Forward-Looking Statements/Non-GAAP Financial Measures

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Transcription:

Forward-Looking Statements/Non-GAAP Financial Measures FORWARD-LOOKING STATEMENTS: This presentation contains a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The use of words such as anticipates, expects, intends, plans, confident that and believes, among others, generally identify forward-looking statements. These forward-looking statements are based on currently available operating, financial, economic and other information, and are subject to a number of significant risks and uncertainties. A variety of factors, many of which are beyond our control, could cause actual future results to differ materially from those projected in the forward-looking statements. Specific factors that might cause such a difference include, but are not limited to: (i) Mattel s ability to design, develop, produce, manufacture, source and ship products on a timely and cost-effective basis, as well as interest in and purchase of those products by retail customers and consumers in quantities and at prices that will be sufficient to profitably recover Mattel s costs; (ii) downturns in economic conditions affecting Mattel s markets which can negatively impact retail customers and consumers, and which can result in lower employme nt levels, lower consumer disposable income and spending, including lower spending on purchases of Mattel s products; (iii) other factors which can lower discretionary consumer spending, such as higher costs for fuel and food, drops in the value of homes or other consumer assets, and high levels of consumer debt; (iv) potential difficulties or delays Mattel may experience in implementing cost savings and efficiency enhancing initiatives; (v) other economic and public health conditions or regulatory changes in the markets in which Mattel and its customers and suppliers operate, which could create delays or increase Mattel s costs, such as higher commodity prices, labor costs or transportation costs, or outbreaks of disease; (vi) currency fluctuations, including movements in foreign exchange rates, which can lower Mattel s net revenues and earnings, and significantly impact Mattel s costs; (vii) the concentration of Mattel s customers, potentially increasing the negative impact to Mattel of difficulties experienced by any of Mattel s customers, including the bankruptcy of Toys R Us, Inc., or changes in their purchasing or selling patterns; (viii) the future willingness of licensors of entertainment properties for which Mattel currently has licenses or would seek to have licenses in the future to license those products to Mattel; (ix) the inventory policies of Mattel s retail customers, including retailers potential decisions to lower their inventories, even if it results in lost sales, as well as the concentration of Mattel s revenues in the second half of the year, which coupled with reliance by retailers on quick response inventory management tech niques increases the risk of underproduction of popular items, overproduction of less popular items and failure to achieve compressed shipping schedules; (x) the increased costs of developing more sophisticated digital and smart technology products, and the corresponding supply chain and design challenges associated with such products; (xi) work disruptions, which may impact Mattel s ability to manufacture or deliver product in a timely and cost-effective manner; (xii) the bankruptcy of Toys R Us, Inc. or other of Mattel s significant retailers, or the general lack of success of one of Mattel s significant retailers which could negatively impact Mattel s revenues or bad debt exposure; (xiii) the impact of competition on revenues, margins and other aspects of Mattel s business, including the ability to offer products which consumers choose to buy instead of competitor s products, the ability to secure, maintain and renew popular licenses and the ability to attract and retain talented employees; (xiv) the risk of product recalls or product liability suits and costs associated with product safety regulations; (xv) changes in laws or regulations in the United States and/or in other major markets, such as China, in which Mattel operates, including, without limitation, with respect to taxes, tariffs, trade policies or product safety, which may increase Mattel s product costs and other costs of doing business, and reduce Mattel s earnings, (xvi) failure to realize the planned benefits from any investments or acquisitions made by Mattel, (xvii) the impact of other market conditions, third party actions or approvals and competition which could reduce demand for Mattel s products or delay or increase the cost of implementation of Mattel s initiatives or alter Mattel s actions and reduce actual results; (xviii) changes in financing markets or the inability of Mattel to obtain financing on attractive terms (xix) the impact of litigation or arbitration decisions or settlement actions; and (xx) other risks and uncertainties as may be described in Mattel s periodic filings with the Securities and Exchange Commission, including the Risk Factors section of Mattel s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, and Mattel s Quarterly Reports on Form 10- Q for fiscal year 2018, as well as in Mattel s other public statements. Mattel does not update forward-looking statements and expressly disclaims any obligation to do so. NON-GAAP FINANCIAL MEASURES: To supplement the financial results presented in accordance with generally accepted accounting principles in the United States ( GAAP ), Mattel presents certain non-gaap financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. The non-gaap financial measures used herein include: gross sales, adjusted other selling and administrative expenses, adjusted operating income (loss), earnings before interest expense, taxes, depreciation and amortization ( EBITDA ), adjusted EBITDA, and constant currency. Mattel uses these metrics to analyze its continuing operations and to monitor, assess and identify meaningful trends in its operating and financial performance. These measures are not, and should not be viewed as, substitutes for GAAP financial measures. Information required by Regulation G regarding non-gaap financial measures, including definitions and reconciliations of the non-gaap financial measures to the most directly comparable GAAP financial measures, are included in Mattel s February 7, 2019 earnings release (as exhibits) and earnings slide presentation (as an appendix), which will be available at the time of this presentation in the Investors section of our corporate website, http://corporate.mattel.com/, under the subheading Financial Information Earnings Releases. We have not reconciled our non-gaap financial measure guidance provided herein (gross sales, gross sales in constant currency, adjusted operating income (loss), EBITDA, and adjusted EBITDA) to the most directly comparable GAAP measures because material items that impact these measures cannot be reasonably predicted and, therefore, cannot be presented without unreasonable efforts. 1 You Can Tell It s Mattel 2019 New York Toy Fair 2 1 All other product names and associated designs

Ynon Kreiz Chairman and Chief Executive Officer 3 Our Mission To Create Innovative Products and Experiences that Inspire, Entertain and Develop Kids through Play 4 2 All other product names and associated designs

Methodical Approach to a Multi-Year Turnaround 5 2020 Expect to see growing benefits and payoff from the transformation work we are doing now Continue to position the company for sustainable, profitable growth Create long-term value for our shareholders 2019 Focus on executing our plan methodically, finding even more efficiencies and driving continued improvement in profitability 6 3 All other product names and associated designs

Strategy to Unlock Growth Potential Transforming Mattel into an IP-driven, high-performing toy company Our mission is to create innovative products and experiences that inspire, entertain and develop children through play 7 Significant Progress in Transformation Plan 8 4 All other product names and associated designs

Largest Year-Over-Year Improvement in Operating Income for Full Year Since 2012 and for the Fourth Quarter Since 2009 Source: Q4 2018 Earnings Press Release 9 First Gross Margin Improvement Since 2013 Source: MAT Earnings 2/7/19 Release 10 5 All other product names and associated designs

Expect to Exceed Overall Savings Target of $650M 11 2018 Progress Towards Regaining Topline Growth Five Consecutive Quarters of Year-Over-Year Growth Highest Annual Gross Sales in Five Years Source: MAT Earnings 2/7/19 Release (growth based on Gross Sales) 12 6 All other product names and associated designs

2018 Progress Towards Regaining Topline Growth Highest Annual Gross Sales in 50-Year History Source: MAT Earnings 2/7/19 Release 13 2018 Progress Towards Regaining Topline Growth Strong Local Execution 14 7 All other product names and associated designs

Global Toy Company in 2018 15 Source: The NPD Group/Retail Tracking Service/G12/Jan-Dec 2018/Total Toys/Adjusted USD #1 Toy Company in Latin America For Years 16 Source: The NPD Group/Consumer Tracking Service (Annual 1994-2010), Retail Tracking Service (Annual 2011-2018) 8 All other product names and associated designs

#1 Toy Company in North America For Years 17 Source: The NPD Group/Consumer Tracking Service (Annual 1994-2010), Retail Tracking Service (Annual 2011-2018) #1 Toy Company in America For Years 18 Source: The NPD Group/Consumer Tracking Service (Annual 1994-2010), Retail Tracking Service (Annual 2011-2018) 9 All other product names and associated designs

Demonstrated Strength as World-Class Licensing Partner 19 Strength in Licensing 20 10 All other product names and associated designs

New Partner Brands TM 21 New Partner Brands FPO Assets to come 22 11 All other product names and associated designs

New Partner Brands 23 One of the Strongest Portfolios of Children s and Family Entertainment Franchises in the World 24 12 All other product names and associated designs

Plush Nurturing Caring For Babies Sensory Pirates Clothing Magic Sci-fi Spies Dolls Sounds Building Sets Science Singing Cars Demographics and Genres Pretend Play Soccer Dinosaurs Lights Vehicles Building Sets Fantasy/Heroes Slime Learning Squishies Collectibles Make-Up Play Infant/Toddler/Preschool Social Interactions Role Play/Storytelling GIRLS Bikes Fairies Building Scents Mermaids Heroes 25 Fashion Accessories Planes Social Family Values Dance Pets/Animals Jewelry BOYS Trains Plush Science Action Figures Acting Dogs Princesses Vehicles People Stories Cats Family And Friends Rockets Performing/Arts Games Learning/Development Tweens/Teens Gymnastics Youth Electronics Circus Capturing the Full Value of IP 26 13 All other product names and associated designs