MAT - Earnings call transcript Q1 2019

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Operator

Good day, ladies and gentlemen, and welcome to the Mattel First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder this conference is being recorded. I would now like to introduce your host for today's call, Mr. Investor of Head Zbojniewicz, Relations. Dave Mr. begin. Zbojniewicz, you may

Dave Zbojniewicz

Thank everyone. you, And good operator. afternoon,

and Mattel’s are President Chief Officer; Chief today me Chairman Officer. and Euteneuer, Financial Ynon Operating Mattel’s Joining Dickson, Kreiz, and Mattel’s Richard Executive Chief Joe Officer;

Mattel’s you financial first results. As quarter XXXX we this afternoon, know, reported

have our for questions. We will we Ynon, slide discussion Joe take your on Richard help a with then guide we today, Joe providing Ynon and you begin and and will To presentation. our today’s commentary call with results provided provide time to

earnings sales Our constant non-GAAP of and will administrative call the stated EBITDA discussion, or amortization sales gross sales, the profit release loss income Please we slide reorganized before structure. margin, adjusted presentation revenues that and EBITDA, our share, XXXX, adjusted adjusted on adjusted expenses, financial adjusted sales interest modified structure first earnings currency. reference loss, figures regional currency. depreciation international this and and gross referenced gross measures, reporting by or or categories in including reporting In and selling quarter and and constant present operating adjusted other earnings be note, our gross per

corporate the is sales non-GAAP disclosures structure, in can and current the be corporate.mattel.com. period In addition, and have by each information been release the sales documents XXXX. our Report regional period brand. slide our are Investors have as Note the website, section earnings to to first earnings international on included to available Regulation provided financial and Mattel's supplemental Quarterly that the reclassified release conform Further required of the found of detail to in well The we quarter the measures regarding Prior for G regarding are as both presentation XX-Q the presentation. amounts by gross XX brands category, Form in included changes to exhibits made in

certain as information these from and business, XXXX that Annual on available filings call risks Form of remind of our Mattel statements statements. this I’d we make obligation expressly describe currently section with well other in statements Reports required our our and Form the our based These in as accompanying materially Before in include could forward-looking presentation and Risk forward-looking as statements. results lines. does other XX-K, not we to so, differ to release those public statements relating XXXX statements brands may the the product subject a the made and of begin, some number on you like are during uncertainties to to performance in our forward-looking XX-Q, law. cause update SEC projected they call, by our time-to-time, from uncertainties any to of We the significant and actual that Factors are do on earnings Quarterly except disclaims the Report future

like over the I’d Ynon. Now, turn to to call

Ynon Kreiz

and demonstrating results. a in the The quarter you XXXX momentum for our reflected strategy, our progress in profitability improvement line. significant execution top continued first Thank joining a of earnings solid is and positive meaningful was our It another quarter, operating strong in in has call. performance our everyone exiting

to ,as company. resilience and a is we commitment, of a the and IP-driven be toy multi-year high-performing still lot continue organization an work is this into turnaround transform While to by Mattel there of I inspired capabilities do, our

our top profitability to IP mid set and on and goals regain results the for a value quarter line to restore to the in remain the track the first short to Our full in and long-term. growth achieve foundation mid-term our year capture solid we from

foreign exchange including “R” may in a comparisons number environment the in well Easter Us as did well Toys evolving face the of quarter first terms of as small and seasonally liquidation. the we the adverse the While due of be timing retail revenues, to of

P&L. across first with improvement significant expectations exceeded quarter results Our the

highlights of XXX gross were was $XX financial operating constant $XXX by and more Some X% improved the basis operating the currency, last first include; up up year margin million, in EBITDA flows notable in points, XX% improved by the $XXX quarter adjusted to adjusted adjusted our income gross million. by revenues improved compared million, cash

by to category. on Moving our gross sales

gross global which grew by as was primarily by Our constant in doll offset sales its celebration Barbie, it continued Pocket kicked partially momentum and declines up American Girl. in XXth currency driven XX% category anniversary X% Polly off in

in the will of All content line with completely be American we the some additional on introductions, our Chicago confident York launching new YouTube influencers. in a plans supported this a and digital architecture, will will engagement include revealed strategy platform. quantum this, New experience summer This launch of flagship consumer and marketing Girl, brand. by are a and the merchandising potential work fall. product much with As to comprehensive the it plan and of new This about relates stores our be broader

closer will launch more We with we the as you to share get dates.

first becoming X% the continues constant toys to and one in beyond engagement expand Cars. performance The Wheels history XX%. decline channel Hot partially category expected strong the its quarter brand grew with up boy’s vehicles aisle was Hot toy currency in by on YouTube. number of offset consumer Matchbox Our X% and finished its the Wheels the up biggest

impacted was and The preschool Friends X%. Our infant Fisher-Price toddler our down lower Thomas of and in revenues further with sales was for brands. currency down some the XX% expected & category constant by category partner

consumers its Sleeper these Consumer its Safety emphasize voluntary brand that the the the recall. want certainly I Notwithstanding the won the At as Associations, to its prioritizing heritage have the York and New Rock voluntary with walk as trust safety Commission. a two Product of Joe take held Mattel to Toy we Industry As very the will a are franchise confident continuing has feel always the Fisher-Price tradition. safety of mission we highest of potential. growth long impact of working details the children you recall has know, in Fisher-Price Year 'n Play seriously. related of of and Toy that and recent we direction awards. Toy Fisher-Price proud Fair, announced its impact, partnership about the in priority recall matters the through financial

award international The encouraging of our We from shelf and with the This also World and expectations. honored continues constant we the category, to benefiting in of America categories win new as games as perspective, a building was and in with on in Universal. are product Jurassic well XX% another our excited and Rescue the figure America of action Action the in second to introduce quarter figures, from very one growth release, in product the across performance region Story regional classic to were a our with North another successful new in sales benefiting partnership and which reintroduction Heroes MEGA. resonate movie World solid both properties. a grew the including shipping most sets was Asia-Pacific. Toy Year lines together From of with strength North in currency in Jurassic include UNO line Toy constant offerings, for Gross three customers improvement of above four notable multiple currency. continued grew advance quarter growth our X% performing

X% absent very in 'R' down Toys X%, Latin EMEA grew X% have up collaborated planning and Asia-Pacific team business Our executing gross the retail X%. effectively and sales Us. International up with America partners and

also the key Although experiencing retail, European is at market several European growth in continue markets. disruption we toy significant to see

channel strategy adjusted proactively our regional omnichannel and have Our teams capabilities. developed our further

growing the We also markets, in strength focusing Mexico region's in our two biggest and our maintained Latin and efforts Brazil. America,

momentum on It remaining retail worldwide is speaks China is X% to gross worth in from focus the by mid-year. increased seeing positive progress net continued and the currency portfolio expect Our of American mentioning the considering in that to This through also especially Girl. sales negative adverse X% inventory our work comparisons of overall the excess impact quarter. we to constant our topline a

very it the early still in positive off a year, While we're start. is to

reshaping operations Simplification a restoring As you has driver been and profitability. towards our program our know, key Structural

we're continued we of we reiterate exceed million to will and savings that operating $XXX XXXX. quarter results. of our well rate savings. track in rate We $XXX is goal reflected The run the expectation our And exiting making with million our progress ended run clearly

We have also to begun execute on capital light our model.

multiyear which optimizing effort this footprint, comprehensive in our our encompasses mentioned supply efficiencies As productivity is chain. and infrastructure across the a achieving increasing manufacturing before, plant entire

manufacturing are As and some part facilities while of owned of or advantage significant have where cost, quality operated market and those a retaining service. we this, we on our selling consolidating

In addition, rebalancing network. our manufacturing we third-party global are

we light savings to have creative model effort, time enhancing toy Given the capabilities to very we the protecting our emphasize an that making to It evident mindful this of while I tangible our expect been of company. cost start and from significant the XXXX. want demonstrating in capital improvements, of strategy realizing IP-driven company been incremental become is results. is we've high-performing and commercial that line

as come. a television total the In film to priorities projects to meaningful mid-term Films distribution. are quarter, Mattel based Mattel recognized and momentum. characters ever of View-Master, Television slate American build date, our the for XX have well We as profitability groundwork iconic value top announced animated more are To will for announced live-action to to with of and In and February, new in and that made and making growth, feature each films mid- MGM. market. television in the with multiplatform our to the been we to to and live-action we in restore be on continues short franchises a regain announced IP and partnership The a globally five progress IP full we're taking long-term. programs of development our line programs capture laying Girl the on first have

engagement, management Our via opportunities. executing product and franchise fronts several partnerships, consumer digital is team strategic on

organization the NetEase is For with and and started results-oriented our solid achieving iOS This we App third improvement a mobile as income, margin, Play. performance priority meaningfully we game on and our free to direction. XXXX and are collaboration together, that line innovation players EBITDA with immediate and bottom first example, coming moving building The the with in globally creativity restoring gross the available core. in profitability, its the Store with consecutive Google also launched line. in is the culture EPS, Android well in operating and through of performance-driven our a at is significant January, app winning UNO!, quarter right with all top

create on entertain execution children focus to our value our that methodical is mission remains Our And shareholders. products inspire, and through and for play. innovative experiences and long-term creating develop

to the Now, will Joe, full and reaffirm detail more to in year who would financials turn I call the like our over cover guidance.

Joe Euteneuer

Thank good afternoon, you, everyone. Ynon, and

key across improvement results Our metrics. the financial reflected strong in performance significant operating quarter first and

income, just In operating addition mentioned, share, also per operating cash improved we our to gross which margin, and Ynon and EBITDA flow. capital earnings working

basis. execute we Importantly, are quarter-by-quarter ability our consistently on demonstrating to a

X% Looking reported and vehicles, a constant action increase first building sales results, as decline in up gross X% preschool. toddler offset currency by by The was at quarter constant were games. driven currency. our year-over-year and infant dolls, down sales in Partially figures, sets in gross in and

down of As the quarter, shift POS was Us. impact the low-single-digits in the expected, excluding Easter, because in Toys “R” from of Mattel

year, million. As a estimated the of do Fisher-Price Play $XX of in 'n returns our $XX sales be there voluntary the to in to Commission. a Rock was loss cost operating in the related future The income retailers. $X announced additional the Safety of of consumer impact net Play Sleeper, Consumer sales based will Separate of from a of the estimated on minutes with 'n Product impact few voluntary discuss return we product may in to and This related expenses which not partnership material. them on million Ynon recall the the million a our recall negative impairment and sales, mentioned, expect of inventory be quarter recently was I which consisted reduction owned recall total Rock rates from more conducted but

from the of from impact gross of margin sales, million net “R” of quarter million. a sales related points negative the the in XXX reported XXXX absence the Toys and recall XX.X% first Our net benefit in voluntary to included up of the $XX XX.X% $XX XXXX. estimated This cost the of Us reversal the was basis

benefit which negative in compared improvement Structural to driven XXX by adjusted of and of gross approximately cost adjusted of of of Us the primarily in million, voluntary significant the year. of QX the margin as sales, improved the from of improvement of reversal prior sales well XX% flat the in “R” of of XX.X% XXX This was cost of partially XXXX million, absence debt basis the million, was quarter of Structural was the by loss expense. points Advertising compared of Excluding debt $XX savings the XXX realized benefit the XX% the was from and as was was Adjusted net the net $XXX was benefit operating XX%. a from improvement XX.X%, the EBITDA year. $XXX year-over-year. and first points operating million Simplification both a points Adjusted XXXX Toys sales million an QX driven net by $XX our reversal. improvement were Us improvement was product in prior loss XXX points impact expense $XXX sales adjusted loss million, of Simplification. realized absence from $XXX year-over-year the Toys percent SG&A the up by Simplification recall, inflation. “R” bad or Adjusted of “R” basis $XX by This of to $XXX million basis of $XXX savings $XXX from The the savings and which primarily the a Structural sales Us XXXX. of substantial bad negative SG&A basis $XXX million $XXX Reported driven Toys related This offset was million, year-over-year. XXXX EBITDA million a an an absence million, improvement as of or million was

items. expense $X tax was a the million discrete in and first tax includes number quarter of income Our

to driven slightly our Moving of days balance improved include cash accounts We of balance the year-over-year This lease on of the now sales collections. new the to leases balance receivable first sheet. a quarter, sheet. outstanding the Due by resulted to XX with in to four-day related the XXXX, the ended in a and result standards capital $XXX adoption X% in working a improved we improvement In million. accounting our liabilities assets days. as decreasing quarter reduction

decreased Additionally tightly owned our inventory. X% to inventory continued as our result a of efforts manage

flows. to Moving cash

$XXX noncash operating usage. by charges excluding capital million improved primarily lower lower flow net driven $XX Our usage cash million, and loss, to working

We as continue investments liquidity feel about business topline. confident well as sufficient structure good make strategic both to capital that grow and our we to are efficiently to the our have run

October driver been said, in to rate maturities primary achieved savings of improvement run of profitability quarters. We XXXX. our and until goal have last has exceed over no three significant $XXX as debt XXXX. million million Structural have the Simplification exiting the expect our And Ynon of $XXX to-date, we

analysis global our our evaluation we including our review plants well an to extensive chain model, manufacturing and as have our multiple concluded network. of capital-light centers of distribution Turning the of third-party an manufacturing supply as XX

sacrificing quickly, thoughtfully We pace without but have progress and and begun implementation moving quality. are continue our safety to

considerations. competitive share will we developments confidentiality progress We to subject key as and

expect in we capital-light gross from which XXXX, our additional start reflected you in model improvement. should effort, of realizing timeline this the see to savings margin Given incremental

We will strategic part in our of quarter, opportunities. our transformation model our of savings These guidance. In first million we expected to capital-light operating IT spent the were $X brand which related incorporate investments growth primarily expenses. future on investments was million $XX our and from

expect to be which Starting we offset currency, our partially review will to like negative from I'd assume year guidance. in continue constant XXXX X% by the impact to exchange. topline, with year-over-year flat a to sales be full XXXX foreign X% Now, gross we

still in and QX. into higher improved ahead given year million and loss achieved $XX than full line year taking through of quarter, 'n not of $XX Rock estimated we sales outlook of vast the our account are momentum the changing Play is majority to the first from revenue the us we top While million expected of QX

from We percentage to Structural a our XXs. dollar XXXX year-over-year margin adjusted gross to and the Structural positive of taken related approximately on the continue SG&A low impact year-over-year and in actions Simplification. basis expect to XXXX materialize we still Simplification still to to to adjusted down as the SG&A our $XXX We sales expense. million XXXX continue increase be We savings will in benefit of of anticipate expect

benefit positive from debt net expense XXXX. income to we of bad year SG&A will inflation, strategic also mirrored $XX More slightly in "R" the investments. of to will operating be still year Us by contributions about million recognized adjusted We increases, $XX and strategic absence we our SG&A. impact full offset full partially Toys specifically, These be Overall, expect in to positive. general investments million expect

$XXX in I outlook the difficulty offset full to year driven tax million cost taking in investments. XXXX. stronger input to year million. to be improvement the primarily operating you million year-over-year of we expense of This We given by S. is update changes in million continue by valuation laws adjusted the partially allowance the of in impact on of and full consideration $XX range to EBITDA our into expect continuing global assets wanted metrics, strategic and the inflation $XX on $XXX U. tax against U.S. significant and taxes. booked tax the Recognizing estimating deferred our approximately

from more period determined even negatively recognized Forecasting positively tax items expense the as individually impacted impacted by and must calculating may and difficult an our our items outcome they tax in because quarterly discrete tax or When discrete be both our are which occur. tax perspective. a either to which challenging, predict expense timing in tax is be

a For because law. a prior tax example, reassessment tax enacted they of tax newly year or audit liabilities of may to relate

foreign of mix In income rate quarterly tax because the losses addition, and or of vary our in level the jurisdictions. also may

valuation record in ways. taxes we have XXXX way U.S. said the allowance I two the As impacts

had believe we foreseeable primarily will allowance during taxable not we expense. any record tax international U.S. record reflects expense of expense pre-tax The current be as expense income is to benefit don't income earlier items we a is loss recorded tax During may did we on do that we $XXX cover our because for a of to recorded tax are periods as this mentioned because income anticipate not tax And expense the approximately position. we of discrete where income, in record from $XX outlook, tax based benefit. we even Having changes in our valuation expense loss. And to see to in allowance we loss U.S. a worldwide related P&L all why outlook the periods said future. released an a the million our will income income be tax or U. an unplanned pre-tax though taxable S. this this, able you million. losses And impacted the in don't XXXX tax in And jurisdictions I valuation in be a by law. audit tax tax

Going operating you that quarter, outlook nature any year the forward, P&L. clearly across the seasonal we the individual quarter, accordingly. our resulting have items of full results benefits in proud will potential provide materializing tax of due discrete continue and on to In performance general a update we the and impact tax to the outsized are may our closing, with

showing are in of We that our third are particularly consecutive profitability we quarter improvement metrics. key encouraged the

time shareholder and Going now of open we value. Thanks remain the the your forward, consistent methodical creation execution will today questions. line for long-term focused on and for progress, we

Operator

Eric comes Partners. first Handler with question MKM Our from you. [Operator Thank Instructions]

Eric Handler

where market Europe. you and Thank improvements much. North for are you how Europe, America profitability talk of seeing versus your in region? the about could if little that I very And the outlook bit you wonder was a

A –Joe Euteneuer

Yeah.

cetera. in Walmart, has the America the really in North Simplification. that et profitability mean, quarter globe across comes growth result benefited the I from The with Target, partnerships a fourth from with Structural So, exited

increase We from as million through globe. rate out have really exiting the comes the expense look SG&A driving as benefit $XXX really right gross an used an profitability. of of that at take you across to force advertising margin And now the run

Ynon Kreiz

marketplace growth is want I turnaround. continue tribute And they to in the execute of a Europe to is tremendous X% comments in job very short challenging well the confident add doing remainder year. we performance. a a currency And conditions. remain its to of will which the on great to constant of nothing couple the that year is phase team of for And in of the their a show currently

Eric Handler

Great.

areas about be you countries? doing? a Do be to problematic still in the the as Just talk may expect throughout Can How year? you follow-up. U.K. other specific this are

Richard Dickson

Yes.

We countries country the on information haven't country really of plan in really by that performing that we But basis. have. most specific turnaround given good the a overall, is

Eric Handler

Thank you.

Operator

Thank you.

from next Our with BMO Markets. Johnson Gerrick question comes Capital

Gerrick Johnson

have data, Hey POS you. over a Thank the good afternoon. do for year-to-date including number Easter but Thanks you for Easter?

JoeEuteneuer

regards negative So year-over-year to X% Easter the Easter, for on impact in a X% probably quarter. to the POS -- probably comparison had

Gerrick Johnson

Okay.

So...

Joe Euteneuer

impact this had it POS of result single was about X% think excluding TRU a low a down So digits as X% way. to Easter.

So basically for you low were the single up digits. quarter

Gerrick Johnson

regarding 'n great. Play, And anticipate associated also reserve with you that? do or legal Okay, Rock then legal cost

Joe Euteneuer

on anything. we right commenting not So are now,

You're really immaterial And we've for talking litigation. so of et that related now we legal returns customer something costs cetera. other the or believe outstanding all to for on But service the don't about year. litigation, comment any provided is is miscellaneous we right

Gerrick Johnson

you. thank Okay,

Operator

Thank you.

Kocharian UBS. with comes Our next Arpine from question

Arpine Kocharian

to Hi, in $XXX savings thank you slides say wanted tracking investment. million you I before comment a to clarify where very XXXX you much. for had realized exceed in

your few guidance is savings. think like comment was $XXX run it comparable back months I EBITDA And a seems unchanged. about a rate million of

EBITDA Excluding your you're savings it about call Why isn't -- going it $XX expecting if you're ahead million, of the up XX-plus offsetting incremental like flow-through? $XX guidance I million, Fisher-Price $XX guess cost or tracking seems million.

Joe Euteneuer

an give me let cost update your you savings you So I think flow-through. on have to

which have result had regards million that said for would the of the the in-period $XX three rate. get savings full $XX exiting all, In of $XX million we million In actions from a we've XXXX. quarters EBITDA, to $XXX and be we which guidance on of $XXX were to ended of to probably in-period in that rate So for $XXX of basis million adjusted exiting savings happened of to that million overall to EBITDA an the there's regards run $XXX quarter run XXXX is year, of P&L million $XX first to up of million. that of our part negative the million P&L

that good I pretty will few the be year. effort of for think a the last quarters

Arpine Kocharian

Okay. Maybe I the call can reconcile still because those after I follow-up can't numbers.

to terms of early. was Story surprised In -- Toy this I see shipments

Toy Story there think in entertainment In Fair, prior or the fact was eight this falling guidance of ship specifically your any you a had on weeks you prior at it Toy you initiatives earlier entertainment to earlier on? in that six bit theaters. usually QX. little to I being shipment expected, than took Did when

Richard Dickson

it's Nothing the we forth. We unusual. set ship are we plan executing Arpiné, that plan, to against Richard. and

Arpine Kocharian

Toy So QX? Story QX you in to expect ship it and

Richard Dickson

Yes, yes.

in and We QX. in QX. QX will we ship both But ship plan yes, for to

Arpine Kocharian

that capital on. of give And model into extent know cost at would the any of savings XXXX? which What XXXX indication are still early look guys some guess to outsource? lines it's would you way Okay. light savings you I the beyond like? I product then, looking

You initial sizing probably would of of of those detail. in Thank like giving share But of plans that sort want be terms to don't what you. look helpful. an most

Ynon Kreiz

entire of Simplification chain the on supply not shelves diligent months information. work we before, At stage, forward. with factories. But confidential we've more work, a We putting the process. through specific as are also the planning because end-to-end. Structural started to flow we competitive across just will we to we go market this or you said do that, about But expect incremental details the And we to sharing together. putting that about of But the XXXX of will because starting saying way multi-year It's completed plan. savings several We the plan update product be Hi. in we to just it plan as Arpiné. this all that demand from But this than it's that today not the are have manufacturing look optimize run we the retailers. system footprint. entire some is the way is

Arpine Kocharian

Thank you very much.

Operator

you. Thank

comes next Stifel. from Crum with question Our Drew

Drew Crum

one. actually Thanks. It Okay. number

said Is any And think point be million 'n whole? impact a $XX as not to a Joe, were is that on Just Rock the that Sleeper. if as a sales the I start. of will of there brand it's Fisher-Price product gone you not, from whole? to specific $XX or Play clarification why million

Joe Euteneuer

So to specific. we product said million million is $XX $XX

Drew Crum

Okay.

Joe Euteneuer

as far it's so As – specific. yes, product

Drew Crum

And spill brand? Okay. no over anticipation any the of to

Ynon Kreiz

every Hi, answer long the that by Fisher-Price beloved trust, has is will back It going a to earn quality confidence We this said has the safety it. and years. Drew. children, and hard parents. The hard we XX always almost continue is that very of worked to to of day work heritage maintain we and

be challenge, over in the XXXX the didn't the of didn't We new later brand this. this it Fisher-Price Obviously rollout leadership, So strong plan in segments some while the in in year. are for we expect our all parents offering, in and will the and we long-term brand and will the build to by confident the that continue remain plan. into didn't But trusted we strategy, we the -- there maybe short-term impact. believe We world. product

Drew Crum

some Okay. the then continue maybe through can the that And of saw brand Richard, benefit about the you the for for and for Does puts talk you year? addressed promo other that be about through Barbie? to takes XXXX? the talk you Can XXth needs for anniversary

Richard Dickson

the great certainly in we've the the in currency a a consistency is XX% incredible world. had sales great The accolades first Sure. off had is great The into plus at Gap start. XXth over continued I growth. Dream six that Barbie's event we constant Role to mean, year-over-year of York quarter. reflection consecutive of quarters a Model, momentum Project, in got anniversary New all fact

spectacular Sky pink event. over the we were Tower, Tokyo on alone is But let impressions, and can Building, In fact History I Jakarta's lit Tree, six garnered brand Toronto's any truly go billion Beach. Empire over Museums, City's, for world mean, Mexico media landmarks I History Museums, world the on. including all State CN Sydney's Bondi which

So really excited. we are

We success. rollout. will continue to continue programs The the

really specifically confident driving lots on got and is But are Our year the product of and the we've the segment business. items lots throughout new new in careers of program. Barbie

Operator

Thank you.

Our next Davidson. from Bolton-Weiser question comes D.A. with Linda

Linda Bolton-Weiser

Hi.

being I can So was for just neutral-ish cetera. I'm be free good. thinking your terms your year. flow the a projected now it capital my more the guide et pretty CapEx you I think in the on projections your I comments in maybe for working cash improvement had of based year But substantial. flow small in bigger cash about said And guess quarter

So can Or generate give that's going you'll now just debt can thoughts we amount? assume more just for used that cash start on be maybe substantial to to that of actually some use you production?

Joe Euteneuer

at our we are give to are not we that to So going point and use how on we effectively the point in shareholders. future at guidance But time going at will obviously, cash. use any for this it most look it

Linda Bolton-Weiser

additional kind And little that new in that you've on bit or shelf of is can at then, retailers of going Okay. you space your build Thanks. give quarter garnered new retail a of e-commerce to And performance places? on how shopping becoming there growth terms color Are those to you positioning your can was consumers brands the 'R' and well? what market Us for in haul. share in as your also your comment Toys accustomed

Ynon Kreiz

work. under over XXX,XXX relationships board the say sometimes remind Well, is relates I of world distribution out across North first U.S. Us 'R' ownership. should and are Toys of we strong in core it and is to network largely in the from customers more new very than the have benefiting rest to U.S., the you The network a of situation the – built currently of a And all, we doors U.K. that as the relationship know doors with XXX,XXX of many need ourselves worldwide. have distribution our we We years America the as

it's vast global. So pretty and

the and are have Following on and our majority growth our partners working of last year. in-store of the the all closely kept year, with of for we specific online with customers remainder seeing and plans

channels are grocery forth. seeing so other department drug as such chains, of with stores, also growth We and stores, specialty retail value and type stores,

has market North year X% the Us the fact indication Toys Toys Toys on. strong last “R” in that life So comp with Us. Us of is that “R” America for a for the moved quarter are the “R” adverse we And do we without to up without performance see in

on. moved we So

Linda Bolton-Weiser

the your e-commerce in How quarter? was growth

Ynon Kreiz

specific breakdown. we is are the satisfied But providing it heading. with direction and are up it's We not

Linda Bolton-Weiser

Okay. Thanks.

Ynon Kreiz

Thank you.

Operator

Thank you.

Our next Goldman Ng question comes with from Mike Sachs.

Mike Ng

a Hi. if Thank have I much you I just few very question. might the could. for

The Asia just and China. first is Pac on

comment pretty good. mid-XXXX? headwind the in Pac you expecting health through digit numbers and expect on in low first by think originally think single the that quarter. headwind still like to be also you low it come could It were the Did the inventory? and just I from I single clean digit second you were the China Do seems of Asia China quarter a

Ynon Kreiz

our cities, partners we a Michael. in sat Hi, down time seeing and Asia progress. Yes, progress spent We with we’re the from back We went I making are specifically. good came in and in multiple trip. actually to China general definitely just team. with

meaningful We’re as will quarter. said be the still we make quarter. in also year. the And do next progress down down expect to But you for we

started. As this China week is we it is Head General just a happens where new in new when a Manager China, -- of

a have to now a So place we about feel we in strong quarters better we ago. where also much new and team just relative are few

still a in directionally are it's we place. So, But to delivered. good be obviously,

Mike Ng

I And just two housekeeping you. thank questions. Great, have

still the health much you expect you the Fisher-Price The could first end back Thank a is stabilization do inventory? comment second you the of make channel the at year? And very the about of is,

Joe Euteneuer

your first So worked other demand, and meeting way not around. sure couple of was over I to last to mean our the in make question, the hard quarters supply we've regards

our coming. the sales new across feel year it balancing worked think to very next for very to billion ours. a three And points. good we it the million products little work retail are hard we Fisher-Price, our the not Fisher-Price confident were a forward And partners with globe of low look we've remember that is is $X quarters more inventory maintain has a $XX the the $XX levels regards back with along at and the in their when to way is We've million that of of couple locations going So half guidance roughly on to impact the I the changed to do. overall. business right at that percentage

stand any Fisher-Price. to we in And early too our break to so early in regards belief so it's And in point. this it's pact year again the changes at

Mike Ng

Great. both. Thank you

Joe Euteneuer

Thanks.

Operator

you. Thank

Our next question comes from with Tim Securities. Conder Fargo Wells

Tim Conder

may bridge you ended is EBITDA have areas from us of Easter that Joe the alluded was Can either would through your through lot where they you. Thank a million for a you be earlier. may million one. may the the itself color just geographic the color -- walk $XXX appreciated. to be just additional on be $XXX of again of through quarter by will the adjusted the in And EBITDA to breakdown you. major if POS Thank or question be any to brands year-to-date there's then any or couple

Joe Euteneuer

Sure.

the excluding So, double-digits. was up POS, the the company TRU. globe to was Vehicles Dolls was in we overall single low regards down was digits. about overall, Overall, low Wheels single-digits. talked down. for Hot down

color. So, that's some

you're If you America in basis, TRU, see low for single-digits looking thing regional internationally. North excluding same down

TRU, down standpoint. just excluding single-digits low are POS we a from So,

Richard Dickson

significantly. well. brands here Hot When up Hot and as trending can up add that bit really Yes, the Barbie also little and look is for the of we're of a Obviously, year. just Wheels in balance sentiment particularly you encouraging Wheels, at really I like that double-digit. the experiencing well. core consistency Barbie

are So, up last we the XXth against year. also to note on important Wheels Hot anniversary

multiple our Walmart there. of one multiplying last experiencing our But consumers, So, really someone out we of a Tour built drivers a connectivity great which challenge year we little expecting of with with It's year. are cities the this is of key Legends bit to have a the of Truck also we start bucking on movie to Monster year would POS. what Jurassic, trends introduced partnership mentioned with year also the be We've are as POS. second also particularly brands, our driving great Show shows it's live -- And its had that two.

confident So, we well. in as that quite are line

we we indication a first how quite which quarter are. going the it's overall is while are where we So, as of about the good year's good feeling exit small

Joe Euteneuer

Yes.

to-- in So, regards

Tim Conder

EBIT Okay from $XXX on bridge that million XXXX, -- down and the again? revisit to $XXX the just then Joe million to

Joe Euteneuer

the things a you We XXXX to first Structural in had the Sure regards had you comparing materialize XXXX is Structural and Simplification to versus Yes. Tim. in the about half. to quarter Simplification half to good when think XXXX started I savings remember really and back we think from is if of that

easier of first year and in of half a in of the comparison we half have sort so year. And a comparison the back the comparable more the

of And quarter, that's regards reported investments other one had we the in that saw that were more the the to loaded so be and in was we benefit is backend PA you In of year. in half distribution happened year. So last investments things. the the expenses will first the And investments, also if TRU the warehouse talking half. we about. remember back That comparables remember then the half the back

else. think comparability a I of of more So, anything actual than it's timing

Tim Conder

you. Thank great. Okay,

Joe Euteneuer

Thanks Tim.

Operator

Thank you.

Chartier with comes from Monness Crespi. Jim question next Our

Jim Chartier

of strategic of year. like looks number. like total my investments $XX question. XX% I OpEx talk in year at this It wanted this be advertising taking you're big Thanks the a seems advertising about for will million investments the to the making

by curious such in could to sales you however year? it? or confidence be of And expecting about investments? advertising you And of an kind this what of talk what So investment you about gives bigger lift make want from if to Thanks. then, may talk the kind some those brand you're initiatives either

Joe Euteneuer

Sure.

things the the our effectively. that doing that of few so target been could really we evaluating that money of is quarters, advertising so have the over last we we could One effectiveness our more

about in influencer trying like new those things that buy. includes of all videos think watching you that their series, about which the online regards to content, animated product-related to are make spend on talking when programs, decision really So to consumers and advertising, what you're

online. that effort this. around going Europe It's good And It's of when so with is portion gets turnaround. America North And Asia this we this what think a helping is in across sold about helping obviously there company. with the

with consumer we are and So we can we moving to is just effective as the try think spend. to as our be where going

Jim Chartier

you this more are sales then from of that assuming And investment across on? any or material is later lift this advertising

Ynon Kreiz

When lift, trying Yes. for the negative losses are over about to year past the to is had we you get to flat stop we've years. and this do talk what sales five

turn and up happening, what's think that's get to to us going So really allowing forward. it's I finally flat look to then

Jim Chartier

you. Great. Thank

Ynon Kreiz

Jim. Thanks,

Operator

Thank you.

comes Our from of America. with next Reuter question William Bank

William Reuter

expect to then investments this about are it going in that and the to guess kind nature be year XXXX? you're of you permanent regard freshly one-time-ish or are I we With will those should be thinking guys. those Hi, like making again in

Joe Euteneuer

Right.

and it. made that Our investment in that that about point has at really talked program in we XXXX that's been we've items time XXXX investment individual and

So guidance one-time yes, in give it's not yes, investment. It's have ongoing would any we investment. a not we would -- XXXX, an but

William Reuter

going I follow-up to anyway expectations with are facilities of result is some proceeds us for you're those guess to leaving then to regard give how that And as these light, there large be? any the proceeds? of as just you Okay. capital sort a could of And be a receiving some

Joe Euteneuer

sensitivity confidentiality that we on time just not and information. triggering us are So of we the the ahead anything jurisdictions of that foreign sure because in providing to of any not an governments that currently want the workforce, and condition. make and would local guidance we Dealing the adverse are cause

Ynon Kreiz

be while and okay? where gross this -- there We've about of to efficiency mostly terms say structure That's and is, margin. benefits is in and focus just might improving some proceeds, the cost

William Reuter

Thank you.

Ynon Kreiz

Thanks, Bill.

Operator

you. Thank

with comes next from Greg question Our Citigroup. Badishkanian

Greg Badishkanian

toy for the line today Fair Story. At you Toy had sizable you. Thank up a Toy pretty TTPM new Great.

given for an XXXX, could should of overall think And least big some year-over-year we XXXX? how the of So to? properties about then entertainment expect that tied growth be modest we for if are opportunity some you at

Richard Dickson

Richard. it's Greg, Hey,

Toy obviously the very excited up. are Story line about product We

perspective. and good. As from our consumers will story on are tell we normally anticipating floor partner a out there, as I extremely reads retailers well. you just gets and X both Toy hitting product bullish are Story don't Early size can relationships. that But we're these We as although the line pretty it's the

in drive also entertainment to And world execution well very are our year with coupled marketing. good and that a up excitement what significant Mattel aisle around property will figures really are into year with world. be we the connectivity Retailers properties believe the for teamed with industry ultimately Disney in the plans. action space supporting particularly the We spaces another and the the all and Jurassic will be over as toy these powerful drive retail

about we Story. action But excited So general, category excited us we Toy are that the for a about very in business is are figure XXXX.

Greg Badishkanian

be Great. well Fair. that this incremental at that sense Toy -- still line Also and sizable you something as the could year? just of that Is pretty the could BTS dolls the

Richard Dickson

a saw and We've It's bet to really that Look you phenomenon. that a see through is taking trend executed product strategy. reacted made. a is BTS as and shape. as all has anticipated we against introduced Yeah. great a innovative We quickly this Mattel social product media

some who Army, associated forefront that been with and ones what the dolls are fans on the called garnering at attracting we're ultimately we've to they traffic the revealing incredible are the we As the least characters, and BTS space that are getting a excited great we about anticipate that will dolls. more and more commitment for perspective. got And lucrative buy fun a from new really be it it. Retailers and line the are hope us. We've

Greg Badishkanian

Thank Great. you very much.

Richard Dickson

Greg. Thanks,

Operator

Thank you.

with Hendrix Felicia question from Barclays. Our comes next

Felicia Hendrix

Hi. Thanks for my taking question.

the in So team you for I you surprises the quarter. the better than you? us But whole biggest the out hoping Richard, could lay what for anticipated was in everyone Richard did guys were well, quarter

Richard Dickson

honest tell you were be would no I Felicia, there and that surprises. real

of in and get place some so early get we most is it's set, thought we quarter a a are will you of we good performance met the it indication small Barbie tell are lines, of are of the on know. brand. balance. where a their lot as of with A expectations back what half. others do. some But the lot small headed. on product expectations floors so we on on of brands course, I to our takes setting obviously some we and we far reads think exactly Retailers and had were I the It lines, going We big some you, up, pleased good. just overall

in work been the last in and several know, and consistency consumer to the terrific. frankly seen support, you been that As programs has press reaction retailer progress real it's a we've the the takeaway, years

us. would tell portfolio that great brands a Story great together. going for UNO. pleased In you we've X. I coming really overall, think Toy And I got partnership Jurassic X that's to our business, with with one our year So, a be games I'm

lot a going see items. you're terrific new the strength half some category to more think from Mattel the I back in in coming games with

pleased general, would in I good would are year and say in I'm a with execution say, I mind. So, we poised for

Felicia Hendrix

And a helpful. beginning all the like year just so in the kind to there's and the that's strong know but So and lot just it of said are year. the seems flipping guidance, I giving Joe in left -- trying from you of just momentum you around – then of of just guys with patterns call, terms you transition prior in

the you want get with what cautious when ahead you of then? about the are guidance. rest to think So don't on year, the of But yourselves you

Joe Euteneuer

internally, know look numbers us, ourselves you To to Well for when think about we're the – to I good first you mean, externally. quarter and, I the performing our plan.

forward. we look to have look when BTS some going already So be things these at those in what of like great I they're and built that into other we've marketplace, the going

ourselves left. Potentially. of We to is there get year sort still so Now have an want much But going are of we the where ahead of before idea really go. things of upside? to don't there's

Felicia Hendrix

out have sheet and or question, just high-yield a as the just would terming heights near are available back It's consider over Okay. par, sorry, I – the off market. XXXX with your recent you I'm paying balance at liquidity Joe, XXXX while you, And with Understood. them XXXX bonds?

Joe Euteneuer

You at that. we are know looking what,

made decisions haven't We yet. any

on you that. So to we will come back

Felicia Hendrix

with Okay. just And then the...

Ynon Kreiz

Felicia… And,

Felicia Hendrix

Okay.

Ynon Kreiz

go Sorry, ahead.

Felicia Hendrix

wanted Dave say, want to to I Z. back. to Welcome I that. say welcome

Ynon Kreiz

Great. right. All

Felicia Hendrix

All right. Thanks.

Ynon Kreiz

of rest tag on just Thanks, year. I the to want Joe's comment the on Felicia.

on consistently numbers, the the now fact are a especially and that and is job can profitability focused clearly execution proud for are that quarters we we very improve able best Our we to in do to do three of and are row. very

have are we But the do what – performed keep just at small but to if a there's said, performing. it and doing you is just will year-on-year, a improvement quarter. And i.e., we And keep $XXX as will any in we This was if the than early expectations, double that, a perform Notwithstanding it it's quarter to there's better go, just it that with years happen, million want of changes. of that things to too per make mean a in years. up to we our and year lot long -- lot XX range, EBITDA to the these it And will hit achieve end we adjusted income we EBITDA, highest decline. year-on-year. I the adjusted revenues be five operating if remind will mean top consecutive it EBITDA of guidance, flat do everyone,

multi-year So in and right this the right want appreciate cadence, the is will is time. momentum. task not we an to easy But order confidence turnaround things recognition, and and the take and this things we a do the recognize the in that

more? No Next questions.

Operator

questions remarks. turn I'm call I'll at the no over this for further back to closing any showing management time.

Ynon Kreiz

audio our PM XX everyone an passcode be link Thank beginning you today. thank is via on found participating for available you dial The Eastern joining and this page. The XXXXXXX. will for you Investor audio replay Time replay the for call. webcast in Or today. operator webcasted at call today's Thank call can XXX-XXX-XXXX. The of be please X:

Operator

participating thank concludes for conference. gentlemen, and the Ladies in program. This today's you

a day. and disconnect wonderful have all may You

Mattel (MAT) 25 Apr 192019 Q1 Earnings call transcript