# Mattel Inc: Form 10-Q for the period ended Mar 31, 2025

- Company: [Mattel Inc](/companies/mat.md) (CIK 63276)
- Form: 10-Q
- Filed: 2025-05-06
- Accepted by EDGAR: May 5, 2025, 22:05 ET
- Period: 2025-03-31
- Accession: 0001628280-25-022312
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/63276/000162828025022312/mat-20250331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/63276/000162828025022312/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-01-01 to 2025-03-31 | $826.6m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2025-01-01 to 2025-03-31 | $418.5m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2025-01-01 to 2025-03-31 | $408.1m | us-gaap:GrossProfit |
| Research and development | 3 months, 2025-01-01 to 2025-03-31 | $46.8m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | −$53.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-01-01 to 2025-03-31 | $29.2m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | −$30.6m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | −$40.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | −$0.12 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | −$0.12 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 327,493,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | $24.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Share repurchases | 3 months, 2025-01-01 to 2025-03-31 | $160.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2025-03-31 | $1.24bn | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $2.79bn | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $6.21bn | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $1.15bn | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2025-03-31 | $2.34bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2025-03-31 | $0 | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2025-03-31 | $2.13bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 44,724 characters.

In the discussion that follows, "Mattel" refers to Mattel, Inc. and/or one or more of its subsidiaries.

The following discussion should be read in conjunction with the consolidated financial statements and the related notes that appear in Part I, Item 1 "Financial Statements" of this Quarterly Report on Form 10-Q. Mattel's business is seasonal with consumers making a large percentage of all toy purchases during the traditional holiday season; therefore, results of operations are most comparable to corresponding periods.

The following discussion includes currency exchange rate impact, a non-GAAP financial measure within the meaning of Regulation G promulgated by the SEC ("Regulation G"), to supplement the financial results as reported in accordance with GAAP. The currency exchange rate impact reflects the portion (expressed as a percentage) of changes in Mattel's reported results that are attributable to fluctuations in currency exchange rates. Mattel uses this non-GAAP financial measure to analyze its continuing operations and to monitor, assess, and identify meaningful trends in its operating and financial performance. Management believes that the disclosure of this non-GAAP financial measure provides useful supplemental information to investors to allow them to better evaluate ongoing business performance and certain components of Mattel's results. This measure is not, and should not be viewed as, a substitute for GAAP financial measures.

The following discussion also includes the use of gross billings, a key performance indicator. Gross billings represent amounts invoiced to customers. It does not include the impact of sales adjustments, such as trade discounts and other allowances. Mattel presents changes in gross billings as a metric for comparing its aggregate, categorical, brand, and geographic results to highlight significant trends in Mattel's business. Changes in gross billings are discussed because, while Mattel records the details of sales adjustments in its financial accounting systems at the time of sale, such sales adjustments are generally recorded by customer and not associated with categories, brands, or individual products.

Amounts shown in millions or billions within this Item 2 may not sum due to rounding.

### Overview

Mattel is a leading global toy and family entertainment company and owner of one of the most iconic brand portfolios in the world. Mattel creates innovative products and experiences that inspire fans, entertain audiences, and develop children through play. Mattel is focused on the following strategy to grow its intellectual property ("IP") driven toy business and expand its entertainment offering:

- Grow toy business profitably through scaling Mattel's portfolio, optimizing operations, evolving demand creation, and growing franchise brands; and
- Expand entertainment offering to capture the full value of Mattel's IP outside the toy aisle in highly accretive business verticals, by growing franchise brands and accelerating content, consumer products, and digital and live experiences.

Mattel is the owner of a portfolio of iconic brands and partners with global entertainment companies to license other IP. Mattel's portfolio of owned and licensed brands and products are organized into the following categories:

**Dolls—**including brands such as *Barbie, American Girl, Disney Princess, Disney Frozen, Monster High,* and *Polly Pocket*. Mattel's Dolls portfolio is driven by the flagship *Barbie* brand and a collection of complementary brands offered globally. Empowering girls since 1959, *Barbie* has inspired the limitless potential of every girl by showing them that they can be anything. *Monster High*, a character-driven franchise, engages fans of all ages, encouraging them to be their authentic selves and celebrate what makes them unique. *American Girl*, with an extensive portfolio of dolls and accessories, content, gaming, and lifestyle products, is best known for imparting valuable life lessons that instill confidence through its inspiring dolls and books, featuring characters from past and present.

**Infant, Toddler, and Preschool—**including brands such as *Fisher-Price* (including *Little People* and *Fisher-Price Wood), Imaginext*, and *Thomas & Friends*. As a leader in play and child development, *Fisher-Price* is dedicated to giving families the best possible start to life by making the most fun, enriching products for infants, toddlers, and preschoolers. *Thomas & Friends* is an award-winning preschool train brand franchise that lays the tracks to inspire, entertain, and develop young train fans through toys, content, live events, and other consumer products.

Infant, Toddler, and Preschool is further divided into three subcategories. The first subcategory is *Fisher-Price*, the power brand, which includes the core Infant, *Little People*, and Newborn product lines, as well as the recently launched *Fisher-Price Wood* product line. The second subcategory is Preschool Entertainment, which includes owned IP such as *Thomas & Friends* and *Barney*, Mattel's character based *Imaginext* line, and partner entertainment brands. The third subcategory is Baby Gear and *Power Wheels*, in which Mattel is strategically out-licensing or exiting certain product lines.

**Vehicles—**including brands such as *Hot Wheels* (including *Hot Wheels Monster Trucks* and *Hot Wheels RC), Matchbox*, and *Cars (Disney Pixar).* In production for over 50 years, *Hot Wheels* continues to push the limits of performance and design, and ignites and nurtures the challenger spirit of kids, adults, and collectors. From die-cast vehicles to tracks, playsets, and accessories, the Mattel Vehicles portfolio has broad appeal that engages and excites fans of all ages.

**Action Figures, Building Sets, Games, and Other—**including brands such as *Masters of the Universe, MEGA, UNO, Jurassic World (NBCUniversal), Minecraft (Microsoft), WWE*, and *Star War*s (*Disney's Lucasfilm*). Mattel's Action Figures portfolio is comprised of product lines associated with licensed entertainment franchises, such as *Jurassic World* and *WWE*, as well as product lines from Mattel-owned IP, such as *Masters of the Universe*. As the challenger brand in Building Sets, *MEGA* inspires creativity through authentic building experiences for builders of all ages and fans of global franchises. Within Games, *UNO* is the classic matching card game that is easy to learn and fast fun for everyone. Other includes Plush, which contains products associated with movie releases from licensed entertainment franchises, as well as Mattel-owned IP.

### Recent Developments

Mattel's net sales in the first quarter of 2025 increased 2% compared to the first quarter of 2024. Gross margin expanded to 49.4% in the first quarter of 2025 compared to 48.0% in the first quarter of 2024, with benefits from lower inventory management costs, the OPG program, and favorable foreign currency exchange, partially offset by cost inflation. Additionally, Mattel ended the first quarter with a cash balance of $1.24 billion, compared to $1.13 billion in the first quarter of 2024 after $460.0 million of share repurchases during the trailing twelve months.

The United States has recently announced changes to its global trade policy, including significant tariffs on imports from China, Vietnam, Mexico, Canada, and other countries. These actions, and retaliatory tariffs imposed by other countries on U.S. goods and exports, have led to significant volatility and uncertainty in global markets.

New or increased tariffs and other barriers to trade, especially in light of recent comments and executive orders made by the United States, could further impact or exacerbate these conditions. Historically, tariffs have led to increased trade and political tensions. Political tensions as a result of trade policies could reduce trade volume, investment, and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and on the stability of global financial markets. There is substantial uncertainty about the duration of existing tariffs, potential changes to existing tariffs, and whether additional tariffs may be imposed, modified, or suspended, and the impacts of such actions on Mattel's business. While the situation remains fluid, Mattel is continuing to evaluate these developments and taking actions designed to mitigate the anticipated cost impact on its business, such as further diversifying its supply chain, optimizing product sourcing and product mix, and taking pricing actions where necessary.

Mattel is operating in an uncertain macro-economic environment with significant volatility that may impact consumer demand. To the extent the macro-economic environment worsens, it may have a material effect on Mattel's results of operations and financial condition. Refer to Part I, Item 1A "Risk Factors" in the 2024 Annual Report and Part II, Item 1A "Risk Factors" of this Quarterly Report on Form 10-Q for further discussion regarding potential impacts on Mattel's business.

### Results of Operations—First Quarter

#### Consolidated Results

The following table presents Mattel's consolidated results for the first quarter of 2025 and 2024:

*(In millions, except percentage and basis point information)*

| March 31, 2025 Amount | For the Three Months Ended % of Net Sales | Amount | March 31, 2024 | % of Net Sales% | Year/Year Change Basis Points of Net Sales |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | $826.6 |  | $809.5 |  | 2% |  |
| Cost of sales | 418.5 | 50.6% | 420.6 | 52.0% | -1% | (140) |
| Gross profit | 408.1 | 49.4% | 388.9 | 48.0% | 5% | 140 |
| Advertising and promotion expenses | 70.2 | 8.5% | 71.4 | 8.8% | -2% | (30) |
| Other selling and administrative expenses | 390.9 | 47.3% | 352.9 | 43.6% | 11% | 370 |
| Operating loss | (53.0) | -6.4% | (35.5) | -4.4% | 49% | (200) |
| Interest expense | 29.2 | 3.5% | 30.1 | 3.7% | -3% | (20) |
| Interest (income) | (16.0) | -1.9% | (17.3) | -2.1% | -8% | 20 |
| Other non-operating expense, net | 13.0 |  | 5.6 |  |  |  |
| Loss before income taxes | (79.3) | -9.6% | (53.9) | -6.7% | 47% | (290) |
| (Benefit) from income taxes | (30.6) |  | (20.8) |  |  |  |
| (Income) from equity method investments | (8.4) |  | (4.8) |  |  |  |
| Net loss | $(40.3) | -4.9% | $(28.3) | -3.5% | 43% | (140) |

#### Sales

Net sales in the first quarter of 2025 were $826.6 million, an increase of $17.1 million, or 2%, as compared to $809.5 million in the first quarter of 2024. The increase in net sales was primarily due to an increase in gross billings of $25.2 million, partially offset by an increase in sales adjustments of $8.1 million.

Gross billings represent amounts invoiced to a customer and do not include the impact of sales adjustments, such as trade discounts and other allowances. Changes in gross billings are discussed below because, while Mattel records the details of sales adjustments in its financial accounting systems at the time of sale, such sales adjustments are generally recorded by customer and are not associated with categories, brands, or individual products. The following tables provide a summary of Mattel's consolidated gross billings by categories, along with supplemental information by brand, for the first quarter of 2025 and 2024:

*(In millions, except percentage information)*

| Gross Billings by Categories | For the Three Months Ended March 31, 2025 | March 31, 2024 | % Change as Reported | Currency Exchange Rate Impact |
| --- | ---: | ---: | ---: | ---: |
| Dolls | $296.6 | $294.5 | 1% | -2% |
| Infant, Toddler, and Preschool | 126.4 | 135.0 | -6% | -2% |
| Vehicles | 308.5 | 297.7 | 4% | -2% |
| Action Figures, Building Sets, Games, and Other | 192.7 | 171.7 | 12% | -1% |
| Gross Billings | $924.2 | $898.9 | 3% | -2% |
| **Supplemental Gross Billings Disclosure** |  |  |  |  |
| **Gross Billings by Top 3 Power Brands** |  |  |  |  |
| Barbie | $173.8 | $177.5 | -2% | -2% |
| Hot Wheels | 268.8 | 258.1 | 4% | -2% |
| Fisher-Price | 90.1 | 93.4 | -3% | -2% |
| Other | 391.5 | 370.0 | 6% | -2% |
| Gross Billings | $924.2 | $898.9 | 3% | -2% |

Gross billings were $924.2 million in the first quarter of 2025, an increase of $25.2 million, or 3%, as compared to $898.9 million in the first quarter of 2024, with an unfavorable impact from changes in currency exchange rates of two percentage points. The increase in gross billings was primarily due to higher billings of Action Figures, Building Sets, Games, and Other, Vehicles, and Dolls products, partially offset by lower billings of Infant, Toddler, and Preschool products.

Dolls gross billings increased 1%, of which 2% was due to higher billings of *Disney Princess* products and 2% was due to higher billings of *Wicked* products, partially offset by lower billings of *Trolls* products of 2% and lower billings of *Barbie* products of 1%.

Infant, Toddler, and Preschool gross billings decreased 6%, of which 8% was due to lower billings of Baby Gear and *Power Wheels* products, due to the continued strategic exit from certain product lines in Baby Gear and *Power Wheels.*

Vehicles gross billings increased 4%, primarily due to higher billings of *Hot Wheels* products.

Action Figures, Building Sets, Games, and Other gross billings increased 12%, of which 19% was due to higher billings of Action Figures products, primarily due to higher billings of *Minecraft* and *Jurassic World* products in advance of their theatrical releases in 2025, partially offset by lower billings of Building Sets products of 8%.

Sales adjustments generally represent arrangements with Mattel's customers to provide sales incentives, support customer promotions, and provide allowances for returns and defective merchandise. Such programs are based primarily on customer purchases, customer performance of specified promotional activities, and other specified factors such as sales to consumers. Additionally, sales adjustments may include foreign currency transaction gains and losses from the remeasurement of accounts receivable denominated in currencies that are different from the relevant entity's functional currency. Sales adjustments increased to $97.5 million in the first quarter of 2025, from $89.4 million in the first quarter of 2024. Sales adjustments as a percentage of net sales increased to 11.8% in the first quarter of 2025, as compared to 11.0% in the first quarter of 2024. The increase in sales adjustments as a percentage of net sales was primarily due to higher promotional activities.

#### Cost of Sales

Cost of sales decreased by $2.1 million, or 1%, to $418.5 million in the first quarter of 2025 from $420.6 million in the first quarter of 2024. Within cost of sales, product and other costs decreased by $8.8 million, or 3%, to $310.3 million in the first quarter of 2025 from $319.1 million in the first quarter of 2024. Royalty expense increased by $6.4 million, or 18%, to $42.5 million in the first quarter of 2025 from $36.1 million in the first quarter of 2024. Freight and logistics expenses were relatively consistent at $65.7 million in the first quarter of 2025, as compared to $65.5 million in the first quarter of 2024.

#### Gross Margin

Gross margin increased to 49.4% in the first quarter of 2025 from 48.0% in the first quarter of 2024. The increase in gross margin was primarily due to lower inventory management costs and other of 130 basis points, primarily lower inventory obsolescence and close-out sales, and incremental realized savings from the OPG program of 110 basis points, partially offset by cost inflation of 100 basis points.

#### Advertising and Promotion Expenses

Advertising and promotion expenses primarily consist of: (i) media costs, which include the media, planning, and buying fees for television, print, and online advertisements, (ii) non-media costs, which include commercial and website production, merchandising, and promotional costs, (iii) retail advertising costs, which include consumer direct catalogs, and (iv) general advertising costs, which include trade show costs. Advertising and promotion expenses as a percentage of net sales were relatively consistent at 8.5% in the first quarter of 2025, as compared to 8.8% in the first quarter of 2024.

#### Other Selling and Administrative Expenses

Other selling and administrative expenses were $390.9 million, or 47.3% of net sales, in the first quarter of 2025, an increase of $37.9 million, as compared to $352.9 million, or 43.6% of net sales, in the first quarter of 2024. The increase in other selling and administrative expenses was primarily due to higher severance and restructuring charges of $15.1 million, higher expenses related to inclined sleeper product recall litigation of $10.4 million, higher employee compensation of $10.0 million, and higher outside services spend and other administrative expenses of $8.2 million, partially offset by realized savings from cost savings programs of $9.5 million.

#### Interest Expense

Interest expense was $29.2 million in the first quarter of 2025, relatively flat as compared to $30.1 million in the first quarter of 2024.

#### Interest Income

Interest income was $16.0 million in the first quarter of 2025, relatively flat as compared to $17.3 million in the first quarter of 2024.

#### Benefit from Income Taxes

Mattel's benefit from income taxes was $30.6 million in the first quarter of 2025, compared to $20.8 million in the first quarter of 2024. The increase in benefit from income taxes was driven by higher loss before income taxes and higher discrete income tax benefits in the first three months of 2025. During the three months ended March 31, 2025, Mattel recognized a net discrete tax benefit of $11.4 million, primarily related to a change of its indefinite reinvestment assertion relating to certain foreign subsidiary earnings. During the three months ended March 31, 2024, Mattel recognized a net discrete income tax benefit of $8.4 million, primarily related to tax elections filed to amortize certain intangible assets transferred as part of Mattel's intra-group intellectual property rights transfer of $10.1 million, partially offset by interest related to unrecognized tax benefits.

Evaluating the need for and the amount of a valuation allowance for deferred tax assets often requires significant judgment and extensive analysis of all available evidence to determine whether it is more-likely-than-not that these assets will be realizable. Mattel routinely assesses the positive and negative evidence for this realizability, including the evaluation of sustained profitability and three years of cumulative pretax income for each tax jurisdiction. During the first quarter of 2025, there were no material changes to Mattel's valuation allowance.

### Segment Results

#### North America Segment

The following tables provide a summary of Mattel's net sales, segment operating income, and gross billings by categories, along with supplemental information by brand, for the North America segment for the first quarter of 2025 and 2024:

*(In millions, except percentage information)*

|  | For the Three Months Ended March 31, 2025 | March 31, 2024 | % Change as Reported | Currency Exchange Rate Impact |
| --- | ---: | ---: | ---: | ---: |
| Net Sales | $491.4 | $477.8 | 3% | —% |
| Segment Operating Income | 83.1 | 73.0 | 14% |  |

Net sales for the North America segment in the first quarter of 2025 were $491.4 million, an increase of $13.6 million, or 3%, as compared to $477.8 million in the first quarter of 2024. The increase in net sales was primarily due to an increase in gross billings of $19.6 million.

*(In millions, except percentage information)*

| Gross Billings by Categories | For the Three Months Ended March 31, 2025 | March 31, 2024 | % Change as Reported | Currency Exchange Rate Impact |
| --- | ---: | ---: | ---: | ---: |
| Dolls | $172.4 | $164.7 | 5% | —% |
| Infant, Toddler, and Preschool | 80.1 | 80.5 | —% | —% |
| Vehicles | 149.5 | 150.2 | —% | —% |
| Action Figures, Building Sets, Games, and Other | 123.9 | 111.0 | 12% | —% |
| Gross Billings | $526.0 | $506.4 | 4% | —% |
| **Supplemental Gross Billings Disclosure** |  |  |  |  |
| **Gross Billings by Top 3 Power Brands** |  |  |  |  |
| Barbie | $92.4 | $92.4 | —% | —% |
| Hot Wheels | 125.5 | 126.8 | -1% | —% |
| Fisher-Price | 58.1 | 53.7 | 8% | —% |
| Other | 250.0 | 233.5 | 7% | —% |
| Gross Billings | $526.0 | $506.4 | 4% | —% |

Gross billings for the North America segment were $526.0 million in the first quarter of 2025, an increase of $19.6 million, or 4%, as compared to $506.4 million in the first quarter of 2024. The increase in the North America segment gross billings was due to higher billings of Action Figures, Building Sets, Games, and Other, and Dolls products.

Dolls gross billings increased 5%, of which 2% was due to higher billings of *Wicked* products and 2% was due to higher billings of *Disney Princess* products, partially offset by lower billings of *Trolls* products of 2%.

Infant, Toddler, and Preschool gross billings were flat year-over-year, with lower billings of Baby Gear and *Power Wheels* products of 11%, substantially offset by higher billings of Preschool Entertainment products of 6% and higher billings of *Fisher-Price* products of 5%.

Vehicles gross billings were flat year-over-year.

Action Figures, Building Sets, Games, and Other gross billings increased 12%, of which 22% was due to higher billings of Action Figures products, primarily due to higher billings of *Jurassic World* and *Minecraft* products in advance of their theatrical releases in 2025, partially offset by lower billings of Building Sets products of 8% and lower billings of Games products of 3%.

Sales adjustments increased to $34.6 million in the first quarter of 2025 from $28.6 million in the first quarter of 2024. Sales adjustments as a percentage of net sales increased to 7.0% in the first quarter of 2025, as compared to 6.0% in the first quarter of 2024. The increase in sales adjustments as a percentage of net sales was primarily due to higher promotional activities.

Cost of sales were relatively consistent at $256.3 million in the first quarter of 2025 as compared to $257.1 million in the first quarter of 2024.

Gross margin increased to 47.8% in the first quarter of 2025 from 46.2% in the first quarter of 2024. The increase in gross margin was primarily due to lower inventory management costs of 120 basis points, including lower inventory obsolescence and close-out sales, and incremental realized savings from the OPG program of 110 basis points, partially offset by cost inflation of 70 basis points.

North America segment operating income was $83.1 million in the first quarter of 2025, as compared to $73.0 million in the first quarter of 2024, primarily due to higher gross profit of $14.4 million.

#### International Segment

The following tables provide a summary of Mattel's net sales, segment operating income, and gross billings by categories, along with supplemental information by brand, for the International segment for the first quarter of 2025 and 2024:

*(In millions, except percentage information)*

|  | For the Three Months Ended March 31, 2025 | March 31, 2024 | % Change as Reported | Currency Exchange Rate Impact |
| --- | ---: | ---: | ---: | ---: |
| Net Sales | $335.3 | $331.7 | 1% | -4% |
| Segment Operating Income | 23.3 | 9.3 | 152% |  |

Net sales for the International segment in the first quarter of 2025 were $335.3 million, an increase of $3.5 million, or 1%, as compared to $331.7 million in the first quarter of 2024. The increase in net sales was primarily due to an increase in gross billings of $5.7 million, partially offset by an increase in sales adjustments of $2.1 million.

*(In millions, except percentage information)*

| Gross Billings by Categories | For the Three Months Ended March 31, 2025 | March 31, 2024 | % Change as Reported | Currency Exchange Rate Impact |
| --- | ---: | ---: | ---: | ---: |
| Dolls | $124.2 | $129.8 | -4% | -4% |
| Infant, Toddler, and Preschool | 46.3 | 54.5 | -15% | -4% |
| Vehicles | 158.9 | 147.5 | 8% | -5% |
| Action Figures, Building Sets, Games, and Other | 68.7 | 60.7 | 13% | -4% |
| Gross Billings | $398.2 | $392.5 | 1% | -4% |
| **Supplemental Gross Billings Disclosure** |  |  |  |  |
| **Gross Billings by Top 3 Power Brands** |  |  |  |  |
| Barbie | $81.4 | $85.1 | -4% | -3% |
| Hot Wheels | 143.3 | 131.3 | 9% | -5% |
| Fisher-Price | 32.1 | 39.6 | -19% | -5% |
| Other | 141.4 | 136.4 | 4% | -4% |
| Gross Billings | $398.2 | $392.5 | 1% | -4% |

Gross billings for the International segment were $398.2 million in the first quarter of 2025, an increase of $5.7 million, or 1%, as compared to $392.5 million in the first quarter of 2024, with an unfavorable impact from changes in currency exchange rates of four percentage points. The increase in the International segment gross billings was due to higher billings of Vehicles and Action Figures, Building Sets, Games, and Other products, partially offset by lower billings of Infant, Toddler, and Preschool and Dolls products.

Dolls gross billings decreased 4%, of which 3% was due to lower billings of *Polly Pocket* products and 3% was due to lower billings of *Barbie* products, partially offset by higher billings of *Disney Princess* products of 3%.

Infant, Toddler, and Preschool gross billings decreased 15%, of which 14% was due to lower billings of *Fisher-Price* products.

Vehicles gross billings increased 8%, primarily due to higher billings of *Hot Wheels* products.

Action Figures, Building Sets, Games, and Other gross billings increased 13%, of which 14% was due to higher billings of Action Figures products, primarily due to higher billings of *Minecraft* products in advance of its theatrical release in 2025, and 9% was due to higher billings of Games products, partially offset by lower billings of Building Sets products of 9%.

Sales adjustments increased to $62.9 million in the first quarter of 2025 from $60.8 million in the first quarter of 2024. Sales adjustments as a percentage of net sales were relatively consistent at 18.8% in the first quarter of 2025, as compared to 18.3% in the first quarter of 2024.

Cost of sales decreased by $8.6 million, or 5%, to $175.5 million in the first quarter of 2025 from $184.1 million in the first quarter of 2024, primarily due to a decrease in product and other costs of $12.0 million.

Gross margin increased to 47.6% in the first quarter of 2025 from 44.5% in the first quarter of 2024. The increase in gross margin was primarily due to favorable foreign currency exchange of 300 basis points, incremental realized savings from the OPG program of 120 basis points, and lower inventory management costs of 110 basis points, including lower inventory obsolescence and close-out sales, partially offset by cost inflation of 140 basis points and unfavorable mix and other factors of 80 basis points.

International segment operating income was $23.3 million in the first quarter of 2025, as compared to $9.3 million in the first quarter of 2024, primarily due to higher gross profit of $12.1 million and lower advertising and promotion expenses of $5.1 million.

### Cost Savings Program

#### Optimizing for Profitable Growth

On February 7, 2024, Mattel announced the OPG program, a multi-year cost savings program that follows the Optimizing for Growth program (the "OFG program"), which concluded in the fourth quarter of 2023. The OPG program is designed to achieve further efficiency and cost savings opportunities, primarily within Mattel’s global supply chain, including its manufacturing footprint. The OPG program includes cost savings actions in connection with discontinuing production at a plant in China, as previously announced in the third quarter of 2023, as well as savings from other previous actions taken in 2023 that were not recognized in the OFG program. Targeted annual gross cost savings from actions associated with the OPG program, which are expected to be completed by 2026, are $200 million. Of the $200 million in targeted annual gross costs savings, approximately 60% is expected to benefit cost of sales and 40% is expected to benefit other selling and administrative expenses. Total cash expenditures under the OPG program are expected to be between $115 and $140 million and total non-cash charges are expected to be up to $5 million.

The costs associated with the OPG program are expected to include the following:

| Optimizing for Profitable Growth – Actions | Estimate of Cost |
| --- | --- |
| Employee severance | $105 to $120 million |
| Other restructuring costs | $5 to $10 million |
| Non-cash charges | up to $5 million |
| **Total estimated severance and other restructuring costs** | **$110 to $135 million** |
| Investments | $5 to $10 million |
| **Total estimated actions** | **$115 to $145 million** |

In connection with the OPG program, Mattel recorded severance and other restructuring costs in the following cost and expense categories within operating income in the consolidated statements of operations:

*(In millions)*

|  | For the Three Months Ended March 31, 2025 | March 31, 2024 |
| --- | ---: | ---: |
| Cost of sales (a) | $1.6 | $2.2 |
| Other selling and administrative expenses (b) | 17.8 | 7.5 |
|  | $19.4 | $9.7 |

34

(a) *Severance and other restructuring costs recorded within cost of sales in the consolidated statements of operations are included in segment operating income in "Note 21 to the Consolidated Financial Statements—Segment Information."*

(b) *Severance and other restructuring costs recorded within other selling and administrative expenses in the consolidated statements of operations are included in corporate and other expense in "Note 21 to the Consolidated Financial Statements—Segment Information."*

As of March 31, 2025, Mattel has recorded cumulative severance and other restructuring charges related to the OPG program of approximately $94 million, which includes approximately $2 million of non-cash charges. Mattel realized cumulative cost savings (before severance, restructuring costs, and cost inflation) of approximately $103 million, which represents approximately 60% benefit to cost of sales, and 40% benefit to other selling and administrative expenses, as of March 31, 2025, in connection with the OPG Program.

### Liquidity and Capital Resources

Mattel's primary sources of liquidity are its domestic and foreign cash and equivalents balances, short-term borrowing facilities, including its $1.40 billion Credit Facility, and access to capital markets to fund its operations and obligations. Such obligations may include capital expenditures, debt service, future royalty payments pursuant to licensing agreements, future inventory and service purchases, and required cash contributions and payments related to benefit plans. Of Mattel's $1.24 billion in cash and equivalents at March 31, 2025, $931.2 million was held by foreign subsidiaries, including $68.6 million held in Russia. Mattel's cash held in Russia can be used within the country; however, its movement out of Russia is currently limited. In early 2022, Mattel paused all shipments into Russia.

Cash flows from operating activities could be negatively impacted by decreased demand for Mattel's products, which could result from factors such as, but not limited to, adverse economic conditions and changes in public and consumer preferences, or by increased costs associated with manufacturing and distribution of products, such as tariffs, or shortages in raw materials or component parts. Additionally, Mattel's ability to issue long-term debt and obtain seasonal financing could be adversely affected by factors such as, but not limited to, global economic crises and tight credit environments, an inability to comply with its debt covenants and its Credit Facility covenants, or deterioration of Mattel's credit ratings. However, based on Mattel's current business plan and factors known to date, it is expected that existing cash and equivalents, cash flows from operations, availability under the Credit Facility, and access to capital markets will be sufficient to meet working capital, operating expenditure, and other contractual requirements for the next twelve months and in the long-term.

#### Current Market Conditions

Mattel is exposed to financial market risk resulting from changes in interest and foreign currency exchange rates.

Mattel intends to utilize its existing cash and cash equivalents, cash flow from operations, and borrowings under the Credit Facility to meet its short-term liquidity needs. At March 31, 2025, Mattel had no outstanding borrowings under the Credit Facility and approximately $9 million in outstanding letters of credit under the Credit Facility.

Market conditions could affect certain terms of other debt instruments that Mattel enters into from time to time.

Mattel monitors the third-party depository institutions that hold Mattel's cash and equivalents. Mattel's emphasis is primarily on safety and liquidity of principal, and secondarily on maximizing the yield on those funds. Mattel diversifies its cash and equivalents among counterparties and securities to minimize risks.

Mattel is subject to credit risks relating to the ability of its counterparties in hedging transactions to meet their contractual payment obligations. The risks related to creditworthiness and nonperformance have been considered in the fair value measurements of Mattel's foreign currency forward exchange contracts. Mattel closely monitors its counterparties and takes action, as necessary, to manage its counterparty credit risk.

Mattel expects that some of its customers and vendors may experience difficulty in obtaining the liquidity required to buy inventory or raw materials. Mattel monitors its customers' financial condition and their liquidity in order to mitigate accounts receivable collectability risks, and customer terms and credit limits are adjusted, if necessary. Additionally, Mattel uses a variety of financial arrangements to support the collectability of accounts receivable of customers deemed to be a credit risk, including requiring letters of credit, purchasing various forms of credit insurance with unrelated third parties, or requiring cash in advance of shipment.

Mattel sponsors defined benefit pension plans and postretirement benefit plans for its employees. Actual returns below the expected rate of return, along with changes in interest rates that affect the measurement of the liability, would impact the amount and timing of Mattel's future contributions to these plans.

#### Cash Flow Activities

Cash flows provided by operating activities were $24.8 million in the first three months of 2025, as compared to $35.5 million in the first three months of 2024. The decrease in cash flows provided by operating activities was primarily due to a decrease in net income, excluding the impact of non-cash items, partially offset by a decrease in cash used for working capital of $14.2 million. The decrease in cash used for working capital is primarily due to $45.5 million of favorable changes in accounts payable and accrued liabilities and $25.1 million of favorable changes in prepaid assets and other current assets, partially offset by $26.2 million of unfavorable changes in inventory and $20.0 million of unfavorable changes in accounts receivable, net.

Cash flows used for investing activities were $31.3 million in the first three months of 2025, as compared to $28.4 million in the first three months of 2024. The increase in cash flows used for investing activities was primarily due to higher capital expenditures of $5.7 million in the first three months of 2025.

Cash flows used for financing activities were $161.9 million in the first three months of 2025, as compared to $131.3 million in the first three months of 2024. The increase in cash flows used for financing activities was primarily due to $60.0 million of higher share repurchases in the first three months of 2025 as compared to the first three months of 2024.

#### Seasonal Financing

See Part I, Item 1 "Financial Statements—Note 8 to the Consolidated Financial Statements—Seasonal Financing" of this Quarterly Report on Form 10-Q.

#### Financial Position

Mattel's cash and equivalents decreased $144.2 million to $1.24 billion at March 31, 2025 from $1.39 billion at December 31, 2024, primarily due to share repurchases of $160.0 million and capital expenditures of $36.2 million, partially offset by cash flows provided by operating activities of $24.8 million during the three months ended March 31, 2025. Mattel's cash and equivalents increased $113.5 million to $1.24 billion at March 31, 2025 from $1.13 billion at March 31, 2024, primarily due to cash flows provided by operating activities of $789.9 million during the trailing twelve months, partially offset by $460.0 million of share repurchases and $208.3 million of capital expenditures during the trailing twelve months.

Accounts receivable decreased $369.9 million to $633.3 million at March 31, 2025 from $1.00 billion at December 31, 2024, primarily due to seasonal declines as year-end receivables are collected. Accounts receivable decreased by $40.0 million to $633.3 million at March 31, 2025 from $673.3 million at March 31, 2024, primarily due to timing of sales and collections.

Inventories increased $156.7 million to $658.4 million at March 31, 2025 from $501.7 million at December 31, 2024, primarily due to seasonal inventory build. Inventories decreased $10.9 million to $658.4 million at March 31, 2025 from $669.3 million at March 31, 2024, primarily due to continued inventory management efforts.

Prepaid expenses and other current assets increased $17.0 million to $251.1 million at March 31, 2025 from $234.1 million at December 31, 2024, primarily due to increases in prepaid insurance of $12.5 million and prepaid income taxes of $10.8 million, partially offset by a decrease in derivative receivables of $11.2 million. Prepaid expenses and other current assets decreased $11.6 million to $251.1 million at March 31, 2025 from $262.7 million at March 31, 2024, primarily due to decreases in prepaid income taxes of $22.3 million.

Accounts payable and accrued liabilities decreased $146.0 million to $1.13 billion at March 31, 2025 from $1.28 billion at December 31, 2024, due to seasonal declines in expenditure levels. Accounts payable and accrued liabilities increased $47.6 million to $1.13 billion at March 31, 2025 from $1.08 billion at March 31, 2024, primarily due to increases in accrued compensation of $24.2 million and accrued royalties of $20.2 million.

A summary of Mattel's capitalization is as follows:

*(In millions, except percentage information)*

|  | March 31, 2025 |  | March 31, 2024 |  | December 31, 2024 |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Cash and equivalents | $1,243.7 |  | $1,130.2 |  | $1,387.9 |  |
| 2010 Senior Notes due October 2040 | 250.0 |  | 250.0 |  | 250.0 |  |
| 2011 Senior Notes due November 2041 | 300.0 |  | 300.0 |  | 300.0 |  |
| 2019 Senior Notes due December 2027 | 600.0 |  | 600.0 |  | 600.0 |  |
| 2021 Senior Notes due April 2026 | 600.0 |  | 600.0 |  | 600.0 |  |
| 2021 Senior Notes due April 2029 | 600.0 |  | 600.0 |  | 600.0 |  |
| Debt issuance costs and debt discount | (14.6) |  | (18.9) |  | (15.6) |  |
| Total debt | 2,335.4 | 52% | 2,331.1 | 54% | 2,334.4 | 51% |
| Stockholders' equity | 2,129.6 | 48 | 2,025.3 | 46 | 2,264.1 | 49 |
| Total capitalization (total debt plus stockholders' equity) | $4,465.0 | 100% | $4,356.4 | 100% | $4,598.5 | 100% |

Total debt was $2.34 billion at March 31, 2025, and $2.33 billion at December 31, 2024 and March 31, 2024, respectively.

Stockholders' equity decreased $134.5 million to $2.13 billion at March 31, 2025 from $2.26 billion at December 31, 2024, primarily due to share repurchases of $160.0 million and net loss of $40.3 million, partially offset by other comprehensive income of $47.9 million and the impact of share-based compensation on additional paid-in capital of $19.9 million during the first three months of 2025. Stockholders' equity increased $104.3 million to $2.13 billion at March 31, 2025 from $2.03 billion at March 31, 2024, primarily due to net income of $529.8 million and the impact of share-based compensation on additional paid-in capital of $81.4 million during the trailing twelve months, partially offset by share repurchases of $464.2 million and other comprehensive loss of $30.9 million during the trailing twelve months.

### Litigation

See Part I, Item 1 "Financial Statements—Note 20 to the Consolidated Financial Statements—Contingencies" of this Quarterly Report on Form 10-Q.

### Application of Critical Accounting Policies and Estimates

Mattel's critical accounting policies and estimates are included in the 2024 Annual Report on Form 10-K and did not materially change during the first three months of 2025.

### New Accounting Pronouncements

See Part I, Item 1 "Financial Statements—Note 22 to the Consolidated Financial Statements—New Accounting Pronouncements" of this Quarterly Report on Form 10-Q.

### Non-GAAP Financial Measure

To supplement the financial results presented in accordance with GAAP, Mattel presents a non-GAAP financial measure within the meaning of Regulation G promulgated by the SEC. The non-GAAP financial measure that Mattel presents is currency exchange rate impact. Mattel uses this measure to analyze its continuing operations and to monitor, assess, and identify meaningful trends in its operating and financial performance. Mattel believes that the disclosure of this non-GAAP financial measure provides useful supplemental information to investors to be able to better evaluate ongoing business performance and certain components of Mattel's results. This measure is not, and should not be viewed as, a substitute for GAAP financial measures and may not be comparable to similarly-titled measures used by other companies.

#### Currency Exchange Rate Impact

The currency exchange rate impact reflects the portion (expressed as a percentage) of changes in Mattel's reported results that are attributable to fluctuations in currency exchange rates.

For entities reporting in currencies other than the U.S. dollar, Mattel calculates the percentage change of period-over-period results at constant currency exchange rates (established as described below) by translating current period and prior period results using these rates and then determines the currency exchange rate impact percentage by calculating the difference between the percentage change at such constant currency exchange rates and the percentage change at actual exchange rates.

The constant currency exchange rates are determined by Mattel at the beginning of each year and are applied consistently during the year. They are generally different from the actual exchange rates in effect during the current or prior period due to volatility in actual currency exchange rates. Mattel considers whether any changes to the constant currency rates are appropriate at the beginning of each year. The exchange rates used for these constant currency calculations are generally based on prior year actual exchange rates.

Mattel believes that the disclosure of the percentage impact of currency changes is useful supplemental information for investors to be able to gauge Mattel's current business performance and the longer-term strength of its overall business since currency changes could potentially mask underlying sales trends. The disclosure of the percentage impact of currency exchange allows investors to calculate the impact on a constant currency basis and also enhances their ability to compare financial results from one period to another.

### Key Performance Indicator

Gross billings represent amounts invoiced to customers. It does not include the impact of sales adjustments, such as trade discounts and other allowances. Mattel presents changes in gross billings as a metric for comparing its aggregate, categorical, brand, and geographic results to highlight significant trends in Mattel's business. Changes in gross billings are discussed because, while Mattel records the details of sales adjustments in its financial accounting systems at the time of sale, such sales adjustments are generally recorded by customer and not associated with categories, brands, or individual products.

## Market risk

As filed, 2,950 characters.

#### Foreign Currency Exchange Rate Risk

Currency exchange rate fluctuations may impact Mattel's results of operations and cash flows. The Euro and British pound sterling were the primary currencies that caused foreign currency transaction exposure for Mattel during the first three months of 2025. Mattel seeks to mitigate its foreign currency exchange risk by monitoring its foreign currency transaction exposure for the year and partially hedging such exposure using foreign currency forward exchange contracts primarily to hedge its purchase and sale of inventory and other intercompany transactions denominated in foreign currencies. These contracts generally have maturity dates of up to 24 months. For those intercompany receivables and payables that are not hedged, the transaction gains or losses are recorded in the consolidated statements of operations in the period in which the exchange rate changes as part of operating loss or other non-operating expense, net based on the nature of the underlying transaction. Transaction gains or losses on hedged intercompany inventory transactions are recorded in the consolidated statements of operations in the period in which the inventory is sold to customers. In addition, Mattel manages its exposure to currency exchange rate fluctuations through the selection of currencies used for international borrowings. Mattel does not trade in financial instruments for speculative purposes.

Mattel's financial position is also impacted by currency exchange rate fluctuations on translation of its net investments in subsidiaries with non-U.S. dollar functional currencies. Assets and liabilities of subsidiaries with non-U.S. dollar functional currencies are translated into U.S. dollars at fiscal period-end exchange rates. Income, expense, and cash flow items are translated at weighted-average exchange rates prevailing during the fiscal period. The resulting currency translation adjustments are recorded as a component of accumulated other comprehensive loss within stockholders' equity. Mattel's primary currency translation adjustments for the three months ended March 31, 2025 were related to its net investments in entities having functional currencies denominated in the Russian ruble and British pound sterling.

There are numerous factors impacting the amount by which Mattel's financial results are affected by foreign currency translation and transaction gains and losses resulting from changes in currency exchange rates, including, but not limited to, the level of foreign currency forward exchange contracts in place at a given time and the volume of foreign currency-denominated transactions in a given period. However, assuming that such factors were held constant, Mattel estimates that a one percent change in the U.S. dollar would have impacted Mattel's first quarter 2025 net sales by approximately 0.2% and would have less than a $0.01 impact to Mattel's net income per share.

## Controls and procedures

As filed, 2,380 characters.

#### Evaluation of Disclosure Controls and Procedures

As of March 31, 2025, Mattel's disclosure controls and procedures were evaluated, with the participation of Mattel's principal executive officer and principal financial officer, to assess whether they are effective in providing reasonable assurance that information required to be disclosed by Mattel in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Based on this evaluation, Ynon Kreiz, Mattel's principal executive officer, and Anthony DiSilvestro, Mattel's principal financial officer, concluded that these disclosure controls and procedures are not effective as of March 31, 2025 due to a material weakness in Mattel's internal control over financial reporting, which is more fully described in Management's Report on Internal Control Over Financial Reporting, in Part II, Item 8 "Financial Statements and Supplementary Data" in the 2024 Annual Report on Form 10-K.

#### Remediation Plan

Management is in the process of executing its remediation plan to address the material weakness. During the quarter ended March 31, 2025, management completed the design and implementation of new user access provisioning and review controls for certain systems. Additional time is required to test the operating effectiveness of these and previously implemented controls to demonstrate the effectiveness of the remediation efforts. The material weakness cannot be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

#### Changes in Internal Control Over Financial Reporting

Except as described above, there were no changes in internal control over financial reporting that occurred during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, Mattel's internal control over financial reporting.

## Risk factors

As filed, 3,697 characters.

Other than as provided below, there have been no material changes to the risk factors disclosed under Part I, Item 1A "Risk Factors" in the 2024 Annual Report on Form 10-K.

**Political developments, including trade relations, and/or trade actions could adversely impact Mattel, its personnel and facilities, its customers and suppliers, retail and financial markets, and general economic conditions.**

Mattel's business is worldwide in scope, and political instability, civil unrest, the deterioration of the political, economic, or social situation in a country in which Mattel has significant sales or operations, or changes to trade policy or the breakdown of trade relations between the United States and a foreign country in which Mattel has significant manufacturing facilities, operations or significant sales, or from which Mattel sources raw materials or components or delivers finished products, could adversely affect Mattel's business, financial condition, and results of operations. A change in trade status between the United States and a foreign country could result in a substantial increase in the import duty of toys manufactured in that foreign country and imported into the United States. For example, the United States has announced significant new tariffs on imports from a wide range of countries, including China, which was followed by retaliatory tariffs by China and a number of countries and a cycle of further retaliatory tariff announcements and trade actions. Certain of the tariffs have been and may be delayed, but others have taken or may take effect. Further, tariffs announced or imposed by the United States could be altered or delayed through actions taken by the administration, bilateral negotiations, judicial orders or congressional action, and tariffs announced or imposed by other countries can be affected by similar developments. These and future changes in tariffs and trade policies by the United States or China, or trade actions by or directed toward other countries, such as Mexico, Vietnam, or Canada, or retaliatory trade measures in response, have resulted and may continue to result in additional costs and pricing pressures, supply chain disruptions, volatile or unpredictable customer spending patterns, and increased economic or geopolitical risks, any or all of which could adversely impact Mattel's future sales, business, financial condition, and results of operations, perhaps materially or in ways that we cannot predict. For example, diverting more production to, or sourcing from, countries other than China or Mexico, could raise the cost of Mattel products in those markets, and could cause customers in those markets to seek domestic or non-U.S. sources for products that Mattel sells, or to be pressured or incentivized by foreign governments not to purchase goods of U.S. companies, which could adversely impact Mattel's future sales.

In addition, the United States, United Kingdom, and European Union, among other jurisdictions, have each imposed export controls, as well as financial and economic sanctions, currency controls, and other trade actions, on certain products, technologies, industry sectors, and parties in Russia and Belarus as a result of the Russia-Ukraine war, which have resulted and could further result in retaliatory measures and actions by Russia. Any increased trade barriers or restrictions on global trade imposed by the United States, whether toward China, Russia, or other countries, or further retaliatory trade measures or currency controls taken by China, Russia, or other countries in response, could further adversely affect Mattel's business, financial condition, and results of operations.

Filed May 6, 2025.
Source: SEC EDGAR, the filing index for accession 0001628280-25-022312. Last ingested by Listed: Oct 24, 2026, 14:53 ET. No prices; not investment advice.