecting to kind of ship ahead of Pls again to talk a little bit about just giving us a level of comfort that there's not excess inventory moving through.
Speaker 5: Yeah, I think if you look over the full year, it's relatively, you know, in line. We came in into the year below, we ended the year above, and we're down in weeks of supply, which we believe physicians does well. You know, when you talk about the POS, you know, we're very happy with consumer take-away, especially the all-important holiday season. And in the context of Q4, POS was up. We gained share and finished as the number one manufacturer globally in a quarter per NPD.
Yes, I think if you look over the full year, it's relatively in line we came in to.
For the year below we ended the year above and we're down in weeks of supply, which we believe positions us well when you talk about the Pos we're very happy with consumer takeaway, especially the all important holiday season and in the context of Q4 POS was up we gained share and finished as the number one manufacturer of globe.
<unk> in the quarter per NPD.
Speaker 5: you know, and POS on a fuller basis off low double digits, again gaining share for the second consecutive year, and expect strong growth in 2022. And, you know, I think we're all, you know, we're very confident in our inventory positions and in our growth outlook and the momentum that we have in the market. Thank you.
And Pos on a full year basis up low double digits again, gaining share for the second consecutive year and we expect strong growth in 2022, and I think we're all we're very confident in our inventory positions and in our growth outlook and the momentum that we have in the market.
Okay, great. Thank you.
Thank you.
Speaker 1: Next question comes from the line of Garrett Johnson with BMO Capital Market. Yolanda's up.
Our next question comes from the line of Garrick Johnson with BMO capital markets. Your line is open.
Speaker 2: All right, good afternoon. Thank you very much. Hey, Richard, I was gonna ask a question on Disney Princess. It's a big undertaking and I know you're the best in the business in dollars. But this is still resources and human and intellectual capital all the way from your other dollar lines, most notably the relaunch of Monster High.
Alright, good afternoon. Thank you very much.
Richard.
Can I ask a question on Disney Princess and that's a big undertaking and I know you are the best in the business and <unk>.
But does this does this still resources and human and intellectual capital away from your other doll lines, most notably the re launch of Monster high.
Thanks Derek.
Speaker 6: Thanks, Eric. The way to think about this is, you know, our restructure several years ago by Category.
The the way to think about this as a restructure several years ago by category.
Speaker 6: really leverages the competency and the talent that we have in the context of working together across the portfolio and our proven success if you will particularly with barbie um... you know you look at our playbook which is been executed incredibly well on the barbie brand is almost a case study and in that context you start to see not only in the doll portfolio but across the entire michelle portfolio the execution against that playbook really work hard for us
Really leverages, the competency and the talent that we have in the context of working together across the portfolio.
Our proven success, if you will particularly with Barbie.
You look at our playbook, which has been executed incredibly well on the Barbie brand as almost a case study and in that context do you start to see not only in the doll portfolio, but across the entire <unk> portfolio the execution against that playbook really work hard for us.
Speaker 6: As you know, we have an incredible portfolio of dolls, and in that context, we work hard to complement them and complement them with each other. The Disney Princess and Frozen franchise coming back to Mattel is an extraordinary moment for the company. They're back because nobody designs, develops, manufactures, or markets dolls better than Mattel.
As you know we have an incredible portfolio of dolls and in that context, we work hard to complement them and complement them with each other the Disney Princess and frozen franchise coming back to Mattel is an extraordinary moment for the company. They are back because nobody designs develops manufactures.
<unk> or market styles, better than Mattel hands down and we can't wait to unveil and can't wait to apply our playbook approach and we will create as you can imagine incredibly innovative and inspiring lines for.
Speaker 6: hands down and we can't wait to unveil and can't wait to apply our playbook approach and we'll create as you can imagine incredibly innovative and inspiring lines.
Speaker 6: for these iconic stories and characters. It's going to be a terrific reunion and we're already very, very excited to present.
These iconic stories and characters, it's going to be a terrific reunion and we're already very very excited to present.
And Gary Great. Thank you.
Speaker 3: Garic, I just, just try the couple of words. You know, it is, it is a great...
Eric I, just just to add a couple of words.
It is it is a great one.
Speaker 3: Win for Mattel. Disney, Princess and Frozen are together one of the crown jewels of the world Disney company.
And for Mitel.
Disney Princess and frozen.
Together, one of the Crown jewels of the Walt Disney Company.
Speaker 3: As you know, a huge wealth of characters and storylines.
As you know a huge wealth of characters and storylines and it's important for Mattel for three reasons.
Speaker 3: And it's important for Mattel for three reasons. It's Gaza, but for you as Richard mentioned, as the leader in the Dal category.
Our portfolio is reached.
You had mentioned as the leader in the adult category. It's also going to be an accretive growth driver both in terms of topline and profitability starting in 'twenty three and also strengthen our position as the partner of choice as we continue to build our relationships with the major entertainment companies. So obviously it is.
Speaker 3: It's also going to be on a creative growth driver, both in terms of top line and profitability, starting in 23.
Speaker 3: And also, it strengthened our position as a partner of choice as we continue to build our relationships with the major entertainment companies. So, obviously, this is a symbolic milestone in our transformation strategy, but important to say we do expect to grow it from the current levels.
This is a symbolic milestone in our transformation strategy, but important to say, we do expect to grow from the current levels.
Speaker 3: We have the capabilities, we have the expertise, and we definitely know how to develop and grow evergreen franchises. So this is another big driver, and we do expect to grow it from the current level.
We have the capabilities we have the expertise.
And we definitely know how to develop and grow evergreen franchises. So this is another big driver and we do expect to grow it from the current levels.
Speaker 2: Great, thank you. I'd like to ask one more question, a little bit different topic here. We're senior retailers, Delay Spring, set dates. How does that impact your outlook for the first half?
Great. Thank you and I'd like to ask one more question a little bit different topic here.
We're seeing retailers do a spring set.
How does that impact your outlook for the first half.
Speaker 5: Yeah, I don't see it having a significant impact relative to our expectations. You know, as we said, we expect to get off to a strong start, top line in the first quarter, although our growth margins will be impacted by inflation. But I think we're well positioned. And I'll just add that, you know, as our new product is hitting shelves, we are very pleased with the performance. And we're in a very good position as we start the year.
Yes, I don't see it having a significant impact relative to our expectations as we said.
We expect to get off to a strong start topline in the first quarter, although our gross margins will be impacted by inflation, but I think we're well positioned and.
I'll just add that as our new product is hitting shelves. We are very pleased with the performance.
And we're in a very good position as we start the year.
Great. Thanks Brooks.
Thanks, Greg.
Speaker 1: Thank you, our next question comes from the line of Mike Eng with Goldman Sachs. You'll learn it though.
Thank you. Our next question comes from the line of Mike <unk> with Goldman Sachs. Your line is open.
Speaker 9: Hi, good afternoon, thanks for the question. I had a couple of follow-ups to the Disney Princess question.
Hi, Good afternoon. Thanks for the question I had a couple of follow ups to the Disney Princess questions.
Speaker 9: Was that the primary driver of the improvement in the 2023 revenue guidance from missing those to high singles? And then if I recall correctly, I think back in...
Was that the primary driver of the improvement in the 2023 revenue guidance from mid singles to high singles.
And then if I recall correctly.
I think back in.
Speaker 9: 2014, you know, Princess was an excess of $500 million. Do you see an opportunity to get back to those levels, you know, if not in 2023 over time? What does that ramp up process look like? Thank you.
2014, Princess was in excess of $500 million do you see an opportunity to get back to those levels. If not in 2023 over time, what does that ramp up process look like thank you.
Speaker 3: Yeah, this is one of the drivers that gives us the building blocks for the goals we provided for 23.
Yes. This is one of the drivers.
That gives us.
The building blocks for the guidance, we provided for 2003.
Speaker 3: So it's not the only reason, but clearly it adds up to our strength and portfolio.
So it's not the only reason, but clearly it adds up to strength and portfolio and as it relates to size, we havent provided.
Speaker 3: And as it relates to size, we haven't provided specific numbers at this point. We don't do that by specific brands, but as I mentioned, we do expect it to grow from the current levels.
Specific numbers at this point, we don't do that by by specific brands, but as I mentioned, we do expect it to grow from the current levels.
Speaker 3: We believe we have unique school sets and capabilities and proven track record and a platform that is going that is getting stronger and stronger by the day and we expect to absolutely exceed the current levels of
We believe we have.
Exclusives and capabilities and proven track record and a platform that is growing.
Getting stronger and stronger by the day.
And we expect to absolutely exceeds the current levels of performance.
Speaker 9: Great, thank you. And if I could just have one follow up. The 16 to 17% margin outlook, you know, that's very strong. You also did a really good job managing op-x in the quarter. I was just wondering how, you know, if you could expand on that a little bit, particularly in the inflationary market that we're currently in. You know, is it simply the cost savings program? Is it something else? Any color there would be helpful.
Great. Thank you and if I could just have one follow up.
The 16% to 17% margin outlook. That's very strong you also did a really good job managing opex in the quarter I was just wondering how are you.
If you could expand on that a little bit, particularly in the in the inflationary market that we're currently in.
Is it simply the cost savings program is it something else any help any color there would be helpful.
Speaker 5: Sure, I can comment on that. As we said, the goal is to achieve an operating income margin on a adjusted base of 16 to 17% of net sales. And we've made really great progress finishing 2021 at 14%. I say there's a combination of drivers. Clearly, 2021 and 2022 have been impacted by high levels of inflation. We expect that to moderate in 2023.
Sure I can comment on that as we said the goal is to achieve operating income margin on an adjusted basis, 16% to 17% of net sales and we've made really great progress, finishing 2021, 14% I would say there was a combination of drivers clearly 2021 and 2022.
<unk> had been impacted by high levels of inflation, we expect that to moderate in 2023.
Speaker 5: We also are also a great start on our optimizing for growth program targeting $250 million of savings by 2023. That will be in one of the key drivers to the margin expansion.
We also are off to a great start on and optimizing for growth program targeting $250 million of savings by 2023 that will be one of the key drivers to the margin expansion. We also will experience with our high level of top line growth the benefit of fixed cost absorption as we see.
Speaker 5: We also will experience with our high level of top line growth the benefit of fixed cost absorption as we scale the business.
<unk>.
The business.
Speaker 5: And lastly, we expect the combination of pricing and cost savings to exceed inflation over time and to contribute to margin expansion.
And lastly, we expect the combination of pricing and cost savings to exceed inflation over time and to contribute to margin expansion.
Great. Thank you.
Speaker 1: Good luck. Thank you. Thank you. And ex-question comes from the line of Megan Alexander with JP Morgan. Yelonne is open.
Youre welcome.
Thank you.
Next question comes from the line of Megan Alexander with Jpmorgan. Your line is open.
Speaker 8: Hi, thanks very much. I was hoping you just talk a little bit more about the cadence of gross margin over there. You know, you spoke to the pressure in the first half, but would you accept, you know, one cue to be paid pressure from the inflation perspective and kind of sequentially improve from there? And then if you look at the second half, can you recapture either the cost inflation from last year, such that gross margin could be up in the back half?
Hi, Thanks, very much I was hoping you could just talk a little bit more about the cadence of gross margin over the ear you spoke to the pressure in the first half, but would you expect <unk> to be paid pressure from inflation perspective, and kind of sequentially from there and then if you look at the second half can you recapture the cost inflation from last year such that our.
Biogen can be up in the back half.
Speaker 5: yes so let me uh... give some context first on the inflation environment as we pointed out we continue to be impacted by high levels of cost inflation which which is actually expected to have a more significant margin impact in twenty twenty two then the four hundred basis point impact in 2021
Yes, So let me give some context first on the inflation environment.
As we pointed out we've continued to be impacted by high levels of cost inflation, which is actually expected to have a more significant margin impact in 2022, then the 400 basis point impact in 2021 now with further details on that inflation about more than half of it right is on ocean freight.
Speaker 5: Now further detail is out of that, on that inflation, about more than half of it, right? It's on ocean freight. The balance is a combination of residents and zinc, as well as higher than usual wage inflation in some of our supply chain markets.
The balance is a combination of resident and zinc as well as.
The higher than usual wage inflation in some of our supply chain markets now on a full year basis, we expect to be able to offset most of that inflation.
Speaker 5: Now on a four-year basis, we expect to be able to offset most of that inflation, you know, with pricing actions, the scale benefit of top-line growth and cost savings.
Pricing actions the scale benefit of topline growth and cost savings on the pricing front, we did take pricing in 2021.
Speaker 5: On the pricing front, you know, we did take pricing in 2021, it had a 150 basis point positive impact on Q4. So we'll get a carry over benefit from that. We've also made assumptions regarding additional pricing actions in 2022. Not going to get into the specifics today, but that's implied in our guidance as well.
150 basis point positive positive impact in Q4, so we'll get a carryover benefit from that we've also made assumptions regarding additional pricing actions in 2022 now going to get into the specifics today, but that's implied in our guidance.
As well and as we said earlier alright with the amount of inflation, we have on our balance sheet at the end of 2020, a little bit more pressure on the first half relative to the second half.
Speaker 5: And as we said earlier, with the amount of inflation we have on our balance sheet at the end of 2021, a little bit more pressure on the first half relative to the second half.
Speaker 7: That's helpful. And then I guess just to follow up to Michael's last question in terms of getting to the 16 to 17% operating margin next year, do you still expect expansion on gross margins, there's 2020 levels of close to 49%.
That's helpful. And then I guess, just a follow up to Michael's last question in terms of dialogue to the 16 and 17% operating margin next year.
Gross margin versus 2020 levels.
9%.
Speaker 5: Yeah, we're not getting into specific numbers, but we expect gross margin expansion in 2023.
Yes, we're not going to get into.
Specific numbers, but we expect gross margin expansion in 2023.
Yes.
Great. Thank you.
Thank you.
Speaker 1: And next question comes from the line of Drew Crombs with Typhil, Yelonne, it's all.
Our next question comes from the line of drew Crum with Stifel. Your line is open.
Speaker 10: Thanks, guys. Good afternoon. I'm wondering if you could provide an update on Monster High, the reboot of that brand, where you are in terms of the content production and launch, and what the product roadmap looks like for that brand, and then I got to follow.
Okay. Thanks, Hey, guys. Good afternoon, I'm wondering if you could provide an update on monster high rebooted that brand, where you are in terms of the content production and launch and what the product roadmap looks like for that brand and then I got a follow up.
Speaker 6: Yeah, sure Drew. We're incredibly excited to introduce, or reintroduce this brand. We're gonna be launching it late in 2022 and we believe Launcher High will be a meaningful growth driver for the company in 2022 and beyond. We have a terrific lineup of live action and animated content to support the launch with our partners at Nickelodeon.
Yeah sure drew.
We're incredibly excited to introduce or reintroduce this brand we're going to be launching it late in 2022.
And we believe monster high will be a meaningful growth driver for the company in 2022 and beyond.
Have a terrific lineup of live action and animated content to support the launch with our partners at Nickelodeon.
Speaker 6: We're not going to provide obviously specific numbers for it, but it's got incredible legacy and a fan base that we're looking to excite as well as introduce to new audiences. We'll be utilizing our playbook to amplify the brand. Course brand purpose, design led innovation, incredible cultural relevance and partnerships that are going to be announced, and lastly, execution excellence.
We're not going to provide obviously specific numbers for it but it's got incredible legacy and a fan base that we're looking to excite as well as introduce to new audiences will be utilizing our playbook to amplify the brand of course brand purpose design led innovation incredible cultural relevance and <unk>.
Partnerships that are going to be announced and lastly execution excellence.
Speaker 6: important to say, you know, that the brand purpose of this brand is really important.
I want to say.
The brand purpose of this brand is really important it is to foster a more accepting world where everyone is proud to be their authentic self and.
Speaker 6: It's to foster a more accepting world where everyone is proud to be their authentic self. And while these are just words, they're really culturally relevant and important in relation to diversity and inclusivity and to consumers overall today. So we're really excited. The brand is more relevant than ever. There's a lot more to share and to come at our analyst day, but we couldn't be more excited about it.
These are just words, they were really culturally relevant and important in relation to diversity and inclusivity and to consumers. Overall today. So we're really excited the brand is more relevant than ever there is a lot more to share and to come at our analyst day, but we couldnt be more excited about it.
Speaker 10: Thanks for the net Richard and I don't want to ask the margin question maybe a little bit differently here Anthony
Thanks for that Richard and then I just wanted to ask the margin question, maybe a little bit differently here Anthony.
Speaker 10: The next sales guidance through 23 suggests you will pass.
The net sales guidance through 'twenty. Three suggests you will past the peak set in 2013 in that year, you guys did an 18% EBIT margin.
Speaker 10: the peak set in 2013 and that year you guys is an 18% EBIT margin. Your guidance for 23 is about 100 to 200 base points below that. This conservatism is a gross margin and is the 16 to 17% a cap or do you see upside to that longer term?
Your guidance for 'twenty three is about 100 to 200 basis points below that.
Is this just conservatism is it gross margin and as the 16% to 17% of cap or do you see upside to that longer term.
Speaker 5: Yeah, first, let me just clarify that these are goals for 2023, not guidance, and we're factoring our current expectations.
Yes, first let me just clarify that these are goals for 2023, not not guidance and we're factoring.
Current expectations.
Speaker 5: And the outlook, you know, for, as I said before, the outlook, you know, for that margin goal includes a couple of assumptions. One is that, you know, following that significant inflation in 21 and 22, that inflation will moderate in 2023.
And the outlook for as I said before the outlook for that margin goal.
It includes a couple of assumptions one is that following that significant inflation in 'twenty, one and 'twenty two that inflation will moderate.
In 2023.
Speaker 5: implied in our guidance in 2022 is some margin expansion but not significant.
Implied in our guidance in 2022.
Margin expansion, but not significant.
Speaker 5: And then, as I said before, the continued benefit of our optimizing for growth programs, some carry over benefit of pricing from 22 to 23, that will see growth margin expansion and will continue to...
And then as I said before the <unk>.
<unk> benefit of our optimizing for growth program some carry over benefit of pricing from 22 to 23.
That we will see gross margin expansion and we will continue to scale, our SG&A and continue to see declines in SG&A as a percent of sales.
Speaker 5: scale our S-GNA and continue to see declines in S-GNA as a percent of sales. And then lastly, that's our goal. I would not say it's a cap, it's a goal at this point. And we have high confidence that we can get to that rate.
And then lastly, thats our goal I would not say, it's a cap it's a goal at this point.
And we have high confidence that we can get to that rate.
Okay. Thanks, guys.
Thank you.
Speaker 1: Ladies and gentlemen, due to the interest of time, our final question comes from the line of a little pateal. With pateal, your line is open.
Ladies and gentlemen, due to the absence of time. Our final question comes from the line of <unk> Patel.
With Mcgill your line is open.
Speaker 10: All right, thanks for taking my question and congrats on the great year. I wanted to follow up on the CAPEX guidance. The low end of 175 million is 25 million above 2021 spend. So I wanted to know where the bulk of that CAPEX is being allocated.
Hi, Thanks for taking my question and congrats on the great year.
I wanted to follow up on the Capex guidance. The low end of $175 million is $25 million above 2021 spend so I wanted to know where the bulk of that capex is being allocated.
Speaker 5: Sure, I can take that. You know, as we said, you know, the 2022 guidance is for CAPEX in the range of 175 to 200, and that's an increase from, you know, where we were in 2021.
Sure I can take that.
We said that 2022 guidance for Capex in the range of $1 75 to two on it and Thats an increase from where we were in 2021 and really reflects strategic investments to increase manufacturing capacity in our owned dolls and vehicles facilities really to support the anticipated high <unk>.
Speaker 5: and really reflects strategic investments to increase manufacturing capacity.
Speaker 5: in our owned dolls and vehicles facilities really to support the anticipated high level of growth. And these are areas where we have a very significant competitive cost advantage.
The growth and these are areas, where we have a very significant competitive cost advantage and while we're committed to a capital light model, our scale and capabilities give us that cost advantage and this this strategic investment is expected to increase productivity and yield a very.
Speaker 5: And while we're committed to a capital-like model, our scale and capabilities give us that cost advantage. And this...
Speaker 5: this strategic investment is expected to increase productivity and yield a very highly accretive return on invested capital. Gotcha. Okay. Okay. That's all.
Very highly accretive return on invested capital.
Got you Okay. That's all I had thanks.
Yes.
Thank you.
Speaker 1: I would now like to turn the call back over to you know on Crafts, Chairman and CEO for closing remarks.
I would now like to turn the call back over to <unk>.
<unk>, chairman and CEO for closing remark.
Speaker 3: Thank you, operator, and thanks to all of you for your questions and interests in Mattel. In summary, 2021 was an exceptional year for the company.
Thank you operator, and thanks to all of you for your questions and interest in Marseille in summary, 2021 was an exceptional year for the company.
Speaker 3: Our turn around is now complete. We are in growth mode.
Our turnaround is now complete we are in growth mode.
Speaker 3: We expect to continue to grow in game market share in 2022 and 2023 and are not stopping there. We look forward to sharing new details on our plans and growth strategy at our virtual analytics presentation on Friday, February 18th.
We expect to continue to grow and gain market share in 2022 and 2023.
Not stopping there we will.
Look forward to sharing more details on that.
Upon our plans and growth strategy at our virtual analyst presentation on Friday February 18th.
Speaker 3: And finally, if your weekend plans include watching the Super Bowl on Sunday, please take a look at the Barbie Big Game Baby in Rocket Homes and Rocket Mortgage Commercial. This is in the second quarter. Don't miss it. It's going to be fun and I'm sure you'll enjoy it. Well, now turn it back today. Thank you. They take it from here.
And finally, if you look in plans include watching the Super Bowl on Sunday.
Let's take a look at.
Bobby Big game, Debbie in rocket homes and rocket mortgage commercial.
This is in the <unk>.
Second quarter.
It is going to be fine and I'm sure you'll enjoy it.
Well now turn it back to Dave. Thank you Dave take it from here.
Speaker 2: Thanks, Anon. And thank you, everyone, for joining the call today. The replay of this call will be available via webcast and audio, beginning at 8.30 PM Eastern Time today.
And thank you everyone for joining the call today.
The replay of this call will be available via webcast and audio beginning at 830 PM Eastern time today.
Speaker 2: The webcast link can be found on our investor page, or for an audio replay, please dial 1-404-537-3406 with the passcode being 329-9196. Thank you for participating.
The webcast link can be found on our investor page or for an audio replay. Please dial 1404, 537 3406 with the pass code being three to 990 196.
You for participating in today's call.
Speaker 1: Ladies and gentlemen, just concludes today's conference call. Thank you for your participation. You may now disconnect.
Ladies and gentlemen, this concludes today's conference call.
For your participation you may now disconnect.
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